bail out

$1.2 Trillion to Banks, You 0

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Bloomberg News has researched a bombshell story, the Federal Reserve gave $1.2 trillion in secret loans to banks during the financial crisis, from August 2007 until April 2010. This is in addition to the TARP bail outs which was publicly known.

The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The top three banks at peaking borrowing are: Morgan Stanley, $107.3 billion, Citigroup took $99.5 billion, Bank of America $91.4 billion, or a total of $298.2 billion. Gets worse, foreign banks amounted to half the loans.

Half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

Oh Those Burdensome Rules

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Here come the Banksters. It was not enough that so called financial reform is Swiss Cheese legislation, full of loopholes. What regulation is left, the banks are going after and seemingly with help from the Government.

Who is their biggest cheerleader? Why, Federal Reserve Chair, Ben Bernanke. From a regulation speech in Chicago:

No one’s interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit. Regulators must aim to avoid stifling reasonable risk-taking and innovation in financial markets, as these factors play an important role in fostering broader productivity gains, economic growth, and job creation.

According to Reuters, Goldman Sachs is having a freak out over the Swiss Cheese Financial Reform bill.

Goldman Sachs Group Inc (GS.N) has just a few more months to put its stamp on the Volcker rule, and it is not wasting any time.

Everything's #@%*ed Up and Nobody Goes to Jail

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Rolling Stone investigative Journalist Matt Taibbi has done it again, writing a knock down, drag out piece asking Why Isn't Wall Street in Jail? It becomes evident if you are rich, acting behind the cover of a corporation, you can get away with pretty much anything. Regular poor people, stealing a bike or a purse, you're going to jail with a felony conviction and a fine larger than your income.

 

Apocalypse When? Decline and Fall (Maybe) January 17, 2011

Michael Collins

For at least ten years the large US banks have been selling a product – the residential home mortgage – with a fatal legal flaw that renders it uncollateralized. Numerian

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Apocalypse When? Round Up of Massachusetts Supreme Court Decision on ForeclosureGate, US Bank N.A. v Ibanez - Around 1995, the big bank lenders established their own rules for handling the various steps of issuing a mortgage. They knew well the contract laws of the states in which they operated. But they had bigger plans. They wanted to bundle up thousands of mortgages and sell them as Mortgage Backed Securities (MBS). To do that, they needed an electronic system (MERS) that could bundle mortgages and sell them repeatedly to investors here and overseas. Never mind that state law required specific documentation at every step, including documentation to prove a specific owner of the property. When banks resold the MBS product, as it were, they were interested in churn and more money, not tagging a specific mortgage with the latest MBS owner.

Oops! The big banks screwed up big time. Bankruptcy courts at the state and federal level are used to adherence to contract law and court rulings. Most people in foreclosure struggle to pay for representation if they go to court. Many settle out of court. But the Show Me the Note movement, in and out of court, has a powerful ally - the Ibanez decision.

The Story of Citigroup's Extraordinary Financial Assistance

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SIGTARP released a new audit report, Extraordinary Financial Assistance Provided to Citigroup which should shock and awe.
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Citigroup was bailed out in November 2008, with $20 billion dollars plus $301 billion in asset guarantees. Now the Special Inspector General of TARP has gone back and done an audit, a forensic accounting of what really happened.

It appears Citigroup poses systemic risk was just screamed from the roof tops like Chicken Little and the solution was to throw money at it. No one bothered to check if this was even true, that Citigroup presented a systemic collapse of the global financial system if it failed. Even worse, while systemic risk is so complex, kind of a domino theory of multi-dimensions, yet to ascertain the possibility, it was implied why bother? From the report:

First, the conclusion of the various Government actors that Citigroup had to be saved was strikingly ad hoc. While there was consensus that Citigroup was too systemically significant to be allowed to fail, that consensus appeared to be based as much on gut instinct and fear of the unknown as on objective criteria. Given the urgent nature of the crisis surrounding Citigroup, the ad hoc character of the systemic risk determination is not surprising, and SIGTARP found no evidence that the determination was incorrect.

Time for a Bailout for the American Workforce

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Note: this is a cross-post from The Realignment Project. Follow us on Facebook!

Introduction:

As the third year of recession ends, the scale of the task of undoing the social and economic damage of the recession is now made plain. It is already well-known that 15 million Americans are officially unemployed, with another 15 million unofficially unemployed. But the scope of the recession goes far beyond their ranks  - more than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the recession began in December 2007.

The widespread nature of workers' declining fortunes, even if they have not suffered unemployment, explains why it is that one-third of U.S working families are now low-income (i.e, under 200% of poverty), one lost paycheck, one illness, or one accident away from disaster. But as I have noted before, the underlying illness of stagnant wages and a weak labor market have existed before - the one-third figure discussed above is only 7% higher than before the recession, and during the previous recovery in '02-05 we saw that figure increase, never falling below its 2007 level.

A rescue is deeply needed.

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