Option ARMS, NegAm, and other forms or risky, exotic loans are making a comeback as 30 year fixed loan rates.
It’s amazing how quickly some lessons are unlearned.
Category: Corruption
Not Enough Bullets, No Golden Parachutes Edition
It looks like the banks are at it again, in this case, Associated Banc-Corp, which received $525 million in TARP funds, and its former President and CEO, Lisa Binder, who arranged a $1.65 million payout upon her resignation, they just dressed it up as a “non-compete” agreement.
Grrrr…
Bushie Takes the 5th
When I last wrote about PBGC head Charles Millard, who a large portion of the agency’s trust fund, and put it in the stock market just before the crash, I thought that it was just another case of another incompetent ideologue.
I was wrong. It’s Bush and His Evil Minions™ style corruption, baby!
The House Education and Labor Committee is now investigating his contacts with the investment banks that actually bought the stock, and generated over $100 million in fees.
So, they called Millard to testify, and he repeatedly invoked the 5th.
Sounds to me like he was throwing business their way in exchange for the possibility of a lucrative job offer.
Abolish the U.S. Office of Thrift Supervision
The inspector general has issued a report, and we now know that the OTS approved or directed banks to backdate captital contributions in order to make the institutions that they regulated appear in better shape than they were.
And now these jokers are letting leveraged buyout experts buy into small community banks, despite the best efforts of the FDIC and the Federal Reserve has closed, allowing.
There is talk of regulatory fixes, and one is to prevent banks from forum shopping, so that agencies compete in this way to get more money from fees.
Doing away with the OTS would be a good start.
Right Wing Priest Uses Schism to Cover Up Embezzlement
Well, now we know what’s driving at least some of the Schism in the Episcopal Church over the ordination of gays, some of the right wing priests are taking the money and running:
The conservative Colorado Springs pastor who broke away from the Episcopal Church to form a new Anglican congregation in May 2007 now is accused of stealing $291,000 from Grace Church and St. Stephen’s Parish.
…
When Armstrong left the Episcopal Church, he said the split was over theological differences, such as his opposition to gay marriage and the church’s ordination of openly gay clergy.
But Colorado Episcopal Diocese officials countered that they believed Armstrong, who had been Grace’s pastor for 20 years, had left to escape reckoning for embezzlement uncovered by diocesan officials. The diocese notified police of its suspicions in May 2007.
I think that we’ll find a lot more of this, but I am a bit of a cynic on such things.
The Law is a Fool
So, 60% of Royal Dutch Shell voted against bonuses for senior executives getting big bonuses after the oil giant missed its numbers, but it has no force, because it’s forbidden in the US and most of the rest of the world for shareholders to have binding votes on remuneration.
The executives keep their money.
Regulatory Arbitrage
Remember the PPIP program, where the US government is going to subsidize the purchase of financial toxic waste in an attempt to clear out banks’ balance sheets?
Well, Sheilah Bair just said that banks will not be allowed to purchase their own toxic assets, which is a good thing, as it it turns the program into little more than a corrupt subsidy program to shake down the taxpayer…..Make than an even more corrupt subsidy program to shake down the taxpayer.
If you had told me 18 months ago that the most responsible member of Obama’s economic team would be a Bush holdover, I would have wanted whatever it was that you were smoking.
H/T Calculated Risk.
Heck of a Terrorist Plot You’ve Got There
You know, those highly trained terrorists who were planting bombs.
You know, the ringleader, David Cromitie, who admitted to being stoned while planting what he thought were bombs.
And you have the full rundown of the “Newburgh 4”, which includes a cocaine addict, a schizophrenic who is borderline retarded, and the government informant, was facing deportation for what amounts to forging immigration documents, who ran a similar sting a few years back, allegedly attempted to pay another member of his mosque to join his merry band, and was described by independent observers as “the boss.”
I have no doubt that they will be convicted, that’s what happened to the folks down in Florida, but this does nothing for anyone, except perhaps the police and prosecutors who use unreliable informants for career climbing.
FASB Rule Will Force Banks to Move Assets Onto Books
Effective for reporting periods after November 15 of this year, the Federal Accounting Standards Board (FASB) is requiring that the assets of Qualifying Special Purpose Entities (QSPEs) be reported “on the books”.
Yes, I know your first question, “Can I have that translated please?”
The quick translation is that these are “off balance sheet entities,” which are used to conceal losses and risk.
Here is a snapshot:
Lenders recorded profits before the U.S. subprime mortgage market collapsed in 2007 by selling pooled loans to off-balance- sheet trusts, which repackaged the pools into mortgage-backed securities. Banks then sold those securities to other off- balance-sheet vehicles they sponsored, concealing from investors that the securities were backed by deteriorating mortgages.
As to the next obvious question, “What does this all mean?”, it means that significant losses and risks which, until now, have not been a part of many financial institutions reporting, will be reported, and significant losses will result.
How much?
Well, the article says about $900 billion, but my guess is that this is low, because one is always shocked when one turns over a rock.
“Move Quickly” Means that the Taxpayer Getting Boned By the Banks
So, Timothy “Eddie Haskell” Geithner is saying that the Treasury will move quickly to sell the warrants it got for the TARP money.
The warrants, basically stock options, were there to ensure that taxpayers would share in the upside, as well as the downside, but now he’s looking to “move quickly” to sell them.
The devil is in the details:
Big banks may value their warrants at an amount that is hundreds of millions of dollars below the prices that other models might generate, the Treasury official said. That range makes it hard for the government to find a price that protects taxpayer funds without penalizing the banks.
…
Geithner today reiterated that the government can sell the warrants back to the bank or to a third party.
Translation: How do we cut a sweetheart deal for the banks?
Because if the Treasury actually believes that the banks are truly solvent, and will survive, then the warrants are worth tens, if not hundreds, of billions more than what we the taxpayer will get for them.
Not Shocking: Habits are Hard to Break
and paying bonuses to KBR for substandard work that killed soldiers was SOP when Halliburton owned them, because they were still paying bribes deferred compensation to him, and organizational inertia took over, even after their shoddy electrical work killed American GIs.
Lying Two Faced Rat Bastard!
I have a joke for you:
Q:What’s the difference between Barack Obama and Dick Cheney?
A: I have no damn clue, because Barack Obama is restarting the military tribunals:
Military Tribunals Will Resume, Obama Says
By Peter Finn
Washington Post Staff Writer
Friday, May 15, 2009 1:55 PMPresident Obama said today he will revive military commissions but with greater legal safeguards for defendants to try some terrorist suspects held at the military base in Cuba.
The decision, which follows an intense internal debate, represents something of a reversal by the president who said during the campaign that military courts martial or the federal courts offered a better route to successful prosecution because he said military commissions had been an “enormous failure.”
In recent weeks, however, the administration appears to have bowed to fears articulated by the Pentagon that bringing some detainees before regular courts presented enormous legal hurdles and could risk acquittals.
Risk acquittals? You are doing this because of a Risk of Acquittals?
That’s the F$#@ING POINT OF A F$#@ING TRIAL, YOU F$#@ING ILL CONCEIVED F$#@ING SON OF A F$#@ING WOMBAT!
If you don’t have a “risk of acquittal”, it’s a F$#@ING show trial. So you are pre-announcing that the military commissions are a fraud, because, you don’t want to “risk acquittals”
He’s claiming that they will be fairer than the commissions that Bush came up with, because….Because, He’s Barack Obama, and he’s just so F$#@ING awesome.
Wrong! We are the United States of America, our whole system of government is about not relying on our leaders being, “so F$#@ING awesome,” it’s about the F$#@ING rule of F$#@ING law.
I don’t care how F$#@ING awsome you F$#@ING think you are, that’s not how Americans do things.
That weren’t bad enough you also have this:
The administration is still grappling with how to handle the cases of detainees that are deemed too dangerous to release, but that some in the Pentagon fear cannot be prosecuted in any legal forum. That could lead to the creation of a system of indefinite detention without charge backed by some form of regular court review.
Well, there’s another wonderful bit of accepting who we are as a nation: If there is anything that defines American jurisprudence, and the things that our founding fathers, commie pinkos like George Washington, Thomas Jefferson, and Ben Franklin, it was that they found the very idea that someone could use the state could detain someone forever without any recourse to legal process to be an anathema.
It’s wrong, it’s stupid, and it’s un-American.
Glenn Greenwald, who is far kinder than I am, or perhaps more well spoken (better writer is a given), calls this “Obama’s kinder, gentler military commissions.” He quotes many people who are now serving in the Obama administration, as well as President Obama when he was candidate Obama, noting that the problem is not just that the processes were wrong, but that the entire idea of a special court with special procedures is wrong.
What is most pernicious, quoting a letter in response to Greenwald’s article is this:
The other aspect of it, and you hinted at this the other day, is this: Under Bush, half the country was trained to recite all sorts of dangerous propositions about how important it is to vest The President with all sorts of powers to keep us safe, how vital it is that he keep things secret to protect us from the Terrorists, how we can trust in our leaders to exercise in ways we don’t understand because we know he’s good at heart.
And now, with Obama, a significant portion of the other half of the country is being trained to recite the same things.
Once again proving that almost any person on the Internet can write, and think, more clearly than I can.
And then there’s what Digby said:
By the way, I have to wonder why it’s taken centuries to come up with the civilian and military justice systems? Apparently, creating a new one is piece of cake. Why all the sturm and drang with appellate court challenges and legislation? Just put it in a presidential memo and carry on.
What has been announced today is disgraceful.
Hank Paulson and His Evil Minions&trade Strong Armed the Banks into Taking TARP
And, BTW, Paulson’s Evil Minions™ include the then president of the Federal Reserve Bank of New York, one Timothy “Eddie Haskell” Geithner.
Judicial watch is a bunch of nuts right-wing, or maybe they are a bunch right-wing of squirrels who collect nuts, but every now and then amongst their nuts (FOIA requests) they turn up a gem, and this time, it appears to be a doozy.
Basically, they have the memos about the initial TARP, and it is clear from them that Hank Paulson told the banks that they had no choice about letting the US government buy equity in them(See also here and here):
“We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed. If a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance,” the document said, citing Paulson talking points.
One of the things of interest here (see the Scribd Window) is that Hank Paulson’s chief of staff did not know who the “big 9 banks” were….The Secretary of the Treasury‘s chief of staff did not know who the big 10 banks were?
Great googly moogly.
Treasury CEO Talking Points v1
Publish at Scribd or explore others:
Note that the Scribd link is from Market Ticker, who also notes that according to AIG President Edward Liddy, the Federal Reserve insisted that all Credit Default Swaps at 100¢ on the dollar (CSPAN video Link at about 2:25:00)
The Smoking Gun For Dick Cheney
And no, this is not from the Smoking Gun, it’s from The Daily Beast, and it’s a big one.
Specifically, Robert Windrem, formerly a senior investigative producer with NBC News, has uncovered information that the office of the Vice President specifically requested that the a senior Iraqi official be waterboarded so as to extract a statement that Saddam Hussein and Osama bin Laden were in league and cooperating on terrorism:
At the end of April 2003, not long after the fall of Baghdad, U.S. forces captured an Iraqi who Bush White House officials suspected might provide information of a relationship between al Qaeda and Saddam Hussein’s regime. Muhammed Khudayr al-Dulaymi was the head of the M-14 section of Mukhabarat, one of Saddam’s secret police organizations. His responsibilities included chemical weapons and contacts with terrorist groups.
…
In his new book, Hide and Seek: The Search for Truth in Iraq, and in an interview with The Daily Beast, Duelfer says he heard from “some in Washington at very senior levels (not in the CIA),” who thought Khudayr’s interrogation had been “too gentle” and suggested another route, one that they believed has proven effective elsewhere. “They asked if enhanced measures, such as waterboarding, should be used,” Duelfer writes. “The executive authorities addressing those measures made clear that such techniques could legally be applied only to terrorism cases, and our debriefings were not as yet terrorism-related. The debriefings were just debriefings, even for this creature.”
Duelfer will not disclose who in Washington had proposed the use of waterboarding, saying only: “The language I can use is what has been cleared.” In fact, two senior U.S. intelligence officials at the time tell The Daily Beast that the suggestion to waterboard came from the Office of Vice President Cheney. Cheney, of course, has vehemently defended waterboarding and other harsh techniques, insisting they elicited valuable intelligence and saved lives. He has also asked that several memoranda be declassified to prove his case. (The Daily Beast placed a call to Cheney’s office and will post a response if we get one.)
(emphasis mine)
This isn’t about a ticking time bomb. This isn’t about ongoing plans. This is a request to torture someone until they say something that benefits you politically.
Can we put him on trial now?
Yes, I know that OVP does not necessarily equal Dick Cheney, but we also know that his office would not make such a request without his tacit or explicit approval.
Schadenfreude: That is Not a Natural Skin Color Edition
It looks like former Countrywide Mortgage CEO Angelo Mozilo is going to be sued by the SEC for, “insider trading and failing to disclose to shareholders the risks the company was running”.
At this point, it appears to just be a civil suit, but it appears to me that this is the first step toward a criminal prosecution.
Needless to say, this is a development that puts me in a Nelson Munz state of mind.
The SEC cannot put Mozilo in jail, but a separate federal criminal probe of Countrywide, begun last year, is continuing, one of the people familiar with the SEC case said.
…..
The agency’s staff also is recommending fraud charges against other former Countrywide officials, according to one of the people familiar with the probe, who was not authorized to discuss it publicly and spoke on condition of anonymity.
In the old days, following the excesses of the 1920s, one of the big players did his jail time, and spent the rest of his life earning a modest living running a farm.
If that were to happen to people like Mozilo and Miliken, it would be a good thing, because it would deter those who would be like them.
Normy’s Going to Jail
It looks like the FBI probe of Norm Coleman’s bribe taking is expanding.
He’s dirty, and with a bit of luck, he’s going to go to jail.
Things being what they are though, he might very well finish serving his sentence before the election is resolved.
Not Enough Bullets: Chrysler/Fiat
It appears that Fiat may be the employer of record for senior management, and that they will then be “seconded” to Chrysler in order to skirt pay limitations at bailed out firms. (See also here)
In the long run, the real answer is confiscatory taxes at higher levels of remuneration.
Figure bumping the tax rate by 1% at $250K/year and at each $250K break point, with a limit of 85% at income in excess of $13¼ million a year, or 90% at 14½ million a year.
This crap needs to stop. These executives are overpaid by the standards of the world, they will be making more than the Chairman of Fiat, which is taking them over, and they do not deliver value.
The problem is not excessive salaries for senior executives at bailed out firms, it is excessive salaries, period, full stop.
It is theft from the shareholders and the less well remunerated employees, and it is corrosive to society.
Impeach Timothy Geithner Today
When he was asked about AIG’s bonus program when it became a scandal, Geithner simply lied about it:
As American International Group chief executive Edward M. Liddy returns to Washington to face Congress today, new details are emerging about how long federal officials were aware of the company’s recent bonus payments to its executives and of how inflammatory the payments could be.
Documents show that senior officials at the Federal Reserve Bank of New York received details about the bonuses more than five months before the firestorm erupted and were deeply engaged with AIG as well as outside lawyers, auditors and public relations firms about the potential controversy. But the New York Fed did not raise the alarm with the Obama administration until the end of February.
(emphasis mine)
The post does note that, “his [Geithner’s] name is not among those of senior New York Fed officials mentioned in the summaries of phone calls, correspondence and other documents obtained by The Washington Post,” but this makes him either a liar, willfully blind, or unconscionably incompetent.
It is crap like this which has led Edolphus Towns (D-NY-10) to call for supervision of AIG to be removed from the New York Bank of the Federal Reserve and moved to a government agency.
Right now these trustees answer to the NY Fed.
It makes sense. The Federal Reserve in general, and the New York Fed in particular, are textbook cases of “regulatory capture“, and what’s more, they are secretive, and opaque.
It does not help that the New York Fed is owned by the banks it is charged to regulate too.
As to AIG CEO Liddy’s testimony today that AIG would pay back the money in 5 years. That’s just a bald faced lie.
Norm Coleman Looking to Use Campaign Funds on His Criminal Defense
Because, you know, he took bribes from Nasser Kazeminy, and he’s raised a lot of money in his election contest.
He has applied to the FEC for permission to do this.
He’ll likely get it too, based on my understanding of the case law.
I don’t think that this will help, because he is as guilty as hell.
Friends Don’t Let Friends Pledge to NPR
There is a documentary out called Outrage about closeted gay politicians, and NPR did a review, and upper management rewrote it to specifically exclude the names to two politicians, Florida Governor Charlie Crist and Senator Larry Craig, from the review, which so outraged the author that he removed his byline from it. (His story had been written with close consultation of his editor)
As Pam Spalding notes, “NPR has no business tossing out the “privacy” card when it couldn’t resist deeming John Edwards’s heterosexual tomcatting newsworthy, underscoring that there were legitimate political reasons for the reporting.”
If I weren’t not giving because of their vociferous opposition to low power local broadcasts, I would not give to them because they have been completely captured by the sensibilities of the “inside the Beltway” crowd.