Wednesday, July 4, 2012
The banksters are at it again
Some whiz bang news just came out today that had wall street smiling. It seems there's a requirement under the Dodd Frank bill that requires banks to submit an annual plan for what they would do in the event of a failure of their institution. All this knowing that there will be no more free ride by the American taxpayers. All well and good you might think. Think again.
Resolution plans by Americas' largest banks
In reading through a couple of their plans one finds them passing the ball off to the FDIC and resolutions under the Dodd Frank bill. Okay then there must be some solution there or at least you'd think. Not to be. In vague terms a financial corporation such as a bank requiring full dissolution like a bankruptcy would be taken over by the FDIC or other receiver as listed in the bill. The assets would be sold but there was no mention of the liabilities. Assuming the liabilities were greater than the assets there's no mention of who gets stuck with the bill except the shareholders. At that point one would assume that the stock shares would be worthless so then what? There was mention of the FDIC being required to sell bonds and stocks to cover shortfalls but who in their right mind would buy them? Dodd Frank bill has holes big enough to drive a truck through.
The only good thing I saw in all this was the requirement to remove management and the board of directors responsible. And I don't think you'll be seeing anymore golden parachutes or bonuses this next time around and yes there will be a next time. The game hasn't changed much since 07 even after this attempt to correct things. But should we be surprised? When most of the input to this bill was provided by the very same people running the game in the first place.
So what going on that's barely reported. We know Barclays bank in the UK just got hit with a couple hundred million dollar fine for their con. And it's been reported that Chase lost $2 billion in their little scheme (some reports as high as $9 billion). To their credit the Barclays management resigned in disgrace. You think that would happen here? Not unless they were stuffing cash in their underwear while strolling out the front door.
Something is going to happen very soon because now I understand that a bunch of the wall street boys are moving overseas. Which can only mean it will make it easier to make this game more complicated. The fuse is lit and it's just a matter of time before this thing blows. I give it six months maybe less. So how's that for a Forth of July firework?