Look out Housing Bubble Creators! Here comes the FBI!

What a wild ride in the markets today. Everything looked just peachy for the bulls today until rising oil reared its ugly head late in the day.

Lehman can breath a sigh of relief. They have now officially made it to Friday! Congrats! Lets shoot for the weekend now boys! The blame game now begun at Lehman with a series of firings:

"June 12 (Bloomberg) -- Lehman Brothers Holdings Inc. replaced Chief Financial Officer Erin Callan and President Joseph Gregory after the firm failed to quell speculation about mounting losses and stem a 65 percent plunge in the stock this year.

Callan, 42, who has been Lehman's public face in television appearances and magazine profiles since she was promoted to CFO six months ago, will return to the firm's investment banking unit and be succeeded by co-chief administrative officer Ian Lowitt. Herbert ``Bart'' McDade, the 48-year-old head of the equities business worldwide, will replace Gregory, the New York-based firm said today in a statement."

Quick Take:

Lehman's stock was down again today despite the announcement that they finalized their capital raising and shook up the management team. The price action on this stock tells you they are in serious trouble.

I am guessing they either go boom ,or get bought out at a Bear Stearns like price by the a large bank or a group of pigmen aka Long Term Capital. I can't see the Fed bailing this one out.

We might be calling this the Wall St. stick save. Remember folks, they have a vested interest in not letting Lehman go under because all of them have so much counter party risk to Lehman. They also fear that it might cause a panic and/or run on the bank. Time will tell. Interesting to say the least.

Here comes the FBI!

I tell you what. I wouldn't want to be a realtor, appraiser, mortgage broker or builder right now. There is a good chance some of them are going to end up in a jail cell sharing a room with a Crip or a Blood.

Here is the FBI news from Bloomberg:

"June 12 (Bloomberg) -- The U.S. Federal Bureau of Investigation, confronting a surge in mortgage fraud, has ordered more than two dozen of its field offices to stop probing some financial crimes so agents can focus on the subprime crisis.

Kenneth Kaiser, chief of the bureau's criminal investigative division, issued the directive late last week on a video conference call with the heads of 26 offices in areas where mortgage crime is rampant, said Bill Carter, an FBI spokesman in Washington.

Carter said the shift was made after an analysis of how agents are spending their time. The FBI traditionally has moved investigators to address urgent needs, he said. About 150 agents were working on more than 1,300 mortgage cases before the change.

``If you're seeing a significant crime problem, you have to move resources,'' Carter said yesterday. ``We've got a big problem with mortgage fraud.''


My Take:

All I can say is its about damn time. This was the biggest fraud I have ever seen. All of these housing bubble blower uppers were in cahoots with one another.

The realtors would call the appraiser and asks for a little help on the price, and would then threaten to take their business elswhere if he didn't come up with the right number.

The mortgage lenders would put lifetime renters people in loans at high interest rates knowing they could never pay them back. Greed makes you do crazy things.

The ratings agencies are just as guilty as far as I am concerned. They knew better when they rated these CDO's as AAA debt.

You already know my thoughts on the pigmen regarding their role in blowing up this bubble.

Anyone with a finance degree realized there were going to be defaults in subprime on a massive scale. The problem was the pigmen were paying them to rate the debt instead of the buyer of debt. Conflict of interest anyone?

Of course the agencies just went along with it and put some lipstick on that CDO pig and passed it on to investors all over the world.

When you create a ponzi scheme that forced $400 billion in losses and counting, you should expect to be prosecuted. Millions have been foreclosed on and thrown out of their homes. Millions more are in deep trouble. It will take years for many to recover.

26 offices is a lot of FBI agents. I would be shaking in my boots if I was one of the larger players in this scheme. I hope they throw the book at these scumbags. I feel safer buying a car right now than buying a house.

Angelo Mozillo better get out of that tanning booth and head to Mexico! There is someone from the FBI that might want to speak with him. Maybe he could be cell mates with an Enron Executive.

It would be a fitting ending.