Felix Salmon

The first panel at the New Yorker Summit featured Nassim Taleb and Bob Shiller. Shiller was placed, uncomfortably, in the role of defender of the status quo, saying that experts can be useful, that economics is a good thing, and that even the SEC has good people who are actually succeeding in making the world a better place.

Taleb, of course, has no time for such things: he said that economists crashed the economy, and that one shouldn’t give them the opportunity to crash it again. In a nutshell, Taleb says that we have far too much debt: “our level of debt is an indication of our faith in experts”, he said, adding for good measure that “debt creates instability and wars”.

Taleb’s solution is a massive conversion of debt to equity, not only in the corporate world but also in the world of housing. That, he says, “would restart the economy on a solid basis”, and he’s even weirdly hopeful that it wouldn’t make investment banks rich.

Shiller liked that idea, and said that there is a proposal out there that systemically important financial institutions issue regulatory convertible debt, which automatically converts to equity on a regulatory event. Is that related to Steve Waldman’s IACCPE? I think they’re close cousins, in any event, and that more thinking along these lines is a very good idea.

But Taleb goes much further. He said that bank runs are much more dangerous now than they were in 1980, because they’re much more instantaneous, and that therefore even 1980 levels of debt “are intolerable today”:

We have to be a lot more careful going forward, because we have globalization, the internet, and operational efficiency — which cannot accommodate debt.

It’s a compelling story, which has zero chance of being adopted by bankers, regulators, politicians, or CFOs. Taleb’s a very useful person to have around, taking a corner position, but the likes of Shiller and Waldman are better at being more constructive when it comes to sketching out how we can react in the real world.

Malcom Gladwell kicked off this morning’s New Yorker summit with a talk about the causes of the financial crisis in general, and of the collapse of Bear Stearns in particular, and started provocatively, by saying that if his diagnosis of the problem is correct, then really “there aren’t any solutions”.

Gladwell’s diagnosis is simple: massive amounts of overconfidence, as revealed by its two most common symptoms, miscalibration and the illusion of control. Both of which can be seen in spades in the person of Jimmy Cayne, whose interviews with William Cohan for House of Cards show a man who’s really very deluded about what Cohan, and Cohan’s readers, are going to think of him.

More generally, said Gladwell,

What’s going on on Wall Street isn’t the result of experts failing to act as experts: it’s the result of experts acting exactly like experts act. It’s not a result of incompetence, it’s a result of overconfidence.

When we look for evidence of miscalibration in people, he said, we find it overwhelmingly in experts. We find it when people are in conditions of great stress and complexity and competitiveness. And we find it overwhelmingly with older, more experienced people, doing difficult things which they feel very strongly about.

Jimmy Cayne, said Gladwell, is the picture of overconfidence — and he’s quite typical when it comes to heads of Wall Street banks. And so, Gladwell concluded:

Our goal is not to enhance the expertise on Wall Street. Expertise they have in spades. Our goal is to rein in the expertise on Wall Street. Wall Street needs to be slower, less competitive, and a lot more boring.

This is undoubtedly true — the difficult thing, of course, is how to legislate it, in a world where banks are falling over themselves to repay TARP funds and start taking on lots of risk again. Here’s Matthew Richardson and Nouriel Roubini write in the WSJ this morning:

Consider also recent bank risk-taking. The media has recently reported that Citigroup and Bank of America were buying up some of the AAA-tranches of nonprime mortgage-backed securities. Didn’t the government provide insurance on portfolios of $300 billion and $118 billion on the very same stuff for Citi and BofA this past year? These securities are at the heart of the financial crisis and the core of the PPIP. If true, this is egregious behavior — and it’s incredible that there are no restrictions against it.

But if there were restrictions against this behavior in particular, the same banks, or other banks, would find other ways to chase risk, just because they’re so confident that they can make billions of dollars — and get themselves out of their present hole — by doing so. They might even be right: 95% of the time, they probably are right. But that’s the Rubin trade: it works until it doesn’t. And although it’s the easy solution to the problem, it’s also a very worrying solution to the problem, because it just sets up yet another inevitable meltdown at some unknown point in the future.

Goldman arm shuns ratings with new credit strategy: Having an “investment-grade” mandate based on credit ratings is increasingly anachronistic.

How David Beats Goliath: Another classic Gladwell piece.

Schapiro’s FINRA Dumped Debt Early: Ryan Chittum finds a scoop buried in a Bloomberg snorer.

Jim Surowiecki thinks that the rise in the size of the financial sector — at least until this decade — makes perfect sense:

The desire to bring back the boring, small banking industry of the nineteen-fifties is understandable. Unfortunately, the only way to do that would be to bring back the economy of the fifties, too. Banking was boring then because the economy was boring. The financial sector’s most important job is channelling money from investors to businesses that need capital for worthwhile investment. But in the postwar era there wasn’t much need for this…

The corporate world was transformed by revolutionary developments in information technology and by the emergence of new industries like cable television, wireless, and biotechnology. This meant that the economy became, and has remained, far more competitive, while corporate performance became far more volatile. In the nineteen-eighties, companies moved in and out of the Fortune 500 twice as fast as they had in the fifties and sixties. Suddenly, there were lots of new companies with big appetites for outside capital, which they needed in order to keep growing. And it was Wall Street that helped them get it… Thomas Philippon, an economist at N.Y.U., has shown that most of the increase in the size of the financial sector in this period can be accounted for by companies’ need for new capital.

I’m sure it’s true that the economy’s capital-raising needs grew sharply between the 1950s and the 1990s. But why does that mean that the financial sector should have grown commensurately? After all, there was just as much “innovation” going on in finance as there was elsewhere; the technology revolution was in many ways driven by the needs of the financial sector. Wouldn’t you expect, in that case, that financial companies would have become more efficient at intermediating between companies and investors? Shouldn’t it have been much easier and much cheaper to issue a billion-dollar bond in 1998 than it was in 1968?

Famously there was something quite cartel-like during the dot-com boom, when the big investment banks all managed to continue to charge an eye-watering 7% underwriting fee for IPOs despite the fact that most of the companies pretty much sold themselves, and similarly-sized bond issues were coming to market at the same time for underwriting fees of about 0.1% or less. And when the likes of Bill Hambrecht tried to break the big banks’ iron grip on the market, they generally failed pretty miserably.

Even so, one would hope and expect that between sell-side productivity gains and a rise in the sophistication of the buy side, any increase in America’s financing needs would be met without any rise in the percentage of the economy taken up by the financial sector. That it wasn’t is an indication, on its face, that the financial sector in aggregate signally failed to improve at doing its job over the post-war decades — a failure which was then underlined by the excesses of the current decade and the subsequent global economic meltdown.

On this view, the seven-, eight-, and nine-figure salaries pulled down by Wall Street folks aren’t a sign of how efficient they are at doing their jobs, but are rather a sign of how inefficient their companies are. As Ryan Avent says:

When you have a few people taking home billions, that’s a sign of either very good luck or some brilliant new strategy. When you have a lot of people in finance taking home billions, then something has gone badly wrong. Either something unsustainable is building, or there are some serious inefficiencies in the market.

How much do Nigerian email scammers make? According to Jeffrey Robinson, it’s the kind of money which would make a CEO blush:

Investigators in the U.K. who are tracking him note that, since Dec. 1, 2008, Macjon has targeted 13.5 million Americans with the work-at-home e-mail scam. Investigators estimate his success rate at around 0.1%. That’s 13,500 victims from whom he’s stolen as much as $40.5 million.

That’s $40.5 million in 150 days, which works out at about $100 million a year. Nice! But also complete bullshit.

Macjon’s scam is highly elaborate. All such scams involve a long series of emails going back and forth to set things up; this one culminates in forged checks being mailed to the mark’s house to be deposited into his bank account. And Robinson reckons that Macjon is doing this at a rate of 630 people a week? Of course he doesn’t really think that, he’s just happy to pull a random 0.1% number out of thin air and extrapolate it into some multi-million-dollar headline figure.

This is a Barron’s article, not a scholarly paper, so I’m not asking Robinson to provide footnotes. But I am saying that the 0.1% figure doesn’t pass the smell test, and that if Robinson had bothered to ask where it came from, he probably would have been very surprised at how sketchy it really is. Frankly, I don’t have much faith in the “13.5 million” number either, or, for that matter, the implication that the average mark has lost $3,000.

It would be nice, just for once, for dubious numbers such as these to come with some kind of warning sticker attached. But journalists are always loathe to admit that they don’t know everything, and as a result we get ludicrous results like Nigerian email scammers making $100 million a year each. Depressing.

I subscribe to three daily newspapers: the WSJ and NYT get delivered on dead trees to my door, while the FT gets delivered electronically to my Kindle, ever since I got given the Amazon reader for my birthday last month. I also read all three on the web. But when it comes to off-web weekday reading, the Kindle is trouncing the dead trees, at least in terms of the amount of my attention it’s getting. It’s much smaller and lighter and more convenient than a newspaper — it’s easy to dip into on the subway or in other pockets of dead time.

With a larger Kindle coming this week designed specifically for newspapers, I share a certain amount of hope that newspapers will be able to take full advantage of this new medium. On my wishlist: that the paper is updated more than just once a day; that the Kindle subscription can be bundled with paper and online subscriptions; that a mechanism can be found to easily email stories to oneself or to friends; and that there be some way of searching a newspaper for a story without having to try and work out which “issue” of the newspaper that story appeared in.

As for the Kindle more generally, my number-one gripe is its draconian whitelist policy when it comes to emailed books. At the moment, I can give you my kindle email address, and you can send me your book in electronic form, but that won’t do any good unless and until I add your email address to my whitelist. If you’re not on my whitelist, you don’t get a bounce message saying that the book wasn’t received, and I don’t have any ability to retrieve your book from some kind of spam filter. Instead, it just disappears. Once I add your email to my whitelist, any books you sent me before I added your email still won’t arrive.

The Kindle is a great way of sending books to journalists, who tend to have desks and bookshelves piled up with unsolicited books they’ll never lug around with them and read . On the other hand, if they’re easily accessible on the Kindle, they’re much more likely to be read. What’s more, if you email an unprotected PDF file to my kindle address, I can’t copy it or email it to anybody else: the book is perfectly secure that way. But because I have no way of turning Amazon’s whitelist feature off, you can’t just send me that book, because it’ll never arrive. With luck Amazon will fix this problem soon, and the publishing industry generally will start spending a lot less time and money sending out physical books to people who don’t want them and didn’t request them.

Trying to do a stress test on a trillion-dollar bank is such a major undertaking that it can’t really be kept completely secret. So it’s hardly surprising that some stress-test results seem to be leaking:

Citi, which has already been bailed out three times by the authorities, could need an extra $10bn or more if the economy worsens. BofA, which has had $45bn in government aid, was found to need well in excess of $10bn, people familiar with the matter said.

Regional lenders Wells Fargo and PNC Financial were also among the banks that would need to raise more capital unless they could persuade the authorities their findings were wrong, said people close to the situation.

But it’s a bit rash to take anything to do with the stress tests, including this report, at face value. A couple of questions spring to mind:

• Stress test results are material non-public information, so who would be so foolish as to leak these things — especially when the leaks seem to be coordinated in a tactical manner? (The WSJ and the NYT had almost identical stories on Saturday saying that Citi would need to raise $10 billion, both citing completely anonymous sources.)
• Why is Bank of America now officially denying the FT story? How can it possibly be a good idea to deny that you’re looking at ways to raise capital, especially when you don’t have the official results of the stress test yet, and there’s a good chance that you will have to raise capital after all?

There’s clearly a huge amount of pretty agitated negotiations going on just out of view right now, in a game where we, the newspaper-reading public, only get to see a few ripples on the surface. The newspaper stories might be a way for Treasury to “anchor” expectations: now that the $10 billion number is ingrained in the public mind, the banks will know that anything much lower than that will seem insufficient, and therefore it’s now easier to persuade them that they have to raise that sort of money. Alternatively, there could be another explanation entirely. With no indication in the newspaper stories as to who is leaking these stories and why, it’s best to take them all with a very large grain of salt.

Joe Weisenthal is upset that the UAW seems to be getting the upper hand over hedge funds and vulture investors:

If we’re thinking about the future, we’d much rather ensure that the notion of bondholder seniority and the rule of law is preserved rather than ensuring that institutions of industrial workers known as unions are preserved.

I could go on at some length about how unions really are necessary to the continued survival of the Detroit auto industry, even if they haven’t been used at Japanese-owned car factories in southern states. But really it’s easier to just quote TED:

Here’s a clue for the novices in the room: It’s called politics, you fucking morons. Stop being such a bunch of whiny pansies.

The holdouts didn’t sway the Obama administration, and it doesn’t look like they’re going to have much more luck in bankruptcy court, either: holders of fully 90% of Chrysler’s bonds are now on board with the government’s deal. It’s over. You lost. Move on.

Yvette Kantrow has been combing Tim Geithner’s datebook, from his New York Fed days, not for meetings with bankers but rather for meetings with journalists. And it turns out that there were a lot of them, the vast majority completely off the record. Kantrow concludes:

The Times’ page 1 opus on April 27, co-written by lunchmate Morgenson, faulted Geithner for being too close and clubby with the financiers he was supposedly monitoring. But looking at his schedule, you can just as easily argue that the media was too close and clubby with him. And a club it was.

Most readers of the press I think are unaware of just how much off-the-record schmoozing of journalists goes on at the very highest levels of government. Geithner was by no means exceptional in this respect: if you’re a senior editor at a major news publication, you can expect regular meetings with VIPs up to and including heads of state, substantially all of them off the record.

The journalists are excited and flattered by all this attention, which amounts to capture of key opinion-formers by the very people being covered. (The VIPs wouldn’t do it if it didn’t work.) But of course no FOIA request will ever uncover the list of officials invited to lunch with the NYT editorial board, and the NYT itself keeps such information very close to its chest.

There’s a lot of complaining about “anonymice” in the media — people who are quoted but not named. My feeling is that if the war on anonymous sources continues, we’ll just see even more of this kind of thing: regular meetings with journalists which result in no direct quotations or attribution at all. Which would not be much of an improvement.

Today (or Friday, May 1 itself) is a bank holiday in most of Europe to celebrate May Day, a slightly more explicitly socialist version of America’s Labor Day. And it happens with unions increasingly involved in strategic business decisions around the world: the UAW is soon going to control Chrysler and have a very large stake in GM; the German autoworkers effectively have a veto over whether Fiat’s Sergio Marchionne can fulfill his ambition of creating an intercontinental automaker spanning Italy, Germany, the US, and Latin America; and the outcome of tense negotiations with its biggest union will determine whether or not Boston still has its own daily newspaper come next week.

I’m happy that the pendulum is swinging back towards labor and away from capital, after having swung far too far in the direction of the plutocrats. But the pendulum carries a poison tip: as the world sinks deeper into the worst global recession in living memory, unions are going to have to be much less antagonistic and much more helpful and strategic if they’re going to preserve the long-term sustainability of their industries.

What are the chances of that happening? It probably varies from industry to industry; when it comes to autos, it’s almost unthinkable that the UAW could manage things more disastrously than the people who have been in charge until now. But unions in general, and large, powerful unions in particular, tend to be lumbering and conservative beasts at the best of times; there’s precious little evidence these elephants can dance, either alone or in concert with the likes of Marchionne. Governments can try their best to chivvy things along, but ultimately it’s going to have to be up to the unions’ membership and leadership to recognize that radical internal change is required to turn things around. I’m not hopeful.

Mike at Rortybomb might start by quoting Barry Eichengreen at length. But before long he’s going freestyle:

It’s like Fischer Black was Kool Herc and Myron Scholes was Afrika Bambaataa, and they’d all go plug in their computers into lamp posts and do martingale representations in the streets and at house parties. And, of course, it was all ruined in 1979 when it went commercial.

Which raises the highly important question: who’s the Grandmaster Flash of the quant world? And who’s Vanilla Ice?

In traditional journalism, you publish what you know for sure as quickly as you can while being assiduous about maintaining accuracy at all times. In financial markets, traders run with rumors and gut feelings and outright guesses on a regular basis, on the basis that they’ll change their mind (or, more to the point, their position) if they turn out to be wrong. And one of the reasons why traders like blogs — and why many journalists don’t like blogs — is that blogs tend to me more traderish than traditional journalism: they’ll run with stuff before it’s nailed down, without checking it, in the full knowledge that it might be wrong. How far they go in that direction depends entirely on the blog, which is one reason why blog readers need to be critical readers: you can’t read a blog and simply know, based on the reputation of the parent institution, that you can trust it implicitly.

For instance: this afternoon, a meme took hold in the blogosphere, started by Zero Hedge, and picked up by the likes of Clusterstock, that there had been some kind of unconscionable bullying of Chrysler holdouts by the White House. Wonderfully, the blog entries caused some real reporting from Dealbook, which got on-the-record denials of any such bullying from both sides. The denials don’t mean that negotiations never got heated at any point of course, but they do mean, I think, that the charges of fascism are maybe a bit overblown.

Blogs can also be sloppy: Clusterstock’s Henry Blodget, for instance, in asking for banks’ senior creditors to be part of any recapitalization by converting their debt to equity, says this:

The best way would have been to seize the banks and restructure them. Since Geithner has opted against the route, however, the next best way would be to convert unsecured bank debt to equity, not just the taxpayers’ preferred stock (the taxpayers’ preferred stock should have been senior to all the bondholders, but that’s spilt milk at this point).

But this just makes no sense: if the taxpayers’ preferred stock had been senior to all the bondholders, it wouldn’t have been preferred stock at all: it would have been a liability of the banks, not equity, and would have done no good whatsoever. You can’t make a borderline-solvent bank healthy by increasing its liabilities, only by decreasing them.

While I’m at it, I should also explain why Blodget’s broader argument is also flawed. He writes, of the plan to convert preferred stock to equity:

The banks will still have the same amount of crap assets on their balance sheets, and they’ll have no more capital available to absorb these losses when they hit. The only thing that will change is that the taxpayer will now get hit first as these losses flow through, instead of getting hit second, as is the case now.

But that’s a huge change, because when common stock holders get hit first, the banks can continue to operate quite happily. If a bank ever reaches the point at which its preferred stock holders get hit, on the other hand, it will pretty much automatically get taken over by the FDIC or otherwise cease to exist in its former form. So converting preferred stock to common really does strengthen a bank and make it more likely to be able to survive future asset write-downs.

Still, I’d much rather read inflammatory or even just plain wrong stuff on blogs than have to wade through execrable nonsense like Vanessa O’Connell’s 2,700-word article on discount shopping in the WSJ magazine. She’s great at (under)stating the bleeding obvious:

According to America’s Research Group, shoppers now view 70 percent off as a great sale, versus the 40-to-50-percent discounts of the past. At the 70 percent level, it’s extremely hard for traditional retailers to make a profit.

But more seriously, she’s also great at blithely parroting numbers without any indication of what they mean:

With carefully managed flash sales of top designer names—from Marc Jacobs to Missoni—it has amassed one million members within 18 months of launching, and the company says it’s on track to multiply its annual revenue to about $80 million, up from less than $7 million.

“On track”, of course, can mean anything — or nothing. If the company wants to give the WSJ its sales numbers, it should give the WSJ its sales numbers. If it doesn’t want to give out those numbers, that’s also fine. But if it doesn’t give out its sales numbers, the WSJ shouldn’t treat it as though it has revealed something interesting or important all the same. Especially when the journalist goes on to contradict herself on much less important numbers pertaining to the company later on in the piece:

Once you are invited to join the online sample sales at Gilt Groupe, get ready. To work up excitement, Gilt blasts an 11:50 a.m. email to its massive member list, with images of some of the designer clothes, shoes and accessories that will be offered at the noon sale time. At 11:59 a.m., there are typically somewhere between 30,000 and 50,000 people on the site, waiting for the clock to tick. Most of the merchandise sells out within the hour…

By 11 p.m., more than half of the women’s styles that went on sale at noon are generally sold out.

So, how long does it take for most of the inventory to be sold? One hour, or eleven? Did O’Connell, or her editors, bother to check? It seems not — despite the luxury of long lead times on the magazine.

The problem here, of course, is that because the piece is appearing in a fluffy lifestyle magazine, rather than in the newspaper proper, no one particularly cares about the content — it’s mainly just there to look glossy and help sell watches. Which is never going to be much of an issue on a blog. If you’re reading something on a blog, it’s not because it was commissioned as a high-concept way of filling the feature well, but rather because someone genuinely has something to say and wants to communicate it. You might need to approach with skepticism — but you should do that with all journalism, not just blogs. And if you’re reading critically, you can generally get much more insight from blogs than you can from carefully-circumscribed journalism. They might sometimes be wrong — but at least they’re provocative, interesting, and useful. Which is more than can be said for just about anything in the WSJ magazine.

Journalism can be fantastically good, of course — as can blogging. But when it’s bad, journalism, even in a well-respected publication, can be just painful — more so than just about anything you’re likely to find on a reasonably-respected blog.

Jason Zweig has some very nice things to say about the executive-compensation scheme at Alleghany Corp in his column this week. He talked to the CEO, who didn’t do very well at all last year:

Alleghany pays its long-term incentive awards as “performance shares” that go up or down with the market. Last year, when the stock fell 28%, “the value of my total compensation was negative,” Mr. Hicks says, “as it should have been, since the shareholders didn’t make anything.”

Wow, negative compensation? That’s some clawback! Instead of the company paying Mr Hicks, it seems, Mr Hicks had to end up writing a check to the company. How much did he have to pay? I thought I’d check out Alleghany’s proxy statement to find out.

What did I find? A salary of $1 million in 2008, a bonus of $1.275 million, a stock award of $4.158 million, and various other bits and pieces which add up to total 2008 compensation of $8,223,698. Yes, that’s positive compensation: money paid by the company to its CEO.

So no, Mr Hicks, the value of your total compensation last year was not negative, it was positive. Compensation is how much the company pays you, and if you’re going to talk about negative compensation, then you had better be paying the company. Maybe what you’re talking about is the change in value of your “performance shares” — I daresay they were worth less at the end of 2008 than they were at its beginning. But you still received a very hefty paycheck for doing your job: something over $150,000 per week.

I’m quite stunned that Zweig not only failed to challenge Hicks’s statement, but even put it in his column with no indication that it might be false. I would love to see a company which really did require its CEO to pay back money received in prior years if suddenly everything fell apart. But Alleghany is not that company, no matter what its CEO says.

Joe Weisenthal asks a how I can believe that bankruptcy is a good thing for Chrysler, and yet at the same time rail against the very hedge funds which drove Chrysler into bankruptcy. Quite easily, is the answer, so long as the creditors don’t get what they’re looking for out of the bankruptcy process. And although it’s very early days yet, I do have faith that the bankruptcy court will tell the creditors to take a hike if they try to demand much more than what the Obama administration was offering them.

The key thing to note is that the government already has the biggest senior creditors — the big banks — on its side. Which means that getting a supermajority of bondholders to agree to force the hold-outs to take the government’s offer might not be too difficult. Bloomberg explains:

Chrysler’s dissident lenders have on their side the “absolute priority” bankruptcy rule, which holds that value must be distributed according to the legal priorities of the stakeholders…

The absolute priority rule is regularly modified in bankruptcy court, said Richard Hahn, co-chairman of the bankruptcy practice at Debevoise & Plimpton LLP, a New York law firm that isn’t involved in the Chrysler negotiations. Two- thirds of the lenders can force the holdouts to go along with them in a procedure called a cram-down.

“The U.S. bankruptcy code foresees the possibility that it may be necessary to vary from absolute priority, in particular when a two-thirds majority is convinced it makes legal or business sense,” Hahn said. “If the government has consents from 70 percent, that’s more than enough” to give equity to junior creditors.

(Thanks to Nate for the pointer to the article.)

As for bankruptcy, most of the downside has already happened, with the firm’s sales down a whopping 48% in April. And Chrysler’s CEO, for one, has very much changed his tune on that issue:

BARTIROMO: Bob, the last time we spoke, you said to me, `Look, it’s a death knell if we go bankrupt because nobody is going to buy a car from a bankrupt company.’ Now you’re filing Chapter 11. What’s changed?

Mr. NARDELLI: Well, let me say this, Maria. Boy, I tell you, if I was ever wrong about something, I’m tickled to death I was wrong about that.

Of course, there’s probably a sense in which Nardelli has to say this. But still. I think this issue has been batted around the media enough by now that Americans are aware of the government warranty backstop, they’re aware that bankruptcy doesn’t mean the same thing as going out of business, and they’re even aware that if you buy a Chrysler going forwards, you’re going to be buying a car from a company 55% owned by its own workers. So the optics of bankruptcy are improving, it gives the company lots of much-needed flexibility on the dealership front, and it’s unlikely that the hold-out creditors will get what they want. So thank you, hedge funds, for forcing this move. I hope — and believe — you won’t get what you want out of it.

HOUSTON, April 30 (Reuters) – Allen Stanford, the Texas billionaire facing civil fraud charges, attempted to turn himself in at the federal courthouse in Houston on Thursday but was turned away because there is no warrant for his arrest, his lawyer said.

Remember, this is a man who still claims that he’s innocent. If you’re innocent, and there’s no warrant out for your arrest, what on earth are you doing trying to turn yourself in?

(Via Alea)