Become a Big Bank, Ignore The Law
by ilene - June 30th, 2010 11:40 pm
Become a Big Bank, Ignore The Law
Courtesy of Karl Denninger at The Market Ticker
When the government began rescuing it from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks — including Goldman, Société Générale, Deutsche Bank and Merrill Lynch — over any irregularities with most of the mortgage securities it insured in the precrisis years.
But after the Securities and Exchange Commission’s civil fraud suit filed in April against Goldman for possibly misrepresenting a mortgage deal to investors, A.I.G. executives and shareholders are asking whether A.I.G. may have been misled by Goldman into insuring mortgage deals that the bank and others may have known were flawed.
Absolutely correct.
If you’re a big bank, when things go south the government will force those who dealt with you to give up their right to sue you for your misrepresentations!
“This really suggests they had myopia and they were looking at it entirely through the perspective of the banks,” Mr. Skeel said.
No, it says in plain English that if you’re a bank there are no laws.
There are no laws about money-laundering that will be enforced.
There are no laws about bribery that will be enforced.
There are no laws about bid-rigging that will be enforced.
There are no laws about emitting fraudulent securities that will be enforced.
And there are no laws about intentionally screwing counterparties that will be enforced.
Everyone else has to follow these laws.
But if you’re a big bank, you can do all these things and more, and there is absolutely no criminal or civil enforcement available to anyone to do anything about it.
May I ask, quite politely, why the American public peacefully accepts this state of affairs?
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Picture credits: Jr. Deputy Accountant
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Merkel to the Banks and Speculators: Sprechen Sie Deutsche? Then Droppen Sie Dead
by ilene - May 18th, 2010 7:50 pm
Droppen Sie Dead? I think that means drop dead.
Merkel to the Banks and Speculators: Sprechen Sie Deutsche? Then Droppen Sie Dead
Courtesy of JESSE’S CAFÉ AMÉRICAIN
There is much surprise that the German government has declared a ban on naked short selling, including CDS, as of midnight tonight, with no prior notice or the niceties demanded by the banks when government chooses to act. This action seems to have perturbed some and confused many.
The reason for this may be quite simple.
After tonight, when hedge funds and the NY and London Banks call upon German financial firms and European governments to make payments on Credit Default Swaps or other financial instruments that are subject to the ban, the Germans will have a great big hammer in hand to help them to negotiate the terms.
Since the CDS will be deemed to be no longer legal, the option to default on them with the backing of the government may be an option. This seems quite similar to the stance that the Chinese government took on behalf of some Chinese firms that were caught on the wrong side of energy derivatives.
I have heard that there was a general disappointment in Europe and in parts of Asia at the lack of progress being made in the US Congress towards creating meaningful reforms in their financial system. In fact, there is a widespread belief that Washington is being dictated to by the Banks, and that their lobbyists are directing the conversation, and in many cases writing the actual legislation. The final straw was when the Obama Administration itself sought to water down and block key provisions of the legislation to limit the power and size of the Banks.
"To some degree this is a battle between the politicians and the markets," she said in a speech in Berlin. "But I am firmly resolved — and I think all of my colleagues are too — to win this battle….The fact that hedge funds are not regulated is a scandal," she said, adding that Britain had blocked previous efforts to do this. "However, this will certainly have taken place in Europe in three weeks," she said, without giving more details." Reuters, 6 May 2010
"German Chancellor Angela Merkel accused the financial industry of playing dirty. ‘First the banks failed, forcing states to
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Second Circuit Tells Fed If It Wants To Maintain Its Secrecy It Better Get Congress To Change America’s Laws
by ilene - March 19th, 2010 1:31 pm
Second Circuit Tells Fed If It Wants To Maintain Its Secrecy It Better Get Congress To Change America’s Laws
Courtesy of Tyler Durden
Key selection from the Second Circuit’s Fed FOIA appeal:
The “public interest” standard rejected in Merrill is the functional equivalent of the “program effectiveness” test, as the Board invokes it: the agency gets to withhold whatever it deems harmful to disclose--and an agency’s decision as to its own mission and effectiveness is the kind of thing that ordinarily commands deferential review. The Board and the Clearing House undertake to show that disclosure would harm the banks that borrowed (by disclosing their prior distress) and the banking system as a whole (because banks under stress may hesitate to seek relief or rescue), and that these harms will reduce the effectiveness of measures critical to the banking system. The arguments are plausible, and forcefully made. But a test that permits an agency to deny disclosure because the agency thinks it best to do so (or convinces a court to think so, by logic or deference) would undermine “the basic policy that disclosure, not secrecy, is the dominant objective of [FOIA].” See Rose, 425 U.S. at 361.
The requirement of disclosure under FOIA and its proper limits are matters of congressional policy. The statute as written by Congress sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.
In other words: if the Fed wants to maintain its strict secrecy, it better get Congress to change the laws immediately. Of course, if that happens it will become very clear who controls not just the fiscal and monetary destiny of America, its executive control (via the recently institued bilateral decision making of who apoints who – the President of the United States <-> The President of the FRBNY, and vice versa), but also the legislative. As for the judicial, we will know definitively when the Supreme Court overturns this decision. In other words, the Federal Reserve is about to become the President, the Congress and the Supreme Court (not to mention Wall Street) all rolled into one.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site