Posts Tagged ‘Paulson’

Time To Indict Geithner For Securities Fraud

Time To Indict Geithner For Securities Fraud

Courtesy of Mish

The web of known parties guilty of fraud, coercion, or securities manipulation keeps getting bigger. Please consider N.Y. Fed Told A.I.G. Not to Disclose Swap Details.

The Treasury Department announces a new partnership with the Department of Education in Washington

Starting in November 2008, the Federal Reserve Bank of New York under Timothy Geithner began urging American International Group, the huge insurer that the government had bailed out, to limit disclosure on payments made to banks at the height of the financial crisis, e-mail messages obtained by DealBook show.

The e-mail exchange between the bailed-out insurance giant and its regulator portray a strange reversal of roles, with A.I.G. staff arguing for the disclosure of certain details on payments for credit-default swaps to major banks, only to be discouraged by officials at, or representing, the Federal Reserve.

In a draft of one regulatory filing, A.I.G. stated that it had paid banks — including Goldman Sachs Group, Merrill Lynch, Société Générale and Deutsche Bank — the full value of C.D.O.’s, or collateralized debt obligations, that they had bought from the company.

In the response to that draft from the law firm Davis Polk and Wardwell, which represented the New York Fed, that crucial sentence was crossed out, and did not appear in the final version filed on Dec. 24, 2008.

In a March 12 e-mail message whose subject line is “Fw: counterparties” — importance: “high” — Kathleen Shannon, a senior vice president at A.I.G., writes:

“In order to make only the disclosure the Fed wants us to make, which we understand to be to not include the CUSIPs or Tranche names and give the amounts by counterparty on a total rather than a transaction by transaction basis, we need to have a reasonable basis for believing and arguing to the SEC that the information we are seeking to protect is not already publicly available.”

The messages were initially obtained by Representative Darrell Issa, Republican of California and ranking member of the House Oversight and Government Reform Committee, and first reported by Bloomberg News.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information to the S.E.C.,” Representative Issa said in an e-mailed statement.

Mr. Geithner, for his part, has defended the A.I.G. rescue, saying he had no choice but to pay full value


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You Stupid Fool (Bernanke)

You Stupid Fool (Bernanke)

Courtesy of Karl Denninger at The Market Ticker

Does anyone remember my ranting at Paulson when he was talking about his "Bazooka"?  Here is what I said:

This joins the list of other "dead wrong" statements you’ve made, of which I am keeping a running copy and sent them around on the 19th of July. 

How many times do you get to be wrong as Treasury Secretary Hank before you resign in shame?

And now I must ask again – is that really a Bazooka in your pocket, or an empty launcher?  I’m not the only one that’s curious you know; the bond market seems to think it smells like BS, and so does the stock market.

Fannie and Freddie collapsed, remember?

Paulson was proved - and rather quickly so - to be completely full of crap.

Bernanke’s comments today may have just provoked a dollar catastrophe – a collapse move that may have just begun.  Witness this chart:

The market took about 10 minutes to discern that Bernanke’s "concern" was BS, and now has pushed in the chips – "all in" – breaking key support below 75 – and still going.

The carry traders have redoubled their bets and obviously intend to force Bernanke to either put up or shut up.

The problem with Paulson’s claim is that when the market called the bluff he wound up sticking the taxpayer for up to $400 billion, of which more than $100 billion has now been dissipated.

It appears the FX market intends to force Bernanke (and Geithner) to either defend the dollar or allow it to collapse.  The violence of this move and the concurrent "ramp job" that accompanied it in the S&P 500 makes clear a few points though.

  • The "efficiency" of transmission between this move down and the move up in the stock market is lower than the previous moves have been, although the correlation remains intact.
  • The FX markets will press this bet incessantly as they did when Geithner last mouthed the "strong dollar" mantra.

The Fannie and Freddie game wound up bankrupting both firms and forcing the government to bail them
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Bernanke Guilty of Coercion and Market Manipulation

Bernanke Guilty of Coercion and Market Manipulation

Courtesy of Mish
 
In April Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis I made the case that BAC chairman Lewis was guilty of fraud and Paulson was guilty of coercion in regards to the shotgun wedding between Bank of America and Merrill Lynch.

The case against Bernanke was weaker because of Bernanke’s selective memory. When confronted by Congress with his role in this mess, Bernanke defense was that he did not remember what he said while Paulson called Bank of America a "Turn in the Punchbowl".

Please see Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America "Turd in the Punchbowl" for details.

In July, Paulson attempted to defend himself, and in doing so Paulson Admitted Coercion. I asked again "Where are the Indictments?"

Today, I am asking the same thing again.

Please consider Bank of America Told Aid May Help Stock, E-Mail Shows.

Bank of America Corp. signed off on its government-assisted purchase of Merrill Lynch & Co. after U.S. regulators said the deal might boost the shares, e-mails from two executives showed. Instead, the stock collapsed.

“The chairman of the Federal Reserve indicated it would be structured in a manner such that BAC stock should go up when announced,” Chief Financial Officer Joe Price said in a Dec. 29 e-mail to executives of the Charlotte, North Carolina-based bank, including Chief Executive Officer Kenneth D. Lewis.

The e-mails are among more than 1,000 pages of documents sent last week to the House Oversight Committee. Bloomberg News was provided a portion of what the committee received in its investigation of the Merrill acquisition. A hearing is scheduled Oct. 22 at which two Bank of America directors and former General Counsel Timothy Mayopoulos are to appear.

“The strategic wisdom of the Bank of America-Merrill Lynch deal is now obvious to everyone,” bank spokesman Lawrence Di Rita said in an interview. “These documents and e-mails reveal the good faith deliberations among those who understood that first.”

Bank of America provided documents to the committee Oct. 16 after agreeing to forego its right to keep discussions with its lawyers confidential. The bank didn’t make the documents public.

The documents include “talking points” prepared by the bank’s law firm to be used by Lewis for a


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Where The Hell Is The Outrage?

Great post by Mish.  There’s a lot to be outraged about, and Mish provides a comprehensive list which, if you feel it, share it with friends and family. – Ilene  

Where The Hell Is The Outrage?

Courtesy of Mish

The number of articles and opinions on Goldman Sachs earnings, bonuses, and influence pedaling over the past several days is quite stunning.

Candy Expo Opens In Chicago

Many have pointed out the problems; few have expressed outrage over what is happening in general, not just at Goldman Sachs. Let’s take a look.

My take is at the end.

Letting The Dice Roll

Rolfe Winkler at Contingent Capital is writing Letting Goldman Roll The Dice.

Is Goldman really such an indispensable financial intermediary? One look at the firm’s revenue breakdown shows that it’s more casino than anything else, and some of the markets it makes still put the economy in danger.

Goldman, in other words, generates most of its revenue trading its own money and earning vigorish on customer transactions. It’s a hybrid hedge fund and bookie, with an investment bank and asset management business thrown in for good measure.

With that in mind, one is left to wonder whether Goldman was really worth saving last year. What have taxpayers received for the $50 billion worth of cash and guarantees, for giving Goldman access to the Federal Reserve as its lender of last resort?

Saving Goldman was largely about saving the derivatives market, which is so big and unstable that the death of one counterparty could mean the death of all. With big commercial banks like JPMorgan Chase in deep, saving the derivatives business was as much about protecting depositors and maintaining the integrity of the payment system as it was derivatives themselves.

To Goldman’s credit, they’ve rebuilt their capital levels faster than anyone. Their leverage ratio has fallen from 35 to 16 in less than two years, despite pressure from equity analysts to juice returns by deploying “excess capital”. But at $50 billion, the bank’s mark-to-myth, or level 3, assets remain as high as its tangible common equity, the cushion it has to absorb losses.

Wall Street and its protectors at the Fed and Treasury tell us the bailout was necessary to protect the financial system, to protect Main Street. That may be. But Main Street still owns much of the risk while Wall Street gets


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Judge Rejects Sweetheart Deal Between SEC and BofA; NY Attorney General Cuomo Sharpens Axe

Judge Rejects Sweetheart Deal Between SEC and BofA; NY Attorney General Cuomo Sharpens Axe

sweetheart dealCourtesy of Mish

The sweetheart deal between the SEC and Bank of America is surprisingly under attack today as a Federal Judge rejects deal between SEC, BofA over bonuses.

A federal judge on Monday rejected a $33 million settlement between the Securities and Exchange Commission and Bank of America Corp., saying the SEC’s accusations of inadequate disclosure by the bank over bonuses paid at Merrill Lynch must now go to trial.

The SEC announced last month that it had settled its civil charges against BofA, which agreed to buy the New York investment bank last year, without the bank admitting or denying guilt in the case. BofA has said it didn’t violate disclosure rules.

U.S. District Judge Jed Rakoff held up his approval of the settlement, however, and ordered the SEC last month to explain why it didn’t pursue charges against specific executives at Bank of America over the accusations.

After receiving additional statements from the SEC and BofA last week, Rakoff ruled Monday that the proposed $33 million settlement "cannot remotely be called fair," and ordered that the case go to trial beginning Feb. 1.

Rakoff, in his ruling, found that the proposed settlement "suggests a rather cynical relationship between the parties: the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger, the bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."

Cuomo Sharpens Axe

Related to the above decision, inquiring minds are reading Cuomo preparing charges against BofA.

The New York Attorney General’s office is preparing charges against several high-ranking Bank of America executives over the bank’s alleged failure to disclose details about its acquisition of Merrill Lynch, according to a person familiar with the investigation.

Attorney General Andrew Cuomo’s office is likely to file civil charges against the executives over their role in failing to alert shareholders to mounting losses as well as accelerated bonus payments at Merrill, said the person, who requested anonymity because no charges have been filed yet.

Bonus Issue Should Be A Sideshow

The issue of a civil lawsuit


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Please don’t call gold an investment, but rather an insurance policy: a look at premium paid vs. coverage received

Please don’t call gold an investment, but rather an insurance policy: a look at premium paid vs. coverage received

gold, investmentCourtesy of Financial Hippie

Not an investment… Any time someone is trying to pitch gold to you as an "investment", he is probably trying to sell you commemorative coins for 2x the intrinsic value. Gold doesn’t make sense from a fundamental investing point of view.

  • It can’t create value on its own
  • It currently trades at more than 50% of replacement cost
  • Demand comes from the eyes of the beholder. Industrial use is barely over 10% of total demand. Annual mining of gold only contributes to 1.5% of total above ground stock. We have a few hundred years of above ground supply for industrial use. Just the scrapping of gold every year covers industrial demand by 2x.  Why are we even mining this stuff?

World Gold Council Primer

 

Buffett shies away from gold, because he’s bullish on America long term and doesn’t feel he needs such an insurance policy, right or wrong.

… but a much needed insurance policy against the establishment. Scary and unprecedented numbers coming out of both fiscal and monetary policies worldwide are increasing demand for protection of wealth. But hold on, just like buying any insurance product, you have to think about how much premium you are paying vs. the coverage you are receiving.

Let’s first take a look at how much premium the coverage costs. I’m going to triangulate the premium in 3 ways.

1) The eyeball regression method. If I draw a fitted line through the graph, the predicted value is probably $500ish 2000 dollars or $550 today. Premium = $400.  

Real Price of Gold vs. Inflation Expectations

 

2) The comparable method. The CRB Commodity Index is down 40% since last June. Gold? roughly flat. Premium = $400 to $500.

3) The inductive method. If inflation expectations since 5/31/09 has been cut in half, shouldn’t the price of gold also be cut in half? Premium = $400 to $500.

Let’s call it $450.

Different payout scenarios under the coverage. If you believe inflation expectations will go beyond the scenarios that I have outlined below by year end 2012, then you should vote for Ron Paul.

Scenario 1. Bernanke surprises pundits, tightens earlier than expected. Inflation expectation remains at 2-3% range. Trend line value of gold increases…
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Treasury, FDIC And More: How Many Lies?

Treasury, FDIC And More: How Many Lies?

Courtesy of Karl Denninger at The Market Ticker


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Bank of America

Bank of America

Courtesy of Tim Knight’s Slope of Hope

There’s been a lot of excited chatter about legendary hedge fund manager Paulson buying up an enormous stake in B of A during Q2, making him one of their largest shareholders.

That’s awesome for Paulson and his investors, because the average price of B of A in Q2 was about $9. It’s currently about double that. So this has been a fantastic investment.

What’s a little perplexing, though, is why people would consider an investment made last quarter, at much better prices, to be a clear "Buy" signal for this stock. As I look as this chart, it doesn’t exactly look like a raging buy to me………..

0813-bac


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Throwing Bernanke under the bus

Here’s Edward Harrison’s take on the Bernanke hearings. – Ilene

Throwing Bernanke under the bus

throw under the busCourtesy of Edward Harrison at Credit Writedowns

In case you missed it, Federal Reserve Chairman Ben Bernanke was on Capitol Hill this morning making his case in regards to the Bank of America – Merrill Lynch deal.  The Chairman stated in unequivocal terms that he did not pressure anyone.  Rather, he stated that he cautioned Ken Lewis about the prudence of invoking a MAC clause and doubted whether Lewis could be successful in extracting himself from the deal (I agree that the MAC clause was not going to help BofA).

Whether Bernanke is justified in his defense is irrelevant at this juncture.  What is relevant, however, is that the Bank of America – Merrill Lynch deal has become a central episode for political recriminations and posturing.  As I said two weeks ago:

My take here is that the Bank of America case has become very political – and that means the blame game is going to be played. Someone — Bernanke, Lewis, Thain or Paulson — is going to take the fall.  The knives are out.

Indeed, the knives are out and it is looking increasingly likely that Bernanke will be the scapegoat.  Below is a Bloomberg News video with Rep. Edolphus Towns (D-NY), Chairman of the House Oversight Committee.  If you listen to what Towns is saying, it does not look very good for Ben Bernanke. 

Next on the hot seat: Hank Paulson.

 

Earlier today at Credit Writedowns, courtesy of Edward: 

Is Bernanke Toast? If he is, Summers is a shoo-in

conspiracy theoryHere’s a conspiracy theory for you.  As I am not much of a conspiracy theorist, I ill keep this one pretty simple. Here’s the chain of events.

Back in late September when the world was falling apart, Ben Bernanke, Tim Geithner and Hank Paulson were all desperate to keep things from unravelling.  As a result, they were pleased that Ken Lewis and Bank of America were willing to pony up  massive $44 billion to take over Merrill Lynch. They might even have encouraged the deal (i.e. we will smooth the way.  There will be no FTC hurdles. We will soft peddle investigation into Countrywide mortgage fraud, etc)

The problem, of course, was that Merrill Lynch was a bottomless pit of…
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Overalottment: May 25

Tyler Durden’s Overalottment: May 25

  • Must Read: Henry Paulson – "I didn’t understand the retail [mortgage] market, I just wasn’t close to it" (Newsweek)
  • Dallas Fed’s Fisher: "Don’t monetize the debt" [too late Dick] (WSJ)
  • Cushman & Wakefield exec says CRE is doomed due to lack of securitization (NYPost)
  • Euro falls on renewed concern over European banking system (Bloomberg)
  • Deripaska nears deal to retain empire (Reuters)
  • China warns Fed over "printing money" (Telegraph)
  • Yuan drops by most in 2 months on signs China gains halted (Bloomberg)
  • Libor’s plunge could trap banks (Telegraph)
  • South Korea won, stocks drop on concern over more North Korean nuclear test (Bloomberg)
  • ECB to buy bonds in June, to seek quick exit [mm hmm] (Bloomberg)
  • 50% of employers suspend college recruitment (Guardian)
  • Geithner dismisses Republican socialism charge as ridiculous
     

 


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Phil's Favorites

Trump Tweeting As Much As Ever Amid Twitter Standoff

 

Trump Tweeting As Much As Ever Amid Twitter Standoff

By , Statista

President Trump has signed an executive order which aims to remove some of the legal protection given to social media companies, though it is expected to face significant legal hurdles. In a nutshell, it sets out to clarify the Communications Decency Act, handing regulators the power to file legal proceedings against social media companies for the way they police content on their platforms. Trump's decision to take action comes two days after Twitter attached a fact check to one of his tweets lambasting mail-in voting. He then threatened to close ...



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ValueWalk

Gold supply chain in recovery mode after pandemic shutdown

By Michelle Jones. Originally published at ValueWalk.

The gold supply chain was largely shut down as the COVID-19 pandemic spread around the world. However, things are starting to open back up, and production is beginning again. The World Gold Council studied the gold supply chain, how it was impacted by the pandemic, and how the disruption of the supply chain has affected investment demand for the yellow metal.

Q1 2020 hedge fund letters, conferences and more

Disruption to the gold supply chain

The World Gold Council said the gold supply chain is entirely global because the metal is mined on evert continent except Antarctica and refined in nume...



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Biotech/COVID-19

Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate

 

Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...



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Zero Hedge

Ted Cruz Accuses Twitter Of Violating Sanctions Against Iran, Demands DoJ Probe

Courtesy of ZeroHedge View original post here.

We've mentioned in nearly every single one of our posts about this week's dustup between the president and Twitter that the Ayato...



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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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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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Promotions

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.