Wednesday, November 11, 2009

Bear, AIG and Other Headlines

  • Ralph Cioffi and Matthew Tannin, the two former Bear Stearns hedge fund managers were found not guilty of securities fraud and insider trading. Ever since these two bozos were arrested, I've marveled that somehow they wound up as the only ones prosecuted for securities fraud from the credit crisis. After all the obvious mortgage fraud, horrendous underwriting, bogus creation of securities, stupid AAA ratings granted by the rating agencies, not to mention major conflicts of interest from certain regulators with crucial decision making powers, somehow all prosecutors could come up with were these two clowns. Two former salesman who had dreams of hedge fund greatness, who discovered in a few short years that they were really really lousy money managers. In any event, the jury didn't buy the prosecution's case, which is amazing considering how much average Americans are dying to see Wall Streeters burned at the stake.
  • AIG's CEO Robert Benmosche, who has spent a whopping three months at the helm of the beleaguered insurer, told the board that he is considering stepping down. Apparently, he is really mad that the government is interfering with his ability to run the company like he wants. Pretty unbelievable that the government, which owns 80% of AIG, due to a massive $125 billion or so infusion into the otherwise bankrupt insurer would have the nerve to interfere with how the company is run. I'm not quite sure why anyone would actually care if Mr. Benmosche stays or goes. So far his biggest accomplishments have been taking a two week vacation in Croatia during the first two weeks on the job, threatening to quit when his $10.5 million pay package wasn't yet approved, and then publicly insulting various regulators with outlandish comments that no sane CEO would ever make. Here's hoping that when Mr. Benmosche does retire, he goes back on his meds.
  • US Treasury Secretary Tim Geithner said Wednesday that maintaining a strong dollar is "very important" for our country's economy. Then he was caught winking at Ben Bernanke. Meanwhile, the dollar fell through 15-month lows and gold hit new highs.
  • Chris Dodd, chairman of the Senate banking committee, introduced a new bill that would strip the Fed of its powers and create a single banking regulator. Naturally, neither the Fed nor the FDIC are happy about losing some of their powers, but when you've spent years asleep at the switch while the banking industry created a massive bubble, maybe you shouldn't be the one in charge next time. The bill does include a new Consumer Financial Protection Agency, which the Republicans (i.e. the banking industry) adamantly oppose, but it does not call for the break-up of large banking institutions.

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