When pitching the Troubled Asset Relief Program (TARP), the Federal Reserve assured taxpayers and Congress that there would be transparency in the process. Again, the American taxpayers were lied to. In this recent article from Bloomberg, they explain that they have filed a federal complaint to get access to [...]
The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG - and their executives - as part of a broad look into possible mortgage fraud.
The mortgage fraud investigation totals 26 large financial institutions involved in subprime lending.
Original post blogged on b2evolution.
[...]Great article from The Big Picture about executive compensation of the failed banking institutions. Amazing how you can commit mortgage fraud and end up walking away with millions in severance pay.
• Lehman Brothers Chairman and CEO Richard Fuld Jr. made $34 million in 2007. Lehman (OTC:LEHMQ) filed for Chapter [...]
Looks like they may try addressing what they believe to be securities fraud in the bail out as well. I'd say they need to pick their battles.
U.S. lawmakers may seek to include commodity speculation limits in legislation designed to rescue banks from bad mortgage investments. Federal Reserve Chairman Ben [...]
First off, the problem with the bailout in general is that there is not a lack of buyers for these assets. There is a lack of buyers willing to pay more than the securities are worth. That is a key distinction to make because if the government is going [...]
There is no reason that tax payer money should be used to support money market funds. If they wanted higher returns from these types of funds they should be willing to accept that its possible for the value to decrease. This particular lawsuit is interesting in that it alleges [...]
More commentary on the proposed bailout from the NY Times...
“This administration is asking for a $700 billion blank check to be put in the hands of Henry Paulson, a guy who totally missed this, and has been wrong about almost everything,” said Dean Baker, co-director of the liberal Center [...]
Health care fraud had been alleged against licensed clinical social worker Rhonn Gilchrist and was under investigation by the Western New York Health Care Fraud Task Force.
He admitted from 2002 until 2007, he defrauded numerous insurers and the New York Workers’ Compensation system of $102,000 by engaging [...]
The U.S. Securities and Exchange Commission, seeking to jumpstart a hunt for suspected manipulation of financial stocks, will require hedge fund managers, brokerages and institutional investors to describe under oath their bets on the firms.
``Abusive short selling, market manipulation and false rumor mongering for profit by any entity [...]
Red flag #1. Conversion rate plummets
One of the biggest indicators of fraudulent clicks is a nose-diving conversion rate. A sudden, significant drop means that you’re getting a lot more clicks that are not converting.
Red flag #2. No conversions from a site
Once you can see each click’s referring URL, you’ll [...]
From the Big Picture...
During the day, I had an interesting phone conversation with Joe Besecker of Emerald Asset Management.
And from what he was seeing and hearing about in terms of order flow, the vast majority of the financial short selling the past week or so were being done [...]
"I think we need to create an institution or a mechanism of a super-trustee to handle incredibly large institutions which may be allowed to fail and how those assets get managed and handled in an expeditious way," Rep. Paul Kanjorski (D-Pa.) said Tuesday. "If we don't do that, we'll [...]
I could think of a few things that were excluded but overall a good general timeline. For one, how about the acquisition of the largest subprime lender, Countrywide, by Bank of America in January 2008. Our the downgrades (and near failure) of the monoline insurers like Ambac, MBIA, etc. [...]
What happened to the invisible hand of the market?!?! Changes the rules during the middle of this mess destroys investor confidence, this will do much more harm than it will help.
As a result, options market makers will be treated in the same way as all other market participants, and [...]
I can't believe it, after the Federal Reserve this week let Lehman Brothers enter into bankruptcy they have reversed course and have now bailed out AIG. This morning that made it clear that AIG should not rely upon the Federal Reserve to bail them out and should [...]
Although maybe not quite E-commerce fraud, it seems pretty suspicious that they avoided European markets because of less regulatory scrutiny. Check out what the LA Times has to say...
The company had hoped to avoid a European review by limiting the ad deal to the United States and Canada, [...]
More on stock option backdating from the LA Times...
"Karatz improperly increased his compensation by millions of dollars without telling KB Home shareholders," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement.
He will pay about $6.7 million in compensation and interest to KB Home and a $480,000 [...]
Major credit ratings agencies downgraded the American International Group late Monday, worsening its financial health, as Federal Reserve officials and two leading investment banks were in urgent talks to put together a $75 billion line of credit to stave off a crisis at the company.
...
“It’s not just [...]
``You look at all the major players in the option ARM market and they're all on their knees,'' said Andrew Laperriere, Washington-based managing director at the International Strategy & Investment Group research firm. ``These companies have changed their stance on these loans dramatically. They were defending them as late [...]
``Buyers have gotten their hands scorched,'' said Michael Donelan, who manages $2 billion of bonds at Ryan Labs Inc., a money management and research firm in New York. He isn't interested in buying preferreds from a financial institution. ``The demand for capital is going to be so huge. We're [...]
NY Times reports more on the auction rate securities fallout...
In a letter to the association last month, Benjamin M. Lawsky, a deputy counsel to Mr. Cuomo, said that the retail brokerages had more knowledge into the troubles buffeting the auction-rate securities market than their clients, and so should be [...]
In a study put out by Navigant Consulting subprime litigation has exceeded the cases filed during the Savings and Loan Crisis (559 cases). Since the start of 2007, there have been over 600 subprime related cases filed in federal court.
Housing Wire reports...
Securities cases overtook borrower class actions for [...]
``We find it way out of line that these two executives will be rewarded with millions of dollars in bonus compensation at a time when taxpayer dollars may have to be deployed to cover any financial losses caused by errors in management,'' Democrats Charles Schumer of New York and [...]
"Julian Tzolov is innocent of these charges," Kenneth Breen, the attorney, said. "We're going to show that these were sophisticated investors who were Mr. Tzolov's clients and that they knew exactly what their investments were," he added. "Julian Tzolov should not be blamed for an unforeseen market failure."
Mr. Tzolov, [...]
Under the takeover, the government replaced the companies' chief executives and shifted management control to their regulator, the Federal Housing Finance Agency, or FHFA. The government pledged to provide as much as $200 billion to help both firms ride through their expected mortgage-related losses. Mr. Paulson outlined his desire [...]
Lawmakers, including Senators Jack Reed, Christopher Dodd and Charles Schumer, already have questioned the agency's handling of the credit crisis. Reed, a Rhode Island Democrat, in April said the agency appeared to have been ``caught off-guard'' by Bear Stearns Cos.'s weakness as the firm collapsed in March. Schumer, at [...]
Alan Fishman has been appointed the new CEO of Washington Mutual Bank, which is the largest US savings and loan institution. Fishman has seven years of experience as CEO at Sovereign Bank.
The New York Times reports
In the second quarter, Washington Mutual posted its biggest loss ever, which sent shares [...]
Another investigation into the Auction Rate Securities practice over at Bank of America. Bloomberg reports that 8 executives have become a part of New York State Attorney General Cuomo's investigation of the Auction Rate Securities market (totaling over $330 billion before the collapse in February).
8 of the Largest Auction [...]
Subprime Mortgage Credit Derivatives by Frank J. Fabozzi
Subprime mortgage bonds and ABS CDOs have become the biggest credit and risk management failure in history. Their story is one of how a small, inconsequential part of [...]
That would make it $15 billion on the year and $27 billion over a two year period. All I can say is WOW...
[...]We've already seen a handful of NY State Supreme Court subprime related cases, it appears they are only the start of it.
[...]“Capitalism without failure is like Christianity without hell,” Mr. Buffett said. He added that “lenders and investors who were dumb enough to deal in subprime mortgages should not receive any special help,” but if homeowners were deceived about the terms of an adjustable mortgage, they should be helped.
I completely [...]
Click Forensics reports that click fraud is on the rise in Q1 2008 over the prior year period. At 16.3% in Q1 2008 it is higher than the first quarter 2007 click fraud rate of 14.8%. Even more alarming, Click Forensics reports
[t]he fraud rate on third-party sites, [...]
[...][A]ccording to etiolated.org, a consumer-advocacy group, only 21 percent of "data-loss" cases in our nation since 2000 have come from the federal and state government, with 40 percent traced to private businesses and 39 percent from educational, medical and nonprofit sources.
Some view the moves by the Bush Administration to increase the limits of guarantees by the Federal Housing Administration as not enough. Sheila Blair from the Federal Deposit Insurance Corp. (FDIC) suggests that:
Congress should initiate a publicly funded loan program under which the Treasury Department would make loans to [...]
Falling home prices have made an increasing number of U.S. homeowners more vulnerable to default, they said. Nearly a third of subprime borrowers owed more than their home was worth at the end of last year, and that figure will double to 63 percent in 2009
It is interesting that [...]
[burnickblog.sovereignsociety.com]
Here's another perspective on the Bear Stearns issue with the SEC. The primary focus on this is how the SEC had acknowledged Bear Stearns shady pricing methods for their CDOs but did nothing to stop them until the bail out.
On a personal note, I have large issue with [...]
I found this article interesting in that it points out how difficult it will be to get these executives for fraud without an email basically saying that they willfully provided valuations despite having knowledge that they were incorrect. What the article does not address is whether the action would [...]
Angry institutional investors of firms such as Morgan Stanley and Washington Mutual have become involved in changing the face of the board of directors. Shareholder activists such as Change to Win have campaigned against directors they believe would should no longer be in control. This type of active investing [...]
Navigant Consulting released today that in the first quarter of 2008 there were 170 cases filed. Of the 170 cases filed, borrower class actions and securities cases dominated the subprime filings with 79 and 44 cases respectively. Based on the explosion of federal subprime filings, Navigant expects that the [...]
The nation's top economic policy makers plan to release today their broadest blueprint yet for avoiding a recurrence of the credit crunch now threatening the economy.
Their recommendations extend to nearly every niche in the credit markets -- from mortgage brokers to the Wall Street firms that [...]
"The consumer magazine Which? warns that people are effectively giving away PIN codes and passwords by posting just a handful of personal details on the sites, including their date of birth, contact details and home address."
Thats a pretty good point that I'm sure many people often overlook. It is [...]
"If convicted, all five could face a maximum sentence of 20 years for wire fraud, five years for conspiracy and up to $500,000 in fines."
Looks like the punishment is starting to fit the crime.
[...]Borrowers, investors and other plaintiffs filed 278 civil lawsuits in federal courts related to subprime lending in 2007, and the trend is expected to continue this year, according to the report released on Thursday.
Last year's subprime tally was equal to about half of the 559 legal actions brought over [...]
JP Morgan Chase reports $1.3 billion in markdowns on subprime positions and an rapid increase in higher credit costs. Following Citigroup's $18.1 billion subprime markdown it appears that JP Morgan's writedown will be well recevied by the market.
[...]I recently came up with an idea to change the focus of this site to be an open source fraud software development project and it got me looking around at what is already out there. Risk IDS provides fraud prevention software specifically related to credit card fraud and other banking [...]
