Our Fearless Leader a criminal? NO!!!!!!

When Did the President Know and Who Did He Tell?

by Chriss W. Street

The tremendous 7% crash in stock market prices over the last five trading days serves as over-whelming evidence that the President of the United States or someone in his inner circle leaked “material non-public information” to Wall Street traders that the AAA credit rating of the United States of America would be downgraded.. Leaking of such information is criminal activity for both the trader who profits and the leaker. Depending on the level of the leak in his Administration; the President may be forced to resign of face severe sanctions.
Standard & Poors (S&P) has been providing credit rating services since 1860. The firm is extremely sensitive to the effect of rating changes have on the value of the securities they review and has an extraordinary capability to track the communications and actions of their employees to avoid any impropriety associated with the securities markets. In the case of a downgrade of the United States, every member of the firm would have known that exposure of such a leak by an S&P staff member would create a scandal that would destroy the 151 year-old firm and the offenders sentenced to long prison terms. Consequently, there is only a remote possibility that an employee of the S&P would have leaked the downgrade to Wall Street.
Reuters News Service reported from a source familiar with the talks on Friday: “Obama was briefed earlier in the day regarding S&P’s intentions, but discussions only took place with Treasury officials and did not include the White House.” This statement suggests the worst type of political spin possible. Either the President is completely incompetent in financial matters or he is disengaged from the plight of the nation!
It is preposterous to believe that the Administration would not have maintained intimate contact with the rating agencies over the last six months as the Sovereign Debt Crisis ravaged much of Europe. As the former CEO of two New York Stock Exchange listed companies and Treasurer of Orange County, California; I am personally familiar with policies and the procedures of each of the credit ratings firms. Ratings agencies meet regularly with every organization they rate. When S&P is about to issue a change in credit rating, they send a preliminary rating and a justification for the rating to the organization. The organization is given the opportunity to formally respond in writing to the proposed ratings change. The formal response is then forwarded to the Standard & Poors Credit Committee for final review. In the momentous event of the issuance of a preliminary downgrade of the United States; the most senior credit analysts at S&P would have personally met with Treasury Secretary Timothy Geithner and senior Treasury staff. President Obama himself or another White House official would have attended the meeting to provide the Administration’s input.

Bloomberg Financial Services estimated that the stock market losses for the week prior to the S&P downgrade were $840 billion for the S&P 500 index of the largest U.S. companies and $2.7 trillion for stock prices world-wide. Most of those stupendous losses were suffered by individual and pension funds who tend to hold stocks for long term appreciation; but some traders who were “short the market” would have made significant profits. Shorting stocks is a speculative investment strategy that is perfectly legal; but the speed and severity of the recent decline indicates powerful traders “in-the-know “about the coming downgrade illegally shorted massive amounts of stock and made epic profits on insider-trading.
Insider trading is subject to criminal prosecution by the Justice Department under Section 32(a) of the Securities Exchange Act of 1934. Individuals face up to 20 years in prison for criminal securities fraud and/or a fine up to $5 million for each “willful” violation. In addition violators are usually charged with mail and wire fraud (which carry additional 20 year prison terms); general “securities fraud” (up to 25 years in prison); and possibly racketeering, tax evasion, and or obstruction of justice. Civil penalties from enforcement by the Securities & Exchange Commission are the greater of $1 million in fines or treble the amount of the illegal insider-trading profit.
It appears that when Congress left Thursday to go home for a month recess in their home Districts; they were oblivious to the impending S&P downgrade the U.S. on Friday evening. With the humiliation of losing our nation’s AAA credit rating on top of existing fears the economy may be falling back into recession; constituent’s anger will blister their local Senators and Representatives. To deflect that anger, Congress will call for investigations. One of those investigations needs to focus on: “when did the President know and who did he tell.”