White House

From the WSJ: "White House proposes temporary payroll tax reduction. The 6.2% Social Security tax would drop to 4.2% for workers for one year." Unclear if this is on top of any additional Bush tax cut extensions. It is amazing that it took D.C. only 1 month to forget that the people are sick and tired of reckless deficit spending (today's debt: 13,833,512,000,000) and will vote out all corrupt idiots who merely pass the hot debt potato to the next generation.

Just a headline from Reuters right now: "White House says WikiLeaks and people who share information with them are criminals"

Unclear is Assange is about to be charged with treason. It is also unclear if the First Amendment is still valid. If so, we will try to bring you an update on this situation.

The real reason for Geithner’s reluctance about a foreclosure moratorium is that he’s scared stiff about those securities – because even if he won’t admit it, he knows that the bailout wasn’t just about TARP and Bernanke isn’t just an economic savior. The government owns or is backing trillions of dollars worth of assets predicated on the same or similar suspicious loans that defaulted during the 2008 crisis period, which they did nothing to stop (or force banks to restructure). Instead, the Fed now owns nearly $1.5 trillion of toxic assets that have no bid (meaning no one but the Fed wants them). They would have less of a bid if there was even more uncertainty about the loans that fill them. The Treasury is directly backing $400 billion of government-sponsored entity (GSE) securities, and is indirectly backing another $6.8 trillion. If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it. - Nomi Prins

Bill H.R. 3808, the Interstate Recognition of Notarizations Act of 2010, which was discussed yesterday, and which according to both Reuters and the NYT may have a material impact on mitigating the impact of the High Freq Signing scandal, at least on the servicers, is now open for public comments at the white house.

Those wishing to tell the president how they feel, may do so at the following link:

http://www.whitehouse.gov/webform/comment-legislation?billname=H.R.%203808%20-%20Interstate%20Recognition%20of%20Notarizations%20Act%20of%202010

White House Press Secretary Robert Gibbs made a rather startling statement in a press briefing on September 21st. He acknowledged that the economy is bad and he further stated under questioning that the recovery would take several years.

And then there was one, even if it was a TurboTax One. Bloomberg headlines flashing that Larry Summers is dunzo in November. He follows such other economic failures as Romer and Orszag, both of whom left the economy in a far more horrendous state than they found it. We wish godspeed to Larry, and hope he managed to get thick windows in the limo that will take him to his next private sector job, presumably somewhere above the 40th floor in 200 West.

On June 9, BP COO Doug Suttles, in response to complaints that the media was being prevented from talking to BP workers, issued a letter (link), in which he said "Recent media reports have suggested that individuals involved in the clean up operation have been prohibited from speaking to the media, and this is simply not true." Alas, as the following clip from WDSU, a New Orleans TV station taken several days later demonstrates, the BP public front is just for show, and the media blackout continues. While it is certainly understandable why BP would want to not show off its oil stained laundry, what is more troublesome is that the administration itself may have a finger in this ongoing attempt to prevent the general public from understanding just what is going on. In an AP article from the 16th, we learn that Michael Oreskes, an AP senior managing editor wrote to White House press secretary Robert Gibbs on Wednesday, “demanding that President Barack Obama’s administration improve media access.” "AP first contacted Obama on June 5, outlining its concerns in a letter from President and CEO Tom Curley. Gibbs followed up with a call to AP editors and a written response. If journalists have concerns, Gibbs said, they can call to report their experiences with a joint information center run by the federal government and BP in Houma, La." Further, we learn from the CJR that Oreskes called the number from his office in New York on Tuesday and left a message, but has not received a response. Is the media blackout campaign a collusive one between BP and our government? If so, the people probably have the right to demand why a member of the administration is not receiving the same idiotic treatment before Congress as CEO's BP had to undergo for 8 hours yesterday.

What's another $50 billion?

According to Reuters headlines, the White House has just announced that penalties for the oil spill will be in the "many billions of dollars" range. Then again, with Goldman downgrading BP and thus actively buying the stock, is all this now fully priced in? Elsewhere, DealBook's Peter Henning says that the criminal charges, which will likely be filed soon, will likely also result in fines and likely prison time if executives of the implicated company are found to have lied to the US government. "Criminal penalties for environmental violations are not as severe as for other white-collar crimes. For a Clean Water Act violation, the maximum fine is $25,000 a day and up to one year in prison for a conviction based on negligence, and $50,000 a day and up to three years in prison for a conviction based on conduct shown to be done 'knowingly.'" We hope someone has set up some markets on InTrade for over/unders on jail time for some of the key executives.

In an exclusive for Oilprice.com, the Wayne Madsen Report (WMR) has learned from Federal Emergency Management Agency (FEMA) and U.S. Army Corps of Engineers sources that U.S. Navy submarines deployed to the Gulf of Mexico and Atlantic Ocean off the Florida coast have detected what amounts to a frozen oil blob from the oil geyser at the destroyed Deep Horizon off-shore oil rig south of Louisiana. The Navy submarines have trained video cameras on the moving blob, which remains frozen at depths of between 3,000 to 4,000 feet. Because the oil blob is heavier than water, it remains frozen at current depths.

The oil spill in the Gulf of Mexico from a collapsed offshore drilling rig could affect White House plans to extend offshore drilling, press secretary Robert Gibbs acknowledged as the oil slick threatened onshore sites from the Louisiana wetlands to the Sarasota beaches and disrupted fishing and energy industries. As oil giant BP mobilized resources to try to stop the leak and to mitigate its damage, President Barack Obama called the spill “potentially unprecedented environmental disaster.” However, some critics charged that the administration’s slow response to the rig accident and Obama’s decision to take part in the humorous proceedings at the White House Correspondents Dinner as the disaster unfolded has been as bad as the Bush administration’s sluggish response to Hurricane Katrina and the subsequent flooding of New Orleans.

Even as the GOP has gotten some harsh words for having its two SEC commissioners side with Goldman in the recent vote to press charges against the squid, Darrell Issa has decided to turn the tables, and is demanding all correspondence between the Syndicate Encouraging Corruption and "White House aides, Democratic Party committee officials, or members of Congress or their aides" Politico reports. The reason - Issa is asserting that Friday’s fraud filing against Goldman Sachs raises “serious questions about the Commission’s independence and impartiality.” On the other hand, letting rampant corruption run amok and unobstructed on Wall Street with or without any form of regulatory framework (as worthless and totally corrupt as Dodd's bill is) does not seem like such fair exchange to us.

Just headlines for now. Headlines will turn to headaches for Goldman longs shortly. And what will really set off the migraine is the just released announcement that the European Commission will back a Tobin Tax on financial institutions. We are fairly confident that this would not be proposed without at least a preliminary nod from their counteparts across the Atlantic. We believe that the slow but certain conversion of the banking sector into a utility industry is now reality. And yes, bonuses in utilities max out at 25% of the base, not 2,500%.

Not that this should surprise anyone at all, but it does seem to sound pretty official now.

Bloomberg: "Treasury Secretary Timothy Geithner “was not involved” in decisions by the Federal Reserve Bank of New York when it told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks in 2008, White House press secretary Robert Gibbs said."