Category Archives: Inside jobs

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A new entry to the repo underworld

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To Lehman Brothers’ repo 105′s and Lee Farkas’ repo fakes, we can now add Barclays’ repo stars. All are transactions viewed by regulators as trickery and deceit. Stars are explained in “Global taxation: Fiscal frustrations” by Megan Murphy and Jeff Gerth, … Continue reading

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Black: Why CEOs haven’t been busted

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“Unless you imprison the fraudsters, sophisticated financial scams grow ever more destructive. It seems as if we have forgotten this lesson,” writes William K. Black for Bloomberg News May 10 in an article headlined “Why CEOs avoided getting busted in … Continue reading

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The underbelly of securitized banking is emerging

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The underbelly of securitized banking is showing, as investors and traders fight over the scraps left after the financial crisis of 2007-2008. One battle that has gotten media attention is a class action against JP Morgan Chase, where pension funds that were clients … Continue reading

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Repo fraud “happens all the time,” says convicted Farkas

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Securitized banking has its first 21st Century big-time crook. Lee B. Farkas, chairman of one of the largest privately owned mortgage lending companies in the U.S. when it collapsed in 2009, was convicted by a jury April 19 of a … Continue reading

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Will ‘ring-fencing’ work better than ‘firewalls’ did?

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We’re hearing a lot about “ring-fencing” these days. That sounds suspiciously like “firewalls” to some of us who covered the S&L calamity 20 years ago. Sheila Bair, chairman of the Federal Deposit Insurance Corp., thinks bank holding companies should ring-fence their investment banking operations … Continue reading

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WSJ: ‘Investors’ hot for riskier mortgage securities

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Investors are “climbing over each other” to invest in higher-yielding mortgage securities like those issued by PennyMac, which RepoWatch wrote about December 9, according to the Wall Street Journal April 11. These securities pay a higher return because they are … Continue reading

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SEC files civil fraud charges against Colonial Bank exec

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The former operations chief at the failed Colonial Bank “enabled the (repo) sale of fictitious and impaired mortgage loans and securities” to Colonial Bank by its largest warehouse borrower, Taylor, Bean & Whitaker Mortgage Corp., according to a National Mortgage … Continue reading

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Did bankers ignore warnings about faulty loans?

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“You can’t get losses of this magnitude without massive fraud,” said Bill Black, a professor at the University of Missouri in Kansas City and an expert on bank fraud. Black should know, he played a key role in uncovering S&L fraud … Continue reading

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Taylor, Bean president pleads guilty to repo fraud

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The former president of Taylor, Bean and Whitaker Mortgage Corp. has pleaded guilty to bank fraud in a $1.9 billion repo conspiracy that contributed to the collapse in 2009 of Colonial Bank, based in Montgomery, Alabama. Raymond Bowman of Atlanta … Continue reading

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Bloomberg: Lehman used repos to look healthy when it wasn’t

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Lehman Brothers used repurchase agreements to make $3 billion in loans to itself and make itself look healthy when it was not, said a March 10 Bloomberg News story by Christine Richard and Bob Ivry.  But the transaction, as described … Continue reading

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PennyMac and Citigroup: A mutual admiration society

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Citibank has agreed to make repo loans to PennyMac Mortgage Investment Trust, collateralized by $125 million in “distressed” residential mortgage loans. Check out the December 9, 2010, press release. It’s interesting to see one of these deals in action. This … Continue reading

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Taylor, Bean CEO accused of repo fraud

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A federal grand jury in Virginia has accused the CEO of Taylor, Bean & Whitaker Mortgage Corp. of Ocala, Fla., once one of the nation’s largest non-bank mortgage lenders, of using repo to run a $1.9 billion fraud scheme. Criminal … Continue reading

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The Valukas Report: 2,200 pages about Lehman and repos

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Finally, repurchase agreements are getting some media attention. That’s because examiner Anton Valukas in the Lehman Brothers bankruptcy has accused that company of using Repo 105 and Repo 108 accounting shams to hide debt. Valukas has a whole volume called … Continue reading

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Black: We have fraud by top elites

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  Bank fraud expert Bill Black is interviewed by Bill Moyers on Bill Moyers Journal April 3, 2009. Black was a key reason more than 1,000 people were prosecuted for S&L wrongdoing 20 years ago. Profoundly affected by that experience, he … Continue reading