Saturday, May 12, 2012

Right-Wing Pols In A Nutshell: Loathing Mitt and His Brethren, Crying Jamie Di(a)mon(d), Wachovia-Lehman Bros. Trysts & Viewing Quick Departure of Would-Be Quislings from Fannie, Freddie, BoA, Chase, Wells, Citi?



It all comes out in the wash.

So they say.

We'll know pretty soon now anyway (if we're paying attention). And the bad news is also breaking about the Wachovia-Lehman machinations.

From our man on the street, Neil Garfield at Living Lies:

Executive Departures at Fannie, Freddie and Investment Banks


The Wall Street Journal and the New York Times are all buzzing about the departures and layoffs of high placed investment bankers at Fannie and Freddie and the huge layoffs at BOA, Citi, Chase, and Wells of formerly high-priced (stupidly high salaries and bonuses) of major players in their investment banking divisions. These people have intimate knowledge of the actual flow of money, securities and the alleged  securitization of millions of loans.

If you are looking for fact and expert witnesses, this group of people contains at least a few hundred whistle blowers despite contracts they signed for their benefits package on leaving the GSEs and the Banks. Many of them are waiting to be contacted and believe they can make far more money busting the banks or agencies that hired them than the bloated severance package they received.

If you ask the right questions and follow up with them, you will learn that from the very start the documents used at closing with borrowers were even more misleading than the documents used at closing with the lender investors. They will also tell you names of investors and investor "pools" and the fund manager of each. And of course they will tell you that the pools are either empty, non-existent or hydrogenated so that their existence and contents are a complete mystery even to those who sold repackaged mini bonds or mortgage bonds using the dissolution of the old "trust" that purportedly claimed ownership over the entire loan.

Most important is that these people can tell you why "bankruptcy remote" thinly capitalised entities were used to originate the loans rather than the lending pools. And they can tell you where to find the money that was received, but not allocated to reduce the loan balances or the balances due on the mortgage bonds.
_ _ _ _ _ _ _

City of St. Petersburg wins $10.4 million verdict against big bank – Tampa Bay Times
on 03 May 2012.

TAMPA — In a major victory for St. Petersburg that further feeds into a backlash against Wall Street, a federal jury ruled Tuesday that Wachovia Global Securities breached its contract and owes the city $10.4 million for not notifying it sooner about a failing investment.

Seven jurors spent more than four hours deliberating in a case that pitted city officials against financial giant Wells Fargo, which bought Wachovia in 2009. After six days of testimony, jurors sided with city officials who blamed Wachovia for losses they incurred when Lehman Brothers went bankrupt.

“The bank was the professional,” said juror Michael Gross, 62, of Pinellas Park. “The city might have been negligent, but the city hired the bank to manage those investments. That’s what they were paid to do.”
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Two jurors interviewed by the Tampa Bay Times said both legal teams presented strong arguments in a case that is bound to have ramifications nationwide. About a dozen lawsuits are set for trial in which large investors, including Sarasota County, are seeking to recover losses in Lehman Brothers bonds from the financial adviser who managed the portfolios — Wachovia Global Securities.

While the jurors agreed with Wells Fargo attorneys that the city should have done a better job overseeing an investment portfolio of more than $400 million, they sided with city attorneys in concluding that such negligence was moot because the investments ultimately were Wachovia’s responsibility.

“We weren’t happy with how the city managed its portfolio,” said jury foreman Bill Jotham, 61, of Sarasota. “But the evidence showed that Wachovia didn’t do its fiduciary duty.”

City officials expect motions related to the trial to be filed in the coming days, and offered few words for comment.

“We’re pleased with the verdict, the verdict speaks for itself,” said City Attorney John Wolfe.

The verdict was undeniably good news for a city that had spent $1.2 million to fight a case that was far from a sure bet.


“Nothing is ever certain in litigation, but we were always confident in our legal team,” Mayor Bill Foster said. Handling much of the litigation for the city were Rob Marcus and C. Bailey King from the Charlotte, N.C., law firm Smith Moore Leatherwood. Helping them throughout was assistant city attorney Jacqueline Kovilaritch.

If the city recoups its money from Wells Fargo, Foster said it will be put back into the city’s investment portfolio.

Can Knowing More About Mitty and Friends Increase Your Loathing? Oh yes.




Right-Wing Politics In A Nutshell?


After reading the Washington Post article about Mitt Romney's prep school days, I think I have a better idea of why he was able to win the Republican presidential nomination, despite the base's doubts about him. He may not be a dyed-in-the-wool wingnut, but he won because the base can tell that he shares a core belief of theirs: that some people are just unworthy of respect and courtesy and common decency. That's what right-wing politics is all about these days - sorting the worthy from the unworthy, celebrating the former, and declaring the latter to be somewhat less than human.

. . . Romney's party believes that all sorts of people are beneath contempt: union workers, liberals, city-dwellers, gay people, immigrants, people who aren't Christian or Jewish, non-whites who stubbornly refuse to turn right-wing, the uninsured, the (allegedly lazy) unemployed, the underemployed and underpaid, people with underwater mortgages or massive student loan debt, and pretty much anyone (other than a corporate CEO) who ever uses any government program whatsoever (Social Security and Medicare possibly excepted). That's a partial list. The message of conservatism is that some people deserve respect and empathy and some just don't. Some people are "us" - full members of the community; others are "them" - parasites and losers.

On a gut level, it's clear that Mitt Romney had already come to that conclusion back in prep school. And I think it became clear to GOP voters during the primaries, from the way he talked about Obama, about Gingrich, about Santorum, about anyone who got in his way, that his view hasn't changed.

 Can you believe . . .  one more jewel from No More Mister Nice Blog? Take it away, baby!

Malkin: The Koch Brothers Are the Real Victims of Bullying in this Society

I could add to the millions of online words already posted or about to be posted in reference to the Washington Post story about Mitt Romney's prep-school bullying of a gay classmate (in the incident cited by the Post, Romney and several prep school friends tackled a classmate whose haircut they regarded as effeminate and forcibly hacked away at his hair). For now, though, I'll just give you Michelle Malkin's reaction on Twitter:




The wingers just can't help it, can they? You give them an example of cruel, callous treatment of a truly helpless or vulnerable person, and when they try to respond in kind, the only "victims" they can imagine on their own side, the only people for whom they can bear to feel empathy, are some of the most powerful people on earth. The Supreme Court? Fox News? Republican donors? Is she serious? Well, yes, she is. Up is down, east is west, only blacks are racist, only feminists are sexist, and only people with massive amounts of power are powerless. That's right-wing thinking right now.

And it makes them so muuuuuch moolah!

And as a closing note, there's always Matt Taibbi's take on the used-to-be-smirking but now  Crying Jamie Dimon (of JPMorganChase) who just had to admit that, er, well, yes we did steal several billion too (while receiving emergency Fed bailouts).

The trading in that hedge roiled markets a month ago, when rumors started circulating of a JPMorgan trader in London whose bets were so big that he was nicknamed "the London Whale" and "Voldemort," after the Harry Potter villain.

I’m still not entirely clear on what the trades by Bruno Iksil, the so-called "London Whale," were exactly. According to the excellent Felix Salmon at Reuters, Iksil had taken a massive long position on corporate CDS, and when word of this leaked out, the market turned on him and beat his brains out. From Salmon’s piece:

Whenever a trader has a large and known position, the market is almost certain to move violently against that trader — and that seems to be exactly what happened here. On the conference call, when asked what he should have been watching more closely, Dimon said “trading losses — and newspapers”. It wasn’t a joke. Once your positions become public knowledge, the market will smell blood.
If you’re wondering why you should care if some idiot trader (who apparently has been making $100 million a year at Chase, a company that has been the recipient of at least $390 billion in emergency Fed loans) loses $2 billion for Jamie Dimon, here’s why: because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.

Activity like this is exactly what the Volcker rule, which effectively banned risky proprietary trading by federally insured institutions, was designed to prevent. It will be argued that this trade was a technically a hedge, and therefore exempt from the Volcker rule. Not only does that explanation sound fishy to me (as Salmon notes, for Iksil’s trade to be a hedge, this would mean Chase had an equally giant and insane short bet on against corporate debt, which seems unlikely), but it's sort of immaterial anyway: whether or not this bet technically violated the Volcker rule, it definitely violated the spirit of the law. Hedge or no hedge, we don’t want big, federally-insured, too-big-to-fail banks making giant nuclear-powered derivatives bets.

Or do we? Let's see how quickly the lobbyists defeat both the purpose and the spirit of this re-regulation.





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