Skip to comments.Exclusive: U.S. banks told to make plans for preventing collapse
Posted on 08/11/2012 8:24:02 AM PDT by EBH
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.
(Excerpt) Read more at reuters.com ...
I wonder: what are the fine-print details of how the Obama administration chooses to define the phrase "act rationally in times of distress."
Nut-job Conspiracy Theory Ping!
To get onto The Nut-job Conspiracy Theory Ping List you need to threaten to report me to the Admin if I dont add you to the list...
The banks are in control.
This is not news. I heard this almost a week ago!
In my five years working in the corporate office of a top 30 bank I spent more time sitting in conference rooms writing disaster plans that it would probably surprize many of you. Weather problems, floods, terrorist attacks, the failure of the electronic payment systems, loss of our data center, and yes, economic collapse were all discussed. In order to meet the requirement of the Basal accords, we all had to have documented plans. I probably still have the huge three ring binder in my office.
This is not “news” to anyone with knowledge of the banking business.
Guess what? The “banks” don’t give a crap about your money. As long as the guys at the top bail out with their millions is the only thing they worry about. Case in point—Goldman Sachs recently dropped “probe”. They got away again because they got away with it the first time. No charges, etc. Until there is REAL jail time involved, we can expect this to continue.
I regularly go to our small local bank for notary services. I spend a little time chatting with the staff. They’re telling me that bank regulators have been meeting with the administrators over the last few weeks. The discussions have not filtered down to the staff yet, but there is an increased level of tension amongst the admin people.
I wonder if this is along the same lines.
They are telling them how the government is going to stop withdrawals and runs on banks. What I have been doing is to draw down to about half my cash on a regular basis and putting it in my bank. If I get a check (paychecks included), half goes to the Simmons First National Bank & Trust (Simmons Mattress Company that is) guaranteed by S&W Security Company.
If Obama is defeated, deposits can be repatriated.
Ground intelligence is one of FR’s strengths. Get back to us when you hear more:)
Likewise, an honest accounting of the financial statements of the US Government's financial statements, with realistic accounting for the present value of liabilities for future payouts for Medicare and other entitlements would reveal the impossibility of the government ever coming close to the ability to pay them.
But, the truth is unwelcome and won't be faced until "pretend and extend" fails completely and utterly. Which WILL happen. The only unknown is how long that will take.
Gee, whatever could happen within 3 - 6 months? It couldn't be Hussein being issued his walking papers and him pulling the plug, huh?
PS to earlier post: In addition, the massive, many-trillions of $ in derivatives exposure that the biggest banks have, most of which are tied to interest rates and have unimaginable exposure to counter party risk in ever-more-likely black swan scenarios, have the very real potential to destroy the already Zombie banks entirely. Tick, tick, tick....
Now that’s a campaign poster that ought to be slapped on every street post around
Regulators come through every year or so. They are jerks. Really, I would guess there is nothing to see there. Examiners ruffle the feathers in little banks because more stuff falls on fewer shoulders. Been there done that.
True and you may be right. What seemed different in the explanation I got was, “the unexpected and frequency of the meetings in the last couple of weeks.
The bank was poorly planned and the glass meeting room was placed immediately off the entrance. I could see the room full of people and it wasnt the staff. They were all at their desks. I asked if the “cheeses were planning their strategies for making us rich?” “No, the regulators came unexpected and theyve been in lots of meetings. Lots of new regulations getting implemented.”
Unexpected frequency of meetings....
They are about to be sld.
Unexpected frequency of meetings....
They are about to be sold.
Could be . . .
Don't know quite what you mean by that, but you don't have to be a conspiracy theorist to see quite a number parallels between the Franklin D. Roosevelt administration in the 1930s and the Obama administration today.