Posts Tagged ‘cards’

Here Comes the Troika

Posted: 16 February 2013 in Uncategorized
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Apparently, the Portuguese are playing a new austerity-era card game: Here Comes the Troika: Once Upon a Time in Portugal-land [ht: sm].

The rules:

Hurry up!

Win the elections and govern all by yourself

Put the money in offshore accounts

If the country goes bankrupt. . .someone has to pay!

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The series resumes with the Seven of Clubs: Not regulating Credit Default Swaps as insurance.

Enabled high-stakes betting on company and country credit. Created interconnected web that helped bring down economy.

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The series continues with the Seven of Spades: 2005 Bankruptcy Reform Act.

Good for bankers, bad for people. Prevents judges from discharging private student loans and other debts.

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The series continues with the Eight of Hearts: Mark-to-Make-Believe.

Out and out lying about how much your instruments are worth in order to avoid looking insolvent.

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The series continues with the Eight of Diamonds: Extend and Pretend.

The practice of allowing businesses (but not individuals) to renegotiate defaulted loans in order to avoid taking losses on the books.

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The series continues with the Eight of Clubs: Off-balance sheet vehicles.

Enron’s favorite technique, adopted by the banks. Move the bad where people aren’t looking.

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The series continues with the Eight of Spades: Repo 105.

Accounting gimmick used by Lehman to make balance sheet look $50 billion prettier than it really was.

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The series continues with the Nine of Hearts: Angelo Mozilo.

Angelo R. Mozilo was chairman of the board and C.E.O of CountryWide Finance until July 2008. Countrywide was not so interested in sub-prime loans in the beginning when the sub-prime loan industry took off. Mozilo described the people involved with those loans at the time as “crooks”. But facing significant loss of business, Country Wide moved quickly into the sub prime business.

Mozilo used his fiscal power to give favorable mortgage financing to key political figures and power brokers. This included loans to Senate Banking Chairman Christopher Dodd, Senate Budget Committee Chairman Kent Conrad and former Fannie Mae CEO Jim Johnson. Other people received favorable mortgages to buy political favors. This included Nancy Pelosi’s son, Paul, Barbara Boxer, Richard Holbrooke, Donna Shalala and others wielding influence and power.

Mozilo sold hundreds of millions of dollars worth of mortgages over the years personally. The SEC charged him in 2009 with insider trading and securities fraud. He reached a settlement with SEC in 2010. He paid $67.5 million of a fortune estimated as over $600 million.

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The series continues with the Nine of Diamonds: Dick “Gorilla” Fuld.

Richard Fuld was the last Chairman and CEO of Lehman Brothers. He was nicknamed “Gorilla” because of his aggressiveness. His best know quote is, ” I am soft, I’m lovable, but what I really want to do is reach in, rip out their hearts and eat them before they die”.

Fuld received almost $500 million in compensation from Lehman from 1993 to 2007.  As the sub prime crisis spiraled, Lehman was over-leveraged, which is to say the company had borrowed thirty two dollars for every one dollar it had. This was higher than the leverage at Goldman Sachs and Merrill Lynch.

Under Fuld’s leadership, Lehman lost 73% of its value in 2008 as the sub prime crisis spun out of control. When Barclay’s pulled out of  a deal to purchase Lehman in August 2008, Lehman filed for Chapter 11 bankruptcy.

With $639 billion in assets and $613 billion in liabilities, the Lehman collapse was the biggest bankruptcy in U.S history. The company was party to over 900,000 derivatives contracts when it imploded. Fuld said when called before Congress, “Until the day they put me in the ground, I will wonder why we weren’t saved.”

Wall Street hold ‘em

Posted: 10 December 2012 in Uncategorized
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The series continues with the Nine of Clubs: Joe Cassano.

Joseph J. Cassano was a prominent insurance executive at the American Insurance Group (AIG) Financial Products Division from 1987 until February 2008.

Cassano sold billions of CDOs without any collateral backing them up. This type of insurance had been deregulated by Senator Phill Gramm’s Commodity Futures Modernization Act of 2000 during the Clinton Presidency. This legislation included the infamous “Enron loophole” that exempted oil and energy transactions from regulation. This fueled the ENRON debacle.

Cassano received $280 million in cash and $34 million in bonuses during his career at AIG. He remained on the payroll even after U.S taxpayers were asked to provide AIG with $85 billion to correct his divisions errors.  When the financial crisis boomeranged in 2008, AIG could not pay insurance money to investment banks for their collapsing derivative products. Joseph Cassano was a major player in this financial meltdown.