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Bank of America Admits To Repo 105-Like Fraud, Even As End Of Quarter Window Dressing Continues Unabated
In what will come as a complete lack of surprise to everyone, Bank of America has officially confirmed it "mistakenly" used Repo 105-type transactions on $10.7 billion in assets, which had been misclassified as sales rather than borrowings, or repos, in the period between 2007 and 2009. As Bloomberg reports, the bank used the excuse that a $10+ billion fraud is simply an rounding error so you must acquit: "Bank of America said the inaccuracies aren’t material and
“don’t stem from any intentional misstatement of the
Corporation’s financial statements and was not related to any
fraud or deliberate error.” We are sure that late night comedians can come with enough material in which a $10.7 billion "mistake" is not material so we will leave it to them, and instead we will ask another question as pertains to the whole end of quarter window dressing theme: namely - why does it continue to this day? As per the FRBNY's public disclosure of Primary Dealer holdings, the week ended June 30 once again saw the traditional balance sheet collapse, with total PD assets as of June 30 closing once again at the lowest level of the entire quarter. This marks the 7th consecutive quarter in which primary dealer assets finished the quarter at or near the lowest exposure during the quarter, and 9 out of the last 10. But it's all fine - according to the SEC mangled rules of corrupt statistics (soon taught at a Princeton University near you), an event that occurs 90% of the time is not at all significant or notable.
To wit:
The US public accepts that the bankers have lied, cheated and stolen pretty much every day for the past century and the only thing we have to show for it is a $20 trillion debt tab in a few years. Yet that they continue doing so with impunity, even as they themselves now confirm they engaged in inadvertent fraud, just boggles the mind.
Here is another representation of PD weekly assets, with the EOQ positions highlighted in red.
We are willing to wager anything with anyone, that the New York Fed PD data week of July 7 will show a material increase in total assets now that the June 30 window dressing charade is over.
And while we are looking at Treasury Primary Dealer assets, he is a full breakdown of holdings in table form...
and in chart form...
The last week of June saw a drop in PD asset holdings of just over $14 billion - just enough to offset the massive outflows in equity mutual funds. And as the action in the past week demonstrates, this is money that sure was put to good use in bidding up risky assets.
And lastly, for those interested in how primary dealers are bidding up treasuries, there may be some surprise to discover that as of June 30, treasuries of alll types held by the PDs dropped to a negative number for the first time since... March 31 (yes, the last time there was major window dressing going on).
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Nice reporting; thanks, TD
What are the proposed causes and implications of negative Treasury holdings by PD's at the end of Q1 and Q2?
Oh its pre-merrill!
Now Worldcom's fraud amounted to around $11B and Bernie is doing 25, Scottie is out now I think.
Let's go backwards - what in any of our systems - all of them - is truly balanced and ethical?
What are these strange words you speak?
Oh I know 'balanced'. That means ultra-pro-republican. Fox taught me that.
Brilliant avatar matches your name...lmao
Words of new reality of which really exists......but it is new - welcome to the Shift! tee hee on your response..... they have been lost words for so long
I am Tyler's complete lack of surprise.
And...once again...attempting to discuss this with family/friends draws blank stares and/or an angry response, typically "...I don't want to hear any of your negativity..."
There is no hope...secure food, ammo & gold/silver...and either you reside in a secure place or you have one identified for a bug-out...
F**K Joe & Josephine SixPack...I have had all that I can take and I can't take ANY of them, anymore !!!!!
I feel the same way. It is hard to keep reminding myself that I would not be aware of most of this had it not been for others warning me. But why can some of us come to believe something before others around us when so many won't believe something unless others around them also believe it?
My favorite response is the nervous laughter.
This is called group think.
A Must Read: The Latest From Martin Armstrong Titled -- The Collective Conscience > http://www.scribd.com/doc/33969704/2010-The-Collective-Conscience-6-26-1...
Thank You! That was indeed a fantastic read.
On unrelated note: their application I read on a blog is made in HTML5.
Such Progress!
it's milgram not milgrave btw.
http://en.wikipedia.org/wiki/Stanley_Milgram
When we mere mortals break the law, we feel the full wrath of our gods while the gods themselves must be as free to do whatever it is they think is best for us, or them. Who really cares about us, anyway.
Ah! We, the peasantry to the New Versailles. Verily, I say unto you, those that bring the Wrath of God down upon us for mere transgressions are the Same who care not to Recognize their Own Sins, those abounding with impunity, the Power Elite.
Mortals not held to any Standard of Morals and Ethics but their own from which they Exempt Themselves. They, who anoint themselves, the Gods of Man, the Power Elite. Those who shall never feel the Steel of the Cuff About Their Wrists for their Own Actions.
amen
Is there any chance that this was "truly" a reserve drain?? If there's any chance, I'd be eerily cautious of a "no effect" on markets perception. What I mean is,,,,is BB potentially doing his job of cutting his BS balance??
And I'm sure there will be a full investigation conducted by those invisible regulators as the joke known as American accounting keeps nations like Venezuela laughing at the corruption within our markets.
sorry cant comment on this...i do not have a Phd..
This isn't a reply, either.
Anyone who has worked at a Commercial or Investment Bank is fully aware of the "Window Dressing" process. It is become as traditional as mom and apple pie, world wide, "accepted" reality of, not a separate dimension from "business as normal."
Do say, does seem the magnitude and creativity of the process is being tremendously enhanced, well past cottage industry standards, of late. But then again, what is to one expect in the days of rocket science, genetic manipulation and financial engineering?
While banks are perhaps the greatest violators of accounting rules, the practice is not restricted to the financial industry. I met a woman recently who was positioned to become the CFO of a major corporation based in Chicago (she would not reveal the name to me), and she believed that 90% of the corporations in the US use accounting gimmicks (read fraud). She couldn't handle the institutional lies, quit abruptly when they asked her to move up, and went to work as the accountant and administrative assistant for a small non-profit... Bless her honest heart.
Disregarding all the fictitious profits, fantasized asset values, farcical imputations and hedonic adjustments, and just plain fudged statistics (especially regarding inflation), I wonder what our GDP really is.
WSJ.com had an article on it, as well. It's still there. You don't even need "Pro" to read it.
http://online.wsj.com/article/SB10001424052748704799604575357421366347624.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
Fraudulent. Let's see some charges. All the other banks will be disclosing they did this in the next few weeks.
List of the Primary Government Securities Dealers Reporting to the Government Securities Dealers Statistics Unit of the Federal Reserve Bank of New York
BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
RBC Capital Markets Corporation
RBS Securities Inc.
UBS Securities LLC.
http://www.newyorkfed.org/markets/pridealers_current.html
Primary dealers = America's Most Wanted
This list along with photos of each crime family's notorious dons and capos should be post in Post Offices across the U.S.
Since law enforcement has failed so far to reign in the rampant criminality, it's time for citizen's arrest to bring these crooks to justice and 20 years to life hard-time prison sentences.
Friendly phrase correction: that's 'rein in'. It harks back to horse-and-buggy days.
Quarter ending balance sheet dressing is an old CFO trick in publically traded companies. Even companies that actually build stuff push orders forward/backward to dress up earnings. Got bad quarterly earnings coming out ?? Just shit them down even further so you demonstrate BTE the next quarter. The short term bonus system rewards this type of scheming.
My personal favorite was GE's handslap fine for getting caught hiding undelivered locomotives in a huge warehouse (that were booked as sold and delivered) to dress up a quarter's end. An insider ratted them out.
Of course it is all fraud. It's just a matter of degree. BAC is not the only perp. There is a pandemic of " creative " balance sheet fraud that has gone on unabated despite the WorldCom/Enron catastrophy, Sarbanes, etc.
Rainman--my personal favorite was Immelt selling off GE Re to Swiss Re: the Swiss said "We'll do the deal, just put back the $19.4BB that you've siphoned off."
http://online.barrons.com/documents/barrons20051226.htm -- Barrons Cover
Welch and Immelt squeeled like a ... er ... pig.
- Ned
(that squeel hurt)
Bank of America is the bank the Obama administration said is "the new role model of what a bank should be". Tks ZH, keep it coming!
It's like Al Capone recommending a role model. What good do you think the "role model" will be?
Maybe Nike can bring back the "I am not a role model" campaign featuring the most notorious CEOs...
http://www.youtube.com/watch?v=nMzdAZ3TjCA
LOL, when Al Capone recommended a natural born killer to someone, he probably was respected. When O-bummer has to ask to pee, he doesn't really have anyone's respect.
Perfect analogy GG!
Corrupt Is as Corrupt Does.
bank of america was founded as bank of italy.
http://www.gold-eagle.com/editorials_08/willie070810.html
http://www.sox-online.com/soxact.html#sec201
Section 302 of the Sarbanes-Oxley Act
Following is an excerpt from the Sarbanes-Oxley Act of 2002.
SEC.302. CORPORATE RESPONSIBILITY FOR FINANCIAL REPORTS.
(a) REGULATIONS REQUIRED- The Commission shall, by rule, require, for each company filing periodic reports under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)), that the principal executive officer or officers and the principal financial officer or officers, or persons performing similar functions, certify in each annual or quarterly report filed or submitted under either such section of such Act that--
(1) the signing officer has reviewed the report;
(2) based on the officer's knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading;
(3) based on such officer's knowledge, the financial statements, and other financial information included in the report, fairly present in all material respects the financial condition and results of operations of the issuer as of, and for, the periods presented in the report;
(4) the signing officers--
(A) are responsible for establishing and maintaining internal controls;
(B) have designed such internal controls to ensure that material information relating to the issuer and its consolidated subsidiaries is made known to such officers by others within those entities, particularly during the period in which the periodic reports are being prepared;
(C) have evaluated the effectiveness of the issuer's internal controls as of a date within 90 days prior to the report; and
(D) have presented in the report their conclusions about the effectiveness of their internal controls based on their evaluation as of that date;
(5) the signing officers have disclosed to the issuer's auditors and the audit committee of the board of directors (or persons fulfilling the equivalent function)--
(A) all significant deficiencies in the design or operation of internal controls which could adversely affect the issuer's ability to record, process, summarize, and report financial data and have identified for the issuer's auditors any material weaknesses in internal controls; and
(B) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal controls; and
(6) the signing officers have indicated in the report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
(b) FOREIGN REINCORPORATIONS HAVE NO EFFECT- Nothing in this section 302 shall be interpreted or applied in any way to allow any issuer to lessen the legal force of the statement required under this section 302, by an issuer having reincorporated or having engaged in any other transaction that resulted in the transfer of the corporate domicile or offices of the issuer from inside the United States to outside of the United States.
(c) DEADLINE- The rules required by subsection (a) shall be effective not later than 30 days after the date of enactment of this Act.
The only thing that will stop these scumbags is an unprecedented economic collapse.
A limo-driving friend of mine in Chicago is busier than ever--driving around execs from various TARP banks. Typical day is pick-up at O'Hare, morning and afternoon meetings in the loop, drop-off at O'Hare. Now, cabs for the day would run $100. But the TARPies won't have that, they rent the SUV limos for $1000 to $1400 per day. Your tax dollars at work.
Once, my bud took some banksters to a day game at Wrigley field. They were starting out at Murphy's bleachers, a popular bar next to the park's Sheffield Ave. border. The street there is closed north of Addison on game day, so my friend dropped them off at the corner for a half-block walk. The banksters couldn't believe they had to actually walk and launched into a bitchfest that would shame a pack of beagles.
My friend also reports that the banksters frequently joke about this deal or that going south but not worrying about it because "Uncle's got our back."
Personally, I think a savage and very public beating of a few of these pricks at the hands of a drunken mob would be very healthy for the country. I mean, nothing else has made them think twice.
The only thing that will stop these scumbags is an unprecedented economic collapse
@ Cheyenne
I respectfully disagree. I think an unprecedented economic collapse will do the exact opposite - it will empower them, just as it did in 2008. There were a few months in 08/09 when the world looked like it was going to wobble off its axis, and the first response to immediately empower the banks by shoving wheel-barrows of cash up their ass, and putting a fire wall around them. Some banks were given cash that they supposedly didn't even want. A few short months later, they were reporting breathtaking profits, while the rest of the country is fighting for the crumbs. Perhaps a few of the banks with trillion dollar balance sheets will implode, but only as a gratuitous offering by the gods at the Fed/Treasury.
At JPM, there is a unspoken secret that everyone knows...the longer the recession lasts (and the worse it gets), the better for them. As small and medium sized banks around the country fold, it's clearing the competition. If you haven't noticed, there are Chase branches popping up everywhere.
Very interesting take, and yeah, I noticed the Chase branch issue. JPM handles a lot of food stamp action (33M a year ago, now 40MM+), so what you say about them certainly rings true.
Your take on '08, however, doesn't entirely jibe with my own. The first "victim" that year was BSC in March. That's when Helicopter started talking about "too-interconnected" (which became TBTF) and the need for a bailout. Enter... JPM, who for $30B got to pick and choose "assets." That's how the Red Roof Inn ended up on the Fed's balance sheet.
The next biggie was LEH in September 2008. Inexplicably, LEH was allowed to fail. A few observations on this one. First, LEH was bigger than BSC, and yet its failure took out one hedge fund only. So Helicopter was wrong about TBTF--no such thing. Not surprising from the prognosticator of $50B--tops--in subprime losses. So I call total bullshit on TBTF, no such thing. Remember too being told that unless $700B in toxic assets were purchased, the end was certain. Never happened. "TBTF" got direct equity injections.
Second, LEH's bk occasioned a report from a bankruptcy examiner named Anton Valukas. His 2200-page report was chock-full of dynamite, including the 105 transactions referred to in the headline above. That report, for example, included intel on the "stress tests" for LEH made up by the head of the NYFED back then, Timothy Geithner.
Finally, it would seem that a great many people have picked up on the scam, but are yet reluctant to acknowledge its magnitude. My brother-in-law, for example, runs a couple Ford dealerships and reports many new customers coming in because "you didn't take the bailout money." Now all of sudden he's all ears to hear my bitching about banks. I've been preaching about the great larceny for 3 years, and now (Summer '10) people are a LOT more knowledgeable.
That's a long way of saying I just don't see this situation--the bailouts and the fighting for crumbs, as you say--continuing unchecked. Eventually the TBTF banks will fuck the wrong one up (I'm betting food) and then things will change because they have to.
But you're probably right, now that I consider another angle. There is NO WAY we'll see another bankruptcy report like the one outta LEH.
Whatever the outcome, I'm glued to... well, this blog.
The only thing that will stop these scumbags is an unprecedented economic collapse.
Oh, I think I'd put a hidden camera in the limo, but that's just me.
WONDERS OF THE WORLD OF FRAUD:
http://williambanzai7.blogspot.com/2010/07/wonders-of-world-of-fraud.html
Is there ANY sort of fraud that the TBTF Banks are NOT engaged in?
I don't think they've tried the Nigerian Letter email fraud.
Legalize accounting fraud and all of a sudden the banks are healthy. I wish it was that easy when I do my personal books.
It won't last for them. The jig is up. Kind of sad for "them" - looks like their granpappys had a plan and the young ones screwed it up.
Kind of sad for "them" - looks like their granpappys had a plan and the young ones screwed it up.
Kind of sad for "them" - looks like their granpappys had a scam and the young ones screwed it up.
Fixed it.
Fraud? Thats nice. Im growing Tomatoes in my backyard. I will be picking them in a couple of days. I cant wait.
Meanwhile, the Mid-East is continuing to play Stratego with live pieces:
http://www.debka.com/article/8905/
I am outraged by this. Biggest deposit base in America and they continued these shenanigans thru 2009. and was reported 1st in 2010
WHAT the FCK is wrong with people????????????????????? Outright fraud and manipulation has been confirmed 100s of times in the past 2 years. and no one cares
this confirms why no retail investor will be coming back to this market EVER unless pe's get so cheap you can't help it
fck you BAC
B of A just cut my daily ATM withdrawal limit from $2,500 to $1,000 without warning, lucky I found out prior to any real emergency. Another little barrier between deposit holders & their funds.
FASB--they were just doing it for your own protection, you might have an identity fraud case and they were protecting your account. (nvm that M3 is imploding and they don't have the cash--I keep going back to Roth's "Depression Diary" and hearing "Jaws" music with the shark. "We need a bigger (life)boat."
Bank of Amigos, well, I've been trying to get out ever since they took over a couple of great local banks. But my wife--NOOOOOO!--"I like those people" (and rightly so, the local branches haven't done the corporate culture change thing.
But then, BoA Corporate IT saw a pattern of payments to cable co. and others and all of a sudden, we had "automatic payment enabled" on three accounts. And my wife called, and waited, and called the folks we buy services from, who "KNOW NOTHINK!", and got bupkis from Bank of Amigos. Voila! the Lioness says "We are so the flock out of there!."
I popped a bottle of champaign that night ('bout a month ago). Plug into new banks almost done.
Just don't want them to seize up over the next two weeks. Then we're outta there.
- Ned
My local bank got eaten by another bank that got eaten by B of A. Over the last 10-15 years, I've probably been to either Foxwoods or Mohegun Sun in Connecticut 40 or 50 times. My trips there were much more frequrent 10 years ago. I always withdrew the same amount, $400. Last year, I after not having gone down there for something like 6 months, I went with a buddy of mine. A few days later I tried to use my card and couldn't.
I called to find out what the problem was. It turned out B of A had frozen my account because they said there was suspicious activity on my account. I asked what it was. They cited the $400 withdrawal from a Mohegun Sun atm. What was particularly exasperating was that I'd used the card the next day to put back $300. So, apparently, B of A imagines that there are thieves who will steal my atm card but go and put most of the money back the next day.
Sheer financial genius!
The banks not only have a disincentive to lend, they have an incentive NOT to lend. In the event that their renewed lending led to an economic recovery (chance=slim to none), the punchbowl of free money and Fed asset purchases would be taken away, and with it all-time record bonuses. Bankers simply cannot take that chance; they've got lifestyle issues at play.
Ironically, the ONLY chance the economy has of recovering---and this chance remains slim to none---is for the Fed to raise rates. Not only would savers suddenly have more earnings, which they might spend, but banks would be forced to actually begin doing credit analysis and lending again.
Looks like rates will remain at record lows "for an extended period".
the only real chance we have is to raise rates AND allow deflation....PERIOD
everything else I see on these boards and blogs and on tv is a lie
Why lend when they can get the money for free and make interest on their reserves?
Without a fed audit, imagine all the 'insignificant' errors that get washed away.
Since we don't get a "list" of the companies that are "legally" "allowed" to provide false documents to the SEC in the name of "national security" , isn't it a given that the banking cartel, supported by our captured government would ALWAYS provide false docs?
A little BofA real estate anecdote from personal experience:
July 8 B of A short sale dept. accepts all cash offer on SFH of $320K($420K in loans outstanding) 6 weeks after submission.
July 9 B of A asset mgt dept. trustee sales same property at Riverside Co courthouse to different buyer for $240,000
July 9 B of A short sale dept. sends buyer of offer accepted on July 8 a rejection of offer letter, claiming it was too low.
Truly a model bank, I'd say.
Ha! That's funny.
"This debt is like a cancer," Bowles said in a sober presentation nonetheless lightened by humorous asides between him and Simpson. "It is truly going to destroy the country from within."
http://www.huffingtonpost.com/huff-wires/20100711/us-governors-debt-comm...
(yes --- I'm sure they had a barrel of laughs and loads of bagels, pastries and donuts to munch on. I'm glad everyone had a good time discussing the ultimate demise of the US economy)
Nothin like US style justice....
Justice is for the small folk....
Justice is for the small folk....
just us.
BofA has confessed to transactions that were essentially repurchases. Essentially what Enron was up to.
But the $64 question is how many other transactions took place to dress up the balance sheet but passed the smell test.
To fully recognize the BofA fraud one must read the real scenario in real time as the article truthfully reports -
http://www.globalanalysis.net/news/296_worst_financial_terrorism_sabotag...
No hearsay, no gossip, only facts as you will, see per legal counsel filings and correspondence.
The world burns and the fat crooks sit in their luxury suites...I don't have any problems with someone making a billion or more per year, unless they are lying, cheating and fucking other people to get it. Burn these fuckers on a stake as an example to the world that we will not tolerate greedy cheats. I know so many people who are losing everything, and they weren't greedy, they were not stupid...they're mistake is that they trusted the system not to fail. These people are guilty of nothing other than being honest and hard working. Anyone who packaged subprime notes as triple AAA bonds or sold CDO's as AAA rated should be put against a wall and shot. Any of the big Wall Street fat cats who knowingly participated in this scam ought to spend a life of hard labor serving the people they fucked. The misery of so many caused by so few is mind boggling. The only thing more insane is that we are letting the bastards get away with it.
Eat the Banksters!
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