Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Protecting the Average Investor - Having it Both Ways

Companies / Investing Oct 23, 2007 - 01:43 PM GMT

By: Paul_Petillo

Companies The joke goes something like this: As Christopher Cox, chairman of the S.E.C. navigates his first balloon flight without an instructor, he finds himself in a little bit of trouble. Fog has set in and his compass no longer works. His staff, along for the ride became worried. He decides to descend to get his bearings. The fog clears somewhat as he comes closer to the ground. He spots Ben Bernanke walking his dog with another man.

He yells to them: “Ben, where am I?” Before Mr. Bernanke could respond, the other man yells, “about a half mile from town”.

The fog once again engulfs the balloon, hiding the two men on the ground. Mr. Cox mumbles under his breath that the man must be a CEO. “How can you tell?” one of his passengers asks.

“He told be what I wanted to know in plain English but it was totally irrelevant.”

Plain English has been a crusade of sorts from Mr. Cox since he took over as chairman of the agency. Giving shareholders the ability to read a company's reports and understand them has been at the heart of his push for better disclosure rules. Those rules he had hoped would eliminate much of the legalese that bog down the average investor's understanding of such publications as earnings reports and more specifically, the hot button topic of compensation.

Pfizer, known for its wordy explanations of how its executives were paid produced a trimmed down version of their compensation package recently for the chairman's review. Hoping the report would provide concise details in an easy-to-use format, a publication the company referred to as a “concept document” it instead was still met with criticism. It seems the document was more stylish that it was informative.

The report, which came with a disclaimer that it was only a mock-up of the report that is expected to be delivered next year during the company's proxy filing, came with color coded sections, a variety of fonts to emphasize importance, bullet points, and a format that uses two columns.

Can Mr. Cox have it both ways? As much as he thinks he can, the simple answer is not likely. The members of his agency want content but not as much as was provided by Pfizer in 2006. That hefty publication landed in shareholder's laps full of charts and analysis that cleverly masked the robust compensation package such as the $200 million one received by the outgoing chairman and chief executive of the company, Henry A. McKinnell. The mock-up report, one the company had hoped would be the template for concise disclosure instead went too far in the opposite direction.

But the S.E.C. chairman has bigger problems. How will Mr. Cox handle the lack of plain English disclosure in the banking and securities industry? The balance sheets of many of the major financial centers have become, for lack of a better description, unbalanced. The recent write downs of bad investments as related to mortgage backed securities, something the average investor or homeowner wishes they could do, should lead to some suspense filled exchanges with the S.E.C. But don't count on it. Banks are Bernanke's problem and he doesn't seem too concerned.

There was a time in the not too distant past when a loan was backed by some sort of secure asset. The recent credit crunch has exposed numerous instances when these firms have been unable to explain exactly what it was they were holding or for that matter, selling. These questionable maneuvers cryptically referred to as tradable assets should warrant further investigation by Mr. Cox in his quest for clarity. Which brings us to the Federal Reserve chairman.

Mr. Bernanke does seem interested in the dollar though and in a speech given at the Economic Club in New York on Monday suggested that it would provide some pressure on inflation. Calling the problems in housing an evolving crisis suggesting that, “ the further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year ”, Mr. Bernanke left most wondering if what he said was relevant.

The Fed chairman referred to the rate cut on September 18 th as “risk management” without taking aim at the purveyors of that risk. The chairman seemed to be hoping that the same type of credit shenanigans would keep the markets buoyed long enough to shake out the loose chafe. That doesn't seem like manageable risk.

Neither Mr. Cox nor Mr. Bernanke can make the claim that they are doing all that is possible to protect the average investor. They seem to want to be able to caress the businesses that seem to be increasingly cloaked in deceptive practices while expounding on the fact that they are doing all they can do to protect the average investor and, by default, the typical homeowner.

Unfortunately, these two chairmen cannot walk the fence forever. Nor can they have it both ways.

By Paul Petillo
Managing Editor

Paul Petillo is the Managing Editor of the and the author of several books on personal finance including "Building Wealth in a Paycheck-to-Paycheck World" (McGraw-Hill 2004) and "Investing for the Utterly Confused (McGraw-Hill 2007). He can be reached for comment via:

Paul Petillo Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in