More money for Banks as BoE keeps interest rates at 0.5%

AGENCE FRANCE PRESSE | APRIL 18, 2012

Bank of England policymakers all voted in favour of holding interest rates at a record low earlier in April, while one member called for more stimulus cash, the BoE said on Wednesday.

Minutes from the central bank’s Monetary Policy Committee (MPC) meeting on April 4-5 showed that the nine policymakers voted to keep the key lending rate at 0.50 percent, where it has stood since March 2009.

The policymaking panel meanwhile voted 8-1 at the same meeting in favour of maintaining the size of the bank’s asset purchasing programme at £325 billion (388 billion euros, $514 billion).

One member, David Miles, voted for the second month to increase the so-called quantitative easing (QE) programme by an additional £25 billion.

Under QE, the central bank creates new cash that is used to purchase assets such as government and corporate bonds in the aim of giving a boost to lending and economic activity.

“For most members, there was no sufficient reason to change either bank rate or the quantity of asset purchases,” the minutes read.

“Moreover, for them, it seemed sensible to let the current programme of asset purchases run its course while coming to a view on medium-term prospects in the context of the May forecast round.

“For one member, the balance of risks continued to warrant an expansion of the asset purchase programme this month, although the decision was finely balanced.”

Greek Parliament approves Austerity Package

While the Greek government surrendered to the IMF and World Bank demands for more spending cuts, the streets of Athens saw an increase in protests with thousands of citizens taking on police.

Associated Press
June 29, 2011

Greece’s lawmakers approved a key austerity bill Wednesday needed to avert default, despite a second day of rioting on the streets of Athens that left dozens of police and protesters injured.

The passage of the bill was a decisive step for the country to get the next batch of bailout loans from international creditors due from last year’s financial rescue. Another bill has to be passed Thursday for the government to secure the money.

The bill to cut spending and raise taxes by euro28 billion ($40 billion) over five years has provoked widespread outrage, coming after a year of deep cuts that have seen public sector salaries and pensions cut and unemployment rise to above 16 percent.

While deputies voted, stun grenades echoed across the square outside the Parliament building and acrid clouds of tear gas hung in the streets. Authorities and emergency services said 21 police and 15 protesters were injured and transferred to hospitals, while 26 people were detained.

The European Union and International Monetary Fund have demanded both bills pass before it releases euro12 billion of bailout funds — without the money, Greece was facing defaulting on its debts by the middle of next month, potentially triggering a banking crisis, particularly in Europe, and turmoil in global markets.

“We must avoid the country’s collapse with every effort,” Prime Minister George Papandreou said in his speech prior to the vote. “Outside, many are protesting. Some are truly suffering, other are losing they privileges. It is their democratic right. But they and no one else must never suffer the consequences and for their families of a collapse. We must do everything so that there is no freeze in payments.”

The Greek vote was greeted by a sense of relief in Europe’s capital cities, who have been fretting about the impact of a potential Greek default both on their banking systems and on the future of the euro currency itself.

“That’s really good news,” German Chancellor Angela Merkel said when told of the outcome of the vote on her way out of an economic forum in Berlin. Germany is Greece’s biggest creditor.

Equally, relief was the main response in markets too. Soon after the vote, the euro was trading at a fairly elevated level around the $1.44 mark while stock markets around the world were posting big gains.

In Greece, the main Athens stock market closed up 0.5 percent at 1,264, while borrowing costs eased some 80 basis points from a morning high, with the yield on 10-year bonds settling at the still high 16.55 percent.

“The fact that the Greek parliament has passed the government’s medium-term fiscal plan clearly reduces the chances of a near-term disaster,” said Ben May, European economist at Capital Economics.

The unpopular package of spending cuts and tax hikes passed by 155 votes to 138, with five opposition deputies voted “present” — a vote which backs neither side.

A sole deputy from the governing socialists, Panayotis Kouroublis, dissented over government plans to sell a further stake in Greece’s state electricity company and was soon expelled from the parliamentary group by Papandreou.

In a dramatic vote, socialist deputy Alexandros Athanassiadis, who had previously vowed to vote against the bill, overturned his decision at the last minute and backed the package, saying he had been swayed by the prime minister’s comments in parliament.

A conservative deputy broke ranks with her party’s line to also vote in favor, bolstering the government’s majority of five seats in the 300-member parliament.

In the run-up to the vote, violence engulfed the square outside for the second day, while services across the country ground to a halt in the last day of a 48-hour general strike. Riot police fired volleys of tear gas at swarms of young men who were hurling rocks and other debris as well as setting fire to trash containers.

After a lull in the fighting around the time of the vote, the riot started up again with intensity.

Protesters threw flares and orange and green smoke bombs, and a few sprayed fire extinguishers at police, who picked up rocks and tossed them back. Heavy clouds of tear gas wafted over the chaotic scene in front of parliament.

Tens of thousands protest against cuts in Madrid

AFP
June 19, 2011

Tens of thousands of protesters flooded the streets of Madrid Sunday blaming bankers and politicians for causing a financial crisis that forced the country to adopt painful spending cuts.

Demonstrators of all ages linked to a protest movement called the “indignants” assembled early Sunday in several neighbourhoods on the outskirts of Madrid.

They then formed six columns and converged on the city centre, gathering near Spain’s parliament where they met various forms of police resistance, including 12 vans blocking several major roads.

Protests over the economic crisis and soaring unemployment began in Madrid on May 15 and fanned out nationwide as word spread by Twitter and Facebook among demonstrators.

On Sunday, protesters insisted that workers and the unemployed would not passively accept spending cuts to help ease a crisis they had no role in causing.

“The banks and the governments that caused this situation must know that we do not agree with the measures and the budget cuts, that we intend to be heard”, the “indignants” movement said in its call for nationwide protests.

The El-Mundo newspaper, quoting police sources, estimated the number of demonstrators on Sunday at between 35,000 and 40,000.

In a procession on the main Castellana avenue that crosses Madrid from north to south, at least 3,000 people marched towards parliament, including the young, the retired, the unemployed and parents pushing babies in their strollers.

“They call this democracy, but it’s not,” shouted the crowd gathered at parliament, watched closely by police.

“We are not property in the hands of politicians and bankers,” read a banner written in bold red letters.

Yolanda Garcia, a 36-year-old woman who said she works a series of low-paying jobs and struggles to pay her bills, insisted that politicians “do nothing” to help people like her.

“I think that the (protest) movement could change things if it continues,” she said,” adding that the demonstrators have the support of Spain’s most disadvantaged.

Similar demonstrators were also expected in Barcelona and Valencia by the end of the day.

Protests in city squares across Spain against welfare cuts, corruption and a jobless rate of 21 percent in the first quarter of 2011 — the highest in the industrialised world — have run across the country for weeks.

The demonstrations peaked ahead of May 22 local election, when tens of thousands of people packed into squares in several towns and cities.

The protesters had also set a camp n Madrid’s Puerta del Sol square, which was dismantled on June 12 although the group said that did not signal the end of their movement.

The “indignants” have inspired similar offshoot movements in other European cities, notably Greece, where the government is also trying to implement a strict austerity programme to avoid defaulting on its loans.

The Spanish central bank said last weak the recovery in Spain’s beleaguered economy would likely remain slow, with unemployment expected to remain high for the foreseable future.

Consolidating US Money Power: The Four Horsemen of Global Banking

By Dean Henderson
Global Research
May 25, 2011

If you want to know where the true power center of the world lies, follow the money – cui bono.  According to Global Finance magazine, as of 2010 the world’s five biggest banks are all based in Rothschild fiefdoms UK and France.

They are the French BNP ($3 trillion in assets), Royal Bank of Scotland ($2.7 trillion), the UK-based HSBC Holdings ($2.4 trillion), the French Credit Agricole ($2.2 trillion) and the British Barclays ($2.2 trillion).

In the US, a combination of deregulation and merger-mania has left four mega-banks ruling the financial roost.  According to Global Finance, as of 2010 they are Bank of America ($2.2 trillion), JP Morgan Chase ($2 trillion), Citigroup ($1.9 trillion) and Wells Fargo ($1.25 trillion).  I have dubbed them the Four Horsemen of US banking Consolidating the Money Power.

The September 2000 marriage which created JP Morgan Chase was the grandest merger in a frenzy of bank consolidation that took place throughout the 1990’s.  Merger mania was fed by a massive deregulation of the banking industry including revocation of the Glass Steagal Act of 1933, which was enacted after the Great Depression to curb the banking monopolies which had caused the 1929 stock market crash and precipitated the Great Depression.

In July 1929 Goldman Sachs launched two investment trusts called Shenandoah and Blue Ridge.  Through August and September they touted these trusts to the public, selling hundreds of millions of dollars worth of shares through the Goldman Sachs Trading Corporation at $104/share.  Goldman Sachs insiders were bailing out of the stock market.  By the fall of 1934 the trust shares were worth $1.75 each.  One director at both Shenandoah and Blue Ridge was Sullivan & Cromwell lawyer John Foster Dulles. [1]

John Merrill, founder of Merrill Lynch, exited the stock market in 1928, as did insiders at Lehman Brothers.  Chase Manhattan Chairman Alfred Wiggin took his “hunch” to the next level, forming Shermar Corporation in 1929 to short the stock of his own company.  Following the Crash of 1929, Citibank President Charles Mitchell was jailed for tax evasion. [2]

In February 1995 President Bill Clinton announced plans to wipe out both Glass Steagal and the Bank Holding Company Act of 1956- which barred banks from owning insurance companies and other financial entities. That day the old opium and slave trader Barings went belly up after one of its Singapore-based traders named Nicholas Gleason got caught on the wrong side of billions of dollars in derivative currency trades. [3]

The warning went unheeded.  In 1991 US taxpayers, already billed over $500 billion dollars for the S&L looting, were charged another $70 billion to bail out the FDIC, then footed the bill for a secret 2 1/2-year rescue of Citibank, which was close to collapse after the Latin American debt crunch hit home.  With their bill’s paid by US taxpayers and bank deregulation a done deal, the stage was set for a slew of bank mergers like none the world had ever seen.

Reagan Undersecretary of Treasury George Gould had stated that concentration of banking into five to ten giant banks was what the US economy needed.  Gould’s nightmare vision was about to come true.

In 1992 Bank of America bought its biggest West Coast rival Security Pacific, then swallowed up the looted Continental Bank of Illinois for cheap.  Bank of America later took a 34% stake in Black Rock (Barclays owns 20% of Black Rock) and an 11% share in China Construction Bank, making it the nation’s second largest bank holding company with assets of $214 billion.  Citibank controlled $249 billion. [4]

Both banks have since increase their assets to around $2 trillion each.

In 1993 Chemical Bank gobbled up Texas Commerce to become the third largest bank holding company with $170 billion in assets.  Chemical Bank had already merged with Manufacturers Hanover Trust in 1990.

North Carolina National Bank and C&S Sovran merged into Nation’s Bank, then the fourth largest US bank holding company, with $169 billion in its war chest.  Fleet Norstar bought Bank of New England, while Norwest bought United Banks of Colorado.

Throughout this period US bank profits were soaring, breaking records with each new quarter.  The year 1995 broke all previous records for bank mergers.  Deals totaling $389 billion occurred that year. [5]

The Big Five investment banks, who had just made boatloads of money steering Latin American debt negotiations, now made a killing steering the bank and industrial merger- mania of the 1980’s and 1990’s.

According to Standard & Poors the top five investment banks were Merrill Lynch, Goldman Sachs, Morgan Stanley Dean Witter, Salomon Smith Barney and Lehman Brothers.  One deal that fell through in 1995 was a proposed merger between London’s biggest investment bank S. G. Warburg and Morgan Stanley Dean Witter.  Warburg chose Union Bank of Switzerland as its suitor instead, creating UBS Warburg as a sixth force in investment banking.

After the 1995 feeding frenzy, the money center banks moved aggressively into the Middle East, establishing operations in Tel Aviv, Beirut and Bahrain- where the US 5th Fleet was setting up shop.  Bank privatizations in Egypt, Morocco, Tunisia and Israel opened the door to the mega-banks in those nations.  Chase and Citibank lent money to Royal Dutch/Shell and Saudi Petrochemical, while JP Morgan advised the Qatargas consortium led by Exxon Mobil. [6]

The global insurance industry had a case of merger mania as well.  By 1995 Traveler’s Group had bought Aetna, Warren Buffet’s Berkshire Hathaway had eaten up Geico, Zurich Insurance had swallowed Kemper Corporation, CNA Financial had purchased Continental Companies and General RE Corporation had sunk its teeth into Colonia Konzern AG.

In late 1998 the Citibank colossus merged with Travelers Group to become Citigroup, creating a behemoth worth $700 billion that boasted 163,000 employees in over 100 countries and included the firms of Salomon Smith Barney (a joint venture with Morgan Stanley), Commercial Credit, Primerica Financial Services, Shearson Lehman, Barclays America, Aetna and Security Pacific Financial. [7]

That same year Bankers Trust and US investment bank Alex Brown were swooped up by Deutsche Bank, which had also purchased Morgan Grenfell of London in 1989.  The purchase made Deutsche Bank the world’s largest bank at the time with assets of $882 billion.  In January 2002, Japanese titans Mitsubishi and Sumitomo combined operations to create Mitsubishi Sumitomo Bank, which surpassed Deutsche Bank with assets of $905 billion. [8]

By 2004 HSBC had become the world’s second largest bank.  Six years later all three behemoths had been eclipsed by both BNP and Royal Bank of Scotland.

In the US, the George Gould nightmare reached its ugly nadir just in time for the new millennium when Chase Manhattan swallowed up Chemical Bank.  Bechtel banker Wells Fargo bought Norwest Bank, while Bank of America absorbed Nations Bank. The coup de grace came when the reunified House of Morgan announced that it would merge with the Rockefeller Chase Manhattan/Chemical Bank/ Manufacturers Hanover machine.

Four giant banks emerged to rule the US financial roost.  JP Morgan Chase and Citigroup were kings of capital on the East Coast.  Together they control 52.86% of the New York Federal Reserve Bank. [9]  Bank of America and Wells Fargo reigned supreme on the West Coast.

During the 2008 banking crisis these firms got much larger, receiving a nearly $1 trillion government bailout compliments of Bush Treasury Secretary and Goldman Sachs alumni Henry Paulsen; while quietly taking over distressed assets for pennies on the dollar.

Barclays took over Lehman Brothers.  JP Morgan Chase got Washington Mutual and Bear Stearns.  Bank of America was handed Merrill Lynch and Countrywide.  Wells Fargo swallowed up the nation’s 5th biggest bank- Wachovia.

The same Eight Families-controlled banks which for decades had galloped their Four Horsemen of oil roughshod through the Persian Gulf oil patch are now more powerful than at any time in history.  They are the Four Horsemen of US banking.

Notes

[1] The Great Crash of 1929. John Kenneth Galbraith. Houghton, Mifflin Company. Boston. 1979. p.148

[2] Ibid

[3] Evening Edition. National Public Radio. 2-27-95

[4] “Bank of America will Purchase Chicago Bank”. The Register-Guard. Eugene, OR. 1-29-94

[5] “Big-time Bankers Profit from M&A Fever”. Knight-Ridder News Service. 12-30-95

[6] “US Banks find New Opportunities in the Middle East”. Amy Dockser Marcus. Wall Street Journal. 10-12-95

[7] “Making a Money Machine”. Daniel Kadlec. Time. 4-20-98. p.44

[8] BBC World News. 1-20-02

[9] Rule by Secrecy: The Hidden History that Connects the Trilateral Commission, the Freemasons and the Great Pyramids”. Jim Marrs. HarperCollins Publishers. New York. 2000. p.74

 Dean Henderson is the author of Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror Network and The Grateful Unrich: Revolution in 50 Countries.  His Left Hook blog is at  www.deanhenderson.wordpress.com

In their own words: “Banks are Government Sponsored Entities”

Reuters
April 12, 2011

Big banks like Bank of America Corp and Citigroup Inc should be reclassified as government-sponsored entities and have their activities restricted, a senior Fed official said on Tuesday.

The 2008 bank bailouts at the height of the financial crisis and other implicit guarantees effectively make the largest U.S. banks government-guaranteed enterprises, like mortgage finance companies Fannie Mae and Freddie Mac, said Kansas City Fed President Thomas Hoenig.

Banks are feeding like parasites from taxpayer money.

“That’s what they are,” Hoenig said at the National Association of Attorneys General 2011 conference.

He said these lenders should be restricted to commercial banking activities, advocating a policy that existed for decades barring banks from engaging in investment banking activities.

“You’re a public utility, for crying out loud,” he said.

The Kansas City Fed president has been a vocal critic of rescuing the biggest banks rather than allowing them to fail. He has criticized the Fed’s easy money policies in the wake of the crisis.

There are slim chances his proposal to classify banks as government-guaranteed enterprises would be adopted. Eighteen out of the 19 biggest U.S. banks have repaid 2008 bailout aid, removing most government investment over the last 18 months.

In a later session, Bank of America Chief Executive Brian Moynihan rejected the notion that the largest banks should divorce their commercial and investment banking operations.

“I think customers want it together,” said Moynihan, noting he sees the combination as necessary to effectively serve large American companies with global operations.

The longest serving Fed bank president, Hoenig began his career in the Fed system in 1973 as an economist in the bank supervision group. The anti-inflation hawk will step down as president of the Kansas City Fed in October.

Hoenig’s experiences shuttering banks during the savings and loan crisis of the 1980s, when over-investment in real estate caused hundreds of bank failures and necessitated a massive government bailout, shaped his views about how to emerge from the most recent crisis.

Hoenig also said banks are still not adequately prepared for the next financial crisis, despite new capital rules requiring lenders to raise billions of dollars to buttress against future losses.

Hoenig said the proposed Basel III capital requirements — which demand as much as 8 percent core capital ratio — will not be enough to weather catastrophic losses.

“That is far too little capital with this complexity and this risk profile,” he said.