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The nausea we feel with respect to Citigroup (C) and our Treasury Secretary just hit a new high. Perhaps it's true that civilization would have ended if we had just allowed Sandy Weill's colossal junk pile to finish blowing itself up. But at this point that seems a more attractive alternative. In case you missed it, here's the latest outrage: As of yesterday afternoon, the United States taxpayer owned 34% of Citigroup's common stock, in addition to a massive amout of TARP preferred stock. The US taxpayer did not own 34% of Citigroup's common stock by choice. We owned it...

One of the numerous adverse side-effects of the horrendous policy decision to start bailing out each and every risky bank, and thus allowing no more risk in any investment (for the time being), has been the very simple observation that massively mispriced risk has gotten concentrated to an unparalleled degree among very few players. The population of Big Banks has been massively trimmed (Goldman thanks everyone for allowing them to have massive Fixed Income bid/ask spreads) and now a mere five banks account for the bulk of loans, deposits, and derivative exposure. When the economy is faced with another Lehman...

Sometimes, a bailout is not enough. When Dubai World black swanned global investors last month with what amounts to be a reported $80 Billion in debt liabilities, it sent shivers down the spine of many a financial manager and stock trader. For those who were paying attention, Dubai’s troubled assets were no surprise, it was simply a matter of time. Oft repeated by contrarian analysts and investors like Dr. Doom Marc Faber, Gerald Celente, Jim Rogers, and Karl Denninger, the mathematical certainty of the economic crisis would play out - eventually. It was a year ago that the entire global...

If you needed a reason to buy today's deja vu listless and volumeless tape, here it is. Mexico cut by S&P from BBB+/A-2 to BBB/A-3. Outlook is "stable"... absent a hyperinflationary collapse. Expect a rebuttal from Goldman Sachs, which has been axed the wrong way for quite a while.

Global Financial Crisis, No Bailout Will Stop It Stock-Markets / Credit Crisis 2009 Dec 15, 2009 - 04:21 AM By: Mac Slavo Sometimes, a bailout is not enough. When Dubai World black swanned global investors last month with what amounts to be a reported $80 Billion in debt liabilities, it sent shivers down the spine of many a financial manager and stock trader. For those who were paying attention, Dubai’s troubled assets were no surprise, it was simply a matter of time. Oft repeated by contrarian analysts and investors like Dr. Doom Marc Faber, Gerald Celente, Jim Rogers, and Karl...

Matt Taibbi gave a very good interview on CNN this afternoon, discussing his recent Rolling Stone piece on Obama's sellout. One of the more interesting points came when Taibbi was asked about some criticism from Andrew Ross Sorkin. Taibbi's response, basically: sorry maisntream jouranlists, I don't have to be evenhanded. Good answer. Video at site

Your government just blew it again. Big time. How? By allowing the biggest zombie banks, Bank of America and Citigroup, to pay back TARP before we dealt with the biggest problem plaguing our financial policy of the past few years: Too Big To Fail. As long as the banks were on the hook for that TARP money, the government had some ability to dictate reform. Now it has none. And in case you missed what is really going on here, the banks that repaid TARP are now getting all the benefits of government help with none of the drawbacks. They...

Even as the "banker meeting" is presumably underway (with several bankers bitchslapping the president and joining telephonically), following up on yesterday's thoughts on Obama's most recent rhetorical force majeure, in which he bashed "fat cat" bankers after pandering to their every whim for the entire duration of his presidency courtesy of Larry Summer and Robert Robin, today David Rosenberg shares his thoughts on the so-called Blame Game. Below we highlight President Obama’s weekly address, in which he blames the big bad banks for luring borrowers into the myriad of products during the credit bubble, a bubble that in our view...

WASHINGTON — US President Barack Obama has hit out at Wall Street "fat cats", expressing anger that banks bailed out by the government plan huge bonuses while millions of Americans battle poverty and unemployment. "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama said Friday in excerpts of an interview with CBS television to be aired on Sunday. With unemployment still hovering at around 10 percent, amid a recession triggered in part by the excesses of financial institutions, Obama voiced frustration that "some people on Wall Street still don't...

Wall Street Titan's Role Shown in Journal Analysis; Firm Says Problems Hidden Goldman Sachs Group Inc. played a bigger role than has been publicly disclosed in fueling the mortgage bets that nearly felled American Insurance Group Inc. Goldman was one of 16 banks paid off when the U.S. government last year spent billions closing out soured trades that AIG made with the financial firms. A Wall Street Journal analysis of AIG's trades, which were on pools of mortgage debt, shows that Goldman was a key player in many of them, even the ones involving other banks. Goldman originated or bought...

USAA, GE and Others Gain Exceptions to Full Impact of Regulatory Overhaul. Buried in a 239-page amendment to the U.S. House of Representatives' financial regulatory overhaul is a provision that appears to do just one thing: exempts financial-services company USAA from some of the bill's tougher provisions. The carve-out is one of a number of exceptions that allow companies to avoid fresh scrutiny envisioned by the White House, which is aiming to overhaul the nation's financial-regulatory apparatus. The beneficiaries run from corporations such as General Electric Co. and Pitney Bowes Inc. to USAA, which caters to members of the military...

Considering it was just a year ago when we were jolted into this banking-induced recession, you can imagine my astonishment when I read this recent Forbes headline: “Dubai's Failure Exposes A U.S. Advantage The well-regulated U.S. financial sector has a lot to show for itself.” I’m also equally perplexed by Dick Bove, a widely followed banking analyst, suggesting “Bank of America (BAC) should beg Ken Lewis to stay,” and that “The success of this bank is due to the brilliance of Ken Lewis as a visionary and tactician.” We are talking about Ken Lewis, who has failed his fiducially duty...

The financial reform bill working its way through the House of Representatives, that includes Ron Paul's "Audit the Fed" provision, has gotten so morphed and horrific that Ron Paul is not even going to vote for it. The evil bastards have added an amendment to the Bill that will allow the Fed to pump any amounts of money it so chooses to "financial holding" companies deemed TBTF, without approval from anyone. William Greider explains: The sales pitch for financial-reform legislation pending in the House claims it would put a stop to “too big to fail” bailouts for the leading banks....

It appears the only thing worse in this world than a measly $500,000 salary is getting no salary at all. And that's exactly what is about to happen to AIG General Counsel, Anastasia Kelly, who before joining the bankrupt firm, was a GC at such reputable organizations as MCI/WorldCon (sic) and Fannie Mae. To paraphrase the objections against a very prominent Treasury Secretary recently, the question is not whether or not she will leave the job, the question is how she got it in the first place. Kelly, who recently was protesting the $500k salary cap imposed by Pay Despot...

Two lawyers have joined forces to assemble a case challenging in U.S. bankruptcy court the federal government's use of Troubled Asset Relief Program funds to bail out Chrysler and in doing so may have created a scenario that finally will bring to a head the issue of Barack Obama's eligibility to be president. The attorneys are Leo Donofrio, who has launched cases directly challenging Obama's eligibility, and Stephen Pidgeon, who also has worked on the issue. Their new case questions the authority by which the federal government and administration officials intervened in the auto industry, specifically allocating some $8 billion-plus...

Treasury Department Releases Text of Letter from Secretary Geithner to Hill Leadership on Administration’s Exit Strategy for TARP WASHINGTON – The U.S. Department of the Treasury released the text of identical letters sent today from Secretary Tim Geithner to Speaker Nancy Pelosi and Senator Harry Reid outlining the Administration's exit strategy for the Troubled Asset Relief Program (TARP) established by the Emergency Economic Stabilization Act of 2008 (EESA). The text of the letter to Speaker Pelosi follows. December 9, 2009 The Honorable Nancy Pelosi Speaker U.S. House of Representatives Washington, DC 20515 Dear Madam Speaker: I am writing to update...

JPMorgan (JPM) says the mortgage-related bloodletting is not over: Marketwatch: J.P. Morgan Chase said Tuesday that it sees more mortgage-related losses in coming quarters. Losses on home equity loans could reach $1.4 billion over the next several quarters, the bank said in a presentation posted on its Web site. Prime mortgage losses may reach $600 million and subprime mortgage losses could hit $500 million in coming quarters, J.P. Morgan added in the presentation. The bank also said it's seeing "initial" signs of stability in consumer delinquency trends, but it warned that it's not certain if the trend will continue. J.P....

I can't believe this is coming from five Democrats: Five House Democrats will call this week for a return to a Depression-era law that separated Wall Street investment banking from Main Street commercial banking. If adopted, the measure would give banks one year to choose between being commercial banks or investment banks. The nation's biggest -- those now commonly referred to as "too big to fail" -- would be broken up. The Obama administration opposes the measure. The amendment's five co-sponsors -- Maurice Hinchey of New York, John Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington, and...

The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. That figure anticipated more financial troubles requiring intervention. The officials said the government could ultimately lose $100 billion more from the bailout program in new loans to banks, aid to troubled homeowners and credit to small businesses. The report could tamp down some of the public anger directed against both parties over the bailouts....

The United States needs a consistent policy for bailing out troubled financial firms because efforts to end the credit crisis worsened the "too big to fail" problem, Federal Reserve Bank of Philadelphia president Charles Plosser said yesterday. "No firm ought to be too big to fail," Plosser said. "Not only does the too-big-to-fail badge generate moral hazard at these institutions, it also creates powerful incentives for other institutions to become large and complex and take risks at taxpayers' expense." His comments come as Congress considers a sweeping dismantling of Federal Reserve authority, including limits to its power to make emergency...

Amazing story here.... you really need to read the whole thing. The salient point is here: The county paid JPMorgan and a group of banks $120.2 million in fees for $5.8 billion of derivatives, according to a series of stories published by Bloomberg News in 2005. The payments were about $100 million more than they should have been based on prevailing rates, according to estimates in 2007 by James White, an adviser the county hired after the SEC said it was investigating the deals. That's six times what they should have cost - that is, six hundred percent of market...

A senior Chinese official who oversees the country's largest state-owned enterprises has publicly slammed Western investment banks for "maliciously" peddling complicated derivative products that caused huge losses for Chinese companies over the last year. In Beijing's strongest criticism on the matter to date, Li Wei, vice director of the state-owned Assets Supervision and Administration Commission, singled out Goldman Sachs, Morgan Stanley, Merrill Lynch, and Citigroup in a long and highly critical article in the latest issue of an official Communist party newspaper. The large losses suffered by Chinese state companies were "closely associated with the intentionally complex and highly leveraged...

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates.

In Rolling Stone Issue 1082-83, Matt Taibbi takes on "the Wall Street Bubble Mafia" --investment bank Goldman Sachs. The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good. " Taibbi shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also...

If you haven't read Matt Taibbi's recent Rolling Stone piece on Goldman Sachs, make sure to get your hands on it ASAP. It's a must read on how Goldman Sachs and the U.S. government work hand in glove to produce giant investment bubbles... bubbles that allow Goldman to work over investors for hundreds of billions of dollars. We don't think you can lay all the blame for the housing bubble and the tech bubble at Goldman's feet... but we do find it suspicious that a ton of high level government posts are staffed by Goldman employees. It's close to a...

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again -~&~- The FIRST THING YOU NEED TO KNOW about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's...

President Barack Obama will extend his push to revive the U.S. economy next week with a speech outlining job creation ideas, from encouraging home insulation programs to diverting funds meant to rescue failing banks, officials said on Friday. With unemployment hovering around 10 percent, political pressure is building on Obama to do more to boost the economy after months of debate on overhauling the U.S. healthcare system and a months-long review of Afghan war strategy. The White House has not given specifics of Obama's strategy but U.S. officials said his proposals included incentives to homeowners to make their homes more...

Even Timmy is slowly realizing that the Administration will need to find a way to deflect Main Steet's anger at Goldman and keep it focused exclusively on Wall Street instead of equating it with Obama et al. The problem is - you make some very serious, tentacled enemies in the process. Geithner also flip flops on his prior position on the transaction tax. While before he was more opposed to the transaction tax than even Marla, his new "windsocked" position on the topic may now provide a challenge even to Nitric Oxide inhibitors. But here is the clincher for the...

To get a sense of what Goldman Sachs (GS) has pulled off in the last two years, consider: Goldman Sachs was directly responsible for creating, marketing, and trading many of the toxic financial instruments behind the mortgage crisis and resulting recession. The bank's irresponsible behavior nearly caused its collapse, and taxpayers had to bail it out. Public funds saved Goldman Sachs, which this year is minting money and watching its stock soar. Last month, two Goldman vice chairmen quietly sold $55 million worth of company stock and pocketed the cash. And there you have it: from your IRS check to...

When an insolvent American International Group distributed $165m in executive bonuses last winter, the public was outraged. But this was small change compared with what we have learnt recently from a federal auditor’s report on the US insurance group, almost 80 per cent owned by the US government. At the direction of the Federal Reserve Bank of New York, AIG quietly gave $62bn to pay in full the claims of Goldman Sachs, Barclays and other large investors. Why did US taxpayers pay so much to the sophisticated clients of AIG when we could have spent much less to settle these...

LIAR-IN-CHIEF Obama has wasted valuable time on 3 huge hoaxes: (1)Urgent Bailout wasn't used to help the economy. It is being used as a slush fund to promote the Democratic power grab and replace our capitalistic system with socialism. (2)Urgent Obamacare has nothing to do with healthcare because it is a plot to provide more free benefits to the illegals so that when the Democrats give them full amnesty, the Democrats think it will provide a permanent block of votes to keep the Democrats in power forever. (3)Urgent Global Warming Cap & Trade is simply an excuse to economically destroy...

Earlier today, I published a post, White House Web Site Asks ‘Who Do You Trust?’ When It Comes to Government-Run Health Care, which made special note of the graphic above. A short while later, someone who had read that post mentioned that it reminded him of a particularly-memorable scene from the 1989 movie, "Batman".

So here’s how Dubai shows us the way forward: Given the over-the-top reaction of creditors and the western media (including the Financial Times) to the possibility that the Dubai and Abu Dhabi sovereigns might not stand behind the debt of Dubai state-owned companies, it is clear that a debt deferral or a debt default by Dubai World or by Nakheel would indeed be news for a number of market participants. They will have learnt that only sovereign debt is debt of the sovereign and that only sovereign-guaranteed debt is debt guaranteed by the sovereign. A simple lesson but a useful...

American International Group says it has slashed the amount of money it owes the government by $25 billion after moving two subsidiaries into special holding units ahead of their planned spinoffs or sale. How could this be? Didn't a Sanford Bernstein analyst just discover that AIG had a new $11 billion hole in its balance sheet? As it turns out AIG has reduced its debt to taxpayers without paying back a dime of the money it borrowed. Instead, it is just engaging in accounting chicannery to transfer the obligations to a pair of companies it is spinning off. The government...

Western financial institutions holding the Dubai World debt may be headed for a clash with Islamic banking law. Under Islamic law, investors are required to share in losses and profits. This rule may require Dubai World to seek concessions from creditors as a condition of a bailout from Abu Dhabi. But the laws governing some of the Western banks with large exposures to the Dubai World debt may prohibit them from voluntarily accepting less than par on the bonds. Recall that when the US sought to win concessions from AIG creditors, it was told that the counterparties would not voluntarily...

The following information may be the most important we have ever published. One of our Intel sources, highly placed in banking circles, tells us that on 1/1/10 all banks that have received TARP funds have been informed by the Federal Reserve that they must further restrict any commercial lending. Loans have to be 75% collateralized, 50% of which has to be in cash, which is a compensating balance. The Fed has to do one of two things: They either have to pull $1.5 trillion out of the system by June, which would collapse the economy, or face hyperinflation. This is...

Wow. The disaster at AIG keeps getting worse. Today a Sanford C. Bernstein analyst released a note on his discovery that the insurer has an undisclosed $11 billion shortfall in reserves to pay property-casualty claims. Todd Bault said that AIG may have cut back on its use of reinsurance and become too "aggressive" in pricing workers' compensation and professional liability policies. As a result, AIG would likely have to take a huge reserve charge before it could sell its Chartis property-casualty business. “AIG shareholders and the federal government face considerably more uncertainty than they may have anticipated,” Bault wrote. For...

You have give these banksters credit - they'll lie and lie and lie some more.... More than 650,994 loan revisions had been started through the Obama administration’s Home Affordable Modification Program as of last month, from about 487,081 as of September, according to the Treasury. None of the trial modifications through October had been converted to permanent repayment plans, the Treasury data showed. That failure is getting the administration’s attention. None? Out of 651,000 "trial" modifications none have turned into a permanent repayment plan? That's all the borrower's fault, right? There's no collusion here, yes? No intent to screw the...

If Central Banks around the world continue what they are doing, then they will destroy their currencies. Change is required

More details on the appalling bailout of AIG. [Neil Barofsky's report on the AIG bailout is] must reading for any taxpayer hoping to understand why the $182 billion “rescue” of what was once the world’s largest insurer still ranks as the most troubling episode of the financial disaster. And it couldn’t have come at a more pivotal moment... [T]he actions taken in the deal by Treasury Secretary Timothy F. Geithner, who was president of the Federal Reserve Bank of New York at the time, grow curiouser and curiouser.

America should learn from Britain's disastrous takeover of its biggest auto company. Few of the policymakers currently nationalizing the American auto industry seem to remember the British experience, and fewer still seem to have learned anything from it. British Leyland, Britain's largest automaker, faced bankruptcy in 1975. Fearing that its collapse would leave a million workers unemployed, the Labour government nationalized it. The company remained a ward of the state for 13 years. During that time, the British taxpayers invested 11 billion pounds — the inflation-adjusted equivalent of $22 billion today — in a company whose only sign of life...

The public will not bail out the financial services sector for a second time if another global crisis blows up four or five years from now, the managing director of the International Monetary Fund (IMF) warned business leaders yesterday. Addressing a conference held in London by the CBI, the business leaders’ organisation, Dominique Strauss-Kahn said that another huge call on public finances by the financial services sector would not be tolerated by the man in the street and may even threaten democracy. “Most advanced economies will not accept any more [bailouts] . . . the political reaction will be very...

We won't have a real market-based financial system until it is safe to let a financial firm fail," Federal Reserve Chairman Ben Bernanke said last week. He's certainly right, though you wouldn't know it from Mr. Bernanke's own actions the last two years. Meanwhile, the politicians are preparing to give the Fed and Treasury more power to bail out all and sundry companies on an unprecedented scale, and so far without any objection from the Fed chairman. Reading the pending bills to "resolve" failing financial houses from Representative Barney Frank and Senator Chris Dodd, the challenge is to conceive of...

A New York Times editorial slammed Goldman Sachs for its role in the financial crisis and said that instead of paying big bonuses to its employees it should make a multibillion-dollar gift to help reduce the U.S. national debt. The editorial, published November 21, attacked Goldman for everything from its top executive's failure to apologize properly for his investment bank's part in creating the crisis as well as Goldman's awarding of bonuses related to profits that the paper said were boosted by a government bailout. The Times sniffed at Goldman CEO Lloyd Blankfein's acknowledgment last week that his bank "participated...

Bombshells are falling in light of the new report from Neil M. Barofsky, special inspector general for the Troubled Asset Relief Program. Derivatives specialist Janet Tavakoli of Tavakoli Structured Finance is calling for the undoing of what she views as essentially a Goldman bailout. Here's NYT's Gretchen Morgenstern with the backstory: The Fed, under Mr. Geithner’s direction, caved in to A.I.G.’s counterparties, giving them 100 cents on the dollar for positions that would have been worth far less if A.I.G. had defaulted. Goldman Sachs, Merrill Lynch, Société Générale and other banks were in the group that got full value for...

Goldman Sachs employees can't help themselves when they see a buck. In the name of doing "God's work," Lloyd Blankfein apparently is going along with the GS is evil mantra and is going to screw GS shareholders and keep more GS money for himself and his GS top dogs. Despite record net income and compensation at Goldman, analysts expect its 2009 earnings per share to be 22% lower than in 2007. The decline is caused by GS issuing more than 100 million shares in the past year to bolster Goldman's financial position and capital. Major shareholders have said that reining...

The bonus bonanza comes just a year after Goldman was ready to go under with the rest of the Wall Street risk-takers. And were it not for extraordinary measures to prop up entities like AIG, which insured Goldman's risky assets and designated Goldman a commercial bank (meaning it was protected by the Fed) on top of a $10 billion loan, Goldman would now be in Lehman Land. Yet it survived because of the government (translation: The American Taxpayer), and now as it maintains many of those same perks, Goldman has become immensely profitable and is building a war chest of...

Reason readers learned a few weeks ago about then-President of the Federal Reserve Bank of New York Tim Geithner's role in crafting a full-payment deal for big banks that had credit-default swaps with the failed AIG insurance company. As Radley Balko noted earlier, Neil Barofsky, special inspector general for the federal Troubled Asset Relief Program, has now issued a harshly critical report on Geithner's handling of the AIG bailout. Barofsky's report [pdf] details how the bailout vehicle "Maiden Lane III" was created, and why Geithner quickly decided to pay 100 cents on the dollar to AIG counterparties -- including Goldman...

Sorry Lloyd: NO SALE “We participated in things that were clearly wrong and have reason to regret,” Blankfein, 55, said at a conference in New York hosted by the Directorship magazine. “We apologize.” But then there's this... Goldman Sachs, the most profitable securities firm in Wall Street history, had a record profit in the first nine months of this year and set aside $16.7 billion for compensation expenses. No they didn't. Their "profit" was entirely ill-gotten. About $10 billion from the government via the AIG conduit, which they had a ZERO chance of collecting had AIG filed bankruptcy. Another $21...

GM will be begin paying back the TARP money in December, the company announced this morning. It’s a statement in need of a little context. Basically, GM will be using a portion of its $50 billion in TARP bailout money it received to in turn repay another portion of the TARP loans. The reason GM can do this is because when GM emerged from bankruptcy, it struck a deal with the Treasury Department to carve up its obligation to the government in four different ways. They are, briefly: 1) $986 million remained an obligation of the old GM, the husk...