Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Detroit News, the Guardian, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndrewKroll.

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Goldman Trader Fires Back at SEC

| Tue Apr. 27, 2010 6:42 AM PDT

Fabrice Tourre, the Goldman Sachs trader at the heart of the Securities and Exchange Commission's blockbuster lawsuit, will outright reject the SEC's allegations that he misled Goldman clients and committed securities fraud in a 2007 mortgage-related transaction, according to prepared remarks for a Senate hearing on Tuesday. The SEC's suit alleges that Tourre and Goldman let a hedge fund trader betting heavily against the mortgage markets, John Paulson, pick the bonds underlying a complex product peddled by Goldman called a synthetic collateralized debt obligation (CDO). More importantly, the suit says Tourre failed to disclose to the CDO's two investors—an American institutional investor named ACA and German bank IKB—that Paulson had picked the bonds, which were of such poor quality that they were essentially rigged to fail. (The SEC said 83 percent of the bonds in the deal had been downgraded six months later by rating agencies, and 99 percent had been downgraded a year later.)

Testifying before the Senate investigations subcommittee Tuesday, Tourre will reject the notion that Paulson, who made $3.7 billion in 2007 by betting against the housing market, picked the bonds. Instead, Tourre will say Paulson had input, but that ACA "ultimately analyzed and approved every security in the deal." He adds, "ACA had sole authority to decide what securities would be referenced in the transaction, and it does not dispute that point... If ACA was confused about Paulson's role in the transaction, it had every opportunity to clarify the issue."

Tourre, set to face a barrage of questions during Tuesday's hearing, concludes his remarks by defending himself in the deal, one of several dozen deals called Abacus. "I wish to repeat—I did not mislead IKB or ACA, two of the most sophisticated investors in these products in the world," he will say.

 

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Finance Reform: Dem Concessions Next?

| Tue Apr. 27, 2010 2:30 AM PDT

After Senate Republicans killed the Democrats' first attempt to begin debating financial reform, members of both parties now head back to closed-door negotiations in an effort to bridge the differences between the Ds, nearly all of whom support the bill, and the Rs, who mostly don't. Sen. Richard Shelby (R-Ala.), a top GOP player in the battle to rewrite financial regulation, told reporters after Monday's cloture vote that he looked forward to a few more days of talks in order to reach some kind of bipartisan agreement. In the days ahead, both parties are going to "try to put that bill together," Shelby said.

In the same breath, though, the affable Alabaman said he wanted to see more concessions from the Democrats. "What I would like to do is reach an agreement on three big sections," he said. He didn't elaborate on what those three "big" sections were, but it's likely Shelby meant resolution authority (how future regulators wind down and euthanize failing big banks without bailing them out); a new consumer protection agency (GOPers and Dems have clashed over the agency's power to write new rules); and, potentially, new oversight of derivatives (the financial products that let manufacturers and utility companies hedge risk but allow financial firms to gamble on the markets). A second cloture vote is likely to happen later on Tuesday. Are Democrats poised to concede more ground to Republicans on a bill some experts say is already miles from ideal?

Senate GOP Blocks Finance Vote

| Mon Apr. 26, 2010 3:58 PM PDT

Senate Republicans this evening successfully prevented an open debate on a bill that would overhaul how Wall Street and financial markets do business. With a 57-41 vote, the GOP delayed the vote for at least another day; the vote broke down along party lines except for Sen. Ben Nelson (D-Neb.), a centrist Democrat who surprised some by voting against the measure to begin the debate. Here on Capitol Hill, Democrats are expected to schedule another cloture vote soon, even as early as tomorrow, to try to start full debate on financial reform.

In the meantime, talks behind closed doors will continue between Democrats and Republicans in an effort to shape the finance bill in a way that wins over a few Republicans. How far Democrats and Republicans have to go to reach an agreement is unclear. On the one hand, Sen. Richard Shelby (R-Ala.) told reporters earlier today that he felt the bipartisan talks had reached a "tipping point," suggesting that an agreement was near. After the vote, however, Shelby said he still wants to "reach agreement on three big sections," a substantial hurdle for both parties this late in the game given that the Senate has been working on financial reform for almost a year.

Ben Nelson Opposes Finance Debate

| Mon Apr. 26, 2010 2:31 PM PDT

Sen. Ben Nelson (D-Neb.), a centrist Democrat who'd been wavering on financial reform, just cast a "No" on the Senate's cloture vote to start debating a bill that would rewrite the rules of our financial markets. Nelson's vote is likely to kill Senate Democrats' attempts to immediately begin haggling over the bill, largely crafted by Sen. Chris Dodd (D-Conn.) in the banking committee. The Democrats, who lack a supermajority, needed at least one of 41 Senate Republicans to vote "Yes" in order to begin discussions on the Senate floor. Dodd alluded to some disagreement among Senate Democrats last week, as did Sen. Richard Shelby (R-Ala.) today in remarks with reporters. Mother Jones previously reported that Nelson could be among the Democratic hold-outs, given his centrist stance and the fact that he was on a shortlist of lawmakers visited by Treasury Secretary Tim Geithner last week, who has recently met personally with lawmakers on the fence on financial reform.

Nelson's opposition is sure to give Democrats headaches. This winter, the Nebraska senator made headlines for holding up health care reform talks and for trying to secure a provision in the bill benefiting his home state. On financial reform, Nelson had lately backed a provision in the finance bill that exempted companies who've previously traded derivatives from retroactively posting collateral on their existing derivatives trades, the Wall Street Journal reported. The exemption was supported by Warren Buffett, the billionaire Nebraska business guru who feared that without it, his company, Berkshire Hathaway, would lose a substantial amount of money. However, the exemption was killed earlier today, the Journal reported, signaling a major setback for Nelson and Buffett. The removal of that small provision could have prompted Nelson to vote against cloture this evening.

The votes are still being tallied on the Senate floor for the cloture vote, but without agreement on the Democratic side, the effort is likely to fail.

Corker: "Very Good Chance" on Wall St. Bill

| Mon Apr. 26, 2010 1:20 PM PDT

Sen. Bob Corker (R-Tenn.), a top GOP negotiator on the Senate's financial reform bill, says the odds for a bipartisan bill are "still very, very good." In remarks to reporters today, Corker, who spent weeks this winter as the top GOP negotiator alongside Sen. Chris Dodd (D-Conn.), added that while no agreement between the two parties had been reached—and that differences remained within the parties as well—he was still optimistic about passing a financial reform bill with bipartisan support.

Asked about reports of an alternative GOP financial reform bill, Corker seemed to scoff at the idea, saying he was "not sure about that" and hadn't seen the bill yet. The day's financial-related happenings will come to a head around 5 pm, when the full Senate has a cloture vote (a vote to begin debate on the bill). Democrats and Republicans have spent much of the day in closed-door negotiations trying to resolve differences on the bill. Those disagreements concern parts of the bill on unwinding too-big-to-fail banks and regulating derivatives, the complex financial products that amplified the housing meltdown and spread losses throughout the global economy. But there haven't been any breakthroughs reported yet, setting the stage for a party line vote this evening in which 59 Democrats are anticipated to vote for beginning debate and 41 Republicans will block that debate.

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