Ben Bernanke Saved Whose World? Pt 2: Racketeering 101

On the Edge with Max Keiser and Stacy Herbert – – – August 28,2009

On the Edge with Max Keiser. . . and Mish Shedlock – – – August 28,2009

On the Edge with Max Keiser. . . and Mish Shedlock – – – August 28,2009

Racketeering 101: Bailed Out Banks Threaten Systemic Collapse If Fed Discloses Information

by Tyler Durden, August 27, 2009, Zero Hedge

And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg’s lawsuit is allowed to proceed unchallenged, let alone if any of the “Audit The Fed” measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The Clearing House submits this declaration because the Court’s Order threatens to impair the ability of our members to access emergency funds through the New York Fed’s Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.

Our members have accessed the New York Fed’s Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank’s financial condition – even completely unfounded rumors – have caused competitive harm, including bank runs and failures.

Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.

And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:

If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank’s customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls – which would be a natural inference from having tapped emergency funds – has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution’s customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.

Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?

The Banks’ racketeering has gone on for far too long.

Read the whole thing here…

Also see: Ben Bernanke Saved Whose World?


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    • Edger on August 30, 2009 at 01:12
  1. I keep forgetting to look him up more.  

  2. because:

    …the banks demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

    To mark to market would expose the reality that the emperor is naked, the  banks are insolvent, and the whole enchilada is bankrupt.

    I am going to look for an article from December 2008 by Mathias Chang, an Asian economist who set forth his prediction of the timeline for our current (phase #2) collapse.

    ps:  I’m surprised to see that Roubini approves of Bernanke.

  3. And then there is this:

    “Financial Parasites Have Killed the American Economy:

    A Review of Economist Michael Hudson”

    by Washington’s Blog on 8/26/09, and reprinted in Global Research.

    Today, I heard the podcast of an interview by KPFA radio host Bonnie Faulkner in which Hudson went even further. Specifically, he [Michael Hudson] said [this about the parasites]:

    —The giant financial institutions have already killed their host – the real American economy.

    —Since they realize that the American economy is dead, they are trying to suck as much blood out of America as possible while the corpse is still warm.

    —Because the American economy is dead, their plan is to soon jump to another host. They will ship all of their money overseas.


  4. …I’m hearing?

  5. We should let the capitalist know…

    that if he’s not ready to clean his house up…

    if he’s not ready to clean his house up…

    he shouldn’t have a house…

    it should catch on fire…

    and burn down.

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