giovedì 4 febbraio 2010

La FIAT prende i soldi e scappa

La FIAT prende i soldi e scappa all'estero

Domenico Moro, AprileOnline, 04 febbraio 2010

La FIAT prende i soldi e scappa all'estero Economia La crisi economica, soprattutto nel settore auto, è un dato di fatto, eppure per le grandi imprese è una occasione d'oro per ristrutturarsi, ridurre i salari, ed eliminare personale, utilizzando per di più gli aiuti dello Stato. A questo proposito, la Fiat rappresenta un caso emblematico. Dopo aver beneficiato nel 2009 di consistenti aiuti statali, che hanno pesato per il 40,7% sulle nuove immatricolazioni auto in Italia (675mila veicoli su un totale di 1,67 milioni), la Fiat riceverà nel 2010 un ulteriore incentivo di 300-350 milioni, come prevede il decreto che dovrebbe essere approvato a breve dal governo Berlusconi. E tutto questo senza contare i consistenti aiuti statali sotto forma di cassa integrazione, che la Fiat ha esteso a tutti gli stabilimenti in questo inizio di 2010

Fino ad oggi, la Fiat è ricorsa al ricatto: niente aiuto statale, niente mantenimento dei livelli occupazionali. Una equazione che non ha sempre funzionato, e che non ha impedito alla Fiat di ridurre costantemente la forza lavoro impiegata in Italia, aumentandola globalmente negli ultimi tre anni, caso pressoché unico tra le multinazionali dell'auto europee e Usa.
Più recentemente, nonostante i soldi pubblici ricevuti, la Fiat ha decretato la morte dello stabilimento siciliano di Termini Imerese. In effetti, come ha spiegato la Repubblica, esisteva un piano Fiat per espandere Termini e renderlo più profittevole, portandolo dal semplice assemblaggio di pezzi a sito di produzione di un maggior numero di componenti. Questo progetto, però, è stato messo da parte, ufficialmente per ragioni burocratiche legate all'impossibilità dell'uso industriale dei terreni richiesti per gli impianti.

La ragione vera è, però, un'altra. Siamo ad un passaggio di fase importante nel modello di accumulazione, che si caratterizza nel contempo per una maggiore concentrazione, attraverso fusioni e alleanze, e per un maggiore impulso alla internazionalizzazione.
Gli investimenti che dovevano andare in Sicilia sono stati dirottati in Serbia. Qui, nello stesso giorno in cui Marchionne annunciava la morte di Termini, arrivava un investimento di 100 milioni di euro, la prima tranche di un totale di 700 milioni. La nuova Fiat serba rileverà la vecchia Zastava, che produceva nel passato modelli Fiat su licenza, e sarà al 67% della Fiat e al 33% dello Stato serbo. Quindi, anche in questo caso la Fiat beneficerà di un consistente aiuto statale.

In effetti, l'abilità maggiore della multinazionale italiana si sta rivelando quella di andare in giro per il mondo a raccattare soldi pubblici, come ha fatto negli Usa, dove, attraverso l'acquisizione della Chrysler, il gruppo torinese comparteciperà agli aiuti massicci concessi da Obama al settore auto.
Mentre in Italia la Fiat licenzia, in Brasile (che è il suo primo mercato mondiale e dove pure ha ricevuto un forte sostegno pubblico) ha assunto negli ultimi tre anni 8mila addetti e in Serbia ne assumerà almeno altri mille. Un altro aspetto "strano" della situazione è che la Fiat in realtà non sta andando così male, soprattutto in confronto alle altre case automobilistiche. La Fiat, tra le prime dodici case della Ue a 27 con una quota dell'8,7%, è una delle sole quattro ad aver registrato nel 2009 un incremento delle vendite (+6,3%), portandosi al sesto posto a poche decine di migliaia di pezzi dalla GM. Solo le ultime due in classifica, la Hyundai e la Kia, hanno fatto meglio, ma con volumi assoluti non paragonabili a quelli della Fiat.

Anche in Italia la crescita delle vendite Fiat nel mese di gennaio è stata consistente, con un + 30,2%.
Il fatto è che la Fiat ha spostato la sua produzione fuori dall'Italia, dove si produce appena un terzo delle auto assorbite dal mercato interno, una quota inferiore non solo a quella di Paesi di nuova industrializzazione ma anche a quella di Paesi capitalisticamente maturi come Francia e Germania. I modelli a marchio Fiat che stanno realizzando i volumi maggiori, la 500 e la Panda, sono prodotti in Polonia ed importati in Italia. La strategia Fiat è evidente: concentrarsi sulla produzione di massa di auto economiche a livello globale e pertanto spostare quote crescenti di produzione nei Paesi in via di sviluppo. Nel 2002, secondo uno studio di Société Générale, i ricavi Fiat venivano dai mercati emergenti per il 14%, nel 2009 per il 28%, e si prevede che la percentuale salirà nei prossimi 3-5 anni al 44%. Le produzioni di auto premium a maggiore valore aggiunto, che normalmente vengono conservate nei Paesi più avanzati come accade in Germania con BMW e Mercedes, sono state abbandonate.
Due marchi prestigiosi, prima Lancia e poi Alfa Romeo, sono stati praticamente distrutti dalla rinuncia ad adeguati investimenti da parte della Fiat. Come sempre, la competizione viene affrontata dalla Fiat non con l'innovazione, ma con la riduzione dei costi.

Ma torniamo al rapporto Fiat-Stato. Secondo l'ineffabile Marchionne, fino a poco tempo fa osannato come salvatore della Patria e novello conquistador in terra americana, "Siamo il maggiore investitore in Italia, ma non abbiamo la responsabilità di governare il Paese.", intendendo con ciò che si lavava le mani di Termini. Se Marchionne, il quale come amministratore delegato percepisce annualmente la quisquilia di 3,4 milioni di euro, ha ragione a ricordare che la Fiat è una impresa privata il cui fine è la massimizzazione del profitto, non si capisce perché, anziché affidarsi al mercato, la Fiat accetti e solleciti i soldi pubblici. Per coerenza dovrebbe rifiutarli, cosa che si guarda bene dal fare.
A questo punto, è bene fare un passo indietro.

Tralasciamo il fatto che la Fiat nasce come grande agglomerato industriale grazie alle commesse statali, prima con la guerra di Libia e la Prima guerra mondiale e poi con le guerre del fascismo, e veniamo ad epoche più recenti. Negli anni 90 gli aumenti di capitale della Fiat sono stati congegnati in modo da ridurre al minimo l'impegno diretto degli Agnelli, cioè del capitale privato. Indovinate su chi si sono scaricati allora gli oneri degli investimenti? Sulle finanze pubbliche, ovvero sui lavoratori dipendenti (tra i quali sono gli operai Fiat), gli unici che pagano interamente le tasse.
Infatti, Massimo Mucchetti in "Licenziare i padroni?" ha scritto: "Nel decennio 90 lo stato italiano ha dato al gruppo Fiat un po' più di 10 miliardi di lire e ne ha ricavato più o meno 6500 di imposte. Nello stesso periodo, gli azionisti della Fiat hanno versato un po' meno di 4200 miliardi nelle casse sociali sotto forma di aumento di capitale e ne hanno ritirati quasi 5700 sotto forma di dividendi.

Nel rapporto tra Stato e azionisti è chiaro chi ha dato e chi ha preso. (...) Nondimeno è curioso che i due terzi dei mezzi freschi immessi dalla Fiat negli ultimi dieci anni provenga dallo stato." No, per la verità non è affatto curioso, si tratta di un andazzo storico, che si ripete ancora oggi allorché la Fiat, da una parte, licenzia e prende soldi dallo Stato e, dall'altra parte, distribuisce un dividendo di 237 milioni ai suoi azionisti. All'estero le cose non vanno esattamente nello stesso modo. In Francia, ad esempio, la Renault è stata costretta dal governo Sarkozy a ritornare sulla sua decisione di spostare all'estero la produzione della nuova Clio, garantendo i livelli occupazionali. La stessa garanzia ha dovuto dare la Opel a fronte degli aiuti del governo tedesco, mentre, sempre in Germania, la Daimler si è accordata con i sindacati per assicurare il mantenimento dei 37mila addetti attuali fino al 2020, rinunciando a spostare la produzione della classe C negli Usa. La presunta efficienza privata sembra non poter resistere senza la comoda rete di salvataggio pubblica. Il capitalismo reale è dappertutto questo: profitti privati con soldi pubblici.

Ma in Italia il governo e lo Stato, assumendo una posizione del tutto subalterna di fronte alla Fiat, non ottengono neanche una contropartita minima in termini occupazionali in cambio dei soldi pubblici erogati, che finiscono per finanziare soltanto l'espansionismo estero della Fiat. A maggior ragione il governo di un premier, Berlusconi, che ha tutto l'interesse a non scontentare la Fiat in vista dei giochi di riassetto del potere economico in cui è impegnato in Italia.

SOMEONE ASKED OBAMA 'THE QUESTION'!

FINALLY SOMEONE ASKED HIM THE QUESTION!
ON "ABC-TV" Monday October 12, 2009

DURING THE "NETWORK SPECIAL ON HEALTH CARE".... OBAMA WAS ASKED:
"MR PRESIDENT WILL YOU AND YOUR FAMILY GIVE UP YOUR CURRENT HEALTH CARE PROGRAM AND JOIN THE NEW 'UNIVERSAL HEALTH CARE PROGRAM' THAT THE REST OF US WILL BE ON ????"
THERE WAS A STONEY SILENCE AS OBAMA IGNORED THE QUESTION AND CHOSE NOT TO ANSWER IT !!!
IN ADDITION, A NUMBER OF SENATORS WERE ASKED THE SAME QUESTION AND THEIR RESPONSE WAS."WE WILL THINK ABOUT IT."
AND THEY DID. IT WAS ANNOUNCED TODAY ON THE NEWS THAT THE "KENNEDY HEALTH CARE BILL" WAS WRITTEN INTO THE NEW HEALTH CARE REFORM INITIATIVE ENSURING THAT THAT CONGRESS WILL BE 100% EXEMPT !
SO, THIS GREAT NEW HEALTH CARE PLAN THAT IS GOOD FOR YOU AND I... IS NOT GOOD ENOUGH FOR OBAMA, HIS FAMILY OR CONGRESS...??
WE (THE AMERICAN PUBLIC) NEED TO STOP THIS PROPOSED DEBACLE ASAP !!!!
THIS IS TOTALLY WRONG !!!!!
PERSONALLY, I CAN ONLY ACCEPT A UNIVERSAL HEALTH CARE OVERHAUL THAT EXTENDS TO EVERYONE... NOT JUST US LOWLY CITIZENS... WHILE THE WASHINGTON "ELITE" KEEP RIGHT ON WIHT THEIR GOLD-PLATED HEALTH CARE COVERAGES.
If you don't pass this around, may you enjoy his Plan!
**********************

WHAT???
The Republic has a CONSTITUTION???

Amendment 28

Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators or Representatives, and Congress shall make no law that applies to the Senators or Representatives that does not apply equally to the citizens of the United States.

Imagine what would happen if everybody passed this around?

Merrill Lynch e Dexia al centro dello scandalo

Puglia, Merrill Lynch e Dexia al centro dello scandalo sui bond
di redazione, BlueRating, 04-02-2010 10:30

La procura ha aperto un’inchiesta per truffa a capo dei due istituti, in merito alla vendita di derivati all’ente pubblico per far fronte alla ristrutturazione della Sanità.

Merrill Lynch e Dexia-Crediop sono al centro di un giallo finanziario ambientato nella regione Puglia.
Due ex funzionari degli istituti sono infatti indagati per truffa aggravata ai danni della Regione Puglia in una inchiesta della procura di Bari per una vendita di derivati all'ente regionale per far fronte a un debito della Sanità nel 2003-2004. L’ammontare del danno si aggirerebbe intorno ai 100 milioni.
La notizia è diffusa dalla stessa Procura della Repubblica di Bari, che ha il controllo dell’inchiesta avviata nel 2009 e coordinata dal pm Francesco Bretone.
L’indagine fa riferimento alla ristrutturazione del debito sanitario regionale a cura delle due banche tramite il collocamento nel biennio di bond della regione per 870 milioni.
“Il reato contestato ai rappresentanti degli istituti di credito è quello di truffa aggravata ai danni di un ente pubblico”, si legge nel rapporto della procura.

Dalle parti coinvolte invece una nota di Dexia Crediop dichiara “di non aver sottoscritto con la Regione Puglia alcuna operazione in derivati”, sottolineando inoltre di “avere tempestivamente adottato sin dal 2003 il modello organizzativo previsto dal D.lgs 231 del 2001”.
Da Merril Lynch ancora nessuna dichiarazione ufficiale, ma nei confronti dell’istituto la procura ha richiesto la misura interdittiva del divieto di stipulare contratti con la pubblica amministrazione per due anni, che sarà discussa davanti al Gip in un'udienza il 10 marzo.Gli illeciti contestati a Merrill Lynch International, con sede estera a Londra e sede legale italiana in Milano, e Dexia-Crediop Spa con sede legale in Roma, riguardano il mancato utilizzo, prima della commissione dei fatti ascritti alle persone fisiche, di “ modelli organizzativi idonei a prevenire il verificarsi dei reati”.

Nell'ambito della medesima inchiesta, il nucleo di polizia tributaria della Guardia di Finanza di Bari ha eseguito oggi un sequestro preventivo, disposto dal gip di Bari, della rata semestrale che la Regione Puglia versa nel sinking fund, circa 30 milioni di euro, nonché il sequestro per equivalente del profitto sui beni patrimoniali degli istituti di credito internazionali fino a un importo di circa 73 milioni di euro. All'epoca dei fatti assessore al Bilancio era Rocco Palese, attuale candidato Pdl alle regionali, mentre presidente della Regione era Raffaele Fitto, oggi ministro per gli Affari regionali.

Italy Seizes Bank of America, Dexia Assets

Italy Seizes Bank of America, Dexia Assets Amid Probe (Update2)

By Elisa Martinuzzi

Feb. 3 (Bloomberg) -- Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.

Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor’s office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.

The region, also known as Puglia, joins more than 519 Italian municipalities that face 990 million euros in derivatives losses, according to data compiled by the Bank of Italy. In Milan, prosecutors seized assets from four banks including JPMorgan Chase & Co. and UBS AG in April and requested they stand trial for alleged fraud. Hearings started this month.

“Italy, like other countries, is full of these examples,” said Dario Loiacono, a banking lawyer in Milan who isn’t involved in the case. “It’s the result of the unavoidable asymmetry of information between the banks and the municipal borrowers.”

Police are sequestering a further 30 million euros that the municipality was set to place in a fund managed by the banks on Feb. 6, the prosecutor said. The magistrate also asked that Charlotte, North Carolina-based Bank of America be stopped from doing business with Italian municipalities for two years. A hearing is slated for next month.

Merrill Lynch

A spokesman for Bank of America in London declined to comment. Dexia Crediop SpA doesn’t have derivatives contracts with the region, the Rome-based Dexia unit said in an e-mailed statement. An official for the bank declined further comment.

Merrill Lynch, bought by Bank of America in January 2009, managed the bond sales for Apulia in 2003 and 2004. The bank didn’t provide the municipality with appropriate information on the financing, said the prosecutor. Officials at the municipality didn’t speak English, and contracts weren’t translated into Italian.

Merrill also recommended that Apulia seek advice from an international law firm, without disclosing that Merrill itself had a long-standing business relationship with the law firm, the prosecutor said.

Prosecutors allege that when the banks arranged swaps and created a fund that invests money the region set aside to repay the bonds in 2023, they misled the region about the economic advantages of the transaction. Banks skewed the swaps to their advantage to hide fees, the prosecutor said.

Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in interest rates or weather.

The seizure of Apulia’s semi-annual repayment of the bond will neither affect the interest payments bondholders receive nor will it affect the final repayment, the prosecutor said. Apulia is rated A1 by Moody’s Investors Service, four levels below the top investment grade.

Legendary historian Eustace Mullins dies

Legendary Historian Eustace Mullins Dies

Legendary historian Eustace Mullins dies

Legendary author of hundreds of books and pamphlets demolishing the lies of warmaking mainstream media, historian Eustace Mullins died Tuesday, Feb. 2, at the home of his caretaker in a small town in Texas.



Mullins, who would have been 87 in March, suffered a stroke three weeks ago in Columbus, Ohio. He had been on an extended tour of his admirers for much of the past year, visiting and chatting with many of his thousands of fans who jumped at the chance to buy his books from him in person.

The author of such incendiary books as “Secrets of the Federal Reserve,” “Murder by Injection,” and “The Curse of Canaan,” Mullins was harrassed by the FBI for almost a half century, and had one of his books burned in Germany in the 1950s. These stories are recounted in one of his books, “A Writ for Martyrs.”

A protege of the imprisoned patriotic poet Ezra Pound, Mullins compiled a well-researched corpus of works that detailed the passage down through time of a hereditary group of banker killers who have essentially ruled the world from behind the scenes since ancient times.

“Eustace Mullins was the greatest political historian of the 20th century, and not just because he was not beholden to the power structure that deters candid reports about significant events, but because, guided by the greatest poet of the 20th century who was imprisoned for broadcasting for peace, his meticulous research eventually uncovered virtually every political secret of the last 400 years,” said Internet essayist John Kaminski of Mullins’ passing.

“It’s a pity so many people are afraid to believe what Mullins told them, because it was much more of the truth than has ever been seen in our schools or our media,” Kaminski added.

Funeral arrangements and appropriate memorial information have yet to be released.

Eustace Mullins Passes On

The Secret Holocaust

Death By The US Medical Cartel

Eustace Mullins Tells It Like It Is - Vid

Murder By Injection - Pt 1/3 - Vid

Murder By Injection - Pt 2/3 - Vid

Murder By Injection - Pt 3/3 - Vid

Mullins - Zionist Bankers Financed Hitler, Both World Wars - Vid

An Afternoon With Eustace Mullins

Listen To Eustace With Jeff - Eustace Mullins - State Of The Union - MP3

Listen To Eustace With Jeff - Eustace Mullins - Legendary Historian On The 'Campaign' & Iraq War - MP3

Listen To Eustace With Jeff - Eustace Mullins - The Two World Wars - MP3

Listen To Eustace With Jeff - Eustace Mullins - Primary Dog And Pony Show - MP3



http://en.wikipedia.org/wiki/Eustace_Mullins
http://www.whale.to/b/mullins_h.html
http://foems.multiply.com/
http://johnkaminski.info/

Chase Bank Has Left Homeowners in Limbo

comments_imageCOMMENTS: 0

How Chase Bank Has Left Homeowners in Limbo

Homeowners who may well be eligible for the mortgage loan modification program are being denied because their troubles were not deemed "permanent."
February 4, 2010 |

On the Saturday before Thanksgiving, Lesa Herron of Santa Rosa, Calif., opened a letter from Chase Home Finance (PDF). She’d been denied a permanent modification under the federal government’s loan-mod program, Chase said, because “Your hardship is not of a permanent nature.” No other reason was given.

For Herron, that was hard to understand. She was working two jobs and her mortgage payment still amounted to more than half of her income. She’d fallen two payments behind. If her money troubles were only temporary, it was news to her.

We at ProPublica reported last month that mortgage servicers are often not following the Treasury Department’s rules for the program and provided three examples. One involved another homeowner who, like Herron, had been denied a modification because his hardship was not “permanent.”

Since that story, we have found several other similar cases: homeowners who may well be eligible for the program but who were denied because their troubles were not deemed “permanent.”

The cases ProPublica found all occurred before Treasury explicitly barred such denials in December. Despite the change in guidelines, however, those homeowners are still in limbo. Some face the possibility of foreclosure.

Through interviews with housing counselors and homeowners, we found six cases in which homeowners were denied because the hardship was found not to be “permanent.” All were in November. All were denied by Chase Home Finance, JPMorgan Chase’s mortgage servicing arm.

Chase seems to be alone among the largest servicers in having used that reason for denial. It’s unclear just what criteria Chase used to judge a hardship temporary.

Housing counselors told us that homeowners denied a modification for that reason should reapply. The program does not allow homeowners to appeal denials, and housing advocates have often criticized the program for not providing an effective way to challenge servicers’ determinations.

Christine Holevas, a spokeswoman for Chase, said that the company “adapts as quickly as possible” to Treasury’s guidelines. When asked, she did not say whether Chase would review the applications of homeowners who’d been denied because their hardships were considered temporary.

As we reported last month, the largest servicers have lagged in approving homeowners for modifications. Together, those servicers account for more than 60 percent of the 3.4 million mortgages eligible for the program, but very few homeowners have been approved for lasting modifications. About 425,000 Chase customers are eligible for loan mods, according to the Treasury Department. Only a little more than 7,000 have received permanent modifications.

The Treasury Department has laid out extensive guidelines for the $75 billion program in an attempt to standardize servicers’ evaluations of applicants. When a servicer joins the program, it signs a contract that says it will abide by those guidelines. In return, the servicers receive incentive payments from the government for each modified mortgage.

To receive a modification under the program, homeowners must demonstrate that they can’t afford their mortgage payments. But Treasury’s guidelines, first issued last April and updated repeatedly since, never mentioned testing the permanence of a homeowner’s difficulties when evaluating an application. Last December, a new guideline explicitly prohibited servicers from distinguishing “between short-term and long-term hardships.”

A Treasury spokeswoman said that since the program’s launch, servicers had developed “varying interpretations of the guidelines” and that Chase’s use of the “temporary hardship” denial before the guideline update was “reasonably consistent” with the program’s rules. She said that homeowners who’d been denied for that reason can contact a hotline staffed with housing counselors for help.

It’s impossible to say how many homeowners were denied for that reason. Servicers were not required to systematically collect and report the reason for denials before December. The reporting system includes only 14 possible reasons for denial; having only a temporary hardship is not one of them. Holevas did not respond to a question about the number of denials.

Jennifer Murphy, director of servicer relations at the nonprofit Center for New York City Neighborhoods, said that she had often seen homeowners rejected for modifications because their hardships were deemed “not permanent”—both before and after the launch of the federal modification program last year. As a result, she said, she advises homeowners to state that their hardships are permanent when they apply.

ProPublica could not find an example of any of the other top three largest servicers using the same denial. Spokespeople for Wells Fargo and Citigroup’s servicing arm said they do not evaluate the duration of the hardship for the purposes of the program. A spokesperson for Bank of America gave a more general reply and said the bank follows the program’s guidelines when evaluating homeowners.

Homeowners must meet certain basic qualifications to be eligible for a modification under the program: the home must be the primary residence and the homeowner must be able to show she can’t afford the mortgage payments. If those hurdles are cleared, the servicer is supposed to run a secret formula developed by the Treasury Department to determine whether the investor would make more money modifying the loan or not. The program lowers the mortgage payments to 31 percent of the homeowner’s monthly income. If modification is likely to be more profitable, the servicer is obligated to offer the homeowner a modification.

Chase’s criteria for a “hardship ... of a permanent nature,” meanwhile, aren’t so easily explicable. The denial seems to have been applied in a range of cases. Some homeowners had been current on their payments when they applied for a modification, some were months behind. Some had been denied even a trial modification, while some had been denied after making trial payments for over half a year. The program is supposed to feature a three-month trial period before modifications are made permanent (as we’ve reported, trials frequently stretch much longer).

In the example we reported on last month, Chase told a mortgage broker named Nathan Reynolds that he’d been denied a modification because Reynolds had expressed optimism that the administration’s policies might rescue the housing market and thus boost his income. He told ProPublica that he’d likely declare bankruptcy if he didn’t receive a modification.

Yves Andre Vital, a housing counselor with Brooklyn Housing & Family Services, told ProPublica that Chase had denied one of his clients on the rationale that unemployment was only a temporary hardship.

In Lesa Herron’s case, she says a Chase employee told her she’d been denied because her gross income had not decreased since she refinanced into her loan in 2006. Herron works as an X-ray technician at a state-run center for people with developmental disabilities, but has supplemented her income by delivering pizza three nights a week for the past nine years.

Since last fall, she’d struggled to keep current on her loan, which carries a 9.5 percent interest rate and amounted to more than half of her income. But when she couldn’t cover the property tax, she fell two months behind. She was accepted to the federal program last May and was able to make the trial payments, because they’d been cut almost in half, from $3,350 to about $1,778.

Herron made six of those monthly payments before she received the denial letter for a permanent modification last November. She didn’t know what to do next. “I stopped paying my mortgage so that my family and I could get the money together to move when the bank made their next move.” She says she might try reapplying now that she knows her denial is against the federal program’s guidelines.

Paul Kiel is a reporter for ProPublica. He's written for TPMmuckraker, Talking Points Memo’s investigative reporting blog, from 2006 to 2008. TPM’s coverage of the firings of U.S. attorneys and politicization of the Department of Justice won a George Polk Award for legal reporting.

Forleo, chi era costei?

Forleo, chi era costei?
di Oliviero Beha - 04/02/2010

Fonte: Il Fatto Quotidiano

Manca un nome nelle cronache finanziarie, politiche e giudiziarie di questi giorni, che si affollano tutte insieme alla impervia attenzione del lettore (meno del telespettatore, o per niente, per i noti motivi connessi alla pre-produzione dei tg...). C'è Geronzi candidato alla presidenza delle Generali e Tronchetti-Provera a quella di Mediobanca, come omaggio al nuovo che avanza e al vecchio che si dimentica. Com'è la biografia di Geronzi? E quella di Tronchetti appena sfiorato dal caso Tavaroli-Pirelli-Telecom?

C'è il patteggiamento di Pirelli per 7 milioni di euro, c'è Ciancimino jr che rammenta benissimo i finanziamenti a Milano 2 e i rapporti di suo padre con Dell'Utri. C'è Consorte, la polemica politica con Rutelli, i rapporti con i Ds e il processo ai "furbetti del quartierino" e alla cosiddetta Bancopoli, con tanto di scalate bancarie nel 2005. C'è la baruffa parlamentare sul legittimo impedimento, la legge anti-pentiti ecc. ecc.

C'è di tutto insomma, ma non il nome dell'oggi gip di Cremona, Clementina Forleo. L'ultima volta che ne abbiamo sentito parlare è stato due mesi fa, per un incidente stradale fortunatamente non grave eppure secondo alcuni leggermente sospetto. Della Forleo non si parla più, è letteralmente scomparsa dalle cronache di ogni tipo, non si è candidata a nessun parlamento,non è in tv. Del caso rimangono solo strascichi di provvedimenti disciplinari nei suoi confronti che stanno svanendo via via, lasciando l'idea precisa a tutti coloro i quali volessero farsene un'idea che è stata letteralmente "fatta fuori", messa in condizione di non nuocere.

Ma da chi, e perché? Dalla destra o dalla sinistra? Dai vertici della magistratura o da quelli della politica o da quelli della finanza? O da tutti questi insieme? E perché? A questa domanda collegata ovviamente con le altre e con la risposta ad esse ("da tutti", non vi pare?), si può provare a rispondere con i dati.

Quando Clementina Forleo, gip a Milano, ha chiesto l'autorizzazione a indiziare per inquisirli i tre Orazi (D'Alema, Fassino e Latorre) e i tre Curiazi (Cicu, Comincioli e Luigi Grillo), intercettati telefonicamente perché chiamati da figure come Consorte o Fiorani indagati per gravi reati finanziari, c'è stato nell'estate del 2007 una specie di black-out dell'intera classe dirigente di questo Paese.

E' stato come se si fosse disvelata una delle Parche, pronta a sgomitolare i fili della degenerazione italiana ed eventualmente a farli recidere, se il giudice competente avesse reputato poi di sentenziarlo. L'epoca è quella di Berlusconi in difficoltà all'opposizione, di Prodi al governo all'ombra di D'Alema, del Pd ormai quasi in culla sulle ceneri di Ds e Margherita con la piccola remora di come fondere le rispettive sostanze (remora che vale ancora...).

Ebbene, facendosi interrogare dal giudice il trio degli Orazi naturalmente circonfusi dalla presunzione di innocenza avrebbero potuto dimostrare al Paese che "la sinistra non era come la destra", che rispettava la giustizia e i tribunali e contribuiva alla ricerca della verità. Oggi potrebbero rinfacciare a Berlusconi le sue nefandezze ad personam con ben altro vigore e credibilità. Invece letteralmente scapparono, trincerati dietro le mancate autorizzazioni delle Giunte deputate, né più né meno che se avessero avuto un "legittimo impedimento".

I tre Orazi chiesero quindi a Veltroni di assumersi la leadership del nascituro Pd, "perché di presentabile era rimasto lui solo", ovviamente meditando fin da allora su come fotterlo poi. Ma sono cose che sapete, nevvero? Mentre la Forleo che ha toccato i fili spaventando un po' tutti è "giustamente" sparita. Una lezione per lei e per noi tutti...

Chi aveva paura di Arrigo Molinari ?

Arrigo Molinari: "La mia ultima battaglia contro l'euro"

27 Settembre 2005

  • da il Giornale.it

«La mia ultima battaglia contro l’euro»

L’intervista inedita rilasciata al Giornale pochi giorni fa spiega la causa cui l’ex questore stava lavorando

La settimana scorsa «il Giornale» aveva intervistato Arrigo Molinari, in occasione dell'udienza presso il tribunale civile su due ricorsi da lui presentati contro Banca d'Italia e Banca centrale europea.

Ecco la testimonianza che stava per essere pubblicata.

Dica la verità, avvocato Molinari: anche lei ce l'ha con Fazio. Infierisce.

«Neanche per sogno. Io ce l'ho con la Banca d'Italia e con i suoi soci voraci banchieri privati».

Cos'hanno fatto di così terribile?

«Hanno divorato l'istituto centrale di Palazzo Koch, rendendolo non più arbitro e non più ente di diritto pubblico. Con un'anomalia tutta italiana».

Ai danni dei risparmiatori.

«...che adesso devono sapere esattamente come stanno le cose».

Ci aiuti a capire.

«Sta tutto scritto nei miei due ricorsi, riuniti ex articolo 700 del codice di procedura civile, contro la Banca d'Italia e la Banca centrale europea per la cosiddetta truffa del “Signoraggio“, consentita alle stesse fin dal 1992».

Ricordiamo chi era, allora, il ministro del Tesoro.

«Era un ministro sottile che ha permesso agli istituti di credito privati di impadronirsi del loro arbitro Bankitalia, e quindi di battere moneta e di prestarla allo Stato stesso con tasso di sconto a favore delle banche private».

Il “Signoraggio“ è questo?

«Il reddito da “Signoraggio“ a soggetti privati si fonda su una norma statutaria privata di una società di capitali, e quindi su un atto inidoneo e inefficace per la generalità, per cui i magistrati aditi dei tribunali di Genova, Savona e Imperia non troveranno alcun ostacolo derivante da un atto di legge. L'inesistenza di una disciplina normativa consente di accogliere i tre ricorsi senza problema di gerarchia di fonti».

Le conseguenze del “Signoraggio“?

«Rovinose per i cittadini, che si sono sempre fidati delle banche e di chi le doveva controllare».

Tutta colpa delle banche?

«Sarò più chiaro, la materia è complessa. Dunque: le banche centrali e quindi la Banca d'Italia, venuta meno la convertibilità in oro e la riserva aurea, non sono più proprietarie della moneta che emettono e su cui illecitamente e senza una normativa che glielo consente percepiscono interessi grazie al tasso di sconto, prestandolo al Tesoro».

Non si comportano bene...

«Per niente! Ora i cittadini risparmiatori sono costretti a far ricorso al tribunale per farsi restituire urgentemente il reddito da “Signoraggio“ alla collettività, a seguito dell'esproprio da parte delle banche private italiane che, con un colpo di mano, grazie a un sottile ministro che ha molte e gravi responsabilità, si sono impadronite della Banca d'Italia battendo poi moneta e togliendo la sovranità monetaria allo Stato che, inerte, dal 1992 a oggi ha consentito questa assurdità».

Un bel problema, non c'è che dire.

«Infatti. Ma voglio essere ancora più chiaro. L'emissione della moneta, attraverso il prestito, poteva ritenersi legittima quando la moneta era concepita come titolo di credito rappresentativo della Riserva e per ciò stesso convertibile in oro, a richiesta del portatore della banconota».

Poi, invece...

«Poi, cioè una volta abolita la convertibilità e la stessa Riserva anche nelle transazioni delle Banche centrali avvenuta con la fine degli accordi di Bretton Woods del 15 agosto 1971, la Banca di emissione cessa di essere proprietaria della moneta in quanto titolare della Riserva aurea».

Lei sostiene che Bankitalia si prende diritti che non può avere.

«Appunto. Prima Bankitalia, nella sua qualità di società commerciale, fino all'introduzione dell'euro in via esclusiva e successivamente a tale evento, quale promanazione nazionale della Banca centrale europea, si arroga arbitrariamente e illegalmente il diritto di percepire il reddito monetario derivante dalla differenza tra il valore nominale della moneta in circolazione, detratti i costi di produzione, in luogo dello Stato e dei cittadini italiani».

Un assurdo tutto italiano, secondo lei.

«Certamente. Sembra un assurdo, ma purtroppo è una realtà. L'euro, però, è dei cittadini italiani ed europei, e non, come sta avvenendo in Italia, della banca centrale e dei suoi soci banchieri privati».

Quasi tutto chiaro. Ma che si fa adesso?

«Farà tutto il tribunale. Dovrà chiarire se esiste una norma nazionale e/o comunitaria che consente alla Banca centrale europea, di cui le singole banche nazionali dei Paesi membri sono divenute articolazioni, di emettere denaro prestandolo e/o addebitandolo alla collettività. L'emissione va distinta dal prestito di denaro: la prima ha finalità di conio, il secondo presuppone la qualità di proprietario del bene, oggetto del prestito».

Lei, professore, ha fiducia?

«Certo. La magistratura dovrà dire basta!».


  • da repubblica.it

Ucciso a coltellate nella sua casa l'ex questore di Genova Molinari

ANDORA (SAVONA) - E' stato trovato ucciso a coltellate l'ex questore di Genova Arrigo Molinari, 73 anni. Il corpo senza vita è stato trovato stamattina nella camera da letto della sua abitazione di Andora. Sul posto, oltre ai carabinieri della compagnia di Alassio, sono arrivati il procuratore capo Vincenzo Scolastico ed il suo vice Maria Chiara Paolucci.

Arrigo Molinari da qualche anno svolgeva l'attività legale e seguiva il figlio impegnato nell'attività di albergatore e di gestore del Bingo di Imperia. L'ex questore si era occupato in passato anche del suicidio del cantante Luigi Tenco, avvenuto a Sanremo nel '67.

Fu proprio Molinari il primo ad entrare nella stanza e ad occuparsi dell'inchiesta. La settimana scorsa, proprio da una sua denuncia, erano stati rinviati a giudizio 6 tra ex direttori e direttori di istituti bancari della Riviera di Ponente con l'accusa di usura.

Imposimato: l'usura bancaria è la vera piaga

Ferdinando Imposimato: l'usura bancaria è la vera piaga dell'Italia. Occorre intervenire sulle banche per evitare che continuino a taglieggiare imprese piccole impegnate a dare lavoro. Solidarietà a queste imprese di Marsala.
(da FaceBook)

Ex-BofA chief Lewis charged with fraud.

Former Bank of America CEO Ken Lewis Charged With Fraud; It's Only A Start


On April 24, I wrote Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis.

At long last we have our first major indictment. You will be pleased to read Ex-BofA chief Lewis charged with fraud.

New York Attorney General Andrew Cuomo said Thursday it was bringing civil charges against senior Bank of America executives, including former company CEO Ken Lewis, for their role in the company's controversial purchase of Merrill Lynch.

Cuomo's office, which has been aggressively pursuing an investigation into the merger and subsequent bonuses paid to former Merrill employees, said it was charging Lewis and Bank of America's former chief financial officer Joe Price with fraud.

The lawsuit contends that the bank's management team understated the losses at Merrill in order to get shareholders to approve the deal, then subsequently overstated the firm's willingness to terminate the merger to regulators weeks later in order to get $20 billion of additional aid from the federal government.

"Bank of America and its officials defrauded the government and the taxpayers at a very difficult and sensitive time," Cuomo said at a press conference Thursday, joined by federal bailout cop Neil Barofsky, whose office aided in the investigation. "I believe that Bank of America officials exploited this fear."
One Down, Many More To Go

Geithner, Paulson, and Bernanke all deserve to be indicted as well. Paulson and Geithner are easier targets, Paulson even admitted coercion.

Here Is The List

April 24, 2009: Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis

June 26, 2009: Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America "Turd in the Punchbowl"

July 17, 2009: Paulson Admits Coercion; Where are the Indictments?

October 20, 2009: Bernanke Guilty of Coercion and Market Manipulation

January 07, 2010: Time To Indict Geithner For Securities Fraud

January 26, 2010: Questions Geithner Cannot Escape

January 28, 2010: Secret Deals Involving No One; AIG Coverup Conspiracy Unravels

Those are the big boys who need to be brought down to earth, preferably in jail where they can ponder the meaning of greed and arrogance.

Many others deserve the same fate. In case you missed it please consider

Inquiring minds note that Neil Barofsky, special inspector for the Troubled Asset Relief Program (TARP), claims Bailouts created more risk in system.

Neil Barofsky Says Handcuffs Are Coming



Barofsky Has 77 Active Fraud Cases

Please consider TARP’s Barofsky Increased Probes 41 Percent in Fourth Quarter
Investigations of misconduct related to the $700 billion Troubled Asset Relief Program expanded in the fourth quarter as the U.S. rescue fund’s watchdog increased opened cases by 41 percent.

Special Inspector General Neil Barofsky began 25 criminal and civil probes in the quarter, and had 77 total active cases, according to a quarterly report to Congress published yesterday.

Examiners are looking into possible wrongdoing linked to the financial-industry bailout, including insider trading, accounting violations, mortgage fraud, obstruction of justice and money laundering, according to the report. Barofsky didn’t identify the targets of pending investigations, though details of some cases have emerged separately.

Barofsky confirmed last week he is probing whether the Federal Reserve Bank of New York improperly limited release of information about payments to American International Group Inc.’s counterparties when the insurer was rescued.
It's time to see the New York Fed and Geithner as well, brought to their knees.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Wikisaggio sul Signoraggio

Wikisaggio sul Signoraggio

Wikisaggio sul Signoraggio

Un Blog come questo non poteva certo esimersi dal trattare un tema controverso quanto complesso quale è il signoraggio.

Ma essendo il signoraggio materia estremamente complessa da trattare, certamente non esauribile con un post di un blog, ho deciso di allestire appositamente un wiki per la stesura a più mani di un “WikiSaggio sul Signoraggio“.

Per capire di cosa si tratta ed eventualmente collaborare, clicca qui.

A tale scopo è anche stata allestita una pagina apposita dal titolo “Wiki sul Signoraggio” che sarà sempre accessibile dal menù a tendina in alto.

Buon wikisaggio a tutti!

California Banker On "Business Loan Margin Calls"

California Banker On "Business Loan Margin Calls"


I received an interesting Email from "California Banker" a few days ago regarding margin calls on businesses.

Amazingly, businesses borrow money from banks with no idea how quickly banks can shut their entire business down.

"California Banker" Writes:

Hey Mish

There’s an interesting type of Margin Call that I think we’re about to see take place in great numbers within the banking industry, specifically within the business lending units. When a bank makes a business line of credit it files a UCC-1 filing against all business assets including accounts receivable.

When a business becomes over leveraged and sales fall they begin to look like that are not going to make it financially. If a business owner fails to demonstrate how and when they can rectify the situation, usually with capital injections, the bank’s primary tool to recoup their loan outstanding is to perfect their interest in those business assets.

They will notify the accounts (clients) of that business they are perfecting their interest in those accounts and they are to pay the bank directly. The bank will also notify them, that failure to do so or paying the borrower does not relieve them of their liability to pay that account to the bank and could end up paying it twice.

At the same time, the bank will notify the borrower in this case that if he receives payment from his account receivables he’s to forward that to the bank, and to not do so is an act of fraud.

This is the business owner’s “Margin Call”. I don’t think business owners understand the recourse a bank has, why and when they will use it, and how important it is for a business to keep their business lender happy and work with the bank as much as possible. They also don’t realize that when a bank notifies their clients it raises such a stink as to their solvency; their clients might just choose to do business elsewhere and the notification itself can put a business out of business.

PS If you want you can change the word perfect to secure, as in secure their interest and securing their interest, it might read easier.
Real Case Example

I asked "California Banker" for an example. Here is one from last week.

Hi Mish

To follow up on my previous email.

I have a client who has what's called an asset based or account receivables line of credit. It's a formula driven line of credit, and as accounts receivables go higher, their availability to borrow goes up. Likewise, as receivables go down, so does their availability under the line of credit.

If the availability falls below the outstanding of the line of credit then they are required to pay down the line usually from recently collected or paid accounts.

One client had $200,000 in accounts at the end of November 2009, and by the end of December 2009 that had fallen down to $100,000. The formula then reflected they could borrow roughly $50,000 and their line of credit outstanding was roughly $100,000.

In one month they had become significantly out of compliance and required to pay the line down by $50,000. The borrower could not pay down his line of credit.

When I asked "What happened to the $100,000 you collected from the pay down in accounts?" he said he used the money to pay off personal credit card debts.

In essence, he spent the banks collateral. This is a serious red flag in the world of bank. He reflects a negative financial picture and poor character as a business owner. In our discussion, he said he was "paying off consumer debts because the credit card companies had cut his credit limits well below what he owed and they were demanding to be paid off."

What he failed to realize is that the consumer lenders had no ability to go after his business assets directly and therefore could not put him out of business. On the other hand, we as the business bank can perfect our interest in his business assets and put him out of business by doing so.

He failed to realize if he wants to stay in business it's imperative to work with his business bank and stay within compliance of the loan terms, and if you're having issues come to the bank early and discuss them.

He also failed in that he's planning on filing personal bankruptcy anyway. That would have wiped out those credit card balances and he could have used the money instead to keep a healthy relationship with his bank and maybe kept his business alive.

Today, we are preparing letters to notify his clients they must pay us directly. It's sad, but just like a real estate foreclosure, at some point you have to pull the plug and invoke the "Margin Call".
Running up personal expenses when your business is financially in trouble is unconscionable. "California Banker" tells me this client went on an expensive vacation right before this. Was this planned fraud or simple stupidity?

That is hard to say and perhaps impossible to prove. However, the result is still the same: that client just lost his business and is facing a personal bankruptcy on top of it by failing to understand the business loan margin call.

It's no secret that banks are lowering credit card limits and raising rates. Any businesses dependent on that credit and using personal lines of credit to help keep their business afloat better beware the above example. If not, they will end up personally bankrupt, and out of business as well.

Sadly, we can expect to see huge numbers of cases where people use their life savings foolishly attempting to keep a nonviable business alive. We can also expect to see huge numbers of cases where people bankrupt a viable business attempting to keep their nonviable living standards alive.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

BofA Settles With SEC, Faces New Suit

BofA Settles With SEC, Faces New Suit From New York Attorney General

The American Lawyer

February 04, 2010

Are $127 million and some oversight provisions enough to placate Judge Jed Rakoff? Last September, Rakoff ferociously rejected a proposed settlement agreement under which Bank of America would have paid $33 million fines to settle a Securities and Exchange Commission lawsuit charging the bank with failing to notify shareholders that Merrill Lynch, which BofA purchased under pressure in late 2008, was going to pay as much as $5.8 billion in employee bonuses in early 2009.

Rakoff dismissed the proposed $33 million settlement as "trivial" and "absurd," and wondered why the bank -- and ultimately its shareholders -- should pay the fine instead of the individual executives who committed the alleged disclosure violations. He even raised the possibility that BofA's outside counsel at Wachtell, Lipton, Rosen & Katz might deserve some punishment.

On Thursday, the SEC announced that the agency and BofA had struck a new proposed settlement subject to Rakoff's approval. Under the terms of this new deal, the bank would pay $150 million in fines, up from $33 million in the scuttled deal. That $150 million would be distributed to shareholders under the terms (still unannounced) of a distribution plan. The bank would also agree to a series of new oversight provisions, including: the hiring of an independent auditor and outside counsel to monitor financial statements and disclosure; a provision guaranteeing that the bank's CEO and CFO personally review all annual and merger proxy statements; and a requirement that directors on the bank's compensation committee be fully independent from the bank.

Will that be enough for Rakoff? The bank surely hopes so, as do its outside lawyers at Wachtell, Cleary Gottlieb Steen & Hamilton, and Paul, Weiss, Rifkind, Wharton & Garrison. The bank has agreed to turn over a heap of formerly privileged documents, some of which presumably include communications between BofA execs and Wachtell. (It is possible that an error in the drafting of that privilege waiver will give plaintiffs attorneys in separate shareholder cases access to those documents, though that issue is still being litigated.)

But the BofA-Merrill litigation won't die so easily. New York Attorney General Andrew Cuomo announced Thursday that his office has filed a civil suit against BofA and three former BofA executives, including departed CEO Kenneth Lewis. The suit charges BofA with various disclosure violations in relation to the Merrill deal, according to The New York Times.

This article first appeared on The Am Law Daily blog on AmericanLawyer.com.

News stories related to the World Bank and IMF

Yuan rise no panacea for others - IMF chief economist
http://www.forexyard.com/en/news/Yuan-rise-no-panacea-for-others-IMF-economist-2010-02-02T163929Z-INTERVIEW
Forex yard, 2 February 2010

IMF Proposes $100 Billion 'Green Fund'
http://blogs.wsj.com/davos/2010/01/30/imf-lifts-soros-climate-fund-idea/
Wall Street Journal, 30 January 2010

Venerdì 5 febbraio, ad Alassio, alle ore 21.00

L’illusione della società aperta: incontro con Marco Della Luna

Venerdì alla Biblioteca Deaglio una conferenza – intervista con il docente di storia e filosofia Prof. Marco Cammi sul filosofo viennese

di Albenga Corsara, pubblicato il giorno feb 4th, 2010 nelle sezioni Alassio, Cultura, Le notizie del giorno, Libri & Autori.

Venerdì 5 febbraio, ad Alassio, alle ore 21.00, nell’Auditorium della Biblioteca “R. Deaglio”, si svolgerà un nuovo appuntamento di “Parliamo di … una proposta culturale per la scuola, per l’aggiornamento, per il dibattito critico”, promossa dall’Assessorato alla Cultura e al Turismo del Comune di Alassio, in collaborazione con il Liceo Don Bosco. Ospite dell’iniziativa sarà l’avvocato e saggista Marco della Luna, che affronterà il tema “L’illusione della società aperta” e presenterà il suo ultimo libro, scritto con lo psichiatra Paolo Cioni, “Neuroschiavi” (Macroedizioni, 2009).

Il libro descrive i meccanismi di condizionamento adoperati nella storia – dal plagio religioso alla propaganda politica, dal marketing e pubblicità fino al controllo elettromagnetico – integrando il piano psicologico con quelli neurofisiologico e sociologico, ponendosi l’esigenza di studiare, comprendere e contrastare l’opera di tali mezzi, a tutela della libertà e del (possibile) benessere proprio e altrui.

Marco Della Luna, avvocato e saggista, con laurea in legge a Parma e in Psicologia a Padova si interessa soprattutto alle tecniche di dominio sociale e alla manipolazione mentale. Nel 2003 pubblica “Le Chiavi del Potere – l’Arte di legittimarsi con l’Illegalità e di restare per sempre Ricchi, Innocenti e Democratici”, presentato a Montecitorio. Nel 2005-07 scrive, insieme con Antonio Miclavez, “Euroschiavi: La banca d’Italia, la Grande Frode del Debito pubblico e i Segreti del Signoraggio”, opera in cui l’autore, tra l’altro, smaschera la falsità delle regole contabili vigenti – tassi di interesse, pressione fiscale e restrizione del credito. Sono oltre 20.000 le copie vendute di questo saggio! Instancabile oratore, Marco Della Luna, attraversa l’Italia per incontrare imprenditori, gruppi e associazioni per condividere le informazioni che ottiene grazie alle sue incessanti ricerche.

“Prosegue” dice l’Assessore alla Cultura, Monica Zioni, “il progetto realizzato in collaborazione con il Liceo Don Bosco, che ha come obiettivo quello di promuovere momenti di crescita culturale attraverso un dibattito critico. Tanti sono i personaggi che hanno aderito all’iniziativa, consentendo di approfondire temi differenti. Gli incontri, aperti a tutta la cittadinanza, sono in particolare rivolti ai giovani che partecipando potranno richiedere il credito formativo.” L’incontro con l’Avv. Marco Della Luna sarà condotto dal prof. Antonio Tassara.

Big Banks Are Feeding Like Parasites

Big Banks Are Feeding Like Parasites on the Govt.'s Money

Big bank CEOs like to trumpet free-market ideology, but they depend on the government for survival in good times and bad.
February 4, 2010 |
Wall Street bankers, along with the rest of the players in the financial industry, like to think of themselves as swashbuckling capitalists. They battle cutthroat competition with one hand and oppressive government bureaucracy with the other. In reality, the financial industry is deeply dependent on the government. Far from the rugged, go-it-alone types they wish they were, they are more like well-dressed, coddled adolescents. And this is true in good times and bad. The industry's dependency takes five main forms:

* an explicit safety net provided by government deposit insurance;
* an implicit safety net provided by "too big to fail";
* a special privilege of being the only untaxed casino;
* an open invitation to raid state and local governments for fees;
* a right to change contract terms after the fact.


These dependencies are entrenched, and, despite loud protests to the contrary, the removal of government from the financial sector is not really on the agenda. The issue up for debate is not the virtues of the free market versus government regulation. The industry wants government regulation, just not in a way that curtails its profits.

In thinking about regulation, then, we need a fuller appreciation of the industry's dependency on government. This will not tell us what to do, but it should open the
door to a debate about regulatory reform that takes up the real question: will regulation be structured in a way that advances the public interest or in a way that
allows the financial sector to profit at society's expense?

* * *
Perhaps the most important financial reform to come out of the Great Depression was federal deposit insurance under the supervision of the Federal Deposit Insurance Corporation (FDIC). The FDIC largely protects banks from the sort of runs that led to the bank failures of that era.

Banks typically keep only a small portion of their customers' deposits on reserve, and, even then, lend most of it at interest. This practice is reasonable
because customers are unlikely to want all of their money at the same time. In fact, there may be as much money deposited as withdrawn on any given day.

But if depositors become concerned about the health of the bank, they may rush to pull money out. Those at the bank first will be able to get their money. Later
arrivals will be out of luck, as the bank's reserves will be depleted. Thus, before federal deposit insurance, runs were a logical response to the fear of bank failure.

The FDIC completely changes the logic. By insuring the bank's deposits, the FDIC eliminates the incentive for depositors to rush to withdraw their money. They know that their funds (up to the insured level) are safe.

The FDIC lent an enormous amount of stability to the system, and the benefits are shared by depositors and banks alike. However, government insurance means that the market does not offer the normal discipline against risky behavior. Typically, a bank making high-risk loans must offer high interest rates in order to assuage wary depositors. But if the bank has government insurance, depositors need not worry about losing their money thanks to others' unpaid loans. Thus, insurance allows the bank to attract deposits at relatively low interest rates and still incur high risk on loans. If a bank is in financial trouble and has little of its own capital at stake, the incentive to take large risks is even greater. And its customers, who are covered by deposit insurance, have no reason to be concerned about the soundness of a bank, even if the bank ends up suffering large losses and going out of business.

The government, as the insurer, must actively regulate insured institutions so that they do not take advantage of FDIC protection. The response to the Savings and
Loans (S&Ls) crisis in the 1980s is a textbook example of what can happen when the government ignores this regulatory responsibility. Heading into that decade,
thousands of S&Ls were essentially insolvent. Instead of shutting them down-the customary response to insolvent banks-the Reagan administration encouraged them to earn their way back to solvency. Many, logically, took large risks with insured deposits. In fact, they flaunted their access to deposit insurance by offering higher interest than their competitors in order to attract more money and grow more quickly. As a result, losses more than quadrupled over the decade, eventually costing taxpayers more than $120 billion ($190 billion in current dollars).

The story of the S&Ls is not a free-market one. Banks were exploiting the deposit insurance system. The lesson is simple: if the government insures the bank's
deposits, then it must also regulate the bank. Where the government grants insurance without oversight, banks take big risks at taxpayers' expense.

In addition to monitoring risk-taking at FDIC-insured banks, the government is required to enforce minimum capital-reserve requirements. Together, these safeguards ensure that the banks' shareholders will suffer the first losses. Only then will shareholders try to prevent the bank from making overly risky bets.

Maintaining a minimum level of capital is a difficult regulatory task. At any given time, banks have a wide variety of loans on their books. Some of these loans may
be worth only a fraction of their original value, as is the case with many commercial and residential mortgages today. In principle, banks should mark these loans down to their true value so that their books represent ongoing profitability accurately and balance sheets reflect true net worth. However, banks have little
incentive to write down a bad loan before absolutely necessary-showing a loss on their books is bad for stock prices and executive bonuses. Delaying write-downs also allows banks to misrepresent their capital position. If a bank has losses equal to 10 percent of its assets (the standard capital reserve requirement), then it has no real capital, since an accurate accounting would show that the loan losses wipe out their capital.

Only if regulators oversee banks' behavior on an ongoing basis will banks disclose the true value of their bad loans. Otherwise, they will have too much incentive to hide their financial condition.

An insured bank must be a regulated bank; there is no way around this. An unregulated bank with government insurance has a license to rip off taxpayers, and
unfortunately many banks have done precisely that. In particular, recent rule changes that allow banks to use "fair value" accounting instead of market accounting in assessing the value of their assets enable banks to bury large losses.

Some argue that because deposit insurance is paid for by banks it is not a subsidy and thus does not require oversight. This is true in normal times, although not in the extreme cases like the S&L crisis, and quite likely will not prove to be completely true in the current crisis. But even in normal times, when FDIC insurance
does not act as a subsidy, the system needs regulation. If the government backed off regulation while still offering insurance, as it did with the S&Ls and is doing
to some extent now in allowing fair-value accounting, the losses and therefore the cost of the insurance would skyrocket. The low-risk actors in the industry would
bear the costs of the risky behavior of others and, in the end, the system of insurance become unworkable, as happened with the S&Ls.

Even if deposit insurance is privately provided, as is the case in some countries, government involvement is still necessary. Any insurance system that covers a
large share of a country's deposits has the implicit backing of the national government in the event of a crisis. No one would believe that the government would
let a private insurer collapse if the simultaneous failure of many banks left it insolvent. The private insurer would be acting with an implicit government guarantee. This guarantee would entail regulation in order to prevent abuse.

* * *

FDIC offers banks an explicit safety net. Several large institutions also enjoy an implicit safety net because they are "too big to fail" (TBTF). This safety net allows them to borrow money (other than insured deposits) at a lower interest rate than would otherwise be the case because lenders know that the government will back up the institutions' loans if necessary.

The implicit TBTF guarantee has become explicit in the current crisis: the government stepped in to back up debts to creditors when Bear Stearns, Fannie Mae,
Freddie Mac, and AIG became insolvent. The government had no legal obligation to honor any of the debts incurred by these companies. It justified the intervention by claiming that failure to act would cause serious damage to the financial system and the economy.

The TBTF guarantee extends well beyond this list of failed institutions. Citigroup and Bank of America would almost certainly have faced insolvency had it not been for the extraordinary measures taken by the government to support them in late 2008 and early 2009. Their status even now is questionable, with both banks operating with government guarantees for hundreds of billions of dollars of bad assets. The 2008 Troubled Asset Relief Program (TARP), coupled with access to a special FDIC loan-guarantee program and Federal Reserve lending facilities, kept several other large and troubled financial institutions alive through the worst months of the financial crisis.

In other words, the implicit TBTF guarantee is real. After it allowed the huge investment bank Lehman Brothers to collapse, the government virtually promised
that it would not allow another major financial institution to fail. Other large financial institutions took the promise seriously.

What is wrong with that? Because lenders knew that their loans to Goldman Sachs, Citigroup, Morgan Stanley, and other giants were effectively backed by the government, they offered these companies substantially lower interest rates than they offered smaller banks. While large financial institutions are always able to get funds at a somewhat lower cost than smaller institutions, the gap in the cost of funds between small and large banks grew by half a percentage point following the collapse of Lehman. Multiplied by the assets of these institutions, the increase amounts to a $33 billion-a-year subsidy at the expense of small
institutions.

There is no reason to allow banks to reach the size of the TBTF institutions. Research on size and efficiency in the banking sector usually shows that all economies of scale can be fully realized at around $50 billion in assets-Bank of America and J.P. Morgan Chase have more than $2 trillion. That banks in the United States and elsewhere have grown so large may be an indication of the benefits of greater market power, political power, and, of course, the advantage of the TBTF subsidy itself.

Subsidizing the largest financial institutions to the detriment of their smaller competitors is not a free-market policy. Two options could restore the balance: break up the large banks so that they are not recognized as TBTF, or impose regulatory penalties, such as larger reserve requirements, that roughly offset the benefits
of the TBTF guarantee. If some banks voluntarily break themselves up into smaller units to avoid the penalty, then we will know that the penalties are comparable in size to the implicit subsidy of TBTF.

* * *
Suppose the state of Nevada waived the 6.75 percent tax on gambling revenues for one casino in Las Vegas. That casino could promise better odds than its competitors and still have a larger profit margin. Wall Street financial institutions essentially enjoy this kind of advantage: they can profit from gambling opportunities unencumbered by the taxes paid on other forms of gambling.

Not all investment is gambling, of course, but most short-term trades, which comprise the vast majority of trading volume, are comparable. The payoff on a bet on
an oil future or credit default swap is, to a large extent, random. Research may help Wall Street traders make informed bets, but it helps serious gamblers at the
horse races too. A gambler who knows the stakes is still a gambler. Yet the racetrack gambler will pay 3-6 percent in taxes on her bet, and the Wall Street gambler pays none.

I use the term "gambling" seriously. Gambling may have a financial upside for the gambler, but it provides no benefit to the economy. If the gambler is successful-- as a skilled poker player may be-- he is simply taking wealth from others, not adding wealth to the economy. Short-term financial gains are similar.

A long-term investor, however, can rightfully claim that he is providing capital to businesses that increase societal wealth. And a successful long-term investor,
such as Warren Buffet, can point to many cases in which his capital allowed companies to grow. These companies presumably provide goods and services valued by society and create jobs. Of course, there are cases in which a company's growth may not be beneficial to society on the whole, but the point remains that long-term investment has the potential to benefit the economy by creating wealth.

Short-term speculation is unlikely to have this effect. For example, if a speculator correctly bets that oil futures will rise in price, she will have captured some of the gain that would have otherwise gone to the producer, which could have sold its product at a higher price. The speculator will probably also have imposed some cost on the purchaser (either an end user or another speculator) who will likely have to pay a higher price in the future than if the speculator had not been an actor in the market.

Speculators can help stabilize markets by forcing prices to adjust more quickly. But "noise traders," who act largely on rumors and focus on anticipating the behavior of other actors rather than fundamentals of supply and demand, impose a cost to the economy by moving prices away from the levels that the fundamentals suggest, thereby destabilizing markets. They make markets give out the wrong signals. If ungrounded speculation drives up a price for oil futures, oil producers might initiate drilling in areas where they will not be able to cover the extraction cost when oil prices return to a non-inflated level. The oil companies will incur losses, and the economy as a whole will suffer a waste of resources.

Distinguishing noise trading from trades based on an assessment of fundamentals is not simple. But, as a general rule, short-term trades fall into the noise
trading category more often than do longer-term trades.

If the government sought to level the playing field across casinos, it could impose a modest tax on each financial transaction. Such a tax would disproportionately affect noise trading, since short-term traders make more transactions than long-term investors. And it could lead to more efficient markets. Not only would fewer resources be wasted in carrying through the financial transactions that support the real economy, but we might see prices that more closely reflect the fundamentals of the market.

Despite being promoted by some of the world's most prominent economists, such as Nobel laureates James Tobin and Joseph Stiglitz, financial-transaction taxes have not been put on the agenda in Congress. Tax proposals have been raised far more often since the fall 2008 bailout, but the industry has moved aggressively to squash any serious discussion of the per-transaction tax.

* * *
State and local governments need a wide variety of financial services. The big actors in the industry recognize this fact and promote their products to state
and local government officials who often have little understanding of the services they are buying.

In many ways the marketing of financial services parallels the defense-procurement process: contracts and bidding are often shrouded in secrecy, and products and services are rarely standardized, so prices cannot be easily compared. In this environment political connections are extremely valuable-they often determine
whose bid wins a contract. Just as defense contractors spend large amounts of money on lobbyists with close ties to key members of Congress or the military, the financial industry spends large amounts of money developing close ties to key officials in state and local governments. These governments hire financial-
sector firms for pension-fund management, financing long-term investments such as school and road construction, and even managing the flow of spending and
tax receipts. All of these subcontracted activities offer the financial industry large opportunities for profit and breed corruption.

The current value of state and local pension funds is $2.4 trillion, with management fees and transaction costs averaging 1-2 percent a year. The revenue
generated from these funds for the financial industry is in the range of $25 billion to $50 billion a year-most of it a gift from taxpayers. Pension officials could simply put their money in a large index fund, such as Vanguard, whose mix of stocks closely tracks the overall stock market. The administrative cost of keeping money in Vanguard's main index funds is typically about 0.15 percent annually; the difference in cost for state and local governments in managing their money would be $20 to $45 billion a year.

The industry has also earned substantial fees selling state and local governments complex financial products inappropriate for public buyers. Typically, if a state
or local government wants to finance a major project, it issues a long-term bond, locking in an interest rate for perhaps 10-30 years. This way it can gradually
accumulate the money needed to repay its debt. Over the last decade, however, several major investment banks made large sums selling "auction-rate securities" to these governments.

Instead of locking in a long-term interest rate, an auction-rate security breaks up the longer period into a series of short-term loans, typically 30-90 days in duration. At the end of each period, the bond is effectively refinanced for another period. The logic is that the short-term interest rate is generally lower than the long-term interest rate, so a bond financed through successive 30 or 90 day loans may require lower interest payments than ten-year or 30-year bonds.

In 2003 J.P. Morgan Chase used this argument to sell auction-rate securities to Jefferson County, Alabama. It also paid a bribe of $235,000 to Larry Langford, the
president of the County Commission at the time. When interest rates subsequently increased, raising the cost of borrowing through auction rate securities, J.P.
Morgan tried to extract a $647 million termination fee from the county in order to excuse it from its contract. Since the bribe became public and led to a criminal conviction of Mr. Langford, Jefferson County was able to get out of this contract without paying the termination fee.

The school district of Erie, Pennsylvania had similar dealings with J.P. Morgan. The district was persuaded in 2003 to sell complex derivative instruments, called
"swaptions," with the promise of $750,000 that could be used upfront for school repairs. A swaption is essentially a bet on interest rates, with the seller taking the risk. Three years later, when interest rates took an unexpected turn, the Erie school district had to pay J.P. Morgan $2.9 million to get out of its commitments. One hundred and seven school districts in the state of Pennsylvania also became involved in the swaption business.

These sorts of deals have become common for J.P. Morgan and other major banks. They have earned billions of dollars in fees selling derivative instruments to
governments. In many instances the associated fees have little to do with markets. Large firms are preying on governments and, thereby, taxpayers. It is not clear
that any of the reform proposals currently being considered by Congress will put an end to this practice.

* * *
In our daily lives, we regularly enter into business relationships that have the character of long-term contracts. For example, most families have cable and phone service, and they pay for them on a monthly basis. Service providers, can, and often do, change the terms of these contracts. In the cases of phone, cable, and other public utilities that are subject to government regulation, changes in the terms of contracts often require the approval of a regulatory agency, which, in turn, usually requires that clear notice be given to consumers. There is no such regulation in the financial industry.

The financial industry now draws much of its income from fees and penalties charged to customers who are late with credit card payments or overdraw their checking accounts. Banks are expected to earn $38.5 billion in 2009 on overdraft fees on debit cards and checking accounts and another $20.5 billion on credit card penalties. In 2007 these fees and penalties represented almost 20 percent of the sector's before-tax profits.

In many cases customers were either not aware of the fees or they did not realize how damaging they would be. Customers are frequently charged fees about which they have never been clearly notified. For example, it is now standard practice for banks to provide overdraft protection on debit cards, whereby the bank will cover the cost of a purchase even if it exceeds the money available in the customer's account. The fee is typically six to ten dollars, so debit-card users may find themselves paying a six-dollar overdraft fee to buy a two-dollar cup of coffee. Since few people would make this purchase knowing the fees involved, the banks
obviously rely on their customers's lack of awareness about the fee. Legislation passed by Congress in the summer of 2009 requires clear notification of the fees
charged on checking accounts and credit and debit cards, although it provides the banks with nine month's grace time, during which they can continue their current practices.

Prior to this legislation, the financial industry had a green light to change unilaterally the terms of long-term contracts in a manner enormously costly for their customers. The change notification might have taken the form of a short letter or paragraph included with advertising and other items and written in language likely to confuse anyone who does not work in finance. The government tolerates this kind of deception in few, if any, other industries. There is no reason-apart from the power of the financial industry-that rate increases or changes in terms for credit cards or bank accounts should be any less clear than the notifications required of utilities.

The recent legislation should limit the extent to which banks can change terms of their contracts in deceptive and ad hoc ways. While this is viewed as government regulation by the banking industry and its allies, in other sectors of the economy, parties do not generally have the ability to change contracts unilaterally. Congress is merely attempting to restore familiar contract law to the sector.

As non-standard as bank fees and penalties may seem, they do not even approach the level of exceptionalism ensured by the bankruptcy reform that the industry
pushed through Congress in 2005. The central purpose of the bill was to make it more difficult for individuals to have debts reduced or eliminated through bankruptcy. The industry successfully framed proponents as enforcers of contracts, while the opponents, supposedly, wanted to excuse borrowers who were down on their luck.

Lenders, who had poorly judged credit risk, could just as easily be accused of running to the government for help in collecting their debts. The banks presumably
understood the risk that they were taking in making loans in the first place. They are in the business of distinguishing good credit risks from bad. A financial
institution that is unable to make such distinctions is misallocating capital. The economy would benefit if it went out of business.

But the bankruptcy reform went the other way, involving the government more deeply in the debt-collection process, thereby increasing the value of the bad loans
issued by banks and other lenders. The new law did not just apply to debt assumed after 2005, but retroactively. Borrowers who had taken out credit card
debt-loans under one set of bankruptcy rules were faced with a different, stricter, set of rules if they eventually fell on economic hardship. Again, not a story
of the free market. This is a transfer of wealth from debtors to creditors-yet another case where the banks used their political power to override market outcomes.

* * *
The debate over regulation in the financial industry has been badly distorted. The government must be directly involved in the operation of the industry, most
obviously through deposit insurance, but also through many other channels. Industry advocates want to end or weaken regulations that reduce their profits, but they are not willing to end the government supports that make their profit and survival possible.

The debate must be returned to appropriate grounds: a question of how best to structure regulation. Which regulations structure the financial industry so that it
will serve the larger economy? This means providing incentives for the industry to better serve consumers and investors, rather than providing incentives to prey
on them. There should not be large returns for writing deceptive contracts. Nor should short-term speculation be the most effective way to get rich.

The economy thrived in the three decades following World War II with a financial sector that was proportionately one-fourth of its current size. There is no reason that the financial sector should use up a larger share of the economy's resources today than it did three decades ago. Effective regulation will restore the financial sector to its proper role in the economy.

Dean Baker is co-director of the Center for Economic and Policy Research and author of the forthcoming book, Taking Economics Seriously (M.I.T. Press, 2010).