Frontline on the firing line

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The current, ongoing, Frontline series called "Money, Power, and Wall Street" is drawing fire:

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Thank you nycll you are much more tactful than I am. Saved me from getting my hands slapped by the moderators.

nsdp (May. 01, 2012 @ 7:15p) |

You are welcome, nsdp. I was thinking, why are we here posting, for me in addition to the entertainment value there are ... (more)

nycll (May. 02, 2012 @ 7:34a) |

I saw the last two parts on late night TV on PBS. From the program, it looks like the F9 key was the way to make a lot ... (more)

fedguy (May. 02, 2012 @ 6:20p) |

Thanks for visiting FatWallet.com. Join for free to remove this ad.

That response was a hell of a lot more accurate(if maybe a little more ranting though as well) than anything Frontline has produced on the subject.

There's always... he said/she said, two sides to the coin, outliers, devil in the details, but I love Frontline none the less. I guess I havent seen this topic yet, but anybody who is interested they have a good library of previous stories available for viewing online. If it allows you to learn what Presidential Signing Statements are, Maiden Lane... and increase your awareness then its a good thing.

I would have to say that while Frontline isn't perfect, they have to walk a fine line so as to not screw up any prosecution. The statements by participants that did not have a Miranda warning before they made them makes all of this a bunch of eggshells for prosecutors. Frontline has mentioned the Martin Act which is NY state law. It is really the best tool for enforcement since it doesn't require proof of intent to make false or misleading statements which the federal statutes do. So you don't have the perennial argument over the Ostrich instruction. . This guy is off chasing rabbit trails. Every one should be asking what is Cyrus Vance, Jr doing since he has the big stick. Yes, Phil Gramm took away Glass Steagall but The banks didn't fix the Martin Act. What the CDO's are is a securitized version of Enron's limited partnerships, he messes that up. A means to get debt off the books without crossing the SEC. The banks forgot about the state of NY where all of this happens.

I haven't watched these yet, but have them DVRed, it will be interesting to see what I think of it. Frontline usually has its issues, but it is so much better than the rest of the garbage reporting out there and usually does a reasonable job of reporting the facts, often times courtesy of the primary players of the topic it is covering. I know of no other program where that is true.

Has Frontline ever really blown it, except in the case of LA Rams owner Carroll Rosenblum?

nsdp said:   I would have to say that while Frontline isn't perfect, they have to walk a fine line so as to not screw up any prosecution. The statements by participants that did not have a Miranda warning before they made them makes all of this a bunch of eggshells for prosecutors. Frontline has mentioned the Martin Act which is NY state law. It is really the best tool for enforcement since it doesn't require proof of intent to make false or misleading statements which the federal statutes do. So you don't have the perennial argument over the Ostrich instruction. . This guy is off chasing rabbit trails. Every one should be asking what is Cyrus Vance, Jr doing since he has the big stick. Yes, Phil Gramm took away Glass Steagall but The banks didn't fix the Martin Act. What the CDO's are is a securitized version of Enron's limited partnerships, he messes that up. A means to get debt off the books without crossing the SEC. The banks forgot about the state of NY where all of this happens.

NDSP you understand the law, but you have a limited understanding of finance.

larrymoencurly said:   Has Frontline ever really blown it, except in the case of LA Rams owner Carroll Rosenblum?

I watch a lot of their stuff mostly just because occasionally their investigative journalists pick up a few extra tidbits nobody knew about. But just like other similar programs such as 60 minutes and 20 20 their explanations of how things fit together are terrible on practically everything. Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.

JorgeBurrito said:   I haven't watched these yet, but have them DVRed, it will be interesting to see what I think of it. Frontline usually has its issues, but it is so much better than the rest of the garbage reporting out there and usually does a reasonable job of reporting the facts, often times courtesy of the primary players of the topic it is covering. I know of no other program where that is true.

Agree. Plus they also give the issues adequate time to tell the story (to wit the 4 hrs given to MPWS). I thought The Warning and Inside the Meltdown were similarly good.

nsdp said:   I would have to say that while Frontline isn't perfect, they have to walk a fine line so as to not screw up any prosecution. ...

I'm having a hard time figuring out why someone would give red to that post.

It's factual.

Where there are statements of opinion, those opinions are from a former legal insider and based on his decades of experience.

It presents additional information which is material to the discussion.

dshibb said:   NDSP you understand the law, but you have a limited understanding of finance.

At the risk of resurrecting the last flame war you had on this subject, I would respectfully disagree with your assessment of NDSP's understanding.

Both NDSP and I benefit from having lived and worked as industry professionals thru the entire era presented in the Frontline story.

And while that doesn't keep us from being wrong, both NDSP and I were in the midst of these issues before most folks here were born.

BEEFjerKAY said:   nsdp said:   I would have to say that while Frontline isn't perfect, they have to walk a fine line so as to not screw up any prosecution. ...

I'm having a hard time figuring out why someone would give red to that post.

It's factual.

Where there are statements of opinion, those opinions are from a former legal insider and based on his decades of experience.

It presents additional information which is material to the discussion.


Well for one,

nsdp said: What the CDO's are is a securitized version of Enron's limited partnerships

Isn't an accurate statement at all. A CDO is a mechanism to sell off debt to investors just like how a bond is a mechanism to sell debt to investors instead of retain it on a banks balance sheet as a loan.

So no its not factual.

BEEFjerKAY said:   dshibb said:   NDSP you understand the law, but you have a limited understanding of finance.

At the risk of resurrecting the last flame war you had on this subject, I would respectfully disagree with your assessment of NDSP's understanding.

Both NDSP and I benefit from having lived and worked as industry professionals thru the entire era presented in the Frontline story.

And while that doesn't keep us from being wrong, both NDSP and I were in the midst of these issues before most folks here were born.


Experience doesn't trump correct information(and lets face it ndsp was a prosecutor not a banker, analyst, trader, etc.) so there is a limit as to how much his experience would be applicable to describing the way certain things in the finance industry work. In the post above I point out a very incorrect statement.

They CDOs and Enron partnerships are not identical, but they are analogous in that they both were unregulated "dark" securities. And it's a fair analogy in terms of where problems and issues can result.

I'm going to sign off now. I've seen where disagreeing with you has led threads before.

That kind of discussion wasn't fun for me 50 years ago.

BEEFjerKAY said:   They CDOs and Enron partnerships are not identical, but they are analogous in that they both were unregulated "dark" securities. And it's a fair analogy in terms of where problems and issues can result.

I'm going to sign off now. I've seen where disagreeing with you has led threads before.

That kind of discussion wasn't fun for me 50 years ago.


No they aren't analogous at all. The Enron partnerships were created to hide **debt(a liability) that Enron retained and to make that debt look like profit** which is accounting fraud. A CDO is a **mechanism to transfer ownership of debt(an asset) to someone else** which is done by sale of that debt in tranche format which is completely legal and will be a good thing for markets for decades to come. The fact that you're talking about 2 completely different sides of debt(Enron being the borrower--liability and a bank being lender--asset) just shows they aren't even close.

LOL, do what you want, but this one is easy.

As mentioned in the OP, this Frontline series is ongoing. The next installment will be aired this coming Tuesday, May 1, at 9:00pm ET, at least in the east.

dshibb said:   larrymoencurly said:   Has Frontline ever really blown it, except in the case of LA Rams owner Carroll Rosenblum?I watch a lot of their stuff mostly just because occasionally their investigative journalists pick up a few extra tidbits nobody knew about. But just like other similar programs such as 60 minutes and 20 20 their explanations of how things fit together are terrible on practically everything. Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Yes, I did ask how CBS, not Frontline, got a story really wrong.

dshibb said:   nsdp said:   I would have to say that while Frontline isn't perfect, they have to walk a fine line so as to not screw up any prosecution. The statements by participants that did not have a Miranda warning before they made them makes all of this a bunch of eggshells for prosecutors. Frontline has mentioned the Martin Act which is NY state law. It is really the best tool for enforcement since it doesn't require proof of intent to make false or misleading statements which the federal statutes do. So you don't have the perennial argument over the Ostrich instruction. . This guy is off chasing rabbit trails. Every one should be asking what is Cyrus Vance, Jr doing since he has the big stick. Yes, Phil Gramm took away Glass Steagall but The banks didn't fix the Martin Act. What the CDO's are is a securitized version of Enron's limited partnerships, he messes that up. A means to get debt off the books without crossing the SEC. The banks forgot about the state of NY where all of this happens.

NDSP you understand the law, but you have a limited understanding of finance.


Actually I have a fair understanding of finance according to FASB. I was selected by FASB to be a part of the group that drafted FASB972 which resulted from the S&L debacle. AS to the comparison between the Enron LP's and CDO's, the 5th Circuit made the comparison between the LP's and the "junk bonds" floated by Drexel Burhham Lambert and Michael Milken when it affirmed Jeff Skilling's conviction for fraud. So I have no pride of authorship. That comparison belongs to the Honorable Judge Edward Prado. The only difference between the CDO's with their levels of seniority and the junk bonds floated by Drexel is the number of debtors. The Drexel "junk bonds " were collateralized by debt from a single consolidated entity and its subsidiaries eg. Sunbeam corporation whereas CDO's had thousands of mortgages as collateral. Since both "junk bonds " and CDO's had to past muster with the SEC I see no real difference between the two. I do think that you owe Judge Prado an apology.

Better to remain silent and be thought a fool than to speak out and remove all doubt.
Abraham Lincoln

larrymoencurly said:   dshibb said:   larrymoencurly said:   Has Frontline ever really blown it, except in the case of LA Rams owner Carroll Rosenblum?I watch a lot of their stuff mostly just because occasionally their investigative journalists pick up a few extra tidbits nobody knew about. But just like other similar programs such as 60 minutes and 20 20 their explanations of how things fit together are terrible on practically everything. Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Yes, I did ask how CBS, not Frontline, got a story really wrong.


Okay, fine(was just trying to give a recent example). Frontline went after fmr CEO John Thane for 'his role' in the crisis. Interesting because he took over Merrill Lynch as the $hit was hitting the fan and he spent every waking minute trying to save his firm. Frontline bought the bull$hit that Ken Lewis's team fed them about Thane when Lewis got scared of Thane pulling a Steve Jobs on him. I can tell you that from people who have met Thane they think he is a genius and an upstanding guy and people who met Ken Lewis "Couldn't believe that one of the world's biggest banks was run by an idiot."

There are a lot more examples, but that is just one off the top of my head.

dshibb said:   larrymoencurly said:   dshibb said:   larrymoencurly said:   Has Frontline ever really blown it, except in the case of LA Rams owner Carroll Rosenblum?I watch a lot of their stuff mostly just because occasionally their investigative journalists pick up a few extra tidbits nobody knew about. But just like other similar programs such as 60 minutes and 20 20 their explanations of how things fit together are terrible on practically everything. Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Yes, I did ask how CBS, not Frontline, got a story really wrong.


Okay, fine(was just trying to give a recent example). Frontline went after fmr CEO John Thane for 'his role' in the crisis. Interesting because he took over Merrill Lynch as the $hit was hitting the fan and he spent every waking minute trying to save his firm. Frontline bought the bull$hit that Ken Lewis's team fed them about Thane when Lewis got scared of Thane pulling a Steve Jobs on him. I can tell you that from people who have met Thane they think he is a genius and an upstanding guy and people who met Ken Lewis "Couldn't believe that one of the world's biggest banks was run by an idiot."

There are a lot more examples, but that is just one off the top of my head.

Stan O'Neil destroyed ML and yet he doesn't seem to take the heat that Thane did. While I think Thane was over his head at ML I do agree he's a fairly upstanding guy who did a great job at the NYSE. Lewis is an idiot that should have been fired after his massive overpayment for MBNA and then for even touching countrywide! How he stayed at bac for so long is beyond me.

dshibb said:    Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Repos are on-balance sheet so they are legitimate form of funding and they don't hide leverage.

Repo 105, the form of repo Lehman used, was treated off balance sheet. The sole purpose of those transactions was to hide leverage. There is only one legitimate way to shrink balance sheet, that is to sell assets. You can't sell then promise to buy them back after quarter end. Could other firms have adopted the same gimmicks in desperation? Very likely. But it doesn't change the egregious nature of the off-balance sheet repos.

"Encouraged by government"? It is perhaps just your misunderstanding of the typical repo (on balancesheet) and repo 105.

dshibb said:   nsdp said: What the CDO's are is a securitized version of Enron's limited partnerships

Isn't an accurate statement at all. A CDO is a mechanism to sell off debt to investors just like how a bond is a mechanism to sell debt to investors instead of retain it on a banks balance sheet as a loan.

So no its not factual.
It seems you don't understand what he meant by "securitized version".

nsdp said:   Better to remain silent and be thought a fool than to speak out and remove all doubt.
Abraham Lincoln
Ouch. Maybe our mutual friend jkimcpa can help out dshibb here about accounting issues...

Episode 1 was pretty good. Reminded me how I was certain CDS trading would end up at a clearinghouse/exchange like most other derivatives to mitigate counterparty failure. Astonishingly, we're in 2012 and the banks have successfully fought/delayed this common sense move. Counterparty failure and its potential systemic impact has not changed.

Episode 2 is good at times but could it be any more pro-Obama? Typical and consistent agenda for Frontline but who cares if Obama got phone calls from head of UBS America? Whatever your opinion of Obama he wasn't really a player in the 2008 meltdown and government response. The show goes a little easy on the regulators as well. To the comments about Lehman earlier, I believe the 60 minutes segment mentioned SEC and Fed were in Lehman's offices for 6 months in 2008. Complete ineptitude and a nice example of how more regulation is no guarantee of safety.

Link to the series as well seems appropriate.
http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/

Tier1Capital said:   Episode 1 was pretty good. Reminded me how I was certain CDS trading would end up at a clearinghouse/exchange like most other derivatives to mitigate counterparty failure. Astonishingly, we're in 2012 and the banks have successfully fought/delayed this common sense move. Counterparty failure and its potential systemic impact has not changed.

Episode 2 is good at times but could it be any more pro-Obama? Typical and consistent agenda for Frontline but who cares if Obama got phone calls from head of UBS America? Whatever your opinion of Obama he wasn't really a player in the 2008 meltdown and government response. The show goes a little easy on the regulators as well. To the comments about Lehman earlier, I believe the 60 minutes segment mentioned SEC and Fed were in Lehman's offices for 6 months in 2008. Complete ineptitude and a nice example of how more regulation is no guarantee of safety.


I don't like President Obama. But several years ago I would have trusted him over many Republicans to perform the post-meltdown cleanup. Instead he appointed Harvard buddy and WS insider Larry Summers to lead the charge. This leaves us (i.e., America) with nowhere to turn when it comes to remediation. I sure don't think Romney is gonna do what needs doing, should he defeat Obama. And Bush and Clinton caused the problem, or at least presided over its cause.

Heck it was President Clinton, and not Bush, who signed into law a catastrophic bill repealing Glass Steagall. Bush merely smiled and went along.

I only have one statement. Humans are just thieves by nature and when companies are not controlled their employees will try to make as much money (and bonuses) as they can for as long as they can using all the tricks in the book (including immoral and illegal ones)...


click for Smartline
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Tier1Capital said:   Episode 1 was pretty good. Reminded me how I was certain CDS trading would end up at a clearinghouse/exchange like most other derivatives to mitigate counterparty failure. Astonishingly, we're in 2012 and the banks have successfully fought/delayed this common sense move. Counterparty failure and its potential systemic impact has not changed.
It looks like you may not be fully tuned in with respect to central clearing. The transition of moving vanilla CDS and IRS to CCPs has been a major project for the derivatives dealers.

guardian44 said:   Tier1Capital said:   Episode 1 was pretty good. Reminded me how I was certain CDS trading would end up at a clearinghouse/exchange like most other derivatives to mitigate counterparty failure. Astonishingly, we're in 2012 and the banks have successfully fought/delayed this common sense move. Counterparty failure and its potential systemic impact has not changed.

Episode 2 is good at times but could it be any more pro-Obama? Typical and consistent agenda for Frontline but who cares if Obama got phone calls from head of UBS America? Whatever your opinion of Obama he wasn't really a player in the 2008 meltdown and government response. The show goes a little easy on the regulators as well. To the comments about Lehman earlier, I believe the 60 minutes segment mentioned SEC and Fed were in Lehman's offices for 6 months in 2008. Complete ineptitude and a nice example of how more regulation is no guarantee of safety.


I don't like President Obama. But several years ago I would have trusted him over many Republicans to perform the post-meltdown cleanup. Instead he appointed Harvard buddy and WS insider Larry Summers to lead the charge. This leaves us (i.e., America) with nowhere to turn when it comes to remediation. I sure don't think Romney is gonna do what needs doing, should he defeat Obama. And Bush and Clinton caused the problem, or at least presided over its cause.

Heck it was President Clinton, and not Bush, who signed into law a catastrophic bill repealing Glass Steagall. Bush merely smiled and went along.


A little history for you, Clinton promised to veto Gramm Leach Bliley the first time after a 54-44 Senate vote. On return to conference committee it was decorated like a christmas tree so it passed 90-8 in the Senate and 362-57 in the House. So if any body in the Democratic party deserves credit for this tar baby it is the Senate democrats who caved. It was veto proof when it hit Clinton's desk. The anti redlining provisions added were a very poor trade by the House Democrats. So if you want to pin the tale on the Donkey pin it on the right Donkeys.

Just a reminder, we want to avoid politics inasmuch as they aren't directly related to the topic in the OP. Thanks.

nsdp said:   dshibb said:   nsdp said:   I would have to say that while Frontline isn't perfect, they have to walk a fine line so as to not screw up any prosecution. The statements by participants that did not have a Miranda warning before they made them makes all of this a bunch of eggshells for prosecutors. Frontline has mentioned the Martin Act which is NY state law. It is really the best tool for enforcement since it doesn't require proof of intent to make false or misleading statements which the federal statutes do. So you don't have the perennial argument over the Ostrich instruction. . This guy is off chasing rabbit trails. Every one should be asking what is Cyrus Vance, Jr doing since he has the big stick. Yes, Phil Gramm took away Glass Steagall but The banks didn't fix the Martin Act. What the CDO's are is a securitized version of Enron's limited partnerships, he messes that up. A means to get debt off the books without crossing the SEC. The banks forgot about the state of NY where all of this happens.

NDSP you understand the law, but you have a limited understanding of finance.


Actually I have a fair understanding of finance according to FASB. I was selected by FASB to be a part of the group that drafted FASB972 which resulted from the S&L debacle. AS to the comparison between the Enron LP's and CDO's, the 5th Circuit made the comparison between the LP's and the "junk bonds" floated by Drexel Burhham Lambert and Michael Milken when it affirmed Jeff Skilling's conviction for fraud. So I have no pride of authorship. That comparison belongs to the Honorable Judge Edward Prado. The only difference between the CDO's with their levels of seniority and the junk bonds floated by Drexel is the number of debtors. The Drexel "junk bonds " were collateralized by debt from a single consolidated entity and its subsidiaries eg. Sunbeam corporation whereas CDO's had thousands of mortgages as collateral. Since both "junk bonds " and CDO's had to past muster with the SEC I see no real difference between the two. I do think that you owe Judge Prado an apology.

Better to remain silent and be thought a fool than to speak out and remove all doubt.
Abraham Lincoln


I don't give 2 $hits about what some judge thought. A CDO is not even close to a Enron LP. I would say that the Drexel junk bonds are a much closer analogy, but Drexel junk bonds and CDOs *are not* like an Enron LP. Folks that actually get these things would never make that comparison.

nycll said:   dshibb said:    Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Repos are on-balance sheet so they are legitimate form of funding and they don't hide leverage.

Repo 105, the form of repo Lehman used, was treated off balance sheet. The sole purpose of those transactions was to hide leverage. There is only one legitimate way to shrink balance sheet, that is to sell assets. You can't sell then promise to buy them back after quarter end. Could other firms have adopted the same gimmicks in desperation? Very likely. But it doesn't change the egregious nature of the off-balance sheet repos.

"Encouraged by government"? It is perhaps just your misunderstanding of the typical repo (on balancesheet) and repo 105.


So then how does that notion fit with LTRO and what the ECB has been doing then? European banks are insolvent and the central banks are all but requiring this type of behavior.

nycll said:   nsdp said:   Better to remain silent and be thought a fool than to speak out and remove all doubt.
Abraham Lincoln
Ouch. Maybe our mutual friend jkimcpa can help out dshibb here about accounting issues...


My comments were factual his were some judges opinion. Say what you want, but that line was more befitting of nsdp's post not mine.

Delighted to see a thread on this series here--even more so that it cites the invaluable Yves Smith in critique. (And thanks to Beef for alerting me to the program.)

I've only watched the first segment, which seemed generally respectable to me given the constraints the FL producers faced (tho I agree with Smith that it extracted too heavily from Fool's Gold--I felt like I was re-reading the book at times.)

Smith's critique is powerful. She makes several valid points. However, I don't think she acknowledges how constrained the mainstream media is in calling out the guilty in matters like this.


As is often the case with FL, some of the added extras are not just well done, but really distinctive resources in their own right. For example, anyone who's really curious about team Obama's thinking during the crisis owes it to themselves to listen/read Goolsbee's extended interview. I was very struck by how revealing it was...and frankly, by how frank Goolsbee was. Great stuff. (Full disclosure--Goolsbee is an old friend.)


Bottom line is that the public needs all the information it can get about what when on here, especially accessible information. This series gives important background. While I wish Smith and others could have had a bigger hand in re-shaping drafts of the telescript, at least this takes time to flesh out some details.

dshibb said:   nycll said:   dshibb said:    Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Repos are on-balance sheet so they are legitimate form of funding and they don't hide leverage.

Repo 105, the form of repo Lehman used, was treated off balance sheet. The sole purpose of those transactions was to hide leverage. There is only one legitimate way to shrink balance sheet, that is to sell assets. You can't sell then promise to buy them back after quarter end. Could other firms have adopted the same gimmicks in desperation? Very likely. But it doesn't change the egregious nature of the off-balance sheet repos.

"Encouraged by government"? It is perhaps just your misunderstanding of the typical repo (on balancesheet) and repo 105.


So then how does that notion fit with LTRO and what the ECB has been doing then? European banks are insolvent and the central banks are all but requiring this type of behavior.
Are the LTRO's off balance sheet? Do you know the difference?

Maybe Frontline, or 60 minutes if that is who you have a beef with, should do a piece of the European crisis. Oh, wait, a quick search found this: http://www.pbs.org/wgbh/pages/frontline/oral-history/financial-c...

Maybe you should watch it first before sharing your uninformed opinion?

nycll said:   dshibb said:   nycll said:   dshibb said:    Just the other day 60 minutes did a program about Lehman's accounting and the entire program centered around the Repo markets. They were acting all astonished that a financial company would be allowed to use tricks within the repo markets to make their balance sheet look better(the purpose of the Repo markets over other forms of debt) and they say this while the ECB and the Fed right now are signing off on more bull$hit repo transactions with European banks then you could possibly imagine.

So while the program was interesting it was terribly explained. They acted like Lehman was taking advantage of some super secret loophole and ignored the fact that this entire market is utilized by practically every financial institution in existence, encouraged by government, and is one of the preferred ways of engaging in monetary policy by our and most of the worlds central banks. How is that for completely missing the huge elephant, gorilla context in the room.
Repos are on-balance sheet so they are legitimate form of funding and they don't hide leverage.

Repo 105, the form of repo Lehman used, was treated off balance sheet. The sole purpose of those transactions was to hide leverage. There is only one legitimate way to shrink balance sheet, that is to sell assets. You can't sell then promise to buy them back after quarter end. Could other firms have adopted the same gimmicks in desperation? Very likely. But it doesn't change the egregious nature of the off-balance sheet repos.

"Encouraged by government"? It is perhaps just your misunderstanding of the typical repo (on balancesheet) and repo 105.


So then how does that notion fit with LTRO and what the ECB has been doing then? European banks are insolvent and the central banks are all but requiring this type of behavior.
Are the LTRO's off balance sheet? Do you know the difference?

Maybe Frontline, or 60 minutes if that is who you have a beef with, should do a piece of the European crisis. Oh, wait, a quick search found this: http://www.pbs.org/wgbh/pages/frontline/oral-history/financial-c...

Maybe you should watch it first before sharing your uninformed opinion?


Yes I do know the difference. LTRO is allowing near worthless collateral to post for full value in the repo. An ECB repo is valuing a Greek bond at par. The point is that the repo market has historically been a market made popular to engage in accounting trickery. That is basically its primary benefit over other methods of lending. The leasing market has historically served a similar role for tax trickery. There really shouldn't be any surprises in what occurs in the Repo market when you have the European central bank engaging in the most egregious examples right as we speak.

Maybe you should get a clue?(wow look I'm cool like you)

Look I'm not getting into some pissing match on here(even though it seems you want to, again). God forbid I share factual information about these markets and try to keep it short and simple. Go on being **pathetic**(since you ask for mods for everything like a child) without me.

nsdp said:   What the CDO's are is a securitized version of Enron's limited partnerships, he messes that up. A means to get debt off the books without crossing the SEC.

I guess I don't see why Enron had to be used here as the analogy bridge for getting debt off books. I could see dshibb's gripe--Comparing a CDO to things like LJM/raptors/etc is out of the solar system.

I think the the problem with documentaries like this one is that they attempt to fit into four hours things that take actual education, experience and financial knowledge to understand. Your average auto mechanic simply doesn't have the background to understand the financial instruments that currently exist. That's why we get morons like OWS raving about "casino capitalism" and demanding somebody be accountable for the notional value of derivatives.

While it is a bit unseemly to just say that the "unwashed masses" are simply not sophisticated enough to understand the details of corporate and investment finance and attempts should not be made...is it true? At a certain point, somebody picking up a soundbite and running with it can be more dangerous. It seems to be the source of most financial legislation in the past few years.

Skipping 5 Messages...
I saw the last two parts on late night TV on PBS. From the program, it looks like the F9 key was the way to make a lot of money .



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