I think we all can appreciate Elizabeth Warren's battle to remove that portion of the Dodd Frank bank giveaway. It was interesting watching this evolve too as I saw it a few days ahead and myself and other bloggers got on it. It quickly moved from being no news to big news and for a good reason.
There lots of others items in there to question as well and this video does a pretty good job hitting 5 of the big ones, including the swap for the banks.
They did a really good job with this.
Further on, again what I have been trying beat folks over the head with for a number of years is the fact that we are under the "Attack of the Killer Algorithms" and it's the math and algorithms used by banks, thare are proprietary that we can't see and are forced to entertain "trust me" which is not good with banks.
One thing that Senator Warren is well aware of is the corruption at the at the Office of the Comptroller of the Currency. She's brought it up a few times and folks may not know exaclty what agency does. When's there's fines levied, they collect them and that's part of their job. Another more important function they are supposed to do is work with banks to ensure their financial math models are sane and or accurate.
It's been a big party over there to say the least and Senator Warren has mentioned it a few times. This is the brain work of the mathematicians that create the models for banks structure their business, work with risk or maybe I should say cheat with risk to be truthful. Portfolios don't get changed, they just change the math. Here's a clip from the Quants of Wall Street Documentary. Pay attention here as this the #1 Quant in the world with math and he's on our side now.
He talks the "real world" and says the most financial models dont' include this so give that some thought, it will never be 100 bottles of beer. That's not in 99% of finance models.
So there's a quick look at finance models. In addition if the complexities get to be too much, they just guess, so listen again to Paul Wilmott and how he describes correlations...how do you know what these numbers are he states...
Most people in banks he says don't have a clue what they are doing, they don't understand the technical business...think Jamie Dimon here but they have the power..and the quants are the brains...
Anyway this is short glimpse of what I to share with consumers with videos from people a lot smarter than me.
So back to to Senator Warren, her efforts are working to keep things like this clean and you don't have to be a mathematician to see how this unfolds. Verbiage in laws are just that and the Quants model around it, hiding their risk fiddling with proprietary code and we never get to see it.
Now let's return to the Office of the Comptroller of the Currency, these are the folks that are supposed to attemp to audit and model complexities like this, so get the picture here? If they are bought off too and don't do their job, then the bank models just float on in and make profits for the banks when algorithms are created to run these models. Here's a little about the Office of the Comptroller of the Currency at the link below and they are trying to get smarter there with some help from MIT with better quants to regulate these math models, again this is where the action takes place, banks, trading, hedge funds, they all use such models.
Office of the Comptroller of the Currency
Senator Warren again knows all about this and the breakdown here too. The Omnibus bill partly stands to disable some of these processes as well and further deterioation can occur as further attacks on Dodd Frank come up. I know this is a bit deep but hang with me:)
I put together a group of videos that will help educate on what happens at Wall Street and there's a lot of videos, book mark and come back if you like. The most important I feel are #1 and #2, the Quant documentary. There's others that go into the Retirement Game, one with Cathy O'Neill who tells you the personality of the quants that rip and tear at pension fund money, and a couple about Gold.
I keep getting the doggone banks on there I think out of curiosity but this is for consumers not them. I just assume they are curious as to what might be getting out there to spoil their world of the "unknown" complexities they like to play out for consumers. What you don't know can get you today as they are not playing fair and all the math and algorithms they can dream up to run where you can't see all of this, well that's their tools. The clips above are from the Quant Documentary and it's the best ever done as it's not super complex in presentation and you'll know a lot more about what's going on after 60 mintues of the video.
Thanks for letting me add this and I hope you find it useful as again I'm just here trying to help explain the frigging madness. I used to be a developer so I know what goes on, how folks can cheat and the videos are people smarter than me that really take it to the next level. They are doing the same thing as me, getting the world out.
The Attack of the Killer Algorithms
So when you think of Senator Warren this week and her battle for us, this is what it's all about, stopping the risk fiddling and math modeling that's simply not fair and with stopping the swaps, that puts a stop sign in front of some of this. Based on a predicted win from the banks, they probably have some new quants ready to hire to rewrite some models if we end up on the hook again for bail outs, and of course we don't want that at all.
Citi has been so over the top with their involvement and I'm glad she called them out. These are the kind of folks, Quants, that banks will hire to fiiddle with risk models if we end up back on the hook as they will of course not change the portfolio, but will change the math to make things look less risky than they really are.
Let's hope in 3 days we have this removed from the bill. Again the Senator knows a lot more than perhaps she can cover when speaking and I've been lucky to have their office digging around my site once in a while over the last year too. It's just the real cold truth that you won't find in the major media today as too many of them focus on their click bait and pay some of the journalists based on the number of ads that get clicked on too...and they don't like it, but big time media reporters are sometimes forced to play the game.