The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaring format the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies), a mere 5 banks (and really 4) account for 95.9% of all derivative exposure (HSBC replaced Wells as the Top 5th bank, which at $3.9 trillion in derivative exposure is a distant place from #4 Goldman with $47.7 trillion). The top 4 banks: JPM with $78.1 trillion in exposure, Citi with $56 trillion, Bank of America with $53 trillion and Goldman with $48 trillion, account for 94.4% of total exposure. As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively. And that’s your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.
YouTube Added: 22.08.2011
- Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans (Bloomberg, Aug 22, 2011):
Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.
By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.
Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.
Tags: Bank of America, Banking, Barclays, Citigroup, Deutsche Bank, Economy, Fed, Federal Reserve, Global News, Goldman Sachs, Hypo Real Estate, Morgan Stanley, RBS, Societe Generale, UBS, Wall Street
- S.E.C. Files Were Illegally Destroyed, Lawyer Says (New York Times, August 17, 2011):
WASHINGTON — An enforcement lawyer at the Securities and Exchange Commission says that the agency illegally destroyed files and documents related to thousands of early-stage investigations over the last 20 years, according to information released Wednesday by Congressional investigators.
The destroyed files comprise records of at least 9,000 preliminary inquiries into matters involving notorious individuals like Bernard L. Madoff, as well as several major Wall Street firms that later were the subject of scrutiny after the 2008 financial crisis, including Goldman Sachs, Lehman Brothers, Citigroup and Bank of America.
The S.E.C. is the very agency that is charged with making sure that Wall Street firms retain records of their own activities, and has brought numerous enforcement cases against firms for failing to do so.
- Is the SEC Covering Up Wall Street Crimes? (Rolling Stone, August 17, 2011):
A whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation’s worst financial criminals.
Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.
That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.
- Confirmed: Thailand’s “Pro-Democracy” Movement Working for US (Activist Post, August 13, 2011):
Thailand’s “Red Shirts” boast of NED, Fortune 500 Washington D.C. Visit
Bangkok, Thailand, August 13, 2011 – While it is well established that Thailand’s “red shirt” street mob is working on behalf of globalist-stooge Thaksin Shinawatra who in turn is backed by some of the United States’ largest lobbying firms, most influential politicians, and most powerful corporate-financier interests, it is now confirmed that key leaders within the “red shirt” movement or United Front for Democracy Against Dictatorship (UDD) have met with Soros’ Open Society-funded Human Rights Watch, the National Democratic Institute for International Affairs (NDI), National Endowment for Democracy (NED), and the U.S. – ASEAN Business Council in an April 2011 Washington D.C. visit.
Thaksin Shinawatra, Thailand’s prime minister from 2001 until a military coup removed him in 2006, was a former Carlyle Group adviser and was literally reporting to the globalist Council on Foreign Relations in New York City on the eve of his ousting from power. While in office, Thaksin attempted to ramrod through the US-Thailand Free-Trade Agreement (FTA) without parliamentary approval, a 2004 FTA backed by the exact same US-ASEAN Business Council recently visited by UDD leaders in April of 2011.
Image: The US-ASEAN Business Council, a who’s-who of corporate fascism in the US, has been approached by Thailand’s “pro-democracy” UDD for support. The UDD never fully explains what corporations like Exxon, BP, Goldman Sachs, Monsanto, or other banes to humanity have to do with democracy or what sort of support was asked for or promised. (click image to enlarge)The council in 2004 included 3M, war profiteering Bechtel, Boeing, Cargill, Citigroup, General Electric, IBM, the notorious Monsanto, and currently also includes the criminal banksters of Goldman Sachs and JP Morgan, Lockheed Martin, Raytheon, Chevron, Exxon, BP, Glaxo Smith Kline, Merck, Northrop Grumman, Monsanto’s GMO doppelganger Syngenta, and Phillip Morris. Admittedly, these corporations are more synonymous with mass murder, mass corruption, corporate fascism, crony-capitalism, warmongering, lies, deceit and all the other ugly aspects that truly define “globalization,” than they are with any tenant of “liberal democracy.”
Tags: Bechtel, Cargill, CFR, Citigroup, Council on Foreign Relations, Economy, General Electric, Global News, Government, IBM, Monsanto, New World Order, Philip Morris, Politics, Society, Syngenta, Thailand, Thaksin Shinawatra, U.S.
- Citi’s Top Economist Says The Water Market Will Soon Eclipse Oil (Business Insider, July 21, 2011):
I expect to see in the near future a massive expansion of investment in the water sector, including the production of fresh, clean water from other sources (desalination, purification), storage, shipping and transportation of water. I expect to see pipeline networks that will exceed the capacity of those for oil and gas today.
I see fleets of water tankers (single-hulled!) and storage facilities that will dwarf those we currently have for oil, natural gas and LNG. I see new canal systems dug for water transportation, similar in ambition and scale to those currently in progress in China, linking the Yangtze River in the South to the Yellow River in the arid north.
I also hope and expect that these new canal ventures will be designed and implemented with a greater awareness of the environmental and social impact of such mega-projects. India will have to engage in investment on a scale comparable to that seen today in China to produce clean water in the best locations and transport it to where the household, industrial and agricultural users are. Continue reading »
- Too Big To Fail?: 10 Banks Own 77 Percent Of All U.S. Banking Assets (The Economic Collapse, July 18th, 2011):
Back during the financial crisis of 2008, the American people were told that the largest banks in the United States were “too big to fail” and that was why it was necessary for the federal government to step in and bail them out. The idea was that if several of our biggest banks collapsed at the same time the financial system would not be strong enough to keep things going and economic activity all across America would simply come to a standstill. Congress was told that if the “too big to fail” banks did not receive bailouts that there would be chaos in the streets and this country would plunge into another Great Depression. Since that time, however, essentially no efforts have been made to decentralize the U.S. banking system. Instead, the “too big to fail” banks just keep getting larger and larger and larger. Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets. Today, the top 10 banks control 77 percent of all U.S. banking assets. Unfortunately, these giant banks are also colossal mountains of risk, debt and leverage. They are incredibly unstable and they could start coming apart again at any time. None of the major problems that caused the crash of 2008 have been fixed. In fact, the U.S. banking system is more centralized and more vulnerable today than it ever has been before.
It really is difficult for ordinary Americans to get a handle on just how large these financial institutions are. For example, the “big six” U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to approximately 60 percent of America’s gross national product.
Back in March of 2009 Zero Hedge, once again a little conspiratorially ahead of its time, solicited reader feedback on a key topic: CDS pricing manipulation, involving in addition to key cartel banks, such “independent” pricing services as MarkIt. We said: “Zero Hedge has received some troubling info (like there isn’t enough) regarding major pricing discrepancies between certain securities pricing services.
The services include companies such as IDC, Advantage Data, Markit and others. While I will not disclose which one may be a culprit, the allegation is that one (or more) are providing substantially above market pricing levels, specifically as pertains to distressed securities.” Then back in August 2010, we followed up by explaining that it is the ongoing price manipulation scheme, in addition to other factors, that allows Goldman Sachs (and other CDS dealers to a much lesser extent) to constantly generate massive profits from trading an opaque off-exchange product like CDS. It took two years and a month for others to take notice of this inquiry, although naturally not in that slum of corruption and market manipulation, the United States of America, but in Europe. Bloomberg reports: “Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and other 14 other investment banks face a European Union antitrust probe into credit-default swaps for companies and sovereign debt, regulators said. …The European Commission said it opened two antitrust probes. It will check whether 16 bank dealers colluded by giving market information to Markit, a financial information provider.” So while some post flow charts explaining the hilarity behind conspiracy theories, others actually expose the facts that today are a conspiracy and tomorrow are a full blown criminal investigation.
From Bloomberg Apr 29, 2011:
“Lack of transparency in markets can lead to abusive behavior and facilitate violations of competition rules,” said the EU’s antitrust chief, Joaquin Almunia, in an e-mailed statement. “I hope our investigation will contribute to a better functioning of financial markets.”
Global regulators have sought to toughen regulation of credit-default swaps saying the trades helped fuel the financial crisis. Lawmakers in the EU plan to encourage the use of clearinghouses and transparent trading systems. CDS are derivatives that pay the buyer face value if a borrower defaults.
JPMorgan, Bank of America Corp. (BAC), Barclays Plc (BARC), BNP Paribas (BNP) SA, Citigroup Inc. (C), Commerzbank AG (CBK), Credit Suisse Group AG (CSGN), Deutsche Bank AG (DBK), Goldman Sachs, HSBC Holdings Plc (HSBA), Morgan Stanley, Royal Bank of Scotland Group Plc (RBS), UBS AG (UBSN), Wells Fargo & Co. (WFC), Credit Agricole SA (ACA) and Societe Generale (GLE) SA will be investigated for possible collusion in giving “most of the pricing, indices and other essential daily data only to Markit.”
Tags: Banking, BNP Paribas, cds, Citigroup, Commerzbank, Credit Agricole, Credit Suisse, Derivatives, Derivatives market, Deutsche Bank, Economy, EU, Europe, Fraud, Global News, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, RBS, Societe Generale, UBS, Wells Fargo
On Friday, free and efficient market champion Ted Kaufman, previously known for his stern crusade to rid the world of the HFT scourge, and all other market irregularities which unfortunately will stay with us until the next major market crash (and until the disbanding of the SEC following the terminal realization of its corrupt and utter worthlessness), held a hearing on the impact of the TARP on financial stability, no longer in his former position as a senator, but as Chairman of the Congressional TARP oversight panel. Witness included Simon Johnson, Joseph Stiglitz, Allan Meltzer, William Nelson (Deputy Director of Monetary Affairs, Federal Reserve), Damon Silvers (AFL-CIO Associate General Counsel), and others.
In typical Kaufman fashion, this no-nonsense hearing was one of the most informative and expository of all Wall Street evils to ever take place on the Hill. Which of course is why it received almost no coverage in the media. Below we present a full transcript of the entire hearing, together with select highlights.
The insights proffered by the panelists and the witnesses, while nothing new to those who have carefully followed the generational theft that has been occurring for two and a half years in plain view of everyone and shows no signs of stopping, are truly a MUST READ for virtually every citizen of America and the world: this transcript explains in great detail what absolute crime is, and why it will likely forever go unpunished.
Key highlights from the transcript:
Tags: AIG, Bank of America, Bank of England, Barack Obama, Bush administration, Citigroup, Congress, Debt, FDIC, Fed, Federal Reserve, Freddie Mac, George Bush, Global News, Goldman Sachs, Government, Obama administration, Politics, Quantitative Easing, Real Estate, Recession, Society, TARP, Taxpayers, Ted Kaufman, U.S., Unemployment, Warren Buffett, Wells Fargo
There was a time when everyone thought CDOs are perfectly safe. That ended up being a tad incorrect. It resulted in AIG blowing up, recording hundreds of billions in losses and almost taking the rest of the financial world with it, leading ultimately to the first iteration of quantitative easing. A few years thereafter, several blogs and fringe elements suggested that munis are the next major cataclysm and will likely require Fed bail outs (some time before Meredith Whitney came on the public scene with her apocalyptic call). It would be only fitting that the same AIG that blew up the world the first time around, end up being the same company that does so in 2011, and with an instrument that just like back then only an occasional voice warned is a weapon of mass destruction: municipal bonds. AIG dropped over 6% today following some very unpleasasnt disclosures about its muni outlook, and corporate liquidity implications arising therefrom: “American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity.” So how long before we discover that Goldman has been lifting every AIG CDS for the past quarter? And how much longer after that until someone leaks a document that the company’s muni strategy was orchestrated by one Joe Cassano?
From the Risk Factors section in the company’s just issued 10-K:
Only now does the Guardian report about this documentary. Just in time before the next crisis: The Greatest Depression.
- Former Governor Jesse Ventura Conspiracy Theory: Wall Street
- Former Assistant Secretary of Housing Catherine Austin Fitts: The Looting Of America
The film Inside Job brilliantly exposes the corruption in US banking that led to the 2008 crash. We ask four bankers for their verdict on this damning indictment of their world
An aerial view of Wall Street, the heart of the global financial meltdown. Photograph: Cameron Davidson
When Michael Moore made his debut feature, Roger and Me, he set about vilifying the boss of General Motors, the now deceased Roger B Smith, for destroying his home town of Flint, Michigan. Charles Ferguson’s film Inside Job attempts to blame a wider cast list for the banking crash of 2008 and explains why so little has been done to reform the financial world or bring criminal prosecutions against the main protagonists.
His villainous lineup includes bankers, politicians (many of whom were previously bankers), regulators, the credit ratings agencies and academics. When Glenn Hubbard, George Bush’s chief economic adviser and dean of Columbia Business School, is shown as a partisan advocate of deregulation, we have one of the movie’s punch-the-air moments. During the interview, Hubbard, who denies he was corrupted by his paid-for relationships with government, angrily barks: “You’ve got five minutes, mister. Give it your best shot.”
The spotlight has largely bypassed academics in the UK. There are plenty of economists who believed the banks understood what they were doing and supported deregulation. Whether they took large slugs of cash for writing poorly researched, cheerleading reports on the economic miracle in Iceland (pre-crash), as former US central banker Frederic Mishkin is found doing, is less clear. Over here, the relationship between academia and business appears to be more arm’s length, though London Business School dean Sir Andrew Likierman sits on the Barclays board, while Howard Davies, who argued for light-touch regulation while head of the Financial Services Authority, has become director of the London School of Economics. The UK’s chief villian, however, is probably the disgraced, but largely unpunished, banker Sir Fred Goodwin, the former boss of Royal Bank of Scotland, once the fifth-largest bank in the world.
In Inside Job, the name that keeps cropping up is Larry Summers, a friend of President Bill Clinton and more recently Barack Obama. Summers exemplifies the links between cheerleaders in academia, Wall Street, supine regulators and an ignorant Capitol Hill that Ferguson stresses were at the root of the problem. It helps that Summers looks like a mafia boss, but the difficulties in making the case against him are shown by the need to explain financial products like credit default swaps and how securitisation was used by banks to increase their borrowing.
Added: 28. January 2011
Tags: AIG, Bailout, Bank of America, Banking, Barack Obama, Barclays, Ben Bernanke, Bush administration, Citigroup, Economy, Fed, Federal Reserve, Foreclosures, George Bush, Global News, Goldman Sachs, Inflation, JPMorgan, Lehman Brothers, Merrill Lynch, Mortgage crisis, Mortgages, Obama administration, Politics, Society, Timothy Geithner, U.S., Wall Street
NEW YORK (CNNMoney.com) — 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.
The loans were made through a special loan program set up by the Fed in the wake of the Bear Stearns collapse in March 2008 to keep the nation’s bond markets trading normally.
The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed — an annual rate of between 0.5% to 3.5%.
Still, the total amount was a surprise, even to some who had followed the Fed’s rescue efforts closely.
“That’s a real number, even for the Fed,” said FusionIQ’s Barry Ritholtz, author of the book “Bailout Nation.” While the fact that the markets were in trouble was already well known, he said the amount of help they needed is still surprising.
“It makes it very clear this was a very serious, very unusual situation,” he said.
UBS was the biggest borrower under the Commercial Paper Funding Facility, with $74.5 billion overall, more than twice as much as Citigroup Inc., the top U.S. bank recipient, according to the data released yesterday.
Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate on whether U.S. regulators bear responsibility for aiding other nations’ banks.
UBS was the biggest borrower under the Commercial Paper Funding Facility, with $74.5 billion overall, more than twice as much as Citigroup Inc., the top U.S. bank recipient, according to the data released yesterday. London-based Barclays Plc took the biggest single amount under another program that made overnight loans, when it got $47.9 billion on Sept. 18, 2008.
“We’re talking about huge sums of money going to bail out large foreign banks,” said Senator Bernard Sanders, the Vermont independent who wrote the provision in the Dodd-Frank Act that required the Fed disclosures. “Has the Federal Reserve become the central bank of the world? I think that is a question that needs to be examined.”
The first detailed accounting of U.S. efforts to spare European banks may add to scrutiny of the central bank, already at its most intense in three decades. The Fed, which released data on 21,000 transactions, said in a statement that its 11 emergency programs helped stabilize markets and support economic recovery. The Fed said there have been no credit losses on rescue programs that have been closed.
Oct. 25 (Bloomberg) — The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used.
More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!”
None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees. Even so, the U.S. government considers the collection of e-mails a partial response to an official request under the federal Freedom of Information Act, or FOIA. The Justice Department in July cited an increase in such responses as evidence that “more information is being released” under the law.
President Barack Obama vowed to usher in a new era of open government. On Jan. 21, 2009, the day after his inauguration and a week before Pittman submitted his FOIA request, Obama directed agencies to “adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA.”
Limits of Transparency
The saga of Pittman’s request shows that the promise of transparency has its limits when it comes to the government’s intervention in the financial industry, which at its peak reached $12.8 trillion in commitments. From the 2008 Bear Stearns Cos. rescue to the Federal Reserve’s policy of quantitative easing in 2010, the Obama administration has delayed disclosures and defended its right to secrecy in court, said Tom Fitton, president of Judicial Watch Inc., which describes itself as a conservative foundation.
“This is an unprecedented crisis for open government,” said Fitton, whose Washington-based organization sued the Bush administration more than 200 times over disclosure issues. “When it comes to the bank bailout, the Obama administration has made a decision to err on the side of secrecy.”
The Justice Department, which oversees disclosure for the executive branch, is “working specifically to encourage agencies to be as transparent as possible and release as much as possible,” said Melanie Ann Pustay, director of the department’s Office of Information Policy. “We view our efforts as an ongoing process.”
US Outlook: Even regulators have taken to using the phrase “window dressing” to describe Wall Street banks’ habit of reducing their short-term borrowings for a few days around the end of each quarter, in order to make themselves look less risky than they really are.
Window dressing is too benign a term. What banks, led by Lehman Brothers, but also including Bank of America and Citigroup, have been doing is much worse than simply dressing up their finest wares in the shop-front window. It is more like finding an Oscar de la Renta dress in the window of a Wal-Mart. It is misleading, and often deliberately so.
Thanks to an examiner’s report commissioned by the bankruptcy courts, we know that Lehman even had a name for the accounting trick: Repo 105. At the end of each quarter before its collapse in 2008, Lehman was able to make its balance sheet look $50bn (£32bn) lighter than it really was, deceiving worried investors who were pressing it to reduce its leverage.
Before you read the Financial Times article below, read this, if you haven’t done so:
They refuse to allow the yuan to strengthen because they know that once they do that it will mark the real end of the dollar era. So instead they are spending like crazy on infrastructure ahead of them allowing the dollar to plunge. Then the strong yuan will be employed to purchase all the commodities they need to utilize their infrastructure and the OECD gets priced out. To those that talk about yuan devaluation, you need to be specific. Devaluation versus what? Versus commodities generally along with other currencies? I can buy that argument very easily. Versus the dollar, highly doubtful. Why? The latest data says China owns $877.5 billion in U.S. treasuries. All they have to do is start dumping and the dollar is finished as the Fed will be forced to print so many dollars it will make Mugabe blush. People need to wake up.
(Mike Krieger, formerly a macro analyst at Bernstein, and currently running his own fund, KAM LP, summarizies the pretend reality we are all caught in now, knowing full well America is set on a crash course with reality at some point, yet sticking our collective heads in the sand, as the collapse will be some time in the “indefinite” future. In the meantime, banks will continue to boost US GDP by peddling “financial innovation” and restructuring advice to countries like Greece… and nothing else.)
And what happened to the US dollar since China allowed the yuan to strengthen?!!!
And now Illuminati bank JPMorgan and …
Aug. 26 (Financial Times) — A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.
HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.
“We’re now capable of doing renminbi settlement in many parts of the world,” said Chris Lewis, HSBC’s head of trade for greater China. “All the other major international banks are frantically trying to do the same thing.”
HSBC and StanChart are among a slew of global banks – including Citigroup and JPMorgan – holding roadshows across Asia, Europe and the US to promote the renminbi to companies.
The move aligns the banks favourably with Beijing’s policy priorities and positions them to profit from what is expected to be a rapidly growing line of business in the future.
The phenomenon will accelerate Beijing’s drive to transform the renminbi from a domestic currency into a global medium of exchange like the dollar and euro. Continue reading »
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
Can’t make this up!
Here is an email from a member of the House Committee on Homeland Security to Max Keiser regarding Financial Terrorism. Both the email and Max Keiser’s response had me laughing my head off.
Hi Mr. Keiser,
My name is Chris Beck and I work on the staff of the House Committee on Homeland Security in Washington, DC. I have been reading and listening to you regarding the May 6 stock market plunge and the likelihood that this was an act of financial terrorism. I think this is a huge issue that has not been given enough attention, and may warrant oversight by our committee. I would greatly appreciate the chance to talk to you to make sure I understand the nuts and bolts, and to figure out what avenues may be available to correct what appears to be a massive fraud that could undermine U.S. National Security. Can you please contact me and let me know if you are available to talk?
Chris Beck, Ph.D.
Senior Advisor for Science and Technology
House Committee on Homeland Security
I asked Max Keiser how he responded.
Max Replied “I told him to investigate this financial terrorist crime happening right now! in real time!”
Max went on to say …
I think it’s really incredible how clueless these people are.
Given the recent track record of corrupt regulators in D.C. it’s not hard to imagine that Chris Beck is wittingly or unwittingly just bird dogging intelligence that will be fed to Goldman and used to package ever more exotic Financial Terrorist weapons.
My position is the government IS Goldman and any info gleaned by this type of thing will end up helping no one BUT Goldman.
Here is the video that Chris Beck was responding to. Play the first few minutes of it. It will have you rolling on the floor.
I am also told that homeland security was interested in talking with David DeGraw about his post on Market Oracle Financial Terrorism Operations: 9/29/08 & 5/6/10.
This reads like a spoof straight out of The Onion, but I have phone numbers and email address and a chain of emails to verify. Continue reading »
Tags: Ben Bernanke, Bonds, Central Bank, Citigroup, Debt, DHS, Economy, EU, Europe, Fed, Federal Reserve, Germany, Global News, Gold, Goldman Sachs, Government, Homeland Security, IMF, Ireland, Italy, Max Keiser, Obama administration, Politics, Quantitative Easing, Society, Spain, Terrorism, Timothy Geithner, U.S., Wall Street
Hiding behind the complexities of our financial system, banks and other institutions are being accused of fraud and deception, with Goldman Sachs just the latest in the spotlight. This has become the most pressing election issue of all
The global financial crisis, it is now clear, was caused not just by the bankers’ colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday’s announcement that the world’s most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world. Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we’ve seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves.
Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US’s Internal Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain. Continue reading »
Tags: Bailout, Banking, Citigroup, Derivatives, Derivatives market, Deutsche Bank, Economy, Fraud, Goldman Sachs, Hedge Funds, Iceland, John Paulson, Lehman Brothers, Meltdown, SEC, Taxes, Taxpayers, U.K., U.S., UBS, 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 »
- EXPLOSIVE: Lehman Corruption – Where Are The Cops? (Market Ticker)
The implosion of Lehman Brothers was in part triggered by excessive capital demands from JP Morgan Chase and Citigroup, and in part by the manipulation of its balance sheet by leading directors, a wide-ranging official report into the investment bank’s collapse has found.
In what is likely to kick-start a series of costly and long-running court cases, the exhaustive investigation found that the two Wall Street banks demanded significant amounts of capital and extra guarantees in the run-up to Lehman’s downfall – with JP Morgan Chase requesting $5bn (£3.3bn) just three days before Lehman’s bankruptcy filing.
At the same time, Lehman directors, including chairman Dick Fuld and former finance director Erin Callan, failed to disclose key practices, and certified misleading statements. The astonishing claims are made in a 2,200-page, nine-volume report written by court-appointed examiner Anton Valukas, which Judge James Peck admitted read “like a best seller”.
The explosive report also calls into question:
• The use of accounting tactics designed to move $50bn from Lehman’s balance sheet.
• The work of auditor Ernst & Young.
• Barclays’ subsequent purchase of Lehman’s US assets.
Among Mr Valukas’s findings – which are designed to help the court and the bank’s trustees establish where there may be legal grounds for future claims – he asserts that the evidence “may support the existence of a . . .[valid] claim that JP Morgan breached the implied covenant of good faith and fair dealing by making excessive collateral requests” to Lehman.
“The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” he says. Continue reading »
In the course of getting to know the online forex landscape, we came across the following.
That’s right. When you do a search for “Casino Bonanza Online” you get two ads for online casino-based sites, but the very first is an add for CitiFXPro.com, which is, yes, a retail Forex trading site run by Citi.
Now, it’s not really shocking that a multi-headed behemoth as big as Citigroup (C) has a retail Forex site, but here they’re specifically advertising against gambling-related terms, and showing up right next to Best USA Online CASINOS.
Major Wall Street firms are frequently likened to casinos, but they’re usually not this blatant about it, and usually their services are geared towards sophisticated, institutional investors. But CitiFXPro.com is pure retail, requiring only $10,000 to open an account. That’s not non-trivial, but it’s way less than the threshold for anything that would be regarded as institutional.
And if all this alone weren’t enough to make Paul Volcker lose his lunch, check out what Citi lists as its advantages. Check out the fourth one, specifically: 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
Citigroup said its fourth quarter revenues were 5.4 billion dollars, or 15.5 billion dollars excluding a repayment of a government bailout loan, down from 20.4 billion dollars in the prior quarter.
The quarterly result amounted to a loss of 33 cents a share, in line with forecast by Wall Street analysts. Continue reading »