Inside Corruption

clipped from pajamasmedia.com How do you keep someone from using what he knows? The Los Angeles Times describes a warning by Neal Barofsky, the special inspector general for the banking rescue program, who says the government bank rescue package can wind up enriching the very people who put it into effect. A controversial $40-billion government program to buy toxic securities from ailing banks has a flaw that law enforcement and financial experts say could allow traders to illegally profit from inside information. … The danger is that traders in the government program could wield enormous influence in the market — and there are no explicit restrictions on how they could use that influence to profit inside deals of their own. For example, a trader could privately buy up groups of toxic mortgages on the cheap then later drive up the price by purchasing similar mortgages using government money. The practice, known as “front running,” could be technically illegal