"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Thursday, June 19, 2008

Cioffi and Tannin, Bear Stearns Dynamic Duo led away in handcuffs by the FBI, charged with criminal offences ...après nous, le déluge

A September 2007 Business Week report said that at a London conference in February, 2006, Matthew Tannin, a senior managing director at Bear Stearns, told investors that...

"... buying into one of the hedge funds he was hawking, the Bear Stearns High-Grade Structured Credit Strategies Fund, was akin to putting money in an ordinary bank account"

The Feds.the Department of Justice and the Securities and Exchange Commission made two major and very public moves today to crackdown, swiftly and very visibly, to demonstrate that wrongdoers in the mortgage meltdown can expect to be handled with ruthless efficiency.

The Bear Stearns Dynamic Duo, Ralph R. Cioffi, 52, and Matthew Tannin, 46, who just 18 months ago enjoyed their status (and 6 figure rewards) as top hedge managers in a firm at the vanguard of the residential mortgage backed seciritisation boom , were arrested at their homes early today. Cioffi at his family home in Tenafly, New Jersey, and and Tannin in his Manhattan duplex by agents of the Federal Bureau of Investigation .They were later indicted for mail fraud and conspiracy to commit securities fraud this morning by agents of the Federal Bureau of Investigation .

The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose collapse last year ignited the subprime mortgage crisis. Cioffi was also charged with insider trading. The Securities and Exchange Commission sued the men today, claiming they duped investors before the funds imploded.

If convicted of conspiracy to commit securities fraud, wire fraud or mail fraud, the defendants face as long as 30 years in prison. The case is U.S. v. Cioffi, U.S. District Court for the Eastern District of New York (Brooklyn) about which we are going to hear a great deal more in the coming months.

Cioffi managed the two funds that collapsed, and Tannin served as his chief operating officer. The hedge funds invested virtually all their assets in subprime-mortgage-related securities. Their investment bets failed last June when prices for collateralized-debt obligations - CDOs, linked to residential mortgage loans plummeted , as they turned sour amidst rising late payments by and defaults by borrowers with poor credit histories or heavy debt.

U.S. prosecutors are focusing on an e-mail allegedly sent by the two suggesting that their funds were headed for trouble, four days before they told investors they were comfortable with their holdings, the Wall Street Journal reported today, citing people familiar with the situation.

Today, both men walked out of FBI headquarters in lower Manhattan looking straight ahead with their hands cuffed behind their backs. Cioffi, wearing a blue blazer, tan slacks and no tie, and Tannin, wearing a blue suit and tie, were led into separate vehicles.

In another move today, two government officials said more than 400 people have been charged in a U.S. Justice Department mortgage-fraud sweep.

Called Operation Malicious Mortgage, the arrests are to be announced this afternoon by FBI Director Robert Mueller and Deputy Attorney General Mark Filip at the Justice Department in Washington. A number of arrests were made earlier this week.

The Department of Justice (DOJ) said it was pursuing 144 cases against the 406 defendants.

The DOJ estimates that total losses to homeowners and borrowers from the identified mortgage frauds in this sweep amounted to about US$1bn (£500m).

"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Mark Filip, Deputy US Attorney General is reported saying. Filip was a Federal judge in Chicago and selected by Ed Mukasey to take over effectively from the position of Gonzalez's no 2 Paul McNulty who resigned last summer. He has an impressive pedigree, there will be a lot of cell doors slamming shut this summer.

Cases involve false employment records and inflation of property values.

As nanny used to say..."There'll be tears before bedtime"

For those who missed it, start at the bottom ....

Tuesday, June 17, 2008 Bear Stearns : the gig is up , Bank Robbers to be charged this week

Tuesday, June 03, 2008 Bradford and Bingley catch cold, Wall Street gets pneumonia : S&P cans Big US Banks ratings - shares slide

Tuesday, April 01, 2008 Lehman Bros 17/3 - " Our liquidity position has been and continues to be very strong,'' Offers US$3 Bn. Convertible stock 7.25% coupon / 33% discount

Monday, March 31, 2008 German Financial regulator BaFin estimates global shakedown of US$600 Bn of which German share is 10%

Ludwig von Mises summed it up like this:"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Friday, March 28, 2008 The Banker's Money Pit swallows helicopter funds at an increasing and alarming rate. When do the Fed and the BOE run out of paper and printing ink ?

Monday, 17th March 2008 Bear Stearns basket case goes to J P Morgan for US$2 a share - share prices shrinking faster than Glaciers - Nightmare on Wall Street Part : 13

Friday , 4th March 2008 Bear Stearns shares crash 42% - Joe Lewis has lost US$600 Mn.

Friday, December 21, 2007 Bank robbers don't carry guns and wear masks these days

October 15th 2007 - You Tube- John Bird and John Fortune

Saturday, September 01, 2007 Bear Stearns - serial NY Bankruptcy Court appearances - fugitive UK citizen in the dock in Vienna - white collar crime - banking Caribbean style (Cioffi first fingered)


Anonymous said...

My Lord, you need to add an earlier date to the history.
Broadcast 14 October 2007, and specifically mentioning Bear Stearns High-Grade Structured Credit Strategies Fund

ziz said...

Curious we imagined that September preceded October in 2007.

But we will add it.

Many Thanks

ziz said...

The Tragedy is that it isn't funny.

The BOE is shoring up Northern Wreck (which curiously remains "un- re- branded) and through the "discount window" (Ditto the fed res in US) os shoring up Giod alone knows what impenetrable losses for banks like HBOS,RBD ,B&B who "sdon't really need the money" they just want address "balance sheet ..er.. imbalances".

The seciond Tragedy is that it really is a lot of people's Pension that has gone down the toilet in this scandal.

The FEC / FBI is a very sensible public policy to rea ssure the public that "something is being done" ... they simply love seing business men in business suits being led away in handcuffs on prime Time news.

Doesn't put the money back in the Pension funds but by God it makes you feel good.

Wonder when Mr Applegarth and his gang of crooks and incompetents in Geordie land will get their collar felt.

The further Tragedy, not yet realised but unfolding quite nicely thank you, is the Carbon Cap and Trade market.

As pols realise their inaction and sloth over the last decade means they now have to burn dirty coal and ever so slightly less dirty gas. Which is preferable to OAP's dying of hypothermia and the stark equation "Heat or Eat" becomes he dilemma they solve by putting another shovel of coal on the fire.

Never mind, this entirely "unpreduictable" dilemma can be blamed on the yellow peril or the brown men with beards or ..

ziz said...

Forgot to mention the £12 Mn. mortgage swindle exposed at B&B.

The word on the Street is that this is what mariners call the tip of the iceberg.

Anonymous said...

When the S-P scandal was still in the uncomfortably unresolved rumour stage late last year a local, Oz, financial commentator delivered a brief explanation of what it all meant. He laid much of the blame at the feet of Moody's and Standard & Poors for providing inflated ratings of the security of SIVs, pointing out that both outfits made bumper profits in 07 as a result of selling misleading endorsements to anyone prepared to stump up the cash.

It is to be hoped that M and S & P's leading lights will also spend time in the slammer, and that both businesses will be extinguished, or at least become the subject of deep reformation, regulation and oversight.

ziz said...

I have not read the contracts that Fitch, S&P etc., draw up for customers of their services but they will have been crafted over the years by many well paid legal operators to absolve Fitch etc.,of any consequential liabilities of anyone relying on their information etc.,

After all they can only act on the publicly available statutory information. The source of which is the Directors of the company.

If the auditors have not agreed with those valuations they have of course had the opportunity of making that clear when they report.

So Fitch etc., can (with good reason) claim that their ratings were fair, and as they all hunt in a pack they all showed much the same ratings.They are of course under threat of action from the companies they report on because slipping from one rating to one lower can cost zillions in extra borrowing costs etc.,need to re-negotiate current loans.

This is what really pissed me off at the time Northern Wreck was hitting the buffers ... Darling and other politicians were saying that NR was "solvent". They were in no position to make that judgement.

The only people who could, were the Directors in the absence of saying they were insolvent no - one is entitled (Darling , etc) to say they were solvent.

I claim then and continue to claim that, Darling especially, acted as a shadow director (Companies Act 1985, s.741) " a person who instructs other directors what to do and those directors follow his instructions. Individuals who act in this way are deemed to have the same liabilities as properly appointed directors. "

There were many instances where this happened very directly, the net result was to mislead public shareholders (many unsophistaces who received the shares "free") into believing the company was "solvent" _"Northern Rock Remains `Solvent,' U.K. Chancellor Says " Bloomberg Sept 16th "Darling authorized the emergency funding, saying the Bank of England will step in as the lender of last resort." also McCarthy of the FSA said (very imprudently"Mr McCarthy said: “If we believed Northern Rock was not solvent, ..." on 17th Sept.

These must have had the same effect say as commercial ratings companies on shareholders but in reality were worth nothing more than share tipsters. However the public shareholder is entitled to believe that the Ch of the Exchq and the Chmn of the FSA have the required information.

17th September NR shares stood at £3.20, 3 days previously they were £5.20 and on the 17th 277Mn shares were traded the highest ever.

Holders who hung on and saw them slide to nothing are entitled to question McCarthy's and Darling's statements (and intent) at that time.

What is interesting is that when JP Morgan took over Bear Stearns CEO Dimon disclosed later that the cost of shedding Bear assets, litigation expenses and other merger-related costs would soar to $9 billion from an earlier rough guess of $6 billion.

Now that the Feds have swooped on Cioffi and Tannin as individuals JP Morgan still have Barclays Bank and (at last count about 53 others) claiming gainst Bear Stearns.

One thing overlooked in all this is that Barclays complained that in Spring 2007 they couldn't get sensible (or even any) answers from the Dynamic Duo and their office about the BS funds.

So say about May 2007 Barclays new that the sub prime shit they had on board was toxic waste. You will look long and hard in their public statements for any information relating to that.

Such knowledge,London the City of, being a village must have collectively seen this ballooning problem. Remember also that Mr Applegarth way ooop North in the City that can't raise a decent footie team, was getting ready to prepare his 6 month balance sheet, Sales zooming but no profits resulting and 66% of their short term loans to be re-newed re negotiated by early Autumn.

Applegarth is not concentrating on his cricket - or his lover in the buy to let offices, he is chasing round the FSA anxious to get Basel II status - and he gets it on June 26th enabling the Board to declare a divvy raised by 33%

The City must have known the undercurrent and of course on the day they show sales up 40% and a divvy up by 33% the wise ones jumped ship and the shares dropped a pound on the day.

Applegarth couldn't give a flying fuck, he had unloaded quietly in January at the very, very top of the market.

Applegarth knew the boys at Sidley Austin , the biggest promoters of these fascinating bits of paper (indeed they acted for them on the whole "Granite" crock), they knew what was afoot in the market, Barclays did, HBOS, RBS etc. did.

Joe Punter didn't and the punditocracy if it knew wasn't telling.

Even when the ceiling came down, there was Darling and McCarthy doing the Corporal Jones act "Don't Panic" ...

Will Darling McCarthy and the others see a prison cell ? Will they see their day in court?

Fat chance.

Ditto the boys at the rating agencies.

No The SEC have moved swiftly , the Feds have got the pictures in the pres of business men in suits hauled off from home in handcuffs.

Justice is being done and beeing seen to be done.

Nothing more to see. Will ya move on please. Please ...Move on.

(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish