In a report to be released on Friday, Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.
The group includes Wall Street giants like Goldman Sachs, JPMorgan Chase and the American International Group as well as small lenders like Boston Private Financial Holdings. Mr. Feinberg’s report points to companies that he says paid eye-popping amounts or used haphazard criteria for awarding bonuses, the people with knowledge of his findings said, and he has singled out Citigroup as the biggest offender...
As I struggle to understand exactly how and why financial institutions inflicted so much damage on the American economy, I appreciate articles like this one from NPR.
Today, a conversation with New York Times financial editor Gretchen Morgenson, who has covered the world financial markets since 1998. She'll be discussing what's going on with Goldman Sachs, the Justice Department, and the SEC.
...Ms. MORGENSON: What the SEC really is saying is that they have omitted a material detail in the selling of this security. Here's how it was created. It was created with a very big hedge fund that was a client of Goldman Sachs.
It was called the Paulson and Company Hedge Fund, and it was run by a man named John Paulson, who has subsequently become very famous for making billions of dollars betting against subprime mortgages when people were still sort of thinking everything was fine.
Now, he and Goldman put together this portfolio of mortgages that were then sold to Goldman's clients. But the element that is at the crux of the case is Mr. Paulson had interest in this portfolio being filled with sort of toxic mortgages, mortgages that were less likely to perform well, that were really sort of on the precipice already.
So was it right for Goldman Sachs to sell such a portfolio to its clients without disclosing that this person who was selecting the portfolio had a negative bet on and was therefore opposed to the people who were buying it, who were hoping that it would perform and that the mortgages would continue to pay?
GROSS: So the suit names Fabrice Tourre, who is a vice president at Goldman, who helped create and sell these derivatives. How come the suit doesn't name the hedge fund manager who helped create the derivative and then betted against it?
Ms. MORGENSON: Well, John Paulson, the hedge fund manager who is involved, did not have a duty to disclose to investors his role in it because he was not selling the securities...
The financial crisis has devastated schools and the economy--so why are Republicans fighting reform? Answer: campaign contributions. But it looks like a few Republicans care more about our economy and our democracy than they do about corporate lobbyists. Let's hope they stand firm.
The battle is only half won with the vote below in the House of Representatives. The Senate still has to agree.
The House of Representatives on Wednesday approved a landmark overhaul of financial regulations but the Senate put off action until mid-July, delaying a final victory for President Barack Obama.
Still, the 237 to 192 vote in the House marked a win for Obama and his fellow Democrats, who have made the most sweeping rewrite of Wall Street rules since the 1930s a top priority in the wake of the 2007-2009 financial crisis.
"It has been a long fight against the defenders of the status quo on Wall Street, but today's vote is a victory for every American who has been affected by the recklessness and irresponsibility that led to the loss of millions of jobs and trillions in wealth," Obama said in a statement.
Analysts say Obama is all but certain to get the measure on his desk eventually, but Democrats' hopes of sending him a bill to sign into law by the July 4 Independence Day holiday were dashed.
The death of Democratic Senator Robert Byrd and cold feet among Republican allies has complicated efforts to round up the votes needed in the Senate. A week-long break following the July 4 holiday means the Senate won't act until the week of July 12, at the earliest..
Obama earlier on Wednesday accused Republicans of being out of touch with the American people for opposing reforms. Others echoed his line of attack on the House floor.
"Republicans have sided with big Wall Street banks at every opportunity," said Democratic Representative Luis Guitierrez. "If it helps Wall Street banks, they favor it, but if it helps Main Street and regular Americans, they won't vote for it."...
Our financial system failed us in 2008. One of the biggest victims has been our school system. Why don't Republicans agree that we need financial reform?
U.S. lawmakers hammered out a historic overhaul of financial regulations as dawn broke over the nation's capital on Friday, handing President Barack Obama a major domestic policy victory on the eve of a global summit devoted to financial reform.
In a marathon session of more than 21 hours, legislators agreed to a rewrite of Wall Street rules that may crimp the industry's profits and subject it to tougher oversight and tighter restrictions.
To secure agreement, lawmakers reached deals in the final hours on the most controversial sections which restrict derivatives dealing by banks and curb their proprietary trading to shield taxpayer-backed deposits from more risky activities.
Banks will be allowed to keep most swaps dealing activity in-house, although the riskiest trading would be pushed out...
...A senator sworn in five months ago owns the swing vote on the most important financial reform legislation in decades.
Brown's concerns are strictly parochial. On the one hand, he wants mutual funds and insurance companies exempted from the Volcker rule. Not uncoincidentally, such exemptions would apply to major Massachusetts-based financial institutions such as Fidelity and MassMutual...
