LHP! Now to read!

what a racket!

Will the Fed pay off my Citibank card?

Failing Lehman Bros. owed $138 billion to Citibank. J.P. Morgan transfered a total of $138 billion to Lehman Bros. over two days. Then, the Federal Reserve Bank (US Gov’t) transfered $ 138 billion to J.P. Morgan over two days! So, US taxpayers bailed out Citibank for the bad unsecured debt owed it by Lehman Bros.

Smells like fish.

The sooner this whole rotten structure comes crashing down, the sooner we can start fresh.

“The only way to fix it is to wash it all away…”

Learn to Swim

Me too! When my job is gone (known date), will they pay my mortgage? Just for a while until “things turn around?”

Hi LHP I never understood why the Fed decided to help some firms and let other firms fail does it have something to do with giving to the GOP?
I thought nobody had any real numbers for how these firms were all doing?
I mean I was as surprised as anybody when Lehman went down.

It’s the actual Bush legacy in action.

Yep..I actually had to set this all down on paper with arrows. – my last arrow ‘in’ is from JP Morgan to Lehman. But no info on whether Lehman did the ‘texas money two step’ back to Citibank…

Paulson and Bernanke must resign.

The self-dealing, and dealing good deals to friends, stinks.

There’s no way these two fear-mongers can responsibly implement any “rescue” plan. Their proposal was profoundly unAmerican. They should not be trusted any longer with the health of the financial system.

They have proved their incompetence and untrustworthiness too many times.

My question would be how much had to do with the fact that Paulson came from Goldman Sachs and Lehman’s was their biggest competitor?

Ha the washing Machine is already full of money thats needs “WASHING” coffers full of the Stuff! What do you think the Republican machine runs on?

Digg is now open for you to get busy with your shovels Pups! So get busy DIGGING!

I wonder how many other behind the scenes episodes of wheeling and dealing are going on. It raises the question whether JP Morgan got rewarded for its participation in the Lehman deal by being given Washington Mutual on a silver platter with guarantees it can unload WaMu’s toxic paper to the government.

I could help the mess by printing my own money. Would not be much, but could help a bit…say a few million.

Couldn’t agree with you more.

I don’t want to see the pain and suffering we would all endure if there was no bailout of the wall street aristocracy, but I sure would love to see our whole economic system rethought with the interests of the people put first.

It’s the actual Bush legacy in action.

This is my answer as well to those die-hards that say, “Well, there hasn’t been a terrorist attack since 9/11…”
There hasn’t been any need for one. Bush has been doing their work for them, systematically destroying the country, with far more devastating consequences than bin Laden could ever have created.

Henry Lehman (c. 1821 – 1855) was a Jewish German-American businessman and the founder of Lehman Brothers.

Born Heinrich Lehmann to a cattle merchant in Rimpar, Bavaria, Lehman emigrated to the United States in 1844. He settled in Montgomery, Alabama, where he opened a dry goods store called simply “H. Lehman”. [1]. In 1847, following the arrival of his older brother Emmanuel Lehman, the firm became “H. Lehman and Bro.” With the 1850 arrival of Mayer Lehman, the youngest brother, the firm became “Lehman Brothers”.

In those years, cotton was the most important crop of the Southern United States. Capitalizing on cotton’s extremely high market value around the world, the Lehman brothers became cotton factors, accepting cotton bales from customers as payment for their merchandise. They eventually began a second business as traders in cotton [2]. Within a few years, this became the major part of their firm.

In 1855, Henry Lehman died from yellow fever. His brothers moved the company’s headquarters to New York City, eventually building it into an important American company which collapsed on September 15, 2008.

http://en.wikipedia.org/wiki/Henry_Lehman

My bold Are the old old money types using the crisis to cutdown folks they don’t like?

“If you or I did something like this, they’d call it moneylaundering”

Bullshit! They’d call it “embezzlement” or “grand theft.”

Shouldn’t we start our own campaign to make them resign? I think we could do it and involve other blogs. That could be what we demand in exchange for not tarring and feathering them.

Assets and/or equity, nobody gets bailed out for free.

((((LHP)))

That is one theory, my next comment suggests that maybe Lehman being a Jewish firm might be a reason, but honestly I really do wonder why?

I wouldn’t be surprised, Hugh, this whole thing reeks to High Heaven

That’s another way of stating the question which has been bugging me in the background all through this “bailout” iteration of the Shock Doctrine:

Each one of these derivative transactions which, we are told, are at the heart of the difficulties in the market, has two sides: parties and counterparties, they call them.

If these derivatives are going from “good and valuable” for the institutions which hold them to “bad and valueless”, the counterparty for each derivative which has gone that way, has seen the value to them go from “bad and valueless” to “good and valuable”.

I’ll digress a bit to come at it from an angle.

In the world of options – which I understand only cursorily – it has always been possible to go into an option transaction in which you bet the stock will be worth, say, $20, even though the stock is currently trading at $5. That option you’d be buying, betting on the $20 value, will be worth, and cost, not so much – the difference between $20 and $5 discounted (i.e., multiplied) by the probability of the stock going from $5 to $20. Since the stock is trading at $5, the market thinks it’s not worth $20 and that probability is correspondingly small. Of course, if you know something that will lead to the stock rising to $20 and that’s why you’re buying in, that’s called insider trading. Options traffic at radical price differences suddenly arising is one of the signs of an insider trading scheme going on – and twigs the regulators’ interest.

But, it’s a zero-sum game, just like these mortgage derivatives.

So, the question about the Citibank and Lehman and NY Fed’s moving billions around becomes the same one that has been itching at me: who are the counterparties on the winning side of these mortgage derivatives? Because someone surely is making money – it’s not like they are just taking money, loading it in a barge and dumping it off Sandy Hook somewhere.

And, to me, the Fed’s manipulations look like they were trying to get around the preferential transfer law, maybe a fraudulent conveyance issue, or some other provision of the bankruptcy law. It surely smells, to me, not like money laundering but more like bankruptcy fraud. Remember from the discussions surrounding Eliot Spitzer’s hooker case, the money laundering statute requires that the money come from an illicit source. If Spitzer was taking his day-job paycheck, cashing it, and spending it on hookers – not money laundering (as to him).

Bankruptcy fraud, OTOH, requires hiding assets from the bankruptcy court, manipulating money to avoid the jurisdiction of the bankruptcy court, or otherwise perpetrating some flavor of fraud (more than 31 flavors of that) in the context of the bankruptcy.

That, I think, is what we have here. And, FWIW, that would explain a lot more clearly why Paulson/Bernanke wanted the Section 8 “no review by anyone” included in their initial bailout bill – they did not want those S.D.N.Y. Bankruptcy judges getting a look at what they were doing. Also note that neutering the Bankruptcy judges would be eminently possible by statute – they are Article I judges, not Article III, and the Constitution would support the move.

I don’t want to see the pain and suffering we would all endure if there was no bailout

I don’t either, but I’m not at all sure that it can be avoided…the longer one waits to fix it, the worse it is and the longer it takes to fix it.
Also, before this is all done, I want to know how much “deferred compensation” Paulsonstein is receiving from Goldman-Sachs.

Another sweet deal, this one for the short-time WaMu chief exec:

But the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s new chief executive, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to people briefed on the situation. Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus, according to an analysis by James F. Reda and Associates. WaMu was not immediately available for comment.

(my bold)

My understanding is that Lehman did not “have to” fail. It could have been sold months ago were it not for the outrageous demands of those at the top re guarantees of compensation.

Fuld was apparently in deep denial.

We are going to have to use antitrust and monopoly laws to break up the few remaining big firms to give consumers choice, that and lobbying by said firms should be banned.
Congress should be able to help big business without getting paid, that is what their paychecks are for.
Maybe publicly funded campaigns are the answer.

You know, the U.S economy, as we knew it, is in its last throes. But I think we’re about to turn a corner, and daylight is just ahead.

Maybe just a Friedman Unit away.

Now contrast what the New York Fed did -and what the mass media hasn’t mentioned BTW- with:
“In Clearwater, Obama said, “Every American has a stake in solving this crisis and saving our financial system from collapse, because, if we don’t act soon, then people’s jobs, people’s savings, the economic security of millions of Americans will be put at risk. So, the clock is ticking.”

Because of the emergency situation, Obama argued that “what we shouldn’t do is to try to get everything done in this package. What we should be doing is following the clear principles, that taxpayers are protected, that we have oversight, that taxpayers are going to get their money back, and that the housing crisis is going to be dealt with as well.”

Is this related to JPMorgan-Chase buying WaMu today? Quid pro quo anyone?

After these transfers, also according to Bloomberg, the Federal Reserve Bank of New York made two subsequent payments to J.P. Morgan: $87 billion on Sept. 15th and $51 billion on Sept. 16th, for a total of $138 billion.

Lehman’s bankruptcy court filing said that J.P. Morgan’s $138 billion transfer to Lehman was “At the request of… the Federal Reserve Bank of New York.”

Uh… Why did the Fed wait for Lehman to go under I’m sure $138 billion very well might have saved Lehman?

“Maybe publicly funded campaigns are the answer.”; absolutely with restrictions on amounts any individual can pledge.

Nice lack of work if you can get it.

A party in one generation of derivatives can be the counterparty in the next generation, and vice versa. At the moment, the system is frozen but not collapsed because no one knows who owes what to whom.

Just wanted to say this was a great catch by both lhp in bringing it to us and the guy who put it up on the yahoo message board.

This is TODAY’S news (Even though it is a replay of the same thing done within the past two weeks):
“
Central banks attempt money-market rescue
Coordinated action as interbank lending freezes up
http://www.marketwatch.com/new…..aspx?guid={342E2AF0-33FA-4FA9-93E8-5AFE1FF18AF0}

$138M >>> $138M >>> $138M ?!?! That’s not even trying to be subtle.

unconscionable!

How many homes could be saved for that amount of money?

I heard that two but the Treasury Secretary Paulson seems to be ok with huge Executive Golden Parachutes.

We could ask John McCain. I believe he has experience with multiple homes.

(Or maybe we should ask his staff, and they’ll get back to us on that.)

I am not sure I get your point here?

We the People

must

Vote for Change

Yep…but the potential buyer (from months) back was not. Guess Fuld could not tear himself away from the trough….and Paulson “understands”.

The kitty kelly Bush family Bio G.W Bush was engaged to a young lady who’s mom married a Jewish person and his family made him delay the engagement because of politics, Nixon was very antisemitic I understand.
The old old money times like the Bushes never never liked Jews.

The potential buyer I understand but why didn’t the Treasury or the Fed save Lehman?

You correctly note that:

A party in one generation of derivatives can be the counterparty in the next generation, and vice versa.

But I cannot go along with:

At the moment, the system is frozen but not collapsed because no one knows who owes what to whom.

Freezing the market might be the best solution.

These are all instruments with definitions and ownership pretty clearly spelled out. What you are describing is a situation where no one knows what they own, or they don’t know what it is worth. In either situation, freezing that market would be the simplest, best start to determine how to collapse the idiotic situtation we’re in.

Let’s look at it from an angle. Years ago, I did defense work on car accident cases for insurance companies. Part of the work was rectifying property damage and medical bill claims as between the insurance companies. The medical and property damage were considered, from the policyholder’s perspective, as first-party insurance. My car gets busted up, my company pays for it. Then I get my car back fixed and my company can deal with the other guy’s company to figure out who owes whom for the damages. The way it went was, a whole pile of cases where those PD and medical issues were present would be accumulated. Then, a representative of Company A and of Company B would sit down in a conference room with a big pile of files in which their two companies were involved, a pot of coffee and a dozen donuts. They’d look at each file in turn, determine whose insured was at fault – and therefore, which company would owe – and then allocate the amount of PD or medicals against that company. At the end of the coffee, donuts and day, they’d have gone through a hundred or two or three accidents, come out with a sheet showing Company A owed B a certain amount, Company B owed A a different amount. They would subtract the smaller amount from the larger and the company owing the bigger amount would wind up owing the difference.

One check, a couple hundred cases resolved.

While I recognize that both the composition of these derivatives and rules for payment are a hell of a lot more complicated than a car accident, and the valuation is considerably more difficult than the bill from an auto body shop, both of those terms of the equation are still defined mathematically for the derivatives. If you can define the problem, you can solve it. These derivatives were – and are – purely a set of definitions and rules, nothing more.

Moreover, the guys adjusting the car accident claims were your generic “I had a hell of a good time at State U, but missed a lot of classes” kind of insurance adjusters. They understood how this was done inside of an hour. These I-Banks have some of the brightest guys from the best schools working for them. I think they can figure out how to do this. They surely could collapse the problem into a few checks.

The disbursement-over-time and currency issues will, surely, impose another level of complexity, but these I-banks (and especially the bankers) have been telling us for years how smart they are, and that’s why they get the big bucks, etc. Time to prove it, I suppose.

What elements make up a charge of money laundering?

You are assuming that the firms involved have the money nobody knows who has the money and who is bluffing.
Some of these firms owe each other cash and are scared of finding out they won’t get paid because then the losses would have to added to their books now.
As to whether freezing the banks is a good idea or not I don’t know but am willing to listen. I don’t trust Bush to handle a bank freeze though.
But Obama after the election thats a different story.

Something smells in this mess, worse than either party is letting on. Chase has had the worst record of all the banks as far as unfair and unseemly fee and business practices in general.
In the last Senate hearing on CC practices a few years ago(?), while all the banks reluctantly admitted to doing some of the things people were complaining about, Chase happily stated they did ‘em all and would continue to do so.
Chase the bad guy, now is allowed to buy out the not so bad guys -o put it in the simplest of terms.

But WaMu is in dire trouble , so everyone says – right? Bought too much bad paper, supposedly.

Bullsh**! Right now I am maxed to the hilt due to illness. My other CC companies, 5 of ‘em including Chase and Citi, have already taken some steps against me or have reduced my credit limit. Not because I haven’t paid – because of !@#$$% credit reporting agencies applied points against me for using my cards -more.

So while other companies have noted my increasing debt and have responded negatively, WAMU has been pounding me with CC offers 2-3 times a week for months now. Now suddenly Chase tais ‘handed’ WaMu too??

Would a ‘failing’ company continue practices supposedly responsible for not only their failure but, the failing of a nation’s financial system?? Of course not.

And why the f*** is Harry Reid and Steny Hoyer so personally into pushing the Bush bailout??

According to reports, the Senate had over 40 Republicans on board yesterday, and over 50 House Republicans ready to roll more than enough to pass it- yesterday.

Hoyer and Reid held it up. Hoyer, the reporter said, wanted about 80 Republicans instead of 50.
McCain helps Hoyer and Reid.
McCain wins the argument.

Insider Dems again find a way to blow another election??

http://www.wisebread.com/how-to-launder-money

Scribe, you can better understand some part of the deriatives that are tied to mortgages but going here:
http://www.frontlinethoughts.com/gateway.asp

And reading Inside a RMBS
Ratings to Collateral to Ratings: A Vicious Cycle

You do have to register but you won’t get spammed or have your email distributed to lists.

The WAMU ‘failure:
http://www.marketwatch.com/new…..ecMostRead

Hoyer is into it because he’s a corporate whore.

Well, if they don’t have the money, then they fail.

Happens all the time in less rareified circumstances. Your corner store can’t pay for the food it sells – it goes out.

Or they negotiate how to pay it back over time. Mr. Soprano will be in shortly to conduct the negotiation.

Heh.

Important question:

Why do some banks get bailed out, and others don’t? Which financial institutions have things the government need hidden that might come out in a public bankruptcy proceeding?

If a bank gets “taken over” then operations and past activities get to remain hidden from the public. Bank of America and JPMorganChase now hold many secrets in their files.

Why do some banks get bailed out, and others don’t?

THAT is a question that has been on my mind a lot lately

In the finanical area among most of the banks, everyone knew that WaMu was MOB run. There are others too. However in the family I was in for more than 26 years involved in the current White House Coup, they personally visited WaMu for a few reasons I won’t comment on. Aside from having the MOB run Banks, the big Banks have been involved in the same White House Coup for decades and are linked to the Shadow Government or better known as The Political Mafia. The current collapse of our economy as explained to me back in the 90’s is part of the plan to eventually totally collapse our economy in preparation for what they called “The Change”. This is when we change over to a Dictatorship and the Detention Camps (Prisons) start up.

Marty Didier
Northbrook, IL

It shows to go that all the fuss about bailout bill is so much window-dressing and probably moot at this point.

Would like to see a statement put out and signed by all the state Bankruptcy Judges Associations about this. Something that could have a similar impact as the AMerican Bar Association letter as well as the NY State Bar Association letter IRT FISA.

If you’re feeling lonely, it may be because they snuck a new Spencer Ackerman post up at Attackerman about fifteen minutes ago. Then Egregious just posted another new post at 11:32.

The JP Morgan purchase of WaMu then should be viewed with skepticism, right? JP Morgan sure seems pretty healthy, to have bought Bear Stearns and WaMu and to have covertly participated in the money-laundering scheme re Lehman…

This info should be front page news, I would think!

Great post lhp, thank you.

ANd Warren Buffet has been bargain hunting too.

It’s like the collapse of the housing bubble. in my town people who can afford to pay cash are gobbling up distressed houses for cheap. they will fix them up, rent them and then flipp them in a couple years when the market improves.