Four big U.S. banks account for 94.4% of total bank exposure to derivative contracts. JP Morgan Chase, Citi, Bank of America and Goldman Sachs combined hold 94.4% of the $250 TRILLION "in gross outstanding derivative contracts."
Derivative contracts are bets. Very Serious People call them "investments." They are bets. Bets on whether credit default swaps on mortgage derivatives will go up or down in perceived value. Bets on the future price of such commodities as electricity, oil and gasoline. Bets on whether the stock market will go up or down. Bets on whether interest rates will go up or down. BIG bets. And only a few U.S. banks are the bookies holding those bets. $250 trillion in bets.
The Wall Street Journal and Forbes and the like did the best they could to hide the fact in 2007 and forward.....that these big banks were responsible for the Bush financial collapse.....and that mortgage derivatives and credit default swaps were at the very center of the biggest economic contraction since the 30's.
I offer that information so that you can properly evaluate the following information.....
Two years ago.....
JPMorgan agreed to pay $153.6 million to end a Securities and Exchange Commission suit. The SEC alleged that the New York- based bank failed to tell investors in 2007 that a hedge fund helped pick, and bet against, underlying securities in the collateralized debt obligation they purchased. In July, Goldman Sachs paid a record $550 million for failing to inform clients in 2007 that it allowed a hedge fund that also bet against housing to help formulate the CDOs.
The year was 2007....and the Bookies of New York failed to inform their marks....I mean, customers....that they were betting against the very "instruments" they had encouraged investors to buy. People who don't consider themselves to be Very Serious People would call that a scam, a ripoff, a setup, double-dealing,.....and/or.....criminal. But they would, wouldn't they, they're not Serious.
(Best movie on the financial industry collapse: "Margin Call" with Jeremy Irons and Kevin Spacey)
The nation’s largest bank, which has previously clashed with its regulators, is seeking to settle with the federal agency that oversees the energy markets, according to people briefed on the matter. The regulator, the Federal Energy Regulatory Commission, found that JPMorgan devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” a commission document said.
The potential deal, the people said, is expected to cost the bank about $500 million, a record for the commission,....
The accusations against JPMorgan surfaced this spring in the confidential commission document, reviewed by The New York Times, that outlined a pattern of illegal trading in the California and Michigan electric markets.
Would it be rude to suggest that there appears to be a pattern here? An MO? And pardon me for suggesting it as not-a-Serious person.....but doesn't some of this stuff look like organized crime?
Is paying a fine enough of a deterrent to these Very Serious People to discourage them from, you know, continuing to extort, scheme and steal? Even with a fine of $500 million (can you even imagine?) it is simply the cost that JPMorgan will pay to continue their criminal activity. After all, JPMorgan's PROFITS just from last quarter were $6.5 billion.
I know. None of this is a shock or a surprise. Democratic Senator Dick Durbin has been quoted for saying that the big banks "own the Senate." Indeed they do.....and the House, the presidency and the judicial branch.
I offer two recommendations on how to confront the repetitive crimes of the Very Serious.
1) Americans can track down all the officials and traders of the five largest banks, facilitate a meeting with them, individually, in a Stand Your Ground state....and then defend themselves for being attacked.
2) Congress can break up the five largest banks in the U.S., strictly regulate all derivatives and place future Serious offenders in a federal jail cell. Congress can, as Democratic Senator Elizabeth Warren has encouraged, separate the Very Serious Gambler banks from the Very Serious commercial banks, like we did before the year 2000. Thus removing some of the risk to the country when the Very Serious Gambler banks really get Serious about f**king up the national economy again.
But sadly...."the banks own the Senate" and the Senate is the Serious chamber!
Aren't you relieved to know that the 5 largest Serious banks in the U.S. have the power to bring our entire national economy to its knees in a matter of days? And isn't it even more calming to realize that these 5 Serious banks continue to commit egregious, systemic crimes of greed and theft on a regular basis.....costing all Americans.....and can simply write a check, admit no wrongdoing, and go on their merry Serious ways?
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