Here's a little bit of advice you can use to make money.
There's big money in lying.
I'll show you how it has worked for people like Beth Jacobson, who fell off the Wells Fargo "stagecoach from hell" after making millions pushing subprime mortgages there.
And for Jamie Dimon, who I'd love to see get kicked off the JPMorgan gravy train, where he's been lying for years, while making himself hundreds of millions, to ING Bank, who lied about doing business with Iran and Cuba to make millions in fees.
Here's the thing.
When you know how the Matrix works, you can make money on the lies building up, and then make money on them being exposed for what they are.
First, let's get back to our liars, because there's a lot of humor in seeing them get caught in their lies…
One Woman's Liar Loans
So, I'm reading this piece yesterday in the Washington Post about Beth Jacobson.
As I said, she used to work for Wells Fargo, peddling a lot of subprime mortgages, and now she's calling them out on their "stagecoach from Hell" practices, ripping people off and everything.
And I'm flat-out laughing so hard that I actually start choking. I'm choking on the crap this woman is spewing, and on this garbage article that is so inane that it's embarrassing as a piece of journalism, or whatever it's supposed to be.
It makes me realize that, while I may be an annoying, in-your-face, no-holds-barred hammer at times, at least I take a stance for the truth.
In any case, Ms. Jacobson is now something of a whistleblower (though not really from the "inside" anymore, because she's been out of Wells since 2007), on account of her claiming that the bank's practice of targeting certain minorities and folks stupid enough to believe they were making millions – which they weren't (and good thing they didn't have to prove it by being talked into some high-interest no-document loans, against their better judgment) – and getting liar loans to buy houses they shouldn't have dreamt about even at twice their actual incomes.
But, before she realized that Wells Fargo was a bad egg, harming all those innocents, this woman was the bank's No. 1 salesperson (in the whole country, folks). She was selling, you guessed it, subprime mortgages. She was making a lot of money selling up to $50 million worth of liar loans and other toxic crap to her flock of innocents, year in and year out.
Then, strictly by pure chance, or God's will – I'm never sure which is which sometimes – in 2007, right around the time that the subprime market hits a brick wall, poor little rich girl Beth is outed, I mean ousted, from Wells. Something to do with production; who knows for sure?
Now, though, the lies that she is foisting on the public are revolting.
She made millions soaking innocent homebuyers by placing them in high-fee (it's all about the fees, folks; it's always about the "what's the best fee for me" deal, screw the Muppets) mortgages. As strange as this might sound, these are the same high-interest loans that these dumb (I mean innocent) homebuyers got saddled with. (You see, it's the high interest rates that account for the high fees the salespeople are paid, or maybe it's the other way around, either way… you get that, right?)
Then she decided to blow the whistle. Why? Oh, because her new job (she's a self-employed, do-gooder, pay for services, for profit, you-know-what) is all about helping the same poor people she set up like bowling pins get their lives and foreclosed homes out of the gutter, for a fee… did I say that?
Now, let's say you're really good at lying. Then you get to run the liar's lair.
That honor goes to Jamie Dimon.
The Leader of the Liar's Club
On Wednesday he lied through his teeth to the idiots and some strumpets whose campaigns he and his bank finance; yeah I'm talking about the liars in Congress. But this is not about them…
It's about how Jamie lied about not knowing what risks the CIO was taking (he knew two years ago). He lied about their losses being a "tempest in a teapot." And he is lying to the point that I'm going to vomit, when he says they were hedging and not prop trading.
All I'll say about Jamie is that I used to respect him. Now I see him for what I had always hoped he was above being and doing.
If he is going to claw back some money from the JPM executives responsible for the lying and losses, he has to give back all his compensation, because he's the leading liar at the liar's club.
My point is this: The financial services industry starts on the ground floor, with individual liars lying for larger and larger fees for themselves.
Then it moves up the chain to the lying executives, who overlook the liars below them to reap the large fees all their collective lies affords them. And it keeps going, all the way to the institutions themselves. (Not that they are not run by humans, they are, although sometimes it seems that the institutions themselves are built on concrete pillars lying in quicksand.)
And that makes the industry what it is… the ultimate liar's club.
And as far as banks as institutions go, in 2009, Credit Suisse Group AG paid $536 million on account of a particular set of lies; in 2010, Barclays PLC paid $298 million on account of the same lies, Lloyds Banking Group PLC paid $350 million, and the winner and record holder of the highest "fine" for these same lies, with a total of $619 million, was just announced to be ING Bank, a unit of ING Groep NV.
What lies you ask? How about, in the case of ING Bank, "stripping" out transaction information that would have revealed that the bank was dealing with Iran and Cuba and channeling their money transfers through Manhattan channels (which most have to go through often enough). That is illegal, as in completely illegal, not on a regulatory level, but on a federal, trading-with-the-enemy level.
All of them did it anyway, for the fees, you know. All of them got caught, you know.
And all of them got away without being criminally prosecuted on account of them being offered "deferred prosecution agreements" also known as the liars' labyrinth.
So, the moral of the story is… There's money to be made lying, and there's money to be made when the lies are laid bare. And you can have it both ways.
That's what this Matrix thing you've been seeing is about, and that's what my Capital Wave Forecast folks have been doing for more than two years now.
I'm not lying.
Related Articles and News:
- Money Morning:
The Facebook IPO Facts: The Good, The Bad and The Ugly
- Money Morning:
Why Wall Street Can't Escape the Eurozone
- Money Morning:
May Q&A: Shah Gilani on the Student Debt Bubble, Europe and More…
- Money Morning:
What a Few Thousand Dollars Will Buy You in D.C.
About the Author
Shah Gilani is Chief Financial Strategist for Money Map Press and boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker. The work he did laid the foundation for what would later become the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk and established that company's "listed" and OTC trading desks. Shah founded a second hedge fund in 1999, which he ran until 2003. Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see. On top of the free newsletter, as editor of The 10X Trader, Money Map Report and Straight Line Profits, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade using a little-known strategy. Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on FOX Business' "Varney & Co."