THE SUBPRIME DEBACLE AND SUBPRIME BAILOUTS
SUBPRIME ENFORCEMENT SUBPRIME ACCOUNTABILITY SUBPRIME RESPONSIBILITY
SINCE 2007 IT IS EVEN WORSE
“At the end of June, 5.35 percent of prime
loans were past due or in foreclosure, up from 4.93 in March. By contrast, 30.48 percent of subprime loans were past due or in foreclosure, up from 29.53 percent.” NY TIMES, 9/5/08 “Overall, delinquencies on 2007 prime jumbo loans rose to 3.22 percent in July, while Alt-A loan delinquencies increased to 14.56 percent. . . .Defaults on subprime loans from last year hit 31.25 percent.” REUTERS, 8/22/08
“We
need to regulate incentives. Bonuses need to be paid on multiyear performance instead of one year, which is an encouragement to gambling. Stock options encourage dishonest accounting and need to be curbed. In short, we built incentives for bad behavior in the system, and we got it.” Joseph Stiglitz, Nobel Laurate Economics, 2001
PAY FOR PERFORMANCE OR LOSSES?
CEO PRINCE LOSES $56.4 BILLION FOR CITIGROUP AND WALKS OFF WITH $68 MILLION; CEO O’NEAL LOSES $51.8 BILLION FOR MERRILL AND WALKS OFF WITH $161 MILLION; CEO CAYNE BANKRUPTS BEAR STEARNS AND WALKS OFF WITH $60 MILLION; CEO FULD BANKRUPTS LEHMAN & MAKES $488 MILLION (1993-2007).
ECONOMIST (8/9/08) AND FORBES (9/15/08)
HOW MUCH HAVE YOU SPENT?
BEAR STEARNS: $30 BILLION AIG: $85 BILLION FED: $500 BILLION IN COLLATERAL FANNIE/FREDDIE: $5.3 TRILLION DEBT WE ALREADY OWN BILLIONS OF CRUD ROGOFF: I CAN’T IMAGINE A TOTAL COST UNDER $ 1 TRILLION FT, 9/17/08
ACCOUNTABILITY OR CORPORATE WELFARE?
THE PAULSON/BERNANKE WAR ON FINANCIAL CRIME , RECKLESS BANKING AND PREDATORY LENDING IN THE US MANY WHO CAUSE LESS DAMAGE THAN DESTRUCTION OF GLOBAL CAPITALISM GO TO JAIL
UNDER THE BUSH ADMINISTRATION WHITE COLLAR CRIMINALS GET $700 BILLION AND A. . .
REMEMBER FIRREA
COST: 124.6 BILLION US SEIZED 747 S&Ls FIRREA ENHANCED ENFORCEMENT GAVE REGULATORS MORE POWER ENHANCED CRIMINAL PROVISIONS WHISTLEBLOWERS CIVIL CLAIMS OF US FOILED IN COURT
FDIC/RTC BAILOUTS 101
DEPOSITORS ARE PROTECTED; SHAREHOLDERS ARE WIPED-OUT MANAGEMENT TERMINATED AUTOMATIC CIVIL INVESTIGATION CRIMINAL INVESTIGATION AS NEEDED NO GOLDEN PARACHUTES PENSIONS, PROFIT SHARING NOT INSURED
GETTING INCENTIVES RIGHT
REWARD WHISLTEBLOWERS ADMINISTRATIVE FINES FOR UNSAFE AND UNSOUND FINANCIAL PRACTICES REPEAL PSLRA (PRIVATE ACTIONS) SHAREHOLDER BOARD NOMINATIONS DOJ FINANCIAL CRIMES TASKFORCE GOVERNMENT TERMINATION OF OLD BOYS CLUB IN CORPORATE AMERICA
LET’S BE LIKE BUFFETT
SAVE THE STRONGEST—GOLDMAN SACHS AVOIDED THIS FIASCO PREFERRED STOCK IS SENIOR TO COMMON NO BRAIN-DEAD MANAGEMENT 10% RETURN “BODY GUARD” NO CASH FOR TRASH FOR BUFFETT
CONFERENCE COMMITTEE COMETH?
SRAMIR3@LUC.EDU CLE to follow 3/27/08 at LUC at Law School