Rubin and Greenspan to face crisis inquiry

[DrDoom]

FRY EM! Two of the biggest ideological hacks responsible for this financial crisis and they remain unapologetic not to mention free from prison..

As far as what did Greenspan know...how bout this! What a sniveling liar....

Robert Rubin, the former Treasury secretary who played a key role in financial deregulation during Bill Clinton’s presidency and who has kept a low profile since stepping down as a special adviser to Citigroup in January 2009, is to be questioned by the US financial crisis inquiry commission this week.

The committee, created by Congress and given sweeping powers in May 2009, is also to question Chuck Prince, the former chief executive of Citi, as well as Alan Greenspan, former chairman of the Federal Reserve Board.


The line-up suggests the committee is narrowing the scope of its investigation ahead of a final report to Congress in December.

Phil Angelides, the commission’s chairman, said he would ask Mr Greenspan, who led the Fed between 1987 and 2006, why the central bank did not curb subprime lending before the housing bubble burst.

Mr Angelides, a former California state treasurer, said: “The fact is that the Fed, as the main regulator, had the power to impose rules that would apply to everybody.

“We need to peel the veil from these events so that the American people find out what really happened.”

On Sunday, Mr Greenspan appeared to be clinging to his free market ideology, telling ABC News there remained “no alternative” to competitive markets in democratic societies and that regulators could not have foreseen the events that would follow the collapse of Lehman Brothers.

Bill Thomas, vice-chairman of the FCIC and the former Republican chairman of the House’s ways and means committee, said he would ask Mr Greenspan: “what did you know, when did you know it and if you didn’t know it, why didn’t you know it?”.

FT.com / US / Economy & Fed - Rubin and Greenspan to face crisis inquiry

[DrDoom]

Yup...Summers, Greenspan and Rubin the keepers of neo-liberal economic faith...god help us

I’m in the “green room” at ABC News, waiting to join a roundtable panel discussion on ABC’s weekly Sunday news program, This Week.

Alan Greenspan is now being interviewed. He says he bore no responsibility for the housing bubble that catapulted the nation into a financial crisis in 2008 because no one could have known about the bubble when he chaired the Fed in the years before it burst. Larry Summers was interviewed just before Greenspan. He said the economy is expanding, that the Administration is doing everything it can to bring jobs back, and that the regulatory reform bills moving on the Hill will prevent another financial crisis.

What?

If any single person is most responsible for the financial crisis, it’s Alan Greenspan. He presided over a Fed that lowered interest rates to zero (adjusted for inflation) but failed to prevent banks from using essentially free money to speculate wildly. You do not have to be a brain surgeon to understand that if money is free, banks will take it and lend it out. And if oversight is inadequate, the banks will lend the money to anyone who can stand up straight and to many who cannot. The result will be a giant subprime lending bubble that will burst.

If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Glass-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.

At the same time, Greenspan, Summers, and Rubin also quashed the efforts of the Commodity Futures Trading Corporation to regulate derivatives, when its director began to worry that derivative trading already was getting out of control.

Yet Greenspan continues to take no responsibility for what occurred. In the interview he just completed he avoiding saying anything about the failure of the Fed under his watch to adequately oversee the banks, and the absence of sufficient financial regulation to begin with.

I dislike singling out individuals for blame or praise in a political system as complex as that of the United States but I worry the nation is not on the right economic road, and that these individuals — one of whom advises the President directly and the others who continue to exert substantial influence among policy makers — still don’t get it.

Robert Reich (Greenspan, Summers, and Why the Economy Is So Out of Whack)

[DrDoom]

Greenspan today is doing his tap dance and CYA act...as this author notes...he can try and revise history all he wants but those in the know are already aware of his damaging influence and soiled legacy...

April 7 (Bloomberg) -- In case you missed the first legacy tour, former Federal Reserve Chairman Alan Greenspan is back for Part II.

Starting with an academic paper presented at the Brookings Institution on March 19 and followed by several TV interviews, “Dr. Greenspan,” as his interviewers politely refer to him, has acquired the clairvoyance he lacked at the Fed.

Asked in a Bloomberg TV interview about a possible bubble in China, Greenspan said there were “significant bubbles in Shanghai and along the coastal provinces” and “some of that in the hinterlands.”

He of the Can’t-See-a-Bubble-In-Advance School now recognizes region-specific bubbles halfway around the world?

As for Greenspan’s claim that only a few predicted the post-bubble fallout, “that’s preposterous,” says Bill Fleckenstein, president of Fleckenstein Capital in Seattle. “I had time to write a book about it.”

The book, aptly named “Greenspan’s Bubbles,” was written in 2007 and published in January 2008.

Greenspan told Bloomberg TV neither he, nor anyone at the Fed, heard about problems brewing in the banking system.

That’s patently false. I know for a fact that regulation and supervision division staff at some of the Federal Reserve District Banks reported risks and irregularities to the Board in Washington.

Unheeded Warnings

The late Ned Gramlich, a Federal Reserve governor from 1997 to 2005, pressed Greenspan to increase the bank’s oversight of subprime mortgage lending starting in 2000, clearly to no avail.

Greenspan’s response? He told the Wall Street Journal in June 2007 he didn’t recall discussing the idea of sending examiners to home-loan units of Fed-regulated bank holding companies.

Greenspan?s Delusions Get Much Worse With Age: Caroline Baum - Bloomberg.com

[DrDoom]

Ha ha Mr "Independent" central banker now absolves himself totally. Sure it was a collusionary money and power relationship between Congress, the Central bank and the Wall Street TBTF institutions that were supposed to be regulated by the Fed and SEC but when Greenspan was being treated like a rock star and engaging in his mealy mouthed Fed speak he was complicit. He enjoyed the accolades and the sycophant didn't use his "independence" to do the right thing. Instead, he continued with the Greenspan put and bubble econ! Hey maestro....there is a special place in hell waiting for you and all your market fundamentalist neo-liberal acolytes...

Former Federal Reserve Chairman Alan Greenspan chastised critics on Wednesday by pointing out that Congress pushed the U.S. central bank to make sure lending to poorer Americans kept rising in the 2000s.

Greenspan says Congress pushed Fed on housing boom | Reuters

RELATED: http://www.philadelphiaspeaks.com/fo...html#post59927

[DrDoom]

Ha ha another damning commentary. Hey Greenspan...3 words..." I was wrong" learn to say them so you can be thrown in jail which won't happen since you are above the law. Ideologues like you can keep changing your story to fit your beliefs but ultimately the truth is self-sustaining...

Here we go -- another meeting of the Federal Crisis Inquiry Commission (FCIC). As we speak, former Federal Reserve Chairman Alan Greenspan continues to shuck and jive in a feeble attempt to restore his reputation.

Early in the testimony, Greenspan claimed that in his career, he was "70% right and 30% wrong", but when asked whether his action (or inaction) in the years leading up to the crisis would be put in the 30% category, he said "I don't know." Mr. Greenspan, I think we know. You were not the solitary cause of the crisis, but many of your decisions and core values, which prevented smart regulation, contributed to an environment that allowed the crisis to occur.

It's mind-blowing that the former "Maestro" is incapable of owning up to any responsibility in his role in fostering the financial crisis. In his prepared remarks, Greenspan noted that the securitization of sub-prime and alt-A mortgages, whose surge was fueled by Government Sponsored Entities Fannie Mae and Freddie Mac. Greenspan noted that the two giants bought 40% of these toxic assets, which is why in 2004, he argued for limiting GSE purchases of these types of toxic debt.

Really? In a September 2007 "60 minutes" interview, Greenspan said "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late." Which is it? Did he think it was a problem in 2004 or not?

Let's agree for a moment that FNM and FRE contributed to the problems-they did. In his opening question, FCIC Chairman Phil Angelides outlined series of warning signs that were brought to Greenspan starting in 1999, which of course begs the question, why didn't the Fed take action to regulate these worrisome products? All well and good that Greenspan issued guidance, but without regulation, how exactly would change occur? Nice comeback from Angelides-"You could've, you should've and you didn't."

When asked about the Fed's low interest policy (Greenspan never encountered a problem that easy monetary policy couldn't solve), which many describe as "too low for too long," Greenspan responded that mortgage rates are based on long term interest rates, over which the Fed had little control. In other words, keeping short term rates low had nothing to do with inflating the housing bubble.

Does anyone else remember early 2004, when Greenspan extolled the virtues of adjustable-rate mortgages? You know, the ones that are based on short-term rates? In a speech before the National Association of Homebuilders, he said "traditional fixed-rate mortgage may be an expensive method of financing a home...homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages over the past decade." It was as if Greenspan was doing a paid announcement for the mortgage industry-the subtext was "can't afford a house with a traditional mortgage? Go get yourself an adjustable rate, or any other cheap money, to get what you want!"

Greenspan Before The FCIC: A Trip To The Land of Denial - EconWatch - CBS News

[DrDoom]

Now it's Rubin's turn to be shown to be a lying piece of dung! The FBI was warning back in 2005 and 2006 about the mortgage crisis that was to come and how massive fraud needed to be addressed but that is rarely brought up by the media....they just keep reporting how Greenspan was shocked!

WASHINGTON — A former executive of Citigroup Inc. is telling a panel investigating the roots of the financial crisis that he warned former chairman Robert Rubin and other bank leaders about the coming mortgage crisis back in 2006.

Richard Bowen says other Citigroup executives were violating the bank's own risk management standards starting in 2006. He says he discovered in the middle of that year that over 60 percent of the mortgages bought and resold by subprime subsidiary Citifinancial Mortgage were defective. Bowen was chief underwriter for the division.

Bowen says he issued many warnings to management about the mortgage risk starting in 2006, and e-mailed Rubin in November 2007.

Bowen's testimony is part of three days of hearings by the Financial Crisis Inquiry Commission.

The Associated Press: Fmr. Citi exec warned Rubin about mortgage risk

[DrDoom]

Ok they said they are sorry...we effed up too bad so sad..**** happens everybody can go home now...the show trial by the US financial crisis inquiry commission....not CRIME commission but crisis inquiry commission is over. They came, they saw, they asked and went home. I hope you are all satisfied with Rubin's apology and Greenpan's "who me?" revisionism Mr and Mrs American taxpayer. Have a nice day. See you next bailout and wealth transfer.....Can this be anymore disdainful.....oh wait probably since the rape and pillage keeps getting "better" or sophisticated...

Chuck Prince and Robert Rubin on Thursday apologised for Citigroup’s severe losses on mortgage related securities but insisted that there was nothing wrong with the company’s risk management ahead of the financial crisis.

“I can only say that I am deeply sorry that our management – starting with me – was not more prescient and that we did not foresee what lay before us,” Mr Prince told a congressionally mandated commission on the financial crisis in Washington.

Mr Prince was chief executive at Citi for most of 2007 as the mortgage meltdown, which ultimately led to a $45bn (€34bn) government bail-out of the bank, began to unfold.

Mr Rubin, the former Treasury secretary who held a senior role at Citi until last year, added: “Almost all of us involved in the financial system . . . missed the powerful combination of forces at work and the serious possibility of a financial crisis. We all bear responsibility for not recognising this, and I deeply regret that.”

However, Mr Rubin pointed out that he did not directly manage personnel or operations at Citi, but rather advised senior management as well as meeting with clients and foreign officials.

Both executives said that Citi’s risk management was solid and claimed that there was a widespread belief within the bank that their holdings of mortgage-related securities, many of which initially had triple A credit ratings, were safe investments. “We had very robust processes around reporting risk,” Mr Rubin said.

But the congressional panel did not appear convinced. “The two of you did not seem to have a grip on what was happening,” said Phil Angelides, the commission chairman. “You were either pulling the levers or asleep at the switch.”

Bill Thomas, vice-chairman, added: “Apparently you can get to the top without ever having experienced all these things that the people below you do,” he said. “What do you get paid for if you don’t have some understanding, intuition, knowledge?”

FT.com / US / Economy & Fed - Ex-Citi chiefs say sorry for loan losses

[DrDoom]

Horrible...

Well done to Cyrus Sanati for getting a bit of snark into Dealbook:

Byron Georgiou asked [Chuck Prince] about the ballooning of Citi’s leveraged loan exposure to $100 billion from $35 billion within a short period of time.

“If you were at all concerned about this business how come you allowed the limits to be tripled during that period?” he asked.

“My belief then and my belief now is that one firm in this business cannot unilaterally withdraw from the business and maintain its ability to conduct business in the future,” Mr. Prince said…

“If you are not engaged in business, people leave the institution, so it is impossible to say in my view to your bankers we are just not going to participate in the business in the next year or so until things become a little more rational,” he said. “You can’t do that and expect to have any people left to conduct business in the future.”

Just months after Mr. Prince’s dancing comment, Citi took a $1.5 billion write down tied to its leverage loan portfolio. Most of the bankers that did those deals are no longer employed at the firm.

Of course this is a prime example of Prince not answering the question. Georgiou didn’t ask Prince why Citi hadn’t quit the leveraged loan business entirely: he asked why Citi had trebled the size of its leveraged loan business during a time when Prince claimed to be concerned about the risks involved and indeed, by his own account, specifically asked regulators to step in and impose limitations.

It really ought to go without saying that the CEO of a company as big as Citigroup, especially when he’s being paid a hefty ten-figure salary, should be able to control his own businesses without crawling to regulators with a plea of “stop me before I issue another cov-lite bond, I can’t help myself”. If Prince would have been happy to see regulators crack down on his leveraged-loan operations, he should by rights have been even more happy to do so himself. After all, if regulators did it, there wouldn’t be any competitive advantage to the move, whereas if he did it and his competitors kept on making bad loans, then Citi would end up beating its competition.

But that’s not the way that bank incentives work: no one ever gets rewarded for not doing a bad deal. In fact, you’re much more likely to get rewarded for doing a bad deal: the investment-banking world rewards dealmaking much more than it rewards successful dealmaking.


The tragedy of Prince and Rubin | Analysis & Opinion | Reuters