"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘J.P. Morgan Chase’

Financial ‘Reform’ Failure: Chase, Bank Of America, Citigroup, Wells Fargo, Goldman Sachs Now 30% Bigger; Control Assests Equal To 56% Of U.S. Economy

In Uncategorized on April 19, 2012 at 1:20 pm

Oldspeak:“Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” & “prevent the further consolidation of our financial system” the nation’s largest banks are bigger than they were before the credit crisis. Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56% of the U.S. economy, according to the Federal Reserve.” Behold! The fruits of toothless, non-regulating financial ‘reform’! Financial oligarchs now control assets equal to a majority of the U.S. economy. They’ve gained complete control of the European economy, and many others around the world. The conditions have been created for a bigger and more devastating global economic crash, that will facilitate the continued consolidation of control over all assets by the International Banking Cartels, and the continued destruction of sovereign states. How long will the rape and pillage of our planet and societies go on? If the Banksters have their way, until there is nothing left.

By Washington’s Blog:

Size of Banks Killing Economy … But Giant Banks Have Only Gotten Bigger Since Financial “Reform” Enacted

For years, many high-level economists and financial experts have said that – unless we break up the giant banks – our economy will never recover, real reform will be blocked, and democracy and the rule of law will be corrupted.

So how did the government respond to the financial crisis which started in 2007?

Let the giant banks get even bigger.

As Bloomberg notes, the five banks that held assets equal to 43% of the US economy in 2007 before the financial crisis and the bank bailout now control assets that equal 56% of the US economy:

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis.

Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch.

“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

***

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

Simon Johnson, a former chief economist of the International Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

***

Regulatory burden could promote further industry consolidation, according to Wilbur Ross, chairman of WL Ross & Co., a private-equity firm.

“We think the little tiny banks, the 90-odd percent of banks that are under $1.5 billion in deposits, are pretty much an obsolete phenomenon,” he told Bloomberg Television on March 14. “We think they’ll all have to merge with each other, be acquired by bigger banks or something.”

***

In 2011, funding costs for banks with more than $10 billion in assets were about one-third less than for the smallest banks, according to the FDIC.

Some presidents of regional Federal Reserve banks have lambasted too big to fail. As Bloomberg notes:

In recent weeks, at least four current Fed presidents — Esther George of Kansas City, Charles Plosser of Philadelphia, Jeffrey Lacker of Richmond and Richard Fisher of Dallas — have voiced similar worries about the risk of a renewed crisis.

But the most powerful Fed bank – the New York Fed – and Bernanke’s Federal Open Market Committee, as well as Tim Geithner’s Treasury Department, have done everything possible to ensure that the the giant banks become too bigger to fail.

Goldman Sachs, Citibank, JP Morgan Chase, Bank Of America Have Assets of $5 trillion & Carry $235 TRILLION In Risk Exposure, 1/3 Of World Total

In Uncategorized on October 4, 2011 at 5:17 pm


Oldspeak
:”With Megabanks carrying 50 to 1 leverage on a hundreds of trillions dollar sized largely unregulated and non-public OTC derivatives market, the next collapse of the global economic system is not a matter of if, but when. “OTC derivatives are an unregulated dark pool of money with no public market.  These are basically debt bets between two entities on things such as credit risk, currencies, interest rates and commodities.  According to the latest report from the Comptroller of the Currency, just four U.S. banks have an eye popping $235 trillion of OTC derivative leverage. (Click here for the complete Comptroller of the Currency report.)  As a nation, U.S. banks have a total OTC derivative exposure of $250 trillion. So, the fact that just four U.S. banks have this much leverage and risk is astounding!” –Greg Hunter It’s going to be really interesting to see what happens when this gargantuan house of cards falls down. I’ll bet quite a few more people will be for occupying wall street then.”

By Greg Hunter @ USAWatchdog.com :

I keep hammering away at the fact the Fed doled out $16 trillion in the wake of the credit crisis of 2008.  This is an enormous sum that is greater than the all goods and services produced in the U.S. in a single year.  Domestic banks and companies got the money, right along with foreign banks and companies.  In effect, the Federal Reserve bailed out the world financial system.  Now, we are right back to square one facing another financial meltdown with European banks and sovereign debt.  If the Fed spent $16 trillion, why in the heck is this problem not fixed and why isn’t the world economy taking off like a rocket?”  The simple answer is it wasn’t enough money.

The Bank of International Settlements pegs the total world over-the-counter (OTC) derivative exposure at around $600 trillion, but many experts say the real figure is more than twice that amount.  No matter which figure you use, it is a gargantuan sum.  OTC derivatives are an unregulated dark pool of money with no public market.  These are basically debt bets between two entities on things such as credit risk, currencies, interest rates and commodities.  According to the latest report from the Comptroller of the Currency, just four U.S. banks have an eye popping $235 trillion of OTC derivative leverage. (Click here for the complete Comptroller of the Currency report.)  As a nation, U.S. banks have a total OTC derivative exposure of $250 trillion. So, the fact that just four U.S. banks have this much leverage and risk is astounding!  The banks are listed below in order of size and approximate OTC exposure:

1.)     JP MORGAN CHASE BANK NA OH

$78.1 trillion OTC derivatives

2.)    CITIBANK NATIONAL ASSN

$56.1 trillion OTC derivatives

3.)    BANK OF AMERICA NA NC

$53.15 trillion OTC derivatives

4.)    GOLDMAN SACHS BANK USA NY

$47.7 trillion OTC derivatives

Considering that the total assets of these four banks are a little more than $5 trillion, I see a frightening amount of risk with a total derivative exposure of $235 trillion!  This is nearly 50 to 1 leverage.  On top of that, assets such as real estate or mortgage-backed securities can be held on the books at whatever value the banks think they can sell them for in the future.  I call this government sanctioned accounting fraud, or mark to fantasy accounting.  Who knows what the true value of the banks “assets” really are.

I am sure the banks would say that the net exposure is really not near that great because the banks have hedged their bets.  The banks will probably say, by and large, these debt bets will cancel out or back up one another.  It is known in the banking world as “bilateral netting.”  A recent article in Zerohedge.com explained the enormous risk by saying, “The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. And while the argument can further be extended that in bankruptcy a perfectly netted bankrupt entity would make someone else whole on claims they have written, this is not true, as the bankrupt estate will pursue 100 cent recovery on its claims even under Chapter 11, while claims the estate had written end up as General Unsecured Claims which as Lehman has demonstrated will collect 20 cents on the dollar if they are lucky.”(Click here to read the complete Zerohedge.com story.) 

The global economy is still in trouble.  Everyone is focusing on Europe because the sovereign debt crisis there is likely to cause the European Union to break apart and kill the Euro.  The Head of UniCredit global securities, Attila Szalay-Berzeviczy said recently, “The euro is beyond rescue . . . . “The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits . . . . A Greek default will trigger an immediate “magnitude 10” earthquake across Europe.” (Click here for more on that story.)  If the EU goes under, do not expect all the highly leveraged U.S. banks to walk away unscathed.  They will need another bailout to stay afloat.

You must remember the U.S. still is at the epicenter of the ongoing credit crisis.  At the moment, America looks like it is in better shape than Europe, but that will not last.  According to the latest report from John Williams of Shadowstats.com“The root source of current global systemic instabilities largely has been the financially-dominant United States, and it is against the U.S. dollar that the global markets ultimately should turn, massively.  The Fed and the U.S. Treasury likely will do whatever has to be done to prevent a euro-area crisis from triggering a systemic collapse in the United States.  Accordingly, it is not from a euro-related crisis, but rather from within the U.S. financial system and financial-authority actions that an eventual U.S. systemic failure likely will be triggered, seen initially in a rapidly accelerating pace of domestic inflation—ultimately hyperinflation.” 

Sure, the dollar may gain in value for a while in absence of the Euro as a competing currency, but, ultimately, the dollar too will crash, right along with a few very big banks.

U.S. Federal Reserve Audit Reveals $16 TRILLION In Secret Loans To Bailout U.S. And Foreign Bankers

In Uncategorized on July 22, 2011 at 4:31 pm

Oldspeak:” Hmm.  Maybe this is why there’s no money for paying teachers, cops, nurses, sanitation, and government workers. Maybe this is why the U.S. Government is on the verge of default. Maybe this is why we’re pretending not to notice more and more homeless people. Tens of trillions of U.S. dollars have gone to bankers. An audit of the Fed reveals why the establishment resisted an audit for so long.  In “a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else “, the audit revealed widespread corruption, collusion, conflicts of interest, double dealing and profiteering among the individuals who facilitated this monumental transfer of wealth to the people responsible for crashing the global economic system with their reckless, unregulated speculative gambling with people’s savings, homes, jobs, food, health, and well being. Why is there money to bailout banks in South Korea and Scotland, but none for Main Street, the working poor, and homeless? The rich have the best government money can buy, that’s why. Socialism is here America! It’s just that’s it’s not for you. Just the unfathomably wealthy.”

By Newsroom @ Sen. Bernie Sanders

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”

To read the GAO report, click here