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Gary Edwards

Swimming with the Sharks: Goldman Sachs, School Districts, and Capital Appreciation Bon... - 0 views

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Banksters Goldman-Sachs

shared by Gary Edwards on 21 Feb 15 - No Cached
  • In 2008, after collecting millions of dollars in fees to help California sell its bonds, Goldman urged its bigger clients to place investment bets against those bonds, in order to profit from a financial crisis that was sparked in the first place by irresponsible Wall Street speculation. Alarmed California officials warned that these short sales would jeopardize the state’s bond rating and drive up interest rates. But that result also served Goldman, which had sold credit default swaps on the bonds, since the price of the swaps rose along with the risk of default.
  • In 2009, the lenders’ lobbying group than proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed, bankers traveled all over the state pushing something called “capital appreciation bonds” (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by more than 400 California districts, some with repayment obligations of up to 20 times the principal advanced (or 2000%).
  • The controversial bonds came under increased scrutiny in August 2012, following a report that San Diego County’s Poway Unified would have to pay $982 million for a $105 million CAB it issued. Goldman Sachs made $1.6 million on a single capital appreciation deal with the San Diego Unified School District.
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  • . . . AB1388, signed by then-Gov. Arnold Schwarzenegger in 2009, [gave] banks the green light to lure California school boards into issuing bonds to raise quick money to build schools. Unlike conventional bonds that have to be paid off on a regular basis, the bonds approved in AB1388 relaxed regulatory safeguards and allowed them to be paid back 25 to 40 years in the future. The problem is that from the time the bonds are issued until payment is due, interest accrues and compounds at exorbitant rates, requiring a balloon payment in the millions of dollars. . . . Wall Street exploited the school boards’ lack of business acumen and proposed the bonds as blank checks written against taxpayers’ pocketbooks. One school administrator described a Wall Street meeting to discuss the system as like “swimming with the big sharks.” Wall Street has preyed on these school boards because of the millions of dollars in commissions. Banks, financial advisers and credit rating firms have billed California public entities almost $400 million since 2007. [State Treasurer] Lockyer described this as “part of the ‘new’ Wall Street,” which “has done this kind of thing on the private investor side for years, then the housing market and now its public entities.”
  • The Federal Reserve could have made virtually-interest-free loans available to local governments, as it did for banks. But the Fed (whose twelve branches are 100% owned by private banks) declined. As noted by Cate Long on Reuters:
  • The Fed has said that it will not buy muni bonds or lend directly to states or municipal issuers. But be sure if yields rise high enough Merrill Lynch, Goldman Sachs and JP Morgan will be standing ready to “save” these issuers. There is no “lender of last resort” for muniland.
  • Among the hundreds of California school districts signing up for CABs were fifteen in Orange County. The Anaheim-based Savanna School District took on the costliest of these bonds, issuing $239,721 in CABs in 2009 for which it will have to repay $3.6 million by the final maturity date in 2034. That works out to $15 for every $1 borrowed. Santa Ana Unified issued $34.8 million in CABs in 2011. It will have to repay $305.5 million by the maturity date in 2047, or $9.76 for every dollar borrowed. Placentia-Yorba Linda Unified issued $22.1 million in capital appreciation bonds in 2011. It will have to repay $281 million by the maturity date in 2049, or $12.73 for every dollar borrowed.
  • In 2013, California finally passed a law limiting debt service on CABs to four times principal, and limiting their maturity to a maximum of 25 years. But the bill is not retroactive. In several decades, the 400 cities that have been drawn into these shark-infested waters could be facing municipal bankruptcy – for capital “improvements” that will by then be obsolete and need to be replaced.
  • Then-State Treasurer Bill Lockyer called the bonds “debt for the next generation.” But some economists argue that it is a transfer of wealth, not between generations, but between classes – from the poor to the rich. Capital investments were once funded with property taxes, particularly those paid by wealthy homeowners and corporations. But California’s property tax receipts were slashed by Proposition 13 and the housing crisis, forcing school costs to be borne by middle-class households and the students themselves.
  • According to Demos, per-student funding has been slashed since 2008 in every state but one – the indomitable North Dakota. What is so different about that state? Some commentators credit the oil boom, but other states with oil have not fared so well. And the boom did not actually hit in North Dakota until 2010. The budget of every state but North Dakota had already slipped into the red by the spring of 2009.
  • One thing that does single the state out is that North Dakota alone has its own depository bank.
  • The state-owned Bank of North Dakota (BND) was making 1% loans to school districts even in December 2014, when global oil prices had dropped by half. That month, the BND granted a $10 million construction loan to McKenzie County Public School No. 1, at an interest rate of 1% payable over 20 years. Over the life of the loan, that works out to $.20 in simple interest or $.22 in compound interest for every $1 borrowed. Compare that to the $15 owed for every dollar borrowed by Anaheim’s Savanna School District or the $10 owed for every dollar borrowed by Santa Ana Unified.
  • How can the BND afford to make these very low interest loans and still turn a profit? The answer is that its costs are very low. It has no exorbitantly-paid executives; pays no bonuses, fees, or commissions; pays no dividends to private shareholders; and has low borrowing costs. It does not need to advertise for depositors (it has a captive deposit base in the state itself) or for borrowers (it is a wholesale bank that partners with local banks, which find the borrowers). The BND also has no losses from derivative trades gone wrong. It engages in old-fashioned conservative banking and does not speculate in derivatives. Unlike the vampire squids of Wall Street, it is not motivated to maximize its bottom line in a predatory way. Its mandate is simply to serve the public interest.
  • Gary Edwards on 21 Feb 15
     
    " Remember when Goldman Sachs - dubbed by Matt Taibbi the Vampire Squid - sold derivatives to Greece so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the undisputed king of the municipal bond business epitomize the culture of greed that has ensnared students and future generations in unrepayable debt."
Paul Merrell

Russia and China: Watch Out Moody's, Here We Come! | New Eastern Outlook - 0 views

journal-neo.org/...watch-out-moody-s-here-we-come

banksters ratings-agencies history Russia China

shared by Paul Merrell on 22 Jan 15 - No Cached
  • In 1945 it was easy to get a defeated Europe to agree to Bretton Woods Gold Exchange Standard in which all currencies would be fixed to the US dollar and the dollar alone fixed to gold at $35 an ounce, where it remained until the system collapsed in August 1971 and Nixon abandoned gold-dollar convertibility. By then Europe was booming with modern reconstructed industry and the USA was becoming a rustbelt. France and Germany demanded US gold bullion instead of inflated dollars, and US gold reserves were vanishing. After 1971, the dollar flooded the world unfettered by gold reserve requirements and US military might during the Cold War forced Japan, Western Europe and others including OPEC to accept constantly inflating paper US dollars. From 1970 until about 2000 the volume of dollars in the world had risen some 2,900%. Because the dollar was the world “reserve currency” needed by all for trade in oil, goods, grains, the world was forced to swallow a de facto mammoth inflation after 1971.First appeared: http://journal-neo.org/2015/01/22/watch-out-moody-s-here-we-come/
  • Paul Merrell on 22 Jan 15
     
    The established New York credit agencies would play a strategic role in this post-1971 dollar system. During the 1970's the US Government's Securities & Exchange Commission, charged with oversight of bond and stock markets, issued a ruling giving the then-dominant New York credit rating agencies-Moody's and Standard & Poor's (and later Fitch Ratings)-a de facto guaranteed monopoly in an unregulated market, when they ruled that only "Nationally Recognized Statistical Rating Organizations" would be qualified to issue appropriate ratings, i.e. only Moody's and S&P. Corruption was made endemic to the US ratings game and Washington was party to the dirty deal. By the end of the 1970's, using the vast amount of OPEC "petro-dollars" from the two oil price shocks in 1973 and 1979, New York international banks, using London, began to loan to the rest of the world to finance imports of oil and other essentials. The New York credit rating agencies, previously primarily rating US corporate bonds, expanded into the new foreign debt markets as the largest and only established rating agencies in the new phase of dollarization and globalization of capital markets. They set up branches in Germany, France, Japan, Mexico, Argentina and other emerging markets much like the US Big Five accounting firms. During the 1980s the rating agencies played a key role in down-rating the debt of the Latin American debtor countries such as Mexico and Argentina. Their ratings determined if the debtor countries could borrow or not. Financial market insiders in London and New York openly spoke of the "political" rating agencies using their de facto monopoly to advance the agenda of Wall Street and the Dollar System behind it. Then in the 1990's, the New York rating agencies played a decisive role in spreading the "Asia Crisis" of 1997-98. With the precise timing of its downgrades they could worsen the panic because they had been suspiciously silent right up un
Paul Merrell

Russia liquidates nearly all its holdings of US debt & invests money in gold - RT Busin... - 0 views

www.rt.com/...1615-russia-liquidates-us-debt

war & peace economic-warfare de-dollarization

shared by Paul Merrell on 21 Oct 18 - No Cached
  • The Central Bank of Russia has continued getting rid of US Treasury bonds in August. The share of Russian investments in American debt is getting close to zero. Russian investments in US securities as of August have fallen to just $14 billion. Back in 2011, Russia was one of the largest holders of US debt with a $180 billion investment.The reason is not only about politics and US sanctions against Russia, a broker at Otkritie bank Timur Nigmatullin told RIA Novosti. The US Federal Reserve is hiking interest rates, which makes American bonds cheaper, he said. “Russia has almost dropped out of the list of holders of US government debt, being the 54th largest holder.”
  • “A further sale of US Treasury bonds by Russia will most likely be compensated by buying gold and opening short-term deposits at banks,” he said. The share of precious metals in the country's foreign reserves has reached a record 18 percent, closely approaching the share of dollar investments.The largest investors in US debt, China and Japan, have also cut their holdings. Chinese holdings of US sovereign debt dropped to $1.165 trillion in August, from $1.171 trillion in July, marking the third consecutive month of declines. Japan has slashed its holdings of US securities to $1.029 trillion in August, the lowest since October 2011.
  • India and Turkey have followed Russia's lead. Turkey has dropped out of the top-30 list of holders of American debt, while India has been liquidating its investment for five consecutive months to $140 billion in August.
Paul Merrell

PDVSA Secures $2.8 Billion Bond Swap to Avert Default - nsnbc international | nsnbc int... - 0 views

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war & peace economic-warfare U.S.-foreign-policy Venezuela oil-prices banksters

shared by Paul Merrell on 28 Oct 16 - No Cached
  • Venezuelan state oil company PDVSA announced Monday that creditors had accepted a proposal to exchange US$2.8 billion in bonds maturing in 2017 for $3.4 billion due in 2020. 
  • In late September, the state oil giant presented creditors with a modified offer to exchange $5.325 billion in bonds due in 2017 for securities payable at 1.22 times the principal in 2020. With the deadline for the deal fast approaching and less than half of bondholders on board, PDVSA extended the cutoff three times and threatened to default if a majority did not accept the deal. By the final deadline Monday, 52.57 percent of creditors agreed to the offer, amounting to a successful swap of 45.3 percent of bonds due in April and November 2017 equal to $2.8 billion.
  • In recent months, the Venezuelan government has repeatedly denounced what it has termed a “financial blockade” by international banks and rating agencies, which it says refuse to renegotiate the terms of debt payments and exaggerate risk ratings despite the country’s pristine payment record. In August, Citibank unexpectedly resigned as pay agent for PDVSA’s bonds in an unusual move that analysts have attributed to the possible influence of the United States government.
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  • While Venezuela’s foreign reserves have fallen to a new low of $11.8 billion, rising oil prices could yield the government an additional $2.5 billion in revenue this year, reports Financial Times.
Paul Merrell

Saudi Arabia in Search of a New Course | nsnbc international - 0 views

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war & peace economic war Saudis oil-prices Syria

shared by Paul Merrell on 19 Oct 15 - No Cached
  • Saudi Arabia, one of the wealthiest countries in the world, is experiencing serious financial problems. The ongoing plummeting of oil prices is forcing the Saudis to be more careful with money. Tens of billions of dollars invested abroad are making a return to the kingdom. In July 2015, Saudi Arabia’s authorities, for the first time in 8 years, issued governmental bonds worth $4 bn.
  • Bloomberg reports that Saudi Arabia has already withdrawn $50-70 bn, which it had previously invested worldwide through management companies. It is noteworthy that the country has been withdrawing funds for the past six months. For example, Saudi Arabia’s SAMA Foreign Holdings reached its maximum in August 2014, having amounted to $737 bn. But since then, the fund has been shrinking because oil prices have dropped more than twice in this period. Saudi Arabia’s budget deficit is forecast to reach 20%; however, reduction of expenditures still remains a sensitive topic. In the context of the continuous fall in oil prices, Riyadh has worked out a plan to gradually reduce public spending to cope with a sharp decrease in budget revenues caused by the slumping oil prices. For example, Saudi Arabia’s Ministry of Finance has issued an order prescribing all state companies to temporary stop hiring new employees and launching new projects until the end of the fiscal year. In addition, the government procurement of new cars and furniture has also been put on hold as well as the signing and approval of new lease agreements for state institutions and enterprises. The expropriation of plots of land for the purpose of the subsequent extraction of oil has also been suspended throughout the country. The Ministry of Finance has, at the same time, demanded an acceleration in the collection procedure of oil revenues.
  • “To prove that the country indeed has a sound fiscal discipline, the government has to take steps to cut expenditures in the 4th quarter. Subsequently Saudi Arabia will be compelled to find new ways to reduce expenditures and boost efficiency in order to assure there will be no budget deficit in 2016,” John Sfakianakis, Director of the Middle East Division of the Ashmore Group, said in his interview to Bloomberg. It should be pointed out in that regard that oil revenues comprise about 90% of Saudi Arabia’s budget, and the landslide of oil prices of over 40% within the last 12 months adversely affected the country’s financial standing. And, although the kingdom’s debt burden remains one of the lowest in the world (less than 2% of the GDP), the kingdom’s international assets have been consistently shrinking for the last nine months and reached a two year minimum. This situation directly influences the policy of OPEC since Saudi Arabia (which extracts almost 30% of the OPEC’s oil, positions itself as an extremely influential raw material supplier, maintains powerful military forces, and has its own global ambitions, immense resources and substantial diplomatic experience) de facto plays the role of the shadow leader of this organization. At times siding with the US, and then pursuing its own interests, the kingdom has assumed such an influential position in the international community that other countries revere its opinion, and as for the last oil crisis, Saudi Arabia is seen as its key player.
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  • And, based on the information provided by the international mass media, the Saudi leadership has split in their opinion on whether to continue funding Syria or to begin reducing their financial commitment. “Riyadh is facing a choice: to give more support to the moderate opposition or to look for a compromise,” an American expert on national security, James Farvell, wrote in The National Interest. The expert explained that if Saudis offer more support, that would trigger a confrontation with Russia, but if they side with Moscow, Russia’s regional influence might be reinforced and that might, in turn, challenge Saudi Arabia’s interests. Because of this dilemma, controversial information regarding Saudi’s decisions are appearing in the press. On the one hand, Saudi Arabia was one of the first to condemn Russia after the beginning of the Russian military operation in Syria on September 30. It accused Russia of bombing the troops of moderate opposition instead of ISIS. “These attacks resulted in the deaths of numerous innocent victims. We call for a stop it immediately,” demagogically and groundlessly said the representative of Saudi Arabia Abdallah al-Muallimi in the UN. Simultaneously 53 religious leaders signed an online appeal to support a jihad against the Syrian authorities as well as the presence of Russia and Iran in this country. They appealed to the countries of the Muslim world to render “moral, financial, military and political support to those who are called the ‘holy warriors of Syria’.” The authors of the appeal explicitly stated that if they fail, the other Sunni states in the region, and, first of all, Saudi Arabia will be the next victims.
  • With reference to a high-ranking Saudi official who wished to remain anonymous, the BBC stated that armed groups of the so-called moderate opposition would receive new, high-tech weapons, including tank destroyers. Jaish al-Fath, The Free Syrian Army and The Southern Front moderate opposition groups will also receive support. According to the source, it is quite likely that the “moderate opposition” in Syria will receive surface-to-air systems as well. Keeping in mind that Russia is carrying out air strikes across not only the facilities of ISIS, but also the above listed groups, a scenario when Saudis turn their weapon against Russian aviation is quite possible. On the other hand, a curious document, apparently a copy of the instructions issued for the embassies of Saudi Arabia in the Middle Eastern countries, has been uploaded to the Internet. The main idea of the documents is that all the diplomatic representative offices should gradually cease financial support of the armed Syrian opposition, apparently owing to the low efficiency of militants’ activities. The authenticity of the document raises certain doubts, as is always the case with such documents. However, specialists in the Arabic language concluded that the text was written by a native speaker, and that the document’s design conforms to the style adopted in Saudi Arabia. It shouldn’t be ruled out that the drying up of the source of funding, that militants used to receive from the Saudis, against the backdrop of a certain degree of success of the government troops as well as the increasing military and technical assistance to Syria on the part of Russia, have convinced many “oppositionists” to surrender and change masters. This process is expected to only accelerate in the future.
  • On Sunday, October 11, the Defense Minister, Mohammed bin Salman, visited Sochi. The search for common ground on the issues related to the situation in Syria was the main theme of the meeting held by the son of the Saudi king and Vladimir Putin. The parties also discussed the prospects of their economic cooperation. And, since Saudi Arabia is currently experiencing certain financial difficulties and is in the “clutches” of economic uncertainty, this topic was of a special interest. It was the second visit to the Russian Federation of the Saudi prince, who currently carries out sensitive missions related to the complex relations between the two countries. It should be noted that King of Saudi Arabia Salman bin Abdulaziz Al Saud has been admitted to hospital in a critical condition and is currently being kept in the intensive care unit of the King Faisal royal hospital in Riyadh.
Gary Edwards

The Bonds Of August Lunacy - 1 views

www.businessinsider.com/the-bonds-of-august-2011-7

bonds-of-august Banksters Federal-Reserve-Bank-Cartel Tea-Party-Patriots national-debt-Ceiling banksters

shared by Gary Edwards on 27 Jul 11 - No Cached
  • Gary Edwards on 27 Jul 11
     
    More boot licking idiocy from well known big government- big Bankster shill, Menzie Chinn.  Great comments though.  These clowns have launched an all out war against the US Constitution and the Tea Party patriots fighting to save this country from Big Banksters and their highly paid political toadies and sycophantic shills suffering from delusional syphilitic miasm.  
Paul Merrell

Saudi Arabia warns of shift away from U.S. over Syria, Iran | Reuters - 1 views

www.reuters.com/...audi-usa-idUSBRE99L0K120131022

shared by Paul Merrell on 23 Oct 13 - No Cached
  • (Reuters) - Upset at President Barack Obama's policies on Iran and Syria, members of Saudi Arabia's ruling family are threatening a rift with the United States that could take the alliance between Washington and the kingdom to its lowest point in years. Saudi Arabia's intelligence chief is vowing that the kingdom will make a "major shift" in relations with the United States to protest perceived American inaction over Syria's civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday.Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had failed to back Saudi support for Bahrain when it crushed an anti-government revolt in 2011, the source said."The shift away from the U.S. is a major one," the source close to Saudi policy said. "Saudi doesn't want to find itself any longer in a situation where it is dependent."It was not immediately clear whether the reported statements by Prince Bandar, who was the Saudi ambassador to Washington for 22 years, had the full backing of King Abdullah.
  • Saudi Arabia's intelligence chief is vowing that the kingdom will make a "major shift" in relations with the United States to protest perceived American inaction over Syria's civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday.Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had failed to back Saudi support for Bahrain when it crushed an anti-government revolt in 2011, the source said."The shift away from the U.S. is a major one," the source close to Saudi policy said. "Saudi doesn't want to find itself any longer in a situation where it is dependent."It was not immediately clear whether the reported statements by Prince Bandar, who was the Saudi ambassador to Washington for 22 years, had the full backing of King Abdullah.The growing breach between the United States and Saudi Arabia was also on display in Washington, where another senior Saudi prince criticized Obama's Middle East policies, accusing him of "dithering" on Syria and Israeli-Palestinian peace.
  • In unusually blunt public remarks, Prince Turki al-Faisal called Obama's policies in Syria "lamentable" and ridiculed a U.S.-Russian deal to eliminate Assad's chemical weapons. He suggested it was a ruse to let Obama avoid military action in Syria."The current charade of international control over Bashar's chemical arsenal would be funny if it were not so blatantly perfidious. And designed not only to give Mr. Obama an opportunity to back down (from military strikes), but also to help Assad to butcher his people," said Prince Turki, a member of the Saudi royal family and former director of Saudi intelligence.The United States and Saudi Arabia have been allies since the kingdom was declared in 1932, giving Riyadh a powerful military protector and Washington secure oil supplies.The Saudi criticism came days after the 40th anniversary of the October 1973 Arab oil embargo imposed to punish the West for supporting Israel in the Yom Kippur war.That was one of the low points in U.S.-Saudi ties, which were also badly shaken by the September 11, 2001, attacks on the United States. Most of the 9/11 hijackers were Saudi nationals.
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  • Saudi Arabia gave a clear sign of its displeasure over Obama's foreign policy last week when it rejected a coveted two-year term on the U.N. Security Council in a display of anger over the failure of the international community to end the war in Syria and act on other Middle East issues.Prince Turki indicated that Saudi Arabia will not reverse that decision, which he said was a result of the Security Council's failure to stop Assad and implement its own decision on the Israeli-Palestinian conflict."There is nothing whimsical about the decision to forego membership of the Security Council. It is based on the ineffectual experience of that body," he said in a speech to the Washington-based National Council on U.S.-Arab Relations.
  • Prince Bandar is seen as a foreign policy hawk, especially on Iran. The Sunni Muslim kingdom's rivalry with Shi'ite Iran, an ally of Syria, has amplified sectarian tensions across the Middle East.A son of the late defense minister and crown prince, Prince Sultan, and a protégé of the late King Fahd, he fell from favor with King Abdullah after clashing on foreign policy in 2005.But he was called in from the cold last year with a mandate to bring down Assad, diplomats in the Gulf say. Over the past year, he has led Saudi efforts to bring arms and other aid to Syrian rebels."Prince Bandar told diplomats that he plans to limit interaction with the U.S.," the source close to Saudi policy said."This happens after the U.S. failed to take any effective action on Syria and Palestine. Relations with the U.S. have been deteriorating for a while, as Saudi feels that the U.S. is growing closer with Iran and the U.S. also failed to support Saudi during the Bahrain uprising," the source said.The source declined to provide more details of Bandar's talks with the diplomats, which took place in the past few days.
  • But he suggested that the planned change in ties between the energy superpower and the United States would have wide-ranging consequences, including on arms purchases and oil sales.Saudi Arabia, the world's biggest oil exporter, ploughs much of its earnings back into U.S. assets. Most of the Saudi central bank's net foreign assets of $690 billion are thought to be denominated in dollars, much of them in U.S. Treasury bonds."All options are on the table now, and for sure there will be some impact," the Saudi source said.He said there would be no further coordination with the United States over the war in Syria, where the Saudis have armed and financed rebel groups fighting Assad.The kingdom has informed the United States of its actions in Syria, and diplomats say it has respected U.S. requests not to supply the groups with advanced weaponry that the West fears could fall into the hands of al Qaeda-aligned groups.Saudi anger boiled over after Washington refrained from military strikes in response to a poison gas attack in Damascus in August when Assad agreed to give up his chemical weapons arsenal.
  • Paul Merrell on 23 Oct 13
     
    This lengthy article from Reuters deserves attention. The peace initiatives by Russia/Syria and by Iran are forcing realignment of foreign policies throughout the Mideast. The U.S. is no longer perceived as being on the side of only Sunni Muslim states. One of the most visible changes (after cancellation of the U.S. military strike on Syria) is a go-it-alone declaration by the House of Saud that parallels the stance taken by Israel's ruling right-wing coalition. Both Israel and the Saudis had very successfully isolated the U.S. from the non-Sunni Arab nations, fueling and deepening a religious divide within the Arab nations. It remains to be seen whether the declarations by the House of Saud and Bibi Netanyahu will translate into effective military action against Iran and Syria, although Saudi money and weapons will continue to flow into Syria for the foreseeable future. Both nations will continue attempts to undo the looming Iran-U.S. thaw in relations. Predictably, the Zionist/Neocon hawks in Congress are pushing legislation to put a big freeze back on the Iran-U.S. thaw in relations, including a bill to stiffen economic sanctions on Iran and authorize military strikes against Syria. But that legislation seems to be going nowhere; the mood of the U.S. population (and thus of those up for election next year) has shifted to profoundly anti-war, at least as applied to Syria and Iran. It would be ironic if Russia/Syria and Iran's peace initiatives actually resulted in a lasting U.S. shift away from the Zionist/Neocon strategy to destabilize all of Israel's neighboring states except Egypt, Lebanon, and Jordan (those three have already been destabilized and swept into Israel's influence). If so, Obama might yet leave a positive legacy.
Paul Merrell

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit - Bloomberg - 0 views

www.bloomberg.com/...-derivatives-to-bank-unit.html

banksters toxic-derivatives BoA JPMorgan FDIC Dodd-Frank too-big-to-fail

shared by Paul Merrell on 13 Nov 13 - No Cached
  • Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation. The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.
  • Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms. “The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”
  • Moody’s Investors Service downgraded Bank of America’s long-term credit ratings Sept. 21, cutting both the holding company and the retail bank two notches apiece. The holding company fell to Baa1, the third-lowest investment-grade rank, from A2, while the retail bank declined to A2 from Aa3.
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  • The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter. Bank of America estimated in an August regulatory filing that a two-level downgrade by all ratings companies would have required that it post $3.3 billion in additional collateral and termination payments, based on over-the-counter derivatives and other trading agreements as of June 30. The figure doesn’t include possible collateral payments due to “variable interest entities,” which the firm is evaluating, it said in the filing.
  • Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates. Dodd-Frank Rules Keeping such deals separate from FDIC-insured savings has been a cornerstone of U.S. regulation for decades, including last year’s Dodd-Frank overhaul of Wall Street regulation. The legislation gave the FDIC, which liquidates failing banks, expanded powers to dismantle large financial institutions in danger of failing. The agency can borrow from the Treasury Department to finance the biggest lenders’ operations to stem bank runs. It’s required to recoup taxpayer money used during the resolution process through fees on the largest firms.
  • Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades. That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
  • Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law. “Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914. As a general rule, as long as transactions involve high- quality assets and don’t exceed certain quantitative limitations, they should be allowed under the Federal Reserve Act, Omarova said.
  • In 2009, the Fed granted Section 23A exemptions to the banking arms of Ally Financial Inc., HSBC Holdings Plc, Fifth Third Bancorp, ING Groep NV, General Electric Co., Northern Trust Corp., CIT Group Inc., Morgan Stanley and Goldman Sachs Group Inc., among others, according to letters posted on the Fed’s website. The central bank terminated exemptions last year for retail-banking units of JPMorgan, Citigroup, Barclays Plc, Royal Bank of Scotland Plc and Deutsche Bank AG. The Fed also ended an exemption for Bank of America in March 2010 and in September of that year approved a new one. Section 23A “is among the most important tools that U.S. bank regulators have to protect the safety and soundness of U.S. banks,” Scott Alvarez, the Fed’s general counsel, told Congress in March 2008.
  • Paul Merrell on 13 Nov 13
     
    So according to Bloomberg, JPMorgan's commercial bank was the recipient of 99 percent of JPMorgan's $79 trillion (face value of derivatives) in bad bets. So adding JPMorgan's $78 trillion or so to the $75 trillion in bad bets Bank of America unloaded on its FDIC insured subsidiary, we arrive at $153 trillion in bad bets moved by two investment banks alone under the FDIC umbrella. Meanwhile, FDIC has authority under Dodd-Frank to liquidate these insolvent banks but doesn't, despite several successful lawsuits to recover the value of toxic derivatives that they sold to smaller banks that failed (which implies that FDIC could tell JPMorgan and BoA's investment banksters that they've got to pay off the toxic assets they transferred to their commercial banks, rather than diluting the insurance for normal depositors. Problem: the two big investment banks don't have sufficient assets to absorb those losses, so the too-politically-connected-to-fail factor kicks in. Note that I have not done any legal research in regard to these issues and am basing these observations on what has been stated about legal requirements in various media articles.
Paul Merrell

Colonization by Bankruptcy: The High-stakes Chess Match for Argentina | Global Research - 0 views

www.globalresearch.ca/...5397548

banksters vulture-capitalism Argentina bankruptcy-court-for-nations

shared by Paul Merrell on 26 Aug 14 - No Cached
  • If Argentina were in a high-stakes chess match, the country’s actions this week would be the equivalent of flipping over all the pieces on the board. – David Dayen, Fiscal Times, August 22, 2014 Argentina is playing hardball with the vulture funds, which have been trying to force it into an involuntary bankruptcy. The vultures are demanding what amounts to a 600% return on bonds bought for pennies on the dollar, defeating a 2005 settlement in which 92% of creditors agreed to accept a 70% haircut on their bonds. A US court has backed the vulture funds; but last week, Argentina sidestepped its jurisdiction by transferring the trustee for payment from Bank of New York Mellon to its own central bank. That play, if approved by the Argentine Congress, will allow the country to continue making payments under its 2005 settlement, avoiding default on the majority of its bonds. Argentina is already foreclosed from international capital markets, so it doesn’t have much to lose by thwarting the US court system. Similar bold moves by Ecuador and Iceland have left those countries in substantially better shape than Greece, which went along with the agendas of the international financiers.
  • Paul Merrell on 26 Aug 14
     
    The saga of bankster and vulture capitalist attempts to establish an international tribunal that could declare nations bankrupt and sell of their land holdings, using Argentina as the exemplary of such efforts. But did Argentina just out-maneuver them?
Gary Edwards

t r u t h o u t | Recent Rulings Could Shield 62 Million Homes From Foreclosure - 0 views

www.truth-out.org/on-homes-from-foreclosure62448

MERS ForeClosure-Mill financial-collapse subprime banksters

shared by Gary Edwards on 20 Aug 10 - Cached
  • Most courts continue to look the other way on MERS' lack of standing to sue, but the argument has picked up enough steam to consider the rather stunning implications. If MERS is not the title holder of properties held in its name, the chain of title has been broken and no one may have standing to sue. In MERS v. Nebraska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed.
  • An August 2010 article in Mother Jones titled "Fannie and Freddie's Foreclosure Barons" exposes a widespread practice of "foreclosure mills" in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title.
  • "'Produce the Note' Movement Helps Stall Foreclosures":
  • ...3 more annotations...
  • "The ticking time bomb in the US banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.
  • "... The loans at issue dwarf the capital available at the largest US banks combined and investor lawsuits would raise stunning liability sufficient to cause even the largest US banks to fail...."
  • homeowner movement to tear off the predatory mask called MERS
  • Gary Edwards on 20 Aug 10
     
    Technicality or Fatal Flaw? To foreclose on real property, the plaintiff must be able to produce a promissory note or assignment establishing title. Early cases focused on MERS' inability to produce such a note, but most courts continued to consider the note a mere technicality and ignored it. Landmark newer opinions, however, stress that this defect is not just a procedural. but a substantive failure, one that is fatal to the plaintiff's case. The latest of these decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E-11. The court held that MERS could not foreclose because it was a mere nominee and that as a result plaintiff Citibank could not collect on its claim. The judge opined: "Since no evidence of MERS' ownership of the underlying note has been offered and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law."
Paul Merrell

Wikileaks' Assange Hints Murdered DNC Staffer Was Email-Leaker, Offers $20k Reward For ... - 0 views

www.zerohedge.com/...-leaker-offers-20k-reward-info

Auction 2016 Hillary DNC homicides

shared by Paul Merrell on 12 Aug 16 - No Cached
  • The mysterious circumstances surrounding the death of 27-year-old Democratic-staffer Seth Rich (shot multiple times, and not robbed, at 420am near his home in Washington D.C., where no homicides have been reported within 1500 feet) have stirred Wikileaks founder Julian Assange to offer a $20,000 reward for information leading to a conviction. But it is Assange's comments during a Dutch TV interview that are most disturbing as he hinted that Rich - who was in charge of DNC voter expansion data - was the email-leaker and his death was a politically-motivated assassination.
  • As we detailed previously, the Clinton related body count so far this election cycle:  Five in just under six weeks - four convenient deaths plus one suicide... 1) Shawn Lucas, Sanders supporter who served papers to DNC on the Fraud Case (DOD August 2, 2016)   2) Victor Thorn, Clinton author (and Holocaust denier, probably the least credible on this list) shot himself in an apparent suicide. Conspiracy theorists at Mystery Writers of America said some guys will do anything to sell books. (DOD August, 2016)   3) Seth Conrad Rich, Democratic staffer, aged 27, apparently on his way to speak to the FBI about a case possibly involving the Clintons. The D.C. murder was not a robbery. (DOD July 8, 2016)   4) John Ashe, UN official who allegedly crushed his own throat while lifting weights, because he watched too many James Bond films and wanted to try the move where the bad guy tries to…oh, never mind. “He was scheduled to testify against the Clintons and the Democrat Party.” (DOD June 22, 2016)   5) Mike Flynn, the Big Government Editor for Breitbart News. Mike Flynn’s final article was published the day he died, “Clinton Cash: Bill, Hillary Created Their Own Chinese Foundation in 2014.” (DOD June 23, 2016) It must be coincidence, right?
Paul Merrell

US sues 16 banks for rigging Libor rate - Americas - Al Jazeera English - 0 views

www.aljazeera.com/...r-rate-201431544528243637.html

banksters libor fraud litigation

shared by Paul Merrell on 16 Mar 14 - No Cached
  • The US Federal Deposit Insurance Corp. (FDIC) has sued 16 big banks that set a key global interest rate, accusing them of fraud and conspiring to keep the rate low to enrich themselves. The banks, which include Bank of America, Citigroup and JPMorgan Chase in the US, are among the world's largest. The FDIC says it is seeking to recover losses suffered from the rate manipulation by 10 US banks that failed during the financial crisis and were taken over by the agency. The civil lawsuit was filed on Friday in federal court in Manhattan, the Associated Press reported. The banks rigged the London interbank offered rate, or Libor, from August 2007 to at least mid-2011, the FDIC alleged. The Libor affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans. A British banking trade group sets the Libor every morning after the 16 international banks submit estimates of what it costs them to borrow. The FDIC also sued that trade group, the British Bankers' Association.
  • By submitting false estimates of their borrowing costs used to calculate Libor, the 16 banks "fraudulently and collusively suppressed [the Libor rate], and they did so to their advantage," the FDIC said in the suit.
  • Four of the banks - Britain's Barclays and Royal Bank of Scotland, Switzerland's biggest bank UBS and Rabobank of the Netherlands - have previously paid a total of about $3.6bn to settle US and European regulators' charges of rigging the Libor. The banks signed agreements with the US Justice Department that allow them to avoid criminal prosecution if they meet certain conditions. Under a change announced last July, the London-based company that owns the New York Stock Exchange, NYSE Euronext, will take over supervising the setting of Libor from the British Bankers' Association. The changeover is scheduled to be completed by early next year.
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