- Editorial Commentary -

July 20, 2010 (FinancialWire) (By “The Political Prophet”®) — Editor’s note: Recall when Bear Stearns began to fall apart at the seams in March of 2008, triggering the SEC’s first emergency weekend meeting in over 30 years. Over the next few months, all of America, in fact, the entire world, watched in trepidation as our financial markets unraveled like a slow motion train wreck, one that the vast majority of Americans had been oblivious to until it was too late. Over the next few months, the train wreck began to pick up speed, prompting SEC chairman Christopher Cox to invoke a one-month ban on July 15, 2008 against naked short selling in 19 battered financial stocks, including Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Lehman Brothers (OTC: LEHMQ.PK), Credit Suisse (NYSE: CS), Merrill Lynch (DOA, as in dead on arrival), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Fannie Mae (NYSE: FNM), and Freddie Mac (NYSE: FRE).

The emergency rule, designed to eliminate the illegal downward manipulation of those companies’ stock prices, stated that no one could short sell stock in those companies unless they had “borrowed or arranged to borrow the security” and that they settle the trade on the required settlement date. Of course, as usual, even that rule imposed absolutely no penalties for anyone who violated the rule.

To that end, FinancialWire(tm) contributor “The Political Prophet”® offers expert political perspective regarding this week’s financial reform bill:

The financial reform bill which will be signed into law this week is a lousy piece of legislation. It does things to our economy by further empowering bureaucrats that, if allowed to stand, will be devastating to wage earners, job seekers and consumers.

On the other hand, the democrats who drafted the bill by excluding republicans from the process completely ignored the big problem of bad mortgages and the enablers for the scam that triggered the meltdown of our economy. Fannie Mae and Freddie Mac are nowhere to be found in this political legislation which has become a dream vehicle for big banks, lobbyists and “government growth specialists.”

In spite of the bills’ huge and numerous failings, the junior senator from Massachusetts, republican Scott Brown, ultimately supported the bill. He was joined by the republican senators from Maine, Collins and Snowe.

We never know the insider wheeling and dealing that occurs among members of congress during the final phases of the legislative process. In all likelihood, senator Scott Brown’s vote was crucial for passage and he received important concessions for it.

The Political Prophet® predicts that we will ultimately discover that in addition to getting his way on several tax matters, senator Brown gained some form of assurance that congressional correction of the abuses at Freddie and Fannie will move forward and that he will play a major role in that process.

Also visit THE POLITICAL PROPHET® weblog (at http://www.investrendweblogs.net/the-political-prophet/) , and go to http://www.financialwire.net/?s=prphthpby for more FinancialWire(tm) articles by THE POLITICAL PROPHET®.

Reporters tell us what happened yesterday. Pollsters tell us what is happening today. THE POLITICAL PROPHET® tells us what is likely to happen tomorrow. An elite team of political strategists with presidential campaign experience provides analytical predictions that tend to be more precise than offerings from those who have never been “in the arena.” To assure objectivity, team members are not involved with active candidates.

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