mortgage-deduction-americas-costliest-tax-break - While there’s no way to stabilize U.S. debt without making tough choices on the tax and spending sides of the ledger, some sacred cows are more sacred than others. And the mortgage-interest tax break is still deemed untouchable. Between 2009 and 2013, the government will lose out on nearly $600 billion because of it, according to the Joint Committee on Taxation. Case in point: a new bipartisan tax reform proposal that has been gaining currency in policy circles. Co-sponsored by Sens. Ron Wyden, D-Ore. and Judd Gregg, R-NH, the proposal would simplify the income tax system, streamline the numbers of credits and deductions, and lower the corporate tax rate. But it doesn’t touch the mortgage deduction.
Dylan Ratigan: A Patriot’s Day Call to Arms – Mr. President, please show the American people the AIG emails. In the wake of the disclosures associated with Friday’s government fraud accusations against Goldman, Sachs & Co., one of our nation’s wealthiest, largest and most politically well-connected banks, it is inexcusable the U.S. government still refuses to release the thousands of emails that exist between AIG and Goldman Sachs. Unlike the Icelandic volcano, this was no natural disaster. Trillions of dollars have been defrauded from the U.S. taxpayer by a banking scam run by the top 1% of our country. The mark for this con game has been and continues to be every teacher, cop, firefighter, nurse, conservative saver, small investor, student and retiree. People whose pensions, homes, jobs and monthly retirement stipends have been and continue to be deprived — so these people can use our government to transfer money from your work to themselves. We also know that the same people responsible for this failed system are STILL RUNNING IT, leaving obvious conflicts of interest everywhere you turn.
The Goldman Defense: Caveat Emptor – Updated with both Goldman response documents Months before the Securities and Exchange Commission sued Goldman Sachs for securities fraud, the investment bank outlined its defense to potential charges related to its construction of a mortgage investment.The essential thrust, as explained by two documents obtained by The New York Times (and mentioned here): buyer beware. The S.E.C., Goldman’s lawyers at Sullivan & Cromwell wrote, was benefiting from “perfect hindsight” in pressing its investigation. A party like ACA Management, the third-party manager of the Abacus collateralized debt obligation in question, was “no mindless dupe that could be easily manipulated,” they wrote. Instead, they should have known what they were doing.
ASIC considers joining Goldman Sachs probe – - AUSTRALIA’S securities regulator is considering whether to join a widening international probe into Goldman Sachs, following landmark US legal action that claims the Wall Street company deceived big clients.The Australian arm of Goldman Sachs was yesterday distancing itself from the crisis enveloping its US parent, although Goldman Sachs JBWere was assuring clients that none of the investment products at the heart of the claims had been marketed in Australia. US regulators launched civil charges against Goldman and one of its high-profile traders, Fabrice Tourre, early in Friday trading, over a complex product sold by the company, known as a collateralised debt obligation (CDO), tied to subprime mortgages. The heart of the claim by the Securities and Exchange Commission was that Goldman or Mr Tourre did not tell institutional investors, including a German bank, that a fund that designed the CDO was also betting against it.
Excess, Shadow Inventory Threaten Fragile Housing Recovery: Fannie – Although the US housing market shows signs of stabilizing, excess inventory and shadow supply could hinder recovery, according to economists at government-sponsored enterprise Fannie Mae Despite “encouraging” recent growth in consumer spending, Fannie said economic growth likely decelerated from an annualized 5.6% in Q409 to 2.7% in Q110. Economists project a 3.1% rate of economic growth for all of 2010, according to the April outlook report by the Fannie Mae economics and mortgage market analysis group (download here). “Financial conditions are improving as seen by the unwinding of various programs, most notably the [mortgage-backed securities] purchase program which ended in March,” said Fannie Mae chief economist Doug Duncan. “This is strong evidence that the [Federal Reserve] believes the financial sector can stand on its own.”
Our Pecora Moment - We have waited long and patiently for our Ferdinand Pecora moment – a modern equivalent of the episode when a tough prosecutor from New York seized the imagination of the country in the early 1930s and, over a series of congressional hearings: laid bare the wrong-doings of Wall Street in simple and vivid terms that everyone could understand, and created the groundswell of public support necessary for comprehensive reregulation. On Friday, that moment finally arrived. There is fraud at the heart of Wall Street, according to the Securities and Exchange Commission. Pecora took on National City Bank and J.P. Morgan (the younger); these were the supposedly untouchable titans of their day. The SEC is taking on Goldman Sachs; no firm is more powerful.
Is the Goldman Sachs suit the tip of the iceberg? - Put simply, here’s how the SEC claims it all went down: Imagine you are the biggest car company in the country. Goldman in this example, and a client, Paulson, comes to you and asks you to design a car that will crash. So you make that bad car "CDO," then sell it to people without telling them you cut the brake lines! Then when the car "CDO" hits a wall, you rake in the dough from the insurance you bought on the bad car before the crash. And you get paid twice! Once when you sell the car, and then again when it crashes and cash in your insurance policy! Of course in Goldman’s case, they bought the insurance from AIG, which didn’t have the cash to back up its bets. Hence, thanks to the $180 billion taxpayer rescue, those bets paid Goldman Sachs back at 100-cents on the dollar
« Questions Surrounding the SEC’s Litigation vs Goldman - Reading the SEC complaint (SEC vs GOLDMAN SACHS & CO. and FABRICE TOURRE) makes it hard to avoid the conclusion that there were material misstatements of facts and significant omissions performed in the selling of the Abacus 2007 securitized product. When you consider the factors surrounding the complaint, it raises a dozens of more questions: A Bakers Dozen: Questions Provoked by the SEC Goldman Complaint
What Goldman’s Conduct Reveals – NYTimes Room for Debate Forum According to the complaint, Goldman let John Paulson, a prominent hedge fund manager, select mortgage bonds that he wanted to bet against because they were most likely to lose value and packaged those bonds into the “Abacus” investments, which were sold to investors like foreign banks and pension funds. As those securities plunged in value, the Paulson hedge fund made money on the negative bets, while the Goldman clients who bought the investments lost billions of dollars. Is this chain of events surprising? The S.E.C. is suing Goldman Sachs, but could regulation or monitoring of these financial instruments have prevented such losses? What kind of regulatory structure would need to be put in place?
- Lynn A. Stout, professor of corporate and securities law, U.C.L.A.
- Michael Greenberger, former commodities regulator
- Nicole Gelinas, Manhattan Institute
- Yves Smith, financial analyst
- Nomi Prins, senior fellow, Demos
- Edward Harrison, banking and finance specialist
- Douglas Elliott, Brookings Institution
- Megan McArdle, Asymmetrical Information
- William K. Black, former banking regulator
Simon Johnson: Wall Street’s Stranglehold on Our Democracy Must Be Broken - Simon Johnson is the former chief economist for the International Monetary Fund, and co-founder of the Baseline Scenario, a blog about the financial crisis and financial reform. He is a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. Johnson’s latest book, 13 Bankers (co-authored with Baseline Scenario co-founder James Kwak) is a detailed examination of Wall Street’s political and ideological power and the devastating economic results. AlterNet’s economics editor Zach Carter recently talked with Johnson about the U.S. banking system
Risk Mismanagement - About a decade ago, Miguel Torres planted 104 hectares of pinot noir grapes in the Spanish Pyrenees, 3,300 feet above sea level. It’s cold up there and not much good for grapes—at least not these days. But Torres, the head of one of Spain’s foremost wine families, knows that the climate is changing. His company’s scientists reckon that the Rioja wine region could be nonviable within 40 to 70 years, as temperatures increase and Europe’s wine belt moves north by up to 25 miles per decade. Other winemakers are talking about growing grapes as far north as Scandinavia and southern England. Torres’ Pyrenees vineyards are a hedge, and may not be necessary. But if climate change redraws the map of Europe’s wine world, he will be prepared. And his company will be one of a very few taking steps to adapt to the future effects of climate change.
