Citi, JPM, Wells: Capital Requirements are ’so Great Depression I’
Oct. 16 (Bloomie) — C(sh)itigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. told U.S. regulators that raising capital requirements next year would be lame, and argued that lending and the economic recovery would be harmed.
Banks need three years to continue the farce of solvency until I can complete my looting operation and parchute out of this mess and retire to someplace with umbrellas in the drinks, Citigroup Chief Financial Officer John Gerspach said yesterday in a letter to regulators. Requiring banks to “assume the risk-based capital effects immediately, or even over one year, is so Great Depression I,” he wrote.
Previousy asleep at the wheel regulators, including the Federal Reserve and the Federal Deposit Insurance Corp. asked if anyone had a good comeback for the diss in Gerspach’s letter and hether to give him more time to stuff his pockets before the whole system imploded. The rule passed in May by the fasb eliminates off-balance-sheet trusts known as Qualifying Special Purpose Entities, forcing banks to move billions of dollars of assets and liabilities onto their books. Fortunately for the banks, no one bothered to tighten up the rules on what constituted an ‘asset’. However, not satisfied with the unbelievably lax standards and obviously fraudulent asset pricing now going on with unperforming loans, JP Morgan weighed in on behalf of the banks as well.
The capital requirements “will have a significant and negative impact on our ability to leverage up to the hilt again in a purposefully fraudulent ponzi pyramid, and leave the taxpayer holding the bag again,” said the letter from JPMorgan, the New York-based bank that this week reported its biggest quarterly profit since the subprime-mortgage market collapsed in 2007 – a totally coincidental occurance.
“We strongly support a longer phase-in period for the rule changes. The longer we kick the can down the road, the more looting we can do, and the deeper we put the serf class down where he belongs,” according to JPMorgan’s letter, which was signed by Managing Director Adam Gilbert. The change would take effect for annual reports after Nov. 15.
‘We’ll Take Our Ball and Go Home’
The rule “could lead to the result that the banks will have to actually maintain safeguards against blowing up, like actual capital, and loan loss reserves. In fact, every $1 billion of additional capital held from newly consolidated assets ‘crowds out’ more than $15 billion in loans. In other words, if you don’t play by our rules, we’ll take our ball — you know, the one that you gave us when you robbed the treasury and gave us several trillion dollars – and we’ll go home,” Paul Ackerman, Wells Fargo’s treasurer, wrote in a letter yesterday to the Fed, FDIC, Office of the Comptroller of the Currency and Office of Thrift Supervision.
“That sort of fear mongering will definately get the attention of politicians,” said Robert Willens, a former managing director at Lehman Brothers Holdings Inc., who now runs his own tax and accounting advisory firm in New York. “Hell, who in their right mind would politick for living responsibly within your means. It’s been shown time and again that that issue is a loser with the voters.”
Citigroup, the New York-based bank that yesterday reported a third-quarter profit of $101 million, argued that bringing off-balance vehicles onto its books would lead to responsible lending and the probability that the sort of thing that happened the last few years would never happen again, Citigroup said.
“Hey, it took us 80 years to get rid of Glass-Steagal,” Gerspach wrote. “Why on God’s green earth would we want that kind of responsible, boring, banking again when we have 300 million serfs and their progeny who will pay for our mistakes when we blow up. Look if you need something to tell the serfs, tell them that we’ll cut off their credit cards, and jimmy’s school loan programs. That should do it.”
Citigroup spokesman Stephen Cohen and JPMorgan spokesman Brian Marchiony declined to comment beyond the content of the letters. Julia Tunis Bernard, a spokeswoman for San Francisco- based, also declined to comment.
Poo’ed Loans
Lenders booked ‘profits’, before reality caught up with the U.S. subprime mortgage market, by selling ‘pooled’ loans (aka poo’ed loans) to off-balance-sheet trusts, which repackaged them into mortgage-backed securities. Despite the haunting similarity to what Enron pulled in the first part of this decade, no one could imagine that these would go wrong. Banks sold those securities to other off-balance-sheet vehicles they sponsored, concealing from investors that the securities were backed by deteriorating home loans. After all, concealment, lies, fraud, hey, isn’t that what accountants are supposed to do for investors?
Luckily, a massive effort by the Federal Reserve and other ‘regulators’ have covered this turd for another couple of months before the mess blows sky high and Americans are forced to live within their means. Despite multiple inquiries we were unable to get any banks to go on the record on the rumor that they are attempting to avoid the pain of coming clean with their loan books until after dec 21, 2012 on the off chance that the Mayans were right.
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