OBAMA’S JUSTICE IS TOO BUSY ASSAULTING LEGALS IN ARIZONA TO TAKE ON OBAMA’S BANKSTER DONORS!
“I’m not here to punish banks!” THE BANKSTER-BOUGHT PRESIDENT
US Justice Department drops investigation of sub-prime mortgage mogul Angelo Mozilo
By Andre Damon
3 March 2011
The US Department of Justice has quietly dropped its investigation of Angelo Mozilo, the former head of mortgage lender Countrywide Financial, the largest originator of the subprime mortgages that were instrumental in the financial collapse of 2008.
According to the Los Angeles Times, which broke the story last week based on interviews with a confidential source, the Justice Department concluded that Mozilo’s activities “did not amount to criminal wrongdoing.”
The action puts a seal on the official response to the financial crisis: there will be no criminal prosecutions of the top executives responsible for the meltdown and the untold misery it has brought.
The office of US Attorney Stephen A. Cazares, which headed the criminal investigation, did not return phone calls.
The Justice Department decision not to pursue criminal charges follows the decision by the Securities and Exchange Commission (SEC) last October to forgo a trial and settle civil fraud charges against Mozilo. Under the agreement, Mozilo did not admit guilt but agreed to pay $67.5 million in penalties.
The mortgage banker pocketed over $500 million in compensation between 2000 and 2008, largely by making high-interest subprime loans to low-income borrowers and selling the loans to Wall Street banks, which packaged and sold them to investors around the world in the form of collateralized debt obligations.
The SEC accused Mozilo of selling nearly $140 million of his own shares in the run-up to the company’s near-collapse and purchase in 2008 by Bank of America. While Mozilo was dumping his own holdings he told shareholders that the company was healthy and organized buybacks to prop up the stock price.
The agency further accused Mozilo of failing to share with investors his own knowledge, documented in email exchanges with fellow executives, that Countrywide’s loan assets were “toxic.”
Mozilo co-founded Countrywide Financial in 1969 and presided over it for almost 40 years. In the late 1990s and early 2000s, Countrywide led the race by mortgage companies to transition from lending and holding mortgages to maturity, to lending to virtually anyone who would sign a contract and then selling the debt to Wall Street speculators in the form of mortgage-backed securities.
By aggressively lowering lending standards, Countrywide expanded rapidly during the housing bubble and by 2006 was originating one out of every six mortgages.
“The definition of a good loan changed from ‘one that pays’ to ‘one that could be sold,’” Patricia Lindsay, a former finance fraud specialist, told the Financial Crisis Inquiry Commission, which published its report to congress on January 27. The commission said in its report that “Countrywide’s essential business strategy was ‘originating what was salable in the secondary market.’ The company sold or securitized 87 percent of the $1.5 trillion in mortgages it originated between 2002 and 2005.”
The Financial Crisis Inquiry Commission report contains a section on Countrywide with sufficiently incriminating information to prosecute Mozilo and many other Countrywide executives and send them to prison. The report concludes that “As early as September 2004, Countrywide executives recognized that many of the loans they were originating could result in ‘catastrophic consequences.’”
“Less than a year later,” the report continues, “they noted that certain high-risk loans they were making could result not only in foreclosures, but also in ‘financial and reputational catastrophe’ for the firm. But they did not stop.”
The report also quotes internal emails sent by Mozilo that clearly demonstrate he knew his company was trafficking in fraudulent securities that would collapse in value at any major downturn in the housing market, bringing the company down along with it.
On March 28, 2006, Mozilo wrote to a fellow executive that subprime mortgage-backed securities are “the most dangerous product in existence and there can be nothing more toxic.”
Afterward, in a September 26, 2006 email, Mozilo concluded, “The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales.”
After expressing these doubts privately, Mozilo quickened the pace at which he sold his own shares, all the while insisting publicly that the company was in good health.
It is notable that this report, which exhaustively documents the fraud and criminality of the figures responsible for the financial crisis, has been buried by both the government and the media.
The Justice Department’s action comes just months after it dropped its investigation of Joe Cassano, the former chief financial officer of American International Group’s financial products unit. Cassano was among the principle architects of the company’s downfall, which ultimately led to a government bailout totaling $100 billion.
Only two Wall Street figures have been prosecuted in connection with the 2008 financial meltdown: Matthew Tannin and Ralph Cioffi, both mid-level executives at Bear Stearns who headed internal hedge funds that collapsed in 2007. They were acquitted of all charges.
*
FINANCIAL CRISIS PANEL URGES PROSECUTIONS OF INDUSTRY FIGURES
By Greg Gordon
McClatchy Newspapers
WASHINGTON — The congressional panel examining the root causes of the nation's financial crisis voted to refer to state and federal prosecutors a wide range of potential criminal wrongdoing by financial industry figures and corporations, people involved in the deliberations said Tuesday.
The politically divided Financial Crisis Inquiry Commission is likely to detail the referrals on Thursday in releasing its final report, based on testimony from more than 700 people in coast-to-coast hearings and a review of millions of pages of documents.
The Huffington Post website first reported on the commission's referrals Monday evening.
It couldn't be learned which financial executives and companies were subject of the referrals to the Justice Department and state attorneys general. The panel investigated the roles of, among others, subprime mortgage brokers and lenders; Wall Street giants that bought, repackaged and resold the loans; bond ratings agencies; and a huge insurer that wrote protection on dicey bonds, enabling a U.S. housing bubble to swell until it burst, crashing the global economy.
Two people who had roles in the deliberations, speaking on condition of anonymity because the report is still confidential, said that the panel voted on a number of the Justice Department referrals months ago.
"And we've done some more," one of these individuals said.
The legislation creating the commission, signed by President Barack Obama on May 20, 2009, charged the 10-member panel to refer to the U.S. attorney general and appropriate state attorneys general "any person that the commission finds may have violated the laws of the United States in relation to (the) crisis."
"We did our duty," said one of the two involved in the process.
However, the other knowledgeable person stressed that the panel's thin investigative staff didn't attempt to compile evidence for solid criminal cases, but rather referred information that raised serious legal issues.
The panel sought to model itself after the hard-hitting Pecora Commission, the Depression-era panel that compiled evidence leading to prosecutions of high officials of some of the nation's biggest banks.
However, the Crisis Inquiry Commission's six Democrats and four Republicans split ideologically in the months after their appointment. The divisions showed up when Republicans chose to release their own findings in December, the original deadline for the final report, and blamed much of the crisis on the "national home ownership strategy" begun under President Bill Clinton and on secondary mortgage giants Fannie Mae and Freddie Mac for jumping into the subprime market.
Commission members and staff signed agreements to keep details of the final report confidential until its release.
However, the New York Times reported late Tuesday that it had obtained a copy of the 576-page report, which it said concluded that the financial disaster was "avoidable" and laid blame on a range of actors from federal regulatory failures to shoddy mortgage lending and reckless risk taking.
Commission spokesman Tucker Warren said the report will be released Thursday and declined to comment further.
(Tish Wells contributed to this article.)
Read more: http://www.mcclatchydc.com/2011/01/25/107430/in-report-financial-crisis-panel.html#storylink=omni_popular#ixzz1CFd8kkpP
• Posted on Monday, January 24, 2011
Wall Street firms earn high profits with Uncle Sam's backing
Read more: http://www.mcclatchydc.com/2011/01/24/107342/wall-street-firms-earn-high-profits.html#ixzz1CFhXylu6
•
By Greg Gordon
McClatchy Newspapers
WASHINGTON — Goldman Sachs, Morgan Stanley and other Wall Street giants that played roles in the subprime mortgage debacle are reporting huge profits and awarding hefty bonuses again even as the government remains on the hook for tens of billions of dollars of their debt.
Banking behemoths are among the scores of lenders and insurers that floated as much as $345.8 billion in federally guaranteed bonds under a program that's widely credited with helping to keep money flowing at the height of the financial crisis, when businesses had nowhere to turn for capital.
Now, with the crisis in the rearview mirror, banks that escaped tough federal pay restrictions by retiring more than $200 billion in direct loans from the Treasury Department are still benefiting from the Federal Deposit Insurance Corp.'s less-conspicuous debt guarantee program, which has no such strings attached.
Some of the Wall Street firms that are getting the guarantees are expected to draw criticism from the congressionally appointed Financial Crisis Inquiry Commission this week when the panel issues its final report on the root causes of the subprime mortgage meltdown, which crashed the global economy.
Under the FDIC program, federal guarantees ensured that bonds that dozens of lenders, investment banks and insurers issued — including Goldman, JPMorgan Chase, Bank of America, Morgan Stanley, Citigroup and General Electric — got gold-plated ratings that drew investors and drove down the cost of financing the debt.
The FDIC's bank insurance fund, which backs the bonds, has reaped more than $10 billion in fees from firms using the guarantees, while the outstanding debt declined to $267 billion as of Dec. 31.
The program doesn't expire until the end of 2012, and the agency says that most of the bonds don't expire until next year.
Robert Pozen, the chairman of Boston-based MFS Investment Management, argues that the government shouldn't have released firms from executive pay restrictions until they'd paid off the Treasury Department's Troubled Asset Relief Program and the FDIC program.
"Any bank that gets out of TARP, it's basically saying that it's now 'good to go' in the private market," said Pozen, the author of the 2010 book "Too Big to Save?" "They shouldn't be continuing to have this big guaranteed subsidy."
However, the agency put tight restrictions on banks' ability to refinance the bonds. Further hampering refinancing is the fact that the market for unsecured bank debt is just beginning to thaw. Morgan Stanley only recently completed a $5.25 billion bond offering, the largest by a U.S. bank in 20 months.
Banking industry consultant Bert Ely said that the adequacy of the fees in the FDIC program, known as the Temporary Liquidity Guarantee Program, was "the kind of thing that will be debated for years."
"If you don't charge enough, then that's what creates moral hazard" and the presumption that risky behavior won't be penalized, he said. "If you charge too much, you may end up sinking institutions that you need."
On Monday, the FDIC, which hadn't identified the participants in its program, gave McClatchy a list of the institutions involved.
Three of the nation's biggest banks — Citigroup, JPMorgan Chase and Charlotte-based Bank of America — account for more than a third of the outstanding debt. Citigroup owes $58.2 billion, JPMorgan $36.1 billion and Bank of America $27.4 billion.
The biggest initial issuer, however, was GE Capital Corp., General Electric's financing arm, which reported nearly $74 billion in FDIC-backed debt as of March 2009, a figure that's since declined to $53.4 billion. Ally Financial, formerly the financing arm for General Motors, has $7.4 billion in guaranteed debt outstanding.
Ely said the banks "are clearly profiting by virtue of having this relatively low-cost funding in place, even though it's in this runoff mode. The question is, to the extent they're making money, how much of that is going into the bonuses? ... There's no way to figure that out."
Goldman, which is doling out $15 billion in employee bonuses for 2010, borrowed as much as $29.8 billion under the FDIC program. It still owes $18.8 billion.
Goldman became something of a pariah in Washington before it settled an SEC civil fraud suit last summer for $550 million that stemmed from its controversial sales of subprime mortgage securities. It's sought to restore its image by announcing an array of internal revisions.
Last week, perhaps symbolizing a return to normalcy, Goldman CEO Lloyd Blankfein was among U.S. corporate chiefs invited to attend a White House luncheon with President Barack Obama and Chinese President Hu Jintao, followed by a state dinner.
Some skeptics have suggested that firms such as Goldman and Morgan Stanley could easily have used the proceeds of the guaranteed bond sales to pay off their TARP loans.
A spokesman for Goldman, which repaid a $10 billion TARP loan in the summer of 2009, declined comment on its government-backed debt.
Spokeswoman Sandra Hernandez of Morgan Stanley, which also repaid a $10 billion TARP tab from Treasury, said the money didn't come from the proceeds of its government-backed bonds, on which it still owes $21.3 billion.
MORE FROM MCCLATCHY
Read more: http://www.mcclatchydc.com/2011/01/24/107342/wall-street-firms-earn-high-profits.html#ixzz1CFdcr7D4
“I’m not here to punish banks!” THE BANKSTER-BOUGHT PRESIDENT
US Justice Department drops investigation of sub-prime mortgage mogul Angelo Mozilo
By Andre Damon
3 March 2011
The US Department of Justice has quietly dropped its investigation of Angelo Mozilo, the former head of mortgage lender Countrywide Financial, the largest originator of the subprime mortgages that were instrumental in the financial collapse of 2008.
According to the Los Angeles Times, which broke the story last week based on interviews with a confidential source, the Justice Department concluded that Mozilo’s activities “did not amount to criminal wrongdoing.”
The action puts a seal on the official response to the financial crisis: there will be no criminal prosecutions of the top executives responsible for the meltdown and the untold misery it has brought.
The office of US Attorney Stephen A. Cazares, which headed the criminal investigation, did not return phone calls.
The Justice Department decision not to pursue criminal charges follows the decision by the Securities and Exchange Commission (SEC) last October to forgo a trial and settle civil fraud charges against Mozilo. Under the agreement, Mozilo did not admit guilt but agreed to pay $67.5 million in penalties.
The mortgage banker pocketed over $500 million in compensation between 2000 and 2008, largely by making high-interest subprime loans to low-income borrowers and selling the loans to Wall Street banks, which packaged and sold them to investors around the world in the form of collateralized debt obligations.
The SEC accused Mozilo of selling nearly $140 million of his own shares in the run-up to the company’s near-collapse and purchase in 2008 by Bank of America. While Mozilo was dumping his own holdings he told shareholders that the company was healthy and organized buybacks to prop up the stock price.
The agency further accused Mozilo of failing to share with investors his own knowledge, documented in email exchanges with fellow executives, that Countrywide’s loan assets were “toxic.”
Mozilo co-founded Countrywide Financial in 1969 and presided over it for almost 40 years. In the late 1990s and early 2000s, Countrywide led the race by mortgage companies to transition from lending and holding mortgages to maturity, to lending to virtually anyone who would sign a contract and then selling the debt to Wall Street speculators in the form of mortgage-backed securities.
By aggressively lowering lending standards, Countrywide expanded rapidly during the housing bubble and by 2006 was originating one out of every six mortgages.
“The definition of a good loan changed from ‘one that pays’ to ‘one that could be sold,’” Patricia Lindsay, a former finance fraud specialist, told the Financial Crisis Inquiry Commission, which published its report to congress on January 27. The commission said in its report that “Countrywide’s essential business strategy was ‘originating what was salable in the secondary market.’ The company sold or securitized 87 percent of the $1.5 trillion in mortgages it originated between 2002 and 2005.”
The Financial Crisis Inquiry Commission report contains a section on Countrywide with sufficiently incriminating information to prosecute Mozilo and many other Countrywide executives and send them to prison. The report concludes that “As early as September 2004, Countrywide executives recognized that many of the loans they were originating could result in ‘catastrophic consequences.’”
“Less than a year later,” the report continues, “they noted that certain high-risk loans they were making could result not only in foreclosures, but also in ‘financial and reputational catastrophe’ for the firm. But they did not stop.”
The report also quotes internal emails sent by Mozilo that clearly demonstrate he knew his company was trafficking in fraudulent securities that would collapse in value at any major downturn in the housing market, bringing the company down along with it.
On March 28, 2006, Mozilo wrote to a fellow executive that subprime mortgage-backed securities are “the most dangerous product in existence and there can be nothing more toxic.”
Afterward, in a September 26, 2006 email, Mozilo concluded, “The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales.”
After expressing these doubts privately, Mozilo quickened the pace at which he sold his own shares, all the while insisting publicly that the company was in good health.
It is notable that this report, which exhaustively documents the fraud and criminality of the figures responsible for the financial crisis, has been buried by both the government and the media.
The Justice Department’s action comes just months after it dropped its investigation of Joe Cassano, the former chief financial officer of American International Group’s financial products unit. Cassano was among the principle architects of the company’s downfall, which ultimately led to a government bailout totaling $100 billion.
Only two Wall Street figures have been prosecuted in connection with the 2008 financial meltdown: Matthew Tannin and Ralph Cioffi, both mid-level executives at Bear Stearns who headed internal hedge funds that collapsed in 2007. They were acquitted of all charges.
*
FINANCIAL CRISIS PANEL URGES PROSECUTIONS OF INDUSTRY FIGURES
By Greg Gordon
McClatchy Newspapers
WASHINGTON — The congressional panel examining the root causes of the nation's financial crisis voted to refer to state and federal prosecutors a wide range of potential criminal wrongdoing by financial industry figures and corporations, people involved in the deliberations said Tuesday.
The politically divided Financial Crisis Inquiry Commission is likely to detail the referrals on Thursday in releasing its final report, based on testimony from more than 700 people in coast-to-coast hearings and a review of millions of pages of documents.
The Huffington Post website first reported on the commission's referrals Monday evening.
It couldn't be learned which financial executives and companies were subject of the referrals to the Justice Department and state attorneys general. The panel investigated the roles of, among others, subprime mortgage brokers and lenders; Wall Street giants that bought, repackaged and resold the loans; bond ratings agencies; and a huge insurer that wrote protection on dicey bonds, enabling a U.S. housing bubble to swell until it burst, crashing the global economy.
Two people who had roles in the deliberations, speaking on condition of anonymity because the report is still confidential, said that the panel voted on a number of the Justice Department referrals months ago.
"And we've done some more," one of these individuals said.
The legislation creating the commission, signed by President Barack Obama on May 20, 2009, charged the 10-member panel to refer to the U.S. attorney general and appropriate state attorneys general "any person that the commission finds may have violated the laws of the United States in relation to (the) crisis."
"We did our duty," said one of the two involved in the process.
However, the other knowledgeable person stressed that the panel's thin investigative staff didn't attempt to compile evidence for solid criminal cases, but rather referred information that raised serious legal issues.
The panel sought to model itself after the hard-hitting Pecora Commission, the Depression-era panel that compiled evidence leading to prosecutions of high officials of some of the nation's biggest banks.
However, the Crisis Inquiry Commission's six Democrats and four Republicans split ideologically in the months after their appointment. The divisions showed up when Republicans chose to release their own findings in December, the original deadline for the final report, and blamed much of the crisis on the "national home ownership strategy" begun under President Bill Clinton and on secondary mortgage giants Fannie Mae and Freddie Mac for jumping into the subprime market.
Commission members and staff signed agreements to keep details of the final report confidential until its release.
However, the New York Times reported late Tuesday that it had obtained a copy of the 576-page report, which it said concluded that the financial disaster was "avoidable" and laid blame on a range of actors from federal regulatory failures to shoddy mortgage lending and reckless risk taking.
Commission spokesman Tucker Warren said the report will be released Thursday and declined to comment further.
(Tish Wells contributed to this article.)
Read more: http://www.mcclatchydc.com/2011/01/25/107430/in-report-financial-crisis-panel.html#storylink=omni_popular#ixzz1CFd8kkpP
• Posted on Monday, January 24, 2011
Wall Street firms earn high profits with Uncle Sam's backing
Read more: http://www.mcclatchydc.com/2011/01/24/107342/wall-street-firms-earn-high-profits.html#ixzz1CFhXylu6
•
By Greg Gordon
McClatchy Newspapers
WASHINGTON — Goldman Sachs, Morgan Stanley and other Wall Street giants that played roles in the subprime mortgage debacle are reporting huge profits and awarding hefty bonuses again even as the government remains on the hook for tens of billions of dollars of their debt.
Banking behemoths are among the scores of lenders and insurers that floated as much as $345.8 billion in federally guaranteed bonds under a program that's widely credited with helping to keep money flowing at the height of the financial crisis, when businesses had nowhere to turn for capital.
Now, with the crisis in the rearview mirror, banks that escaped tough federal pay restrictions by retiring more than $200 billion in direct loans from the Treasury Department are still benefiting from the Federal Deposit Insurance Corp.'s less-conspicuous debt guarantee program, which has no such strings attached.
Some of the Wall Street firms that are getting the guarantees are expected to draw criticism from the congressionally appointed Financial Crisis Inquiry Commission this week when the panel issues its final report on the root causes of the subprime mortgage meltdown, which crashed the global economy.
Under the FDIC program, federal guarantees ensured that bonds that dozens of lenders, investment banks and insurers issued — including Goldman, JPMorgan Chase, Bank of America, Morgan Stanley, Citigroup and General Electric — got gold-plated ratings that drew investors and drove down the cost of financing the debt.
The FDIC's bank insurance fund, which backs the bonds, has reaped more than $10 billion in fees from firms using the guarantees, while the outstanding debt declined to $267 billion as of Dec. 31.
The program doesn't expire until the end of 2012, and the agency says that most of the bonds don't expire until next year.
Robert Pozen, the chairman of Boston-based MFS Investment Management, argues that the government shouldn't have released firms from executive pay restrictions until they'd paid off the Treasury Department's Troubled Asset Relief Program and the FDIC program.
"Any bank that gets out of TARP, it's basically saying that it's now 'good to go' in the private market," said Pozen, the author of the 2010 book "Too Big to Save?" "They shouldn't be continuing to have this big guaranteed subsidy."
However, the agency put tight restrictions on banks' ability to refinance the bonds. Further hampering refinancing is the fact that the market for unsecured bank debt is just beginning to thaw. Morgan Stanley only recently completed a $5.25 billion bond offering, the largest by a U.S. bank in 20 months.
Banking industry consultant Bert Ely said that the adequacy of the fees in the FDIC program, known as the Temporary Liquidity Guarantee Program, was "the kind of thing that will be debated for years."
"If you don't charge enough, then that's what creates moral hazard" and the presumption that risky behavior won't be penalized, he said. "If you charge too much, you may end up sinking institutions that you need."
On Monday, the FDIC, which hadn't identified the participants in its program, gave McClatchy a list of the institutions involved.
Three of the nation's biggest banks — Citigroup, JPMorgan Chase and Charlotte-based Bank of America — account for more than a third of the outstanding debt. Citigroup owes $58.2 billion, JPMorgan $36.1 billion and Bank of America $27.4 billion.
The biggest initial issuer, however, was GE Capital Corp., General Electric's financing arm, which reported nearly $74 billion in FDIC-backed debt as of March 2009, a figure that's since declined to $53.4 billion. Ally Financial, formerly the financing arm for General Motors, has $7.4 billion in guaranteed debt outstanding.
Ely said the banks "are clearly profiting by virtue of having this relatively low-cost funding in place, even though it's in this runoff mode. The question is, to the extent they're making money, how much of that is going into the bonuses? ... There's no way to figure that out."
Goldman, which is doling out $15 billion in employee bonuses for 2010, borrowed as much as $29.8 billion under the FDIC program. It still owes $18.8 billion.
Goldman became something of a pariah in Washington before it settled an SEC civil fraud suit last summer for $550 million that stemmed from its controversial sales of subprime mortgage securities. It's sought to restore its image by announcing an array of internal revisions.
Last week, perhaps symbolizing a return to normalcy, Goldman CEO Lloyd Blankfein was among U.S. corporate chiefs invited to attend a White House luncheon with President Barack Obama and Chinese President Hu Jintao, followed by a state dinner.
Some skeptics have suggested that firms such as Goldman and Morgan Stanley could easily have used the proceeds of the guaranteed bond sales to pay off their TARP loans.
A spokesman for Goldman, which repaid a $10 billion TARP loan in the summer of 2009, declined comment on its government-backed debt.
Spokeswoman Sandra Hernandez of Morgan Stanley, which also repaid a $10 billion TARP tab from Treasury, said the money didn't come from the proceeds of its government-backed bonds, on which it still owes $21.3 billion.
MORE FROM MCCLATCHY
Read more: http://www.mcclatchydc.com/2011/01/24/107342/wall-street-firms-earn-high-profits.html#ixzz1CFdcr7D4
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