Office of the Comptroller of the Currency

Ben Bernanke has started his speech on the Fed's role under Frank-Dodd, and specifically on Bernanke's role as head regulator of everything. His prepared comments were released Tuesday evening. He did not address either the status of the economy or monetary policy. He focused on how the Fed is helping to establish the new Bureau of Consumer Financial Protection (CFPB). The speech and Q&A can be followed here.

A lot going on today, beginning with the CPI and claims, followed by the Philly Fed, the index of leading indicators, and mortgage delinquencies, and testimony on implementation of Dodd-Frank and the FY 2012 budget at mid-morning, a few regional Fed presidents from noon into the early afternoon(Lockhart, Evans, Fisher, and Hoenig..not listed separately below), and winding up with the Fed’s latest balance sheet information this afternoon…And, most importantly as always, the Fed will buy 10 Years (05/15/2018 – 02/15/2021) in the amount of $6-8 billion between 10:15 and 11:00 am. Keep an eye on 912828PX2.

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer. "Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that." I put down my notebook. "Just that?" "That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there." One has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."

Bernanke tells the public and Congress that the reason we need low interest rates is to support housing prices. He doesn’t mention that $188 TRILLION of the $223 TRILLION in notional value of derivatives sitting on the Big Banks’ balance sheets is related to interest rates. Yes, $188 TRILLION. That’s thirteen times the US’s entire GDP and nearly four times WORLD GDP. If even 4% of this money is “at risk” and 10% of that 4% goes wrong, you’ve wiped out ALL of the equity at the top five bank

Markopolos went on to say, “The banks that are doing it, it's 25-33% of their bottom line net income per year, so it's like being addicted to heroin, they can't afford to pull the needle out because their share prices will collapse."

Naming names ...

In short, the Banks’ authority to act as trustees under federal law does not insulate the assets the Banks hold in trust for the benefit of investors from state law requirements otherwise applicable to those assets.

Please support their important efforts

Both of Bernanke’s claims (that QE will help housing and spur business investment) are a crock. So what’s the REAL reason he’s frantic to kep interst rates low?

Derivatives.

According to the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION.

Five banks account for 95% of this. Can you guess which five?

The media is staring at the wrong target. Each major media outlet is copying what is popular or what the next outlet broke as a story versus where the true economic risks actually lie. Here's what's truly at stake – the United States is now at risk of losing its hegemony as the financial capital of the world!

Making money as the sell side turns on itself...

Two weeks ago we disclosed that a proposed amendment by Maine Republican Susan Collins would disqualify TruPS securities from bank regulatory capital, "which if passed into law, will trim about $108 billion from bank holdco Tier 1 capital, an amount which is about 13% of the "Big 4" banks' total Tier 1 capital according to Moody's." The reason for this long overdue proposal is that TruPS are nothing but a fancy way that banks bought and sold CDOs to each other in what can only be qualified as one big Ponzi scheme involving worthless assets. There are no longer just our words. Bloomberg's Yalman Onaran and Jody Shenn have written an extensive piece on the dangers facing bank balance sheets and liquidity as a result of having approximately a tenth of their capital locked into the same kinds of securities that are now the reason for Goldman's ongoing legal troubles.

The title says it all...

Guess who may be exposed to what? We will probably dig a little deeper into this if the market doesn't punish the company before positions can be expanded, in the mean time their is plenty for subscribers to chew on. I have included much food for thought for non-subscribers as well. Oh yeah, as I type this, futures are down 28 as the global markets drop 3 to 5% (again), all due to what I warned about since January yet the pundits said was "contained". Yeah, globally contained!

This article was inspired by a conversation in January 2010 with fellow directors of the Gold Anti-Trust Action Committee: Chairman Bill Murphy, Secretary/Treasurer Chris Powell, and Directors Adrian Douglas and Ed Steer. In speaking about the growing role of the exchange traded funds in the precious metals market, it was clear that the disclosure that the precious metals ETFs described below were providing to investors was inadequate. However, was there a material omission under securities law? I found the issues complex. Understanding the commodities markets can seem daunting to someone like myself with a securities background. Meanwhile, the securities markets and related legal and regulatory issues can be unfamiliar to those with a background in commodities. I decided to ask my attorney to help me gather the relevant information into one document to make it easier for GATA supporters and other interested parties—whether from the commodities or securities markets—to examine these issues and to better understand and price these securities. - Catherine Austin Fitts, Solari Report