Fed 'bends' banking rules to help Bank of America & Citigroup...LINK

[Blackhatjack]

So the Fed is acting behind the scenes to help the biggest of banks stay afloat. This does not bode well for anyone.


http://money.cnn.com/2007/08/24/magazines/fortune/eavis_citigroup.fortune/?postversion=2007082417

"Fed bends rules to help two big banks

If the Federal Reserve is waiving a fundamental principle in banking regulation, the credit crunch must still be sapping the strength of America's biggest banks. Fortune's Peter Eavis documents an unusual Fed move."

MORE

[TNDemo]

1. I was looking up their safe and secure rating on bankrate

and there are so many choices for Bank of America. Which state are they headquartered in?

[Blackhatjack]

7. North Carolina .... made Carolina Panthers possible here. n/t

[NYC]

9. Address:

The principal executive offices of Bank of America Corporation (the Corporation) are located in the Bank of America Corporate Center, Charlotte, NC 28255.

http://media.corporate-ir.net/media_files/irol/71/71595/reports/2006_AR/comp_overview.html

[aquart]

2. Citigroup is being helped? Is it being audited?

No way those crooks should get a dime without seeing where every single dime has gone.

[AX10]

3. If they are bending the rules, then how secure is the FDIC?

:shrug:

[Selatius]

4. The FDIC has had to step in to keep banks connected with the sub-prime mess from FAILING.

Countrywide Financial suffered a massive run on the banks when its investments in the sub-prime mortgage market imploded. It got so bad the FDIC had to ship to them hard cash because so many thousands of their customers were trying to withdraw their deposits. The funny thing with fractional reserve banking is if the FDIC had not stepped in, they would've discovered that you have a thousand dollars in your account when only one hundred is really there with the rest loaned out, yet the books still say you've got a thousand.

[WCGreen]

10. Countywide is getting help from Bank of America....

They just bought $2 billion worth of stock in order to keep the mortgage company somewhat solvent...

[stop the bleeding]

5. serious statement here:

Sure, the temporary nature of the move makes it look slightly less serious, but the Fed didn't give a date in the letter for when this exemption will end. In addition, the sheer size of the potential lending capacity at Citigroup and Bank of America - $25 billion each - is a cause for unease.

[napi21]

6. That doesn't surprise me at all! You know all those damn CC offers

we all get in the mail ALL THE DAMN TIME? Well, lots of people take advandage of those offers, and the banks have been granting credit to thousands, of not millions of people they probably shouldn't have. Then there's all the people who had to use their cc's just to survive because they lost their job and it was the only way their family could eat! Well, those same people who can't pay their mtg. also can't pay the cc bill either!

This is going to get BAD folks, and the banks you mentioned were the biggest promoters of "YOU'VE BEEN PRE-APPROVED!!!!!!!"

[AX10]

14. It's amazing how many millions of people are "pre-approved" for..

lines of credit without a credit check.

[Blackhatjack]

8. IN the same article, Subprime hits Credit Cards Link.....

THere are very important decisions being made right this moment by financial institutions trying to predict the future of the next 6 months.

Do they crush their customer base by demanding full payment, raise all rates to the max, reap as much in fees as is possible, and foreclose RIGHT NOW before it gets even worse?

OR do they make accomodations to help people avoid too many increased payments and fees to push them over the edge, and hope the markets turn around.

That is the debate going on --and some very 'big players' are taking positions that seem to be consistent with the first option. If that is the case, we are in for a catastrophic crash in the very near future.

The number of foreclosures is accelerating at an astounding rate, with even more in the pipeline.

When credit card credit is gone along with home equity, people are really going to be left with no choice but to miss payments --and then it will 'be Katy bar the door' among creditors and debtors.

[whistle]

11. Can the Federal Reserve Bank create $254 trillion to save the banking system?

...They could but the U.S. economy would find itself in a 1923 style German Weimar Republic hyper-inflationary spiral which at its peack reduced the German currency to one trilionth its original value and that would erase the wealth of nearly all Americans.

My hunch is then the Federal Reserve Chairman Ben Bernanke is just enough of an idiot to try to do something like that.

[Blackhatjack]

12. IMHO all the recent Fed gyrations are about helping the 'big boys' recoup their losses before ...

the huge downturn hits.

So in essence it is all about a massive transfer of wealth from those in the middle and working classes to the super rich. You keep the system limping along to allow the 'big boys' who wagered way too much on continued Bush created prosperity to get themselves out of the wringer.

As soon as they reap enough assets, if the system fails they will be in a position to pick up assets for pennies on the dollar and become super-rich themselves --at the expense of the rest of the population.

[Blackhatjack]

13. This is a huge story travelling below the radar for most people...n/t

[scarletwoman]

15. I agree that it's a huge story, & really appreciate your efforts to make it visible.

There's a massive economic shit storm lurking just over the horizon, methinks.

sw

[Blackhatjack]

17. Similar in nature to a rumor like Microsoft is borrowing money to remain in business...

These are the biggest of the 'bigs.' These guys own a piece of many others, and are committed financially to backing others financially. If they are 'in need' of additional capital, this is front page worthy.

[Blackhatjack]

20. It would be really helpful to know what Bank of America and Citigroup are doing behind the scenes

How can these behemoths of the financial industry be in need of waivers from the Federal Reserve on banking regulations?

This is just a surprising revelation.

It may be slipping under the radar for most people, but those heavily invested in the stock market must be making moves in reaction to it.

[scarletwoman]

16. k & r (nt)

[DemReadingDU]

18. morning kick

[DemReadingDU]

19. morning kick