No truth to this @zerohedge story. The Dallas Fed does not issue such guidance to banks. https://twitter.com/zerohedge/status/688441021986959361 …
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Dallas Fed “Responds” To Zero Hedge FOIA Request
Dallas Fed “Responds” To Zero Hedge FOIA Request
Two weeks ago, Zero Hedge reported an exclusive story corroborated by at least two independent sources, in which we informed our readers that members of the Dallas Federal Reserve had met with bank lenders with distressed loan exposure to the US oil and gas sector and, after parsing through the complete bank books, had advised banks to i) not urge creditor counterparties into default, ii) urge asset sales instead, and iii) ultimately suspend mark to market in various instances.
The Dallas Fed took the opportunity to respond (on Twitter), when in a tersely worded statement it said the following:
US Bank Counterparty Risk Soars After Energy MTM Debacle
US Bank Counterparty Risk Soars After Energy MTM Debacle
A few dots are starting to be connected now that we have exposed the debacle of The Fed’s decision to allow banks to mark-to-unicorn their energy loans. “Something” was wrong in recent weeks as the TED-Spread surged (implying rising counterparty uncertainty among banks) and then the last week – since The Fed’s alleged meeting with banks – has seen financial credit and stocks crash.
Coincidence? We don’t think so. In the week since The Fed gave the nod to banks to hide losses on energy loans, credit risk has spiked and stocks tumbled…
It is clear banks are hedging against one another’s systemic risk.
Simply put, it’s 2008 all-over-again as “when in doubt, sell ’em all” is back for the US financial system. When you know/question one bank (or some banks) is not transparent in their loan losses (and implicitly their capital ratios) then contagion (and collateral chains) tells any good fiduciary to sell them all – and the banks themselves will enable a vicious circle as they hedge.
And of course, the unintended consequence of The Fed’s decision to enable cheating in the banks’ energy loans is a surge in financial system instability as banks and the price of oil now become systemically more coupled.
What Just Happened With OIL?
What Just Happened With OIL?
Yesterday, we reported exclusively how the Dallas Fed is pulling strings behind the scenes to conceal the fallout from the oil market crash. As Dark-Bid.com’s Daniel Drew notes, by suspending mark-to-market on energy loans and distorting the accounting, they are postponing the inevitable as long as possible. The current situation is eerily reminiscent to the heyday of the mortgage market in 2007, when mortgage defaults started to pick up, and yet the credit default swaps that tracked them continued to decline, bringing losses to those brave enough to trade against the crowd.
Amidst the market chaos on Friday, a trader brought something strange to my attention. He asked me exactly what the hell was going on with this ETN he was watching. I took a closer look and was baffled. It took me awhile to put the pieces together. Then when I saw the story about mark-to-market being suspended, it all made sense.
Here is the daily premium for the last 6 months on the Barclays iPath ETN that tracks oil:
Initially, Dark-Bid.com’s Daniel Drew thought this was merely a sign of retail desperation. As they faced devastating losses on their oil stocks, small investors turned to products like oil ETNs as they tried to grasp the elusive oil profits their financial adviser promised them a year ago. Oblivious to the cruel mechanics of ETNs, they piled in head first, in spite of the soaring premium to fair value. After all, Larry Fink is making the rounds to convince the small investor that ETFs are indeed safer than mutual funds. Because nothing says “safe” like buying an ETN that is 36% above its fair value.
Sure, there are differences between ETFs and ETNs, particularly regarding their solvency in the event of an issuer default, but the premium/discount problem plagues ETFs and ETNs alike. Nonetheless, widely trusted retail sources of investment information perpetuate the myth that ETNs do not have tracking errors.
…click on the above link to read the rest of the article…
The Most Devious Liars in the Room
The Most Devious Liars in the Room
There were a few different stories coming out over the last few days that reveal the true nature of government and the apparatchiks who use disinformation, devious machinations, fraudulent accounting, and taxpayer money to cover up their criminality, lies, and the true state of the American economy. The use of government accounting tricks to obscure the truth about our dire financial straits is designed to keep the masses sedated and confused.
A few weeks ago, to great fanfare from the fawning faux journalists who never question any Washington D.C. propaganda, they announced the lowest annual deficit of Obama’s reign of error.
For the fiscal year that ended Sept. 30 the shortfall was $439 billion, a decrease of 9%, or $44 billion, from last year. The deficit is the smallest of Barack Obama’s presidency and the lowest since 2007 in both dollar terms and as a percentage of gross domestic product.
Jack Lew, the Treasury Secretary, and Obama were ecstatic as they boasted about this tremendous accomplishment. I find it disgusting that our leaders hail a $439 billion deficit as a feather in their cap, when until the mid-2000’s the country had never had an annual deficit above $300 billion. After 183 years as a country, the entire national debt was only $427 billion in 1972. Now our beloved leaders cheer annual deficits above that figure. What a warped, deformed, dysfunctional nation we’ve become.
When the government reported this tremendous accomplishment, there was no way to verify the number against the national debt figures, as the government stopped reporting the daily national debt figure because of the debt ceiling impasse with Congress. The farce of these Kabuki Theater exercises in government incompetence is almost beyond comprehension.
…click on the above link to read the rest of the article…
Happy 6th Birthday: The Day FASB Folded & “Mark-To-Fantasy” Was Born
Happy 6th Birthday: The Day FASB Folded & “Mark-To-Fantasy” Was Born
The captured corporate MSM is celebrating the six year anniversary of when the stock market bottomed in March 2009. They will spin a false narrative of Bernanke, Obama and Geithner saving the world with TARP, QE, and the $800 billion Porkulus bill. What great heroes. Bernanke now gets $300,000 for a lunchtime speech at Bank of America gatherings. He is raking in north of $10 million per year now. He made $200,000 per year as the Fed Chairman. His wisdom must be on par with Jesus Christ to get $300,000 for a one hour speech. Bernanke’s Sermon on the Mount tour:
The millions he is getting paid by the Wall Street banks for speeches isn’t a payoff. Right?
Bernanke and Geithner stopped the market from falling in March 2009 by threatening the accounting geeks at the FASB and forcing them to allow fraudulent reporting by the insolvent Wall Street banks. The crisis ended – precisely – on March 16, 2009, when the Financial Accounting Standards Board abandoned FAS 157 “mark-to-market” accounting, in response to Congressional pressure from the House Committee on Financial Services and threats from Bernanke and Geithner on March 12, 2009. That change immediately removed the threat of widespread insolvency by making insolvency opaque. Mark to fantasy was born. Profits for everyone!!!
…click on the above link to read the rest of the article…
