Why Congress Won’t Investigate Wall Street

April 30, 2009

Good luck with those record poll numbers for the first 100 days, America. And don’t forget: keep talking to the hand. And if you happen to have a little moment in between drooling, ask yourself: who pays for the bank bail-outs? Remember, they need to be bailed out because they have debts so indecent they need to wear pants in public. And you think your president can pay off those debts?! He can’t, not even now he’s taken everything you own. You didn’t own nearly enough before, and you owe nothing but debt today. Any appeals to transparency and the rule of law will be dealt with the way Ken Lewis tried today at the Bank of America shareholders meeting. He told that bunch of sore losers that he was mum on Merrill’s losses because of “systemic risk”. He did so just a short while after telling Andrew Cuomo it was because Paulson and Bernanke made him do it. Hey, who cares about the difference anymore? All we need to do is sit back and wait for Obama to start using terms like “systemic risk” and “national security”. He will as soon as those numbers start dropping. For now, though, it’s Lala Land all the way. US GDP drops even faster than Germany, and the street turns a “healthy profit”. We must be stuck in Pleasantville, Land of Oz, and glued to the Truman Show. Say what you will, but the Obama campaign is one of the most outstanding sales jobs in history, fridges for Eskimo’s territory. The economy tanks, and stocks rise. A politician robs his voters blind, and his ratings go through the roof. This is not a housing bubble or credit bubble we’re witnessing, it’s a reality bubble. -Ilargi

[The Automatic Earth]

Why Congress Won’t Investigate Wall Street [WSJ]

If millions of households no longer qualify for a mortgage, then who’s going to be buying the 8 million houses which are in default? Yes, speculators are busy snapping up “bargains,” but few seem to ask who will be buying from the speculators. [oftwominds; Housing: the Steeplechase Analogy]


Hopium: the fragile hope that a future re-inflated bubble will lift the value of worthless assets back to their bubble-era glory.

Advertisements

Pecora, Roosevelt, Mitchell

April 28, 2009

A little historical perspective courtesy of Dr. Housing Bubble:

Pecora Commission Where Art Thou? Lessons from the Great Depression Part XXVI: Time to put the Bankers and Wall Street on Trial. “Legal chicanery and pitch darkness were the banker’s stoutest allies.

excerpt:

“Yet who right now is pursuing this avenue? Mr. Pecora was able to do this because he had experience breaking up bucket shops and understood the corrupt structure that had infiltrated Wall Street. He managed to scour the books and present the information to the public in a manner that simply solidified the corruption on Wall Street. Right now, all we get is a high tax rate on bonuses to AIG executives. GM’s CEO has been ousted and the U.S. government is taking a hard stance against the beleguered automaker. What of Bank of America or Citigroup? What of Goldman Sachs? How exactly are they turning a profit in this market? Instead of a hard stance we give them more money!”

CalPERS opposes entire Bank of America board

But who will vote out the CalPERS board? [Reuters]

How would you like to own 55% of a white elephant?

The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.

Fiat SpA “eventually” will own 35%, and the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.

[WSJ]

Ask the employees at the latimes.

The old K-car used to have a little badge on the dash which read “Assembled with indifference in the USA.”  I shit you not.

Ponz du jour

David Schindler, an attorney for Mr. Danny Pang, said his client expects to be fully vindicated.

[Dealbreaker] [Dealbreaker][Calif. financier Danny Pang arrested by FBI]


Men plan and God laughs.


Damning with faint praise

April 27, 2009

“What’s good for General Motors is good for the country?”
[The Great Depression of 2006]

Say hello to 'Bubbles'

Banks are destroying new homes because they cannot sell them
[Daniel] [Part 2]

Bulletin From the Hindenburg: A Housing Crash Update
[Mike Whitney via patrick.net]

Fannie Mae wasted $462 million in unsecured loans to troubled homeowners to get them current on their payments
[Housing Kaboom]

Our Next Troubled Bank: The Fed

[The Big Picture]

Great Depression Rallies; Historical perspective of bear market rallies
[The Big Picture]


Right on

April 27, 2009

Epic fail

April 26, 2009

Bloomberg accuses Geithner of fraud and collusion

April 24, 2009

Turbo Timmeh Shitener (he of the extensively deficient resumé) is the ultimate scam artiste.

BB doesn’t come right out and say it (this is the MSM after all), but the implication is there in black and white:

“Compare that with Treasury Secretary Timothy Geithner’s latest proposal to help financial institutions remove unwanted loans and mortgage-backed securities from their balance sheets.

“Under the Treasury’s Public-Private Investment Program, the size of which could hit $1 trillion, the government plans to invest side-by-side with private investors who place bids on toxic assets that have plummeted in value. Those buyers, lured by federal loans and guarantees, might include affiliates of the same struggling banks and insurance companies the program is designed to assist.”

I suppose Ferdinand Pecora is rolling over in his grave. He never expected his report on the fraud and abuse that laed to GD1 would actually be used as a primer for .gov to game the markets.

“As with an old-fashioned pool, one of the public-private program’s biggest vulnerabilities is that it invites collusion. That was one of the points made in a report this week by the Troubled Asset Relief Program’s inspector general.”

Dark pools of mattter

“The Treasury program’s goal is to drive up prices and stimulate trading, so the financial institutions can minimize their losses and replenish their capital. Should the prices later collapse, taxpayers could end up with the vast majority of any losses.

As with an old-fashioned pool, one of the public-private program’s biggest vulnerabilities is that it invites collusion. That was one of the points made in a report this week by the Troubled Asset Relief Program’s inspector general.”

““In both the Legacy Loans Program and the Legacy Securities Program, the significant government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit,” the report said.”

Turbo Taxcheat Timmeh looking out for his cronies friends. Expect him to be amply compensated.

“No Controls

“Similar collusion could occur in the program for mortgage- backed securities. Fund managers might agree to overpay for each other’s holdings, leaving taxpayers to bear the losses. So far, the report said, the Treasury Department hasn’t set up the systems it needs to ensure proper oversight, such as basic conflict-of-interest rules or disclosure requirements for the private-equity firms’ owners.”

In Turbo Tim’s world, every asset always appreciates. Always.

“The main premise of Geithner’s plan is that the banks’ toxic assets are now priced at artificially low levels. As the federal bailout program’s Congressional Oversight Panel wrote in an April 7 report, “Treasury has not explained its assumption that the proper values for these assets are their book values,” rather than the prices unsubsidized investors would pay for them.

” ‘If Treasury’s premise proves false, we may end up looking back on the Public-Private Investment Program as an elaborate pump-and-dump game. Only this time, unlike with the pools that sucked in gullible investors during the 1920s, the big losers would be taxpayers — who never had the choice of not playing.’ ”

“It’s hard to imagine that Pecora would think any of this is a good idea.”

[BB]


legerdemain
1 : sleight of hand
2 : a display of skill or adroitness


Stoke the fire

April 22, 2009