There are so many examples, some going back to 2006. I have a pretty busy day today and my internet connection is acting funny so I am only including one example of Wall Street cover up.
This one is from June of 2008. It is the story of a Wall Street Bank auditor who was paid by the bank to investigate the loans that were being purchased for resale.
Warren has worked in the mortgage business for 25 years, the past five in quality control. Most recently, she was a contract worker for a company called Watterson-Prime, which did loan audits for investment banks. She says their biggest client was Bear Stearns, which recently all but collapsed because of its exposure to bad loans. It was her job to dig into the loans and ferret out problems. By 2006, they were easy to find.
Warren thinks her supervisors didn't want her to do her job. She says that when she would reject, or kick out, a loan, they usually would overrule her and approve it.
About 75 percent of the time, loans that should have been rejected were still put into the pool and sold, she says.
Auditors like Warren basically were hired to find the bad apples in the barrel and pull them out: borrowers with payments they couldn't afford, houses with inflated appraisals, people lying about their income.
But Warren says her bosses were taking a lot of those bad apples and putting them back in. And Peterson says he thinks the investment banks had a strong financial incentive to do that.
"There's a name for this — it's called 'passing the trash,' " says David Grais, an attorney getting ready to sue Wall Street firms on behalf of investors — big pension funds and others — who bought the bad loans.
Get the whole thing here:
Read the article, then listen to the story.
Enjoy!!Comment Posted By bsjones On 15.02.2009 @ 14:08
In a way, I see this whole discussion in the light of my new mantra: accountability.
A CEO is accountable to his Board of Directors whose job it is to monitor corporate performance, select a CEO, and/or replace that CEO when warranted. I firmly believe that a bank CEO that lies about his bank's balance sheet or can't keep his bank's balance sheet in balance should be replaced. (It is also my understanding that an unbalanced bank balance sheet is against U.S. law.) If the Board of Directors had met their responsibility and discharged the negligent banksters I am referring to, they would not be heading these multi-national banks anymore. There would be, therefor, no need to seek caps on CEO salaries as a way to get accountability for their radical malfeasance. New, responsible bankers would take over and make things right. It is important to remember that in a properly functioning banking industry this would have been done long ago.
Summary: If the CEO bansters were held accountable for their performance by their Board of Directors, they would be out of a job and there would be no need to impose accountability from the outside. Then our discussion of the legality of pay caps for banksters would never have come up.
Since it is the weekend, I am posting a long piece (33 minutes) about the role of a bank's balance sheet has in contributing to the global financial crisis.
Here it is:
http://www.npr.org/blogs/money/2009/02/hear_how_to_save_a_bank_1.htmlComment Posted By bsjones On 14.02.2009 @ 17:26
Thanks for the link. I was not familiar with the idea of unconstitutional conditions before today. The idea, as you point out, is that the government cannot force a person to waive a constitutionally guaranteed right to obtain a benefit.
After reading the linked document I came away with two points:
1. The doctrine of unconstitutional conditions is vague, that is, it has never been defined by the Supreme Court. When making an exception to the doctrine the Supreme Court usually just ignores the doctrine completely.
2. "The government CAN require the surrender of a constitutional right as an openly published condition of a benefit when:
A) There is an "essential nexus" between the right being surrendered and the benefit
B) the values of the surrendered right and the benefit are approximately equal.
In your case of government officials looking at the bank's balance sheets(publicly available information b.t.w.) the "essential nexus" seems to be there because the government wants to ensure the banker is broke before giving the handout. So, if the TARP money received was roughly equal to the amount being stolen by the cap on the CEO salary, it would appear to be legal.
Clearly this is a point for debate and, as you state, would have to be decided in the Supreme Court, but I believe (based on the linked document) that it would be legal.
Thanks for the interesting information!!Comment Posted By bsjones On 14.02.2009 @ 13:08
mannning ,Comment Posted By bsjones On 14.02.2009 @ 12:20
As far as I am concerned, this is (part of) the media.
Re: post #26
The Wall Street investment banks knew everything you described. They, then, created and sold these C.D.O.'s and all the other junk they created anyway. The collapse of the global financial system was done with complicity by everyone involved. No one link in the chain could have collapsed the global economy all by itself.
A funny explanation by two comedians of the role of London investment banks in the sub prime banking mess can be found here:
http://www.youtube.com/watch?v=UC31Oudc5BgComment Posted By bsjones On 14.02.2009 @ 12:11
The link for getting tough on the banks is here:
It is the second part with Adam Posen. He argues in favor of getting tough with the welfare queen banksters.
He works at the Peterson Institute. Their website can be found here:
http://www.iie.com/Comment Posted By bsjones On 13.02.2009 @ 20:13
Pay caps for accepting taxpayer handouts does nothing to solve the problem of a collapsed banking industry.
Pay caps for accepting taxpayer handouts is NOT symbolic.
Pay caps for accepting taxpayer handouts is a very weak form of accountability for those smartest M.B.A.'s in the room at the investment banks who created and then sold the investment instruments that have collapsed the global banking and investment systems. (I am talking about Henry Paulson of Goldman Sachs.)Comment Posted By bsjones On 13.02.2009 @ 20:01
I thought everyone here was in agreement about their condemnation of the "traditional" welfare queen.
To me what is new and interesting about our current crisis is this "new breed" of welfare queen. That's right Virginia, this new bloodsucker has no interest in his and her gold town cars. This bloodsucker with "a big brain" forgot what his professor's taught him about moral hazard.
Sara, I believe you are right about how both types of bloodsuckers are more similar than different. The only difference I see is that the banksters have traditionally been role models, but, I have never met anybody who wants to grow up and be an "old school" welfare cheat.Comment Posted By bsjones On 13.02.2009 @ 19:53
Thanks for the thoughtful response and compliment.
A strong argument for nationalizing the banks can be found here:
However, I am not taking a position on bank nationalization.
This is my answer to your question.
No bank is being forced to participate in the bank bailout program, so at this point any guarantee, subsidized loan, or handout that the failed banks accept from the taxpayers is COMPLETELY VOLUNTARY. In my mind, concessions that individual banksters make to access the taxpayer bailout are completely voluntary. (Don't want to phone in every two weeks, then don't take the unemployment check,)
Don't make any concessions, that's ok, you just won't participate in the bailout with the rest of your failed industry.
At this point, I think this is the position of the Ford Motor Company. They refuse to voluntarily conform to the obligations of the auto bailout package (as weak as they were), so they are not taking any of the bailout money.
Summary:If you voluntarily choose to meet the obligations imposed by the bailout program, then stick your maw in the trough. Don't like the terms? Don't accept the money.
The Hank Reardon's of the bank world don't need the taxpayer funded bailout anyway. They will refuse to participate on principle.Comment Posted By bsjones On 13.02.2009 @ 19:36
Some of the money took the form of subsidized loans, some took the form of guarantee (a potential government liability), and some money was simply a handout.
From where I sit, these 'banksters' are the true welfare queens. They are just using the money for private jets instead of two Caddies in the driveway.Comment Posted By bsjones On 13.02.2009 @ 15:56