SOS: Financial Whistleblowers Under Attack From Industry
July 29th, 2007 - by: danny
Credit Bubble, Toil and Trouble….
Yes, I promised myself not to blog during my vacation here in Australia. But two things have forced me to reconsider. First, it is clear that the housing lending crisis that I have been tracking has surfaced here, “down under” as well and throughout the world. We need to keep our eye on the global tidal wave of economic destruction it is creating.
More urgently, one of the websites, Mi-implode, that I have been referencing and that does a great job of tracking all the imploding lenders and criminal mortgage practices has come under attack from the industry. They are amazing whistle-blowers and deserve our support now that one of the financial companies they have been exposing tries to put them out of business with a malicious law suit. Here’s their release.
RELEASE: STOP THE ATTACK ON MI-IMPLODE: SUPPORT A FREE FINANCIAL PRESS;
One of the leading websites monitoring the mortgage loan crisis that is unhinging world financial markets is under attack in the courts by a lending agency, Loan Center of California, because an alleged claim in an anonymous email from whistle-blower charging that the company was collapsing, as well as a variety of impropriety charges. Although the general claims were reasonably supported by both public and private evidence available to ml-implode at the time, the lawsuit aims to silence the work of a widely-read, web-based independent financial news outlet, which is now scrambing to raise legal costs.
“This is akin to using the courts to shoot the messenger,” says Aaron Krowne, proprietor of the widely-known and valued ml-implode.com website. “This is an example of an attack on the free press and citizen-journalism in the digital age by a well-heeled lending company using deep pockets to undercut outside scrutiny by the public, cloud transparency in the financial markets, and potentially force the website out of business with unsubstantiated claims and mis-placed blame.”
Krowne explains that the web site is run on a shoestring, with the workload shouldered by him (in addition to a full-time job), a partner, and a free-lance contractor, all working part-time. In spite of this, reports contributed by the public (the majority) are only posted if there are multiple independent sources corroborating a claim. This was the case with the whistleblower’s tip on LCC.
Krowne says that in accordance with standard operating procedure, the post was marked as doubtful immediately after LCC complained. However, the company refused to send in a correction for unknown reasons, demanding the information be removed entirely. Krowne says ml-implode relented within a day, and removed the posting from the web page.
However, LCC surprised the site by filing a lawsuit a few weeks later, blaming Krowne and ml-implode for the loss of about $3.8 million in funding, and requesting damages of at least $50,000. LCC did not disclose whether the funding was restored, or explain why major investment banks Credit Suisse and Washington Mutual (the creditors) were not themselves responsible for any business injury LCC suffered. The suit implies the banks acted against solely based on information on the ml-implode site, despite the prominent disclaimers advising otherwise.
Krowne and ml-implode have thus far pursued an “anti-SLAPP” defense, which would provide for early dismissal of the suit and award the defendant legal costs. However, last Friday Judge Franklin Taft denied this motion in a ruling that casts doubt on the state’s ability to abide by its own anti-SLAPP statute. The ruling states that the site “is not an index” (even though this is clearly what it is) and that the submitted letter had been “transformed” (even though it was posted verbatim). The ruling did not address the issue of the site’s disclaimers, which amply explained the meaning of the “imploded” list and imperfect nature of the information on the site. The ruling also did not consider the defendent’s immediate flagging of the item as “doubtful” and its rapid removal within a day.
Krowne says the site is considering seeking an appeal of the anti-SLAPP denial decision. Failing that, the case would proceed to litigation, which Krowne is optimistic about, saying that the site acted reasonably and responsibly, within the best of its abilities. However, Krowne urges that the community’s support is needed to pay for the case.
MI-implode.com has had more than 4.5 million visits since January 1, 2007, according to the site meter on the web page. Currently 105 lending operations are listed as “imploded”.
Please pass this release along to financial journalists and media freedom groups.
IN DEBT WE TRUST SCREENINGS
Paul Hyland wrote to me at Facebook: “Just watched In Debt We Trust in the US Capitol – it got a good reaction (or at least a reaction…a couple amens, a few wows, that sort of thing). Campaign for America’s Future sponsored the screening.”
Next screeinging I will be at is August 8 at 6 PM at Downtown Community TV at 87 Lafayette Street in Lower Manhtattan organized by NEDAP. There will also be a screening with Bob Manning in attendence at the American Socilogical Association Meeting at 8:30 am on Aug 12th.
Comments to Dissector@mediachannel.org. Blog Resumes Aug 8. Medichannel seeking partners.
See the whole Post / →
CONTAGION: Street Explosions and Financial Implosions
July 22nd, 2007 - by: danny
UPDATE WED JULY 25: Arrived in Syndney only to read a report that the country’s top HEDGE FUND is in serious trouble for the reasons spelled out below. Another report in the local press compares the CDO debt crisis to a “tidal wave.”
The NY Times reports today:
Top Lender Sees Mortgage Woes for ‘Good’ Risks
By VIKAS BAJAJ
Countrywide Financial, the nation’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.
The news from Countrywide, widely seen as a bellwether for the mortgage market, initiated a sell-off in the stock market, which is at its most volatile in more than a year. The Standard & Poor’s 500-stock index fell 30.53 points, or 2 percent, to 1,511.04, its biggest one-day drop in nearly five months. The dollar dropped to a new low against the euro, edging closer to $1.40 to 1 euro. Stocks opened sharply lower in Japan this morning.
The slumping housing market has become the biggest worry for the stock market, which just four days ago set records, because of its potential impact on the broader economy and financial system.
This crisis is clearly having a GLOBAL impact already. There is more woe to come.
Putting another CDO on the Barbie….
Posted Sunday July 22, 2007.
No regular blog today. I am off on a rare well-deserved vacation. But since I am so immersed in this credit issue because of my film IN DEBT WE TRUST, I just had to do a new piece abou the crisis and the “contagion” it is causing.
Back August 8.
“CONTAGION” COULD LEAD TO A FINANCIAL TSUNAMI
Explosions, Implosions and the Recession Around The Corner
By Danny Schechter
Mediachannel.org
Last week, there was panic in the streets of New York after a steam pipe exploded in mid-Manhattan. One person died, another is in coma, but the real fear is that asbestos belched into the air could have a deadly effect on many more people like it did at the World Trade Center in the aftermath of 911. In that event, city officials like Rudy Giuliani did not insist on protective clothing and safety rules. Thousands of rescue workers are still dying.
This time the city responded more swiftly with clean up crews in space suits. The cause of the explosion was determined to be buried beneath the surface in ageing infrastructure which only gets tended to AFTER highly visible accidents occur, rarely before. The public, initially worried about the presence of terrorists, appears to have relaxed when the culprit was identified as an old pipe.
New Yorkers are a hearty lot and the saying “shit happens” is commonplace.
Yet the real danger may not be explosions, but “implosions.” The exloding pipe could be well covered because it happened in one spot. The “implosions” I am going to tell you about are having a global impact and maybe harder to track.
The mayhem in Manhattan is actually further down the Island, in the downtown financial district where another shit storm is building steam although this one is hard for most people to decode unless they follow the business news closely and understand arcane terms like “securitization.” That describes a way in which mortgage money, often invested by poor people in subprime loans, is recycled by Wall Street firms and turned into leverage used to finance all of these buyouts we have been hearing about. They started out ripping others off but guess who is getting ripped off now?
It’s called “blowback.”
Armies of too clever by-a half money managers had been making a fortune on all of this with practices that are now being characterized as “outright fraud” by none other than President Bush’s Chairman of the Federal Reserve. Most of their wheeling and dealing flew under radar of public scrutiny with the press boostering the rise of the stock market without examining the precarious “infrastructure” under that street, also known as THE STREET.
I have been trying to blow the whistle on this scandal as have experts who know a lot more than I do. I wrote an article back in 2005 calling for better coverage of the credit and debt complex by the media. It appeared on Mediachannel and in Nieman Reports, a journalism magazine read by top editors. The reaction was minimal. Sure there been a slew of stories on consumer fraud and identity theft but not mny dissecting the process of financialization that permits big banks and Wall Street firms to dominate our economic and political system.
Progressive journalists for the most part were not paying attention either. Michael Moore’s film SICKO on the heath care crisis does touch on debt, so maybe this is changing.
I made a film too, IN DEBT WE TRUST (InDebtWeTrust.ccom) to sound the alarm but it was tough to get distribution to challenge the financial power structue when advertising by lenders and credit cards is all over the media. (We are setting up screenings and selling the DVD to promote a campaign by America for Debt Relief – see stopthesqueeze.org)
Then, as predicted but at first downplayed, the bubble began to burst. Suddenly, it was not just poor people to be blamed for being financially irresponsible – even as two million families face foreclosures of their homes— but the whole financial industry itself.
Wall Street is far more culpable than main street.
Last week, Credit Suisse, predicted a big stock market fall in 6 months because securities are overvalued. The Fed warned of l00 Billion in credit losses. The Guardian reported, “Some analysts said they feared a broader credit crunch if a collapse in confidence in the US mortgage market rippled out to other parts of the debt markets.” A NY Post article suggested that over two TRILLION dollars is at risk. Of course, all of this is speculative but as they say, when there is smoke in high places, fire can’t be far behind.
Last Saturday, the New York Times reported, “Anxiety over securities backed by risky mortgage and rising interest rates has roiled the credit market for several moths. Now the CONTAGION (caps mine) from those troubles seems to be spreading into other parts of the marketplace.”
Terms like “roiled” and “contagion” are insider words for a spreading panic Writing on Money And Markets.com, Mike Larson declares “ITS ALL HITTING THE FAN.
He says two Bear Sterns funds simply “VAPORIZED” explaining, “In plain English, here’s what happened:
“These funds invested in complicated mortgage securities
They used extensive leverage, or borrowed money, to improve returns …
Then, delinquencies and foreclosures started surging, and the value of the underlying loans and bonds tied to them began sinking fast.”
Now private equity firms which have been making monster deals built on debt are being squeezed. Much of the debt is being seen as junk. We have also learned that the agencies rating credit and debt offerings had their heads in their rear ends. They have lost credibility putting the market at more risk.
The excellent website Mi-explode.com reports that since late 2006 l00 major US Lenders have collapsed or “imploded.” The editor sums up the reasons this way: “Thank you greed; thank you delusion; thank you anti-regulation – we couldn’t have done it without you!”
The press is beginning to wake up and realize how important this is. They have been talking about the rise of the stock market as if that tells the whole story. Yes, some corporate profits are up but what’s happening down below is alarming. Note, the market fell nearly 150 points after last weeks high of 14000.
Business Week saya that the subprime crisis is spreading to other kinds of debt, and far more serious than thought writing it is “Only a surprise to those who listened exclusively to soundbite-based talking-heads belaboring “subprime” as an isolated implosion. Around here, long ago we were forwarding along data and analysis showing sharp rises in delinquencies in virtually all classes of consumer debt.”
More Contagion.
We are finally beginning to talk about real money and a real danger of the kind that terrifies bankers and the elite. They may not care about the poor, but they do about themselves! As Mike Larson suggests: “Ultimately, losses on subprime mortgage bonds alone may total as much as $90 billion, according to one estimate. Losses on collateralized debt obligations (CDOs), investment vehicles created from slices of various mortgage-backed securities and asset-backed securities, may total billions more.”
In an interdependent interlaced economy, a problem in one sector quickly ripples elsewhere just like the South East Asian financial crisis ten years ago. It’s like cancer, not easily checked or maybe a virus that’s not easily stopped.
I went to a dinner party last week and met a credit expert who works at one of Wall Street’s top investment firms. He acknowledged to me that the people shoveling out those subprime loans KNEW many of the borrowers couldn’t afford to pay back.
I asked: “So what happened to due diligence?” one of the “market disciplines” that these bankers are always preaching?
He shrugged, indicating that there was so much to be made that normal safeguards and standards were pushed to the side or forgotten. He says there are many investigations underway right now.
We can’t allow them to investigate themselves.
Where are the TV series on this pernicious corporate crime? Where are the investigative reporters showing how this is connected to government policies in the so-called “ownership society?” Where are the Democrats and their candidates on these issues? And where is the progressive community?
It is clearly time for our political and social movements to engage on this problem that is causing so much economic pain and revealing the gangsterism at the heart of the economy.
As Rick Perlstein explained on TomPaine.com, this problem is an issue and a movement for economic justice just waiting to happen. Once you look into it in depth, “You’ll find out how the’ foreclosure crisis spun of short-sighted Republicans’ political greed can spur a new (old) progressive politics of homeownership that could someday save the world..”
What are we waiting for?
News Dissector Danny Schechter edits Mediachnnel.org. He directed IN DEBTWE TRUST (InDebtWeTrust.com) Comments to dissector@mediachnnel.org. Please help organize screeinings in your town or community.
LETTER RE HAIRSPRAY:
spelled Buddy’s name wrong (!), she made some great points. Thought you’d want to
know that at age 14, in the summer of 1960, after finally passing one of many
auditions, I was selected to be a member of The Buddy Deane Committee. And that to
a skinny Jewish girl who loved to dance, and who took a great socio-cultural leap to
mix it up on TV with (white) kids from all over the city, Buddy was, and is
remembered as, a good guy. So, there’s another, pre-1963 “back story” to it all,
one that innocently ignores race but is greatly informed by class. Being part of it
was a defining life experience for me. Just wanted to share that with you, old
friend. Please let me know that you’ve received this.
All best,
Diane
PS: I love John Waters but have never seen any versions of Hairspray and don’t
intend to; I can’t stand seeing powerful stuff trivialized. Especially when bad
Baltimore accents are involved!
COULDN’T IGNORE THIS ON THE REJECTION OF CONDI
From an artice by Joel Brinkley ex-NYT in the SF Chronicle (via M Petrelis)
A few months ago, she decided to write an opinion piece about Lebanon. She enlisted John Chambers, chief executive officer of Cisco Systems as a co-author, and they wrote about public/private partnerships and how they might be of use in rebuilding Lebanon after last summer’s war. No one would publish it.
Think about that. Every one of the major newspapers approached refused to publish an essay by the secretary of state. Price Floyd, who was the State Department’s director of media affairs until recently, recalls that it was sent to the Wall Street Journal, the New York Times and perhaps other papers before the department finally tried a foreign publication, the Financial Times of London, which also turned it down.
As a last-ditch strategy, the State Department briefly considered translating the article into Arabic and trying a Lebanese paper. But finally they just gave up. “I kept hearing the same thing: ‘There’s no news in this.’ ” Floyd said. The piece, he said, was littered with glowing references to President Bush’s wise leadership. “It read like a campaign document.”
So I guess we are not the only ones who have problems with The Media. (Ha,Ha)
Ok, that’s it from me for now.
See youse guys later, mate.
Danny
See the whole Post / →
Nation’s Top Eco Policymaker Condemns Housing Fraud
July 20th, 2007 - by: danny
It wasn’t terrorism By Rick Perlstein
It’s E. coli conservatism.
An explosion wracked the area around Manhattan’s Grand Central Station yesterday, spewing asbestos, claiming one life, sending the city into a panic. The culprit? A pipe built in 1924.
We’ve warned here again and again about the decrepitude of our underground infrastructure, about what happens when a nation consecrates itself to no higher domestic goal than the cutting of taxes. New York had a Republican mayor, in fact, who now spends his days boasting that he cut taxes 23 times. Cut spending, too, he’s proud to say….
NEW YORK TIMES BURIES AN “OUTRIGHT FRAUD”
BUSH PEACE PLAN IN MIDDLE EAST WILL FAIL
MEMORIES OF MOVEMENT DAYS
Wow – here’s an admission by none other than President Bush’s Federal Reserve Chairman. It appeared in the Guardian in England yesterday.. Read this and I will then tell how the NY Times handled the same story:
Fed chief condemns ‘outright fraud’ of easy mortgages for the poor
· Bernanke pledges to rein in sub-prime market abuse
· Dollar drops to 26-year low against the pound
Larry Elliott, economics editor
Ben Bernanke, chairman of the Federal Reserve, last night warned that the downturn in the US housing market would get worse before it got better as he pledged action by the central bank to rein in abuses in the sub-prime mortgage market.
Deploring what he described as “the outright fraud” involved in selling some home loans to those on low incomes, Mr Bernanke sent the dollar into a fresh slide when he stressed that the housing market would remain a drag on growth.
The Fed chairman’s half-yearly health check on the economy stressed that growth would remain weak in the rest of 2007 before gathering steam in 2008.”
Ok that is what readers in England were being exposed to. And our press?
The headline on the business page of the NY TIMES on the same day was this: “FED TRIMS ITS FORECAST FOR GROWTH.”
The word fraud pops up in the third paragraph from the BOTTOM of the piece on the jump page on B-4, the EIGHTEENTH PARAGRAPH down in the story. This just confirms my sense that if you want the real story you have to read these stories from the bottom up, not the top down.
FAIR meanwhile passes this little corrective along about our obsession with the climb in the Dow:
FAIR ON PHONIED UP ECO NEWS
The dow hit 2000 yesterday. Many are wondering whether to buy or sell, but beware the numbers game:
This column, on how the media-hyped “record high” Dow Jones number isn’t really a record at all, is an implicit indictment of virtually every recent news report on the stock market. Pointing out that if you take the basic step of adjusting for inflation, stocks are worth far less than their 2000 high, Leonhardt writes that “if we are going to talk about a stock market record, we should be doing the same for a whole lot of other things: Loaves of Bread Surge to New Highs.”
US ATTACK ON RUSSIA? PARANOIA OR POLICY:
Retired Generals Predict US War Against Russia, Third World War\
From: The Telegraph (Britain) July 17, 2007
Retired generals predict US-Russia war
[A] group of influential retired generals yesterday said the United States was preparing to invade Russia within a decade.
Interviewed by Komsomolskaya Pravda, Russia’s biggest circulation newspaper, the four senior generals – who now direct influential military think tanks – said the
United States had hatched a secret plan to seize the country’s vast energy resources by force.
BUSH IN THE MIDDLE EAST
From Tomdispatch this morning, Tony Karon, “Yes, Bush Is Naked, What of It? — On the Middle East Catwalk with the Bush Administration”
He then "handicaps" the competition for the most craven and cynical player of all those who are clustering around the "naked emperor" -- the Israelis, Palestinian leader Mahmoud Abbas, the various Arab regimes allied with Washington, and the Europeans. ("Unlike the Arab allies smiling painfully as they quietly agitate for President Bush to put on some clothes, the Europeans, bizarrely enough, have stripped down to the buff and joined Bush on the catwalk.") Written with verve, Karon's piece nonetheless reaches a grim conclusion in the sort of analysis of the Israeli/Palestinian situation that is in painfully short supply here. Karon finishes this way: "Sadly, the end of an independent European role will have tragic consequences for the Israelis and the Palestinians, as well as for the rest of us. After all, as the Europeans have surely noted, under President Bush and his top officials the U.S. has made itself part of the problem, not part of any prospective solution in the Middle East. That really is one great tragedy of the Bush administration, which essentially outsourced its policy on the Israeli-Palestinian conflict to Ariel Sharon. Sharon's ideas are now so deeply embedded in the mainstream of both parties on Capitol Hill that Congress is even more anti-Palestinian than the administration. As the presidential candidates of both parties fall over one another to take ever harder-line stances on the Palestinians, Iran, and any other subject of concern to Israel, it's an odds-on bet that the naked imperial fashion show will continue, no matter who replaces Bush on the imperial throne."
FROM A JUDGE APPOINTED BY PRESIDENT BUSH Valerie Plame’s Lawsuit Dismissed I recently came back from South Africa where a Communist Party exists and challenges the government with which it is aligned. TIME reports that there is also a CP in JAPAN. Cute as Hello Kitty, 19-year-old Michiko Suzuki looks But when the Wako University student takes time off from study sessions dissecting Marx to hit the street, it’s usually in order to distribute political literature. To her classmates, the party may be something to which you bring the karaoke machine, but Bolshevism runs in her family: The daughter and granddaughter of party members, she joined the Japanese Communist Party (JCP) as soon as she turned 18. “I think it’s cool to see [fellow members] struggling unyieldingly,” says Suzuki, smiling shyly. “I really love that last word.” The idea of a communist party soldiering on in the world’s second-largest economy more than 15 years after the collapse of the Soviet Union may invite comparisons “The JCP is probably the most successful non-ruling communist party in Asia, if not the world,” says Lam Peng-er, a research fellow at the National University of Singapore’s East Asian Institute.
Notice their use of the word “dissecting.”
like any of the thousands of teens haunting the street fashion stores of Tokyo’s youthful Harajuku district.
Suzuki knows it’s really the revolutionary vanguard of class struggle. That’s because Suzuki is a teenage communist.
to Japanese soldiers who remained hidden on isolated Pacific islands because nobody told them World War II had ended. But the JCP is far from extinct: It claims
some 400,000 members, and earned 7.3% of the vote in the most recent legislative elections, in 2005 – that’s 4.36 million voters.
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About Danny Schechter
Danny Schechter is an Emmy award winning journalist, television producer and independent filmmaker who also writes, blogs and speaks about media issues.
His latest film is PLUNDER The Crime Of Our Time.
Mr. Schechter is NOT the Godfather of Soul.
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