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Archive for December 1st, 2010
Are The Banks Insolvent? Fair Question, Given This….
December 1st, 2010 | 
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I’ve been going through The Fed’s “data dump” that the WSJ has linked and made “easier” for us.
And I’ve got lots of questions.
Let’s, for example, look at “Bank of Amer NA”, otherwise known as BAC.
They used the TAF a lot. Here’s a snapshot:
Pay particular attention to that pink column I highlighted.
Why?
Well, BAC borrowed $15 billion an awful lot. Maybe the same $15 billion.
Look at the face value of what they posted as collateral.
$127 billion – or in one case $185 billion – to borrow $15 billion?
What was being posted there – that’s a more than 90% haircut!
That’s a fairly clear declaration by The Fed that these “Assets” were worth no more than $15 billion, right? After all, that’s all they got credit for when posting their collateral.
Ok, two immediate questions:
- What was that, and at what value was that carried on their balance sheet at the time?
- Where is it now and what value is it being carried at TODAY on their balance sheet?
Ah, Kemosabe, now we get to a problem, don’t we? See, if BAC had to borrow $15 billion, why would they post collateral at that sort of haircut? Further, that’s a God-Awful loss embedded in those instruments that’s being assumed by the NY Fed and BOG and we damn well ought to know through their quarterly reports where that presumed loss of value went and where it was.
There’s a problem of course – BAC never reported that sort of loss any time during this “crisis.” That leaves me with the question as to where these so-called “assets” are now, what they’re marked at, and whether we’re still dealing with massive and outrageously bogus “marks” – that is, claims of value – in these securities!
By the way, they’re not alone. Barclays has a bunch of these transactions with big haircuts too. So does Goldman, with several TSLF transactions that show $2 billion borrowed and $25 billion+ of notional value of alleged “collateral” deposited.
Then there’s Wells, which has a nice single-page output that looks like this:
Have a look and take a gander. And don’t keep your investigation to the above – try to find just ONE large institution that had all of its collateral postings valued at, say, 80 cents on the dollar or better.
Best of luck.
Remember, the claim was that all of these “facilities” were liquidity operations.
The Fed told us explicitly – many times – that it was taking “good collateral” to back up these loans and that it was quite confident it would not lose any money.
That, it turns out, was true.
What we were not told is that the “collateral” they took was so bad that it was in some cases valued at TEN CENTS on the dollar or less, and in each of these cases it leaves open the question as to where is that collateral now, having been returned to the bank, what is it actually worth, and how is it being carried on the books – because what we do know from the bank’s financial reporting is that it most-certainly was NOT written off.
There’s more than enough here in these tables to call for a massive forensic investigation into the accounting practices of each and every one of these institutions as the fact that FRBNY valued this “collateral” at such a tiny fraction of it’s claimed value by the submitting institution leads to an immediate question as to how one squares that valuation with the values reported by the banks in their quarterly and annual reports, and whether they were at the time, or are today, in point of fact, at anything approaching actual valuations, insolvent.
We the people deserve both answers AND HONEST ACCOUNTING.
Posted in Banks, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud | 
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Dylan Ratigan: Money for Nothing
Posted in Banks, Chris Whalen, Corruption, Debt, Dylan Ratigan, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Money |
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Bankers Win: No Capitol Hill Action on Mortgage Foreclosure Protection for Two Years
From the Huffington Post today:
Stashed away in a draw somewhere on Capitol Hill is a simple piece of legislation that would have done much to stop the mortgage mess, robo-signing, unfair foreclosures, and the growing claims against lenders. But Congress has not touched the Produce the Note Act since it was first introduced in February 2009 — nearly two years ago.
Now, with this session of Congress drawing to an end, the chance of a hearing, consideration or a vote has dropped to just about zero.
Where’s The Note?
Sponsored by Rep. Marcy Kaptur (D-OH), the legislation would require lenders in a foreclosure situation to identify the actual owner of the mortgage note, the originating mortgage lender and all subsequent loan owners. In other words, in the same way a title search is used to assure that property owners actually have the right to sell a house, the Kaptur bill would require lenders to show they have title to a loan before they can foreclose — a requirement which is supposed to already be part of every foreclosure claim.
This should not be a big deal. After all, we plainly know who originated the mortgage — that would be the lender who sat with you at closing and collected a fee for their work.
And if the loan was sold then surely someone, somewhere has a record showing the date of sale and the purchase price each time the loan was sold and re-sold. After all, we know who owns 100 shares of IBM no matter how many times it has been traded.
Or maybe not. There was, after all, the New Jersey mortgage broker who allegedly took in $11 million by repeatedly selling the same loans to Wall Street.
Posted in Banks, Corruption, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud, Government, Marcy Kaptur |
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Federal Reserve Made $9 Trillion In Emergency Overnight Loans
– The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday.
Well, except for the public was told that this would be limited to $700 Billion, remember?
Sen. Bernie Sanders, the Vermont independent who had authored the provision of the financial reform law that required Wednesday’s disclosure, called the data that was released incredible and jaw-dropping.
“The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution,” Sanders said.
I’d call it more than ‘jawdropping’ – I’d call it theft.
Posted in Bailout, Bank of America, Banks, Bear Stearns, Citigroup, Economic Crisis, Economy, Federal Reserve, Financial System, Goldman Sachs, Merrill Lynch, Money, Morgan Stanley |
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From The Deficit Commission Conference Today
The issue is here:
All this so-called “growth” is false and has been “bought” via this expansion of deficits. If it’s not reversed, and reversing it will cause this pump to come off, we will not get to choose when and how we take our medicine – others will choose that for us.
Posted in Debt, Deficit Spending, Deficits, Economic Crisis, Economy, Financial System, GDP, Government, spending |
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Bankruptcy Courts: Foreclosing? Prove It
The foreclosure mess has now entered a new phase, courtesy of the US Bankruptcy courts. The Trustees are forcing institutions to prove “they even have the right to foreclose at all.”
This is a positive development.
In my various writings on the Fraudclosure debacle, I have not suggested we want to see foreclosures of defaulted mortgagees stopped. To the contrary, Foreclosures (done right) are a necessary part of the RE unwind. My position has been very simple; Banks must follow the law, respect property rights and due process. Oh, and not commit perjury or fraud, and if they did, they must suffer criminal prosecution like any other suspected felon.
Here’s Gretchen Morgenson on the latest twist in this pathetic sage:
“The United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts, is taking a different view. The unit is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.
In both cases, Donald F. Walton, the United States trustee for the region, has intervened, filing motions contending that the banks trying to foreclose have not shown they have the right to do so.
The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.”
This is progress.
Now if we only can get some criminal indictments for the robo-signer/fraud/perjury lawyers, bankers, and loan servicers, we will be making progress.
Posted in Bankruptcy, Banks, Debt, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud |
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