Sentinal Ruling: You Have No Legal Right To Your Money.

Jon Corzine stole $1.6 billion from segregated client accounts during the collapse of MF Global, and now he has a legal precedent to officially support him thanks to the August 9th  Sentinel Management Group decision.

This egregious ruling not only sets precedence for futures brokerages, it sets precedence for every depository institution.   In other words, your funds--customer funds--are now the legal property of the mega-banks. That's right. The banksters can legally use your money to fund its casino transactions with legal impunity.  Not that it makes much difference in an environment where the rich and powerful are above the law.

But, for what its worth, this 7th circuit court decision--that puts Bank of New York Mellon ahead of former customers of Sentinel in the line of those seeking the return of money lost--punishes innocent account holders everywhere. Because, to be sure, the appeals court that affirmed an earlier district court ruling that the bank had a "secured position" on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money, did so in order that its ruling will be applied in perpetuity.

“Basically, there is a new 7th Circuit opinion saying that there is no reason to impose a constructive trust on a lender's takings of customers' funds from client commodity firms that were used (inappropriately) to secure the firms' borrowings, as long as the lender can say that it did not know WITH CERTAINTY that customers' funds were being repledged. Negligence and misappropriation (vs. knowing criminal intent) are now a sufficient excuse for letting the lender keep the money and go to the head of the line for distributions in bankruptcies of the client commodity firms. Spread the word.” -- Walker Todd of AIER, former legal counsel, Federal Reserve Banks of New York and Cleveland

Links:

Sentinel indictments: Feds say 2 reaped $500 million in fraud

"Federal authorities announced Friday the indictment of Eric Bloom and Charles Mosley, the former chief executive and head trader, respectively, of bankrupt Sentinel Management Group Inc., on charges of defrauding some 70 customers of more than $500 million.

The case, described as one of the largest criminal financial fraud cases prosecuted in federal court in Chicago, stems from the sudden August 2007 collapse of Sentinel, a long-standing, well-connected money-management firm based in Northbrook that allegedly misled clients by exposing their accounts to a portfolio of highly risky derivatives.

$1.6 Billion in Missing MF Global Funds Traced

Email Ties Corzine to Missing Funds

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Sacrificing Real People to Boost an Illusion.

Despite Warren Buffet's huge $5 billion vote of "confidence" in Bank of America, the "too big to fail" institution is slashing 30,000 jobs - after it's already cut 6,000 jobs - in an effort to reverse a crisis of confidence in its investors. It's the single largest job reduction by a US company this year, since the post office cut 30,000 jobs, last year, since General Motors cut 47,000 jobs in 2009. The cuts which effect Bank of America's consumer businesses represent 10% of South Carolina's work force.  This year, when the real unemployment rate is over 20%.

Not to mention the poverty rate in America is rapidly increasing, especially for children under 18. And middle class wealth is falling. 

The government draws the line of poverety at an income of $22,314 a year for a family of four and $11,139 for an individual.  Oh, and Merck is also cutting 13,000 jobs. So, boosting investor confidence? In what? The only thing I can think of is that the uber rich' will continue to get uber uber rich. Because that's the only segment of the population that is benefitting.

Of course, this is nothing new. Banks and corporations often slash jobs in order to boost confidence, boost their bottom line, and whether we want to face it or not, boost the profits in order to line the already lined pockets of the powers behind these institutions. The results - the rich getting richer by the day - prove that this is true.

But isn't there something inherently wrong with a system that sacrifices its people, real people, for an illusion? For excessive profit? To maintain institutions that are too big to fail? Because, after all, confidence is not real. Confidence is often misleading and not congruent with reality, and that often leads to delusion and deception. In fact, over-confidence inflated the housing bubbles that burst in 2008, bringing our economy to its knees. And don't kid yourself, there are a few more bubbles yet to burst. Still, we're willing to sacrifice real people in order to create the illusion that everything is just fine...when, everyday, it seems, it gets worse and worse.

Then, there is the problem that if Bank of America collapses, there may not be enough money in the FDIC to cover the losses that will occur. That's right. Bank of America just might collapse the FDIC. In August, the FDIC rejected Bank of America's mortgage accord because it doesn't have enough money information to evaluate the settlement.

And I thought this was interesting. Adulos Huxley, from zerohedge posted a Goldman Sachs Case Study that may or may not predict

Buffett branding is just a first line of defense in the rescue plan.

9/15/2008 | GS=$131 | Lehman Bros files for Ch. 11

9/16/2008 | GS=$129 | AIG bailed out

9/23/2008 | GS=$121 | Buffett buys $5B of GS @ $115/share (under market)

10/3/2008 | GS=$124 | TARP made into law

10/28/2008 | GS=$91 | US Treasury buys $10B of GS @ $122.9/share (over market)

11/21/2008 | GS=$47.41 | low

11/24/2008 | GS=$65 | QE 1 begins; Fed buys MBS

For Banksters of America, we can expect same order of bailouts about a month apart with BAC falling 20-30% each interval:

8/25/2011 Buffett (private deal)

9/23/2011 US Treasury (federal)

10/28/2011 QE 3 (international overlord)

It does make one wonder why such a savvy investor like Buffet would invest $5 billion into what appears to be a powderkeg of debt.

Links:

Bankrate.com
Poverty Call to Conscience Tour

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Megabanks Continue to Devour America's Banking System.

Regulators seized seven small banks last week. That brings the total U.S. bank failures to 103 so far this year compared to 57 at the same time last year. The FDIC now estimates that their funds will experience a $60 billion reduction due to additional bank closings between now and 2014. The agency's deposit insurance fund stood at negative-$20.7 billion at the end of the first quarter, and the FDIC estimates that the seven bank failures on Friday will reduce the fund by another $431 million.

Meanwhile, the six biggest banks in the United States (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to 60% of America’s gross national product. In the mid-1990s, these "six banks" had less than 20%. Their assets were less than 20 percent of the gross national product.

These megabanks are slowly transferring the wealth of our nation to themselves and to the international financial interests that control them. They can make money no matter what happens in our economy because as bank credit continues to contract  - outstanding consumer credit fell $2.2 billion; real estate lending contracted $9.2 billion; and commercial industrial loans slid $5.1 billion - they continue to make money hand over fist.

As Matt Taibbi so eloquently put it in his article, The Great American Bubble Machine,

"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Anyway, the megabanks continue to report very large profits as they devour enormous shares of the U.S. banking market.  The new reality is that the legislation and regulations implemented over the last few decades were deliberately designed to continue the consolidation of power under way right now, while we the taxpayers financially suffer as we continue to pay the price.

To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive.

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Obama Wants Increase Federal Insurance on Deposits to $250,000

Obama wants to include increasing federal insurance on deposits from the current $100,000 to a $250,000 in an effort to "boost small businesses, make our banking system more secure, and help restore public confidence in our finanical system", according to CNN, this morning.

“Yesterday, within the course of a few hours, the failure to pass the economic rescue plan in Washington led to the single largest decline of the stock market in two decades.

While I, like others, am outraged that the reign of irresponsibility on Wall Street and in Washington has created the current crisis, I also know that continued inaction in the face of the gathering storm in our financial markets would be catastrophic for our economy and our families.

At this moment, when the jobs, retirement savings, and economic security of all Americans hang in the balance, it is imperative that all of us – Democrats and Republicans alike – come together to meet this crisis.

The bill rejected yesterday was a marked improvement over the original blank check proposed by the Bush Administration. It included restraints on CEO pay, protections for homeowners, strict oversight as to how the money is spent, and an assurance that taxpayers will recover their money once the economy recovers. Given the progress we have made, I believe we are unlikely to succeed if we start from scratch or reopen negotiations about the core elements of the agreement. But in order to pass this plan, we must do more.

One step we could take to potentially broaden support for the legislation and shore up our economy would be to expand federal deposit insurance for families and small businesses across America who have invested their money in our banks.

The majority of American families should rest assured that the deposits they have in our banks are safe. Thanks to measures put in place during the Great Depression, deposits of up to $100,000 are guaranteed by the federal government.

While that guarantee is more than adequate for most families, it is insufficient for many small businesses that maintain bank accounts to meet their payroll, buy their supplies, and invest in expanding and creating jobs. The current insurance limit of $100,000 was set 28 years ago and has not been adjusted for inflation.

That is why today, I am proposing that we also raise the FDIC limit to $250,000 as part of the economic rescue package – a step that would boost small businesses, make our banking system more secure, and help restore public confidence in our financial system.

I will be talking to leaders and members of Congress later today to offer this idea and urge them to act without delay to pass a rescue plan,” -- Barack Obama.

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