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Mr. Summers has long said that mixing private profit with public risk is bad policy, and we trust he doesn't want to repeat the mistake. A starting point for permanent reform would be to treat Fan and Fred, in the budget and on the federal balance sheet, as the government-owned creatures that they are. For the moment, despite 80% government ownership, their $85 billion bailout cost (with more losses to come) and their $5.4 trillion in taxpayer liabilities remain off-balance-sheet in the mold of Enron's special purpose vehicles or Citigroup's SIVs.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajTkVUSQd6DU
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A structured investment vehicle (SIV) was an operating finance company established to earn a spread between its assets and liabilities like a traditional bank. The strategy of SIVs was to borrow money by issuing short-term securities, such as commercial paper and medium term notes and public bonds at low interest rates and then lend that money by buying longer term securities at higher interest rates, with the difference in rates going to investors as profit. Long term assets could include, among other things, residential mortgage backed securities (RMBS), auto loans, student loans, credit cards securitisations, and bank and corporate bonds. Because of this structure, SIVs were considered to be part of the shadow banking system.
Invented by Citigroup in 1988, SIV's were popular until the market crash of 2008.[1] SIVs were a type of structured credit product; they were often from $1bn to $30bn in size and invested in a range of asset-backed securities, as well as some financial corporate bonds. SIVs had an open-ended (or evergreen) structure; they planned to stay in business indefinitely by buying new assets as the old ones matured, much like a bank. The SIV manager was allowed to exchange investments without providing investors asset by asset transparency, instead providing monthly portfolio reports. At their peak in July 2007, SIVs had asset under management in excess of $ 400 billion.[2]
As of October 2008, no SIVs remain.[3]
Citigroup SIVs Draw $7.6 Billion of Emergency Funds (Update2)
The offices of Citigroup in London
The SIVs drew on the $10 billion of so-called committed liquidity provided by Citigroup, according to a Securities and Exchange Commission filing yesterday. Shares fell to the lowest since 2003.
Citigroup's disclosure came a day after it announced as much as $11 billion of debt writedowns linked to U.S. subprime mortgages, and the resignation of Chief Executive Officer Charles O. ``Chuck'' Prince III. The New York-based bank also said in the SEC filing that the amount of securities it owns that are considered hardest to value, known as Level 3 assets, rose 42 percent in the third quarter to $135 billion.
http://en.wikipedia.org/wiki/Structured_investment_vehicle
Excerpt:
A structured investment vehicle (SIV) was an operating finance company established to earn a spread between its assets and liabilities like a traditional bank. The strategy of SIVs was to borrow money by issuing short-term securities, such as commercial paper and medium term notes and public bonds at low interest rates and then lend that money by buying longer term securities at higher interest rates, with the difference in rates going to investors as profit. Long term assets could include, among other things, residential mortgage backed securities (RMBS), auto loans, student loans, credit cards securitisations, and bank and corporate bonds. Because of this structure, SIVs were considered to be part of the shadow banking system.
Invented by Citigroup in 1988, SIV's were popular until the market crash of 2008.[1] SIVs were a type of structured credit product; they were often from $1bn to $30bn in size and invested in a range of asset-backed securities, as well as some financial corporate bonds. SIVs had an open-ended (or evergreen) structure; they planned to stay in business indefinitely by buying new assets as the old ones matured, much like a bank. The SIV manager was allowed to exchange investments without providing investors asset by asset transparency, instead providing monthly portfolio reports. At their peak in July 2007, SIVs had asset under management in excess of $ 400 billion.[2]
As of October 2008, no SIVs remain.[3]
http://www.washingtonpost.com/wp-dyn/content/article/2005/06/10/AR2005061000532.html
Excerpt:
Citigroup to Settle With Enron Investors
By Carrie Johnson
Washington Post Staff Writer Saturday, June 11, 2005
Citigroup Inc. yesterday agreed to pay $2 billion to settle a class-action lawsuit filed by investors who argue the world's largest bank helped a faltering Enron Corp. disguise billions of dollars in debt.
The settlement is among the largest ever -- following closely behind a $2.65 billion payment Citigroup made last year to wipe away a lawsuit involving its underwriting work for WorldCom Inc. "It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us," chief executive Charles O. Prince III said in a statement.
http://news.cnet.com/2009-1022-943517.html
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http://news.cnet.com/2009-1022-943517.html
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http://www.globalresearch.ca/index.php?context=va&aid=10297
The Paulson-Bernanke Bank Bailout: Will the Cure be Worse than the Disease?
by Michael Hudson
Excerpt:At first glance it may sound appealing to taxpayers for banks to be told to use their future earnings to pay back the $700 billion dollars in junk mortgages, bad hedge-fund bets and other gambles that the Treasury promised on September 20 to pick up at face value, no loss incurred. To provide a sense of proportion, this money could have funded the next forty or fifty years of Social Security. It could have funded health care for all Americans. It could have made a big step toward rebuilding the nation's crumbling infrastructure. But that is another story. For now the major question is just how the banks, insurance companies and financial conglomerates are to raise the money to pay off this bailout.
http://investing.businessweek.com/research/stocks/people/person.asp?personId=31264338&ticker=TEL:US
Excerpt:
http://newsroom.tycoelectronics.com/index.php?s=43&item=247
Excerpt:
http://articles.sfgate.com/2002-01-30/news/17527644_1_price-caps-wholesale-power-electricity-prices
Excerpt:
http://www.harpercollins.com/books/Cheney-Stephen-F-Hayes/?isbn=9780060723460
Excerpt:
Now, in Cheney: The Untold Story of America's Most Powerful and Controversial Vice President, New York Times bestselling author and Weekly Standard senior writer Stephen F. Hayes offers readers a groundbreaking view into the world of this most enigmatic man.
http://en.wikipedia.org/wiki/The_Weekly_Standard
Excerpt:
Ownership change
Although the publication had, as of 2006, never been profitable and reputedly "los[t] more than a million dollars a year", News Corporation head Rupert Murdoch had previously dismissed the idea of selling it.[8] In June, 2009, a report circulated that a sale of the publication to Philip Anschutz was imminent, with Murdoch's position being that, having purchased The Wall Street Journal in 2007, his interest in the smaller publication had been less forceful.[9][10] The Washington Examiner reports that the Examiner's parent company, the Anschutz-owned Clarity Media Group, has since purchased the Standard.[11][12] Since the sale to the Clarity Media Group, the Standard has increased its paid circulation by 39 percent between its June 2009 and June 2010 BPA statements.[13]
http://www.nytimes.com/2002/05/20/business/enron-is-seen-having-link-with-global.html
Excerpt:
http://investing.businessweek.com/research/stocks/people/person.asp?personId=31264338&ticker=TEL:US
Excerpt:
BACKGROUND*
Mr. Terrence R. Curtin has been Chief Financial Officer and Executive Vice President of TE Connectivity Ltd. (formerly, Tyco Electronics ltd), the parent of Tyco Electronics Group S.A. since October 2006. Mr. Curtin has been Chief Financial Officer of Tyco Electronics Corporation since December 11, 2006. He served as Vice President and Corporate Controller of TE Connectivity Ltd., since 2001. Prior to joining TE Connectivity, Mr. Curtin was employed by Arthur Anderson ...http://newsroom.tycoelectronics.com/index.php?s=43&item=247
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Functional Leadership:
Terrence R. Curtin, a five-year veteran of Tyco Electronics, serves as executive vice president and Chief Financial Officer (CFO) of the company. Curtin most recently served as vice president and corporate controller for Tyco Electronics, where he was responsible for the company’s financial reporting, control and accounting policies -- including Sarbanes-Oxley compliance. In his new role, Curtin, 38, is responsible for developing and implementing the overall financial strategy for Tyco Electronics and for creating the robust financial infrastructure necessary to drive the company’s financial direction, vision and compliance initiatives as it becomes a publicly traded entity. Prior to joining Tyco Electronics, Curtin worked at Arthur Andersen & Co. where he served in the audit and accounting advisory services group with a focus on large multinational companies. Curtin holds a bachelor’s degree in accounting from Albright College (Pa.), and is a Certified Public Accountant (CPA).
Robert A. (Bob) Scott has been named executive vice president and general counsel for Tyco Electronics. In addition to Scott’s responsibilities relating to law and governance, he will also lead strategy and business development for the company. He currently serves as senior vice president of corporate planning for Tyco International and is responsible for managing Tyco International’s planned separation into three independent, publicly traded companies in 2007. Scott, 56, previously served as vice president of strategy and business planning for Tyco’s Engineered Products & Services segment. Prior to joining Tyco, Scott served as senior vice president and chief of staff for Motorola’s integrated electronics sector. Before the merger of General Instrument Corporation and Motorola in 2000, Scott had served as senior vice president, general counsel, and secretary of General Instrument. He holds a bachelor’s degree in political science from Colgate University (N.Y.), a master’s degree in city planning from Cornell University (N.Y.), and a law degree from Rutgers University (N.J.).
Joan E. Wainwright serves as senior vice president of communications and public affairs for Tyco Electronics. A 20-year veteran in communications and marketing, she leads all internal and external communications, corporate branding and reputation, government relations and philanthropic programs for the company. Wainwright, 46, joined Tyco Electronics in June from Merck & Co., Inc., where she most recently served as vice president of public affairs. Prior to that, she served as deputy commissioner of communications for the U.S. Social Security Administration. She holds a bachelor’s degree in communications from the University of Delaware and a master’s degree in business administration from Temple University (Pa.).
Jane A. Leipold, as senior vice president of global human resources, is responsible for developing and implementing the human resources processes, programs, policies and shared services for Tyco Electronics, with approximately 99,000 employees in 54 countries. For the past five years, she has led the company’s global human resources organization, including, benefits, compensation, employee relations, legal compliance, payroll, human resources information systems, and security functions. A 25-year veteran of Tyco Electronics and AMP, Leipold, 46, has worked in training and development, organizational development, executive education and leadership development, as well as purchasing and engineering. She holds a bachelor’s degree in quantitative business analysis and a master’s degree in business administration – both from the Pennsylvania State University (Pa.).
Mario Calastri has been named senior vice president and treasurer for Tyco Electronics. In this capacity, he will oversee all of the company’s cash management, banking, capital structure development and funding, foreign exchange, contingent liabilities, investments, and risk management activities. Calastri currently serves as vice president and assistant treasurer for Tyco International. Prior to his service with Tyco, Calastri, 49, served for 20 years in a variety of management positions with IBM – including assistant treasurer, global risk manager and vice president of finance for IBM’s IGF division in Europe. He earned his undergraduate degree in economics from Universita Bocconi (Italy) and holds a master’s degree in finance from Pace University (N.Y.). Calastri will report to CFO Terrence Curtin.
Eric J. Resch has been named senior vice president and chief tax officer for Tyco Electronics. He currently serves as vice president of tax reporting for Tyco International. In his new role, Resch, 49, will be responsible for the company’s global tax strategy, as well as tax accounting and compliance. He holds a bachelor’s degree in accounting from Fordham University (N.Y.) and a master’s degree in business administration from Hofstra University (N.Y.). Resch will report to CFO Terrence Curtin.
John M. Roselli has been named vice president of investor relations for Tyco Electronics. In his new role, Roselli will be responsible for communicating the company's strategy and overall performance to investors. Roselli, 34, currently serves as director of investor relations for Tyco International. Prior to his service with Tyco, Roselli spent six years at Citigroup as an associate analyst in the equity research department. Roselli holds a bachelor's degree from Shippensburg University (Pa.) and is a Chartered Financial Analyst (CFA). Roselli will report to CFO Terrence Curtin.http://articles.sfgate.com/2002-01-30/news/17527644_1_price-caps-wholesale-power-electricity-prices
Excerpt:
THE ENRON COLLAPSE / Memo details Cheney--Enron links / Company's suggestions resembled elements of the administration's energy policy
http://www.harpercollins.com/books/Cheney-Stephen-F-Hayes/?isbn=9780060723460
Excerpt:
Now, in Cheney: The Untold Story of America's Most Powerful and Controversial Vice President, New York Times bestselling author and Weekly Standard senior writer Stephen F. Hayes offers readers a groundbreaking view into the world of this most enigmatic man.
http://en.wikipedia.org/wiki/The_Weekly_Standard
Excerpt:
Ownership change
Although the publication had, as of 2006, never been profitable and reputedly "los[t] more than a million dollars a year", News Corporation head Rupert Murdoch had previously dismissed the idea of selling it.[8] In June, 2009, a report circulated that a sale of the publication to Philip Anschutz was imminent, with Murdoch's position being that, having purchased The Wall Street Journal in 2007, his interest in the smaller publication had been less forceful.[9][10] The Washington Examiner reports that the Examiner's parent company, the Anschutz-owned Clarity Media Group, has since purchased the Standard.[11][12] Since the sale to the Clarity Media Group, the Standard has increased its paid circulation by 39 percent between its June 2009 and June 2010 BPA statements.[13]
http://www.nytimes.com/2002/05/20/business/enron-is-seen-having-link-with-global.html
Excerpt:
Enron Is Seen Having Link With Global
Enron and Global Crossing used a complex deal brokered by a third company to sidestep accounting rules in a March 2001 transaction that was designed to help Global Crossing disguise a loan and allow each company to book revenue, according to executives and traders involved in the transaction.
The people involved said the deal, a swap of fiber optic network capacity and services, was brokered by Reliant Resources, one of the nation's biggest traders of energy contracts, which had expanded into the network-capacity trading market. The transaction helped disguise what was essentially an exchange of long-term services and a $17 million loan to Global Crossing by Enron, the executives said.
The details shed light on the way Enron and Global Crossing operated in the formerly frenetic market for trading high-speed communications capacity -- a market that until recently, federal investigators say, was fraught with so-called round-trip transactions conducted merely to inflate the reported revenue of the parties.
The executives say the deal, which was hatched in the fall of 2000 but not completed until March 2001, was emblematic of the techniques companies like Enron and Global Crossing used to impress Wall Street and help drive up their stock prices.
http://law.justia.com/cases/federal/appellate-courts/F3/349/816/636806/
Excerpt:
The people involved said the deal, a swap of fiber optic network capacity and services, was brokered by Reliant Resources, one of the nation's biggest traders of energy contracts, which had expanded into the network-capacity trading market. The transaction helped disguise what was essentially an exchange of long-term services and a $17 million loan to Global Crossing by Enron, the executives said.
The details shed light on the way Enron and Global Crossing operated in the formerly frenetic market for trading high-speed communications capacity -- a market that until recently, federal investigators say, was fraught with so-called round-trip transactions conducted merely to inflate the reported revenue of the parties.
The executives say the deal, which was hatched in the fall of 2000 but not completed until March 2001, was emblematic of the techniques companies like Enron and Global Crossing used to impress Wall Street and help drive up their stock prices.
http://law.justia.com/cases/federal/appellate-courts/F3/349/816/636806/
Excerpt:
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