- PFF Bank and Trust, Pomona, CA
- Downey Savings and Loan, Newport Beach, CA
- The Community Bank, Loganville, GA
Category: regulation
The CIA Brings Back the 1970s
It appears that the good folks at Langley are murdering people again, and not over terrorism, but over drug trafficking.
And they are lying to Congress and investigators about it.
The more things change….
Senator Harkin To Introduce Bill to Force Derivatives Onto Regulated Exchanges
I think that it’s a good idea, because the markets need transparency:
Senate Agriculture Committee Chairman Tom Harkin plans to introduce a bill Thursday that would force all over-the-counter derivatives, including credit-default swaps, onto regulated futures exchanges.
The problem for some folks, like hedge funds and former Lehman employees is that this will shut their business model down, because it is predicated on secrecy.
It’s not a problem for me, though. Just shut it down, and the stuff that continues, let a Commodity Futures Trading Commission with serious teeth aggressively enforce this.
Any business model that is predicated on information asymmetry and secrecy is dishonest at its foundations, and should be restricted.
Future 3rd World Nations
First, we have the now neutered Celtic Tiger, Ireland, which is one of the biggest economies of Europe, with:
- Farmers unable to sell produce because of collapsing prices.
- Potential public strikes in the public services.
- Bank of Ireland shares cheaper than toilet paper.
- Rumors that their ATM system will be shutting down.
Meanwhile, the Irish government is in the midst working out the finer points of an enormous bank rescue plan, and Irish lenders are now requiring 20% down for mortgages.
You know, if you had done that last one 3-5 years ago, you would not be up the creek now.
In the mean time, Iceland just got a $10.2 billion bailout loan from the IMF, Scandinavian countries, and the UK.
The money goes primarily to the Icelandic deposit guarantee agency, their version of the IMF, so most of the money is going right back to foreigners from the countries who made the loan, but the Iclandic people will be left with the debt, by my calculations about $34 thousand for every man, woman and child on the island.
Welcome to the third world.
And while we’re at it, scroll down on this article, and note that Turkey is going to get screwed again by world financial markets, even though they paid off their debts a few years back, and have been doing everything right.
The lesson here is that if you play by the WTO rules of international trade, you will never be allowed to come out of debt and control your own destiny.
Hank Paulson, Go Cheney Yourself
So now Secretary of the Treasury Hank Paulson is warning that the financial meltdown might create too restrictive a regulatory environment for financial companies:
Treasury Secretary Henry Paulson called the financial crisis now plaguing the world economy a “once or twice” in a 100 years event, even as he warned Thursday against imposing too-strict regulations to prevent a repeat calamity.
The translation for this is, “I made my money because the SEC and the CFTC were muzzled, so I could use deception and extortion to get money out of the average working Joe’s pocket, and this should not change, because I have relatives.”
Paulson is an idiot. While the financial crisis we’re having right now mirrors the stock market crash in 1928, almost 80 years ago, the fact is that these fiscal implosions have gotten more common as we have backed off regulation, and before 19289, they happened every decade or so.
The reason that nothing has happened in the past 80 years is because of the regulations you dispise, and the reason that it is happening now is because of the slow deregulatory movements from about 1975-2001, and the rush to deregulate since then.
Not Enough Bullets
This time, it’s longtime CEO and founder of South Financial Group, who moved up his retirement date to preserve an $18 million dollar severance:
Meanwhile, corporate governance analyst Hodgson said that Whittle’s deal — nominally a retirement, but treated as a severance — is all too typical of golden parachutes: “If you and I decided to retire, we might get what’s left of our 401(k). But for some reason the rules seem to be different for executives. They get severance even though they’re retiring. There’s no logic to it at all.”
These guys need to be tattooed with verses insulting Mohammad, and parachuted into a Taliban camp.
Henry Cohen of Production Radio Rentals, This One is For You
I’ve posted occasionally on the FCC’s rules process on white space, space between channels that is currently unused, or more accurately unallocated.
A number of people, including me, feel that if this bandwidth should be made available to unlicensed users, much in the same way that Wi-Fi is, because it promises better bandwidth, greater penetration, and better range.
The complicating factor is that it has been used, largely almost completely illegally by the wireless microphone industry.
As a result, I’ve attracted the attention of the above mentioned gentleman, who deals in said microphones, and we had a bit of discussion on the matter.
He mentioned that, “There are no handheld military RF communication devices that do what he [Telco Expert Harold Feld, who is a friend] claims.” (emphasis mine)
By what he claims, he means using “sense and avoid” to avoid interfering with other devices sharing the spectrum.
I find his argument complete bullsh^%, because I have personal knowledge of vehicle mounted communications systems in various stages of test and deployment, JTRS comes to mind because I had to package components when I worked a military contract, but he was insisting on “hand held.”
Well, Mr. Cohen, I have your handheld right here. It’s not just a handheld, they’ve got the system on a chip:
Researchers here are developing new, handheld, wireless radios fitted with a single processor chip that is embedded with algorithms for compressing as many as 5 simultaneous, stealthy conversations into the same time and frequency slot and then, on arrival, untangling them.
Equally importantly, while in transit messages and data packages are seemingly hopelessly mixed – to the point of sounding like static. The chance of intercepting even the digital gibberish is unlikely since foes or potential adversaries don’t have the receiver technology to sort through such high levels of interferences.
….
They also are working to discover what’s necessary and what’s not, allowing them to take computing short cuts and use new techniques to increase performance and efficiency. Such advances in signal processing have allowed researchers to reduce the amount of “overhead” or needless digital instruction in the protocol that is not voice traffic. “Protocol overhead” as part of the total message has decreased to 20% from 50%. That is a key strategy for freeing room for more transmissions. Phase three is to conclude in June with demonstration of up to a 20-radio network. By the end of 2010, researchers expect to have completed design and implementation of a full-waveform protocol and hardware for a brick-size radio.
It’s from the minds of DARPA, and it’s here, it’s real, and it’s on a chip, and here is a video: (4:24)
Isn’t This Like Paying Off One Credit Card with Another?
So, the Treasury is unwinding a roughly $550 billion temporary T-bill program it set up to finance the Federal Reserve’s sh$#pile for cash program, so that people will buy longer term Treasuries to fund the larger bailout.
The FDIC is Guaranteeing What???
It looks like the FDIC will be guaranteeing store gift cards, according to their most recent release
- The new General Counsel’s Opinion No. 8 addresses the issue of whether the funds underlying stored value cards and other nontraditional access mechanisms qualify as “deposits” as defined in the Federal Deposit Insurance Act.
- Under the new opinion, the funds will be “deposits” to the extent that the funds have been placed at an insured depository institution. Consequently, the funds will be subject to assessments. Also, the funds will be insured (up to the insurance limit).
- In applying the insurance limit to a pooled custodial account, the FDIC will recognize the holders of the stored value cards (or other access mechanisms) as the owners of the deposits if the FDIC’s standard requirements for “pass-through” insurance coverage have been satisfied. Otherwise, the card distributor or other named accountholder will be recognized as the owner.
- The treatment of the funds underlying stored value products does not differ from the treatment set forth in the FDIC’s proposed rule published in August of 2005 (see FIL-83-2005 at http://www.fdic.gov/news/news/financial/2005/fil8305.html).
Let me be the first to say that this is fracking nuts.
Not Enough Bullets: AIG, the Gift That Keeps on Giving Edition
AIG is paying $503 million in deferred compensation to its top employees, because it needs to, “keep valuable workers from exiting the troubled insurance giant.”
Let’s see, the company in bankrupt. It’s sucked up hundreds of billions of dollars from the federal government, and it still needs more.
Could someone please explain to me how getting a company this deep in a hole makes senior management “valuable”?
Complete Pwna63*
As has been noted in various places Bush and His Evil Minions&trade have been aggressively creating new regulations in the run-up to the inauguration, in order to saddle Obama with the fallout from their insane ideology for months or years.
Well, it looks like they goofed:
“Fortunately, [the White House] made a mistake,” said a top Senate Democratic aide.
Last May, White House chief of staff Joshua Bolten instructed federal agency heads to make sure any new regulations were finalized by Nov. 1. The memo didn’t spell it out, but the thinking behind the directive was obvious. As Myron Ebell of the conservative Competitive Enterprise Institute put it: “We’re not going to make the same mistakes the Clinton administration did.”
President Bill Clinton finalized regulations within 60 days of the 2001 inauguration, meaning Bush could come in and easily reverse them.
It could take Obama years to undo climate rules finalized more than 60 days before he takes office — the advantage the White House sought by getting them done by Nov. 1. But that strategy doesn’t account for the Congressional Review Act of 1996.
The law contains a clause determining that any regulation finalized within 60 legislative days of congressional adjournment is considered to have been legally finalized on the 15th legislative day of the new Congress, likely sometime in February. Congress then has 60 days to review it and reverse it with a joint resolution that can’t be filibustered in the Senate.
In other words, any regulation finalized in the last half-year of the Bush administration could be wiped out with a simple party-line vote in the Democrat-controlled Congress.
(emphasis mine)
*Ownage.
Economics Update
Retail sales are imploding Down 2.8% from September, and down 4.1% year over year,
Here is a historical data, courtesy of Calculated Risk, just so you know how bad these numbers look.
Of course, the financial press always has to find a silver lining, so they make note of the fact that consumer confidence rose from to 57.9 from 57.6, the article attributes this to falling gas prices, but I ascribe it to three words, “Buh Bye Bush.” With the election, they realize that Bush will soon be gone, and so the number goes, though the number still reflects major suckage.
In the overseas economy, yesterday, it was Germany, well today, it’s been confirmed that it’s actually the whole Euro Zone that is in recession.
Also, we have automotive news from that side of the pond, with the three major credit insurers in Europe pulling insurance coverage to suppliers of Ford and GM. Basically this means that if either of the auto makers default, the suppliers are on their own.
They have basically decided that the risk of a default is too much for them to cover.
And in domestic bad news cast as good news, we make note of the fact that banks and bank like institutions borrowed less from the Fed this week. Only an average daily borrowing rate of 95.4 billion, down from $110 billion.
Down to an average of 95.4 average daily borrowing list week. Let’s run the numbers 95.4 billion/business days * 250 days a year = 28.85 trillion…$23,850,000,000,000.00…By comparison, the US GDP in 2006 was 13.6 trillion.
We also have Freddie Mac tapping a $100 billion bailout fund that was not counted in the above.
As Calculated Risk notes, “Remember Fannie and Freddie have much lower default rates than the loans packaged by Wall Street. If conditions worsened dramatically for Freddie and Fannie, imagine how bad it is for Wall Street MBS and loans held by lenders like Wachovia (Wells Fargo) and WaMu (JPMorgan Chase).”
As to energy, oil is down on demand concerns, and and retail gasoline is down almost $2/gallon from peak.
There is a part of me that wonders if the swing in oil/gas was some sort of electioneering, but it clearly did not work.
In currency, the dollar rose, because when people are frightened, they still flee to the dollar for safety…for a while at least.
Who is Brooksley Born?
Funny name, but she is a serious regulator. In the late 1990s, she was head of the CFTC, and she warned that the unregulated CDS market was a disaster waiting to happen. For this she was vociferously attacked, and now Bloomberg news has an article about how she has been vindicated.
And who went after her for attempting to regulate Credit Default Swaps (CDS)?
Alan “Bubbles” Greenspan and Larry Summers, who the very serious people inside the beltway are suggesting would be a perfect Secretary of the Treasury.
George W. Bush Can Kiss My Shiny Metal Ass
Well, it now appears that the lamest lame duck since Nixon announced his resignation 18 hours hence is now warning about the dangers of over regulation of a free market economy.
It appears that he is concerned that the G-20 meeting will result in calls for additional regulation to keep the Harvard Business School types from raping the general public.
So, George W. Bush, a man who was born on 3rd base, and thought that he had hit a home run,* can kiss my shiny metal ass.
*Yes, I know that I am mixing my metaphors. So sue me.
IMF Holding Over 300,000 People Hostage
This is yet another example as to why the IMF is fundamentally an evil and criminal organization that needs to be shut down:
However, the board will not in practice approve the loan until Iceland resolves a conflict with European governments over how foreign savers will be compensated for billions of dollars in losses suffered on their deposits in Icelandic banks, mainly at Landsbanki’s Icesave unit.
Translation, “We will make the loan, but all the money has to go to foreign creditors.”
I may have not given the IMF enough credit earlier.
I thought that they would treat Icenlanders better, because they are white, but not it appears that they are treating Icelanders like N*gg*rs.
I expect a deal for a Russian naval base, along with a Kremlin loan, in the next few months.
News Flash: UK Bankers Are Evil Too
OK, not really news, but the news that following the Bank of England’s surprise 150 basis point (1.5%) rate cut, banks have continued to increase the interest rates of credit cards.
There is some relief in discovering that it’s not just US bankers. Still, how about taking a few hundred, sending them to Gitmo, and keeping them in solitary until the courts rule, because they are doing more damage to the economy than Osama bin Laden could even imagine.
The Exiled on Larry Summers
In addition to the War Nerd, pretty much everything from The Exiled Online is pretty amaxing stuff, and I highly recommend it.
Case in point, Mark Ames review of the life and times of Lawrence Summers:
- In 1991 he authored a memo calling Africa “Under Pulluted.”
- 1n 1982 he worked on Reagan’s council of economic advisers helping to deregulate banking.
- In 1990, his policies for economic shock therapy in Lithuania literally had citizens of the Baltic republic killing themselves at twice the rate of other recently liberalized nations, which had the Lithuanians voting the Communists back into power in 1992.
- His role in corruption, along with protege Andrei Schleifer, in the “liberalization” of the Russian economy.
Let’s be clear here, in any sane place, and Washington, DC is apparently not a sane place, not only would this man not be considered for a public position, but just on the basis of his calling Africa, “Under Polluted”, he would be shunned from polite society.
The man is a corrupt and incompetent ideologue, and the idea that he is being considered as Secretary of the Treasure, and that he was Secretary of the Treasury, leaves me stunned.
Economics Update
Well, Calculated Risk has your daily inventory of interest ratescredit crisis indicators, and today, they are pretty neutral.
In Hank Paulson and His Evil Minions™ news, he has finally publicly eschewed the idea of buying distressed assets.
I think that the reason for this is that the sales price would either be so low that all of his Wall Street friends would be technically insolvent, or so high as to land his corrupt ass in jail, because the big sh$#pile is near worthless. That’s why there is no market. Wall street cannot handle the truth.
It also looks like he will start requiring some level of private capital to match any bailout money. My translation is that now that he’s bailed out his Wall Street friends, anyone else who wants money needs to work for it.
Of course none of this will do much for the economy, with estimates that holiday sales will drop 1%, the first decrease since 1985, and home values falling for the 7th straight quarter.
What we should be thinking about is not how to rescue Wall Street, but rather how to amputate it from out economy, because these parasites are on a path to destroy more than 10% of US GDP.
Speaking of parasites, it looks like GE capital just got the FDIC to insure $139 billion of their debt. It appears that, “GE’s finance businesses are able to seek FDIC debt coverage because its GE Capital subsidiary also owns a federal savings bank and an industrial loan company, both of which already qualify.”
Like I said, parasites.
In the mean time, recession worries drove oil down again today, to a 21 month low, and it appears that the world thinks that the UK is in worse shape than the US, because not only was the dollar up today, it hit a 6-year high vs. the pound.
If you are worried about a resurgent Russia though, you have less to worry about, with Russia easing up support on the Ruble, which promptly fell.
Why Cap and Trade Sucks
Because at the end of the day, it’s a tax, and it’s not just a tax, it’s a hard to regulate and administrate one, which means that folks like Goldman Sachs are going to look for ways to game the market to line their own pockets, and the money that they make will come out of taxpayer’s, or consumer’s pockets.
Case in point, Goldman Sachs, “Recently bought pieces of two carbon-offset companies, in the latest sign of investment banks’ interest in the area.”
The idea that somehow or other allowing mini-Wall Streets will create innovation and make things better is simply wrong. Look at what they did to home mortgages.
What this is really about is Ivy League alumni politicians and bureaucrats deciding on policies based on the best interests of their Ivy League alumni friends on Wall Street.
It is senseless and destructive tribalism, and no different than Sunni-Shia in Iraq, or Hutu-Tutsi in Rwanda.
Bailout II: Bail Harder
Not my hed, but rather Paul Keil’s, who is reporting that Paulson is disparately looking to get the second half of the 700 billion bailout in his hands, so that he can benefit his Wall Street cronies before someone honest, or Larry Summers, ends up in charge of the Department of the Treasury:
In order to keep tabs on how the Treasury Department is handling the $700 billion bailout, Congress split up the payments. The first $350 billion is dwindling fast. $250 billion was set aside to buy stakes in the nation’s banks (here’s our tally of where that’s going) and yesterday $40 billion went to AIG as part of its renegotiated bailout.
That only leaves $60 billion. The Treasury has not even begun implementing its original plan, to purchase troubled mortgage assets. And with a number of major American institutions — General Motors, GMAC, bond insurers, insurance companies, etc. — pushing for their share of the bailout, that figure is likely to run out soon. Before it does, Treasury Secretary Henry Paulson will be forced to return to Capitol Hill for the second helping. Such a journey is proving increasingly “likely,” the Wall Street Journal ventures.
IMNSHO, if he comes back to congress, he should not be allowed to take a piss without a Congressional staffer looking over his shoulder.