The Subprime Debacle, Act II Part II [View article]
Obviously others were aware of the widespread collusion, deception, corruption and racketeering taking plaguing Wall Street but, predictably, when the problem came to light the Treasury and Fed responded to a very complex problem with only liquidity measures.
And while there was a liquidity crisis, it was borne of a solvency issue that remains to this day. Only through unprecedented purchases of MBS by the Fed, fraudulent stress tests which allowed the banks to raise capital, low interest rates and a steep yield curve, relaxed accounting standards and other devices have the banks been able to remain viable while burdened by toxic assets and fundamental solvency issues.
For reasons not entirely clear, we refuse to address the criminal activities that defined the sub-prime crisis and remaining solvency issues. Quoting Charles Hugh Smith “The U.S. government and the Fed had a stark choice: either impose the rule of law and indict and convict hundreds, if not thousands, of people who perpetrated and profited from the systemic fraud and embezzlement at the heart of the mortgage and mortgage-securities industries, or socialize the corrupted, poisoned markets and use taxpayer funds to prop up the wizened shell of a stripmined market and reward the criminals with freedom.
They chose to reward the criminals and prop up a simulacrum market with only one buyer: the Federal Reserve. You can go to the the Fed's balance sheet and see the $1.2 trillion in mortgage-backed securities it owns. There is no effort to hide the brazen socialization of what once was a private-sector, free market.
When the well has been poisoned, the only players dumb enough to drink from it are the taxpayers, who have no choice as the politico toadies of the investment banking/financial Power Elites have funneled some $13 trillion in cash, backstops and guarantees into their "partners" who fund their campaigns and write the laws via their lobbyist proxies.
By failing to cleanse the financial sysytem of endemic corruption and force banks to deal with fundamenatal solvency issues we are underwriting economic policies designed to perpetuate failure and misery. QE2 will be nothing more than Japan2.
Tim is basically living in the past as president of the NY Fed; the fact that he largely responsible for the fate of the dollar and the future of our finances has not dawned on him.
The very essence of being Secretary of the Treasury may be so challenging, he takes comfort and solace in dispensing financial huggies to his former buddies who secretly view him as a water boy. The G20 dismissed him and his message as being irrelevant.
Stress tests, recapitalization and PPIP's were announced to be essential to revitalization the banking sector. PPIP never happened and the perceived success of the banking system rests upon a raft of fraudulent accounting gimmicks including effective repeal of FAS 157, whatever guideline which permits banks to recognize income when their bond prices decrease and the ability to shuffle about, increase or decrease reserves at will.
As to the stress tests, at the end the amount of additional capital required was "negotiated" rather than determined by hard analytics.
Stocks Give Up Gains, Finish Broadly Lower [View article]
I believe the S&P 500 got up to 1130 and then sank to 1113, passing through 1120 (Fib 50% retracement from March 09 lows) but remaining above the 200 day SMA of 1110.
Hidden Benefits of a Greek Debt Default [View article]
I'm sure there are bankers supporting "reform" and additional lending to Greece but the primary culprits behind this bankrupt idea are the political leaders who supported the eurozone and the technocrats in Brussels who embrace collectivism in any and all forms. On any given day, you can see thousands of these little creatures, who populate the EU, EUC, ECB, ESCB and EuroStat, donned in trench coats scurrying about with Blackberry's while busily texting and planning the economic revival of Western Europe. For these progressives, a default within the EU would represent failure of the EU of the itself; this would create a serious fissure in the groundless arguments for collectivism and the need for thousands of apparatchiks. Who knows they might have to join the ranks of many in Greece and get a real job.
Goldman Sachs, The SEC and the Question of Timing [View article]
So for me a central question is, “Why last Friday?” Possibly we will never know the answer to that. But I have my own suspicions. This step was made at this time to influence the outcome of the financial regulation that is now being discussed and drafted. What better reason to implement big reforms than a big splashy case in the papers that all but proves that our big banks are crooks and they need to be regulated into oblivion. ______________________...
I think you're right on the timing of the charges; this will simply put republicans in a box unless they want to outbid the democrats in arguing for harsher reform measures. Thus far, the Dodd bill, in addition to inconsistencies, incorporates more symbolism than it does reform and it's likely to remain that way.
As to Blankfein, I think he will dig in and fight this tooth and nail fully aware that other clients, including governments, are predisposed to get in on the action and recover whatever they can. And who knows where this may lead as the SEC has also fingered this guy Fabrice who, when told he could face fines or banishment, is certain to squeal like a little pig and possibly implicate higher ups within Goldman.
And lastly, with Obama's poll numbers flagging any action against Goldman will more than offset any loss of political capital owing to deflating the zeppelin a bit.
Dodd Bill Will Kill Angel Investing [View article]
This elitist administration, whose thinking is more closely aligned with EU than it is with most Americans, is more concerned with concentrating and expanding the reach of government than it is with creating jobs.
After frittering away a $1.5 trillion or so on the banks the sludge laden stimulus package, the notion of creating jobs arose almost as an afterthought. I can here them now "this unemployment thing is going to be a problem during the upcoming elections so let's paper over the problem with some legislation". "Maybe extend unemployment benefits as well". So they pass a poorly structured bill with a price tag of $18 billion, which will be exploited by those that would hire anyway.
Knowing that small businesses and new businesses account for virtually all job creation, would it tax the administration's thinking to make it easier to create businesses and even offer incentives to start businesses divorced from where the business is to be located and the color profile of its first employees? Similarly why have they done nothing to improve the sentiment and confidence of small businesses who are pressed for capital and embrace a dire view of the future? And why have we not identified key future technologies and offered a broad suite of incentives to research, develop and commercialize these technologies? And almost laughably Obama want to expand exports, along with the rest of the world, but why has he not given priority to getting rid of all the red tape wrapped around the process of securing approval to export?
The answer to these and similar questions is that this spending and policy direction is not aligned with liberal progressive thinking and the blocs of votes aligned with such thinking.
Goldman's CDO Switch? All Perfectly Legal [View article]
Andrew you make a number of good points and this is not going to be a slam dunk for the SEC. It will come down to proving intent to defraud investors through creating a financial instrument designed to fail and misleading investors through questionable statements and omissions.
From what I have read, including the complaint, it would appear that this particular issuance of Abacus was designed, created and structured purely at the behest of and around the interests of Paulson.
ACA, concerned about Paulson's involvement, was told by Goldman (Fab) that Paulson was going long $200 million to allay their concerns of his involvement and cherry picking many of the reference securities used to construct the CDO.
Further, in the flip sheet many pages are devoted to ACA's qualifications but the materials are silent on Paulson's involvement, which could prove to be a material omission. Why go on and on ad nauseum about ACA's track record and qualifications when Paulson made most of the selections? There's only one answer: inducement.
Another interesting point is that Paulson may have not purchased the CDS written and sold as part of creating the CDO; Goldman and other clients may have taken down these instruments while Paulson bought CDS on specific tranches within the CDO from Goldman. It's not clear but the complaint suggests as much and if it's true Goldman would have hedged their exposure through AIG.
So now we have material omissions, Paulson cherry picking reference securities and going short through instruments not essential to the transaction. I don't think this is perfectly legal.
The charges are becoming surreal; life is eclipsing the boundaries of fiction. Hot off the press:
April 16 (Bloomberg) -- Paulson & Co. rejected Wells Fargo & Co. subprime mortgage bonds for a security it helped to structure with Goldman Sachs Group Inc. because the quality of underlying loans was too high, according to documents from the Securities and Exchange Commission.
A bit of insight into the allegations from ZH and the pivotal role played by Paulson (Paulson helped construct the RMBS packages sold by Goldman):
Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. (“Paulson”), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio, Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (“CDS”) with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1 capital structure.
Has the FDIC Found the Solution for Too Big to Fail? [View article]
Intersting comments Bruce; among those in the loop, Sheila Bair and Elizabeth Warren have made more contributions by way of identifying the causes of the crisis and offering some constructive suggestions than all the men combined. Both of them have more ba**s than little Timmy or uncle Ben.
For this proposal or similar proposals to work, they must eliminate regulatory capture by closing the revolving career door between agencies and banks; many of the regulators are treading water and handling the banks with kid gloves in advance of a career move.
And forward looking statements should be prepared by the FDIC, rather than the FDIC simply accepting the blindly optimistic forecasts that would be coughed up by the banks to reduce fees.
Sweden Did Not Nationalize Entire Banking System [View article]
Rather than deal with the myriad problems within the banking sysytem, we have devised an elaborate scheme to work around the underlying problem and treat the symptoms. Here is a more complete checklist (developed my someone else) and current status as to how we have handled the banking crisis:
1- Have the Federal Reserve reduce Fed Funds Rate to Zero Done
2- Have the Federal Reserve hold down rates for a historic length of time i.e. a "very extended period" Done
3- Have Federal Reserve flood market with money (i.e. Quantitative Easing) Done
4- Have Government initiatives that support asset appreciation (i.e. housing, auto programs) Done
5- Have accounting changed that forced asset liquidation for mal-investments (see Accounting) Done
6- Change Margin requirements or Leverage Pricing ISE had instituted special rebates for specific option liquidity providers - April 1 Done
NYSE Euronext's U.S. Options Exchanges Announce New Pricing and Fee - April 5 Done
ISE to Introduce a Modified Maker/Taker Fee Schedule - March 29 Done
New interest rate futures contracts and futures options on Eurodollar & US Treasuries Done
7- Spin or exaggerate economic news through the media in a positive manner only In Process
8- Decrease risk premiums and increase levels of speculation Returning
Phantom volume at 3 am on Sunday night In Process
Is volume merely hiding in plain sight, dark pools and structured notes? In Process
The obvious overhang of CFTC position limits In Process The cross-pollination of inter-continental routing capabilities In Process
9- Establish a Carry Trade that will flow monies to US assets (i.e. re-establish Yen Carry Trade) In Process Market Melt Up? More Like Yen Meltdown In Process
10- Weaken the US$ to solidify Carry Trade returns and reduce currency risk Expected
11- Give the market a surprise jolt -> China revising currency peg (China biggest US collateral holder) Expected
12- Increase the Velocity of Money by instilling an inflation worry in the public Failing to mixed
13- Place restrictions on market shorting (i.e. shortages on key dates) Expected
Financials, Housing Face Growing Trouble [View article]
We have to remember that we are recovering from a financial crisis and are superimposing upon this and its attending challenges suites of misguided policies. It would be premature to think we would see stabilization in either housing or the financial sector notwithstanding "enlightened" policies.
According to Reinhart and Rogoff, this is what a recovery from a financial crisis looks like:
Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics.
First, asset market collapses are deep and prolonged. Real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years.
Second, the aftermath of banking crises is associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years. Output falls (from peak to trough) an average of over 9 percent, although the duration of the downturn, averaging roughly two years, is considerably shorter than for unemployment.
Third, the real value of government debt tends to explode, rising an average of 86 percent in the major post–World War II episodes. Interestingly, the main cause of debt explosions is not the widely cited costs of bailing out and recapitalizing the banking system. Admittedly, bailout costs are difficult to measure, and there is considerable divergence among estimates from competing studies.
But even upper-bound estimates pale next to actual measured rises in public debt. In fact, the big drivers of debt increases are the inevitable collapse in tax revenues that governments suffer in the wake of deep and prolonged output contractions, as well as often ambitious countercyclical fiscal policies aimed at mitigating the downturn.
Will a Continent Have to Blow Up Before We Stop Wall Street? [View article]
if one is to judge from the recent comments of French Finance Minister, Christine Lagarde. Of course, cracking down on “currency speculators”, or short sellers, is largely beside the point, when you’ve got clear evidence of a bank deliberately conspiring to hide the true extent of an EU government’s debt. That’s abetting fraud, plain and simple. Jeffrey Skilling, former CEO of Enron, is sitting in jail today for that very offence.
Simon Johnson notes: These actions are fundamentally destabilizing to the global financial system, as they undermine: the euro zone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets. When the data are all lies, the outcomes are all bad - see the subprime mortgage crisis for further detail.
______________________...
From the FT: However, according to sources, the cross-currency swaps transacted by Goldman for Greece’s public debt division were ‘off-market’ – the spot exchange rate was not used for re-denominating the notional of the foreign currency debt. Instead, a weaker level of euro versus dollar or yen was used in the contracts, resulting in a mismatch between the domestic and foreign currency swap notionals. The effect of this was to create an upfront payment by Goldman to Greece at inception, and an increased stream of interest payments to Greece during the lifetime of the swap. Goldman would recoup these non-standard cashflows at maturity, receiving a large ‘balloon’ cash payment from Greece.
It is patently clear Goldman conspired with Greece to circumvent EU debt and borrowing guidelines by structuring currency swap agreements to provide Greece up-front cash with invisible instruments while postponing the inevitable day of reckoning. These actions delayed the marking down of Greece debt, allowing Greece to borrow from the ECB when, absent the currency swaps, it may have not been able to. Thus, Goldman assisted Greece in defauding the ECB and willfullly violate EU eurozone standards.
I agree with much of what the author submits but if nothing else the Volcker rule would remove the insanity of offering these grotesque financial behemoths FDIC insurance and access to the Fed window while, simultaneously, allowing them to gamble and play in global casinos.
We have the regulatory authority to contain and manage systemic risk: stringent underwrting standards. If the loans underlying MBS or CDO's are sound, then you can slice, dice and securtize as much as you want and expect to be repaid. There are a number of reforms I would like to see but one of the most important is limiting CDS to those that actually hold debt being hedged.
Obama, Volcker: Defining the Role of Banks [View article]
I agree Tom and the fact that we guarantee the deposits of institutions heavily involved in betting large sums in the global casinos, as opposed to undertaking and managing their central role, is unconscionable and underscores the power of combined banking interests. We need to address this glaring policy inconsistency and eliminate the problem of too big to fail........whether the result of size or high correlation of risk
The Subprime Debacle, Act II Part II [View article]
And while there was a liquidity crisis, it was borne of a solvency issue that remains to this day. Only through unprecedented purchases of MBS by the Fed, fraudulent stress tests which allowed the banks to raise capital, low interest rates and a steep yield curve, relaxed accounting standards and other devices have the banks been able to remain viable while burdened by toxic assets and fundamental solvency issues.
For reasons not entirely clear, we refuse to address the criminal activities that defined the sub-prime crisis and remaining solvency issues. Quoting Charles Hugh Smith “The U.S. government and the Fed had a stark choice: either impose the rule of law and indict and convict hundreds, if not thousands, of people who perpetrated and profited from the systemic fraud and embezzlement at the heart of the mortgage and mortgage-securities industries, or socialize the corrupted, poisoned markets and use taxpayer funds to prop up the wizened shell of a stripmined market and reward the criminals with freedom.
They chose to reward the criminals and prop up a simulacrum market with only one buyer: the Federal Reserve. You can go to the the Fed's balance sheet and see the $1.2 trillion in mortgage-backed securities it owns. There is no effort to hide the brazen socialization of what once was a private-sector, free market.
When the well has been poisoned, the only players dumb enough to drink from it are the taxpayers, who have no choice as the politico toadies of the investment banking/financial Power Elites have funneled some $13 trillion in cash, backstops and guarantees into their "partners" who fund their campaigns and write the laws via their lobbyist proxies.
By failing to cleanse the financial sysytem of endemic corruption and force banks to deal with fundamenatal solvency issues we are underwriting economic policies designed to perpetuate failure and misery. QE2 will be nothing more than Japan2.
The Trouble With Tim's Treasury [View article]
The very essence of being Secretary of the Treasury may be so challenging, he takes comfort and solace in dispensing financial huggies to his former buddies who secretly view him as a water boy. The G20 dismissed him and his message as being irrelevant.
Stress tests, recapitalization and PPIP's were announced to be essential to revitalization the banking sector. PPIP never happened and the perceived success of the banking system rests upon a raft of fraudulent accounting gimmicks including effective repeal of FAS 157, whatever guideline which permits banks to recognize income when their bond prices decrease and the ability to shuffle about, increase or decrease reserves at will.
As to the stress tests, at the end the amount of additional capital required was "negotiated" rather than determined by hard analytics.
Stocks Give Up Gains, Finish Broadly Lower [View article]
Hidden Benefits of a Greek Debt Default [View article]
Goldman Sachs, The SEC and the Question of Timing [View article]
______________________...
I think you're right on the timing of the charges; this will simply put republicans in a box unless they want to outbid the democrats in arguing for harsher reform measures. Thus far, the Dodd bill, in addition to inconsistencies, incorporates more symbolism than it does reform and it's likely to remain that way.
As to Blankfein, I think he will dig in and fight this tooth and nail fully aware that other clients, including governments, are predisposed to get in on the action and recover whatever they can. And who knows where this may lead as the SEC has also fingered this guy Fabrice who, when told he could face fines or banishment, is certain to squeal like a little pig and possibly implicate higher ups within Goldman.
And lastly, with Obama's poll numbers flagging any action against Goldman will more than offset any loss of political capital owing to deflating the zeppelin a bit.
Dodd Bill Will Kill Angel Investing [View article]
After frittering away a $1.5 trillion or so on the banks the sludge laden stimulus package, the notion of creating jobs arose almost as an afterthought. I can here them now "this unemployment thing is going to be a problem during the upcoming elections so let's paper over the problem with some legislation". "Maybe extend unemployment benefits as well". So they pass a poorly structured bill with a price tag of $18 billion, which will be exploited by those that would hire anyway.
Knowing that small businesses and new businesses account for virtually all job creation, would it tax the administration's thinking to make it easier to create businesses and even offer incentives to start businesses divorced from where the business is to be located and the color profile of its first employees? Similarly why have they done nothing to improve the sentiment and confidence of small businesses who are pressed for capital and embrace a dire view of the future? And why have we not identified key future technologies and offered a broad suite of incentives to research, develop and commercialize these technologies? And almost laughably Obama want to expand exports, along with the rest of the world, but why has he not given priority to getting rid of all the red tape wrapped around the process of securing approval to export?
The answer to these and similar questions is that this spending and policy direction is not aligned with liberal progressive thinking and the blocs of votes aligned with such thinking.
Goldman's CDO Switch? All Perfectly Legal [View article]
From what I have read, including the complaint, it would appear that this particular issuance of Abacus was designed, created and structured purely at the behest of and around the interests of Paulson.
ACA, concerned about Paulson's involvement, was told by Goldman (Fab) that Paulson was going long $200 million to allay their concerns of his involvement and cherry picking many of the reference securities used to construct the CDO.
Further, in the flip sheet many pages are devoted to ACA's qualifications but the materials are silent on Paulson's involvement, which could prove to be a material omission. Why go on and on ad nauseum about ACA's track record and qualifications when Paulson made most of the selections? There's only one answer: inducement.
Another interesting point is that Paulson may have not purchased the CDS written and sold as part of creating the CDO; Goldman and other clients may have taken down these instruments while Paulson bought CDS on specific tranches within the CDO from Goldman. It's not clear but the complaint suggests as much and if it's true Goldman would have hedged their exposure through AIG.
So now we have material omissions, Paulson cherry picking reference securities and going short through instruments not essential to the transaction. I don't think this is perfectly legal.
Goldman News Shocks Markets [View article]
April 16 (Bloomberg) -- Paulson & Co. rejected Wells Fargo & Co. subprime mortgage bonds for a security it helped to structure with Goldman Sachs Group Inc. because the quality of underlying loans was too high, according to documents from the Securities and Exchange Commission.
Goldman News Shocks Markets [View article]
Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. (“Paulson”), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio, Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (“CDS”) with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1 capital structure.
Has the FDIC Found the Solution for Too Big to Fail? [View article]
For this proposal or similar proposals to work, they must eliminate regulatory capture by closing the revolving career door between agencies and banks; many of the regulators are treading water and handling the banks with kid gloves in advance of a career move.
And forward looking statements should be prepared by the FDIC, rather than the FDIC simply accepting the blindly optimistic forecasts that would be coughed up by the banks to reduce fees.
Sweden Did Not Nationalize Entire Banking System [View article]
1- Have the Federal Reserve reduce Fed Funds Rate to Zero Done
2- Have the Federal Reserve hold down rates for a historic length of time i.e. a "very extended period" Done
3- Have Federal Reserve flood market with money (i.e. Quantitative Easing) Done
4- Have Government initiatives that support asset appreciation (i.e. housing, auto programs) Done
5- Have accounting changed that forced asset liquidation for mal-investments (see Accounting) Done
6- Change Margin requirements or Leverage Pricing
ISE had instituted special rebates for specific option liquidity providers - April 1 Done
NYSE Euronext's U.S. Options Exchanges Announce New Pricing and Fee - April 5 Done
ISE to Introduce a Modified Maker/Taker Fee Schedule - March 29
Done
New interest rate futures contracts and futures options on Eurodollar & US Treasuries Done
7- Spin or exaggerate economic news through the media in a positive manner only In Process
8- Decrease risk premiums and increase levels of speculation Returning
Phantom volume at 3 am on Sunday night In Process
Is volume merely hiding in plain sight, dark pools and structured notes? In Process
The obvious overhang of CFTC position limits In Process
The cross-pollination of inter-continental routing capabilities
In Process
9- Establish a Carry Trade that will flow monies to US assets (i.e. re-establish Yen Carry Trade) In Process
Market Melt Up? More Like Yen Meltdown In Process
10- Weaken the US$ to solidify Carry Trade returns and reduce currency risk Expected
11- Give the market a surprise jolt -> China revising currency peg (China biggest US collateral holder) Expected
12- Increase the Velocity of Money by instilling an inflation worry in the public Failing to mixed
13- Place restrictions on market shorting (i.e. shortages on key dates) Expected
Financials, Housing Face Growing Trouble [View article]
According to Reinhart and Rogoff, this is what a recovery from a financial crisis looks like:
Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics.
First, asset market collapses are deep and prolonged. Real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years.
Second, the aftermath of banking crises is associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on
average over four years. Output falls (from peak to trough) an average of over 9 percent, although the duration of the downturn, averaging roughly two years, is considerably shorter than for unemployment.
Third, the real value of government debt tends to
explode, rising an average of 86 percent in the major post–World War II episodes. Interestingly, the main cause of debt explosions is not the widely cited costs of bailing out and recapitalizing the banking system. Admittedly, bailout costs are difficult to measure, and there is considerable divergence among estimates from competing studies.
But even upper-bound estimates pale next to actual measured rises in public debt. In fact, the big drivers of debt increases are the inevitable collapse in tax revenues that governments suffer in the wake of deep and prolonged output contractions, as well as often ambitious countercyclical fiscal policies aimed at mitigating the downturn.
Will a Continent Have to Blow Up Before We Stop Wall Street? [View article]
Simon Johnson notes:
These actions are fundamentally destabilizing to the global financial system, as they undermine: the euro zone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets. When the data are all lies, the outcomes are all bad - see the subprime mortgage crisis for further detail.
______________________...
From the FT: However, according to sources, the cross-currency swaps transacted by Goldman for Greece’s public debt division were ‘off-market’ – the spot exchange rate was not used for re-denominating the notional of the foreign currency debt. Instead, a weaker level of euro versus dollar or yen was used in the contracts, resulting in a mismatch between the domestic and foreign currency swap notionals. The effect of this was to create an upfront payment by Goldman to Greece at inception, and an increased stream of interest payments to Greece during the lifetime of the swap. Goldman would recoup these non-standard cashflows at maturity, receiving a large ‘balloon’ cash payment from Greece.
It is patently clear Goldman conspired with Greece to circumvent EU debt and borrowing guidelines by structuring currency swap agreements to provide Greece up-front cash with invisible instruments while postponing the inevitable day of reckoning. These actions delayed the marking down of Greece debt, allowing Greece to borrow from the ECB when, absent the currency swaps, it may have not been able to. Thus, Goldman assisted Greece in defauding the ECB and willfullly violate EU eurozone standards.
More Thoughts on the Volcker Rule [View article]
We have the regulatory authority to contain and manage systemic risk: stringent underwrting standards. If the loans underlying MBS or CDO's are sound, then you can slice, dice and securtize as much as you want and expect to be repaid. There are a number of reforms I would like to see but one of the most important is limiting CDS to those that actually hold debt being hedged.
Obama, Volcker: Defining the Role of Banks [View article]