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?


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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


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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


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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…
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Zero Hedge

Paul Craig Roberts Warns "The World Is Going Down With Trump"

Courtesy of ZeroHedge. View original post here.

Authored by Paul Craig Roberts,

On June 21 the editorial board of the Washington Post, long a propaganda instrument believed to be in cahoots with the CIA and the deep state, called for more sanctions and more pressure on Russia.

One second’s thought is sufficient to realize how bad this advice is. The orchestrated demonization of Russia and its president began in the late summer of 2013 when the British Parliament and Russian diplomacy blocked the neoconned Obama regime’s pla...



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ValueWalk

Magic Quadrant In Picking Stocks And Sports Betting

By Jacob Wolinsky. Originally published at ValueWalk.

Picking stocks is a tricky game and so is sports betting. With the NFL and NCAA football seasons only a few months away, we can analyze the professional sports-betting industry to better understand the complexities behind making money in the stock market. Anybody who has traveled to Las Vegas, and bet on a sporting event, understands that simply choosing a game winner is not enough for a casino to pay you winnings. You also need to forecast how many points you think a certain team will win or lose by (i.e., the so-called “spread”) – see also What Happens in Vegas, Stays on Wall Street. In the world of stocks, winning/losing is not measured by spreads but rather equities ...



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Phil's Favorites

Uber gets a backseat driver as Kalanick exits top job

 

Uber gets a backseat driver as Kalanick exits top job

Courtesy of John ColleyWarwick Business School, University of Warwick

TED Conference/Flickr, CC BY-NC ...



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Insider Scoop

Marveling At Multi-Factor ETFs

Courtesy of Benzinga.

Related This Goldman ETF Keeps Growing Getting Smarter About Smart Beta Related ...

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Digital Currencies

Bitcoin In Perspective: Bill Gates Worth More, Gold 200 Times More

Courtesy of Mike Shedlock, MishTalk

An interesting article on HowMuch puts the Bitcoin phenomenon into proper perspective.

Google founder Larry Page’s net worth beats bitcoin’s entire market cap. Microsoft founder Bill Gates’s net worth is double Bitcoin.

Please consider The Bitcoin Economy, in Perspective.

Last year, Bitcoin became more stable than gold, and earlier this year, the price of a Bitcoin surpassed that of an ounce of gold for the first time. Currently, all the bitcoin in the world is ...



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Chart School

Russell 2000 at Rising Support

Courtesy of Declan.

There wasn't much to say about today, but the one index which caught my attention was the Russell 2000. The index caught a bounce in demand at the rising trendline and also did enough to recover the 20-day MA. Traders looking for pullback opportunity could take a look at the Russell 2000. Stops on a loss of 1,397.


The Nasdaq is primed for a move to challenge 6,350. Today's doji marks indecision just below 6,250 but if it can push above this price level it would likely trigger a spate of short covering. Technicals hav...

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Biotech

Even though genetic information is available, doctors may be ignoring important clinical clues

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

Even though genetic information is available, doctors may be ignoring important clinical clues

Courtesy of Greg HallCase Western Reserve University

Digitized strand of DNA. Mathagraphics/From www.shutterstock.com

With the availability of home genetic testing kits from companies such as “23andMe” and “Ancestry DNA,” more peo...



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OpTrader

Swing trading portfolio - week of June 19th, 2017

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 ...



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Mapping The Market

Frontier laid off state Senate president after broadband vote it didn't like

Courtesy of Jean-Luc

Speaking of FTR – not nice people…

Frontier laid off state Senate president after broadband vote it didn’t like

By Arstechnica.com

Broadband provider Frontier Communications recently laid off the West Virginia state Senate president after a vote the company didn't like—and yes, you read that correctly.

West Virginia does not have a full-time legislature, and state lawmakers can supplement their part-time government salaries ($20,000 a year,&...



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Members' Corner

Robert Sapolsky: The biology of our best and worst selves

Interesting discussion of what affects our behavior. 

Description: "How can humans be so compassionate and altruistic — and also so brutal and violent? To understand why we do what we do, neuroscientist Robert Sapolsky looks at extreme context, examining actions on timescales from seconds to millions of years before they occurred. In this fascinating talk, he shares his cutting edge research into the biology that drives our worst and best behaviors."

Robert Sapolsky: The biology of our best and worst selves

Filmed April 2017 at TED 2017

 

p.s. Roger (on Facebook) saw this talk and recommends the book ...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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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...

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