Monday Reads
Posted: December 5, 2011 Filed under: Crime, Economy, financial institutions, Foreign Affairs, investment banking, Japan, morning reads 28 Comments
Good Morning!!
One of the few television shows I actually watch regularly these days is Criminal Minds. The profiling activities fascinate me. I’ve actually passed on my addiction to BostonBoomer who sent me this CBS story which sounds like something right off of their series. A young woman was abducted by a very disturbed young man and was successfully returned to her family in Kearney, Nebraska. Gotta love a happy ending!
Kidnapping victim Anne Sluti came home Friday, a week after the 17-year-old was whisked away from a local mall parking lot and kept hostage hundreds of miles away in Montana.
With a bruise under her right eye and an FBI baseball cap on her head, Sluti stepped off a private jet with her parents and brother. A small group of family members and friends shrieked with excitement.
“Thank God she’s alive,” said her aunt Sue Daniel. She placed a sign in the dashboard of her minivan that showed a happy face and said “Welcome Home, Anne.”
“I’m just happy to get back home,” Sluti said earlier in the day as the family prepared to leave Kalispell, Mont. “I want to thank everyone who helped me get home safely.”
Remarked her mother, Elaine Sluti, “Someone at the hotel said to me this morning, ‘Have a good day.’ Believe me, we are having a very good day.”
We knew there was a major cover up on the Fukushima melt down. Here’s a Guardian story that indicates that the fuel rods may have completely melted down. Scary stuff. This time reality mimics the move The China Syndrome.
Fuel rods inside one of the reactors at the Fukushima Daiichi nuclear power plant may have completely melted and bored most of the way through a concrete floor, the reactor’s last line of defence before its steel outer casing, the plant’s operator said.
Tokyo Electric Power (Tepco) said in a report that fuel inside reactor No 1 appeared to have dropped through its inner pressure vessel and into the outer containment vessel, indicating that the accident was more severe than first thought.
The revelation that the plant may have narrowly averted a disastrous “China syndrome” scenario comes days after reports that the company had dismissed a 2008 warning that the plant was inadequately prepared to resist a tsunami.
Tepco revised its view of the damage inside the No 1 reactor – one of three that suffered meltdown soon after the 11 March disaster – after running a new simulation of the accident.
It would not comment on the exact position of the molten fuel, or on how much of it is exposed to water being pumped in to cool the reactor. More than nine months into the crisis, workers are still unable to gauge the damage directly because of dangerously high levels of radiation inside the reactor building.
If you haven’t read Eliot Spitzer’s article on Slate about the $7 trillion secret loan program, you really should. It is also something that seems more Hollywood than reality. Spitzer is calling for perp walks.
During the deepest, darkest period of the financial cataclysm, the CEOs of major banks maintained in statements to the public, to the market at large, and to their own shareholders that the banks were in good financial shape, didn’t want to take TARP funds, and that the regulatory framework governing our banking system should not be altered. Trust us, they said. Yet, unknown to the public and the Congress, these same banks had been borrowing massive amounts from the government to remain afloat. The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation. $460 billion was lent to J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley alone—without anybody other than a few select officials at the Fed and the Treasury knowing. This was perhaps the single most massive allocation of capital from public to private hands in our history, and nobody was told. This was not TARP: This was secret Fed lending. And although it has since been repaid, it is clear why the banks didn’t want us to know about it: They didn’t want to admit the magnitude of their financial distress.
The banks’ claims of financial stability and solvency appear at a minimum to have been misleading—and may have been worse. Misleading statements and deception of this sort would ordinarily put a small-market player or borrower on the wrong end of a criminal investigation.
Spitzer cites this Bloomberg Analysis which is something we’ve looked at before but bears a second viewing. After stabilizing the financial system, every effort should have been made by regulators and the current administration to purge the financial industry of toxic senior management. They also should have taken over some of the huge banks and sliced and diced them into more appropriately sized regional banks. None of this actually happened, however if you read Confidence Men, you’ll see that it wasn’t for Sheila Baer’s lack of trying and it was actually the original concept supported by Obama. The Geithner Treasury evidently ran all kinds of end run plays to stop this from happening. Geithner continually proves that his loyalties are to huge financial institutions.
… the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.
Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.
For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.”
Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.
“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”
Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.
This is completely unacceptable. It is one thing for the FED to help stabilize the financial system, it’s another one for the Treasury to ignore the requests of the President and to prevent a key regulator–FDIC in this case–from doing its job. The other culprit identified in the Confidence Men narrative is Rahm Emmanuel. The narrative on Obama and Baer’s desire to shut down Citibank and the obfuscation from Geithner and Emmanuel is the stuff of movies focused on government conspiracies.
One of the plotlines in Ron Suskind’s Confidence Men concerns the various bureaucratic and substantive moves through which Tim Geithner and Rahm Emmanuel dissuaded the president from ordering the seizure and shutdown of Citigroup. The story starts with the fact that Larry Summers and Christina Romer, who were sympathetic to the idea, lacked the staff resources to develop a plan for doing it, while Geithner, who had the staff, thought it was a bad idea. Sheila Bair also had the staff, and also wanted to go ahead, but was out of the loop:
But when it came to controlling information, there was one area in which Geithner’s office had been successful. Key disclosures of what actually happened in the March 15 “showdown” never leaked. Bair didn’t know, and never found out, that the president had been trying to push forward what the FDIC chairwoman was recommending. He wasn’t successful, either. Alan Krueger said one reason Treasury dragged its feet on a constructing a plan for Citigroup’s resolution was Sheila Bair. They would have had to consult the FDIC chairwoman. After all, her agency is in the business of closing banks. “The fear was that Sheila would leak it,” Krueger said, in a comment echoed by others at Treasury. “And there’d be a run on Citi.” He added that this was one of many reasons: “It was more than just that. The bottom line is Tim and others at Treasury felt the president didn’t fully understand the complexities of the issue, or simply that they were right and he was wrong, and that trying to resolve Citi and then other banks would have been disastrous.”
Krueger, for one, disagreed, and that very day he was due to have lunch with someone uniquely suited to edify him about the resolution of troubled banks: Andrea Borg, the Swedish finance minister.
It seems that many West Wing technocrats are much more interested in their post-DC careers than their current duties and responsibilities to US law. I’ve said many times that were in a much better position for a major and uncorrectable meltdown–much like the Japanese Fukushima plant–should these circumstances continue. The vulnerability of the nation’s largest banks to any kind of contagion is substantial. Their ability to bring down the payments and credit system is fully understood by the FED who instigated more money floodgate opening last week to aid those same banks with that same senior management muck their way through the Eurozone crisis. Any private institution that has had to call on the Government for that much assistance doesn’t deserve to be in business. We shouldve GM’d them all.
Here’s a link to CBS and last night’s 60 minutes (h/t Elizabeth Warren) on Prosecuting Wall Street.
Two whistleblowers offer a rare window into the root causes of the subprime mortgage meltdown. Eileen Foster, a former senior executive at Countrywide Financial, and Richard Bowen, a former vice president at Citigroup, tell Steve Kroft the companies ignored their repeated warnings about defective, even fraudulent mortgages. The result, experts say, was a cascading wave of mortgage defaults for which virtually no high-ranking Wall Street executives have been prosecuted.
So, that’s my little contribution to the discussion this morning. What’s on your reading and blogging list this morning?
More Congressional Sleaze: Boehner and Cantor own stock in Goldman Sachs
Posted: November 23, 2011 Filed under: investment banking | Tags: Bohenr, Cantor, Congress members who own Goldman Sachs Stock, corruption, Fraud, Goldman Sachs, Ryan 7 CommentsSeth Cline of Open Secrets Blog reports some extremely disturbing connections between Congressional leaders and Goldman Sachs. I think it’s time for a law that places congressional investment accounts into a blind trust.
According to research by the Center for Responsive Politics, 19 current members of Congress reported holdings in Goldman Sachs during 2010. Whether by coincidence or not, most of these 19 Goldman Sachs investors in Congress are more powerful or more wealthy than their peers, or both.
Nine of them sit on either the most powerful committee in their chamber or committees charged with regulating the Wall Street giant. Moreover, seven of them are among the 25 wealthiest members of their respective chambers, according to the Center’s research.
And of the six lawmakers who fall into neither category, two are the most influential Republicans in the U.S. House of Representatives: House Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.).
Altogether, the 19 had at least $480,000 and as much as $1.1 million invested in Goldman Sachs in 2010, the most recent year personal finance data are available. That’s an average of about $812,900 for these 19 lawmakers’ holdings combined.
Lawmakers are only required to report their personal assets and liabilities in broad ranges, meaning it’s impossible to know the precise value of these holdings. The Center uses the minimum and maximum values listed on the filings to calculate an average value for each asset and liability.
But these financial interests are not a one-way street: Goldman Sachs employees and its political action committee have contributed about $124,000, combined, to a dozen of the lawmakers who reported holdings in the company in 2010, according to the Center’s research. This includes all money given during the 2010 election cycle and thus far in 2011.
So, not only do Boehner and Cantor get donations from Goldman Sachs, they are also stock holders. No wonder they want to get rid of the Volcker Rule. Looks like Paul Ryan is an investor also.
In the leadership category are names such as Boehner and Cantor, each of whom has an average $32,500 invested in Goldman.
Goldman Sachs’ employees, meanwhile, have also contributed heavily to Boehner and Cantor.
Boehner has received $29,500, and Cantor $48,000, from them since 2009, according to the Center’s research.
Other Goldman investors with this kind of power include two members of the Joint Select Committee on Deficit Reduction, better known as the debt supercommittee.
The first, Sen. Jon Kyl (R-Ariz.), reported $1,177 invested in Goldman in 2010, and, as minority whip, is the second highest ranking Republican in the Senate.
And not only is Kyl a member of the supercommittee and party leadership, he also sits on the Senate Finance Committee, which regulates Goldman Sachs and its peers on Wall Street.
Another one of Kyl’s colleagues on the supercommittee, Rep. Fred Upton (R-Mich.), is also a Goldman investor.
Upton had an average of $8,000 invested in the company in 2010, according to the Center’s research.
Rep. Paul Ryan (R-Wis.), is another influential Goldman shareholder in Congress.
Ryan sits on two very important House committees: the Budget Committee, which he chairs, and the Ways and Means Committee.
Ryan reported an average of $8,000 invested in Goldman and has received $5,800 from the company’s employees so far this year after receiving $10,000 from them during the 2010 cycle, according to the Center’s research.
One of Goldman Sachs’ most valuable congressional investors is Rep. Randy Neugebauer (R-Texas), whose average of $550,000 in investments in the company is far and away the most in Congress.
Additionally Neugebauer sits on the House Financial Services Committee, which oversees Wall Street and the securities and investment industry of which Goldman is a part.
That also helps explain the $9,500 Goldman Sachs employees have contributed to Neugebauer since January 2009 through the company’s political action committee.
Rep. Gary Peters (R-Mich.) is another Goldman Sachs investor on the Financial Services committee. He has an average of $8,000 invested and has received $4,500 from the company this year from its PAC.
There’s a substantial list of Republicans listed that I didn’t include in the list above.. Democrats holding GS stock include Sens. Ben Nelson (D-Neb.), Claire McCaskill (D-Mo.), Sheldon Whitehouse (D-R.I.) and Sen. Mark Warner (D-Va.). The details are on a spreadsheet here.
Can you really believe that they’re acting in our best interest when their wealth is vested in stopping GS from doing suspect things like selling lemons to clients and placing side bets that the lemons lose? I sure don’t. The Volker Rule places trading restrictions on institutions like GS. It controls the types of transactions that GS can do in its proprietary trading like the example I just gave you. They settled fraud charges in the US with the SEC and are under investigation in the UK and some of Europe. You may recall the unit and testimony before congress. The US settlement came in 2010. That’s the same year that these holdings were found by the Center for Responsive Politics.
The FSA opened its investigation into the bank in April after the SEC charged Goldman with misleading investors in a complex mortgage-backed security known as Abacus. The SEC claimed that Goldman had failed to disclose that a hedge fund that was betting against the security had selected some of the mortgage loans included in the portfolio, costing investors as much as $1bn.
The largest fine handed down by the UK regulator came three months ago, when JPMorgan paid a £33.3m for failing to keep client money in separate accounts.
Goldman, the world’s best-known investment bank, has seen its reputation tarnished in recent months as questions continue to swirl over whether it favoured the interests of some clients at the expense of others during the financial crisis.
The bank’s business model is also under pressure amid volatile markets and regulatory reforms that have forced it to shut some of its highly profitable “proprietary” trading operations.
No wonder we don’t see perp walks. These folks have skin in GS. We are so f’d.
Let’s Hear It For the Girl
Posted: November 15, 2011 Filed under: Banksters, Democratic Politics, Economy, Elizabeth Warren Campaign, Feminists, income inequality, investment banking, Media | Tags: Democratic party, Elizabeth Warren, Financial Crisis, Wall Street Reform 10 CommentsElizabeth Warren, the Woman Who Would Throw Stones, The Matriarch of Mayhem, the Socialist Whore [according to an irate party crasher] dedicated to turn your first born into a Marxist revolutionary and the woman who dares to run for the late Ted Kennedy’s Senate seat in Massachussets has produced her first political ad. Ooooo, scary!
Now think about the ads Karl Rove’s outfit, Crossroads GPS, has run against Elizabeth Warren–the attacks, the baseless accusations. This straightforward introduction is a breath of fresh air. And that is why Elizabeth Warren is so very dangerous.
Let’s hear it for the girl!
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