Lehman’s Auditor Goes Blind From the Cooking

See also:

Timmy-Gate: Did Geithner Help Hide Lehman’s Fraud? (Prof. L. Randall Wray)

Dylan Ratigan & Eliot Spitzer on The Lehman Brothers Report (MSNBC)

Report: JPMorgan, Citigroup helped trigger Lehman collapse (Telegraph)

Lehman bosses used accountancy gimmick to cover up debt (Times)

EXPLOSIVE: Lehman Corruption – Where Are The Cops? (Market Ticker)


March 18 (Bloomberg) — Ernst & Young LLP, the Big Four auditor that failed to keep Lehman Brothers from misleading investors about its financial condition, still can’t get its facts straight.

Last week, after Lehman’s bankruptcy examiner accused E&Y of malpractice in a report on the investment bank’s collapse, the accounting firm issued a brief statement standing by its audit work and offering up its best defense.

“After an exhaustive investigation, the examiner made no findings in his report that Lehman’s assets or liabilities were improperly valued or accounted for incorrectly in Lehman’s November 30, 2007, financial statements,” E&Y said, referring to the last fiscal year for which it performed a full-fledged audit of Lehman’s books.

Part of that statement is a half-truth. The other part stretches the truth past the breaking point.

It’s true the examiner, Anton Valukas, didn’t find that Lehman’s assets or liabilities were improperly valued at the end of 2007. One thing E&Y left out: Valukas did find evidence that Lehman used unreasonable asset values for the first and second quarters of 2008, including one investment he said was overvalued by as much as $500 million.

E&Y issued signed opinion letters for both quarters. Those letters, which Lehman disclosed in its financial filings, said the firm had reviewed Lehman’s financial statements and found nothing wrong.

‘False and Misleading’

Read moreLehman’s Auditor Goes Blind From the Cooking

Timmy-Gate: Did Geithner Help Hide Lehman’s Fraud?

See also:

Dylan Ratigan & Eliot Spitzer on The Lehman Brothers Report


Timmy-Gate Takes a Turn For The Worse: Did Geithner Help Lehman Hide Accounting Tricks?

geithner-cfr
Timothy Geithner at the Council on Foreign Relations

By L. Randall Wray

L. Randall Wray, Ph.D. is Professor of Economics at the University of Missouri-Kansas City, Research Director with the Center for Full Employment and Price Stability and Senior Research Scholar at The Levy Economics Institute. His research expertise is in: financial instability, macroeconomics, and full employment policy.

Just when you thought that nothing could stink more than Timothy Geithner’s handling of the AIG bailout, a new report details how Geithner’s New York Fed allowed Lehman Brothers to use an accounting gimmick to hide debt. The report, which runs to 2200 pages, was released by Anton Valukas, the court-appointed examiner. It actually makes the AIG bailout look tame by comparison. It is now crystal clear why Geithner’s Treasury as well as Bernanke’s Fed refuse to allow any light to shine on the massive cover-up underway.

Recall that the New York Fed arranged for AIG to pay one hundred cents on the dollar on bad debts to its counterparties-benefiting Goldman Sachs and a handful of other favored Wall Street firms. (see here) The purported reason is that Geithner so feared any negative repercussions resulting from debt write-downs that he wanted Uncle Sam to make sure that Wall Street banks could not lose on bad bets. Now we find that Geithner’s NYFed supported Lehman’s efforts to conceal the extent of its problems. (see here) Not only did the NYFed fail to blow the whistle on flagrant accounting tricks, it also helped to hide Lehman’s illiquid assets on the Fed’s balance sheet to make its position look better. Note that the NY Fed had increased its supervision to the point that it was going over Lehman’s books daily; further, it continued to take trash off the books of Lehman right up to the bitter end, helping to perpetuate the fraud that was designed to maintain the pretense that Lehman was not massively insolvent. (see here)

Geithner told Congress that he has never been a regulator. (see here) That is a quite honest assessment of his job performance, although it is completely inaccurate as a description of his duties as President of the NYFed. Apparently, Geithner has never met an accounting gimmick that he does not like, if it appears to improve the reported finances of a Wall Street firm. We will leave to the side his own checkered past as a taxpayer, although one might question the wisdom of appointing someone who is apparently insufficiently skilled to file accurate tax returns to a position as our nation’s chief tax collector. What is far more troubling is that he now heads the Treasury – which means that he is not only responsible for managing two regulatory units (the FDIC and OCC), but also that he has got hold of the government’s purse strings. How many more billions or trillions will he commit to a futile effort to help Wall Street avoid its losses?

Read moreTimmy-Gate: Did Geithner Help Hide Lehman’s Fraud?

Dylan Ratigan & Eliot Spitzer on The Lehman Brothers Report

Report: JPMorgan, Citigroup helped trigger Lehman collapse (Telegraph)

Lehman bosses used accountancy gimmick to cover up debt (Times)

EXPLOSIVE: Lehman Corruption – Where Are The Cops? (Market Ticker)


Added: March 12, 2010 MSNBC

Gerald Celente: ‘It’s the greatest bank robbery in world history and the banks are doing the robbing.’


Added: 13th Mar 10

Gerald Celente: ‘The Crash is Coming in 2010.’

The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street

Survivor, America: ‘It’s Only Going to Get Worse,’ Gerald Celente Says

The No.1 Trend Forecaster Gerald Celente: The Terror And The Crash of 2010

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
– New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
– CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.
– CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
– The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
– The Economist

Report: JPMorgan, Citigroup helped trigger Lehman collapse

See also:

Lehman bosses used accountancy gimmick to cover up debt (Times)

EXPLOSIVE: Lehman Corruption – Where Are The Cops? (Market Ticker)


The implosion of Lehman Brothers was in part triggered by excessive capital demands from JP Morgan Chase and Citigroup, and in part by the manipulation of its balance sheet by leading directors, a wide-ranging official report into the investment bank’s collapse has found.

dick-fuld
Dick Fuld, the former chief executive of Lehman, is criticised in the report which has taken a year to compile

In what is likely to kick-start a series of costly and long-running court cases, the exhaustive investigation found that the two Wall Street banks demanded significant amounts of capital and extra guarantees in the run-up to Lehman’s downfall – with JP Morgan Chase requesting $5bn (£3.3bn) just three days before Lehman’s bankruptcy filing.

At the same time, Lehman directors, including chairman Dick Fuld and former finance director Erin Callan, failed to disclose key practices, and certified misleading statements. The astonishing claims are made in a 2,200-page, nine-volume report written by court-appointed examiner Anton Valukas, which Judge James Peck admitted read “like a best seller”.

The explosive report also calls into question:

• The use of accounting tactics designed to move $50bn from Lehman’s balance sheet.

• The work of auditor Ernst & Young.

• Barclays’ subsequent purchase of Lehman’s US assets.

Among Mr Valukas’s findings – which are designed to help the court and the bank’s trustees establish where there may be legal grounds for future claims – he asserts that the evidence “may support the existence of a . . .[valid] claim that JP Morgan breached the implied covenant of good faith and fair dealing by making excessive collateral requests” to Lehman.

“The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” he says.

Read moreReport: JPMorgan, Citigroup helped trigger Lehman collapse

EXPLOSIVE: Lehman Corruption – Where Are The Cops?

Sarbanes-Oxley was supposed to prevent crap like this:

lehman-105serendipity

From the paper:

Lehman employed off-balance sheet devices, known within Lehman as “Repo 105” and “Repo 108” transactions, to temporarily remove securities inventory from its balance sheet, usually for a period of seven to ten days, and to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008.2847

Oh yeah, that’s legal?  It’s not supposed to be!

Lehman regularly increased its use of Repo 105 transactions in the days prior to reporting periods to reduce its publicly reported net leverage and balance sheet.2850  Lehman’s periodic reports did not disclose the cash borrowing from the Repo 105 transaction – i.e., although Lehman had in effect borrowed tens of billions of dollars in these transactions, Lehman did not disclose the known obligation to repay the debt.2851  Lehman used the cash from the Repo 105 transaction to pay down other liabilities, thereby reducing both the total liabilities and the total assets reported on its balance sheet and lowering its leverage ratios.

Isn’t that special?

It gets better, as you might expect.

The Examiner concludes that colorable claims of breach of fiduciary duty exist against Richard Fuld, Chris O’Meara, Erin Callan, and Ian Lowitt, and that a colorable claim of professional malpractice exists against Arthur Anderson Ernst & Young.2915  (strikethrough mine, not in the original)

It is stated that Government Regulators (FRBNY and The SEC) had “no knowledge” of these practices.  Perhaps true.  But this calls into question why we’re hearing of this just now, and whether other firms have or are at present doing the same sort of thing.

There also appears to be a colorable claim that Lehman Management was fully-aware of what was going on:

Read moreEXPLOSIVE: Lehman Corruption – Where Are The Cops?

Secret Banking Cabal Emerges From AIG Shadows

Jan. 29 (Bloomberg) — The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System

Read moreSecret Banking Cabal Emerges From AIG Shadows

Fall Of The Republic – The Presidency Of Barack H. Obama (The Full Movie HQ)

“When the people find they can vote themselves money, that will herald the end of the republic.”
– Benjamin Franklin


Added: 22. October 2009

Fall Of The Republic documents how an offshore corporate cartel is bankrupting the US economy by design. Leaders are now declaring that world government has arrived and that the dollar will be replaced by a new global currency.

President Obama has brazenly violated Article 1 Section 9 of the US Constitution by seating himself at the head of United Nations’ Security Council, thus becoming the first US president to chair the world body.

A scientific dictatorship is in its final stages of completion, and laws protecting basic human rights are being abolished worldwide; an iron curtain of high-tech tyranny is now descending over the planet.

A worldwide regime controlled by an unelected corporate elite is implementing a planetary carbon tax system that will dominate all human activity and establish a system of neo-feudal slavery.

Read moreFall Of The Republic – The Presidency Of Barack H. Obama (The Full Movie HQ)

Peter Schiff on RT: Americans must prepare for deepening unemployment, inflation

“Nobody in the senate today understands basic economics.”


Date: 17th Sep 09

Related information:

US: Hyperinflation Nation
Peter Schiff: The Case For Inflation (09/12/2009)

Obama’s Money Cartel (Flashback)

How Barack Obama Fronted for the Most Vicious Predators on Wall Street

obama-fraud

Wall Street, known variously as a barren wasteland for diversity or the last plantation in America, has defied courts and the Equal Employment Opportunity Commission (EEOC) for decades in its failure to hire blacks as stockbrokers. Now it’s marshalling its money machine to elect a black man to the highest office in the land. Why isn’t the press curious about this?

Walk into any of the largest Wall Street brokerage firms today and you’ll see a self-portrait of upper management racism and sexism: women sitting at secretarial desks outside fancy offices occupied by predominantly white males. According to the EEOC as well as the recent racial discrimination class actions filed against UBS and Merrill Lynch, blacks make up between 1 per cent to 3.5 per cent of stockbrokers — this after 30 years of litigation, settlements and empty promises to do better by the largest Wall Street firms.

The first clue to an entrenched white male bastion seeking a black male occupant in the oval office (having placed only five blacks in the U.S. Senate in the last two centuries) appeared in February on a chart at the Center for Responsive Politics website. It was a list of the 20 top contributors to the Barack Obama campaign, and it looked like one of those comprehension tests where you match up things that go together and eliminate those that don’t. Of the 20 top contributors, I eliminated six that didn’t compute. I was now looking at a sight only slightly less frightening to democracy than a Diebold voting machine. It was a Wall Street cartel of financial firms, their registered lobbyists, and go-to law firms that have a death grip on our federal government.

Why is the “yes, we can” candidate in bed with this cartel? How can “we”, the people, make change if Obama’s money backers block our ability to be heard?

Seven of the Obama campaign’s top 14 donors consisted of officers and employees of the same Wall Street firms charged time and again with looting the public and newly implicated in originating and/or bundling fraudulently made mortgages. These latest frauds have left thousands of children in some of our largest minority communities coming home from school to see eviction notices and foreclosure signs nailed to their front doors. Those scars will last a lifetime.

These seven Wall Street firms are (in order of money given): Goldman Sachs, UBS AG, Lehman Brothers, JP Morgan Chase, Citigroup, Morgan Stanley and Credit Suisse. There is also a large hedge fund, Citadel Investment Group, which is a major source of fee income to Wall Street. There are five large corporate law firms that are also registered lobbyists; and one is a corporate law firm that is no longer a registered lobbyist but does legal work for Wall Street. The cumulative total of these 14 contributors through February 1, 2008, was $2,872,128, and we’re still in the primary season.

But hasn’t Senator Obama repeatedly told us in ads and speeches and debates that he wasn’t taking money from registered lobbyists? Hasn’t the press given him a free pass on this statement?
Barack Obama, speaking in Greenville, South Carolina on January 22, 2008:

“Washington lobbyists haven’t funded my campaign, they won’t run my White House, and they will not drown out the voices of working Americans when I am president”.

Barack Obama, in an email to supporters on June 25, 2007, as reported by the Boston Globe:

“Candidates typically spend a week like this – right before the critical June 30th financial reporting deadline – on the phone, day and night, begging Washington lobbyists and special interest PACs to write huge checks. Not me. Our campaign has rejected the money-for-influence game and refused to accept funds from registered federal lobbyists and political action committees”.

The Center for Responsive Politics website allows one to pull up the filings made by lobbyists, registering under the Lobbying Disclosure Act of 1995 with the clerk of the U.S. House of Representatives and secretary of the U.S. Senate. These top five contributors to the Obama campaign have filed as registered lobbyists: Sidley Austin LLP; Skadden, Arps, et al; Jenner & Block; Kirkland & Ellis; Wilmerhale, aka Wilmer Cutler Pickering.

Read moreObama’s Money Cartel (Flashback)

Now Hiring: Lehman Brothers

Then & Now

Then:

CEO: Richard Fuld (above)

Employees: 25,158

Cash on balance sheet: $3.3 billion

Now:

CEO: Bryan Marsal, (above)

Employees: 500

Cash on balance sheet: $7 billion

It’s bankrupt. Its reputation is in tatters. And it has been forced from its plush headquarters building. Yet working for Lehman Brothers Holdings Inc. — what remains of it — has become one of the hottest jobs on Wall Street.

That’s because Lehman, though a shadow of its former self after selling many of its businesses to Barclays PLC and Nomura Holdings Inc., retains a broad patchwork of assets. It has some $7 billion in cash and more than 1,400 private investments valued at $12.3 billion. Then there’s a thicket of about 500,000 derivative contracts with 4,000 trading partners worth some $24 billion.

So for now, Lehman is seen as a relatively secure home for throngs of finance professionals thrown out of work in recent months. It’s even become a place for former Lehman CEO Richard Fuld to informally hang his hat.

“We’re getting swamped with résumés,” says Bryan Marsal, a turnaround expert who is now Lehman’s chief executive officer. The inquiries, he says, are from people affiliated with marquee names such as Bank of America, Citigroup Inc., and Morgan Stanley.

“It’s just a tough, tough time, and there are a lot of good people out there looking for work.”

The wages are not great by past standards. But there are hidden benefits. It could take two years or more to wind down the firm. Such a timeline promises the kind of job security that’s a rarity on Wall Street today.

Charged with untangling the mess is Alvarez & Marsal, the New York-based restructuring firm where Mr. Marsal is a co-founder. With 150 full-time employees working on the case, its chief task is to sell off Lehman’s remaining assets and maximize recovery for creditors, which are owed more than $150 billion.

Read moreNow Hiring: Lehman Brothers

How top financiers paid themselves £1bn before the wheels fell off

A dozen senior bankers whose influence has shaped the financial world gave themselves pay awards valued at more than £1bn before the credit crunch spectacularly exposed the fragility of the profits they appeared to have secured for shareholders.

Although seemingly profitable during the boom, these same banks have since revealed losses, write-downs and emergency capital injections totalling more than £300bn.

In Britain, they include Barclays executives John Varley and Bob Diamond, who between them took more than £50m of awards in the past four years.

But the biggest winners were on Wall Street where Stan O’Neal – who was pushed out of Merrill Lynch in 2007 after shock losses from sub-prime mortgage investments made him one of the first high-profile casualties of the crisis – received pay, bonuses, stock and options totalling $279m (£196m) for less than nine years’ service. This is the highest amount for any Wall St executive in the Guardian’s study.

The figures are based on annual proxy statement filings in the case of US bank executives. These include a projection by the banks of the likely future value of stock and option awards. If such awards have not been cashed in they will have depreciated in value along with relevant bank share prices. Data for UK bank directors only values share-based awards that have been cashed in and therefore makes comparisons difficult.

The US bankers include Dick Fuld who presided over the collapse of Lehman Brothers – the world’s biggest ever corporate failure, which sent shockwaves throughout the global banking system last September. Fuld received annual awards totalling $191m from 1999 to 2007. The tally includes stock and options valued at the time at $111m.

Jimmy Cayne, the long-serving boss of Bear Stearns, also makes the list. Cayne received pay awards valued at $233m before Bear Stearns became the first big Wall Street investment bank to effectively fail, when it was forced to seek an emergency Federal Reserve loan in March last year.

Former US treasury secretary Hank Paulson, charged by George Bush with marshalling the $700bn taxpayer bailout efforts, had been another central Wall St figure – chairman and chief executive of Goldman Sachs – until joining the US government three years ago. Paulson’s taxpayer-funded troubled assets relief programme is in the process of handing out tens of billions of dollars each to firms including Goldmans, Morgan Stanley and Citigroup. Paulson’s pay awards from Goldmans totalled $170m over eight years.

His successor Lloyd Blankfein took home $231m over eight years. Fellow Goldman executive and later Merrill Lynch boss John Thain received $94.9m over six years, while Citigroup boss Sandy Weill and his successor Chuck Prince received $173m and $110m respectively over seven years.

Britain’s top five banks made two-year pre-tax profits of £76bn for 2006 and 2007 after credit and housing boom years combined with ever more exotic financial instruments to push their earning power to unprecedented heights.

Wednesday 28 January 2009
Simon Bowers

Source: The Guardian

Federal Reserve Refuses to Disclose Recipients of $2 Trillion

“We do not tell you what we are doing, but you have to pay for it.”

What would you do to someone that breaks into your house and is stealing your money?(I know, it isn’t really ‘your’ money anyway, but that is another story.)

That is exactly what the Fed is doing. The Fed is also stealing the value of your money. Inflation is a ‘hidden tax’.

You don’t have to study economics to understand what these banksters are doing, although it was helpful for me.

Hyperinflation is coming. The government and the Fed are bankrupting the US.

Remember just a few months ago when they told you that ‘the economy is sound’?

Listen to Ron Paul, Peter Schiff and Jim Rogers and prepare yourself for the worst.

This article is a must read.
_________________________________________________________________________


Vehicles are parked outside the U.S. Federal Reserve building in Washington, Dec. 4, 2008. Photographer: Brendan Smialowski/Bloomberg News

Dec. 12 (Bloomberg) — The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.

“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.

Read moreFederal Reserve Refuses to Disclose Recipients of $2 Trillion

Interview: Peter Schiff still grim on future

“Tens of millions of people unemployed, inflation spiraling out of control, the government instituting price controls that result in shortages and blackouts and long lines for things. I think things are going to get very bad.”

“From an investment point of view, investors need to stay clear, because they need to realize that it’s not just U.S. stocks and real estate that are going to lose value, but U.S. bonds. This is the last bubble yet to burst. I think we’re going to see a collapse of the bond market sometime during Obama’s first term, and interest rates are going to spiral out of control, and the dollar is going to just be destroyed.”
____________________________________________________________________________

People aren’t laughing any more at the way-out-there predictions of Peter Schiff, whose long-standing pessimism about the economy and stock market has been largely borne out.

Schiff heads Euro Pacific Capital, a brokerage in Darien, Conn. with more than $1 billion in assets under management. He has silenced critics because he predicted the collapse of the housing market, the subprime crisis and the soaring of oil prices in his market commentaries before they came to pass.

A YouTube video called “Peter Schiff Was Right” shows him being repeatedly mocked when he went on TV stock shows to make those ultimately correct calls in 2006 and 2007, including forecasting a recession 2 1/2 years ago.

Now, in the midst of what’s already the biggest financial crisis in decades, the prominent purveyor of gloom and doom still sees far tougher times ahead – including a depression and a bear market he thinks will last another five years or more.

Read moreInterview: Peter Schiff still grim on future

Profiles in Panic: The World of the Rich Collapses

With Wall Street hemorrhaging jobs and assets, even many of the wealthiest players are retrenching. Others, like the Lehman Brothers bankers who borrowed against their millions in stock, have lost everything. Hedge-fund managers try to sell their luxury homes, while trophy wives are hocking their jewelry. The pain is being felt on St. Barth’s and at Sotheby’s, on benefit-gala committees and at the East Hampton Airport, as the world of the Big Rich collapses, its culture in shock and its values in question.


Illustrations by Barry Blitt.

A snapshot: East Hampton, late summer, a lawn party at a house on the ocean overlooking the dunes. The host is a prince of private equity known for dressing well. One of his guests is Steven Cohen, the publicity-shy billionaire whose SAC Capital, with $16 billion under management, is perhaps the most revered of the 10,000 or so hedge funds spawned by this giddily rich time. Nearby is Daniel Loeb, of Third Point, one of the better-known “activist” hedge funds, who hopes to move soon into a 10,700-square-foot, $45 million penthouse at l5 Central Park West, a Manhattan monument to the new gilded age. Gliding easily between them is art dealer Larry Gagosian, so successful at selling Bacons and Serras to Wall Street’s new titans-including to Cohen-that he now travels in his own private jet and has his own helicopter to take him to it.

Read moreProfiles in Panic: The World of the Rich Collapses

Colossal Financial Collapse: The Truth behind the Citigroup Bank “Nationalization”

On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America’s largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be ‘too big to fail.’

The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street ‘investment banker’, whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.

‘Spitting into the wind’

A case in point is the secretive manner in which Paulson has used the $700 billion in taxpayer funds voted him by a labile Congress in September. Early on, Paulson put $125 billion in the nine largest banks, including $10 billion for his old firm, Goldman Sachs. However, if we compare the value of the equity share that $125 billion bought with the market price of those banks’ stock, US taxpayers have paid $125 billion for bank stock that a private investor could have bought for $62.5 billion, according to a detailed analysis from Ron W. Bloom, economist with the US United Steelworkers union, whose members as well as pension fund face devastating losses were GM to fail.

Read moreColossal Financial Collapse: The Truth behind the Citigroup Bank “Nationalization”

The global economy is being sucked into a black hole

This Is Not A Normal Recession

Moving on to Plan B

“The Winter of 2008-2009 will prove to be the winter of global economic discontent that marks the rejection of the flawed ideology that unregulated global financial markets promote financial innovation, market efficiency, unhampered growth and endless prosperity while mitigating risk by spreading it system wide.” Economists Paul Davidson and Henry C.K. Liu “Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy”

The global economy is being sucked into a black hole and most Americans have no idea why. The whole problem can be narrowed down to two words; “structured finance”.

Read moreThe global economy is being sucked into a black hole

Lehman’s administrators paid more than the bankers

The administrators of the UK and European arm of bankrupt investment bank Lehman Brothers are making better money than the bankers.

Lehman's administrators paid more than the bankers
Lehman’s administrators paid more than the bankers

PricewaterhouseCoopers, which has around 300 employees working on the Lehman administration, is being paid £4m a week, the accounting firm revealed yesterday. By contrast, the monthly wage bill for Lehman’s remaining 1,100 bankers is £8m – £2m a week – though that does not include planned “small retention bonuses”.

PwC has been in charge for nine weeks, taking the cost of the administration so far to £45m. Tony Lomas, the PwC partner leading the process, said it was impossible to estimate the final bill but “it’s going to be an expensive process”.

Asked about timing, he drew comparisons with the administration of Enron’s UK operations, on which he also worked. “We’re still doing bits and pieces on Enron. [That’s] seven years old. This is 10 times as big and much more complicated,” Mr Lomas said. At the current rate, the final Lehman bill after seven years would be £1.4bn.

Read moreLehman’s administrators paid more than the bankers

Fed refuses to identify the recipients of almost $2 trillion

Nov. 10 (Bloomberg) — The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

“The collateral is not being adequately disclosed, and that’s a big problem,” said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. “In a liquid market, this wouldn’t matter, but we’re not. The market is very nervous and very thin.”

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

Read moreFed refuses to identify the recipients of almost $2 trillion

Wall Street jobs axe threatens 70,000

The financial industry is bracing for a fresh round of job cuts as Wall Street banks slash costs to cushion the blow of further market turbulence and deepening economic woes in 2009.

Executives and analysts say the redundancies – to be finalised this month as banks prepare next year’s budgets – could top 70,000 among US groups alone and add to the estimated 150,000 jobs already lost by the financial sector worldwide.

The job losses are expected to be concentrated in the investment banking and trading businesses that have been hit hard by the near-freeze in capital markets and the collapse in takeover and financing activity.

The continued shrinking of the banking industry will deepen the economic plight of financial centres such as New York, London and Hong Kong by reducing tax revenues and putting pressure on the local housing market.

“The fourth quarter is going to be very disruptive,” Meredith Whitney, analyst at Oppenheimer, said in a video interview with the Financial Times. “For many of the capital markets intensive players, you’re going to have resizing of anywhere from 25 to 30 per cent of their workforce. But if you think about it, from the peak, revenues are down more than that.”

Read moreWall Street jobs axe threatens 70,000

Rescued RBS to pay millions in bonuses

RBS ‘making monkeys’ out of the government, says Vince Cable


Royal Bank of Scotland. Photograph: Newscast

Royal Bank of Scotland, which is being bailed out with £20bn of taxpayers’ money, has signalled it is preparing to pay bonuses to thousands of staff despite government pledges to crack down on City pay.

The bank has set aside £1.79bn to cover “staff costs” – including discretionary bonuses – at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank’s profits for the same period.

The government had demanded that boardroom directors at RBS should not receive bonuses this year and the chief executive, Sir Fred Goodwin, is walking away without a pay-off. But below boardroom level, RBS and other groups are preparing to pay bonuses to investment bankers who continue to generate profits.

Read moreRescued RBS to pay millions in bonuses

‘The banks are cheating us’

Hong Kong investors protest Lehman Brothers losses

HONG KONG – Angry Hong Kong investors, some banging gongs and others waving banners, scuffled outside a bank on Friday as frustration mounted over losses tied to investments linked to failed U.S. bank Lehman Brothers.

Several hundred investors, many of them elderly retirees, marched to eight banks which had sold Lehman structured products, including ABN Amro, Standard Chartered, Bank of China, Citic Ka Wah and DBS bank, demanding compensation for their losses.

Some investors tried to barge into a DBS bank branch on Hong Kong island, jostling with security staff who linked arms to form a human barricade.


Lehman Brothers mini-bonds holders scuffle with officials during a protest against various banks which sold them the product in Hong Kong Friday.

“The banks are cheating us,” shouted some investors, while others banged gongs and waved protest banners accusing the banks of misleading investors on the risks involved.

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Roubini: Hundreds of hedge funds are going to go bust; Panic May Force Market Shutdown

Oct. 23 (Bloomberg) — Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

“We’ve reached a situation of sheer panic,” Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. “There will be massive dumping of assets” and “hundreds of hedge funds are going to go bust,” he said.

Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.

“Systemic risk has become bigger and bigger,” Roubini said at the Hedge 2008 conference. “We’re seeing the beginning of a run on a big chunk of the hedge funds,” and “don’t be surprised if policy makers need to close down markets for a week or two in coming days,” he said.

Roubini predicted in July 2006 that the U.S. would enter an economic recession. In February this year, he forecast a “catastrophic” financial meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a “sharp drop” in equities.

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