In the wake of chopping its Central Bank swap rates today, the Fed has been called a bunch of names: a hero for slugging the big bailout bat in the ninth inning, and a villain for printing money to help Europe at the expense of the US. Neither depiction is right.
The Fed is merely continuing its unfettered brand of bailout-economics, promoted with heightened intensity recently by President Obama and Treasury Secretary, Tim Geithner in the wake of Germany not playing bailout-ball. Recall, a couple years ago, it was a uniquely American brand of BIG bailouts that the Fed adopted in creating $7.7 trillion of bank subsidies that ran the gamut from back-door AIG bailouts (some of which went to US / some to European banks that deal with those same US banks), to the purchasing of mortgage-backed–securities, to near zero-rate loans (for banks).
Similarly, today’s move was also about protecting US banks from losses – self inflicted by dangerous derivatives-chain trades, again with each other, and with European banks. (more…)
NEW YORK — MF Global, the securities firm led by former Goldman Sachs chief and former New Jersey Gov. Jon Corzine, has admitted to using clients’ money as its financial troubles mounted, a federal official said Tuesday. An MF Global executive made the admission to federal regulators in a phone call early Monday after regulators discovered money missing from clients’ accounts, The Associated Press reported, citing an official familiar with the conversation.
The official spoke on condition of anonymity because he was not authorized to discuss a preliminary investigation by federal regulators. Government rules require securities firms to keep clients’ money and company money in separate accounts. Violating the rule could result in civil penalties. MF Global, which filed for bankruptcy protection Monday, faced a cash crunch after making multibillion-dollar bets on European sovereign debt.
Hundreds of millions of dollars of customer’s money have gone missing from the brokerage firm, sources told The New York Times. The discovery of the missing millions stopped a last-minute deal to sell a major part of MF Global to another brokerage firm from going ahead, The New York Times reported. The company’s main exchange regulator, CME, said earlier Tuesday that MF did not separate its customers’ accounts from the firm’s funds as required by law, Reuters reported. (more …)
“Governments don’t rule the world, Goldman Sachs rules the world.”
That’s what a purported London-based independent trader named Alessio Rastani told the BBC on Monday in a jaw-dropping interview that quickly went viral. But just as quickly, rumors swirled that Rastani was actually a member of the Yes Men, a loose-knit group of merry pranksters and imposters that attempt to manipulate the media with the goal of exposing the dubious conduct of big corporations.
The Yes Men publicly denied that Rastani is a member. And the BBC said in a statement that it doesn’t think he is, either: “We’ve carried out detailed investigations and can’t find any evidence to suggest that the interview with Alessio Rastani was a hoax. He is an independent market trader and one of a range of voices we’ve had on air to talk about the recession.” “We’ve never heard of Rastani,” the group said in a statement of its own. “He isn’t a Yes Man. He’s a real trader who is, for one reason or another, being more honest than usual.” (more…)
Treasury Secretary Timothy Geithner described the nation’s financial crisis as “deeply unfair” to average Americans Tuesday, during an interview with Rachel Maddow. Geithner told Maddow that because of American suffering, he felt a “deep sense of responsibility” to reform the nation’s financial system:GEITHNER is a joke.