Posted by CrabbyCon on July 2, 2009 · 2 Comments
What a surprise! Bank of America, now owned mostly by taxpayers will be accepting California’s IOUs.
California, one of the most solvent states is of course good for their debts/sarc.
This really should have been expected – a state-run bank accepting an insolvent, soon-to-be-bailed-out-state. Seems like monopoly money to me! This is similar to a false economy, where government interference and regulation make free markets anything but FREE/REAL.
Ponzi scheme has become my favorite catch phrase. It effectively seems as though California is issuing it’s own fake currency called IOUs, although it is already insolvent, to pay back at a later date – of which, will never happen. Bank of America is already suffering and got into trouble the last time it bought a toxic company and toxic assets, as did many others – but here it is doing the same thing again. Insanity = Doing the same thing over and over again, expecting different results.
Bank of America Corp. says it will accept warrants issued by California’s state government through July 10.
BofA says the state’s budget crisis prompted its decision.
“To support our customers, while giving the state legislature additional time to pass a budget, we will accept California state-registered warrants — or IOUs — from existing customers and clients,” Charlotte-based BofA (NYSE:BAC) says in a written statement.
It is always important to ask “Why” in these very odd and overwhelming times.
Why would Bank of America, who is already in financial trouble and dire straights, accept California IOUs, which it will probably never see? Why does this seem incredibly like the forced situation of Merrill Lynch? Is Bank of America doing this as a favor to the US government? Should I assume that Bank of America will get more bailout dollars if it accepts such a risky investment?
My biggest “beef” with this scenario: who is supporting Bank of America? The government! And where does the government get its money? The taxpayers! It’s not ok by me, that my money is being used to help bailout California due to its liberal/progressive policies that it enacted on the state.
“It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.” ~ Frédéric Bastiat 1801-1850 “The Law”
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Filed under Bailouts, Constitution, Corruption, Double Standards, Economy, Obama, Obama Administration, State Issues, TEa Parties, Treasury, Wall Street · Tagged with Bailouts, Bank of America, California, Corruption, Double Standards, Economy, Fed, IOUs, Obama, Obama Administration, Ponzi Scheme, Treasury, Wall Street
Posted by CrabbyCon on June 17, 2009 · Leave a Comment
Obama wants his unprecedented historic power grab before he leaves office and the crisis window is closing soon. Obama’s plan Wednesday will officially call for the supervision of global financial firms through supervisory colleges.
The Obama administration this week will propose the most significant new regulation of the financial industry since the Great Depression, including a new watchdog agency to look out for consumers’ interests.
Under the plan, expected to be released Wednesday, the government would have new powers to seize key companies — such as insurance giant American International Group Inc. — whose failure jeopardizes the financial system. Currently, the government’s authority to seize companies is mostly limited to banks.
But critics say the easing of the financial crisis that gripped the country last year appears to have reduced the momentum for some of the most far-reaching proposals, such as merging several banking regulatory agencies.
The administration’s move to seize greater power over the financial industry is quite frankly… making me seize. This is so incredibly unconstitutional and will completely crush the economy. The banks are already too tight on lending and Obama wants to regulate them more – makes tons of sense!/sarc. Too many regulations on the free market make it completely dysfunctional – can we not let capitalism work? Why is it that difficult?
What’s worse? This new push for regulation will also give the Federal Reserve additional power and control. The Federal Reserve, as many of us already realize, has been behind many of the economic collapses/recessions in this country, since it’s creation in 1913.
The Federal Reserve, already arguably the most powerful agency in the U.S. government, will get sweeping new authority to regulate any company whose failure could endanger the U.S. economy and markets under the Obama administration’s regulatory overhaul plan.
Just what we need, an entity accountable to no one, not even an auditing agency…
To understand Obama’s intentions we could also take a look back at his G20 plan from a couple months prior:
The Financial Stability Board then has the international authority to set policies in these corporations, including compensation packages the private boards of directors in the examined companies decide to pay top executives and senior managers.
Morris charged that the Obama administration, by agreeing to create the Financial Stability Board, has gone beyond nationalizing U.S. corporations, to “internationalize” U.S.-based corporations under the control of this new global regulator.
While the G20 focused on regulating risks in hedge funds and derivatives, the authority of the Financial Stability Board extends to any banking, brokerage or business practice by a major U.S. corporation that the Financial Stability Board on its own authority determines is unduly risky.
Under the premise that the IMF and the Financial Stability Board would have the ability to make loans to important U.S. corporations, the IMF and the Financial Stability Board become the effective global regulators over the corporate world, superseding all U.S. governmental authorities, including the Federal Reserve, the U.S. Treasury, the Federal Deposit Insurance Corporation and a host of corporate regulators, including the U.S. Department of Commerce and the U.S. Department of Labor.
So Obama says no meddling in Iran but, we can meddle in Capitalism around the globe…? Huh?
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Filed under Constitution, Double Standards, Economy, Foreign Affairs, G20 Summit, Obama, Obama Administration, Socialism, Treasury, Wall Street · Tagged with Constitution, Double Standards, Federal Reserve, Marxism, Obama, Obama Administration, Regulation, Socialism, Treasury
Posted by CrabbyCon on May 20, 2009 · Leave a Comment
Three cheers for the state of Indiana, who is taking bold steps to block whatever they can to avoid the federal power grab and so the state won’t lose money, which is what it deems will occur if the government gets involved:
Indiana will no longer invest in bonds issued by banks and automakers who receive federal bailout money.
Bondholders are supposed to be at the head of the line for repayment if a company goes bankrupt. But State Treasurer Richard Mourdock says the government rewrote the rulebook for the Chrysler bankruptcy, leaving investors with 29 cents on the dollar. Mourdock says that cost state investment funds $5.6 million.
Mourdock says the state won’t sell bonds it already holds — he says that would lock in losses. But he’s ordering fund managers not to buy any more bonds from Chrysler, GM, or banks covered by the bailout.
In a related story taking place in Indiana, state funds have already lost money due to the auto industry debacle.
Indiana State Treasurer Richard Mourdock announced effective immediately that no portfolios under his control will make additional investments in secured corporate debt of businesses that are receiving infusions of federal funds. In addition, Treasurer Mourdock is communicating his message to Hoosier fiduciaries of public monies who might otherwise make investments in securities that can be devalued due to the unilateral action of the federal government.
“I serve as the Trustee of the Indiana State Police Pension Fund and am responsible for investing the Major Moves Construction Fund. Both of those funds suffered losses when the Obama administration overturned some two-hundred years of established law by redefining ‘secured creditors’ to mean something less,” explained Treasurer Mourdock. “In the past, to be ‘secured’ meant an investor was ‘first in line’ in the event of a bankruptcy and ‘non-secured’ creditors would receive value after secured-creditors were paid. In the Chrysler bankruptcy, however, secured creditors received $.29 on the dollar even as non-secured creditors received higher values and ended up with a 55% ownership of the new company, which is fundamentally wrong and a dangerous precedent to the capital markets.”
“Indiana’s pensioners should not be punished as a result of investment managers making historically sound decisions. The managers did nothing wrong, but the portfolios have been victimized due to the actions of the federal government in the Chrysler bankruptcy. Losses have happened once, due to the action of the feds, and as fiduciaries, we must be certain Indiana pensioners and portfolios are not victimized again. Henceforth, we will not add to the portfolios ‘secured’ debt from companies such as General Motors, other manufacturing companies, or those insurance companies who have or will be receiving bailout funds. Given the recent actions of the federal government, the risk is too great for any prudent investor to accept,” clarified Treasurer Mourdock.
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Filed under Auto Industry, Economy, Socialism, State Issues, Treasury · Tagged with Auto Industry, Economy, Funds, Indiana, Socialism, State Issues, Treasury
Posted by CrabbyCon on May 20, 2009 · Leave a Comment
Take that!
Here’s the transcript – no video yet:
Treasury Secretary Tim Geithner, who just finished testifying before Sen. Chris Dodd’s (D-Conn.) Senate Banking committee, said that “it’s not fair” that AIG counter-parties are getting paid 100 cents on the dollar by government bailout money but “if I felt there was a better way…I would support it.”
Geithner was responding to tart questioning by Sen. Mark Warner (D-Va.) asking why, when others owed money by the troubled insurance giant are taking “haircuts,” the counter-parties (such as Goldman Sachs) are getting all the money owed to them.
“It is an incredibly difficult balance and it is very hard to know if we’re going to get the balance right,” Geithner said. AIG has received or been promised more than $150 billion in bailout money.
Geither got his anger up at one point, saying that, “I would not give a penny to AIG to protect counter-parties” if he didn’t have pay them to reduce the risk to pensions and other taxpayer-related funds that have done business with AIG and that are owed money by the company.
GOP Senator Hammers Geithner
11:29 A.M.: Geithner was hammered by a Republican senator decrying Treasury’s growing power over the American economy.
“This is not mission-creep,” said Sen. Jim DeMint (R-S.C.). “This is a stampede of any traditional understanding of constitutional boundaries.”
DeMint called Geithner the chief executive of the American economy. And he didn’t mean it in a good way.
DeMint complained that “we hear very little talk about exit strategies.” He asked Geithner how much of the $700 billion government bailout will be returned to Treasury’s general fund within five to six years.
“That’s hard to say right now,” Geithner said, deflecting: “If we are successful, that money will come back with substantial interest.”
Geithner added that the way the bailout was designed, for each $1 that is paid back, $1 can be lent back out.
“So it’s your understanding that you have $700 billion to use permanently as you see fit?” DeMint asked incredulously.
Geithner wouldn’t take the bait. “I’m not quite sure ‘permanently’ is right,” he said.
Rest of the questioning from other Republicans can be found here.
Later Geithner pulled a Clinton and asked what the definition of permanently is… j/k!
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Filed under Bailouts, Congress, Economy, Obama Administration, Socialism, Treasury · Tagged with AIG, Bailouts, Congress, Economy, Geithner, Obama Administration, Socialism, Treasury
Posted by CrabbyCon on May 6, 2009 · Leave a Comment
I don’t know what to make of this but it seems like a pretty big deal. Will it be pushed under the rug or become a thorn in the side of those involved? You be the judge.
Whether the story is bigger than Watergate or not, it is definitely a scandal of huge proportions.
To sum it up, on April 23, 2009, New York Attorney General Andrew Cuomo sent a letter to Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs Chris Dodd; Chairman of the House Financial Services Committee Barney Frank; SEC Chairwoman Mary Schapiro; and Chairwoman of the Congressional Oversight Panel Elizabeth Warren.
The letter outlined how former Treasury Secretary Paulson and Fed Chairman Ben Bernanke forced Bank of America’s acquisition of Merrill Lynch – even though Bank of America CEO Ken Lewis and the board of directors tried to pull the plug on the deal after it turned out that Merrill Lynch was far deeper in debt than it had admitted.
In the words of Attorney General Cuomo himself:
Immediately after learning on December 14, 2008 of what Lewis described as the “staggering amount of deterioration” at Merrill Lynch, Lewis conferred with counsel to determine if Bank of America had grounds to rescind the merger agreement by using a clause that allowed Bank of America to exit the deal if a material adverse event (“MAC”) occurred. After a series of internal consultations and consultations with counsel, on December 17, 2008, Lewis informed then-Treasury Secretary Henry Paulson that Bank of America was seriously considering invoking the MAC clause. Paulson asked Lewis to come to Washington that evening to discuss the matter.
Bank of America’s attempt to exit the merger came to a halt on December 21, 2008. That day, Lewis informed Secretary Paulson that Bank of America still wanted to exit the merger agreement. According to Lewis, Secretary Paulson then advised Lewis that, if Bank of America invoked the MAC, its management and Board would be replaced.
Meanwhile Ken Lewis has been sacked as chairman of the board at Bank of America… even though he might well have been the only conscientious and honest player in this scheme. And now the sharks have started to turn on each other: according to Cuomo, Paulson “largely corroborated Lewis’s account” and informed the attorney general’s office that he “made the threat at the request of Chairman Bernanke.” The latter has so far chosen to keep his mouth shut.
The key factor here is not that the Devious Duo forced Bank of America into a merger it didn’t want to commit to. Granted, that’s an unheard-of interference of government in the free market, but we’re quite sure that the Powers-That-Be could sweep it under the rug by invoking the “greater good.”
No, the part of the story that could really break ‘Al’ Paulson and ‘Don’ Bernanke’s necks is the failure to inform the Securities and Exchange Commission, as well as Bank of America’s shareholders, of the extent of toxic waste Bank of America was forced to accept. That’s fraud, pure and simple.
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Filed under Bailouts, Congress, Corruption, Economy, Media, Politicians, Treasury, Wall Street · Tagged with Andrew Cuomo, Bailouts, Bank of America, Barney Frank, Bernake, Chris Dodd, Corruption, Democrats, Economy, Elizabeth Warren, Mary Schapiro, Media, Merrill Lynch, Paulson, Scandal, Toxic Assets, Treasury
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