catapultthepropaganda : Messages : 114889-114898 of 114898

http://www.zerohedge.com/article/racketeering-101-bailed-out-banks-threaten-systemic-collapse-if-fed-discloses-information?page=2

And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg's lawsuit is allowed to proceed unchallenged, let alone if any of the "Audit The Fed" measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The Clearing House submits this declaration because the Court's Order threatens to impair the ability of our members to access emergency funds through the New York Fed's Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.

Our members have accessed the New York Fed's Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank's financial condition -

even completely unfounded rumors - have caused competitive harm, including bank runs and failures.

Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.

And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:

If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank's customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls -

which would be a natural inference from having tapped emergency funds -

has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution's customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.

Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?

The Banks' racketeering has gone on for far too long.

And yet, it does not stop: the conclusion from the banks' letter:

In sum, our experience differs from the factual conclusions the Court appears to have reached about the nature of competition in the banking industry:

The competitive harm to institutions that are publicized as needing emergency funding is not "speculative," but demonstrated by the recent multiple failures of financial institutions whenever information about their funding difficulty has been disclosed.

The disclosure does not involve mere "embarassing publicity" but information that could result in the immediate demise of an institution.
The disclosure would not merely "stigmatize [ ]"the institution or make it "look [ ] weak," but goes to its very viability.

The disclosure of accessing emergency funding is not an "inherent risk" of market participation, but an extraordinary risk in extraordinary circumstances.
Competitors can use the disclosure to advertise or publicize that they are financial stronger because they don't need emergency funding.

In a nutshell - the banks want their complete opacity cake and eat it too, or else, the racket goes, the transparency that will somehow promote massive rumor mongering will again destroy capitalism. In the meantime, the Ken Lewises of the world can continue touting how stable their businesses are based on optimistic future projections, while implicitly, they continue to survive merely thanks to the cash granted them by you, taxpayers.

Full filing here:

"calgirlsddd85021" <calgirlsddd85021@...>

calgirlsddd8...

http://groups.yahoo.com/group/WETHEPEOPLE_UNITED/message/182968

Clearinghouse_Decl -

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by Anonymous
on Thu, 08/27/2009 - 16:06
#50687

What's tedious is responding to shills

by Anonymous
on Thu, 08/27/2009 - 17:54
#50904

"I believe they're wrong not to disclose, but only because I believe shareholders have a right to know if their banks borrowed at the discount window"

CHA is claiming that disclosing the information could lead "counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans." If CHA is worried about that, it's because those counterparties already have the right to make those collateral calls or accelerate those loan repayments. I.e., under the terms of the EXISTING CONTRACTS that at least some CHA members have, the counterparties would have taken those steps if they had accurate information. IOW, at least some CHA members are deceiving the counterparties to their contracts in order to avoid complying with those contracts.

And, according to this brief, they want to continue that decpetion and to deceive FUTURE lenders who they claim will "refuse to make new loans" if they knew about that member's borrowing at the Fed window.

Now, presumably, the party who will be making the loan to a CHA member is sophisticated enough to include covenants and other protections in such loan that would include (directly or indirectly) the CHA member's need for Fed Funds. And CHA has said that if current counterparties knew about its members activities they would accelerate loan payments. But not only do they want to avoid that, they want to deceive new parties into making new loans that the CHA member does not intend to comply with. (Ditto for counterparties that have the right to make collateral calls.)

How is the source of the money relevant to the CHA member's not disclosing relevant information to their current and future lenders (and those who enter contracts that have collateral calls)? Are you saying that it's ok for CHA members to deceive counterparties to their current and future contracts?

by Anonymous
on Thu, 08/27/2009 - 19:09
#51032

The brief says "has caused" depositors, counterparties, etc to do those things.

It's the warning that if you make us disclose you'll be risking another Bear and Lehman.

The claim is complete BS of course, but it's what you'd expect the defense to argue.

I took a look at JPMs June 10Q and they do disclose that they are taking money from the Fed in various forms including discount window borrowing (See note 19 and p 59 if you're interested).

The banks institutional customers all know who got money through these programs. They are disclosed, to some degree,in their financials.

The issues here are - 1. The Fed doesn't want to disclose this information, since interested people can get the information from the banks themselves and they feel no need to make it easier for anyone to get the consolidated view, and 2 Banks PR is terrified that their less saavy customers will panic and disrupt the banks operations, (i.e withdraw deposits) or dump the stock.

The wild card here is if the Fed numbers don't agree with what the bank's have already disclosed, there will be unintended consequences.

I'd like to see the Fed disclose.

by Anonymous
on Thu, 08/27/2009 - 21:30
#51218

I know the declaration says "has caused". But that part of the declaration makes no sense unless CHA is essentially saying that the same thing will be likely to happen to at least some of its members. Otherwise, it is putting an irrelevant threat into its declaration. IOW, it's overtly BSing the judge and trying to get her to rule its way by misrepresenting the dangers involved. I think your reading (that CHA isn't saying it would probably happen to them, it's just talking about some speculative potential danger) would be worse than what I said they were doing. Any judge would be really pissed if that's what they are doing.

If they are only worried about their unsophisticated customers, why put their concerns about their CURRENT AND FUTURE creditors into the declaration?

And why worry about their current lenders and counterparties if they are not in violation of some provision in their contracts that would trigger a loan acceleration or collateral call? You can't do those things just because you are worried about some event. The events that allow those things are clearly specified in the relevant contracts. They have to have actually occurred. So, either they are worried about actually being in breach of current contracts or else the whole line in the declaration about disclosing the information might cause current counterparties to acclerate loans or make a collateral call is BS.

Democrats Push For Reinstatement Of Glass-Steagal

Submitted by Tyler Durden on 12/07/2009 20:52 -0500

In what is the start of the biggest uphill battle in D.C., arguably even bigger than deposing the printing press leprechaun, five democrats are proposing an amendment to reinstate Glass-Steagal, whose repeal, through the Larry Summers orchestrated Gramm-Leach-Bliley Act, in 1999 set the economy on the collision course that culminated with the implosion of every single Goldman Sachs FICC competitor in 2008. The five Democrats who have undertaken thesisyphean task of taking on both Wall Street and their direct boss, are Maurice Hinchey of New York, John Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington, and John Tierney of Massachusetts.

Merrill RateLab's Stocking Stuffers

Submitted by Tyler Durden on 12/07/2009 19:34 -0500

Merrill is convinced inflation is a-coming. As such, here are RateLab's proposed top trades, some of which are rather esoteric, others which make intuitive sense (of course, assuming one agrees that inflation trumps deflation: a bold assumption keeping in mind the endless consumer credit collapse). Some of the ideas: i) Sell OTM Payer Skews, ii) GNMA Reverse Mortgage Floaters, iii) Sell MBS/Buy Treasury Strips, iv) Buy CMBX 3 AAA /Sell CMBX 3 A, v) Buy FN 4.5/Sell half of FN 4 and 5 each, vi) Buy August 2025 vs USH0 Basis, and lastly some encouraging words on Agencies. As Zero Hedge is firmly convinced that the entire mortgage market is firmly gamed courtesy of endless Fed intervention which is the defacto buyer of first, middle and last resort, we urge readers to be very careful with any andall MBS/Agency trades.

Another Reason Why You Should Buy, Buy, Buy... Straight From The Sachsth Branch Of Government

Submitted by Tyler Durden on 12/07/2009 19:17 -0500

With the full frontal we have been doing lately of Team Jan and Team Jim, we have ignored some of the other more prominent strategists at Goldman, which is why today we shift our focus on Chief European Strategist Peter Oppeneimer. We present his most recent comprehensive outlook report titled, not surprisingly, "From hope to growth." Don't expect anything tooearth-shattering or against the party line of the government sponsored hedge fund. You will, however at the very least, find out where some of the catchier slogans in the administration come from.

Bloomberg Finally Discloses NYB Insider Trading Action, Schapiro Must Still Resign

Submitted by Tyler Durden on 12/07/2009 15:56 -0500

A report by Bloomberg finally recaps the flagrantly obvious insider trading in NYB stocks and options, presented first here on Zero Hedge.

Consumer Credit Contracts For 9th Straight Month, Non-Revolving Credit Increases

Submitted by Tyler Durden on 12/07/2009 15:28 -0500

Total borrowings declined by 3.5 billion to a total of $2,482.9 billion, with revolving credit declining by $6.9 billion while non-revolving increased by $3.5 billion. As non-revolving credit is directly linked to auto purchases, the seasonal spike in this segment is not surprising as consumers rushed to get financing for all those CfC subsidized Toyotas (and to a lesser extent, domestic cars). Notable is that the LTV increased to a skyhigh 93%, while the average amount financed has hit a record of $32.3k, a jump of over 6% MoM. The expected total decline was $9.4 billion, with economists likely ignoring the consumer need to finance even much cheaper auto purchases.

Latency Arbitrage: The Real Power Behind Predatory High Frequency Trading

Submitted by Tyler Durden on 12/07/2009 15:12 -0500

A new white paper out of Themis Trading analyses the impact of predatory algos comprising various HFT strategies. In Themis' view: predatory HFT generates $1.5-$3 billion in profit. Themis concludes with the following three market integrity questions:

1. Instead of belittling the impact of latency arbitrage, and representing it as a gloriously naive $0.01-$0.02, does the regulators' thinking change if that impact is as high as $3 billion a year?

2. In a quid-pro-quo worlds, are market centers merely charging HFTs a higher fee in exchange for an advance look at the NBBO? Market centers should be protecting all participants equally.

3. The most critical question: "When a market center provides an HFT the ability to out-maneuver institutional orders, is not the exchange putting institutions and their brokers in breach of their fiduciary responsibilities, especially those institutions managing pension funds governed by ERISA?"

Fried Calamari?

Submitted by Tyler Durden on 12/07/2009 14:39 -0500

Goldman Sachs

The weakness in leaders is spreading, with the chance of fried calamari by market close creeping higher by the minute. Watch out for those fishing boats.

Weekly Flow Of Funds Summary

Submitted by Tyler Durden on 12/07/2009 14:25 -0500

An overview of where money is moving most recently, from Morgan Stanley. Overall a mixed picture, with anyone who has half a brain dumping as many MBS as the Fed will buy (i.e., all of it), coupled with a mildly declining interest in Treasurys.

Whither Market Leadership

Submitted by Tyler Durden on 12/07/2009 14:02 -0500

The traditional market leaders, financials and tech, are nowhere to be seen, as sector rotation out of high beta names continues. Look for much more weakness ahead of fins, especially with market (and "free" world) proxy Goldman now actively taking on water.

And You Were Worried About Gold...

Submitted by Tyler Durden on 12/07/2009 13:23 -0500

All it took was for Chairman Ben to open his mouth. The rest is "lift every offer" history.

Now the Kashkari Puff Piece Makes Perfect Sense

Submitted by Marla Singer on 12/07/2009 12:59 -0500

And you called us cynical for calling the Washington Post piece a public relations plant.

Bob Ivry's Eulogy For Mark Pittman

Submitted by Tyler Durden on 12/07/2009 12:54 -0500

One last fitting tribute to the memory of Mark Pittman

Lunatics At Institute For International Economics Endorse $6 Trillion More In QE, Cite Fred "Iceman" Mishkin For Corroboration

Submitted by Tyler Durden on 12/07/2009 12:17 -0500

The latest lunacy out of the Institute for International Economics notes that the dollar can and should go to negative territory courtesy of another roughly $6 trillion in Quantitative Easing. Enter Joseph Gagnon, who is obviously daring to boldly go where the Fed Chairman can only dream of going, and is set on ruining whatever is left of America's (and the world's) middle class.

Cash is King

Submitted by Marla Singer on 12/07/2009 11:55 -0500

One thing you might expect in the midst of a bank confidence crisis (aside from a spike in mattress sales) is a spike in currency demand.

For The SEC's Viewing Pleasure: NYB Stock And Option Chart

Submitted by Tyler Durden on 12/07/2009 11:54 -0500

As we speculated on Friday, whoever bought those 7,500 calls on inside information ahead of the NYB assumption of massive taxpayer subsidies in the form of the AmTrust's $2 billion "failed bank" consideration via the FDIC, is now much richer. And we demand a full investigation into who and why i) leaked this information and ii) profited from it. With the stock up 9%, any inactivity by Mary Schapiro is equivalent to her spitting in the face of anyone still caring about a free and fair market.

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Racketeering 101: Bailed Out Banks Threaten Systemic Collapse If Fed Discloses Information