Friday, May 22, 2009
- Former CEO of insurance giant AIG!
- Instead of going by a snooty French name, goes by "Hank" -- after baseball great Hammerin' Hank Greenberg!
- Still manages to be described as "brusque" and "arrogant"!
- Board member of the New York Federal Reserve Bank from 1988 to 1995!
- Forced out as CEO of AIG in 2005 -- the result of an accounting-fraud investigation!
- Oversaw the creation of AIG's Financial Products Group!
- Set up the Financial Products Group such that it wasn't subject to the oversight of the AIG board of directors!
- As the largest insurer in the world, AIG depended on limiting its risk exposure!
- Instead, via the Financial Products Group's complex credit default swap (CDS) transactions, the insurer took on massive but uncertain amounts of risk!
- Because AIG was traditionally a very staid, conservative business, its securities were AAA-rated!
- As a result of that high rating, AIG didn't have to put up collateral on CDSs!
- The Financial Products Group also invested in billions of dollars of "toxic" subprime mortgage-backed securities!
- When the housing market crashed, so did the value of AIG's toxic assets!
- When AIG's capital reserves decreased as a result, its credit rating was lowered, CDS counter parties demanded $100 billion in collateral -- and the insurer cratered!
- To date, AIG has been bailed out by taxpayers out to the tune of $180 billion!
- The main beneficiaries of the AIG bailout? CDS counterparties like (wait for it...) Goldman Sachs -- which were paid 100 cents on the dollar of what they were owed!
- Greenberg refuses to accept any blame for AIG's destruction!
- According to Forbes, though, "In the end, Greenberg's legacy will be shabby"!
Posted by Joe Six-Pack at 9:37 PM
- Co-CEOs of Golden West Financial, parent company of World Savings Bank -- a major subprime lender!
- The first housing lender to offer adjustable rate mortgages (ARMs) -- one of the easy-credit products that ending up cratering the housing market!
- Also did big business in "liar's loans" -- which require no proof of income from the borrower!
- Made a regular practice of issuing illegal, predatory loans!
- Cashed out of the housing market in 2006, just as it was starting to teeter -- selling Golden West to Wachovia and making $2.4 billion in the process!
- Because of World Savings' extensive subprime portfolio, in 2008 the housing crash devastated Wachovia -- resulting in massive layoffs and the acquisition of Wachovia by Wells Fargo at a fire-sale price!
- Described as people who deserve to be shot by Saturday Nite Live!
- Now claim they're being "unfairly tarred" by accusations of their wrongdoing!
Posted by Joe Six-Pack at 9:21 PM
Wednesday, May 20, 2009
- Goes by "Larry"!
- One of the "best and brightest" acting as advisers to Barack Obama -- and former Clinton administration Treasury Secretary!
- Matriculated at MIT -- when he was 16!
- Free market ideologue!
- As chief economist at the World Bank, wrote, "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that ... I've always thought that under-populated countries in Africa are vastly underpolluted"!
- Under Clinton, helped ensure that derivatives like those that destroyed the global financial system in 2008 would remain unregulated!
- During the 2000 energy crisis in California, accompanied Enron CEO Ken Lay to a meeting with Governor Gray Davis -- to argue that the problem wasn't manipulation of energy markets by corporations, but rather state regulation!
- Key supporter of the Gramm-Leach-Billey Act, which overturned the Glass-Steagall Act and opened the door for financial institutions to grow too big to fail!
- Paid $5.2 million by hedge fund D.E. Shaw in 2008 -- for a one-day-a-week job!
- Also received $2.7 million for speaking appearances at Wall Street banks (like Goldman Sachs)!
- Central to the decision to bail out AIG and pay off counter parties to credit default swaps (like Goldman Sachs) -- to the tune of 100 cents on the dollar!
- To date, U.S. taxpayers are on the hook for $1 trillion in bank bailout money!
- Despite the global economic disaster -- and the central role market breakdowns played in creating it -- still believes that markets are "self-equilibrating"!
- Key backer of the Geithner Plan, which gives hedge funds a virtually risk-free chance to make trillions of dollars -- while costing taxpayers big-time should "toxic asset" prices remain in the dumps!
Posted by Joe Six-Pack at 11:19 PM
Monday, May 18, 2009
- In 1998, merged his Travelers insurance business with commercial banking giant Citicorp to create Citigroup -- the biggest financial services company in the world!
- Completed the Citi-Travelers merger even though the Glass-Steagall Act mandated the separation of banks and insurance companies!
- Pressed politicians to repeal the Glass-Steagall Act, keeping Citigroup intact -- and setting the stage for other institutions to get "too big to fail"!
- Introduced to Citi an aggressive take-no-prisoners corporate culture!
- Under his leadership, Citi aggressively grew its subprime mortgage lending operation -- and was repeatedly accused of predatory lending practices!
- Said to consider himself an old-fashioned, Gilded Age business tycoon -- like Andrew Carnegie!
- Since the failure of Lehman Brothers and the crash of the global financial system in 2008, propping up other too-big-to-fail institutions has cost taxpayers trillions of dollars in bailouts and guarantees!
- The cost to bail out Citigroup? $350 billion -- or $1,000 for every man, woman, and child in the United States!
- That $1,000 that used to be yours? It belongs to the same bankers who destroyed the global economy!
- The cost of the crash to society? Well, in the past year, 6 million people have lost their jobs!
- Citi's contribution to that number? 53,000 people!
- As the bank he created was being bailed out by taxpayers, took a private Citi jet -- one of the perks of his $3 million-per-year retirement package -- to Cabo San Lucas, where he and his family vacationed at a $10,000-a-night hotel!
- Saw his net worth tumble by more than a quarter in 2008 -- all the way down to $1.3 billion!
Posted by Joe Six-Pack at 7:31 PM
Thursday, May 14, 2009
- Nobel Prize-winning economist, and co-creator of the Black-Scholes equation for derivatives pricing!
- Known as the intellectual godfather of credit-default swaps -- perhaps the biggest culprit in the worst global economic crash since the Great Depression!
- Believes that all good things come from fewer rules and freer markets -- and that all bad things come from government!
- Apparently hasn't spent much time with government-employed cops ... or soldiers ... or firefighters ... or schoolteachers!
- Believes financial speculation is a good thing -- making markets more liquid and more efficient!
- The Black-Scholes equation claimed to be able to price complex derivative products -- scientifically!
- Black Scholes allowed investors to believe they could accurately measure the risk implicit in complex derivative products!
- Principal of the Long Term Capital Management (LTCM) hedge fund -- which made big bets on complex derivative products!
- LTCM employed 25 PhDs!
- In 1998, LTCM's formulas stopped working, and the fund's investment portfolio collapsed -- losing $4.6 billion in value in just four months!
- Because an LTCM bankruptcy might have caused seizures in global markets, the fund was bailed out -- to the tune of $3.6 billion!
- Busted by the government for illegal LTCM tax shelter shenanigans!
- Said, under oath, that he wasn't a legal expert -- then was confronted with a textbook he wrote, which indicated his detailed understanding of why those shenanigans were illegal!
- After the utter failure of LTCM, somehow continued to convince investors to hand over their cash -- this time to his Platinum Grove Asset Management hedge fund!
- Same old story: In October 2008, down 38 percent on the year, Platinum Grove suspended fund withdrawals!
Posted by Joe Six-Pack at 11:40 PM
Tuesday, May 12, 2009
- CEO of Goldman Sachs -- current or former employer of Hall of Idiots inductees including Hank Paulson, Robert Rubin, and John Thain!
- Goldman is known as the gold standard of investment banks!
- In May 2009, Goldman agreed to pay $60 million to settle charges that it had promoted unfair lending in Massachusetts -- to feed the appetite for fresh mortgages of its mortgage securitization business!
- Goldman issued $33 billion of mortgage-backed securities from 2005 through 2007 -- flooding mortgage lenders with capital, and leading to increasingly risky and aggressive lending practices!
- Goldman engaged in the same uber-risky practices as other big banks, but made it through the crash in one piece -- no small thanks to its many friends in high places!
- An AIG bankruptcy may well have capsized Goldman, because the insurer owed the bank $12 billion on credit default swaps!
- After a meeting at which Blankfein was the only Wall Street CEO, the government decided to bail out AIG rather than letting it go bankruptcy -- to the tune of 100 cents on the dollar!
- Tried to hide massive losses in Q4 2008 from investors -- using legal but ethically dubious accounting trickery!
- In April 2009, told Congress that bankers needed to stop making so much money that they look "self-serving and greedy"!
- Days later, set aside $4.7 billion for Goldman compensation in Q1 2009 -- or about $675,000 per employee on an annualized basis!
- Blankfein's 2006 compensation: $53 million!
- His 2007 compensation: $70 million!
Posted by Joe Six-Pack at 4:00 PM
Sunday, May 10, 2009
- Fortieth President of the United States!
- Began his career as a New Deal-supporting Democrat -- but later became the darling of the Republican Party!
- President of the Screen Actors Guild during the late-1940s Red Scare -- during which he provided the names of "communist sympathizers" in Hollywood to the FBI!
- Opposed the Civil Rights Act of 1964 -- and the Voting Rights Act of 1965!
- Held an extreme right-wing economic philosophy known as "supply-side" economics -- which held that lowering taxes more than pays for itself in economic growth!
- Supply-side philosophy was famously derided as "voodoo economics" -- by Reagan's very own Vice President, George H.W. Bush!
- Lowered taxes during his time in office, but had to pay for government somehow -- and so raised the national debt from $700 billion to $3 trillion!
- Signed an early version of NAFTA -- which made it easier for businesses to exploit workers in the relentless pursuit of bigger profits!
- Fired striking air traffic control workers -- but reduced business regulation!
= Opposed giving health care to all Americans!
- Believed in unregulated free markets as the best way to address all of society's problems -- saying, "Government is not the solution to our problem -- government is the problem"!
- Actually believed AIDS might be God's punishment on those with sinful lifestyles!
- Cut housing subsidies by three-quarters -- causing an explosion in the American homeless population!
- Provided the philosophical underpinning for the practices and policies that would lead to global financial meltdown in 2008!
Posted by Joe Six-Pack at 7:50 PM
- Husband of Secretary of State Hillary Rodham Clinton!
- From a town called Hope!
- Before having heart surgery in 2004, known to enjoy the occasional cigar!
- Nickname: Slick Willie!
- Key supporter of the North American Free Trade Agreement -- which made it easier for businesses to exploit workers in the hunt for ever-bigger profits!
- Signed welfare reform legislation, making life more difficult for millions of Americans!
- Fostered the inflation of the 1990s dot-com bubble, dress rehearsal for the economic meltdown of 2008 -- and product of the same free-market ideology!
- Pushed to expand subprime mortgage lending!
- Ramped up Fannie Mae and Freddie Mac leverage levels to finance subprime mortgages!
- Repealed the Glass-Steagall Act, which kept investment and commercial banks and insurance companies separate -- paving the way for the creation of too-big-to-fail financial institutions!
- Signed the Commodities Futures Modernization Act -- ensuring that the risky derivatives that would topple the global financial system remained exempt from regulation!
- Since leaving government, has made some $75 million writing books and giving speeches!
- Made millions more selling his Rolodex of Middle Eastern royals to the investment firm of Ron Burkle -- a billionaire buddy and political contributor!
- Is he an idiot? Depends on what the meaning of "is" is!
Posted by Joe Six-Pack at 1:47 AM
Saturday, May 9, 2009
- CEO of Washington Mutual -- the biggest failed bank in history when it was seized by the FDIC on September 8, 2008!
- Took home more than $100 million in compensation while at WaMu!
- Dreamed of making WaMu the Wal-Mart of banking!
- Called WaMu branch offices "stores"!
- Made the bank a big player in subprime lending!
- Managed WaMu in such a way that the bank was repeatedly accused of illegal, predatory lending practices!
- Under Killinger, WaMu "pressured appraisers to provide inflated property values that made loans appear less risky" -- and "pressed sales agents to pump out loans while disregarding borrowers' incomes and assets"!
- 2003 WaMu ad campaign: "The Power of Yes"!
- Received compensation of more than $14 million in 2007, even as the housing market crashed, foreclosures soared -- and WaMu's stock price fell by 70%!
- 2008 WaMu ad campaign: "WaMu - Whoo Hoo!"
- In July 2008, then-Treasury Secretary Hank Paulson warned Killinger to sell WaMu -- before it collapsed!
- In 2003, predicted that in five years, thanks to that massive growth, WaMu would no longer be considered a bank -- and was correct!
- Left WaMu with a $44 million golden parachute!
Posted by Joe Six-Pack at 1:42 AM