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by WashingtonsBlog Guest post by Ellen Brown. Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com. “[W]ith Cyprus . . . the game itself changed. By raiding the depositors’ accounts, a major central bank has gone where they would not previously have dared. The Rubicon has been [...] US regulators to fault JP Morgan over Madoff accounts US regulators plan to fault JPMorgan, which served as Bernie Madoff’s main bank for two decades, for failing to conduct adequate due diligence and report suspicious activity, according to sources. by WashingtonsBlog
50% In Favor of Directly Breaking Them Up … Many More In Favor of Stopping Artificial Support and Letting them Shrink On Their Own A new Huffington Post/YouGov poll finds: Sixty-one percent of respondents said that banks and other financial institutions have become too large and powerful …. A Rasmussen poll conducted last month found that: A new Rasmussen Reports national telephone survey shows that 50% of U.S. Adults favor a plan to break up the 12 megabanks, [...] Lawrence E. Rafferty The recent news about Cyprus banks confiscating depositor’s funds sent chills throughout the financial world here and abroad. I couldn’t believe that the plan in Cyprus hinged on the idea that the bank could just steal customer’s funds to balance the bank’s books. I muttered to myself when I read the story that something as crazy as that couldn’t possible happen here in the United States. [...] Mac Slavo
At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained. Ben Bernanke, Federal Reserve Chairman At the latest Federal Open Market Committee (FOMC), Ben Bernanke assuaged fears of a potential government confiscation of depositor holdings in America by suggesting that such an event is “unlikely” to take place. When asked whether [...] by WashingtonsBlog
Chris Whalen is one of America’s top banking analysts. Nouriel Roubini notes: Chris Whalen is one of the leading independent analysts of the US banking and financial system. Whalen notes today that the big American banks get a subsidy in excess of $780 billion dollars per year. Specifically, Whalen estimates the following types of subsidies to the giant banks: $360 billion in Federal Reserve subsidies, by creating an artificial “spread” in interest rates $120 billion in federal deposit insurance [...] China Warns: Prepare For Worst Are we approaching the start of World War 3 in a way that was once though unimaginable? China has warned its’ citizens to “prepare for the worst” as tensions in the region escalate dramatically. Where will these ‘war games’ lead? Let’s all hope that this does not grow beyond the current proportions being seen now. From the Business Insider.: After repeatedly flying surveillance aircraft into disputed airspace with Japan, [...] Why Bank Earnings Could Face Rude Awakening Are banks facing a rude earnings awakening? With JPMorgan and Wells Fargo on tap to report this week, some investors may be questioning whether the depletion of loan loss reserves — the money banks set aside to pay for loans that turn sour — is too premature as credit quality keeps improving. (Read More: 10 Big Bank Stocks Gearing Up for Third-Quarter Earnings.) A recent report [...] From FT: Tim Geithner, the US Treasury secretary, acted to shield Citigroup’s bondholders and management from accountability at the height of the financial crisis while taxpayers were left on the hook, a former US bank regulator has alleged. Sheila Bair, who served as chairman of the Federal Deposit Insurance Corp during the crisis and its aftermath, levelled fresh attacks at Mr Geithner, the Obama administration, fellow financial regulators and bankers such as Vikram [...] In the aftermath of one of the worst recessions in history, more Americans have limited or no interaction with banks, instead relying on check cashers and payday lenders to manage their finances, according to a new federal report. Not only are these Americans more vulnerable to high fees and interest rates, but they are also cut off from credit to buy a car or a home or pay for college, the [...] Susanne Posel In June of 2012, Eric Bloom, former chief executive, and Charles Mosely, head trader of Sentinel Management Group (SMG) were indicted for stealing $500 million in customer secured funds. Both Mosely and Bloom were accused of “exposing” customer segregated funds “to a portfolio of highly risky derivatives.” These customer funds were used to “back up personal investments” which were part of “collateral for a loan from Bank of New York Mellon” (BNYM). [...] Sanford “Sandy” Weill, whose creation of Citigroup Inc. (C) ushered in the era of U.S. banking conglomerates a decade before the financial crisis, said it’s time to break up the largest banks to avoid more bailouts. “What we should probably do is go and split up investment banking from banking,” Weill, 79, said yesterday in a CNBC interview. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be [...] As the Federal Reserve Bank of New York faced criticism for missing a multibillion-dollar trading loss at JPMorgan Chase, the regulator convened a town hall meeting in May to bolster employee morale. Two months later, the New York Fed staff huddled again, after lawmakers questioned why the regulator had failed to rein in banks that manipulated key interest rates. “We were told to keep our heads down and stay focused,” said one [...] On June 18 the Federal Deposit Insurance Corp. proposed rule changes to categorize gold as a Zero Percent Risk-Weighted, Tier 1 Asset. This is significantly bullish for gold in the long term as this potential systemic change could drive gold demand and gold prices much higher. n light of the global financial downturn, cash and bonds have begun to lose their luster as global financial regulators have begun to recognize the implied risks behind paper assets. In [...] The Federal Deposit Insurance Corp. sued a group of banks, including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Bank of America Securities and Deutsche Bank AG (DBK), in two suits over mortgage-backed securities. The FDIC, acting as receiver for two failed banks, filed the suits in New York federal court today seeking money the banks allegedly lost on securities backed by residential mortgages. The suits claim a total of $77 million. The FDIC filed an $11 [...] The Federal Deposit Insurance Corporation was created after the bank runs and collapses of the Great Depression. The goal was to create consumer trust in the banking system. The Savings and Loan Crisis of the 1980s was the first major challenge to the system. “The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of about 747 out of the 3,234 savings and [...] http://www.cnbc.com/id/47726367 Fed Agrees to Increase Capital Rules for Banks, Hitting Stocks(11) Fed Boosts Capital Rules for Banks, Hitting Stocks The Federal Reserve released a proposal to enact an international agreement on higher capital standards for banks, known as Basel III, that largely rejects pleas by the U.S. banking industry to soften parts of the new standards. The move, which came just [...] WSJ When the next crisis brings a major financial firm to its knees, U.S. regulators will seize the parent company but allow its units around the globe to keep operating while the mess is cleaned up, according to a planned announcement Thursday from the Federal Deposit Insurance Corp. The equity stakeholders of the large bank or other financial firm will be wiped out, and bondholders will face losses as their holdings are [...] Have been on deadline this week, but wanted to post a few interesting links: • I hope everyone saw ex-Federal Deposit Insurance Corporation chief Sheila Bair’s editorial in the Washington Post, entitled, “Fix Income Inequality with $10 million Loans for Everyone!” The piece might have set a world record for public bitter sarcasm by a former top regulatory official. In it, Bair points out that since we’ve been giving zero-interest loans to all of the [...] I RECENTLY asked a group of colleagues — and myself — to identify the single most important development to emerge from America’s financial crisis. Most of us had a common answer: The age of the bank run has returned. Mark Shaver
Since the end of World War II, economists have generally thought that runs on banks were dead, at least as a phenomenon in advanced nations. In the United States, for example, bank [...] From FT:
There were no new banks created in the US in 2011, making it the first year in decades that the country has gone without the establishment of a single start-up lender. The lack of new or de novo banks underscores the rapidly shifting business environment for US financials and changed attitudes towards the industry after the recent crisis.
A de novo bank is a freshly chartered bank that has not been created through the takeover [...] The largest banks must show how they would break up their assets if they were in danger of failing, under a rule approved Tuesday. The Federal Deposit Insurance Corp voted to require banks with $50 billion or more in assets to submit so-called living wills. Seven banks with more than $250 billion in assets will have to show their plans by July. The other 30 affected by the rule have until 2013. The FDIC [...] The habitual secrecy of banks is understandable. Banks almost never want you to understand where they have invested your money. They reveal their quarterly results through glasses tinted so dimly that no one on earth can understand what risks they face, what assets they own, or how they make money. This is all understandable once you grasp the basic premise that banks are dishonest enterprises that do their best to appear respectable [...] www.informationclearinghouse.info/article29474.htm By Mike Whitney October 21, 2011 “Counterpunch” – -Why is Bank of America moving derivatives from Merrill Lynch to an insured subsidiary? Is it because the derivatives could blow up at any time leaving Merrill with gigantic, unsustainable losses? If that’s the case, then it would make perfect sense to shift them into a depository institution that’s covered by the FDIC. That way, the taxpayers would wind up paying for the damage [...] by Lisa Du Image: AP Bank of America came under further scrutiny this week after Bloomberg reported that the company moved risky derivatives from its investment bank arm to its retail banking unit following a Moody’s downgrade last month.
(To clarify: Bank of America Corp. is the holding company that oversees Merrill Lynch — the investment banking division — and Bank of America — the retail banking branch everyday people use. Derivatives are financial instruments or contracts [...] Charles O. Holliday, Jr., (63) Chairman of the Board, Bank of America Corporation Mukesh D. Ambani, (54) Chairman and Managing Director, Reliance Industries Ltd. Susan S. Bies, (64) Former Member, Board of Governors of the Federal Reserve System Frank P. Bramble, Sr. (63) Former Executive Officer, MBNA Corporation Virgis W. Colbert, (72) Senior Advisor, MillerCoors Company Charles K. Gifford, (68) Former Chairman, Bank of America Corporation D. Paul Jones, Jr., (69) Former Chairman, Chief Executive Officer [...] |
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Under a rule approved by the FDIC Tuesday, the largest US banks must file “living wills”: plans for how they would break up their assets if they were in danger of failing. Seven banks with more than $250 billion in assets will have to show their plans by July.
WASHINGTON – The largest banks must show how they would break up their assets if they were in danger of failing, under a rule approved Tuesday.
The Federal Deposit Insurance Corp. voted to require banks with $50 billion or more in assets to submit so-called living wills. Seven banks with more than $250 billion in assets will have to show their plans by July. The other 30 affected by the rule [...]