Here’s how Wall Street was conned by a white supremacist who claimed he had a scoop on the US Treasury’s “stress tests” of the 19 biggest banks.
The US market fell heavily, helped by some poor results from major companies, including a major bank. Big falls in Europe didn’t help, but an early factor was a claim that the US Treasury’s so-called stress tests of the country’s 19 biggest banks had come up with some very poor results.
That news, on an obscure blog, got into the market and was reported. It was circulated around the world, including in Australia without too much checking. And yet by the time this had happened this morning, the US Treasury’s rejection was in the market, as were details of Turner’s background.
Here’s how Bloomberg reported the situation:
A US Treasury spokesman said there’s no basis to a blog posting that buffeted financial stocks by saying that most of the nation’s largest banks are insolvent.
Andrew Williams, a Treasury spokesman, dismissed the report from Hal Turner of North Bergen, New Jersey, “particularly given we don’t have stress test results yet”. Turner has advocated violence against blacks, Jews and immigrants on his website and internet radio show, according to the Anti-Defamation League, created in 1913 to monitor anti-Semitism.
The Financial Select Sector SPDR Fund, an exchange-traded fund tracking banks, brokerages and insurers, fell to $10.62 from $10.75 in six minutes after FlyOnTheWall.com cited Turner’s blog post at 8:14am in New York. At 8:30am, FlyOnTheWall advised readers to disregard the earlier story.
Harold Turner is a US nutter of the most miserable kind and yet Wall Street analysts (and some around the world) and investors paid attention when he published a claim on his website that the stress test results had shown many of the 19 biggest banks were insolvent.
It added to concerns after Bank of America released profit figures that didn’t convince investors. The combination sent the US market down, (which took its lead also from big falls in Europe) which was added to by a string of poor results from the likes of IBM, Hasbro (the toys group) and Texas Instruments, showing that the recession is punching holes in revenues and profits for some of America’s biggest companies.
But it was the way that the Turner claim on the banks conned so many on Wall Street that stood out.
The FT’s blog site Alphaville explains:
The blog attached to the Hal Turner Show (fronted by a white supremacist — “Honest talk in a time of universal deceit”) adds that the FDIC’s “Problem List” of troubled banks includes 252 institutions with assets of $159bn. Furthermore, 1816 banks and thrifts are at “risk of failure”, with total assets of $4,670 bn, compared to 1568 institutions, with $2,320bn in total assets in prior quarter.
So far, something of a scoop … except that Mr Turner and friends seem to be worried that the outside world might not believe them.
Sunday’s blog post — entitled “LEAKED! Bank Stress Test Results!” — was followed up with a strange update in the early hours of Monday morning, stating that anyone sceptical of the veracity of the story should check out the radio network’s coverage of a leaked Department of Homeland Security memo a week earlier.
Then there is a reference to Reuters somehow “confirming” the stress test results with an article on April 6, although the report linked to is actually a piece of analysis by an independent firm, Weiss Research.
Oh, and then there’s a post on how the Hal Turner Show was allegedly first to publish details of the CIA torture memos, time-stamped Friday night — at least 24 hours after the New York Times and others published all the details.
Clearly a nutter, as this entry on Wikipedia explains:
Harold Charles “Hal” Turner is an American white nationalist and white supremacist from North Bergen, New Jersey. He ran his program, The Hal Turner Show, as a webcast from his home once a week, and depended on donations from his listeners. He quit the show in July 2008. In August his website also closed down, though he retains a blog.
Turner promotes anti-Semitism (including the rounding up and killing of Jews) and opposes the existence of the state of Israel. He also denies the Holocaust. In 2005, Turner organised what he billed as a “rally against violence” after a white student was beaten by a black student at a high school. In 2006, he got into a fight with Jaime Vazquez, a former Jersey City deputy mayor, after Vazquez called him a “racist coward”. Turner has made numerous threats against political figures on his website and in other forums.
And to think someone on Wall Street gave this man credence.