Yesterday I called the reporting of some trade information for MBS bonds a “baby step” in the right direction, but didn’t try to describe exactly why it was such a small step, or why the sleazoids that hide in the shadows could still do their thing. Quite rightly, frequent commenter and longtime friend from the business “Conscience of a Conservative” pointed out that one AA private label MBS might be so different from another that the information has truly limited value without knowing the exact bond that traded.
The reason I didn’t get “down into the weeds” in my initial post was that I hadn’t come up with the right metaphor to describe why disclosing trade prices without CUSIP numbers still leaves too much hidden. I’m sure it doesn’t escape anyone’s notice that the SEC is a captured regulator, or that FINRA obviously won’t bite the hand that owns it directly and signs the paychecks, but that doesn’t get to the specifics.
I have to thank my friend Stephen Jencks for making a comment on Jody’s article that gave me that elusive metaphor that makes it clear to the average Joe why the new “transparency” is so little so late. Here’s how Stephen neatly summarized the issue:
I also have to thank Stephen for the reality that he embedded in the used car metaphor — a reality everyone can relate to — that a lot of the salesmen in the bond business have the same qualities as less well paid sales professionals in the used car business.