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.

“A Factory of Fraud”

09 Saturday Oct 2010

Posted by in Congress, economy, Financial Crisis, Politics, special interests, too big to fail, Wall Street

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Congressman Alan Grayson explaining what is becoming known as Foreclosuregate. And if you think it just affects people who aren’t making their mortgage payments, think again. It concerns everyone:

“We are approaching a point where the easiest way to make a buck is to steal it.”

No, we’re already there. We have been and we will be until the perpetrators, and those who aid and abet this “factory of fraud,” (including our elected representatives) are behind bars.

Taliban Hired for Security at U.S. Bases in Afghanistan

08 Friday Oct 2010

Posted by in Afghanistan, Congress, Pentagon, war on terror

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On the day that marked the beginning of the 10th year of the Afghani-Nam cluster(bleep) the Senate Armed Services Committee, chaired by Carl Levin (D-MI), released the results of an investigation which found that private security forces hired by the Pentagon to protect our military bases there include Taliban warlords and people with ties to Iran.

“Afghan private security forces with ties to the Taliban, criminal networks and Iranian intelligence have been hired to guard American military bases in Afghanistan, exposing United States soldiers to surprise attack and confounding the fight against insurgents, according to a Senate investigation.

The Pentagon’s oversight of the Afghan guards is virtually nonexistent, allowing local security deals among American military commanders, Western contracting companies and Afghan warlords who are closely connected to the violent insurgency, according to the report by investigators on the staff of the Senate Armed Services Committee.

[…]

There are more than 26,000 private security employees in Afghanistan, and 90 percent of them are working under United States government contracts or subcontracts. Almost all are tied to the militias of local warlords and other powerful Afghan figures outside the control of the American military or the Afghan government, the report found.”

But as usual, Congress loves to have investigations and release reports followed by nothing. Especially true when the findings involve the Pentagon, which is apparently a government unto itself, with an unlimited budget and unrestrained power.

“Levin did not indicate that he would seek any legislative fixes. The panel’s investigation likely will inform two Pentagon task forces that are looking into the problems.”

Letting the fox “look into problems” at the henhouse is always a good idea.

“Gen. David Petraeus, the top commander in Afghanistan, earlier this month issued guidance on the use of contractors “that made it clear that all corrective actions, including terminating contracts and suspending and disbarring contractors, will be on the table,” Levin said.

Levin said that commanders in Afghanistan, with Petraeus in the lead, are committed to change the “status quo” of private security contracts in Afghanistan.”

I take it General Petraeus and Sen. Levin aren’t aware that the State Department recently awarded a 5-year, $10 billion contract to eight private companies for security in Iraq and Afghanistan, including the infamous Blackwater under another name.

But always looking on the bright side, Republicans on the committee “faulted the report for failure to acknowledge the positive impact of providing employment to Afghans.”

If only they were that interested in providing employment to Americans.

“Levin said…that his panel’s report underscores the need to “shut off the spigot” of U.S. money going into the “pockets of warlords.”

I know of one sure-fire way to “shut off the spigot,” Sen. Levin. Get the hell out of there. Now.

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.

The Party of “No” or The Party of No Backbone

24 Friday Sep 2010

Posted by in Congress, Democrats, economy, Politics

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Gutless. Spineless. Cowards.

“Senate Democrats said Thursday that they had abandoned plans for a pre-election showdown with Republicans over taxes, postponing any vote on extending Bush administration tax cuts until after the November midterms.

Democrats discussed the issue during a caucus luncheon but left the final decision to Senate Majority Leader Harry Reid (D-Nev.)”

That was your first mistake, leaving it up to Sir Robin Harry Reid.

“Late Thursday, Reid spokesman Jim Manley said, “We will come back in November and stay in session as long as it takes to get this done.”

Bullshit. If the Republicans take control of Congress, and how can they not with opposition like this, does anybody with half a brain (which excludes Reid) think they’ll be in the mood to make a deal after the election. Here’s what will happen:

“…the GOP is going to shout and scream and throw feces and demand what it will deem one of two acceptable options:  a permanent extension of all cuts or a one- or two-year extension.  And one of these will pass.  And if it’s the temporary extension, the renewal will come up before the very Congress these midterms are going to elect, meaning it will be an even more Republican Congress than the one in the lame-duck session.  So the tax cuts for the rich will be made permanent then.”

Meanwhile, back in D.C.:

“The Senate left for the weekend Thursday afternoon and will not return until early next week, when Reid has scheduled a vote on a bill to prevent firms from sending jobs overseas and reward those that bring jobs back to the United States. Congressional leaders are aiming to get lawmakers out on the campaign trail by the end of next week.”

No, don’t go back at all. Slither your worthless invertebrate asses home and stay there. Don’t even come back for the lame-duck session. Get ready for your post-Senatorial careers. At least we can save on the cost of utilities by keeping the Capitol building dark, you useless wastes of space.

The party of no or the party of no backbone. One hell of a choice.

Vietnam Redux

22 Wednesday Sep 2010

Posted by in Afghanistan, Iraq, war on terror

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The ever-increasing toll that an endless number of deployments necessitated by our state of perpetual war is taking on our soldiers. In Iraq:

“When Lt. Col. Dave Wilson took command of a battalion of the 4th Brigade of the 1st Armored Division, the unit had just returned to Texas from 14 months traveling some of Iraq’s most dangerous roads as part of a logistics mission.

What he found, he said, was a unit far more damaged than the single death it had suffered in its two deployments to Iraq.

Nearly 70 soldiers in his 1,163-member battalion had tested positive for drugs: methamphetamine, cocaine and marijuana. Others were abusing prescription drugs. Troops were passing around a tape of a female lieutenant having sex with five soldiers from the unit. Seven soldiers in the brigade died from drug overdoses and traffic accidents when they returned to Fort Bliss, near El Paso, after their first deployment.”

In Afghanistan:

“The U.S. soldiers hatched a plan as simple as it was savage: to randomly target and kill an Afghan civilian, and to get away with it…For weeks, according to Army charging documents, rogue members of a platoon from the 5th Stryker Combat Brigade, 2nd Infantry Division, floated the idea. Then, one day last winter, a solitary Afghan man approached them in the village of La Mohammed Kalay. The “kill team” activated the plan.

One soldier created a ruse that they were under attack, tossing a fragmentary grenade on the ground. Then others opened fire…According to charging documents, the unprovoked, fatal attack on Jan. 15 was the start of a months-long shooting spree against Afghan civilians that resulted in some of the grisliest allegations against American soldiers since the U.S. invasion in 2001. Members of the platoon have been charged with dismembering and photographing corpses, as well as hoarding a skull and other human bones.”

Steve Hynd at Newshoggers (my emphasis):

“Drug abuse and suicide rates are at record highs, misdemeanours committed while in uniform have almost doubled in the last five years, sexual assaults by those in uniform have trippled since 2001.

Over a million US servicemen and women have passed through Afghanistan and Iraq since 2001. Estimates on how many suffer from some form of PTSD-related illness range from 40-60%. If current psychological data on how mental illness spreads its hurt like ripples in a pool are any guide, each of them will adversly affect between five and twelve friends and close family, who will see negative behavioural changes themselves ranging from mild PTSD-like symptoms to full shell-shock caused by a mentally ill but still abusive partner or parent.

And this is why you should care. The American victims of Bush’s adventures, continued by Obama, are your brothers, sisters, parents, spouses and friends. Their troubles will affect your sister, your brother…you get the idea. This is one area where both Iraq and Afghanistan are like Vietnam.

Bring them ALL home.“