Listen to Catherine Austin Fitts in this video from 2008:
A U.S. Customs and Border Protection agent inspects a vehicle heading into the U.S. at the San Ysidro border crossing in San Diego.(Bloomberg)
Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.
They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.
The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.
This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.
The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.
Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.
Since 2006, more than 22,000 people have been killed in drug-related battles that have raged mostly along the 2,000-mile (3,200-kilometer) border that Mexico shares with the U.S. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid- June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.
Rondolfo Torre, the leading candidate for governor in the Mexican border state of Tamaulipas, was gunned down yesterday, less than a week before elections in which violence related to drug trafficking was a central issue.
Mexican President Felipe Calderon vowed to crush the drug cartels when he took office in December 2006, and he’s since deployed 45,000 troops to fight the cartels. They’ve had little success.
Among the dead are police, soldiers, journalists and ordinary citizens. The U.S. has pledged Mexico $1.1 billion in the past two years to aid in the fight against narcotics cartels.
In May, President Barack Obama said he’d send 1,200 National Guard troops, adding to the 17,400 agents on the U.S. side of the border to help stem drug traffic and illegal immigration.
Behind the carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans. The cartels have built a network of dealers in 231 U.S. cities from coast to coast, taking in about $39 billion in sales annually, according to the Justice Department.
‘You’re Missing the Point’
Twenty million people in the U.S. regularly use illegal drugs, spurring street crime and wrecking families. Narcotics cost the U.S. economy $215 billion a year — enough to cover health care for 30.9 million Americans — in overburdened courts, prisons and hospitals and lost productivity, the department says.
“It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network.
“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods says.
Cleansing Dirty Cash
Congress looked serious about finance reform – until America’s biggest banks unleashed an army of 2,000 paid lobbyists
(Rolling Stone Magazine) — It’s early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once-indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.
The real shocker is a thing known among Senate insiders as “716.” This section of an amendment would force America’s banking giants to either forgo their access to the public teat they receive through the Federal Reserve’s discount window, or give up the insanely risky, casino-style bets they’ve been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street’s most lucrative profit centers: Five of America’s biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan’s trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed. Continue reading »
Tags: Alan Greenspan, Bank of America, Banking, Barack Obama, Ben Bernanke, Citigroup, Congress, Derivatives, Derivatives market, Economy, FDIC, Fed, Federal Reserve, Goldman Sachs, Government, JPMorgan, Law, Lobbyists, Morgan Stanley, Obama administration, Politics, Ron Paul, Senate, Sheila Bair, Timothy Geithner, U.S., Wall Street
March 26 (Bloomberg) — JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.
A government list of previously unidentified “co- conspirators” contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.’s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24. Continue reading »
Timmy-Gate Takes a Turn For The Worse: Did Geithner Help Lehman Hide Accounting Tricks?
By L. Randall Wray
L. Randall Wray, Ph.D. is Professor of Economics at the University of Missouri-Kansas City, Research Director with the Center for Full Employment and Price Stability and Senior Research Scholar at The Levy Economics Institute. His research expertise is in: financial instability, macroeconomics, and full employment policy.
Just when you thought that nothing could stink more than Timothy Geithner’s handling of the AIG bailout, a new report details how Geithner’s New York Fed allowed Lehman Brothers to use an accounting gimmick to hide debt. The report, which runs to 2200 pages, was released by Anton Valukas, the court-appointed examiner. It actually makes the AIG bailout look tame by comparison. It is now crystal clear why Geithner’s Treasury as well as Bernanke’s Fed refuse to allow any light to shine on the massive cover-up underway.
Recall that the New York Fed arranged for AIG to pay one hundred cents on the dollar on bad debts to its counterparties-benefiting Goldman Sachs and a handful of other favored Wall Street firms. (see here) The purported reason is that Geithner so feared any negative repercussions resulting from debt write-downs that he wanted Uncle Sam to make sure that Wall Street banks could not lose on bad bets. Now we find that Geithner’s NYFed supported Lehman’s efforts to conceal the extent of its problems. (see here) Not only did the NYFed fail to blow the whistle on flagrant accounting tricks, it also helped to hide Lehman’s illiquid assets on the Fed’s balance sheet to make its position look better. Note that the NY Fed had increased its supervision to the point that it was going over Lehman’s books daily; further, it continued to take trash off the books of Lehman right up to the bitter end, helping to perpetuate the fraud that was designed to maintain the pretense that Lehman was not massively insolvent. (see here)
Geithner told Congress that he has never been a regulator. (see here) That is a quite honest assessment of his job performance, although it is completely inaccurate as a description of his duties as President of the NYFed. Apparently, Geithner has never met an accounting gimmick that he does not like, if it appears to improve the reported finances of a Wall Street firm. We will leave to the side his own checkered past as a taxpayer, although one might question the wisdom of appointing someone who is apparently insufficiently skilled to file accurate tax returns to a position as our nation’s chief tax collector. What is far more troubling is that he now heads the Treasury – which means that he is not only responsible for managing two regulatory units (the FDIC and OCC), but also that he has got hold of the government’s purse strings. How many more billions or trillions will he commit to a futile effort to help Wall Street avoid its losses? Continue reading »
Goldman Sachs Demands Collateral It Won’t Dish Out
Lloyd C. Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., speaks during a session on day two of the World Economic Forum in Davos, on Jan. 24, 2008. Photographer: Daniel Acker/Bloomberg
March 15 (Bloomberg) — Goldman Sachs Group Inc. and JPMorgan Chase & Co., two of the biggest traders of over-the- counter derivatives, are exploiting their growing clout in that market to secure cheap funding in addition to billions in revenue from the business.
Both New York-based banks are demanding unequal arrangements with hedge-fund firms, forcing them to post more cash collateral to offset risks on trades while putting up less on their own wagers. At the end of December this imbalance furnished Goldman Sachs with $110 billion, according to a filing. That’s money it can reinvest in higher-yielding assets.
“If you’re seen as a major player and you have a product that people can’t get elsewhere, you have the negotiating power,” said Richard Lindsey, a former director of market regulation at the U.S. Securities and Exchange Commission who ran the prime brokerage unit at Bear Stearns Cos. from 1999 to 2006. “Goldman and a handful of other banks are the places where people can get over-the-counter products today.” Continue reading »
Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash
On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America’s pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman’s role in precipitating the global financial crisis.
The bank had already set aside a tidy $16.2 billion for salaries and bonuses – meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a “bailout tax” on banks. Maybe this wasn’t the right time for Goldman to be throwing its annual Roman bonus orgy.
Not to worry, Blankfein reassured employees. “In a year that proved to have no shortage of story lines,” he said, “I believe very strongly that performance is the ultimate narrative.”
Translation: We made a shitload of money last year because we’re so amazing at our jobs, so fuck all those people who want us to reduce our bonuses.
Goldman wasn’t alone. The nation’s six largest banks – all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry – set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007. In a gesture of self-sacrifice, Blankfein himself took a humiliatingly low bonus of $9 million, less than the 2009 pay of elephantine New York Knicks washout Eddy Curry. But in reality, not much had changed. “What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?” asks Eliot Spitzer, who tried to hold Wall Street accountable during his own ill-fated stint as governor of New York.
Beyond a few such bleats of outrage, however, the huge payout was met, by and large, with a collective sigh of resignation. Because beneath America’s populist veneer, on a more subtle strata of the national psyche, there remains a strong temptation to not really give a shit. The rich, after all, have always made way too much money; what’s the difference if some fat cat in New York pockets $20 million instead of $10 million?
The only reason such apathy exists, however, is because there’s still a widespread misunderstanding of how exactly Wall Street “earns” its money, with emphasis on the quotation marks around “earns.” The question everyone should be asking, as one bailout recipient after another posts massive profits – Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation – is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?
The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients. Continue reading »
Tags: AIG, Alan Greenspan, Bailout, Bank of America, Banking, Bankruptcy, Ben Bernanke, Bonds, Brad Sherman, Bubble, Citigroup, Debt, Economy, FDIC, Fed, Federal Reserve, Goldman Sachs, Government, JPMorgan, Matt Taibbi, Morgan Stanley, Mortgage crisis, Mortgages, Politics, Ponzi schemes, Robert Rubin, Societe Generale, Taxpayers, Timothy Geithner, Treasury, Wall Street
Feb. 3 (Bloomberg) — Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.
Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor’s office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.
The region, also known as Puglia, joins more than 519 Italian municipalities that face 990 million euros in derivatives losses, according to data compiled by the Bank of Italy. In Milan, prosecutors seized assets from four banks including JPMorgan Chase & Co. and UBS AG in April and requested they stand trial for alleged fraud. Hearings started this month.
“Italy, like other countries, is full of these examples,” said Dario Loiacono, a banking lawyer in Milan who isn’t involved in the case. “It’s the result of the unavoidable asymmetry of information between the banks and the municipal borrowers.” Continue reading »
- Abu Dhabi Gets Pressure on Dubai (Wall Street Journal)
- Dubai debt crisis triggers Wall Street sell off (Telegraph)
- Dubai expansion fuelled by years of cheap money (Independent)
Nov. 27 (Bloomberg) — Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.
“One cannot rule out — as a tail risk — a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.
A default would lead to a “sudden stop of capital flows into emerging markets” and be a “major step back” in the recovery from the global financial crisis, they wrote.
“When the people find they can vote themselves money, that will herald the end of the republic.”
- Benjamin Franklin
Added: 22. October 2009
Fall Of The Republic documents how an offshore corporate cartel is bankrupting the US economy by design. Leaders are now declaring that world government has arrived and that the dollar will be replaced by a new global currency.
President Obama has brazenly violated Article 1 Section 9 of the US Constitution by seating himself at the head of United Nations’ Security Council, thus becoming the first US president to chair the world body.
A scientific dictatorship is in its final stages of completion, and laws protecting basic human rights are being abolished worldwide; an iron curtain of high-tech tyranny is now descending over the planet.
A worldwide regime controlled by an unelected corporate elite is implementing a planetary carbon tax system that will dominate all human activity and establish a system of neo-feudal slavery.
Tags: 1984, Abu Ghraib, Afghanistan, Africa, AIG, Alan Grayson, Alan Greenspan, Alex Jones, Bailout, Bank of America, Banking, Barack Obama, Barclays, Bear Stearns, Ben Bernanke, Bill Clinton, Bill of Rights, BIS, Brad Sherman, Bubble, Bush administration, carbon tax, cds, Central Bank, China, Citigroup, Congress, Constitution, Corporations, Corruption, cybersecurity, Debt, Democrats, Dennis Kucinich, Depression, Derivatives, Derivatives market, Detention, Deutsche Bank, Dictatorship, Documentary, Dollar, Economy, EU, Euro, False flag, Fascism, FBI, FDIC, Fed, Federal Reserve, Financial Crisis, First Amendment, Fourth Amendment, Fraud, G20, GDP, George Bush, George Orwell, Gerald Celente, Global News, Global Warming, Goldman Sachs, Gordon Brown, Government, Great Depression, Henry Paulson, Human Rights, Hyperinflation, IMF, Impeachment, Inflation, Internet, Iraq, Jesse Ventura, John Perkins, JPMorgan, Larry Summers, Law, Law enforcement, Lehman Brothers, Lobbyists, Martial Law, Max Keiser, Merrill Lynch, Military, Mind-Control, money supply, Morgan Stanley, Mortgage crisis, Mortgages, NAFTA, Nancy Pelosi, New World Order, NSPD 51, Obama administration, Patriot Act, Paul Volcker, Police State, Politics, Poverty, Privacy, Rahm Emanuel, Raytheon, Republic, Republicans, Rockefeller, Ron Paul, Rothschild, SEC, Second Amendment, Senate, Society, Surveillance, Taxes, Taxpayers, Terrorism, Timothy Geithner, Treason, U.N., U.S., Unemployment, Wall Street, War, warrantless wiretapping program, Wells Fargo, White House, World Bank
Current Numbers Dont Add Up To Recovery
This past week the BLS (Bureau of Labor Statistics) released the September unemployment statistics and they worsened as usual, as America enjoys its recovery.
U-1-Those unemployed 15 weeks or longer, as a percent of the civilian labor force was 5.4%.
U-2-Job losers and persons who completed temporary jobs, as a percent of the labor force was 6.8%.
U-3-Total unemployed, as a percentage of the civilian labor force, the official unemployment rate, 9.8%.
U-4-Discouraged workers 10.2%.
U-5-Total unemployed plus discharged workers, plus marginally attached workers 11.1%.
U-6-Total unemployed as a percent of the civilian labor force 17%.
If the birth/death ratio is removed, U-6 is in reality 21.3% total US unemployment. The estimate is that 824,000, more jobs may be extracted from the payroll count for the 12-months ended next March. Such a revision would be the biggest since 1991. The BLS is underestimating job losses deliberately and has been for a long time. That would mean September’s loss would be some 300,000 not 263,000.
Such a revision would put job losses not at 4.8 million but 5.6 million jobs.
This is how government has operated for some time and will continue to as long as we allow them too.
Tags: Bank of America, Banking, CIT, Citigroup, Debt, Dollar, Economy, Fed, Federal Reserve, Gold, Goldman Sachs, Government, IMF, JPMorgan, M2, Morgan Stanley, Nancy Pelosi, Obama administration, Politics, Silver, Stock Market, Taxes, Taxpayers, Treasury, U.S., Unemployment, Wall Street, Wells Fargo
If people trust the US government and the Federal Reserve, then they are doomed and they deserve it, because they haven’t done they research.
Why would you trust somebody that has been caught lying and stealing almost all of the time?
Why would you trust somebody that has brought down the value of the US dollar to 5 cents compared to 1913, when the Federal Reserve banksters took over?
Why would you trust somebody that has stolen essentially 95% of your money?
Why would you trust somebody that threatens with an economic meltdown if you would take a look into their books?
Senior Officials Had Financial Concerns About Nine Bank Instiutions Receiving TARP Funds
The chief watchdog for the government’s $700 billion bailout program says federal officials were trying to contain the worst financial crisis in decades last year with the Troubled Asset Relief Program, but they had concerns about the bank institutions’ financial health. (ABC News Photo Illustration)
The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, a government watchdog states in a new report released today.
Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), says that despite multiple statements on Oct. 14 of last year that these nine banks were healthy and only receiving government funds for the good of the country’s economy, federal officials knew otherwise.
“Contemporaneous reports and officials’ statements to SIGTARP during this audit indicate that there were concerns about the health of several of the nine institutions at that time and, as detailed in this report, that their overall selection was far more a result of the officials’ belief in their importance to a system that was viewed as being vulnerable to collapse than concerns about their individual health and viability,” Barofsky says.
Last October, the government was in the midst of trying to contain the worst financial crisis in decades. On Sept. 7, 2008, mortgage giants Fannie Mae and Freddie Mac were placed under conservatorship. On Sept. 15, the massive investment bank Lehman Brothers filed for bankruptcy. The next day, insurance giant AIG needed an $85 billion government loan to avoid collapse.
On Oct. 13, after Congress had passed the $700 billion financial bailout program earlier that month, Treasury provided capital injections for nine institutions that together held over $11 trillion in assets: Bank of America, Citigroup, Wells Fargo, JP Morgan Chase, Goldman Sachs, Morgan Stanley, Merrill Lynch, State Street and the Bank of New York Mellon. As of June 2008, these nine banks accounted for around 75 percent of all assets held by U.S. banks.
In announcing the initial $125 billion provided to these banks, former Treasury Secretary Hank Paulson on Oct. 14 said, “These are healthy institutions, and they have taken this step for the good of the U.S. economy. As these healthy institutions increase their capital base, they will be able to increase their funding to U.S. consumers and businesses.”
That same day, the Treasury Department, the Federal Reserve and the FDIC also released a joint statement reiterating that “these healthy institutions are taking these steps to strengthen their own positions and to enhance the overall performance of the US economy.” Continue reading »
Tags: AIG, Bailout, Bank of America, Banking, Citigroup, FDIC, Fed, Federal Reserve, Goldman Sachs, Government, Henry Paulson, JPMorgan, Merrill Lynch, Morgan Stanley, Politics, Taxpayers, Treasury, U.S., Wall Street, Wells Fargo
Related article: Eliot Spitzer: Federal Reserve is a Ponzi scheme, an inside job:
The Federal Reserve – the quasi-autonomous body that controls the US’s money supply – is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.
Is a political scandal brewing in New York? A year and a half after taking over for a disgraced Spitzer, Paterson is now at war with everyone, but most notable the New York State Budget, and now, the President.
Reports the New York Times:
President Obama has sent a request to Gov. David A. Paterson that he withdraw from the New York governor’s race, fearing that Mr. Paterson cannot recover from his dismal political standing, according to two senior administration officials and a New York Democratic operative with direct knowledge of the situation.
The decision to ask Mr. Paterson to step aside was proposed by political advisers to Mr. Obama, but approved by the president himself, one of the administration officials said.
“Is there concern about the situation in New York? Absolutely,” the second administration official said Saturday evening. “Has that concern been conveyed to the governor? Yes.”
The president’s request was conveyed to the Mr. Paterson by Representative Gregory W. Meeks, a Queens Democrat, who has developed a strong relationship with the Obama administration, they said.
Yet Paterson seems unwilling to pull a Perella-Weinberg just yet:
“The message the White House wanted to send – that it wants Paterson to step aside – was delivered,” said the Democratic operative,, who spoke on condition of anonymity because the discussions were intended to be confidential. “He is resistant.”
What is the reason for this escalation? Simple – Bank Of America, and SEC-gate. Throw in some potential race issues, and you have one clusterfuck of a situation about to develop:
Now, Mr. Cuomo effectively has the blessing of the nation’s first black president to run against New York’s first black governor. That will probably neutralize any criticism he may face among the governor’s prominent black allies, including Representative Charles B. Rangel of Harlem, who warned this year that the party would become racially polarized if Mr. Cuomo took on Mr. Paterson.
With Andrew Cuomo now elbow deep in the Merrill bonus investigation, and likely about to file criminal charges against Ken Lewis any minute, what better way to shut him up than to promote him immediately to the post he will obtain sooner or later anyway. If in the meantime, the Faustian bargain between Lewis and Paulson/Bernanke can be retained without Lewis actually going to jail for folding like a lawn chair to threats about his job security by the Chairman, so much the better. As for the simple matter of how and why the President can so blatantly interfere in State affairs, and specifically nudging the direction of popular elections, which ultimately are the domain purely of US citizens, it is likely that nobody will care.
Submitted by Tyler Durden on 09/19/2009
And now the credit card crisis. Who will bailout the US consumers?
“The defaults are a wake-up call for those expecting a V-shaped recovery.”
V-shape recovery? There is no recovery:
NEW YORK (Reuters) – Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks’ consumer lending woes are far from over.
The trend was echoed among most other major credit card issuers, dashing optimism sparked when many banks and specialty finance companies reported lower default rates for July.
- Geithner: Auditing the Federal Reserve is a ‘line that we don’t want to cross’
- Judge: Federal Reserve Must Release Reports on Emergency Bank Loans
- Ben Bernanke warns on auditing the Federal Reserve
- Federal Reserve Refuses to Disclose Recipients of $2 Trillion
These days the TRUTH ‘could’ cause a systemic collapse!
And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg’s lawsuit is allowed to proceed unchallenged, let alone if any of the “Audit The Fed” measures are actually implemented.
As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.
In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.
The Clearing House submits this declaration because the Court’s Order threatens to impair the ability of our members to access emergency funds through the New York Fed’s Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.
Our members have accessed the New York Fed’s Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank’s financial condition – even completely unfounded rumors – have caused competitive harm, including bank runs and failures.
Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.
And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:
If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank’s customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls – which would be a natural inference from having tapped emergency funds – has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution’s customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.
Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?
The Banks’ racketeering has gone on for far too long.
And yet, it does not stop: the conclusion from the banks’ letter: Continue reading »
These four stocks represented thirty seven percent of all shares traded today.
Today 3,162 different stocks traded on the NYSE. These four represent 0.13% of the total, yet they comprised 37% of the volume. That’s an over-representation of nearly 300 times the average.
Now folks, let’s be straight here. Do you believe for one second that this is “great liquidity” added by the “high-frequency trading” computers that are almost certainly behind the vast majority of this volume?
This isn’t the first day with this sort of abnormal trading and volume pattern either. In fact it has been going on for the last week, with AIG making a frequent appearance on the list as well.
If there was ever an argument to be made for the NYSE having turned into a gigantic “hot potato” parlor game, this is it – in your face in an impossible-to-explain-away fashion.
- Stocks led by four wounded horsemen (of the coming apocalypse):
In fact, these four wounded horsemen of the financial sector comprised 40% of the overall trading volume on the NYSE on Tuesday. These stocks haven’t just been active, they’ve been surging.
This is kind of scary. It suggests that the late-summer portion of the almost six-month long market rally is being fueled more by speculation and momentum, not real optimism about a potential recovery in the financial sector and the overall economy.
If the economy were truly in “recovery” mode, and if consumer demand were truly picking up, the Baltic Dry Index should be moving consistently higher.
It’s not. And that fact should be a major warning sign for anyone buying stocks and betting the economy’s current blip higher is sustainable.
From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the recent plunge in earnings and recent stock market rally, the PE ratio spiked and just peaked at 144 – a record high. Currently, with 97% of US corporations having reported for Q2 2009, the PE ratio now stands at a lofty 129.
Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts.
He expects the S&P 500 index of US equities to reach the “mid 500s”.
July 30 (Bloomberg) — Citigroup Inc., Merrill Lynch & Co. and seven other U.S. banks paid $32.6 billion in bonuses in 2008 while receiving $175 billion in taxpayer funds, according to a report by New York Attorney General Andrew Cuomo.
Cuomo analyzed 2008 bonuses at nine banks that received Trouble Asset Relief Program financing from the U.S. government. New York-based Citigroup and Merrill, which has since been taken over by Bank of America Corp., received TARP funding totaling $55 billion, Cuomo said.
Hank Paulson admitted to threatening Bank of America CEO Ken Lewis when Lewis threatened to pull the plug on the Merrill Lynch merger last fall.
Former Treasury Secretary Henry Paulson made no bones about it: He did threaten Bank of America CEO Ken Lewis when Lewis threatened to pull the plug on the Merrill Lynch merger last fall.
“I further explained to him that, under such circumstances, the Federal Reserve could exercise its authority to remove management and the board of Bank of America,” Paulson told the House Oversight and Government Reform Committee on Thursday. “By referring to the Federal Reserve’s supervisory powers, I intended to deliver a strong message.”
That admission pretty much blew away the committee’s top Republican, Rep. Darrell Issa of California.
“The inappropriate behavior of government officials did not start or end with the threat to fire Ken Lewis and Bank of America’s board of directors,” Issa said. “It is a threat to the foundations of our free society when government officials, acting in the midst of a crisis, use dire predictions of imminent disaster to justify their encroachment on our individual liberty and the rule of law.”
By MARTIN KADY II
7/17/09 4:21 AM EDT
- Day of Reckoning for California and, ultimately, for all of America:
“Why I Expect a Default on California’s Bonds”
A group of the biggest U.S. banks said they would stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.
The development is the latest twist in California’s struggle to deal with the effects of the recession. After state leaders failed to agree on budget solutions last week, California began issuing IOUs — or “individual registered warrants” — to hundreds of thousands of creditors. State Controller John Chiang said that without IOUs, California would run out of cash by July’s end.
But now, if California continues to issue the IOUs, creditors will be forced to hold on to them until they mature on Oct. 2, or find other banks to honor them. When the IOUs mature, holders will be paid back directly by the state at an annual 3.75% interest rate. Some banks might also work with creditors to come up with an interim solution, such as extending them a line of credit, said Beth Mills, a California Bankers Association spokeswoman.
Meanwhile, on Monday morning, a budget meeting between Gov. Arnold Schwarzenegger and legislative leaders failed to produce a result. Amid the budget deadlock, Fitch Ratings on Monday dropped California’s bond rating to BBB, down from A minus, the latest in a series of ratings downgrades for the state.
The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others. The banks had previously committed to accepting state IOUs as payment. California plans to issue more than $3 billion of IOUs in July.
Special guest, Paul Craig Roberts.
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Tags: Bank of America, Banking, Ben Bernanke, Bonds, British Airways, China, CIA, Congress, Debt, Deflation, Dollar, Economy, Fed, Federal Reserve, Fraud, GDP, Goldman Sachs, Google, Government, Henry Paulson, Honduras, Hugo Chavez, JPMorgan, Max Keiser, Obama administration, Paul Craig Roberts, Politics, U.S.
Bernanke is ‘the perfect puppet’ and a ‘total success’ for the elitists … but a total disaster for the people.
- Jim Rogers: We are going to have another Depression in the U.S. (Video):
“Mr. Bernanke has never been right. He has been in the government for six or seven years, he has never been right.”
Such ‘competence’ needs to be rewarded by the other perfect puppet:
Inquiring minds are reading Bernanke Flubs Tryout, Still Up for Leading Role by Caroline Baum.
Most often I agree with Caroline, but not this time.
After trashing (and rightfully so) Bernanke’s last appearance before Congress, Caroline somehow arrives at the following conclusion.
It would be hard to find someone more suited for the job of Fed chairman than Bernanke. His performance yesterday has nothing to do with his unique qualifications for the position. … Unless President Barack Obama wants a solo pilot, he would do well to tap Bernanke for a second term.
Let’s take a look at the qualifications of which Baum speaks.
1) Bernanke is either a liar or has a memory problem. I believe the former. Either way, there is a problem when a Fed chairman cannot recall a conversation with another Fed governor over something as critical as the Bank of America/Merrill Lynch merger. See Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America “Turd in the Punchbowl” for my take.
2) Bernanke claims to be a student of the great depression yet amazingly concludes the cause was misguided Fed policy after the stock market crash. This is nonsense. The cause of the great depression and the cause of the current depression (yes we are in a depression), is the massive expansion of credit and debt fostered by the Fed itself. Bernanke is no student of history, he is a dunce.
3) Bernanke has on many occasions promised transparency. This is an outright lie. There is no transparency and Bloomberg has filed freedom of information lawsuits requesting information that should have been disclosed. Moreover, Congress had to subpoena the Fed in regards to the Bank of America / Merrill Lynch shotgun wedding which is how we know about Bernanke’s selective memory loss. What else is Bernanke hiding?
The US government has told BoA to bolster its capital cushion – and similar instructions are expected at up to 10 other banks
The US government has told Bank of America that it needs to bolster its capital cushion by as much as $34bn (£22.6bn) after a stress test found weaknesses in the bank’s ability to withstand any further shocks.
Bank of America’s executives learned of the figure from treasury officials before tomorrow’s public release of the results of tests on the 19 largest US financial institutions.
As many as 10 banks, including major players such as Citigroup and Wells Fargo, are likely to be told that they need extra capital. But BoA’s shortfall could be the largest of any bank.
- Reports: Wells Fargo needs $15B capital boost following ‘stress test’ (Denver Business Journal)
- Wells Fargo freezes traditional pension plan (San Francisco Chronicle):
Wells Fargo & Co. told employees on Monday it will no longer contribute to their traditional pension plan, effectively cutting the total compensation of its workers less than two weeks after announcing record first-quarter profit.
- Regulators Say Banks Needing Capital Must Submit Plan by June 8 (Bloomberg):
May 6 (Bloomberg) — Banks that need to raise capital under the government’s stress tests will have until June 8 to develop a plan and until Nov. 9 to implement it, U.S. bank regulators said today.
The North Carolina-based bank, which is the largest US high-street player in terms of deposits, has been financially weakened by its purchase of the troubled Wall Street brokerage Merrill Lynch, which lost $15bn in the final quarter of last year. Angry about the deterioration in the bank’s condition, shareholders last week voted to strip chief executive Ken Lewis of his title as chairman.
Pressure from Fed and Treasury chiefs to complete purchase of Merrill Lynch despite ‘staggering’ losses
Merrill Lynch Chairman and CEO John Thain, left, shakes hands with Bank of America Chairman and CEO Ken Lewis, at a news conference last autumn. The deal between the banks has proved controversial Photo: AP
Ken Lewis’s position at the helm of Bank of America looked increasingly uncertain on Thursday after it emerged he stopped short of pulling out of the deal to buy loss-making Merrill Lynch after Treasury Secretary Hank Paulson threatened to oust him and his entire board.
Mr Lewis BoA’s chairman and chief executive, also knowingly hid the state of Merrill Lynch’s “staggering” losses from shareholders at the behest of former Treasury Secretary Paulson and Federal Reserve chairman Ben Bernanke.
The revelations were contained in a batch of BoA board minutes and testimony from Mr Lewis and Mr Paulson sent by New York Attorney General Andrew Cuomo to the Securities and Exchange Commission and Congressional leaders Chris Dodd and Barney Frank.
Bank of America chief ‘told to buy Merrill or face sack’
Bank boss claims US treasury told him to seal $50bn deal and keep quiet about brokerage’s huge losses
The US government threatened to eject the entire board of Bank of America if the firm pulled out of a $50bn (£34bn) takeover of troubled Merrill Lynch in December, according to new documents set to inflame a bitter shareholder dispute at America’s wealthiest bank.
In potentially explosive testimony to regulators, Bank of America’s chief executive, Ken Lewis, has claimed the US treasury ordered him to press ahead with a buyout of Merrill and to keep quiet about the Wall Street brokerage’s mounting losses.
Full article here: The Guardian
Mr Cuomo, who released details of the exchanges yesterday, has been investigating BoA after Merrill paid $3.6bn (£2.45bn) of bonuses to its staff just days before the acquisition was completed on January 1.
He believes he has uncovered “facts that raise questions about the transparency” of the Treasury’s $700bn bank bail-out programme “as well as about corporate governance and disclosure practices at Bank of America.”
Investors have already expressed serious concern that BoA did not attempt to pull out of the merger with Merrill, given the investment bank racked up losses of $15.84bn in the fourth quarter of 2008. The loss required BoA to take on an extra $20bn of Treasury funding as well as an $118bn loan-loss guarantee.
The documents paint all three men in a bad light. Mr Lewis, though initially keen to pull out of the Merrill deal after revealing the extent of what he calls the “staggering amount of deterioration in its finances,” claimed he caved in after being threatened by Mr Paulson on December 21, ten days before the sale was due to complete.
“That makes it simple. Let’s deescalate,” Mr Lewis told Mr Paulson, with reference to his original plan to invoke a material adverse clause (MAC) to get out of the Merrill deal.
Mr Paulson later testified to Mr Cuomo that he only threatened Mr Lewis “at the request of Chairman Bernanke.”
A “funny” thing is happening just as Treasury Secretary Tim Geithner seems to have finally found a scheme to deal with banks’ toxic debt: Some big banks are aggressively bidding for toxic debt in the open market.
Specifically “Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market,” Mark DeCambre of The NY Post reported earlier this week.
Friday, DeCambre joined Henry and me to discuss the story in the accompanying video.
The banks contend they are helping to bring liquidity to the “frozen” mortgage-backed-securities market, as per their “marching orders” under the TARP program, DeCambre notes.
Furthermore, the banks’ buying of toxic assets may be on behalf of clients rather than for their internal accounts.
A less generous interpretation is that Citi and BofA (among others, no doubt) are attempting to “front run” Geithner’s program, which presumably will result in banks being able to unload these assets at prices above the current “depressed” market levels – leaving taxpayers on the hook for future losses.
Furthermore, having put their franchises – if not the entire global economy – in jeopardy by gorging on MBS securities the first time around, do Citi, BofA and other TARP recipients have any business jumping back into that (still) toxic pool?
Posted Mar 27, 2009 12:24pm EDT
by Aaron Task in Investing
Source: Yahoo Finance
CHARLOTTE, N.C. — Banks nationwide hold $41 billion in loans to directors, top executives and other insiders, a portfolio that experts say should be stripped of secrecy.
Insider lending to directors is particularly troublesome because it could cloud the judgment of people charged with protecting shareholders and overseeing bank management, the experts say.
At Charlotte-based Bank of America, those loans more than doubled last year, to $624.2 million — the biggest dollar jump in the country. The largest of them likely went to three directors or their companies. The surge came during the third quarter as credit markets froze, the government prepared to infuse banks with billions in tax dollars and the board approved the purchase of troubled Merrill Lynch.
Bank of America ranked fourth on the list of biggest insider lenders. At the top was JPMorgan of New York, which held $1.48 billion in insider loans, mostly by directors or their companies.
This time the bailout money from the U.S. taxpayer went to:
Goldman Sachs led beneficiaries, with $12.9 billion, followed by SocGen, France’s No. 3 bank, with $11.9 billion, and Deutsche Bank, Germany’s biggest lender, with $11.8 billion. Barclays Plc received $8.5 billion from AIG, Merrill Lynch & Co. got $6.8 billion, Bank of America Corp. got $5.2 billion and UBS AG got $5 billion.
“I was happy to see that AIG finally handed over the counterparty information we’ve been requesting for months,” said Representative Elijah Cummings, a Maryland Democrat on the House Oversight Committee. “However, I am deeply concerned that Goldman Sachs received so much money from AIG considering the relationships between the two companies. We will certainly be investigating this further to ensure that this is merely a coincidence.”
March 16 (Bloomberg) — American International Group Inc., bailed out four times by taxpayers and under pressure to show what it’s doing with the money, disclosed which banks and states got $105 billion of U.S. funds and may have to name some of the employees splitting $1 billion in retention pay.
President Barack Obama called AIG’s $165 million of retention bonuses handed out yesterday unwarranted and vowed to block or recover them. Andrew Cuomo, New York State’s attorney general, demanded names of the recipients and said he’d send a subpoena if New York-based AIG didn’t respond by 4 p.m.
“It’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay,” said the text of Obama’s White House speech today. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”
AIG has been pressed to reveal its inner workings since the U.S. took a stake of almost 80 percent last year to avert a collapse of the insurer, once the world’s biggest. Yesterday, AIG said U.S. states and banks led by Goldman Sachs Group Inc., Societe Generale SA and Deutsche Bank AG were among those that benefited from the rescue, now valued at $173 billion.
Rather than using federal bailout money to reinvigorate lending to consumers, some banks that received funds from TARP have spent it on questionable items that have done little to improve the health of the country’s financial sector but have certainly helped out foreign economies such as Dubai and China.
For instance, Citigroup Inc, which received $50 billion in Troubled Asset Relief Program funds, made an $8 billion December loan, not to an American entity, but to a Dubai public sector company, according to a newly released Monday memo by Rep. Dennis Kucinich (D-OH), chairman of the House Domestic Policy Subcommittee.
The Goldman Sachs Group, which received $10 billion in TARP funds at the end of October, saw fit to spend $2 billion earlier in the year on the repurchase of company stock, which resulted in an increase in company share price.
The memo notes of that stock repurchase, “That increase would have constituted a significant benefit to top executives at Goldman Sachs, who typically own large amounts of company stock.”
As of January 3, Goldman Sachs CEO Lloyd Blankfein owned 1,995, 835 shares of the company, according to the memo.
In mid- November, Bank of America spent $7 billion investing in the China Construction Bank Corporation. Bank of America received $25 billion in TARP funds.
J.P. Morgan Treasury Services spent $1 billion investing in cash management and trade finacie solutions in India also in November. J.P Morgan Chase & Co. received $25 billion in TARP funds.
March 5 (Bloomberg) — Disclosing the identities of Merrill Lynch & Co. employees who were paid $3.6 billion in bonuses just before the firm merged with Bank of America Corp. will cause “grave and irreparable harm,” said lawyers for the companies.
Bank of America today filed documents in state court in Manhattan to intervene in a case brought by New York Attorney General Andrew Cuomo to compel former Merrill Chief Executive Officer John Thain to testify about the bonus recipients.