Just a few million in treasuries would have allowed a meager existence without shame….
Comments »Monthly Archives: February 2012
Will Low Wage Service Jobs Support the Economy ?
GM Reports Their Eighth Consecutive Quarterly Profit; Revenues Up 11%, Profits Down YoY
How Many Senators Does it Take to Screw a Taxpayer ?
A friend of mine told me that cattails can produce more ethanol than corn per acre. Something like 300% more with less fossil fuels and water needed to produce the fuel additive.
Granted we just ended ethanol subsidies saving taxpayers $6 billion a year, but it behooves us all not to waste money in the first place given the state of our economy and deficits.
It is just another reason to reconsider your future leaders….
Comments »Congress Reaches a Payroll Tax Deal
“WASHINGTON—Congressional negotiators working on a deal to extend jobless benefits and a payroll-tax cut say they have come to a deal, paving the way for a vote before the policies expire at the end of the month.
“We have reached an agreement,” said Rep. Dave Camp (R, Mich.) shortly after midnight. “We’re confident that this can be concluded.”
Sen. Max Baucus (D, Mont.) said, “It’s clear that we’ll have a majority of conferees sign the conference report.”
A tentative deal outlined earlier this week would extend the tax break, which reduces workers’ payroll taxes to 4.2% from 6.2%, until year-end. …”
Comments »U.S. Intelligence Reports Suggest Al-Qaeda & Iran are Teaming Up For an Attack on the U.S. or London
“LONDON — Iran and al Qaeda’s core leadership under Ayman al Zawahiri have established an operational relationship amid fears the terror group is planning an attack against the West.
There are concerns such an attack, possibly targeting the London Olympics later this year, would be in revenge for the killing of Osama bin Laden by the US last year.
A’JAD LOADS ‘HOMEMADE’ NUCLEAR FUEL RODS, IRAN TV SHOWS
Intelligence sources said Iran has been supplying al Qaeda with training in the use of advanced explosives, “some funding and a safe haven” as part of a deal first worked out in 2009 which has now led to “operational capacity.”
Comments »Ron Paul’s Traction is Shaking Things Up for the GOP
John Paulson Predicts a Greek Default; Ramifications as Bad as Lehman
Foreclosures Rise in January
Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans From U.S.
“Four years after rotten mortgages helped trigger a global financial crisis, Sherry Hunt said her Citigroup Inc. quality-control team was still finding flaws in new loans that included altered tax forms, straw buyers and borrowers who listed fictitious employers.
Instead of reporting the defects to the Federal Housing Administration, the bank saddled the agency with losses by falsely declaring the loans fit for its federal insurance program, according to a complaint filed yesterday by the U.S. Attorney’s Office in Manhattan. Citigroup agreed to pay $158.3 million to settle the claims, and admitted that it certified loans for FHA backing that didn’t qualify.
Hunt, who filed a sealed lawsuit against New York-based Citigroup in August that the government joined, will collect $31 million of that sum — before taxes and attorney’s fees — as a whistle-blower, she said in an interview yesterday. The settlement, which encompassed misconduct spanning 2004 to the present, indicates Citigroup has lingering problems in its O’Fallon, Missouri-based CitiMortgage unit.
“Citigroup in particular received government funding, taxpayer dollars, because of its risky operations,” said Peter Henning, a law professor at Wayne State University in Detroit. “It shows that they hadn’t really learned much of a lesson from the financial crisis.”
Inspector General
The inspector general for the U.S. Department of Housing and Urban Development faulted Citigroup’s quality-control program during a 2008 audit, according to the complaint. Taxpayers rescued the bank with a $45 billion bailout that same year and guaranteed more than $300 billion of its risky assets after the lender’s stability was threatened by mounting costs on soured loans. The bank lost a total of $29.3 billion in 2008 and 2009.
Hunt’s co-workers, instead of checking for fraud or making reports about underwriting defects to the FHA as required, argued with her over the soundness of the loans, she said. Employees who acted as “gatekeepers” applied “what they describe as ‘brute force’ to pressure Citi’s quality control managers” into downplaying defects, according to the government’s complaint.
Some colleagues had pay incentives tied to reducing the number of reported problems, and they spent hours trying to get her to relax her warnings, including those about the most basic deficiencies, Hunt said.
‘Beating Us Up’
“They started beating us up over the quality-control reports,” she said.
Last year, she said, she became convinced she was being asked to look the other way on serious flaws. That’s when she decided to become a whistleblower.
“All a dishonest person had to do was change the reports to make things look better than they were,” Hunt said in an interview. “I wouldn’t play along.”
Citigroup has approved about 30,000 loans with a value of $4.8 billion for FHA insurance since 2004; more than 30 percent of those borrowers have quit paying, the Justice Department said in its complaint. Almost half the bank’s FHA loans originated in 2006 and 2007 have defaulted, the government said, with HUD paying out almost $200 million in insurance claims on mortgages Citigroup originated or underwrote since 2004.
Mark C. Rodgers, a Citigroup spokesman, said bank executives were pleased to resolve the matter.
Improvements Undertaken
“We take our quality-assurance processes seriously and have proactively undertaken process improvements to ensure that they are as robust as possible,” Rodgers said in an e-mailed statement. “We are committed to continuing to work with the Department of Housing and Urban Development to make mortgage loans available to low- and moderate-income borrowers through the FHA program.” He declined to comment further.”
Comments »Moody’s is Planning on Taking U.S. Banks Down Several Notches
“UBS AG, Credit Suisse Group AG (CSGN) and Morgan Stanley’s credit ratings may be cut by as many as three levels by Moody’s Investors Service, which is reviewing 17 banks and securities firms with global capital markets operations.
Goldman Sachs Group Inc. (GS), Deutsche Bank AG (DBK),JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) are among companies that may be downgraded by two levels, Moody’s said in a statement, adding that the “guidance is indicative only.” Moody’s today cut some European insurers’ ratings based on risks stemming from the region’s sovereign debt crisis.
The potential downgrades, which may raise borrowing costs and force banks to increase collateral, put the ratings company at odds with bond investors, who are sticking with bets that new capital rules and trading limits will make the financial firms safer in the long run. Funding costs have climbed for banks worldwide as Greece’s debt woes roil markets.
“In the next two years, these big banks will be less robust than they used to be, that’s for sure,” Jim Antos, a Hong Kong-based financial analyst at Mizuho Securities Co., said by telephone. “For any bank that has to raise capital today, it’s already very difficult. This makes it just that much more expensive and difficult.”
Barclays Plc (BARC), BNP Paribas (BNP) SA, Credit Agricole SA,HSBC Holdings Plc (HSBA), Macquarie Group Ltd. (MQG) and Royal Bank of Canada may also be cut by two levels, Moody’s said. Bank of America Corp. (BAC), Nomura Holdings Inc. (8604) Royal Bank of Scotland Group Plc and Societe Generale SA may be lowered by one grade, it said.
Evolving Challenges
“Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions,” Moody’s said. “These difficulties, together with inherent vulnerabilities such as confidence- sensitivity, interconnectedness and opacity of risk, have diminished the longer-term profitability and growth prospects of these firms.”
The 43-member Bloomberg Europe Banks and Financial Services Index fell 2.4 percent as of 8:56 a.m. local time in London. Deutsche Bank shares dropped as much as 4.2 percent to the lowest intraday price since Jan. 30. Barclays declined as much as 3.2 percent while Credit Agricole fell as much as 5 percent and UBS (UBSN) retreated as much as 1.9 percent….”
Comments »Singapore Economy Contracts Less Than Expected
SocGen Reports Their First Loss in Two Years; Profits Down 89%
UBS Turns Evidence For Immunity in Canadian Probe of Banking Manipulation in Derivatives Market
“UBS AG (UBSN), Switzerland’s biggest bank, sought immunity from prosecution by Canadian regulators probing a potential conspiracy to rig the price of derivatives globally, three people with knowledge of the inquiry said.
The lender is the cooperating party referred to by Canada’sCompetition Bureau in court papers filed by the regulator with the Ontario Superior Court in May, said the people, who declined to be identified because the identity of the firm hasn’t been made public.
The papers, shown this week to Bloomberg News by court clerks, indicate a bank told the regulator that traders and cash brokers conspired to influence the Yen London interbank offered rate from 2007 to 2010 to profit on interest-rate derivatives linked to the benchmark. Regulators worldwide are investigating whether banks attempted to manipulate the London, Tokyo and euro interbank offered rates, known as Libor, Tibor and Euribor.
UBS already has been given conditional immunity by the Swiss Competition Commission as part of an investigation into suspected manipulation of the Yen Libor, Tibor and Swiss franc Libor rates. The Zurich-based lender was granted similar immunity by the U.S. Department of Justice last year as part of its probes of Yen Libor and Euroyen Tibor rates.
Dominik von Arx, a spokesman for UBS in London, declined to comment on the case. Alexa Keating, a spokeswoman for the Competition Bureau, declined to comment on the identity of the cooperating party.
“There is no conclusion of wrongdoing at this time and no charges have been laid,” Keating said in an e-mailed statement.
Artificial Submissions
According to the affidavit filed by the bureau, Canadian officials were informed that HSBC Holdings Plc (HSBA), JPMorgan Chase & Co., Citigroup Inc. (C), Deutsche Bank AG (DBK),Royal Bank of Scotland Group Plc, ICAP Plc (IAP) and RP Martin Holdings Ltd. took part in the scheme. Employees at the banks agreed to make artificially high or low submissions for Yen Libor to improve the outcomes of trades tied to the rate, the Canadian regulator said, citing information it received under the immunity program.
Libor rates are generated through a daily survey of firms conducted on behalf of the British Bankers’ Association in London. The lenders are asked how much it would cost them to borrow from one another for 15 different time periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs.
Yen Libor
According to the Competition Bureau’s filings, the cooperating party said one of its derivatives traders described his bets to an ICAP broker, and the trader explained how he wanted the Yen Libor to move. The broker said he would try to arrange for other ICAP brokers to influence banks that submit data for the benchmark rate, the bureau said. ICAP is the world’s largest broker of transactions between banks.
The documents also describe similar communications involving traders at other banks. For instance, Peter O’Leary, a trader at HSBC, allegedly instructed cash brokers on how to influence the benchmark rate, the bureau said. It also described communications involving London-based traders Guillaume Adolph at Deutsche Bank, Stuart Wiley at JPMorgan and Brent Davies at RBS, as well as former RBS employee Will Hall and former JPMorgan employee Paul Glands. The bureau hasn’t brought claims against any of them.
Wiley and Glands declined to comment. Davies didn’t return calls to his mobile phone. There was no response to an e-mail sent to an address found for O’Leary. Contact information for Adolph and Hall couldn’t be located through directory assistance and in an Internet search.
Spokesmen for New York-based JPMorgan and Citigroup, Frankfurt-based Deutsche Bank, Edinburgh-based RBS and London- based ICAP have declined to comment on the affidavit. A spokeswoman for London-based HSBC didn’t respond to requests for comment.”
Comments »Australia Celebrates Their Best Jobs Data in 14 Months
China’s Banking System May Suffer From Depositor Flight to Safety
Essentially there are products that allow Chinese savers to get a higher interest rate that current savings and checking accounts. This rate is a little higher than the rate of inflation and is causing depositors to move their money.
This coupled with less deposits overall is concern for the health of the banking system in China.
Comments »Direct Foreign Investment in China Fell 0.3%; Doves Hopeful of Easing
The Euro Trades Down Slightly While the Dollar Climbs a Little Higher
European Bond Yields Hit Two Week Highs; Still Far Below Nosebleed Territory & Auctions Go Off Well
“Italian bonds fell, driving 10-year yields to a two-week high, and German bunds climbed as European officials struggled to reach agreement on a financial rescue for Greece, boosting demand for safer assets.
Spanish bonds dropped before the nation sells as much as 4 billion euros ($5.2 billion) of securities. France plans to auction as much as 10.3 billion euros of notes and index-linked bonds. Europe’s creditor countries are discussing more control over how future aid to Greece is used, Luxembourg Prime Minister Jean-Claude Juncker said yesterday.
“There is a spread-widening pressure across the board,” said Matteo Regesta, a senior interest-rate strategist at BNP Paribas SA in London. “It’s a function of risk-off mode coming back to the surface as a result of these conflicting and quite confused and contradictory statements coming from policy makers.”
The Italian 10-year bond yield rose 10 basis points, or 0.1 percentage point, to 5.84 percent at 9:37 a.m. London time. The rate reached 5.93 percent, the highest since Feb. 1. The 5 percent securities maturing in March 2022 fell 0.735, or 7.35 euros per 1,000-euro face amount, to 94.275.
The yield on Spain’s 10-year bond climbed nine basis points to 5.53 percent, increasing the spread over German bunds by 11 basis points to 369 basis points. It reached 377 basis points, the most since Jan. 9. The German 10-year bond yield fell two basis points to 1.84 percent.”
Comments »Greek Bailout Delay Sends Stocks & Commodities Down
“Stocks (MXWD) fell, the euro weakened for a fifth day and commodities declined as Europe’s leaders remained divided over a Greek rescue and Moody’s Investors Service said it may downgrade global banks. The cost of insuring government debt against default rose to a one-month high.
The MSCI All-Country World Index (MXWD) slipped 0.6 percent at 9:50 a.m. in London. The Stoxx Europe 600 Index fell 0.7 percent, led by banks, and Standard & Poor’s 500 Index futures lost 0.4 percent. The euro declined to less than $1.30 for the first time since Jan. 25 and Spanish 10-year bonds dropped for a third day, sending the yield 10 basis points higher. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments rose for a seventh day, its longest run of increases since November 2010. The S&P GSCI gauge of 24 commodities sank 0.4 percent as copper retreated to a three-week low.
Concern grew that Greece will miss a debt payment next month as a decision on 130 billion euros ($170 billion) of aid was postponed to Feb. 20. Ratings for global banks may be cut as lenders worldwide face risks of rising funding costs amid Europe’s debt woes, Moody’s said. Spain sold 4.07 billion euros ($5.29 billion) of debt maturing in 2015 and 2019, more than the 4 billion-euro maximum target. France is scheduled to auction as much as 8.5 billion euros in two- three- and five-year notes.
“In the absence of a fresh catalyst, the current rally in equities is looking rather tired,” said John Woods, the Hong Kong-based chief Asian strategist at Citigroup Inc.’s private bank. “The positivity around issues such as Greece is beginning not so much to wane as to sour.”
Ban Lifted
Nine stocks (MXWD) declined for each that rose in the Stoxx 600. Spanish banks led losses as regulators lifted a six-month ban on short-selling the nation’s lenders. Banco Santander SA lost 3.9 percent, the most in six weeks. Banco Bilbao Vizcaya Argentaria SA and Bankia SA retreated more than 5 percent.
Societe Generale SA sank 3.4 percent in Paris after France’s second-largest bank said fourth-quarter profit declined 89 percent as the investment bank posted its first loss in two years. Zurich Financial Services AG slid 1.8 percent as Switzerland’s biggest insurer said fourth-quarter profit tumbled 45 percent after losses from Thai floods and other natural disasters.”
Comments »
