Contents Pages by Subject

Bailouts

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The Market Ticker

Hoh hoh hoh! We're finally seeing some recognition of what I've been talking about for the last two years! Aug. 14 (Bloomberg) -- More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. And Bloomberg appears to have recognized the key problem with these banks (all of which should have been shut over a year ago): Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter. Yeah, that's a problem. But the real problem is regulatory malfeasance. See, the purpose of the Tier Capital Ratio is to permit the government (FDIC) to come in via the OTS or OCC before the regulatory capital cushion is entirely depleted, and if the law is actually followe

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LA Times

A 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.

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The Market Ticker

I just received one of the famous "fundraising calls" from the RNC. They were soliciting people to give them money (and tried for slightly over $3k!) to "stop Obama's Health Care plan that will cost $1 trillion." Oh boy did that poor sap get an earful. I "explained" that: $1 trillion is a lot of money. $12 trillion is a lot more, and that's how much the RNC has allowed to be pissed away backstopping and rewarding people who have stolen from the American people through bailouts and handouts, all of which have gone to the very people doing the stealing! John McCain, to whom I gave a significant campaign donation, returned my favor by suspending his campaign to push through the EESA/TARP, a bill that by 300:1 margins the American People opposed. If the Republicans are the party of the people why is it that they are allowing these bankers to steal over $30 billion dollars by re-ordering transactions to generate the MAXIMUM in overdraft fees? Th

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Google

Here is the perfect example of Socializing the Losses Sound Familiar? Icesave, a subsidiary of the Landsbanki bank that was nationalised in October 2008, had attracted more than 320,000 British and Dutch savers owing to the high interest rates offered in Iceland. But they lost their savings when their accounts were frozen in connection with Landsbanki's nationalisation. London and The Hague partially compensated them before turning to Reykjavik, which led to a lengthy row that was only resolved in June. But now lawmakers are under public pressure, with a Capacent Gallup poll published last week showing that 67.9 percent of Icelanders are against the refund scheme, and only 19.6 percent support it. "It should be flatly rejected," said Brynjar Elinarson, a thirtysomething Reykjavik resident. Bjorg Gudmundsdottir, a woman in her 40s, agreed. "We can't repay all these debts." With its 319,000 inhabitants, the repayment plan represents about 12,000 euros pe

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CRIME & FEDERALISM

This New York Times expose on Henry Paulson and Goldman Sachs makes one thing clear: There is now no doubt that Henry Paulson and Goldman Sachs have violate numerous federal laws. Paulson laundered several billion dollars of money to Goldman Sachs, through A.I.G. Paulson lied to Congress about the true nature of TARP. Paulson lied to Congress about his role in the Federal Reserve's decision to give over $185 billion to A.I.G. Paulson has also violated the federal honest service statute, which makes it a felony for a government official to breach his fidicuariy obligation to taxpayers. See 18 U.S.C. 1346 ("the term 'scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services.")

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Investment Watch

The bailout of American banks was supposed to provide money for loans. But — according to a report released last week by a watchdog agency overseeing the financial rescue program — instead of boosting lending, banks have used the funds provided by the government (read: “you and me”) to pay down debt or, believe it or not, buy other banks. So today, I won’t be asking you to look at the market or at a sector or a stock. Instead, I’m going to tell you a story. It’s a fairly involved story, with lots of intrigue; as such I’ll tell it in two parts. It’s a story with many lessons. And it’s a story that is not, unfortunately, unique, in that there are others who could also be placed under a similar revealing lens (see B-of-A mention above). Today we’re going to turn our attention to Part 1 of “A Wall Street Saga.” Today’s installment is “A ‘Goldman’ Opportunity.” Now last year, during the financial crisis with which we all have become intimately acquainted (through no desire of ou

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The International Forecaster

Well I do not agree with him that Tarps should have bailed out the people (WE SHOULD NOT BE FORCED TO BAIL OUT ANYONE)but other then that this is a good article. The starting point for all analysis of the ongoing bailout orgy that is currently being used in crony capitalist fashion to transfer wealth from our middle class to the Illuminati and their transnational conglomerates is whether these bailouts are authorized by the US Constitution. The answer is a resounding NO!!! Were the bailouts even constitutional?

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Bloomberg

Well of course BO will not want to support something like this after all the payouts er I mean "contributions" he received from the Banks! Many of us pay taxes to governments that bailed out banks whose risks robbed our retirement funds. We tend to not look happily on big fat bonuses said banks then pay to their folks. Some 5,000 employees took home bonuses of at least $1 million. That may not be much on Wall Street, but for most Americans that’s about what they’ll see in 20 years. Median household income in the U.S. came to $50,233 back in good ol’ 2007, the U.S. Census Bureau reports. And that’s the figure for the entire annual income for the whole household. A House bill passed last week would authorize the SEC and bank regulators to bar pay practices that encourage excessive risk-taking and threaten economic health. Fear of too much government intervention will make it tougher going in the Senate. President Barack Obama isn’t inclined to support it, either.

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Investment Watch

Guess the FDIC/fed will have their hands full since Colonial Bank in Alabama ($26 billion in assets) will likely be seized in the next few weeks - looks like another big bank collapse is coming. Ain’t nothin’ pretty about this train wreck! “…The banking board will meet Wednesday to discuss whether to allow John Harrison, state banking superintendent, to seize Colonial and turn it over to the FDIC The FDIC is waiting on an order for a freshly printed $26 Billion before moving on it. There is a waiting list for new cash. Goldman & Treasury get first dibs.

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The Business Insider

Bottom line: he was in touch with Goldman a lot. During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives. On Sept. 17, the day Mr. Paulson secured his waivers, he and Mr. Blankfein spoke five times. Two of the calls occurred before Mr. Paulson’s waivers were granted. By waviers, they're referring to ethics waivers which had barred Paulson from having any significant relationship in dealing with Goldmn Sachs issues, as Secretary of the Treasury. Clearly, this was no time to be bound by old formalities and ethics limitations that they thought would never become an issue.

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Emacs Stock Watch

The $3.5 tn commercial real estate market is eroding, defaults are doubling on loans for apartment buildings, office buildings, housing complexes, strip malls, hotels, hospitals, and a staggering amount of loans must be rolled over this year into refinancings, or else go bellyup. The problem now is, the US government, meaning taxpayers, may be called upon once again for even more bailout help for this struggling sector, beyond the $23.7 tn in gross exposures already in the bailout programs to date (gross exposures are an Armageddon scenario, although they do show what the government has committed, according to the inspector general for the Troubled Asset Relief Program, Neil Barofsky).

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The Business Insider

The inspector general for TARP -- the government's $700 billion bailout of the financial industry -- says lawmakers asked regulators to fund certain banks, but found no evidence that outside lobbying influenced decisions. The report doesn't name names, but Reps. Barney Frank and Maxine Waters have already been called out for helping get funds for banks they had ties to.

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Economic Policy Journal

There are a lot of questions that need to be answered surrounding the period when Buffett made his investment in Goldman Sachs. First, there is the curious trading I have previously identified by the Senate's No. 2 Democrat, Dick Durbin. Did Durbin buy Buffett's Berkshire Hathaway stock after learning that Buffett via Berkshire was going to buy into Goldman? The public timeline suggests he may have. Now, Denninger raises the question as to what went on in meetings between Buffett and the government. Was Buffett assured before he bought stock in Goldman that the government would not allow Goldman to fail? And just who was buying stock in Goldman and Berkshire that caused the stocks to climb just before it was publicly announced that Buffett was going to take a position in Goldman?

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CNN

I posted an article yesterday "AIG Breakup Is Fee Bonanza" by the WSJ I think that might help explain what is going on. Now snippets from the story... Less than a year after it nearly brought down the financial system with a misguided derivatives bet, AIG is everyone's favorite lottery ticket. Shares in the troubled taxpayer-owned insurer have nearly doubled in the days leading up to Friday morning's scheduled release of second-quarter earnings. It is a flurry of speculative enthusiasm that boggles the mind. Even so, given the scope of AIG's problems -- it reported a $99 billion loss last year and survived last fall's market meltdown thanks only to $180 billion in federal support -- it's hard to square the rally with the company's grim outlook. "This is truly a phenomenon," Tabacco said. "I don't know what is going on, but it appears to be the new game in town."

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The Business Insider

We couldn't believe this when we saw this quote from the U.S. Transportation Secretary (Ray Lahood) in yesterday's NYT (page B3) on the “Cash for Clunkers” program: “There obviously is a real pent-up demand in America ... people love to buy cars, and we've given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who's going to be able to get a rebate from the government to buy a new vehicle.” Are you kidding me? If there is pent-up demand for autos why do we need a rebate? If there are 20% more vehicles than there are licensed drivers, why the need to perpetuate this cycle of overspending? Why is it a politician's job to create incentives to spend? Shouldn't they be focusing their attention on health, education, defense, infrastructure, public safety, job skills and productivity growth (and perhaps the youth unemployment rate of around 20%)? We're not exactly espousing an

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BBC

The mainstream news has been derelict in showing the public the corruption and fraud that took place within these agencies. These are of course things non partisan professional journalists would have done however the mainstream news reporters now are paid corporate shills. I have a few links I hope you will view after reading this article. US mortgage finance firm Fannie Mae has asked the Treasury for another $10.7bn, (£6.4bn) as it announced a loss for the second three months of 2009. Fannie Mae reported a loss of $15.2bn, but it was smaller than the $23.2bn it lost in the previous quarter. It is the third time that Fannie Mae has requested government aid in recent months. It received $15.2bn in March. Fannie Mae and Freddie Mac buy mortgages from approved lenders then sell them to investors. Together they underwrite more than half of all US mortgages, worth about $5.4 trillion. Fannie's latest request takes the amount which the pair have requested from the US Treasury t

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BBC

The mainstream news has been derelict in showing the public the corruption and fraud that took place within these agencies. These are of course things non partisan professional journalists would have done however the mainstream news reporters now are paid corporate shills. I have a few links I hope you will view after reading this article. 1.  US mortgage finance firm Fannie Mae has asked the Treasury for another $10.7bn, (£6.4bn) as it announced a loss for the second three months of 2009. Fannie Mae reported a loss of $15.2bn, but it was smaller than the $23.2bn it lost in the previous quarter. It is the third time that Fannie Mae has requested government aid in recent months. It received $15.2bn in March. Fannie Mae and Freddie Mac buy mortgages from approved lenders then sell them to investors. Together they underwrite more than

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NYT

Remember when they say the Government stepped in that is YOU being FORCED thru the threat of imprisonment (IRS Failure to pay taxes) to pay back the kick backs for their campaign contributions. Lloyd C. Blankfein has a story about the cataclysm that nearly brought down all of Wall Street. It goes something like this: One by one, lesser banks were swept away by the financial storm of 2008. And as the floodwaters rose, no one, not even Goldman Sachs, seemed safe. The question, in Mr. Blankfein’s eyes, was how high the water would rise. But Washington stepped in with all those bailouts before the surge reached Goldman. The story, which was recounted by several friends and colleagues, represents a sobering private admission from Mr. Blankfein, Goldman’s chief executive. Publicly, it is a different story. Now that Goldman is minting money again, the bank insists that it was never in any real danger. Mr. Blankfein, in an e-mail message this week, disputed his private account, say

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The Market Ticker

Keep in mind without the "Pig Politicians" this could not happen. Who doesn't love the image Warren Buffett projects in the media? The beloved stock-picker, with his mantra "buy smart, sell never", has become an American icon. He preaches the free market, capitalism, smart business practices and running a tight ship. He lives frugally in a modest home, doesn't flash his (extreme) wealth and claims that through hard work and dedication one can succeed in America. And now, Berkshire is set to report what may be the best quarter in his firm's history. The truth is somewhat different. Buffett has repeatedly used his influence to exempt himself from laws that apply to everyone else. Among them is an exemption from reporting requirements when he acquires or sells significant stakes in companies; these actions are required, for ordinary people, to be reported to the SEC and filed publicly. Warren has an exemption. He was a "smart investor" i

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Reuters

Teach your children well so they do not fall victim to these crooked politicians and the Wall St. Predators! When I was 14, Warren Buffett wrote me a letter. It was a response to one I’d sent him, pitching an investment idea. For a kid interested in learning stocks, Buffett was a great role model. His investing style — diligent security analysis, finding competent management, patience — was immediately appealing. Buffett was kind enough to respond to my letter, thanking me for it and inviting me to his company’s annual meeting. I was hooked. Today, Buffett remains famous for investing The Right Way. He even has a television cartoon in the works, which will groom the next generation of acolytes. But it turns out much of the story is fiction. A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.

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Market Watch

What a deal bribe the politicians with campaign contributions (google barack obamas wall st problem is now Americas - no quarter and obamas money cartel sometime or go to open secrets and see obamas kickback from AIG) and they enslave your grandchildren to pay them off! Now snippets from the story... AIG, which was rescued several times by U.S. taxpayers, who now own more than 75% of the company, recently named a new chief executive, and will report earnings on Friday. The company has been the focus of intense criticism for its risky behavior writing what amounted to insurance contracts for risky subprime mortgages and other debt. When those debt securities' prices fell, AIG didn't have the money to pay off counterparties. That's when the government stepped in to make AIG trading partners like Goldman Sachs and foreign government funds whole with taxpayer dollars. Interestingly, short selling played a significant role in AIG's downfall as well as wreaking havoc th

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WSJ

Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group Inc. to help manage and break apart the insurer, according to a Wall Street Journal analysis. That would represent one of Wall Street's biggest paydays -- four times the fees paid to break up AT&T Corp. in 1996, and nearly double those paid for Visa USA's 2008 initial public offering, the largest U.S. IPO ever. The federal government's bailout of AIG has left it with a nearly 80% ownership stake. The government has a multiyear plan to recoup the more than $100 billion in taxpayer money it put at risk in the rescue. Among the biggest beneficiaries is Morgan Stanley, which has earned about $10 million assisting the Fed, but could collect as much as $250 million from various AIG-related deals, according to some banking experts and documents released by the New York Fed. Goldman Sachs Group Inc., Bank of America Corp. and J.P. M

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Forbes

Government also asks about credit derivative instruments * Firm says it is cooperating with requests Goldman set aside $6.65 billion in the quarter for compensation expenses, setting off a firestorm of criticism about pay practices. According to the filing, Goldman's board has received several letters from shareholders regarding compensation. It said shareholders have demanded the board investigate compensation in recent years, begin recouping so-called excessive compensation, and consider reforming its pay practices.

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The Business Insider

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.

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Emacs Stock Watch

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

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CRIME & FEDERALISM

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

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CNN

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

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CNN

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.

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The Golden Truth

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

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