Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Federal Deposit Insurance Corporation

Big Banks Oppose Volcker Rule, Urge Delay in Implementing It

President Barack Obamaa, flanked by Paul Volck...

The deadline for comments on the proposed Volcker Rule was Monday night and hundreds, if not thousands, of letters arrived at the last minute to rail against the rule, mostly from Wall Street. The Volcker Rule — which would prohibit banks from trading with their own money — was proposed last summer by former chairman of the Federal Reserve Paul Volcker, who said in a letter to President Obama that they shouldn’t be gambling with money guaranteed by the taxpayers. Big losses by government-backed banks that were trading in risky securities such as mortgage-backed assets precipitated the financial crisis in 2008 and set up the need for federal bailouts of those banks.

The idea behind the rule is simple: Prohibit banks from making “proprietary trades” that are unrelated to traditional banking practices such as making loans and clearing checks. Putting such rules down on paper however is proving to be daunting and giving the banks affected a chance to buy some time.

Volcker’s letter to President Obama was three pages long. The rule incorporated into the Dodd-Frank act was 10 pages long. By the time the four regulatory agencies empowered to oversee its implementation — the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, the Comptroller of the Currency, and the Securities and Exchange Commission (SEC) — got done with it, the Volcker Rule encompassed 298 pages.

The public comment period started when the FDIC signed onto the bill on October 11, and ended Monday, February 13 at midnight. The draft offered for comment contained 1,300 questions on 400 topics so that the agencies would be able to “discern” the right, proper, and appropriate course of action to take with the final draft. Implementation of the Volcker Rule is scheduled for July. This gave the banks a perfect opportunity to delay the whole process by complaining among other things that the bill is far too complicated for the banks to be able to comply by then.

As of Monday the SEC had already received over 14,000 letters, at least one of them 365 pages long. Some attempted to respond to all 1,300 questions with answers of their own while others posed new questions and offered significant revisions to the bill’s language.

But that was Monday. By midnight another 200 letters from the primary target of the bill—Wall Street banks and investment houses—were expected. Lawyers representing Goldman Sachs, Morgan Stanley, and Citigroup as well as the trade group itself, the Securities Industry and Financial Markets Association (SIFMA), spent the weekend holed up in hotels in downtown Manhattan cranking out long and detailed responses to the proposed bill.

The strategy is clear: Delay the matter until after the elections when the entire game could change, including the need to reintroduce the legislation for congressional and presidential review, probably with many new faces perhaps more favorable to tabling the matter altogether. Dennis Kelleher, president of Better Markets, a nonprofit pro-regulation group, said, “It’s part of their ongoing strategy—if you can’t kill the

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Big Banks Gamble on Derivatives at Taxpayers’ Risk

Risk Tournament

When Bank of America announced that it was moving its derivatives-laden portfolio at its subsidiary Merrill Lynch over to its bank holding company, it said it was merely responding to pressure from some of its partners to take advantage of the holding company’s higher credit rating. It would also reduce the need for the bank to post an additional $3.3 billion in collateral because of the recent downgrade it suffered at the hands of Moody’s last month.

But the real reason, according to Bloomberg, is that the FDIC insures the bank but not Merrill Lynch, and in the event of a failure in

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The FDIC: Bailing Out Banks with Your Tax Dollars Since 1933

Logo of the United States Federal Deposit Insu...

On Friday the Federal Deposit Insurance Corporation (FDIC) closed and sold off four more banks, bringing the total shuttered this year to 84. The FDIC’s Deposit Insurance Fund paid out $358 million to enable the transactions to take place, with additional losses being borne by the failed banks’ new owners. Through 2010 the FDIC has paid out $76 billion and the total is likely to exceed

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Bank Failures: 127 Down, 800 to Go

FDIC placard from when the deposit insurance l...

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When Zacks Equity Research announced on Monday the failure of two more banks in the current recession, the silence was deafening. The report blamed the usual suspects: “tumbling home prices, soaring loan defaults, and a high unemployment rate continue to take their toll on such institutions.”

But buried in the report was the much more ominous forecast of the “increasing … possibility of more bank failures.” Zacks said that any bank which makes the FDIC’s problem bank list is essentially doomed. “As of now, only 13 percent of banks on [that list] have actually failed.” The number on that list? 829, up from 775 in the last quarter.

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Will the U.S. Bail Out Kabul Bank?

45th Munich Security Conference 2009: Hamid Ka...

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The bank run at Afghanistan’s largest bank, Kabul Bankwas precipitated by the takeover of the bank by Da Afghanistan Bank, the country’s central bank, last week. By Friday nearly all of its currency reserves and most of its capital had been withdrawn by nervous customers, with no end in sight.

Afghanistan President Hamid Karzai blamed the run on the bad press the bank had been getting in the United States ever since a major article about corruption at the bank appeared in the Washington Post in February. Last Thursday, the second day of the run on the bank, Karzai said, “The Western press is…printing out our decision [to take over the bank] in a negative way and in a provocative way. It’s sad to hear that. It’s unfortunate.”

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TARP Criticism Misses the Point

PaulsonHenry

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When TARP Inspector General Neil Barofsky criticized the Home Affordable Modification Program (HAMP) as being ineffective, he blamed the Treasury Department for not setting clearer goals for that part of the Troubled Asset Relief Program (TARP).

Only 390,000 homeowners “have seen their mortgage terms permanently modified since the $50 billion program was announced in March 2009. That is a small fraction of the three to four million borrowers who were supposed to receive assistance under the program.”

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Great Depression II: Here We Go Again?

The Causes of The Great Depression / FDR Memor...

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The unremitting flow of negative news about the economy has finally caught the attention of the mainstream media, causing an increasing number of economists to make comparisons between today’s recession and the Great Depression.

David Rosenberg, Gluskin Sheff’s chief market economist, commented to his clients that the monster drop in new home sales in June compared to May was not exactly “a one-month wonder” but instead invited comparison of the current recession’s similarities with those of the Great Depression. He said they include:

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Financial Reform: Expanding Hubris, Limiting Freedom

Chris Dodd

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When the House passed the 2,319-page Dodd-Frank financial reform bill by a vote of 237-192, all it did was confirm for many the extraordinary hubris of legislators believing they could in fact “fix” the problems they themselves created which resulted in the Great Recession of 2008.

John B. Taylor,  professor of economics at Stanford University says, “The main problem with the bill is that is based on a misdiagnosis of the causes of the financial crisis…the presumption that the government did not [already] have enough power to avoid the crisis.”

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Financial Reform: Pressing On, Regardless

Bob Corker

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Last month, Senator Bob Corker (R-Tenn.) pushed back against the Obama administration’s plans to create a “standalone” Consumer Financial Protection Agency, and some Washington-watchers held their breath to see if Corker would hold his ground.

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Bernanke’s Kudos, Criticisms Miss the Point

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A preliminary vote today for Ben Bernanke’s reappointment to a second four-year term as chairman of the Federal Reserve is expected to clear the way for a final favorable vote by the Senate.

Bernanke’s first term record was subjected to criticism and praise during confirmation hearings in December, and  he was selected as Time magazine’s Person of the YearTime magazine’s Michael Grunwald was kind to a fault, calling Bernanke “our mild-mannered economic overlord” (a reference, no doubt to Superman’s mild-mannered Clark Kent), and “the most powerful nerd on the planet.”  In that lengthy tribute, Grunwald summarized the Fed’s role:

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Captains of the Economy: The ‘Good Ol’ Boy’ Network is Alive and Well

ABC News Now

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In its attempt to glorify “the 10 who shaped the U.S. economy the most since 2000,” ABC News did a great favor for those interested in the interconnections among the “elite” who are impacting the current world economic and political scene.

Naturally, much was left unsaid about these “captains,” especially regarding their connections to the elite currently in charge. In order, then, here is a brief look at each of these “10 who shaped the U. S. economy”:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.

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