from-the-banks

NY AG Wants Mortgage Records From 3 Major Banks

by AP on May 18, 2011

Huffington Post…

ALBANY, N.Y. — New York Attorney General Eric Schneiderman is seeking records from three major Wall Street banks as part of a broad investigation into the mortgage crisis that fueled the recession, an official familiar with the issue said Tuesday. Schneiderman is meeting with representatives of the Bank of America, Morgan Stanley and Goldman Sachs, according to the official, who spoke to The Associated Press on condition of anonymity. Those meetings are expected to focus on mortgage securities operations during the boom on Wall Street that ultimately cost banks billions of dollars. The official said securitization of those mortgages would be an area Schneiderman will examine. Packaging mortgages into securities that investors could buy might have concealed risky loans, something critics on Wall Street said was at the center of the mortgage crisis. The official spoke on the condition of anonymity because of the sensitivity of the continuing investigation. There was no immediate comment from the banks. There also was no immediate response to messages left at Schneiderman’s offices about the records search, which was first reported by The New York Times and the Wall Street Journal. The official told the AP that the records search is part of Schneiderman’s review of factors that led to the 2008 financial crisis. Back then, banks sold bundles of risky mortgages with teaser rates that increased after only a few years. Many borrowers ended up defaulting on the loans when the interest rates spiked. As a result, the value of mortgage securities plummeted. Experts in the area have since said that banks had very little of their own money invested in those mortgages. That led banks to take greater risks, which contributed to the fiscal crisis. ___ Associated Press Business Writer Pallavi Gogoi contributed to this report from New York City.

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NY AG Wants Mortgage Records From 3 Major Banks

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Jonathan Weil: Saving Americans Requires Sticking It To Them

by Mother Jones on September 22, 2010

The banks were saved by the American people. Now who will save the people from the banks?

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Jonathan Weil: Saving Americans Requires Sticking It To Them

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Sen. Carl Levin: Credit Rating Agencies Escaping Reform In Latest Bill

April 23, 2010

WASHINGTON — Former credit rating industry executives told a Senate panel Friday that competitive pressures and poor internal communications led their analysts to award safe ratings to risky investments. The highly rated investments turned out to be toxic, contributing to the financial crisis. The chairman of a panel investigating the industry proposed Friday that Congress should address a conflict of interest that arises from credit rating agencies being paid by the same banks whose bonds they rate. “It’s like one of the parties in court paying the judge’s salary,” said Sen. Carl Levin, D-Mich. He said the financial regulatory overhaul the Senate will take up Monday should include a solution to that problem. Levin was chairing a hearing of the Permanent Subcommittee on Investigations, which has been investigating the causes of the financial crisis. He said credit rating agencies gave high ratings to risky investments before the financial crisis in part because they were competing for business from the banks. Frank Raiter, a former managing director for Standard & Poor, said there was a “disconnect” between senior managers and the analytical managers responsible for assigning bond ratings. He said that, along with weak government regulation, led agencies to award high ratings to risky investments. Raiter said management placed increasing pressure on analysts to earn fees by attracting business from banks. He said many former colleagues had quit after clashing with management. When analysts “show the benefits of higher-quality rating criteria, and they come back and say, ‘Revenues will go down,’ you either (drop the issue and) continue to work there, or you quit,” said former Standard & Poor managing director Frank Raiter. Raiter also said weak government regulation led agencies to award high ratings to risky investments. The Securities and Exchange Commission is prohibited by law from overseeing credit rating agencies. The agencies have escaped legal liability by claiming their ratings are protected by the First Amendment right to free speech.

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Ireland’s `Worst Fears Surpassed’ as Bad Bank Leaves $42.7 Billion Hole

March 30, 2010

By Dara Doyle and Colm Heatley March 30 (Bloomberg) — Ireland’s banks may need at least 31.8 billion euros ($42.7 billion) in new capital after a real- estate slump left them crippled by mounting bad loans. The fundraising requirement was announced after the National Asset Management Agency, the country’s so-called bad bank, said it will apply an average discount of 47 percent on the first block of loans it is taking over from lenders and the country’s financial regulator set new capital targets. The discount compares with the government’s initial 30 percent estimate. “Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin today. “The detailed information that has emerged from the banks in the course of the process is truly shocking.” Allied Irish Banks Plc needs to raise 7.4 billion euros, while Bank of Ireland Plc will need 2.66 billion euros. Anglo Irish Bank Corp. , nationalized last year, may need as much 18.3 billion euros, Lenihan said. Lenders must have a core tier 1 capital ratio of 8 percent and an equity core tier 1 capital of 7 percent by the end of 2010, according to the regulator. They must “set out plans to ensure that capital is in place by the end of 2010,” it said. The regulator has given Ireland’s banks 30 days to submit recapitalization plans, which can involve asset sales and the issue of shares. To contact the reporter on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net ; Colm Heatley in Belfast at cheatley@bloomberg.net

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So Much For That Brown Bull Market

January 20, 2010

It seems like only yesterday that CNBC stock market comedian Jim Cramer was waggling his pom-poms and telling investors that Scott Brown’s successful election was going to lead to a “gigantic rally” in the market : “I think investors who are nervous about the dictatorship of the Pelosi proletariat will feel at ease, and we could have a gigantic rally off a Coakley loss and a Brown win,” said Cramer on Friday’s show, anticipating Brown’s win. “It will be a signal that a more pro-business, less pro-labor government could be in front of us… Pelosi politburo emasculation! Everything from the banks, which are usually in the Democrats’ penalty box, or the oils which are despised by this administration for being carbon, could be propelled dramatically higher all of this Tuesday night.” As Oliver Willis points out , no : Investors must be wondering today why Senator-elect Scott Brown has failed to deliver on the promises that Jim Cramer made on his behalf. I’m going to be OK, though, because last week I directed my broker to invest heavily in complex derivatives based on the prospective value of the dowries that would accompany Brown’s daughters . [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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So Much For That Brown Bull Market

January 20, 2010

It seems like only yesterday that CNBC stock market comedian Jim Cramer was waggling his pom-poms and telling investors that Scott Brown’s successful election was going to lead to a “gigantic rally” in the market : “I think investors who are nervous about the dictatorship of the Pelosi proletariat will feel at ease, and we could have a gigantic rally off a Coakley loss and a Brown win,” said Cramer on Friday’s show, anticipating Brown’s win. “It will be a signal that a more pro-business, less pro-labor government could be in front of us… Pelosi politburo emasculation! Everything from the banks, which are usually in the Democrats’ penalty box, or the oils which are despised by this administration for being carbon, could be propelled dramatically higher all of this Tuesday night.” As Oliver Willis points out , no : Investors must be wondering today why Senator-elect Scott Brown has failed to deliver on the promises that Jim Cramer made on his behalf. I’m going to be OK, though, because last week I directed my broker to invest heavily in complex derivatives based on the prospective value of the dowries that would accompany Brown’s daughters . [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Ben Arnon: Do American Taxpayers Receive Dividends on Repaid TARP Funds?

December 21, 2009

In no way do I profess to be an expert on the topic of TARP and government bailouts. For that matter, I don’t think many people in the entire country, even leading economists and political scientists, can make that claim. I offer this post merely as an observation about a question I recently had. I diligently followed the TARP debate and happenings early on. However, at this point there have been so many versions, revisions, and debates about the TARP program that I have lost track. I do know that recently banks have begun repaying TARP funds to the federal government. My limited understanding of the TARP program is that the funds used to purchase troubled assets from the banks is money borrowed from the American taxpayers. I believe there is a recoupment clause written into the TARP program legislation. How exactly does TARP recoupment work? Does it only get repaid to taxpayers once all TARP funds have been repaid to the federal government? A claim on Wikipedia states that TARP funds will be repaid after 5 years . I often hear people – particularly Republicans – talk angrily about how much money the government is spending on the bailout programs. However, I rarely hear people describe these spending programs as loans made to banks by the American taxpayers. Viewed through this lens, the question people should be debating is what interest rate they will see on their return once TARP funds are repaid by the banks, and when exactly they will receive their dividends. As for who pays the interest on the TARP bailout loans, it should be the banks. It is clear from observing the healthcare debate that the federal government is currently catching a lot of heat about perceived overspending — not just from Republicans but also from independents and conservative Democrats. Why doesn’t the government re-structure the TARP recoupment clause so that American taxpayers receive repayments sooner than 5+ years down the road? This would help more people understand the difference between spending and loaning. USAA insurance company has an interesting model that seems like it would make sense for the repayment of TARP monies to taxpayers. Every year, if USAA’s total capital exceeds its current and projected requirements, the Board of Directors authorizes a Subscriber’s Account distribution. This year, USAA returned $490 million in distributions and dividends to its membership . Why not use this model for TARP recoupment so that all monies repaid in 2009 are repaid to American taxpayers in the form of dividend checks in 2010? And onward for 2011, 2012, etc. until all TARP funds have been repaid to the American taxpayers with interest paid by the banks. Please share your thoughts about this topic by writing a comment to this blog post below.

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K1 Fund Hires Liquidator Following Kiener’s Arrest, Director’s Letter Says

November 10, 2009

By Karin Matussek Nov. 10 (Bloomberg) — K1 Invest Ltd., a fund of K1 Group based in the British Virgin Island, hired Grant Thornton as liquidator, according to a letter by K1 Invest’s director. K1 Invest decided to liquidate after the arrest of K1 Group founder Helmut Kiener , K1 Invest’s director F.I.S.I. Financial Services Ltd. said in the letter addressed to its distribution partners. David Zuendorf, managing director of Treukapital AG, the administrator of K1 Invest and K1 Global, confirmed the letter’s authenticity by telephone. “The director has determined that a voluntary liquidation is in the best interest of the company and the investors,” FISI wrote in the letter dated today. The company’s assets have been frozen and K1 Invest can’t pay its debts on time, the letter said. K1 Group is at the center an international criminal probe after saddling banks, including Barclays Plc, JPMorgan Chase & Co. , and BNP Paribas SA , with about $400 million of losses, people with knowledge of the probe said. European and U.S. authorities are examining whether K1, which manages funds of hedge funds, deceived the banks when borrowing money to inflate investments. K1 Invest and K1 Global Ltd. are two funds of the group mentioned in an arrest warrant for Kiener. Kiener may have illicitly used money he received from the banks, according to the warrant. Kiener has denied the allegations. K1 Global is still pondering on whether to liquidate, Zuendorf said. To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net .

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