KeNo's Housing and Economic Portal: Friday December 16 Housing and Economic stories

Thursday, December 15, 2011

Friday December 16 Housing and Economic stories

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TOP STORIES:

Occupy Wall Street's Making It Harder for Banks to Recruit - (www.theatlanticwire.com) Occupy Wall Street has given Ivy Leaguers a conundrum. See, normally these prestigious undergrads flock to the consulting and banking industries, because those are the ones recruiting them on campus. But, now that Occupy Wall Street momentum, in some form, has taken hold on most campuses, how's a conflicted, debt-ridden college student to feel about choosing to work for The Man while still at school? DealBook lays out the dilemma: "At Harvard, Dartmouth and Cornell, student newspapers have featured polemic columns that urged fellow students to consider working somewhere — anywhere — outside finance." So how have students responded to their hippier classmates? For "those students still hoping to land a job in finance, the added peer pressure has forced some of their enthusiasm underground."

Crony Capitalism: Hank Paulson's Extraordinary Meeting - (www.propublica.org) Despite the economic wreckage we are still trying to repair, we have yet to have an adequate accounting of how the financial crisis happened, what caused it, and who knew what when. According to the story, on July 21, 2008, then-Secretary of the Treasury Hank Paulson met with “a dozen or so hedge- fund managers and other Wall Street executives” and discussed “a possible scenario for placing Fannie [Mae] and Freddie [Mac] into ‘conservatorship.’” That’s a fancy term for a government seizure that would have allowed the entities to keep operating, but would have caused severe adverse consequences to holders of the Frannies’ equity and, possibly, debt. A fund manager told Bloomberg he was “shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan.” After the meeting, this manager consulted a lawyer, who told him to cease trading immediately in the Frannies, lest he later be accused of – here’s the rub – insider trading.

Even Wall Street Insiders Express Quiet Outrage At The Rigged Game - (www.nytimes.com) Last week, I had a conversation with a man who runs his own trading firm. In the process of fuming about competition fromGoldman Sachs, he said with resignation and exasperation: “The fact that they were bailed out and can borrow for free — it’s pretty sickening.” Though the sentiment is commonplace these days, I later found myself thinking about his outrage. Here is someone who is in the thick of the business, trading every day, and he is being sickened by the inequities and corruption on Wall Street and utterly persuaded that nothing has changed in the years since the financial crisis of 2008. Then I realized something odd: I have conversations like this as a matter of routine. I can’t go a week without speaking to a hedge fund manager or analyst or even a banker who registers somewhere on the Wall Street Derangement Scale. That should be a great relief: Some of them are just like us! Just because you are deranged doesn’t mean you are irrational, after all. Wall Street is already occupied — from within.

Gingrich made millions lobbying to raise your insurance and drug costs - (www.nytimes.com) Newt Gingrich is adamant that he is not a lobbyist, but rather a visionary who traffics in ideas, not influence. But in the eight years since he started his health care consultancy, he has made millions of dollars while helping companies promote their services and gain access to state and federal officials. In a variety of instances, documents and interviews show, Mr. Gingrich arranged meetings between executives and officials, and salted his presentations to lawmakers with pitches for his clients, who pay as much as $200,000 a year to belong to his Center for Health Transformation.

What happens when Wall Street breaks the law? Not much. - (www.cnn.com) The Times found 51 cases over the past 15 years in which 19 Wall Street firms broke anti-fraud laws they had promised not to break. These firms include Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America. When faced with these multiple violations, the SEC simply reaches another settlement and extracts another promise, rather than bring a contempt charge in court. Furthermore, these settlements do not even require the companies to admit to the charges brought against them. Instead, there is a provision that lets them "neither admit nor deny" the violations, which makes them less vulnerable to investor lawsuits. Shortly after the Times article appeared, the Washington Post reported that the SEC agreed to collect $285 million as a penalty for a $700 million loss to investors due to fraud committed by Citigroup, and again allowed Citigroup to cop the "neither admit nor deny" clause. On Monday, U.S. District Judge Jed S. Rakoff rejected the settlement as too weak, joining others who criticized the SEC as toothless, saying it gives a pass to executives and allows corporations to conceal that they violated the law.