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Goldman's Dan "Shitty Deal" Sparks Sued For Selling “Junk,” “Dogs,” “Big old lemons,” and “Monstrosities”

Tyler Durden's picture




 

While the FHFA has targeted lawsuits at a whole bunch of employees of the 17 banks previously disclosed, nothing gives us as much amusement and frankly pleasure, as the fact that Goldman's definition of smugness - one Dan Sparks of "shitty deal" fame, is among the accused. Perhaps, even in uber crony communist America, what goes around eventually comes around. Now, if only someone can figure out how Warren Buffett's Wells Fargo, with its several hundred billion worth of Wachovia toxic biohazard, is not on the list of defendants...

As a reminder:

And some blurbs on Dan Sparks from the filing:

On March 9, 2007, Goldman’s Daniel Sparks wrote: “Our current largest needs are to execute and sell our new issues—CDO’s and RMBS—and to sell our other cash trading positions .... I can’t overstate the importance to the business of selling these positions and new issues.” A leading structured finance expert reportedly called Goldman’s practice “the most cynical use of credit information that I have ever seen,” and compared it to “buying fire insurance on someone else’s house and then committing arson.” Senate PSI Hearing Ex. 4/27- 76. As the Senate PSI found, Goldman “sold RMBS securities to customers at the same time it was shorting the securities and essentially betting that they would lose value.” Senate PSI Report at 513.

 

That Goldman knew of the originators’ abandonment of applicable underwriting guidelines and of the true nature of the mortgage loans it was securitizing is further evidenced by how Goldman handled its own investments. Goldman internally characterized its offerings as “junk,” “dogs,” “big old lemons,” and “monstrosities.” FCIC Report at 235–36. Nevertheless, it congratulated itself for successfully offloading such “junk” onto others. As the public learned in the FCIC’s Report, by January 2007, “Daniel Sparks, the head of Goldman’s mortgage department, extolled Goldman’s success in reducing its subprime inventory, writing that the team had ‘structured like mad and traveled the world, and worked their tails off to make some lemonade from some big old lemons.” Id. at 236.

 

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Fri, 09/02/2011 - 17:56 | 1628207 iDealMeat
iDealMeat's picture

Now, if only someone can figure out how Warren Buffett's Wells Fargo, with its several hundred billion worth of of Wachovia toxic biohazard, is not on the list of defendants...

Just needed to be repeated...

Fri, 09/02/2011 - 18:01 | 1628230 spiral galaxy
spiral galaxy's picture

Ok.........here goes........."Now, if only someone can figure out how Warren Buffett's Wells Fargo, with its several hundred billion worth of of Wachovia toxic biohazard, is not on the list of defendants..."

:-)

Actually, can't be repeated enough.  Perhaps the Washington Post or NYT will have something on this?  ......next to the DOJ 'Fast & Furious" coverup article?

Fri, 09/02/2011 - 18:05 | 1628242 ghostfaceinvestah
ghostfaceinvestah's picture

What about IndyMac?

Oh, yeah, the FDIC owns those liabilities...

Fri, 09/02/2011 - 19:07 | 1628403 Yes_Questions
Yes_Questions's picture

 

 

Liabilities is such a kind word.

Fri, 09/02/2011 - 23:11 | 1628849 spiral_eyes
spiral_eyes's picture

I suspect that bigger geopolitical "events" may emerge that prevent any of these cases from being properly prosecuted...

http://azizonomics.com/2011/08/14/pentagon-plans-for-war-with-china/ 

Sat, 09/03/2011 - 10:17 | 1629373 Kayman
Kayman's picture

That plan is only an extension of the McArthur plan, beginning in 1950.  It ends with nukes.

Fri, 09/02/2011 - 18:48 | 1628360 Atlas_shrugging
Atlas_shrugging's picture

I've been wondering for weeks what Obama had over Buffett to get him to act like a hand-puppet and wax on about waxing off rich people...now we know.

Fri, 09/02/2011 - 20:03 | 1628541 crazyjsmith
crazyjsmith's picture

He had to pay $5 Big ones to buy his protection. Just like anyone who gets shaken down by the mob. You get to play Uncle Warren, also means you get to pay.

Fri, 09/02/2011 - 20:11 | 1628566 New_Meat
New_Meat's picture

meh-$1BB tax lien for $5BB "investment" into BK BAC?  Not Snowballz style.

He likes high "Death-Tax" because it forces rather-more-larger family concerns to sell off vs. liquidation when the princes go off to their reward.

Local example is "Jordan's Furniture" that sold to BRK, got a cash infusion to build a warehouse, and the Broz got to retire in style.

- Ned

Fri, 09/02/2011 - 19:35 | 1628475 Old Poor Richard
Old Poor Richard's picture

Buffet's going roll back the clock, turn the sales fraud spigot back on, and Obama will buy up the truly odious junk that won't sell.

He's hanging onto the drug money laundering operation, though.

Fri, 09/02/2011 - 21:33 | 1628688 chubbar
chubbar's picture

Yeah, Fast & Furious! Fat chance any newspaper covers THAT story. Holder should be run out of office and face criminal trial with the deaths he has directly caused by his actions, but you won't see that charge being levied anywhere in print. Now the cocksucker in chief is talking about limiting guns that have clips in the "border states" to prevent the fucking loser drug gangs from shooting border agents. See a connection here? The fucking White House funnels guns to the gangs, they shoot the border cops and now the Cocksucker in Chief wants to limit gun types! What a fucking asshole both he and Holder are! Just another attempt to grab our 2nd amendment rights. Fight these assholes and write your senators and congressmen about this flagrant attempt to usurp the constitution!!!!

Sat, 09/03/2011 - 01:20 | 1628988 chindit13
chindit13's picture

How much securitization did WFC do?  Perhaps they still are holding the lion's share of their bad paper.  I'll have to go back and check the 10-Q's.

Sat, 09/03/2011 - 07:38 | 1629227 oogs66
oogs66's picture

The only possible explanation, other than the obvious favoritism is that they were too stupid to sell any and own everything they originated?

More likely vanity fair or rolling stone will shed light on this issue than any of the business press

Sat, 09/03/2011 - 22:11 | 1630535 DosZap
DosZap's picture

< spiral galaxy >@ 18:01,

BINGO!!!, another winner O.T. same principles.................

 

next to the DOJ 'Fast & Furious" coverup article?

Starts at Owhammy, and ends (to date) with over 2000 weapon handouts illegally by the PTB.

A Nation of Law.Breaking the Law, in the name of the Law, seems we have a Pandemic here, in a 10sq mile area.

Run by lawbreakers............................Top to Bottom.

Fri, 09/02/2011 - 18:46 | 1628316 LMAO
LMAO's picture
"Now, if only someone can figure out how Warren Buffett's Wells Fargo, with its several hundred billion worth of Wachovia toxic biohazard, is not on the list of defendants..."

Uncle choo-choo "All-in bet on America" Warren is enjoying himself in the bathtub knowing another quid pro quo deal was landed in the BAC trade-off against the all-in bet on American infrastructure which the Big Zero is going to announce in the coming week. Warren The Saviour Buffet is becoming increasingly untouchable.

The Big O will be promising jobs, the taxpayer will pay for them and the stinking* orifice of Omaha will cash in once again.

 

* Sorry Warren, no bathtub visit will ever wash away that smell

Fri, 09/02/2011 - 19:48 | 1628499 Kayman
Kayman's picture

 no bathtub visit will ever wash away that smell

Buffets not washing, he's drinking the bath water.

Sat, 09/03/2011 - 03:10 | 1629113 williambanzai7
williambanzai7's picture

They signed a tolling agreement which waives the right to assert the statute of limitations as a defense.

Fri, 09/02/2011 - 18:48 | 1628363 ska11153
ska11153's picture

WTF, no WFC??? Forget Wachovia..they also own Golden something or another, which has all sorts of crap from the West coast.  Amazing.....truly amazing.  Meanwhile, banks aren't lending yet....this obviously isn't going to help.  I don't understand what this dumb ass administration is doing.  On one hand they want to try to spur the economy, on the other hand they are now going after the banks. I welcome them going after these criminals, but it sure doesn't help the other agenda.  If anyone was uncertain on QE3 before, there is no doubt it is coming now......will it even help??

 

Fri, 09/02/2011 - 19:21 | 1628439 cossack55
cossack55's picture

Only if helicopters are involved.

Sat, 09/03/2011 - 06:07 | 1629185 rcintc
rcintc's picture

Golden West Financial - mostly Sub-Prime and Neg Am (real shitty) loans.

Sat, 09/03/2011 - 22:25 | 1630556 DosZap
DosZap's picture

ska@18:48,

banks aren't lending yet, no one to lend to..........................no hiring, no new businesses.(simple)

On one hand they want to try to spur the economy......................No they don't,they do not want to SPUR anything positive.

 If anyone was uncertain on QE3 before, there is no doubt it is coming now......Never had a doubt it would come  pre-planned

will it even help??................Yep, their agenda, to Bankrupt the nation,that's the plan.Destroy the nation as a Republic.

Fri, 09/02/2011 - 19:58 | 1628525 Hugh_Jorgan
Hugh_Jorgan's picture

I'll bet that Wells negotiated a "get out of jail free card" when they were pressured/enticed to take over Wachovia back in early 2009, that's why.

http://www.cbsnews.com/stories/2009/02/09/eveningnews/main4788018.shtml.

Remember, they were in good shape but they were forced to take TARP so that publicly ALL of the banks looked like crap to the sheeple.

Sat, 09/03/2011 - 08:04 | 1629241 reading
reading's picture

The fact that they convinced you they were in "good shape" shows they are better at this then the others.  Wells has more toxic crap chugging through it and sold off as much shitty crap they just got lucky that big Warren had already invested.

Fri, 09/02/2011 - 23:21 | 1628864 Jim in MN
Jim in MN's picture

Those (Wachovia sub Evergreen) are the fuckers that stuffed the Presbyterian Church's investment fund (New Covenant) full of toxic MBS garbage. 

They deserve to rot in jail and hell.  And Buffet with them for arranging the 'get out of lawsuit' card. 

Sat, 09/03/2011 - 01:59 | 1629034 Mauibrad
Mauibrad's picture

BHO fundraiser.

Fri, 09/02/2011 - 17:59 | 1628219 barsenault
barsenault's picture

bastards is all I can say!  lock'em up, and let the inmates have fun with them.

Fri, 09/02/2011 - 18:00 | 1628222 barliman
barliman's picture

"Sorry gentlemen, we are not serving any Buffet torts today."

barliman

Fri, 09/02/2011 - 18:01 | 1628224 Sophist Economicus
Sophist Economicus's picture

When they bring suit against the Senate and Congress too, I'll pay attention....

Fri, 09/02/2011 - 19:00 | 1628390 g
g's picture

Indeed

Sat, 09/03/2011 - 22:07 | 1630530 DosZap
DosZap's picture

<Sophist Economicus  >@18:01,

BINGO, give this man de prize....................!!!

Fri, 09/02/2011 - 18:01 | 1628225 T-Bond
T-Bond's picture

Better get a new toothbrush Dan.

Fri, 09/02/2011 - 18:01 | 1628228 HelluvaEngineer
HelluvaEngineer's picture

pound me in the ass prison, now!

Fri, 09/02/2011 - 18:05 | 1628236 brandy night rocks
brandy night rocks's picture

Putting Levin and Sparks in the same room together should've caused a Shitty Deals Getting Sold To Ignorant, Dependent Constituencies singularity.

Fri, 09/02/2011 - 18:08 | 1628241 Zero Govt
Zero Govt's picture

 

"..Sued For Selling Junk, Dogs, Big old lemons, and Monstrosities

 

That just about covers Goldmans entire 80 year history and financial strategy in one sentance ..they started out with a pyramid selling scam and nothing much improved after that

Fri, 09/02/2011 - 18:09 | 1628256 MarketTruth
MarketTruth's picture

+1  EPIC!

Fri, 09/02/2011 - 18:06 | 1628243 uno
uno's picture

if you pause the video at 3:19 you can see 3 poster children of in-breeding gone terribly wrong.

Fri, 09/02/2011 - 18:42 | 1628341 Bananamerican
Bananamerican's picture

fucking gargoyles....The "Talent"  is nothing more or less than the spawn of Satan

Fri, 09/02/2011 - 18:06 | 1628244 Xibalba
Xibalba's picture

No one will ever see the inside of a cell.  THAT'S GUARANTEED.  I bet they settle for less than a billion collectively.  

Fri, 09/02/2011 - 18:37 | 1628330 Jasper M
Jasper M's picture

I'll take the Under on that trade.

Look through your history books. WHen the framework supporting this sort of thing fails, those that Were in favor become targets of popular hatred, and those claiming to serve the electorate find their careers demand they attack their former allies. 

Fri, 09/02/2011 - 18:07 | 1628248 Flounder
Flounder's picture

If you connect the dots, Blankfein's hiring of Reid Weingarten for himself 10 days ago looks like the chief rat saying FU to the staff and trying to save whats left of his own skin.

Fri, 09/02/2011 - 18:16 | 1628274 Xibalba
Xibalba's picture

er...surprised?

Fri, 09/02/2011 - 18:54 | 1628373 chet
chet's picture

That f**ker isn't listed in the lawsuit, but hopefully someone is cooking up a perjury suit against him.

I really thought that the politicians would try to set up the banksters as the great bogeymen of the 2010 election.  Maybe the 2012 election?

Fri, 09/02/2011 - 18:08 | 1628253 pamriallc
pamriallc's picture

What Tyler says here is true..... WFC/Wachovia was the king of option arm finance.  Only reason they may not have been named is again....because while BAC-CFC basically had to get baked in this process.....  the political opportunity to eviscerate BAC (again and again and again and again) is just too great.....  the fact remains that JPM *also* would  likely not have been named *EXCEPT* that they acquired the assets of Bear Stearns and also from Washington Mutual, in which case the lawsuits had to be filed vs the company.

So here we have it.....   "BANKSTERS" is getting old and tired.  For people who want the system to collapse on their watch, they may also consider PIIGS for their new home, perhaps a nice trip to a third world country?  Mayby something nice like a walk to Iceland?  The point being that at this juncture, the system has been purged enough, and that the system will never be perfect.  If we go and sue every chemical company in America for every spill and unearth every lawsuit and etc.... then we won't have a chemical industry either, and maybe technoloogy, maybe then we will completely gut Aerospace Defense?  $150.00 hammer, please?

Point is that WFC wasn't named but that somewhere Washovia will be.  JPM was named but because of WAMU and BSC.  The policymaker witch-hunt in an ELECTION year is precisely the wrong answer, and if I were a bank CEO at this point..... I would relish the opportnity to bring the policymakers to justice.  The next move will be CEO retailiation and policymakers will likely take a step back.  Most of the heads in banking have rolled, and it will never be enough for some people.  These same raving populists want a barter system and global failure to justify their indignation for what has ALREADY happened.  These are the same people typically *most* ill-equipped to deal with the same system that they are essentially *praying for* under the guise of "citizens for liberty---down wiith the bank-sters" line of argument.

Maybe instead of complaining further, the users of ZEROHEDGE could contribute to a fund that would create a bank f their own.  Zero-Financial?  Then the same users could run the bank the way they wanted to.  A brilliant idea, actually.  If it were run with the same zeal as we witness here daily, perhaps it would be well run and extremely successful?  Put all of the great advice from users to better use.

In the meantime, calling the end of the world over and over again is getting pretty pointless.  Make something better than we have today, and use that strength and independence as your unfair competiitve advantage.  That's what we did.

Solutions Delivered Daily.  shawnm@pamria.com

 

Fri, 09/02/2011 - 18:36 | 1628323 gmj
gmj's picture
Nassim Taleb: The American Economy Will Transfer $5 Trillion To Banker Pay And Bonuses Over The Next 10 Years

Read more: http://www.project-syndicate.org/commentary/taleb1/English#ixzz1Wpwhinni

Sounds like the problem is not behind us at all.  In fact, it sounds to me like the bankers will not be happy until they have stripped the bones of this nation clean.  So what are you saying, Shawn?  That we should passively accept our fate? 

Fri, 09/02/2011 - 18:48 | 1628350 Bananamerican
Bananamerican's picture

"the system has been purged enough"

Moynihan? Is that you?

 

this system won't be "purged" until we see Banksters trying to walk down Wall Street with yachts in their rectums

Fri, 09/02/2011 - 19:41 | 1628487 eduard khil
eduard khil's picture

its pretty crazy that you feel threatened enough by a blog.  go spend your time defending yourself if the us dept of justice comes calling.  otherwise its pointless coming here to just say shut up.

you do raise one prospect as to what a bank run by zh folks would look like.  id imagine quite a few would just say eff banks, eff their crappy interest rates, eff all their stupid buildings that could be replaced with atms, eff crappy customer service, eff debt and loans and servitude.  theyd get cash every payday and put savings in gold or whatever they want.  the rest would be old school like me and go to a small local bank that loans only to worthy people, gives a decent rate on savings, and doesnt need a million branches.

problem is at some point like always, the tbtf banks and tptb align and make it damn near impossible for small banks to survive. my bank gets bought by another and then another and then im just another idiot at bac getting nothing for interest and crap customer srvice.  were  sick of tptb rigging the system, with their double speak and system in place to keep them at the top. and thats why zh is my favorite site on the web, as there is at least one outlet for peoplee that feel like i do

Fri, 09/02/2011 - 19:47 | 1628497 damnitalready
damnitalready's picture

 Most of the heads in banking have rolled, and it will never be enough for some people. 

Who?  Was I sick that day?  What did I miss?

Sat, 09/03/2011 - 15:27 | 1629838 11b40
11b40's picture

Amen to that.  Somehow, I don't think has the same definition of "head's rolling" that many here do.

I'm still waiting for some trials.   Sorry, but I have zero sympathy for the banker gangsters.

On top of that......bring back a newer & more stringent version of Glass-Stegall, change the bankruptcy laws back to the way they were, and put Usury Laws in place...ensuring a more complete examination of credit-worthiness.

Bust up all the TBTF banks.  Period.

Fri, 09/02/2011 - 22:08 | 1628745 Piranhanoia
Piranhanoia's picture

There is no evidence that the Morgue got anything from Washington Mutual. They didn't pay anything.  Fannie Pie was a delicate lassie that knew about icky men like JP and didn't want syphilis by letting them servicer her.  She had already financed their projects with the promise of marriage and affection until she saw the drip, drip drip coming from both their pantlegs and personalites. They all began to drool a lot more explaining why they couldn't pay her if she didn't give in. 

She laid down in the end, and got MER'sd. Poor old poodle wants her honey back, and she doesn't care about who gave it to her, so there.

Sat, 09/03/2011 - 00:50 | 1628965 StychoKiller
StychoKiller's picture

Didn't your Doctor warn you not to take Greedquil AND Corruptol??

Side effects include loss of spine, and a strange urge to feel large objects inserted into one's anus!

Sat, 09/03/2011 - 01:55 | 1629018 chindit13
chindit13's picture

While I agree with you that there is a bit too much "bring it on!" here uttered by people who probably have not experienced a societal uprising firsthand and who might be overestimating their ability to survive in it, you fail to grasp the key point that is the hallmark of everything Zerohedge hopes to be (or so I think).

"Make something better than we have today" you say.  Everyone here would probably agree.  In order to do that, however, what doesn't work has to be cleared away.  The people who caused the disaster have to be removed from positions where they would have the chance to do it again.  Ideally, the people who benefitted unfairly from the collapse/bailout, should be held financially accountable, as in clawbacks of bonuses paid on deals that subsequently went bad and required taxpayer monies to save.

Do we still have TBTF banks that have their finger on the financial nuclear trigger?  Yes.

Do we lose anything to foreign competition if we break them up, either in terms of staff or stability?  No.  Let the culprits go elsewhere, and let Europe or Asia have financial WMDs and the AQ Khans of finance.

Are we any less likely to face a similar or greater financial calamity in the future as a result of "financial reform"?  There has been no reform, only a banker-written Dodd-Frank that further enhances the banks' power.

Has anyone been held accountable?  Yes, Jimmy Cayne lost about $1.59 billion of his $1.6 billion fortune.  Lehman went belly up.  On the other hand, failed executives like Angelo Mozila and MER's old boss got "punished" with exit packages totaling hundreds of millions of dollars.  Blankfein and Dimon are still there (Dimon had a blatent conflict of interest in the Bear Stearns deal.).  Lewis got away with a redder face, but a pile of cash.  Thain got hundreds of millions and several jobs.  AIG staff got to keep hundreds of millions in bonuses.  The nameless spewers of toxic waste that peopled the desks of GS, DB, MS, JPM, MER, UBS, etc., are either still in their seats, or else retired with bonuses paid on failed deals.  For their incompetence or criminality, they received record bonuses and were responsible for the enormous debt burden placed on current and future US citizens.  Everybody avoided jail.

Moral hazard has become a key tenet of American business.  That is not "something better".

Until the bomb is defused and dismantled, and the criminals are taken to task for their crimes, it is not possible to "make something better".  First things first.

Sat, 09/03/2011 - 07:06 | 1629213 jm
jm's picture

I don't think that anyone disagrees here with you either about these guys you mention needing to be flushed.

However, the clueless and bloodthirsty mob here on the Zero Hedge channel should stop and learn a bit.  Not saying you are one of them.

It is a commonplace that bank executives as a class are called "evil".  Not only is this generalization completely wrong, it trivializes evil and justifies basically anything.  I'm fine with getting rid of the executives you describe, but how well would it go down with the most vicious here if their shares were a wash?  I think there is some greed and envy going on in some parts of the Zero Hedge community, just as there are some really decent, deservedly outraged people.

Idiots here talk about how Blythe Masters is somehow responsible for this entire mess because she was a part of a team that engineered CDOs.  This team also kept JPM out of the excesses that destroyed other banks. 

Innovation = progress.  The "we are going to the stone age" crowd, well, they should frontrun the collapse and live under a rock now.

 

Sat, 09/03/2011 - 11:00 | 1629425 Kayman
Kayman's picture

jm

Innovation = progress.

I defy you to show me "financial innovation" in the past 2 decades that can be equated with progress. Let me help you there- I will define progress as being for the greater good.

Let's stop soft-balling criminal behavior by calling it "moral hazard"

And while we are at it, let's also stop calling the speculating, manipulating, skimming and churning industry, "banking". Banking is an intermediary business, not a predatory business.

"if their shares were a wash?"  Hey... I loved Walt Disney, but eventually you must discern between the real and the pretend.  Just because you can pretend your worthless assets are solid gold does not make it so. Pretending things are great, simply delays the inevitable.

And I am always curious how the general ZH community is trashed by someone who (ahem) is communicating on ZH. Perhaps you gain something here that you find nowhere else.  Or.... you are a troll.

"Behind every great fortune is a great crime".  This does not always apply, but it is a good starting point.

Finally, let's deal with the real problem in America. Wall Street could slide into the Atlantic and the Fed (from a telephone booth) could conjure up electronic money and the economy would carry on. 

 BUT IT'S THE ECONOMY, STUPID ! Killing off private sector middle class families has virtually destroyed the nation.  America is failing, China is booming. Some people cannot connect the dots back to free Chinese access to the American consumer market.

Everyone in Government and Wall Street are riders, my friend.  This nation has too many riders and not enough horses.

 

 

 

 

 

 

Sat, 09/03/2011 - 14:07 | 1629718 jm
jm's picture

You and I aren't able to determine the "greater good".  Innovations are simply responses to an given environment:  for our case, low interest rates.

That said, many ETFs that people buy act very much like CDOs eveyone hates.  Thank you JPM.  Those ETFs make it a lot easier to be short for retail investors, not that being short is the way to go.  They allow you to get much more tailored risk exposures because you don't have to buy block on a margin account.

Algos are hated but many of them serve a purpose other than scapling retail.  Some algos tie futures to underlying.  This was done as a balancing operation EOD before computerization,  Now it is done real time.  This makes valuation models work much better.

There are other innovations, but this is sufficient.

*

While some stock are worthless, most are not.  That whole line is silly,

*

While I respect the opinions of most on ZH, I do not respect the opinions of some.  This does not a troll make.  I have little respect for people who don't know what they are talking about and pretend they do, and insist on saying they are right in spite of the facts.  I have less respect for the violently stupid.  I have no respect for people who hate others for who they are, with no regard for what they do.

*

We are in agreement that the economy is a disaster.  The only cure is time and shared sacrifice.  After this passes, things will not return to the normal people are using to.  Everyone in the United States is going to be a lot poorer one way or another.  Those that downside will be ahead of the curve.

 

 

 

 

Mon, 09/05/2011 - 18:18 | 1636038 Kayman
Kayman's picture

JM

I accept that you are sincere and well-intentioned, but there is NOTHING in financial "innovation" in the last 30 years that has made this country better- only poorer.  We have become an upside down pyramid thru financial "innovation".

Without a country and an economy there is no Wall Street.

"for our case, low interest rates. " Low interest rates, as dictated by the Fed, have killed cash savings (the foundation for investment).  We now only have conjured savings- effectively enslaving our children and grandchildren.

Low (non-market) interest rates are the foundation for the greatest mal-investment and misallocation of resources of all time (IMHO).

Our politicians act as if the quantity of expenditure supercedes the quality of the investment. They are dead wrong.

 

 

Sat, 09/03/2011 - 18:22 | 1630147 ToNYC
ToNYC's picture

 

"Behind every great fortune is a great crime"

 

Reducing
Balzac's quote for the sake of brevity fails at both tasks.

grand fortune...sans cause apparent oublie (forgotten) ...because it was propremement fait (expertly done, perfectly executed)

 

I get more about the expertise with which innocent bystanders get punished for not having at the jungle pirate play.

 

...like reducing Machiavelli to a monster advocating unspeakable horrors worthy of Dick "Lon" Cheney

when actually he was talkin' survival for his chosen Prince. In the best of times and relationships, keep the army at the ready and survive with the best angles Niccolo can devise.

Read it where it came from.

 

Take the book, shove the kindle.

Form factor decay will burn more books than a hundred Popes.

Mon, 09/05/2011 - 18:28 | 1636057 Kayman
Kayman's picture

I accept the admonishment on the fullness of Balzac.

However, as I have written many times, I have evolved from skepticism to cynicism.  And in that cynicism I can ascribe motive and execution.  In that, most events in politics and finance can be understood (by me).

And not to belabor a tender point, but some of the best books we never read were burned by the Catholic Church and their copycat- Islam.

Fri, 09/02/2011 - 18:20 | 1628284 mathdock
mathdock's picture

+5, pamria!!!!!

Fri, 09/02/2011 - 19:41 | 1628484 pamriallc
pamriallc's picture

apparently no one wants to open a bank called "ZeroHedge" makes sense.... Easier to blindly complain than to consider constructive resolution.

zerohedgefinancial.com   is available! Just $9.99*     Select the domain names below that you would like to register

dare you......

Fri, 09/02/2011 - 19:59 | 1628527 Kayman
Kayman's picture

pamriallc

Say, rather than those nasty negative ZH'rs starting a bank (insult understood), why don't you start a whorehouse ?  Maybe your mother, wife and daughters could be enlisted into your vacuous positive thinking.

Fri, 09/02/2011 - 21:32 | 1628685 Maniac Researcher
Maniac Researcher's picture

Pamriallc - as you will soon see, this "community" doesn't take kindly to observations that calling for a collapse is irresponsible, hypocritical, and [gasp] stupid.

The little semi-affluent Goldman-esque Mini-me crowd here doesn't see the obvious irony of whining about the crimes of corporate elites, when essentially both groups want the same things: a completely deregulated environment ripe for corruption, total privatization of all services - providing even more power to monopolized capital, and a complete contempt for minority rights; hence the toleration of all sorts of extreme bigotry here - which is just as paternalist and anti-democratic as the attitude of any exploitative 'bankster' CEO.

I honestly think the hate directed at Goldman et. al. on Zerohedge isn't motivated by a thirst for justice at all - it's actually simple envy and jealousy. This is why most of the regulars are wannabe trade wonks who spend their time rubbing their hands together thinking about gold and silver. They're just as selfish and hateful as the corporatists they abhor.

Fri, 09/02/2011 - 23:43 | 1628899 Terminus C
Terminus C's picture

*yawn* your pathetic attempt at trolling is wasted here.

How many accounts do you hold?  You enjoy talking to yourself?  It is a sad life you live if you think that al we do is complain.  We do all that we can with our limited resources.  We, unfortunately, do not have access to the infinite money machine... indeed, we would go to jail trying to mimic it. 

We care not for your anemic insults.  Now go crawl back into your hole.

Have a nice day.

Sat, 09/03/2011 - 11:35 | 1629469 Libertarians fo...
Libertarians for Prosperity's picture

 

 

Perfectly stated. 

You don't have any affiliation with the word "beast" do you?  If that doesn't make any sense to you, then never mind.  I do wish you'd post more around here, though.  Your thoughts are almost always in sync with mine. 

 

 

Sat, 09/03/2011 - 10:31 | 1629388 pamriallc
pamriallc's picture

actually I was serious.  it would be well funded, well run, and and  probably have its excess reserves in precious metals.  I advised a few regional banks to do just that, and yet they declined the wisdom at that time.  on the other hand, personal feelings aside that all banks are brothels.... simply reinforces that *some* people will not stop complaining until the world is on a barter system, and governments are all in net cash positions, politicians stop lying, and etc....  yet this has never been the world we live in, so I simply suggest that interested people might start their own bank instead.  really thing people should.  its a reason so many small banks are started.  core group of business guys want to do something about the lack of service and etc that they see from the huge banks, so they want to do a better  job for themselves.  its your right to do so, and expecially for this forum, I believe it is a great idea. 

Sat, 09/03/2011 - 11:18 | 1629441 Kayman
Kayman's picture

pamriallc

Your enthusiasm for banking leads me to believe that YOU SHOULD START A BANK.  Let me give you a clue- if you are not well connected at the Fed and do not have direct access to the Treasury, then you will fail.  Without welfare none of the Too Big to Jail would be here today.

Your self-proclaimed "sincerity" seems a tad bit hollow.

Oh yeah. Money and Banking are built on trust. Since that trust has been destroyed-only a fool would believe that audited statements are a true representation of financial assets/liabilities. Ergo, do not dismiss the barter system.  It is alive and well.

Good luck with that believing in magic thingy.

Fri, 09/02/2011 - 20:28 | 1628600 blunderdog
blunderdog's picture

Dude, sorry, but banks are passe in the world of negative real interest rates.

Learn a trade.  Soon.

Fri, 09/02/2011 - 23:14 | 1628828 JohnG
JohnG's picture

 

 

Sat, 09/03/2011 - 07:48 | 1629232 oogs66
oogs66's picture

I would love to start a bank but the approval process is almost impossible to navigate unless you are already rich and connected

Sat, 09/03/2011 - 10:36 | 1629396 pamriallc
pamriallc's picture

"mutual institutions" take $20MM maximum to create.  I believe Tyler has the political capital to do so, and with the ZH community, I repeat that I don't think its a bad idea.  Frankly.... an awesome idea.  lots of potential backers, and it would be--- I repeat--- it would be well run.  This site gets something like "millions" of unique hits and visits a day.  it would be a breeze to get the capital in the door, and there are plenty of people who would be willing to offer maangement services who support the community in its quest for rightousness.

Sat, 09/03/2011 - 11:21 | 1629451 Kayman
Kayman's picture

Come out of the closet. Leo is that you ?

Sun, 09/04/2011 - 13:00 | 1631487 blunderdog
blunderdog's picture

Hey, you should check out the news or something, 'cause you seem really confused about the current financial landscape in the world of banking.

Banks aren't making any money legitimately.  That's why they're all thieving zombies.  ZIRP and non-existent bond yields have destroyed their potential.

Did you just wake up after a nap you took in 2006?

Fri, 09/02/2011 - 18:29 | 1628308 sudzee
sudzee's picture

TPTB know the finacial system can't be saved. They tried everything but realise the end is here. They're lining up the fall guys now to make themselves look like heros.

Fri, 09/02/2011 - 18:34 | 1628310 LMAO
LMAO's picture

 dup

.

Fri, 09/02/2011 - 18:30 | 1628311 nasdaq99
nasdaq99's picture

WFC bought Golden West Financial too, didn't they?  They wrote tons of belly flop mortgages.

Fri, 09/02/2011 - 18:47 | 1628358 Sutton
Sutton's picture

the Sandlers  need to be mentioned in every Mortgage story.  And Roberta Achtenberg for decreeing in the 90's that banks had to give mortgages to useless non-bill paying handout mongering minorities.

Sat, 09/03/2011 - 18:40 | 1630208 ToNYC
ToNYC's picture

 

Marian and Herbert ran a quality shop before the market made play loose or die in their face. They got out while the gettin' was good, but they were good guys then.

Fri, 09/02/2011 - 18:51 | 1628371 dick cheneys ghost
dick cheneys ghost's picture

I am Linda Green

Fri, 09/02/2011 - 18:55 | 1628375 Duuude
Duuude's picture

Levin...

 

Called in favors.

Fri, 09/02/2011 - 19:08 | 1628407 Yes_Questions
Yes_Questions's picture

 

 

How's the carpal tunnel?

Fri, 09/02/2011 - 19:06 | 1628402 johnmilan
johnmilan's picture

we should hire Putin to head the SEC

Fri, 09/02/2011 - 19:12 | 1628420 Big Ben
Big Ben's picture

“Daniel Sparks, the head of Goldman’s mortgage department, extolled Goldman’s success in reducing its subprime inventory, writing that the team had ‘structured like mad and traveled the world, and worked their tails off to make some lemonade from some big old lemons.”

Sounds more like kool aid, not lemonade. If Goldman is buying or selling, it is for a reason. Not a good idea to buy/sell from/to them. They probably know something that you don't.

Fri, 09/02/2011 - 20:02 | 1628538 Kayman
Kayman's picture

Well you'd both know one true thing going in-GS are criminals.

Sat, 09/03/2011 - 18:44 | 1630222 ToNYC
ToNYC's picture

 

Merde dealers. They spot a cowpie for the cost of removal then find the fool who likes the shine they put on it. Hint: GS uses spray shellac, it's organic and bugs had to die to make it; shinola is too tough to apply.

Fri, 09/02/2011 - 19:17 | 1628430 tony bonn
tony bonn's picture

"...Now, if only someone can figure out how Warren Buffett's Wells Fargo, with its several hundred billion worth of Wachovia toxic biohazard, is not on the list of defendants..."

well, when the indonesian-in-chief utters buffet as though it were a common copulative you know darn tootin' well why wells fargo is absent from the lawsuits....uncle butthole from omaha didn't cough up 5b for nothing....

Sat, 09/03/2011 - 18:46 | 1630229 ToNYC
ToNYC's picture

 

If it weren't for Uncle, they'd need to be running more planes out of the jungle for a few quick units.

Fri, 09/02/2011 - 19:25 | 1628449 JustACitizen
JustACitizen's picture

Imagine what the US economy would look like today had the administration:

Let the banksters fail - which they so richly deserved.

Sold the assets off/restructured banks for pennies on the dollar.

Applied a straight up tiny transaction tax on all securities trades.

Prosecuted all the "big-hitters" guilty of criminality.

Foreclosed wherever legally possible - sold off defective assets to scavenger investors.

Restored Glass-Steagall and actually enforced the regulations on the books.

Produced a single regulation that said: "You are purchasing a derivative product/investment - regardless of any representations - you are at risk for losing the entirety of your investment. Proceed at your own risk." to be stamped on all such offerings.

P.S. If you are a fiduciary for other people's money - and lose it - you may be personally prosecuted.

It's a dream...

Fri, 09/02/2011 - 20:17 | 1628579 Yes_Questions
Yes_Questions's picture

will look like..

Hopium lenses.

Sat, 09/03/2011 - 02:35 | 1629077 Mauibrad
Mauibrad's picture

We might be recovering by now.  As it is, the cancer keeps getting worse, until the events that you describe happen.  After that, only then can things start to get better.

Sat, 09/03/2011 - 06:44 | 1629203 chindit13
chindit13's picture

We would have had a boatload of pain no matter what.  That was the price that must be paid for the years of abject stupidity, irresponsibility and fraud.  Those who took on more than they could afford would lose, as they should have.  Those who handed out money to people who had no possibility of repaying it, but who only got a loan because the originator knew he could slough off the note to a greater fool, would pay both a financial and legal price.  Those who packaged toxic waste, browbeat ratings agencies who needed revenue, and sold known waste to "the most sophisticated investors", aka Peter Principle Mugs and Suckers, would face fines, clawbacks, banishment from the financial industry, and pounded-in-the-ass jail time if convicted.

Failed banks would have failed.  Equity holders would lose all, and bondholders would lose according to seniority and as necessary to cover the losses.  Depositors below the insured minimum would be made whole, as that was the deal when they made their deposits.  What remained of the bank, after a short period of custodianship, would be sold off to private investors.

Moral hazard would not exist.  The funds used to bailout the banks---which (according to Nomi Prins) were enough to pay off every mortgage in the country and buy every renter a home---would be available for UE compensation or even stimulus until the economy regained its footing.  The dollar would still have a future, at least one with a longer horizon than today.

Then while the economy was trying to recover, the country could have addressed larger issues such as bank size, Glass Steagall, the budget deficit, national industrial policy, the necessity or lack thereof of a Fed...even the nature of fractional reserve banking.

To clean up everything might have been too much to hope for, but to do as we have done---clear up NOTHING---was the worst possible path, and all we have done is exacerbate the pain both in time and scope.

Sat, 09/03/2011 - 11:28 | 1629461 Kayman
Kayman's picture

We could have cauterized the wound; now gangrene has set in. 

Sat, 09/03/2011 - 22:31 | 1630568 DosZap
DosZap's picture

<JustACitizen  >@ 19:25,

Right on, the way it should have went down,if we had a lawful legal system,where those that mete out Justice were not guilty themselves.

But, your American Dream,and mine,  is  alas,IMAGINE  like John lennon..................DEAD.

Fri, 09/02/2011 - 19:31 | 1628465 MoneyWise
MoneyWise's picture

It's a good sign when everyone piling up on the

one side of the boat.. If that was so easy,

keep running, ruts.. You are dead meat in 2-3 days with

huge Equity Shorts and about every grand PAPA and welfare

guys long GOLD at

all time high.. I'll be smoking my "Montecristo"

and watch you punks flip over in couple of days..

http://img402.imageshack.us/img402/3118/trainwx.jpg

Should get some popcorn as well...

Fri, 09/02/2011 - 20:06 | 1628551 Kayman
Kayman's picture

Leo - is that you ?  I think you're smoking a fat one , not a Monte.

Fri, 09/02/2011 - 21:53 | 1628729 realitybiter
realitybiter's picture

I'm pretty sure Leo's solar stocks are coral reef at this point.  Sunk.

Fri, 09/02/2011 - 20:15 | 1628572 Yes_Questions
Yes_Questions's picture

 

 

Haroh, shitty mohgage!

Might as well have been.

Fri, 09/02/2011 - 21:52 | 1628726 realitybiter
realitybiter's picture

Who knows?  Maybe our Kenyan foreign exchange President gets desperate.  Comes to the realization that the bankers hood-winked him and now realizes that his only hope for re-election is to start lopping banker heads like an Aztec after downing a dozen 5 hr energy drinks.

Pleasant dreams.

Fri, 09/02/2011 - 23:32 | 1628881 Jim in MN
Jim in MN's picture

The essence of Japanification is that it's never over.  The finance sector will keep coming back for more braaaiiiiins because the Original Sin of not marking to market/taking haircuts is never undone.

That is Geithner's treason: whiting out the percentage haircut line--the STANDARD LINE--on the AIG contract and writing in "PAR".  That is Obama's clued-out seppuku, cutting out his own guts by standing idly by for it.  All the payola, all the tense profanity, all the relieved limo and jet rides, it all just adds up to being fucking pussies and killing the US economy for the next twenty to thirty years.

All of these later set pieces are just thrashing around.  The bastards that hamstrung us in the first place are standing in plain sight, and there is no policy discussion at all.  None. 

Remember the Federal agents occupying bank offices, taking over boards, sitting behind the lending desks, gathering the elites in each big city to explain what was going down?  Didn't think so.  Read some more.  The 'depression experts' in power now never did, and have no clue of what the actual policies were at the time.  Or at least, they sure as hell aren't mentioning it.

A full on raid and hard drive seizure of these pricks would be no more difficult than a typical weekday DEA bust.  At least until Goldman's security opens fire on the Feds in the lobby....what a sight that would be....

Sat, 09/03/2011 - 08:38 | 1629273 jm
jm's picture

Actually, a lot of Japanese corporates and banks are in really good shape.

Equity looks good, tough to make a case for the bonds.

Sat, 09/03/2011 - 09:00 | 1629293 Jim in MN
Jim in MN's picture

"This blessing has also been a curse to investors, say economists. Its wealth shields Japan from pressures to meet global standards of growth or corporate profitability. This is what allowed the nation to accept near zero growth rates in the 1990s and what permits the survival of Japanese corporate practices like valuing employees and clients over shareholders."

--NY Times, September 19 2008, 'In Japan, Financial Crisis is Just a Ripple'

Are you seeing the point?  Yes the banks can be protected...at the cost of the economy.  That is the point.

Sat, 09/03/2011 - 14:11 | 1629727 jm
jm's picture

No, it's not the point.  The point is deleveraging due to demographic and other shifts.  Japanese companies and banks have learned to survive and cope with what is coming for the whole planet.  They are used to "crises" and I hope they will be able to capitalize on thier experience and get out of their policy hell.

Sat, 09/03/2011 - 14:54 | 1629781 Jim in MN
Jim in MN's picture

'Deleveraging'?!?  Do you mean deleveraging corporate officers by putting them in jail?  The OP is about corruption and criminal fraud, and the coddling of insiders.  Japanification is one way to describe letting economic growth and investment returns go to zero in order to avoid a bond/debt revaluation.  That is pretty clear.

Demographic and other shifts add plenty of stress to the situation.  But corruption and loss of legitimacy, which Japan has also experienced in spades, are the factors that ought to be controllable and which push the system from stress to collapse.

So...your point is off-point.  In this context.  It's just noise compared to the main signal, which is corruption/fraud.

 And just to cement the point (zombie banks always need more braaaaaaainz):

Moody's downgrades major Japanese banks

24 August 2011 | 08:43 | FOCUS News Agency Home / World Tokyo. Ratings agency Moody's on Wednesday downgraded most Japanese banks after it cut Japan's rating on concerns about its ability to address the industrialised world's biggest debt, AFP reported
Moody's revised its assessment of Mizuho Bank, Mizuho Corporate Bank, Bank of Tokyo Mitsubishi-UFJ and Sumitomo Mitsui Banking Corporation following its downgrade of Japan.
It said the average downgrade was one notch, in reflection of the impact of the change in its rating on the government of Japan, with most Japanese banks having large government bond holdings.
"The rating downgrades primarily reflect the combined impact of the change in the rating of the government of Japan, as a supporting entity, and Moody's reduced assumptions for government support to the banking system in a stress scenario," it said.
It added that the rating was a reflection of Moody's concern that "notwithstanding continued strong government willingness to support the banking system, there is an increasing risk that the government's capacity to provide support to banks in a future crisis has diminished".

 

Sat, 09/03/2011 - 18:12 | 1630138 jm
jm's picture

Nothing with being wrong sometimes.  This could be one of my many times.

I think you and I can both agree that whatever Moody's says about Japan is laughable.

Sat, 09/03/2011 - 19:41 | 1630330 blunderdog
blunderdog's picture

IF what we had been led to believe was "economic growth" over the past 50 years was actually just increased leverage held by the populations of the advanced economies, doesn't "growth" HAVE TO go to zero?  In fact, doesn't it have to go NEGATIVE?

The only way I can see that not happening would be to start shifting the increase in debt to the currently dirt-poor populations in China and India.  But there doesn't appear to be sufficient yield there to offset the collapse of the USA and Europe debts.

Sat, 09/03/2011 - 00:53 | 1628969 jmc8888
jmc8888's picture

One could say that's whac(k)o.  Others would say it's perfectly in line with the accurate assumption that our regulators, when somehow something falls through the crony cracks, cannot walk and chew gum at the same time.  But seeing how Whaco-via and Bank of Crimerica did basically the same thing, I guess it would be more accurate that they can't put two feet in front of each other either. 

Glass-Steagall

Sat, 09/03/2011 - 02:02 | 1629040 Mauibrad
Mauibrad's picture

What about Lloyd B. is he gettin' sued?  Is that why he hired the criminal attorney last week, knew ahead of time.  And what about that "Marvelous" whateverthefuck his name was?  Is he gettin' sued too?

Sat, 09/03/2011 - 05:04 | 1629157 Garbage Can Ray
Garbage Can Ray's picture

People need to use some context with regard to Buffett and BAC. If BAC goes to $0.50, but remains solvent, big deal. Costs Warren $0. Granted, his warrants might be worthless, but not his 6%, preferred vig, which is above the common. You think Warren gives a shit about today's 9% decline? Please. It was only a $5 billion investment. That is cheap. His goal was to settle the shit down for awhile and lend confidence - he has a lot to lose, but its not his $5 billion BAC stake that worries him. If things get out of hand, its going to cost him a lot more than a mere $5 billion. It's good stuff. Warren being Warren, ripping the shit out of some zombie bank that is an expert at doing the same thing to the peasants. It's the food chain. Universal law, basically. Hey, Warren, sack up and buy some common if it's such a fucking bargain! Maybe you can get it at $6 and change next week.

Sat, 09/03/2011 - 18:50 | 1630237 ToNYC
ToNYC's picture

 

He's on the hook for a few more B's; Jaime had to bump up from $2 to $10 a share when someone noticed 383 Madison Ave cost nothing at $2

Sat, 09/03/2011 - 05:17 | 1629168 prophet
prophet's picture

Wells Fargo snatched Wachovia from the jaws of Citi as you may recall.  How Prudential.

Sat, 09/03/2011 - 08:05 | 1629243 Bruce Almty
Bruce Almty's picture

With BFFs Jeff Immelt ( 0 GE taxes ) and Warren Buffet ( WFC 0 responsibility ), is there any wonder why President Zero is failing & his admin is failing?

Sat, 09/03/2011 - 12:12 | 1629523 Kayman
Kayman's picture

Let's not forget "audacity" also means impudent.

And impudent means "contempt, cocky boldness, and disregard for others "

Yep. hiding in plain sight, the POTUS.

 

Sat, 09/03/2011 - 22:05 | 1630526 DosZap
DosZap's picture

People, do not take your eyes off the ball.

When those that are bringing the suits point the fingers,(and rightly so), those same fingers should be coming RIGHT back at themselves.

Assigning blame to unfettered, uncontrolled banksters?,c'mon!!.

They did none of this w/out prior knowledge and legislation allowing it be so, by the same SO called hand of Justice JUST now coming to bear?.

LOL, gimme a break.Always has to be a fall guy/s............

Meanwhile, where's/ who's the Head Cheese?.

Sun, 09/04/2011 - 02:33 | 1630924 Caggge
Caggge's picture

Daniel Sparks just hired the ghost of Johnnie Cochran to represent him. If the derivative is a piece of shit....you must acquit.

Sun, 09/04/2011 - 03:07 | 1631014 LucazBrewz
Mon, 09/05/2011 - 08:33 | 1633775 shacai
shacai's picture

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