It has been a day of firsts, folks.
Today we not only found ourselves nodding along with a Wall Street Journal editorial, but an editorial siding with Andrew J. Hall, the castle-owning commodities trader fighting for his $100 million payday.
And about those "regulators":
In Phibro and Citi, we can see writ small the debate over financial regulation that took place inside the Obama Administration. Former Fed Chairman Paul Volcker has been warning for months that such proprietary trading is incompatible—and intolerable—with a taxpayer guarantee against failure. But he was opposed by the Obama Treasury, White House powerhouse Larry Summers, not to mention the ghost of former Treasury Secretary and Citigroup exec Robert Rubin and most of Wall Street.
It has been a day of firsts, folks.
Today we not only found ourselves nodding along with a Wall Street Journal editorial, but an editorial siding with Andrew J. Hall, the castle-owning commodities trader fighting for his $100 million payday.
And about those "regulators":
In Phibro and Citi, we can see writ small the debate over financial regulation that took place inside the Obama Administration. Former Fed Chairman Paul Volcker has been warning for months that such proprietary trading is incompatible—and intolerable—with a taxpayer guarantee against failure. But he was opposed by the Obama Treasury, White House powerhouse Larry Summers, not to mention the ghost of former Treasury Secretary and Citigroup exec Robert Rubin and most of Wall Street.
It's a compelling, comforting storyline.
The stock market is enjoying a bungee-cord bounce the likes of which have not been seen since the '70s, the housing market appears to be reviving, and economic green shoots may be starting to sprout from the fiscal fertilizer the government has spread around.
Not so fast.
Wall Street economists and analysts say they are now bracing for the second wave of the credit crisis, another tsunami of poisonous loans that could swamp the banks and a still floundering economy.
Prices in the $3.5 tn U.S. commercial real estate have fallen about 39% from the peak in mid 2007, according to the Massachusetts Institute of Technology's Center for Real Estate, with no signs of the plunge stopping.
The 39% drop in commercial real estate prices has already eclipsed the 27% decrease during the S&L crisis of the late '80s to early '90s. And losses from commercial property loans for housing complexes, strip malls, office buildings, hotels
As with Bernie Madoff, we must take it on faith that Goldman is honest and ethical. Goldman Sachs, like Bernie Madoff, wouldn't cheat anyone out of a dime - or even a fraction of a penny, ala Superman 3. There is no need for the SEC to waste Goldman's time.
Going after Goldman will get a person fired. Larry Summers forced out an Administration official who started asking questions about Goldman Sachs and other Wall Street firms.
Joseph Facciponti and the Department of Justice arrested a man, 48-hours after Goldman called them (does Goldman Sachs have a "bat phone"?) to report that an employee might have stolen some computer code. Facciponti commited fraud on the court to do Goldman's bidding. After intense media attention, Goldman Sachs told Facciponti to make the Aleynikov prosecution go away; Facciponti complied.
Unlike Bernie Madoff, Goldman Sachs will never be punished. They are too mobbed up. Goldman's investment in public officials is paying
First report by Obama administration details slow, uneven performance by firms implementing $75 billion mortgage modification program.
Just 9% of delinquent borrowers are in trial modifications so far, the Treasury Department said Tuesday. That translates into 235,247 loans that were at least two months delinquent.
Under fire for the program's rocky start, the Obama administration says it is on pace to help up to four million homeowners over the next three years. The initiative was announced in February and the first institutions to join began accepting applications in April.
I will believe it when I see it...
Sen. Charles Schumer, D-N.Y., said Tuesday that the Securities and Exchange Commission plans to ban so-called "flash trading," where high-frequency traders can get information just before it becomes public.
"We salute the SEC for moving forward with this ban that will restore integrity to the markets. The agency is absolutely making the right call by stepping up and ending this unfair practice," Schumer said.
Flash orders are trades that flash in milliseconds to only a select group of market participants which can disadvantage other investors. Traders with access to the information because of super-fast computers can act on it quickly to trade ahead of other traders, influencing the pricing of stocks.
The markets are on a roll, but it's still a tad early for Treasury Secretary Tim Geithner to be counting his bailout winnings.
Geithner said this past weekend that taxpayers have made a small profit on their investments in banks via the Troubled Asset Relief Program. "We've already earned about $6 billion for the taxpayer on those investments," Geithner said Sunday on ABC's "This Week."
Pollock said it's impossible to assess the profitability of TARP without a robust and systematic accounting of the program's costs, including interest expense and overhead.
Others have reached similar conclusions. Gary Engel, director of financial management and assurance at the Government Accountability Office, was asked at a hearing last month whether he views the stream of dividends into Treasury as a profit for taxpayers. "Not at this point," he said
One of the things they teach in Successful Investing 101 is to cut your losses short and let your winnings run. But when it comes to the Troubled Assets Relief Program, the government is stuck doing the opposite. Its gains are being cut short, because its most profitable investments are being closed out, yet its losses will continue running.
The big gains come from stock-purchase warrants that Congress insisted the Treasury get as part of the $244 billion of TARP loans it made to 662 banks and bank holding companies. Warrants, which give holders the right (but not the obligation) to purchase stock at a fixed price for a fixed period, are designed to offer taxpayers a chance to make some serious money if the stock prices of the bailed-out banks rise.
In this recent article, Some U.S. bank pay "unmoored" from performance: Cuomo
By Grant McCool of Reuters, Jul 30, 2009 7:22pm the reporter makes the comment,
..."bonuses for Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co were "substantially greater" than the banks' net income."
Goldman earned $2.3 billion, paid out $4.8 billion in bonuses and received $10 billion in TARP funding,...
How is it any company can pay out more in bonuses then they earn? One way is to use taxpayer money. New York's AG, Cuomo is on the right path in this investigation but the outcome of his efforts are yet to be seen or heard.
But Goldman Sachs is not alone in this. Yet it is very possible from reading Michael Lewis' book "Liars Poker" that they may have invented the concept of overpaying people and then found ways to justify it which in turn they possibly shared with the others in their "club".
Is it a coincidence that Pa
Call it another sign that fear is out, greed is back, and we have entered the new post-crisis era. Subprime Stan is back on Wall Street, after less than three years away.
Stanford "Stan" Kurland, the Countrywide Finance executive who pocketed more than $140 million at the expense of outside investors at the height of the subprime mania, has raised about $300 million from fresh investors for his latest venture -- trying to profit from the crisis.
His PennyMac Mortgage Investment Trust (PMT) made its stock-market debut last week
The name of the game: Distressed mortgages, particularly the kind of troubled subprime loans that Countrywide used to make.
I guess this kind of behavior it is to be expected from the do as I say not what I do no class trash in government. Smoke and mirrors anyway since the so called regulations of Obama's Economic Regulations Are Like a Law Which Makes Arson Illegal, But Exempts Convicted Arsonists.
Treasury Secretary Timothy Geithner blasted top U.S. financial regulators in an expletive-laced critique last Friday as frustration grows over the Obama administration's faltering plan to overhaul U.S. financial regulation, according to people familiar with the meeting.
The proposed regulatory revamp is one of President Barack Obama's top domestic priorities. But since it was unveiled in June, the plan has been criticized by the financial-services industry, as well as by financial regulators wary of encroachment on their turf.
The more alert blogs have finally figured out how Goldman Sachs, et. al. are creating enormous trading profits, especially at a time when trading volumes in most securities have seriously declined. These Wall Street firms are buying toxic, illiquid garbage which institutional investors (read: your pension fund or insurance company) have marked at low levels (yet still not low enough) and selling these securities into the Fed at the Fed's inflated bid levels. This is one way in which the Fed is injecting liquidity into the big banks - at the taxpayers' and pension investors' expense. It is also a primary reason the Fed refuses to disclose what it its paying for these toxic assets and why the Fed is spending millions in lobbying to prevent an audit.
Here's the mechanics, and it's a trading ruse that was being used when I was trading junk bonds back in the 1990's: Naive pension fund has toxic crap asset marked down to 20 cents. Snake Wall Street firm has bid from
The more alert blogs have finally figured out how Goldman Sachs, et. al. are creating enormous trading profits, especially at a time when trading volumes in most securities have seriously declined. These Wall Street firms are buying toxic, illiquid garbage which institutional investors (read: your pension fund or insurance company) have marked at low levels (yet still not low enough) and selling these securities into the Fed at the Fed's inflated bid levels. This is one way in which the Fed is injecting liquidity into the big banks - at the taxpayers' and pension investors' expense. It is also a primary reason the Fed refuses to disclose what it its paying for these toxic assets and why the Fed is spending millions in lobbying to prevent an audit.
Here's the mechanics, and it's a trading ruse that was being used when I was trading junk bonds back in the 1990's: Naive pension fund has toxic crap asset marked down to 20 cents. Snake Wall Street firm has bid from
In a few weeks, the Treasury Department's czar of executive pay will have to answer this $100 million question: Should Andrew J. Hall get his bonus?
Mr. Hall, the 58-year-old head of Phibro, a small commodities trading firm in Westport, Conn., is due for a nine-figure payday, his cut of profits from a characteristically aggressive year of bets in the oil market.
There is little doubt that Mr. Hall is owed the money under his contract. The problem is that his contract is with Citigroup, which was saved with roughly $45 billion in taxpayer aid
We are six months into the Obama reign, and he surely did have a good thing going until very recently. He pushed through what voters thought was a stimulus bill. He held numerous press conferences at which an adoring media allowed him to display his rhetorical skills. No mumbling George W. Bush, he. He toured the world, to the applause of adoring masses from London to Paris to Cairo. He fulfilled a campaign promise to tackle perceived global warming and lead the world to a cooler, greener future by urging Congress to pass a cap-and-trade bill aimed at cutting CO2 emissions. He bailed out General Motors and Chrysler, rewarding the United Auto Workers for delivering key states to him in last year's election.
Then he made the mistake about which Sondheim wrote and Sinatra sang -- he wanted too much. He attempted to push through Congress a so-called reform of the nation's health care industry -- a $1 trillion restructuring that would turn effective control of one-sixth of the ec
Americans are streaming back into auto showrooms, and one reason is the “cash for clunkers” subsidy. Democrats are naturally claiming this is a great success, while Republicans are claiming that because the program has run out of clunker cash so quickly, this proves government can’t run the health-care system. How do we elect these people? What the clunker policy really proves is that Americans aren’t stupid and will let some other taxpayer buy them a free lunch if given the chance.
All of Washington professes to be surprised that the $1 billion allocated to the subsidy has been used up so quickly, but giving away money is one thing government knows how to do. The Clunkers who are in Congress are now patting themselves on the back for their great success, and the House quickly voted to pass out another $2 billion in clunker coupons. With a $1.8 trillion budget deficit, who’s going to notice this pocket change?
Clearly, we spoilsports need an attitude adjustment to Washington’s ne
Goldman Sachs' reputation among both the general public and financially sophisticated Americans has been damaged by the events of the past year. Meanwhile, Goldman shares look set to open around $165 today, over 300% off their lows from the crisis. If this reputational hit mattered, nobody bothered to tell paid-up Goldman Sachs shareholders.
The report doesn't quantify the decline, but we can surmise that it's significant.
Want another shocker? Barack Obama has received more from one source–Goldman Sachs $542,252.00–than McCain has from all of the companies combined. Who the hell is more beholden to lobbyists? And why does a junior Senator from Illinois rate this kind of dough?
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
Behind Democrats’ struggle to pay the $1 trillion 10-year cost of President Obama’s promise to overhaul the health care system is their collision with another of his well-known pledges: that 95 percent of Americans “will not see their taxes increase by a single dime” during his term.
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Stephen Crowley/The New York Times
President Obama has promised that 95 percent of Americans “will not see their taxes increase by a single dime” in his term.
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This will not be the last time that the president runs into a conflict between his audacious agenda and his pay-as-you-go guarantee, when only 5 percent of taxpayers are being asked to chip in. Critics from conservative to liberal warn that Mr. Obama has tied his and Congress’s hands on a range of issues, including tax reform and the need to reduce deficit
Behind Democrats’ struggle to pay the $1 trillion 10-year cost of President Obama’s promise to overhaul the health care system is their collision with another of his well-known pledges: that 95 percent of Americans “will not see their taxes increase by a single dime” during his term.
Enlarge This Image
Stephen Crowley/The New York Times
President Obama has promised that 95 percent of Americans “will not see their taxes increase by a single dime” in his term.
Blog
The Caucus
The latest on President Obama, the new administration and other news from Washington and around the nation. Join the discussion.
More Politics News
This will not be the last time that the president runs into a conflict between his audacious agenda and his pay-as-you-go guarantee, when only 5 percent of taxpayers are being asked to chip in. Critics from conservative to liberal warn that Mr. Obama has tied his and Congress’s hands on a range of issues, including tax reform and the need to reduce deficit
Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.
The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.
However, the Fed is not a typical market player. In the interests of transparency, it often announces its intention to buy particular securities in advance. A former Fed official said this strategy enables banks to sell these securities to the Fed at an inflated price.
Obama's regulation of credit default swaps leave loopholes large enough to drive the biggest trucks through. Specifically, it forces over-the-counter credit default swap transactions to be traded through an exchange unless it is a non-standard cds. So all that the "financial innovators" who melted down the economy have to do is get a little creative in drafting their cds' - or just to tell regulators "oh no, that wasn't a standard contract", and they are excepted from the regulation.
Similarly, the Obama administration has just passed a new set of regulations "getting tough" on the naked short selling of stocks, which independent economists say can manipulate stock prices and bring down otherwise healthy companies.
But the regulation will exempt hedge funds, and allow them to continue hiding their shorts from regulators.
Eleven months into the massive, $182.5 billion taxpayer bailout of ailing insurance giant AIG, the company appears to be foundering in a stormy sea of bungled deals, consultants run amok and a lack of senior management.
Stymied in its attempts to gain information on how taxpayer money is being spent, Congress is expected to send a team of investigators to AIG's New York offices tomorrow to begin a probe into the most costly corporate tragedy in American history.
The company has failed to disclose its spending since September on more than 3,000 consultants who have produced 53.6 million pages of documents pertaining to AIG's accounting alone
No wonder they want to let Grandma and Grandpa Die!
Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout.
Guaranty Bank is hardly a household name. But the Austin, Texas-based thrift's looming failure is shaping up as a big headache for bank supervisors -- not to mention a black eye for Carl Icahn and others in the smart money set.
Guaranty (GFG) could be soon seized by the government in what would be the biggest bank failure in a year that has already had 64 of them. Last week, the bank warned investors to expect a federal takeover after regulators forced a writedown of its risky mortgage investments and a bid to raise new capital failed.
Banks, take the blue pill. Public, please take the red pill. If I had to characterize the current economic environment, it would have to consist of two completely different sets of beliefs. On one hand, you have banks and Wall Street receiving massive bailouts from the U.S. Treasury and the Federal Reserve, bailouts of the magnitude that would gear up for a Great Depression and imply that the banking system of our country is insolvent. Then on the other hand, you have Wall Street and the crony banks trying to convince the public that this is a minor recession and all will be well in Q3 and Q4 of 2009. The problem of course is that this is not your typical recession yet the public is being led to believe that all is well while bailouts are being dolled out by the truckload to the wrong locations. The actions we are taking keeps in place the banking oligarchy and sacrifices the public under the guise that this is good medicine for the general economy.
Nothing proves this point bet
Without Uncle Sam, the economy looks way worse..
Today's better-than-expected -1% GDP was tempered, somewhat, by the staggering 11% spike in Federal Government spending (hello stimulus!). Today's chart looks back at the Y/Y GDP change with the same number sans government spending. As you can see from the divergence, the government boost provides a big help.
Even when their profits dried up and they turned to taxpayers to stay afloat, the nation's biggest banks kept paying huge bonuses. But much of the money went not to top executives, but to star traders and salesmen, even as the economy battled through the worst recession in a generation.
The dozens of insurance companies that make up the American International Group show signs of considerable weakness even after their corporate parent got the biggest bailout in history, a review of state regulatory filings shows.
Over time, the weaknesses could mean trouble for AIG’s [AIG 13.0198 -0.1102 (-0.84%) ] policyholders, and they raise difficult questions for regulators, who normally step in when an insurer gets into trouble. State commissioners are supposed to keep insurers from writing new policies if there is any doubt that they can cover their claims. But in AIG’s case, regulators are eager for the insurers to keep writing new business, because they see it as the best hope of paying back taxpayers.
One of the many mysteries swirling around high-frequency trading is just how profitable the lightning-fast buying and selling of stocks, options and commodities really is. Most prefer to say simply nothing on the subject, leaving us in a very dark pool on the issue of high-frequency profits.
To be fair, Goldman Sachs (GS.N) recently came out and said "even using the broadest definition, high-frequency shares trading accounted for less than one percent of Goldman Sachs' total revenue in the first half of 2009."
But Goldman is talking only about high-frequency trading of stocks, not options and commodities. In options trading alone, Goldman's algorithmic-driven platform is estimated by a market source to account for 15 percent of the daily trading volume.
Andrew Cuomo has once again turned the bright glare on Wall Street bonuses, giving everyone a fresh chance to jeer and offer their ideas about how compensation will be reformed.
But the obsession with bonuses is a big distraction whichever side you're on.
If there's something to be enraged about, it's not the bonuses, it's the profits in the banking sector.
Because shareholders of companies like JPMorgan (JPM) and Goldman Sachs (GS) are perfectly happy fattening up their big earners.
