michaelr

Bank of America gets subpoenas, reports SEC probe

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anonnymous

they may have broken the law with regards to state securities.
On another note, hedge funds started having problems this week.

Right now I'm having amnesia and deja-vu at the same time.

I think I've forgotten this before.

william the wierd

Seriously Mike, Bank of America avoided being shut down 1931-4 by campaign contribution that skirted the law even back then. What happened they run out of palms to grease or the money to do so?

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores

michaelr

I figure they pissed someone off.

william the wierd

There's this invesrigation, there's the predatory lending investigation featured on Bill Moyer's tonight and no doubt others, anybody got a ball park estimate on how many?

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores

michaelr

It is starting to look like they are desperate to hang the crash on someone William, that is a bad sign. Hell it is a sign that after a recovery nothing will change and the cycle will start again. They should do a complete review of fractional lending, there is your culprit.

william the wierd

I tend to agree with Kondratiev: leveraging and deleveraging is needed for growth. Central Banking guidance and control of the money supply is the problem, too much banking leverage (fractional lending gone wild) is an effect not a cause. Normal leverage of banking without a central bank is in the range of 2-4 to 1. In the US "Conservative" banking practice is 10 to 1 leverage. You may or may not remember that except for checking accounts a 90 day hold could be put on any account at the bank's discretion up until the 70s at least. It was in the fine print but it was there. Increasing leverage while removing firewalls is very dangerous but it is not technically fractional lending.

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores

michaelr

Actually fractional lending can by law be 1000:1 and fractional dollars can be re leveraged at 1000:1. That sir is the problem.

william the wierd

Remember your mom and dad saying "If Joe jumps off a cliff does that mean you have to?" Well short of the Fed bailing out bank executives who by their actions should be given a fair trial prior to their execution the free market can handle the overleverage of banking assets much better than regulatory agencies.

In Switzerland at least up until the early 70s there were no legal limits to leverage. Of course the prison sentence for mis/malfeance by a bank manager frequently was longer than that for 2nd degree murder. I think it was "Adam Smith" who brought out a case where a bank manager got a sentence four times longer than a man convicted of killing his wife because the depositors averaged a payout of less than I think it was $,8/$1 when the bank went tits up. It was a famous case because usually bad bank management sentences were only slightly longer than second degree murder sentences.

Mike investment banks in the US run debt ratios of greater than 95% with commercial banks running more than 90%. In most countries, Japan and Germany being exceptions, debt ratios of greater than 75% are not well thought of. In Britain a few years back Lloyd's underwriters were not merely going bankrupt in full percentage points about a quarter of those people went to jail trying to raise money to cover their unlimited liabilities. What mortgage banker besides the two fund managers at Bear Stearns have been taken into custody?

Business Week has published a special edition on predatory lending, Cleveland is suing most of the money center banks, Atlanta is likely to follow suit and where are the indictments? Names have been named both corporate and personal but guess what, this is an election year and the unindicted felons are big Obama contributers. If Bush does anything he gets accused of dirty tricks. McCain with his Keating five history cannot bring it up. In an Obama White House these guys will walk.

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores