Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter. [...]
After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public. [...]
The New York Fed’s decision to pay the banks in full cost AIG -- and thus American taxpayers -- at least $13 billion. [...]
The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG. He declined to comment for this article.
Goldman Sachs is the most prominent of several multibillion dollar siphons suckling the US Treasury.
At the time the New York Fed was run by a genius called Tim Geithner, who has since become Obama's Treasury Secretary.
Unless we investigate and prosecute, we are also guilty.
Q. On the Internet, I read Mr. Wells described as some sort of “huckster” who steals money from widows. What’s that about?
A. It’s absurd. An anonymous blogger has focused on one investor out of more than 200,000. While we will not comment on any specific investor, the fund in question was a mid-1980s Wells limited partnership – and a particular class of partnership units. (For the record, that Wells fund exists today; unlike many of its contemporaries, it survived changes in tax law and the real estate downturn of the mid-‘80s. It is nearing the end of its life cycle, and will be returning proceeds to investors.)
My response: It's not absurd. That widow took the time to write a long letter to me — I did not solicit her story — and quite obviously from their response it's clear they never paid her back. So nothing new there... they took her money and are trying to dismiss it as a "mid-1980s" thing, because taking money from widows was obviously standard operating procedure way back then.
Their statement:
Q. That same blog says Leo Wells “has never fully repaid investors in any of his funds over the last 20 years.” True?
A. This is simply not true. Most Wells funds, including Wells’ flagship REITs, are designed as long-term income investments to be held for a number of years, and are not traded on the stock market. But our REITs have clearly stated redemption procedures, and more than 10,000 investors have asked for – and received – redemption of their shares. Additionally, last year Wells REIT sold more than $700 million in properties from its portfolio and returned the proceeds to REIT investors.
My response: "That same blog" was not the origin of this claim. The quotation “has never fully repaid investors in any of his funds over the last 20 years" is not from me, but is from the Wall Street Journal of August 5, 2004, as I document here. Falsely attributing these words to me, instead of to the most respected business newspaper who actually said it, is just plain lying. The full quotation from the Wall Street Journal is as follows: "In fact, Mr. Wells has never fully repaid investors in any of his funds over the last 20 years." Note, once again, that I did not say this — the Journal did.
The remainder of the Leo Wells Pathetic Defense Page is about how his Christianity is so great. But I vaguely remember something called the Ten Commandments, which includes the commandment "Thou shalt not steal." I notice God did not asterisk the commandment to disclose in the fine print that it would be okay if the theft involved a "mid-1980s Wells limited partnership – and a particular class of partnership units."
Sorry for having to state the obvious, but if the WSJ and Forbes have identified Mr. Wells's empire as questionable, far be it from me to argue with them. Further reading here.
Literally nothing on the Leo Wells Pathetic Defense Page is new. (And I haven't even mentioned the regulatory sanctions — how's that for self-control?) The Wells real estate empire is based on a flimsy facade of fake Christianity. It is an illiquid, overpriced investment of dubious quality and suspicious management. When the Wall Street Journal says, "In fact, Mr. Wells has never fully repaid investors in any of his funds over the last 20 years," investors would be well-advised to stay the hell away.
Hey, Bob Byrd! PR guy for Leo Wells! You're the one who wrote the Leo Wells Pathetic Defense Page — it says so in the page source &mdash can't you do any better?
President Obama reached his much-ballyhooed 100-day milestone last week, but most financial advisers were in no mood to celebrate.
An exclusive InvestmentNews online survey conducted last week found that a hefty 63.9% of advisers did not approve of his overall performance as president. Only 36.1 % of the 1,010 advisers who responded to the survey thought he was doing a good job.
Worse yet, 68.5% said they had either “not too much” or “no” confidence in his ability to fix the ailing economy, while only 31.2% had a “fair” or a “great deal” of faith in his capabilities on that front.
If you think your financial advisor in one of those who have "not too much" or "no" confidence in Obama's ability to fix the economy, ask him if he believes in "correlation." Specifically, ask him (and more than 90 percent of them is a "him") if he believes there is a correlation between a Democratic president and a healthy stock market and a Republican president and a lackluster stock market. Ask him who was better for the economy — Clinton or Bush Junior.
Insist that he explain this chart, showing that $10,000 invested exclusively under the Democratic presidents of the last 80 years — who covered half that span — would have grown to more than $300,000. By contrast, $10,000 invested in the nearly 40 years of Republican presidencies since 1929 would have grown to a measly $11,733. Print a couple of copies and bring them to his office. Show him that the average annual rise in the S&P 500 under all Democratic presidents of the last eight years was 8.9 percent. The average annual rise rise under Republicans during the same period was 0.4 percent.
If you are unhappy with your financial advisor's rationale for why this is so, or if your financial advisor is unaware of these facts, or if your financial advisor questions the factual nature of this, your next step is simple. FIRE HIM.
This has nothing at all to do with political litmus tests. People who work in financial services seem to self-identify as disproportionately Republican, but to be effective any financial advisor worth his salt should exist exclusively in the reality-based community. The InvestmentNews survey shows that nearly two-thirds of financial advisors choose not to live in reality. Their advice is based on hearsay, belief, and hunches — not the kind of people you want anywhere near your money.
November 5, 1999: ''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.'' [...]
''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''
Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''
''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''
Decisions made during the final months of the Bush administration created an environment in which the most politically connected investment banks, Goldman Sachs and Morgan Stanley, not only flourished, but saw their competitors laid waste, with firms like Lehman in bankruptcy, and others, like Merrill Lynch and Bank of America, forced to merge in desperate hope of surviving. [...]
The roots of the linkage between Goldman Sachs and AIG go back to the closing months of the Bush administration, as the financial meltdown reached crisis proportions and key decisions were made that are now reaping the whirlwind. Remember who played a key role in deciding to bail out AIG? Henry Paulson, the Goldman CEO-turned George W. Bush Treasury Secretary. Paulson, according to a September 27, 2008 New York Times piece by Gretchen Morgenson, led a team of regulators and bankers in early September to determine what to do with the most severely wounded financial institutions. One of the participants in those meetings was Lloyd C. Blankfein, Paulson's successor at Goldman Sachs.
Out of those meetings came the controversial and heavily criticized decision to allow Lehman Brothers, a Goldman competitor, to go belly up, and to bail out AIG. Starting with $85 billion from the Fed, taxpayers have pumped a total of $170 billion into the giant insurance company. The bailout was crucial to Goldman in that it permitted AIG to pay off its $12.6 billion debt to the firm, $8.1 billion of which was to cover AIG-backed credit derivatives.
The key words above: "during the final months of the Bush administration."
During the final month of the Clinton adminstration, the USS Cole was attacked by Al Qaeda — an event that is still actively criticized as evidence of Democrats' "softness" on terrorism.
During the final months of the Bush administration, Hank Paulson demanded and received $700 billion to save his corporate legacy. The difference between the terrorists during the two administrations is that the terrorists during the Clinton era live in caves in central Asia, while the terrorists during the Bush era were in Bush's cabinet, running the Treasury Department.
GOP soft on terrorists? No way — they are the terrorists, financially speaking. Heckuva job, Hank!
CNBC and the Wall Street Journal are both notorious for presenting opinions that are clearly disconnected from any of the quantitative, reality-based information they manage to report. The Journal's opinion page, always a hotbed of right-wing talking points and ludicrous extrapolations, consistently and systematically ignores whatever objective evidence is there to see on the front page.
Today's WSJ provides the cognitive-dissonance-du-jour. Pieces on the opinion page are hysterically headlined, "Obama's radicalism is killing the Dow," and "Obama repeats Bush's worst market mistakes," but the front page shows the real culprit: the job loss that will undermine the potential for any recovery. This job loss started well before Obama was even a front-runner, and yet the opinion page manages to paint him as some sort of über-villain who brought Wall Street to its dirty, dirty knees within six weeks.
If you have ever gone sledding or skiing, you know there's an inflection point on the hill where gravity will pull you down pretty fast. Look at the chart from today's Journal and tell me with a straight face that it's all Obama's fault. [Blue text is mine; everything else WSJ.]
The financial services industry spent more than $5 billion on political contributions and lobbying from 1998 through 2008, according to a study released today.
The study, issued by Essential Information, a Washington-based non-profit that seeks to curb corporate influence, and the Los Angeles-based Consumer Education Foundation, a non-profit consumer organization, blames influence peddling for the financial crisis.
Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurers made $1.7 billion in political contributions and spent another $3.4 billion on lobbyists, the study found.
Securities firms spent more than $504 million in campaign contributions and $576 million on lobbying over the period.
Spending by the major New York-based firms was:
The Goldman Sachs Group Inc.: $46 million
Merrill Lynch & Co. Inc.: $68 million
Citigroup Inc.: $108 million
JPMorgan Chase & Co.: $65 million
In addition, Bank of America Corp. of Charlotte, N.C., spent $39 million; the former Wachovia Corp. of Charlotte spent $15.9 million; and Wells Fargo & Co. of San Francisco spent $21.9 million.
Lawmakers and regulators “responded to the legal bribes from the financial sector” by rolling back standards, barring new rules to address “trashing enforcement efforts,” Robert Weissman, director of Essential Information and the lead author of the report, said in a statement.
Only $46 million in bribes from Goldman Sachs? Such a deal!
Hank Paulson's "By Monday I need $700 billion, no strings attached" ransom note last fall — before the election — seems literally a steal. Talk about leverage! A mere $46 million will buy you $700 billion in deleveraging magic, which you can use as a wand to wish away your catastrophic management of the global financial system. Killing Lehman and "saving" AIG was all part of Paulson's plan to secretly save Goldman, Lehman's rival and AIG's pivotal trading partner, which was facing disaster thanks to Paulson's own leadership as former CEO.
(By analogy, you could regard Cheney's whoops-no-WMD adventure in Iraq as a way of secretly saving no-bid Halliburton, which was likewise facing disaster thanks to his own leadership as former CEO. Apparently "public service" is the last resort of Republican CEOs who fuck their companies up so badly that they feel obliged to empty the US Treasury to compensate for their multitrillion dollar errors of judgment and outright chicanery.)
Today's WSJ: "The nation's top 400 taxpayers made more than $263 million on average in 2006, as the stock market was rallying, but paid income taxes at the lowest rate in the 15 years that the Internal Revenue Service has tracked such data, according to figures released Thursday. [...] Of the 400 taxpayers, 31 paid taxes at average rates between 0% and 10%."
Foreign investors plan to spend significantly more money on U.S. real estate in 2009 than they did last year.
A study released today by the Association of Foreign Investors in Real Estate showed that equity investors plan to boost real estate investment activity by 73% in the United States and 40% globally.
“Our investor members have expressed a growing confidence and interest in U.S. real estate,” James A. Fetgatter, chief executive of the Washington-based association, said in a statement. “Their investment plans for 2009 for the U.S. resemble the flight to quality that is creating the demand for U.S. Treasuries.”
The 17th annual study surveyed about 200 of the association’s members, who collectively hold $1 trillion worth of real estate.
Washington topped the list of cities in which foreign investors are most likely to park their cash this year. [...]
The study showed that half of investors’ favorite cities for investing in real estate this year are in the United States.
This differs from a year ago, when five of the top 10 cities were in Asia.
The top U.S. cities were Washington, New York, San Francisco, Los Angeles and Houston.
Investors named apartments as their favorite property type. That was followed by office, industrial, retail and hotel properties.
Also, most investors said that they are having little trouble finding attractive U.S. real estate opportunities.
