TPMMuckraker
March 22, 2009 - March 28, 2009

Bob Dole: Bank Nationalizer Sheila Bair Putting The"Compassion" Back In Conservativism

Moe Tkacik | March 27, 2009, 6:46PM

One of the great ironies of this financial crisis (and there are lots) is that the only financial regulator remotely capable of inspiring confidence in anyone is a Republican Bush appointee who's gone largely ignored by the White House since Tim Geithner reportedly tried to push her out of her job for not being enough of a "team player." We speak of course of FDIC Chairman Sheila Bair, who has gotten so much practice nationalizing financial institutions since the crisis began she let 60 Minutes come watch and record one for a segment earlier this month. And now she's been pushing for the authority to take her operation to the likes of AIG, Bear Stearns and the rest of the Too Big To Fail cartel. (And as finance blogger Felix Salmon explained in the New York Times today, she may get her wish as part of Geithner's public-private toxic asset buyout plan.)

On Wednesday Bair went on the hyperconservative supply-side pundit Larry Kudlow's CNBC show to sweetly explain why, when a company like AIG fails, she ought to be able to

come in, repudiate employment contracts, pick and choose who you want to keep, who you want to get rid of, what you want to pay them. Replace the management, get rid of the boards, bring in better management and do an orderly unwinding of the entity.

Kudlow seemed stunned. "You've done this before?" he asked. (About 50 times since the crisis began.) But he remained polite in the face of all this suspiciously socialist-sounding rhetoric -- because it came from a Republican. Her old mentor Bob Dole even confirmed it, an American Banker report today reveals...

PERMALINK | COMMENTS (23) | RECOMMEND RECOMMEND (16)
Topics: FDIC, Sheila Bair, Tim Geithner

John Sununu

Have Oversight Panelists Complained About Sununu's Conflict? Sounds Like It...

Zachary Roth | March 27, 2009, 5:21PM

Remember that little conflict of interest problem for John Sununu that we revealed last month?

The former New Hampshire GOP senator, who sits on the Congressional Oversight Panel that monitors the TARP funds, was recently named to the board of a firm that's a subsidiary of Bank of New York Mellon -- which not only got TARP money itself, but also administers the program for the Treasury Department.

Sununu insisted to the Associated Press, which picked up on our report, that this really wasn't a conflict. But it looks like at least some of Sununu's fellow panel members disagree.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (10)
Topics: Bailout, Elizabeth Warren, Financial Crisis, John Sununu, Wall Street

AIG

Taibbi To AIG-er DeSantis: "Be A Man And Deal With It"

Zachary Roth | March 27, 2009, 4:41PM

Some Friday afternoon catharsis ...

In one of those perfect matches of writer and subject, Matt Taibbi responds to that op-ed writing AIG-er Jake DeSantis -- and says all the things you'd probably forget to say if you ever ran into deSantis, but then would think of in the shower when it was too late.

PERMALINK | COMMENTS (22) | RECOMMEND RECOMMEND (30)
Topics: AIG, Bailout, Financial Crisis, Wall Street

Wall Street

The TARP Email Trail: AIG And Citi Execs Clueless And Arrogant, Kashkari "Tough To Watch"

Moe Tkacik | March 27, 2009, 3:48PM

Following a few months of courtroom wrangling, Fox Business News has obtained a much-redacted 10,096 pages of Treasury Department documents on the bank bailout. Scrubbed of "proprietary" information and what would presumably be their most explosive revelations, the communiques exchanged between the Bush Administration and executives at Citigroup and AIG read something like "Dumb and Dumber and I Know It Seems Impossible But Even Dumber Than That." The first role would be played by the TARP overseer and cheerleader for the Italian automobile industry Neel Kashkari, whose aides nervously emailed one another as they watched him testify before the House Financial Services Committee on what exactly he was doing with their money.

Nason: How's it going?

Zuccarelli: Bad. Serious questions, too, not "chump" type questions. They're going to start to break Neel down soon, I'm getting worried he's going to start snapping.

Nason: This AIG stuff is tough to watch.

Zuccarelli: They killed him on exec comp. He didn't know answer.

But we wouldn't know how to answer, either, if we'd written the law that appropriated the trillion or so taxpayer dollars that paid bonuses to the clueless executives at AIG and Citigroup:

PERMALINK | COMMENTS (21) | RECOMMEND RECOMMEND (30)
Topics: AIG, Citigroup, Wall Street, elijah cummings, neel kashkari

AIG

How Did AIGFP Shut Out Risk Officers? Congressman Wants To Know

Zachary Roth | March 27, 2009, 3:44PM

Earlier today we flagged that exchange between AIG CEO Ed Liddy and Rep. Gary Peters (D-MI), during Liddy's testimony last week.

Peters asked Liddy about AIG's how AIG's internal risk management procedures could have failed so badly. In response, Liddy said that those procedures "generally were not allowed to go up into the financial-products business" that caused the firm's collapse.

When Peters pressed Liddy on how that could be, the CEO replied:

[Y]ou need to get the people who ran FP -- Mr. Cassano -- and the people who ran AIG before my arrival, and ask them that question.

Peters clearly agrees with us that this is worth some follow up: a spokesman from his office tells TPMmuckraker that they've contacted AIG for a fuller explanation of just how the financial products unit was able to operate in such secrecy.

So you can add Peters' office to the growing list of bodies that's probing, formally or informally, various related aspects of the AIG fiasco.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (8)
Topics: AIG, Financial Crisis, Joseph Cassano, Wall Street

Barack Obama

What Obama Can Learn From JP Morgan CEO Jamie Dimon

Moe Tkacik | March 27, 2009, 2:17PM

Whatever the 25 bank CEOs descending upon the White House this morning told the president and his economic team, we hope JP Morgan CEO Jamie Dimon repeated one line from the speech he gave at the Chamber of Commerce earlier this month. (It's about 11:30 in.)

One of the main root causes [of the crisis], and this has been going on for a long time, was the huge trade and global financing imbalances which fueled very low rates and excess consumption, and over a long period of time I do not believe you can run those kind of trade deficits...

Dimon was getting at one of the root structural causes of the current crisis -- America takes, the world (China especially) makes, an unsustainable situation sustained above all by an increasingly usurous financial services industry. As the CEO of PNC Financial Services just pointed out, banking is the biggest sector of the American economy -- and it's been to the detriment of everything else.

And while that might seem obvious, intuitive even, Dimon's speech came just three days after Larry Summers told the Financial Times that the global trade imbalance wasn't the problem anymore, that it had been eclipsed by more pressing emergencies, etc. etc.

Naturally Dimon went on to condemn the demonization of Wall Street and corporate America.

PERMALINK | COMMENTS (12) | RECOMMEND RECOMMEND (4)
Topics: Bank of America, Barack Obama, Jamie Dimon, Larry Summers

AIG

Did Cassano Shut Out AIG Risk Officers?

Zachary Roth | March 27, 2009, 1:38PM

Did AIG's entire risk management team fall down on the job? Or, like the firm's auditors, were they prevented from doing it?

Yesterday we told you about Bob Lewis, AIG's chief risk officer, who still has his job despite a rather obvious failure to ensure that the firm wasn't taking on an unmanageable level of risk.

PERMALINK | COMMENTS (16) | RECOMMEND RECOMMEND (16)
Topics: AIG, Bailout, Financial Crisis, Joseph Cassano, Wall Street

Bernard Madoff

Report: UK Expects To Soon Charge Others In Madoff Scheme

Zachary Roth | March 27, 2009, 12:21PM

The Madoff trail is shifting, at least in part, across the Atlantic. And investigators are wondering whether the Ponzi scheme was a family affair.

A report from the Wall Street Journal's London bureau contains three important new pieces of information.

1) "U.K. authorities investigating Bernard Madoff's massive Ponzi scheme believe criminal offences have been committed by people other than the New York financier and expect to start filing charges within months, according to investigators."

PERMALINK | COMMENTS (1) | RECOMMEND RECOMMEND (10)
Topics: Bernard Madoff, Financial Crisis, Wall Street

Bailout

Lawmakers Call On Bailout IG To Probe AIG Counter-Party Payments

Zachary Roth | March 27, 2009, 11:45AM

The effort to get to the bottom of those payments by AIG to its counter-parties is heating up.

Earlier this week, we noted that several different efforts to investigate that question. Now, reports the New York Times, Rep. Elijah Cummings (D-MD) has sent a letter, signed by 26 other House Democrats, to Neal Barofsky, the inspector general for the TARP funds, calling on him to probe the matter.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (2)
Topics: AIG, Bailout, Financial Crisis, Treasury Department, Wall Street

The Daily Muck

Ben Buchwalter | March 27, 2009, 9:16AM

Among the hullabaloo surrounding the AIG retention bonus scandal, one thing is certain: speaking before Connecticut lawmakers Thursday, AIGFP exec Stephen Blake did not bend to public opinion. Blake defended the insurance company's $165 million in retention bonuses which have drawn the scorn of taxpayers following the government's $182.5 billion bailout of AIG. "The program did what it was supposed to do, and that was to retain employees," he said. While defending the bonuses, though, he affirmed that no rewards went to individuals who made credit default swaps, which are largely responsible for AIG's failure. (Associated Press)

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (10)
Topics: The Daily Muck

Hans von Spakovsky

Spakovsky Finds More DOJ Politicization: Brazile Speech On .... Women's Achievements!

Zachary Roth | March 26, 2009, 6:53PM

One the one hand: Firing US attorneys because they won't bring politically motivated prosecutions. On the other: inviting Donna Brazile to speak at a "Women's History Month" event.

Pretty much the same thing, right?

That's what voter suppression guru and TPMmuckraker favorite Hans Von Spakovsky is arguing. In a post on the National Review, Von Spakovsky notes that the Justice Department has invited all employees to attend an upcoming speech by Brazile, the noted Democratic party strategist.

PERMALINK | COMMENTS (6) | RECOMMEND RECOMMEND (10)
Topics: Hans von Spakovsky, Justice Department, U.S. Attorneys

Henry Paulson

Hank Paulson To Write Goldman/Bush/Credit Default Swap Tell-All

Moe Tkacik | March 26, 2009, 6:48PM

Hank Paulson has a book deal. And if there is demand in the marketplace for yet another score-settling insider account by a flawed but well-meaning Bush appointee, we guess it is Hank. Since the centimillionaire is generously refusing an advance and donating the proceeds to a hotline that helps homeowners prevent foreclosure -- an endeavor he did not have much time for as Treasury Secretary -- we'll put a copy on hold. But a Hank Paulson book is veritably guaranteed to disappoint, right? Or should we hedge that statement?

After all, Paulson is a competitive guy, and the "Bush Administration Treasury Secretary Tell-All" genre has formidable competition in The Price Of Loyalty, Ron Suskind's account of Paul O'Neill's tenure in that post -- plus Paulson has the advantages of having presided over the spectacular financial crisis that begat the current depression and Goldman Sachs. Paulson doesn't seem to have pent-up literary ambitions -- instituting the short selling ban was his equivalent to "burning books," he told the Post -- but he will undoubtedly submit himself to the editorial judgments of his daughter, a journalist who writes about public education. And in interviews, as his willingness to admit to burning books suggests, Paulson has seemed less of an ideologue than an ambitious business man who had never given ideology much thought -- so we won't be getting Ten Minutes From Normal here. (Although it would be awesome if he ripped off that title.)

On the other hand...

PERMALINK | COMMENTS (9) | RECOMMEND RECOMMEND (5)
Topics: Goldman Sachs, Henry Paulson

AIG

Looks Like AIG's Chief Risk Officer Still Has A Job!

Zachary Roth | March 26, 2009, 6:10PM

It seems safe to say that if your job at AIG was to ensure that the company was managing its credit risks effectively, you failed.

Which is why it's interesting that the man who has had that post since at least 2000, Bob Lewis, still appears to have the job today.

An official list of AIG execs obtained by TPMmuckraker and created after CEO Ed Liddy took over last September shows Lewis as the firm's Chief Risk Officer and an executive vice president.

PERMALINK | COMMENTS (6) | RECOMMEND RECOMMEND (8)
Topics: AIG, Financial Crisis, Wall Street

Andrew Cuomo

Cuomo Wants Info On AIG's Credit Default Swaps

Zachary Roth | March 26, 2009, 4:52PM

Is New York Attorney General Andrew Cuomo's probe of those AIG bonuses expanding?

Maybe kind of.

The Wall Street Journal reports (sub. req.) that Cuomo plans to subpoena AIG for documents about the credit default swaps that brought the company to its knees.

AIG has claimed that it paid those lavish bonuses because it needed to keep employees of its Financial Products unit in place, so that they could do the difficult work of unwinding the disastrous deals. But in some cases, AIGFP paid back its counter-parties in full, raising questions about how complex the job really was -- and therefore, whether AIG needed to spend so much money to get their employees to stick around and do it.

Bonuses aside, the subpoena request suggests that Cuomo's probe could end up shedding important light on the underlying question of how AIGFP managed to take on so much risk through its credit default swaps that it toppled the company and put the entire financial system at risk.

Cuomo has already obtained from AIG the list of employees who got bonuses, and has said his office is considering security concerns before deciding whether to release it.

Other investigators are also looking into the bonuses, and the swaps deals. A staffer for the House Oversight committee told TPMmuckraker earlier this week that the committee planned to soon probe the question of who at AIG knew about how the swaps were being conducted.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (5)
Topics: AIG, Andrew Cuomo, Financial Crisis, House Oversight, Wall Street

AIG

Why Can't AIG Get Rid Of Its Non-Toxic Assets?

Moe Tkacik | March 26, 2009, 4:06PM

Don't say AIG never put anything in your wallets, taxpayers! The company just sold its Taiwanese securities unit to the Bank of East Asia, for something between ten and twenty million dollars, or between five and nine retention bonuses. Which brings us to the latest twist in the ongoing mystery of America's great black-scholes hole: why is it taking so long to sell off the pieces? Surely the rest of the company's units couldn't be as toxic as the one that had Joe Cassano in charge! Or could they? On Tuesday Ben Bernanke let it slip to Congress that had AIG Financial Products been allowed to bust, its bread-and-butter insurance businesses might have folded as well -- so buried were their balance sheets in lethal "products."

Cue the red tape gestapo!! But isn't insurance regulated? Says Institution Risk Analytics:

Speaking of poor fundamentals, when AIG released information about the amounts and recipients of roughly $100 billion of its government loans from September to December 2008, almost utterly unreported was the fact that the staid, boring, heavily regulated insurance businesses managed to run up losses on securities lending requiring $44 billion of government support.

By contrast, the free marketeers at Institutional Risk Analytics point out, the "credit derivatives widely blamed for bringing down the world's financial system" were only consuming $27 billion. "Could it be that the big story at AIG is the unsoundness of the insurer, not the credit default swaps?" they ask. "Why the misdirected coverage?"

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (9)
Topics: AIG, Joseph Cassano

Allen Stanford

Stanford Lawyer: "SEC Came In Like A Bunch Of Storm Troopers"

Zachary Roth | March 26, 2009, 3:06PM

Dick DeGuerin, the hard-charging Texas lawyer who just signed on to represent Allen Stanford, isn't pulling any punches.

In an interview with TPMmuckraker moments ago, DeGuerin denied that Stanford was running a Ponzi scheme. And, referring to federal investigators' raids on Stanford offices as the SEC prepared charges last month, DeGuerin played the Nazi card, declaring:

The SEC came in like a bunch of Storm Troopers, which caused a panic, and caused the banks in Venezuela and elsewhere to nationalize his banks, just take them away.

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (3)
Topics: Allen Stanford, FBI, Securities and Exchange Commission, Stanford Financial Group

CDR

Regulator Who Regrets "Silence" About Derivatives Told To Shut Up

Moe Tkacik | March 26, 2009, 2:55PM

Yesterday Christopher "Kit" Taylor, the former executive director of the Municipal Securities Rulemaking Board, became one of the few regulators to publicly apologize for his role in the crisis. Like many public officials, he worried for years about the explosion in the unregulated derivatives market, which he was in the unique position of seeing bankers pawn off on slightly less sophisticated investors than the usual hedge fund guys: school districts, park authorities, power companies and other local government entities. Today Detroit, Jefferson County, Alabama and various towns in California alone are out more than a billion dollars after investing in interest rate "swaptions" and other financial "products" that left them on the hook in a national conspiracy through which banks, lawyers, consultants and corrupt politicos bilked as much as $4 billion a year from state and local government coffers. But "the big firms, he told Bloomberg yesterday, "didn't want us touching derivatives...they said, 'Don't talk about it, Kit.'"

"Every time I talked to the board about swaps, I made it clear that the MSRB had no authority to take action," said Taylor, in an e-mail. "My 'regret' is that MSRB would not speak out loudly that swaps were going to cost taxpayers a bundle if issuers did not clearly understand what they were doing."

Perhaps as penance, Taylor has been a main source for most of the media coverage of municipal finance corruption, currently the subject of a federal probe, and his candor has been hailed by his former colleagues in financial regulation, oh wait not really.

PERMALINK | COMMENTS (1) | RECOMMEND RECOMMEND (12)
Topics: Bill Richardson, CDR, Christopher "Kit" Taylor, Muncipal bonds, Tim Geithner

Allen Stanford

Stanford Lawyer: SEC Using Sir Allen As "Distraction" From Madoff

Zachary Roth | March 26, 2009, 2:31PM

Yesterday, we noted BusinessWeek reporting that Dick DeGuerin, the high-profile Texas lawyer who has represented Tom DeLay and David Koresh, among other bold-faced names, might have signed up to defend accused massive Ponzi schemer Allen Stanford.

And today, the magazine confirms that DeGuerin is on the case -- and that the official Stanford fight back, after weeks of being portrayed as a corrupt, Gatsby-esque fraud -- is underway.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (1)
Topics: Allen Stanford, Securities and Exchange Commission, Stanford Financial Group, Tom DeLay

Allen Stanford

For Stanford Number 2, A Gated Home With Ionic Columns, And A God-Fearing Rep

Zachary Roth | March 26, 2009, 12:56PM

Bloomberg has some good details about Jim Davis, Allen Stanford's Number 2 man, who, along with his boss, has been charged with orchestrating a massive Ponzi scheme.

In mid-January, Davis -- who still lives in the region of northern Mississippi where he was born -- sent a text message to the youth pastor of a local church he helped start, telling him: "I'm praying for you."

Among church congregants, Davis, known by some as Mr. Jim, was viewed as God-fearing and honest, according to Ethan Nanney, an elder at the church. In fact, Nanney told Bloomberg, Davis started the church, whose pastor is black, because he wanted a place where black and white people could come together. Davis is also on the board of Memphis's National Civil Rights Museum, which is located at the motel where Martin Luther King Jr. was assassinated.

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (3)
Topics: Allen Stanford, FBI, Securities and Exchange Commission, Stanford Financial Group

AIG

AIG Execs: We're Being Extorted!

Moe Tkacik | March 26, 2009, 12:31PM

No really, AIG Financial Products chief Gerry Pasciucco told a meeting of his European based derivatives gurus that the money vortex CEO Ed Liddy's request that they return their bonuses amounted to "blackmail." That's according to a London-based recipient of one of the bonuses -- London, you'll recall, is where the inimitable Joseph Cassano was employed -- who furnished the news agency with emails showing that AIG compliance officer David Haig had actually asked the country's Serious Organised Crime Agency to probe whether the (voluntary) requests could be legally considered extortion. Well what a fascinating use of government-bankrolled hours for the taxpayers of both countries!! But wait, don't shoot yourself, hear the anonymous employee out...

PERMALINK | COMMENTS (16) | RECOMMEND RECOMMEND (17)
Topics: AIG, Joseph Cassano, Wall Street

AIG

AIG Financial Products Chief Cheers As His Unit Loses Executives -- And Another $234 Billion?

Moe Tkacik | March 26, 2009, 11:24AM

That AIG Financial Products trader who resigned -- and stridently refused to return his million dollar bonus -- in yesterday's New York Times, apparently gave some notice. Yesterday, in latest installment of the Wall Street Ends Its Contrite Silence trend we highlighted yesterday, the Wall Street Journal reports, he showed up for work to a standing ovation! And conspicuously not sitting out the ovation was AIG FP president Gerry Pasciucco. Wow it is just like that scene in Dead Poet's Society!

A less inspiring trend DeSantis' resignation highlights is this: AIG is hemorrhaging executives as fast as it is money, and if the company is to be believed the losses will cost the system hundreds of billions more dollars. In fact, the loss of two Paris-based executives, James Shephard and Mauro Gabriele, could trigger nearly a quarter trillion dollars in defaults. Say that again?

PERMALINK | COMMENTS (53) | RECOMMEND RECOMMEND (4)
Topics: AIG

Bernard Madoff

Looking For A New Career? Try Fraud Investigator.

Zachary Roth | March 26, 2009, 11:14AM

One of the few growth industries in the current economic climate? Fraud investigators.

Allegations of fraud are increasing, as the financial crisis drags on. As a result, reports the New York Times, people who are skilled at following the money have rarely been more in demand.

The FBI is recruiting new hires to work on a glut of cases -- it had more than 1600 open mortgage-fraud investigations at the end of fiscal 2008, almost twice as many as two years earlier.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (4)
Topics: Bernard Madoff, FBI, Financial Crisis, Harry Markopolos, Securities and Exchange Commission, Wall Street

The Daily Muck

Ben Buchwalter | March 26, 2009, 9:19AM

He fought the law, and he lost. Faron White, a former north Alabama police officer, pleaded guilty Wednesday to stealing $60,000 from the police department where he was a sergeant, feigning his abduction, and fleeing to Las Vegas. White faked an elaborate struggle in his Alabama office to divert would-be pursuers but was found only three days later in Sin City. White, who was once named officer of the year by the Decatur Police Department, also said that a former citizen volunteer from the organized crime unit that he supervised aided his escape plan. White faces up to ten years in prison and a fine of $250,000. (Associated Press)

PERMALINK | COMMENTS (1) | RECOMMEND RECOMMEND (7)
Topics: The Daily Muck

Allen Stanford

Stanford Number 2, "Devastated" By Alleged Fraud, Talks With Investigators

Zachary Roth | March 26, 2009, 9:12AM

Is the noose tightening?

James Davis, Allen Stanford's number 2, sat down with FBI and SEC investigators yesterday, Davis' lawyer, David Finn, told Bloomberg. Finn said earlier this week that Davis would fully cooperate with both investigations.

PERMALINK | COMMENTS (9) | RECOMMEND RECOMMEND (10)
Topics: Allen Stanford, FBI, Securities and Exchange Commission, Stanford Financial Group

Bailout

Lawsuits: Lewis, B of A, Misled Shareholders On Merrill Deal

Zachary Roth | March 25, 2009, 5:26PM

This is just the headache that beleaguered Bank of America CEO Ken Lewis needs...

It looks like B of A is facing legal woes as a result of its hastily arranged deal to buy Merrill Lynch last fall, and its subsequent statements about Merrill's finances.

The Wall Street Journal reports (sub. req.):

Five public pension funds are seeking lead status in a class-action suit against Bank of America Corp., alleging that the nation's largest bank by assets made "untrue statements" in the run-up to its purchase of Merrill Lynch & Co. and did not disclose material information to shareholders.

The funds claim to have lost $274 million on their Bank of America investments between July 21, 2008 and Jan. 20, 2009.

PERMALINK | COMMENTS (6) | RECOMMEND RECOMMEND (8)
Topics: Bailout, Bank of America, Financial Crisis, Ken Lewis, Merrill Lynch, Wall Street

AIG

Is Probe Of AIG Bailout, Payments To Counter-Parties, In The Offing?

Zachary Roth | March 25, 2009, 2:48PM

Is the momentum building for an investigation into the real beneficiaries of AIG's latest bailout?

Earlier this month, the Treasury Department announced it was rescuing the fallen insurance giant yet again, bringing the total amount of taxpayer assistance given to the firm since last September to $170 billion. It soon became clear that much of that money -- over $49 billion, to be exact -- was going right through AIG to the counter-parties on its credit default swaps, both American banks like Goldman Sachs, and foreign ones like DeutscheBank.

Defenders of the move have argued that not giving the counter-parties this indirect bailout would have risked a wider financial collapse.

PERMALINK | COMMENTS (9) | RECOMMEND RECOMMEND (3)
Topics: AIG, Bailout, Federal Reserve, Financial Crisis, Goldman Sachs, Treasury Department

AIG

Wall Street To Washington: "I Want My Campaign Contributions Back"

Moe Tkacik | March 25, 2009, 1:33PM

Yes, that was an actual sentence spoken -- or more specifically "groused" -- by an anonymous Wall Street executive concerned for his "personal safety," though not enough to be dissuaded from attending or talking to a reporter at yesterday's Wall Street Journal 'Future Of Finance' Conference, where the future sounded like it had gone back in time and purchased a hundred billion dollars worth of extra credit protection, which is to say suspiciously like Finance Past.

It looks like Wall Street, no doubt emboldened by the recent 20% runup in the S&P 500, the fourteen bucks in matching leverage the government is offering them for every dollar they invest in toxic/"legacy" assets and the prospect of better-than-awful numbers at Citigroup and Credit Suisse, got its hubris back along with its proverbial groove. In the six months since it nearly triggered global financial Armageddon, the investment banking community has seemed, if not quite chastened, at least somewhat subdued amidst the nation's ever-heightening awareness that their industry engineered the ever-intensifying economic morass. But not anymore!

This morning the New York Times ran as an op-ed the resignation letter of one Jake DeSantis, a securities trader and executive vice president at AIG's infamous financial products division and recipient of one of those million dollar bonuses ($742,006.40 after taxes.) That's right: he's keeping it. And don't ask him if he feels guilty about it because he will tell you: NO.

PERMALINK | COMMENTS (153) | RECOMMEND RECOMMEND (23)
Topics: AIG, Federal Reserve, Goldman Sachs, Timothy Geithner, Treasury Department

Barack Obama

Does Obama's Approach To State Secrets Ape Bush's?

Zachary Roth | March 25, 2009, 1:04PM

Is the Obama administration aping its predecessor by taking a dangerously broad view of state secrecy, enabling them to avoid revealing information about warrantless wiretaps and other controversial tactics in the war on terror?

The Washington Post raises the question today, but doesn't provide much of an answer.

PERMALINK | COMMENTS (5) | RECOMMEND RECOMMEND (1)
Topics: Barack Obama, George Bush, Justice Department, Wiretapping

The Daily Muck

Ben Buchwalter | March 25, 2009, 9:14AM

A judge will allow a lawyer for Chrissy Mazzeo to continue to collect evidence in connection to Mazzeo's civil lawsuit against Nevada Governor Jim Gibbons. Mazzeo, a Las Vegas cocktail waitress, accused Gibbons of assaulting her in a parking lot after a night of drinking at a Vegas bar. Though Gibbons was cleared of sexual assault charges by a police investigation, Mazzeo claims that her reputation and constitutional rights were harmed when Gibbons allegedly covered up a the 2006 assault. Gibbons' lawyer Pat Lundvall said that this would amount to nothing more than a waste of time because the suit lacks legitimate federal claims. (Las Vegas Sun)

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (9)
Topics: The Daily Muck

Allen Stanford

Report: Stanford May Hire DeLay Lawyer

Zachary Roth | March 24, 2009, 6:27PM

We probably should have seen this coming.

Billionaire Texas banker Allen Stanford is considering hiring Dick DeGuerin -- the heavy-hitting Texas defense lawyer who has represented a string of big-name clients, including former House Speaker Tom DeLay -- to defend him on charges that he orchestrated an $8 billion Ponzi scheme, reports BusinessWeek.

The magazine sources that news to "a person familiar with the securities fraud investigation" into Stanford, and adds:

A secretary for DeGuerin says the attorney had been contacted about representing Stanford, but declined to comment further.

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (5)
Topics: Allen Stanford, Securities and Exchange Commission, Stanford Financial Group, Tom DeLay

AIG

Source: Cassano In Congressional Investigators' Sights

Zachary Roth | March 24, 2009, 4:47PM

Another set of investigators is hot on the trail of Joseph Cassano, the man who walked away with a multi-million dollar golden parachute after spearheading the credit default swaps that brought down AIG.

Investigators for the House Oversight committee intend to interview Cassano about his role in the firm's collapse, and have already contacted his lawyer, a committee staffer told TPMmuckraker.

PERMALINK | COMMENTS (14) | RECOMMEND RECOMMEND (18)
Topics: AIG, Financial Crisis, House Oversight, Joseph Cassano, Wall Street

AIG

Longtime AIG Chief Greenberg To Testify On Firm's Collapse

Zachary Roth | March 24, 2009, 3:42PM

Former AIG CEO Maurice "Hank" Greenberg will appear next week before a congressional committee probing the firm's central role in causing the financial crisis, according to a committee staffer.

Greenberg -- who had run AIG since 1968 before stepping down in 2005 -- will be questioned by members of the House Oversight committee about the credit default swaps that led to his former firm's collapse last year. "No one knows AIG better than Greenberg," said the staffer. "He ran every minute detail of that company -- nothing took place without his knowledge."

PERMALINK | COMMENTS (5) | RECOMMEND RECOMMEND (5)
Topics: AIG, Bailout, Financial Crisis, Henry Waxman, House Oversight, Wall Street

Bernard Madoff

Madoff's Prison Number Is A Lottery Winner

Zachary Roth | March 24, 2009, 2:45PM

At least someone got something out of the Bernie Madoff affair.

Ralph Amendolaro of Queens, New York, used the confessed Ponzi schemer's prison number to play the lottery, after seeing it on the front page of the New York Daily News earlier this month. And a few days later, that number -- 61727-054 -- came up, winning the lucky construction worker $1500.

Amendolaro told the Daily News that he thought at the time: "I'm going to be a winner with this guy even though everyone lost money with him. Somebody had to get a little lucky with him."

He said he plans to spend some of the money on a birthday trip to Vegas with his wife and some friends, and also to take his family out to dinner.

And he added that if Madoff hears about it, "he'll probably want a cut."

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Topics: Bernard Madoff, Wall Street

Allen Stanford

In Ominous Sign For Sir Allen, Feds Flip Stanford Number Two

Zachary Roth | March 24, 2009, 1:46PM

This doesn't sound like good news for Sir Allen...

James Davis, the number two at Stanford Financial Group, is cooperating with the federal civil and criminal probes into the $8 billion Ponzi scheme that both are accused of orchestrating, Davis' lawyer has told (sub. req.) the Wall Street Journal.

That's a shift by the former SFG chief financial officer, who was also Allen Stanford's college roommate. Previously, Davis had taken the fifth, along with Stanford himself, and had refused to provide investigators with key company documents.

To date, Stanford, Davis, and a third Stanford employee, Laura Pendergest-Holt, have been charged in a civil complaint filed by the SEC. But only Pendergest-Holt currently faces criminal charges, relating to obstruction of justice.

That's likely to change. Even Davis' cooperation doesn't appear likely to shield him from facing his own criminal charges. But it can hardly come as welcome news for the cricket-loving billionaire.

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Topics: Allen Stanford, Stanford Financial Group

Goldman Sachs

Government Sachs: TARP Funds Just The Tip Of The Iceberg For Goldman

Zachary Roth | March 24, 2009, 12:39PM

Goldman Sachs is planning to give back the TARP money it got last fall, "ideally in the next month," reports the New York Times.

The firm is saying it just can't handle the level of government oversight that comes along with the funds, especially amid the outrage over AIG bonuses. "It's just impossible to run our business in this environment," one exec told the Times' Andrew Ross Sorkin.

Sounds great.

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Topics: AIG, Bailout, Federal Reserve, Financial Crisis, Goldman Sachs, Treasury Department, Wall Street

The Daily Muck

Ben Buchwalter | March 24, 2009, 9:20AM

The IRS has challenged a set of offshore tax deals set up by the now-infamous AIG Financial Products, according to court records. AIG essentially helped U.S. companies benefit from foreign tax laws for isolated tax payments through offshore banks it owned. Last year, AIG paid $61 million in disputed taxes to the government but now requests a refund, according to the lawsuit. Some of the same companies also made credit default swaps with AIG. IRS Commissioner Douglas Shulman said that the tax transaction "really perverts the foreign tax credit." (Wall Street Journal)

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Topics: The Daily Muck

AIG

Cuomo: Most AIG Bonus Money Went To Foreigners

Zachary Roth | March 23, 2009, 6:39PM

Nine of the top ten AIG bonus recipients have given back the payouts, according to Andrew Cuomo, the New York Attorney General who is probing the issue.

Cuomo also said, on a conference call this afternoon, that 15 of the top 20 bonus recipients from the firm's financial products unit, which is at the center of the bonus furor after causing the company's collapse last year, have returned their awards.

But he added something else that may wind up being less exculpatory for AIG: 47 percent of the $165 million in retention bonuses was awarded to Americans, he said, declaring that he expected to get that money back. That means 53 percent -- around $87 million -- of taxpayer money went to foreigners, and is unlikely to be recouped.

Cuomo said he didn't think it would be in the public interest to release the names of those who gave back the bonuses, and that his office is still assessing the risks of releasing any names at all.

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Topics: AIG, Andrew Cuomo, Financial Crisis, Wall Street

Torture

Report: More OLC Torture Memos To Come

Zachary Roth | March 23, 2009, 1:52PM

It sounds like we could soon be getting a look at a few more of those Bush administration legal opinions justifying the use of water-boarding and other "harsh interrogation techniques" for use in the War on Terror.

Newsweek reports that the White House is moving to declassify and release three of those memos, written by Justice Department lawyers in May 2005. In doing so, President Obama is siding with his attorney general, Eric Holder, over the objections of current and former CIA officials, who argue the disclosure could compromise "sources and methods". Ex CIA director Michael Hayden is said to be "furious" about the decision, and to have tried unsuccessfully to intervene directly with Obama officials.

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Topics: Barack Obama, Eric Holder, George Bush, Justice Department, Torture

Bobby Jindal

Jindal's Mockery Of Volcano Monitoring Money Only Looking Dumber After Redoubt Blows

Zachary Roth | March 23, 2009, 12:48PM

Remember how, during his big prime-time speech last month, Lousiana's Republican governor Bobby Jindal, in addition to making stuff up about what he did during Hurricane Katrina, also found time to mock the Obama administration for "wasteful spending" in the stimulus bill, including "$140 million for something called 'volcano monitoring'"?

That line immediately drew criticism from just about everyone who understands what volcano monitoring involves. And now, it's looking even dumber.

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Topics: Bobby Jindal

The Daily Muck

Ben Buchwalter | March 23, 2009, 9:09AM

Alaska Governor Sarah Palin said Friday that she owes more than $500,000 in legal fees to her Anchorage-based lawyer Thomas van Flein for work defending her on ten lawsuits, which she did not name. But Palin specified that the lawsuits start with "the politically motivated Troopergate probe," in which Palin was accused of pressuring a state official to fire a state trooper embroiled in a personal dispute with the Palin family. Palin also said that she could not use public funds to pay her lawyer because "to do so could itself violate state law," but she might establish a legal fund to help pay the debt. (Anchorage Daily News)