So, Allee Bautsch, a fundraiser for Bobby Jindal, the Governor, and Village Idiot, of Louisiana gets mugged in New Orleans, and “source close to Bautsch tells Yahoo! News that they were politically motivated.”
Note that official sources have made no such claims, but a conservative blogger seems to have put words in the mouth of a NOPD spokesman.
In any case, the Times Picayune has some decent coverage which appears to make it clear that no political epithets were involved, it was a bunch of drunken assholes.
As an FYI to those living under rocks in the past year, the pic is not of Ms. Bautsch,* but of Ashley Todd.
*Whose name, for some reason, I keep spelling Bat-sh%$.
The SEC has charged Goldman Sachs and one of its VPs with, “defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.”
It sounds to me like they assembled a particularly crappy CDO at the request of a hedge fund, most likely the now infamous Magentar:
The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.
“The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, Director of the Division of Enforcement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
So it sounds like Goldman Sachs assembled CDOs, a form of mortgage backed security, at the request and to the specifications of the hedge fund Magetar, which demanded that the CDOs that it funded be as crappy as possible so that it could win on bets against high rated tranches.
This was apparently fairly common knowledge on the street, and Goldman did it anyway, and then sold the instruments as being “rock solid”. Oopsie
Background, and links to Pro Publica‘s and This American Life‘s stories on Magnetar’s, “burn down your neighbor’s house for the insurance money,” investment strategy are here.
There are two potential outcomes:
A tepid settlement followed by an inconsequential fine.
That the string is being pulled, and a whole lot of stuff comes unraveled.
I hope for the latter, but I expect the former.
*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.
Full complaint and embedded PDF of the filing are after break:
Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. Additional Materials
The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.
“The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, Director of the Division of Enforcement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
Kenneth Lench, Chief of the SEC’s Structured and New Products Unit, added, “The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress.”
The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.
According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.
The SEC’s complaint alleges that after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.’s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.
The SEC alleges that Goldman Sachs Vice President Fabrice Tourre was principally responsible for ABACUS 2007-AC1. Tourre structured the transaction, prepared the marketing materials, and communicated directly with investors. Tourre allegedly knew of Paulson & Co.’s undisclosed short interest and role in the collateral selection process. In addition, he misled ACA into believing that Paulson & Co. invested approximately $200 million in the equity of ABACUS, indicating that Paulson & Co.’s interests in the collateral selection process were closely aligned with ACA’s interests. In reality, however, their interests were sharply conflicting.
According to the SEC’s complaint, the deal closed on April 26, 2007, and Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded.
Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion.
The SEC’s complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.
# # #
For more information about this enforcement action, contact:
Lorin L. Reisner Deputy Director, SEC Enforcement Division (202) 551-4787
Kenneth R. Lench Chief, Structured and New Products Unit, SEC Enforcement Division (202) 551-4938
Reid A. Muoio Deputy Chief, Structured and New Products Unit, SEC Enforcement Division (202) 551-4488
In case you were living under a rock, this is why he left so quickly from his position managing the bailouts of GM and Chrysler:
New York Attorney General Andrew Cuomo confirmed his office is investigating former Obama administration auto industry advisor Steven Rattner, in a growing probe into illegal kickbacks involving the state pension fund.
Rattner, who helped craft the federal rescues of General Motors and Chrysler, left the Obama administration abruptly last year. This morning, the private equity firm he co-founded, Quadrangle Partners, agreed to pay $7 million to settle allegations it made illegal payments to a New York state official and a political consultant in exchange for millions of dollars in pension investments.
But the settlement specifically excludes Rattner, who Cuomo says is no longer with the firm and remains under investigation. What’s more, Quadrangle issued a scathing statement against its co-founder.
“We wholly disavow the conduct engaged in by Steve Rattner,” the statmement says. “That conduct was inappropriate, wrong and unethical.”
This is a guy who operated a corporate “chop shop,” and we are surprised to discover that he is a dirt bag.
This “experience” thing, which justified, Rattner, Geithner, Summers, etc. is highly overrated.
Ethics first, allegiance to the American public second, and only then consider experience.
Of course, the actual rule is still months away, but my guess is that John Aravosis’s Don’t Ask, Don’t Give donor boycott has finally developed critical mass, and the fund raisers are beginning to notice.
So, now we know, that, if absolutely backed into a corner, Barack Obama is willing to take the most timid steps for LGBT civil rights.
Well, so much for a recovery in employment, initial unemployment claims rose by 24,000 to 484,000, with the 4-week moving average rising by 7,5000 to 457,750, and continuing claims rose by 73,000 to 4.64 million.
On Monday, I had a regular appointment with our doctor, and mentioned that I had a tick bite on the prior Tuesday, and that since I had Lyme disease before (1992), and actually ended up in the hospital with Lyme Carditis.
Since the standard test would show positive, it tests for the antibody whether or not I had it, so the Dr. S. prescribed a prophylactic antibiotic regime.
The standard drug for this is something in the Tetracycline family, most commonly Doxycycline, which he prescribed, and I filled at the CVS near our house.
It’s a mile away, and open 24 hours, but we have never been too satisfied with the service.
In this case, they filled the prescription in ½ hour while I got some blood tests, and filled it, no muss, no fuss ……… Or so it seemed.
The instructions on the label called for taking the pills at least two hours after, or one hour before, eating; i.e. on an empty stomach.
It should be taken with a full glass of water, after food, and patients should be upright for at least 30 minutes after administration to prevent irritation of the esophagus and stomach. Failure to take food prior to ingesting Doxycycline may induce vomiting.
Take doxycycline with food or following a meal. If you have taken doxycycline on an empty stomach before and gotten away with it, the next time may be different. Doxycycline induced nausea is quite unpleasant and more serious stomach irritation can occur.
Also, no note on the label not to take it before bed, nor to avoid sunlight and UV, though Dr. S. told me that last part.
I’ve been wondering who the hell has been doing the flaming sword dance in my stomach for the past few days.
No, I’m afraid not. The 2010 election campaign, more than any other, has underscored the continuing gulf between Tory values and my own. It is not only that the renewed marginalisation of the single, the divorced and the widowed brings back very bad memories. There has also been the revelation, after ten years of prevarication on the subject, that Lord Ashcroft, deputy chairman of the Conservatives, is non-domiciled for tax purposes.
Now, I never, ever, expected to find myself in a position where I could understand, from personal experience, the choices and temptations open to a man as rich as Lord Ashcroft. The fact remains that the first time I ever met my recently retired accountant, he put it to me point-blank: would I organise my money around my life, or my life around my money? If the latter, it was time to relocate to Ireland, Monaco, or possibly Belize.
I chose to remain a domiciled taxpayer for a couple of reasons. The main one was that I wanted my children to grow up where I grew up, to have proper roots in a culture as old and magnificent as Britain’s; to be citizens, with everything that implies, of a real country, not free-floating ex-pats, living in the limbo of some tax haven and associating only with the children of similarly greedy tax exiles.
A second reason, however, was that I am indebted to the British welfare state; the very one that Mr Cameron would like to replace with charity handouts. When my life hit rock bottom, that safety net, threadbare though it had become under John Major’s Government, was there to break the fall. I cannot help feeling, therefore, that it would have been contemptible to scarper for the West Indies at the first sniff of a seven-figure royalty cheque. This, if you like, is my notion of patriotism. On the available evidence, I suspect that it is Lord Ashcroft’s idea of being a mug.
You will inevitably find people, both in the UK and the US who will make noise about moving their primary residence, or their company’s “headquarters” to some other country because of taxes or regulations that they do not like.
These people are Quislings, and they should be viewed as the lowest of the low, and their opinions should be of no concern of any person who cares about this country.
It’s not that government is too big, it’s that you are giving money to n*****s:
“That’s a conundrum, isn’t it?” asked Jodine White, 62, of Rocklin, Calif. “I don’t know what to say. Maybe I don’t want smaller government. I guess I want smaller government and my Social Security.” She added, “I didn’t look at it from the perspective of losing things I need. I think I’ve changed my mind.”
It seems that they think that it will cost, “13 of the largest banks $20 billion in annual earnings.”
This is probably right. When things are going well, going in hock up to your eyeballs is a good way to maximize your profits, and since the executives of these banks are paid largely on the basis of year to year profits, and the taxpayer bails them out when they fail, it means that they may have to forgo that 5th vacation for a year or so.
As to the dire consequences of such restrictions:
Standard & Poor’s said the new Basel rules could force some banks to change their business models.
“We expect smaller, deposit-funded retail banks to find it easier to comply with more stringent liquidity and capital requirements than larger wholesale-funded institutions with extensive trading operations or large loan books and securities holdings,” the credit rating company said in a report today. “For investment banks, the increase in capital requirements could be sizable.”
I don’t know about you, but it seems to me that this is a plus, not a minus.
I still favor a small (20-50 basis point) Tobin tax on all financial transactions and leverage, as well as a larger tax on M&A activity, but that is in addition to much larger capital requirements.
I have been following the comings and goings in Zimbabwe since Tsvangirai’s election, subsequently stolen, as President in 2008.
At first, I did so because I thought that we could see a real game change and a peaceful transition from one of the nastier pieces of work on the African continent, Robert Mugabe.
This has not happened, largely because Mugabe does not care, but additionally because the surrounding community, in particular South Africa and its former President Thabo Mbeki, have been most accommodating to Mugabe and his Zanu-PF party.
I don’t see this changing, and I have been posting about once a month because I feel guilty about not caring any more, which is a silly reason to post.
I have little knowledge of the area, nor of the complex social and political dynamics of the region, and honestly, little interest, just some guilt, so I’m throwing the towel in.
I would suggest the BBC and the Guardian for updates if you want them.
How reliable are these numbers? The PRC tends to encourage lower level bureaucrats to over-report growth, and these numbers tend to filter up the chain.
If these numbers are anywhere near reality, what is driving it, and will it be like Wile E. Coyote discovering that he is standing in thin air when something more sustainable hits?
Chinese real estate is clearly with a bubble, with some areas experiencing appreciation in excess of 50% (!) over the past year.
One of the things driving this is the fact that the Yuan is under-valued: It makes foreign assets more expensive, which drives up demand for local investments, like real estate.
If their currency appreciates, and it does appear to be in the cards in the not-too-distant future, we could see money flowing to non-Chinese assets, and their bubble burst.
This could be yet another shoe to drop (there are many out there) in the current downturn, even though we currently appear to have found a bottom.
The latest right wing meme is that 47% of the population pay no taxes.
Of course, it’s not true, though it is true that that number owe no federal income tax, but the do owe significant amounts of Social Security, Medicare, and state and local taxes.
As this handy, dandy chart shows, it’s simply not true, and my guess would be that if this were broken up into deciles, as opposed to quintiles, that the top 10% would pay even less, since they are above the social security cutoff, and get far more of their income in capital gains and dividends.
Warren Buffet once noted that his receptionist paid a greater percentage of her wages in taxes than he did, and that still holds true.
Blanche Lincoln (D-AR), as head of the Senate Agriculture Committee, has significant input on derivatives legislation, because one of the oldest of the derivatives are commodity futures, things like pork belly futures, which is why it manages the Commodities Futures Trading Commission (CFTC).
The word has been that Lincoln would be almost as much of a road block ad the Republicans on meaningful reform, seeing as how her record is one of doing the bidding of insurance companies and bank.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and their biggest rivals would be forced to wall off derivatives trading operations from their commercial banks under a measure to be introduced by Senate Agriculture Committee Chairman Blanche Lincoln, a congressional aide said.
Lincoln, an Arkansas Democrat, will propose a “no-bailout provision” as part of an overhaul of derivatives regulation she plans to unveil today, according to the aide, who declined to be identified because the plan isn’t public. The measure aims to ensure banks don’t endanger depositors’ money with risky trading of over-the-counter derivatives, the aide said.
…………
Lincoln’s provision would bar swaps dealers from taking advantage of the Federal Reserve’s discount lending window, emergency liquidity functions and the Federal Deposit Insurance Corp.’s deposit guarantee. “It eliminates all of the advantages with the affiliation with an insured depository institution, which are profound,” said Karen Petrou, managing partner of Washington-based research firm Federal Financial Analytics Inc.
…………
It would also increase protections for clients by requiring swaps dealers to treat them as a fiduciary — obligating them to put customers’ interests ahead of the company’s, the aide said.
The measure requires most over-the-counter derivatives to be traded on exchanges or through clearinghouses. Companies that use swaps to hedge the cost of materials or other non-investment purposes would be exempted from the requirements, the aide said. Like the Volcker rule, which would ban commercial banks from proprietary trading, the wall-off provision would separate derivatives trading from traditional banking activities such as taking deposits and making loans.
Let’s be clear, this is very tough stuff, at least by the standards of the Congress, particularly the Senate.
“Proposals that I have seen from the administration have not gone far enough to prevent bailouts of ‘too big to fail institutions’ and could contain loopholes,” Lincoln said. “If we pass reform, it needs to be real reform. My proposal will go further than any other congressional or administration proposal to prevent future bailouts.”
I’m with David Dayen, this all happened within days of her primary challenger, Bill Halter (Reminder, he’s on My Act Blue Page) releasing ads saying that she was too close to the banking industry.
Everyone on Capitol hill know that her proposals will never go beyond a press release, and that behind the scenes, she will continue to do the big banks’ bidding.
This is just electoral politics, and a full court press from her Congressional Colleagues and the White House.
On the down side, the National Federation of Independent Business’ index of small business optimism fell in March, and since this is where most jobs are created, it does not bode well for jobs in the near term.
In real estate, mortgage applications fell for the 6th straight week, which is not surprising, as mortgage rates have been trending higher and the FHA has started to charge more for mortgage insurance to replenish its depleted reserves.
This is very much in line with the district’s PVI D +19, but that’s the point: there was no movement from the existing trends.
So much for “voter backlash” against the HCR bill.
I think that the Republicans may have seen the outrage of their base at losing when they thought that they had won, and thought that it was some sort of mass anger at the bill.
So, Allee Bautsch, a fundraiser for Bobby Jindal, the Governor, and Village Idiot, of Louisiana gets mugged in New Orleans, and “source close to Bautsch tells Yahoo! News that they were politically motivated.”
