Financial Fraud - Obama's White Elephant

[WhiskeyGirl]

Why isn't Financial Fraud being addressed by Obama's administration? 

Why do Americans, Main Street, and future generations keep getting stuck with the socialized losses, debt, Depression II, and job losses?

Paul Volcker, former Fed Chairman and current Chair of the President's Economic Advisory Board, made the most worthwhile comments. Moral hazard was not discussed in the open forums, so Volcker reminded the assembly. Yet even Volcker did not broach the topic of fraud.

Alistair Darling, Chancellor of the Exchequer, spoke on the opening evening. I asked him why massive financial fraud remained unaddressed. Darling appeared momentarily confused and seemed to suggest this was exclusively a U.S. problem to be handled by the courts. I pushed back on this notion. By the time one needs a lawyer, it is too late. I noted that we, the middle aged financiers in the room, are responsible for taking action. If we don't face this issue head on, we will never restore trust in the financial system.

Amazing logic!  White wash the paperwork and let the government investigate the emails! 

There is no trust, there is no fund.

Privatized profits & socialized losses…

Ana Botin, Banesto's Executive Chairman, suggested that the risk manager should report to the board. Then she blew it with the assertion--made several times--that the CEO can also be Chairman. (Ken Lewis defended his dual role as CEO and Chairman of Bank of America at a Fed conference in 2003. How did that work out?)

Not a problem.  Privatized profits & socialized losses…

Robert Diamond, president of Barlcays PLC, sounded like a financial holocaust denier. He seemed to think that the idea of breaking up banks has only to do with the threat to the financial system, if they fail. The point is that some of these institutions threatened the financial system--and continue to threaten the financial system--because they are too big to manage.

Diamond seemed to dislike the term "socially useless" to describe recent financial innovation and defended Barclays' proprietary trading. Since Barclays has dropped its suit involving its total return swap with Bear Stearns' imploded hedge funds, Diamond may have already forgotten this relevant example of financial innovation gone wrong. Hedge fund investors were wiped out, the hedge funds' dodgy assets landed on Bear Stearns's balance sheet, and later on JPMorgan Chase's balance sheet, after it acquired Bear Stearns. Our past crisis taught us that hedge funds are not independent of the banking system. This transaction wasn't merely socially useless, it had negative social utility.

Great…we have Barney on the job to help us.

Privatized profits & socialized losses…

More good reading here - http://www.marketoracle.co.uk/Article15795.html

[WhiskeyGirl]

Tavakoli has a web page that lays out the "Largest Ponzi Network In Financial History" here - http://www.tavakolistructuredfinance.com/

It's that simple!

She has a list of videos here - http://www.tavakolistructuredfinance.com/videos.html

[WhiskeyGirl]

Wall Street’s Fraud and Solutions for Systemic Peril
TSF Opinion Commentary – September 29, 2009
By Janet Tavakoli

…

…collapsing mortgage lenders paid high dividends to shareholders (old investors) and interest on credit lines to Wall Street (old investors) with money raised from new investors in doomed securities. New money allowed Wall Street to temporarily hide losses and pay enormous bonuses. This is a classic Ponzi scheme.

This seems to explain the connection to Madoff…

Sounds a lot like healthcare reform & the new CLASS entitlement...

By the end of 2006, public reports of implosions of large mortgage lenders eliminated CEOs’ plausible deniability. By January 2007, many (including me) publicly challenged the failure to account for losses. Instead, toxic securitization accelerated in the first half of 2007—classic malfeasance as a Ponzi scheme collapses. In August 2007, I projected hundreds of billions in principal losses for mortgage loans alone—not counting other troubled asset classes, derivative duplication, and leverage. Fed Chairman Ben Bernanke contemporaneously said mortgage loan losses would be $50‐100 billion.

Let’s keep Bernanke in office forever…

In the recent Ponzi scheme only the agents—mortgage lenders, rating agencies, fund managers, securitization professionals, CFOs, CEOs, and other fee or bonus beneficiaries—prospered. Controls and risk management were undermined. The financial institutions and their shareholders, for which these agents are failed stewards, collapsed. Investors in toxic securitizations lost money. Had regulators done their jobs, they would have shut down Wall Street’s financial meth labs, and the Ponzi scheme would have quickly choked to death from lack of monetary oxygen.

Lots more reading here - http://www.tavakolistructuredfinance.com/Fraud.pdf

Anyone publishing reports?  Looking at the bottom line?  Wondering where all the losses are going?

[WhiskeyGirl]

Ms. Tavakoli’s bad…apparently she missed a few things…

“…The Federal Reserve and the Treasury aided and abetted Goldman Sachs in committing financial and ethical crimes at an astounding level.”

Follow the money?

The job rotation?  Treasury?  Federal Reserve?  Congress? 

A marked deck of cards?

But Ms. Tavakoli fails to note that the collapse of the CDO bonds and the collapse of AIG were a deliberate strategy by Goldman. To realize on their bet against the housing market, Goldman needed the CDO bonds to collapse in value, which would cause AIG to be downgraded and lead to AIG posting collateral and Goldman getting paid for their bet. I am confident that Goldman Sachs did not reveal to AIG that they were betting on the housing market collapse.

The evidence is in the actions and NOT the emails?

Follow the money?

To help hasten the housing market collapse, Goldman ran a huge mortgage lending and issuance program with low quality loans virtually designed to fail, including dozens of deals backed by completely toxic non-prime second lien loans (these loans help pump up the housing bubble and let borrower’s suck the equity out of their homes)…

Goldman never wanted these CDOs to succeed – their bet depended on them failing. This is why they used AIG as their insurer – AIG posted collateral, which enabled Goldman to still get paid even when AIG inevitably got downgraded for taking on such toxic deals.

Goldman, the grim (yet giddy) reaper of Wall Street?

More good reading here - http://beforeitsnews.com/story/0000000000001593

Where is Holder on all this?

Doesn’t Obama work for Main Street?  All the little people, in tacky houses, without jobs, and driving old belching cars (because they are too poor to buy a new one, even with cash for clunkers)?

Which side is the Obama administration on?

Who’s on the side of everyday non Wall Street Americans?

[WhiskeyGirl]

Apparently, healthcare reform masked all this news and analysis...

Goldman Fueled AIG Gambles
Wall Street Titan's Role Shown in Journal Analysis; Firm Says Problems Hidden

Goldman charged more than AIG for the protection, so it was able to pocket the difference, making millions while moving the default risks to AIG, according to people familiar with the trades.

 

I seem to recall that months ago, Goldman got itself hooked up with health insurers, brokers...iirc.

When Goldman didn't get as much collateral as it wanted from AIG, in 2007 and 2008 it bought protection against a default of AIG itself from other banks.

AIG officials were skeptical of the prices Goldman presented, according to the minutes of a February 2008 AIG audit committee meeting, which noted that Goldman was "unwilling or unable to provide any sources for their determination of market prices."

No more blood in the turnip?  Privatized profits...socialized losses?  US taxpayer pennies up?

more good reading here - http://online.wsj.com/article/SB10001424052748704201404574590453176996032.html?mod=rss_com_mostcommentart

[WhiskeyGirl]

Bank on little change
By Martin Hutchinson

It must surely have become obvious from both the catastrophes of 2008 and the bumper profits of 2009 that the investment banking/trading business, whether through independent behemoths or within even larger commercial banks, simply isn't working.

Now that "too big to fail" bailouts by taxpayers have been established, risk management in the industry is a joke. Thus the Basel Committee on Banking Supervision's recommendation last week that banks suffering capital shortfalls should be forced to stop paying bonuses is a welcome opening salvo in a new struggle. That struggle is to force investment bankers' remuneration back towards a partnership system. Investment bankers must suffer in their pocketbooks from disasters, and rent-seeking rip-offs of the taxpayers and the general economy must be minimized.

It has now become clear that risk management as practiced by investment banking operations is not merely ineffectual; it is a diversionary fig-leaf. Using it, management can pretend to regulators that risks are being managed. That allows them to leverage to ever-more excessive levels and take ever-more exotic risks through securitization, extreme derivatives and credit default swaps.

Before 2008, there was a certain restraint about this because losses would fall on shareholders, and managers worried that their careers might be destroyed by failure. Now that it is obvious that state bailouts will be available in a disaster and most careers will be safe, the downside risk for investment bank management has been minimized.

more reading here -
http://www.atimes.com/atimes/Global_Economy/KL23Dj01.html

My financial ignorance...don't know what the Basal Committee is.

Here is a link - http://www.bis.org/bcbs/

another Basal article - http://www.ft.com/cms/s/0/37979244-ee68-11de-944c-00144feab49a.html

This one makes the large, big bank GLOBAL banking industry look like a house of cards, wild con game, casino gambling...

Always a danger and threat to the community and citizens of every nation.