Thursday, May 21, 2015

Senate Banking Panel Approves Shelby Reg Reform Bill on party lines 12-10

defeated dems version 10-12

Nothing is changing, party lines does not change this outcome. DOA. 

WASHINGTON — The Senate Banking Committee approved a broad regulatory reform bill Thursday on party lines, with lawmakers on both sides of the aisle vowing to continue negotiations this summer.
Chairman Richard Shelby, R-Ala., and Democrats have clashed in recent weeks over a GOP bill to provide regulatory relief for small and regional banks, along with changes to the insurance industry, the Federal Reserve and the Financial Stability Oversight Council. Democrats have repeatedly charged that the legislation goes too far, rolling back key parts of the Dodd-Frank Act. But committee members did signal that they plan to continue working on a bipartisan compromise in coming months, with the hope of getting a bill signed into law.
"Even if we report this bill on a partisan vote, I do not in any way see this as the end of the road," Shelby said at the markup. "In fact, I believe it presents another opportunity to explore areas of potential agreement before this bill goes to the Senate floor which I fully expect that it will."
The Financial Regulatory Improvement Act passed 12-10.
Democrats, meanwhile, offered a narrower substitute bill that was defeated down party lines, 10-12.

Wednesday, May 20, 2015

Times journalist hits White House for growing secrecy in Fannie Mae case

Times journalist hits White House for growing secrecy in Fannie Mae case

More recently, I’ve seen another example of the government trying to cloak its actions. The extreme secrecy began with a lawsuit filed against the government by shareholders of Fannie Mae and Freddie Mac, the mortgage finance giants that are wards of the state. These shareholders sued after the government changed the terms of those companies’ bailouts in 2012 and began funneling all of their profits into the Treasury’s general fund. The plaintiffs contended that siphoning off those profits was an illegal taking of private property by the government.

In response to the lawsuit, the government has demanded an extreme level of secrecy surrounding documents the judge has ordered it to produce. Those documents would shed light on how the decision to divert the profits was made, an important question given that the 2008 law written by Congress to handle the company’s problems was supposed to stabilize them and let them build up capital after the crisis receded.

And yes, the crisis has receded. As of the most recent quarter, Fannie and Freddie have returned to the government $40 billion more than they drew from taxpayers. And the money spigot continues to spout. But the companies have not been able to build up the capital they need to forestall another rescue.

The shareholder case is still in its early stages. But the government’s desire to keep a tight lid on its documents is remarkable. Indeed, the Justice Department is even asserting presidential privilege to keep 45 of the documents permanently confidential. These materials — emails, draft memos and news releases — were created by officials at the Treasury Department and the Federal Housing Finance Agency, the overseer of Fannie and Freddie since they collapsed in 2008.

After I wrote about this unusual assertion of presidential privilege, the DOJ went further. It asked the judge to put under seal additional lists of documents that the government will withhold because of various privilege claims. In short, the DOJ is asking that its privilege assertions be privileged.

I’m not a court reporter, but this is a first for me. And the lawyers who are litigating the case for the Fannie and Freddie shareholders say they’ve never seen anything like it either.

For the government’s part, it has said that these documents, which date back as far as 2008, must be kept under wraps because they may roil the markets. That is completely absurd.

What it really looks like is the government thinks it has something to hide in this case. Whether the judge will allow it to keep these documents confidential remains to be seen. But this is certainly not how a government that was going to be the most transparent in history behaves.

WHAT IS WRONG WITH OBAMA, SENATE, FHFA, and Treasury wanting GUILTY BANKS to take FANNIE MAE from Stock Holders and Taxpayers?

Here is your TBTF banks!

JPMorgan Chase, 
Barclays and 
The Royal Bank of Scotland 
Also paying fines but not pleading guilty:

conspired with one another to fix rates on U.S. dollars and euros traded in the huge global market for currencies

Banks fined $2.5 billion, to plead guilty to market rigging

4 big banks fined $2.5 billion and will plead guilty to rigging global currency markets


Each of the banks agreed to a fine proportional to its involvement, the Justice Department said: Citigroup, involved from December 2007 until at least January 2013, will pay $925 million; Barclays, involved from December 2007 until July 2011, and then from December 2011 until August 2012, will pay $650 million; JPMorgan, involved from July 2010 through January 2013, will pay $550 million; and RBS, involved from December 2007 until April 2010, will pay $395 million.

Those banks and two others -- UBS (UBS) and Bank of America (BAC - Get Report) will also pay cumulative fines of $3.4 billion to regulators from the Federal Reserve to the Commodity Futures Trading Commission.

Tuesday, May 19, 2015

Fannie and Freddie Didn't Do It!


Critics, (mainly those caught selling fraudulent loans to Fannie and Freddie) have long maintained the GSE's encouraged too many people to buy homes by offering all manner of payment assistance, and even guaranteeing subprime mortgages from the likes of Countrywide Financial (that was subsequently bought by Bank of America).

A U.S. judge on Monday ruled that two more large financial entities, including Nomura Holdings Inc., made false statements in selling mortgage-backed securities to Fannie Mae and Freddie Mac ahead of the 2008 financial crisis. U.S. District Judge Denise Cote in Manhattan ruled for the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, in a ruling that could allow the U.S. regulator to recover around $450 million.

This is one more example of how almost all of the major financial institutions jumped on the bandwagon that encouraged the housing bubble--lending money to both qualified and unqualified borrowers and then misrepresenting their quality to the main guarantors of US housing finance.

Goldman Sachs TRAIL of Fannie mae action

Goldman Sachs Nearing $1.1 Billion Settlement With U.S. Housing Regulator

Aug 22 (Reuters) - Goldman Sachs Group Inc could pay about $1.1 billion to settle claims from the U.S. housing finance regulator that it sold bad mortgage-backed securities (MBS), the Financial Times reported.

Negotiations between Goldman and the Federal Housing Finance Agency (FHFA) could be concluded as early as next week, the business daily reported, citing people familiar with the matter. (
  • Goldman Sachs - SEC charged the firm with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. (4/16/10)
    • Goldman Settled Charges - Firm agreed to pay record penalty in $550 million settlement and reform its business practices. (7/15/10)
    • Fabrice Tourre Found Liable - A jury found former Goldman Sachs Vice President Fabrice Tourre liable for fraud relating to his role in a synthetic collateralized debt obligation tied to subprime residential mortgages. (8/1/13)

Goldman Sachs in $3.15 billion settlement with federal regulators

Goldman Sachs  GS 0.83%  has agreed to pay $3.15 billion to repurchase mortgage-backed securities from Fannie Mae and Freddie Mac to settle accusations that it misstated the quality of the investments.

Liberty Mutual Sues Goldman Sachs Over Fannie Mae Stock

By Jonathan Stempel | July 12, 2010

Goldman Sachs Group Inc. was sued by Liberty Mutual Insurance Co. for fraudulently misleading it into buying preferred stock of mortgage financier Fannie Mae that would become “virtually worthless.”

In a lawsuit filed last Thursday in Boston federal court, Liberty Mutual said it deserves to be reimbursed for losses on the $62.5 million of Fannie Mae preferred stock it had bought in late 2007 through offerings underwritten by Goldman.

How Paulson Gave Hedge Funds Advance Word of Fannie Rescue

At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge-fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006. 

Back in the summer of 2008, as the financial system teetered on the edge of collapse, no one knew what would happen to the debt-laden mortgage giants Fannie Mae and Freddie Mac—would they be allowed to go under, or would the government come to their rescue? What would become of the shareholders? Trillions rested on the answers to those questions. Oh wait, someone did know. Treasury Secretary Hank Paulson. And he told his hedge fund pals and former Goldman Sachs colleagues. 
That's right—Hank Paulson just randomly told his bros something so sensitive that even a hedge fund manager's lawyer didn't want to touch it.

Whither Fannie and Freddie? A Proposal for Reforming the Housing GSEs

Goldman Sachs guys,

The firms’ collapse confirmed what many analysts had long warned: the traditional GSE structure is fundamentally flawed. The opportunity to pursue private profit backstopped by an implicit government guarantee was an invitation to excess risk-taking. Light regulation failed to reign in the resulting excesses.

Eventually, the former GSEs could themselves become vertically integrated or be bought by banks. Again, however, the key is to allow a long enough transition period for competition to develop across the different activities.

In July and September 2008, taxpayers had to stand behind the GSE debt to avoid the possibility that losses in the event of a default would force banks to recapitalize en masse at a time when markets were already under stress.  The risks to taxpayers and the economy from large portfolios overwhelm any potential economic benefits from the incremental liquidity they might provide to the mortgage market.


Fannie, Freddie Recapitalization Rejected

A top U.S. Treasury Department official suggested the White House wouldn’t allow mortgage titans Fannie Mae and Freddie Mac to rebuild capital, rejecting some advocates’ wishes that the companies would move past being government wards.

At the same time, in a speech delivered at a Goldman Sachs housing-finance conference in New York

As you can see GOLDMAN SACHS had a big part in the 2008 downfall of Fannie Mae, $5 billion paid in fines for GS bad behavior, Now in 2015 the US Treasury and Goldman Sachs are still in bed trying to give banks Fannie's business for free and allow banks to get all the profits and the Taxpayer take the risk!

This is the US Treasury which is run by GS for years, still seems to be the case. It is amazing this is not the story being told!