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Forum Post: Henry Paulson gave hedge funds advance word on Fannie Mae rescue

Posted 12 years ago on Jan. 11, 2012, 11:17 a.m. EST by mtnguy (2)
This content is user submitted and not an official statement

http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html

17 Comments

17 Comments


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[-] 2 points by mtnguy (2) 12 years ago

Paulson caused the whole credit crisis!

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[-] 1 points by ineptcongress (648) 12 years ago

he facilitated it, the cause was fifty million people in america (and more around the world, as well as governments at all levels, borrowing (i.e., leveraging) too much money to live in a higher fashion than they really could have afforded, thereby surrendering too much future income to some third party (ie., various banks). get used to a 30 year credit contraction that will cause us to live at far lower standards of living. the boomers screwed us by charging a giant expensive meal, and leaving us with the tab. fuck them.

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[-] 1 points by nomdeguerre (1775) from Brooklyn, NY 12 years ago

I'm afraid you've got it backwards. The looting bankster parasites ran the economy like a landlord who milks a building while letting it fall around the tenants' heads.

Jailout to the too big to fail banksters.

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[-] 1 points by ineptcongress (648) 12 years ago

not true. people lived a false fantasy of wealth beyond their means. the bankers facilitated it by funding, and now the hen's come home to roost. this has happened in many places and many times, and credit contraction following expansion has always been very painful (ask argentina). never before has it been so global though.

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[-] -3 points by smartcapitalist (143) 12 years ago

Quite the opposite actually. But then, when did OWS hippies ever have brains

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[-] 2 points by Builder (4202) 12 years ago

Define hippy.

Paulson was just a bit player in a larger play. His input was clearly not of his own making.

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[-] 1 points by nomdeguerre (1775) from Brooklyn, NY 12 years ago

Why hasn't he been arrested yet?

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[-] 1 points by MonetizingDiscontent (1257) 12 years ago

:::::::::::::::: Guaranteed Returns: John Paulson and the 92nd Street Y ::::::::::::::::

AN OPEN LETTER TO THE SEC AND FINRA

Back at the end of November, Peter Lattman and Jenny Anderson reported in The New York Times... http://query.nytimes.com/gst/fullpage.html?res=9B07E3DE1E30F933A05752C1A9679D8B63&ref=johnpaulson ...that John A. Paulson, the billionaire hedge fund manager and member of the board of the 92nd Street Y, "has guaranteed he will cover the Y for any losses it incurs in his funds."

The Times reported further: ''This is a very uncommon arrangement,'' said Andrew M. Grumet, a lawyer specializing in philanthropy. ''But the 92nd Street Y isn't your average nonprofit, and John Paulson isn't your average money manager.'' Indeed.

As a member of FINRA and a 30-year veteran of the securities industry, I found the report troubling and called the 92nd Street Y for an explanation. No call back from the 92nd Street Y as yet.

Aside from the apparent conflict of interest involved with having a financial adviser sit as a director on the 92nd Street Y board, the situation also struck me as conflicted because of the explict guarantee made by Paulson.

Indeed,under US securities law and FINRA rules, it is unlawful and a violation of professional ethics for a registered person or investment advisor to guarantee investment results for any client.

So here are my questions for the 92nd Street Y,the State of New York, the SEC, FINRA and other interested parties:

  • 1) Why is it OK for any investment adviser to sit on the board of any NY charity and lose money for that client with no professional repercussions?

  • 2) Why is it OK for an investment adviser to guarantee the investment results of the 92nd Street Y in apparent violation of FINRA and SEC rules?

I look forward to your replies.

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[-] 1 points by ineptcongress (648) 12 years ago

that is truly amazing, thank you for bringing it into public light. it would appear to be patently illegal. also, perhaps more importantly, he will have to rob other investors to fund the Y's losses, now and in the future. he performed horribly in 2011 (-46), and so has gigantic losses as you know. if the other investors were to know of this (hint, hint) they'd be outraged, and probably demand the same terms, or just withdraw. he's an idiot anyway, i blow him away on returns, although my fund is much smaller and therefore more nimble, plus we do mostly options so the returns are going to be better anyway.

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[-] 1 points by MonetizingDiscontent (1257) 12 years ago

Where is the Attorney General Eric Holder? Doesn't this fall into his department? His work is really beginning to stack up out here.

By the time he shows up for work, the statutes of limitations could leave these top fraudulent, larcenous bankers & puppets totally off the hook. The clock is ticking...

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[-] 1 points by ineptcongress (648) 12 years ago

this is a good point. you should do something about it,,, like write to him, or perhaps get a job at DOJ.

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[-] 1 points by richardkentgates (3269) 12 years ago

what is your deal? You just run around being a smart ass. If thats all the hours of your life are worth, power to ya.

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[-] 1 points by ineptcongress (648) 12 years ago

was this comment meant to address mine? i don't get it?

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[-] 1 points by jomojo (562) 12 years ago

What a country!

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[-] 0 points by MonetizingDiscontent (1257) 12 years ago

::::::::::::::::::::Hank Paulson’s Inside Jobs::::::::::::::::::::

http://blogs.reuters.com/felix-salmon/2011/11/29/hank-paulsons-inside-jobs/

-Nov 29, 2011-

What on earth did Hank Paulson think his job was in the summer of 2008? As far as most of us were concerned, he was secretary of the US Treasury, answerable to the US people and to the president. But at the same time, in secret meetings, Paulson was hanging out with his old Goldman Sachs buddies, giving them invaluable information about what he was thinking in his new job.

The first news of this behavior came in October 2009, when Andrew Ross Sorkin revealed that Paulson had met with the entire board of Goldman Sachs... http://blogs.reuters.com/felix-salmon/2009/10/20/the-secret-paulson-goldman-meeting/ ...in a Moscow hotel suite for an hour at the end of June 2008. He told them his views of the US and global economies, he previewed a market-moving speech he was about to give, and he even talked about the possibility that Lehman Brothers might blow up. Maybe it’s not so surprising that Goldman Sachs turned out to be so well positioned when Lehman did indeed do just that a few months later.

Today we learn that the Goldman meeting in Moscow was not some kind of aberration. A few weeks later, on July 28 2008, Paulson met with a who’s who of the hedge-fund world... http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html ...in the headquarters of Eton Park Capital Management — a fund founded by former Goldman superstar Eric Mindich.

The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets…

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out…

The fund manager who described the meeting left after coffee and called his lawyer. The attorney’s quick conclusion: Paulson’s talk was material nonpublic information, and his client should immediately stop trading the shares of Washington- based Fannie and McLean, Virginia-based Freddie.

When we found out about the Moscow meeting, I asked how on earth Paulson thought such behavior was OK. But now I think he was downright pathological in giving inside information to his old Wall Street buddies. And the crazy thing is that we have no idea how many of these meetings there were, or how long they went on for — the only way that we ever find out about them is when reporters like Sorkin or Bloomberg’s Richard Teitelbaum manage to find a source who was in the meeting and is willing to talk about what happened.

Given that it’s taken two years since the release of Sorkin’s book for the Eton Park meeting to be made public, it’s fair to assume that there were other meetings, too — possibly many others. Paulson was giving inside tips to Wall Street in general, and to Goldman types in particular: exactly the kind of behavior that “Government Sachs” conspiracy theorists have been speculating about for years. Turns out, they were right.

Paulson, says Teitelbaum, “is now a distinguished senior fellow at the University of Chicago, where he’s starting the Paulson Institute, a think tank focused on U.S.-Chinese relations”. I’d take issue with the “distinguished” bit. Unless it means “distinguished by an astonishing black hole where his ethics ought to be”.

(((View This Article Here))) http://blogs.reuters.com/felix-salmon/2011/11/29/hank-paulsons-inside-jobs/

Treasury Secretary Henry Paulson Tipped Off Prominent Hedge Funds Regarding Fannie Mae While Telling the US Senate and General Public a Different Story

http://globaleconomicanalysis.blogspot.com/2011/11/treasury-secretary-henry-paulson-tipped.html

-November 29, 2011-

:::::The Secret Meeting Between Henry Paulson and Hedge-Fund Chiefs:::::

http://latimesblogs.latimes.com/money_co/2011/11/the-secret-meeting-between-henry-paulson-and-the-hedge-funds.html

-November 29, 2011-

::::::::How Paulson Gave Hedge Funds Advance Word of Fannie Mae Rescue::::::::

http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html

-Nov 29, 2011-

::::::::Paulson's Actions Raise Serious Ethical Questions::::::::

http://www.huffingtonpost.com/mike-quigley/paulsons-actions-raise-se_b_1131556.html?

-November 11th, 2011-

Last week, we learned that Treasury Secretary Paulson disclosed material non-public information to Wall Street insiders regarding his plan to take Fannie Mae and Freddie Mac into conservatorship. In a July 21, 2008 meeting at Eton Park Capital Management LLC, which included at least five Goldman Sachs alumni, Mr. Paulson "explained that under [the conservatorship scenario], the common stock of [Fannie and Freddie] would be effectively wiped out."

We also learned that the insiders present in this meeting may have traded on and profited by this information. One participating fund manager immediately contacted his attorney, who concluded that "Paulson's talk was material non-public information, and his client should immediately stop trading shares of [Fannie and Freddie]."

These are very troubling revelations. What is equally troubling is that in public, Secretary Paulson was telling a different story. Just before his meeting at Eton Park, Secretary Paulson answered questions for a New York Times story that would run the next day and "emphasized that he still believed that [Fannie and Freddie] have an adequate cash cushion to withstand further declines in the housing market."

(((Continue Reading Here)))

http://www.huffingtonpost.com/mike-quigley/paulsons-actions-raise-se_b_1131556.html?

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[-] 0 points by FrogWithWings (1367) 12 years ago

And still, Obama, the scholarly and decorated attorney still has his should be charged with treason DOJ bring no charges on ANYONE!

I guess it's like his jaque supporters say, he's just a lawyer and we can't expect him to know about financial crimes.

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