The Next Financial Crisis Will Be Even Worse
by ilene - July 7th, 2011 1:47 am
By Brett Arends
The last financial crisis isn’t over, but we might as well start getting ready for the next one.
Sorry to be gloomy, but there it is.
Why? Here are 10 reasons.
1. We are learning the wrong lessons from the last one. Was the housing bubble really caused by Fannie Mae, Freddie Mac, the Community Reinvestment Act, Barney Frank, Bill Clinton, "liberals" and so on? That’s what a growing army of people now claim. There’s just one problem. If so, then how come there was a gigantic housing bubble in Spain as well? Did Barney Frank cause that, too (and while in the minority in Congress, no less!)? If so, how? And what about the giant housing bubbles in Ireland, the U.K. and Australia? All Barney Frank? And the ones across Eastern Europe, and elsewhere? I’d laugh, but tens of millions are being suckered into this piece of spin, which is being pushed in order to provide cover so the real culprits can get away. And it’s working.
2. No one has been punished. Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide , along with many others, cashed out hundreds of millions of dollars before the ship crashed into the rocks. Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains. But they aren’t in jail. They aren’t even under criminal prosecution. They got away scot-free. As a general rule, the worse you behaved from 2000 to 2008, the better you’ve been treated. And so the next crowd will do it again. Guaranteed.
Read the rest here: The Next Financial Crisis Will Be Even Worse – SmartMoney.com.
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FDIC Authorizes $1 Billion Lawsuits Against Failed-Bank Executives; Token Search for Low-Profile Scapegoats
by ilene - October 10th, 2010 4:41 pm
FDIC Authorizes $1 Billion Lawsuits Against Failed-Bank Executives; Token Search for Low-Profile Scapegoats
Courtesy of Mish
The FDIC has only brought one case to date against executives of failed banks. Supposedly more charges are coming.
Bloomberg reports FDIC May Seek $1 Billion From Failed-Bank Executives
The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 officers and directors of failed banks as the agency aims to recoup more than $1 billion in losses stemming from the credit crisis.
The lawsuits were authorized during closed sessions of the FDIC board and haven’t been made public. The agency, which has shuttered 294 lenders since the start of 2008, has held off court action while conducting settlement talks with executives whose actions may have led to bank collapses, Richard Osterman, the FDIC’s acting general counsel, said in an interview.
“We’re ready to go,” Osterman said. “We could walk into court tomorrow and file the lawsuits.”
The FDIC, which reviews losses for every bank failure, has brought only one case against officers or directors tied to recent collapses — a suit filed in July seeking $300 million in damages from four executives of IndyMac Bancorp Inc.
The FDIC “brings suits only where they are believed to be sound on the merits and likely to be cost-effective,” according to an agency policy statement that dates from the savings-and- loan crisis of the 1980s. That requires considerations of whether an individual, if sued, has the means to pay or an insurance policy to cover all or part of the claim.
“It doesn’t make sense to file a lawsuit if at the end of the day you have a low chance of recovery,” Osterman said.
“It’s in both our interest and theirs to try and settle this matter before it gets into the court and we get into expensive litigation,” he said.
Political Stunt to Placate the Public
I see this as little more than a political stunt to placate the public. These cases are unlikely to go to trial, on purpose, and not for the reason the FDIC says.
The FDIC does not want to rattle the banking system, so they won’t. Instead they will settle most if not all of these cases for peanuts.
To make it look legit, the FDIC might pursue a couple of scapegoat cases, IndyMac being one of them, but don’t expect anything more.
Criminal…
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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...
Ilene is editor and affiliate program
coordinator for PSW.