Morgan Stanley Banker Who Stabbed Cab Driver Fired by Firm

By: Saturday December 22, 2012 11:03 am

I was racking my brain for one final story that sums up this era in politics, the state of our world circa 2012, and I have to give it to this one from a few days ago.

William Bryan Jennings, whose parents obviously hoped for a Progressive populist reformer as a child, grew up to work at Morgan Stanley, and acquire all the sense of entitlement and douchebaggery that goes along with such an occupation (I believe they give that to you at the same time as your parking space). One year ago to the day, on December 21, 2011, Jennings left a Christmas party in New York City, and his town car didn’t show up (#richwhitepeopleproblems). So he hailed a cab to take him to his home in Darien, Connecticut. When he got home, Jennings decided to treat the cab ride like a buyout deal, and trying to negotiate down for a lower fare. This is an executive at Morgan Stanley who didn’t want to pay full fare to get home. The cabbie asked for $204 (Jennings said it was $294). Jennings offered $50 (good negotiating ploy; start low!). At this point I should mention that Jennings makes around $3 million a year.

What the Housing Market Actually Looks Like

By: Friday December 21, 2012 5:49 am

This week brought more good statistical news for the housing market. Existing home sales rose at a decent clip in November, nearing post-bubble highs not seen since the artificial spike from the homebuyer’s tax credit (I’ve noted that the end of the Mortgage Forgiveness Debt Relief Act could be giving the same spike). Inventory fell again, which presages higher prices. And while housing starts fell in November, the more stable indicator of homebuilding permits rose above expectations. There’s a huge hole to dig out from – even with its 25% rise, housing starts in 2012 would be the 4th-lowest in history – but the digging is occurring.

SEC Report on Credit Ratings Highlights Conflict of Interest Inherent in Issuer-Pays Model

By: Wednesday December 19, 2012 1:38 pm

The Securities and Exchange Commission released a report on the method for how credit rating agencies get their business, something mandated by the Dodd-Frank financial reform law. And just as expected, it showed a serious conflict of interest in the current business model, where rating agencies are paid by the issuer of securities, and have to compete for their business, adding all sorts of distortions into the kinds of ratings they give. A better model, envisioned by Dodd-Frank at first but then put into this study, would allow an oversight board to dole out to qualified ratings agencies the securities that would get rated, removing the conflict of interest entirely.

Mortgage Backed Securities Lawsuits Still Proliferate

By: Tuesday December 18, 2012 2:01 pm

While we wait for more settlements in the Libor case, banks continue to face exposure for their fraudulent mortgage conduct dating back to the housing bubble. Two more major lawsuits emerged yesterday.

Yes, We’re Still in the Middle of a Foreclosure Crisis

By: Friday December 14, 2012 5:55 am

The Office of Mortgage Settlement Oversight released some interesting data on the first-lien and second-lien portfolios of the five services sanctioned in the foreclosure fraud settlement. Calculated Risk reproduces the data here. Despite the heavy investment in a narrative of the foreclosure crisis being over and the housing recovery underway, these loan portfolios show substantial weakness at the big banks, particularly Bank of America and JPMorgan Chase. Even at Wells Fargo, the bank with the best data here, nearly 1 in 11 first-lien mortgages in their portfolio are in some stage of delinquency.

That number widens with BofA, which only has 84.4% of its loans current, and 4.81% in foreclosure, well above traditional averages. JPMorgan Chase’s foreclosure rate is 5.06%.

These just aren’t good numbers, and they suggest continuing softness in the sector. Worse, home seizures have begun to rise for the first time in two years.

The HSBC Money Laundering Case as a Perfect Symbol of Too Big to Fail

By: Thursday December 13, 2012 6:41 am

Maybe I was too blasé about the federal government letting HSBC off the hook; certainly the story has effectively shown how Too Big to Fail continues to be the watchword of the financial regulatory community. My pet theory here is actually that, because practically every mega-bank engaged in this same type of money laundering for drug cartels and countries under sanction – all of the big four in the US, including Wells Fargo (who admitted it in court), Bank of America, Citi and JPMorgan Chase – if they threw the book at HSBC, they would have to do the same to everyone else. So we’ve migrated from Too Big to Fail to Too Caught Up In The Same Criminality to Fail.

Elizabeth Warren Formally Gets Banking Committee Slot

By: Wednesday December 12, 2012 2:01 pm

Senator-elect Elizabeth Warren officially received her committee assignments today, and she will sit on the Senate Banking Committee, with key oversight over Wall Street and the financial system. Progressives agitated for weeks for Warren to get this spot, and in the end it wasn’t that difficult a lift. I’m looking forward to future hearings from the committee, especially when Wall Street’s finest makes the trip to testify.

First Libor Arrests Net Three Former Low-Level Traders

By: Wednesday December 12, 2012 12:05 pm

Maybe at some point, banks will face prosecution or at least fines in the Libor case. Everyone expects UBS, the Royal Bank of Scotland and several others to face some sort of sanction. But we’ve been hearing about imminent charges for months now, with nothing to show for it. Banks have individually terminated people they claim are responsible for the rate-rigging, but that internal discipline has been the only kind on offer.

NYT Reports on Investor Purchases of Foreclosed Homes for Rental Conversion

By: Tuesday December 11, 2012 1:50 pm

The same people who were present at the creation of the original bubble are driving the boat in this second incarnation.

Banks Rake In Profits – Largely From Government Supports

By: Wednesday December 5, 2012 6:20 pm

It goes without saying that you should not weep for the banking industry. In the years following a Great Recession they caused, they still manage to churn out record profits. This is the 13th straight quarterly rise in profits for financial institutions.

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