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Friday
Aug242012

BUSTED: Henry Paulson Declares 'I'm A Capitalist' While Responding To Robert Reich On Bailouts

Paulson's brand new way of looking at TARP:

"I'm a capitalist..."

Vigorous self-examination from the former U.S. Bailout Secretary. 

 Paulson's hypocrisy arrives at 1:45.

 

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Reader Comments (22)

(Reuters) - Confidence in French President Francois Hollande has slipped in the three months since his election, a survey showed on Friday, as the leader of the euro zone's second-largest economy faces a slew of criticism upon his return from his summer break.

http://uk.reuters.com/article/2012/08/23/uk-france-hollande-poll-idUKBRE87M0Y320120823
Aug 24, 2012 at 6:04 PM | Registered CommenterDailyBail
Aug 24, 2012 at 6:08 PM | Registered CommenterDailyBail
My cousin was raped and strangled to death. The young man who did the crime was the son of a police officer. The charges were dropped as a result of his Miranda rights not being read to him. My aunt and uncle sold their home so that they would not have to be reminded of this horror every time they drove past the young mans home. WTH? Is this really as far as we have come as a society? We gotta cheer for rapists and bank robbers. Put them on a pedestal and hang wreaths and garlands on their inflated male protuberances. For the Love of God.
Aug 24, 2012 at 6:49 PM | Unregistered CommenterSKINFLINT
That's just horrible Skinflint my heart goes out to your family.

I don't know if you have seen this story yet reminds me of Holder/Covington

Wall Street Gets Its Way in Washington

snip

Every once in a while the financial industry lives up to its critics’ worst expectations: that it operates against the interest of the investing public, in cahoots with captive regulators and Washington’s powerful elite.

This is exactly what happened Wednesday, when Securities and Exchange Commission Chairman Mary Schapiro had to cancel an Aug. 29 vote on sensible new rules to make money-market mutual funds safer. Although Schapiro had the support of Federal Reserve Chairman Ben S. Bernanke and leading conservative economists, she knew that three of the five commissioners would oppose her. This came after an intensive and often-misleading campaign by the $2.6 trillion money-fund industry to gloss over the inherent instability of the funds.

Among those swayed by the lobbying was Luis Aguilar, a Democratic commissioner (the other is Elisse Walter) who usually sides with Schapiro. Aguilar, a former general counsel of Invesco, one of the country’s major sponsors of money-market funds, met 11 times with industry lobbyists this year. Among his concerns was that additional rules might lead investors to funnel cash into shadowy, unregulated funds.

This incidentally is a claim of the Investment Company Institute, a mutual-fund lobbying group, which never offered persuasive evidence to back up the assertion. Enough had already been done, the ICI argued, citing modest changes made in 2010 requiring the funds to hold investments that could be quickly converted into cash.

Blow Ups

continue

http://www.bloomberg.com/news/2012-08-23/a-case-study-in-wall-street-getting-its-way-in-washington.html

Related

Money Funds Step Up Fight --- Fidelity and Others Have Dedicated More Lobbyists to Beating Back SEC Rules

snip

"WASHINGTON -- Four of the largest mutual-fund companies and their industry group have shifted money to a lobbying campaign to fend off tighter regulations for the $2.5 trillion money-market fund industry, according to quarterly lobbying reports.

They have hired former top aides to key lawmakers and held receptions for congressional leadership such as California Rep. Kevin McCarthy, the third-ranking Republican in the House. In all, the group has spent about $2 million to engage 20 lobbying firms over the past three quarters. That compares with just $580,000 spent on lobbying related to money-fund overhaul during the same nine-month period in the prior year. Those figures don't include firms' internal spending on lobbying, which is harder to link to specific issues.

Securities and Exchange Commission officials privately concede that the industry is winning the argument so far. SEC Chairman Mary Schapiro hasn't been able to convince two fellow commissioners to formally support the new money-market rules. Even so, she has distributed a 337-page draft proposal to fellow commissioners and is considering holding a public vote late next month, officials said.

The lobbying intensified last fall after the collapse of closed-door talks between the SEC and the Investment Company Institute, the industry group backing mutual funds, the officials said.

Ms. Schapiro, Federal Reserve board members and other officials have said money funds are among the weakest links in the financial system because they lack pools of capital to absorb unexpected losses on their asset holdings. Also, their shareholders have incentives to flee at the first sign of trouble, jeopardizing broader short-term debt markets. Treasury Secretary Timothy Geithner on Thursday backed stronger rules for the funds.

Money funds are cashlike instruments that typically hold short-term debt and are designed to be safe. But one fund "broke the buck" in 2008 by falling below the $1-a-share value that the funds seek to maintain. Investors fled the industry, roiling the market. The U.S. Treasury Department and Federal Reserve intervened to backstop the funds.

But money-fund firms argue that rules imposed by the SEC in 2010 have sufficiently safeguarded the industry, partly by tightening restrictions on the securities the funds are allowed to hold. They also say funds rarely get into trouble.

The four companies spending the most on lobbying are Fidelity Investments, Federated Investors Inc., Charles Schwab and the Vanguard Group.

Part of their strategy involves courting lawmakers who are on key committees or close to SEC commissioners. For instance, in May, Federated hired a former chief of staff to Sen. Robert Menendez, paying him $30,000 in the second quarter. Mr. Menendez, a member of the Senate Banking Committee, backed the SEC appointment of Luis Aguilar, a Democrat seen as a swing vote on the five-member commission.

Mr. Aguilar, a former general counsel for Invesco Inc., the 13th largest money-fund company by assets, has said he doesn't believe there is sufficient evidence that additional reforms are needed. A spokeswoman for Mr. Menendez declined to comment. Mr. Aguilar declined to comment"

more
http://iwidget.infodesk.com/infodisplay/story/fac073120120313091214.html?APP=5&CU=iwi9538
Aug 24, 2012 at 9:48 PM | Unregistered CommenterLiberatedCitizen
Aug 24, 2012 at 11:55 PM | Unregistered CommenterTR
Is the fund that broke the buck in 2008 the Primary Reserve Fund?
Aug 25, 2012 at 8:09 AM | Unregistered CommenterSKINFLINT
http://news.muckety.com/2010/03/09/hank-paulson-treehugger/24981

[snip]

Paulson is an investor in Coda Automotive, an electric car company co-chaired by another former Goldman Sachs exec, Steven Hiller. He is also former chairman of the Nature Conservancy and the Peregrine Fund.

Wendy Paulson chairs RARE Conservation, a group that assists conservation programs around the world.

In his new memoir, On the Brink, Paulson describes his love of the outdoors: “My parents indulged this passion by taking us on wilderness canoe trips with difficult portages through Canada’s Quetico Provincial Park.”

Until he reached college, he had dreamed of being a forest ranger.

He and his wife have stayed aloof from the high life of the Upper East side, maintaining a home in Illinois, taking tropical vacations to see wildlife, working to set aside parkland in Asia.

“It isn’t like I’m trying to do good,” he told Fortune in 2004. “This is really fun for me.”
Aug 25, 2012 at 11:13 AM | Unregistered Commenterjohn
Henry Paulson is the BIGGEST lying bullshit artist in entire world. Anyone agreeing with him should be put agains the wall with him.
Aug 25, 2012 at 3:03 PM | Unregistered CommenterInsidious
I'm with Insidious, as the only people who agree with that lying bullshit criminal extortion artist, are the equally lying bullshit criminal extortion artists on Wall Street or those in the government and the FED. Hang them all and let God sort them out.
Aug 25, 2012 at 6:08 PM | Unregistered CommenterSagebrush
Don’t know if everyone has been keeping score here. This Marine was released from the hospital per judges order and case thrown out.

http://wtvr.com/2012/08/23/brandon-raub-judge-orders-release-of-detained-marine-veteran-freed/
Aug 25, 2012 at 10:54 PM | Unregistered CommenterSKINFLINT
"Skinflint Is the fund that broke the buck in 2008 the Primary Reserve Fund?"

YES

Breaking a Buck, Maybe, but Not Taxpayers’ Backs
snip

MARK Aug. 29 on your calendar. It’s the day all of us could end up on the hook for a big future bailout.
The Securities and Exchange Commission is expected to vote that day on a proposal that would limit taxpayers’ exposure to the $2.6 trillion world of money market mutual funds. The plan would reduce the odds of having to rescue teetering funds when the next financial crisis comes — and it will.

Money market funds are a huge cog in the nation’s financial machinery. Many people think that these funds are as safe as federally insured bank deposits. In most cases, they aren’t. But then, in the dark days of 2008, a run on one fund, Reserve Primary, reverberated in the industry.

more

http://www.nytimes.com/2012/08/12/business/sec-vote-is-near-on-money-market-fund-plan-fair-game.html



For Stability’s Sake, Reform Money Funds

snip

Consider the experience of 2008. When Lehman Brothers Holdings Inc. went bankrupt, many money funds suffered significant losses. Sponsors supported all but one fund, and that single money fund -- the Reserve Primary Fund -- broke the buck. This triggered a stampede of withdrawals across the sector that threatened severe consequences for the economy and for millions of investors. The stampede was halted only when the U.S. Treasury stepped in to guarantee the value of the money funds, at taxpayer risk, and the Federal Reserve put in place additional emergency programs to backstop credit markets.

in full

http://www.bloomberg.com/news/2012-08-14/for-stability-s-sake-reform-money-funds.html

Related

Boston Fed: 78 money funds needed help
Between 2007 and 2011, 21 funds would have ‘broken the buck,’ report says

http://articles.marketwatch.com/2012-08-13/economy/33178502_1_trillion-money-market-fund-industry-money-market-funds-paul-schott-stevens

Week in Review: A Defeat for Schapiro

snip

Regulators are are now huddling to discuss more modest alternatives. Peter Eavis and Nathaniel Popper explored the most likely next steps:

A group of top regulators, the so-called Financial Stability Oversight Council, could vote on designating money market funds as systemically important, which would pave the way for stricter regulations.

in full http://dealbook.nytimes.com/2012/08/24/week-in-review-a-defeat-for-schapiro/

COMMNET MINE ALSO PAVE THE WAY TO MAKE SURE WE CONTINUE BAILING THEM OUT IMO
Aug 26, 2012 at 1:29 PM | Unregistered CommenterLiberatedCitizen
Skinflint more

Your Money Market Fund May Not Survive The Next Wall Street Panic


http://www.forbes.com/sites/billsinger/2012/06/22/your-money-market-fund-may-not-survive-the-next-wall-street-panic/

Why One SEC Commissioner Spoiled The Fed And Treasury's Plan For Money Market Capital Controls: In His Words

http://www.zerohedge.com/news/why-one-sec-commissioner-spoiled-fed-and-treasurys-plan-money-market-capital-controls-his-words#comment-2738747
Aug 26, 2012 at 1:40 PM | Unregistered CommenterLiberatedCitizen
"I'm a capitalist."

Translation:
"I'm a financial terrorist."
Aug 26, 2012 at 2:49 PM | Unregistered CommenterPitchfork
Thanks so much LC. I remember a few years ago reading about this but most of it was just skimmed over.
Aug 26, 2012 at 5:45 PM | Unregistered CommenterSKINFLINT
Skinflint Your Welcome
Aug 26, 2012 at 9:18 PM | Unregistered CommenterLiberatedCitizen
So. A couple of questions. MMF's are supposed to be somewhat liquid in that an investor can reach their money quickly and efficiently when needed. The return is not great, but the risk the MMF's is not supposed to be risky. However, didn't Reserve Primary goose the return by going deep on risky investments then lost their ass when everyone wanted to pull out. Also is this the same mechanism Mr. Soros used when it was alleged he broke the British Pound?
Aug 26, 2012 at 10:12 PM | Unregistered CommenterSKINFLINT
William Dudleys article seems to say that there are risks with MMF's and that the way to deal with the run on the funds is to have the customer remove only a portion of their money. While I would agree that there should be some sort of stop gap measure to allow for a organised retreat, should not the funds keep on hand an amount to satisfy all accounts? Seems like a reasonable approach to me. Indeed, Ms. Schapiro appears to be making that point. According to some of these articles that are posted, there seems to be a push back from the industry. I wonder if some of these folks have given a ton of money to either presumptive candidate.
Aug 26, 2012 at 10:26 PM | Unregistered CommenterSKINFLINT
Steve, I think this piece hits it on the Nail Head...........


Why we are on the brink of the greatest Depression of all time


Read more: http://www.foxnews.com/opinion/2012/08/23/why-are-on-brink-greatest-depression-all-time/#ixzz24iRichP0
Aug 27, 2012 at 12:03 AM | Unregistered CommenterTexas Dar
Skinflint they may not be liquid long

Still Think That Money Market Fund Is “Cash”?

snip

Well, maybe not. Apparently the Fed, cognizant of the potential weakness of the money fund system, is considering withdrawal limits

more

http://dollarcollapse.com/capital-controls/still-think-that-money-market-fund-is-cash/

It is similar to what Soro's did to England, he bet against the pound.

http://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp

Money Market funds loan money to governments & others ($2.4 Trillion Dollar Industry) in fact I would say Soro's had a huge hand in this since Money Markets are part of the Shadow Banking Industry this might help explain a bit

"Those who say that the financial recent crisis tells us to re-enact Glass-Steagall overlook what failed and what did not: the largest failures in the 2008 crisis – Lehman Brothers, AIG, and the Reserve Primary Fund – were not deposit-taking commercial banks on which Glass-Steagall’s repeal had a major impact. AIG was a mega-insurer. Lehman was an investment bank. The Reserve Primary Fund – brought down by its purchases of IOU’s from Lehman – was a money-market mutual fund, not a commercial bank."

Flashback Thursday, 21 Aug 2008

Lehman Tumbles, Soros Buys in Big

http://www.moneynews.com/StreetTalk/soros-lehman-buy/2008/08/21/id/324987


True they aren't supposed to be risky but they broke the buck thus they were bailed out.

Broke The Buck

http://www.investopedia.com/terms/b/broke-the-buck.asp

Money Market Funds are NOT 100% Safe

http://www.investorplace.com/2012/08/money-market-funds-are-not-100-safe/

SEC flub on money market funds creates new muddle

http://newsandinsight.thomsonreuters.com/Legal/News/2012/08_-_August/Breakingviews__SEC_flub_on_money_market_funds_creates_new_muddle/

How Money Market Funds Were Wounded by European Interest-Rate Cuts

http://www.marketplace.org/topics/economy/easy-street/how-money-market-funds-were-wounded-european-interest-rate-cuts

George Soros: I made money from the Crisis

http://www.youtube.com/watch?v=aNdfKeRM4HY

Martin Weiss: You Are Being Forewarned ? Again ? About an Imminent Financial Megashock!

http://www.gold-speculator.com/munknee/79810-martin-weiss-you-being-forewarned-again-about-imminent-financial-megashock.html

This appears to be another case of cronyism Aguilar was the attorney for Invesco as for money they spent millions lobbying. It would take me a bit more research to know definitively about donations to candidates since I don't know all the fund managers names, etc.

See also

Trillion dollar bank insurance program may sneak into legislation

http://dailycaller.com/2012/08/07/trillion-dollar-bank-insurance-program-may-sneak-into-legislation/

Hope that helps in reality if you think about it Soro's was a huge obama benefactor you might have seen the images of him being the puppet master pulling obama's strings. People were ticked about the Bail Outs unbeknownst (is that a word?) to many obama was on the banks payroll for years. Sweet deal they bought a president and no criminal prosecutions.

Barack’s Wall Street Problem is Now America’s

http://www.noquarterusa.net/blog/4939/baracks-wall-street-problem-is-now-americas/
Aug 28, 2012 at 4:24 AM | Unregistered CommenterLiberatedCitizen
Skinflint "However, didn't Reserve Primary goose the return by going deep on risky investments then lost their ass when everyone wanted to pull out"

Forgot to answer that Reserve Primary was sued but the investment that had was Lehman who supposedly everyone thought was safe.

"The Complaint on behalf of purchasers of shares of The Reserve Fund’s Primary Fund (NASDAQ: RFIXX) (the “Fund”) during the period September 28, 2007 through September 16, 2008,

alleges that the Fund and the Fund’s underwriter, investment adviser, officers and trustees and the other related Defendants, violated Sections 11, 12 and 15 of the Securities Act of 1933 by making false and misleading statements and omissions concerning the lack of true diversification of the Fund’s assets, safety of principal, access to liquidity and exposure to at least face value debt of $785 million of the now defunct Lehman Brothers Holdings, Inc., and thus the Fund’s Registration Statement and Prospectus issued September 28, 2007, pursuant to which members of the proposed class purchased or acquired shares of the Fund during the Class Period, was materially false and misleading. "

http://www.free-press-release.com/news/200810/1223052270.html

Reserve Primary Fund Lawsuit
On September 16, 2008, it was announced that Reserve Primary Fund (RFIXX), one of the largest money market mutual funds, put a seven-day freeze on investor redemptions after the net asset value of its shares "broke the buck," falling below $1. The fund is owned by Reserve Management Corporation and held approximately $785 million in Lehman Brothers commercial paper and medium-term notes, which was revalued as worthless by the fund's board on Tuesday, following Lehman's bankruptcy filing.

According to recent news articles, as of Friday, September 12, 2008, the fund had approximately $62.6 billion in assets and by late Tuesday afternoon, the fund had taken a $40 billion hit, falling to approximately $23 billion in assets. The loss of assets combined with the revaluing of Lehman Brothers holdings sent the net asset value of the fund shares down to 97 cents on Tuesday, only the second time in history that a money market fund's net asset value dipped below $1.

On September 19, 2008, Girard Gibbs filed a class action lawsuit on behalf of all persons and entities who purchased or reinvested in any class of shares of the Reserve Primary Fund (“Primary Fund”), between September 28, 2007, and September 16, 2008, inclusive.

http://www.girardgibbs.com/case/82/reserve-primary-fund-lawsuit/

Judge combines Reserve Primary Fund lawsuits

snip

"The fund held about $785 million of Lehman debt when that investment bank filed for bankruptcy protection. The Chapter 11 filing triggered a shareholder run on the Reserve fund."

http://www.reuters.com/article/2009/08/26/reservefund-thirdavenue-idUSN2628529920090826

"Reserve Fund Accused of Securities Fraud in Giant Money Market Fund

snip

The complaint alleges that in violation of its legal obligations, as imposed by the Investment Company Act and the SEC’s Rule 2A-7 thereunder, the Primary Fund had invested in, and continued to invest in, approximately $785 million in commercial paper and other debt obligations issued by Lehman Brothers Holdings, Inc. (“Lehman”) (Pink Sheets:LEHMQ).

As Lehman’s financial difficulties mounted in recent months, its debt obligations became high-risk securities that were inappropriate for money market funds to hold. The Complaint further alleges that by Friday, September 12, 2008, Lehman’s financial situation had become desperate; yet defendants continued to hold the debt obligations. On September 15, 2008, when Lehman filed for bankruptcy, defendants were still holding onto $785 million of the Company’s debt obligations, which were now worthless. By the afternoon of September 16, defendants had allowed about a dozen institutional investors to withdraw a total of over $40 billion from the fund, at the “net asset value” price of $1.00 per share. That is the per share value that the Reserve Fund, like virtually all money market funds, strives to maintain.

However, the shares were actually worth less than that when they were redeemed.

in full
http://www.thinkglink.com/2008/09/22/class-action-lawsuit-against-the-reserve-primary-fund/

Interesting to note the court filing does not tell who the investors were

http://webcache.googleusercontent.com/search?q=cache:JVmz1BCBvG0J:www.nytimes.com/packages/pdf/business/20080923FUND/Ameriprise-v-Reserve.pdf+%22institutional+investors%22+Reserve+Fund&hl=en&ct=clnk&cd=3&gl=us&client=firefox-a

Flashback
Fed to Provide Up to $540 Billion to Aid Money Funds (Update6)

http://www.bloomberg.com/apps/news?pid=newsarchive&refer=home&sid=agNqzG4X0j0I
Aug 28, 2012 at 6:27 AM | Unregistered CommenterLiberatedCitizen
Again thanks so much L.C. Trying to read through all of this. The breaking of the pound in which he made a billion dollars kind of makes one sick. I remember Mr. Soros being on Fareed "Plagirist" Zakarias show one Sunday on CNN and gushing how wonderful he was in giving 500 mill for community programs serving poor people. If he felt that bad, seems he should have given all that money back. Just amazing stuff. If I can find the clip I will post it. Also check out the New Yorker article on Obama's lack of campaign money coming from large donors. Just amazing how much fairy dust comes from the MSM.
Aug 28, 2012 at 8:15 PM | Unregistered CommenterSKINFLINT
"I remember Mr. Soros being on Fareed "Plagirist" Zakarias "

ROFL

Soro's had his hand in the Egyptian uprisings seems he has his slimy fingers in everything
Aug 28, 2012 at 10:24 PM | Unregistered CommenterLiberatedCitizen

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