I’ve been following the unraveling of the GS fraud case and the most interesting information that I’ve found to date is in this Bloomberg link. It has pretty good coverage of the possible links between folks in the White House covering the bailout and GS itself as well as a good simple explanation of the current suit.
I hesitate to go too far into depth as so much of this stuff is written in legalese which is beyond my understanding as a finance person but Bloomberg is reporting that the fraud case may hang on the interpretation of the word “selected”. As you recall, Paulson & Co.–a hedge firm–was allowed to select the loans going into the tranches for a CDO and was preparing to place sidebets against the CDO. The relevant CDO is referred to as Abacus 2007-AC1. This marketing material around the CDO made no mention of who specifically was selecting the loans.
The banks that bought up the mortgages are the usual suspects. That would be BOA, Citigroup, and UBS. (We also know how lax the due diligence on things like income and credit checks was on the part of originators at the time.) All of three have had tremendous financial problems and have relied on tax payer funds since the markets fell apart. Also, remember, this is a Collateralized Debt Obligation. Investors bear the risk inherent in these loans. The loans were supposedly sorted by credit risk (based on the loan documentation) into tranches so you should know which tranche has the riskier loans by the rating assigned by an ‘impartial’ rater.
Senior tranches have lowest credit risk but there are tranches that contain highly risky loans. The lowest tranche is likely to be filled up with loans unlikely to repay so the GS argument that hinges on the word “selected” is based on the argument that even though the prospectus (Abacus 2007-AC1) didn’t specify Paulson & Co. in the selection process, the selection process would’ve been similar regardless of who did it. You know the stinkers go into the subordinate tranches and you know that there is another party out there betting against you. Does it make any difference who it is and if they told you they were going to bet against it because that’s just the nature of the beast any way?
That’s undoubtedly why there was an interesting insider leak that says that the SEC vote to go after GS was split. The two Republicans sitting on the SEC voted no while the two Democrats voted yes. SEC chair Mary Schapiro cast the deciding vote to file the suit. The leak undoubtedly stopped any complete freefall of GS stock. That information muddies the water.
“The fact that SEC members are said to be split suggests the story is not going to be catastrophic for Goldman Sachs,” said Eric Teal, who oversees $5 billion as chief investment officer at First Citizens BancShares Inc. in Raleigh, North Carolina.
Republicans in Congress are still fighting regulation of the derivatives markets. Interestingly enough, the first Bloomberg link also states that two democrats are looking at possible conflicts of interest in the White House. While Rahm’s connection to Magnetar is known and Magentar is mentioned as one possible hedge fund with similar problems, so far, everything surrounding it remains speculation. I did find this particular part of the article interesting, however.
While Magnetar avoided ordering managers to buy specific securities, it often pushed them to select ones with higher yields, according to a person who participated in some of the transactions and declined to be identified because the deals were private. The firm told banks and asset managers what its strategy was, the people said.
Bringing anything closer to AIG, however, gets one into the Treasury Department.
Democratic Representatives Elijah Cummings and Peter DeFazio said today they would ask SEC Chairman Mary Schapiro to review whether Goldman Sachs CDOs insured by American International Group Inc. were improperly created. AIG, rescued by the U.S. in 2008, covered $6 billion of assets through Abacus deals.
Another Hedge Fund of interest is Tricadia that also has some west wing connections. It evidently was also in the market for some of the questionable CDOs.
Tricadia, which also said it would buy some of the CDOs’ most junior slices, was created in April 2003 as an affiliate of Marnier Investment Group, a hedge-fund firm whose management included Lee Sachs, now a counselor to Treasury Secretary Timothy F. Geithner. Tricadia co-founder Michael Barnes didn’t respond to messages seeking comment.
The CDO at the center of the SEC case is one of at least 23 Abacus deals created by Goldman Sachs, and one of the only ones for which the firm hired an outside asset manager, according to prospectuses. The others were managed by Goldman Sachs.
These kinds of lawsuits frequently rely on pulling one string from the fabric at a time and putting enough leaks out to the press to get enough inside but small fry players to think their necks may be on the line next. They also know they are small fry and most likely expendable and will be hung out to dry. This turns these folks on the inside to the SEC’s cause and frequently that grows the case into something more substantial which intrigues the Justice Department. SEC cases often have the same complex game strategies used to negotiate treaties and trade agreements. Trying to make small fry very nervous is frequently a first step. You have to cut the weakest out of the herd and see what it has to offer you.
I think many folks are noticeably disappointed that this investigation does not seem larger than the crash of the financial markets themselves. Again, fraud and insider trading are the mainstays of the SEC investigations and while a lot of what’s been announced shows bad faith with customers, it’s difficult to prove the intent was to defraud. The prospectus must report things that are germane to an investor in as forthright way as possible. Arguing over the choice of one word over another, if it comes to that, seems like more of a wild hair than a strategy. But again, part of the deal is to go in and start poking around the right places and making the right people very nervous. You could tell they were ready to play psych ops just based on the Friday afternoon filing. No one can assemble a good response to anything in NYC on a Friday afternoon.
The biggest thing that makes me nervous about this is why so many pension plans, etc. were guided towards these assets. I still think the ratings companies need to take a major hit on this one. Here’s one good quote from the Bloomberg article that should let you know why without explaining the entire rationale behind a synthetic asset. What the argument is here, is that these pension plan managers should’ve known better even with the stellar ratings had they known anything about financial engineering. So, you’re not defrauding them in this case, just taking advantage of their professional ignorance.
Remember, Larry Summers got the Harvard portfolio caught in the mess. Summers must have either felt that housing prices would never fall and the subprime market was pretty secure or he got caught up in the greed or got in over his head or some combination of all three. (Just right now I’m thinking I may asked my ex who used to do investing of pension and life insurance funds for Mutual/United of Omaha about how to set up a synthetic hedge and see if he can give me the details as a test case. He’s been out of academia and into fund management for some time. I wonder how up to date he is with these kinds of things?)
Buyers of deals involving default swaps are foolish if they don’t realize someone had picked securities to bet against them, said David Castillo, a senior managing director at San Francisco-based broker Further Lane Securities, a trader of structured securities.
“In a synthetic transaction involving any asset, the participants know upfront that there is someone who believes the opposite side of the trade,” Castillo said. “It’s unreasonable to participate in this type of transaction and expect any other scenario.”
Still, what Goldman Sachs didn’t tell investors included the fact that Paulson was betting against the Abacus CDO’s senior pieces, the SEC said, meaning the firm only stood to profit if many of the securities it helped pick went bad and not just a few. In addition, the regular sales of synthetic and hybrid CDO notes to other CDOs and into $400 billion market for structured investment vehicles, or SIVs, such as Axon Financial Funding Ltd. that funded themselves with commercial paper means that not all debt buyers were aware they were taking the opposite side of some investor’s bets.
The involvement of default swaps in the Goldman Sachs case may make it harder for the SEC to win, said Todd Henderson, a law professor at the University of Chicago.
Anyway, my guess is they are just trying to find the right thread to pull. The entire market seems to made up of a lot of bad players so it seems to me they should find the right one sooner or later. This is because their actions say to me that some folks believe the intent to defraud was there and they are willing to stake the SEC’s reputation on it. (And they are willing to go to court on it.) The one thing that you do need to know is that an investment bank is only as good as its reputation. There are all kinds of academic studies on how important the reputation of an underwriter is when pricing things like IPOs (i.e. initial public offerings of stocks). It also has a lot to do with actually getting an IPO to sell out. If they can damage a bunch of these firms, you may find out that Goldman Sachs–even though it comes through with few lawsuits on its hands–could have a reputation that makes it the next Arthur Anderson. Guess, time will tell.
I was reading my this week’s The Economist over a tall glass of ice tea. I really was trying to take a break from posting, but something just hit me like the proverbial bolt out of the blue.
There’s a special report on innovation in emerging markets which is where my money and my research are so I’m fully vested in the topic. The big introductory article is called “The new masters of management.” I was very interested in it because before I moved down here to the land of still using plantation-style management techniques Louisiana, I used to own a very profitable consulting firm focused on Japanese Manufacturing Techniques. I was taught by Dr. W. Edwards Deming in the 1980s. His work was considered the second ‘industrial’ revolution wave and the reason I still buy Ford stock, despite everything, is that they still practice Dr. Deming’s lessons. He was a revolutionary mind and I am still very proud that he was one of my earliest mentors.
The article in The Economist talks about what’s going on in places like India and China that are frankly cleaning the clocks of nearly every developed nation in North America and Europe in terms of economic growth rates and industrialization. The author basically concludes that it’s the redesign of products and of processes that do things faster and much much cheaper that are revolutionary. I guess being primarily a business magazine, they’re focusing on the more mundane aspects of the innovation although the idea that the west is losing its economic leadership because it’s not developing breakthrough, transformational ideas is correct. I think they may have missed the larger point buried in all that high minded ink. But then, many management types miss what was REALLY important about the first industrial revolution and, indeed the second. I think this is because they go straight to business school and skip things like World History. I also think that it’s the major point that the MBA-centric management in the USA has completely missed too which is why many businesses are profitable, but the wealth isn’t trickling anywhere and change appears to be happening now at a snail’s pace.
Even more striking is the emerging world’s growing ability to make established products for dramatically lower costs: no-frills $3,000 cars and $300 laptops may not seem as exciting as a new iPad but they promise to change far more people’s lives. This sort of advance—dubbed “frugal innovation” by some—is not just a matter of exploiting cheap labour (though cheap labour helps). It is a matter of redesigning products and processes to cut out unnecessary costs. In India Tata created the world’s cheapest car, the Nano, by combining dozens of cost-saving tricks. Bharti Airtel has slashed the cost of providing mobile-phone services by radically rethinking its relationship with its competitors and suppliers. It shares radio towers with rivals and contracts out network construction, operations and support to specialists such as Ericsson and IBM.
Just as Henry Ford and Toyota both helped change other industries, entrepreneurs in the developing world are applying the classic principles of division of labour and economies of scale to surprising areas such as heart operations and cataract surgery, reducing costs without sacrificing quality.
When I read that paragraph, I don’t focus on the ‘principles of division of labour and economies of scale’, surprisingly enough. Yes, I’m an economist, but what drew me to economics was the social sciences first. I focused on this part right here: “no-frills $3,000 cars and $300 laptops may not seem as exciting as a new iPad but they promise to change far more people’s lives”. That’s called burying the headline in the middle of the article.
It wasn’t so much the process of industrialization that changed the young, agrarian nation of the United States into a modern powerhouse nation as it was the availability of the Tin Lizzie to nearly every household in the U.S. It won’t be so much an iPad that will change anything anywhere, it would be a $300 laptop available to nearly every one, cheaper than a TV, more functional than an iPad, and much more revolutionary because it grants access to information and the ability to process it and share it.
It’s the availability of these no frills products to the masses that revolutionize countries and bring them out of tribal darkness, not the innovation of a few sexy toys for the privileged few. It’s the availability of products that can create a huge empowered middle class that are innovative. I’ll point to one of the oldest examples and that is the Gutenberg Printing Press. It made literacy, books, and knowledge available to nearly every one. You no longer had to get the message from the one person in the county that could read the meager library in his estate or rectory. Think of small pox vaccines versus erectile dysfunction pills or mosquito nets vs. botox injections.
It wasn’t the production process itself that was revolutionary on its own, it was the production that brought a radicalizing product to the masses. The iPad and the iPhone are nice for the few remaining upwardly mobile yuppies we have left in this country and I’m sure they have a really nice profit margin. But, just try and argue with me that the disposable cell phone or a $300 laptop wouldn’t do more in terms of bringing a whole lot of Americans out of the darkness of isolation and into the light of the information age. But, perhaps, deep down, that’s not what today’s marketing execs really want. Perhaps niche marketing to an elite makes them feel, well, so very elite?
So, instead look at China or India, and then decide what is more likely to revolutionize their country? An iPad available to the already technical and cultural elite few or a cheap, minimally functional computer that does just about everything? Would it be a Prius that very few people can afford but gee, it sounds so, well, green and upscale and trendy, or a $3000 piece of transportation called the Nano that nearly every working family can afford?
I know that MBAs and Lawyers from Harvard think it’s all about them. I know that CEOs are always looking for that niche they can exploit by convincing a group of status-conscious yuppies that one label is more prestigious than another. But, what about the concept of offering a life changing vehicle to the ‘unwashed masses’ that they desperately try to ignore? What happened to the kinds of products that brought every man to a new level? This kind of volume marketing doesn’t just changes lives, it changes countries.
Is this what living in an emerging market like India and China brings to a business that living in a culture and access-driven society does not? Also, how are you going to get more customers if you don’t bring more customers up to the level of income where they can afford your product? Right now, we’re concentrating wealth into the hands of fewer and fewer people. As a result, our innovation is aimed at pleasing and tantalizing their taste buds, not creating a larger market for bigger ideas.
What product have we now offered the masses in our nation? Fast Food. Stuff that’s basically killing them, not raising them to a new level of knowledge and economic power. A 99 cent menu of grease and bad carbs does not have the same impact as a $300 laptop and cheap broadband would for the inner cities of the U.S. or it’s poor rural counterparts. But where are the minds in the U.S. that grok this simple concept?
We need to rethink our paradigm (oh, gawd, that word) of niche marketing and go back to the idea of selling things that move the country. I think that’s what’s really going on in India and China. They’re bringing the people up to the niches instead of making the niches compact and highly profitable. It isn’t all about lean manufacturing or innovative production techniques after all. It’s about meeting people’s needs and that ought to be highly profitable if done correctly for lots of people.
So, as an example, green technology is nice, but until every one can afford to put a solar panel on their roof and generate electricity to their home, it’s really not going to be much of game changer. Although, the idea seems to have given Ed Begley Jr a nice hobby and TV show for awhile. It also gives POTUS some really nice talking points for California Yuppies. (Pssst, POTUS, you have to be rich enough to take advantage of the TAX credits.) Right now, here in the ninth ward, the only homes with their green showing are the ones where the Hollywood elite adopted the local po’folk like they do starving kids in Africa. Let me see a few of us teachers, firefighters, and waiters with the same set up on our houses and it will then be revolutionary.
An important article was published this week in The National Catholic Reporter by journalist and author Jason Berry. This article sheds new light on possible motives for the Vatican to encourage Bishops to conceal sexual abuse by priests, as they did for many years in the U.S. and, as we are now learning, in other countries.
Berry has been covering the story of the Catholic Church’s cover-up of sexual abuse by Catholic priests since the scandal first broke in New Orleans in the early 1980s. Berry is the author of the book Vows of Silence: The Abuse of Power in the Papacy of John Paul II and director of a documentary based on the book.
Berry’s April 6 article in The National Catholic Reporter is the first of two parts dealing with the secretive “Legionaries of Christ” and its late founder Father Marcial Maciel Degollado. This organization is said to be even more influential and mysterious than Opus Dei.
Berry Describes Maciel as a “great fundraiser” who was successful in attracting young men to the priesthood, as well as “a notorious pedophile” who also had affairs with a number of women who bore him “several children.”
The charismatic Mexican, who founded the Legion of Christ in 1941, sent streams of money to Roman curia officials with a calculated end, according to many sources interviewed by NCR: Maciel was buying support for his group and defense for himself, should his astounding secret life become known.
This much is well established from previous reporting: Maciel was a morphine addict who sexually abused at least 20 Legion seminarians from the 1940s to the ’60s. Bishop John McGann of Rockville Centre, N.Y., sent a letter by a former Legion priest with detailed allegations to the Vatican in 1976, 1978 and 1989 through official channels. Nothing happened. Maciel began fathering children in the early 1980s — three of them by two Mexican women, with reports of a third family with three children in Switzerland, according to El Mundo in Madrid, Spain. Concealing his web of relations, Maciel raised a fortune from wealthy backers, and ingratiated himself with church officials in Rome.
Berry reports that Maciel arranged through generous gifts (paying for massive renovations on the Cardinal’s house) to get a powerful Cardinal named Eduardo Francisco Pironio, now deceased, to sign off on the Legion of Christ’s constitution, which included:
…the highly controversial Private Vows, by which each Legionary swore never to speak ill of Maciel, or the superiors, and to report to them anyone who uttered criticism. The vows basically rewarded spying as an expression of faith, and cemented the Legionaries’ lockstep obedience to the founder. The vows were Maciel’s way of deflecting scrutiny as a pedophile.
Pope Benedict XVI, who has been sharply criticized for aiding in the cover-up of the pedophilia scandal, opened an investigation into Maciel’s activities in 2004, and despite the favor in which Pope John Paul II held Maciel, Benedict was successful in having him replaced as head of the Legion of Christ and disciplined for his sexual activities with seminarians.
How did this man get away with his debauchery for so long? Berry explains that Maciel gave money–a lot of it, and in cash–to Cardinals.
In an NCR investigation that began last July, encompassing dozens of interviews in Rome, Mexico City and several U.S. cities, what emerges is the saga of a man who ingratiated himself with Vatican officials, including some of those in charge of offices that should have investigated him, as he dispensed thousands of dollars in cash and largesse.
Maciel built his base by cultivating wealthy patrons, particularly widows, starting in his native Mexico in the 1940s. Even as he was trailed by pedophilia accusations, Maciel attracted large numbers of seminarians in an era of dwindling vocations. In 1994 Pope John Paul II heralded him as “an efficacious guide to youth.” John Paul continued praising Maciel after a 1997 Hartford Courant investigation by Gerald Renner and this writer exposed Maciel’s drug habits and abuse of seminarians. In 1998, eight ex-Legionaries filed a canon law case to prosecute him in then-Cardinal Joseph Ratzinger’s tribunal. For the next six years, Maciel had the staunch support of three pivotal figures: Sodano; Cardinal Eduardo Martínez Somalo, prefect of the Congregation for Institutes of Consecrated Life and Societies of Apostolic Life; and Msgr. Stanislaw Dziwisz, the Polish secretary of John Paul. During those years, Sodano pressured Ratzinger not to prosecute Maciel, as NCR previously reported. Ratzinger told a Mexican bishop that the Maciel case was a “delicate” matter and questioned whether it would be “prudent” to prosecute at that time.
In 2004, John Paul — ignoring the canon law charges against Maciel — honored him in a Vatican ceremony in which he entrusted the Legion with the administration of Jerusalem’s Notre Dame Center, an education and conference facility. The following week, Ratzinger took it on himself to authorize an investigation of Maciel.
According to Berry, in 1997, then Cardinal Joseph Ratzinger, now Pope Benedict, firmly refused a cash gift offered by a Legionary after Ratzinger spoke at one of their meetings. That certainly speaks well of Ratzinger, judging by the amount of money the Legion was spreading around. Here is a little more from Berry’s piece:
Maciel traveled incessantly, drawing funds from Legion centers in Mexico, Rome and the United States. Certain ex-Legionaries with knowledge of the order’s finances believe that Maciel constantly drew from Legion coffers to subsidize his families.
For years Maciel had Legion priests dole out envelopes with cash and donate gifts to officials in the curia. In the days leading up to Christmas, Legion seminarians spent hours packaging the baskets with expensive bottles of wine, rare brandy, and cured Spanish hams that alone cost upward of $1,000 each. Priests involved in the gifts and larger cash exchanges say that in hindsight they view Maciel’s strategy as akin to an insurance policy, to protect himself should he be exposed and to position the Legion as an elite presence in the workings of the Vatican.
Yet Berry could find no evidence that the Legion’s “donations” have been reported or recorded in any systematic way. There does not even seem to be a method by which this could be done. So the Church has a situation in which a powerful organization run by a pedophile has used money to spread its influence far and wide during “five decades” of “Maciel’s strategy of buying influence.”
Based on Berry’s descriptions, the Legion of Christ is still extremely influential in the Vatican, in the Church as a whole, and in the secular world as well. Maciel’s followers are everywhere, even among the wealthy and powerful in the U.S. Some of Maciel’s famous followers/admirers who are mentioned in Berry’s article are actor Mel Gibson, Domino’s Pizza founder Thomas Monaghan, singer Placido Domingo, politicians Jeb Bush and Rick Santorum, and frequent cable commenters William Donohue and William Bennett.
Meanwhile, seminarians are still being taught that Maciel was a saint:
Two Legion priests told NCR in July that seminarians in Rome were still being taught about Maciel’s virtuous life. “They are being brainwashed, as if nothing happened,” said a Legionary, sitting on a bench near Rome’s Tiber River.
How do you go about cleaning up corruption that is this long-term and pervasive?
Some key retirements today. As expected, Obama will get a chance to appoint the next judge to SCOTUS. Glenn Greenwald profile’s one possible appointment here at Salon, Elena Kagan.
The danger that we won’t have such a status-quo-maintaining selection is three-fold: (1) Kagan, from her time at Harvard, is renowned for accommodating and incorporating conservative views, the kind of “post-ideological” attribute Obama finds so attractive; (2) for both political and substantive reasons, the Obama White House tends to avoid (with a few exceptions) any appointees to vital posts who are viewed as “liberal” or friendly to the Left; the temptation to avoid that kind of nominee heading into the 2010 midterm elections will be substantial (indeed, The New York Times‘ Peter Baker wrote last month of the candidates he said would be favored by the Left: ”insiders doubt Mr. Obama would pick any of them now“); and (3) Kagan has already proven herself to be a steadfast Obama loyalist with her work as his Solicitor General, and the desire to have on the Court someone who has demonstrated fealty to Obama’s broad claims of executive authority is likely to be great.
Matthew Ygleisas has some Outside the Box suggestions for Potus.
What motivated Bart Stupak to retire? via Marc Ambinder.
Rep. Bart Stupak (D-MI) plans to announce his retirement today, Democrats briefed on his decision said. Stupak, the leader of a pro-life faction within his party, had received death threats and was under intense political pressure after he agreed to support the Democratic health care reform legislation even though pro-life groups insisted that it would allow federal funds to be used for abortion.
Do you suppose we could encourage Ben Nelson of Nebraska to consider announcing his retirement next? I’d also like to see Bobby Jindal retire but no such luck.
Nate Silver takes about the chances of a Red Christmas here.
The point is not necessarily that these are the most likely scenarios — we certainly ought not to formulate a judgment based on Rasmussen polls alone, as the jury is still out on whether the substantial house effect they’ve displayed this cycle is a feature or a bug. But these sorts of scenarios are frankly on the table. If Democrats were to lose 50, 60, 70 or even more House seats, it would not totally shock me. Nor would it shock me if they merely lost 15, or 20. But their downside case could be very far down.
If we lived in a perfect world of either perfect market capitalism or perfect government planning, there’s a lot of things that wouldn’t exist. There would be no corruption, no hidden information, no excesses or shortages, and absolutely no need for banks, insurance companies, and stock, real estate, or insurance brokers. That’s right. The entire FIRE lobby wouldn’t exist. Not only would we not need lobbyists, but we wouldn’t need the industries they represent. The Financial Markets exist because we don’t have any perfectly beneficent centrally planned governments or any form of real capitalism with perfect markets. They can’t exist. They are theoretical models period.
We have blended economies. They’re mishmashes of government intervention and mess-ups and failing markets and limping-along-as-best-they-can-markets. Nearly every economic transaction in the real world is fraught with some kind of chance for a misfire. You hire a real estate broker who you hope you can trust to guide you through the treacherous process of buying and selling the biggest asset most folks will ever have. You don’t know what’s a fair price, you don’t know where the buyers or sellers are and if either are honest or hiding The Money Pit from you, and you certainly don’t know who is a good or bad mortgage loan lender and lawyer to help ensure that you get a loan and a title free of bad encumbrances. That process is the same when you have a baby and you need a doctor and a hospital and you trust your insurance company to get a good deal for you. It’s the same when you look to save up for your pension or your kid’s college. The entire FIRE industry is there to help you navigate a bunch of imperfect markets with a lot of imperfect information. They’re supposed to be the experts who will help you navigate moral hazard and hidden information for you.
Except when they don’t.
Then, their government regulators are there to protect you and them from the bad eggs in the business. No one should be protected from their own stupidity, but these markets are so fraught with hazards and problems, that anything can happen. Bernie Maddoffs happen despite everything. So, do Goldman Sachs’ untoward influence in the NY Fed and the Treasury and financial panics. The key to these markets is middle-path economics. Yes, I’m a Buddhist and a Financial economist so I have to use the don’t tune the string too tight or it breaks, or tune the string to loose or it won’t play metaphor. It’s a balancing act. The financial markets play a unique role in a mixed market economy. The way we treat them must be unique also.
I got drug back from the bliss of the first few days of spring break where the last thing I should be thinking about is the financial markets (not teaching) but the only thing I should be thinking about is the financial markets (researching) by an email by the petulant clown. Did I want to handle or look at the discussion here? It’s a thread at FDL started out with a nod to the WAPO editorial here by Simon Johnson and James Kwak then a retort at the NYT by Paul Krugman here. The central question is financial reform. The specific question is should we break up big banks? Johnson and Kwak join ex-Fed Chair Volcker and say yes. Krugman says no, just toughen their regulation. My bottom line is all of the above. Break them up AND toughen the regulation.