Sovereign Debt

Outrage of the day, and Rush says, "The Occupy Wall Street mob are whiners." I say they have a point, and both polarized parties can surely agree on this one. That is, unless both parties are getting so much money under the table from banks as to agree to do nothing.

By MARK DECAMBRE

 Last Updated: 4:44 AM, October 21, 2011
 Posted: 11:34 PM, October 20, 2011 in the New York Post
 "A plan by beleaguered Bank of America to foist trillions of dollars of funky Merrill Lynch derivatives onto its depositors is raising eyebrows on Wall Street.

The rarely used move will likely save the bank millions of dollars in collateral but could put depositors’ cash behind the eight ball.
The move also brought to light fissures between the nation’s top banking regulators, the Federal Deposit Insurance Corp. and the Federal Reserve, in the wake of new regulations meant to curb the free-wheeling habits that fostered the worst crisis in a generation back in 2008.
At issue is BofA’s decision to shift what sources say is some $55 trillion in derivatives at Merrill Lynch to the retail bank unit, which houses trillions in deposits insured by the FDIC.
Critics say the move potentially imperils everyday depositors by placing their money and savings at risk should BofA run into trouble.
Sources say that the derivative transfers from Merrill to BofA’s bank subsidiary were sparked by credit-rating downgrades to the bank holding company and are meant to help BofA avoid having to fork over more money to post as collateral to its derivative counterparties."

It should raise more than eyebrows. It should raise Hell, and it looks illegal or at least gray area to me. Federal Reserve has a duty to keep banks afloat internationally. That misplaced concern may have lead to behind the scene encouragement for the banks to shelter their questionable derivatives, laden with European bank debt, by transferring them to FDIC (government backed) banking divisions. Disgustingly, this shell game puts depositors at risk and ultimately the US tax-payer. Hello! there is no longer enough wealth left in the tax payer class to cover these banks who made the over-leveraged dark pool derivative bets.

The only solution is to break up the monopolies that combine our commercial banks with insurance banking and high risk investment banking, thus the shell game. Instead of campaigning, these Washington so called leaders should go back to work, work together and have the balls to break up these three faced banks.

At risk is 55 trillion at Merrill / BoA. Furthermore, it is reported that JP Morgan plans to do the same with 79 trillion worth of derivatives -- all for the sake of protecting these out of control monopolies and European banking. That's 134 trillion worth of risk as compared to a national debt of a mere 14 trillion, and we can't pay that!

There is no wonder Europe cannot make up it's mind how to solve their problem with Greece and others, they know America will naively bail them out. Well, there is no more water in the bail; don't you get it Bernanke? While you are at it please outlaw these dark horse derivatives and give our homeowners bankruptcy protection for their fraudulent mortgages, so they can stay in their homes.

Break up the Banks!