THE DOT - if this turns orange or red be alert

Thursday, June 11, 2009

Fraud by the FED makes it quite obvious that they play an insane game with taxpayers

The FED is acting beyond legal structures not only that they have made very destructive calls and decisions on behalf of taxpayers which cost them hundreds of billions directly and indirectly rather trillions. Directly the AIG 100 % payouts were criminal and have cost 200 bil so far. That they gave away those perks to JP Morgan is definitely not legal as well and their bond purchase program has cost taxpayers at least 50 bil so far as bond prices dropped 10% so far and they will not admit that as they hold them to maturity but it will be losses after all.
Bernanke has lied to the Senate in many cases and should be fired and even prosecuted together with Paulson for fraud as they gave away billions of undeserved profits to banks in many cases which is robbery of taxpayers in an unprecedented dimension. The Obama admin does not show the slightest interest to go after them and the consequences should be presented to them either. The whole system is so corrupt that nobody will do the necessary unfortunately but that's a democratic effort the people have to undertake if they do not wish to be robbed finally by all their money and rights going forward after big parts have disappeared already.
This 'green shoot' bulls... is just a distraction from the reality as stocks trade at a 100% premium to reality right now and as in many cases those paper profits will disappear in some months. All they want is to get the 4 tril in money market funds to buy so they can dump the stocks they gathered in this manufactured rally assisted by the FED.

Excerpt

Republican Staff Say E-mails Show Fed Overstepped on Merrill

June 11 (Bloomberg) -- House Republican staffers preparing lawmakers for a hearing today said Federal Reserve and Treasury officials overstepped their authority and pressured Bank of America Corp. to complete its Merrill Lynch & Co. purchase.

In a memo written for Republicans on the House Oversight Committee and obtained by Bloomberg News, the staffers cite what they identify as excerpts from internal Fed e-mails to support their stance. The committee issued a subpoena to the Fed June 9 for documents related to the transaction.

Bank of America Chief Executive Officer Kenneth Lewis, who is scheduled to testify at the hearing in Washington, told New York state investigators in February that he was pressured in December by Fed Chairman Ben S. Bernanke and former Treasury Secretary Henry Paulson to complete the Merrill acquisition amid mounting losses at the brokerage firm.

The memo said that Richmond Fed President Jeffrey Lacker wrote in a Dec. 20 e-mail that Bernanke intended to “make it even more clear that if they play that card and they need assistance, management is gone,” referring to a threat by Bank of America to break off its deal with Merrill. Bernanke indicated he saw the threat as “not credible,” the memo said.

That was a “gun placed to the head of Bank of America to go through with the merger,” the Republican memo said. “Government officials crossed the line by applying inappropriate pressure on a private institution to go through with a business deal.”

Declined to Comment

Lacker’s district includes Bank of America’s headquarters in Charlotte, North Carolina. Fed Board of Governors spokeswoman Michelle Smith in Washington declined to comment. Richmond Fed spokeswoman Laura Fortunato and New York Fed spokeswoman Deborah Kilroe also declined to comment. Paulson spokeswoman Michele Davis didn’t respond to a telephone message requesting comment.

In an April letter to Representative Dennis Kucinich, chairman of the committee’s domestic policy subcommittee, Bernanke said the Fed “acted with the highest integrity” during its discussions with Bank of America on Merrill Lynch and didn’t seek to withhold any information from the public on Merrill Lynch’s losses. Merrill Lynch reported a $15.8 billion loss during the fourth quarter.

The Fed never threatened to terminate or take supervisory action against anyone at Bank of America if they disclosed any of the company’s or Merrill Lynch’s information on losses or other matters, Bernanke said in the letter.

‘Severely Damaged’

The Republican memo said e-mails indicate Bank of America’s relationship with federal regulators “would be severely damaged if it failed to go through with the merger,” and that Bernanke saw the company’s threat as a “bargaining chip.”

“The Fed and the Treasury, jointly acting as a committee, decided the interests of shareholders were going to be subverted to what they perceived were bigger threats,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. and a former research director at the Atlanta Fed. “In this case, those threats were undefined.”

The Republican staff memo says an e-mail from New York Fed economist Adam Ashcraft noted that investors might view Bank of America’s retreat from the deal as a “smart move” as they walked away from “a black hole.”

Eisenbeis said the Fed and the Treasury should have consulted the Securities and Exchange Commission whose mandate is to protect shareholders. SEC Chairman Mary Schapiro called the agency’s absence in the discussions “troubling” in April.

‘Should Have Known’

“Shareholders should have known” that the government was “trying to purposefully have Bank of America shareholders absorb the losses for the takeover,” said Tim Yeager, an associate professor of finance at the University of Arkansas and a former economist at the St. Louis Fed.

“At some time it becomes so material that shareholders need to know,” Yeager said.

The Republican memo said none of the Fed documents show that government officials “explicitly instructed Bank of America employees” not to disclose the Merrill Lynch losses. At the same time, there was “at least the intent to influence disclosure decisions in order to allow the government to manage the situation in an orderly manner,” the staffers said.

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