Jan 31 2011

Some Findings of the Financial Crisis Inquiry Commission Report

Crossposted from The Stars Hollow Gazette

Wall Street Appears To Have Violated Federal Securities Law, Crisis Panel Finds

Shaihien Nasiripour, The Huffington Post

01/27/11 10:28 PM

Wall Street firms that sold mortgage-backed securities appear to have violated federal securities laws by misleading investors on the quality of the underlying mortgages, a bipartisan panel created by Congress to investigate the root causes of the financial crisis concluded.

…

In September, the crisis commission heard testimony from Keith Johnson, former president of Clayton Holdings, one of the nation’s biggest mortgage research companies. Johnson testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm on behalf of Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added.

Last April, the commission heard from Richard Bowen, a whistleblower and former chief underwriter for Citigroup’s consumer-lending unit. Bowen told the panel that in the middle of 2006, he discovered more than 60 percent of the mortgages the bank had purchased from other firms and then sold to investors were “defective,” meaning they did not satisfy the bank’s own lending criteria. On November 3, 2007, Bowen sent an e-mail to top Citi officials, including Robert Rubin, a former Treasury Secretary. Bowen’s warnings appear to have been ignored.

In Panel’s Report, Stern Warning on Repeating Financial Crisis

By SEWELL CHAN, The New York Times

Published: January 27, 2011

WASHINGTON – Behind closed doors, Ben S. Bernanke, the Federal Reserve chairman, called it “the worst financial crisis in global history, including the Great Depression.”

He said that 12 of the country’s 13 most important financial institutions, including Goldman Sachs, had been on the verge of collapse “within a week or two.” (The apparent exception: JPMorgan Chase.)

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Enabling those developments, the panel found, were a bias toward deregulation by government officials, and mismanagement by financiers who failed to perceive the risks.

Goldman Sachs Got Billions From AIG For Its Own Account, Crisis Panel Finds

Shaihien Nasiripour, The Huffington Post

01/26/11 10:23 PM

Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the final report of an investigative panel appointed by Congress.

The fact that a significant slice of the proceeds secured by Goldman through the AIG bailout landed in its own account–as opposed to those of its clients or business partners– has not been previously disclosed. These details about the workings of the controversial AIG bailout, which eventually swelled to $182 billion, are among the more eye-catching revelations in the report to be released Thursday by the bipartisan Financial Crisis Inquiry Commission.

…

At a hearing on July 1, 2010–two weeks before Goldman sent the e-mail acknowledging how $2.9 billion in AIG funds wound up in its own account–the crisis panel questioned Goldman’s chief financial officer, David A. Viniar and managing director David Lehman. Both said they knew nothing about AIG funds landing in the bank’s private coffers, according to a transcript of the hearing.

The report concludes that Goldman collected the $2.9 billion as payment for so-called proprietary trades made for its own account–essentially successful bets on large pools of financial instruments.

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  2. Interesting to cut through the smoke and mirrors of this document.

    via trilateral.org

    Is political democracy, as it exists today, a viable form of government for the industrialized countries of Europe, North America, and Asia?

    The current pessimism about the viability of democratic government stems in large part from the extent to which contextual threats, societal trends, and intrinsic challenges have simultaneously manifested themselves in recent years. A democratic system which was not racked by intrinsic weaknesses stemming from its own performance as a democracy could much more easily deal with contextual policy challenges. A system which did not have such significant demands imposed upon it by its external environment might be able to correct the deficiencies which arose out of its own operations. It is, however, the conjunction of the policy problems arising from the contextual challenges, the decay in the social base of democracy manifested in the rise of oppositionist intellectuals and privatistic youth, and the imbalances stemming from the actual operations or democracy itself which make the governability of democracy a vital and, indeed, an urgent issue for the Trilateral societies.

    The gist of this high sounding gibberish is: democracy will allow the people to diminish the power of the elites, therefore democracy must be neutered.

  3. … talking in an overoptimistic past tense when he says that all but one of the largest financial institutions were in danger of collapse.

    If they are ever forced to value the only fictionally secured mortgages passed through the electronic clearing house system, which did and does not comply with state law regarding transfers of mortgages at their real value as unsecured loans, most of them are still in danger of collapse.

    Indeed, the financial crisis, as far as it affects the financial system, is that we have all the big banks trading while insolvent, and that is a financial crisis that is not going away until we allow them to collapse and clean up the mess in bankruptcy courts.

  4. For whom does Tim Geithner work for/owe allegance to.

    The globalist oriented Council of Foreign(Fucked up) Relations or the United States Treasury.  The simple answer to this was for the local station to change the original “news” story picture of Tim to one of him NOT seating in front of the blue background with Council On Foreign Relations plastered all over it.

    Why might this be relevant you might ask.  Well simply because before the planned and engineered financial 2008 crash/push for a globalist asshole global currency there was other soundbytes of torture, rendition, two illegal Peace Prize winning wars, GMO Monsanto and the negative productivity legislation of Sarbanes-Oxley in the wake of Enron on top of not historizing Microshit Corporation for just being a macro asshole globalistically Edward Tufte style.

    http://www.edwardtufte.com/tuf…

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