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**

The lead underwriter for Gazprom was Goldman, Sachs, …
also – just remembered from the hearings today about the credit ratings agencies –
1. noted by someone testifying at the end of the second hour –
The ratings agencies set the standards for what is AAA or BBB, etc. – as he suggested, it is like allowing a private enterprise to determine what is a “tall” building and then they define tall as 5 stories one time, ten stories another time and whatever else at some other time, etc.

2. how did they increase the cushion – the credit cushion in the derivatives – as the executives were saying?

3. the $376 million – in 4 tranches by Citigroup that was described by the Senator – expected to have 77% losses – which ended up being more than that but were rated as AAA

4. by not back reviewing the credit derivatives while claiming to be subjecting them to a new more conservative credit model (and publishing and publicizing that epprudent model was in us) – that is why the AAA ratings on old sets of credit products / derivatives were thought to have the rating based on the new standard when they didn’t – it means the company, its executives, managers and departments intentionally misled clients because their CEO & sales info says they were using the new models and updating the old securities’ ratings using it – when they weren’t

– they also depleted resources and refused to acquire the necessary personnel resources in the departments responsible for placing the old securities packages through the new models and re-rating them appropriately, they effectively hindered them from accomplishing that process and did so knowing the result would be to not have the new ratings model applied to the existing derivatives and previous products put in place by them in the marketplace and still being resold with the new model being touted as if it was used.

– cricketdiane, 04-24-10

***

About the Goldman Sachs / Abacus case SEC announced this week –

(from NY Times article)

[ . . . ]

The ABN Amro executives who were involved in the Abacus deal were, like Abacus itself, largely unknown. Many focused on “exotics,” that is, complex instruments that are virtually unheard of outside of financial circles.

These executives included Mitchell Janowski, the head of credit trading exotics at ABN; Richard Whittle, global head of credit and alternatives trading; and Stephen Potter on the trading desk, whose job it was to present the trade to ABN’s credit and risk committee.

At the furthest remove from the trade was Robert McWilliam, who was in charge of assessing the credit quality of ABN’s trading counterparties.

According to people involved in the transaction, Goldman and ACA Capital, a bond insurance company that also played a central part in Abacus, contacted ABN Amro because they needed a big bank to offset ACA’s risk in the deal.

( . .

Former ABN executives were divided on the merits of the case against Goldman. One person involved in the deal said that if ABN Amro executives had known of Mr. Paulson’s role in Abacus they might have had second thoughts about the deal.

But another former executive insisted that ACA, as an expert in this area, had a chance to reject the securities that Mr. Paulson had chosen for the deal.

“These guys were experts,” this person said. “If they were so good and thought the market was going to go to hell, they should not have put their name to it.”
A version of this article appeared in print on April 23, 2010, on page A1 of the New York edition.

http://www.nytimes.com/2010/04/23/business/23cdo.html?src=me&ref=business

When the Abacus investment soured, Royal Bank of Scotland, under the terms of the deal, was obligated to cover the $840.1 million in losses. The British bank paid that sum to Goldman Sachs, which, in turn, paid John A. Paulson, the hedge fund manager who had bet against the deal. According to the Securities and Exchange Commission, Goldman had devised the investment to fail from the start so that Mr. Paulson could wager against it. Goldman has vowed to fight the claims, which it has called baseless.

(from above NY Times article, 04-23-10)

A Routine Deal Became an $840 Million Mistake
By LANDON THOMAS Jr.
Published: April 22, 2010

**

Perhaps 60% Of Today’s Oil Price Is Pure Speculation
Jun 27, 2006 – The price of crude oil today is not made according to any traditional … of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who …. US gasoline and heating oil futures on the ICE Futures exchange in London. … where we have both high supplies of crude oil and high crude oil prices. …
www.rense.com/general81/pure.htm

(also from the 2006 – 2007 oil prices debacle – )

“We’re facing a new threshold and that’s $4 a gallon,” said Mr. Reed of Edmunds.com. “It’s going to be interesting to see at what point will people start making substantial changes.”

http://www.nytimes.com/2006/05/27/business/27gasoline.html?_r=1&pagewanted=2

For an 800-mile round trip, the average during the summer, the extra cost of paying a dollar more a gallon at the pump adds up to $40 for a vehicle that gets 20 miles a gallon.

A third of all leisure travel takes place in the summer. This season, Americans will take 326 million trips, according to the Travel Industry Association, essentially the same as last year. The trade group expects Americans to spend $1,000 on each trip, but travelers are expected to save money on hotels, food and dining to make up for the higher gasoline expense.

Gasoline prices rose to record highs this spring on the back of a big increase in oil prices. After reaching a high of $75.17 a barrel in April, crude oil remains around $70 a barrel because of concerns over the security of supplies around the world.

Gas prices are directly affected by oil’s movements. A general rule is that a $10 increase in the price of a barrel of oil adds nearly 25 cents to the price of gas at the pump.

Higher energy prices have eaten into incomes, wiping out almost a third of last year’s total wage increases, according to a new report by the United States Conference of Mayors and Global Insights. In 2005, energy expenditures accounted for 5.9 percent of consumer spending — up 20 percent from 2004, the report said. Households spent $287 billion for gasoline and $225 billion on other energy expenses, or 9 percent of all wages and salaries.

The Energy Information Administration of the Energy Department, in a recent report, said a lasting increase of 10 percent in the price of crude oil would lead to a 0.4 percent drop in domestic petroleum consumption over two years. While that may not seem like much for a nation that consumes more than 20.5 million barrels of oil a day, it can add up.

http://www.nytimes.com/2006/05/27/business/27gasoline.html

“So far, $3 a gallon is old hat,” said Jan Stuart, an energy economist at UBS in New York. “The question is, What kind of price levels do you need for people to stay at home?”

This is not to say that Americans are immune to changes in energy prices, whose effects are slowly spreading through the economy. Lower-income households, which devote a higher share of domestic spending to energy, are feeling the pain, certainly, much more than higher-income families.

(from the same article above – 2006)

By Labor Day, drivers will have logged more than 800 billion miles, or 8.6 billion miles a day, and will have consumed 36 billion gallons of fuel crisscrossing the United States, according to the Energy Department.

http://www.nytimes.com/2006/05/27/business/27gasoline.html

Gas Prices Aren’t Deterring Summer Travelers – New York Times
May 27, 2006 – After reaching a high of $75.17 a barrel in April, crude oil remains around $70 a barrel because of concerns over the security of supplies around the world. …
http://www.nytimes.com/2006/05/27/business/27gasoline.html

Gas Prices Aren’t Deterring Summer Travelers
By JAD MOUAWAD
Published: May 27, 2006

***

My Note – and considering the following – why were speculators in energy and oil futures allowed to drive up the prices of crude to over $100 per barrel?

– cricketdiane

Market Surveillance

CFTC Market Surveillance Program
The CFTC’s market surveillance program is intended to preserve the economic functions of futures and option markets. The market surveillance program’s primary mission is to identify situations that could pose a threat of manipulation and to initiate preventive actions.

Large Trader Reporting Program
The CFTC operates a comprehensive system of collecting information on market participants as part of its market surveillance program. The Commission collects market data and position information from exchanges, clearing members, futures commission merchants (FCMs), foreign brokers, and traders. The Commission and U.S. futures exchanges employ a comprehensive large-trader reporting system (LTRS), where clearing members, FCMs, and foreign brokers (collectively called reporting firms) file daily reports with the Commission.

Aggregate data of reported positions are published by the CFTC in its weekly Commitments of Traders reports.

Speculative Limits
To protect futures markets from excessive speculation that can cause unreasonable or unwarranted price fluctuations, the Commodity Exchange Act authorizes the Commission to impose limits on the size of speculative positions in futures markets.

(from)

http://www.cftc.gov/IndustryOversight/MarketSurveillance/index.htm

US Commodity Futures Trading Commission, Department of the US Treasury

***

Index Investment DataSwap dealers and index traders that receive a “special call” (under CFTC Rule 18.05) must file monthly reports with the CFTC’s Division of Market Oversight within 5 business days after the end of the month. Selected quarterly data from those reports is published below. Those data show the national values and the equivalent number of futures contracts for all U.S. markets with more than $0.5 billion of reported net notional value of index investment at the end of any one quarter.

The most recent quarter-end information generally is added about 4 to 5 weeks after the “as of” date. Once posted, the CFTC does not generally revise this information to reflect any amended information subsequently received, but may do so if the changes are extraordinary.

Send comments to marketreports@cftc.gov.

http://www.cftc.gov/MarketReports/IndexInvestmentData/index.htm

My Note –

Does this mean that only a selection / a slice of the swap dealers and index traders are given oversight and overview by the US Commodity Futures Trading Commission? Don’t they have just about the best computers and software in the world available to them? Or is that only one part of some bigger process that isn’t evident?

– cricketdiane

**

Treasury Financial Manual
Volume IV: Treasury Tax and Loan Depositaries

Volume IV Table of Contents

Part 1 Table of Contents

Chapter 1000 Purpose and Plan of Volume IV of the Treasury Financial Manual (TFM) (T/L 9)
Web File HTML File PDF FilePDF File

Chapter 2000 Federal Tax Collections Overview (T/L 6)
Web File HTML File PDF File PDF File

Chapter 2100 Federal Tax Collections Using the Paper Tax System (T/L 6)
Web File HTML File PDF File PDF File

Chapter 2200 Federal Tax Collections Using the Electronic Federal Tax Payment System (T/L 8)
Web File HTML File PDF FilePDF File

Chapter 2300 Treasury Investment Program (T/L 6)
Web File HTML File PDF FilePDF File

Viewing PDF filesPortable Document Format Filerequires Acrobat Reader Acrobat Reader, which is included in many Web browsers. If your browser does not read Acrobat’s pdf files, the Acrobat Reader is free to download and use.

(from -)

http://fms.treas.gov/tfm/vol4/index.html

Chapter 2300 Treasury Investment Program (T/L 6)

(see above)

***


Index Investment Data

Treasury Investment Program
Overview

Treasury’s operating cash balance is maintained in a portfolio of four separate investment vehicles under investment authority codified at Title 31 U.S.C. Section 323. Currently, only financial institutions that are designated as Treasury Tax and Loan (TT&L) depositaries are eligible to participate in Treasury’s investment program.

Treasury’s Federal Reserve Account:
Represents Treasury’s checking account. The vast majority of payments and collections are paid out of and received into this account maintained at the Federal Reserve Bank of New York. Treasury does not earn explicit interest earnings on the account although it does receive implicit interest on the balances in the form of Federal Reserve earnings. Treasury generally targets a $5 billion end-of-day balance in its Federal Reserve Account.

TT&L Balances:
Represents funds invested with commercial depositaries that agree to pay Treasury interest at the rate determined by the Secretary of the Treasury. Treasury has the ability to call TT&L funds on a same-day basis and place funds on a same-day or one-day basis depending upon each depositary’s designation (almost 90% of Treasury’s TT&L capacity is available on a same-day basis). TT&L investments may be placed as direct investments, dynamic investments, or special direct investments.

Term Investment Option (TIO) Investments:
The TIO is an investment opportunity offered to TT&L depositaries. Treasury will frequently auction excess operating funds to participants for a fixed term and rate determined through a competitive bidding process. Term Investments are normally placed toward mid-month and mature toward end-of-month. Acceptable collateral is typically TT&L collateral and commercial loans held in a Borrower-in-Custody (BIC) arrangement. However, Treasury reserves the right to restrict acceptable collateral to TT&L collateral only.

Repurchase Agreement (Repo) Program:
The Repo Program is Treasury’s newest investment opportunity offered to TT&L depositaries. Treasury will invest excess operating funds through Reverse Repo transactions for an overnight term. Repo investments will typically occur daily at approximately 9:15 a.m. ET. Settlement is Fedwire delivery-versus-payment. Underlying securities for a Repo investment must be U.S. Treasury Bills, Notes, or Bonds. The Repo Program began as a pilot program in March 2006 and was designated a permanent program in the fall of 2007.

(from)

http://fms.treas.gov/tip/ipt/index.html

Get It Done Online – Treasury Online Services
A to Z topic Index [a – l]

http://www.ustreas.gov/get-it-done/

My Note –

Seems like an interesting game to be investing federal Treasury funds with the same people they are supposed to be regulating . . .

– cricketdiane

***

(from wikipedia entry about TARP)

This article is about the Treasury fund. For the legislative bill and subsequent law, see Public Law 110-343. For the legislative history and the events leading to the law, see Emergency Economic Stabilization Act of 2008.

The Troubled Asset Relief Program, commonly referred to as TARP, is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector. It is the largest component of the government’s measures in 2008 to address the subprime mortgage crisis.

Of the $245 billion invested in U.S. banks, over $169 billion has been paid back, including $13.7 billion in dividends, interest and other income, along with $4 billion in warrant proceeds as of April 2010. AIG is considered “on track” to pay back $51 billion from divestitures of two units and another $32 billion in securities.[4] In March 2010, GM repaid more than $2 billion to the U.S. and Canadian governments and on April 21 GM announced the entire loan portion of the U.S. and Canadian governments’ investments had been paid back in full, with interest, for a total of $8.1 billion.[5]

http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

**

TARP Program – Troubled Asset Relief Program

http://www.financialstability.gov/

04/21/2010 Statement of Treasury Secretary Geithner on Senate Agriculture Committee Passage of Financial Reform Bill

04/21/2010 GM Repays Treasury Loan in Full, TARP Repayments Reach $186 Billon

04/20/2010 Treasury Announces Voting Of Its Shares At Citigroup Annual Meeting

12/18/2009 Fannie Mae and Freddie Mac Announce New Executive Compensation Reforms –>

04/22/2010 Deputy Secretary Neal S. Wolin Remarks at the International Swaps and Derivatives Association 25th Annual Meeting As Prepared for Delivery

04/22/2010 Assistant Secretary Herb Allison Testimony Before the House Subcommittee on Financial Services

04/20/2010 Geithner Written Testimony before the House Financial Services Committee

***

Anti-cartel enforcement is a key focus of competition law enforcement policy. In the US the Antitrust Criminal Penalty Enhancement and Reform Act 2004 raised the maximum imprisonment term for price fixing from three to ten years, and the maximum fine from $10 to $100 million.[64]

These actions complement the private enforcement which has always been an important feature of United States antitrust law. The United States Supreme Court summarised why Congress allows punitive damages in Hawaii v. Standard Oil Co. of Cal.:[65]
“     Every violation of the antitrust laws is a blow to the free-enterprise system envisaged by Congress. This system depends on strong competition for its health and vigor, and strong competition depends, in turn, on compliance with antitrust legislation. In enacting these laws, Congress had many means at its disposal to penalize violators. It could have, for example, required violators to compensate federal, state, and local governments for the estimated damage to their respective economies caused by the violations. But, this remedy was not selected. Instead, Congress chose to permit all persons to sue to recover three times their actual damages every time they were injured in their business or property by an antitrust violation.     ”

http://en.wikipedia.org/wiki/Competition_policy

***

(from wikipedia entry – “Competition Policy”)

In the mean time, Art. 81 EC makes clear who the targets of competition law are in two stages with the term agreement “undertaking”. This is used to describe almost anyone “engaged in an economic activity”,[70] but excludes both employees, who are by their “very nature the opposite of the independent exercise of an economic or commercial activity”,[71] and public services based on “solidarity” for a “social purpose”.[72] Undertakings must then have formed an agreement, developed a “concerted practice”, or, within an association, taken a decision. Like US antitrust, this just means all the same thing;[73] any kind of dealing or contact, or a “meeting of the minds” between parties.

(etc.)

and the corresponding provision under US antitrust states similarly,

“No person shall acquire, directly or indirectly, the whole or any part of the stock or other share capital… of the assets of one or more persons engaged in commerce or in any activity affecting commerce, where… the effect of such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of proxies or otherwise, may be substantially to lessen competition, or to tend to create a monopoly.[95]

What amounts to a substantial lessening of, or significant impediment to competition is usually answered through empirical study.

(also)

Then although the lists are seldom closed,[80] certain categories of abusive conduct are usually prohibited under the country’s legislation. For instance, limiting production at a shipping port by refusing to raise expenditure and update technology could be abusive.[81] Tying one product into the sale of another can be considered abuse too, being restrictive of consumer choice and depriving competitors of outlets. This was the alleged case in Microsoft v. Commission[82] leading to an eventual fine of €497 million for including its Windows Media Player with the Microsoft Windows platform. A refusal to supply a facility which is essential for all businesses attempting to compete to use can constitute an abuse.

(etc.)

http://en.wikipedia.org/wiki/Competition_policy

**

(this week)

Goldman’s Cohn to attend Obama speech-source

NEW YORK
Thu Apr 22, 2010 2:12pm BST

(Reuters) – Goldman Sachs Group Inc (GS.N) President and Chief Operating Officer Gary Cohn is expected to attend President Barack Obama’s Wall Street regulation address on Thursday

http://uk.reuters.com/article/idUKTRE63L2E420100422

**

  1. Bankers lose their luster at Davos – MarketWatch

    Jan 23, 2010 … Bankers scarce as Davos probes post-crisis dangers … CEO Lloyd Blankfein, a Davos regular before 2009, doesn’t plan to attend. Goldman President Gary Cohn, however, will be making the trip, a spokeswoman said. …
    http://www.marketwatch.com/…/bankers-lose-their-luster-at-davos-2010-01-23 – Cached

  2. Gary Cohn – News, Articles, Biography, Photos – WSJ.com

    Bankers Return to Davos. January 24, 2010 12:01 a.m. … March 30, 2009 12:01 a.m.. Gary Cohn, president of Goldman Sachs Group, talked to The Journal’s …
    topics.wsj.com/person/c/gary-d-cohn/656 – Cached – Similar

  3. Davos Too Big to Fail as Bankers Recoil in Political Backlash …

    Jan 26, 2010 … Ackermann and Sands will be the most visible bankers in Davos, … Cohn, Goldman Sachs’s president and the most senior executive attending …
    http://www.businessweek.com/…/davos-too-big-to-fail-as-bankers-recoil-in-political-backlash.html – Cached

  4. Bankers Return to Davos World Forum With a Bit Less Swagger …

    Jan 26, 2010 … Bankers are trickling back to Davos, but they will not be strutting quite the way … They will number 235, forum organizers said, a 23 percent increase from 2009. … Gary D. Cohn, will be part of a Goldman delegation. …
    http://www.nytimes.com/2010/01/26/business/global/26banks.html

(from)

http://www.google.com/search?hl=en&tbo=s&q=davos+2009+Cohn+bankers&btnG=Search&aq=f&aqi=&aql=&oq=&gs_rfai=

***

However, I was trying to find the part where at Davos, the bankers and investment firms / bank holding companies / Wall Street investors and brokers / investment bankers all got together in a room to decide amongst themselves to provide a united front against legislation of financial reforms, etc. – which was on the news at the time. I don’t remember if it was at Davos 2009 – or 2010, but it was on just about every news show when they did it.

I’ll find it . . .

I do remember one of the panels that Cohn or somebody from the US financial system was on speaking before a packed audience at Davos in 2009 among other financial experts and leaders addressing questions – it was a complete embarrassment for the US and the Wall Street view of the financial crisis and what to do about it. I’ll see if I can find that video too. It has to be seen to be fully comprehended in light of reality.

– cricketdiane

***

(from BBC News – about Davos 2010 -)

Josef Ackermann, the boss of Deutsche Bank, proposed the creation of a B20 group of business leaders, to ensure the voice of business was heard when the G20 group of leading countries met again to co-ordinate economic policies and financial regulation.

(my note, if that isn’t a cartel – I don’t know what is)

(etc.)

Some of the world’s top bankers – including those at Deutsche Bank and Barclays – indicated that they might be prepared to pay a global financial insurance levy, so that the next bank bail-out would be financed by the industry, not by taxpayers.

Both Mr Sands and Mr Ackermann warned that there would have to be a trade-off between making the financial system safer and raising the cost of, or even limiting, the availability of credit.

(and on cable news and business shows there were a parade of interviews with a couple of financial / CEO people who continuously flitted around Davos and the media with those and other threats – insisting that everyone needed to treat the bankers much nicer and not assign blame to them for the mess, etc., my note))

http://news.bbc.co.uk/2/hi/8489946.stm

***

Jan. 26 (Bloomberg) — For a sign of how the mood has changed at the World Economic Forum in Davos this week, consider the speakers at an invitation-only client lunch hosted by Paul Calello, who runs Credit Suisse Group AG’s investment bank.

Last year’s panel on “Financial Market Dynamics” featured senior executives from financial companies JPMorgan Chase & Co., Blackstone Group LP, hedge fund Eton Park Capital Management and NYSE Euronext. This year clients will learn about “Leadership, Responsibility and the Recovery of the Financial System” from U.K. and Swiss regulators and Laura D’Andrea Tyson, an economics professor who has served in the U.S. government.

(etc.)

While those attending may represent banks that are too big to fail, they are not too big to keep a low profile. Citigroup Inc. CEO Vikram Pandit, Morgan Stanley Chairman John Mack and the chief executives of Credit Suisse and UBS AG won’t be speaking at any sessions listed in the official program. Bank of America Corp. CEO Brian Moynihan and Goldman Sachs President Gary Cohn are each participating on one panel.

None of them will be speaking at a session on “Redesigning Financial Regulation” on Saturday afternoon moderated by Barry Eichengreen, a professor of economics and political science at the University of California at Berkeley. That panel will include European Central Bank President Jean-Claude Trichet, the governor of the central bank of Mexico, the South African finance minister and the CEO of U.K. insurer Prudential Plc.

Financial companies continue to play a key role in the World Economic Forum, with more than 25 banks, insurers, exchanges and investment companies serving as sponsors of the annual meeting. They include Bank of America, Citigroup, JPMorgan, Goldman Sachs and Morgan Stanley, as well as the two biggest Swiss banks and HSBC Holdings Plc, Barclays Plc and Standard Chartered Plc from the U.K.

Ackermann’s Visibility

Two of the seven co-chairs of this year’s meeting run banks: Deutsche Bank AG CEO Josef Ackermann and Peter Sands, CEO of London-based Standard Chartered. Ackermann, who chairs the Institute of International Finance trade group, has positioned himself as a spokesman for the industry. He said at a conference in London last week that proposals to split up or limit the size of banks are “misguided.”

Ackermann and Sands will be the most visible bankers in Davos, with each participating in three sessions. On Jan. 30, Ackermann will take the stage as the sole private-sector executive alongside Summers, the finance minister of France, the deputy governor of the People’s Bank of China and Dominique Strauss-Kahn, managing director of the Washington, D.C.-based International Monetary Fund.

Offstage — in private sessions and dinners — bankers may wield more clout. Ackermann is one of a group of bank CEOs scheduled to take part in an “informal” Saturday morning gathering on global financial regulatory reform with central bankers and ministers, said Ackermann’s spokesman Stefan Baron.

http://www.businessweek.com/news/2010-01-26/davos-too-big-to-fail-as-bankers-recoil-in-political-backlash.html

(And particularly from this same article – )

said the University of California’s Eichengreen.

“We have transformed the banking crisis into kind of a sovereign solvency crisis by buying up a lot of private securities and auto companies and so forth,” he said. “We’ve dealt with the consequences of vaporizing $3 trillion of private demand in the U.S. by providing a lot of public demand.”

( . . . )

AND –

Looking for Goldman

Banks typically reserve hotel suites and conference rooms throughout the Alpine town to hold private meetings with clients and to host cocktail parties and invitation-only dinners. Citigroup, the bank that is 27 percent owned by the U.S. Treasury Department, will be having a cocktail party on Friday. Jon Diat, a spokesman for the bank, declined to provide details.

In a sign of how little of the action at Davos takes place at public events, only two of the seven Goldman Sachs executives attending the forum are participating in discussions on the official schedule.

“This is a client-driven event for us,” said Samuel Robinson, a company spokesman. Goldman Sachs will host “a couple of small, private dinners” that will include “a range of clients.” He declined to comment further.

The bank’s delegation includes four executives from New York, two from London and J. Michael Evans, chairman of the firm’s Asian business, who is based in Hong Kong.

Cohn, Goldman Sachs’s president and the most senior executive attending from the firm, is scheduled to participate in a panel on “Rethinking Risk in the Boardroom” that will be closed to the media. The other Goldman Sachs executive making an appearance is Dina Powell, head of corporate engagement, who will be one of 12 panelists in a discussion on Wednesday.

Her subject: how business can address rural poverty.

(from same article above – )

http://www.businessweek.com/news/2010-01-26/davos-too-big-to-fail-as-bankers-recoil-in-political-backlash.html

(bloomberg and businessweek)

January 26, 2010, 1:51 PM EST

***

My Note – Now, if they stopped creating rural poverty by the business practices they are consumed with at Goldman and other Wall Street firms – that would be a good start . . .

I’m sure Iceland, Greece, Scotland, Ireland and others would agree along with most state budget comptrollers and state school system budget stewards across the United States.

– cricketdiane

***

Dealbook Column – Bankers in Davos Seek a United Message on …

Feb 2, 2010 … Bankers in Davos Seek a United Message on Volcker Rule … until early Saturday morning at a closed-door meeting here in the Swiss Alps. …
http://www.nytimes.com/2010/02/02/business/02sorkin.html

(and – this from it -)

By ANDREW ROSS SORKIN
Published: February 1, 2010

Davos, Switzerland

For the previous few days, bankers and regulators had been shouting past one another over the Volcker Rule — President Obama’s surprising proposal to prevent commercial banks from engaging in proprietary trading and limiting their overall size — and what it would mean to the global banking system.

The bankers had gone on the offensive, with Bob Diamond, chief executive of Barclays Capital, taking the lead.

“You have to step back from the rhetoric,” he said. “I have seen no evidence to suggest that shrinking banks and making banks smaller and more narrow is the answer.” (Not all the chief executives were in agreement on that point, however. Several privately told me, as one said, that “size, by default, increases risk.” That seems a sensible assessment, but none of them contested Mr. Diamond’s point out loud.)

The more contentious discussions were around Mr. Obama’s plan to restrict proprietary trading. One hedge fund manager described the proposed rule by using more four-letter words in one sentence — as nouns and verbs — than I thought possible.

The biggest debate surrounded exactly how proprietary trading was going to be defined.

Mr. Obama had said, “Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit, unrelated to serving their customers.”

( . . . )

A senior banker put it to me more bluntly: “I can find a way to say that virtually any trade we make is somehow related to serving one of our clients. They can go ahead and impose the rule on Friday, and I can assure you that by Monday, we’ll find a way around it. Nothing will change unless the definition is ironclad.”

Indeed, in the past week and half, banks have tried to estimate their proprietary trading, with most banks suggesting that it is a minuscule part of their business. JPMorgan Chase, Morgan Stanley and others estimated it at less than 2 percent of their business; Goldman Sachs said it was under 10 percent.

But as the chief executive of a global bank said to me, knocking back a shot of vodka, “The numbers you’ve heard about don’t include all the investments we make that are related to our clients. Nobody’s talking about that. That’s a much bigger number.”

The politicians and regulators in attendance, on the other hand, started the week off with their own fiery bursts, including this from Representative Barney Frank, who didn’t win over many bankers in the audience: “I think almost every American here pays much less in taxes than you ought to,” he said. “I’m going to go back and try to raise the taxes of most of the people who attended here.”

(etc.)

And so perhaps it was surprising that by Saturday, after many of the biggest names had already flown back in their private jets (yes, many took private jets, though it is worth noting that Mr. Diamond did not, nor did George Soros nor Eric Schmidt of Google, for those of you keeping score), the beginning of an agreement started coming together.

( . . . )

http://www.nytimes.com/2010/02/02/business/02sorkin.html

***

http://www.cbsnews.com/stories/2010/01/30/business/main6157431.shtml

DAVOS, Switzerland, Jan. 30, 2010

(AP)

Government regulators from the United States and Europe laid out their financial reform plans Saturday before a skeptical banking industry, asking financiers for input but adamant that change was coming with or without their support.

Emerging from the two-hour meeting as its unofficial spokesman, U.S. Representative Barney Frank made it clear that governments were now calling the shots after spending billions to bail out the industry.

The meeting comes after days of tension at this Swiss Alpine resort over government plans for stricter controls on the financial industry to limit speculation and avoid a repeat of the 2008 meltdown that plunged the world into recession. Bankers have protested, saying the U.S. and other countries risk choking off a gradual economic recovery with regulation they see as heavy-handed.

The event was not on the forum’s official agenda, but quickly became the most significant development of the day.

“We are determined to do strong, sensible regulation,” Frank said, rejecting any notion that President Barack Obama’s administration could sink the economy again with too many new controls on the banking industry.

“That’s nonsense,” Frank told reporters. “What we’re trying globally to recover from is a total lack of regulation.”

On the government side, those at the meeting included Lawrence H. Summers, Mr. Obama’s top economic adviser, British treasury chief Alistair Darling, French Finance Minister Christine Lagarde and Jean-Claude Trichet, president of the European Central Bank, which oversees the 16-nation euro zone.

Bankers attending the private talks included Josef Ackermann, chief executive of Deutsche Bank AG, Bank of America Corp. CEO Brian Moynihan and JPMorgan Chase & Co. Chairman Jacob Frenkel.

The banks were asked for their input, Frank said, adding that he believed they got the message that tighter controls were coming.

“Frankly it doesn’t matter if they did or didn’t,” Frank said. “They aren’t in charge of this.”

(etc.)

http://www.cbsnews.com/stories/2010/01/30/business/main6157431.shtml

***

My Note –

I wish I could find that – it seems like it was on Wednesday or Thursday at Davos when the bankers in the afternoon were shown going into a room together for a private meeting and they all looked pissed as hell. I’ll keep looking but they intended to unite against and plan a strategy against whatever reforms and regulations, bonus diminishment, proprietary trading regulations, and higher funding against leverage requirements, etc. – I’ll keep looking –

– cricketdiane

***

(This one has some video – including three at the bottom of the page, one of which is titled – Bankers at Davos criticise Obama’s State of the Union speech)

http://www.france24.com/en/20100130-officials-tell-bankers-davos-regulation-coming

“If global (partners are) ready to do exit strategy, China is ready … including various issues — liquidity issue, exchange issue,” Zhu Min, deputy head of China’s central bank, told the Davos forum.

Click here to find out more!

(and from the article – )

A bust-up over US plans to curb risk-taking by banks again took centre stage on the last day of the World Economic Forum, with central bank chiefs huddling with finance ministers and officials, and top private bankers.

The banking issue has clouded the four-day Davos meeting, starting with French President Nicolas Sarkozy’s opening address in which he backed US President Barack Obama’s tough clampdown plans.

Chinese and Indian delegates have trumpeted their country’s healthy growth rates of nearly nine and seven percent respectively, and the United States hailed Friday’s unexpectedly-rosy 5.7 percent GDP growth figure.

But unemployment remains a worrying problem in the United States and Europe, which both have a jobless rate of around 10 percent, despite a return to overall growth.

“What we’re seeing in the United States is a statistical recovery and a human recession,” said Larry Summers, Obama’s chief economic advisor, commenting on the jobless recovery phenomenon.

Warnings of a double-dip recession — where nascent recovery fades back into a new slowdown — have abounded in Davos as leaders mull exit strategies from huge stimulus packages agreed to prevent a full-blown Depression last year.

(etc.)

http://www.france24.com/en/20100130-officials-tell-bankers-davos-regulation-coming

***

Davos: Bank CEOs Hold Private Meeting To Plot Resistance To Reforms

Jan 29, 2010 … Davos bankers to lobby against Obama reforms | Business | guardian . … If so, wouldn’t this meeting be illegal under the anti-trust laws if it happened in the US? …. Comments are closed for this entry …
http://www.huffingtonpost.com/…/davos-bank-ceos-hold-priv_n_441624.html

(and)

Davos: Top bankers to hold secret talks with Darling in bid to …

Jan 28, 2010 … British and American banks at a secret meeting in Davos… between London-based bankers before presenting the UK’s position … tomorrow to
business.timesonline.co.uk/tol/business/economics/wef/article7005340.ece

***

January 28, 2010

Davos: Top bankers to hold secret talks with Darling in bid to avert tough sanctions

Patrick Hosking, Helen Power and Suzy Jagger

http://business.timesonline.co.uk/tol/business/economics/wef/article7005340.ece

Alistair Darling is to meet the chiefs of top British and American banks at a secret meeting in Davos tomorrow to hear their concerns about the introduction of tough new sanctions against the banking sector.

The Times has learnt that the bosses of HSBC, Barclays and Standard Chartered, and top executives from key American banks, including JP Morgan and Morgan Stanley, will try to persuade the Chancellor that any moves to curtail the banks will have unforeseen repercussions for the global economy.

The talks will be hosted by Peter Sands, the group chief executive of Standard Chartered, one of the architects of last year’s banking bailout.

The bankers will also press the point that any perception that there could be an extension of this year’s tax on bonuses could damage London’s status as a financial capital.

(etc.)

Mr Soros defended Mr Obama’s plans to stop banks growing too big and to prevent them undertaking riskier activities such as proprietary trading and said that he had been unimpressed by the bankers’ response to it. “I think the banking community . . . is tone deaf. I think it is a very unfortunate reaction.”

Mr Soros’s broadside came minutes after three of the world’s most senior bankers had questioned the wisdom and practicalities of clamping down too fiercely on banks.

Bob Diamond, president of Barclays, argued in favour of large universal banks because they were liked and needed by big business, by governments and by large institutional investors, such as pension funds. “I’ve seen no evidence … that suggests that shrinking banks to make them smaller and narrower is effective,” he said.

Josef Ackermann, chairman of Deutsche Bank, hit out at politicians and regulators for failing to take their share of responsibility for the global financial collapse, a direct criticism of politicians that leading bankers have long held off from making.

( . . . )

http://business.timesonline.co.uk/tol/business/economics/wef/article7005340.ece

(And from among the comments – )

Ryan Baldwin wrote:
“A Banker wrote:
Another idiotic comment from another outsider who has no idea what they´re talking about. My desk risks more per day than there is gold in the world, that´s one area of one bank! The sheer stupidity of the comments regarding banks in recent times is unbelievable. I fail to understand why people are against us making money, our corporate and personal taxes only serve to increase public spending and finance your roads, hospitals, schools etc. The less we make, the less you make!”

It is not paying tax or making money that is in the public interest. It is creating wealth and exchanging it for pounds that is in the public interest in our case.

We can print any amount of money. All the money we can print though is only worth what someone is willing to exchange for it.

January 29, 2010 9:12 AM GMT

***

However, even if the ratings agencies were duped, their participation in these complex deals gives the appearance of complicity. At minimum, Goldman and its competitors had a symbiotic relationship with the ratings agencies.

When Goldman Sachs Chief Executive Lloyd Blankfein recently testified before the congressionally mandated Financial Crisis Inquiry Commission, which is looking into the causes of the financial crisis, he suggested that Wall Street banks were at the mercy of the ratings agencies.

However, in a McClatchy investigation late last year, former Moody’s officials recounted how Wall Street investment powers like Goldman played the three major ratings agencies off each other to get the ratings they needed to attract investors.

The carrot for the ratings agencies was a big reward, $1 million or more, for providing an investment grade to a complex deal.

Moody’s dominated the rating of “structured-finance products,” the general term for complex financial instruments concocted by Wall Street. Chief among these were collateralized debt obligations and mortgage-backed securities.

Both involve pools of loans, most often mortgages, which were packaged into bonds that were sold to investors. Institutional investors such as pension funds and endowments are often restricted to purchasing only investment-grade securities, so Wall Street worked feverishly to win investment grades from Moody’s or its competitors, Standard & Poor’s and Fitch.

McClatchy’s investigation documented how McDaniel promoted officials from the highflying structured finance division, and how he installed its architect Brian Clarkson as president and chief operating officer of Moody’s.

Officials who oversaw the process of giving top ratings to some of the worst deals were given top executive suites and jobs heading regulatory affairs and compliance.

During this era, former Moody’s executives said, ratings quality eroded as analysts were under intense pressure from Clarkson and McDaniel to maintain market share and a “business-friendly” environment.

http://www.mcclatchydc.com/2010/04/20/92540/senate-to-ask-moodys-chief-why.html

My Note –

During the Senate hearings on the credit ratings agencies, there was a place during the middle set (second of the series) when the adversarial and abusive tactics used by the investment firms was described by one of the three managers of the credit ratings agencies that were testifying. That is a form of extortion by intimidation, considering that they were literally yelling on the phone at the ratings committee members, threatening, intimidating, abusive and apparently it was a common practice over the course of the hundreds of thousands of credit derivatives that were rated by the agencies for them.

That shows a pattern of behavior. Just as the bankers, ratings agencies, Wall Street investment firms and speculative futures traders in every case, engaged in those kinds of pattern of behavior. They met together in secret. They knew all the details of the deals, because their organizations were the same ones making the mergers happen for companies. They were the same ones with the inside information about what institutional investors were doing because their firms were handling or advising on those portfolios and trades, then turning around and making the same speculative position purchases for themselves in both hedging plays and short sells and large trades to benefit their own profits. Hmmm . . .

They met regularly with their competitors, even going to Davos and other similar events to meet behind closed doors intending to create and support a united front to benefit their own profits and purposes. To what end is their good in this when such a massive population, including those populations’ joint resources have been not only jeopardized by this behavior but also depleted, lost or destroyed?

– cricketdiane

**

TARP allows the United States Department of the Treasury to purchase or insure up to $700 Billion of “troubled assets”, defined as “(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.”[6]

In short, this allows the Treasury to purchase illiquid, difficult-to-value assets from banks and other financial institutions. The targeted assets can be collateralized debt obligations, which were sold in a booming market until 2007 when they were hit by widespread foreclosures on the underlying loans. TARP is intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses.

The American Bankers Association (ABA) has lobbied congress to cancel the warrants owned by taxpayers, calling them an “onerous exit fee.”[63]

Yet, if the Capital Purchase Program warrants of Goldman Sachs are representative, then the Capital Purchase Program warrants were worth between $5-to-$24 billion dollars as of May 1, 2009. Thus canceling the CPP warrants amounts to a $5-to-$24 billion dollar subsidy to the banking industry at taxpayers expense.[64]

http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

(etc.)

***

Financial crisis of 2007–2010
Late 2000s recession · 2008 G-20 Washington summit · APEC Peru 2008 · 2009 G-20 London Summit · 2009 G-20 Pittsburgh summit · APEC Singapore 2009
Specific issues
By country (or region)
Legislation and policy responses
Banking and finance
stability and reform
Stimulus and recovery

**

http://www.federalreserve.gov/

Release Date: April 21, 2010

For immediate release

The Federal Reserve Board on Wednesday announced the termination of the enforcement action listed below. Terminations of enforcement actions are listed on the Federal Reserve’s website, www.federalreserve.gov/boarddocs/enforcement, as they occur.

Heritage Bank, Topeka, Kansas
Prompt Corrective Action Directive dated March 26, 2009
Terminated April 13, 2010

Last update: April 21, 2010
(which is included in part of the document for Ameri-National Corporation below, my note)

Release Date: April 20, 2010

For immediate release

The Federal Reserve Board on Tuesday announced the execution of a Written Agreement by and between Ameri-National Corporation, Overland Park, Kansas, a registered bank holding company, and the Federal Reserve Bank of Kansas City.

A copy of the Written Agreement is attached.

Attachment (59 KB PDF)

The board of directors of Ameri shall take appropriate steps to fully utilize Ameri’s financial and managerial resources, pursuant to section 225.4(a) of Regulation Y of the Board of Governors of the Federal Reserve System (the “Board of Governors”)
(12 C.F.R. § 225.4(a)), to ensure that National Bank of Kansas City complies with the Formal Agreement entered into with the Office of the Comptroller of the Currency (the “OCC”) on May 20, 2008, and that Heritage Bank, National Association complies with the Formal Agreement entered into with the OCC on September 29, 2008, and any other supervisory action taken by the Banks’ federal regulators.
Dividends and Distributions
2. (a) Ameri shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation (the “Director”) of the Board of Governors.
(b) Ameri shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Banks without the prior written approval of the Reserve Bank.

(c) Ameri and its nonbank subsidiary shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.
(d) All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice of deferral on trust preferred securities. All requests shall contain, at a minimum, current and projected information on Ameri’s capital, earnings, and cash flow; the Banks’ capital, asset quality, earnings, and allowance for loan and lease losses (the “ALLL”); and identification of the sources of funds for the proposed payment or distribution. For requests to declare or pay dividends, Ameri must also demonstrate that the requested declaration or payment of dividends is consistent with the Board of Governors’ Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service,
4-877 at page 4-323).
Debt and Stock Redemption
3. (a) Ameri and any nonbank subsidiary shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.
(b) Ameri shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.

(excerpt from)

http://www.federalreserve.gov/newsevents/press/enforcement/enf20100420a1.pdf

***
NEW YORK (Reuters)—An analyst
at Goldman Sachs, a banker at
Merrill Lynch and a printing plant
worker were arrested, charged with
participating in an international insider
trading ring that netted $6.7
million and involved more than a
dozen people.
Authorities said the schemes involved
stealing pre-publication copies
of BusinessWeek magazine to gain advance
knowledge of share tips and persuading
an investment banker to pass
on details about upcoming mergers.
The U.S. Attorney said those under
arrest were Eugene Plotkin, a bond
analyst at Goldman Sachs Group
Inc., and Stanislav Shpigelman, a junior-
level investment banker at Merrill
Lynch & Co. Inc.
A third man, Juan Renteria, an
employee at a plant that printed BusinessWeek
magazine, was arrested
in Milwaukee. All three face insider
trading and securities fraud charges.
“These defendants developed their
sources of information in the hopes of
running that insider trading business
as a money-making machine, and for
a little while it worked, netting millions
of dollars,” said Michael Garcia,
the U.S. Attorney for the Southern
District of New York.
The case showed “there are still
some people out there even at the biggest
and best of Wall Street firms who
are motivated by greed, are willing to
put their careers and their liberties in
jeopardy,” Garcia added.
The case is linked to the arrest last
year of David Pajcin, a former Goldman
employee who allegedly made
stock trades from stolen pre-publication
copies of BusinessWeek. Pajcin
is cooperating with authorities, officials
said.
The U.S. Securities and Exchanges
Commission said the schemes were
orchestrated by Plotkin and Pajcin,
who persuaded Shpigelman to provide
tips on upcoming mergers in return
for a share of trading profits.
In a second scheme, Plotkin and
Pajcin recruited two individuals, including
Renteria, to obtain jobs at a
printing plant, steal advance copies
of BusinessWeek and tip them about
the names of companies discussed.
The arrests were the result of an
eight-month investigation that began
in early August 2005.
Plotkin, aged 26, faces a maximum
penalty of 70 years in prison; Shpigelman,
aged 23, could get up to 55
years; and Renteria, aged 20, could
be jailed for 15 years.
All three will be arraigned later on
Tuesday.
Separately, the SEC filed civil insider
trading charges against Shpigelman,
Plotkin, Renteria and a number
of people who allegedly received inside
tips. These included Pajcin’s aunt
Sonya Anticevic, a former underwear
factory worker living in Croatia.
International Scheme
Plotkin and Pajcin allegedly recruited
Merrill Lynch’s Shpigelman
to pass along inside information about
various deals at the investment bank,
in exchange for cash payments.
Plotkin and Pajcin traded stocks
based on those tips, making at least
$6.4 million in illicit gains, according
to the complaint.
The deals included Proctor & Gamble
Co.’s acquisition of Gillette Co. in
January 2005 and Adidas’ acquisition
of Reebok in August. The Adidas
deal allegedly netted them more
than $2 million in profit.
In the other scheme, Plotkin and
Pajcin allegedly bribed Renteria
and Nickolaus Shuster, employed
at a Wisconsin printing plant where
McGraw-Hill Cos. Inc.’s Business-
Week was produced, to pass along
the names of stocks favorably mentioned
in the magazine’s “Inside Wall
Street” column, on the trading day
before it hit the newsstands.
The pair traded in approximately
20 different stocks on this basis,
earning $340,000 in illicit gains, the
complaint said. These stocks included
TheStreet.com Inc., PriceSmart Inc.
and Symbol Technologies Inc.
In order to boost their combined
profits, the pair allegedly tipped off
other individuals, including two people
in Germany.
A spokesman at Merrill said:
“These allegations, if true, represent
a serious breach of trust and violation
of Merrill Lynch’s fundamental principles.
We do not tolerate or condone
insider trading. This conduct victimizes
the company and the clients
alike. It is outrageous, if true. We are
cooperating with the regulators.”

http://www.daikynguyen.com/eet/print_archive/united_states/chicago/2006/04-Apr/14/A3.pdf

**
The arrests were the result of an
eight-month investigation that began
in early August 2005.
Plotkin, aged 26, faces a maximum
penalty of 70 years in prison; Shpigelman,
aged 23, could get up to 55
years; and Renteria, aged 20, could
be jailed for 15 years.

***

My Note –

That seems way out of scale considering the billions of dollars involved in the scandals rocking bank’s shareholders, investors, pension funds and depositors, taxpayers, state revenues and budgets, endowments, trusts and other financial pools – which have sustained incredible losses –

and this –

http://www.federalreserve.gov/newsevents/press/enforcement/2010enforcement.htm

2010 Press Releases:

(from)

http://www.federalreserve.gov/newsevents/press/enforcement/2010enforcement.htm

***

Testimony by Chairman Bernanke on lessons from the failure of Lehman Brothers

http://www.federalreserve.gov/

FRB: TARP Program Information

… Print Print. Troubled Asset Relief Program (TARP) Information. The federal
banking and thrift regulatory agencies encourage all eligible …

URL: http://www.federalreserve.gov/bankinforeg/tarpinfo.htm

FRB: Federal Reserve announces final rule on senior perpetual preferred stock issued by banking holding companies to the Treasury and an interim final rule on subordinated debt issued by S-Corp and mutual bank holding companies to Treasury

… in their Tier 1 capital without restriction senior perpetual preferred stock issued
to the US Treasury Department under the Troubled Asset Relief Program (TARP …

URL: http://www.federalreserve.gov/newsevents/press/bcreg/20090522a.htm

***

***

The Reserve Bank will make up to $200 billion of loans under the TALF.

TALF loans will have a one-year term (with interest payable monthly), will be folly secured by the market value of high-quality ABS (subject to a collateral haircut), and will be non-recourse to the borrower. The term of TALF loans may be lengthened later if appropriate.

Substitution of collateral during the term of the loan will not be allowed. TALF loans will not be subject to ongoing mark-to-market or re-margining requirements.
The U.S. Treasury Department – under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008 – will provide $20 billion of credit protection to the Reserve Bank in connection with the TALF, as described below,
Eligible Collateral. Eligible collateral will include U.S. dollar-denominated ABS that have a long-term credit rating in the highest investment-grade rating category (for example, AAA) from two or more major nationally recognized statistical rating organizations (NRSROs) and do not have a long-term credit rating of below the highest investment-grade rating category from a major NRSRO.

http://www.federalreserve.gov/monetarypolicy/files/129talf.pdf

***

My Note – But aren’t they still making up those AAA ratings – is there any objective standard for what that !!!AAA!!! represents? Aren’t they still being rated by the same two corrupt companies that were making them all through the damages they helped to cause in the financial markets and economies around the world? Aren’t we still paying for their mistakes in every business, school system, state, family, community, employer and non-profit in the US and elsewhere?

Unbelievable.

– cricketdiane

***