Tag: ek Politics

I know the Egyptian Revolution has been big news, but also over the last few days a story has been developing about how Bank of America and the U.S. Chamber of Commerce have been hiring law firms and private security companies to attack progressive institutions and individuals.

In summary the story goes like this-

Security Firms Pitching Bank of America on WikiLeaks Response Proposed Targeting Glenn Greenwald

By: emptywheel, Wednesday February 9, 2011 8:49 am

On Saturday, private security firm HBGary Federal bragged to the FT that it had discovered who key members of the hacking group Anonymous are. In response, Anonymous hacked HB Gary Federal and got 44,000 of their emails and made them publicly available.

…

As TechHerald reports, among those documents was a presentation, “The Wikileaks Threat,” put together by three data intelligence firms for Bank of America in December. As part of it, they put together what they claimed was a list of important contributors to WikiLeaks. They suggested that Glenn Greenwald’s support was key to WikiLeaks’ ongoing survival.

Now at the time the big joke was these security firms had the sadly mistaken impression that Glenn Greenwald is the kind of person who would respond to blackmail threats by putting “professional preservation” before “cause” and principle.  But the rabbit hole is deeper than that Alice.

Among the hacked documents was a Power Point presentation that laid out the plan of attack which included leaking false documents to destroy credibility and paying professional trolls $2000 a day to disrupt social media sites like Facebook and Twitter and political blogs like… well, this one.

HBGary Fees: "Dam It Feels Good to Be a Gangsta"

By: emptywheel, Friday February 11, 2011 8:05 am

This is a social media consultant, someone we know from the team’s plans they intended to deploy on Facebook and Twitter in false personas ultimately aiming to destroy the credibility of anti-Chamber activists.

These are just reasonably skilled trolls.

And for that, they wanted to charge $2,000 a day.

To put it in even more stark perspective, consider one ultimate target of the campaign: the men and women SEIU organizes pushing back against the anti-worker policies of the Chamber. Many of these workers-the kind of people who keep your building clean or care for you when you’re sick-make as little $12/hour or less (though the wages for nurses and other skilled medical care providers are higher).

These corporate spook assholes-in addition to targeting Americans for political activism-also think they’re worth 20 times as much as the people who care for the sick.

One the most interesing details is the identity of the firms proposing this scheme-

The Disinformation Campaign Bank of America Considered

By: emptywheel, Wednesday February 9, 2011 1:43 pm

Wikileaks has posted the presentation (.pdf) three security companies-Palantir, HBGary Federal, and Berico Technologies-made to Bank of America, proposing to help it respond to Wikileaks.

In addition to the degree to which the proposal emphasizes the national security ties and military background of the employees of the company (particularly Berico), the presentation fleshes out what the companies proposed.

…

(A)ccording to Tech Herald, the law firm pitching these firms, Hunton and Williams, was itself recommended to BoA by DOJ. As the presentation makes clear, these are significant government contractors. (Remember, we’re getting these documents because Anonymous hacked HBGary Federal, which was offering what it had collected to DOJ.) To what extent is what we’re seeing just an extension of what our own government is trying to combat Wikileaks?

Bank of America had not committed to the proposal.  Another group, The U.S. Chamber of Commerce was already actively using HBGary to inplement their plan.

Hacked Documents Show Chamber Engaged HBGary to Spy on Unions

By: emptywheel. Thursday February 10, 2011 1:37 pm

(I)t appears that back in November the same parties involved in the pitch to Bank of America-Palantir, HBGary Federal, and Berico Technologies working through Hunton and Williams-started preparing a pitch to the Chamber of Commerce. At that point, HBGary started researching anti-Chamber groups StoptheChamber.com and USChamberWatch. At one point, HBGary maps the connections between SEIU, Change to Win, and USChamberWatch as if he’s found gold.

By the end of November, Barr starts working on a presentation outlining the difference between StoptheChamber and USChamberWatch, as well as “a link chart of key people in the distribution of information, background information on each individual and ways to counteract their effect on group.”

On January 13, HBGary believed they had signed a contract.

…

On February 3, law firm H&W came back to the three security firms and told them they’d be doing their Phase I work on spec, until the Chamber had bought into the full project. At that point, the firms put together a plan including a proposed February 14 briefing.

The Chamber issued a non-denial denial-

From the ChamberPot: A Carefully Worded Nondenial Denial

By: emptywheel, Thursday February 10, 2011 5:29 pm

Note, first of all, that they’re not denying hiring Hunton & Williams, the law firm/lobbyist which they hired last year to sue the Yes Men. They’re not even denying that they retain Hunton & Williams right now.

What they’re denying is that they-or, implicitly, Hunton & Williams, on their behalf-hired HBGary.

…

In other words, no, the Chamber has not “hired” HBGary. They’ve gotten HBGary to do a month of work for free to decide whether they want to hire them.

…

Now, back in my consulting days, when working with a primary contractor there were always several iterations of work between when we pitched the primary and when we all, jointly, pitched the client itself.

So, sure, the Chamber didn’t see this document. They saw one that proposed the same or very similar plots against citizen activists, probably completed a week or more later, probably containing a different level of  detail (other emails discuss a November 23 meeting with a revised proposal).

They didn’t hire HBGary and they didn’t read the particular document TP linked to.

But that is far short of denying that they’ve been discussing such a plot with HBGary and/or Hunton & Williams.

Other firms involved in this plot are trying to back away from it too-

Palantir Tries to Preserve Their Government Contracts

By: emptywheel Thursday February 10, 2011 8:23 pm

As a reminder, Palantir Technologies is one of the two other security firms that HBGary partnered with to try to get spying business with Bank of America and the Chamber of Commerce.

But perhaps more relevant is Palantir’s primary focus: working with the national security apparatus. They’ve done at least $6,378,332 in business with entities like SOCOM and FBI in the last several years. And while they say they have no plans to adopt “offensive cyber capabilities,” that’s not to say they’re not helping the government analyze data on our presumed enemies.

I would imagine Palantir has pretty good reason to know that the government will not do business with a contractor using the same technologies to target Glenn Greenwald (and maybe Brad Friedman).

At least not publicly. Remember-DOJ recommended Hunton & Williams (which put Palantir and HBGary together for the bid) to Bank of America.

Glenn Greenwald (remember him?) sums it up in his post today-

The leaked campaign to attack WikiLeaks and its supporters

By Glenn Greenwald, Salon.com

Friday, Feb 11, 2011 05:12 ET

What is set forth in these proposals for Bank of America quite possibly constitutes serious crimes.  Manufacturing and submitting fake documents with the intent they be published likely constitutes forgery and fraud.  Threatening the careers of journalists and activists in order to force them to be silent is possibly extortion and, depending on the specific means to be used, constitutes other crimes as well.  Attacking WikiLeaks’ computer infrastructure in an attempt to compromise their sources undoubtedly violates numerous cyber laws.  

Yet these firms had no compunction about proposing such measures to Bank of America and Hunton & Williams, and even writing them down.   What accounts for that brazen disregard of risk?  In this world, law does not exist as a constraint.  It’s impossible to imagine the DOJ ever, ever prosecuting a huge entity like Bank of America for doing something like waging war against WikiLeaks and its supporters.  These massive corporations and the firms that serve them have no fear of law or government because they control each.  That’s why they so freely plot to target those who oppose them in any way.  They not only have massive resources to devote to such attacks, but the ability to act without limits.

…

There are supposed to be institutions which limit what can be done in pursuit of those private-sector goals.  They’re called “government” and “law.”  But those institutions are so annexed by the most powerful private-sector elites, and so corrupted by the public officials who run them, that nobody — least of all those elites — has any expectation that they will limit anything.  To the contrary, the full force of government and law will be unleashed against anyone who undermines Bank of America and Wall Street executives and telecoms and government and the like (such as WikiLeaks and supporters), and will be further exploited to advance the interests of those entities, but will never be used to constrain what they do.  These firms vying for Bank of America’s anti-WikiLeaks business know all of this full well, which is why they concluded that proposing such pernicious and possibly illegal attacks would be deemed not just acceptable but commendable.

Italian prosecutors push for speedy trial in Berlusconi prostitution case

Italian Prime Minister Silvio Berlusconi, who has weathered many scandals during his career, could be in court within weeks to face charges related to underage prostitution.

By Nick Squires, Correspondent, The Christian Science Monitor

February 9, 2011

The prosecutors in Milan said they had “sufficient evidence” for the case to be sent to trial without the need for preliminary hearings, meaning the prime minister could face court within weeks.

…

Prosecutors have accused Berlusconi of paying to have sexual relations with a 17-year-old nightclub dancer, Karima el-Mahroug. Investigators also allege that the prime minister abused his office by putting pressure on police in Milan to have the Moroccan-born teenager released from custody after she was arrested on suspicion of theft – an allegation that carries a maximum 12-year prison term.

Berlusconi has admitted personally calling a police station in Milan to intervene in the case, justifying his actions by saying that he believed Ms. Mahroug’s claim that she was the granddaughter of the Egyptian president, Hosni Mubarak.

More from The Guardian.

Of course he still fucked her, even though he believed that.  That’s kind of disrespectful to Muslims don’t you think?

And in other news showing how utterly corrupt our Global Elites are-

Nicolas Sarkozy orders ministers to holiday in France

President Nicolas Sarkozy on Wednesday ordered ministers to pay the ultimate price after two scandals over hospitality from disputed North African leaders and take all their holidays in France.

By Henry Samuel, The Telegraph

5:52PM GMT 09 Feb 2011

The presidential order came a day after François Fillon, the prime minister, admitted taking a holiday in Egypt with his family paid for by President Hosni Mubarak’s government.

His admission came as Michèle Alliot-Marie, the foreign minister, fended off calls to resign for taking a hospitality jet while on holiday in Tunisia over Christmas and with unrest under way. The plane belonged to a Tunisian billionaire close to the country’s ousted president, Zine al-Abidine Ben Ali.

…

“The crumbling of the public spirit has reached the very top of the state,” said Jean-Marc Ayrault, the Socialist parliamentary leader who had led calls for Mrs Alliot-Marie to resign. Mr Fillon pledged to propose a law to curb conflicts of interest “in the coming weeks”.

Banks face $60 billion mortgage hit: S&P

Cleaning up the mortgage mess isn’t getting any cheaper.

Posted by Colin Barr, Fortune

February 8, 2011 12:48 pm

The banking industry could find itself picking up a $60 billion tab for souring home loans, Standard & Poor’s Ratings says in its latest report on so-called mortgage putbacks.

When S&P last looked at the issue in November, it said the six biggest U.S. lenders faced $43 billion in mortgage-repurchase costs. That was itself up from July’s estimate, which held that the leading banks would have to build their reserves to the tune of $24 billion.

…

February’s estimate stems largely from rising projected costs to settle claims by private mortgage securities investors and monoline insurers.

…

S&P has been raising its forecasts for the costs of settling disputes with private investors and monoline insurers who promised to pay when borrowers fell behind. The rating agency now estimates the cost of settling those cases at $29 billion, evenly split between the two categories.

…

Rising projected costs for settling the private label and monoline claims could hit bank earnings at a time when tighter rules and slow economic growth are already weighing on profits. What’s more, the report highlights the risk that the banks could yet take more lumps, depending on how various cases turn out and whether investors become more aggressive in pressing their grievances.

The world’s dumbest banks

Ireland’s disastrous banks continue to punch above their weight.

Posted by Colin Barr

February 9, 2011 6:36 am

(A) list of the most reckless banks wouldn’t be complete without a mention of Merrill Lynch, which was sold in distress to Bank of America (BAC) with $668 billion in assets just before Lehman Brothers failed, or Wachovia, which was raffled off to Wells Fargo (WFC) a couple weeks later with $764 billion worth.

…

The good news is that one of the guys who made out like a bandit while running into the ground, former CEO Sean FitzPatrick (of Anglo Irish Bank), has already reached this acceptance state. This after he took 80 million euros in loans from the bank without telling shareholders, then declared he had frittered it all away.

“I am very happy to put my hands up,” he told the Irish Sunday Times last month. “I am very happy to apologize to all my creditors. I don’t feel ashamed, but I do feel regret, very serious regret, and I am sorry that it is going to cause people losses.” Talk about an understatement.

I repeat my offer to lose $24 Billion for a much more reasonable rate than 80 Million Euros.  I bet I could manage to do it for a mere Million or 2 a year.

Long story short- Samuelson Economics is science.  It’s predictive and the predictions are confirmed by observation.

Voodoo Economics is just that.  A bunch of rattle shaking shamen dancing around you shouting and chanting in tongues motivated by vanity, greed, and the academic desire for novelty.

Let’s start with Bloomberg shall we?

Conservative Austerity Idea Is Failing: David G. Blanchflower

By David Blanchflower, Bloomberg News

Jan 27, 2011 10:15 PM ET

Fiscal austerity has already been started in Greece, Ireland, Spain and Portugal, and this seems to be pushing all of them back into recession. Over the last four quarters, growth in Greece was negative and falling, and bond investors are once more demanding sky-high returns to compensate their risk. The excuse in these countries was that they have little choice because they are stuck in the European monetary union and don’t have the ability to depreciate their exchange rate.

The U.K. may be a purer case of the harm austerity at the wrong time can inflict. Britain now looks as if it is headed back into recession on fear about the damage that will be done by massive spending cuts and tax increases, which haven’t even gone into effect yet. Government ministers with their talk of austerity have already smashed confidence.

…

Despite the government’s claims that its intent was to raise confidence, consumer and business confidence tumbled right after the new government took office.

Businesses and consumers know what is coming and have cut back accordingly. Retail spending has flat-lined. The balance of trade is deteriorating. Unemployment is rising, and house prices have started to fall again.

The Great British austerity experiment

With deficit hawks poised in the US, we watch with great interest UK economic policy. It’s not looking an enviable example so far

Dean Baker, The Guardian

Tuesday 1 February 2011 21.00 GMT

The elite media and the politicians whom they promote would love to see the United States follow the austerity path of the UK’s new government. However, if this path takes the UK into dangerous economic waters, it could provide a powerful warning to the public in the United States before we make the same mistake.

The British economy looks like it is doing its part. The fourth-quarter GDP report showing that the economy went into reverse and shrank at a 2.0% annual rate is exactly the sort of warning that many of us here were expecting. Weather-related factors may have slowed growth some, but you would have to do some serious violence to the data to paint a positive picture. Of course, the austerity in the UK is just beginning. There will likely be much worse pain to come, with a real possibility that the country will experience a double-dip recession, or at least a prolonged period of stagnation.

…

The takeaway lesson should be “austerity does not work; don’t go there.” Unfortunately, in the land of faith-based economics, evidence does not count for much. The UK may pursue a disastrous austerity path and those of us in the United States may still have to follow the same road anyhow. But we opponents of that course all appreciate the willingness of the UK to demonstrate the foolishness of this action.

McCaskill Leads Democratic Rush Toward Austerity

By: David Dayen, Firedog Lake

Wednesday February 2, 2011 11:08 am

You could simply not accomplish the cuts in this proposal without massive reductions to Social Security and Medicare. And the fact that this puts those programs “on-budget,” despite their dedicated funding source, is the real tell here. That means that it would be part of the automatic cuts from OMB.

Harry Reid opposes this bill and will fight efforts to put it into action. But it’s only one of multiple efforts where Democrats are crossing the aisle in a bid for austerity. Mark Udall pledged support for a balanced budget amendment, introducing the bill with Richard Shelby. Kent Conrad – who finds McCaskill-Corker unacceptable because it does nothing on the revenue side, which just shows you how extreme a proposal it is – has been working to revive the Bowles-Simpson cat food plan on the Senate Budget Committee. Jeanne Shaheen and Johnny Isakson’s proposal for a two-year budget cycle is perhaps the most inoffensive of these plans (I’d actually go along with that one).

The point is that, with a struggle over the new budget and the debt limit looming, and with conservative activists rallying their representatives to stand firm, you have multiple Democrats perfectly to cut and cap spending, reduce Social Security benefits, and basically drown the government in the bathtub the way that conservatives have always wanted.

Nothing unusual about Taco Bell’s meat, experts say

Ingredients what you’d expect from fast-food restaurants; no advertising rules broken

By Gregory Karp and Ellen Gabler, Tribune reporters

February 2, 2011

Soy lecithin (is) a byproduct of soy bean processing that is used as an emulsifier. That means it helps blend and bind substances that would otherwise separate like oil and water.

…

(A)utolyzed yeast extract. Made by breaking down yeast cells with salt, it’s a flavor-enhancing additive similar to monosodium glutamate (MSG), without the known side effects of MSG some people experience. It gives foods a full, savory, beeflike taste, Brewer said.

Maltodextrin is derived from starches, usually corn in the United States. It can be used as a sweetener and a thickener.

Isolated oat product is a binder, kind of like how an egg is used in homemade hamburgers or meatballs so they don’t fall apart in the pan. And soybean oil is used as a so-called anti-dusting agent, meaning it prevents finely ground, powdery ingredients from literally billowing into the air, as would happen if you clapped flour-coated hands.

Caramel color is caramelized sugar used to give the mixture a consistent brown appearance, Brewer said. Heating some of the ingredients, such as cocoa powder and chili pepper, causes them to change colors and potentially combine to turn the mixture a hue the customer wouldn’t like, she said. It doubles as a flavor component. Flavor experts identify caramel as a component flavor of beef that can be lost in processing, said Betsy Booren, director of scientific affairs for the American Meat Institute.

“Natural smoke flavor” can be added by burning wood chips, capturing the smoke and piping it into the oven where meat is cooking, similar to how you burn wood chips to give smoky flavor to meats on a backyard grill, Booren said. The same aroma can also be captured in a viscous liquid that can later be sprayed onto meat to give it a smoky flavor, the method probably used for ground beef, she said.

No doubt by now you’re aware of the return of ‘Baby Doc’ Duvalier, but you may have missed the news that the only democratically elected President of Haiti ever, Jean-Bertrand Aristide, is also returning to Haiti.

This takes place against the backdrop of the devastating earthquake one year ago and the announcement tomorrow of the results of the first round of another Presidential election where the clear winner was Mirlande Manigat, a former first lady.

The second place on the ballot was disputed between Michel Martelly, a popular singer, and the hand picked choice of current President Rene Preval- Jude Celestin.

Celestin had a slim lead in the vote count, but widespread allegations of fraud are leading to reports of his withdrawal from the race.

It’s been a long time so in case you’ve forgotten, Abdelbaset al-Megrahi is the Libyan Intellegence officer convicted of organizing the 1988 bombing of Pan Am Flight 103 that killed 270 including 11 people in the town of Lockerbie, Scotland where the plane fell to earth.

Al-Megrahi was imprisoned from 2001 to 2009 when he was released for compassionate reasons with a supposedly terminal cancer diagnosis.  He’s still alive and was greeted on his return to Libya as a hero.

At the time of his release there was understandable outrage and the Blair/Brown British Labor government steadfastly maintained that the decision was made by Scottish authorities alone.

Well, it turns out that was a lie.

WikiLeaks cables show Government was ‘playing false’ over Lockerbie bomber

By Christopher Hope, and Robert Winnett, The Daily Telegraph

9:21 AM GMT 01 Feb 2011

A Foreign Office minister sent Libyan officials detailed legal advice on how to use Abdelbaset al-Megrahi’s cancer diagnosis to ensure he was released from a Scottish prison on compassionate grounds, documents obtained by the Daily Telegraph show.

The Duke of York is also said to have played a behind-the-scenes role in encouraging the terrorist’s release.

The Scottish First Minister said the revelations confirm that while his administration acted according to its public pronouncements on the affair, Tony Blair’s Government was behaving duplicitously.

“The cables … show that the former UK Government were playing false on the issue, with a different public position from their private one,” said a statement released by Mr Salmond’s office.

Something Very Serious People never talk about is how most of the complexity of the Tax Code is there specifically to provide monetary entitlements to the Extremely Wealthy and our Corporate Citizens.

This post by masaccio about Turn Left Racing caught my eye and is well worth reading in full even if it is a little technical and wonky at points.

Let’s Go Racing for Loopholes – Motorsports Tax Scam Wins a Grafty

By: masaccio, Firedog Lake

Friday January 28, 2011 2:28 pm

There is a special rule for Motorsports Entertainment Complexes, allowing their buildings, grandstands, parking lots and other improvements to be written off over 7 years. IRC § 168(e)(3)(c)(ii). To write the limitation so that it mainly affected auto race tracks, as opposed to dog tracks, took 213 words in IRC § 168(i)(15). The provision was set to expire December 31, 2009, but it was extended to 2011 by § 738 of the Obama Tax Capitulation Act of 2010, more politely known as Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

One of the fun parts of tax issues is to see who benefits from a loophole. The obvious answer is International Speedway Corporation, the publicly held company that owns a bunch of NASCAR tracks, including Daytona, Talladega, Michigan International, Darlington and Watkins Glen.

Now the Very Serious People will tell you these Tax Breaks are stimulative, that they create economic demand and jobs and by the Miracle of the discredited Trickle Down Voodoo Supply Side Economics of the last 30 years they somehow benefit you.

This is a bald faced LIE!

I refuse to believe that the availability of this deduction made the slightest difference in the budgeting decisions of International Speedway Corporation. This budget was set with full knowledge that the loophole would expire at the end of 2009, and projects were going forward without the exemption. The loophole did not create a single job. The extension is a pure gift to the company.

I call it a Miracle because it’s supernatural.  There’s not one shred of evidence that supports it, it’s just one of those things you take on faith like any true believing Jihadi Fundamentalist.  No more scientific than burnt offerings to Mammon.

I also liked the editor’s note-

(A)nother post in Firedoglake’s semi-regular series exposing and exploring ways in which the federal government spends vast sums or forsakes vital revenue in a perpetual, profligate and pathetic quest to assure corporate America that the elected representatives of we the people are really, truly, madly, deeply “business friendly.” With each story, we hope to highlight another government giveaway, tax break, or loophole handcrafted by lawmakers and lobbyists to keep the powerful powerful and make the rich richer. If the reverse Robin Hoodism rises to special heights, we will present it with the FDL Wealthy Welfare Award-or, as we have taken to calling it back here, The Grafty.

Wall Street Appears To Have Violated Federal Securities Law, Crisis Panel Finds

Shaihien Nasiripour, The Huffington Post

01/27/11 10:28 PM

Wall Street firms that sold mortgage-backed securities appear to have violated federal securities laws by misleading investors on the quality of the underlying mortgages, a bipartisan panel created by Congress to investigate the root causes of the financial crisis concluded.

…

In September, the crisis commission heard testimony from Keith Johnson, former president of Clayton Holdings, one of the nation’s biggest mortgage research companies. Johnson testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm on behalf of Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added.

Last April, the commission heard from Richard Bowen, a whistleblower and former chief underwriter for Citigroup’s consumer-lending unit. Bowen told the panel that in the middle of 2006, he discovered more than 60 percent of the mortgages the bank had purchased from other firms and then sold to investors were “defective,” meaning they did not satisfy the bank’s own lending criteria. On November 3, 2007, Bowen sent an e-mail to top Citi officials, including Robert Rubin, a former Treasury Secretary. Bowen’s warnings appear to have been ignored.

In Panel’s Report, Stern Warning on Repeating Financial Crisis

By SEWELL CHAN, The New York Times

Published: January 27, 2011

WASHINGTON – Behind closed doors, Ben S. Bernanke, the Federal Reserve chairman, called it “the worst financial crisis in global history, including the Great Depression.”

He said that 12 of the country’s 13 most important financial institutions, including Goldman Sachs, had been on the verge of collapse “within a week or two.” (The apparent exception: JPMorgan Chase.)

…

Enabling those developments, the panel found, were a bias toward deregulation by government officials, and mismanagement by financiers who failed to perceive the risks.

Goldman Sachs Got Billions From AIG For Its Own Account, Crisis Panel Finds

Shaihien Nasiripour, The Huffington Post

01/26/11 10:23 PM

Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the final report of an investigative panel appointed by Congress.

The fact that a significant slice of the proceeds secured by Goldman through the AIG bailout landed in its own account–as opposed to those of its clients or business partners– has not been previously disclosed. These details about the workings of the controversial AIG bailout, which eventually swelled to $182 billion, are among the more eye-catching revelations in the report to be released Thursday by the bipartisan Financial Crisis Inquiry Commission.

…

At a hearing on July 1, 2010–two weeks before Goldman sent the e-mail acknowledging how $2.9 billion in AIG funds wound up in its own account–the crisis panel questioned Goldman’s chief financial officer, David A. Viniar and managing director David Lehman. Both said they knew nothing about AIG funds landing in the bank’s private coffers, according to a transcript of the hearing.

The report concludes that Goldman collected the $2.9 billion as payment for so-called proprietary trades made for its own account–essentially successful bets on large pools of financial instruments.

The next part of my story centers around frauds 6, 7, 8, and 9 of 11 criminal frauds.

AMBAC is a Monoline Insurer and they offer-

Bond insurance is a service whereby issuers of a bond can pay a premium to a third party, who will provide interest and capital repayments as specified in the bond in the event of the failure of the issuer to do so. The effect of this is to raise the rating of the bond to the rating of the insurer; accordingly, a bond insurer’s credit rating must be almost perfect.

The premium requested for insurance on a bond is a measure of the perceived risk of failure of the issuer.

The economic value of bond insurance to the governmental unit, agency, or company offering bonds is a saving in interest costs reflecting the difference in yield on an insured bond from that on the same bond if uninsured. Insured securities ranged from municipal bonds and structured finance bonds to collateralized debt obligations (CDOs) domestically and abroad.

AMBAC is suing Bear Stearns (JP Morgan Chase).

The Ambac Suit: Bear Stearns Execs Double-Dipped, Committed Criminal Fraud on Investors

By: David Dayen Tuesday January 25, 2011 11:01 am

The mortgage traders at Bear, who now are spread out across the financial sector, sold purposefully bad securities to investors – emails revealed show that they told superiors they were selling “a sack of shit.” They got data on their pools of mortgages bundled up in securities deals that came back with high percentages of bad underwriting or even loans already slipping into default. They falsified that data for the rating agencies to get AAA ratings, never told the investors about the bad loans in the pools, and sold the shit as gold. But it gets worse.

…

They got paid by the investors for selling the mortgage-backed security, AND they got paid by the originator for taking back the bad loan. So Bear traders made money on the same mortgage twice. Only the investors could force a put-back on an originator after the security was sold – Bear Stearns didn’t have a legal claim on the loan after they sold it. They did so anyway.

There is no legal universe under the sun where that isn’t just criminal fraud and theft. Ambac eventually discovered that 80% of the loans in its MBS had an early payment default. They were corrupted and substandard from the moment they received them, so awful that Bear Stearns was forcing the bank to take them back – even though they didn’t own the loans.

This Ambac suit names the actual decision-makers, Marano and two others who are working at Goldman Sachs and Bank of America. JPMorgan, which now owns Bear Stearns, is named in the lawsuit as well, as a responsible party. It seems that this is a pretty standard repurchase lawsuit, but Ambac added accounting fraud to the claim to double the award owed to them.

The original Atlantic article-

E-mails Suggest Bear Stearns Cheated Clients Out of Billions

Teri Buhl, The Atlantic

Jan 25 2011, 1:01 AM ET

Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear. According to e-mails and internal audits, JPMorgan had known about this fraud since the spring of 2008, but hid it from the public eye through legal maneuvering. Last week a lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was unsealed. The lawsuit’s supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a “sack of shit.”

…

According to the lawsuit, the Bear traders would sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds. The Marano-led traders also cut the time allowed for early payment defaults, without telling the bond investors. That way, Bear could quickly securitize defective loans, without leaving enough time for investors to do their own due diligence after the bonds were sold and put-back any bad loans to Bear.

The traders were essentially double-dipping — getting paid twice on the deal. How was this possible? Once the security was sold, they didn’t have a legal claim to get cash back from the bad loans — that claim belonged to bond investors — but they did so anyway and kept the money. Thus, Bear was cheating the investors they promised to have sold a safe product out of their cash. According to former Bear Stearns and EMC traders and analysts who spoke with The Atlantic, Nierenberg and Verschleiser were the decision-makers for the double dipping scheme, and thus, are named as individual defendants in the suit.

…

Last week, JPMorgan CEO Jamie Dimon said it will take years to get through mortgage litigation risk the bank inherited and had set aside around $9 billion for litigation-related risk. Yet in the bank’s January earnings call, Dimon suggested that the bank may not have to buy back any soured mortgages from private investors and said that the issue is “not that material” for JPMorgan. Still, Ambac recently won a court order in December to add accounting fraud against JPMorgan to its suit, which can double or triple lawsuit awards. So it’s hard to tell whether America’s largest bank is prepared to pay for the sins of Bear. JPMorgan did fight tooth and nail for the Ambac suit not to be made public, however, because the firm argued it could damage the reputations of senior bank executives currently working in the industry. Individuals named as defendants in the amended complaint include: Jimmy Cayne, Alan “ACE” Greenberg, Warren Spector, Alan Schwartz, Thomas Marano, Jeffrey Mayer, Mary Haggerty, Baron Silverstein, Jeffrey Verschleiser, and Michael Nierenberg. But the court chose to fold these individuals into the charges against JPMorgan as the case goes through appeal.

JPMorgan is not the only firm in trouble-

Countrywide Accused in Lawsuit of ‘Massive Fraud’

By Karen Freifeld, Bloomberg News

Jan 25, 2011 5:54 PM ET

Bank of America Inc.’s Countrywide Financial unit, acquired by the bank in 2008, was accused of “massive fraud” in a lawsuit by investors who claim they were misled about mortgage-backed securities.

TIAA-CREF Life Insurance Co., New York Life Insurance Co. and Dexia Holdings Inc. are among a dozen institutional investors who filed the complaint yesterday in New York state Supreme Court.