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Bailed-out banks face probe over fee hikes: report
(Reuters) - U.S. banks that received money under the Troubled Asset Relief Program (TARP) are facing a probe over increases in rates and fees, the Wall Street Journal said. The Congressional Oversight Panel, the body named by Congress to oversee the federal bailout, is working on a report examining instances of potentially inappropriate lending by banks that got taxpayer capital, according to the paper.
"The people who are subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending," Elizabeth Warren, chairwoman of the Congressional Oversight Panel told the Journal in an interview.
"In a sense, we're asking taxpayers to pay twice," Warren told the paper.
The U.S. Treasury Department's $700 billion TARP was intended to provide lenders with more capital to spur lending and improve the economy.
Since TARP was launched in October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized as predatory by consumer advocates, the Journal said.
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HSBC says considering sales of office buildings
HONG KONG (Reuters) - Europe's largest bank, HSBC Holdings (0005.HK)(HSBA.L), confirmed on Monday it was considering selling three of its major office buildings and said it had received interest from potential buyers.
HSBC, which recently raised nearly $19 billion in a rights issue, said it may sell and lease back-office buildings in New York, Paris and London, including its headquarters at Canary Wharf.
London's Sunday Telegraph reported that HSBC was considering selling three of its biggest office buildings to raise 2.7 billion pounds ($3.98 billion).
"We are taking a look at the market, yes," spokesman David Hall said in Hong Kong.
"There are people interested in buying at an appropriate price," Hall said.
He declined to give further details.
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ING to unload $10.6 billion in assets
AMSTERDAM (Reuters) -- Dutch financial services group ING Group said on Thursday it plans to divest operations worth up to $10.6 billion to reduce risk and will focus its banking activities on Europe.
ING (ING), which was loss-making in 2008 and got a €10 billion injection from the Dutch state last October, said in a statement it wants to divest non-core activities worth €6 billion to €8 billion, or 10 to 15 businesses.
ING, which also said its insurance business would in future focus on life insurance and retirement services globally, had previously targeted divestments of €2 to €3 billion and had already sold a stake in ING Canada.
ING, the biggest Dutch bank and insurance group measured by balance sheet assets, joins banks such as Royal Bank of Scotland and U.S. Citigroup (C, Fortune 500) which are cutting operations after being hit by the credit crisis and getting state aid.
"It is making us focus on, first of all, making sure we get through the crisis but also to set ourselves up after the crisis. To have a position in markets where we can lead," ING Chief Executive Jan Hommen told reporters.
It's time to breakup Goldman Sachs, Citigroup, and for that matter any bank or holding company deemed too big to fail. It's not just the "too big to fail" hazard that is troubling, it's also the power these corporations have and the potential to abuse that power that is also troubling.
Please consider the article Incredibly Shrinking Market Liquidity as posted on the Zero Hedge blog.
A very interesting data point, also provided by the NYSE, implicates none other than administration darling Goldman Sachs in yet another potentially troubling development. The chart below demonstrates the program trading broken down by the top 15 most active NYSE member firms. I bring your attention to the total, principal, customer facilitation and agency columns.
**see article at link for chart**
Key to note here is that Goldman's program trading principal to agency+customer facilitation ratio is a staggering 5x, which is multiples higher than both the second most active program trader and the average ratio of the NYSE, both at or below 1x. The implication is that Goldman Sachs, due to its preeminent position not only as one of the world's largest broker/dealers (pardon, Bank Holding Companies), but also as being on the top of the high-frequency trading/liquidity provision "food chain", trades much more often for its own (principal) benefit, likely in tandem with the other top dogs on the list: RenTec, Highbridge (JP Morgan), and GETCO.
In this light, the program trading spike over the past week could be perceived as much more sinister. For conspiracy lovers, long searching for any circumstantial evidence to catch the mysterious "plunge protection team" in action, you should look no further than this.
Readers know that I am not a subscriber to Plunge Protection Team (PPT) theory. However, I am open to the idea that it is possible for Broker Dealers or Bank Holding Companies to be trading their own accounts ahead of customer accounts and/or advising clients (or the public) one way (and trading the other), on purpose.
That is not a direct accusation. Instead it is a statement of what is possible due to lack of sufficient separation between trading groups, advisory groups, and a myriad of hedge funds sponsored by the broker dealers and bank holding companies.
Following on the circumstantial evidence track, as Zero Hedge pointed out previously, over the past month, the Volume Weighted Average Price of the SPY index indicates that the bulk of the upswing has been done through low volume buying on the margin and from overnight gaps in afterhours market trading. The VWAP of the SPY through yesterday indicated that the real price of the S&P 500 would be roughly 60 points lower, or about 782, if the low volume marginal transactions had been netted out. And yet the market keeps on rising. This is an additional data point demonstrating that the equity market has reached a point where the transactions on the margin are all that matter as the core volume/liquidity providers slowly disappear one by one through ongoing deleveraging.
Unfortunately for them, this is not a sustainable condition.
As more and more quants focus on trading exclusively with themselves, and the slow and vanilla money piggy backs to low-vol market swings, the aberrations become self-fulfilling. What retail investors fail to acknowledge is that the quants close out a majority of their ultra-short term positions at the end of each trading day, meaning that the vanilla money is stuck as a hot potato bagholder to what can only be classified as an unprecedented ponzi scheme. As the overall market volume is substantially lower now than it has been in the recent past, this strategy has in fact been working and will likely continue to do so... until it fails and we witness a repeat of the August 2007 quant failure events... at which point the market, just like Madoff, will become the emperor revealing its utter lack of clothing.
So what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades. When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility. Furthermore, high convexity names such as double and triple negative ETFs, which are massively disbalanced with regard to underlying values after recent trading patterns, will see shifts which will make the November SRS jump to $250 seem like child's play.
Originally posted by GreenBicMan
but in my series 7 book - no where has it mentioned futures contracts - were you tested on this??? my book is from 2003 or 04 I believe... am i missing something??
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Gold rises above $890 on worries over GM, banks
NEW YORK (MarketWatch) -- Gold futures rose above $890 an ounce Monday, as bargain hunters bought the metal after its third straight weekly loss while worries over General Motors and bank earnings raised the metal's investment appeal.
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Girard Gibbs LLP Files Class Action Lawsuit against Citigroup Inc.
SAN FRANCISCO, Apr 13, 2009 (BUSINESS WIRE) -- The law firm of Girard Gibbs LLP ( www.girardgibbs.com...) has filed a class action lawsuit on behalf of purchasers of Citigroup, Inc. 8.50% Non-Cumulative Preferred Stock (NYSE: C-M) issued pursuant and/or traceable to the May 2008 public offering of approximately 81.6 million Series F depositary shares. It charges global banking corporation Citigroup and certain of its affiliates, officers and directors, and the underwriters of the offering with violations of the Securities Act of 1933.
The class action, entitled Pellegrini v. Citigroup Inc. et al, 09-cv-3669, is pending in the United States District Court for the Southern District of New York. The plaintiff is represented by Girard Gibbs, a law firm specializing in the prosecution of investor class actions with extensive experience in actions involving financial fraud. If you would like to serve as lead plaintiff in this action, you must move the Court no later than June 2, 2009. If you wish to discuss your rights as an investor, please contact Girard Gibbs LLP ( www.girardgibbs.com/citi.asp) or call 866-981-4800. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of his or her choice, or may choose to do nothing and remain an absent class member.
The complaint alleges that Citigroup consummated the offering pursuant to a false and misleading registration statement and prospectus. Specifically, Citigroup sold approximately 81.6 million Series F depositary shares at $25 per share for proceeds of approximately $2 billion. After Citigroup completed the offering, the company ultimately announced multi-billion dollar write-downs associated with its exposure to subprime mortgages, related collateralized debt obligations, commercial real estate loans and investments, as well as loans to companies with low credit ratings, causing the price of the Securities to decline dramatically.
A recent report has revealed that Chinese foreign exchange reserves have declined dramatically owing to reduced exports in recent months.
The People's Bank of China disclosed on Saturday that the reserves -- the world's largest -- had risen 16 percent year-on-year to tally USD 1.95 trillion as at the end of March. "Even with a growth of USD 7.7 billion for the first quarter of this year, the increase was USD 146.2 billion lower than the same period in the preceding year," Xinhua reported.
Analysts say the diminutive growth rate is linked to fluctuations in the value of non-US dollar assets and money flows under the capital account.
"Changes of foreign exchange reserves in the first quarter were mainly driven by non-US-dollar assets' volatile fluctuation," said Liu Yuhui, an economist with the Chinese Academy of Social Sciences (CASS).
During this period - mainly January and February, non-dollar foreign currencies plummeted considerably against the US dollar. The revaluation resulted in significant depreciation of nearly 40 percent of the country's non-dollar assets.
In unison, the country's trade surplus decreased throughout the first quarter as a result of declining foreign demands for Chinese exports.
Exports dropped 17.5 percent in January, 25.7 percent in February and 17.1 percent in March. In February, China's trade surplus tumbled by USD 34.3 billion to just USD 4.8 billion.
Official statistics indicate that during the first two months, actually-utilized foreign direct investment dropped by 26.2 percent.
A great proportion of China's foreign exchange reserves are invested in US treasuries and banknotes.