Morgan Stanley’s settlement for $3.2 billion pales in comparison to what they borrowed.
While some may claim that the settlements made with big banks in recent years are better than nothing or are significant amounts, no matter how much that bank borrowed in 2008-2009, to say that these settlements are minuscule at best is an understatement. Last month, Morgan Stanley, one of the largest investment banks in the world and biggest borrowers in the 2008 financial crisis, agreed to pay $3.2 billion in a settlement with federal authorities. Continue reading »
Did you know that there are 5 “too big to fail” banks in the United States that each have exposure to derivatives contracts that is in excess of 30 trillion dollars? Overall, the biggest U.S. banks collectively have more than 247 trillion dollars of exposure to derivatives contracts. That is an amount of money that is more than 13 times the size of the U.S. national debt, and it is a ticking time bomb that could set off financial Armageddon at any moment. Globally, the notional value of all outstanding derivatives contracts is a staggering 552.9 trillion dollars according to the Bank for International Settlements. The bankers assure us that these financial instruments are far less risky than they sound, and that they have spread the risk around enough so that there is no way they could bring the entire system down. But that is the thing about risk – you can try to spread it around as many ways as you can, but you can never eliminate it. And when this derivatives bubble finally implodes, there won’t be enough money on the entire planet to fix it. Continue reading »
While it will hardly come as a surprise to its employees (who were warned a week ago that 25% of all fixed income workers would lose their jobs in the immediate future) most had hoped that the bailed out bank would at least have the ethics to wait with the layoffs until after the new year, now just three weeks away.
It did not. Continue reading »
In other news:
Stiffer capital rules, a slump in client transactions and a shift toward electronic trading have crimped margins in key fixed-income markets, pushing banks to pull back and eliminate staff… and amid a 42% collapse in fixed-income revenue in Q3, Morgan Stanley is taking action:
- *MORGAN STANLEY SAID TO PLAN FIXED-INCOME JOB CUTS OF UP TO 25%
The cuts are said to be worldwide and will happen with two weeks (just in time to watch the carnage unleashed by The Fed). Continue reading »
Having watched the credit markets grow more and more weary of the major US financials, it should not be total surprise that ratings agency S&P just put all the majors on watch for a rating downgrade:
*JPMORGAN, CITIGROUP, GOLDMAN SACHS, STATE STREET CORP, MORGAN STANLEY MAY BE CUT BY S&P
Despite all the talking heads proclamations on higher rates and net interest margins and ‘strongest balance sheets’ ever, S&P obviously sees something more worrisome looming. This comes just hours after Moody’s put Bank of Nova Scotia on review also (blaming the move on concerns over increased risk appetite).
– Murray Abbott, Missing Morgan Stanley Trader, Dies at 36 (Bloomberg, May 12, 2015):
Murray Abbott, an institutional sales trader at Morgan Stanley in Toronto who had been missing since April 25, was found Monday by the shore of Lake Ontario near the city’s Beaches neighborhood where he lived. He was 36.His death wasn’t suspicious, Mark Pugash, a Toronto Police Service spokesman, said Tuesday in a telephone interview. “It was obviously a very tragic missing person’s case.”
Abbott was a vice president and one of 16 people on the institutional equities desk at Morgan Stanley’s Canadian wealth-management division. He joined the New York-based bank in 2010, following jobs at Toronto-based brokerage Blackmont Capital Inc. and Research Capital Corp.
“He was larger than life, a very gregarious guy, very well liked by clients,” Laura Adams, head of Morgan Stanley’s Canadian equity-distribution business, said Tuesday in a telephone interview. “He was just a super guy.” Continue reading »
H/t reader M.G.:
“Looking at the destruction Morgan Stanley wrought on the mortgage market, and the crooked judges are looking for a “settlement” early next year. No word about the millions who suffered as a result of their policies, not just those who bought the homes, but all of us who suffered from radical drop in property values as a result of mass foreclosures around us.”
– Court Filing Illuminates Morgan Stanley Role in Lending (CNBC/New York Times, Dec 30, 2014):
Since the financial crisis, Wall Street firms have argued that they were victims, just like everybody else, of the bad mortgages that were churned out by subprime lenders like Countrywide and New Century.
Now, though, a trove of emails and confidential documents, filed in court, reveal the extent to which one of Wall Street’s leading banks, Morgan Stanley, actively influenced New Century’s push into riskier and more onerous mortgages, and brushed aside questions about the ability of homeowners to make the payments. Continue reading »
– The Vampire Squid Strikes Again: The Mega Banks’ Most Devious Scam Yet (Rolling Stone, Feb 12, 2014):
Banks are no longer just financing heavy industry. They are actually buying it up and inventing bigger, bolder and scarier scams than ever
all it the loophole that destroyed the world. It’s 1999, the tail end of the Clinton years. While the rest of America obsesses over Monica Lewinsky, Columbine and Mark McGwire’s biceps, Congress is feverishly crafting what could yet prove to be one of the most transformative laws in the history of our economy – a law that would make possible a broader concentration of financial and industrial power than we’ve seen in more than a century.
But the crazy thing is, nobody at the time quite knew it. Most observers on the Hill thought the Financial Services Modernization Act of 1999 – also known as the Gramm-Leach-Bliley Act – was just the latest and boldest in a long line of deregulatory handouts to Wall Street that had begun in the Reagan years.
– On The 100th Anniversary Of The Federal Reserve Here Are 100 Reasons To Shut It Down Forever (Economic Collapse, Dec 22, 2013):
December 23rd, 1913 is a date which will live in infamy. That was the day when the Federal Reserve Act was pushed through Congress. Many members of Congress were absent that day, and the general public was distracted with holiday preparations. Now we have reached the 100th anniversary of the Federal Reserve, and most Americans still don’t know what it actually is or how it functions. But understanding the Federal Reserve is absolutely critical, because the Fed is at the very heart of our economic problems.
Since the Federal Reserve was created, there have been 18 recessions or depressions, the value of the U.S. dollar has declined by 98 percent, and the U.S. national debt has gotten more than 5000 times larger. This insidious debt-based financial system has literally made debt slaves out of all of us, and it is systematically destroying the bright future that our children and our grandchildren were supposed to have.
If nothing is done, we are inevitably heading for a massive amount of economic pain as a nation. So please share this article with as many people as you can.
The following are 100 reasons why the Federal Reserve should be shut down forever: Continue reading »
Tags: Alan Greenspan, Bank of America, Bank of England, Banking, Barack Obama, Ben Bernanke, Bonds, Citigroup, Collapse, Debt, Dollar, Economy, Fed, Federal Reserve, Global News, Goldman Sachs, Government, JPMorgan, Mexico, Morgan Stanley, Obama administration, Politics, Quantitative Easing, U.S., Unemployment
– Too Big To Fail Is Now Bigger Than Ever Before (Economic Collapse, Sep 20, 2013):
The too big to fail banks are now much, much larger than they were the last time they caused so much trouble. The six largest banks in the United States have gotten 37 percent larger over the past five years. Meanwhile, 1,400 smaller banks have disappeared from the banking industry during that time. What this means is that the health of JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley is more critical to the U.S. economy than ever before. If they were “too big to fail” back in 2008, then now they must be “too colossal to collapse”. Without these banks, we do not have an economy. The six largest banks control 67 percent of all U.S. banking assets, and Bank of America accounted for about a third of all business loans by itself last year. Our entire economy is based on credit, and these giant banks are at the very core of our system of credit. If these banks were to collapse, a brutal economic depression would be guaranteed. Unfortunately, as you will see later in this article, these banks did not learn anything from 2008 and are being exceedingly reckless. They are counting on the rest of us bailing them out if something goes wrong, but that might not happen next time around.
– Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings (Economic Collapse, Jan 29, 2013):
Does a shadowy group of obscenely wealthy elitists control the world? Do men and women with enormous amounts of money really run the world from behind the scenes? The answer might surprise you. Most of us tend to think of money as a convenient way to conduct transactions, but the truth is that it also represents power and control. And today we live in a neo-fuedalist system in which the super rich pull all the strings. When I am talking about the ultra-wealthy, I am not just talking about people that have a few million dollars. As you will see later in this article, the ultra-wealthy have enough money sitting in offshore banks to buy all of the goods and services produced in the United States during the course of an entire year and still be able to pay off the entire U.S. national debt. That is an amount of money so large that it is almost incomprehensible. Under this ne0-feudalist system, all the rest of us are debt slaves, including our own governments. Just look around – everyone is drowning in debt, and all of that debt is making the ultra-wealthy even wealthier. But the ultra-wealthy don’t just sit on all of that wealth. They use some of it to dominate the affairs of the nations. The ultra-wealthy own virtually every major bank and every major corporation on the planet. They use a vast network of secret societies, think tanks and charitable organizations to advance their agendas and to keep their members in line. They control how we view the world through their ownership of the media and their dominance over our education system. They fund the campaigns of most of our politicians and they exert a tremendous amount of influence over international organizations such as the United Nations, the IMF, the World Bank and the WTO. When you step back and take a look at the big picture, there is little doubt about who runs the world. It is just that most people don’t want to admit the truth.The ultra-wealthy don’t run down and put their money in the local bank like you and I do. Instead, they tend to stash their assets in places where they won’t be taxed such as the Cayman Islands. According to a report that was released last summer, the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.
U.S. GDP for 2011 was about 15 trillion dollars, and the U.S. national debt is sitting at about 16 trillion dollars, so you could add them both together and you still wouldn’t hit 32 trillion dollars. Continue reading »
Tags: AXA, Bank of America, Banking, Barack Obama, Barclays, Credit Suisse, Deutsche Bank, Dictatorship, Economy, EU, Europe, Fed, Federal Reserve, GDP, Goldman Sachs, Government, Illuminati, IMF, JPMorgan, Merrill Lynch, Morgan Stanley, New World Order, Obama administration, Politics, Rockefeller, Societe Generale, U.S., UBS
– The Federal Reserve Cartel: Part IV: A Financial Parasite (Veterans Today, Dec 14, 2012):
(Excerpted from Chapter 19: Big Oil & Their Bankers…Part four of a five-part series)
United World Federalists founder James Warburg’s father was Paul Warburg, who financed Hitler with help from Brown Brothers Harriman partner Prescott Bush. 
Colonel Ely Garrison was a close friend of both President Teddy Roosevelt and President Woodrow Wilson. Garrison wrote in Roosevelt, Wilson and the Federal Reserve, “Paul Warburg was the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London.”
Tags: Adolf Hitler, Banking, Barclays, BNP Paribas, Credit Suisse, CS First Boston, Economy, Fed, Federal Reserve, Global News, Gold, Goldman Sachs, Government, James Paul Warburg, JPMorgan, Lehman Brothers, Max Warburg, Merrill Lynch, Military, Morgan Stanley, Paul Volcker, Politics, Rockefeller, Rothschild, Salomon Brothers, U.S., UBS, Woodrow Wilson
– On Gold; Morgan Stanley Is Buying What Goldman Is Selling (ZeroHedge, Dec 6, 2012):
Just yesterday, Goldman Sachs suggested its clients should sell their gold (to them?) as the precious metal cycle had turned. It seems Morgan Stanley disagrees; the firm’s preferred fundamental metal exposure for 20913 is Gold. Expecting Silver to outperform also (given its ‘cheaper’ store of value), MS believes nothing has changed on the fundamental thesis for owning gold as the adoption of QE 3 (and 4…) and the ECB’s commitments (and BoJ) remain the most important factors for a continuation of weakness in the TWI trend for the US Dollar. They also add that low nominal and negative real interest rates, ongoing geopolitical risk in the Middle East and continued mine supply issues are also supportive. From India and ETF demand to central bank buying and USD weakness – MS seems to be buying what GS is selling(or is less about muppet-mauling).
Via Morgan Stanley: Continue reading »
– Banker Bonuses: Spot The Odd One Out (ZeroHedge, Nov 29, 2012):
Bankers in London, Europe’s trading hub, are bracing themselves for significantly lower bonuses (and salary cuts) especially so relative to their New York counterparts. As Bloomberg Businessweek notes in the brief clip below, investment bankers and traders should expect a 15% pay cut compared to unchanged in the US and while hope is that these are temporary, many believe this shift is structural and reflects “US regulators [not having] the same obsession with pay structures that European regulators have.” As is evident from the chart below, there are winners and losers (and we bet you can guess who the winner is).Looks like Goldman wins, UBS loses, and even with a huge drop in revenues Morgan Stanley is being generous…
Preparing you for the ‘Greatest Depression’.
– Morgan Stanley’s Doom Scenario: Major Recession in 2013 (CNBC, Nov 20, 2012):
The bank’s economics team forecasts a full-blown recession next year, under a pessimistic scenario, with global gross domestic product (GDP) likely to plunge 2 percent.“More than ever, the economic outlook hinges upon the actions taken or not taken by governments and central banks,” Morgan Stanley said in a report.
Under the bank’s more gloomy scenario, the U.S. would go over the “fiscal cliff” leading to a contraction in U.S. GDP for the first three quarters of 2013. In Europe, the bank’s pessimistic scenario assumes a failure of the European Central Bank (ECB) in cutting rates and a delay of its bond-buying program.
From the article:
Comment: It’s not “socialism for the rich”; that’s an oxymoron.
It’s corporatism, i.e. fascism, as defined by Benito Mussolini.
– Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts (Sott.net, Sep 1, 2012):
The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.
Ben Bernanke, Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.
What was revealed in the audit was startling:
Continue reading »
Tags: Alan Greenspan, Bailout, Bank of America, Banking, Barclays, Bear Stearns, Ben Bernanke, BNP Paribas, Citigroup, Congress, Credit Suisse, Deutsche Bank, Fed, Federal Reserve, Global News, Goldman Sachs, Government, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Politics, RBS, U.S., UBS
– This Is What Happens When A Mega Bank Is Caught Red-Handed (ZeroHedge, June 23, 2012):
Back on May 10, when JPMorgan announced its massive CIO trading loss (which may or may not have been unwound courtesy of a risk offboarding to another hedge fund which may or may not be backstopped by the Fed as the massive IG9 position was not novated but merely transferred) JPM also disclosed something else which may have bigger implications for the broader, and just downgraded, banking sector. As a reminder, in the 10-Q filing, the bank reported a VaR of $170 million for the three months ending March 31, 2012. This compared to a tiny $88 million for the previous year. According to the company, “the increase in average VaR was primarily driven by an increase in CIO VaR and a decrease in diversification benefit across the Firm.” What JPM really meant is that after being exposed in the media for having a monster derivative-based prop bet on its books, it had no choice, as it was no longer possible to use manipulated and meaningless risk “models” according to which the $2 billion loss, roughly 23 sigma based on the old VaR number, was impossible (ignoring that VaR is an absolutely meaningless and irrelevant statistical contraption). Turns out it is very much possible. Which brings us to the latest quarterly Office of the Comptroller of the Currency report, and particularly the chart on page 7. More than anything it shows what happens when a big bank is caught red-handed lying about its risk exposure. We urge readers to spot the odd one out.
Another way of visualizing the change: Continue reading »
– Here We Go: Moody’s Downgrade Is Out – Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls (ZeroHedge, June 21, 2012):
Here it comes:
- MOODY’S CUTS 4 FIRMS BY 1 NOTCH
- MOODY’S CUTS 10 FIRMS’ RATINGS BY 2 NOTCHES
- MOODY’S CUTS 1 FIRM BY 3 NOTCHES
- MORGAN STANLEY L-T SR DEBT CUT TO Baa1 FROM A2 BY MOODY’S
- MOODY’S CUTS MORGAN STANLEY 2 LEVELS, HAD SEEN UP TO 3
- MORGAN STANLEY OUTLOOK NEGATIVE BY MOODY’S
- MORGAN STANLEY S-T RATING CUT TO P-2 FROM P-1 BY MOODY’S
But the kicker:
ONLY MORGAN STANLEY, HSBC CUT LESS THAN MOODY’S ORGINAL MAXIMUM.
And there you have it – the reason for the delay were last minute negotiations, most certainly involving extensive monetary explanations, by Morgan Stanley’s Gorman (potentially with Moody’s investor Warren Buffett on the call) to get only a two notch downgrade. And Wall Street wins again.
Recall, from MS’ 10-Q:
“In connection with certain OTC trading agreements and certain other agreements associated with the Institutional Securities business segment, the Company may be required to provide additional collateral or immediately settle any outstanding liability balances with certain counterparties in the event of a credit rating downgrade. At March 31, 2012, the following are the amounts of additional collateral, termination payments or other contractual amounts (whether in a net asset or liability position) that could be called by counterparties under the terms of such agreements in the event of a downgrade of the Company’s long-term credit rating under various scenarios: $868 million (A3 Moody’s/A- S&P); $5,177 million (Baa1 Moody’s/ BBB+ S&P); and $7,206 million (Baa2 Moody’s/BBB S&P). Also, the Company is required to pledge additional collateral to certain exchanges and clearing organizations in the event of a credit rating downgrade. At March 31, 2012, the increased collateral requirement at certain exchanges and clearing organizations under various scenarios was $160 million (A3 Moody’s/A- S&P); $1,600 million (Baa1 Moody’s/ BBB+ S&P); and $2,400 million (Baa2 Moody’s/BBB S&P).”
So instead of $9.6 billion, MS will face only $6.8 billion in collateral calls.
Still the firm is not out of the woods: Continue reading »
Tags: Bank of America, Banking, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Economy, Global News, Goldman Sachs, HSBC, JPMorgan, Moody's, Morgan Stanley, Nomura, Rating, RBS, Societe Generale, Warren Buffett
– Big Bank Downgrade By Moody’s Imminent (ZeroHedge, June 21, 2012):
Even as Moody is now about a week late on its Spanish bank downgrade where the banks are rated higher than the sovereign (which obviously is kept in check to prevent yields on bonds from soaring even more), here comes the next wholesale bank downgrade:
- Moody’s expected to announce ratings downgrade for UK banks this evening – Sky Sources
- Exclusive: Big news – I’m told Moody’s will announce downgrades of some of world’s biggest banks, incl in UK, after US mkts close tonight. – Sky’s Mark Kleinman
Looks like that fabricated 2 notch Margin Stanley downgrade (because 3 notches just won’t do – those 4 months of Gorman-led “negotiations” made that painfully clear) is about to strike. The real question is: What Would Egan Who Do?
Some of Britain’s biggest banks are poised to have their credit ratings downgraded by Moody’s as soon as tonight as part of a wider reassessment of the health of the global banking industry, I can reveal.
Moody’s is expected to outline its verdicts about the creditworthiness of banks including Barclays, HSBC, JP Morgan and Royal Bank of Scotland.
Tags: Bank of America, Banking, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Economy, Europe, Global News, Goldman Sachs, HSBC, JPMorgan, Moody's, Morgan Stanley, Nomura, Rating, RBS, Societe Generale, UBS
– Facebook Banks Said to Make $100 Million on Stabilizing Stock (Bloomberg, May 23, 2012):
Facebook Inc. (FB)’s underwriters for its initial public offering made gains of about $100 million through their work to stabilize the shares in public trading, said a person familiar with the matter.
The gains will be shared by all banks on the IPO syndicate, said the person, who declined to be identified because the process was private. Morgan Stanley (MS) will use some of the gains to reimburse clients who lost money because of glitches in trade execution, the person said.
– Facebook At All-Time Lows; -31% From Highs (ZeroHedge, May 22, 2012):
UPDATE: 6 minutes into the day-session and FB has a $30 handle and 17mm shares traded.
1.8mm shares have traded this morning as the long-selling continues as the stock-that-shall-not-be-named traded as low as $32.70 this morning (from its $45 highs on Friday)…
Not helping matters is the Reuters report that:
“Morgan Stanley unexpectedly delivered some negative news to major clients: The bank’s consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company. The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast.”
Cue the shareholder class-action lawsuits.
What could possibly go wrong?
– TBTF Get TBTFer: Top 5 Banks Hold 95.7%, Or $221 Trillion, Of Outstanding Derivatives (ZeroHedge, Mar 26, 2012):
Every quarter the Office of the Currency Comptroller releases its report on Bank Derivative Activities, and every quarter we find that the Too Big To Fail get Too Bigger To Fail. To wit: in Q4 2011, of the total $230.8 trillion in US outstanding derivatives, the Top 5 banks (JPM, BofA, Morgan Stanley, Goldman and HSBC) accounted for 95.7% of all Derivatives. In some respects this is good news: in Q2, the Top 5 banks held 95.9% of the $250 trillion in derivatives. Unfortunately it is also bad news, because $220 trillion is more than enough for the world to collapse in a daisy chained failure of bilateral netting (which not even all the central banks in the world can offset). What is the worst news, is that the just released report indicates that in addition to everything else, we have now hit peak delusion, as banks now report to the OCC that a record high 92.2% of gross credit exposure is “bilaterally netted.” While we won’t spend much time on this issue now, it is safe to say that bilateral netting is the biggest lie in modern finance (read How US Banks Are Lying About Their European Exposure; Or How Bilateral Netting Ends With A Bang, Not A Whimper for an explanation of this fraud which was exposed completely in the AIG collapse). And just to put this in global perspective, according to the BIS in the first half of 2011, global derivative gross exposure increased by $107 trillion to a record $707 trillion. It will be quite interesting to get the full year report to see if this acceleration in gross exposure has increased. Because if it has, we will now know that in 2011 European banks were forced up to load up on several hundred trillion in mostly interest rate swap exposure. Which can only mean one thing: when and if central banks lose control of government bond curves, an rates start moving wider again, the global margin call will be unprecedented. Until then we can just delude ourselves that central planners have everything under control, have everything under control, have everything under control.
– Moody’s may downgrade UBS and Morgan Stanley (Reuters):
Moody’s warned on Thursday it may cut the credit ratings of 17 global and 114 European financial institutions in another sign the impact of the euro zone government debt crisis is spreading throughout the global financial system.
It was reviewing the long-term ratings and standalone credit assessments of a range of banks, Moody’s added. Markets were unaffected by the Moody’s announcement.
“Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions,” the ratings agency said in a statement.
It said among 17 banks and securities firms with global capital markets operations, it might cut the long-term credit rating of UBS, Credit Suisse and Morgan Stanley by as much as three notches following the review. It said the guidance was indicative.
Among the banks that might be downgraded by two notches are Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC Holdings, and Goldman Sachs.
Bank of America and Nomura were included in those that might be downgraded by one notch.
– Stephen Roach Explains How The Fed Is Pulling The Wool Over Our Eyes (ZeroHedge, Jan. 27, 2012):
“Bernanke is betting the ranch on open-ended QE and zero interest rates and it worries me” is how Stephen Roach of Morgan Stanley starts this must-see reality-check interview with Bloomberg TV’s Tom Keene. The reason for his concern is simple, the current Fed modus operandi is a framework for rescuing economies in crisis but does little to sustain economic recovery. Roach agrees with Cal’s Eichengreen that the European and US central banks are indeed in a policy trap, committed to a path of action that has to be perpetually ante’d up to maintain the dream. With Europe in recession already in his view, Roach does not expect the tough structural action until we see greater social unrest or overwhelming unemployment and reminds us of how close we got when Greece threatened the referendum in the late summer. He goes on to discuss China (positive on their efforts and ‘solid strategy’) and it’s relative success as a regime which he contrasts with our “central bankers who pull the wool over our eyes with ZIRP and magical QE”. Taking on the mistakes of Greenspan, letting capitalism go unchecked, and his incredulity at the ‘glide-path’ charts we were treated to yesterday by the Fed’s bankers (‘accountability‘), Roach sees the painful process of deleveraging from excess debt, insufficient savings, and over-consumption as likely to take a long time as we should not assume investment will be the driver as Obama goes ‘protectionist’ (in the SOTU) on our 3rd largest export partner – yes, China.
– S&P slaps ten Spanish banks with downgrade (Sydney Morning Herald, Dec. 16, 2011):
Standard and Poor’s downgraded Thursday the credit rating of 10 Spanish banks after applying new criteria, and warned it may lower their short-term scores further.
The 10 banks had their ratings lowered and remained in “creditwatch with negative implications”, indicating the risk of a further downgrade, Standard and Poor’s said in a statement.
– S&P cuts ratings of 10 Spanish banks (Reuters, Dec. 15, 2011):
Standard & Poor’s cut the credit ratings of 10 Spanish banks on Thursday and said they remained on watch for a possible further cut subject to a review of Spain’s sovereign rating.
– Fitch cuts ratings on 8 major banks (AP, Dec. 15, 2011):
NEW YORK (AP) — Fitch Ratings on Thursday downgraded its viability ratings on eight of the world’s biggest banks, citing increased challenges facing the banking sector due to weak economic growth and heightened regulation.
The firm lowered its viability ratings for Bank of America Corp., Barclays PLC, BNP Paribas, Credit Suisse AG, Deutsche Bank AG, The Goldman Sachs Group Inc., Morgan Stanley and Societe Generale.
– The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation (ZeroHedge, Dec. 10, 2011):
Now that the rehypothecation bogeyman has been let loose, and the question of just how many paper (and apparently physical) assets have been double, triple, and n-counted (where n can be a number up to “infinity”) by the infinitely daisy-chained modern global financial system in which one’s liability is someone else’s asset….apparently up to infinity times, the next logical step was for the firms named in the original Reuters article (‘MF Global and the great Wall St re-hypothecation scandal’) to step up and begin denials they had anything to do with anything. Sure enough, below is the first (of many) such response, by Interactive Brokers, claiming it has been greatly misunderstood and unlike MF Global, it has done nothing wrong at all. Of note is that IB was simply one of many brokers mentioned in the Reuters piece, where we read that
“Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).“
Sure enough, we predicted a firm would have to promptly step up and “deny all charges.” To wit: “Oh Jefferies, Jefferies, Jefferies. Barely did you manage to escape the gauntlet of accusation of untenable gross (if not net) sovereign exposure, that you will soon, potentially as early as tomorrow, have to defend your zany rehypothecation practices.” As it turns out Jefferies, and all the other mentioned banks tried to avoid this festering can of worms by completely ignoring the topic… until Interactive Brokers’ response now demands that every single named bank has to do the same and come out with an outright explanation of why it has billions in hyper-hypothecation, or else not journalists and bloggers, but the market itself will suddenly start asking questions. Something tells us it will not be nearly as easy enough for the others to deny all charges… Incidentally, if this indeed becomes “the next big thing”, what the potential collapse of (re) hypothection means is that PBs will be unable to lend out shares anymore, in effect collapsing stock shorting as there is one giant short stock recall/forced buy in. Ironicaly the unwind of the biggest market fraud could result in the entire market pulling one last “Volkswagen“style hurrah, before all hell breaks loose.
From Interactive Brokers Continue reading »
– Have You Heard About The 16 Trillion Dollar Bailout The Federal Reserve Handed To The Too Big To Fail Banks? (The Econonomic collapse, Dec. 2, 2011):
What you are about to read should absolutely astound you. During the last financial crisis, the Federal Reserve secretly conducted the biggest bailout in the history of the world, and the Fed fought in court for several years to keep it a secret. Do you remember the TARP bailout? The American people were absolutely outraged that the federal government spent 700 billion dollars bailing out the “too big to fail” banks. Well, that bailout was pocket change compared to what the Federal Reserve did. As you will see documented below, the Federal Reserve actually handed more than 16 trillion dollars in nearly interest-free money to the “too big to fail” banks between 2007 and 2010. So have you heard about this on the nightly news? Probably not. Lately Bloomberg has been reporting on some of this, but even they are not giving people the whole picture. The American people need to be told about this 16 trillion dollar bailout, because it is a perfect example of why the Federal Reserve needs to be shut down. The Federal Reserve has been actively picking “winners” and “losers” in the financial system, and it turns out that the “friends” of the Fed always get bailed out and always end up among the “winners”. This is not how a free market system is supposed to work.
According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis comes to a whopping $16.1 trillion.
Tags: Bailout, Bank of America, Banking, Barclays, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Dexia, Dollar, Dresdner Bank, Economy, Fed, Federal Reserve, GAO, Global News, Goldman Sachs, Government, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Politics, RBS, Societe Generale, U.S., UBS, Wachovia, Wall Street, Wells Fargo
– Eurozone debt crisis: Markets dive on Greek referendum (BBC News,Nov. 1, 2011):
US and European markets have fallen following Monday’s announcement of a Greek referendum on the latest aid package to solve its debt crisis.
Eurozone leaders agreed a 50% debt write-off for Greece last week as well as strengthening Europe’s bailout fund.
But the Greek move has cast doubt on whether the deal can go ahead.
New York’s Dow Jones ended the day 2.5% lower, after a mid-afternoon rally on hope that Greek MPs may block the referendum proved short-lived.
One of Mr Papandreou’s MPs, Milena Apostolaki, resigned from the ruling Pasok parliamentary group on Tuesday, leaving the government with a two-seat majority in parliament.
Six other party members have called for Mr Papandreou to resign, according to the state news agency.
There are doubts whether the government will last long enough to hold the referendum, pencilled in for January.
A confidence vote is due to take place in the Greek parliament on Friday.
Earlier in the day, London’s FTSE 100 had ended trading down 2.2%, while the Frankfurt Dax fell 5% and the Paris Cac 40 some 5.4%.
Shares in French banks saw the biggest falls, with Societe Generale down 16.2%, BNP Paribas 13.1% and Credit Agricole 12.5%.
Other European banks also fared badly for the second day, with Germany’s Commerzbank and Deutsche Bank and the UK’s Barclays and Royal Bank of Scotland all 8% to 10% lower.
In the US, Bank of America fell 6.3%, while Morgan Stanley was down 8% at the close of trading.
Tags: Bank of America, Banking, Barclays, BNP Paribas, Cac 40, Commerzbank, Credit Agricole, DAX, Deutsche Bank, Dow Jones, EU, Europe, FTSE, Global News, Government, Greece, Morgan Stanley, Politics, RBS, Societe Generale, Society, Stock Market, Wall Street
– Revealed – the capitalist network that runs the world (New Scientist, Oct. 19, 2011):
AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters’ worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.
The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.
The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).
“Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market,” says James Glattfelder. “Our analysis is reality-based.”
Tags: Allianz, AXA, Bank of America, Barclays, BNP Paribas, Corporations, Credit Suisse, Deutsche Bank, Economy, Global News, Goldman Sachs, Government, JPMorgan, Lloyds TSB, Merrill Lynch, Morgan Stanley, Science, Societe Generale, Society, UBS, Unicredit
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
– 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.
– The Real “Margin” Threat: $600 Trillion In OTC Derivatives, A Multi-Trillion Variation Margin Call, And A Collateral Scramble That Could Send US Treasurys To All Time Records… (ZeroHedge, June 6, 2011)
Tags: Barclays, Bear Stearns, cds, Credit Suisse, Debt, Derivatives, Derivatives market, Deutsche Bank, Dollar, Economy, Global News, Goldman Sachs, Government, Morgan Stanley, otc, otc derivatives, Politics, U.S., Wells Fargo
‘BTFD!’ (Buy the f****ing dip!)
(… but only in the form of physical gold and silver.)
30 years ago, Bunker Hunt, while trying to demand delivery for virtually every single silver bar in existence, and getting caught in the middle of a series of margin hikes (sound familiar), accused the Comex (as well as the CFTC and the CBOT) of changing the rules in the middle of the game (and was not too happy about it). Whether or not this allegation is valid is open to debate. We do know that “testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective.” One wonders how many short positions current Comex board members have on now. Yet by dint of being a monopoly, the Comex had and has free reign to do as it pleases: after all, where can futures investors go? Nowhere… at least until now. In precisely 9 days, on May 18, the Hong Kong Mercantile exchange will finally offer an alternative to the Comex and its alleged attempts at perpetual precious metals manipulation.
From Commodity Online:
The Hong Kong Mercantile Exchange (HKMEx) has received authorisation from the Securities and Futures Commission and will make its trading debut on May 18, 2011 with the 1-kilo gold futures contract offered in US dollars with physical delivery in Hong Kong.
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