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

Meanwhile, In Every News Editor's Office Across America

Courtesy of ZeroHedge. View original post here.

Speaking the unspeakable...

Source: Townhall.com

...

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ValueWalk

Mass Deportations Coming?

By insidesources. Originally published at ValueWalk.

The accelerated deportation of illegal immigrants is brainless, cruel, antagonizing to many allies and neighbors and, ultimately, banal. Mass Deportations  are antithetical to our better natures and to the humane face of America that has made us an exemplar for human rights, a voice for the voiceless and, as Ronald Reagan said, “a shining city on a hill.”

It is American exceptionalism abandoned for petty prejudice.

Mass Deportations

PublicDomainPictures / Pixabay

There is linkage — there always is linkage — between the desecration of the Jewish Chesed Emeth Cemetery in University City, Mo., and those knocks on the door as the men from Immigration and Customs Enforcement (ICE) perpetrate the ...



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Phil's Favorites

Le Pen Calls for "Europe of Nations", Blasts EU as "the Problem"

Courtesy of Mish.

Striking back at the nannycrats who want “more Europe” including a “superstate”, French presidential candidate Marine le Pen instead seeks a “Europe of Nations”.

Bloomberg reports Le Pen Says French Foreign Policy Must Be Decided in Paris.

Laying out her foreign-policy vision in a speech in Paris, Le Pen spoke of a world based on nation states that pursue their own interest and preserve their own cultures without interference.

“To assure the freedom of the French, there is no price too high too pay,” Le Pen said. “The foreign policy of France will be decided ...



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Kimble Charting Solutions

Gold & Silver; Knocking on breakout door again!

Courtesy of Chris Kimble.

Silver and Gold have continued to head lower since highs reached back in 2011. Is the 6-year bear market nearing an end?

Below looks at the Silver/Gold ratio over the past decade. To be long and strong Silver and Gold, the preference would be for this ratio to be heading higher.

CLICK ON CHART TO ENLARGE

The ratio has formed a clean falling channel (series of lower highs and lower lows) inside of (1). Three different times it knocked on the underside of falling...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil Sands Batter Major Explorers' Reserves as Rout Sinks Value (Bloomberg)

Oil-sands investments in Western Canada that gobbled tens of billions of dollars over the past decade are proving an Achilles heel for some of the world’s biggest energy producers.

A definitive breakdown of the gloomy state of Wall Street (Business Insider)

Don't be fooled by the strong rebound in Wall Street trading revenues at the end of 2016: Investment banks still had a lousy year.

...



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Chart School

Market Pause

Courtesy of Declan.

Nothing really to add to yesterday. Markets took minor hits, but there was little intraday spread. The biggest spread was in the Russell 2000 which was underperforming heading into today's session. It reversed most of yesterday's gains, but it has some way to go before it begins challenging the breakout


The New Lows and Highs is in a secular bullish pattern, and it will take continued pressure in spike lows to generate a sustained sell off - none of which is happening here.

...

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Digital Currencies

It's Time To Beat Up On Credit Suisse and Their Woefully Misinformed Bitcoin Advice

Courtesy of Reggie Middleton at Zero Hedge

Credit Suisse has been posting cryptocurrency advisories over the last few weeks. They are quite one-sided, although couched in the appearance of objectivity. To explain why it's couched in the appearance of objectivity, and not actually objective, let me give you some background. 

The Obama administration enacted a law known as the Fiduciary Rule, as per Investopedia

The Department of Labor’s definition of a fiduciary demands that advisors act in the best interests of their clients, and to put their clients' interests above their own. It leaves no room for advisors to conce...



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Members' Corner

Lumber Liquidators Leukemia?

Courtesy of The Nattering Naybob

Phil – LL –   "I can see the ad campaign now: "Our lumber hardly kills you!" 

We Nattered... Today Feb 23, 2016 down -19.5% premarket from $14.21 to $11.27.   

Somebody forgot to convert feet to meters. The CDC said it made an ERROR in the Feb 10th report and had used an incorrect value to calculate ceiling height, which meant its estimates of the airborne concentration of cancer-causing formaldehyde were about three times lower than they should have been. 

Considering myeloid leukemia, some cancers and formaldehyde are linked at the hip, wonder if overexposure had anything to do with the CEO's leukemia?  

LL subsequently went to $19.67 on Sept 30th and has since cooled down to $15....



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OpTrader

Swing trading portfolio - week of February 20th, 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

NSA May Be Withholding Intel from President Trump

By Jean Luc

These GOP guys were so worried about Hillary's email server and now we find out that we had something close to a Russian mole in the White House. In the meantime, Trump keeps on using his unsecured phone, had high level conversation in his resort in front of dinner guests! It's getting so bad that rumors are now circulating that the NSA is not sharing information with the WH:

NSA May Be Withholding Intel from President Trump

By 

….Our spies have had enough of these shady Russian connections—and they are starting to push back….In light of this, and out of worries about the White House’s ability to keep secrets, some of our spy agencies have begun withholding intelligence fro...



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Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



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Biotech

The Medicines Company: Insider Buying

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

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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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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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...

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