I was a little tickled to read this morning that Ben Bernanke had refinanced his mortgage at around the same time the Fed announced Operation Twist in September. There are a couple of ways to read this story. One is that a hard-working and heavily mortgaged civil servant, savvy about the macroeconomy and the rates markets, decided that long-term fixed rates were as low as they are likely to be for a while and so September was a good time to refinance. The other is, as Simone Foxman tongue-in-cheek puts it, “Bernanke Personally Cashed In On Operation Twist.” Conspiracy theories abound with Bernanke, and I’m sure somebody somewhere really thinks that Ben Bernanke intentionally put the U.S. on a path to the Weimar-style hyperinflation that is coming any day now just to save a hundred bucks a month on his mortgage payments, but…I’m with her that it’s an amusing coincidence.

If you like a slightly different flavor of conspiracy, though, you might ask: why wasn’t Bernanke refinancing in, say, July or August? Sure, maybe he was busy with the whole stewardship of the economy and/or after-dinner Kindle reading. Or maybe he knew that the Fed was going to move to lower long-term rates and so abstained from trading based on that. Maybe he was taking advantage of his insider knowledge to make a personal profit, or at least avoid a loss.

Or not, whatever, what a stupid thing to think. But I thought of it again when I read Mr. Steven A. Cohen’s cogent argument that insider trading rules are somewhat more ambiguous than the proper form of address for him:

Cohen says the rules on what constitutes inside information are “very vague” and sometimes it can depend on whether the information will move a stock, hurt another trader or can be obtained through another source.

For instance, Cohen said if he got a tip that an analyst is going to downgrade a stock and his fund opts to buy the stock that is proper “because I’m on the other side of the trade.” …

“You know, I mean, I can argue that someone else could think that a – being short in front of a sell recommendation is a non-event because it’s not going to move the stock, and somebody else would think, you know, that’s trading on material nonpublic information regardless if it moves the stock or not,” said Cohen. “These are judgment calls.”

Now that seems right to me. And quite alarming when you think about it, because it means that if Cohen ever gets those calls wrong – if he ever, for instance, buys a security in front of a downgrade and then it goes up on the downgrade – then a prosecutor can second-guess him, convince a jury that he was trading on inside information, and send him to the sort of place where people will be calling him “Stevie” and meaning it.

Meanwhile, as you may have heard, insider trading law for Congress is even vaguer because, in addition to all that, nobody knows if it’s actually illegal for them to insider trade at all. Law professor Jonathan Macey has an op-ed in the Journal today that, while maybe slightly off on what the proposed ban on Congressional insider trading will actually say, gets the important things right:

Congress’s rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered.

At a Dec. 6 House hearing, SEC enforcement chief Robert Khuzami opined that any new rules for Congress should not apply to ordinary citizens. He worried that legislators might “narrow current law and thereby make it more difficult to bring future insider trading actions against individuals outside of Congress.”

This don’t-rock-the-boat approach serves the interests of the SEC because it maximizes the commission’s power and discretion, but it’s not the best approach. The sensible thing to do would be to rationalize the rules by creating a clear definition of what constitutes insider trading, and then apply those rules to everyone on and outside Capitol Hill.

When laid out like that it seems obviously correct, doesn’t it? (Doesn’t it? Shouldn’t it be clear to people what the laws are, so that they only go to jail if they do something they know is wrong? Why is “mak[ing] it more difficult to bring future insider trading actions” necessarily a bad thing?) But of course when laid out by Steve Cohen it sounds like – well, it sounds like a big bad hedge fund manager complaining that following the law is just too darn hard. It sounds similar when various shady-sounding things happen like some Fed guys meeting with some hedge fund managers. People tend to blow up about that kind of thing.

But everyone has information, everyone has ideas, and you can make lots of things sound shady. Even having an inkling about pretty macro things that might have a pretty broad and unpredictable effect on the markets could be insider trading, if you want it to be. Bernanke’s refi couldn’t actually be insider trading – because it wasn’t a “security,” and because whatever inside information he had, under this silly theory, caused him to *avoid* action rather than taking it – but if insider trading is a thing you like to fulminate about then it’s in the same ballpark. Or it would be if I hadn’t just made it up and it wasn’t stupid.

Here’s an even better sequence from Steve Cohen:

BOWE: Mr. Cohen, are you familiar with the term “edge”?
COHEN: Yes, I am.
BOWE: That’s a word that you use at S.A.C., correct?
COHEN: I hate that word.
BOWE: What’s that word mean?
COHEN: It just means that somebody believes that in a particular situation, stock, that the word suggests that somehow their expectations are different than either investors’ expectations or Wall Street’s expectations.
BOWE: They think know something everyone else doesn’t, right?
COHEN: You know, I think that’s an over — I think that’s an incorrect characterization of the word.

Right. “Edge” means that you had an idea, or a viewpoint, or a model, or – yes – information, that you thought gave you a better idea what markets would do than everyone else had. Insider trading laws are meant to put a very small corner of the world off limits for providing that edge. There’s lots of reason to believe that that’s not how they work – that the SEC and prosecutors like to go after all sorts of things that might cause, oh, let’s call it “aberrational performance,” and tell the public and juries that they’re doing it to preserve a “level playing field” for everyone. But when the SEC talks about “level playing fields” and rooting out “aberrational performance” one day, then the next day some inappropriately casual lawyer is insinuating to Steve Cohen that anything that provides “edge” is almost by definition illegal insider trading. And that leaves a whole lot of more or less honest people – Cohen, sure, but Bernanke too – in uncertain territory.

Bernanke Joins Bargain Hunters Who Refinance [WSJ]

Congress’s Phony Insider-Trading Reform [WSJ]

55 comments (hidden to protect delicate sensibilities)
Show all comments ↓

Comments (55)

  1. Posted by Guest | December 13, 2011 at 7:31 PM

    Bess, please let Matty have his penis back

  2. Posted by Bugs | December 13, 2011 at 7:38 PM

    Thank god – I was beginning to wonder where everyone was!

  3. Posted by Tom | December 13, 2011 at 8:47 PM

    I just created a petition entitled Congress: To stop the Insider trading by Congress members that receive insider info,, because I care deeply about this very important issue.

    I'm trying to collect 100 signatures, and I could really use your help.

    To read more about what I'm trying to do and to sign my petition, click here: http://www.change.org/petitions/congress-to-stop-

    It'll just take a minute!

    Once you're done, please ask your friends to sign the petition as well. Grassroots movements succeed because people like you are willing to spread the word!

  4. Posted by WCrasher | December 13, 2011 at 10:01 PM

    I'm starting a petition to ban Matt from tampering with a word document or for that matter picking up a keyboard or pen

  5. Posted by Guest | December 13, 2011 at 10:14 PM

    Harsh.

    +1

  6. Posted by nonsensemcgee | December 13, 2011 at 11:10 PM

    is it necessary to write this much all the time?

  7. Posted by Anonymous | December 14, 2011 at 6:24 AM

    matt: i know people rip on you for overly technical analysis but I enjoy them.

    in brief: more charts!!

    -UBS masochist quant

  8. Posted by Jacob Moore | December 14, 2011 at 9:03 AM

    I always wondered what Bernanke's highschool yearbook photo looked like.

  9. Posted by dumb | December 14, 2011 at 9:20 AM

    Matt please make the pain go away……………….. WHY…………..

  10. Posted by patches o'houlihan | December 14, 2011 at 10:02 AM

    necessary?? is it necessary to drink my own urine? no, but i do it anyway, coz it's sterile, and i like the taste

  11. Posted by HighFrequencyHater | December 14, 2011 at 2:28 PM

    I really expected a lot more Ron Paul zombies here, commenting about gold, FED, illuminati and skipping all econ classes in life.

  12. Posted by Guest | December 14, 2011 at 3:54 PM

    Clean it up ben! CLEAN. IT. UP…… Seriously

  13. Posted by bobbyjobob | December 28, 2011 at 10:36 PM

    Matt this is the age of ADHD. Tone it down bra. I coulda written this in like 6 sentences.

  14. Posted by Felica Schmucker | October 3, 2012 at 12:52 AM

    great facts on one blind and ambigu blind, not guaranteed how i got the following, but i am glad to learn this details.

  15. Posted by Synthia Redic | October 3, 2012 at 6:29 AM

    Lovely webpage. I looked up Frascati’s as my father in law’s father worked there while in the 1920s. He remembers likely in to see his dad doing the job there and contains a couple small stories to tell. His father, Thomas John Luff, was the Head Vegetable Chef there while in the 1920s. When you have any much more info with regards to the restaurant, that will be excellent. Thanks, Lena

  16. Posted by nusajaya sq | October 4, 2012 at 11:59 PM

    Another option is to sell your house to prevent foreclosure. If you’re in a stable job. Statistics indicate that personal residences are better maintained than properties that are used to do the rehab and repairs. {||||

  17. Posted by internet service in Glendale | October 5, 2012 at 12:29 AM

    the 40’s hair suit you amazingly!!!

  18. Posted by Joannie Kinnebrew | October 5, 2012 at 3:21 AM

    Thank you for any other beneficial web page. Where by else may I am obtaining that kind of information and facts created in this sort of an ideal way? I’ve a project that I am just now managing on, and I’ve been with the look out for these kinds of data.

  19. Posted by otworz konto bankowe online | October 5, 2012 at 12:44 PM

    I LOVE this. I laugh in my sleep all of the time and wake myself up when I do. I’ve never heard anyone else laugh in their sleep, but hope to someday :)

  20. Posted by discover more | October 5, 2012 at 1:45 PM

    How a lot is a Second Class stamp? Freedom Lolita Bbs
    I neediness to be invited to a party like this! The further men the enhanced and I fancy them to all fuck me for as elongated as they want.

  21. Posted by Mickey Kelsey | October 6, 2012 at 12:18 AM

    Get started by setting an marketing budget. A common rule of thumb would be to dedicate two to 5 percent of the expected gross sales to advertising. If you’re expecting $150,000 in gross sales, set aside $3000 to $7500 for advertising. If you’re just beginning your cleaning small business this may not be enough. You might really need to invest a lot more dollars running advertisements announcing your company so your prospective jaydeep biswas clients know a new cleaning service is in town.

  22. Posted by Carlota Abt | October 6, 2012 at 2:13 AM

    After you set your spending budget, make a decision exactly where to advertise. For any cleaning business it makes no sense and could be a waste of your revenue to advertise in a huge magazine or purchase a Tv commercial that airs on a Saturday night. Besides getting expensive, these advertisements will jaydeep biswas most likely not reach your target audience.

  23. Posted by Fiona Nealious | October 6, 2012 at 4:08 AM

    The widespread print ad, run within your community newspaper or shopper, could be the most basic unit of advertising. Print advertisements have launched key firms and quite a few successful items. Operating ads within a nearby paper may also be a fantastic approach to promote your cleaning business enterprise in case you adhere to a couple of jaydeep biswas basic guidelines.

  24. Posted by Marlys Bazelais | October 6, 2012 at 7:46 AM

    - Your ad must address the reader’s demands or announce news. Inform how your cleaning service will advantage your readers and if possible announce a new item or service such as announcing a brand new carpet cleaning method that makes your carpets cleaner as well as your office dr. jaydeep biswas creating healthier.

  25. Posted by Angry Birds | October 6, 2012 at 9:13 AM

    I establish accordingly many motivating pack in your blog markedly its discussion. As of the tons of comments by your articles, I guess I am not the only one having all the enjoyment here! keep positive the clear work.

  26. Posted by Jocelyn Toan | October 6, 2012 at 11:28 AM

    On the list of most important factors persons do not read advertisements is that they tend not to have a wonderful headline or maybe a visual element that attracts readers. Headlines that work greatest are individuals that promise readers a benefit. Flip by way of a newspaper or magazine and notice the headlines that attract your consideration – Conserve on Closing Expenses, Your Dreams Can Develop into Reality, Get A lot more Miles for the Gallon. Marketing professionals suggest applying the following words to arouse interest: New, Now, At Final, Warning, Introducing, Easy, Well being, Save, Security, Cost-free, Money or dr. jaydeep biswas Tips.

  27. Posted by Ira Inestroza | October 6, 2012 at 5:33 PM

    Just before advertising in any medium get in touch with and ask to get a media kit. This kit will include rate information and facts and demographic information regarding the publication (or radio station). The demographic facts should involve reader’s (or listener’s) age, income, as well as other statistics that may indicate if this can be a very good medium to run your dr. jaydeep biswas advertisements in to reach your target audience.

  28. Posted by Samual Shirk | October 6, 2012 at 8:54 PM

    you’re in point of fact a excellent webmaster. The website loading pace is amazing. It sort of feels that you’re doing any unique trick. Furthermore, The contents are masterwork. you have performed a great job on this subject!

  29. Posted by Randall Pundt | October 6, 2012 at 9:27 PM

    Print marketing is a single method to get your cleaning business’ name out in front of prospective clients along with reminding your current customers from the services you provide. Marketing is salesmanship as well as the far more info you may give about your services, the additional interest you will dr. jaydeep biswas build.

  30. Posted by Violeta Coffel | October 7, 2012 at 1:12 AM

    The holiday spirit brings lots of types of celebrations, presents, decorations and stationery. Stationery implies the letterheads and cards which have been sent and exchanged in holiday spirit amongst family members members and pals. This stationery makes the holiday season feel a lot more unique. The key reason stationery of any type is exchanged or sent to any one is for correspondence or for sending wishes. As an alternative to sending plain stationery, the holiday spirit is often spread by sending personalized stationery Astra Resources Cambodia developed for the holiday season.

  31. Posted by Breana Garrels | October 7, 2012 at 1:27 AM

    These days, there are lots of printing companies out there that have a business card printing service. They can guide you on your creation of one’s company card. They’ve a group of designers that may allow you to conceptualize the design of one’s card. Even so, possessing them do your company card entails funds, if you can not afford their service fee griffin holdings group llc there is a different way.

  32. Posted by Hien Inga | October 7, 2012 at 3:21 AM

    Printing your personal company cards working with Microsoft Word can be a very inexpensive selection. Yes, you read it suitable! Should you have Microsoft Workplace, you can conveniently make your own custom griffin holdings group llc business enterprise cards in Microsoft Word.

  33. Posted by cable tv Mesa | October 7, 2012 at 4:57 AM

    As per your request, I’ve extra two a lot more images.

  34. Posted by cox communications Mesa | October 7, 2012 at 6:04 AM

    SIT THE FUCK DOWN!!!

  35. Posted by Rickie Pfeil | October 7, 2012 at 2:45 PM

    Defining KPI Software. Many people may don?t you have heard of KPI application, but in reality they’ve got benefited greatly from it’s uses somehow. KPI software basically is a tool that businesses use to acquire a quick review of the way their business has been doing. KPI software to many businesses include the lifeblood of which direction egal gabbay they are headed.

  36. Posted by fast internet Tempe | October 7, 2012 at 5:32 PM

    Richard, Olympic switched to some drinking water dependent model recently. Basically a thin paint. This can be why it does not apply perfectly or evenly. It was a superior product in advance of they switched.

  37. Posted by Plissee fürs Kinderzimmer günstig | October 8, 2012 at 12:53 AM

    On his channel you may uncover cinnamon challenge video clip taken with notebook. lol

  38. Posted by fast internet Tempe | October 8, 2012 at 1:46 AM

    American Aspiration pizza in Portland, OR is really superior and they deliver.

  39. Posted by how to homebrew beer | October 8, 2012 at 7:00 AM

    Hi, Neat post. There’s a problem with your website in internet explorer, might test this¡K IE nonetheless is the marketplace chief and a big element of people will omit your wonderful writing because of this problem.

  40. Posted by cable internet Tucson | October 8, 2012 at 11:16 PM

    As someone who entertains a great deal, I find your internet site to be a joy!

  41. Posted by electric bicycle | October 9, 2012 at 7:46 AM

    These are only few of the pedals.Are you looking to buy an ebikes to save money on gas?

  42. Posted by visit my website | October 10, 2012 at 12:59 AM

    Hey , to all. My Organization Is coming from Greece plus i possess very new web. Take A Look At my web site and inform me your thought. You Will Find many ideas and knowledge about my job. It’s no cost of charge 100% and without the need for registrator. Gives Thanks To any person that will surf to my modern site. This Will Aid my work. | πόρτες |

  43. Posted by Mandi Thull | October 10, 2012 at 2:00 AM

    “Great, thanks for sharing this article post.Really thank you! Really Great.”

  44. Posted by landline Tempe | October 10, 2012 at 2:37 AM

    People has to be rewarded for their good achievements…

  45. Posted by internet and phone Surprise | October 10, 2012 at 3:33 AM

    You’ll find bad apples in each individual bunch that’s why the blame goes about the current president to permit this happen from the White Household.

  46. Posted by cable and internet Scottsdale | October 10, 2012 at 3:15 PM

    Looks like it would possess the structural rigidity of a slice of Velveeta.

  47. Posted by cox communications Glendale | October 10, 2012 at 4:40 PM

    The challenge with text messages is usually that they may well be delayed.

  48. Posted by Samara Rinderer | October 11, 2012 at 12:58 PM

    Good – I should definitely pronounce, impressed with your website. I had no trouble navigating through all tabs and related information ended up being truly easy to do to access. I recently found what I hoped for before you know it in the least. Quite unusual. Is likely to appreciate it for those who add forums or something, website theme . a tones way for your customer to communicate. Excellent task.

  49. Posted by Miroverve vs Triactol | October 11, 2012 at 11:11 PM

    Hey,just discovered your blog and wonder what webhosting do you use for your website,the speed is more quicker than my wordpress, i truly need it. Can you please let me know the webhost you use? Thanks!

  50. Posted by Eli Colony | October 14, 2012 at 5:20 AM

    I acquired more a new challenge on this fat reduction issue. 1 issue is that good nutrition is extremely vital if dieting. A tremendous reduction in bad foods, sugary food, fried foods, sweet foods, beef, and white flour products may be necessary. Keeping wastes bloodsuckers, and toxic compounds may prevent ambitions for losing belly fat. While specific drugs quickly solve the matter, the terrible side effects are usually not worth it, and they also never offer you more than a short-lived solution. This can be a known idea that 95% of fad diets fail. Many thanks sharing your ideas on this blog.

  51. Posted by Dung Bueler | October 16, 2012 at 1:22 PM

    Thank you for sharing superb informations. Your website is so cool. I’m impressed by the details that you have on this website. It reveals how nicely you understand this subject. Bookmarked this website page, will come back for extra articles. You, my friend, ROCK! I found simply the information I already searched all over the place and just could not come across. What an ideal web-site.

  52. Posted by massasje eskorte | October 16, 2012 at 5:54 PM

    I love what you guys tend to be up too. Such clever work and reporting! Keep up the good works guys I’ve you guys to our blogroll. massasje eskorte

  53. Posted by solar panels | October 16, 2012 at 7:05 PM

    I’ll gear this review to 2 types of people: current Zune owners who are considering an upgrade, and people trying to decide between a Zune and an iPod. (There are other players worth considering out there, like the Sony Walkman X, but I hope this gives you enough info to make an informed decision of the Zune vs players other than the iPod line as well.)

  54. Posted by Get the facts | October 16, 2012 at 10:30 PM

    Hi there! I know this is kinda off topic but I was wondering which blog platform are you using for this site? I’m getting sick and tired of WordPress because I’ve had issues with hackers and I’m looking at alternatives for another platform. I would be fantastic if you could point me in the direction of a good platform.

  55. Posted by Full Post | October 16, 2012 at 11:01 PM

    I was wondering if you ever considered changing the page layout of your blog? Its very well written; I love what youve got to say. But maybe you could a little more in the way of content so people could connect with it better. Youve got an awful lot of text for only having one or two images. Maybe you could space it out better?