See stories like this are what's driving me insane about President Obama throwing money at banks all willy nilly like. This story further proves that investment banks knew that the assets that they were using to back CDOs were worthless and intentionally spread the risk throughout the market in an attempt to recoup their losses and get out before the market began to completely crumble. Here we have a government official, and former Lehman Brother's employee wanting to invest heavily in real estate at the end of the bubble? Having worked for Lehman, I'm sure that he was fully aware of the impending collapse of several mortgage lenders including Mortgage Lender's Network in which Lehman was a heavy investor. What made Lehman Brother's stop purchasing paper from wholesale mortgage lenders? And if Lehman found that the investments were no longer sound, what would make a former Lehman executive take a government insurance fund heavy into stocks and real estate in or after 2007?
If he was unaware of Lehman's disastrous position in 2007 then he was ill equipped to be handling government finances. If he was aware and made this investment anyway then he's a criminal. Either way he needs to be investigated. President Obama, there can be no redress until we stop allowing these criminals to rob the cookie jar. If cases like this one and the recent funneling of billions from AIG to private banks demonstrate nothing else, they tell you that these criminals will not stop unless charges are filed. Congress, the SEC, and other regulatory and oversight bodies are derelict.
Criminal investigations need to begin immediately.
Showing posts with label Sho wish I could get bailed out.... Show all posts
Showing posts with label Sho wish I could get bailed out.... Show all posts
Tuesday, March 31, 2009
Tuesday, February 10, 2009
What did they know and when did they know it...
Ok I've had enough. Today Geithner came out spewing that same nonsense about the government guaranteeing the banks debt which is essentially the same as an agreement to pay off their debt. The same banks that lobbied to make filing for bankruptcy more difficult and have been ripping consumers off with usurous interest rates on credit cards and car loans for years. The same banks that KNOWINGLY passed on exorbinant risk to investors; some saavy and some not so saavy. The banks need to be investigated for myriad reasons not limited to the following:
They knowingly securitized bad debt.
At the start of the housing boom, mortgage brokers and lenders used their established relationships with commercial banks and investment houses to pass off riskier debt. People have to question why investment banks, many of which had lending arms of their own post the repeal of the Glass-Steagall Act, were purchasing paper from mortgage lenders. If the investments were as safe as purported, why were borrowers paying a premium for the loan in the form of higher interest rates and why couldn't the retail or commercial lending arms of these banks provide loans to these consumers in the first place?
They knew the product lines were dangerous.
Banks knew that mortgage lenders were creating products that would significantly impair a borrowers ability to sell their home. Loans with LTVs of 103-125% were prevalent meaning that borrowers were getting loans that were higher than the value of the asset itself. This is fine in a growing market but creates quite a challenge if the market stagnates or worse begins to decline. Initially banks sought legislation like the revisions to bankruptcy law forcing homeowners into a state of indetured servitude. However as more homeowners continued to defualt, investment banks stopped purchasing paper from mortgage lenders forcing them to collapse.
Banks knowingly sold assets that had questionable value.
Once investment bankers began to realize the toxicity of the assets they were holding, they began to look for ways to spread the risk. Issuance of asset backed secutrities peaked between 2006 and 2007, AFTER banks cease to buy loans from mortgage lenders. Banks did not differentiate the assets in these securities even though they were aware that there were significant challenges with some of the loans they were holding on their books to be bundled into securities. In the pyramid scheme that was the mortgage industry for the past decade, the banks looked for new entrants in an attempt to recoup their losses. This worked well until outside investors began to challenge the valuations of the assets backing the securities.
If for no other reason than to garner a better understanding of the potential depth of the challenge currently faced by the banks, the government needs to conduct a thorough audit of these banks books. By thorough I mean access to the banks ledgers and internal manangement consolidation systems and reports. The government has many arms capable of carrying this out, including forensic accountants in the IRS and FBI. Congress should request this inquiry before attempting to shore up assets they don't understand.
I think at this point everyone is growing weary of the charades and grandstanding of hearings that accomplish nothing because congressional leaders don't even know what questions to ask.
They knowingly securitized bad debt.
At the start of the housing boom, mortgage brokers and lenders used their established relationships with commercial banks and investment houses to pass off riskier debt. People have to question why investment banks, many of which had lending arms of their own post the repeal of the Glass-Steagall Act, were purchasing paper from mortgage lenders. If the investments were as safe as purported, why were borrowers paying a premium for the loan in the form of higher interest rates and why couldn't the retail or commercial lending arms of these banks provide loans to these consumers in the first place?
They knew the product lines were dangerous.
Banks knew that mortgage lenders were creating products that would significantly impair a borrowers ability to sell their home. Loans with LTVs of 103-125% were prevalent meaning that borrowers were getting loans that were higher than the value of the asset itself. This is fine in a growing market but creates quite a challenge if the market stagnates or worse begins to decline. Initially banks sought legislation like the revisions to bankruptcy law forcing homeowners into a state of indetured servitude. However as more homeowners continued to defualt, investment banks stopped purchasing paper from mortgage lenders forcing them to collapse.
Banks knowingly sold assets that had questionable value.
Once investment bankers began to realize the toxicity of the assets they were holding, they began to look for ways to spread the risk. Issuance of asset backed secutrities peaked between 2006 and 2007, AFTER banks cease to buy loans from mortgage lenders. Banks did not differentiate the assets in these securities even though they were aware that there were significant challenges with some of the loans they were holding on their books to be bundled into securities. In the pyramid scheme that was the mortgage industry for the past decade, the banks looked for new entrants in an attempt to recoup their losses. This worked well until outside investors began to challenge the valuations of the assets backing the securities.
If for no other reason than to garner a better understanding of the potential depth of the challenge currently faced by the banks, the government needs to conduct a thorough audit of these banks books. By thorough I mean access to the banks ledgers and internal manangement consolidation systems and reports. The government has many arms capable of carrying this out, including forensic accountants in the IRS and FBI. Congress should request this inquiry before attempting to shore up assets they don't understand.
I think at this point everyone is growing weary of the charades and grandstanding of hearings that accomplish nothing because congressional leaders don't even know what questions to ask.
Wednesday, February 4, 2009
I'm Just Saying...
I can not stand all the tell the president what to do people out there but I had to make this suggestion. Maybe President Obama should go beyond limiting executive pay at the banks. Maybe he should just fire them altogether and let hedge fund managers run the banks. They seem to understand what the banks are holding better than the CEOs and regulators do. Maybe by forcing them to have skin in the game on the side of the growth of the economy instead of its failure we can all come up. I'm just saying don't take my word for it read for yourself...
John Paulson article.
John Paulson article.
Tuesday, February 3, 2009
Interesting
Ever since i learned that Qaddafi built a river in Libya I've been wondering why other African leaders did not work with him to improve irrigation and water purification challenges through out the continent. Now it looks like they just may.
Read entire article here.
I wish someone would let me borrow about $2B so that I could put solar panels in the Sahara desert and provide an alternative power source throughout the continent.
DAKAR, Senegal — President Muammar el-Qaddafi of Libya was named chairman of the African Union on Monday, wresting control of a body he helped found and has long wanted to remake in his pan-African image.
His installation as the new head of the 53-member body resembled more of a coronation than a democratic transfer of power. Colonel Qaddafi was dressed in flowing gold robes and surrounded by traditional African leaders who hailed him as the “king of kings.”
The choice of Colonel Qaddafi was not a surprise — he was the leading candidate — but the prospect of his election to lead the African Union caused some unease among some of the group’s member nations, who were meeting in Addis Ababa, Ethiopia, as well as among diplomats and analysts. Colonel Qaddafi, who has ruled Libya with an iron hand for decades, is a stark change from the succession of recent leaders from democratic countries like Tanzania, Ghana and Nigeria.
Read entire article here.
I wish someone would let me borrow about $2B so that I could put solar panels in the Sahara desert and provide an alternative power source throughout the continent.
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