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

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 2

 

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 2

Courtesy of John Mauldin, Thoughts from the Frontline

Last week we started a mini-series in the form of an open letter responding to a series of essays by Ray Dalio, the founder of Bridgewater Associates. I wrote that he was kinda, sorta wrong in Why and How Capitalism Needs to Be Reformed, Parts 1 and 2 but really, really wrong in ...



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Zero Hedge

Hong Kong Rocked By Biggest March Yet After Extradition Bill Pulled; Millions Demand Lam Resign

Courtesy of ZeroHedge. View original post here.

Despite City Executive Carrie Lam's major concession to the protest movement - that is, the (not really) 'indefinite' suspension of the extradition bill that catalyzed the protests - a planned protest march went ahead as scheduled on Sunday, marking the second consecutive Sunday of street protests in Hong Kong.

...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Kimble Charting Solutions

Gold Bugs Index Attempting 8-Year Breakout, Says Joe Friday

Courtesy of Chris Kimble.

Are Gold Bugs fans about to receive positive news they haven’t had in years? Possible!

This chart looks at the Gold Bugs Index (HUI) on a weekly basis over a couple of decades. The index has spent the majority of the past 20-year inside of rising channel (1).

The index hit the top of the channel in 2011, where it peaked and started creating a series of lower highs for the past 8-years, which has formed line (2).

The index is now kissing the underside of falling resistance and the underside the 2016/2017 lows at (3).

Joe Friday Just The Fa...



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Insider Scoop

Wedbush: Apple's Stock Could Gain $20-$25 From US-China Trade Deal

Courtesy of Benzinga.

The Sino-American trade dispute and near-term developments could prove to be a "major swing factor" for Apple Inc. (NASDAQ: AAPL), according to Wedbush.

The Analyst

Daniel Ives maintained an Outperform rating on Apple with an unchanged $235 pric...



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Chart School

Silver Review

Courtesy of Read the Ticker.

The folks in the federal reserve will debase the US dollar currency to an extreme degree silver will finally lift off the floor.. 

Note: Readers should re watch the silver back screen news video, here.

The following video looks at price action and Wyckoff logic.

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If gold moves, silver wi...

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Digital Currencies

Cryptos Are Crashing As Asia Opens, Bitcoin Back Below $8k

Courtesy of ZeroHedge. View original post here.

Having survived the day's bloodbath in US tech stocks, cryptos are crashing in the early Asian session, apparently playing catch-down to the day's de-risking.

While no catalyst is immediately evident, there are some reports noting 13 large global banks are preparing to launch digital versions of major global currencies next year, though we suspect this drop was more algorithmic that fundamental-driven.

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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...

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