Posts Tagged ‘Brooksley Born’

Deciphering Joe Cassno’s Lies Before The Financial Crisis Inquiry Commission

Courtesy of Tyler Durden of Zero Hedge 

Submitted by David Fiderer

Deciphering Joe Cassno’s Lies Before The Financial Crisis Inquiry Commission

Joe Cassano is a very good liar, which is why it would be so hard to prosecute him for perjury. When testifying before The Financial Crisis Inquiry Commission, the former head of AIG Financial Products kept blending in half-truths with his audaciously dishonest claims, so that the overall effect was nonsensical. For instance, to justify his outrageous claim that, "the books were generally considered fully hedged," he explained that "we were using it basically in actuarial basis …[so] it’s not hedged in the conventional sense." (Translation: The book was never hedged in any sense. Nor was there any actuarial analysis, only a reliance on triple-A credit ratings.) These rhetorical tricks were designed to throw sand in everyone’s face. But his tactics seem to have worked. The staunchly unregenerate Cassano framed a media narrative that deflected away from his dishonesty and gross incompetence.

Here’s a reality check on some of his more ridiculous claims, in order of appearance:

1. Cassanos’s Claim: AIGFP never compromised its high underwriting standards.
The Truth: AIGFP had no underwriting standards pertaining to the most important risk, which affected AIG’s liquidity
.

Commission Chairman Phil Angelides asked Cassano if he understood the subprime risks he insured. Cassano stonewalled with a lot of doubletalk:

Angelides: I want to talk to you about this, that these were represented as multisector CDOs. But if you look at — we did a sample of some of these in 2004, 2005, 2006, they were almost overwhelmingly residential-backed and very substantially subprime. For example, in the survey we did of some of these CDOs that you issued protection on, 84 percent were backed by RMBS residential mortgages in ’05, 89 percent in ’06. And just as an example, while you indicated you decided to stop writing on subprime instruments in January of ’06, for example, you backed an instrument called RFC III where that CDO was 93 percent subprime and seven percent HELOC home equity loans.

My question for you, Mr. Cassano, is was there — you said you did thorough due diligence. Were you aware of the quality of the mortgages? Do you do direct analysis of the loan data? Were you confident that you had a full understanding of the nature of what you were backing?


continue reading


Tags: , , , , ,




David Viniar Walks A Thin Line Between Truth And Perjury At Today’s FCIC Hearing

David Viniar Walks A Thin Line Between Truth And Perjury At Today’s FCIC Hearing 

Courtesy of Tyler Durden

Today, during the FCIC’s second day of hearings, Goldman CFO David Viniar was forced to provide additional data about the firm’s AIG CDS trades. Luckily the firm kept a record of all entry and exit points, and thus will be able to confirm just what the P&L of the associated trades is (and if not, we are happy to teach Goldman’s risk department how to use the Bloomberg CDSD function in conjunction with RMGR run scraping to build a real time CDS portfolio tracker)… Which is ironic, because when asked by Brooksley Born why the firm has not yet provided a break down of its derivative revenue Mr. Viniar by all accounts perjured himself. As Bloomberg reported: “We don’t have a separate derivatives business,” Viniar told the panel. “It’s integrated into the rest of our business.

Uh… what?

Every evening, a firm’s back office (and that most certainly includes Goldman) takes the EOD CDS and cash marks from every single prop trader, be they equity, fixed income, mortgage, FX, etc. and using its own integrated pricing system or an outsourced one, compiles a daily P&L which is immediately sent to the head of the risk division, the head of trading, and other various listserv participants. And most certainly the traders, who have every interest of knowing just how they did in any given day as they prepare their bonus speech at the end of the fiscal year. Traders, who combine cash and CDS trading simply look at a consolidated P&L on the basis of DV01 exposure, which makes the form of product used completely irrelevant, and is a process whereby every change in 1 basis point in interest rates is equivalent to a profit or loss. Every single derivative is presented in Goldman’s daily risk summary on a DV01 basis to show not only maximum possible loss, but what the daily profit or loss may have been. This makes the tracing of both revenue from derivatives and cash products seamless.

Obviously even the FCIC panel was fully aware of this: 

When you tell us that you don’t know how much you make in your derivatives business, nobody here really believes it,” [Commissioner Byron] Georgiou told Viniar. “Nobody here believes that you don’t know how much money you’re


continue reading


Tags: , , ,




Frontline Special On Brooksley Born’s Attempt To Tame Derivatives

Frontline Special On Brooksley Born’s Attempt To Tame Derivatives 

Courtesy of Tyler Durden

Think Blanche Lincoln’s attempts to tame derivative trading are new? Think again. During the 1990′s, its was the CFTC’s  Brooksley Born who was the original crusader, attempting to warn about the dangers posed by an unregulated and out of control explosion in synthetic exposure. And just like Lincoln’s current role reprisal will likely end up being neutered by the Dodd-Frank tag team, so Born’s warnings continuously fell on deaf and conflicted ears. To see how 12 years ago one person was predicting precisely what may happen if JPM got its way to drown the world in $1.2 quadrillion of derivatives, watch this Frontline video "The Warning" from late last year: a fascinating hour-long adventure into the shadowy Over The Counter world which everyone has an opinion on, yet so few understand.

 

h/t TwentypercentTV


Tags: , , ,




The Warning: Brooksley Born’s Battle With Alan Greenspan, Robert Rubin And Larry Summers

If you missed "The Warning," watch it here, thanks to John. – Ilene

The Warning: Brooksley Born’s Battle With Alan Greenspan, Robert Rubin And Larry Summers

Courtesy of John Carney at Clusterstock

alangreenspan closeup tbiLast night PBS’s Frontline aired a new documentary called The Warning. If you missed it, you are in luck. We’ve got it right here. 

Here’s how Frontline describes the documentary.

"We didn’t truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency — the Commodity Futures Trading Commission (CFTC) — who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

In The Warning, airing Tuesday, Oct. 20, 2009, at 9 P.M. ET on PBS (check local listings), veteran FRONTLINE producer Michael Kirk (Inside the Meltdown, Breaking the Bank) unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn’t know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton’s powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group — former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin — convinced him that Born’s attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born’s battle behind closed doors was epic, Kirk finds. The members of the President’s Working Group vehemently opposed regulation — especially when proposed by a Washington outsider like Born.

"I walk into Brooksley’s office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She’s hanging up the…
continue reading


Tags: , , , , , , , , , , , , , ,




 
 
 

Zero Hedge

CNN Cancels Dr. Drew's Show One Week After He Voiced "Grave Concern" For Hillary's Health

Courtesy of ZeroHedge. View original post here.

One week ago, board-certified medicine specialist, TV personality and CNN employee Dr. Drew Pinsky broke the mold of conformity, when he said that he is "gravely concerned" about presidential candidate Hillary Clinton’s health, pointing out that treatment she is receiving could be the result of her bizarre behaviors.

Appearing on KABC’s McIntyre in the Morning, Pinsky said he...



more from Tyler

ValueWalk

The Minimum Wage Alternative No One Is Talking About

By insidesources. Originally published at ValueWalk.

Lawmakers and activists have often touted the minimum wage as a way to address poverty, but one tax break could provide an alternative that is less economically risky.

Photo by WageIndicator.org – Pictures from Paulien Osse and

The Earned Income Tax Credit (EITC) is a tax break aimed specifically at lower income households. It helps the working poor by allowing them to keep more of their paycheck when paying income tax. Some experts note the policy could help the poor while avoiding many of the economic shortfalls that the minimum wa...



more from ValueWalk

Phil's Favorites

Uncertainty Soars in China and UK

Courtesy of Mish.

Global uncertainty is on the rise, led by China and the UK.

In the US and Europe measures of uncertainly are on the decline. I gather this from a chart that ZeroHedge tweeted this morning.

Global Uncertainty

I asked ZeroHedge where the chart came from and he replied “In today’s Citi report from Willem Buiter”.

OK, but where did Buiter get the data?

Although the scales are different, the answer appears to be Economic Policy Uncertainty. The the patterns match precisely.

Economic Policy Uncertainty UK

...



more from Ilene

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

OMEGA: 'The in-place equity bull market should last a long time' (Business Insider)

It's a good time to be in stocks, according to Omega Advisors' Steve Einhorn.

The stock market should forge ahead on its bull run, Einhorn said in an email Sunday to macro traders that was viewed by Business Insider.

Goldman Sees Pound, Yen and Kiwi Most Exposed to Yellen Shock (Bloomberg)

Goldman Sachs Group Inc. sees the pound, the yen and the New Zealand dollar as most vulnera...



more from Paul

Chart School

S&P 500 Snapshot: Another Down Day Before Jackson Hole Friday

Courtesy of Doug Short's Advisor Perspectives.

Equity markets around the globe posted losses today, rather minor ones in the US. Our benchmark S&P 500 spent the day in a narrow range between its 0.16% late morning high to its -0.26% intraday low at the beginning of the final hour of trading. It trimmed about half the loss to close at -0.14% for the day. Today's trading range was at the 9th percentile of the 164 market day so far in 2016. Volume was on the light side in advance of the final day of the Jackson Hole event, with Fed Chair Yellen in the spotlight tomorrow morning.

The yield on the 10-year note closed at at 1.58%, up two basis points from the previous close.

Here is a snapshot of past five sessions in the S&P 500.

Here is daily chart of index. We see th...



more from Chart School

Kimble Charting Solutions

Gold Mining stocks could be breaking important support

Courtesy of Chris Kimble.

Gold mining stocks have had a great year 2016. From the lows, GDX is up over 100%, remaining inside of a steep rising channel. The rising channel GDX has been in during this historic sharp rally, could be breaking.

CLICK ON CHART TO ENLARGE

GDX has remained inside of the blue rising channel for the majority of 2016. This channel has contained a 100% rally in the past few months.

The rally took GDX up to an unfilled GAP, just below its 38% Fibonacci retrac...



more from Kimble C.S.

Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



more from Biotech

OpTrader

Swing trading portfolio - week of August 22nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Digital Currencies

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust

 

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust 

By  at Bloomberg

Excerpt:

Stefan Thomas, who introduced millions of people to bitcoin, has had a change of heart.

Blockchain, the ledger software that makes the digital currency possible...



more from Bitcoin

Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



more from M.T.M.

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David

Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



more from Promotions

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>