Tag Archives: money

How 2 US senators profited from America’s financial crisis

Documents connect Senators Bob Corker and Mark Warner to controversial Wall Street deals.

Bob Corker is the Junior Senator in Tennessee and he is no friend of Constitutional Conservatives.  He is following in the leftist footsteps of our Senior Republican Senator, Lamar Alexander.  Both of these Republican neo-cons should be ousted and for many, many reasons.

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Bob Corker and Mark Warner speaking in an interview with Zillow about mortgage-finance reform in September 2013.

Bob Corker and Mark Warner speaking in an interview with Zillow about mortgage-finance reform in September 201 …

“The idea that Wall Street came out of this thing just fine, thank you, is just something that just grates on people. They think you didn’t just come out fine because it was luck. They think you guys just really gamed this thing real well.”

So said then-Senator Edward E. Kaufman, a Democrat from Delaware, at the Congressional hearing in the spring of 2010 where assorted members of Congress lambasted Goldman Sachs’ activity in the run-up to the financial crisis.

But it turns out two members of Congress actually made money from that crisis, according to publicly available documents. During the crisis years, two now-senators, Mark Warner (D-Va.) who was the governor of Virginia until his Senate term began in 2009, and Bob Corker (R-Tenn.), who took office in 2007, were invested in a fund that appears to have made sizable profits from Goldman products that were designed to bet against the real estate market.

 

There’s no evidence either Senator was aware of the specific strategy, although both have reported millions of dollars of income from the fund. A little bit of ancient history: Back in the spring of 2010, the SEC charged Goldman Sachs with fraud over a deal called Abacus 2007-AC1. Abacus 2007-AC1 was a so-called CDO, which in essence requires investors to wager against each other. One set of investors was betting that homeowners would continue to pay their mortgages. Others, who were short, were betting there would be massive defaults.

In this particular deal, Goldman allowed a hedge fund client, Paulson Capital Management, to take the short position and help choose which securities would go into it. The SEC alleged that Goldman hadn’t told the long investors that Paulson’s team essentially had designed the CDO to fail. According to a report done by the US Senate Permanent Subcommittee on Investigations, three long investors together lost about $1 billion from their Abacus investments, while the Paulson hedge fund profited by about the same amount.

Goldman paid $550 million to settle the SEC’s charges in the summer of 2010. A young vice president who had worked on the deal, Fabrice Tourre, was eventually found liable in a civil suit brought by the SEC, making him one of the few to face any repercussions from the crisis era.

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Senate Foreign Relations Committee Chairman Sen. Bob Corker, R-Tenn., listens on Capitol Hill in Washington, Tuesday, June 28, 2016.

Senate Foreign Relations Committee Chairman Sen. Bob Corker, R-Tenn., listens on Capitol Hill in Washington, Tuesday, …

But Abacus 2007-AC1 wasn’t unique. In fact, it was merely the last in a series of Abacus CDOs. According to the Senate report, these were “pioneered by Goldman to provide customized CDOs for clients interested in assuming a specific type and amount of investment risk” and “enabled investors to short a selected group” of securities. Many of the Abacus deals were tied in part to the performance of subprime residential mortgage-backed securities, but some were also tied to the performance of commercial mortgage-backed securities.

Because AIG provided insurance on at least some of the Abacus deals, the Abacus deals were also part of the collateral calls that Goldman made to AIG, and part of the reason that taxpayers ended up bailing out AIG. Plenty of well-known hedge funds availed themselves of Goldman’s Abacus deals, according to a document Goldman provided the Financial Crisis Inquiry Commission. The list of those who were short various Abacus deals includes Moore Capital Management, run by billionaire Louis Bacon; Magnetar, an Illinois-based fund run by Alec Litowitz; Brevan Howard, a European hedge fund management company; and FrontPoint Partners (which shows up in the movie “The Big Short”).

There are also some lesser known names in the document, including Pointer Management, a Tennessee-based fund which was founded in 1990 by Joseph Davenport, a Chattanooga area businessman and former Coca-Cola executive, and Thorpe McKenzie, also from Chattanooga, according to the Campaign for Accountability.

Specifically, Pointer took short positions in an Abacus deal called ABAC07-18, as did FrontPoint Partners and several others. According to several sources, this Abacus deal was based entirely on securities tied to commercial real estate, rather than residential real estate. While few people have heard about this particular Abacus deal, it too resulted in Goldman making a collateral call on AIG. According to a document Goldman submitted to the FCIC, it looks as if by late 2008, AIG had posted a total of $308 million in collateral to Goldman in connection with Abacus 2007-18.

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U.S. Senator Mark Warner (D-VA) speaks at a news conference in the U.S. Capitol in Washington, in this May 19, 2015 file photo. REUTERS/Kevin Lamarque...

U.S. Senator Mark Warner (D-VA) speaks at a news conference in the U.S. Capitol in Washington, in this May 19, …

And it too was controversial — so controversial that at a meeting of the Financial Crisis Inquiry Commission on October 12, 2010, the commissioners voted to refer the matter to the Department of Justice, citing “potential fraud by Goldman Sachs in connection with Abacus 2007-18 CDO.”

In its write-up, the FCIC quoted Steve Eisman, the FrontPoint trader whose character figures prominently in “The Big Short.” According to his interview with the FCIC, Eisman seemed to feel that Goldman might have gamed the rating agencies, and might have brought in outside investors so that the firm could justify marking the deal down immediately, meaning long investors would suffer and short sellers would make money.

According to Eisman’s testimony, he said to the Goldman traders, “So you put this stuff together and you went to the agencies to get a rating and the biggest issue with the rating is the correlation of loss, and you presented a correlation analysis that was lower than you actually thought it was but the rating agencies were stupid, so they’d buy it anyway. So assuming your correlation analysis was correct, you took the short side, sold it to the client, and then [did the deal with me to get a mark].” One of the Goldman traders responded, according to Eisman’s testimony, “Well, I wouldn’t put it in those terms exactly.”

Eisman went on to say he believed Goldman “wanted another party in the transaction so if we have to mark the thing down, we’re not just marking it to our book.” He added that, “Goldman was short, and we [FrontPoint] were short. So when they go to a client and say we’re marking it down, they can say well it wasn’t just our mark.”

The FCIC noted that if Goldman did agree with Eisman’s characterization, this could raise legal issues for Goldman as to whether the firm deliberately misled the rating agencies, thereby leading to a material omission in the offering documents for Abacus 2007-18 and violating securities laws. The FCIC also noted that if Goldman indeed knew it was expecting to lower the value of the security as the firm was creating it, and brought in other investors only to make that look more genuine, that could be another potential violation of securities laws. Anyway. Nothing came of this, just as nothing came of any of the FCIC’s other referrals to the Justice Department.

According to a document Goldman submitted to the FCIC, the short investors did very well: Pointer appears to have been paid $120 million in “termination payments” in 2008 and 2009. (Although commercial real estate held up fairly well in the end, prices also collapsed in the crisis.) The documents don’t make it clear what, if any, upfront investment was required; the monthly coupon rate was small.

“This amount of money that’s going into AIG, there is no upside now,” Corker told Politico in early 2009 about the taxpayer bailout of the company. “This is all just like gone money.”

Gone where? Well, what is clear is that Corker especially, but also Warner, made money from their overall investments in Pointer.  According to his disclosure forms, Corker’s investment in Pointer first shows up in 2006. He put the value of his investment between $5 million and $25 million. In July 2007, several months before the effective dates for Pointer’s Abacus deals, he put an additional $1 million to $5 million into Pointer. From 2006 to 2014, he reported total income from Pointer of between $3.9 million at the low end and $35.5 million at the high end (including funds from the sale of part of his stake in the fund in 2012.) He sold the rest of his stake in 2014 and reported a cash receivable from Pointer of between $5 million and $25 million that year.

According to Warner’s disclosure forms, he first invested in Pointer in 2007. He assigned his stake the same value range as Corker did his: between $5 million to $25 million. Warner, who sold his entire position in 2012, reported total income from Pointer of between $1.5 million and $10 million. There’s no evidence that either senator knew that a fund in which they had invested was shorting the real estate market.

A letter from Pointer’s chief compliance officer says that Corker “can neither exercise control nor have the ability to exercise control over the financial interest held by Pointer.” Nonetheless, Corker and the principals of Pointer have known each other for a long time. According to the Campaign for Accountability, in 2004, Corker named Joseph Davenport among his co-chairs of his campaign committee ahead of his 2006 election; Pointer employees and their spouses have contributed $76,840 to Corker’s campaigns and $55,000 to his Rock City PAC, says CfA. And several business entities tied to Corker list the same address as Pointer. There aren’t any obvious ties between Warner and Pointer.

Pointer did not return a call for comment. A spokesperson for Warner declined to comment.  Corker’s spokesperson says, “This is yet another ridiculous narrative being peddled by a politically-motivated special interest group that refuses to disclose its donors. This dark money entity has an abysmal track record for accuracy, and just like the other unfounded claims they have leveled against Senator Corker, this too is completely baseless.” (They are apparently referring to the Campaign for Accountability, although this story was sourced from publicly available documents.)

It’s also a little ironic that Corker and Warner were the co-sponsors of the Corker Warner bill, which set out to reform the housing finance system. Let’s give them some credit. Since they already benefitted from the last crisis, maybe they’re trying to protect us from the next one?

Read more:

Why was nobody prosecuted for contributing to the financial crisis? Documents show why

The biggest remaining risk in today’s financial system, hiding in plain sight

Bank capital is an illusion: Bethany McLean

Planned Parenthood undercover video no. 2

5BY CAROL BROWN FOR AMERICAN THINKER.COM

The Center for Medical Progress has released its second undercover video that features two individuals posing as “buyers” from a fetal tissue procurement company speaking with Mary Gatter, president, medical directors council, Planned Parenthood Federation of America (PPFA).
Like the first video of Dr. Deborah Nucatola speaking matter-of-factly about abortion and fetal tissue procurement, this video exposed a similarly cold and brazen attitude by Gatter toward matters as shocking and surreal as selling the organs, body parts, and/or tissue from an aborted baby to a procurement company that would turn around and sell it to biotech firms doing stem cell research.
Like Nucatola, Gatter spoke about “volume” when talking about the number of abortions they perform. Also like Nucatola, Gatter avoided the word abortion. And babies. Because the abortion industry is all about manipulating language in order to sterilize that which is gruesome and to distance itself from that which is human in order to do something utterly inhumane. And so the lexicon is all about tissue, specimens, suctioning, cases, volume, and waste.
Oh, and also money.
Early in the discussion Gatter raised the issue of money, and a negotiation about fees ensued. Gatter was initially reluctant to name a price out of concern that the person who names a price first tends to lose. But eventually she spit out a number: $75 per specimen.
Gatter followed up by saying that Planned Parenthood is “not in it for the money” and that they “don’t want to be in the position of selling tissue.” She’s got her talking points down and apparently knows enough about the law to know she’s got to cover her you-know-what when speaking on this subject.
But.
There are costs involved that Planned Parenthood needs to recoup, such as use of its space by the procurement company – which is precisely how this devious arrangement works in order to get around the law that prohibits sale of fetal tissue for money. (To learn more about that, see here.)
After talking about money, the participants moved their conversation to abortion techniques and how said techniques may be adapted to improve the chances of getting an “intact specimen.” As with the monetary discussions, Gatter appeared to have her talking points down. She stated that they cannot change their technique in order to improve their chances of getting a “specimen” that would not be in acceptable condition for the procurement company to take. However, like Nucatola, Gatter soon expressed a willingness to reconsider and offered to speak with Ian, their surgeon who does the “cases.” Or more specifically, she would find out how Ian would feel about using a “less crunchy” technique to get more whole specimens.
At the end of the conversation, Gatter reiterated that money was not the important thing.
Uh-huh.
No, wait.
She wanted to make sure the amount they discussed was similar to what other Planned Parenthood affiliates are receiving from procurement companies.
Oh, I see. She wants to make sure she’s not being ripped off.
No, wait.
“It has to be big enough that it’s worthwhile for me.”
Wow, for someone not concerned about money, this sure is taking on a life of its own.
And then, with a somewhat nervous laugh, she said: “I want a Lamborghini.”
Ah. I see.
Hey, lady. You just exposed the face of Planned Parenthood. The face, the words, the tone, the attitude, and worst of all, the activity of destroying thriving babies in the womb and then selling their parts.
In the wake of these video releases, Planned Parenthood is claiming victim status. (Is there any other status these days?) Breitbart reports:

In a threatening five-page letter issued yesterday through one of its lawyers, Planned Parenthood complained to Congress that undercover investigators from the Center for Medical Progress had harassed and unlawfully infiltrated its clinics for years. (snip)

It appears that Planned Parenthood chief executive Cecile Richards issued an all-points bulletin to Planned Parenthood abortion clinics and offices around the country to ask if any had been visited by David Daleiden and his team posing as entrepreneurs of a fictitious company called Biomax Procurement Services. The letter warns of more videos to come as, according to the New York Times, “abortion opponents” had “infiltrated” clinics nationwide “posing questions to unsuspecting employees and patients.”
The letter accuses Daleiden of being involved in at least 10 “attacks” on Planned Parenthood offices over the previous eight years, including his time as director of research for Live Action, the pro-life group that pioneered undercover reporting on Planned Parenthood abuses. Planned Parenthood expects up to 65 recordings to surface.
Planned Parenthood also accuses Daleiden’s setting up a phony corporation may have violated state and federal laws involving “corporate filings and taxes.”

The Center for Medical Progress denies any wrongdoing or engagement in illegal activity.
I’m not a legal expert, but would like to offer a few words about undercover investigative reporting to Planned Parenthood: get over it! Investigative sting operations have been around for a long time and have been used by major news outlets as well as citizen-journalists. As Career News Insider reports: “Sometimes, getting the scoop on a story means doing more than simple research and interviews. Sometimes it requires a bigger and riskier sacrifice, like going undercover. Although the ethics and credibility of undercover tactics have been called into question, in some cases, the only way to unearth the truth is to go incognito.”
I believe that this describes what has been done in this case. And what had to be done. Can anyone imagine Planned Parenthood being forthcoming if a journalist who was not undercover were to ask its people about any of this barbarity? I think not.
In the first video, Nucatola noted that Planned Parenthood is always “under a microscope.” Now let’s make sure they’re under investigation.
I will continue to follow this story and report on additional videos as they are released.
Hat tip: Legal Insurrection and The Right Scoop
Read more: http://www.americanthinker.com/blog/2015/07/planned_parenthood_undercover_video_no_2_.html#ixzz3gfYgYsLD
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P.J. O'Rourke

O'Rourke

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P.J. O’Rourke

O'Rourke

Creflo Dollar is no longer asking his faithful to fund a new, $65 million private jet

 for THE WASHINGTON POST

FILE - In this Feb. 7, 2007, file photo, megachurch pastor Creflo Dollar speaks during funeral services for HERO driver Spencer Pass at World Changers Church International in College Park, Ga. . (AP Photo/Atlanta Journal-Constitution, Phil Skinner, File) Megachurch pastor Creflo Dollar speaks during funeral services for HERO driver Spencer Pass at World Changers Church International in College Park, Ga., in 2007 . (Phil Skinner/Atlanta Journal-Constitution via AP)

Televangelist Creflo Dollar wanted a $65 million, state-of-the-art private jet. But unlike many people who want expensive things, Dollar believed he had a plan to acquire it: simply ask 200,000 of his friends and followers to donate a few hundred dollars towards its purchase.

But there was just one problem for Dollar: The campaign, “Project G650,” was roundly mocked by those who felt that perhaps a pastor should focus on something other than obtaining a Gulfstream G650 plane of his very own. A spokesperson for Dollar’s ministries told the Christian Post on Monday that the campaign no longer exists. Instead, Dollar and company will wait for the opportunity to buy a “properly priced” private jet.

“There is no campaign. It’s a moot point. The ministry will now focus on spreading the Gospel,” Juda Engelmayer of 5W Public Relations said to the Christian Post. It’s not quite an apology, but it does hint at the extent of the backlash Dollar’s ministry faced for the campaign.

In case you missed this story, here’s a catch-up: on Friday, the Christian Post first reported on Dollar’s campaign, noting that Dollar says he “needs one of the most luxurious private jets made today in order to share the Gospel of Jesus Christ.” To get a sense of just what kind of plane Dollar was fundraising for, here’s a soothing advertisement:

This jet literally had a wait list of billionaires interested in buying one.

In a campaign appeal that has now been removed from Dollar’s site — along with the page collecting donations — Dollar’s ministry explained that the pastor’s current plane is more than 30 years old, and that it was damaged in November.

“We believe it is time to replace this aircraft so that our Pastors and staff can continue to safely and swiftly share the Good News of the Gospel worldwide,” the appeal text read. “Believe it or not, there are still millions of people on this planet who have never heard of Jesus Christ and know nothing of His greatness. Our hearts desire to see precious lives changed and snatched out of darkness and thrust into His marvelous light!”

Dollar is the founder and pastor at the World Changers Church International in Georgia, which has about 30,000 members. He preaches the prosperity gospel, which basically boils down to the idea that God rewards faithful followers with earthly riches. And it encourages adherents to “sow a seed” with, or give money to, their pastor as a kind of investment. Sarah Posner explained more about the theology behind Dollar’s big fundraising campaign over at CNN. One other thing that’s important to know about prosperity teachings: Most Christians, including evangelicals, do not consider them to be a mainstream interpretation of Christianity.

The popular reaction to this campaign was not particularly kind to Dollar’s argument that his plane would help fulfill the Word.