The FCIC’s report on the causes of the financial crisis released on Friday has many tales of what happened on Wall Street before it became the straight-laced industry it is today.The report uses the stories for evidence of corporate greed, ineptitude, and borderline fraud to show how Wall Street still needs to be punished — its authors slam the finance industry and want to see prosecutions.
But even though some of them are upsetting, they’re entertaining. Some are even funny.
A Goldman Sachs Partner told her subordinates to package and hide the crap they couldn't sell in CDOs
All the way back in 2006, Stacy Bash-Polley, a Goldman Partner (the co-head of fixed income sales) told her subordinates to off-load the 'mezz' risk -- the mortgage bonds rated with a relatively low level of risk -- now that the firm had gotten rid of the super risky stuff.
The best way to do so, she told them, was to, begin to re-package them into other CDOs.
And Fabrice Tourre told his unit to sell them to the dumb money.
When the economy was about to collapse, Morgan Stanley's head of due diligence was living in Florida
At Morgan Stanley, the head of due diligence was based not in New York but rather in Boca Raton, Florida.
He had, at any one time, two to five individuals reporting to him directly--and they were actually employees of a personnel consultant, Equinox.
The report also said that Deutsche Bank and JP Morgan had only small due diligence teams too, but we're guessing they weren't based in wealthy, retirement enclave in Florida.
One of the 700 people the FCIC interviewed while conducting its investigation of what caused the financial crisis was Ken Lewis, who told the FCIC about a certain executive's incessant calls.
Lehman was on the brink of failure, and Dick Fuld was as desperate as a school girl for Lewis to buy it.
Lewis' wife finally had to tell Fuld, 'Stop calling. He won't pick up. He's mine.'
The CEO bragged about how his execs made their own rules and paid themselves whatever they wanted at Fannie Mae
Even though Goldman Sachs execs testified on the Hill that AIG bailout funds it received did not stay with the bank, but were dispersed as compensation to clients and institutions on the other side of a prop trade gone wrong, it actually kept $2.9 billion for itself, according to a report by the FCIC.
Remember, Goldman faced a hearing in July of 2010 about the bank's exposure to AIG.
That's when CFO David Viniar and MD David Lehman testified they knew nothing about AIG funds landing in the bank's private reserves.
On the Thursday before Lehman Brothers totally collapsed, the New York Fed was obviously feeling crazed and kind of helpless, the FCIC report reveals.
Because they were clearly taking any and all advice they could get; they were even forwarding around an email from Louis Bacon, billionaire hedge funder and CEO of Moore Capital, about what to do.
He urged the fed to step in and do something, and sent an email to Hayley Boesky, a senior New York Fed official.