14 posts tagged “banks”
We all have seen the real estate bubble unfold because banks, brokers, buyers, regulators, and Wall Street all looked a blind eye. Less conspicuous, but just as damaging, was the greatest financial crime in history. Today I will attempt to document how governments, regulators, brokerage firms, and foreign banks are crushing the retail investor.
- Deutsche Bank is liquidating the PowerShares DB Crude Oil Double Long ETN (DXO). Deutsche Bank said: “Limitations imposed by the exchange on which Deutsche Bank manages the exposure of the Notes have resulted in a “regulatory event” as defined in the terms of the Notes, which has caused Deutsche Bank to redeem the Notes.”
- In an effort to stem the effect that the seemingly inevitable regulation will have on futures-based commodity funds, multiple ETF issuers have halted share creation. Thus, these securities trade at huge premiums to the underlying commodity (market distortions).
- FINRA announced that it would be increasing margin requirements for leveraged ETFs as of Dec. 1. These changes will require margin for leveraged funds to be "commensurate" with the degree to which they are leveraged. FINRA's warning set off a domino effect as firms like Edward Jones, Ameriprise, and UBS ceased selling leveraged funds to investors.
- Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the USA. U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities have put Switzerland’s traditional bank secrecy at risk.
- Canada's Royalty Trusts are similar to U.S. master limited partnerships in that they generally pay out a substantial portion of their cash flow in the form of monthly distributions. The Canadian government wants a piece of that. In 2001, in what has come to be known as the "Halloween Surprise" for its announcement on October 31st, 2006, these trusts will have to change their structure and their payouts or face huge tax consequences.
- Lehman Brothers filed for bankruptcy
- Bank of America agrees to buy Merrill Lynch
- The Federal Reserve keeps rates the same
- Oil drops below $100 a barrel
- The Dow falls 498.86 points
The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.
The number of problem U.S. banks and thrifts on an official watch list rose sharply to 416 in the second quarter of 2009 from 305 in the prior quarter, as the industry recorded a $3.7 billion loss.
The FDIC fund used to safeguard bank deposits dipped 20
percent in the second quarter to $10.4 billion from $13 billion at the
end of the first quarter
The problems with naked short selling have been all over the
mainstream media. But hardly a peep when clearing firms fail to deliver
stock after a trade. It's analogous to selling a product on EBay and
then failing to ship it
to the buyer.
Here is the list of Threshold Securities from yesterday.
Please contact your Congressperson and the SEC. Tell then to start enforcing existing law (Section 17A of the 1934 Securities Exchange Act)!
That is what Bloomberg reports as of February 9, 2009 has been committed on behalf of the American taxpayer to bail out America's finance system and stimulate the economy. Only a small percentage of this money--$1.68 trillion--has been voted on by Congress. The vast majority of the spending, $8.1 trillion, has been off the Congressional books and made by the Federal Reserve and FDIC.
- The amount is equal to almost two-thirds of the value of everything produced in the US during 2008.
- It is enough to pay off 90% of the mortgages in the United States--$10.5 trillion would pay for all mortgages, according to the Federal Reserve.
- It is $30,000 for every man, woman and child in America.
- It would be enough to send a $1,430 check to every man, woman and
child alive in the world.
From Randall Parker, Yahoo Answers
PMI protects up to 90% of the loan amount with proceeds payable to the lender.Indirectly, it allows banks to loan money when prudence might dictate otherwise.
PMI companies ARE paying out billions of dollars to lenders, but again, the lenders must foreclose first, and then file a claim to collect 90% of their losses. This is still not enough to stem the tide.
Keep in mind that a lender might only make 2-4% of the loan amount as profit, after selling the loan. If the loan goes bad, the lender has to buy it back, while making your missed payments. Then, the lender has to go through all of the expense of foreclosing or otherwise settling your case before trying to collect from the PMI firm.
If this was on a loan-by-loan basis, it might not be so bad, but that is not how it works. A lender will package $100 million worth of loans in a single offering. They might sell that bundle for $103-104 million. If the default rate goes over a certain amount, say 3-5%, then the lender has to give back the $103-$104 million all at once.
If a lender has a 5% default rate, they are out of business, because they had to pay all of their profits out to buy back those bundles. That's without even taking into account any of the lender's expenses of marketing, salaries, and operations.
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Here is an earlier post you should read. Then check out these sites:
My earlier post detailed the problem. Now I find out the NYSE publishes a daily list of stocks that have naked short sellers. Of course they don't call it that, they use Orwellian double-speak and call them Threshold Securities. If you go through the list day by day, you'll probably find a stock you own!
Remember, this practice is illegal yet no one at the SEC or in our phony government seems to be enforcing the rule of law.
1/07/2009 Follow Up
WASHINGTON, Jan 6 (Reuters) - Proposals by a U.S. Treasury market industry group to allow participants to charge their counterparties for failure to deliver securities on time will improve market liquidity, a Treasury official said on Tuesday.
"The practical measures recommended by the TMPG should serve to minimize episodes of chronic fails, promote overall market liquidity, and enhance the operational integrity of the Treasury market place," said Karthik Ramanathan, acting Assistant Secretary for Financial Markets.
Ramanathan was responding to proposals announced on Monday by the Treasury Market Practices Group (TMPG) that market participants should from May 1 start gathering data on so-called "fails" where securities have not been provided by the scheduled settlement date.
TMPG was formed by the Federal Reserve Bank of New York to address market manipulation.It is safer to make a debit card purchase using the “credit” option (no PIN used) if the card has a Visa or MasterCard logo on it. That’s because the credit card company’s zero liability protection policy applies to this transaction.
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