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  • Fannie, Freddie bailout: $153 billion ... and counting
    that new business only goes so far because it s still dwarfed by the loans made five to 10 years ago he said Cecala thinks the losses may end up coming in a bit below FHFA s estimates but other experts believe those estimates may be too conservative The losses depend very much on housing prices and I don t see the situation in the housing market getting very much better said Peter Wallison senior fellow at the American Enterprise Institute a conservative think tank As long as home prices continue to decline or even stay the same the losses to Fannie and Freddie and to the taxpayers will continue to climb Congress essentially approved a blank check in July 2008 to back losses at the two firms and in September of that year the government stepped in and took them over after finding that losses on the mortgages they bought during the the housing bubble had overwhelmed their net worth But while the government has kept the firms alive by pumping money into them since then there has been no plan on reforming their operations going forward Friday the Obama administration unveiled its plan to slowly wind down Fannie and Freddie and have banks and the private sector provide the financing for home loans But the administration plans call for some continued role for the government in promoting mortgage lending and home ownership Critics of the plan would like to see the government removed from the mortgage finance market altogether But even advocates of that position say it will take a period of years to phase in that change And no one expects the legislative battle between the administration and Republicans in Congress over the future of the firms to be an easy one The politics suggests to me

    Original URL path: http://www.911omissionreport.com/fannie_freddie.html (2016-02-14)
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  • Citigroup Gets Huge New $38 Billion Bailout, Wiping Out All of Taxpayer's "Profits"
    Service on Friday issued an exception to long standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government As a result Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors While the Obama administration has said taxpayers are likely to profit from the sale of the Citigroup shares accounting experts said the lost tax revenue could easily outstrip those profits So what specifically happened Citigroup was required to replace its federal aid with an equal amount of money from private investors more than any other bank The government concluded that Citigroup needed the IRS ruling because a reduction in the value of its tax breaks would have eroded its capital forcing the company to raise more money officials said Federal tax law lets companies reduce taxable income in a good year by the amount of losses in bad years But the law limits the transfer of those benefits to new ownership as a way of preventing profitable companies from buying losers to avoid taxes Under the law the government s sale of its

    Original URL path: http://www.911omissionreport.com/citigroup_38bln.html (2016-02-14)
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  • Treasury Secretary's Secret Talking Points Reveal That Banks Were Forced to Surrender Ownership Stakes to Government
    is not appealing you should be aware that your regulator will require it in any circumstance The nine CEOs present at the Oct 13 meeting reportedly included Vikram Pandit of Citigroup Jamie Dimon of JP Morgan Richard Kovacevich of Wells Fargo John Thain of Merrill Lynch John Mack of Morgan Stanley Lloyd Blankfein of Goldman Sachs Robert Kelly of Bank of New York Kenneth Lewis of Bank of America and Ronald Logue of State Street Bank The Treasury Department s announcement of the government s action the next day described the capital injection as a voluntary program for healthy banks I don t think there was any banker in that room who was going to look us in the eye and say they had too much capital Paulson told The New York Times In a relatively short period of time people came on board Each of the nine CEOs present at the meeting received an application where they hand wrote the name of their qualifying financial institution in support of the U S financial system and the broader U S economy The banks then agreed to issue Preferred Shares in varying amounts which they wrote by hand into the provided space State Street took 2 billion Bank of New York Mellon took 3 billion and Bank of America took 15 billion Merrill Lynch Goldman Sachs and Morgan Stanley all agreed to take 10 billion and JP Morgan Wells Fargo and Citigroup all took the maximum 25 billion in exchange for issuing preferred shares to the U S Treasury In return the qualifying institutions under the Capital Purchase Program agreed to adopt standards dictated by the Treasury Department regarding executive compensation and corporate governance With the government now determining how banks should spend their money benefits such as golden parachute payments to top executives were terminated and banks were required to repay any bonus that was based on projected earnings that later proved to be inaccurate A limit of 500 000 has also been set on the tax deductibility of salaries While some of the nine banks are still accepting money through TARP Wells Fargo Chairman Richard Kovacevich has been more vocal about the government restrictions that have come with the TARP package Is this America when you do what your government asks you to do and then retroactively you also have additional conditions Kovacevich reportedly said according to a March 2009 New York Post article In the same article the Post reported on Kovacevich s revolt against the required stress tests saying that he believed that imposing these tests on healthier banks left then open to stock manipulation We do stress tests all the time on all of our portfolios said Kovacevich It is absolutely asinine that somebody would announce we re going to do stress tests for banks and we ll give you the answer in 12 weeks The stress tests were formulated by the U S Treasury in an attempt to ensure the countries most influential banks are

    Original URL path: http://www.911omissionreport.com/banks_forced.html (2016-02-14)
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  • Bank of America chief 'told to buy Merrill or face sack'
    account was revealed today in a letter to Congressional law makers from New York s attorney general Andrew Cuomo who has raised concern that Bank of America s shareholders were kept in the dark about liabilities inherited from Merrill The purchase has been enormously expensive for Bank of America which is the largest US bank in terms of deposits The issue has sparked an investor rebellion forcing Lewis into a fight for his job at a potentially acrimonious annual meeting next week The takeover was struck in a lightening deal agreed over a weekend at the height of Wall Street s financial meltdown in September The bank s shareholders approved the transaction on 5 December but Lewis testified that a week later he learned of a staggering amount of deterioration in Merrill s finances with quarterly losses jumping from 9bn to 12bn in six days After consulting lawyers Lewis said he wanted to invoke a material adverse event clause to terminate the buyout But the former treasury secretary Henry Paulson stepped in saying he would use the government s bail out powers to sack Bank of America s board unless it completed the deal Lewis testified I can t recall if he Paulson said we would remove the board and management if you called it a material adverse event or if he said we would do if you intended to In an allegation which has sparked questions about an over reach of government power Lewis maintains that Paulson and the Federal Reserve s chairman Ben Bernanke told him to keep Merrill s losses to himself I was instructed that we do not want a public disclosure The saga sheds new light on feverish behind the scenes negotiations as government officials scrambled to stabilise the financial system in the wake of

    Original URL path: http://www.911omissionreport.com/bofa_told_buy_merrill.html (2016-02-14)
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  • Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter
    dubious paper There are to be no limits on executive compensation for the firms that get relief and no equity share for the government in exchange for this massive infusion of capital Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson a provision that evokes the Bush administration s suspension of normal constitutional safeguards in its conduct of foreign policy and national security The differences between this proposed bailout and the three closest historical equivalents are immense When the Reconstruction Finance Corporation of the 1930s pumped a total of 35 billion into U S corporations and financial institutions there was close government supervision and quid pro quos at every step of the way Much of the time the RFC became a preferred shareholder and often appointed board members The Home Owners Loan Corporation which eventually refinanced one in five mortgage loans did not operate to bail out banks but to save homeowners And the Resolution Trust Corporation of the 1980s created to mop up the damage of the first speculative mortgage meltdown the S L collapse did not pump in money to rescue bad investments it sorted out good assets from bad after the fact and made sure to purge bad executives as well as bad loans And all three of these historic cases of public recapitalization were done without suspending judicial review Kuttner s opposition here is perhaps the strongest language I ve seen used pushing back on this piece of legislation in any publication of repute and even here Section 8 is not cited by name or by content McClatchy Newspapers also alludes to Section 8 with concern citing the unfettered authority that Paulson would be granted and noting that the law also would preclude court review of steps Paulson might take something Joshua Rosner managing director of economic researcher Graham Fisher Co in New York said could be used to mask previous illegal activity Jack Balkin also gives the matter the sort of attention it deserves on his blog Balkinization But elsewhere the conversation is muted The debate over whether Congress is going to pass the Paulson bailout package or pass the Paulson bailout package really hard seems to have boiled down to a discussion of time and concessions The White House has made it clear that they want this package passed yesterday Congressional Democrats seem to be of different minds on the matter with some pushing back hard and others content to demand a small dollop of turd polish to make the package seem more aesthetically pleasing at which point they ll likely roll over and pass the bill Neither candidate John McCain or Barack Obama seem all that amenable toward the bailout but neither have either demonstrated that they are willing to risk their candidacies to do much more than exploit the issue for electoral purposes Sunday morning came and went with Paulson traipsing dutifully from studio to studio facing nary a question on Section 8 Front

    Original URL path: http://www.911omissionreport.com/700b_bailout.html (2016-02-14)
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  • Former treasurer at a collapsed bank: 'Right and wrong became blurry'
    some ways I was always an anomaly in finance In a way I always thought of it as a game I didn t take it that seriously I would be thinking what the hell it s not my money is it I suppose that s why I could cope with the stress reasonably well I always saw it as a bit of a laugh I had gathered this band of anti establishment people around me and we would mock the seriousness of the banking world Right and wrong became blurry and hard to define If you shaft people and get a very good deal this is considered the greatest thing there is What I mean is that in business when you deliberately consciously make money out of someone that s what it s all about isn t it Excessive profitability is deemed cause for promotion Somewhere in the back of your mind you realise that somebody is paying for what is going into your bonus pot But then you re kidding yourself that you re making the world a better place grease the wheels of capitalism and all that Finance is not alone in this Drug companies try to get you to take as many medicines as they can while thinking of themselves as being in the business of curing disease Having said that the City is an extraordinary working environment and as such it is in my view fundamentally different from other business sectors and the civil service I am sure the things we re talking about are happening there too What makes the City so special is that historically the sector has been very close together There are all these pubs and bars close by where you can meet discretely It becomes a huge playground a social network at very close proximity You can bond very easily and become bonded to like minded people Colleagues become buddies Throw in the alcohol and the client entertainment and you get an explosive mix Boundaries are crossed very easily leading to massive conflicts of interest Brokers and traders are friends but one also gives business to the other I ll get tickets for rugby for you if you do that trade with me that sort of thing happens very easily I never thought I was stressed There just wasn t any time for self reflection I ended up drinking huge amounts Alcohol is a quick mood changer it stops you from thinking and dulls you down Not that I was aware of that at the time You need to hide the stress from yourself but also from others You cannot admit it because if you let on about being stressed it makes you look unreliable So much in banking depends on taking quick decisions daily hourly Do we do this deal or not It s rarely a clear cut decision there s never time to establish the situation intellectually Every decision that is made about the markets is an impossible call

    Original URL path: http://www.911omissionreport.com/right_wrong_blurry.html (2016-02-14)
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  • AIG ships billions in bailout abroad
    which financial firms are benefitting from the federal handout In all AIG disclosed payments of 105 3 billion between September and December 2008 And some of the biggest recipients were European banks Societe Generale based in France was the top foreign recipient at 11 9 billion Deutsche Bank of Germany got 11 8 billion and Barclays based in England was paid 8 5 billion Here in the U S Goldman Sachs received 12 9 billion Edward Liddy the government installed CEO of AIG sat on the board of directors of Goldman Sachs until he joined AIG He took the position while President George W Bush s Treasury Secretary Henry Paulson who until joining the administration had served as Goldman s chairman and CEO arranged the insurance company s initial government bailout The disclosure of US taxpayer money going to foreign banks rankled some analysts These revelations raise serious questions about the extent to which U S taxpayers are being asked to bail out foreign banks said James Rickards the senior managing director for market intelligence at Omnis an applied research organization Why were French and German authorities not asked to pick up the tab for their portion of potential AIG losses Political pressure is also building on AIG as House Speaker Nancy Pelosi on Sunday called on AIG executives to renounce their bonuses and refuse retention pay and said that House Financial Services Chairman Barney Frank would examine options that are legally available to recover taxpayer funds of companies that abuse the privilege of taxpayer assistance The House Financial Services Subcommittee on Capital Markets Insurance and Government Sponsored Enterprises has called on Liddy to testify before the committee on Wednesday The full list disclosed by AIG can be found here That s information that members of Congress and media outlets

    Original URL path: http://www.911omissionreport.com/aig_abroad.html (2016-02-14)
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  • Deutsche Bank to pay over $550M in fraud probe
    that the Internal Revenue Service was unable to collect from taxpayers from 1996 to 2002 because of the misconduct It also includes a civil penalty of more than 149 million In a statement Deutsche Bank said it was pleased that the investigation had been resolved Since 2002 the bank has significantly strengthened its policies and procedures as part of an ongoing effort to ensure strict adherence to the law and the highest standards of ethical conduct it said The bank said the payment had already been accounted for and would not have any impact on current net income Bank spokesman John Gallagher said the company had no additional comment U S Attorney Preet Bharara said in a news release that the bank provided a detailed statement of facts describing its wrongful conduct The nonprosecution agreement bars the bank from involvement with any prepackaged tax products of the type the bank had previously offered according to the release In court papers the Department of Justice agreed not to criminally prosecute Deutsche Bank for any crimes related to its participation in a broad conspiracy to defraud the Internal Revenue Service Authorities said the scheme enabled wealthy U S citizens from 1996 through

    Original URL path: http://www.911omissionreport.com/550mln_tax_fraud.html (2016-02-14)
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