Because, this is America, where the rich and powerful are above the law.
However, it appears that the CFTC is saying that they know where all the customer money went.
I should note that Corzine is claiming that he has no idea where all the client funds went, which, if true, means that he is in violation of the Sarbanes-Oxley, which should still qualify for the bracelets … Or it would, if we were a nation of laws, instead of a nation of men …
They didn’t do much.
The FOMC Statement does show that they are expecting “moderate growth,” and one can infer that they are scared sh%$less about the Euro and what is going on in Europe.
Pretty much, not much.
No action from the FDIC for 3 weeks, this may be the longest stretch without closings in a year.’
That being said, there were 2 credit union closings last week that I missed: (Sorry)
It’s been an odd 2 weeks.
For those of you have followed my blog for a while, I started it in May of 2007, I have been suggesting that the Euro was likely to supplant the US as the world’s reserve currency.
Well, I missed a couple of things:
Now, I’m inclined to believe that, absent a German exit from the Euro, that the unified currency is doomed, and the EU may be as well.
Unlike my hairier brother,* I do not think that another war in Europe is inevitable, though I think that an EU breakup has a potential of leading to some shooting, or, more likely, some sort of a “Cold Peace.”
*The Indians call him “Carpet who walks”.
Here are two bullet points for the presentation
On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
A Different Message
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives — at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Stock Wipeout
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.
The fund manager says he was shocked that Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.
I think that the next two paragraphs, while appearing to exonerate those involved, actually reveal the criminality:
There’s no evidence that they did so after the meeting; tracking firm-specific short stock sales isn’t possible using public documents.
And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.
I understand where the reporter is coming from: He knows what could be done with information, and what probably was done with the information, but his legal department said that he could not connect the dots.
This is Wall Street and the “Vampire Squid” we are talking about. Of course they would use this information to profit. It’s what they do.
As to the morality of Hank Paulson, I will refer you to the fact that he does not use email, and “People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes.”
And this guy was the f%$#ing Secretary of the F%$#ing Treasury of the United States of America
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(pictured to the left), 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: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3
What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.
To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.
Seriously, if we don’t start prosecuting these folks, this is never going to end, and by these folks, I mean Hank Paulson, and any member of the Federal Reserve who did anything beyond jaywalking.
We need to start throwing asses in jail, serious time in serious prisons, because if we don’t, they are just going to keep looting.
It looks like the Euro Zone may be letting the big banks get 100¢ on the dollar for bad sovereign debts:
Euro zone states may ditch plans to impose losses on private bondholders should countries need to restructure their debt under a new bailout fund due to launch in mid-2013, four EU officials told Reuters on Friday.
The possible move helped push stocks up in Europe and the U.S.
Discussions are taking place against a backdrop of flagging market confidence in the region’s debt and as part of wider negotiations over introducing stricter fiscal rules to the EU treaty.
Euro zone powerhouse Germany is insisting on tighter budgets and private sector involvement (PSI) in bailouts as a precondition for deeper economic integration among euro zone countries.
Commercial banks and insurance companies are still expected to take a hit on their holdings of Greek sovereign bonds as part of the second bailout package being finalized for Athens.
But clauses relating to PSI in the statutes of the European Stability Mechanism (ESM) — the permanent facility scheduled to start operating from July 2013 — could be withdrawn, with the majority of euro zone states now opposed to them.
The concern is that forcing the private sector bondholders to take losses if a country restructures its debt is undermining confidence in euro zone sovereign bonds. If those stipulations are removed, most countries in the euro zone argue, market sentiment might improve.
What is going on here is that the European Central Bank (ECB) was structured to eschew one of the most basic activities of a central bank, back-stopping debt sales in the presence of an investor panic.
The problem is that the ECB was structured largely in response to the German experience with hyperinflation in the 1920s, which led to the creation of the ECB as an organization committed to austerity and battling inflation to the exclusion of all other concerns.
I guess I kind of understand this, because, after all, they think that this period of extreme inflation led to the collapse of the German economy in the 1930s, and the rise of the Nazis, and WWII.
Of course, the German central bank of the 1930s was among the tightest of the central banks, and made the German depression particularly brutal, which could also tagged as leading to rise of the Nazis, and WWII.
Of course, if subscribe to the theory that roughly every century a war occurs in Europe, the parallels now, and 1914, when the Very Serious People in Europe, with the memory of the Napoleonic wars (1812), frantically tried to integrate the economies of Europe, which also sounds a lot like the entire Euro currency project.
My brother has predicted a new war in Europe, (see the comments)and this has led me to start looking at rather alarming echos of the past.
But I doubt it.
In any case, representatives of OWS have “Mic Checked”* Barack Obama:
President Obama was heckled on Tuesday during an appearance at a New Hampshire high school.
Obama had traveled north to the Granite State, which holds the nation’s first presidential primary, to discuss the economy and his proposal to extend a current payroll tax cut.
Just as the president started his speech, protesters, apparently from the Occupy Wall Street protest movement, used the “human mic” technique to amplify their voices. It was unclear what the protesters were saying, or what point they were attempting to make.
The president smiled through the disruption, saying: “No, it’s OK,” as other parts of the crowd sought to hush the protesters by chanting his name and old campaign slogan, “Yes We Can.”
In Chicago, another group mic checked Rahm Emmanuel too.
I don’t expect either of them to sympathize with OWS’ goals, ever.
They are both products of the wing of the Democratic party that is beholden to big money, and the FIRE (Finance, Insurance, Real Estate) sector’s money in particular, so to the degree that we see any movement towards accountability and meaningful regulations for the banksters, it will be because they are dragged kicking and screaming toward doing the right thing.
I’m not sure if the Banksters have signed off on a disinformation, disruption, and infiltration program against Occupy Wall Street, but a a prominent Washington lobbying firm is trying to sell it to them:
A well-known Washington lobbying firm with links to the financial industry has proposed an $850,000 plan to take on Occupy Wall Street and politicians who might express sympathy for the protests, according to a memo obtained by the MSNBC program “Up w/ Chris Hayes.”
The proposal was written on the letterhead of the lobbying firm Clark Lytle Geduldig & Cranford and addressed to one of CLGC’s clients, the American Bankers Association.
CLGC’s memo proposes that the ABA pay CLGC $850,000 to conduct “opposition research” on Occupy Wall Street in order to construct “negative narratives” about the protests and allied politicians. The memo also asserts that Democratic victories in 2012 would be detrimental for Wall Street and targets specific races in which it says Wall Street would benefit by electing Republicans instead.
According to the memo, if Democrats embrace OWS, “This would mean more than just short-term political discomfort for Wall Street. … It has the potential to have very long-lasting political, policy and financial impacts on the companies in the center of the bullseye.”
The memo also suggests that Democratic victories in 2012 should not be the ABA’s biggest concern. “… (T)he bigger concern,” the memo says, “should be that Republicans will no longer defend Wall Street companies.”
It’s amusing, but it’s not time for a happy dance.
The thing to remember, and Chris Hayes is clear on this in the vid, is that this memo is just one pitch at creating a CoIntelPro type program, even if the American Bankers Association turned down this proposal.
There are dozens, if not hundreds of similar proposals in the works, and people who are trying to find someone obscenely rich mother f%$#er to bankroll them, so you have to figure that there are similar programs in process.
We are, after all, juxtaposing unconscionable levels of wealth with a sense of entitlement, and that’s a toxic brew.
Because financial fraud prosecutions have fallen even further under Obama than under Bush:
During the first 11 months of the 2011 fiscal year, the federal government filed 1,251 new prosecutions for financial institution fraud. If that pace continues, TRAC projects a total of 1,365 prosecutions for the fiscal year. That’s less than half the total a decade ago.
The decline in these new cases stands in contrast to the government’s broader approach to federal criminal prosecutions. Federal prosecutions for other crimes have grown tremendously, with the number of total new prosecutions filed for all federal crimes nearly doubling over the last decade:
(emphasis original)
As you can see, federal prosecutions have skyrocketed:
But prosecutions for financial fraud have fallen.
If you were wondering whether or not Obama was a willing captive of Wall Street, this should disabuse you of this.
The only hope here is to play on his weakness and cowardice to force him to do the right thing, because it’s clear that his better angels lie with the Vampire Squid.*
*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.
And here they are, ordered, and numbered for the year so far.
2 a week is pretty close to trend. I would also note that while have been 9 credit union closing this year, but none since mid-July.
So, here is the graph pr0n with last years numbers for comparison (FDIC only):
*Which is why I’m not going with the MJ popcorn GIFTalk about mangling a metaphor, huh?*
But that’s the way I see the reports that the CFTC will be auditing all futures firms, in the hopes of preventing the theft co-mingling of funds that MF Global did under John Corzine:
Federal regulators have ordered an audit of every American futures trading firm to verify that customer money is protected, a move that comes after roughly $600 million in client funds were discovered to be missing from MF Global, the bankrupt brokerage firm once run by Jon S. Corzine.
The Commodity Futures Trading Commission, the federal regulator searching for the missing money at MF Global, will audit many of the nation’s largest futures commission merchants, according to a person briefed on the decision. Exchanges like the CME Group will examine smaller firms to ensure they are keeping customer money separate from company money, a fundamental rule on Wall Street.
The futures commission also announced on Thursday that it had formally opened an investigation into MF Global, a largely symbolic move that indicated the seriousness of the case. The agency has already issued subpoenas to MF Global and its auditor, PricewaterhouseCoopers, but the commission had to vote before announcing a full-scale investigation.
“The commission has determined it is in the public interest to confirm the existence of this particular investigation,” the agency said in a statement.
The thing here is that what MF Global did may be considered legal by regulators, as Jesse notes (BTW, he’s been on this like white on rice):
This is most likely a distortion of the principle known as ‘rehypothecation‘ in which a broker can use customer positions and holdings as collateral pledged for a margin loan for the purpose of securing funding from a third party to service that loan.
The principle at play here may be closer to a type of droit du seigneur, in which any assets you have posted at a futures brokerage may be used at will by the broker for their own purposes without regard to any customer obligations. It depends on the extent to which MF took customer assets and leveraged them.
In a way it is just making the unbalanced relationship between Wall Street and its customers official.
It means that customers are bearing hidden counterparty risks on assets to which they thought they had a clear title, such as Treasuries, and foreign currencies, and warehouse receipts for precious metals.
It means that brokers can go beyond the mere provision of funding for loss, and use customer accounts to fund their own leveraged speculation under exemptions duly granted by their ‘regulators.’
(emphasis mine)
Basically, what it means is that MF Global was allowed to use customer funds as collateral, without telling the customers, and without sharing any of the profits derived from this leverage.
What is going to happen here is that no one (except perhaps Corzine, since he’s clearly a Democrat) will see any serious jail time, and there will be no change in the rules, because, after all the system must be preserved, which is pretty much a mantra of both the professional staff at the various regulatory agencies and the White House.
As to preserving the existing system, it is merely a system of rent-taking, and if we were to take it down completely, and replace it trained elephants doling out loans, we’d probably do better, because elephants, at least, work for peanuts.
It was probably just because today is Veteran’s Day, and while a lot of people were at work today, the FDIC wasn’t.
88 failures so far this year.
At this point, I would say that it’s 50-50 whether or not we hit 3 digits for bank failures this year:
Community Bank of Rockmart in Rockmart, GA.
This is obviously out of the ordinary for the FDIC (the NCUA doesn’t wait until Fridays), so I’m wondering if something is odd, as in criminal indictments to follow, or if this Thursday is Friday, because of the
Nigel Tufnel
Veteran’s Day holiday.
We’ll find out tomorrow, when I’ll post my regular update, with graph, tomorrow.
While it remains online, here is the movie The Inside Job:
Inside Job / Trabalho Interno (2010) Legendado PT from MDDVTM TV12 on Vimeo.
H/t DC on the Stellar Parthenon BBS.
I’ve watched the first 15 minutes so far.
Well, here is the evidence:
Comedy central does not have his monologue up yet, but I’m watching Jon Stewart talk about Jon Corzine’s clusterf%$# at MF Capital.
It’s not up on the web yet, but this is unbelievably brutal.
As I’ve said before, don’t piss this man off.
I’ll post it tomorrow.
The big banks, who are so dedicated to nickel and diming their customers that Wal-Marthas experienced explosive growth in its check cashing services as people desperately try to find a bank that does not cheat them:
Americans say they are fed up with banks. They are protesting on Wall Street and raising a ruckus over outsize fees. Now there is a surprising beneficiary: Wal-Mart.
Geoffrey Cardone, a 26-year-old factory worker, said he dumped his bank account because he felt that he was being nickeled and dimed by fees. His new payday ritual includes a trip to the Wal-Mart here in northeastern Pennsylvania.
“It’s cheaper,” said Mr. Cardone, who was charged a flat fee of $3 to cash his paycheck. Many check-cashing stores keep a percentage of the check, which tends to be higher.
The Wal-Mart here has a clerk in a brightly painted Money Center near the entrance, like more than 1,000 other Wal-Marts across the country. Customers can cash work and government checks, pay bills, wire money overseas or load money on to a prepaid debit card. At most Wal-Marts without dedicated Money Centers, the financial services are available at the customer service desks or kiosks.
Four years ago, Wal-Mart abandoned its plans to obtain a long-sought federal bank charter amid opposition from the banking industry and lawmakers, who feared the huge retailer would drive small bankers out of business and potentially conflate its banking and retail operations. Ever since, Wal-Mart has been quietly building up à la carte financial services, becoming a force among the unbanked and “unhappily banked,” as one Wal-Mart executive put it.
Even before the recent outcry against banks, the services had become popular with cash-poor customers, many of whom never had a bank account and found the services more affordable than traditional check-cashing operations. Now newcomers to the ranks of the banking disaffected are helping to swell the numbers, Wal-Mart officials said.
Here is the kicker:
In research conducted a year and a half ago, Wal-Mart found that more than 60 percent of the customers using its financial services had bank accounts. When Wal-Mart asked those people how much their banking activities cost them over the last six months, the answer was between $200 and $400, Mr. Eckert said, with overdraft fees, minimum-balance charges and so forth.
(emphasis mine)
So for the privilege of giving customers ¼% on their own money, money that they then lend to them at 23% as revolving credit, they are also charging them around $500 a year.
Let’s see, 500 a year, ¼% … So the break even point is about $200,000.00.
And the VSPs wonder why people hate the banksters.
Silvio Berlusconi has offered to resign:
The European debt crisis appeared to claim its most prominent victim on Tuesday when Prime Minister Silvio Berlusconi of Italy, cornered by world markets and humiliated by a parliamentary setback, pledged to resign after Italy’s Parliament passes austerity measures demanded by the European Union.
Although Mr. Berlusconi’s exit was not immediate — weeks of political wrangling over the austerity measures probably lie ahead — political commentators said they could see no escape this time for the prime minister, whose Houdini-like ability to wriggle free from scandals is legendary.
“A season is over,” said Mario Calabresi, the editor in chief of the Turin daily newspaper La Stampa, who said Mr. Berlusconi told him that he was not only stepping down, but also would not run for office again.
In the end, it was not the sex scandals, the corruption trials against him or even a loss of popular consensus that appeared to end Mr. Berlusconi’s 17 years as a dominant figure in Italian political life. It was, instead, the pressure of the markets — which drove Italy’s borrowing costs to record highs this week — and the European Union, which could not risk his dragging down the euro and with it the world economy.
It’s good that he’s going, but the bigger picture is that Berlusconi’s continued political success has been almost entirely due to his near complete dominance of Italian television.
Self-serving clowns like Silvio are the inevitable result of media consolidation, whether it’s the Italian monopoly on commercial TV (and effective control of state TV), or the media oligopoly in the United States.
The problem is that while one can have free and fair elections, but without an independent and heterogeneous media, you stand a real risk of not having a free and fair campaign.
Stealing from our customers is a business decision, not a legal decision.
——An unnamed Citibank Executive
You see, Citi was simply taking money from customers when they overpaid their accounts.
It was called the “sweep” program, and it gets even better:
The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool.
Why are we not not sending these assholes to jail?
I know that I’m a bit behind on this story, it broke in 2008, but it still raises the question, why aren’t these people going to jail? Why hasn’t anyone gone to jail?
You can see the California AG’s PR on this here.
In describing a new, “informal leadership directorate” in Europe, the “leaders of Germany and France, the presidents of the executive European Commission and of the European Council of EU leaders, the heads of the European Central Bank and the International Monetary Fund, the chairman of euro zone finance ministers, and the European Commissioner for economic and financial affairs,” is described as a “New Politburo“.
Heh.
