Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60783 Fri, 30 Sep 2016 23:32:06 GMT The Contagion Deutsche Bank Is Spreading Is All About Derivatives http://implode-explode.com/viewnews/2016-09-30_TheContagionDeutscheBankIsSpreadingIsAllAboutDerivatives.html Why Goldman Sachs, Morgan Stanley and Citigroup shed more equity value than Wall Street banks with much larger balance sheets like JPMorgan Chase and Bank of America was foretold on February 12, 2015 when the research agency created under the Dodd-Frank financial reform legislation issued a report [indicating] that Morgan Stanley, Goldman Sachs and Citigroup had the highest OTC derivatives values as a percent of their total exposures.

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In other words, the contagion Deutsche Bank is spreading is all about the opaque derivatives that the Federal Reserve and Congress have failed to meaningfully reform. President Obama has also failed the American people in this regard -- even going so far as to misinform the public on the derivatives issue in a press conference on March 7 of this year.

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iehi-feed-60782 Fri, 30 Sep 2016 23:11:00 GMT To Disclose or Not to Disclose? Wells Fargo Woes Shine Light on a Knotty Problem http://implode-explode.com/viewnews/2016-09-30_ToDiscloseorNottoDiscloseWellsFargoWoesShineLightonaKnottyProble.html While the bank's management had known since 2013 that some employees had created deposit and credit-card accounts for customers without their knowledge, the accounts were a tiny portion of Wells Fargo's business. The settlement, which included a $185 million fine, was less than 1% of last year's earnings. The matter was "not a material event," Chief Executive John Stumpf told a Senate panel last week.

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The standards for determining whether a piece of information is material differ somewhat depending on the regulator involved. And some regulators are considering changes in existing standards around what is material information. In short, it is something of a gray area.

Generally speaking, materiality depends on whether a reasonable investor would consider the information important enough to affect the investor's decision to buy a company's securities.

Many companies and investors use a rule of thumb that something has to make up at least a specific portion of the company's business to be considered material--10% of revenues, for instance, or 5% of earnings. But companies are supposed to go beyond the numbers and consider "qualitative" factors as well.

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iehi-feed-60781 Fri, 30 Sep 2016 19:11:19 GMT Obama administration may use obscure fund to pay billions to (I.E. BAIL OUT) ACA insurers http://implode-explode.com/viewnews/2016-09-30_ObamaadministrationmayuseobscurefundtopaybillionstoIEBAILOUTACAi.html

The administration's efforts reflect the partisan thorns that still surround the sprawling law a half-dozen years after its passage. The payouts that officials want to salvage were part of an ACA strategy to help the marketplaces flourish early on. But Republican opponents in Congress branded them an insurance industry "bailout" and restricted the use of HHS funds.

A settlement probably would rely on Treasury's Judgment Fund, a 1950s creation that is allowed as much money as it needs to satisfy valid claims against the government. The fund's website shows that it has been used for a few hundred claims against HHS in the past decade. Taken together, they amounted to about $18 million -- a fraction of what the insurers are owed.

In the administration's waning months, officials are continuing their upbeat portrayal of all aspects of the law. Behind the scenes, they think that making these payments to insurers -- $2.5 billion for 2014 and an as-yet-undisclosed sum for 2015 -- is crucial to the exchanges' well-being.

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iehi-feed-60780 Fri, 30 Sep 2016 19:09:08 GMT Deutsche Bank Jumps on Report (UNCONFIRMED) of $5.4 Billion DOJ Settlement http://implode-explode.com/viewnews/2016-09-30_DeutscheBankJumpsonReportUNCONFIRMEDof54BillionDOJSettlement.html Deutsche Bank AG jumped the most in almost six months after a media report that the lender is nearing a $5.4 billion settlement with the U.S. Department of Justice, less than half the amount initially requested.

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"The amount would be very good news, below what consensus expects now," said Jerome Legras, an investor at Axiom Alternative Investments, who holds a short position on the lender. "Deutsche Bank has dropped so much as there is so much speculation circulating -- at some point people just want to make a profit on short positions."

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iehi-feed-60779 Fri, 30 Sep 2016 15:51:08 GMT Is another German bank in trouble? Commerzbank to cut 9,600 jobs and suspend dividend http://implode-explode.com/viewnews/2016-09-30_IsanotherGermanbankintroubleCommerzbanktocut9600jobsandsuspenddi.html Commerzbank, the second-biggest bank in Germany, has suspended its dividend and revealed more than 9,000 job losses as it tries to shore up its business in the face of ultra-low interest rates and sagging client activity.  

The bank said its decision to cut almost one in five of its employees worldwide and merge two of its largest businesses will result in a €700m write-off and a loss for this quarter.

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Commerzbank also warned that "ongoing weakness in the shipping markets" would push up its loan loss provisions in the coming months. The bank decided four years ago to exit the ship financing business but still has about €8bn on its books.

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iehi-feed-60778 Fri, 30 Sep 2016 15:47:26 GMT ING Plans Thousands of Job Cuts, Het Financieele Dagblad Reports http://implode-explode.com/viewnews/2016-09-30_INGPlansThousandsofJobCutsHetFinancieeleDagbladReports.html iehi-feed-60777 Fri, 30 Sep 2016 15:45:30 GMT Wells Fargo Faces Grassroots Backlash Via Viral Facebook Campaign http://implode-explode.com/viewnews/2016-09-30_WellsFargoFacesGrassrootsBacklashViaViralFacebookCampaign.html iehi-feed-60776 Fri, 30 Sep 2016 15:40:35 GMT NY: Trump Has Likely Been Operating Foundation Illegally http://implode-explode.com/viewnews/2016-09-30_NYTrumpHasLikelyBeenOperatingFoundationIllegally.html Donald Trump's charitable foundation -- which has been sustained for years by donors outside the Trump family -- has never obtained the certification that New York requires before charities can solicit money from the public, according to the state attorney general's office.

Under the laws in New York, where the Donald J. Trump Foundation is based, any charity that solicits more than $25,000 a year from the public must obtain a special kind of registration beforehand. Charities as large as Trump's must also submit to a rigorous annual audit that asks -- among other things -- whether the charity spent any money for the personal benefit of its officers.

If New York Attorney General Eric Schneiderman (D) finds that Trump's foundation raised money in violation of the law, he could order the charity to stop raising money immediately. With a court's permission, Schneiderman could also force Trump to return money that his foundation has already raised.

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Experts on charity law said they were surprised that Trump's foundation -- given its connections to a wealthy man and his complex corporation -- did not register to solicit funds.

"He's a billionaire who acts like a thousandaire," said James J. Fishman, a professor at Pace University's law school in White Plains, N.Y. He said Trump's foundation seemed to have made errors, including the lack of proper registration, that were more common among very small family foundations.

"You wouldn't expect somebody who's supposed to be sophisticated, and brags about his business prowess, would run his foundation like this," Fishman said.

In other news, Trump may have violated the US-Cuban embargo. No biggie.

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iehi-feed-60775 Fri, 30 Sep 2016 15:29:19 GMT Iceland's Pirates head for power on wave of public anger http://implode-explode.com/viewnews/2016-09-30_IcelandsPiratesheadforpoweronwaveofpublicanger.html iehi-feed-60774 Fri, 30 Sep 2016 15:21:49 GMT Pressure is building for Germany to show it's ready to rescue Deutsche Bank http://implode-explode.com/viewnews/2016-09-30_PressureisbuildingforGermanytoshowitsreadytorescueDeutscheBank.html ... market talk intensified that it's becoming time for the German government step in and assure investors that it will be at the ready to stabilize both Deutsche and the broader system -- much along the lines of what U.S. officials had to do during the 2008 financial crisis.

"They're going to probably have to say that they would be willing to put funds into the bank," said banking analyst Christopher Whalen, senior managing director and head of research at Kroll Bond Rating Agency. "It's exactly like what (former Treasury Secretary Henry) Paulson did with Citi ... It's a very analogous situation. Hopefully, the German government will take a page from that particular book and look at how the U.S. responded."'

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However, the European corporate culture is different, particularly when it comes to banking. Bailouts are considered anathema, and German officials in recent days have signaled an unwillingness to step in.

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"The politicians in Germany aren't in position right now to do anything ahead of the election," he added. "The beast in the market, the serpent in the market, knows this, and the market will push and push and push until they break the politicians in Germany to come up with public funds."

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iehi-feed-60773 Thu, 29 Sep 2016 21:28:20 GMT Wells Fargo Troubles Mount With Penalty for Soldier Repos http://implode-explode.com/viewnews/2016-09-29_WellsFargoTroublesMountWithPenaltyforSoldierRepos.html Wells Fargo & Co., reeling from weeks of pummeling over fraudulent customer accounts, was sanctioned by the Justice Department over improperly repossessing cars owned by members of the military.

Federal authorities are punishing the San Francisco-based lender for as many as 413 alleged violations of the Servicemembers Civil Relief Act, according to a statement Thursday from the Justice Department, which said the bank agreed to pay more than $4 million to compensate borrowers involved in unlawful repossessions spread over seven years. The bank's regulator, the Office of the Comptroller of the Currency, also fined the company $20 million for a decade of transgressions, the agency said in a statement.

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iehi-feed-60772 Thu, 29 Sep 2016 19:58:55 GMT Deutsche Bank under pressure as hedge funds cut exposure http://implode-explode.com/viewnews/2016-09-29_DeutscheBankunderpressureashedgefundscutexposure.html Deutsche Bank came under mounting pressure this evening after it emerged that some hedge funds worried about its financial health had started to trim their exposure to the troubled lender, sparking fresh fears about its future.  

About 10 funds that use Deutsche's prime brokerage business -- a division that services hedge funds - are believed to have reduced their positions with the bank in recent days by shifting some of their derivatives holdings to different firms and withdrawing some cash.

See also Martin Armstrong's comments.

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iehi-feed-60771 Thu, 29 Sep 2016 18:42:20 GMT Bank Of England Governor Warns Of ZIRP/QE "In Perpetuity" http://implode-explode.com/viewnews/2016-09-29_BankOfEnglandGovernorWarnsOfZIRPQEInPerpetuity.html iehi-feed-60770 Thu, 29 Sep 2016 02:40:53 GMT In U-Turn Shocker, Saudis Choose Higher Prices Over Free Oil Markets http://implode-explode.com/viewnews/2016-09-28_InUTurnShockerSaudisChooseHigherPricesOverFreeOilMarkets.html ``The decision at this week's meeting of the Organization of Petroleum Exporting Countries in Algiers to cut production was necessitated by Saudi Arabia's tattered finances. The kingdom has the highest budget deficit among the world's 20 biggest economies, it's enduring a delay in its first international bond issue and now faces fresh legal uncertainty as the U.S. Congress voted Wednesday to allow Americans to sue the country for its involvement in 9/11.''

Inquiring minds wonder if this abrupt about-face is actually in direct response to/retaliation for the 9/11 liability legislation. Those who predicted that the legislation might herald the death of the petrodollar certainly have a giant factual point in their favor already, after a mere few hours.

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iehi-feed-60769 Thu, 29 Sep 2016 01:41:27 GMT Housing Bubble? Here's why I dumped my last US property http://implode-explode.com/viewnews/2016-09-28_HousingBubbleHereswhyIdumpedmylastUSproperty.html Hockey stick charts make me want to sell immediately. They're screaming indicators that we're entering another housing bubble. It's not just Dallas; home prices across the United States are at or near their all-time highs, eclipsing the previous peak set a decade ago.

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In fact, in the Dallas market, the ratio of home prices to income actually exceeds the level it was at during the previous housing boom. So, relative to income levels, home prices are becoming EXTREMELY expensive. This means that home prices are passing their all-time highs on both a relative AND absolute basis.

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iehi-feed-60768 Wed, 28 Sep 2016 23:42:02 GMT As Real Estate Market Turns, Donald Trump's Billions Lose Their "4-Handle" http://implode-explode.com/viewnews/2016-09-28_AsRealEstateMarketTurnsDonaldTrumpsBillionsLoseTheir4Handle.html iehi-feed-60767 Wed, 28 Sep 2016 20:12:03 GMT California Suspends `Business Relationships' With Wells Fargo http://implode-explode.com/viewnews/2016-09-28_CaliforniaSuspendsBusinessRelationshipsWithWellsFargo.html California, the nation's largest issuer of municipal bonds, is barring Wells Fargo & Co. from underwriting state debt and handling its banking transactions after the company admitted to opening potentially millions of bogus customer accounts.

The suspension, in effect immediately, will remain in place for 12 months, State Treasurer John Chiang said Wednesday. "Complete and permanent severance" between his office and the bank will occur if it doesn't change its practices, he said. The treasurer is also suspending his office's investment in Wells Fargo securities.

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iehi-feed-60766 Wed, 28 Sep 2016 20:07:04 GMT Stumpf Pay Surrender Buys Time But Lawmakers Say It's Not Enough http://implode-explode.com/viewnews/2016-09-28_StumpfPaySurrenderBuysTimeButLawmakersSayItsNotEnough.html "This is a good first effort by Wells Fargo to start to move this behind them," Paul Miller, a banking analyst at FBR Capital Markets & Co., said Wednesday in an interview on Bloomberg Television. "The question is -- and I do not have the answer -- is it enough?"

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"There are still dozens of unanswered questions," Senator Sherrod Brown of Ohio, the banking committee's top Democrat, said in a statement. "We still don't know how many customers were harmed and how long this fraud continued."

The news about executives forgoing pay and the board's review won't affect the House Financial Service Committee's investigation into Wells Fargo, said a spokesman for Chairman Jeb Hensarling, a Texas Republican.

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iehi-feed-60765 Wed, 28 Sep 2016 17:18:16 GMT Draghi rejects German criticism, calls on Berlin carry its weight http://implode-explode.com/viewnews/2016-09-28_DraghirejectsGermancriticismcallsonBerlincarryitsweight.html iehi-feed-60764 Wed, 28 Sep 2016 17:17:06 GMT Yellen Cornered by Lawmaker in Heated Exchange Over Fed Politics http://implode-explode.com/viewnews/2016-09-28_YellenCorneredbyLawmakerinHeatedExchangeOverFedPolitics.html Fed Governor Lael Brainard has donated to Clinton's campaign and is widely viewed as a potential Clinton pick for Treasury secretary. Yellen hesitated and then demurred when Representative Scott Garrett of New Jersey asked whether Brainard would have a conflict of interest if she were indeed in talks with Democratic nominee Hillary Clinton's campaign about a position. The election takes place Nov. 8.

"I would have to consult my counsel, I'm not aware that that's a conflict," Yellen said in testimony to the House Financial Services Committee in Washington, while rejecting Garrett's suggestion that the U.S. central bank has a political bias.

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The heated exchange came during a week when the Fed has been under fire for its politics: Republican Presidential nominee Donald Trump said that the Fed is keeping rates low to make President Barack Obama look good during a widely-viewed televised debate on Monday. Merited or not, the persistent questioning of the Fed's objectivity -- and Yellen's inability to deflect that skepticism -- could become a headache for the officially non-partisan and independent central bank.

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