Taxpayers are paying billions of dollars for a swindle pulled off by the world’s biggest banks, using a form of derivative called interest-rate swaps; and the Federal Deposit Insurance Corporation has now joined a chorus of litigants suing over it. According to an SEIU report:Web of DebtDerivatives . . . have turned into a windfall for banks and a nightmare for taxpayers. . . . While banks are still collecting fixed rates of 3 to 6 percent, they are now regularly paying public entities as little as a tenth of one percent on the outstanding bonds, with rates expected to remain low in the future. Over the life of the deals, banks are now projected to collect billions more than they pay state and local governments – an outcome which amounts to a second bailout for banks, this one paid directly out of state and local budgets.It is not just that local governments, universities and pension funds made a bad bet on these swaps. The game itself was rigged, as explained below. The FDIC is now suing in civil court for damages and punitive damages, a lead that other injured local governments and agencies would be well-advised to follow. But they need to hurry, because time on the statute of limitations is running out.
The Global Banking Game Is Rigged, and the FDIC Is Suing
Ellen Brown
There are three women that would make a better president than Hillary Clinton. They have stood up to the banks, advocated for the American consumer, and been beaten down by Wall Street Democrat henchmen like Rubin and Summers, without a peep from Bill Clinton or Obama. They are Brooksley Born, Sheila Bair, and Elizabeth Warren. They fought for derivative regulation, making big banks pay for their mistakes, and protecting consumers from the Wall Street vultures. And they never have gotten any credit for it from the people they worked for.
ReplyDeleteGood luck finding a judge and court willing to nullify swap contracts entered into by sophisticated investors on both sides. The same old plot played over and over by the hippie/boomer generation mythology of a hapless government incapable of doing anything right and needing protection from the smart savvy private sector.
ReplyDeleteUniversities, Local and State governments were caught with their pants down speculating on interest rates when they had no business doing it. If they needed a fixed rate loan, they should have borrowed at a fixed rate, banks are experts at hedging rates. This was speculation pure and simple that rates would go in one direction or the other. LIBOR is joke-fraud. But even if LIBOR wasn't a joke or fraud, these bets would have soured.
Prosecute the government employees, fire the ones that don't do their job and make the criminals among them share a cell with a bankster. They'll get along just fine. Government holds the reigns and power and sets the rules. People should be furious with their elected officials and appointed leaders that entered into the swap agreements. The folks responsible should have their accounts, travel records, expense records reviewed for any hint of corruption or influence peddling.
"Good luck finding a judge and court willing to nullify swap contracts entered into by sophisticated investors on both sides."
ReplyDeleteMy thoughts exactly. All the talk about our politicians when its really our judiciary that is the most treasonous and reprehensible. The SCOTUS is the best example of that.
The judges are of, by and for the 1%....... errr .... the 0.1%
Re: There are three women that would make a better president than Hillary Clinton.
ReplyDelete----------
There are tens of thousands of women who would make a better president than Hillary Clinton.
I have a cat who would make a better president that Hillary Clinton.
I don't think Ryan realizes that Government is a creation of the private sector.
ReplyDelete
ReplyDeleteBlaming the "private sector" for regulatory failures by government is absurd. People breaking the law always rationalize and justify their actions by blaming those around them, usually the least powerful. This is why we call it a control fraud, those in control create the crimes and make it appear as if others were breaking the laws. In our Republic voters have no direct responsibility for regulating banks. Period. The people that are paid to regulate banks work for the Office of Thrift Supervision, OCC, FED, or FDIC. They are responsible. If they believe the laws are flawed, they report to congress or the executive. When they see felony crime leading to a systemic failure, there is not supposed to be prosecutorial discretion of the sort they exercised. No one at FHFA, FREDDIE or FANNIE, who were providing the funds and criminal motives in the market, or any of the bank regulatory agencies above brought one single suit to stop the behavior. They made a few polite suggestions to congress but nothing even close to the sort of warnings and enforcement actions that were appropriate.
When a CEO of a Bank claims that his employees, his customers or his regulators caused him to create a criminal enterprise, do you think prosecutors buy into that argument? No. I think we need to suss out the criminals in government in the same fashion, those who directed, controlled and created the fraud and prosecute them. If a regulator in charge of watching over bank assets ignored fraudulent loans, criminal behavior when they were auditing in 2000-2006, they need to be fired or disbarred or lose their accounting license. If they were corrupted by a politician or banker they should all go to prison. Whatever reason they give for ignoring the crime is inculpatory evidence! We know crime happened, we know who was responsible for enforcing the laws, we know when it happened, we know which banks failed, I guarantee you, it wouldn't be hard to find out which government regulators were watching WAMU's assets, practices and risk taking in the decade leading up to their failure. This isn't rocket science.