DOJ Launches Broad Investigation Into Derivatives Market

nytimes.com:

The Justice Department is investigating the role of several major companies in the credit markets, in another indication that the government is intensifying its scrutiny of derivatives,

Markit Group Holdings, a data warehouse controlled by several big banks, said Tuesday that it had been notified by antitrust officials at the Justice Department of an inquiry into the "credit derivatives markets and related markets" and that it would "provide any information requested."

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Read the whole story: nytimes.com

Comments

[outnow]

Markit Group Holdings is the name. That refers to "mark it to fantasy." The scheme is a price-fixing scheme based on faulty evaluation of the magnitude of the risks based on computer models.

The banks set their fractional reserves based on the assets. When assets are"toxic," then lending freezes up because the assets do not support the leveraging. The banks want these asset prices known only to them.

[PhilipTaylor]

It is worse than that!

The Fantasy goes further as the Banks projected HOT 2004 to 2006 home appreciation forward ten years and added fees to the Derivatives to grab that appreciation "NOW" and pocketed it with bonuses!

So the leverage include unrealized appreciation that, of course, never materialized.

[outnow]

Anti-trust law is used to bust trusts and foster competition. The money trust needs to be busted. The Money Industry operates world wide with virtually no oversight nor transparency. Their influence is overwhelming at this point because of our campaign financing laws.

Monopolizing pricing information on top of the Ponzi Derivatives schemes have proven to be too much for the real economy. The subprime meltdown was a seizing up in the derivatives repo market as borrowers defaulted.

The Money Industry or the People will win. It cannot be both ways.

[PhilipTaylor]

What about these three little matters:

1. Misrepresentation of High Risk Products as "AAA" on par with Treasury Bills and sold by the banks all over the world!

2. Manufactured Insider Trading - Far more manipulative than Chef Martha! Make Sure-Fail and turn around and make Massive repeated Bets they will FAIL and collect $13 Billion of Taxpayer Money through A1G!

3. RE St0len Softwarwe: "The bank (Goldman) has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate the market in unfair ways." Regarding stolen software they developed! Isn't this the MOST AM@ZING ADM1SS1ON in a c0urt of l@w?

[PhilipTaylor]

All three are Fe1ony Fraud Charges with decades of PR1S0N time!

[PhilipTaylor]

What will happen if we have WE@K Pr0secution of the CR1MINALS!

Look at the S&1 and ENR0N deb@cles when basically except for Ke@ting and Ski11ing nothing was done.

With the only punishment being a slap on the hand nothing will work! The Just!ce Dep@rtment knows this and even wrote papers about it!

[outnow]

Ken Lay died conveniently.

[PhilipTaylor]

Yes while on a sky trip!

Very curious and I wonder who was paid to do the aut0psy?

[PhilipTaylor]

And why did the judge basically "grant a pardon" in case he suddenly showed up again?

[Carolab]

Just see BCCI. NOTHING happened.

[PhilipTaylor]

We have CONTACT AMERICA!

Glass-Steigel them!

Divide them up and get rid of the JUNK at the expense of the Stakeholders!

Anyone can show a Mammoth Profit if you FAKE IT using Legalized Illegal Accounting!
ENRON did!

So is G0LDMAN's $3.44BillionProfit larger than $47.7Trillion in TOXIC DEBTS?

NO! Well Then they are Bankrupt and so are ALL these Banks!

A Federal Agency in our Government, the 0ffice of the Comptroller of the Currency, 0CC, issues a quarterly Report that has the following info:

1 JPM0RGAN $81TRILLION in Toxic Derivatives
2 B 0F A $78TRILLION
3 G0LDMAN $48TRILLION
4 M0RGAN $39TRILLION
5 C1T1GROUP $32TRILLION

http://www.occ.gov/ftp/release/2009-72a.pdf
Page 23!

Without "MARK-TO-MARKET" they exaggerate the Value of Derivatives "On-Balance-Sheet" while G0LDMAN has increased their Toxic Debts from around $30Trillion to almost $48Trillion all conveniently hidden OFF-BALANCE-SHEET!

So accounting is totally FAKE! Why do analysts ignore the "MAMMOTH DEBT IN THE ROOM" - unless they are paid!

Well Congress Made this and continues to allow this 1llegal Accounting to be Legal!

So they are also to blame! But Congress is well PAID for its VOTES!

We need to:

1. Outlaw ENR0N Loophole+return to FULLY HONEST Accounting

2. Return Glass-Steigel and separate Big Banks functions into legal entities

3. Outlaw Credit DefaultSwaps

4. Take these Criminals to C0URT

5. Automate Banking99%+Trading100% with built in accountability - use computers to help not hurt

6. Heavily Regulate Banks+HedgeFunds+Derivatives

[PhilipTaylor]

What about these three little matters:

1. Misrepresentation of Products

2. Manufactured Insider Trading - Far more manipulative than Chef Martha!

3. RE St0len Softwarwe: "The bank (Goldman) has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate the market in unfair ways." Regarding stolen software they developed! Isn't this the MOST AM@ZING ADM1SS1ON in a c0urt of l@w?

[outnow]

You can't steal from a thief because he doesn't have title himself. But why does intellectual property law protect a means to violate Anti-trust laws and to carry out trades based on other non-public information. There is some 'splaining to do!

Since so much money was lost we should not have bailed out the bankers. We should sue them and that would be both criminally and civilly. There are many firms in San Diego gearing up to do just that. They say that there's plenty of fraud to go around for lawfirms interested in representing defrauded investors.

[PhilipTaylor]

U.S. District Judge Sim Lake ordered ENR0N's Skilling to a 24 year term and added, however,

"His crimes have imposed on hundreds if not thousands, a life sentence of poverty."

Can you imagine what Judge Lake would say about this case where 300 Million Lives have been damaged in some way!

[PhilipTaylor]

1. What is wrong with writing mortgages that are SURE TO FAIL in two or four years?

2. What is wrong with slicing and combining them into a package called a Derivative that is SURE TO FAIL in two to four years? Adding lots of hidden Fees!

3. What is wrong with selling those as LOW RISK "AAA" Rated Derivatives to the little old lady down the street who thinks "AAA" means the safety of a Treasury Bill and to people (v!ctims) all over the world who think it is nearly 100% safe. What is wrong with representing JU_NK as if it is Low Risk?

4. What is wrong with using A1G Credit Default Swaps to make Massive and Repeated Bets those Derivatives are going to SURELY FAIL in Two to Four Years?

Two Major Laws on the BOOKS have been Broken! Anyone want to guess?

[PhilipTaylor]

How Bankrupt is BANKRUPT?

When your Impressive MSM Claimed Income for the quarter is .000072% of your Toxic Derivatives Debt! Ask G0LDMAN!

[wadenelson1]

It all depends on which side of a Credit Default Swap you're on as to whether you're in trouble or in tall cotton as mortgage backed securities began to fail.

A "naked" buyer of a CDS would love to see the underlying MBS fail. They get a payday. Essentially they placed a bet that a particular security WOULD fail.

This depends, however, on the financial condition of the seller. If you bought a CDS from AIG, and AIG goes broke, you may not get the payoff you were counting on.

Or if you bought a CDS from AIG, and AIG resold it to some puny bank or firm without the capital to make good on it in a default. Since there's no regulation, no registration, no transparency in the ownership of CDS's, you really have NO IDEA who the current "holder" may be.

As with MOST financial instruments, someone wins, and someone else loses as prices go either up or down. But in THIS case, the apparent winners, like Goldman, appear to be collecting their winnings, while the US TAXPAYERS are being asked to bail out the losers.

It is no different than if I went to a casino and won a million dollars, but the casino didn't have that much, so they (AIG) got a bailout from the US Government to pay me off. I win, the casino (investment bank) doesn't go broke, and American taxpayers all lose.

[PhilipTaylor]

Wilbur Ross, one of the super-rich Timmy picked for his PPIP program, in a RARE MOMENT of FULL HONESTY on CNBC last Monday, said,

"This is the largest TRANSFER of DEBT from the PRIVATE Banks to the Government in History and it will take MANY YEARS."

So are they going to gradually weigh down Americans with 50 years of GDP Growth ($700 Trillion) that will take 200 years to work OFF?

Close the Zombie BANKS, FD1C and C0NGRESS!

Wilbur Ross is also implying it is the Greatest transfer of wealth from the American People/Government to Wall Street over MANY YEARS as a corollary!

Thanks Wilbur for the RARE MOMENT of FULL HONESTY from Wall Street!

CNBC has the video interview with Maria unless it has been mysteriously erased by now!

[research]

Hooray!

Fraud carries triple damages!

go DOJ!

[jalowe1957]

Hollywood has been dealing in derivatives since its infancy. You know that just by watching a movie sequel or even an "Our Gang" comedy -- derivatives all!

[unite4change]

This is the problem with our corporate MSM. They are not reporting real news and continues to focus on nonsensical stories to keep us occupied.

[spinns17]

get the ropes guys.president obama just give the american people the ok.pitchforks ready and waiting

[HekmabaJuzimax]

Hopefully they will also investigate Mayor Bloomberg of NYC, who helped create the derivatives market and whose sole purpose for wanting to run again is to shield himself from prosecution.

[westcoastsc]

Duh and finally. Let's see what they do with this.

[peterg76]

It would appear that the Justice Department was the last to clue in that there was something suspicious happening.

[GerryS]

what do I want for christmas?

the government to outlaw derivatives--------------

[spinns17]

and a buch of wall crooks in jail.

[vagabondvet]

The government and Fed has done plenty regarding derivatives.

In 1998, the Fed orchestrated the bailout of Long Term Capital Management, which was heavily leveraged and invested in derivatives. This set the stage for more risky derivatives trading as now companies had nothing to fear since their derivatives investments would be de facto insured by the government, i.e. too big to fail.

(One should note that LTCM happened in 1998, before the GLB and CFMA were passed, in effect saying that those two "deregulatory" acts actually happened after derivatives began to be dangerous. Thus our problems had nothing to do with "deregulation.")

With the insurance bailouts last fall, the government again said that it will insure banks against derivative defaults. As a result, these companies still have hidden liabilities of hundreds of trillions of dollars. Even less has been done to purge the derivatives than has been done to get rid of the toxic assets, the mortgage backed securities.

Everyone ignores the best path that needs to be taken; let the insurance companies and banks that got too leveraged up fail. This is the only way to liquidate the derivatives market, get rid of the toxic assets, de-leverage our economy and allow our economy to begin to recover. When the government rewards failure (like it has done with the bailouts) in order to prevent systemic collapse, it makes the whole system weaker without improving the overall fundamentals.

[Sam1234567]

Well said.

[Carolab]

before the GLB and CFMA were passed, in effect saying that those two "deregulatory" acts actually happened after derivatives began to be dangerous.

Exactly what Brooksley Born knew and tried to stop.

As for LTCM, the beginning was with BCCI who stole BILLIONS from depositors and the Bank of England, who was its "regulator", got a pass. BILLIONS that have never been found.

BCCI - The Bank that tied it all together II

http://www.scribd.com/doc/3497784/BCCI-The-Bank-that-tied-it-all-together-II

[Carolab]

What was AIG "insuring" for all those black budget networks?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4169766

[Durango]

Hope they extend their investigation into the manipulation of the Oil Markets and the, is what precipitated the collapse of the world economy bubbe speculators caused last year.

Which, even though the Corporate media doesn't seem to remember .

Can't remember but didn't I read Goldman Sachs was the fourth largest Oil Company in America? If that is true how much of their recent profits came from the speculation driven rise in oil prices.

After all, the Senate Investigations Committee in 2006 concluded "“…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”

Now lets have the Justice department see if the words "Market Manipulation" or "Restraint of Trade" apply to the Oil Markets.

[TXfemmom]

The derivatives markets were just a legalized Ponzi scheme. The mortgage brokers and companies made all this money issuing these mortgages which they knew would likely fail, then the Goldman Sachs and others made so-called profits by bundling them, then they would sell it to someone else when they were misrepresenting what they were really worth, and then they would purchase insurance on the derivatives which they knew were never really worth that much and AIG insured them for their phony values. AIG brokers took huge salaries and bonuses for issuing the policies.

It was just a Ponzi scheme and all those involved should go to jail.

[hellboundtrain]

There is no such thing as a legalized Ponzi scheme. Since a Ponzi scheme is a fraudulent investment too, they are all illegal.

So the derivatives market should be ruled null and void, as it is illegal. End.

[Durango]

i thought they were called Madoff Schemes these days.