This is as good a day as any to remember that Ben Bernanke's Fed under Obama bailed out the banksters and hung 6.5 million homeowners out to dry

 Bloomberg, August 21, 2011, here:

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley, got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. ...

Homeowners are more than 30 days past due on their mortgage payments on 4.38 million properties in the U.S., and 2.16 million more properties are in foreclosure, representing a combined $1.27 trillion of unpaid principal, estimates Jacksonville, Florida-based Lender Processing Services Inc. ...

Congress required the disclosure after the Fed rejected requests in 2008 from the late Bloomberg News reporter Mark Pittman and other media companies that sought details of its loans under the Freedom of Information Act. After fighting to keep the data secret, the central bank released unprecedented information about its discount window and other programs under court order in March 2011.

 

US on its way to becoming a net exporter of oil, dominating global oil market and securing the dollar as global reserve currency

Note to Chris Irons: This is not bullish for gold.

The US is about to send a lot more oil into an already oversupplied world market: 

“It will be 4 million barrels a day by six or eight months. Four million barrels a day is a lot bigger than the North Sea as a whole. That crude oil is going to go everywhere. It goes to Asia, Europe, to India,” said Edward Morse, Citigroup global head of commodities research. “If the U.S. gets to 6 million barrels a day in three years, it will be hands-down the world benchmark.” ... 

“Add on the amount of petroleum products that are exported and add on the amount of natural gas that is exported. The U.S. becomes the biggest hub for energy trading in the world,” said Morse. “It has dramatic implications for the U.S. dollar.”Morse notes there are those who doubt the dollar’s future as the global reserve currency. But in a scenario where the U.S. grows into an energy powerhouse, “the dollar becomes more entrenched.”The U.S. had been the world’s dominant oil producer, prior to World War II. “This will be back to the future for the Gulf Coast,” said Daniel Yergin, IHS Markit Vice Chairman. Yergin said the U.S. would not have had the opportunity to increase production as much, were the law not changed in 2015 to allow for U.S. oil exports.

David Dayen thinks Tim Geithner's disobedience of Obama's orders fed the anger at government Trump parlayed into the presidency

Of course, this begs the question whether Obama knew what he was doing, or even wanted to know.

Here in The New Republic:

Every action fit Geithner’s worldview: The financial system must be stabilized at all costs, as the only way to heal the economy so real people benefit. “We do not need to imagine that he was in the pocket of any one bank,” Adam Tooze wrote in the new book Crashed. “It was his commitment to the system that dictated that Citigroup should not be broken up.” ...

Today, some may welcome the internal dissension in the Trump administration. But Geithner’s actions to protect banks from the president he served, and the anger it bred at a “rigged” system, diminished the public’s faith in government intervention and helped install Trump in the White House.

All But One Big Bank Would Fail Real Stress Tests, Which Means In An Actual Crisis It's 2008 All Over Again

So says Bloomberg View here, naming Wells Fargo as the only one which would pass:

The results aren’t pretty. Using a start date of Sept. 30, 2013, the same as that of the Fed's latest round of stress tests, the NYU model gives only one of the six largest U.S. banks -- Wells Fargo & Co., Inc. -- a passing grade. The other five -- JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley -- would have a combined capital shortfall of more than $300 billion. That's not much less than they needed to get themselves out of the last crisis.

FDIC Sues 16 Big Banks Saying LIBOR Rigging Hurt 38 US Banks Which Eventually Failed

CNBC reports here:

The FDIC said the defendants' conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.

Among the banks named as defendants include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank AG, HSBC Holdings, JPMorgan Chase, the Royal Bank of Scotland Group and UBS.

I Know! Let's Get The Sequestration Cuts From The Banks!

In an editorial on February 20th, here (which has caused quite the hubbub), Bloomberg.com maintained that most big banks are not profitable because their preferred rate to borrow from the government amounts to a gift roughly equal to their stated profits:

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits . . .. In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

No one seems to be inquiring too deeply, however, why the banks are not profitable without continuing massive taxpayer support ($83 billion annually -- remind you of anything beginning with the letter "s" and starting today?).

Gee, could it be because of all those bad mortgages on and off the books which are not performing and cutting into their capital? Ya think?

And maybe, just maybe, the Fed's policies are trying to repair this one thing only, while telling us it's to help with employment, housing, the stock market even, blah, blah, blah, pissing down our backs and tellin' us it's rainin'?

If this were really a free market economy with a private banking industry, we'd have had the equivalent of $85 billion in sequestration spending cuts for years already by not subsidizing these losers.

And another thing we wouldn't have is these big banks. They would have failed already.

Warren Buffett, Amoral Crony Capitalist, Bought An Indulgence From The Left

So says Daniel Mitchell of The Cato Institute, here:

"If you’re an amoral person with political connections, it’s possible to make a lot of money.

"Warren Buffett lined his pockets by making a government-subsidized investment in Goldman Sachs during the financial crisis.

"The rest of us suffered and he got richer, but the left seems to be okay with that perverse form of redistribution because he supports class-warfare tax hikes. Sort of like buying an indulgence in the Middle Ages."

I really like that analogy with the church because it speaks to the failure of all idealist conceptions to deliver on what they promise. This is as true of socialism as it is of capitalism, of fascism as it is of Christianity. All offer a promised land which never seems to arrive, but you have to ask yourself who thought this stuff up.

Like beer to Homer Simpson, it is we who are the cause of and the solution to all of life's problems.

America's LIBOR Banks' Silence Is Deafening

John Carney for NetNet, here:

I asked Bank of America, Citi, and JP Morgan Chase to provide answer[s] to four sets of questions about their Libor practices.

1. Who makes the Libor submission for your bank? How many people involved? Who does the submitter report to? How high up in management does decision go? Is it reviewed before or after submitted to BBA? Who signs off on changes?

2. How is the submission calculated?

3. Has this procedure changed over time?

4. Is it under review following Barclays scandal?

Not one of the banks would provide the information requested. Bank of America and JPMorgan declined to comment. Citigroup did not return phone calls.

European Project Has Been Hijacked To Prop Up Insolvent Banks

So says an angry Irishman, Declan Ganley, who is none too happy that despite being in an economic depression, Ireland continues to bailout failed banking institutions elsewhere, here:

“[On Tuesday] Ireland paid, once more, another half a billion euros to unsecured, un-guaranteed failed private bank holders — we don’t know who they are,  some of them are French banks, some of them German — it’s not even disclosed [to whom] Irish tax payers money is going.  So Irish taxpayers are bailing out failed banks."

“The whole of the European project, it would appear, has been hijacked to subsidize and protect an industry that needs to go through its insolvency purge [and] needs to go through bankruptcy."

Well . . . yeah!

His faith in American-style banking bankruptcy arrangements for Europe, expressed elsewhere at the link, is touching, but we don't really practice them here either, sorry to say, in the cases that really matter. American taxpayers remain on the hook for failed behemoths like Citigroup and Bank of America, and Fannie and Freddie, GM, AIG, et cetera, et cetera, et cetera.

Some French readers will be amused by these additional remarks:

“You cannot take the path that Hollande is taking in France of dropping retirement ages and putting in exploitative, extractive taxation and creating a hostile environment for business [because then] there will be no growth in Europe and the whole European project will fall apart.”

Citigroup VP Pleads Guilty to Embezzling Millions Between '03 and '10

And he's only 35 NOW, according to this story:

A former vice president for Citigroup pleaded guilty Tuesday to embezzling more than $22 million from the company and funneling the money to his personal bank account.

Gary Foster, 35, pleaded guilty to bank fraud, admitting that he took the money between 2003 and 2010. He appeared in U.S. district court in Brooklyn before Judge Eric Vitaliano.

Some Money Market Funds Increase Liquidity By Over 40 Percent, Lighten Up On Treasuries

As reported here:

Money market funds are avoiding the one-month Treasury notes which mature on August 4 and August 11. “Those are the securities most vulnerable to some sort of change,” said Joseph Abate, strategist at Barclays Capital. ...

Money market funds, which hold $338 billion of US government debt, according to Citigroup, are also reducing the amount of time they are willing to lend. This could raise funding concerns for banks, as they are reliant on short-term borrowing in the repurchase or repo market.

The Fed Still Refuses to Document for the GAO the Exigent Circumstances Justifying Loans to Non-Primary Dealers

See the story here.

We're talkin' affiliates of Merrill Lynch, Goldman Sachs, Morgan Stanley and Citigroup.

None dare call it fascism.

The True Born Sons of Liberty want The Fed to end.

Guarantees Implicit Under Dodd-Frank Hand Big Banks Billions in Borrowing Advantages at Taxpayer Expense

So says John Carney here, calling Bank of America, Citigroup and Wells Fargo, among others, our new Fannie Maes and Freddie Macs.

BankRobberiesRUs

From Jeff Randall for The UK Telegraph:

When asked by a judge why he persisted in robbing banks, the serial offender replied: “Because that’s where the money is.”

For us taxpayers, this observation is now doubly true. The banks have captured our money twice over: as cash in their vaults and investments in their shares. ... We rescued them – and in so doing became their prisoners. ...

The global economy cannot function without big banks, they say: gigantism provides synergies, efficiencies and benefits of scale. What a hoot. Tell that to the shareholders of Citigroup, a banking behemoth, which all but disappeared up its own balance sheet in 2008, having had a wild (losing) punt on sub-prime mortgages. ...

There is a general perception that we don’t want banks to fail, not even bad ones. This is a mistake. We should be perfectly happy to see poorly run businesses disappear.

Read the rest here.

Here's Why Your Government Stalled on the FOIA for Two Years

Because the American taxpayer has bailed out the whole world, that's why. We're now the biggest suckers in history.

And the following information wouldn't have been released either, except for the Dodd-Frank legislation:

Citigroup ($2.2 trillion)

Merrill Lynch ($2.1 trillion)

Morgan Stanley ($2 trillion)

Bear Stearns ($960 billion)

Bank of America ($887 billion)

Goldman Sachs ($615 billion)

JPMorgan Chase ($178 billion)

Wells Fargo ($154 billion)

Swiss bank UBS ($165 billion)

Deutsche Bank ($97 billion)

Royal Bank of Scotland ($92 billion)

Fannie Mae and Freddie Mack ($1.25 trillion)

General Electric ($16 billion)

Harley-Davidson Inc. ($2.3 billion)

Caterpillar Inc. dealers ($733 million)

The story from yahoo.com is totally irresponsible for saying the Fed didn't take part in an appeal to the Supreme Court with a group of commercial banks seeking to prevent the disclosure of the names of institutions receiving emergency loans in 2008. Hell, the Fed appealed all the way up the line until it came time to appeal to the Supreme Court or comply with two (2! II! Zwei!) orders from lower courts to disclose the information. And we still don't have that.

Has anyone painted a clearer picture of the bankruptcy of our largest institutions and industries?

Only a fool would keep his money in a bank now.

Hell, only a fool would keep money.

US Treasury Still Stonewalling FOIA Request on Citigroup Guarantees

Twenty months and counting, including a non-response response on what securities $300 billion of taxpayer monies guarantee. It's our money! We have a right to know!

And tomorrow it will be the Federal Reserve's turn to continue the stonewalling on a separate FOIA request involving $2 trillion in taxpayer guarantees for financial institutions from two years ago, and we still don't know even though the courts have ordered the Federal Reserve to comply with the requests. When they finally do, how much do you want to bet it will be a similar non-response response?

No wonder the people want the Federal Reserve abolished, and the Treasury to burn down.

Bloomberg, which supports the FOIA requests, has the full story here.

Corporate Cash Really Isn't

Mish has an interesting post which contrasts "corporate cash" with corporate debt. The upshot is the cash is concentrated in just four big financials (Goldman Sachs, JP Morgan Chase, Citigroup and Bank of America), and overall in about 50 companies. But corporates with cash are also in debt up to their eyeballs, so much so that the debt outweighs the cash by a TARP-size bailout amount:

As you can see, the total cash (in green) for the top 50 companies is $3.71 trillion, which sure sounds like a hell of a lot of cash, and it would be were it not for the debt (in red) totaling $4.45 trillion.

Read it all and see the graphic here.

The Dodd Bill Makes Moral Hazard Government Policy

An Opinion from The Washington Examiner

Run against Wall Street

By: Michael Barone

Senior Political Analyst

04/01/10

Senate Banking Committee Chairman Christopher Dodd, after spending some time negotiating with committee Republicans Bob Corker and Richard Shelby, has decided to advance major financial regulation legislation without bipartisan support. Democratic spin doctors will try to portray the fight over this legislation as a battle between Republicans favoring lax regulation of Wall Street and Democrats favoring tough regulation.

But is the Dodd bill really tough legislation, particularly in its treatment of the major financial entities? My American Enterprise Institute colleague Peter Wallison argues that it is not, because it gives Too Big To Fail status to the big entities—Citigroup and JPMorgan Chase, Goldman Sachs and Morgan Stanley. This is done by setting up a resolution process for a failing firm which protects creditors more than ordinary bankruptcy proceedings would. Wallison writes:

“From the perspective of its effect on the economy, it does not matter what happens to the company, or to its shareholders and management. The only thing that matters in a government resolution of a failing company is what happens to the creditors--because it's the creditors that will provide the funds preferentially and at favorable rates to large companies rather than small ones.

"In this respect, the Dodd bill does it again--it signals to creditors that they will get a better deal if they lend to the big regulated firms rather than their smaller competitors, and it does this by making it possible for creditors to be fully paid when a too-big-to-fail financial firm is liquidated, even though this would not happen in bankruptcy. There are a number of ways that this can be done, including through a simple merger with a healthy firm. As a prescription for moral hazard, this can hardly be surpassed. The creditors will line up to provide cheap money to the too-big-to-fail firms the Fed will be regulating.”

Wallison is not alone in taking this view. Clive Crook, writing in National Journal seems to agree:

“You do not deal with ‘too big to fail’ by keeping a list of systemically significant institutions: By itself, that makes things worse. You do not deal with it by promising to let most failing financial firms, including those on your list, go bankrupt: Nobody will believe that promise. You deal with it by combining early FDIC-like resolution for all financial firms, banks and nonbanks alike, with stricter and smarter requirements on their capital, liquidity, and leverage.”

Libertarian economist Arnold Kling suggests an even tougher approach, though he doesn’t say how to put it into effect: break up the big banks.

I think as a matter of both policy and politics, Republicans ought to oppose the Dodd bill’s provisions that effectively grant Too Big To Fail status to a handful of financial institutions (and perhaps to other companies, Wallison has argued). They should oppose giving preferred status to the very largest firms as compared to smaller competitors. They should be prepared to argue that the Democratic bill gives vast advantages to firms whose employees have gotten huge compensation (and who, as it happens, tend to give more money to Democrats than Republicans). The cry should be, no favor to the big Wall Street fat cats. Mainstream media is unlikely to transmit this message but, as we have seen in the health care debate, messages can get through without them.

"The Banks Must Be Restrained"

Total bank failures year to date reached 106 yesterday, bringing the total cost to the FDIC Deposit Insurance Fund this year to about $25 billion, with only about $100 billion to go, according to the FDIC's own projections.

The FDIC likes to take over banks on Friday afternoons, believing you won't notice it as readily with the weekend intervening before the next regular day of business. They wouldn't want you to panic, you know. So people who watch this stuff carefully like to call the last day of the work week "Bank Failure Friday." Yesterday, I noticed that the 106th bank to fail this year was in Itasca, Illinois, near where I used to live, and it reminded me of these words posted by Mish (who lives in Illinois) in July of 2008:

23. FDIC Chairman Sheila Bair said the FDIC is looking for ways to shore up its depleted deposit fund, including charging higher premiums on riskier brokered deposits.

24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.

Since those words were penned, the FDIC is planning to charge premiums several years forward to banks to the tune of $45 billion, its deposit fund is down to about $10 billion, and its troubled bank list has ballooned to over 400 banks, with nearly 300 in serious trouble. The FDIC expects to need at least another $100 billion for bailouts through 2013. Let's see, $10 billion on hand plus $45 billion charged forward = $55 billion. Only $45 billion short! Hmm. And you think we can afford to federalize health care?!

When you go down to the bank to ask for a loan to buy a house, you typically get leverage of only 5 to 1 (20% down), because nobody's got your back but you. So why does the bank get leverage to the tune of 25 to 1 (4% down)? Because of the taxpayer guarantee, that's why. And "rules" which let them, written by politicians on the take. It's high time we ended all that or this country will surely go bankrupt. Consider Citigroup.

It alone has $800 billion in "assets" off the books, and looks to be in serious trouble: suddenly this week it ended its gasoline credit card program and dramatically hiked interest rates on its other cards. Forget about the FDIC covering Citigroup with forward charged premiums to its member banks if it goes under. There isn't enough money there. The taxpayer will be on the hook. Again. Are you mad as hell yet? Are you going to take it anymore? Vote the bums out.

No wonder Jesse keeps saying, "The banks must be restrained . . . before there can be any sustained recovery."