Monday, January 7, 2013

Banksters rules - Heads they win , Tails we lose....

( Nice overview of what happened in the first go round of bailouts for the banksters.... )

Secrets and Lies of the Bailout

January 7, 2013
By Matt Taibbi, Rolling Stone
The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come...

It has been four long winters since the federal government, in the hulking, shaven-skulled,Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
But the most appalling part is the lying. The public has been lied to so shamelessly and so often in the course of the past four years that the failure to tell the truth to the general populace has become a kind of baked-in, official feature of the financial rescue. Money wasn't the only thing the government gave Wall Street – it also conferred the right to hide the truth from the rest of us. And it was all done in the name of helping regular people and creating jobs. "It is," says former bailout Inspector General Neil Barofsky, "the ultimate bait-and-switch."
The bailout deceptions came early, late and in between. There were lies told in the first moments of their inception, and others still being told four years later. The lies, in fact, were the most important mechanisms of the bailout. The only reason investors haven't run screaming from an obviously corrupt financial marketplace is because the government has gone to such extraordinary lengths to sell the narrative that the problems of 2008 have been fixed. Investors may not actually believe the lie, but they are impressed by how totally committed the government has been, from the very beginning, to selling it.
Today what few remember about the bailouts is that we had to approve them. It wasn't like Paulson could just go out and unilaterally commit trillions of public dollars to rescue Goldman Sachs and Citigroup from their own stupidity and bad management (although the government ended up doing just that, later on). Much as with a declaration of war, a similarly extreme and expensive commitment of public resources, Paulson needed at least a film of congressional approval. And much like the Iraq War resolution, which was only secured after George W. Bush ludicrously warned that Saddam was planning to send drones to spray poison over New York City, the bailouts were pushed through Congress with a series of threats and promises that ranged from the merely ridiculous to the outright deceptive. At one meeting to discuss the original bailout bill – at 11 a.m. on September 18th, 2008 – Paulson actually told members of Congress that $5.5 trillion in wealth would disappear by 2 p.m. that day unless the government took immediate action, and that the world economy would collapse "within 24 hours."
To be fair, Paulson started out by trying to tell the truth in his own ham-headed, narcissistic way. His first TARP proposal was a three-page absurdity pulled straight from a Beavis and Butt-Head episode – it was basically Paulson saying, "Can you, like, give me some money?" Sen. Sherrod Brown, a Democrat from Ohio, remembers a call with Paulson and Federal Reserve chairman Ben Bernanke. "We need $700 billion," they told Brown, "and we need it in three days." What's more, the plan stipulated, Paulson could spend the money however he pleased, without review "by any court of law or any administrative agency."
The White House and leaders of both parties actually agreed to this preposterous document, but it died in the House when 95 Democrats lined up against it. For an all-too-rare moment during the Bush administration, something resembling sanity prevailed in Washington.


( Naturally nothing has changed - the bankster still get the easy way out of the messes they made.... ) 

In Case There Was Any Confusion Just Who The Fed Works For...

January 7, 2013

Source: Zero Hedge
Today, to little fanfare, the Fed announced a major binding settlement with the banks over robosigning and fraudclosure, which benefited the large banks, impaired the small ones (which is great: room for even more consolidation, and even more TBest-erTF, which benefits America's handful of remaining megabanks), and was nothing but one minor slap on the banking sector's consolidated wrist involving a laughable $3 billion cash payment. As part of the settlement, the US public is expected to ignore how much money the banks actuallymade in the primary and secondary market over the years courtesy of countless Linda Greens and robosigning abuses. A guess: the "settlement" represents an IRR of some 10,000% to 100,000% for the settling banks. We are confident once the details are ironed out, this will be an accurate range.

Yet what is most disturbing, or not at all, depending on one's level of naivete, is the response of Elijah Cummings, ranking member of the house Committee on Oversight and Government Reform. As a reminder, Congress had demanded that the settlement not be announced before there was a hearing on it. This did not even dent the Fed's plans to proceed with today's 11 am public announcement which can now not be revoked. It is Cummings' response which shows, yet again, just who is the true master of the Federal Reserve.
From The Committee on Oversight and Government Reform:
Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, issued the following statement regarding the public announcement of a new settlement between the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and 10 mortgage servicers without first briefing the Oversight Committee as requested on a bipartisan basis last week:
“I am deeply disappointed that the OCC and the Federal Reserve finalized this settlement and effectively terminated the Independent Foreclosure Review process before providing Congress answers to serious questions about how this settlement amount was determined, who these funds will go to, and what will happen to other families who were abused by these mortgage servicing companies, but have not yet had their cases reviewed.  I do not know what the rush was to make this settlement without answering these key questions, and although I look forward to obtaining information about how this deal may assist homeowners, I have serious concerns that this settlement may allow banks to skirt what they owe and sweep past abuses under the rug without determining the full harm borrowers have suffered.
On Friday, Cummings and Oversight Committee Chairman Darrell Issa sent a bipartisan letter to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry requesting a briefing before any new settlement was agreed to or announced publicly. 
The statement concludes as follows:
In calls to the agencies this morning, agency officials stated that they
would not provide the briefing or answer additional questions before
going public with the announcement of the deal
And that, folks, says it all, although it should not come as a surprise to anyone who has by now realized that the only goal the Fed has is to boost the Russell 2000 to new record highs, instead of giving any part of a rat's anatomy about the US public or the broader economy.

and the slow walking continues - why pretend to pass laws that are simply never applied to the banksters ?

Banks win concessions and time on liquidity rules

Bank of England governor Mervyn King says concessions will allow banks to use reserves to help struggling economies grow
Stefan Ingves and Mervyn King
Stefan Ingves, left, chair of the Basel committee on banking supervision's governing body and Mervyn King of the Bank of England. Photograph: Patrick Straub/EPA
Banks have won significant concessions from global regulators after being granted four more years to introduce watered-down measures designed to make them less vulnerable to Northern Rock-style runs and financial shocks.
As well as extending the time limit on compliance, the Basel committee of banking supervisors has relaxed proposals setting out the range of assets banks must hold as a buffer against the threat of a collapse.
The British banking industry described the changes, secured after lobbying, as a "Twelfth Night present". Mervyn King, governor of the Bank of England and chair of the committee's oversight body, denied that the agreement was a weakening of earlier proposals: "For the first time in regulatory history, we have a truly global minimum standard for bank liquidity."
The standards are intended to allow a bank to survive a 30-day crisis by retaining a minimum amount of cash and liquid or easy-to-sell assets, as an insurance against the mass withdrawal of deposits and funding freeze that crippled Northern Rock or a systemic crisis of the kind triggered by the Lehman Brothers collapse.
The new rules will not be imposed in January 2015, as intended under an earlier draft, but will be phased in over four years by 2019. King indicated that the concessions would allow banks to use their reserves to help struggling economies grow, rather than have them tied up in meeting the new global banking guidelines, dubbed Basel III.
"Importantly, introducing a phased timetable for the introduction of the liquidity coverage ratio … will ensure that the new liquidity standard will in no way hinder the ability of the global banking system to finance a recovery," he said.
The Basel group includes representatives from the 27 major financial centres – including the UK, Japan, China and the US – and it agreed a first draft of liquidity rules in 2010. The draft triggered fierce lobbying by the banking community because it required the buffers to comprise government bonds and the highest grade of corporate bonds.
Banks warned that it might choke off a global economic recovery by squeezing lending to households and businesses. They added that focusing the buffers on government bonds would force them to buy even more sovereign debt, tying their fortunes more closely to a state's solvency – a concern exacerbated by the mounting eurozone crisis.
King said the new liquidity coverage ratio (LCR) was more "realistic", although he denied that the changes represented a weakening of the proposals.
He added that the agreement would protect taxpayers from the consequences of a banking crisis, saying it was a "clear commitment to ensure that banks hold sufficient liquid assets to prevent central banks from becoming lenders of first resort".
Under the deal, banks will only have to meet 60% of the LCR obligations by 2015. A study by the Basel committee in 2011 found more than 200 banks had a total shortfall of €1.8tn (£1.4tn) in meeting the 2010 LCR. The way in which the buffer is calculated has also been changed in a way that will benefit many banks, analysts said.
King added: "The committee and the regulatory community more generally felt it was appropriate to broaden the class of liquid assets. That doesn't mean to say it's a loosening of the whole regime."
Simon Hills, executive director of the British Bankers' Association, said allowing mortgage-backed securities in the liquidity buffer would help kick-start that particular market, which has been moribund since the 2007-09 crisis. Mortgage-backed securities have been classed as "liquid" under the new guidelines even though their lack of liquidity from 2007 on was a key factor in the banking crisis, a recurrence that Basel III hopes to prevent.
During times of stress, the Basel committee said, national regulators could allow banks to drop below the minimum liquidity requirement.
The UK Financial Services Authority signalled last summer it would consider relaxing liquidity rules – which required UK banks to hold a buffer of £500bn of government bonds and other instruments – amid concerns that banks were restricting lending to businesses and households.
The financial policy committee, responsible for overseeing financial stability and chaired by King, had considered whether liquidity rules should be relaxed altogether.
UK banks have been concerned about the liquidity rules since they were first suggested in the wake of the 2008 banking crisis and could have required banks to hold up to three times the level of the assets that they held in the past.