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IMF Prepares Financial Revolution – Say GOODBYE to the Dollar

April 11, 2024

IMF Prepares Financial Revolution – Say GOODBYE to the Dollar

Global reserve currency status allows for amazing latitude in terms of monetary policy.

The Treasury Department understands that there is constant demand for dollars overseas as a means to more easily import and export goods. The petrodollar monopoly made the U.S. dollar essential for trading oil globally for decades.

This means that the central bank of the U.S. has been able to create fiat currency from thin air to a far higher degree than any other central bank on the planet while avoiding the immediate effects of hyperinflation.

Much of that cash as well as dollar-denominated debt  ends up in the coffers of foreign central banks, international banks and investment firms. Sometimes it is held as a hedge, or bought and sold to adjust the exchange rates of local currencies. As much as 60% of all U.S. currency (and 25% of U.S. government debt) is owned outside the U.S.

Global reserve currency status is what allowed the U.S. government and the Fed to create tens of trillions of dollars in new currency after the 2008 credit crash, all while keeping inflation more or less under control.

The problem is that this system of stowing dollars overseas only lasts so long and eventually the effects of overprinting come home to roost.

The Bretton-Woods Agreement of 1944 established the framework for the rise of the U.S. dollar. While the benefits are obvious, especially for the U.S., there are numerous costs involved. Think of world reserve status as a “deal with the devil.” You get the fame, you get the fortune, you get trophy dates and a sweet car – for a while. Then one day the devil comes to collect, and when he does he’s going to take everything, including your soul.

Unfortunately, I suspect collection time is coming soon for the U.S.

…click on the above link to read the rest of the article…

Proposal to Move Bank Regulation Goalposts Signals Underlying Problems in Financial System

April 5, 2024

Proposal to Move Bank Regulation Goalposts Signals Underlying Problems in Financial System

If a formula spits out a number you don’t like, just change the formula so you get a better number!

That’s exactly what the Bureau of Labor Statistics did to the Consumer Price Index formula in the 1990s. Because the CPI kept indicating price inflation was too high, the BLS tweaked the formula to spit out a lower inflation number.

Now the International Swaps and Derivatives Association (ISDA) is trying to talk the Federal Reserve into changing the formula for the supplementary leverage ratio (SLR) to make bank balance sheets look better.

This proposal sends some alarming messages about the stability of the banking system and confidence in U.S. government debt.

What Is the SLR and Why Do They Want to Change It?

The SLR is calculated by dividing the bank’s tier 1 capital (capital held in a bank’s reserves and used to fund business activities for the bank’s clients) by all assets on the bank’s balance sheet, including U.S. Treasuries and deposits at Federal Reserve Banks.

Banks use the SLR to calculate the amount of equity capital they must hold relative to their total leverage exposure. Regulations imposed after the 2008 financial crisis require category I, II, and III banks to maintain an SLR of 3 percent. “Globally Systemically Important Banks” are required to keep an extra 2 percent SLR buffer.

During the pandemic, the Fed temporarily altered SLR requirements, allowing banks to exclude Treasuries and reserves from the formula’s denominator. This made it easier to maintain the required SLR ratio.

As a Federal Reserve note explained, the banking system “exhibited considerable strains” during the reign of COVID-19. As the pandemic unfolded and governments began shutting down economies, banks quickly liquidated risky assets and increased their cash holdings. This resulted in a “sharp increase in bank deposits.”

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Wells Unexpectedly Shuts All Existing Personal Lines Of Credit, Hinting US Economy On The Edge

July 8, 2021

Wells Unexpectedly Shuts All Existing Personal Lines Of Credit, Hinting US Economy On The Edge

Wells Fargo just announced that it’s shutting down all of its existing personal lines of credit – a popular product offered by the retail-focused Wall Street giant – a move that will likely infuriate legions of customers.

The revolving credit lines, which will be shut down in the coming weeks, typically allow users borrow $3K to $100K, were pitched as a way to consolidate higher-interest credit-card debt, pay for home renovations or avoid overdraft fees on checking accounts attached to the loan.

Customers have been given a 60-day notice that their accounts will be shuttered, and remaining balances will require regular minimum payments, according to the statement.

According to CNBC, it’s the latest “difficult decision” facing Wells CEO Charlie Scharf, who is being forced to make cutbacks to the banks’ business thanks to restrictions imposed by the Federal Reserve years ago as punishment for the bank’s criminal scandals like the now-infamous scandal whereby branch managers opened credit lines for customers without permission. a scandal that outraged the public.

“Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts,” the bank said in the six-page letter. The move would let the bank focus on credit cards and personal loans, it said.

The sudden closures will leave many customers without what may be a critical source of liquidity. What’s worse, many will be penalized for the decision, making it more difficult for them to receive credit from a new source. Per CNBC, those whose credit lines are involuntarily closed will still see their FICO scores penalized as if they had elected to close the credit line willingly.

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No Banker Goes To Jail – Former Barclays Executives Acquitted Of Fraud

February 29, 2020

No Banker Goes To Jail – Former Barclays Executives Acquitted Of Fraud  

Days after Wells Fargo agreed to pay $35 million to settle regulatory claims that its financial advisors pushed clients into risky exchange-traded funds, three former Barclays executives were acquitted of fraud by a London jury after they were accused of paying secret “fees” to Qatar in return for emergency funding during the financial crisis, reported Reuters. 

In exchange for rescue financing to avoid nationalization of the bank (which would’ve meant shareholders take deep losses and executives loses their bonuses), Roger Jenkins, Tom Kalaris and Richard Boath (the three former Barclays executives) paid £322 million ($423 million) in “fees” to the Qatari sheikh who arranged the financing. To ensure that the deal went through, the executives allegedly conspired to hide these payments from their investors, the British government, and the press. 

We noted several weeks before the first trial began last January, that after more than a decade since the fall of Lehman Brothers, ushering in the financial crisis, and wrecking the finances of tens of millions of middle-class Americans and citizens of other Western nations, “no bank executives have faced criminal penalties – that is, until very recently.”

The three former executives were on the cusp of facing a maximum of 10 years in jail after a 7.5-year investigation by the Serious Fraud Office (SFO) that charged the three in 2017, alleging they paid a “fee” demanded by Qatar in exchange for investing £4 billion ($5.15 billion) in the bank as part of an £11 billion ($14.15 billion) emergency fundraising in 2008. The funding allowed Barclays to avoid nationalization that would’ve been devastating for shareholder value.  

The acquittals of the three executives is another loss for SFO, which failed to win a separate 2018 trial against Barclays for unlawful financial assistance to Qatar in 2008. 

…click on the above link to read the rest of the article…

Hayes: “A Lot Of What I Know Even The DOJ Is In The Dark”

March 25, 2017

Hayes: “A Lot Of What I Know Even The DOJ Is In The Dark”

An exclusive excerpt from the hot new financial and legal thriller “The Spider Network” by David Enrich

The small ski resort town, nestled in the mountains outside the city of Karuizawa, was a popular destination for day trips for Japanese families. Bustling during the day, it was mostly quiet this Saturday night. Clouds cloaked the moon.

A chartered bus pulled up outside a bar, its windows aglow. A light snow was falling. Out into the peaceful evening stumbled dozens of rowdy bankers, some toting tall cans of Asahi and Kirin. Most of them were drunk. They quickly took over the small bar.

The drinkers were employees of the American bank Citigroup, one of the world’s largest and most troubled financial institutions. A year earlier, at the beginning of 2009, American taxpayers had finished pumping a staggering $45 billion into Citigroup to bail out the collapsing behemoth. Now the transfused recipient was treating dozens of its investment banking employees to a weekend getaway. The bankers were housed nearby in a sprawling luxury hotel, each employee’s room designed in Japan’s typical spare style.

These festivities weren’t so spartan. The point was to foster camaraderie, and that was happening in spades. The party had begun on the hundred-mile ride on the bullet train out from Tokyo. After a day of hitting the slopes, Citigroup ferried the bankers to a bowling alley, where they drank and bowled and drank some more. Their bus had then deposited the intoxicated crew at this bar, before leaving the partiers behind to fend for themselves.

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Wall Street Bankers and Lobbyists Move to Ensure Industry Continues to Regulate Itself

March 17, 2016

Wall Street Bankers and Lobbyists Move to Ensure Industry Continues to Regulate Itself

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Not content with continued prosecutorial immunity and trillions in taxpayer bailouts and backstops, Wall Street banksters are making moves to ensure they regulate themselves.

In case you’re still wondering who the real owners of this country are…

The Wall Street Journal reports:

ORLANDO, Fla.—Wall Street’s top lobbying group wants a closer relationship with the policy makers that oversee its member firms.

John Rogers, chairman of the Securities Industry and Financial Markets Association and a top official at Goldman Sachs Group Inc., on Tuesday called for a standing body made up of bankers and regulators to discuss developments in policy, examination and enforcement. A key responsibility for the panel would also involve regularly providing guidance on postcrisis rules and other issues to financial firms.

Mr. Rogers said such a standing body isn’t novel, noting the Treasury Department operates such a group aimed at tackling money-laundering issues. That panel, he said, “can be extremely effective, providing regulators with valuable insight into the commercial viability and impact of their initiatives, and the industry with a greater sense of control over their destiny.”

Thanks for playin’ suckers.

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Wall Street’s definitely getting “ready for Hillary.”

…click on the above link to read the rest of the article…

The Banking Turmoil Spreads—-Massive Banking Crisis Brewing In Singapore

February 17, 2016

The Banking Turmoil Spreads—-Massive Banking Crisis Brewing In Singapore

By Singapore Business Review

The three biggest banks are losing capital.

A crisis of staggering proportions is looming in China, and tiny Singapore will be caught right in the middle of the storm once the disaster finally erupts.

Speaking at the annual Barron’s roundtable, Swiss billionaire investor Felix Zulauf warned that Singapore’s largest banks are at risk of massive capital outflows if the Chinese economy experiences a hard landing, which he expects will happen this year.

“We are in a down cycle that will end with crisis and calamity. China in today’s cycle is what US housing was during the financial crisis in 2008,” Zulauf warned.

Zulauf warned that capital outflows in China will continue, prompting regulators to devalue the yuan by as much as 15% to 20% within the year. When this happens, Asian economies which are heavily dependent on China—particularly Singapore—will suffer because Chinese corporates will cut their imports even more, while indebted Chinese companies will be placed at greater risk of default.

“I expect the situation the deteriorate to a point where we will witness a banking crisis in Asia that will hit Singapore and Hong Kong particularly hard,” Zulauf said.

“It is conceivable that Singapore, which has attracted a lot of foreign capital over the years because of its image as a strong-currency state, will be extremely exposed to the situation in China. Singapore’s banking-sector loans have grown dramatically in the past five or six years. Singapore is now losing capital, which means the banking industry is losing deposits,” Zulauf said.

He said that such a situation will cause carry trades to go awry, which will result in steep losses for heavily-leveraged traders.

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Our Banking System is a Giant House of Cards

May 2, 2015

Our Banking System is a Giant House of Cards

It Could Fall On You.

Anat Admati teaches finance and economics at the Stanford Graduate School of Business and is co-author of The Bankers’ New Clothes, a classic account of the problem of Too Big to Fail banks. On May 6th, at the Finance and Society Conferencesponsored by the Institute for New Economic Thinking, she will join Brooksley Born, former chair of Chair of the Commodities Futures Trading Commission, to discuss how effective financial regulation can make the system work better for society. Seven years after the worst financial crisis since the Great Depression, Admati warns that we are not doing nearly enough to confront a bloated, inefficient, and dangerous financial system. The system can’t fix itself. Here’s what you need to know.

Lynn Parramore: How would you describe the problem of Too Big to Fail banks. Whey does it matter to an ordinary person?

Anat Admati: Too Big to Fail is a license for recklessness. These institutions defy notions of fairness, accountability, and responsibility. They are the largest, most complex, and most indebted corporations in the entire economy.

We all have to be really alarmed by the fact that not only do we still have such institutions, but many of them are ever-larger and more complex and at least as dangerous, if not more so, than they were before the financial crisis.

They are too big to manage and control. They take enormous risks that endanger everybody. They benefit from the upside and expose the rest of us to the downside of their decisions. These banks are too powerful politically as well.

 

…click on the above link to read the rest of the article…

New bank fees target kids’ accounts and allow ‘double-dipping,’ say customers

April 29, 2015

New bank fees target kids’ accounts and allow ‘double-dipping,’ say customers

RBC says new fees ‘cost of doing business’

Banking fees are going up at all of Canada’s five big banks, but some customers of RBC in particular are outraged about the changes. They’re accusing Canada’s biggest bank of targeting children and those who can least afford it.​

Gordon and Elaine Murray from Glen Margaret, N.S., have been RBC customers for 20 years. It took one envelope in the mail the other day to get them thinking about changing.

Inside that envelope, Elaine Murray found the flyer Royal Bank of Canada recently mailed to many of its 16
million clients outlining the fee changes on the way.

“I couldn’t believe it — it just seemed outrageous,” she says.

Fee hikes June 1

On June 1, RBC is introducing new or higher fees for a variety of accounts and transactions including debit purchases, mortgage and loan payments and children’s accounts.

The bank is also increasing the age eligibility for seniors’ rebates from 60 to 65.

Elaine Murray and her husband have several accounts, insurance and a mortgage with RBC. The first thing they noticed is the new fee being added to mortgage payments, on top of the interest already being charged.

‘Double-dipping’

“It looked like double-dipping when I saw that we could be paying on top of our interest a fee for making our mortgage payments,” Gordon Murray says.

The fee increases may only be a dollar here and there, but he says any additional money being taken from customers is too much, especially from a bank that just announced a record $2.46-billion profit.

“You have a multinational corporation that makes billions of dollars … come to its clients and say, ‘and we want more,'” Murray says.

The couple say they are less worried about themselves and more troubled by the fees being added to children’s accounts and student loans.

“They were reaching into the pockets of young savers and students — it is just wrong,” Gordon Murray says.

 

 

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