Posted on 04/04/2010 1:56:59 PM PDT by neverdem
A FEW weeks ago, two Republican House members asked Ben Bernanke, the chairman of the Federal Reserve, whether the Fed knew — before Lehman’s bankruptcy examiner revealed it — about the bookkeeping scam at Lehman known as “Repo 105.” This scam allowed Lehman to disguise how much debt it was carrying, right up until it collapsed. Lehman got new loans to pay off old loans, pretended the new loans were “sales,” and through a complicated series of steps made both the old and new loans disappear just in time for its quarterly reports.
Mr. Bernanke said the Fed had known nothing about this. After all, he explained, the...
--snip--
Our bank regulators were not, as they would like us to believe, outside the disco, deaf and blind to the revelry going on within. They were bouncing to the same beat. In 2006, the agencies jointly published something called the “Interagency Statement on Sound Practices Concerning Elevated Risk Complex Structured Finance Activities.” It became official policy the following year.
What are “complex structured finance” transactions? As defined by the regulators, these include deals that “lack economic or business purpose” and are “designed or used primarily for questionable accounting, regulatory or tax objectives, particularly when the transactions are executed at year end or at the end of a reporting period.”
How does one propose “sound practices” for practices that are inherently unsound? Yet that is what our regulatory guardians did. The statement is powerful evidence of the permissive approach bank regulators took toward the debt-dissolving financial products that our banks had been developing, hawking and using themselves for years. And it’s good reason for Americans to be outraged by the “who me, what, where?” reaction of Mr. Bernanke and the S.E.C. to the revelation of Lehman’s Repo 105 scam...
(Excerpt) Read more at nytimes.com ...
Regarding “Run against Wall Street,” I’d say, make a list of the too-big-to-fail financial firms and give it to the antitrust regulators.
It’s NOT “Washington”....it’s DC.....NYT is illiterate
Who cares what the NYT writes anymore. For the answer go to Bawney Fwank, Chrissy Dodd and Chrissy Cocks. They precipitated this and then covered it up. What patriots they are.
LOS ANGELES -- Bankrupt financial giant Lehman Bros' former top officers, its auditor and several rival brokers could face legal claims, a report by a court-appointed examiner said.
In a 2,200-page report, examiner Anton Valukas said that while Lehman's directors at the time of the collapse weren't necessarily responsible, some of its top executive management might be held liable, according to reports of the findings. Lehman is currently undergoing court-supervised liquidation to pay off creditors.
Valukas mentioned ex-Chief Executive Dick Fuld and chief financial officers Chris O'Meara, Erin Callan and Ian Lowitt as possibly facing claims for negligence or breach of duty.
The report cited a practice known internally as "Repo 105," in which Lehman allegedly used repurchase agreements -- the temporary exchange of assets for cash -- that were structured as sales so that the leverage could be moved off the firm's balance sheet. See story on Lehman's accounting "drug" Repo 105. As a result, the report says, Lehman may have already been insolvent on Sept. 2, 2008, almost two weeks before its Sept. 15 bankruptcy filing rocked the financial world and helped send the stock market into a nosedive.
"In this way, unbeknownst to the investing public, rating agencies, government regulators, and Lehman's board of directors, Lehman reverse engineered the firm's net leverage ratio for public consumption," the report said.
A Reuters report quoted an attorney representing Fuld as saying the former CEO "did not know what those transactions were" and that "he didn't structure them or negotiate them, nor was he aware of their accounting treatment." (Excerpt) Read more at marketwatch.com ...
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HOW MUCH DID YOUR STATE LOSE FROM THE LEHMAN BANKRUPTCY? The death grip Lehman had on just one state.
Lehman Brothers managed Florida's public assets, sold securities, underwrote bond deals and handled residential and commercial mortgages. Local Fla governments are stuck with about $556 million in tainted securities that they can't redeem.
Fla counties, cities and school districts face a loss of more than $300 million for roads, sewers and schools. The state has $290 million less to pay for everything from hurricane claims to health care, community colleges and care for infants with disabilities.
The biggest casualty is Florida's giant public pension fund. Fla took a $230 million hit on Lehman stocks and bonds. More than $440 million disappeared from the pension fund that pays benefits for some 1 million retirees and public employees.
The pension fund holds another $53 million in Lehman bonds that have lost most of their value and has $323 million tied up in tarnished mortgage-related securities purchased from Lehman. If the state sold those securities today, the pension fund would lose about $188 million more.
Further north, 75% of then-NJ Gov Jon Corzine's appointments to the State Investment Council (invests pension billions) had ties to the bankrupt Lehman Bros. The New Jersey Economic Development Authority gave Lehman Bros $123 Million tax dollars FOR DOING NOTHING. That's right---FOR DOING NOTHING. The EDA brainiacs unloaded $123 million tax dollars on Lehman Brothers (AND Morgan Stanley) .... simply to cancel an earlier deal. NOTE: Corzine once headed Goldman Sachs.
Yet these losses are trivial compared to the collateral damage. Obama's trillion dollar bailouts are a direct result of the instability that followed the collapse of Lehman.
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REFERENCE We kept reading and hearing about Ohaha rushing Congress to approve $787 billion stimulus package" early this year. Now uber-Lobbyist Thomas Hale Boggs, Esq interviewed by network news said, "there's $2 TRILLION federal stimulus waiting to be distributed". Boggs said he is getting unprecedented numbers of calls from all over the US......from those who want a piece of it. (Boggs is the son of former Cong Hale Boggs and brother of former ABC-TV commentator Cokie Roberts).
The reality of the Ohaha govt:
Behind The Real Size of the Bailout (Mother Jones reports its $14 trillion)
Mother Jones | Dec. 21, 2009
FR Posted January 04, 2010 by E. Pluribus Unum
A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street.
The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle:
Treasury Department bailout programs (controlled by Rahm Emanuel)
Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].
Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokerages—as much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].
TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid. Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets." GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion [PDF].
--SNIP--- long read
Federal Reserve bailout programs
Commercial Paper Funding Facility: With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion [PDF] was earmarked for the program.
Mortgage-backed securities purchase: In 2009, the Fed earmarked up to $1.25 trillion to buy investments based on home loans.
Term Asset-Backed Securities Loan Facility: TALF provides financing to investors who are buying asset-backed securities. In February 2009, the Fed and Treasury announced an expansion of the program to generate up to $1 trillion in new lending.
Foreign Central Bank Currency Liquidity Swaps: The Fed has provided $755 billion [PDF] for currency liquidity swaps with foreign central banks.
--SNIP--- long read
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CIRCA Sept 15, 2009 A SHOCKING DISPLAY OF OBAMA'S THIRST FOR POWER
FOX News' Judge Napolitano notes: if implemented, the unconstitutional proposals Obama urged in his Sept 2009 speech to Wall Street will amount to a final coup d’état by banksters, their technocrats and enforcers, at the Federal Reserve (*the privately-held bankster cartel that masquerades as a government agency).
Obama's "reforms" would install a dictatorial regulatory power controlled by international bankers over the entire US economy — down to the local grocer and hot dog vendor on the corner.
It will control our lives down to the smallest detail. It will require us to ask permission for the most mundane and routine of financial transactions. IT MUST BE BE RESISTED AT ALL COSTS. VIDEO LINK AVAILABLE Judge Andrew Napolitano On Obama/Bankster Takeover
When are we going to hear about the WaMu heist by JPMorgan/Chase?
When are we going to hear about the WaMu heist by JPMorgan/Chase?
Did you bother to read it? It's one of the few things the NY Times is good for, their guest OpEds. Guess who's been throwing money at the rats? It was Wall Street Banks!
Thanks for posting this.
Related:
Looting Main Street
http://www.rollingstone.com/politics/story/32906678/looting_main_street
I’d say make a list of the wizards who developed these “complex structured finance” transactions and sold them to unsuspecting investors and bring them before the bar of justice!
Can we do both?
I am not well enough connected to either make the list or prosecute the perps, but I am aware that there are some very clever people out there who can.
We just need to encourage them!
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