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Thread: Reuters - U.S. Banks Told to Make Plans for Preventing Collapse

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    Default Reuters - U.S. Banks Told to Make Plans for Preventing Collapse

    http://www.reuters.com/article/2012/...87905N20120810

    (Reuters) - U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.

    The two-year-old program, which has been largely secret until now, is in addition to the "living wills" the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.

    Officials like Lehman Brothers former Chief Executive Dick Fuld have been criticized for having been too hesitant to take bold steps to solve their banks' problems during the financial crisis.

    According to documents obtained by Reuters, the Federal Reserve and the U.S. Office of the Comptroller of the Currency first directed five banks - which also include Citigroup Inc,, Morgan Stanley and JPMorgan Chase & Co - to come up with these "recovery plans" in May 2010.

    They told banks to consider drastic efforts to prevent failure in times of distress, including selling off businesses, finding other funding sources if regular borrowing markets shut them out, and reducing risk. The plans must be feasible to execute within three to six months, and banks were to "make no assumption of extraordinary support from the public sector," according to the documents.

    Spokespeople for the five banks declined to comment. The Federal Reserve also declined to comment.

    Recovery plans differ from living wills, also known as "resolution plans," which are required under the 2010 Dodd-Frank financial reform law. Living wills aim to end bailouts of too-big-to-fail banks by showing how they would liquidate themselves without imperiling the financial system.

    "Recovery plans are about protecting the crown jewels," said Paul Cantwell, a managing director at consulting firm Alvarez & Marsal. "It's about, 'How do I sell off non-core assets?' The priority is to the shareholders. A resolution plan is about protecting the system, taxpayers and creditors."

    The recovery plans are being used as part of regulators' ongoing supervisory process. In Britain, recovery and resolution plans have both been part of the living will requirements for large banks.

    Mike Brosnan, senior deputy comptroller for large banks at the OCC, said the regulator continuously evaluates contingency planning at the banks and savings associations it supervises.

    "Recovery plans required of the largest banks are helpful in ensuring banks and regulators are prepared to manage periods of severe financial distress or instability affecting the banking sector," he said.

    This summer, nine global banks submitted living wills to the Fed and Federal Deposit Insurance Corp, and regulators released the public portion of the documents.

    The recovery plans requested in 2010, meanwhile, have received little publicity. The names of the banks required to submit them have not been previously disclosed, and Reuters obtained them only through a Freedom of Information Act request.

    The Fed supplied Reuters with the letters requesting plans from banks, but not the banks' actual plans because they were deemed confidential supervisory information. The regulator said it was withholding 5,100 pages of information.

    MOVING FURTHER FROM DISASTER

    Five years after the financial crisis, concerns remain about whether blow-ups at big banks could lead to another round of taxpayer bailouts. Trading losses have cost JPMorgan nearly $6 billion so far, and scandals such as the alleged rigging of an international interest rate benchmark have only highlighted the risks lurking inside big banks.

    These disasters have damaged banks' reputations, but not their balance sheets. Most are still profitable, and in recent years the five banks have improved their capital bases and liquidity. They also have been subjected to annual Federal Reserve stress tests that measure whether the banks have sufficient capital to weather severe economic scenarios.

    Bank of America and Citigroup, in a sense, have already been executing the kind of moves called for in the recovery plans. Both have been selling off non-core operations and assets to streamline their sprawling businesses, after receiving multiple bailouts during the financial crisis.

    Bank of America in June 2011 told Fed officials that it could shed branches in some parts of the country if it needed to raise capital in an emergency, a person familiar with the matter said in January. The proposal was part of a series of options provided to the Fed, including issuing a tracking stock for Bank of America's Merrill Lynch operations.

    But just because the bank proposed selling branches does not mean it's a desirable move or highly probable, the person said. In the past year, Bank of America has shown progress in building capital without such actions. Its Tier 1 common capital ratio increased to 11.24 percent of risk-weighted assets as of June 30 from 8.23 percent a year earlier.

    Tier 1 refers to a bank's core capital and has been the main focus of regulators in assessing a bank's capital adequacy.

    MENTIONED IN PASSING

    The banks' chief risk officers, and in the case of Citigroup, Chief Executive Vikram Pandit, received letters in May 2010 instructing them on what to include in the recovery plans. The requests stemmed from January 2010 crisis management meetings held by regulators. The letters sent to the five banks were nearly identical.

    Each plan was to address severe financial stress at the firm, as well as "general financial instability." The plans should be capable of being executed ideally within three months, but no longer than six months, the documents said.

    The plans should "make appropriate assumptions as to the valuations of assets and off-balance sheet positions," the documents said.

    Recovery plans have been mentioned in public before, but only in passing. In testimony to Congress in July 2010, Fed Governor Daniel Tarullo said the "largest internationally active U.S. banking organizations" were working on recovery plans. The initiative stemmed from work led by the Financial Stability Board, a body that coordinates the work of international financial regulators, he said.

    In a presentation in March, JPMorgan Chase said it had a recovery plan in place and said it was ordered by regulators. The presentation was organized by Harvard Law School and was closed to the media at the time, but is available online. (here)

    (Reporting By Rick Rothacker in Charlotte, North Carolina; Additional reporting by David Henry in New York; Editing by Leslie Adler)
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    Member Zippyjuan's Avatar
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    In a couple of years, these "recovery plans" will be in some file someplace, forgotten and it will be back to "business as usual".
    I am Zippy and I approve of this message. But you don't have to.

  4. #3

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    Bank of America in June 2011 told Fed officials that it could shed branches in some parts of the country if it needed to raise capital in an emergency, a person familiar with the matter said in January. The proposal was part of a series of options provided to the Fed, including issuing a tracking stock for Bank of America's Merrill Lynch operations.
    All these things would take months, if not years, to implement. And obviously the government would need to approve every minute detail.
    .[QUOTE]"Every great new thought was opposed. Every great new invention was denounced. The first motor was considered foolish. The airplane was considered impossible. The power loom was considered vicious. Anesthesia was considered sinful. But the men of unborrowed vision went ahead. They fought, they suffered and they paid. But they won." - Ayn Rand, The Fountainhead[/QUOTE]
    ..
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    I blog at Red State Eclectic, and I tweet here,.

  5. #4

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    Everyone who thinks Goldman Sachs and JP Morgan will NOT get as much government cash as needed to keep them from folding raise your hand. Have I got an investment for you!
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  6. #5

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    According to documents obtained by Reuters, the Federal Reserve and the U.S. Office of the Comptroller of the Currency first directed five banks - which also include Citigroup Inc,, Morgan Stanley and JPMorgan Chase & Co - to come up with these "recovery plans" in May 2010.
    Hmmm... does this mean we can finally end the charade of the Fed being an independent body?
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  7. #6

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    Quote Originally Posted by CaptUSA View Post
    Hmmm... does this mean we can finally end the charade of the Fed being an independent body?
    No, they are an independent unconstitutional body who performed a coup d'état on America first in 1861, killed a bunch of Americans, and then took complete control in 1913 as a world dominating empire. They have no lawful powers. They do not obey the Constitution. They are unlawful counterfeiters with unlimited money which they use to buy thugs (military & police), politicians, and indoctrinate the people through public schools to obey them and complicit media to perpetuate the propaganda. They are an independent body alright, but they are not lawful. They are the Khazars.
    Last edited by Travlyr; 08-14-2012 at 01:05 PM.

  8. #7

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    Quote Originally Posted by Zippyjuan View Post
    In a couple of years, these "recovery plans" will be in some file someplace, forgotten and it will be back to "business as usual".
    And some small chunk of the trillions of dollars that the Fed and our government handed to the banks will have been completely lost, and some lucky, well-connected people will be living in luxury on a beach somewhere thanks to it.

  9. #8

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    Quote Originally Posted by Travlyr View Post
    No, they are an independent unconstitutional body who performed a coup d'état on America first in 1861, killed a bunch of Americans, and then took complete control in 1913 as a world dominating empire. They have no lawful powers. They do not obey the Constitution. They are unlawful counterfeiters with unlimited money which they use to buy thugs (military & police), politicians, and indoctrinate the people through public schools to obey them and complicit media to perpetuate the propaganda. They are an independent body alright, but they are not lawful. They are the Khazars.
    And people say there are Jew haters among Ron Paul's supporters. Hard to believe, even though the discredited by science Kazar nonsense is still circulating around here.

    I choose to believe it's merely people trying to be fair to Arabs and Persians and Palestinians. But then, I believe in unicorns as the answer to our transportation problems.

  10. #9

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    Spokespeople for the five banks declined to comment. The Federal Reserve also declined to comment.
    lol.
    Something, something, something...Whatever my rage for the day.

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  12. #11

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    Quote Originally Posted by BKom View Post
    And people say there are Jew haters among Ron Paul's supporters. Hard to believe, even though the discredited by science Kazar nonsense is still circulating around here.

    I choose to believe it's merely people trying to be fair to Arabs and Persians and Palestinians. But then, I believe in unicorns as the answer to our transportation problems.
    Blaming all evil on widely unknown secret conspirators is a lot easier than to understand bad systematic socio-economic incentives or the fact that free market-solutions may sound counter-intuitive for many well-intentioned people ("let them fail", etc).

    Covering the real issues with arcane theories won't do any good. Telling them fantasy stories about an old, evil, Jewish/Satanic tribe that originated from the Caucasus a thousand years ago and is on a mission for world domination won't "convert" well-educated people to the cause of liberty. And it won't help in finding good solutions either, because the real problem is not a bunch of evil people, but a lack of understanding of free market principles by both the public and so-called "experts".

    If only the real problems of humanity were "the Khazars", that would be lot easier to deal with.

  13. #12

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    Quote Originally Posted by Travlyr View Post
    No, they are an independent unconstitutional body who performed a coup d'état on America first in 1861, killed a bunch of Americans, and then took complete control in 1913 as a world dominating empire. They have no lawful powers. They do not obey the Constitution. They are unlawful counterfeiters with unlimited money which they use to buy thugs (military & police), politicians, and indoctrinate the people through public schools to obey them and complicit media to perpetuate the propaganda. They are an independent body alright, but they are not lawful. They are the Khazars.
    Quote Originally Posted by BKom View Post
    And people say there are Jew haters among Ron Paul's supporters. Hard to believe, even though the discredited by science Kazar nonsense is still circulating around here.

    I choose to believe it's merely people trying to be fair to Arabs and Persians and Palestinians. But then, I believe in unicorns as the answer to our transportation problems.
    I probably should have called them descendants of the people from Khazaria rather than calling them The Khazars so that you could not claim they have been disproved by science. I don't know what kind of junk science BKom believes in but as all readers here at RPF can easily determine by clicking on the link I provided, the Khazars were real and they were empire builders.

    Also, not all Khazars are Jews, and not all Jews are Khazars, so for BKom to make the false claim that I am a Jew hater is disingenuous bullshit. I never said anything of the sort. I seriously don't care what anyone else believes as long as they are not harming me or those I genuinely care about. Using the anti-Semitic hate claims as a defense against counterfeiting is so last century.

    Quote Originally Posted by Danan View Post
    Blaming all evil on widely unknown secret conspirators is a lot easier than to understand bad systematic socio-economic incentives or the fact that free market-solutions may sound counter-intuitive for many well-intentioned people ("let them fail", etc).

    Covering the real issues with arcane theories won't do any good. Telling them fantasy stories about an old, evil, Jewish/Satanic tribe that originated from the Caucasus a thousand years ago and is on a mission for world domination won't "convert" well-educated people to the cause of liberty. And it won't help in finding good solutions either, because the real problem is not a bunch of evil people, but a lack of understanding of free market principles by both the public and so-called "experts".

    If only the real problems of humanity were "the Khazars", that would be lot easier to deal with.
    I did not blame all evil on the Khazars. That is a false claim. I claimed that they are in control of the money supply and they are warmongers. That is proven through a study of history.

    Even the Federal Reserve Bank of Minneapolis admits to the conspiracy of international bankers and politicians to take-over the United States money supply. Here is their website: Paul Warburg's Crusade to Establish a Central Bank in the United States
    The Jekyll Island Expedition
    One evening in early November 1910, Warburg and a small party of men from New York quietly boarded Sen. Aldrich's private railway car, ostensibly for a trip south to an exclusive hunting club on an island off the coast of Georgia.

    In addition to Warburg and Aldrich, the others, all highly regarded in the New York banking community, were: Frank Vanderlip, president of National City Bank; Harry P. Davison, a J.P. Morgan partner; Benjamin Strong, vice president of Banker's Trust Co.; and A. Piatt Andrew, former secretary of the National Monetary Commission and now assistant secretary of the Treasury. The real purpose of this historic "duck hunt" was to formulate a plan for US banking and currency reform that Aldrich could present to Congress.

    Even Warburg at first questioned the motives of this gathering, not knowing if he was included because the group knew what he preached and was interested in what he had to offer, or if he was to be involved as a conspirator in order to be muzzled. He soon saw that the Jekyll Island conference was pulled together because, as Warburg later wrote, Aldrich was "bewildered at all that he had absorbed abroad and he was faced with the difficult task of writing a highly technical bill while being harassed by the daily grind of his parliamentary duties."
    I was merely pointing out the difference between lawful money (sound money) and unlawful currency (counterfeit currency).
    The Federal Reserve System is an unconstitutional system.

    My claim is that the descendants of Khazaria were smart enough to understand how to control the lives of others by conquering them.

    The Khazars knew two fundamental truths of economic life.
    1. War Economy is Profitable - Conquering other people through battle creates jobs (weapons, uniforms, transportation, food, and on and on, etc.), and the other benefit of a war economy is pillage and plunder of the conquered land. War economy pays big bucks to whomever rules. War Is A Racket
    2. Counterfeiting is Profitable - This truth has been handed down since the time of Babylon. Whoever controls the money supply, controls the people. For example, let's say that you would like to control your own money supply, so you go to your garage and print as many $100 FRNs as you wish. The Feds currently control the money supply (unconstitutionally) and they will throw you in jail for competing with them. They control you because they control the money supply.


    My first claim that they took-over the money supply in 1861 stems from the U.S. Department of the Treasury when they first started cranking the printing presses. They claimed the power to print money (Greenbacks) to pay for the war. Yet, there is no basis for that in the Constitution. They just took that power so that they could war on the South. ... Big Bucks.

    After the war of Northern Aggression, the U.S. returned to the Constitutional use of silver and gold until 1913 when U.S. Government was overthrown by Warburg, Aldrich, et. al. in a peaceful coup d'état. They did that so that they could continue their warmongering by funding both sides of the wars. Max Warburg funded the Germans and his brother Paul Warburg was in charge of the U.S. money supply. War Economy Pays Big Bucks.

    America has been on the warpath ever since. WWI, WWII, Korea, Iran, Vietnam, Middle East... militarizing all over the world because they control the money supply (unconstitutionally) and profit from the wars just like their ancestors did.
    Last edited by Travlyr; 08-15-2012 at 07:43 AM.

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    Default Reuters - U.S. Banks Told to Make Plans for Preventing Collapse

    The Plan: QE3, QE4, QE5, ... QE13, ... QE42.

  16. #15

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    Quote Originally Posted by Travlyr View Post
    The Plan: QE3, QE4, QE5, ... QE13, ... QE42.

  17. #16

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    Quote Originally Posted by Steven Douglas View Post
    My precious.
    (always sounded like an addict of easy money)

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