November 12, 1999— the date passing the Gramm-Leach-Bliley Act will live in infamy—
Franklin D. Roosevelt Address to Congress Requesting a Declaration of War with Japan
December 8, 1941
Mr. Vice President, and Mr. Speaker, and Members of the Senate and House of Representatives:
Yesterday, December 7, 1941—a date which will live in infamy—The United States of America was suddenly and deliberately attacked by naval and air forces of the Empire of Japan.
As Commander in Chief of the Army and Navy I have directed that all measures be taken for our defense. I ask that the Congress declare that since the unprovoked and dastardly attack by Japan on Sunday, December 7, 1941, a state of war has existed between the United States and the Japanese Empire.
The start of World War II proved to be very costly in both money and lives. When the public learned that Japan started World War II, they knew that their lives were changed forever. This war had the greatest effect on the lives of millions of Americans in the twentieth century.
There is another date: November 12, 1999—a date which will also live in infamy—
Unlike the Japan bombing of Preal Harber, this day of infamy was caused by passing the Gramm-Leach-Bliley Act which repealed the Glass-Steagall Act of 1933.
The rest of this report indicates the many problems that were caused by the repealed the Glass-Steagall and how it has affected our country.
It is important to review what caused the Great Depression and what Congress did to improve the financial climate. This would allow the future economy that gave the U.S. the highest standard of living in the world.
In the 1920s, many banks found that they could make more money by investing their deposits in the ever rising stock market.
But then in 1929 the stock market crashed. In the first 10 months of 1930, a total of 744 US banks failed. In November and December of that same year, 600+ more banks failed.
Throughout the entirety of the Great Depression, over 9,000 US banks failed, which is by far the worst stretch in US history when it comes to bank failures.
After the stock market crash of 1929, our country desended into the worse depression ever seen in America.
None of the Government’s actions or the Federal Reserve’s actions worked and by 1933 the President and Congress were ready to take advice from outsiders.
The answer was found in a series of recommendations that were made in 1933 by a titan of industry – with banks, railroads and corporations spanning the American west.
But first one must learn how his proposed reforms were implemented and how they resulted with America having the strongest financial and economic system the world has ever known.
The following was taken from “ London Banker: Testimony of Marriner Eccles to the Committee on the Investigation of Economic Problems in 1933″
Marriner Eccles was born the son of an illiterate, bigamist, Mormon, Scottish immigrant. He was about as far as you could get from the Eastern elite ranks that ran US banking on Wall Street. But he sure understood money, economics and trade, and had the personal drive and charisma to carry his point with the president and with Congress.
Below are excerpts from the testimony of Marriner Eccles to the Senate Committee on the Investigation of Economic Problems in 1933.
It is an historic document – laying out the future terms of the Federal Deposit Insurance Corporation, the management of money supply nationally through open market operations, , and reforms of the Federal Reserve System to eradicate the excesses of untamed capitalism and financial dominance of Wall Street. He encouraged federal regulation of child labor, unemployment insurance, social security and other farsighted reforms.
Following his testimony, Marriner Eccles, the Utah banker was invited by Franklin Roosevelt to come to Washington to spearhead legislation to enact his proposed reforms.
Within two years he had drafted and enacted the Securities Act of 1933 and the Banking Act of 1933(a.k.a., The Glass-Steagall Act, which separated investment and commercial banking and established the FDIC) and the Banking Act of 1935 (which created the modern Board of Governors of the Federal Reserve System and Federal Open Market Committee). He served as Chairman of the Board of Governors of the Federal Reserve System from 1934 until 1951.
These banking laws served our country well for over 65 years and the U.S. became the leader of the World with the highest standard of living.
The rules that would provide a good economy appeared to be quite simple:
1. Keep the banking system solvent, 2. Federal insurance that private banking accounts were safe and 3. Allow the private sector to prosper and keep the economy going.
The Wall Street Banks were 100% for rule 1. Keeping their banks solvent!
These banks were also OK with rules 2 and 3, as long as they didn’t get in their way.
However the Wall Street Banks did have a problem with Glass-Steagall.
The Banking Act of 1933(a.k.a., The Glass-Steagall Act, which separated investment and commercial banking was a very important step, as it prevented commercial banking from getting involved with speculative investments. This made the banks more safe but they could not make as much money!
The effect of repealing Glass-Steagall was slow in coming with many members of Congress approving the end of Glass-Steagall in 1999.
For more information read 1. “ Wall Street banks and the Fed battle to repeal Glass-Steagall.” found in the later part of this report.
This was from: “10 Years Later, Looking at Repeal of Glass-Steagall – NYTimes.com”
Ten years ago to the day, On November 12, 1999 the Glass-Steagall Act was repealed.
The repeal of the Glass-Steagall Act of 1933 was seen at the time as a way to help American banks grow larger and better compete on the world stage.
“Today, Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” then-Treasury Secretary Lawrence H. Summers said at the time. “This historic legislation will better enable American companies to compete in the new economy.”
But 10 years later, the end of Glass-Steagall has been blamed for many of the problems that led to the 2009 financial crisis. While the majority of problems that occurred centered mostly on the pure-play investment banks like Lehman Brothers, the huge banks born out of the revocation of Glass-Steagall, especially Citigroup, and the insurance companies that were allowed to deal in securities, like the American International Group, would not have run into trouble had the law still been in place.
“Commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps and other explosive financial derivatives,” “Without the watering down and ultimate repeal of Glass-Steagall, the banks would have been barred from most of these activities,” Demos, a nonpartisan public policy and research organization, wrote in a report. “The market and appetite for derivatives would then have been far smaller, and Washington might not have felt a need to rescue the institutional victims.”
After the repeal of Glass-Steagall, the largest Wall Street Banks acquired many other banks and institutions. This resulted with a small number of extremely large and powerful super banks that even the federal government consideres too big to fail!!
For more information read 2. “Since 1999 the Wall Street Banks have become way bigger.”
The five largest banks in the United States at December 31, 2011 were JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs.
On that same date, the five largest banks’ assets were equal to 56 % of the U.S. economy, compared with 43% five years earlier.
By comparison On Dec 31, 2011 there were 6207 U.S. commercial banks with38% or about 2360 banks being members of the Federal Reserve System. The remaining U.S. 6202 banks had assets equal to only 44% of the U.S. economy!
These big banks and some others are known as banks that are too big to fail. Therein lies the problem—-If these big banks were to fail, it would also cause the U.S. economy to fail!
The too big to fail banks know that our government will bail them out rather then let them fail. These banks know this and they are not afraid to engage in very risky endeavors.
For more information read 3. “The Federal Reserve System and who controls it.”
The Federal Reserve is a privately-owned banking cartel that is effectively owned and controlled by the Wall Street Banks.
Bailing out these (too big to fail banks) became very costly in 2008-2010.
The Dodd-Frank Wall Street Reform and Consumer Protection Act July 21, 2010 ,directed the Government Accountability Office to conduct a one-time audit of the emergency loan programs and other assistance authorized by the Board of Governors of the Federal Reserve System.
This was from “U.S. Senator Bernie Sanders The Fed Audit July 21, 2011″
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said U.S. Senator Bernie Sanders.
Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.
The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.
For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.
In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.
To Sanders, the conclusion is simple. “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” he said.
The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.
The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts.
Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the
Fed bailout of AIG.
A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”
This was from “Fed’s Once-Secret Data Compiled by Bloomberg Released to Public”
By Phil Kuntz & Bob Ivry – Dec 22, 2011
Bloomberg News today released spreadsheets showing daily borrowing totals for 407 banks and companies that tapped Federal Reserve emergency programs during the 2007 to 2009 financial crisis. It’s the first time such data have been publicly available in this form.
Bloomberg News obtained information about the discount window and ST OMO through the Freedom of Information Act. While the Fed initially rejected a request for discount-window information, Bloomberg LP, the parent company of Bloomberg News, filed a federal lawsuit to force disclosure and won in the lower courts. In March, the U.S. Supreme Court decided not to intervene in the case, and the Fed released more than 29,000 pages of transaction data.
My comments on the one-time audit of the emergency loan programs and other assistance authorized by the Board of Governors of the Federal Reserve System.
We do not know exactly how much money was given or lent to these banks and other financial institutions. Or how much money has been paid back.
We do know that the interested rate was close to zero. However these where emergency loan programs. The institutions that received the loans must have required the funds to remain solvent.
Since mid 2010, the world’s economies have not improved, so how would these banks pay back their loans? Do you really think that Citigroup had 2.5+ Trillions of profits & paid their loan back!
I find it very hard to believe that any of these institutions have paid back much of their loans.
This is from: “Fed Extends Program to Lend Dollars to Foreign Central Banks”
Source: Wall Street Journal (blog) December 13, 2012
“The Federal Reserve extended until February 2014 a program that lends U.S. dollars to foreign central banks.
The U.S. central bank will continue to run its dollar swap lines with the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank through Feb. 1, 2014, the Fed said in a statement Thursday. Under the program, the Fed lends dollars to other central banks, which send back to the Fed an equal amount of funds in their currencies and make the dollars available to banks under their jurisdictions.
The Fed’s action prevents the program from expiring in February. Used extensively during the financial crisis, the swap lines had been shut down in February 2010, but revived in May 2010 as sovereign-debt problems began to emerge in Europe. The swap lines are designed to ease financial conditions and avert short-term funding problems.
My comments: Note that the Fed’s foreign loans are only insured by Funds of foreign central banks that might fail.
It appears that sovereign-debt problems are getting worse and the Fed is lending even more money to these foreign banks
This and the previous two articles indicate that the Fed has lent a very large amount of money to foreign banks.
This indicates just how important to the Fed and our country, that certain foreign economies do not fail! I fear that the Fed has sent and will send even more trillions to the euro zone since 2010!!!
Paul Craig Roberts is an American economist. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as a co-founder of Reaganomics. He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. Paul Craig Roberts has testified before congressional committees on 30 occasions on issues of economic policy.
The following was taken from: “The Fiscal Cliff Is A Diversion: The Derivatives Tsunami and the Dollar Bubble” by Paul Craig Roberts. December 18,2012.
“Prior to financial deregulation, essentially the repeal of the Glass-Steagall Act and the non-regulation of derivatives – a joint achievement of the Clinton administration and the Republican Party – Chase, Bank of America, and Citibank were commercial banks that took depositors’ deposits and made loans to businesses and consumers and purchased Treasury bonds with any extra reserves.
With the repeal of Glass-Steagall these honest commercial banks became gambling casinos, like the investment bank, Goldman Sachs, betting not only their own money but also depositors money on uncovered bets on interest rates, currency exchange rates, mortgages, and prices of commodities and equities.
These bets soon exceeded many times not only US GDP but world GDP. Indeed, the gambling bets of JP Morgan Chase Bank alone are equal to world Gross Domestic Product.”
According to the first quarter 2012 report from the Comptroller of the Currency, total derivative exposure of the largest US banks has fallen insignificantly from the previous quarter to $227 trillion. The exposure of the four US banks accounts for almost of all of the exposure and is many multiples of their assets or of their risk capital.
The Derivatives Tsunami is the result of the handful of fools and corrupt public officials who deregulated the US financial system. Today merely four US banks have derivative exposure equal to 3.3 times world Gross Domestic Product. When I was a US Treasury official, such a possibility would have been considered beyond science fiction.
Hopefully, much of the derivative exposure somehow nets out so that the net exposure, while still larger than many countries’ GDPs, is not in the hundreds of trillions of dollars. Still, the situation is so worrying to the Federal Reserve that after announcing a third round of quantitative easing, that is, printing money to buy bonds – both US Treasuries and the banks’ bad assets – the Fed has just announced that it is doubling its QE 3 purchases.
In other words, the entire economic policy of the United States is dedicated to saving four banks that are too large to fail. The banks are too large to fail only because deregulation permitted financial concentration, as if the Anti-Trust Act did not exist.
The purpose of QE is to keep the prices of debt, which supports the banks’ bets, high. The Federal Reserve claims that the purpose of its massive monetization of debt is to help the economy with low interest rates and increased home sales. But the Fed’s policy is hurting the economy by depriving savers, especially the retired, of interest income, forcing them to draw down their savings. Real interest rates paid on CDs, money market funds, and bonds are lower than the rate of inflation.
Moreover, the money that the Fed is creating in order to bail out the four banks is making holders of dollars, both at home and abroad, nervous. If investors desert the dollar and its exchange value falls, the price of the financial instruments that the Fed’s purchases are supporting will also fall, and interest rates will rise. The only way the Fed could support the dollar would be to raise interest rates. In that event, bond holders would be wiped out, and the interest charges on the government’s debt would explode.
With such a catastrophe following the previous stock and real estate collapses, the remains of people’s wealth would be wiped out. Investors have been deserting equities for “safe” US Treasuries. This is why the Fed can keep bond prices so high that the real interest rate is negative.
As indicated by Paul Craig Roberts, the Fed started printing even more money in 2012.
In Oct. 2012 the Fed announced QE3, that they would print 40 billion dollars a month out of thin air to purchase agency mortgage-backed securities (MBS) from the biggest banks. This $40 billion a month was to continue until the labor market improves substantially. This could take many years! As in the past, this money will be going to the Too Big To Fail Banks.
In Dec. 2012 the Fed announced QE4, that they would print an additional 45 billion dollars a month out of thin air to purchase U.S. Treasury bonds. It appears that no country will buy our Treasury bonds when the interest rates are lower than the rate of inflation!
As indicated above, This $85 billion a month was to continue until the economy improves substantially.
A recent article by Bloomberg : Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress” raises concerns that the value of securities in the Fed’s portfolio may be put into the economy causing massive inflation and rising interest rates. This article is quite long however, an article by Karl Denninger in The Market Ticker explains the problem and how it will effect the economy.
This article will be hard for many to comprehend. In summery, the Fed gave too much money to the big banks, that it is in a trap that will end with the economy having higher interest rates and massive inflation.
Why The Insanity Must Be Stopped NOW
Ah, someone appears to have done the arithmetic…. Quoting from the Bloomberg article:
“ Federal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels.
That sum is the difference between the value of securities in the Fed’s portfolio on Dec. 31 and what they may fetch in three years, according to data compiled by MSCI Inc. of New York for Bloomberg News. MSCI applied scenarios devised by the Fed itself for stress-testing the nation’s 19 largest banks.
MSCI sees the market value of Fed holdings shrinking by $547 billion over three years under an adverse scenario that includes an economic contraction and rising inflation. MSCI puts the Fed’s mark-to-market loss at less than half that, or $216 billion, if the economy performs in line with consensus forecasts of gradually rising growth, inflation and interest rates.”
The article goes on to state that these are “potential” losses and MTM, making the point that The Fed has no obligation to sell (and in fact Bernanke said today they won’t, more or less.)
The article goes on to state that these are “potential” losses and MTM, making the point that The Fed has no obligation to sell (and in fact Bernanke said today they won’t, more or less.)
That would be true if he had the luxury of sitting on the portfolio.
What if he has to sell?
Here’s the problem — look at the Fed balance sheet.
Note a few things. First, The Fed has zero in bills. Bills are short-term instruments that are mostly-insensitive to interest rates. In the extreme case you can wait the 4 (or 13, or 26, etc) weeks for them to roll off, so there is no, or nearly-no, interest-rate risk in holding them.
However, The Fed doesn’t have any more of them. They’re all gone, having been “twisted” away.
Everything else is interest-rate sensitive, which is where that above analysis comes from. The longer the duration the greater the mark-to-market move of a bond you’re holding when interest rates change.
Now here’s the kicker: At present The Fed is preventing the “printed” currency they’re using to execute QE from entering the economy, causing immediate and serious inflationary pressures, from leaving The Fed. They are doing this by paying interest on these “excess reserves.”
But as the name implies, the reserves are excess of requirements — that is, the banks cannot be required to leave them on deposit at The Fed. They do so because the interest rate The Fed pays them (out of its operating income) is greater than the risk-adjusted return they believe they could earn in the economy as a whole. Remember, back in the early days of the crisis Bernanke argued for having this power to pay interest on excess reserves for this exact reason.
Nobody ever asked him the following question: What happens when you have a scadload of excess reserves on deposit, no short-term bills on your balance sheet at all, you’ve bought a crap-ton of long-term paper at historically low rates and rates go up?
Suddenly from the banks’ point of view it becomes more lucrative to withdraw those reserves and put them into the economy. But if that happens inflation spikes dramatically and interest rates go up further in response!
To prevent this The Fed would have to pay a higher rate on those excess reserves so as to maintain the preference to leave them on deposit.
From where does it get the money to do so when it is trying to unwind the portfolio — that is, sell in the market and withdraw excess liquidity?
This is a positive feedback situation. If The Fed sells securities to get the funds to pay the reserves with it crystallizes a mark-to-market loss into a real, honest-to-god cash operating loss and those sales will at the same time depress prices, causing rates to go higher and the mark-to-market loss on the remaining securities to increase!
If The Fed doesn’t sell the securities then it has no funds with which to pay the excess reserve interest and the banks will withdraw those funds, causing inflation which will also drive rates higher and increase the mark-to-market loss.
The only way The Fed gets away with this is if we are Japan — stuck in an economic environment in which there is no meaningful growth and no meaningful inflation, and therefore no reason for the banks to want to withdraw those funds nor do rates rise.
Now remember folks, one of Bernanke’s key claims early on is that he “knew” how to avoid the Japanese problem coming here to America when the crisis hit, and that he would avoid it.
With the repeal of Glass-Steagall these honest commercial banks became gambling casinos.
Unknown to Congress, from 2008 to 2010, the fed has spent many trillions of dollars bailing out the biggest U.S. banks a well as some foreign banks! Since then the Fed policies of QE1 through QE4 have cost more than two more trillion dollars and the Fed caused debt will continued to rise more than a trillion dollars a year. Most of this debt has been caused by the Federal Reserve continuing to bail out the to big to bail banks.
By comparison, the Federal Deposit Insurance Corporation (FDIC) closed 465 failed banks from 2008 to 2012. Apparently the rest of the banks are on their own if they fail!!
Paul Craig Roberts and Karl Denninger agree that the Fed’s actions will most likely cause massive inflation and rising interest rates. The America that we know will never be the same!
Today merely four US banks have derivative exposure equal to 3.3 times world Gross Domestic Product. Are the reckless gambling debts of these four banks going to bankrupt our country with them!
Perhaps the Government could still save our country by letting these big banks default on their obligations. But way too much damage has already been done by these policies.
Even if this would save our country, I still believe that November 12, 1999—The date that they
repealed Glass-Steagall will live in infamy—
1. Wall Street banks and the Fed battle to repeal Glass-Steagall
The Following was taken from:The Long Demise of Glass-Steagall PBS Frontline
Beginning in the 1960s, banks lobby Congress to allow them to enter the municipal bond market.
In the 1970s, some brokerage firms begin encroaching on banking territory by offering money-market accounts that pay interest.
In December 1986, the Federal Reserve Board, which has regulatory jurisdiction over banking, reinterprets Section 20 of the Glass-Steagall Act, deciding that banks can have up to 5 percent of gross revenues from investment banking business.
In August 1987, Alan Greenspan — formerly a director of J.P. Morgan and a proponent of banking deregulation — becomes chairman of the Federal Reserve Board. One reason Greenspan favors greater deregulation is to help U.S. banks compete with big foreign institutions.
1980s-90s Congress repeatedly tries and fails to repeal Glass-Steagall
In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting (up from 10 percent). This expansion of the loophole created by the Fed’s 1987 reinterpretation of Section 20 of Glass-Steagall effectively renders Glass-Steagall obsolete.
In 1998 Congress is yet again unable to pass final legislation before the end of its session.
As the push for new legislation heats up, the finance, insurance, and real estate industries spend more than $200 million on lobbying and make more than $150 million in political donations. Campaign contributions are targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.
On November 12, 1999 President Clinton singed the law that after 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $350 million worth of lobbying efforts.
From this time on there were no restrictions and the Big Wall Street Banks were able to do whatever they wanted to do to become bigger and richer!
2. Since 1999 the Wall Street Banks have become way bigger
The Following was taken from: Wikipedia, The Free encyclopedia.
After the repeal of Glass-Steagall The Wall Street Banks were free to get much bigger.
On April 6, 1998, the merger between Citicorp and Travelers Group was announced to the world, creating a $140 billion firm with assets of almost $700 billion.
In 2000, Citigroup acquired Associates First Capital Corporation, which, until 1989, had been owned by Gulf+Western (now part of National Amusements).
In 2001, Citigroup made additional acquisitions: European American Bank, in July, for $1.9 billion, and Banamex in August, for $12.5 billion.
The year 2012 marks Citi’s 200th anniversary. It is now the third largest U.S. bank.
In 1996, Morgan Stanley acquired Van Kampen American Capital. On February 5, 1997, the company merged with Dean Witter Reynolds, and Discover & Co. the spun off financial services business of Sears Roebuck.
Morgan Stanley has long had a dominant role in technology investment banking and, in addition to Apple and Facebook, served as lead underwriter for many of the largest global tech IPOs, including: Netscape, Cisco, Compaq, Broadcast.com, Broadcom Corp, VeriSign, Inc., Cogent, Inc., Dolby Laboratories, Priceline, Salesforce, Brocade, Google and Groupon. In 2004, the firm led the Google IPO, the largest Internet IPO in U.S. history.
In the same year Morgan Stanley acquired the Canary Wharf Group.
Morgan Stanley ended 2004 with the best competitive rankings in the history of the firm:
• #1 in global equity trading. It is now the Sixth largest U.S. Bank.
• #1 in global equity underwriting in 2004 for first time since 1982
• #1 Global IPO market share in 2004
• #2 in global debt underwriting in 2004, with steady gains since late ‘90s
• #2 in completed global M&A in 2004
In 2009, Morgan Stanley purchased Smith Barney from Citigroup.
Bank of America
In 1994, BankAmerica acquired the Continental Illinois National Bank and Trust Co. of Chicago .
In 1997, BankAmerica acquired Robertson Stephens, a San Francisco-based investment bank.
In October 1998 BankAmerica was acquired by NationsBank of Charlotte in what was the largest
bank acquisition in history at that time. While NationsBank was the nominal survivor, the merged bank took the name Bank of America Corporation.
In 2004, Bank of America announced it would purchase Boston-based bank FleetBoston Financial.
On June 30, 2005, Bank of America announced it would purchase credit card giant MBNA.
On November 20, 2006, Bank of America announced the purchase of The United States Trust Company.
On September 14, 2007, Bank of America won approval from the Federal Reserve to acquire LaSalle Bank Corporation from Netherlands’s ABN AMRO.
On August 23, 2007, the company announced a $2 billion repurchase agreement for Countrywide Financia.
On January 11, 2008, Bank of America announced that it would buy Countrywide Financial.
On September 14, 2008, Bank of America announced its intention to purchase Merrill Lynch & Co., Inc. On September 28, 2012, Bank of America settled the class action lawsuit over the Merrill Lynch acquisition. It is now the second largest U.S. Bank
In 1996, Chemical Bank acquired the Chase Manhattan Corporation taking the more prominent Chase name. In 2000, the combined company acquired J.P. Morgan & Co. and combined the two names to form what is today JPMorgan Chase & Co.
Bank One Corporation was formed upon the 1998 merger between Banc One of Columbus, Ohio and First Chicago NBD.
In 2004, JPMorgan Chase merged with Chicago based Bank One Corp.
At the end of 2007, Bear Stearns & Co. Inc. was the fifth largest investment bank in the United States but its market capitalization had deteriorated through the second half of 2007.
On March 16, 2008, after a weekend of intense negotiations between JPMorgan, Bear Stearns, and the federal government, JPMorgan Chase announced that it had plans to acquire Bear Stearns.
On September 25, 2008, JPMorgan Chase bought most of the banking operations of Washington Mutual from the receivership of the Federal Deposit Insurance Corporation. It is now the largest U.S. Bank.
Wells Fargo entered into a merger agreement with Norwest, which was announced in June 1998.. The new Wells Fargo started off as the nation’s seventh largest bank with $196 billion in assets.
Wells Fargo acquired 13 companies during 1999 with total assets of $2.4 billion. The largest of these was the February purchase of Brownsville, Texas-based Mercantile Financial Enterprises, Inc., which had $779 million in assets. The acquisition pace picked up in 2000 with Wells Fargo expanding its retail banking into two more states: Michigan, through the buyout of Michigan Financial Corporation ($975 million in assets), and Alaska, through the purchase of National Bancorp of Alaska Inc. ($3 billion in assets). Wells Fargo also acquired First Commerce Bancshares, Inc. of Lincoln, Nebraska, which had $2.9 billion in assets, and a Seattle-based regional brokerage firm, Ragen MacKenzie Group Incorporated. In October 2000 Wells Fargo made its largest deal since the Norwest-Wells Fargo merger when it paid nearly $3 billion in stock for First Security Corporation, a $23 billion bank holding company based in Salt Lake City, Utah. Wells Fargo had total assets of $263 billion with some 140,000 employees.
In September 2008, Wells Fargo made a bid to purchase troubled Wachovia Corporation. Acquisition of Wachovia would expand Wells Fargo’s operations into nine Eastern and Southern states.
The acquisition was completed on January 1, 2009, creating a superbank with $1.4 trillion in assets and 48 million customers. It is now the fourth largest U.S. Bank.
3. The Federal Reserve System and who controls it.
Most of the following was taken from: 19 Reasons Why The Federal Reserve Is At The Heart Of Our Economic Problems
By Michael, on March 30.2011. And Wikipedia, The Free encyclopedia.
To understand the banking industry one must know about the Federal Reserve ( Fed) All banks are controlled by the Federal Reserve Act, which was passed by Congress in 1913 and is subject to Congressional modification or repeal.
When people complain about the economy, most of them blame either the Democrats or the Republicans for inflation, for the housing crash, for our unemployment and for the national debt. But the truth is that the institution with the most power over our economic system is the Federal Reserve.
Is the Federal Reserve a part of the federal government? No it is not, in fact, the Federal Reserve itself has argued in court that it is not an agency of the federal government. Instead, the Federal Reserve is a privately-owned banking cartel that has been given a perpetual monopoly over our monetary system by the U.S. Congress.
The Federal Reserve operates in great secrecy, it has never been subjected to a comprehensive audit and it is not accountable to the American people. Yet the decisions that the Federal Reserve makes have a dramatic impact on the lives of all Americans.
The Federal Reserve System, the central bank of the United States, conducts the nation’s monetary policy, supervises and regulates banks, and provides a variety of financial services to the U.S. government and to the nation’s banks.
Although the U.S. Constitution specifically gives Congress the power to create money, the U.S. Congress has given that power to the Federal Reserve and to the banking system.
When the government wants more money, the U.S. government swaps U.S. Treasury bonds for “Federal Reserve notes”, thus creating more government debt. The Federal Reserve creates these “Federal Reserve notes” out of thin air. These Federal Reserve notes are backed by nothing and have no value of their own.
The Federal Reserve then sells these U.S. Treasury bonds to investors like China and other nations. When no one will buy these Treasury bonds (mainly because the interest rates are too low) them the Federal Reserve buys them themselves. In fact, the Federal Reserve has recently been buying up 45 Billion U.S. Treasury bonds every month! This has the effect of monetizing the U.S. debt.
The Federal Reserve System is supervised by the Board of Governors. Located in Washington, D.C., the Board is a federal government agency consisting of seven members appointed by the President of the United States and confirmed by the U.S. Senate.
There are 12 Federal Reserve Banks located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Each reserve Bank is responsible for member banks located in its district.
The Wall Street banks of the New York Federal Reserve have the most influence over the system.
The Federal Reserve is a privately-owned banking cartel that is effectively owned and controlled by the Wall Street Banks.
Each regional Bank’s board consists of nine members. Members are broken down into three classes: There are three board members in each class. class A members are chosen by the regional Bank’s shareholders, and are intended to represent member banks’ interests. Class B board members are also nominated by the region’s member banks, but class B board members are supposed to represent the interests of the public. Lastly, class C board members are nominated by the Board of Governors, and are also intended to represent the interests of the public.
Note that Each regional Bank’s board has three members that represent member banks’ interests and six members that are supposed to represent the interests of the public.
This is what the law requires but life tells us things do not always work out this way!!
The Federal Reserve is committed to guarantee that the too big to fail banks will always stay solvent regardless of how much it will cost to bail them out!!!
The Federal Deposit Insurance Corporation (FDIC) closed 465 failed banks from 2008 to 2012. However the Federal Reserve has spent many Trillions of dollars to keep the too big to fail banks solvent.
This comment was made by Karl Denninger – The Market Ticker on the Cyprus bail out proposal.
Incidentally, everyone knows Spain (along with Italy) have a bunch of banks that are sitting on bad assets, right? And that they’ve not been written down, right? And they’re functionally insolvent, right?
Oh, and let us not forget that Cyprus just protected all the bondholders, who are allegedly behind depositors in terms of their protection in a bank’s capital structure and thus should have been wiped out before one Euro was lost by said depositors.
And what just happened in Cyprus would never happen in either of those places…. or anywhere else important, like here in the United States……. right?
PS: $100 bills in your hand have just been declared to be worth somewhere between 7-10% more than those “deposited” and “stored” in a bank. May I ask the following pertinent and rather timely question: Where are yours?