naked capitalism

Anonymous says:

$1.5 trillion is a lot of saxaphones, power tools, guitars, gold watches and jewelry.

steven says:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKr.oY2YKc2g

Matt Dubuque says:

I see.

The reporters at Bloomberg are supposed to have access to all of the internal figures of every entity that comes to the Fed for a loan?

Sounds like Rule 11 to me. In a New York hurry.

Matt Dubuque

ruetheday says:

I didn’t read it as Bloomberg asking for what specific items were used as collateral by what specific institutions, rather they’re looking for aggregates by type of security. But there isn’t much to go on here.

Capt Obvious says:

You dont need to know this info. If it wasnt a good idea, the Fed wouldnt do it. This is for your protection and well-being.

For further clarification, go watch the TV series..The prisoner.

Peripheral Visionary says:

Filings by private entities to government regulatory agencies are typically exempt from FOIA, and special filings–as under the various recent emergency measures–have been made with the understanding that they are exempt from FOIA. But aggregated information, when not otherwise included in official government communications (which typically are subject to FOIA), is a gray area.

To be honest, my own regulatory agency has such information but has not disclosed any of it, and frankly I’m not sure what we would do if we were hit with a FOIA request (probably have our counsel tie it up in the courts while asking Congress to provide us cover, I suspect.) The general approach we take is to not advertise the presence of information that we’re not certain we want available to the public; but in this case, of course, the press knows what information is held by the Federal Reserve.

Anonymous says:

Matt,

I suggest you learn to read. Bloomberg is NOT asking for “all of the internal figures of every entity that comes to the Fed for a loan?” And BTW, having worked for a bank, there is no way the Fed or any regulator has that.

BBerg is asking for details of collateral posted for a specific time period.

I have not read the suit, but it ALSO appears that BBerg is NOT asking for WHO posted what collateral, merely WHAT the collateral is. This eliminates the concern some have raised, that it could discourage particular banks from using the Fed, and gets at the issue most of us are concerned about: how drecky is the stuff posted at the Fed and are the Fed’s marks realistic? Recall that the Fed is accepting dealer marks on most (maybe all) of the collateral submitted at the time it is presented.

Anonymous says:

The federal reserve is not subject to the foia. It is a private bank.

patrick neid says:

Collateral of possible dubious quality?

Here at Rick’s, the patrons at the bar have only one thing to say, “we’re shocked”!

Anonymous says:

How dare you question my promise to maybe repay if I feel like it and it is not raining that day?

Anonymous says:

Remember(?) before the Treasury Czar was granted further magical powers,(core)demands were such: Immunity from prosecution; Treasury TARP actions to be kept on the Federal Reserve books, etc.

Well, Congress has oversight involving anything connected to the Federal Reserve. Using this Congressional oversight, Federal Reserve books are exempted from a full accounting (how convenient). See why the Treasury wanted the Federal Reserve to keep their TARP books? A nuclear explosion could be hidden in those books.

Bloomless is looking for values. The collateral is worth zero, all of it. Better question, “Is it worth less than zero?” We’ll be the last to know but watch as the US$ begins reflecting it.

Anonymous says:

If the Fed isn’t subject to FOIA, then why does it have a FOIA Service Center? I infer the Board of Governors may be but the branches are argued not to be.

doc holiday says:

I have to weigh in here; I make $5000.00 an hour and these Fed punks are dog meat that are ready to be ground into greasy burgers.

Item #1, The concept of denying information based on commercial confidentiality is bullshit, because if they can say that, then we get to go back to the origins of TARP and the authority of The Treasury to commence in commercial activities — which it had no authority or power to engage in; all this alphabet activity has been a process to usurp authority away from a very weak-minded Congress, who is complacent in collusion, as they aid and abet in this fraud! The Treasury, by granting itself the power to engage in commercial enterprise and inventing phantom powers was absurd from the start, thus to suggest they can hide behind commercial exemption is simply retarded.

I call to your friggn attention: … misunderstanding or lack of knowledge is insufficient however, and the burden of proving such fraud or concealment, by evidence which is clear, precise and convincing, is upon the asserting party." Id. Moreover, "in order for fraudulent concealment to toll the statute of limitations, the defendant must have committed some affirmative independent act of concealment upon which the plaintiffs justifiably relied..

> I suggest that now that Paulson and Bernanke are in the business of commerce, that they review the following:

The CEO and CFO must design corporate-wide disclosure controls and procedures to ensure that material information is made known to them. Lack of knowledge is not a defense if the officers failed to implement an effective compliance system. The SOX increases the penalties for false certification of financial reports with fines of up to $5 million and prison terms of up to 20 years. Additionally, if a company restates its financial statements as a result of material misconduct, CEOs and CFOs may face forfeiture of certain bonuses and profits.

>> The question here is, is The Treasury involved in Commercial operations, or are they involved in managing tax payer revenues? If The Treasury is using public funds for TARP, then I sure as hell think these funds and all information should be public!

See: THE FREEDOM OF INFORMATION ACT
5 U.S.C. 552(b)(4)
http://www.usdoj.gov/oip/foiastat.htm

> Also see: Freedom of Information Act Guide, May 2004 Exemption 4

http://www.usdoj.gov/oip/exemption4.htm

Exemption 4 of the FOIA protects "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential." (1)

Now, I'm really pissed off again…. thanks Yves!

doc holiday says:

What about: The USA PATRIOT Act amended the Bank Secrecy Act, with which banks must comply. Several provisions and implementing rules were added to bankers’ compliance obligations.

Nah… Ok this is it baby!

In 1976 Congress enacted the Government in the Sunshine Act.1 The purpose of the Sunshine Act is to provide the public with information regarding the decision-making processes of the Federal Government “while protecting the rights of individuals and the ability of the Government to carry out its responsibilities.” Pub.L.No.94-409, § 2, 90 Stat. 1241 (1976). To effectuate this purpose, the Act requires that every “meeting” of a covered “agency” be open to the public, 5 U.S.C. § 552b(b), with but a few limited exceptions. See 5 U.S.C. § 552b(c)(1)-(10). The Act also mandates the public announcement of meetings, 5 U.S.C. § 552b(e), and the maintenance of a complete transcript or electronic recording of meetings closed under any of the section 552b(c) exemptions. 5 U.S.C. § 552b(f).

3
The definitions of “meeting” and “agency” in the Sunshine Act are quite specific. The term “meeting” applies only to “the deliberations of at least the number of individual agency members required to take action on behalf of the agency where such deliberations determine or result in the joint conduct or disposition of official agency business ….” 5 U.S.C. § 552b(a)(2). In order to be covered by the Sunshine Act, an “agency” must initially fall within the ambit of the definition found in the Freedom of Information Act (FOIA), 5 U.S.C. § 552(e) (1976),2 and in addition must be “headed by a collegial body composed of two or more individual members, a majority of whom are appointed to such position by the President with the advice and consent of the Senate ….” 5 U.S.C. § 552b(a)(1) (emphasis added). It is this definition of “agency,” and in particular the words “to such position,” upon which this case turns.

4
B. The Chrysler Corporation Loan Guarantee Board

We do not quarrel with the district court’s characterization of the Sunshine Act as a broadly remedial statute dedicated to the principles of open government deliberations and the public’s “right to know.” 488 F.Supp. at 876. The fact that legislation has a remedial purpose, however, does not give the judiciary license, in interpreting a provision, to disregard entirely the plain meaning of the words used by Congress. This court has stated in the FOIA context that, even where a statute is broad in scope, proper deference must be paid to the plain meaning rule. Consumers Union of the United States, Inc., v. Heimann, 589 F.2d 531, 533 (D.C.Cir.1978).

Although the Act uses as a foundation the general “agency” definition found in the FOIA, Congress chose further to restrict Sunshine coverage to particular types of agencies. The Act clearly does not apply to agencies headed by a single individual, and Congress failed to act on an early version of the legislation that would have made all agencies having more than one member subject to the Act, without regard to method of appointment.8

Symons
v.
Chrysler Corp. Loan Guarantee Board

http://www.altlaw.org/v1/cases/419051

Huh… huh, closer???

eh says:

@ anonymous 12:28 AM

I have a suggestion – go to another blog if you want to disseminate your anti semitic hate.

I read the entire post by z.o.g. and didn’t see any “hate” or ‘anti-Semitism’. If I mention that Jews are also disproportionately Nobel Prize winners, especially in difficult fields like the hard sciences (physics, chemistry), am I also spreading ‘anti-Semitic hate’? If I mention that in nearly every major 100m sprint final for men, all the participants are black men of west African descent, does that mean I’m spreading ‘racist hate’? Probably not. How about if I state the facts that in the US black males are less than 10% of the population, but represent over 50% of all murder convictions (link left as an exercise) — does that make me a ‘racist hater’?

Thanks for your efforts toward censorship though — always nice to see that.

@z.o.g.

Thanks for the data. I’d also noticed that among the financial elite — at least here in the US — Jews seem to be dominant, and this includes the Fed; but I’d never seen the numbers. And you’re right, the degree to which they are disproportionately represented at the highest levels of the Fed is HUGE, although I’m not sure what to ascribe it to. However for supposedly being so smart — e.g. Ashkenazi Jews have the highest average IQ of any identifiable and tested group — between Greenspan and Bernanke those two sure have made a mess of things.

And last but not least: it’s weird that the last 4 letters of Ashkenazi are…

Doug says:

Yves: The Columbia Journalism Review has issued an open invitation to organizations, companies, individuals et al who wish to join in a coordinated effort aimed at greater transparency and disclosure. For more see:

http://www.cjr.org/the_audit/goldmans_backdoor_bailout.php

This call to action gives an opportunity to everyone, who like yourself and so many others, have emphasized the need for more regulation in financial markets.

Yes, regulation itself must await action by elected officials and regulatory agencies.

But, as the Bloomberg action as well as CJR call to action illustrate, folks can act RIGHT NOW to pressure, sue, cajole and take other steps aimed at transparency and disclosure.

joe says:

Thanks, Doc.
You’re obviously under-priced.

I guess I am just not sure exactly which “meetings’ of a quorum of the FRBoG had a discussion of the nature of the collateral to be used to match up to our public money.

More important to me is the fact that the FRB system is a private corporation. Period.
I know we all know it.
Yet, many deny it.

And the fact that this private corporation is capable of extending limitless debt payable in taxpayer derived, US- denominated dollars.

Thus, as Paulson unexpectedly blurted out to the Congress:
“The US taxpayer is ALREADY on the hook!”

Not one Congressman nor one reporter asked what the f*#* he was talking about.

Treasury-issue, debt-free money.
Do not pass Wall Street.
Go directly to peaceful prosperity.
One hundred percent reserves.
Let the bankers lend real money.

Anonymous says:

The US taxpaper should have offered to house this alphabet soup of crap but not pay for it. Those banks that have loads of it automatically are hosed and closed unless they have balance sheets that are strong enough without it.

Some could be re-capitalised post cleansing.

doc holiday says:

Another key issue: This act allows for the full or partial disclosure of previously unreleased information and documents controlled by the United States Government.

TARP, from my understanding, is controlled by taxpayers, hence providing citizens with accounting for our cash is a no brainer — unless we have corruption and a coup in place to subvert the will of the people and to suppress Constitutional stuff like Freedom of Speech.

"With the ongoing stress on both constitutional and inherent rights of American citizens and the added assertion of government subservience to the individual, some thought it was necessary for government information to be available to the public."

"The nine exemptions to the FOIA address issues of sensitivity and personal rights."

> I think, it is obvious that this is not a matter of personal rights, but perhaps a matter of sensitivity.

A more recent and familiar situation comes to mind with Lehman, Florida and the mess there with credit and debt obligations last year, and the more recent Bear Stearns structure.

As you will recall: "Waxman says he wants to know more about BlackRock's role in managing the money, why it received a no-bid contract and whether the company's portfolio has investments in distressed mortgages or anything that may be in conflict with its new role in managing the Fed's money during the housing meltdown."

This effort by Waxman is directly linked and related to Bloombergs FOIA request, yet Waxman seems to suddenly be out of the loop and not looking for the accountability he sought earlier. The matter of collusion and corruption within government and by fraudulent wall street accounting goes back to the earlier premise that lack of knowledge is no defense and thus freedom of speech remains in the balance and the right for Americans to know what is going on with our government.

A related topic is this: At Long Last, Congress Passes IG Reform Act
http://pogoblog.typepad.com/pogo/2008/09/at-long-last-co.html

After more than a year of wishin' and hopin' and plannin' and dreamin'…at long last both houses of Congress have passed the same version of H.R. 928, the Inspector General Reform Act of 2008. Final passage came per unanimous votes in the Senate on Wednesday the 23rd, and in the House on Saturday the 27th.

> Now, back to Florida and Blackrock as an example of public information:

Florida Is Advised on Saving a State Fund
http://www.nytimes.com/2007/12/04/business/04fund.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1226163873-yztEnyR1ufjyO5nI3y5sXw

BlackRock, the asset management firm hired to advise Florida on a state pool whose subprime-tainted holdings led to withdrawal of almost half its $27 billion assets, recommended yesterday that the remaining holdings be split into two entities to ensure the fund’s survival.

BlackRock, at a meeting in Tallahassee, Fla., with officials from schools and cities participating in the Local Government Investment Pool, recommended putting about 86 percent of the $14 billion of assets that have no risk of loss or default into a “fund A.” The remaining 14 percent would go into a “fund B,” said Simon Mendelson, chief operating officer of BlackRock’s cash-management business….

> Also: Due Diligence Review Local Government Investment PoolLocal Government Investment Pool
http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?DocumentType=Press%20Release&FileName=100

As a result of this Run, on November 29, 2007, the SBA Trustees suspended withdrawalsfrom the Pool and on December 4, 2007, split the Pool into two funds, Fund A and Fund B. The four downgraded Securities with a then-par value of approximately $867 million together with additional securities with a par value of approximately $1.2 billion deemed by an investment manager, BlackRock, hired by the SBA, to have an unacceptable level of risk, were placed in Fund B and frozen. Additionally, the Trustees transferred to Fund B the Pool’s entire $22 million in accumulated, unspecified reserves and $96 million representing the Pool’s interest earned in November 2007 by all Participants in the Pool. The $96 millionwas transferred to Fund B in the form of $82 million in cash and $14 million in securities.

We strongly feel the business, legal and accounting basis for splitting the Pool into Funds A and B, the two “reserve” transfers and the suspension of redemptions is very problematic and will hamper the ability to attract new funds to the Pool. We have referred these items to the SBA’s forensic accountants for further examination and to address their impact on the Pool’s June 30, 2008 independent audit. Accordingly, we recommend that a new pool in the form of a new trust be created by the Legislature and the current Pool, both Funds A and B, be allowed to self-liquidate. This recommendation is explicitly conditioned upon the implementation of the risk and control safeguard we find missing in the Pool’s current operation.

Many of the Pool’s documents use the term “maturity” without explaining that maturity does not equal payment. Currently the website reports that 53.9% of Pool A assetshave a maturity beyond August 2008 and 53.2% of the Pool B assets have a maturity of “Under negotiation/Other” beyond June 2008

>>> Does anyone really care about this shit??? I'm burned out for now, but … I'd like to go and see how the folks in Florida felt about FOIA-like disclosure, because the liquidity freeze there and the mix of public funds with private investments does not seem to indicate that Blackrock can hide information from the public ….. but, that would require more work and @ $5000.00 and hour, Yves is kinda burning up my time….

doc holiday says:

Related DD:

University of North Florida
Board of Trustees
October 2, 2008, 2:30 p.m.
University Center, Room 1058
Agenda

http://www.unf.edu/trustees/botagenda/agenda100208.html

Item 6 Memorandum of Understanding (MOU) between the UNF Board of
Trustees and the UNF Financing Corporation (UNFFC)
(Attachment 1, 2)

The MOU between the UNF Board of Trustees and the UNFFC is being presented for ratification by the Board of Trustees. This MOU further clarifies fund management between the University and the UNFFC. It has been reviewed by the UNFFC board of directors and the Finance and Audit Committee.

Vice President Shuman will address the Board and present this item.

hmmmm, very nice, a little innovation:

Memorandum of Understanding (MOU)
between
The University of North Florida Board of Trustees
and The University of North Florida Financing Corporation

http://www.unf.edu/trustees/botmaterials/bot100208/08a_item_6_1of1.pdf

UNFFC is the primary custodian of funds earned and/or proceeds from revenue bond financing or
other investments and, as such, will transfer funds to the designated entity within the University in
compliance with applicable laws, University policies and agreements.

Consistent with provisions of UNFFC’s bylaws and its articles of incorporation, in the event UNFFC
ceases to exist or ceases to be an Internal Revenue Code §501 (c) (3) organization, UNFFC will transfer
its assets and property to the Board of Trustees or its successor, to a reincorporated successor direct
support organization, or to another direct support organization with a similar purpose, or to the state or
federal government for public purposes, in accordance with applicable law.

>> Item 9B Accounts Receivable Write-offs (Attachment 1, 2)

Florida Statutes authorize the University’s Board of Trustees to charge off or settle uncollectible accounts. The Board delegated the authority for accounts receivable write-offs under $10,000 to the President of the University. As part of this delegation, the President will annually report the status of accounts receivable charge-offs to the Board.

As the President’s representative on this issue, Vice President Shuman will address the Committee and present an update on the University’s accounts receivable write-offs for June 30, 2008.

>>**>>** I highly recommend glossing over this part of the audit report: <<<<

http://www.unf.edu/trustees/botmaterials/bot100208/11a_item_9A_1of3.pdf

The re-structure of failed investments is apparently related to IRS not for profit re-organization (501 (c) (3), which is apparently being set to transfer funds out of the original structure connected to the LGIPs which is now being run by Blackrock. Apparently, NFU is going to spin off its own revenue bonds and break away from Blackrock ASAP, which is a matter related to current market confidence and the lack of disclosure related to this mess.

Nonetheless, since I'm new to this shit, WTF is a Special Purpose Financial Statement (SPFS) and why are they calling to attention the possibility of misstatements and control deficiencies?

In closing, this innovation with something like a SPFS and a MOU is a matter of adding layers of confusion on top of chaos, but perhaps this is how people and corporations will try to dig out of this mess. Unfortunately, this is a matter of time and transferring peas under different shells and although there may not be criminal intent, the act of transfer and shifting and re-shaping will add to a lack of confidence for investors, so I would suggest that people do serious DD and ask lots of questions and get lots of details in regard to answers. This all goes fill circle to Bloomberg's FOIA request for TARP, i.e, where the fu-k is the tax payer money going — other than CEO bonuses and vacations and facials and golf games and jets, food and all the fun that is un-accounted for.

I leave you now on peace….

doc holiday says:

I couldn’t let this go..

http://www.ed.gov/about/offices/list/oig/auditreports/fy2008/a17h0005.pdf

To the Inspector General U.S. Department of Education We have audited the accompanying reclassified balance sheets as of September 30, 2007 and 2006, and the related reclassified statements of net cost and changes in net position for the years then ended (hereinafter referred to as the special-purpose financial statements) contained in the special-purpose closing package of the U.S. Department of Education (the Department). Thesespecial-purpose financial statements are the responsibility of the Department’s management.

Material weaknesses are significant
deficiencies, or a combination of significant deficiencies, that result in more than a remote
likelihood that a material misstatement in relation to the special-purpose financial statements
being audited will not be prevented or detected by the Department’s internal control.

IMHO, they are trying to plan ahead, to cover up mis-information for future accounting.

doc holiday says:

Link for the above:

http://www.whitehouse.gov/omb/memoranda/fy04/m04-22.pdf

john bougearel says:

Consider what Ferdinand Pecora said in his memoirs from the Pecora Hearings:

“Bitterly hostile was Wall Street to the enactment of the regulatory legislation…Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker’s stoutest allies.”

75 yrs later, not much has changed. Only that we can now add the treasury and the Fed to the list of bansksters who prefer to run their day to day ops under the cloak of pitch darkness.

To paraphrase FDR: If a taxpayer or investor wants a friend, get a dog!

joe says:

to doc.
we’re listening.

to luther,
you said it exactly well.

Let’s hope he’s reading THAT Lincoln.

to yves –
hey when the sh-t is hitting the fan, and nobody can agree which way is up, well, hell, typos accepted.
If not expected.

doc holiday says:

Re: .. to doc. we’re listening.

Hey Joe (et al), Thanks, I thought that this was a dead link, which ended up getting too surreal, so I came back to see if drilling matters to anyone. I do wonder why no one is following up on Florida and all these little derivative problems that are under the rug — not to mention the re-invention of non-GAAP accounting within our government, the corruption at Bear, in TARP and everywhere. What an impossible mess to fix — it really is beyond fixing. The system needs to be burned down and re-built by new people — and what a revolutionary idea that would be, to dis-connect from a corrupt and oppressive government!

FYI, from James Madison, The Constitutional Convention Debates: … people deliberating in a temperate moment, and with the experience of other nations before them, on the plan of Government most likely to secure their happiness, would first be aware that those charged with the public happiness, might betray their trust. An obvious precaution against this danger would be to divide the trust between different bodies of men, who might watch and check each other.