Posts Tagged ‘Bush’
04/01/2011 16:08 -0400
While it is no surprise that the day after Lehman failed, every single bank scrambled to the Fed to soak up any and all available liquidity after confidence in the entire ponzi collapsed, what is a little surprising is that of the 6 banks that came running to papa Ben, and specifically his Primary Dealer Credit Facility, recently upgraded, or rather, downgraded to accept collateral of any type, two banks (in addition to Lehman of course which at this point was bankrupt and was forced to hand over everything to triparty clearer JPMorgan), had the temerity to pledge bonds that had defaulted (i.e. had a rating of D). As in bankrupt, and pretty much worthless. Now that the Fed would accept Defaulted bonds as collateral: or “assets” that have no value whatsoever is a different story. What is notable is that the two banks that did so were not the crappy banks such as Citi or Morgan Stanley, but the two defined as best of breed: Goldman Sachs and JP Morgan. It is probably best left to the now defunct FCIC to determine if this disclosure is something that should also be pursued in addition to recent disclosure that Gary Cohn may have perjured himself by not disclosing truthfully his bank’s discount window participation. However, we can’t help but be amused by the fact that of all banks, the ironclad Goldman and JPMorgan would be the only ones in addition to bankrupt Lehman to resort to something so low.
PDCF collateral as of September 15, 2008. (Click on picture for larger view)
And further analysis indicates that a few weeks later, this practice became pervasive, with virtually every banker pledging defaulted bonds in exchange for money good cash with which to pretend these banks were doing just fine (not to mention that $71.7 billion in collapsing equities represented nearly half the total collateral of $164.3 billion pledged to receive $155 billion in cash.)
(Click on picture for larger view)
At some point people will inquire, perhaps not in the most peaceful of terms, just why this travesty of fiduciary responsibility was happening when it happened. But not yet. And certainly not while the Chairman continues to successfully levitate the market singlehandedly.
By Bradley Keoun and Craig Torres
Apr 1, 2011 10:53 AM PT
U.S. Federal Reserve Chairman Ben S. Bernanke’s two-year fight to shield crisis-squeezed banks from the stigma of revealing their public loans protected a lender to local governments in Belgium, a Japanese fishing-cooperative financier and a company part-owned by the Central Bank of Libya.
Dexia SA (DEXB), based in Brussels and Paris, borrowed as much as $33.5 billion through its New York branch from the Fed’s “discount window” lending program, according to Fed documents released yesterday in response to a Freedom of Information Act request. Dublin-based Depfa Bank Plc, taken over in 2007 by a German real-estate lender later seized by the German government, drew $24.5 billion.
The biggest borrowers from the 97-year-old discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record. The disclosures may stoke a reexamination of the risks posed to U.S. taxpayers by the central bank’s role in global financial markets.
“The caricature of the Fed is that it was shoveling money to big New York banks and a bunch of foreigners, and that is not conducive to its long-run reputation,” said Vincent Reinhart, the Fed’s director of monetary affairs from 2001 to 2007.
Separate data disclosed in December on temporary emergency- lending programs set up by the Fed also showed big foreign banks as borrowers. Six European banks were among the top 11 companies that sold the most debt overall — a combined $274.1 billion — to the Commercial Paper Funding Facility.
The discount window, which began lending in 1914, is the Fed’s primary program for providing cash to banks to help them avert a liquidity squeeze. In an April 2009 speech, Bernanke said that revealing the names of discount-window borrowers “might lead market participants to infer weakness.”
The Fed released the documents after court orders upheld FOIA requests filed by Bloomberg LP, the parent company of Bloomberg News, and News Corp.’s Fox News Network LLC. In all, the Fed released more than 29,000 pages of documents, covering the discount window and several Fed emergency-lending programs established during the crisis from August 2007 to March 2010.
“The American people are going to be outraged when they understand what has been going on,” U.S. Representative Ron Paul, a Texas Republican who is chairman of the House subcommittee that oversees the Fed, said in a Bloomberg Television interview.
“What in the world are we doing thinking we can pass out tens of billions of dollars to banks that are overseas?” said Paul, who has advocated abolishing the Fed. “We have problems here at home with people not being able to pay their mortgages, and they’re losing their homes.”
David Skidmore, a Fed spokesman, declined to comment. Fed officials have said all the discount window loans made during the worst financial crisis since the 1930s have been repaid with interest.
The Monetary Control Act of 1980 says that a U.S. branch or agency of a foreign bank that maintains reserves at a Fed bank may receive discount-window credit.
“Our job is to provide liquidity to keep the American economy going,” Richard W. Fisher, president of the Federal Reserve’s regional bank in Dallas, told reporters today. “The loans were all paid back and they were well-collateralized.”
Wachovia Corp. was the only U.S. bank among the top five discount-window borrowers as the crisis peaked.
The company, based in Charlotte, North Carolina, borrowed $29 billion from the discount window on Oct. 6, in the week after it almost collapsed, the data show. Wachovia agreed in principle to sell itself to Citigroup Inc. on Sept. 29, before announcing a definitive agreement to sell itself to Wells Fargo & Co. (WFC) on Oct. 3. The Wells Fargo deal closed at the end of 2008.
Wells Fargo spokeswoman Mary Eshet declined to comment on Wachovia’s discount-window borrowing.
Bank of Scotland Plc, which had $11 billion outstanding from the discount window on Oct. 29, 2008, was a unit of Edinburgh-based HBOS Plc, which announced its takeover by London-based Lloyds TSB Group Plc in September 2008.
The borrowings in 2008 didn’t involve Lloyds, which hadn’t completed its acquisition of HBOS at the time, said Sara Evans, a spokeswoman for the company, which is now called Lloyds Banking Group Plc. (LLOY)
“This is historic usage and on each occasion the borrowing was repaid at maturity,” Evans said. “The discount window has not been accessed by the group since.”
Other foreign discount-window borrowers on Oct. 29, 2008, included Societe Generale (GLE) SA, France’s second-biggest bank; and Norinchukin Bank, which finances and provides services to Japanese agricultural, fishing and forestry cooperatives. Paris- based Societe Generale borrowed $5 billion that day, and Tokyo- based Norinchukin borrowed $6 billion.
Jim Galvin, a spokesman for Societe Generale, declined to comment.
“We used it in concert with Japanese and U.S. authorities in the purpose of contributing to the stabilization of the market,” said Fumiaki Tanaka, a spokesman at Norinchukin.
Bank of China
Bank of China, the country’s oldest bank, was the second- largest borrower from the Fed’s discount window during a nine- day period in August 2007 as subprime-mortgage defaults first roiled broader markets. The Chinese bank’s New York branch borrowed $198 million on Aug. 17 of that month.
“It was just routine borrowing,” said Dale Zhu, head of the Bank of China New York branch’s treasury.
Two Deutsche Bank AG divisions borrowed $1 billion each, according to a document released yesterday.
Arab Banking Corp., then 29 percent-owned by the Libyan central bank, used its New York branch to get at least 73 loans from the Fed in the 18 months after Lehman Brothers Holdings Inc. collapsed. The largest single loan amount outstanding was $1.2 billion in July 2009, according to the Fed documents.
The foreign banks took advantage of Fed lending programs even as their host countries moved to prop them up or orchestrate takeovers.
Dexia received billions of euros in capital and funding guarantees from France, Belgium and Luxembourg during the credit crunch.
The Fed loans were “secured by high-quality U.S. dollar municipal securities,” and used only to fund U.S. loans, bonds and other financial assets, Ulrike Pommee, a spokeswoman for the company, said in an e-mail.
“The Fed played its role as central banker, providing liquidity to banks that needed it,” she said, adding that Dexia’s outstanding balance at the Fed has been reduced to zero. “This information is backward-looking.”
Depfa was taken over in October 2007 by Hypo Real Estate Holding AG, which in turn was seized by the German government in 2009.
“Since the end of May 2010, Depfa is not making use of the Federal Reserve Discount Window,” Oliver Gruss, a spokesman for the bank, said in an e-mailed statement. He declined to comment further.
Many foreign banks own large pools of dollar assets — bonds, securities and loans — funded by short-term borrowings in money markets. The system works when markets are calm, said Dino Kos, former executive vice president at the New York Fed in charge of open-market operations. In times of stress, banks can be subject to sudden liquidity squeezes, he said.
“They are playing with fire,” said Kos, a managing director at Hamiltonian Associates Ltd. in New York, an economic research firm. “When the market dries up, and they can’t roll over their funding — bingo, you have a liquidity crisis.”
The potential for dollar shortages remains. As the Greek fiscal crisis roiled financial markets last year, the Fed had to open swap lines with the European Central Bank, the Swiss National Bank, the Bank of England and two other central banks to make more dollars available around the world. That move was partially the result of U.S. money market funds shrinking their exposure to European bank commercial paper.
Bloomberg News is posting the Fed documents here for subscribers to the Bloomberg Professional Service as well as online at www.bloomberg.com.
Read the entire article HERE.
submitted by Tyler Durden
03/01/2011 20:55 -0500
Ten days ago, when we first looked at the Libyan investment authority (its sovereign wealth fund), we asked “Which US Banks Are Managing Billions For The $32 Billion Libyan Sovereign Wealth Fund?” Based on Wikileaks data, it was disclosed that various US banks manage billions for the country which has just seen $30 billion of its assets largely frozen (although this is merely half of its total deposits). Obviously, we had “some” banks in mind, most of the variety whose directors believe they are above the law and can share inside information with criminal intent with utter disdain for the law. Now, courtesy of Marcus Baram of the Huffington Post we find that the usual suspects are, naturally, all here: among the key banks that serve as advisors and asset managers are Goldman Sachs (and not just anyone, but Jim “Revolutions are Bullish” O’Neill’s GSAM, Citi and JP Morgan. The only question now is how long before we get some sort of public statement out of the likes of Lloyd Blankfein and Jamie Dimon: on the 22nd we said: “perhaps it is time for the US banks who manage billions in capital for the LIA, to step up.” Now that they have been exposed by a third party, the CEOs should really take the hint before this escalates into a full blown PR disaster.
The secretive Libyan Investment Authority has reportedly invested hundreds of millions of dollars in Goldman Sachs Asset Management funds, including a loan fund designed to invest in new hedge funds set up by the Kuwait Investment Authority. Goldman Sachs already has a relationship with Libya — in 2008, Goldman was the first U.S. bank to get a contract with the country following the removal of sanctions, when it was hired by Libya’s central bank to provide information on its behalf to credit rating agencies. A spokesperson for Goldman Sachs did not return calls seeking comment.
The Libyan government, including LIA, has also banked with Citigroup, according to several sources familiar with the matter. A spokesperson for Citigroup declined to comment on the bank’s interactions with the Treasury Department’s Office of Foreign Assets Control, which is in charge of carrying out Obama’s order regarding Libyan assets.
JPMorgan Chase reportedly handles much of the LIA’s cash and some of the Libyan central bank’s reserves. The summer after then-Secretary of State Condoleezza Rice visited Gaddafi in 2008, LIA gave “mandates to some of the international banks, including JPMorgan to manage their funds in the interbank money markets, according to Vanity Fair.
Banks are not the only entities: Washington DC darling private equity firm, and alleged CIA front organization, Carlyle is also among the collaborators:
Two years ago, the Carlyle Group’s co-founder and managing director, David Rubenstein, and Blackstone chief executive Steven Schwarzman traveled to the Libyan capital of Tripoli to help celebrate the wedding of Mustafa Zarti, the deputy director of the LIA, in a massive tent set up on the outskirts of the city, reported the Financial Times. And when Gaddafi’s son and longtime likely successor, Saif al-Islam, visited New York in November 2008, Schwarzman hosted a lunch for him at the Blackstone CEO’s Park Avenue apartment. The younger Gaddafi was also honored on that trip by Carlyle’s retired chairman, former defense secretary Frank Carlucci, who hosted a dinner for him in a private room at the City Club.
Yet while nobody really cares about Carlyle which for decades now has managed to remain behind the scenes, even though in many regards it is the Goldman Sachs of the Private Equity world, many do care about Goldman, especially following today’s latest disclosure of supposed gross and criminal abdication of fiduciary duty by a person at the very top. The last thing Goldman needs is to be disarming a PR minefield in which various bloggers and the less than mainstream media (certainly excluding those that have Goldman Sachs Asset Management ad banners on their pages) try to pin the tail on the Blankfein donkey of PR blunder following PR blunder.
Read the entire article HERE.
By Barry Ritholtz – December 31st, 2010, 10:00AM
The Big Picture
On the last day of the year, I like to think back about the truths I learned this year. Some were revealed accidentally, others were the work of challenging data analysis. We happened upon some Truths during deep contemplation, and occasionally stumbled across them accidentally.
And of course, there was Wikileaks.
Regardless of your method, with a little digging, truth seekers were regularly rewarded. When you find it, often, it is not pretty; the Truth will destroy long held, cherished myths. But if you are an investor, you must go through this process on a regular basis.
If you can identify where the masses’ subjective view of reality is wrong, and then time when they begin to realize this, there are good investment returns to be had. A bonus of this process is some small measure of personal enlightenment.
In 2009 and 2010, I learned that Corporate America took over the political process via their exhaustive lobbying efforts. What was once a Democracy is now a Corporatocracy. Just because I personally despised this result did not prevent me from profiting from it. Hardware, software, and research all cost money. I can promise you it is much easier to fight the powers that be when you have an unlimited Amex card — and cold hard dollars fiat printed Fed money — to help you.
Exactly how far has the takeover gone? The corrupt US Supreme Court provided a sympathetic venue for the creation of corporate rights never envisioned by the Founding Fathers; Congress has become a wholly owned subsidiary of America, Inc. The White House talks a good game of smack, but genuflects in order to beg for job creation.
Politicians do the bidding not for the people, but for the corporate establishment. Those people who want to blame the barking, snarling government for all the woes of the world do not want you to look further up the leash to see who is giving the commands. These corporate apologists pretend to be philosophers, but in reality they are mere Fellatrix, bought and paid for by their lords and masters.
Fearing a corporate takeover of the nation isn’t nearly as radical as it sounds. Thomas Jefferson reviled the idea of big corporations: “I hope we shall…crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of our country.” Jefferson knew the influence bankers could have on a nation’s soul, and he was horrified by it.
No less a figure than Dwight D. Eisenhower — five-star Army general, Supreme Commander of the Allied forces in Europe during World War II, responsible for planning and supervising the successful invasion of France and Germany, who then became the 34th President of the United States from 1953 until 1961 — warned that “we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” He knew it was not just the military, but the entire existing corporate structure that sought to take advantage of their influence in order to thwart legitimate competition, skew Federal contracts, and exempt themselves from taxation and regulation.
What might Eisenhower have said about the bailouts, and enormous decrease in banking competition?
The surprising thing about this anomaly is that there are enormous incentives to find the objective truth. Often, it seems like the reality gets buried under a mountain of conflicting interests, with power and money and influence on one side and We, the people on the other.
However, the credit crisis and collapse has taught us one very important lesson: If you continually search for that nugget of reality, if you are willing to roll up your sleeves and sift through the vast mounds of horse shit that Wall Street and Washington regularly serve up, there is indeed, a pony somewhere in there.
That is your job in 2011: Go find the pony . . .
Find the original article HERE.
Following the initial movie preview is the interview with Charles Ferguson. In this interview, INET’s Executive Director Rob Johnson talks to Charles Ferguson, the director of the new documentary film “Inside Job,” about corruption in academia, the failure of both political parties in dealing with the financial crisis, and the potential for change.
FEATURED ARTICLE: Elimination of the Mortgage Interest Reduction Will Lead to a Depression Far More Severe Than “the Great Depression”
Ryan G Wright
“The reduction or elimination of Mortgage Interest Reduction will lead to a depression far more severe than “the Great Depression”
Today is a day you can make your voice heard and it is not only your opportunity but if you believe in freedom it is your obligation. Congress Deficit Commission made a proposal to either limit or eliminate the Mortgage Interest Deduction. Homeowners and Landlords are able to write off or not pay taxes on the amount of money they pay in interest each year on the loans they have on properties.
To help understand the gravity of the situation lets use an example. Let’s take an average family that makes between a combined household income between $15,000 and $68,000. They own an average size home in most areas. For example lets assume their house payment is $12,000 per year. This payment includes Taxes, Insurance, and Principle (paying down what is owed on the loan). We will assume that the Interest is $10,000 per year for the home and the Taxes, Insurance, and Principal are $2,000 annually.
Right now this family is able to deduct $10,000 per year from income taxes because they are paying interest. Congress is recommending that this deduction is eliminated or drastically reduced. That would mean that this family would now have to pay taxes on this $10,000. The tax rate for this family income is 15%. So an additional $1,500 would be paid in taxes, basically this family house payment just went up $100 per month. But it gets worse… If the house hold income is between $68,000 and $137,000 per year the tax rate is 25%. Many of these families have annual house payments around $24,000 per year. If the Mortgage Interest Deduction was eliminated this family would be paying an additional $6,000 per year in taxes or in essence there house payment just went up $500 per month due to the additional tax burden.
Congress is trying to pull the wool over our eyes making you think they are not going to increase taxes but they are going to eliminate a deduction that will automatically make it more expensive for you to own your home or for new homeowners to purchase a home.
Remember the founding fathers of this country revolted when Great Britain started taxing tea, legal business documents stamps, and so forth. This lead to the Boston Tea Party and eventually to our independence as a country.
Lets look at all the effects of this Deduction being eliminated:
1. Essentially every homeowner’s monthly house payment will increase. They will not be paying more to the bank, but they will be paying more in taxes due to not being able to deduct the interest paid on the loan. As we know there are many families that are struggling and barley getting by. An additional $100 to $500 or more a month in “tax” will take many people over the edge and cause more foreclosures and bankruptcies.
2. Decline in House values. If the Deduction is eliminated, homeowners will get foreclosed on not being able to make house payments and there will be more houses on the market which will lead to continue decline in house values.
3. Home buyers will not be able to afford as much. When a buyer looks at monthly payments on a home if the Mortgage Interest Deduction is eliminated the “buying power” of a home buyer will go down substantially. This will do two things: A. It will take many families that were able to purchase properties to no longer able to buy because of the “tax” so it takes them out of the home buying market. B. Families that are able to purchase will have to buy a smaller home because essentially their monthly payment will be more money since they cannot write off the interest on the loan. This will lead to fewer home buyers and people that are able to buy a home will have to purchase homes for much less money due to not being able to write off the interest on the loan.
4. Lenders will have to look at borrowers having to earn more money because they cannot write of the tax. This will lead to less lending on homes due to the ability for borrowers to qualify.
5. Small and Large landlords everywhere are going to get hit with HUG taxes! Think if you where a landlord paying $500,000 on interest expenses a year. This may seem like a lot of money but it is really not. It is a small time landlord that owns around 30 homes. On most of these homes the landlord does not have any profit margin until the home is paid off. So in most cases the landlord is not making any money whatsoever, but he is able to write off the interest so that helps with taxes. If the mortgage deduction is eliminated this Landlord would be paying an additional $175,000 PER YEAR in taxes! Due to not being able deduct the interest. To continue to break-even the Landlord would have to raise rents by $500 per property just to break even and cover the tax.
6. Discouragement of Investments. Property investors will not be interested in investing in property because they don’t have the write off of the Mortgage interest deduction. In addition any current landlords large and small will go into default on their loans due to not being able to cover the payment due to the increased “tax” by not being able to deduct their mortgage interest. This will make the final shoe drop! Property investors are the movers and shakers in the real estate market and could lead to the downturn of these investors completely. This will lead to more Foreclosure, more bankruptcy, and the decline of property values and so on.
I am a Homeowner, Landlord, Realtor, Lender and have over a decade of experience in the real estate market. I have been on the front lines of the housing crisis and I can assure you that the elimination or reduction of mortgage interest deduction will be more devastating to this country than large banks and large companies failing. In fact it may be the very thing that leads this country into a depression much greater than the “great depression!”
Call to Action to homeowners, future homeowners, investors and patriots everywhere… Stand Up and Make your voice heard.
First Find your Senator. This is very easy just go to…
From that Site you can email your Senators directly and call them…PLEASE CALL AND EMAIL THEM.
I have created the email below for you to send directly to your Senator. You have complete permission to copy the below verbage in its absolute entirety. Just find your senator and copy and paste the below message in. I cannot stress the importance of doing this today!
I am writing you today to let you know that I absolutely and emphatically am AGAINST the reduction or elimination of the Mortgage Interest Deduction. The reduction or elimination of MID will essentially raise the house payments for hard working Americans everywhere. This will lead to more defaults, more foreclosure, and more decline in property values. There are so many families just trying to get buy and this will have a devastating impact on millions of families. In addition this will impact small and large landlords and there ability to provide rental housing and will disincentives property investors to take risks in purchasing homes.
Please DO NOT support the reduction or elimination of Mortgage Interest Deduction in any form or Fashion!
Do not delay. Take action today, or it may be too late
To Homeowners, Future Homeowners, Real Estate Investors and Patriots everywhere, the future of our country rests in what you choose to do in over the course of the next week. Please make your voice heard today!
Ryan G Wright
Owner of DoHardMoney.com
By SEWELL CHAN
Published: December 16, 2010
New York Times
WASHINGTON — When Pimco, the huge bond manager, approached investors recently to raise money for a new fund that would buy soured mortgage securities from ailing banks, it promoted its expertise by listing several former top Bush administration officials and Alan Greenspan, the former Federal Reserve chairman.
In a confidential presentation to investors, Pimco listed as either consultants or employees an all-star constellation of former federal officials, including Mr. Greenspan; Joshua B. Bolten, who was White House chief of staff under George W. Bush; and Neel T. Kashkari, who ran the Wall Street bailout program for the Treasury department.
Those former officials, as well as others hired by Pimco, helped set national economic policy during the run-up to the financial crisis of 2008, which was prompted by the collapse of the housing market.
Now investment firms like Pimco are looking to profit by buying distressed mortgage debt from banks, which are under pressure to raise cash and hold more capital.
While Pimco did not create shoddy mortgages or contribute to the crisis, its presentation to investors, which was prepared in October, suggests that former senior officials are now poised to help investors benefit from the disastrous financial developments that occurred while they held power in Washington.
The presentation, a copy of which was obtained by The New York Times, also reflects Washington’s revolving door where officials leave government to pursue lucrative opportunities working with industries they once dealt with while in public office.
“This highlights the all-too-close relationships between our largest financial institutions and the people who acted as their regulators,” said Joshua Rosner, managing director of Graham Fisher & Company, which advises institutional investors, after the presentation was described to him. “The ‘too big to fail’ concept is not just about assets. It’s also about relationships.”
Mr. Greenspan, who led the Fed for 18 years until his retirement in January 2006, has been criticized for not using the central bank’s regulatory powers to crack down on subprime mortgage lending. He has been a paid adviser to Pimco since May 2007.
Reached at his consulting firm, Mr. Greenspan expressed surprise on learning that he was listed as a “special consultant to Pimco” in a marketing presentation.
“Pimco has never asked me to assist in the marketing of any of their products, and I never have,” he said. “I am a consultant to them on global economic and financial issues.”
Another special consultant was Mr. Bolten, a former Goldman Sachs executive who worked in the White House for the eight years of the Bush administration.
As the chief of staff from 2006 to 2009, Mr. Bolten was intimately involved in economic policy. He helped lure Henry M. Paulson Jr., a fellow alumnus of Goldman Sachs, to serve as Treasury secretary, and was Mr. Paulson’s main liaison to the White House in 2008, when the Treasury worked frantically with the Fed to avert a collapse of the capital markets.
Mr. Bolten, who is now a visiting professor in the Woodrow Wilson School of Public and International Affairs at Princeton University, did not respond to phone calls and e-mails requesting comment.
The presentation also names two other Bush administration officials who are now executives at Pimco.
One is Mr. Kashkari, who was the assistant Treasury secretary charged with managing the Troubled Asset Relief Program, which Congress set up to rescue the financial services industry. The other is Richard H. Clarida, who was the top economist at the Treasury in 2002 and 2003. He is now an executive vice president at Pimco’s New York office, as well as a professor of economics at Columbia University. Neither responded to requests for comment.
Officials at Pimco, which is based in Newport Beach, Calif., and is a subsidiary of the German insurer Allianz, declined to comment, saying their lawyers believed that rules set by the Securities and Exchange Commission prohibited them from discussing the investment offering.
Harold P. Reichwald, a banking and finance lawyer at Manatt, Phelps & Phillips in Los Angeles, who does not have a relationship with Pimco, said the use of policy experts was not surprising for the kind of investment Pimco was offering.
“It’s not surprising that an issuer would surround itself with people with expertise in the field,” he said. “I think good practice would dictate that if you’re going to name individuals in a prospectus, which is essentially a selling document, that you would clear it with them in advance.”
While some large Wall Street banks have been thriving in recent months after getting a lifeline from the government, other financial institutions, including smaller banks, have been teetering.
The Federal Deposit Insurance Corporation has seized and closed nearly 300 banks in the last two years. And some big banks are trying to get out of the business of servicing residential mortgages, an expensive and time-consuming task to which banks that focus on originating loans are not well-suited.
The presentation estimates that banks in the United States and Europe need to raise more than $550 billion in capital, partly because of pressure from regulators to strengthen their balance sheets, and partly in anticipation of new international bank capital standards known as Basel III.
In essence, the Pimco fund — known as Bravo, short for Bank Recapitalization and Value Opportunities — intends to buy a wide variety of distressed assets, including pools of nonperforming loans bundled into securities, at a discount, among other strategies. Pimco is believed to be trying to raise hundreds of millions of dollars for the fund.
Read the entire article HERE.
By Nathan Diebenow
Friday, December 17th, 2010 — 9:42 am
America’s military and economic empire could collapse at any time, but predicting the precise day, week or month of its potential demise is unattainable, according to a former New York Times war correspondent who spoke with Raw Story.
“The when and how is very dangerous to predict because there’s always some factor that blindsides you that you didn’t expect,” Pulitzer-winning journalist Chris Hedges said in an exclusive interview. “It doesn’t look good. But exactly how it plays out and when it plays out, having covered disintegrating societies, it’s impossible to tell.”
He explained that he learned this lesson as events unfolded around him in the fall of 1989. Then, members of the opposition to the Soviet Empire told him that they predicted travel across the Berlin Wall separating East from West Germany would open within the year.
“Within a few hours, the wall didn’t exist,” he said.
Hedges was one of roughly 135 activists who participated in an act of civil disobedience that resulted in their arrests outside the White House yesterday, even as Obama was unveiling a new report on progress of the war in Afghanistan.
Speaking to Raw Story on Wednesday night, he said the signs of US collapse are plain to see and compared the country’s course through Afghanistan to Soviet Russia’s.
“We’re losing [the war in Afghanistan] in the same way the Red Army lost it,” he said. “It’s exactly the same configuration where we sort of control the urban centers where 20 percent of the population lives. The rest of the country where 80 percent of the Afghans live is either in the hands of the Taliban or disputed.”
One day after this interview was conducted, reports hit the global media noting the CIA’s warning to President Obama, that the Pakistan-supported Taliban could still regain control of the country.
Hedges predicted that President Obama’s war report released Thursday would “contradict not only [US] intelligence reports but everything else that is coming out of Afghanistan.”
His prediction came startlingly true: the CIA’s own assessment was said to stand in striking contrast with President Obama’s report. Defense Secretary Robert Gates, however, insisted that the US controlled more territory in Afghanistan than it did a year ago.
“Foreigners will not walk the streets of Kabul because of kidnapping, and journalists regularly meet Taliban officials in Kabul because the whole apparatus is so porous and corrupt,” he said.
‘A corporate coup d’état in slow motion’
Hedges said he attended the protest and planned to get arrested because he is against the corporate powers that have enveloped the nation.
“We’ve undergone a corporate coup d’état in slow motion,” he said. “Our public education system has been gutted. Our infrastructure is corroding and collapsing. Unless we begin to physically resist, they are going to solidify neo-feudalism in this country.”
“If we think that Obama is bad, watch the next two years because these corporate forces have turned their back on him,” Hedges warned.
Read the entire article HERE.
Sonntag, 12. Dezember 2010 13:23
James G. Rickards, the Senior Managing Director of the consulting firm Omnis, Inc., gives in this exclusive interview his analysis of the so called currency war and explains why Germany should pick up its gold reserves from New York. Moreover, he gives his take on the secret gold policy of the major central banks of the world and discusses two scenarios for a new global monetary system.
James G. Rickards is Senior Managing Director of Omnis, Inc. (http://www.omnisinc.com/), a research and consulting firm in McLean, Virginia, USA. He is also co-head of the firm’s practice in Threat Finance & Market Intelligence and a member of the Board of Directors. Moreover, he serves as Principal of Global-I Advisors, LLC, an investment banking firm specializing in the intersection of capital markets and geopolitics. Mr. Rickards is a seasoned counselor, investment banker and risk manager with over thirty-five years experience in capital markets including all aspects of portfolio management, risk management, financing, regulation and operations.
Mr. Rickards’ career spans the period since 1976 during which he was a first hand participant in the formation and growth of globalized capital markets and complex derivative trading strategies. He has held senior executive positions at sell side firms (Citibank and RBS Greenwich Capital Markets) and buy side firms (Long-Term Capital Management and Caxton Associates) as well as technology firms (OptiMark). He has directly participated in the release of U.S. hostages in Teheran, Iran in 1981 as well as in the 1987 Stock Market Crash and the 1990 collapse of Drexel. He was the principal negotiator of the government-Federal Reserve Bank of New York-sponsored rescue of LTCM in 1998.
Mr. Rickards is a graduate school visiting lecturer at Northwestern University and the School of Advanced International Studies. He has recently delivered papers on econophysics at the Applied Physics Laboratory and the Los Alamos National Laboratory. Mr. Rickards has written articles published in academic and professional journals in the fields of strategic studies, cognitive diversity, network science and risk management. He is a member of the Business Advisory Board of Shariah Capital, Inc., an advisory firm specializing in Islamic finance and is also a member of the International Business Practices Advisory Panel to the Committee on Foreign Investment in the United States (CFIUS) Support Group of the Director of National Intelligence.
Mr. Rickards holds an LL.M. (Taxation) from the New York University School of Law; J.D. from the University of Pennsylvania Law School; M.A. in international economics from the School of Advanced International Studies, Washington DC; and a B.A. degree with honors from the School of Arts & Sciences of The Johns Hopkins University, Baltimore, MD.
His advisory clients include private investment funds, investment banks and government directorates. Mr. Rickards is licensed to practice law in New York and New Jersey and various Federal Courts and has held all major financial industry licenses. He has been a frequent speaker at conferences sponsored by bar associations and industry groups in the fields of derivatives and hedge funds and is active in the International Bar Association. He has been interviewed in The Wall Street Journal and on CNBC, Fox, CNN, NPR and C-SPAN and is an OpEd contributor to the New York Times, Financial Times and the Washington Post.
James G. Rickards lives in Connecticut, U.S.A.
Mr. Rickards, could you give me your interpretation of the so called currency war? Is there for example a difference between your analysis and the one in the mainstream media?
Well, I would say the one difference is that in my view that there is a currency war going on now. I think a lot of the mainstream media and some policy makers have used the expression, usually to say that there is no currency war. I believe the currency war has already begun. The main front in the currency war is between the United States and China. China is maintaining a fixed exchange rate between the yuan and the dollar, and the U.S. is trying desperately to inflate. We want to create inflation in the United States. But the problem is: Chinas exporters receive dollar payments and then the Central Bank of China requires them to basically hand in the dollars and they get the yuan, which they use for their local expenses. So what’s being happening is, as the U.S. is printing dollars and expanding the money supply, a lot of that money is going to China and the Chinese are having to increase the Chinese money supply in order to maintain the peg.
The result is that the inflation is showing up not in the United States, but in China. The Fed is desperately trying to get inflation in the U.S., they have not been successful – the inflation is showing up in China and the Fed is going to continue to pursue its policy of quantative easing, essentially trying to break the peg between the Chinese currency and the U.S. currency. The Chinese have become very concerned. They may soon have to raise interest rates, they may soon have to revalue the yuan upwards, but this creates other problems for them, because the low yuan and the fixed yuan to the dollar has been a big source of job creation in China, because they need jobs to maintain political stability. But if they keep the peg and get inflation, they’ll going to have political instability because of the inflation. So either way, China appears to be poised on a lot of instability, either on the employment front or the inflation front, possibly both.
I think China’s solution in the short run will be to impose price controls which they can back up with coercion. The U.S. solution in the short run is to continue quantative easing to force the Chinese to break the peg, but so far without success. So you have a currency war between China and the United States, which at the moment both sides appear to be losing. The winner in some ways is Europe, because the euro-crisis has caused the euro to devalue somewhat, but that might be a temporary advantage, because if the U.S. does devalue in some way, then you may see the dollar go down against the euro and the euro rally again.
So it’s a three-front currency war among the euro, the yuan and the dollar, it is getting serious and it is going to continue. This is very typical of what happens when you have not enough growth. When you have good economic growth, people don’t worry so much about their share, if somebody gets a little advantage over someone else because of the currency, they may grumble, but they are not overly concerned because they have the growth. But when you have no growth or insufficient growth, people begin fighting over the crumbs, and that’s when currency wars begin.
Read the entire interview HERE.
Since the announcement last week that I will chair the congressional subcommittee that oversees the Federal Reserve, the media response has been overwhelming. The groundswell of opposition to Fed actions among ordinary citizens is reflected not only in the rhetoric coming out of Capitol Hill, but also in the tremendous interest shown by the financial press. The demand for transparency is growing, whether the political and financial establishment likes it or not. The Fed is losing its vaunted status as an institution that somehow is above politics and public scrutiny. Fed transparency will be the cornerstone of my efforts as subcommittee chairman.
Thanks to public pressure earlier this year, Congress did pass legislation that requires the Fed to disclose some information about its bailout of select industries and companies following the 2008 financial crisis. So two weeks ago the Fed released data concerning more than $3 trillion of assistance it offered to banks through its bailout facilities. After reviewing this data, however, we are left with many more questions about the Fed’s “lending”.
In the “Term Securities Lending Facility”, the Fed was supposed to have loaned against AAA-rated securities– yet over half of the collateral put up by banks to obtain loans had no listed credit rating. Should we assume that the Fed accepted absolute junk rated securities as collateral for loans? Presumably these securities were so bad that they wouldn’t even publicize their credit rating. So why should our central bank, backed up by your taxes, accept such collateral?
On another note, of the $1.25 trillion purchased under the Fed’s “Mortgage-Backed Securities Purchase Program,” only $877 billion in purchases have been publicized. What happened to the remaining $400 billion?
These kinds of limited disclosures by the Fed only underscore the need for a full and complete audit of the Fed’s financial books. This audit should be done by an independent third party, in the same manner that public companies are audited. The Fed should make public its balance sheet, income statement, and perhaps most importantly its cash flow statement. It also should publicize the notes explaining those financial statements.
We seem to forget sometimes that Congress created the Fed– it is a government-created banking monopoly, and its top decision-makers are appointed by the President and confirmed by the Senate. If the Fed does not perform satisfactorily in the eyes of these politicians and their constituents, the Chairman and Governors may not be re-nominated.
In theory, Congress could even repeal the Federal Reserve Act altogether since it has the authority to do so. Obviously Congress is within its authority to audit an organization it created by statute, and it is time to assume that responsibility.
With 320 Members of Congress cosponsoring my legislation to fully audit the Fed in the 111th Congress, my hope is that we can build on our broad bipartisan coalition in 2011 and continue the push for greater Fed transparency going forward.
Read the original article HERE.