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Fed Finally Finds The 230 Trillion Number: Blasts Banks' "Living Wills", Says Taxpayers Still On The Hook

Tyler Durden's picture




 

Having torched Janet Yellen over the weakness of the so-called "living wills" of the Too-Big-To-Fail banks, it appears Elizabeth Warren's tirade struck home. As WSJ reports, in a sweeping rebuke to Wall Street, U.S. regulators said 11 of the nation's biggest banks haven't demonstrated they can collapse without causing broad, damaging economic repercussions and ordered them to show "significant" progress by July 2015. Of course, the whole 'living will' concept is a self-referential joke, but we leave it to Thomas Hoenig to sum it up: "the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support." In other words, taxpayers are still on the hook.

In other words, the Fed finally figured out something that is so obvious, even five year olds were well aware: namely that banks fading into darkness, by way of living wills, is sheer idiocy.

Via The Wall Street Journal,

The Federal Reserve and the Federal Deposit Insurance Corp. said bankruptcy plans submitted by big banks make "unrealistic or inadequately supported" assumptions and "fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for" an orderly failure. The regulators raised the specter of slapping banks with tougher capital, leverage and other rules—and even eventually forcibly breaking them up—absent significant progress to address the shortcomings.

 

The findings applied to 11 banks with assets greater than $250 billion, all of which will get letters detailing shortcomings in their so-called "living wills." The firms have until July 1, 2015 to file significantly improved plans or face consequences such as higher capital requirements, borrowing limits, or potentially an order to restructure their firm.

 

"Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support," said Thomas Hoenig, the No. 2 official at the FDIC, in a statement.

So how did we know? Because as the charts below show, just the top 4 US banks hold $213 trillion in derivatives, 92% of the total $230 trillion, something which no living will in this world, or anything else for that matter, can possibly unwind.

 

 

Then again, we would have been delighted to watch the expression on people's faces when during the reading of JPM's will it was announced that the bank bequeathed its $68 trillion in derivatives to whatever banks remained solvent in its, shall we say, turbulent wake.

Perhaps it's time to finally re-examine The Fed ownership structure.

 

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Tue, 08/05/2014 - 16:49 | 5050955 gcjohns1971
gcjohns1971's picture

My BANK BUSINESS PLAN:

 

Heads I win, Tails you lose.

 

Who wants in?

Tue, 08/05/2014 - 16:51 | 5050960 DoChenRollingBearing
DoChenRollingBearing's picture

+ 100

 

The FED doesn't care about the taxpayers...

Tue, 08/05/2014 - 16:53 | 5050979 pods
pods's picture

I'll take "how to get around the paltry leverage rules" for 10,000,000 Alex. Ooops, I meant 1000.  

pods

Tue, 08/05/2014 - 17:06 | 5051035 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Too big to fail is too big to bail.

The flushing is so crushing

When all you can hear is sucking

With my monetary worth adjusting

 

-A very bad poet

Tue, 08/05/2014 - 17:18 | 5051098 remain calm
remain calm's picture

Here come the bail ins folks, Cypress USA style. Bend over sheeple the bankers with Yellens urging are about to stick it in your keester one more time. Enjoy.

Tue, 08/05/2014 - 17:29 | 5051148 NoDebt
NoDebt's picture

"something which no living will in this world, or anything else for that matter, can possibly unwind."

And that's all you need to know.  Even if the banks had a desire to do this to the best of their ability (they don't), it's an impossible task.  In a world built on interconnected debt and fiat money you can NOT have a major bank collapse without massive repercussions.  Period.  

Tue, 08/05/2014 - 17:43 | 5051220 0b1knob
0b1knob's picture

< TBTF (Too Big To Fail)

< TSTL (Too Stupid To Live)

Tue, 08/05/2014 - 17:52 | 5051255 whotookmyalias
whotookmyalias's picture

There is a reason why the founders of this country and early leaders like Andrew Jackson didn't trust bankers.  It wasn't because they were stupid or didn't have the internet or candy crush.

Tue, 08/05/2014 - 19:01 | 5051490 max2205
max2205's picture

I am sure 8 fucking years and ZIRP is not long enough to 'fix' the banks.

They need more time to steal from America

Tue, 08/05/2014 - 19:19 | 5051543 IANAE
IANAE's picture

Despite what is being required by regulation or served up by banks, Living Wills should stipulate a liquidation/run-off basis of accounting and balance sheet management.

That means true matching of assets and liabilities (eliminating the short-funding approach) and more reasonable, supported, accruals for ALLL and CDS (both of which are arguably insurance-type undertakings) making the pnl much less attractive.

Tue, 08/05/2014 - 17:07 | 5051038 El Vaquero
El Vaquero's picture

It is worth noting that Citi, JPM and BofA have these things stuffed into their FDIC insured deposit taking subsidiaries.  Even if congress and/or regulators wanted to do something about this, they can hold the entire financial system and taxpayers hostage.  

 

Roll the mothafucking guillotines. 

Tue, 08/05/2014 - 17:47 | 5051242 Groundhog Day
Groundhog Day's picture

They can only hold you hostage for the amount you keep in their banks.  thats why people buy gold and silver and only keep what they need to write checks and pay cc bills.  then they can't hold you hostaage

Tue, 08/05/2014 - 18:38 | 5051404 Whootie_who
Whootie_who's picture

Holding you hostage with the force of the government is how it is done, the Government cannot only take you, and everything you "own" (including your life) but they can also take everything you will ever have and since all taxation is slavery... guess what we are? Wage slaves are the easiest but as long as you need money you will need the governments money and of course their permision/ tithe

Wed, 08/06/2014 - 01:37 | 5052821 Rigger
Rigger's picture

Guillotine s are a barbarous relic. I plan on having several of these built by the time the masses want heads to roll...

 

https://www.youtube.com/watch?v=lfsMMVgIToA&feature=youtube_gdata_player

 

The only hiccup is funding it. Not sure whethere to crowd fund it or roll it into a sexy IPO so I can have the pleasure of whispering 'You funded this' into Dimon's ear as it fires up. Please advise.

Tue, 08/05/2014 - 16:55 | 5050983 Oldwood
Oldwood's picture

Sure they care, just like a farmer cares about his chickens.

Tue, 08/05/2014 - 17:44 | 5051229 Eyeroller
Eyeroller's picture

True that.  Yellen doesn't want any video tapes of her exchange with LIE-AWATHA being shown over and over again once the SHTF. 

I'm convinced that the Ponzi Munchkin and her crew are fervently praying for a Black Swan so they can deflect blame from themselves when their house of cards falls.

Tue, 08/05/2014 - 19:59 | 5051714 DeadFred
DeadFred's picture

Obama is trying hard to push Russia into being a black swan but so far no luck. Who are they kidding by thinking they have until July 2015 before this mother blows? Try harder Obama, more red lines at least.

Tue, 08/05/2014 - 23:26 | 5052505 TeethVillage88s
TeethVillage88s's picture

$129.6 Trillion in Swap Derivatives for the Top 4 Banks.

Wow, in 2008 there was a big Credit Crunch... something about Swaps with BoA & AIG... and global bank linkages!

Punters! Fraudsters! Racketeering! US Title 18 of US Code, Criminal Behavior & Crimes.

Tue, 08/05/2014 - 16:53 | 5050976 Oldwood
Oldwood's picture

Its all about too big to fail. They may hold the bulk of the risk but also control a significant chunk of the assets. Nobody wants to see them burning down the house.

Tue, 08/05/2014 - 18:03 | 5051283 Everybodys All ...
Everybodys All American's picture

1. Break up the big banks. All of them. As an example JP Morgan Chase could easily be broken up to at least five fairly large banks. This should have been done under Dodd Frank but they were all too busy sucking off banksters. This would actually create jobs something even Obama could get behind if he had any sense of doing the right thing.

2 Outlaw derivatives and again this should have already been done under Dodd Frank but no Obama and the rest of the democrats in charge were too busy living off those bankster donations. Too be fair so have all the Rhinos.

3. Outlaw prop trading and again this was supposed to have been done already under Dodd Frank and yet here we are still seeing prop trading from banks taking large postions with bank deposits at risk.

4. End the Federal Reserve and replace it with a gold / silver standard backed dollar. All Federal Reserve assets and liabilities would be dispersed among all member banks equally.

 

Add your own solutions or knock mine. I'm sick of this subject and I'm sick of people not thinking for the long term good of this country.

Tue, 08/05/2014 - 18:38 | 5051407 JimS
JimS's picture

I like your first 3 items. The 4th one is partly correct, as we need to end the banker-owned Federal Reserve. Read Stephen A. Zarlenga's "The Lost Science Of Money" and you'll understand the issues of any "money" tied to any commodity. This book will open your eyes to the true definition of money, and why the World's financial system is rotten to it's basic core.

Tue, 08/05/2014 - 23:50 | 5052634 TeethVillage88s
TeethVillage88s's picture

First analysis:

- 2003 the Derivatives took off
- 2005 4th QTR was the top for housing
- 2007 there was no obvious pause indicating that it was not just housing bubble...as we can see it was a Swaps Bubble and many financial products were part of the bubble

Repost:

1) Banks don't invest in Recession or Economic Weakness... You get a Choice either Currency Controls OR Public Banking and Recognition of Public Commons including Public Utilities to provide low cost energy, water, gasoline, and removal of some aspects of speculation in commodities, money & credit is a public Utility also

2) Population is growing, but number of self employed & small businesses are in long decline... and even the number of banks are in long decline... you get a choice simplify banking rules including Standardized Financial Instruments and an End to 90% of Private Banking, increase Fed Prime Lending Rates, create separations in different kind of banking, and fully fund FDIC OR See your monopoly as Federal Reserve Dealers and main customers for the Federal Government come to an End

3) Foreign Direct Investment in the USA is greater than Private Domestic Investment... this means US Banks & Corporations are not Patriotic and not Doing what they should be doing in the US Economy, we have Capital Flight, Brain Drain from Industry, Few National Stock Piles for Economic Shocks, Capital Stagnation, Mal-Investment, Large Amounts of Capital flowing to Speculation or paper trades... US Banking system is not working in a way that serves with integrity... So you have a choice TBTF Banks will be broken up into 8 Separate smaller Banks under Anti-Trust type Actions OR We will declare Money & Credit a public Utility which is the right of every US Citizen and we will Close Down the Federal Reserve banking system and begin Treasury Open Market Activities and student loan lending.

Tue, 08/05/2014 - 22:59 | 5052458 TheReplacement
TheReplacement's picture

I will play with you by those rules.

Tue, 08/05/2014 - 16:52 | 5050958 ejmoosa
ejmoosa's picture

What a waste of time and money.  

 

The banks have been asked to do the impossible and the Fed knows it.

 

And the majority of the risks originate with the actions of the Fed.

 

I want to see the Fed's plan for eliminating the systemic risk they have created, and I'd like to see it yesterday.  They cannot believe they are the solution to what ails us can they?  Really?

 

 

Tue, 08/05/2014 - 17:35 | 5051185 Killer the Buzzard
Killer the Buzzard's picture

DING DING DING. Bingo.  Congress repeals Glass-Steagall and the govt. complains that banks are too big to fail?!?!  What a joke.

Tue, 08/05/2014 - 18:40 | 5051416 Whootie_who
Whootie_who's picture

2008 crisis .. Banks to big to fail? Solution Make the banks Bigger .. Say what?

Tue, 08/05/2014 - 16:53 | 5050973 q99x2
q99x2's picture

Dude the FED is the banks and Brussels, 2 queens and 85 other scumbags.

Arrest them. Somebody call the police.

Tue, 08/05/2014 - 16:54 | 5050978 Oldwood
Oldwood's picture

They sign the cops pay checks, got it?

Tue, 08/05/2014 - 16:56 | 5050986 RaceToTheBottom
RaceToTheBottom's picture

Just threaten to Nationalize them.  That is the only way to get them to take this crap seriously.....

They are just stupid enough to require pointing out that Nationalized industries don't require CEOs who make 20 million a year too.

 

Tue, 08/05/2014 - 16:58 | 5050997 Oldwood
Oldwood's picture

Sure, we want the same ideological dumb asses running our corporations, just like they run our government. I'm sure there would be no corruption then! 20 million is pikers pay compared to the graft government can procure.

Tue, 08/05/2014 - 17:46 | 5051236 Bemused Observer
Bemused Observer's picture

Well, that is why it wouldn't work. But it IS what should have been done in 2008. Those banks should have been nationalized, management fired and replaced, then break up, audit and unwind the fuckers' messes, with the goal of returning them to private practice, so to speak, once they were on solid ground again.
But like you said, it would never work with the cast of characters we have.

Tue, 08/05/2014 - 18:00 | 5051278 Oldwood
Oldwood's picture

What we actually saw was a lot of smaller banks being told they were not in compliance with the then "currently accepted banking rules" and liquidated, their assets sold on the cheap to friends of Obama and the toxic shit left to us taxpayers to cover. What makes you think what actually happened is not effectively nationalization? These banks are living precisely as the rules have been dictated by government. The money these thieves have made off with personally is but a tiny portion of the actual losses foised upon the tax payers. I don't want the government running anything. Its bad enough to be robbed by these cocksuckers without the force of law behind it.

Tue, 08/05/2014 - 20:25 | 5051809 lotsoffun
lotsoffun's picture

oldwood - correct.  the sucked up all the local banks.  and having a face at a bank that might be accountable to the community was what something as tear jerking stupid as 'it's a wonderful life' was about.  human factor and accountability to the community.

and amongst all the shit heads that are still around, and i know people disagree with me, but sheila bair at fdic made a small attempt, then checked out before she was completely covered with it.

 

Tue, 08/05/2014 - 19:35 | 5051624 RaceToTheBottom
RaceToTheBottom's picture

I was comenting about the threat of nationalization, but it has become so onesided, that Nationalization is the only solution.  Not for the US Government to run them.  No even they are not that stupid.  

Just break them up into regional entities and separate the IBankstering from their original Bank roles.

They can still compete against worldwide banks by having agreements and relationships....

 

Tue, 08/05/2014 - 17:01 | 5051013 Dr. Venkman
Dr. Venkman's picture

Franklin Raines disagrees with this statement.

Tue, 08/05/2014 - 17:08 | 5051047 slightlyskeptical
slightlyskeptical's picture

Fannie never should have been a private company in the first place. The only method where it would have made sense is if they were limited to administrative functions and profits turned over to Treasury. If anything todays technology should be able to hold everyone accountable. There just has to be the will. Ross Perot, where the hell are you?

Tue, 08/05/2014 - 19:10 | 5051519 Blankenstein
Blankenstein's picture

They should never been allowed to have an implicit government backing. 

Tue, 08/05/2014 - 17:09 | 5051051 waterhorse
waterhorse's picture

Nationalize the systemically dangerous institutions and put Prof. Bill Black in charge. 

Tue, 08/05/2014 - 17:49 | 5051247 TheInfoman
TheInfoman's picture

Nationalize them under who's control?  Certainly not the greedy gang in Washington.  

Tue, 08/05/2014 - 17:56 | 5051266 Jethro
Jethro's picture

Can you imagine the banking system being run with the efficiency of the DMV?

Tue, 08/05/2014 - 20:20 | 5051788 lotsoffun
lotsoffun's picture

the dmv is only a penalty for somebody that has to show up to work.  otherwise, i'm on my obama phone, gots me some obama care and on the way home, my ebt card whips out and gets me some dinner.  i might be missing out on a few bucks not showing up for paid jury duty, but that's ok.  i gots me all the time in the world. 

why youse always in such a rush?  playoffs are over, nothing to watch on t.v.

see how it works?  just need to be sure the community organizer can get them all out to vote.

 

 

Tue, 08/05/2014 - 18:13 | 5051326 Everybodys All ...
Everybodys All American's picture

You do not have to nationalize any of them but what you have to do is split them up. These banks are monopolies much like the telephone companies were before they were taken apart. Believe it or not all the banks would be much more manageable as smaller entities and at the same time jobs would be created because there would be redundancy created instead of eliminated. At the end of this would be banks that if they failed would not be anything more than a normal bankruptcy procedure. Dodd Frank was supposed to have solved this and they didn't. Having a "disaster plan" once a failure occurs to unwind them is simply a fraud that the Fed and banking community has decided you'll believe solved the problem. It doesn't and once again we'll find during the next crisis.

Tue, 08/05/2014 - 21:28 | 5052075 ThroxxOfVron
ThroxxOfVron's picture

They WERE nationalized with TARP.  The Government sold them back their stolen goods to keep the deficit spending debt ponzi running and the Bankers did what they always have: paid with counterfeited credits!

Tue, 08/05/2014 - 16:57 | 5050992 Muh Raf
Muh Raf's picture

it's just the blind leading the blind, communally they're all out of bullets and ideas, the only way is down. Only question is when, not if.

Tue, 08/05/2014 - 16:59 | 5050995 Dr. Engali
Dr. Engali's picture

These people are idiots. With 750 trillion and growing derivatives there is no way they can unwind any major bank in a bankruptcy situation. That is why BofA transferred 53 trillion in derivatives over to the bank holding side. They know regardless of what is said that the tax payer is on the hook.

http://www.zerohedge.com/news/bank-america-forces-depositors-backstop-it...

Tue, 08/05/2014 - 17:04 | 5051030 Winston Churchill
Winston Churchill's picture

Hope that was a joke.They are too big to save now.

You actually think ten times world gdp can be bailed out by taxpayers.

Beg to differ there Doc.

Thats one poison pill thats too big to swallow.

Tue, 08/05/2014 - 17:08 | 5051048 El Vaquero
El Vaquero's picture

But they're going to try to cram it down our throats anyway.  

Tue, 08/05/2014 - 17:16 | 5051088 Winston Churchill
Winston Churchill's picture

Better have a big funnel. Will they sell our livers for foie gras after ?

Tue, 08/05/2014 - 17:18 | 5051100 NotApplicable
NotApplicable's picture

How to Serve Man?

Tue, 08/05/2014 - 17:24 | 5051122 Dr. Engali
Dr. Engali's picture

Marinated in red wine, lightly seasoned, served over a bed of rice with gravy. Add a side of asparagus and a garlic roll for dipping.

Tue, 08/05/2014 - 17:42 | 5051217 Jethro
Jethro's picture

They'll b e force feeding a different orifice.

Tue, 08/05/2014 - 17:18 | 5051057 Dr. Engali
Dr. Engali's picture

I didn't say I believed they could be bailed out. I don't see how you gleaned that from my post. I'm simply stating that no matter what happens, the tax payer is on the hook.

Edit: one more thing to consider, even though there is 750 in derivatives they all theoretically cancel each other out. It all comes down to counter party risk. In other words, who do you trust to deliver.

Tue, 08/05/2014 - 17:31 | 5051161 NoDebt
NoDebt's picture

Wish I had read down the thread far enough to catch your original post before I threw something in up top.

Couldn't agree more.

 

Tue, 08/05/2014 - 17:35 | 5051184 Dr. Engali
Dr. Engali's picture

That doesn't make what you said any less relevant. I've done the same thing several times myself. My take is that certain truths can't be reinforced enough.

Tue, 08/05/2014 - 17:38 | 5051204 Killer the Buzzard
Killer the Buzzard's picture

NET EXPOSURE = GROSS EXPOSURE.  Bitchez.

Tue, 08/05/2014 - 18:06 | 5051299 Winston Churchill
Winston Churchill's picture

Yep, that worked out so well for Lehman Bros.

$10bn in exposure after netting out the CDS, became $800tn after counterparty failure.

And that was before we had mark to model phantasy accounting.

Sure its sound, but don't touch it whatever you do.Don't even blow on it even.

Tue, 08/05/2014 - 20:13 | 5051761 lotsoffun
lotsoffun's picture

oh - you guys.  all alarmist.  look - VaR is peanuts.  peanuts.  it all nets out.  this stuff is complicated, why do you think jamie dimon makes more than you??  and doesn't bother to read, or comment here.  guys on zh can't understand this stuff.

Low volatility continues to reduce trading risk exposure, as measured by Value-at-Risk (VaR).  Total average VaR was $381 million at the five largest trading companies in 2013, $153 million lower (29%) than $534 million in 2012. •

that 381MM var was across almost all the banks in the USA for derivatives.  this stuff isn't any sort of molotov cocktail.  it's safe, secure and well monitored.

The OCC has us covered.  Check for yourself.

http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq113.pdf

 /sarc

 

Tue, 08/05/2014 - 17:15 | 5051075 Dr. Venkman
Dr. Venkman's picture

Correct. Every major bank bankruptcy will go down just like Lehman. It is unavoidable. I assumed that all the living wills just said "Have NY Fed backstop JP Morgan DIP Loan. Spend a decade in USBC SDNY. Use $3.2B in reserves for bankruptcy attorneys fees. Rest for Executive bonuses."

Tue, 08/05/2014 - 16:57 | 5050996 Seasmoke
Seasmoke's picture

Should have let the motherfuckers collapse in 2008. We be much better off today in 2014. Claw back every asset to the last penny these scumbags have accumulated these past papered over 6 years !!

Tue, 08/05/2014 - 16:59 | 5051008 Oldwood
Oldwood's picture

But they sacrificed their soul for us.

Tue, 08/05/2014 - 17:03 | 5051023 Dr. Engali
Dr. Engali's picture

No, they sacrificed our souls for them.

Tue, 08/05/2014 - 18:02 | 5051290 Oldwood
Oldwood's picture

We just think we are in hell, but they are most definitely going to the real thing. They had such altruistic goals, willing to lie cheat and steal to save us, and as we know the road to hell is paved with those very same intentions.

Tue, 08/05/2014 - 22:24 | 5052325 Bemused Observer
Bemused Observer's picture

Not good enough. People wanted the obsidian knife, the still-beating heart plucked from the chest, the lifeless corpse tossed down the temple steps...

Tue, 08/05/2014 - 16:58 | 5050998 Bemused Observer
Bemused Observer's picture

So the Fed is angry with the banks for not acting responsibly...good. Now why don't they STOP LENDING THEM OUR MONEY AT ZERO PERCENT INTEREST!!!

Tue, 08/05/2014 - 17:02 | 5051010 slightlyskeptical
slightlyskeptical's picture

If they can't survive without public assistance, but we can't afford to let them fail, then they need to be public enterprises so the profits can flow to the public as well.

If all the interest Americans paid, was paid to the government instead, wouldn't that pretty much eliminate the need for most taxation? Think about..no inner govt interest paid..workers keeping more of their paychecks..economy heals...welfare shrinks..more working better ssa and medicaire income.

Everyone wins except the bankers...sounds to me that they have bankrupted themselves so they should lose and no one should feel sorry for them. Private enterprise has proven they can do no better job than the government itself, so why should they get a cut of everything?. 

Tue, 08/05/2014 - 17:01 | 5051011 Omen IV
Omen IV's picture

This is all show time as alead up to November election - Obama today on tax inversion another promote

its all about perception of Obama action

 

Tue, 08/05/2014 - 17:09 | 5051050 roadhazard
roadhazard's picture

What ! No bashing E. Warren. I'm shocked, but probably not for long now that I mentioned it.

Tue, 08/05/2014 - 17:10 | 5051055 ShrNfr
ShrNfr's picture

Squah no cook good. Squaw big mouth. Squaw not even Indian. Fuck off squaw.

Tue, 08/05/2014 - 17:19 | 5051104 WTFUD
WTFUD's picture

Janet's Old School, knows the score and has OUR backs, s/

Tue, 08/05/2014 - 17:22 | 5051114 surf0766
surf0766's picture

Warren cannot be trusted

 

Tue, 08/05/2014 - 17:38 | 5051207 Jethro
Jethro's picture

But, but....she has "high cheekbones!" 

Tue, 08/05/2014 - 17:25 | 5051118 gcjohns1971
gcjohns1971's picture

Who comes up with this crap?

"Living Wills" indeed!

 

Who was stupid enough to think the rest of us were stupid enough to buy it?

You invest in a insolvent, a deadbeat, an incompetent, or a fraud and  you lose your money.  Simple as that.  A world without risk is a world without scarcity, is a world full of unicorns, rainbows, and apparently a massive cache of LSD.

The US has become an idiocracy at the top.  There the elite still project hauteur of the best and brightest while displaying the mental skills of the petulant and sightless!

Tue, 08/05/2014 - 17:28 | 5051145 cobra1650
cobra1650's picture

living wills, goldilocks, escape velocity, santa claus, glide path etc....give me a fucking break...pure fantasy....Elizabeth Warren is the fantasy frontman

Tue, 08/05/2014 - 17:31 | 5051163 FishHockers
FishHockers's picture

If we give them all we have, and all Jimmy Jones it, then what will they do? Eat one another. On a Long Enough Time ...........................

Tue, 08/05/2014 - 17:36 | 5051164 JustObserving
JustObserving's picture

When will the Fed find the $244 trillion number? That represents the unfunded liabilities of the US federal government?

Not in my lifetime.

Tue, 08/05/2014 - 19:29 | 5051591 Accounting101
Accounting101's picture

Will you fucking pay attention! Read the god damn piece again and try to get your piss ant brain to comprehend the content. Since 2008, US taxpayers have bailed out these parasites in the amount of $23 trillion, and obviously have the potential to be on the hook for a hell of a lot more. And what do you pull out of your ass??? The unfunded liabilities canard. Great! Let's blame grandmothers.

Good God! The Oligarchs just love tools like you.

Tue, 08/05/2014 - 17:35 | 5051178 NYPoke
NYPoke's picture

101 years too late, to examine The Feds' ownership structure.

Tue, 08/05/2014 - 17:35 | 5051180 buzzsaw99
buzzsaw99's picture

what part of tbtf doesn't that bitch understand?

Tue, 08/05/2014 - 17:38 | 5051198 Jethro
Jethro's picture

Did they just try to paint Elizabeth Fucking Warren in a good light???  Good God the Democrats are desperate....

Tue, 08/05/2014 - 17:52 | 5051256 Eyeroller
Eyeroller's picture

I can't stand Lie-awatha, but sure did like to see Yellen squirm with her non-answers.

Why the hell aren't any other Congressmen dragging the Ponzi Munchkin over the coals and asking DIRECT questions about Fed policy when she goes to testify?

Tue, 08/05/2014 - 17:45 | 5051234 doctor10
doctor10's picture

If the Fed don't hang the bankers out to dry, the bankers will hang the Feds out to dry. There ain't no Mutually Assured Destruction restraints about this situation any longer.

Tue, 08/05/2014 - 18:05 | 5051296 Oldwood
Oldwood's picture

There is honor amongst thieves as long as their is profit. Once the profit is gone they will stab each other in the back all day long, claiming ignorance and pleading for forgiveness.

Tue, 08/05/2014 - 18:03 | 5051291 Dre4dwolf
Dre4dwolf's picture

Just checked.....nope im hook free overhere no hooks in sight really. Actually I would probably benefit from a major collapse at this point...

Tue, 08/05/2014 - 18:05 | 5051295 yogibear
yogibear's picture

Yellen and the rest of the rest of the Federal Reserve bankers  encourages financial rape.

Your a fool banker if your not siphoning off reserves and off-shoring the funds into your private wealth account. Your bank will be bailed out and the mater covered up by the Federal Reserve and the treasury.

It's free money and the DOJ will just look the other way. It'll never make it to the DOJ anyway. The fraud will be covered up by the Fed.

Over the last 5 years the Fed and the government said fraud and book-cooking is good. This continues because even the Fed is marking it's books to fantasy. All to protect the TBTF.

Tue, 08/05/2014 - 18:11 | 5051316 Oldwood
Oldwood's picture

AS we saw with Holder refusing to prosecute banks for crimes as the risk of damaging banking confidence was too high.

This is a confidence scheme we are in, by every classic description. They are printing and loaning themselves money that has our name on it, knowing it will not be sustained. Everything is about maintaining public confidence, which is why they have run the markets so high. They can't fake jobs or prosperity, but they can ramp the markets creating an illusion of wealth. When all of the hope of getting rich has finally faded, we will see what the world actually looks like with the lights on the the curtains pulled wide.

Tue, 08/05/2014 - 18:13 | 5051327 kchrisc
kchrisc's picture

I've said it before and here it is again: "There is no such thing as a "taxpayer."

Imagine a business owner considering himself an "extortion-payer" to the local mobster. Imagine him going to the local Don to request, "Services, because I pay you a lot of money as an extortion-payer." LOL

 

There are only tax-victims.

Tue, 08/05/2014 - 18:16 | 5051334 QQQBall
QQQBall's picture

GET YOUR SHIT TOGETHER! next year

Tue, 08/05/2014 - 18:27 | 5051359 ramacers
ramacers's picture

this is really CYA stuff and really bodes ill...

Tue, 08/05/2014 - 18:28 | 5051364 QQQBall
QQQBall's picture

Just nationalize them - we'll owe it to ourselves so what could go wrong?

Tue, 08/05/2014 - 22:33 | 5052307 Lead Balloon
Lead Balloon's picture

comment deleted

 

 

Tue, 08/05/2014 - 22:21 | 5052308 Lead Balloon
Lead Balloon's picture

Derivatives are contracts.  Unwinding them would mean owing someone else.  We would have to natioanlize EVERYTHING.

 

 

Tue, 08/05/2014 - 18:39 | 5051406 ekm1
ekm1's picture

LECTURE

 

- A central bank is always and at anytime a private institution in practice regardless of whatever laws are in place.

- Ultra elite or ultra large business always has enough power by paying people in elected in decision making positions.

- These people always make decision in the "national interest" that X or Y or Z ultra elite be bailed out

- Bailout would mean that a losing business would be securitized in one form or another and the central bank (upon order of government decision makers) will buy up the paper, thus creating currency which goes to bailout the insolvent ultra elite.

- It is always a matter of which ultra elite controls who at the decision making level. This is what the lobby  war is about, controlling those positions in order to be bailed out.

- Example: UK, Japan do not have private central banks, but they do bailout private institutions.

 

Conclusion:

All central banks are in one way or another privately owned by X or Y or Z ultra elite who ally with each other or war against each other to control the central bank of any country.

 

END OF LECTURE

Tue, 08/05/2014 - 21:53 | 5052145 ThroxxOfVron
ThroxxOfVron's picture

" Bailout would mean that a losing business would be securitized in one form or another and the central bank (upon order of government decision makers) will buy up the paper, thus creating currency which goes to bailout the insolvent ultra elite."

 

That would mean that government/central bank bailouts are especially favorable for and desirable to the elites as ALL insolvencies are magically converted into highest grade securitizations by fiat.  

It might actually be a better way of making money than actually buying productive assets or accruing capital in the traditional sense.

There is absolutely zero need for diligence or concern for pricing since all leveraged fantasy valuation claims produced during the junk securitization phase are by accounting subterfuge automatically transformed into new unencumbered capital equivalents at the point that the valuation claims collapse into worthlessness. 

When valuations are at their lowest the redemptions paid by captured government/central banks are actually the most profitable.

...thinking about Milken and junk bonds, money losing social media stocks bid into the billions, hedgies buying defaulted Argentine junk debt and demanding/holding out for face value, AIG cds being paid to GS and friends at 100% face by .GOV in the fraudulent/faked/illegal bankruptcy, GM UAW claims paid out in equity...

 

The US Dollar is now apparently on the defaulted junk bond derivative standard.

 

Tue, 08/05/2014 - 22:48 | 5052416 ekm1
ekm1's picture

exactly

Tue, 08/05/2014 - 19:02 | 5051494 Fuku Ben
Fuku Ben's picture

Like the white flag of surrender message on the Brooklyn Bridge. Or we're going get you to voluntarily surrender your guns message of Sandy Hook. Or the we're going to get you to willingly surrender your unalienable rights of Sept. 11 it is all about sending a message.

Do you really believe some drugged out losers headed up by the Reverend Bud Green (Long time actor Norm Lebow also spelled Lubow) pulled a lights out and planted those white flags on the NY bridge on his own?

He was acting in a script that was intended to send you a message. Here is Bud/Norm on Springer (He was/is also a Springer Show Producer), Wally George & Joan Rivers

https://www.youtube.com/watch?v=f8vtnwoWfr8
https://www.youtube.com/watch?v=kaDWkwvy2bA
https://www.youtube.com/watch?v=vl1q-cTEn7k

So for those that have stuck with this post up until this point. Here you go. In case you're forgetting old hook noses instructiones. Drop the zeroes. Remember? 23 trillion = 23 --> 2+3=5

I'll leave the interpretation of the message to you

23 - http://deoxy.org/iching/23/
5- http://deoxy.org/iching/5

Tue, 08/05/2014 - 19:37 | 5051633 NoWayJose
NoWayJose's picture

Not even Mr. Yellen can print 250 Trillion - but rather than the taxpayer being 'on the hook' I think the Fed governors will finally get 'the point' when they look outside their windows and see the angry mob carrying pitchforks.

Tue, 08/05/2014 - 19:50 | 5051678 Reaper
Reaper's picture

TBTF is another myth of government. Rome was TBTF. Babylon was TBTF.

Tue, 08/05/2014 - 20:23 | 5051797 Joebloinvestor
Joebloinvestor's picture

Everyone knows the BAIL IN is the final straw they grasp at.

 

Tue, 08/05/2014 - 20:22 | 5051798 Oliver Klozoff
Oliver Klozoff's picture

Surprised that Lizzy Warren is still kicking. 

From various media, I never gathered the impression that she is anything but genuine.

If so, there is at least one creature in Wash. with a soul.

Tue, 08/05/2014 - 21:35 | 5052105 ThroxxOfVron
ThroxxOfVron's picture

"

The Federal Reserve and the Federal Deposit Insurance Corp. said bankruptcy plans submitted by big banks make "unrealistic or inadequately supported" assumptions and "fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for" an orderly failure. The regulators raised the specter of slapping banks with tougher capital, leverage and other rules—and even eventually forcibly breaking them up—absent significant progress to address the shortcomings.

 

The findings applied to 11 banks with assets greater than $250 billion, all of which will get letters detailing shortcomings in their so-called "living wills." The firms have until July 1, 2015 to file significantly improved plans or face consequences such as higher capital requirements, borrowing limits, or potentially an order to restructure their firm."

 

Gee, Tom; I'm sure that the Bankers enjoying practically unlimited monopolistic seignorage of the world's reserve currency and capture of the entire regulatory and political aparatus of the world's largest and most formidable military will drop everything and immediately begin creating plans to dismantle their astronomically powerful and lucretive fiefdoms just cause you said so.

 

P.S.

IF I was the type to read between the lines of shit talkers from The FED and Government I might just infer that You are openly telegraphing the timing of the next crisis bottom of the markets sometime in July 2015 -just about when the next presidential election media sham is going to be kicked into hyper-drive...

Tue, 08/05/2014 - 22:30 | 5052350 FredFlintstone
FredFlintstone's picture

Does anyone else think Elizabeth Warren is smokin' hot?

Tue, 08/05/2014 - 23:31 | 5052574 hedgiex
hedgiex's picture

The Y Gen should go to parts of South America, Asia etc to find how people survive in communities and build the parallel underground economy (not talking about drugs, money laudering, arms, etc here but basics).

There are still juices left in their collective pension funds and savings in the mutual funds, etc and future taxes to feed predators are small potatoes compared to these funds. Get out of them!

Wed, 08/06/2014 - 04:39 | 5052949 Watson
Watson's picture

FWIW, I'm not so sure about TBTF any more.

Suppose tomorrow (Thursday), a big US bank failed owing to a substantial derivative position going wrong in some way. I think the situation would be concealed until Sunday morning (until when there would be frantic (but unsuccessful) attempts to engineer a takeover), and then there would be a joint broadcast by Obama, Yellen, etc., saying that FDIC current/deposit accounts are protected (probably giving an explicit government guarantee to FDIC), and possibly also funds in transit (to avoid disrupting business).
And that's it, folks...shareholders, bondholders (sub and senior) are all drained until the problem's gone or there's nothing left...

To repeat a bank bailout, tomorrow, is simply politically unacceptable; if the cause is 'derivatives', even more so.

Wed, 08/06/2014 - 10:30 | 5053777 imbtween
imbtween's picture

I find this troubling. If the bureaucracy is covering its ass it means the time is close at hand....

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