New Pecora: Financial Crisis Inquiry Commission Discussion Thread
Alright, this is a hot button issue and folks seem to want a place to chat on the proceedings in the Financial Crisis Inquiry Commission with the Masters Of The Universe.
It is live on CSPAN and here is a web link to streaming CSPAN coverage.
Discuss away!!
Most of the questions are going to Goldman Sachs CEO Lloyd Blankfein. Earlier he said that in regard to the failure and economic activities that have taken place over the last decade have to be thought about in the “context of the time” He referred to the crisis as a “hurricane” several times. Angelides ( I believe he is the chair of this committee) responded “hurricanes are an act of God” The economic crisis was an “act of men and women”
Blankfein knew exactly what was going to happen to the economy (helped to cause both the bubble and highly predictable bursting thereof), made money all the way up, caused untold numbers of short-squeezes to prolong the game, and positioned the firm to make money all the way down (swaps, shortselling, etc.). He knew exactly what the deal was with AIG, and knew that he could count on his agents inside the FED and Treasury to pay him at 100 cents on the dollar.
Anyone who doesn’t get that these guys planned all of this is living in denial. All one need do is follow the money. There are no coincidences.
My trash can, waiting for pickup, was victim of a hit-and-run, so I had to go clean that up. Were Born’s questions effective?
(Yes, it is Phil Angelides.)
I cannot judge the effectiveness of Born’s questions (or anyone else’s) so quickly. That kind of judgment comes better in due time.
Bob in AZ
Would that we could enlist Elliot Spitzer( are someone like him that was not tainted by his own scandal) -so that we could have a true independent prosecutoer to go after these gangster banksters .
Meanwhile we long ago moved all of our accounts to A Plus Credit Union -a locally chartered institution . It realy better at the credit union -they are making lots of loans both commercial and private . They really care -call us by name when we step in the lobby .
“Think globally act locally “
Apparently Bob Schacht has something going too:
Oops– see bmaz @6 for what I was going to write. My diary includes background links to Cynthia Kouril’s articles on the Pecora commission, as well as links to the live blogging.
Bob in AZ
Very cool! Thnx.
FCIC co-Chair Bill Thomas is inviting the public to submit questions they ought to be asking.
The FCIC Web page has been updated within the last 24 hours and now has a bunch of info on it.
Bob in AZ
Glad you put that up. Heard him say this and then meant to post the link. Thanks
Hey that is a great description for what is taking place. Taxpayers doing what they are supposed to do the financial industry comes by hits the Treasury and the taxpayers get to clean the mess up.
Aargh! I clicked on the cspan link and got — Pete Hoekstra!
Are the hearings over for the day?
No, though I have no idea what’s up with CSPAN.
Bloomberg TV had the first panel, and sounded as if they would have the others (2 more scheduled today, 3 tomorrow) later —after 3pm maybe?
They had some technical difficulties for their live feed on TV, but they’re taping the session and will re-broadcast later. However, you can follow the session live via the CSPAN website.
Bob in AZ
One of the interesting parts of the second panel is that they are being asked to comment on the testimony of the first panel. This creates some useful tension that helps to sharpen the focus.
Bob in AZ
More kabuki!
Please wake me up when we have a million Americans surround the WH and Congress with pitchforks demanding the Wall Street and DC fraudsters be prosecuted.
Your going to be sleeping a long time
For those of us working and not able to watch what are most folk’s overall impressions of the day?
TIA
I could only watch for awhile. Thought it was odd to have the panel be asking some of the very folks who created the mess about what and how things should change. Did notice while I was watching that most of the questions were going to the CEO of Goldman Sachs. Who tried his best to blame the crimes that took place as a “hurricane” as if the economic disaster had not been created by greedy humans. The chair of the committee did not let him get away with that spinning “hurricane” hogwash
A hurricane? As someone whose hometown was hit by Ike I resent the hell out of that. Glad to hear someone called him on it.
Frakking asshat.
I left a preliminary impression over at my Seminal diary on today’s hearings. I’ll put up a more detailed summary of Day 1 in a bit.
Bob in AZ
A “common carrier” in telecommunications is a firm, especially recognized by the gov’t, which carries anybody’s calls or video with no prejudice and without eavesdropping.
Goldman-Sachs portends to be a common carrier (of sorts) wrt financial assets they would broker. But, they went further, they used that information as well as their own knowledge (and opinion) of different kinds of investment assets.
Can one be a bank with deposits and risk those in investments only a day-trader could try?
Can one be an insurance company with a trading floor and use the credit rating of your insurance reserves to under-score the safety of your trading?
Can G-S really be a common carrier and not be tempted to trade on their knowledge of what others are doing?
We have some problems in the financial world and many have been around forever. Add on top of that the millions of dollars used to get deregulation from politicians and you end up with a disaster.
Does Pecora have the answers? Perhaps some, but today’s financial world is a bit different. We should also look to the Europeans and anywhere else we might get ideas.
We need to know how to keep different kinds of financial firms and their activities separate from others. Bank deposits & insurance reserves do NOT go with speculative trading.
We also need to finally decide what kinds of things (such as a naked CDS) should be done away with altogether.
I have some knowledge of object-oriented programming for programming languages and computers. The concept of modularity and objects could be of some use wrt the many different kinds of financial firms. It’s based on mathematic set theory and it’s pretty well defined.
An object has an identity, set of behaviors and set of data about it’s own state. A financial firm should have a narrow specific kind of identity with the related set of behaviors and of course the data. Using this kind of thinking you can keep separate one firm from another (not exactly a firewall, much more than that).
Another thing which is troublesome is the potential for the domino chain effect if relationships between firms entail long carried deals and assets and whatnot. The more long-term connections which exist the more likely one’s failure would bring down the next 10. That’s not desirable and it was at the core of Lehmann Bros and it’s failure.
To fix all this will require more than just one or two committee hearings and a few slanderous remarks. Of course, we at FDL have already done a lot of the legwork on this for the past year.
Yup.
Maybe we should start a UML project to list the classes, functions, properties, and their relationships…;-)
I left a comment at the bottom of bobschacht’s Seminal Diary that references Bookstaber’s book, which IMVHO goes into the ‘code layer’ of how this mess happened, and goes back to the 1970s. If interested, you can find more over at bobs’s diary.
The FCIC (‘new Pecora’ commission) has a staff of 35 people, besides the commissioners. The people on the three panels today were willing to supply much more data to the commission. Those people represent organizations with their own data collection and analysis staff. I think they’re pretty well set up to do a significant amount of analytical work, and if they don’t get cooperation, they can issue subpoenas. We’ll have to see what happens (or doesn’t happen.)
Tune in tomorrow at 9 AM ET for more!
Bob in AZ
I was interested to hear Dimon mention that they had done stress tests (which is part of OOP as it’s done today), but that they simply didn’t consider housing prices going down 40%. One wonders if they (and everyone else on Wall St. who deal with these mortgages) greedily considered prices going UP 100%.
Wall St. can certainly learn from this experience to do more rigorous stress tests.
Another thing which came through was a complete confidence that their kind of businesses and how they do them is good and not broken. In a sense I agree with them, but it just begs the question of what was broken and whodunnit.
It can’t all be blamed on stupid politicians, can it?
I was also impressed for a brief moment by the discussion of what they thought a few years ago about the economy and the outlook. They were extremely confident and didn’t see any major impediments to tremendous world-wide growth. If they’re being entirely honest, then this crisis had to have completely blindsided them and many others.
Somehow the voices of those who thought there were problems were simply ignored. Why?
I was amused at discussion of how bonuses were based on various factors, of which profitability was first of many. With the large amounts of money in play they had to be wary of risks, but something about their environment changed and yet they didn’t catch it. That kind of blindness was obviously NOT due to stupidity. These men are all smart and experienced in their businesses.
How did they miss the changing environment? Had they not begged for it?
Do they (the top-level execs) not communicate enough with Washington?
I suppose it would be some other people further down the chain who could tell us more about the ratings agencies and why they changed and how these banks took it all in stride.
How can a changing environment not fall within the purview of the Boards of Directors? Is the system so phony (a facade) that it needs to be changed?
Questions questions. Oh, BTW, I did think there were several commissioners who asked very good probing questions. They have a lot on their plate and I think their work could be very productive.