Archive for April, 2011
Banks Play Shell Game with Taxpayer Dollars
Posted by Admin in Uncategorized on April 30, 2011
BURLINGTON, VT–(ENWESPF)–April 26 – A study requested by Sen. Bernie Sanders (I-Vt.) found numerous instances during the financial crisis of 2008 and 2009 when banks took near zero-interest funds from the Federal Reserve and then loaned money back to the federal government on sweetheart terms for the banks.
The banks pocketed interest on government securities that paid rates up to 12 times greater than the Fed’s rock bottom interest charges, according to a Congressional Research Service analysis conducted for Sanders.
“This report confirms that ultra-low interest loans provided by the Federal Reserve during the financial crisis turned out to be direct corporate welfare to big banks,” Sanders said. “Instead of using the Fed loans to reinvest in the economy, some of the largest financial institutions in this country appear to have lent this money back to the federal government at a higher rate of interest by purchasing US government securities.”
The Federal Reserve claimed at the time that the emergency loans were needed so banks could provide credit to small- and medium-sized businesses that desperately needed money to create jobs or to prevent layoffs. “Instead of using this money to reinvest in the productive economy, however, it appears that JPMorgan Chase, Citigroup, and Bank of America used a large portion of these near-zero-interest loans to buy US government securities and earn a higher interest rate at the same time, providing free money to some of the largest financial institutions in this country,” Sanders said.
The Fed transactions during the financial crisis were detailed in documents that the central bank was forced to disclose last Dec. 1 to comply with a Sanders provision in the Wall Street reform law. Sanders subsequently asked the Congressional Research Service to compare the emergency Fed loans with investments in government securities by the nation’s six largest bank holding companies. The study found, for example, that:
- In the 1st quarter of 2008, JPMorgan Chase had an average of $1.2 billion in outstanding Fed loans with a 2.1 percent interest rate while it held $2.2 billion in US government securities with an average yield of 4.6 percent.
- In the 4th quarter of 2008, JPMorgan Chase had an average of $10.1 billion in outstanding Fed loans with a 0.6 percent interest rate while it held $10.3 billion in US government securities with an average yield of 1.7 percent.
- In the 1st quarter of 2009, JPMorgan Chase had an average of $29.2 billion in outstanding Fed loans with a 0.3 percent interest rate and held $34.6 billion in US government securities with an average yield of 2.1 percent.
- In the 2nd quarter of 2009, JPMorgan Chase had an average of $7.6 billion in outstanding Fed loans with an interest rate of 0.25 percent interest. Meanwhile, it held $34.6 billion in US government securities with an average yield of 2.3 percent.
- In the 1st quarter of 2008, Citigroup received over $5.2 billion in Fed loans with a 3.3 percent interest rate and held $7.9 billion in US Treasury Securities with an average yield of 4.4 percent.
- In the 4th quarter of 2008, Citigroup received $15.8 billion in Fed loans through the Fed’s Primary Dealer Credit Facility with a 1.2 percent interest rate; $11.6 billion in Term Auction Facility loans with a 1.1 percent interest rate; and $4.9 billion in Commercial Paper Funding Facility loans with a 2.7 percent interest rate. It simultaneously held $24 billion in US government securities with an average yield of 3.1 percent.
- In the 1st quarter of 2009, Citigroup received over $12.1 billion in Fed loans with an interest rate of 0.5 percent while holding $14.3 billion in US government securities with an average yield of 3.9 percent.
- In the 2nd quarter of 2009, Citigroup received over $23 billion in Fed loans with an interest rate of 0.5 percent while holding $24.3 billion in US government securities with an average yield of 2.3 percent.
- In the 3rd quarter of 2009, Bank of America had an average of $2.9 billion in outstanding Fed loans with an interest rate of 0.25 percent while purchasing $23.5 billion in Treasury Securities with an average yield of 3.2 percent.
Another Sanders provision in the financial reform law required the Government Accountability Office to audit the Fed’s activities during the financial crisis. Sanders asked the non-partisan research arm of Congress to examine in greater detail the sorts of transactions that the Congressional Research Service highlighted. “I hope the GAO will closely investigate this issue as part of the top-to-bottom audit that I included in the Wall Street reform bill last year,” the senator said.
Bailout Money Miss-Used – Lent Back to Government
Posted by Admin in Uncategorized on April 29, 2011
The American taxpayer was counting on the country’s largest banks to use the bailout money for lending back to the American public; small business loans, personal loans basically hoping for business start ups and personal relief. The same banks that helped bring down America with the fractional banking nightmare during the housing crisis, actually turned around and screwed the America tax payer twice.
By taking the bailout money that the Federal Reserve printed, some 3 trillion dollars, at an unheard of interest rate of 0.0078 percent, they then turned around and re-loaned back to the U.S government at a much higher rate making huge profits, this after the big gamble of the synthetic fractional securities catastrophe. The banking mafia had no intentions at all of helping regular Americans. Instead, they chose another “Three Card Monte” circus act to make big profits.
If you recall, Americans were wondering why no loans were being made to people and businesses around the country, complaining and no receiving reliable answers from anybody that would listen. Well now we are starting to hear some of the reasons why, as Bernanke is starting to open up. The corporate mafia again used the U.S taxpayer to fill their pockets.
Bank of America, JP Morgan/Chase were both players in this crapola crap shoot, and now we can start to see how the CEOs have managed to give themselves, in some cases, up to 23 million dollars in bonuses. Just when you think that you have a pretty good idea what kind of games are being played by the corporate mafia, you get hit with something like this.
So now we have to ask ourselves, what the hell did the U.S government do with the money that they basically loaned to themselves? Why wasn’t more unemployment benefits extended to the American people? What exactly happened to the 3 trillion dollars? Tim Giethner should be investigated as to what the happened to that money. Why were the American people left out of the equation? Americans were counting on that money for small business loans.
Bernie Sanders, the junior senator from Vermont had a study done for him by a Congressional Research Service. Below gives us some more light:
A study requested by Sen. Bernie Sanders (I-Vt.) found numerous instances during the financial crisis of 2008 and 2009 when banks took near zero-interest funds from the Federal Reserve and then loaned money back to the federal government on sweetheart terms for the banks.
The banks pocketed interest on government securities that paid rates up to 12 times greater than the Fed’s rock bottom interest charges, according to a Congressional Research Service analysis conducted for Sanders.
“This report confirms that ultra-low interest loans provided by the Federal Reserve during the financial crisis turned out to be direct corporate welfare to big banks,” Sanders said. “Instead of using the Fed loans to reinvest in the economy, some of the largest financial institutions in this country appear to have lent this money back to the federal government at a higher rate of interest by purchasing US government securities.”
The corporate mafia loaned just enough to the American people to at least be able to answer uncomfortable questions later if and when the time came for those inconvenient explanations.
A Bank of America spokesman says in an e-mail below that it had loaned money to the American people:
Bank of America provided vital support to the economy throughout the financial crisis and we continue to support businesses and individuals today through our lending and capital raising activities,
Extended $184 billion in credit to individuals and businesses
JP Morgan/Chase has had no comment.
The American people are still waiting for a full accounting of the money that was basically stolen from them. The government had to have known where this money was coming from. These billions could give much needed help to the currently 15 million unemployed, rather than sitting in some multimillionaire’s private account subsidizing their yachts and private jets.
What about all of this gobble de gook Barry Soetoro was flapping his gums about loaning money to the Americans to start new businesses?
Americans have been shown another way the corporate mafia and the U.S government are in bed together, doing nothing but furthering their own agendas while giving the American people the brush off. Pathetically, the American tax payer had to foot the bill.
The government is just as complicit as the banksters with all of this and Americans demand answers.
Congressional Research Services Report
Reference 2
Electricity discount money for poor, now unspent, might be used on Medicaid
Sen. Steve Ogden, the Bryan Republican whos the Senates chief budget writer, said Thursday that money collected from a fee on electricity bills should possibly be used to draw down more federal matching money, perhaps in the state-federal Medicaid health insurance program for the poor, elderly and disabled.
The state budget passed by the House runs about $6 billion short of current funding, if you count loss of temporarily higher federal match money, recommended provider fee cuts and failure to add money for inflation and growth in use of services and enrollment. The budget shaping up in the Senate also shorts Medicaid, but not as much.
Ogden, as his panel approved last-minute items for regulatory agencies such as the Public Utility Commission, noted that the Senate budget wouldnt spend any of the fees collected on electric bills in the deregulated portions of the state for low-income ratepayer discounts. The discounts, which the GOP-controlled Legislature has shaved in size and scope in recent years, are known as the system benefit fund. He said the House budget would spend $170 million over the next two years. Last weekend, as we blogged, a conservative House member took a pass at raiding some of the money, then backed off.
If new money for discounts is zeroed out, Ogden told colleagues, the funds balance could be as high as $900 million by the end of the next budget cycle.
Were probably going to have to come back and take a hard look at our policy position on this, he said, perhaps changing the 1999 electricity-deregulation law in such a way that we can draw down federal funds … to help match some federal-state program that were underfunding right now.
This is a big pot of money out there, and weve got to be smart on it, he said.
After the meeting, Ogden told reporters that hes not sure if the Legislature can rework the law authorizing the fee this session. But he confirmed that hes primarily thinking about using the fee money, if it can be freed of strings and turned into state general revenue, as state matching money for Medicaid.
Attorney claims Michael Jackson’s money troubles caused death
The attorney for Dr. Conrad Murray, who has pleaded not guilty to involuntary manslaughter in Michael Jacksons death, believes that the singers crumbling finances resulted in Jackson putting his own life at risk, according to the Associated Press. The crux of the defense is going to be that Michael Jackson engaged in a desperate act and took desperate measures that caused his death, Edward Chernoff told Superior Court Judge Michael Pastor at a pretrial hearing. We believe at the time Michael Jackson died he was a desperate man in relation to his financial affairs.
Chernoff requested access to Jacksons financial records to support his argument, but Pastor denied it, saying, Im not going to turn an involuntary manslaughter trial into some kind of an escapade in analysis of the finances in Michael Jacksons entire life Right now this is major deep sea fishing.
Deputy District Attorney David Walgren, meanwhile, dismissed the defenses strategy as a irrelevant sideshow and a smear.
The trials opening arguments are scheduled for May 9.
Read more:
Judge considers delaying Michael Jackson trial
Michael Jackson manslaughter trial will be televised
Michael Jackson preliminary hearing ends, Conrad Murray ordered to stand trial
Fernwood slots decision could be made next week
Posted by Admin in Uncategorized on April 21, 2011
April 14 may be the day the Poconos learns if its getting a second casino.
The Pennsylvania Gaming Control Board will consider the final category three gaming license at its monthly meeting next Thursday. The Bushkill Groups Fernwood Resort in Middle Smithfield Township is one of four applicants for the license.
Shutdown threat: It’s about more than money
Sticking points
GOP policy proposals that could be possible deal-breakers for Democrats:
Planned Parenthood: Republicans seek to defund the nations largest abortion provider. The organization receives millions of dollars for nonabortion services for poor women, including cancer screenings and contraceptives. Conservatives question Planned Parenthoods integrity and argue federal funds free up other money that can be used for abortions; liberals say taking away funding would harm womens health efforts.
Abortion: Federal law bars the use of federal money to pay for abortions, but that ban does not extend to state funding. Seventeen states, including Washington, and the District of Columbia use nonfederal dollars to help some low-income women obtain the procedure through Medicaid. Because DC money is overseen by Congress, the city had to gain congressional approval before extending that benefit. That permission came two years ago, when Democrats controlled the White House and both chambers of Congress. The Republican-led House has proposed revoking that permission.
The environment: Republicans are aiming to curb the Environmental Protection Agencys reach, especially its role as a regulator of the greenhouse gases that contribute to climate change. GOP lawmakers have proposed riders that would limit the agencys ability to oversee coal mining and enforce the Clean Air Act.
The Washington Post
Knowing Buffett’s moves not always a money-maker
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By Ben Berkowitz
NEW YORK (Reuters) – Knowing what Warren Buffett is going to do a few weeks before he does it is not the sure-fire money-maker you might think.
The iconic investor and champion of ethical corporate behavior is under fire over the…
Al Qaeda members hide in Brazil, raise money – report
BRASILIA (Reuters) – Al Qaeda operatives are in Brazil planning attacks, raising money and recruiting followers, a leading news magazine reported Saturday, renewing concerns about the nation serving as a hide-out for Islamic militants.
Veja magazine, in its online edition, reported that at least 20 people affiliated with al Qaeda as well as the Lebanese Shiite Muslim group Hezbollah, the Palestinian group Hamas and two other organizations have been hiding out in the South American country.
The magazine said these operatives have been raising money and working to incite attacks abroad. The magazine cited Brazilian police and US government reports, but did not give details on specific targets or operations.
The United States has said Islamic militants have been operating in the border region between Brazil, Paraguay and Argentina. Brazil has denied this, while saying it is aware that some members of Brazils Lebanese community legally transferred funds to the Middle East.
There has been a warming of relations between Brazil and the United States since President Dilma Rousseff took office in January. She has sought closer US ties after her predecessor, Luiz Inacio Lula da Silva, angered the United States with attempts to mediate over Irans nuclear program.
Veja reported that a Lebanese man named Khaled Hussein Ali, who has lived in Brazil since 1998, is an important member of al Qaedas propaganda operation and has coordinated extremists in 17 countries.
He was briefly arrested in Brazil in March 2009 after a police investigation that found videos and texts directed at al Qaeda followers. One email found on his computer and sent as spam to email addresses in the United States incites hatred against Jews and blacks, Veja said.
He spent 21 days in prison on charges of racism, inciting crime and gang formation, but was set free because prosecutors did not pursue the charges in court, Veja said.
(Reporting by Raymond Colitt)
IRS goes after HSBC customers with money offshore
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By Andrea Coombes, MarketWatch
SAN FRANCISCO (MarketWatch) — In their latest salvo against taxpayers who stash money offshore, and banks who may enable the practice, the U.S. Justice Department and Internal Revenue Service on Thursday sought a federal court’s authorization to force HSBC Bank USA to reveal the names of its U.S. customers with accounts in India.
The Justice Department and IRS seek to serve a “John Doe” summons on HSBC USA
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“to obtain information about possible tax fraud by people whose identities are unknown,” the government said in a news release.
April tax to-do list
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The U.S. government’s action Thursday parallels a similar strategy used to uncover the names of U.S. customers at another bank — UBS
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— with offshore accounts in Switzerland, said Robert McKenzie, a partner in the Chicago-based law firm Arnstein & Lehr. Ultimately, UBS released the names of about 4,500 customers.
In that case, there was “a criminal investigation against the bank but the second element is the IRS sought permission and issued John Doe summonses and demanded 52,000 names from UBS,” McKenzie said.
The court petition today follows earlier government moves to uncover offshore accounts in India. In January, a Newark, N.J., man was charged with conspiracy to defraud the U.S. by using offshore accounts in the British Virgin Islands and at HSBC India to evade income taxes.
And, in the fall of 2010, McKenzie said, the Justice Department mailed letters to some U.S. residents with HSBC accounts. McKenzie currently represents an HSBC customer in his negotiations with the Justice Department.
“Letters went out to many Indian Americans saying, ‘We know you have a foreign bank account; please call to discuss,’ signed by the Department of Justice, so it was not a civil investigation; it was already a criminal investigation,” McKenzie said.
For its part, HSBC said it has complied with the law.
“While we haven’t seen the summons, HSBC does not condone tax evasion and fully supports the U.S. efforts to promote appropriate payment of taxes by U.S. taxpayers,” Juanita Gutierrez, a bank spokeswoman, said in an email on Thursday. “While complying with the law in all the jurisdictions in which it operates, including India, HSBC cooperates with requests from U.S. authorities,” she said. “We have been engaged in a constructive dialogue with U.S. authorities. We hope any ‘IRS summons’ issues can be resolved expeditiously.”
Got an account? Get in before the deadline
The message for taxpayers with offshore accounts? Report that account soon. The deadline to come in under the IRS’s latest offshore voluntary disclosure initiative, if you’re eligible, is Aug. 31. (U.S. taxpayers are required to report foreign bank accounts if their value tops $10,000 at any time in a calendar year.)
Read more about the amnesty program on IRS.gov.
“The IRS continues to focus its attention on international tax evasion,” IRS Commissioner Doug Shulman said in the news release. “This summons request is focused on obtaining more information to help us determine if additional actions are needed. As I’ve said all along, our international efforts are not about just one country or one bank — it’s about our wider effort to ensure compliance with the nation’s tax laws.”
Under the IRS amnesty program, taxpayers can avoid a major hit: possible criminal charges, and a bill totaling 50% of the account’s value for each year it wasn’t reported to the IRS, among other penalties.
Still, the amnesty program comes with its own costs, including a one-time penalty of 25% of the account’s value, any back taxes owed, and interest and penalties on the unpaid taxes.
See this IRS page for an example that details the penalties.
The federal court in San Francisco is likely to grant the government’s petition to force the bank to reveal the names, McKenzie said, adding that India is less likely than Switzerland to protect people’s names. “I don’t believe the Indian government will aggressively assert their privacy laws at the same level the Swiss did,” he said.
If and when names are disclosed, McKenzie said, “the IRS is going to choose a select group of those and indict them, as they did with the UBS names.”
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Andrea Coombes is MarketWatch’s personal finance editor, based in San Francisco.
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Will Investing In TripAdvisor Take Your Money For A Ride?
With the announced spinoff of TripAdvisor from Expedia (NASDAQ: EXPE), investors need some guidance in sifting through the rubble. Specifically, does TripAdvisor have what it takes to stand – and thrive – on its own?
Credit rating giant Fitch believes that TripAdvisor, as it stands now, is a significant contributor to the overall credit quality of Expedia. Given this nod of confidence, investors might approach the concept of a stand-alone TripAdvisor positively.
Fitch also sees a possibility, if not likelihood, that TripAdvisor will grow into a competitor for its former partner, Expedia. The independence of being its own company will, Fitch theorizes, give TripAdvisor flexibility to rearrange its hotel bookings system, streamlining it to better compete with Kayak and other direct booking companies.
TripAdvisor is already the worlds largest travel site, allowing clients to find hotels, flights, restaurants, and entertainment in cities across the globe. This presents some interesting synergy possibilities for the future. For example, TripAdvisor could partner with entertainment venues to offer discounted tickets to shows or sporting events. They could partner with restaurants to offer discounted prices to patrons who make reservations through the website. The possibilities are endless, as are the potential profits.
The exact design of the split has not yet been determined, and will still require formal approval from Expedias board, as well as approval from shareholders. Expedia did release its possible plans for how the split will take place, announcing in a release that It is anticipated that the transaction will take the form of a distribution of stock of TripAdvisor to Expedia stockholders or a reclassification of Expedia stock, with the holders of Expedia stock receiving a proportionate amount of TripAdvisor stock, in either case in a tax free transaction.
After-market trading has Expedia up $2.90 a share (+12.95%) at time of posting, perhaps reflecting investor confidence that something good will come of this proposed split. At the very least, this is an interesting development for savvy investors to follow, for both the short term and long term.