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2023-03-17 07:00 by Karl Denninger
in Corruption , 509 references Ignore this thread
Oh, He Admits It!
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I love it when a former Congresscritter speaks the truth out loud.

New Yorker: It seems to me that we don’t necessarily want to count on the banks or the regulators always being perfect, so having these requirements might be useful.

Frank: I agree, but there’s no way to. You can require greater liquidity, etc. But there’s no way to force people to do their job well. By the way, are you assuming that, under Donald Trump, the regulation of Bank of America and JPMorgan Chase was everything it should be because they were still covered by the law?

Oh, but there is when someone is in a position of public trust.

You hang them when they play with themselves instead of doing their job.

Who remembers IndyMac?  Uninsured depositors (and there were quite a few) got hosed on that one, and the reason they got hosed is that the bank was backdating deposits to avoid violating reserve requirements.  The problem is that the regulators knew it and deliberately ignored it; in point of fact the examiner who knew it specifically had done the same thing during the S&L crisis and not only didn't go to jail, he still had his job.

And by the way, for those who think Sheila Bair would be a good choice to bring back would you like me to repost some of my articles from the 08-09 timeframe aimed at her, specifically, and her failure at the FDIC to enforce a law called "Prompt Corrective Action" which requires the FDIC to act before a bank invades its bond portfolio and thus is insolvent?

Said law is not a suggestion -- it is a law.  Yet exactly nobody has been indicted for their failure to do their actual job and enforce the law.

Its been fifteen years since that crap blew up the banking (and asset market) world generally and the people who stole the money not only got to keep it they got to ruin you -- and not a single thing changed.  These jackasses are still running around screaming about how "wonderful" they all are and, of course, how diverse!

It is absolutely true that OCC is responsible for examining the financial condition of banks.  It was back in 2007 too, along with OTS for thrifts (one of the changes is that OTS and OCC were folded into OCC.)  These requirements are not suggestions -- they are laws.  Yet we see the same thing happen all over the country, including gang-bangers being let out of jail because racism made the dude pull a gun as he was a poor blaaaaaaack or bwowwwwwwn boy, laws against carjacking and similar thuggery be damned.

We allow little hooligans to remain in schools because its too much to expect them to actually sit in class and not attack their teachers and, since we won't take those little thugs and put them somewhere else (like a reform school or even a rubber room) we then wonder why we have teachers who can't and unions who we allow to stay in power even when their members are drawing a salary while failing to do their job.  Of course the most important factor in all of this is whether a boy who claims he was born into the wrong body can go into the girl's locker room and leer at the actual girl's breasts.

We have a Treasury Secretary who ignores any law she finds inconvenient just as she did when she was at The Fed; why its important to talk about how climate is going to ruin financial conditions if we don't kill whales with windmills which disrupt their navigational capacity but its perfectly ok that our banking system enables the expenditure of gigawatts of power, all of which must be dumped as heat into the environment, for the trading of mathematical formulas with no intrinsic value of any sort (so-called "crypto" assets) when that same heat could do something productive -- like, for example, turn coal into synfuel or build a LFTR that can then do so, remove the alpha emitters from said coal and use them for power instead of causing lung cancer, and make the lights and heat in your home work.

This very same Treasury Secretary is well-aware that fully one third of the funds spent by said Treasury Department goes to Medicare and Medicaid and that is 80% unfunded, which is in fact more than the entire federal deficit.  Said person also knows that 15 USC Chapter 1 forbids any sort of scheme to fix prices or monopolize trade including internationally and that every drug company in the land does exactly that with their differential pricing between nations, say much less between individuals in the United States which virtually every medical provider in the US violates on a daily basis.  She also knows that this practice was challenged twice all the way to the Supreme Court and found to be illegal.  As the person signing the checks she thus also knows she's suborning, permitting and furthering felony violations of laws that have stood on the books for more than 100 years and yet rather than demand the DOJ put a stop to it and refuse to issue said checks until it is stopped she gives a speech about how women and minorities are under-represented and, once again, your Suburban is ruining the environment.

In 2006 it was blatantly obvious that the Option ARMs and other similar hinky products were fraud-riven packs of lies and everyone knew it.  There were tapes and emails of bankers having conversations with each other calling those securities vomit yet three minutes later they were off selling them to customers as "good investments"!  Not a single one of those institutions or persons went to jail and neither did any of the regulators who were quite-clearly doing anything other than regulating -- perhaps they were watching porn on the Internet in their offices?

That "zero" interest rates would not persist into the indefinite future because it could not, that M2 was driven up on a parabolic trajectory by both Democrat and Republican administrations with exactly neither Treasury Secretary doing a thing to stop it, that Trump bragged repeatedly about being "The King of Debt", that every penny of The Fed's bond-buying could only happen if the Treasury continued to deficit spend and thus issue said bonds was in fact driven by and caused by that issuance and that all of this was wild-eyed crazy, irrational and criminally negligent, akin to giving a convicted arsonist a five gallon can of gasoline, a pack of matches and several bricks to throw through the windows of buildings is fact.

That we, the people of this nation were given a prime, front-row seat as to what happens when you allow such conduct and refuse to jail those who are supposed to enforce laws but refuse, and instead they collude with entities interested in stealing everything they can is also fact.  That happened fifteen years ago, I reported on every bit of it and you would think the damage it inflicted on the average American would have forced reform -- if not jail right then and there a very clear statement that if it happened again we, the people, will not wait around to see if you suddenly decide to enforce the law -- we will do so on a summary and final basis, so you better cut that crap out.

But nooooooo!

Instead we're still screaming "Diversity!", "Equity!" and "Inclusion!" without a single care in the world as to whether before any of those the two most-important words of all are enforced:  COMPETENCE and JUSTICE.

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Flappingeagle 5k posts, incept 2011-04-14
2023-03-17 07:51:41

The local police do not give tickets to their friends.

The revolving door between the government and the financial firms guarantees that they all know each other. Why should we expect the financial regulators to fine their friends? It is a system designed to not work as advertised. It does work as intended though, the people in it get rich.

Great ticker as usual and completely accurate.


Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave
Dingleberry 684 posts, incept 2011-11-06
2023-03-17 07:51:45

There is a saying that goes "wealth does not survive three generations".

So if we start with the Boomers who inherited post-WW2 America....I'd say we are right on track to insolvency and ruin. Sorry Zoomers....you got left holding the bag. But at least you have the option of gender swapping at will.

I surmise that is because wealth (especially unearned) leads to all manner of societal fuckery and buffoonery. A national orgy complete with coke, whores, and depravity. All charged to the national credit card.

Without the necessary feedback loop of the negative consequences of easy money...this has allowed all manner of lunacy to fester. Green scams. Obesity. Useless (at best) drugs. Bailing out bankster gambling losses and frauds. Overpriced and ineffective MIC. A media that is allergic to truth. All are various forms of grift. All compliments of money printing and manipulations in large degree.

Corrupt the currency.....corrupt the people. Guaranteed. And the worst part is, much of the corruption is now ingrained. You see this with banksters, the woke, the karen, etc. Be they evil or an idiot....it doesn't matter....the results are the same. The refs are on the take.

There is not one single institution that remains true to its creation. The medical, educational, entertainment/media, banking and most certainly the political system (including federal law enforcement) are all hopelessly corrupt, decrepit and beyond repair. The rot is entrenched like a cancer, and spreading. It cannot be repaired. Only rebuilt. They are too far gone.

There has always been a fringe element of societal lunacy and graft. As long as it remained on the fringe...it could be tolerated and even afforded.

That fringe has now become the majority. And the lessons of history ignored. And we know what happens to those who ignore history.

Happy St. Patty's Day friends!
Invisiblesun 687 posts, incept 2020-04-08
2023-03-17 08:15:30

Barney Frank is right and the interviewer and Sen Warren are wrong. Regulation is always backward looking. It is reactive. One regulation that would matter - that would light a fire on bank executives and board members - is to make them personally liable for financial loss experienced by depositors. Require them to post personal bonds securing deposits and then you will see a conservatively run bank!

Is it not interesting that neither Dems or Reps care to address the problem of financial failure by imposing personal liability on the executives. They all favor bailing out the rich and the insiders on the backs of the people.
Augeries 369 posts, incept 2019-09-26
2023-03-17 08:26:30

An excellent point made on Crypto's environmental effect. It's so obvious yet who would ever bring it up? Massive amounts of electrical power and other resources spent in the production of Absolutely Fucking Nothing. Meanwhile the things necessary for societies function are what take the brunt of all the enviroweenie attacks.

And yet imagine bringing up something like this in say, a presidential debate? You would be mocked and ruined, not by logic but by sheer weight of screaming.

I recently watched the film Don't Look Up. I liked it, but DAMN was it painful to watch. It was so on the nose I kept having to take breaks. I recognize that this satire might as well be truth...I wanted all those characters put against the wall. At least the ending was satisfying.

The people in that movie are pretty much real and they are in charge. That's scary and very depressing.

The World is Quiet Here.
Ronniemcghee 364 posts, incept 2012-07-28
2023-03-17 08:41:16

If a cashier at Walmart tried to short-change you $20, you would go ballistic on them
You wouldnt surrender an inch.

How strange people cant or wont see beyond that example.
Dji 1k posts, incept 2009-04-21
2023-03-17 09:03:05

FRC stock this morning....

$26.12 -8.15 -23.78%

So the 30 billion card monty is working right? smiley

Don't be a bag holder-Me

What goes up Must come Down- Alan Parsons Project
Cmoledor 1k posts, incept 2021-04-13
2023-03-17 09:05:59

And the people who need to hear this the most wont hear it at all.

The whole world is one big fucking scam
Why are you giving a vulgarity warning here? Our genial host is an advocate of both skullfucking and sodomy via rusty chainsaw. Credit to Rollformer
Cvdoc 550 posts, incept 2009-06-11
2023-03-17 09:20:41

@Invisiblesun. This is a variation of holding pharmaceutical executives liable for narcotic scripts by pill pushers.

These big banks are all in the same bad place. And because they are so are we. If they backstop all depositors it seems like they are effectively nationalized

Few men desire liberty; most men wish only for a just master.
Invisiblesun 687 posts, incept 2020-04-08
2023-03-17 09:29:36

Yellen explains she and Joe Biden are picking winners and losers - who are protected bank clients and who are not. As expected the deplorables are not preferred bank customers.

It is amazing to watch the Communists do what they do, in plain sight, and it doesn't generate headlines.



A bank only gets that treatment ... if I (Janet Yellen), in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.

Reason: Added link to Reuters story
Chemman 352 posts, incept 2021-05-03
2023-03-17 10:17:13

@diggleberry: "Corrupt the currency.....corrupt the people."

Bass ackwards. You build men without chests and they will corrupt every institution they run.
Calrissian 142 posts, incept 2021-04-12
2023-03-17 10:17:18

Don't Look Up. @Augeries
Indeed, that is a fine little satire on just how crazy the collective of the species are.
Discernment 2 posts, incept 2021-09-27
2023-03-17 10:22:28

The Fed is insisting on taking on the debt and foolishness committed by the banks instead of letting the natural consequences of their actions play out.

The Fed economy wont last much longer at this rate, especially with the loss of petrodollar status being inevitable.
Dingleberry 684 posts, incept 2011-11-06
2023-03-17 10:50:25

No Chenman,

I am correct. The Fed was created and THEN society and people went to shit. All the endless social programs (that are monstrously in debt) come from the ability to effortlessly add debt via currency creation. In other words.....bribes for votes. I am old enough to remember "ask not what your gov can do for you".....and taking welfare or charity was embarrassing to the point of many refusing to accept it due to pride.

But now? Since the rich are getting the lion's share and have been for decades....the masses want their cut too.
Garbageman67 6 posts, incept 2022-01-07
2023-03-17 10:50:34

Is there any way to add a penalty to the depositors in SVB? They were chasing a rate well above the national average of 'clean' banks and like anyone involved in a Ponzi scheme should have been asking how they were obtaining that rate (and thus should be liable for the loss at least at a rate if not double the above market rate)

Just something I was thinking about when they keep saying 'make depositors whole'...
Rangeishot 2k posts, incept 2021-11-18
2023-03-17 11:32:11

Garbageman, why penalize somebody for chasing a better rate?

My credit union (Navy Federal) has a money market at a paltry 0.45% or something along those lines. I moved a bunch of my money to a different bank paying nearly 5%. Should I be penalized?

Welcome to TF: The "T" stands for "Thoughtcrime"
Ncrown 28 posts, incept 2021-07-24
2023-03-17 11:38:22


Perhaps this is just splitting hairs, but I do think the point @Chemman made has some validity. One could argue that it took "men without chests" to create "The Fed" in the first place. In that case, the timeline has shifted back.
Garbageman67 6 posts, incept 2022-01-07
2023-03-17 11:38:30

Maybe. How are they achieving that rate? Are you sure its sustainable. You are essentially investing in that bank. (Though 5% is nearer to the going rate now but 5% 2 years ago was not).

I said is there a way (to do this both legally and morally but I guess I should have been explicit)

If the bank was paying 10% now, do you think you 'earned' those by going with that bank, even though there is no reasonable way they could pay that rate and shouldn't you have some responsibility in that chase?
Tickerguy 193k posts, incept 2007-06-26
2023-03-17 11:39:14

Why do we bother with regulators if they won't do their job? They're supposed to prevent that sort of thing from happening.

The difference between "kill" and "murder" is that murder, as a subset of kill, is undeserved by the deceased.
Ncrown 28 posts, incept 2021-07-24
2023-03-17 11:42:41

@Rangeishot - perhaps you should if you are chasing a higher rate with an institution that is doing the same stupid shit?

Not my argument, but I can understand the point being made by @Garbageman67.
Ingar 498 posts, incept 2017-02-14
2023-03-17 11:42:52

Will Janet Yellen make the SVB depositors who had over $250000. whole ostensibly to protect from the contagion of bank runs? We wouldn't want to see the many SVB investors in Israeli start-ups lose their money would we? Oy.
Heartlander 2k posts, incept 2021-02-25
2023-03-17 12:02:22

We allow little hooligans to remain in schools because its too much to expect them to actually sit in class and not attack their teachers and, since we won't take those little thugs and put them somewhere else (like a reform school or even a rubber room) we then wonder why we have teachers who can't

In my little rural county, teachers are quitting... and the school board is panicky about how are we going to replace them. Nobody wants to teach little monsters. No amount of money -- even if our district HAD the money -- can entice people to endure the abuse, frustration, and even trauma that the job so often inflicts now.

COVID, of course, made everything much worse.

This is a county of population 5,000. We have had a 13-year-old girl raped by a classmate, fentanyl overdoses, suicides...
There is no gang violence that I know of, but that definitely happens in the neighboring county, which is much larger and a regional center.

What we do have is broken families, alcoholic and drug-addicted parents with neglected kids, and massive social-media addiction.
Ee4fire 868 posts, incept 2011-03-24
2023-03-17 12:02:44

Said law is not a suggestion -- it is a law. Yet exactly nobody has been indicted for their failure to do their actual job and enforce the law.

Karl, we only have selective enforcement of the law. It is clearly a two-tiered system. They don' even hide it anymore. If you have the right connections and political philosophy, it doesn't really matter what crime you committed. The US Attorneys are political appointees and tow the line of their masters.

The Bidens, Clintons, and Obamas didn't get rich because they came from wealth, they were bought and paid for. Most members of CONgress are on the take. Most come to DC with very little money and leave millionaires with a taxpayer funded fat pension, if you get them to leave. There is a reason people spend millions of dollars to get jobs that pay less than $200k/year.

Yellen has made millions between her gov't office holder stints with outlandish speaking fees from the financial institutions. Mayorkis is being funded and propped up by some donors or advocacy groups. No honest administration would have kept Mayorkis on the job after his first 30 days. McConnell is a CCP puppet posing as a conservative. All of them should be investigated and indited on corruption charges.

If you were a Jan 6 protester who did nothing but walk around or through the US Capitol without doing any damage or assaulting a police officer or an anti-abortion advocate peaceably protesting/praying outside an abortion mill, you are treated like an organized crime felon. Most likely you are on your own to fight the charges.

If you are an Antifa, Code Pink, BLM, or Climate Change protester destroying property, throwing incendiary devices at buildings or people, and/or assaulting people you are most likely treated like a first time juvenile, if that harsh. If for some reason you are arrested there are plenty of groups who will line up to bail you out. Some of this money is funneled to these groups is from NGOs or similar organizations which get taxpayer money.

Our law enforcement has been politically weaponized and now follows the Banana Republic/Marxist/dictatorial type governments. There are numerous investigations into Trump and his administration. There are a handful of investigations into Biden's or his administration. You never hear about the Biden investigations. The Trump investigations seem to take the majority of the CNN and MSDNC airtime. Hunter's laptop (if it still exists) is in a vault somewhere in the FBI building in DC and Chris Wray is probably the only guy who has the key to the vault. I remember when the FBI let Hilliary and her underlings destroy their laptop hard drives and cell phones along with all the evidence of illegal activity.

There has to be some serious clearing out of our elected representatives and entrenched bureaucrats to get back to a free and fair justice system. Unfortunately, there are too many mind numbed robots and dead people who are allowed to vote. We need to go back to only allowing citizens who contribute to the tax base being allowed to vote.

(Politicians), 536 commoditized temple monkeys pawing through the ruins of America in search of bribes. (The District of Corruption) works like a vending machine. You put coins in the slot, select yo
Ceiii2000 554 posts, incept 2021-05-17
2023-03-17 12:03:38

Ya'll worry to much, the Fed has INFINITE money and they will do whatever needs done.
Kcforreal 60 posts, incept 2021-09-27
2023-03-17 12:18:47

@Tickerguy - We have a Treasury Secretary who ignores any law she finds inconvenient just as she did when she was at The Fed; why its important to talk about how climate is going to ruin financial conditions if we don't kill whales with windmills which disrupt their navigational capacity but its perfectly ok that our banking system enables the expenditure of gigawatts of power, all of which must be dumped as heat into the environment, for the trading of mathematical formulas with no intrinsic value of any sort (so-called "crypto" assets)@ when that same heat could do something productive -- like, for example, turn coal into synfuel or build a LFTR that can then do so, remove the alpha emitters from said coal and use them for power instead of causing lung cancer, and make the lights and heat in your home work.

Let's not forget HFT (High Frequency Trading) strategies that involve building ultra-fast systems with high-speed data pipelines and quantitative analysis to execute lightning-fast trades that have NOTHING to do with investing. All that energy expended to gain microseconds of advantage in getting ahead of other high-speed trading criminals.

Even though I never got burned in the Internet stock crash circa 1999, in 2001 I decided I'd had enough of Wall Street, sold at a profit (I never had Internet stocks) and paid off the outstanding balance of my mortgage (8+% interest on late 1998 loan) and never looked back. I detest the systemic fraud that permeates the market, including the rating agencies and so-called regulators but also including a significant amount of fraud in the companies themselves. Perhaps I cut off my nose to spite my face but at least I am not at their mercy any longer. All I have to worry about now is the entire federal government, the banking system and nuclear war. <sarc>

"Most people are not just comfortable in their ignorance, but hostile to anyone who points it out." - Plato, The Allegory of the Cave
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