Regulating Large Financial Institutions

http://federalreserve.gov/newsevents/speech/stein20130417a.htm 

"Thank you. I'm delighted to be here, and want to thank the International Monetary Fund and the organizers of the conference for including me in a discussion of these important topics. I will focus my remarks today on the ongoing regulatory challenges associated with large, systemically important financial institutions, or SIFIs.¹  In part, this focus amounts to asking a question that seems to be on everyone's mind these days: Where do we stand with respect to fixing the problem of "too big to fail" (TBTF)? Are we making satisfactory progress, or it is time to think about further measures?

I should note at the outset that solving the TBTF problem has two distinct aspects. First, and most obviously, one goal is to get to the point where all market participants understand with certainty that if a large SIFI were to fail, the losses would fall on its shareholders and creditors, and taxpayers would have no exposure. However, this is only a necessary condition for success, but not a sufficient one. A second aim is that the failure of a SIFI must not impose significant spillovers on the rest of the financial system, in the form of contagion effects, fire sales, widespread credit crunches, and the like. Clearly, these two goals are closely related. If policy does a better job of mitigating spillovers, it becomes more credible to claim that a SIFI will be allowed to fail without government bailout." - Jeremy Stein, Federal Reserve Governor

Sinclair - The US Will Be Cyprused & We Will See $50,000 Gold

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/19_Sinclair_-_The_US_Will_Be_Cyprused_%26_We_Will_See_%2450%2C000_Gold.html

California Pension May Ask for 50% Boost to Close Gap

If you're a Californian, it is time to consider moving.

http://www.bloomberg.com/news/2013-04-16/california-pension-may-ask-for-50-boost-to-close-gap.html

Every American should read this

Bob Fanning summarizes how big Banksters and our complicit Government have hookwinked US taxpayers in the biggest heist known to man. It's a long read, and if you don't understand some of it, ask questions. Make it your mission to find out what's going on.

It's also a reminder you should have paid more attention in school. Actually, I take that back. They didn't teach us this in school. We were taught that our government would have our best interests at heart.

http://www.takeitbackday.org/Website_Summary.php

AIG bailout

Taxpayers bailed out AIG, which eventually meant these banks got life preservers. The question is: at what cost? Click on the chart to zoom in.

FDIC

Many observers know the FDIC is broke. Let's further examine the FDIC website to fully understand the ramifications of a bankrupt FDIC.

http://www.fdic.gov/about/mission/index.html

Mission

The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by:

* insuring deposits,
* examining and supervising financial institutions for safety and soundness and consumer protection, and
* managing receiverships.

The insured banks themselves--not the US government--fund the FDIC. Even if their bank fees are increased, there is no way those fees will cover the funds required to close failed banks into receivership. Too many banks will collapse.

Which means the US Treasury will have to step in and bail out the FDIC. Which means it is on the US taxpayer again to subsidize the failures of bankers gone wild. Notice how this all flows down?

GM bankruptcy tomorrow

In the "It's BFT" ('Bout Friggen' Time) category, GM is expected to file for bankruptcy tomorrow. I predicted their demise 2 years ago, as GM has the awesome track record of losing money 22 out of the last 23 years, incurring debt of more than $82 billion in the process. They have been technically insolvent for years, and bankruptcy was the ONLY option, despite misguided attempts by our government to bail GM out. Billions of dollars down the drain later, our government has finally come to the only conclusion they should have come to months ago. Prior to filing for bankruptcy, thousands have been laid off, dealerships closed, and vendors also going under. An earlier bankruptcy would have not only saved billions of lost taxpayer dollars, but would have reduced the blow of restructuring.

Of course, special interest groups (i.e. the UAW) opposed bankruptcy the whole way. As unpleasant as Chapter 11 is, believe it or not, this is the best thing for GM and US taxpayers. Hopefully, GM's remaining assets will be sold off and the US auto industry can reset and recover in a meaningful way, less burdened by GM's astronomical legacy costs. Capitalism works--we just have to get out of its way and let it sort itself out.

Chrysler files BK

Chrysler filed for Chapter 11, as more taxpayer funds were thrown down the rat hole once again. This bankruptcy should have occurred six months ago, but the government had to throw more dollars at it.

Obama spun Chrysler's demise like it was a desirable outcome. Necessary, but certainly not desirable...there is a huge difference. This is just a barometer for how far down American industry has declined.

Who's next?

Is Wachovia at risk? I gave my opinion on GM earlier. Is Ford a bailout candidate? What criteria is being used to determine whether a bailout is warranted? Taxpayers are already strapped. Can they afford a bigger tax hit? I like the concept of taxpayer-funded bailouts enabling taxpayers to enjoy any upside via warrants, but even if that best-case scenario plays out 5 years from now, will the funds actually trickle down to the taxpayers? Or will the government continue to be poor stewards of said funds?