“what the hell were you thinking?”...Never has this been quite as extraordinary as it is in the Covered Bond Act of 2011, a bill that is intended to avoid the hassle and exposure of public debate over bailing out the criminals while leaving the country twisting in the wind. Of course this will be supported by the full faith and credit (me & you) of the United States.
This bill will just confirm the practice of privatizing profits while nationalizing the losses, as a legal response to criminal activity. From the folks over at Patrick.net: “The United States Covered Bond Act of 2011 is designed to allow bundling of any kind of debt including derivatives, into marketable securities guaranteed at full face value by the FDIC.” Derivatives? Weren’t those instruments the same ones that caused the near collapse of the system? So what are they, exactly? Avery Goodman from seekinglapha.com explains them this way:
“Derivatives are highly volatile financial instruments that are occasionally used to hedge risk, but mostly used for speculation. They are bets upon the value of stocks, bonds, mortgages, other loans, currencies, commodities, volatility of financial indexes, and even weather changes. Many big banks, including Bank of America, issue derivatives because, if they are not triggered, they are highly profitable to the issuer, and result in big bonus payments to the executives who administer them.” This should make your eyes explode from your head:
Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion. 75 TRILLION? 75 trillion worth of hedges, bets and speculation? I can’t help note the word “obligation”.
Whose obligation? Ultimately mine and yours... Read on and comment at: The PPJ Gazette and also see: http://www.hagan.senate.gov/files/111109_CoveredBond_BillText.pdf
This bill will just confirm the practice of privatizing profits while nationalizing the losses, as a legal response to criminal activity. From the folks over at Patrick.net: “The United States Covered Bond Act of 2011 is designed to allow bundling of any kind of debt including derivatives, into marketable securities guaranteed at full face value by the FDIC.” Derivatives? Weren’t those instruments the same ones that caused the near collapse of the system? So what are they, exactly? Avery Goodman from seekinglapha.com explains them this way:
“Derivatives are highly volatile financial instruments that are occasionally used to hedge risk, but mostly used for speculation. They are bets upon the value of stocks, bonds, mortgages, other loans, currencies, commodities, volatility of financial indexes, and even weather changes. Many big banks, including Bank of America, issue derivatives because, if they are not triggered, they are highly profitable to the issuer, and result in big bonus payments to the executives who administer them.” This should make your eyes explode from your head:
Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion. 75 TRILLION? 75 trillion worth of hedges, bets and speculation? I can’t help note the word “obligation”.
Whose obligation? Ultimately mine and yours... Read on and comment at: The PPJ Gazette and also see: http://www.hagan.senate.gov/files/111109_CoveredBond_BillText.pdf