Dear CIGA,

Not only were there nearly tears in the eyes of the Money Bunnies of financial TV trying to spin the Goldman Sachs news, but now they are camped out in front of Goldman Sachs’ main office commenting that the people inside are going about their business with smiling faces. Nothing could really be wrong based on that fact! God help us all at the glib nature of reporting.

If the present suit is for $1.1 billion on the CDO sales and the total that was profited was $9.9 billion, what makes you think the additional $8.8 billion will not be added to the suit?

Triple damages against that number makes Goldman’s risk quite severe even though they claim no basis under law.

 

Jim Sinclair’s Commentary

In case you missed it yesterday.

Goldman Director Gupta to Leave
Galleon Case Figure Relayed His Decision in March After Notification of U.S. Scrutiny
By SUSAN PULLIAM
APRIL 15, 2010

Rajat Guptatold Goldman Sachs Group Inc. in March he wouldn’t stand for re-election as a director, after receiving notice from prosecutors that they were reviewing recorded conversations between him and Galleon Group founder Raj Rajaratnam, people close to the matter say.

Mr. Gupta, a Goldman director since 2006, said through a spokesman that his decision to step down was because of "other commitments."

The U.S. has charged Mr. Rajaratnam and 20 others in a wide-ranging insider-trading case. Mr. Rajaratnam is fighting the charges; 11 others have pleaded guilty in the case, which is continuing.

Goldman declined to say whether Mr. Gupta told the firm about the government notification. Mr. Gupta is in India and unavailable for comment, a spokesman said. Mr. Rajaratnam declined to comment.

As reported by The Wall Street Journal on Thursday, prosecutors are examining whether Mr. Gupta gave insider information about the big banking firm to Mr. Rajaratnam during the height of the financial crisis.

More… ^[1]

Jim Sinclair’s Commentary

I would add to this that Dwayne also believe in a Jobless Recovery.

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Jim Sinclair’s Commentary

After a long day working extremely hard in Oman.

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Jim Sinclair’s Commentary

Goldman’s last CDO subprime purchasing clients leader.

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Jim Sinclair’s Commentary

In case you did not see this yesterday. There wasn’t a word of this on financial TV.

Goldman Real Estate Fund Lost 98 Cents on the Dollar
Published: Friday, 16 Apr 2010 | 4:41 AM ET
By: Henny Sender, Financial Times

Whitehall Street International, Goldman Sachs’ international real estate investment fund, has lost almost all of its $1.8 billion of equity following soured property investments in the U.S., Germany and Japan, according to the fund’s estimates.

By the end of 2009, the fund was down to its last $30 million, a paper loss of about 98 cents on the dollar, an annual report sent to investors last month said. The report said that Goldman was Whitehall’s largest investor, with a commitment of $436 million. Last year, Goldman took a loss of $1.76 billion from all its real estate principal investments.

The Whitehall disclosure is the latest in a string of losses reported by bank-owned property funds that relied on debt, and it comes as the Obama administration is seeking to restrict banks’ investment in private equity funds.

It was revealed earlier this week that Morgan Stanley’s most recent $8.8 billion international property fund will lose as much as two-thirds of its value.

The Whitehall fund, raised in 2005, invested more than half its capital in the U.S., and was also heavily exposed to Germany. While the drop in property values was dramatic in these two countries, losses at the Goldman fund were exacerbated by its dependence on debt.

More… ^[5]

Jim Sinclair’s Commentary

What is salient in each of these bank failures is that it clearly reveals the capitulation of the FASB by spelling out perfectly the overvaluation of the bank’s inventory by up to 91%.

Is it not the duty of the overseers of auditing procedures, the FASB, to assure us that their practices insure an honest balance sheet? If the overseer of auditing has failed us what is there left to protect us from Beelzebub Incorporated?

Regulators shut 5 banks in Fla., Mass., Mich.
Apr 16, 6:22 PM (ET)

NEW YORK (AP) – Regulators have shut down five banks based in Florida, Massachusetts and Michigan, putting the number of U.S. bank failures this year at 47.

The Federal Deposit Insurance Corp. says it took over AmericanFirst Bank in Clermont, Fla.; First Federal Bank of North Florida in Palatka, Fla.; Riverside National Bank of Florida in Fort Pierce, Fla.; Butler Bank in Lowell, Mass.; and Lakeside Community Bank in Sterling Heights, Mich.

More… ^[6]

Jim Sinclair’s Commentary

Add three more failures to our Friday number so far.

Wake up. This is awful!

Bank Closing Information – April 16, 2010
These links contain useful information for the customers and vendors of these closed banks.

City Bank, Lynnwood, WA ^[7]
Tamalpais Bank, San Rafael, CA ^[8]
Innovative Bank, Oakland, CA ^[9]
Butler Bank, Lowell, MA ^[10]
Riverside National Bank of Florida, Fort Pierce, FL ^[11]
AmericanFirst Bank, Clermont, FL ^[12]
First Federal Bank of North Florida, Palatka, FL ^[13]
Lakeside Community Bank, Sterling MI ^[14]

http://www.fdic.gov/ ^[15]

Jim Sinclair’s Commentary

We live in a financial sewer designed to steal and rape.

Merrill Used Same Alleged Fraud as Goldman, Bank Says (Update1)
By William McQuillen

April 17 (Bloomberg) — Merrill Lynch & Co. engaged in the same investor fraud that the U.S. Securities and Exchange Commission accused Goldman Sachs Group Inc. of committing, according to a bank that sued the firm in New York last year.

Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, known as Rabobank, claims Merrill, now a unit of Bank of America Corp., failed to tell it a key fact in advising on a synthetic collateralized debt obligation. Omitted was Merrill’s relationship with another client betting against the investment, which resulted in a loss of $45 million, Rabobank claims.

Merrill’s handling of the CDO, a security tied to the performance of subprime residential mortgage-backed securities, mirrors Goldman Sachs conduct that the SEC details in the civil complaint the agency filed yesterday. It claimed Goldman omitted the same key fact about a financial product tied to subprime mortgages as the U.S. housing market was starting to falter.

“This is the tip of the iceberg in regard to Goldman Sachs and certain other banks who were stacking the deck against CDO investors,” said Jon Pickhardt, an attorney with Quinn Emanuel Urquhart Oliver & Hedges, who is representing Netherlands-based Rabobank.

“The two matters are unrelated and the claims today are not only unfounded but weren’t included in the Rabobank lawsuit filed nearly a year ago,” Bill Halldin, a Merrill spokesman, said yesterday of the Dutch bank’s claims.

More… ^[16]

Jim Sinclair’s Commentary

This really is awful. Even worse is how the FDIC operates.

It looks like someone forgot to lock the pad lock in this picture representing closed banks.

US regulators close 8 banks
Sat, 17 Apr 2010 10:18:21 GMT

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United States federal bank regulators have shut down eight more banks across the country with assets worth a total of over six billion dollars.

The banks are located in the states of Washington, California, Massachusetts and Florida.

The Friday closures have raised the number of failed US banks since January to 51.

Moreover, the Federal Deposit Insurance Corporation (FDIC) predicts bank failures will peak this year.

The FDIC has sold the assets and liabilities of three failed banks in Florida to Canada’s TD Bank.

At least 140 financial institutions went down across the US during the past year.

The FDIC says the total cost of bank failures from 2009 to 2013 is likely to be $100 billion.

More… ^[18]

Jim Sinclair’s Commentary

If the deficit is out of control, which it is, the dollar does not stand a chance.

Federal Budget Deficits Will Reach Levels Never Seen Before in the U.S.

Recent budget deficits have reached unprecedented levels, but the future will be much worse. Unless entitlements are reformed, spending on Social Security, Medicare, and Medicaid will drive deficits to unsustainable levels.

Percentage of GDP

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Source: Congressional Budget Office (Alternative Fiscal Scenario).

More… ^[20]

Jim Sinclair’s Commentary

Bilk, Steel, and Rab seems to manage all these businesses

Washington Mutual created ‘mortgage time bomb,’ Senate panel says
The failed bank made subprime loans it knew were likely to go bad and then packaged them into risky securities, investigators say.
April 13, 2010|By Jim Puzzanghera and E. Scott Reckard

Reporting from Los Angeles and Washington — Before Washington Mutual collapsed in the largest bank failure in U.S. history, its executives knowingly created a "mortgage time bomb" by making subprime loans they knew were likely to go bad and then packaging them into risky securities, a congressional investigation has found.

In some cases, the bank took loans in which it had discovered fraudulent activity — such as misstated income by borrowers — and rolled them into mortgage securities sold to investors without disclosing the fraud, according to the report released Monday by the Senate’s Permanent Subcommittee on Investigations.

The actions were driven in part by greed, according to the committee report, which pointed out that WaMu’s pay practices rewarded loan officers and processors based on how many mortgages they could churn out.

The new disclosures could give a boost to efforts by President Obama and congressional Democrats to pass sweeping overhaul of financial regulations, which the Senate is set to consider this spring, said Sen. Carl Levin (D-Mich.), the subcommittee’s chairman.

More… ^[21]

Jim Sinclair’s Commentary

"Jobless Recovery" Is a world class oxymoron.

Asia will rule.

FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN FIRST QUARTER
By RealtyTrac Staff

IRVINE, Calif. – April 15, 2010 — RealtyTrac® (realtytrac.com ^[22]), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for Q1 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 932,234 properties in the first quarter, a 7 percent increase from the previous quarter and a 16 percent increase from the first quarter of 2009. One in every 138 U.S. housing units received a foreclosure filing during the quarter.

Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.

“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”

More… ^[23]