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A Video Reminder Of Wall Street's Criminal Activities

Tyler Durden's picture




 

As if anyone needed a reminder of how corrupt Wall Street is, here are two easy to digest videos providing some additional perspectives on why the entity that controls the Fed, Congress and the Senate, not to mention the teleprompter in chief, is nothing but a bunch of criminals. While nothing new to regular readers, the NYT's Louise Story has taken a look at securities lending, dominated by firms such as State Street, BoNY and JPM, which she describes as follows: "funds lend some of their stocks and bonds to Wall Street, in return for
cash that banks like JPMorgan then invest. If the trades do well, the
bank takes a cut of the profits. If the trades do poorly, the funds
absorb all of the losses." In other words, just one more of two magic coin flips in which the US taxpayer always has a 100% chance of losing. The response by JPM on allegations that it entices clients in a rigged game is memorable: "If customers lose money that they have entrusted with the bank, he said,
that “can lead to a loss of clients and can affect the reputation of
the business.
" Um, what reputation? And in another clip, the Huffington Post Investigative Fund also takes a look at JPMorgan (is the administration's former war with Goldman now shifting over to the house of Dimon? That will teach you to turn down that SecTres post Jamie...) in a documentary which look at what it dubs Wall Street's new sweet spot "as surrogate tax collectors who see profits in tacking on fees and threatening to foreclose when homeowners fall behind on property taxes." Well, at least the whole foreclose bit is off the table for now.

The NYT on the lose/lose of securities lending in a failed Ponzi environment (full video after the jump).

 

And HuffPo on JPM as a surrogate tax collector:

h/t Mike

 

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Mon, 10/18/2010 - 13:01 | 658571 Oligarchs Gone Wild
Oligarchs Gone Wild's picture

Meanwhile, French start leveraging Mogadishu signaling tactics to call in backup.

http://apnews.myway.com/article/20101018/D9IU2ICG0.html

Mon, 10/18/2010 - 13:02 | 658574 Gubbmint Cheese
Gubbmint Cheese's picture

And yet the market continues on..

lol

Mon, 10/18/2010 - 13:06 | 658580 Chemba
Chemba's picture

securities lending is now a "criminal activity"?  really?  that is pretty amusing since securities lending is (a) completely legal, and (b) the necessary ingredient for selling short, which is an activity that ZH must support since it believes that equities are 50% over-valued.

More populist nonsense here for the uninformed and ignorant.

Mon, 10/18/2010 - 13:10 | 658586 Tyler Durden
Tyler Durden's picture

Zero Hedge believes stock markets are broken and no trading is encouraged period, which the uninformed and ignorant would know unless they had a desire to chime on anything and everything. As for completely legal, wasn't Madoff one of those things too?

Mon, 10/18/2010 - 13:39 | 658663 SoBoredWithUSA
SoBoredWithUSA's picture

Don't the pension funds who took these deals deserve some blame? Presumably the structure of the deal (gains are shared, losses belong to investors) and the risks involved (cash collateral shortfall) were disclosed, yes? 

Mon, 10/18/2010 - 15:43 | 659026 Stun Gun
Stun Gun's picture

+10

Mon, 10/18/2010 - 16:48 | 659224 Djirk
Djirk's picture

no trading? but what if you like to gamble and are contrarian to the contrarians, but not necessarily bullish?

Mon, 10/18/2010 - 13:22 | 658614 Tortfeasor
Tortfeasor's picture

p0wned

Mon, 10/18/2010 - 13:23 | 658616 molecool
molecool's picture

What are you smoking?? 'Populist nonsense'? 99.9% of the population has no clue as to what is going on in this country. The few individuals who show up here are trying to shine some light into the rat infested death star that is the financial industry. I'm not religious but even in the bible there are references to usury and blackmail.

Here you have anonymous shadow corporations associated with large banks which are in the business of collecting overdue taxes whilst squeezing a huge penality fee out of impoverished home owners. Why is this collection process even legally being privatized? Who's running this city and approved these penality fees in the first place? Who gave these shadow companies the right to impose penalties on government taxes? HAS EVERYONE FUCKING GONE INSANE? IS THERE ANY SENSE OF COMMON SENSE OR REASON REMAINING IN THIS NATION?

Next time you hear someone praise the 'free market' and 'privatization' remember this poor woman who had to sell her family's house to pay for a few lap dances that a fat rat running this collection agency will enjoy after having destroyed her family's life.

Mon, 10/18/2010 - 16:14 | 659117 the rookie cynic
the rookie cynic's picture

A free market shouldn't include fraud (i.e. stealing from the powerless, like the unfortunate woman here portrayed).

With the big banks in charge, however, we have a wolf in sheep's clothing. They will wrap themselves in free market propaganda (market-making, liquidity, deregulation) while simultaneously committing financial atrocities.

http://therookiecynic.wordpress.com/2010/10/18/the-worlds-fastest-way-to...

Mon, 10/18/2010 - 13:36 | 658654 High Plains Drifter
High Plains Drifter's picture

Gee, chemba, you ever heard of naked short selling or high frequency trading?  Why should anyone trust this type of business concern?  The SEC is owned and is not doing its job. The congress goes along for the ride. What part of all of this do you not understand?

 

Mon, 10/18/2010 - 13:11 | 658593 molecool
molecool's picture

Fucking vultures. I have some ideas about what to do with those empty locations...

Mon, 10/18/2010 - 13:17 | 658604 Calculated_Risk
Calculated_Risk's picture

Those empy locations are also tax write offs, which is basically a subsidy(?)

So, in addition to the bailouts, we're paying the banks to rape and pillage us again..

Mon, 10/18/2010 - 14:39 | 658880 Max Hunter
Max Hunter's picture

You are reading my mind..

Mon, 10/18/2010 - 13:13 | 658595 Catullus
Catullus's picture

Note to huffpo: the banks are "investing" in government bonds. That's why the state (that most holy of holy instituitions) allows this to happen.

Mon, 10/18/2010 - 13:14 | 658596 tahoebumsmith
tahoebumsmith's picture

Nothing but Crony bail bondsman using free money from the FED to force people into lien sales on their homes. So we bail the big banks out and this is how they express their appreciation? What a fricken joke this country has turned into! Probably the same type of loan they just gave California to balance their budget. JP Morgan to the rescue? How many people are going to be forced into the streets on that 10 billion dollar deal Schwarzenegger just cut with JP Morgan to balance the budget? You just can't make this shit up anymore. 

Mon, 10/18/2010 - 13:24 | 658617 williambanzai7
williambanzai7's picture

Tue, 10/19/2010 - 05:25 | 660618 Praetor
Praetor's picture

I'm wondering with your artistic skills wether the squid should become the Kraken?

Mon, 10/18/2010 - 13:23 | 658618 OutLookingIn
OutLookingIn's picture

 

 My Grandad said "when you hide or you hide something, you're most probably up to no good." Bingo!

The TBTFs are just plain rotten to the core. The complete banking/financial system is full of crooks. It's nothing more than a porcine cadaver, with a slight smear of lipstick to cover the stinking, rotting interior.

DO NOT HAVE ANYTHING TO DO WITH THEM. DO NOT GIVE THEM MONEY.

Squeeze their pursed stringed cajones until they die!   

 

Mon, 10/18/2010 - 13:34 | 658651 JR
JR's picture

The Liars and Thieves Are Moving Ahead in This Country’ by Michael Panzner on Octobery 17 2010 | Daily Markets

I’ve lived through more than five decades thinking that people are basically decent but after all that has happened and the many facts that have come to light in recent years, I guess I’m pretty naive.

Indeed, a post by Charles Hugh Smith, author of Survival+: Structuring Prosperity for Yourself and the Nation and publisher of the Of Two Minds blog, entitled “The Rot Within: Our Culture of Financial Fraud and the Anger of the Honest,” features commentary by an accountant with decades of experience in high-level global consulting firms and Fortune 50 U.S. corporations that suggests things have truly reached a low point :

I belong to a large number of finance organizations and sometimes I even assist clients with hiring a finance person. Since I have a lot of experience with finance and accounting, when I am interviewing these people I know when I am getting a BS answer and unlike most BS recruiters I do not steer away from controversy since I am truly looking for the most qualified for my clients and not who is just most marketable to them. After I start drilling down you would be amazed (or maybe you wouldn’t) how many of these CFO’s and Controller types were basically dismissed because they would not cook the books in some manner.

 

Now maybe I have told you that I was asked to resign from one of the nations largest companies (a company that I worked hard for and saved from bankruptcy and due to my actions had created) in the US because I refused to book a revenue entry for over a million dollars which was unsupported and the CFO (I had been the CFO up until a merger) blew up with me when I asked him to send a memo telling me to record it. Funny, a few years and one acquisition later it melted down as one of the biggest accounting frauds in US history.

 

My next gig as the CFO for a NYSE company I basically walked in and found what I would consider a $60 million dollar accounting fraud in one day (once again a mark to market issue draining cash flow and sucking the company into a dark hole). Corrected that accounting problem and the company began to prosper but since I thought the board and upper management was so corrupt I left (Chairman of the Audit Committee was found guilty at another large company for back dating options).

 

The next public company where not only was I the CFO but prior to that a board member, I was basically asked to resign for BS reasons a couple of weeks later after I pointed out what the board was asking me to do was basically wire fraud and of course they backed off quickly and said they would get a legal opinion from our law firm (one of the top 10 in the US) to cover me. In the same meeting our outside legal counsel said he had a problem giving such an opinion and I pointed out that a legal opinion did not keep me from being both civil and criminally liable. It should be noted that this was another company that 2 years before I came in and took the reins as CFO/COO and pulled the company out of black hole of looming bankruptcy and made it profitable in the first time in its history since it went public and then refinanced the company. In summary a year after I left the company had burned through the money I raised and the Board sold the company for nothing.

 

There is lots of bitterness out there with the straight shooting finance people. Many of them find themselves unemployable. This stretches from banks, Private Equity, Investment Banking, through the large accounting firms (the average partner in the large accounting firms any more is a pathological liar) to senior finance people in organizations. Right before Enron and MCI blew-up, I actually had a BS HR person tell me I was not flexible enough. I wanted to tell this idiot that I knew where flexibility got me and it was an orange jumpsuit. Bankers and Companies only hire the weakest and most pliable senior finance executives they can find.

 

One other short story. A while back I was at a networking meeting with a large group of CFO and ex-CFO’s. I asked this group how many thought that most CEO’s wanted a weak CFO working for them. Approximately 70% of the attendees raised their hand! You have to remember that the only person who had steady access to the Board is the CFO.

 

The point, the middle class is becoming torn and frayed and there is real anger out there. The common belief is that only the liars and thieves are moving ahead in this country.

(Michael J. Panzner is a 25-year veteran of the global stock, bond, and currency markets who has worked in New York and London for such leading companies as HSBC, Soros Funds, ABN Amro, Dresdner Bank, and J.P. Morgan Chase.  He is author of  many books, including When Giants Fall: An Economic Roadmap for the End of the American Era…)

http://www.dailymarkets.com/economy/2010/10/16/the-liars-and-thieves-are-moving-ahead-in-this-country/

http://www.oftwominds.com/blogoct10/fraud-anger10-10.html

Here is the link to Nathan Martin’s incredible introductory commentary yesterday to Panzner’s article on Nathan’s Economic Edge:

http://economicedge.blogspot.com/

Mon, 10/18/2010 - 13:39 | 658664 nutkicker
nutkicker's picture

Remind anyone else of the movie, Boilerroom?

Mon, 10/18/2010 - 18:23 | 659599 Hansel
Hansel's picture

The New York Times has an agenda with this video, and the democrats have been talking about "guaranteed retirement accounts".  This video is an attempt to incite.

Mon, 10/18/2010 - 13:49 | 658670 pamriallc
pamriallc's picture

This "stock loan pool" is akin to what Goldman did with Paulson wherreby Goldman constructed MBS with Paulson "helping" to select the securities which went into the MBS pool.

Paulson then in turn borrowed those securities and shorted the pool since it was made up of extremely risky securities.  He made a ton of money noly because the MBS failed so quickly.

What is being alleged in this example is that the loan pool was constructed with securities that were of "extraordinary short interest" from those institutions who would otherwise wish to borrow the securities with intention to short-sell them to make money when they declined in vaslue, and that a disproportionate percentage of the pool was designed to fail.

A JP Morgan created stock pool with customer securities would actually (otherwise) seem like a very good idea.  They can typically lend securities at a profit anyway, so they were giving customers a piece of that profit for the right to borrow some additional securities the customer was going to hold-as-long in the furst place.   I would sign up for that.  Yes I would.

Banks have been known to collect 8% annually for short-lending when a stock is in high demand.  In some cases (General Motors) I remember the Bank (Citibank, actually) was offering shares for loan at the astonishing rate of 100% interest annualized (they figured GM would be de-listed in a matter of days).

Short-pools are typically not a bad idea.  In fact, if they are construsted with customer securities that the customer would already be holding, then it's probably a non-issue, unless customers are reading research reports on the same securities generated by the bank who wishes to lock them up for borrowing, for example.  When however, a pool is constructed purely of securities which are of insatiable demand on the short side for immediate lending---  for the purposes of betting on absolute failure, then a higher standard of business conduct is in order, should the pool be marketed as a "return plus fund" or something like that.

Digging into the pool, if some comes up with KO, WMT, PEP, XOM, CVX and a bunch of boring drug stocks and food companies and big-cap tech companies, no one should be complaining if the fund also held an S&P-500 relative position in banks.  If however the fund was marketed heavily and contained pure refuse, we will soon have a reenactment of Goldman MBS in the form of "Stock Loan Market Return Plus-Fund" with another Senate committee.

Shawn A. Mesaros, Pamria, LLC

Mon, 10/18/2010 - 13:58 | 658720 HonestJohn
HonestJohn's picture

"Well, at least the whole foreclose bit is off the table for now."...NOT

Though several mortgage lenders, including JPMorgan, recently suspended foreclosures amid concerns that some may have been done improperly, the slowdown is not expected to apply to foreclosures stemming from unpaid taxes.

Mon, 10/18/2010 - 14:03 | 658727 Mercury
Mercury's picture

As usual, government is failing and behaving thuggishly and The Huff 'n Puff is blaming the cockroaches in the filthy house.  City Hall is the real crook here.  JPM is just providing an apparently legal (but odious) and in-demand service involving money.

City Hall is supposed to be the servant of the residents and taxpayers of that city/town but we all know their primary concern is to keep the money rolling in for their bloated payrolls, patronage jobs and gold-plated benefits for life. 

Instead of going by the book when a property owner falls behind on their taxes they take some money up front in exchange for the right of JPM to twist arms and collect on the debt.  Because JPM is undoubtedly better at pricing this stuff than City Hall, remaining taxpayers get shafted by this transaction.  Plus, the in-arrears property owner gets treated like an animal - all because City Hall is lazy and stupid and thinks taxpayers exist for them instead of the other way around.  They would rather outsource their dirty work to thugs and incur needless expenses rather than actually work.

Mon, 10/18/2010 - 14:13 | 658780 midtowng
midtowng's picture

It's amazing how you can find fault in City Hall, HuffPo, and just about everyone else except for the people who are actually charging outrageous fees and taking people's homes.

Mon, 10/18/2010 - 14:44 | 658896 Mercury
Mercury's picture

The point is City Hall shouldn't be allowed to further beggar their taxpayers (by getting ripped off in asset sales of tax liens and claims on property) or mistreat, by proxy,  the residents (and until recently, taxpayers) whose interests they are supposed to be serving.

Sure JPM has involved themselves in a dirty business (again) but let's examine the uncontested premise that anything a municipal government can do to get money in the door right now is totally cool.  No fat to trim? - Really?  Get that under control and that particular dirty business won't be available for Wall St. to pursue.

Mon, 10/18/2010 - 14:32 | 658856 sgt_doom
sgt_doom's picture

Hate to burst your bubble, highly liquidified Mercury dood, but a quick check on the background of ALL the management types in the US Treasury indicates the VAST MAJORITY are Goldman Sachs' alumnus, with a few private equity types (Blackstone Group) thrown in.

That covers all departments within Treasury, and we haven't even touched on the rest of the fed agencies.

Mon, 10/18/2010 - 14:50 | 658910 Mercury
Mercury's picture

...and that somehow proves that most municipal governments haven't devolved into self-aggrandizing, rent-seeking authorities who's own self-perpetuating interests always come before those of the public?

Mon, 10/18/2010 - 14:10 | 658765 midtowng
midtowng's picture

Yet somehow this is all the fault of working people. At least that is what I've read in ZH comments before today.

Mon, 10/18/2010 - 14:20 | 658811 Downtoolong
Downtoolong's picture

Maybe the scam is still ultimately on the bankers. The devil has them falsely believing they only lent him their soul.

Mon, 10/18/2010 - 14:30 | 658848 tnfcfa
tnfcfa's picture

Here's a way to run JPM out of the business of profiting from tax liens - pay your taxes (and mortage) deadbeats.....

Mon, 10/18/2010 - 15:05 | 658949 NumberNone
NumberNone's picture

See if you can guess who the deadbeat is???

"We asked for the $xxx....because now we have a case where if __________ don't get approved for this money, they may not be able to stay in ______________(fill in blank with home, car, or business)

Who is this loser that needs help or fails???  

******************************************

If you guessed banks, you are correct.  

***************************

"We asked for the $700 billion, and we asked for capital purchases of bank shares. Now we have a case where if banks don't get approved for this money, they may not be able to stay in business."

Read more: http://www.time.com/time/business/article/0,8599,1858844,00.html#ixzz12jqBvwaO

Mon, 10/18/2010 - 15:30 | 658976 GoinFawr
GoinFawr's picture

That first vid is a nice explanation as to why the French are striking...

To all those jabronis acting as unwitting elitist mouthpieces who think that your real enemies are pensioners on strict grade c dog food diets, raped paraplegic single mothers on welfare, and the (truly) mentally/physically handicapped:

Are we learning yet?

Regards

Mon, 10/18/2010 - 15:57 | 659056 Stun Gun
Stun Gun's picture

Theft by other means.

Pretty cagey of the Asshats to hide behind shell LLCs. It keeps the little people from tying them down and liberally applying one of these their rear exit orifice.

Mon, 10/18/2010 - 17:31 | 659436 radsz
radsz's picture

Hi,

Nice movies.

The whole system is screwed up for one simple reason. The government believes

that it can take care of the people by forcibly taking away money from people to

put in the hands of people who do not care enough what happens to that money.

After the system collapses because the losses to socialize will be too great

(e.g. Island) then people will learn the hard way that they can only trust their

own judgement and if they delegate the financial duties to others they take all

the counterparty risk. Only this way we have honest financial intermediaries as

the bad ones will be starved by the market.

best,

Radek

 

Mon, 10/18/2010 - 18:26 | 659605 pazmaker
pazmaker's picture

I only watched the second video...I am new here on Zerohedge...but I don't know if my blood pressure can take this!!  The second video has made me so so angry.  I hope those greedy vultures will burn in hell!

Mon, 10/18/2010 - 19:02 | 659721 blindman
blindman's picture

i think you got the gist on the first shot.  now enjoy

your life. 

Mon, 10/18/2010 - 19:54 | 659850 TuesdayBen
TuesdayBen's picture

Hmm.  Business has of late dumped Obama like the warm loose load that he is.  The NYT reflexively jumps to the defense of it's Boy O, suddenly uncovering a whiff of corruption on Wall Street.  Right here in Manhattan!   All these years, and who knew!!  Next thing you know, they'll suddenly hear Markopolos, and discover that B. Madoff is running a Ponzi.

Like their Boy O, the NYT is a warm loose load.

Mon, 10/18/2010 - 22:55 | 660246 cjbosk
cjbosk's picture

Tyler, are you serious:

by Tyler Durden
on Mon, 10/18/2010 - 12:10
#658586

 

"Zero Hedge believes stock markets are broken and no trading is encouraged period, which the uninformed and ignorant would know unless they had a desire to chime on anything and everything. As for completely legal, wasn't Madoff one of those things too?"

 

So I'm ignorant because you think the market is broken and no trading is encouraged?!  Or maybe it's perhaps because you can't trade these markets because you're getting corn holed by the SPX rip...

 

And as for Madoff, there wasn't a hedge, and there wasn't any fund so all he ran and had was a shell game.  Are you drawing a parallel between them?  Sounds like it.

 

I agree with Chemba, just because we're capitalists doesn't make us criminals/bad people.  I've said before on this site, for every person winning, there's someone else loosing....I guess you're on the wrong side of the trade.

Meanwhile, I'll enjoy being on the winning side.  Don't worry, I can shor too, just not now....I'll wait until you're long!

 

Tue, 10/19/2010 - 11:56 | 661409 GoinFawr
GoinFawr's picture

"I've said before on this site, for every person winning, there's someone else loosing....I guess you're on the wrong side of the trade."

Ah, the zero sum game, "I'm all right so f all the rest" type capitalist.  You might have the law backing you, but that doesn't make you any less immoral. And those attitudes are most certainly part of the problem.

 

Tue, 10/19/2010 - 09:30 | 660937 cycjyf
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