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Post by sandi66 on Apr 10, 2011 10:55:59 GMT -5
Water, Water, Water — Libya’s Hidden Asset March 9, 2011 Friday, March 4, 2011 Virtually unknown in the West: Libya’s water resources A. PEASANT at twelfthbough.blogspot.com We still wonder how on earth did Gaddafi manage to stay in power for forty years? Did no one notice his madness until now? Did no one notice that he built a HUGE FRESH WATER PIPELINE to the Benghazi region, that lunatic? Were they waiting for him to finish? Libya – click to enlarge Libya’s Great Man-Made River Project, September 1, 2010 The 1st of September marks the anniversary of the opening of the major stage of Libya’s Great Man-Made River Project. This incredibly huge and successful water scheme is virtually unknown in the West, yet it rivals and even surpasses all our greatest development projects. The leader of the so-called advanced countries, the United States of America cannot bring itself to acknowledge Libya’s Great Man-Made River. The West refuses to recognize that a small country, with a population no more than four million, can construct anything so large without borrowing a single cent from the international banks. …In the 1960s during oil exploration deep in the southern Libyan desert, vast reservoirs of high quality water were discovered in the form of aquifers. … …In Libya there are four major underground basins, these being the Kufra basin, the Sirt basin, the Morzuk basin and the Hamada basin, the first three of which contain combined reserves of 35,000 cubic kilometres of water. These vast reserves offer almost unlimited amounts of water for the Libyan people. The people of Libya under the guidance of their leader, Colonel Muammar Al Qadhafi, initiated a series of scientific studies on the possibility of accessing this vast ocean of fresh water. Early consideration was given to developing new agricultural projects close to the sources of the water, in the desert. However, it was realized that on the scale required to provide products for self sufficiency, a very large infrastructure organization would be required. In addition to this, a major redistribution of the population from the coastal belt would be necessary. The alternative was to ‘bring the water to the people’. In October 1983, the Great Man-made River Authority was created and invested with the responsibility of taking water from the aquifers in the south, and conveying it by the most economical and practical means for use, predominantly for irrigation, in the Libyan coastal belt. By 1996 the Great Man-Made River Project had reached one of its final stages, the gushing forth of sweet unpolluted water to the homes and gardens of the citizens of Libya’s capital Tripoli. Louis Farrakhan, who took part in the opening ceremony of this important stage of the project, described the Great Man-Made River as “another miracle in the desert.” Speaking at the inauguration ceremony to an audience that included Libyans and many foreign guests, Col. Qadhafi said the project “was the biggest answer to America… who accuse us of being concerned with terrorism.” The Great Man-Made River, as the largest water transport project ever undertaken, has been described as the “eighth wonder of the world”. It carries more than five million cubic metres of water per day across the desert to coastal areas, vastly increasing the amount of arable land. The total cost of the huge project is expected to exceed $25 billion (US). Consisting of a network of pipes buried underground to eliminate evaporation, four meters in diameter, the project extends for four thousand kilometres far deep into the desert. All material is locally engineered and manufactured. Underground water is pumped from 270 wells hundreds of meters deep into reservoirs that feed the network. The cost of one cubic meter of water equals 35 cents. The cubic meter of desalinized water is $3.75. Scientists estimate the amount of water to be equivalent to the flow of 200 years of water in the Nile River. The goal of the Libyan Arab people, embodied in the Great Man-Made River project, is to make Libya a source of agricultural abundance, capable of producing adequate food and water to supply its own needs and to share with neighboring countries. In short, the River is literally Libya’s ‘meal ticket’ to self-sufficiency. Self-sufficiency?!? Absolutely Not Allowed. Banksters don’t like that sort of thing one bit. This project has been in the works for many years. Have you ever heard of it? We had not until today. Underground “Fossil Water” Running Out, National Geographic, May 2010 Libya turns on the Great Man-Made River, by Marcia Merry, Printed in the Executive Intelligence Review, September 1991 A gala ceremony was held in Libya at the end of August, at which Libyan leaders “turned on the tap” of the Great Man-Made River, the water pipeline/viaduct project designed to bring millions of liters of water from beneath the Sahara Desert, northward to the Benghazi region on the Mediterranean coast. The inauguration marked the end of Phase I of the project, which is slated for completion in 1996. Under the giant scheme, water is pumped from aquifers under the Sahara in the southern part of the country, where underground water resources extend into Egypt and Sudan. Then the water is transported by reinforced concrete pipeline to northern destinations. Construction on the first phase started in 1984, and cost about $5 billion. The completed project may total $25 billion. South Korean construction experts built the huge pipes in Libya by some of the most modern techniques. The engineering feat involves collecting water from 270 wells in east central Libya, and transporting it through about 2,000 kilometers of pipeline to Benghazi and Sirte. The new “river” brings 2 million cubic meters of water a day. At completion, the system will involve 4,000 kilometers of pipepines, and two aqueducts of some 1,000 kilometers. Joining in celebrating the inauguration of the artificial river were dozens of Arab and African heads of state and hundreds of other foreign diplomats and delegations. Among them were Egyptian President Hosni Mubarak, King Hassan of Morocco, the head of Sudan, Gen. Omar El Beshir, and Djibouti’s President Hassan Julied. Col. Muammar Qaddafi told the celebrants: “After this achievement, American threats against Libya will double…. The United States will make excuses, [but] the real reason is to stop this achievement, to keep the people of Libya oppressed.” Qaddafi presented the project to the cheering crowd as a gift to the Third World. Mubarak spoke at the ceremony and stressed the regional importance of the project. Qaddafi has called on Egyptian farmers to come and work in Libya, where there are only 4 million inhabitants. Egypt’s population of 55 million is crowded in narrow bands along the Nile River and delta region. Over the last 20 years, the water improvement projects envisioned for Egypt, which could provide more water and more hectares of agricultural and residential land, have been repeatedly sabotaged by the International Monetary Fund and World Bank, and the Anglo-American financial interests behind them. In the 1970s, Qaddafi expelled many Egyptian families from Libya, but over the recent months the two countries have become close once again. There are plans to build a railway line to facilitate travel back and forth. There is also a standing commission between Sudan and Libya for integrating economic activity. Over 95% of Libya is desert, and the new water sources can open up thousands of hectares of irrigated farmland. At present over 80% of the country’s agriculture production comes from the coastal regions, where local aquifers have been overpumped, and salt water intrusion is taking place. The Great Man-Made River will relieve this. The water now flowing will immediately supplement supplies for domestic and industrial needs in Benghazi and Sirte. But Libyan officials plan for 80% of the overall project’s flow to eventually be used for irrigating old farms, and reclaiming some desert lands. Since 20% of Libya’s imports are foodstuffs, expanded water supplies are a means to greater self-sufficiency. The Great Man-Made River project and its objectives fly in the face of the water-control schemes sanctioned by the World Bank and the International Monetary Fund. These institutions have blocked work on other “great projects” such as the Jonglei Canal–the huge ditch that was designed as a straight channel on the upper White Nile in southern Sudan. The Jonglei Canal, which stands half-finished and abandoned at present, would have drained swamplands, aided agriculture, transportation, power resources, and health, and provided expanded flow to the Nile River all the way down to Egypt. The World Bank and the U.S. State Department are backing a “Middle East Water Summit” in Turkey this November, which is intended to promote only politically favored projects such as desalination plants in Saudi Arabia, and water shortages elsewhere. London and Washington circles were apoplectic about the opening of the new Libyan water project. The London Financial Times ran criticisms of the project from Angus Henley of the London-based Middle East Economic Digest. The pipeline, he said, was “Qaddafi’s pet project. He wants to be seen as something other than the scourge of the West.” The Financial Times called the project Qaddafi’s “pipedream,” stating that critics may be awed by the engineering involved, “But they regard the dream as a monument to vanity that makes little economic sense in a country where the U.N. Development Program says 94.6% of territory is desert wasteland.” If it is vanity that motivated the project, at least the vanity of Libya’s head of state is being channeled in a productive direction in this case–which is more than can be said of the leaders of Britain and the United States. Libya ethnic map from Arthur Zbygniew atrueott.wordpress.com/2011/03/09/water-water-water-libyas-hidden-asset/****************** Irrigation assessment workshop in Libya May 30, 2010 at 5:17 am Libya’s Agricultural Research Center (ARC) and ICARDA jointly organized a workshop in Tripoli, 1-6 May, as part of a research program to improve irrigation practices. The workshop, inaugurated by H.E. Eng. Abdulmajeed Al Gaoud, Minister of Agriculture, brought together experts in irrigation, agronomy, economics and modeling to share information on modern irrigation technologies. A first step in developing more efficient, economic and sustainable irrigation practices is to evaluate current practices in different parts of Libya. The objective of the workshop was therefore to assess how irrigation water is being used in different crops, farming systems and geographical regions, and from different water resources; and to develop a project workplan. Presentations by Dr Fawzi El Doumi, Project Coordinator, Dr Mohamed El Mourid, Coordinator of ICARDA’s North Africa Regional Program, Dr Theib Oweis, Director of ICARDA’s Integrated Water and Land Management Program, and other specialists from national and international organizations, set the scene for discussions on technical issues and logistics. The workshop included a three-day field visit to the south and the east of the country, for a first-hand view of various irrigation projects and water resources – including the ‘man-made river’ that transports water from the south to the north of Libya. This was followed by two days of technical meetings, at which a range of issues were thoroughly discussed, and the project workplan agreed upon – including research questions, assessment indicators and the approaches to be used. icardanews.wordpress.com/2010/05/30/irrigation-assessment-workshop-in-libya/
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Post by sandi66 on Apr 10, 2011 11:08:09 GMT -5
Citigroup to reinstate cash dividends Published: Apr 10, 2011 00:31 Updated: Apr 10, 2011 00:35 RIYADH: Prince Alwaleed bin Talal, chairman of Kingdom Holding Company (KHC), and largest shareholder in Citigroup, expressed his support of Citigroup's reverse stock split and the reinstatement of its cash dividend policy. Prince Alwaleed is a prominent investor in Citigroup through KHC since he first invested in the company in 1991, and is the largest single shareholder in the company. In January 2008, the prince participated in a $12.5 billion private offering of convertible preferred securities of Citigroup. The new direct investment was made alongside an exclusive group of leading international investors. The prince converted the preferred shares in 2009 into common shares (voting shares). Citigroup announced on March 21, 2011 a 1-for-10 reverse stock split of Citigroup common stock; also that it intends to reinstate a quarterly dividend of $0.01 per common share in the second quarter of 2011. Prince Alwaleed commented: "Citigroup has demonstrated its ability to overcome the recent economic obstacles. I commend Citigroup's performance and the management of Citigroup under the leadership of Vikram Pandit." Early this year, Prince Alwaleed met Pandit in New York and they discussed the latest developments in Citigroup and future plans of the Company. During the visit, the prince re-affirmed his support for Pandit and Citigroup's management. In 2010, Prince Alwaleed received at his office in Riyadh, Pandit during his visit to Saudi Arabia. Moreover, the prince hosted a luncheon for Pandit at Kingdom Resort. During Pandit's visit to Saudi Arabia, he met with Minister of Finance Ibrahim Al-Assaf, Saudi Arabian Monetary Agency Gov. Muhammad Al-Jasser and Abdulrahman Al-Tuwaijri, chairman of Capital Market Authority. Also in the same year, Prince Alwaleed was received by Pandit at Citigroup Headquarters in New York. Prince Alwaleed also met with Richard Parsons, chairman of Citigroup. arabnews.com/economy/article351619.ece
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Post by sandi66 on Apr 10, 2011 11:09:42 GMT -5
Saudi Alwaleed backs Citigroup reverse stock split April 10, 2011 Prince Alwaleed backs reinstatement of cash dividend; Citigroup announced reverse stock spit, dividend in March Saudi billionaire Prince Alwaleed bin Talal said on Saturday he supports Citigroup’s reverse stock split and reinstatement of its cash dividend. “Citigroup has demonstrated its ability to overcome the recent economic obstacles. I commend Citigroup’s performance,” Alwaleed, a prominent investor in Citigroup, said in a statement. The nephew of Saudi Arabia’s King Abdullah, Alwaleed is also chairman of Kingdom Holding. Citigroup, the most actively traded stock in the United States, will resume paying a normal dividend after it uses a reverse stock split to shrink the number of shares outstanding, it said in March. The bank will pay a quarterly dividend of a penny a share, its first payout since 2009. It said it will reduce the number of common shares outstanding to 2.9 billion from 29 billion through a 1-for-10 stock split. In March Alwaleed said he expected Citigroup to post a profit in the first quarter. Citigroup’s chairman said in December the bank would not pay dividends in the near term. www.kippreport.com/2011/04/40092/
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Post by sandi66 on Apr 10, 2011 11:16:31 GMT -5
Banks to post profits, but loan growth elusive CHARLOTTE, North Carolina | Fri Apr 8, 2011 7:14pm EDT (Reuters) - Investors looking for loan growth and surging revenues at the biggest U.S. banks, including Citigroup Inc (C.N) are likely to be disappointed by first-quarter earnings. Banks have been generating most of their profits in recent quarters from dipping into money they previously set aside to cover bad loans. Those reserve reductions make sense if credit losses are stabilizing, which seems to be the case. But banks cannot reduce their loan loss reserves forever and at this point profit growth must come from making more money from loans and generating more fees, analysts said. Boosting interest income from loans is tough when the interest rates at which banks lend are so low and loan demand is still tepid. Fee income, meanwhile, is being threatened by future regulatory changes. "The revenue line will be key, that's what most investors will be focusing on," said Jason Ware, senior equities analyst at Albion Financial Group. The Salt Lake City-based wealth manager oversees $650 million in client assets. "The question everyone has is 'Where does the top line go from here?'" he said. Some banks will be particularly hard hit by weak trading in the quarter, as the stock market sagged on Middle Eastern political upheaval, a Japanese earthquake and tsunami sent the yen to record highs and markets were broadly unpredictable. But what many analysts are focusing on now is loan growth and data show the results may not be great. Bank loans outstanding declined 0.9 percent in January and 6.8 percent in February, according to a report from the Federal Reserve. Commercial and industrial loans were on the rise, which many analysts see as a positive sign, but meanwhile a broad array of consumer loans -- mortgages, credit cards -- are posting declines, so total bank credit outstanding are shrinking. The first quarter, analysts said, is typically the weakest of the year for banks. But the analysts with the best track records foresee a quarter that was tougher than usual for many banks, according to Thomson Reuters Starmine Smart Estimates. These "smart analysts" believe other analysts are far too optimistic about some banks, and only a little too pessimistic about the others. The analysts that have historically been the most accurate believe that results for Citigroup, Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) will fall short of analysts' average estimates, according to Starmine Smart Estimates. Starmine's analyst estimates, for example, indicates Morgan Stanley may miss estimates by as much as 22 percent. The Starmine "smart analysts" are projecting that Bank of America Corp (BAC.N), JPMorgan Chase, and Wells Fargo & Co (WFC.N) will beat broader estimates by a fairly small margin. BofA is projected with the largest earnings beat at 7.7 percent above the average estimate, Starmine estimates. NEW NORMAL For even the largest U.S. banks, interest income from loans is a key driver of earnings growth, but the total number of outstanding loans continues to stagnate, even as banks appear to have solved many of the credit issues that have dogged them for the last three years. The fees that banks get from processing debit cards will likely be limited by provisions of the Dodd-Frank financial reform bill, which will pressure fee income for banks in the future. Marty Mosby, bank analyst with Guggenheim Securities, said he is expecting banks will show a 10 percent decline in total charge-offs of bad loans, with some showing charge-offs shrinking by as much as 50 percent. While that will be a boost to earnings as banks continue to release reserves protecting against loan losses, Mosby said he does not expect loan growth for the next few quarters. "This will be a different model than what we're used to seeing, based more on profitability, consolidation and efficiency, rather than outright organic growth," Mosby said. In the fourth quarter of 2010, loans at U.S. banks totaled $7.38 trillion, the lowest level since the fourth quarter of 2009 and off from the peak of $8 trillion in the second quarter of 2008, FDIC data show. Long term, investors may need to adjust their expectations for the industry's earning ability. Mosby said banks that were once able to produce a 20 percent return on shareholder equity may not be able to top 15 percent. Bank's return on equity could dip to as low or 10 or 12 percent, he added. Halle Benett, a banker in charge of financial institutions merger advisory at UBS for the Americas, said: "I do think you've got to come to a decision as to what is generally accepted profitability for banking institutions and I'm not sure the cycle we came out of was the long-term norm." www.reuters.com/article/2011/04/08/us-banks-earnings-idUSTRE73787P20110408
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Post by sandi66 on Apr 10, 2011 11:25:03 GMT -5
Cobell Indian trust settlement meeting set for Thursday April 10, 2011, 12:00 AM A meeting about the $3.4 billion Cobell Indian Trust settlement will be held at 11 a.m. Thursday, April 14, at the Shooting Star Casino and Event Center in Mahnomen, according to a news release from the White Earth Tribal Council. A meeting about the $3.4 billion Cobell Indian Trust settlement will be held at 11 a.m. Thursday, April 14, at the Shooting Star Casino and Event Center in Mahnomen, according to a news release from the White Earth Tribal Council. After 14 years, there is a proposed settlement in Cobell v. Salazar. The class action suit claims that the federal government violated its duties by mismanaging trust accounts and individual Indian trust lands. The settlement includes American Indians who had an IIM account anytime from approximately 1985 to Sept. 30, 2009; had an individual interest in trust land as of Sept. 30, 2009; or are heirs to deceased IIM account holders or owners of land held in trust or restricted status. The settlement provides: E $1.5 billion to pay those included in the settlement. E $1.9 billion to buy small interests in trust or restricted land to benefit Indian communities. E Up to $60 million to fund scholarships for Indian youth. Most people included in the settlement will get at least $1,500. Others may receive more or less based on the terms of the settlement. Those who are currently receiving an IIM account statement do not have to do anything to get a payment. Those who are not currently receiving an IIM account statement and believe they are included in the settlement, or who would like more information on the settlement and their legal rights, should call 800-961-6109 or visit the website www.IndianTrust.com. The deadline to act on some of those rights is April 20. A meeting about the $3.4 billion Cobell Indian Trust settlement will be held at 11 a.m. Thursday, April 14, at the Shooting Star Casino and Event Center in Mahnomen, according to a news release from the White Earth Tribal Council. After 14 years, there is a proposed settlement in Cobell v. Salazar. The class action suit claims that the federal government violated its duties by mismanaging trust accounts and individual Indian trust lands. The settlement includes American Indians who had an IIM account anytime from approximately 1985 to Sept. 30, 2009; had an individual interest in trust land as of Sept. 30, 2009; or are heirs to deceased IIM account holders or owners of land held in trust or restricted status. The settlement provides: - $1.5 billion to pay those included in the settlement. - $1.9 billion to buy small interests in trust or restricted land to benefit Indian communities. - Up to $60 million to fund scholarships for Indian youth. Most people included in the settlement will get at least $1,500. Others may receive more or less based on the terms of the settlement. Those who are currently receiving an IIM account statement do not have to do anything to get a payment. Those who are not currently receiving an IIM account statement and believe they are included in the settlement, or who would like more information on the settlement and their legal rights, should call 800-961-6109 or visit the website www.IndianTrust.com. The deadline to act on some of those rights is April 20. www.bemidjipioneer.com/event/article/id/100027438/
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Post by sandi66 on Apr 11, 2011 12:59:43 GMT -5
Revealed: The secret FBI files that shows how police and army officers saw a UFO explode over Utah By Daily Mail Reporter Last updated at 8:46 AM on 11th April 2011 Comments (42) Add to My Stories A secret FBI memo detailing how police and army officers witnessed a UFO exploding over Utah has been unearthed. On April 4 1949 special agents sent a cable marked ‘urgent’ to the bureau director, Edgar Hoover. The top secret document reveals how an army guard, a policeman and a highway patrol, who were all miles apart, each saw a UFO, which they said exploded over mountains near Logan, north of Salt Lake City. The memo is one of thousands of previously unreleased classified files that the bureau has made public in a new online resource called The Vault. Under the title ‘Flying Discs’, the document about the sightings in Utah said the three men each ‘saw a silver coloured object high up approaching the mountains at Sardine Canyon’ that ‘appeared to explode in a rash of fire.’ It added: ‘Several residents [reported] seeing what appeared to be two aerial explosions, followed by falling object.’ Documents show that an earlier UFO sighting had been investigated in Logan in September 1947. It said numerous witnesses told the FBI they saw ‘flying discs’ in formation that were ‘circling the city at a high rate of speed’. Also among the files, released for the first time, is a memo from Guy Hottel, the special agent in charge of the Washington field office in 1950, which appears to prove that aliens landed at Roswell, New Mexico. Proof of (alien) life? A copy of the 1950 memo that recounts the discovery of flying saucers and aliens in New Mexico. The memo has been published on the FBI website In the memo, whose subject line is 'Flying Saucers', Agent Hottel reveals that an Air Force investigator had stated that 'three so-called flying saucers had been recovered in New Mexico'. The investigator gave the information to a special agent, he said. The FBI has censored both the agent and the investigator's identity. Agent Hottel went on to write: 'They were described as being circular in shape with raised centers, approximately 50 feet in diameter. 'Each one was occupied by three bodies of human shape but only 3 feet tall,' he stated. The bodies were 'dressed in a metallic cloth of a very fine texture. Each body was bandaged in a manner similar to the blackout suits used by speed flyers and test pilots.' Was it true? An image, later disproved a hoax, showing one of the aliens that were autopsied at Roswell in 1947 He said that the informant, whose identity was censored in the memo, claimed the saucers had been found in New Mexico 'due to the fact that the Government has a very high-powered radar set-up in that area and it is believed the radar interferes with teh controlling mechanism of the saucers'. He then stated that the special agent did not attempt to investigate further. The release of the secret memo is likely to fuel conspiracy theorists' claims of a government cover-up. The town of Roswell in New Mexico became infamous after reports that a flying saucer had crashed in the desert near a military base there on or around July 2, 1947. The bodies of aliens were said to have been recovered and autopsied by the U.S. military, but American authorities allegedly covered the incident up Roswell: Secret memo released online is written to the FBI Director and could confirm the 1947 Roswell UFO incident Flying saucers: One of the faked photos of the supposed alien victims of the Roswell UFO crash Military authorities issued a press release, which began: ‘The many rumours regarding the flying disc became a reality yesterday when the intelligence officer of the 509th Bomb Group of the Eighth Air Force, Roswell Army Air Field, was fortunate enough to gain possession of a disc.’ The headlines screamed: 'Flying Disc captured by Air Force.' Yet, just 24 hours later, the military changed their story and claimed the object they'd first thought was a 'flying disc' was a weather balloon that had crashed on a nearby ranch. Amazingly, the media and the public accepted the explanation without question. Roswell disappeared from the news until the late Seventies, when some of the military involved began to speak out. Another memo published in The Vault from 1947 claimed that an object 'purporting to be a flying disc' had been recovered near Roswell. The disc was 'hexagonal in shape' and 'suspended from a balloon by a cable', according to the memo, marked as 'Urgent', to the FBI director. Autopsy: A dead alien is allegedly examined following the landing at Roswell. The photo was later shown to be a hoax The memo noted that the disc resembled a weather balloon - but claimed that a telephone conversation between the Air Force and the field office 'had not [word censored] borne out this belief'. The disc and balloon were being transported to Wright Field for further inspection, the memo noted. It added that the information was being flagged up because of 'national interest' in the episode, and noting that both NBC and the AP were set to break the story that day. www.dailymail.co.uk/news/article-1375493/FBI-file-shows-police-army-officers-saw-UFO-explode-Utah.html
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Post by sandi66 on Apr 11, 2011 13:01:51 GMT -5
FBI files reveal exploding UFO, aliens near Roswell permalink email story to a friend print version Published: 11 April, 2011, 19:49 FBI releases old UFO files. TAGS: Space, SciTech, History, USA Secret FBI files have been released that detail how US officials witnessed a UFO explode over Utah and aliens landing near Roswell, New Mexico. A document recently declassified from 1949 explained how three men on separate patrols miles from one another all witnessed a UFO explode over the mountains of Salt Lake City, Utah. Their experiences were reported and directed to then FBI Director Edgar Hoover in a memo titled “Flying Discs.” According to the memo, the three men were a policeman, a highway patrolman and an army guard. Each reported to have seen a “silver colored object high up approaching the mountains at Sardine Canyon” which then “appeared to explode in a rash of fire.” The memo further explained “several residents [reported] seeing what appeared to be two aerial explosions, followed by falling object.” The memo is one of thousands of formerly classified files which have bow been made public in a new online resource called The Vault, an online database run by the FBI. Another document in The Vault is a statement from special agent Guy Hottel which described events which seem to present evidence in support of the Roswell alien theories. In a memo Hottel explained three flying saucers had been recovered in New Mexico, he described them as “being circular in shape with raised centers, approximately 50 feet in diameter." He said there was life found inside the crafts, resembling humans. "Each one was occupied by three bodies of human shape but only 3 feet tall," he wrote.“[The bodies were] dressed in a metallic cloth of a very fine texture. Each body was bandaged in a manner similar to the blackout suits used by speed flyers and test pilots." The release of the files is reigniting an old and ongoing debate surrounding alien life in Roswell. Alien theorists who believe the US government covered-up alien landings in New Mexico have now gained new confidence. Roswell became famous following reports that a UFO had crashed in the desert in 1947 and that witnesses saw the bodies of aliens being recovered by the US military. rt.com/usa/news/fbi-ufo-aliens-roswell/
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Post by sandi66 on Apr 12, 2011 13:44:42 GMT -5
Bullion Bank Trading – A Closely Guarded Secret * Saturday, April 8, 2011 I have written extensively in the past about how the bullion banking members of the London Bullion Market Association (LBMA) trade unbelievable amounts of unallocated gold and silver on a daily basis. See for example: “LBMA OTC Market – Alchemists Turn Paper into Gold.” I also managed to introduce spoken testimony on the subject at the CFTC March 25, 2010, hearing on the Metals Markets: “LBMA OTC gold market cited as a Ponzi Scheme in CFTC hearing.” The latest LBMA clearing statistics (Feb 2011) reveal that the LBMA bullion bank members traded a total average net daily gold volume of 18.1 million ounces with a value of $24.8 billion. Some analysts have in the past estimated that the gross volume is likely to be three to four times the net volume giving potentially over 70 million ounces of gross gold trading worth $100 billion. This would be equivalent to trading all the gold that is mined in world each year each and every day. Clearly the majority of this trading is unbacked by physical gold. The bullion banks only make a ledger entry for gold sold or bought and as long as the client never asks for delivery the bank never has to have the gold. I have through my studies indicated that probably 45 ounces of gold have been sold for each one that exists. The bullion banking business is very opaque but it struck me that if the members of the LBMA are collectively trading a net value of $6.2 trillion annually this should be laid out and explained in the bullion banks’ annual reports. There are over 60 bullion banks who are members of the LBMA. Based on an 80/20 rule we can estimate that 20% of the banks conduct 80% of the business; that is to say that about 12 banks should collectively trade an annual amount of $5 trillion or $400 billion annually each. If gross volumes were to be reported (which they should be by accounting practices) then each bank would be reporting revenue based on $1.2 trillion of gross annual trading. I turned to analyzing the bullion banks’ annual reports. I limited the review to the four of the five hundred pound gorillas on the block namely JPMorgan Chase, HSBC, Deutsch Bank, and Scotia Mocatta. The latter three banks are all the only members of the London Silver Fix and three of the five members of the London Gold Fix. In analyzing the annual reports of the major bullion banks I made some astonishing discoveries. For most of these banks their bullion banking business is entirely hidden from the accounting. In the text there is almost no mention of gold, silver, bullion or precious metals. In fact it is impossible to know that these banks are even in the bullion banking business let alone know anything about their trades, assets and liabilities. The only exception is Scotia Mocatta (see below). The bullion banking business is completely obscured from view in the annual reports. We know from our discussion that there should be revenues of $1.2 trillion annually be reported which would make the activity the largest activity in any of the banks, yet instead it is entirely missing! How could such trading and references to it be almost entirely absent from these reports? I analyzed the JPMorgan 2008 annual report. It is 240 pages long. I searched it for the word “silver”. There are only two mentions of the word “silver:” “There is no silver bullet: We believe that all of these actions, if implemented properly and executed – in a timely way and in conjunction with the U.S. fiscal stimulus program – could have an enormous positive impact.” Clearly nothing to do with bullion and: “Scott A. Silverstein, President and COO, The Topps Company Inc.” You would not believe that this is a bullion bank when there is no reference to silver bullion. There is also no reference whatsoever to its custodial activities of the i-shares ETF SLV. For the word “gold” most of the references are for “Goldman Sachs” the only reference to the commodity is: “The Firm uses forward contracts to manage the overall price risk associated with the gold inventory in its commodities portfolio. As a result of gold price fluctuations, the fair value of the gold inventory changes. Gains or losses on the derivative instruments that are linked to gold inventory are expected to substantially offset this unrealized appreciation or depreciation. Forward contracts used for the Firm’s gold inventory risk management activities are arrangements to deliver gold in the future.” So they talk very briefly about “gold inventory” and hedging it but they don’t mention any silver inventory at all. This is very suspicious because we know from the Treasury department OCC derivatives report that they had over $9 billion in silver derivatives in that year. Why aren’t these mentioned? Does this mean they have a very small silver inventory if only a gold inventory is mentioned? If they don’t have any silver worth mentioning then what are they hedging with $9 billion of silver derivatives? How can they be a member of the LBMA and peddling unallocated accounts as a member of the London Fix and not mention any silver bullion? Also the gold that is mentioned is part of a “commodity portfolio” and not anything to do with bullion banking. Is their entire bullion banking business “off balance sheet”? If so, why? The term “precious metals” appears nowhere in the report. The word “bullion” does not appear anywhere in the report. Very strange for a “bullion bank.” This is highly irregular for the annual report of the biggest bullion bank! HSBC 2008 annual report The word “silver” only appears twice: “Awarded the Silver Bauhinia Star by the Hong Kong Government in 2008” which is unrelated to silver as a metal. The term “precious metals” only occurs twice. One occurrence is in a list of the broad products offered by the bank and the other in the following: “Revenues from emerging markets trading and precious metals trading also rose as a result of ongoing market volatility and increased transaction volumes as prices of gold and platinum rose during 2008.” The word “gold” occurs in references to “Goldman Sachs” but only once referring to the metal which is the same quote as above. The word “bullion” occurs only once where it is under the assets of the bank as ‘Bullion .......................................................... 6,095M$ (2008) 9,244 M$ (2007)” The liabilities of the bank are not broken down into the same level of detail, so it is impossible to know what the net liabilities for bullion are. It is interesting to note that if they are trading approximately $400 billion of net trades annually with 6 $billion of assets then the ratio of net traded gold to actually in vault gold is 50:1. Reading the HSBC report it would not be possible to determine that they are a major bullion market player. The keywords of gold, silver, bullion and precious metals are hardly mentioned in 472 pages! You would also not know that they are members of both the London Gold Fix and the London Silver Fix. There is also no way to know they are custodians of the i-shares GLD ETF, the biggest gold ETF in the world! Deutsche Bank 2009 The 2008 DB report is no longer on line, so I analyzed 2009.The report is 436 pages. The word “Bullion” does not occur anywhere, again very strange for a bullion bank and a member of the “London Fixes.” The word “silver” does not occur anywhere. The word “gold” occurs twice in references to “Goldman Sachs” yet it does not occur in reference to the metal. “Precious metal” occurs in a glossary description of “futures” and under OTC derivative contracts held. It shows 101.376 Billion euros of precious metal derivatives which would be equivalent in value to twice the annual global production of gold! Nowhere in the report could one discern that Deutsche Bank is a bullion banker. Nowhere does it mention any business related to the buying and selling of actual physical metal yet it reports holding a massive precious metals derivatives position. Scotia Bank 2008 In the Scotia Bank 2008 Annual report there is an asset table which is shown in Figure 1 and liabilities shown in Figure 2. In 2008 the report shows Scotia Mocatta had liabilities for gold and silver certificates of $5.619 billion and Precious Metal assets of $2.436 billion. In other words Scotia Mocatta was naked short $3.18 billion of precious metals by their own accounting! The price of precious metals would be very different if this $3.2 billion of customer money paid to them for buying precious metals had actually gone to making real purchases of physical metal. Note they were $1.94 billion net short precious metals in 2007 also. Imagine what the losses could have been if the precious metals had not been suppressed and hammered down by JPMorgan and HSBC in 2008, as alleged by at least 25 class action lawsuits and supported by statements by Bart Chilton, a CFTC commisioner. Figure 1 Figure 2 Scotia Bank 2009 By the end of 2009 Scotia Mocatta was net long $1.7 billion in precious metals. Now that is interesting. How convenient that prices had been heavily suppressed in 2008 when they were net short and they managed to cover their short position and accumulate a net long position. Note, however, that the “assets” do not use the same language as in the liabilities. The liabilities line item is “gold and silver certificates and bullion” while the asset line item is “precious metals”. We don’t know what those assets are because it does not specify “bullion” as is the case for the liabilities. These could be forward contracts or call options or OTC derivatives or some other paper promise for future delivery which is being booked as a precious metal asset. So although they could be net long based on valuation of paper assets there is still the possibility Scotia Bank is net short in terms of bullion. But they were definitely net short of bullion in 2007 and 2008. There have been many people who have challenged or dismissed out of hand the existence of an organized scheme to suppress precious metals as long and expounded and documented for over a decade by the Gold Anti-Trust Action Committee (GATA). There is without a question of doubt something highly irregular and criminal occurring when a multi-trillion dollar business is not reported in Annual reports of the major bullion banks conducting the business. Furthermore there is not even any disclosure that these banks are even in the bullion trading banking business, let alone the principle operators of it by being members of the London Fix and being custodians of the world’s largest bullion funds! If investors think they own large amounts of bullion in “unallocated” accounts they should take a very close look at what has been presented here and try to work out where exactly the underlying assets that back their investment might be hidden. The inescapable conclusion is that the unallocated accounts are unbacked or backed with no more than 2% of the bullion required. The gigantic revenues that the precious metals market generates for the banks seems to be been omitted from the Annual reports entirely. Anyone with an unallocated bullion position would be well advised to take delivery, or you can hope that there is a very reasonable explanation for all of this. www.resourceinvestor.com/News/2011/4/Pages/Bullion-Bank-Trading--A-Closely-Guarded-Secret.aspx ty joye
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Post by sandi66 on Apr 13, 2011 5:06:25 GMT -5
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Post by sandi66 on Apr 14, 2011 6:29:49 GMT -5
Singapore Allows Further Currency Gains as GDP Grows Twice Estimated Pace By Shamim Adam - Apr 13, 2011 9:22 PM ET Singapore’s economy grew more than twice the pace economists estimated in the first quarter and the central bank said it would allow further gains in the currency in the third tightening of monetary policy in a year. The Singapore dollar jumped to a record after a trade ministry report showed gross domestic product rose at an annual rate of 23.5 percent last quarter from the previous three months. That’s up from 3.9 percent in the fourth quarter, and compares with the 11.4 percent median estimate in a Bloomberg News survey of 14 economists. The central bank said separately it will allow the Singapore dollar to appreciate more. The island’s dollar has climbed 10 percent over the past year, the best performer in Asia outside Japan, as policy makers used the currency as their main tool to fight inflation. Earnings at Singapore companies including lender DBS Group Holdings Ltd. (DBS) and property developer City Developments Ltd. (CIT) have surged after the economy’s expansion boosted demand for loans and spurred home prices to a record. “We were taken aback by the strength of the economy in the first quarter,” said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch. “Still, the central bank’s tightening is less aggressive than in the past” and will result in a more modest appreciation in the currency than the past two decisions, reflecting the uncertainties in the global economy, he said. Currency Jumps The Singapore dollar jumped to S$1.2496 a dollar after the central bank’s semi-annual policy statement. It traded at S$1.2505 as of 8:59 a.m. local time. The Monetary Authority of Singapore revalued the currency in April 2010 and said in October it would steepen and widen the trading band while seeking a modest and gradual appreciation. The central bank guides the Singapore dollar against a basket of currencies within an undisclosed band. “Economic activity is likely to be sustained at a high level for the rest of the year, even as the underlying growth momentum moderates,” the central bank said. Today’s policy “adjustment takes into account the tighter policy stance adopted in April and October last year, which will continue to have a restraining effect on the economy and prices,” it said. The central bank will re-center the currency’s band upwards, while keeping it below the prevailing level of the nominal effective exchange rate, it said today. There will be no change to the slope or width of the band, it said. Commodity Prices Global central banks are raising interest rates, removing excess cash from their financial systems or allowing their currencies to appreciate as rising oil and commodity prices fuel inflation. “They have a good feel on the strength of the economy that could feed into the inflation scenario,” said Saktiandi Supaat, head of foreign-exchange research in Singapore at Malayan Banking Bhd. (MAY) “There’s still upside room for the Singapore dollar but this time, they made known their intent to restrain any excessive move.” Half of the 20 analysts surveyed by Bloomberg predicted the central bank would re-center the band in which the dollar is allowed to trade. Four forecast faster gains in the currency to be achieved through a steepening of the band, while the remaining six foresaw no change from the stance adopted at the last policy meeting. The next review is in October. Policy Tool Unlike most central banks that use interest rates to control inflation, Singapore conducts monetary policy through its exchange rate, adjusting the pace of appreciation or depreciation against an undisclosed band of currencies. A steeper slope allows faster appreciation over time, while lifting the band’s midpoint amounts to a one-off revaluation. Singapore’s consumer prices gained 5 percent or more in the first two months of 2011. The central bank said today inflation may moderate to about 3 percent by the fourth quarter and is expected to reach the upper end of its 3 percent-to-4 percent forecast range this year. Economic growth this year may be at the upper end of the government’s 4 percent-to-6 percent forecast range, the central bank said. GDP increased 8.5 percent in the first quarter from a year earlier, compared with the median estimate for a 5.8 percent gain in the Bloomberg News survey. Elections Due The government is distributing cash to its citizens and giving out utility rebates to limit the effect of inflation ahead of general elections that must be held by February 2012. Prime Minister Lee Hsien Loong’s ruling People’s Action Party has unveiled new candidates to compete in the upcoming polls. Policy makers introduced more measures in January to curb property speculation after private home prices and transactions reached records. Attempts to rein in prices had started in 2009. Singapore, located at the southern end of the 600-mile (965-kilometer) Malacca Strait, has remained vulnerable to fluctuations in overseas demand for manufactured goods even after the government boosted financial services and tourism. Non-oil shipments may increase 8 percent to 10 percent in 2011, after growing 22.8 percent last year, according to government predictions. Manufacturing, which accounts for about a quarter of the economy, rose 13.9 percent from a year earlier last quarter, after gaining 25.5 percent in the three months through December. Tourists are arriving in Singapore in record numbers, benefiting companies from Singapore Airlines Ltd. (SIA) to hotel operator Shangri-La Asia Ltd. (69), as the island plays host to more conventions and exhibitions. The city state’s two casinos run by Genting Singapore Plc (GENS) and Las Vegas Sands Corp. (LVS) are also luring gamblers from around the region. The island’s services industry grew 7.2 percent last quarter from a year earlier, after climbing 8.8 percent in the previous three months. The construction industry grew 2.6 percent, compared with a 2 percent decline in the fourth quarter. www.bloomberg.com/news/2011-04-14/singapore-allows-faster-currency-gains-as-gdp-grows-twice-estimated-pace.html
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Post by sandi66 on Apr 14, 2011 6:34:15 GMT -5
G-7 Boosting Currency Reserves as UBS Sees Intervention Revival By Simon Kennedy - Apr 13, 2011 7:35 PM ET Group of Seven governments are boosting their currency reserves as strategists at UBS AG (UBSN) and Bank of New York Mellon Corp. (BK) detect the potential for more intervention to quell exchange-rate swings in coming years. G-7 finance ministers and central bankers meet in Washington tonight for the first time since uniting to sell yen on March 18, after avoiding such action for more than a decade. They meet as Mansoor Mohi-uddin, UBS’s chief currency strategist, suggests the growing risk of currency sell-offs in the next decade means G-7 nations may increase reserves from about $200 billion in the euro area and $50 billion each in the U.S., U.K. and Canada. British and Canadian officials have signaled they will raise their stockpiles to meet commitments to the International Monetary Fund. Japan’s now top $1 trillion. “The more currency volatility we experience, the more policy makers will seek the greater degree of comfort that comes from a higher level of foreign-exchange reserves,” Singapore- based Mohi-uddin said in a telephone interview. He calls greater swings in currencies and interventions “mega-trends” for investors to monitor. The G-7 is composed of the U.S., Japan, Germany, France, U.K., Canada and Italy. Its finance chiefs, including U.S. Treasury Secretary Timothy F. Geithner and European Central Bank President Jean-Claude Trichet, meet about 5:30 p.m. today. They may keep to their recent practice of not making a statement, given that the G-20 meets tomorrow and is now deemed the main forum for international economic policy. Soaring Yen Four weeks ago, the G-7 agreed to counter a soaring yen after its rise to the highest level against the dollar since World War II threatened Japan’s ability to recover from the country’s record earthquake on March 11. The intervention, the term used when governments buy or sell their currencies, was the first by the G-7 since its September 2000 effort to buoy the euro and suggested it still carries clout at a time when some investors question the G-20’s ability to find common ground. The effort worked, with the yen falling 10 percent versus the dollar from its peak of 76.25 on March 17. “Concerted interventions are an indispensable means of safeguarding our international monetary system,” French President Nicolas Sarkozy, the G-20 chair this year, said March 31, adding that they are an “instrument of the last resort.” Policy Reversal Any newfound willingness to enter exchange markets would mark a reversal from the G-7’s practice of the last decade, said Simon Derrick, chief currency strategist at BNY Mellon in London. Until the 2000’s, interventions were more regular, with U.S. Treasury data showing that in 1995 alone it intervened on eight separate days. That changed, with policy makers spending much of the past decade speaking of the need for exchange rates to “reflect economic fundamentals.” Derrick now senses a shift, citing an October 2008 occasion when G-7 policy makers also hinted they may tackle a soaring yen, and how the group didn’t criticize Japan’s solo intervention last September. Among other rich nations, Switzerland has also sought to restrain its franc. “We’ve been quietly and slowly moving back to a world where a more activist approach to FX markets could become a little more of the norm,” said Derrick. Ammunition Shortage That may require greater ammunition, given the size of the $4 trillion-a-day foreign-exchange market. That’s the lesson learnt by emerging markets, which followed the Asian financial crisis of the mid-1990s by boosting their reserves to protect against investors dumping their currencies. Mohi-uddin at UBS, the second-largest foreign-exchange trader, calculates that global reserves now total more than $9 trillion, up from $2 trillion in 2000 and $1 trillion in 1990, with China’s alone standing at about $3 trillion. U.K. Chancellor of the Exchequer George Osborne said March 23 that the U.K. has decided to “rebuild the U.K.’s foreign currency reserves, which are at a historically low level,” while citing the need to meet higher IMF pledges as the main reason. His plan will involve 6 billion pounds ($9.8 billion) being added this year and a similar amount over each of the subsequent three years, he said. Canada’s March 22 budget, which failed to pass before the country’s election, also featured an intention to increase its reserves by about $10 billion, with the IMF also cited as a rationale. Japan’s total has expanded about 18 percent since January 2007 and in October reached $1.06 trillion, the most since records began in April 2000. Market Size Even if they bolster reserves, G-7 officials may remain wary of intervening because the size of the market has more than doubled since the late 1990s. While he acknowledges some are increasing reserves to meet IMF pledges, Steve Barrow, a currency strategist at Standard Charted Bank Plc, said there won’t be a return to the practice of repeat interventions and currency accords. The recent yen campaign was a reaction to a natural disaster and increased interventions would conflict with the G- 7’s free-market ideology and calls for China to let the yuan gain faster, he said. “It looks a bit unfair to say you need a more flexible exchange rate in China and then intervene like there’s no tomorrow in your own currency,” said Barrow. ‘Little Monster’ Rather than stabilizing markets, last month’s yen sales also spurred instability, David Bloom, global head of currency strategy at HSBC Holdings Plc (HSBA), told Bloomberg Television on April 5. That’s because investors can now sell the yen in the knowledge that the G-7 will likely offset any renewed rise, he said. “They’ve created a little monster here,” said Bloom. “There’s nothing more a trader likes than a free trade. If my yen position goes wrong the G-7 will be there to protect me and if it goes right, happy days.” As the G-20 is now the forum for coordinating global policy, the G-7’s March intervention may also have made some in the broader group “feel that they are not equal partners,” said Jim O’Neill, London-based chairman of Goldman Sachs Asset Management. The G-20 includes emerging markets such as China and India. Officials may be moving to placate such complaints, with German Finance Minister Wolfgang Schaeuble telling reporters on March 29 that exchange-rate discussions will migrate toward the G-20 from the G-7 by the end of the year. Given the unwieldy nature of the larger group, one option is for the topic to be overseen by a sub-group consisting of the G-7, Brazil, Russia, India and China. “Needless to say, other G-20 countries are not too pleased about these possibilities,” said O’Neill www.bloomberg.com/news/2011-04-13/g-7-nations-boosting-currency-reserves-as-ubs-senses-intervention-revival.html
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Post by sandi66 on Apr 14, 2011 6:39:22 GMT -5
Levin Says Goldman Misled Congress <script src="http://player.ooyala.com/player.js?height=400&width=640&embedCode=dlOTVlMjqp-MfjbaMBk1MlDPFMOwVI7s&deepLinkEmbedCode=dlOTVlMjqp-MfjbaMBk1MlDPFMOwVI7s&autoplay=1"></script> April 14 (Bloomberg) -- Bloomberg's Mark Barton and Lizzie O'Leary report on the findings of a two-year U.S. Senate inquiry into the causes of the financial crisis which was released yesterday. Senator Carl Levin, the chairman of the panel that conducted the investigation, said Goldman Sachs Group Inc. misled clients and Congress about the bank’s bets on securities tied to the housing market. (Source: Bloomberg) www.bloomberg.com/video/68664792/************ Goldman Sachs Misled Congress After Duping Clients: Levin By Robert Schmidt, Clea Benson and Phil Mattingly - Apr 14, 2011 12:00 AM ET Goldman Sachs Group Inc. (GS) misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said. Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value. The Michigan Democrat also said federal prosecutors should review whether to bring perjury charges against Goldman Sachs Chief Executive Officer Lloyd Blankfein and other current and former employees who testified in Congress last year. Levin said they denied under oath that Goldman Sachs took a financial position against the mortgage market solely for its own profit, statements the senator said were untrue. “In my judgment, Goldman clearly misled their clients and they misled the Congress,” Levin said at a press briefing yesterday where he and Senator Tom Coburn, an Oklahoma Republican, discussed the 640-page report from the Permanent Subcommittee on Investigations. Goldman and Deutsche Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market, according to the report. The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG (DB) of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value. In a statement, New York-based Goldman Sachs denied that it had misled anyone about its activities. “The testimony we gave was truthful and accurate and this is confirmed by the subcommittee’s own report,” Goldman Sachs spokesman Lucas van Praag said. “The report references testimony from Goldman Sachs witnesses who repeatedly and consistently acknowledged that we were intermittently net short during 2007. We did not have a massive net short position because our short positions were largely offset by our long positions, and our financial results clearly demonstrate this point,” van Praag said. ‘Divergent Views’ In a statement, Deutsche Bank spokeswoman Michele Allison said, “As the PSI report correctly states, there were divergent views within the bank about the U.S. housing market. Moreover, the bank’s views were fully communicated to the market through research reports, industry events, trading desk commentary and press coverage. Despite the bearish views held by some, Deutsche Bank was long the housing market and endured significant losses.” The panel’s report also examined the role of credit-rating firms in the meltdown, lax oversight by Washington regulators and the drop in lending standards that fueled the mortgage bubble and ultimately caused hundreds of bank failures. The subcommittee’s findings show “without a doubt the lack of ethics in some of our financial institutions who embraced known conflicts of interest to accomplish wealth for themselves, not caring about the outcome for their customers,” said Coburn. “When that happens, no country can survive and neither can their financial institutions.” Final Assessment The report is likely Washington’s final official assessment of the turmoil beginning in 2007 that froze credit markets, took down investment banks Bear Stearns Cos. and Lehman Brothers Holdings Inc. (LEHMQ), sent housing finance giants Fannie Mae and Freddie Mac into government conservatorship and caused the worst economic collapse in the U.S. since the Great Depression. The $700 billion taxpayer bailout that followed in October 2008 upended the relationship between Wall Street and the federal government, turning CEOs like Blankfein and Lehman’s Richard Fuld into political punching bags. Populist anger at high-paid bank leaders helped fuel the passage of last year’s Dodd-Frank law, which set out the biggest changes to financial oversight since the 1930s. The Senate report comes less than a year after Goldman Sachs paid $550 million to resolve SEC claims that it failed to disclose that hedge fund Paulson & Co was betting against, and influenced the selection of, CDOs the company was packaging and selling. Goldman Sachs, in its settlement with the SEC, acknowledged that marketing materials for the 2007 CDO deal contained “incomplete information.” Documents and Footnotes The Senate subcommittee’s bipartisan report, buttressed by 2,800 footnotes and thousands of internal documents from Goldman Sachs and other firms, may have more impact than previous investigations into the crisis. It’s an open question whether the Justice Department and the SEC will review its findings. Levin does not have the power to refer the allegations to federal authorities on his own. The subcommittee has a formal process for making referrals, which requires Levin to get the support of Coburn before making an official referral. Levin is going to recommend that the subcommittee make referrals, though he has not done it yet, staff members said. The Levin report will be examined by policy makers including the SEC and Commodity Futures Trading Commission, which are writing hundreds of Dodd-Frank rules governing derivatives, mortgage securities and proprietary trading. Coburn, the senior Republican on the subcommittee, said the review carries more heft than the three separate reports issued earlier this year by a politically divided Financial Crisis Inquiry Commission. Goldman Practices “We don’t need commissions to do our job and this proves it,” Coburn said. The FCIC “spent $8 million and 15 months” on its inquiry and “didn’t report anything of significance.” The panel said Goldman Sachs relied on “abusive” sales practices and was rife with conflicts of interest that encouraged putting profits ahead of clients. “While we disagree with many of the conclusions of the report, we take seriously the issues explored by the subcommittee,” van Praag said. Van Praag pointed to the firm’s recent examination of its business practices that prompted it to make “significant changes that will strengthen relationships with clients, improve transparency and disclosure and enhance standards for the review, approval and suitability of complex instruments.” In the case of one CDO, Hudson Mezzanine Funding 2006-1, Goldman Sachs told investors its interests were “aligned” with theirs while the firm held 100 percent of the short side, according to the report. Gemstone CDO The report detailed a $1.1 billion Deutsche Bank CDO known as Gemstone VII, which was backed with subprime loans that its then-top trader, Greg Lippmann, referred to as “crap.” The head of the bank’s CDO group, Michael Lamont, said in an e-mail cited in the report that he would try to sell the CDO “before the market falls off a cliff.” On lending, the panel alleges that executives at failed thrift Washington Mutual Inc. (WAMUQ) dumped its bad loans on clients while misleading them about their value. “WaMu selected delinquency-prone loans for sale in order to move risk from the banks’ books to the investors in WaMu securities,” Levin said. Compounding that problem, the subcommittee found, was an apparently cozy relationship between WaMu and its regulator, the Office of Thrift Supervision. WaMu E-Mail The report cited a July 2008 e-mail from then-OTS director John Reich to WaMu CEO Kerry Killinger, in which Reich said the regulator would issue a memorandum of understanding regarding the bank’s problems. “If someone were looking over our shoulders, they would probably be surprised we don’t already have one in place,” Reich wrote, apologizing twice for communicating the decision in an e-mail. Under the Dodd-Frank regulatory overhaul, the OTS will be folded into other regulators in July. “The head of OTS knew his agency had been providing preferential treatment to the bank,” Levin said. “The OTS was abolished by Dodd-Frank, and for good reasons.” At yesterday’s press briefing Levin called credit rating firms Moody’s Investors Service and Standard & Poor’s “a key cause to the crisis.” Triple-A Ratings The raters, which the report says stamped the highest Triple-A grades on securities they knew were souring, were hamstrung by a system that has a built-in conflict of interest, Levin said. The Wall Street banks pay the firms for their ratings, leading to competitive pressure between the firms that may have pushed them to more readily place a high rating on a product. The panel released nine “findings of fact” on the failures of the credit raters, including inadequate resources, inaccurate rating models and a failure to reevaluate old ratings when they recognized they might be inaccurate. The raters also “shocked the financial markets” with mass downgrades of thousands of residential mortgage-backed securities and CDO ratings, according to the report. “Perhaps more than any other single event, the sudden mass downgrades of RMBS and CDO ratings were the immediate trigger for the financial crisis,” the report said. www.bloomberg.com/news/2011-04-14/goldman-sachs-misled-congress-after-duping-clients-over-cdos-levin-says.html
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Post by sandi66 on Apr 14, 2011 15:40:01 GMT -5
The Perfidy Of Government How We Lost Our Economy, The Constitution And Our Civil Liberties By Paul Craig Roberts 3-1-11 This essay is about three recent books that explain how we lost our economy, the Constitution and our civil liberties, and how peace lost out to war. Matt Taibbi is the best--certainly the most entertaining--financial/political reporter in the country. There is no better book than Griftopia (2010) to which to turn to understand how stupidity, greed, and criminality, spread evenly among policymakers and Wall Street, created the financial crisis that has left Americans overburdened with both private and public debt. Taibbi walks the reader through the fraudulent financial instruments that littered the American, British, and European financial communities with toxic waste. He has figured it all out, and what in other hands might be an arcane account for MBAs is in Taibbi's hands a highly readable and entertaining story. For the first 65 pages Taibbi entertains the reader with the inability of the public and politicians to focus on any reality. The financial story begins on page 65 with Fed chairman Alan Greenspan undermining the Glass-Steagall Act leading to its repeal by three political stooges, Gramm-Leach-Bliley. This set the stage for the banksters to leverage debt upon debt until the house of cards collapsed. When Brooksley Born, head of the Commodity Futures Trading Commission, attempted to do her regulatory job and regulate derivatives, the Federal Reserve, Treasury, and Securities and Exchange Commission got her bounced out of office. To make certain that no other regulator could protect the financial system and its participants from what was coming, Congress deregulated the derivatives markets by passing the Commodity Futures Modernization Act. As an Ayn Randian mentality of a self-regulating private sector crowded out prudence, the media cheered. Taibbi captures the era in a sentence: "In was in the immediate wake of all these historically disastrous moves--printing 1.7 trillion new dollars in the middle of a massive stock bubble, dismantling the Glass-Steagall Act, deregulating the derivatives market, blowing off his regulatory authority in the middle of an era of rampant fraud--that Greenspan was upheld by the mainstream financial and political press as a hero of almost Caesarian nature. In February 1999, Time magazine put him on the cover." Mortgage securitization allows lenders such as banks to issue mortgages that can be sold to third parties. Instead of making money from the interest from mortgages in its portfolio, the bank issues mortgages for a fee and sells the mortgages. The mortgages are then combined with mortgages sold by other lenders and resold to investors. This development resulted in lenders being less interested in the credit-worthiness of borrowers. In order to assure investors about credit-worthiness and to appeal to risk-tolerant hedge funds, the next development was to take a pool of mortgages of varying credit-worthiness and to organize them into three tranches. The mortgages were separated into AAA, B grade, and high-risk stuff. The triple A tranche could be sold to pension funds and institutional investors. Hedge funds would take the high-risk tranche for the high-interest rate that they offered, intending to get rid of the mortgages before they had time to go bad. The middle tranche was the one hard to sell. The interest rate on the B grade tranche was not high enough to appeal to hedge funds, and pension funds were restricted to investment grade. So what did the banks do? Well, they lumped together all the B grade tranches and started the process all over. The best of the lot were turned into--you guessed it--AAA, then came the B grade, and then the worst of the lot became the third tranche. And then the process was repeated. This was bad enough, but even worse was happening. Many of the triple A and B grade mortgages had that rating only because of fraudulent credit scores and rating agencies assigning investment grade ratings to lower grade mortgages. Everyone was focused on short-term profits, from the lenders who churned out mortgages for fees to hedge funds that had no intention of holding the high-risk tranches beyond the short-run. You can see how toxic waste was spread throughout the financial system. Then it became possible to "insure" the AAA mortgages (many of which were not AAA). Once this happened, financial institutions that were required to maintain reserves against deposits or to capitalize obligations, such as insurance policies, could now substitute higher-paying mortgage derivatives for U.S. Treasury notes and still meet their reserve requirements for a ready cash reserve. Treasury notes are so liquid that they are considered the equivalent of cash, and insured AAA securitized mortgages acquired similar status. AIG became the big provider of "insurance" in an operation run by Joe Cassano. Cassano's "insurance" product is called a credit default swap. It is not insurance, because AIG did not set aside capital to pay any claims. And claims there would be. Not only were the AAA mortgages that were being insured littered with toxic waste, investment banks and hedge funds could purchase swaps against mortgages that they did not even own. As Taibbi puts it, people were gambling in a casino in which gamblers did not have to cover their bets or own the financial instruments that they were insuring. While Cassano was collecting fees for bets that he could not cover, Win Neuger on the other side of AIG was lending the insurance giant's long-term portfolio of sound investments to short-sellers for a fee. Short-selling works like this: A short-seller thinks a company's stock price is going to fall in value. He borrows the stock from AIG by putting up collateral equal to its market price the day the stock is borrowed plus a small fee, sells the stock, pockets the money and waits for the stock to fall. If his hunch or inside information is correct, and the stock falls in value, he buys the stock and returns it to AIG, pocketing the difference in the two prices. Normally, people who lend stock to short-sellers are content with the fee and with the interest on the collateral (cash) invested in safe instruments like Treasury bills. The lender of the stock cannot take any risk with the cash collateral, because the cash must be returned to the short-seller when he returns the borrowed stock. Once, however, toxic waste got AAA ratings plus insurance from Cassano, higher-paying insured investment grade toxic waste could displace of US Treasuries as a place for Neuger to hold the short-sellers' collateral. You can see the untenable position into which Cassano and Neuger put AIG. Enter Goldman Sachs as a buyer of swaps from Cassano and a borrower of stocks from Neuger. Once the real estate bubble that the crazed Federal Reserve had caused popped, all the fraud that had been disguised by rising real estate prices appeared in its naked glory. AIG couldn't cover Cassano's swaps, and it could not return the collateral to short-sellers that Neuger had invested, unknowingly, in toxic waste. This was the origin of the TARP bailout, which was perceived by Goldman Sachs (whose former executives, as Taibbi relates, controlled the U.S. Treasury, financial regulatory agencies, and the Federal Reserve) as an opportunity not merely to have U.S. taxpayers make good on its exploitation of AIG, but also to fund with free capital supplied by hapless taxpayers more money-making opportunities for "banks too big to fail." As Taibbi shows, Goldman Sachs had yet more ruin to bring to Americans. Goldman Sachs managed to get the position limits that regulation imposed on speculators in order to prevent speculation from taking over commodity markets (for example, grains, metals, and oil) secretly repealed. This allowed Goldman Sachs to create a new product, index speculation, which brought hundreds of billions into commodities markets and drove up the price of gasoline in 2008 to $4.50 per gallon despite the fact that there was no change in supply or consumer demand. It was entirely a profit rip-off from speculation in oil futures contracts. From here on Taibbi's book really rolls. If the U.S. had a media worthy of the name, instead of mere shills for private oligarchs and propagandists for government, Matt Taibbi would be the editor of an independent Wall Street Journal with a regiment of investigative reporters. Then Americans would have a prospect of reclaiming their country and their economy. Charlie Savage is a summa cum laude graduate of Harvard with a Master's degree in law from Yale. As a Boston Globe reporter, he documented the Bush-Cheney-Yoo-Bybee-et.al. destruction of U.S. civil liberties and the constitutional separation of powers as they occurred during the reign of the 43rd president of the United States. Savage draws on this disillusioning experience to give us another important book, Takeover (2007). Savage documents completely how American civil liberty was destroyed by Dick Cheney and the traitors he was able to place in key positions in the Bush regime. President George Bush, an inconsequential person, gloried in the increase in his power that the Cheney forces and the Federalist Society achieved by a fabricated doctrine of "inherent power" that allegedly resides in the presidency. This power, its tyrannical advocates assert, places the President above Congress, the Judiciary, and the law itself during times of war. The advocates of this doctrine used war to advance their claims, but actually believe that the President, as long as he is a Republican, is, in fact, a Caesar who is unaccountable. Savage is a clear, masterful writer. He shows that the Bush/Cheney traitors have left Americans with an executive branch that is unaccountable to statutory law, treaties, international law such as the Geneva Conventions, and Congress. What one reads in Takeover is not opinion but documented fact. There is no better way for gullible flag-waving Americans to sober up than to readTakeover. Anyone who has any remaining faith in the U.S. government after reading the Taibbi and Savage books will lose it completely when they read James W. Douglass' JFK And The Unspeakable (2008). Douglass' book is more gripping than the best thriller or murder mystery; yet, it is based on hard evidence documented in 100 pages of footnotes. Douglass presents the solution to the greatest murder mystery of the 20th century--that of President John F. Kennedy. Douglass is not the first to take on this task. Millions of people in the U.S. and abroad have been convinced by years of investigation by many competent researchers that President Kennedy was murdered by his own government. What differentiates Douglass book is that he proves it several times over with official government documents that have been declassified in the years that have passed, with personal and careful interviews with eye-witnesses whose testimony was excluded from the Warren Commission's report and whose mouths where shut by threats that silenced them into old age when they had nothing left to lose, and with circumstantial evidence that is so overwhelming that it could not be a mere coincidence. In brief, JFK who began political life as a cold warrior was brought face to face with reality in the Cuban missile crisis when the U.S. military insisted that the crisis be resolved by military attack on Cuba and a first-strike nuclear attack on the Soviet Union. Kennedy found his intelligence and humanity isolated within his own government and turned via back channels to Soviet leader Khrushchev for help. Khrushchev sensed sincerity in JFK's plea and withdrew the Soviet nuclear missiles from Cuba in exchange for Kennedy's promise that the US would not invade Cuba. Kennedy added the promise to remove U.S. strategic missiles from Turkey in six months but not as a public part of the deal. The U.S. Joint Chiefs of Staff, the CIA, and even the Secret Service entrusted with the protection of the president concluded that JFK was soft on communism and a national security threat. Kennedy had not gone along with the Bay of Pigs invasion of Cuba, calling off the U.S. air support. He had nixed the Operation Northwoods project conceived by the Joint Chiefs of Staff to conduct black ops terrorist operations against American citizens in Miami and Washington D.C., to hijack and shoot down American airliners ("real and simulated"), to strafe and bomb Cuban refugee ships headed for Florida and to blame it all on Castro in order to create public support for "regime change" in Cuba. When Kennedy signed the nuclear test ban treaty with Khrushchev, it brought him more condemnation from within his own government. In the eyes of the Joint Chiefs, the CIA, and the Secret Service, America had a national security risk in the White House who was selling out the country to Soviet deceptiveness. The decision was made to eliminate the security risk. Douglass presents in fascinating detail every inch of the story. I can't reproduce it here. Suffice it to say that Oswald was on both the CIA and FBI payrolls. He was set up as the patsy without realizing it until he was in the Dallas jail where he was shot by Jack Ruby, another CIA asset. The FBI at headquarters level was not part of the plot, although local offices were infiltrated by the CIA. The CIA had set the assassination up so that the patsy, Oswald, was linked to a KGB assassin and to Castro. The goal was to use Kennedy's murder to enrage the American public and to attack Cuba and the Soviet Union. I know, it sounds to naive Americans like a farfetched conspiracy theory, but I have never seen a better proven case. After JFK's assassination, J. Edgar Hoover clued in Lyndon Johnson that the linkages of Oswald to the KGB and Cuba were fabricated by the CIA. The problem for President Johnson was that the CIA had assassinated Kennedy in a manner that was too transparent. The CIA had overdone its setup of Oswald, for example, to the point that it was transparently a CIA operation. What to do? If Johnson ordered the arrest of the CIA operatives responsible, the responsibility rose high up into the ranks. What would be the effect on the American public during a difficult time of the cold war if they learned that they could not trust their own government not to murder their own president? In addition, liberals were concerned that if the truth came out, Americans' trust in their government would evaporate. Heaven forbid! Johnson made the decision to cover up the crime and that was the task assigned to the Warren Commission. Edgar Hoover knew the truth, but went along with the coverup. Johnson and Earl Warren were thinking short-run and did not understand the unintended consequences of the coverup. They thought that by blaming Oswald as a lone deranged assassin, that they had done service by eliminating the CIA plot to implicate Cuba and the Soviet Union. Johnson did not realize that he had handed the U.S. government over to the CIA, and that he would soon be involved in an escalating war in Vietnam--a war that JFK had ordered wound down--which would deny him a second term. Evidence continues to pile up that the Warren Commission covered up JFK's murder by a conspiracy within the U.S. government. In his multi-volume Inside The Assassination Records Review Board, Douglas P. Horne, Chief Analyst for Military Records, Assassination Records Review Board, provides voluminous incontrovertible evidence that fraud was introduced into the autopsy reports that served as the basis for the Warren Commission's conclusion that JFK was shot from behind by a lone gunman. Out of JFK's assassination came Robert Kennedy's assassination, the Oklahoma City bombing, Waco, and 9/11. Niels Harrit, a professor of nano-chemistry at the University of Copenhagen, together with U.S. physicists and engineers published a paper in the Open Chemical Physics Journal in 2009 that proves that nano-thermite was used to bring down the World Trade Center towers. In the U.S. this startling finding is unreported except on 9/11 truth sites. The researchers say that in the dust from the World Trade Towers destruction they found unreacted nano-thermite, some of which they tested to confirm their identification. They researchers say that they have enough of the unreacted nano-thermite left for others to examine. There have been no takers in America. Not a single U.S. physics department, most of which are totally dependent on federal government grants, will touch the subject. The campaign that has been organized against the finding of Harrit and his associates is that the dust has not been in certified custody, and the explosive material could have been added. This claim overlooks that nano-thermite is a material that is not available to anyone except the U.S. military. In America today the financial press says we cannot believe Taibbi. Law professors hoping for elevation to the federal bench say we cannot believe Savage. The mainstream media and some leftwing Internet sites say we can't believe Douglas. It is in this disbelief of hard evidence that America is dissolving. Paul Craig Roberts is a frequent contributor to Global Research. Global Research Articles by Paul Craig Roberts www.rense.com/general93/howec.htmty joye
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Post by sandi66 on Apr 15, 2011 4:03:15 GMT -5
Goldman Traders Tried to Manipulate Derivatives Market in '07, Report Says By Christine Harper and Joshua Gallu Apr 13, 2011 7:09 PM PT Goldman Sachs Group Inc. (GS) mortgage traders tried to manipulate prices of derivatives linked to subprime home loans in May 2007 for their own benefit, according to a U.S. Senate report. Company documents show traders led by Michael J. Swenson sought to encourage a “short squeeze” by putting artificially low prices on derivatives that would gain in value as mortgage securities fell, according to the report yesterday by the Permanent Subcommittee on Investigations. The idea, abandoned after market conditions worsened, was to drive holders of such credit-default swaps to sell and help Goldman Sachs traders buy at reduced prices, according to the report. “We began to encourage this squeeze, with plans of getting very short again,” Deeb Salem, a trader in the structured product group, said in a 2007 self-evaluation excerpted in the report. Swenson, Salem’s supervisor, sent e-mails in May 2007 urging traders to offer prices that will “cause maximum pain” and “have people totally demoralized.” In interviews with the committee, Salem and Swenson denied attempting a short squeeze, the report said. Salem “claimed that he had wrongly worded his self- evaluation,” the report said. “He said that reading his self- evaluation as a description of an intended short squeeze put too much emphasis on ‘words.’” The subcommittee cited the episode as an example of how Goldman Sachs traders placed the firm’s interests ahead of its clients’ as the value of mortgage-linked investments tumbled in 2007. The subcommittee, led by Senator Carl M. Levin, a Michigan Democrat and Tom Coburn, Republican of Oklahoma, has called on regulators to craft strict bans on proprietary trading and conflicts of interest to keep the problems from recurring. ‘Poor Quality Investments’ “Conflicts of interests related to proprietary investments led Goldman to conceal its adverse financial interests from potential investors, sell investors poor quality investments, and place its financial interests before those of its clients,” according to the subcommittee. Goldman Sachs traders abandoned the short-squeeze attempt after discovering on June 7, 2007, that two Bear Stearns Cos. hedge funds that specialized in subprime-mortgage investments were collapsing. Salem e-mailed Swenson and another colleague to suggest trying to buy short positions, known as “protection,” on collateralized debt obligations, or CDOs, from hedge fund Magnetar Capital LLC, according to the subcommittee’s report. “We need to go to magnetar and see if we can buy a bunch of cdo protection… Can tell them we have a protection buyer, who is looking to get into this trade now that spreads have tightened back in.” ‘Great Idea’ Swenson expressed “no concerns about the proposed deception” and responded to Salem that it was a “great idea,” according to the report. The report comes almost a year after the committee spent more than 10 hours grilling Lloyd C. Blankfein, Goldman Sachs’s chairman and chief executive officer, and six current and former employees in one of the most hostile political showdowns in the aftermath of the financial crisis. That hearing happened 12 days after the Securities and Exchange Commission sued New York-based Goldman Sachs for fraud in a case that the firm settled for $550 million in July. In an effort to address questions raised by the SEC lawsuit and the subcommittee, Blankfein convened a committee of Goldman Sachs executives to review the firm’s practices. In January, the firm published 39 recommendations aimed at better managing conflicts and client relationships, as well as governance and employee training. Citigroup, Merrill Lynch Goldman Sachs disagrees with “many of the conclusions” in the report and cited the business standards committee as evidence that “we take seriously the issues explored by the subcommittee,” the firm said in a statement released by Lucas van Praag, a company spokesman. As rivals including Citigroup Inc. (C) and Merrill Lynch & Co. posted losses on mortgage-related investments during 2007, Goldman Sachs reported record earnings that benefited from the firm’s negative view of the subprime-mortgage market. Blankfein and other executives at the firm have said that its traders placed “short” bets, which profited when prices of mortgage-linked securities fell, to hedge against losses. He also said in last year’s hearing that Goldman Sachs was acting as a “market maker” in selling CDOs and other mortgage-backed investments to clients as the company’s own traders were betting against them. ‘Massive Short’ “We didn’t have a massive short against the housing market, and we certainly did not bet against our clients,” Blankfein, 56, who received a record $67.9 million bonus for his performance in 2007, told the subcommittee last year. “Rather, we believe that we managed our risk as our shareholders and our regulators would expect.” The subcommittee said that documents uncovered in its two- year investigation of the financial crisis show that Goldman Sachs’s mortgage traders did have a large short position during 2007 and the sales team aggressively sought clients to buy CDOs that the traders expected would decline in value. One executive “instructed Goldman personnel not to provide written information to investors about how Goldman was valuing” a CDO called Timberwolf, according to the report, “and its sales force offered no additional assistance to potential investors trying to evaluate the 4,500 underlying assets.” Joshua S. Birnbaum, who ran a unit called the ABX Trading Desk, said in an October 2007 internal presentation that a short position established by the structured product group after the collapse of two Bear Stearns hedge funds was “not a hedge” against CDOs and residential mortgage-backed securities, or RMBS, owned by the firm, the report said. ‘Not a Hedge’ “By June, all retained CDO and RMBS positions were identified already hedged,” the presentation said. “In other words, the shorts were not a hedge.” The subcommittee’s report describes four CDOs that the firm created and sold in an effort to reduce Goldman Sachs’s exposure to subprime-mortgage risk. It describes Goldman Sachs as having given misleading descriptions of some of the CDOs and in some cases seeking out buyers who were inexperienced with them. The report also says that the mortgage desk reversed its view on how it marked derivatives values based on its position in the market. Clients with short positions complained that Goldman Sachs was undervaluing those bets during the squeeze attempt. After the traders abandoned that strategy in June 2007 and increased their wagers against the mortgage market, other clients complained the firm was overvaluing the short positions. “Once it began buying CDS shorts, the SPG Desk immediately changed its CDS short valuations and began increasing their value,” the report said. “Clients with long positions began to complain that the marks were too high, and internal Goldman business units also raised questions.” www.bloomberg.com/news/2011-04-14/goldman-traders-tried-to-manipulate-market-in-2007-report-says.html
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Post by sandi66 on Apr 15, 2011 5:07:40 GMT -5
Criminal actions against failed bank executives Jones Day USA April 14 2011 One of the defining characteristics of the current financial crisis has been the large number of banks that have failed—348 during 2008 through March 2011—taking investor money and the FDIC's Deposit Insurance Fund ("DIF") funds with them. These failed banks had approximately $604.4 billion of assets, and cost the DIF approximately $80.1 billion. Not surprisingly, the financial crisis has triggered an outcry from politicians, the public, regulators, and law enforcement, who are concerned that improper behavior contributed to the economic meltdown, or caused losses to the Troubled Asset Relief Program ("TARP") or the DIF, and believe that those responsible should be held accountable and pursued civilly and/or criminally. Much of this outcry has been directed toward "Wall Street," although executives and directors of failed banks, most of which were community banks, are now potential targets of prosecutorial zeal. A handful of bank executives have been charged, and brief summaries of those cases are provided to illustrate the approach taken so far. It is unknown whether this small number of prosecutions is just the beginning of a trend similar to the over 1,800 criminal cases brought against bank insiders in the wake of the savings & loan crisis of 1988—1994 (the "S&L Crisis"), but these cases should be watched by those involved with troubled or failed banks. These cases also provide useful examples of operating risks and the need for strong internal controls and active oversight for healthy banks. The Fraud Enforcement and Recovery Act of 2009 was enacted as a response to the financial crisis. This Act, among other things, authorized significant appropriations for various federal agencies including the Department of Justice ("DOJ"), FBI, and SEC to hire new agents and staff to investigate and prosecute financial fraud. The Emergency Economic Stabilization Act of 2008 also created the Special Inspector General for the TARP ("SIGTARP") to uncover and prosecute fraud and waste of TARP funds. Additionally, the DOJ launched a specialized interagency Financial Fraud Task Force to combat financial crime, with Attorney General Eric H. Holder, Jr., vowing to root out financial wrongdoing that helped bring about the meltdown and prosecute future criminal actions by "unscrupulous executives," boldly declaring, "We will investigate you, we will prosecute you, and we will incarcerate you."[1] This increase in resources continued into 2010, with the DOJ securing a 12 percent budget increase to fight financial fraud and requesting an additional 23 percent increase in 2011.[2] The enforcement effort also has continued to clearly target executives of financial entities, including banks. For example, in a September report to the Senate on current Fraud Enforcement, Assistant Attorney General Lanny A. Breuer described the ongoing "aggressive efforts to hold bank executives to account" and stressed DOJ's intention to make enforcement examples out of them through future prosecutions.[3] Despite the rhetoric, increased resources, and ever-increasing list of failed banks, there have been only a handful of prosecutions of failed bank executives. There are significant numbers of ongoing investigations and prosecutions relating to mortgage fraud and bad loans,[4] but, other than the several bank actions summarized below, the vast majority of the prosecutions to date have been against mortgage brokers and borrowers rather than bank executives. This may be because individual mortgage brokers and borrowers are "low hanging fruit" for prosecutors, with politically attractive results on behalf of consumer borrowers. Still, executives of failed and failing banks should be wary. First, prosecutions of bank executives often involve complex and resource-intensive investigations, which delay the bringing of charges. It is difficult to distinguish between what actions were merely business judgments that ended poorly in the recession versus actions that were made with criminal intent. After the S&L Crisis, over 1,800 bank insiders were prosecuted between 1990 and 1995, resulting in more than 1,000 officers, directors, and other officials being sent to prison—but the prosecutions were often brought years later, as late as 1998.[5] Indeed, the FDIC's current deputy inspector general, Fred W. Gibson, noted that charges often are not filed for at least 18 months after a bank has failed.[6] Second, prosecutors appear convinced there were plenty of bad actors in the banking industry leading to the meltdown. Undoubtedly, many banks were merely victims of fraudulent borrowers and mortgage brokers, or the economic downturn. The FDIC's acting general counsel assured bankers in late 2010 that "as long as they compl[ied] with their legal duties, they don't have anything to worry about."[7] However, federal officials are seeking to identify bankers who played fast and loose with regulations, looked the other way as borrowers diverted funds from their intended purpose, or failed to properly account for the true market value of assets. Even though few such cases have been brought so far, prosecutors have publicly stated that they are actively pursuing criminal investigations in connection with a number of failed banks, and further indictments are likely.[8] After each bank failure, the FDIC investigates, along with the DOJ and the FBI, possible grounds for recovery of its losses against bank officers, directors, and insiders, and whether the likely recoveries outweigh the expenses of pursuing claims against insiders.[9] This can be a long process. The FDIC has recently confirmed that it is actively conducting investigations and considering criminal claims against insiders of about 50 failed banks, with the targeted individuals typically ranking as vice president or higher (including former directors), and it expects the heightened industry scrutiny to continue for years.[10] Third, when prosecutors do decide to institute a criminal proceeding as a result of improper conduct, they have a wide range of laws with which to prosecute bankers. Beyond traditional bank fraud[11] and embezzlement[12] statutes, prosecutors can also base charges on a wide range of banking and general fraud violations including making false statements[13] or concealing material facts,[14] making false entries in bank books and records,[15] receipt of commissions or gifts for procuring loans,[16] mail or wire fraud,[17] and organizing a continuing financial crimes enterprise.[18] Additionally, there are newly created offenses related to fraud connected with TARP funds.[19] Bank insiders should be mindful of the heightened scrutiny of the industry and increased government resources being focused on seeking to identify and prosecuting fraud. The facts uncovered in civil actions and FDIC investigations, as well as bank regulatory examinations and enforcement actions taken before a FDIC-insured institution fails, may be used in criminal actions. Criminal Prosecutions of Executives of Failed Banks The following is a short summary of the primary criminal prosecutions to date of executives of failed banks from the current financial crisis, including the first two TARP-fraud indictments ever, as well as prosecutions that may be on the horizon. Integrity Bank, Alpharetta, Georgia. Integrity Bank ("Integrity") failed in August 2008. Real estate developer Guy Mitchell and related parties obtained over $80 million in business loans from Integrity between 2004 and January 2007 with the help of Integrity's Executive Vice President and Chief Lending Officer, Douglas Ballard. Mitchell was unable to repay the loans, and Integrity became undercapitalized. On April 14, 2010, Ballard was indicted on more than 20 counts of bank fraud, receipt of bribes, securities fraud, evasion of currency reporting requirements, and conspiracy. The indictment was unsealed on May 7, 2010, and Ballard entered a guilty plea on July 6, 2010 for conspiracy and one additional new count of tax evasion. As part of the plea, Ballard admitted to conspiring with Mitchell to receive loans under false pretenses and improperly distributing nearly $20 million in loan proceeds to Mitchell's businesses to Mitchell's personal account to be used for his personal purposes in violation of the Bank's loan approvals and documents. In return, Ballard received over $200,000 in bribes from Mitchell. Ballard could receive 10 years in prison and a $500,000 fine. Additionally, in the April 14, 2010 indictment, Integrity's Vice President of Risk Management, Joseph Todd Foster, was charged with two counts of securities fraud based on insider trading in the publicly traded stock of Integrity's parent holding company. Foster entered a guilty plea to both of those counts on July 6, 2010, admitting that he discovered in 2006 that Mitchell was in a precarious financial situation, that Mitchell was likely to default on the loans, and that Integrity did not have sufficient liquid capital to survive that default. In light of this nonpublic knowledge of Integrity's likely failure in the near future, Foster sold the shares of Integrity that he owned. He could receive up to 20 years in prison and a $5 million fine. Ballard and Foster have not yet been sentenced. Mitchell was charged in the April 14, 2010 indictment as well but has entered a plea of not-guilty and is proceeding toward trial. The court has postponed sentencing Ballard and Foster until after conclusion of the case against Mitchell. Additionally, civil charges seeking recovery of the estimated $250-350 million of losses to the DIF from Integrity's failure were brought by the FDIC against selected Integrity insiders on January 14, 2011, in the U.S. District Court for the Northern District of Georgia (Case No. 1:11-cv-111.). Bank of Clark County, Vancouver, Washington. Bank of Clark County ("BOCC") was scheduled for a safety and soundness examination by FDIC and state regulators on November 3, 2008. In the two weeks prior to that examination, however, BOCC's Chief Lending Officer, David S. Kennelly, received updated appraisals on a number of subdivision and condo properties that served as security for some of BOCC's loans. The appraisals showed that the value of the properties had depreciated by several million dollars. For example, one subdivision property's appraised value dropped from $8.1 million to $2.9 million. Fearing the negative effect the appraisals would have on the examination and on BOCC's capitalization, Kennelly panicked, concealed the appraisals from the regulators, and falsely told regulators that all current appraisals had been provided to them. Two weeks later, a whistleblower alerted the FDIC, and examiners returned to BOCC and confronted Kennelly. Kennelly initially denied the appraisals existed but ultimately produced them and instructed other BOCC personnel to claim they had not been originally scanned into the system due to disorganization and staff being too busy. After reviewing the concealed appraisals, the FDIC declared BOCC undercapitalized, and BOCC entered FDIC receivership on January 16, 2009. In February 2010, Kennelly was charged with one count of scheming to conceal a material fact pursuant to 18 U.S.C. § 1001(a)(1), and entered a guilty plea one week later. Kennelly asked the sentencing judge to forgo any incarceration because Kennelly did not personally profit from his actions and was only acting to preserve the welfare of BOCC, its employees, shareholders, and depositors. The court, however, did not find Kennelly's arguments persuasive and sentenced him to four months' incarceration, 120 days of electronically monitored home confinement, 100 hours of community service, three years of supervised release, and a fine of $5,000. He has been banned for life from employment in the financial services industry without prior written approval from federal regulatory agencies. FirstCity Bank, Stockbridge, Georgia. FirstCity Bank ("FirstCity") reported a relatively healthy Tier 1 capital ratio of 7.29 percent and a total risk-based ratio of 8.54 percent as of December 31, 2008, even though approximately one-third of its loans were in some stage of default. On March 20, 2009, FirstCity was closed. Two years later, on March 21, 2011, federal agents arrested Mark A. Conner, who had served as FirstCity's President and interim CEO and Chairman of the Board of Directors, at the Miami International Airport. That same day, the U.S. Attorney's Office in Atlanta unsealed a criminal indictment charging him with bank fraud, conspiracy to commit bank fraud, and conducting a continuing financial crimes enterprise. The indictment also charged Clayton A. Coe, former Vice President and Senior Loan Officer, with bank fraud, conspiracy to commit bank fraud, and making false statements to a financial institution. Prosecutors claim Conner and Coe falsified documents and caused the Bank's loan committee and board to approve several multimillion dollar commercial loans for borrowers to purchase property that was, unbeknownst to FirstCity, actually owned by Conner and Coe. Conner and Coe then allegedly caused other banks to purchase participations in these loans to shift some of the risk of default and routinely misled regulators to conceal the scheme. Connor also, according to the indictment, made an unsuccessful application for TARP funds. Conner faces a mandatory minimum sentence of 10 years in prison, a maximum sentence of life in prison, and a potential fine of up to $10 million for organizing a continuing financial crimes enterprise. Connor and Coe each face a maximum of 30 years in prison and fine of up to $1 million on each of the counts of bank fraud and conspiracy to commit bank fraud. Omni National Bank, Atlanta, Georgia. Omni National Bank ("Omni"), which was a community development financial institution or "CDFI," had a Community Redevelopment Department, headed by Omni's co-founder and Executive Vice President, Jeffrey L. Levine. Omni borrowed federal funds at low rates to make high-interest, short-term loans to borrowers for purchasing and rehabilitating distressed properties for resale or Section 8 rental in run-down, inner-city neighborhoods. These loans were often made to borrowers with less than stellar credit and often no steady employment or formal education, and many of the borrowers failed to sufficiently rehabilitate the property. Omni had a high rate of foreclosures and significantly lower profits than originally predicted. As real estate market prices fell, Omni masked its deteriorating financial condition by listing properties at values higher than they were worth, and even recycling foreclosed loans into higher-value new loans to disguise losses. In the summer of 2008, regulators ordered Omni to write off 33 percent of the value of its foreclosed properties. On March 27, 2009, Omni was closed and taken over by the FDIC, leaving large amounts of decrepit real estate that had not been redeveloped. On December 22, 2009, Levine was charged in a criminal information with making, and causing others to make, materially false statements in bank books, reports, and statements. Levine entered a guilty plea on January 14, 2010, admitting to knowing that Omni's loans were overvalued but failing to disclose violations of Omni's policies and procedures for many of the loans, which resulted in an overvaluation of Omni's assets by regulators, auditors, and shareholders. He is scheduled to be sentenced on April 22, 2011, and could receive up to 30 years in prison and a $1 million fine. Colonial Bank, Montgomery, Alabama. In 2008, Colonial Bank ("Colonial") was one of the 50 largest banks in the United States, with 350 branches, approximately $26 billion in assets, and $19 billion in deposits. However, on August 14, 2009, Colonial was closed and taken over by the FDIC, becoming the fifth largest bank failure in U.S. history. Lee Bentley Farkas is the former chairman of Taylor, Bean & Whitaker Mortgage Corporation ("TBW") (once one of the largest private mortgage companies in the United States and one of Colonial's largest customers). He was charged in a 16‑count indictment on June 15, 2010, with perpetrating a massive fraud scheme with fake mortgages and a fraudulent application for TARP money by Colonial, resulting in losses exceeding $1.9 billion and contributing to the Bank's failure. Farkas' indictment alleged that he orchestrated and executed his scheme with the help of co-conspirators that included unnamed executives and employees of Colonial, and prosecutors stated publicly that they would seek to hold other individuals accountable at a later time. Following through with that assertion, federal prosecutors have secured guilty pleas from a number of former TBW executives in connection with the alleged scheme: Desiree Brown, the former treasurer of TBW, pleaded guilty on February 24, 2011, to one count of conspiracy to commit wire fraud, bank fraud, and securities fraud. Brown is scheduled to be sentenced on June 10 and faces up to 30 years in prison, a $250,000 fine, and restitution to victims. Raymond E. Bowman, the former president of TBW, pleaded guilty on March 14, 2011, to one count of conspiracy to commit wire fraud, bank fraud, and securities fraud, and one count of making false statements. Bowman is scheduled to be sentenced on June 10 and faces up to five years in prison and a $250,000 fine on each count, and restitution to victims. Sean Ragland, a former senior financial analyst of TBW, pleaded guilty on March 31, 2011, to one count of conspiracy to commit bank fraud and wire fraud. Ragland is scheduled to be sentenced on June 21 and faces up to five years in prison, a $250,000 fine, and restitution to victims. Paul Allen, the former CEO of TBW, pleaded guilty on April 1, 2011, to one count of conspiracy to commit bank fraud and wire fraud, and one count of making false statements. Allen is scheduled to be sentenced on June 21 and faces up to five years in prison and a $250,000 fine on each count, and restitution to victims. Criminal law enforcement actions have also been taken against Colonial executives: Catherine L. Kissick, a former senior vice president and head of Colonial's Mortgage Warehouse Lending Division, pleaded guilty on March 2, 2011, to conspiracy to commit wire fraud, bank fraud, and securities fraud. Kissick is scheduled to be sentenced June 17 and faces up to 30 years in prison, a $250,000 fine, and restitution. Teresa A. Kelly, a former operations supervisor at Colonial's Mortgage Warehouse Lending Division, pleaded guilty on March 16, 2011, to conspiracy to commit wire fraud, bank fraud, and securities fraud. Kelly is scheduled to be sentenced June 17 and faces up to five years in prison, a $250,000 fine, and restitution. Furthermore, the SEC has charged Kissick and Kelly with securities fraud for falsely reporting TBW-originated loans and mortgage securities held by Colonial to the investing public as high-quality, liquid assets. The SEC announcements regarding these charges reflect the interrelationship between civil and criminal investigations and the numerous agencies involved, which included the Fraud Section of the DOJ's Criminal Division, the FBI, SIGTARP, the FDIC's Office of the Inspector General, the U.S. Department of Housing and Urban Development's Office of the Inspector General, and the Civil Division of the U.S. Attorney's Office for the Eastern District of Virginia as part of the Financial Fraud Enforcement Task Force. Community Bank & Trust, Cornelia, Georgia. Community Bank & Trust ("CBT") opened in 1900 and had 36 branches, 400 employees, and $1.1 billion in assets. It was closed by the FDIC on January 29, 2010, and an FDIC Inspector General report in September 2010 found that CBT had failed to follow its loan policies and had made more than $10 million in bad loans. On January 20, 2011, CBT's former Executive Vice President and Chief Credit Officer Robert "Randy" Jones pleaded guilty to conspiracy to commit bank fraud. The criminal information stated that Jones had received over $770,000 in kickbacks for approving loans so a customer could purchase tracts of land, and then caused the Bank to finance subsequent purchases of the land at inflated prices. It alleged Jones also made loans to straw purchasers and issued loans in the names of unsuspecting family members. On February 24, 2011, Jones agreed to a Prohibition Order from the FDIC banning him from working in the banking industry. He is scheduled to be sentenced on May 10, 2011 and faces up to 30 years in prison and a fine of up to $1 million. La Coste National Bank, La Coste, Texas. La Coste National Bank ("LCNB"), a bank founded in 1921, had not been the subject of FDIC enforcement actions and even made a profit for 2009. However, $7.3 million in fraudulent transactions and $1.1 million in related loan losses were uncovered in early 2010, which the FDIC attributed to an unnamed former LCNB executive. The Bank's financials gave no indication of potential problems, much less failure, and we suspect these problems were only discovered as part of a regulatory examination late in the Bank's life. The Comptroller of the Currency, LCNB's primary regulator, determined that LCNB was critically undercapitalized with no reasonable chance at recovery, and placed LCNB into FDIC receivership on February 19, 2010. On April 21, 2010, a seven-count indictment charging embezzlement and bank fraud was issued against LCNB's former President, Jody P. Gwyn. Gwyn was hired by LCNB in 1995 as Assistant Vice President and promoted to President in 2009. The indictment alleges that from 2007 to 2010, Gwyn made a number a transfers, including transfers from LCNB's asset accounts into customer accounts, then withdrew or diverted the monies from client accounts for his own use. Gwyn entered a guilty plea on October 27, 2010, and is scheduled to be sentenced on April 7, 2011. He faces three to five years' imprisonment and $8 million restitution. Also, on June 16, 2010, former LCNB Vice President Mary Magdalene Crawford was indicted on two counts of embezzlement related to fraud discovered after LCNB failed. The indictment alleged that Crawford fraudulently prepared 10 cashier checks for $3,000 each, which she used to pay bills, and balanced LCNB's accounts by withdrawing funds from a customer's individual retirement account. It also alleged Crawford stole $10,000 from LCNB's vault. Crawford entered a guilty plea on October 10, 2010, to the count involving cashier checks, but has stated she does not have any knowledge of the fraud allegedly committed by Gwyn. She is scheduled to be sentenced on April 20, 2011. Park Avenue Bank, New York, New York. Park Avenue Bank ("PAB") had retail branches in Manhattan and Brooklyn, with a client base primarily consisting of small businesses. Between October 2008 and February 2009, PAB applied for and tried to obtain over $11 million in funds from TARP, but its application was ultimately denied and regulators became suspicious of PAB's capitalization. On March 12, 2010, PAB was closed and taken over by the FDIC due to ineffective management and inadequate capital. The next day, a 10-count criminal complaint was issued against Charles J. Antonucci, Sr., who was PAB's President and Chief Executive Officer from 2004 to 2009. Antonucci was arrested on March 15, 2010, and became the first defendant to be charged with fraud on TARP by falsifying PAB's capital position. On October 8, 2010, Antonucci, a former bank examiner, entered a guilty plea to six counts, becoming the first defendant to be convicted of fraud on TARP. As part of the guilty plea, Antonucci admitted misrepresenting PAB's capital position in pursuit of TARP funds by orchestrating a sham "round-trip" using the Bank's own money to make it appear he had made a personal investment in the Bank. Prosecutors said PAB made loans to a group of companies tied to Antonucci, these entities funneled the loan proceeds to Antonucci, and then Antonucci invested the funds back into PAB. In exchange for the "investment," Antonucci received more than 308,000 shares in the Bank, giving him about 52 percent of the Bank's outstanding shares. In order to conceal the "round-trip" investment, Antonucci allegedly created a counterfeit certificate of deposit, in the amount of $2.3 million, purportedly issued by the Bank. Additionally, Antonucci admitted to a number of other crimes, including accepting over $250,000 in bribes for approval of various banking transactions, self-dealing, embezzlement and misappropriation of bank funds, and false statements in connection with the sale of an insurance company that later failed. Antonucci already consented to an $11.2 million judgment entered against him, and he is scheduled to be sentenced on April 8, 2011. He faces up to 135 years in prison. Most recently, insurers that had supplied PAB's director and officer insurance and blanket bond brought an action to rescind these policies based on misrepresentations in the applications for renewal of these policies, and reimbursement for $70,000 of claims paid.[20] The claim is based, in part, upon Antonucci's guilty plea in the criminal proceedings. If successful, the rescission will leave other PAB directors and officers without coverage. Other Failures That May Lead To Criminal Charges First Southern Bank, Batesville, Arkansas. First Southern Bank ("First Southern"), which was extremely well-capitalized as of September 30, 2010, with an 11.1 percent Tier 1 leverage capital ratio, failed suddenly on December 17, 2010 as a result of an apparent bond fraud. First Southern purchased approximately $22.0 million worth of rural improvement district bonds (the "Bonds") from December 2008 through September 2010. These purchases exceeded the Bank's equity. According to Arkansas Business, bank officials, the FDIC, and possibly the FBI began scrutinizing the Bonds in November 2010. First Southern believed that the Bonds might be fraudulent and tried to contact attorney Kevin Lewis, who sold the Bonds to the Bank but had disappeared in December 2010. Arkansas Business reported that Kevin Lewis is a member of the family that controlled First Southern when the Bank failed. Several other Arkansas banks have sued Lewis for damages related to these banks, and an attorney for Lewis has stated that Lewis is "under investigation by federal law enforcement authorities." Pierce Commercial Bank, Tacoma, Washington. Pierce Commercial Bank ("Pierce") failed on November 5, 2010. In 2008 and 2009, Pierce, along with other area lenders, fell prey to a mortgage fraud scheme involving real estate flips reminiscent of the Texas bank failures in 1988-1994 where Seattle resident Mark Ashmore, with the help of several associates in the mortgage industry, recruited "straw buyers" to purchase homes by taking out inflated mortgage loans. Ashmore and his associates would skim the excess over the actual sales price based on the inflated property values. Usually, the loans also were based on false application information regarding the buyers' employment and income, which Ashmore sometimes supported with fake documentation. The same homes would be sold and resold to different "straw buyers" as part of the scheme. On each flip, the homes were sold at higher and higher prices. Eventually, many of the loans on the properties went into foreclosure, resulting in losses to the lending banks. Christopher DiCugno, a loan officer at Pierce, was one of four men, including Ashmore, indicted in November 2009. All of the men involved were charged with multiple counts of wire fraud and conspiracy to commit wire fraud. Three of the four charged in the scam pleaded guilty, and Ashmore was convicted in September 2010. DiCugno was sentenced to eight months' imprisonment for his role, with the amount of restitution to be determined at a later date. As a result of this mortgage scheme and the general downturn in the residential mortgage market, Pierce's home loan portfolio suffered severe damage. Despite a $4.5 million injection of TARP proceeds, Pierce struggled to keep up with its losses. Before it failed, Pierce consented to a cease and desist order (the "C&D Order") from the Federal Reserve and the Washington Department of Financial Institutions on December 4, 2009, after selling the mortgage banking division in an attempt to "correct deficiencies in its residential mortgage underwriting, consumer compliance, and operational risk management." The C&D Order prohibited the Bank from making any more residential mortgage loans and required the Bank to institute an improved consumer compliance program. Further criminal charges relating to the Pierce failure may be forthcoming. Government prosecutors have stated in court filings that DiCugno is assisting them in ongoing investigations into activities at Pierce. Additionally, prosecutors have filed a civil forfeiture action alleging that Shawn Portmann, a Senior Vice President of Pierce until July 2008, and "two other principals" at Pierce made a large number of fraudulent loans, and that a related criminal investigation is ongoing. Conclusions The extensive regulation of banks creates legal risks for directors, officers, and other "institution-affiliated parties."[21] Regulatory enforcement powers are broad, ranging from corrective actions to personal civil money penalties to individual bans from the industry. Banks and holding companies, especially those that are public, are subject to enforcement actions, as well as civil and criminal penalties under federal securities laws. Banks and their directors and officers should carefully consider their compliance programs and create a culture of compliance within their organization, including appropriate internal controls and effective insider trading policies. Prompt filing of confidential suspicious activity reports ("SARs") should be made timely and provided to the bank's board of directors whenever there is a known or suspected violation of federal law or a suspected money laundering activity or Bank Secrecy Act violation.[22] Bank directors should make sure their bank has appropriate procedures for timely filing SARs. So far, the financial crisis that began in 2008 has claimed numerous banks but has resulted in few criminal sanctions. Civil actions by the FDIC to recover losses to the DIF from failed bank insiders are at an early stage. Potential criminal charges are likely to lag behind the civil actions, except in the most obvious cases and where criminal investigations were underway before the banks failed, such as the Park Avenue Bank and Pierce Commercial Bank failures. Civil and criminal actions can be interrelated and may have widespread consequences, including FDIC claims upon insurance policies and blanket bonds, and even loss of such insurance as the insurers seek rescission based upon fraudulent or other misrepresentation in the insurance applications. Both of these may leave bank directors and officers further exposed, personally. Prevention, early detection, and correction of crimes against banks—whether by third parties, insiders, or some combination—are fundamental. Directors and officers of banks that become unhealthy or subject to regulatory enforcement should consider their activities with a view to avoiding potential later civil and criminal charges, especially in the event the bank fails. Boards of directors should consider very carefully their institutions' responses to: insider dealings; transactions and results that are "too good to be true;" any indications that the company's books and records, including the accounting and valuation of assets, may be inaccurate; indicia of fraud and possible illegal activity reported by employees, auditors, and customers; information from regulators, including examination reports and enforcement actions; and civil money penalties against insiders personally and bars or suspensions under FDI Act, Section 19. The good news is that few bank failures during 2008-2011 appear, based on public information, to have been caused by illegal activities. Banks in trouble and their boards of directors should be sensitive to potential civil and possibly criminal charges if their institutions fail, and they should be fully informed as to how to minimize these risks. www.lexology.com/library/detail.aspx?g=2fcf2620-0c3e-4d37-96d2-1e9e7b31b1b3
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Post by sandi66 on Apr 15, 2011 5:15:04 GMT -5
Senate report identifies conflicts, oversight failures PRESS RELEASE Published 4/14/2011 WASHINGTON – Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom Coburn M.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression. “Using emails, memos and other internal documents, this report tells the inside story of an economic assault that cost millions of Americans their jobs and homes, while wiping out investors, good businesses, and markets,” said Levin. “High risk lending, regulatory failures, inflated credit ratings, and Wall Street firms engaging in massive conflicts of interest, contaminated the U.S. financial system with toxic mortgages and undermined public trust in U.S. markets. Using their own words in documents subpoenaed by the Subcommittee, the report discloses how financial firms deliberately took advantage of their clients and investors, how credit rating agencies assigned AAA ratings to high risk securities, and how regulators sat on their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of interest are the threads that run through every chapter of this sordid story.” "The free market has helped make America great, but it only functions when people deal with each other honestly and transparently. At the heart of the financial crisis were unresolved, and often undisclosed, conflicts of interest,” said Dr. Coburn. “Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight.” The Levin-Coburn report expands on evidence gathered at four Subcommittee hearings in April 2010, examining four aspects of the crisis through detailed case studies: high-risk mortgage lending, using the case of Washington Mutual Bank, a $300 billion thrift that became the largest bank failure in U.S. history; regulatory inaction, focusing on the Office of Thrift Supervision’s failed oversight of Washington Mutual; inflated credit ratings that misled investors, examining the actions of the nation’s two largest credit rating agencies, Moody’s and Standard & Poor’s; and the role played by investment banks, focusing primarily on Goldman Sachs, creating and selling structured finance products that foisted billions of dollars of losses on investors, while the bank itself profited from betting against the mortgage market. New Evidence. Today’s report presents new facts, new findings and recommendations, with more than 700 new documents totaling over 5,800 pages. It recounts how Washington Mutual aggressively issued and sold high-risk mortgages to Wall Street, Fannie Mae, and Freddie Mac, even as its executives predicted a housing bubble that would burst, and offers new detail about how its regulator deferred to the bank’s management. New documents show how Goldman used net short positions to benefit from the downturn in the mortgage market, and designed, marketed, and sold CDOs in ways that created conflicts of interest with the firm’s clients and at times led to the bank’s profiting from the same products that caused substantial losses for its clients. Other new information provides additional detail about how credit rating agencies rushed to rate new mortgage-backed securities and collect lucrative rating fees before issuing mass ratings downgrades that shocked the financial markets and triggered a collapse in the value of mortgage related securities. Over 120 new documents provide insights into how Deutsche Bank contributed to the mortgage mess. “Our investigation found a financial snake pit rife with greed, conflicts of interest, and wrongdoing,” said Levin. Among the report’s highlights are the following. High Risk Lending. With an eye on short term profits, Washington Mutual launched a strategy of high-risk mortgage lending in early 2005, even as the bank’s own top executives stated that the condition of the housing market “signifies a bubble” with risks that “will come back to haunt us.” Executives forged ahead despite repeated warnings from inside and outside the bank that the risks were excessive, its lending standards and risk management systems were deficient, and many of its loans were tainted by fraud or prone to early default. WaMu’s chief credit officer complained at one point that “ ny attempts to enforce more disciplined underwriting approach were continuously thwarted by an aggressive, and often times abusive group of Sales employees within the organization.” From 2003 to 2006, WaMu shifted its loan originations from low risk, fixed rate mortgages, which fell from 64% to 25% of its loan originations, to high risk loans, which jumped from 19% to 55% of its originations. WaMu and its subprime lender, Long Beach Mortgage, securitized hundreds of billions of dollars in high risk, poor quality, sometimes fraudulent mortgages, at times without full disclosure to investors, weakening U.S. financial markets. New analysis shows how WaMu sold some of its high risk loans to Fannie Mae and Freddie Mac, and played one off the other to make more money. Regulatory Failures. The Office of Thrift Supervision (OTS), Washington Mutual’s primary regulator, repeatedly failed to correct WaMu’s unsafe and unsound lending practices, despite logging nearly 500 serious deficiencies at the bank over five years, from 2003 to 2008. New information details the regulator’s deference to bank management and how it used the bank’s short term profits to excuse high risk activities. Although WaMu recorded increasing problems from its high risk loans, including delinquencies that doubled year after year in its risky Option Adjustable Rate Mortgage (ARM) portfolio, OTS examiners failed to clamp down on WaMu’s high risk lending. OTS did not even consider bringing an enforcement action against the bank until it began losing substantial sums in 2008. OTS also failed until 2008, to lower the bank’s overall high rating or the rating awarded to WaMu’s management, despite the bank’s ongoing failure to correct serious deficiencies. When the Federal Deposit Insurance Corporation (FDIC) advocated taking tougher action, OTS officials not only refused, but impeded FDIC oversight of the bank. When the New York State Attorney General sued two appraisal firms for colluding with WaMu to inflate property values, OTS took nearly a year to conduct its own investigation and finally recommended taking action -- a week after the bank had failed. The OTS Director treated WaMu, which was its largest thrift and supplied 15% of the agency’s budget, as a “constituent” and struck an apologetic tone when informing WaMu’s CEO of its decision to take an enforcement action. When diligent oversight conflicted with OTS officials’ desire to protect their “constituent” and the agency’s own turf, they ignored their oversight responsibilities. Inflated Credit Ratings. The Report concludes that the most immediate cause of the financial crisis was the July 2007 mass ratings downgrades by Moody’s and Standard & Poor’s that exposed the risky nature of mortgage-related investments that, just months before, the same firms had deemed to be as safe as Treasury bills. The result was a collapse in the value of mortgage related securities that devastated investors. Internal emails show that credit rating agency personnel knew their ratings would not “hold” and delayed imposing tougher ratings criteria to “massage the … numbers to preserve market share.” Even after they finally adjusted their risk models to reflect the higher risk mortgages being issued, the firms often failed to apply the revised models to existing securities, and helped investment banks rush risky investments to market before tougher rating criteria took effect. They also continued to pull in lucrative fees of up to $135,000 to rate a mortgage backed security and up to $750,000 to rate a collateralized debt obligation (CDO) – fees that might have been lost if they angered issuers by providing lower ratings. The mass rating downgrades they finally initiated were not an effort to come clean, but were necessitated by skyrocketing mortgage delinquencies and securities plummeting in value. In the end, over 90% of the AAA ratings given to mortgage-backed securities in 2006 and 2007 were downgraded to junk status, including 75 out of 75 AAA-rated Long Beach securities issued in 2006. When sound credit ratings conflicted with collecting profitable fees, credit rating agencies chose the fees. Investment Banks and Structured Finance. Investment banks reviewed by the Subcommittee assembled and sold billions of dollars in mortgage-related investments that flooded financial markets with high-risk assets. They charged $1 to $8 million in fees to construct, underwrite, and market a mortgage-backed security, and $5 to $10 million per CDO. New documents detail how Deutsche Bank helped assembled a $1.1 billion CDO known as Gemstone 7, stood by as it was filled it with low-quality assets that its top CDO trader referred to as “crap” and “pigs,” and rushed to sell it “before the market falls off a cliff.” Deutsche Bank lost $4.5 billion when the mortgage market collapsed, but would have lost even more if it had not cut its losses by selling CDOs like Gemstone. When Goldman Sachs realized the mortgage market was in decline, it took actions to profit from that decline at the expense of its clients. New documents detail how, in 2007, Goldman’s Structured Products Group twice amassed and profited from large net short positions in mortgage related securities. At the same time the firm was betting against the mortgage market as a whole, Goldman assembled and aggressively marketed to its clients poor quality CDOs that it actively bet against by taking large short positions in those transactions. New documents and information detail how Goldman recommended four CDOs, Hudson, Anderson, Timberwolf, and Abacus, to its clients without fully disclosing key information about those products, Goldman’s own market views, or its adverse economic interests. For example, in Hudson, Goldman told investors that its interests were “aligned” with theirs when, in fact, Goldman held 100% of the short side of the CDO and had adverse interests to the investors, and described Hudson’s assets were “sourced from the Street,” when in fact, Goldman had selected and priced the assets without any third party involvement. New documents also reveal that, at one point in May 2007, Goldman Sachs unsuccessfully tried to execute a “short squeeze” in the mortgage market so that Goldman could scoop up short positions at artificially depressed prices and profit as the mortgage market declined. Recommendations. The Report offers 19 recommendations to address the conflicts of interest and abuses exposed in the Report. The recommendations advocate, for example, strong implementation of the new restrictions on proprietary trading and conflicts of interest; and action by the SEC to rank credit rating agencies according to the accuracy of their ratings. Other recommendations seek to advance low risk mortgages, greater transparency in the marketplace, and more protective capital, liquidity, and loss reserves.
WASHINGTON – Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom Coburn M.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression.
“Using emails, memos and other internal documents, this report tells the inside story of an economic assault that cost millions of Americans their jobs and homes, while wiping out investors, good businesses, and markets,” said Levin. “High risk lending, regulatory failures, inflated credit ratings, and Wall Street firms engaging in massive conflicts of interest, contaminated the U.S. financial system with toxic mortgages and undermined public trust in U.S. markets. Using their own words in documents subpoenaed by the Subcommittee, the report discloses how financial firms deliberately took advantage of their clients and investors, how credit rating agencies assigned AAA ratings to high risk securities, and how regulators sat on their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of interest are the threads that run through every chapter of this sordid story.”
"The free market has helped make America great, but it only functions when people deal with each other honestly and transparently. At the heart of the financial crisis were unresolved, and often undisclosed, conflicts of interest,” said Dr. Coburn. “Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight.”
The Levin-Coburn report expands on evidence gathered at four Subcommittee hearings in April 2010, examining four aspects of the crisis through detailed case studies: high-risk mortgage lending, using the case of Washington Mutual Bank, a $300 billion thrift that became the largest bank failure in U.S. history; regulatory inaction, focusing on the Office of Thrift Supervision’s failed oversight of Washington Mutual; inflated credit ratings that misled investors, examining the actions of the nation’s two largest credit rating agencies, Moody’s and Standard & Poor’s; and the role played by investment banks, focusing primarily on Goldman Sachs, creating and selling structured finance products that foisted billions of dollars of losses on investors, while the bank itself profited from betting against the mortgage market.
New Evidence. Today’s report presents new facts, new findings and recommendations, with more than 700 new documents totaling over 5,800 pages. It recounts how Washington Mutual aggressively issued and sold high-risk mortgages to Wall Street, Fannie Mae, and Freddie Mac, even as its executives predicted a housing bubble that would burst, and offers new detail about how its regulator deferred to the bank’s management. New documents show how Goldman used net short positions to benefit from the downturn in the mortgage market, and designed, marketed, and sold CDOs in ways that created conflicts of interest with the firm’s clients and at times led to the bank’s profiting from the same products that caused substantial losses for its clients. Other new information provides additional detail about how credit rating agencies rushed to rate new mortgage-backed securities and collect lucrative rating fees before issuing mass ratings downgrades that shocked the financial markets and triggered a collapse in the value of mortgage related securities. Over 120 new documents provide insights into how Deutsche Bank contributed to the mortgage mess.
“Our investigation found a financial snake pit rife with greed, conflicts of interest, and wrongdoing,” said Levin. Among the report’s highlights are the following.
High Risk Lending. With an eye on short term profits, Washington Mutual launched a strategy of high-risk mortgage lending in early 2005, even as the bank’s own top executives stated that the condition of the housing market “signifies a bubble” with risks that “will come back to haunt us.” Executives forged ahead despite repeated warnings from inside and outside the bank that the risks were excessive, its lending standards and risk management systems were deficient, and many of its loans were tainted by fraud or prone to early default. WaMu’s chief credit officer complained at one point that “ny attempts to enforce more disciplined underwriting approach were continuously thwarted by an aggressive, and often times abusive group of Sales employees within the organization.” From 2003 to 2006, WaMu shifted its loan originations from low risk, fixed rate mortgages, which fell from 64% to 25% of its loan originations, to high risk loans, which jumped from 19% to 55% of its originations. WaMu and its subprime lender, Long Beach Mortgage, securitized hundreds of billions of dollars in high risk, poor quality, sometimes fraudulent mortgages, at times without full disclosure to investors, weakening U.S. financial markets. New analysis shows how WaMu sold some of its high risk loans to Fannie Mae and Freddie Mac, and played one off the other to make more money. Regulatory Failures. The Office of Thrift Supervision (OTS), Washington Mutual’s primary regulator, repeatedly failed to correct WaMu’s unsafe and unsound lending practices, despite logging nearly 500 serious deficiencies at the bank over five years, from 2003 to 2008. New information details the regulator’s deference to bank management and how it used the bank’s short term profits to excuse high risk activities. Although WaMu recorded increasing problems from its high risk loans, including delinquencies that doubled year after year in its risky Option Adjustable Rate Mortgage (ARM) portfolio, OTS examiners failed to clamp down on WaMu’s high risk lending. OTS did not even consider bringing an enforcement action against the bank until it began losing substantial sums in 2008. OTS also failed until 2008, to lower the bank’s overall high rating or the rating awarded to WaMu’s management, despite the bank’s ongoing failure to correct serious deficiencies. When the Federal Deposit Insurance Corporation (FDIC) advocated taking tougher action, OTS officials not only refused, but impeded FDIC oversight of the bank. When the New York State Attorney General sued two appraisal firms for colluding with WaMu to inflate property values, OTS took nearly a year to conduct its own investigation and finally recommended taking action -- a week after the bank had failed. The OTS Director treated WaMu, which was its largest thrift and supplied 15% of the agency’s budget, as a “constituent” and struck an apologetic tone when informing WaMu’s CEO of its decision to take an enforcement action. When diligent oversight conflicted with OTS officials’ desire to protect their “constituent” and the agency’s own turf, they ignored their oversight responsibilities. Inflated Credit Ratings. The Report concludes that the most immediate cause of the financial crisis was the July 2007 mass ratings downgrades by Moody’s and Standard & Poor’s that exposed the risky nature of mortgage-related investments that, just months before, the same firms had deemed to be as safe as Treasury bills. The result was a collapse in the value of mortgage related securities that devastated investors. Internal emails show that credit rating agency personnel knew their ratings would not “hold” and delayed imposing tougher ratings criteria to “massage the … numbers to preserve market share.” Even after they finally adjusted their risk models to reflect the higher risk mortgages being issued, the firms often failed to apply the revised models to existing securities, and helped investment banks rush risky investments to market before tougher rating criteria took effect. They also continued to pull in lucrative fees of up to $135,000 to rate a mortgage backed security and up to $750,000 to rate a collateralized debt obligation (CDO) – fees that might have been lost if they angered issuers by providing lower ratings. The mass rating downgrades they finally initiated were not an effort to come clean, but were necessitated by skyrocketing mortgage delinquencies and securities plummeting in value. In the end, over 90% of the AAA ratings given to mortgage-backed securities in 2006 and 2007 were downgraded to junk status, including 75 out of 75 AAA-rated Long Beach securities issued in 2006. When sound credit ratings conflicted with collecting profitable fees, credit rating agencies chose the fees. Investment Banks and Structured Finance. Investment banks reviewed by the Subcommittee assembled and sold billions of dollars in mortgage-related investments that flooded financial markets with high-risk assets. They charged $1 to $8 million in fees to construct, underwrite, and market a mortgage-backed security, and $5 to $10 million per CDO. New documents detail how Deutsche Bank helped assembled a $1.1 billion CDO known as Gemstone 7, stood by as it was filled it with low-quality assets that its top CDO trader referred to as “crap” and “pigs,” and rushed to sell it “before the market falls off a cliff.” Deutsche Bank lost $4.5 billion when the mortgage market collapsed, but would have lost even more if it had not cut its losses by selling CDOs like Gemstone. When Goldman Sachs realized the mortgage market was in decline, it took actions to profit from that decline at the expense of its clients. New documents detail how, in 2007, Goldman’s Structured Products Group twice amassed and profited from large net short positions in mortgage related securities. At the same time the firm was betting against the mortgage market as a whole, Goldman assembled and aggressively marketed to its clients poor quality CDOs that it actively bet against by taking large short positions in those transactions. New documents and information detail how Goldman recommended four CDOs, Hudson, Anderson, Timberwolf, and Abacus, to its clients without fully disclosing key information about those products, Goldman’s own market views, or its adverse economic interests. For example, in Hudson, Goldman told investors that its interests were “aligned” with theirs when, in fact, Goldman held 100% of the short side of the CDO and had adverse interests to the investors, and described Hudson’s assets were “sourced from the Street,” when in fact, Goldman had selected and priced the assets without any third party involvement. New documents also reveal that, at one point in May 2007, Goldman Sachs unsuccessfully tried to execute a “short squeeze” in the mortgage market so that Goldman could scoop up short positions at artificially depressed prices and profit as the mortgage market declined. Recommendations. The Report offers 19 recommendations to address the conflicts of interest and abuses exposed in the Report. The recommendations advocate, for example, strong implementation of the new restrictions on proprietary trading and conflicts of interest; and action by the SEC to rank credit rating agencies according to the accuracy of their ratings. Other recommendations seek to advance low risk mortgages, greater transparency in the marketplace, and more protective capital, liquidity, and loss reserves.
www.futuresmag.com/News/2011/4/Pages/Senate-report-identifies-.aspx
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Post by sandi66 on Apr 15, 2011 5:20:30 GMT -5
Tip: Will FDIC cover your deposits? Published: April 14, 2011 6:47 PM More than 320 banks have failed since 2009. Nearly 900 more are on the FDIC's "Problem Bank List" because they may have solvency issues. (The FDIC does not release the names of the banks on its list.) When a bank fails, everyone with deposits covered by FDIC insurance is made whole immediately. But those whose deposits exceed insurance limits may lose money if the FDIC can't find a buyer for... www.newsday.com/business/retirement/tip-will-fdic-cover-your-deposits-1.2819039
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Post by sandi66 on Apr 15, 2011 5:21:38 GMT -5
April 14, 2011 05:55 PM Eastern Daylight Time First BanCorp Announces Amendment to U.S. Treasury Agreement SAN JUAN, Puerto Rico--(BUSINESS WIRE)--First BanCorp (the “Corporation”), (NYSE:FBP), (NYSE:FBPPrA), (NYSE:FBPPrB), (NYSE:FBPPrC), (NYSE:FBPPrD), (NYSE:FBPPrE), announced today that it has signed a second amendment to the Certificate of Designations of the Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series G (the “Series G Preferred Stock”) held by the United States Department of the Treasury (the “U.S. Treasury”) in connection with the Exchange Agreement executed on July 7, 2010, as amended. This amendment reflects the U.S. Treasury’s agreement to extend the date by when the Corporation is required to complete an equity raise in order to compel conversion of the Series G Preferred Stock into shares of common stock by six months to October 7, 2011. About First BanCorp First BanCorp is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida, and of FirstBank Insurance Agency. First BanCorp and FirstBank Puerto Rico all operate within U.S. banking laws and regulations. The Corporation operates a total of 170 branches, stand-alone offices and in-branch service centers throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a small loan company; FirstBank Puerto Rico Securities, a broker-dealer subsidiary; First Management of Puerto Rico; and FirstMortgage, Inc., a mortgage origination company. In the U.S. Virgin Islands, FirstBank operates First Insurance VI, an insurance agency, and First Express, a small loan company. Additional information about First BanCorp may be found at www.firstbankpr.com. Safe Harbor This press release may contain “forward-looking statements” concerning the Corporation’s future economic performance. The words or phrases “expect,” “anticipate,” “look forward,” “should,” “believes” and similar expressions are meant to identify “forward-looking statements” within the meaning of Section 27A of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbor created by such section. The Corporation wishes to caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and to advise readers that various factors, including, but not limited to, uncertainty about whether the Corporation will be able to fully comply with the written agreement dated June 3, 2010 that the Corporation entered into with the Federal Reserve Bank of New York (“FED”) and the order dated June 2, 2010 (the “Order”) that the Corporation and FirstBank Puerto Rico entered into with the FDIC and the Office of the Commissioner of Financial Institutions of Puerto Rico that, among other things, require the Corporation to attain certain capital levels and reduce its special mention, classified, delinquent and non-accrual assets; uncertainty as to whether the Corporation will be able to issue $350 million of equity so as to meet the remaining substantive condition necessary to compel the U.S. Treasury to convert into common stock the shares of Series G Preferred Stock that the Corporation issued to the U.S. Treasury; uncertainty as to whether the Corporation will be able to complete future capital-raising efforts; uncertainty as to the availability of certain funding sources, such as retail brokered CDs; the risk of not being able to fulfill the Corporation’s cash obligations or pay dividends to its shareholders in the future due to its inability to receive approval from the FED to receive dividends from FirstBank Puerto Rico; the risk of being subject to possible additional regulatory actions; the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and their impact on the credit quality of the Corporation’s loans and other assets, including the Corporation’s construction and commercial real estate loan portfolios, which have contributed and may continue to contribute to, among other things, the increase in the levels of non-performing assets, charge-offs and the provision expense and may subject the Corporation to further risk from loan defaults and foreclosures; adverse changes in general economic conditions in the United States and in Puerto Rico, including the interest rate scenario, market liquidity, housing absorption rates, real estate prices and disruptions in the U.S. capital markets, which may reduce interest margins, impact funding sources and affect demand for all of the Corporation’s products and services and the value of the Corporation’s assets; the Corporation’s reliance on brokered CDs and the Corporation’s ability to obtain, on a periodic basis, approval to issue brokered CDs to fund operations and provide liquidity in accordance with the terms of the Order; an adverse change in the Corporation’s ability to attract new clients and retain existing ones; a decrease in demand for the Corporation’s products and services and lower revenues and earnings because of the continued recession in Puerto Rico and the current fiscal problems and budget deficit of the Puerto Rico government; a need to recognize additional impairments on financial instruments or goodwill relating to acquisitions; uncertainty about regulatory and legislative changes for financial services companies in Puerto Rico, the United States and the U.S. and British Virgin Islands, which could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from prior results and anticipated or projected results; uncertainty about the effectiveness of the various actions undertaken to stimulate the United States economy and stabilize the United States financial markets, and the impact such actions may have on the Corporation's business, financial condition and results of operations; changes in the fiscal and monetary policies and regulations of the federal government, including those determined by the Federal Reserve System, the FDIC, government-sponsored housing agencies and local regulators in Puerto Rico and the U.S. and British Virgin Islands; the risk of possible failure or circumvention of controls and procedures and the risk that the Corporation’s risk management policies may not be adequate; the risk that the FDIC may further increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an additional increase in the Corporation’s non-interest expense; risks of not being able to generate sufficient income to realize the benefit of the deferred tax asset; risks of not being able to recover the assets pledged to Lehman Brothers Special Financing, Inc.; changes in the Corporation’s expenses associated with acquisitions and dispositions; the adverse effect of litigation; developments in technology; risks associated with further downgrades in the credit ratings of the Corporation’s long-term senior debt; general competitive factors and industry consolidation; and the possible future dilution to holders of common stock resulting from additional issuances of common stock or securities convertible into common stock. The Corporation does not undertake, and specifically disclaims any obligation, to update any “forward-looking statements” to reflect occurrences or unanticipated events or circumstances after the date of such statements. Contacts First BanCorp Alan Cohen, 787-729-8256 Senior Vice President Marketing and Public Relations alan.cohen@firstbankpr.com www.businesswire.com/news/home/20110414007033/en/BanCorp-Announces-Amendment-U.S.-Treasury-Agreement
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Post by sandi66 on Apr 15, 2011 5:25:15 GMT -5
Unit of Spain's Grupo Santander penalized in U.S. Published April 14, 2011 Washington – Sovereign Bank, an affiliate of Spain's Grupo Santander, is one of 14 financial institutions in the United States being sanctioned for misconduct and negligence in mortgage loan servicing and foreclosure practices, several U.S. government agencies said. The investigation was conducted by the Federal Reserve, Office of Comptroller of the Currency (OCC), FDIC and the Office of Thrift Supervision (OTS). The latter entity ordered Sovereign, Aurora, EverBank and OneWest Bank to take corrective actions in servicing and foreclosure processes and each must submit plans acceptable to the Federal Reserve. So far, no penalties have been announced against any of the 14 cited institutions. The investigation of Sovereign was begun in late 2010 and, according to the OTS, the bank - "without admitting or denying" that reasons exist for the OTS to initiate an administrative action - accepted the order from the supervisory agency. Meanwhile, the Federal Reserve said on its Web page that the 14 institutions, which represent 68 percent of the mortgage market, demonstrated a "pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing." The other banks being sanctioned by the Fed are Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase & Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company. The Fed also said that the "deficiencies" at these institutions "represent significant and pervasive compliance failures and unsafe and unsound practices." The investigation found that the banks' deficiencies included the filing of inaccurate affidavits and other documentation in foreclosure proceedings, inadequate oversight of attorneys and other third parties involved in the foreclosure process, inadequate staffing and training of employees and the failure to effectively coordinate the loan modification and foreclosure process to ensure effective communications to borrowers seeking to avoid foreclosures. Although the sanctions announced on Thursday did not include any mention of fines, they could well be imposed in the future since the Fed said that it believes that in these cases "monetary sanctions are appropriate" and such penalties will indeed be announced. The measure requires that the cited banks establish a variety of obligatory programs and undergo reviews conducted by independent firms of their loan processing procedures and their oversight of risk management, audit and compliance programs. Fines and other corrective measures could also result from an investigation being conducted by 50 state attorneys general and the Justice Department. latino.foxnews.com/latino/money/2011/04/14/unit-spains-grupo-santander-penalized/
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Post by sandi66 on Apr 15, 2011 5:32:09 GMT -5
China's inflation rises again; growth still high By JOE McDONALD , 04.15.11, 06:12 AM EDT BEIJING -- China's inflation jumped to a 32-month high in March despite government efforts to cool an overheated economy, adding to pressure for more interest rate hikes and other controls. Prices rose 5.4 percent over a year ago in the world's second-largest economy, driven by 11.7 percent surge in politically sensitive food costs, data showed Friday. That was up from February's 4.9 percent and a setback for communist leaders who have declared taming inflation their priority and raised interest rates four times since October. "They will have to step up their fight against inflation," said Credit Agricole CIB senior economist Dariusz Kowalczyk. Analysts say prices are being driven by the dual pressures of consumer demand that is outstripping food supplies and a bank lending boom that was allowed to run too long after it helped China ward off the 2008 global crisis. Regulators are clamping down on credit but analysts say it will be months before the effect is seen. Inflation is a political threat to the Communist Party because it erodes the public's gains from economic growth, possibly triggering unrest. Food prices are especially volatile in a society where poor families spend up to half their incomes on food. Beijing's failure to cool prices and growth have frustrated communist leaders who also face mounting foreign pressure to allow China's yuan to rise in value and narrow its swollen trade surplus. Reflecting rising official urgency, Premier Wen Jiabao called in a speech Thursday for authorities to step up the anti-inflation fight. The economy grew 9.7 percent in the first three months of the year - little changed from the previous quarter's 9.8 percent - despite government efforts to steer growth to a sustainable level following last year's double-digit expansion. "The government cannot seem to slow the economy down," said IHS ( IHS - news - people ) Global Insight analyst Alistair Thornton in a report. China's surging growth and possibly more drastic government efforts to rein it in could have global repercussions. Washington and other governments complain exports are supported by exchange rate controls that they say keep China's yuan undervalued. They say that swells its trade surplus and hurts foreign competitors at a time when other countries are trying to create jobs. Chinese leaders have pledged to restructure the economy by promoting consumer spending to reduce reliance on exports and investment. They have promised a stronger yuan, which would both ease trade strains and boost Chinese consumer spending power. But they have taken few practical steps. Officials including Premier Wen Jiabao have affirmed support for exporters by rejecting a rapid rise in the yuan - a move that would boost consumer spending power - on the grounds that might cost jobs. China foreign reserves soared past $3 trillion in March as Beijing bought dollars and other currency to restrain the yuan's rise despite a June pledge to allow more exchange rate flexibility. The International Monetary Fund cited China's currency controls this week as a possible factor that might hamper a global recovery. Analysts expect at least one more rate hike in the coming months and for Beijing to allow a faster rise in the yuan, which has gained about 4.5 percent against the dollar since a June pledge of more exchange rate flexibility. A stronger yuan could help to cool inflation by making oil and other imports cheaper in Chinese currency terms. Still, many analysts expect inflation to rise further through at least midyear before easing. "We clearly feel that prices are constantly rising. Every few months there is a new price for things," said Zhang Haichao, a 23-year-old messenger in Beijing. More drastic measures to cool growth and prices could have repercussions abroad if they cut Chinese demand for iron ore from Australia and Brazil, factory machinery from the United States and Europe and other foreign goods. March inflation was the highest since July 2008, when prices rose 7.1 percent. In his speech Thursday, Wen cited surging housing costs and rising public expectations of higher inflation, the official Xinhua News Agency reported. Such expectations can lead to higher wage demands and retail price increases. "We need to skillfully handle the relationship between promoting economic growth and curbing inflation," Wen said at a Cabinet meeting, according to Xinhua. Also in the first quarter, retail sales rose 16.3 percent over a year ago. Spending on factories, real estate and other fixed assets rose 25 percent in March over a year ago despite investment curbs. The jump in food costs came at a time when prices usually fall as spring harvests start to come in, indicating inflation pressures are strong. "We are seeing continued very strong growth momentum," Kowalczyk said. "The government has not succeeded in containing inflation, despite increases in interest rates. So they will have to do more." www.forbes.com/feeds/ap/2011/04/15/business-financials-as-china-economy_8409869.html
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Post by sandi66 on Apr 18, 2011 6:29:51 GMT -5
Morgan Stanley fund fails to repay debt on Tokyo property By Junko Fujita Junko Fujita – Fri Apr 15, 1:30 pm ET TOKYO (Reuters) – A Morgan Stanley property fund failed to make $3.3 billion in debt payments by a deadline on Friday, handing over the keys to a central Tokyo office building to Blackstone (BX.N) and other investors, the largest repayment failure of its kind in Japan. It marks the latest fallout from a series of highly leveraged investments by Morgan Stanley (MS.N), one of the most aggressive investors in worldwide property markets before the global financial crisis. The $4.2 billion MSREF V real estate fund missed its April 15 deadline to repay 278 billion yen($3.3 billion) worth of debt packaged in commercial mortgage-backed securities on the 32-storey Shinagawa Grand Central Tower, a property which has seen its value plunge, two people involved in the transaction said. They spoke on condition of anonymity due to the sensitive nature of the matter. A Morgan Stanley spokeswoman in Tokyo declined to comment. A New York based spokesman for Blackstone, which holds the most junior portion of the debt and gains the right to market the building for seven months, was not immediately available for comment. This is the largest repayment failure of debt packaged in CMBS in Japan, according to analysts and industry experts, bigger than the 112 billion yen that real estate investor K.K. daVinci Holdings failed to pay on the Pacific Century Place office building. MSREF V bought the Shinagawa property for 140 billion yen in 2004 from Mitsubishi Corp (8058.T) and Mitsubishi Motors (7211.T). The building now houses Microsoft's Japan offices among other tenants. Morgan Stanley repackaged the loans into 125 billion yen worth of CMBS in 2005, according to a website for Morgan Stanley. Taking advantage of a run-up in property prices, MSREF V refinanced its debt on the Shinagawa property in 2007 with new debt worth 278 billion yen, twice the value of its purchase and likely yielding a tidy profit for the fund. The refinanced debt was sold in six different tranches by Morgan Stanley to investors. (Reporting by Junko Fujita; Editing by Edwina Gibbs and Nathan Layne) news.yahoo.com/s/nm/20110415/bs_nm/us_morgan_stanley_real_estate
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Post by sandi66 on Apr 21, 2011 8:32:39 GMT -5
50 Factors Launching Gold By: Jim Willie CB, GoldenJackass.com
goldseek.com APRIL 20, 2011
Edification is not the word that comes to mind when observing an interview with Larry Fink of Blackstone this morning on network financial news. It was inspirational if not humorous, and somewhat pathetic. Of course the interviewer treated him like royalty, when just a syndicate captain, a Made Man. As a cog within the US financial hierarchy, he was asked why Gold is approaching record price levels near $1500 per ounce. He gave his best 10-second answer, showing no depth of comprehension but an excellent grip of propaganda laced with simplistic distortion. He said, "GOLD IS RISING FROM ALL THE GLOBAL INSTABILITY, AND NOT FROM INFLATION AT ALL." Sounds good, but it lacks much reflection of the world of reality burdened by complexity and interconnectivity that the enlightened perceive. At least he did not babble about Gold being in an asset bubble. It cannot, since Gold is money. It is curious that all the analysts, bankers, fund managers, corporate chieftains who did not advise on Gold investment over the last ten years are precisely whom the financial network news appeals to for guidance in the current monster Gold bull run. They knew nothing before, and they know nothing now. The major US news networks carry the Obama water while the USCongressional members carry the USBanker robes and show respect with genuflection before the priests. But guys like Fink are their harlot squires. Poor Ben Bernanke, despite his high priest position, does not gather a fraction of respect that Alan Greenspan did even though Alan presided over the collapse. The wild card possibly later this year or 2012 will be a national movement to force mandatory wage gains, and thus avert a national economic collapse. The squeeze is on in a powerful manner to both businesses and households. ANOTHER STRONG GOLD BREAKOUT As long as Quantitative Easing programs are in place and actively pursued, Gold & Silver prices will soar. The programs are urged by exploding budget deficits and absent USTBond demand. That translates to a ruined USDollar currency. Gold & Silver respond to the debasement and ruin. Efforts will become ridiculously stretched to save the USDollar, but will fail. QE will go global and secretive, assuring tremendous additional gains in the Gold & Silver price. No effort to liquidate the big USbanks will occur, thus assuring the process will continue until systemic breakdown then failure. The more extraordinary the measures to save the embattled insolvent fraudulent USDollar, the more the Gold & Silver price will soar. It is that simple. Gold & Silver will soar as long as central banks continue to put monetary inflation machinery to work. They are attempting to provide artificial but coordinated USTreasury Bond demand. In the process their efforts will continue to push the cost structure up further. In my view, since the Japan natural disaster hit with financial fallout, the Global QE is very much in effect, but not recognized as a global phenomenon. It pushes up Gold in uniform fashion worldwide.
50 FACTORS POWERING THE GOLD BULL
1) USFed is stuck at 0% for over two years and printing $1.7 trillion in Quantitative Easing, otherwise called monetary hyper inflation. They are not finished destroying both money and capital.
2) USFed tripled its balance sheet, with over half of it bonds of exaggerated value, while it gobbled up toxic mortgage bonds as buyer of last resort. The mortgage bonds have turned worthless. The USFed waits for a housing revival to bail itself out, but it will not arrive.
3) Debt monetization has gone haywire, as over 70% of USTBond sales from the USFed printing press. The QE was urgently needed, since legitimate buyers vanished. Even the primary dealers have been reimbursed in open market operations within a few weeks.
4) PIMCO has shed its entire USTreasury Bond holdings, seeing no value. They joined many foreign creditors in an unannounced buyer boycott in disgusted reaction to QE which is essentially a compulsory unilateral debt writedown.
5) Growing USGovt deficits have run over $1.5 trillion annually, with absent cuts, obscene entitlements, endless war. The prevailing short-term 0% interest rates are out of synch with exploding debt supply and rising price inflation.
6) Unfunded USGovt liabilities total nearly $100 trillion for medicare, social security, pensions, and more. The obligations are never included in the official debt. It represents insult to injury within insolvency.
7) Standard & Poors warned that USGovt could lose AAA rating in lousy credit outlook, one chance in three within the next two years. Ironically, the announcement came on the day when the USGovt exceeded its debt limit. The network news missed it.
8) State & Municipal debt have collapsed, as 41 states have huge shortfalls, and four large states are broken. They might receive a federal bailout. It could be called QE3, maybe QE4.
9) Coordinated USTBond purchases from Japanese sales have relieved the USFed, as other major central banks act as global monetarist agents. The sales by Japan are vast and growing. Witness the last phase in unwind of Yen Carry Trade, where 0% borrowed Japanese money funded the USTreasury Bonds and US Stocks.
10) Quantitative Easing, a catch word for extreme monetary inflation and debt monetization, has become engrained into global central bank policy, soon hidden. It is so controversial and deadly to the global financial structures that it will go hidden, and attempt to avoid the furious anger in feedback by global leaders. This is the most important and powerful of all 50 factors in my view.
11) The FedFunds Rate is stuck near 0%, yet the actual CPI is near 10%, for a real rate of interest of minus 9%. Historically a negative real rate of interest has been the primary fuel for a Gold bull. This time the fuel has been applied for a longer period of time, and a bigger negative real rate than ever.
12) The USGovt claims to have 8000 tons of Gold in reserve, but it is all in Deep Storage, as in unmined ore bodies. The collateral for the USDollar and USTreasury debt is vacant. It is in raw form like in the Rocky Mountain range or Sierra Nevada range.
13) Fast rising food prices, fast rising gasoline prices, and fast rising metals, coffee, sugar, and cotton serve as testament to broad price inflation. So far it has shown up on the cost structure. Either the business sector will vanish from a cost squeeze or pass on higher costs as end product and service price increases.
14) The entire world seeks to protect wealth from the ravages of inflation & the American sponsored QE by buying Gold & Silver. The rest of the world can spot price inflation more effectively than the US population. The United States is subjected to the world's broadest and most pervasive propaganda in the industrialized world.
15) The European sovereign debt breakdown with high bond yields in PIIGS nations points out the broken debt foundation to the monetary system. The solutions like with Greece in May 2010 were a sham, nothing but a bandaid and cup of elixir. Spain is next to experience major shocks that destabilize all of Europe again, this time much bigger than Greece. The Portuguese Govt debt rises toward 10% on the 10-year yield, while the Greek Govt debt has risen to reach 20% on the 2-year yield.
16) Germany is pushing for Southern Europe bank climax in their Euro Central Bank rate hike. Europe will be pushed to crisis this year, orchestrated by the impatient and angry Germans. They have no more appetitive for $300 to $400 billion in annual welfare to the broken nations in Southern Europe.
17) Isolation of the USFed and Bank of England and Bank of Japan has come. The small rate hike by the European Central Bank separated them finally. The Anglos with their Japanese lackeys are the only central banks not raising rates. With isolation comes all the earmarks on the path to the Third World.
18) The shortage of gold is acute, as 51 million gold bars have been sold forward versus the 11 million held by the COMEX in inventory. Be sure that hundreds of millions of nonexistent fractionalized gold ounces are polluting the system. Word is getting out that the COMEX is empty of precious metals.
19) Such extreme Silver shortage has befallen the COMEX that the corrupted metals exchange routinely offers cash settlement in silver with a 25% bonus if a non-disclosure agreement is signed. The practice cannot be kept under wraps, as some hedge funds push for fat returns in under two months holding positions with delivery demanded.
20) China has begun grand initiatives to replace its precious metal stockpiles. They are pursuing the Yuan currency to become a global reserve currency. As they build collateral for the Yuan, they are also elevating Silver as reserves asset.
21) A global shortage of Gold & Silver has been realized in national mint production. From the United States to Canada to Australia to Germany, shortages exist. Many interruptions will continue amidst the shortages, which feed the publicity.
22) The Teddy Roosevelt stockpile of 6 million Silver ounces was depleted in 2003. He saw the strategic importance of Silver for industrial and military applications. The USEconomy and USMilitary will turn into importers on the global market.
23) The betrayal of China by USGovt in Gold & Silver leases is a story coming out slowly. The deal was cut in 1999, associated with Most Favored Nation granted to China. But the Wall Street firms broke the deal, betrayed the Chinese, and angered them into highly motivated action. No longer are the Chinese big steady USTBond buyers, part of the deal also.
24) Every single US financial market has been undermined and corrupted from grotesque intervention, constant props, and fraudulent activity. The degradation has occurred under the watchful eyes of compromised regulators. Fraud like the Flash Crash and NYSE front running by Goldman Sachs is protected by the FBI henchmen.
25) The USEconomy operates on a global credit card, enabling it to live beyond its means. The USGovt exploits the compulsory foreign extension of credit in USTBonds, by virtue of the USDollar acting as global reserve currency. Foreign nations are compelled to participate but that is changing.
26) The USMilitary conducts endless war adventures for syndicate profits. They use the USTreasury Bond as a credit card. The wars cost of $1 billion per day is considered so sacred, that it is off the table in USGovt budget call negotiations, debates, and agreements.
27) Narcotics funds have proliferated under the USMilitary aegis. The vertically integrated narcotics industry is the primary plank of nation building in Afghanistan. The funds keep the big
US banks alive from vast money laundering.
28) No big US bank liquidations have occurred, despite their deep insolvency. Any restructure toward recovery would have the liquidations are the first step. The USEconomy is stuck in a deteriorating swamp since the Too Big To Fail mantra prevents the urgent but missing step.
29) The unprosecuted multi-$trillion bond fraud over the last decade has harmed the US image, prestige, and leadership. The main perpetrators are the Wall Street bankers and their lieutenants appointed at Fannie Mae and elsewhere. They bankers most culpable remain in charge at the USDept Treasury and other key supporting posts like the FDIC, SEC, and CFTC.
30) The ugly daughters Fannie Mae and AIG are forever entombed in the USGovt. They operate as black hole expenses whose fraud must be contained. The costs involved are in the $trillions, all hidden from view like the fraud. Fannie Mae remains the main clearinghouse for several $trillion fraud programs still in operation.
31) The US banking system cannot serve as an effective credit engine dispenser, an important function within any modern economy. It is deeply insolvent, and growing more insolvent as the property market sinks lower in valuation. The banks lack reserves, and hide their condition by means of the FASB permission to use fraudulent accounting.
32) The big US banks are beneficiary of continuous secret slush fund support from the USGovt and USFed. Their sources and replenishments have been gradually revealed. The TARP Fund event will go down in modern history as the greatest theft the world has ever seen, easily eclipsing the biggest mortgage bond fraud in history.
33) The insolvent big US banks continue to sit at the USGovt teat. The vast umbilical cord of banker welfare has not gone away. Goldman Sachs still is in control of the funding machinery.
34) The shadow banking system based upon credit derivatives keeps interest rates near 0%. The usury cost of money is artificially low near nothing. As money costs nothing, capital is actively and rapidly destroyed.
35) A vast crime syndicate has taken control of the USGovt. A vast crime syndicate has taken control of the USMilitary. A vast crime syndicate has taken control of the USCongress. A vast crime syndicate has taken control of the US press networks.
36) A chronic decline of the US housing sector keeps the USEconomy in a grand decline with constant deterioration. With one million bank owned homes in inventory, a huge unsold overhang of supply prevents any recovery of housing prices. Home equity continues to drain, and bank balance sheets continue to erode.
37) Over 11 million US homes stand in negative equity. The sum equals to 23.1% of households. They will not participate much in the USEconomy, except when given handouts. They have become downtrodden.
38) The USEconomy will not benefit from a export surge. The US industrial base has no critical mass after 30 years of dispatch to the Pacific Rim & China. The industry must contend with rising costs in offset to the falling USDollar, which is cited as providing the mythical benefit. Then can export in droves if they do so at a loss.
39) A global revolt against the USDollar is in its third years. The global players work to avoid the US$ usage in trade settlement. Several bilateral swap facilities flourish, mostly with China. If China supplies products, then the Yuan currency will be elevated to global reserve currency.
40) Global anger and resentment over three decades has spilled over. The World Bank and IMF have been routinely used by the US bankers to safeguard the USDollar and Anglo banker hegemony. Neither financial agency commands the respect of yesteryear.
41) A middle phase has begun in a powerful Global Paradigm Shift. The transfer moves power East where the wealth engines of industry lie, far from the fraudulent banking centers. The next decade will feature the Chinese as bankers, since their war chest contains over $3 trillion.
42) The crumbling global monetary system was built on toxic sovereign debt. Legal tender has been nothing more than denominated debt posing as legitimate by legal decree. That is what word FIAT means. The system is gradually breaking in an irreversible manner.
43) The global central bank franchise system has been discredited. It is a failure, which is not recognized by the bank leaders still in charge. The stepwise process of ruin continues with a new sector falling every few months. Next might be municipal bonds.
44) Witness the final phase of a systemic cycle, as the monetary system has run its course. It is saturated with debt from faulty design. The deception cited in the mainstream media focuses upon the credit cycle which will renew. It will not. It will break of its own weight and lost confidence.
45) The recognition has grown substantially that suppression of the Gold price has been the anchor holding fiat system together. The Chinese realize that Gold, when removed, leads to the collapse of the US financial system. They realize it more than the US public. But the syndicate in control of the USGovt understands the concept very well, as they designed the system.
46) The institution of a high level global barter system might soon take root. Gold will sit at its central core, providing stability. No deadbeat nations will participate. That includes the United States and several European nations. The barter system will be as effective as elegant.
47) The movements spread like wildfire in several US states to reinstitute gold as money. In a few states, led by Utah and Virginia, progress has been made for Gold to satisfy debts, public & private. Consider the movement to be in parallel to the Tenth Amendment movements.
48) Anglo bankers have lost control in global banking politics. The phased out G-7 Meeting is evidence. China has wrested control of G-20 Meeting, and has dictated much of its agenda in the last few meetings. The US has been reduced to a diminutive Bernanke and Geithner being ignored in the corner.
49) New loud stirrings by Saudi Arabia seek a new security protector. If security is no longer provided by the USMilitary, then the entire defacto Petro-Dollar standard is put at risk. Remove the crude oil sales in USDollars exclusively, and the US sinks into the Third World with a USDollar currency that cannot stand on its own wretched wrecked fundamentals.
50) The IMF solution to use SDR basket as global reserve is a final desperate ploy. By fashioning a basket of major currencies in a basket, they attempt to enforce a price fixing regime. It is a hidden FOREX currency exchange rate price fixing gambit that will invite a Gold price advance in uniform manner across the currencies bound together. This ploy is being planned in order to prevent the USDollar from dying a horrible death at the expense of the other major currencies. By that is meant at the expense of the other major economies which would otherwise have to operate at very high exchange rates.
THE BIGGEST UPCOMING NEW FACTORS Introduction of a New Nordic Euro currency is near its introduction. The implementation with a Gold component will send Southern European banks into the abyss, marred by default. The new currency has the support from Russia and China, even the Persian Gulf. In my view, it is a US Dollar killer. The first nations to institute a new monetary system for banks and commerce will be the survivors. The rest will slide into the darkness of the Third World.
Gold & Silver seem to be the only assets rising in price, an extension of a terrific 2010 decade. The exceptions are farmland and the US Stock market. However, stock valuations are propped by constant and admitted US Govt support. Their efforts are mere attempts to keep pace with the US Dollar decline, as stocks merely maintain a constant purchase power.
A hidden overarching hand seeks the global Gold Standard as the bonafide solution. Darwin is at work, but Adam Smith turns a new chapter. The crumbling monetary solution demands a solution. Further investment in the current system assures a devastating decline into the abyss of insolvency and ruin.
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Post by sandi66 on May 2, 2011 10:49:43 GMT -5
The Dollar: Sliding or Crashing? Mon, May 2 2011, 12:08 GMT Much has been made of the persistent slide in the dollar in recent months. Many proclaim it’s the end of its status as the primary world reserve currency. Others suggest it’s a notice of the demise of America. These viewpoints tend to quickly spread to Main Street, and that has a tendency to create panic. How bad is it? For some broader perspective, the Dollar Index (the dollar against a basket of major currencies) still sits 3.5 percent above the lows of 2008. Measured against over 75 currencies in the world, the dollar is weaker against 26, flat against 11 and stronger against 38 since the onset of the global financial crisis. And it still commands 62 percent of global currency reserves — down only three percentage points from pre-crisis levels. So, while it’s made new all-time lows against some currencies, it’s not a bloodletting like the media would have you believe. In fact, from a fundamental and technical perspective, it’s so stretched it has all of the makings of a market that’s going to snap-back violently. Nonetheless, the drama surrounding the panic scenarios prompted journalists this week to prod a response out of Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke. Geithner made an unusually defensive comment about the dollar saying, as long as he’s around the U.S. has a strong-dollar policy. Bernanke maintained his rare but consistent comments on the dollar, saying a strong and stable dollar was important for the U.S. and the global economy and that the Fed’s policy efforts were consistent with achieving a strong dollar. So if policymakers favor a stronger dollar, why aren’t they showing concern about its slide? Some would suggest they just don’t get it. Others insist there is a covert operation underway by U.S. officials to broadly and desperately devalue the dollar. Here’s my take … First, while some near-term weakness can be favorable for the U.S. economy, a more protracted decline in the dollar at the recent pace would mean very negative implications for both the U.S. and the rest of the world — no one wins. So a weak dollar conspiracy is not the answer. Clearly U.S. policymakers like a weaker dollar in the near term. It helps stimulate exports and the growth of manufacturing, a historically important ingredient for recovering from economic recession and especially important in the effort of rebalancing the U.S. economy. In fact, exports have become a big driver of economic growth throughout the “recovery” phase. The Wall Street Journal reports that exports have made the biggest 18-month contribution to U.S. GDP growth on record. That’s the Good. How about the Bad? In addition to a supply shock associated with problems in the Middle East and commodity hoarding from China, a weaker dollar is adding to rising commodity prices. The biggest threat of a weaker dollar though, if perceived as open-ended, is capital flight, which can set off a dangerous threat to the country’s solvency. Despite the many fears, that isn’t happening. The truth is, growth in the U.S., even if it doesn’t hit the optimistic projections this year, continues to be among the top for major developed economies. Meanwhile, inflation (even headline inflation) and market interest rates remain low, and more stable than their counterparts — all solid underpinnings for the relative value of a currency in this environment. So given the problems around the world and the reality that the world is in a slow, bumpy recovery, the slide in the dollar in recent months is consistent with just another ebb and flow within the currency markets. To sum up: While there are significant risks, the facts argue that the weaker dollar isn’t a sign of a U.S. economic catastrophe. To the contrary, on a relative basis, the U.S. economy is still plugging along. But Who Is That Hurting? China. China has been trying, unsuccessfully, to get a grip on inflation. And rising global asset prices, inflamed by a weaker dollar, puts pressure on China to finally look to its currency policy as a tool to curtail inflation. As such, we may soon see a dollar devaluation that the entire world would embrace: Against the Chinese yuan! After six years of consistent, but weak, global prodding of the Chinese to appreciate their currency, diplomacy hasn’t worked. The Chinese have allowed their currency to appreciate a measly 3.6 percent against the dollar on average per year since de-pegging in 2005. Meanwhile their economy has grown by nearly 250 percent in the same time frame. Clearly, the Chinese have maintained a massive unfair advantage in global trade via their weak currency policy. And the world has always had two options in dealing with it: Convince them to adjust for the greater good of the global economy, or Export inflation to China to forcibly adjust up the cost of Chinese exports by driving up wages and input prices. Now it appears that we’re seeing option number two play out. And China’s fight to gain control over inflation, isn’t going well. Perhaps soon, China will finally act to strengthen their currency in a meaningful way. That would go a long way toward putting the global economy on a path of sustainable recovery, and correcting the continued booms and busts taking place in global economies and financial markets. Regards, Bryan www.fxstreet.com/fundamental/market-view/the-dollar-sliding-or-crashing/2011/05/02/
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Post by only2percent on Jul 16, 2011 20:41:43 GMT -5
Seems like a pattern. Patriot Act extention, my a$$ ... UK. Murdoch says "Sorry" to the BritishReuters, 7/16/201With full-page ads in seven British newspapers Rupert Murdoch wants to stem the loss of image. Photo: dpa With a late guilty plea media mogul Rupert Murdoch has tried to get the eavesdropping scandal involving his British scandal newspaper "News of the World" in the handle. In full-page newspaper ads Murdoch said "Sorry."
London - but went with Les Hinton, the day before the second top executive in the bottom of the Murdoch affair with. The Dow Jones director and former chief executive of the British newspaper News International Holding just had to take my hat as his successor, the controversial publisher boss Rebekah Brooks.
"We Are Sorry" ("Sorry") is the headline of the ad text, which has been run in all national newspapers published in Britain. The text bears the signature of Rupert Murdoch. "The business of the News of the World, it was another to take responsibility too. It failed when it came to themselves they did. The serious misconduct that happened, sorry," says the text. And Murdoch adds this: "It is clear to me that there is not enough to simply apologize."
Reporter of the Sunday newspaper, according to previous knowledge have systematically bugged the phones of celebrities, politicians and crime victims. The incidents fall into the time when Hinton led the publisher in the UK and also the first details came to light. "When I left News International in December 2007, I thought the rotten part of the" News of the World "would be eradicated," Hinton said late Friday (local time). Previously, Brooks had gone under public pressure. She was until 2003 editor of "News of the World" and then second of Murdoch's British tabloid "The Sun", before she moved in 2009 to the publisher tip from News International.
Murdoch, who the day before had already personally apologized to the families of the kidnap victim Milly Dowler intercepted, announced that a transparent process of enlightenment. "In the coming days, where we will take further concrete steps to solve these things and to pay the damage they have caused, you will hear more from us." Reporters were tapping into the mailbox of the kidnapped, and Milly messages solved. The parents of the then 13-year-olds and the police have been misled.
Rupert Murdoch to testify along with his son James on Tuesday before a parliamentary committee of inquiry into the bugging affair. His apology was accepted in many parts of the British public with skepticism. Murdoch had given only a few days at its U.S. newspaper "The Wall Street Journal," an interview in which he only talk to a few minor errors in the management acknowledged the crisis and accused critics of "junk".
Meanwhile it was announced that Prime Minister David Cameron in March this year, his government resigned in January, spokesman Andy Coulson has received in Cameron's official residence for dinner. Coulson was in 2007, resigned as chief editor of "News of the World". A few days ago, police arrested him. Foreign Secretary William Hague defended in the "Independent" Cameron. The invitation was a "very normal, human thing" was. translate.googleusercontent.com/translate_c?hl=en&rurl=translate.google.com&tl=en&twu=1&u=http://www.abendzeitung-muenchen.de/inhalt.grossbritannien-murdoch-sagt-sorry-zu-den-briten.92daa69c-c7a7-4a66-b487-fbc4892e2306.html&usg=ALkJrhi0yFAipRESRoWYlpe7ck9fDdEpXgAlso done by Murdoch ... Apology is due. Michael Hezarkhani Video / CNN Best Angle - The WTC 2 Media Hoax:www.911research.dsl.pipex.com/ggua175/hezarkhani/
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Post by only2percent on Jul 17, 2011 15:23:28 GMT -5
Bugging affair with "News of the World"London police chief resignsThe most senior British police officer has resigned. The head of Scotland Yard, Paul Stephenson, should not be pursued in the past, including allegations of "News of the World".Old Scotland Yard: Paul Stephenson 2009 in London Old Scotland Yard, Paul Stephenson, 2009 in London17th July 2011 "Because of the eavesdropping scandal, the British tabloid "News of the World" is the head of the London Police Department Scotland Yard, Paul Stephenson, has resigned from his position. At a press conference justified the step Stephenson on Sunday evening with the "speculations and accusations" about connections from Scotland Yard to the newspaper group News International, publisher of Rupert Murdoch. He was in the afternoon the Home Secretary and the Mayor informed of his intention to resign as head of Scotland Yard, said Stephenson.
Scotland Yard had to admit before that a senior policeman 2006-2010 many times met with representatives of the media empire at social events. The police authority is alleged to have, despite initial allegations against the "News of the World" is not revealed in the 2005 wiretapping scandal. A few hours before the resignation of Scotland Yard, the London police chief close confidant Murdoch Rebekah Brooks had been arrested. Brooks was until 2003 editor of "News of the World," at that time, when the eavesdropping occurred. She led until her resignation on Friday, the News International Group." translate.googleusercontent.com/translate_c?hl=en&rurl=translate.google.com&tl=en&twu=1&u=http://www.faz.net/artikel/C31325/abhoeraffaere-bei-news-of-the-world-londoner-polizeichef-tritt-zurueck-30467563.html&usg=ALkJrhhhLYinIgrJefggMm57dbGgx7_DpA
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Post by only2percent on Aug 31, 2011 3:02:07 GMT -5
Pope's visit delays crucial euro-votePublished: 31 Aug 11 08:13 CET Germany's parliamentary vote on Europe's next rescue fund will be delayed until September 29 owing to a visit by Pope Benedict XVI, a leading member of Angela Merkel's ruling party said Tuesday. The pope is due to address parliament on September 22 and a number of deputies have also asked for time off to follow the pope on his official visit to Germany which will end on September 25, according to Michael Meister, deputy leader of the Christian Democrat parliamentary faction. Chancellor Merkel's government is expected to agree Wednesday on extending the mandate of the European Financial Stability Facility (EFSF) which will then be submitted to parliament for debate. It had earlier been expected that a final parliamentary vote would be taken on September 23. European leaders agreed in July to modify the EFSF by allowing it to buy sovereign debt in public markets and loan money to eurozone governments and commercial banks under certain conditions. The reforms must be ratified by lawmakers across the 17-nation eurozone, which has raised concern that it could be a lengthy process. AFP/bk www.thelocal.de/national/20110831-37285.html
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Post by only2percent on Sept 2, 2011 7:54:13 GMT -5
Fund view: Rich trim gold holdings, buy artAn employee displays a gold tooth at a shop that purchases gold in the Ginza district of Tokyo August 23, 2011. Credit: Reuters/Toru HanaiBy Martin de Sa'Pinto ZURICH | Thu Sep 1, 2011 (Reuters) - Some of the world's richest families are cutting their holdings in gold to take profits on the run-up in prices and are buying high-end art to preserve their wealth during market turmoil, an executive advising these families said. While many of these families have been holding gold for a decade or more, building positions of up to 15 percent of their investment portfolio, they are now taking profits and putting the money to work in the art market, said Andrew Nolan, a director of wealth management and advisory firm Stonehage. "Families were well ahead of the market on gold. A lot of them were sitting on large amounts of gold for quite a while," said Nolan, whose company manages $2 billion and advises around 100 families with total wealth of around $30 billion. "Families are putting more into the art market, which held up far better through the crisis than a lot of other assets. There are more emerging markets buyers now, they want trophy assets, which supports prices." Although liquidity has become more of a concern since the financial crisis, rich families are prepared to tie up some of their wealth long term in developing investment themes like farmland and forestry, as well as "lifestyle assets" like art. "If they are investing true family wealth, they are prepared to take a longer-term view," Nolan said. Since the financial crisis, he said, these families are more focused on risk management and have slashed investment leverage. When investing in financial assets, they are avoiding hard to understand investments in favor of simpler products and while they have 15 percent and more in hedge funds they are largely avoiding illiquid and complex strategies. "They are avoiding 'black boxes' and 'structured notes'. They do not want that sort of illiquidity or counterparty risk," Nolan said. "They are not accepting lock-ups or long-time horizons if they do not understand the strategy. They are much more specific in terms of what they expect from hedge fund managers." MORE FAITH IN CORPORATES THAN SOVEREIGNS With 20-25 percent of their investments in fixed income products, families are beginning to rotate out of sovereign debt and into corporate debt. "Many companies are better off than many governments. Families have more faith in corporate at the moment than in a lot of sovereigns," Nolan said. He said clients usually have a predominant currency exposure based on their home country, where they spend most of their money, but have added currency investments to hedge out value swings rather than to profit from movements. "They are now tending to take a much wider currency exposure to mitigate downside risk from sharp currency movements. Speculation is marginal," he said. Many are also very concerned about further turmoil in the banking system. They use multiple banks to keep a lid on counterparty risk, and prefer to deposit with banks that don't have big proprietary investment businesses. Commodities remain popular, but families are holding fewer physical commodities, and avoiding exchange-traded funds (ETFs), as many have to roll positions monthly and can be easily gamed by hedge funds, Nolan said. "A lot of families like playing commodities and energy themes through stocks. They are still avoiding banks and financial companies. Three or four years ago they had much more exposure than now," Nolan said. (Reporting by Martin de Sa'Pinto; Editing by Greg Mahlich) www.reuters.com/article/2011/09/01/us-stonehage-idUSTRE7803NM20110901
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Post by imust on Sept 3, 2011 8:00:55 GMT -5
I have some priceless art on the side of my frig? I'm open to offers on ode de crayon! lol Imust
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Post by only2percent on Sept 7, 2011 11:29:19 GMT -5
Who IPOs during orchestrated depression? NWO Inc. themselves, no less ... Carlyle Files to go PublicBy Reuters Tuesday, September 06, 2011NEW YORK (Reuters) - Carlyle Group filed for an IPO on Tuesday [Sept. 6], a long-awaited move to catch up with rivals Blackstone, KKR and Apollo, but the volatility of global markets means an IPO is unlikely to happen until the first half of 2012. The private equity group's IPO will put the firm, famous for its Washington connections, under even more public scrutiny as it fulfills a longtime desire to become a publicly traded global brand. Still, it could be a difficult road ahead: the U.S. IPO market has struggled as concerns about Europe's debt crisis and a weak recovery in the United States have made markets volatile. A number of deals were pulled last month. "There is going to be pricing pressure for this deal, given the weak demand for financial IPOs and the performance of the listed companies," said Josef Schuster, founder of Chicago-based IPO research and investment house IPOX Schuster. Carlyle's business model partly depends on using the public markets as an exit for its portfolio companies. The market conditions and the poor performance of other listed private equity players like Blackstone Group and Apollo Global Management, and the complex listing of Kohlberg Kravis Roberts & Co. may also dampen investor appetite. Shares in Blackstone, currently valued at $14.6 billion, have dropped by a third since a near-3-year high in late April. Carlyle's filing with the U.S. Securities and Exchange Commission lists an offering size of $100 million, though that may be a placeholder amount. Sources said in June the offering could be as large as $1 billion. Carlyle is expected to move ahead with an IPO in the first half of next year, pending market conditions and regulatory approval, two sources familiar with the situation said on Tuesday. A flotation early next year would avoid the holiday doldrums and give the market more time to recover, said Steven Kaplan, a finance professor at the University of Chicago who specializes in private equity. "This is probably a mildly bullish signal about next year," Mr. Kaplan said. "They wouldn't be doing this if they thought we were in the fall of 2008." But the timing of the filing raises questions. Investors in the last six weeks have shied away from the U.S. junk bond market, and instead flocked to U.S. Treasuries and other lower-yielding assets that are considered safer, Bank of America Merrill Lynch data show. Junk bonds are often used to finance buyout deals. Firms like Carlyle could be in a challenging position if both the IPO market, which provides an exit, and the junk bond market, which provides financing for new deals, are struggling. Carlyle, which has invested in companies including Dunkin Brands, Alliance Boots and Freescale Semiconductor, was valued at $20 billion in September 2007, before the credit crisis sent stock markets sliding. The buyout firm said it generated economic net income, a measure of profitability used by private equity firms, of over $1 billion last year and around $770 million in the first half of this year. Blackstone's second-quarter economic net income was $703 million. Carlyle has been famed, and sometimes criticized, for its political connections and a history of having Washington heavy hitters on its payroll. The list of politicians who have worked in some capacity for Carlyle includes former U.S. President George H.W. Bush and former British Prime Minister John Major."We were seen by many as a shadow government ... a Trilateral Commission and that we were out to rule the world," co-founder David Rubenstein said at a conference in 2004. While three men founded Carlyle back in 1987, it is Mr. Rubenstein who has become the public face. The 62-year-old executive is a staple at industry conferences where he is famous for kicking off self-deprecating speeches by polling the audience on their views on the economy, taxes and the buyout industry. Mr. Rubenstein, who trained as a lawyer and worked in the White House during the Jimmy Carter administration, co-founded Carlyle with William Conway and Daniel D'Aniello, who remain atop the firm. Mr. Rubenstein has a net worth of $2.6 billion according to Forbes magazine in March 2011. Blackstone's IPO in 2007 saw its founders, Stephen Schwarzman and Peter Peterson, become multibillionaires. Carlyle is controlled by its senior managers and investors that own minority interests in the business: Mubadala Development Co, an Abu Dhabi based strategic development and investment company, and California Public Employees' Retirement System (CalPERS). However, private equity companies and hedge funds typically give little, if any, power to shareholders in decision making. "Investors have to be very comfortable with the fact that they are just a speck of sand on the beach when it comes to having any say in what's going on with the company," said David Menlow, president of IPOfinancial.com. Carlyle manages about $153 billion in assets versus Blackstone's $159 billion. The buyout firm told the U.S. Securities and Exchange Commission in a preliminary prospectus that JPMorgan, Citigroup and Credit Suisse are underwriting the IPO. The filing did not reveal how many units the company planned to sell or their expected price. By Clare Baldwin, Megan Davies and Jonathan Stempel; additional reporting by Tanya Agrawal and Jochelle Mendonca in Bangalore It is a signal, alright, but to whom and about what?
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Post by only2percent on Sept 9, 2011 21:37:38 GMT -5
ESM postponed voting on contractOriginally, the contract for a "European Stability Pact" on 23 September in the Bundestag will vote on the same day by the Federal Council confirmed. Now the voting is postponed by a week. In a straw vote was clear yesterday that the coalition does not have a majority on this issue anymore and that although the FDP creeps, even after the disastrous state election in Meckpom still bravely to cross. Only two FDP deputies voted against the treaty. The majority's own shirt, that is, closer diets, when the idea to fulfill their duty as elected officials. A "lost" vote would mean the end of the coalition, new elections likely. In order to drown out the bad conscience of the propaganda is in full swing. Germany is hammered into the people's representatives, benefiting more than any other country from the euro, so it had to agree. The cost of the rescue of the Euro would be lower than the cost of the disintegration of the single currency. Of both the opposite is true. Since we have the euro is Germany, although the strongest economy, the country with the lowest investment rate. An estimated two thirds of Germany's total savings are no longer here, but invested elsewhere in Europe. Given the price rises, real incomes have declined. Therefore, our exports are booming, even though domestic demand is stagnant. Still, the costs of "energy revolution" has long had an impact not full. If that's the case, the stagnation is solidified. € The only winners are large listed companies, which loan funds for emission rate, an increase of 3%, are available. The unlisted company, which is 98.8! Percent need to get loans from banks with interest rates between 7 and 13 percent. This is a huge competitive disadvantage, the negative impacts we will feel even more. Banks and large companies benefit from the euro, the real economy and the population are disadvantaged by the single currency. What is the cost of the "rescue €" is concerned, the only true statement of our Chancellor on 22 Been taken in July, when she admitted that the financial implications of decisions taken in the EU "in the moment nothing can be said" could. The estimated amount of 600 billion, which could pay off its interest from Germany as of 2010 for 15 years and a trillion, which would increase the German public debt by 50%. I can no longer hear the word of the "disorientation" of our politicians. The direction is quite clear: the task of national sovereignty, which is determined by elected parliaments in favor of a Eurokratur, the unelected "elites" are in charge. Who does not believe this, read the ESM contract text or look at least four minutes of this video at. Who wants to do something, here are supporting the campaign against the ESM. Vera Lengsfeldwww.abgeordneten-check.de/artikel/649-vera-lengsfeld-hat-das-wort.html&usg=ALkJrhgK5A5BGWD-hso6YR5n1Fo0jEOz-gtranslate.googleusercontent.com/translate_c?hl=en&rurl=translate.google.com&tl=en&twu=1&u=http://www.abgeordneten-check.de/artikel/649-vera-lengsfeld-hat-das-wort.html&usg=ALkJrhgK5A5BGWD-hso6YR5n1Fo0jEOz-g
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