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Evidence That Primary Dealers Have Collectively Engaged In Repo 105 And Qtr-End Book Cooking Type Schemes For Years

Tyler Durden's picture


The WSJ has compiled some data that gives us hope about the future of the MSM journalistic model (and makes us blush for not having thought of it first). In sorting through PD weekly repo holdings, the WSJ has observed a pattern in which End Of Quarter positions tend to be among the lowest of any reported during the quarter. The WSJ study goes back 5 quarters. Zero Hedge has performed a comparable analysis (incidentally we were looking at Primary Dealer holdings just 3 hours earlier) and we present the preliminary results. They are stunning, and we are scratching our heads how this glaring observation could have been missed, not just by us but by everyone else as well. In a nutshell, in the past 9 quarters, beginning with Q1 2008 or about the time Bear failed and things started going downhill fast, the Primary Dealers (a set of banks that as everyone knows includes Goldman, BofA, JPM, and included Lehman and Bear), in 8 of the these quarters closed out quarters at the lowest level of net asset holdings! Whether this is by Repo 105-type transactions, or via BofA type "roll" trades as discussed in detail in the WSJ, is irrelevant: the simple purpose of this phenomenon was to make balance sheet leverage more palatable and easily presentable: the lower the asset base, the less the equity required to satisfy regulatory leverage ratios. How nobody has observed this scheme previously is simply stunning, and a real testament to the PD's collective ability to keep this crucial data to the distribution list of a select few.

Some facts:

  • The average quartertly High to Low spread in the past 9 quarters was $73.7 billion;
  • The median quartertly High to Low spread in the past 9 quarters was $60.1 billion;
  • In the past nine quarters, Primary Dealers ended their Fiscal Quarter on the lowest net asset holding level 5 times out of 9; Another 3 times, the closing print was a statistically insignificant $6.7 billion away from the low.
  • The only major outlier occurs in Q3 of 2008, or the quarter when Lehman went bankrupt, and PDs closed that quarter at the high of the Lo-High range. To be sure, in that quarter banks had more important things to worry about than cooking their books.
  • The average of all 9 quarters, including the one major outlier, indicates that banks closed just $7.9 billion away from the lows.
  • It would be naive to assume that of the 18 PDs only Lehman, via Repo 105 or however, was presenting to its investors a picture of "health" that was better than reality and than what sensible leverage ratios would permit.
  • We contend that Repo 105 type book-cooking and quarter end balance sheet window dressing was a prevalent phenomenon among all the banks. The fact that over the past two and a half years this resulted in a differential from the peak quarterly assets of over $65 billion is unbelievable, and the fact that this had slipped through the regulators' fingers is inexcusable.

The graphic representation of the Primary Dealer holdings of net assets shown as a Lo-High range during any given quarter, together with the closing net assets (presented by the red dot), is shown on the chart below.

We are confident that armed with this data, the SEC will be able to provide a prompt and logical response why the PDs have such a peculiar pattern in downshifting their assets toward quarter end, and much more relevantly, who the counterparties are that would consistently take the other side of these quarter end window-dressing trades.

And to think we were perplexed earlier why PDs saw a $31 billion drop in their assets in the last week of Q1...

We urge any and all readers to replicate our results at the following FRBNY database.


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Fri, 04/09/2010 - 03:06 | 292750 GoldmanSux
GoldmanSux's picture

What about the other side of the equation? All the banks have roughly the same quarter ends. Who took/takes this off their books at quarter end and is duplicitous in accounting fraud, securities fraud, et al? The numbers are so big it can only be the central bank.

Fri, 04/09/2010 - 03:44 | 292772 xPat
xPat's picture

I agree - as you say and Tyler highlighted in the 3rd paragraph from the end, the big question is who was the counterparty.

But let me pose this another way... Assume for sake of argument that FRBNY or another gov't agency was the counteparty. If that were true, is there any possible explanation other than that the government was a party to intentional fraud of the public and that a government-sponsored plot existed to usurp existing reserve ratio laws?

I'm not just asking that rhetorically. I mean really, this seems like the news of the century if it means what I think it means. Either a whole bunch of european banks were taking the other side (making them apparent accomplices to fraud), or our own government was.

I just don't see how this could be happening without FRBNY at least knowing it was going on, if not actually participating.

Who has the authority to petition a court for a criminal indictment against Tim Geithner anyway? Is there a way for the slowly awakening public to create political pressure in favor of such an outcome?


Fri, 04/09/2010 - 05:01 | 292819 Bear
Bear's picture

Who ran the stress test of last year ... Oh, the Treasury, the Fed?

Fri, 04/09/2010 - 09:48 | 293018 Cognitive Dissonance
Cognitive Dissonance's picture

This is why we must always distrust any "investigations" or "regulatory reform" initiated and appointed by the system itself. The system will always protect itself from everyone and everything. This is a given.

Fri, 04/09/2010 - 12:39 | 293383 Seer
Seer's picture

Do people demand a really just system? Well, we'll arrange it so that they'll be satisfied with one that's a little less unjust ... They want a revolution, and we'll give them reforms -- lots of reforms; we'll drown them in reforms. Or rather, we'll drown them in promises of reforms, because we'll never give them real ones either!!

- DARIO FO, Accidental Death of an Anarchist

Fri, 04/09/2010 - 09:05 | 292947 Janice
Janice's picture

I say line the CEO Bansters up and shoot then.  Everytime they have an audit, the management is required to sign that the numbers in the financials are provided by the management and are an accurate reflection of ongoing operations. Lies, lies & more lies.

Oh, and if the banks are doing this, who else is?

Fri, 04/09/2010 - 06:34 | 292851 GillianX
GillianX's picture

This is not true. Most of the Investment Banks (GS, MS, etc) had quarter ends that were not calendar quarters like the Commercial Banks (JPM, Citi, Barclays, etc). This was specifically done so they could run this sham and offload assets to the commercial banks over their reporting periods. If the Commercial Banks had the same quarterly reporting period as the Investment Banks these trades wouldn't have worked.  

Fri, 04/09/2010 - 09:48 | 292912 hedgeless_horseman
hedgeless_horseman's picture

This is one reason why firms have been allowed to select their own "fiscal year" instead of a common calender year for tax reporting, like the common man must.

The next thing your going to tell me is that investment funds buy "must have" stocks for their portfolios' quarterly reporting.

Truth be told, I try to do some push ups before I get in bed with the Mrs.

Same window dressing, different windows.

Fri, 04/09/2010 - 07:59 | 292885 Miles Kendig
Miles Kendig's picture

Either a whole bunch of european banks were taking the other side (making them apparent accomplices to fraud), or our own government was. - XPat

Or both, either in conjunction with their respective central banks or not.  I would add that in other locations governed by different regulations many firms do not report quarterly and have other variances in disclosure requirements and legal precedence... The power of arbitrage.

Fri, 04/09/2010 - 09:19 | 292965 Cognitive Dissonance
Cognitive Dissonance's picture


The drum you've been beating regarding judicial exclusion seems to run even deeper than simply the bankster CEO and their henchmen, either animal or mineral. I guess I shouldn't be surprised when the black spot on the apple is just the surface manifestation of a rotten core.

Of course, our problem when looking for criminal behaviour is the near total absence of the criminal mentality and imagination in ourselves. We are hampered by our sense of fair play and a deeper respect for rules and the rule of law. We are outmatched and often outplayed.

I've often thought that in order to beat these bastards, we must think and play like them. But this just leads to a point where you become corrupted and thus your mission is rendered moot. The base insanity that's at the root of this mentality is both seductive and oppressive.

Fri, 04/09/2010 - 10:12 | 293072 Miles Kendig
Miles Kendig's picture

We have managed to create an entire profession around the concept of criminal profilers.  One need not be a criminal to understand criminal operations.  The processes that have been repeatedly employed not only in finance, but throughout societies professions are fairly straight forward, if convoluted in construct.  An interesting set of objective circumstances.

Fri, 04/09/2010 - 10:36 | 293117 Orly
Orly's picture

The issue is not personal or individual criminality.  There is a culture of criminality that at once makes the individual criminal virtually invisible and obfuscates their crimes against other cultures that do not see things the same way.

In other words, the broach of decency is broken quite easily in a culture that has a different idea of right and wrong.  They don't think they are doing anything wrong.

In fact, they are doing "God's work" (Blankfein) with "angels" (Skilling).  There is a pervasive cultural disconnect between what these people (mainly Ivy Leaguers, other than "little people"...) and nearly everybody else.

Who would the US government be to question these noble ideals, let alone prosecute for what are clearly philanthropic motives on the part of that culture?  In their blatant adoration of the noblesse oblige, they not only look the other way but, in fact, justify and enable their actions, leaving us wondering why they don't see what we see.

I will call this phenomenon "cultural capture."

Fri, 04/09/2010 - 10:44 | 293137 Cognitive Dissonance
Cognitive Dissonance's picture

Thank you Orly.

This is why I talk about denial, the hive mentality and group think etc. Because this goes so beyond simple criminality and exactly why it's nearly impossible to prosecute or even attack when these criminals are essentially supported by the general population, either through ignorance, fear or denial. It's also easy to be corrupted by the system when you are a part of and live within the system. This is why it's nearly immpossible to reform the system from within. 

It's deep capture of and by the hive. One of my next articles will be titled "Hive Mentality and Group Think" and I will discuss the dynamics. It's quite disturbing for the average Joe to face the fact that they are in many ways enabling this behaviour. Thus the important role denial has in the enabling.

Fri, 04/09/2010 - 11:01 | 293162 Orly
Orly's picture

Respectfully, CD, I will disagree with your assessment.

In order for there to be denial, there must be a truth that is there that is either not accepted by the individual or is rationalised and eventualy accepted in bits and pieces.

I submit that there is no denial in play here because there is no "truth" to accept.

It is sort of like having an MRI of your brain.  There is an astrocytoma present in the temporal lobe.  Your neurologist gets the report from the radiologist, which clearly states, "No abnormality noted in the cranial cavity.  Essentially a negative study."

The tumor is still there, whether the physician recognises it or not.  Neurologists rely on radiologists to see the problem.  You come back in two weeks later and bring the images to the neurologist's office.  You've still got a splitting headache and this vicodin just ain't cutting it.  The doctor puts the CD into the computer and lo and behold! an astrocytoma in the temporal lobe!

How could the radiologist have missed that?  Was he lying?  Was he incompetent?  What about what the neurologist told you two weeks ago- that there was no problem, take two aspirin and call me in two weeks?  Was he lying or incompetent?

Either way, there was no "denial" on the part of either the neurologist or the patient, just as there is no denial on the part of Joe Sixpack in America in regards to the financial mess we find ourselves in.

Believe me, if Joe found out he had a brain tumor and was walking aroud for nearly a month with a negative diagnosis, he would be beyond pissed off when he found out the truth.  He will be mad as hell, too, when he finds out the truth about how both the government and the banksters have ruined the lives of his great-grandchildren through their incompetence and lies.

Through sites like this, we can get the truth to Joe so that he can see it for himself.  But the truth must be available for him to be able to deny it.

Fri, 04/09/2010 - 12:01 | 293310 Cognitive Dissonance
Cognitive Dissonance's picture

"He will be mad as hell, too, when he finds out the truth about how both the government and the banksters have ruined the lives of his great-grandchildren through their incompetence and lies."

Orly, you basic assumption here is that once people have been shown the truth, they will accept it as the truth and then become energized by the truth to rectify the situation. Or at least will now know the truth and no longer be swayed by the lies. I submit that is a tragic misunderstanding of how denial plays out and the dynamics behind denial. This is not a situation of ignorance but of willful ignorance. And we must be careful how we define ignorance.

Many people will and have accepted that there is corruption and out-right theft by political, corporate and military interests in America. For whatever reason, they have decided they are powerless. Thus in their mind they simply don't wish to know the details and no amount of information will be accepted.

Then there are the people who simply can't get past the notion that the very people who are sworn to protect and serve this nation would not only harm the nation but that others would enable them to do so, again for whatever reasons. So they rationalize away the evidence of this in thousands of ways, one of which is to avoid the details and stick to the big picture world view they have constructed in their minds in order to explain what's going on.

I have been trying to inject some reality into various people, either friends, family, clients or strangers for years and years and the vast majority simply don't want to know what's going on. They don't want to know the details because it's so much harder to ignore the details. Knowing the details will destroy the fragmented worldview that they have piecedtogether (with huge gaps) in their minds. Your premise that they must know something in order to deny it and that once knowing something they will be "pissed" is fundamentally incorrect.

But I still love ya Orly. :>)

Fri, 04/09/2010 - 12:05 | 293322 WaterWings
WaterWings's picture

What if Joe refuses to believe the doctor? What if Joe decides that happy thoughts and tele-prompter presidents will make it go away. Ask CD how truthtelling has worked out for him with friends and family.

If you aren't happy with the current administration you are a racist tea-bagger. If you say, "Enough!" you are a racist tea-bagger. If you want to print up flyers about Ending the Fed you are a racist tea-bagger. If you want to march to DC to make a stand you are a racist tea-bagger. If you are not at home collecting welfare, watching teevee, you are a racist tea-bagger.

Ridicule. Marginalize. Demonize. Silence.

Lotta people heading to DC with guns in a short while...


Fri, 04/09/2010 - 11:05 | 293165 Miles Kendig
Miles Kendig's picture

It goes far beyond this excellent observation.  As an example looking at the recent disclosures regarding activities at Morgan Keegan(1) one could include the field rep at Morgan Keegan who had no clue or concept of the activities elsewhere in the organization and faithfully marketed these grossly deficient products.  Back to judicial exclusion and so corrupting the structure that the law defends and protects plunder and false philanthropy at the expense of the very society whose freedom from these parasitic activities the system of justice is supposed to defend.(2)



Fri, 04/09/2010 - 08:00 | 292889 SWRichmond
SWRichmond's picture

Maiden Lane "X".  Off-balance.

Audit the fucking Fed.

Fri, 04/09/2010 - 11:24 | 293188 Miles Kendig
Miles Kendig's picture

Once the secrecy is removed, which is just a matter of time, what we'll see is yet another global financial resolution process.  Whatever shape that process takes will have monumental consequences. Just as the last resolution process of extend and pretend has only enhanced the probability and scope of future or ongoing disaster.

Fri, 04/09/2010 - 08:26 | 292907 knukles
knukles's picture

Since time immemorial, investment banks and investment/dealer departments of commercial banks have contracted their balance sheets immediately prior to audit/reporting dates and re-expanded them immediately thereafter. 
This whole process is absolutely Nothing New.

Ever heard of institutional retail being referred to as "inventory"?  Or parking with the "bookie"?  Not everybody closes their books on the same day.

Been there, watched it happen, real time.

Fri, 04/09/2010 - 08:44 | 292920 Miss Expectations
Miss Expectations's picture

The same is done with consumer products companies. End of Quarter/End of Year activities include:

1.  Take as many of your future ship orders as you need.

2.   "Release" the orders

3.   Pick and Pack

4.   Load orders on rented trailers

5.   Book the "shipments"

6    Close the books

7    Next day...begin returning products to the warehouse.  Return rental trailers.  Process "returns"

Fri, 04/09/2010 - 08:54 | 292933 godzila
godzila's picture


Absolutely. It's just the scale that might be different

Fri, 04/09/2010 - 09:36 | 292998 Eally Ucked
Eally Ucked's picture

Really? Just look carefully at the graph. Do you see something in few first data points?

Fri, 04/09/2010 - 10:52 | 293146 Ned Zeppelin
Ned Zeppelin's picture

I don't think you are suggesting this is OK, only that this is not news.  I agree with the other posters that it is the scale of this thing (quite astounding,  I think, and may constitute a new crack in the dike) that causes one to suspect a larger conspriacy at work. 

Sunshine is the best disinfectant for this kind of bacteria.   

Fri, 04/09/2010 - 12:50 | 293400 chet
chet's picture

I thought the Lehman story was that they had basically set up an off-sheet vehicle, Enron-style, shifted off the liabilities, then bought them back from this manufactured counterparty paying some sort of fee to make it look legit.

In other words, they are their own counterparties.

Am I remembering the Lehman repo 105 story wrong?

Fri, 04/09/2010 - 03:09 | 292752 sweet ebony diamond
sweet ebony diamond's picture

someone has to force the banks to value their assets using common-law metrics.

would someone in the supreme court of the USA take action please.

Fri, 04/09/2010 - 04:38 | 292810 erik
erik's picture

we have the power to do it.  we need to close our accounts at the big banks.  i did it yesterday, and already 3 of my friends are going to do it too.  make sure your family and friends do it.  if they pass it along to others, then we have real momentum.

the government is not going to do anything on the taxpayer's behalf, that is obvious now.  we must do it ourselves.

believe me, once you do it, you'll realize how gratifying it is to have your voice finally heard. 

we keep asking ourselves "what can we do?"  removing our money, that is what we can do.  that is what we must do.


Fri, 04/09/2010 - 07:37 | 292873 system failure
system failure's picture

I agree. I did it a while back. My account was interest bearing which was paying practically nothing and was very wasteful of me to leave it there for thier cheap use. I specifically told the bank that they will have to call me or send me a flier in the mail when they would be willing to pay a respectable interest again.

The whole country needs to do this and yank their money from the banks that pay such low interest, which is a slap in the face. Send the message now. Send the message now. Send the massage now.

Fri, 04/09/2010 - 09:31 | 292992 Dark Space
Dark Space's picture

ooh - I want a massage. Can you send one my way?

Fri, 04/09/2010 - 11:24 | 293209 WaterWings
Fri, 04/09/2010 - 06:49 | 292855 ArkansasAngie
ArkansasAngie's picture

You can dad gum well vote in November.  Vote against all incumbents. 

In the mean time ... you tell every person you have the opportunity to meet.

If our government refuses to impose moral hazard ... we'll just have to do it ourselves.

And ... it's important to remember that elections are the perferred method of throwing the bums out.

Fri, 04/09/2010 - 08:05 | 292893 SWRichmond
SWRichmond's picture

Vote for who?

Voting in America’s “two-party system” is like using a port-a-potty.  You have to use it because there’s nowhere else to “go”.  You hold your nose, go into the booth, do #1 or #2, and when you come out the stink is in your clothes and you feel like you need to wash your hands.

Fri, 04/09/2010 - 08:09 | 292896 nedwardkelly
nedwardkelly's picture

Love the analogy

Fri, 04/09/2010 - 09:23 | 292974 Cognitive Dissonance
Cognitive Dissonance's picture


As a man who has invested in securitized port-a-potties, I resemble your comments about stinky cloths and holding your nose.

You will be smelling the presence of my lawyer shortly. :>)

Fri, 04/09/2010 - 09:55 | 293030 hedgeless_horseman
hedgeless_horseman's picture

Is this guy the MSM in your analogy?  Real "insiders" so to speak.


Fri, 04/09/2010 - 11:07 | 293067 Cognitive Dissonance
Cognitive Dissonance's picture

Authorities said Gary Moody, 45, of Gardiner, Maine, somehow got inside a toilet in the women's restroom and stayed there undetected as women used the restroom until a young girl detected him. The teen apparently walked into the restroom and looked down into the toilet and saw Moody looking back up at her.

Police were called in to flush him out.

"It's a very filthy environment and before we put anybody in contact with him we wanted to decontaminate him. We treated him exactly like he was hazardous material," Capt. John Hebert of the Carroll City Sheriff's Department said. "I started in this business in 1980 and I have never in my career encountered anybody in this type of a situation."

Fri, 04/09/2010 - 08:08 | 292894 nedwardkelly
nedwardkelly's picture

Vote against all incumbents.


Wow you're optimistic. What are you smoking that makes you think the new Boss will be any different to the old Boss?


Fri, 04/09/2010 - 10:54 | 293154 Ned Zeppelin
Ned Zeppelin's picture

No difference. Tweedle Dum and Tweedle Dumber. Demoncrats and Rethuglicans all the same simpering, corrupt scum.

Fri, 04/09/2010 - 22:34 | 294127 RockyRacoon
RockyRacoon's picture

Maybe the new guy/gal will realize that he/she will be voted out again with one term under their belt, just like the old incumbent was voted out for being self-serving.  Fear works wonders.  The knowledge that a legislator will make a career out of being re-elected is what causes the problem(s).  I'll vote against EVERY incumbent on the ballot -- regardless of party or platform.  You can't rely on what they say being what they believe anyhow.

Fri, 04/09/2010 - 03:18 | 292753 GoldmanSux
GoldmanSux's picture

KPMG, PWC, E&Y... Dude, you couldn't pay me enough to be a partner in one of these firms. This is the ratings agencies x50. Out and out fraud. The liabilities these partners have is astonomical.

Fri, 04/09/2010 - 03:22 | 292755 sweet ebony diamond
sweet ebony diamond's picture

not just those people. you are looking at the whole financial industry.

great "leaders" here.


Fri, 04/09/2010 - 08:07 | 292892 Miles Kendig
Miles Kendig's picture

The example set by the actions of those in financial leadership positions communicates it all.

Mon, 04/26/2010 - 22:31 | 293425 wyosteven
wyosteven's picture

** Edited for Content **

Fri, 04/09/2010 - 04:37 | 292813 Silver_Bullet
Silver_Bullet's picture

This is more evidence of criminal conspiracy among the enemy oligarchs that usurped the republic in 1895.  Everyone who hasn't should see Max Keiser's article on "Peek-a-Boo" accounting that came out way before Lehman blew.  60 days can be like 60 years to a Red Bull fueled robot trader, so everyone who is anyone on Wall St knew before hand that Lehman was being set up for the kill, because all of them are BK from derivatives.  It was possible before any of this to see it coming.  Max even says Lehman is trying to out Enron Enron.  He picks Lehman by name two months out from Banker-geddon.  This is a controlled demolition of western civilization by the Anglo-Venetion faction of oligarchs, and the purpose is verticle integration and genocide.


See this Puff-Ho article:

Fri, 04/09/2010 - 05:22 | 292818 Bear
Bear's picture

The SEC ... what would they do with it ... Tell the Treasury Dept? Does the FBI still work for Treasury?

This makes me ill ... kinda like listening to an Obama speech. What's happening here; everything that is wrong becomes right and enery right becomes wrong. I'm so FED up I'm changing my name to Bull.

Fri, 04/09/2010 - 05:51 | 292838 hunkofjunk
hunkofjunk's picture

I'm pretty sure that this practice was common in London across the US investment banks and has been for many years. I suspect most of the big European banks acted as counterparties. Anyone who worked, (not me), on an equity finance desk would be able to add some interesting colour I would have thought.

Fri, 04/09/2010 - 06:07 | 292842 The Axe
The Axe's picture

Great reporting, Great effort...But no one gives a shit period...amazing but true. Many years as a Trader/MarketMaker I would have some horrible, illiquid stock on my list for a huge salesman in the firm, something that had a 3 dollar spread and I had to maintain a 30,000 position in. So to prevent getting screwed on a shitty mark on the close of the month, I would park the stock at friends firm, his computers (T+2) wouldn't pick it up for his quarter, break the trade on T+1, and start all over again, never once was I inquired about, these trades and marks don't even need a real counter-party, these banks could easily create false counter-party trades, or transactions and then just back it out again at the start of a new quarter---in fact thats exactly what they did...period...but again the SEC has no guts..

Fri, 04/09/2010 - 08:15 | 292901 Miles Kendig
Miles Kendig's picture

Playing Three Card Monte, just as it is designed to be.  Excellent insight.

Fri, 04/09/2010 - 06:13 | 292845 TooBearish
TooBearish's picture

The practice is wide spread and has be used since the early 90s, the counterparties are hedge funds and even real money accounts because the banks will pay an above market rate to get the securities off the books for a reporting period.

Everyone has a price.

The SEC will do nothing, nor will the rating agencies, as the practice solidly in the gray area in terms of accounting, at worst it is a washed sale, or guaranteed buy- back, which is a contigent liability.  So duh the banks under report their commitments, why is anyone surprised?  The banks have the most powerful lobby in Washington - be outraged but don't expect the status quo to change. 

It is the rating agencies that are once again failing to rate the industry correctly.

Move along nothing to see here....

Fri, 04/09/2010 - 08:57 | 292940 Miss Expectations
Miss Expectations's picture

There's plenty to see here.  Reminds me of the scene in Kingdom of the Crystal Skull where the Ukranian woman says, "I vont to know"  Eventually, her head explodes.

(I have an 8 year old)

Fri, 04/09/2010 - 07:24 | 292866 Monday1929
Monday1929's picture

Jamie Dimon moves ever closer to a jail cell. Or, he pays a 100 million dollar fine with our money.

Fri, 04/09/2010 - 08:14 | 292900 InsanePonziClown
InsanePonziClown's picture

insane revelation no. 3,266   this shyte is unbelievable, mr. reggie middleton is proved correct more and more each and every day, the f'n banks rule the world period end of story

Fri, 04/09/2010 - 08:26 | 292906 Miles Kendig
Miles Kendig's picture

Which revelation was this one?

Peel back the rind and examine the fruit
Rotten to the core buried in they best suits
Maggots crawling on they face,
Eyes sunk in they head
Throw your phuckin arms up and rock the dead

Fri, 04/09/2010 - 08:34 | 292914 Miles Kendig
Miles Kendig's picture

The picture based upon the FRBNY's own public data.  Sweet!

Fri, 04/09/2010 - 08:40 | 292915 john_connor
john_connor's picture

This is relatively simple.  Banks are not making money on loans anymore as there are no willing borrowers.  Therefore they must ratchet up casino activities to make up for the shortfall.  I wouldn't be surprised if they were using more net leverage now as compared to 2006-2007.

And regulators are not going to do a thing because this whole charade has been presented as "good for the country."

Fri, 04/09/2010 - 08:51 | 292927 justbuygold
justbuygold's picture

There is only two ways to stop this becuase you can forget about the regulatory agencies since they are part of the corruption.  

1) END the FED

2) Customers of the mega banks need to open an account at a strong mid-tier bank and transfer their money over

Also if everyone was to take physical possession of thier gold and silver it would go a long way to exposing the mega banks and the FED.


Fri, 04/09/2010 - 09:26 | 292981 john_connor
john_connor's picture


Fri, 04/09/2010 - 10:08 | 293066 RSDallas
RSDallas's picture

Definitely considering #2.  Not sure if I can have any immediate influence on #1.

Fri, 04/09/2010 - 10:18 | 293081 Janice
Janice's picture

I am with you, but.....

1) If they won't listen to us screaming about health care, they damn sure won't hear us scream about the FED.

2) My mortgage was with AMBRO, but without my consent or foreknowledge, Citi bought my mortgage...effectively making me a Citi customer by default since I can't afford to pay off my mortgage in its entirety AND a refi would be cost prohibitive.

1) Screwed

2) Screwed

I say if you want to get back at them, buy gold ~ pay cash.  That way you take the dollars (and your wealth) out of their system.  Is it a risk? Yes, but what is the risk that the government will defile my 401K and leave me penniless standing in a line while begging for a doctor's appointment?



Mon, 04/26/2010 - 22:32 | 293223 wyosteven
wyosteven's picture

** Edited for Content **

Fri, 04/09/2010 - 09:21 | 292970 Grappa
Grappa's picture

I can only see one solution to all this. I don't like violence and am afraid to use it, but in a system and a situation like this violence is the only solution. It doesn't matter how much one screams bloody murder and calls for regulators to place criminal charges. If all other possibilities fail then war/"terrorism" is the only option.

We have been speculating and quessing when we will blow each other up. It's scary that 2012 is approcing while this S***strom is gaining more momentum.

Fri, 04/09/2010 - 12:38 | 293240 wyosteven
wyosteven's picture

Grappa, one cannot instill violence against a corporation, the concept is immune to all that you are not.  This has been affirmed by your government (now all three branches) that now operates anywhere but in Constitutional/legal bounds.  The corporate model is alive, breathing and has a new CEO - Uncle Sam.

Remember, they own you, your rights, your stuff, your debt (money), your laws, and your future - not the other way around.

Violence is merely a distraction to make the ownership of YOU easier.  Absolutely any action that a citizen takes will land them in the goulag, while corporations receive selective-enforcement of laws. Laws are simply not applied if it doesn't benefit corporations.  Show me any example where this is not the case!

You are resisting the faceless forces of arbitrary nothingness that has all control and has already won.  This has been illustrated rather simply and clearly where all rules/laws are changed or enforced where the citizen ONLY loses.

All the US citizen has to look forward to is the Great Oppression, sponsored by none other than the corporate model and enabled by corrupt government.



Fri, 04/09/2010 - 22:49 | 294143 RockyRacoon
RockyRacoon's picture

How true!  My wife is law-enforcement and she reminds me that when I wake up in the morning, and before the chance I get to stretch, I have broken at least one law.  That law will be enforced when and if the establishment decides to.

Mon, 04/26/2010 - 22:36 | 319088 wyosteven
wyosteven's picture

The good news is liberty addresses that.  It seems to be on the back burner sometimes, eh?

Thu, 04/29/2010 - 00:36 | 293019 Rusty Shorts
Rusty Shorts's picture


Fri, 04/09/2010 - 10:05 | 293058 RSDallas
RSDallas's picture

"We are confident that armed with this data, the SEC will be able to provide a prompt and logical response..."

Wishful Thinking.  Timmy, Ben....Hurry.....Please get me the broom....

I'm not sure if I have read a more disturbing article in the WSJ.  It can't get anymore corrupt than this.  This pretty much confirms that the banks are nothing more than deadly, toxic and highly inflammable and insolvent zombies just waiting to explode.  Again, we won't hear anything outside of this forum. 

Fri, 04/09/2010 - 22:53 | 294151 RockyRacoon
RockyRacoon's picture

I was amazed that a segment on this very topic was hosted today on CNBC!  No Kudlow, no Kneale, no maze of octa-boxes, no talking over each other.  A sane and reasonable discussion of this very topic.  I had to double-check the station setting.

If anyone has the link it would be appreciated.

Fri, 04/09/2010 - 10:26 | 293099 Hugh Janus
Hugh Janus's picture

they don't have to mark to market, so who cares about any of this?  they are permitted/encouraged to lie about the state of their health.  all the major banks were/are insolvent.  what is so shocking about these new findings? 

Fri, 04/09/2010 - 11:07 | 293174 Ned Zeppelin
Ned Zeppelin's picture

Because even with that mark to fantasy rule, they are still floundering and insolvent. The substitute for the real problem, cash flow not being there, are endless essentially un-collateralized (unless you think bags of doggie doo doo constitute "collateral") loans at zero %.

The enormous asteroid crater that appeared in September 2008 has not gone away - it has been papered over and moved around. But it's still there, and it's huge.

Fri, 04/09/2010 - 10:57 | 293158 trav7777
trav7777's picture

FUCK YOU, Durden...the banks NEVER LIE

Fri, 04/09/2010 - 11:49 | 293257 WaterWings
WaterWings's picture

Buy gold, ammo, #10 cans of long-term storable food, and then go over to YouTube and forgettaboutit:

Oh, and don't get scammed for your kidney by Israelis in the meantime:


Fri, 04/09/2010 - 12:09 | 293329 Dirtt
Dirtt's picture

If you dont plan on using the phucking ammo on the psychopath banksters then what's the point.  If they don't confiscate your gold they'll make it phucking worthless (i.e. nowhere to cash it in).

Fri, 04/09/2010 - 12:47 | 293384 WaterWings
WaterWings's picture

Deer and rabbits for food. Drug cartels, looters, and anyone else that initiates force against me or anyone I know. You can never have too much because new psychopaths are born every day.

There is a black market for everything. The less free the primary market, the bigger the shadow market. Why would I do business with anyone that has official sanction of the DC tyrants?

Why don't you post your name here and then go do something yourself. We'll all clap for you when you make the news.

Fri, 04/09/2010 - 10:57 | 293159 Ned Zeppelin
Ned Zeppelin's picture

Lead: the only PM that matters.

Fri, 04/09/2010 - 11:02 | 293164 Robb
Robb's picture

Good Job Tyler!

Fri, 04/09/2010 - 11:15 | 293187 AnonymousMonetarist
AnonymousMonetarist's picture

'I have spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior managers told me that Bernie Madoff was a fraud. Of course no one wants undue career risk by sticking their head up and saying that the emperor isn't wearing any clothes.'
-Harry Markopolos in 2005.

'As long as the music is playing, you've got to get up and dance.'
-Chuck Prince

'You know, Paul, Reagan proved deficits don't matter'
-Dick Cheney to Paul O'Neill (a month later Cheney told O'Neill he was fired)

'To the ordinary guy, all this is a bunch of gobbledygook. But out of the gobbledygook comes a very clear thing: You can't trust the government; you can't believe what they say; and you can't rely on their judgment; and the implicit infallibility of presidents, which has been an accepted thing in America, is badly hurt by this, because it shows that people do things the President wants to do even though it's wrong, and the President can be wrong.'
-Haldeman to Nixon on Daniel Ellsberg's release of classified documents concerning a Pentagon study of US government decision making about the Vietnam War that came to be known as the Pentagon Papers.

WIKI : Ellsberg later claimed that after his trial ended, Watergate prosecutor William H. Merrill informed him of an aborted plot by Liddy and the "plumbers" to have 12 Cuban-Americans who had previously worked for the CIA to "totally incapacitate" Ellsberg as he appeared at a public rally, though it is unclear whether that meant to assassinate Ellsberg or merely to hospitalize him.

'Well, I had been consulting for the government, and this is now ’64, for about six years at that point, since ’58, in particular since ’59: Eisenhower, Kennedy, and now Johnson. And I had seen a lot of classified material by this time—I mean, tens of thousands of pages—and had been in a position to compare it with what was being said to the public. The public is lied to every day by the President, by his spokespeople, by his officers. If you can’t handle the thought that the President lies to the public for all kinds of reasons, you couldn’t stay in the government at that level, or you’re made aware of it, a week. … The fact is Presidents rarely say the whole truth—essentially, never say the whole truth—of what they expect and what they’re doing and what they believe and why they’re doing it and rarely refrain from lying, actually, about these matters.'
-Daniel Ellsberg

WIKI: Sibel Deniz Edmonds is a Turkish-American former FBI translator and founder of the National Security Whistleblowers Coalition (NSWBC). Edmonds was fired from her position as a language specialist at the FBI's Washington Field Office in March, 2002, after she accused a colleague of covering up illicit activity involving foreign nationals, alleging serious acts of security breaches, cover-ups, and intentional blocking of intelligence which, she contended, presented a danger to the United States' security. Since that time, court proceedings on her whistleblower claims have been blocked by the assertion of State Secrets Privilege.

Regarding 9/11

She alleges that the FBI received information in April 2001, from Behrooz Sarshar, one of its Farsi translators, that Osama Bin Laden was planning attacks on 4-5 cities with planes, some of the people were already in the country and the attacks would happen in a few months.

Regarding nuclear proliferation and official corruption

She alleges that she found evidence that people in the FBI, the State Department, the RAND corporation, the Pentagon, and Congress were recruited by a Turkish and Israeli-run criminal intelligence network, with connections to Pakistan and Saudi Arabia, to steal nuclear weapons secrets.

She alleges that the FBI has a case file, 203A-WF-210023, detailing evidence of this.

She alleges that one high-ranking member of the State Department was selling classified information to Washington-based agents of the Republic of Turkey, who were in turn selling these secrets on the black market.

'The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class.'
-Rothschild Brothers of London, 1863

'I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected.'
— John Danforth (R-Mo)

'It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.'
— Henry Ford

'By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.'
— John Maynard Keynes

'Give me control of a nation's money and I care not who makes it's laws'
—Mayer Amschel Bauer Rothschild 

A long-held belief of your humble blogger when presented with, most often in the presence of alcohol, 'proof' of some conspiracy, is that at the end of the day all conspiracy falls under the same auspices.... the conspiracy of silence.

The secret is, at the end of the day, there are no secrets. Power and privilege afford a sensibility which typically involves keeping your neck in, your shoes polished, and your mouth shut.

Of course when someone violates the Federales Omertà, when someone dares to disregard the code of 'u è surdu, orbu e taci, campa cent'anni 'mpaci' ("He who is deaf, blind, and silent will live a hundred years in peace"), then of them an example must be made.

Even though hard and difficult truths can not be enunciated plainly that does not mean that the architects of the pablum narrative and the enablers thereof are totally unawares of their obfuscation and completely unsympathetic to the principals they espouse (but do not follow), and sometimes, much akin to the robber barons of old, they toss doubloons of disambiguation, from their carriages, to us humble folk.

But to get to these 'clues' sometimes you have to hold the MSM comics up to the light with magnifying glass and indignity extended.

To wit: Sycophantic Lawrence Summers stating,'There's a quiet depression in small business.'

And why?

Just connect the dots of the Federales having staff at each of the major banksters to monitor asset levels on a daily basis with the revelation? that the Mayan Long Count will probably expire before ZIRP does.

This Great Cycle of tight credit for homeowners and small businesses and the 'lingering' housing downturn keeps spinning chiefly because the asset levels being monitored and perpetually obfuscated by our blessed squints are sucking the capitalist 'love' right outta the middle class room.

But who in the MSM will beat the drum that the banskters are too bankrupt to go broke, and the consequences thereof? 

Who will articulate again and again, who will pound the table, that the suffering and pain that is unfolding like a slow motion car crash is directly attributable to the ring-fencing of rich folks bad speculative bets? Who among the Amerikantura will call out the Nancy Capitalists as being antithetical to the American dream, as wholly unpatriotic, and dare one even suggest ... subversive? Socializing the downside and piratizing the upside is a national security threat and is for its' victims nothing short of domestic terrorism.

Can you imagine someone at Smells Fargo, a bankster coven heralded as one of the strongest that in reality is the granddaddy of insolvency, coming out and saying, 'We aren't just insolvent, we aren't just double secret insolvent we are cosmic s%*t sandwich insolvent..., hell we could gulp down another TARP whole and still be gurgling for oxygen. I mean seriously folks we got 1.7 trillion in QSPE and I'd be damned if I could find a handful of that crap that would realistically be 90% of par (maybe the quadruple A stuff) and brother the whole boatload would have to get to 94% to not wipe out in total our Tier One Kapital. We are Tier None. We've shuffled off the mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-BANK!!'

No one wants to be Markopolis, Ellsberg or Edmonds. Everyone within the silent conspiracy knows that they must be vewy vewy quiet or they'll be bupkes, ehehehehehehe...

What we need is a hero, or it's generation zero.

Fri, 04/09/2010 - 13:57 | 293490 Cognitive Dissonance
Cognitive Dissonance's picture

One of your best AM, one of your best.

The greatest conspiracy of them all is the conspiracy of silence. One doesn't get a memo with instructions on what to say or not nor is there a need for smoke filled rooms occupied by huddled sociopaths carefully controlling every single issue for the marching orders to be disseminated. It is conveyed in much more subtle ways, through body language and a few whispered words or a stern look when you mention some uncomfortable facts.

But of absolute importance is that most of the methods used to perpetuate and accelerate a consirpacy are brushed aside as implausible and deniable not only in front of a court of law but in front of the bathroom mirror. The subterfuge begins between the ears long before it's expressed within society. In spite of all this, no conspiracy can be successful for long unless there is a population willing to remain in denial of not only the actual conspiracy in question but that high level conspiracies against the population could exist at all.  

This is why the average person is so willing to accept that the only dangerous enemies we face exist outside of our borders. To think otherwise would require that we be responsible for our own safety and welfare. It's so much easier to let Daddy protect us from the make believe monster under the bed than to protect ourselves from Daddy.  

Fri, 04/09/2010 - 17:53 | 293734 AnonymousMonetarist
AnonymousMonetarist's picture

To quote Henry Miller, 'A man can get to love shit if his livelihood depends on it, if his happiness is involved.'

Fri, 04/09/2010 - 11:20 | 293196 benevolous
benevolous's picture

This secret was so well hidden that the Squid disclosed this fact as far back as its 10-Q for the quarter ended May 2002.


Our balance sheet is lower at quarter end than would be observed on an average basis. We require our businesses to reduce balance sheet usage on a quarterly basis to demonstrate compliance with limits set by management, thereby providing a disincentive to committing our capital over longer periods of time. These balance sheet reductions are generally achieved during the last several weeks of each fiscal quarter through ordinary-course, open-market transactions in the most liquid portions of our balance sheet, principally U.S. government and agency securities, securities of foreign sovereigns, and mortgage and money market instruments, as well as through the roll-off of repurchase agreements and collateralized financing arrangements. Accordingly, over the last six quarters, our total assets and adjusted assets at quarter end have been, on average, 20% lower and 12% lower, respectively, than amounts that would have been observed, based on a weekly average, over that period. These differences, however, have not resulted in material changes to our credit risk, market risk or excess liquidity position because they are generally in highly liquid, short-dated assets that are typically financed on a secured basis.


Mon, 04/26/2010 - 23:19 | 293212 wyosteven
wyosteven's picture

** Edited for Content **

Fri, 04/09/2010 - 11:49 | 293274 Gimp
Gimp's picture

It is irrelevant, the TBTF have the governments blessing to do whatever it takes to make the economy look good. Don't get wrapped up in legalities :-)

Fri, 04/09/2010 - 12:13 | 293340 Dirtt
Dirtt's picture

What a bunch of phucking cry babies.  Waaaaaaaa. Waaaaaaaaa. It's a two-party system waaaaa waaaa. We can't do anything about it. waaaaaaaa.  The banks run the world get used to it. wwwwwwwwwwww


If you dont plan on using the phucking ammo on the psychopath banksters then what's the point.  If they don't confiscate your gold they'll make it phucking worthless (i.e. nowhere to cash it in).

You'll need to go back to the late 1700's and study what REAL MEN did it times like this. They started a revolution.


Fri, 04/09/2010 - 12:21 | 293356 mikjall
mikjall's picture

WSJ opines that this is legal. How can systematic fraud and market manipulation be legal?

Mon, 04/26/2010 - 23:20 | 293388 wyosteven
wyosteven's picture

*** Edited for Content **

Sat, 04/24/2010 - 19:47 | 316533 Fraud-Esq
Fraud-Esq's picture

The WSJ are judge and jury. That's the game. It's hard to pay reporters who actually find things and run propaganda. So, publish their hard work (someone else will) but sow your meme in it. That's the only choice. First mover gets to create the meme, here, legality. It is legal. Period. No source of this opinion. It just IS. So, as long as no one handcuffs the banks, they at least have a civil argument of disclosure in their filings and wide market knowledge of this practice. There's many benefits to exposing potential torts which will be exposed anyway. Get that statute of limitations running and have some control of the editorial comment.  

Fri, 04/09/2010 - 12:21 | 293357 Jack Ryan
Jack Ryan's picture

I love the documentation of window dressing.  (By the way, a lot of it goes off balance sheet and comes on.) 

Fri, 04/09/2010 - 12:26 | 293372 mrcmmm
mrcmmm's picture

Experience tells us that: (a) the PDs own and operate the Fed; (b) the SEC is impotent, whether by design or incompetence; and (c) Congress is bought and paid for. I see redress occurring only if: (a) Andrew Cuomo decides to make his name on this issue, Elliott-style; or (b) a collection of State AGs sue the PDs for securities fraud on behalf of their respective pension funds (think the Tobacco Wars). Given the budget woes of virtually every state, one would think that the states should see this as a golden opportunity to transfer to themselves the wealth that the PDs have recently sucked out of the taxpayers. The tobacco companies (initially, essentially four of them) agreed to pay $200B over 25 years. You can't tell me eight or ten of the wealthiest banks in the world can't pay substantially more than that.

Fri, 04/09/2010 - 13:14 | 293446 kote
kote's picture

Is there any question that this occurs at almost every company in the country?  It's even more painful at industrial companies.  Emptying your factory 4 times per year is very costly even in the short term, and the volatility in inventory means you can't control and improve lead times.  It's disasterous for sustainable productivity - the long term costs are huge.

We should require that the daily, weekly, or at least monthly average be reported along with the quarter end value for balance sheet lines.  The reporting costs will without a doubt be offset by the improved transparency (and resulting improvement in capital allocation efficiency) and by the improved industrial productivity.

We have the technology.  This one seems like a no-brainer.

Fri, 04/09/2010 - 14:04 | 293529 williambanzai7
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sun1's picture

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