Since when is the TBTF JP Morgan Chase, Bank of America, Citi, Morgan Stanley, Goldman Sachs more important to the United States of America than anyone of forty four states now facing a budget crises? The amount of bailout money that was afforded the banking cartel is more than 10 times all the US State deficits ‘combined’.
On bank failure Friday, as typical of our opaque banking system, the Federal Reserve announced it was insolvent. As the twisted economic policy of the politically and financially connected they are not to worried about it. Why? Through the miracle of financial accounting they just put the $1.3 Trillion of MBS debt on their second set of books…. The US Treasury.
The significant shift was tucked quietly into the Fed’s weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.
“Could the Fed go broke? The answer to this question was ‘Yes,’ but is now ‘No,'” said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. “An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital.”
The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.
“Any future losses the Fed may incur will now show up as a negative liability as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible,” said Brian Smedley, a rates strategist at Bank of America-Merrill Lynch and a former New York Fed staffer.
$1.3 Trillion dollars of toxic paper that toppled Lehman, Bear, AIG and brought the global economy to its knees that was taken onto the FEDs balance sheet has now been shifted to the American taxpayer.
While the theft of the US Treasury continues what was Washington DC doing on Friday? Why they were contemplating letting the States file bankruptcy wiping out legacy debt and muni bond holders. Thus completing the transfer of the nations wealth to Wall Street.