September 30, 2008

A message from Wall Street to Washington DC - by Barry Ritholtz

We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy, to boot. And we got huge bonuses.

But here’s a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence.


Anonymous said...







Anonymous said...

The TED spread — the difference between what banks and the Treasury pay to borrow money for three months — spiked 21.2% to 3.54 percentage points after hitting a record 3.58, according to Bloomberg.

Anonymous said...

Really ,this is a good point about how Wall Street does have to be regulated , because they aren't capable of self-regulation.
But the 1929 Stock market crash
taught that lesson of the need for
regulations on lending and leverage
requirements .

Anonymous said...

Well, I have to give them that. Our government IS a bunch of idiots after all...

Anonymous said...

It seems like if Congress delays or rejects the bailout plan, the lower crude oil price goes down, so why not use the bailout plan as a hedge.

Congress can keep on rejecting the bailout plan until crude oil go back down to $28 a barrel before passing a very water down plan.

Seems like a win win situation - Wall Street and Main Street can get something out of the bailout plan.

November crude oil closed down $11.41 at $95.48 a barrel today.

Anonymous said...

Since late 2006 286 major U.S. lending operations have "imploded"

`the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money... ....via public injections of preferred shares into these firms; via required matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; via suspension of dividends payments; via a conversion of some of the unsecured debt into equity (a debt for equity swap).

All these actions would have implied a much lower fiscal costs for the government as they would have forced the shareholders and creditors of the banks to contribute to the recapitalization of the banks.....''

Anonymous said...

Now you understand why third world country's mobs eventually kill their bad leaders ?

America, you used to look down on them, should learn!

Anonymous said...

Why is it that every time there is a bust Wall Street want to "SOCIALIZE LOST", but every time there is a boom Wall Street want to "PRIVATIVE PROFITS"

Wall Street's five biggest companies paid more than $3 billion (R24.1 billion at current exchange rate) in the past five years to their top executives while they presided over the packaging and sale of loans that helped bring down the investment banking system.

Anonymous said...

Place under arrest immediately. Revoke passport. Freeze & Seize assets. Place lien on employer and gett in line for trial.

Large FEMA camps await the admitted crooks. Location optional.

The Big House Crew is saving a warm bed for you.

Anonymous said...

Goldman Sachs to Paulson:

"We're lovin this new bank gig, Hankster! It makes us feel all warm and fuzzy! When do we get our first 'fire sale' regional bank takeover? Did you give the FDIC our shopping list? When does the capital reserves requirement go down to 2%?

Your Partners in Crime,

Da Boyz @ GS BANK ;)

Markus Arelius said...

I can't believe what I've just read, nor the analogy to alcoholism. Alcoholism is a real physical, medical disease.
Are we really saying that greed is some kind of medical disease with "enablers"?

Christ, now we have Wall Street douchebags (of all people walking the face of this planet) trying to pull an "Oprah Winfrey" sob job on the taxpayers of America!


"..and I was wealthy, but never satisfied. I was eating and eating and then my husband, God love him, kept buying me Whoppers with cheese, Coke Classic and 36 pcs Hot Wings from Pizza Hut!"

Way to go Wall Street. Way to throw your ex-lover "enablers" under the bus!

Anonymous said...

Barry Ritholtz is a fat porker. Who cares what he has to say! Bush, McCain, Obama and Palin are trying to save us from the TERRORISTS!!!

We need this bailout now to make America safe from the WEAPONS OF MASS DESTRUCTION on WALL STREET!!

Bin Laden has struck again!!

He sent his dirty Arab henchmen from his cave in Islamofascistajihadistan to Wall Street to sell derivatives and cheapo bunko mortgages to topple the US economy!!!

If we don't get that bailout we'll have a NEW ECONOMIC 9/11!!!


Anonymous said...

Duke University finance Prof. Campbell Harvey predicts there could be 750 to 1,000 bank failures over the next six months because of billions in bad assets stemming from the housing meltdown.

Scarce credit also threatens other types of companies that are already struggling and desperately need capital, such as the Detroit automakers and some of the airlines.

The government will be able to deal with some of those companies one at a time, but without a comprehensive plan, others will fall through the cracks.

Anonymous said...

Before the vote didn't Jim Cramer said the Dow was going to drop 2,000 points if Congress did not pass the bailout plan, so why did Jim Cramer said the Dow is going to drop 2,500 points after the vote.

Cramer said:
The Federal Deposit Insurance Corp. needs to increase its guarantee limit right now, Cramer said during Monday’s Stop Trading!, to stop a collapse in banking.

The Mad Money host has said before that the FDIC’s $100,000 deposit insurance might have been suitable for the Great Depression era, but not the 21st century.

Cramer’s calling for that limit to be increased to $1 million. He also wants to see corporate accounts, which carry with them much more money, insured for a fee, even if it’s as small as 0.1%.

Otherwise, Cramer said, “we’re going to go down another 2,500 points, and we’ll go down that 2,500 points rather quickly.”

Anonymous said...

Hugh Johnson of Johnson Illington & Mark Zandi of Moody's Analyze The Bailout Rejection & Stock Slide

ZANDI: ....I think credit markets will remain frozen, businesses will have difficulty making payroll in two, three, four weeks, and we'll be in a deep recession.

Anonymous said...

If redemptions can cause other redemptions then what happens to the last investor to CASH OUT.

Hedge Funds Brace for Investors to Cash Out

To pay back investors, some funds may be forced to dump investments at a time when the markets are already shaky.

The big worry is that a spate of hurried sales could unleash a vicious circle within the hedge fund industry, with the sales leading to more losses, and those losses leading to more withdrawals, and so on.

A big test will come on Tuesday, when many funds are scheduled to accept withdrawal requests for the end of the year.

“Everybody’s watching for redemptions,” James McKee, director of hedge fund research at Callan Associates, a consulting firm in San Francisco, told The Times. “And there could be a cascading effect, where redemptions cause other redemptions.”

Even a modest outflow could reverberate through the financial markets

Anonymous said...

Many hedge fund investors can withdraw money on Dec. 31.

Some funds require that redemption requests be submitted 90 days ahead of time.

That means requests have to be in by Tuesday.

London-headquartered hedge fund manager Man Group has lost half of the $10bn (€6.9bn) it has garnered in new funds over the last six months, as market turmoil hit what one consultant called “a bellwether” of the hedge fund industry.

Anonymous said...

Message to Wall Street:

So if the executive and legislative ask you to eat a can of $hit, you'll do it, right?

Don't forget to pay your bills at the whorehouse and at the coke dealer. I hope you all starve to death, because America doesn't need people like you (we already got 20 millions illegals to support that Michelle Obama wants to give a citizenship to)

The Simpsons said...

Now they "feel somewhat compelled to take at least some responsibility". Gimme a fucking break - like a bunch of teenagers, they conned their way into having the car for the night, went out got a load on, piled their friends into the trunk, got in a wreck & now they want to blame the folks (who they never listen to anyway) for believing they'd earned some responsibility. Too fucking hilarious. I hope they all lose their upper East Side condos & have to go live in Wasilla - I'll bet there are some Real Housewives of New York spewing into their Channel purses right now!

Anonymous said...

Hey Hussein cultists, here's a little info on your hero Barney Frank:

Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Maes main defenders in the House Rep. Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 was once romantically involved with a Fannie Mae executive.

The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his spouse. Another Washington Post report said Frank called Moses his lover and that the two were still friends after the breakup.

While the relationship reportedly ended 10 years ago, Frank was serving on the House Banking Committee the entire 10 years they were together. The committee is the primary House body which along with the Office of Federal Housing Enterprise Oversight (OFHEO) has jurisdiction over the government-sponsored enterprises.

He has served on the committee since becoming a congressman in 1981 and became the ranking Democrat on the committee in 2003. He became chairman of the committee, now called the House Financial Services Committee, in 2007.

Moses was the assistant director for product initiatives at Fannie Mae and had been at the forefront of relaxing lending restrictions at the company, according to the Feb. 23, 1998, issue of National Mortgage News (NMN).

Herb Moses, who helped develop many of Fannie Maes affordable housing and home improvement lending programs, has left the mortgage industry. Mr. Moses - whose last day was Feb. 13 - spent the past seven years at Fannie Mae, most recently as director of housing initiatives. Over the course of time, he played an instrumental role in developing the company's Title One and 203(k) home improvement lending programs.

While Moses served at Fannie Mae and was Franks partner, Frank was actively working to support GSEs, according to several news outlets.

In 1991, Frank and former Rep. Joe Kennedy, D-Mass., lobbied for Fannie to soften rules on multi-family home mortgages although those dwellings showed a default rate twice that of single-family homes, according to the Nov. 22, 1991, Boston Globe.

Moses left Fannie in 1998 to start his own pottery business. National Mortgage News called Moses a mortgage guru and said he developed many of Fannie Mae's affordable housing and home improvement lending programs. Moses ended his relationship with Frank just months after he left Fannie.

Geez, I wonder if Barney gave his lover a job at Fannie and made him rich with your taxpayer money. Hoooweee, from "an executive" at Fannie Mae to pottery. Open your eyes, Hussein's sheeple.

born to lose said...

I accept responsibility for my actions, but it's your fault for giving me so much freedom.

Anonymous said...

Warning: PPT at work in Europe and probably will be in the US today.

It doesn't seem that we'll see a big nosedive today because PPT is in full force today.

So there's no need for bailout because the world isn't ending. The markets in Europe are not sinking.

Anonymous said...

what a bunch of crap; it sounds like two drunks who bicker over who took the first drink.

Anonymous said...

>> Alcoholism is a real physical, medical disease.

No, it's not. It's a choice. Show us the cancer-like diseased cells that subliminally tell the brain that it's time to go to the liquor store.

And as a freebie from me to you, here's the cure for all you anorexics: swallow.

Anonymous said...

I would like to personally thank the Republicans for rejecting the Housing Bail-Out bill.

Anonymous said...

I haven't seen Ritholtz on TV for quite some time. Did he and Kudlow have a spat...or did Ritholtz tire of never getting a word in edgewise? haha

Anonymous said...

I read a Washington Post article I think where Wall St. dude tried to blame their IT computer programmers for not setting up the models properly in code based on the equations. LOL, like it was IT who approved Casey Serin's mortgages and Ed McMahon's mortgage.

Lots of Wall St. blamestorming here. Blame IT. Blame the government. Blame the mortgage brokers and the underwriters for "duping" innocent Wall St. with bad mortgages - as if Wall St. couldn't perform rudimentary quality control random sampling and checking on the mortgages they were purchasing.