B12 Solipsism

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Archive for the ‘banking’ tag

Debit Fee Cut Is Rare Loss for Banks

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Poor poor lil’ banking corporations, might have to cut back on their bonuses. Or more likely, find other ways to screw their customers in the name of profits.

National Bank of Pakistan

Retailers have begged Congress for years, in vain, to limit the fees they must pay to banks when customers swipe credit or debit cards. Bills never reached a vote. Amendments were left on the table. The Senate did not even grant the courtesy of a committee hearing.

That long record of futility ended in a landslide Thursday night. Sixty-four senators, including 17 Republicans, agreed to impose price controls on debit transactions over the furious objections of the beleaguered banking industry.

The amendment to the Senate’s sweeping financial legislation could save billions of dollars for family restaurants and dry cleaners, Wal-Mart and Amazon.com, and every other business whose customers increasingly pay with debit cards. It does not address credit card fees directly.

Consumers also could save money, particularly at businesses like grocery stores that compete on price. But some experts warned that lower profit margins could lead banks to curtail bank card reward programs.

The Senate approved a series of amendments unfavorable to the banking industry over the last week, but this one was widely regarded as the most surprising. Meddling in dealings between businesses generally is anathema to Republicans and a relatively low priority for Democrats.

And this was not an easy vote. Lobbyists for the wounded but formidable banking industry made clear to some senators that this decision would affect future campaign donations, according to people who participated in those conversations.

But retailers mounted an unusually effective yearlong campaign to frame the issue as a chance for Congress to help small business. A leading trade group for chain retailers worked with small-business groups to make sure that every time a senator held a town hall meeting back home, a local business owner showed up to ask about card fees.

The industry also rode the support of Senator Richard J. Durbin, the Democratic whip, who wrote the amendment and pushed the sponsor of the banking overhaul bill, Senator Christopher J. Dodd of Connecticut, to allow a vote on the Senate floor.

(click to continue reading Debit Fee Cut Is Rare Loss for Largest U.S. Banks – NYTimes.com.)

 Did you catch this bit of anonymous sourcing?

But some experts warned that lower profit margins could lead banks to curtail bank card reward programs

Oh, noes! Profit margins might be reduced by 2%! Won’t somebody think of the children (of bankers)?

Written by Seth Anderson

May 15th, 2010 at 9:25 am

Posted in Business,politics

Tagged with ,

Ten Things You Don’t Know About the Goldman Sachs Case

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Barry Ritholtz is very confident that Goldman Sachs is either going to lose or settle and wants to educate interested non-lawyer observers1 about certain assumptions being promulgated that are not accurate.

Wheels grind exceedingly fine

8. The case looks thin: What we see in the complaint is the bare minimum the prosecutor has to reveal to make their case. What you don’t see are all the emails, depositions, interrogations, phone taps, etc. that the prosecutors know about and GS does not. During the litigation discovery process, this material slowly gets turned over (some is held back if there are other pending investigations into GS).

Going back to who the prosecutor in this case is: His legal reputation is he is very thorough, very precise, meticulous litigator. If he decided to recommend bringing a case against the biggest baddest investment house on Wall Street bank, I assure you he has a major arsenal of additional evidence you don’t know about. Yet.

Typically, at a certain point the lawyers will tell their client that the evidence is overwhelming and advise settling. That is around 6-12 months after the suit has begun.

9. This case is Political: I keep hearing that phrase, due to the SEC party vote. It is incorrect. What that means is the case is not political, it means it has been politicized as a defense tactic. There is a huge difference between the two.

[Click to continue reading 10 Things You Don’t Know (or were misinformed) About the GS Case | The Big Picture]

Hope Goldman loses their shirt, and pants on this and subsequent cases.

Footnotes:
  1. or whatever you would call folks like me, and you []

Written by Seth Anderson

April 26th, 2010 at 10:43 am

Posted in Business

Tagged with , , ,

Republicans Mindlessly Support Wall Street Criminals

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To the Republicans on the SEC, and elsewhere, corporate crime is a category that does not exist. Even crooks like Goldman Sachs predictably are supported by Republicans. Shameful.

Urban archeology SwankoPrint version

The Securities and Exchange Commission decided to sue Goldman Sachs Group Inc. over the objections of two Republican commissioners, suggesting an unusual split at the agency that could politicize one of its most prominent cases in years.

People familiar with the matter said the five-member commission held a lengthy meeting Wednesday to debate the civil-fraud charges against Goldman, and ultimately voted 3-2 in favor of pushing forward. The charges were filed Friday.

Normally the agency prefers to have unanimous support when bringing enforcement actions against the firms it regulates. Word of the SEC split could exacerbate partisan tensions in Washington over the Obama administration’s proposed financial-regulatory overhaul.

[Click to continue reading SEC Was Split Over Goldman Case – WSJ.com]

Fraud is partisan, apparently

On Tuesday, SEC Chairman Mary Schapiro is likely to get a grilling over the internal dissent when she appears before the House Financial Services Committee for scheduled testimony.

People familiar with the vote said Ms. Schapiro—a registered independent—joined two Democrats on the commission, Elisse Walter and Luis Aguilar, in supporting the fraud case against Goldman. The two Republican commissioners, Kathleen Casey and Troy Paredes, were opposed, they said.

Again, this sounds like whining to me, there are five members of the SEC for a reason, just like there are 12 jurors in a criminal case, and 9 Supreme Court justices, sometimes there are differences of opinion on important matters. Expecting that every decision is unanimous translates into Doing Nothing, and while that is the Republican mantra, the rest of us would like Wall Street to be reined in.

Written by Seth Anderson

April 20th, 2010 at 7:48 am

Goldman Whines It Was Blindsided by The Law

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Poor lil’ Goldman Sachs didn’t get a memo from the S.E.C. before the case went public. Of course, when the police arrest a serial killer they give at least 48 hours to the suspect so that the evidence can all be boxed up neatly. Right? I don’t care if this is common practice for Wall Street criminals, it shouldn’t be. I hope the Security and Exchange Commission has changed their modus operandus, and no longer is complicit with covering up financial malfeasance.

Funny also how the Republicans are all for law and order, when it applies to non-white collar crimes, but when their donor class is threatened, the tune changes.

crime plus 8 mailbox

Goldman Sachs Group Inc. officials said they knew as far back as August 2008 that regulators were examining controversial mortgage securities created by the firm but were stunned by the bombshell civil fraud suit lodged against it Friday, with most having learned about it from news reports.

Firms typically get a chance to settle such suits, but not in this case, Goldman said. The Wall Street giant said it was alerted to the probe in the summer of 2008 and was warned that it might face a suit in July 2009. It says it then responded in detail to the Securities Exchange Commission’s inquiry in September, but heard nothing back from the government until Friday’s unveiling of the civil suit. The SEC usually notifies firms ahead of a lawsuit as a courtesy to give them a chance for a last-ditch settlement or to prepare for the public fallout.

Lawsuits by the SEC are subject to a vote by the agency’s five commissioners, and the tally on the Goldman case will be closely watched in Washington, as the current commission is split along party lines—with two Republicans and two Democrats, plus one independent who was appointed by President Obama.

The way the SEC launched the suit “certainly doesn’t follow the spirit” or practice of the agency, said Paul Atkins, who served as a Republican SEC commissioner.

[Click to continue reading Goldman Contends It Was Blindsided by Lawsuit – WSJ.com]

Well, Paul Atkins is part of the problem then, isn’t he? If SEC commissioners aren’t interested in regulating Wall Street, they should go ahead and resign to get a job in a Wall Street bank.

Written by Seth Anderson

April 19th, 2010 at 9:44 am

Looters in Loafers

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Goldman Sachs, aka Gold Sacks, aka corporate criminals, are not having a good PR month. They are an easy target – so greedy, so arrogant that even their allies are keeping mum. Whether any real penalties will be levied against Goldman Sachs remains to be seen.

Financial Blues Brothers

Paul Krugman writes, in part:

Most discussion of the role of fraud in the crisis has focused on two forms of deception: predatory lending and misrepresentation of risks. Clearly, some borrowers were lured into taking out complex, expensive loans they didn’t understand — a process facilitated by Bush-era federal regulators, who both failed to curb abusive lending and prevented states from taking action on their own. And for the most part, subprime lenders didn’t hold on to the loans they made. Instead, they sold off the loans to investors, in some cases surely knowing that the potential for future losses was greater than the people buying those loans (or securities backed by the loans) realized.

What we’re now seeing are accusations of a third form of fraud.

We’ve known for some time that Goldman Sachs and other firms marketed mortgage-backed securities even as they sought to make profits by betting that such securities would plunge in value. This practice, however, while arguably reprehensible, wasn’t illegal. But now the S.E.C. is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure. That’s what I would call looting.

And Goldman isn’t the only financial firm accused of doing this. According to the Pulitzer-winning investigative journalism Web site ProPublica, several banks helped market designed-to-fail investments on behalf of the hedge fund Magnetar, which was betting on that failure.

So what role did fraud play in the financial crisis? Neither predatory lending nor the selling of mortgages on false pretenses caused the crisis. But they surely made it worse, both by helping to inflate the housing bubble and by creating a pool of assets guaranteed to turn into toxic waste once the bubble burst.

[Click to continue reading Op-Ed Columnist – Looters in Loafers – NYTimes.com]

Continuing to Talk

and the part that interests me, as a non-Wall Street banker, will the proposed financial reforms stop future meltdowns?

The obvious question is whether financial reform of the kind now being contemplated would have prevented some or all of the fraud that now seems to have flourished over the past decade. And the answer is yes.

For one thing, an independent consumer protection bureau could have helped limit predatory lending. Another provision in the proposed Senate bill, requiring that lenders retain 5 percent of the value of loans they make, would have limited the practice of making bad loans and quickly selling them off to unwary investors.

It’s less clear whether proposals for derivatives reform — which mainly involve requiring that financial instruments like credit default swaps be traded openly and transparently, like ordinary stocks and bonds — would have prevented the alleged abuses by Goldman (although they probably would have prevented the insurer A.I.G. from running wild and requiring a federal bailout).

Read the rest

Written by Seth Anderson

April 19th, 2010 at 6:57 am

Chase Happily Conducts War on Nature

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Banks are corporate villains, part the 3243rd.

Loneliness is an ATM

Unlike virtually all of its competitors, JPMorgan Chase steeled itself early for the collapse of the subprime market and emerged from the rubble of the global financial meltdown with both its balance sheet and reputation intact. But the storied firm stands alone among its Wall Street rivals in another area, too. JPMorgan backstops one of the most destructive mining practices in the world: mountaintop removal coal mining. And it continues to do so even as other major banks have cut ties to this practice.

“Chase is the single largest remaining player in this game,” says Scott Edwards, advocacy director for the Waterkeeper Alliance, an environmental advocacy group comprised of lawyers, scientists, and activists, among others. “They just absolutely refuse to take responsibility for their role in this absolutely devastating industry.”

Mountaintop removal (MTR) mining, focused in Appalachian states like West Virginia, Tennessee, and Kentucky, involves deforesting huge swaths of land and blasting the summits off of mountains to expose the black veins of coal underneath. The waste and rubble from the demolition is then dumped into nearby rivers and streams, burying local water sources in toxic byproducts, choking off tributaries that feed into larger rivers, and wiping out plants and wildlife, according to numerous scientific studies. Despite the mining industry’s claims, there are no successful ways to mitigate the effects of MTR, according to Margaret Palmer of the University of Maryland Center for Environmental Science. The effects on the nearby environment, she says, are long lasting and often irreversible.

[Click to continue reading JPMorgan’s War on Nature | Mother Jones]

Satanic Gift

Chase is happy to make some short-term profits at the expense of all our lives

Over the past 17 years, JPMorgan Chase has helped to underwrite nearly 20 bond or loan deals, worth a combined $8.5 trillion, for some of the biggest players in the MTR mining business, according to data from Bloomberg. Other large banks have either halted financing companies engaging in the practice outright or signaled their intent to do so. In December 2008, for instance, Bank of America publicly announced plans to “phase out financing of companies whose predominant method of extracting coal is through mountain top removal.” Wells Fargo has cut ties with coal giant Massey Energy. And a Credit Suisse official says the bank has a “global mining policy” that ensures “we explicitly do not finance the extraction of coal in a mountaintop removal setting.” But JPMorgan continues to back the practice.

By underwriting MTR, JPMorgan ties itself to some of the nation’s biggest polluters. Take Massey Energy, which leads the nation in MTR mining. In 2008, the company extracted more than 21 million tons of coal using mountaintop removal mining, according to opensourcecoal.org, an online database for coal production statistics. That same year, JPMorgan acted as lead manager on a $690 million bond offering by Massey, according to financial records.

Written by Seth Anderson

March 31st, 2010 at 8:59 am

Usually not a good sign to receive a letter from the FDIC

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Usually not a good sign to receive a letter from the FDIC
Usually not a good sign to receive a letter from the FDIC, originally uploaded by swanksalot.

My bank got eated!

Shot with my Hipstamatic for iPhone
Lens: Helga Viking
Film: Float
Flash: Off

decluttr

Saving account, I think it held something like $400. Guess my retirement plan is shot now. According to the letter, if I don’t take action in the next month, they will just send me a check for the full amount. Whoo hoo. Birthday is coming up, maybe I’ll spend it on an iPad.

Also, especially in the enlargement of this photo, my fingers look like elephant legs. I guess I’m not a young man anymore.

Written by swanksalot

March 16th, 2010 at 7:40 pm

Posted in Photography

Tagged with , , ,

Walk Away Guilt Free

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Walk away from your negative equity house. Wow, that’s some harsh advice. Luckily I’m not in this situation, but I know some people who are. As Brett Arends writes, the economy is amoral, banks are not your friends, why should you be theirs?

Can't Get Out of Here

Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.

No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family’s finances first.

How widespread is this? More than 11 million families are in “negative equity”—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That’s a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That’s true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.

[Click to continue reading ROI: When It’s OK to Walk Away From Your Home – WSJ.com]

If you are 25% underwater, your home would have to raise 33% in value before you break even. What’s the time frame of that? Will your home value increase 3% a year, every year? So when do the math to see when your equity is no longer “negative”, it isn’t pretty.

As far as legal consequences, there might not be any…

Are you worried about the legal consequences of walking away? Certainly, you should check with a lawyer before doing anything, but the consequences will probably be more limited than you think.

In “non-recourse” states, the mortgage lender may have no right to come after you for any shortfall. They may have no option but to take the home, sell it and eat the loss. According to a survey last year by the Federal Reserve Bank of Richmond, such states include negative-equity hot spots California and Arizona. Even in “recourse” states, lenders may have limited ability to come after you. Often they’d have to jump a lot of legal hurdles, and it’s just not worth it for them. They’re swamped with cases anyway.

“In my experience, right now they’re not really going after anyone,” says Richard Nemeth, a bankruptcy attorney in Cleveland. “They just don’t have the resources.”

So what are the non-recourse states, anyway?

Here’s one list, but I’d make sure to discuss options with a lawyer or two before doing any drastic deeds.

Alaska
Arizona
Arkansas
California
Colorado
District of Columbia (Washington DC)
Georgia
Hawaii
Idaho
Mississippi
Missouri
Montana (if non-judicial foreclosure is used)
Nevada – (lender can get a deficiency judgment)
New Hampshire
Oregon
Tennessee
Texas (lender can get a deficiency judgment)
Virginia
Washington
West Virginia

The following states allow non-judicial foreclosure:

Michigan
Minnesota
North Carolina
Rhode Island
South Dakota
Utah
Wyoming

[Click to continue reading WikiAnswers – Which states are non-recourse states for mortgage debt]

Written by Seth Anderson

February 26th, 2010 at 11:39 am

Posted in Business

Tagged with , ,

Short Selling and Wall Street

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Matt Taibbi points out a strange occurrence that happened in the last year that George Bush was in office

National Bank of Pakistan

Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — “like buying 1.7 million lottery tickets,” according to one financial analyst.

But what’s even crazier is that the bet paid.

At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.

The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…

Or what? That this was a brazen case of insider manipulation was so obvious that even Sen. Chris Dodd, chairman of the pillow-soft-touch Senate Banking Committee, couldn’t help but remark on it a few weeks later, when questioning Christopher Cox, the then-chief of the Securities and Exchange Commission. “I would hope that you’re looking at this,” Dodd said. “This kind of spike must have triggered some sort of bells and whistles at the SEC. This goes beyond rumors.”

Cox nodded sternly and promised, yes, he would look into it. What actually happened is another matter. Although the SEC issued more than 50 subpoenas to Wall Street firms, it has yet to identify the mysterious trader who somehow seemed to know in advance that one of the five largest investment banks in America was going to completely tank in a matter of days. “I’ve seen the SEC send agents overseas in a simple insider-trading case to investigate profits of maybe $2,000,” says Brent Baker, a former senior counsel for the commission. “But they did nothing to stop this.”

The SEC’s halfhearted oversight didn’t go unnoticed by the market. Six months after Bear was eaten by predators, virtually the same scenario repeated itself in the case of Lehman Brothers — another top-five investment bank that in September 2008 was vaporized in an obvious case of market manipulation. From there, the financial crisis was on, and the global economy went into full-blown crater mode.

[Click to continue reading Wall Street’s Naked Swindle : Rolling Stone]

Strange indeed. Strange also that the case hasn’t gotten as much news coverage as say Tiger Woods hitting a fire hydrant near his house.

Written by Seth Anderson

December 1st, 2009 at 2:07 pm

Posted in Business

Tagged with , , ,

Reading Around on August 25th through August 27th

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A few interesting links collected August 25th through August 27th:

  • Mac OS X Automation: Services Downloads – Download free services. Service collections are grouped by color. Some services will install required Automator actions and may require an adminstrator password to do so.”
  • One_Billion_Dollar_Daley_Chicago_Reader.jpg
  • Chicago vice – chicagotribune.com – Chicago Police Sgt. John F. Mangin displays a bushel of marijuana leaves and a jar of ground marijuana found Sept. 27, 1945, in a flat at 601 W. Madison St.. Six men were arrested in the narcotics bust, including a 60-year-old man that Mangin said was the first person he arrested when he joined the narcotics detail in 1931.

Written by swanksalot

August 27th, 2009 at 5:00 pm