* BoA DUMPS $75 TRILLION IN DERIVATIVES ON TAXPAYERS, SUPER COMMITTEE LOOKS AWAY. SEIZE BoA NOW.
By Ralph Lopez, OpEdNews
It’s real money, especially since “Bank of America Deathwatch” financial pundits have multiplied on the web and it has become a bit of a geek guessing game. When will BoA finally tank? And when it tanks, the question becomes, who will walk away with all their money, and who will be left holding the bag? The deal just snuck through with the Federal Reserve’s, and implicitly, Congress’s approval insures Wall Street casino gambler’s debts by moving them into accounts meant for penny-pinching grandmas.
Citing Bloomberg, financial commentator Avery Goodman tells us:
“Even if we net out the notional value of the derivatives involved, down to the net potential obligation, the amount is so large that the United States could not hope to pay it off without a major dollar devaluation, if a major contingency actually occurred and a large part of the derivatives were triggered.”
A bailout for one company’s most irresponsible investors triggering a major dollar devaluation? This is the kind of thing that starts revolutions.
“Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.”
Without going too far into bewildering financial jargon, it’s like this: Your wildest son is asking you to co-sign for a debt. If he can’t make his payments, you are on the hook. How much is the debt? He doesn’t know. Just sign on the dotted line.
Meanwhile the “super committee” is looking for a trillion or so dollars in hits to everything, including Social Security and Medicare/Medicaid, to keep the budget from going any more out of whack. It’s urgent, they say, for us to stop spending like drunken sailors. But at the same time they just whipped out a pen and signed for junior, crossing their fingers that something won’t happen which is almost inevitable.
Where did I stumble across this news item? Sure as heck not on MSM, which is focused on the smoke grenade of BoAs recent $400 million fee case settlement. $400 million fits into $72 trillion almost 2 million times. Now which is the bigger story?
I stumbled across it posted by an outraged Occupy Wall Street-type on one of their Facebooks. You don’t need to read Karl Marx to become an Occupy Wall Streeter. The American financial pages will do it.
It is unlikely the taxpayer’s hit will be as much as $72 trillion. Again, no one knows. But it will be a chunk of money. …
* FINALLY, A JUDGE STANDS UP TO WALL STREET
By Matt Taibbi
Federal judge Jed Rakoff, a former prosecutor with the U.S. Attorney’s office here in New York, is fast becoming a sort of legal hero of our time. He showed that again yesterday when he shat all over the SEC’s latest dirty settlement with serial fraud offender Citigroup, refusing to let the captured regulatory agency sweep yet another case of high-level criminal malfeasance under the rug.
The SEC had brought an action against Citigroup for misleading investors about the way a certain package of mortgage-backed assets had been chosen. The case is very similar to the notorious Abacus case involving Goldman Sachs, in which Goldman allowed short-selling billionaire John Paulson (who was betting against the package) to pick the assets, then told a pair of European banks that the “designed to fail” package they were buying had been put together independently.
This case was similar, but worse. Here, Citi similarly told investors a package of mortgages had been chosen independently, when in fact Citi itself had chosen the stuff and was betting against the whole pile.
This whole transaction actually combined a number of Goldman-style misdeeds, since the bank both lied to investors and also bet against its own product and its own customers. In the deal, Citi made a $160 million profit, while its customers lost $700 million.
Goldman, in the Abacus case, got fined $550 million. In this worse case, the SEC was trying to settle with Citi for just $285 million. Judge Rakoff balked at the settlement and particularly balked at the SEC’s decision to allow Citi off without any admission of wrongdoing. He also mocked the SEC’s decision to describe the crime as “negligence” instead of intentional fraud, taking the entirely rational position that there’s no way a bank making $160 million ripping off its customers can conceivably be described as an accident.
“Why should the court impose a judgment in a case in which the SEC alleges a serious securities fraud but the defendant neither admits nor denies wrongdoing?” And this: “How can a securities fraud of this nature and magnitude be the result simply of negligence?”
Rakoff of course is right – the settlement is nuts. If you take Citi’s $160 million profit on the deal into consideration, what we’re talking about then is a $125 million fine for causing $700 million in damages. That, and no admission of wrongdoing. …
* THE YOUNG AND THE BROKE – 37 PERCENT OF YOUNG HOUSEHOLDS HELD ZERO OR A NEGATIVE NEW WORTH IN 2009. THE MEDIAN NET WORTH OF THOSE 35 AND YOUNGER IS $3,600.
It is hard to imagine a future generation of Americans were those moving forward are actually poorer than the current generation. Yet that is precisely the world we are diving into. Those that purchased homes in the pre-bubble days and also attended college in less inflated times have a massive head start on the current younger generation that is contending with a bursting housing bubble and a financial system that might as well be a roulette wheel. One startling figure from a recent Pew Research report shows that 37 percent of young households hold zero or a negative net worth. This is not a good way to build a healthy financial future. The wealth gap between previous generations is also becoming increasingly large. This narrative ties into the overall systemic pilfering of the middle class. …
* THE TEN FIRMS THAT RULE THE WORLD
By Suzy Khimm
… Top 10 network control-holders
1. Barclay’s (Great Britain)
2. The Capital Group Companies (U.S.)
3. Fidelity Investments (U.S.)
4. AXA (France)
5. State Street Corporation (U.S.)
6. JP Morgan & Chase (U..S)
7. Legal & General Group (Great
8. Vanguard Group (U.S.)
9. UBS (Switzerland)
10. Merrill Lynch (U.S.)
Altogether, the top 10 firms control 19.45 percent of the global financial network, and the top 50 firms control nearly 40 percent. …