What role did the intelligence world play in cooking the books for crisis?

Anyone remember this item from Business Week more than two years ago? Please follow the link to read the whole thing: The White House authorized the intelligence czar (Negroponte at the time) discretion to grant secret waivers on all SEC rules for any company. National security apparently requires money laundering and cooked books. That would give incredible advantages to such a company in its dealings on the closed markets of derivatives. Wonder if any of the heavyweights involved in the current crisis are among the beneficiaries, and what impact this may have had? Was this the beginning of plunder operations in advance of the inevitable crash? Can companies who received such waivers still present cooked books as the derivatives now unwind? Will the DNI be able to block investigations of possible criminality among financial players based on such waivers?



http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=rss_daily





PS - If you recommend, please also kick / add a comment / add other relevant practices pointing to plunder operations or attempted orchestration of financial crises.

more more more

http://www.cbsnews.com/video/watch/?id=4502673n

i snitched the link from another thread: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4175272

tune in.
dp

K&R.

They are purposeful, methodical, and thorough.

on shitbags face after he signed the Loot America Bill.

I'm not sure how much more outrage I can take.

:kick:

http://ftrsummary.blogspot.com/2008/09/ftr-641-were-we-controlled-part-ii.html

http://ftrsupplemental.blogspot.com/2008/08/bringing-down-bear-stearns.html

For the record, I do not trust "JackRiddler" of RI/9-11 truth community fame, and nobody should trust me either.

Conducting dialogues about the intelligence community is a common psyop whereby said dialogues are led & controlled.

The Vanity Fair article ( http://www.vanityfair.com/politics/features/2008/08/bear_stearns200808 ) on which that For The Record was based.

Just recently the story about Lehman: "Lehman Cash Crunch Caused by Lender JPMorgan, Creditors Say" ( http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOBEg1wAitck )

Some weird stories about AIG in April / May:

Hank Greenberg sues AIG, saying it hid losses of $4B related to CDSs ( http://www.marketwatch.com/news/story/hank-greenberg-sues-aig-saying/story.aspx?guid=%7BF681ECA7-E52F-4CD1-ADF8-3FB2EECBB838%7D ) and the major stockholders sold off some stock in the same period as well:

05/14/08	EDWARD E & MARIE L MATTHEWS FOUNDATION, Unknown	Planned Sale	—	$6.68 M	170,400	$— - $—	—
05/13/08	STARR FOUNDATION, Affiliated Person	Planned Sale	—	$19.24 M	500,000	$— - $—	—
04/17/08	STARR FOUNDATION, Affiliated Person	Planned Sale	—	$15.09 M	326,800	$— - $—	—
04/07/08	STARR FOUNDATION, Affiliated Person	Planned Sale	—	$32.34 M	673,200	$— - $—	—
04/07/08	EEM VOLARIS TRUST, Trustee	Planned Sale	—	$33.69 M	705,613	$— - $—

http://finance.aol.com/company/american-international-group-inc/aig/nys/insider-transactions


The biggest problem is the amount of stories is still limited and it will take a long time before we'll get a glimpse about what was going on behind scene. ( Lehman 'may take 10 years to wind up' www.independent.co.uk/news/business/news/lehman-may-take-10-years-to-wind-up-951388.html )

I was looking to find some information about the total debt and came accross the following jewel on a blog of a Long Beach real estate agent. Overall the blog is quite good with lots of good information.



The amount of the total debt varies between 10 and 12 trillion at the moment. Even if 20% is in trouble of defaulting, it'll make a max of $12T * 0.2 / 3 = $800B or the max of the bailout, however that is the worst of the worst of the maximum estimation of the total loss we are talking about, or in short where the fuck did those billions in loss come from because it couldn't have been the mortgages.

One should always do one's own research, be skeptical and think for oneself. But why are you giving me the special treatment? Do you think I'm managing these points on behalf of the CIA? And aren't you the same judasdisney of RI fame? (RI is fame?!)

As you know from the many threads on which we've both participated, I don't have any systemic objection to seeing the role of intelligence and/or criminal networks in various international events.

The problem with applying that kind of analysis to the current economic crisis is that, basically, the current economic crisis is very, very transparent. I think that the financial catastrophe we are experiencing is probably difficult for lay people to understand, and it seems mysterious and therefore it's easy to imagine all kinds of unsavory, secretive things going on.

But to me, there is nothing mysterious about it. I spent (wasted) about 7 years in New York finance (mainly in order to pay off student loans after which I've always been in the non profit sector) and frankly everything you need to know about where the money went is being reported on the front pages of the New York Times and Wall Street Journal -- if you can wrap your mind around things like asset backed securities and credit default swaps. Financial elites don't lie to themselves and each other about stuff this important.

Basically, where the money went is not mysterious. At bottom, this entire crisis is about the value of houses and the ability of regular families to pay their mortgages. It was an event of mass economic hysteria, not a secret plot. It was as open as the real estate listings in the newspaper and the widespread efflorescence of dozens of reality tv shows, like "Flip This House" that persuaded hundreds of thousands of people to think they could make a quick killing in real estate, or that they could afford a MacMansion because real estate prices "always" go up.

The war, instability in the energy markets, Katrina (and oil companies taking advantage of closed pipelines) gave us not only $4 gas, but $4 heating oil and higher prices in everything, while wages stayed stagnant. Millions of people couldn't afford their mortgage payments, and for the last hundred years or so, the main assets banks have held have been mortgages -- whether individually (S&L crisis, 1988) or packaged as securities (mortgage backed security crisis 2008).

I keep hearing that no one knows what's in the mortgage securities. But what's stunning to me is the transparency. Here is the prospectus for one of the worst pieces of MBS dogshit every scraped together -- Bear Stearns ALT-A Trust 2007-2.

http://www.secinfo.com/d1zj61.ue8.htm

It's hundreds of pages long and it tells you exactly what kinds of bad mortgages are included, and how they have been sliced and diced to make a whole long series of 20 or so different kinds of mbs -- some of which even now after the entire thing has defaulted are essentially gold plated, and others of which were as valuable as used toilet paper on the day they were created. It tells you what's inside almost down to the individual mortgage. And there's one of these prospectuses for every single MBS that was created and sold to the public -- plus quarterly and annual statements as well.

Want to know how much of this and other bad paper (and good paper) a major bank owns? It's perfectly transparent. Just go here and click on any 10K or 10Q for thousands and thousands of pages of disclosure on Bank of America, for example:

http://investing.businessweek.com/research/stocks/financials/secfilings.asp?symbol=BAC

What's so frustrating is that confronted with this tsunami of information, the mainstream press, including the financial press, throws up its hands and says, "it's opaque -- no one understands what's going on!!!" when what they mean is they are too lazy to read it, and that in fact most of them have little training in the fields on which they are reporting and wouldn't understand what a first year banking associate knows by the first December after university graduation. This meme gets transmitted to the public, which already has little understanding of the inner workings of the banking system, let alone this crisis.

By focusing on hypotheses about criminality (not that there wasn't plenty of it), intelligence, or whatever, we're missing what's right in front of our faces -- namely this crisis was caused by the looting by Bush and his oil buddies of the family budgets of millions of those "regular folks" and "hockey moms" that people like Palin prattle on about, and that impoverisation has been sucked up the system to the top, where fantastic levels of hedging and leverage magnified the crisis a hundred fold, in one transparent step after another transparent step, into global financial chaos. No "conspiracy theory" is necessary to explain this one, this time.

Your conclusion:



Now tell me how I disagree with any of that. Including the "not that there wasn't plenty of it." I point to one possible means of facilitating criminality, which was announced, and which may be in play right now to protect perpetrators who received secret waivers.

I do think you are too harsh on everyone, even including journalists, who doesn't manage to read the thousands of pages involved in these deals (unless they were investors in these derivatives), and expresses an opinion anyway. The overload of transparent information is one way to induce an overall opacity. Not too long ago, these complex instruments didn't even exist. Failing to regulate them set off a predictable series of events.

Now tell me this: Have you read Pete Brewton on the S&L debacle? Was it in large part a bust-out by a set of cronies and associates, many of them connected through Bush? Was there not an aspect in that case of intentional plunder with conscious knowledge of where it would end?

This is probably the single biggest problem in the securities markets -- something I wrote about a few weeks ago and will have to track down. It's a weird dance between the SEC and issuers, in which the SEC is always demanding more disclosure (ie longer propsectuses) with the result that they get harder and harder to read and understand, except for insiders. You pick up this shorthand way of reading this stuff, so that you can read 300 pages in 5 minutes, because there are like 10 paragraphs that actually tell you what the deal is and 299 pages of boilerplate.

"Not too long ago, these complex instruments didn't even exist."

This is not actually true. Your basic MBS has been around almost 30 years, although many of the derivates based on them (which are supposedly not supposed to be part of the bailout) are new. On the other hand, I would say there was a recent proliferation of "subordinate certificates" issued with vanilla MBS, which is new. I remember seeing the first guts (trust documents) of an MBS around 1991 and they had already been around some time and I think there were 2 classes of certificates -- a triple A for investors and a speculative certificate for insiders. The Bear issue had about 20 classes, which is beyond stupid. But the gold plated class even in the Bear issue is basically the same as it ever was and is the only one sold to the public.

"Failing to regulate them set off a predictable series of events...Was it in large part a bust-out by a set of cronies and associates, many of them connected through Bush? Was there not an aspect in that case of intentional plunder with conscious knowledge of where it would end?"

Although the current crisis is much worse than the S&L crisis, ironically, the issuance of MBS was much, much more heavily regulated than the S&L's. That's because MBS had to go through SEC disclosure, while S&L deals with insiders was opaque to bank regulators and law enforcement -- until of course, the bank collapsed. Obviously the SEC under Bush didn't do its job -- at all. If it had done its job, investors would have known the risks involved in buying the more exotic MBS that are at the heart of the crisis. But I don't see a similarity between the two in terms of insider influence.

Having actually spent some of my finance years designing new MBS, I just never saw anything close to an intentional desire to plunder anything -- but I've been out of it for about 10 years. They really believed they were doing the "efficient" thing. For example, later, when I taught, I used to use a great report called "Take the Money and Run" by NY PIRG/Bank on Brooklyn -- by a group of Brooklyn college students who basically invented community reinvestment. They looked into why Brooklyn in the 70s collapsed, with burned out hulks of builings in black neighorhoods, and discovered a startling fact: the local savings banks had not made one single loan in Bed Stuy for over 10 years. It was completely redlined. Back in the 70s, four or five white guys who controlled the Dime, the Williamsburg and a few other local savings banks could get together at a golf course in Long Island and cut off mortgages to all of black New York for a decade.

MBS allowed mortgage brokers (a large number were Trinidadian immigrants) to do an end run around the local banks to investors from California to Calcutta, funding the urban rebirth of New York's inner city neighborhoods. That's the kind of almost crusading mentality there was in the early 90s in the MBS market.

I'm sure there's no reason for anyone to believe this, but that's what I saw first hand.

and I should not be sloppy about it. Your view of what happened in New York with it is fascinating and new to me.

But you'll admit before the start of this century the MBS and CDS markets were some tiny fraction of what they are now, and could have never caused the present meltdown. So what did? Why did all this leveraged capital rush in? (Did they feel they had an alternative?) Weren't there rules changes that facilitated this?

Have no idea where I heard that.