Times – Northern Rock, the state-owned bank bailed out with £26 billion in taxpayers’ funds, will share a £14.9 million bonus among its staff despite running up a loss over 2009. The lender’s 4,500 staff will receive rewards, including its 32 top managers, who will benefit from a £3 million bonus specifically for senior staff, to be paid in three instalments and subject to the Government’s 50 per cent tax on awards in excess of £25,000. Read Article
New York Times – Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking. A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent. None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves. Read Article
The Times – Obama administration’s latest attempt to stem the housing crisis. NEW YORK – In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave. This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions. Read Article
Associated Press – WASHINGTON (AP) — President Barack Obama stood with Greek Prime Minister George Papandreou on Tuesday and pledged that the United States would work with its ally, even as Greece’s enormous debts sparked frenzied trading. Papandreou said he outlined European proposals in his White House meeting and Obama reacted positively to European ideas about cracking down on currency speculation. He also said the issue would be discussed at the next meeting of the Group of 20 summit of leading and emerging economies in June. Read Article
Reuters – Britain will on Wednesday propose to force banks to reveal how many of their staff earn top wages, in steps that go further than previous proposals, financial services minister Paul Myners said. The government’s Walker review on bankers’ pay had previously laid out proposals for such moves. “This will include proposals for narrower disclosure bands than Walker proposed, starting with salary packages below the one million pound floor that he suggested,” Myners said in a speech in London. Read Article
Washington Times – Undaunted by a rash of scandals over the science underpinning climate change, top climate researchers are plotting to respond with what one scientist involved said needs to be “an outlandishly aggressively partisan approach” to gut the credibility of skeptics. In private e-mails obtained by The Washington Times, climate scientists at the National Academy of Sciences say they are tired of “being treated like political pawns” and need to fight back in kind. Their strategy includes forming a nonprofit group to organize researchers and use their donations to challenge critics by running a back-page ad in the New York Times. “Most of our colleagues don’t seem to grasp that we’re not in a gentlepersons’ debate, we’re in a street fight against well-funded, merciless enemies who play by entirely different rules,” Paul R. Ehrlich, a Stanford University researcher, said in one of the e-mails. Some scientists question the tactic and say they should focus instead on perfecting their science, but the researchers who are organizing the effort say the political battle is eroding confidence in their work. Read Article
Ed – The question is who is better funded? Those who are supported by vested interests in the oil industry, or those who are supported by vested interests in Governments and the banking industry? Who needs rational debate & science anyway when there is money to be made?
New York Times – In an effort to secure Republican support for an overhaul of financial regulations, the chairman of the Senate Banking Committee on Monday proposed giving the Federal Reserve responsibility for protecting consumers from abusive and deceptive financial products. The new plan, described by an official briefed on the negotiations, was the latest iteration of an idea that has divided members of the committee, largely along party lines, and has been the major barrier in the path toward the most significant overhaul of banking rules since the Depression, a priority of the Obama administration. Read Article
Ed – Not only therefore would the wolves have the keys to the chicken coop, but they would also be appointed gamekeeper too.
Irish Independent – A revolution will erupt if billions of euro more in taxpayers’ money is handed over to Anglo Irish Bank, Enda Kenny has warned. The Fine Gael leader said people can no longer tolerate massive public funding of the nationalised bank as it stands.Expected record losses at the bank, to be announced later this month, have fuelled speculation it will seek another six billion euro from the Government, on top of the four billion it has already pumped in. Read Article
Bloomberg — George Soros is helping drive up gold prices by doubling his bet in a market even he considers a “bubble” as Goldman Sachs Group Inc., Barclays Capital and HSBC Holdings Plc predict more gains before it bursts. Soros Fund Management LLC, which manages about $25 billion, increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter, a Feb. 16 Securities and Exchange Commission filing shows. While prices have fallen 9.2 percent since reaching a record on Dec. 3, 15 of 22 analysts in a Bloomberg survey say gold will reach a new high, with the median forecast predicting a 17 percent advance to as much as $1,300 an ounce this year. Read Article
Ed – With the coming inflationary crisis in the USA & UK (due to significant ‘quantitative easing’ over the last 2 years – in other words printing lots of extra money) the smart money will go to the safest bet there has always been in such times, gold.
Bloomberg – When a congressional panel convened a hearing on the government rescue of American International Group Inc. in January, the public scolding of Treasury Secretary Timothy F. Geithner got the most attention. Lawmakers said the former head of the New York Federal Reserve Bank had presided over a backdoor bailout of Wall Street firms and a coverup. Geithner countered that he had acted properly to avert the collapse of the financial system. A potentially more important development slipped by with less notice, Bloomberg Markets reports in its April issue. Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG. Read Article
BBC – The role of Wall Street firms in deals that may have helped Greece mask its debt woes are under scrutiny in the US, the Federal Reserve chief has said. Ben Bernanke said the Fed and the US financial watchdog were “looking into a number of questions” related to banks’ derivatives arrangements with Greece. But he stopped short of saying an official inquiry was under way by either the Fed or the regulator. Read Article
Business Insider – The image of banks locking their doors to keep customers from making withdrawals during a bank run is what immediately came to mind when we heard that Citigroup was telling customers it has the right to prevent any withdrawals from checking accounts for seven days. “Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” Citigroup said on statements received by customers all over the country. Read Article
The Times – Royal Bank of Scotland (RBS), which is 84 per cent owned by the British taxpayer, will pay out up to £1.7 billion in bonuses to its bankers after reporting a £3.6 billion pre-tax loss for the past financial year. The loss for the 12 months to December 31 is less than the £5 billion expected and far below the £24.3 billion loss that RBS reported for 2008, a record for any British company. However, the bank is facing criticism over its decision to reward investment bankers with bonuses worth £1.3 billion, or 27 per cent of its revenue, after receiving billions of pounds in taxpayers’ money during the recession to save it from collapse. Other staff will share up to £400 million in bonuses. Read Article
Huffington Post – The International Monetary Fund operates primarily as a banker bailout machine. They cajole and tempt and confuse and threaten the leaders of governments worldwide to pay off the failed bets of the big bankers using the taxpayer funds of their countries. This has been going on a long time, at least since the early 1980s. Thus, I am not in the teeniest bit surprised that the same thing is happening today in Iceland and Latvia. Read Article
Daily Telegraph – It is all too easy to lose track of the amount of cash poured into the economy by the British authorities in order to support banks and prevent a repeat of the Great Depression. So here, for any of you who might have forgotten, is a quick reminder: some £76bn from the Treasury to buy shares in RBS and Lloyds Banking Group ; £200bn worth of lender-of-last resort liquidity support provided by the Bank of England to stricken banks at the height of the crisis; £250bn of wholesale lending guaranteed by the Bank through the credit guarantee scheme; £185bn of loans to banks through the Special Liquidity Scheme; £40bn of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme. Then, deep breath, there is the £200bn of liabilities taken on board from the Asset Protection Scheme, and the £200bn of cash poured into the economy through quantitative easing . Read Article
Reuters – Regulators seized four more U.S. banks on Friday, bringing the total for the year to 20.The Federal Deposit Insurance Corp, in charge of safeguarding bank deposits and resolving failed banks, has predicted that 2010 will be peak year for failures resulting from the recent financial crisis. Read Article
Rolling Stone – Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash Read Article
The Times – Greece yesterday replaced the head of its national debt management agency amid demands from the European Union that it tackle the crisis in its public finances. The Greek Finance Ministry said that Spyros Papanicolaou had been replaced late on Thursday by Petros Christodoulou, the former head of asset management at the National Bank of Greece. No explanation was given for the move. Mr Christodoulou held various positions in global markets at Credit Suisse, Goldman Sachs and JPMorgan Chase before joining the National Bank of Greece in 1998. He is expected to take up the position immediately. Read Article
New Scientist – WITH smartphones taking the world by storm, a phone that can only send and receive voice calls and text messages may seem like a relic from a bygone age. Yet in East Africa, simple phones like these are changing the face of the economy, thanks to the “mobile money” services that are spreading across the region. Using the text-messaging capability built into the GSM system used by most cellphone networks, these services allow people without a bank account or credit card to use their phone as an electronic wallet that can be used to store, send or receive cash. Read Article
Ed – Yet another tiny step along the path to a cash-less society. But before you smile at man’s inventiveness just consider the civil liberties implications of your entire financial dealings, and therefore your ability to fulfil the most basic needs such as buying food, all just one mouse click away from deletion or from theft through fraud.
Financial Times – Reaction to revelations that Greece used derivatives to disguise its true level of borrowing is reminiscent of Captain Renault (played by Claude Rains) in Casablanca: “I am shocked, shocked to find that gambling is going on in here.” Use of derivatives to disguise debt and arbitrage regulations and accounting rules is not new. In the 1990s Japanese companies and investors pioneered the use of derivatives to hide losses – a practice called “tobashi” – “to make fly away”. Derivatives, such as interest rate and currency swaps, are used to alter the interest rates and currency of the cash flows on existing assets or liabilities. Transactions entail exchanges of one stream of payments for another. At the commencement of the transaction, if the contract is priced at current market rates, then the current (present) value of the two sets of cash flows should be equal (ignoring any profit). The contract has “zero” value – in effect, no payment is required between the parties Read Article
abc – Michele Brown has seen Americans’ struggles with jobs first hand. She lives in hard-hit Florida, spent 20 years in the real estate business and recently had her days as a nanny cut back after her boss had his own hours reduced. But nothing prepared her for what happened one day when she called a toll-free line to inquire about her food stamps. “The woman who answered the phone — it’s not like she wasn’t nice or anything — but it was kind of evident that she wasn’t in the States,” Brown said. Read Article
Daily Telegraph – Much noise this morning surrounding the news that Goldman Sachs (and a number of other banks) allegedly helped Greece to hide the full scale of its ballooning government debts through financial jiggery-pokery over the past decade or so. Eurostat has now demanded an explanation from the Greeks for $1bn of currency swaps it says it was unaware of (though Greece seems to be insisting the authorities did know). The original story about Goldman’s involvement appeared in Der Spiegel last week (though the theme has been the subject of investigation by the excellent euro blog A Fistful of Euros for some time), and over the weekend the New York Times produced an excellent feature filling in the gaps. One of the more intriguing lines from that latter piece says: “Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.” So, the obvious question goes, what about the UK? Did Britain hide its debts? Was Goldman Sachs involved? Should we panic? To which the answers, respectively, are: yes, yes and no. Read Article
Daily Telegraph – Barclays, Britain’s third-largest bank, has reported blockbuster profits of £11.6bn for 2009. The 92pc rise in pre-tax profits was boosted by the £5.3bn sale of Barclays Global Investors to Blackrock and strong performance from its investment banking arm. Total income increased 34pc to £30.9bn. Barclays shares jumped 8pc on the better-than-expected full-year results. Read Article
Ed – Lest we forget the poor banking sector that required trillions of dollars bail-outs from tax-payers less than 18 months ago
New York Times – Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels. Read Article
News.Com.Au – A BANK has been accused of rigging a public vote on whether the City should pay a levy on its wheeler-dealing. Campaigners for a “Robin Hood tax” on banks operating in the City of London were surprised when thousands of votes invaded their website, rejecting the proposal. There were almost 5,000 no votes against the tax within less than half an hour, but these emanated from just two computer servers – one registered to the investment bank Goldman Sachs. Read Article
