http://money.cnn.com/2008/09/23/news/companies/fbi_finance/index.htm The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG - and their executives - as part of a broad look into possible mortgage fraud. The mortgage fraud investigation totals 26 large financial institutions involved in subprime lending.

http://bigpicture.typepad.com/comments/2008/09/ceo-clawback-pr.html Great article from The Big Picture about executive compensation of the failed banking institutions. Amazing how you can commit mortgage fraud and end up walking away with millions in severance pay. • Lehman Brothers Chairman and CEO Richard Fuld Jr. made $34 million in 2007. Lehman (OTC:LEHMQ) filed for Chapter 11 Bankruptcy protection earlier this month. Fuld also sold nearly a half-billion –$490 million – from selling LEH stock; • Goldman Sachs (NYSE:GS)paid its Chairman and CEO Lloyd Blankfein $70 million last year. Co-Chief Operating Officers Gary Cohn and Jon Winkereid were paid $72.5 million and $71 million, respectively. • Bears Sterns (BSC JPM)former chairman Jimmy Cayne, rescued by a $29 billion Fed shotgun wedding to JPM, received $60 million when he was replaced; • American International Group (AIG) chief executive Martin Sullivan got a $14 million compensation package in 2007. He was ousted in June. The insurance giant (NYSE:AIG) is on the receiving end of an $85 billion federal bailout. Robert Willumstad was handed $7 million for his three months at the helm. (Edward Liddy took over as AIG’s chief executive earlier this month). • Morgan Stanley (MS) Chairman John Mack earned $1.6 million + stock. Chief Financial Officer Colin Kelleher got a $21 million paycheck in 2007. Morgan Stanley also received an expedited approval to become a banking holding company in 48 hours -- that's record time. • Countrywide Financial's (CWF BAC) founder & CEO Angelo Mozilo, which has been at the forefront of the subprime fiasco, cashed in $122 million in stock options in 2007; His total take is estimated at over $400 million dollars; • Stanley Neal, who steered Merrill Lynch (NYSE:MER) into financial collapse before being taken over by Bank of America, was given a package of $160 million when he left his post last year; That package makes current CEO John Thain was paid $17 million in salary, bonuses and stock options in 2007 look like a bargain. • Bank of America (NYSE:BAC) is acquiring Merrill. BofA CEO Kenneth Davis brought home $25 million in 2007. • JP Morgan Chase & Co. (JPM) Chairman and CEO James Dimon earned $28 million in 2007. Chase acquired troubled investment house Bear Stearns earlier this year with the federal reserve backstopping $29 billion in Bear assets to help get the deal done. • Fannie Mae (FNM) CEO Daniel Mudd received $11.6 million in 2007. His counterpart at Freddie Mac (FRE) Richard Syron, brought in $18 million. Federal government is taking over the mortgage backers with Herbert Allison to serve as Fannie CEO and David Moffett the new CEO at Freddie. • Wachovia Corp. (WB) Chairman and CEO G. Kennedy Thompson received $21 million in 2007. He was succeeded by Robert Steel as CEO in July. Steel is slated to get a $1 million salary with an opportunity for a $12 million bonus, according to CEO Watch. Wachovia (NYSE:WB) is one of the banks that could be sold in the midst of the financial crisis. • Seattle-based Washington Mutual (WM) will pay its new CEO Alan Fishman a salary and incentive package worth more than $20 million through 2009 for taking the helm of the battered bank, according to the Puget Sound Business Journal.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a78TcheLW_aw&refer=home Looks like they may try addressing what they believe to be securities fraud in the bail out as well. I'd say they need to pick their battles. U.S. lawmakers may seek to include commodity speculation limits in legislation designed to rescue banks from bad mortgage investments. Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are urging skeptical lawmakers to quickly pass the $700 billion package. ``I know for a fact that some members of Congress are working to include speculation legislation in the financial markets legislation,'' CFTC Commissioner Bart Chilton said yesterday in an e-mail. ``Those efforts, I think, may get fueled by the large spike in oil prices.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEyg9syOgmjE&refer=home First off, the problem with the bailout in general is that there is not a lack of buyers for these assets. There is a lack of buyers willing to pay more than the securities are worth. That is a key distinction to make because if the government is going to bailout the financial firms they will be paying more than the market. This emphasizes further that Bernanke has the intention of paying more than the securities are worth by saying that taxpayers should pay hold-to-maturity prices. That is downright wasteful spending. Another problem I have with this bailout is that they use the facade of we are doing this to ensure that there are banks lending. Ok, if that is the case why not use the $700 billion for lending purposes either directly to the people or through the normal methods of the federal reserve. Although, I enjoy that at least someone was speaking logically and hopefully they will be heard. ``They are basically saying, `Let's take a best-case scenario, let's assume we don't have losses,''' said Julian Mann, vice president at First Pacific Advisors LLC in Los Angeles. ``Home prices continue to deteriorate. There are real losses here.''

http://www.nytimes.com/2008/09/23/business/23funds.html?ref=business There is no reason that tax payer money should be used to support money market funds. If they wanted higher returns from these types of funds they should be willing to accept that its possible for the value to decrease. This particular lawsuit is interesting in that it alleges the Reserve Fund warned certain clients prior to notifying the public. Glad that we give these type of people our tax dollars to reward them when they commit fraud.

http://www.nytimes.com/2008/09/23/business/23skeptics.html?_r=1&ref=business&oref=slogin More commentary on the proposed bailout from the NY Times... “This administration is asking for a $700 billion blank check to be put in the hands of Henry Paulson, a guy who totally missed this, and has been wrong about almost everything,” said Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington. “It’s almost amazing they can do this with a straight face. There is clearly skepticism and anger at the idea that we’d give this money to these guys, no questions asked.” “It absolutely has to be punitive,” Mr. Baker said. “If they sell us the junk, then we own the company. This isn’t a way to make these companies and their executives rich. This should be about keeping them in business so the financial system doesn’t collapse.”

http://www.bizjournals.com/buffalo/stories/2008/09/15/daily27.html Health care fraud had been alleged against licensed clinical social worker Rhonn Gilchrist and was under investigation by the Western New York Health Care Fraud Task Force. He admitted from 2002 until 2007, he defrauded numerous insurers and the New York Workers’ Compensation system of $102,000 by engaging in double billing and billing for services he did not provide to his patients. It's people like this that make health care so expensive for the rest of us.

http://www.bloomberg.com/apps/news?pid=20601110&sid=a9AeBwRLLoHk The U.S. Securities and Exchange Commission, seeking to jumpstart a hunt for suspected manipulation of financial stocks, will require hedge fund managers, brokerages and institutional investors to describe under oath their bets on the firms. ``Abusive short selling, market manipulation and false rumor mongering for profit by any entity cuts to the heart of investor confidence in our markets,'' said Linda Thomsen, the SEC's enforcement chief. ``We will root it out, expose it, and subject the guilty parties to the full force of the law.'' When you mess with the equilibrium of the market you better be prepared for the unintended consequences...

http://www.marketingsherpa.com/article.php?ident=30828 Red flag #1. Conversion rate plummets One of the biggest indicators of fraudulent clicks is a nose-diving conversion rate. A sudden, significant drop means that you’re getting a lot more clicks that are not converting. Red flag #2. No conversions from a site Once you can see each click’s referring URL, you’ll be able to determine the quality of traffic each site sends you. “If we’ve had a thousand clicks from that URL and no conversions, we’re obviously going to question the quality of the traffic and investigate it,” Myers says. Red flag #3. Visitors from distant regions Local marketers should be concerned when receiving traffic from Bangladesh or Moscow or other foreign locales. If your marketing material doesn’t reach foreign lands, your customers shouldn’t be coming from foreign lands. You can find your visitors’ locations through their IP addresses, reported in your backend (see tool below to convert an IP address to a geographic region). Red flag #4. Drop in average session length Your website’s average session length is a great click-fraud indicator. With CPC ads, a fraudster does not intend to stay on your site. They click, generate the revenue and leave immediately within a few seconds. That will cause your average session length to drop and indicate that something fishy is happening. Red flag #5. A sudden performance dip If any metric associated with your online advertising takes a sudden unexpected hit, you want to dig deeper and find out why. Find the keyword, website, region or time of day causing the problem and report it to your network.

http://bigpicture.typepad.com/comments/2008/09/terror-attack-o.html From the Big Picture... During the day, I had an interesting phone conversation with Joe Besecker of Emerald Asset Management. And from what he was seeing and hearing about in terms of order flow, the vast majority of the financial short selling the past week or so were being done overseas. It appears that the lion's share of shorting was coming out of overseas bourses such as London and Dubai.It may not be a coincidence that the financial short selling ban is both here and in London. Then there is another coincidence: The huge increase in shorting of the financials occurred on the anniversary of 9/11. And on top of that, the same institutions attacked on 9/11/01 were the ones suffering in recent days. Joe asked the question: Is anyone investigating whether this is a case of financial terrorism? Not sure then why they would suspend short selling in the US. From everything I've heard it seems that the recent ban will do little to help the situation and may even make things worse.

http://www.forbes.com/businessinthebeltway/2008/09/17/banking-rtc-treasury-biz-beltway-cx_lm_0918rtc.html "I think we need to create an institution or a mechanism of a super-trustee to handle incredibly large institutions which may be allowed to fail and how those assets get managed and handled in an expeditious way," Rep. Paul Kanjorski (D-Pa.) said Tuesday. "If we don't do that, we'll just go from one failure to another." One proposed twist on the old version of the RTC is to allow a new entity to take on assets of otherwise healthy banks, freeing the healthy banks to regenerate. The RTC handled assets of thrifts that failed. Great idea, except for the fact that it will further subsidize losses for the banks at the expense of tax payers. The government chose to not intervene when they had a chance to regulate they should not jump in to fix things after the fact. Not to mention, as this article explains, the FDIC took over for the Resolution Trust Corporation at the termination of its charter. Now if the banks themselves independently of the government decided that it was in their best interest to create such an organization than that's a different story.

http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/

http://money.cnn.com/2008/09/15/news/economy/subprime_timeline/index.htm?section=money_latest I could think of a few things that were excluded but overall a good general timeline. For one, how about the acquisition of the largest subprime lender, Countrywide, by Bank of America in January 2008. Our the downgrades (and near failure) of the monoline insurers like Ambac, MBIA, etc. Creating a mortgage fraud timeline may be something worth pursuing in the future.

http://www.sec.gov/news/press/2008/2008-204.htm What happened to the invisible hand of the market?!?! Changes the rules during the middle of this mess destroys investor confidence, this will do much more harm than it will help. As a result, options market makers will be treated in the same way as all other market participants, and required to abide by the hard T+3 closeout requirements that effectively ban naked short selling. Rule 10b-21 Short Selling Anti-Fraud Rule The Commission adopted Rule 10b-21, which expressly targets fraudulent short selling transactions. The new rule covers short sellers who deceive broker-dealers or any other market participants. Specifically, the new rule makes clear that those who lie about their intention or ability to deliver securities in time for settlement are violating the law when they fail to deliver. This new rule is effective immediately.

http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html