Category

Banking

Global Economy

They're Planning the First Legal "Bank Robbery" in U.S. History

So-called "bail-ins," which give banks the right to dip into your savings to pay for their lousy financial decisions, have been on the table for years, ever since Cyprus tested the idea.

But they're moving beyond the "testing phase" now.

The latest clue came from a seemingly benign banking conference on December 2, when one man revealed some frightening central government intentions.

And anyone taking careful notes understands the consequences.

They're huge.

You see, the most direct impact will be felt by the biggest account holders. But the indirect impact will hit everyone.

401(k)s… IRAs… Individual brokerage accounts…

The market will not like the newfound acceptance for bail-ins. And it won't get any warning – neither will we. Not from the mainstream financial outlets, anyway.

They're not even covering it.

First, here’s the frightening – and all-too-real – scenario…

Wall Street

How the Masters of the Financial Universe Use Derivatives for Fun and Profit

Jon Stewart just did a very funny piece on "The Daily Show" about a new derivatives dust-up that Bloomberg News broke.

Earlier this year, a big Wall Street firm bought a credit default swap on debt that a private company owed to a third party. So the firm was set up to make money if that company missed any payments.

In fact, this "game" has gotten even more dangerous...

Wall Street

The Greatest Criminal Enterprise in the World

From the Editor: Shah Gilani is one of the few people who can show you how it really is. In this case, he's going to show you the real reason the Fed chose not to taper. If you're overly idealistic, don't read this. It will only anger you. That, of course, is why Shah's naming names today…

Ben Bernanke is the don of the greatest criminal enterprise in the world.

And yesterday his made monsters, the Five Families, lined up to kiss his ring, again.

By not "tapering" or reducing the $85 billion a month ($45 billion in Treasuries and $40 billion in agency mortgage-backed securities) the Fed is buying from banks, the Fed is saying to its hit men, "We are family, and as long as Johnny Law is coming after you, we've got your back."

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Let's name names... and then I'll tell you the REAL reason the Fed didn't taper yesterday

Wall Street

Bank of America and JPMorgan, Oh How Illegal Activity Pays

What a surprise. The big banks are not playing by the rules — the rule of law, that is.

News last week revealed that Bank of America Corp. (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) are dirty, dirty, dirty.

The Justice Department announced that it is pursuing a civil lawsuit against Bank of America on the grounds that the bank lied about the quality of the mortgages underlying its mortgage-backed securities (MBS) prior to the housing collapse and financial crisis. The Justice Department is still on a high from its successful civil lawsuit against Goldman Sachs Group Inc.'s (NYSE:GS) mid-level toxic securities shill, Fabrice Tourre.

The charges allege out-and-out fraud in Bank of America's soup-to-nuts loan origination and securitization of mortgages. Loans, bad from the start, were knowingly bundled and securitized into trade-able MBS, unbeknownst to buyers.

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Hot Stocks

Best Stocks to Buy Now: A Big Growth Case for Small Banks

While the big banks may have the attention of the Street right now, it's the smaller regional and community banks that are among the best stocks to buy now.

These small bank growth stocks are starting to show dazzling growth as their balance sheets improve dramatically. And they are still very early in the recovery cycle, so there is still plenty of time for individual investors to catch this train…

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Washington

Why the Dodd-Frank Act Didn't Work

On July 21, the Dodd-Frank Act turned three years old.

But, unlike most three-year-olds who can walk and talk, this one hasn't gotten out of the crib yet…

You see, the Dodd-Frank Act was a promise to protect Americans from the excesses and ruthlessness of Wall Street. It was meant to streamline the regulatory process.

But three years later, we are still waiting for its full implementation.

In fact, as of last week, only 155 of 398 rules required by this law are considered final.

That's because instead of focusing on the systemic problems that caused the crisis, the pen to write the bill ended up in the hands of disconnected agencies and lobbyists.

Instead of fixing the serious problems of current law, Dodd-Frank failed to curtail Wall Street – just a few years after a major financial crisis.

At a time when Sen. Elizabeth Warren, D-MA, and Sen. John McCain, R-AZ, have pushed for a new Glass-Steagall Act to reduce risk, some voices like Treasury Secretary Jack Lew argue that the Dodd-Frank bill will alleviate the problems of Too Big to Fail, systemic risk, and cronyism.

But we know that such arguments are spurious at best.

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Washington

If A New Glass-Steagall Act Can Protect Us, Why Is There Opposition?

There has been a huge outpouring of support for Senators John McCain and Elizabeth Warren's idea to reinstate some form of the Glass-Steagall Act, which drew a clear separation between investment banking and commercial banking.

The enthusiasm has managed to vault a wall that many thought impossible: broad bipartisan support.

In fact, from McCain and Warren on down to the right and left, strange bedfellows are signing on.

Whether it's the various Tea Party groups, or MoveOn.Org. Whether it's the Huffington Post or Breitbart, or Bill Clinton, there is plenty of common ground between all of these divergent groups.

Even in Congress itself, there is significant bipartisan support for at least the idea behind Glass-Steagall – that big banks should be broken up, and that those who remain should be absolutely prohibited from, frankly, gambling with our money.

It's perfectly clear that, among the people of this country, there is a real desire to bring banks to heel.

Professor William K. Black, veteran warrior of the Savings & Loan Crisis, put it well when he said that "it violates the core principles of conservatism and libertarianism to extend the federal subsidy (to)… commercial banks via deposit insurance to allow that subsidy to extend to non-banking operations," meaning that we, the taxpayers, shouldn't be forced to subsidize a bank's gambling habit.

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Washington

After 14 Years of Free-for-All, Glass-Steagall Is Back

Three cheers for Elizabeth Warren!

Yesterday she launched a wire-guided Scud missile at the too-big-to-fail banks.

The freshman senator from Massachusetts, formerly a Harvard Law School professor specializing in bankruptcy law, introduced her "21st Century Glass-Steagall Act" co-sponsored with Sens. John McCain (R-Ariz.), Maria Cantwell (D-Wash.), and Angus King (I-Maine).

And it's got the Big Banks shaking in their boots.

Here's why.

The 21st Century Act would separate institutions with savings and checking accounts, in other words FDIC-insured depository commercial banks, from investment and trading "banks" engaged in capital markets activities, most of which are on the border between speculation and manipulation.

Finally!

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Washington

Senators Move to Create 21st Century Glass-Steagall Act

Warren, John McCain (R-Ariz.), Maria Cantwell (D-Wash.), and Angus Kin (I-Maine) introduced legislation that would again separate bank's traditional activities (like deposits currently backed by the Federal Deposit Insurance Corp.) from riskier activities like investment banking, insurance underwriting, swap dealing, and hedge funds.

Glass-Steagall was repealed by Congress back in 1999.

When the news broke of Warren’s determined attempt to bring back Glass-Steagall last week, it covered front pages across the country and instigated a firestorm of commentary on the future of the U.S. economy.

The problem, of course, is the ability to cut through the hype and understand if financial reform is necessary to fix the U.S. economy.

Rarely do I find myself championing regulatory efforts by the Federal Government, but the financial sector is an entirely different beast from energy, agriculture, and other resource sectors.

But reinstituting key elements of the Glass-Steagall Act is just one step on a long return to sanity for the economy.

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Global Economy

New Basel Banking Regulations Mean Every Bank is its Own Cop

The Basel Committee on Banking Supervision, a global group made up of central banks, just came out with its new bank capital standards, the Third Basel Accord (Basel III), to address some of the problems and weaknesses in global financial regulation.

These problems were seen to have been a partial cause of the global financial crisis.

When banking systems adopt the regulations, which are completely voluntary, it's seen as a step towards greater transparency, a more robust system. It's seen as regulators finally getting tough. This is all part of the mad, frantic scramble for… credibility among regulators.

Sounds Good In Theory

The latest round of Basel III regulations, which were approved and adopted by the Fed just last week, call for banks to begin strengthening and improving the quality of their capital reserves. Quantity and quality of capital are absolutely vital to a healthy banking system.

It was the paradigm of the "honest-to-god, AAA mortgage-backed security," with all of its rubbish quality, willfully overstated and overestimated by U.S. ratings agencies, which helped lead us down the path to collapse just five years ago.

So why not have the banks shore up their defenses, take on more capital of good quality?

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