Here’s another grim statistic converted into a glimmer of economic hope: 39 banks have failed so far this year, but that’s not so bad because last year at this time there were 64 failed banks.
This week’s Failure Friday claimed five more banks in Florida, Georgia and Michigan, a headline that hardly gets noticed among the hundreds of banks that have failed since Lehaman Brothers failed in the fall of 2008. Click here to read more about those failed banks from the Associated Press. Geez, they held on this long. Why now when everything is so rosy and there’s so much free money from the Federal Reserve sloshing around.
The economic news is almost always leavened with hope. Bad numbers are portrayed as “better than expected” or improving by some large percentage over the following year, without always acknowledging that the following year was really, really, really bad and that the improvement just brings it to really, really bad.
But take heart. For what it’s worth bank failures are down 39% this year.
“This report confirms that ultra-low interest loans provided by the Federal Reserve during the financial crisis turned out to be direct corporate welfare to big banks,” Sanders said. “Instead of using the Fed loans to reinvest in the economy, some of the largest financial institutions in this country appear to have lent this money back to the federal government at a higher rate of interest by purchasing U.S. government securities.
“Instead of using this money to reinvest in the productive economy … it appears that JPMorgan Chase, Citigroup, and Bank of America used a large portion of these near-zero-interest loans to buy U.S. government securities and earn a higher interest rate at the same time, providing free money to some of the largest financial institutions in this country,” Sanders said.
Warren Buffett may not have come completely clean about the trading activities of his former top executive David Sokol, but the audit committee for his company sure did.
“By engaging in such questionable conduct, Mr. Sokol threatened Berkshire Hathaway’s reputation — or would have done so had he remained with the company,” the audit committee said in a report released today. Click here to read more.
When Buffett first disclosed this issue last month, it seemed he was trying to white-wash it. “Dave’s contributions have been extraordinary.” “I had not asked for his resignation, and it was a surprise to me.” Blah, blah, blah.
Now Buffett’s audit committee says he was misled. Click here to read a column I wrote on Buffett’s attempted white-washing. The harsher tone from his audit committee suggests the controversy is heating up just in time for Berkshire Hathaway’s annual meeting in Omaha this weekend.
Posted by Al Lewison April 27, 2011 Mr. Ponzi /
Here’s a hot tip on how to run a Ponzi scheme, compliments of Sean Mueller, famed for ripping off Hall of Famer John Elway:
Get the accountants in on the deal.
A lawsuit filed by C. Randel Lewis, the receiver for Mueller’s remaining assets, details how principals of accounting firm Bailey Saetveit & Co. ended up owning 10% of Mueller’s funds and allegedly became blinded to the many red flags that cried, Ponzi!
“Schaefer and Saetveit lent an air of credibility and legitimacy that was essential to the success of the Ponzi scheme,” it reads.
No comment from the accounting firm so far. But it will be interesting to see their response in court. It appears to me that they were victims too, having lost not only money to Mueller but a reputation as well.
Posted by Al Lewison April 25, 2011 Fat Cats /
Capitalism and democracy is over, says former Reagan administration official and former Congressman David Stockman.
Stockman tells “The Daily Ticker” that the Federal Reserve Bank’s move to flood the world with free money has created an absurd speculation boom in commodities, stocks and currencies that is only benefiting a few at the top for no good reason.
“We now have turned the capital markets into a rip-roaring casino that really is not productive for the main street economy,” he said.
The Michigan Republican even asserts it was a mistake to bailout General Motors and Chrysler in his home state.
“Capitalism requires the right to succeed as well as fail,” he said. “If we basically adopt too-big-to-fail, we’re already failing ,and that’s were I think we are today.”
As the nation slowly sinks into this swamp, Washington D.C. has been co-opted by money.
“Right now everything is up for grabs in terms of who can lobby, who can marshal campaign funds,” Stockman says.
It’s disturbing to hear these sorts of opinions from the masses, but when they come from a Reagan official, you have to suspect the game is rigged.
Posted by Al Lewison April 25, 2011 Washington /
Clearly, it’s the Treasury Secretary’s job to talk up the economy. But when Tim Geithner says there’s no chance the U.S. will lose it’s Triple-A credit rating, and S&P says there’s a once in three chance, who are we supposed to believe?
Not that S&P is so credible, either, given how it put top credit ratings on mortgage backed securities before the big bust. But maybe this time it is right.
Click here to read my column in The Sunday Wall Street Journal.
Posted by Al Lewison April 22, 2011 Washington /
President Obama’s birth certificate is a surer thing than Donald Trump’s net worth.
Trump’s claim that he will file a financial statement detailing his billions if he decides to run for president is a clear sign he is not planning to run for president. Surely, Trump would not invite that kind of scrutiny, preferring to keep the world guessing.
Trump has sued a New York Times editor who wrote a book suggesting Trump was not really a billionaire. He also has admitted to exaggerating his net worth. Now Trump says he is worth “whatever I feel.” Click here to read more on that frothy statement.
Trump is a man who will do anything for attention, whether it’s offering to buy a mosque near Ground Zero in New York City, claiming Obama’s U.S. birth is suspect, or threatening to run for president.
This bluster has been going on for a long time. Read on to see what I wrote about the controversial book “TrumpNation,” in 2005, which claimed the guy was only worth $150 million to $250 million and detailed his many financial woes over the years, including multiple Trump casino bankruptcies.
Suggesting that banks deceived borrowers, shareholders and taxpayers? Believing that financial products should not be complex so that thieves can hide behind the complexity?
Or is it because the former Harvard professor simply has a higher IQ and a longer list of accomplishments than her Congressional opponents?
Warren is one of the few people in Washington D.C. who isn’t on the take and isn’t an idiot.
As one blabbering politician after the next conveniently forgets about the financial crash of 2008 and it’s causes, Warren remains among the few people focused on trying to prevent it from happening again.
And all she is saying is that consumer loans need to be simple and honest. Is that so controversial?
The pushback she is getting is seems to be coming from people who want to keep making their living by making shoddy loans to unsophisticated borrowers. It also comes from the political machine in Washington that supports anything for a campaign contribution.
“How much of that push back is about money? And how much of the push back is about politics? I don’t think we’ll ever sort it out. Because I think those two have found each other and multiplied their forces,” Warren said.
Click here to read my column on Warren. And read on to read what Warren told me in 2005.