What in the World is Going on with Banks this Week? Emergency Meetings, Banker Summits, Crashing European Banks, and the Worst Bank Reports Since the Great RecessionBy David Haggith It is rare for presidents to meet with the chair of the Federal Reserve. The last time President Obama met with Janet Yellen was in November of 2014, a year and a half ago. It is even more rare for the vice president of the United States to join them. In fact, Ive heard but havent verified that it has never happened in a suddenly called meeting with the Fed before. For security reasons, the president and vice president dont regularly attend the same events. There are, of course, many planning sessions or emergency meetings where they do get together, but not with the head of the Federal Reserve.Emergency meetings where the VP is included in the planning session would include situations related to dire national security in case the VP winds up having to take over. (George Bush and Dick Cheney were exceptional to the point that everyone commented on how often the VP was included in meetings with the president, but I always figured that was because George Bush couldnt think and speak without Cheney acting as the ventriloquist.) In fact the meeting with the prez and vice prez is so rare that the White House is bending over backwards to assure the entire nation that thepresident is not meeting with Yellen to try toinfluence the Fed, which is required to act independently of politics (so they claim). According to the White House, President Obama is meeting with the Fed chair and Biden to discuss the nations longer-term economic outlook, even though Yellen just told the entire nation that the economy was strong and had arrived nearly back at full health. Thepresident says they will be comparing notes. Do their notes about the nations outlook disagree? Compare notes sounds sufficiently vague to cover everything imaginable. White House spokesman Josh Earnest said both Obama and Yellen are focused on ways to expand economic opportunities for the U.S. middle class. He called the meeting an opportunity for the two to trade notes while emphasizing that Yellen makes decisions about monetary policy independently. (SFGate) Either such meetings are, indeed, extremely rare, or the White House doth protest to much because they spent more time this week emphasizing whatthe president was not going to do than what he was going to do in assuring us all that the presidentwill not try to influence Yellen. The president has been pleased with the way that she has fulfilled what is a critically important job, Earnest said. He added that Obama has the utmost respect for the independent nature of her role. Earnest also said that,even in a confidential setting Obama would nothave a conversation that would undermine the Feds ability to make critical financial decisions independently. Im waiting to here the next words trust us! If such meetings with the Fed are so rare they require careful defensive explanation, why the sudden call of the meeting, oddly timed between two specially called, emergency meetings of the Fed or, at least, expedited meetings of the Fed.It cantjust be that the president wants to plan what he will be saying at this weeksG-20 conference, if hes to speak there. That kind of planning would happen in advance because one knows the conference is coming. One striking peculiarity of the presidents meeting with the Fed is that it appeared to have been called immediately after the Fed announced Mondays expedited meeting of the Board of Governors. We are in an election cycle, and I already speculated in my last article that, with the anti-establishment, Fed-hating candidates Sanders and Trump doing so well in their bids for the presidency, we could be sure the Administration would be doing all it can with the Fed to put some accelerant on this economy and forestall the recession that I believe we have already begun. A recession would prove Trump and Sanders right in their statements about a coming recession or about the failed recovery actions of the Fed and Wall Street.So, the Fed and the President have every reason to work together to make sure an announcement of recession never happens. That could be what comparing notes on the economys future means how do we assure the economy doesnt fall apart in the next few months before the election since we have that common interest? (In that case, the president is right that he will not be influencing the Fed not in the sense of telling it what to do. He will be brainstorming with the Fed what they can both do in their own self-interest. No need for presidential persuasion or coercion because the Feds head is in the noosewith the presidentsif this economy fails.) That would explanation why the White House is saying, in advance of any accusations, that the president isnt trying to influence the Fed. They want to get ahead of the story. (Of course, it could just be that they recognize such rare meetings will lead to the kind of speculation Im now brattishly doing.) Here is theannouncement the Fed posted at the end of last weekfor Mondays meeting (italics mine): It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at11:30 AM on Monday, April 11, 2016, will be held under expedited procedures, as set forth in section 26lb.7 of the Boards Rules Regarding Public Observation of Meetings, at the Boards offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting. Meeting Date:Monday, April 11, 2016 A final announcement of matters considered under expedited procedures will be available in the Boards Freedom of Information and Public Affairs Offices and on the Boards Web site following the closed meeting. Dated:April 7, 2016 The promised update after the meeting merely added, EffectiveApril 11, 2016, the meeting was closed to public observation by Order of the Board of Governors1because the matters fall under exemption(s)9(A)(i)of the Government in the Sunshine Act (5 U.S.C. Section 552b(c)), and it was determined that the public interest did not require opening the meeting. Ive worked with boards for enough years to know they can always find a reason something is not in the public interest and to know how generically they word things whenever they have a closed-door session. One day later, the Fed put out an announcement of another special meeting to be held on Tuesday, after the suddenly scheduled meeting with the president: It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at2:00 PM on Tuesday, April 12, 2016, will be held under expedited procedures, as set forth in section 26lb.7 of the Boards Rules Regarding Public Observation of Meetings, at the Boards offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting. Meeting Date:Tuesday, April 12, 2016 A final announcement of matters considered under expedited procedures will be available in the Boards Freedom of Information and Public Affairs Offices and on the Boards Web site following the closed meeting. Dated:April 8, 2016 O.K. Two expedited, closed meetings in a row accompanied bya meeting with the president and vice president in between, which the White House, itself, associated with these closed-door meetings, that is so rare it required special White House defenseas to what would not be happening in the presidents meeting between these two sessions. The first meeting was nominally to talk about setting interest rates, which the FOMC will be meeting to consider again later this month, having just postponed their scheduled increase in March. The second meeting is more interesting. If you have served on board or worked with boards that go into closed session, you know they always use the most generic terminology that is still truthfulwhen announcing the meeting and whenreporting in minutes what happened in the meeting. The fact that it is a bank supervisory matter makes it sound like a particular concern, not a general discussion about supervisory policy. Something is thematter somewhere that requires an immediate meeting right after another immediate meeting behind closed doors. That particular matter immediatelyrequires central-bank supervision. Boards hold closed meetings when they have to talk about specific institutions or individuals with details that they dont want to go public. This allcomes very close to sounding like some bank somewhere is in trouble, and the trouble is big enough to call a special meeting of the very august board of governors right after they just had a special meeting, and if you know these kinds of guys, they dont like wasting their time in excessive meetings. Naturally, I am as curious as you probably are about why so many last-minute meetings behind closed doors and with the president and vice president at a time when all major central bank heads in the world will be meeting with finance ministers in Washington, DC. So, I cast about for some possible related stories in orderto what could be the matter, and I found several very hotissuesgoing on this same week. The presidents meeting with the Fed and the Feds two meetings with the Fed were all called rightafter the Atlanta Federal Reserve Bank revised the revisions of its previous revisements to say the US economy now looks like it will report in for the first quarter at 0.1% growth. It seems I cannot write fast enough to keep up with the Federal Reserves downward revisions of anticipated US GDP growth for the first quarter of 2016. No sooner did I click publish on my last article where I noted they hadjust revised their estimates of GDP down to a 0.4%growth rate than I read an article stating they haverevised it again down to 0.1%! Isnt this where I said this quarter was going? That last number is within a rounding error of going negative and is less then the margin of error for their data. It was only back in February that the Fed anticipateda cruising speed of 2% growth for GDP in the first quarter. They have revised that number down almost every week. Of course, the fact that the Fed and the President called an unscheduled,closed-door meeting to include the VP does not mean there is any connection between the events, and I certainly am not concluding even for myself that there is something dire happening here but stay with me. There is more to perk the ears. Thats no minor announcement for a coincidence in timing. What if the numbers to be reported are even worse than has been anticipated, and the Fed is seeing bank trouble in some of those numbers, and the President has received advanced information about some of those numbers? What if they foresee turmoil as the numbers come out? All speculation on my part, of course. What isnt speculation on my part is that Wall Street is already predictingthat this weeks quarterly bank reports are going to look like the start of the Great Recession, and some pretty big players are using some pretty severe language. Analysts say it has been the worst start to the year since the financial crisis in 2007-2008 and expect poor first-quarter results when reporting begins this week.Analysts forecast a 20 percent decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs Group Inc (GS.N), are expected to report the worst results in over ten years. (Reuters) Whoa! That means a report for Goldman Sachs that is worse than any time just prior to or during the Great Recession! When you consider how bad the last decade has been, being worse than that is pretty bad. Moreover, the timing is considered unusuallynasty: This spells trouble for the financial sector more broadly, since banks typically generate at least a third of their annual revenue during the first three months of the year.Bank executives have already warned investors to expect major declines.Citigroup Inc (C.N) CFO John Gerspach said to expect trading revenue more broadly to drop 15 percent versus the first quarter of last year. JPMorgan Chase Cos (JPM.N) Daniel Pinto said to expect a 25 percent decline in investment banking. Several bank executives have warned about declining quality of energy sector loans. The first quarter is going to be ugly and we dont think that necessarily gets recovered in the back half of the year, said Jerry Braakman, chief investment officer of First American Trust, which owns shares of Citigroup, JPMorgan, Wells Fargo and Goldman. There are a lot of challenges ahead. Yes, one of the biggest areas of bank troubles is emerging nowfrom defaults in the energy sector that I have been saying will play a major role in birthing this banking crisis. (Translate that primarily oil and gas.) BofAs Michael Contopoulos warned last week, it may be the worst default cycle in history with cumulative losses over the length of the entire cycle could be worse than weve ever seen before. Over the weekend, the FT got the memo with a report thatsaid that the global bond default rate by companies is running at its highest since 2009 with the US accounting for the vast majority, according to rating agency Standard Poors. A further four defaults this week, with three coming from the troubled oil and gas sector, pushed the overall tally to 40 with a little over a quarter of 2016 done. (Zero Hedge) According to the Wall Street Journal, these defaults are from massive energy loans that most investors didnt even know about until recently. The recovery rate of these bad debts is falling extremely fast. The growth of the high-yield bond market allowed drillers to take on far more debt than in past booms, leaving them more vulnerable to default. The emergence of shale technology allowed companies to expand reserves and the loans backed by those properties.Some of those loans may now be underwater. (Bloomberg) You can thank the Feds zero-interest-rate policyfor that easy, crazy credit bubble! Is anyone starting to feel a little financial crisis deja v? Last time it was declining housing-sector loans. This time, as Ive beensaying for the last few months we would soon see, its declining energy-sector loans. Same song, different verse. Looks like all of that is nowmaterializing. In code words, Wells Fargo tells us thattheir trench-worthy report hasnot even begun to fully write down the bad debts or move into foreclosures that would cause write-downs: (That is, at least, what I read in public bankerspeak.) John Shrewsberry, Wells Fargos chief financial officer, said on a January call with analysts. We were working with each customer to help them work through this. It doesnt do us any good to accelerate an issue, or to end up as the holder of a number of oil leases as a bank. Since we startthe big-bank reporting season on Wednesday, we should know right away if this is the next leg down in the Epocalypse, but you will probably have some coded language to look through. Something as big as thiswould certainly merit a flash meeting with the president and vice president, multiple meetings of the board of governors, and a G-20 financial summit in Washington along with meetings with the IMF and World Bank. Not saying thats what it is. Just sniffing out the kinds of stories that could be related to all these meetings, some planned earlier, others suddenly and all heldsomewhat secretively. Five and a half years ago,I wrote an article here that mentioned how the Great Depression took its second and deepest plunge in 1931because of the failure of a private Austrian bank named Credit Anstalt. In May 1931, a Viennese bank named Credit-Anstalt failed. Founded by the famous Rothschild banking family in 1855, Credit-Anstalt was one of the most important financial institutions of the Austro-Hungarian Empire, and its failure came as a shock because it was considered impregnable. The fall of Credit-Anstaltand the dominoes it helped topple across Continental Europe and the confidence it shredded as far away as the U.S.wasnt just the failure of a bank: It was a failure of civilization. (Bloomberg) Now, as Ive been writing about the start of what I believe will be thethe second and worst dip of the Great Recession, another Austrian bank is crumbling. Austria created Heta Asset Resolution AG when it nationalized all the bad loans ofHypo Alpe-Adria-Bank Internationalfive years agoto rescue that bank and its depositors bycreating a bad bank to containthe problems. It went down something like this: Hypo Alpe-Adria bank, when it was still owned by the small Austrian state of Carinthia, was a cesspool of corruption. It involved bankers, politicians, and powerbrokers in Austria and the Balkans. It was the perfect union of money and power. Investigators found 160 instances of suspected fraud. Six of the banks former executives have been convicted of crimes. Im not aware of a criminal case bigger than this one, explained Christian Bhler, whose forensics team started investigating the bank in 2011. It was a mix of greed, criminal energy, and utter chaos. (Wolf Street) Hypostroubles began, much asCredit Anstalts had before it, when it was required to adjust its books to reflect the true value of its collateral assets after the value of real estate in southeasternEurope collapsed. Everything fell apart upon the realization of how little it was actually worth. Austrias central bank governor Ewald Nowotny and his task force recommended that Hypos toxic assets of 17.8 billion should be put into a bad bank. But to stop the drag on public finances, the federal government should not guarantee Hypos bonds. At the time, Austrian taxpayers had already plowed 4.8 billion into Hypo to bail out these bondholders. He then explained on TV to incredulous Austrians that this deal would nudge the budget deficit over the 3% limit set by the Maastricht Treaty and push the governments debt from 74.4% of GDP to 80% of GDP. This one rotten, state-owned bank in Carinthia was causing this much damage to the countrys finances! The government, at that point, set a one-year moratorium on all payments to the bad banks bondholders. After burningthrough 5.5 billion euros of taxpayer money to no availand discoveringa7.6-billion-euro hole in its balance sheet still remained to be filled,Finance Minister Hans Joerg Schelling ended support in March 2015. Surprise, surprise, the bad bank created by the government to put a fence around all the bad debts of the original bad bank became nothing but a black hole of debt, swallowing all money poured into it with nothing to show for the effort.That didnt stop Schellingfrom claiming the nationalized bank was in good health in order to put a good face on things, as leaders are inclined to do when dealing with really bad stuff in order to protect the public from a scare. Yesterday, under the first application of Europes new forced bail in procedures, Austria ordered a haircut to the banks bondholders. Sighs. This is apparently what happens if your money is invested in a bank with good health. It does, indeed, sound a tad bit like Credit Anstalt. Now the moratorium is up, and its time to start dishing out the bad news to the bondholders under Europes new rules: Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG. The highlights from the announcement This is actually some much-needed relief from how things used to work: Throughout the Financial Crisis, and since, there has been one rule: bank bondholders will always be bailed out at the expense of everyone else. The sanctity of bank bonds reigned supreme, no matter what government and central banks had to do to keep it that way. Bank bonds werent allowed to be judged by the capital markets. They were simply untouchable. Underpaid and overtaxed workers would have to bail out bank bondholders when these recklessly managed banks collapsed. That was the rule in the US when the Fed, and to a lesser extent the federal government, bailed out the banks. And that was the rule during the debt crisis in Europe. (Wolf Streetcont.) Europes new rules were intended to make sure that depositors did not take all the loss and that tax payers dont absorb all the loss.Heta, because it was a government created bad bank, apparently does not have depositors, asit was thecreditors and stock holderswho were pooled into the bad bank who take the hit. The preferred creditors at the Austrian bank have been told they will have to take a 54% haircut, meaning the bonds they have purchased willrecover forty-sixcents on the euro. The big-money (preferred) creditors of the bank, however, dont like the new rules. They complained and are still holding out for ninety-two cents on the euro. That doesnt bode well for anything being left for the smaller creditors, whose money will, in the very least, be kept in a lockbox for seven years because payouts to the non-Majors dont wind up until 2023. Major bond-holders demanding a smaller hit includePimco, Commerzbank and the already deeply troubled Deutsche Bank. (Anybody see how things can quickly move down the line like dominoes when you consider the size of some of the worried creditors who are complaining that the hit will be too hard for them?) The subordinated liabilities, as I understand the complex breakdown (for which I have been unable to find any clear definitions), appears toinclude bondholderswho tooka second position to the preferred liabilities in getting their money backandthird-party investors in the bank. It also appears to include the partners in the bank. If so, then this is exactly how bank failures should happen. The investors are slated to lose 100% of their money first, allowing for the smaller loss by the bondholders. It is the investors who elect the board that governs the bank and who fill the board positions and who make the decisions of who will be CEO; so, of course, they should lose all of their money before anyone else does. Creditors (bond holders) should be next, as they are often large institutions like PIMCO that have more than enough capacity to investigate risk before investing. Depositors should always be last, as most of them have no capacity whatsoever to investigate the real risk of banks and nowhere near enough money to put into a bank to make it worth a serious and usefulinvestigation of risk. They are acting in trust and particularly in trust that government regulators are doing their job. Too bad the United States doesnt operate this way! What kind of spinoff can the settlement of Heta have to other institutions? Well, last month, the Association of German Banks had to bail out a small bank called Duesseldorfer Hypothekenbank AG because its hit as a creditor of Heta would have killed it. Though Duesseldorfer is a small bank, it was apparently deemed too big to fail because, once again, government bailouts went to the rescue. Given that such an agreement happened on Sunday afternoon, and that central banks and regulatory bodies usually talk with other national bodies that may be affected, I have to wonder if the thought ofhow Europe might react on Monday had anything to do with Mondays sudden meetings of the Fed. As if all that were not bad enough for the start of a week in banking news,Italys minister of finance called an emergency meeting over the past weekend of Italian bankers to engage last resort measures for dealing with 360-billion euros of bad loans in banks that have only 50 billion in capital. Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italys largest financial institutions to agree final details of a last resort bailout plan. Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italys large banks. Italian bank shares have lost almost half their value so far this year amid investor worries over a 360bn pile ofnon-performing loans equivalent to about a fifth of GDP. (Contra Corner) Could that have had anything to do with the flurry of bank meetings in the US. I have no idea, but I do have to wonder, with so much smoke everywhere in the banking industry, is there a fire we need to know about? You can be sure, well be the last to know, and any announcement of whats really going down will hit like Bear Sterns or Lehman Brothers. One day, all the central bankers are talking like things are fine. The next day a major vertebrae is knocked out of the nations financial spine. Or maybe presidents and central bankers are just making sure things generally hold together through the election cycle. Such a bad-news week for banks around the world certainly doesnt sound like all is well as our smiling central bankers, president and VP, say it is. I dont know any top secrets to reveal, but the smoke is killing me. You can read more from David Haggith at his site The Great Recession Blog. The banks failing makes no logical sense when everyone and every government in the world is supposedly in debt to the banks. Me thinks this is the final fraud to take the last of the peoples money through government bail outsthe ultimate fraud. Time to say goodbye to our way of life. .. and hello to a glorious new one where the people are in control. Until the masses lose everything they will refuse to wake up, but once that happens change will come fast, because when you have lost (ie had stolen) your money, your home, your job, your freedom, then you have nothing else left to lose and that is when the people will rise up. May it come soon. the system will collapse, it has to for NWO to emerge. it is still not too late to convert all paper assets into physical assets. Total eclipse of the banks. Always be a light that is .shininginthedark. One Bank. I think this is their goal, just speeding up the events, because despite the crash, they own everything, where that goes I dont know, but this stinks high heaven, and also keep the Panama pappers in the back of your mind to. What is it then with people, to me the issue is infact not that hard, or the consequencess dont damaging, but the freaks dont want you to know that, but is the To Bigg to Fail/Jail isnt wacked out of existence, where states plunder their own land and people to feed the beast, isnt stoped, well, time, is what we have left, the downfall is already been ongoing for an half an century. Or, build gallows and Giljotines. peace Theyll have to flee to avoid the collapse and avoid their own lynchings but they wont be welcomed in the BRICS nations and their island paradise wont be paradise for long. The fresh water will run out, luxuries like wines and foods will run out as will parts for limos, yachts, villas etc. Everything runs out in the end. Russia and China should then hunt down western war criminals and banksters. Hunt them ALL. They are going under ground. They have their facilities there to last many many years. We paid for it. Those facilities are totally vulnerable to ELF/HAARP type attacks however. Just think the ruling vermin will be trapped miles underground and escape will be impossible when an adjacent fault gets a little extra energy the balls are falling out of the air and no one has an answer or any idea how to keep up the illusion that all is well Its time for the big monetary shift around the world. Soon, there will be global debt forgiveness and all currency will be asset-based rather than debt-based. My dear Sandi: How I hope your analysis is correct and this happens. april 1st was 2 weeks ago Have you been paying attention to the massive gold redistribution around the world? Have you been paying attention to the actions of BRICS and the AIIB? Have you been paying attention to the resignations of leaders over the past couple of years? Have you been paying attention to all the secret meetings between the new leaders? The old guard is out. The new guard is taking its place. These things take time, effort, and plenty of secrecy. But, its getting done. What or who do u mean with the old guard? And who is the new guard? What is taken over exactly? Can u please elaborate? Thanks. For many, many years (some say a millennium) ThePowersThatBe (PTB) have been a very few very wealthy and powerful families. These families own the private central banks like the Federal Reserve. Through ownership of many nations banks, the World Bank, and the IMF, they have been able to control the entire world. Those that have refused to be controlled are destroyed (Libya, etc.) or continually threatened (Cuba, Venezuela,Iran, etc.). The PTB uses intelligence agencies and think-tanks to plan the campaigns that the military might of the U.S. and NATO use to get more power over the world. The PTB used the Federal Reserve to incorporate the U.S. government so the U.S. Constitution means nothing. There is also a coalition of secret organizations who have been trying to undermine the PTB for centuries. The creation of the U.S. Constitution was guided by these people hoping to make a nation free of the PTB but, over time, the PTB got the upper hand. Still, the coalition hasnt given up. The goal of the New Guard is to create a multi-polar world which gives every nation an equal voice in world affairs. It wants to end poverty without having to give up sovereignty to the PTB. They are promoting an alternative to the IMF and World Bank that treats nations fairly rather than enslaving them with debt. They want freedom for all not a One World Government ruled by the PTB. Each nation has a right to choose for itself. When it does, youll know the New Guard is there. When a nation faces a coup because it disobeys the rules, youll know the Old Guard is there. The Old Guard wants Control of All. The New Guard wants Freedom for All. Thats how youll tell whos who. So WHO is the new guard? Any names or organisations? I cant give you that. If you do the work that gets you into the inner circle the names will be given to you. But then youll understand the need for secrecy. This is a real war. People die. Lets hope they figure it all out. There shouldnt be any reason for the financial system not to be able to repair itself since the worlds financial system is a scam and depends solely on the people running it to keep it healthy. They know the god dam evil government is going to nuke Chicago for the next false flag. Nice, LONG, speculative article. Guess well know eventually what all the secretive hubbub is about. The issue is really that the worlds banks have gambled our money on oil and gas derivatives. While the total derivatives market is at least an unmanageable $500 trillion, much of it is in the oil and gas sector which is bringing the world economy down. So what is the average person to do? This place is a loony bin! how often the VP was included in meetings with the president Dont you mean that it was extraordinary how often Cheney included Bush in the meetings? This veil is not One, but Three; and the Three are Blood, Idolatry, and the Curse of Eve. And to you it is given to withdraw them; be faithful and courageous; the time has come. Hence, for the true ray refracted from above, men mistake and substitute the false ray reflected from below, foul with the taint of earth, and savouring of the limitations of the lower nature, and, like the image in the glass, exactly reversing the truth. Wherever we find a systematic depreciation of life, advocacy of bloodshed, and materialisation of things spiritual, there, we may be confident, does evil influence prevail. Obtain cognition of substance, wed understanding to knowledge, and attain certitude of truth, thereby completing your system of thought. 