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Fed Governor Stein Warns When A TBTF Bank Fails, Depositors Will Be Cyprus'ed
Two months ago, Fed governor Jeremy Stein caused a major stir among the very serious excel-using economists and other wannabe "scientists"-cum-voodoo witchdoctors, when he hinted that it was the Fed's actions that were leading to "overheating" in the markets. It took quite a bit of rhetoric by other very serious people to talk down his comments and give the impression that the S&P is not about 50% overvalued. Today, Stein has managed to stick his foot in his mouth for the second time in a row, and do what virtually nobody in the status quo is capable of: tell the truth.
In a speech titled "Regulating Large Financial Institutions" Stein made something very clear: if and when a TBTF fails, and since this time is not different, and a failure is only a matter of time, depositors will lose everything (courtesy of some $300 trillion in gross unnetted liabilities which once there is a counterparty chain failure, suddenly become very much net and immediately marginable - a drain of cash), which now that Cyprus is the template, is to be expected. Not only that but Stein makes it all too clear that part of the Dodd-Frank resolution authority guidelines, a bailout is no longer an option.
Perhaps more to the point for TBTF, if a SIFI does fail I have little doubt that private investors will in fact bear the losses--even if this leads to an outcome that is messier and more costly to society than we would ideally like. Dodd-Frank is very clear in saying that the Federal Reserve and other regulators cannot use their emergency authorities to bail out an individual failing institution. And as a member of the Board, I am committed to following both the letter and the spirit of the law.
At least he can't say Americans weren't warned when the Cypressing(sic) hammer finally falls.
Oh, and as a reminder...
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So, what they mean to say is, that Jon Corzine was a pioneer of the New World Order at MF Global. When the going gets rough, there is no distinction between company and client funds. What's theirs is theirs and what's ours is theirs. Might as well just lay it out like this now.
The question is in the Dodd Frank act, how are investments prioritized. If one of these TBTF banks goes tits up does people's 401ks if they are handling them go with it based on the new rules? If that is the case I think 50+ million people armed to the teeth may just be pushed over the edge and people like Mr. Stein will need to be under 24/7 personal protection if that happens. I think 50+ million people armed to the teeth some that are still in the matrix will not want to be hearing none of it. You wipe out a few union pensions in the process, ohhh boy.
"Now if I were to arrange terms that certain other banks could not refuse that may or may not include rescuing said bank...", he later clarified over two fingers of legal scotch.
Banking by suicide belt?
Geronimo's last stand? (Except I'm sure the
Apaches had lots of equities, probably
far more than those who
had long earlier induced the March of Tears.)
Perhaps we're her Apaches this time round.
The notion that there's no alternative
seems naive (I could use a different word.)
One could break them up before their
doomsdays in tact might arrive.
It might be easier to deal with the pieces.
Depositors will surely be far more trusting
and at ease if they trust a structure and process
being implemented with their better interest
at heart, fully (that's what the Fed was
supposed to be about, not the precise opposite.)
One could do what clothes loft operators are
reputed to have done a lot. Use 2 sets of books,
inventing force majeure or the like where needed
to protect depositors from whatever would hit them.
Invent a new class of bankruptcy to effect the above,
or in lieu of the above, if need be.
Selling more protection for ever more risk, for
ever smaller premiums, for ever larger bonuses,
I think, is not even a legitimate business.
Thought the TBTF banks' counterparties would not
have been responsible for that, they presumably
were savvy, understood the process was not
founded on anything realistic, and, otherwise,
because of mere state power alone, may have to
simply understand from now on they shouldn't
do business with shady bankers.
They all already failed... that's what TARP was about... then they continued to fail... which is what QE is about
No more bailouts for deadbeat depositors bitchez!!!
Each bank account I have has a credit card attached to it issued from the same bank, with a balance always higher than the respective checking balance. I deduct the interest on the card as a business expense when it's not doing some zero percent deal, as well as collecting all the points by making all business purchases with it. They take the account and they've taken away my ability to repay them, C'est la vie. The rest is in gold, silver and bitcoins :-)
I thought 83 billion was the subsidy, not 63 billion as the graphic shows. The graphic also says the big 5 banks are profitless without the subsidy, but then says they have a 7 billion profit without the subsidy, just not a 69 billion profit with the subsidy.
How can a TBTF bank fail when the government subsidizes it?
Solyndra would still be in business today, if the government continued to subsidize it.
Add to my own the following.
Splitting them up compartmentalizes
the damage (think: Titanic, if the flooding
compartments had been enough.)
Banking by suicide belt?
Geronimo's last stand? (Except I'm sure the
Apaches had lots of equities, probably
far more than those who
had long earlier induced the March of Tears.)
Perhaps we're her Apaches this time round.
The notion that there's no alternative
seems naive (I could use a different word.)
One could break them up before their
doomsdays in tact might arrive.
It might be easier to deal with the pieces.
Depositors will surely be far more trusting
and at ease if they trust a structure and process
being implemented with their better interest
at heart, fully (that's what the Fed was
supposed to be about, not the precise opposite.)
One could do what clothes loft operators are
reputed to have done a lot. Use 2 sets of books,
inventing force majeure or the like where needed
to protect depositors from whatever would hit them.
Invent a new class of bankruptcy to effect the above,
or in lieu of the above, if need be.
Selling more protection for ever more risk, for
ever smaller premiums, for ever larger bonuses,
I think, is not even a legitimate business.
Thought the TBTF banks' counterparties would not
have been responsible for that, they presumably
were savvy, understood the process was not
founded on anything realistic, and, otherwise,
because of mere state power alone, may have to
simply understand from now on they shouldn't
do business with shady bankers.
http://www.pbs.org/wgbh/pages/frontline/untouchables/
Guillotines. Not just bankers but those in "Justice" who took paychecks and did nothing.
Here is the video link to Stein's speech making this revelation. Skip to 6:33 for the particular quote referenced.
https://www.imf.org/external/mmedia/view.aspx?vid=2308086097001