Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Bear Stearns 'not for sale' says Cayne

  • Bear Stearns 'not for sale' says Cayne

  • 5 October 2007
  • Bear Stearns is not for sale, despite coming out as the worst performer of Wall Street's major investments banks, according to chief executive officer Jimmy Cayne

    Speaking at a conference, Mr Cayne said: "I'm confident that Bear Stearns will weather the storm and come out a stronger, more diversified and a greater organization."

    According to the New York Post Mr Cayne would consider a deal with a partner if it "brings along geographic, strategic value to us" but he ruled out the possibility of a bailout investor.

    Bear Stearns has fallen behind its rivals in the aftermath of the sub-prime mortgage crisis, and could face investment from foreign firms, Chinese investors have are reported to be interested in the organization.

    Shares in the investment bank have tumbled by 22 per cent this year, the worst out of Wall Street's major banks and the firm has had to cut jobs in its mortgage business.

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Mr Cayne said: "I'm confident that Bear Stearns will weather the storm and come out a stronger, more diversified and a greater organization."

Not if we can help it Mr. Cayne.  
The days of Bear Stearns and EMC Mortgage screwing people, destroying lives and stealing their money and homes is about to come to an end.
Our evidence is going to take you down in the worst way, including your many accomplices. 
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I can wait till it happens Digger.  I look forward to it everyday

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EMC Hater
I say string the ol man up and drag him all the way to lewisville on the streets of Dallas and give em some good ol texas justice.
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The Cayne Mutiny

StockJockey's avatar
by StockJockey
Monday, September 10, 2007 - 12:33 am

Are Jimmy Cayne's days at Bear Stearns numbered?

Well, that is what Charlie Gasparino is reporting. After the close on Friday, CNBC ran a piece in which Gasparino intimated that a revolt was building at Bear, with disillusioned employees looking to get rid of him once and for all. Not only that, but Warren Spector might still be in the picture, if the employees have anything to say about it. Those who are still left standing seem to be taking a different strategy, putting heat on Cayne via the media.

Cayne's problems are legion. He is having trouble finding a buyer for the 20% stake in Bear he has been trying to peddle to Chinese buyers, who have recently gotten a lesson in high finance, American-style, after getting spanked on subprime paper and an equity interest in the sinking stock of Blackstone group. Their reticence is not surprising given their recent experience.

Warren Spector has yet to take a new position on the Street, and if he is smart he is still relaxing on Martha's Vineyard with his wife enjoying the splendid late summer weather. The rumors Gasparino dredged up should extend the shelf life of the recent speculation regarding Spector. Gasparino stated "I obviously didn't take a survey of the entire firm, but I spoke to plenty of key people there, and there is a lot of dissension there."

Bear Stearns' stock is holding just above its recent lows, and if the stock cracks $100 for any sustained period the knives might just come out. For now its business as usual for Cayne, as he continues to smoke cigars in the hallways and executive dining room at Bear's Madison Avenue headquarters.

But if Gasparino is on the mark, the next leg down in Bear's stock might just seal Jimmy's fate.
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Bear Stearns has fallen behind its rivals in the aftermath of the sub-prime mortgage crisis, and could face investment from foreign firms, Chinese investors have are reported to be interested in the organization.

I'm thinking the Chinese would treat these people to a little Chinese

They execute their finance fraudsters.

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Could I please just get to see them perp walk first? They owe me that one little satisfaction for stealing my home.  Then you can have your Texas style justice.

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I think they just call it "justice" in China, Dee.

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4 justice now
No matter what it's called... I'd sure love to see it for a change.


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The Sunny Side Of The Street
Liz Moyer, 10.05.07, 9:45 AM ET

 By This Author
Liz Moyer
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Bear Stearns executives, during a scheduled day of presentations for Wall Street analysts Wednesday, said the worst of the subprime mess might be over. James Cayne, the firm's chief executive officer, told analysts "most of our businesses are beginning to rebound" and he said the firm wasn't looking for an equity infusion, contrary to recent media reports.

Optimistic? You bet. Wall Street would love to put the subprime mess behind it. But signs abound that more pain awaits financials.

Cayne's deputy, Bear Stearns (nyse: BSC - news - people ) President Alan Schwartz, acknowledged as much, saying the markets were in the "very early stages" of recovery. "You can see the tension in the markets ease," he said. But that doesn't mean it has evaporated.

Certainly, there is still plenty of it on trading desks. Merrill Lynch (nyse: MER - news - people ) and JPMorgan Chase (nyse: JPM - news - people ), are exacerbating the worry. Friday, Merrill said it would take a net loss for the third quarter following a $4.5 billion writedown of debt instruments, subprime mortgages and leveraged debt. Wednesday, Merrill reshuffled senior managers in its bond division. Osman Semerci, who ran fixed income, and his second, Dale Lattanzio, were ousted. Their former boss, Dow Kim, the former co-head of institutional securities is out as well. Late JPMorgan is scheduled to report Oct. 17.

Merrill now ranks among the worst hit of Wall Street firms. Citigroup (nyse: C - news - people ) warned earlier this week it would take $5.9 billion worth of charge-offs and write-downs in the quarter, reducing expected profits by 60%. Most of the damage also came, the firm said, from leveraged lending and subprime mortgage bond holdings, but also from expected credit costs and extra reserves in its consumer lending unit.

Analyst per-share earnings estimates for Merrill have dropped 33% since mid-September, when rival investment banks began reporting their fiscal third quarters. Merrill is among the biggest in subprime lending thanks to its January purchase of mortgage lender First Franklin (nasdaq: FFHS - news - people ), and it is also among the biggest in derivatives backed by loans.

JPMorgan is the dominant bank in the leveraged lending market; it also has a big mortgage operation. Estimates for its third-quarter earnings per share have come down 7% since mid-October.

Bank of America (nyse: BAC - news - people ) and Wachovia (nyse: WB - news - people ) have hinted in recent weeks that their results would be affected by the turmoil in the capital markets.

The downward trend in earnings comes off a record period of profits in the first half of the year, creating an odd dynamic, says Alan Johnson, the head of Wall Street compensation consulting firm Johnson & Associates.

Banks squirreled away money for bonus periods during the good times and in many cases will be able to match last year or increase bonuses for businesses that are doing well, including equities trading. At the same time, the banks are laying off in structured finance, fixed income and other affected areas. And the slow-down is seen tipping into next year, Johnson says, potentially pulling pay down 20%.

"I think next year it's going to be worse," he said.

Both mortgage securities and leveraged lending have weighed down profits. Bear Stearns, which announced another 310 job cuts in its mortgage unit this week, reported a 62% decline in fiscal third-quarter earnings last month. In August, it ousted its co-president, Warren Spector, and its asset management chief, bringing in Jeffrey Lane, a ringer from Lehman, to clean up the mess.

Bear, poster child of the mortgage meltdown, shut two hedge funds and slashed the value of its bond and loan holdings. They're scrambling to shore up the damaged reputation of its asset management division, though it acknowledged that $8 billion, or 18% of its assets under management, would be leaving come the end of the year along with star portfolio manager James O'Shaughnessy, who is starting his own firm.

Bear will keep a minority stake and has a revenue sharing agreement with the O'Shaughnessy firm.

UBS (nyse: UBS - news - people ) said Monday it was cutting 1,500 jobs after writing down $3.4 billion mostly related to mortgage securities, and it said it would have a loss of up to $687 million for the third quarter.

UBS is also undergoing a big restructuring of its fixed-income division. Former Chief Executive Peter Wuffli resigned abruptly in July. This week, his successor, Marcel Rohner, replaced the head of the investment bank, the chief financial officer and the chief risk officer.

"It is a case of learning lessons, addressing the issues very rigorously going forward, learning everything we need to learn," Rohner said on Monday.

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October 4, 2007 - Federal Prosecutors Launch Probe of Bear Stearns Funds

Oct. 4 — Federal prosecutors have launched a criminal investigation into two Bear Stearns Cos. mortgage-related hedge funds that collapsed during the summer, according to people familiar with the matter.

Federal prosecutors have launched a criminal investigation into two Bear Stearns Cos. mortgage-related hedge funds that collapsed during the summer, according to people familiar with the matter.

The U.S. attorney in Brooklyn has made a request to Bear Stearns for information related to the hedge funds, whose failure cost investors $1.6 billion, said these people. The probe is in the early stages, the people added, and has not generated subpoenas.

The specter of a criminal investigation is clearly bad news for the embattled Wall Street firm, which is already under the microscope by the U.S. Securities and Exchange Commission. Thursday, two weeks after reporting an abysmal third quarter marred by broad declines in their asset-management and fixed-income operations, Bear officials tried to put a positive spin on the firm's future during an investor gathering at its New York City headquarters.

“Most of our businesses are beginning to rebound,” said Bear Chief Executive James Cayne. Late in New York Stock Exchange trading Thursday, Bear shares closed 0.52% lower, at $127.61. Bear's two funds, the High-Grade Structured Credit Strategies fund and a riskier sister vehicle known as the High-Grade Structured Credit Strategies Enhanced Leverage Fund, were launched in 2003 and 2006 respectively and managed by Ralph Cioffi, a former Bear mortgage salesman. Until this past spring, the funds had enjoyed a series of up quarters. But when the market for subprime home loans, which catered to weak borrowers, turned south, so did many of the funds' holdings.

After protracted performance declines and margin calls from Wall Street lenders that could not be met, the funds were shuttered in July. It was around that time that federal prosecutors in Brooklyn took an interest in the matter, said one of the people familiar with the matter.

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Calyon Trader Fired for Losses Says He's No Rogue (Update2)

By Pierre Paulden, Jacqueline Simmons and Hamish Risk

Oct. 10 (Bloomberg) -- The Calyon trader fired last month for alleged unauthorized trading that led to 250 million euros ($353 million) of losses said his bosses knew what he was doing and considered him a ``golden child'' of the New York office.

``There was nothing deceptive or rogue,'' Richard ``Chip'' Bierbaum, 26, said in an interview. ``My positions were reported on a daily basis. It did not blow up. I expect there were some losses but nowhere near the amounts they are discussing. I was the golden child of credit trading in New York.''

Calyon, the investment banking unit of Paris-based Credit Agricole SA, France's second-largest bank, said on Sept. 18 that it had an ``unusually large market position'' that was ``above the authorized limit'' and would cause third-quarter profit to fall ``sharply.'' While Calyon didn't identify the people involved, Bierbaum, whose stepfather is a descendent of John Jay, the first chief justice of the U.S., said he was fired and blamed for the trades on indexes linked to derivatives.

The losses would be the biggest from unauthorized trading since John Rusnak's currency bets cost Dublin-based Allied Irish Banks Plc $691 million in 2002. Management failures to oversee derivatives traders allowed Nick Leeson to bankrupt Barings Plc and Yasuo Hamanaka to hide $2.6 billion of losses from copper futures at Tokyo-based Sumitomo Corp. while their employers remained ignorant.

`Isolated Incident'

``The bank maintains that this is an isolated incident and the work of an individual trader who did not respect our risk procedures and who breached our trading limits,'' Calyon spokeswoman Anne Robert said in an interview last week in Paris. ``The losses were the result of the cost to unwind these unauthorized positions.''

Five of Bierbaum's superiors were also dismissed, according to people with direct knowledge of the situation who declined to be identified because the information wasn't publicly disclosed.

Calyon ousted Francois Pages, 50, the chief executive officer of the U.S. unit, and Loic Fery, 33, global head of credit markets, according to the people familiar with the situation. Zain Abdullah, 37, Calyon's head of credit markets and collateralized debt obligations in the U.S.; Jerome Le Jamtel, 40, head of the credit and debt markets division of Calyon Americas, and Thierry Hasse, 45, head of proprietary trading in New York, also left the firm, the people said.

Fery, Le Jamtel and Abdullah declined to comment. Hasse and Pages didn't return calls seeking comment. Calyon's Robert said the bank ``has taken the relevant disciplinary measures linked to the non-authorized transactions.''

Credit-Default Swaps

Bierbaum said he invested in indexes linked to credit- default swaps that would profit if the Federal Reserve cut interest rates, causing investor perception of credit quality to improve. He declined to provide details of the trades.

Credit-default swaps are derivatives, financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates. Traders use the contracts to speculate on the ability of companies to repay debt. The contracts pay the buyer face value of a bond or loan in exchange for the underlying securities should the company default.

On Aug. 17, the Fed lowered the so-called discount interest rate that it charges banks by 0.5 percentage point, to 5.75 percent.

The move reduced the cost of credit-default swaps included in the CDX North America Investment Grade Index to 60.51 basis points on Aug. 24 from 78.33 on Aug. 16, showing that investor perception of risk had diminished.

Credit Agricole

Credit Agricole said at the end of the month that a decline in the value of fixed-income securities sparked by record U.S. subprime mortgage foreclosures was having a ``limited impact'' on its business.

The index then switched direction and rose to 67.525 basis points on Sept. 4, the day that Calyon said it discovered the trade, according to prices from CMA Datavision in London. A new version of the index is now at 44.75.

Calyon, created when Credit Agricole bought Paris-based Credit Lyonnais in 2003, said the position was mainly built during the ``last days of August, above the authorized limit and without the authority to engage the bank at the level of this trade.'' Credit Agricole's shares have lost 9 percent this year, compared with the 5.2 percent drop for the Bloomberg Europe Banks and Financial Services Index. The stock fell 0.39 euros, or 1.4 percent, to 28.14 euros at 1:20 p.m. in Paris. France's largest bank by assets is Paris-based BNP Paribas SA.


Bierbaum said he sent reports on his position every day to his supervisors and Calyon's risk management department. He also said the trade had made a profit of about $100 million before he was placed on administrative leave. Bierbaum couldn't explain how that turned into a $353 million loss. Banks typically reverse bets that credit-default swaps will fall by purchasing the contracts.

Calyon said on Sept. 18 that the position was back ``within the normal trading activities.''

The statement that the trades were made without permission is ``ludicrous'' and getting fired was a ``complete shock,'' Bierbaum said. He said he hired a lawyer, though he wouldn't name the firm or provide more details.

``You would think that a bank would put limits on the aggregate amount a 26-year-old could have to trade,'' said John Coffee, professor of securities law at Columbia University in New York, who has served on advisory committees to the Nasdaq, New York Stock Exchange and NASD.

`Doubled Down'

Derivatives can be harder to monitor than other financial assets, such as stocks or currencies, because they trade privately, said Frank Partnoy, a former debt trader who is now a law professor at the University of San Diego.

``Typically, these losses involve a trader who has lost more money than he should and then doubled down,'' Coffee said. ``It's predictable. Like someone going to the race track, losing all day and then betting the rent money in the final race to make back losses.''

Leeson, whose currency derivatives caused Barings to collapse in 1995, said continued losses show that banks don't want to spend the money needed to prevent rogue trades.

``Over the last 10 years there have been several large financial scandals that have lost billions of dollars and yet people don't really have the systems and controls in place,'' he said in an interview in Dublin on Oct. 4. ``You have to ask yourself why.''

`Emotional Issues'

Bierbaum confirmed his mother is married to Henry T. Mortimer Jr. Bierbaum's stepfather is also descended from Henry Morgan Tilford, a former president of Standard Oil. Bierbaum grew up in New York and attended St. Bernard's School, a private boy's middle school in Manhattan.

During high school, he was sent to the Rocky Mountain Academy in Bonner Creek, Idaho. The academy catered to teenagers with ``behavioral and emotional issues'' before closing in 2005, according to Julia Andrick, the former marketing director at the school. She said the issues ranged from ``disrespecting parents'' to drug and alcohol abuse.

``It was a place to be for a couple of years relative to public school,'' said Bierbaum, declining to elaborate.

Bierbaum then attended Trinity College in Hartford, Connecticut. In 2001 he was arrested in Suffolk County, New York, for driving under the influence, according to records on the Financial Industry Regulatory Authority's Web site. The arresting officer found fake identification in Bierbaum's wallet. Bierbaum said he pleaded guilty to disorderly conduct.

``I was a sophomore in college,'' Bierbaum said. ``I wasn't aware of the consequences.''

LeFrak, Bear Stearns

After graduating from Trinity in 2003, Bierbaum spent four months at real estate and investment firm LeFrak Organization in Newport, New Jersey. His main job was to show apartments to potential renters.

``He was a good soldier,'' said Jamie LeFrak, a 33-year-old principal at the firm who is in a relationship with Bierbaum's sister, Caroline. ``Chip is an honest guy who would certainly check with his bosses,'' said LeFrak, grandson of the late real estate billionaire Samuel LeFrak.

Bierbaum joined New York-based Bear Stearns Cos. in October 2003, where he processed trades and eventually became a junior trader for one of the firm's hedge funds that collapsed in June because of bad bets on securities linked to subprime mortgages, his resume shows. Russell Sherman, a spokesman for the firm, didn't return a call seeking comment.

Bierbaum joined Calyon in March as a trader making bets with the firm's capital. He became a chartered financial analyst in May, according to Kathy Valentine, spokeswoman for the CFA Institute.

``I would like to get back into credit trading,'' said Bierbaum, who has remained in New York since being fired, reading the newspapers and sending out his resume. ``I worry about it,'' he said of the allegations that he was a rogue trader. ``It's my word against theirs.''

To contact the reporters on this story: Pierre Paulden in New York at ; Jacqueline Simmons in Paris at ; Hamish Risk in London at .

Last Updated: October 10, 2007 07:28 EDT

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