The real pig slut whore housewives of Wall St

[Windpower]

Warning don't read this without your blood pressure meds nearby

Meet Christy Mack



and Susan Karches




Read how they got  $220,000,000 From the Fed ( I mean us taxpayers)

Why ? because they are wives of Wall Street bankers


http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411?print=true

[Squirl]

I try not to get too outraged over articles like this.  People write articles like this with one very important false premise that is pretty glaring.  They conflate the concept of a payment and a loan.  I got half way through the article and stopped.  It got annoying.  First the author would say that they were given a $220 million dollar loan.  Then the next line they would call it a welfare check.  A welfare check doesn't have to be paid back, a loan does.  The only way they wouldn't have to pay it back is if they claimed bankruptcy, then a bankruptcy trustee has the power to go were ever the money went.  Look at what happened with Madoff. Most of the investors will be getting back a majority of the money they invested because the bankruptcy trustee had the power to do so.  Another line about the 9 billion to the central bank of Mexico.  What if the bank heavily invested in American mortgages. The article seems to leave out why, and the repercussions of to the American dollar and the American economy if the government didn't.  In the article just the fact we loaned them money is the outrage.  I'm not saying there shouldn't be outrage and that there shouldn't be investigations, to where the money went and why. An article simply state that the money went and constantly putting it as a hand out is misleading at best.

[Windpower]

Perhaps you should have kept reading


"Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even."


Is the article inflammatory ?

damn straight it is

but not inflammatory enough, IMO

[Squirl]

"But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment."

I understand the loan.  So the two women take $15 million of their own money and invest it in a fund.  The government puts in another $220 million in the fund.  Combining the two they have a fund of  $235 million.  So they buy  bonds at value at $235 million.  If the bonds gain in value the fund pays back the $220 million and keeps the profits.  (The taxpayer gets back his complete investment and the women made a profit win/win)  If the bonds default the women are out their $15 million and the government is out $220 million.  Since the government put in 95% of the price of the bond, and they are absorbing 95% of the losses compared to the two women personally absorbing 5% of the losses. The win for the government is for any losses other than a complete default.  So if the value of the bonds drops the two women lose 10%  even though they only invested 5% of the total value, and the government only absorbs only 90% of the losses even though it invested 95% of the money. (win for the government/ loss for the women) That is not the same.  It is win/lose for both sides.  It explains why this is a guy writing for rolling stone, a music publication, and not a financial publication.  He can't work through the math of the transaction.

[Squirl]

The most important fact is that the women had to put their own skin in the game.  And the difference in percentages doubles their losses.  So for every dollar they would have lost if they invested in the mortgages on their own, they lose two under the loan terms with the government.  Why would anyone do this you may ask?  It is called limited down side risk.  I will put it in lower equivalent dollar figures so people could understand it better.  So if you had $15 dollars to invest you look and say well there is an equal chance the investment could go up or down 5%.  By taking the loan terms you would lose 10% ($1.50) if the price went down 5% went down, but would gain 78% if it went up 5%.  So while the maximum they could lose would be 100% they could potentially profit 300%.  High risk, high gain investments. 

It is like when i had friends investing in BoA at $1 a share. They figured if it went bankrupt the most they were out was $500 which was a small percentage of their income, but if it went up to even a small percentage of it's former value (sold at $4) they would get a return of 400%.  Limited downside risk. 

There are many, many problems with our financial system and many problems with the bailout.  This transaction wasn't one of them.

[muldoon]

leverage made easy.

[glenn kangiser]

Good explanation, muldoon.

More business as usual for the elite and their helpers.

http://www.blacklistednews.com/Corrupted!%3A_5_Shocking_Examples_Of_Government_Corruption_That_Will_Blow_Your_Mind/13509/0/0/0/Y/M.html