Eighteen months ago, banks were throwing money around with very little discretion. Now we find that they made a lot of bad loans, took extreme risk and jeopardized the global economy and the well being of hundreds of millions of people.

All this was supported by a simple minded president, corrupt Congress and an over-confident, short sighted investment community maneuvering in and around a sleeping Securities and Exchange Commission.

Having invested in a broad range of real estate assets (as well as stocks), I am feeling the pain like most everyone else. Reduced values, tighter liquidity, and uncertainty rule the market place.

What has me steamed currently is that I think there is more capital in the marketplace than courage! The lack of courage along with a shortage of leadership and wisdom continues to exacerbate a bad situation. I am probably better off than many people having been able to close two loans in the past month. It was not easy. However, after dealing with many financial institutions that are now doing a better job in the review process, I see that they have swung too far to the conservative side.

If you have an ADR for Japanese electronics giant NEC, save it as a collectible. In light of the SEC's recent decision to revoke NEC's securities registration in the U.S., there will not be any more of those ADRs. NEC ran afoul of U.S. listing requirements when it failed to file annual reports for 2006 and 2007, and improperly booked revenues for 2000-2006. NEC was also the victim of internal fraud when at least 10 emplyees, over a period of several years, booked millions of dollars worth of fraudulent transactions. NEC had no procedures in place to authenticate or track these transactions.

To be fair to NEC, recognizing software sales revenue up front in complicated under GAAP SOP 97-2, particularly when the software is sold as part of a service package that also includes hardware and/or software maintenance. But NEC was responsible for taking steps to see it was not being robbed blind from within. NEC was delisted from active trading on Nasdaq in November 2007. NEC neither accepted nor disputed the SEC decision. The company has also been under investigation by the Tokyo Regional Taxation Bureau. NEC states it has constructed sufficient internal controls to cut back on the potential for internal fraud. Too little, too late. The stock now trades on the pink sheets.

Last week, I wrote about the SEC's horrible new rule making it easier for companies to keep outside candidates for director off the ballot.

But after Gary Weiss chastised SEC Chairman Chris Cox and the media for not paying attention, I had to return to the topic. Weiss's comments are right on:

... the media has been comparatively silent over the SEC's capitulation to corporate lobbyists, such as the Business Roundtable and U.S. Chamber of Commerce ... Chris Cox, very much a "politician" as Gretchen points out, is blowing with the wind -- which is an utter indifference to investor rights in the Bush administration.

Bank of America (NYSE: BAC) volatility at 23 into 3Q net income decline of 32% to $3.7 billion. BAC is recently trading at $48.46 in pre-open trading, below Wednesday's close of $50.03. BAC reported Q3 EPS of 82 cents vs. consensus estimates of $1.05. BAC November option implied volatility of 23 is near 26-week average of 21 according to Track Data, suggesting non-directional risk.

Countrywide (NYSE: CFC), a U.S. home mortgage lender, closed Wednesday at $17.35. The Wall Street Journal says "The Securities and Exchange Commission has opened an informal investigation into stock sales by CFC's CEO, according to people familiar with the matter." CFC Chairman, CEO & founder is Angelo Mozilo. CFC is expected to report EPS on 10/26. CFC November option implied volatility of 74 is above its 26-week average of 59 according to Track Data, suggesting larger risk.

Apple (NASDAQ: AAPL) is recently down $1.24 to $171.51 in pre-open trading. AAPL will report Q4 EPS on October 22. AAPL November option implied volatility of 54 is above its 26-week average of 43 according to Track Data, suggesting larger price movement.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Last week one of our bloggers, Kevin Kersten, noticed something a little strange about call options on Dow Jones. Mr. Kersten did a little research and noticed that there was some pretty intense buying of Dow Jones on the day before News Corp. (NYSE: NWS) announced it had made a bid to buy Dow Jones & Co. (NYSE: DJ). Well, it looks like Mr. Kersten was not the only one doing his homework as news has come out that federal and state authorities are investigating suspicious options trading.

Dow Jones announced yesterday that it had been sent a subpoena from the New York attorney general's office and also a request from the Securities and Exchange Commission regarding options trading. This comes after news last week that the other company involved, News Corp., had received a subpoena from Cuomo's office and an inquiry from the SEC.

As Douglas McIntyre pointed out yesterday, the possible deal between the two companies now appears to be falling apart, but on the day of the deal announcement buyers flocked into Dow Jones and pushed shares up over 54%. Shareholders of the stock had to feel pretty good about their investments on that day, but not nearly as good as the lucky ones that actually owned call options on the stock. These investors made a killing on that day, but as Mr. Kersten pointed out, questions were immediately swirling around insider trading information.