Barring extraordinary developments, Bernie Madoff will spend the rest of his life in prison.
The Wall Street swindler has been sentenced to 150 years in prison for swindling investors out of many billions of dollars, reports the AP.
Congress has subpoenaed the Federal Reserve, to force it to hand over documents about its role in Bank of America's takeover of Merrill Lynch during the financial crisis last fall, reports Reuters.
Staffers for the House Oversight committee, chaired by Rep. Ed Towns of New York, had been allowed to view the documents at the Fed. But Towns has now concluded that the committee needs to have the documents in its possession. The Fed has said it will comply with the subpoena.
AIG CEO Ed Liddy, who was brought in by the government to try to stabilize the firm amid the financial crisis last fall, is going to step down.
It's unclear exactly why, and for how long the departure had been planned. Here's the key part of AIG's press release:
Is a cornered AIG now trying to cast doubt on a key part of CEO Ed Liddy's testimony? It sure looks that way...
In his testimony in March before Congress, Liddy was asked about the company's risk management practices concerning AIGFP, the unit of the firm that made those disastrous credit default swaps.
You can say one thing for John Ashcroft: he's not short on chutzpah.
In an op-ed in today's New York Times, the former attorney general points out a thorny problem that the Justice Department may face as a result of the financial crisis: if there's evidence that a company that has received significant amounts of bailout money committed fraud or other financial crimes, how do the Feds prosecute that company, while still protecting the health of the company on behalf of taxpayers?
The answer, according to Ashcroft: deferred prosecution agreements.
AIG and the House Oversight committee have agreed to a date, May 13, on which the firm's CEO, Ed Liddy, will testify before the committee. But it looks like Liddy will be going to Washington kicking and screaming.
As we noted earlier this week, the committee invited Liddy to testify May 6, and told us that it expected to see him then. But today the Wall Street Journal reports (sub. req.) that that day "was scrapped because AIG is due to report its results for the first quarter the following day."
Yesterday we told you that federal investigators are now zeroing in on two other AIG staffers, in addition to Joseph Cassano, as part of their probe into potential criminal wrongdoing at AIG. But a report (sub. req.) in the Wall Street Journal, which confirmed that information, also began to flesh out the more interesting question of just what the Feds suspect Cassano and his crew may have done wrong.
We knew that that December 2007 presentation, at which Cassano and others reassured investors that everything was basically fine, was drawing particular scrutiny from investigators. But the Journal adds some meat to that bone.
We took another quick look at that press release that AIG released in November 2007 about its third quarter earnings -- which is now reportedly being looked at by federal investigators as evidence that the firm may have deliberately misled investors.
And here's one line that jumps out. The release quotes CEO Martin Sullivan saying:
AIGFP reported an operating loss in the quarter due principally to the unrealized market valuation loss related to its super senior credit default swap portfolio. Although GAAP requires that AIG recognize changes in valuation for these derivatives, AIG continues to believe that it is highly unlikely that AIGFP will be required to make any payments with respect to these derivatives. (our itals)
CBS News has some new developments in the criminal probe into AIG...
We knew that Joe Cassano, the former head of AIG's Financial Products unit, was in investigators' crosshairs for potentially giving misleading public statements about AIGFP's position. But the network now reports that the Justice Department is also looking closely at two of his deputies -- Andrew Forster, an executive vice president, and Thomas Athan, a managing director -- for the same reason.
Congress is upping the ante in its bid to get access to those insider reports on AIG compiled by a government monitor.
House Oversight chair Ed Towns, joined by ranking GOPer Darrell Issa, yesterday sent letters to the Justice Department and the SEC, threatening them with subpoenas if they don't hand over the information by this Thursday*.
AIG CEO Ed Liddy has already testified once before Congress about his firm's starring role in the financial crisis. But it looks like he'll soon be doing so again.
Last week, Rep. Ed Towns -- who chairs the House Oversight Committee, which is probing the causes of the crisis -- sent a letter to Liddy inviting him to appear May 6th. Among the topics that Towns intends to cover, according to the letter: "What caused the downfall of AIG?" and "what has AIG done with its Federal financial assistance?"
New York Attorney General Andrew Cuomo has just released documents from his investigation into Bank of America, its receipt of government money, and those billions in bonuses that went to Merrill Lynch executives.
Here's one quick nugget we found: It looks like then-Treasury Secretary Hank Paulson didn't keep the SEC -- whose role, of course, is to protect investors -- informed on the government's intense December 2008 discussions with B of A about Merrill's losses, and possible government assistance for B of A.
In an interview with The Hill published yesterday, Neil Barofsky, the inspector general for the bailout, said that he was pursuing 20 criminal and civil investigations into potential fraud in the TARP program.
And it looks like at least one has now paid off.
Last night, Elizabeth Warren, the Harvard Law professor who chairs the Congressional Oversight Panel for the bailout, talked to Jon Stewart on the The Daily Show.
Here's part 1:
| The Daily Show With Jon Stewart | M - Th 11p / 10c | |||
| Elizabeth Warren Pt. 1 | ||||
| ||||
And here's part 2:
| The Daily Show With Jon Stewart | M - Th 11p / 10c | |||
| Elizabeth Warren Pt. 2 | ||||
| ||||
Earlier this morning, we reported that the Justice Department is dragging its heels on a demand from Congress to hand over information compiled by a highly placed government monitor at AIG.
But DOJ's recalcitrance is underlined by the approach of the SEC, which was also asked to turn over the monitor's information. According to a source on the House Oversight committee, the SEC has said it's complying with the request, and is expected to turn over the information shortly.
Last month, as we noted at the time, House Oversight committee chair Ed Towns formally asked the Justice Department for records kept by a government monitor, who since 2004 has had access to high-level internal deliberations at AIG.
But DOJ seems to be dragging its heels.
AIG has responded to the letter from Rep. Ed Towns requesting information about the company's PR expenses, that we first reported on yesterday -- and which has now been picked up by Reuters, Bloomberg, and ABC News, among others.
Here's the statement they sent us:
In more than 30 media appearances since the beginning of the year and elsewhere, Mr. Greenberg and his lawyers have made false and misleading statements about AIG, including his role in creating AIG Financial Products and its credit default swap business, as well as the circumstances surrounding his forced departure from AIG during an accounting fraud investigation. We look forward to providing Congressman Towns with background on why it has been necessary to correct these and other misstatements, which are both misleading to the American public and damaging to AIG and its ability to repay taxpayers.This issue is not about AIG's corporate public relations expenditures, which are down sharply since last year. It is about correcting Mr. Greenberg's false and damaging statements.
Congress is demanding information from AIG about reports that the bailed-out insurance giant has four PR firms on its payroll -- and about its recent PR blitz aimed at discrediting former CEO Hank Greenberg.
In a letter sent this morning to AIG chief Ed Liddy and obtained exclusively by TPMmuckraker, House Oversight committee chair Ed Towns requests detailed information on AIG's PR expenses, specifically mentioning Hill & Knowlton, and Mark Penn's Burson-Marsteller, two high-priced experts in Washington spin that have signed on to represent the firm.
Ever since AIG's bonus shenanigans exploded onto the national scene last month, Merrill Lynch's own outrageous payouts have kind of gotten short shrift. We've felt this was unfair to the Thundering Herd, since at an around $3.6 billion, its bonuses dwarfed those of AIG. Granted, its role in bringing down the financial system may not have been quite as central as that of AIG's financial products unit, but it's not like Merrill, which needed rescuing last fall by Bank of America, was squeaky clean. Where's the respect?
But luckily, the Merrill bonuses are back. The SEC is looking at whether Bank of America broke the law by not disclosing, in filings last year, the fact that it was planning to pay those bonuses, reports the Washington Post.
One final note on the great New York Times Merkin/Madoff op-ed disclosure brouhaha, which we've written about here and here.
The Washington Post's Howard Kurtz covered the controversy in today's column. Here's the entirety of what he wrote:
When the New York Times published a March 21 op-ed column sympathetic to a "quintessential nice guy" -- stock swindler Bernie Madoff -- contributing writer Daphne Merkin noted that she had "a sibling who did business with him."That turned out to be J. Ezra Merkin, former chairman of GMAC, now accused by New York authorities of defrauding clients by funneling more than $2 billion of their money to Madoff. Was the vague "sibling" reference really enough?
Ombudsman Clark Hoyt wrote yesterday that many readers thought "the disclosure was so limited as to be disingenuous," but Op-Ed Editor David Shipley defended it, saying that paper approached Merkin "in some respect because of her brother."
A female relative of Bernard Madoff -- identified by the New York Post as Madoff's niece, Shana Madoff -- called a "federal prison consultant" to ask how much jail time she might be facing, the consultant told TPMmuckraker.
Larry Levine -- a former federal prisoner who now runs a company, Wall Street Prison Consultants, that gives advice to future inmates on how to survive prison time and win an early release -- said that a woman had called him about three weeks ago, saying that she might face conspiracy charges. At first, said Levine, the woman was hesitant to divulge any specific information, but, when pressed by Levine, said that she was a relative of Bernard Madoff, explained the basics of her situation, and asked how much jail time she might be facing. "No money changed hands," said Levine, describing the call as "exploratory".
"More Quickly Than It Began, The Banking Crisis Is Over" declares longtime financial journalist Douglas McIntyre in a column posted this morning on the TIME website. Well miracles of miracles! Noting yesterday's news from Wells Fargo that the bank made more than twice analysts' projections during the first quarter and the positive buzz about the progress of the Treasury Department "stress tests" being run to assess banks' abilities to withstand further economic downturns, he wonders why the heck they're bothering to run "stress tests" at all. Isn't it obvious we're out of the woods?
Oddly absent from the discussion of how well Wells Fargo did is why the government was in the midst of testing bank balance sheets at all. The experts at the Treasury had been thrown off the scent and consequently had missed the fact that there was not need to test what is already working well. The same holds true for the Geithner plan to take toxic assets off bank balance sheets. It is academic now. What banks are earning from the difference between the cost of capital and the income from lending is now great enough for the banking system to be self-sustaining again.Hallelujah, but: zombie banks don't rise from the dead every day. On CNBC this morning CEO Howard Atkins credited Wachovia, the bank it hastily acquired in the thick of the panic of '08, for bringing the good news. And indeed, an analyst tells Forbes the Wachovia deal has been much more auspicious than experts initially expected, when Wells told analysts it anticipated writing down $10 billion in bad and "non-performing" loans held by Wachovia; thus far, they've only had to write down $77 million.
There's probably a very good reason for that, according to mortgage blogger Ken Watson -- the Financial Accounting Standards Board just relaxed mark-to-market accounting restrictions, meaning Wells can value those loans a bit more creatively than before.
Yesterday, the panel overseeing bailout spending on behalf of Congress issued its latest hard-hitting report, which criticized the Treasury Department's approach to the program and called for top execs at major banks to be fired.
But perhaps the most interesting thing about the report is the "alternative view" that accompanied it, from Republican panel member John Sununu.
TPM Media Sites
Talking Points Memo
TPMDC
TPMCafe
Approved Sites
Washington Independent
The Blotter
ThinkProgress
War&Piece
Taxpayers for Common Sense
Mother Jones
Sunlight Foundation
Harper's
POGO blog
PC Action Fund
Josh
Zachary
