Regulations

Three things. One I meant to post on a while ago.

 

1) Why. WHY? is our central bank acting as a regulator of our financial services industry? Who thought that one made sense? Hmm... central bank.. supporting the currency... and regulating the financial industry... thats a logical combination.

 

2) Freddie and Fannie were and are too bloated. Amazingly it was only a month or two that they were expanded to be able to take on more mortgages in order to "help out" with our current crises. Good bit 'o thinking that.

 

3) SEC's naked short selling ban. I find this one disingenuous. Naked short selling is already banned. The primes are calling this a firm pre-locate requirement on these stocks, which it is, but I am going to be a little bit more of a pessimist. The thing is, this came after Freddie and Fannie tanked and the US govt agreed to give them unlimited support. My view is that the SEC is 'protecting' Freddie and Fannie from the hedgies the govt. believes could take them under and cost the govt. a bundle. Now, the interesting thing, is that I have pulled the stock loan rates on these guys (Bloomberg needed them for an article, and I think they will be a little disappointed with the result on this one), and both Freddie and Fannie were general collateral (easy to borrow) through their entire fall. What that means, and this is interesting, is that there is no need to naked short, because it is dead easy to get a locate on the shares. And, this has generally been true of most financial services firms recently: with their huge (90+%) of institutional ownership, they are easy to borrow. So what the hell is the SEC doing by banning an already banned action? Swinging baseball bats at ghosts, in my opinion.