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The Rock ’em Sock ’em Fed Comes Out Swinging

45 | By Shah Gilani

Last Tuesday, January 14, 2014, the Federal Reserve finally had enough.

After supposedly looking into big banks ownership of commodity-related infrastructure operations (like warehouses, oil barges, and utilities) for the last two years, which came on the heels of their 2003 review of the same issues, the rock ’em sock ’em Fed came out swinging.

Now, they said, they needed to look at “all aspects” of what they’ve been looking at for two years. That’s not because they were looking the other way before.

It’s because now they’re thinking big and asking themselves, “What would be the systemic risk to the system if a big bank owned something like the Deepwater Horizon (the BP well that blew out and cost almost $50 billion to date), or Japan’s Fukushima Daiichi nuclear power plant (which was destroyed by an earthquake-related tsunami and is costing god only knows how much) and the bank got sued, and their share price collapsed, and depositors fled, and that caused a run on other banks, and put the entire financial system at risk?”

Yep, it’s time for a study, they said. And because they are maybe thinking about some related rule changes, in maybe a year or two or three (these things take time, you know), they put out a request for comment. You and I have 60 days to submit ours, and so do the big banks.

But that’s not the “timing” part of this story…

The timing of the Fed’s announcement on Tuesday was just amazingly coincidental, a stroke of almost incalculable luck.

Here’s why…


Because the very next day, Wednesday January 15, 2014, at a hearing called by the Senate Banking Committee’s Subcommittee on Financial Institutions and Consumer Protection, a few well-meaning senators got all huffy about banks having their greasy hands all over stuff related to commodities.

The subcommittee wanted to know why nothing has been done to stop a handful of big banks from ripping off businesses and consumers by manipulating (that’s code for jacking up) commodity prices by controlling “gateway” commodity-related infrastructure? Inquiring minds want to know!

Of course, the banks believe that because they own this stuff, they have a right to manipulate it because it’s a free market, after all, and if you own the stuff… well, you know.

How’s that for timing? The senators had a Federal Reserve bloke give testimony, which was part of the Fed’s amazing luck, because the fellow had nothing much to say. Except of course that they had just put out a notice that they were looking into it and were waiting for public comment before taking a couple of years to put their ideas for new rules down into some regulation ledger so it could go out for even more public comment.

As you can imagine, it was another productive subcommittee hearing.

What the senators kind of wanted to say (but didn’t) was that their brethren in Congress back in 1999, in a sweetheart deal of a law proudly named for the senators who put the whole thing together, maybe shouldn’t have allowed big banks to continue to own commodity infrastructure assets.

But that was probably an oversight in the otherwise great Gramm-Leach-Bliley Act (also known as the Financial Services Modernization Act of 1999), the final nail in the coffin of the old Glass-Steagall Act, and which famously ushered in the era of mega-giant Transformer Terminator banks, the 2008 credit crisis, and the ensuing Great Recession.

Maybe you remember, maybe you don’t. The good Senator Phil Gramm, from the ten-gallon hat state of Texas, retired from his hard work in 2002 after delivering the law to his banker friends. He then rode off into his sunset years to ply his retirement dreams of barely working for millions of dollars a year as vice chairman of the investment banking division of mega-giant Transformer Terminator Swiss bank UBS AG (NYSE:UBS).

Yeah, that UBS. The one that has had to pay millions of dollars in fines for manipulating mutual fund prices, for money laundering, and for helping thousands of U.S. citizens evade taxes. The same UBS that, in 2002 (note the year), acquired Enron’s energy trading assets. Yeah, that Enron, the bastion of corporate fraud and corruption that managed to hide billions in debt from its investors in the biggest accounting scandal in American history. The same Enron that included Wendy Gramm, wife of Senator Phil Gramm, on its board of directors. (If you want to read UBS’ full rap sheet, check this out: http://www.corp-research.org/UBS).

You see, it’s all about timing.

So, is now the time for big banks to be forced out of their commodity manipulation and hijacking businesses?

Give me some time to think about that.

Shah

45 Responses to The Rock ’em Sock ’em Fed Comes Out Swinging

  1. Benton H Marder says:

    While we’re at it, give some time to thinking about the connivance between the likes of JP Morgan and the New York Fed manipulating the price of gold and silver and the little matter of leasing out and rehypothecating gold belonging to other countries and the stonewalling about court-ordered repatriation for forensic audit.
    “The gold is gone!
    The gold is gone!
    Vault is empty as can be,
    Empty as a birdless tree!
    Ohhh, what’ll I do?
    The gold is gone!
    The gold is gone!”

    Don’t look for it at Fort Knox. That’s prbably gone, too—–gone to pay off the oil sheikhs to use the dollar to price the oil. What’s left is going to Asia—never to return.

    • Ron Umberger says:

      Connivance-Webster=commission of an illegal act by another. And rehypothecating.

      How sophisticated we R, any way you say it, a thief is a thief. Actually more than just a thief, one who in deed has lost all integrity.

      The Age of Kali Yuga

    • Tim Keetis says:

      How about a class action lawsuit against JPM and UBS by all who lost money in gold and silver last year. Then we form up a posse to go out and hang the offending lawmakers and CEOs.

    • Mike Demyan says:

      The Fox(Bank) guarding Hen House(Fort Knox)!

      The banks should not be in the banking business. They can’t keep their grimy hands off our money. Time to take it all back – before they spend ours too.

    • John says:

      I’m sure there is truth in what you say.
      I’m also pretty sure you are long gold and that’s hurting you.

      Gold at $1200 is a play on total systemic failure of the financial system.
      “The house of cards comes tumbling down, but physical Gold owners can sleep tight on their shiny coins.”
      Like the markets were acting in January 2009: end of the world. Didn’t happen.
      The rest of the markets have caught up to the idea that in fact, total systemic failure of the financial system is not upon us. Gold has not caught up to that.

      Eventually, the dollar goes to zero. I agree. Eventually, everything goes to zero.
      But if rampant inflation is not upon us right now, $1200 gold is a losing proposition right now.
      One day, it will be worth that any more.
      But is that 2014, or is that 2100, or 2500?

      I know, these words are vile putrid heresy to the faithful. Sorry.

  2. Jack Lucero says:

    It’s about time we all get our money back from all the big bank’s that were to big to fail,I think that would only be fair.

  3. Ron says:

    Keep the heat on them Shah. They can’t stand the light of day or the truth. Thanks for exposing the fraud and corruption.

  4. H. Craig Bradley says:

    THE SHIFTING PICTURE

    No doubt another commodity boom will develop and probably under the next president before the FED finalizes their possible rules and regulations about commodity aggregation. What luck, the next guy/gal gets to “hold the bag”. “Bridge- Gate” might just be a pleasant memory in comparison. However, future regulations probably won’t be near soon enough to prevent another 2007-2008 global commodity price surge and recession.

    Don’t forget, by then China will be trading most commodities and currencies in their own markets in direct competition with London, Chicago, and New York. Change is ongoing and has many facets, as well. Bottom line, it may not mean as much if the FED does anything in the future unless ALL the other Central Bankers are also in it together, as is presently the case with printing money or currency debasement.

  5. Michael Padula says:

    The Federal Gov’t absolutely not let Big Mega Banks control the price of Commodities by Controlling the Infrastructure that supply those commodities. My Golly that’s a NO BRAINER!

    • Ken says:

      Jim Traub says: January 20, 2014 at 3:03 pm

      So, Shah, what is the plan of action for us?Well stated, Jim !

      ————-

      Well stated, Jim !

  6. Frank Laauwen says:

    Big Banks will always dictate because they already control your money, otherwise they won’t be big anymore. Unlike Mc Donalds who dictates the price of a Big Mac, although they only can do this as long as you’re hungry. So this doesn’t appear to be a business for Big Banks so they will fight tooth and nail to hang on to whatever gives them power.

  7. Stewart Spector says:

    To allow markets to work, transparency is required. Any major/minor financial institution should be required to disclose it inventory position of each commodity owned, on a daily, weekly, or monthly basis.That would be in addition to commodity exchanges which report data daily and industry groups that report monthly.
    Since all markets prices are a function of the marginal supply/demand complete transparency is required buy all players. That would allow market to judge the real supply demand position.
    If the banks want to play the game, they must reveal positions to some centeral reporting system, like the FRB just like they record there financial information.

  8. Pal Adino says:

    You guys crack me up. Plan of action! Thanks for exposing them! Give me a break. Nothing is going to happen to these banks. The Treasury, Bush, Fed & Obama all bailed out the banks when they went submarine using and continuing to use taxpayers funds and the public swallowed it like a southside hooker, smiled and then asked for seconds. Seconds we all will get and you all are blowing dope if you think the administration is going to NOT double-down on these banks. …..Why cuz like Willy said ‘Cuz that’s where the money is!’ and every Congressman knows where the money comes from. I have given up, packed up and left, my culo is down South and ain’t coming back. In six more months I will have but a few bucks remaining in the USA or the dollar. I suggest everyone get righteous about a CYA plan rather than trying to fight the FED. You will loose! Get off your behind folks, they don’t care about you; Get real! [I mean the rant with love folks, get ready for the sodomization of American …. again!]

    • Terry says:

      I don’t necessarily disagree with your ideas, except the idea of leaving. We may not be the greatest generation, but we are the generation here now so it is up to us to come to the aid of our country. I think we have the best weapon of mass destruction to destroy the DC establishment, the vote. IMO DC is the world’s largest financial-political establishment that needs to broken into two parts. Currently the govt collects taxes, then gives billions to the owners of the fed res, the financial part of the establishment in the form of interest on the national debt. Part of this no strings attached money funds campaigns for the political part of the establishment. All legal of course and to be repeated as often as required by law to have elections. We the taxpayers are actually just spectators as the financial and political teams work together to keep us all at bay, barefoot and pregnant if you will, but demand we always pay our taxes. And now the SC is into levying new taxes.

      The govt, actually elected officials since they make all the decisions, is not allowed to establish a state religion, better known as the separation criteria. I presume to make driving religion out of America with make work lawsuits for lawyer? Shovel ready well paid jobs for lawyers? This of course apparently does not keep elected officials from establishing a pagan religion or even the religion of Secular Humanism as a state religion?

      The point is the govt should not be allowed to establish a financial institution, a bank. Just so pols can withdraw an endless amount of cash to suit their fancy. After all the three Rs of govt are. The Role of the govt is to Regulate, not Rule.

      The govt has several monopolistic powers. It, the govt, can tax, it operates the courts, it passes laws, it operates the military. And is empowered to put money in circulation w/o any need to borrow money from a bank. Not even THE bank that is a system. Our govt does not need and has never needed to have a national credit card to get money, cash, from a fed res ATM. In exchange for a promissory note by elected officials to pay interest. Endless interest at that since the only way the principal on the national mortgage can be reduced is for there to be a budget surplus in lieu of a budget deficit with the surplus being used to buy back govt interest bearing paper. This is where money comes from. The govt. It is not generated by the economy. The economy only determines who has the money put into circulation by the govt, by our elected officials.

      • Pal Adino says:

        I wish you well Terry. I do. But your commentary is no more solution than mine. I believe in math in this instance; I believe in science in most others. There is no way to repay the debt that has already been accumulated, ever…. except by printing more paper money. The alternative is default which the powers that be will not allow until they have sucked every drop of life from the taxpayers and what used to be a form of capitalism.

        In the mean time by conservative estimates the USA has 100 trillion dollars in unfunded future liabilities and the Congress is still spending… racking up just short of another trillion every 12 months. The voters have not even demanded Congress stop spending yet, actually the opposite is true. In every poll of taxpayers or non-taxpayers the citizen wants Congress to reduce spending but not on their district, their social program, their social security, their medicare, their welfare, their …. you name it.

        The fabric of America is broken, irreparably, and I have not read nor found anything that contradicts that in thirty years. Americans have no intention of stop watching TV long enough to save their own rears. They will but blinders on and vote for more spending and as J. Patrick Moynahan the ONLY liberal I have respected politically in decades… “You are entitled to your own opinion but not your own facts.” or thereabouts.

        The math is not deniable. If you want to tilt at windmills … you are luck as that is still a legal right in the USSA.

        Take care all but you better get some type of plan together if you want to be swimming on top. That ends my rant part deaux.

  9. Terry says:

    IAQ 1 The media presents info on how much money Gates, Buffett, etc. have. But no one ever mentions how much wealth the owners of the fed res have? With 30 billion per month paid in tribute, oops interest on the ND, somebody is probably fabulously wealthy? Wouldn’t you think?

    IAQ 2 Congress is quick to investigate what all of us non-govt types are doing. Presumably in an effort to keep us honest? But who investigates them? At one time the press and others claimed to be the watch dogs of the govt. These watch dogs have either switched sides because they are on some sort of establishment/govt welfare or have retired from the watchdog business? Coupled with this lack of oversight is the attitude demonstrated by the GOP and ACA. They all voted against it, but since then have played like P Pilate and have washed their hands of trying to eliminate this legislative abomination, this scourge on the citizens of this country? The Tea party people, sort of like a political tiny little horn, tried to keep ACA from being funded, but got massacred by the GOP branch of establishment. Even the SC is part of the establishment with their fine = tax ruling that made ACA constitutional instead of determining ACA as written was constitutional? I guess this is what empathy does to lawyers? Cause they are full of it, empathy I mean towards the establishment. It really seems to me that the taxpayers/voters are pretty much citizens ruled by a govt that is appointed by the few with lots of money. You know. Fines, oops taxation for not buying govt HC insurance. An O version of taxations w/o representation!

    IAQ 3 I wonder where the budget went? Why did it, the budget, disappear about the time gearing up to pay to implement ACA got started? Is it because they started QE bucks to fund all the ACA start up costs and this type of money is off budget, takes govt revenues above and beyond the debt limit which is a no no. After all we are in a post sequester era now and the debt limit should no longer be challenged by deficit spending. It is possible that Denmark is not the only place where something is rotten?

    IAQ 4 Where is the money coming from to give govt employees a raise? What did they cut to be able to redirect funds to the “deserving” few? And what have they done to deserve a raise? Surely this is not a reward for silence? Everybody know what happened to Snowden. What our elected officials are now telling us subjects is legislation is above reproach, it is good even if it is bad, and don’t question what we are doing. So get used to it! And if you don’t NSA will finger, oops find out who you are! And the media reports this as good for Amerika!

  10. Sabin Brunet says:

    The fed is a smokesscreen.
    By that time they will have taken in so much money that we will not be able to stop them.What will we do the day they suddenly surprise us with a Cyprus-type reset of our accounts?
    Make another 2 year study? I don’t understand how all these people can keep a straight face?

  11. Tom A says:

    It appears to me that however well intentioned government intervention and regulation is, the complex nature of these beasts always leaves loopholes for the powerful entities (big banks and the like) to squeeze through. When will government learn that a simpler set of rules with well defined terms would be much more effective in accomplishing goals.

  12. Dave Z says:

    Old Glass-Steagall:New Glass-Steagall: We need a version of it with teeth like the old law but the Big Bank firewall is in the Senate and in the House. Anyone for public financing of campaigns?

  13. John Heeckt says:

    Ah, given the worst president in the history of our nation and a congress which has no interest in the welfare of the American people but will readily sell what little soul it has to the power mongers of the banking world and their allies, we may futilely whine and cry about these gross injustices but nothing will come of it. What will happen when the collapse comes?

    Sadly, at this grave point in our history we are without a leader.

  14. fallingman says:

    Phil and Wendy Gramm…can you think of two more execrable characters? They’re both drawing fat pension checks when they should be making license plates.

  15. Ranchman says:

    The Fed, with its inherently evil system of fractional reserve lending, has manipulated the masses of the world for just over a hundred years now. Fiat currencies have run their course, per the globalist’s agenda. They knew this was coming 20-30 years ago and have planned accordingly. They’re hell-bent on creating the next system of financial control, a single world currency for all to enjoy…hooray! The people will soon realize full well what’s being done to them. It’s inevitable. So, too, will be their reaction.

  16. Henry says:

    Shah,

    you are brave. I admire you! I bet you are getting mail not that nice sometimes. Only one question: “Why does it take so long in a person’s life span to see so clearly and shrug of many, many of the illusions”?

  17. Ramesh shah says:

    LME Metal warehouses in Timbuktoo(?), Zinc in NewZealand or Gold Warehoused in Somalia…try getting physical delivery… 6 months !! Gimmicks played out by Goldman, Glencore etc…but they have “protection ” of CB’S, SEC etc who take years before any “action” is sanctioned….Govt by the GS for the GS …Board by GS

  18. Tom Baldwin says:

    Tell me again why banks are so necessary…..all they seem to do is create calamity in everything they are involved in……

  19. Ron A says:

    The COT, Comex and Jamie Diamond should all be in jail- If you haven’t heard of Ted Butler he has a web site that explains the manipulation of silver by JPM

  20. Itzik Janowitz says:

    You have given us insights that no one else would say Shah. Too bad that the system is set up to fail if the banks lose their ill gotten gains. Unfortunately I had worked on wall street and had seen those bank brokers all lined up in the bars at 7:45 AM before work to numb their brains not to think about all of their dirty dealings they had done the night before, and to what they were about to do during that day. You can not have a conscience and be a banker or broker. Meanwhile the carrot has grown much larger to sucker in more and more sheep. The normal hard working people do not have the time to concentrate on all of the politics that keep them running on the tread-mill and not getting ahead or falling behind, and making them believe they are moving, when in reality they are standing in place. If you expect anything to change you are mistaken as the lawmakers blind themselves by counting their insider tradings and not impacted by the laws that they pass. Greedy, insulated, ungodly, people that they are, who feel that no matter what happens, they will be able to be untouched by any current events, or those of the future.
    Shah, be careful, they do not like ANYONE THAT SPEAKS THE TRUTH.
    God bless you and be well.

  21. sandra says:

    UBS, (u be suckers) to all those big banks they will crash before they will give in or pay off the next one that try’s to lord over them and its not like there’s a shortage in those that won’t take the money and look the other way and start another committee to look into the problem again

  22. Jeff P. in Canada says:

    We probably would not be in this situation if the masses were at all interested in what is happening in the financial markets. But they aren’t. I am beginning to think that the baby-boomers were the last demographic group that were educated enough to be able to pay attention to the shennanigans that are going on. Just take a look at who it is who elected the current administration, and then ask yourself, how many of them can even speak the English language properly, let alone take the time to read up on what is happening in our world. It is the uneducated masses that have created the problem by not caring. They don’t care because they are not educated enough to understand. And so where does that leave the rest of us? We have to have our own exit plan, that’s where. We need to cover our own asses because nothing is going to change until there is a catastrophy sufficient to wake up the masses. That could mean blood in the streets, a natural disaster, or just plain old poverty for the masses. If you look at what has happened in Ukraine over the last several decades, bank failures with no protection for depositors, huge unemployment, total crumbling of infrastructure, you will see what it takes for the masses to wake up and hold their leaders accountable.
    I have spent time in both Russia and Ukraine, and they are starting to evolve, more so in Ukraine than Russia, into countries where the masses are awakening.
    Thankfully, I am Canadian, and we have a good government and a solid banking system that is held together by good legislation. Sadly, I can see the same creeping degredation of the overall education of the general population, as has happened in the USA. Hopefully our masses can learn from what has happened south of the border.

  23. Bernard B says:

    Nothing is going to happen. The average American does not know and does not want to know, and as a whole is financially dumber than a sack of turnips. Congress is not going to do it, because they are all in on it, top to bottom, both parties. They do their flim flam act and we buy it. There is no way to get the sack of turnips to get a constitutional convention even started, much less completed. And even if they did, they would find a way to have our supreme court overturn it. Nothing short of a revolution will cause any change. And as long as the government hand outs continue to a growing majority, nothing will happen. However, if the dollar fails, or they stop paying the hand outs, there will be riots in the streets. However, the government has already prepared for that by arming cities with swat equipment and arms. Notice the swat equipment when they went door to door after the Boston bomber? Speaking of which, why don’t we hear about him any more? Or the one that shot up Ft. Hood. Or the one that killed his daughter? Is that an armed drone I hear above?

    • Pal Adino says:

      Shakespeare. Hamlet Act 3, scene 1, 114–121 comes to mind [not at you only about thit sit.] …

      “Hamlet:
      Get thee to a nunn’ry, why woulds’t thou be a breeder of
      sinners?”

  24. THOMAS BURKE says:

    Shah !

    I smell something that seems very bad. If in fact we have no gold to back our dollar and the Chinese have it all what happens if things tank? Will the banks be forced to close? will everything skyrocket and will the government seize our accounts to keep the country afloat? Will chaos take over the country? Is this why FEMA has bought up all the ammo plus 2700 armored personnel carriers and tons of food !!!!!!!!!!

  25. Richard Waldren says:

    Sh ah, you are toooo hard on these crooks. After all, our lobbyists and crooked congressman as thelet them do it legally. Poor guys, remember when they were taking away insider trading from senators and representatives one ol boy had the nerve and chutzpa to say they did not make enough money on pay so they had to do something else. So our crooked elected officials lose their insider trading benefits, then they just rewrite the law and pass it so they have business as usual. THERE IS ABSOLUTELY NO REASON TO PUT PEOPLE IN JAIL FOR INSIDER TRADING. THEY NEED TO LET ROGER RAMJET OUT OF JAIL. IF IT GOOD ENOUGH FOR CROOKED CONGRESSMAN IT IS GOOD ENOUGH FOR ANYONE. AFTER ALL THIS THE AMERICAN WAY.

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