he Colbert Report did a fine job of recapping the issues in a smear campaign that was being planned by the so-called cyber security firm HB Gary (along with Palantir and Berico Technologies) against journalists who defended WikiLeaks, in particular Salon’s Glenn Greenwald.
Read more...This may strike some readers as off topic (you’ve been warned!), but I find this exchange intriguing in a perverse way.
I have featured some of this story in Links. By way of background, various news sites reported that the internet group Anonymous had said it was going to mount cyber attacks on the Westboro Baptist Church, which among other things hosts the website GodHatesFags. Anonymous is best known for making life difficult for various players who have undermined Wikileaks, such as banks that have stopped processing donations to Wikileaks, but it has also played a role in supporting the rebellion in Tunisia by attacking non-essential government websites.
A couple of weeks ago, a letter was published, supposedly by Anonymous, warning that if the Westboro Baptist Church didn’t shut down its public website, they would be targeted. It turns out Anonymous not did issue that letter, begging the question of whether it actually came from the church itself, as some have speculated, or a third party.
David Parkman arranged for representatives of the church and Anonymous to interact with each other.
Read more...No sooner have the preliminary outlines of an inadequate settlement of mortgage servicing abuses been leaked, but the banking industry is engaged in a full court press to stop it.
The astonishing part is that the banking industry continues to maintain that it really didn’t do anything wrong, all it did was make some technical errors. That so grossly understates the degree of its recklessness and malfeasance as to be beyond relief.
It’s no surprise that the so-called Foreclosure Task Force which spent a mere eight weeks reviewing servicer activities and didn’t find much. The timeframe of its exam assured that it would not verify servicer records and accounts against borrower experience and records. It is almost certain that they also did not look at how servicer software credited payments and charges, when there is widespread evidence of violations of agreements with borrowers and RESPA.
And to the extent they looked at “improprieties” in foreclosure documents, it’s a given that they did not go beyond robosigning, when that is arguably the least significant form of malfeasance. There is ample evidence of fraud to cover for the failure to convey notes to securitization trusts, ranging from the misuse of lost note affidavits to document fabrication (bogus allonges being the most common fix).
In addition, pooling and servicing agreements also have specific provisions as to level and procedures for charging certain fees. Yet studies have determined that a specific servicer will apply the same charges across all borrowers and investors, irrespective of the requirements of particular securitizations. So it’s blindingly obvious that this exam was cursory, looking at one or two points of failure in a slapdash fashion and completely ignoring other issues that are at least as important.
Read more...We remarked before that attempts to nobble Mervyn King would soon bring other UK bank reformers out of the woodwork, and we have a confirming sighting today, via a puzzled tweet from @EconOfContempt: Strange op-ed by Andrew Haldane in the FT. No one is really pushing the argument that he’s trying to shoot down EoC […]
Read more...Not a bad couple of week’s work for the banks, since the “Project Merlin” publicity? Actually it’s taken a bit longer than that, and reconstruction of some of the behind-the-scenes action might be instructive. Although other banks get walk-on parts, the story is mostly about Barclays. Let’s start the timeline in September 2010, when John […]
Read more...Soon-to-be-unemployed sports team managers the world over know what it means when they receive an affirmation of full confidence from the club chairman. Accordingly, we know roughly what to make of this: ‘The Bank of England has credibility,’ said Osborne (pictured). ‘I have complete confidence in it.’ The chancellor will not alter the 2% inflation […]
Read more...We posted last week about the NYT’s smear of Mervyn King (as did London Banker), and followed that up with some observations on the UK Chancellor’s dreary capitulation to the banks, aka “Project Merlin”; we concluded somewhat world-wearily by promising more sightings of attempts to nobble the UK’s radical bank reformers. Well, here’s the first, […]
Read more...By Douglas K. Smith, Member, Board of Directors, SeaChange Capital Partners
Social impact bonds, a useful experiment underway in England, is gaining attention on this side of the pond, including from the Obama administration. We are glad to see this at SeaChange (a non-profit group seeking innovative ways to bring capital to the non-profit sector). What is deeply concerning, though, is how some elites are packaging and promoting social impact bonds as yet one more example of everything the market does is good while everything government does is bad. Moreover, these same elites betray a stunningly superficial grasp about how markets actually work.
Read more...I was reining myself too much when I wrote this. Or rather, I just wasn’t going far enough. On reflection, two or three more bullet points from the malodorous Treasury press release are worthy of comment, and there’s some extra context to add.
First, the purported object of Project Merlin was to achieve a new understanding between banks and government after the 2008 crash, the 2008-9 bailouts, and the 2009-2010 bonus rows. A Magna Carta-like settlement of rights and responsibilities, perhaps. So you’d think there’d be some public undertaking by the banks, promising never to screw up so mightily again: not to drift stupidly into massive dependence on market-based funding, perhaps, or simply, to manage credit risk better; or not to incentivize risk taking via heads-I win-tails-you-lose bonuses; or not to award performance-unrelated bonuses immediately after massive infusions of taxpayer support.
Oddly, none of that is in the Treasury press release
Read more...While it is far too early to break out any champagne, the Powers That Be seem to be taking notice of the continuing train wreck in courtrooms all over the US as far as banks’ ability to foreclose is concerned. Apparently, the American Securitization Forum’s “Drive on by, nothing to see here” mantra is becoming less and less convincing with every passing day.
It’s worth nothing that only the Financial Times seems to be carrying this story (yours truly did check on key word variants in Google News and came up empty-handed). They also deem it to be worthy of front page placement. This is only an isolated sighting, but one of the features of the runup to the financial crisis was an ongoing news disparity between the Financial Times and US business press, particularly the Wall Street Journal. The FT would pick up on stories that seemed important and were too often either completely ignored or reported by the American financial outlets only in in a selective manner. So if we see more bypassing of inconvenient news by the usual suspects in the US, take heed.
What is particularly interesting is that the SEC seems to be targeting specifically the sort of abuses that we have chronicled at length on this blog…
Read more...By Richard Smith, a UK based capital markets IT specialist, and Yves Smith
It’s always a fraught business when a foreign paper hazards into parsing UK politics. But one has to wonder at the unseemly spectacle of the Grey Lady giving such a distorted reading on Mervyn King, the governor of the Bank of England.
Were you to rely on the New York Times story on Monday, “A Crisis of Faith in Britain’s Central Banker,” you would think that this central banker is under assault on all fronts. While most of the article is on his fiscal/monetary policy stance, where King is taking a great deal of criticism, it also leads readers to believe he is isolated on bank reform as well. These are the first and third paragraphs of the piece:
Read more...The most noteworthy bit of the AOL acquisition of HuffPo (aside from the price, which I assume will leak out sooner rather than later) is Arianna will run the AOL unit that will include the old HuffPo plus a bunch of other content businesses. It’s a pretty significant new media empire. From the joint announcement:
Read more...I often enjoy Joe Nocera’s take on Wall Street, but like some other well known financial writers, he has become overly close to his subjects. No where is this more evident than in a stunning little aside in an otherwise not bad piece on the Financial Crisis Inquiry Commision’s report, which points out that it is long on potentially helpful detail, short on analysis.
Here is the offending section:
Read more...But I wonder. Had there been a Dutch Tulip Inquiry Commission nearly four centuries ago, it would no doubt have found tulip salesmen who fraudulently persuaded people to borrow money they could never pay back to buy tulips.
The Financial Crisis Inquiry Commission released its report yesterday and went into PR overdrive. Journalists and the public are still digesting the weighty document, and various tidbits, like the report that Goldman did indeed profit from the AIG rescue, are touted as news when the basic facts were already in the public domain.
What is troubling about the report is the manner in which it hews to conventional wisdom. Its ten major findings are hardly controversial, yet they are still insufficient to explain why the financial system seized up and appeared close to failure. And telling a familiar-sounding story assures that the status quo will remain unchallenged, and serves to validate the inadequate reforms now underway. After all, they are premised on the very same superficial beliefs.
I participated in a blogger conference call with FCIC commissioners Phil Angelides and Brooksley Born. I’m clearly not cut out for public life. It was disconcerting to hear them thumping their talking points.
But the stunning part were Angelides’ and Born’s answers to my questions.
Read more...From the very outset, the Financial Crisis Inquiry Commission was set up to fail. Its leadership, particularly its chairman, Phil Angelides, was seen as insufficiently experienced in sophisticated finance. The timetable was unrealistic for a thorough investigation of a crisis this complex, let alone one international in scope. Its budget and staffing were too small. The investigations were further hampered by the requirement that subpoenas have bi-partisan approval along with Its decision to hold hearings with high profile individuals, including top Wall Street executives, before much in the way of lower-level investigation had been completed. The usual way to get meaningful disclosure from a top executive is to confront him with hard-to-defend material or actions; interrogations under bright lights, while a fun bit of theater, generally yield little in the absence of adequate prep.
So with expectations for the FCIC low, recent reports that the panel urged various prosecutors to launch criminal probes were a hopeful sign that the commission might nevertheless come out with some important findings. But correspondence from insiders in the last few days suggests otherwise. One, for instance, wrote, “I’m still in the process of getting the stink out of my clothes.”
These ideologically-neutral sources close to the investigation depict the commissioners as having pre-conceived narratives and of fitting various tidbits unearthed during the investigation into these frameworks, with the majority focusing more on the problems caused by deregulation and the failure of the authorities to use even the powers they had, while the minority assigns blame to government meddling, particularly housing-friendly policies.
These insiders see both sides as wrong, and want to encourage investigative reporters to challenge both the majority and dissenting accounts. They contend that both versions help perpetuate the myth that Wall Street was as much a victim of the crisis as anyone else.
One of these sources sent this document in an effort to question the notion that any of the reports coming out of the FCIC were the result of a fact-based investigative process…
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