Washington's Plans May Result in Even Higher Executive Pay (Big Government® fails again)

In 1992, Congress intervened in corporate compensation and messed things up. Now it's the White House's turn.

Executive pay has emerged, once again, as a major issue in Washington. This week Treasury and the Federal Reserve announced new regulations designed to oversee and limit executive pay at thousands of financial institutions. This is deeply ironic, because today's pay woes are the direct result of prior government intervention.

Government is dumber then dung. No matter how you regulate pay, lawyers for the CEO will find a way around it. The problem is not pay, but fraud disguised as aggressive business strategy. When a bubble forms the initial stages of the pump wave is when corporate fraud will most likely to manifest. Example of this is WaMu who decided to become a nationwide bank in lieu of a regional west coast bank. Their CEO decided to make money on processing loans and immediately bundle them and sell them to the after market. Mortgage departments were under pressure to originate all the mortgages they can get homebuyers to apply for. Normal debt ratio and income checks were ignored. Liar loans became the norm and were bundled into portfolios, and rating companies were pressured to rate these portfolios AAA and sold to unsuspecting investors. Right now the US government can investigate one of the choke points of the fraudulent process that will net many bankers and corporations and that choke point is the rating agencies such as Moody and etc. Moody earns fees when banks ask them to rate their investment products they want to sell on Wall Street. Without even looking at the application data for the loans, Moody execs pressured their professional analysts to find a way to satisfy the clients (i.e give AAA ratings) without any loan data from the banks or ELSE they will be on the managements shit list (no more raises, promortions and first to be laidoff or even fired). I had freepers argue that many of these portfolios were sold and resold that it would be impossible to rate them because the loan data is impossible to get. In the past many rating agencies will not rate anything if there is insufficient data because the company’s future business depends on technical accuracy of their ratings. That is common commercial practice and today Moody and many rating companies deviated from it. It means the government and cheated investors have grounds to sue and hold the rating companies/execs/management/analysts liable in civil court and possibly criminal court. Investigation of the rating agencies will also shed light on how mortgage bankers operate and also expose fraud and malfesance on their part. The problem with the Obama administration is they will not investigate the Wall Street rating agencies. They tell the public they are pursuing fraud, but in reality they ordered the manpower strapped FBI to reveal and field thousands of telephone calls complaining about Wall Street/bank fraud. In essense, the government adopted an investigation strategy of diluting their resources which will take time to sort out while the statue of limitation is ticking away for many of the Wall Street fraudsters.

Example of this is WaMu who decided to become a nationwide bank in lieu of a regional west coast bank. Their CEO decided to make money on processing loans and immediately bundle them and sell them to the after market. Mortgage departments were under pressure to originate all the mortgages they can get homebuyers to apply for. Normal debt ratio and income checks were ignored. Liar loans became the norm and were bundled into portfolios, and rating companies were pressured to rate these portfolios AAA and sold to unsuspecting investors.

Right now the US government can investigate one of the choke points of the fraudulent process that will net many bankers and corporations and that choke point is the rating agencies such as Moody and etc. Moody earns fees when banks ask them to rate their investment products they want to sell on Wall Street. Without even looking at the application data for the loans, Moody execs pressured their professional analysts to find a way to satisfy the clients (i.e give AAA ratings) without any loan data from the banks or ELSE they will be on the managements shit list (no more raises, promortions and first to be laidoff or even fired).

I had freepers argue that many of these portfolios were sold and resold that it would be impossible to rate them because the loan data is impossible to get.

In the past many rating agencies will not rate anything if there is insufficient data because the company’s future business depends on technical accuracy of their ratings. That is common commercial practice and today Moody and many rating companies deviated from it. It means the government and cheated investors have grounds to sue and hold the rating companies/execs/management/analysts liable in civil court and possibly criminal court. Investigation of the rating agencies will also shed light on how mortgage bankers operate and also expose fraud and malfesance on their part.

The problem with the Obama administration is they will not investigate the Wall Street rating agencies. They tell the public they are pursuing fraud, but in reality they ordered the manpower strapped FBI to reveal and field thousands of telephone calls complaining about Wall Street/bank fraud.

In essense, the government adopted an investigation strategy of diluting their resources which will take time to sort out while the statue of limitation is ticking away for many of the Wall Street fraudsters.

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