Unloading Toxic Waste Mortgage Backed Securities: “We Americans Were Very Clever”
November 2nd, 2007We’ll see how clever they are when the Good Fellas show up to collect.
At some point, this thing is going to start looking less like a financial crisis and more like a mob war.
How do I know?
Because I got a job that resulted from a decapitation strike against the computer systems of a wholly owned subsidiary of a Wall Street firm that was heavily involved with generating subprime loans and selling the resulting mortgage backed securities.
I haven’t talked about this before in public, but a core Cryptogon contributor wondered if the organizations that wound up with the toxic waste paper would eventually attempt to settle the score in a less than pleasant manner, if you know what I mean…
I wrote a candid response to him because I’ve wanted to tell this story many times, but was afraid to do it here on Cryptogon. After reading about this smug prick, Lawrence Lindsey, in the GATA piece below, I decided to share with all of you what I’ve seen happen to some other smug pricks who thought they were very clever too.
This was my private response to the Cryptogon reader-contributor. I’ve edited the message just slightly for length and readability:
I can’t post this publicly.
You’ve probably figured out by now the name of the firm I’ve been
referring to in the Wall Street Chop Shop piece, and a certain other
post… I’m not explicitly saying it, but people who have been following
this probably get it.
Yes, they even dress like mobsters, and wear the pinky rings.
But here’s a story that I’m afraid to talk about in public.
I and several other IT guys were brought into that company to handle
the aftermath of an attack that was probably undertaken by a “disgruntled
employee.” Well, we were lead to believe that it was a disgruntled
employee. But was it?
Here’s what happened:
At the time, the Mother Ship was content to allow the red headed step
child to run its own systems. As long as the paper got to where it
needed to be at the end of the month, each month, no worries, fuggetaboutit.
Someone compromised this operation at the root level, they understood
the timing and then they launched an attack that literally blew the
support columns out from underneath the entire thing THE DAY BEFORE THE
PAPER DUMP at the end of the month.
I got a call from one of the recruiters I was with on a Saturday. He
told me that this place wanted me to show up on Monday morning.
I asked, “For an interview?”
“No. For work. And they said to bring hip waders and a shovel.”
“Holy shit, what happened?”
“I don’t know but the people I’ve been talking to are panicking. They’re
at the office now (Saturday).” Not an exact quote, but something very
close to that.
Monday morning, bosses were still white faced and panicking. Many people
had been there over the weekend. The place reeked of greasy nerds who’d
been sweating out hundreds of gallons of cheap coffee.
The losses were in the tens of millions of dollars.
Now, here’s the interesting thing.
The firm didn’t call the cops. No state or federal law enforcement were
involved. There was no media coverage of the event at all. Not one story
anywhere. The firm handled the thing internally. They brought in “some
forensics people from New York” to find out who did it. If one of these
people wanted access to something, they didn’t even go to us, the IT
support and operations people. They called the CIO and that guy, always
drunk/hungover, moved like his life was on the line.
We never heard anything about how it wound up, what they found, or what
they did about it. The incident simply became known as, “That thing.”
The firm built a completely separate, parallel network infrastructure
along side the existing one. New cabling, even. New servers, new
routers, new client side systems. Everything new. Two factor
authentication, including hardware based crypto key generators. This
became known as the “clean” network, the Mother Ship’s network. The
existing network became known as the “dirty” side. Money was no object
in terms of this build out. [It is interesting to note that since I wrote this,
a few months ago, the entire operation has been rolled up, all employees fired
and offices vacated. It went down exactly the way I said it would in the
Wall Street Chop Shop piece.]
Anyway, I don’t want to know what “connected” actually means when it
comes to this firm. I can’t begin to imagine what that thing does, off
the books. That’s why I’m not posting this in public.
Obviously, anyone who bought that shit they were selling is going to be
pissed.
Disgruntled employee?
When I was a boy, we called an attack like that, “strategic information
warfare.” Maybe the attackers looked at the Mother Ship’s network and
found that it was too locked down. Someone or something tried to hurt
that firm bad and used the easiest vector to accomplish the most
financial damage. They also committed several federal crimes to do it.
Best,
Kevin
That was a taste of what happened when “very clever” wasn’t clever enough.
Via: GATA:
Lindsey’s charts went into the collateralized debt obligation problem, the asset-backed commercial paper, mortgage-backed securities .. the lot. He said that it will “force banks et al. to mark these products to market (over time) instead of their current practice of marking to model … or to myth.” He wasn’t the least bit worried about how the hedge funds would manage because, as he said, they were very good at looking after themselves.
He appeared delighted that Wall Street had been able to unload hundreds of billions of dollars’ worth of (now toxic) CDOs on the rest of the world, saying that “we Americans were very clever” in doing this.
Research Credit: She Knows Who
Fascinating piece. I can’t figure out why Lindsey decided to come clean at the New Orleans conference and then later with Ed Steer of all people. It looks and smells like one faction of the elites is starting to do battle with another, and this was a shot across the bow.
I read again this morning that the ‘All Clear’ signal has again been issued in regards to the CDO crisis. It seems the worst is behind us now, Damn! if I don’t feel all better now.
Your two pieces regarding your experiences with ‘them’ are very enlightening. I have always figured those at the top were scum, and this just confirms what I think. It seems that scum permeates the entire system from the top in DC and NY all the way down to small FL cities being run by their own petty versions of ‘Boss Hogg’.
It looks this this chapter of the gig is up. Though the show should be fun as the rats first turn on, and then devour each other. I have my popcorn and easy chair at the ready for the show that is sure to come.
Top US analyst hits back after death threats over Citigroup downgrade
I wonder who is giving these threats. I thought this ties in well with the above.
http://business.timesonline.co.uk/tol/business/markets/article2796774.ece