SEC Bombs and Moody's Blasts

spy vs spyKing of the Click Business Insider has alerted us all to an obscure comment on a proposed SEC rule for Nationally Recognized Statistical Rating Organizations. William J. Harrington, is a former Moody's Senior Vice President in the derivatives analyst group from 1999-2010. In Harrington's 80 page comment, he starts with this opening salvo:

Moody’s argues that RMBS committees could not have factored the collapse of real estate prices into their opinions, given that the scale of the collapse was both unprecedented and unforeseeable. This rationale is as unconvincing as it is disingenuous, for it pretends that Moody’s and other financial players were not designing and operating the conveyances that carried real estate prices to unsustainable levels in the first place. A roller coaster inexorably chugs up to stomach-turning heights before it hurtles downward, and both a carnival operator
and a thrill seeker understand the nature of the ride’s operations.

The rationale of “who could know?” is wholly undone through even a cursory examination of the actions of Moody’s and other financial players in the structured finance sector. Moody’s and other financial players took care to protect their earning should the real estate bubble that they were ushering into the world subsequently collapse.

Running Rupert to Ground – Vox Populi, Vox Dei

How will they get rid of Rupert Murdoch and his toxic enterprises?

July 4, 2011 may turn into the people's Independence Day.  On that day, stellar journalist Nick Davies of the Guardian released his story; Missing Milly Dowler's voicemail was hacked by News of the World.  Twelve year old Milly Dowler had been kidnapped with foul play feared.  The Murdoch tabloid couldn't resist.  News of the World (the News) hired a private detective to hack Milly's voicemail.  Finding the mail box full, the News or its hired dick deleted existing messages to make room for new ones, all to fuel their ongoing coverage.  The deleted messages raised hopes by Milly's parents that she was still alive and using her voicemail. (Image)

The Davies story elicited a reaction of near universal shock, outrage, and revulsion.  Milly had already been murdered by the time the Murdoch paper began its illegal tapping.

The public revulsion resulted in immediate and fervent popular demands for justice.  Those demands were compounded by follow-up stories on other Murdoch media hacking.  As it turned out, the News also broke into the voicemails of war widows to capture their most intimate exchanges on the loss of fallen soldiers in Afghanistan and Iraq.   All in all, at least 4,000 citizens had their voicemails hacked to boost the Murdoch publication's circulation and profits.

Driven by broad public ire, Murdoch's empire began unraveling immediately.  He became a target for those he'd tormented, particularly in politics.  In just a few days, he became anathema for those he'd placed in power, indicating the focused intensity and force of public outrage.   Conservative Prime Minister David Cameron fell in line with Labour Party Leader Ed Milliband's call to stop Murdoch's critical acquisition of pay TV network BSkyB.  The Independent spoke of Murdoch having to abandon his United Kingdom media properties.

The crisis spread across the Atlantic when Senator John D. (Jay) Rockefeller demanded that law enforcement look into possible voicemail and other electronic surveillance of 9/11 survivors in the United States by  Murdoch's News Corporation.

Will the NY Attorney General Bring Doomsday Charges Against Wall Street? If So, How Long Will He Survive?

Michael Collins
Gretchen Morgenson of the New York Times just published one of the few feel good stories in months following the 2008 financial crisis. She describes a possible day of reckoning for the perpetrators of the 2008 crisis and much of the pain that has followed.

The newly elected New York attorney general, Eric Schneiderman (D), wants information from Goldman Sachs, Bank of America, and Morgan Stanley. Among other things, the information concerns mortgage pooling and bundling. This may well include information on collateralized debt obligations (CDO's) and mortgage backed securities (MBS). New York state officials told Morgenson:

"The New York attorney general has requested information and documents in recent weeks from three major Wall Street banks about their mortgage securities operations during the credit boom, indicating the existence of a new investigation into practices that contributed to billions in mortgage losses." New York Investigates Banks’ Role in Financial Crisis New York Times, May 16

"Show Me the Money!" - Waste and Fraud in Iraq from the Start

Michael Collins

The Associated Press ran an article Sunday that focused on the wasted funds during the US reconstruction efforts in Iraq. There were stories of an unused children's hospital, a prison for 3,600 that will never open, and the diversion of reconstruction funds to pay off Sunni fighters to turn on al Qaeda.

AP failed to mention that the main reason that we have to rebuild Iraq is that the United States government invaded it and destroyed everything it could in a display of shock and awe. Also unmentioned were the unique post invasion strategies of no security for sites like power plants that keep the country running and the dissolution of the 400,000 man army, the main institution that kept order in the country before the invasion. But I digress.

Anyone paying attention should know that financial controls and accountability went out the window from the very first days following the defeat of Saddam Hussein's military.