FedUpUSA

Archive for the ‘Banking industry’ Category

The Banks Are Still Scamming

It never ends, does it?

More than half of the derivatives- trading business of Goldman Sachs Group Inc. (GS), Morgan Stanley and three other large banks could fall largely outside the Dodd- Frank Act if they succeed in lobbying regulators to exempt their overseas operations, government records show.

The debate over the reach of Dodd-Frank has been among the most contentious aspects of the regulatory overhaul enacted by President Barack Obama after the 2008 credit crisis. The banks have met with regulators, testified to Congress and filed dozens of letters contending that they will suffer a competitive disadvantage if the regulations apply to their foreign arms.

Bluntly: “F” ‘em.

There’s a simple solution to this problem — if you want to do business with a United States banking license, you will bring all operations worldwide under US laws.

If you don’t want to do that then leave.  Some other enterprising entity will then take the business from you, since you won’t be able to run securities in the US at all.

Our market is plenty large to attract entrepreneurs (if not existing smaller banks) to fill the vacuum.  The premise that being the largest campaign contributors to both parties should give the banks the ability to effective buy regulators is nonsense — our nation’s response to this, whether from OWS, the “Tea Party” or simply from the American people, should be one giant middle finger and the jingling of a pair of handcuffs for those who want to continue to press the issue.

I’ve had enough of this crap and you should have as well.

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[Bernanke's Office]

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BTW, did you catch Banzai7 on Today’s Keiser Report? Watch the bit about Timmah and Fatso…”It’s war, btut we have the Art…”

And now for a brief public service announcement:

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ZeroHedge

The Biggest Financial Deception of the Decade

By Jeff Clark

01/12/10 Stowe, Vermont – Enron? Bear Stearns? Bernie Madoff? They’re all big stories about big losses and have hurt a lot of employees and investors. But none come close to getting my vote for the decade’s most dastardly deception…

First came Enron, with $65.5 billion in assets, going belly-up and becoming the largest bankruptcy in US history at that time. The stock went from a high of $84.63 in December 2000 to a whopping 26¢ one year later. And what had we been told by the media? Fortune magazine dubbed Enron “America’s Most Innovative Company” for six consecutive years.

Next came WorldCom filing for bankruptcy in 2002, their assets of $103.9 billion dwarfing Enron’s. Tyco, Adelphia, Peregrine Systems…also made headlines for their acts of fraud and mismanagement.

A few years later, Bear Stearns set us all up for the Big Meltdown of 2008. It was B.S. (no, I mean Bear Stearns) that pioneered the asset-backed securities markets, and we all know how that turned out. Later we learned that as losses mounted in 2006 and 2007, the company was actually adding to its exposure of mortgage-backed assets. With net equity of $11.1 billion supporting $395 billion in assets, Bear leveraged itself up to an astonishing 35-to-1.

And during it all, Bear Stearns was recognized as the “Most Admired” securities firm in a survey by Fortune magazine (there’s that Lower Manhattan tabloid darling again). Frequent sightings of company executives on country club fairways assured the public that all was well. And CEO Alan Schwartz told us there was “no liquidity crisis for the firm” and insisted he “had the numbers to back it up.” His company was sold four days later to JPMorgan Chase at $10 per share, a 92% loss from its $133.20 high.

Lehman Brothers, the 158-year-old investment bank, was next and still today holds the title as the largest bankruptcy in US history. L.B. succumbed to 2007’s Word of the Year, “subprime,” and its $600 billion in assets all went poof! In just the first half of 2008, before the meltdown, Lehman’s stock slid 73%.

And what did CEO Dick Fuld tell us in April of that year? “I will hurt the shorts, and that is my goal.” He must have been referring to the attire of his tennis club buddies, because the ones who actually got hurt were numerous other banks, money market funds, institutions, hedge funds, REITs, brokers, private and public trusts, foundations, government agencies, foreign governments, employees, and investors.

Moving on to the largest US government bailout recipient by far, AIG’s troubles spawned my favorite placard of the decade: seen outside their Manhattan offices stood a sign that simply read, “Jump!” Maybe its creator heard what I did from AIG’s financial products head Joseph Cassano: “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these [credit default swap] transactions.”

Oops!

Topping off our list of the infamous debacles of the decade is Bernie Made-off (er, Madoff), who scammed $65 billion over 20 years from unsuspecting institutions and wealthy investors…

By now you are probably wondering… What’s bigger than all these debacles? He’s covered the major frauds and scams of the past decade – what could possibly be left?

To quote my favorite sleuth, Hercule Poirot, “When all the facts are laid before me, the solution becomes inevitable.”

Here are a few clues…

Federal Reserve Chairman Ben Bernanke said on July 16, 2008, that Fannie Mae and Freddie Mac are “adequately capitalized” and “in no danger of failing.” Then-Secretary Treasurer Henry Paulson declared on August 10, 2008, “We have no plans to insert money into either of those two institutions.”

– Both Fannie and Freddie were nationalized 28 days later, on September 8, 2008.

Ben Bernanke claimed on February 28, 2008, “Among the largest banks, the capital ratios remain good and I don’t expect any serious problems of that sort among the large, internationally active banks…” Henry Paulson added on July 20, 2008, that “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

– Since the recession started in December, 2008, 144 banks have failed.

Paulson informed us on April 20, 2007, that “All the signs I look at show the housing market is at or near the bottom.”

– The number of foreclosures skyrocketed shortly thereafter and will now any day surpass those during the Great Depression.

Ben Bernanke announced on June 20, 2007, that “[The sub prime fallout] will not affect the economy overall.”

– Less than one year later, the stock market crashed, losing 53% of its value, and is still down 25% despite one of the biggest bounces in history.

Those in charge of our country’s finances not only failed to see the crises developing and then bungled the handling of the recovery, they’ve deliberately misled us about what they’re doing to our currency. In spite of emphatic promises, flowery speeches, pat-on-the-back assurances, and continual reassurances, here’s what they’ve actually done to the dollar:

• Since September 1, 2008, the monetary base has ballooned from $908 billion to $2.0 trillion. The current monetary base is now equal to bailing out General Motors 23 times.

• Bailout funds in 2008 and 2009 total $8.1 trillion. That’s almost 78 WorldComs. It’s over 123 Enrons.

• US debt has risen sharply, from $6.2 trillion in 2002 to $12.1 trillion today. That’s over $39,000 per citizen.

• David Walker, the comptroller general of the Government Accountability Office from 1998-2008, warned that the US is on the hook for $60 trillion in unfunded liabilities. Independent analysts peg the figure at near twice that. Whatever the number, it is incomprehensibly large. The only way we will meet these liabilities is to print the money and inflate them away.

We’re bailing out corporations that should fail, making financial promises we can’t keep, and adding layers of debt we can’t possibly repay. And the real killer is, if we don’t have the cash, we just print it. It is, by any reasonable account, the “blunder that will plunder” the next several generations. It is changing America permanently, and the problems will persist long after you and I are laid to rest.

Bottom line: after all the bailout programs, housing initiatives, rescue efforts, stimulus schemes, bank takeovers, wars, unemployment benefit extensions, and numerous other promises, the biggest financial deception of the decade is what the US government is doing to the dollar. Nothing else even comes close.

This reckless activity has spooked our foreign creditors, weakened our global standing, diluted our currency, is punishing savers and retirees, and ultimately sets us up for a level of inflation this country has never seen before.

Yet, what is the guardian of our economy and money telling us now?

“Will the Federal Reserve’s actions to combat the crisis lead to higher inflation down the road? The answer is no; the Federal Reserve is committed to keeping inflation low and will be able to do so. In the near term, elevated unemployment and stable inflation expectations should keep inflation subdued, and indeed, inflation could move lower from here.” (Ben Bernanke, December 7, 2009).

This is pure rubbish. If inflation could be controlled by just thinking stable inflation thoughts, then Ben should be able to grow a full head of hair by just thinking scalp follicle thoughts. This is so ridiculous, it’s insulting.

Government actions make a mockery of their words; what they say and what they do are diametrically opposed. It’s clear that inflation is not a question of “if,” but “when.”

Any level-headed individual has to conclude that there will be a steady – and likely accelerating – decline in the dollar’s purchasing power. It’s inevitable.

The great masses don’t quite understand it yet, but they will. There will be no escape from the cold, hard slap in the face citizens will receive when a high level of inflation arrives. And when it does, it will make a mockery of any opposing viewpoint.

So the question before you is simple: Will you be a prepared survivor for what lies ahead, despite what our government leaders tell us, or will you be a complacent victim of the biggest financial deception of the decade?

For me, there’s only one solution. Don’t kid yourself into thinking a man-made asset will protect your purchasing power. This is the time to be overweight gold and silver. I advise letting them serve their purpose for you.

Regards,

Jeff Clark
for The Daily Reckoning

Hint To Other Nations: Here’s The Bill

Posted by Karl Denninger

For your coddling of the banker cabal, that is.

Yes, that’s my view.  This sort of bluster and bullshit must not stand:

Dutch Finance Minister Wouter Bos would not be drawn into speculation on steps against Iceland. “But this can’t go on forever. We want our money back. We negotiated reasonably.”

Mr. Bos, go perform an indecent act on yourself.

You, along with the rest of the “western world”, were complicit in and willing partners with the criminal banking cabal that ripped off the entire world with their worthless securities.

You “negotiated” for the right to steal even more after you failed to lock up the banksters for their criminal conduct – for intentional concealment and fraud in their “marketing” of these securities to investors worldwide.

You, just as with those here in Washington DC, were fully complicit in the looting of the public that took place over the last decade and more.

YOUR GOVERNMENT has allowed institutions in your nation (and elsewhere) to claim that “debt is output” and that speculation constitutes GDP.  That’s a willful, knowing lie.

Britain is also weighing in with the following threat:

Myners (the British Financial Services Minister) told the BBC that if Iceland voted against the deal, it would cut itself off from the global financial system and from International Monetary Fund aid for its economy, one of the worst hit by the world bank crisis.

‘The Icelandic people, if they were to reach that conclusion, would effectively be saying that Iceland does not want to be part of the international financial system, that Iceland doesn’t want to have access to multi-national, national and bilateral funding and doesn’t want to be regarded as a safe counter-party with whom to do business,’ Myners said.

Mr. Myners, with all due respect (that is, none), may you be fornicated by a stallion.

“The City” has for literal hundreds of years been the hotbed of bankster corruption, greed and fraud.  Your nation is on record (in The Congressional Record no less!) as having sent bankster “representatives” over to this country shortly after it was formed for the explicit purpose of bribing our Congress into being recaptured after you lost the Revolutionary War!

I, for one, am tired of this game of “captured government” and it appears so is Iceland and its people.

It’s about damn time.

You and your ilk had every ability to stop the fraud and looting over the last several decades.  You could have prevented the blowing of your own property bubble and destruction of your federal budget, along with the insane expansion of leverage and “yield seeking” through fraudulent misrepresentation of risk and leverage but you didn’t do so.  Instead you, like the so-called “government regulators” in The United States, knelt before the banking cartels and performed obscene acts so frequently that you wore out sets of kneepads at a rate that kept Home Depot’s profit margins at a record during the decade of the 2000s.  

Now that the bubble has burst you’re whining that you’re going to have to eat the product of your own cooking and willful blindness.

To that I say: Tough crap.

Start locking up the jackasses who did this to the global economy instead of kneeling before Zod for yet more obscenities.  You know who they are.  Just walk down any of your much-vaunted “streets” in “The City” and where you see a $5,000 suit apply a pair of handcuffs.

If you won’t and don’t I predict that it will not be long before the reaction of the Icelandic people spreads – including to the UK.

Whether the people of your country will give you the opportunity to do the right thing when, not if that sentiment spreads is something you may wish to ponder.

PPIP May Have INCREASED the Amount of Some Toxic Assets

Submitted by George Washington

In March, I pointed out that:

PPIP [the Public-Private Investment Program] is a massive wealth transfer from taxpayers to investors and banks, and that Treasury funds are being used to sidestep Congress and their constituents – the American people…

Citigroup, Bank of America and other players are already gaming the program (and see this), which will create unintended consequences.

In April, I noted that the former head of structured products at UBS said that game theory exposes PPIP as fraudulent.

Also in April, I predicted that the PPIP will not substantially reduce the amount of toxic assets in the system.

It’s turned out to be even worse …

PPIP has actually increased the amount of some toxic assets.

As Bloomberg notes this morning, some of the nation’s largest banks have actually bought more risky home loans instead of getting them off their balance sheets.

As Huffington Post puts it:

In other words, the program that was supposed to help banks dispose of these toxic assets instead made those assets so marketable that banks bought more — which has pushed Wall Street’s titans to even greater exposure to the stalled housing market. The banks apparently decided that the government’s entry into the mortgage security market was simply a guaranteed money-making opportunity.

Bloomberg has some choice quotes:

It’s “absolutely ridiculous” that banks, which were expected to reduce their holding of such volatile mortgage securities, bought them before the government program was running and may now profit, said Michael Schlachter, managing director of Wilshire Associates, the Santa Monica, California- based investment-consulting firm. “Some of them created this mess, and they are making a killing undoing it” …
 “Any time the government says, ‘We’re going to buy something in the securities market,’ they’re putting out a sign that says, ‘Free money, come and get it’,” he said.

Well yes . . . isn’t that what looting is all about?

In support of Huffington Post’s call for people to move our money from the giant banks to community banks and credit unions:

• Here is a site which lets you find local credit unions

• Here is a site which rates the safety of banks, thrifts and credit unions

• And here is another site which rates the safety of credit unions

As USA Today pointed out in August 2008:

Credit unions are regulated by the National Credit Union Administration, or NCUA, or by state agencies. The NCUA oversees the safety and soundness of all credit unions.

If you want to check up on your credit union, make sure it’s federally insured by the NCUA and look at its finances, you can do that any time. Go to the NCUA’s website at www.ncua.gov, click on the “Credit Union Data” link on the left-hand side of the page below where it says Data and Services. Next, click on the Find a Credit Union link, type in the credit union’s name and click the Find button.You can then choose to view the Financial Performance Report or the official regulatory document, called the 5300 report. This report will tell you how well capitalized the credit union is and even let you see how many of the loans are going bad.

What about your asset protection? Credit unions are backed by the NCUA, through the NCU Share Insurance Fund, which is backed by the U.S. government. Individual accounts are backed up to $100,000, with additional coverage up to $250,000 for certain retirement accounts. Joint accounts may qualify for coverage of up to $200,000.