"if banks really accounted for all the losses in the home loan market, they'd all be insolvent. "

[dixiegrrrrl]

That quote came from Diana Olick in a article early this month
http://www.cnbc.com/id/35768105

which is connected to the growing evidence of Bernanke's failing attempts to hide a widening scandal:

"Remember, Bernanke said under questioning the other day that "they hid it" in response to a question about whether or not The Fed knew about the Lehman "105" repo arrangements, which appear to have been structured to intentionally mislead the public (and investors) about its liquidity position.

But in the deep of the night Financial Times published an article that resoundingly calls "BS" on that claim:

Securities and Exchange Commission and Federal Reserve officials were warned by a leading Wall Street rival that Lehman Brothers was incorrectly calculating a key measure of its financial health months before its collapse in 2008, people familiar with the matter say.
Former Merrill Lynch officials said they contacted regulators about the way Lehman measured its liquidity position for competitive reasons. The Merrill officials said they were coming under pressure from their trading partners and investors, who feared that Merrill was less ­liquid than Lehman.

Beyond the apparent perjury (which our Congress seems to ignore any time a "powerful" person commits it) there is the larger problem in that if the Chairman of The Fed has lied about this, what else has he lied about?"

Worth the read:
Keeping in mind that confidence in our banking system is crucial.....
oooops.


http://market-ticker.org/

[Warpy]

1. That's exactly why Ben Bernanke wants the minimum cash balance

rule abolished, he knows damned full well the banks are insolvent.

The alternative, the wise alternative, would be to nationalize them in the short term, pry their books fully open, jail the Rover Boys who decided to gamble with depositor money, and ease them back into the private sector only when and if strict regulation along with the reinstitution of Glass-Steagall as been accomplished and they're solvent again.

Unfortunately, Bernanke will get his way and the banks will continue to gamble and stay insolvent until the whole business collapses completely.

[dixiegrrrrl]

2. So we go out with a whimper, not a bang, eh?

[Warpy]

4. More like the "whuff!" of an implosion

that leaves us all standing around in a cloud of dust wondering what the hell just happened.

[CoffeeCat]

7. They would need a "whuff"....

...because a slow death would cause a bank run. There would be time for the American
people to get their money out of the banking system. If they get their "whuff" our
dollars go up in that "whuff" with the banks left holding onto our money.

It's like any natural disaster. A few minor earthquakes may signal that something
big is coming--and people have time to prepare. However, a 9.0 quake takes everything
with it--leaving everyone with nothing.

I'm commented in this thread about the big lie we are being sold about the banks--that
they're not insolvent and all is well. We know it's a lie, but we are left speculating
about what really lies under the rock.

It could be that 'the lie' is just a cover--so the banks get that 9.0 in one
swoop--leaving us with no warning and no tremors. Because if we have "tremors"
that means bank runs.

Just thinking out loud....

[CoffeeCat]

5. Can someone tell me...

...why these banks would want to continue on insolvent like this? If they're insolvent, there's no way out
of it, unless they get help. Why limp along--knowing that your fate is death? Why would anyone in our
government want this?

Why hide insolvency? One could guess that they're trying to avoid a complete panic. True, we would panic--but
there's no payoff for continuing on in failure with nothing positive in sight.

I don't get it. At all.

If the banks are insolvent...maybe this is a controlled demolition. Possibly, those in charge (and I don't even
know who that would be!) want an implosion at a time of their choosing.

So much mystery. The only non mystery is that THEY know what's going on, and we are being sold a pack of lies
that doesn't even resemble reality.

[Warpy]

6. Everybody's trying to paste things together to conduct business as usual

rather than take drastic and unpopular steps to make sure the system is stable in the long run.

The banks are using fancy accounting footwork to make themselves look solvent, counting assets they don't really hold like full 2005 sales prices on foreclosed housing that's being held off the market. Were they to be completely honest, the bailout would send the country into bankruptcy, so nationalization is the only rational answer.

While they're allowed to get away with accounting chicanery, everybody can pretend everything's OK. Bernanke's statement shows that he, at least, is aware that everything is not OK.

[CoffeeCat]

8. i don't understand what their endgame is...

Are they just trying to buy time, because they think they can fix all of this and work
it all out--behind the scenes?

It's pretty clear these banks are insolvent. I don't see any way out of it for them.
Unless the economy goes gangbusters, and they're able to pull out of it--they'll remain
a mess.

You just wonder what they're doing. Maybe they gambled on the economy improving, and that
things would return to previous levels. However, those levels were made possible by people
spending like drunken sailors, using credit cards, and people using their homes as ATMs and
purchasing expensive homes. That's all gone. It ain't coming back either.

It's like someone trying to hide that their home is infested with mold--hoping that nature
will take care of things. After a while, they're not going to be able to hide this anymore.

Then what?

[Warpy]

9. You're right on all counts

People who don't want to bite the bullet and shell out for new roof put out buckets and hope it doesn't rain too often, oblivious that what's happening between the roof and where the ceiling is dripping is going to cost them a lot more than a roof redone in time would.

Likewise, there's always an attempt to kludge an expensive appliance together to squeeze some more useful life out of it, hoping the kludge will fix the the thing permanently.

It never works out that way, though, and efforts toward buying time usually makes the final process of total collapse far worse when it happens.

Yes, they're hustling around trying to fix things behind the scenes. However, Bernanke put his foot in his mouth by admitting just how bad things really are behind these scenes.

[Delphinus]

18. I really like your analogy, Warpy.

It works for *SO* many things!

[pokercat999]

13. They aren't HIDING their insolvency, the are ignoring it. So is

the Fed, the FDIC and the Administration. Why? Because if they admit to it they must be closed, sold or otherwise brought back to solvency. That can't happen as it's all the banks carrying large amounts of mortgages, residential or commercial. That's most ot the 9000 banks in the U.S.! So they extend, by not foreclosing or holding foreclosed property off the market or anything they can do to avoid showing and recording the real value of their "assets" (mortgages). As long as the mortgages are "on the books" even non-performing mortgages, the mortgage can be counted at it's full or face value. The property for the mortgage is no longer marked to market so a house purchased at the top of the market for $600,000 now only worth $300,000 is still "marked" or recorded as being worth $600,000....a total lie. Their only hope would be the market comes back while they still hold the property and they become solvent or their is some other bubble they can make trillions in and cover their losses. Japan has been at this same thing for two decades....20 years of extend and pretend......we are following their lead.

Your President is fully aware of these lies and is in fact allowing them to perpetuate because he doesn't have a clue as to what to do about it either!

The only answer was to allow the banks to go into bankruptcy and mark the assets to market so the undervalued property could be cleared out and the remaining banks could return to honest business.

[CoffeeCat]

3. I'm no Rhodes Scholar...

...but the line the banks are toeing via the MSM--has been ridiculous, bizarre and contradictory.

First, the banks needed an immediate bailout to avoid some cataclysmic financial implosion. They
didn't use the money to "unfreeze the credit markets" as they said. Red flag there. What did they
do with the money? ...Major lies from the onset of this situation.

They also didn't "buy up the toxic assets" as they promised. They heavily lobbied the government to CHANGE
Federal Accounting Standards. Assets were once valued by "current market value." Now, due to changes made
a year ago, THE BANKS now decide the worth of those toxic assets, not market value. How significant is
that? Bank balance sheets include a mess of toxic assets (aka worthless junk) that are most likely overvalued
beyond measure.

I'm sick of the MSM stories about "record profits" at Bank of America, Wells Fargo and other banks. How is
this possible? When they needed that bailout, they were stricken and on the verge of collapse. Then, we
go into the Great Recession. Businesses are hanging on for dear life, they're not borrowing. Homeowners
aren't using their homes as ATMs anymore. Banks are barely lending or loaning out to anyone; and qualifying
for a home-equity loan is practically impossible. Where did these "record profits" come from? ATM fees?

None of it makes sense. Again, I'm no expert--but you'd have to be an idiot to buy the nonsense they've
been selling to us. One thing is clear--the story we're getting is fabrication. Major lies and elaborate facades
are concocted only when someone is hiding something. Something big.

It's obvious, by now, that we are being bamboozled. The question is...what is the reality? What is really
going on with the banks?

[phantom power]

10. Whatever "real" wealth is left in the world economy is being harvested.

It's quietly making its way into private numbered accounts, maybe land acquisitions, or Au/Ag.

I have a friend who likes to say that we are currently witnessing the largest clandestine transfer of wealth (a heist, if you will) in the history of mankind. I'm not altogether sure he's wrong. Among other things, it explains the current behavior of basically not fixing anything. The plutocracy knows it can't be fixed. They're just keeping the empty husk propped up as long as they can, so they can continue their harvest.

Assuming this theory is true, a corollary is that when the husk finally does collapse, the new overlords will be evident, as the ones left with all the wealth. Hope their gated communities are of the highest quality.

Anyway, it's a theory.

[dixiegrrrrl]

11. Lemme make a stab at it.

The banks were given something like 2.1 trillion dollars,in the first place.
NOT the 700 million. The law that Paulson got passed in late 2008 was that he could give away
700 million AT ONE TIME. He/Timmy have dipped into that a lot.

So, the banks get money from the Treasury, to hedge their bad bets.
They also get FREE money from the Fed discount ( overnight) window at ZERO %.
They take that money and use it to buy bets on the stock market. Remember, they are legally
"investment houses" also.
They make a profit, return the FREE loan, get another one, etc.
We know that Goldman has a front running scheme. Say you are the investor, you want to buy a 1,000 shares of xyz for 10.00 a share. Goldman buys the shares at 9.75 and sells them to you at 10.00.
Multiply that a 1,000 times a minute and you have a real profit.
So the banks pump and dump the market, they run gold leasing schemes where they lease out gold they are supposed to be keeping for other people ( BOA just got into trouble when it got caught short after a customer demanded his gold and they did not have it).
While we have been looking at their hidden asset losses, knowing they would be insolvent if they had to declare them, we have not paid much attention to their ill gotten gains and how they are gambling with the money they do not want to spend on paying down the losses.
They are like gamblers running from the loan shark, desperately trying to win the big hustle and keep the game going.
One of the games is "bet on the derivatives in both directions:.
And they are doing this world wide.
Remember that Goldman just got caught red handed ripping off Greece.
They did that to Iceland, Spain, and other countries.

I am thinking the plan is for them to move headquarters out of the country and out of jurisdiction, at some point soon. They damn near have all our money, only the retirement funds are left, and they are trying several schemes to get that.

That's my take...whadda ya think?

[westerebus]

12. As odd as this may sound...

I think the Supreme Court did us a favor. If corporations have the rights of a person / citizen then they should be prosecuted as such.

You may not lock up the shareholders per se, that doesn't preclude locking up the officers and board of trustees who "head" the corporation.

Tell the judge you didn't know you were breaking the law. Yet, you were compensated in millions of dollars for your innovation and leadership. Let a jury decide your fate.

There is no reason why the assets of those involved in a criminal venture can't have those ill gotten gains seized.

Will it shatter the market and banking system? For the TBTF, one can only hope.

Will this effect us? We already know it has.

What have we to loose? Credit? That's gone. Jobs? Gone. Retirement? About to go.

So what's going to change?

Is it time to call for the impeachment of a certain Cabinet member?

High crimes and misdemeanors are impeachable.

A certain Attorney General perhaps?

Failure to enforce the law and uphold his Constitutional duty to investigate fraud? Impeachable.

Or shall we wait for those without hope to take matters into their own hands?

Home Land Security? I want to report a domestic terrorist act. Yes, it is still happening now.

Where? Between D.C. and Wall Street.

They've stolen the economy. Can you send some one?

Hello? Hello?

[upi402]

16. +1^ We pay Holder to uphold the law

not make us victims of another hold-up. Team Obama is proving Nader right. How bad can it get? Well we're told this is a recovery, with the M3 still hidden, BushCo wars and Gitmo continued, BushCo bankster heists... we all know the story -no recovery except in the media lies and the boardrooms.

There's one party and a facade of democracy and still we're caught up in the horserace of Blue Vs. Red.
When dixiegrrl takes Geithner's job and westerbus changes chairs with Holder, THEN I'll have hope for change. Until then I have little hope of getting some spare change from my new cardboard sign business.

[westerebus]

17. If you see me in Holder's chair,

Then we've won the revolution! And that ought to keep some people up at night! Myself included!

[snot]

14. It's worth noting that, for senior management of the banks et al.,

if they keep up the appearance that the banks are more live than dead, they can continue to pay themselves huge salaries and bonuses until they've landed good jobs elsewhere.

Corporations (including banks) are not run for society's benefit, and not for their stockholders' benefit or even for their own benefit. The reality is, corporations are run by and for the benefit of senior management.

[sendero]

15. +1 n/t