HOLY BAILOUT – Federal Reserve Now Backstopping $75 Trillion Of Bank Of America’s Derivatives Trades

By The Daily Bail

UPDATE – Chcek out regulator William Black’s blistering reaction to this story HERE.
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This story from Bloomberg just hit the wires this morning.  Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.

This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers.  Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties.  Now the Fed and the FDIC are fighting as to whether this was sound.  The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input.

Obama Embraces The Money Party

Michael Collins

It’s time for Plan B. The White House is about to be sold to the same people who bought it in 2008. The front page of today’s New York Times says it all. President Obama is on the hunt for campaign cash and the Wall Street crowd represents his main target. After all, he and his “good friend Tim” (Geithner) delivered in the biggest way possible. Obama must be thinking that it’s payback time! Pony up fellas.

This much is clear. There will be no federal prosecutions of Wall Street crooks for the 2008 financial collapse, no day of judgment for massive mortgage fraud before, during and after the housing bubble, and no representation for the people the in the White House, no matter who wins in 2012. Populist rhetoric will guarantee a place on the no-fly list for any who stray from the new party line.

The Times article resorts to irony right out of the gate:

“Mr. Obama, who enraged many financial industry executives a year and a half ago by labeling them “fat cats” and criticizing their bonuses, followed up the meeting with phone calls to those who could not attend.” New York Times, June 13

Obama and Geithner – Back to the Future on Corporate Tax Breaks and Derivatives

Michael Collins

Speculation reigns supreme in your nation’s capital. Who is next in line after the bin Laden operation? The bipartisan coalition directing the war on terror forgot one important fact about the security of the United States of America. It doesn’t matter who they kill overseas, the assault on almost all citizens continues unabated at home. No one is doing anything to stop it. Only the financial and political elite remain immune. (Image-WikiCommons)

According to the National Bureau of Economic Research, the national economic collapse (aka recession) ended June 2009. That’s news to the 55% of the public that believe we’re in either a recession or depression (April 2011).

Official unemployment is around 9%. That excludes the marginally employed and under employed. Adding those two groups takes unemployment up to 15.9%. Add the long-term unemployed and the figure climbs to nearly 23%.

Triumph of the Money Party!!! Warren’s role downgraded, reports to Geithner

Michael Collins

The White House snatched back one of the few bones it’s thrown to the people outraged at the looting of the United States Treasury by failed financial concerns – the big banks and Wall Street. The promised appointment Elizabeth Warren as head of the new agency to protect consumers from the financial services industry has been seriously downgraded. Instead of running the Consumer Finance Protection Agency, Warren’s role has been diminished to that of special assistant to the president and adviser to Treasury Secretary Tim Geithner.

“President Obama, sidestepping a possibly heated confirmation battle, will appoint Harvard law professor Elizabeth Warren as a special advisor to the Treasury Department to launch the government’s powerful new Consumer Financial Protection Bureau, according to two Democratic officials familiar with the decision.” LA Times, Sept 15

An interim appointment would have given the no-nonsense Warren the full authority to structure consumer bureau in the interests of the people. A special adviser role is defined in a New York Times article as follows:

NY Fed AIG Coverup – “criminal or civil charges possible” SIGTARP

By Michael Collins

Prosecuting those who caused the financial crisis would lead to the next logical step: confiscating all the ill gotten gains and returning them to the people. The market went down and the people lost a bundle. The market is now back up and those losses are still in place. But guess who made a bundle on the fluctuation? This must be corrected.

The Trillion-Dollar Shadow (audit the Fed!)

By Richard (RJ) Eskow

March 30, 2010            OurFuture.org

What secrets are hidden in the Federal Reserve’s trillion-dollar shadow? Economic recovery depends on confidence, and confidence requires knowledge. But Senators like Chris Dodd and Judd Gregg don’t want us to have that knowledge. They don’t even want it themselves.

In Sen. Dodd’s case, he’s trying to give the Fed more authority (over consumer protection) even as he fights to keep its activities hidden. Fortunately, the final decision may not be up to him.

Today’s portion of contempt from Geithner & Co

Trained Seals

By Digby

March 9, 2010        OurFuture.org

According to Sam Stein members the Treasury Department, including Tim Geithner himself, met with a group of progressive bloggers yesterday to tell them what a good job the administration’s done all things considered, but that now they need to get the voters all charged up to help them pass a tepid financial reform bill. This is part of a larger public relations offensive to rehabilitate Geithner and the Obama economic policies:

Earlier that morning two lengthy profiles of the Treasury Secretary were published in the New Yorker and the Atlantic respectively. There too, Geithner was cast (or, perhaps, cast himself) in the role of the humble victim, doing the bidding of the country at the price of personal reputation.

“We saved the economy,” he told the New Yorker, “but we kind of lost the public doing it.”

Secret Banking Cabal Emerges from AIG Shadows

By David Reilly
Bloomberg

The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York,

SEC mulled national security excuse for hiding AIG details

NEW YORK (Reuters) – U.S. securities regulators originally treated the New York Federal Reserve’s bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.

Crisis in Credit

The request to keep the details secret were made by the New York Federal Reserve — a regulator that helped orchestrate the bailout — and by the giant insurer itself, according to the emails.

The emails from early last year reveal that officials at the New York Fed were only comfortable with AIG submitting a critical bailout-related document to the U.S. Securities and Exchange Commission after getting assurances from the regulatory agency that “special security procedures” would be used to handle the document.