williambanzai7

Where's the Bottom? Still Anybody's Guess

TO BAIL OR NOT TO BAIL
(Adapted from William Shakespeare's Hamlet)
(WilliamBanzai7)

To Bail, or not to Bail, that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous loss of fortune,
Or to take arms against a sea of financial troubles
And by opposing end them. To die—to sleep,
No more; and by a sleep to say we end
The heart-ache and the billion market shocks
That investor hubris is heir to: 'tis a consummation
Devoutly to be wish'd. To die, to sleep;
To sleep, perchance to dream—ay, there's the rub:
For in that sleep of death what dreams may come,
When we have shuffled off this market coil,
Must give us pause—there's the respect
That makes calamity of so long life.
For who would bear the whips and scorns of time,
The CEO banker's wrong, the proud man's contumely,
The pangs of write offs, the law's delay,
The insolence of office, and the spurns
That patient merit of th'unworthy takes,
When he himself might his quietus make
With a bare quill? Who would Federal oversight bear,
To grunt and sweat under an ordinary life,
But that the dread of something after death,
The undiscovere'd country, from whose bourn
No traveller returns, puzzles the will,
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all,
And thus the familiar hue of resolution trust
Is sicklied o'er with the pale cast of thought,
And enterprises of great pitch and moment
With this regard their currents turn awry
And lose the name of action.

Paulson/Bernanke: $700 Billion at 'Hold to Maturity' Pricing

DRAFT NO. 1
U.S. Treasury
Office of Sekretary Henry (Hank) Paulson

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
TO PURCHASE TOXIC FINANCIAL ASSETS

Sec. 1. Short Title.

This Act may be cited as "Taxpayer networth annihilation and Investment banking wealth Recovery Plan" ("TwIRP") .

Sec. 2. Purchases of Toxic Assets.

(a) Authority to Purchase. – The Sekretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Sekretary in his sole, absolute, divine and knowing discretion, any and all manner of Toxic Assets from any Financial Institution, as those terms are defined in section 13 of the Act.

(b) Necessary Actions. – The Sekretary is authorized to take such actions as the Sekretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees and hiring konsultants (da Konsultanz with a K), unemployed investment bankers and advisors as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, MOUs, LOIs, including lucrative contracts for investment banking and financial advisory services for the management of Toxic Assets;

(3) designating Financial Institutions as financial agents, revenue collectors, purchasing agents and proxies of the Government, and they shall perform all such reasonable duties related to this Act as financial agents and proxies of the Government as they deem fit in their sole and absolute discretion;

(4) establishing vehicles, including offshore SPIVs and conduits, pyramids and highly leveraged PONZI structures that are authorized, subject to new ideas by the Secretaries quantitative engineer, to purchase Toxic Assets and issue open ended obligations;

(5) directly and indirectly, granting bonuses, equity kickers, management fees, performance fees, restructuring fees, brokerage commissions, finders fees, entertainment accounts, unemployment compensation and other compensation arrangements; and

(5) formulating such regulations, fine print, boilerplate, standard terms, ISDA riders and other terms as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Sekretary shall take into consideration means for –

(1) Reinstating Wall Street investment bankers into the financial pecking order of society;

(2) shafting the taxpayers; and

(3) appropriate steps to paper over any conflicts of interest in the hiring of Wall Street contractors or advisors. Any regulation issued under this authority shall not be subject to the rest of the United States Code.

Only to the extent reasonably feasible, the Secretary shall attempt to provide stability or prevent corruption in the financial markets or banking system;

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Sekretary shall only if feasible, attempt to report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Troubled Assets.

(a) Exercise of Rights. – The Secretary may, at any time, in his sole, absulute, reasonable or unreasonable, divinely inspired discretion, exercise any rights received in connection with Toxic Assets purchased under this Act.

(b) Management of Toxic Assets. – The Secretary shall have authority to manage, securitize and repackage Toxic Assets purchased under this Act, including conjuring revenues and engineering away all portfolio risks therefrom.

(c) Sale of Toxic Assets. – The Sekretary may, at any time, any place, to anyone, upon terms and conditions and at prices determined by the Secretary in his sole and absolute divine discretion, sell, or enter into securitiised loans, CDOs, CDSs, kickers, participations, synthetic securities, repurchase transactions, black holes or other financial weapons of mass destruction in regard to, any asset purchased under this Act.

(d) Application of Sunset to Toxic Assets. – The authority of the Sekretary to hold any Toxic mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Sekretary's authority to purchase Troubled Assets under this Act shall be unlimited, but for optical puroses shall be expressed as $700,000,000,000,000,0... outstanding at any one time.

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Sekretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are absolutely non-reviewable and committed to absolute agency discretion, and may not be reviewed by any court of law, any administrative agency, any Congressional Committee, media, newspaper or press or other divine authority.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall be in perpetuity.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof "such amount as is determined under Section 6.

Sec. 11. Credit Reform.

The costs of purchases of Troubled Assets made under section 2(a) of this Act shall be determined only if feasible and if we have more time.

Sec. 12. Indemnification and Release.

No consultant, agent, employee or other firm engaged pursuant to this Act shall be held accountable for negligence or shabby performance, including in particular, service and performance
in a grossly negligent and reckless manner. Such parties shall be fully indemnified with the full faith and credit of the USA.

Section 13. Definitions.

For purposes of this Act, the following definitions shall apply:

(1) Financial Institution. – The term "Financial Institutions" means any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies, having significant operations in the United States; and, upon the Sekretary's determination perhaps in consultation with the Chairman of the Board of Governors of the Federal Reserve, any other institution he determines necessary to promote financial market stability. For the avoidance of doubt, the term shall include Goldman Sachs, Morgan Stanley and any spin off, successor or surviving entity.

(2) Secretary. – The term "Sekretary" means the "Hank" Paulson and his heirs and or Phil Gramm.

(3) Toxic Assets. – The term "Toxic Assets" means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008; and, upon the determination of the Sekretary perhaps in consultation with the Chairman of the Board of Governors of the Federal Reserve, any other financial WMD, as he determines necessary to promote the strength of Wall Street; including without limitation, leveraged buyout credits, prime brokerage margin credits and and all CDS counter party liability.

(4) Black Scholes Formula.-- A term utilized to convince the cynics and skeptics that we know what we are doing.

(5) LTCM. A previous financial disaster that would have led to financial meltdown. Discounted by the regulatory authorities as a 1000 year aberation.

(6) Alan Greenspan. A once in a 1000 year goofball.

(7) George Bush. A circus clown who lives in the White House.

(8) SEC. Somebody please Eject Cox.

(9) 2 Big 2 Fail. 2 Stupid 2 Survive.

(8) United States. – The term "United States and USA" means the United Socialistic American States, territories, and possessions of the United States, Wall Street, East Hampton, Nantucket and the District of Columbia.

HEAR YE, HEAR YE, HEAR YE, may it be known by all thee present, that this TwIRP is hereby declared the law of the land.

Lessons From the Banking Meltdown

Wall Street, Bush, AAA Lawyers and the Demise of Accountability

We live in a time when political and business leaders are able to avoid being held accountable for their acts of gross negligence and wilful misconduct. Sounds like lawyer talk. Well lawyers are intricately involved in this sorry state of affairs. Lets take the Bush administration. What did all the Republican cronies like Cheney learn from the Nixon saga? Don't put yourself in weak position legally. Don't testify under oath, better yet don't testify. Don't provide information under threat of perjury and obstruction of justice, better yet don't provide information. They have artfully avoided political accountability for a litany of constitutional abuses, executive misconduct and malfeasance. They are also getting AAA legal advice.

OK, now lets consider what has happened in the financial services industry. Until recently, our securities laws forced Wall Street to worry about the way it conducts business. Don't play by regulatory rules with origins in Roosevelt's New Deal and sooner or later the SEC or Elliot Spitzer will hunt you down. You had to worry about adequate disclosure and a battery of rules designed to protect average public investors. If you misbehaved, you also had to worry about a ravinous plaintiff's bar charged with the duty of prosecuting claims on behalf of investors unable to fend for themselves (for a generous fee, of course). More AAA lawyers.

Those New Deal rules are still there. However, Wall Street has managed to water everything down to the point where a manmade Katrina hits the financial markets and there is little or no means to hold the perpetrators accountable. Don't hold your breath waiting for the SEC to chase the bankers that designed, peddled and later lied about their exposure to toxic jackass backed securities. What about Credit Default Swaps? Oh, those so called financial weapons of mass destruction are not securities within the meaning of the securities laws. Those are cutting edge risk management tools. How about investors like poor old AIG banding together to sue those who set them up with these improvised financial explosive devices. Never mind, those were sold to "sophisticated" and "accredited" investors able to fend for themselves. Sales to these financial sophisticates are not subject to the same legal regime. We now see that "sophisticated investor" means one who expects to be bailed out by Uncle Sam. Finally, you won't be seeing any widows and orphans starting class action suits, because no one sold them any securities. Instead, they are accused of being financially culpable in this mess because they fell prey to the army of mortgage/real estate brokers who aggressively peddled shadow bank loans. Mortgage brokers in some instances owned by who else? Wall Street investment banks like Lehman and Bear Stearns. Shadow bank loans? Yep, more AAA legal advice.

Let the markets regulate themselves! That is the fundamentalist mantra of the lords of the Street. Well, that is what the market was actually doing until this past Friday. Self regulation came in the surprising form of punishment by the shorts. After all, it was the unregulated hedge fund industry, Messrs Einhorn et al, and not the SEC that called Lehman and AIG to the carpet. Not to worry, Mr. Cox, a Wall Street lawyer who runs the SEC, has fixed the short problem for his former clients/masters. Trading bets against financial institutions are now banned. In a comic twist, the SEC is apparently planning to force hedge fund managers to testify under oath. Something more than you can expect from the likes of Harriet Myers, Esq. and Alberto Gonzalez, Esq. Ultimately, the reckless bets that the investment banks made with shareholder capital will go unpunished. Still more AAA legal advice.

Well you begin to see how what seems like one big scam is actually a legally airtight apparatus for screwing Grandma, Grandpa and Joe public in an indirect manner without being held legally accountable. Time to throw out all of the New Deal regulatory assumptions and start all over again. Wall Street, like the Bush administration, has managed to innovate its way out of corporate accountability-- the old fashioned way: hire innovative AAA lawyers. 

One hundred years ago a man named Franklin Keyes, Esq. (you guessed it, a Wall Street lawyer) published a tract titled: "Wall Street Speculation, Its Tricks and Its Tragedies". In it he says: "Wall Street is dominated by some of the brainiest and shrewdest men in the country, natural born sharpers and schemers, and before the average man can get the better of them, except through the merest chance, he will have to eat brain food for a long time." Well said Mr. Keyes. Nothing seems to have changed, particularly the need to hire AAA lawyers.

WilliamBanzai7
September 2008