just in in-tray
market analyst Garrett Jones is royally p.o.'d:
At a time when everyone is trying to figure out what is going on, here are some interesting thoughts.
Paulson's Plan - In a nutshell he is bailing out Wall Street. Let me make this very clear. Paulson is a crook, a liar and a fraud. Paulson was the COO of Goldman Sachs from 1994 - 1998. He then took over as CEO until 2006. Goldman was one of the firms that created the derivatives we are focusing on now. In fact, they were responsible for more derivatives than any other firm in the world . . . and Paulson was clearly in charge. Now he wants to bail himself and his friends out at our expense. He's either Satan himself or he has cut his deal with Satan to deliver all of us.
Unavoidable Depression - There is no doubt we go into a Depression. I have been writing about a "Decession" for two years, and this past January, I started calling it what it is . . . The Greater Depression. The issue at hand is who pays for it. Do we pay for it alone, as taxpayers. Or do we make sure there is some accountability, so guys like Paulson pay for their share . . . and go to jail for fraud.
Paulson's Was There - Paulson IS Part of the Problem - If you read nothing else today, read the section below about Paulson and how he profited from the crisis he is now overseeing. This is truly like asking the bank robber to lead the investigation of the bank heist.
If you do nothing, we not only pay for the Depression alone, but we reward those who created it . . . and we give them all the money they want to buy us up for pennies as we struggle to find food. If you do nothing, the crooks keep the booty, and they get to laugh at us from their beach houses.
Paulson's plan is criminal. He is the grandest financial criminal of all history. Please don't sit back and watch this train wreck. Use the links below to contact your Senators, Congressmen and Nancy Pelosi. It only takes a few minutes. If you can fax your concerns in, that is even better. Use the links to access their email and fax.
1 - Paulson was the CEO of Goldman Sachs while much of the toxic waste was created. He made more than a half a billion dollars personally from the development of this crisis. If there is to be a bail out of $500 billion, let's have 100 guys like Paulson return $500 million each and 1000 of his buddies return $50 million each. That's a start, but even that will not solve the $5 trillion problem that Paulson wants you to believe is $500-700 billion.
2 - Paulson is asking for complete control with no oversight or review. He demands the dictatorship. Even Castro is laughing at us right now.
3 - Paulson is proposing paying his "buddies" 10to 20 times what their assets are worth. The toxic paper he is talking about buying is trading at 5 -20 cents on the dollar, if it trades at all. The whisper number from Paulson is he will use our money to buy it for 60 cents on the dollar.
4 - Once Paulson and his thugs on Wall Street finish shaking us up for everything we have, it is still Game Over. So why not take the medicine now, when Wall Street will be taking it with us? Why reward Wall Street with yachts, vacation homes and piles of money in the bank, when they are the reason for the coming Depression.
5 - His Baby. Think about when Paulson decided he was "shocked" with what was going on. Not when Bear Stearns failed. Not when Lehman failed. Not when Merrill and the others were teetering. No, not until his baby, Goldman Sachs dropped 40% in one day. That's when he decided enough was enough. Not until it effected his pocket book and his legacy as the World's Greatest Thief.
Paulson Was There - Below is an article from Bloomberg that appeared almost a year ago. It's sad. Very sad. Very sad that nobody stopped this man. It is sad that we gave a man responsible for much of the mess we are in, the power to wave his wand and exonerate himself and his friends . . . then to reward his friends and trash the taxpayers. It is even sadder that just a handful of politicians in Washington are speaking out. It seems like our politicians are prepared to hand the keys to the United States to a man that probably deserves to be in jail at this point. If he has not committed fraud, he has demonstrated the most extreme form of grossly negligent conduct I have ever seen. And he's a liar.
Paulson's Focus on `Excesses' Shows Goldman Gorged
By Mark Pittman
Nov. 5, 2007 (Bloomberg) -- Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that ``yesterday's excesses'' aren't repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc.
Paulson, 61, doesn't mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg.
Goldman, the most profitable investment bank, was one of 14 primary dealers of U.S. Treasuries who contributed to a three- year binge as $1 trillion of subprime mortgages were packaged and sold to investors. The value of Goldman's outstanding subprime bonds trails Lehman Brothers Holdings Inc.'s $33 billion, out of $106.8 billion created during Paulson's years at Goldman, and Morgan Stanley's $28.8 billion, out of $82.5 billion.
``He should admit to having been involved in creating the problem that we have now,'' said Representative Brad Miller, a North Carolina Democrat, who introduced a bill Oct. 22 to make firms packaging subprime mortgages liable for bad loans in some circumstances.
The subprime crisis developed earlier this year when falling home prices triggered defaults by homeowners who wouldn't have normally qualified for a mortgage. Many were unable or unwilling to make adjustable-rate payments that were due to rise. Home foreclosures doubled in the third quarter from a year earlier to 635,159, RealtyTrac reported Nov. 1.
Largely Contained
Starting in March, Paulson said the damage was ``largely contained'' and was no risk to the larger economy. When other credit markets began to be affected, he and others began pushing for solutions.
``I can't help but notice that when middle-class homeowners were losing their homes to foreclosure, he was pretty nonchalant about it,'' Miller said of Paulson. ``But when Wall Street CEOs start seeing trouble in their absurdly complicated financial instruments built on the mortgages of middle-class homeowners, he feels their pain.''
Paulson declined to comment through spokeswoman Michele Davis, who said, ``he can't talk about Goldman business.'' Spokesman Michael DuVally of New York-based Goldman declined to say how much subprime mortgages contributed to the investment bank's profits, or Paulson's compensation, during his tenure from May 1999 through June 2006.
Goldman paid Paulson $38.5 million for 2005, and he received an $18.7 million bonus for the first half of last year.
Bet Against Subprime
While competitors reported losses from their subprime portfolios in recent months, Goldman said Sept. 20 that it profited from the market's decline by using derivatives to bet that mortgage securities would continue to fall.
Paulson's involvement in the subprime crisis ``points out that there needs to be complete accountability up and down the system,'' said Allen Fishbein, the director of credit and housing policy at the Consumer Federation of America in Washington. ``Goldman wasn't alone. All the brokerages did this.''
Goldman ranks 10th among 118 issuers, based on the amount of subprime loans still on the market. Bonds with a face value of $484.6 billion remain from those created in the years Paulson ran Goldman.
Countrywide
Market leader Countrywide Financial Corp. has $40.7 billion in subprime bonds still on the market, or 8.4 percent of the total. GMAC LLC's Residential Capital LLC has $34.4 billion. Lehman's $33.1 billion leads Wall Street firms. The amounts tally the securities issued, not what remains on the banks' books.
Calabasas, California-based Countrywide, the nation's biggest home lender; ResCap, the Minneapolis-based home lending arm of General Motors Corp.'s finance subsidiary; and Goldman were among those competing to create pools of mortgages consisting mostly of subprime loans, made to borrowers with poor credit records or high debt.
Goldman has more subprime debt outstanding than Credit Suisse, which has almost $10 billion; Citigroup Inc., with $6.8 billion; or JPMorgan Chase & Co., with $7.8 billion.
Losses on holdings of subprime securities have already claimed the jobs of two chief executive officers. Citigroup yesterday accepted the resignation of CEO Charles Prince after saying its holdings of subprime securities may cause writedowns of as much as $11 billion. Merrill Lynch CEO Stan O'Neal left last week amid writedowns of more than $8 billion.
House Bill
The data on subprime bonds, compiled by Bloomberg from reports by debt servicing companies, don't include all of the mortgage bond offerings managed by any of the firms. That's because all of them handle offerings by bond issuers outside of Wall Street, including Irvine, California-based New Century Financial Corp., a subprime lender now in bankruptcy.
The House bill Miller introduced is backed by Representative Barney Frank, the Massachusetts Democrat who is chairman of the Financial Services Committee. One provision would make firms that package and sell subprime mortgages liable for damages if loans violate certain minimum standards, including ensuring a borrower's reasonable ability to repay.
Paulson criticized the liability idea in an Oct. 16 speech at Georgetown University in Washington.
``We need to ensure yesterday's excesses are not repeated tomorrow,'' Paulson said. Penalizing Wall Street for packaging mortgage loans ``is not the answer to the problem,'' he said.
Potential Paralysis
The House measure would ``potentially paralyze securitization,'' which, Paulson said, has been ``extremely valuable in extending the availability of credit to millions of homeowners nationwide and lowering the cost of financing.''
In New Delhi on Oct. 30, Paulson repeated his pledge to find what went wrong in the financial system. ``We need to shed light on it and make the policy adjustments so this doesn't happen again,'' he said.
When the subprime mortgage issue exploded as an economic and political issue this year, Federal Reserve Board Chairman Ben S. Bernanke was the federal government's point man. He was called before Congress to defend regulators' failure to prevent lending abuses.
Paulson's public role increased in the past month as the credit crunch spread to the commercial paper markets and off- balance-sheet structured investment vehicles, known as SIVs. He urged major lenders in a Sept. 12 meeting in Washington to help subprime borrowers keep their homes.
Saving SIVs
Paulson and Robert Steel, a former Goldman Sachs vice chairman who is the Treasury's undersecretary for domestic finance, helped persuade Citigroup and other banks to set up an $80 billion partnership to buy assets from any SIVs that couldn't refinance their debt.
Goldman under Paulson created 58 mortgage pools branded under the acronym of GSAMP, which originally stood for Goldman Sachs Alternative Mortgage Products, starting in July 2002. The value of the loans at risk of default is almost 50 percent for one Goldman pool, according to Bloomberg data, which includes pools identified as containing home equity financings as well as subprime mortgages.
The average delinquency rate for subprime bonds sold from May 1999 through June 2006 is 19.3 percent as of yesterday, according to data compiled by Bloomberg. Among the top 20 issuers that have more than $5 billion outstanding, Goldman's GSAMP ranks ninth with 21.7 percent for delinquencies of 60 days or more, foreclosures or real estate that has been taken away from borrowers.
Higher Delinquencies
That rate is higher than for JPMorgan, with 20.8, and Citigroup, with 19.9 percent, according to data compiled by Bloomberg through October. Goldman's delinquency rate is lower than the 26.2 percent for bonds in Deutsche Bank AG's ACE trust, as well as 25.1 percent for Barclays Capital's SABR and 23.8 percent for Merrill Lynch's MLMI.
One of Goldman's bonds, GSAMP 2006-HE2 B2, is valued at 47 cents on the dollar, to yield 14.5 percent, according to Merrill Lynch. The pool, which was sold March 1, 2006, already has a delinquency rate of 16.4 percent. The bond was cut five levels from investment-grade Baa2 to a junk rating of B1 on Oct. 11 by Moody's Investors Service.
To contact the reporter on this story: Mark Pittman in New York at mpittman@bloomberg.net.
King Henry Will Run the United States of America as Dictator - If you think you're hearing the truth in the media, think again. The fact is, King Henry is demanding complete control and he can never be questioned or prosecuted for anything he does. Here is a section direct from his proposal . . .
Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
You had better start emailing and calling your Senators and Congressman. He already has enough votes to get this passed. If you don't act, King Henry rules.
Senators - senate.gov
Congressman - forms.house.gov
Nancy Pelosi - house.gov
Senator Bunning -
bunning.senate.gov
Senator Bunning is the only Senator that I have heard speak up against the plan. Others have spoken, but they are doing so cautiously, so as not to piss of the King Henry just in case he pulls off the overthrow of the United States government.
Garrett Jones
(925) 820-0161
garrett111@comcast.net |
