Madoff Accountant Pleads Guilty To Fraud

Zachary Roth | November 3, 2009, 5:25PM

David Friehling

Bernie Madoff's former accountant has pleaded guilty to fraud in connection with his auditing of Madoff's operation. But David Friehling denied that he knew anything about the underlying massive Ponzi scheme, which Madoff has pleaded guilty to orchestrating.

Friehling admitted that he didn't independently audit Madoff's financial statements, saying he took Madoff's claims at "face value." But he said (sub. req.) he put his own and his family's money with Madoff. In what was "the biggest mistake of my life, I placed my trust in Bernard Madoff," he said.

PERMALINK | COMMENTS (1) | RECOMMEND RECOMMEND (1)
Topics: Bernard Madoff, David Friehling, Securities and Exchange Commission, Wall Street

Bernard Madoff

SEC-er To Madoff: "It's A Big Organization, We Don't Talk To Each Other"

Zachary Roth | October 30, 2009, 7:08PM

During a 2006 examination, an SEC staffer asked Bernie Madoff for information. Madoff replied that he had already provided it to a top agency official. To which the SEC-er responded: "It's a big organization, we don't talk to each other."

That's according to Madoff's testimony to SEC investigators. The agency's inspector general's office has just released documents that were part of its probe into its failures on the Madoff affair. And they further the picture of a regulator at which the right hand didn't know what the left was doing, and which depended on inexperienced and over-matched agents to sniff out complex financial frauds like Madoff's.

You can see all the documents here. And you can see Madoff's testimony here.

Let us know in comments about anything else that jumps out.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (5)
Topics: Bernard Madoff, Securities and Exchange Commission, Wall Street

Bernard Madoff

Failing Upward: Many SECers Who Failed To Catch Madoff Haven't Paid A Price

Alex Amend | October 13, 2009, 9:49AM

Ever wonder what happened to the SEC staffers and supervisors who, for nearly two decades, managed to miss Bernie Madoff's multi-billion dollar Ponzi scheme, despite a persistent whistle-blower and multiple inquiries -- a monumental level of incompetence that "astonished" even Madoff himself?

Well, some saw their failures rewarded with high-paying private-sector jobs, while others are still at the agency, charged with catching the next Madoff.

Via CNN, here's a quick look at what happened to some of the major players.

PERMALINK | COMMENTS (11) | RECOMMEND RECOMMEND (5)
Topics: Bernard Madoff, Securities and Exchange Commission, Wall Street

Hassan Nemazee

Feds: Nemazee Swindled Two Other Banks

Zachary Roth | September 2, 2009, 4:06PM

Hassan Nemazee

It looks like that fraudulent $74 million loan that top Democratic fundraiser Hassan Nemazee allegedly obtained from Citigroup may have just been the tip of the iceberg.

In a letter to the judge in Nemazee's case, reported by Reuters, prosecutors claimed that Nemazee also ripped off two other banks.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (2)
Topics: Hassan Nemazee, Hillary Clinton, Wall Street

Bernard Madoff

Madoff Claimed He Was On "Short List" For SEC Chair

Zachary Roth | September 2, 2009, 3:36PM

When Franklin Roosevelt appointed Joseph P. Kennedy as SEC chair, the president responded to concerns about Kennedy's unsavory reputation by declaring: "It takes a thief to catch a thief."

Over 70 years later, Bernard Madoff may have been hoping that President Bush agreed.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (2)
Topics: Bernard Madoff, Financial Crisis, Securities and Exchange Commission, Wall Street

Bernard Madoff

Madoff: "I Thought It Was The End Game. Over" -- But SEC Never Followed Up!

Zachary Roth | September 2, 2009, 3:16PM

It's not really news that the SEC screwed up big-time on Bernard Madoff. But the just released executive summary (pdf) of the agency's inspector general report really brings home just how far that failure went.

The summary, produced by SEC inspector general David Kotz, paints a picture of a series of botched investigations going back to 1992, in which inexperienced, unsophisticated and incurious agency examiners repeatedly failed to take seemingly obvious steps that would have uncovered Madoff's massive scam. And it shows how Madoff used his air of authority to confuse and intimidate the over-matched Feds in order to keep them at bay.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (2)
Topics: Bernard Madoff, Financial Crisis, Securities and Exchange Commission, Wall Street

Bernard Madoff

SEC Lawyer Who Failed To Catch Madoff Got Highest Performance Rating

Zachary Roth | September 2, 2009, 2:26PM

The SEC attorney who failed, despite numerous red flags, to catch Bernie Madoff's colossal fraud received the highest possible performance rating from the agency -- citing her "ability to understand and analyze the complex issues of the Madoff investigation" -- soon after the probe closed in 2006.

That's according to an SEC inspector general report on the Madoff fiasco, whose executive summary (pdf) was released this afternoon. The full report will be made available in the coming days.

PERMALINK | COMMENTS (10) | RECOMMEND RECOMMEND (3)
Topics: Bernard Madoff, Financial Crisis, Securities and Exchange Commission, Wall Street

AIG

Report: Senate Subpoenas Goldman, Deutsche Bank, On Subprime Statements

Zachary Roth | July 30, 2009, 4:42PM

Goldman Sachs and Deutsche Bank have received subpoenas from a Senate committee that's probing whether they committed fraud in connection to last year's financial collapse, the Wall Street Journal reports (sub. req.).

The Senate Permanent Subcommittee on Investigations, chaired by Carl Levin, is said to be looking into whether those firms, and perhaps others, had private doubts about the mortgage-backed securities they were putting together, despite their rosy public pronouncements about the complex products.

PERMALINK | COMMENTS (8) | RECOMMEND RECOMMEND (7)
Topics: AIG, Bailout, Financial Crisis, Goldman Sachs, Wall Street

Goldman Sachs

Emails Show Cozy Ties Between Federal Pension Guarantor And Wall Street Firms He Hired

Zachary Roth | July 29, 2009, 1:57PM

Remember our old friend Charles Millard? He's the former Lehman investment banker who, after taking over the federal agency that guarantees our pension systems, had the genius idea to ignore a host of warnings and switch the agency's investment portfolio from conservative bonds to risky stocks -- just as last year's financial storm was gathering.

We also learned -- thanks to an inquiry by the inspector general for the agency, the Pension Benefit Guaranty Corporation -- that Millard had had extensive contacts with staff at Goldman Sachs, BlackRock Capital, and JP Morgan, during the period that the P.B.G.C. was choosing firms to hire as managers for its fund. And that Millard also raised the issue of getting a job with these firms once he left government. All three firms ended up winning contracts -- which were recently revoked, thanks to concern about those contacts.

PERMALINK | COMMENTS (10) | RECOMMEND RECOMMEND (17)
Topics: Charles Millard, Financial Crisis, Goldman Sachs, JP Morgan, Wall Street

Financial Crisis

Stiglitz, Galbraith, Reich To Financial Crisis Panel: Get To The Truth!

Zachary Roth | July 22, 2009, 5:28PM

Looks like were not the only ones who are concerned that the Congressional commission to look into the causes of the financial crisis may struggle to get to the truth.

A group of distinguished economists, academics, and thinkers -- including Joseph Stiglitz, Jamie Galbraith, and Robert Reich -- has written an open letter to the newly-named commissioners, urging them to come together "in non-partisan cooperation to investigate the origins of the financial crisis in ways that lead to a full understanding of the institutions, people and practices that are responsible for our economic collapse."

PERMALINK | COMMENTS (5) | RECOMMEND RECOMMEND (6)
Topics: Financial Crisis, Phil Angelides, Wall Street

AIG

Financial Crisis Panel Will Probe AIG Bailouts, Says Chair

Zachary Roth | July 22, 2009, 12:26PM

The man who will lead the special congressional effort to probe the causes of the financial crisis says his panel will also consider the government's response to the events of last fall -- including the controversial serial bailouts of AIG.

In an interview with TPMmuckraker, Phil Angelides, the former California treasurer who was recently named by Congress to chair the Financial Crisis Inquiry Commission, noted that the statute that created his panel required it to look not just at the financial institutions that failed, but also at those that would have failed but for massive government intervention. That means that "it's going to be hard not to touch on those issues," said Angelides, referring to the various AIG bailouts -- which some have portrayed as disingenuous backdoor efforts to save AIG counterparties like Goldman Sachs and Merrill Lynch from the consequences of their bad bets -- as well as other moves by the government to prevent a wider collapse of the financial sector.

PERMALINK | COMMENTS (12) | RECOMMEND RECOMMEND (6)
Topics: AIG, Bailout, Financial Crisis, Nancy Pelosi, Phil Angelides, Wall Street

Financial Crisis

New Pecora Commission Looks Unlikely To Aggressively Probe Financial Mess

Zachary Roth | July 17, 2009, 9:12AM

Earlier this week, we told you over at TPMDC about the newly named members of what's being called the Pecora II commission, which has been given the crucial task of getting to the bottom of the financial crisis.

The stakes are high here. If we're ever to come to a full understanding of the causes of an episode that has created enormous pain, dislocation, and anxiety for a large number of Americans -- allowing us to craft policies to ensure it doesn't recur -- we need an effective commission. In other words, one that's capable of conducting an aggressive investigation that goes after the truth and lets the chips fall where they may, even if that means publicly calling out powerful Wall Street interests and lax Washington regulators. And not one that settles for making a few polite recommendations while protecting its political overseers -- as too many Washington commissions have done in the past.

PERMALINK | COMMENTS (24) | RECOMMEND RECOMMEND (23)
Topics: Financial Crisis, Lobbyists, Wall Street

Steve Rattner

Did Pay-To-Play Probe Cause Rattner's Resignation?

Zachary Roth | July 15, 2009, 2:34PM

So: is Steve Rattner stepping down as the Obama administration's car czar because of the investigation into whether his private-equity fund used pay-to-play tactics to win business from New York's public pension fund?

Probably.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (8)
Topics: Andrew Cuomo, Securities and Exchange Commission, Steve Rattner, Wall Street

Bernard Madoff

Madoff Sentenced To 150 Years In Prison

Zachary Roth | June 29, 2009, 11:51AM

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.

PERMALINK | COMMENTS (27) | RECOMMEND RECOMMEND (7)
Topics: Bernard Madoff, Financial Crisis, Wall Street

Ben Bernanke

Congress To Bernanke: Hand Over Docs On BofA-Merrill Deal

Zachary Roth | June 9, 2009, 6:16PM

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.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (5)
Topics: Bank of America, Ben Bernanke, Edolphus Towns, Federal Reserve, Financial Crisis, House Oversight, Ken Lewis, Merrill Lynch, Wall Street

AIG

AIG Chief Liddy To Step Down

Zachary Roth | May 21, 2009, 4:41PM

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:

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (1)
Topics: AIG, Ed Liddy, Financial Crisis, Wall Street

AIG

AIG: Our CEO Didn't Know Enough To Testify About What He Testified About

Zachary Roth | May 13, 2009, 5:49PM

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.

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (5)
Topics: AIG, Ed Liddy, Financial Crisis, Joseph Cassano, Martin Sullivan, Wall Street

AIG

Ashcroft Made Millions As Corporate Monitor, Sees Dire Need For More Corporate Monitoring

Zachary Roth | May 5, 2009, 3:19PM

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.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (8)
Topics: AIG, Bailout, Financial Crisis, John Ashcroft, Justice Department, Securities and Exchange Commission, Wall Street

AIG

AIG Sets Date For Liddy Testimony -- But Only Under Threat Of Subpoena

Zachary Roth | May 1, 2009, 11:45AM

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."

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (1)
Topics: AIG, Bailout, Ed Liddy, Financial Crisis, House Oversight, Wall Street

AIG

Feds Zeroing In On Cassano's Valuation Of Credit Default Swaps

Zachary Roth | April 29, 2009, 12:40PM

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.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (5)
Topics: AIG, Financial Crisis, Joseph Cassano, Martin Sullivan, Wall Street

AIG

AIG's Sullivan: "Highly Unlikely" We'll Have To Pay Out On Credit Default Swaps

Zachary Roth | April 28, 2009, 6:22PM

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)

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (1)
Topics: AIG, Financial Crisis, Martin Sullivan, Wall Street

AIG

Report: Feds Probing Two Cassano Deputies

Zachary Roth | April 28, 2009, 1:02PM

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.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (5)
Topics: AIG, Financial Crisis, Joseph Cassano, Justice Department, Wall Street

AIG

Congress To DOJ And SEC: Hand Over AIG Docs Or We'll Subpoena Them

Zachary Roth | April 28, 2009, 10:21AM

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*.

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (4)
Topics: AIG, Bailout, Edolphus Towns, Financial Crisis, House Oversight, Justice Department, Securities and Exchange Commission, Wall Street

AIG

Congress To Ask Liddy: "What Caused The Downfall Of AIG?"

Zachary Roth | April 27, 2009, 10:22AM

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?"

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (4)
Topics: AIG, Bailout, Ed Liddy, Edolphus Towns, Financial Crisis, House Oversight, Wall Street

Bank of America

Cuomo: Paulson Kept SEC Out Of The Loop On B Of A

Zachary Roth | April 23, 2009, 12:19PM

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.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (10)
Topics: Andrew Cuomo, Bailout, Bank of America, Financial Crisis, Merrill Lynch, Securities and Exchange Commission, Treasury Department, Wall Street

Bailout

Bailout Fraud Prosecutor Nets First Catch

Zachary Roth | April 22, 2009, 1:41PM

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.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (9)
Topics: Bailout, Financial Crisis, Neil Barofsky, Securities and Exchange Commission, Treasury Department, Wall Street

Bailout

Eilzabeth Warren On Daily Show

Zachary Roth | April 16, 2009, 1:01PM

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

thedailyshow.com

Daily Show
Full Episodes

Economic Crisis

Political Humor

And here's part 2:

The Daily Show With Jon Stewart

M - Th 11p / 10c

Elizabeth Warren Pt. 2

thedailyshow.com

Daily Show
Full Episodes

Economic Crisis

Political Humor

PERMALINK | COMMENTS (3) | RECOMMEND RECOMMEND (11)
Topics: Bailout, Elizabeth Warren, Financial Crisis, Wall Street

AIG

Source: SEC (Unlike DOJ) Cooperating With Congress's Request For AIG Docs

Zachary Roth | April 15, 2009, 12:17PM

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.

PERMALINK | COMMENTS (1) | RECOMMEND RECOMMEND (1)
Topics: AIG, Edolphus Towns, Financial Crisis, House Oversight, Justice Department, Securities and Exchange Commission, Wall Street

AIG

Justice Dragging Heels On Congress's Request For AIG Docs

Zachary Roth | April 15, 2009, 9:50AM

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.

PERMALINK | COMMENTS (0) | RECOMMEND RECOMMEND (4)
Topics: AIG, Financial Crisis, Joseph Cassano, Justice Department, Wall Street

AIG

AIG Responds On PR Expenses: We'll Give Congress What It Wants, And Then Some

Zachary Roth | April 15, 2009, 9:06AM

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.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (4)
Topics: AIG, Bailout, Edolphus Towns, Financial Crisis, House Oversight, Wall Street

AIG

Congress Probing AIG Spin Shop

Zachary Roth | April 14, 2009, 12:57PM

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.

PERMALINK | COMMENTS (10) | RECOMMEND RECOMMEND (7)
Topics: AIG, Bailout, Edolphus Towns, Financial Crisis, House Oversight, Wall Street

Bailout

SEC Reviewing Whether B of A Broke Law On Merrill Bonuses

Zachary Roth | April 14, 2009, 11:37AM

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.

PERMALINK | COMMENTS (1) | RECOMMEND RECOMMEND (1)
Topics: Bailout, Bank of America, Financial Crisis, Mary Schapiro, Merrill Lynch, Securities and Exchange Commission, Wall Street

Bernard Madoff

WaPo's Kurtz Takes No Position On NYT's Merkin/Madoff Op-Ed

Zachary Roth | April 13, 2009, 1:30PM

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."

PERMALINK | COMMENTS (5) | RECOMMEND RECOMMEND (3)
Topics: Bernard Madoff, Financial Crisis, Media, Wall Street

Bernard Madoff

Report: Shana Madoff Contacted Prison Consultant

Zachary Roth | April 13, 2009, 12:05PM

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".

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (16)
Topics: Bernard Madoff, Securities and Exchange Commission, Wall Street

Wall Street

Wells Fargo's Rise From The Dead Redeems Sins Of All Banks, Says TIME Columnist

Moe Tkacik | April 10, 2009, 2:04PM

"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.

PERMALINK | COMMENTS (4) | RECOMMEND RECOMMEND (1)
Topics: Douglas McIntyre, Wall Street, Wells Fargo, stress tests

Bailout

Conflicted Sununu: The Real Problem Is That CEO Pay Limits Are Too Tough

Zachary Roth | April 8, 2009, 3:00PM

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.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (5)
Topics: Bailout, Financial Crisis, John Sununu, Treasury Department, Wall Street

AIG

Warren: Fire Top Management At AIG and Citi

Zachary Roth | April 7, 2009, 5:25PM

We're late to this, but it looks like Elizabeth Warren, the Harvard Law professor who chairs the Congressional Oversight panel for the TARP funds, is upping the ante.

After several months of raising the alarm about the Treasury Department's failure to attach strings to the bailout funds, to little apparent effect, Warren will issue a hard-hitting report this week that broadly indicts the Obama administration's approach to the financial crisis, reported the British paper The Observer over the weekend.

PERMALINK | COMMENTS (31) | RECOMMEND RECOMMEND (33)
Topics: AIG, Bailout, Citigroup, Elizabeth Warren, Financial Crisis, Treasury Department, Wall Street

Bernard Madoff

Times Editor: Lack Of Disclosure On Merkin Op-Ed Is No Big Deal

Zachary Roth | April 7, 2009, 12:25PM

Here's another one to add to the growing list of "newspapers acting badly"...

Late last month, the New York Times published an op-ed by Daphne Merkin, a contributing writer to the Times Magazine, on the Bernie Madoff mess. The curious premise of the piece seemed to be that Madoff's "victims" (the quote marks are Merkin's) aren't really blameless, since "no one was holding a gun to anyone's head, saying sign up with Mr. Madoff or else."

PERMALINK | COMMENTS (55) | RECOMMEND RECOMMEND (37)
Topics: Bernard Madoff, Financial Crisis, Media, Wall Street

Bernard Madoff

Madoff Associate Who Ran Feeder Fund Is Charged With Fraud

Zachary Roth | April 6, 2009, 12:14PM

The high-profile proprietor of a second feeder fund has been charged in connection with Bernie Madoff's multi-billion dollar Ponzi scheme.

A civil fraud lawsuit filed by New York Attorney General Andrew Cuomo charges Ezra Merkin, the former chairman of GMAC, and a prominent Madoff associate and New York philanthropist, with "betraying hundreds of investors" by placing billions with Madoff without their knowledge, reports the Wall Street Journal.

PERMALINK | COMMENTS (2) | RECOMMEND RECOMMEND (1)
Topics: Andrew Cuomo, Bernard Madoff, Financial Crisis, Wall Street

AIG

In Letter To Liddy, Lawmaker Probes AIG Risk Practices

Zachary Roth | April 3, 2009, 5:32PM

Investigators are starting to zero in on the crucial issue of how much access AIG's risk control team had to Joe Cassano's deals.

Earlier this week, we wrote about a December 2007 presentation in which AIG execs assured investors that the firm's risk control officers looked closely at the credit default swaps made by Cassano's financial products unit. But as we noted, those assurances were contradicted last month by AIG CEO Ed Liddy, who told Congress that Cassano limited the access of the risk control team to his unit. And there's additional evidence (sub. req.) supporting Liddy's claim.

And now it looks like one Democratic lawmaker is picking up on that same discrepancy.