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April 29th, 2014

4/29/2014

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The SEC allowed US banks to leave GAAP accounting principles for an International Accounting Principles that place the protections on shareholder wealth and not the public.  As you see below, so many accounting frauds are happening now.  Accounting is a dry subject but it is behind all of the loss of control in fraud and corruption.  Please take time to glance through these postings, especially the last one!

DO YOU HEAR YOUR POL SHOUTING THAT OBAMA AND NEO-LIBERALS ARE DISMANTLING ACCOUNTING REGULATIONS JUST AS CLINTON DEMANTLED BANK REGULATIONS MAKING IT HARDER FOR THE PUBLIC TO CONVICT IN ACCOUNTING FRAUD?


I want to take a few days to look at the state of US banks several years after the massive frauds were discovered and brought down the US economy.  Bank of America and Citibank were to too largest pushers and processors of subprime mortgage loans and Citibank's CEO Robert Rubin was of course Bill Clinton's finance chief when all of the bank deregulation and breaking of Glass Steagall occurred.  It is reasonable to assume the overall plan to blow up the US real estate market was in full swing as Clinton was creating the structures for what is now global Wall Street.  The reason Citi and BOA are of importance is that they are the ZOMBIE banks....the ones that Rule of Law would have required be nationalized and taken into bankruptcy so that all assets could be sent back to creditors and victims of mortgage fraud. 

THIS IS WHAT RULE OF LAW REQUIRED BECAUSE OF THE UNQUESTIONABLE PROOF OF MASSIVE AND SYSTEMIC FRAUD.

That of course did not happen and we have yet to get justice with these two banks.  Mind you, Wells Fargo and the other big banks are equally guilty but CITI and BOA need to go.  Most economists agree that nationalizing these banks to recover fraud would not have had much more of an effect on the economy than the current stagnant and crippled economy we have today.  The second piece to this of which I've spoken earlier is that the movement of US private and public pensions from the then safety of the bond market to the stock market in 2007-2008 was done to buoy these collapsing banks.  Many of US pension money is still attached to the worst of criminal banks.  Rather than bring these banks into bankruptcy and transfer lost pension wealth to worker's, the pensioners are being told the gains of the BULL market these few years has made up the losses----only, it hasn't.

Below you see that yet another illegal game was played at the time of the crash simply to make these banks appear viable.  The idea was pretend they are OK and they can go overseas to amass new profits.  The idea was to allow the FED policy of QE take trillions of dollars of those bad loans off bank accounts to make them look healthier----the FED with $4 trillion in debt has been heard to say they will pass all that debt from fraudulent loans over to the US Treasury-----AKA, THE TAXPAYER.  The FED has reached its limit of debt that can be sustained, the massive transfer of bundled foreclosures has mostly finished (round two of the massive subprime mortgage fraud) so talk moves to reversing the policies that allowed these banks to hide debt and look healthy.


GOODBYE PENSION GAINS FROM THE LAST SEVERAL YEARS----IT WAS ALL FRAUD AND MISREPRESENTATION YET AGAIN.  JUST AS THE WALL STREET RATING AGENCIES GOT OFF SCOTT FREE FOR FRAUDULENTLY GIVING 'AAA' RATINGS TO THESE SUBPRIME LOANS---NOW BANK OF AMERICA AND CITIBANK WILL BE ALLOWED TO REVERSE THE ACCOUNTING TRICKS THAT FALSIFIED THEIR VALUE FOR YEARS AFTER THE CRASH-----ALL INVOLVING FRAUD AND CORRUPTION.


'And how did it err? It says that it properly raised its reported capital levels to offset the reported loss caused by unrealized changes in the valuation of the securities it had issued. But it also raised the capital levels to offset losses that had been realized, something it should not have done. The realized changes came when securities issued by the bank were paid at maturity or repurchased at an earlier date.

That mistake improperly increased its reported capital.

Bank of America did not explain how that the error came to happen or how it was repeated year after year. Nor did it explain why the error was discovered when the first-quarter financial statements for this year were being prepared'.


What all the US big banks did-----BOA and CITI especially ----was to leave the GAAP accounting principles method of recording debt and used an accounting model that allowed it to hide all the subprime mortgage loan and other debt making it look healthier than it was.  You then watch TV commercies toting BOA and CITI as strong and profitable banks as they expanded overseas when in fact they had enormous debt.  Again, these banks were allowed to provide false information to investors to attain business just as happened with the subprime loans.

ALL OF THIS IS FRAUD AND ALL OF THIS PLACES THE PEOPLE'S WEALTH AND INVESTMENTS IN CONSTANT RISK.




Generally Accepted Accounting Principles (United States)

From Wikipedia

Accounting standards have historically been set by the American Institute of Certified Public Accountants (AICPA) subject to Securities and Exchange Commission regulations.[4] The AICPA first created the Committee on Accounting Procedure in 1939, and replaced that with the Accounting Principles Board in 1959. In 1973, the Accounting Principles Board was replaced by the Financial Accounting Standards Board (FASB) under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Council serving to advise and provide input on the accounting standards.[5] Other organizations involved in determining United States accounting standards include the Governmental Accounting Standards Board (GASB), formed in 1984, and the Public Company Accounting Oversight Board (PCAOB).

Circa 2008, the FASB issued the FASB Accounting Standards Codification, which reorganized the thousands of US GAAP pronouncements into roughly 90 accounting topics[6]

In 2008, the Securities and Exchange Commission issued a preliminary "roadmap" that may lead the United States to abandon Generally Accepted Accounting Principles in the future (to be determined in 2011), and to join more than 100 countries around the world instead in using the London-based International Financial Reporting Standards.[7] As of 2010, the convergence project was underway with the FASB meeting routinely with the IASB.[8] The SEC expressed their aim to fully adopt International Financial Reporting Standards in the U.S. by 2014.[9] With the convergence of the U.S. GAAP and the international IFRS accounting systems, as the highest authority over International Financial Reporting Standards, the International Accounting Standards Board is becoming more important in the United States.

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Just to show how widespread these accounting frauds were----look below at the systemic nature of these frauds.  Remember, Enron and its collapse resulted by massive frauds by its accounting firm and back then----Rule of Law held Enron and the accounting firm accountable.  That hasn't happened since.

DEREGULATION HAS MADE A WILD WEST OF ALL CORPORATE BEHAVIOR AND THIS HAS OUR ECONOMY AT THIRD WORLD LEVELS OF CORRUPTION.


So, Wall Street banks were allowed to hide massive amounts of debt with accounting tricks and when the FED did the 'STRESS TESTS'  that famously allowed banks to exit government control due to BAILOUT in 2009-2010....it was all a lie.


16 Financial Shenanigans That Got Companies Into Tons Of Trouble

Eric Platt and Lucas Kawa Nov. 20, 2012,

Accounting improprieties, disclosure failures, and outright misrepresentations have gotten companies into trouble since the beginning of business. These are the accusations that Hewlett-Packard has made against software company Autonomy.

As the HP story continues to unfold, we are reminded of some past instances when confusing financial and accounting principles got some big companies on the front page for all of the wrong reasons.

In the recent past, companies have been busted for employing questionable accounting tricks, financial engineering, complicated risk metrics, and outright fraud in an effort to hide losses are inflate profits.


Special Purpose Vehicle (SPV)
Definition: An SPV is a legal entity typically used to serve as a counterparty with the main corporation. In finance it often used for securitization, but it has also been used to hide risky corporate behavior/transactions and conceal corporate relationships.

Case: The most notorious case of special purpose entities being used to distort a company's obligations is Enron, which filed for bankruptcy in 2001. Enron used SPVs to lower the appearance of its debt load and overstate earnings and equity. 

Mark to Market (MTM) AP


Definition: MTM is an accounting measure that values accounts to the current environment. Firms use mark-to-market accounting when the value of an asset or liability moves over time.


Case: Bear Stearns, the now defunct investment bank purchased by JP Morgan, reported in June and July of 2007 that its two main hedge funds (the Bear Stearns High-Grade Structured Credit Fund and High-Grade Structured Credit Enhanced Leveraged Fund) had to mark down nearly all their value, sparking concerns of contagion in the financial crisis. Banks across Wall Street suffered huge paper losses thanks to MTM.


Repo 105
AP Images/ Kristy Wigglesworth

Definition: Repo 105 is an accounting trick that defines a short-term loan as a sale. A company can then use that cash to lower liabilities before paying back the loan with interest. Generally in the repo market, companies will not exchange collateral because the time period is very short.

Case: Lehman Brothers masked extensive liabilities right before quarter-end by using this Repo 105 tactic. The company ultimately filed for bankruptcy and was sold off to different institutions (with most U.S. operations going to Barclays). 

Expense Recognition
ABetterBagofGroceries.com

Definition: Under generally accepted accounting principals, expenses should be recognized when incurred — not necessarily when the payment is made. This is known as the expense recognition principle.

Case: Diamond Foods allegedly shifted payments to walnut growers to later periods to offset costs during its fiscal 2011 year, inflating earnings as it entered negotiations with Proctor & Gamble. The stock transaction depended heavily on Diamond's share price.

Revenue Recognition
haccamopooly/flickr

Definition:  Under  generally accepted accounting principals, revenue should be recognized when the company delivers or performs the task it will be paid for — not necessarily when the payment is received. This is known as the revenue recognition principle. However, exceptions do apply.

Case: Xerox settled with the SEC in 2002 for accelerating revenue recognition of equipment sales by more than $3 billion, which increased pre-tax earnings by $1.5 billion. The company, which was supposed to record revenues both upfront and over a period of time (for servicing equipment over its usable life), moved those service revenues to the time of purchase.

Misrepresented Cash Flows
Definition: The statement of cash flows is the third major financial statement, which tallies cash generated and spent by a company during a fiscal period. This portion of the financial statement of an earnings release is one of the best ways to gauge a company's solvency and actual performance.


Case: WorldCom used its cash flows statement to hide expenses by marking operating costs, which should have been booked as expenses, as capital investments. Under that plan, WorldCom inflated cash flow by $3.8 billion and posted quarters of positive performance when it really lost money.

Channel Stuffing
Krispy Kreme

Definition: Channel stuffing is a practice where a distributor ships retailers excess goods that were not ordered to increase the accounts receivable portion of their balance sheet. Generally, the retailers then ship back the goods and the company must mark them as returns.

Case: Krispy Kreme allegedly sent franchises double their usual shipments at the end of financial quarters so the company could meet Wall Street forecasts. In 2005 the company said it would restate past financial statements.

Hiding Losses in Acquisitions
HK-DMZ on flickr

Definition: Companies can pay high prices for financial advice during a merger, and some have used that guise as a method to cover prior losses. 

Case: Japanese technology giant Olympus announced it had been hiding losses on securities investments for years by using the cover of acquisitions. When new CEO Michael Woodford called attention to strange payments made in 2008, he was subsequently fired.

Round Trip Trading alan5o5 via Flickr

Definition: This is practice where a firm trades an asset and then buys it back many times to inflate its transaction volume. However, the market-manipulation has no impact on profit (although it will bolster top line results).

Case: Dynegy was forced to pay the SEC $3 million after it was found conducting round trip trades with special purpose entities. According to the SEC, Dynegy's "overstatement of its energy-trading activity resulting from 'round-trip' or 'wash' trades — simultaneous, pre-arranged buy-sell trades of energy with the same counter-party, at the same price and volume, and over the same term, resulting in neither profit nor loss to either transacting party."

Smoothing Earnings
Definition: This is a practice where a firm smooths net income by using GAAP techniques to level off fluctuations between periods.


Case: Freddie Mac understated earnings by more than $5 billion over three years to keep earnings consistent and investors happy. According to The New York Times, Freddie Mac lost $111 million during a period it announced net income of nearly $1 billion. Freddie Mac only reported half of what it reported it earned during the third quarter of the year, stating that it earned about $1 billion rather than $2 billion.


Churning
Definition: A practice by brokerage houses where they excessively trade securities to generate commission — even when the trades do not benefit the account holder. Similarly, the practice has been conducted by insurance companies by moving clients from one policy to another.

Case: MetLife, just one of a number of insurance companies found guilty of the practice, settled with state regulators and set aside billions for claims that it moved clients from one policy to another, to generate high premiums.

Bartering
Boonsri Dickinson, Business Insider

Definition: A transaction where two companies (or people) agree to trade goods or services with each other without the use of currency. 

Case: AOL was investigated by the SEC and Justice Department for inflating revenue by using barter trades for online advertising and recognizing the trade as a sale in the period leading up to the merger with Time Warner.

Tax Evasion Philly News

Definition: Pretty simple: an illegal practice where a person or company does not pay the correct tax liabilities owed to the government.

Case: Crazy Eddie, a discount electronics retailer, evaded taxes for years before going public by "skimming and under-reporting income." This was just one of the practices the company used to bolster results. 

Back Dating Employee Stock Options Lara604 / Flickr

Definition: The process where a company offers options to an employee at a date before the actual date the option was made. Companies have done this so they can set better exercise prices to the employee (generally pushing the option into the money).

Case: Apple came under scrutiny for back dating options to employees and forced then-CEO Steve Jobs and other Apple executives to pay $14 million, plus attorney fees. 

Goodwill Impairments
Howard Lake

Definition: Although not illegal, companies have come under pressure from investors for overstating goodwill — which bolsters the balance sheet. Goodwill represents a company's intangible assets (its brand, customer relations, etc.) and often arises during a merger or acquisition.

Case: Green Mountain came under fire for its accounting of goodwill during its acquisition of Van Houtte and how its jump in assets was mainly attributable to that line item on the balance sheet. 

Value at Risk (VAR)
Chris McGrath/Getty Images

A sign on the outside of a Chase bank branch in New York City.

Definition: A tool used by financial institutions that estimates probable losses based on historic trends, prices and volatility. Firms generally report VAR data at quarter-end, with confidence intervals, and for periods stretching from one day to two weeks.

Case: JP Morgan is under intense scrutiny after reporting a $2 billion loss after publishing a VAR of just $76 million a quarter earlier for its entire credit portfolio. At that pace, the entire JP Morgan unit could have lost as much as $76 million in value in any given day (to a 95 percent confidence interval).

_____________________________________________

Remember, these pensions were deliberately thrown into the stock market as it crashed just to buoy these big banks.  This is fraud and public malfeasance on the part of public pensions.  What will double-down on these losses if the fact that all the gains from the stock market these few years are masked by hidden debt----no real gains.

Pension fund managers were part of sending these pensions into a crashing market and as of yet very little justice has come from all these massive pension losses.  Below you see movement by pension funds to recover losses but as of yet-----the same small settlements bring nearly nothing back.  When Bank of America is forced to stop using the accounting methods hiding its debt-----stock values will fall once again.
  This article highlights the ongoing fraud as these foreclosure proceedings were handled as badly.

KEEP IN MIND THIS IS NOW HAPPENING IN THE OBAMA ADMINISTRATION AND A DEMOCRATIC MAJORITY IN THE SENATE AS ARE ALL POLITICIANS ARE SILENT.  CAN YOU IMAGINE IF ALL OF CONGRESS SHOUTED LOUDLY TO GIVE CITIZENS JUSTICE ----- THAT IT WOULD HAPPEN.

This is how we know we have corporate pols running as democrats-----NEO-LIBERALS.

Biggest US Pension Funds Get Into Fraudclosure Fray, Demand Banks "Immediately Examine Foreclosure Practices"

Submitted by Tyler Durden on 01/09/2011 20:13 -0400


  More bad news for the BofA/Wells syndicate. After on Friday two of the biggest mortgage lenders in the world were hit with bad news out of the Massachusetts supreme court, today it is seven of the nation's major pension funds, between them representing nearly half a trillion in capital, which are demanding that "the boards of directors of Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo immediately undertake independent examinations of the banks’ mortgage and foreclosure practices." The coalition of pension funds called for the banks’ Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter. The coalition members’ insistence on immediate action reflects the urgency of their concerns over mishandled mortgages. But Jim Cramer on Friday said there was no urgency, and no reason to be concerned, and that this is nothing but a buying opportunity for the lemmings which jut got one step closer to the cliff.
_____________________________________


Let's be clear----there were trillions of dollars in subprime mortgage fraud.  The number of homes in America involved was massive.  The reason this fraud was allowed to continue and goes without justice is the goal of this entire scheme was to remove the American people from homeownership----

THE EQUITY WE THE PEOPLE GAINED OVER DECADES OF SAVING AND INVESTMENT.

    I want people who are still losing their homes to foreclosure....and Maryland is ground zero for this.....that damages to the US economy from this massive fraud need to extend to families facing long term unemployment and are now losing their homes.


Remember, all US big banks are still responsible for massive fraud but BOA and CITIBANK were the ringleaders.

Bank of America: Too Crooked to Fail The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?


By Matt Taibbi March 14, 2012 10:55 AM ET

Rolling Stone

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.

All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.



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Here you see while Bank of America was known to be in debt of a trillion or more in US fraud....it took its bailout money and expanded overseas where it invests in more high-risk and leverage as much as before the crash.  As this article shows, the Chinese are creating the environment that will hasten a collapse in our US economy this year.


Bank of America advises China default contracts to hedge debt storm Chinese bond yields have already risen to the highest in a decade yet markets remain “complacent” about the implications Bank of America's Bin Yao says markets have underestimated the risk of a monetary squeeze

 Photo: EPA By Ambrose Evans-Pritchard

2:15PM GMT 13 Dec 2013



Bank of America has advised clients to take out default insurance against Chinese debt, warning that monetary tightening by China’s central bank risks setting off a bout of serious credit stress in 2014.

Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

He recommends buying credit default swaps (CDS) on five-year Chinese debt as the easiest way to “hedge the China tail risk”. These contracts spiked to 266 after the Lehman crisis and again to 206 during the ‘hard-landing scare’ of late 2011. They have since settled down to stable levels, trading this week near 66.

Bin Yao said the markets have underestimated the risk of a monetary squeeze. The central bank has already raised interest rates by three quarters of a point over the last year. Rising yields are pushing the shadow banking system closer to the brink. “We find trust loans especially troubling,” he said.

Short-term debt issuance by trust companies has jumped to $320bn from almost zero two years ago. A new study by the China Academy of Financial Research warned that the trusts face a redemption shock after promising returns of 10pc to 15pc that may be impossible to deliver.



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The American accounting system GAAP is just too burdensome with all of the defined rules that allowed accounting fraud to be easily investigated and prosecuted.  That is why we need to go with this International Accounting Standard.  In order to successfully break from any ability of the public to prosecute fraud as happened with Enron and Aurthur Anderson Accounting, the ability of Americans to file lawsuits for accounting irregularities must be curtailed.


So, they are doing to the accounting sector what was done with the financial deregulation by adopting this International system with much weaker and broadly defined rules.

MIND YOU----THIS IS OBAMA AND A MAJORITY CONTROLLED CONGRESS ALLOWING THIS.  THE SECURITY AND EXCHANGE COMMISSION IS ACTING WITHOUT ANY THOUGHT OF PUBLIC INTEREST.  THAT IS A NEO-LIBERAL FOR YOU!

DO YOU HEAR YOUR POLS SHOUTING AGAINST THIS????


The Dark Side of Global Accounting Standards

Expect loose standard-setting in the oil and gas industries and a ton of litigation if convergence hurtles down its current track, critics say.

  • David M. Katz    CFO
  If the Securities and Exchange Commission on Thursday votes as expected and allows non-U.S. issuers here to report their financials in line with International Financial Reporting Standards without reconciling them with Generally Accepted Accounting Principles, the United States will have crossed a point of no return in the movement toward a single set of global accounting standards, some experts feel.

But that doesn’t mean that many key players won’t cross that line without a fair amount of kicking and screaming.

Speaking at a roundtable discussion on global accounting standards at New York University’s Stern School of Business on Monday, Charles Niemeier, a member and former acting chair of the Public Company Accounting Oversight Board, said that he was “a bit troubled by the speed” of the SEC’s march toward the convergence of U.S. and international accounting standards.
“If we eliminate reconciliation, what have we done? I have some fear that we’re crossing the Rubicon — that we’ve lost leverage in order to get closer [to global uniformity].”

Leverage by U.S. regulators and standard-setters to push for rigor in converged standards could be lost, as well as the clout to hold individual companies to international rules, Niemeier told CFO.com. At the roundtable, the audit firm overseer disputed a basic premise of the proponents of convergence: that if the international standards are adopted in the United States, it would produce a clearer system based on solid principles rather than rule-based minutiae. “Some say Europe is principles-based. I beg to differ. It’s younger,” he said, suggesting that much of the detail in GAAP is justified by long-standing experience. Some speakers said that IFRS lacks the detail provided under GAAP to provide adequate financial reporting in a number of specific industries in the United States, particularly oil and gas and insurance.

By contrast, critics of U.S. GAAP’s complexity, including the SEC’s own advisory committee, consider industry specific guidance to be one of the U.S. accounting system’s major flaws.

At the same time, many roundtable participants worried that the U.S. legal system — also blamed for the complexity of U.S. GAAP — might trip up global accounting standards too. Under the U.S. legal system, they said, auditors feel they must adhere closely to preset rules in order to avoid being sued. In order for IFRS to take hold in the United States, there needs to be “a change in the way we look at litigation in America, where it’s a mark of honor to sue someone,” said Stern accounting professor Seymour Jones at the roundtable.


Even a decision by the SEC to recognize the International Accounting Standards Board (which sets IFRS) as a bona fide standards setter could get tested in a U.S. court, according to Stanley Siegel, an NYU law professor. “Nothing is going to stop an American litigant who has bought shares in an American company or a Brazilian company” issuing stock in the United States from questioning the validity of the SEC’s choice of IASB under Section 108 of the Sarbanes-Oxley Act, he said. (Sarbox 108 enables the SEC to designate a standard setting body’s accounting principles as “generally accepted.”).

Indeed, many seem to feel that the SEC is moving ahead too swiftly and without adequate planning for what truly looms as a major step in the direction of converged international accounting standards. Even Financial Accounting Standards Board chairman Robert Herz, perhaps convergence’s prime U.S. spear carrier feels that “a national plan” for convergence needs to be in place before target dates are set. “Before you get to a timetable,” the key players need to determine “what are the tasks to be done.” High on the plan’s priority list should be educational and regulatory requirements. Underscoring the point about education, Nieimeier said in an interview that few people at PCAOB understand IFRS.

Nevertheless, convergence seems to be proceeding apace. While the SEC has been promoting the idea of installing a single set of international standards for about 20 years, the notion has gone into high gear in the last year, according to John White, the director of corporation finance at the SEC.

The reconciliation proposal, which White and SEC Chief Accountant Conrad Hewitt will present to the commission on Thursday, would create the unprecedented existence of “two co-existing financial reporting systems in the U.S.,” White said at a Financial Executives International conference in New York earlier this week. In developing the proposal, he said, the commission had three questions to answer:

• Is there a satisfactory convergence process in place?

• Are International Financial Reporting Standards being consistently and faithfully applied?

• Is IASB up to the job of setting global financial accounting strictures?

The commission is apparently satisfied enough with the answers to go ahead with at least the first step. The percentage of public issuers in the United States that will be affected is modest, however. Just 1,100 companies out of the 11,000 entities that report their financials to the SEC are foreign issuers, and only 200 of them use GAAP. Of the remaining 900 foreign companies required to file a GAAP reconcilation report, up to 180 may qualify to take advantage of the proposal if they file their financial reports using the IASB’s version of IFRS.


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February 10th, 2014

2/10/2014

0 Comments

 
WHEN NEO-LIBERALS SAY 'SUSTAINABILITY' THEY MEAN....NOW THAT WE HAVE ALL THE MONEY.....EVERYTHING PUBLIC HAS TO GO!!!



As we know, big investors are dumping the bonds and heading to gold investments as the bond market is ready to implode.  So what do we see below as a result?

PENSIONS ARE BEING THROWN INTO THE BOND MARKET TO KEEP IT AFLOAT JUST A LITTLE LONGER BEFORE THE COMING ECONOMIC CRASH.

Remember, in 2007 pensions were taken from the then safe bond market and placed into the stock market as it was ready to collapse causing pensions to lose 1/2 their value.  Mind you....these pension-fund managers, whether public or private, know these are bad investments as does the public officials involved in allowing it.  This coming crash will take all the value again from pensioners as big private investors run and insure against losses with Credit Default Swaps.
  The entire bubble was manufactured with the intent to blow up the bond market with sovereign and municipal bond debt -----THE PUBLIC SECTOR------taking the hit.

Bonds are low because the market is ready to crash and that is not the same as a simple low in a normal stock cycle.

Pensions Sell Stocks to Buy Bonds

By Roben Farzad January 24, 2014


Coming off a year when the broad U.S. stock market enjoyed a 30 percent gain, investors and financial advisers are struggling to determine the most appropriate portfolio asset allocation consistent with their tolerance for risk, says Andrew Clinton, president of Clinton Investment Management, in Stamford, Conn. Pension funds, in particular, are striving to lock in the outsize gains they have enjoyed over the past few years in the booming debt and equity markets. To do so, they are going against the broader fund-flow trend by selling equities and shifting money to fixed income. Deutsche Bank (DB) forecasts that pensions will liquidate about $150 billion in equities this year alone to buy bonds with maturities of 10 years or longer.

“It’s only logical,” says Clinton. “Pensions struggling with underfunded status need to lock in the lift of the past couple of years. From a risk-adjusted perspective, equities, for all their recent outperformance, are nearly four times as volatile as municipal bonds. Pension managers are in a different dialogue than everything you hear now about people rotating out of stocks, etc.”

Clinton believes this asset reallocation is likely to last for years. As for domestic equities, which are near their all-time high: They are their costliest compared with government debt in three years. The Standard & Poor 500-stock index’s profits as a percentage of the index’s price is just under 3 percentage points higher than the yield for 10-year government notes, the smallest premium since March 2011.

Video: Stocks vs. Bonds vs. Commodities: Where to Invest? In the third quarter, U.S. pension funds, which have assets of $16 trillion, swapped out of equities and into bonds at the fastest clip in five years, data compiled by the Federal Reserve show. According to Matt Robinson of Bloomberg News, they bought $117 billion of debt on an annualized basis and offloaded $135 billion of stocks. The 100 biggest corporate pension plans thinned their deficits by a net $319 billion, according to consultancy Milliman; they are now 95 percent funded, compared with a low of 77 percent two years ago.

“It makes sense,” says Michael Gayed of Pension Partners in Manhattan. “Rebalancing to target weights is a time-tested approach to enhancing longer-term returns--forcing you to buy low and sell high.” He says the “Great Rotation” is presently, at the margin, from stocks back to bonds.


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This is the reason the Spanish citizens are marching in the street.  Their pensions are being eliminated because TROIKA payments are being made by Spanish leaders by the citizen's public assets.  It is incredible as Spain is one of the hardest hit with fraud and corruption.  They had all that debt created by leaders tied with Wall Street and DeutschBank with development that was not deeded.....money simply spent to move it to the top.  This is what is happening with US pensions as well as they are moved to the bond market ready to implode!

'Retiring' The Debt: Spain Drains Pension Fund To Prop Up Bonds

Jan. 14, 2013 9:33 AM ET  |  Includes: EWP Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

Last week, Spain's Treasury raised $5.82 billion euros at auction in the country's first debt sale of the year; this was well above even the upper end of the target range. The auction, which the Wall Street Journal described as 'robust,' was enough to drive yields on Spanish 10-year notes below 5% for the first time in 10 months.

The Treasury in Madrid sold three bonds, one maturing in 2015, one maturing in 2018, and a 2026 note. Yields were down across the maturities compared with the last time the notes were sold and, in the case of the 2026 note, compared with where it traded in the secondary market. The consensus, which of course is somewhat justifiable, is that the successful auction indicates demand for Spanish debt isn't going to dry up anytime in the very near future. Here's Annalisa Piazza, a fixed income strategist quoted by the Wall Street Journal:

Today's Spanish auction suggests that market appetite for euro-zone periphery's debt remains solid despite uncertainties regarding the request for a bailout and eventual activation of the European Central Bank's Outright Monetary Transactions.

The problem for Spain in 2013, however, is that two major sources of demand for the country's debt are likely to be largely unavailable in the coming year. In a rather disconcerting piece published on January 3, the Wall Street Journal disclosed that Spain has now spent over 90% of its Social Security Reserve Fund buying its own debt. Just to reiterate: Spain has spent pretty much the entirety of its pension fund on its own bonds.

There are three obvious problems here. First, this means that the fate of pensions in Spain is now hopelessly intertwined with the fate of Spanish government bonds, a fact that doesn't inspire much confidence, given the market for periphery sovereign debt in 2012. Indeed, the Wall Street Journal notes that the decision to invest the Social Security Reserve Fund's cash in Spanish government bonds violates a Spanish government decree which states that the fund can only purchase securities "of high credit quality and a significant degree of liquidity." This is terribly ironic given that if anyone should know that Spanish government bonds are not of the highest quality and are certainly not highly liquid, it's the Spanish government.

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Keep in mind that the California pension fund was found to be the worst for fraud and corruption in investments the last economic crash.  Tons of lawsuits for bad investments bringing little back as 'settlements' were just as bad in pension claims as Wall Street financial fraud and the US Justice Department. 

Here we see California pensions back in the action of losing money.  Keep in mind that corporate stocks have soared through this BULL market....mergers and acquisitions from free money by the FED made corporations rich.....yet pensions are again dying on the vine because they are invested in markets that are ready to implode.


Keep in mind that if the US Justice Department had brought back all of the fraud lost to pensions in 2008 and all that had been invested in the BULL market these few years....pensions would be flush.  Rather, neo-liberals deliberately placed pensions into investments they knew would fail and now pretend these pensions are unsustainable.

As this article shows.....this was a national plan by neo-liberals to dismantle public sector pensions and just as Rawlings-Blake is ready to throw Baltimore's pensions into the market as 401Ks and O'Malley sends teacher's union pensions to localities knowing localities cannot pay....this pension dismantling was planned and it is all illegal!

California teachers’ pensions sink further into debt
By Kevin Martinez
27 November 2013

A new report released by the California Public Policy Center on November 12 reported that the California State Teachers’ Retirement System (CalSTRS) added $4 billion to its unfunded pension obligations for the 2012 fiscal year.

CalSTRS, the largest teachers’ pension fund in the United States, collected $5.8 billion from employees and employers last year. Of this, $4.7 billion was considered a “normal contribution,” while $1.1 billion was used to pay unfunded liabilities, which by 2012 were estimated to be $71 billion in debt. As a result, plans to dismantle the pension fund in the name of fiscal solvency are being aggressively developed.

The study shows that the so-called “catch up” payment should have been 7 times higher based on unfunded liability payback terms recommended by Moody’s Investor Services in April. The study also shows that if the rate of return projection drops to 6.2 percent, the unfunded liabilities recalculate to $107.8 billion and the catch-up payment increases to $9.6 billion, assuming a rate of return of 6.2 percent. Because of overly optimistic forecasts, the study estimates that CalSTRS actually increased its debt in 2012 by $4 billion.

Should CalSTRS lower its rate of return projections, its funded ratio of 67 percent will fall dramatically.
The dependency on stock market profits thus sets the stage for volatility, even more indebtedness and, ultimately, privatization. While in Detroit, with President Obama’s backing, banks are using the bankruptcy courts to tear up pensions and privatize city services, California’s Democratic Governor Jerry Brown has pursued similar results by signing a pension “reform” last year which demands workers pay more toward their own pensions and work many more years before they collect it.

The corporate media is supporting the argument that there will be no money to fund pensions in another 30 years. This is the same strategy used to argue for the dismantling of Social Security and other basic entitlements. The claim is being made that pension enhancements from 1999 are responsible for the unsustainable obligations, when in actuality calculations were based on optimistic Wall Street investment projections. Now, in the aftermath of the 2008 economic crash, these same financial forces are trying to justify a “take back” of benefits.

In San Jose, Democratic Mayor Chuck Reed is being touted for his work on pension “reform.” After a referendum was passed last year, the city will now force current employees to contribute up to 16 percent toward their pensions or switch over to an even more expensive private plan, and new workers will have a pension that pays even less, while they are required to contribute half toward their pensions.


Plans for the dismantling of these funds are clearly well advanced. In addition to Governor Brown’s “reform” and various municipal initiatives, powerful lobbyists are pursuing similar plans which would ensure workers’ loss of hard-fought, essential survival benefits.

One such initiative is the so-called Pension Reform Act of 2014, proposed by the Coalition for Fair and Sustainable Pensions, made up of a group of mayors from cities with similar problems (San Jose, Vallejo, San Bernardino). Based on San Jose Mayor Reed’s brutal attack on municipal workers’ retirement, the plan, according to its web site, “would amend the California Constitution to give government agencies clear authority to negotiate changes to existing employees’ pension or retiree healthcare benefits on a strictly going-forward basis.” In essence, it’s open season for the demolition of pension benefits.


The premise that these funds, including CalSTRS, are going bankrupt, is a lie. First of all, workers have paid their whole lives into these funds, making it their money and no else’s. Secondly, while the banks and major corporations were bailed out during the crash and continue to be supported to the tune of $85 billion a month, no one in the political establishment is arguing for pensions to be rescued, although these funds have also invested billions in the same “free market.”

Lastly, there is plenty of money to be found. California is home to more billionaires than anywhere else in the world. One out of nine of the world’s billionaires reside there. The total combined wealth of California’s billionaires amounts to $1 trillion, nearly the total GDP of countries like South Korea or Mexico.

While in the post-war era the US economy was based on industrial production and pension fund operations were regulated in order to ensure a degree of stability, now the economy has been financialized and pension fund portfolios rise and fall with the gyrations of the stock market. Not only are they exposed to financial crises in the US, but to international fluctuations as well, such as the European debt crisis or derivatives markets. According to CalSTRS’s website, the portfolio invests over 56 percent of its assets into global equity, 12 percent into real estate, and another 12 percent into private equity funds.

The situation for workers is now so desperate that many have to work until they are elderly to get a decent pension. According to a recent poll by Harris Interactive, 48 percent of middle-class Americans don’t think they have enough money saved for a comfortable retirement and a full one-third think they will work “until at least 80.”

The poll also found that more than half of the people said that paying monthly bills comes before saving for retirement. More than 4 out of 10 Americans say that saving for retirement and paying their bills at the same time is not possible.

For their part, the California Teachers Association (CTA) has been instrumental in the implementation of the pension “reform.” It has been complicit with the Democrats in supporting these initiatives to dismantle pension funds. All it asks for is a seat at the table.

On the CTA website, under the headline, “Where we stand on Teachers’ Retirement,” they write on the estimated $56 billion shortfall that “this does not have to be paid overnight. Like a mortgage, this is an amount that will need to be closed over a 30-year period.” The CTA does not bother to explain how, because, in essence, it agrees that teachers will have to pay for the shortfall by increasing their contributions to the pension fund.

Moreover, the CTA supported Prop. 30, which promised to restore funding to education at the expense of thousands of teachers being laid off and no budget cuts rescinded. The CTA also supports Common Core, which tailors school curriculum to the demands of big business.

In related developments, the California Public Employees’ Retirement System (CalPERS) is also reporting $340 billion in liabilities with only $260 billion in assets as of September 2013. A 2011 study by Joe Nation, a former Democratic state legislator and professor at Stanford Institute for Economic Policy Research, estimated that the real number is closer to $170 billion in unfunded pension obligations, not $80 billion as previously assumed.

According to Nation, CalPERS uses an overly optimistic formula to calculate returns on investments averaging 7.5 percent annual growth. A more realistic figure would be 5 to 6 percent. Even with this model, both CalSTRS and CalPERS are expected to run out of funds by 2043.

CalPERS, like its CalSTRS counterpart, is intimately involved in Wall Street investments. As of April, the $263 billion fund was 65 percent invested into “growth investment” (i.e. stocks), with 52 percent in public equity, 12 percent in private equity, and 8 percent in real estate. For every dollar paid to CalPERS, 66 cents comes from “investment earnings,” 21 cents from CalPERS employers, and 13 cents from CalPERS members. This last figure is likely to increase if the ruling class continues its policies unabated.

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Below you see a LOL comment from the last economic benefactor of massive corporate fraud.  As people reading my blog know I have these four years shouted that inflation was already high and that the FED was simply pretending/hiding it in order to justify all that FREE MONEY FROM THE FED.   They all knew they were creating huge inflation and that when the bond market imploded the inflation would create what will be a Great Depression.  This is not hyperbole ......it is coming and deliberate.

Remember, the investment firms for the rich have protected their wealth from this coming catastrophe....investment in real estate and gold with little in the bond or stock market.  See why they need to move pensions into these markets as they pull out....just as they did in 2008!

IT IS ALL PLANNED AND ILLEGAL!


Either way, I think we're all best served to heed the words of John Paulson, the preeminent hedge fund manager who oversees $14 billion in assets: "By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position."

What Inflation Could Look Like in 2014
By Jeff Clark, Senior Precious Metals Analyst

Most economists, especially those from the mainstream, will tell you that inflation is widely expected to remain benign for the foreseeable future. And for those who think it could climb higher, it's usually because they think it should be higher. History has a message for them: be careful what you wish for.

There are plenty of examples in history showing that once inflation takes hold, it can quickly spiral out of control. That's the danger we face now. Here's what I mean…

A recent article about sudden inflation by Amity Shlaes, a senior fellow of economic history at the Council on Foreign Relations and a best-selling author, provides some examples from the past century of US inflation that was at first subdued but then abruptly rocketed to alarming levels. I put them into a chart so you could see how quickly inflation rose within just two years from "benign" levels. I then made some projections for us today based on these historical examples.

According to Shlaes, US inflation was 1% in 1915 (based on an earlier version of the CPI-U). Over just two years, it hit 17%. As she states, it happened because the Treasury "spent like crazy on the war, creating money to pay for it…"

Given the fact that our spending and money-printing is now out of control, I projected what our inflation rate would be if we matched the inflation rates of these time periods. The first striped bar to the right represents what the CPI would register if we matched the 1915-1917 rise. Inflation would hit 19% by 2014. (Yes, the CPI has been tinkered with many times, but this is at least what "unofficial" or "authentic" inflation would register.)

In 1945, the official inflation rate was 2%. It accelerated to 14% in 24 months. If we matched this percent rise, we'd hit 15% by 2014 (middle striped bar)..

And the example that kicked off the greatest bull market in gold and silver, the early 1970s. The CPI stood at 3.2% in 1972, a level close to ours today. It soared to 11% just two years later. Mimicking this rise, the third striped bar shows we'd also be at 11% in 2014. (Shadow Stats says we're already at 10% based on 1980 methodology, so from this level we'd hit 17% in 24 months.)


Could we really have inflation that high within two years? Consider the following:

  • Fox Business reported on March 7 that "wages grew much more quickly at the end of last year than originally estimated…" This is an important data point because most economists believe you can't have higher inflation without rising wages.
  • Commercial and industrial loans have risen 14% year over year, and business and consumer spending are in an uptrend.
  • Home-building permits are at their highest point since October 2008. Existing home sales fell 0.9% last month, but that's after January sales were up 4.6%.
     
  • Jobless claims are coming down, retail sales gained the most in five months, and auto sales were up 16% last month. One report I read stated that we've had 24 consecutive weeks of stronger US data.
If the economy continues to improve and more money is sloshing through the system, it's easy to see how inflation could grab hold. Yet, if you understand Austrian economics, you'll look beyond how the mainstream views inflation and to its root cause: monetary debasement.

  • The US monetary base stands at $2.72 trillion, a 168% increase since October 2008.
  • The national debt in the US has risen by a whopping $4.9 trillion just since Obama took office. It now stands at $15.5 trillion.
  • The US budget deficit this year is projected to be over $1.3 trillion, an obscene amount that exceeds the entire annual budget of just 20 years ago.
  • According to ISI Group, there have been an incredible 122 "stimulative policy initiatives" from central banks around the world over the past seven months.
Remember, in these historical examples, inflation was initially low and therefore off everyone's radar. But government tinkering with the monetary system lit the spark that led to a sudden and rapid rise in inflation. It caught many off guard, just like I suspect it would now. Don't think there are no consequences to our unwise fiscal and monetary course; a potentially ugly tipping point is more likely than not at some point.

Given the abuse most fiat currencies are undergoing around the world today, coupled with obscene amounts of deficit spending, I think gold should be viewed not just as a potential moneymaker but as protection against the rabid inflation that will invariably damage our economy and dilute our pocketbooks.
If you think deflation is next, I'll accept that argument – for a time – if you accept mine, that the Fed would almost certainly panic at another deflationary event and print to the max. This is why we're convinced that inflation, à la currency dilution, is inevitable. (Harry Dent, best-selling author of The Great Crash Ahead, is convinced deflation poses our biggest economic threat, while Currency Wars author James Rickards believes inflation is the real danger. You can hear them debate the issue – and participate as a member of the audience – during the Inflation-Deflation Face-Off program at the upcoming Casey Research Recovery Reality Check Summit.)

To those of you who say gold hasn't always kept up with inflation, don't kid yourself about what it would do in a highly inflationary environment: it would surely climb like it did in the 1970s. And those "productive assets" Warren Buffett prefers over gold? They would have a difficult time raising the prices of their products quickly enough to keep up with a rapidly escalating CPI. Gold may not perfectly track inflation when it's low, but it is precisely a high-inflation environment where it serves one of its core purposes.

You may think high inflation is further away than 2014, but don't dismiss the fact that it can happen suddenly. And keep in mind the possibility that a sudden shift in inflation – especially inflation expectations – could be the spark for a mania in precious metals. I can easily see this being the catalyst that finally pushes the greater public into our sector, causing a paradigm shift that eventually sends it into a bubble.


Either way, I think we're all best served to heed the words of John Paulson, the preeminent hedge fund manager who oversees $14 billion in assets: "By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position."

We agree. As we stated in the February BIG GOLD, if 10% of your total investable assets (i.e., excluding equity in your primary residence) aren't held in various forms of gold and silver, we think your portfolio is at risk. And as Doug Casey reminded us last week, "Anyone who thinks they have any measure of financial security without owning any gold – especially in the post-2008 world – is either ignorant, naïve, foolish, or all three."

This is the time to accumulate, while gold and silver prices are below their peaks. Buy a little every month and store it in a safe place. And for even better bargains, look to the undervalued stocks, which I would argue offer better protection against inflation than most other equity investments since their cash flow will climb commensurate with gold and silver prices. We identified the two best stocks for new money right now in the current issue of BIG GOLD, and you can get the brand-new pick from International Speculator – an African company that has built its first gold mine and is already working on its second.


If we match the inflation rates seen several times in the recent past, what will your savings be worth in a few years? We'll have lots to worry about in a high-inflation climate, but our purchasing power can be protected by owning gold.

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Mainstream media pretended that the economy was on its way to recovery each year even as they knew it was being positioned to implode.  That is why you and I did not know anything and it is why I am a blogger today....so I will know what is happening and share it with you!  It is true we cannot stop this....but all we need to do is

REINSTATE RULE OF LAW AND REBUILD WHITE COLLAR CRIMINAL AGENCIES TO RECOVER ALL THIS CORPORATE FRAUD.....EASY PEASY.  WHEN GOVERNMENT SUSPENDS RULE OF LAW, THEY SUSPEND STATUTES OF LIMITATION!



THE 1% ARE READY FOR THIS NEXT CRASH THAT WILL TAKE ALL PENSIONS AND PUBLIC SECTOR ASSETS WITH IT.  HEAVILY LEVERAGED CREDIT BOND DEBT IN MARYLAND AT A TIME OF ECONOMIC COLLAPSE?  THERE IS A REASON FOR THAT!

Zero Coupon Inflation Swap

  Definition of 'Zero Coupon Inflation Swap'


An exchange of cash flows that allows investors to reduce or increase their exposure to the risk of a decline in the purchasing power of money. In a zero coupon inflation swap, which is a basic type of inflation derivative, an income stream that is tied to the rate of inflation is exchanged for an income stream with a fixed interest rate. However, instead of actually exchanging payments periodically, both income streams are paid as one lump-sum payment when the swap reaches maturity and the inflation level is known. Investopedia explains 'Zero Coupon Inflation Swap'
The currency of the swap determines the price index that is used to calculate the rate of inflation. For example, a swap denominated in U.S. dollars would be based on the Consumer Price Index of the United States, while a swap denominated in British pounds would typically be based on Great Britain's Retail Price Index. Other financial instruments that can be used to hedge against inflation risk are real yield inflation swaps, price index inflation swaps, Treasury Inflation Protected Securities (TIPS), municipal and corporate inflation-linked securities, inflation-linked certificates of deposit and inflation-linked savings bonds.



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January 17th, 2014

1/17/2014

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SO FAR IT HAS BEEN BERNIE SANDERS AND RUSS FEINGOLD THAT HAVE SHOUTED FOR STRONG BANK REFORM AND JUSTICE IN THESE MASSIVE FRAUDS....SO LET'S GET THEM TO RUN FOR PRESIDENT/VICE-PRESIDENT IN 2016!!!



Did you hear the corporate NPR introduction of Obama's next Wall Street appointment to an agency supposedly protecting the public from economic instability and work for high employment?  What a stellar appointment of a good all-round guy!!!  We all love him!  Now, if you look at the US Federal Reserve as the center of global corporate tribunal rule acting to place massive corporate fraud on steroids and installing policy that keeps the public caught in boom and bust crony and criminal markets losing all their wealth and causing ever-growing levels of unemployment.....ALL MAXIMIZING WEALTH FOR THE FEW---- you see from where this promotion comes. Indeed, Fischer is in fact THAT good ole' boy.  In the days of TPP there is no public sector or US citizens to consider for goodness sake!

For those who know better you'll see below how the Fischer/Bernake/Draghi fit goes with the TROIKA mess that has hold of the US and Europe.  You can follow the money to see his place in the pecking order of moving massive wealth.  Again, we want to thank Anonymous and those hackers that are doing civil disobedience and not stealing people's pin numbers.....hacking to download banking information that is allowing International Journalists to follow the money to off-shore accounts to the tune so far of $35 trillion dollars.  We are getting a great picture of who has the money and where it is so when Rule of Law is reinstated the people of Europe and US will be able to recover the loot and reverse wealth inequity.  THIS IS WHERE FISCHER COMES INTO THE PICTURE.

We all remember when Obama placed Greenspan's deputy and Geithner to head Financial agencies needed by the public to hold banks accountable.  These two where of course in the forefront of allowing the massive frauds to go forward while everyone was shouting MASSIVE AND SYSTEMIC MORTGAGE AND FINANCIAL FRAUD throughout the 2000s.  This is now round two of 'IT'S ABOUT THE GLOBAL TRIBUNAL AS WORLD RULER' politics.
  Yellen has stated she supports all of what Bernanke did so she will be status quo for the US economy and wealth inequity.


For those liking to follow the financial fraud this is the next connection of dots in the revolving door of cronyism.  It is important because as more people see how corrupt this system is, the more people will move to revolution.  Fischer is MIT material tied to Summers and Italy's Draghi.  Draghi is now head of the European ECB.  We all know Summers as Clinton's global market king and MIT is of course farm team for Wall Street.  Fischer's connection with the BAnk of Israel coincides with the exact time Wall Street was moving massive amounts of money off-shore and guess where the top off-shore location was according to International Investigative Journalists using WIKILEAKS hacking download of Wall Street banks showing the movement of $35 trillion dollars?????  ISRAEL WAS ONE TO THE TOP LOCATIONS.  Know why Pope Benedict retired suddenly...Draghi's Italy used the Vatican Bank to move money from NYC through the Vatican.  See the crony?  It is all illegal and it is all documented by International Justice groups!!!!



Obama to nominate Stanley Fischer, 2 others to Federal Reserve seats

By Jim Puzzanghera January 10, 2014, 8:35 a.m. Los Angeles Times



WASHINGTON -- President Obama will nominate Stanley Fischer, the former head of the Bank of Israel, to be vice chair of the Federal Reserve, and also tapped two other people for seats on the central bank's Board of Governors, the White House said Friday.

Lael Brainard, who recently stepped down as Treasury undersecretary for international affairs, was chosen to fill one of the vacant seats on the seven-member Fed board.

And Jerome H. Powell, a former Treasury official and investment banker who has served on the Fed board since 2012, will be renominated. Powell was confirmed to an unexpired term that expires on Jan. 31.

PHOTOS: Federal Reserve chairs through the years

"These three distinguished individuals have the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time for our economy," Obama said.

The nominations, which had been expected, add to the major changes coming at the Fed as it tries to pull back on its aggressive stimulus efforts without damaging the economic recovery.

Current Vice Chair Janet L. Yellen was confirmed this week to replace Ben S. Bernanke, whose second four-year term as central bank chair expires on Jan. 31. She will lead a different, and potentially more fractious Fed policy-making team.

This month, four new regional Federal Reserve Bank presidents will rotate into the 12 voting positions on the Federal Open Market Committee, or FOMC, which sets monetary policy. All seven Fed governors are voting members.

Friday's disappointing government report showing the economy created just 74,000 net new jobs in December highlighted the difficulties for Fed policymakers. They must decide if the economy is strong enough to continue the reduction started last month in the Fed's bond-buying stimulus program, when most data pointed to an improving labor market.

Fischer, who was governor of the Bank of Israel from 2005-13, is a legendary economist who brings a wealth of experience to the Fed board.

He has worked at the World Bank, the International Monetary Fund and was vice chairman of Citigroup Inc. from 2002-05.

Fischer was the PhD advisor for outgoing Fed Chair Ben S. Bernanke at the Massachusetts Institute of Technology. Fischer also taught European Central Bank President Mario Draghi and former Treasury Secretary Lawrence H. Summers.

If confirmed by the Senate, Fischer would replace Yellen as the Fed's No. 2 official.

"He is widely acknowledged as one of the world’s leading and most experienced economic policy minds and I’m grateful he has agreed to take on this new role and I am confident that he and Janet Yellen will make a great team," Obama said.

Brainard also brings international experience to the Fed. And she helps close a pending gender gap on the central bank's board. Elizabeth Duke stepped down last year and Sarah Bloom Raskin is awaiting confirmation as deputy Treasury secretary.

If Raskin departs as expected, Yellen would be the only woman remaining on the board.

Obama said Brainard's "knowledge of international monetary and economic issues will be an important addition to the Fed."

Powell served as an assistant secretary and under secretary at the Treasury Department under President George H.W. Bush.

Fed governors have 14-year terms but rarely serve all of it. Powell is nominated to a full 14-year term. Fischer would fill a term expiring in 2020 and Brainard one expiring in 2026.


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Below you see nothing has been done with the Financial Reform Bill.  Volcker demanded long ago that his name be taken off of what neo-liberals are pretending are rules that will safeguard the banking system.  NO ONE BELIEVES THAT.  I'v spoken as to the importance of bank capitalization and the fact that most financial experts wanted this to be at least 20%...below you see the TROIKA as will the FED move away from any accountability.  Remember, QE and 0% recapitalized the banks by taking all the most toxic subprime mortgages off the banks accounting and move them to the FED in the trillions of dollars.  THIS IS WHAT CORPORATE NPR CALLS 'THE BANKS/CORPORATIONS ARE HEALTHY NOW'.

Somehow we are getting bank warnings that requiring capital will hurt lending that has yet to happen as they roll in profit and will not happen as the goal is to consolidate all small and regional businesses into these global corporations.


The two issues in financial reform were banks having enough capital to cover leverage and the Glass Steagall separation of bank's money from its consumers....the Volcker Rule was advanced for this. So, capitalization many thought needed to be 20% as it had historically been 70%. When the financial reform debate was hot we were told we would get 8-10% which was a start, but now we see below they are back where it was before the crash....3%. NOT ONE CHANGE HAS BEEN MADE....NOT ONE BIT OF ACCOUNTABILITY.....AND THIS IS BECAUSE WE HAVE A NEO-LIBERAL PRESIDENT AND CONGRESS.

KEEP IN MIND THAT IT IS THE FEDERAL RESERVE WRITING MANY  OF THESE LAWS AND CHOOSES TO ENFORCE REGULATIONS OR NOT.  SINCE NEO-LIBERALS CONSIDER TPP A DONE DEAL.....ALL THE POLICY IS ABOUT WHAT MAXIMIZES PROFIT....MORE NAKED CAPITALISM.

What the American people want is a President that appoints people that want the opposite.....more capitalization, more regulation, and more downsizing by recovering tens of trillions of dollars in fraud still owed. 


SO FAR IT HAS BEEN BERNIE SANDERS AND RUSS FEINGOLD THAT HAVE SHOUTED FOR STRONG BANK REFORM AND JUSTICE IN THESE MASSIVE FRAUDS....SO LET'S GET THEM TO RUN FOR PRESIDENT/VICE-PRESIDENT IN 2016!!!

Debt Rule Faces Dilution as Regulators Heed Bank Warnings

By Jim Brunsden Jan 10, 2014 8:05 AM ET

Lenders are poised to win concessions from central bank chiefs and global regulators over a debt limit they criticized as a blunt instrument that would penalize low-risk activities and curtail lending.

A revised leverage-ratio plan is set to be laxer than a draft published last year by the Basel Committee on Banking Supervision, said a person familiar with the scope of a Jan. 12 meeting of the group’s oversight body at which the measure will be discussed.

Leverage ratios are designed to curb banks’ reliance on debt by setting a minimum standard for how much capital they must hold as a percentage of all assets on their books. A quarter of large global lenders would have failed to meet the draft version of the leverage limit had it been in force at the end of 2012, according to data published by the committee in September.

“I expect considerable change in the rule to defer to applicable national accounting systems,” Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics Inc., said in an e-mail. “If the rule in fact doesn’t do this, it will wreak tremendous havoc in securities financing, repo, and other capital-market activities and send them over to the shadows.”

Photographer: Chris Ratcliffe/Bloomberg Bank of England Governor Mark Carney said, “My personal view, is that a leverage ratio... Read More

Some supervisors have called for greater use of leverage ratios instead of standard Basel capital requirements, which are measured as a ratio of banks’ equity against risk-weighted assets, because banks are inconsistent in the way they calculate these standards.

Asset Size The draft leverage rule published last year would have required banks to hold capital equivalent to at least 3 percent of their assets, without any possibility to take into account the riskiness of their investments. Stefan Ingves, the Basel committee’s chairman, has said that discussions in the group have focused on calibrating how banks should calculate the size of their assets, as opposed to reopening talks on the 3 percent figure.

“In our view, the final leverage rule will be significantly moderated to avoid it becoming a binding constraint on bank lending activity,” research firm Capital Alpha Partners LLC wrote in a note to clients yesterday.

The “most likely adjustments will be to allow for greater netting for derivatives and securities financing transactions,” according to the note. There is also “a good chance” that regulators will scale back rules on how banks must calculate the size of some off balance sheet commitments, it said.

Stated Intentions The Basel committee declined to comment on the leverage ratio talks.

“Overall and in contrast to publicly stated intentions, a binding leverage ratio may actually encourage increased risk-taking by European banks while at the same time forcing them to cut back on low-risk exposures” such as derivatives used to hedge risk, Jan Schildbach, senior economist at Deutsche Bank Research, said in an e-mail. This would potentially hurt “their clients and the European economy as a whole.”

Global regulators have met for almost 40 years in Basel, Switzerland, to negotiate common standards for supervising the banking system.

The Jan. 12 meeting will be of the Group of Governors and Heads of Supervision, or GHOS, which oversees the committee’s work and is comprised of central bank and regulatory chiefs. The GHOS is led by Mario Draghi, the president of the European Central Bank.

Bank Strength Relying on leverage ratios to assess a bank’s strength wouldn’t be sensible as the measure can easily be influenced and is hard to compare between lenders under different reporting standards, Rabobank Groep Chief Financial Officer Bert Bruggink said in an interview this week.

“For banks reporting under European accounting rules, a leverage ratio of 3 percent or 4 percent is very well defendable,” Bruggink said. “Requiring higher numbers, especially if that’s done with reference to U.S. banks, would be wrong and harmful to the economy.”

Main Item The leverage measure is the main item on the agenda for the GHOS talks, according to two other people familiar with the talks. All three asked not to be identified because the discussions are private.

Under the published Basel timetable, banks will be expected to publicly disclose how well they measure up to the standard from 2015, with the rule to become a binding minimum standard in 2018.

Banks such as BNP Paribas SA (BNP), Bank of America Corp. and Citigroup Inc. (C) have called for a rewrite of the draft leverage rule published in June, saying it would adversely affect economic growth and job creation, make it more expensive for governments to sell their debt and give banks incentives to invest in riskier assets.

“The leverage ratio instrument sets the wrong incentives by discriminating against low-risk business, which also accounts for a larger share of European banks’ operations than for U.S. institutions,” Schildbach said. “In addition, in the U.S., a compulsory leverage ratio has been in place for many years already, whereas the Europeans are used to align their business models to a system of risk-weighted capital ratios.”

More Scope Banks have called on the committee to alter the rule by giving lenders more scope to carry out netting, which would allow them to reduce the size of the pool of assets used to calculate the leverage ratio.

Netting is an accounting term describing the process of banks offsetting the value of different assets and liabilities they have taken on with a single counterparty.

Lenders have argued that they should be allowed to net the collateral received on derivatives trades because otherwise the protection they gain wouldn’t be taken into account by the leverage ratio. They have also called for more scope to use netting on securities financing transactions such as repurchase agreements, or repos.

Other requests from banks have included that assets perceived to bear little risk of loss, such as high quality mortgage debt, should be exempted or partially exempted from the leverage ratio calculation.

Playing Field Knowing how the international leverage ratio is defined “is important domestically for a level playing field,” Bank of England Governor Mark Carney told U.K. lawmakers in November, according to a public record of the proceedings.

“My personal view, is that a leverage ratio is an integral part of the capital framework of banks, so it is absolutely necessary,” Carney said.

There is no chance that all high quality assets will be removed from the calculations, Simon Hills, executive director at the British Bankers’ Association, said in a telephone interview.

“The most we can probably hope for on scope is a little movement,” he said. “Our priority is that cash held with central banks should be excluded from the leverage ratio calculations, as well as gilt purchases made as part of central bank monetary policy operations. We think that merits another look.”



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As corporate NPR and local WYPR pretend they do not know the economy is ready to implode with the same conditions as last time only instead of subprime mortgage fraud in the trillions it will be sovereign and muncipal bond debt that took Europe last crash.  We are over the $600 trillion leverage mark now!

This is why Fischer and Yellen are so important for the global tribunal because they both will use the same system of bailout and coverup that Bernanke and Geithner did in 2007-2008.



Derivatives: The $600 Trillion Time Bomb That's Set to Explode
  • By Keith Fitz-Gerald, Chief Investment Strategist, Money Map Report  ·   October 12, 2011  ·   Print  |   Email
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Keith Fitz-Gerald Do you want to know the real reason banks aren't lending and the PIIGS have control of the barnyard in Europe?

It's because risk in the $600 trillion derivatives market isn't evening out. To the contrary, it's growing increasingly concentrated among a select few banks, especially here in the United States.

In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.

The four banks in question: JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and Goldman Sachs Group Inc. (NYSE: GS).

Derivatives played a crucial role in bringing down the global economy, so you would think that the world's top policymakers would have reined these things in by now - but they haven't.

Instead of attacking the problem, regulators have let it spiral out of control, and the result is a $600 trillion time bomb called the derivatives market.

Think I'm exaggerating?

The notional value of the world's derivatives actually is estimated at more than $600 trillion. Notional value, of course, is the total value of a leveraged position's assets. This distinction is necessary because when you're talking about leveraged assets like options and derivatives, a little bit of money can control a disproportionately large position that may be as much as 5, 10, 30, or, in extreme cases, 100 times greater than investments that could be funded only in cash instruments.

The world's gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist. So there is literally not enough money on the planet to backstop the banks trading these things if they run into trouble.

Compounding the problem is the fact that nobody even knows if the $600 trillion figure is accurate, because specialized derivatives vehicles like the credit default swaps that are now roiling Europe remain largely unregulated and unaccounted for.

Tick...Tick...Tick To be fair, the Bank for International Settlements (BIS) estimated the net notional value of uncollateralized derivatives risks is between $2 trillion and $8 trillion, which is still a staggering amount of money and well beyond the billions being talked about in Europe.

Imagine the fallout from a $600 trillion explosion if several banks went down at once. It would eclipse the collapse of Lehman Brothers in no uncertain terms.

A governmental default would panic already anxious investors, causing a run on several major European banks in an effort to recover their deposits. That would, in turn, cause several banks to literally run out of money and declare bankruptcy.

Short-term borrowing costs would skyrocket and liquidity would evaporate. That would cause a ricochet across the Atlantic as the institutions themselves then panic and try to recover their own capital by withdrawing liquidity by any means possible.

And that's why banks are hoarding cash instead of lending it.

The major banks know there is no way they can collateralize the potential daisy chain failure that Greece represents. So they're doing everything they can to stockpile cash and keep their trading under wraps and away from public scrutiny.

What really scares me, though, is that the banks

think this is an acceptable risk because the odds of a default are allegedly smaller than one in 10,000.

But haven't we heard that before?

Although American banks have limited their exposure to Greece, they have loaned hundreds of billions of dollars to European banks and European governments that may not be capable of paying them back.

According to the Bank of International Settlements, U.S. banks have loaned only $60.5 billion to banks in Greece, Ireland, Portugal, Spain and Italy - the countries most at risk of default. But they've lent $275.8 billion to French and German banks.

And undoubtedly bet trillions on the same debt.

There are three key takeaways here:

  • There is not enough capital on hand to cover the possible losses associated with the default of a single counterparty - JPMorgan Chase & Co. (NYSE: JPM), BNP Paribas SA (PINK: BNPQY) or the National Bank of Greece (NYSE ADR: NBG) for example - let alone multiple failures.
  • That means banks with large derivatives exposure have to risk even more money to generate the incremental returns needed to cover the bets they've already made.
  • And the fact that Wall Street believes it has the risks under control practically guarantees that it doesn't.
Seems to me that the world's central bankers and politicians should be less concerned about stimulating "demand" and more concerned about fixing derivatives before this $600 trillion time bomb goes off.


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Corporate NPR/APM likes to tell us that the world's economy is getting better now that looted money has made it to offshore accounts and austerity in Europe and US has the public filling the $17 trillion whole in the national deficit caused by the massive frauds.  The free money and QE has moved most of the US real estate into the hands of these huge investment firms now controlling development and soaking people with rents and slum-landlording.  YES, THIS IS INDEED THE NEW ECONOMY!!!

So, as Americans pray the TPP nations that signed the treaty can bring down their governments to end the TPP......and as we pray that the Atlantic Trade deal will fall because of loss of trust created by the NSA exposure and Europe's farm/environment issues that will not bend to US naked capitalism.....this we know:

Europeans are not all rosy and cheerily agreeing to austerity and TROIKA rule and the dismantling of their social programs and labor unions contracts.  In fact the move for dismantling the Euro is far stronger and Wall Street knows that the shock from this default will be traumatic to the world and US economy.  What is happening in Spain, Wall Street's favorite nation following TROIKA orders as you see below is a return of Fascism to Spain.  Global corporate tribunals will be totalitarianism and while Americans have not known this personally and this is why we are slow to fight.....

EUROPEANS HAVE ALL OF THIS AUTOCRACY IN RECENT MEMORY AND THEY WILL NOT ALLOW IT TO CREEP!  That's why the NSA scandal was so important, it is why attempts to pass laws limiting protest and political speech happening in the US will not fly in Europe.  Remember, it was Germany/DeutscheBank and Wall Street/Goldman Sachs that started this full fledged attack on social governments over the decade and it started with fraudulent financial instruments hiding sovereign debt and then loading these countries with tremendous municipal debt.  Europeans know this dynamic and will not join a European union with Germany leading the TROIKA and the UK fat on massive financial fraud on top!  As we see the PIIGS nations have been made IMF developing world wards with this massive fraud and attack on their sovereignty!

What does that mean to you and me?  It means that all the US pensions and municipal bonds that are now propping up these European nations under attack by the TROIKA will default and just as with these same US pensions./municipal bonds sent into the stock market to prop up the Wall Street banks in 2007 losing 1/2 their value to fraud.....it is about to happen big time sometime soon and your politician, your pension fund manager knows this!  With the amount of debt Wall Street has....$600 trillion in leveraged debt, the FED has several trillion in leveraged debt, the US Federal debt of $17 trillion, and local credit bond and municipal debt soaking local budgets-----


THIS WILL BE A DEPRESSION-MAKER JUST AS WE HEAD INTO 2014 ELECTION YEAR.  REMEMBER OBAMA ELECTED JUST AS THE LAST CRASH HIT?  WE WILL HEAR ALL POLICY AGAIN SURROUNDING BAILING OUT THE ECONOMY.

This is where Obama's Federal Reserve appointments come into play as the same system of bailouts and protection from fraud happen all over!!

The EU is a new form of colonialism – it’s time to break free

Posted by revoltingeurope ⋅ January 14, 2014 ⋅ 


Spain has a future but it means breaking with the Eurozone and EU institutions, argue Hector Illueca and Adoración Guamán

The economic crisis affecting our country and the austerity policies imposed by the troika (European Commission, European Central Bank and International Monetary Fund) are leading to an increasingly evident social fracture. Astonished citizens observe the degradation of everyday life and the tolerance of abuses of power by the most privileged in the country. The deterioration of the material conditions of an increasingly wide social majority comes accompanied by grave corruption scandals that have infected the political and economic elites, shining a light on a society in which injustice and inequality are ever more entrenched.

In this context, the dream of European integration has become a nightmare of a brutal present and a bleak future. Citizens have been quite deliberately served up a false, ideological and idyllic image of the European Union, with the media projecting a mythical vision quite removed from reality: the truth is that the European Union completely alien to the principles of cohesion and solidarity collaborative solidarity and has become a sort of German hunting ground where strong economies exploit their economic and commercial advantages to crush the weak economies. This is a European Union governed by the law of the jungle .


However, the severity of the economic situation and declining well-being has cast aside the veil and the inhabitants of the periphery are starting to understand that they are victims of a new settlement. It is increasingly difficult to hide that the introduction of the euro has led to a centre-periphery relationship within the European Union, where the North dominates the South. It is no longer possible to deny that the single currency has benefited Germany and the other rich countries of Europe, strengthening their position in the European scheme as net exporters of capital goods and consumption, and net importers of overall demand.

To put it plainly and simply: economic and monetary union has allowed the core countries, especially Germany, to accumulate growing trade surpluses in Europe, blocking any possibility of competitive devaluation and fuelling a radical redistribution of work to the detriment of the less powerful economies of the Mediterranean basin. Strong core countries such as Germany, the Netherlands and Finland, increase their competitiveness, retain their national sovereignty and finance their welfare states due to loss of competitiveness and the destruction of sovereignty and welfare in the European periphery.

The new European division of labour

Spanish workers, along with workers in other peripheral economies, have become a reservoir of low cost labour. As noted by others, the process of European integration has created a new international division of labour, fuelling colonialist dynamics characterized by German hegemony and the subordination of peripheral [1 ] economies. This is what explains why state control over the market and the protection of social rights are being dismantled according to the dictates of economic and monetary union.

When this process clashes with state provisions in social policy, peripheral states adapt their welfare systems, always, to be clear, reducing the protection of labour and social rights. Social dumping has not only not been challenged, but it has been fostered, placing labour regulation as a competitive factor and triggering a fierce regulatory Darwinism to reduce labour standards and social protection.

SOUND FAMILIAR?????  SAME THING HAPPENING IN THE US!!!

The new European division of labour explains and promotes the progressive destruction of state -sponsored social models desired by the Troika and which is immediately apparent in two key areas: the flexibility of labour markets (in particular, lowering the protection for stabile employment and cutting the cost of labour) and the reduction of welfare, in particular social security systems (reducing pensions, health care reforms, etc. . ) .

Its influence is also evident in the education reform in Spain pursued by Minister Wert, reforms which are also sponsored by European institutions, which guide the educational system towards the formation of cheap labour and providing the knowledge needed to deal appropriately with the garbage that characterizes the labour market in underdeveloped countries. The dependent and peripheral position of our economy in the European scheme is radically incompatible with the existence of public pensions, education and public health and a fair and decent job market.

By accepting the dictates of the Troika, the ruling classes of the peripheral countries show their inability to take an independent path for their respective countries and seal a relationship of subordination and dependence similar to that which occurs in the process of classic colonization, characterized by the systematic dispossession of peripheral economies and the exploitation of its workers. We must not forget that they are the ruling classes of the Member States which have built and paid for this European Union model, under whose untouchable legitimacy the most unpopular and tough reforms have sheltered. The undermining of the bargaining position of the unions is the price of the treacherous collusion of the elites of the deficit countries in forging a strong and stable alliance with the German bourgeoisie to impose a new political and social order throughout Europe.

More Europe?

In this context, it is surprising that certain sectors of the Spanish and European left insist on reforming the eurozone as a solution to the current social and economic emergency. With something of a Panglossian air, they invoke the need for “more Europe” , denounce the fragmentation of fiscal policy and the criticise the ECB for providing ample liquidity to banks while abandoning indebted member states to face speculative attacks.

They propose the abolition of the Stability Pact, the creation of a fiscal authority and amendments to the statutes of the ECB to enable loans to governments experiencing difficulties. In a burst of ingenuity, they even speak of a “good euro” in which one could establish a European minimum wage to reduce the competitiveness differentials between countries.

This is an illusion that for decades has paralyzed much of the left and the labour movement and blocked the construction of an alternative at the service of the masses of our country. The euro area lacks a single European state and there is no expectation that one will be created in the near future. The unification of fiscal policy would mean a complete restructuring of sovereignty throughout the European Union, constructed from a strict hierarchy of states and a careful calculation of national interests, and would require a consensus that will not occur.

Any possible reform would follow the existing hierarchy of power, characterized by the dominance of the countries of the centre and especially Germany. To be exact, the euro has been the means to build the hegemony of German capital, which has inexorably imposed itself on the European stage and prevents the possibility of implementing a programme that meets the needs of the social majority.

Time for a break

In our opinion, any political agenda that seeks to actually break with neoliberalism, even in a reformist direction, should seriously consider euro exit. As noted by Costas Lapavitsas [2 ] , the only progressive answer for our people is to leave the euro zone and regain control of sovereignty in the context of a radical shift in economic and social power to labour.


This strategy must start with the default on sovereign debt and extends to a euro exit to allow our country to escape the cataclysm of internal devaluation imposed by the European Union. Our country has a future, but a decent future will necessarily mean breaking with this Europe and the European institutions.
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October 15th, 2013

10/15/2013

0 Comments

 
Regarding national debt 'crises' and Mikulski 'forced to compromise' on reforming Social Security and Entitlements:

Did you hear JP Morgan has offered to pay SS and Vet benefits if the budget scam results in a shutdown? In third world countries the 1% have a motto: keep the poor barely living and they will not revolt. We know that JP Morgan alone owes the American people trillions of dollars in fraud.....energy manipulation fraud....transaction rate manipulation fraud.....LIBOR fraud......subprime mortgage fraud. Then there are the profits made with that fraud. JP Morgan alone could be the recovery of corporate fraud that would pay down trillions in national debt. Rather, it is allowed to continue to defraud and offer to be the sugar-daddy to people impoverished by the corporation's bad actions. As we said.....it was Mikulski who heads the Appropriations Committee that funded the FBI white collar criminal agency at one of its lowest rates at a time of record fraud. Citizens groups like mine are trying to help these pols 'see the fraud' so they are not forced to reform public programs for lack of money.

We spoke of finding the cash assets of banks moving tens of trillions to offshore accounts....$35 trillion with the current database download. We spoke of Joe Biden and Delaware and Harry Reid and Nevada as the portal to hiding and secreting corporate wealth out of the country through offshore accounts and protecting wealth from scrutiny through dynasty plans that try to skirt estate tax and wealth tax laws. Lastly, we spoke of the worldwide network of investigators tracking the laundering of fraudulent gains through international real estate investments all totaling tens of trillions of dollars.

WE COULD PAY THE NATIONAL DEBT DOWN IN JUST A FEW YEARS IF THE US ATTORNEY GENERAL/STATE ATTORNEY GENERAL SIMPLY ASKED FOR THE DATA AND FOLLOWED OUR LEAD.

This is the reaction by the 1% to the news that we know where they live.....'it looks like we should close down the International Criminal Court' as it seems investigating and bringing to justice rogue international leaders and thugs may not be in the interest of the 1% any longer'.

Indeed, it is the International Criminal Court (ICC) to which the International Investigative Journalists and International Justice organizations would take these claims against the banks in moving the people's money out of countries to hide in shell accounts. SEE WHY THE ICC IS NO LONGER A POSITIVE ASSET FOR RESOLVING INTERNATIONAL CRIME? The Bush Administration removed the US from the ranks of those countries participating in the ICC joining Israel and the Sudan as the only nations in the world to do so. He did that because he was lying about Weapons of Mass Destruction to start wars, committing torture, private US contractors were openly bribing and committing fraud all around the world, and THE US BANKS HAD A MASSIVE FINANCIAL FRAUD OPERATING ALL AROUND THE WORLD. These are pretty good reasons for Bush to take the US out of the ICC. By now everyone knows Obama has done the same for the same reasons and has gone so far as to try to pass domestic laws protecting Bush and himself from any legal responsibility for all of the above.

THIS IS WHY THE HUFFINGTON POST RATED THE OBAMA ADMINISTRATION THE MOST CORRUPT IN US HISTORY WITH BUSH RIGHT BEHIND.

So, you and I are supposed to allow Congress and the President to shutdown government over and over in a fake crisis each time taking billions from public services......negotiate reforms to Entitlements and Social Security because the Trusts have been emptied from fraud....all in order to pay for cuts to corporate tax rates at a time when corporations average 17% tax rate with tax breaks taking that even lower. THIS IS WHAT THE ENTIRE MANUFACTURED CRISES ARE ABOUT. REMEMBER, NEO-LIBERALS AND OBAMA WERE 'FORCED' IN 2010 TO ALLOW BUSH TAX CUTS TO CONTINUE SETTING THE TAX RATE AT ZERO FOR MUCH OF WEALTH AND CORPORATIONS GIVING A TRILLION IN TAX CUTS JUST THAT YEAR. They were forced to do that because of the US START Treaty with Russia that has never been spoken of again.


We simply need to get rid of the neo-liberals and take back the people's democratic party by running and voting for labor and justice in all elections! All of Maryland's democrats are neo-liberals....SHAKE THE BUGS FROM THE RUG!

FBI struggles to handle wave of financial fraud cases

By Eric Lichtblau, David Johnston and Ron Nixon

WASHINGTON — The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country's economic crisis, according to current and former bureau officials.

The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the U.S. economic woes.

The pressure on the FBI has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including Fannie Mae and Freddie Mac. The FBI is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm. But some people inside and out of the Justice Department wonder where the agents will come from and whether they will be enough.

So depleted are the ranks of the FBI's white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau's attention in cases involving possible frauds of millions of dollars.

Since 2004, FBI officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.

According to previously undisclosed internal FBI data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes like mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels.

Over all, the number of criminal cases that the FBI has brought to U.S. prosecutors — including a wide range of crimes like drug trafficking and violent crime — dropped 26 percent in the last seven years, going from 11,029 cases to 8,187, Justice Department data showed.

"Clearly, we have felt the effects of moving resources from criminal investigations to national security," said John Miller, an assistant director at the FBI "In white-collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims."

But Justice Department data, which include cases from other agencies, like the Secret Service and Postal Service, illustrate the impact. Prosecutions of frauds against financial institutions dropped 48 percent from 2000 to 2007, insurance fraud cases plummeted 75 percent, and securities fraud cases dropped 17 percent.

Statistics from a research group at Syracuse University in New York State, the Transactional Records Access Clearinghouse, using somewhat different methodology and looking only at the FBI, show an even steeper decline of nearly 50 percent in overall white-collar crime prosecutions in the same period.

In addition to the investigations into Fannie Mae and Freddie Mac, the FBI is carrying out investigations of American International Group and Lehman Brothers, and it has opened more than 1,500 other mortgage-related investigations. Some FBI officials worry privately that the trillion-dollar U.S. bailout of the financial industry may itself become a problem because it contains inadequate controls to deter fraud.

No one has suggested that a quicker response would have averted the mortgage meltdown, but some officials said a faster reaction might have deterred more of the early schemes that seized on loose U.S. lending regulations.

"They were very late to the game," Representative Zoe Lofgren, a California Democrat who has quarreled with the FBI over its financing priorities, said of the bureau's response to the mortgage crisis. "They were not on top of this, and they're just now starting to really do something."


_____________________________________________
'The FBI’s fiscal year (FY) 2013 budget request totals $8.2 billion in direct budget authority, including 34,083 permanent positions (13,018 special agents, 3,025 intelligence analysts, and 18,040 professional staff). This funding level continues increases provided to the Bureau in the past, most recently in FY 2012, allowing the FBI to maintain its forward progress, including targeting additional resources on investigating financial and mortgage fraud'.

The FBI’s fiscal year (FY) 2014 budget request totals $8.4 billion in direct budget authority, including 34,787 permanent positions (13,082 special agents, 3,026 intelligence analysts, and 18,679 professional staff). This funding level provides critical funding to address threats posed by terrorists, cyber attackers, and criminals.



Robert S. Mueller, III
  • Director
  • Federal Bureau of Investigation
  • Statement Before the House Appropriations Committee, Subcommittee on Commerce, Justice, Science, and Related Agencies
  • Washington, D.C.
  • March 07, 2012


Raise your hand if you understand that $8.4 billion is almost nothing as far as protecting the American people against attack from terrorism, from violent criminals, from every sort of white collar crime.  EVERYBODY!!!!!!  So, it looks like a staff of about 70,000 people are doing all of this.  Raise your hands again if you understand most of that budget is spent on terrorism and crimes against/protection of corporations.  EVERYBODY!!!!






Mikulski Chairs Appropriations Hearing on FBI Fiscal Year 2010 Budget

FBI Director Mueller testifies before CJS Appropriations Subcommittee

June 4, 2009

WASHINGTON, DC – U.S. Senator Barbara A. Mikulski (D-Md.), Chairwoman of the Commerce, Justice and Science (CJS) Appropriations Subcommittee, today chaired a hearing on the Federal Bureau of Investigation (FBI) fiscal year 2010 budget. The hearing included testimony from FBI Director Robert Mueller.

Senator Mikulski’s prepared statement follows:

“Good morning and welcome. Today the Commerce, Justice, Science (CJS) Appropriations Subcommittee will hear from Federal Bureau of Investigation (FBI) Director Robert Mueller about the FBI’s budget and priorities for fiscal year 2010.

“First, I want to say that I am proud of the FBI. I am proud of how the men and women serving there fight to protect Americans, dismantle organized crime and drug cartels and combat gang violence that is destroying our neighborhoods. They solve kidnapping and extortion cases and rescue the vulnerable from illicit traffickers. I do not think that Americans don’t fully appreciate the full breadth of what the FBI does to keep America safe.

“After 9/11, the FBI was charged with a new mission. They were still required to carry out their domestic crime fighting role, but an agency within an agency was created to protect us from international terrorism and weapons of mass destruction. The FBI now has two principal jobs: fighting terrorism and fighting crime.

“As Chairwoman of CJS, I want our hearing with the Director to reflect these two huge priorities. We need to truly understand what it takes for FBI to carry out these extraordinary responsibilities. We will begin with an unclassified hearing that will focus primarily on the FBI’s domestic mission. Then, for the first time, we will move to a classified hearing to discuss the FBI’s new mission, much of which cannot be discussed in a public hearing. The CJS Subcommittee will include classified hearings in our annual appropriations process. We will also extend classified hearings to other federal law enforcement agencies when merited. We may even have another classified hearing later this summer to learn about other federal law enforcement needs.

“The President’s budget request for the FBI is $7.9 billion -- a $560 million increase above the 2009 omnibus level, or a 7.7 percent increase. Fortunately, the President’s budget reflects the ongoing needs and priorities of the FBI. This request funds important initiatives like fighting white collar crime and public corruption, protecting the U.S. – Mexico Border from drug traffickers and human smugglings rings, dismantling organized criminal organizations and enterprises and disrupting gangs and recruitment. This budget request includes funding for 12,325 special agents, including 407 new agents, and 2,635 intelligence analysts, including 321 new analysts.”

“The request is $2.4 billion for the FBI’s traditional crime fighting efforts--$133 million above the 2009 omnibus level. This funding will support FBI efforts to fight violent crime and organized criminal enterprises that threaten the safety of our communities and prey on the vulnerable. These criminals are sophisticated and transnational. They smuggle drugs, guns and even people across borders. They do anything to make a profit.

“Criminals are technologically savvy. They use the Internet, BlackBerrys and text messaging to communicate with each other and evade law enforcement. We need sophisticated agents and state of the art technology to track down and investigate these bad guys. The FBI is the premiere law enforcement agency that carries out this important mission. The President’s budget request for criminal activities will fund a total of 4,500 special field agents and 104 intelligence analysts.

“The FBI is playing a major role in protecting the U.S. – Mexico Border, with its Southwest Intelligence Group (SWIG), a clearinghouse of all activities to augment and unify existing FBI efforts with Mexico. It is increasing its focus on public corruption, kidnappings and extortion with a particular focus on Southwest border issues; yet, another major role FBI is playing to fight transnational crime.

“Not only is the FBI fighting violent crime on the border, but it is also fighting financial crimes, like mortgage fraud, which are destroying our communities. The FBI request provides $25 million above the fiscal year 2009 omnibus level of $50 million to hire 50 new agents and 61 new forensic accountants to investigate complex financial investigations. This increase is necessary and timely.

“As of April 2009, the FBI is investigating 2,000 mortgage fraud cases and 40 corporate fraud cases. Mortgage fraud cases are complex and resource intensive. An average mortgage fraud investigation takes one and a half years to complete. A corporate fraud investigation requires almost four years to complete. These financial fraud cases are only growing as the economy struggles. I want to know if your budget keeping up with this pace.

“I want to compliment Senator Shelby for sounding the alarm and working to provide funding for the Adam Walsh Act. The FBI plays an important role in Adam Walsh. The FBI is responsible for monitoring, targeting and arresting Internet predators. Innocent Images in Calverton, Maryland, is the FBI cyber headquarters. The FBI also is responsible for rescuing children who have been forced into prostitution, kidnapped and trafficked into and out of the United States.

“Since 2003, the FBI’s Innocence Lost initiative has developed 24 task forces in the U.S. that partner with State and local law enforcement to end child prostitution and trafficking. Efforts have resulted in over 575 children rescued and the conviction of more than 300 pimps, madams and their associates who exploit children through prostitution. Yet there is no additional funding for these important programs that have saved children’s lives. These two programs continue to be flat funded. I want to hear from you today about what resources you need to keep kids safe.

“Our nation faces a growing and pervasive threat from hackers, cyber spies and cyber terrorists. Cyber security is a critical component to our nation’s infrastructure. We need safe and resilient networks to protect our online banking, online commerce, electrical and power grids, air traffic control systems and digitalized records. The FBI is bringing to justice cyber hackers, cyber spies and cyber terrorists who operate in anonymity and with predatory intent towards the United States.

“Last year, we appropriated $75 million for the FBI’s cyber security efforts. This year, the request is $140 million -- a $65 million increase to add 107 agents, 42 intelligence analysts and 111 professional staff. We will hear more about the details on the FBI’s cyber security efforts in the classified session, but I am pleased that the FBI is a key component in guarding our nation’s cyber security.

“Finally, most increases in the FBI’s budget request are for the FBI’s counterterrorism and intelligence activities. We all agree this is a top priority. For counterterrorism, the budget proposes $3.13 billion; a $257 million increase above the 2009 omnibus level. Counterterrorism is over 40 percent of the FBI’s budget. For intelligence, the budget proposes an increase of $1.64 billion, or $154 million a 10 percent increase above the 2009 omnibus level.

“Given all of the FBI’s important roles and responsibilities, we must ensure that it has the resources needed to protect the lives of 300 million Americans. I would like to say it is a personal privilege to thank Director Mueller and the FBI for the leadership on effective interrogation methods that follow the rule of law, but also make sure we get the information we need to protect the American people. You provide advice and guidance on what are effective and legal interrogation techniques. We will leave it up to the Judiciary Committee to further investigate the previous Administration’s approach. Today, I just want to thank you for your leadership.”




________________________________________

As you see here the International Criminal Court has been less effective than it could be because of budget funding far lower than needed to do its job.  It has proven to be a valuable resource in providing a venue for criminal actions across international borders and would be used to recover this Visigoth looting of national Treasuries around the world.

It appears that the ICC sees these kinds of tasks in its future but as this article shows the nations charged with funding it are the very nations guilty of these massive frauds.  It will be critical to get funding from perhaps the BRIC nations.....those growing economies that are no less criminal but often victims of the Visigoth fraud none the less.



Dispatches: Big Budget Ask is Sign of Fresh Thinking at ICC

August 5, 2013 Elizabeth Evenson

  • 2011 Reuters Limited
In this age of austerity, the nearly 27 percent budget boost requested by the International Criminal Court (ICC) for its prosecutor’s office leaps out. It’s the clearest sign yet of fresh thinking coming out of the office’s new leadership.

The ICC released an advance version of its budget request for 2014 last week. The Office of the Prosecutor – whose new prosecutor started in June 2012 – said the funding would be used, in part, to grow the size of its investigation teams and invest in new technologies.

The request will be debated by the ICC’s 122 member countries, who foot the bill for the court, and the budget will be finalized in November.

Given that the court’s big payers – like Germany and Japan – have in the past insisted that the court hold down growth altogether, it remains to be seen how states will react. In a separate report, the court, which overall is seeking a 9.5 percent increase in funding, has warned that if it doesn’t get more resources in 2014, it will be forced to shut down the equivalent of activities in two or three countries.

It’s the thinking behind the prosecution’s request that may matter as much as the figures.

According to the document, the office has concluded that its model of rotating small teams of investigators between cases is not effective in digging up the evidence judges want. This comes on the back of recent setbacks, including an acquittal last December in only the second ICC case to reach a verdict.

In the past we raised concerns that the office simply didn’t have the staff it needed to conduct investigations.

The office’s task is – to put it mildly – daunting, and resources are certainly not the only issue. But the office’s candid assessment that change is needed is perhaps the biggest sign yet of its new leadership.


__________________________________________
 As I described earlier, this massive corporate fraud of tens of trillions was orchestrated....it was not only excessive greed.  The goal was to move all wealth from low/middle income people to the top earners and that is what we have today.  So, at the same time this fraud was picking up steam Bush found a reason to dismantle most of the criminal agencies charged with oversight of white collar fraud.  Remember, it was Reagan and Clinton who set the stage for these global connections allowing money to be laundered out of the country and into hiding.  That was what bank deregulation and free trade did as banks went global.

Obama was elected with a supermajority because he ran on holding corporations accountable and then he did the opposite, working to make sure the fraud stayed where it was.

WHEN A GOVERNMENT SUSPENDS RULE OF LAW IT SUSPENDS STATUTES OF LIMITATIONS.


FBI Eases Up on White Collar Crime

Back to News inShare Tuesday, October 01, 2013 (graphic: stateofsearch.com)

The Federal Bureau of Investigation (FBI) used to be the go-to federal law enforcement agency for cracking down on white-collar crime. But both recent and historical data reveals that the FBI is pursuing far fewer of these cases.

The Transactional Records Access Clearinghouse (TRAC), a nonpartisan government watchdog located at Syracuse University, found that FBI white-collar crime cases recommended for prosecution are down significantly so far this year, based on government records obtained from the U.S. Department of Justice.

If the FBI maintains its pace for the remainder of 2013, the bureau’s total will be down nearly 7% from the previous year, TRAC concluded.

More importantly, the rate that the FBI pursues white-collar crimes could be down as much as 45% compared to totals from 2003—and nearly 59% from 1993.

TRAC attributed the decline to the FBI’s decision following the September 11, 2001, attacks to devote more resources and manpower to combating international and domestic terrorism and weapons of mass destruction.

To date, the FBI has sent 2,001 white-collar cases to the Justice Department for prosecution this year. The vast majority of these investigations have dealt with fraud, particularly those involving financial institutions, mortgages and health care.

-Noel Brinkerhoff




Justice Dept. Mistakes Slapping Wall Street Wrists for True Punishment for Fraud

 Monday, February 25, 2013 (graphic: stateofsearch.com)

Stung by criticism that it has given Wall Street a “Get out of Jail Free Card” despite its role in causing the 2008 financial crisis and subsequent Great Recession, the Justice Department (DOJ) is talking tough about what it calls a new model for going after Wall Street fraudsters. Instead of settling for consent agreements and fines, DOJ claims it is now insisting on actual guilty pleas to felony charges. But critics remain skeptical, particularly because there is no indication that corporate executives will be held responsible for the crimes committed by the businesses they run.  Matt Taibbi of Rolling Stone called the new model “beyond laughable.”

The new approach, which surfaced in recent settlements with UBS and the Royal Bank of Scotland for their roles in the LIBOR rate-fixing fraud, involved demanding that their Japanese subsidiaries plead guilty to felony wire fraud. Now, prosecutors are said to be setting their sights on the Japanese subsidiaries of Citigroup, Deutsche Bank and JPMorgan Chase.

“This Department of Justice will continue to hold financial institutions that break the law criminally responsible,” claimed Lanny A. Breuer, head of DOJ’s criminal division.

Critics retort, however, that none of the corporate parent companies involved in LIBOR pleaded guilty, nor did any of their executives. Even the impact on the Japanese units was softened, as Japanese authorities assured UBS that they would not de-license its subsidiary. While the plea has depressed its stock price, the subsidiary is operating normally and clients remain.

“Extracting a guilty plea from a wholly-owned subsidiary finally enables the Justice Department to look tough on financial institutions while sparing them from the corporate death penalty,” observed Evan T. Barr, an ex-prosecutor who now defends white-collar criminal cases at the law firm Steptoe & Johnson.

Barr’s reference to the corporate death penalty is telling, because the claim that job losses would follow strict enforcement of the law is one that DOJ officials themselves have cited in defending their lenient approach to Wall Street fraud.

As Taibbi has pointed out however, protecting jobs at fraudster firms may seem like a good idea in the short run, but “the long-term job losses are going to be much greater when investors around the world lose confidence in the U.S. financial system because they recognize that individuals do not face punishment for criminal activity.” 

This type of what economists call “moral hazard,” arises when an individual has no incentive to obey the law because he or she faces no risk of punishment, while others will actually bear the consequences of the law-breaking. That is what happened in 2008, and even under the DOJ’s new strategy, “the individual incentive not to commit crime on Wall Street now is almost zero.”



____________________________________________


Mueller: I Crippled FBI Effort v. White-Collar Crime, My Successor Will Make it Worse

Posted on August 26, 2013 by Devin Smith  By William K. Black
(Cross posted at Benzinga.com)

FBI Director Robert Mueller is taking his victory lap as he steps down after 12 years of service.  I have done three articles in a series that explains how the Mortgage Bankers Association (MBA) conned the FBI into adopting the Tea Party’s mythology about the causes of the crisis – virginal banks beset by ultra-sophisticated fraudulent hairdressers.  The MBA created a faux definition of mortgage fraud under which the bank and its senior officers were always the victims instead of the perpetrators.



Mueller’s description of his tenure reveals that his obsession with one of the FBI’s tasks, anti-terrorism caused the FBI to fail catastrophically in many other tasks.  The FBI is essential in a wide range of fields.  We have, for example, roughly one million Americans employed in our criminal justice system.  Only the 2,300 FBI white-collar specialists, however, investigate elite white-collar crimes and we have over 1,300 industries (not firms).  We have over 500 fewer FBI agents working white-collar crime cases because Mueller transferred over 500 of them to national security tasks after 9/11.  (Mueller sought to move the best 500-800 of those white-collar agents by permanently or temporarily reassigning them to national security, so the true loss of capacity against sophisticated financial frauds was far greater than the bare numbers suggest.)  We can all understand that action, which was part of a transfer of over 2,000 FBI agents to national security that Mueller ordered in response to 9/11.

Senior FBI officials sought to replace the lost agents, but the Bush administration refused to allow the FBI the right to do so and Mueller never went to the mat to replace the loss of agents in fields other than national security because his focus was almost exclusively on national security.

“Robert Mueller, the FBI’s director since 2001, said mortgage fraud needed to be considered ‘in context of other priorities,’ such as terrorism. He told the Commission that he hired additional resources to fight fraud, but that ‘we didn’t get what we had requested’ during the budget process. He also said that the FBI allocated additional resources to reflect the growth in mortgage fraud, but acknowledged that those resources may have been insufficient. ‘I am not going to tell you that that is adequate for what is out there,” he said. In the wake of the crisis, the FBI is continuing to investigate fraud, and Mueller suggested that some prosecutions may be still to come’” (FCIC 2011: 163).

“Some prosecutions may be still to come” – what a forlorn hope.  Since he uttered the forlorn hope there have been zero prosecutions of the senior officers of the control frauds that caused the crisis.  “Terrorism” cannot be accepted as an excuse for failing in the FBI’s responsibilities, yet Mueller remains blind to the costs to the Nation of the FBI’s mono-focus on national security.

“‘I had been a prosecutor before, so I anticipated spending time on public corruption cases and narcotics cases and bank robberies and the like, and Sept. 11 changed all of that,’ he says.

It took him a while to realize how drastically the mission of the FBI had to change. Conversations with President George W. Bush and later with President Obama focused his mind on this thought: ‘What is the FBI doing to prevent the next terrorist attack?’”

Mueller’s comment reveals the critical error that caused the FBI to fail.  The “mission” of the FBI did not need to “change” in response to 9/11.  The FBI had always had the mission of preventing domestic terrorist attacks.  The 9/11 attacks should not have led to Mueller not “spending time” on the FBI’s other functions.  Mueller “drastically” redefined his mission as national security – period.  That cannot work when one runs an agency that is the only means of detecting, investigating, prosecuting, and deterring a vast range of dangerous crimes.  Mueller “locked-on” on a single “target” and lost broader “situational awareness.”

The obvious point, except to Mueller (and the media) was “what is the FBI doing to prevent the rapidly growing epidemics of mortgage origination and secondary market control frauds that are going to cause the worst financial and economic crisis in 75 years?”  The NPR program accepted uncritically the claim that Mueller had transformed the agency in a positive manner.

“And in a huge shift in mindset, he also set up an intelligence operation within the bureau to analyze threats.”

The FBI must prevent threats of fraud epidemics that cause over $12 trillion in losses in wealth and cost over 10 million American jobs.  Where was the “intelligence operation” that missed?

  1. The appraisers’ warnings – which began in 2000 – that the lenders were engaged in endemic appraisal fraud in order to inflate appraisals,
  2. Our driving liar’s loans out of the S&L industry in 1990-1991 because we recognized that only fraudulent lenders would regularly make liar’s loans,
  3. The FBI’s own twin warnings in September 2004 that there was an epidemic of mortgage fraud and that it would cause a financial crisis were it not successfully contained – warnings that Mueller failed to heed
  4. The lending industry’s own anti-fraud expert’s five warnings about the endemically fraudulent nature of “liar’s” loans in early 2006,
  5. The fact that the industry called the loans “liar’s” loans behind closed doors.
There has never been a crisis with earlier warnings, from our crackdown on fraudulent S&L lenders making liar’s loans in 1990-1991 and from the appraisers in 2000 (over a year before Enron failed) and a more obvious “tell” (calling the fraudulent loans “liar’s” loans lacks subtlety).  The FBI never developed “an intelligence operation” “to analyze threats” of even epidemic fraud.  Mueller’s failure to respond to these exceptionally early, strong, and unambiguous warnings of the mounting epidemics of accounting control fraud, the same form of fraud that had driven the Enron-era crisis and the savings and loan debacle, represents the ultimate failure of leadership under the test that his supporters urge us to use.

“Former Justice Department Inspector General Glenn Fine, who frequently held Mueller’s feet to the fire, says it has been a successful run for the director.

‘The measure of a tenure and the measure of a leader is whether when he learns of those problems, he fixes them,’ says Fine….”

Mueller did not fix the problems.  He dealt with only one set of problems, as did Fine after 9/11.

Mueller shows no recognition that he has created institutions that have reinforced his worst tendency to focus solely on terrorism.

“For nearly a dozen years now, Mueller has started his morning — every morning — with a secret threat briefing. So, what keeps him up at night?

‘Well, the thing I worry about most … is the possibility of a bomb on an airplane, here in this day and age,’ he says.”


The reporters never ask him how many times that morning “secret threat briefing” warned him about the control fraud epidemics.  Mueller’s saw banks only as the potential victims of terror.


“Lately, Mueller has been focusing his energy on a new area of work for the FBI: cyberattacks on banks, utilities and other ‘vulnerable’ areas. And in another pivot point for his agency, Mueller worries that the cyberthreat will soon overtake al-Qaida as the bureau’s biggest priority.

‘Before we have a substantial incident which would serve as a wake-up call, we need to do everything we can to prevent that happening,’ he says.

Mueller’s rare consideration of banks is doubly revealing.  First, notice that he ignores the lead role that bank control frauds play in assisting terror – particularly potential state-sponsored terror.  The HSBC and Standard Chartered cases – real cases of the world’s largest banks deliberately aiding the funding terror groups and Iran’s pursuit of nuclear weapons (controversial, I know, but Mueller certainly believes it).  Second, Mueller ignores these real cases and worries solely about hypothetical cases where the banks might be the victims.  That hypothetical leads Mueller to declare that “we need to do everything we can to prevent that happening.”  But we apparently do not have to “do everything we can to prevent” the real actions by fraudulent banks (among the largest in the world) to aid terrorists in order to increase bank profits and their officers’ bonuses.  DOJ refused to prosecute HSBC and Standard Chartered and the hundreds of employees who committed tens of thousands of frauds for over a decade.

The 9/11 attacks caused a terrible loss of life, but the FBI’s duty is to prevent crimes (including white-collar crimes) that kill and maim far more people than do terrorist attacks.  An FBI leader must not focus on the politically sensitive cases and must counter the hysteria and grossly exaggerated fear that terrorism seeks to create.  Mueller was terrorized by terror.

Mueller portrays his mono-focus on national security as a virtue and impugns those who focus on all crimes or cared about constitutional rights as deficient in their humanity.

“As a prosecutor, he worked for years on the investigation of the bombing of Pan Am 103 over Lockerbie, Scotland, in 1988.

To ‘people who [criticize] our intelligence programs…I would say: Spend a few moments with families of those who have lost their loved ones, whether it be Pan Am 103 or Sept. 11 … and it puts it in a wee bit different context.’”

Every family member who loses a loved one suffers.  Only a tiny percentage of family members suffer that loss due to a crime are the collateral victims of terrorists.  It is clear that the Pan Am experience is the defining trauma of Mueller’s life.  Had he been the prosecutor in Bangladesh of the white-collar criminal who owned the clothing plant that collapsed and murdered thousands of workers Mueller might have become the scourge of control frauds.  One hopes, however, that in that alternative incarnation he would not have become so cavalier about harming constitutional rights in the pursuit of the control frauds.  The suffering of families who lose loved ones due to crimes does not put the constitution “in a wee bit different context.”  “

Mueller has never met most of the victims of our insane drug wars.  As with other attempts at prohibition it creates criminogenic environments that cause the deaths of tens of thousands of people.  Most of the families of these victims live in other nations.  The drug war also funds many terrorists so it is doubly stupid.  Ending the drug wars would free up investigators and to make the FBI more effective in every field (including anti-terror).  An FBI Director focused solely on terror cannot bring the strategic thinking essential to making these vital changes.

Mueller also explained that politics will exacerbate the FBI’s failure to hold elite bankers accountable for the frauds that drove crisis.  Mueller stated as an obvious fact that no FBI leader will cut the agents assigned to terror, so the sequester cuts will fall entirely on other programs.

“Over the past few months, something else has been on the mind of the FBI director, a problem he’s leaving for his successor: the budget crisis.

Mueller says there’s only so much the bureau can cut back on cars and travel and information technology upgrades. Furloughs for 2014, he says, are on the way. So is a tough conversation about priorities.

‘I expect the special agent in charge to make certain that there is no Mohamed Atta, terrorist, swimming in the waters in that division,’ Mueller says. ‘So what’s going to be hit is white-collar crime. What’s going to be hit is violent crime — we’re not going to be able to do as much as we’d want there. Organized crime.’”

This is significantly insane.  Why haven’t Mueller, Holder, and Obama been raging every day to the media about how irresponsible Republicans are to give a free pass to violent criminals, organized criminals, and elite white-collar criminals?  If the Democrats gutted the FBI the Republicans would be denouncing them every hour as traitors endangering the Nation and serving the interests of murderers, mob bosses, and criminal bank CEOs.  It is also insane that our counter-productive, unconstitutional, and immoral anti-terror programs are sacrosanct from budget cuts while the already understaffed FBI functions will be slashed again due to the (non-existent) “budget crisis.”  First on the Mueller’s list for further cuts:  “white-collar crime.”

White-collar crime investigations and prosecutions are massive money makers that reduce the deficit, but Mueller, Holder, and Obama refuse to make these points and refuse to prosecute the elite bank fraudsters.  On substantive and political grounds their actions are either inexplicable or all too explicable and support my readers’ belief that the FBI leadership no longer wants to investigate and prosecute the elite bank frauds.

Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.


0 Comments

July 08th, 2013

7/8/2013

0 Comments

 
WHEN IT COMES TO BEING RANKED AT THE BOTTOM NATIONALLY IN FRAUD, CORRUPTION, AND TRANSPARENCY.....STATE ASSEMBLYMEN JON CARDIN AND PETER FROSH WORK TO PROTECT THE FRAUDSTERS AS DOES ATTORNEY GENERAL DOUG GANSLER WHO IS RUNNING FOR GOVERNOR 

WRITE TO MICHAEL GREENBERGER AT U OF M LAW SCHOOL AND TELL HIM MARYLAND WANTS A RULE OF LAW ATTORNEY GENERAL!!!



I want to move away from the attack on health care in America to reminding people that all of the austerity cuts, rise in local and state taxes, cutting and privatization of public programs and assets are all caused by revenue lost to corporate fraud with no attempt by Justice to recover.  When they give a press release saying they are fighting fraud and give an amount of a few billion.....largest ever.....we know there are tens of trillions of dollars owed the American people.  WE CANNOT LET STAND THE THEFT OF WHAT IS OUR AND OUR CHILDREN'S FUTURE.

Do not believe the corporate media favorite for health fraud numbers.....80 billion dollars,......we all know that number is more like $600 billion each year for these few decades.  So it is clear, if anything is done with health care costs....they need to use universal care to bring back all that stolen taxpayer and individual health care money!


In Maryland, our State Attorney General Doug Gansler who has the distinction of being the deputy dog for a state ranked at the bottom for fraud and corruption and has suspended Rule of Law in Maryland has a campaign sign with his picture saying he is fighting for health insurance coverage for the little guys.  This is such garbage as to make the strongest stomach weak.  He single-handedly ignores all health fraud that has billions of dollars lost in Maryland alone to fraud and he is silent as Maryland Assembly makes sure the laws protect the health industry from public ability to recover fraud.  GANSLER IS AIDING AND ABETTING CORPORATE FRAUD AND RUNNING FOR HIGHER OFFICE!


We are going to see over this next year a release of millions of bank and government documents from Wikileak and from NSA Snowden that give the public ever more of a view as to the extent of criminal fraud whether corporate tax evasion or other fraud.  I am sure we will see as well that NSA was not only surveilling for terrorist activity....they were data mining to give US corporations advantage in markets.....all of which is illegal.  You are not seeing any attempts at stopping the economic chaos and it is because we have neo-liberals who 'WIN AT ALL COSTS' when it comes to corporate profits!

VOTE YOUR INCUMBENT OUT OF OFFICE AT ALL LEVELS....DO YOU HEAR YOUR DEMOCRATIC POL SHOUTING LOUDLY AND STRONGLY TO PAY ALL GOVERNMENT DEBT WITH RECOVERY OF CORPORATE FRAUD?  THEN THEY ARE NOT A DEMOCRAT WORKING FOR LABOR AND JUSTICE!!!


Medical Fraud’s Staggering Price Tag


August 18, 2009

As the nation engages in a contentious debate over health care, one thing that almost everyone agrees on is the need to fight rampant fraud.  Rip-offs add billions of dollars a year to the tab for health care in America. How much money could be saved by eliminating fraud?  "It's just an extraordinary sum," Malcolm Sparrow of Harvard University told National Public Radio. Unsure if fraud costs $100 billion or $600 billion, Sparrow told NPR he is sure that whatever the first digit is, it has 11 zeroes after it. To address the problem, the Senate health committee on July 23 voted 23 to 0 for an amendment by Senator Bernie Sanders  that would double penalties for health care fraud. “What we have seen for many years is the systemic fraud perpetrated by private insurance companies, private drug companies, and private for-profit hospitals ripping off the American people and the taxpayers of this country to the tune of many billions of dollars,” Sanders said.

Sanders’ amendment would authorize double the current penalties under the False Claims Act for fraudulently billing new health exchanges created by the reform bill. Convicted companies would face fines of up to six times the amount of the fraud. “I worry very much that for many international corporations getting hit with treble damages may well be worth it and passed along as a cost of doing business,” Sanders said. “What we have to tell these big multi-national corporations is that if they are going to engage in fraud they’re going to pay for it dearly.”

Virtually all of the major hospital chains, private insurance companies, and pharmaceutical companies have been involved in massive health care fraud over the past decade, the senator added. He also pointed to a string of criminal and civil cases against many of the leading corporate health care providers in the country, including:

  • Earlier this year, a jury found Pfizer owed Wisconsin $9 million for violating the state Medicaid fraud law more than 1.4 million times by purposely overcharging the state for prescription drugs. The company faces potential fines from $140 million to $21 billion.  (Now, how does the public have any faith in these figures up to $21 billion, as we are never allowed to see these settlement details....the answer is we should have no faith)!
  • Also in 2009, UnitedHealth, a leading insurance company, paid $350 million to settle lawsuits brought by the American Medical Association and other physician groups for shortchanging consumers and physicians for medical services outside its preferred network.
  • In 2003, GlaxoSmithKline paid $88 million in civil fines for overcharging Medicaid for its anti-depressant Paxil.
  • Also in 2000, Humana paid $14.5 million to settle federal charges of overcharging government health programs.
  • In 2000, the Hospital Corporation of America agreed to pay $745 million to settle civil charges that it systematically defrauded Medicare, Medicaid and other federally-funded health programs.
    (The head of HCA when this fraud happened is now Governor of Florida having a field day with health care reform....HCA has the most profit of all health care companies)
In addition to the Sanders Amendment, other initiatives to fight fraud include a new Obama administration task force made up of officials from the Department of Justice and the Department of Health and Human Services. A House version of the health care overhaul bill also includes anti-fraud provisions, such as $100 million a year to fight fraud and increased penalties for perpetrators, according to NPR.

To give an idea of what $100 million to fight fraud would do....we have one business in Baltimore getting $100 million in tax breaks.  It is nothing.  But all of fraud recovery would pay for itself, no republicans or taxpayer money needed.
________________________________________________


We must not let this stand as we allowed ourselves to lose political representation by not paying attention to whom we elected......from Clinton on we simply sent neo-liberals back to work with republicans to hand the country over to corporate interests!  These pols have watched as all fraud was left without justice, the financial oversight agencies worked double-time to protect Wall Street from loses and manipulated great gains while the rest of the country falls into poverty.  NONE OF THE FINANCIAL REFORM HAS HAPPENED AND NO JUSTICE FOR TENS OF TRILLIONS IN BANK FRAUD HAS OCCURRED.  THIS IS TREASONOUS AND YOUR POLITICIAN IS AIDING AND ABETTING CRIME!

Wall Street Dodges Financial Reform Again --

By Erika Eichelberger

| Fri Jul. 5, 2013 2:01 PM PDT  Mother Jones
    30

The Dodd-Frank financial reform act, the law designed to clean up the abuses that led to the financial crisis, celebrates its third birthday this month. But only about a third of the rules required by the legislation have been finalized so far, and even those are not going into effect as scheduled. This week provided a perfect example of why that is: The Federal Reserve granted Goldman Sachs a two-year extension to implement a key Dodd-Frank rule that would require banks to move risky trading into separate affiliates that are not backed by the Federal Deposit Insurance Corporation (FDIC). Several other of the nation's biggest banks won the same exemption last month.

Financial reformers are not shocked. "Quelle surprise!" quips Bart Naylor, a policy advocate at the consumer advocacy group Public Citizen. "The Federal Reserve decides to heed the crush of Wall Street lobbyists."

The Dodd-Frank rule, which Goldman Sachs was supposed to implement by July 16, requires FDIC-insured banks to move most of their derivatives trades into separate firms so that when a trade goes bad the bank will have to handle the fallout, not taxpayers. (Derivatives are financial products with values derived from underlying variables, like crop prices or interest rates; they were a major catalyst in the economic meltdown of 2008.) In its request for an extension, Goldman told the Federal Reserve—the main overseer of derivatives dealers—that complying with the deadline would mean the firm would need to either divest or stop a big portion of its swaps trading; a transition period, Goldman said, would be needed to ensure that the rest of the economy is not damaged by the shift. On Tuesday, the Fed agreed.

There is a provision in the Dodd-Frank law that allows banks to request a two-year transition period, if complying with the rule will damage the wider financial system. But banks were already given three years to phase in compliance with the rule. "If the regulators hadn't let them waste [that] three-year period…then they could have been prepared to execute [the rule] in a way that was less disruptive," says Marcus Stanley, policy director at the financial reform advocacy group Americans for Financial Reform. "It's like saying I need an extension on my homework because it would be disruptive for me to to have do it all the night before," he adds. "This is just a generalized excuse for postponing action."

In June, other major banks, including JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo, were granted two-year extensions on the same rule. Along with Goldman Sachs, those banks control more than 90 percent of the $700 trillion derivatives market.

"The procrastination of both regulators and the banks on this portion of Dodd-Frank has been pretty amazing," Stanley told Bloomberg Businessweek in January.

This particular Dodd-Frank rule is also under assault by Wall Street's allies in Congress. A bill that would exempt a large number of derivatives trades from the so-called pushout rule sailed through the House financial services committee in May. It could come to the House floor for a vote as soon as next week.


_____________________________________________

Freddie Mac was the dumping ground for all of the millions of dollars of fraudulent subprime loans along with AIG Insurance insuring these same fraudulent loans against default.  Both are taxpayer liabilities as AIG was nationalized and Freddie is a private company that partners with the government so the taxpayers can pay all costs.....just as with all public private partnerships!

The massive subprime loan fraud involved trillions of dollars in fraud and Freddie and Fannie had/have $600 billion in bad loans on their books.  If we had a Rule of Law nation the banks would have been forced to write down/off those bad loans on Freddie's books as they were criminal and the taxpayer would have taken a far lesser hit for this Wall Street Freddie.  Rather, Obama and Third Way corporate neo-liberals worked hard to see that banks and shareholders lost little or nothing....actually gaining from the massive fraud.  We saw a nationalized AIG pay 100% on insurance claims which never happens to a bankrupt corporation.  So while main street was losing big time in investments, lost homes, and jobs.....the neo-liberals turn the banks fraud into massive gains.  The Federal Reverve's policy of QE was simply a way of removing all toxic loans from the banks balance sheet and all of those trillions in bad debt are going to the Treasury for the taxpayer to pay.  Now, the taxpayer is going to lose on the fraudulent Freddie loans that were never written down/off because they are auctioning at a huge loss those loans and it will be the same banks and investment firms that will buy these discounted loans that they created through fraud.  Remember as well, these few years have seen foreclosures bundled and sold in bulk to these same players at discount.

Sp these 5 years of Obama's term and a neo-liberal Senate has seen all the massive mortgage fraud stay with the criminal banks, watched as the Fed and Treasury turned those fraudulent gains into a watershed of profit through manipulated markets, and sold most of the millions of homes involved in fraud and foreclosed because of the economic crash back to the same people.  The money made by all of this fraud and corruption is in the trillions and the cost to taxpayers stuck with the fraud debt and economic damage in the tens of trillions.  THIS IS JUST FOR THE SUBPRIME MORTGAGE FRAUD.  IT DOES NOT INCLUDE ALL OF THE TENS OF TRILLIONS IN CORPORATE FRAUD.

YOUR LONG-TERM THIRD WAY NEO-LIBERAL HAS WORKED ON THIS SCHEME SINCE THE CLINTON ADMINISTRATION ALONG WITH BUSH.....OBAMA AND THE SUPERMAJORITY OF NEO-LIBERALS COULD HAVE PROTECTED THE PEOPLE SIMPLY BY APPLYING RULE OF LAW.


RUN AND VOTE FOR LABOR AND JUSTICE NEXT ELECTIONS!  IF YOUR LABOR LEADERS AND JUSTICE LEADERS ARE NOT RUNNING CANDIDATES IN PRIMARIES AGAINST NEO-LIBERALS.....THEY ARE NOT WORKING FOR YOU AND ME!




Freddie Mac to $3 billion bills July 8
(Reuters) - Freddie Mac, the No. 2 U.S. home funding company, said it will sell $3 billion of reference bills on Monday.

Freddie Mac said it plans to sell $1 billion of three-month bills due Oct. 7, 2013, $1.5 billion of six-month bills, due Jan. 6, 2014, and $500 million of 12-month bills due July 7, 2014.

The bills will be sold over the Internet in a Dutch auction. In such uniform price auctions, successful bidders pay only the price of the lowest accepted bid rather than the actual price as in a conventional multiple-price auction.

Bids will be accepted from authorized dealers until 9:45 a.m. EDT (1345 GMT).

Settlement is July 9.


XXXXXXXXXXXXXXXXXXXXXX

Reference Bills® securities are unsecured general corporate obligations. This program supplements our Discount Notes program.

  • Provide a predictable supply of short-term debt at popular maturities, from one-month through one-year
  • Are offered in sizeable volumes on a regular, standardized issuance cycle
  • One-month Reference Bills auctions will be optional each week, with a minimum of one auction per month. Three- and six-month Reference Bills will be auctioned every week. Auctions of 12-month Reference Bills securities will be optional each week
  • Are globally sponsored and distributed
  • Are intended to encourage active trading and market-making
  • Facilitate term repo market development
  • Are designed to offer predictable supply, pricing transparency and liquidity, thereby providing premium-quality alternatives to Treasury bills.
________________________________________________

We really need to know that what is happening with the TPP and with the recent Supreme Court rulings violates the US Constitution.....it is not another interpretation, it is rewriting.  Corporations are not people, they cannot be allowed to circumvent Constitutional rights simply by including a clause in a business contract, and they cannot be given the rights of writing law that excludes the people's rights to legislate change.  All of this is a COUP by the politicians you re-elect each year......THEY ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFITS AND NOT FOR THE PEOPLE!!

In Maryland we are starting to hear lectures in the community that describes Maryland as a corporation and that as a colony in the times described below they were chartered by the Queen as a corporation.....and that is what they are trying to do right now with all these public private partnerships.....make the state into one big corporation with the 1% as shareholders and the citizens as peasants!  THIS IS NOT HYPERBOLE....IT IS HAPPENING!  WE NEED TO SEE PEOPLE FORMING DEMOCRACY NOW ORGANIZATIONS IN THEIR COMMUNITIES!

What We Can Learn From America's First Tea Party About Countering Corporate Power

Saturday, 06 July 2013 09:57 By Thom Hartmann, Yes! Magazine | News Analysis

(Image: Wikimedia)Before there was Citizens United, a modern Tea Party movement, or national momentum to ban corporate personhood, Thom Hartmann shows that resistance to corporate power is just as patriotic as Boston’s original Tea Party.

On a cold November day, activists gathered in a coastal town. The corporation had gone too far, and the two thousand people who'd jammed into the meeting hall were torn as to what to do about it. Unemployment was exploding and the economic crisis was deepening; corporate crime, governmental corruption spawned by corporate cash, and an ethos of greed were blamed. “Why do we wait?” demanded one at the meeting, a fisherman named George Hewes. “The more we delay, the more strength is acquired” by the company and its puppets in the government. “Now is the time to prove our courage,” he said. Soon, the moment came when the crowd decided for direct action and rushed into the streets.

That is how I tell the story of the Boston Tea Party, now that I have read a first-person account of it. While striving to understand my nation's struggles against corporations, I came upon a first edition of Retrospect of the Boston Tea Party with a Memoir of George R.T. Hewes, a Survivor of the Little Band of Patriots Who Drowned the Tea in Boston Harbor in 1773, and I jumped at the chance to buy it. Because the identities of the Boston Tea Party participants were hidden (other than Samuel Adams) and all were sworn to secrecy for the next 50 years, this account (published 61 years later) is the only first-person account of the event by a participant that exists, so far as I can find. As I read, I began to understand the true causes of the American Revolution.

I learned that the Boston Tea Party resembled in many ways the growing modern-day protests against transnational corporations and small-town efforts to protect themselves from chain-store retailers or factory farms. The Tea Party's participants thought of themselves as protesters against the actions of the multinational East India Company.

Although schoolchildren are usually taught that the American Revolution was a rebellion against “taxation without representation,” akin to modern day conservative taxpayer revolts, in fact what led to the revolution was rage against a transnational corporation that, by the 1760s, dominated trade from China to India to the Caribbean, and controlled nearly all commerce to and from North America, with subsidies and special dispensation from the British crown.

Hewes notes: “The [East India] Company received permission to transport tea, free of all duty, from Great Britain to America…” allowing it to wipe out New England–based tea wholesalers and mom-and-pop stores and take over the tea business in all of America. “Hence,” he told his biographer, “it was no longer the small vessels of private merchants, who went to vend tea for their own account in the ports of the colonies, but, on the contrary, ships of an enormous burthen, that transported immense quantities of this commodity ... The colonies were now arrived at the decisive moment when they must cast the dye, and determine their course ... ”

A pamphlet was circulated through the colonies called The Alarm and signed by an enigmatic “Rusticus.” One issue made clear the feelings of colonial Americans about England's largest transnational corporation and its behavior around the world:“Their Conduct in Asia, for some Years past, has given simple Proof, how little they regard the Laws of Nations, the Rights, Liberties, or Lives of Men. They have levied War, excited Rebellions, dethroned lawful Princes, and sacrificed Millions for the Sake of Gain. The Revenues of Mighty Kingdoms have entered their Coffers. And these not being sufficient to glut their Avarice, they have, by the most unparalleled Barbarities, Extortions, and Monopolies, stripped the miserable Inhabitants of their Property, and reduced whole Provinces to Indigence and Ruin. Fifteen hundred Thousands, it is said, perished by Famine in one Year, not because the Earth denied its Fruits; but [because] this Company and their Servants engulfed all the Necessaries of Life, and set them at so high a Rate that the poor could not purchase them.”

After protesters had turned back the Company's ships in Philadelphia and New York, Hewes writes, “In Boston the general voice declared the time was come to face the storm.”

The citizens of the colonies were preparing to throw off one of the corporations that for almost 200 years had determined nearly every aspect of their lives through its economic and political power. They were planning to destroy the goods of the world's largest multinational corporation, intimidate its employees, and face down the guns of the government that supported it.

The Queen's Corporation

The East India Company's influence had always been pervasive in the colonies. Indeed, it was not the Puritans but the East India Company that founded America. The Puritans traveled to America on ships owned by the East India Company, which had already established the first colony in North America, at Jamestown, in the Company-owned Commonwealth of Virginia, stretching from the Atlantic Ocean to the Mississippi. The commonwealth was named after the “Virgin Queen,” Elizabeth, who had chartered the corporation.


Elizabeth was trying to make England a player in the new global trade sparked by the European “discovery” of the Americas. The wealth Spain began extracting from the New World caught the attention of the European powers. In many European countries, particularly Holland and France, consortiums were put together to finance ships to sail the seas. In 1580, Queen Elizabeth became the largest shareholder in The Golden Hind, a ship owned by Sir Francis Drake.

The investment worked out well for Queen Elizabeth. There's no record of exactly how much she made when Drake paid her share of the Hind's dividends to her, but it was undoubtedly vast, since Drake himself and the other minor shareholders all received a 5000 percent return on their investment. Plus, because the queen placed a maximum loss to the initial investors of their investment amount only, it was a low-risk investment (for the investors at least—creditors, such as suppliers of provisions for the voyages or wood for the ships, or employees, for example, would be left unpaid if the venture failed, just as in a modern-day corporation). She was endorsing an investment model that led to the modern limited-liability corporation.

After making a fortune on Drake's expeditions, Elizabeth started looking for a more permanent arrangement. She authorized a group of 218 London merchants and noblemen to form a corporation. The East India Company was born on December 31, 1600.

By the 1760s, the East India Company's power had grown massive and worldwide. However, this rapid expansion, trying to keep ahead of the Dutch trading companies, was a mixed blessing, as the company went deep in debt to support its growth, and by 1770 found itself nearly bankrupt.

The company turned to a strategy that multinational corporations follow to this day: They lobbied for laws that would make it easy for them to put their small-business competitors out of business.

Most of the members of the British government and royalty (including the king) were stockholders in the East India Company, so it was easy to get laws passed in its interests. Among the Company's biggest and most vexing problems were American colonial entrepreneurs, who ran their own small ships to bring tea and other goods directly into America without routing them through Britain or through the Company. Between 1681 and 1773, a series of laws were passed granting the Company monopoly on tea sold in the American colonies and exempting it from tea taxes. Thus, the Company was able to lower its tea prices to undercut the prices of the local importers and the small tea houses in every town in America. But the colonists were unappreciative of their colonies being used as a profit center for the multinational corporation.

Boston's Million-Dollar Tea Party

And so, Hewes says, on a cold November evening of 1773, the first of the East India Company's ships of tax-free tea arrived. The next morning, a pamphlet was widely circulated calling on patriots to meet at Faneuil Hall to discuss resistance to the East India Company and its tea. “Things thus appeared to be hastening to a disastrous issue. The people of the country arrived in great numbers, the inhabitants of the town assembled. This assembly, on the 16th of December 1773, was the most numerous ever known, there being more than 2000 from the country present,” said Hewes.

The group called for a vote on whether to oppose the landing of the tea. The vote was unanimously affirmative, and it is related by one historian of that scene “that a person disguised after the manner of the Indians, who was in the gallery, shouted at this juncture, the cry of war; and that the meeting dissolved in the twinkling of an eye, and the multitude rushed in a mass to Griffin's wharf.”

That night, Hewes dressed as an Indian, blackening his face with coal dust, and joined crowds of other men in hacking apart the chests of tea and throwing them into the harbor. In all, the 342 chests of tea—over 90,000 pounds—thrown overboard that night were enough to make 24 million cups of tea and were valued by the East India Company at 9,659 Pounds Sterling or, in today's currency, just over $1 million.

In response, the British Parliament immediately passed the Boston Port Act stating that the port of Boston would be closed until the citizens of Boston reimbursed the East India Company for the tea they had destroyed. The colonists refused. A year and a half later, the colonists would again state their defiance of the East India Company and Great Britain by taking on British troops in an armed conflict at Lexington and Concord (the “shots heard 'round the world”) on April 19, 1775.

That war—finally triggered by a transnational corporation and its government patrons trying to deny American colonists a fair and competitive local marketplace—would end with independence for the colonies.

The revolutionaries had put the East India Company in its place with the Boston Tea Party, and that, they thought, was the end of that. Unfortunately, the Boston Tea Party was not the end of that. It was only the beginning of the power of corporations in America.

The Birth of the Corporate “Person”

Fast forward 225 years.

The American war over corporate power is heating up again. A current struggle centers on the question of whether corporations should be “people” in the eyes of the law.

In October 2002, Nike appealed a lawsuit against it to the Supreme Court, asking it to rule that Nike's letters to newspapers about treatment of workers in Indonesia and Vietnam are protected by the First Amendment.

In Pennsylvania, several townships recently passed laws forbidding corporate-owned farms. In response, agribusiness corporations threatened to sue the townships for violation of their civil rights—just as if these corporations were persons.

Imagine. In today's America, when a new human is born, she is instantly protected by the full weight and power of the US Constitution and the Bill of Rights. Similarly, when papers called articles of incorporation are submitted to governments in America (and most other nations of the world), another type of new “person” is brought forth into the nation.

The new corporate person is instantly endowed with many of the rights and protections of personhood. It doesn't breathe or eat, can't be enslaved, can live forever, doesn't fear prison, and can't be executed if found guilty of misdoings. It is not a human but a creation of humans. Nonetheless, the new corporation gets many of the Constitutional protections America's founders gave humans to protect them against governments or other potential oppressors. How did corporations become persons?

After the Revolutionary War, Thomas Jefferson proposed a Bill of Rights with 12 amendments, one of which would “ban commercial monopolies,” forever making it illegal for corporations to own other corporations, to do business in more than one specific product or market, and thus forever preventing another oppressive commercial juggernaut like the East India Company from arising again in North America to threaten democracy and oppress the people.

But Jefferson's amendment failed and the corporations fought back. Now those corporations use the club of the amendments that did pass to influence elections and legislation favoring them—in the name of their rights as persons.

An Historic Goof?

What most people don't realize is that this is a recent agreement—and it is based on an historic error. Only since 1886 have the Bill of Rights and the 14th Amendment been applied explicitly to corporations. For 100 years people have believed that the 1886 case Santa Clara County v. Southern Pacific Railroad included the statement “Corporations are persons.” But looking at the actual case documents, I found that this was never stated by the court, and indeed the chief justice explicitly ruled that matter out of consideration in the case.

The claim that corporations are persons was added by the court reporter who wrote the introduction to the decision, called “headnotes.” Headnotes have no legal standing.

It appears that corporations acquired personhood by persuading a court reporter and a Supreme Court judge to make a notation in the headnotes of an unrelated law case. In Everyman's Constitution, legal historian Howard Jay Graham documents scores of previous attempts by Supreme Court Justice Stephen J. Field to influence the legal process to the benefit of his open patrons, the railroad corporations. Field, as judge on the Ninth Circuit in California, had repeatedly ruled that corporations were persons under the 14th Amendment, so it doesn't take much imagination to guess what Field might have suggested Court Recorder J.C. Bancroft Davis include in the transcript, perhaps even offering the language, which happened to match his own language in previous lower court cases.

Alternatively, Davis may have acted on his own initiative. This was no ordinary court reporter. He was well-connected to the levers of power in his world, which in 1880s America were principally the railroads, and had, himself, served as president of the board of a railroad company.

Regardless of how it happened, an amendment to the Constitution, designed to protect the rights of African Americans after the Civil War, passed by Congress, voted on and ratified by the states, and signed into law by the president, was re-interpreted in 1886 for the benefit of corporations. The notion that corporations are persons has never been voted into law by the people or by Congress, and all the court decisions endorsing it derive from the precedent of the 1886 case—from Davis' error.

Other legal errors have been corrected with time. The notions that women aren't persons under the law, (affirmed, for example, in the 1873 Bradwell v. State case) and that blacks aren't entitled to equal protection (decided in the Dred Scott and Plessy cases) were superseded by court cases affirming the full rights of African Americans and women under the law. The establishment of corporate personhood, on the flimsy foundation of a court reporter's insertion of a phrase into a legal summary, may be the next mistake to be corrected, particularly if grassroots efforts continue to challenge the legitimacy of corporate personhood.

(Adapted from Thom Hartmann's book Unequal Protection: The Rise of Corporate Dominance and The Theft of Human Rights)


_________________________________________________

THIS IS FROM A WIKLEAKS RELEASE....THERE ARE MILLIONS OF PAGES FROM HACKED BANK DATA THAT IS TRICKLING OUT.....REMEMBER, MUCH OF THESE TRILLIONS STASHED IN OFFSHORE ACCOUNTS ARE FRAUD.

Below you see just the tip of the iceberg with corporate tax evasion......the wealthy have all their wealth in corporations and these corporations are avoiding all taxes.  As is said below....there are lots of ways to get that money back other than hunting and taking these corporations to court!

DO NOT STOP SHOUTING FOR JUSTICE IN GETTING THIS MONEY BACK INTO GOVERNMENT COFFERS....IT IS WHY THEY ARE CUTTING ALL PROGRAMS AND SERVICES FOR PUBLIC INTEREST AND LOCALLY RAISING TAXES ON THE MIDDLE/LOWER CLASS TO MAKE UP FOR LOST CORPORATE REVENUE!


You will be taxed to death and get nothing for it if we do not reverse this
!


Commenter on the article below:


Sigh, what a racket Submitted by beowulf on Tue, 01/18/2011 - 1:00am If this were something the government was serious about stopping, they'd treat these accounts like they do any cash held by suspected drug mules. They take the money (even if they let the suspect go) and tell them, if you want the money back, you can sue us and explain to the judge where the money came from.

One of my pet peeves about the tax system is that the capital gains tax, which is already taxed at a lower rate than earned income, does not apply to unrealized (or "accrued") capital gains. And since capital gains tax liability dies with the capital holder, their heirs inherit the property with all prior capital gains wiped clear. That's kind of a big tax loophole. For liquid property like stocks and bonds, cap gains could easily be taxed annually (so-called "accrual taxation"). For illiquid property like real estate or closely held company stock, cap gains could still be taxed at realization but with an interest penalty for every year their accrued cap gains were not taxed ( "retrospective taxation"). And if you don't sell it, death should be a realization event (last year when there was no estate tax, for once, heirs WERE required to pay capital gains taxes on the accrued gains).

For anyone who thinks its unconstitutional or impracticable to write accrual or retrospective taxation into the tax code, they're both already in the tax code. Futures contracts are taxed on an accrual basis and retrospective taxation already applies to passive foreign investment company stock.

What I'm driving out is, if the government traced the money from offshore bank accounts to offshore stock holdings, there would be a LOT of unpaid taxes owed simply from the interest penalty. Since they won't do that, if Congress simply applied accrual taxation to all securities and retrospective taxation to all other property. It would at least triple (key words being "at least") the $100 billion in capital gains taxes collected now without raising tax rates. I expect Lambert to get a tax credit for his compost pile before we see that happen.

Accrual taxation, 26 USC 1256 "contracts marked to market"
http://www.law.cornell.edu/uscode/html/u...
Retrospective taxation, 26 USC 1291 "interest on tax deferral"
http://www.law.cornell.edu/uscode/26/usc...


Check Out Who's Hiding $32 Trillion in Offshore Accounts
  • Greg Madison, Associate Editor - May 1, 2013


More than two million emails that shed light on the biggest tax dodge in history - trillions of dollars hidden in offshore accounts - have been uncovered by the British newspaper The Guardian and the Washington, D.C.-based International Consortium of Investigative Journalists (ICIJ).

Some $32 trillion has been hidden in small island banking hubs which host a bevy of trust funds, shell corporations and other tax havens, the Tax Justice Network estimates.

This money is to the financial world what the Higgs boson and dark matter are to particle physics: It's tough to prove it's there, but the universe doesn't make much sense without it. It's just a matter of connecting the money to the people hiding it.

That's been a tall order... until now.

An Unprecedented Tax Dodge Next to this bombshell, Wikileaks looks like a first-grader's game of Telephone.

In fact, the leak contains more than 200 gigabytes of data, compared with Wikileaks' two gigabytes.

The information is still being sifted through, even as it's being released to the public, but here's some of what's been found so far:

  • American Denise Rich, ex-wife of pardoned tax cheat Marc Rich, has been uncovered as the settlor and beneficiary of two large trusts based in the tiny Cook Islands. The ICIJ found that Denise Rich gave up her American citizenship in 2012. Her citizenship was convenient enough when President Clinton had the authority to pardon her ex-husband.
  • French President Francois Hollande, ardent socialist and tireless champion of the 75% marginal tax rate, appears in these documents, mostly by association. His campaign co-treasurer, Jean-Jacques Augier, has been forced to reveal the name of his Chinese business partner in a Caymans-based distribution company. Augier says he used his offshore company to make a large investment in China.
  • Australian actor Paul Hogan, of "Crocodile Dundee" fame, has lost about $35.3 million from an account that he used to offshore his "bonza" film royalties. His once-trusted tax adviser Philip Egglishaw ran off with Hogan's sizeable hidden offshore stash.
  • French banking scion Elie de Rothschild, of the famous banking family, has been named in the leaks. He was instrumental in setting up some 20 trusts and 10 holding companies in the Cook Islands, all extremely opaque in nature. His heirs have, not surprisingly, refused comment.
  • Brigitte Bardot's third ex-husband, Gunter Sachs, a millionaire industrialist, has been revealed as the owner of a huge, obscure wealth-masking machine: trust upon shell company upon holding company, almost ad infinitum, mostly based in the Cook Islands. The ICIJ has constructed an interactive map of Sachs' extensive offshore holdings and business networks. The network is fairly representative of the steps that many on this list have taken to hide their wealth away. You can marvel at its imponderable complexity here.
And these names are barely the tip of the iceberg. The shockwaves have already begun to spread through the corridors of wealth and power all over the world.

How Much is $32 Trillion? It bears repeating: $32 trillion has been stashed away, off the books, by corporations and wealthy individuals.

Let that sink in for a moment. The implications are stupefying. The real effects of this are far more subtle, and pernicious, but this makes for a fun thought exercise - even setting aside the fact that only some percentage of this huge sum would be fair game for the tax man.

In the extremely unlikely event that all $32 trillion was added to government coffers, that would be enough to give every man, woman and child alive on Earth today a roughly $4,600 "stimulus" check.

Maybe we could all enjoy a two-week vacation in the British Virgin Islands. After all, it seems to be the destination of choice for monied types...

A Bright, Sunny Hub for Dark Business The British Virgin Islands appear to be at the epicenter of this huge offshore stash.

The small Caribbean islands specialize in tourism and financial services. Along with far-flung places like Liechtenstein, Sark in the English Channel, the Cook Islands in the South Pacific, the Caymans and others, the British Virgin Islands are home to thousands of shadowy front companies, trusts and funds that host the bulk of this $32 trillion stash.

As of 2000, the last year verifiable data was available, roughly 400,000 companies were listed in the BVI offshore registry. The number certainly has increased. Some of these countries remain underdeveloped, their citizens impoverished, even though they have high per-capita GDPs, and trillions flow to and from their shores.

Tax havens like these tend to have in common secretive banking laws and loose residency requirements, which make them appealing to those with money to hide. In once extreme case, The Guardianlocated an erstwhile British subject, Sarah Petre-Mears, who was the "nominal director" of nearly 1,200 companies across the world.

Less a captain of industry and more a shill for dodgy investors, Petre-Mears ran companies fronting everything from porn sites to time-share vacation properties. She used dozens of different addresses across the globe, with most turning out to be post office boxes and mail drops.

The consequences of this enormous tax dodge are hard to calculate. How does one reckon who's entitled to what? Which country's tax rate do you use - Canada? Azerbaijan? Slovenia?

There's almost certainly an impact to national budgets, from highway construction to military spending to social programs.

It's safe to say that whenever anyone anywhere feels the sting of budget cutbacks, whether a brigadier-general in South Africa or a primary school teacher in England, they'll have a world-class selection of tax cheats in part to blame.

Journalists are still sifting through the data contained in this massive leak, but as they go along, there're no telling who will appear in the data - and those people are running out of time and places to hide.

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Neo-liberals will be working with republicans and Obama to lower the corporate tax rate and gave $4 trillion in corporate tax breaks in the past 4 years!
  They are moving to end all corporate taxes and have

Despite National Crackdown On Whistleblowers, IRS Relying On Informers To Report Tax Fraud
By Martin Michaels | September 13, 2012



In this Jan. 8, 2010 file photo, Bradley Birkenfeld, a whistleblower in the tax evasion case against Swiss bank UBS AG, pauses during a press conference outside the Schuylkill County Federal Correctional Institution in Minersville Pa, before reporting to the federal prison. (AP Photo/Carolyn Kaster, File )

(MintPress) — The Internal Revenue Service (IRS) is increasingly relying upon the whistleblower program to investigate cases of tax evasion and fraud. While estimates vary, wealthy U.S. citizens could be hiding up to $5 trillion in offshore accounts, according to a Senate report published in 2008. By providing rewards for successful indictments, the government could significantly reduce the multi trillion dollar deficit by recovering lost tax revenue.

While the program has netted more than $5 billion, critics believe the U.S. government is promoting an unfair double standard. Despite being financially compensated, those who expose tax fraud are still subject to prosecution despite bringing valuable information to the attention of authorities. This has occurred at a time when the Obama administration has cracked down on a record number of whistleblowers.

Bradley C. Birkenfeld, a former employee at UBS AG bank was awarded a $104 million “whistleblower award” earlier this week for reporting widespread tax fraud committed by his former employer. During his career at the financial services firm, Birkenfeld helped thousands of wealthy Americans move their money to Swiss banks in order to avoid taxation by the U.S. government.

UBS tax evasion The UBS case is one of the biggest cases of tax fraud in U.S. history. In 2009, UBS was found to have helped 19,000 clients move more than $20 billion to Swiss bank accounts, tax shelters outside the purview of U.S. financial regulation and taxation. Birkenfeld an employee of UBS at the time, played an integral role in helping UBS clients move their money to these tax shelters.

Birkenfeld would later divulge the details of widespread UBS fraud. After his testimony, the bank was forced to pay more than $780 million in fines. UBS closed the division responsible for the tax evasion and also agreed to hand over account information for more than 4,500 clients. An additional 33,000 tax evaders chose to report offshore accounts on their own accord, generating an additional $5 billion.

Birkenfeld, who himself was complicit in the tax fraud as a UBS employee was tried and sentenced to 40 months in prison for his role. Earlier this week the IRS rewarded the 47-year-old for his efforts in the UBS case, a case that many tax experts believe could lead to investigations in other financial institutions.

Stephen Kohn, Birkenfeld’s co-counsel in the case commented on his client’s actions in a recent interview, saying:

“It’s the largest whistleblower award in history. But Birkenfeld turned in the largest financial fraud. He turned in 19,000 felons, and $20 billion in one unit. We also know that 33,000 people are turning themselves in. The total amount of U.S. dollars in illegal offshore accounts is over $5 trillion. That is the estimation by a Senate report.”

Although Birkenfeld was rewarded generously for his cooperation, Kohn believes that it was wrong of the Justice Department to prosecute his client, adding, “When the Justice Department prosecuted Bradley Birkenfeld in one of the most absurd and misguided efforts, they took an asset, a person who turned in the keys to the kingdom, the first whistleblower to expose exactly how illegal Swiss banking worked, and instead of using him, they persecuted him.”

However, Swiss authorities believe that the U.S. government has displayed “hypocrisy” for prosecuting Birkenfeld, then later rewarding him. Pirmin Bischof a member of the upper house in the Swiss Parliament commented, saying, “It’s the height of hypocrisy if the U.S. is one day sentencing the guy to 40 months in prison and the next give him the highest reward.”

Regardless of the duplicitous actions by the U.S. government, Kohn’s client is by no means the the only whistleblower to be prosecuted for exposing crimes, fraud and misdeeds.

Crackdown on whistleblowers Other whistleblowers reporting crimes have similarly been prosecuted for their actions. Bradley Manning, a member of the U.S. army has been held in solitary confinement since 2010 on 22 charges, including conspiracy and “aiding the enemy.” Manning allegedly released a cache of documents exposing U.S. military corruption and the murder of innocent civilians in Iraq and Afghanistan.

A video titled, “Collateral Murder,” was released in the vast cache, implicating the U.S. military in the murder of innocent Iraqi civilians and members of the international press. Filmed in 2007, the video has gone viral, viewed more than 12 million times on YouTube. While the video has stirred controversy, there have been no arrests or prosecutions since the video’s release.

Similarly, WikiLeaks founder Julian Assange is currently involved in a diplomatic standoff, unable to leave the Ecuadorian Embassy in London. Assange’s WikiLeaks project has brought to light hundreds of thousands of diplomatic cables exposing corruption and war crimes committed by the U.S. armed forces and the U.S. government. U.S. authorities have sought his extradition for releasing classified information despite his being granted asylum in Ecuador last month.

The cases of Assange and Manning are, of course, different than that of Birkenfeld. However, all three are subject to a crackdown that occurs when the U.S. government has been found guilty of committing crimes, or has proven unwilling to prosecute crimes committed by its own citizens.

Unlike other whistleblowers, Birkenfeld received relative leniency for his crimes and was later compensated generously for his cooperation. While the case could lead to more investigations into offshore banking fraud, the unwillingness to properly tax major corporations remains a much larger, unaddressed issue.

Closing corporate tax loopholes Major U.S. corporations are able to move their corporate headquarters outside the U.S. while maintaining production and sales inside U.S. borders. When headquarters are moved offshore, corporations can avoid taxation despite being subject to other government regulations.

Consumer advocacy groups believe that this major loophole has cost the U.S. government more than $100 billion in annual tax revenue. U.S. PIRG, a consumer advocacy group, has advocated for closing corporate tax loopholes, a necessary component of tax reform, saying on its website:

“No company should be able to game the tax system to avoid paying what it legitimately owes. And, yet, establishing shell companies in offshore havens for the purpose of tax avoidance is becoming more the rule than the exception for at least 83 of the nation’s top 100 publicly traded companies. GE, Google, Goldman Sachs and dozens of others have created hundreds of phantom entities with nothing more than a clever tax attorney and P.O. box.”

According to its website, U.S. PIRG is “a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.”

General Electric, a company that boasted $14.2 billion profit in 2010 adeptly avoided taxation altogether despite earning over $5 billion from U.S. sales. The company moved its address outside the U.S. and continues to avoid the 35 percent corporate tax rate.

Instead of prosecuting GE, Goldman Sachs and others for tax evasion, the U.S. government  has consistently raised taxes on the middle class in order to close budget deficits and fund social programs.

This issue has become a cause celebre of Occupy Wall Street and sympathetic tax reform advocates in Washington. However, few voices have emerged calling for comprehensive corporate tax reform. The main issue is because Washington policies are largely dominated by corporations and wealthy donors able to shape policy by financing costly elections.

Sen. Bernie Sanders (I-Va.), one of the few advocates for corporate tax reform, commented on the issue in a statement last year saying, “We have a deficit problem. It has to be addressed, but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”




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May 29th, 2013

5/29/2013

0 Comments

 
PLEASE BE AWARE AT HOW OUTRAGEOUS WHAT IS HAPPENING WITH WALL STREET AND THE CRONY AND CRIMINAL STOCK MARKET......IT IS INCREDIBLE! 


Regarding the rebounding housing market:

I spoke of the coverup in the failure of the banks to do anything as regards the postage stamp settlement for massive subprime mortgage fraud. The housing boost is the aftermath of this suspension of Rule of Law. I want to remind people that when government suspends Rule of Law it suspends Statutes of Limitation. When a crook steals money and bets that money on a pony that wins.....that profit comes back to the victim as their gain. So, as the banks enrich themselves on the tens of trillions of dollars stolen in financial fraud from individuals and government coffers.....THAT BELONGS TO YOU AND ME! WE SIMPLY NEED TO REINSTATE RULE OF LAW TO CLAIM IT....IT IS SIMPLE.

The Federal Reserve's policies of 0% interest and QE have nothing to do with employment or repairing the economy.....it has everything to do with setting an environment for massive financial gain for a select few people....that is why the entire world is calling the US financial system crony and criminal and are staying away from it. Indeed, as the market is made to look like it is soaring.....only 4 % of people have reentered what we all know to be a criminal market. That is where the Fed comes in. If no one will come to the party by choice they say.....we will have our own party and force others to eventually come!!! THAT IS THE FED POLICY GOALS!!!

Obama will go down in history as the protector of the massive looting of the US Treasury and citizens in history. IT IS AMAZING THAT THIS IS HAPPENING IN A FORMERLY FIRST WORLD COUNTRY AND INDEED IT IS WHY MANY PEOPLE HAVEN'T REACTED BECAUSE THEY DO NOT BELIEVE IT COULD HAPPEN. First Obama, through his cabinet/agency appointees made sure that the fraudulent subprime loans were not written down/off as Rule of Law would require. We know the ratings were false....we know the investment firms knew the bundled mortgages were 'dogs'....we know the originators were openly flaunting all laws regarding fiduciary duties and everyone from accountants to lawyers were flaunting law in moving these loans through the MERS mill. THE ENTIRE PROCESS WAS A FRAUD FROM TOP TO BOTTOM and Rule of Law would have had the banks write all of them off and then let the banks go after the accountants and lawyers who colluded. Obama and Eric Holder suspended Rule of Law and allowed those subprime loans to stay hidden and balance sheets using new accounting rules hide this enormous debt. The second thing Obama did was to fail to save people who were falling into foreclosure whether as a result of direct fraud or damages caused by the economic collapse caused by the fraud. Why did Obama not help main street? THE PLAN WAS TO BUNDLE THESE FORECLOSURES AND RESELL THEM FOR A SECOND ROUND OF BILLIONS IN PROFIT FOR THE SAME PEOPLE COMMITTING THE ORIGINAL FRAUD. That's where the Fed comes in. The banks need to get rid of all this bad subprime debt with as little loss as possible. QE is a mortgage buyback scheme that has the Fed buying what looks to be a trillion dollars of the worst subprime mortgages to get them off the bank's balance.....they call this recapitalizing the banks. The word has it that all that buyback will then be sent to the Treasury where all of our payroll taxes for our Social Security and Entitlements are now sent.....ergo....your retirement will be used to hand the banks back money lost on fraudulent loans. THIS IS QE POLICY. The 0% interest allows this system of bundling and selling that mirrors the subprime mortgage sales where closing and selling fees in the billions happen over and over until these bundles land in the hands of the same developers and real estate firms that created them......for bargain basement prices since they are foreclosures. This is what is making the housing market look like it is soaring.

THESE PEOPLE ARE PITIFUL!

So, now the crooks have these properties back in their hands and are ready to sell. Here is the second piece to what is international fraud.....WE HAVE THE PEOPLE WHO ARE RICH ON TENS OF TRILLIONS IN FRAUD NEEDING OFFSHORE INVESTMENTS TO LAUNDER THE LOOT! That means US looters are buying real estate overseas and the foreign looters are buying US real estate for cash. As the news reports state......much of these housing purchases are in cash. It is one great big money-laundering scheme carried out by the Federal Reserve and Obama Administration with Third Way corporate democrats working hard to handle the details at the state and local levels. So, the areas of the country hardest hit by subprime mortgage fraud are now the epicenters of this housing rebound.....Nevada, Arizona, and California. We hear of it in Maryland as well. Most of this property will be kept as rentals or sold at a higher price for profits now that the market is moving from low to high. WHICH IS WHY THE TIME IS RIGHT FOR THE FED TO END QE AND WHY HOUSING PRICES ARE RISING. They don't want the average house buyer getting something for nothing....like they just did!

RUN AND VOTE FOR LABOR AND JUSTICE NEXT ELECTIONS!!!!


Wow! Check Out The New Home Sales Recovery Bernanke is Taking Credit For

Posted on 3 March 2013 by admin by Lee Adler, Wall Street Examiner



The media reported a 16% rise in new home sales in January to the highest level in 4 1/2 years based on data from the Commerce Department released today. The headlines were based, as always, on seasonally adjusted data.  The not seasonally adjusted data was also rocking, showing a year to year gain of 34.7% for January, and a gain of 47.6% since January 2011, which was near the bottom in new house sales. Sales have risen from 21,000 units in January 2011 to 31,000 units in January 2013. Look at the trend on this chart. Awesome!

Click to enlarge

Here’s how Dow Jones’s Marketwatch put it.

Sales of newly constructed U.S. housing jumped almost 16% in January — hitting the highest level in 4½ years — offering strong proof that the sector’s rebound trend is intact.

Sales of new homes rose to an annual rate of 437,000 last month from an upwardly revised 378,000 in December, marking the biggest one-month gain since 1993, the Commerce Department said Tuesday. The figures are seasonally adjusted.

The pace of sales easily blew by the 384,000 consensus estimate of the economists polled by MarketWatch.

I skimmed through the lead-ins for this story in Google News, and trust me, this wasn’t even close to being the most ebullient.

So to give you a better idea of just how fabulous this mammoth recovery is, here’s a long term perspective. It looks fabulous, doesn’t it.

Click to enlarge

Wait a minute! That 48% gain looks a little different from this angle. The range of 20,000 to 40,000 unit sales per month since 2009 compares with a range of  80,000 to 130,000 per month in the early to mid 2000′s. Could Bernanke be exaggerating just a little when he claims credit for a housing recovery?

Looking at single family housing starts versus new house sales, the pattern is similar. Starts are up from 26,600 units in January 2011 to 39,600 units in January 2013, a whopping gain of 49%. But the numbers today are only 30% to 50% of the levels of 2000-2005. Of course 2005 was when the housing bubble was getting ready to drive the economy off the cliff, but current levels are still only half what they were in the recession years of 2001 and 2002.

Click to enlarge

The charts make it plain that while housing is no longer a drag on the economy, its net positive contribution to economic growth isn’t much. The Fed may claim credit for the recovery, but it hasn’t gotten much bang for the trillions it has printed since 2008.  What the Fed has gotten is a return to house price inflation (another story), but it hasn’t really gotten a recovery.


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Insight: The Wall Street gold rush in foreclosed homes
NEW YORK | Tue Mar 20, 2012 3:44pm EDT

(Reuters) - Dan Magder recently gave up a top job with private equity firm Lone Star Funds to strike out on his own and become a landlord.

He's joining a growing list of big and small investors who see fat profits to be made in renting out foreclosed homes, especially now the U.S. government is moving ahead with a trial project to sell big pools of single-family homes that Fannie Mae currently owns in some of the hardest-hit housing markets.

Investors seeking higher yields are drawn to foreclosures because the rental market is red hot. But the heated competition for foreclosed homes is reminiscent of the frothy expectations that seem to accompany each new Wall Street investing craze.

Even proponents of buying foreclosed homes are advising caution about the kind of returns that investors can expect to reap and the potential negative headlines that can come with being a landlord.

Critics, meanwhile, contend the federal government is fostering a transfer of wealth of sorts by selling big pools of foreclosed homes to big fund investors and high-net-worth individuals. There's also concern that some of the players who helped create the housing crisis will now benefit by buying foreclosed homes at a steep discount.

Between them, Fannie and Freddie Mac own more than 200,000 foreclosed homes. The nation's banks own more than 600,000 single-family homes, according to RealtyTrac, a housing tracking service.

Housing experts expect the foreclosure machinery to crank up again now that regulators and banks have agreed to a $25 billion settlement to deal with earlier foreclosure abuses.

Some of the high-profile institutional investors who are committing money to buying foreclosed homes - or seriously considering jumping in - include private equity firm TPG Capital, investment firm Oaktree Capital Management, Warren Buffett's Berkshire Hathaway Inc., Starwood Capital, Och-Ziff Capital Management and bond fund manager TCW, say people familiar with the fast-growing market.

PILOT PROJECT

The Federal Housing Finance Agency, which regulates Fannie and Freddie Mac, expects it will receive a considerable number of bids in April for the initial round of 2,500 Fannie-owned homes in cities like Atlanta, Chicago, Los Angeles and Phoenix.

"This is really a test and we don't know what the results will be," says Meg Burns, senior associate director for housing and regulatory policy for the FHFA. "But the beauty of this pilot is we are going out with properties that are largely rented already, so people know what the cash flows look like and we know it is far preferable to have people living in the homes rather than the properties sitting vacant."

In August, when the FHFA first announced its intention to conduct bulk sales for Fannie and Freddie properties, it received expressions of interest from more than 4,000 investor groups, not-for-profits and other organizations.

If the pilot is successful, the FHFA is also considering selling off pools of distressed mortgages held by Fannie and Freddie, according to people familiar with discussions about that.


On the Internet, the gold rush mentality clearly has taken hold with some small investment firms. Wong Diversified International Investments of Austin, Texas, for example, offers a fund to invest in foreclosed homes, boasting on its website that it is pursuing the Fannie bulk sale.

"It is clearly over-hyped, but I think this is real and it's going to happen," said Magder, who about a week ago left Lone Star, where he had focused on distressed banks and financial services firms. "There is definitely room for people who have a well-thought-out operational plan and are careful about putting the pieces together."

Magder has formed Rock Creek Capital Group, based in Washington, D.C., and intends to raise money from investors and submit a bid for some of the foreclosed homes Fannie is selling in Los Angeles and Phoenix and across Florida.

RETURN ON INVESTMENT

One of the most bullish investors is Carrington Capital Management, which has teamed up with Los Angeles-based OakTree Capital. They have created a $450 million fund to buy foreclosed homes in bulk and rent them out.

In a marketing document for one of its funds, Carrington claims that without using leverage or borrowed money it can generate an annual yield of 7 percent from rental income alone. Its long-term strategy is to package the fund into a publicly traded real estate investment trust. If that strategy is successful, Carrington projects investors can see an internal rate of return of 25 percent over three years.

Rick Sharga, an executive vice president with Carrington, says the firm is optimistic that if the Fannie auction attracts a lot of bidders, then banks will begin holding their own bulk sales of foreclosed homes.

Other investors looking at the foreclosed home market say Carrington's projections seem too rosy and they are projecting a return on investment of between 8 percent and 15 percent. That said, in an environment where U.S. Treasuries are yielding less than 2.5 percent on a 10-year Treasury note, those kind of returns are piquing the interest of wealthy individuals.

Miami-based Carlos Guajardo, who is considering bidding for some of the Fannie properties being sold in bulk in Florida, says he is seeking to raise about $50 million, largely from wealthy individuals and small family offices. To date, his firm Maynada Capital Advisors has acquired about 70 foreclosed homes in southeast Florida, which he has fixed up and is in the process of renting out.

In Las Vegas, Laus Abdo is doing something similar and he's trying to expand his potential reach by partnering with a hedge fund or private equity firm to back him.

"I think the majority of your return in this portfolio comes in the form of cash flow from renting, not capital appreciation, unless you buy properties at a huge discount," says Abdo, executive director at TriArchic Advisors, a Las Vegas-based real estate advisory and management firm.

Even as some investors are getting into the market, others are looking at getting out because they fear the presence of big institutional players will drive up prices.

New York hedge fund manager Jason Ader says he and a business partner in Phoenix are looking at selling some of the more than 100 homes they acquired at foreclosure auctions over the past year. Ader, founder of Ader Investment Management, said the market in Phoenix for foreclosed homes began getting more competitive this year. He expects institutional money will start to crowd out smaller investors bidding for the Fannie properties.

PR NIGHTMARE

Some hedge fund managers say they're staying out of the market largely for fear of getting vilified as being a bad landlord if the need comes to evict a tenant. One manager who did not want to be identified said while there's a lot of money to be made from investing in foreclosed homes, "it is a potential PR nightmare."

In February, Phil Angelides, the former chairman of a federal commission set up to look into the causes of the financial crisis, stepped down as executive chairman of Mortgage Resolution Partners one month after Reuters reported on his involvement in the company which aimed to turn a profit from buying distressed mortgages. Angelides' involvement had drawn scrutiny on Capitol Hill, where one congressman sent a letter warning about potential political influence peddling.

Already, some liberal economists are questioning the wisdom of the federal government pushing to sell homes owned by Fannie and Freddie to institutional investors at a potential 20-30 percent discount to prevailing market price.


"This is actually moving the underlying physical assets, or homes, to the top 1 percent," says L. Randall Wray, a professor of economics at the University of Missouri-Kansas City and a senior scholar with Bard College's Levy Economics Institute.

Laus, the Las Vegas housing entrepreneur, says there could be a "potential backlash" if some of the buyers are subsidiaries of the big banks that got bailed out by the federal government.

But many more public policy experts say the bulk sales by the government are worth trying, given the huge stockpile of foreclosed homes controlled by Fannie and Freddie.

"We have a shortage of rental housing already and I think this is a win-win situation," says Kenneth Rosen, chairman of Rosen Consulting Group, which advises on urban planning and real estate management.

In February, Rosen co-authored a report with mortgage-backed securities guru Lewis Ranieri, which advocated the need for a private sector solution to the foreclosure crisis. A Ranieri-backed hedge fund, Selene Finance, has been investing in distressed mortgages for the past few years and is now eyeing foreclosed homes.

"I don't think the money to do this is the problem," says Rosen. "It's the execution."


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Not only are the banks not meeting the terms of the settlements and the State AG's not enforcing it.....Obama's supposed rescue for homeowners of $70 billion to modify loan for underwater and foreclosing homes has hardly been used. 

What is the incentive for banks and the government to modify when bundling foreclosures makes lots of money for the same few.


National Mortgage Settlement inadequate, Md. consumer group says

February 26, 2013|By Steve Kilar | The Baltimore Sun

The National Mortgage Settlement’s relief is not reaching enough Maryland homeowners and is not as effective as it could be in keeping people in their homes, the Maryland Consumer Rights Coalition said Tuesday.

“The number of Maryland families facing new foreclosures continues to dwarf those getting help under the settlement,” said Marceline White, the group’s executive director, in a statement.

Between March 1, 2012 and the end of last year, about 14,200 homeowners received assistance through the settlement, intended to resolve accusations by 49 states and the federal government that five major mortgage servicers abused borrowers during the foreclosure process.

During the same nine-month period, though, notices of intent to foreclose were sent out to nearly 131,000 homeowners, according to MCRC’s review of the settlement monitor’s third progress report, which was released last week, and statistics from Maryland’s labor department.

“The relief offered under the settlement doesn’t begin to match the scale of the foreclosure crisis,” White said.

The servicers bound by the settlement — Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial — are also failing to provide ample principal reductions, an effective tool in keeping people in their homes, according to MCRC. Instead, the servicers are opting to arrange short sales, which result in homeowners losing their residences, the group said.

“Since the settlement was signed, the five big banks that are part of the settlement have provided 3,450 Marylanders with short sales relief, while providing principal reductions for 1,583 families,” MCRC said.

The MCRC’s full analysis of the settlement monitor’s third report can be found here.




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This US housing rise is from the selling of foreclosures in bundles to investment firms but also many are going to the wealthy foreign buyers trying to launder all the loot taken during the massive financial frauds. So US looters are buying overseas and UK looters are buying real estate in the US. All that money is sure to be apart of offshore shelter accounts that hide the tens of trillions of dollars stolen in financial fraud last decade!!

Foreign buyers behind half of £2m+ home sales in London Spending spree led by Russians Chinese, Americans, Emiratis and Indians looking for safe haven investments
  • Rupert Neate
  • The Guardian, Monday 6 May 2013 13.15 EDT
Kensington Palace Gardens hosts some of the most expensive houses in London. Photograph: Graham Turner for the Guardian Wealthy foreigners bought more than half of London's most expensive homes sold over the past year.

A foreign spending spree, led by Russians, Chinese, Americans, Emiratis and Indians, resulted in the number of overseas buyers overtaking the number of Britons buying London properties worth more than £2m in the 12 months to April 2013, according to new research by estate agent Knight Frank.



This is from 2011 but the same news headline aired yesterday as 1/3 of the housing market was paying cash and foreign buyers!  Meanwhile foreclosures are going sky high because of the stagnation and no bank modifications are help from the government even as it pretends to do so!

Foreign buyers cashing in on U.S. housing closeout sale
by Broderick Perkins
DeadlineNews.Com

(6/1/2011) Some say the end is near -- for either an up or down housing market -- when foreigners rush ashore to jump on the bandwagon or go for the spoils.

Right now they are after the spoils.

"In recent years, we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory," said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, RI.

Foreign buyers are joining domestic investors to take up some of the slack left by first-timers and other traditional buyers who are more susceptible to the hostile lending market, according to the National Association of Realtors 2011 Profile of International Home Buying Activity.  Hostile lending market = massive subprime loans.

"The word that may apply in this case is capitulation. Smart investors, both foreign and domestic, want to invest in an asset when no one else wants to and that may be exactly what's happening here. Investing in real estate may seem a safer bet by comparison than other options at this point," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

Sales from those abroad or those who were new to this country, equaled $82 billion for the past year ending March 2011, up from $66 billion in 2010.

The sales were split evenly between non-resident foreigners and recent immigrants and amounted to about 8 percent of the $1.07 trillion figure for all existing-home sales in the U.S. during the period. Foreigners purchased 7 percent of U.S. existing homes or $907 million worth in 2010.

Foreign buyers are coming to America with boatloads of money.

Sixty-two percent of foreign buyers used all cash. In recent months, nearly one in three foreigners buying existing homes were plunking down bags of cash, NAR said.

Compared to foreigners, that makes domestic real estate investors real pikers.

Only 18.5 percent of domestic investors were cash buyers, according to a recent Move.com study.

NAR also said foreign buyers are high-rollers. The average purchase price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. However, 45 percent of international purchases were under $200,000.

Again, that beats out American investors.

Another study by Econohomes.com said today's breed of U.S. investors is only putting out for homes in the $50,000 market.

According to NAR, foreign buyers favor U.S. properties because they are generally cheaper than comparable foreign properties and right now they are bargain basement steals. They also see homes as a good long-term investment with the potential for rental income.

Some Realtors say more foreign families are also housing their college kids in properties near colleges and universities. International demand also stems from foreign executives temporarily working in America.

Said Phipps, "Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country."

Most buyers were Canadians, accounting for 23 percent of sales to foreigners, followed by China and, tied for third, Mexico, the United Kingdom and India. The top five nations accounted for 53 percent of all international transactions. Argentina and Brazil both reported an increase in foreign sales, together account for five percent of all sales, up from two percent in 2010, NAR said.

Foreigners are largely shopping in Florida (31 percent), California (12 percent), Texas (9 percent) and Arizona (6 percent), NAR reported.

Single-family homes accounted for 61 percent of foreign sales, compared to 36 percent for condos, apartments or townhomes.

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When the Fed floods trillions of dollars in mortgage buybacks into the Treasury he is doing just as Bush et al did in using Social Security to pay for tax cuts, wars, and now the mortgage fraud.  Meanwhile they are telling us that SS and Entitlements need to be cut because the Trusts do not have enough money......OH REALLY?

Time to live up to Reagan's Social Security deal



By David Sarasohn, The Oregonian
on February 08, 2011 at 5:13 PM, updated February 08, 2011 at 5:19 PM



The Social Security surpluses were used to help pay off years of federal deficits. When the prospect of federal surpluses first appeared, Bill Clinton urged, in his 1998 State of the Union speech, that the money be used to "save Social Security first." Running for president in 2000, Al Gore wanted the Social Security surpluses put in a "lockbox," an idea that struck people as so hilarious it became a punchline.

Instead, hundreds of billions of dollars of Social Security taxes -- a flat tax that the government stops collecting above certain incomes -- were used to help balance three major George W. Bush tax cuts. As Harry J. Holzer, public policy professor at Georgetown University, put it seven years ago, "Thus the Social Security surplus -- financed by payroll tax increases on the lower and middle classes -- has been used to fund income tax cuts that overwhelmingly benefit high-income people."






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4/21/2012

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Back to my bank bashing... has me outraged yet again over the continued collusion of the Justice system with banks in protecting their fraudulent profits.  This time it involves private lawyers on whom the public now relies since the Obama Administration has given the banks a free pass on massive fraud.  One thought that, like the Barney Madoff fraud where the private lawyer hired to claw-back as much of the fraudulent gains as possible,  a law firm would take over from where the government failed and advocate for the other investor lawsuits seeking justice against the banks.  The Madoff money involved many wealthy investors and that lawyer turned every stone in getting much of their money back.  This Bank of America lawsuit involves pension funds, again, you and I and our retirements, and we are seeing a settlement of pennies on the dollar for these pension investors....$20 million rather than $5 billion.
Make no mistake....the reason this crisis is so long and deep is the failure to prosecute and properly penalize this massive fraud, in the US and Europe.  This money should have moved back to the people the first year....we are talking trillions .......that would have stabilized the state and local governments, staved off spending cuts, and jump-started the economy immediately, not to mention the added perk of down-sizing the b anks.  The 99% will not let this stand. 

IF THE JUSTICE DEPARTMENT DOESN'T HEAR FROM YOU THEY WILL NOT CHANGE!  YOU MUST SHOUT LOUDLY AND STRONGLY AGAINST THE ATTORNEYS GENERAL IN YOUR STATE.  MAKE HIS/HER NAME KNOWN AS THE ONE WHO SOLD OUT MIDDLE/LOWER CLASS AMERICA. 

In Maryland, we have Doug Gansler who sold out the citizens of Maryland.  He is gathering a war chest of donations from his friends he protected in the mortgage settlement.  WE DO NOT WANT HIM FOR GOVERNOR AND NOW IS THE TIME TO BE PUBLIC ABOUT THIS.  Write letters to the editors....talk about it with your social groups....forward this blog or website URL, or join citizensoversight in data-mining for crime with the Freedom of Information Act, but get the word out......WE WILL NOT STAND FOR THIS FAILURE TO ENFORCE LAW!




Bank of America Accord in Lawsuit Is Challenged

By
GRETCHEN MORGENSON Published: April 20, 2012   New York Times 

Lawyers leading a class-action lawsuit in federal court in Manhattan against the directors of
Bank of America over its purchase of Merrill Lynch have agreed to settle the matter for $20 million even though damages in the case could reach $5 billion, according to plaintiffs in a parallel suit against the bank’s board in Delaware.

  Calling the settlement grossly inadequate and the result of collusion, the lawyers in the Delaware case have asked P. Kevin Castel, the judge overseeing the New York matter, to order the parties agreeing to the deal to justify its terms. If the settlement is approved by the Manhattan court, all damage claims made in the Delaware suit would be extinguished. That matter is scheduled to go to trial in October.

The settlement was struck privately on April 12 by lawyers representing two public employee pension funds that had sued the directors of Bank of America for breach of fiduciary duty. The funds are the Louisiana Municipal Police Employees’ Retirement System and the Hollywood (Florida) Police Officers’ Retirement System.

At issue in both the federal and state suits is whether Bank of America’s board breached its duty to shareholders in approving the 2008 acquisition of Merrill Lynch for $50 billion and whether it misled investors about the brokerage firm’s weakening financial condition leading up to the purchase.

Struck during the depths of the financial crisis by Kenneth D. Lewis, then Bank of America’s chief executive, the Merrill deal generated billions of dollars in losses at the bank. Those losses led to Bank of America’s second request for bailout money under the government’s
Troubled Asset Relief Program.

According to the lawyers in the Delaware case, the $20 million deal is inadequate in several ways. First, the amount does not come close to the
$150 million fine paid by the bank in 2010 to settle a Securities and Exchange Commission suit over the Merrill deal.

Jed S. Rakoff, the federal judge overseeing that matter, said the evidence showed that the bank’s disclosures to shareholders about losses and employee bonuses at Merrill were inadequate. Judge Rakoff had rejected the initial proposal by the bank and the S.E.C. to settle the case for $33 million, calling it a contrivance at the expense of shareholders.

The Manhattan court deal is also objectionable, the lawyers in the Delaware case said, because it would not require the directors to dig into their own pockets. The bank’s insurance policies extend well beyond the $20 million cost, the papers said, although the exact coverage was redacted in the filing.

A spokesman for Bank of America declined to comment.

In addition, the court filing contended, the settlement deal is the result of collusion between the lawyers for the bank’s directors and those representing the pension funds.

The lawyer representing Bank of America’s directors approached the New York plaintiffs about a settlement, after negotiations with the Delaware representatives collapsed, the filing noted. The Delaware plaintiffs would not accept a settlement amount within the limits of insurance covering Bank of America’s directors. When the Delaware plaintiffs learned of the negotiations with the New York plaintiffs and tried to join, they were met with silence.

Joseph E. White III, a partner at Saxena White, one of the law firms representing the New York plaintiffs, said neither he nor his colleague on the case at Kahn Swick & Foti would comment.

Over the last three years, the lawyers in the Delaware case have conducted extensive discovery, taking 48 depositions, including those of all 16 Bank of America directors at the time of the merger, and their experts estimate the damages at as much as $5 billion.

The lawyers for the Delaware plaintiffs have also taken testimony from investment bankers and financial advisers who opined on the Merrill deal. There are four law firms at work on the Delaware case: Horwitz, Horwitz & Paradis; Chimicles & Tikellis; Wolf Haldenstein Adler Freeman & Herz; and James Evangelista.

By contrast, the lawyers in the New York case have done little fact-finding, the filing contended. They have deposed just two of the bank’s directors, for example, and did not determine whether the board members had sufficient assets to contribute to a settlement, the court filing noted.

As such, the lawyers who agreed to the $20 million settlement “have not taken the depositions of witnesses necessary to prove their claims, and have failed to pursue the production of highly relevant and prejudicial documents,” lawyers for the Delaware plaintiffs contended.

Such documents were identified during discovery in the Delaware case. For example, the lawyers told the court that they discovered a high-ranking Bank of America official in charge of the Merrill deal had routinely deleted documents in spite of having been advised to hold onto them.

Documents also emerged showing “threats made by the bank to its financial advisers to remove cautionary language from their fairness opinion in the proxy,” according to the court filing. Shareholders rely upon fairness opinions when voting to support or reject a merger.

Chancellor Leo E. Strine Jr. is overseeing the Delaware case, which will not be heard if the proposed settlement goes through.

Mr. Strine has noted in court hearings that the matter involves important issues of state law governing the many companies that are incorporated there.

IF YOU HEAR ANY CANDIDATE TAKE CREDIT FOR THE FINANCIAL REFORM BILL, TELL THEM TO JUMP IN THE LAKE.....THIS BILL HAS BEEN COMPLETELY GUTTED LEAVING BANKS JUST AS THEY WERE BEFORE THE CRISIS................$600 TRILLION IN LEVERAGE, JUST AS BEFORE THE CRASH. 

THIS IS UNACCEPTABLE FOLKS.....IT IS YOUR VOICE AND YOUR VOTE THAT WILL MAKE THE CHANGE!


Derivatives A Dodd-Frank Regulatory Exemption Grows by 7,900%
By Karen Weise on April 20, 2012   Bloomberg Financial

For two years, regulators and business tussled over which companies that trade derivatives must submit to strict oversight as part of the Dodd-Frank financial reform. Credit default swaps and other derivatives, of course, were a major cause of the 2008 financial crisis. In meetings, reports, hearings, and letters, they sought to resolve issues like “What is a swap dealer?” and “What is a ‘financial entity?’”—questions that sound almost existential but have real-world ramifications in the $700 trillion global derivatives market.

Federal regulators made their first proposal in 2010, saying that only small players that trade less than $100 million a year would be exempt from rules requiring them to hold more capital and report more information on their trades. Regions Financial (RF), energy giant BP (BP), and other companies that write and use derivatives pushed back. They argued that a broader exemption makes more sense because derivatives trading is highly concentrated. According to the Office of the Comptroller of the Currency, five large banks—JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), and Goldman Sachs (GS)—hold almost 96 percent of the notional value of all derivatives contracts. The smaller players, the argument goes, shouldn’t be burdened with extra requirements that would ultimately drive up costs for consumers.

The counterargument was that relatively small players can still create systemic risk. Before the financial crisis, American International Group (AIG), for example, was not a top-five trader, but, as we all learned, was still a linchpin in the interwoven world of mortgage derivatives. Indeed, the OCC also says (PDF) that the notional value “does not provide a useful measure of either market or credit risks.” It says risk can hinge on a lot of different factors, like leverage, liquidity, and volatility.

This week, the regulators finally settled the issue, and generally the industry won out. Regulators expanded the exemption to include companies that do less than $8 billion in swaps a year—80 times more than the initial proposal. By one estimate, that means 60 percent of swap dealers will now be exempt. Those companies, ranging from banks to energy and agricultural firms, can breathe easier now that they’re exempt. As for what the new rules mean for risk in the market, regulators say they’ll reevaluate in five years, when the threshold defaults down to $3 billion.

Weise is a reporter for Bloomberg Businessweek

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    Cindy Walsh is a lifelong political activist and academic living in Baltimore, Maryland.

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