Judge of Nations, spare us yet,
Lest we forget—lest we forget.
Martin Luther King, Jr.
And Blythe should rest easy knowing that Benny has her back on those massive metals shorts.
Sounds like they even plan to have the Fed backstop the derivatives trade in London.
Heads the banks win, tails those holding US dollars lose.
How will they support the next bailout? Austerity!
Wailing Wall Street Journal, who's real editorial board is in IsraHell...As we noted in May 2010, the authority for this regulatory achievement was inserted into Congress's pending financial reform bill by then-Senator Chris Dodd. Two months later, the legislation was re-named Dodd-Frank and signed into law by Mr. Obama. One part of the law forces much of the derivatives market into clearinghouses that stand behind every trade. Mr. Dodd's pet provision creates a mechanism for bailing out these clearinghouses when they run into trouble.
A Mess the 45th President Will Inherit...
Thursday, May 24, 2012
Taxpayers Now Stand Behind Derivatives Clearinghouses...
...Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading -- not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net.
Specifically, the law authorizes the Federal Reserve to provide "discount and borrowing privileges" to clearinghouses in emergencies. Traditionally the ability to borrow from the Fed's discount window was reserved for banks, but the new law made clear that a clearinghouse receiving assistance was not required to "be or become a bank or bank holding company." To get help, they only needed to be deemed "systemically important" by the new Financial Stability Oversight Council chaired by the Treasury Secretary.
Last year regulators finalized rules for how they would use this new power. On Tuesday, they began using it. The Financial Stability Oversight Council secretly voted to proceed toward inducting several derivatives clearinghouses into the too-big-to-fail club. After further review, regulators will make final designations, probably later this year, and will announce publicly the names of institutions deemed systemically important.
We're told that the clearinghouses of Chicago's CME Group and Atlanta-based Intercontinental Exchange were voted systemic this week, and rumor has it that the council may even designate London-based LCH.Clearnet as critical to the U.S. financial system.
U.S. taxpayers thinking that they couldn't possibly be forced to stand behind overseas derivatives trading will not be comforted by remarks from Commodity Futures Trading Commission Chairman Gary Gensler. On Monday he emphasized his determination to extend Dodd-Frank derivatives regulation to overseas markets when subsidiaries of U.S. firms are involved...
Read the rest here.
Corruptio optimi pessima.
(The best things when corrupted become the worst.)
Aristotle, Nicomachean Ethics
Not even a wrist-slap....
Well at least the SEC released its report. The craven curs and hypocrites at the CFTC have been studying the criminal manipulation of the silver market for more than four years, and as of yet have not even had the decency to release their findings, and then proclaim they will do nothing about it.
It is the contempt of vultures. The more you take it, the bolder they become.
But not to worry, you will be able to vote for 'change' again in November.
There will be another financial crisis. And there will be another bailout. And you will take it and do nothing, except perhaps grumble quietly and draw comfort with the thought, 'Thank God, at least we are not socialist like Europe.' Before it is over they may do monstrous things in your name, and you will avert your eyes and say nothing.
"For what does it profit a man, if he shall gain the whole world, but lose his soul?"There is little downside to white collar crime, and accounting fraud has been effectively decriminalized in the acceptance of Lehman's 'Repo 105.'
Nothing is safe.
Deep Capture the Movie.
SEC Staff Said to End Lehman Probe Without Seeking Action....
By Joshua Gallu
May 24, 2012
U.S. Securities and Exchange Commission investigators have concluded their probe of possible financial fraud at Lehman Brothers Holdings Inc. and determined that they will probably not recommend any enforcement action against the firm or its former executives, according to an excerpt of an internal agency memo.
The agency has been grappling with the case for more than three years amid questions from lawmakers and investors as to whether Lehman misrepresented its financial health before filing the biggest bankruptcy in U.S. history in September 2008.
Under a heading reading “Activity in Last Four Weeks,” the undated document reads, “The staff has concluded its investigation and determined that charges will likely not be recommended.”
SEC officials didn’t dispute the authenticity of the memo or its contents.
Pressure on the agency to punish any wrongdoing related to Lehman’s collapse escalated after Anton Valukas, the court- appointed bankruptcy examiner, found the firm misled investors with “accounting gimmicks” that disguised the firm’s leverage.
Senior officials have been reluctant to formally close the matter even though investigators found a lack of evidence of wrongdoing, according to people with direct knowledge of the matter. The officials have weighed issuing a public report on their findings that would stop short of an enforcement action while describing questionable conduct...
Read the rest here.
I would respectfully include ECONned by Yves Smith on the reading list. It adds a dimension of scholarship and detailed analysis found nowhere else.
Barry Ritholtz on the Crisis: Causes, Cures, Corptocracy, and Suggested Reading...
When you get bit by a dog, you don’t just look at the dog, you have to look at the owner who is holding the leash.To me, a lot of the regulatory changes, and a lot of what the Federal Reserve did, stand on their own as a major factor. But if you’ve read David Hume, if you’ve studied the philosophy of causation, you have to look at what motivated those changes.
I have these debates with friends. One group blames everything on big government; the other group blames everything on big corporations. The sad news is that there’s really no difference between the two: Big government and big corporations work hand-in-hand. If you want to know who is the puppet and who is the puppet master, it sure looks like Wall Street has been pulling the strings of Congress for many, many, many years.
I remember the Dick Durbin quote, right in the middle of the crisis. He was astonished at all the bankers and bank lobbyists running around the halls of Congress, and said, “I can’t believe these guys – they act as if they own the place.” The fact is, it’s not an act – they do own the place...
Read the rest here.
Read the rest here.