Stupid Political Theater And Financial Reform

It would seem that damn near everybody knows that most of America is not at all happy with "Wall Street." The quotes are advisable, investment banking and its ilk are a bit more broad in residence. Somehow the GOP seemed to miss that particular memo and fillibustered the "Democratic" bill. I am pretty sure anyone with a brain could have figured out that the "too big to fail" scam they ran would get outed and that would leave them not much of anywhere to go. There may be political capital with some piece of their base to oppose anything Obama, but that chunk seriously shrinks where the bankstas are concerned - down to the dedicated racists pretty much (excepting of course the plutocrats).

This left the GOP fillibustering a bill to do something meeting general enthusiasm. That is awkward. Some think Mitch McConnell didn't want to miss the Kentucky Derby, I think he realized that looking stupid is much worse than being stupid. (that's really saying something considering the viewership they're concerned with)

How Many Days?

How many days did it take to put together the Bail Out of Bankers?

How many days since without some sort of Financial Reform?

Who OWNS the Senate?

Finance Regulation Happening?

It kind of looks as though the House has passed something resembling reform of regulation of financial institutions, investment institutions. I'm quite sure there is plently lacking from the left perspective, I am insulted by the exclusion of cram down that would allow morttgage term restructuring on primary residences while allowing it on luxuries like second homes and yachts - who is that designed to benefit?

It seems to have a lot going for it, regardless. Now we get to see what the Corporate Investment Whoredom known as the US Senate will make of it. Be ready to puke, despite the last couple years.

A Moody's Rating In One Hand And Crap In The Other

...And what do you actually have? According to McClatchy you've got two handfuls of very smelly crap (I know that's spelled/pronounced differently). Now some people trust these agencies to do something a bit differently than this:

As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

I suppose you could ask yourself how things could get like that and maybe the answer would be that money trumps anything remotely resembling ethics, honor, or other old fashioned behavior like that. You see:

The ratings agencies were under no legal obligation since technically their job is only to give an opinion, protected as free speech, in the form of ratings.

Now that might interact with this if a bunch of near crooks were running the show:

To promote competition, in the 1970s ratings agencies were allowed to switch from having investors pay for ratings to having the issuers of debt pay for them. That led the ratings agencies to compete for business by currying favor with investment banks that would pay handsomely for the ratings they wanted.

Wall Street paid as much as $1 million for some ratings, and ratings agency profits soared. This new revenue stream swamped earnings from ordinary ratings.

"In 2001, Moody's had revenues of $800.7 million; in 2005, they were up to $1.73 billion; and in 2006, $2.037 billion. The exploding profits were fees from packaging . . . and for granting the top-class AAA ratings, which were supposed to mean they were as safe as U.S. government securities," said Lawrence McDonald in his recent book, "A Colossal Failure of Common Sense."

Hey, how's that 401K looking these days? Ain't their problem, bucko. AAA horseshit.

Oh yeah, you can just bet the Senate will clean up this mess - sure, and I've got a bridge...

Banks And Cram Downs

They may no longer be the Masters of the Universe but bankers proved they are the Masters of the Senate today. Legislation enabling bankruptcy judges to renegotiate the terms of mortgages went off the rails today with Democratic Senatorial help.

Now in case you buy into the idea that such a thing would create a situation of lessening personal responsibility you need to look at the reality is that second home mortgages and yachts and such are subject to cram downs, just not primary residence mortgages. You can see the justice in that, it should be obvious that those who can afford such things are morally superior to the proles who can only afford one house and no yachts. People like bankers, who can, certainly should not be subjected to the onus of just losing their second homes or yachts or...really anything.

Bankers didn't think much of the idea...



Ah well, Republicans are happy too, so all is not lost for everybody.

Who Likes Investment Bankers, Now?

"I've got a system," is the sit-com or movie comedy line where the smart protagonist puts his wallet back in his pocket, it is that ubiquitously a stupid statement that it's a joke. Or is it? David X Li had one, and apparently it was a doozy since it has pretty much sunk the financial system of the world. Huh?

For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.

The Lords of Finance, the Masters of the Universe had a system? Until it fell apart. Go ahead, you go tell your Uncle Joe you've got a system...

Bank of America and Merrill have received $45 Billion in Federal assistance and done a few things like pay $3.6 Billion in bonuses to Merrill employees and spend $10 Million on a Super Bowl party and $8.7 Million on lobbying in 2008. NY Attorney General Andrew Cuomo would like B of A President Ken Lewis to tell him about those bonuses and President Obama is done with Bankers flying around in corporate jets...think so?

On Thursday, Lewis refused to provide a list of bonus payments to the New York Attorney General, after arriving in New York in his $50 million corporate jet

Sorry to be rude, but that's a pretty major Fuck You.

You may remember Northern Trust threw a big bash for their employees and rich customers at a golf tournament and for some reason people objected to them taking $1.6 Billion in taxpayer money and having a big party. It seems they'd rather keep on partying without hearing about it from the peons.

Northern Trust has set a goal of repaying government funds "as quickly as prudently possible," Waddell said.(Pres & CEO)

Earlier this week, eighteen Democrats on the financial services panel, led by Chairman Barney Frank, D-Mass., told Waddell in a scathing letter, "We insist that you immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events."

Prudent? How about now, asshat?

I'm sorry to do this, but AIG should scare you spitless. The $160 Billion restructuring package is failing, AIG is expected to post (no kidding) $60 Billion 4th quarter losses - 3 damn months. Why should this bother you, other than the money spent?

"If the government lets AIG fail, I think you are going to see an enormous sort of shock wave across all industries because AIG had their finger in a lot of different areas," said Russell Walker, a risk management professor at Northwestern University in Chicago.

Actually, Walker is understating the extent of the damage, now are you spooked?

Citigroup has burned through their $36 Billion and now their hands are out for more, a lot more.

The U.S. government will exchange up to $25 billion in emergency bailout money it provided Citigroup Inc. for as much as a 36 percent equity stake in the struggling bank,

Maybe you don't have your hate on for this bunch quite yet. I can help you right along with that. UBS, yep Phil Gramm's employer, settled a tax evasion based case with the US Government that cost them a $780 Million deferred prosecution agreement that also included the release of the names of 52,000 American clients that DOJ suspects used them for tax avoidance. The kicker, UBS is being sued in Swiss courts to block that release.

The lawsuit accuses UBS and Switzerland’s financial regulator, the Swiss Financial Market Supervisory Authority, or Finma, of violating Swiss bank secrecy laws and of conducting what Swiss law considers illegal activities with foreign authorities. It also named Peter Kurer, the chairman of UBS, and Eugen Haltiner, the chairman of Finma, as defendants.

The suit, filed by a lawyer in Zurich, Andreas Rued, on behalf of nearly a dozen American clients, underscores the growing clash between Swiss banking secrecy laws and those of the United States. Tax evasion is not considered a crime in Switzerland. Disclosing client names under Swiss law is a criminal offense and can expose bank executives and officers to fines, prison terms and other penalties.

The Swiss have a bit of a problem going on, you see they hid Nazi loot and some agreements were made about the survivors and descendants of those looted and a part of that is tied into this action. Just try real hard to not remember this stuff as the Republicans accuse you of class warfare...

Maybe you don't have to smack the stupid off their faces, just spit on their boots. They've got a system... Let the bastards run wild because they're rich and we mustn't mess with that and free markets and government is the problem and class warfare and you're doody heads so we'll have a teabag rebellion socialist pig Democrats won't let them fail like a good Randian would and...and...rotten liberal media keeps making us look bad and...and...

Sure, sure, and that poll down below is just a joke.

Taking Care Of Their Own

TMZ reports on a bank?

Northern Trust, a Chicago-based bank, sponsored the Northern Trust Open at the Riviera Country Club in L.A. We're told Northern Trust paid millions to sponsor the PGA event which ended Sunday, but what happened off the golf course is even more shocking.

Northern Trust flew hundreds of clients and employees to L.A. and put many of them up at some of the fanciest and priciest hotels in the city. We're told more than a hundred people were put up at the Beverly Wilshire in Bev Hills, and another hundred stayed at the Loews Santa Monica Beach Hotel. Still more stayed at the Ritz Carlton in Marina Del Rey and others at Casa Del Mar in Santa Monica.

You can go see how Northern Trust defines itself if you please, but I'll give you their lead in:

To achieve your financial objectives, you need a partner you can trust. Our clients' trust helped us become a global leader in asset management, asset servicing, wealth management and banking. Northern Trust (NASDAQ: NTRS) offers you exceptional service backed by innovative technology and the latest economic research from our industry-renowned experts. For more than a century, our clients have relied on us for service, expertise and integrity.

Part of that service includes the kinds of things that interest celebrity sites like TMZ:

- Wednesday, Northern Trust hosted a fancy dinner at the Ritz followed by a performance by the group Chicago.

- Thursday, Northern Trust rented a private hangar at the Santa Monica Airport for dinner, followed by a performance by Earth, Wind & Fire.

- Saturday, Northern Trust had the entire House of Blues in West Hollywood shut down for its private party. We got the menu -- guests dined on seared salmon and petite Angus filet. Dinner was followed by a performance by none other than Sheryl Crow.

There was also a fabulous cocktail party at the Loews. And how's this for a nice touch: Female guests at the Chicago concert all got trinkets from ... TIFFANY AND CO.

To TMZ's credit they attempted to indepentently assess costs, see them.

To get a feel for Nothern Trust's view of economics you might find their analysis of the Great Depression interesting, a fair clip:

But the facts of the 1930s appear to be pretty clear – monetized increased federal government spending does result in increased real economic activity in the short run.

You can read the entire piece which ignores the political reality of the Republican inspired cuts to FDR's programs immediately preceding the second slump - a typical Republican ploy of late. You will note, perhaps, that the presence of this bank in this story is because this bank got a New Deal, like $1.5B worth of a new deal that allows a bank that caters to the rich have a big goddam party for the rich all the while telling you - essentially - that the rich are our benefactors.

This bank has stated that no government funds were involved...exactly how does that work? Is this bank's balance sheet run on separate pages, one for taxpayers' liabilities and the other for rich folk? Who the hell's money got lost? Not one damn cent of mine, but I ain't rich enough to use their bank.

It isn't that these bankers can't read a paper or see the news, they do - they don't give a rat's patoot because they're not the little people. Rules of ethics don't count after a certain income level - this is for you poor fools who'll make a good faith effort to pay your obligations. These folks may be responsible for an economic smash-up but they don't have to give a damn about it.

The media asks questions like, "how can they not get it?" They do get it, they get bailed out. Their clients will have plenty of money no matter how far south this mess goes short of apocalypse and they'll use that money at firesale prices to further enrich themselves. Try to get this, if you have money free this is a buying opportunity of historic proportions, stock prices are falling below the actual value of company assets. If you think you've seen a concentration of wealth over the last 30 years, you ain't seen nothing yet. Oh jeeze, there's a little matter of 15% capital gains tax...

What exactly is it that you're supposed to think they don't get?