Updates: These short positions GS took are the AIG CDS’ we lost billions on?! Golden Slacks getting hammered by SEC fraud charges…

Update: Oh shxt! I didnt realize the short positions they are talking about are the damn AIG CDS!!! Oh snap! These are the frakkin CDS we lost BILLIONS on via AIG! h/t doc holiday:

Skeptical CPA: December 2008Re: “Some of AIG’s speculative bets were tied to a group of [CDOs] named ‘Abacus,’ created by [GSG]. … In what amounted to a side bet on the value of these holdings, AIG agreed to pay [GSG] if the mortgage debt declined in value and would receive money is it rose. … The plan has resulted in banks in North America and Europe emerging as winners: They have kept the collateral they previously received from AIG and received the rest of the securities’ value in the form of cash from Maiden Lane III. … It also has been a double boon to banks and financial institutions that specifically bought protection on now shaky mortgage securities and are effectively being made whole on those positions by AIG and the [Fed]”, my emphasis, Serena Ng, Carrick Mollenkamp & Michael Siconolfi at the WSJ, 10 December 2008.”

Update: Cramer is all over CNBC saying his confidential high sources say GS had a position , long, in the CDO, really laying it on shilling for Golden, really sad. Saying its caveat emptor the German bank who took losses is responsible, while he is saying GS was long the position. Shill Jim shill. wow some guy(silvan raines, sp?) says Cramer takes money from GS to his face on the air just now, heh.

Update: Here is Boehner stmt, he calls GS Pres Obamas top Wall St Ally, oohhh, nice:

“These are very serious charges against a key supporter of President Obama’s bill to create a permanent Wall Street bailout fund.  Despite President Obama’s rhetoric, his permanent bailout bill gives Goldman Sachs and other big Wall Street banks a permanent, taxpayer-funded safety net by designating them ‘too  big to fail.’  Just whose side is President Obama on?

“Instead of permanent bailouts for President Obama’s Wall Street allies, Republicans believe the best way to protect taxpayers is by reforming Fannie Mae and Freddie Mac, the government-sponsored companies that sparked the meltdown by giving high-risk loans to people who couldn’t afford it.”

NOTE: Goldman Sachs was President Obama’s top Wall Street contributor during the 2008 election cycle, donating nearly $1 million to his campaign.

Update: John Boehner GOP minority leader House, just put a wicked spin on that ball, his statement said these charges against GS a partner in Pres Obamas Fin Reg Plan are very concerning, that the FIn Reg Reform Bill will protect GS as too big to fail, Boehner said, whose side is President Obama on? oooooohhhh!! ^5 to Boehner

Update: So I was thinking the Volcker Rule is gonna make a BIG comeback off this, ya know? I mean WSJ was just declaring it dead, again, this week and I do not see how the banks are gonna fight Volcker Rule and the Consumer Protection Thingy in the face of the headlines the lamestream put together off this. And it is things like this that kill the markets for everyone, thanks GS you frakkers.

12:51pm EST: DOW down 153 now, back under 11k, like Spinal Tap, it goes to eleven..that’s about all that number was worth…S&P back under the big 1200 the traders were so excited about…GLD, OIL, all down…

Update: Steve Liesman – Paulson’s right hand man, Pelligrini,  was source of confirmation for the fraud charges in re his selection of the ‘lousy’ subprime securities that went into the CDO. He left Paulson in 2009. Steve says what Paulson did is likely not illegal, the issue is disclosure and that is all on GS…

Paging Andrew Cuomo, will Andrew Cuomo please file an indictment on the white courtesy phone….

Update: WSJ has the SEC complaint up in pdf here

Update Q/A Adam Schapiro of FoxBiz asks other fin firms did this, on synthetic CDOs like Deutsche Bank, are they facing charges?

ongoing investigation is the answer

DOW is tanking, down 75 now, GS down 20 (12%)

Q- Why Paulson not charged?

A- Paulson didnt make the representation to the long investors, GS did.

Update:11:11 am est:  SEC conf call LIVE on CNBC now!

they chose which MBS would make up this CDO, J Paulson had significant role in building product, had incentive to choose worst rated MBS to put in the CDO and then they took a short position against it

the prospectus for the long investors in the CDO revealed none of this including Paulsons role..

long investors lost $1b, paulson made $1b

Sing with me!

Karma chameleon baby

CNBC Chyron: SEC charges GS with FRAUD ON SUBPRIME SECURITIES

Muhhuuuuhaaaaa!!!!!

SEC: GS misstated, omitted key facts related to subprime products

SEC: (John) Paulson & Co had hand in structuring CDO in question

SEC grew a pair, hoocodanode!

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April 16, 2010. Tags: , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Wall St. Comments off.

Ben Bernanke: ‘Joblessness, foreclosures pose hurdles to economic recovery’ in other Earth shattering news, water is wet!

But he still denies that overly loose Fed policy has anything to do with the housing bubble V1…

…meanwhile Greenspan told the ‘Crisis Cmte’, lol, that it was Congress’ that pushed the Fed to allow all those loose lending standards and predatory products, and no regulator could have caught it, yeah whatevs Alan, you abandoned your Randian views and tanked the economy with not one but 2 bubbles, the dot com bust thanks to your loose rates and later the housing bubble…

James Grant, editor of Grant’s Interest Rate Observer,  absolutely annihilated Greenspan on Bloomberg today during the hearing coverage-go to bloomberg for entire interview it is must see TV…

The lights actually went out in the Crisis Panel hearing with Greenspan, they continued in the dark for a bit, a metaphor from God surely, heh…

Bloomberg:

…Federal Reserve Chairman Ben S. Bernanke said joblessness, home foreclosures and weak lending to small businesses pose challenges to the economy as it recovers from the worst recession since the 1930s.

“We are far from being out of the woods,” Bernanke said today in a speech in Dallas. While the financial crisis has abated and economic growth will probably reduce unemployment (MiM here, italics mine) over the next year, the U.S. faces hurdles including the lack of a sustained rebound in housing, a “troubled” commercial real estate market and “very weak” hiring, he said.

The remarks reflect concerns by Fed officials at their meeting last month that the job market and tight credit would restrain consumer spending. At the session, Bernanke and his colleagues reiterated interest rates will stay very low for an “extended period.” He didn’t repeat that in today’s speech, while saying the Fed’s “stimulative” rates will aid growth.

“The economy has stabilized and is growing again, although we can hardly be satisfied when one out of every 10 U.S. workers is unemployed and family finances remain under great stress,” Bernanke said in prepared remarks to the Dallas Regional Chamber…

April 7, 2010. Tags: , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Labor Department, Obama Administration, Politics, TARP, Taxes, Uncategorized, Unemployment Statistics, Wall St. Comments off.

50 Ways to Leave Your Lender

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February 1, 2010. Tags: , , , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St. Comments off.

Fannie Mae is back and they want 400 billion….

UPDATE: WSJ provides an interactive map of ‘strategic defaults’  here

A-HA!!!! I FRAKKING KNEW IT!!! $%^y&*u(*(&^%&$&^!!!!! Frakkiing Fannie and Freddie will NOT MODIFY frakking loans but they want BILLIONS MORE!!! ARRRRRGLEEE!!!!! Our previous rants on this here. People are not talking about this much and this is THE NUMBER ONE OBAMA FAILURE – HOUSING.

As we have said over and over and over –   DO THE DAMN HOLC ALREADY!! We are bailing out the losses on the short sales and these homes are being bought by investors who are making another damned housing bubble!!! (and the big bank servicers get a hefty fee) Just write down principal for the 4 states sooo far underwater and keep the homeowners in, this way we take the loss ONCE and have saved a family. Jeebus it is not that hard.

If anyone doubts the cycle of DOOM this lack of action is creating, see WSJ front page again today a piece about peeps here in AZ walking away – ‘strategic default’.  It is getting less and less ‘stigmatic’ lol, to walk away. It is a cycle of DOOM that will drag the economy back down to its damn knees if they do not take MEANINGFUL action. And this move by FAN FRED to get HUNDREDS OF BILLIONS MORE IN TAXPAYERS BAILOUTS PROVES MY DAMN POINT.

Anyone who thinks folks cannot just walk away, you are wrong. In non recourse states like AZ CA you CAN walk away, jingle mail. They cannot come after you for the loss AND the Congress passed the 2007 Mortgage Debt Relief Act so no folks the IRS is NOT sending 1099s to these people.  Stop the freefall or it will spread across the country, AZ, CA FL, NV represent 21% of our national GDP folks.

I am doing all I can to stay and the damned FAN and servicer will not make any offer, we have lost income and are underwater, it is like they WANT us to walk away, they likely do, the investors have hyped prices back up to 2004 levels here, it is another bubble happening before our eyes and no one will stop it.

NYT:

…Fannie Mae recently warned, for example, that it could not pay the dividends it owes the Treasury, so “future dividend payments will be effectively funded with equity drawn from the Treasury.”

All the companies have recently drawn new government money or are in talks to do so:

Fannie Mae and Freddie Mac, which buy and resell mortgages, have used $112 billion — including $15 billion for Fannie in November — of a total $400 billion pledge from the Treasury.

Now, according to people close to the talks, officials are discussing the possibility of increasing that commitment, possibly to $400 billion for each company, by year-end, after which the Treasury would need Congressional approval to extend it. Company and government officials declined to comment….

Reminder, Fannie Mae % of loans ‘seriously delinquent per total number of loans since 1998:

December 17, 2009. Tags: , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Unemployment Statistics, Wall St. Comments off.

Gentle Ben on the Hill for renomination hearing

Update 2: This afternoon we learned:

Bob Corker R-TN really has a great head on his shoulders. I remember when he tried valiantly to work out a deal on GM before they wound up doing a giant interventionary bailout instead. He zeroed in on a huge issue with Ben. What is the Fed’s expectation on how interest rates will react when the FED MBS purchase plan ends in March. Corker said it would be incredibly important to know if indeed you really plan to end those MBS purchases from FAN FRED etc in March, some folks expect interest rates to rise quite high as a result (yes above 6% fer shure I would think, that being the number used in all the housing recovery models 6% max rates for 2010-MiM)

Ben would not give a real answer. He basically said, we have been slowly winding down our MBS purchases and we have not seen any big jump in mortgage interest rates yet and when we end the program in March if circumstances change we will act then.

When asked the biggest things that might interfere with the recovery Ben did not mention housing. So he is still blind there. That was evident in his response to Corker. He really did not acknowledge the HUGE LOOMING inventory spike that will follow the housing mods that don’t make it to permanent status reentering foreclosure combined with interest rates above 6% and falling values will stop purchases (and of course so will unemployment). He said FWIW IOW eh, we’ll cross that bridge IF we come to it.

Ben, Ben, the bridge is washed out and you are GALLOPING toward it!

I know a lot of conservatives don’t like Michael Bennett R-UT but he did make the key inflation argument, we will post that as well.

To cap this afternoon Chief of WH Council of Economic Advisers (somehow she and Larry have almost identical titles, and if you don’t think Larry is hogging the decisions, you don’t know Larry, the only saving grace about Tim Geithner (and Ben!! but I do like Ben) is they are not Larry) Christy Romer spoke to Maria Bartiromo on the jobs summit ideas and Tim Geithner just spoke to Liz Claman on FOXBiz and based on what they said they do indeed plan to let the Bush Tax cuts expire and there was no mention of   a payroll tax cut.

When Obama spoke he talked about Cash for Caulkers (which actually IS a good idea, and Big Dawg suggested it to the WH with papers on its costs and suggested using TARP funds for it) but the rest was about how his previous plans have worked so well he cited the CEO of Liz Claiborne, and how they will Green Tech the economy and possibly offer hiring tax credits. NOTHING ABOUT PAYROLL TAX HOLIDAY, GIVE US OUR MONEY BACK! We will post clips.

Update: From the first hour of testimony we learned:

Chris Dodd does not know who Dr Doom is. The head of the Banking Cmte mentions ‘an economist named Nouriel Roubini’ and says he hopes he pronounced his name right . So again a middle aged housewife in AZ , moi, knows more about the current state of the economic debate than our Congressional leadership, fabulous.

Pretty gentle until Jim Bunning R-KY. As expected Jim laid Ben out in a 15 minute soliloquy on his failures and Greenspan’s before him. In fact he called Ben ‘Greenspan’ and the entire room laughed.

I am reminded again why I like Evan Bayh D-IN. He was our pick for HRC VEEP. He follows Bunning. He acknowledges the round robin of errors and asks pertinent insightful questions , he notes he would prefer to have Ben there he knows Ben will not make the AIG mistake again, He asks about the proposed loss of access of the FED to the banks financial state if Dodd’s proposed stripping of regulatory authority from the Fed (Dodd keeps following all the questioners to gently argue with Ben that his plan to model our FED after the UK model would not have precluded the FED from its actions following 9/11 as Ben surmises) would be a problem. Ben says in his thorough thoughtful articulate way (whatever else you can say Ben is incredibly smart about economics, just myopic as to the limits of what they can predict as are IMo all scientists of any field) hell yes it is a problem, the UK model failed, those Euro countries Dodd is citing are moving back towards OUR US model he says. Bayh and Schumer now have heads together nodding as Dodd is off rambling about his grand plan again. Clearly Schumer and Bayh are not down with Dodd’s shortsighted plan to strip the FED of its regulatory powers, good.

Dodd following up to argue the point AGAIN (he doesnt know who Nouriel Roubini is but he thinks he can rewrite our FED regulations following the ‘Eruopean model’ he keeps mentioning ‘other G8 countries’ just say Europe Chris! In fact Dodd went out of his way to agree with Bunning on AIG of all things and whined that while all the talk was of the AIG bonuses (BWAAA yeah its in his head baby) the fact that the Fed paid par on the AIG CDS’ was the real issue.

Ben says he does not abuse his regulatory authority and could not control foreign banks on the negotiations to take less. Dodd bemoans the fact that Ben didnt abuse his authority there.

And while Ben waived the chance to talk tax cuts forcefully when reminded Greenspan did it, he said he Ben would not address that, he also waived the chance to say the stimulus worked and said only 30% has been spent it is too early to judge the impact and he said too early to discuss more spending, and entitlements need to be brought in line with a deficit that is no more than 2-3%of GDP going forward.

CNBC will Live Stream the hearings when they begin.

Having Dodd question Ben should be fun though for the sheer HYPOCRISY of it all, it will be a wonder if lightning does not strike Dodd when he tries to be stern to suck up to pixxed CT voters..

CNBC:

…While his confirmation does not appear in doubt, that popular discontent is likely to translate into aggressive, even hostile questioning on Thursday when Bernanke testifies before the Senate Banking Committee in a bid to win confirmation to a fresh four-year stint as Fed chairman.The panel must approve his nomination before sending it to the full Senate for a vote. His term expires on Jan. 31. It is unclear when the panel will act on the nomination.

“My guess is he’ll be confirmed, but he’ll take a lot of flak,” said Allan Meltzer, a professor of economics at Carnegie Mellon’s Tupper School of Business in Pittsburgh and an expert on the Fed’s history. “We’re in a bad period and the public is very unhappy. So that comes out in the Congress.”..

Wow, even the WSJ op ed has come out against him:

Federal Reserve Chairman Ben Bernanke faces his Senate renomination hearing today, amid signs that the confirmation skids are greased. We nonetheless think someone should say that, as a matter of accountability for the financial crisis and looking at the hard monetary choices to come, the country needs a new Fed chief.

…He supplied ample liquidity when it was most needed last autumn, and he has certainly been willing to pull out every last page of the central banker playbook. If some of those decisions were mistakes, the conditions the Fed faced were extraordinary. Anyone at the helm would have made calls that in hindsight he’d regret.

The real problem is Mr. Bernanke’s record before the panic, with its troubling implications for a second four years. When George W. Bush nominated the Princeton economist four years ago, we offered the backhanded compliment that at least he’d have to clean up the mess that the Alan Greenspan Fed had made. That mess turned out to be bigger than even we thought, but we also didn’t know then how complicit Mr. Bernanke was in Mr. Greenspan’s monetary decisions.

Neither did I! AHA!! J’accuse!!! Per the transcripts it WAS Ben ably assisting and even ENCOURAGING Greenspan’s reckless looseness! Maroons!

Now we do, thanks to the release of the Federal Open Market Committee transcripts from 2003. They show (see “Bernanke at the Creation,” June 23, 2009) that Mr. Bernanke was the intellectual architect of the decision to keep monetary policy exceptionally easy for far too long as the economy grew rapidly from 2003-2005. He imagined a “deflation” that never occurred, ignored the asset bubbles in commodities and housing, dismissed concerns about dollar weakness, and in the process stoked the credit mania that led to the financial panic….

Go read the whole thing!

December 3, 2009. Tags: , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Taxes, Unemployment Statistics, Wall St. 2 comments.

Updates: Bernie Sanders I-VT seeks to put hold on Bens renomination; Black Swan says he will shun public life if Ben reconfirmed; Mark Zandi agrees double dip for housing ahead; Flashback: Bernanke in Denial 2005-2007

Update 2: Breaking on CNBC via Politico Bernie Sanders I-VT trying to put hold on Bens renomination hearing tomorrow. But they seem to have the 60 votes they need. Also today Taleb, of the Black Swan said if Ben is reconfirmed he will leave public life, seriously:

Nassim Taleb, the author of “The Black Swan”, said he would retreat from public life if Federal Reserve Chairman Ben Bernanke gains a second term at the helm of the central bank.”What I am seeing and hearing on the news — the reappointment of Bernanke — is too hard for me to bear,” Taleb wrote on his blog on The Huffington Post.

“I am not blaming Bernanke (he doesn’t even know he doesn’t understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible — as if we promoted every doctor who committed malpractice,” he wrote.Taleb wrote he will not take part in interviews in the press and will not go to the World Economic Forum in Davos in January.

“I need to withdraw as immediately as possible into the Platonic tranquility of my library, work on my next book, find solace in science and philosophy, and mull the next step,” he wrote, adding that “I will only (briefly) emerge from my hiatus when the publishers force me to do so upon the publication of the paperback edition of The Black Swan.”…

Update: Boy it is exhausting having these fancy pants academics and/or advisers to MAC and Obama come along and agree with MiM months after we take a position, like being Cassandra, it sucketh big time. Now I just heard Marty Feldstein agreeing on Kudlow too, lol. To be fair Feldstein came out on this in October...sure now that it’s COOL to say there is a double dip ALL the kids wanna do it!

Soon Orszag and Krugman will be the cheese, and we all know the cheese stands alone.

Mark Zandi of Moodys (who will be at the big job summit this week, and who is at every Nancy Pelosi jobs bill panel as well), the man who advised MAC and later the Congress on the stimulus, is now forecasting a second leg down in housing, a big one, the one we and others have been yammering on about for months.

Maybe now that one of the chosen few who get listened to (despite often being quite wrong) and whose ideas are often quite unsuccessful (see WSJ on Orszag and Stiglitz’  EPIC FAIL on the risk posed by FAN FRED that somehow gets them promoted and invited to all the summits and now they help design all our economic policy and even our healthcare system!!) is on board with the fact that housing is in imminent danger of collapsing under the continuing deterioration of employment and the failure of the mo mods. Well maybe now they will do the damned HOLC and get it done.

FDR did it, in out boom,. Buy the home loans from the banks,w e already own them in FAN FRED anyway, write down 20% everyone underwater, boom, done. Let homeowners pay it off via their taxes to the government. Give a payroll tax holiday. Stop the uber spending in areas that don’t help the underlying economy. The entire 78 billion directed to housing is still sitting there waiting to be paid out on permanent mods that aren’t happening.

The meltdown of the U.S. housing market is not over yet, and home prices will soon start trekking downward again as a flood of foreclosures looms, a well-known economist said Wednesday.

Home prices, as measured by the Standard & Poor’s/Case-Shiller U.S. National Home Price Index, will trough in the third quarter of 2010 after declining 38 percent, Zandi said. The index peaked in the second quarter of 2006 and hit a trough in the first quarter of 2009, a drop of about 32 percent. Home prices in many regions have been rising.That is because foreclosure sales fell over the summer and fall as mortgage servicers have tried to put stressed homeowners into the Home Affordable Modification Program and other modification plans, he said. “This lull in foreclosures sales has resulted in the price gains in the past few months,” he said.

“Foreclosure sales will increase, and home prices will resume their decline by early 2010 as mortgage servicers figure out who will not qualify for a modification,” he said.

Zandi said 7.5 million foreclosure sales will have taken place between 2006 and 2011. The majority of these sales, however, have not emerged yet, with 4.8 million foreclosure sales expected between 2009 and 2011….

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December 2, 2009. Tags: , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Unemployment Statistics, Wall St. Comments off.

Memo to Team Obama: The Smartest Guys in the Room Model Does Not Work…

From Charles Krauthammer:

The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates. Indeed, one could perversely make the case that, if anything, the proliferation of overeducated, Gucci-wearing, smart-ass MBAs inventing ever more sophisticated and opaque mathematical models and debt instruments helped get us into this credit catastrophe in the first place.

And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis.

We need to get in a team of regular Americans on these ’round table, summit,cocktail party, bs sessions on the Hill. Whenever the Geniuses get together it is a frakkin clusterfxxk

Ideally we should send follow the Nextel commercial model for governance, firefighters, roadies and UPS folks do our representing :0) We were supposed to get that with the House, but clearly it ain’t happenin, look at Pelosi vineyards and the Top 10 wealthiest Critters, their seats are good as the gold they can spend to keep them…

try to make it to a Tea Party or call your Critters when they roll out these goofy proposals that clearly are unworkable to markets and Main St, but the critters think are swell…

March 6, 2009. Tags: , , , , , , , , , , , , , , , , , , , . Economy, Obama Administration, Politics, TARP, Taxes, Uncategorized, Wall St. 2 comments.

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