The Truly Unbelievable (but true!) department !!

I ran across some extremely weird, baffling and horrifying links, videos and accusations when I was in my Infragard mode. Insurance scams that were taking away all of a person's assets as a strategy was highest on the list of outrages.

But THIS, below, published on Crooks & Liars today, has me snorting dragon flames. The intimidation of poor, impoverished, effed over folks always has me breathless with RAGE. This misuse of human imagination seems to have no limits in the hands of profiteers and psychopaths/ sociopaths.

I wonder if there will be a class action suit or similar follow up.

The latest news results for Unicredit is here. I notice the fabulous Mish Shedlock is all over this story, too . . . (video below.)

Guidelines for how to protect YOURSELF if you fall into financial straits are here, too. (and please, do, read them !!) Also, a link to find a good bankruptcy attorney is here.

Debt Collection Company Was Using Fake Sheriffs, Judges and Courtroom To Scare Debtors

By Susie Madrak

Now remember, citizens, it's the people who neglected to yank out their gold fillings to pay their credit card bills after they lost their jobs who are the real bad guys here. A debt is a debt, after all, and an honorable person would go without food or shelter to pay the crooks who are collecting the money!

HARRISBURG - Attorney General Tom Corbett today announced that a consumer protection lawsuit has been filed against an Erie debt collection company accused of using deceptive tactics to mislead, confuse or coerce consumers - including the use of bogus "hearings" allegedly held in a company office that was decorated to look like a courtroom.

Corbett said the civil lawsuit was filed by the Attorney General's Bureau of Consumer Protection against Unicredit America Inc., with corporate and business offices located at 1537 West 39th St., Erie, also identified as the "Unicredit Debt Resolution Center."

"This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection," Corbett said. "Consumers also allegedly received dubious 'hearing notices' and letters - often hand-delivered by individuals who appear to be Sheriff Deputies - which implied they would be taken into custody by the Sheriff if they failed to appear at the phony court for 'hearings' or 'depositions'."

Corbett said that in conjunction with the lawsuit, the Attorney General's Office has also filed a petition for special and preliminary injunction, asking the court to freeze all Unicredit assets; prohibit the company from engaging in any debt collection; immediately cease all bogus hearings or depositions; and to provide detailed information about company bank accounts, assets and business records.

According to the lawsuit, fictitious court proceedings were used to intimidate consumers into providing access to bank accounts, making immediate payments or surrendering vehicle titles and other assets - sometimes dispatching Unicredit employees to consumers' homes in order to retrieve documents or have consumers sign payment agreements.

Corbett said Unicredit allegedly used civil subpoenas to summon consumers to an office in Erie, which included an area referred to by Unicredit employees as "the courtroom."

The fake courtroom allegedly contained furniture and decorations similar to those used in actual court offices, including a raised "bench" area where a judge would be seated; two tables and chairs in front of the "bench" for attorneys and defendants; a simulated witness stand; seating for spectators; and legal books on bookshelves. During some proceedings, an individual dressed in black was seated where observers would expect to see a judge.

Corbett said Unicredit is accused of violating Pennsylvania's Consumer Protection Law and the Fair Debt Collection Practices Act, and also failed to comply with state and Erie County court rules in order to extract payments from consumers.

Corbett urged consumers with complaints or questions related to Unicredit debt collection practices to call the Attorney General's Consumer Protection Hotline at 1-800-441-2555 or file an online consumer complaint.


More video and comments here ... all by people in investment circles so far.

And now the video you MUST WATCH> (Keiser Report No. 92)



More links (hopefully, more to follow . . .)

From the PA Attorney General's website.

Chycho> Economic events of the last 7 years, to WWIII,

chycho.com

7 of the Most Important Economic Events of the Last 7 Years: Collapsing the Economy in the Buildup to World War III

Since the year 2000, the following seven events have either caused or been the symptom of the present economic crises:

1. Year 2000: Iraq dumps the US dollar and switches to the Euro - The following article,"The Real Reasons for the Upcoming War With Iraq", which was written before the US invasion of Iraq, lays forth an argument that the war in Iraq was not just about oil but about the currency in which oil is traded. It is mandatory reading for anyone who wants to understand the basic concepts of American foreign policy, economics, and its military operations around the world. This article states that the principle reason why the United States invaded Iraq was because Saddam Hussein in the year 2000 went "ahead with its plans to stop using the U.S. dollar in its oil business" and start using the Euro.
   Iraq switching from the US Petro-dollar to the Euro meant that countries would no longer be obligated to buy oil in US dollars, so they would no longer have to maintain their US dollar reserves.
2. Since reaching a double top in the year 2001/02, the US dollar has been devalued approximately 35%.
   
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   source
   Even though Iraq dumping the US currency is no longer an issue because the United States is now occupying Iraq, many countries continue to sell the dollar, converting their reserves to other currencies. Some of these countries include: Sweden, Cuba, U.A.E., China, Russia, India, Indonesia, North Korea, Venezuela, and many more. If the tipping point has been reached, it would explain the dollars dramatic devaluation.
3. Year 2005: Rewriting the U.S. Bankruptcy Law - After years of lobbying, the “dream bill for credit card and financial service companies” finally came into effect in the United States. Two years ago the financial institutions that were preparing for the coming crash were able to lobby Congress to pass the ‘Bankruptcy Bill’. This law that took effect in 2005 created what is now widely refereed to as Debt Slavery and is “the biggest rewrite of U.S. bankruptcy law in a quarter century”.
   The Bill was conveniently introduced at a time when US household debt was at an all time high.
   
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   source
   Those who were wise enough to realize what the implications of the Bill would be declared bankruptcy before it took effect. Those unfortunates to have been caught unaware are now just realizing that corporations, who’s debts are wiped clean when they declare bankruptcy, have more rights then they do. Unfortunately, since personal bankruptcies have been surging, many people are finding out about their slave status the hard way.
4. Year 2006: Discontinuance of M3 - “On March 23, 2006, the Board of Governors of the Federal Reserve System” ceased publishing the M3 monetary aggregate. The M numbers (M1, M2, and M3) are “components of the United States money supply”, which “show the amount of dollars in circulation”.
   
   click to enlarge
   source
   “M1 is the most volatile, equivalent to cash on the loose. M2 is less volatile, equivalent to savings account deposits. M3 is least volatile, equivalent to Rich Folks Money which they park.” One of the most important things that the M numbers are used for is to measure inflation. Clearly, the data indicates that “there has been substantial money growth since 2000”.
   If there is more money in circulation then it becomes devalued. The downside of devaluing a currency is that it can cause inflation and force the government to increase interest rates, but there are positive effects.
   As the Federal Reserve states, “A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of a devaluation. First, devaluation makes the country's exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country's exports and decrease imports, and may therefore help to reduce the current account deficit.”
   However, not knowing how much money the Banks are printing means that there is no longer an accurate indication of how much currency is in circulation. This basically means that we are playing Monopoly with people who can take money out of the bank anytime they want, because they are the bank. This should be raising alarm bells across the United States the way it has done across the world, as the dumping of the US dollar by most countries indicates. After all, why would anyone want to hold on to a currency that has lost more than 67 percent in five-years relative to its peers?
5. Year 2006: Iran moves from US dollars to the Euro - At the end of 2006 Iran announced that they would “use the euro instead of the US dollar in the country's budget for the next Iranian year”. This announcement is at least an order of magnitude more significant than Saddam Hussein saying that Iraq would start selling oil in Euros.
   If the United States was willing to invade Iraq to prevent oil from being traded in any other currency then the dollar, then it would be logical to assume that they will also confront Iran regarding their plans to permanently and absolutely phase out the US dollar. The United States now finds itself between a rock and a hard place, because they will either need to invade, bomb, or enforce sanctions against Iran along with any other country that decides to stop using US dollars in their oil exports, or they will have to watch the complete collapse of their economy and the devaluing of the Federal Reserve currency known as the US dollar.
   
   click to enlarge
   source
   Where this will lead is yet to be determined but we now know that the United States is willing to sacrifice hundreds of thousands of lives, both American and foreign, and is willing to execute the leaders of sovereign countries to prevent them from switching from US dollars to the Euro.
6. Year 2006/07: Subprime Market Collapses - “Subprime lending , also called B-paper, near-prime, or second chance lending, is the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. The term also refers to paper taken on property that cannot be sold on the primary market, including loans on certain types of investment properties and certain types of self-employed individuals. Subprime lending is risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and adverse financial situations usually associated with subprime applicants.”
   In the US the competition between these lenders became so fierce that “when the rates were getting too low, they switched to competing by way of advance ratio versus selling price.”
   “In other words, if lender ‘A’ was offering 90% financing, lender ‘B’ would go to 100% financing, then lender ‘C’ would advance 100% of selling price plus costs, then to 105%, etc. We have seen the U.S. equity lenders now go to 130% of selling price, giving back 10-15% to the purchasers to help buy furniture, large electronic products, groceries, while the remaining 15-20% was eaten up in fees.”
   Why would a lender risk giving someone 130% of the value of a property, especially if the people are considered to be high risk? Fractional-reserve banking of course: A system that has been established to allow financial institutions to “loan their customers many times the sum of the credit reserves than they hold”. It’s a pyramid scheme in which everything continues to work until the bottom falls out, and the bottom has fallen out in the United States where “States have subprime exposure between 18% to 30%” and early payment defaults are rising. This problem with the subprime mortgage market is intensifying with the US and UK housing market crashes.
   The following animated documentary contains further information on our present monetary system, and is a great introduction to fractional reserve banking: Money As Debt (47:07)
   With this kind of banking system where money is created from debt, is it any wonder that the International Monetary Fund is warning that “house prices in the UK are overpriced by as much as 40 per cent and the bubble might burst” in Britain as well as several other European markets as it has in the United States.
7. Year 2007: Run on The Bank in the UK - “A bank run is a type of financial crisis. It is a panic which occurs when a large number of customers of a bank fear it is insolvent and withdraw their deposits,” and this is exactly what happened in Britain, the financial capital of the world, in September of this year.
   “The queues that formed outside Northern Rock, the country's fifth-biggest mortgage lender, represented the first bank run in Britain since 1866. The panic was prompted by the very announcement designed to prevent it. Only when the Bank of England said that it would stand by the stricken Northern Rock did depositors start to run for the exit. Attempts by Alistair Darling, the chancellor of the exchequer, to reassure savers served only to lengthen the queues of people outside branches demanding their money. The run did not stop until Mr Darling gave a taxpayer-backed guarantee on September 17th that, for the time being, all the existing deposits at Northern Rock were safe.”
   This banking crisis is not an anomaly that just became realized in the UK. Banks in the rest of Europe are also facing a crisis and all indications are that this “Force 5 economic-hurricane that just touched ground in Great Britain is headed for America and gaining strength on the way.”
   The following documentary is worth viewing to fully understand the causes and implications of what is taking place: ZEITGEIST, The Movie: Part 3 of 3 (47:05)
   
   
   

   
   
   
8. Year 2007: 52% Support U.S. Military Strike Against Iran - In the most recent Zogby Poll released October 29, the “majority of likely voters – 52% – would support a U.S. military strike to prevent Iran from building a nuclear weapon, and 53% believe it is likely that the U.S. will be involved in a military strike against Iran before the next presidential election.”
   Why would an attack on Iran be considered an economic event? Because war is the perfect consuming machine and a racket. “It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.” (Major General Smedley D. Butler, USMC)
   The US economy was on the verge of collapse before 911 and again before the invasion of Iraq, but it was saved thanks in large part to the wars. “What do the wars in Iraq and Afghanistan and the economic recovery in the United States have in common? More than one might expect, to judge from the last couple of rounds of US growth figures (2004).”
   How much did the Iraq war contribute to boasting the economy? “During the second quarter of 2003, when the war in Iraq was in full swing, some 60 per cent of the 3.3 per cent GDP growth rate was attributable to military spending.”
   “The war has been a large part of the justification for the Bush administration to run ever-widening budget deficits, and those deficits, predicated largely on military spending, have in turn pumped money into the economy and provided the stimulus that low interest rates and tax cuts, on their own, could never achieve.”
   This however has run its course and the American economy has taken a serious downturn. As it is the case with delaying the inevitable, the present economic crisis is much graver than it was pre-Iraq, hence a bigger intervention is required to rejuvenate the American economy with its cannibalistic corporate structure.
   Thanks to these wars, US debt is at historic levels, $9 trillion and counting, and all indications are that it is going to go a lot higher.
   
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   source
   So what is this ever-widening budget deficits mean? The above chart is a “projection of the US budget” for the near future. “These are the US government’s own projections—and we all know they have every incentive to accent the positive. If this is the best they can do at this point, then you know things are not just bad, they are calamitous.
   “This glimpse at the future clearly shows that the debt of the US will, in the foreseeable future, go from being a troubling yet manageable fraction of the economy to being several times the size of economy. That can’t happen without serious repercussions.
   “The US government will be spending money they don’t have, which means creating more of it out of thin air and diluting the value of all the dollars that came before. It doesn’t take a Harvard MBA to know that the kind of deficits projected above guarantee a persistently weak dollar, higher inflation and higher interest rates going forward.”
   So how does a collapsing empire as large as the United States recover from such disastrous fiscal policy? If history is any indication, a World War is the only solution. “The Great Depression ended as nations increased their production of war materials at the start of World War II. This increased production provided jobs and put large amounts of money back into circulation.” Hence in large part, WWII helped to bring about the end of the great depression.
   Unfortunately however it was not the general public that benefited from the war. “World War II spending often required a conversion of plants designed for civilian good production into military factories and back again over the 9 year period. Substantially higher federal tax rates that were paid by the majority of households imposed much stronger fiscal drags on the benefits of the spending. Finally, less of the military spending was earmarked for wages and use of locally produced inputs, which reduced the direct stimulus to the local economy.” In essence, World War II just helped to consolidate corporate assets for the privileged few.
   This attack on Iran will be nothing short of World War III which happens to be the mantra of the neocons who, with their corporate connections, would have everything to gain while the human race would have everything to lose, specially considering that this global war to save the American Empire is about to begin with the use of Nuclear weapons.
   Unwittingly, the American populace is beginning to support the Bush administration’s plans to attack Iran, but they fail to realize that the decision to start World War III is solely an economic one to prevent the banking institutions from collapsing.

So what are the implications of all this?

In a recent lecture, Seymour Hersh, an American Pulitzer Prize winning investigative journalist, stated that he feared what would happen if American citizens began to believe the propaganda from the Bush administration now that the rhetoric to attack Iran has changed from preventing Iran from acquiring nuclear weapons to stopping them from killing American troops in Iraq. He states that this change in tactics by the US administration seems to be working and Americans are starting to support an attack on Iran. As the Zogby Poll indicates, Hersh’s fears are becoming realized.

The US economy is showing signs that it is in a recession and heading for a hard landing, due in large part to the subprime crisis and the inevitable end to fractional reserve banking. Unfortunately economists believe that the short term solution to saving the banking theocracies from completely collapsing, with a crisis of this magnitude, is to wage war. However this strategy has the reverse effect, and completely collapses an economy if the war drags on by mushrooming the national debt and depleting the resources of the warring nations. This kind of economic lifeline has two major consequences: First it devastates the populace and the environment, and second it consolidates assets for the elite.

There is also one major setback to this proposal of a war with Iran: An attack on Iran would be nothing less then World War III. But then again maybe that is what the US economy needs to stay alive, a World War: The Perfect Consuming Machine. After all it was World War II that decisively ended the great depression, and since most economic indicators are worst now then they were then, it would be reasonable to assume that the United States will start World War III for nothing else then to continue the American lifestyle, maintain the banking plutocracy, and consolidate world assets into the corporate coffer.

If World War III, the minimum expected death toll for which is 200 million, is allowed to take place to save the banking institutions from collapse, then it is a true sign of corporate economic intelligence and control, however this well not resonate well with humanity, but then again, corporations are anything but human and war is everything but humane.

Posted in Economics | Politics Submitted by chycho on Sat, 2007-11-10 23:10.

Update: March 15, 2008

CARACAS (AFP) - “Venezuelan state oil giant PDVSA has decided to sign some oil contracts in euros in the face of a plummeting dollar, local media reported, citing officials.”

chycho | Sat, 2008-03-15 22:21

Bank run in the US

Unsure about the future of home-loan giant Countrywide, bank customers line up to withdraw their money.

chycho | Sat, 2008-03-01 12:55

US Debt .. let's see hoq trillion stacks up

1. Hank Says:
   March 12th, 2008 at 7:09 pm

   How big is $1 trillion? A billion is a big number, a trillion is beyond comprehension.

   A $100 note is 0.13mm thick. From this base the following figures can be calculated:

   100 x $100 notes ($10,000) = 13mm thickness

   10,000 x $100 notes ($1,000,000) = 1,300mm = 1.3 metres

   10,000,000 x $100 notes ($1 billion) = 1.3 kilometres

   10,000,000.000 x $100 notes ($1 trillion) = 1,300 kilometres

   Zimbabwe anyone?

   The US national debt is $9.4 trillion. It can’t be paid back and it will never be paid back.

Finance: The increasing economic toll on the masses

The Increasing Economic Toll On The Masses

by Jan Baughman

(Swans - March 10, 2008) In a January 28, 2008, article I criticized the upcoming $1 toll increase (to $6) for crossing the San Francisco Golden Gate Bridge, which is being proposed to counter the Transit District's $91 million budget shortfall, as it is yet another tax on the backs of the poor and the middle class to repair the city's -- and the country's -- crumbling infrastructure. What I learned next was a lesson in how we the People are being shut out of the political process as our finances are being chipped away.

As stated on the bridge Web site, "A final decision on the proposed toll increase will not be made until after receiving public input at three scheduled public open houses (February 28, March 13 and March 19) and following the formal Public Hearing on June 11, 2008. We encourage you to attend one of these meetings." [emphasis added] I added the emphasis because I decided to attend one such meeting, having never attended a public hearing and wanting to voice my objection, which I also did on their Web site -- I'll come back to that matter later.

I arrived at the Fort Mason Conference Center, Landmark Building A, promptly at 5:30 on February 28 in order to get a seat. What I encountered was not a "meeting," but a conference room lined with poster boards explaining the need for the toll increase; approximately twelve suited Transit District employees ready and willing to answer questions; and perhaps three other presumed citizens. In one corner were a couple of laptops that citizens could use to submit comments on the Golden Gate Bridge Web site. All that was missing was wine, cheese, and a string quartet. As I walked through the presentation I was approached at different times by three individuals, to whom I expressed repeatedly my opposition to the toll increase. Each listened politely and offered no counterpoint, let alone any recognition of my concern beyond one person's comment, "it's not just San Francisco's infrastructure that is in disrepair; it's the same across the whole country." I countered that we need a broad solution to the country's failing infrastructure -- for example, decreasing war spending, and increasing taxes on the corporations that are enjoying large profits at the expense of the average citizen -- not nickel and diming the citizens to compensate for budget shortfalls. "Thank you for coming, and feel free to submit a comment if you like," they all smiled.

Two of the justifications for the toll increase are that "There has been no toll increase since 2002. During that same period, the Consumer Price Index increased 15.86%, or an average of 2.64% per year," and that inflation has reduced the value of the toll since then. Never mind that "The peak income year for the bottom 90 percent of Americans was way back in 1973 -- when the average income per taxpayer (adjusted for inflation) was $33,001. That is nearly $4,000 higher than the average in 2005," as written by Bob Herbert of the New York Times and quoted by Gilles d'Aymery in an excellent exposé of the income inequality scandal.

I left after fifteen minutes, disgusted and unsatisfied. That night the local news covered the non-meeting from far outside the conference room, not exposing it for the non-event it was, and indicating that the increase was essentially a "done deal."

Back to the public comment. The week of the public non-meeting, I submitted a message on the Golden Gate Bridge Web site opposing the toll increase. Returning to the site on March 7, I learned that, Due to a technical glitch, online comments submitted between February 19 and February 29 regarding the proposed Golden Gate Bridge toll increase did not get captured into the database correctly. If you submitted a comment during that period, we ask that you take a few moments and resubmit your comments at
http://goldengate.org/feedback/tollcontactform.php.

If you are not certain when you submitted your comment, please do so again and we will verify that your comment is not duplicated. We apologize for any inconvenience and thank you for your understanding. Inconvenience, coincidence, or did the public comments fall into the political black hole that stores Dick Cheney's e-mail messages?

Last weekend, the New York Times published editorials from the former presidential candidates on the issues they'd like to see in the campaign ("What I'd Be Talking About if I Were Still Running"). It was a weak collection at best, and only 250 to 350 words from each, particularly considering that they had nothing to lose (but their establishment support, of course...). However, Christopher Dodd acknowledged that

"With every bursting pipe, potholed road and derailed train, the conclusion became inescapable: America's backbone is decaying."

Trickle-up economics is working beautifully. Individuals are going bankrupt; schools are going bankrupt; districts are going bankrupt; towns are going bankrupt; and the wealthy are getting obscenely wealthier. What is frightening to consider is that with the rigged political process and the state of disrepair in a city that is relatively progressive and where the median home price is $744,500, one can only imagine what is happening throughout the country in areas with fewer jobs, less wealth, and less political participation. And we are spending $10 billion per month on the Iraq War. To put it in perspective, at $14 million per hour, just six and a half hours of war funding would make up the Golden Gate Bridge budget shortfall... Something to ponder during the increasingly expensive few minutes it takes to cross that bridge, and the many other costly bridges that lie ahead and are falling apart.

Worth noting: Citicorp, and shuffling chairs on the Titanic

Due to this information below, given to you, don't act surprised as others will, when it suddenly merges with another bank! Banks will be increasingly go "global" as they struggle to find other currencies to keep the "liquid".

Ratings agencies are lowering their estimates of what the SIVs are worth (Citicorp 60%), but they are flying by by the seat of their pants trying to figure out just how much debt to write down when doing an assessment(s). While it seems "easier", no one ends up any closer to the TRUTH; the real assets ledger goes begging and the Enron-style accounting practices just continues. You either you know or you don't. Granted, the values of what bank holdings actually are is far less than what anyone's been told, but this guesstimate's business is part and parcel of the whole problem with lack of regulation of all sectors in the financial community which is ever so busy covering its less than professional ass. You see getting it right would entail doing something to change the "back offices" - rooting and pillaging the gamblers who've benefitted and employing competant staff who are diligent.

I can assure you that ain't gonna happen.

Instead, what there will be is tons of coming litagation that will keep people tied up for years, all making money off that - "hedging" their own personal incomes through activities related to fighting being charged with crimes and lack of diligence. Trust me on this!

Expect lots of changes on the deck of the Titanic, as executives/greedsos suddenly move from one "hat" to another. But essentially, the same old dross will be firmly in control. So the "accountant" suddenly ends of being the Human Resources guy: the head of the trading wing suddenly becomes "Compliance Officer". It's easy peesy to rewrite job descriptions, I know. I've done it when European banks came swanning into the US following deregulation and have a very fine idea how all the rearrangements are actually done. If you think the regulators care, guess again. There are actually PR firms (called consultants) who specialized in this very activity and charge a nice little buck for their services.

If nothing changes, nothing changes

~Ernie Larson

Veeger

Citigroup offloads assets from SIVs

By Paul J Davies in London, David Wighton in New York and Adam Jones in Paris

Published: December 10 2007 22:04 | Last updated: December 10 2007 22:04

Citigroup has slashed the size of its struggling off-balance-sheet investment funds by more than $15bn in two months through quiet side deals with some junior investors, according to people familiar with the business.

The news that the troubled US bank has been finding ways to offload assets from its structured investment vehicles (SIVs) without resorting to fire sales comes as Société Générale on Monday became the latest bank to announce a bail-out for its own $4.3bn vehicle. SocGen’s decision follows similar moves by HSBC, Standard Chartered and Rabobank in the past fortnight.

Previous article!!

Citigroup offloads assets from SIVs

By Paul J Davies in London, David Wighton in New York and,Adam Jones in Paris

Published: December 11 2007 02:00 | Last updated: December 11 2007 02:00

Citigroup has slashed the size of its struggling offbalance-sheet investment funds by more than $15bn in two months through quiet side deals with some junior investors, according to people familiar with the business.

The news that the troubled US bank has been finding ways to offload assets from its structured investment vehicles (SIVs) without resorting to fire sales comes as Société Générale yesterday became the latest in a string of banks to announce a bail-out for its own $4.3bn vehicle. Both moves appear likely to reduce the impetus behind plans for the so-called "super-SIV", conceived by Citigroup, Bank of America and JPMorgan with the backing of the US Treasury as a buyer of last resort for the industry that would prevent fire sales.

SIVs, which sell cheap, short-term debt to invest in higher-yielding, longer term assets, have been at the centre of the credit squeeze of recent months as all kinds of investors have ditched exposure to anything that could be tainted by exposure to US subprime mortgages.

Citi yesterday refused to comment on asset sales by its seven SIVs - all of which have been put on watch for downgrades by the rating agencies - but people familiar with the vehicles said their size had been cut from more than $80bn at the end of September to about $66bn.

Most of the cuts have come from selling portions of a SIV's portfolio of assets to investors in the most junior notes at market values.

In return for taking the loss in the value of their notes in such sales, which will be about 40 per cent in many of Citi's SIVs and putting in more money, the investors could reap greater profits later from any recovery in their value.

Meanwhile, SocGen's decision to absorb its sole SIV - which had been dubbed Pace, for 'Premier Asset Collateralised Entity' - follows similar moves by HSBC, Standard Chartered and Rabobank in the past fortnight.

The SIV industry's problems are causing headaches for US money market funds, which are big investors in their debt.

Money market fund managers have been supporting funds to ensure that their asset values do not fall below par - or "break the buck".

Bank of America yesterday said that it was winding down its $12bn Columbia Strategic Cash Portfolio, after losses on holdings of paper sold by SIVs.

The fund is an "enhanced cash" fund, a riskier form of money market fund sold only to institutions and high-net worth individuals.

The net assets of the fund have fallen to 99.4 cents on the dollar.

Citigroup SIVs Draw $7.6 Billion of Emergency Funds (Update2)

By Neil Unmack and Jody Shenn

Nov. 6 (Bloomberg) -- Citigroup Inc., the largest U.S. bank by assets, provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after they were unable to repay maturing debt.

The SIVs drew on the $10 billion of so-called committed liquidity provided by Citigroup, according to a Securities and Exchange Commission filing yesterday. Shares fell to the lowest since 2003.

Citigroup's disclosure came a day after it announced as much as $11 billion of debt writedowns linked to U.S. subprime mortgages, and the resignation of Chief Executive Officer Charles O. ``Chuck'' Prince III. The New York-based bank also said in the SEC filing that the amount of securities it owns that are considered hardest to value, known as Level 3 assets, rose 42 percent in the third quarter to $135 billion.

``This company, if it were any other company, would probably be considered to be operating in an unsafe and unsound condition,'' said Josh Rosner, managing director at New York- based investment research firm Graham Fisher & Co.

SIVs sell commercial paper to buy longer term assets such as mortgage or bank bonds. Citigroup SIVs have no direct investments in subprime assets and $70 million of ``indirect exposure'' through collateralized debt obligations, or bonds that package debt, according to the filing, based on figures as of Oct. 31.

Avoiding Fire Sale

Citigroup purchased the commercial paper from the SIVs it advises ``on arms' length commercial terms'' as part of its existing commercial paper programs, Jon Diat, a Citigroup spokesman in New York, said in an e-mailed statement today.

The bank won't consolidate the assets of the SIVs on its balance sheet, according to the filing.

Citigroup created the first SIV in 1988 and is the largest manager of the companies. The bank, along with JPMorgan Chase & Co. and Bank of America Corp., agreed last month to start an $80 billion fund to help SIVs avoid dumping their $320 billion of holdings at fire sale prices and further roiling credit markets.

Citigroup fell $1.16, or 3.23 percent, to $34.74 at 12:30 p.m. in New York Stock Exchange composite trading, after declining 4.9 percent yesterday. The stock had dropped more than 35 percent this year before today. Only National City Corp. and Washington Mutual Inc. had posted bigger losses of the 24 companies in the KBW Banks Index.

LTCM Experience

Credit-default swaps tied to Citigroup bonds traded at the highest level in at least five years yesterday, suggesting investor confidence is eroding. The contracts, used to speculate on a borrower's ability to repay debt, rise as the perception of credit quality deteriorates. The contracts fell 2 basis points to 70 basis points today, according to Phoenix Partners Group in New York.

Citigroup named Richard Stuckey, 51, to manage most of its $43 billion of subprime mortgage assets, the same executive who helped unwind hedge fund Long-Term Capital Management LP's bad bets nine years ago.

Investors are refusing to buy commercial paper, loans due in 270 days or less, from some SIVs because they are concerned about the value of the mortgage securities, asset-backed debt and finance company bonds they own.

U.S. asset-backed commercial paper shrank for 12 straight weeks to a seasonally adjusted $874.7 billion last week, the lowest since April 2006, according to the Federal Reserve in Washington.

`Backing Away'

``Citigroup has one of the more established bank-sponsored SIVs in the sector,'' said Priya Shah, a structured credit analyst at Dresdner Kleinwort in London. ``If they are drawing on their liquidity it shows that investors are backing away from the sector as a whole and they are not really differentiating.''

The largest of Citigroup's SIVs is Centauri Corp., with $20 billion of assets, according to the filing. The six other companies are Beta Finance Corp., Dorada Corp., Five Finance Corp., Sedna Finance Corp., Vetra Finance Corp. and Zela Finance Corp. All are based in the Cayman Islands.

Citigroup's SIVs sold $19 billion of assets between July and the end of September, reducing their assets to $83 billion from just over $100 billion, according to the filing. About 98 percent of the companies' assets are fully funded through the end of 2007, the filing said.

Citigroup said it doesn't own any of the SIVs' capital notes, which rank below the senior commercial paper and first in line for losses.

-- With reporting by Shannon D. Harrington. Editor: Reierson (grs/ajr)

See also: http://www.iht.com/articles/2007/12/10/business/siv.php

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Rob the Poor to Pay the Rich: 'It is entirely possible that all of the U.S. banks are currently bankrupt'

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Ann Lee

Posted November 24, 2007 | 07:05 PM (EST)

Every day CNBC features talking heads who drone on with the same platitude that there is fear in the market regarding the lack of transparency in the banks. "Lack of transparency" is really a euphemism for "bankrupt." Whether it is Citicorp, AIG, Fannie Mae, or your pension funds, all these large financial institutions own or guarantee trillions of dollars worth of collateralized debt obligations (CDOs) that contain subprime mortgages and other worthless collateral which people now realize are total scams. The most outrageous part of this drama is that the government will allow these investment bankers who dreamed up this financial engineering in the first place to receive millions of dollars each in the form of yearend bonuses for underwriting all this worthless paper. This latest boom and bust of not only subprime mortgages, but of all types of credit ranging from out-of-control consumer credit card issuance to rampant private equity acquisitions have created the largest transfer of wealth from the poor to the rich in modern history. None of the experts on television will ever admit to it because if the average American actually understood what has happened, social upheaval would probably ensue.

Mark to model (as opposed to mark to market) is the method these large financial institutions value CDOs. They claim to use this method because the market for these securities has evaporated. To put it bluntly, valuing these things using "mark to market" is legalized stealing. If no one wants to buy a worthless piece of paper, it should be valued at ZERO-- not ten million or a hundred million or whatever arbitrary number they're currently using--because any other number is by definition inflated. The conflict of interest lies in the fact that the traders whose bonuses and jobs depend on making profits from trading these securities are the same people who price these securities. If they mark them to zero, not only will they not receive a bonus, they'll most likely be out of a job so they have every incentive to lie about the value of these securities. Auditors can't keep them honest because auditors just ensure that banks follow a checklist of procedures. Auditors have no way of verifying whether prices are inflated when each bank uses proprietary computer models to value these securities. But according to a friend of mine who is the head of risk management at a large British investment bank, these auditors don't even know how to ask the right questions.

It is entirely possible that all of the U.S. banks are currently bankrupt. Just because Citicorp generates billions of dollars every day in revenue doesn't mean that it has any equity left. Between 2005 and 2007, over a quadrillion dollars of CDOs were underwritten. A one percent writedown would amount to at least a trillion dollars worth of losses. Most CDO analysts at the large investment banks have already publicly stated that they expect at least several hundred billion in writedowns, although to date, less than a hundred billion has been announced.

My guess is that neither the Treasury nor the Fed has any idea what to do about this credit mess. Treasury Secretary Paulson has no risk management experience. He was a relationship banker, meaning he was just a plain old sales guy, who politically maneuvered his way to the top job at Goldman. Insiders say that he accepted the Treasury post knowing that he was soon to be ousted. At the Federal Reserve, nobody on the board of governors, including Bernanke, has any experience with these types of markets either. When I met with Gerald Corrigan, former New York Fed President and current Vice Chairman at Goldman Sachs in October 2006, I asked him why his Counterparty Risk report only addressed how to deal with operational risk and not credit risk. He confessed that risk managing CDOs was well over his head and added that no central banker had any idea what to do if things went wrong. So much for leadership at the top.

Where do we go from here? I wish there would be an equitable solution possible, but I'm getting cynical in my old age. Realistically, I bet all the bankers will get to keep the hundreds of millions they all made selling and trading these securities while the rest of America face foreclosures and bankruptcies since politicians in Congress and elsewhere depend too heavily on Wall Street to get elected and to stay in power. I doubt Congress will never do the right thing and pass legislation that will demand more transparency in banks. They will never pass legislation for more regulation of financial services now that this industry is more than twenty percent of our economy. Most likely, the final chapter to this credit mess will end with taxpayers footing the bill should the government need to step in and bail out one or more of these large financial institutions. Meanwhile, the rich Wall Streeters will dream up the next innovative way to fleece the world again.

Ann Lee has spent seven years as a trader for hedge funds and over ten years in finance. Presently she is on the Advisory Board for Baron Group, a merchant bank with offices in Beijing, Shanghai, Hong Kong, and New York and working as an adjunct professor teaching graduate finance at Pace University. Before that, she was the Head of the Global Convertible Fund for Ritchie Capital Management, a $5B multi-strategy hedge fund firm where she managed and traded a portfolio of securities that included bank debt, credit derivatives, structured products, and sovereign debt. Prior to her role at Ritchie, she was a partner at Forest Investment Management, a $1.5B dollar fund, trading mostly distressed debt securities and equity derivatives. Ann also co-managed a multi-billion dollar directional convertible arbitrage portfolio for Symphony Asset Management, a hedge fund firm with over $5B in assets. Ann graduated magna cum laude from U.C. Berkeley in three years, studied International Relations at Princeton University’s Woodrow Wilson School as a Ford Foundation Fellow, and received a Masters in Business from Harvard Business School. She also writes for the Huffington Post, the Foreign Policy Association, and Trader Monthly.

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