Posts filed under “Derivatives”
While the name Abacus is famous as Goldman’s fraudulent CDO scheme – the poster child for the rampant fraud on Wall Street – another Abacus (a small bank) has just made news by being criminally indicted for mortgage fraud.
Bloomberg’s Anthony Lee Pacchia interviewed Bill Black on the meaning and ramifications, and sent me the following summary and clip:
Manhattan DA Cy Vance given us a rarity in filing *criminal* charges against Abacus Bank and 19 former employees for mortgage fraud. The papers say the bank originated liar loans, a common practice for most banks. But according to guest Professor William K. Black, don’t expect this case to lead to more prosecutions of large banks despite overwhelming evidence of rampant fraud amongst the big banks in mortgage origination. A couple of his points:
-state and federal authorities don’t have anywhere near the manpower or resources to actually prosecute big banks for fraud.
-Treasury Sec. Tim Geithner has actively discouraged prosecutors from going after big banks.
-the very idea of prosecuting Abacus for a crime while allowing it to remain open is completely nonsensical and is likely to provoke a run on the bank.
Of course, fraud caused the 1930s Depression and the current financial crisis, and there’s no recovery because the government made it official policy not to prosecute fraud (and see this, this, this, and this).
But government regulators have said that they’ll take on the small fish … and let the big-time criminals go.
Michael Belkin is the author of the eponymously named Belkin Report — a highly respected institutional quantititative/technical service that looks at global markets in equities, commodities, currencies and bonds. His report this week is tongue-in-cheek titled “Where Else Are You Going To Put Your Money?” and begins with this delightful spoof of the Euro bailout…Read More
As An Encore to Bailing Out the Big Banks, Government to Backstop Derivatives Clearinghouses … In the U.S. and Abroad … Which Will Lead to Bailouts and Encourage Even More Fraud The government has been bailing out the giant, insolvent banks for years. (Many of the bailed out banks are foreign.) That is preventing the…Read More
The claim is being made that JP Morgan’s $2 billion trading loss was in a trade that was a “a hedge.” It doesn’t take much review to easily disprove that position. We first learned of this particular trade when they began to distort credit indices. Any trade so huge that it impacts its markets –…Read More
Bloomberg’s Dawn Kopecki talks about JPMorgan Chase & Co.’s $2 billion trading loss after what Chief Executive Officer Jamie Dimon calls an “egregious” failure in the firm’s chief investment office. Kopecki speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “InsideTrack.”
Source: Bloomberg, May 11 2012
Nationally renowned forensic accounting expert, Thomas A. Myers, explains the fundamentals of credit defaults swaps and synthetic CDOs (collateralized debt obligations). These structured finance products were at the heart of the market meltdown, and were the building blocks of numerous allegedly fraudulent transactions, including the Goldman Sachs ABACUS deal, a transaction that caused the SEC to take significant action.
Via The Trader
For more information on the Goldman ABACUS deal, including an overview of the alleged fraud, visit the T.A. Myers & Co. website: