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HomeLegalized Bribery ***UPDATE***
Posted by Larry Doyle on February 18th, 2009 8:55 AM |
(Editor’s Note: This post is an update to the piece Legalized Bribery, which was originally published on 2/16/09)
***Update*** After Bernie Madoff, it appears the next largest, fraudulent investment scheme is centered on an entity known as Stanford Financial. This company has offices in Houston and also operated an offshore bank in the Caribbean. While this story is developing, it is not surprising that the main principal, Allen Stanford, knew how to play the “Legalized Bribery” game I highlighted on February 16th. Who benefitted from his millions in gifts and lobbying? Charlie Rangel (D-NY), Greg Meeks (D-NY), Bill Nelson (D-FL), Pete Sessions (R-TX), former CA governor Gray Davis, and the Democratic Party. Check it out: Texas Businessman Sought Influence in Corridors of Capitol
I will continue to update this story on an ongoing basis. In the meantime, you can access my original piece entitled Legalized Bribery.
Where East Meets West
Posted by Larry Doyle on February 18th, 2009 6:00 AM |
In the late ’80s, an international banking crisis in Latin America and South America led to massive losses for many money center banks here in the United States. In the late ’90s, the collapse of the Thai bhat and Russian ruble were the precursors to global economic turmoil and significant dislocations in the capital markets. Fast forward to the current economic turmoil and the bulk of the problems have emanated in the developed markets. From the United States to the U.K. to Japan there are major destructive forces at work. Emerging markets have been following the developed markets with signs of stress present but not overwhelming…..until today.
As if western European banks did not already have enough to worry about, a major factor in Tuesday’s selloff in global equities was the expectation of truly massive unrealized losses due to exposure to the emerging economies of eastern Europe.
With capital flowing into eastern Europe truly drying up (effectively financial protectionism), the pace of delinquencies and defaults on loan payments is expected to skyrocket. European banks are not well positioned to deal with these losses. I would expect this situaiton will lead to the formal nationalization of many European banks. Does that create a wave of nationalization around the globe? At the very least it will put added pressure on the Euro and increase the sovereign credit risk of many European nations.
Banks Reel On Eastern Europe’s Bad News . . .
The Wall Street Journal; February 18, 2009
By Marc Champion, Joanna Slater and Carrick Mollenkamp
Legalized Bribery
Posted by Larry Doyle on February 16th, 2009 6:57 PM |
Quality business relationships are always mutually beneficial. If they are not mutually beneficial, then they will not thrive or perhaps even last at all. A strong business relationship, like any personal relationship, needs a foundation of honesty and
integrity. As in any relationship, there will be plenty of instances in which the parties have disagreements and misunderstandings. If the relationship is strong enough, it can not only endure through these times but often grow stronger as a result of them.
The challenge in any relationship is when one party is conflicted and attempts to serve two masters. These conflicted relationships – whether personal, political, social, or business – must change in order to grow or are doomed to languish and underperform if not die completely. On Wall Street, a business that so grossly prioritizes short term profits versus long term customer relationships will not grow. Perhaps for a period of time the excess profits will be addicting and mesmerize management, but over time that model will not work. Bear Stearns is a classic example of this principle. From having worked there for 7 years in the 90s, I evidenced it firsthand. (more…)
Cheaters Never Win
Posted by Larry Doyle on February 12th, 2009 7:34 PM |
While our country has had high profile cheats such as Bernie Madoff, Barry Bonds, and the crowd from Enron amongst MANY others, we have other cheats permeating our lives every day. Tim Geithner offered that “he screwed up” on his taxes and Alex Rodriguez claimed that he was young and naive from 2001-2003 when he took steroids. In my opinion, I believe both of these individuals are representative of a society that has become far too lax in tolerating a lack of decency and integrity. This is not good business!!
In the midst of the current economic turmoil, we all want to look for individuals, groups, parties, and/or industries that are culpable and direct our indignation towards them. While we may gain some sort of short term gratification, are we changing the nature of the dialogue and in turn the course of our country? I think not.
The opportunity for the “silent majority” within the American public to voice their opinion, promote real core values of decency and accountability, and “lead” our country has never been greater. (more…)
Let’s Question the Bank CEOs
Posted by Larry Doyle on February 11th, 2009 9:27 AM |
This morning at 10am, the CEOs of the major money center banks in our country will be in Washington to face Congressional heat. Watch it LIVE on C-Span3.
These CEOs are easy targets for plenty of reasons. As a precursor to their testimony, I thought it may be helpful to view a 1-minute clip of Jamie Dimon, CEO of JP Morgan, commenting on the proposed stimulus plan, the state of the banking industry, and the concept of nationalizing the banking industry.
If I were questioning these CEOs, I would want to ask the following:
1. To all the CEOs, how do you justify paying $18+ billion in year end bonuses after having taken more than $150+ billion in government funding?
2. Why shouldn’t Citi be formally nationalized right now given the market’s belief that if positions were marked to market properly that the institution would be insolvent?
3. How do you justify the egregious process of raising rates on credit card lines for consumers who are not delinquent?
One MASSIVE Margin Call
Posted by Larry Doyle on February 10th, 2009 3:46 PM |
In light of the serious economic crisis facing our country and the world today, there is understandably heightened interest and anticipation towards both the proposed Stimulus Plan and the newly designated Financial Stability Plan. Clearly every individual in our country is impacted by this turmoil and we are hopeful that our leaders in both the private and public sectors can display the real leadership necessary to “right the ship.” Let’s provide a concise review of the newly designated Financial Stability Plan proposed today by Secretary Geithner. I’ll then move toward a further review of our economy and what it means for us going forward.
Financial Stability Plan
Secretary Geithner prefaced his remarks by highlighting that this process will “take time to resolve.” He offered that there is plenty of blame to go around to the public and private sectors, including the regulatory and rating agencies. He acknowledged that public distrust has heightened in the process. While he believes the government is being appropriately aggressive with this plan, I do not share that opinion. I commend him for emphatically stating that there will be total transparency in the process, along with strong contingencies for any entities that borrow public funds. All details will be posted on www.financialstability.gov.
While Geithner did lay out the overview of the plan, he did not extensively provide details. The market has sold off 3% in the process. I believe the market also sold off given the realization that this plan is going to take a LONG time to make a real impact. Let’s get to the meat of the plan: (more…)
An $800 Billion Mistake
Posted by Larry Doyle on February 7th, 2009 4:40 PM |
The American populace knows that the primary architects in the formulation of the Stimulus Plan working its way through Congress are Rahm Emanuel, Nancy Pelosi, and Harry Reid. This contingent, along with President Obama, have not been bashful in stating they view the November election results as effectively a mandate to change policies emanating from Washington. Against that backdrop, the initially proposed Stimulus Plan was so loaded with pork that the Republicans and the American population at large slammed it as more a promotion of the Democratic agenda than a true stimulus plan.
I will give President Obama credit for formulating a Panel to Advise Obama on Economy. This panel will be known as the White House Economic Recovery Advisory Board. The Board will be headed by former Fed chair Paul Volcker. He will be joined by Jeff Immelt of GE, James Owens of Caterpillar, William Donaldson, former SEC chair, Roger Ferguson Jr. of TIAA-CREF, Richard Trumka of AFL-CIO, Anna Burger of SEIU, and Martin Feldstein, renowned Harvard economist. The group will be guided by Austan Goolsbee, an economic adviser to the White House.
Do you think President Obama and his economic team would listen to Mr. Feldstein or is that a “mere courtesy” having him on the board. Let’s review what Mr. Feldstein said about the Stimulus Plan just last week.
Stimulus Bill . . . Where’s the Accountability?
Posted by Larry Doyle on February 4th, 2009 4:31 PM |
I fully appreciate the dire circumstances of our current economic times. I am fully supportive of promoting programs that help those who are unemployed, losing their shelter, healthcare, and basic necessities. In times of crisis, Americans need to take care of our fellow citizens. History has proven we need bold moves and strong leadership. In the face of these needs, the politicians in Washington who crafted the economic stimulus plan loaded it up with so much pork that it is more in the camp of “feeding from the trough” than providing critically important stimulus.
We had written previously that we were concerned this bill would be more a promotion of the Democratic agenda than a focus on judiciously allocating capital to generate the greatest immediate impact and laying the foundation for real long term sustainability. Leave it to the base elements of our political process to start from a bad spot and work towards something acceptable than displaying real statesmanship right from the outset.
Who understands this? The American people understand and are voicing their opinions en masse to their elected officials. The pols are hearing them and representatives on both sides of the aisle are working to refine this piece of legislation. A lot of the “fat” in this bill must come out. Why can’t we get a public accounting of the politicians who include the different requests for shameless funding?
Why is it that virtually every economist I have read has repudiated the structure of this bill. Where’s the leadership? I am fully supportive of funding programs that will address real needs and pay long term dividends. In regard to water parks, Hollywood film production tax cuts, STDs, and the like, what country is this? Who proposed these programs? While Obama continues to defend this stimulus plan, the American populace is rallying for significant changes.
LD
Will Be Held to Account
Posted by Larry Doyle on January 21st, 2009 8:25 AM |
All eyes were fixed on Washington on Tuesday. Prior to addressing dramatic developments in the world of finance, I would like to make a brief comment about the inauguration of Barack Obama from a historical perspective. I am proud to be an American and revel in seeing the smooth transfer of power. I think back to the stories my Dad shared with me as to how Irish politicians in Boston gained power. In the late 1800s, many job listings in Boston, and I assume other cities as well, included the letters NINA. “No Irish need apply” branded my ancestors as second class citizens. My Irish forefathers had a burning desire to move out of the ghetto. That desire was aided by the general ascent of the Irish to political power in Boston.
While I certainly do not agree with President Obama on a wide array of issues, I do hope President Obama’s ascendancy to the highest office in the land inspires current and future generations of African Americans and others who may have felt disenfranchised. For our country and all her citizens, I wish him well as he undertakes his role.
In the course of his speech this afternoon, President Obama remarked, “those of us who manage the public’s dollars will be held to account–to spend wisely, reform bad habits, and do our business in the light of day–because only then can we restore the vital trust between a people and their government.” I am going to take him up on this.
As I heard this remark, I thought of my desire to pursue further questioning of proposed SEC chair Mary Schapiro. Rest assured, we will push on for the simple reason that our democracy deserves no less. I hope everybody who reads our work will join our efforts and, as necessary, will write or forward material to your respective representatives in Washington. (more…)
