Forum Post: Federal Reserve agrees to backstop 154 TRILLION in BofA and JP Morgan gambling debts
Posted 12 years ago on Oct. 18, 2011, 5:17 p.m. EST by EndTheFedNow
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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 the taxpayer.
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.
You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks. His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.
Full article : http://dailybail.com/home/holy-bailout-federal-reserve-now-backstopping-75-trillion-of.html
Now, when you see the shills here saying that we don't need to end the Fed and this wholesale theft of the money of We the People, you know they aren't on our side. The Fed is the lynch pin of this whole Wall Street thing.
In case this thread gets spammed to oblivion, I am also on http://www.themultitude.org
Up...
We are suffering huge austerity measures here in the UK to reduce our national defecit. The right wing government would have us believe that this is all down to the economic policy of the last "left of centre" government. It was in fact caused by the last government having to bail out some of our largest banks to the tune of trillions because they were "too big to fail"! This effectively made the publicly owned by the taxpayer. Q. What have these same banks done since 2008 when the taxpayer became their owners ? A. Continued to pay multi-million bonuses to selected employees justifying it as necessary to retain the "talent" that created the whole stinking mess in the first place! Do they think we are all idiots?
Re. Sir John Vickers' Recommendations
Are you looking for these threads:
http://www.guardian.co.uk/business/2011/sep/12/vickers-report-banks-given-until-2019
http://www.telegraph.co.uk/finance/comment/edmundconway/8756671/Sir-John-Vickers-banking-report-bankers-pay-too-low-a-price-for-high-risks.html
I agree with Sir John's recommendations, but not the time frame. I would like to see High Street ring-fenced from investment banking activities within 2 years or less.
My preference is to reintroduce the Glass Steagall Act and de-merge the likes of BoA and Merrill here in USA. UK should do likewise.
There a number of the establishments' useful idiots right here, defending the Fed and the bailouts!!! It's crazy. Some are, no doubt, shills for system, others just don't understand what the Fed is and does.
These banksters are going for the kill.
Wall Street Looted and Leveraged and We Bailed Them Out: http://www.rollingstone.com/politics/news/wall-streets-naked-swindle-20100405
While this post is full of crazy hyperbole there is definitely a lessen here: Wall St. needs a lot more regulation.
This is not hyperbole.
I knew nothing about this. I am going to have to look this up. If it's true ... this is scarier than anything I've ever seen!
Are you looking for this?
http://www.bloomberg.com/news/2011-10-18/bofa-said-to-split-regulators-over-moving-merrill-derivatives-to-bank-unit.html
...BoA has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits... and ...The concern is that there is always an enormous temptation to dump the losers on the insured institution
Unfortunately, USA has a history of privatising profit and socialising debt. Obviously FDIC is not happy with it, last thing on earth FDIC would want to insure!
And, the FDIC does not have those kinds of funds. Covering losses in those gargantuan sums will mean quantitative easing that will inflate our currency into the stratosphere. Not to mention debt slavery for ever and ever.
Agreed, FDIC would not have this kind of money. Tim Geithner to the rescue.
Ignore Obama, he wouldn't know if his re-election option is in the money.
Timmy boy and Helicopter Ben.
Oh, and the FDIC can't even cover normal deposits!
No need to call names and no, FDIC cannot cover all retail bank deposits under normal circumstances. It couldn't even cover the deposits of one of the "too-big-to-fails".
FDR could not have foreseen the Bush-Greenspan legacy, FDR expected plain common sense.
Let it wash over us again once more: BoA holding company moved derivatives, including OTC derivatives, to its retail bank. In other words, retail banks are now punting on derivatives.
I think this thread will be spammed soon...
It's insane! This is how We the People get looted and our wealth is transferred to the bankster class and the hedge fund giants.
Here's the problem: A lot of OWS peeps don't really understand what derivatives are and what the Fed is. There are shills working overtime here to mislead people by feeding them disinfo and telling them we have to defend the Fed!