Category: Finance

Economics Update

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The Federal Open Market Committee has released its statement, and its policies of low (basically zero) interest rates and quantitative easing (printing money) remain in effect.

Meanwhile, home builder confidence rose in March, but remains really really low, while the New York Feds Empire State Index Rose.

Full FOMC statement after the break:

Release Date: March 15, 2011
For immediate release

Information received since the Federal Open Market Committee met in January suggests that the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the summer, and concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks. Nonetheless, longer-term inflation expectations have remained stable, and measures of underlying inflation have been subdued.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
2011 Monetary Policy Releases

Last update: March 15, 2011

Nope, No Corruption Here. None At All

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Allegedly Democratic Co-Chair of Obama’s deficit reduction (aka cat food) commission, Erskine Bowles, was recommending changes to Social Security that would likely lead to its privatization while on the board of directors of Morgan Stanley:

Erskine Bowles, co-chairman of President Barack Obama’s debt-reduction commission, said his job as a Morgan Stanley (MS) director didn’t influence his work on the panel’s recommendations for balancing U.S. spending, which said taxes are sapping the competitiveness of companies.

He and the commission’s co-chief, Alan Simpson, told an audience of bankers, investors and executives at an Economic Club of New York lunch meeting March 7 that the country may face a crisis if it doesn’t rein in the debt. Bowles, 65, has been a member of the bank’s board since the end of 2005.

“It didn’t have any effect on me at all,” he said in an interview after the lunch, when asked if his work for New York- based Morgan Stanley influenced the commission’s December proposals. “We tried to gore every ox we could.”

He also said that “The check is in the mail, this won’t hurt a bit, I’ll respect you in the morning, and I won’t cum in your mouth.”

Note also that Barack Obama was the one what hired these guys.

It’s Bank Failure Friday!!!!

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

  1. First National Bank of Davis, Davis, OK
  2. Legacy Bank, Milwaukee, WI

Full FDIC list

And here are the credit union closings:

  1. Land of Enchantment Federal Credit Union, Santa Fe, NM

Full NCUA list

I don’t have much to add, except that it looks a lot like 2010, and the “Land of Enchantement Federal Credit Union” is a really trippy name. 

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

And since it’s early in the year, here is a detail of the first few weeks:

Shoot Me. I’m Thinking that Ron Paul is Right

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The Federal Reserve’s Consumer Advisory Council just released a report saying that there have been no wrongful foreclosures by banks:

A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday.

During a public meeting attended by Fed chairman Ben Bernanke and other regulators, consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.” At least one member of the panel voiced concerns that the public would not take the Fed’s findings of improper practices seriously, since the wide-ranging review did not find a single homeowner who was wrongfully foreclosed upon.

The Fed’s findings seem to support claims from the banking industry, which has admitted to sloppy practices but has maintained that the homeowners whose homes have been repossessed were substantially behind on their payments. The Fed’s report has not been released to the public.

This is crap.  Even if you argue that fraudulent statements to the court are not “wrongful foreclosure”, you have to note that banks have foreclosed on people who had mortgages with other people, and foreclosed on people who paid cash for their homes.

Well, with regard to the Federal Reserve, I used to take the middle ground, Alan Grayson’s position for audits and more transparency, while eschewing Ron Paul’s suggestion that we close down the Federal Reserve.

I thought that Paul was loony, and that it was a loony suggestion.

Now I’m beginning to think that the Federal Reserve is so thoroughly captured by the banks, and so thoroughly corrupt, that closing it down might be the only sane option.

Again, I Invoke Saroff’s Rule

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Click for full size

Here’s a Shocker, MERS is a Fraud

As I have said many times, “If a financial transaction is complex enough to require that a news organization use a cartoon to explain it, its purpose is to deceive.”

Well, Michael Powell and Gretchen Morgenson of the New York Times, cover it, and I think that this is the important take away:

Apparently with good reason. Alan M. White, a law professor at the Valparaiso University School of Law in Indiana, last year matched MERS’s ownership records against those in the public domain.

The results were not encouraging. “Fewer than 30 percent of the mortgages had an accurate record in MERS,” Mr. White says. “I kind of assumed that MERS at least kept an accurate list of current ownership. They don’t. MERS is going to make solving the foreclosure problem vastly more expensive.”

(emphasis mine)

Regardless of issues of law, on matters of basic fact MERS is completely unreliable, and the attempts by regulators to protect it are actually an assault on basic property rights, which depend on the rule of law, in the United States.

I’m not suggesting that anyone should go full Tyler Durden at “Library Street, in Reston, VA,” but I am suggesting that someone with a law go full avenging angel on their asses, with a good dose of RICO mixed in.

H/t Barry Ritholtz.

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

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Click for full size


Here’s what I saw on the way to the lab

It’s a fairly slow week, no banks, and one credit union failed, so banks remain at 24 failures, see the Full FDIC list

And here is the credit union closing:

  1. Wisconsin Heights Credit Union, Ogema, WI

Full NCUA list

I also have a special bonus pictorial. I snapped some pix of K-Bank, which was closed in November. I noticed when I was walking to the lab to get some bloods drawn.

I have been aware for some time that Maryland banks have been closed, but this is the first time that I’ve seen one with an FDIC notice on its door.

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

And since it’s early in the year, here is a detail of the first few weeks:

Normally, I Don’t Follow the Oscars

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Good question


And the trailer

But Charles Ferguson, the director of the documentary The Inside Job, upon accepting his award for best documentary, raised an obvious point:

Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.

It’s a good question, and, considering the timing of the crisis, it really started in September 2008, and there was no way that anything but damage control could be done over the next few months, the answer has to be, “Because Barack Obama does not want a single financial executive to go to jail.”

There are some issues that were mismanaged by the Bush administration, they had no intention to reign in excessive bonuses, for example, but the only way that major figures, such as the recent decision to no-bill Angelo Mozillo, is if there was a conscious decision not to apply to the rule of law at the highest level.

This is very similar to, and as least as damaging in the long term as, his conscious to allow the worst excesses of torture, perjury, and civil rights violations for Bush and His Evil Minions.™

This is corrosive to society.

The Irish Elections, and What it All Means…

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Former Prime Minister, and former Fianna Fail head, Brian Cowen, in an unintentionally apt photograph

So, Fianna Fail, having been in government for 60 of the past 79 years, has been tossed out by a resounding margin.

They fell 59 seats to 18 in Parliament, and the Green party, its coalition partner, lost all of its seats, while Fine Gael picked up 19 seats to 70, the Labour Party picked up 16 seats to 36, Sinn Fein(!) picked up 9 to get 13, the United Left Alliance (a coalition of various socialist parties) picked up 5 seats, and the new “New Vision” Party picked up 1 seat.

This is obviously a crushing defeat for Fianna Fail, and for the bank coddling policies, where the indemnified not just the depositors, but the banks’ bond holders, thereby committing the Irish taxpayers to what can only be called “debt slavery”.

What is interesting here is that Fine Gael is actually a further right party than Fianna Fail, and what the voters were really calling for were basically three policies:

  • F%$# the Irish banks.
  • F%$# the foreign banks that hold Irish debt.
  • F%$# the banks.

Whether this electoral landslide has any long term effects has to do with whether the people who voted for real change actually see it.

While there is both a moral and treaty obligation to make the account holders whole (up to something around €20,000), the idea that the Irish are impoverishing themselves in order to prop up foreign bond holders, largely British and German, who received higher returns than they would have at home because of the higher risk, banks is clearly something that the average Irishman finds unacceptable.

A lot of people are talking about how this is a seismic reshaping of the Irish body politic, but I doubt it.

My guess is that Fianna Fail will be back in the majority in the next election, because now that the opposition has control of government, we will see half measures, and coddling of both the Irish banks and their foreign creditors, which will result in a tsunami in the other direction in the next elections.

As has been noted, a, “deeply indebted economy with just 1.8 million people at work cannot underwrite private banking liabilities of €200bn.”

If Fine Gael, (and one their likely coalition partner Labour) do not understand this, and do not force haircuts on the bond holders through threat of default (which has the added benefit of transferring the pain to the feckless Angela Merkel ), the voters will turn on them.

For a recent political case study on the wages of timidity in this sort of a crisis, one need only look to the US, and the Democratic Party under the leadership of one Barack H. Obama.

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

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It’s a fairly slow week, with only one bank, and one credit union

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

  1. Valley Community Bank, St. Charles, IL

Full FDIC list

And here are the credit union closings:

  1. NYC OTB Federal Credit Union, New York, NY

Full NCUA list

I suppose that the OTB credit union closing was inevitable, as New York’s OTB, state run Off Track Betting, was shut down recently because they could not make a profit. 

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

And since it’s early in the year, here is a detail of the first few weeks:

Not Enough Bullets

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RBS bankers get £950m in bonuses despite £1.1bn loss:

More than 100 bankers at Royal Bank of Scotland were paid more than £1m last year and total bonus payouts reached nearly £1bn – even though the bailed-out bank reported losses of £1.1bn for 2010.

The chairman, Sir Philip Hampton, said the number of millionaires was lower than a year ago and said a quarter of the group’s 18,700 investment bankers would not receive a bonus from the £950m payout pool agreed with UK Financial Investments, which controls the taxpayer’s 83% stake in the bank. Unions were baffled that any bankers were getting bonuses.

The unions are not the only ones who are baffled.

Mozilo Skates…

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The Department of Justice, no doubt looking forward rather than backward, had dropped its criminal investigation of former Countrywide CEO Angelo Mozilo:

Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing.

As the former chairman of Countrywide Financial Corp., Mozilo helped fuel the boom in risky subprime loans that led to the crippling of the banking industry and the near-collapse of the financial system.

A federal grand jury in Los Angeles began probing Mozilo in 2008, and four months ago he agreed to pay a $22.5-million fine and to repay $45 million in what the government said were ill-gotten gains to former Countrywide shareholders. The payments settled a civil action by the Securities and Exchange Commission.

As Atrios notes, what this really means is that if you want to run a criminal enterprise, make sure that everyone has a piece of it, because, “If Everybody Is Guilty Then Nobody Is.”

Matt Taibbi is right, our society is now run by people who have declared criminals to be untouchable before the law.

It’s Bank Failure Friday!!!!

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

  1. Habersham Bank, Clarkesville, GA
  2. Citizens Bank of Effingham, Springfield, GA
  3. Charter Oak Bank, Napa, CA
  4. San Luis Trust Bank, FSB, San Luis Obispo, CA ⇐ I missed this one last night.

Full FDIC list

And here are the credit union closings:

  1. Family First Federal Credit Union, Orem, UT

Full NCUA list

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

And since it’s early in the year, here is a detail of the first few weeks:

This year is shaping up a LOT like last year so far.  It’s a bit early to be definitive, but it does look like bank failures are tracking ahead of what we saw at this point last year.

Unsurprising News of the Day

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Bernie Madoff is now saying that the banks were complicit or willfully blind with regard to his Ponzi scheme:

In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking noticeably thinner and rumpled in khaki prison garb — maintained that family members knew nothing about his crimes.

But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved.

………

In many ways, however, Mr. Madoff seemed unchanged. He spoke with great intensity and fluency about his dealings with various banks and hedge funds, pointing to their “willful blindness” and their failure to examine discrepancies between his regulatory filings and other information available to them.

“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

There’s a surprise.

The banks generated big fees by sending their customers to someone that they thought might not be on the up and up, and “surprise”, they made a point of not turning over the rocks?

Why is only Bernie going to jail?

The Only Answer is that Some People Are Above the Law

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The great Matt Taibbi Asks, “Why Isn’t Wall Street in Jail?,” and he doesn’t have an answer per se, but he does explain the consequences of the fact that the banksters are untouchable:

The mental stumbling block, for most Americans, is that financial crimes don’t feel real; you don’t see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They’re crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let’s steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They’re attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone’s claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.

This is the America that we live in, and Barack Obama and Timothy Geithner like it that way.

It really is a pity that the other side is so thoroughly contemptible, because there appears to be no good option.

Read the whole thing.

Not Enough Bullets

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No, but apparently we look like a bitch


This episode of Sesame Street is brought to you by the letter “B”, as in bullet, and banker …

So, Citi’s CEO, the incomparably incompetent Vikram Pandit, is saying that if if regulators reign in debit card fees, they will have to stick it to poor people:

U.S. banks may cut their services to the poorest Americans as a result of new U.S. financial regulations, including federal caps on debit card processing fees, Citigroup Chief Executive Vikram Pandit said Tuesday.

New U.S. laws, including the Dodd-Frank financial regulation act passed last year, “will change banking,” Pandit said in prepared remarks due to be delivered at an investors’ conference in New York Tuesday.

This makes me want to go all Samuel L. Jackson/Pulp Fiction on his ass …… OK, I want to go all Samuel L. Jackson/Pulp Fiction on his ass dressed in an Elmo suit, but that last bit is just me …… Or at least I think (hope) that the last bit is just me.

Let’s be clear here the debit card fees are a fee levied disproportionately on the poor, and he’s saying that if he can’t f%$# the poor like a bitch, then he won’t serve them?

This guy has a job because he f%$#ed so badly no one wants to take his job, because they would have to fix his mess, and so he, and the whole rotten bank, live off of TARP money, back door Treasury Department subsidies, and the largess of “Helicopter” Ben Bernanke’s Federal Reserve, and he has the nerve to suggest that he is anything but a leech at the public tit.

Un-dirtyword-believable.

It’s Bank Failure Friday!!!!

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

I would note that this trend seems to be hewing fairly close to last year’s pattern so far,

  1. Sunshine State Community Bank, Port Orange, FL
  2. Peoples State Bank, Hamtramck, MI
  3. Badger State Bank, Cassville, WI
  4. Canyon National Bank, Palm Springs, CA

Full FDIC list

And we have the first credit union closing of the year:

  1. Oakland Municipal Credit Union, Oakland, CA

Full NCUA list

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

And since it’s early in the year, here is a detail of the first few weeks:

Unsurprising News of the Day

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In the last election, the City banks, the London equivalent of Wall Street, supplied half the campaign donations for the Tories:

Financiers in the City of London provided more than 50% of the funding for the Tories last year, new research has revealed, prompting claims that the party is in thrall to the banks.

A study by the Bureau for Investigative Journalism has found that the City accounted for £11.4m of Tory funding – 50.79% of its total haul – in 2010, a general election year. This compared with £2.7m, or 25% of its funding, in 2005, when David Cameron became party leader.

The research also shows that nearly 60 donors gave more than £50,000 to the Tories last year, entitling each of them to a face-to-face meeting with leading members of the party up to and including Cameron.

The study shows the impact that Michael Spencer has had on party funding. He was appointed by Cameron as Tory treasurer in an attempt to reduce the influence of Lord Ashcroft, the party’s former deputy chairman. Spencer was asked by Cameron to increase the number of relatively small donations of £50,000 to curb the influence of large donors such as Ashcroft, and for these smaller donations the City was place to look.

Relatively small donations of fifty thousand quid? That’s like eighty thousand US Dollars!

This might explain why their proposals to reign in bankster pay are so toothless.