SAN FRANCISCO, CA — I had an existential “Occupy” moment last Friday.
While walking to a meeting in San Francisco’s Financial District, I passed near a big demonstration in front of Wells Fargo Bank’s California Street Headquarters. I knew something was up when I saw police were congregating three blocks away.
Then, as I got closer, I heard the chants. “Foreclose the banks,” “Move Your Accounts.”
They were organized and peaceful. The north side of normally busy California Street was blocked off, including the popular California Street cable car line. Many carried signs, all the same, and printed. It was an enthusiastic and orderly demonstration.
I went to my meeting, two doors down from the demonstration. I was early. So I picked up a magazine, the main newsletter for professional financial planners, “Investment News.”
I read the first article about a poll in which over 50 percent of generally conservative financial planners supported the basic core protest of the Occupy WS movement.
But here’s where it got interesting. Another article had this headline. “Best Short EVER! Ends up Costing Citicorp $285M.”
It told how Citicorp, Inc. agreed to pay $285 million for betting that a $ 1 billion mortgage investment that they sold to investors, would fail. What’s worse is that Citicorp helped pick half the mortgages they bet against and failed to tell the investors. This describes it graphically. On the day the transaction closed, an experienced trader wrote in an email that the portfolio was “dog sh*it” and “possibly the best short EVER!”
So, as I’m reading this I say to myself, the demonstrators outside got it right — more than they could imagine. It wasn’t just the foreclosures, bailouts and high executive salaries. Some financial institutions made huge profits bundling the bad mortgages and selling them to investors, then betting that the bundle would lose value.
It wasn’t just Citicorp, Inc. The article also noted that giant Goldman Sachs Group, Inc. agreed in July 2010 to pay an astounding $550 million to resolve claims that it failed to tell investors in a mortgage-backed investment that a hedge fund was betting against and help select the underlying assets. JPMorgan Chase & Co. agreed in June to pay $153.6 million to resolve similar claims. (There is no evidence that Wells Fargo Bank participated in this shorting scheme.)
After the meeting, I was heading out the door. The demonstration was gone. Not a trace, no trash, or signs or police.
But I passed a woman a block away. She was smiling, and carrying one of the signs over her shoulder. She wasn’t a student. She was elderly; looked like a grandmother.
I had the article in my coat pocket. A minute or two later, I decided that I would try to catch up to her and give her the article. But she was gone.
I regretted missing her. I wanted her to know that after reading the article, my contempt had amped up for those institutions that profited from homeowners losing their homes, while making hundreds of millions of dollars betting against the bad mortgages. I wanted her to know I had greater respect for her and the others protesting the behavior of many of America’s well known financial institutions who have profited handsomely over the last three years.
It was my existential experience of the Occupy movement. They had reached me — an independent conservative. I was angry then, and am now.