Critics are blaming Alan Greenspan for today’s financial crisis, but now the former Federal Reserve chief is fighting back.

Greenspan sets the record straight in an exclusive interview.

Part 1

What are others saying about Alan Greenspan

Why do people blame Alan Greenspan for the sub-prime crisis? He lead the Federal Reserve during the dot-com crash, 9/11 and following years when interest rates in the US fell and look what we we built for us in 2010!

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Bear Stearns reaped a profit of $115 million or 86¢
a share before the JP Morgan takeover.

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The Federal Reserve Was Ready to Make Lending Available to Other Brokers on Same Day They Helped Out Bear Stearns; Borrowers at Discount Window Included Goldman Sachs, Morgan Stanley and Lehman Brothers.

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For release at 2:00 p.m. EDT

The Federal Reserve Board and the Federal Open Market Committee – FOMC on Tuesday released the attached minutes of the Committee meeting held on March 18, 2008, and of the conference call held on March 10, 2008.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. The description of economic and financial conditions contained in these minutes is based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board’s website at
http://www.federalreserve.gov/monetarypolicy/fomc.htm#calendars.

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Bear Stearns CEO Alan Schwartz was in the hot seat on Capitol Hill as lawmakers review rescue plan. In the days leading up to the fire sale of investment bank firm Bear Stearns, the company was the topic of rumors, speculation and fear that led the venerable Wall Street firm to the brink of ruin.

Bear Stearns CEO Alan Schwartz, testified about those uncertain days before the Senate Banking Committee.

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JP Morgan CEO Jamie Dimon is quadrupling the price of Bear Stearns from the price he agreed o pay just nine days ago and yet he is still managing to get kudos for the deal.

I think he made a steal. I think what will happen as five or 10 years and now when we do not remember what the Subprime Mortgage Industry is about, they will spin that off at a very significant profit.

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FBI: 2008 Could Be Record Year for Suspicious Activity Reports

Financial institutions filed a record 15,000 suspicious activity reports (including instances of mortgage fraud) with the Federal Bureau of Investigation in the first fiscal quarter of this year. If the pace keeps up, more than 60,000 SARs will be filed, outstripping 2007, when 46,717 reports hit the system.

In a briefing on January 29, FBI officials said the agency has 14 major “corporate fraud” investigations under way involving mortgage or related companies. The focus, officials said, was on subprime mortgage firms, their accounting and lending practices, and insider trading. The agency did not specify any cases, but it is well known that the collapse of New Century Financial, is the subject of a major probe.

As previously reported, the Securities and Exchange Commission is investigating the failure of several subprime firms, focusing on, among other things, their investment bankers, including Bear Stearns, Merrill Lynch, and Morgan Stanley.

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Bear Stearns chief executive, James Cayne, stepped down. This has been widely expected. Surprising, though, do you think since he is staying on as chairman, some people were calling for him to be ousted after the problems that they had over the summer. He is being succeeded by Alan Schwartz. Alan is considered collegial, reaching out to various clients, part of what you have to do as chief executive. He has been co-president since 2001 and took over an investment bank.

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Brokerages to Report Earnings This Week: Goldman Sachs, Morgan Stanley, Bear Stearns. Brokerage Earnings Outlook with Howard Silverblatt of S&P.

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Bear Stearns Mortgage unit accused of predatory loan servicing. DuPont’s CEO Holliday says US recession is unlikely.

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Cuomo Subpoenas Street Firms on Underwriting

As part of an expanding probe into the mortgage crisis, New York Attorney General Andrew Cuomo has subpoenaed loan underwriting records from a handful of Wall Street firms, according to industry sources.

Wednesday morning The Wall Street Journal identified three firms that reportedly received subpoenas: Bear Stearns, Deutsche Bank, and Merrill Lynch.

The Attorney General’s office has already subpoenaed records from contract underwriting firms, including The Bohan Group, San Francisco, and Clayton Holdings.

One executive close to the matter indicated that “The Street is trying to blame the contractors they used.” At deadline time, a spokesman for the Attorney General’s office had not commented. Bear Stearns, Deutsche Bank, and Merrill Lynch had not released any statements on the matter.

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Bear Stearns Hedge Fund Losses Lead to Arbitration Claims, According to Law Firms Representing Investors — BSC

NEW YORK, Dec. 5, 2007 (PRIME NEWSWIRE) — A four-law firm legal team, with nationally recognized securities law experience, has filed investor claims against two subsidiaries of Bear Stearns Companies, Inc. (NYSE:BSC) — Bear Stearns & Co., Inc. and Bear Stearns Securities
Corp. — over the recent collapse of a Bear Stearns hedge fund.

Arbitration claims were filed this week with Financial Industry Regulatory Authority (FINRA) by the law firms of Maddox, Hargett & Caruso, P.C., of New York, New York and Indianapolis, Ind.; Aidikoff, Uhl & Bakhtiari, of Beverly Hills, Calif.; Page Perry, LLC, of Atlanta, Ga.; and David P. Meyer & Associates Co., LPA, of Columbus, Ohio.

The Bear Stearns hedge fund at issue in the FINRA claims is the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage (Overseas) Fund.

Three weeks ago, Massachusetts Secretary of State William Galvin charged Bear Stearns with improper trading in the failed hedge fund as well as the Bear Stearns High-Grade Structured Credit Strategies hedge fund. In late July, both funds filed for bankruptcy protection in the
Southern District of New York, wiping out nearly all investor capital.

According to Steven B. Caruso of Maddox Hargett & Caruso’s office in New York City, “Bear Stearns did not properly disclose related party transactions, the true nature of the risk of the illiquid securities in the investment portfolio and failed to protect the interests of their clients. Our investigation indicates that officials at Bear Stearns engaged in a concerted effort to conceal the true state of affairs at both of these hedge funds for an extended period of time before they imploded.”

Added Ryan Bakhtiari, of Aidikoff, Uhl & Bakhtiari, “Given Bear Stearns’ dominance in the mortgage backed securities underwriting market, they knew or should have known how much subprime exposure both of these hedge funds faced. We’re finding, in our investigation of these funds, that many investors in these funds simply were unaware of what was being held in their portfolios because it was not adequately disclosed.”

The legal team pursuing the arbitration claims includes the immediate past president and several current and former directors of the Public Investors Arbitration Bar Association (PIABA), the co-chairman of the American Bar Association Securities Arbitration Subcommittee, the current chair and past members of the FINRA National Arbitration and Mediation Committee (NAMC), a former general counsel of a national brokerage company, a former state securities commissioner, and a past member of the NASD Securities Arbitration Policy Task Force.

For more information, please visit www.subprimelosses.com.

More information on this and other class actions can be found on the Class Action Newsline at www.primenewswire.com/ca.

-0-
CONTACT: Maddox, Hargett & Caruso, P.C.
New York, New York; Indianapolis, Indiana
Steven B. Caruso
(800) 505-5515
(212) 837-7908
sbca...@aol.com

Aidikoff, Uhl & Bakhtiari
Beverly Hills, California
Ryan K. Bakhtiari
(800) 382-7969
(310) 274-0666
rbak...@aol.com

Page Perry, LLC
Atlanta, Georgia
J. Boyd Page
(877) 673-0047
(770) 673-0047
jbp...@pageperry.com

David P. Meyer & Associates Co., LPA
Columbus, Ohio
David P. Meyer
(866) 827-6537
dme...@dmlaws.com

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Donate Bonuses to Foreclosure Fund

A coalition of housing and community activists is calling on five Wall Street investment banks that “reaped” huge profits from funding and securitizing subprime loans to contribute their 2007 bonuses to a foreclosure prevention fund.

It has been reported that as of June 1 2007, Bear Stearns paid out over $17 Billion in bonuses – despite 2 of their hedge funds have filed for bankruptcy protection

The National Training and Information Center, the National Association for the Advancement of Colored People, and other groups contend that the investment banks pushed subprime lending to unsustainable levels and reaped tremendous profits and bonuses.

The groups also are releasing a report that details Wall Street’s involvement in the subprime mortgage debacle. “Wall Street must do the right thing and forgo their lavish bonus to help families stay in their homes,” said NTIC board member Inez Killingsworth.

“It’s time they clean up their mess.” As part of a “Save the American Dream” campaign, the groups are inviting Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers, and Bears Stearns to a summit to set up a foreclosure prevention fund.

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C-BASS Owned Fieldstone Files for Chapter 11

The C-BASS owned Fieldstone Mortgage of Maryland which closed its doors last week has filed for Chapter 11 bankruptcy protection.

According to the Mortgage Industry Directory, Fieldstone ranked 26th among all subprime lenders last year, funding $5.2 billion.

According to its bankruptcy filing, its creditors include Morgan Stanley, Bear Stearns, and Countrywide Financial, among others. C-BASS, in turn, is owned by two publicly traded mortgage insurance companies, MGIC and Radian, which have been trying to sell the company and its servicing unit, Litton Loan Servicing of Texas.

In February C-BASS bought Fieldstone, a publicly traded real estate investment trust, for $260 million. This past summer, in the wake of the margin calls, MGIC and Radian wrote down their interest in C-BASS by $1 billion.

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Federal Reserve Adds Liquidity to Money Markets. Analysis and Discussion with John Ryding of Bear Stearns.

Transcript:
>> this is a week for many federal reserve speakers, a lot and the market still trying to figure out what they will do when it meets December 11. Bear Stearns now saying the fed will cut its benchmark interest rate by 1/4 point next month, that is a shift because previously they said the fed will hold steady. joining me now on the change of mind, a chief u.s. economist at Bear Stearns. john, thank you for joining us. >> good to be here. >> what changed? >> i think the fed has sent all the signals, and it is a position we agree e|e with, that they did not want to cut rates December 11, but the market, particularly the bond markets, do not believe that is how the events will play out. In particular, the announcement on the agency’ s last week on the more the to related write- owns and the spillover effects on the financing of some mortgage lenders look like it was going to be another tightening of the notch. you can see it in the libor market, you can see and the tightness of the fed funds market and treasury yields plunged, and taken the two-year below 4%. all the signs are there to the question is the fed come December 11 of the market conditions persist, have the will to vote effectively for interest rate hike, which is what not cutting will be. the fed has given the market what it wanted back in September, what it wanted on October 31, and i think the fed will do the same December 11. >> john, you’ re saying it is not so much to the fed is worried are recession the way some people are, that it is more a question of these very complicated credit market strains right now that do not work their way out easily and the fed qgg has to make sure it offsets. >> i think that is right. that is why i think it would have been better if the fed was cutting rates for these purposes, that it adopted what we called in our note last week, a shock and awe strategy, taking a big cut in the funds rate, saying is specifically this is related to the financial market problems, and then talking about as financial conditions normalize, and then need to take those rate cuts away in 2008. the problem with the current strategy is sent it links rate cuts with offsetting impact on the real economy, each rate cut tends to make people a little more pessimistic that perhaps we have taken a turn for the worse and the fed needs to to cut — cut rates again. that may be the interpretation. i would be much more explicit and say we are doing this for the financial system and we expect to reverse these in 2008. >> when you talk about shock and awe, d think the fed should say, hey, there are a lot of assets and securities sitting on people’ s books, all kinds of write-downs, stuff not ` moving, let’ s just do a 50 basis point cut? >> if you are easing for the purposes of kicks starting a financing system, i think a large rate cut, 50, 100 basis points, as long as you identify that is why we are doing it, we know it will probably adversely affect the dollar, but we will reverse the rate cut in 2008 as financial conditions reno normalize. the problem with the strategy is we did not know when the cuts will be taken back, whether there be more rate cuts. he strategy is unclear at the present time because the fed suggested it does not want to cut rates any more already, and the market is just not listening to that. >> what do you think of the rates in other countries relative to the united states? that is one thing that is an issue for the dollar. if you look at the ten-year note, well below 4 percent today, right now trading at 3.89%. is the bond market and of the fed? is it the bond market telling us, you know, unlike what you are saying, the fed will cut and they will keep cutting in the new year? >> the bond market is well ahead of the fed. if you cannot argue where the front end, two-year is priced, but the bond market is 100 basis points ahead of the fed and ultimately i do not think the yield levels will be sustainable because right now we are in a flight to quality rally. another factor that will make them not sustainable over the longer haul is the current strategy of cutting rates and adding liquidity has undermined the value of the dollar, it pushed gold prices up sharply, it has inflation — conflict commodity prices, boosted the value of oil. all of that looks like it will begin to inflation pressures down a road and that is one of the reasons openly the fed will not be able to keep the rate cuts in place. again, it comes back to my previous point. if the fed outlined the strategy that these rate cuts are temporary to kick start the system, they come — can take them back later, and i think the current level of yields is too low.

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