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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...

An energized George W. Bush laid out plans for his public policy institute – and appointed its first fellows -at SMU today. My colleagues Devin Dwyer and Evan Harris report on a man who didn’t seem to miss flying to the APEC Conference today: “I Went Against My Free-Market Instincts” That’s what former President Bush said today in explaining why he signed off on the bailout for Wall Street…calling the decision “one of the most difficult of his presidency.” The former President made the remarks at the unveiling of the George W. Bush Presidential Center at Southern Methodist University. “I...

hat's because while Goldman traders regularly have the Midas touch when it comes to the firm's own fortunes, they seem to have a penchant for capital destruction when it came to the management of its charitable holdings. Sure, 2008 was an unusually tough year, but the filing shows that the Goldman Sachs Foundation managed to vaporize more than $100 million in assets in 2008, even as it executed thousands of trades on everything from obscure stock indexes to commodities to hedge funds. As a result, foundation assets fell by nearly a third last year For all this, the Goldman Foundation...

Perhaps hearing that CEO Lloyd Blankfein stated that Goldman Sachs' was now doing "God's work", Buffett on Wednesday visited Goldman's headquarters at 85 Broad Street--maybe to make sure the 10% dividend on his muilti-billion preferred share investment was secure. Since never before has earning billions with the help of a massive government bailout been considered "God's work." I have it on good authority that though Buffett was given a tour of Goldman's entire trading floor, he didn't spot a bible in the place. And, although he did speak to the Goldman congregation. These were dubbed "town-hall style meetings."

Fixing the financial sys tem so that it doesn't blow up the economy again isn't hard. But complex solutions help Washington and the "too-big-to-fail" financial firms maintain the status quo -- and make future problems worse. The administration and lawmakers are giving us pretend ways to fix finance. The latest came Tuesday from Senate Banking Committee Chairman Chris Dodd -- a 1,136-page plan for bureaucratic "reform," plus new bureaucracy. We'd get a "Consumer Financial Protection Agency" to police things like mortgages. We'd get an "Agency for Financial Stability," which would supposedly stop catastrophic risks, like AAA-rated mortgage securities, before they...

Agency's cash running low; automatic bailout possible if loss continues The Federal Housing Administration, which has played a crucial role supporting American home buyers after the collapse of the mortgage market, has burned through a huge cash reserve in less than a decade and could soon wind up with what amounts to an automatic taxpayer bailout if the agency's fortunes don't improve, according to a review of FHA finances. Senior FHA officials have assured Congress that the agency will not need a bailout, which would be politically sensitive for lawmakers to approve after the government has already spent hundreds of...

Goldman wasn’t the only contributor to the systemic risk that nearly toppled the global financial markets, but it was the key contributor to the systemic risk posed by AIG’s near bankruptcy. When it came to the credit derivatives, American International Group, Inc. (AIG) was required to mark-to-market, Goldman was the 800-pound gorilla. Calls for billions of dollars in collateral pushed AIG to the edge of disaster. The entire financial system was imperiled, and Goldman Sachs would have been exposed to billions in devastating losses. A Goldman spokesman told me its involvement in AIG’s trades was only as an “intermediary,” but...

A federal bailout of AIG last year attracted angry protesters who for weeks gathered outside the insurance giant's headquarters in New York and stalked company executives at their homes. But there has been little response to the bailout of Peter Miller, who runs a two-person lobster-fishing crew in Maine. Miller, who gets 50 cents on the dollar for his catch these days, a few months ago received a $35,000 loan from a new Small Business Administration program that was crafted in February during final negotiations on the federal stimulus package. The loan program offers an unprecedented 100 percent guarantee to...

With what looks like imminent passage of the Mother of All Bailouts (following on the heels of a year’s worth of government-funded rescues of private homeowners, lenders, insurers and automakers), Washington has turned Aesop’s famous fable about prudence and hard work on its head. The time is ripe for a revised 2008 edition of “The Ant and the Grasshopper:”

Bankruptcy, taxpayer bailouts appear inevitable. States and municipalities are in deep financial trouble. Pension performance has faltered. Over a trillion dollars worth of municipal pension fund assets have been erased in the recent market meltdown. The average public pension plan is 35% under-funded, and things are getting worse. A wave of municipal bankruptcies could well follow. To avoid such a fate, there are three possible responses cities and towns can take to the problem of under-funded pension plans. None of them are appealing. First, it's important to understand that "under-funded" basically means municipalities lack the money in the pot to...

Meadowman performs his song Government Santa

More Extortion By The BanksThe Market TickerSaturday, November 7. 2009 Posted by Karl Denninger in Corruption at 13:14 Yeah, that's a strong word. In my opinion it is also the only word that's appropriate for the circumstances: The Fed has been informed by dealers that they would be willing to enter into very sizable amounts of reverse repos with the Fed, if asked to do so, provided they could get some relief from Tier I capital constraints, MNI also understands. Ah, the old "let us lever up and we'll do it, but if it blows up, we'll then be back...

I had lunch last week with Rolfe Winkler, who is an up and comer in the blog world, a thinking man’s Felix Salmon. He is similarly annoyed with St. Warren — but rather than engage in my sophmoric venom spew, he went to the spreadsheet to discover that Buffet owns major stakes in 8 companies that have received more than $100 billion in government bailouts. Capitalist? Hardly. Sounds more like just another crony to me. Rolfe also posts this fabulous chart:

Bailouts For Bonuses Kevin Depew Nov 06, 2009 7:55 am As the year comes to a close, Wall Street is setting up for another record year of bonuses which will be financed by bailout money. Kevin Depew debates the hot button issue on the latest Two Ways to Play.[snip]

Fannie Mae is asking for an additional $15 billion in government aid after posting another big loss in the third quarter as taxpayers' bill from the housing market bust keeps getting bigger. The mortgage finance company, seized by federal regulators in September 2008, posted a quarterly loss of $19.76 billion, or $3.47 per share. The loss includes $883 million in dividends paid to the Treasury Department and compares with a loss of $29.41 billion, or $13 per share, in the year-ago period. The results were driven by $22 billion in credit losses as the company continued to build its reserves...

As U.S. car manufacturer 'stuns' Wall Street with 3Q profits, some media forget to report Ford didn't take government cash. Ford Motor Company took everyone by “surprise” Nov. 2, when it announced nearly a billion dollars in profit for the third quarter of 2009. The company also said it would be “solidly profitable” by 2011. CNN repeated the announcement on Nov. 3 “American Morning,” saying, “Turning now to the Big Three in Detroit, Chrysler extends its buyout offer to more than 20,000 employees while General Motors is still trying to restructure spending billions of bailout dollars, but Ford – which...

In the late 1980s, all anyone could talk about was how Japanese companies were going to take over the world. The Japanese were smarter than we were, more disciplined than we were, more team-oriented than we were, hungrier than we were. Japan was taking over. We were done. Then Japan's bubble burst. And it was payback time. In the late 1990s, all anyone in America could talk about was why Japan was mired in a "lost decade." It was cultural, everyone explained. The Japanese were just too wimpy and "team-oriented" to face the facts. Instead of just facing reality and...