Financial Crime of the Century

[dlry]

Goldman Under Fire (Again): Ponzi Bonuses?

What's being alleged here is that they have effectively pilfered the public Treasury and then paid that out as bonuses, rather than doing with it as Treasury intended and their shareholders were entitled to, which is to use the capital to rebuild the firm's foundation and strengthen it against future potential losses.

Goldman Under Fire (Again): Ponzi Bonuses?

Are we seeing once again the same game being played that WaMu played in the spring of 2007 - and which started me writing Tickers?
In his lawsuit (PDF), Brown states that Goldman Sachs gave out $4.82 billion in bonuses in 2008, despite earnings of only $2.32 billion that year. The lawsuit alleges that the company spent 259 percent of its income in the first quarter of 2009 on compensation.
Uh, that's kinda interesting. It is somewhat like WaMu, no?

http://tinyurl.com/yda6pb4

[dlry]

January 8, 2010: Compliments of The Huffington Post...Timothy Geithner, I Call Your Bluff
by Janet Tavakoli, President, Tavakoli Structured Finance, Inc.

The Treasury responded to reports that the New York Fed asked AIG to suppress and delay facts about the bailout. Meg Reilly, a Treasury spokesperson claimed: "In the transaction at the heart of this dispute...the FRBNY [Federal Reserve Bank of New York] made a loan of $25 billion which is on track to be paid back in full with interest." She claims the loan is currently "above water."
In the first place, that loan is not the heart of the dispute. Nonetheless, the FRBNY should immediately release the details of all of the Maiden Lane III assets backing that loan and show the current prices BlackRock has placed on them. Based on the current market, it is extremely likely that the loan is underwater.

As for Goldman Sachs's approximately $8.2 billion in CDOs (including synthetic CDOs) that are still on AIG's books, they can be settled at ten cents on the dollar, and excess collateral currently held by Goldman can be returned. This is the value at which other bond insurers have settled similar deals. The return of payments to AIG can be used to pay down its public debt, before banks pay tax-payer subsidized bonuses to their employees.

http://tinyurl.com/y9ovybp

[Entendance]

http://www.nypost.com/p/news/business/t ... z0cGYJHt8H



Last posts? at <View active topics>

You may add <active topics> to your favourite links
search.php?search_id=active_topics

[dlry]

Issa On AIG: "The American People Deserve Somebody's Head On A Platter"

Darrell Issa asks the key question: "If not Tim Geithner then who? What's wrong with a system that the New York Fed can hand out your tax dollars in these quantities and not think it is particularly important to make sure it's the right amount."

http://tinyurl.com/yj5dszz

[sowhat]

Nobody checks in or out. If you want to know what life would be like if you were the last human alive, visit Detroit.
http://tellittoal.newswires-americas.com/?p=2562

In this economy, many people are having trouble paying for a funeral and burial of a loved one. Some families are not claiming their relatives' remains, placing the responsibility on taxpayers. In many U.S. towns boxes containing unclaimed human remains are literally stacking up.

[Entendance]

Watch the Financial Crisis Inquiry Commission's grilling of Blankfein, Dimon, Mack and Moynihan live and turbofan enginge commercial free at the FCIC's
http://www.fcic.gov/watch/


last posts? at
search.php?search_id=active_topics

[GSIMMERLE]

Watching the Senate Testimony

Ad hoc observations.
Lloyd Blankfein seems like Al Capone as compared to Jamie Dimon as Lucky Luciano...
...

http://jessescrossroadscafe.blogspot.co ... imony.html

[dlry]

The Subsidy That Won't Die

The big banks claim the government isn't helping them anymore. Not exactly. Check out this little-known subsidy.

Banks and financial institutions have to pay money to get money. When they pay less to borrow, it's much easier to make profits, and they tend to borrow more of it. When they have to pay more to borrow, it's more difficult to make money. This chart (from Bloomberg, via Zero Hedge) breaks down the TLGP borrowings of individual institutions as of Nov. 30 and the interest rates they're paying. General Electric was the largest user, with nearly $88 billion. (Its GE Capital unit has prodigious borrowing needs.) But GE was followed by the big bailed-out banks: Citigroup ($64.6 billion), Bank of America ($44.5 billion), JPMorgan ($39.7 billion), Morgan Stanley ($25 billion), Goldman Sachs ($21.26 billion), and Wells Fargo ($9.5 billion). With the exception of Citi, the government no longer owns shares in these firms. And so they feel the government should have no say in their practices going forward.

But if these firms are such rugged individualists, why do they persist in borrowing on the public's credit rather than their own? And why did they do it in the first place? After all, unlike with the TARP, participation in the TLGP program was entirely voluntary. Here's a list of the banks that opted out of the program: You'll note that the Wall Street biggies aren't on it. At any time, the banks could go out into the public markets and raise debt to replace the taxpayer-subsidized borrowings. But they haven't. The reason: It would make them less profitable. Take Goldman. The chart shows that Goldman was paying a blended rate of 0.767 percent annual interest on $21.3 billion in FDIC-guaranteed debt. For every 100 basis points (i.e., if that debt bore an interest rate of 1.7 percent instead of 0.7 percent), Goldman is saving $213 million in interest costs per year. In the spring of 2009, when much of this debt was issued, the spread—i.e., the difference between the interest rates charged to private-sector corporate borrowers and to the government borrowers—was significant. In April 2009, it stood at 540 basis points. I don't know what to call this other than a huge subsidy.

http://tinyurl.com/ygk9zwm

[dlry]

Watch

Elizabeth Warren: Behind the TARP Bailout

http://tinyurl.com/ybgonte

[dlry]

Coincidences, coincidences...................gets a little old don't you think?


Larry Summers, Robert Rubin: Will The Harvard Shadow Elite Bankrupt The University And The Country?

At the heart of the new system of power, says Janine Wedel, is "a decline in loyalty to institutions" and "the proliferation of players who swoop in and out of organizations with which they are affiliated." There is no more vivid example of this phenomenon than Harvard University, which for centuries was held together by institutional loyalty. Today, that loyalty has eroded, and those at the top act much more flexibly. Yet they still enjoy almost unlimited power. Like all forms of mismanagement, Harvard's woes call for transparency and accountability. The story resonates to Washington, where Harvard's power elite is deeply entangled.

Harvard lost $11 billion from its endowment last year, plus another $2 billion by gambling with operating cash and $1 billion in bad bets on interest rate fluctuations. Harvard had been borrowing vast sums to leverage its assets and to expand its physical plant; its president, Lawrence Summers, had described as "extraordinary investments" what ordinary people would call crushing debt. The only way to balance the looming deficits was through huge investment returns. The speculating worked for a while, but when the bubble burst, Harvard was left almost insolvent.

The Corporation is stunningly secretive. The members are listed on a Harvard web page--but with no contact information. Their meetings and agendas are unannounced, their decisions unreported. The Fellows, scattered across the country, are isolated from the institution they govern. Even the university's statutes--the closest thing to a constitution limiting the Corporation's discretionary power--are almost impossible to locate. The colonial-era board structure is failing the modern university.

In September, 2000, the government sued Harvard, Shleifer, and others, claiming that Shleifer was lining his own pockets and those of his wife, hedge fund manager Nancy Zimmerman--formerly a vice president at Goldman Sachs under Rubin.

http://tinyurl.com/yc9yf4s