Sunday, July 5, 2009

Time to say “Good Night and Good Luck” to the Fed

The Federal Reserve Act of 1913 creating the private Federal Reserve System has been responsible for more bank failures than during the entire history of America, and that includes the beginning of the colonial empires, and now its time to say to the system as Edward R. Murrow would say, good night and good luck.

The current bantering between Ken Lewis (CEO Bank of America) and Congress regarding the potential for Bank of America failure is fueled by none other than Ben Bernanke (Chairman of the Federal Reserve). As we have come to find out, Merrill Lynch was teetering on the edge of catastrophe as the losses on their toxic assets were no longer able to be contained, they were about to implode under the weight of a $78 Billion dollar loss ($78 Billion).

Bank of America in December after discovering the extent of Merrill’s looming losses considered retreating from the deal. The Fed determined that this deal MUST be made, and that if the deal were completed at that time the losses that would be disclosed to the public and BOA shareholders could be much less. As BOA took over Merrill January 09, Merrill reported a $15.8 billion loss for the fourth quarter. Everyone at the Fed and the FDIC were happy, only the Shareholders of BOA stock, when the deception was discovered, were not.

The takeover by BOA allowed Merrill to disclose a mere $15.8 Billion in losses in their January report. What happened to the remainder, well that is now the problem facing BOA, and the subject of their current financial distress, which will require a further bailout of BOA with taxpayer money, (our money).

BOA at the time of the merger was in no better shape, with losses on a much lower scale but losses nevertheless. Bernanke intimidated Lewis to take over Merrill, through “gentle persuasion” pointing out all of the reasons that the deal MUST be completed which included the potential for BOA to also fail if they backed away.

Memos that have been released establish communications between members of the Fed, but particularly between Kevin Warsh, Scott Alvares, and Ben Bernanke at the crucial period, November and December 2008, in which a plan was devised to intimidate Lewis to takeover Merrill Lynch. The discussions circled all of the reasons that the merger MUST go forward, including the potential failure of BOA and Merrill if they did not proceed, and included discussions of the potential collapse of the financial market fully.

The e-mails show that the Fed engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other Federal Regulatory agencies and from the public. The Fed did this fully understanding the implications that the merger might create additional problems of viability for BOA, as such the Fed had agreed and promised BOA left over TARP money to assist them in the takeover. The Fed also promised Loans, which Lewis declined in favor of gifts or incentives.

In light of all the adverse publicity surrounding the Banks and their continuing Fraud, Wall Street has now retained PR groups to clean up their public image employing two former aides to Treasury Secretary Henry Paulson in eschewing that image.

The Banks now “pledge” to “embrace change” and “accountability”. (right) The PR campaign plan targets policy makers in congress and the media in New York, London, Washington and Brussels and calls for a “city-by-city, grass roots approach. The Banks plan is to make the public “believe” they are part of the solution. (The PR Firm believes the forgetful public may well embrace this concept over time) .

The Bank program crafted by polling, lobbying and public relations companies paid and continue to pay out more than $85,000 a month from bailout funds which were placed in their reserves and invested in Oil and other commodity futures.

“It is imperative that in this historic period of reform, the industry be recognized as playing a positive role in seeking change and providing solutions to the problems we face,” one of the documents from the PR firm explains. “There is currently widespread skepticism about the industry’s commitment to this needed change.” An astute observation garnered by public outrage.

The plan calls for the use of regional securities firms, which have escaped notoriety in the financial crisis, to push the industry’s message with their local assets in Congress, members of the house and senate who are on the receiving end of the Banking industry bribe money.

The Brunswick Group LLC an entity consisting of Michele Davis, Secretary Paulson’s former spokeswoman, and Jim Wilkinson, his former chief of staff, are running the show at a retainer of $70,000 a month. Paulson as you may recall had an interest in Goldman Sachs which he saved with Government bailout money. Henry Merritt "Hank" Paulson Jr. was the Chairman and Chief Executive Officer of Goldman Sachs and cut the company a sweet deal with our money, at the same time securing the value of his securities in the firm. Paulson gave a $10-billion "gift" to Goldman Sachs, the firm Paulson headed before joining the Bush team.

Assisting Davis and Wilkinson is a Democratic polling company, Brilliant Corners Research and Strategies, which is paid $5,000 a month. Brilliant Corners is run by pollster Cornell Belcher, who worked on Obama’s campaign. BKSH & Associates Worldwide, a lobbying firm chaired by Republican strategist Charlie Black, signed on for an additional $10,000 a month. In all the cost for this phase of the plan is $85,000 a month, spread out where everyone gets a slice of the pie.

The real thrust and motivation of the Banks is a two fold frontal attack (i) to clean up their damaged image, and more subtly (ii) to promote the creation of a federal systemic risk regulator (FRR) that has increased government power to wind down financial firms that don’t own banks, (the competition).

About 600 securities firms, brokerages and asset-management companies are members of the trade group SIFMA which is funding the PR campaign, through its members. It counts among its members the biggest U.S. banks, including Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co., which have received capital injections from the $700 billion Troubled Asset Relief Program.(TARP)

The Banks’ real concern is that Wall Street can not afford to be left out as the Obama administration and Congress push for increased oversight, executive-pay limits and other restrictions likely to affect the industry and its players for decades. It is because of this concern that the Banks intend to invest Millions in bribes to accomplish their agenda, and to possibly draft the legislation they will approve. After all they, the Bankers are the Masters, the puppeteers, and Congress and Obama the mere servants and puppets.

Obama, the Bankers puppet in office plans to expand the power and authority of the FED the single most troubling agency, which is not part of the Federal Government, an agency that has mismanaged the economics of this country from its inception, in favor of the Banking Interests, while destroying the Volatility of numerous private enterprises and families through its manipulation and mismanagement of the money and credit supply.

This includes Greenspan, who was the chief architect in discarding Glass Stiegel Don’t be fooled, the Banks Must be fully restrained and controlled, what has already happened on more than one occasion, will happen again, and again, Bankers CAN NOT be trusted, we have the ability to control the Banks even if Congress will not, its called the power of the purse. Banks can not survive without our deposits, consider that.