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Thursday, August 18, 2011

Is The Justice Department S&P Investigation Ironic or Retribution?


As I suggested in my August 6, 2011 posting, the S&P downgrade would result into a Justice Department investigation!  Here is what I said:

"--the other rating agencies probably will not jump onto the S&P bandwagon for one very chilling reason. One can expect a Justice Department/Congressional investigation into the downgrade by S&P within a couple weeks.  (An Italian rating agency downgraded Italy's bonds and was raided by the national police this past week.)"

Here we are a mere 11 days later and we read the following article in the New York Times. Of course, we see the protestations by the writer that the investigation had been on going, however, it is odd that only the S&P seems to be under the gun!  Fitch and Moody's have reaffirmed the AAA credit of the United States and they do not seem to be in the sights of the Justice Department. 

Ironic or Retribution?  I think the latter.  What do you think?



U.S. Inquiry Eyes S.&P. Ratings of Mortgages

nytimes
On Wednesday August 17, 2011, 9:59 pm EDT
The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.
The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it is likely to add fuel to the political firestorm that has surrounded that action. Lawmakers and some administration officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.
In the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.
It is unclear if the Justice Department investigation involves the other two ratings agencies, Moody’s and Fitch, or only S.& P.
During the boom years, S.& P. and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.
Since the crisis, the agencies’ business practices and models have been criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits.
The Securities and Exchange Commission has also been investigating possible wrongdoing at S.& P., according to a person interviewed on that matter, and may be looking at the other two major agencies, Moody’s and Fitch Ratings.
Ed Sweeney, a spokesman for S.& P., said in an e-mail: “S.& P. has received several requests from different government agencies over the last few years. We continue to cooperate with these requests. We do not prevent such agencies from speaking with current or former employees.” S.& P. is a unit of the McGraw-Hill Companies, which is under pressure from some investors and has been considering whether to spin off businesses or make other strategic changes this summer.
The people with knowledge of the investigation said it had picked up steam early this summer, well before the debt rating issue reached a high pitch in Washington. Now members of Congress are investigating why S.& P. removed the nation’s AAA rating, which is highly important to financial markets.
Representatives of the Justice Department and the S.E.C. declined to comment, as is customary for those departments, on whether they are investigating the ratings agencies.
Even though the Justice Department has the power to bring criminal charges, witnesses who have been interviewed have been told by investigators that they are pursuing a civil case.
The government has brought relatively few cases against large financial concerns for their roles in the housing blowup, and it has closed investigations into Washington Mutual and Countrywide, among others, without taking action.
The cases that have been brought are mainly civil matters. In the spring, the Justice Department filed a civil suit against Deutsche Bank and one of its units, which the government said had misrepresented the quality of mortgage loans to obtain government insurance on them. Another common thread — in that case and several others — is that no bank executives were named.
Despite the public scrutiny and outcry over the ratings agencies’ failures in the financial crisis, many investors still rely heavily on ratings from the three main agencies for their purchases of sovereign and corporate debt, as well as other complex financial products.
Companies and some countries — but not the United States — pay the agencies to receive a rating, the financial market’s version of a seal of approval. For decades, the government issued rules that banks, mutual funds and others could rely on a AAA stamp for investing decisions — which bolstered the agencies’ power.
A successful case or settlement against a giant like S.& P. could accelerate the shift away from the traditional ratings system. The financial reform overhaul known as Dodd-Frank sought to decrease the emphasis on ratings in the way banks and mutual funds invest their assets. But bank regulators have been slow to spell out how that would work. A government case that showed problems beyond ineptitude might spur greater reforms, financial historians said.
Sylla, a professor at New York University’s Stern School of Business who has studied the history of ratings firms.
In particular, Professor Sylla said that the ratings agencies could be forced to stop making their money off the entities they rate and instead charge investors who use the ratings. The current business model, critics say, is riddled with conflicts of interest, since ratings agencies might make their grades more positive to please their customers.
Before the financial crisis, banks shopped around to make sure rating agencies would award favorable ratings before agreeing to work with them. These banks paid upward of $100,000 for ratings on mortgage bond deals, according to the Financial Crisis Inquiry Commission, and several hundreds of thousands of dollars for the more complex structures known as collateralized debt obligations.
Ratings experts also said that a successful case could hamper the agencies’ ability to argue that they were not liable for ratings that turned out to be wrong.
“Their story is that they should be protected by full First Amendment protections, and that would be harder to make in the public arena, in Congress and in the courts,” said Lawrence J. White, another professor at New York University’s Stern School of Business, who has testified alongside ratings executives before Congress. “If they mixed business and the ratings, it would certainly make their story harder to tell.”
The ratings agencies lost a bit of ground on their First Amendment protections in the recent financial reform bill, which put the ratings firms on the same legal liability level as accounting firms, Professor White said. But that has yet to be tested in court.
People with knowledge of the Justice Department investigation of S.& P. said investigators had made references to several individuals, though it was unclear if anyone would be named in any potential case. Investigators have been asking about a remark supposedly made by David Tesher about mortgage security ratings, two people said. The investigators have asked witnesses if they heard Mr. Tesher say: “Don’t kill the golden goose,” in reference to mortgage securities.
S.& P. declined to provide a comment for Mr. Tesher.
Several of the people who oversaw S.& P.’s mortgage-related ratings went on to different jobs at McGraw-Hill, including Joanne Rose, the former head of structured finance; Vickie Tillman, the former head of ratings; andSusan Barnes, former head of residential mortgage bond ratings. Investigators have told witnesses that they are looking for former employees and that has proved difficult because so many crucial people still work at the company.
One former executive who has been mentioned in investigators’ interviews is Richard Gugliada, who helped oversee ratings of collateralized debt obligations. Calls to his home were not returned

Ron Paul Favored By Former OMB Director Stockman

I know our friend, David, will jump all over this posting! David Stockman endorses Ron Paul on several issues including the budget and foreign policy.  Dr. Paul has stuck to his views for years and one must appreciate someone who does not waffle as it is so rare in politics.  I,  however, would think that a third party run by Paul only would siphon off votes from the Republican Party candidate. What do you think?

Former Michigan Congressman and former Reagan official David Stockman is a vocal critic of President Obama's Keynesian policies but he's also not very pleased with his GOP cohorts running for the White House.
As he details in the accompanying interview with Aaron Task, Stockman believes the Republicans are off base in their refusal to even discuss the notion of higher taxes at a time when the government faces an insurmountable debt burden. "I think it's absurd. It is willful ignorance of the facts of life."
At the Iowa GOP debates last week all candidates in attendance said they would reject any debt reduction compromise featuring a 10 to 1 ratio of spending cuts to tax increases. An incredulous Stockman's reaction: "that means the Republican party is checked out of reality."
Out of all the current contenders Stockman favors Texas Congressman Ron Paul. "If I were to pick any candidate who's saying the right things on the core issues of foreign policy and the need to end this credit card imperialism, and the need to get the central bank back into the narrow slot it should be in," Stockman believes Paul's "a lot closer than anyone else."
Does Paul have a shot to win?
Stockman isn't so sure but does think he could make a real difference if he runs as a third party candidate.

Tuesday, August 16, 2011

Where Are Obama's_______________?

Whether you are an Obama supporter or detractor, there are questions that have never been answered (and some that have not been asked.)  I do not know the answers to these questions posed by the following article and have not heard anyone attempt to answer them.  Have you?   If so, I would like to know your answers.

There may be some of you who disagree with the entire article to which I say, please answer the questions and I will post them! 



WHERE ARE THE OBAMA GIRLFRIENDS?

I hadn't thought about this - but where are Obama's past girlfriends - surely he had at least one? No past girl friends popping up anywhere? Strange - strange to the point of being downright weird!

OK, this is just plain old common sense, no political agendas for either side. Just common knowledge for citizens of a country, especially American citizens, who know every little tidbit about every other president (and their wives) that even know that Andrew Jackson's wife smoked a corn cob pipe and was accused of adultery, or that Lincoln never went to school or Kennedy wore a back brace or Truman played the piano.

We are Americans! Our Media vets these things out! We are known for our humanitarian interests and caring for our 'fellow man.' We care, but none of us know one single humanizing fact about the history of our own president.

Honestly, and this is a personal thing ... but it's bugged me for years that no one who ever dated him ever showed up. Taken his charisma, which caused the women to be drawn to him so obviously during his campaign, looks like some lady would not have missed the opportunity....

We all know about JFK's magnetism, McCain was no monk, Palin's courtship and even her athletic prowess were probed. Biden's aneurysms are no secret. Look at Cheney and Clinton-we all know about their heart problems. How could I have left out Wild Bill before or during the White House?

Nope... not one lady has stepped up and said, "He was soooo shy," or "What a great dancer!"

Now look at the rest of what we know... no classmates, not even the recorder for the Columbia class notes ever heard of him.

Who was the best man at his wedding? Start there. Check for groomsmen. Then get the footage of the graduation ceremony.

Has anyone talked to the professors? Isn't it odd that no one is bragging that they knew him or taught him or lived with him.

When did he meet Michele and how? Are there photos? Every president provides the public with all their photos, etc. for their library. What has he released? Nada - other than what was in this so-called biography! And experts who study writing styles, etc. claim it was not Obama's own words or typical of his speech patterns, etc.

Does this make any of you wonder?

Ever wonder why no one ever came forward from Obama's past, saying they knew him, attended school with him, was his friend, etc. ? Not one person has ever come forward from his past. This should really be a cause for great concern. Did you see the movie titled, The Manchurian Candidate?

Let's face it. As insignificant as we all are... someone whom we went to school with remembers our name or face...someone remembers we were the clown or the dork or the brain or the quiet one or the bully or something about us.

George Stephanopoulos, ABC News said the same thing during the 2008 campaign. Even George questions why no one has acknowledged that the president was in their classroom or ate in the same cafeteria or made impromptu speeches on campus. Stephanopoulos was a classmate of Obama at Columbia-class of 1984.He says he never had a single class with him.

Since he is such a great orator, why doesn't anyone in Obama's college class remember him? And, why won't he allow Columbia to release his records?

Do you like millions of others, simply assume all this is explainable - even though no one can?

NOBODY REMEMBERS OBAMA AT COLUMBIA

Looking for evidence of Obama's past, Fox News contacted 400 Columbia University students from the period when Obama claims to have been there, but not one remembers him. For example, Wayne Allyn Root was (like Obama) a political science major at Columbia , who graduated in 1983. In 2008, Root says of Obama, "I don't know a single person at Columbia that knew him, and they all know me. I don't have a single classmate who ever knew Barack Obama at Columbia ... EVER!

Nobody recalls him.

Root adds that he was, "Class of '83 political science, pre-law" and says, "You don't get more exact or closer than that. Never met him in my life, don't know anyone who ever met him."

At our 20th class reunion five years ago, who was asked to be the speaker of the class? I was. No one ever heard of Barack! And five years ago, nobody even knew who he was. The guy who writes the class notes, who's kind of the, as we say in New York, 'the macha' who knows everybody, has yet to find a person, a human who ever met him."

Obama's photograph does not appear in the school's yearbook, and Obama consistently declines requests to talk about his years at Columbia , provide school records, or provide the name of any former classmates or friends while at Columbia .

How can this be?

NOTE: Wayne Allyn Root can easily be verified. He graduated valedictorian from his high school, Thornton-Donovan School

Some other interesting questions.

Why was Obama's law license inactivated in 2002?

Why was Michelle's law license inactivated by court order?

According to the U.S. Census, there is only one Barack Obama - but 27 Social Security numbers and over 80 aliases.

WHAT!?

The Social Security number he uses now originated in Connecticut where he is never reported to have lived.

No wonder all his records are sealed!

Please continue sending this out to everyone. Somewhere, someone had to know him in school...before he "reorganized" Chicago and burst upon the scene at the 2004 Democratic Convention and made us swoon with his charm, poise, and speaking pizzazz.