Anat Admati on Bill Moyers: Thoughts on “Too Big To Fail”, an inflate/collapse strategy

“Anat Admati on Bill Moyers: Thoughts on “Too Big To Fail”, an inflate/collapse strategy – Big Financials at risk for starring roles in a contemporary drama of Shakespeare ‘s Julius Caesar”

A few weeks ago, I caught part of Bill Moyers’s program on which Anat Admati was his guest. Although on a few matters she and I agree (and on where we agree and disagree is perhaps for another post), on a number of others such as what to do about Systemically Important Financial Institutions, aka “SIFIs”, I am not supportive of taking apart these institutions capriciously, or even if any of them are ‘sick’ ie in some danger of such that they’d be perceived to need to be ‘resolved’. This is FDIC lingo for the FDIC seizing the bank and/or the bank getting taken over or shut down and put into conservatorship or receivership and as a whole or in parts bid out to ‘investors’.

In the past the FDIC didn’t take over large financial institutions, except in 1991 when it seized the Bank of New England. At that point, I owned a block of its shares.  I hadn’t even received the certificate when later that week on Friday at 5pm , the FDIC shut down the Bank and had to operate it through the transition to the winning bidder to assume most of the bank’s assets and some liabilities. During that time, the FDIC was requiring New England banks and thrifts to take aggressive charges on their souring real estate and mortgage portfolios. Bank of New England was going to have to take a charge that left it with 1% equity or perhaps would have wiped out its equity. This occurred a while ago and I forget the exact details except I lost about what a pair of shoes would cost.

Until WAMU, that was the largest depository institution that the FDIC shut down. In the case of WAMU, JPMC (NOTE 1)  was waiting to assume the franchise with a loss/share arrangement set up with the FDIC. In the case of a $300B thrift, with a Balance Sheet of 1-family loans and derivatives, and probably structured product of loans it had written, but rising rates were not going to benefit WAMU and any marking to market shadowing the deteriorating financial markets.

Considering the ‘regulators’ as well as Congress, SEC, FASB all have aided and abetted SIFIs into their ‘Too Big to Fail’ ability to abuse power and associated size, I’m not quick to give a pass either to Prof Admati to target “TooBigtoFail’ for some sort of ‘resolution’. Resolution means to shut down a SIFI and/or sell parts; along with Sheila Bair and a few others like Paul Volcker, until perhaps around 2007 or so it wasn’t vogue to be public in  wanting to break up Too Big to Fails. Now however, it IS blood-sport or blood lust, arguably open season for publicly calling for break-up of the franchises of some these largest Insured Depository Institutions (“IDIs”), that have sort of gone off the reservation and are of the size that is actually reflective of their ability to abuse power.

Prof Admati and former FDIC chairman Sheila Bair are sort of relative new comers to concerns about the ISDA cartel, aka the TooBigToFail group of financial institutions that in their ability to abuse power, are writing and trading virtually ALL of the over the counter contracts and derivatives now with an estimated notional value of between $600Trillion to $700Trillion. I suggest it is this, THESE instruments and the power to proliferate them and TRADE them that IS the problem and make the system fragile. That the system is ‘fragile’ are on what Prof Admati and I agree ( NOTE 2)  Ten years ago, I testified at the Boston Fed, when it had public due process hearings regarding the merger application of Bank of America for Fleet Bank Boston. No mystery – I opposed that merger on the abuse of power grounds which ah, well I used the expression “TooBig to Fail”. I also opposed the combination stating problems of an out- of- region bank determined to acquire the region’s largest bank and in a shrinking economy (NOTE 3) would be bad for New England.

Consolidation in the financial sector has been aggressive with some slow down, but arguably since the end of the ‘Cold War’ or even with the first thrift crisis which plumed with the Reagan/Bush1 Admin while Volcker was Fed Chair, but consolidation coincident with inflate/collapse has been happening since Volcker’s money supply constraints.  Thrift regulation contributed to trashing those Balance Sheets while 1982’s Garn St. Germaine legislation fanned the fire with flawed legislation and domestic financial sector policy.

I’ll not take the time in this post to go into the problems of disintermediation that occurred when interest rates spiked while Volcker was constraining the money supply, however, *inflate/collapse* hadn’t been seen in the US since the post WW1 and the Hoover era, when the US had made 2 series of loans to post Kaiser Germany -after WW1  (NOTE 4). While our economy was encountering money supply problems perhaps in part because of  those loans, but the strong domestic economy that the US enjoyed after WW1, our large population of banks and thrifts that were NOT Fed members were going to be at risk for inside dealings and schemes that were going to target our economy and thus them, that was going to alter the future for not only those many non Fed member depository institutions during a time when deposit insurance had yet to exist, but also to the means of many middle class and bank connected voters whose means, like those of my grandparents were in savings in depository institutions who lost ALL of their savings in a bank/thrift failure in 1930 0r 1931 in Philadelphia.

Abuse of power is the real problem and the root of “Too Big to Fail”  rather than focusing on Too Big To Fail. With regard to the condition of our largest financial institutions which are among the largest ISDA cartel members, problems of stability and health of some of those financial institutions have existed off and on for a while.  Where the label ‘Too Big To Fail’ (“2B2F”) or Systemically Important Financial Institutions (SIFIs”) many use to identify these US ISDA cartel members, that many believe their condition is bad enough that they should fail, but are so large that they enjoy protection, or ‘teflon’, that they’re able to thwart ‘market’ discipline and thus able to abuse power which people mix or see their ability to remain distractingly extremely large … gets us to a complex problem with many types of bad fruit.

Again, we’re really seeing the abuse of power rather than that these enterprises are deserving to be dis-assembled because as they’re said to be in bad condition, whether that’s really true or otherwise, but the regulators have the power to deem something is bad when it may not be. Moral hazard issues run throughout this entire matter, but there seems to be amnesia of the history of regulator and government moral hazard that again has contributed to this symbiotic Too Big To Fail and the government and associated workers which populate our regulators’ staffs. NO disrespect to them. They work hard and often are earnest although we’re more than 2 decades into Germany’s reunification and US -Bush 1 era ‘agreements’ with Helmut Kohl, which slowly have changed virtually everything. No Conspiracy Theory here, as this was by design by interests which covered for (protected or enfranchised) Bush and Kohl.

And perhaps it is, that these huge ‘shops’ are thugs in our economy. To rid ourselves however, of these ‘oppressive’ financial companies, that they should be ‘resolved’ and allowed to ‘fail’, I reject this because of the attendant destruction of capital. Again, “Resolve” is an FDIC expression that means more than I want to fully define here, but the associated slice-and-dice actions the FDIC does in a resolution that would serve to reduce a SIFI to a size of accountability, ie, ‘market’ discipline is very disruptive and in the short and long run I suggest destroys capital. Resolving fails to solve the destruction of Capital I’m seeing in what the FDIC has proposed and the luminaries including Prof Admati who are among those calling for slicing up (again “resolving”) or I suggest would be plundering SIFIs.

Ah, well I do agree about making the private sector accountable, as well as making government and administration including the regulators accountable.  None of them have been truly held accountable, however, and all ie, administration (regulators) and the ‘SIFIs” again, I suggest are in their respective conditions because of co-dependence.  

It’s been expedient for the 2B2F and our administration and regulators which are in this co-dependent condition to produce something dysfunctional and broken that think it is and has power to enjoys a sort of feudal, fief-like tribal-esque power over the people.


This condition exists because of, and I’ve blamed flawed federal level policy (multi-lateral policies that link us with the ‘Old world’) that one could argue is ‘mission creep’ at great cost to our society done at and above the federal level, sourced in part in multilateralism as far back as GHW Bush’s administration and a G7? meeting with Helmut Kohl and the other G7 senior administrators at that point. These included Margaret Thatcher and Francois Mitterand ( see FootNOTE 6   although an earlier version of ‘money center banks’ lending to governments of Catholic countries did happen with the ‘3rd World Debt Crisis in the early/mid 80s).

Around that time, “Glastnos” had begun in the former Soviet Union. Notwithstanding, against the strong concerns and opposition from Thatcher and Mitterand, Bush fully supported and/or incentivized Helmut Kohl’s plan for German reunification. Without direct transfer payments from the US to Germany, but with nearly every other give-over the President Bush could promise, the US’s largest banks of which all were in International Swaps and Derivatives Association (aka “ISDA”)  cartel as well as our Wall Street investment banks, these were enlisted to support this to which Bush committed the US and the resources of our public weal and those of our voters.

Again, I call this MISSION CREEP. Again, see here the Moral Hazard of where the guy behind the curtain, aka OZ  manipulates the levers of the Oz Face regulators, which can’t really do anything else but what the OZ has them do.

As it were, understand roots of this complex problem which remind us that it was not our job (the American People) nor that of our financial institutions to serve or solve German problems. Nor was George HW Bush some royal and the United States a fief of his, that he could obligate the future of the US to suit Germany’s interests and advantage. And even against 2 key allies of ours suffering great losses at Germany’s hands during the military part of WW2, Mr Bush over-rode their strong objections to allowing and incentivizing Germany to reunify.

Forgetting the past when we should not have, and thus its snaring of us in this false burden *Mission Creep* to help Germany – to which one of our presidents and  his self interests ‘committed’ US voters, their wealth, property and quality of life and future, the economy and its health and our financial system, the trillions in ad hoc contracts (Derivatives and OTC contracts) aka the “financial innovation” all are a part of supporting this mission creep now to be an accepted policy of the US government and which the American people, commerce and its financial system were going to  have to accept and exist in, for better or worse.

Worse – it was going to be  including the financial regulators accepting these flawed policies, and having to dance with the elephants. Now the people and our private enterprise including our financial sector were going to have to underwrite the Bush agreements to Helmut Kohl and Germany in G7/G8/G20 Agreements, rather than engaging in ho-hum commercial banking such as making performing loans, and investment banking activities like corporate finance. That to which Bush agreed, to deindustrialize the US, do ‘free’ trade to spur the deindustrialization, and erode – contract our domestic economy that would harm the environment into which our banks lend, the true problem has been the disintegrating economy resulting from the multilateral agreements struck long ago.

It’s foul and treacherous to our own that we engaged in agreements with foreign sovereigns that were able to encompass virtually all of American society and the economy, while our largest financial companies, corporate America and the institutional investors were going to see their ‘future’ in the flimsy economies of the former colonies of our allies. Where is there more ailment in a way than that? And the derivatives, OTC contracts were going to hide and have been hiding this dissipation of what had been the wealth and relative health of US domestic commerce into the  flimsy economies of the former colonies of our allies, many of which have Catholicism as their national religion.

This is where Mission Creep and failing to discern it, failing to discern ah, haul out the “T” word, Treason has sentenced us. And here in effect, we’ve been rotting and I suggest it’s been by design which I’d mentioned earlier in this comment.

We don’t have to stay here. We can repeal flawed legislation, regulation and policy. We repealed Prohibition; we repealed GLASS STEAGALL! And Glass Steagall wasn’t even a bad thing, nor was Prohibition, except for making organized and white collar criminals wealthy and making splashy headlines for gangsters and their gun molls.

We can repeal our signatory status to the policies to which GHWB and other foolish presidents in G7/G8/G20 Agreements (NOTE 5).  Prior to legitimization to trade these instruments (which hid bad or weak business and credits), this limited the writing and use of these instruments, generally to ‘hedging’. Most of this was off Balance Sheet, ie considered contingent and not able to be defined as an Asset and enjoy Balance Sheet access. This is key because there also is less accountability for these contracts and less capital needed also because it’s not really including in what hits Balance Sheet footings.

The FDIC initially rejected this ‘financial innovation’ activity, and the increasing amount of off-Balance Sheet exposure as unsafe and unsound  banking practices because it’s unstable even when off-set or ‘hedged’. Many of these instruments didn’t have the cash flow generating, credit risk monitored profiles of performing loans. And there was a lack of accountability and regulatory oversight of these contracts, as well as their use and this as a banking activity. This new mix of products and services would expose and has exposed the banks and thus the Deposit Insurance fund to potentially great liability. Even after Commodity Futures Modernization Act’s passing in  2000, institutional framework was non-existent then, and only now with Dodd Frank (2010) legislation and pursuant regulation, or at that point within the banks. The financial system had virtually no tracking and constraint against the increasing and self-dealing and abuse of what bank management and companies like Enron were doing with these contracts.

The Fed however, itself also a  multilateral organ characterized derivatives and OTC contracts writing as “Financial Innovation”. The Fed was enlisted to virtually crusade for the financial engineering aka,  ‘financial innovation’, contrary to what and how the FDIC viewed this financial engineering for the purpose of and now covering for the sobering cost of Germany’s reunification and with its EU strategy (takeover Europe without using panzers) the other European countries ‘accepted’ in 1991/1992 at Maastricht.  So our using ‘financial innovation’ for appeasing of Germany’s reunification, which Thatcher and Mitterand vigorously opposed, which also has been including financialization of Germany’s Maastricht – EU take over of Europe, packing the banks’ balance sheets with ad hoc, non loan like contracts and what would help keep the paper moving – the FDIC is now supportive of all of this.

Again, consider that these instruments often do not produce healthy cash flows like performing loans, nor are they like underwriting business or like institutional same from one to the next common stock shares or bonds. Additionally there was no regulatory framework but now with Commodity Futures Modernization Act (NOTE 6)  which legitimized financial innovation contracts to trade, also gave them Balance Sheet access to inflate the Balance Sheet but also needing capital while fattening up the Balance Sheet although now using these crippled, crippling OTC contracts and derivatives items rather than performing loans.

Discern here the inflate/collapse scenario – an ISDA strategy which enjoys multilateral power with a cartel of the world’s most powerful enterprises which are the arteries of the world’s economies. But none of this financial ‘innovation’ was quality banking and in the long run what wasn’t anything to write home about for the health of the sector, rather than the increasing amount of ‘fragility’ and cripple points financial innovation would add.

Dr. Admati and I agree on the fragility, but where it’s at is that FASB, Congress (and the regulators), and the academic community, the monetary economists too aided and abetting the fragility with the erosion of US GAAP into fair value basis accounting and at all that financial innovation could be traded and be plumed as well as have Balance Sheet access because these contracts could be traded and now ah, with ‘trading’ having to be marked to market. So any financial markets inflating or correcting accordingly would have that same affect on ISDA banks’ Balance Sheets. Some characterize this as ‘pro-cyclicality’ but in any event, it ie, mark to market and the ‘financial engineering’ isn’t good for banks’ Balance Sheets.

Like a spider while weaving its web, there is a designer here with this design. Again, as opposed to what George HW Bush committed the US Balance Sheet and people to Germany’s war footings, again it’s not our problem but now brings the risk of “night-of-the- long-knives” to all the US ISDA cartel members, which are going the way of financial innovation and drinking quantitative easing rather than operate using that well worn but ho-hum groove of safe and sound banking.

There’s no Resolution plan that can be triggered if without QE and if there is a market correction, because a bank which returns to ho-hum banking, that bank’s Balance Sheet probably will not get trashed in a mark-to-market. SIFIs don’t have to be here even though they have to file Resolution Plans, and don’t have to be like even more tame versions in the past before Dodd Frank and Resolution Plans and Orderly Liquidation Authority and many high profile people out for Blood…Volcker, Bair, and others like Prof. Admati.  Perhaps even DB wants our banks to trash themselves, and our experts to want to take down a SIFI using ‘SPoE’, and competitors are vanquished.

Not like the 80’s “3rd World Debt Crisis” encountered by our “Money Center”Banks wasn’t a bad enough experience – although that was in a way contrived to take control over – a form of re-colonialization – of the former colonies of our European allies, but then the largest US banks had to write down or write off their portfolios of loans to ‘3rd World’ countries.  It’s from that, that friend of mine who’d been in Commerce in Reagan’s first administration  and had worked for Willard Butcher (who’d headed Chase after Dr. David Rockefeller retired), said that “countries should lend to countries”.


Well, it wasn’t his own wallet that former President Bush committed to Helmut Kohl. It wasn’t Yankee Bonds, or Bund Bonds that Bush and Kohl brewed up, not even Dawes or Young plans or IMF loans or like that. It was the US to deindustrialize, violate our Constitution’s Article 1 Section 8’s indirect fiscal revenue clause to spur off-shoring production into low wage countries which are former colonies of our allies and have their National religions that of the Vatican. It also had our banks engaging in unsafe and unsound banking, with laws, regulation, and accounting all along the way to throw us under the bus to benefit the Germans.  So we’re a long way away from countries should lend to countries.

What George HW Bush did for the 4rth Reich and exploited/expropriated the future of America and the quality of life of its 99% is unlike anything seen in recent times.

God rest his soul,  my friend Bob Chapman used the expression, “slow train wreck” about ‘free’ trade and what was happening in the US economy. Whereas it’s not then nor now our problem to help and support Germany’s reunification then and its EU take-over Europe strategy now, slow train wreck and by design is what the Bush 1 agreements to Helmut Kohl have been to the US and the vast majority of Americans (NOTE 7)  Virtually all Americans anyway didn’t know that there is a German core still engaging in commercial and cultural war against the US, Britain and Russia. This isn’t well discerned again by virtually all Americans and our press and policy makers likewise either fail to discern it or at the the heart of the problem are the Bushes and their camp (NOTE 8).

WRAPPED NOW IN FEDERAL POLICY.  Thus that to which the US agreed wrapped up in G7/8/, after March of 1992, the new president  would have to carry out the ‘free’ trade part of deindustrialization, while attendant with Maastrict, the ‘financial innovation’ sky-rocketed until 2000, when US ISDA cartel members’ obtained legitimization to write Credit Default Swaps (“CDS”)  as well as to trade these instruments but long before there was any effective oversight or a regulatory framework to keep this stuff in check, this enabled the ISDA cartel to enjoy their financial ‘innovation’.  The 2000 Commodity Futures Modernization Act legitimized the OTC contracts and derivatives to keep in line with GHWBush agreements to the Germans.

No question the turn of the paper (and the associated fees NOTE __)( In this I mention the way that fair value accounting enables bank management to enjoy a huge gravy train when the Balance Sheet exposures of these instruments when FV’d is run through the Income Statement and with the $700 or so Trillion in notional value, that if 1 basis point is recognized in the Income Statements of the ISDA banks, that is a huge gravy train that bank management and others feeding from the pie, don’t want touched.) mounted astronomically, while the derivatives and swaps etc, were also to cover for the souring and weak credits that were being written and would be written in the future.  Although ‘fee’ income would be generated and while these contingent contracts were off – Balance Sheet, and thus no capital was needed to help ‘foot’ what wasn’t on the Balance Sheet, when able to trade these and Balance Sheet them, this was believed to solve what was believed to be a problem of multilateralism, that our banks were not as big as Deutsche Bank and those in Japan.

I’ve attended meetings of the regulators, read through their Resolution Plan regulation, read through its Single Point of Entry Proposed Regulation. Recall that our regulators and supervisors of insured depository institutions are the Fed -which is a mask in search of a face, and the FDIC, a tag team member with the passive, but dominant Fed. The Fed has a difficult time being a ‘regulator,’ while the FDIC is having a difficult time also being a regulator, when it only had ever been that.

Some may give a pass to this if one has read the Notice for Proposed Regulation (“NPR”) in which the FDIC discusses its new ‘role’* or presumed new role rather than as regulators and examiners for safety and soundness of Insured Depository Institutions, and protectors of the Bank Insurance Fund, and where in my Comment letter (pg32 – here below and edited) for the public due process of the FDIC NPR for Single Point of Entry (“SPoE”).

I suggest and mentioned earlier, returning to ho-hum commercial banking and investment banking. I suggest and have mentioned here and elsewhere in some of my comment letters, to repeal US signatory status to the flawed multilateral policies in the G7/G8/G20 Agreements, in order to restore the domestic US economy into which our banks can lend and do investment banking. Rather than ‘financial innovation’, which will bring one to the slice-and-dice crowd, looking to serve up the SIFIs, I suggest that the US ISDA cartel have the means and resources to lobby on behalf of what will make the US economy better and it’s not ‘free’ trade, the form of what ‘trade liberalization’ was established to produce deindustrialization.

I suggest abstaining from ‘financial innovation’ which although it may be exciting like a speed rush, or a opiate, it is a financial form of a pipe dream even if by design to get the people and the administration and  perhaps even the regulators under the thumb of the US ISDA cartel. Like terrorists of a financial sort, holding their form of guns to our heads.

Ah, they lived by that sword and they’re at risk for dying by that sort by the hands of the slice-and-dice crowd, calling for blood of SIFIs by way of ‘resolving’ them, by way of ‘piercing’ their top holding company and using their capital to cover for the losses the FDIC would encounter when shutting down an ongoing concern.  Where is there some sanity? Again I suggest a lobbying congress and the Executive Branch for better policy and in turn that will spur the economy into one better into which to lend. It would be different if others too haven’t observed the same condition about the economy, but the ISDA cartel have the means to reverse the slow train wreck that’s been happening to our society, quality of life and commerce.

“(At levels above the FDIC, purposed destabilization is deemed to happen in the US, although Congress has had a hand in passing ‘free’ trade agreements, which have been to facilitate de-industrialization to which George Bush agreed in 1988 or so with Helmut Kohl at a G”X” meeting. Effects of breeching compliance of the Constitution’s Article 1 Section 8 were known and understood even at that time, especially eliminating tariffs on goods from asymmetric economies.

The FDIC had no power to thwart these flawed policies, but its research again as I’ve said has failed to expose or condemn these flawed policies and their deleterious effects on the US economy and areas/footprint of US IDIs into which these lend, take deposits, engage in their products and services.

I also suppose I shouldn’t be shocked that the FDIC assumes it has right or power to promote market discipline and maintain financial stability, when it really has neither of these nor right to claim them. Market discipline or using it as punishment is easily manipulated in part by forces the FDIC failed in the past to discipline, i.e. such as the NEWS although the FDIC has no control over this. It does HOWEVER and did have power to issue MOUs and C&Ds against abusive behavior occurring inside IDIs and enterprises that are close financial affiliates under BHCs having large IDIs.

Moreover it has little power over the abuses of traders or the FDIC fails to take effective regulator interaction with annual comprehensive safety and soundness examinations.

Beyond the true, on the books role of FDIC however are long-time problems with thick roots. Whereas utilities tend to not be broken up, like power dam or power plant that has to be large to provide power to many residential as well as industrial users, we now have very large banks. Although I’m not advocating ‘TooBigToFail’ because it was Rockefeller, Morgan and Rothschild agent Warburg by 1913 who were key in establishing a central bank to suit their key interests: to provide banking for their large corporations and to control the economy of the United States with their own Too Big To Fails of that era. There are other interests they had, those two I mention are not conspiracy theory related to establishing the Fed. Now up to this point (1913) large financial institutions were partnerships and made loans which they syndicated, i.e., took parts of large loans so that they all enjoyed the profits to large borrowers while not having exposure on any single balance sheet.

Then there were partnership structures used for the banks.
Partnerships tended to engage in only that which its partners felt comfortable, with limits to their exposure to risks of sorts, usually credit or commercial risk.

Partnerships and the ability to abuse power over federal government however are two different things. When our banks began lending and backing different warring factions as far back as the Franco-Prussian War and our government bailing out the US lender which had backed the looser, that’s what also contributed to the problems of abuse of power and also corporate-personhood which a few years after that the Supreme Court provided for the wealthy and their corporate interests.

Given these are deeply entrenched problems in the US and have multilateral connections, and given it’s not really in the FDIC’s job description to ‘promote’ market discipline, it IS the regulator’s job to protect the Bank Insurance Fund and regulate for Safety and Soundness. There is FDICIA. Prompt Corrective Action “PCA” and disciplining against management engaging in abusive conduct practices and at any level of capital, administering discipline and using MOUs and C&Ds at any capital level.

So do that JOB -this is the on-the-books job. Please do that job,
rather than this surreal, mission creep which it is assuming and mentions in this NPR, which sounds worse and with more problems because it isn’t really able to do that, nor fence with slick foreigns and their regulators. Sadly the ‘policy-makers’ have the FDIC thinking it is able, and legitimized to ’embrace’ this new mission creep role and also coordinate with foreign regulators which are upon it because of multilateralism and large foreign banks operating with significant assets and power, along with largest US banks operating globally.)

Again, I’m not supportive of globalism and giving that a pass.
Actually Citi operated in 100 or many foreign countries long prior to G7 and related agreements calling for the US to deindustrialize. THIS is globalism, i.e. US deindustrialization into many former colonies of our allies, of which many have Catholicism as their national religion. Operating in many foreign countries as an operating strategy isn’t globalism.

*Including Skull/Bones – established in Bavarian jesuit occult and today still manipulated to serve those interests which are quite contrary to those livelihoods and quality of life of virtually all Americans.

** 76622 (page) in Federal Register / Vol. 78, No. 243 / Wednesday, December 18, 2013 / Notices
FEDERAL DEPOSIT INSURANCE CORPORATION – Resolution of Systemically Important Financial Institutions: The Single Point of Entry Strategy AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Notice; request for comments.
Request for Comment To implement its authority under Title II, the FDIC is developing the SPOE strategy. In developing and refining this strategy to this point, the FDIC has engaged with numerous stakeholders and other interested parties to describe its plans for the use of the SPOE strategy and to seek reaction. During the course of this process, a number of issues have been identified that speak to the question of how a Title II resolution strategy can be most effective in achieving the dual objectives of promoting market discipline and maintaining financial stability. The FDIC seeks public comments on these and other issues.

(+)–EU.html. See also below – NOTE 7 of this comment.

(NOTE 1 which was the typical way a large financial institution was dealt with if in sick condition, or deemed by the regulators to be in sick condition such as what the OCC and/or FDIC or Fed did with Southeast Bancorp with 7% primary capital and tee’d it up for First Union by seizing Southeast and bidding it to First Union, while keeping some of the sour real estate assets. Depository Institutions were seized and held for bid or there was a new owner lined up and when the FDIC on Friday would shut down a ‘shop’, on Monday the new owner pre-arranged by the FDIC would re-open the branches the following Monday. also see note 26 in that pdf)

(NOTE 2 I have been saying this since around the time of the correcting financial markets beginning in March 2007. In late 2006, Nuriel Roubini’s research became public on the trillions of dollars of financial sector assets, non-performing mortgages going to or that had achieved that condition. AEI in March of 2007 hosted him and others on a panel that Chris Whalen and Alex Pollock moderated, where Roubini made his presentation. That summer, Moody’s and S&P began aggressive reviews of many of the structured vehicles of mortgage paper and referenced mortgage paper, ie ‘synthetic’ structured product, that all were affected by interest rates and the condition of the financial markets. Things got quite ugly from there. )

(NOTE 3) Reviewed, opposed merger proposal between Bank of America and Fleet Boston on Concentrations of Power issues. Testified before the Committee at the Federal Reserve Bank of Boston with written statement introduced as support, however not read in entirety at the hearing: Public Hearing Regarding Bank of America Corporation, and FleetBoston Financial Corporation – Held on Wednesday, Jan 14, 2004, at the Federal Reserve Bank of Boston: Unedited Transcript. Vol I, Pgs 1 – 423, line . 0263 beginning 23

 (NOTE  4 Street And The Rise Of Hitler By Anthony C. Sutton approx. 12, 13 paragraph of the post )

(NOTE 5)  We also can repeal our concordat with the Vatican, to which the Reagan administration committed the US, but never before had any President or administration or Congress EVER had signed and ratified in the form of a treaty. This concordat with the Vatican, this treaty is with the largest, oldest dictatorship and feudal society on the face of the earth. Not anything to which the founders had bound us, not anything that they ever would have promoted or suggested. NOT EVER, until Reagan. Perhaps he felt that the enemy of my enemy is my friend, considering the Vatican as an enemy of the former Soviet Union. In that Russia had been Orthodox, one could say historically the Vatican had its sovereign interests contrary to those of the Orthodox Church and thus, Russia. That Reagan would sign treaty with the Vatican which defacto bound us to it and recognized a ‘national religion’ contrary to the Constitution, greased a bad path against the US.

It was after that, that our economy and society began experiencing ‘planned obsolescence’ worse than ever throughout all of America society and commerce.

And George HW Bush was Reagan’s Vice President. That GHWB was Vice President and that the Vatican and the US went into a concordat are related problems, but what has this to do with our banks, financial system and society?

G7/G8/G20 Agreements and those member countries (many of which have Catholicism as their National Religions and probably often where the Vatican’s representatives are present or in attendance as the ‘Christian Democrat’ party members from those “G” countries parliaments), and multilateralism anyway in reference to the ISDA cartel, for the ISDA cartel members which include the largest European banks like Deutsche Bank, this not only meant more ad hoc contracts although swaps on loans and FX were well-worn grooves, and non listed, non exchange traded/cleared derivatives, this meant generally engaging in what would facilitate Germany’s reunification.  German reunification was going to have significant costs to the US and many other societies, especially since Germany’s 4th Reich was/is still at war (asymmetric) against the US, Britain and Russia.

(NOTE 6 at the hands of Texas Senator Phil Gramm, Treasury Secretary former Goldman Chair Bob Ruben, former CEA Economist Larry Sommers and then Fed BOG chair Alan Greenspan – and against then CFTC chair Brooksly Born’s expert and strong reservations)

(NOTE 7 on 4th Reich and what I’d found about asymmetric war–EU.html  and Albert Speer, “Inside the Third Reich, p 497, 498 which discusses what Speer had stumbled into in his circle at the top of the Reich.  The Reich’s government in fact was never required to surrender in the same way the Wehrmacht was required to unconditionally surrender. We see Speer’s observations about this. War protagonists wage their non-military battles, using asymmetric means. This includes strategies and tactics that lurk in financial, commercial and social ‘theaters’, to use a war time expression.

(NOTE 8)  Opposing Basel III, see NOTE 6 in that Comment letter for the FDIC public due process on Basel III posted in this wordpress site, Note 6 of that document)


About apsoras1

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This entry was posted in asymmetric war, Corporate Governance/Stakeholder Rights, FDIC, financial sector, Professional: banking, Resolutions of 'SIFIs'. Bookmark the permalink.

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