9 Sep 2011

Obama Jobs Plan: $447 Billion, More Than Half In Tax Cuts, To Be Paid For By Super Committee

'This Is Simple Math. These Are Real Choices That We Have To Make' WATCH: Highlights From Obama's Speech.. Full Text Of Address Inside The President's Plan.. Controversial Cuts On The Table 
Congressional Leaders React To Proposal.. MORE UPDATES

  • WASHINGTON -- Hoping to stem the tide of poor economic news and boost his falling poll numbers, President Barack Obama proposed a $447 billion jobs plan to Congress on Thursday evening.
    Titled the American Jobs Act, the proposal includes more than $250 billion in tax incentives for small businesses and employers, according to administration estimates. The rest of the money would be devoted to infrastructure spending, state aid, unemployment insurance, and neighborhood rehabilitation. The president will pay for the proposal by asking the congressional super committee tasked with finding $1.5 trillion in deficit reduction to offset the cost of the package in their proposal.
    Senior administration officials said that the White House plans to introduce the president's proposal next week as a single piece of legislation. The same administration officials did not rule out the idea that the White House would petition the congressional super committee to simply include the jobs bill in the set of recommendations that they reveal later this fall. In his speech to a joint session of Congress, however, the President repeatedly made the case that quicker action is needed.
    "I am sending this Congress a plan that you should pass right away," he said. "There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that's been supported by both Democrats and Republicans -- including many who sit here tonight. And everything in this bill will be paid for. Everything."
    A White House official said Obama phoned House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) earlier in the day to discuss the need for rapid passage of his jobs plan. During his speech, which was peppered with a defiant sometimes combative tone, he pledged to sell his plan outside of the D.C. Beltway as well.
    "I intend to take that message to every corner of this country," Obama said. "I also ask every American who agrees to lift your voice and tell the people who are gathered here tonight that you want action now. Tell Washington that doing nothing is not an option." In all, the phrase "pass this jobs bill" was uttered eight times in the president's speech, with several variations of the phrase appearing elsewhere.
    There was no mention as to how many jobs the president believed his proposal would create. At a briefing before the speech, senior administration officials declined to make such an estimate as well. But underlying the whole proposal was the promise that, down the road, it would be paid for. And in the latter portion of his speech, Obama called for Congress to close special interest tax loopholes as one way to cover that cost.
    "This isn’t political grandstanding," he said. "This isn’t class warfare. This is simple math. These are real choices that we have to make."
    At the heart of the president's plan is an extension of the payroll tax cut passed last year, through 2012. The proposal, which would affect an estimated 160 million workers by providing a $1,500 tax cut for the average family, comes in at a cost of $175 billion.
    The tax components of the president's plan don't end there. The White House also wants a payroll tax holiday for businesses that add new workers or increase the wages of current employees; a fifty percent reduction of the tax rates businesses pay on the first $5 million in payroll; and a $4,000 tax credit for employers who hire long-term unemployed workers.
    On the spending side, the president is calling for $50 billion in infrastructure repairs; $10 billion for an infrastructure bank to help leverage private capital; $30 billion for school modernization and repairs; and $35 billion in aid to states and municipalities for the purposes of rehiring and retaining teachers and first responders. The proposal would also re-authorize federal unemployment benefits for another year, with additional incentives for employers to retain their workers and train new ones without any cost. A national wireless internet initiative and changes to federal refinancing programs are also part of the American Jobs Act.
    The most innovative addition may be the $15 billion that the president is proposing for "Project Rebuild" a program that would leverage private capital to finance the refurbishing of vacant or foreclosed homes. According to a senior administration official, the program would focus on "emerging residential and commercial foreclosure problems" in an effort to raise plummeting property values in those areas and avoid "community blight."
    The president's suggested spending totals are a drop in the bucket in terms of the economy's actual needs. Obama's top advisers have, in the past, estimated that the country faces a $2 trillion infrastructure deficit. There is an estimated $270 billion to $500 billion in backlogged school maintenance costs. More than 200,000 government jobs have been slashed in the past year, many of them teachers and emergency first responders.
    But the outlines were cheered by Democrats as an important start, as well as a much-needed shift in a political conversation that has been dominated by budget cuts.
    Even in the face of obvious need, however, it's unclear if Congress as a whole possesses the political will to back the president's requests. Republican lawmakers have made cutting taxes a top priority over the past few years, but even before the president's address, GOP senators were balking at the idea of temporarily extending the payroll tax cut. Even progressives aren't entirely enamored with the idea, with serious concern among Social Security advocates that an extension would drain money from the entitlement program's trust fund -– even though the administration's proposal instructs the Treasury to replenish that fund's coffers.
    More problematic could be the amount of spending Obama is proposing and the vague outlines for how it will be paid for. Despite petitioning for infrastructure money for their home districts, Republicans have castigated all proposals for federal stimulus. The idea that the super committee will pick up the tab seems unlikely to quiet GOP criticism that the plan will increase the national debt.
    But that may be the trick up the administration's sleeve. The administration officials in the pre-speech briefing left open the door to having the super committee write the president's bill into their final set of recommendations, rather than just offset the cost of a separate proposal. Doing so would mean that the jobs plan wouldn't come up for a vote until late December. But it would also give it a much more likely chance of passage, as components of same triggers that apply to the committee's debt reduction suggestions -- mostly major cuts to defense spending and Medicare -- would suddenly apply to the president's jobs bill.
    "Obviously it could be passed as a part of a larger grand bargain, but we don't want to limit our options to that," said a senior administration official. "It would be very positive for this economy for this to pass quickly and for it to pass in a way that people could see we're willing to work together to do something bold on creating demand in the short term, and a context in which we're also creating a confidence in our long term fiscal situation."

    Bernanke offers little hope for fresh stimulus

    Federal Reserve Chairman Ben Bernanke said the US central bank would spare no effort to boost disappointingly weak growth and reduce unemployment, while downplaying concerns about inflation.
    While the Fed chairman did little to change expectations of a further easing of monetary policy when officials meet on September 20-21, he offered no details of steps the Fed might take.
    "The Federal Reserve will do all it can to help restore high rates of growth and employment in a context of price stability," Bernanke told the Economic Club of Minnesota.
    In what could be taken as a bid to quell concerns among some of his colleagues that further easing could spark inflation, Bernanke said a rise in consumer prices this year would likely to be transitory.
    "We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy," he said.
    US stocks fell as investors registered disappointment that Bernanke did not lay out a plan of action for the central bank's policy-setting Federal Open Market Committee. The dollar extended gains against the euro, while Treasury debt prices rose.
    "Although the speech was lacking in any specifics about potential policy options, we see the relatively downbeat nature of the chairman's comments on the growth outlook as confirming our view that the FOMC is inclined to take further accommodative steps at its September meeting," said Michael Gapen, an economist at Barclays Capital in New York.
    A widening debt crisis in Europe and collapse in consumer and business confidence in the United States has raised concern the US and global economies could slide back into recession.
    So stark is the recent deterioration in the global economic recovery that the political debate in Washington has veered in only six weeks from a preoccupation with how to cut US debt to a renewed urgency on lowering unemployment.
    President Barack Obama is scheduled to lay out a jobs package worth more than $US300 billion later on Thursday, and job creation was a key theme for Republican presidential hopefuls at a debate on Wednesday.
    Few new clues on easing
    Other than offering a bit more detail on the outlook for inflation and emphasizing that sluggish growth is not enough to satisfy the Fed, Bernanke offered few fresh insights into thinking at the central bank on measures to aid the recovery.
    He largely reiterated remarks he made two weeks ago, repeating that the Fed has a range of tools to provide additional stimulus and is prepared to use them.
    The Fed cut benchmark rates to near zero almost three years ago to pull the economy out of a sharp recession. It then bought $2.3 trillion worth of longer-term securities in two installments ending in June to boost growth.
    But with confidence crumbling, the Fed on Aug. 9 eased monetary policy further by expanding on an earlier promise to hold rates at rock-bottom levels for an extended period, saying it expected to keep them low at least through mid-2013, a decision that drew three dissents on the FOMC.
    Bernanke may have decided to keep his cards close to his vest on Thursday in order not to pre-empt the debate later this month among members of the Fed's fractious policy panel.
    "With the FOMC clearly split, Bernanke probably didn't want to antagonize the hawks who voted against the decision at August's meeting," said Paul Ashworth, chief US economist for Capital Economics.
    Many analysts expect the Fed's next move to be a shift in its $2.8 trillion balance sheet to holdings of more longer-term securities. The point of such a move would be to "twist" down interest rates for longer maturities, potentially spurring mortgage refinancing and other activity that depends on longer-term interest rates.
    The Fed is considering selling shorter-term securities and buying longer-term bonds, as well as simply replacing maturing securities with longer-dated issues.
    One Fed official, Chicago Federal Reserve Bank President Charles Evans, has called for pledging to maintain ultra-loose monetary policy until unemployment comes down to a more acceptable -- and specified -- level.
    A more modest step under consideration would be for the central bank to encourage lending by lowering the rate it pays banks for excess reserves they hold at the Fed.
    Bernanke said unusually weak household spending and persistent financial strains spurred by worry over Europe's sovereign debt crisis and the loss of Washington's top-tier credit rating continue to hold back the recovery.
    He also repeated a warning that overzealous belt-tightening by the US government in the near term could also slow down the "erratic" recovery.
    In response to an audience question, the Fed chairman said a bitterly polarized debate this summer on raising the US debt ceiling had roiled financial markets.
    "We need a better process so that we don't have the same consequences that we saw with the (ratings) downgrade and with some of the financial volatility that was associated with the process," he said.


    8 Sep 2011

    Alasdair Macleod talks to James Turk

    Alasdair Macleod, of financeandeconomics.org, and James Turk, Director of the GoldMoney Foundation, talk about about the importance of savings and how currency debasement destroys savings and the middle class, killing growth.
    They talk about the sovereign, the gold standard and price stability. How long term growth is compatible with a stable money supply and even with prolonged deflation.
    They explain how central bank interest rate manipulation through credit creation creates the business cycle and misdirect investment. Alasdair explains how in British history, absent the central bank, continuous growth and sound money helped create the most prosperous nation in the world. James explains the importance of the Rule of Law for stability and prosperity.
    Alasdair's articles on GoldMoney's website can be read here: http://www.goldmoney.com/author/alasdair-macleod.html

    7 Sep 2011

    Full-Blown Civil War Erupts On Wall Street: Financial Elite Start Turning On Each Other

    Full-Blown Civil War Erupts On Wall Street: As Reality Finally Hits The Financial Elite, They Turn On Each OtherFinally, after trillions in fraudulent activity, trillions in bailouts, trillions in printed money, billions in political bribing and billions in bonuses, the criminal cartel members on Wall Street are beginning to get what they deserve. As the Eurozone is coming apart at the seams and as the US economy grinds to a halt, the financial elite are starting to turn on each other. The lawsuits are piling up fast. Here’s an extensive roundup:
    As I reported last week:
    Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, It’s A “Bloodbath” As Wall Street’s Crimes Blow Up In Their Face
    Time to put your Big Bank shorts on! Get ready for a run… The chickens are coming home to roost… The Global Banking Cartel’s crimes are being exposed left & right… Prepare for Shock & Awe…
    Well, well… here’s your Shock & Awe:
    First up, this shockingly huge $196 billion lawsuit just filed against 17 major banks on behalf of Fannie Mae and Freddie Mac. Bank of America is severely exposed in this lawsuit. As the parent company of Countrywide and Merrill Lynch they are on the hook for $57.4 billion. JP Morgan is next in the line of fire with $33 billion. And many death spiraling European banks are facing billions in losses as well.
    FHA Files a $196 Billion Lawsuit Against 17 Banks
    The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), today filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises.
    Complaints have been filed against the following lead defendants, in alphabetical order:
    1. Ally Financial Inc. f/k/a GMAC, LLC – $6 billion
    2. Bank of America Corporation – $6 billion
    3. Barclays Bank PLC – $4.9 billion
    4. Citigroup, Inc. – $3.5 billion
    5. Countrywide Financial Corporation -$26.6 billion
    6. Credit Suisse Holdings (USA), Inc. – $14.1 billion
    7. Deutsche Bank AG – $14.2 billion
    8. First Horizon National Corporation – $883 million
    9. General Electric Company – $549 million
    10. Goldman Sachs & Co. – $11.1 billion
    11. HSBC North America Holdings, Inc. – $6.2 billion
    12. JPMorgan Chase & Co. – $33 billion
    13. Merrill Lynch & Co. / First Franklin Financial Corp. – $24.8 billion
    14. Morgan Stanley – $10.6 billion
    15. Nomura Holding America Inc. – $2 billion
    16. The Royal Bank of Scotland Group PLC – $30.4 billion
    17. Société Générale – $1.3 billion
    These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation. Certain complaints also allege state securities law violations or common law fraud. [read full FHFA release]
    You can read the suits filed against each individual bank here. For some more information read Bloomberg: BofA, JPMorgan Among 17 Banks Sued by U.S. for $196 Billion. Noticeably absent from the list of companies being sued is Wells Fargo.
    And the suits just keep coming…
    BofA sued over $1.75 billion Countrywide mortgage pool
    Bank of America Corp (BAC.N) was sued by the trustee of a $1.75 billion mortgage pool, which seeks to force the bank to buy back the underlying loans because of alleged misrepresentations in how they were made. The lawsuit by the banking unit of US Bancorp (USB.N) is the latest of a number of suits seeking to recover investor losses tied to risky mortgage loans issued by Countrywide Financial Corp, which Bank of America bought in 2008. In a complaint filed in a New York state court in Manhattan, U.S. Bank said Countrywide, which issued the 4,484 loans in the HarborView Mortgage Loan Trust 2005-10, materially breached its obligations by systemically misrepresenting the quality of its underwriting and loan documentation. [read more]
    Bank of America kept AIG legal threat under wraps
    Top Bank of America Corp lawyers knew as early as January that American International Group Inc was prepared to sue the bank for more than $10 billion, seven months before the lawsuit was filed, according to sources familiar with the matter. Bank of America shares fell more than 20 percent on August 8, the day the lawsuit was filed, adding to worries about the stability of the largest U.S. bank…. The bank made no mention of the lawsuit threat in a quarterly regulatory filing with the U.S. Securities and Exchange Commission just four days earlier. Nor did management discuss it on conference calls about quarterly results and other pending legal claims. [read more]
    Nevada Lawsuit Shows Bank of America’s Criminal Incompetence
    As we’ve stated before, litigation by attorney general is significant not merely due to the damages and remedies sought, but because it paves the way for private lawsuits. And make no mistake about it, this filing is a doozy. It shows the Federal/state attorney general mortgage settlement effort to be a complete travesty. The claim describes, in considerable detail, how various Bank of America units engaged in misconduct in virtually every aspect of its residential mortgage business. [read more]
    Nevada Wallops Bank of America With Sweeping Suit; Nationwide Foreclosure Settlement in Peril
    The sweeping new suit could have repercussions far beyond Nevada’s borders. It further jeopardizes a possible nationwide settlement with the five largest U.S. banks over their foreclosure practices, especially given concerns voiced by other attorneys general, New York’s foremost among them…. In a statement, Bank of America spokeswoman Jumana Bauwens said reaching a settlement would bring a better outcome for homeowners than litigation. "We believe that the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively and with finality. [read more]
    FDIC Objects to Bank of America’s $8.5 Billion Mortgage-Bond Accord
    The Federal Deposit Insurance Corp. is objecting to Bank of America Corp. (BAC)’s proposed $8.5 billion mortgage-bond settlement with investors, joining investors and states that are challenging the agreement. The FDIC owns securities covered by the settlement and said it doesn’t have enough information to evaluate the accord, according to a filing today in federal court in Manhattan. Bank of America has agreed to pay $8.5 billion to resolve claims from investors in Countrywide Financial mortgage bonds. The settlement was negotiated with a group of institutional investors and would apply to investors outside that group. [read more]
    Fed asks Bank of America to list contingency plan: report
    The Federal Reserve has asked Bank of America Corp to show what measures it could take if business conditions worsen, the Wall Street Journal said, citing people familiar with the situation. BofA executives recently responded to the unusual request from the Federal Reserve with a list of options that includes the issuance of a separate class of shares tied to the performance of its Merrill Lynch securities unit, the people told the paper. Bank of America and the Fed declined to comment to the Journal. Both could not immediately be reached for comment by Reuters outside regular U.S. business hours. [
    read more]
    Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit
    Wow, Jones Day just created a huge mess for its client and banks generally if anyone is alert enough to act on it. The lawsuit in question is American Home Mortgage Servicing Inc. v Lender Processing Services. It hasn’t gotten all that much attention (unless you are on the LPS deathwatch beat) because to most, it looks like yet another beauty contest between Cinderella’s two ugly sisters. AHMSI is a servicer (the successor to Option One, and it may also still have some Ameriquest servicing).
    AHMSI is mad at LPS because LPS was supposed to prepare certain types of documentation AHMSI used in foreclosures. AHMSI authorized the use of certain designated staffers signing with the authority of AHSI (what we call robosinging, since the people signing these documents didn’t have personal knowledge, which is required if any of the documents were affidavits). But it did not authorize the use of surrogate signers, which were (I kid you not) people hired to forge the signatures of robosigners. The lawsuit rather matter of factly makes a stunning admission… [read more]
    Fraudclosure: MERS Case Filed With Supreme Court
    Before readers get worried by virtue of the headline that the Supreme Court will use its magic legal wand to make the dubious MERS mortgage registry system viable, consider the following:
    1. The Supreme Court hears only a very small portion of the cases filed with it, and is less likely to take one with these demographics (filed by a private party, and an appeal out of a state court system, as opposed to Federal court). This case, Gomes v. Countywide, was decided against the plaintiff in lower and appellate court and the California state supreme court declined to hear it
    2. If MERS or the various servicers who have had foreclosures overturned based on challenges to MERS thought they’d get a sympathetic hearing at the Supreme Court, they probably would have filed some time ago. MERS have apparently been settling cases rather than pursue ones where it though the judge would issue an unfavorable precedent
    3. The case in question, from what the experts I consulted with and I can tell, is not the sort the Supreme Court would intervene in based on the issue raised, which is due process (14th Amendment). But none of us have seen the underlying lower and appellate court cases, and the summaries we’ve seen are unusually unclear as to what the legal argument is. [read more]
    Iowa Says State AG Accord Won’t Release Banks From Liability
    The 50-state attorney general group investigating mortgage foreclosure practices won’t release banks from all civil, or any criminal, liability in a settlement, Iowa Attorney General Tom Miller said. [read more]
    Fed Launches New Formal Enforcement Action Against Goldman Sachs To Review Foreclosure Practices
    The Federal Reserve Board has just launched a formal enforcement action against Goldman Sachs related to Litton Loan Services. Litton Loan is the nightmare-ridden mortgage servicing unit, a subsidiary of Goldman, that Goldman has been trying to sell for months. They penned a deal to recently, but the Fed stepped in and required Goldman to end robo-signing taking place at the unit before the sale could be completed. Sounds like this enforcement action is an extension of that requirement. [read more]
    Goldman Sachs, Firms Agree With Regulator To End ‘Robo-Signing’ Foreclosure Practices
    Goldman Sachs and two other firms have agreed with the New York banking regulator to end the practice known as robo-signing, in which bank employees signed foreclosure documents without reviewing case files as required by law, the Wall Street Journal said. In an agreement with New York’s financial-services superintendent, Goldman, its Litton Loan Servicing unit and Ocwen Financial Corp also agreed to scrutinize loan files for evidence they mishandled borrowers’ paperwork and to cut mortgage payments for some New York homeowners, the Journal said. [read more]
    Banks still robo-signing, filing doubtful foreclosure documents
    Reuters has found that some of the biggest U.S. banks and other "loan servicers" continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures. In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts. Reuters also identified at least six "robo-signers," individuals who in recent months have each signed thousands of mortgage assignments — legal documents which pinpoint ownership of a property. These same individuals have been identified — in depositions, court testimony or court rulings — as previously having signed vast numbers of foreclosure documents that they never read or checked. [read more]
    JPMorgan fined for contravening Iran, Cuba sanctions
    JPMorgan Chase Bank has been fined $88.3 million for contravening US sanctions against regimes in Iran, Cuba and Sudan, and the former Liberian government, the US Treasury Department announced Thursday. The Treasury said that the bank had engaged in a number of "egregious" financial transfers, loans and other facilities involving those countries but, in announcing a settlement with the bank, said they were "apparent" violations of various sanctions regulations. [read more]
    This Is Considered Punishment? The Federal Reserve Wells Fargo Farce
    What made the news surprising, of course, was that the Federal Reserve has rarely, if ever, taken action against a bank for making predatory loans. Alan Greenspan, the former Fed chairman, didn’t believe in regulation and turned a blind eye to subprime abuses. His successor, Ben Bernanke, is not the ideologue that Greenspan is, but, as an institution, the Fed prefers to coddle banks rather than punish them.
    That the Fed would crack down on Wells Fargo would seem to suggest a long-overdue awakening. Yet, for anyone still hoping for justice in the wake of the financial crisis, the news was hardly encouraging. First, the Fed did not force Wells Fargo to admit guilt — and even let the company issue a press release blaming its wrongdoing on a “relatively small group.”
    The $85 million fine was a joke; in just the last quarter, Wells Fargo’s revenues exceeded $20 billion. And compensating borrowers isn’t going to hurt much either. By my calculation, it won’t top $20 million. [read more]
    Exclusive: Regulators seek high-frequency trading secrets
    U.S. securities regulators have taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes. The requests for proprietary code and algorithm parameters by the Financial Industry Regulatory Authority (FINRA), a Wall Street brokerage regulator, are part of investigations into suspicious market activity, said Tom Gira, executive vice president of FINRA’s market regulation unit. [read more]
    And here’s part of the Collapse Roundup I wrote on August 25th, referenced in the beginning of this report – as you will see, I would probably make a lot more money as an investment adviser:
    Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, It’s A “Bloodbath” As Wall Street’s Crimes Blow Up In Their Face
    Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, Banking Cartel's Crimes Blowing Up In Their FaceTime to put your Big Bank shorts on! Get ready for arun
    The chickens are coming home to roost. Reality is catching up with the market riggers (Fed, ECB, PPT, CIA) and the “too big to fail” banks are getting whacked. Trillions of dollars in bailouts and legalized (FASB) accounting fraud cannot save these insolvent zombie banks any longer. The Grim Reaper is on the horizon and his sickle will do what paid off politicians won’t, cut ‘em down to size. So get your silver stakeready, time to plunge it into their vampire squid hearts….
    What about Warren Buffet? He saved Goldman Sachs with a bailout in 2008. Can he save Bank of America?…
    Warren’s bailout will help BofA over the short run, but $5 billion is just a drop in the bucket when it comes to their problems. The only thing his $5 billion will accomplish is a temporary run up in stock value so everyone who has been killed on the plummeting stock price can then jump out without complete loss….
    Trouble a-comin’…
    Goldman Sachs TANKS After CEO Lloyd Blankfein Hires Famous Defense Lawyer
    Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, Banking Cartel's Crimes Blowing Up In Their FaceIs the Goldman Sachs CEO facing a new lawsuit?
    The market seems to think so. Goldman Sachs just tanked in minutes before the close after news that Lloyd Blankfein hired a lawyer famous for defending vilified execs. It’s back up a bit since dropping over 5%, but the news is still concerning.
    It’s unclear whether the lawyer is for him, Goldman Sachs, or both, but Goldman Sachs’s CEO Lloyd Blankfein hired Reid Weingarten, a high profile defense attorney who says “I’m used to these monstrously difficult cases where everybody hates my clients,” according to Reuters.
    Reuters says the hire might have something to do with accusations of Blankfein’s committing perjury. Or something else:
    One former federal prosecutor, who was not authorized to speak publicly, said Blankfein may have hired outside counsel after receiving a request from investigators for documents or other information. [read full report]
    Speaking of hiring lawyers…
    The Global Banking Cartel’s Crimes Are Being Exposed Left & Right…
    Blowing Up In Their Face… Prepare for Shock & Awe…
    BOOM! Moody’s exposed:
    MOODY’S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts
    A former senior analyst at Moody’s has gone public with his story of how one of the country’s most important rating agencies is corrupted to the core.
    The analyst, William J. Harrington, worked for Moody’s for 11 years, from 1999 until his resignation last year.
    From 2006 to 2010, Harrington was a Senior Vice President in the derivative products group, which was responsible for producing many of the disastrous ratings Moody’s issued during the housing bubble.
    Harrington has made his story public in the form of a 78-page “comment” to the SEC’s proposed rules about rating agency reform….
    Here are some key points:
    * Moody’s ratings often do not reflect its analysts’ private conclusions. Instead, rating committees privately conclude that certain securities deserve certain ratings–but then vote with management to give the securities the higher ratings that issuer clients want.
    * Moody’s management and “compliance” officers do everything possible to make issuer clients happy–and they view analysts who do not do the same as “troublesome.” Management employs a variety of tactics to transform these troublesome analysts into “pliant corporate citizens” who have Moody’s best interests at heart.
    * Moody’s product managers participate in–and vote on–ratings decisions. These product managers are the same people who are directly responsible for keeping clients happy and growing Moody’s business.
    * At least one senior executive lied under oath at the hearings into rating agency conduct. Another executive, who Harrington says exemplified management’s emphasis on giving issuers what they wanted, skipped the hearings altogether. [read full report]
    BOOM! The SEC Caught Covering Up Wall Street Crimes:
    Matt Taibbi Exposes How SEC Shredded Thousands of Investigations
    An explosive new report in Rolling Stone magazine exposes how the U.S. Securities and Exchange Commission destroyed records of thousands of investigations, whitewashing the files of some of the nation’s largest banks and hedge funds, including AIG, Wells Fargo, Lehman Brothers, Goldman Sachs, Bank of America and top Wall Street broker Bernard Madoff. Last week, Republican Sen. Chuck Grassley of Iowa said an agency whistleblower had sent him a letter detailing the unlawful destruction of records detailing more than 9,000 information investigations. We speak with Matt Taibbi, the political reporter for Rolling Stone magazine who broke this story in his latest article….
    KA-BOOM! The Fed And All Their Crony-Capitalist Cartel Members Exposed, Yet Again:
    Wall Street Pentagon Papers Part III – Are The Federal Reserve’s Crimes Still Too Big To Comprehend?
    Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, Banking Cartel's Crimes Blowing Up In Their FaceAnother day, another trillion plus in secret Federal Reserve “bailouts” revealed. Bloomberg News exposes this latest Fed “deal” after winning a long Freedom of Information Act (FOIA) legal battle to get the details on what was done with the American people’s money. Their report runs with an AmpedStatus style headline: “Wall Street Aristocracy Got $1.2 Trillion From Fed.”
    The aristocracy is alive and well… thanks to the Fed, of course.
    Keep in mind, this $1.2 trillion is in addition to the $16 trillion the Government Accountability Office (GAO) audit revealed and the over $2 trillion in Quantitative Easing the Fed dished out, not to mention the now continued promise of the Zero Interest Rate Policy (ZIRP). This is also separate from the $700 billion TARP program that Congress approved. This is yet another unknown secret program, throwing another mere $1.2 trillion in public money at the Wall Street elite (global banking cartel), just being revealed now.
    Those of us paying attention over the past three years have had Fed crony-capitalism on steroids fatigue for awhile now. Nonetheless, this is deja vu all over again as another mindbogglingly huge story that must be covered comes to light.
    Here are the details of this latest revelation:
    Speaking of the $16 trillion GAO audit…
    BOOM! GAO audit exposed, missing some vital details:
    More on how the GAO’s Fed audit failed to disclose some dirty secrets about BlackRock and JP Morgan
    In its review of the Fed’s outsourcing practices, it failed to mention the most damaging and suspicious sole-source (no bid) contract awarded to BlackRock, which was for handling the New York Fed’s toxic Bear Stearns portfolio, otherwise known as Maiden Lane. This contract would generate $108,000,000 in fees and was one of the largest awarded during the bailout period, but it might also have saved JP Morgan $1.1 billion in losses from its Bear Stearns acquisition….
    Also, BlackRock was also one of the managers of the NY Fed’s separate $1.25 trillion MBS purchase program as part of QE1. Contrary to the lie on the NY Fed’s webpage (that the MBS auctions were conducted via competitive bidding), the NY Fed’s own purchasing manager, Brian Sack, admitted in a paper that, “the MBS purchases were arranged with primary dealer counterparties directly, [and] there was no auction mechanism to provide a measure of market supply.”
    Putting it all together, it looks like Jamie Dimon signed off on hiring BlackRock for no justifiable reason to trade the very Maiden Lane portfolio that could have caused his bank, JP Morgan, to lose up to $1.1 billion. And, it was entirely possible that BlackRock saved the portfolio by trading the MBS portion of ML with the New York Fed directly as QE1 was underway. [read full report]
    BOOM! Bear Stearns exposed:
    Report Says Bear Stearns Executives Sold Illegal RMBS and Covered It Up
    Former back office employees from Bear Stearns are coming out of the woodwork to explain how Tom Marano’s mortgage group cheated their own clients out of billions. This week I reported at The Distressed Debt Report, EMC insiders say they were told to make up the classification for whole loans, packaged into mortgage securities, to get them switched out of the trust. By classifying the loans as ‘prepaid’ or having ‘subsequent recoveries’ Bear employees were able to fool the trustee into giving them back loans they were not able to legally service. A move New York Attorney General Eric Schneiderman is actively investigating now.
    In my latest DealFlow story we hear from EMC staffers who describe how subprime loans, that would have been sold by Bear Stearns trader Jeff Verschleiser’s team, never had a proper servicing license in West Virginia when they were packaged into the residential mortgage backed security. In 2003 Bear/EMC put $100 million of subprime loans from West Virginia into a few RMBS transactions. EMC, the banks wholly owned mortgage servicing shop, would service all of Bear’s RMBS after they were sold.
    A year latter, when senior executies realized the mishap instead of Bear going out and informing their regulator and applying for a license, they orchestrated a cover up and even threaten EMC employees not to talk about it. [read full report]
    The big banks are getting lit up!
    You shall reap what you sow.
    Karma is a … bit@h. [read full report]
    Let’s end with this video. We need to keep in mind that the Federal Reserve has known about all of this criminal activity from the start. Yet, they have done everything they could, and are still trying, to keep this criminal operation up and running. As all these criminal banks begin to blow up, let’s not forget who their central bank is and what they have done to the American people.
    Cenk, take it away and drive the point home: