TPMMuckraker
Zachary Roth

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.

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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.

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Topics: AIG, Bailout, Financial Crisis, Wall Street

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.

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Topics: AIG, Financial Crisis, Joseph Cassano, Wall Street

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.

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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."

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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.

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Topics: AIG, Bailout, Financial Crisis, Treasury Department, Wall Street

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.

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Topics: Hans von Spakovsky, Justice Department, U.S. Attorneys

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.

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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.

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

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.

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Topics: Allen Stanford, FBI, Securities and Exchange Commission, Stanford Financial Group

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.

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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.

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Topics: Allen Stanford, FBI, Securities and Exchange Commission, Stanford Financial Group

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.

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Topics: Bernard Madoff, FBI, Financial Crisis, Harry Markopolos, Securities and Exchange Commission, Wall Street

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.

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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.

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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.

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Topics: AIG, Bailout, Federal Reserve, Financial Crisis, Goldman Sachs, 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.

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Topics: Barack Obama, George Bush, Justice Department, Wiretapping

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.

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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.

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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."

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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

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