Lehman Bros head took home $300m - video
torresD
The head of failed US investment
bank Lehman Brothers has told Congress
that he took home about $300m in pay
and bonuses over the past eight years.
Richard Fuld,
whose firm went bankrupt last month,
made the statement during testimony
before the House Oversight and
Government Reform Committee.
The panel is holding its first
hearing into the cause of the
financial crisis.
It is being held amid
renewed market turmoil,
with shares plummeting
further in Europe and the US.
Committee chairman Henry Waxman
opened the hearing by saying the
credit freeze threatened the entire economy.
"To restore our economy to health,
two steps are necessary," he said.
"First, we must identify what went wrong.
Then we must enact real reform of our financial markets."
'Feeling horrible'
Turning to Mr Fuld,
Mr Waxman asked whether it was true
he had received $480m (£276.2m)
in pay and bonuses since 2000 -
and whether this figure was fair.
Mr Fuld replied that the
correct total was about $300m (£172.6m).
"We had a compensation committee that
spent a tremendous amount of time making
sure that the interests of the executives
and the employees were aligned with shareholders," he said.
Mr Waxman also criticised Mr Fuld
for requesting multi-million dollar
bonuses for departing executives
just days before last month's collapse.
"In other words," he added,
"even as Mr Fuld was pleading
with [Treasury] Secretary [Henry]
aulson for a federal rescue,
Lehman continued to squander
millions on executive compensation."
Mr Fuld said he took
"full responsibility for the decisions
that I made and for the actions that I took"
and defended his actions as
"prudent and appropriate" based
on information he had at the time.
"I feel horrible about what happened," he added.
Lehman's failure set off a
financial panic which prompted
a $700bn rescue package approved
by Congress last week.
Ob...@real.com
<torr...@hotmail.com> wrote:
>http://news.bbc.co.uk/2/hi/americas/7655178.stm
>The head of failed US investment
>bank Lehman Brothers has told Congress
>that he took home about $300m in pay
>and bonuses over the past eight years.
>
If I'm reading this mess right, it is begining
to seem that what went wrong was: the "brains"
constructing these esoteric vehicles were
some kind of "sheltered book-o-philes" who
were out of touch with reality.
Because, only an idiot or a person, living
a "carefully sheltered" life, would not realize
that there were crooks, liars and other ill intended
people "out there" in the real world.
Of course, then, that is exactly where
Congressional responsibility comes into
play! Because gov't is the "tool" of the
"collective public interest", responsible
for protecting us all from the wild schemes,
that "eggheads" might cook up, in their
"sheltered" minds, and unleash onto us
all. Congress cannot claim to have been
so "sheltered" as they deal with crooks and
liars all day long, day in and day out!
So the central question is: "Why, exactly
did Congress forego it's regulatory responsibilities
in this case?" The answer is not a simple one.
Because Congress is a "political animal", one
can't simply look at any role of the vote counts,
to determine who did, or did not, abdicate
their responsibilities. Since a vote merely
indicates the results of a series of actions,
and a series of "pushes", that can and often
do, result in a "wave" of sentiment, futility,
greed, honor/dishonor, such and the like,
sufficient to move votes, regardless of the
content of the underlying legislation.
And so it devolves to: "Who are the ones
responsible for creating and foisting onto
the Congress, the wave of deregulatory
sentiments?" The present crisis derives
from their success! They succeeded, by
various means, in pushing the Congress
to abandon our collective interests in
exchange for their views.
The problems that led to this crisis, need
not have been an ill intended scheme! It
could merely be an off shoot of calculations,
aimed at doing and creating new types of
business and revenue streams, by "hypothecation"
of interdependencies clear of realistic
considerations of: "The risks to trust", that
these programs were going to gamble, against
the existence of those who would take unfair
advantage of, for personal gain.
By not paying attention to who would be
allowed to join in, or play this game they
created, they created an opening for
crooks and liars, scamsters and shamans
and other ne'er-do-wells, to ride into the
fray!
Although, these ill-intended people,
were few and far between. as they
usually are -- a society cannot function
if the greatest majority are "criminals"
(meaning serious law and rule breakers)
because it then takes too many resources
to contain, leaving not enough to maintain --
But, with the ever greater and growing masses
of assets, both real and projected, being entirely
dependant upon trust, the danger, that any
possible breach of trust would create, grew
exponentially.
Thus, though the largest quantity of
these products may be actually sound,
the breach of trust, once discovered,
calls the whole ball of wax into question!
However, even these questions so raised,
don't bring the whole system down! They
merely act as a match that ignites a fire of
distrust that spreads! As the "fire" of distrust
spreads, people/investors/holders demand
verifications! And it is while they wait for
verification, that they must stop trading/trusting!
So the market "locks up", nothing get traded,
leaving those who relied on the liquidity of
their investments, unable to raise or access
the cash they need on a regular basis, as
their "programs" required, and so they "crash"!
When a company/entity "crashes, it's assets
get heavily devalued! That means that all
"like kind" assets get devalued also, regardless
of who the holder is! And this is the begining
of the downwards cycle. As assets of other
holders get devalued, as these "crashed
companies" dump their holdings onto
the market, the balance sheets of other
companies tilt towards the graveyard.
It is this unknowable "tilting of balance sheets
towards the graveyard", that makes people
ever more skeptical of who is really worth
what, and deprives them of the ability to
rely on any and all statements, to invest
or lend.
So, the companies begin to drop like
flies, dumping ever more assets onto
the market, or threatening to do so, that
causes the market reactions leading down!
Putting more cash into such a market does
nothing but... Well... Put more cash into
the market! But since it does nothing to
"clarify" the value of things, and the
strength or weakness of the holders, it
does nothing to make them creditworthy,
thusly their securities cannot be traded
or held. Since, from a shareholders/investors/lenders
perspective, it is not the amount of cash a
co., has, but it's ability to do future business,
that is the key to making the decision to
put money in.
Obviously with assets rapidly declining
in value, people being dumped out of work,
commodity prices rising and consumers,
therefore, not spending, there is little to
hope for in the future of many companies.
With the gov't misdirecting it's funds, incurring
increasing levels of debt, that do nothing but
approach ever closer a day, when its interest
payments exceed it's revenues... Well... The
picture is not a pretty one.
Since the gov't will not find the political
will to "clarify" the financial sector, by
re-reguating it and imposing oversight,
the collapse will have to run it's course
"naturally", unaided by these human devices
which could attenuate it. Where we will
be when it ends, of course, is anyone's
guess! My guess is; "In very bad shape
indeed"!
Trust cannot return to the marketplace
until it's real fundamentals, and "the rules"
are known! Since there is no effort to establish
these things, the natural market forces will
have to do this work on it's own. As we
know, the forces of nature are brutally
honest, which is why we trust in them so!
---
upon trust,
two-X-four
Publication:IBD; Date:Sep 26, 2008; Section:Front Page; Page Number:A1
UNCOMMON KNOWLEDGE
Congress Pushed Fannie, Freddie In Wrong Direction During 1990s
Before GOP takeover, Congress, Clinton joined to loosen lending rules
What Caused The Loan Crisis? FOURTH IN A SERIES
BY TERRY JONES INVESTOR'S BUSINESS DAILY
It was October 1992, nearly 15 years before the housing meltdown and
subprime crisis.
Republican Rep. Jim Leach of Iowa was on the floor of the House,
talking about something that no one at the time seemed to care about:
the potential danger that Fannie Mae and Freddie Mac posed to the economy.
In remarks later reported by the Washington Post, Leach warned that
Fannie and Freddie were changing “from being agencies of the public at
large to money machines for the stockholding few.”
Leach’s prescient comments went unheeded — indeed, Congress spent
the next decade and a half avoiding the alarms going off around Fannie
and Freddie. Until, that is, it was too late.
Led by top Democrats, including Rep. Barney Frank in the House and
Sen. Chris Dodd in the Senate, Congress not only did nothing about the
growing risks at Fannie and Freddie, it in essence doubled down on their
risks.
The Democrat-led Congress of the early 1990s eased capital limits
on the two mortgage lending giants, letting them use enormous leverage —
2.5% of assets at Fannie and Freddie, vs. 10% for banks — to expand
lending to low-income, minority communities.
Regulator Reined In
Congress, with the passage of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, also created a regulator for
Fannie and Freddie — but made sure that, from the very beginning, it
would essentially be neutered.
That regulator, the Office of Federal Housing Enterprise Oversight,
an arm of the Department of Housing and Urban Development, was unique
among financial regulators in that it had to go back each year to
Congress for its budget.
This assured its total dependence on Congress — a less-thanideal
situation for a regulator.
Over the next decade or so, Fannie and Freddie made sure that OFHEO
stayed off their backs, funneling $200 million to various political
causes and community activists while donating to 354 political
candidates of both parties.
Congress Eases Lending Rules
In 1994, the Democratic Congress again moved, passing the Community
Reinvestment Act — an update of the original 1977 law.
For the first time, homeowners that previously didn’t qualify —
either because they couldn’t put any money down or had bad credit — were
made eligible for government-backed loans.
The housing boom was on.
During the 1990s, according to one Fed study, Fannie and Freddie
enjoyed a subsidy of as much as $182 billion, with most of that going to
shareholders — not to poor borrowers, as supporters of the
government-sponsored enterprises have often claimed.
Still, even after the GOP won control of Congress in 1995,
Democrats in both houses worked with President Clinton as Fannie and
Freddie’s enablers.
Clinton, bypassing Republicans in Congress, had HUD rewrite the
rules for Fannie and Freddie to let them get involved in the subprime
market for the first time.
Robert Rubin’s Treasury got involved too, reworking its own rules
to crack down on banks that didn’t make enough loans to distressed,
minority neighborhoods.
That year, Fannie Mae bought an estimated $18.6 billion in subprime
loans from banks. By 2004, that amount had exploded to $175 billion, or
44% of the total.
Republicans controlled Congress from 1995 through 2006. But under
Clinton their hold was precarious, and with the Internet boom on and
several foreign financial crises to deal with, Fannie and Freddie got
lost in the shuffle.
Too Little, Too Late
At the tail end of Clinton’s administration, Treasury officials
under the new secretary, Lawrence Summers, became alarmed at Fannie and
Freddie’s excesses.
Undersecretary Gary Gensler went to Congress in 2000 seeking an end
to the companies’ special status — especially the “implicit” federal
guarantee of their now-$5.4 trillion loan portfolio — and more power for
regulators to boost the companies’ capital requirements.
Democrats raised a ruckus. So did Fannie and Freddie, which were
both headed by politically well-connected CEOs who knew how to
strategically reward — and punish — those who crossed them.
“We think that the statements evidence a contempt for the nation’s
housing and mortgage markets,” Freddie Mac spokeswoman Sharon McHale
said at the time, summing up the sentiment in Congress.
It was the last chance during the Clinton era for anything like
real reform.
>
--
not too random uselessnet weirdness:
Bill Shatzer wrote:
"And over 4,000 Americans have paid with their lives for that little
adventure. Plus a half a trillion dollars in national treasure
You might compare that with the number of lives lost on 9-11. Or the
economic injury incurred from that event.
It would have been cheaper in both lives and money to just suffer
another 9-11 every six or seven years.
Peace and justice,"
Baxter blurts out a plaintive call for Viagra:
"At my age, I don't need balls. I'm done with the procreation stuff."
WhorresD gets politically bipolar:
"I like McCain's plain speaking way, to the point,
no punches pulled.
I would trust McCain to do the right thing,
I think that he's a truthful person, with his heart in
the right place."
Dog shit McAfee expresses his Marxism:
"Capitalism has never worked."
Ob...@real.com
None of which explains why there
was so much fraud in a market that
was growing in size and almost totally
dependant upon people believing what
they were being told, by people they
expected to tell them the truth!
You see, it isn't the fact that mortgages
weren't being paid. It isn't the fact that
there were some going into foreclosure,
that brought the market down. The "set up",
contained an "expected failure rate", and
it was that rate that was insured against
by the "swaps".
If things had proceeded normally, and
the foreclosures grew and even crested
a bit over 5%, the markets would have
absorbed the blow as "cost of doing business"
as risk. Bad risk taking can damage a market,
but it comes back rather quickly from such,
because, in our modern levels of modeling,
there are people putting money on both
sides of risk bearing events.
The trouble here is: Some of those
defaulted mortgages, caused foreclosures
that forced mortgage holders to take a
look at what they'd just repossessed!
What they found was extraordinary, to
say the least!
Instead of discovering that they had taken
back property that was somewhat in line
with the banks assessed value, they discovered
that in some cases, there was no property at
all! THAT's what made all mortgages, and
all mortgage backed securities questionable!
No one could say just how many bad mortgages
were in existence, or where/who held them!
If anyone could know that, then they could
have been "cut out" and trading could continue!
But, when questions to the effect of: "Where are
the bad ones and how many are there!"; went
unanswered, people had no choice but to
suppose the worse! Meaning they could no
longer simply trust the mortgages, and now
they are finding that they can't trust the market
either! Since the market won't "fess up", to
it's current state! Instead, we're being caught
by surprise, as once-believed-to-be-staid-
companies, suddenly go belly up!
These "surprises" are revealing that just
about every authority on the matters, have
been asleep at the switch! So the early birds
pulling out, are sending the whole pile of
offal sliding down hill!
So, all that blather about what happened
in Congress in 1994 is just that: Blather!
This is about crooks and liars, being allowed
to create totally fraudulent instruments and
institutions accepting and trading them.
No bills about who gets to borrow has anything
to do with this problem! It is all about not
"vetting" the paper!
Where there were supposed to be several
layers of this "vetting" in place, fraudulent
mortgages/paper should not have been able
to either get into the market, or survive long
in the market place.
For the further information, of those
who believe that the poor and/or "ineligible"
borrowers had any hand in this, that is
patentedly false! The greatest bulk of
sub-primes, went, not to poor or "ineligible",
or first-time-home-buyers, but to people
refinancing their homes --"cash-out"!
These people, had budgets and knew
the costs and methods of operating a home!
They were very familiar with mortgages and
"re-fi's"! So they weren't making bad decisions
in ignorance as pundits would have you assume!
The poor borrowers, were few and far between,
such that either appreciation and/or "re-fi's" would
make these mortgages work out in the end, if]
not in the hands of the home owner, then in the
hands of the holders once repossessed. Thus
the "insurance" swaps, we're incredibly sound
investments to begin with... As long as there
remained enough trust in them, to keep people
trading them, until the mortgages came to term!
It's the "human factor" that brought the whole
scheme down! Something that could not be
done by mere defaults! Towering sums were
placed at risk, in a market that was being
considered "highly trustworthy"! It was
considered that way, because, up to a
certain point, it was! Every peice of paper
had an appreciating peice of property behind
it, valued at-or-above it's "face value", or
close enough to it, that it would not matter
to the market who owned it; bank or purchaser!
Then the crooks were allowed in! They
created paper without any assets behind
it! They created paper with false valuations!
And the "appearance of activity" they created,
pushed the values of assets that existed, higher.
Thus adding false values to the tower of
investment paper! Thusly "leveraging" ever higher
the levels of trust the markets needed to maintain!
"The Bubble", burst, when that trust was
discovered to have been misplaced, by
just a few instances of fraud! That prevented
those home owners, who had refinanced,
"cash out", from getting the new loans they
needed. So they stopped spending, hoping
to hold on, until they could get new loans!
Meanwhile, with people questioning the
value of real estate in general and mortgages
in particular, the markets tightened! As the
markets tightened, people near the edge
fell off! And this wave of "fall offs" caused
even more questions, and more fraud was
discovered, thus weakening remaining
levels of trust, locking everyone into their
positions, as expenses ran on dragging
ever more people and companies down!
It's a vicious spiral downward! Which is
why regulations had been put in place!
We've seen this kind of thing before!
Market professionals, who have studied
market histories, are extremely familiar
with what is happening now! And they
already know what the course is! But,
like their counterparts before them, they're
holding their tongues, in the hopes of
avoiding the "self fulfilling prophecy"!
Which is B'! Because it's like saying:
"I know that army is coming over the
hill to attack the village... But I won't
warn the villagers, because that
might start a panic!"
Where the truth would allow for
an orderly retreat! As the inevitable,
inevitably become apparent, guess
what results these geniuses have
chosen for us? If you guessed Sheer
Panic, you're right!
green lantern
Actually it PRECISELY explains it, if you have any ability to read for
comprehension!
Publication:IBD; Date:Sep 24, 2008; Section:Front Page; Page Number:A1
UNCOMMON KNOWLEDGE
Good Intentions Paved The Road To Subprime-Stoked Meltdown
Carter-era lending act forced banks to make risky mortgage loans What
Caused The Loan Crisis? SECOND IN A SERIES
BY TERRY JONES INVESTOR'S BUSINESS DAILY
For those looking for a real start to today’s financial meltdown and
government rescue, you need to go back — way back — to 1977, and the
Jimmy Carter presidency.
It was then, for the best and purest of reasons, that well-meaning
Democratic members of Congress brought the Community Reinvestment Act
into being.
The main idea, as the late Democratic Sen. William Proxmire said on
the Senate floor in 1977, was “to eliminate the practice of redlining by
lending institutions.”
That term — “redlining” — seems quaint today. But in the 1970s, it
was widely seen as the cause of housing disparities between white and
black Americans.
The redlining theory went thus: Banks set up shop in low-income
areas, took deposits, then lent the funds to richer areas — leaving poor
and minority communities starved of housing and capital.
President Carter, a reformist former governor from the racially
aware “New South,” embraced the 1977 CRA as a way to end the supposed
practice of redlining.
Coming as it did just years after other major civil rights
legislation — including the 1964 Civil Rights Act, the Fair Housing Act
of 1968 and the Equal Credit Opportunity Act of 1974 — community
activists and others viewed it as essential to bringing
African-Americans into the American dream.
At the time, the U.S. was in the middle of what came to be known as
stagflation. After the first oil embargo in 1973 sent prices spiraling
upward, the economy struggled to emerge from a vicious two-year
recession in 1974 and 1975.
By 1977, inflation hit 7% — on its way to 14% in 1980. A year
earlier, in 1976, 30-year mortgage rates crested 9% for the first time
ever.
Meanwhile, the jobless rate stood at 7% — 14% for blacks. Many
African-Americans felt frozen out of homeownership. As home prices
soared, affordability became a crisis for black families.
In such a nasty economic environment, it’s easy to see why
something like the CRA got passed.
Good intentions, bad results.
Unfortunately, this well-intended law eventually led to a housing
boom based on shoddy loan practices, a subsequent bust, and the
financial mess we are in today.
Initially, the CRA was supposed to not just lend to poor areas, but
to do so “consistent with safe and sound lending practices.” That latter
key proviso was ignored as CRA was implemented.
As IBD has already shown, the CRA forced banks and savings
institutions — then, far more heavily regulated than today — to make
loans to poor, often uncreditworthy minority borrowers.
Banks were required to keep extensive records of their minority
lending practices. Those that didn’t pass muster could be denied the
right to expand their branches, merge with other banks, or boost lending
in new markets.
Regulators didn’t need to do much policing; they let that job fall
to radical community groups, such as ACORN and NACA, which siphoned
literally billions of dollars from banks and lent the money in poor
communities.
It wasn’t entirely altruistic.
The community groups booked thousands of dollars in fees for every
loan. And loans often required recipients to become active in radical
causes — what’s today called “community organizing.”
If a community group decided a bank was operating in bad faith, it
could affect the bank’s “CRA rating” — the scorecard for how well it was
doing as a minority lender.
Banks became pliable, easy targets. No bank CEO wanted to be
mau-maued as an enemy of the poor. They became shakedown targets,
channeling billions of dollars to groups that had, at best, meager
results to show for it.
That’s how it began. Later, in the Clinton era, Fannie Mae and
Freddie Mac got involved — buying up bad loans from banks, and
securitizing them for sale on world markets. The seeds of the subprime
meltdown were planted.
As of last year, the homeownership rate among all Americans was
68.1% — up from 63% in 1970. For black Americans, it’s up from just
below 42% in 1970 to 47.2% last year. It’s still below 50%, and still
the lowest of any minority group.
Today, Americans might rightly ask 31 years after the CRA was
passed whether the more than $1 trillion lent under its auspices did
what its proponents promised.
grandwazoo
appointees.
Ob...@real.com
Nope, these good intentions had
nothing but good results! It meant
that people who would otherwise
been locked out of the housing market,
could get in.
And that... Those people, those loans,
had nothing to do with the crash! They
are victims of it, not the cause!
Most of the "sub prime" loans went to
people who were refinancing their homes,
and taking "cash out's". And most of them
are victims too!
The people to be held responsible are
those who put fraudulent paper into the
market and those who allowed it and
continued to trade it, even after they
knew. Like the guy who gets stuck with
a counterfiet bill, who goes out to pass
it on, so he doesn't have to take the loss.
Meanwhile, the people taking out
loans, to buy fairly valued houses,
were people in a position similar too
this:
Let's suppose, for a moment, that
you are offered 1,000,000 one oz bars
of gold at 1 dollar per bar! An extremely
good deal, wouldn't you say? But the
problem is, you don't have a million
dollars, nor do you have the income
to carry a million dollar loan!
Well, in a case like this, you know you'd
be foolish not to take any loan you could
get... And, any prospective lender would
consider themselves very foolish not to
make this loan!
So that's the position the borrowers and
lenders were placed in, in a rapidly
appreciating market! Best yet, was
the fact that "Masters of the Universe",
had figured a way to "insure" all these
loans! Where "insure" means to spread
the risks of the defaults expected to happen.
At that time, the only way defaults were
expected to happen would be due to
market appreciation slowing! Even then
they would be few, and the risks spread
so widely that each investor/insurer would
only lose a few pennies per each. Against
earning dollars in fees!
But the fraudulent paper had no backing,
no property in some cases, and no buyers
or sellers in others. There were cases
where the property was over valued. This
threw the market into turmoil, because
it meant, if this kind of paper was in the
market, the market had to know how
much of it was there? The market had
to know, how much, how many, and
where, but it asked these questions and
got no answers. So people stopped trading
this paper!
Since it was the cash, from trading this
paper, that was producing the money
banks needed to make loans, loans dried
up! Houses kept appreciating for a while,
but without buyers (because of fewer loans),
these increased valuations could not be
"actualized" by the people who needed
to realize them.
That sent the first wave of defaulters over
the edge, and that begot a new wave of
desperados, trapped with unservicable
mortgages, because appreciations could
not be realized, nor new terms be negotiated,
as appreciations cooled down. And that
sent yet another wave over the edge bringing
the value of assets down with them.
Soon people with nothing to do with sub primes,
became engaged in the battle! As consumers
became fewer, business performance slowed,
sending yet another wave over the edge, which
in it's turn pulled down others, by dumping people
out of work. Ad infinitum!
At the root is the fraud, that Elliot Spitzer
and other State Attorney Generals were
trying to address, when the OOC barred
their path! It was the fraudulent paper,
the dimensions of which were not
disclosed, that made everything go
sour! Not the people who obtained loans,
even if they couldn't really afford them
"on paper" at the time, because in
reality they could afford them at the time,
and the lenders knew that they could!
And lenders had insurance if they couldn't!
So it was one of those times when it
made no sense not to buy, and it made
even less sense not to lend! But most
of the loans were good, but "tarnished"
by the unknown dimensions of fraud, that
should not have been in this market at all,
if the regulators had guarded the gates,
and not simply abandoned their posts.
Ob...@real.com
McCain won't let that happen, if he
can help it, he's relying on the racists
to give him the boost he needs, since
such people will reliably vote against
their own interests and even their own
country to hold their beliefs. With them
racism comes first! Many countries
of the world are waking up to this fact,
and know that racists are "traitors without
opportunity". Simply because they don't
get the chance to choose between their
own racist ideals and their country many
times in their life. But, you can bet, if
they'd harm themselves to hold their
racist ideals, what else wouldn't they do?
Someone, somewhere on the net I've
read, suggested that a backroom deal
may be on the stove, where the BushCo.,
goes to the Hague in exchange for international
cooperation. We'll see...
Mars State
> Most of the "sub prime" loans went to
> people who were refinancing their homes,
Oh...cite?
> and taking "cash out's". And most of them
> are victims too!
Really?
Victims of what?
Their own GREED and STUPIDITY???
FUCK YOU, scumbag.
Mars State
You fucking lying asshole, McCain has been steadfastly OPPOSED to any
racial element in this campaign.
Go peddle your used up crap elsewhere, whore-face.