Daily Archives: February 22, 2009

Will NYC drag down Greenwich?

Barron’s thinks NYC luxury homes will drop another 50%. They got hit later than Greenwich did but Greenwich got hit after much of the rest of the country. Greenwich and New York have a ways to go still. If New Yorkers don’t feel rich, they may not buy weekend homes here in Greenwich. Worse, if they have to sell their city property to buy a primary residence here and they get only half of what their property was worth a year ago, guess what will happen to their concept of what’s affordable housing out here among the deer ticks? Ouch.

UPDATE: Or maybe 60%.


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Is the US going to drag down Eastern Europe?

The EPA is getting set to draft and then impose regulations on CO2.

Carol Browner, special adviser to the president on climate change and energy, said in an interview Sunday that the EPA is looking at a 2007 Supreme Court ruling that requires the agency to determine whether carbon dioxide endangers public health or welfare. And the agency “will make an endangerment finding,” she said.

“The next step is a notice of proposed rule making” for new regulations on carbon-dioxide emissions, said Ms. Browner, speaking on the sidelines of the National Governors Association meeting in Washington.

Officially recognizing that carbon dioxide is a danger to the public would require the government, under the Clean Air Act, to draw up regulations governing greenhouse-gas emissions from coal-fired power plants, refineries, chemical plants, cement firms, vehicles and any other emitting sectors.

Administration officials have said they would limit regulation to facilities over a certain size. But legal experts say designating carbon dioxide a public danger could open up any emitters to legal challenge. The U.S. Chamber of Commerce and the National Association of Manufacturers have been lobbying the EPA for months against trying to regulate greenhouse gases under the Clean Air Act, warning that such action would lead to costly new regulations affecting not only coal plants and large manufacturers but also schools, apartment buildings and hospitals.

“Once carbon dioxide is regulated, they can no longer contain the Clean Air Act…and it would completely shut the country down,” said William Kovacs, a chamber vice president.

It will certainly be a lawyers full employment act and every NIMBY in the country should rejoice because they can now prevent anything being built, anywhere. There are people determined to destroy the United States and this should do it.

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Is Eastern Europe going to drag down the west?

That’s what some people fear. If Poland et als fail, western European banks will get sucked into the vortex and there’s nothing available to bail them out. That wouldn’t be a lot of fun for anyone, including those of us over on this side of the Atlantic. My, things are getting interesting.

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Remember those black helicopter nut cases and their rants about “a new world order”?

Even paranoids and stopped clocks are right occasionally. Europe wants the IMF to run the world’s financial system and we’re considering going along. Well why not? We’re going to subject our economy to a world order of environmental global warming dictators, what’s the point of trying to retain our hegemony over what’s left of our banking system? I can’t see why the UN wouldn’t do a fine job of running our country since its members have only our best interests at heart.

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What? You can’t sue Walter Noel? Blame Chris Dodd

Jane Bryant Quinn’s article that I discussed last week reappears in the Washington Post today. While she doesn’t completely rule out recovery against Walt Noel and other feeder funds who channeled your money to Bernie Madoff, she does outline the significant hurdles placed in the way of defrauded investors by a securities law passed in a decade ago.

The securities laws may be your worst enemy if you lost money in the Madoff scam. Investors are suing the feeder funds that channeled their money to Bernard Madoff, accusing the feeders of fraud, negligence or breach of fiduciary duty. On the surface, the cases sound like slam dunks.

They’re not. Congress and the courts have spent more than a decade writing and affirming laws that protect companies from irate investors. Those laws may turn out to be feeder fund protection acts.

For investors who lost money, the problems begin with the federal Private Securities Litigation Reform Act (PSLRA), passed in 1995. 

So who passed this law? Republicans, of course, helped it along because they see their job as helping their friends on Wall Street. But guess who sponsored it in the Senate? None other than that Champion of the Little People, the Scourge of Wall Street, Nutmeg Stater and Irish property owner, Christopher Dodd. Here’s Wikipedia:

Legislative History

The PSLRA was enacted into law by the U.S. Congress over a veto by President Bill Clinton. The U.S. House of Representatives approved the bill by a 319-100 margin, and the U.S. Senate approved it 68-30. Every Republican in the House voted in favor of the legislation, and only four Republicans in the Senate voted against it: William CohenJohn McCainRichard Shelby, and Arlen Specter. Prominent liberals in the Democratic Party like senators Tom HarkinTed KennedyClaiborne Pell, and Carol Moseley Braun voted in favor of the legislation while many conservative-to-moderate Democrats such as senators John Breaux,Robert ByrdFritz Hollings, and Sam Nunn and representatives such as John Murtha and Gene Taylor voted against it. Both the current Senate majority leader, Harry Reid, and the current Speaker of the House,Nancy Pelosi, voted for the bill. This event was one of two times during Bill Clinton’s entire two terms in office that Congress successfully overrode one of his 37 presidential vetoes to enact a bill into law.

The PSLRA was originally developed as part of Newt Gingrich‘s Contract With America. Its principal authors in the House were Representatives Thomas BlileyJack Fields and Chris Cox. Senators Chris Dodd andPete Domenici sponsored the legislation in the Senate.


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Dodd and his pardon

Chris Dodd opposed, in the most passionate terms, granting immunity to telephone companies who helped the government eavesdrop on terrorists

And opposed any pardon for Scooter Libby

But found it in his heart to forgive the man who was a campaign contributor and co-owner of the Magic Irish Cottage which Dodd was to shortly buy out for peanuts. Speaking on behalf of that generous friend, Edward Downe Jr., Dodd wrote a letter to Clinton that enabled his friend and financial benefactor escape the consequences of his actions.

Dodd Helped Friend Secure Presidential Pardon 
                By DAVID LIGHTMAN 
                The Hartford Courant, February 24, 2001

                WASHINGTON – Sen. Christopher J. Dodd personally wrote 
                President Clinton a two-page letter requesting a pardon for 
                Edward Downe Jr. of New York, who pleaded guilty in 1993 
                to violating tax and securities laws. Clinton granted the full 
                and unconditional pardon last month.

                Downe, a former director of the Bear Stearns investment 
                firm, was also accused by the Securities and Exchange 
                Commission of providing inside information to friends and 
                family in the late 1980s, an effort that, according to the SEC, 
                allowed them to amass $13 million in profits. Dodd, who was 
                present at Downe’s sentencing hearing in 1993, is an old 
                friend. “They’ve known each other for 20 years,” said Dodd 
                spokesman Marvin Fast. “He’s a very good friend.”

                Downe was sentenced to three years’ probation and 
                community service for the federal violations. In 1994 he 
                agreed with the SEC to pay back $11 million. He did not 
                admit or deny guilt.

                Dodd once headed the Senate’s Securities Subcommittee, 
                which oversees securities matters. Fast insisted there was 
                no connection. “He has paid his debt to society,” he said of 
                Downe. “Sen. Dodd has said there’s not a sinner without a 
                future or a saint without a past.”

                In his letter to Clinton, the senator, who initiated the pardon 
                request, said he and Downe speak nearly every day.

                “Ed made a mistake a couple of years ago, for which he has 
                accepted full responsibility,” Dodd wrote. “Over the years, 
                Ed has expressed to me, his family and his friends his deep 
                remorse for his actions.”

                What has particularly moved him, Dodd added, was that 
                although Downe’s community service obligation ended long 
                ago, “because he found the experience so rewarding, Ed has 
                continued to teach and assist students as a volunteer.”

                Downe’s service consisted of teaching mostly minority 
                students at the Brooklyn campus of Long Island University. 
                “The example of Ed’s private goodness is extensive,” Dodd 
                said, “but they all share one thing in common – they were all 
                done quietly to help people, average people in need.”

                Downe was a frequent contributor to Democratic campaigns, 
                usually in $1,000 chunks. He gave Hillary Rodham Clinton 
                $1,000 and Vice President Al Gore $1,000 in 1999, and gave 
                Dodd $2,000 in 1995.

                Downe could not be reached for comment, but SEC officials 
                told USA Today last week that they were not notified about 
                the pardon. Fast said it went through proper channels, and 
                Dodd did not speak personally to President Clinton about the 

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Dodd and Criminals


When prosecutors filed insider-trading charges against a group of prominent New York socialites on June 4, the news shocked the Long Island enclave of Southampton. There, the government contends, in a mansion on Ox Pasture Road, Edward R. Downe Jr. swapped inside corporate information with at least six friends. During parties, over poker, and on yachting excursions in the late 1980s, Downe allegedly provided this inner circle with stock tips that enabled the group to reap more than $23 million in profits. Downe has pleaded guilty to related criminal charges, while retired Kidde Chairman Fred R. Sullivan settled civil charges of giving Downe a takeover tip. Sullivan agreed to pay $58,000 in penalties.

Clinton pardoned the man on his last day in office.

In the case of Marc Rich, a fugitive billionaire indicted on tax evasion and other charges, the prosecutors were not consulted at all. Mr. Clinton pardoned Mr. Rich, whose ex-wife, Denise, has been a benefactor of Democrats, including Mrs. Clinton. Ms. Rich wrote to the president asking for the pardon.

Ms. White’s office learned last Friday that Mr. Clinton would pardon Edward R. Downe Jr., a onetime socialite and investor who gave $1,000 to Mrs. Clinton’s campaign and was invited to a state dinner at the White House last year. By that time, it was too late for the office to weigh in against Mr. Downe, according to a government official.

Three United States senators supported the application, the official said, declining to identify them.

Mr. Downe pleaded guilty in the early 1990’s to insider trading and was sentenced to probation and stiff fines. He has also been a contributor to other Democrats. In a telephone interview, Mr. Downe declined to say whom he had enlisted in his bid for a pardon. ”I think that it is wonderful to have, and it will make my grandchildren very happy,” he said.

We now know that Chris Dodd was one of those unidentified Democrats and that he bought out Downe’s share of the infamous Irish cottage for a below-market price shortly thereafter. I’m sure Downe’s grandchildren understood this tit-for-tat and probably don’t resent the Connecticut senators’ theft of their patrimony. After all, Pop Pop did get pardoned and was spared paying an $11 million fine. What’s the value of a bog cottage compared to that?

Update: in 2006, Downey joined the board of the Thomas J. Dodd Research Center at UConn. I don’t know what a board seat sells for but I’m sure Chris was delighetd to receive the proceeds in honor of his disgraced father.

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This is the man Chris Dodd got pardoned

As Clinton pardons went, this one wasn’t so bad. I mean, Edward R. Downe, Jr. wasn’t a PR terrorist and didn’t kill anyone, for heaven’s sake – at least he didn’t do that. He did trade on inside information and, even though he was Henry Ford II’s son-in-law and a director of Bear Stearnes and probably didn’t need the money, pocketed $23 million. I guess those types never can have too much money and Chris Dodd must agree because when the SEC demanded that Downe return fifty cents on the dollar of what he’d stolen Dodd got a pardon for his friend in the waning days of the Cliton administration. Oh! And a nice house in Ireland. Sounds like a deal to me.

From the New York Times (1992)

After a four-year investigation, the Securities and Exchange Commission filed insider trading charges yesterday against seven corporate executives and investors, including Edward R. Downe Jr., a former director of Bear, Stearns & Company and the husband of the automobile heiress Charlotte Ford.

Also charged were Martin E. Revson, co-founder of the Revlon cosmetics empire; Steven A. Greenberg, a New York public relations executive; Milton Weinger, a broker at Oppenheimer & Company; Thomas Warde, a Los Angeles real estate investor, and David Salamone, a foreign businessman last located in London. In addition, Fred R. Sullivan, former chairman of Kidde Inc. and a director of numerous public companies, including the Tyler Corporation, was accused of providing confidential information to Mr. Downe.

The agency charged that from at least 1987 through 1989 Mr. Downe conspired with Mr. Greenberg “to exploit their access” to inside information to generate at least $23 million in illegal profits for themselves, their family and their friends. Hours after the S.E.C. civil complaint was filed, Mr. Downe, 62 years old, appeared in Federal District Court in Manhattan to plead guilty to two related criminal charges, brought by the United States Attorney’s Office in New York. Insider Trading Tenacious

The S.E.C. case, besides being one of the most important brought in recent years by the New York office, illustrates just how tenacious the problem of insider trading is on Wall Street. The trades cited by the S.E.C. took place in the midst of other highly visible insider-trading investigations — cases that supposedly had put the financial community on notice that regulators and prosecutors were ready to pounce on such activity. The S.E.C. case also offered clues to previously unexplained stock price movements. [ Page D1. ]

Mr. Downe, as a consequence of pleading guilty to one charge of conspiracy and another of failing to disclose securities purchases he made as a director, faces a maximum five-year prison term and $250,000 fine on each charge. In addition, the S.E.C. is seeking to recover at least $23 million in asserted insider profits from the defendants, including $8 million from Mr. Downe, and fines of up to three times the total profits reaped by the defendants and others with whom they shared information.

But lawyers said that the related case brought against Mr. Downe by the United States Attorney was especially significant because it reflected a new approach by the Government, relying on a section of the securities code that had not figured in earlier Federal prosecutions. This strategy, Government lawyers said, may ease the prosecutors’ burden of proof.

People in the legal community said yesterday that the Government was aware of a number of others, some with celebrity status, who have supposedly participated in the scheme. They said the criminal investigation was continuing.

“This is a classic — and very significant — insider trading case,” said Richard Walker, the New York regional S.E.C. administrator, after the charges were filed yesterday. “Obviously, the commission hopes that by bringing cases like this, we can send the message that this is something we simply will not tolerate.”

The SEC won’t tolerate it but Chris Dodd will. Until now, of course. Now Dodd is a champion of “the little people” and is going to run roughshod over Wall Street crooks. Nice conversion, Chris.

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Sotheby’s of Greenwich

In addition to passing around Xeroxed copies of last week’s New York Post article on unsold spec houses in Greenwich (with the enemy’s name – that would be me – highlighted), I understand that Sotheby’s is instructing its agents to use 2004 prices as a price benchmark – sort of, “2009 is the new 2004”. I think the company is (a) wasting energy worrying about me and (b) over-optimistic in where it thinks current values are, but what I really want to know is whether they’ve informed their listing clients of this new reality. Judging from the asking prices of their inventory I wouldn’t think they had, but perhaps the sellers just aren’t listening.


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Good and bad news for Greenwich?

As prices drop in Massachusetts, more desirable towns hold value.

Such is the fate of communities that grew in demand and stature when traditional tony suburbs became increasingly unaffordable and the high waters of the housing market washed westward. With the economy rapidly retrenching, the real estate markets in these communities founder, while the Wellesleys and Westons of Massachusetts resemble islands of safety.

“For a long time, inventory was so low, builders would build houses in other towns, and these would sell, always priced a little less than the blue-chip towns,” said Concord real estate agent Brigitte Senkler, who has worked in the area for more than 20 years. “But nowadays, people would rather invest in a stable town, even if the price is more. They’re concerned if they buy elsewhere, prices will deteriorate.”

Just compare Weston and Wayland. In ultrarich Weston, the median sales price of a single-family home sold last year climbed 7.5 percent, to $1.3 million. In neighboring Wayland, home prices dropped a whopping 20 percent, to a median of $505,000.

Jeff Morgenstern, a Coldwell Banker manager in Wayland, said a soft real estate climate is making Weston, Wellesley, and Newton more accessible. Ironically, the result is a concentration of demand that has pushed some home prices up in those communities.

“The market in Wellesley and Newton becoming so overpriced is what created the million-dollar market in Wayland,” he said. “Now it’s easier to buy in those places, so people give less consideration to the high-end in Wayland.”

Other agents noted that in a market like this, the neighboring communities suffer in comparison to the blue-chip towns: The school systems suddenly don’t look as strong, the underdeveloped town centers less inviting.

That’s encouraging for Greenwich but this development may give spec builders heartburn:

What is selling in Wayland, however, are mid- and lower-price homes. That could suggest a kind of ripple effect underway: As more upper-income home shoppers find the Westons more affordable, middle-income buyers find the Waylands of Massachusetts are finally accessible to them. Wayland, after all, is still a beautiful quintessential New England town and its schools enjoy a strong reputation.

But what suffers in this demographic market shift are the high-end homes, particularly new construction.

I continue to believe that we have so many high-end spec houses that, when they fall to banks and are sold for peanuts, they’ll drag down everything else. But sellers who are looking for a ray of hope to cling to may find some comfort in this article. Be my guest.


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Chris Dodd and his Irish Cottage – finally!!

I’ve been ranting about this particular piece of dirt about our awful Senator ever since I heard about it but, not being a real reporter, could do nothing about it but yell and scream. Today, the Hartford Courant does what newspapers do best – report the facts. Here’s what the Chairman of the Senate Banking Committee has been up to overseas.

In 1993, Dodd’s close friend, New York bon vivant Edward R. Downe Jr., got a heaping helping of justice when his insider trader scheme caused him to plead guilty to violating tax and securities laws. Downe, who lived at exclusive 25 Sutton Place on the Upper East Side with his then wife, heiress Charlotte Ford, was nabbed setting up foreign accounts to make illegal insider stock trades for himself and some socialite friends. Dodd attended Downe’s sentencing, where the schemer received three years’ probation and 3,000 hours of community service. Downe agreed a year later to pay $11 million to the SEC. 

While Downe fought the SEC in 1994 about paying the penalty, Dodd and William Kessinger of Kansas City, Mo., whom Dodd knew through Downe, purchased a house and nearly 10 acres (4 hectares in local parlance) on the island of Inishnee in the affluent Roundtree section of Connemara, in County Galway, Ireland, for $160,000. 

Kessinger and Downe have a history as business partners in a Missourireal estate investment company.

Dodd, who says he contributed $12,000 to the purchase price, owned one-third of the house, Kessinger two-thirds. They purchased the property with a two-year mortgage from the seller of the property that was, according to Dodd’s Senate financial disclosures for both 1994 and 1995, between $100,001 and $250,000. 

The Irish land registry isn’t open to the public in the manner of the American system. It probably appeared unlikely that anyone would discover the curious appearance of Downe’s nearly illegible signature as the witness to Kessinger’s signing the official transfer document. Downe, convicted, on probation and banned for life from the securities business, described himself as “private investor” on the document and included his New York address. 

When Downe agreed to pay $11 million to the SEC in 1994, he claimed he was virtually bankrupt. Six months later, he made $2,000 in contributions to Dodd, again listing his occupation as “private investor.” Must be a lot of loose change in the cushions at 25 Sutton Place, even in a “bankrupt” pauper’s grand apartment. 

In 1996, the Irish mortgage needed to be paid, and it was. A new mortgage was obtained, according to Dodd, for the same amount. He has reported collecting rent in ranges from $201 to $15,000 on his Senate ethics filings, though the names of the people who rented are not disclosed. Through 2001, Dodd declared his interest in the Irish property as worth between $50,001 and $100,000. 

In 2001, Dodd did the favor of a lifetime for his pal, Downe. The veteran senator circumvented the normal Department of Justice vetting process and got Downe a full pardon from President Bill Clinton on his last day in office. Dodd initiated the pardon request and included in his two-page letter to Clinton the tidbit that he speaks to Downe nearly every day. 

Between 1994 and 2004, according to the Central Bank of Ireland, prices of existing homes (as opposed to new ones) nearly quadrupled. But not according to a 2002 bank appraisal that Dodd used in the purchase of Kessinger’s interest.

That year, a year after Dodd obtained a pardon for Downe, Dodd purchased Kessinger’s two-thirds interest in the Irish hideaway for only $127,000, according to Dodd. Irish property records obtained for this story show it as $122,351. That was slightly more than its value eight eventful years before, but much less than what might have been expected given the explosion of Irish real estate prices.

So late night pardons, undervalued property deals and non-disclosure. Sounds like our Dodd, alright. Now if someone will look into that financing, that is rumored to involve Fannie Mae funds (illegal to export out of the country), Dodd will have still more questions to refuse to answer.

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