B of A dumps $75 trillion in potentially toxic assets onto tax payers (Congress, illegal)
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Unreal, and watch when bonuses are issued the corp apologists to say "Free Market decision". As if the payroll account would be solvent w/o having gov't "buy" their losses, while retaining their profits.
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.
BofA isn't the only one. JP Morgan is the largest, with over $80 trillion in derivatives associated with their associated FDIC insured arm. In total, banks have now switched $200 trillion in derivative investments over to their FDIC insured counterparts that the taxpayers are on the hook for.
This is what happens when you let investment banks merge with commercial lending institutions. Death of Glass Steagall was the death of the United States.
Amazing how these banks, as the author eloquently put it, " privatize profits and socialize losses". This is the very definition of corporate welfare.
BofA isn't the only one. JP Morgan is the largest, with over $80 trillion in derivatives associated with their associated FDIC insured arm. In total, banks have now switched $200 trillion in derivative investments over to their FDIC insured counterparts that the taxpayers are on the hook for.
This is what happens when you let investment banks merge with commercial lending institutions. Death of Glass Steagall was the death of the United States.
Amazing how these banks, as the author eloquently put it, " privatize profits and socialize losses". This is the very definition of corporate welfare.
This is the planned results of the master scheme from the get go. I'm not going to blame the corporations or banks alone ... I'm also blaming the progressive liberals for attempting to crash the system. We should arrest people in the Obama administration, Ben Bernanke, Soro's and all the other socialist that planned our economic collapse.
BofA isn't the only one. JP Morgan is the largest, with over $80 trillion in derivatives associated with their associated FDIC insured arm. In total, banks have now switched $200 trillion in derivative investments over to their FDIC insured counterparts that the taxpayers are on the hook for.
This is what happens when you let investment banks merge with commercial lending institutions. Death of Glass Steagall was the death of the United States.
Amazing how these banks, as the author eloquently put it, " privatize profits and socialize losses". This is the very definition of corporate welfare.
Yea, it is all over but the crying.
Were on train with a mountain dead ahead on the tracks and rather than search for solutions, everyone is finger pointing.
We don't have time for the partisan games any more folks. This is a national emergency and it's both the Democrat and Republican's fault. It's also our fault for demanding that political promises be made that we should have known could not be kept.
But we did make the promises and the politicians on both sides of the aisle lied. When faced with the reality of the mathematics instead of telling us "We can't provide that; the money does not exist to give every retired person a triple bypass and two new hips" we instead created ponzi schemes to attempt to extend how much credit was available in the system.
We allowed Alan Greenspan to circumvent bank reserve requirements by permitting "sweeps" - a clearly and obviously fraudulent practice as it's only purpose was to permit the intentional "gearing up" beyond what the law permitted.
We then allowed Alan Greenspan to approve the merger of Solomon and Citi, which was black-letter illegal at the time.
We passed Gramm-Leach-Bliley, eviscerating The Glass-Steagall Act that had kept the commercial banking system safe for over 50 years, and retroactively making the merger of Citi and Solomon lawful.
We bailed out the bondholders of Continental Illinois, telling the market that you can buy the debt of any financial company and you will not lose your money no matter how stupid (or even how criminal) management is.
We allowed the peddling of worthless securities during the 1990s by Wall Street during the Internet bubble -- firms that the offering investment banks and their analysts called "crap", "****" and other very-descriptive (and accurately-so) terms. Despite my and others warnings that the claims of exponential growth of the Internet on a current and forward basis were both false and mathematically impossible virtually no one went to jail.
We allowed banks and others to write intentionally bogus mortgage loans; Citifinancial's former chief risk officer testified under oath before the FCIC that by 2007 80% of their loan production did not meet quality standards. These loans were packaged up and sold despite actual knowledge of this deficiency and it was not disclosed to investors. Citifinancial of course was not the only bank that was doing this -- they all were.
We allowed banks and others (including an unregulated subsidiary of AIG) to write trillions of dollars of credit protection and other derivatives of various sorts without any evidence that they could actually pay. This in turn allowed banks and other institutions to claim that very risky assets were "money good" when in fact they were not. That is where the "systemic risk" came from, and it was an intentional act on the part of our regulators that permitted it.
We allowed the government to lard up the entitlement budget with program after program with no ability to pay for them, and what's worse, most of them had built-in exponential expansions of their own that dramatically exceeded the growth rate of the economy. None were explicitly capped to the expansion (or contraction) of GDP.
Despite the bleating of both left and right neither side of the political aisle has done a damn thing about any of this -- not then, not now.
Now we have come around the bend, the train is traveling at 70mph and accelerating, and the mathematically inevitable solid side of the mountain has come into view, and the tracks lead straight in toward it, head-on!
The World Economic Forum said that we must double systemic credit to sustain a "reasonable" GDP growth rate on a global basis. But we hit the wall in 2007 because people couldn't pay as agreed -- we shifted that payment risk to governments Now they're falling one after another into insolvency themselves, and in response we're trying to bail out the credit drunk by giving him a bottle of whiskey in the belief that he was become sober!
It's not going to work.
There are two -- and only two -- choices.
Admit the truth. We made political promises, especially in the entitlement area, that we cannot keep. The politicians on both sides of the aisle intentionally lied to buy votes. When the numbers caught up with them they allowed Wall Street to asset-strip the public in a futile attempt to keep the game going. These are facts, not conjecture and we can face them, accept that which we cannot afford to pay won't be paid and take the adjustment in our economy and realign it to work within what's possible. This is the equivalent of slamming on the brakes on the train. We are going to hit the rock; the physics of the matter make it impossible to stop in time. But we can hit it at 25mph if we choose to slam on the brakes now and we can also warn everyone on board to brace for impact, lessening the inevitable carnage.
Continue to play partisan political games and amplify the lies. Instead of slamming on the brakes -- withdrawing the excess liquidity, managing the bankruptcies, restoring the rule of law, prosecuting the wrongdoers where we can and ejecting them from the realm of finance and politics in all cases -- we can keep lying, pretending, and compounding the damage. Seeing the wall up ahead we can move the throttle from "accelerate" to "FULL POWER!" and go from our present 70mph to more than 100mph at impact.
In short we no longer have any easy choices. Now we are choosing between plenty of pain and possible loss of our nation's political and monetary system -- that is, insufferable pain.
Those are the options folks. I wish they were not, but they are. Those who argue that we "should not" engage the OWS folks and try to educate the people involved in the movement so they bring pressure for positive change are, in my opinion, fools.
The side of the mountain, and the tracks we are on that lead right up to the vertical face of it, are both in direct view at this point. WE the people -- all of us -- blew it. Back in the 1990s we refused to force our politicians to do the right thing, we didn't do it after the tech wreck in 2000, we didn't do it when we were collectively pulling out phantom home equity to buy Hummers and we didn't learn a damn thing from the collapse of 2008. Some of us tried to organize protests and political action but the fact of the matter is that an insufficient number of people were willing to listen and act. That's not only the fault of those who didn't act, it's also the fault of those who failed to persuade -- myself included. We tried and failed but this is not an excuse for giving up and hiding in a hole.
There is no longer a question about the outcome -- only about whether we are going to try to slow down before we hit the granite or whether we wish to see whether or not the impact will be visible from Mars.
Leverage (look to the right) is my attempt to bring all of this, from both a historical context and a present context -- into the public debate. It also sets forth what I believe are policy prescriptions that (unfortunately) cannot prevent the impending impact but will lessen its severity -- if we choose to take them.
As for my part The Market Ticker and Tickerforum are going dark on the 2nd of November in solidarity with the called General Strike out of Oakland. On that day there will be only a "we're on strike" banner displayed on this site.
Each and every individual must choose on their own what path to take. We are all on this train called The US Economy whether we like it or not. The engineer (Congress and our President) is a madman, he has locked himself in the cab and jammed the throttle open. These are facts.
Your options are to squabble among yourself, arguing over whether the left or right is "more to blame", voting for a new engineer (despite the fact that they're all insane and we're likely to hit the wall before the next opportunity to vote anyway), saying "**** it" and waiting for the flash or you can raid the bar car and getting drunk. Your final choice is to attempt to climb over the top of the cars, brave jumping the open gaps between them at 80mph, risk being crushed under the train if you slip, and (if you make it that far) attempting to break into the cab, kill the throttle and apply the brakes.
I'm going for the cab: Win, lose or draw I'm going to try to slow this train down. I'm in solidarity not only with the 99%, and yes folks, it is the 99%, but also with the passengers on UA 93 who made the exact same choice when faced with the same options.
You're free to do as you wish, but don't expect me to respect the drunks, the folks who simply cry or the squabblers if I and those who are with me succeed and as a consequence we all survive.
If, on the other hand, I fail, then so be it. We're not worse off for the effort -- that much I'm sure of.
Thank the Federal Reserve for this. They forced this onto the FDIC who was against it.
Bankers: 1
Americans: 0
FWIW reinstating Glass-Steagall would not have prevented this as this was a move by the Fed.
Watch for the rest to follow and BofA was not #1 on the list of toxic paper.
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