How in the face of the arrests of two Bear Stearns hedge fund managers can the Bush Administration justify the unprecedented bailout/sale of that investment bank, but not help homeowners stuck in adjustable rate mortgages? In case you missed it, Ralph Cioffi and Matthew Tannin were hauled to jail Thursday accused of encouraging investors to stay in their hedge funds, heavily exposed to subprime mortgages, even as they knew the credit market was in serious trouble. The eventual implosion of their two hedge funds cost investors $1.8 billion and started the domino effect that led to the demise of Bear Stearns itself, which barely avoided bankruptcy in a rescue buyout by JP Morgan Chase & Co. The only way the deal could be brokered is if the Federal Reserve backed the worst of the mortgages with U.S. tax dollars. “This is not about mismanagement of a hedge fund,” Mark Mershon, head of the New York FBI office, told reporters. “It is about premeditated lies to investors and lenders.” Given that, the whole domino theory that once Bear Stearns fell, the U.S. economy would be doomed, no longer holds water. Tell it to the rising number of homeowners whose houses are being foreclosed on because of predatory mortgage practices, and for whom Bush and his cronies have shown little sympathy. And if you still think its the homeowners’ own fault for signing mortgage papers they didn’t understand, then why has the Justice Department indicted more ...
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How in the face of the arrests of two Bear Stearns hedge fund managers can the Bush Administration justify the unprecedented bailout/sale of that investment bank, but not help homeowners stuck in adjustable rate mortgages? In case you missed it, Ralph Cioffi and Matthew Tannin were hauled to jail Thursday accused of encouraging investors to stay in their hedge funds, heavily exposed to subprime mortgages, even as they knew the credit market was in serious trouble. The eventual implosion of their two hedge funds cost investors $1.8 billion and started the domino effect that led to the demise of Bear Stearns itself, which barely avoided bankruptcy in a rescue buyout by JP Morgan Chase & Co. The only way the deal could be brokered is if the Federal Reserve backed the worst of the mortgages with U.S. tax dollars. “This is not about mismanagement of a hedge fund,” Mark Mershon, head of the New York FBI office, told reporters. “It is about premeditated lies to investors and lenders.” Given that, the whole domino theory that once Bear Stearns fell, the U.S. economy would be doomed, no longer holds water. Tell it to the rising number of homeowners whose houses are being foreclosed on because of predatory mortgage practices, and for whom Bush and his cronies have shown little sympathy. And if you still think its the homeowners’ own fault for signing mortgage papers they didn’t understand, then why has the Justice Department indicted more ...