Proof - Republicans Pimp for Big Banks

If on nothing else, the Occupy Wall Street protesters and the Tea Party protesters do agree that big banks are a big problem, so what will the Tea Party say about this?

A well-known Washington lobbying firm with links to the financial industry has proposed an $850,000 plan to take on Occupy Wall Street and politicians who might express sympathy for the protests, according to a leaked memo obtained by the MSNBC.

Yesterday the story broke exposing the memo by the lobbying firm with ties to House Speaker John Boehner. The memo, written by K Street firm Clark, Lytle, Geduldig, Cranford (CLGC) is a quintessential example of Wall Street interests seeking to use their money and their access to influence the outcome of elections and legislation.

CLGC’s memo proposes that the American Bankers Association (ABA) pay CLGC $850,000 to conduct “opposition research” on Occupy Wall Street in order to construct “negative narratives” about the protests and allied politicians.

The memo also asserts that Democratic victories in 2012 would be detrimental for Wall Street and targets specific races in which it says Wall Street would benefit by electing Republicans instead.

According to the memo, if Democrats embrace Occupy Wall Street (OWS), “This would mean more than just short-term political discomfort for Wall Street. It has the potential to have very long-lasting political, policy and financial impacts on the companies in the center of the bulls-eye.”

The memo also suggests that Democratic victories in 2012 should not be the ABA’s biggest concern. “The bigger concern should be that Republicans will no longer defend Wall Street companies.”

Two of the memo’s authors, partners Sam Geduldig and Jay Cranford, previously worked for House Speaker John Boehner, R-Ohio.

This will certainly be one of the "smoking guns" that I've been looking for.

The 99%’s Deficit Proposal

The disconnect between Congress and the people is vast. For decades, Congress has been passing laws that benefit the 1%, their campaign donors and big business interests, rather than creating a fair economy that serves all U.S. citizens.

With this report on how to create jobs, reduce the wealth divide and control spending, Occupy Washington DC shows that Congress is out of touch with evidence-based solutions, supported by the majority of Americans that can revive the economy, reduce the deficit and wealth divide while create millions of jobs.

"For forty years, concentrated corporate interests have acted with intent to take over government and other institutions. We seek an end to the rule of concentrated wealth and corporate power by shifting control, wealth and ownership to the people."

Now some of the protesters are "occupying the highway".

Occupy the Highway

Last week, a courageous group of people had already left the Occupy Wall Street camp in New York City and started marching to Washington, DC. Their goal was to bring the outrage and energy of the 99% directly to Capitol Hill.

They're marching to call out the congressional Super Committee, which could cut a deal before Wednesday slashing Social Security, Medicare, and Medicaid - - while at the same time, protecting tax breaks for the 1%.

After marching nearly 200 miles through the winter cold, they'll cross through Baltimore and prepare for their final push into Washington on Tuesday, just before the Super Committee's deadline.

Dozens of supporters have joined the march along the way. But it's up to all the rest of us to help share their story and make sure that by the time they get to Washington, Congress and the rest of the country is expecting them.

The marchers' stories are powerful, and Congress needs to hear them before they slash programs that so many of us rely on.

MoveOn.Org met up with the marchers yesterday and filmed a short video to help spread their story. It's critical that as many people as possible see this, as the Super Committee nears its critical deadline.

ALSO READ - Mellon: The banker who rigged the U.S. tax code, and how the Republicans and bankers fleeced the American working people (and how they continue to so today) by using lobbyists on K St. who are paid by CEOs on Wall St. to redistribute all the wealth from the bottom and concentrate it all at the top.

IMF Scolds (and Praises) China for Success

Does someone usually critique or criticize someone else as to how they're doing something, especially if they're doing something much better than the one who's criticizing? Doesn't their "advice" usually end up sounding like sour grapes? Think about how the U.S. and European economies have fared over the last 30 years, and how America's middle-class has declined, and how our banks and politicians crashed our housing market, and how so many jobs went to China, and how our banks have gauged and foreclosed on American consumers, and how long and deep our recession has been over the last 3 years. Then think about how well China has done over the last 30 years, and then read this report from the International Monetary Fund (IMF) scolding China's nationalized banks, but at the same time, praising China's economic success....

The I.M.F. said that state controls over the economy were partly to blame for soaring property prices, excessive bank lending and mounting local government debt, and that these were among the growing risks that threatened to undermine the country’s economic boom.

The report was the latest effort by the I.M.F. to pressure Beijing to quicken the pace of its economic reforms and adopt a more market-oriented approach to banking and finance in the country, which has the world’s second-largest economy.

“The existing configuration of financial policies fosters high savings, structurally high levels of liquidity and a high risk of capital mis-allocation and asset bubbles, particularly in real estate,” the report said. “The cost of these distortions is rising over time, posing increasing macro-financial risks.”

Jonathan Fiechter, one of the authors of the I.M.F. report, said China had made remarkable progress over the last three decades, but that the country’s integration into the global economy made it more urgent for its banks to operate according to market forces.

“Take the training wheels off and let the banking system work,” Mr. Fiechter said.

Take the training wheels off? Let the banking system work?

China’s central bank responded by saying "the suggestions regarding the time frame and prioritization of some reform measures lack a thorough understanding of China’s reality.”

The Chinese government’s control over the economy has become a sore point in China’s relations with the United States and the European Union over the last few years.

Only two weeks ago, in a report to Congress, the U.S.-China Economic and Security Review Commission criticized China for pursuing “state capitalism” — policies that give big state-owned companies a competitive advantage over foreign companies doing business in China.

The Chinese Communist Party “has not expressed an interest in becoming a bastion of free market capitalism,” the Congressional report said, noting that state companies account for about 50 percent of China’s economic output. “It is pursuing socialism with Chinese characteristics, which mandates a prominent role for state ownership.”

In the I.M.F. report, China’s banking and financial system is portrayed as huge, complex and flawed, with state bank lending favoring state companies over private corporations and the financial system creating distortions that affect a wide range of factors, including interest rates, property prices and the exchange rate.

The I.M.F. said, for instance, that despite the nation’s spectacular growth, the quality of that growth had become increasingly inefficient. It now takes about $5 worth of investment to create $1 of gross domestic product — about 40 percent more than it takes in Japan or South Korea, the report said.

The IMF suggested that China "give banks more control over lending and risk management and expanding the authority of the nation’s central bank."

Ms. Christine Lagarde, Managing Director of the IMF emphasized the important role of Asia, and especially China, in achieving global economic recovery.

“The rise of Asia in the global economy is really the defining economic success story of modern times. And so today, it is no surprise that Asia is propelling the global recovery,” she said in a speech at the International Finance Forum in Beijing.

She noted in particular the achievements of China in growing by an average 10 percent a year and pulling half a billion people out of poverty over the past three decades. “No wonder that when I visit this region, I feel that I am filled with hope and optimism about the future.”

Ms. Lagarde also commented that she believed China is on the right path--as laid out in its comprehensive 12th five-year plan, in terms of reducing domestic vulnerabilities and reorienting the economy towards domestic consumption.

Ms. Lagarde also stressed the importance of IMF governance reforms in giving a greater voice to emerging markets and developing countries, noting that “One result of these governance reforms is that China is in our top three shareholders. So China is a very important member of the IMF—which is only fitting, given its very important role in the global economy.”

“China has once again taken the global central stage and plays a crucial role—today and into the future,” she said.

I do believe thou does protest (and praise) to much!

How BofA Made Mega-Profits Again this Year

...besides just the illegal forecloses that were written off to the taxpayers and the banks over-draft scams.

Bank of America reported Third-Quarter 2011 Net Income of $6.2 Billion, helped in part by Net Charge-Offs, which is bad debt or poor credit quality loans which are regularly charged off as bad debt and purged from the books, often on a monthly or quarterly basis.

A charge-off is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will make this declaration at the point of six months without payment. The purpose of making such a declaration is to give the bank a tax exemption on the debt.

B of A also had a $1.7 billion pretax gain in trading Debit Valuation Adjustments (see the full WSJ article below). Debit valuation adjustments (DVA), is an accounting trick rule that permits banks to post paper profits when the value of their own credit quality declines. It also helped Citigroup post a $3.77 billion profit Monday even as its revenue fell. And J.P. Morgan Chase & Co. included a $1.9 billion pre-tax benefit from debt valuation adjustments in its investment bank when it posted third-quarter earnings last Thursday. This morning, Bank of America Corp. reported booking their $1.7 billion gain due to the accounting rule.

B of A revenues were also helped by total average deposit balances of $1.05 trillion, which were up $77 billion. Average deposit balances increased $11.2 billion from a year-ago this quarter, driven by growth in liquid products in a low rate environment. "Liquid investment" is an investment that one has immediate access to, either the ability to buy or sell the investment (such as a stock or mutual fund) or the ability to access and withdraw funds (such as a savings account). A "low rate environment" means cheap money borrowed from the FED before they re-loan it to you.

The number of net new consumer and small business checking accounts was positive for the third consecutive quarter as the company continued to focus on the retention of "profitable customer relationships" (the wealthier depositors) - so many customers are willing to increase their balances to achieve account benefits (i.g. free checking and ATM use).

Evidently those people never heard of Bank Transfer Day.

The company continued to strengthen their balance sheet by reducing risk-weighted assets by $33 billion from the second quarter of 2011 and $117 billion from the third quarter of 2010. For example, loans that are secured by a letter of credit would be weighted riskier than a mortgage loan that is secured with collateral.

Earlier this year B of A launched an initiative with the implementation of Phase 1 beginning this month with a goal of reducing expenses by approximately $5 billion per year by 2014, on a baseline of approximately $27 billion. The company expects to incur technology and severance costs during the implementation of Phase 1. (New computers and the layoff of employees).

The allowance for loan and lease losses with "net charge-offs" (write-offs) remained strong in the third quarter of 2011. B of A's Chief Financial Officer Bruce Thompson says, "We reduced the size of our balance sheet by $42 billion from the second quarter of 2011." (Bad debts written off their taxes after they were already bailed out by taxpayers.)

The number of new U.S. credit card accounts for B of A grew by 17 percent in the third quarter of 2011 compared to the second quarter of 2011. Credit quality continued to improve with the 30-day delinquency rate declining for the 10th consecutive quarter. Card Services reported net income of $1.3 billion. (after already writing off most of their bad debts, and only retaining customers with the better credit scores).

Average loans for B of A declined $17.5 billion from a year-ago due to charge-offs (write-offs), portfolio runoff, and divestitures. "Divestiture" is the removal of assets from the books. Businesses divest by the selling of ownership stakes, the closure of subsidiaries and the bankruptcy of divisions. "Portfolio runoff" is a decrease in the assets of a mortgage-backed securities portfolio due to the prepayment of the securities held in that portfolio.

B of A's net income rose 29 percent from the year-ago. Revenue for B of A rose 6 percent to $28.7 billion - the CEO got a $9 million bonus, but you got $5 ATM fee. They got bail outs while you got foreclosures, jacked up interest rates, user fees, and over-draft charges. The banksters should have been occupying jail, while we should be nationalizing all the banks.

How Weakening Credit Strengthens Banks' Results—and Vice Versa

From the Wall Street Journal By Katy Burne - katy.burne@dowjones.com  

Investors in bank stocks should take the latest round of quarterly earnings with a pinch of salt, given the effects some contentious accounting metrics have had on their income statements, according to market observers.

Debit valuation adjustments, an accounting rule that permits banks to post paper profits when the value of their own credit quality declines, helped Citigroup Inc. post a $3.77 billion profit Monday even as its revenue fell. And J.P. Morgan Chase & Co. included a $1.9 billion pre-tax benefit from debt valuation adjustments in its investment bank when it posted third-quarter earnings last Thursday. And this morning, Bank of America Corp. reported booking a $1.7 billion gain due to the accounting rule.

Risk specialists say the banks have been up front about the accounting rules inflating their incomes and contributing to earnings volatility. The specialists also note that while the rules worked in the banks' favor in the previous quarter, they have worked against the banks in the past.

"This is just fair-value accounting—it's not something banks decided to use to boost their earnings," said Joyce Frost, partner at Riverside Risk Advisors LLC. "It just so happens that we were in an environment because of the European debt crisis, that bank credit spreads widened dramatically and applying these accounting principles resulted in a non-cash gain. If credit spreads tighten dramatically this quarter, you will see an equal and opposite effect."

Keith Horowitz, a banking analyst at Citigroup, said most investors have seen these sorts of accounting benefits before, and know to look straight through them.

"Most investors are completely ignoring the DVA gains since it's accounting fiction and it's been an item before," he said. "The investors I talk to, they are accustomed to it and it's not an issue for the stock."

Citi's third-quarter results included a $1.9 billion gain from a widening in its credit-default swap spreads over the third quarter. The adjustments let banks record gains when the cost of protecting their own debt with credit-default spreads rises, reflecting a higher probability of default on derivatives contracts and other obligations.

As a firm's liabilities move in its favor, its counter-parties record a loss and the firm records a gain, said David Kelly, director in credit product development at derivatives solutions specialist Quantifi Inc.

However, the firms could realize these gains only if they were to default on their obligations, Mr. Kelly said, and if a firm's credit spreads improve in the fourth quarter, the gains would be reversed.

Jon Gregory, partner at counterparty risk consultancy Solum Financial, said the effect of a debit valuation adjustment is like having a very large life-insurance policy, but not being rich because you can't monetize it until death. "We went through this before in 2008," he said. "Every time bank spreads widen, inevitably there are DVA gains. One argument is that if you don't do that, then balance sheets wouldn't add up. But it's not real money."

In the first quarter of 2009, J.P. Morgan had a DVA gain of $638 million due to its deteriorating credit quality, while Morgan Stanley recorded a DVA loss of $1.5 billion as its credit spreads rallied.

Nearly three years later, the pattern seems to be repeating.

In J.P. Morgan's case, the DVA benefits this quarter were nearly a quarter of its $4.3 billion net income for the period. Citi had net income of $3.77 billion for the quarter, and said its revenue was $18.9 billion excluding the $1.9 billion credit adjustment.

In both of these cases—and in earnings coming from other big banks—counterparties "had to record a loss due to the bank's wider credit spreads and on the other side of the ledger, [banks] recorded a corresponding gain," Mr. Kelly explained.

"As counterintuitive as this accounting treatment may seem, shareholders can't push for more of a mark-to-market world, but then cherry-pick when they want to include the mark-to-market. In either case, bank analysts have figured out what the DVA means to the results and are discounting the effect in their analysis," said Jiro Okochi, chief executive of the risk management company Reval.

Citi Mr. Horowitz last week forecast that Morgan Stanley would record a $1.5 billion net DVA gain when it reports earnings Wednesday.

Other articles I've written:

Phil Gramm: From US Senator to UBS Banker 
Elizabeth Warren - Consumer Financial Protection
I Want to be a Banker
George Clooney - New Spin Doctor for Goldman Sachs?
GOP Won't Reform Banks or Cut Oil Subsidies
Republicans Support Crooked Bankers
A Company of One Verses Big Banks
Some Bankers Must #Occupy Jail
B of A CEO Gets $9M Bonus-You Get $5 ATM Fee

I Want to be a Banker

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." ~ Henry Ford

I'm pretty stupid and don't understand the complexities of our banking system, and how their financial wizards have been making so much money during the Great Recession while ordinary people have lost everything they had. So if I wanted to be a banker, how do I open my own bank?

Why is it that the fine print on credit card and checking accounts agreements says I am legally bound by the Federal banking and tax laws of the U.S. when I am FORCED to open a bank account just to cash my paycheck? Is there a law that says I can demand cash from my employer instead? Would I be fired from my job for demanding a cash payment for my labor? Would a law protect me if I were fired if I chose to not voluntarily participate in the Federal Reserve banking system?

"Governments do not govern, but merely control the machinery of government, being themselves controlled by the hidden hand. The world is governed by very different personages from what is imagined by those who are not behind the scenes." ~ Lord Rothschild

What's the difference if:

• I loan you money and charge you 15% interest for one month
• You borrow money from a loan shark at 20% interest for one week
• You cash your payroll check for a "Pay Day" loan for 15% of the check
• You borrow money from Goldman Sachs and get charged a commercial interest rate (20.0% APR for a personal loan over 3 years or 5.5% APR interest for a home mortgage over 30 years)
• Goldman Sachs borrows from our central bank (the Federal Reserve) and gets charged Federal Interest (only 0.15%, practically nothing)
• What's the difference between "usury" and legal lending; and the difference between "banking" and theft?

What would be the difference between a silver dollar (or a gold dollar) and a paper dollar (or a digital dollar today) when a U.S. dollar was once backed by gold held at Fort Knox?

Why does our money say "In God We Trust", to infer we should blindly trust the banks and Federal government because THEY believe in a god? Weren't gods invented to control and manipulate people all throughout the ages?

"Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it." - Woodrow Wilson, 28th President of the United States (1913-1921).

The Constitution of the United States of America provides that the United States Congress shall have the power "To coin Money". Does this only mean silver and gold coins that are minted ("coined")? Or does this also include I.O.U.s printed at the privately owned Federal Reserve Bank?

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world, no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." - Woodrow Wilson, 28th President of the U.S. on his death bed for passing the Federal Reserve System.

The Constitution provides that "a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time". The U.S. dollar may therefore be described as the unit of account of the United States. Is a Federal Reserve Note a legally binding "U.S. Dollar" and Constitutionally recognized as legal tender?

The word "dollar" is one of the words in the first paragraph of Section 9 of Article 1 of the U.S. Constitution. This act designated the United States dollar as the unit of currency of the United States. Did this also mean promissory notes (and not just gold coin dollars), such as "Federal Reserve Notes" (essentially I.O.U.s) are valid, even though they no longer promise a dollar's worth of gold being held by the government at Fort Knox?

Denominations equal to or greater than one dollar are produced out of thin air as Federal Reserve notes, with the exception of gold, silver and platinum coins, which can be valued up to $100 as legal tender (but worth far more as bullion) and are coined at the U.S. Mint for the U.S. Treasury. But remember when the ownership of gold by a "private citizen" was once illegal?

The dollar (USD) used to be backed by gold, but no more. Why? And why can't we see the gold in Fort Knox? We haven't since the 1970s...is it still there? And if not, where is it, and where did it go?

For the past several years China has been buying tons of gold and gold has tripled in value in the last 10 years alone. If we still had gold in Fort Knox, and it tripled in value, how is that applied to out nation's wealth and national debt? Can we buy our debt back from China?

Why (and how) do the following countries also use the U.S. dollar exclusively as its national currency?

British Virgin Islands
Caribbean Netherlands
East Timor
Ecuador
El Salvador
Marshall Islands
Federated States of Micronesia
Palau
Panama
Turks and Caicos Islands

Before the Federal Reserve system the U.S. used to have many different banks that printed and "coined" their own money (dollars) and issued bank checks (supposedly if they held they real assets). Now America has one privately owned bank called the Federal Reserve, which has NO association to the U.S. government - and was designated as the U.S. central bank, for which it prints paper and digital dollars for American banks. The U.S. Mint makes the coins..."To coin Money".

Can the Federal Reserve print a dollar any time it wants to (with the consent of congress-people who are beholden to banks) and "loan" it to Goldman Sachs for a penny, who in turn, loans it to you for two dimes? Is this how bank bailouts work? When these banks make bad investments, we are FORCED to buy their debt....the banks hit pay-dirt. When we make bad investments, we just eat plain dirt. Is this how our Founding Forefathers envisioned the U.S. dollar (and our banking system) in the Constitution?

Was this why limited liability corporations were also used to do business in America?

Who are these INDIVIDUAL people who own and profit from our central bank, the Federal Reserve, and what of the other central banks around the world, such as the Bank of England who stayed with the British pound, rather than go "Euro"?

If ONE DOLLAR represented all of America's wealth, and was backed by one ounce of gold at Fort Knox, could the Federal Reserve print one more dollar (devaluing the current dollar), then loan it to Goldman Sachs for almost nothing, who in turn loans it to you for a profit? And would doing this thereby double the value of the gold at Fort Knox? Is this how the prices of precious metals go up, by central banks monetizing their currencies?

And what if there were only half an ounce of gold (or no gold at all) at Fort Knox? Why can't we get Congress to allow us to peek inside the vault and show us? How much of the gold that is presently mined in Northern Nevada (and elsewhere) shipped and stored at Fort Knox? Isn't the gold ours too, a natural resource, our national treasure? The PEOPLE'S gold? And why can't we get Congress to audit the Federal Reserve? What do they have to hide?

Why did most of the central banks in the countries of Europe agree to a "EURO"? And who exactly MINTS or COINS the Euro?

"Three hundred men, each of whom knows all the others, govern the fate of the European continent, and they elect their successors from their entourage." ~ Walter Rathenau

Who exactly MINTS and COINS the Amero, and is it Constitutionally recognized a legal U.S. tender like the Monopoly money the Federal Reserve prints and profits so much from? Would it be backed by a barrel of oil, as opposed to gold? And isn't our domestic oil also a natural resource and national treasure...the PEOPLE'S oil?

 "I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain's money supply controls the British Empire, and I control the British money supply."  ~ Nathan Mayer Rothschild

If I wanted to be a banker, would the Federal Reserve print me a FREE dollar (or produce a "digital" dollar and electronically transfer it to my personal home computer - to my own personal "bank") so that I can loan that "dollar" to you for a profit? If so, then I want to be a banker.

Today from the Huff Post: Big banks saved billions as homeowners suffered.