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frank part knowing jesse i zinger had a terrific piece in the land scroll what's
inside america's backs
and and
you see some devastating effects
first of all america's get it they don't trust the banks in fact
only twenty-one percent respondents said that they have faith index now of course
again
among are uh... powerful that people in new york in washington the politicians
in the media
salomon bank so some issues but you know the rock solid and we did the stress
that's they're fine
well we're not buying it
and were right as your about to see
but what's interesting
ok fine american people are by but neither are the investors
now these are guys on wall street and they don't wanna invest in the banks
cuz they call the banks big black boxes meaning we have no idea what's inside
seventy nine percent of investors have no or trust
in the financial system
is amazing
seven nine percent of investors don't believe in the backs
it's not just
investors it's not just that american people to sanction the people who work
for the banks to
let me give you a list here
four purcell axial morris family and dean witter
uh... or if you say morris a leading winner sally project x c_f_o_ of
citigroup
david kamensky axial merrill lynch jeremy former ceo citigroup sandy weill
legendary former axia of citigroup minnesota in the right way it's
uh... but very well know one of the top anchors in the country for a long time
they have called for break-up of the big banks tighter regulation
and a return to glass steagle laws 'cause they all had been inside the
banks they were on the banks and they know they are loaded to explode if you
don't get them under control if you don't break them up
bina destroy this economy
they uh... how bad don young he's uh... financial accounting standards
board member that is a private group
that's supposed to do the county status for the backs
after having served on the board
don young says
quote after serving on the board
buying no longer trusts bank county
now that's a guy incharge
im bank accounting
if you are a look at it
and you're crazy if you trusted but he's not alone and other board member of that
same financially tennis tennis board
and trot
when asked do you trust bank accounting said quote
aps so
loot lee not
gee i wonder if they're set to explode
buzzing of these writers did was they looked into wells fargo
now wells fargo supposed to be the most conservative back there
warren buffett has large ownership interest in there
and it's usually heralded as like boy those guys on to the congress
other crazy bankers
orwell succinct so they look at them disclosure forms
but what they found out they were incredibly they on purpose number two
when steve got to the schools use in all the different levels
of uh...
transactions they make it got scarier scary
so the court one part of the disclosure
it was like us or customer accommodation
now wait a minute
this is
a huge profit center for them
how could customer commendation be such a big profit center is that hey i helped
a guy and with his
checking account and we made money off that no no no no no
this is what they called setting the market
they accommodate the customers
by doing tremendous amount of training of derivatives on their own
they can help set the market
in fact they explain in their own is going to forbes quote
customer accommodation trading
also includes net gains related to market maybe activities
in which we take positions
to facilitate
expect
customer order flow
why is that so important i might sound complicated if you don't know
about these disclosure
because they're saying owner know
which is market making you know gaya act or tremendous investor paid well like
the new deal which rests a tremendous investor beat and it we just simply make
that we'll have a if that's all they did that would be understandable
but they say
we're doing this
to facilitate x-spam
the customer order fourteen other words
the customers have not asked for that trade
they're doing that trade on their own
and so if it blows up it blows up on that
but they have to find an excuse they can just go out there and say well what
we're doing
hundreds of billions of dollars in his you're about to see some
some pieces try is always with a risky trades
for the bank by the way also using customer money
they have to say no it's expected customer demand
it's a joke
of the writers found out that there was three different levels of risk
level one was understandable level to that really scary and level three was
instead
let me sweat
the banks level three estimates
are generated primarily
from model-based techniques that you significant assumptions
not to observable in the market
okay let me decide without woodford
so i said are we got all these level one things and we keep we have some sense of
how much they're worth level till we don't have the as good a sense we're
kind of guessing
in this one
all listen money that we have in these transactions
even though we tell everybody were point totally financially sound
we have no idea what their work
we use in every year the substance
of not observable in the market
no i don't know what it means
no one has any idea what they're worth
now if u make a bet with a friend of yours
and if you lose the bet you don't know how much you're gonna lose
that would be an issue review lose ten bucks you can lose a thousand straight
it meant that really hurts every loss of alesha box
but they don't know the size of these bats
and they're not but that doesn't box their bed trillions
here we go
now in the past
companies like and ron
did these
tricky accounting things
that too
levels one through three or at least on the books but they were newsome
off the books transactions
so became a little word for it
special-purpose antique
game in town the name right
it's a special promise entity
the special-purpose is the cheek appstate it's i want to all of my box
companies all of my books
you're immediately realized
i'm committing mass of fraud
so now they don't do that that's discredited
they change the worst doing the same exact thing but it's now called
variable interest entity
so it's off the books it's not even level grades were some level three rest
and what's the interest
it's a variable interest entity
okay but we're thinking okay
but these guys have a lot of this error for example wells fargo has it you know
over a hundred forty billion dollars in cash from the start that sounds like a
lot right
well it's not so much when you find out just their variable interest entities
coalescence our
one point four six trillion dollars
that's the stuff that's what the books
one point four sixty trillion dollars
if you don't know exactly what you all within exactly what you alone
when you're making bets awful one point four six trillion dollars
if it goes a little wrong when he may have missed your bank
and when wells fargo goes down
then all the banks that are connected embedding with wells fargo
they also go down and here's something really scary that's not an article that
i know from other articles that i have it
all the company is now due thirty day more
now why is that obscure fact important here
is short term funding
if the banks go under
all the company's immediately run out of money
he can't pay their vendors they can't pay their employees the campaign
anything
'cause there's no one to lend them the thirty day money
loops
these guys are going to drag the entire global economy down with them
i haven't even gotten to the worst part
now wells fargo
actually does
twice as much
derivatives trades
as it does
variable interest entities
it does to point the trillion dollars it's true
tool company
members are will blow up the economy last summer and two thousand
if you think that's pat remember i told you that wells fargo is actually the
most conservative back
i think this is the crap you find the most conservative
you're ready for
uh... bank that is often praise j_p_ morgan my god these guys are they gotta
figure that recently had a six billion dollar blow up on derivative trading
uh... endeavors and all my guide jamie dot it once you get we had any errors at
all by god's well that's probably the worst of it
you know how much
in notional derivative trades j_p_ morgan s
seventeen too
trillion dollar
five times the size of the u_s_ accounting
now they will argue hey listen the that's the notional value
that doesn't mean that the whole set me to truly in dollars and is at risk
you know we've got that someone said we got that some of the other side you
can't lose them all
so not the entire seventy trillion is at risk
always a percentage of it
all that so comforting
scott maybe only seven trillion dollars that risk what difference does it mate
well i tell you what's the excellent side of the u_s_ economy
any little error
constand
doesn't billions of dollars perhaps a hundred billion dollars pick them up and
it's like anna something transaction i don't know talks anyway o as there is no
hard evidence that is our verbal
anybody who
the reads this and that authors of the article came the same conclusion
we are no world over
we're not big spread didn't think
these guys are still completely are really out of control
an explosion uh... that is centered around the banks
is inevitable
i mean the idea that we can fix this in time is a joke nobody's even trying to
fix it
so will they make a mistake one of these guys at one of these banks
that then leads to
uh... at cascading
series of paris
and that's that can't be paid
absolute
write it down in stone
these banks are going to
collapse
they're gonna collapse the u_s_ economy with it
and almost the entire world accompli
probably at the end of last for about