A snippet- "Mr Volcker actually said, "I don't get it", which is a Big Fat Lie (BFL), because he understands it perfectly, but he is just so polite and so politic that he finds it hard to say, as I would have so succinctly put it, "How in the hell can you talk about purposely creating at least 2% inflation in prices and then talk about the Fed's duty to pursue price stability at the same freaking time, which gives rise to the expression 'talking out of both sides of your mouth at the same time', and also gives rise to an occasion for me to call you a lying halfwit economic ignoramus who thinks that everybody else is so stupid that you can say such utter preposterous crap like this to me and think I am going to swallow it!" "
Good read.
Every time a politician opens his mouth, he is lying.
ReplyDeleteShanky, it is about time the judicial branch spoke up about what was done:
ReplyDeletehttp://www.pbs.org/moyers/journal/blog/2009/04/william_k_black_on_the_prompt.html
From the Bill Moyer's interview:
" The Prompt Corrective Action Law: Section 1831o
William K. Black
Associate Professor of Economics and Law
University of Missouri – Kansas City
WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.
BILL MOYERS: In other words, they could have closed these banks without nationalizing them?
WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships. Nobody called it nationalization.
BILL MOYERS: And that's a law?
WILLIAM K. BLACK: That's the law.
BILL MOYERS: So, Paulson could have done this? Geithner could do this?
WILLIAM K. BLACK: Not could. Was mandated-
BILL MOYERS: By the law.
WILLIAM K. BLACK: By the law."
And get a load of this story starting to surface out of the fracas:
ReplyDeletehttp://www.bloomberg.com/apps/news?pid=20601080&sid=aBMZTQJSmLqo&refer=asia
"Hong Kong Banks Sell Lehman Notes to Mentally Ill."
It is possible the lawless actions of Paulson have spilled over to moral decline in banking communities around the world.
From the story: "Hong Kong banks sold notes linked to the bankrupted Lehman Brothers Holdings Inc. to 'vulnerable investors' including elderly and people who were mentally ill, according to an investigation by the Hong Kong Monetary Authority.
The central bank identified 102 cases where complex and risky investments were sold by banks to elderly ... (and) mentally ill ... people, according to information contained in a blacked-out section of an investigation made public at a hearing in the city’s Legislative Council today...."
"I was the staff leader for Federal Home Loan Bank Board Chairman Ed Gray’s successful reregulation of the S&L industry. That reregulation provided the tools that allowed the agency to place in receivership many of the worst control frauds. Gray inherited (and for a time supported) a dominant strategy of covering up the scale of the S&L industry’s insolvency. He personally recruited vigorous senior regulators such as Michael Patriarca and Joe Selby to reverse that strategy. The PCA law was adopted largely in response to the enormous cost to the taxpayers of our predecessor’s failed strategy of not closing insolvent S&Ls.
ReplyDeleteThe new law had an impressive start, thanks in great part to the transformed reregulatory spirit. How many readers recall the 1991-92 subprime crisis? It didn’t happen because we took prompt regulatory action against subprime S&L lenders that were following practices (e.g., qualifying borrowers at the teaser rate, offering “neg am” mortgages, etc) that we knew would lead to widespread failures."
Referring same link above:
http://www.pbs.org/moyers/journal/blog/2009/04/william_k_black_on_the_prompt.html
Whoops I see you have posted link to the subject in a previous blog entry. lol
ReplyDeleteSorry about that Spanky.:)
http://shankystechblog.blogspot.com/2009/04/bill-moyers-interviews-william-k-black.html
The link I posted is more at the detailing of The mandates in the PCA law . Check out some of the subsections and sub-paragraphs.
ReplyDeleteI have long believed that Paulson and the Fed were circumventing law. The PCA law and subsections included, clearly show they have circumvented and violated the regulatory laws in place, to deal with under capitalized banks that are over paying executes under coloring of contract law:
Highlights:
"The PCA law states its sole, express purpose:
(1) Purpose
The purpose of this section is to resolve the problems of insured depository institutions at the least possible long-term loss to the Deposit Insurance Fund. (1831o (a) (1)).
The administration’s duty, under the rule of law, is to administer the law to achieve that purpose. Prompt receiverships “resolve the problems” of insolvent and failing banks “at the least possible long-term loss.” ..."
- - -
"In 1991 the Congress moved to limit taxpayer exposure to losses at failed banks with the passage of FDICIA. The PCA provisions of FDICIA create a structured system of supervisory responses to declines in bank capital, culminating in the bank being forced into receivership within 90 days after its tangible equity capital dropped below two percent of total assets. (pp. 11-12)
Note that two percent tangible capital (the point below which a bank is “critically undercapitalized”) is a much higher number than it may appear, for many banks have large amounts of “goodwill” (an intangible) on their books as an asset. The authors emphasize the regulators “forc[ing]” the bank into receivership if it does not promptly restore its capital. They expressly tie these provisions to the PCA law’s intent to combat regulatory forbearance through “mandatory” supervisory intervention."
- - -
"The US supervisors did not need political or judicial approval prior to PCA to intervene at a troubled bank or to force an insolvent bank into resolution. The major change in supervisory practice resulting from PCA is that after PCA the supervisors were required to intervene as a bank’s supervisory capital ratios deteriorated. The independence of supervisory action provided to supervisors before PCA is critical to the effective operation of PCA. A system that requires the prior approval of political authorities creates the potential for delay ...Moreover ... the requirement of prior political approval reduces the effectiveness of PCA...(p. 22)"
"If the bank cannot promptly raise capital on its own to return to health it must be placed in receivership. Nieto & Wall explain that such receiverships ...lead to the removal of the bank officers that caused the failure ... and substantially reduce the cost to the taxpayers."
- - -
"No bank may make a capital distribution (dividend or stock repurchase) if after the payment the bank would fall in any of ... three under-capitalized categories unless the bank has prior supervisory approval."
"All undercapitalized banks must submit a capital restoration plan and that plan must be approved by the bank’s supervisor.
"All undercapitalized banks also face growth restrictions. Significantly undercapitalized banks must restrict bonuses and raises to management."
"Critically undercapitalized banks must be placed in receivership within 90 days unless some other action would better minimize the long-run losses to the deposit insurance fund."
"Supervisors are also given a variety of discretionary actions they may take. For example, the supervisors may dismiss any director or senior officer at a significantly undercapitalized bank and may further require that their successor be approved by the supervisory agency. (p. 13)..."
- - -
"Deeply insolvent banks, ... fall into a more severe category under the PCA law. They are “severely undercapitalized,” and the law mandates that the bank or the regulators promptly restore them to adequate capital or place them in conservatorship or receivership (and prohibit a wide range of business activities)...."
- - -
"(3) Conservatorship, receivership, or other action required:..."
(C) Appointment of receiver required if other action fails to restore capital
(i) In general Notwithstanding subparagraphs (A) and (B), the appropriate Federal banking agency shall appoint a receiver for the insured depository institution if the institution is critically undercapitalized ..."
- - -
"To carry out the purpose of this section, the Corporation (Receivership) shall, by regulation ... (1) restrict the activities of any critically undercapitalized insured depository institution; and
(2) at a minimum, prohibit any such institution from doing any of the following without the Corporation’s prior written approval:
(A) Entering into any material transaction other than in the usual course of business...
(B) Extending credit for any highly leveraged transaction.
(C) Amending the institution’s charter or bylaws, except to the extent necessary to carry out any other requirement of any law, regulation, or order.
(D) Making any material change in accounting methods.
(E) Engaging in any covered transaction (as defined in section 371c (b) of this title).
(F) Paying excessive compensation or bonuses.
(G) Paying interest on new or renewed liabilities at a rate that would increase the institution’s weighted average cost of funds to a level significantly exceeding the prevailing rates of interest on insured deposits in the institution’s normal market areas."
Breur - Thenks for the concise reply. You are on the money. It is a sad sad situation. Bottom line is clear as day. We've got a bunch of crooks running the show, the media is in their back pocket (major media) and no one in this country really gives a shit as long as their 401k is solvent. It is pathetic. Laws? What laws?
ReplyDeletehey shanky, what's your email..... I wanna give you a pass to the new site? let me know it asap...... thanks.....
ReplyDeleteI agree with Kenny, all liars and cheats and thugs....
but at least he is old, and they had the good sense to be polite when they screwed you.... lol......