Many questions arise from this. Just how and why does SIPC calculate that a $2.5 billion fund, combined with an equal sized Government line of credit is enough? In 2003 some important Congressmen told SIPC, after a GAO report, that it should think about increasing the funds available to it, but it declined to do so, claiming privately, as I gather it, that actuaries had told them it had access to enough money. Did actuaries tell it in 2009, after Madoff and Stanford, that $5 billion in available money was enough? If so (or even if not), were the requisite calculations based on a continuation of SIPC's now 40 year old policy of attempting -- successfully until now -- to screw investors by fighting tooth and nail against paying them -- by pulling out all the stops in negotiations and litigation to successfully avoid paying all but a small percentage of claimants? What if SIPC is somehow forced by the courts or Congress to change this fight-them-to-the-death policy which destroys the intent of Congress? Will $5 billion still be enough? (Personally, I think that, if there is to be a change in SIPC's conduct, its entire management and Board must be replaced. They have all been complicit in SIPC's conduct, and, without a clean sweep, one must fear that nothing the courts or Congress can do will cause those who have been part of SIPC for 35 years -- or have been associated with and influenced by such persons -- to dramatically change their mindset and conduct. Unfortunately, though, in Government or quasi government people don't get fired for performing their jobs terribly or destroying Congressional intent.)
Moreover, if $5 billion is sufficient, why does half of it have to come from the Government, which already has lots of calls for money? Why shouldn't it come entirely from the fabulously wealthy investment business, which may have benefitted to the tune of hundreds of billions or even many trillions of dollars from the existence of SIPC insurance -- for which industry members paid the farcical sum of only $150 per year per member for a decade or more? How big would the SIPC fund itself get if, say, investment houses were required to pay one half percent of net revenues into the fund, or one percent of net revenues into it, for, say, ten years?
And just how has SIPC "demonstrated" that it has "sufficient resources for its statutory mission"? Hasn't any such demonstration been dependent upon the policy of screwing investors out of advances, so that relatively little money is paid out? Moreover, has SIPC told us the full story of why a consortium of banks refused to renew a line of credit to it? Did the banks possibly have concerns over what might happen in the markets and over SIPC's ability to repay them if disaster struck?
G. Here are two quick "semi-logistical" points.
SIPC says the average time period between the filing of a claim and the determination of the claim, for the 13,189 claims that have been determined already (out of a total of 16,374) is 7.55 months. It then gives a bunch of excuses for taking 7 months. But as you can see for yourself by reading the excuses (on pp. 6-7 of its answers), the lengthy time period, which contravenes Congress' intent for prompt payment, is due to use of CICO. CICO requires extensive calculation and work that is unnecessary under the FSM.
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