Financial Advisor Fraud

Does anyone think the advisors are guilty of fraud? Just wondering
Sorry the Financial advisors who were employed by Sir Allen Stanford
Sir allen stanford who was accused of running a ponzi scheme.

who ?

2009-06-27 16:07:55 by Matthew

.WatchMojo.com sits down with a financial advisor to learn more about Ponzi schemes and how to avoid this type of fraud. ... Ponzi scheme Bernie ...

Holy crow .. I darn near fell off my chair when I read this one!

Is this a good deal for the taxpayer - buying the toxic mortgages for far, far more than their worth, and letting the banks determine how much the taxpayer will pay for them?

Read this fascinating article before you answer. I'll quote it here for people who don't follow links.


The Free Market, Financial Style
How the Scam Works

URL: dubya dubya duba dot counter punch dot org slash
hudson03272009 dot html

By MICHAEL HUDSON

Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Treasury Secretary Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks. Bank stocks are soaring – thereby bidding up the Dow Jones Industrial Average, as if the “financial industry” really were part of the industrial economy.

Why are the very worst offenders – Bank of America (now owner of the Countrywide crooks) and Citibank the largest buyers? As the worst abusers and packagers of CDOs, shouldn’t they be in the best position to see how worthless their junk mortgages are?

That turns out to be the key! Obviously, the government has failed to protect itself – deliberately, intentionally failed to do so – in order to let the banks pull off the following scam.

Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A “liars’ loan” mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting operators taking out mortgages at far more than properties were worth and pocketing the excess.

The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other’s junk CDOs.) The government – that is, the hapless FDIC – puts up 85 per cent of $5 million to buy this – namely, $4,250,000. The bank only needs to put up 15 per cent – namely, $750,000.

Here’s the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.

The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85 per cent. So the strategy is to overpay, overpay, and overpay. Paying 15 per cent is a small price to pay for getting the government to put in 85 per cent to take the most toxic waste off your books.

The free market at work, financial style.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002)

(end of quote)

Please someone ... how do people intelligent enough to rise to the positions of financial advisers to the Administration and Treasury make such errors?

Are they truly errors, or is this an example of what happens when you let the wolves guard the hen house?

The taxpayers got scammed , and that other word that starts with an S.

2009-03-29 17:36:13 by Ruby

The Facts

The McCain video attempts to link Obama to Franklin Raines, the former CEO of the bankrupt mortgage giant, Fannie Mae, who also happens to be African American. It then shows a photograph of an elderly white woman taxpayer who has supposedly been "stuck with the bill" as a result of the "extensive financial fraud" at Fannie Mae.

The Obama campaign last night issued a statement by Raines insisting, "I am not an advisor to Barack Obama, nor have I provided his campaign with advice on housing or economic matters."

So let's say that this dude did give advice to Obama, does that mean that somehow Obama is partly responsible for the Fannie Mae downfall? Why is there so much "guilty by association" accusations being thrown around with this? That's the GOP for you. However, what they don't tell you is that McCain's campaign manager was the pres. of an advocacy group that defended Fannie and Freddie against gov't regulation, or that at least 20 of McCain's fundraisers and advisers were lobbyists for the companies, yet, I don't hold McCain responsible for the downfall of those companies. Again, that's the GOP for you.

2008-09-20 21:42:50 by Britton J

The History of a Financial Disaster
1997

Fannie Mae is a GSE (Govt Sponsored Entity) regulated by Congress.
Fannie Mae buys mortgages from other companies.
It is backed by the taxpayers for all losses, but keeps all profits.
President Clinton loosens Home Loan Requirements.




1998

Banks begin making thousands of bad loans,0 down, no documentation, for 120%! (1998 � 2008).
Executives at Fannie receive huge bonuses if loan targets are met.
Franklin Raines and Jamie Garelick from the Clinton Administration are appointed to run Fannie Mae.




2003

President Bush proposes a new oversight committee to clean up Fannie Mae, but Democrats derail the effort.

Rep. Melvyn Watt, (D-NC) Committee on Financial Institutions & Consumer Credit. stated, "I don't see much other than weakening the bargaining power poorer families to get affordable housing."




1999 - 2004

Raines earns $100 million in bonuses.
Garelick earns $75 million in bonuses.
In 2004, Enron collapses, congress investigates, Executives Skilling & Lay go to jail, for fraudulent bookkeeping.
Congress responds with the Sorbanes-Oxley Act, more heavy regulation of corporations.



2004

An OMB investigation finds massive fraudulent bookkeeping at Fannie Mae.
False numbers triggered executive bonuses every year.
Congress holds no hearings, no one goes to jail, or is punished.
WHY NOT?



1999 -2005
Fannie Mae gives millions to Democratic causes, examples: Jesse Jackson & ACORN.
Fannie Mae pays millions to 354 congressmen and senators, from both parties.
Who got the most money?



Top 4 Recipients

#1 Sen. Christopher Dodd, (D-CT) Chairman of the Banking, Housing, & Urban Affairs Committee

#2 Sen. Barack Obama, (D-IL)
Federal Financial Management Committee




Top 4 Recipients

#3 Sen. Chuck Schumer, (D-NY)
Chairman of the Finance Committee

#4 Rep. Barney Frank, (D-MA)
Chairman of the House Financial Services Committe

05

Franklin Raines & top execs are forced to resign from Fannie Mae.
They do not go to jail.
There is no media "perp. walk."
They keeps all of their bonuses
They finally pay $31.4 million in civil fines.



2005

The Federal Housing Enterprise Regulatory Reform Act is sponsored by:

#325 Sen. John McCain, (R-AZ)
Armed Services, & Commerce, Science, & Transportation

"If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole."



None of the top 4 recipients support the legislation.
The reform act is blocked by Democrats, never even making it out of committee.
None of the politicians return any of the money, tainted by fraud.

08

Fannie Mae & Freddie Mac go bankrupt and the govt. takes them over completely.
Lehman Brothers, goes bankrupt from investing in bad mortgages.
AIG get $85 million in loan guarantees, after insuring bad loans & projects.
Taxpayers will ultimately pay BILLIONS.
2008

Franklin Raines is now an advisor to the Obama Campaign which wants the govt. to take over more of the economy.
Did government involvement in the mortgage market work out?
How will even MORE government involvement make it better? Do you want to be Sweden?
McCain favors revising regulations & loan standards, selling off Fannie & Freddie.
RCES
Congressional Record, 5/25/06
"Hannity & Colmes," Fox News, 9/16-9/17/08
Herald Tribune, 4/18/08
New York Times, 9/13/03
www. govtrack.com, 9/17/08

You've outlined the history of our current economic crisis very well. But it's not finished yet.

2009

President Barack Obama increases taxes on businesses, while at the same time giving tax cuts to the middle class. Combined with increased regulations and funding problems caused by the current financial crisis, large numbers of small businesses are forced to curtail spending, and many are forced into bankruptcy. Unemployment skyrockets, wages decrease, and the Great Depression II is born.

2008-10-10 18:56:31 by Centurion

Is Obama actually BAD for the economy?

Obama's top economic advisors are complete failures, Jim Johnson and Franklin Raines who were CEO's of Fannie Mae! Everyone knows how Fannie Mae collapsed and the mess that followed! Last but not least, Franklin Raines is accused of extensive financial fraud when he was the CEO for Fannie Mae!

Another top advisor for Obama is Rahm Emanuel, who served on the Board of Directors for Freddie Mac. We all know how Freddie Mac collapsed too!

Plus we know Barack Obama has no economic experience so why do people believe he is better for the economy?
Daniel aka simpleton,

Please explain why facts are nonsense?

I guess Obama advisers may have some blame but then so does John McCain economic advisers.

for example McCain's top economic adviser Phil Gramm who's Gramm-Leach-Bliley Act undid many of the regulation placed after the great depression to make sure that banking, insurance and brokerage activities where separated. many feel that this bill is one of the major factors that lead the mess we have seen recently.

2008-09-19 15:28:33 by Whocares