Taibbi: “US Politics – Reality Show Sponsored by Wall Street”
Taibbi discusses the lack of financial reform and failure to prosecute Wall Street on RT America (hat tip reader May S):
Read more...Yearly Archives: 2011
Links 5/21/11
Guest Post: More oil, less democracy – Evidence from worldwide crude oil discoveries
By Kevin Tsui, Assistant Professor in the John E. Walker Department of Economics, Clemson University. Cross posted from VoxEU.
It has been widely argued that natural-resource wealth is a curse that leads to corrupt politicians, closed and illiberal societies, and defunct economies. This column presents new evidence on the political impacts of oil wealth. It argues that the effects depend on geology and history, shedding light on the recent uprisings in the Middle East and North Africa.
Read more...Lawyers Threatened With Sanctions for Talking About Foreclosure Abuses
So much for the idea that the legal profession cares about integrity. While there are no doubt many upstanding attorneys, state bar associations seem vastly more concerned about trying protect the industry’s meal ticket than policing questionable conduct. It’s well known in the profession that to the extent lawyers are ever sanctioned, it’s almost without exception small firm operators. The big boys pay a lot in dues and often have partners in their firms that hold offices in the state bar organization.
One damning illustration: even though Florida has been a virtual cesspool of legal malfeasance, with its biggest foreclosure mill having shuttered its doors and impermissibly not passed open cases on to other lawyers and all of the other big players on the ropes, not a single lawyer has been sanctioned. Yet two lawyers in the state were threatened because they’ve dared to say a candid word or two about the mortgage mess.
Read more...Links 5/20/11
Former LPS Employees Allege 30% to 78% Error Rate in Borrower Mortgage Records, Contradicting Banker/Regulator Cover-Up
One investor said that every time he looked at corporate misconduct, “No matter how bad you think it is, it’s always worse”. Lender Processing Services is proving to be a classic illustration.
The City of St. Clair Shores Employees’ Retirement System is the lead plaintiff in a class action lawsuit against Lender LPS that was amended and expanded yesterday. The suit is against the company and its three top officers, charing them with violations of Federal securities laws with the intent of inflating the company’s revenues and stock price.
Read more...Rajat Gupta and McKinsey’s Dented Reputation
A new story by Suzanna Andrews for BusinessWeek on Rajat Gupta, the former McKinsey managing director alleged to have fed tips to convicted insider trader Raj Rajaratnam, is mainly about Rajat, but it does have a damning tidbit about McKinsey:
McKinsey had a culture of superiority, says one longtime client, who declined to be identified, adding that consultants at the firm really seemed to think they were better than anyone else in the business world. This CEO is still shocked recalling an incident in the late 1980s, when a McKinsey team offered to provide him with a road map of what his competitors were doing. When asked how they could produce such information, he was told that McKinsey also worked with his competitors, but he could trust McKinsey to know what was confidential information and what was to be kept private. He says arrogance permeated the firm.
Felix Salmon deems this revelation to be of what a “presumably-representative McKinsey team would do in the course of normal business.” Having been at the firm at around that time (the mid 1980s), the reality was more complicated, but in the end points to the same troubling conclusion: a lack of adequate (one might say any) meaningful controls on client work.
Read more...Florida Kangaroo Foreclosure Courts Likely to Fold
e reported from time to time on the special foreclosure courts created in Florida to clear up its foreclosure backlog, and this horribly implemented experiment looks as if it is moving to a well deserved death.
In concept, creating a specialized court system to provide extra capacity and judges who focused only on that issue was a sound move. In practice, it was an embarrassment and a disaster for many borrowers. As we recounted last September:
Read more...These new foreclosure-only courts are special creations of the Florida legislature, funded separately from the usual court system. They are manned by retired judges, which means in many cases they are not familiar with real estate law.
But perhaps most important, the explicit objective of these courts is to clear up the backlog. And that is coming to pass not by the Legislature having thrown enough resources at the problem (that is, having greatly enlarged court capacity to process more cases in parallel) but by pushing for faster resolution. The problem is that an accelerated process runs roughshod over due process and allows banks to foreclose when they may not be the right party, or worse, when the foreclosure is the result of servicing error.
Links 5/19/11
Registrars of Deeds as Unexpected Foot Soldiers Fighting Mortgage Abuses?
As regular readers no doubt know, the reason for creating the electronic mortgage registry service MERS was to save on recording fees when notes (the borrower IOUs) were transferred through multiple parties when mortgage securitizations were set up. As MERS legal status has come under questions, a few local registrars of deeds (the officers in charge of local recording offices) have made estimates of the losses to their county and have come up with significant numbers.
As more and more information about mortgage abuses have gotten media coverage, some registrars of deeds have dug further into their records to document their extent.
Read more...Marshall Auerback: IMF’s Predatory Policies Likely to Continue with New Leadership
By Marshall Auerback, a portfolio strategist and hedge fund manager. Cross posted from New Deal 2.0.
It doesn’t matter who leads the IMF when the institution is governed by ideology.
Greece and Ireland appear to have lost an important political ally with the sidelining of Dominique Strauss-Kahn as both plead for more financial assistance from European partners to avoid an early restructuring of debt. The key word is “appears,” as in truth, arsenic remains arsenic, even if it is coated in sugar by an ostensible champagne socialist like Mr. Strauss-Kahn.
Read more...Guest Post: Geithner Says “The Size Of The Shock Was Larger Than What Precipitated The Great Depression”
Geithner says “the size of the shock was larger than what precipitated the Great Depression”, without mentioning that he was largely responsible for that shock … and future crises.
Read more...Levin Optimistic That DoJ Will Act on Goldman Disclosures
The Financial Times interviewed Senator Carl Levin, whose report contained a great deal of information pointing to what at a minimum can be called bad faith dealing by Goldman. Matt Taibbi has argued in his characteristic forceful manner that Goldman execs clearly perjured themselves in their testimony.
Keep your champagne corked. The DoJ has been missing in action for so long I can’t imagine that they will actually put in an appearance, particularly on Goldman, but I’d be delighted to be proven wrong.
Read more...Links 5/18/11
On Short-Termism and the Institutionalization of Rentier Capitalism
Andrew Haldane and Richard Davies of the Bank of England have released a very useful new paper on short-termism in the investment arena. They contend that this problem real and getting worse. This may at first blush seem to be mere official confirmation of most people’s gut instinct. However, the authors take the critical step of developing some estimates of the severity of the phenomenon, since past efforts to do so are surprisingly scarce.
A short-term perspective is tantamount to applying an overly high discount rate to an investment project or similarly, requiring an excessively rapid payback. In corporate capital budgeting settings, the distortions are pronounced:
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