Anton Valukas

GM CEO Mary Barra "My Bad, All Fixed Now Though" Congressional Hearing - Live Feed

Following the release of the  "deeply troubling" 315-page "Valukas Report" and the firing of 'all' those responsible for multiple deaths from GM's 'Kevorkianesque' cars, CEO Mary Barra is back on the Hill to face the music once more from The Subcommittee on Oversight and Investigations. Having explained in her previous testimony that she could answer their questions as she did not have the information, Subcommittee Chairman Tim Murphy (R-PA) noted, now "we will have the chance to get those answers and compare the company's findings to our own." Of course, one wonders if the politicians will ask about how GM silenced a whistleblower.

Frontrunning: June 12

  • Iraqi Drama Catches U.S. Off Guard (WSJ)
  • Al-Qaeda Offshoot on NATO Border Threatens Turkish Rally (BBG)
  • It's just the snow, people: U.S. Economic Recovery Looks Distant as Growth Lingers (NYT)
  • Freed Taliban leaders may remain in Qatar beyond one-year travel ban (Reuters)
  • BNP Paribas Executive Chodron de Courcel to Quit Post (WSJ)
  • Greenmail is back (WSJ)
  • Facebook Places Multiple Bets to Win Messenger Wars (BBG)
  • ECB easing to benefit Ukraine, Russia corporate bonds (Reuters)
  • Rome Shows the World How Not to Run Bike-Sharing Program (BBG)

GM Fires 15, Disciplines 5 After "Deeply Troubling" Report

Former U.S. Attorney Anton Valukas report on GM's SNAFU is proclaimed as "extremely thorough, brutally tough, and deeply troubling," by CEO Mary Barra; but finds no collusion or conspiracy to boost bottom line at the expense of customers' lives. However, the report did find "a pattern of incompetence" and actions must be taken...


Of course, none of this matters as easy credit is fueling the sale of more Kevorkianesque GM cars than ever before...

MF Global Probe Begins: Firm's Offices "Secured"

The MF Global probe begins. Here are the broad scope details from Bloomberg

  • Trustee liquidating MF Global brokerage has started a probe into the company’s failure after getting a judge’s go-ahead. To protect books and records, forensic accountants are “securing” offices in NYC, Chicago, trustee James Giddens said in a statement today.
  • "Significant’’ numbers of brokerage accounts being transferred
  • Individual accounts will probably be transferred next week
  • Giddens, team will work weekend on bulk transfers

As readers will recall, it was only 2 years after the Lehman filing, did Anton Valukas discover such critical mainstays of modern banking fraud as Repo 105. Alas, we do not hold much hope here, at least in the beginning, and certainly not before the FBI is involved.

Another Quarter, Another Blatant Window Dressing By The Primary Dealer Banks To Make Their Balance Sheets Seem Strong

When back in 2010, Lehman examiner Anton Valukas exposed the bankrupt bank's Repo 105 practices (which subsequently we learned were also partaken into by most other banks, although the trail ends there and nobody was prosecuted for it, let alone went to jail -after all, everyone was doing it, and everyone knew about it), many were shocked and appalled that such a blatant window dressing practice was allowed to continue quarter after quarter. Which is why we suppose nobody will be surprised to learn that glaringly "in your face" window dressing continues to this very day quarter in and quarter out by the same Primary Dealers who already leech billions in free Fed (i.e., taxpayer) money courtesy of a collusive BWIC/OWIC spread-to-market in the Fed's daily POMOs. The quote-unquote shocking chart below is one we have demonstrated on numerous occasions in the past: it shows total primary dealer assets on a weekly basis as reported publicly by the New York Fed. We have made it clear time and again, that this chart demonstrates nothing short of the end of quarter window dressing, when PDs convert their asset holdings into cash to make their Tier 1 Capital much more robust than it truly is. After all, none other than JPM and Citi were praising just how prepared for Basel III they are with their "sterling" capitalization ratios... which were only sterling courtesy of precisely the highlighted window dressing which occurs each and every quarter. We expect nothing less from Bank of America and Morgan Stanley when they report their own numbers in the coming days. We also expect the regulators to do absolutely nothing to prevent this blatant abuse of fiduciary duty which has no other purpose than to hide the true sad state of America's banking system.

Letting No Disaster Go To Waste, SEC Prepares To Let Lehman Executives Walk For Repo 105 Fraud

And while the general public frets over the latest geopolitical disasters, the SEC proves Rahm Emanuel correct once again, and letting no disaster go to waste, man-made or natural, the world's most incompetent (but massively underpaid, or so they claim) regulator is preparing to let Dick Fuld completely off the hook for last spring's stunning Repo 105 report by Anton Valukas, whose findings even the bankruptcy expert said were probably cause for civil lawsuits. The WSJ reports: "In recent months, Securities and Exchange Commission officials have grown increasingly doubtful they can prove that Lehman violated U.S. laws by using an accounting maneuver to move as much as $50 billion in assets off its balance sheet, which made it appear that the securities firm had reduced its debt levels....After zeroing in last summer on the battered real-estate portfolio and an accounting move known as Repo 105, SEC officials have grown more worried they could lose a court battle if they bring civil charges that allege Lehman investors were duped by company executives. The key stumbling block: The accounting move, while controversial, isn't necessarily illegal." Oh no, illegal it is. The problem is that should the SEC actually pursue it and win, that act would open up the floodgates for hundreds of lawsuits against everyone from Bank of America and Citi, which have also disclosed they used comparable tactics to misrepresent the true status of their books, to shady accounts like Ernst & Young, all the way to FASB at the very top of the corruption pyramid. And with hundreds of millions if not billions in legal fees about to be paid out if the fraudclosure back door settlement fails, the SEC simply can not allow the pursuit of justice to threaten the viability of America's only national interest: that of its criminal banking syndicate.

The Fuld Guy: Lehman CEO Finally Sued Over Repo 105 Scam

It always seemed to us that the whole Lehman Repo 105 fiasco seemed to be too much of a slam dunk for nobody to get sued over it. Yet here we were, almost a year after the Valukas report, and nobody was even pretend to be fighting off justice, or even a bunch of brain impaired porn addicts. Not so any longer. Bloomberg reports that per an unsealed filing in the Lehman bankruptcy docket, the Lehman 401(k) retirement plan, which had just under $230 million invested in Lehman stock, has sued Dick Fuld "and other former executives of the defunct firm for failing to disclose Repo 105, a financing method allegedly used to conceal billions of dollars of debt." And all this is occurring as the SEC is scrambling to find new and improved ways to pay off its multi-million midget porn bill, up to an including firing every staffer with an IQ over 50...All 4 of them.

SEC To Propose Rule Making End Of Quarter Window Dressing For Banks Just That Little More Difficult

Developing news that the SEC is proposing a rule that will make EOQ window dressing, along the lines of the Repo 105 transactions that made so many headlines yet resulted in absolutely no criminal convictions, more difficult. We will bring you more some time in 2394 when this proposal actually becomes enforced, but in the meantime here is our chart that shows just how much of a pervasive phenomenon this is among the Primary Dealer community. Readers can find out more about this here: End Of Quarter Primary Dealer Asset Window Dressing Games Continue. We will update this chart in the first week of October when the Q3 window dreassing game is complete. We expect another 30 billion up and down swing as banks "fix" their capitalization ratios just in time for their 10-Q filings.

Bank Of America And Citi Found To Have Used Fraudulent Repo 105-Like Transactions "Due To Error"

The WSJ reports that, as broadly expected, Lehman is not alone in its illegal Repo 105 window-dressing scam: it turns out that Citigroup and Bank Of America also routinely used such shady practices for years. As Michael Rapoport reports, "Citigroup said the misclassified transactions-of $5.7 billion as of the end of 2009, and as much as $9.2 billion over the past three years-involved "a very limited number of our business units" that "used this type of transaction in very small amounts." So its all good - fraud may have been performed but it was just nickel and diming: after all it's not like Citigroup was robbing cemeteries or anything (and since guilt was neither admitted nor denied in that specific case, one can say Citi was never sleeping because it was robbing graveyards but only due to honest mistake). Sure enough, this disclosure come only after the SEC demanded clarification on Repo-105 comparable transactions at all major firms. And with such daily distractions as ten trillions point swings in the market, and crude oil filling up the world ocean, who really cares anymore that all US banks commit fraud on a daily basis. The punchline: "Bank of America and Citigroup say their misclassifications were due to errors--not an attempt to make themselves look less risky." Well, that surely justifies everything.

Lehman Sues JPMorgan, Claims Dimon Forced Firm Into Bankruptcy; Opens Avenue For AIG Lawsuit Against Goldman

In October of last year we wrote an extended piece discussing the conflict between the bankrupt Lehman Brothers estate (i.e., its unsecured creditors) and Barclays, in which JPMorgan played a prominent part, as it was the critical tri-party repo clearing bank on all of Lehman's collateral that would subsequently go to Barclays. As we summarized, extortion attempts back then by Barclays only had the adverse effect of making Jamie Dimon very, very angry: "Barclays' attempt to nickel and dime JPM (and the US taxpayers) so infuriated Jamie Dimon that he penned an angry letter to John Varley,
Barclays Group CEO (which CC:ed Barclays' president Bob Diamond),
threatening with litigation in case Barclays is intent on sticking JPM
with Lehman collateral that it thought was without value and not worth
assuming in a time when every single day stock prices were crashing
further lower
." As we expected in October, the resolution would most likely involve litigation, as by dint of its collateral clearing position, JPM had unprecedented knowledge about Lehman's affairs: a special status that would likely be abused in a court of law. Sure enough, here is the lawsuit: the estate of Lehman Brothers, desperate to pick another several bps in recovery on their Lehman General Unsecured Claims, has sued JPMorgan, claiming Jamie Dimon's bank pushed Lehman into bankruptcy by forcing it to turn over $8.6 billion in collateral. As Lehman was completely insolvent long before JPM demanded any incremental collateral comfort, claiming that JPM was the catalyst for Lehman's bankruptcy is absolutely the same as saying that Goldman forced AIG's bankruptcy by increasing its collateral demands. While both arguments are ludicrous, should the JPM case proceed to court, it is tantamount that AIG immediately seek legal action against Goldman Sachs on identical grounds.

Prepared Remarks By Bernanke, Fuld And Schapiro Contradict Those Of Anton Valukas In Tomorrow's Lehman Hearing

In a nutshell, Bernanke says he was not supervising Lehman, Fuld was not aware of Repo 105, and the SEC had never heard of such a concept.The only person who is not lying, Anton Valukas says that he "found Lehman was significantly and persistently in excess of its own risk limits" and confirms that the SEC is nothing but a pathetic liar lead by incompetent idiots: "we found that the SEC was aware of these excesses and simply acquiesced" and "we believe it is clear that the SEC wasLehman's primary regulator." And just in case the FRBNY thinks it can avoid claims of potentially criminal negligence "
Valukas concludes: "there were "serious lapses" in SEC, federal reserve bank of New York working together to avert Lehman's failure." In other the CEO, the Regulators and the deranged money printer all wash their hands of the fraud that very well may have led to the biggest and most dramatic bankruptcy in history, despite that the independent third party arbiter finds them all guilty of gross incompetence and possibly collusion.

Lehman Subpoenas Goldman Sachs, SAC, Greenlight, And Citadel In Probe

April 19 (Bloomberg) -- Lehman Brothers Holdings Inc., which has been investigating whether any companies may have contributed to its bankruptcy, issued at least five subpoenas to investment firms and hedge funds including Goldman Sachs Group Inc., SAC Capital Advisors LP, Greenlight Capital Inc. and Citadel Investment Group LLC, according to court filings. Bankrupt Lehman is conducting its own probes separately from the 2,200-page report by examiner Anton Valukas that was published on March 11.

Investigation Begins Into E&Y's Role In Connection With Lehman's Repo 105 Scam

Fox Business reports that the investigation around Lehman is intensifying. Surely the SEC, now generically equated with objects that float around in sewers in formal conversation, has realized it has to do something, anything, to find at least one scapegoat for the financial collapse. Which is why we read with little surprise Gasparino's report that "thee SEC has ramped up its inquiry into Lehman’s fall, particularly after court-appointed bankruptcy examiner Anton Valukas issued a lengthy report stating that Lehman’s top executives were “grossly negligent” in possibly hiding the risky nature of the firm’s finances during its final day." What we find much more interesting is that "yet another investigative agency, the Public Accounting Oversight Board
-- created under the 1992 Sarbanes-Oxley law to investigate and
discipline public accounting firms -- has launched an inquiry into the
role of Lehman’s auditor, Ernst & Young,
following the examiner’s
report, which accused the big accounting firm of “professional
malpractice,” for its work in approving accountings techniques Lehman
used during its dying days in the summer of 2008." In the absence of any Wall Street villains, which it is now all too clear have endless diplomatic immunity from prosecution by the corrupt regulators, will the auditor, together with Dick Fuld, be made into the sacrificial lambs? Or will we continue the farce that anything even remotely related to capital markets integrity and reporting is real and valid? Judging by the nearly 60 days of no S&P downticks, the market has answered that question for us.