The reasons for his failure to reap credit for any economic accomplishments are a catechism by now: the dark cloud cast by undiminished unemployment, the relentless disinformation campaign of his political opponents, and the White House’s surprising ineptitude at selling its own achievements. But the most relentless drag on a chief executive who promised change we can believe in is even more ominous. It’s the country’s fatalistic sense that the stacked economic order that gave us the Great Recession remains not just in place but more entrenched and powerful than ever.
No matter how much Obama talks about his “tough” new financial regulatory reforms or offers rote condemnations of Wall Street greed, few believe there’s been real change. That’s not just because so many have lost their jobs, their savings and their homes. It’s also because so many know that the loftiest perpetrators of this national devastation got get-out-of-jail-free cards, that too-big-to-fail banks have grown bigger and that the rich are still the only Americans getting richer.
This intractable status quo is being rubbed in our faces daily during the pre-election sprint by revelations of the latest banking industry outrage, its disregard for the rule of law as it cut every corner to process an avalanche of foreclosures. Clearly, these financial institutions have learned nothing in the few years since their contempt for fiscal and legal niceties led them to peddle these predatory mortgages (and the reckless financial “products” concocted from them) in the first place. And why should they have learned anything? They’ve often been rewarded, not punished, for bad behavior. Continue reading “From the Cerebral Wing of the Slabbed Nation: President Obama, The Peter Principle, Crooks and Liars.”
Today we’ll continue analyzing the concept of Moral Hazard in the context of rule of law as differences in how contracts are honored are compared and contrasted. The result, as illustrated by Hurricane Katrina’s aftermath is that some contracts are more “sanctified” than others. Those who have been screwed by big insurance, especially AIG, knew immediately Ed Liddy wasn’t talking about their contracts when he was trying to fleece taxpayers into paying those executive bonuses using that bogus rule of law argument.
Claims handing at AIG has enjoyed the reputation of being the most hard nosed, despicable sum bitches in the industry and Mr Greenberg deserves that credit too. People across the country have been shafted from small auto claims to large Katrina related homeowner claims so I was not surprised to see AIG once again in the news for shafting government contractors badly hurt in Iraq. We’ll start with a story from last August in the Charleston Gazette on Stan White’s troubles collecting from AIG unit American General Life Insurance Company:
The parents of an Iraq war veteran who died in his sleep in February while recovering from post-traumatic stress disorder have sued his insurance company after it refused to pay his life insurance.
The emperor has no clothes! Bloomberg has the story (H/T Russell):
Billionaire Warren Buffett’s Berkshire Hathaway Inc. had its top-level AAA credit rating cut by Fitch Ratings, which cited concern about the potential for losses on the insurer’s equity and derivatives holdings.
Buffett’s role as chief investment officer also puts the company at risk if he becomes unable to do the job, Fitch said in a statement. Fitch cut the so-called issuer default rating on Berkshire to AA+, and senior unsecured debt to AA. The insurance and reinsurance units kept their AAA status, with a negative outlook for all entities, Fitch said.
“Fitch views this risk as unrelated to Mr. Buffett’s age, but rather Fitch’s belief that Berkshire’s record of outstanding long-term investment results and the company’s ability to identify and purchase attractive operating companies is intimately tied to Mr. Buffett,” Fitch said. Buffett is 78.
The Hartford’s President/COO thinks now is a good time to skedaddle but cry not for Tom Marra as he leaves still very well stocked with freebie stock. At least the HIG shareholders that lost their rear ends have the pleasure of knowing his option gun is worthless. Next stop, probably through the revolving door to the Connecticut DOI as it’s time for Mr Sullivan to recycle back to the Hartford. So far no word yet from Connecticut DOI on how well counting deferred tax assets as tangible capital is working out for consumers there. The market’s verdict is decidedly a big two thumbs down.
In hindsight it is clear Senate Majority Leader Harry Reid knew exactly what he was talking about last October when we welcomed him to slabbed, especially when we later found out bankruptcy for the Hartford was closer than Senator Dodd or they admitted. Turns out the Hartford liked very much hopping in bed with moneychangers and now finds itself about broke despite TARP. We’ve had national financial media all over our old slabbed threads on that topic and more yesterday so today it is no surprise to us the Wall Street Journal is reporting long lost brother Darrell is needing big help and unfortunately for them Susan Voss isn’t around to help them cook their books and count deferred tax assets toward the statutory TNW (tangible net worth). Predictably in$urance inc.’$ very own $enator Chri$ Dodd is doing his part beating the drum to suspend fair value accounting so we can all pretend the toxic mortgages and worthless financial guarantees the Hartford paid good money for are actually worth something (heckuva a job Chrissy):
The U.S. Treasury Department and the Securities and Exchange Commission are not discussing the suspension of a controversial fair value accounting rule blamed for billions of dollars in bank losses, a source familiar with matter said on Thursday.
Speculation that the U.S. government would suspend the accounting rule surfaced earlier on Thursday, sending U.S. stocks higher. But the source said no such discussions had taken place between the Treasury Department and SEC.
Key policymakers have suggested that the rule could be amended. Sen Christopher Dodd, the Democratic chairman of the Senate Banking Committee, said it might be possible to modify fair value accounting rules for banks facing steep write-downs of troubled assets without abandoning the underlying accounting standard.
Now down south we have a phrase for what Senator Dodd is doing. It’s called called pretending shit is shinola and let’s be honest this is really about the money and lots of it. Senator Dodd has been a faithful waterboy to the same bunch of Wall Street crooks that brought us the 2008 financial implosion so it’s no surprise he is still out trying to raid the treasury for his big business friends. From the sound of the story, his drum beating does not seem very effective which brings us to this breaking news story from the Wall Street Journal: Continue reading “The Hartford to Bankruptcy? Part M”