Thursday, February 28, 2013

Like Images From Deep Within the Bowels of Abu Ghraib Prison

My impression is that the New York Times often produces master narrative scripts, which are sold to the public as news. When such a preordained process is started from scratch--let's say, like with the first Gulf War--it is unusually effective in creating a shared version of exoteric reality. But when the story writers are called in at the last moment for emergency repairs to an organic breach that threatens to expose more unpalatable truths than the public can adequately rationalize or deny, their efforts at containment seem forced, illogical, even sophomoric.

The Salomon Bros. bond-trading scandal that erupted in August 1991 was an epic challenge at information management. Certain facts had escaped in the opening days and weeks of the scandal, which couldn't be massaged into happy endings. Even with the sophisticated controls manifest in the infrastructure of government and finance as countermeasures, the very dangerous nature of what underpins our capitalist democracy very nearly sprang out into general awareness.

What's changed in the years since then is now the record of events which once received widespread attention can now be reexamined and studied by online layman with the aegis of Google, and I'd imagine, such a dynamic for analytic self-determination is unprecedented in so-called recorded history.

That history is constructed by a victorious few is exactly my point, and that sometimes it's schmaltzy.


Below are excerpts, within excerpts...with further excerpts...

September 5, 1991, New York Times, Excerpts From Statement By Salomon to House Panel,

Following are excerpts from the statement submitted by Salomon Inc. with the testimony of its chairman, Warren E. Buffett, describing the key event that led to Treasury Department inquiries into the firm's bidding at securities auctions.

The people referred to are: Paul W. Mozer, former managing director in charge of the firm's government trading desk; Thomas Murphy, also a former managing director who assisted Mr. Mozer in managing that desk; Christopher Fitzmaurice, a trader; John W. Meriwether, former vice chairman; Thomas W. Strauss, former president, and John H. Gutfreund, former chairman and chief executive of Salomon. Also mentioned is Charles Jackson, a senior director of Mercury Asset Management.

On Feb. 21, 1991 . . . Mr. Mozer told Mr. Murphy that he had submitted an unauthorized customer bid in the name of "Warburg" to obtain the amount of notes Mr. Mozer wanted to purchase. . . .

At some point after the auction . . . Mr. Fitzmaurice answered a telephone call from a representative of the Treasury who was trying to reach Mr. Murphy. The Treasury representative inquired about the identity of the "Warburg" listed on the Feb. 21, 1991, bid placed by Salomon and wanted to know whether the entity in question was S. G. Warburg & Co., which, like Salomon, is a primary dealer.
["At some point after the auction" just won't do. My adrenaline would have gone through the roof after a phone call like that. The professional response would be to mark down the time and date in a calender and take notes of all the conversations. This would be called the "covering your ass stage," which even the not-guilty do before "lawyering-up." So it's clear, right off the bat, that this is not a professional communique between a supervisory House panel and subservient government agents, but probably the reverse.]
After being advised by Mr. Fitzmaurice of the Treasury inquiry, Mr. Murphy discussed with Mr. Mozer how to respond. . . . At Mr. Mozer's instruction, Mr. Murphy obtained information on the corporate structure of Mercury Asset Management Company. . . . Mercury and S. G. Warburg are both subsidiaries of S. G. Warburg P.L.C., but, unlike S. G. Warburg, Mercury is not a primary dealer.
[After the fact, they seek information about corporate structure, but first they submit a one-word bid to the Federal Reserve with the name of "Warburg."]
. . . Messrs. Mozer and Murphy agreed that Mr. Murphy would . . . advise a Treasury representative that the bid submitted in "Warburg's" name should have been submitted in the name of "Mercury." . .

Apparently unbeknownst to Messrs. Mozer or Murphy, S. G. Warburg had submitted a bid for $100 million in its own name in the Feb. 21, 1991, auction. In the view of the Treasury, as expressed in an April 17, 1991, letter . . . to Mercury [ with a copy to Mr. Mozer ] , Mercury's affiliation with S. G. Warburg was sufficient to require aggregation of S. G. Warburg's own bid with the unauthorized bid submitted by Salomon in the name of "Mercury" for purposes of the Treasury's 35 percent bid-limit rule. Aggregation of these two bids would have resulted in a bid by S. G. Warburg greater than the 35 percent of the offering amount. . . .
[First, it is my understanding that there is no 35-percent bid rule, but a 35-percent awards rule. It was Mozer's taking advantage of this as a tactic (one time bidding 300 percent of a total auction. See below.) that was considered "gaming" the system. Remember also that the Basham-Mozer rule was only enacted in late 1990 in response to his ongoing pattern of behavior. One would assume that a gentlemanly collegiality had prevailed untill then.]
[Now here's the rub! Nowhere are we told the size of Mozer's fraudulent Warburg order, but if a measly $100,000,000 tipped it over the line, then in a $12 billion auction, Mozer was bidding something on the order of $3.9 billion on the Warburg name. Wouldn't a bid of that scale draw attention to itself?]
[Why would Mozer use the name of a fellow primary dealer instead of some obscure customer's name? Since it is a requirement of primary dealers to "make markets" and bid at auction (at every auction?) such piggybacking would be prohibited on its face. Did Mozer think somehow that Warburg wouldn't attend the auction and bid? Where is the logic? Would Warburg be expected to pay a commission to Salomon for this effort? Furthermore, Mozer wasn't bidding on another firm's "name." He was bidding on Salomon's account and appending a meaningless appellation. It seems clear that even if the Fed had some requirement that bids be listed with pending orders--versus purchases for in-house "stock"--there is obviously no follow through to verify if sales and transfers were actually finalized, i.e. with the $1 Billion dollar "practical joke" order, or any of the other fraudulent orders placed by Salomon. (Writing "Warburg" in pencil on a slip pf paper doesn't indicate anything. Try going to a real auction for farm equipment and see how far that gets you.)]
[If the Fed was concerned that Warburg was wrongly or mistakenly segmenting their bid in some act of legerdemain (Oh, $4 billion plus $100,000,000 equals--really tricky maneuver there!) wouldn't that issue be addressed at the time of the bid openings? How else would they determine the awards? Why wait 54 days to write a letter?]
. . . Apparently concerned that the Treasury would learn from Mercury or S. G. Warburg representatives that neither of those entities had authorized Salomon's initial submission of a bid in "Warburg's" name, or its subsequent use of "Mercury" to identify the bid, Mr. Mozer contacted Mr. Jackson and told him that Salomon had mistakenly submitted a bid in Mercury's name in the Feb. 21, 1991, auction. Mr. Mozer requested that Mr. Jackson not embarrass Mr. Mozer with the Treasury and the Federal Reserve by responding to the Treasury's letter. (The letter itself did not ask for a response.) . . .
[So not only was the letter written 54 days after the fact, (and isn't it about time for another auction?) it had no discernable interrogative, admonishing or ministerial purpose.]
In late April 1991 . . . Mr. Mozer approached his supervisor, John W. Meriwether . . . and advised him that he had submitted an unauthorized bid in the name of "Warburg." Mr. Mozer also advised Mr. Meriwether that he had asked Mr. Jackson not to respond to the Treasury's letter. . .
[If Mozer and his underlings didn't take the matter seriously enough to note the time and date of the phone call, wouldn't you think when that when the issue is raised to the attention of their superior, Mr. Meriwether, that one of them would have taken notes? But asking for a professional response is hard when one key aspect of your defense is that you consummated an $1 billion order as a result of a practical joke gone awry. This is supposed to be a submission to the Goddamn Congress and approximating "late" April, is the best they can do?]
Mr. Meriwether told Mr. Mozer that the matter was very serious and represented career-threatening conduct. Mr. Meriwether asked Mr. Mozer whether unauthorized customer bids had been submitted on other occasions. Mr. Mozer told Mr. Meriwether that the Feb. 21, 1991, Warburg/Mercury incident was the only time that an unauthorized customer bid had been intentionally submitted by the government trading desk. Mr. Mozer did not advise Mr. Meriwether that he had submitted a second unauthorized customer bid . . . in the name of "Quantum" in the same . . . auction. Mr. Meriwether told Mr. Mozer that he would have to bring the matter to the attention of Thomas W. Strauss, then Salomon's president. Mr. Mozer asked Mr. Meriwether not to do this.
[Again with the "customer bids," authorized or unauthorized, "in the name of shit." They act as if the outside world doesn't know the leeway a wholesaler has. But if this is the case, why not just be a customer of the Treasury or the Fed itself, and save yourself the $5 million a year bonus Mozer is paid as gatekeeper?]
Mr. Meriwether promptly met with Mr. Strauss, who asked Donald M. Feuerstein, then Salomon's chief legal officer, to join the meeting. Very soon thereafter, Messrs. Strauss, Meriwether and Feuerstein met with John H. Gutfreund. . . . Messrs. Gutfreund, Strauss, Meriwether and Feuerstein have stated that they decided that Mr. Mozer's conduct should be reported to governmental authorities and discussed how this should be done. They have also stated that no final decision was made concerning the manner in which the matter would be reported to governmental authorities. As this committee is aware, governmental authorities were not notified until August 1991. As Warren Buffett has stated, the delay in reporting remains "inexplicable and inexcusable."
[Some important people lost their positions (jobs) because of their inability or unwillingness to explicate the thinking behind the non-reporting, but to copy a letter to the Times containing such a vapid degree of pointlessness is, well, just sad. Then, with one last, final, imprecise August 1991 we can know they were canned for bad playacting, with the real center of gravity not in the Congress but some phantom nursery school nanny.  Too bad the PR grownups couldn't get a semblance of logical realism into this laughably put together narrative.]

August 17, 1991, New York Times, Quotation of the Day

"We cannot let our unfortunate mistake of not taking prompt action, when in April we learned of one unauthorized bid at a February Treasury auction, to harm the firm. We are taking this action to protect the firm, its 9,000 people and its clients." -- John H. Gutfreund and Thomas W. Strauss, announcing they would resign the top positions at Salomon Brothers. [ 1:3. ]

Lie to the Congress. Lie to the S.E.C. Lie to the Federal Reserve. Lie to the Justice Dept. Lie to the public. Lie to me. Eventually, when the full run of news accounts is assembled, and we can chart every nook and cranny and outpost of deceit, we will see how venal the story really is. This is a Failed State.


OK, I may stand corrected, but probably not. The very early dated Boston Globe article posted below, Salomon will suffer in scandal, by Forbes national editor Robert Lenzer, contains a rash of details of the kind that are absent once the press goes to the mattresses in support of their favorite financial Don Buffett. (while the New York Times stands in the garden dusting the tomatoes) Some interesting facts:
  • Salomon was able to buy $1 billion of Treasury notes for $10 million down, a 1 percent margin that is unavailable to the ordinary investor.
Who pays the costs for this special privilege? Probably the federal taxpayer.
  • five firms (share) half the $800 million pretax profits from 1990 Treasury trading.
I'm assuming this refers to profits on the original issue and not the secondary market. If so, the cost is as ruinous as the 19 cents of every medical-care dollar spent to support the insurance industry. Mozer's bonus schedule for his last three years at Salomon was absurdly irrationally. He was Master of the Mundane. How difficult can it be to sell something everybody wants to buy? So the system as it stands now is a total giveaway; a function of class power and control; an example of Wall Street Welfare of the Worst Weft and Warp!
  • The Treasury, which hasn't the manpower to supervise the market, has let dealers carry their derivative positions books in offshore subsidiaries.
That fact simply leaves me stunned. But since a Crime of Salomon's was that it
  • misrepresented the size of its positions and falsified its books and records. 
can some books be kept in the Cayman Islands but others must be "squared" with the Fed? What good is an originating or overt position if derivatives can undermine it to the thousandth decimal point?

In the May 22 auction for a $12.26 billion issue, Lenzner says that after Solly had bought in the half-billion range for their house account, "Salomon bid as agent for two well-heeled clients for another $6 billion in notes, bringing the group's total position to 85 percent." Now, individual purchases of that caliber can't be common, so what are the probabilities that two $3 billion sales would go on together using the same primary dealer as agent? These rich privates wouldn't get the same one-percent margin privilege, so absent using their dealer's rights, what's the point of paying a commission on $3b? Why not buy directly from the house? But since every aspect of the process is designed to promote the utmost secrecy and confusion, maybe that's worth the price.

In the February 1991 sale of $9.04 billion five-year notes, Salomon was guilty of
"forging customer orders. In both instances Salomon's written bids to the Federal Reserve Bank in New York, transmitted electronically, were misrepresented as well, the sources said." 
Not a very secure system, but then it's a club that works on the "honor system." The parties who should be aggrieved by Salomon's taking an unfair share of the pie are the other 39 primary dealers, but we never hear a word out of them. In fact, the man at Warburg, Charles Jackson, goes along with the deception when first contacted by the Treasury.

An amazing publication is the following Washington Post article from May 31, 1991, which lays out all the issues, hearsay and gossip. It even attempts to blame George Soros' Quantum Fund for the squeeze being felt, when Salomon had apparently used the name as a ploy (We'll never know for sure, will we?). Who among the 40 primary dealers would be caught short in such a structured set up and then keep quiet about it? The ones hueing-and-crying are the one's caught out there. For Gutfreund to have kept his knowledge of Salomon wrong-doing a secret over the period of May, June and July, (while acquiescing to further wrong-doing in May) meant he and the other leadership either don't read, don't think the rest of us read, or, third, the option I believe to be true, Gutfreund never conceived that he would be the one caught up in a "short" position. He relied on an established conspiratorial network so vast, powerful and corrupt that it naturally includes all the 39 primary dealers, (what good is a 35% limitation. Haven't you ever seen three guys talking in a corner?) but also all the Fed and Treasury officials with line responsibility over their common function and affairs.

A good question ask to divine this theory into action is: what do you think becomes of all the fines and disgorgement used to "punish" these bad boys? Think it goes into the general treasury for the benefit of the taxpayer? No--it's used the flush the system and ensure the next round of willing pawns, victims, heroes and scapegoats.

May 31, 1991, The Washington Post, Fed Studies Possible Squeeze On Sale of Treasury Securities; 'Short-Sellers' Rumored to Face High Costs, by John M. Berry,

The Federal Reserve yesterday was trying to determine whether a large portion of two recent $12 billion issues of Treasury notes has ended up in the hands of a few owners who may now be demanding a premium for selling or lending the securities.

According to widespread rumors in financial markets, such a maneuver is occurring, squeezing dealers and investors who need to acquire the two-year Treasury notes to cover "short" market positions.

The Fed has a big stake in assuring an open, orderly market in government securities, which it buys and sells constantly to influence the course of the economy.

If the Fed detected a squeeze was in process, it could bring strong pressure on the participants to stop. However, in the lightly regulated government securities market, carrying out such a squeeze would not normally be illegal, officials at several securities dealers said.

A short sale occurs when an investor who believes the value of a security that he or she does not yet own sells it, expecting its value to fall. Initially, the short seller may borrow the security from someone else so he or she can deliver it to the buyer. If all goes well, the investor will replace the borrowed security by buying it at a lower price in the market.

As a result of the apparent squeeze on the Treasury notes, there were few sellers but plenty of buyers, a condition that has pushed yields on the notes about 0.15 percentage points below what they otherwise would be, analysts said.

Similarly, holders of the notes, who were using them as collateral on loans, were able to borrow at favorable rates from investors who needed to obtain the securities to cover a short position. The holders were paying as little as 1 percent to 4 percent interest rates on such loans. In contrast, transactions of that type, called repurchase agreements, that involved other government securities were paying about 5.8 percent yesterday.

Speculation on the identity of the note holders centered on George Soros, manager of an aggressive hedge fund, the Quantum Fund.

The rumors also indicated that Salomon Brothers Inc., one of the largest of the major dealers in government securities, was involved, presumably acting on Soros's behalf.

According to Dow Jones Capital Markets Report, Soros and Salomon Brothers declined to comment on the rumors.

A spokesman at the Federal Reserve Bank of New York said that officials there were "asking questions" about the circumstances surrounding the two-year notes but that they did not consider it to be an investigation.

The yield on the two-year notes "is definitely out of line" with what it normally would be given the yields on other Treasury securities, said a senior official at one government securities dealer.

On the other hand, he added, the 0.15 percentage point involved is "not way, way out of line. This is a good issue to own on its merits," he said.

While it was unclear exactly how the apparent squeeze developed, an official at another major dealer said that it was quite possible for one or more investors to gain leverage over an issue by putting up only $100 million to $200 million.

With such a stake, the investor, working though a dealer, could spread offers to buy several billion dollars worth of the notes among several other dealers. Those dealers, unaware of what was in store, would agree to sell the desired securities. Likely, they would have only a portion of what was sold already in their own inventory and would plan to buy or borrow the rest.

But if the investor setting up the squeeze acquired enough of the available supply, the only source from which the dealers who were short could obtain the notes would be the investor to whom they had sold them in the first place.

Such a transaction is not without risk to the original investor, however. If interest rates rose suddenly, the investor would face a capital loss since the value of the notes would fall as rates rose. In addition, the investor would also have to pay higher rates on the money he borrowed to purchase the notes in the first place.


August 15, 1991, The Boston Globe, Salomon will suffer in scandal, by Robert Lenzner,

NEW YORK -- Salomon Brothers, one of the bully boys of Wall Street, pushed too hard this time. It has broken the rules that block a single trader from controlling the monthly auctions of Treasury bonds, by which the United States raises money. Although investors were not hurt, the integrity of the huge Treasury market has been damaged.

Salomon, which since 1917 has raised more money for Uncle Sam than any other registered Treasury dealer, has admitted violating the 35 percent position limit in five Treasury-note auctions since last December.

Even worse, sources say Salomon misrepresented the size of its positions and falsified its books and records. These problems are certain to bring costly fines, private lawsuits and action by the Securities and Exchange Commission. Additionally, Salomon says the irregularities may result in "censure, suspension or debarment from acting as a broker-dealer and as a primary dealer in government securities."

Salomon also says legislation currently under consideration, if enacted, "would have an adverse impact on Salomon's business."

Potentially more troubling would be a Justice Department indictment charging Salomon with trying to "rig," or monopolize the Treasury market. It may well bring the $120 billion-a-day government securities market under increased regulation and change the rules of the game for Salomon and its competitors.

In a confession highly unusual on Wall Street, chairman John Gutfreund, President Thomas Strauss and Treasury bond manager John Meriwether admitted last night they knew of the irregularities in late April and did not take any action until July. A special committee of outside directors will be formed to review these irregularities.

The scandal is a jarring setback for Gutfreund's game plan to return Salomon to its mid-1980's prominence as Wall Street's leading trading firm. The firm earned a record $451 million for the first six months this year. It recently scored a major coup by managing the $3 billion Time Warner Inc. rights offering and was chosen as British Telecom's banker.

Nevertheless, rot at the heart of Salomon's core business could be costly. The firm's in-house investigation has only reviewed Treasury auctions back to December 1990. If there is a more extensive pattern of fraudulent trading, the firm's standing in the global financial community could be damaged. Salomon's franchise was built on trading Treasuries and its reputation has been unsullied until now.

Astutely, Salomon wants to clean up its act before the government does. Salomon has discovered that before the May 22 auction of 2-year Treasury notes it purchased $497 million in the when-issued market -- that is, a promise to buy securities after they are issued. Then the firm for its own account bid for 35 percent of the $12.26 billion issue. Another $500 million transaction, which may be Salomon's doing, brings the firm's position to the 44 percent level, an "inadvertent" violation, the firm says.

At the same time Salomon bid as agent for two well-heeled clients for another $6 billion in notes, bringing the group's total position to 85 percent.

This substantial position by Salomon and others in a Treasury-note issue raised havoc with other Treasury dealers who sold bonds short before the auction and lost a bundle of money scrambling to buy them back. Salomon and its two clients did not make it easy for other dealers by holding onto their note positions, rather than distributing them into the market. This behavior led traders to charge Salomon with trying to "squeeze" or "corner" the market in this issue. The only saving grace was Salomon's 6.82 percent bid, which saved the US government $25 million.

If the May auction was a crude power play that got out of hand, at least two earlier fundings involved Salomon's falsifying purchase orders, sources say. In December 1990 Salomon bid in its own name for 35 percent of the $8.57 billion auction of four-year notes. It also bid for another large order in the name of clients who hadn't authorized the transactions. Salomon traders falsified these purchase orders, and the subsequent sale orders, whereby Salomon repurchased the notes from the clients at the original issue price, sources say.

Then, in February 1991, Salomon made a similar play, buying substantially more than 35 percent of the $9.04 billion sale of five-year notes by forging customer orders. In both instances Salomon's written bids to the Federal Reserve Bank in New York, transmitted electronically, were misrepresented as well, the sources say. Tom Murphy, the two managing directors in charge of Treasury trading. Their attempt to control the auction process, and make a killing, may have been motivated by Salomon's generous year-end bonus plans.

Unfortunately, this pressure forces traders to take gigantic risks with shareholders' money. Huge leverage and declining interest rates make the Treasury market one of Wall Street's most competitive but profitable arenas. Salomon was able to buy $1 billion of Treasury notes for $10 million down, a 1 percent margin that is unavailable to the ordinary investor. Then it borrowed $990 million at an interest rate 150 basis points less than the interest earned by holding the notes.

This "positive carry" -- borrowing at 5.75 percent and earning from 6.90 percent to 7.30 percent -- made buying Treasuries an odds-on play. When the return is figured on a small down payment and annualized, it's considerable. Even better, Treasuries in short supply might rally and be sold at a profit.

Salomon's fiddling will renew congressional fervor about regulating the huge government securities market, where price data and position size are not available publicly. The Treasury, which hasn't the manpower to supervise the market, has let dealers carry their derivative positions books in offshore subsidiaries. The SEC would apply much tougher capital charges on positions.

Before this pressure to maximize profits, Salomon used to ask the Fed's permission before subscribing to 30 percent of a new issue. But those polite times are a relic.

Salomon's domination of the Treasury market was tested by brutal competition in the 1980s, when daily average trading rose from $28 billion in 1981 to $118 billion in 1990. Severe overhead reductions in fixed-income trading helped five firms to gain half the $800 million pretax profits from 1990 Treasury trading.

Now, the tarnishing of its reputation alone will cost Salomon dearly.
See how the game was played  thirty years before...
August 29, 1962, New York Times, Effort To Corner U.S. Bills Hinted; Treasury Says Particularly Large Amount of 91-Day Issue Sought at Sale; Dillon Invokes a Limit; Bid at Auction Last Monday Believed Biggest Ever-- Bidder Undisclosed, by Albert L. Kraus,
An attempt may have been made this week to corner the floating supply in the weekly Treasury bill auction...

August 30, 1962, New York Times, Morgan Guaranty Denies Move To Corner 91-Day-Bill Auction; Bank Denies Bid To Corner Bills, by Edward T. O'Toole, [Section Business & Finance, Page 51]
Morgan Guaranty Trust Company admitted yesterday it was the big bidder in Monday's Treasury bill auction but denied it was attempting to corner the short-term securities market. The bank had submitted a bid for $650,000,000 of the $1,300,000,000 in ninety-one-day bills that the Treasury auctioned last Monday.

September 2, 1962, New York Times, Demand Is Heavy For 91-Day Bills; One of Largest Bids Ever Is Received at Auction; Demand For Bills Continues Heavy, by Albert L. Kraus, [Section Business & Finance, Page 77]
A little before 1:30 P.M. last Monday, a messenger from the Morgan Guaranty Trust Company of New York hurried across the marble foyer of the, Federal Reserve Bank of New York and thrust a sealed envelope through a teller's wicket.


Just what any man could use: a moral endorsement from Henry Kissinger --
"When you read these stories, you say, 'How could this happen?' " said Henry Kissinger, who has known Gutfreund for more than a decade. "It is inconceivable to me that John Gutfreund would do anything at the edge of legality or morally wrong."

An October 3, 1991, New York Times article, Additional Salomon Violation, by Kurt Eichenwald, says that
it was
In July 1990, after Mr. Mozer was said to have bid $15 billion at an auction of $5 billion in securities, Michael E. Basham, a Treasury Department official, revised the rules to restrict bids, as well as awards, to 35 percent of the overall auction.

but that the illegal bidding began a month before, in June, 1990
In a statement, Salomon said it "believes that the submission of unauthorized customer bids by its government trading desk did not begin until the Treasury, in late June 1990, raised questions about the size of the bids made by Salomon for its own account."
The investigation found that the illegal bidding began after June 1990, when the Treasury Department clamped down on Salomon's excessive bidding in the market. It linked the series of violations to rules imposed by the Treasury to limit the amount of securities an individual firm could bid for in an auction.
In further confusion, Mr. Eichenwald reports that the investigation reviewed 68 Treasury auctions in which Salomon and its customers had placed "about 1,000 auction bids"
Salomon said its internal investigation of the government desk had reviewed 68 Treasury auctions.
The firm said it examined about 1,000 auction bids by Salomon and its customers and tens of thousands of trades in the securities that occurred up to 15 days after the auction.
Could there really be that many bids per auction? If Salomon did submit many small itemized customer bids per auction, what would happen if the Fed only allocated a partial award of bonds, as in this scenario...
People who work with Salomon said the firm's internal documents indicated that a $2 billion bid had been submitted in the customer's name. But Fed documents showed that a $3 billion bid had been submitted, and $600 million of securities had been awarded. The Salomon records showed, however, that only $400 million of securities had been allocated to the Salomon customer.

I'm not feeling very partial to Mr. Kurt Eichenwald right now anyway because of the following paragraph, where he deliberately "included" only a partial list of firms who had been victimized, if you will, be the misuse of their identities on bids, orders and purchase contracts
People working with the firm said the newly disclosed bid involved a customer whose name had already been disclosed as one that Salomon had used improperly. They declined to offer more details. The customers whose names were used without authorization in other auctions included the S. G. Warburg Group, the Tiger Management Group and the Pacific Investment Management Corporation.
Why wouldn't Eichenwald include George Soros' Quantum Fund when that name had been published in the Times just the month before, on September 5th? You'd think they'd want to include a celebrity's brand name in order to sell newspapers. GEORGE SOROS SCARRED FOR LIFE BY SCHEMING AUCTION DEBACLE!  Instead we're treated to a mush of minutia, which is sure not to cross-reference when I get around to it.

And who is it that conducts and oversees these auctions, the Treasury or the Fed? All the parts are interchangeable. 

I made this with sugar cubes and my glitter gun this afternoon!

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