As Greece continues to scramble to raise funds to avert default and keep paying pensioners and government officials, the end game is becoming clearer.
Saturday, March 28, 2015
Greece Raids Public Health Service Kitty as It Scrambles for a Short-Term Lifeline; ECB Refuses to Cut a Break. Updated: No Deal, Greece Given Ultimatum
This post by Ed Walker provides a detailed description of how badly municipalities have been fleeced when they bought interest rate swaps from Wall Street as part of financings. It isn’t simply that these borrowers were exploited, but that the degree of pilfering was so extreme that the financiers clearly knew they were dealing with rubes and took full advantage of the opportunity.
But what is even more troubling than the fact set here is the failure of the overwhelming majority of abused borrowers to seek to recover their losses. Walker describes that multiple legal approaches lead you to the same general conclusion: the swaps provider, as opposed to the hapless city, should bear the brunt of the losses. So why haven’t cities like Chicago, that have been hit hard by swaps losses, fought back? Walker does not speculate, but in the case of Rahm Emanuel, it’s not hard to imagine that his deep ties to Big Finance are the reason.
Posted by Yves Smith at 6:55 am |
This is the second post in a devastating series on why major banks and their executives got away with large-scale, systematic fraud in the runup to the crisis. Bill Black uses Citigroup whistleblower Richard Bowen as a case example of how derelict the DOJ and SEC were in the performance of their duties.
Here, Black describes how historically frauds and criminal conduct were pursued primarily by regulators and the FBI. However, not only were regulations were weakened, but the Bush Administration ended criminal referrals: “References to the criminal referral coordinators disappeared or were removed from the bank examiners’ manuals.” FBI staffing for white collar crime was cut drastically as the war on terror was given precedence.
That meant, as Black describes, whistleblowers became more important than ever as not just a source of information for civil and criminal prosecutions, but as key witnesses. Yet in many cases they are problematic. They are often disaffected former employees who call out the bad conduct they saw after they were terminated, or were so badly roughed up by their former employer for becoming an internal dissident that they were traumatized and don’t hold up well on the stand. Hence, as Black explains, the failure to take advantage of a stellar whistleblower like Richard Bowen. As Bowen put it, “Not only did they bury my testimony, they locked it up.”
John Helmer: Auction House Bonhams, Sued Over Frauds and Forgeries, Casts Pall Over Russian Art Market
We’ve said that fraud is the fastest growing business in the US, but the US is far from having a lock on that market. One of the proofs is the way our Richard Smith has turned chasing international scammers into a full-time activity.
Scamming has strong links to money laundering. That seems to have exploded as more and more of the global rich seek to move cash across borders in ways not readily tracked by tax men and border officials. The New York Times, for instance, did a major expose on high end real estate as a money laundering vehicle, focusing on one building, the Time Warner Center in Manhattan.
John Helmer looks at another nexus, that of art and very high end collectables, through the lens of auction house Bonhams. However, there are intriguing extra wrinkles with Bonhams which puts it closer to the Graham Greene world of shadowy dealing than is the norm for the art world. And since Bonhams is a major dealer in Russian art, the collateral damage extends to the Russian art market, as well as Bonham’s efforts to sell itself.
Today’s Water Cooler: Rocky Cruz launch, Rahm’s TV ads, Total Information Awareness in Singapore, the Chevy V-8 small block, empathy
Get a cup of coffee. This important post gives an in-depth analysis that helps explain how bad conduct was covered up or glossed over by the FCIC, and how much of the media fell in line with the official, sanitized story.
Posted by Yves Smith at 6:55 am |
Are progressives willing to attack Ron Wyden on TPP?
Bryan Cook in the Media: How the Scammers Behind Virgin Gold Mining Corporation Bit Off More Than They Could Chew (IX)
The Virgin Gold scam hits the press, along with London Capital and Bryan Cook
Last week, we wrote about a damning example of regulatory capture that occurred at a conference at Stanford Law School on March 5. In the Q&A session, the SEC’s head of examinations, Andrew Bowden, threw a big bouquet at an industry he oversees, private equity, repeatedly calling it “the greatest,” praising its returns, and saying that he’s told his son that he’d really do well to get a job in private equity.
Today’s Water Cooler: Clinton dynasty hedge fund, Cruz throws clown nose in ring, existing home sales, Ferguson Burger Bar, NRA and hackers
Topics: Water Cooler
Posted by Lambert Strether at 1:55 pm |
Neoliberalism and the question of the state.
Posted by Lambert Strether at 6:55 am |
If the plan of the Troika was to starve the Tsipras government and produce either capitulation or a loss of domestic credibility, their effort appears to be on track.