Category: Finance

Rats Leaving the Sinking Vampire Squid

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So, Greg Smith, who ran equity derivatives business in Europe, the Middle East and Africa for Goldman Sachs, has resigned today.

Normally, this would not be particularly newsworthy, except for the fact that he published his separation letter on the OP/ED page of the New York Times:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

Truth be told, I’m not impressed.

This guy as been a Vampire Squidling for over a decade, so I see this as kind of self serving.

If he were claiming law breaking, it would mean something, but he is mostly complaining how the brokers trash talk:

You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

He’s not claiming any law breaking (Yeah, right), just that there is a insane macho culture at Goldman that sees the clients more as marks than as partners in success.

How the f%$# can you work at a f%$#ing brokerage for ten f%$#ing years, and not f%$#ing realize that it’s a f%$#ing testosterone f%$#ing hormone filled f%$#ing cesspool after being there two f%$#ing weeks hours.

Seriously, just f%$#!

Whoever wrote, “Why I am leaving the Empire, by Darth Vader,” got the crux of the matter.

I will issue a correction if this guy does something like working for a regulator, but my guess is that this is all about providing himself plausible deniability, or possibly pimping a book, or maybe he’s hanging out his own shingle.

Here’s a thousand years on what I’m seeing:

Why I am leaving the Empire, by Darth Vader


H/t FT/Alphavill for the Pic

[update]Matt Taibbi thinks that this guy is for real, so if you want want an opposing opinion, and I think that it is well argued, go read.

Cue Inspector Renault

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I’m shocked, shocked to find that gambling is going on here!

I am shocked, shocked I tell you, that we are now seeing reports that senior managers actively directed their subordinates to robosign and falsify records:

Employees at major banks who churned out fraudulent foreclosure documents, forged signatures, made up fake job titles and falsely notarized paperwork often did so at the behest of their superiors, according to a federal investigation released Tuesday.

It’s well documented that the nation’s biggest banks routinely “robo-signed” legal papers to keep up with the wave of foreclosures brought on by the housing bust. But the new report from the inspector general of the Department of Housing and Urban Development reveals that those shoddy practices often came at the direction of managers at the banks, and that employees in some cases were judged by how fast they could get new foreclosure filings out the door.

“I believe the reports we just released will leave the reader asking one question: How could so many people have participated in this misconduct?” David Montoya, HUD inspector general, said in a statement. “The answer: simple greed.”

HUD investigators launched their inquiries soon after news of the banks’ practices caused a national uproar in late 2010, and government officials used their findings as they negotiated a recent landmark $25 billion settlement with the banks.

HUD reviewed foreclosure practices at all five banks involved in the recent settlement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. They issued subpoenas, pored over personnel files, conducted interviews with scores of employees and examined the quality control measures — or lack thereof — at the banks’ mortgage servicing units.

Repeatedly, according to the report, investigators were hampered by poor record-keeping at the banks, sluggish responses to requests for documents and an unwillingness to make employees available for interviews or to allow them to answer detailed questions at the virtual foreclosure factories where they worked.

Nevertheless, investigators pieced together a picture of a deeply flawed system riddled with errors, where employees often had little or no training, where managers encouraged wrongdoing and where haste trumped all else.

You know, maybe the banks had poor record-keeping, and responded sluggishly to requests for documents because, you know, they knew that they were aggressively breaking the law.

Stop the looting, and start prosecuting!

Quote of the Day

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I’ll say what Joe didn’t: The prosecutors need to cut a deal with one of the small fish in order to catch a big (or bigger) fish. Perhaps with MFG’s Treasurer or Comptroller. If it were me, I’d let the Defense bar know that we have 3 potential immunity deals that go to the first takers (with several hi profile exceptions).

This is just like prosecuting drug dealers — you pick up the dime bag seller, roll them to the mid-level guy, repeat. Keep doing that until you reach as close to the top as you can get.

Works for pot, crack, robo-signing, and segregated account theft . . .

—Barry Ritholtz on how to prosecute MF Global executives for stealing customer funds

Iceland Does it Right

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Not only are they prosecuting their banksters, they have put a former PM in the dock:

The trial of former Icelandic Prime Minister Geir Haarde, on charges of negligence over the 2008 financial crisis, has begun in Reykjavik.

Mr Haarde is thought to be the first world leader to face criminal charges over the crisis.

He rejects the charges as “political persecution” and has said he will be vindicated during the trial.

The country’s three main banks collapsed during economic turmoil and the failure of Icesave hit thousands.

With a population less than that of Baltimore City, Iceland seems to have cornered the market on both balls and common sense where the financial meltdown is involved than the other 6.8 billion of us.

Go figure.

Broken Window Theory of Financial Crimes

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Bill Black has a very interesting look at the “Broken Window” theory of law enforcement and how, and whether, it might be applied to financial wrongdoing.

For those of who are unfamiliar with the “Broken Window” theory of law enforcement:

James Q. Wilson was a political scientist who often studied the government response to blue collar crime. The public knows him best for his theory called “broken windows.” The metaphor was what happens to a vacant building when broken windows are not promptly repaired. Soon, most of the windows in the abandoned building are broken. The criminals feel little compunction against petty destruction because the building’s owners evince no concern for the integrity of their building. Wilson took social norms, community, and ethics seriously. He argued that as community broke down fewer honest citizens were active in monitoring and policing behavior. The breakdown in community was criminogenic – it led to widespread serious blue collar crime. He urged us to take even minor blue collar crimes and breaches of civility seriously and to demand that they be contained through social pressure and policing.

Wilson got a lot of credit for cleaning up New York City, where crime levels did drop, but they did elsewhere, so perhaps the theory is a bit overrated.

And it should be noted that Mr. Wilson specifically excluded white collar crimes.

I think that the operative word here is “white”.

As in pigmentation, and Wilson found “white crime” just fine:

In a book entitled, Thinking About Crime, Wilson argued that criminology should focus overwhelmingly on low-status blue collar criminals.

This book [does not deal] with “white collar crimes”…. Partly this reflects the limits of my own knowledge, but it also reflects my conviction, which I believe is the conviction of most citizens, that predatory street crime is a far more serious matter than consumer fraud [or] antitrust violations … because predatory crime … makes difficult or impossible maintenance of meaningful human communities (1975: xx).

I am rather tolerant of some forms of civic corruption (if a good mayor can stay in office and govern effectively only by making a few deals with highway contractors and insurance agents, I do not get overly alarmed)…. (1975: xix).

Wilson won’t say it, and cannot now, because he’s dead, and may not admit it to himself, but he’s tolerant of white collar, because “Broken Window” enforcement should only be used when it involves cops harassing poor people and/or minorities.

That’s why Wilson created a “get out of jail free” for the crimes of the upper class.

I’m inclined to believe that small crimes beget bigger crimes, and that this problem is worse among the privileged than it is among the poor and minorities.

As Prof. Black illustrates in his article, when the little things are let slide, you end up with things like liars loans, and blacklists of honest home appraisers, with executives engaging in wholesale looting of their own firms.

H/t Yves Smith.

No One Owns Their House in the USA

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The fabrication of mortgage documents has gotten so bad that one of the most respected financial services consulting groups in the country, SolomonEdwardsGroup, has issued press releases explicitly offering falsified documents:

Reader Lisa N. pointed me to a troubling October 2010 press release by SolomonEdwardsGroup, a company that describes itself as a “national financial services consulting and staffing firm” about its remediation services for “significant loan documentation problems.” Alert readers will recognize that this is shortly after the robosiging scandal broke.

Here are the key parts of the press release:

SEG’s teams can also be rapidly deployed across the U.S., to help banks and servicers “scrub” files and determine which foreclosures may have been tainted by incorrect loan documentation and processing issues such as robo-signing….

For instance on a recent engagement, SEG quickly deployed a 25-person team to review a single-family loan portfolio containing 5,000 loans and within six weeks brought the portfolio into compliance with investor guidelines. During another recent engagement, SEG successfully completed the same type of project involving 20,000 single-family loans tainted by fraud allegations.

Needless to say, this sounds consistent to the charges we’ve heard from borrower attorneys and have even seen at trial: that of “tah dah” documents appearing suddenly in court that solved all the problems with the evidence presented. A not that unusual case occurred last week, in Kings County, New York, where in HSBC v. Sene, when the lawyers for the bank tried submitting two notes (borrower IOUs), the second attempting to remedy problems raised by the first one, each presented as the original. The judge not only ruled against the foreclosure but referred the case to the district attorney and the state attorney general.

…………

It was disconcerting to speak to someone who obviously thinks his firm is highly professional engaged in activities that include document fabrication, which is what creating allonges now amounts to. And the worst is I have no doubt SolomonEdwards is more careful than most firms in the industry. This confirms, as we have said repeatedly, that there was a massive failure in the industry to conform to the requirement of the legal agreements that it devised. And there is a very big business, now with a government seal of approval, in covering up that fact.

Seriously, over the past 20 years the banks have shredded the basic concepts of real estate law that took a thousand years to develop.

This law was created for one reason: to ensure that when someone bought the land, it could not be taken away by someone with a conflicting claim.

It’s all been destroyed.

What Is The Difference Between A Broker And A Psychopath?

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The answer appears to be, “psychopaths are much better for the rest of us“:

What makes individual stockbrokers blow billions in financial markets with criminal trading schemes? According to a new study conducted at a Swiss university, it may be because share traders behave more recklessly and are more manipulative than psychopaths.

Two weeks ago, yet another case of rogue trading shocked the financial world when UBS trader Kweku Adoboli was arrested for allegedly squandering some $2.3 billion with a risky and unauthorized investment scheme. The 31-year-old, who had been based in London for the Swiss bank, remains in jail. The bank’s chief executive Oswald Grübel, meanwhile, has resigned over the scandal — the third major embarrassment to rattle the institution in just a few years.

…………

According to a new study at the University of St. Gallen seen by SPIEGEL, one contributing factor may be that stockbrokers’ behavior is more reckless and manipulative than that of psychopaths. Researchers at the Swiss research university measured the readiness to cooperate and the egotism of 28 professional traders who took part in computer simulations and intelligence tests. The results, compared with the behavior of psychopaths, exceeded the expectations of the study’s co-authors, forensic expert Pascal Scherrer, and Thomas Noll, a lead administrator at the Pöschwies prison north of Zürich.

…………

“Naturally one can’t characterize the traders as deranged,” Noll told SPIEGEL. “But for example, they behaved more egotistically and were more willing to take risks than a group of psychopaths who took the same test.”

So, Dr. Noll, could you explain to me why we cannot, “characterize traders as deranged?”

It seems to me that if there is any lesson of the past few years, it is that traders are deranged.

It’s Bank Failure Friday!!!!

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It’s a two week update, because of my mother-in-law entering hospital last week (she’s doing a lot better now).

And here they are, ordered, and numbered for the year so far.

  1. Charter National Bank and Trust, Hoffman Estates, IL
  2. SCB Bank, Shelbyville, IN
  3. Central Bank of Georgia, Ellaville, GA <== Last week
  4. Home Savings of America, Little Falls, MN <== Last week
  5. Global Commerce Bank, Doraville, GA

Full FDIC list

And here are the credit union closings:

  1. A M Community Credit Union, Kenosha, WI

Additionally, the People for People CDCU​, in Philadelphia, which had been put under conservatorship in January, has been liquidated.

Full NCUA list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

And here is the detail, since it is early in the year:

Dallas Fed President calls for Big Bank Breakup

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I’m stunned that someone at this high a level in the financial establishment would suggest breaking up the mega-banks. I don’t know what is leading to this, but he’s off Tim Geithner’s Christmas list:

The five biggest banks in the United States are too powerful and should be broken up, Dallas Fed President Richard Fisher said on Wednesday.

The financial crisis has left the five biggest banks even more powerful than before, he said at an event in Mexico City.

The five biggest U.S. banks are: JPMorgan , Goldman Sachs , Morgan Stanley , Bank of America , and Citigroup .

“After the crisis, the five largest banks had a higher concentration of deposits than they did before the crisis,” he said. “I am of the belief personally that the power of the five largest banks is too concentrated.”

The U.S. Dodd-Frank reform and consumer protection act includes mechanisms for regulators to break up large financial companies, but imposes high hurdles for such action.

“The purpose of Dodd-Frank was to reduce the concentration of power and we have a term called ‘too big to fail’… perversely, these banks are now even bigger, they are too ‘bigger’ to fail than before.”

Last month a group of consumer advocates, academics and economists said they wanted to end “too-big-to-fail” banks, starting with Bank of America.

Fisher continued his U.S. assessment by focussing on consumer demand, which he said is driving a pick-up in the economy although risks remain.

A welcome, if unexpected, development.

My guess, and I could be talking out of my ass, is that this is an artifact of the fact that he’s one of the most extreme inflation hawks at the Fed. 

Basically, I think that he thinks that Bernanke is keeping rates at the zero bound in order to allow the too big to fail banks to dig themselves out of their holes, and he is concerned that this will set the stage for inflation.

If I am right in my analysis, his statement is actually less shocking than it appears at first glance.

H/t Chris in Paris.

Not Enough Bullets…

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Seriously, if I read one more story about these parasites complaining because they can’t do whatever they want whenever they want, I’ll go postal:

Andrew Schiff was sitting in a traffic jam in California this month after giving a speech at an investment conference about gold. He turned off the satellite radio, got out of the car and screamed a profanity.

“I’m not Zen at all, and when I’m freaking out about the situation, where I’m stuck like a rat in a trap on a highway with no way to get out, it’s very hard,” Schiff, director of marketing for broker-dealer Euro Pacific Capital Inc., said in an interview.

Schiff, 46, is facing another kind of jam this year: Paid a lower bonus, he said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a Kent, Connecticut, summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.

“I feel stuck,” Schiff said. “The New York that I wanted to have is still just beyond my reach.”

The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to interviews with bankers and their accountants, therapists, advisers and headhunters.

“People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”

…………

If they feel so bad about driving a “Porsche 911 Carrera 4S Cabriolet (the Volkswagen of supercars.)”, or to go to a market in Brooklyn to score cheaper salmon, I have a suggestion for them, be the guy from Fight Club.

You know the one:

And this button-down, Oxford-cloth psycho might just snap, and then stalk from office to office with an Armalite AR-10 carbine gas-powered semi-automatic weapon, pumping round after round into colleagues and co-workers. This might be someone you’ve known for years. Someone very, very close to you.

Save one round for yourself, and you will do the world a favor.

HFT, SEC, EE-I-EE-I-O

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SEC Chairman Mary Schapiro is now saying that there may be some real problems with high frequency trading:

Chairman Mary Schapiro of the Securities and Exchange Commission (SEC) is worried about the rise of high-frequency trading, but two years after the agency flagged the phenomenon as a potential problem, she says regulators still don’t know enough to do much more about it.

High-frequency trading, which is practiced by hedge funds and other technologically turbocharged investors, involves the purchase and sale of large volumes of shares in tiny fractions of a second, often to exploit fleeting inconsistencies in the markets.

At a wide-ranging question-and-answer session with reporters Wednesday, Schapiro said that major regulators from various countries gathered in the fall to confidentially compare notes about high-frequency trading.

“And we all concluded that we have concerns but we don’t have enough data yet to really be able to justify significant additional steps at this point,” Schapiro said. “We need to have a much deeper understanding of the impact of high-frequency trading on our markets.”

This is why financial “innovations” should be treated the same way that the FDA treats drugs: You don’t get to use them until they are proven safe and effective.

But beyond this, it’s clear that HFT is a form of front-running, where computers see incoming orders, and get to the queue ahead of those orders in order to profit from the market move.

A financial transaction tax of 10 (I’d actually favor 50) basis points would solve this, and a lot of the other problems of our financial system.

Ha Ha!

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Lehman and its its creditors have subpoenaed Timothy Geithner over his discussions with JPMorgan Chase over the time when the investment bank collapsed:

Lehman Brothers‘ bankruptcy estate and its official committee of unsecured creditors asked a court late on Thursday to compel Treasury Secretary Timothy F. Geithner to testify about the investment bank’s collapse.

The request for a subpoena comes as part of the estate’s lawsuit against JPMorgan Chase, which asserts that the bank illegally took $8.6 billion in collateral from Lehman, precipitating that firm’s demise.

The lawsuit’s main argument is that JPMorgan, apprised of Lehman’s fragile condition, improperly profited from making its collateral demands — and also pushed Lehman into bankruptcy.

Lawyers for Lehman’s creditors wrote in a court filing that they and the estate served Mr. Geithner with a subpoena last August, ordering him to testify about conversations he had held with both JPMorgan and Lehman over the former’s calls for collateral in early September 2008.

Mr. Geithner, then president of the Federal Reserve Bank of New York, spoke with JPMorgan’s chief executive, Jamie Dimon, 10 times in the week before Lehman fell, according to the filing. Many of those conversations, the lawyers contend, must have been about JPMorgan’s collateral demands.

Basically, Lehman is asserting that Jamie Dimon’s bully boys stole from them in order to push them over into bankruptcy.

The implication is that they did so because they knew that, in the event of a collapse, they would get to keep the money.

Note that they are not asking about deliberations at the NY Fed, but the content of his discussions with Jamie Dimon.

Still, I relish the though of Geithner in the dock forced to answer questions about his dealings with the big banks.

Sergey Aleynikov Freed

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You may recall that he was convicted under the Economic Espionage Act for downloading some high frequency trading software from Goldman Sachs, where he worked.

Apparently, the judge in the trial completely bought into the prosecutions expansion of the law, intended to prosecute people for selling military secrets to the Chinese, to this case, and the appellate court came down hard on the judge. They did not just remand this back to the lower court, they ordered the lower court to enter a judgement of acquittal.

Felix Salmon explains why whole case was such an outrage:

The secrets at defense contractors, of course, are secret for reasons of national security. The secrets at investment banks and hedge funds, by contrast, are secret purely for reasons of profit: they reckon that if they have some clever algorithm which nobody else has, then that makes it easier for them to profit from it. Which is why it was always a stretch for the government to use the EEA to prosecute Aleynikov — indeed, it is why it was always a stretch for Aleynikov to be criminally prosecuted at all. Goldman could have brought a civil case against him, but instead they got their wholly-owned subsidiary, the U.S. government, to come down on him so hard that he ended up with an eight-year sentence. Violent felons frequently get less.

The forthcoming decision from the Second Circuit is likely to be a doozy; I’m told that the judges shredded the prosecutors during the oral hearing. And certainly their decision to enter a judgment of acquittal, rather than any kind of retrial, is a strong indication that they handed down this order with extreme prejudice against prosecutorial overreach.

(emphasis mine)

This has been a lose-lose for the Vampire Squid. They looked like bullies, they brought a lot of attention to the bit of front-running that is high frequency trading, and they have now lost the case.

That being said, I don’t expect Goldman, or the prosecutors, to give up just yet.

Background here.

Least Shocking News of the Day

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San Francisco County has conducted an audit of 400 foreclosures, and found a morass of fraud and corruption:

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

(Emphasis mine)

And the settlement is going to let these guys off for about 2 grand a pop.

Guess What, the Bank Deal is Even Worse Than You Thought

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We still have no written agreement, but we the North Carolina AG has released an executive summary, and it strongly implies that the immunity grant is a lot broader than has been implied:

This is the critical part:

The proposed Release contains a broad release of the banks’ conduct related to mortgage loan servicing, foreclosure preparation, and mortgage loan origination services. Claims based on these areas of past conduct by the banks cannot be brought by state attorneys general or banking regulators.

The Release applies only to the named bank parties. It does not extend to third parties who may have provided default or foreclosure services for the banks. Notably, claims against MERSCORP, Inc. or Mortgage Electronic Registration Systems, Inc. (MERS) are not released

.

This is sufficiently general so that it is hard to be certain, but It certainly reads as if it waives chain of title issues and liability related to the use of MERS. That seems to be confirmed by the fact that made by local recorders for fees are explicitly preserved (one would not think they would need to be preserved unless they might otherwise be assumed to be waived). This is exactly the sort of release we feared would be given in a worst case scenario. The banks have gotten a huge “get out of jail free” card of bupkis.

It’s gonna get worse.

Every time we get more information it’s gonna get worse.

We are going to discover that this precludes all sorts of remedies for bad acts, and there will be no enforcement mechanisms to prevent future bad faith actions.

It’s gonna be more extend and pretend, so the banksters can get their bonuses, and we get the shaft.

Epic Snark

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Barry Ritholtz puts in his application to be head of corporate communications for the Vampire Squid:

To: Hiring Committee, Goldman Sachs
From: Barry Ritholtz
Re:  Position, Head of Public Relations, Goldman Sachs
Date: February 13, 2012

Gentlemen:

Now that your public relations chief, Lucas van Praag is (finally!) retiring, it is time for the executive committee to seriously rethink the position of PR head. To be blunt, your efforts have not been up to the level of excellence that one would expect from Goldman Sachs. It would be impolite to speak ill of the job done by LVP has done under challenging circumstances, but you gentlemen need to face the facts, and fast. On his watch, the firm’s reputation has suffered, its ability to recruit top talent has been compromised, and its market cap has gotten shellacked.

In short, your PR efforts have performed about as well as the ABACUS 2007-AC1 –  the John Paulson created mortgage bundle that cratered. Or, about as well as John Paulson’s fund in 2011, which also cratered (I am seeing a pattern here).
All of which says, you guys have really stunk the joint up.

Thus, it is with great pleasure that I toss my hat into the ring for the position of Director of Communications for Goldman Sachs. Not only do I have the requisite skill set to help rehabilitate the image of the 100+ year old firm — media savvy, legal smarts, netizen, with just a dollop of snark — but I believe I can help you move gracefully into the new century.

Just read the rest. It’s da bomb!

Greeks Vote to Approve Their Own Suicide While the Rest of the EU Applaudes

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Their parliament has approved the new austerity plan, which will allow them to borrow money and give it to German, French, and British banks.

If I were running Greece, I would start a program of aggressive instruction in German for the populace.

If the Germans want to make Greece uninhabitable, perhaps they should accommodate the refugees.

In the meantime, Athens burns:

After violent protests left dozens of buildings aflame in Athens, the Greek Parliament voted early on Monday to approve a package of harsh austerity measures demanded by the country’s foreign lenders in exchange for new loans to keep Greece from defaulting on its debt.

Though it came after days of intense debate and the resignation of several ministers in protest, in the end the vote on the austerity measures was not close: 199 in favor and 74 opposed, with 27 abstentions or blank ballots. The Parliament also gave the government the authority to sign a new loan agreement with the foreign lenders and approve a broader arrangement to reduce the amount Greece must repay to its bondholders.

The new austerity measures include, among others, a 22 percent cut in the benchmark minimum wage and 150,000 government layoffs by 2015 — a bitter prospect in a country ravaged by five years of recession and with unemployment at 21 percent and rising.

But the chaos on the streets of Athens, where more than 80,000 people turned out to protest on Sunday, and in other cities across Greece reflected a growing dread — certainly among Greeks, but also among economists and perhaps even European officials — that the sharp belt-tightening and the bailout money it brings will still not be enough to keep the country from going over a precipice.

It’s actually going to make things worse, because it will cause the economy to contract, and the last thing you want to do in order to get out of debt is to cut your salary.

The Bank Deal is Likely Worse Than it Sounds

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Because the details of the deal have not been released, and they may in fact not have actually been settled, which means that when they are finalized, they could be worse than what we have already heard.

In fact they almost certainly will be worse, because the state AGs and the Obama administration simply cannot afford pull defeat from the jaws of what they claim to be victory:

You know it’s bad when banks are the most truthful guys in the room.

Remember that historical mortgage settlement deal that was the lead news story on Thursday? It has been widely depicted as a done deal. The various AGs who had been holdouts said their concerns had been satisfied.

But in fact, Bank of America’s press release said that the deal was “agreements in principle” as opposed to a final agreement. The Charlotte bank had to be more precise than politicians because it is subject to SEC regulations about the accuracy of its disclosures. And if you read the template for the AG press release carefully, you can see how it finesses where the pact stands. And today, American Banker confirmed that the settlement pact is far from done, and the details will be kept from the public as long as possible, until it is filed in Federal court (because it includes injunctive relief, a judge must bless the agreement).

This may not sound all that important to laypeople, but most negotiators and attorneys will react viscerally to how negligent the behavior of the AGs has been. The most common reaction among lawyers I know who been with white shoe firms (including former partners) is “shocking”. Let me explain why.

Negotiating of large, complex deals (or even little deals) does not happen in one fell swoop. Even when the two sides have outlined the major terms, and in sone cases hammered out the really important ones in some detail, there is still a great deal of negotiating that takes place in finalizing the text of the contract. The negotiation over the definitive agreement makes a great deal of difference on how fair the pact turns out to be. For instance, one of the sayings of transaction lawyers is “He who controls the document controls the deal.” The party that writes up the initial version of the contract has undue influence because that becomes the default and the other side has to negotiate back from that language.

Politics is trumping both the law and mathematics, and this will not end well.

This is Why These F%$#s Need to Go to Jail

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Because the financial class is really a bunch of monsters:

Fannie Mae (FNMA) pulled the plug on a 2010 plan to forgive borrowers’ mortgage debt because company executives were “philosophically opposed” to the idea, a former company employee told House investigators.

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According to the letter, a former Fannie Mae employee told the committee that the mortgage finance company had developed a pilot program for reducing mortgage debt for borrowers who owe more on their house than the property is worth.

The purpose of the plan was to develop “a responsible way to reduce principal balances for underwater mortgage borrowers without creating undue incremental moral hazard,” the employee told the committee.

The pilot had preliminary approvals from officials at Fannie Mae, FHFA, and the Office of the Comptroller of the Currency, a bank regulator, according to the former employee.

In mid-2010, two weeks before its launch, senior Fannie Mae executives cancelled the program because they were “philosophically opposed to writing down principal balances,” according to the former worker, who was quoted in the letter without being identified.

“I believe that we could be saving tens of billions of dollars while also helping stabilize housing prices and stimulating economic growth,” the former employee said, according to the letter.

They f%$#ed the economy, but they are so convinced of their ultimate virtue that they are acting against the interests of the companies that they manage, and the taxpayers, because they have bought into a, “heads I win, tails you lose,” vision of crony capitalism in which they are the arbiters of virtue.

These people are dangerous sociopaths.