and Citicorp today,
shall we??
First stop, see:
http://mparent7777-2.blogspot.com/search?q=Citibank
and
http://mparent7777-2.blogspot.com/search?q=Robert+Rubin
Here Comes the Next Big Screw Over
by bink
Rubin, of course, has long been associated with Citigroup and its subsidiaries. Shortly after leaving his post as Bill Clinton's Treasury Secretary, he brokered a deal on behalf of Citigroup that resulted in an en masse abandonment of regulations that had protected the financial services industry and its customers for decades. For his trouble, he was rewarded with a seat on the board and the title of "Chairman of the Executive Committee."
The former Secretary is a close economic advisor to Nancy Pelosi. She even brought him to Washington after the 2006 elections to lecture the incoming Freshman class on how things were done inside the Beltway, as far as economic policy was concerned.
We couldn't have Freshman Dems getting any populist ideas into their heads.
He also heads the so-called Hamilton Project, a group of influential bankers, economists and lobbyists whose job is to make sure that Democrats don't deviate from right-wing "free market" policies where Wall St. is concerned.
So what does this mean for Citigroup?
My interpretation:
Citigroup has decided that it's time to seek a political, rather than financial solution to problems resulting from the collapse of the housing bubble, the sub-prime mortgage meltdown and the global credit crunch.
Rubin's appointment is a sign that Citigroup knows it can't keep going without the help of the American taxpayer.
(And neither can the other big Wall St. institutions.)
So -- open up your wallets, folks!
I know that times are hard. Wages are stagnating and falling. Health care and insurance costs are going through the roof. You can't afford to pay your mortgage. You can't afford college tuition for your kids without taking on tens of thousands of dollars in loans. Your 401(k) account is empty. You can't save up anything to retire.
Doesn't matter.
Open up your wallets, because your about to bail out Citigroup.
(And Merrill Lynch and Bear Stears and J.P. Morgan and Goldman, Sachs.)
Robert Rubin and Enron
The New York Times reports that former Treasury Secretary Robert Rubin may take over as CEO of Citigroup on an interim basis following the departure of its current chairman, Charles O. Prince III. The article notes that Mr. Rubin's reputation may have been tarnished in recent years because he has been associated with the decisions of Mr. Prince, which have led to large loan write-offs for the bank.
In this respect, it would have also been appropriate to note Mr. Rubin's involvement with Enron. As the NYT previously reported, when the collapse of Enron was imminent, Mr. Rubin phoned a former associate at the Treasury Department to see if he would ask the credit rating agencies to delay downgrading Enron's debt. Citigroup held hundreds of millions of dollars of Enron's debt at the time.
Since there may be important ethical and legal questions surrounding Citigroup's dealings with structured investment vehicles and exotic financial instruments, this piece of Mr. Rubin's background would seem highly relevant at the moment.
--Dean Baker
One example was the way NAFTA was used to open up Mexico's banking system to foreign ownership, profiting elites on both sides of the border.
The governments of Carlos Salinas and his successor, Ernesto Zedillo--hailed in Washington as great free-market reformers--privatized government-owned banks, turning them over to business cronies, and, through NAFTA, revoked the legal ban on foreign ownership. When the banks started to fail, they were given huge government subsidies to make them attractive to transnational buyers. At the same time, the "reform" government was slashing subsidies to the poor for food and medicine.
Banamex, the country's second-largest bank, was bought by a Mexican syndicate, owned by Salinas pal Roberto Hernandez Rodriguez, for $3.2 billion and when, thanks to NAFTA, foreigners were allowed to own Mexican banks, it was resold to Citigroup for $12.5 billion. Robert Rubin negotiated the deal for Citigroup, where he had gone after leaving the Treasury Department. The Mexican government's welfare program for Citigroup and other foreign investors continues: In 2003 government subsidies to private banks (more than 85 percent of them now owned by foreigners) were almost three times those spent on roads, schools and other infrastructure.
http://www.thenation.com/doc/20060213/faux
This Rubin is a real piece of work. He fights as hard as anyone for the enrichment of himself and his cronies and yet he is treated as a beneficent wise man. One can only hope that after this neoliberal nightmare has ended, Rubin is viewed by history as just another politically connected Wall Street grifter.
By the way check this company MDFI. Their stock is set to increase because of their association with Apple iphone and Complete Care Medical. Find more about this company and stock http://www.growurmoney.com/medefile/
Tuesday, October 23, 2007
What the Citibank, et al $80B Bail-Out Fund is Trying to Avoid
Billions in equity disappear, and the people in charge do not go to jail.
---
Monday, October 22, 2007
Below is an example of what the Citibank, B of A, and J P Morgan bail-out fund are trying to circumvent the default of a SIV. From Bloomberg:
Royal Bank of Scotland Group Plc is in talks to buy the assets of Cheyne Finance Plc, the structured investment vehicle that defaulted last week.
``The action follows detailed discussions with a number of different bidders over the past few weeks and after consultation with the informal creditors' committees,'' Cheyne Finance and its receiver Deloitte & Touche LLP said today in a statement.
Cheyne Finance appointed Deloitte last month to oversee its assets after the SIV was forced to liquidate some holdings to repay maturing commercial paper. The company, which bought securities backed by home loans, had its credit ratings cut to default by Standard & Poor's last week.
SIVs have sold about $75 billion of assets since July after record U.S. home foreclosures prompted investors to avoid debt linked to mortgages. The U.S. Treasury stepped in to arrange talks between Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. to create an $80 billion fund to buy the assets.
Cheyne Finance, set up by London-based hedge fund Cheyne Capital Management Ltd., has about $7.3 billion of outstanding debt, Standard & Poor's said on Oct. 19. The value of the portfolio backing Cheyne Finance's bonds is $6.2 billion, excluding cash of $948 million, S&P said.
More than half of Cheyne Finance's holdings are mortgage- backed securities, and have a market value of 93 percent of their face value, S&P said.
Deloitte is trying to organize a restructuring of the SIV's debt or the sale of its assets.
SIVs, with $320 billion of assets, invest in securities from mortgage-backed debt to bank bonds. They finance their investments by selling commercial paper, debt that comes due in 270 days or less, and medium term notes, which mature in nine months or longer.
Wednesday, October 3, 2007
The Alarming Parallels Between 1929 and 2007
Go and read the entire thang .. it's ALL relevant, and Robert Rubin KNOWS THIS.Has deregulation left the economy at risk of another 1929-scale crash? Should the Fed keep bailing out speculators? Robert Kuttner testified yesterday before the House Financial Services Committee. |
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October 2, 2007 | web only |
Before the Committee on Financial Services
Rep. Barney Frank, Chairman
U.S. House of Representatives
Washington, D.C.
October 2, 2007
Mr. Chairman and members of the Committee:
Thank you for this opportunity. My name is Robert Kuttner. I am an economics and financial journalist, author of several books about the economy, co-editor of The American Prospect, and former investigator for the Senate Banking Committee. I have a book appearing in a few weeks that addresses the systemic risks of financial innovation coupled with deregulation and the moral hazard of periodic bailouts.
In researching the book, I devoted a lot of effort to reviewing the abuses of the 1920s, the effort in the 1930s to create a financial system that would prevent repetition of those abuses, and the steady dismantling of the safeguards over the last three decades in the name of free markets and financial innovation.
Your predecessors on the Senate Banking Committee, in the celebrated Pecora Hearings of 1933 and 1934, laid the groundwork for the modern edifice of financial regulation. I suspect that they would be appalled at the parallels between the systemic risks of the 1920s and many of the modern practices that have been permitted to seep back in to our financial markets.
*snip*
"Disentangling the Wealth Effect: a Cohort Analysis of Household Savings in the 1990s"]
*snip* ... The fact is that the economic fundamentals are sound -- if you look at the real economy of factories and farms, and internet entrepreneurs, and retailing innovation and scientific research laboratories. It is the financial economy that is dangerously unsound. And as every student of economic history knows, depressions, ever since the South Sea bubble, originate in excesses in the financial economy, and go on to ruin the real economy.
It remains to be seen whether we have dodged the bullet for now. If markets do calm down, and lower interest bail out excesses once again, then we have bought precious time. The worst thing of all would be to conclude that markets self corrected once again, and let the bubble economy continue to fester. Congress has a window in which restore prudential regulation, and we should use that window before the next crisis turns out to be a mortal one.
The most basic and alarming parallel is the creation of asset bubbles, in which the purveyors of securities use very high leverage; the securities are sold to the public or to specialized funds with underlying collateral of uncertain value; and financial middlemen extract exorbitant returns at the expense of the real economy. *snip*
A second parallel is what today we would call securitization of credit. *snip*
A third parallel is the excessive use of leverage. *snip*
The fourth parallel is the corruption of the gatekeepers.
Robert Kuttner is co-founder and co-editor of The American Prospect. He writes regularly for the magazine on political and economic issues. Bob has just completed a book, to be published in 2007, on the connection between political and economic inequality and systemic risks facing the economy. He is pursuing these issues as a distinguished senior fellow at Demos. Click here to read more about Kuttner.
Friday, September 28, 2007
What the Fed Has Done to Us
by Ron Paul
Statement before the Financial Services Committee, September 20, 2007
Mr. Chairman, the situation facing us now in the mortgage industry has its roots in the Federal Reserve's inflationary monetary policy. Without addressing the roots of the current crisis, any measures undertaken to improve the situation will be doomed to fail.
As with asset bubbles and investment manias in past history, the fuel for the current housing bubble had its origins in monetary manipulation. The housing boom was caused by the Federal Reserve's policy resulting in artificially low interest rates. Consumers, misled by low interest rates, were looking to consume, while homebuilders saw the low interest rates as a signal to build, and build they did.
One of the primary means the Federal Reserve uses to stimulate the economy is manipulation of the federal funds rate and the discount rates, which are used as benchmark rates throughout the economy. The interest rate is the price of time, as the value of a dollar today and the value of a dollar one year from now are not the same. Just like any price in the market, interest rates have an important informational signaling purpose. Government price fixing of the interest rate has the same deleterious effects as price controls in other areas.
Reduction in the interest rate has two major effects: it encourages consumption over saving; and it makes long-term, capital-intensive projects cheaper to undertake. Under Chairman Greenspan's tenure, the federal funds rate was so low that the real interest rate (that is the nominal interest rate minus inflation) was negative. With a negative real interest rate, someone who saves money will literally lose the value of that money.
The Federal Reserve continued and still continues to increase the money supply. After ceasing the publication of M3 last February, private economists have calculated that M3 has risen at an annual rate of almost 12%, which is faster than we have seen since the 1970's.
Millions of Americans now find themselves stuck in a financial quandary that is not their fault. The result of manipulation of the interest rate, money supply, and mortgage markets are the recently popped housing bubble.
Further regulation of the banking sector, of mortgage brokers, mortgage lenders, or credit-rating agencies will fail to improve the current situation, and will do nothing to prevent future real estate bubbles. Any proposed solutions which fail to take into account the economic intervention that laid the ground for the bubble are merely window dressing, and will not ease the suffering of millions of American homeowners. I urge my colleagues to strike at the root of the problem and address the Federal Reserve's inflationary monetary policy.
One example was the way NAFTA was used to open up Mexico's banking system to foreign ownership, profiting elites on both sides of the border.
The governments of Carlos Salinas and his successor, Ernesto Zedillo--hailed in Washington as great free-market reformers--privatized government-owned banks, turning them over to business cronies, and, through NAFTA, revoked the legal ban on foreign ownership. When the banks started to fail, they were given huge government subsidies to make them attractive to transnational buyers. At the same time, the "reform" government was slashing subsidies to the poor for food and medicine.
Banamex, the country's second-largest bank, was bought by a Mexican syndicate, owned by Salinas pal Roberto Hernandez Rodriguez, for $3.2 billion and when, thanks to NAFTA, foreigners were allowed to own Mexican banks, it was resold to Citigroup for $12.5 billion. Robert Rubin negotiated the deal for Citigroup, where he had gone after leaving the Treasury Department. The Mexican government's welfare program for Citigroup and other foreign investors continues: In 2003 government subsidies to private banks (more than 85 percent of them now owned by foreigners) were almost three times those spent on roads, schools and other infrastructure.
http://www.thenation.com/doc/20060213/faux
This Rubin is a real piece of work. He fights as hard as anyone for the enrichment of himself and his cronies and yet he is treated as a beneficent wise man. One can only hope that after this neoliberal nightmare has ended, Rubin is viewed by history as just another politically connected Wall Street grifter.