Posts Tagged ‘Dick Fuld’

The Next Financial Crisis Will Be Even Worse

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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Does Our Economy Really Have to Run on Fraud?

Does Our Economy Really Have to Run on Fraud?

Courtesy of MICHAEL HUDSON, writing at CounterPunch 

William Hogarth's print published in 1721, satirising the South Sea Bubble. People queue to enter Devil's shop, while he cuts up Fortune. Clerics of various denominations gamble (1.foreground) People ride on wooden hobby horse. Honour is flogged in the stocks by Villainy and Honesty is broken on the wheel with self-interest acting as confessor. Engraving

What is the difference between today’s economy and Lehman Brothers just before it collapsed in September 2008? Should Lehman, the economy, Wall Street – or none of the above – be bailed out of bad mortgage debt? How did the Fed and Treasury decide which Wall Street firms to save – and how do they decide whether or not to save U.S. companies, personal mortgage debtors, states and cities from bankruptcy and insolvency today? Why did it start by saving the richest financial institutions, leaving the “real” economy locked in debt deflation?

Stated another way, why was Lehman the only Wall Street firm permitted to go under? How does the logic that Washington used in its case compare to how it is treating the economy at large? Why bail out Wall Street – whose managers are rich enough not to need to spend their gains – and not the quarter of U.S. homeowners unfortunate enough also to suffer “negative equity” but not qualify for the help that the officials they elect gave to Wall Street’s winners by enabling Bear Stearns, A.I.G., Countrywide Financial and other gamblers to pay their bad debts?

There was disagreement last Wednesday at the Financial Crisis Inquiry Commission now plodding along through its post mortem hearings on the causes of Wall Street’s autumn 2008 collapse and ensuing bailout. Federal Reserve economists argue that the economy – and Wall Street firms apart from Lehman – merely had a liquidity problem, a temporary failure to find buyers for its junk mortgages. By contrast, Lehman had a more deep-seated “balance sheet” problem: negative equity. A taxpayer bailout would have been an utter waste, not recoverable.

Lehman CEO Dick Fuld is bitter. He claims that Lehman was unfairly singled out. After all, the Fed lent $29 billion to help JPMorgan Chase buy out Bear Stearns the preceding spring. In the wake of Lehman’s failure it seemed to gain the courage to say, “Never again,” and avoided new collapses by bailing out A.I.G. – saving all its counterparties from having to take a loss.

Was this not a giveaway? Fuld implied. Why couldn’t the Fed and Treasury do for Lehman what they did with other Wall Street investment firms and stock brokers: let it reclassify itself as a bank so it could pawn off…
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Outrageous But Legal: AIG Scam Mastermind Joseph Cassano Avoids DOJ Charges

Outrageous But Legal: AIG Scam Mastermind Joseph Cassano Avoids DOJ Charges

Courtesy of Damien Hoffman

Although we are getting closer to the handcuff phase of the economic crisis, the US Department of Justice does not have the authority to bring charges against AIG (NYSE: AIG) or uncollateralized credit default swap mastermind Joseph Cassano. This is another classic case of the criminals being 10 steps ahead of the police.

Also, this raises a much more important issue: when extremely harmful or completely unethical behavior is exceptionally creative or cutting edge, it may not yet be deemed illegal.

So, in this case, there were $1,000 an hour lawyers toiling more than 24 hours a day to abet destructive behavior. This is completely identical to the nifty off balance sheet scams engineered by Enron. As we speak, armies of the brightest legal minds are pouring over the new Financial Regulation Bills in order to help another savvy client do the same.

When will we preempt this game of smart cat and slow mouse? When we establish a set of core principals in finance which establish an ethical playing field. I discussed this in depth on Fox Business on Friday night, and I will be publishing my full proposal in the weeks to come.

Unfortunately, until we transform the Wild West of Wall Street into a productive gridiron, the next financially engineered scam is inevitable. And until we arrest and punish CEOs like Lehman Brother’s Dick Fuld, corporate executives will continue using the ridiculous excuse that they somehow deserve all the credit when their strategy is successful yet somehow had no idea what was happening when their strategy screwed others. Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) are also particularly adept at this PR game.

Yesterday, Joseph Cassano’s attorney, F. Joseph Warin, said ”[T]he results are wholly appropriate in light of our client’s factual innocence.” This is public relations speak for: “Since you suckers did not have a law prohibiting my client’s destructive behavior, he was appropriately allowed to escape punishment by your incompetent law makers and executives.”

Outrageous, but legal.

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If you are interested in more detailed trading and investing ideas, try a free trial Wall St. Cheat Sheet Premium newsletter written by Wall St. Cheat Sheet founders Derek and Damien Hoffman


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Culture of Deceit: Why Dick Fuld So Needlessly and Recklessly Perjured Himself Before Congress

Culture of Deceit: Why Dick Fuld So Needlessly and Recklessly Perjured Himself Before Congress

Courtesy of JESSE’S CAFÉ AMÉRICAIN

"Truth is not only violated by falsehood; it may be equally outraged by silence." 
Henri-Frederic Amiel

Yet another whistle blower who had been completely ignored by the SEC just stepped forward.

A Bloomberg analyst reported around noon NY time that they had verified Mr. Budde’s story, and that indeed Dick Fuld easily had received cash in excess of $500 million in compensation for the period in question, higher than even Henry Waxman had asserted in his charts during Dick Fuld’s testimony.

Mr. Budde, a former counsel who was frustrated and plain fed up with the culture of personal greed and deceit among the Lehman executives stepped forward again to tell his story after being completely ignored by the SEC and the Lehman Board of Directors.

Now, I have some sympathy for Dick Fuld. I mean, when you are making the big bucks owed to a master of the universe, and you eat widows and orphans for breakfast, what does it really matter if it is $300 million, or $550 million, or even the one billion that some estimate was the true total compensation? What is a few hundred millions when you wipe your behind with Cohiba cigars, and gargle with Cristal Brut 1990?(Oh yeah, that’s class, real class. I must finally be somebody, and not just some schmuck from the Bronx. I’ll show them, show them all.)

I know I have trouble keeping track of what I have exactly in my own wallet at times, especially after paying the kids a couple of quid to walk the dog. And $200 million is hardly a significant sum anymore in the rapidly expanding compensation universe change on Wall Street. There is the locus of Bernanke’s inflation, the FIRE sector, where the liquidity has been channeled, for years.

But what interests me most is why did Dick Fuld perjure himself over something so obviously verifiable, and largely irrelevant? Doesn’t he file tax returns? Did he mess up using Turbo Tax like other board members of the NY Fed are said to have done? Or was he just a little bit ashamed of taking huge sums from a company that he ran into the ground in a Ponzi scheme? On the other hand Goldman execs…
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Lehman CEO’s “Sergeant Schultz Defense” of Repo 105

Lehman CEO’s "Sergeant Schultz Defense" of Repo 105

Courtesy of Mish

Inquiring minds are interested in Lehman CEO Dick Fuld’s defense of Repro 105. Please consider Fuld Says Lehman Used Repo 105s to Satisfy Accounting Mandates.

Richard Fuld, the former chief executive officer of defunct Lehman Brothers Holdings Inc., said the Wall Street firm reported certain repo transactions as sales because accounting rules required it to do so.

“Lehman should not be criticized for complying with the applicable accounting standards,” Fuld said in the prepared text of testimony to be presented to Congress tomorrow.

Fuld reiterated that he had “absolutely no recollection whatsoever hearing about Repo 105 transactions while I was CEO of Lehman.”

Sergeant Schultz Defense

Do you believe Fuld did not know about Repo 105? I don’t. Moreover, Repro 105 was decidedly illegal so it is preposterous to propose "accounting rules required it to do so".

In essence Fuld is pleading incompetence. Moreover, he sounds just like Sergeant Schultz with his ridiculous attempts to exonerate himself. With any luck a smoking gun will turn up and Fuld will end up in prison where he belongs.

For more on Repo 105 please see Lehman’s Alter Ego – How Lehman Hid Risk In Shell Corporations; Where is The Indictment of Ex-CEO Dick Fuld?

Mike "Mish" Shedlock


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Chris Dodd Asks Department Of Justice To Probe Lehman Repo 105 And “Other” Accounting

Chris Dodd Asks Department Of Justice To Probe Lehman Repo 105 And "Other" Accounting

Courtesy of Tyler Durden

Not to worry Dick "Tragic, Mistaken Figure" Fuld – after all Repo 105, what was the line, merely "vindicated you." There is absolutely no need to jump on a one flight to Caracas.

Dick FuldMarch 19, 2010

The Honorable Eric H. Holder, Jr.
Attorney General of the United States
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, D.C.  20530

Dear Attorney General Holder:

I am deeply concerned about the facts that have come to light regarding the demise of Lehman Brothers and the accounting manipulation that contributed to it. I respectfully ask you to commission a task force to investigate the Lehman situation as well as other companies that may have engaged in similar accounting manipulation with a view to prosecution of employees or agents who contributed to any violations of the law.     

According to the Report of the U.S. Trustee-appointed Examiner Anton R. Valukas, Lehman presented a misleading picture of its financial condition to the public by using extensive repurchase agreements known as Repo 105 transactions. The Examiner found that "Lehman did not disclose its use — or the significant magnitude of its use — of Repo 105 to the Government, to the rating agencies, to its investors, or to its own Board of Directors." The result was to conceal its holdings of bad assets and to temporarily remove approximately $50 billion of assets from its balance sheet at the end of the first and second quarters of 2008. The Examiner found that Lehman used Repo 105 transactions for no other articulated purpose than to shrink its balance sheet at the quarter-end, in a manner that deceived investors and creditors about its true financial state and misleading others.     

We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets. A task force investigation and taking appropriate Federal actions in these matters will contribute to these goals.

Sincerely Christopher J. Dodd Chairman 

Portrait: Courtesy of Wall Street Cheat Sheet


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One Year After Lehman: We Don’t Love These Bros.

Straight Shooter?  LOL

Straight Shooter? LOL

No one misses Lehman Brothers.

Yeah, I said it.

On September 15th 2008, the investment bank filed for bankruptcy after 6 months of protestations by Dick Fuld, Erin Callan and the rest of the brain trust that all was well at 745 Seventh Avenue in Times Square.

Enough has and will be written about the causes but I’ll sum it up for those who love delicious irony:

Lehman became a global powerhouse because of real estate and fixed income, Lehman went bankrupt because of real estate and fixed income.

If you’re reading this from your new/old offices at Barclays Capital Markets, save your breath – I’m not interested in how profitable the investment banking and trading businesses used to be and how you guys got screwed.

The fact of the matter is, without the absurd risks taken in the name of earnings growth and market share, your trading and banking businesses would never have grown to where they were.

Live by the gun, die by the gun.

The fate of Lehman’s profitable units was inextricably linked to the business units that bit off more than they could chew.  This is the exact reason why I have been against the paying of bonuses to employees at failed organizations who happened to have run a profitable division amidst the red ink.  They were only profitable because of the scale they were blessed with, directly proportional to the size of the mother ship (parent company).

You can’t and shouldn’t have it both ways.

One year later, from living and working on The Street, I can say emphatically that there is much more nostalgia for Bear Stearns than there is for Lehman Brothers.  This is ironic because during its lifespan, Bear was always looked at as “the outsider” of the bulge bracket firms.

Lehman’s final months were a mixture of unjustified hubris and calculated deceit.  The lengths that were gone to in order to keep up appearances were, in retrospect, extraordinary.  Fuld’s game of footsie with sovereign wealth funds and Korean banks should have moved past the foreplay


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Phil's Favorites

LNG Shipper Flex LNG

 

Transformity's Tobin Smith is highlighting LNG Shipper Flex LNG (FLNG) today for his subscribers and us. The company goes ex-dividend tomorrow, so he's also suggesting reading this article and, if you're interested, buying shares today under $25. 

LNG Shipper Flex LNG

Courtesy of Tobin Smith, Editor-in-Chief, Transformity Investor PRO

Investment Idea: Buy $FLNG under $25 with $30-$34 target (buy today, shares go ex-dividend tomorrow) 

We have been waiting patiently for Flex LNG (too patiently, actually) to increase their nearly 3% dividend to what made sense given the huge demand for LNG imports into Europe and Asia (especially China) and our cash flow estimates.  Well...in the last few days, FLNG raised their dividend by 80%. If we act quickly, we can lock about a $3/...



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Zero Hedge

Risk Assets Don't Have A Central Bank Superhero This Time

Courtesy of ZeroHedge View original post here.

By Michael Read, Bloomberg Markets Live commentator and reporter

Why hasn’t risk bounced?

Why hasn’t there been a large troupe of dip buyers at the ready after Friday’s rout? 

There are three main factors behind the underwhelming price action so far this week:

  1. The emergence of previous variants has come as central bankers were roughly midway through an easing program: there was a backdrop of asset purchases and dovish forward guidance to placate an angsty market. This time not so much, and while policy makers may twe...



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Biotech/COVID-19

Omicron: why the WHO designated it a variant of concern

 

Omicron: why the WHO designated it a variant of concern

Courtesy of Ed Feil, University of Bath

The World Health Organization (WHO) has announced that the B.1.1.529 lineage of Sars-CoV-2, thought to have emerged in southern Africa, is to be designated as a variant of concern (VoC) named omicron. This decision has already precipitated a broad shift in priorities in pandemic management on a global scale.

The WHO has recommended, among other things, increased surveillance, particularly virus genome sequencing; focused research to understand the dangers posed by this...



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Politics

The first Thanksgiving is a key chapter in America's origin story - but what happened in Virginia four months later mattered much more

 

The first Thanksgiving is a key chapter in America’s origin story – but what happened in Virginia four months later mattered much more

In the 19th century, there was a campaign to link the Thanksgiving holiday to the Pilgrims. Bettman/Getty Images

Courtesy of Peter C. Mancall, USC Dornsife College of Letters, Arts and Sciences

This year marks the 400th anniversary of the first Thanksgiving in New England. Remembered and retold as an allegory for perseverance and cooper...



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Chart School

Gold and Silver still working higher

Courtesy of Read the Ticker

Using Gann Angles from zero we can time the next run up, and it is near.

The last two days gold and silver are down on the back of central bankers talking the US Dollar higher in a attempt to off set inflation. A rising dollar is a form of tightening. Also the talk of a faster 'taper' has sent interest rates higher. But Luke Gromen knows this cant not last.

@LukeGromen Externally-financed twin deficit nations with insufficient external financing (ie the US, not Japan) cannot abide rising real rates for long.


RTT Comments: What this means a higher US Dollar makes it harder for those outside the US to buy the vast quantity of US Treasuries. 


U...

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Digital Currencies

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

 

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

Safe as houses? iQoncept

Courtesy of Jean-Philippe Serbera, Sheffield Hallam University

Cryptocurrencies have had an exceptional year, reaching a combined value of more than US$3 trillion (£2.2 trillion) for the first time in November. The market seems to have benefited from the public having tim...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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