In Madoff scandal, Jews feel an acute betrayal

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International Herald Tribune
In Madoff scandal, Jews feel an acute betrayal
By Robin Pogrebin
Wednesday, December 24, 2008

There is a teaching in the Talmud that says an individual who comes before God after death will be asked a series of questions, the first one of which is, “Were you honest in your business dealings?” But it is the Ten Commandments that have weighed most heavily on the mind of Rabbi David Wolpe of Sinai Temple in Los Angeles in light of the sins for which Bernard Madoff stands accused.

“You shouldn’t steal,” Rabbi Wolpe said. “And this is theft on a global scale.”

The full scope of the misdeeds to which Madoff has confessed in swindling individuals and charitable groups has yet to be calculated, and he is far from being convicted. But Jews all over the country are already sending up something of a communal cry over a cost they say goes beyond the financial to the theological and the personal.

Here is a Jew accused of cheating Jewish organizations trying to help other Jews, they say, and of betraying the trust of Jews and violating the basic tenets of Jewish law. A Jew, they say, who seemed to exemplify the worst anti-Semitic stereotypes of the thieving Jewish banker.

So in synagogues and community centers, on blogs and in countless conversations, many Jews are beating their chests — not out of contrition, as they do on Yom Kippur, the Day of Atonement, but because they say Madoff has brought shame on their people in addition to financial ruin and shaken the bonds of trust that bind Jewish communities.

“Jews have these familial ties,” Rabbi Wolpe said. “It’s not solely a shared belief; it’s a sense of close communal bonds, and in the same way that your family can embarrass you as no one else can, when a Jew does this, Jews feel ashamed by proxy. I’d like to believe someone raised in our community, imbued with Jewish values, would be better than this.”

Among the apparent victims of Madoff were many Jewish educational institutions and charitable causes that lost fortunes in his investments; they include Yeshiva University, Hadassah, the Jewish Community Centers Association of North America and the Elie Wiesel Foundation for Humanity. The Chais Family Foundation, which worked on educational projects in Israel, was recently forced to shut down because of losses in Madoff investments. Many of Madoff’s individual investors were Jewish and supported Jewish causes, apparently drawn to him precisely because of his own communal involvement and because he radiated the comfortable sense of being one of them.

“The Jewish world is not going to be the same for a while,” said Rabbi Jeremy Kalmanofsky of Congregation Ansche Chesed in New York.

Jews are also grappling with the implications of Madoff’s deeds for their public image, what one rabbi referred to as the “shanda factor,” using the Yiddish term for an embarrassing shame or disgrace. As Bradley Burston, a columnist for haaretz.com, the English-language Web site of the Israeli newspaper Haaretz, wrote on Dec. 17: “The anti-Semite’s new Santa is Bernard Madoff. The answer to every Jew-hater’s wish list. The Aryan Nation at its most delusional couldn’t have come up with anything to rival this.”

The Anti-Defamation League said in a statement that Madoff’s arrest had prompted an outpouring of anti-Semitic comments on Web sites around the world, most repeating familiar tropes about Jews and money. Abraham Foxman, the group’s national director, said that canard went back hundreds of years, but he noted that anti-Semites did not need facts to be anti-Semitic.

“We’re not immune from having thieves and people who engage in fraud,” Foxman said in an interview, disputing any notion that Madoff should be seen as emblematic. “Why, because he happens to be Jewish, he should have a conscience?”

He added that Madoff’s victims extended well beyond the Jewish community.

In addition to theft, the Torah discusses another kind of stealing, geneivat da’at, the Hebrew term for deception or stealing someone’s mind. “In the rabbinic mind-set, he’s guilty of two sins: one is theft, and the other is deception,” said Burton Visotzky, a professor at the Jewish Theological Seminary.

“The fact that he stole from Jewish charities puts him in a special circle of hell,” Rabbi Visotzky added. “He really undermined the fabric of the Jewish community, because it’s built on trust. There is a wonderful rabbinic saying — often misapplied — that all Jews are sureties for one another, which means, for instance, that if a Jew takes a loan out, in some ways the whole Jewish community guarantees it.”

Several rabbis said they were reminded of Esau, a figure of mistrust in the Bible. According to a rabbinic interpretation, Esau, upon embracing his brother Jacob after 20 years apart, was actually frisking him to see what he could steal. “The saying goes that, when Esau kisses you,” Rabbi Visotzky said, “check to make sure your teeth are still there.”

Rabbi Kalmanofsky said he was struck by reports that Madoff had tried to give bonus payments to his employees just before he was arrested, that he was moved to do something right even as he was about to be charged with doing so much wrong. “The small-scale thought for people who work for him amidst this large-scale fraud — what is the dissonance between that sense of responsibility and the gross sense of irresponsibility?” he said.

In a recent sermon, Rabbi Kalmanofsky described Madoff as the antithesis of true piety.

“I said, what it means to be a religious person is to be terrified of the possibility that you’re going to harm someone else,” he said.

Rabbi Kalmanofsky said Judaism had highly developed mechanisms for not letting people control money without ample checks and balances. When tzedakah, or charity, is collected, it must be done so in pairs. “These things are supposed to be done in the public eye,” Rabbi Kalmanofsky said, “so there is a high degree of confidence that people are behaving in honorable ways.”

While the Madoff affair has resonated powerfully among Jews, some say it actually stands for a broader dysfunction in the business world. “The Bernie Madoff story has become a Jewish story,” said Rabbi Jennifer Krause, the author of “The Answer: Making Sense of Life, One Question at a Time,” “but I do see it in the much greater context of a human drama that is playing out in sensationally terrible ways in America right now.”

“The Talmud teaches that a person who only looks out for himself and his own interests will eventually be brought to poverty,” Rabbi Krause added. “Unfortunately, this is the metadrama of what’s happening in our country right now. When you have too many people who are only looking out for themselves and they forget the other piece, which is to look out for others, we’re brought to poverty.”

According to Jewish tradition, the last question people are asked when they meet God after dying is, “Did you hope for redemption?”

Rabbi Wolpe said he did not believe Madoff could ever make amends.

“It is not possible for him to atone for all the damage he did,” the rabbi said, “and I don’t even think that there is a punishment that is commensurate with the crime, for the wreckage of lives that he’s left behind. The only thing he could do, for the rest of his life, is work for redemption that he would never achieve.”

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Homes foreclosure more than doubled in 1Q from 2007

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Tuesday April 29, 6:18 am ET, by Alex Veiga, AP Business Writer

Number of US homes facing foreclosure jumps 112 percent in first quarter from 2007 LOS ANGELES (AP) — The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said.

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year.

RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

“What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again,” said Rick Sharga, RealtyTrac’s vice president of marketing.

However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said.

“It’s a cycle that’s going to be difficult to break, and we’re certainly not at the breaking point just yet,” Sharga added.

The surge in foreclosure filings also suggests that much-touted campaigns by lawmakers and the mortgage lending industry aimed at helping at-risk homeowners aren’t paying off.

Hope Now, a Bush administration-organized mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to receive a foreclosure-related filing plunged 24.4 percent from a year earlier.

Sharga credited the decline to the state’s foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac.

The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate.

The number of properties with a filing increased 137 percent over the same quarter last year but only rose 3 percent from the fourth quarter.

California had the most properties facing foreclosure at 169,831, an increase of 213 percent from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice.

California metro areas accounted for six of the 10 U.S. metropolitan areas with the highest foreclosure rates in the first quarter, RealtyTrac said.

Many of the areas — including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield — are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

“California still hasn’t hit bottom,” Sharga said. “We have a lot of California homes that are in early stages of default that may not be salvageable because either there’s no market or financing available, or both.”

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245 percent from a year ago and up 45 percent from the last quarter of 2007.

Florida had 87,893 homes reporting at least one foreclosure filing, a 178 percent jump from the first quarter of last year and a 17 percent hike from the fourth quarter last year. That translates into a foreclosure rate of one in every 97 households.

The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

RealtyTrac Inc.: http://www.realtytrac.com

How to Steal Money from the Stock Markets

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Revealed: the dirty tricks of rogue traders
By Robert Winnett, The Daily Telegraph 3/21/08

A hedge fund based in London set up a “dirty-tricks unit” to manipulate share prices and get illicit information on companies in an attempt to make millions on the stock market, an insider has revealed.

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  • As the official hunt began for the rogue traders who tried to bring down Britain’s biggest mortgage lender, HBOS, The Daily Telegraph can reveal a whistle-blower’s account of how a multi-billion pound fund allegedly used illegal tactics to drive down stock prices.

    the dirty tricks of rogue traders

    Wanted: the trader who allegedly made £100m from the 17 per cent slump in HBOS shares
    Private detectives were allegedly employed to hack into executives’ emails and telephone records.

    Front companies were set up to allow the hedge fund traders to pose as independent researchers or journalists.

    Negative information on companies was then distributed to leading investment banks in the hope that rumours would spread and some share prices would fall.

    The hedge fund, which cannot be named for legal reasons, stood to make millions from “short-selling” the shares as they fell in value.

    The allegations – made in a sworn statement seen by The Daily Telegraph and which has been sent to financial regulators – will add to growing concern over the activities of rogue traders in the City.

    The Financial Services Authority, the City regulator, has begun a criminal investigation to find the trader who allegedly made £100 million from the 17 per cent slump in HBOS shares on Wednesday.

    white collar crimes pays big

    The shares fell after “malicious” rumours were spread in the City about the bank, sparking fears that the price had been illegally manipulated – a move described as “the modern day version of bank robbery”.

    FSA investigators are seeking emails sent to traders that are thought to have prompted widespread selling of HBOS shares. They claimed the bank was experiencing difficulties.

    advertisementIt has emerged that the rumours are thought to have originated in the Far East, with Singapore named as the most likely source. Nick Leeson, the notorious rogue trader responsible for the collapse of Barings Bank, also operated in Singapore.

    In a separate development, Credit Suisse, the investment bank, admitted that it had uncovered a separate £1.4 billion share-dealing scam by rogue traders – many of whom were based in London – who were trying to protect their bonuses.

    The Credit Suisse traders are understood to have sought to cover up their trading losses at the end of last year.

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  • The revelations follow a week of turmoil in the global markets after the near collapse of the American investment bank Bear Stearns.

    Following a meeting with the major banks, it emerged that the Bank of England was considering helping to alleviate the financial crisis by easing the restrictions on banks seeking to borrow money from it.

    The accusations about the hedge fund form the most detailed account yet of the illicit activity carried out by the London office of a major international hedge fund. Such tactics are also thought to be used by other hedge funds.

    The sworn statement containing the allegations is understood to have been sent to the FSA last year although it is not known what action the regulator took.

    The document alleges that:

    – Employees of the hedge fund ordered an American-based private detective to hack into the corporate email systems of two firms in which the hedge fund had an interest

    – A bogus firm — with a phoney internet address — was established to allow employees to pose as independent researchers and approach company executives to garner information on their firms’ future financial prospects. The firm was also used to gain access to industry conferences.

    – A false website — with a bogus address — was also registered to allow hedge fund traders to pose as journalists. The offices of American politicians were approached by people claiming to be journalists to obtain information about potential new laws banning internet gambling that would hit British firms.

    – Jurors and their families in a sensitive legal case into whether a firm had exclusive patent rights in which the hedge fund had invested were “tapped up”. Money was allegedly paid to jurors’ families for information about jury-room deliberations.
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    ? – Hedge fund staff gathered “sensitive” negative information on firms in which they had an interest in the share price falling. This information was distributed to leading investment banks whose experts were encouraged to take a dim view of the prospects of the company’s shares. A German “media consultant” was also used to disseminate information.

    – A safe containing large amounts of cash was installed in the hedge fund’s office. Money was paid to “sources” providing valuable inside information. On one occasion, an anonymous informant was paid $50,000.

    The hedge fund at the centre of the allegations has offices in London’s West End and traders spent their staff Christmas party on a luxury cruise.

    It was set up by former senior executives from a blue-chip investment firm. However, from 2005, the “dirty-tricks unit” was staffed by former corporate investigators and investigative journalists hired from newspapers.

    Pressure is growing on the FSA to clamp down on the worst excesses of the hedge fund industry after a series of scandals culminating in the attempt this week to start a run on HBOS.

    The hedge fund “dirty tricks unit” exposed today was set up in London but operated around the world. It is alleged that this was to avoid tougher regulatory controls in New York.

    On Thursday, Britain’s biggest banks met with the Bank of England to urge them to loan more money to help alleviate the impact of the global credit crunch.

    The Bank, which agreed to some of the demands, released another £5?billion for the money markets. The stock market, which dropped slightly, is now closed until Tuesday.

    HBOS shares recovered on Thursday, closing up more than six per cent.

    the audacity of hope

    Visa planning largest IPO in U.S. history

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    Visa planning largest IPO in U.S. history

    By Eric Dash, Tuesday, February 26, 2008, IHT

    Undaunted by recent turbulence in the financial markets, Visa, the biggest credit-card network in the United States, said Monday that it would forge ahead with what would be the largest initial public stock offering in the nation’s history.

    Visa plans to sell as much as $17.1 billion of stock in late March, following in the footsteps of its smaller rival MasterCard, which went public in May 2006.

    Visa and MasterCard are prospering as Americans increasingly flex plastic, rather than use cash, to pay for just about everything. The companies have not been hurt by the credit crunch, because they do not actually make credit-card loans. They merely processes transactions for banks that do.

    If all goes as planned, Visa’s offering would generate a windfall for thousands of its so-called member banks, which own the company. The largest gains would go many of the nation’s biggest banks, which have been stung by losses stemming from mortgage-linked investments.

    “Visa will be able to tell its story, even in an uncertain market, because its story is a good one,” said David Robertson, publisher of The Nilson Report, a payment industry newsletter. “If investors think MasterCard is a good story, Visa looks like the same thing on a bigger scale.”

    Visa plans to sell 406 million Class A shares for $37 to $42 a share, with just over half going to the public and the rest to Visa’s member banks.

    The first $3 billion will be placed into a special account to cover outstanding antitrust and unfair-pricing claims brought by merchants. Visa will use some of the new money to streamline its operations, expand in fast-growing emerging markets and invest in new technology like systems that enable people to make card payments using cellular phones. But the bulk of the capital will end up in the bank’s coffers, from repurchasing stock from them.

    Visa’s member banks can use the extra cash.

    If Visa’s shares are valued at a midpoint price of $39.50, JPMorgan Chase, the company’s largest shareholder, would receive an estimated $1.1 billion for its stake. Bank of America would get about $545 million; National City would get about $380 million; and Citigroup, U.S. Bancorp, and Wells Fargo can each expect around $240 million or more.

    “The credit crunch is pretty cyclical; the prospects for Visa are very strong long-term,” said Marc Abbey, the managing partner of First Annapolis, a consulting firm that works with many banks and payments companies. “I am sure it is convenient for them to have extraordinary gains at the same time they have extraordinary losses.”

    Since going public nearly two years ago, MasterCard have soared 408 percent, closing at $198.45 on Monday. It now has a market value of $26 billion.

    MasterCard’s successful IPO prompted Visa to move forward with owns plans to go public. Since October 2006, Visa has reorganized its sprawling management structure, bringing together all of its global operations with the exception of those in Europe. It has also hired Joseph Saunders, the former head of Providian Financial Corporation, as its chairman and chief executive, giving him a pay package worth $11.1 million in cash for 2007. Upon completion of the IPO, he is expected to receive an additional $11.5 million in stock and options, according to Equilar, a compensation research firm.

    Visa transactions accounted for roughly 66 percent of all credit and debit card purchases in the United States in 2006, compared to about 26 percent for MasterCard, according to The Nilson Report data.

    Growth in card transactions, the foundation of the companies’ businesses , has historically held up well, even when the economy and consumer spending slows.

    “If you look back at the last recession, card transactions did not drop ? they took a dip in growth, but they didn’t fall below prior year,” Robertson said.

    “There is no reason to think that growth in the United States is going to sink Visa’s boat,” he said. “Whatever lackluster growth in the U.S. should certainly be matched and exceeded by what occurs outside the U.S.”

    The prospectus for the sale lays out a convoluted capital structure, with four classes of shares, including three which go to the banks. But the deal, which is underwritten by JPMorgan and Goldman Sachs, also raises potential conflicts for the banks underwriting the shares.

    Both institutions have strong ties to the financial services industry. But JPMorgan is Visa’s largest shareholder and largest customer. It is a member of the bank syndicate that agreed to lend $3 billion to the company. And it could reap more than 1.1 billion in proceeds from the IPO

    Goldman, meanwhile, will serve as the “qualified independent underwriter” in setting the price of the offering, according to public filings. Its independence is not deemed in question even though Suzanne Nora Johnson, a Visa director, used to be a vice chairman of Goldman Sachs.

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