TPM: Big Trouble (Something very bad may have happened here)

[deminks]

http://www.talkingpointsmemo.com/archives/2009/03/big_trouble_2.php

The more I look at these investment decisions of Pension Benefit Guaranty Corporation and former Lehman exec Charles Millard the more my suspicion grows that some very bad happened here. There's no question that something happened very bad for the pensioners who were relying on this fund. But is there any conceivable good reason why you'd take most of the assets of the fund designed to insure pension benefits out of safe investments like bonds and put them into highly speculative investments -- hedge fund, equities, etc. -- just before the stock market collapsed.

Incompetence doesn't cut it as an explanation.

(snip)

One of the big drives behind Social Security privatization was the desire to find more money -- in the case of Social Security, a lot more money -- to keep the fires burning on Wall Street. Not just more fees for the people handling the money, but more money to keep pushing asset values higher. This looks like the same thing just using slightly different means.


(end snips)

emphasis mine.

background link here:

http://tpmmuckraker.talkingpointsmemo.com/2009/03/genius_federal_pension_guarantor_switched_from_bon.php


The plan, looks like to me, was to take our pensions, our property, our credit, our wages, our social security, medicare, medicaid, and anything else Wall Street and the little Enabler - GWB- could get their grubby little hands on, and feed it to the unregulated great and powerful monster.

[av8rdave]

1. The only "pension" I have left is through PBGC.

I already suspect I'll never see a dime of it.

Oh well, working until you die is a good thing...right?

[deminks]

2. I hope so, that seems to be my destiny as well. nt

[av8rdave]

4. Sorry to hear that....

This is all just another symptom of a larger trend...that of crushing the middle and lower classes at the expense of the well off. A company can wash its hands of pension obligations, dump the remnants to the PBGC, and feel they've somehow done right by their employees.

[crikkett]

7. "crushing middle and lower classes at the expense of the well off..."

did you mean to write that?

[av8rdave]

9. No, I didn't!

Thanks for catching that. Let me try again:

Crushing the middle and lower classes for the benefit of the well off.

Hard economic times, you know. I had to lay off my proofreader!

[crikkett]

20. LOL

:thumbsup:

[barbtries]

3. it is starting to look to me

as if the number of people benefiting from all the shenanigans might be small enough to go after them, should the DOJ ever choose to pursue justice and fulfill its reason for being. too early to give up hope that they will from my perspective, but i don't know. it's all very disheartening.

[Beetwasher]

5. This Was An Outright Heist Of The Pension Funds

No question about it.

[Vinnie From Indy]

6. Lehman's demise wiped out a huge chunk of my father's retirement

He had his money in their "safest" funds. It is beyond tragic that a man that worked his whole life and played by the rules has been robbed of his retirement savings.

[Winterblues]

8. Government will cover the costs and GOPs buddies get the dough.

It can't get much simpler than that.

[ddeclue]

10. Thank you Captain Obvious...GWB out to steal out SS for Wall Street..

Ummm yep that's pretty obvious to anyone who can do basic math.

:rofl:

http://1.bp.blogspot.com/_fWLtJmEhLG0/SWy4IyP3_yI/AAAAAAAADVs/uUcTL59byyc/s400/captain+obvious.jpg

[glitch]

11. Looks like Millard is going for the incompetence defense, must've learned it watching lil bush

...For his part, Millard appears sanguine. Asked by the Globe whether, given the market's decline, the strategy was a mistake, he replied: "Ask me in 20 years. The question is whether policymakers will have the fortitude to stick with it."...

[Old and In the Way]

12. Thanks for posting this.

I read the TPM link earlier and got really steamed. No question that the push to privatize SS was driven by the need to paper over the looming problem with the financial markets. In retrospect, we know that the Bush administration had information that clearly underscored the coming banking insolvency...and chose not to expose it to the American people. Perhaps that trillion+ dollar taxcuts might have been exposed for the bankrupting play that it was? Regardless, this should be investigated and prosecuted as the criminal act that it was. They knew it and elected to hide it from the American people...hoping to escape before the damage was exposed.

What did Bush/Cheney know and when did they know it?

[starroute]

15. You have to look back to the 2004 election

The push to privatize Social Security began in early 2005, right at the beginning of Bush's second term, and was meant as a payoff to the interests who had plowed the most money into his campaign -- mostly through the outside 527's like Progress for America and the Swiftboat Veterans.

The US Chamber of Commerce was also involved in the privatization push, working in concern with Progress for America.

It's not clear to me whether they already knew trouble was coming at that point, or if they were still in the phase of trying to steal anything that wasn't bolted down. But either way, the events of the 2004 campaign and its aftermath need careful reconsideration in the light of what has happened since.

[glinda]

23. Yes. When the hell is the Chamber going to get investigated? Long overdue!!!!!

[flyarm]

19. and if i remember correctly, it was alot of young people who wanted the SS changes!!

And it was us older folks who were screaming it was a scam..but wtf do we know eh?????????

My pension now may also be down the drain ( i don't know yet) ...33 years....but i have a hubby still working..so i am not in bad shape compared to so many seniors i know here in Fla..I am indeed greatful ..but my heart goes out to all who worked a lifetime to be robbed of their pensions!!! This is a disgrace for this nation ..for our government to have allowed this ..and don't misunderstand it..they allowed it!! and still are, with the cover up of what these corporations have done, to the people of this country..who many served this nation and most who worked their whole lives to be raped in their twilight years.. by corporate power.

Makes me sick...and damn angry!

I want to see all these bastards in jail ..not getting bail outs..brake em up..I damn well don't want my kids and grandkids paying for these MTF'ers who sit on their yachts and laugh at us all! And believe me , they do, and are.

[cabluedem]

28. Right about now we need Zorro or The Shadow to sink their yatchs. nt

[Blackhatjack]

13. The 'truth' is that the WallStreeters Have Massive Off the Books Debt....

... and the stories they had told on Capitol Hill and to the White House were clearly concocted to get their hands on taxpayers' money to shore up balance sheets that were not worth the paper they were written on.

This is a massive shell game in which the Wall Street Financial Titans have benefitted far beyond anyone's imagination in the last 8-10 years, but now the corrupt practices have become obvious .... and they are trying to keep the plates spinning long enough to blame their destruction on the Government's mishandling of the financial crisis.

Billions and Trillions of dollars don't march out the door to offshore accounts without having a toxic effect on any fairy tale they have been selling.

IT is ENRON accounting and practices all over again... only on a massive scale.

[glitch]

17. Excellent post. nt

[flyarm]

30. shell game..it sure is..while UAW workers lose their jobs and perhaps pensions!

and these lovelies keep getting roses and Champagne from this white house!


Report: AIG bailout money behind banks' recent profitability
http://blogs.usatoday.com/ondeadline/2009/03/the-financial-blog-zero-hedge-has-posted-an-exclusivethat-claims-that-according-to-an-insiders-account-aig-yes-that-aig-w.html


The financial blog Zero Hedge has posted an "exclusive" that claims that according to an insider's account, AIG (yes, that AIG) "was responsible for the banks' January and February profitability."


Saying it is "rarely speechless," ZH offered "a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good."


ZH says the insider perspective came in an email from "a correlation desk trader." Unless you're a finance whiz (and who is these days?!) you might get lost in the explanation of how AIG supposedly engineered this feat of profitability. But ZH tries to explain the "mumbo jumbo" in "layman's terms":


AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.


In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).


What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.


For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this "one time profit", which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers' money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.

Over at Seeking Alpha a columnist calls the email "scary" and says that if it's true,

then (a) the banks still aren't anywhere near sustainable profitability, and (b) those AIG retention bonuses -- paid on the grounds that only the people who got AIG into this mess could get it out -- are even more egregiously untenable than we had suspected.

The whole point of having the government take over AIG was that it wouldn't need to enter into panicked unwinds. If it went ahead and did that anyway, the levels of competence and oversight at AIG are even lower than most of us had thought. Which is quite an achievement.

Stay tuned.

(In other words they gutted AIG for the money after U.S. taxpayers bought it out.)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

and you wonder why foreign banks are lining up for your tax dolars..keep reading!!

http://www.bloomberg.com/apps/news?pid=newsarchive&sid= ...

If Oppenheimer Gets Handout, Blame Canada: Susan Antilla


Commentary by Susan Antilla
March 30 (Bloomberg) -- With word out that the U.S. is offering generous new welfare benefits, it was only a matter of time before those opportunistic foreigners who provided Lou Dobbs with his shtick started crossing the border with their hands out.

This time, the benefits are bailout goodies for banks and other financial institutions, and the grovelers are management of a Canadian brokerage firm.

Oppenheimer Holdings Inc., based in Toronto, said in several regulatory filings this month that it wants to reincorporate in Delaware and perhaps seek federal rescue money.

Oppenheimer “is exploring becoming a U.S. corporation and a U.S. bank holding company in order to help resolve the ARS problem for our clients,” the company said in its annual letter to shareholders released last week. (Toronto’s Oppenheimer & Co. isn’t related to OppenheimerFunds Inc., a unit of Massachusetts Mutual Life Insurance Co.)

The “ARS problem,” of course, is the nasty pickle Oppenheimer has gotten itself into with customers who hold $929.6 million in auction-rate securities, the ill-fated investments that flat-lined in February 2008. The auction-rate meltdown left investors at Oppenheimer and many of its Wall Street brethren unable to liquidate positions that had been marketed as, well, pretty darned liquid, to customers who often had no clue about the product’s risks.

Foul Call

Regulators and the public cried foul, and firms including Citigroup, Merrill Lynch & Co. and UBS AG ponied up the money to make customers whole after getting strong-armed by state regulators and the Securities and Exchange Commission.

[Poll_Blind]

14. Very interesting- thanks for posting! n/t

PB

[AndyTiedye]

16. They Were Trying to Keep The Market From Crashing BEFORE THE ELECTION!

[Hannah Bell]

18. who made the decision? it should be easy to narrow down the suspects.

[OffWithTheirHeads]

21. It's no coinkydink that this happened just as an entire

generation was getting ready to retire.

This is the "Shock Doctrine" writ large.

I say we find the motherfuckers, seize their assets and chop their fucking heads off!

[Enthusiast]

29. You will have to do this on your own

because 'law enforcement' surely to fuck will not assist you in this effort. Law enforcement and the military exists primarily to protect these interests. Guillotine.

[CoffeeCat]

22. Look at this...this is another example...

In my state of Iowa, we have a very solid pension fund for state employees. It's called the
Iowa Public Employees Retirement System (IPERs) and it has a stellar reputation.

Last month, I was discussing the distressed economy with a friend and she said, "We talked
with our financial adviser and he said, 'No matter what happens, you guys have it good because
your husband works for the state and is enrolled in IPERs."

If you have it, it's considered golden.

An article came out last Sunday in the Des Moines Register. Apparently, $500 million was
invested in Westridge Capital, but most of the money has been lost. Apparently, the owners
of Westridge were scam artists. Only $35 million of the $500 million can be recovered.

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2009903280330

I find all of these "failures", "scams" and unfortunate incidents happening around the
country, to be suspicious.

Are we supposed to believe that rock-solid pension funds, banks and institutions just
accidentally became idiotic overnight--simultaneously?

All of this "Oh noes! Your money is gone!" happening NOW--is coincidence??????

Sorry about that rigged mortgage you took out. Sorry about losing your home. Sorry
about your bank closing. Sorry about the stock market tanking and taking half of
your savings and retirement into the abyss. Sorry about the credit-card companies
charging you 30 percent interest and then cutting your line of credit. Sorry about
the bankruptcy laws that won't help you. Sorry about you losing your job. Sorry
about that pay cut. Sorry about your pension. Sorry about your house losing tons
of value, making it impossible to sell your home. Sorry about trillions of your
tax dollars being used to bail out corporations who made truckloads of cash.

Really now...are we supposed to believe that all this happening at once is some
kind of bad luck or the work of foolish nimrods?

It looks like an orchestrated heist to me.

[glinda]

24. It appears to be and yet Obama and Dems are doing little about it. Heads need to roll.

[live love laugh]

25. WTFcan Obama do about it? The people who created this problem are like a crime syndicate.

Obama can "go after" them at his own peril IMHO. Furthermore, you don't/can't, as a new president, walk into the circles of the power elite that has been grown and bolstered for more than thirty years and attempt to change everything overnight. A lot of people are to blame--including the American public. WE also let this happen by watching stolen elections pass us by; by watching the media be overtaken...by watching... Period.

If I could reset/rerun DU back to November/December when there was talk of a bailout--I couldn't get a word in here edgewise about why we should not bail out these corporations. The posts here that were pro-bailout outnumbered mine ten to one. Absolutely ridiculous. NOW people are concerned?

[undergroundpanther]

27. Yeah I was against the bailouts..

Early on. I posted why I was against them ,And I caught hell for it too.
Even DU can get caught up in group think sometimes,and fail to hear the canaries in the coal mine posting up the truth.
And hell yes it was a coordinated deliberate heist.
I will go to say it even looks to me like this is all a planned collapse,disaster capitalism writ on a global scale.


The rich and sociopathic want debtors prisons,tent cities,and slavery type wages, prisoner labor and extract our labor for free,as they take our lives away. Because the wall street thieves are PRO-Aristocracy & pro- FEUDALISM, that is what conservatism IS,and why they cannot tell the truth about their own political agendas.Because nobody wants to be a serf living in a tent city.


These aristocratic assholes in their ideal society of course will claim to be the ruling lords,and since there are so few rich enough to own anything, we will become serfs.The rich want this country to be just like things were in the middle ages.The rich want all the power and wealth and zero responsibility or accountability. They are never satisfied,these greedy mean little people,not satisfied with robbing us all blind they try to squeeze blood from a stone,and they are tired of having to hide that they HAVE and we don't have.. They want total control. Simply put they wanna be kings and be catered to like gods by desperate toadies and sycophants and display their hoarded wealth to all the serfs and tell themselves how great they are.Fucking vainglorious,weak,pathetic,puffed up,devoid of any value,they are nothing but pieces of shit dipped in fake gold .

I say it's time to water the tree of liberty again...

[flyarm]

31. seems Obama did a easy job of getting rid of the CEO of GM...and bought out AIG

after it wasn't worth a shit and was only a shell ..after they passed on your tax $$ to foreign and domestic banks..now we own a empty comapny named AIG..don't spend any profit ahead of time though..it is worthless..but that CEO..still at work..

lets see GM lost 84$ billion in 4 years..( ALOT OF MONEY NO DOUBT) ..but AIG and the banks..700 billion in just a few months..AND WHO GETS CANNED BY OBAMA????????????

HMMM..THE MATH DOESN'T ADD UP FOR THE CANNING!!


Report: AIG bailout money behind banks' recent profitability

http://blogs.usatoday.com/ondeadline/2009/03/the-financial-blog-zero-hedge-has-posted-an-exclusivethat-claims-that-according-to-an-insiders-account-aig-yes-that-aig-w.html


The financial blog Zero Hedge has posted an "exclusive" that claims that according to an insider's account, AIG (yes, that AIG) "was responsible for the banks' January and February profitability."


Saying it is "rarely speechless," ZH offered "a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good."


ZH says the insider perspective came in an email from "a correlation desk trader." Unless you're a finance whiz (and who is these days?!) you might get lost in the explanation of how AIG supposedly engineered this feat of profitability. But ZH tries to explain the "mumbo jumbo" in "layman's terms":


AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.


In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).


What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.


For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this "one time profit", which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers' money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.

Over at Seeking Alpha a columnist calls the email "scary" and says that if it's true,

then (a) the banks still aren't anywhere near sustainable profitability, and (b) those AIG retention bonuses -- paid on the grounds that only the people who got AIG into this mess could get it out -- are even more egregiously untenable than we had suspected.

The whole point of having the government take over AIG was that it wouldn't need to enter into panicked unwinds. If it went ahead and did that anyway, the levels of competence and oversight at AIG are even lower than most of us had thought. Which is quite an achievement.

Stay tuned.

(In other words they GUTTED AIG for the money after U.S. taxpayers bought it out.)

and you wonder why foreign banks are lining up for your tax dolars..keep reading!!

http://www.bloomberg.com/apps/news?pid=newsarchive&sid= ...

If Oppenheimer Gets Handout, Blame Canada: Susan Antilla


Commentary by Susan Antilla
March 30 (Bloomberg) -- With word out that the U.S. is offering generous new welfare benefits, it was only a matter of time before those opportunistic foreigners who provided Lou Dobbs with his shtick started crossing the border with their hands out.

This time, the benefits are bailout goodies for banks and other financial institutions, and the grovelers are management of a Canadian brokerage firm.

Oppenheimer Holdings Inc., based in Toronto, said in several regulatory filings this month that it wants to reincorporate in Delaware and perhaps seek federal rescue money.

Oppenheimer “is exploring becoming a U.S. corporation and a U.S. bank holding company in order to help resolve the ARS problem for our clients,” the company said in its annual letter to shareholders released last week. (Toronto’s Oppenheimer & Co. isn’t related to OppenheimerFunds Inc., a unit of Massachusetts Mutual Life Insurance Co.)

The “ARS problem,” of course, is the nasty pickle Oppenheimer has gotten itself into with customers who hold $929.6 million in auction-rate securities, the ill-fated investments that flat-lined in February 2008. The auction-rate meltdown left investors at Oppenheimer and many of its Wall Street brethren unable to liquidate positions that had been marketed as, well, pretty darned liquid, to customers who often had no clue about the product’s risks.

Foul Call

Regulators and the public cried foul, and firms including Citigroup, Merrill Lynch & Co. and UBS AG ponied up the money to make customers whole after getting strong-armed by state regulators and the Securities and Exchange Commission.

[snot]

26. K&R'd --v. impt. If even I knew what they were doing, at least some of THEM did.