Another Summer of Discontent; Another Summer of Stupid

Before the deep freeze starts here in the East-
A  brief summary of  another bummer of a summer…


By John Tully

The New York Herald Sun


Summer is just the perfect time to see just exactly what the heck is going on out there in “America”.

The first thing I remember was British Petroleum destroying the planet and our Leaders sitting on their thumbs.

All of a sudden I’m sitting in a hotel room in Florida after a friend’s wedding and watching a humongous plasma television. A woman named Trish Regan from CNBC declared: “the stimulus didn’t work”. I wondered what had happened and how she knew and what had happened so I quickly switched the channel and witnessed ABC News’ Jonathan Karl file a brave and hard-hitting four-minute “piece” on the cost of the road signs that tell citizens about stimulus money being used for infrastructure projects.

Brave Jonathan Karl.

It reminded me of that George Stephanopoulos fellow on World News Tonight. Less than two months into President Obama’s term, immediately after the Stimulus Bill was finally passed with all kinds of silly concessions to the fiscally illogical demands of the Say No Republicans (already in full Waterloo-mode) the TV Star declared gleefully “Now, Barack Obama owns the economy….”

Those ABC boys sure are wankers.

Jake Tapper much?

The next thing I know I’m in South Jersey watching CBS News’ Bob Schieffer indignantly imploring Bloggers to “pick up the phone next time and do some reporting”

Mr. Schieffer’s lazy network, lead by Fox News, had been fooled by a well-known fraud named Andrew Breitbart into covering the story of how every major news gathering organization in the U.S. had failed to investigate an obvious right-wing smear job that lead the cowardly Obama administration to fire an employee of the Department of Agriculture for doing the right thing and speaking the truth about Racism.

Schieffer’s wise and sage shtick is utterly revered in the District but this completely backwards, twisted and wholly illogical pooh-poohing/blame shifting was truly a Spin of epic proportions. He’s got BS right there in his initials after all.

That began a second straight summer of Red-Herring Race Babble.
Remember last summer’s “Beer Summit”? Months of wasted time and newsprint on distractions from the real problems in this country and it happened again this year. Halliburton and Blackwater were relieved I’m sure.

I met sweet and dopey 80 year-old Democrats who think that President Obama was still just swell; never mind his continuation of all the most heinous policies of  Bush-Cheney: “State Secrets” to defend endless imprisonment, renditions and assassinations in the War on Terror-coupled with no intention to prosecute the definitive War Crimes of the former administration.

The next thing I remember Fox News is on in some restaurant.
There is a weepy, pinkish, Morning DJ on the screen and he’s assembled a bunch of Libertarians who listen to bad music cry about God and Gold on the anniversary and location of Martin Luther King’s “I have a dream” speech.
The stupid hurts.

For some reason, all this kvetching about Obama reminded me of long-time DC columnist and television commentator Mark Shields and his outrage three years ago about that famous Move-On Ad questioning General Petraeus and his leadership.
Betray Us?
Perish the thought.

I was so mystified at the time that I called Shields on the phone. He nicely and politely explained to me that basically the Move-On folks and their approach was not only disrespectful but highly arrogant. He made a lot of very reasonable points about Generals and War.

But then I saw the same Mr. Shields this summer on Television- making sure to declare that he “liked” House Minority leader John Boehner before politely and gently criticising his newest nonexistent policies.

This is a politician, Mr. Boehner, who has so little respect for his opposition that he routinely uses the derogatory term “Democrat Party” to describe his critics. He and most of  his fellow Republicans just love to throw that phrase in every chance they can get. Guess what? Np one in the mainstream media calls them on it. Not even good ol’ Mark Shields.

I spoke with a 40-something Republican woman who asked me about Obama. She railed against “all these people being on the dole” and all this darn “spending” in Washington. I started to argue that taxes have never been lower and that TARP was Bush’s plan but it seemed to be a losing proposition. She looked me dead in the eye and politely informed me that pesky facts and hard-truths about politics and Glenn Beck and Obama were merely my personal opinions.

Well, you were just asking me for them.

I decided not to mention Al Gore’s Global Warming Hoax.

The summer was almost over but a plan to build a Muslim community center took center-stage in the American News Soap Opera.

Plans for the “9/11 mosque” in a neighborhood sort of close to the place where mostly Saudi Arabians flew planes into buildings, where it’s taken 10 years to rebuild anything– has unleashed the pure stupid.

TV anchor Brian Williams, who wears excellent ties, threw to the next commercial, intoning: “the mosque that is proving to be Too Much for some people”

I’m just glad that the rational and reasonable Jon Stewart has identified the problem in America and has planned a rally in DC for later in the month to address it.

I mean, really, the Democrat Party needs to stop being so gosh-darn harsh and mean and partisan.

Love, Peggy Noonan

Elizabeth Warren on Bill Maher

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Wall Street's Bailout Hustle

Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash

MATT TAIBBI

Posted Feb 17, 2010 5:57 AM

On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America’s pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman’s role in precipitating the global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries and bonuses — meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a “bailout tax” on banks. Maybe this wasn’t the right time for Goldman to be throwing its annual Roman bonus orgy.

Not to worry, Blankfein reassured employees. “In a year that proved to have no shortage of story lines,” he said, “I believe very strongly that performance is the ultimate narrative.”

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Translation: We made a shitload of money last year because we’re so amazing at our jobs, so fuck all those people who want us to reduce our bonuses. Continue reading Wall Street's Bailout Hustle

How Goldman Secretly Bet on the U.S. Housing Crash

McClatchy Washington Bureau

tongue

Sun, Nov. 01, 2009

Greg Gordon | McClatchy Newspapers

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November 01, 2009 01:17:44 AM

WASHINGTON — In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman’s sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation’s premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman’s failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

“The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion,” said Laurence Kotlikoff, a Boston University economics professor who’s proposed a massive overhaul of the nation’s banks. “This is fraud and should be prosecuted.”

John Coffee, a Columbia University law professor who served on an advisory committee to the New York Stock Exchange, said that investment banks have wide latitude to manage their assets, and so the legality of Goldman’s maneuvers depends on what its executives knew at the time.

“It would look much more damaging,” Coffee said, “if it appeared that the firm was dumping these investments because it saw them as toxic waste and virtually worthless.” Continue reading How Goldman Secretly Bet on the U.S. Housing Crash

Dylan Ratigan Breaks Down the TARP Fiasco

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ShitiBank Appears To Have No Exit Strategy

thinking

DEALSCAPE

Citigroup Inc. (NYSE:C) apparently doesn’t have an exit strategy to pay back the $45 billion in Troubled Asset Relief Program (TARP) funds the government gave it. Is this really a shocker?

Earlier this week, Bank of America Corp. (NYSE:BAC) and Wells Fargo & Co. (NYSE:WFC) both discussed ways to eventually pay back their bailout money. However, Citi has been pretty much mum on the subject, aside from having its shareholders approve the final arrangements giving U.S. taxpayers a 33.6% stake in the company

Now, Elizabeth Warren, chairwoman of the Congressional Oversight Panel for the TARP, is concerned that the silence is because Citi doesn’t have a plan. Warren told the New York Post that regulators don’t have any insight into how Citi’s management team plans on paying back its bailout loans.”Too big to fail and not strong enough to succeed is obviously no exit strategy at all,” Warren told the Post.

No wonder federal regulators forced the bank to hire outside consultant Egon Zehnder International to evaluate whether the current management team is cut out to lead the bank out the crisis. Like most investors, the government needs a bit of reassurance its investment is going to succeed.

Let’s hope CEO Vikarm Pandit’s right hand man, Lewis B. Kaden — the most famous banker you’ve never heard of and Citi’s vice chairman in charge of human resources, government affairs, and philanthropy — has some words of wisdom that will allow Pandit to keep his job. – Maria Woehr

Goldman Sachs Did An Excellent Job of Bailing Out Goldman Sachs

THE NEW YORK TIMES

August 9, 2009
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Paulson’s Calls to Goldman Tested Ethics
By GRETCHEN MORGENSON and DON VAN NATTA Jr.

Before he became President George W. Bush’s Treasury secretary in 2006, Henry M. Paulson Jr. agreed to hold himself to a higher ethical standard than his predecessors. He not only sold all his holdings in Goldman Sachs, the investment bank he had run, but also specifically said that he would avoid any substantive interaction with Goldman executives for his entire term unless he first obtained an ethics waiver from the government.

But today, seven months after Mr. Paulson left office, questions are still being asked about his part in decisions last fall to prop up the teetering financial system with tens of billions of taxpayer dollars, including aid that directly benefited his former firm. Testifying on Capitol Hill last month, he was grilled about his relationship with Goldman.

“Is it possible that there’s so much conflict of interest here that all you folks don’t even realize that you’re helping people that you’re associated with?” Representative Cliff Stearns, Republican of Florida, asked Mr. Paulson at the July 16 hearing.

“I operated very consistently within the ethic guidelines I had as secretary of the Treasury,” Mr. Paulson responded, adding that he asked for an ethics waiver for his interactions with his old firm “when it became clear that we had some very significant issues with Goldman Sachs.”

Mr. Paulson did not say when he received a waiver, but copies of two waivers he received — from the White House counsel’s office and the Treasury Department — show they were issued on the afternoon of Sept. 17, 2008.

That date was in the middle of the most perilous week of the financial crisis and a day after the government agreed to lend $85 billion to the American International Group, which used the money to pay off Goldman and other big banks that were financially threatened by A.I.G.’s potential collapse.

It is common, of course, for regulators to be in contact with market participants to gather valuable industry intelligence, and financial regulators had to scramble very quickly last fall to address an unprecedented crisis. In those circumstances it would have been difficult for anyone to follow routine guidelines.

While Mr. Paulson spoke to many Wall Street executives during that period, he was in very frequent contact with Lloyd C. Blankfein, Goldman’s chief executive, according to a copy of Mr. Paulson’s calendars acquired by The New York Times through a Freedom of Information Act request.

During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives.

On Sept. 17, the day Mr. Paulson secured his waivers, he and Mr. Blankfein spoke five times. Two of the calls occurred before Mr. Paulson’s waivers were granted.

Michele Davis, a spokeswoman for Mr. Paulson, said that the former Treasury secretary was busy writing his memoirs and that his publisher had barred him from granting interviews until his manuscript was done. She pointed out that the ethics agreement Mr. Paulson agreed to when he joined the Treasury did not prevent him from talking to Goldman executives like Mr. Blankfein in order to keep abreast of market developments.

Ms. Davis also said that Federal Reserve officials, not Mr. Paulson, played the lead role in shaping and financing the A.I.G. bailout.

But Mr. Paulson was closely involved in decisions to rescue A.I.G., according to two senior government officials who requested anonymity because the negotiations were supposed to be confidential.

And government ethics specialists say that the timing of Mr. Paulson’s waivers, and the circumstances surrounding it, are troubling.

“I think that when you have a person in a high government position who has been with one of the major financial institutions, things like this have to happen more publicly and they have to happen more in the normal course of business rather than privately, quietly and on the fly,” said Peter Bienstock, the former executive director of the New York State Commission on Government Integrity and a partner at the law firm of Cohen Hennessey Bienstock & Rabin.

He went on: “If it can happen on a phone call and can happen without public scrutiny, it destroys the standard because then anything can happen in that fashion and any waiver can happen.”

Inevitable Questions

Concerns about potential conflicts of interest were perhaps inevitable during this financial crisis, the worst since the Great Depression. In the weeks before Mr. Paulson obtained the waivers, Treasury lawyers raised questions about whether he had conflicts of interest, a senior government official said.

Indeed, Mr. Paulson helped decide the fates of a variety of financial companies, including two longtime Goldman rivals, Bear Stearns and Lehman Brothers, before his ethics waivers were granted. Ad hoc actions taken by Mr. Paulson and officials at the Federal Reserve, like letting Lehman fail and compensating A.I.G.’s trading partners, continue to confound some market participants and members of Congress.

“I think it’s clear he had a conflict of interest,” Mr. Stearns, the congressman, said in an interview. “He was covering himself with this waiver because he knew he had a conflict of interest with his telephone calls and with his actions. Even though he had no money in Goldman, he had a vested interest in Goldman’s success, in terms of his own reputation and historical perspective.”

Adding to questions about Mr. Paulson’s role, critics say, is the fact that Goldman Sachs was among a group of banks that received substantial government assistance during the turmoil. Goldman not only received $13 billion in taxpayer money as a result of the A.I.G. bailout, but also was given permission at the height of the crisis to convert from an investment firm to a national bank, giving it easier access to federal financing in the event it came under greater financial pressure.

Goldman also won federal debt guarantees and received $10 billion under the Troubled Asset Relief Program. It benefited further when the Securities and Exchange Commission suddenly changed its rules governing stock trading, barring investors from being able to bet against Goldman’s shares by selling them short.

Now that the company’s crisis has passed, Goldman has rebounded more markedly than its rivals. It has paid back the $10 billion in government assistance, with interest, and exited the federal debt guarantee program. It recently reported second-quarter profit of $3.44 billion, putting its employees on track to earn record bonuses this year: about $700,000 each, on average.

Ms. Davis, the spokeswoman for Mr. Paulson, said Goldman never received special treatment from the Treasury. Mr. Paulson’s calendars do not disclose any details about his conversations with Mr. Blankfein, and Ms. Davis said Mr. Paulson always maintained a proper regulatory distance from his old firm.

A spokesman for Goldman, Lucas van Praag, said: “Lloyd Blankfein, like the C.E.O.’s of other major financial institutions, received calls from, and made calls to, Treasury to provide a market perspective on conditions and events as they were unfolding. Given what was happening in the world, it would have been shocking if such conversations hadn’t taken place.”

Although federal officials were concerned that Goldman Sachs might collapse that week, Mr. van Praag said the only topics of discussion between Mr. Blankfein and Mr. Paulson at the time involved Lehman Brothers’ troubled London operations and “disarray in the money markets.” Mr. van Praag said Goldman was fully insulated from financial fallout related to a possible A.I.G. collapse in mid-September of last year.

However, Mr. Paulson believed he needed to request the ethics waivers during that tumultuous week, after regulators had become concerned that the same crisis of confidence that felled Bear Stearns and Lehman might spread to the remaining investment banks, including Goldman Sachs.

At a conference call scheduled for 3 p.m. on Sept. 17, 2008, Fed officials intended to discuss the financial soundness of Goldman Sachs, Merrill Lynch and Morgan Stanley, and they had asked Mr. Paulson to participate, according to Mr. Paulson’s calendars and his spokeswoman.

That was the first time during the crisis that Mr. Paulson’s involvement required a waiver, Ms. Davis said. The waiver was requested that morning and granted orally that afternoon, just before the 3 p.m. conference call.

A few minutes later, in an e-mail message to Mr. Paulson, Bernard J. Knight Jr., assistant general counsel at the Treasury, outlined the agency’s rationale for granting the waiver.

“I have determined that the magnitude of the government’s interest in your participation in matters that might affect or involve Goldman Sachs clearly outweighs the concern that your participation may cause a reasonable person to question the integrity of the government’s programs and operations,” Mr. Knight wrote.

Goldman’s Windfall

For investors in the United States and around the world, the days after the A.I.G. rescue were perilous and uncertain; the Dow Jones industrial average fell 4 percent on Sept. 17 as credit markets froze and investors absorbed the implications of the insurance giant’s collapse. That day, Mr. Paulson and his colleagues at the Federal Reserve were scrambling to contain the damage and shore up investor confidence.

But Mr. Paulson has disavowed any involvement in the decision to use taxpayer funds to make Goldman and A.I.G.’s trading partners whole. In his July testimony to the House, he said: “I want you to know that I had no role whatsoever in any of the Fed’s decision regarding payments to any of A.I.G.’s creditors or counterparties.”

Ms. Davis reiterated this, saying that Mr. Paulson’s involvement in the A.I.G. bailout was meant to forestall a collapse of the entire financial system and not to rescue any individual firms exposed to A.I.G., like Goldman. However, she said, federal officials were worried that both Goldman and Morgan Stanley were in danger themselves of failing later in the week and it was in that context that Mr. Paulson received a waiver.

“The waiver was in anticipation of a need to rescue Goldman Sachs,” Ms. Davis said, “not to bail out A.I.G.”

Treasury Department lawyers said a waiver for Mr. Paulson regarding A.I.G. was not necessary, Ms. Davis said, because the A.I.G. rescue was conducted by the Federal Reserve. The Treasury had no power to rescue A.I.G., she said. Only the Fed could make such a loan.

But according to two senior government officials involved in the discussions about an A.I.G. bailout and several other people who attended those meetings and requested anonymity because of confidentiality agreements, the government’s decision to rescue A.I.G was made collectively by Mr. Paulson, officials from the Federal Reserve and other financial regulators in meetings at the New York Fed over the weekend of Sept. 13-14, 2008.

These people said Mr. Paulson played a major role in the A.I.G. rescue discussions over that weekend and that it was well known among the participants that a loan to A.I.G. would be used to pay Goldman and the insurer’s other trading partners.

Over that weekend, according to a former senior government official involved in the discussions, Mr. Paulson said that he had been warned by lawyers for the Treasury Department not to contact Goldman executives directly. But he said Mr. Paulson told him he had disregarded the advice because the “crisis” required action.

Ms. Davis said: “Hank doesn’t recall saying that. Staff had advised that he interact one on one with Goldman as little as possible, not because it would be a violation but for appearances, recognizing someone would likely attempt to read too much into it.”

On Sept. 16, 2008, the day that the government agreed to inject billions into A.I.G., Mr. Paulson personally called Robert B. Willumstad, A.I.G.’s chief executive, and dismissed him. Mr. Paulson’s involvement in the decision to rescue A.I.G. is also supported by an e-mail message sent by Scott G. Alvarez, general counsel at the Federal Reserve Board, to Robert Hoyt, a Treasury legal counsel, that same day.

The subject of the message, acquired under the Freedom of Information Act, is “AIG Letter,” and it contains a reference to a document called “AIG.Paulson.Letter.draft2.09.16.2008.doc.” The letter itself was not released.

Ms. Davis said this letter was intended to confirm that the Treasury and Mr. Paulson supported the loan to A.I.G. and that its officials recognized that any Fed losses would be absorbed by taxpayers. She said the existence of the letter did not confirm that Mr. Paulson was extensively involved in discussions about an A.I.G. bailout.

Since last September, the government’s commitment to A.I.G. has swelled to $173 billion. A recent report from the Government Accountability Office questioned whether taxpayers would ever be repaid the money loaned to what was once the world’s largest insurance company.

Constant Contact

In the ethics agreement that Mr. Paulson signed in 2006, he wrote: “I believe that these steps will ensure that I avoid even the appearance of a conflict of interest in the performance of my duties as Secretary of the Treasury.”

While that agreement barred him from dealing on specific matters involving Goldman, he spoke with Mr. Blankfein at other pivotal moments in the crisis before receiving waivers.

Mr. Paulson’s schedules from 2007 and 2008 show that he spoke with Mr. Blankfein, who was his successor as Goldman’s chief, 26 times before receiving a waiver.

On the morning of Sept. 16, 2008, the day the A.I.G. rescue was announced, Mr. Paulson’s calendars show that he took a call from Mr. Blankfein at 9:40 a.m. Mr. Paulson received the ethics waiver regarding contacts with Goldman between 2:30 and 3 the next afternoon. According to his calendar, he called Mr. Blankfein five times that day. The first call was placed at 9:10 a.m.; the second at 12:15 p.m.; and there were two more calls later that day. That evening, after taking a call from President Bush, Mr. Paulson called Mr. Blankfein again.

When the Treasury secretary reached his office the next day, on Sept. 18, his first call, at 6:55 a.m., went to Mr. Blankfein. That was followed by a call from Mr. Blankfein. All told, from Sept. 16 to Sept. 21, 2008, Mr. Paulson and Mr. Blankfein spoke 24 times.

At the height of the financial crisis, Mr. Paulson spoke far more often with Mr. Blankfein than any other executive, according to entries in his calendars.

The calls between Mr. Paulson and Mr. Blankfein, especially those surrounding the A.I.G. bailout, are disturbing to Samuel L. Hayes, a professor emeritus at Harvard Business School and a consultant in the past for government agencies, including the Treasury Department.

“We don’t know what they talked about,” Mr. Hayes said. “Obviously there was an enormous amount at stake for Goldman in whether or not the A.I.G. contracts would be made whole. So I think the burden is now on Mr. Paulson to demonstrate that there was no exchange of information one way or the other that influenced the ultimate decision of the government to essentially provide a blank check for A.I.G.’s contracts.”

In a letter accompanying the government’s production of Mr. Paulson’s calendar under the Freedom of Information Act request, Kevin M. Downey, a lawyer for Mr. Paulson, raised questions about how comprehensive the schedules were. He noted, for example, that the calendars did not reflect the Treasury secretary’s attendance at several public events. Mr. Downey did not return phone calls or e-mail messages seeking further comment.

Moreover, because the schedules include only phone calls made through Mr. Paulson’s office at Treasury, they provide only a partial picture of his communications. They do not reflect calls he made on his cellphone or from his home telephone.

According to the schedules, Mr. Paulson’s contacts with Mr. Blankfein began even before the height of the crisis last fall. During August 2007, for example, when the market for asset-backed commercial paper was seizing up, Mr. Paulson spoke with Mr. Blankfein 13 times. Mr. Paulson placed 12 of those calls.

By contrast, Mr. Paulson spoke six times that August with Richard S. Fuld Jr. of Lehman, four times with Jamie Dimon of JPMorgan Chase and only twice with John Thain of Merrill Lynch.

U.S. Lawmakers Smell Something Fishy in Bank of America / Merrill Deal

bo21U.S. lawmakers seek BofA-Merrill probe

R E U T E R S

Fri Apr 24, 2009
By Kim Dixon and Rachelle Younglai

WASHINGTON (Reuters) – Momentum is building among U.S. lawmakers to investigate Bank of America’s (BAC.N: Quote, Profile, Research, Stock Buzz) purchase of Merrill Lynch, amid allegations that federal officials gave the bank’s chief executive an ultimatum to complete the deal with the troubled investment house.

A senior Republican Senator joined House Democrats on Friday in seeking more details after New York’s attorney general said CEO Kenneth Lewis had testified he was pressured by former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke to do the merger, or lose his job.

“That was very disturbing,” Senator Richard Shelby, the ranking Republican on the Banking Committee, told the Reuters Global Financial Regulation Summit in Washington on Friday.

“I don’t know if there is securities fraud in there or what,” said Shelby, from Alabama.

Meanwhile, lawmakers in the House of Representatives expanded their probe by demanding all internal communications from the Federal Reserve and the U.S. Treasury Department touching on the deal.

New York Attorney General Andrew Cuomo said on Thursday that Lewis testified that Paulson and Bernanke also pressured him to keep quiet about losses at the troubled Merrill Lynch, which rose to $12 billion from $9 billion in a matter of days.

This account has been disputed by representatives for Bernanke and Paulson but raises questions about whether federal officials encouraged Lewis to keep important information from investors.

Bank of America ultimately got additional federal bailout money to absorb Merrill.

Shelby said he wants the Senate Banking Committee to hold a hearing on the merger.

A spokeswoman for Senate Banking Committee Chairman Christopher Dodd said he was deeply concerned about the allegations and had talked on Friday with Cuomo. “He will decide on next steps soon,” she said.

Representative Ed Towns, chairman of the House Oversight and Government Reform Committee, and domestic policy subcommittee chairman Dennis Kucinich, sent letters dated April 23 to the Fed and Treasury demanding the internal documents, with a request for responses by May 4.

“The implications of Mr. Lewis’ testimony, if accurate, are extremely serious,” said Towns and Kucinich.

The Securities and Exchange Commission has already said it is reviewing the disclosures surrounding the merger.

Publicly-traded companies are supposed to widely publicize so-called material information — information an investor needs to decide whether to buy or sell a stock.

“Bank of America and Ken Lewis are, in my mind, in deep trouble,” said James Cox, a securities professor at Duke Law School. “Both under state law and federal law disclosure standards there was clear duty to correct earlier statements regarding the viability and wisdom of the acquisition of Merrill Lynch.”

The potential liability of Paulson and Bernanke is a more murky area, according to former SEC chairman Harvey Pitt, who served under former President George W. Bush.

Securities law absolves government officials from liability in acts performed as part of official duties, he said.

“If Paulson and Bernanke coerced B of A to violate the securities laws out of concern for the economy, they can’t be liable and I think it would be hard to hold B of A liable,” Pitt said in an email.

“Nevertheless, you can’t violate the duties you owe shareholders merely because someone in the government asks you to do so,” said Pitt.

(For summit blog: blogs.reuters.com/summits/)

(Reporting by Kim Dixon and Rachelle Younglai; Editing by Tim Dobbyn)

Bank of America: When $45 Billion is Really $199.2 billion

crashing

Michael Whitney

FIREDOGLAKE/ OXDOWN GAZETE

Friday April 24, 2009

If you’ve been following the news, you know by now that Bank of America is in debt to the American taxpayer in the amount of $45 billion – the amount of TARP funds (aka “bailout money”) that they received since last year.

But it turns out that a figure that you likely haven’t heard – $199.2 billion – paints a bit more of an accurate number on how much Bank of America will most likely “borrow” from the American people.

How do we figure?

$12 Billion in TARP Funds for AIG
In addition to the $45 billion in direct TARP funds mentioned above, Bank of America has received a total of $12 billion from AIG after its own bailout, all of which is directly attributable to financing from the Federal Reserve (AIG.com)

$98.2 Billion in Asset Guarantees Against Losses
Bank of America has received a taxpayer guarantee on $118 billion worth of toxic assets. Taxpayers are on the hook for up to $98.2 billion in losses – $7.5 billion from the Treasury, $2.5 billion from the FDIC, and $88.2 billion from the Federal Reserve. (New York Times, 1/16/09)

$44 Billion in Asset Guarantees Through the FDIC’s TLGP
That’s a lot of initials, but essentially, the $44 billion is backed by new bond issuances under the Debt Guarantee Program. This is more than any other financial institution. (Barrons 4/20/09)

Sick of This?
So where does that leave Bank of America? Essentially, it leaves them in our debt. It’s time that Bank of America’s CEO, Ken Lewis, answers to the decisions that he’s made during his tenure as Chief Executive Officer. It’s just one of the many reasons why we’re calling for him to be fired next week during Bank of America’s annual shareholder meeting.

If you’ve yet to sign your name to our list of now-tens of thousands of fellow taxpayers who have called for CEO Ken Lewis to go, go to TakeBackTheEconomy.org.

Government Report: TARP a Complete Clusterf*ck

McClatchy Washington Bureau

Wed, Apr. 01, 2009

Watchdogs: Treasury won’t disclose bank bailout details

Chris Adams | McClatchy Newspapersbush_ok_100

WASHINGTON — The massive programs designed to rescue the nation’s financial sector are operating without adequate oversight, with vague goals and limited disclosure of their details to the taxpayers who are paying for them, government watchdogs told a Senate panel Tuesday.

The Troubled Asset Relief Program, or TARP, was launched in the midst of last fall’s collapse of the nation’s banking system and is designed to get loans flowing to businesses and individuals.

But “without a clearer explanation” about parts of the program, “it is not possible to exercise meaningful oversight over Treasury’s actions,” said Elizabeth Warren, a Harvard Law School professor who leads a special congressional oversight panel monitoring the TARP program. Her comments came in a Senate Finance Committee hearing on the bailout program.

Noting that TARP passed Congress six months ago, Warren said that her group has repeatedly called on the Treasury Department to provide a clear strategy for the program — and that “the absence of such a vision hampers effective oversight.”

Although she has asked Treasury to explain its strategy, “Congress and the American public have no clear answer to that question.”

TARP is one of several programs the government has launched in recent months to help ailing institutions and even bolster healthy banks. Warren singled out one program, known as TALF, for appearing to involve “substantial downside risk and high costs for the American taxpayer” while offering big potential rewards for private interests. She said the public information about that program was “contradictory, promoting substantial confusion.”

The Government Accountability Office shared some of the same concerns, saying in a new report that “Treasury continues to struggle with developing an effective overall communication strategy” for the TARP program.

Beyond that, the GAO’s report pointed out the difficulty in even measuring whether TARP is working. As of March 27, the Treasury Department had handed out more than $300 billion of the $700 billion in approved TARP funds, the GAO said.

The majority of that money went to banks large and small around the country. And there are signs that credit is flowing from those banks; the GAO said that several hundred billion dollars in new loans were processed by the largest TARP recipients in December and January.

But crediting TARP for that is difficult, given the range of actions the government has taken since October. “Isolating the effect of TARP’s activities continues to be difficult,” the GAO’s Gene Dodaro said in his prepared testimony.

The Treasury Department, in a statement, said that “transparency and accountability are central to ensuring that taxpayer funds are spent wisely,” and noted that the department is actively working to respond to the recommendations of GAO and other oversight bodies. Among other things, the department has hired more staff and expanded its survey on bank lending activities.

Iowa Sen. Charles Grassley, the panel’s ranking Republican, described himself as “disappointed and frustrated” in the amount of information available about the program. “You can’t measure effectiveness when you don’t know what the goals and objectives of a program are, or how the program is being run,” he said.

Warren’s oversight panel made news earlier this year with its report that Treasury’s bailout programs had overpaid by an estimated $78 billion in its transactions with the nation’s ailing financial institutions. She said that issue is still under investigation.

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