Loophole in government program to buy toxic securities could cost taxpayers
• LA TimesA 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. Critics of the program say that without adequate safeguards, traders could use the tens of billions of dollars provided by the government to manipulate prices and exploit the price swings in other trades. Because the government is providing 75% of the program's money -- $30 billion -- the manipulations could lead to significant losses by taxpayers. "It is a conflict by design," said Neal Barofsky, the special inspector general for the banking rescue program who has urged tighter controls on the nine trading firms selected to participate.
