Planet Wall Street The AGE, April 2, 2009
The five big US banks are on the brink of a coup, and their partners in crime are many.
THE G20 summit was all over bar the shouting when Angela Merkel put her foot down and, Thatcher-like, announced: "No, there won't be any more money! You have been very naughty boys and that's it!" She actually said: "This crisis did not come about because we issued too little money but because we created economic growth with too much money, and it was not sustainable". The German Chancellor's formal comment to the Financial Times was a blinding flash of truth — the G20 bankers' game was up.
Attention swung back to the rerun of that old favourite Nightmare on Wall Street and the Dow financials were brought to a thunderous halt.
Bank of America, the largest US bank by assets, lost almost 16 per cent and Citigroup fell almost 9 per cent after Timothy "Trillions" Geithner, enabler-in-chief, let ABC News know some banks were going to need "large amounts of assistance". And we all know who they are. The banks too big to fail. What I have dubbed the "Big Brothers" (in the truly Orwellian sense) of banking that, as we shall see, are intent on completing the greatest heist in history. They have half-completed it.
But are these not the very same banks that, with JPMorgan, a few weeks ago were orchestrating a huge financial rebound from their worst annual starts on record, announcing they were profitable in January and February and basking in the final salvation orchestrated by Geithner on the toxic assets front?
Just a flesh wound, JPMorgan's Jamie Dimon told the world, his mood that of a considerate banker at last happy to take us back into his confidence. So to market the herd rushed.
Yesterday, as the flesh wound gushed, Geithner "declined to say" whether the banks, which a few days ago were talking about crawling out of their TARP covers, would ask for more, but he did say that the Treasury was down to its last $US135 billion ($A196 billion) in the financial stability fund, so we know what's next. Oh, and JPMorgan fell some 6 per cent after Dimon coughed up and let CNBC know his company had a "tougher" month in March while Kenneth Lewis let on that Bank of America's trading book "was not as good" as in the first two months of the year.
So much for the rally they had so flagrantly contrived.
Perhaps it's time to get to the heart of the problem. Merkel has.
The heart of the problem is we have been consistently and serially lied to by political and financial leaders who have never been held to account and who never give honest, clear accounting.
The truth is five financial institutions today believe they are larger and more powerful than the US Government and the combined will of the people of the world, and are orchestrating what some call a bankers' coup d'etat.
According to just-released reports obtained by F. William Engdahl — who is about to release his latest book, Power of Money — The Rise and Fall of the American Century, — from the Office of Comptroller of the Currency's Quarterly Report on Bank Trading and Derivatives Activity, the Big Brothers of banking hold 96 per cent of all US bank derivatives positions in terms of nominal values, and an eye-popping 81 per cent of the total net credit risk exposure in event of default.
"The five are," Engdahl writes, "in declining order of importance: JPMorgan Chase, which holds a staggering $US88 trillion in derivatives. JPMorgan Chase is followed by Bank of America with $US38 trillion in derivatives, and Citibank with $US32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs with a 'mere' $US30 trillion in derivatives. Number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $US5 trillion."
So that there's no confusion — we wouldn't want that around Bankers' Fools Day — a trillion is $US1,000,000,000,000. Multiply that by a few hundred and we are talking real money at last. It makes the blather about regulation and hedge funds that will drone from the ExCeL Centre in London during the G20 summit rather pale.
The world is being held up, blackmailed, by bankers but only a few of them. They just happen to be the ones in control, the ones that, through Geithner and Larry Summers, were crucial in the orchestration of this coup in the dying days of the Clinton administration when they had him tear up the Depression-era protections such as the 1933 Glass-Steagall Act.
Engdahl writes: "In 2000 the Clinton administration then Treasury secretary was a man named Larry Summers. Summers had just been promoted from No. 2 under Wall Street Goldman Sachs banker Robert Rubin to be No. 1 when Rubin left Washington to take up the post of vice-chairman of Citigroup … Summers convinced President Bill Clinton to sign several Republican bills into law, which opened the floodgates for banks to abuse their powers. The fact that the Wall Street big banks spent some $US5 billion in lobbying for these changes after 1998 was likely not lost on Clinton.
"One significant law was the repeal of the 1933 Depression-era Glass-Steagall Act that prohibited mergers of commercial banks, insurance companies and brokerage firms like Merrill Lynch or Goldman Sachs. A second law backed by Treasury secretary Summers in 2000 was an obscure but deadly important Commodity Futures Modernisation Act (CFMA) of 2000. That law prevented the responsible US Government regulatory agency, Commodity Futures Trading Corporation, from having any oversight over the trading of financial derivatives. The new CFMA law stipulated that so-called over-the-counter derivatives like credit default swaps, such as those involved in the AIG insurance disaster (which investor Warren Buffett once called 'weapons of mass financial destruction'), be free from government regulation."
At the time Summers was busy opening the floodgates of financial abuse for the Wall Street Money Trust, his assistant was none other than Geithner, the man who today is US Treasury Secretary. Today Summers is President Obama's chief economic adviser, as head of the White House Economic Council.
To have Geithner and Summers responsible for cleaning up the financial mess is tantamount to putting the proverbial fox in to guard the hen house.
Who did the US Government bail out with $US180 billion, and counting, to pay AIG's credit default swap obligations? A tried and trusted team led by what Engdahl calls "counterparty gamblers" being Goldman Sachs, Citibank, JPMorgan Chase, Bank of America —the Big Brothers of banking.
The US Government has long had laws in place to deal with insolvent banks. Of course, the Federal Deposit Insurance Corporation could place the banks into receivership, as it does weekly with lesser banks, and have their assets and liabilities independently audited.
Management could be cleaned up, stockholders take their losses and, eventually, smaller, manageable banks could be sold when they have their health back.
It is happening all over America except to those that manufacture reality.
The Big Brother banks will rely on the collective amnesia of the public and the market, take another round from the public purse, and contrive another rally.
It could all be changed with a stroke of President Obama's pen, returning the real restraints and enforcing the remaining powers of US regulators.
But the Big Brother banks rule unless we, mere mortals, direct them to their dishonourable graves.
David Hirst is a journalist, documentary maker, financial consultant and investor. His column is syndicated by News Bites, a Melbourne-based business news publisher.
