Quants and market collapse

Love this video. I like the part where they talk about how the bankers tell them to change the model so the model reflects the risk the bankers want to have. Nothing like fudging the numbers. I believe that is called FRAUD!!!

Dilbert - on the take

A great Dilbert today. Nicely timed for all the bills coming off the hill.

Tim Ryan and the SIFMA role in bailouts

From reading the documentation the Judicial Watch obtained I wonder what role Tim Ryan from SIFMA.org played in the government funding of the 9 large banks. SIFMA (Securities Industry and Financial Markets Association) is a major lobby for the securities industry and large banks. Why or how they were involved with the federal infusion of money into the banks is beyond me. You can be sure that they DON'T have the taxpayers interest in mind.


We may never know the truth, as the government has redacted most of the documents released under the FOIA request:


I hope that these industry lobby groups are looked at during the coming years as we determine how we fell so low.

AIG forced by Federal Reserve to pay all CDS contracts at 100% - way above current value at the time of settlement.

I have yet to see this on the MSM – but Karl Denninger picked it up as covered on CSPAN.

AIGs CEO Liddy answered a question posed by Rep Kaptur:

"When The Fed set up Maiden Lane they took on responsibility for settlement of all of the CDS."

"The Federal Reserve decided we should pay 100 cents on the dollar",

Rep Issa expanded the truth of this in a followup - they could have purchased those contracts for far less in the open market at the time.

"AIG repaid counterparties one to one, dollar for dollar, but when it comes to teachers and firefighters in Ohio, [they got] zero," Kucinich said. "This is not acceptable, Mr. Liddy. I'm not going to let you get away with it."

Rep Issa called the three-member board from the NY Fed that oversees the government’s 80% ownership stake in AIG "an unconstitutional and unaccountable entity."

As Mr. Denninger says: “The bottom line is that the testimony was that The Fed decided to settle the contracts in a non-economic manner that resulted in screwing the taxpayer by transferring more than $100 billion dollars of taxpayer money out to these banks when the cash value at the time was FAR LESS.”

This is the ONLY reason that the large banks have reported large first quarter profits.

Mr. Denninger continues: “The allegation just made by Liddy is that Bernanke and The Fed literally stole $100 billion dollars from you and I by intentionally and wantonly overpaying on the settlement of these contracts!”

AIG is fighting all requests from the congress: "AIG has spent millions of dollars on high-priced P.R. firms and big-time lawyers to attack its critics," Rep. Towns said. "Clearly, AIG is making sure its lawyers and PR firms are watching its back."

The deceptive nature of Large Numbers

When President Obama recently announced that they would be finding savings of one hundred million here, one hundred million there to cut costs in the federal budget, many were impressed.

On the other hand, that is is like an average American family cutting two dollars out of their yearly budget - not very hard to do.

Institution: Average Family
Yearly Budget: $40,000.00
Yearly Savings: $2.00
% savings: 0.005%

Institution: Federal Government
Yearly Budget: $2,000,000,000,000.00
Yearly Savings: $100,000,000.00
% savings: 0.005%

When our government has it's budget in the Trillions of dollars, a hundred million dollars is NOTHING!

401K - tough times for those who need money now.

http://www.cbsnews.com/video/watch/?id=4955194n

These individuals were not helped in saming their money safely. Too many just put their money in and forgot about it, or trusted in the "diversify" and you will be safe. They would have been better if they had just put their money in a mattress!

Profit from our Sweat: exploiting the credit spread and fees

As the population works hard to stay afloat, scrimping away money into savings accounts paying just over ZERO percent, Wells Fargo comes out this morning and says they're going to make a "record" profit, claiming an expected 55 cents a share? WOW - where is this profit coming from? The cost for them to borrow money is near ZERO, this has allowed them to increase their profits per home loan from $1000 to $4000. Have credit card rates fallen? NO, I don't think so. Have auto loan rates fallen? No, I don't think so.

These banks are exploiting the population both by not passing on the full extent of saving in borrowing costs and by charging exorbitant fees on customers during times of turmoil.

Bank earnings have also been helped by the recent FASB Mark to Market changes. They will also book earnings from AIG counterparty payments that are coming from taxpayers.

Don't believe the banks are out of the water yet. This is going to be a multi year problem.