Why Is The Head Of The SEC Calling For Mutual Fund “Stress Tests?”

SEC Chief Seeks Mutual Fund Stress Tests (link)

Is she worried about the large body of mutual funds that bloated up with derivatives? Is she worried about the lack of liquidity in the bond market?  Did Mary Jo White see a burning bush that spoke to her about the system derivatives risk embedded in every crevice of the financial markets?

I warned everyone less than a year ago to get out of your bond mutual funds.  Get out NOW.  A good friend of mine who is a hedge fund consultant told me yesterday that he spoke to a big bond fund manager who is terrified about the lack of liquidity in the corporate bond market.  This guy couldn’t get a bid on some paper he wanted to sell this week.  A year ago he could have moved it in one phone call.

The system is collapsing.  We have seen several clear indications of that just this week…

7 thoughts on “Why Is The Head Of The SEC Calling For Mutual Fund “Stress Tests?”

  1. Once confidence in this whole scam is shattered the shit will finally hit the fan for every one to see. And the banksters will say again that nobody could have seen it coming. Well, then we show him your site, Dave Kranzler.

  2. With numerous failures evident in the system are you not
    concerned about your funds being lost in the meltdown ?
    I know that I’m concerned and have been shifting funds
    from brokerages to in my hand hard assets. I would
    rather be six months early then six minutes too late.

  3. a friend of ours, divorced, is seeing a financial advisor whose only product is mutual funds. He does not change them much, he told me he does not speak with clients that much, no need to, no group e mails, no nothing. Set it and forget it investing.

    He would not tell me which funds but my guess its mostly front end loaded stock and bond funds of course with trailers. He laughs at me for being in gold (I did not know him in 2008-11).

    he is not tense nor stressed.

    hmmm

  4. Energy (mostly shale plays) junk bond market is +$500 billion. Six months ago they were paying just over 5%, today they are at almost 10%. Far too heavy for this low oil price, as the shale oil play liquidity has dried up.

    These now toxic bonds and energy loans have been rolled into collaterised debt obligation (CDO’s) derivatives and sold on to major institutional investors, such as mutual funds and pension funds looking for higher yield.

    This is just the tip of the dung heap! It goes much deeper then we can see on the surface. When this pile of dung blows (30 to 90 days) the s**t will really hit the fan!

  5. There you go, Mary Jo, stress tests no less. What’s good for the bank goose, is good for the mutual fund gander no?
    But be careful, withdrawal symptoms follow addiction to the thrills of risk intermediation and short sighted profiteering.
    “Innovative” financial products, securities, bonds, notes, CD’s, have pretty much run the gamut of assets to be monetized. Hardly anything remains to be bundled, securitized or sold as credits to funds and institutions, except roads, bridges or resource rich parklands.
    Take zero interest rates, currency swaps and other perks of too big to fail status, throw in a quadrillion and a half dollars of illiquid, unregulated, off-market, opaque derivatives presumed to reinvigorate the economy hopelessly undercapitalized and debauched bank, insurance, mutual fund and brokerage industries , pensions, annuities, retirement funds etc.
    Soon you will be glad to have back GAAP, nominal financial reports, once at risk of extinction under the latest notional accounting rules. No more marking to model aasets and liabilities not marked to market, under pretense of national security concerns, torturing statistics with hedonics, seasonal adjustments or decapitating headline news.
    Withdraw, graciously from ZIRP, licentious money printing, crony capitalism, collateralized debt obligations (CDO), mortgage backed securities (MBS), credit default swaps(CDS), asset backed securities(ABS), interest rate swaps(IRS) and currency swap narcotics of your off-ledger underground funding- dollar imperialism is a bankrupt experiment before all the world.

  6. Way to go, Mary Jo. Stress tests- what’s good for the bank goose, is good for the mutual fund gander.
    Miss fox guarding the hen house, how do you intend to navigate this new policy when the addiction chickens come home to roost with their jerky, impetuous withdrawal antics?
    The thrills of unregulated monetary matchmaking and risky financial intercourse must take wing with the thought.
    “Innovative” financial products, securities, bonds, notes, CD’s ran the gamut of assets to be monetized. Hardly anything remains to be bundled, securitized or sold as credits to funds and institutions, except roads, bridges or resource rich parklands not yet offshored as collateral.
    Take zero interest rates, currency swaps and other perks of too big to fail status, throw in a quadrillion and a half dollars of illiquid, unregulated, off-market, opaque derivatives once presumed to reinvigorate the economy. Observe hopelessly undercapitalized and debauched bank, insurance, mutual fund and brokerage industries , pensions, annuities, retirement funds scarcely alert to the tornadic feedback loops.
    Soon you will be glad to have back GAAP and nominal financial reports, banned for TBTF’s under recent notional accounting rules. No more marking to model, assets and liabilities once considered junk, toxic, or unrecoverable.
    Marked to market, no pretense of national security concerns or torturing statistics with hedonics, nounending revisions and adjustments, no decapitating headline news.
    Withdraw then SEC, and all pseudoregulators, self-appointed imposters. Graciously, remorsefully end privatized central banking, ZIRP, licentious money printing, cronyism and admit that collateralized debt obligations (CDO), mortgage backed securities (MBS), credit default swaps(CDS), asset backed securities(ABS), interest rate swaps(IRS) and currency swaps are narcotics as foul as your off-ledger underground funding.
    Dollar imperialism is a bankrupt experiment before all the world.

  7. Carlyle, Warburg Could Have Captive Rating Agency
    Reuters reported:

    A private equity consortium of Carlyle Group LP and Warburg Pincus LLC is in advanced talks to acquire privately held credit rating agency DBRS Ltd for more than $500 million, according to people familiar with the matter.

    After final bids were submitted this week, Carlyle and Warburg Pincus have so far prevailed in the auction for DBRS, which also attracted Canadian private equity firm Birch Hill Equity Partners Management Inc, the people said on Friday.

    No exclusivity has been awarded to any bidder and the outcome could still change, the people cautioned. Carlyle and Warburg Pincus are in the lead partly because they have a global footprint that can help DBRS expand further internationally, one of the people said.

    The Carlyle Group has been known to bleed affiliates for dividends by floating debt.

    How might a captive rating agency help Carlyle’s cause?

    Carlyle junk: never too hot to loan. Might this be DBRS new mantra?

    http://peureport.blogspot.com/2014/12/carlyle-warburg-could-have-captive.html

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