Category: Finance

It Would Be Ironic If…………

No Comments

Pass the Popcorn

The first big name bankster to get put in the dock is Barack Obama’s biggest backer, Jon Corzine for his role in the collapse of MF Global.

You see it appears that first he successfully lobbied regulators to allow the trades that did his firm in, and then the firm commingled customer funds with their own private risk capital,* so now he is hiring a lawyer:

Jon S. Corzine has hired Andrew J. Levander, a leading white-collar criminal defense lawyer, according to three people briefed on the matter, as the former New Jersey governor deals with fallout from the collapse of MF Global, the brokerage firm he has run since last year.

Mr. Corzine resigned from MF Global on Friday morning and will not seek $12 million severance payments.

Federal authorities, including the Federal Bureau of Investigation and the Securities and Exchange Commission, are investigating the $630 million in missing customer money at MF Global.

Mr. Levander could not be reached as he is out of the country, according to his assistant. He did not return an e-mail seeking comment. Daniel O’Donnell, the chief executive of Mr. Levander’s law firm, Dechert, declined to comment.

In Mr. Levander, the chairman of Dechert, Mr. Corzine has retained a New York lawyer who is no stranger to defending prominent Wall Street executives. He represented John Thain, the former chief executive at Merrill Lynch, in a government inquiry related his role in Merrill’s sale to Bank of America. Ezra Merkin, a hedge fund manager who invested with Bernard L. Madoff, hired Mr. Levander to defend him against a New York attorney general’s lawsuit connected to the Madoff case.

The only question now is who is first, Barack Obama, claiming never to have known the guy, or the Republicans, who will try to super glue Corzine to him.

Pass the popcorn.

*The technical term for this is “stealing”.

It’s Bank Failure Friday!!!! (on Sunday)

No Comments

I missed last week’s closings, so it’s included here this week.

It appears that the little spike over weeks 41 and 42 is over.

And here they are, ordered, and numbered for the year so far.

  1. All American Bank, Des Plaines, IL  ⇐ This was from last week
  2. Mid City Bank, Inc., Omaha, NE
  3. SunFirst Bank, St. George, UT

Full FDIC list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

Not Enough, But a Step in the Right Direction

No Comments

The European Central Bank, in the first meeting since Mario Draghi replaced the clueless Jean-Claude Trichet as president, the ECB has chosen to cut rates.

Seeing as how the whole world, and in particularly the increasingly desperate cluster f%$# that is the Euro Zone, are in the the midst of a liquidity crisis/debt overhang where cheap money won’t do much.

That being said, the fact that Draghi did not wait a few months in order to save face for the ECB, and that he’s actually warning of an upcoming recession indicates that he is a bit more of a “reality based” than your typical central banker, who typically only give a sh%$ about inflation.

It should be noted that this is actually a significant departure from prior ECB policy, because Draghi appears to be sending a message that he will, at least temporarily ignoring the (under the current circumstances absolutely absurd) 2% inflation target.

You Know, Occupy Wall Street Is Beginning to Look More and More Like Tunisia or Egypt…

No Comments

And not just because Tunisians are drawing satirical comparisons with the Arab spring, making comments about “recognizing the American Transitional National Council,” on Barack Obama’s Facebook page.

It appears that law enforcement has been directed to crack down on the Occupy Wall Street movement, with the recent crack downs in Oakland, Portland, and Tulsa, with what was clearly brutality in the cases of Oakland and Tulsa.

Additionally, it appears that the NYPD, realizing that their previous thuggery has served to help the movement to go viral, has become more sophisticated in its tactics by herding drug addicts and the homeless to Zuccotti Park in an attempt to  disrupt the New York protests.

When this is juxtaposed with the general strike in Oakland today,  it really is beginning to seem a lot more like the Arab Spring, though whether it is Tunisia or Bahrain remains to be seen.

I will say that one protest, the occupation of Obama’s chairman of the Council on Jobs and Competitiveness and GE CEO Jeffrey Immelt’s front lawn brings back memories of the protests on chancellor’s Joe Duffy’s front lawn at UMass over the maze.*

I also came across an interesting take on the whole movement, that it is a proxy for a primary challenge to Obama:

Like a major national primary against a sitting-though-unpopular president, this movement is sending a signal to the existing elites. Change and deliver on a new social contract, or else. It isn’t clear what “or else” means. Perhaps this is signifying a collapse of older institutional arrangements, or a breakdown in belief in existing authority structures. Perhaps this is the first of many large-scale civil disturbances, and a spark that will lead the establishment to solidify its authoritarian impulses. Maybe the training of tens of thousands of people around the world in nonviolent non-electoral means of challenging power, the legitimization of protest, the introduction of new areas of contention like the role of the Federal Reserve, and the re-mainstreaming of figures like Noam Chomsky and the promotion of people like Naomi Klein and Chris Hedges are signifying a larger shift in our political culture. It’s too early to know.

One of the bitter ironies about the Obama administration is that they have successfully seized control of the Democratic Party apparatus to a degree that I’ve never seen, which makes primarying him, even as a symbolic gesture, is off the table, and, much like water finding a path of least resistance, Occupy Wall Street seems to an alternate path.

If this is the case, then what appears to be the strangely incoherent decision making process of Occupy Wall Street makes sense, because the Obama administration’s apparatus is best defined as very bright control freaks, and this sort of decentralized decision making is something that is calculated to make their little hardwired politico brains explode.

The alternative to this unwieldy process would be the almost certain co-opting of the movement.

*There was a chain link fence erected as a sculpture at UMass in the 1970s, and a frequent activity of students until the late 1980s was to get drunk and wander through the maze. After a decade of drunks bumping into the walls, it was falling apart, and the administration wanted to demolish it. This resulted in a storm of protests, culminating in protests on the Chancellor’s lawn, and the administration agreed to replace the sculpture, rather than demolishing it.

What a Whiny Bitch

No Comments

Roll Jon Stewart

It appears that BoA CEO Brian Moynihan is incensed at the criticism directed at bank of America:

Bank of America Corp. Chief Executive Officer Brian T. Moynihan said he’s “incensed” by public criticism of his company and is pushing back by reminding local leaders of its contributions to their economies.

Moynihan, 52, told employees in a global town hall meeting last week from the firm’s Charlotte, North Carolina, headquarters that the “place to win the battle” over the bank’s battered public image is at the state and municipal level.

Bank of America’s outreach campaign is part of Moynihan’s effort to turn around the lender since he took over as CEO in January 2010 following two taxpayer bailouts. His plan to charge some debit-card users a $5 monthly fee drew reprimands from President Barack Obama and lawmakers, including U.S. Senator Richard Durbin, the Illinois Democrat who said customers should withdraw their deposits in protest.

“I, like you, get a little incensed when you think about how much good all of you do, whether it’s volunteer hours, charitable giving we do, serving clients and customers well,” Moynihan said during the Oct. 18 gathering. To the bank’s critics, he said, “You ought to think a little about that before you start yelling at us.”

Moynihan is laboring to rebuild the bank’s reputation with customers, employees and investors. Even before the debit-card fee sparked protests in Los Angeles and Boston, state attorneys general blamed the bank for using improper documents to justify foreclosures. To help reverse a stock decline this year of more than 50 percent, the lender is cutting expenses by eliminating more than 30,000 jobs.

If you don’t want people to complain about your bank, start by not treating your customers like sh%$.

Mr. Moynihan, why don’t you  ……… Well, Jon Stewart said it best. (see vid)

Taibbi Gets It

No Comments

People are claiming that somehow or other Occupy Wall Street hates the rich because of envy of the wealthy.

Taibbi argues that it’s because they haven’t gotten rich by cheating, not winning:

And we hate the rich? Come on. Success is the national religion, and almost everyone is a believer. Americans love winners. But that’s just the problem. These guys on Wall Street are not winning – they’re cheating. And as much as we love the self-made success story, we hate the cheater that much more.

We cheer for people who hit their own home runs in this country– not shortcut-chasing juicers like Bonds and McGwire, Blankfein and Dimon.

That’s why it’s so obnoxious when people say the protesters are just sore losers who are jealous of these smart guys in suits who beat them at the game of life. This isn’t disappointment at having lost. It’s anger because those other guys didn’t really win. And people now want the score overturned.

Go read the rest.

The Question is Not Whether, but How Obama’s HARP Will F%$# Homeowners

No Comments

So, Obama has announced a new assistance program for homeowners with underwater mortgages, the Home Affordable Refinance Program, which is to succeed the thoroughly corrupt HAMP program, which was geared toward helping the banksters to defraud homeowners, to allow for that cash flow to paper over some of the evidence of their insolvency.

A quick perusal of the proposal gives us the the following bullet points:

  • The homeowner can be at a higher level of negative equity than previously allowed.
  • An appraisal is not necessarily.
  • Some fees are being waived, particularly for those who take shorter term loans.
  • Underwriting standards for the banks are relaxed, making it less likely for them to have to buy back bad loans. ⇐ This is the stealth bank bailout. Another f%$#ing get out of jail free card.
  • An agreement from the major banks to not block refinancing on the basis of a 2nd mortgage.
  • It only applies to loans held by Fannie and Freddie .

I’m dubious because I believe that the Obama administration has been completely captured by the banksters, and so will not live up to its expectation, but Felix Salmon calls the program pathetic based on its basic features:

  • If you’re a homeowner whose mortgage isn’t owned or guaranteed by Frannie, you’re out of luck.
  • If your mortgage was sold to Frannie after May 31, 2009, you’re out of luck.
  • If you want to get out of negative-equity hell by doing a principal reduction, you’re out of luck.
  • If your bank doesn’t feel like participating, for whatever reason, you’re out of luck.

Salmon also notes that even by the FHFA, the agency that is managing this program, does not forecast a significant uptick in refinancing, and the initial program has refinanced less than ⅕ of the the anticipated activities.

So, it probably fails on both the specifics of the plan, and the fact that Timmy “The Bankster’s Bitch” Geithner will be supervising the implementation, which is a recipe for another blow job for big banks.

God Bless Gawker

No Comments

Call Goldman Sachs CEO Lloyd Blankfein on His Cell Phone and Cheer Him Up

It’s been a rough day for Goldman Sachs CEO Lloyd Blankfein. His company reported a humiliating $428 million quarterly loss this morning, just the second in Goldman’s 12-year history as a public company. We figured he might like a sympathy call from the Occupy Wall Street folks, who know how to get by with less. Here’s his cell phone number.

Last week’s effort to put Citigroup CEO Vikram Pandit in touch with the Wall Street protesters worked so well we thought we’d expand the program.

Here are some pick-me-up messages you might want to deliver to Blankfein: “I know you just lost half a billion dollars, but look on the bright side—you’ve set aside $10 billion in bonuses to pay out to your 34,200 employees.” Or, “Hey, just do what I do when I run out of money—head over to the Fed’s discount window and borrow more at no interest.” Or, “Just think how much worse the loss would be if you hadn’t had the foresight to snag that $13 billion taxpayer-financed pass-through bailout via AIG.” Or, “We’ve all got to eat a shitty deal once in a while.”

…………

Heh.
H/t MP at the Stellar Parthenon BBS.

It’s Bank Failure Friday!!!!

2 Comments

And here they are, ordered, and numbered for the year so far.

  1. Old Harbor Bank,Clearwater, FL
  2. Decatur First Bank, Decatur, GA
  3. Community Capital Bank, Jonesboro, GA
  4. Community Banks of Colorado, Greenwood Village, CO

Full FDIC list

Two weeks of 4 bank failures in a row.

I’m not sure if this is a trend, I’d wait another week on that, but we are back to (exactly) a two bank failure per week.

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

Least Surprising News of the Day

No Comments

According to Senator Sanders, a recent GAO report has uncovered pervasive conflicts of interests at the Federal Reserve.

The language is steeped in the gentility of the Senate, but I think that the short version is, “Stop the looting and start prosecuting”.

Sanders’ full press release after the break.

GAO Finds Serious Conflicts at the Fed

October 19, 2011

WASHINGTON, Oct. 19 – A new audit of the Federal Reserve released today detailed widespread conflicts of interest involving directors of its regional banks.

“The most powerful entity in the United States is riddled with conflicts of interest,” Sen. Bernie Sanders (I-Vt.) said after reviewing the Government Accountability Office report. The study required by a Sanders Amendment to last year’s Wall Street reform law examined Fed practices never before subjected to such independent, expert scrutiny.

The GAO detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves.  “Clearly it is unacceptable for so few people to wield so much unchecked power,” Sanders said. “Not only do they run the banks, they run the institutions that regulate the banks.”

Sanders said he will work with leading economists to develop legislation to restructure the Fed and bar the banking industry from picking Fed directors. “This is exactly the kind of outrageous behavior by the big banks and Wall Street that is infuriating so many Americans,” Sanders said.

The corporate affiliations of Fed directors from such banking and industry giants as General Electric, JP Morgan Chase, and Lehman Brothers pose “reputational risks” to the Federal Reserve System, the report said. Giving the banking industry the power to both elect and serve as Fed directors creates “an appearance of a conflict of interest,” the report added.

The 108-page report found that at least 18 specific current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis.

In the dry and understated language of auditors, the report noted that there are no restrictions in Fed rules on directors communicating concerns about their respective banks to the staff of the Federal Reserve. It also said many directors own stock or work directly for banks that are supervised and regulated by the Federal Reserve. The rules, which the Fed has kept secret, let directors tied to banks participate in decisions involving how much interest to charge financial institutions and how much credit to provide healthy banks and institutions in “hazardous” condition. Even when situations arise that run afoul of Fed’s conflict rules and waivers are granted, the GAO said the waivers are kept hidden from the public.

The report by the non-partisan research arm of Congress did not name but unambiguously described several individual cases involving Fed directors that created the appearance of a conflict of interest, including:

  • Stephen Friedman In 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap Fed loans. During the same period, Friedman, chairman of the New York Fed, sat on the Goldman Sachs board of directors and owned Goldman stock, something the Fed’s rules prohibited. He received a waiver in late 2008 that was not made public. After Friedman received the waiver, he continued to purchase stock in Goldman from November 2008 through January of 2009 unbeknownst to the Fed, according to the GAO.
  • Jeffrey Immelt The Federal Reserve Bank of New York consulted with General Electric on the creation of the Commercial Paper Funding Facility. The Fed later provided $16 billion in financing for GE under the emergency lending program while Immelt, GE’s CEO, served as a director on the board of the Federal Reserve Bank of New York.
  • Jamie Dimon The CEO of JP Morgan Chase served on the board of the Federal Reserve Bank of New York at the same time that his bank received emergency loans from the Fed and was used by the Fed as a clearing bank for the Fed’s emergency lending programs. In 2008, the Fed provided JP Morgan Chase with $29 billion in financing to acquire Bear Stearns.At the time, Dimon persuaded the Fed to provide JP Morgan Chase with an 18-month exemption from risk-based leverage and capital requirements. He also convinced the Fed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired this troubled investment bank.

To read a more detailed analysis of the GAO report prepared for Sen. Sanders, click here.

To read the full GAO report, click here.

Another Stinker of a Bank Deal from

No Comments

Hoocoodanode that Biden’s Kid Would Be a Hero in All This?

Another day, another sell-out deal from Iowa Attorney General Tom Miller and the Obama administration:

Talks between U.S. states and top banks over mortgage abuses are nearing agreement on a major sticking point that has bogged down settlement negotiations for more than a year.

…………

Under the proposed terms of the settlement — which could total $25 billion — banks would get broad legal immunity from state lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.

…………

Banks have been holding out on a multi-billion-dollar settlement because they wanted broader legal immunity than state attorneys general were prepared to offer.

Originally, the states were only considering immunity for shortcuts taken during mortgage servicing and foreclosures, including the so-called “robo-signing” of documents to evict people behind on their mortgages.

In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.

In exchange, banks would agree to refinance mortgages for borrowers who are current on their payments but owe more than their homes are currently worth, the sources said.

So, as Biden notes (see vid), they are getting a (pretty lame) deal from a contractor for bad gutters, and he demands to be cleared for the roof and the gutter they put in too.

But, as Yves Smith observes, the relief, such as it is, would only apply to non-securitized mortgages (about 20% of the mortgages), and the banks get to write the deal for the homeowners, meaning more booby traps for the the people who get “relief”, and probably a waiver of private liability.

BTW, this likely f%$#s the MBS investors, because without an official investigation of the securitization process, any potential private suit will be hamstrung.

And the Banksters Look to Occupy Greece

1 Comment

Police with Bayonets, Yeah, this is All About Law Enforcement!

No, I’m not joking, the EU has a paramilitary force, the European Gendarmerie Force, and they have allegedly been deployed to Greece:

Did you know that the EU has its own riot police that can operate in any European country but is answerable directly to none of them? No I didn’t either.

They are called the European Gendarmerie Force (Eurogendfor) . They are based in Italy but funded and staffed by six signatory nations who are France, Italy, Holland, Spain, Portugal and Romania. However, according to the Treaty which established Eurogendfor they can operate in any EU country and are available to others who invite them to do so. The country which invites them in is refered to as the ‘Host’.

…………

What does it say if it turns out ot be true that the Greek government has ‘invited’ a quasi military riot police made of personel from other nations to operate in Greece against its own citizens. Greek police not enough? Greek military not willing to crack heads? Got to get some foreigners to do it for you?

What exactly is the difference between Eurogendfor and any other mercenary force? The Greek government could ‘invite’ any private army in. No matter how you view the status of Eurogendfor, the reality is the Greek people did not vote in favour of joining it and certainly were not asked if they wanted foreign quasi military forces to be able to operate in Greece. If this story turns out to be true then it iouwld mean that the greek government that like all governments through history that have lost all legitimacy with its own people, eventually seek military support from outside forces with which to supress its own people. Once you view it like that the word tyranny eventually enters in. And that word has extremely serious consequences.

Let’s take a step back from this. The cuts in Greece are tied up intimately with bailing out French and German banks as well as the Greek owners of Greek banks. The Greek people have been demonstrating against the bail out for months. The Greek government has ignored its people and chosen to do the bidding of the EU elite, the IMF, the ECB and most of all the banks globally.

Now it is alleged that a non-Greek militarized riot force may have arrived to enforce austerity. Whose bidding would they really be doing? Whose interests would they be serving? Could it be the banks? Have the financial class now got their own riot police who they can ship to wherever the locals try to defy them and where the local police cannot be ‘trusted’ to serve the supra-national interests of the banks?

Of course this is not how Eurogendfor is set up. I know that. But is this how it actually works nevertheless?

Obviously at this point, what we have is one blogger (at the link) who has, “checked with friends in Athens,” who have confirmed this, so this is not at the level of confirmation, and I don’t know anyone in Greece, but there is a history of such actions,* so the allegations pass my smell test.

* The history that I know of are the occupations of Latin American nations to extract debt payments in the inter-war years, which prompted Will Rogers to say, following a tour of Latin America, that he knew that he was back in the USA when he didn’t see any US Marines.

OK, This Ain’t Good…………

No Comments

Bank of America is trying to take its Merrill Lynch’s dodgy derivatives division and move it to the FDIC insured bank.

Interestingly enough, this has created a conflict between the Federal Reserve (who want to green light this) and the FDIC (who oppose the move):

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”

(Emphasis mine)

Gee, you think? Keeping banks from moving risky investments to federally insured divisions is a bad thing?

Moody’s Investors Service downgraded Bank of America’s long-term credit ratings Sept. 21, cutting both the holding company and the retail bank two notches apiece. The holding company fell to Baa1, the third-lowest investment-grade rank, from A2, while the retail bank declined to A2 from Aa3.
Moody’s Downgrade

The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter.

………

Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law.

“Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914.

………

In 2009, the Fed granted Section 23A exemptions to the banking arms of Ally Financial Inc., HSBC Holdings Plc, Fifth Third Bancorp, ING Groep NV, General Electric Co., Northern Trust Corp., CIT Group Inc., Morgan Stanley and Goldman Sachs Group Inc., among others, according to letters posted on the Fed’s website.

The central bank terminated exemptions last year for retail-banking units of JPMorgan, Citigroup, Barclays Plc, Royal Bank of Scotland Plc and Deutsche Bank AG. The Fed also ended an exemption for Bank of America in March 2010 and in September of that year approved a new one.

Section 23A “is among the most important tools that U.S. bank regulators have to protect the safety and soundness of U.S. banks,” Scott Alvarez, the Fed’s general counsel, told Congress in March 2008.

If Bank of America is not actually insolvent, they wouldn’t be doing this.  This is outright fraud.

What’s more, the Federal Reserve is an active accomplice in this .

H/t Naked Capitalism, where Yves Smith notes:

This changes the picture completely. This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail. Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. So this move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral. It’s well nigh impossible to have an orderly wind down in this scenario. You have a derivatives counterparty land grab and an abrupt insolvency. Lehman failed over a weekend after JP Morgan grabbed collateral.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors. No Congressman would dare vote against that. This move is Machiavellian, and just plain evil.

(emphasis original)

Evil, incompetent, and convinced of their own Objectivist virtue. Ayn Rands supermen in a nutshell.

Goldman May Drop Bank Status ………

1 Comment

At least until the next time that they need to be bailed out by the Treasury and Federal Reserve.

It seems that they don’t like the Volker rule:

Goldman Sachs Group Inc. (GS) and Morgan Stanley may consider dropping their status as bank holding companies to avoid expenses tied to the Volcker rule, said David Hilder, an analyst at Susquehanna Financial Group LLP.

The rule in its current form would impose costs on lenders and drive capital to non-bank market makers, causing the two New York-based firms to consider whether to stop being banks, Hilder said in a note yesterday, when four regulatory agencies issued a 298-page draft of the rule for public comment.

Goldman Sachs and Morgan Stanley were the biggest U.S. securities firms before they converted to bank holding companies after the September 2008 bankruptcy of Lehman Brothers Holdings Inc. Both became subject to regulation by the Federal Reserve and won access to central bank programs such as the discount window, which are designed to protect deposit-taking banks.

“The regulators have proposed a massive new compliance burden on banks to prove that their market-making activities are just that, and not proprietary trading in disguise,” wrote Hilder, who’s based in New York. “If these regulations are adopted in anything close to their proposed form, there will be large additional costs imposed on banks as market-makers that will not apply to market-makers not owned by banks.”

Does anyone think that the Vampire Squid isn’t going to get bailed out when they f%$# themselves up again?

Banks are Demolishing Homes Now

1 Comment

Yes, it’s central Cleveland, but it’s happening elsewhere, and with a real turn around in house prices years away, this will spread:

Cleveland — The sight of excavators tearing down vacant buildings has become common in this foreclosure-ravaged city, where the housing crisis hit early and hard. But the story behind the recent wave of demolitions is novel — and cities around the country are taking notice.

A handful of the nation’s largest banks have begun giving away scores of properties that are abandoned or otherwise at risk of languishing indefinitely and further dragging down already depressed neighborhoods.

The banks have even been footing the bill for the demolitions — as much as $7,500 a pop. Four years into the housing crisis, the ongoing expense of upkeep and taxes, along with costly code violations and the price of marketing the properties, has saddled banks with a heavy burden. It often has become cheaper to knock down decaying homes no one wants.

The thing is that as bad as it is in the cities, when this happens in the suburbs, and the lifestyle in the far suburbs is not sustainable, there won’t be the any sort of useful application for the abandoned land, the article mentions land banks creating things like common spaces and community gardens, are just going to sit and decay.

It will be like some suburban Cyberpunk novel.

10 Percent of the Chinese Economy?

1 Comment

It turns out that much of the lending to small businesses in China is done by loan sharks, because the official banks prefer to lend to large state owned enterprises.

That’s not shocking. Official Chinese societal structures have always been for the benefit of the few over the many.

That being said, a throw away line in a New York Times article is truly shocking:

Such illegal lending amounts to about $630 billion a year, or the equivalent of about 10 percent of China’s gross domestic product, according to estimates by the investment bank UBS.

10%?  10% of the f%$#ing Chinese economy is loan sharking???????

When the bubble bursts in China, and there is a bubble in China, it’s going to be incredibly ugly.

It’s Bank Failure Friday!!!!

No Comments

And here they are, ordered, and numbered for the year so far.

  1. Piedmont Community Bank, Gray, GA
  2. Blue Ridge Savings Bank, Inc., Asheville, NC
  3. First State Bank, Cranford, NJ
  4. Country Bank, Aledo, IL

Full FDIC list

Busy week. 4 Banks.

Right not, this is in a path for 101 bank closures, but my guess is that it will be just under 100, because they don’t want to break 3 figures.

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

The Lesson Here is If You Cheat Investors, Be a White Man

No Comments

Long prison term, dark face, any questions?

You know why Raj Rajaratnam just got sentenced to 11 years in prison for insider trading:

Fallen hedge fund tycoon Raj Rajaratnam has been sentenced to a record 11 years in prison after his conviction in the biggest Wall Street insider trading case in decades.

Prosecutors had pushed for 25-year sentence after convicting Rajaratnam, 54, in the biggest insider trading investigation ever conducted by US authorities.

Legal experts said that while prosecutors may have been disappointed with the decision, the sentence was still the highest ever given for insider dealing.

The thing to remember here is that this is actually fairly small time by the scale of the financial meltdown, and that he is not white.

I won’t believe that there is any sort of meaningful crackdown on the banksters until we see someone who is both white, and at least at the VP level for a major bank.

This is just, “Rounding up the usual suspects.”