Who's to Blame for IndyMac's Failure? 58 comments
Mark McQueen
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The $32 billion failure of U.S. mortgage lender IndyMac demonstrates just how differently the United States is governed than Canada. This from today’s Wall Street Journal:
The director of the Office of Thrift Supervision, John Reich, blamed IndyMac’s failure on comments made in late June by Sen. Charles Schumer
(D., N.Y.), who sent a letter to the regulator raising concerns about the bank’s solvency. In the following 11 days, spooked depositors withdrew a total of $1.3 billion. Mr. Reich said Sen. Schumer gave the bank a “heart attack.”
“Would the institution have failed without the deposit run?” Mr. Reich asked reporters. “We’ll never know the answer to that question.”
Mr. Schumer quickly fired back.
“If OTS had done its job as regulator and not let IndyMac’s poor and loose lending practices continue, we wouldn’t be where we are today,” Sen. Schumer said. “Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs.”
You might be asking yourself, why is a New York Senator asking a regulator to look into a California bank’s “solvency”? Sen. Shumer is a member of multiple committees, each of which gives him a call on the financial markets and banking sector: Banking, Housing and Urban Affairs & Finance are two of his key Senate committees. He also Chairs the Senate Subcommittees on Economic Policy (Banking).
Having established that he has an oversight interest in the banking world, just what is he doing writing letters that could be seen to encourage panic on the part of depositors? When his staff sat around and discussed what to do before the letter was issued, they would have discussed the obvious risks to IndyMac’s solvency if a key U.S. Senator was raising concerns about solvency. At the same time, others would have advocated that “he has to be ahead of the issue” and “on the record” before Indymac hits the wall.
It’s not like Americans haven’t lived through a year of warnings (see prior post “US subprime borrowers sink deeper into trouble” June 15-07) about the financial health of small to mid-sized U.S. financial institutions. Many Californians lined up last summer to get their savings out of Countrywide Financial (CFC), for example (see prior post “Has the run started at Countrywide?” August 18-07). Moreover, Sen. Shumer’s anger appeared to be directed at the Office for Thrift Supervision, as much as it was at IndyMac’s management. I’m not sure that five votes in New York State tilt on whether or not Sen. Shumer was “out in front” on this issue or not. His profile is so high, and his power to get projects passed for N.Y. so clear, that his Senate seat is likely in the bag for several terms to come.
Which makes it all the more interesting that he got into the details of this specific situation. It appears to me that he was just doing his job. Which is probably more than you can say, as an outsider, for the Office of Thrift Supervision [OTS].
If the SEC continues to be AWOL on most of its mandate, and the OTS can’t help its charges avoid insolvency, huge corners of the U.S. capital markets fall to those members of Congress who are prepared to take the baton.
Disclosure: None
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This article has 58 comments:
unfortunately, these institutions are less and less to be found as are the ethical people who manage them.
Or is part of the report missing?
Whenever he comes to our small city, his Modus operandi is to visit a small business that is "affected" by the problem dujour that prompted Schumer's current tour.
He goes to the allegedly affected business in each community on his schedule, wags his finger of blame, and rails against the current target of his displeasure.
Wouldn't you think that at some point, he would demand that candidates for office in our area not be allowed to run unopposed? It would be great if Central New York voters were allowed to actually cast a meaningful vote for a particular office. Instead, the politicians decide who will be in office and the voters are allowed to rubberstamp the unopposed candidate.
Hey Schumer! Quit causing runs on California banks and demand that your constituents be allowed to participate in free and fair elections!
Its like Your Mother told you....If you can't say something nice....Don't say anything!!
Why should he care about the people who's savings are in California. Its a shame he can't keep his mouth shut!!
He didn't just hurt a Bank...he hurt people and stole their hard earned money with his uncalled for statement.
Managment is first to blame. They setup this house of cards.
However, Schumer (who I agree is a world class blow hard), is 100% correct that the regulators should have put an end to the shady business practices long ago. If I fault Schumer for anything, it's why did he wait this long to speak out?
As for John Reich, just look at his resume. While not a political hack and has plenty of banking experience (not a "hellava job" Brownie, from FEMA guy), he is a Bush appointee. His career was built in the Republican party, having spent 12 years on the staff of Florida Senator Connie Mack and worked his way up to basically chief of staff for his office. He is trying to cover his own a** and defending the boss that appointed his.
This administration believes in unregulated capitalism and the policy from the top down is to let businesses govern themselves. So agencies have a hands off policy. When businesses are not regulated - those who are reckless, unknowledgeable, or just greedy; will push to get away with whatever they can.
Also, everything from the sub-prime blowup, whose root is in the Skinflinton Ad's Justice Dept. suing banks and lending institutions across the nation for not lending enough to minorities and forcing them through the courts to do so, to their own constipation, they blame on the man who is obviously, to hear them tell it, the most evil person ever to live: Bush.
The whole financial mess simply shows the true results of our statist society; and it's not going to get any better.
The solution is to run the economy (and all else) through the freedom ideals of Austrian Economics, rather than Marxist Control and Command Ideals.
But that is not even in the sights of a high-powered telescope. And so, things will continue to get worse with more government creating more government which will require more rules and regulations and taxation and control of a formerly free nation.
I don't appreciate being treated as a child and protected from the truth that is the real world.
The next question is OK... Freddie and Fannie were the first shoe, Indybank is the second... It sure doesn't feel like this is the end of the problems... Are we dealing with a centipede? Then where are the next shoes?
Thx jegan
"Hey...who taught you to write/edit? I'm glad you mentioned Canada, else I would have never read the article? Why didn't you tie in Madonna so that you could catch more readers with this non-sequiter."
Apologies if you were anxious to read more about how Canada regulates its banks. Individual politicians have no role in such things, which in our country requires no explanation whatsover (that's where I'm based and the market I write to, so to speak); that's why I didn't go into detail.
But, you've opened my eyes to something. Since I never know when Seeking Alpha might catch and repost something, I'm always at risk for appearing to be cutting corners and assuming a lvel of knowledge.
As I write a blog, and this is not a paid subscription to the NYT, you might consider cutting me some slack perhaps? Or not. ;-)
MRM
Soros is an infamous and a greedy speculator who has acted like the fictional Auric Godfinger of James Bond fame. He previously was complicit in attacks upon the Bank of England in 1992 and Central Bank ok Thailand in 1997. He profited handsomely on each occassion, reportedly making well in excess of $ 1 billion in his shorting the British Pound on September 16, 1992, while he still resided in London.
He has a family blood fued going on with the Bush clan since George W., the village idiot, scamed Soros and his cronies into acquiring Bush's defunct Spectrum 7 Oil Co. in 1986.
You be the judge, but whatever you decide you cannot rule out Soros, and possibly New York Senator acting in concert with Soros, as having some role in the termoil in the credit markets and the failure of Indy.
Some facts about George Soros disdain for George W. Bush. Soros owned one-third interest in Harken Energy in 1986 when Bush's father was Vice President. Harken bought Spectrum 7 from Bush for $2.2 Million, bailing Bush out of a company that had lost $1.5 million that year. In an article posted on the Web site of the magazine The Nation, David Corn, the magazine's Washington editor, said he happened to run into Mr Soros at a party recently and asked him why Harken had bought Mr Bush's company. "I didn't know him," Corn quoted Mr Soros as saying. "He was supposed to bring in the Gulf connection. But it didn't come to anything. We were buying political influence. That was it. He was not much of a businessman." Soros felt Bush family connections came with the purchase. They did not.
In 2000-01 Soros and his cronies reportedly lost a boat load of money speculating in the commodities markets because of the Enron operations, which Soros connected to Bush family influence in Houston and Soros' belief that the Bush boys were out to humble him. Soros became very bitter at the Bush clan for being duped for the second time. (Soros does not like to lose, particularly his own money caused by the village idiot from West Texas.)
In an interview with The Washington Post on November 11, 2003, Soros said that removing President George W. Bush from office was the "central focus of my life" and "a matter of life and death." He said he would sacrifice his entire fortune to defeat President Bush, "if someone guaranteed it", and many continue to state this as Soros's position even after Soros clarified the humorous nature of the statement in a Q&A session at the end of his March 3, 2004 address to California's Commonwealth Club.
Soros has been predicting doom for the U.S. economy principally because of his feud with the Bush family. He has a history of dishonourable conduct. His family changed its name from Schwartz to Soros in 1936 in order to conceal their Jewish heritage and continue to operate their businesses in Budapest, Hungry with the rise of the Nazis. As a teenager Soros and his family apparently collaborated with the Nazis to save his own skin going as far as assisting in the deportation of other Jews by the Nazis.
As a speculator, he is infamous as the person who instigated "Black Wednesday" in September 1962 by shorting $10 billion British pounds to harm the Bank of England and the Tory government. Likewise, he instigated an attack on the Thai Baht in 1997 provoking the Asian Financial Crisis. Soros is one of the world's most vicious speculators and believes that information or misinformation can not only undermine market fundamentals, but also change the fundamentals. He has used this tactic to short currencies and to "front run" currencies and other commodities.
In 1988, he was asked to join a takeover attempt of the French bank Société Générale. He declined to participate in the bid but did later buy a number of shares in the company. French authorities began an investigation in 1989, and in 2002 a French court ruled that it was insider trading as defined under French securities laws and fined him $2 million, which was the amount that he made using the insider information. His insider trading conviction was upheld by the highest court in France on June 14, 2006.
In an editorial in September 2007, Investor's Business Daily criticized Soros for funding organizations such as MoveOn.org and has claimed that Soros is not transparent in the way he gives away his money. The newspaper said: "The irony here is that Soros claims to be an advocate of an 'open society.' His OSI does just the legal minimum to disclose its activities. The public shouldn't have to wait until an annual report is out before the light is flipped on about the Open Society's political action."
IBD said that Soros' giving cannot be considered philanthropy to the extent that it is political activism. The editorial compared Soros and Bill Gates, pointing out that the latter gave money to improving medical services, while Soros tends to fund foundations and NGOs which he characterises as promoting civil society and democracy."
In April 2008, Soros hosted an event in his apartment that had guests such as David Brock of the self-described progressive watchdog group Media Matters and liberal commentator Paul Begala. Brock described that the plan intends to raise $40 million to run political advertisements against the presumptive Republican nominee, Senator John McCain, through a group called The Fund for America and Progressive Media, whose key backer, according to politico.com, is Soros.
There have been suggestions that Soro's political gifts may have served his own interests. In late 2006, Soros bought about 2 million shares of Halliburton, which had been a major target of criticism (for war profiteering) by MoveOn and the Center for American Progress. Soros's critics allege that these organizations suddenly stopped criticism of Halliburton after Soros purchased the stock, and subsequently the stock values appreciated significantly, netting substantial profits for Soros.
Soros has been active in all sorts of speculation. He plays to win. The crude oil futures market conditions are made for his exploitation, as are the financials, where rumour has driven down Freddy and Fanny.
Soros' writings focus heavily on the concept of reflexivity, where the biases of individuals enter into market transactions, potentially changing the fundamentals of the economy. Soros argues that such transitions in the fundamentals of the economy are typically marked by disequilibrium rather than equilibrium, and that the conventional economic theory of the market (the 'efficient market hypothesis') does not apply in these situations. Soros has popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions.
Reflexivity is based on three main ideas:
Reflexivity is best observed under special conditions where investor bias grows and spreads throughout the investment arena. Examples of factors that may give rise to this bias include (a) equity leveraging or (b) the trend-following habits of speculators.
Reflexivity appears intermittently since it is most likely to be revealed under certain conditions; i.e., the equilibrium process's character is best considered in terms of probabilities.
Investors' observation of and participation in the capital markets may at times influence valuations AND fundamental conditions or outcomes.
A current example of reflexivity in modern financial markets is that of the debt and equity of housing markets. Lenders began to make more money available to more people in the 1990s to buy houses. More people bought houses with this larger amount of money, thus increasing the prices of these houses. Lenders looked at their balance sheets which not only showed that they had made more loans, but that their equity backing the loans--the value of the houses, had gone up (because more money was chasing the same amount of housing, relatively). Thus they lent out more money because their balance sheets looked good, and prices went up more, and they lent more, etc. Prices increased rapidly, and lending standards were relaxed. The salient issue regarding reflexivity is that it explains why markets gyrate over time, and do not just stick to equilibrium--they tend to overshoot or undershoot.
Today, George Soros is reportedly combining with other speculators to: (1) profiteer from the Israeli-Iranian nuclear dispute and (2) to aid his political agenda of crushing the Republican party in November. It is rumoured that Soros and his cronies are agitating the futures markets by aiding in spreading rumors of eventual military action by Israeli Defense Forces, aided by the U.S. military. Soros reportedly has had several operatives in Israel and in the U.K. and this country leak info to the news media to protect against a "short squeeze" and drive up the price of oil. Goldman's commodities operation in London is also making a killing and is aligned with the Soros Gang, if not complicit in the reflexivity operations. The commodities Futures people have been taken off the field by legislation and regulations. Chris Cox, as head of the SEC is akin to allowing Michael Jackson to be a cub scout leader. He was named in a huge securities fraud action and was out placed by his law firm to run for Congress in 1988.
The futures markets are dictating the spot price of crude oil, which governs what the consumer pays at the petrol pump. Bush and his cronies from Texas independent exploration and production companies are making huge profits from spot oil prices. The big oil companies are not really to blame; they have profited from the spike, but their interests are better served with lower prices to stave off alternative energy sources, as is the Saudis.
The Iranians are ironically aligned with the Israeli and London speculators because oil at $140 per barrel (1) limits the military options against Iran's nuclear program lest oil go to $400, (2) allows Iran, with outdated technology to profiteer from high prices on declining oil production to weaken economically the US and EU,who are Iran biggest rivals next to Israel,(3) it undermines public opinion in Europe against military action against Iran given Europe's 20th Century wars, and (4) it externalises Iran's domestic problems, including hyper-inflation in excess of 20% per annum.
Every patriotic person reading this should write to their Senators and Congressman to bring George Black Soros and his subordinates before Congress via subpoena (for documents as well) to quiz him on his role is, if any, in the speculation in the crude oil futures markets, as well as Mortgage Backed Securities Market. The Democratic controlled Congress should not turn a blind eye to this matter simply because Soros is a huge contributor to the party and to 527 organisations aligned with the Democrats. A ganiff is still a ganiff even if the ganiff creates the illusion of being a philanthropist. Additionally, the Department of Justice should empanel a grand jury to stop Soros and Goldman's apparent manipulation of the crude oil futures markets here and abroad.
Just do the research; every time oil futures sell off on some material market news, leaks out of Israel or Washington about military action against Iran drive the price back up. That in turn drives the spot prices which have moved in tandem with the futures markets.
Soros should not be insulated from scrutiny by being a so called "philanthropist." Soros past dishonourable actions, his disdain for the Bush administration and his selfish, arrogant and vindictive personality, as well as his avowals to destroy George W. Bush, coupled with his web of cronies and operatives establish that Soros has the opportunity and inclination to profiteer from anyone else's misfortune. Mike Milken, called the "Master Thief of the 20th Century" by Ben Stein was also a philanthropist. Let's not protect and insulate this Hungarian born monster from scrutiny simply because he is the principal backer of MoveOn.org. Let's call a spade a spade and get our politically corrupt government to investigate George BLACK Soros, the World's master speculator who has in the past employed his reflexivity theory to undermine other sovereign governments.
FOOD FOR THOUGHT?
In the wake of the Fed and quasi-deregulation generated .com collapse, the Fed lowered the interest rate to prop up the economy. Next, Congress passed legislation making it harder to declare bankruptcy.
The additional money supply and lenders' protection against bankruptcies encouraged them to make really bad loans.
If the Fed did not exist and Congress would stop its illegal regulation of industry, things like this wouldn't happen.
Certainly no one of authority.
It began with greed, what a wonderful concept, make loans to people that have demonstrated they either can't or won't pay the back. Since they are an iffy bunch we will charge them a little higher interest rate but we will float the down payment for them.
We will all be rich!! And if not, we will get the Fed to bail us out. Either way, no harm done.
Hey, it's only money! Easy come, easy go!
crowded theater. Why would he do this? ]
I think you're bang on there...what he should have shouted out instead is 'Nuclear
Warhead!!'...
Since the beginning of the Sub-prime crisis, the federal financial institutions, regulators
and lawmakers have been in denial and it shows in the fact that the US still does not have
a strong plan to re-haul it's credit structure.
Be it IndyMac or Bear Stearns or XYZ, the underlying assets that all of the institutions
have are hugely overvalued..now i'm not saying i knew this was coming and something should
have been done before they got overvalued. The point is that this scenario was evident in
August 2007 when the Bear Hedge funds failed. The regulators had a fair understanding of
the situation but failed to act on the root cause - the Credit Structure. The closest any
measure has come to resolving the crisis is the recent (mid-week) proposals laid out by
Henry 'slow' Paulson. It's high time that the saving-spending equations of the lay American
be redrawn so that every few years she/he does not have to bear the brunt of loose-decision
making CFO's losses with the tax that she/he has paid so unquestioningly since getting
that first paychek.
It is also high time that Americans be made aware that this is not the end of financial
troubles; With Adjustable Rate Mortgages set to be revised this summer, the foreclosure
rate is going to shoot up and it will take atleast a few quarters to come back to sane
levels again. Also, since the crisis has affected availability of credit, other loan types
are also in muddy waters. Student loans and auto loans are the first to get affected by
this and we should expect a few of these to go bankrupt as well. A special mention for
municipal bonds (these are the debt instruments that help build/maintain infrastructure)
issued by government backed institutions - they are having a tough time finding buyers in
the market. Worse performing are the bonds issued by educational trusts. Almost shockingly
(in terms of historical financial trends), these bonds are being offered by some trusts at
higher yield of interest than that on municipal bonds. What does all this mean to the lay
American? It means that things are going to be expensive for a while. It means luxuries
might have to take a backseat. It means that for a few years, people will live in a fear of
losing their job - and this is not the scariest part. It means standards of living will
change in America - even though it doesn't sound like it, this is the scariest. It means
thing are going to be really tough for the lay American for a few years.
This is a realist's viewpoint. If I wanted to bring in pessimism, I would have talked about
how higher oil prices is the next big ruin story. It's not. The oil run is just being used as a speculative vehicle right now, but it will not last long. Oh, and it's also high time NEWS channels stopped blaming traders for the run because they don't plan out before buying
crude oil!! If John were to tell Bob that he bought oil at 140 and Bob should buy at 145 to
take the price up, Bob will sell all his oil right there. Speculators buy if they think the
price is going to go up. They have negligible control over the price of oil. No two speculators can be fiends and earn a living.
So tell your senators to awaken you and make you more aware. Vote for the president who tells you he's going to look into the foundations of American finance, for the one who says the credit structure needs to be revised.
And don't fret too much because this is just a cyclical scenario in a capitalist setup. It happens every other decade it's just that the impact varies. The economy will recoup in about 3 years and people will again worry more about the NYY than the President's speech on the economy.
All sub-prime, financial and insurance derivatives and other the Wall-Street "inventions" came from Sen. Charles Schumer home state NY. But the Senator is very quiet about them. How come we hear nothing about investment banks financial problems? What about Merrill Lynch or Lehman Brothers? Are they solvent?
What are the real senator motivations?
Example Value of home a year ago $500,000.00
loan from first federal--- $400,000.00
start rate of ( .5)
Heloc from Indymac ------ $60,000.00
Current value of home most likely under 400,000.00 and with the first mortgage balance above 400,000.00 because of the high rate of negative amortizing Indymac second mortgage is worthless. I want to blame this as the cause.
Soros has been predicting doom for the U.S. economy principally because of his feud with the Bush family. He has a history of dishonourable conduct. His family changed its name from Schwartz to Soros in 1936 in order to conceal their Jewish heritage and continue to operate their businesses in Budapest, Hungry with the rise of the Nazis. As a teenager Soros and his family apparently collaborated with the Nazis to save his own skin going as far as assisting in the deportation of other Jews by the Nazis.
As a speculator, he is infamous as the person who instigated "Black Wednesday" in September 1962 by shorting $10 billion British pounds to harm the Bank of England and the Tory government. Likewise, he instigated an attack on the Thai Baht in 1997 provoking the Asian Financial Crisis. Soros is one of the world's most vicious speculators and believes that information or misinformation can not only undermine market fundamentals, but also change the fundamentals. He has used this tactic to short currencies and to "front run" currencies and other commodities.
In 1988, he was asked to join a takeover attempt of the French bank Société Générale. He declined to participate in the bid but did later buy a number of shares in the company. French authorities began an investigation in 1989, and in 2002 a French court ruled that it was insider trading as defined under French securities laws and fined him $2 million, which was the amount that he made using the insider information. His insider trading conviction was upheld by the highest court in France on June 14, 2006.
In an editorial in September 2007, Investor's Business Daily criticized Soros for funding organizations such as MoveOn.org and has claimed that Soros is not transparent in the way he gives away his money. The newspaper said: "The irony here is that Soros claims to be an advocate of an 'open society.' His OSI does just the legal minimum to disclose its activities. The public shouldn't have to wait until an annual report is out before the light is flipped on about the Open Society's political action."
IBD said that Soros' giving cannot be considered philanthropy to the extent that it is political activism. The editorial compared Soros and Bill Gates, pointing out that the latter gave money to improving medical services, while Soros tends to fund foundations and NGOs which he characterises as promoting civil society and democracy."
In April 2008, Soros hosted an event in his apartment that had guests such as David Brock of the self-described progressive watchdog group Media Matters and liberal commentator Paul Begala. Brock described that the plan intends to raise $40 million to run political advertisements against the presumptive Republican nominee, Senator John McCain, through a group called The Fund for America and Progressive Media, whose key backer, according to politico.com, is Soros.
There have been suggestions that Soros political gifts may have served his own interests. In late 2006, Soros bought about 2 million shares of Halliburton, which had been a major target of criticism (for war profiteering) by MoveOn and the Center for American Progress. Soros' critics allege that these organizations suddenly stopped criticism of Halliburton after Soros purchased the stock, and subsequently the stock values appreciated significantly, netting substantial profits for Soros.
Soros has been active in all sorts of speculation. He plays to win. The crude oil futures market conditions are made for his exploitation, as are the financials, where rumour has driven down Freddy and Fanny.
Soros' writings focus heavily on the concept of reflexivity, where the biases of individuals enter into market transactions, potentially changing the fundamentals of the economy. Soros argues that such transitions in the fundamentals of the economy are typically marked by disequilibrium rather than equilibrium, and that the conventional economic theory of the market (the 'efficient market hypothesis') does not apply in these situations. Soros has popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions.
Reflexivity is based on three main ideas:
Reflexivity is best observed under special conditions where investor bias grows and spreads throughout the investment arena. Examples of factors that may give rise to this bias include (a) equity leveraging or (b) the trend-following habits of speculators.
Reflexivity appears intermittently since it is most likely to be revealed under certain conditions; i.e., the equilibrium process's character is best considered in terms of probabilities.
Investors' observation of and participation in the capital markets may at times influence valuations AND fundamental conditions or outcomes.
A current example of reflexivity in modern financial markets is that of the debt and equity of housing markets. Lenders began to make more money available to more people in the 1990s to buy houses. More people bought houses with this larger amount of money, thus increasing the prices of these houses. Lenders looked at their balance sheets which not only showed that they had made more loans, but that their equity backing the loans--the value of the houses, had gone up (because more money was chasing the same amount of housing, relatively). Thus they lent out more money because their balance sheets looked good, and prices went up more, and they lent more, etc. Prices increased rapidly, and lending standards were relaxed. The salient issue regarding reflexivity is that it explains why markets gyrate over time, and do not just stick to equilibrium--they tend to overshoot or undershoot.
Today, George Soros is reportedly combining with other speculators to: (1) profiteer from the Israeli-Iranian nuclear dispute and (2) to aid his political agenda of crushing the Republican party in November. It is rumoured that Soros and his cronies are agitating the futures markets by aiding in spreading rumors of eventual military action by Israeli Defense Forces, aided by the U.S. military. Soros reportedly has had several operatives in Israel and in the U.K. and this country leak info to the news media to protect against a "short squeeze" and drive up the price of oil. Goldman's commodities operation in London is also making a killing and is aligned with the Soros Gang, if not complicit in the reflexivity operations. Don't forget Hank Paulson is a former Goldman man.
Schumer's staff will not touch Soros because Soros spent over $ 23 million on attack adds against the Republicans in 2006 because George W. Bush sold him a defunct oil company owned by Bush in 1986 with a promise to connect Soros with Gulf nations oil ministers, which never happened. Soros has a code of conduct much like the fictional character Auric Goldfinger who battled James Bond. He is ruthless, arrogant and vindictive, just like Chuck Schumer.
DID SCHUMER ACT AS THE UNDISCLOSED AGENT PROVOCATEUR FOR SOROS TO ASSIST SOROS TO PROFIT FROM INDYMAC'S FAILURE BY EMPLOYING THE SOROS MODUS OPERANDI OF REFLEXIVITY?
Why else would a purportedly sophisticated Senator from New York utter the public cry of wolf? Schumer and Soros need to be investigated for the enormous harm visited upon the banking system at this time of crisis. We all need to enlighten the Congress and the Justice Department of this matter given Soros past history of predatory practices to enrich himself at the expense of central banking systems in England and in Asia, as well as his conviction in France, which was affirmed by the Conseil d'Etat, for insider trading.
Terrible. Ghastly. No one else does that, right?
About the only thing that you can really say is that when he yelled "Fire", he encouraged the last two patrons of the theater to wake up and make an exit.
President Bush's tenure has been a sordid history of regulators and regulations that have been removed in order to facilitate the picking of the public pocket by greedy manipulators. No one was watching the store as the looters partied, and when someone finally has the guts to say "Why are you keeping it open, the shelves are empty?" the outcry predictably comes loudest from those who profited most from the looting.
1. Congress for never passing a law mandating "teaser rates" be outlawed.
2. Banks for being idiots
3. Wall Street for being greedy bastards and not even knowing what they were buying or trading.
4. The American consumer for buying a home bigger than he could afford.
5. Appraisal agents who bid homes up to appease their customer, the banks.
A few key indicators of a general lack of soundeness. 1) Common stock trading at a significant discount to book value, less than 80%. In general, a declining stock price is an indicator of default. See work by Moodys-KMV 2) NPAs non-performing assets greater than 5%. High levels of NPAs are a good indication that the bank is either a poor underwriter or has taken undue risk with your money 3) lack of cash earnings. Neg-am and the use of interest reserves in construction lending may overstate real earnings, as the loans typically don't default until the neg-am reaches its maximum and the loan recasts.
Schumer was not wrong. The regulators who have been applying traditional measures of solvency to non-traditional loan products are completely at fault and completely incompetent. I have no doubt there will be many more seizures to come out of the Alt-A, option ARM and construction lending crowd. Wall St. recognized this a year ago. Too bad Schumer is just waking up now and the cost to the taxpayer goes up every day these banks are allowed to stay in business throwing good money after bad in the hopes of some miraculous recovery in the housing market. And no the run on the bank didn't kill IndyMac just hastened the inevitable failure.
You totally miss the point. Soros is a pig of a speculator. He is not a gracious winner nor loser. Any one who serves as an apologist for the apparent Nazi kiss-up should look into Soros dishournanble past. Do you dispute that he instigated "Black Wendesday" on September 16, 1992 to profiteer from the shorting the British pound or his instigating the Asian Financial Crisis of 1997, or that he was convicted of insider trading by France? Have you no shame? How can anyone withan a scintilla of decency defend this self-absorbed speculator pig? The world would be a better place if the Nazis shipped him off to a concentration camp rather than those good Jews he reportedly betrayed in Hungry during the holocust to save his own skin! He uses his ill-gotten wealth to attempt to atone for his past actions. Nevertheless, he continues to be a ruthless and vindictive monster that should be investigated and punished if he has any complicity in this financial crisis, particularly if he has done so out of his own desire to visit revenge on the fool that serves as the President.
Have you no shame for being an apologist for George SCHWARTZ Soros whose family changed its name to be able to deal with the Nazis?
A word to the wise banker: if you want your bank to withstand credit crunches, rumours, and the ordinary and expected rigours of the marketplace, make low-risk loans, use leverage sparingly, and tell the market in detail about the contents of your balance sheet. If you're happy to see your equity vapourised, your career destroyed, and your debt transformed into discounted equity in the hands of the next RTC, then don't. I don't really care either way. But for God's sake stop demanding that I bail you out when things go ever so predictably to hell. I owe you nothing and I don't share your inflated view of your own importance to the rest of us. If you need to be bailed out, go back to your shareholders and demand they return those fat dividends you paid them with the cash that should have been left on your balance sheet as provision against the bad loans you were making - loans that you and the borrower both knew would never, could never, be repaid.
If Sen. Schumer wanted to do something useful, he would introduce a new law limiting banks to the same leverage equities traders are permitted: 2x.
He definitely didn't break the Bank Of England in '92 or cause the Asian currency crisis. Those things were going to happen with or without him, he just profited from the trend. If you are going to blame him for that you might as well hate anyway who has invested in a market or has funds in a pension plan.
He also appears to have done a lot of good for the world. e.g. Donating money for photocopiers in the former Soviet Union to help people spread information and communicate. He also has funded many artistic and scientific organizations, in the former Soviet Union, South Africa, and even Burma I believe. I find it hard to see that as a bad thing.
He does strictly separate business and philanthropy. He invested heavily in Russia during the beginning of the collapse in an attempt to stabilize the region and help it rebuild, that turned out badly and he lost money. So now he strictly separates business and charity, I can't say I blame him for it.
The reason he doesn't like Bush is because he thinks bush is leading the US towards fascism. He wants to make sure free speech and the rule of law is protected in the USA.
Personally I wish he would have funded Ron Paul rather than the Democrats, but as I said I don't agree with his politics.
Finally let me end with something slightly critical about Soros. The Quantum fund (best performing hedge fund over a 30year period IIRC) was founded by Soros and Jim Rogers. Soros is no dummy and he was very generous in describing how the global financial system works and how to run a hedge fund in his books. (Thanks George!). But Rogers left to do his own thing, and given the superior returns made by Rogers compared to Soros over the last 10 years I have to consider Rogers the better investor.
The regulators, but also people like Schumer in Congress, and the Federal Reserve, all deserve blame. But Schumer doesn't want blame, he wants power, so he tried making a political issue out of IndyMac to get his name in the press, and he will use his power to punish regulators and anyone else he can, in order to further his political career.
Imagine a building was built with poor conditions and everyone knows it is structurally unsound. There are engineers and construction firms working to fix the building. Chuck Schumer drives a bulldozer into the side of the building and it collapses. Then he blames the building inspectors and construction company for not doing their job. See the difference? Schumer should be in jail.
Since i never knew this material about Mr. Soros, i am once again impressed at how the U.S.media, especially that of television, fails to expose the likes of Soros the Schwartz. While we could all benefit from exposure of GOP cronies, it is most regretable and very serious that the media will do all it can to hide the Dem Cronies of DCLand. I also wish to remind people of the fun film using "the Schwarz" to play a take off on "The Force" of Star Wars fame.
Could we force the media to reveal more if we all begin to refer to him as Soros the Schwartz? That seems more fun than Schwartz Soros or The Schwartz Soros. Wonder what Billious the Bad would have to say here. Seems obvious to me if the media did not have Mr. Obama to highlight they'd be doing it for Mrs.Clinton. We do not have a truly objective clear headed media in America. They do not serve us well as they should. And they never ask "What's in it for Schumer?" They just automatically operate as if he were a good guy. Maybe it's time for SS to mean Soros & Schumer. That'd be a blast, er, I mean " a force."
1. Congress for never passing a law mandating "teaser rates" be outlawed. ]
Should they outlaw teaser rates on furniture purchases, computers, etc., too?
While we're at it, let's get Senator Ensign to toss in an amendment to outlaw Vicodin, Percoset, and Oxycontin because some people develop a dependency.
Adjustable rate mortgages were available long before this crisis began, and they did benefit a number of people who used them properly.
mr speculator should not try to couch his words around a long winded diatribe. he probably would feel right at home, in his brown shirt, while walking through the streets of yorkville in manhattan many years ago.
last comment: if merrill lynch or goldman said sell indymac when it was trading at 68 cents, down from $45 they would have been laughed out of the business. schumer should have made his speech last year and then some nay sayers would have more of a leg to stand on.
At best Schumer should be censured for poor judgement and investigated for using his office and authority for potential abuse and maybe even outright monetary gain...
With that said...he had a responsibility to make the case for appropriate oversight...but he has been head of the committees and in the offices mentioned in the above article for what "two years"?
Draw your own conclusions from there as to who is doing their jobs...
HOW CLOSE IS WAMU TO THE BRINK?
Here is a write-up I found on the internet at walltreetexaminer.com about Washington Mutual.
"In order to get a better idea of the likelihood that ...(this) leading mortgage lender... will “go under”, I thought it would be a good idea to dig into their last 10-K annual report filing to obtain information on what is their total exposure in higher risk loan categories. As you read through this post, keep this quote in mind: The option ARM is “like the neutron bomb,” says George McCarthy, a housing economist at New York’s Ford Foundation. “It’s going to kill all the people but leave the houses standing.”
"Let’s start with Washington Mutual’s portfolio, shall we?
Option ARMs $63.4 billion
Loans with combined loan-to-value over 80% (and no insurance) $7.5 billion
Home equity loans and home equity lines of credit $15.6 billion
Interest-only loans $11.7 billion
Total exposure: $98.2 billion
You can find all these numbers on page 79 of their last annual report.
Tangible equity: $14.4 billion (Source: Yahoo Finance)
"Therefore, it would only take a write-down of 15 percent on their higher risk loans for Washington Mutual to be completely wiped out. (14.4B / 98.2B).
"Also, keep in mind that 1/2 of their total loan portfolio is in California (ground central for the US real estate meltdown—the highest risk region of the country)."
Considering the closure of Indymac Bank and its Option ARM clobbering them, it looks to me that WAMU is next.
The failure of IndyMac is a tragedy caused by a liquidity crisis more than anything else. What fraction of Alt-A mortgagors are more than 30 days behind in their payments? Alt-A mortgages should not be lumped with subprime mortgages. Besides good credit, a large ratio of equity/debt is often a requirement for an Alt-A mortgage. Those mortgagors aren't about to walk away from their homes; they have a lot of their own money tied up in them.
As for CentralNY'ers et al: trust me, we, people in NYC are way more pissed by the worthless Upstate, especially its Brunos and similar parasites.
Just not quite pissed enough to stop bleeding us dry 'eh? If Upstate NY didn't subsidize NYC through outrageous taxes, we might possibly be able to have a business or two that would remain here (in upstate).
Thanks for "allowing" us to pay the price to keep your glorious city afloat. As all of our kids have moved away to find employment, and those that remain will be unable to heat their homes, I'm more than a little concerned as to whose money you will confiscate in the future.
July 14, 2008, 2:30 pm
Rogers, Soros: Fannie, Freddie plan a disaster
by Katie Benner
Investor Jim Rogers tells Bloomberg that the Treasury Department’s plan to shore up market confidence in Fannie Mae (FNM) and Freddie Mac (FRE) is an “unmitigated disaster” and that the country’s largest mortgage lenders are “basically insolvent.” “These companies were going to go bankrupt if they [the government] hadn’t stepped in to do something, and they should’ve gone bankrupt with all of the mistakes they’ve made,” Rogers reportedly said.
Rogers is a former partner of famed hedge fund manager George Soros and the current chairman of Rogers Holdings. He said that taxpayers will be saddled with debt if Congress approves Treasury Secretary Henry Paulson’s request for the authority to buy unlimited stakes in and lend to Fannie and Freddie; and that the mortgage giants’ stocks could fall further. Goldman Sachs (GS) analyst Daniel Zimmerman agrees, saying shares could slide another 35%. He lowered his price estimate for Fannie to $7 from $18 and for Freddie to $5 from $17. The analyst note isn’t surprising, given the government’s reported indifference to the fortunes of company shareholders. Fannie Mae’s market cap is now about $9.5 billion, down from $38.9 billion at the end of 2007. Freddie Mac’s market value has shrunk to about $4.4 billion from $22 billion at the end of last year.
Soros got a jab in, too. The billionaire investor told Reuters that “Freddie Mac and Fannie Mae have a solvency crisis, not a liquidity crisis.” The real problem, he says, is that Fannie and Freddie are “extremely leveraged,” and that “deterioration in the housing market, the foreclosures, are going to cause losses which exceed their equity.”
As for the Soros past, read this also from Fortune:
GEORGE SOROS, SCOURGE OF ASIA? CONSPIRACY THEORIES
By MAHATHIR MOHAMAD; NEEL CHOWDHURY
September 29, 1997
(FORTUNE Magazine) – Malaysian Prime Minister Mahathir Mohamad, who was on vacation during the speculative attack on Southeast Asia's currencies in mid-July, returned to Kuala Lumpur in a combative mood. Mahathir remains certain he has identified what caused the currency assault, which wiped 15% off the value of the Malaysian ringgit in the past two months: namely, George Soros, American billionaire hedge-fund manager. Mahathir, who vociferously objects to the merest hint of Western meddling in Asian affairs, believes Soros' aim is to punish Malaysia for its support of Myanmar, or, specifically, its ruling junta, the State Law and Order Council (SLORC). Soros' Open Society Institute opposes the antidemocratic activities of SLORC but has repeatedly denied that this has influenced Soros' investment decisions. "There is absolutely no connection between the Open Society Institute's Burma Project and the currency trading conducted by Soros Fund Management," Soros declared in an official statement. Even so, Soros was irked that in late July, Mahathir and the other leaders of the Association of Southeast Asian Nations formally ushered Myanmar into ASEAN. Here follow excerpts from an exclusive interview FORTUNE's Neel Chowdhury had with Mahathir in Kuala Lumpur:
FORTUNE: On what basis have you accused Mr. Soros of speculating on the Malaysian ringgit and other regional currencies?
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MAHATHIR: We have definite information that he is involved. Of course, he is not the only one. Others followed suit. But he started it. In fact, he more or less confessed later on that he was involved. He had this idea that by applying pressure on Thailand and Malaysia he could prevent Myanmar from joining ASEAN. We also know that on his staff he has a person from Myanmar who might be influencing him. We have every evidence that he is involved.
FORTUNE: Why do you oppose the activities of Mr. Soros' Open Society regarding Myanmar?
MAHATHIR: We believe Myanmar should be given time to make the necessary adjustments. We never believe in applying pressure on people. Trying to starve a whole nation in order to force its government to behave, that is not our idea. If you want to act against the government, you act against the government.... You have to show them that the way others do things can bring benefits to the country without in any way undermining their authority. Even if they lose authority they're not going to be thrown into jail. We have seen in some countries that when military authorities give up power in favor of democracy, and they happen to lose the election, they are thrown into jail. I mean that democracy is not any better than the dictatorship, because once you are elected to become the government you throw people into jail and then you say that you are a democracy. To me it doesn't make sense.
FORTUNE: But hasn't Myanmar's military government put its political opponents under house arrest?
MAHATHIR: Yes, they put people under house arrest for this. In some countries people are executed, they are massacred as in Bosnia. What has the international community done? Nothing. You know they sat there and saw people being slaughtered in front of their eyes, and they did nothing. So why should we accuse these people? She [Burmese political dissident Aung San Suu Kyi] is living comfortably in her own house. There are restrictions, of course. But it's not as if she's being strung up....
FORTUNE: There has been an anti-Semitic strain in the reporting on Mr. Soros in the Malaysian newspapers. What do you plan to do about that?
MAHATHIR: No, we are not anti-Semitic, because, as you know, the Arabs are also a Semitic people. We have always treated American Jews without any consideration at all that they are Jews. But when a person of Jewish origin does this kind of thing, the effect is the same as when a Muslim carries out something that is akin to terrorism. Immediately people link it to Islam, to Muslims, although generally Muslims do not behave like terrorists....People should stop accusing Muslims of being terrorists. People should not link Jews to these kinds of activities. Most Jews I think are quite innocent. They are not involved in this at all. But the impression created is of course that being Jewish they have lots of money. They know how to manipulate money as much as some people assume we Muslims naturally are terrorists, including myself....
FORTUNE: Are you worried that this quarrel you've had with Mr. Soros will deter foreign investors from coming to Malaysia?
MAHATHIR: We have no choice. He has wiped out billions of dollars from our economy, and if we're going to sit by and say nothing in the hope that it will not deter investors, then we're going to pay a very high price for those investments.
FORTUNE: If Mr. Soros were right here in front of you, what would you say to him?
MAHATHIR: Go somewhere else.
People wake up.... Just because some one says so-an-so is poor does not mean a bank will go bankrupt.
I can assure of any comment of those type will not affect Charles Schwab for that matter..