Oligarchy is the Problem. We need a solution.

Every quarterly earnings statement and public comment from banks in the post-bubble period contains some discussion of a reserve fund for mortgage losses and liabilities. They always attach a dollar amount to it. If BofA knew about an AIG lawsuit seven months ago that would reshape the extent of their mortgage liabilities, and chose not to reveal that information, that’s a serious error. Is it criminal? Hard to say. The SEC has requested more disclosure on these matters. But if I were a BofA shareholder, I’d be mighty unhappy today.

Well, here we go again. As usual, the past couple of weeks there have been a few articles on how the economy really isn’t THAT bad. In fact, that was a large part of the title of this article from McClatchy while USA Today offered up this from a Maria Bartiromo interview with the head of AIG, Robert Benosche (with a McCainesque “There’s a core of strength to the economy”). However once again, the reality on the ground rears up to refute the cheerleaders. Today’s (Thursday, August 18) Initial Unemployment Claims report for last week is out and the numbers are back over the dreaded 400k line once again (via Reuters):

I guess news outlets are still pushing the line that the S&P debt downgrade is what has driven the stock market volatility over the past week or so. They have to neglect that the market was falling before the downgrade to come up with this rationale, but no matter, I guess.

Bank of America was just getting over having the New York Attorney General step in on their settlement with Countrywide investors over mortgage bonds, when Delaware’s AG decided to join in.

There are a plethora of books written, and yet to be written, about what lead up to the 2008 financial crisis, but even so, All the Devils are Here stands out. Co-authors, Bethany McLean (co-author of the bestselling, documentary-inspiring book on the Enron scandal, The Smartest Guys in the Room) and Joe Nocera (Award winning New York Times business columnist), expertly weave a narrative that captures not just the elements, but the characters of the crisis; the human flaws, choices and repercussions perpetrated by a small, dispersed collection of very dangerous people.

Watching the MOTUs as their financial services universe shakes and shudders around them reminds me of the five stages of death and dying. There’s lots of denial and anger coming out of the MOTUs, and hints of bargaining, but little sign of depression and acceptance. But it’ll come . . .

I can’t quite determine what the Times’s business columnist Andrew Ross Sorkin is trying to tell us about the Bush/NY Fed 2008 backdoor bank bailout via A.I.G. But the evidence he cites seems to support the “backdoor” theory more than ever.

If Joseph Cassano, the head of AIG’s disastrous Financial Products unit, has granted an interview since the insurance giant melted down, I certainly don’t remember it. That’s what makes today’s Financial Crisis Inquiry Commission hearing so interesting. The theme is the derivatives market, and there will be a particular emphasis on AIG and Goldman Sachs, and how their trading played a role in the financial meltdown.

Remember the outrage following the decision to cover 100 percent of the credit default swaps claims against AIG? Well, now it appears that payout may have been partly for the same types of Goldman Sachs securities over which Goldman is now being sued by the Securities and Exchange Commission.