Category Archives: Obama administration

Openness and Transparency, Anyone?

28 Thursday Oct 2010

Posted by in bailout, Obama administration, too big to fail, Wall Street

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Fiction:

My Administration is committed to creating an unprecedented level of openness in Government.  We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government.

Transparency promotes accountability and provides information for citizens about what their Government is doing.  Information maintained by the Federal Government is a national asset. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use.

Fact:

“The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used.

More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!”

None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees.”

So much for openness and transparency.

Dems Get $32 Million Line of Credit from Bank of America

28 Thursday Oct 2010

Posted by in Bank of America, Congress, Democrats, Foreclosures, Obama administration, Politics, Wall Street

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I’m sure the Obama administration’s opposition to a national foreclosure moratorium and its willingness to look forward and give the big banks, Bank of America for instance, a do-over on fraudulent court documents has absolutely nothing to do with this:

“Shortly after Labor Day, as polls continued to sink, the Democratic National Committee (DNC) realized it needed a cash infusion for the upcoming midterm elections. Its chairman, former Virginia Governor Tim Kaine, turned to the Bank of America to secure a $15 million revolving credit line. Then, in the middle of this month, the Democratic Congressional Campaign Committee (DCCC) got another loan from BofA for an additional $17 million.”

Nothing to see here. Move along.

William Black: “Fire Holder, Fire Geithner, Fire Bernanke”

26 Tuesday Oct 2010

Posted by in AIG, bailout, Financial Crisis, Foreclosures, Justice Department, Obama administration, too big to fail, Wall Street

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Lisa Epstein and William Black on Dylan Ratigan’s show yesterday:

Speaking of Geithner telling “one lie after another”:

“The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program.

“In our view, this is a significant failure in their transparency,” said Neil M. Barofsky, the inspector general, in an interview on Monday.”

Zero Hedge has more of Mr. Barofsky’s report:

“This conduct has left the Treasury vulnerable to charges it has manipulated its methodology for calculating losses to present two different numbers depending on its audience: one designed for release in early October as part of a multifaceted publicity campaign touting the positive aspects of TARP and emphasizing the reduction in anticipated losses, and one, audited by the GAO for release in November as part of a larger audited financial statement. Here again, Treasury’s unfortunate insensitivity to the values of transparency has led it to engage in conduct that risks further damaging public trust in the Government.”

‘Manipulated its methodology for calculating losses?” Didn’t Jeff Skilling and Andy Fastow go to prison for that?

“Risks further damaging public trust in the Government?” Is that even possible?

Foreclosuregate, Cont’d

20 Wednesday Oct 2010

Posted by in economy, Foreclosures, Justice Department, Obama administration, too big to fail, Wall Street

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Bank of America has completed its “internal review” of alleged improprieties in its foreclosure proceedings–a review of 102,000 foreclosures that took all of 17 days–and found, surprise surprise, zero mistakes:

“Bank of America  announced on Monday that it would resume home foreclosures in nearly two dozen states, despite the running controversy over how banks handled tens of thousands of cases of homeowners facing eviction.

Bank of America, the nation’s largest bank and the servicer of roughly one in five American mortgages, insisted that it had not found a single example where a foreclosure proceeding was brought in error.”

Not so fast, says one state’s assistant attorney general involved in their own investigation:

“A day after the bank said it would once again pursue defaulting borrowers in the 23 states where foreclosures were overseen by the courts, judges in Florida said they were expecting even more challenges from defaulting homeowners.

…“There has been an attempt by some of the major servicers to indicate there are no problems,” said Patrick Madigan, an assistant attorney general in Iowa. “We’re not at the end of this process. We’re at the beginning.”

But BofA has much bigger problems than a few lawsuits from a few homeowners, the big boys are coming after them to buy back the mortgage bonds packed with toxic garbage that BofA was peddling:

“The fears behind mortgage bond-gate might be real after all. Reports indicate that Bank of America is has been asked to repurchase some of its mortgage bonds by some very prominent investors due to procedural failures. Who are those investors? BlackRock Inc. — the largest money manager in the world, PIMCO — the largest Bond fund investor, and the New York Federal Reserve are said to be among them…Metlife, the biggest U.S. life insurer, is expected to join this group of investors demanding repurchase.

Bank of America is the target thanks to its acquisition of Countrywide in 2008. These investors say that Countrywide failed to properly service mortgages which were repacked into bonds. How many bonds? According to Bloomberg, these investors want Bank of America to repurchase $47 billion worth.”

Here’s why this entire fiasco, from origination to securitization to foreclosure, is going to be difficult if not impossible to unwind. From a BofA June court filing:

“It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies”…[T]hat is the reason that two different banks sometimes try to simultaneously foreclose on the same home.”

Finally, the feds are getting in on the act, too:

“Members of President Obama’s Financial Fraud Enforcement Task Force [Justice, Treasury, HUD, and the SEC] and other administration officials are scheduled to meet Wednesday to discuss the foreclosure crisis.”

Frankly, I have no confidence that anything substantive will come from this group. I see one of two outcomes. Either they open an investigation, bury it, and we never hear a word of it again, or they go after a few low-level flunkies and the MOTU skate. As usual.

To be continued…

Who Says Crime Doesn’t Pay?

16 Saturday Oct 2010

Posted by in economy, Financial Crisis, Justice Department, Obama administration, too big to fail, Wall Street

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It certainly paid well for two former executives of Countrywide yesterday in the settlement of a civil lawsuit brought by the Securities and Exchange Commission charging Angelo Mozilo, former CEO, and David Sambol, former president, with securities fraud and insider trading. A scam which netted the two a total of nearly $160 million.

The first two paragraphs of the story read like this:

“Angelo R. Mozilo, who as head of home-loan giant Countrywide was at the center of the housing boom and bust, agreed Friday to pay a record fine as part of a $73-million settlement of a government fraud lawsuit over the lender’s near-collapse.

The deal with the Securities and Exchange Commission requires Mozilo, the highest-profile figure to be accused of wrongdoing in the mortgage meltdown, to personally pay a $22.5-million fine. The government said it would be the largest penalty ever paid by a senior executive of a public company in an SEC settlement.”

Then come the “buts”:

“Mozilo…also agreed to pay $45 million in “ill-gotten gains” to former Countrywide Financial Corp. shareholders, who lost billions when the company’s stock price plunged as defaults on home loans surged. But Bank of America Corp., which bought Countrywide in 2008, and Countrywide’s insurers will pay that amount under terms of Mozilo’s employment contract.

Countrywide’s former president, David Sambol, agreed to pay $520,000 in fines and $5 million in restitution. Bank of America will reimburse him for the latter.”

So to recap, Mozilo pays $22.5 million, Sambol pays $520,000. During the period covered by the suit Mozilo received $141.7 million, Sambol $18.3 million, while Countrywide was losing $1.6 billion. But that’s just a snapshot:

“For years, Mr. Mozilo was among the highest-paid executives in America and his S.E.C. fine is a fraction of the vast wealth he amassed running Countrywide. In one eight-year period, from 2000 until he left the company in 2008, Mr. Mozilo received total compensation of $521.5 million, according to Equilar, a compensation research firm.”

Mozilo is still the subject of a criminal investigation by the Justice Department, but anyone who believes this DOJ will pursue criminal charges against any of the financial industry’s Masters of the Universe hasn’t been paying attention. The next one prosecuted will be the first. Gotta keep looking forward, you know.

Foreclosure Fraud Just the Tip of the Iceberg

12 Tuesday Oct 2010

Posted by in bailout, Congress, economy, Financial Crisis, financial reform, financial regulation, Foreclosures, Justice Department, Obama administration, special interests, too big to fail, Wall Street

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Dylan Ratigan, Ohio Secretary of State Jennifer Brunner, and Karl Denninger of The Market Ticker unravel foreclosure fraud:

To reiterate, the fraud in foreclosures that we’re seeing now is just the tip of the iceberg. The purpose is to try and cover up, and cover for, the fraud in the mortgage process all the way back to the origination of the mortgages, which were then packaged into securities and fraudulently sold to investors as AAA quality, a rating gained by paying off the ratings agencies. As our parents always told us, one lie requires another one to cover up the first one, which requires another lie to cover up the second one, and so on, and so on, and…….

In my opinion, that’s why the Senate tried to sneak through the legislation that President Obama vetoed—it would have given the big banks protection from liability in this entire mess. As an aside–again just my opinion– but the only reason the president vetoed the bill was because of the attention it received and the light that was shone on its alleged “unintended consequences” (and if you’ll buy that….) My cynical nature when it comes to politicians tells me that “sending the bill back for modifications” translates into, ‘We’ll try again when the heat’s off.’

It’s also why, according to David Axelrod, the hope in the White House is that “this moves rapidly and that this gets unwound very, very quickly.” And why the White House opposes a national moratorium on foreclosures. A moratorium would give investigators and especially some 40 states’ attorneys general time to delve back into fraud and deceit at every level of the process

As Mr. Denninger explained, the only remedy is to force the big banks to buy back the toxic securities that they sold to investors under false pretenses. They can’t do that, which means Chase, BofA, et al, are insolvent. Actually, they’re insolvent now but for the phony profits from peddling this garbage to unsuspecting investors.

There is a provision in the financial reform legislation for resolution authority, that is breaking up large financial institutions that pose a “systemic risk” to the entire economy. Will Congress use it or will they do what they have done in the past and bail out their Wall Street cronies and contributors—again. If Republicans take control of Congress will they hold true to their campaign rhetoric of “no more bailouts” or will they dance to the tune of their big donors on Wall Street?

We may soon find out.

Obama Invokes “State Secrets” in Assassination Plot

26 Sunday Sep 2010

Posted by in Bill of Rights, Constitution, Justice Department, Obama administration, torture, war on terror

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“If tyranny and oppression come to this land, it will be in the guise of fighting a foreign enemy.”—James Madison, often referred to as the father of that antiquated, outdated, document known as the Constitution of the United States, which is now little more than an a la carte menu.

When the president of the United States has the power to order the assassination of an American citizen suspected of terrorist activities but charged with no crime, that is tyranny. And that is exactly the power President Obama is seeking, under the ever-increasing justification of preserving “state secrets.”

“The Obama administration on Friday asked a federal judge to throw out a lawsuit seeking to stop the government from killing an American citizen [Anwar al-Awlaki] accused of ties to Al Qaeda…In a legal brief, which was filed shortly before midnight, the administration included the contentious argument that litigating the matter could reveal state secrets.”

Glenn Greenwald at Salon:

“…in other words, not only does the President have the right to sentence Americans to death with no due process or charges of any kind, but his decisions as to who will be killed and why he wants them dead are “state secrets,” and thus no court may adjudicate its legality.”

From the ACLU and the Center for Constitutional Rights (remember those?):

“The idea that courts should have no role whatsoever in determining the criteria by which the executive branch can kill its own citizens is unacceptable in a democracy.”

Obstruction of Justice Department spokesman Matthew Miller:

“If al-Awlaqi wishes to access our legal system, he should surrender to American authorities and return to the United States, where he will be held accountable for his actions.”

Why would al-Awlaki, who is thought to be in Yemen, surrender to authorities when he has not been charged with, or indicted for, any crime? Sure, give himself up and be on the next plane to Jordan or Morocco or wherever the latest outsourcing torture extraordinary rendition site is, to be tortured and meet an untimely, accidental death. Oops.

But few people will notice and even fewer will care. Republicans don’t care because it’s one of “them” who is being targeted for assassination, never mind that al-Awlaki is a US citizen. He don’t look like a reel ‘Murrican. And they’ll take full advantage of the expanded powers of the Executive Branch the next time a Republican occupies the Oval Office. Democrats don’t care because their guy is in there now and they trust him with this power, for some reason that escapes me. Never mind that they would be screaming about the president shredding the Constitution if George Bush was still in office.

Axelrod in Wonderland

24 Friday Sep 2010

Posted by in financial reform, health care, Obama administration, Politics, special interests, too big to fail, Wall Street

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David Axelrod in yesterday’s Washington Post:

“Pundits will spend a lot of time predicting who will win in November. But more is at stake than the fate of Democrats or Republicans. What’s at stake is whether the powerful corporate special interests will go back to writing our laws or whether our democracy will remain where it belongs — in the hands of the American people.”

What color is the sky in the land where unicorns run free, Dave? “Go back?” They never left. Former insurance company lobbyists and executives wrote the lion’s share of health care “reform.” Your boss cut a backroom deal with the pharmaceutical industry to ensure their monopoly remained intact. Did the big banks get broken up by so-called financial reform? Hell no. Is too big to fail still around? Hell yes. Does the military-industrial complex still get the same blank check that they’ve always had? Absolutely.

FYI, Mr. Axelrod, we no longer have a democracy in America. The correct term is oligarchy.

Insurance Industry’s Pre-Emptive Strike on Health Care “Reform”

22 Wednesday Sep 2010

Posted by in health care, Obama administration, Politics

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Sure is a good thing we avoided the public option “government takeover” of the health care system and mandated coverage by private companies. Nobody could have ever seen this coming:

“Some of the country’s most prominent health insurance companies have decided to stop offering new child-only plans, rather than comply with rules in the new health-care law that will require such plans to start accepting children with preexisting medical conditions after Sept. 23.

The companies will continue to cover children who already have child-only policies. They will also accept children with preexisting conditions in new family policies.

Nonetheless, supporters of the new health-care law complain that the change amounts to an end run around one of the most prized consumer protections.

“We’re just days away from a new era when insurance companies must stop denying coverage to kids just because they are sick, and now some of the biggest changed their minds,” Ethan Rome, executive director of Health Care for America Now, an advocacy group, said in a statement. “[It] is immoral, and to blame their appalling behavior on the new law is patently dishonest.”

[…]

But officials of the Obama administration said the move contradicted a letter from the leader of one of the insurance industry’s most important trade groups after the law’s adoption in March. Karen Ignagni, president of America’s Health Insurance Plans, expressed support for the law’s provisions concerning children with preexisting conditions and promised to “fully comply” with them.

“We expect [insurance companies] to honor that commitment. Insurers shouldn’t break their promise and turn their backs on some of our most vulnerable Americans,” said Jessica Santillo, a spokeswoman for the Department of Health and Human Services.

Naive much?

Beware Wannabe Speakers Bearing Gifts

13 Monday Sep 2010

Posted by in budget, Congress, Conservatives, Democrats, economy, Obama, Obama administration, Politics, Republicans

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Speaker-in-waiting (he hopes) John Boehner says a few reasonable sounding words on Face the Nation and the headlines are about a ‘shift in policy,’ a ‘crack in Republican solidarity,’ a ‘victory for the Obama administration,’ and ‘Republicans caving on the tax cut battle.’ Three words of advice:

Don’t buy it.

First, why would anyone believe a word Boehner says? Then look at the entirety of his comments. Yes, he said,  “If the only option I have is to vote for some of those tax reductions, I’ll vote for it.” He also added, “But I’m going to do everything I can to fight to make sure that we extend the current tax rates for all Americans.” One hand giveth, the other taketh away.

Here’s what the Orangeman is doing as I see it. One, he’s taking a campaign issue away from the Democrats. He’s not going to let them beat the GOP over the head with ‘defenders of the rich’ for the next seven weeks, so he appears to show willingness to compromise.

Two, Boehner uses the qualifier “if the only option I have is…” because he knows that’s not the only option he’s going to have. He knows that, like everything else, the battle over extending the tax cuts is going to be in the Senate, not in the House. He knows that there are already 4 Democratic Senators—Bayh, Conrad, Nelson, and Webb—plus Joe Lieberman, who have come out in support of extending all the tax cuts for at least some period of time.

That’s why he also said this during the interview: “I don’t control the agenda on Capitol Hill. Nancy Pelosi and Harry Reid do…”

Here he’s painting the Democrats into somewhat of a corner. He and the Republicans can say, ‘See, it’s not us, it’s them. We’re not the obstructionists here. We’re willing to compromise but the president can’t get members of his own party to go along with him.’

Boehner hasn’t turned reasonable, it’s all a political calculation. Caveat emptor—let the buyer beware.