Facing Jail, Banker Leaps to Death
November 4th, 2007What is it about Colorado and big time swindlers who don’t seem to be able to live long enough to show up to court for sentencing?
Remember Kenny Boy:
Kenneth Lay, the founder of Enron Corp. who ascended to the pinnacle of American business only to tumble into disgrace, died of a heart attack on Wednesday. He was 64.
Lay, 64, faced the prospect of the rest of his life in prison after his conviction May 25 of fraud and conspiracy in one of the biggest debacles in American corporate history.
Dr. Robert Kurtzman, Mesa County Coroner, said his autopsy showed Lay died of heart disease while on vacation in Aspen, Colo
…
Along with fraud and conspiracy charges, Lay also was convicted in a separate federal trial of bank fraud and making false statements to banks. Those charges related to his personal finances.
Lay was scheduled to be sentenced Oct. 23, along with Skilling, who also faces a long prison term.
Nothing solid, of course. Just echoes and coincidences among the bones, the entrails and the breathtaking financial crimes.
Via: Rocky Mountain News:
Former BestBank owner Edward Mattar, facing 14 years in prison and the forfeiture of millions of dollars at his fraud sentencing Friday, chose instead to leap from a 27th-story window.
The Denver coroner’s office identified Mattar’s body through fingerprints and ruled the death a suicide late Friday.
At 3:40 a.m, Mattar, 68, smashed a window with a hammer at his home at the Apartments at Denver Place, 1880 Arapahoe St. He then jumped, landing in the courtyard in front of the building.
…
The banker’s 2 p.m. hearing in U.S. District Court in Denver was canceled, and prosecutors eventually will dismiss the charges.
“Suicide is a terrible thing, whenever it happens,” Assistant U.S. Attorney John Haried said. “That’s all you can say about it.”
…
Harrison Greene worked for Mattar at Central New England College for more than three years as director of admissions and then dean of institutional relations. He then worked at Mattar’s for-profit Nasson College.
“He was one of those guys, 20 percent of the things he taught me were lifelong business lessons I’ve continued to use,” Greene said Friday. “The other 80 percent, I wish I’d never heard.”
Greene said Mattar “managed people through intimidation,” once giving him an illustration of a dying apple tree with just one piece of fruit left. The caption was “the tree with the best apples gets the worst beating.” [This is an axiom that all stock and commodity operators are very familiar with. Gold bugs; take note— Kevin]
He expressed surprise Friday that Mattar killed himself.
“He had a tremendous fear of death.”
Pakistan Under Martial Law
November 3rd, 2007Via: BBC:
Pakistan’s President Pervez Musharraf has declared emergency rule and suspended the country’s constitution.
He defended his actions in a national address, saying he was curbing a rise in extremism in Pakistan.
Chief Justice Iftikhar Chaudhry has been replaced and the Supreme Court surrounded by troops, who also entered state-run TV and radio stations.
The moves come as the Supreme Court was due to rule on the legality of Gen Musharraf’s October election victory.
The court was to decide whether Gen Musharraf was eligible to run for re-election last month while remaining army chief.
The BBC’s Barbara Plett reports from Islamabad that fears had been growing in the government that the Supreme Court ruling could go against Gen Musharraf.
Gold Closes Above $800 at Highest Level Since 1980
November 3rd, 2007Via: MarketWatch:
Gold futures rallied Friday to close above $800 at their highest level in nearly 28 years, boosted by rallying crude-oil prices and the dollar’s tumble to a new record low against the euro.
Gold for December delivery rallied $14.80 to finish at $808.50 an ounce on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $810.70, a level not seen since 1980.
The record high for Nymex gold was $875 set on Jan. 21, 1980, and the record settle was $825.50 set on the same date.
…
“Gold had already regained its footing overnight, as fresh dollar selling emerged once again after yesterday’s feeble attempt at a rally,” said Jon Nadler, an analyst at Kitco Bullion Dealers, in a research note.
“The metal’s powerful surge is reflective of growing apprehensions that something, somewhere in the global financial system might go awry, despite interest rate maneuvers designed to keep things going,” Nadler said.
CITI FACING LIQUIDITY CRISIS
November 2nd, 2007Via: Business Week:
For all its financial might, Citigroup (C) is undercapitalized according to some Wall Street analysts sounding fresh alarms about the banking behemoth’s balance sheet. Citigroup shares tumbled nearly 7% on Nov. 1 after three analysts downgraded the company’s stock.
Citigroup’s tangible capital is 2.8% of assets, just over half the industry average of 5%, according to Meredith Whitney, a bank analyst with CIBC (CM) World Markets. “They don’t have enough capital, pure and simple,” Whitney says. “They will have to address that, ASAP.” She downgraded the stock on Oct. 31 to sector under performer from sector performer. A Citi spokesman declined to comment on the report or on the issues it raised.
Unloading Toxic Waste Mortgage Backed Securities: “We Americans Were Very Clever”
November 2nd, 2007We’ll see how clever they are when the Good Fellas show up to collect.
At some point, this thing is going to start looking less like a financial crisis and more like a mob war.
How do I know?
Because I got a job that resulted from a decapitation strike against the computer systems of a wholly owned subsidiary of a Wall Street firm that was heavily involved with generating subprime loans and selling the resulting mortgage backed securities.
I haven’t talked about this before in public, but a core Cryptogon contributor wondered if the organizations that wound up with the toxic waste paper would eventually attempt to settle the score in a less than pleasant manner, if you know what I mean…
I wrote a candid response to him because I’ve wanted to tell this story many times, but was afraid to do it here on Cryptogon. After reading about this smug prick, Lawrence Lindsey, in the GATA piece below, I decided to share with all of you what I’ve seen happen to some other smug pricks who thought they were very clever too.
This was my private response to the Cryptogon reader-contributor. I’ve edited the message just slightly for length and readability:
I can’t post this publicly.
You’ve probably figured out by now the name of the firm I’ve been
referring to in the Wall Street Chop Shop piece, and a certain other
post… I’m not explicitly saying it, but people who have been following
this probably get it.
Yes, they even dress like mobsters, and wear the pinky rings.
But here’s a story that I’m afraid to talk about in public.
I and several other IT guys were brought into that company to handle
the aftermath of an attack that was probably undertaken by a “disgruntled
employee.” Well, we were lead to believe that it was a disgruntled
employee. But was it?
Here’s what happened:
At the time, the Mother Ship was content to allow the red headed step
child to run its own systems. As long as the paper got to where it
needed to be at the end of the month, each month, no worries, fuggetaboutit.
Someone compromised this operation at the root level, they understood
the timing and then they launched an attack that literally blew the
support columns out from underneath the entire thing THE DAY BEFORE THE
PAPER DUMP at the end of the month.
I got a call from one of the recruiters I was with on a Saturday. He
told me that this place wanted me to show up on Monday morning.
I asked, “For an interview?”
“No. For work. And they said to bring hip waders and a shovel.”
“Holy shit, what happened?”
“I don’t know but the people I’ve been talking to are panicking. They’re
at the office now (Saturday).” Not an exact quote, but something very
close to that.
Monday morning, bosses were still white faced and panicking. Many people
had been there over the weekend. The place reeked of greasy nerds who’d
been sweating out hundreds of gallons of cheap coffee.
The losses were in the tens of millions of dollars.
Now, here’s the interesting thing.
The firm didn’t call the cops. No state or federal law enforcement were
involved. There was no media coverage of the event at all. Not one story
anywhere. The firm handled the thing internally. They brought in “some
forensics people from New York” to find out who did it. If one of these
people wanted access to something, they didn’t even go to us, the IT
support and operations people. They called the CIO and that guy, always
drunk/hungover, moved like his life was on the line.
We never heard anything about how it wound up, what they found, or what
they did about it. The incident simply became known as, “That thing.”
The firm built a completely separate, parallel network infrastructure
along side the existing one. New cabling, even. New servers, new
routers, new client side systems. Everything new. Two factor
authentication, including hardware based crypto key generators. This
became known as the “clean” network, the Mother Ship’s network. The
existing network became known as the “dirty” side. Money was no object
in terms of this build out. [It is interesting to note that since I wrote this,
a few months ago, the entire operation has been rolled up, all employees fired
and offices vacated. It went down exactly the way I said it would in the
Wall Street Chop Shop piece.]
Anyway, I don’t want to know what “connected” actually means when it
comes to this firm. I can’t begin to imagine what that thing does, off
the books. That’s why I’m not posting this in public.
Obviously, anyone who bought that shit they were selling is going to be
pissed.
Disgruntled employee?
When I was a boy, we called an attack like that, “strategic information
warfare.” Maybe the attackers looked at the Mother Ship’s network and
found that it was too locked down. Someone or something tried to hurt
that firm bad and used the easiest vector to accomplish the most
financial damage. They also committed several federal crimes to do it.
Best,
Kevin
That was a taste of what happened when “very clever” wasn’t clever enough.
Via: GATA:
Lindsey’s charts went into the collateralized debt obligation problem, the asset-backed commercial paper, mortgage-backed securities .. the lot. He said that it will “force banks et al. to mark these products to market (over time) instead of their current practice of marking to model … or to myth.” He wasn’t the least bit worried about how the hedge funds would manage because, as he said, they were very good at looking after themselves.
He appeared delighted that Wall Street had been able to unload hundreds of billions of dollars’ worth of (now toxic) CDOs on the rest of the world, saying that “we Americans were very clever” in doing this.
Research Credit: She Knows Who
New York Attorney General Sues First American Corp. for Allegedly Colluding with Washington Mutual Inc. to Use a List of Preferred Appraisers to Inflate Mortgage Appraisals
November 2nd, 2007Note this passage from the story below:
Washington Mutual isn’t listed as a defendant. At the press conference, Cuomo said his office chose not to pursue Washington Mutual as a defendant because of jurisdictional issues since the company is a chartered federal financial institution.
Washington Mutual executives should expect a visit from the feds at any moment.
Via: CNN:
New York Attorney General Andrew Cuomo said Thursday that his office sued First American Corp. (FAF) and its eAppraiseIT unit for allegedly colluding with Washington Mutual Inc. (WM) to use a list of preferred appraisers to inflate mortgage appraisals.
At a press conference Thursday, Cuomo said First American allegedly caved in to pressure from Washington Mutual, eAppraiseIT’s largest client, to use a list of so-called “proven appraisers” who allegedly provided inflated appraisal values.
“This is a case we believe is symbolic of an industry-wide problem,” Cuomo said. “By the way, it’s been a long-time problem.”
Eric Corngold, a senior prosecutor in Cuomo’s office, said at the press conference that eAppraiseIT conducted more than a quarter of a million appraisals for Washington Mutual in the past 18 months and was paid $50 million for doing so.
The lawsuit, which was filed in New York State Supreme Court in Manhattan, is seeking to stop the practice and disgorgement of fees that First American and eAppraiseIT received for the allegedly inflated appraisals.
Washington Mutual isn’t listed as a defendant. At the press conference, Cuomo said his office chose not to pursue Washington Mutual as a defendant because of jurisdictional issues since the company is a chartered federal financial institution.
Representatives from First American and Washington Mutual didn’t immediately return phone calls seeking comment Thursday.
The lawsuit alleges eAppraiseIT improperly allowed Washington Mutual’s loan production staff to handpick “appraisers who would bring in appraisal values high enough to permit WaMu’s loans to close” and improperly permitted Washington Mutual to pressure eAppraiseIT appraisers to change appraisal values that were too low to permit loans to close.
“Instead of preserving its independence, which would have protected consumers and business customers alike, eAppraiseIT chose to protect only itself,” the lawsuit said. “And senior executives at First American, though warned by eAppraiseIT’s senior management of its compromised independence, nonetheless directed eAppraiseIT to continue its wrongful conduct.”
The conduct constitutes a deceptive, fraudulent and illegal business practice under New York state law, the lawsuit said.
Washington Mutual retained eAppraiseIT in spring 2006 after deciding to close its internal appraisal office and terminate its staff appraisers. eAppraiseIT hired about 50 former Washington Mutual employees as staff appraisers and appraisal business managers, the lawsuit said.
Under its agreement with eAppraiseIT, Washington Mutual can challenge an appraiser’s conclusions by requesting a “reconsideration of value,” the lawsuit said.
“Throughout the business relationship, WaMu has frequently ordered ROVs from eAppraiseIT,” the lawsuit said.
In early summer 2006, Washington Mutual’s loan production staff began complaining that the eAppraiseIT appraisal values were too low, the lawsuit said.
During this period, First American was seeking additional business from Washington Mutual, which was conditioned on the success of the eAppraiseIT deal, the complaint said.
The lawsuit said eAppraiseIT eventually capitulated to Washington Mutual’s demands in February 2007, with an eAppraiseIT executive allegedly telling senior management at First American in an email: “we have agreed to roll over and just do it.”
LARGEST FED INTERVENTION IN FINANCIAL SYSTEM SINCE 9/11 AFTERMATH
November 2nd, 2007Who needs trading curbs with the Plunge Protection Team on the job?
I wonder if They’re going to run out of zeros in the computers that “print” the “money”?
Via: AP:
The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, the largest cash infusion since September 2001, to help companies get through a credit crunch.
The action came one day after Fed Chairman Ben Bernanke and all but one of his central bank colleagues voted to slice a key interest rate. It was the second time in six weeks that policymakers acted to protect the economy from the effects of the housing downturn and credit troubles.
Wall Street took a nosedive with the Dow Jones industrials losing 362.14 points to close at 13,567.87.
The Fed on Wednesday ordered its key rate, called the federal funds rate, to be lowered by one-quarter of a percentage point to 4.5 percent. That followed up on a half-percentage point cut in September. Those two rate reductions might be sufficient to help the economy make its way safely through trouble spots, Fed policymakers indicated.
The funds rate affects many other interest rates charged to millions of individuals and businesses and is the Fed’s most potent tool for influencing economic activity.
The Federal Reserve Bank of New York, which carries out the central bank’s open market operations, moved Thursday to inject $41 billion in temporary reserves into the financial system.
A New York Fed spokesman said it was the largest single day of operations since $50.35 billion was pumped into the system on Sept. 19, 2001, following the terrorist attacks on New York and Washington. He declined further comment.
Fed policymakers at their meeting on Wednesday noted that the “strains from financial markets have eased somewhat on balance.” In the past week, many Fed officials have described the state of financial markets as fragile.
Bernanke and other Fed officials have said it will take time for the markets to fully recover from the credit crisis.
Since August, the Fed has been pumping cash into the financial system to help ease strains from the credit crunch. It also has cut its lending rate to banks — a third such cut came on Wednesday.
Loonie at All Time High vs. Dollar
November 1st, 2007Ay?
Via: Globe and Mail:
The seemingly unstoppable Canadian dollar surged to its highest level yet Wednesday, topping 106.17 cents (U.S.).
The record came just after 4 p.m., when official trading ended for the day. Officially, the dollar closed at 105.85 cents, up nearly a cent from Tuesday’s close, but trading continues virtually around the clock.
By cracking through 106 cents, the dollar topped what most observers believe to be the old record of 106.14 cents set on Aug. 20, 1957.
Technically, the dollar was worth as much as $2.78 in the late 1800s, but that’s largely because during Canada’s early history the value of the currency was either pegged to the price of gold or regulated by the government. It wasn’t until 1950 that the dollar began trading freely on global markets, according to the History of the Canadian Dollar, written by James Powell. The Bank of Canada recognizes the 1957 mark as the official record.
Gold Rises on Fed Rate Cut
November 1st, 2007Here’s my take on this from several days ago. If any of you were waiting to hedge with some put options at higher strikes… Here they are.
Thank you. I’ll be here all week. Tip your waitress.
To those of you who trade options on futures (not options on equities), which firms are good these days?
Via: AP:
Gold barreled above $800 an ounce Wednesday for the first time since 1980 as investors cheered the Federal Reserve’s decision to lower its benchmark interest rate by a quarter point.
The Fed dropped its federal funds rate to 4.50 percent, as the markets widely anticipated. Lower interest rates tend to undermine the dollar and raise the allure of precious metals as an investment alternative. The dollar stumbled to another low against the euro following the Fed’s decision on Wednesday, helping drive gold higher.
Although the regular trading sessions of most commodities markets were closed before the Fed released its decision, gold prices continued to climb in aftermarket trading. An ounce of gold gained $7.50 to settle at $795.30 an ounce on the New York Mercantile Exchange, then rose to a high of $800.80 ounce in later electronic activity.
Gold last topped $800 an ounce in 1980, when prices reached as high as $875 an ounce in January. Adjusted for inflation, an $800 ounce of gold in 1980 would be worth more than $2,000 today.
NYC’s ‘Realtor to the Stars’ Found Murdered
November 1st, 2007Fuggetaboutit.
Via: CBS News:
CBS 2 News has learned that Linda Stein, the former manager of the Ramones and “realtor to the stars,” was found dead, lying in a pool of blood in her multi-million-dollar Fifth Ave. apartment on Manhattans’ Upper East Side.
Police confirm she suffered blunt impact trauma to the head and neck.
EMS pronounced the 62-year-old former school teacher DOA when they arrived late Tuesday. The medical examiner ruled the death a homicide on Wednesday.
