October 2010 archive

Usually on Fridays, Atrios at Eschaton posts the lists of banks that have been taken into receivership by the FDIC.

Now the FDIC is going to hold the bank executives of these failed entities to count to the tune of one billion dollars. According to Bloomberg

The potential lawsuits would help the FDIC recover more than $1 billion it lost during the credit crisis, which has forced the FDIC to take over 294 lenders since 2008. So far the FDIC, which, according to Bloomberg, doesn’t sue unless it believes the defendant is able to pay up, has only filed one lawsuit related to the credit crisis, against IndyMac executives in July.

FDIC May Seek More Than $1 Billion From Failed-Bank Executives

The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 officers and directors of failed banks as the agency aims to recoup more than $1 billion in losses stemming from the credit crisis.

The lawsuits were authorized during closed sessions of the FDIC board and haven’t been made public. The agency, which has shuttered 294 lenders since the start of 2008, has held off court action while conducting settlement talks with executives whose actions may have led to bank collapses, Richard Osterman, the FDIC’s acting general counsel, said in an interview.

“We’re ready to go,” Osterman said. “We could walk into court tomorrow and file the lawsuits.”

The FDIC, which reviews losses for every bank failure, has brought only one case against officers or directors tied to recent collapses — a suit filed in July seeking $300 million in damages from four executives of IndyMac Bancorp Inc.

When a bank fails, the agency’s investigators take about 18 months to complete their autopsies, meaning most of the probes stemming from the financial crisis are ongoing, Osterman said.

If FDIC investigators determine litigation is possible early in their review process, they send letters to officers and directors alerting them that a suit may be coming to recoup a portion of the losses to the agency’s insurance fund.

FDIC Chairman Sheila Bair has said 2010 will be the peak year for failures, and the agency’s list of so-called problem lenders suggests banks will keep collapsing at an accelerated rate in coming months. The confidential list had 829 banks with $403 billion in assets at the end of the second quarter.

Unbelievable that anyone thinks that TARP was a success. If the FDIC can recover that one billion it will be only .05% of what was actually given the the banks and the financial industry by the Treasury and the Federal Reserve which may have been upwards of 2 TRILLION DOLLARS.  

This covers a topic about which I wrote earlier this week, but is expanded and completely revised, and includes actions that you can take if you find yourself in this situation.  I know that this will not be as well received as the installment last week, but this is an important topic, (although not a popular one), and is part of our culture at present.  I am talking about telephone billing scams, often called cramming, and they are common.

This incident is from personal experience, and recent at that.  Cramming is the addition of charges on one’s residential or wireless telephone bills that were not authorized by the owner of the account, or the addition of charges that were unwittingly authorized by the owner of the account.  In my case, it was the former, twice.

Yankees have taken a commanding lead, what did I tell you?  Reds @ Phillies, Braves @ Giants tonight on TBS.  A scattering of broadcast premiers.  Qualifying in Suzuka at 1 am.  More PrIson Porn (at least it knocks Larry O’Donnell off the air).

• AMC– Aliens (by far the best of the series)
• Disney– New Phineas and Ferb, also Suite Life and Fish Hooks
• Discovery– Swamp Loggers (Season Premier), Beyond Survival With Les Stroud (premier)
• ESPN– College Throwball, Connecticut @ Rutgers (two teams that shouldn’t be playing in Division I)
• ESPN2– College Throwball, Oklahoma State @ Louisiana-Lafayette
• Oxygen– While You Were Sleeping x 2
• Sci Fi– Haven (premier)
• Turner Classic– The Plague of the Zombies, The Devil’s Bride
• TLC– Say Yes to the Dress marathon (with 2 premiers), Four Weddings (premier)
• Toon– Sym-Bionic Titan, Generator Rex, Clone Wars (premiers)

These people are here to protect you. They’re soldiers.

It won’t make any difference.

Later-

Maybe.

Evening Edition is an Open Thread

1 Hungary plays down toxic spill threat, toll rises to seven

by Geza Molnar, AFP

2 hrs 5 mins ago

They all got theirs from government grants, programs or jobs and many of their family members receive benefits like Medicare and Social Security. Now, if elected these Republicans want to eliminate, cut and decimate all the very programs that gave them a start.

Michele Bachmann did vote to protect farm subsidies for wealthy recipients

Despite Joe Miller Calling Federal Aid Unconstitutional, His Wife Received Unemployment Benefits

Ron Johnson’s Latest Hypocrisy on Government Assistance: His Own Job Was Created by a Government Grant

Sharron Angle And Her Husband Receive Government Health Care.

Hypocrites that want to turn the US into a third world country with the rich and the poor and let the banks, financial industry and corporations run the show with little or no oversight.

I’ve tried to document in my posts on economics what a dismal position the United States is in.  I’ve tried to explain what Keynesian/Samuleson analysis predicts.  I’m Neo-Classical.

But now I’m going the full Roubini.

Title Fraud, let’s call it what it is, casts a question on the entire United States housing market- the single largest economic asset in the world financial system and leveraged up the wahzoo.  We are talking about vanishing tens of trillions of paper profits from the portfolios of the ‘stakeholders’.

This is going to cause massive economic disruption.  Easily the equal of 2008.

Welcome to shotgun and private fire department America.

Not that I’m in favor of either of those policies,  I think that even if people had minimum wage government jobs digging holes and filling them that would be about as good as anything except Food Stamps which also benefit billionaire ‘family farmers’.

There’s a ‘Jobs not Food Stamps’ program for you.

This is big.  Really, really big.

And whither CRE?  Et tu Brutus?

Ezra Klein: What’s happening here? Why are we suddenly faced with a crisis that wasn’t apparent two weeks ago?

Janet Tavakoli: This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security, and it’s not optional.

EK: And how much danger are the banks themselves in?

JT: When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one.

On Monday October 04…

…the Supreme Court said it would not take up a warrantless surveillance case, Wilner v. National Security Agency (NSA), filed by the Center for Constitutional Rights (CCR). The lawsuit argued that the Executive Branch must disclose whether or not it has records related to the wiretapping of privileged attorney-client conversations without a warrant. Lawyers for the Guantánamo detainees fit the officially acknowledged profile of those subject to surveillance under the former administration’s program, and the Bush administration argued in the past that the Executive Branch has a right to target them.

“The Obama administration has never taken a position-in this or any of the other related cases-on whether the Bush administration’s NSA surveillance program was legal. In this case they claimed that even if it was illegal, the government has the right to remain silent when asked whether or not the NSA spied on lawyers,” said Shayana Kadidal, Senior Managing Attorney of the CCR Guantánamo Global Justice Initiative. “Today the Supreme Court let them get away with it.”  […]

The plaintiffs [had] filed a Freedom of Information Act (FOIA) request seeking records of any surveillance of their communications under the NSA’s warrantless surveillance program, which began after 9/11 but was only disclosed to the public in December 2005. The government refused to either confirm or deny whether such records existed, and the lower courts refused to order the government to confirm whether it had eavesdropped on attorney-client communications. The question before the Supreme Court was whether the government can refuse to confirm or deny whether records of such surveillance exist, even though any such surveillance would necessarily be unconstitutional and illegal.

more at CCR…

Real News Network’s Paul Jay talks with Shayana Kadidal** – Senior Managing Attorney of the Guantánamo Global Justice Initiative (GGJI) at the Center for Constitutional Rights about the CRR’s initiative and about this case and the Administration’s eavesdropping.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Robert Reich: The Secret Big-Money Takeover of America

Not only is income and wealth in America more concentrated in fewer hands than it’s been in 80 years, but those hands are buying our democracy as never before — and they’re doing it behind closed doors.

Hundreds of millions of secret dollars are pouring into congressional and state races in this election cycle. The Koch brothers (whose personal fortunes grew by $5 billion last year) appear to be behind some of it, Karl Rove has rounded up other multimillionaires to fund right-wing candidates, the U.S. Chamber of Commerce is funneling corporate dollars from around the world into congressional races, and Rupert Murdoch is evidently spending heavily.

No one knows for sure where this flood of money is coming from because it’s all secret.

But you can safely assume its purpose is not to help America’s stranded middle class, working class, and poor. It’s to pad the nests of the rich, stop all reform, and deregulate big corporations and Wall Street — already more powerful than since the late 19th century when the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators.

Paul Krugman: The End of the Tunnel

The Erie Canal. Hoover Dam. The Interstate Highway System. Visionary public projects are part of the American tradition, and have been a major driver of our economic development.

And right now, by any rational calculation, would be an especially good time to improve the nation’s infrastructure. We have the need: our roads, our rail lines, our water and sewer systems are antiquated and increasingly inadequate. We have the resources: a million-and-a-half construction workers are sitting idle, and putting them to work would help the economy as a whole recover from its slump. And the price is right: with interest rates on federal debt at near-record lows, there has never been a better time to borrow for long-term investment.

But American politics these days is anything but rational. Republicans bitterly opposed even the modest infrastructure spending contained in the Obama stimulus plan. And, on Thursday, Chris Christie, the governor of New Jersey, canceled America’s most important current public works project, the long-planned and much-needed second rail tunnel under the Hudson River.

Mike Lux: Obama Comes Through on Foreclosure Issue: What’s Next?

When the notarization on foreclosures issue suddenly flared up over the last 24 hours, my heart sank. Just as regular homeowners were starting to get some legal traction to fight back against fraud and predatory lending by big banks, it seemed, some bank lobbyist had managed to sneak something through in the dead of night that would screw people over again. It was Washington at its worst: the bank lobbyists in control, and Congress asleep at the wheel.

But then, that most delightful and rare of Washington moments happened: the system worked. Consumer advocates started raising hell on the blogs and in traditional media, the White House started looking more closely at the issue, and literally within a matter of hours, Obama announced that he was not going to sign the bill. No long, painful, drawn out internal debate at 1600 Pennsylvania. No twisting round trying to split the middle on the issue. As soon as the issue was raised, the White House team focused on it, and made the right decision quickly. Elizabeth Warren, the new Assistant to the President and Treasury Secretary, weighed in. Pete Rouse, the new Chief of Staff, got engaged immediately. And the President made the right decision.

So what did we learn? First, that exposing sleazy dead-of-night deals cut by the special interests does sometimes work. And second, that having good people in key government roles really does matter. Obama might well have done the right thing without Warren and Rouse there, but it sure did happen quickly and easily with them around.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

October 8 is the 281st day of the year (282nd in leap years) in the Gregorian calendar. There are 84 days remaining until the end of the year.

On this day in 1871, flames spark in the Chicago barn of Patrick and Catherine O’Leary, igniting a 2-day blaze that kills between 200 and 300 people, destroys 17,450 buildings,leaves 100,000 homeless and causes an estimated $200 million (in 1871 dollars; $3 billion in 2007 dollars) in damages.

The Great Chicago Fire was a conflagration  that burned from Sunday, October 8, to early Tuesday, October 10, 1871, killing hundreds and destroying about 4 square miles (10 km2) in Chicago, Illinois. Though the fire was one of the largest U.S.  disasters of the 19th century, the rebuilding that began almost immediately spurred Chicago’s development into one of the most populous and economically important American cities.

On the municipal flag of Chicago, the second star commemorates the fire. To this day the exact cause and origin of the fire remain a mystery.

The fire started at about 9 p.m. on Sunday, October 8, in or around a small shed that bordered the alley behind 137 DeKoven Street.[3]  The traditional account of the origin of the fire is that it was started by a cow kicking over a lantern in the barn owned by Patrick and Catherine O’Leary. Michael Ahern, the Chicago Republican reporter who created the cow story, admitted in 1893 that he had made it up because he thought it would make colorful copy.

The fire’s spread was aided by the city’s overuse of wood for building, a drought prior to the fire, and strong winds from the southwest that carried flying embers toward the heart of the city. The city also made fatal errors by not reacting soon enough and citizens were apparently unconcerned when it began. The firefighters were also exhausted from fighting a fire that happened the day before.

After the fire

Once the fire had ended, the smoldering remains were still too hot for a survey of the damage to be completed for days. Eventually it was determined that the fire destroyed an area about four miles (6 km) long and averaging 3/4 mile (1 km) wide, encompassing more than 2,000 acres (8 km²). Destroyed were more than 73 miles (120 km) of roads, 120 miles (190 km) of sidewalk, 2,000 lampposts, 17,500 buildings, and $222 million in property-about a third of the city’s valuation. Of the 300,000 inhabitants, 90,000 were left homeless. Between two and three million books were destroyed from private library collections. The fire was said by The Chicago Daily Tribune to have been so fierce that it surpassed the damage done by Napoleon’s siege of Moscow in 1812. Remarkably, some buildings did survive the fire, such as the then-new Chicago Water Tower, which remains today as an unofficial memorial to the fire’s destructive power. It was one of just five public buildings and one ordinary bungalow spared by the flames within the disaster zone. The O’Leary home and Holy Family Church, the Roman Catholic congregation of the O’Leary family, were both saved by shifts in the wind direction that kept them outside the burnt district.

Nobel Peace Prize awarded to China dissident Liu Xiaobo

Jailed Chinese dissident Liu Xiaobo has been named the winner of the 2010 Nobel Peace Prize.

The BBC 8 October 2010  

The award, announced in Norway’s capital Oslo, is certain to anger Beijing, which had earlier warned against the move.

Norwegian Nobel Committee president Thorbjoern Jagland said Mr Liu was “the foremost symbol of the wide-ranging struggle for human rights in China”.

Mr Jagland earlier admitted he knew the choice would be controversial.

He told local television before the announcement: “You’ll understand when you hear the name.”

‘Curtailed freedom’

During the announcement of the award, Mr Jagland said China’s new status in the world “must have increased responsibility”.

He said that in practice the freedoms enshrined in China’s constitution had been “distinctly curtailed for many of China’s citizens”.