NOT a ‘REAL’ BANK
http://gawker.com/5840953/the-private-bank-of-denny-ray-hardin-wasnt-a-real-bank

After reading some books about banking, Denny Ray Hardin set up a website, created 2,000 fake promissory notes, and opened up “the Private Bank of Denny Ray Hardin” (not necessarily in that order) from his home in Kansas City. How entrepreneurial! And illegal. On his website—sorry, the Private Bank’s website—Hardin claimed that the notes, which he made on his home computer, were bonded and authorized by the U.S. Treasury Department. From September 2008 to September 2009 he sold more than $100 million of these things, reports the Kansas City Star.

In a March 2010 profile by the Kansas City alt-weekly The Pitch, Hardin comes off as a tragic and complicated character who has some altruistic motives but is also driven by extremist “don’t tread on me” ideology. Fittingly, the article introduces him by way of a his many life troubles, which seem to have begun when he and his girlfriend were in a car accident, she lost her ability to work, and he was laid off from his construction job. “The one good thing we had was Betsy,” he told The Pitch, referring to his beloved Corvette Stingray. But then a friend set him up in a small-time marijuana deal, and Hardin was arrested. The cops confiscated the Corvette, and Hardin was sentenced to jail time plus probation. Upon his release, he experienced this horror: “The next time Hardin saw Betsy, almost a year later, she had been painted up as an ad for the D.A.R.E. program.” Seriously, that’s tragic.

Besides seeing his old hot rod being used to promote snitching on your parents, Hardin faced other troubles. His woman left him. He began smoking crack. His life essentially fell apart. Then he went to rehab and read about various subjects, including banking. He applied his knowledge and opened the Private Bank of Denny Ray Hardin, under this theory that we don’t understand:

Hardin theorizes that it’s possible to file a document that renounces one’s U.S. citizenship and instead declares what he refers to as American citizenship. By doing this, the newly declared American citizen can take possession of an account that is supposedly set up by the feds on the occasion of every person’s birth. Next, the American citizen can file a financial statement with the U.S. Secretary of State and copyright his or her name. The Americans Republic Party explains that with these three simple steps, it’s possible to become a sovereign with the right to cash checks from one’s established-at-birth account.

Hardin didn’t really charge people much of a fee to his customers, whose mortgages he paid off using his special-issued Denny Ray bonds (for more on how this works, see this LA Timesarticle). Like an official bank, he gave his customers information packets describing “all the steps he had taken, what laws he had to abide by, the ordinances that must be followed.” And, as The Pitch notes, he was just one banker in a small yet diverse niche market; the Gadsden flag-flyingAmericans Republic Party, which has supported Hardin over the years, knows of other private banks operating right here in America.

On Wednesday, Hardin was found guilty in federal court on 11 counts of creating fictitious obligations and 10 counts of mail fraud, reports the Kansas City Business Journal; he now faces at least 20 years in prison. At the time of his indictment in May 2010, he was already incarcerated in state prison on a probation violation based on a 2006 incident in which he tried to arrest the lieutenant governor of Kansas for violating the Constitution. The government did not agree with Hardin about the lieutenant governor’ behavior. Hardin and the government are rarely in agreement on the issues, it seems.

It’s amazing that people would do business with a bank named after some random guy. Then again, people do business with all kinds of banks. At least this can be said about the now-shuttered Private Bank of Denny Ray Hardin: it was probably one of the only banks in Kansas City that was helping people to avoid foreclosure instead of making foreclosure more likely.

Among those who say Hardin is their savior (from left): Denelle Ginder-Brown; her husband, James Brown; and their daughter, Michelle Elam. - Michael McClure

NEVER ASKED for the MONEY BACK
http://www.pitch.com/gyrobase/denny-hardins-weapon-against-the-us-government-his-own-private-bank/Content?oid=2197865&showFullText=true

Denny Hardin’s weapon against the U.S. government: his own private bank
by Peter Rugg  /  March 11, 2010

It started over a cherry 1977 Corvette named Betsy. “Ever since they took that car, the fight’s been on,” Denny Hardin says. He’s talking to The Pitch by phone from the Moberly Correctional Center, where he’s serving the first months of a five-year sentence for a probation violation. By “they,” he means the United States of America. Hardin didn’t plan to wage a one-man war against the government. He was once a loyal citizen; he even served in the Navy in the 1980s. By 1991, he was in his late 20s, divorced from the wife he’d met in Tokyo, and back in his hometown of Kansas City. He began dating a hairdresser named Sherry Lee, who wanted to open her own salon. They found a space and started work on it, sleeping on the floor of the shop when they didn’t have enough money to also rent an apartment. But then they were in a car accident. The insurance company paid out $20,000 for medical bills and the cost of the car. They spent $7,780 on Betsy. Hardin found the car on the lot of a Raytown Chevrolet dealer. It was in such pristine condition that it was just a thousand dollars less than the original sticker price. A ’77 Stingray is one of the most popular Corvette models ever made, the type of car that bikini-wearing models still recline against on the covers of muscle-car magazines. The rest of the money went to medical bills, but Lee couldn’t work. Her hands, which she had relied on to style hair, now shook uncontrollably. “Then I got laid off from my construction job,” Hardin remembers. “The one good thing we had was Betsy.” For the next few months, money was scarce. One day, a friend of Hardin’s from grade school asked if Hardin could help him find some weed. His friend promised that Hardin would make a couple of bucks for setting up the deal. When they got to the dealer’s house, the friend feigned shyness, telling Hardin that because the dealer didn’t know him, it was better that he stay in the car while Hardin bought the dope. Hardin went in and bought a half-pound of pot. When he came back out, police arrested him. “It turned out, that friend had been busted by the cops earlier, and he set me up because he’d made a deal with them to deliver people,” Hardin says. He served 120 days and got five years’ probation. Even worse, the cops claimed that the Stingray had been bought with drug money, so they confiscated it. The next time Hardin saw Betsy, almost a year later, she had been painted up as an ad for the D.A.R.E. program.

Lee eventually left him. He knows that she’s in Iowa somewhere, working as a paralegal, but they haven’t spoken in years. “When they took Betsy away, that just about destroyed her. Betsy was repayment for almost dying,” he says. “I promised her I’d make up for what they did, and I still keep that promise.” He didn’t start right away. Hardin spent the next few years in a crack-smoking stupor, dropping down to 87 pounds before checking himself into a hospital for rehab. As he convalesced, he read history and law books. Eventually, the man who was still three credits short of his associate’s degree at Longview Community College was offering legal advice to friends and family. Before long, he learned how to make his own bank.

The Private Bank of Denny Hardin, responsible for writing more than $160 million in bonded promissory notes to borrowers all around the country, is a two-story house on the East Side of Kansas City. Taped to the door is a notice declaring that no foreign agents are allowed to search the premises. Inside, shelf after shelf is filled with accordion folders holding the names and addresses of the people for whom Hardin, with the help of his fiancée, Melinda Harrington, has written bonds. Hardin theorizes that it’s possible to file a document that renounces one’s U.S. citizenship and instead declares what he refers to as American citizenship. By doing this, the newly declared American citizen can take possession of an account that is supposedly set up by the feds on the occasion of every person’s birth. Next, the American citizen can file a financial statement with the U.S. Secretary of State and copyright his or her name. TheAmericans Republic Party explains that with these three simple steps, it’s possible to become a sovereign with the right to cash checks from one’s established-at-birth account.

In April 2009, the Office of Inspector General at the U.S. Department of the Treasury posted a fraud alert. In 2008, Treasury agents noticed that people were sending in notes and bonds to pay their taxes. “These scams have been directed towards banks, charities, individuals, and companies which seek payment on the fraudulent securities,” the Treasury warned. In most cases, perpetrators were writing bonds with a Treasury Bureau routing number in place of a bank’s and were writing their own Social Security numbers where the checking-account numbers would normally be listed. “Fraudulent seminars are being held throughout the United States, which teach attendees how to create the aforementioned fictitious documents and how to use federal routing numbers,” the Treasury warned.

Other than the part about putting on seminars, the warning was essentially a description of Hardin’s operation. Hardin says he has never charged his clients anything more than the administrative cost of filing his notes (typically no more than $100) and has never asked for repayment on a loan. If he’s telling the truth, that’s a lot of risk for little payoff. One of Hardin’s early customers was Bob Suppenbach, who had known him when the cops took Betsy but had lost track of him. (Those were the years when Hardin was addicted to crack, Suppenbach learned.) “I ran into a mutual friend, and he told us what had happened to him.” The mutual friend then told Hardin about running into Suppenbach. “Denny came out to see us two days later and he’s been coming to the house ever since.” Suppenbach wasn’t immediately sold on Hardin’s new calling. But as a man who had his own troubles with the government, he saw the appeal. In the late 1960s, state agents removed Suppenbach and his three brothers from their mother’s care. Suppenbach says his two brothers were later molested by people who were supposed to watch out for them, and both died in the 1980s after contracting HIV. Before Hardin was busted in a drug sting, Suppenbach served four months in the U.S. Penitentiary at Leavenworth for making cable descramblers for satellite dishes. “I’m the only man in the whole damn country who’s served time in a federal prison for stealing HBO,” Suppenbach says.

He had money troubles, too. “Seems like everything I went and got involved in, for one reason or another after two or three years, got obsolete. Got into TV repair, VCR repair, then computers. Then I thought I’d try construction. I got a company set up, got all my trailers, my tools, spent thousands of dollars getting set up in construction. Then the market fell out.” Suppenbach had a $60,000 mortgage hanging over him. Then in 2006, he joined the class of plaintiffs in a multistate lawsuit against the company that supposedly held his title, Ameriquest Mortgage. The nation’s largest subprime lender settled claims of predatory lending by agreeing to pay $295 million in restitution and changing its lending practices. A year later, Suppenbach got a collection notice for the same loan from Citibank, whose parent company, Citigroup, had acquired much of Ameriquest in 2007. During last year’s bank bailout, Citigroup’s arrangement with the government ensured that about $20 billion in federal dollars would be directly invested in the company, in addition to $306 billion to help back loans and securities. “They were selling them back and forth. It didn’t matter that they defrauded me and I won in court. They got rewarded for it.”

When it comes to not knowing exactly who owns his mortgage, Suppenbach has a lot of company. In many cases, even the banks aren’t sure. (Last year, researchers at the University of Iowa found that out of 1,733 foreclosures begun in 2006, 40 percent of the foreclosing creditors showed no proof of ownership on the note or security investment in the property.) If a bank has to contest a payment’s legitimacy — for example, if payment is presented in the form of a bonded promissory note from a self-proclaimed banker — then not being able to show proof of ownership could actually help the homeowner, or at least let the homeowner delay getting kicked into the street. After Hardin’s 2009 incarceration, the Americans Republic Party Web site posted a list of other private banks. As of February, the only links were to a man named Charles Elliot in Henderson, Arkansas (who did not return The Pitch‘s calls), and J.W. Patterson, president and founder of Shadow Mountain Bank in Ash Fork, Arizona. The latter is probably the only financial institution in the country whose Web site includes links to prove it’s a real bank, along with clip art of doves carrying roses in their teeth and a teddy bear that somersaults and dances over the P.O. Box number. Patterson says the Treasury Department is just catching up. “I’ve been doing this since the ’80s,” he says.

The Private Bank of Denny Hardin is the originator of more than $160 million - in bonded promissory notes to borrowers all around the country. - Sarah Rae

Patterson says he has written bonds for thousands of people, including members of the Montana Freemen — the group that spent 81 days in a standoff with the FBI in 1996, defending land they claimed was their own, separate from the United States. (They were also known for passing counterfeit checks and money orders.) Today, the group’s most famous former member is Scott Roeder, admitted killer of Kansas abortion provider George Tiller. Patterson won’t say how many clients request his help in a given day, just that Shadow Mountain has a budget of $500 a week for ink. In Kansas City, at least one family considers Hardin an angel. In March 2009, KCTV Channel 5 aired video of a 44-year-old named Denelle Ginder-Brown, who was near tears. All around the country, people had been losing their homes. Ginder-Brown, who worked as a cashier, lived in a house on East 93rd Street near Indiana Avenue with her husband, 63-year-old James Brown, and their two children. They had lived there for 15 years and had a deal with the owner: They would make the monthly mortgage payments and eventually the house would be theirs. In 2004, the owner died and willed the house to them. They kept writing checks to Capitol Federal and never missed a payment.

But within months of the owner’s death, Capitol Federal ordered that the remaining $10,000 balance on the mortgage be paid immediately or else it would foreclose on the house. The Browns didn’t have the money. A representative from the Neighborhood Assistance Corporation of America — a group that helps families facing foreclosure — looked at the case and discovered that Capitol Federal had continued accepting payments even though it knew that the Browns’ deal wasn’t a legal sale of the property. NACA’s local director tried to work out a payment plan, but Capitol Federal refused. In a suit brought against Ginder-Brown by Capitol Federal, a judge ruled that the bank owned the property because her name was never on the title. The family was given a week to find a new place to live. Channel 5 aired the story on Monday, March 2, 2009, and the property was scheduled for auction on Monday, March 9.

On the day of the auction, Channel 5 aired a new story. This time, Denelle Ginder-Brown was smiling. Capitol Federal had relented because, as it turned out, it was only servicing a loan that was owned by Freddie Mac, which had decided to work with her on a new loan. But there was even better news. An anonymous good Samaritan had seen the Browns on the previous week’s broadcast and offered to pay the loan completely. All Ginder-Brown had to do was wait for the bank to confirm that it had received the house payment in full, and then she could see her name on the title. The moral to the story: There are good people in the world. The family’s anonymous savior was Hardin. “We got down on our knees and we prayed for God to help us because we didn’t have anything else we could do,” says Brown, who is currently on disability. “We believe God makes a way out of no way, and he sent Denny Hardin.”

At first, the Browns were skeptical of Hardin’s claims that he was a private bank. Then he gave them a packet with all the steps he had taken, what laws he had to abide by, the ordinances that must be followed. They decided their prayers had been answered. Immediately after Hardin paid their mortgage, the couple says, they received a visit from FBI agents telling them that Hardin was paying off other people’s homes with fraudulent bonds. James Brown claims that the agents asked him to inform on Hardin. But it’s hard to convince people to roll on a man sent by God to save them. The Browns believe that the status of their house is still uncertain; they claim that they’re still fighting over the initial loan disagreement. Most of their belongings are in storage, and they’re ready to move on a moment’s notice. “We’re down to the barest of essentials in here,” Brown says. “Our house is almost naked because we don’t know the final outcome. But if it hadn’t been for Denny’s help, we’d have been steamrolled right over from the start.” Since he started his bank in September 2008, Hardin says, most of the $160 million in notes that he has written have been to pay off people’s bank loans and keep them from going into foreclosure. “As far as I can tell, nobody’s lost their house who he helped,” Brown says. “He put a new roof on our house, and he saved us from being on the street, and he never asked us for a dime.”

The thing about probation-violation hearings is that they’re supposed to be simple. There are no mitigating circumstances. There are no degrees of violation. Either you broke the terms of your probation or you didn’t. Denny Hardin has a gift for making simple things complicated. At this late-summer hearing in 2009, Hardin is accused of violating a probation order restricting him from appearing in court or filing papers on behalf of anyone other than himself. The probation stems from an incident in 2006, when he camped out on the steps of the Capitol in Jefferson City and tried to arrest Lt. Gov. Peter Kinder for violating the U.S. Constitution. Hardin appears unassuming for a man who wants to bring down the federal government — a “paper terrorist,” as some agents refer to him. He is slight, with long hair and a beard, wearing blue jeans and a T-shirt that reads “Americans Republic Party” and “Don’t Tread On Me.” Along with the slogans, the shirt bears the yellow Gadsden flag — a favorite symbol among Tea Partiers — with its symbol of a coiled snake ready to strike.

The snake also appears on the chests of 30 other men and women of the Americans Republic Party who have filled the right side of the courtroom. Each one holds a black, leather-bound copy of the Constitution. The Browns are there. So is Suppenbach. Several supporters are Hardin’s bank customers. Over the course of what becomes a two-hour hearing, Hardin objects to every possible authority that the court tries to exert over him, including its authority to make him sit down. On this point, Judge Stephen Nixon concedes, and Hardin spends the trial brandishing a copy of the Constitution over his head as if it were a Bible at an exorcism. Hardin’s argument against being forced to sit down is the only victory he has today. To list each overruled objection would take more pages than a pocket Constitution. Nixon overrules with a calm that seems uncaring to the members of the Americans Republic Party and generous to the two prosecuting attorneys.

Hardin’s most minor objections involve claims that he was forced to sign documents under duress. His most sweeping denounce the legitimacy of the judge, the court, the legal systems of the state of Missouri and the United States, and the bar-admitted lawyers who have sworn allegiance to British royalty. Hardin’s followers take copious notes, recording their leader’s argument every time Nixon denies a motion. When the hearing ends, Hardin has been sentenced to five years in prison. There’s a collective gasp from Hardin’s supporters. The prosecuting attorneys and the judge are unmoved. Sentencing is always followed by a gasp. Hardin takes off his choker necklace and gives it to Harrington. “I guess now I’ll be writing that letter to the president of the United States from the Jackson County Jail,” he says, before officers escort him away in handcuffs.

In the Moberly Correctional Center, Hardin’s days are scheduled around four strict appointments. At 7:15 a.m., 11 a.m., 4 p.m. and 7 p.m., he gets a phone call from Harrington. Hardin spends time in the law library. Being incarcerated hasn’t given him second thoughts about offering his services to his fellow inmates. “My theory is that if there’s no property damage and no injured party, there’s no crime,” he tells The Pitch. “Most of the guys in here never committed a crime. It’s just the system bringing them in so it can make money off of their incarceration.” He’s certain that if he files enough motions, if he cites the right laws, he can build a chain of arguments he can follow back to the world. In Kansas City, the Americans Republic Party is confident that, any day now, Hardin will be released. “We’re all working on it and doing what we can,” James Brown says. “I think he’ll be out in a couple weeks.” Patterson, in Arizona, is also trying to help. “Probably 90 percent of the people he was helping have come to me,” Patterson says. “I’m writing a bond to try and get him out right now. Of course, he didn’t set his bank up totally right — he missed a few things, but I can help him correct it all when he gets out.” The right paperwork is crucial, Hardin says. “I have to show them I’m right. We can’t be violent. We can’t tell people to go out and get guns. We have to win with the power of our reason. We have to show them they’re wrong and we’re right.”

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Painting by Anthony Freda www.AnthonyFreda.com

a HOLIDAY OPPORTUNITY
http://moveyourmoneyproject.org/find-bankcredit-union
http://www.findacreditunion.org/
http://www.asmarterhoice.org/

BANK TRANSFER DAY
http://thinkprogress.org/special/2011/11/03/360804/650000-americans-credit-unions/
650,000 Americans Joined Credit Unions Last Month — More Than In All Of 2010 Combined
by Zaid Jilani on Nov 3, 2011

One of the tactics the 99 Percenters are using to take back the country from the 1 percent is to move their money from big banks to credit unions, community banks, and other smaller financial unions that aren’t gambling with our nation’s future. Now, the Credit Union National Association (CUNA) reports that a whopping 650,000 Americans have joined credit unions since Sept. 29 — the date that Bank of America announced it would start charging a $5 monthly debit fee, a move it backed down on this week. To put that in perspective, there were only 600,000 new members for credit unions in all of 2010. “These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings,” said CUNA President Bill Cheney. This Saturday, 99 Percenters are calling on Americans to move their money from big banks to credit unions and community banks on what is being called “Bank Transfer Day.” If you want to stand with the 99 Percent and take part in this action, use the Move Your Money project’s community bank and credit union finder tool to find out how.

http://www.cuna.org/public/press/press-release/issues/hundreds-thousands-of-consumers-billions-of-$$-move-credit-unions
http://www.americanbanker.com/issues/176_214/customers-flee-for-credit-unions-1043783-1.html
Bank Customers Flee to CUs
by Ed Roberts / 11.3.2011

An estimated 650,000 consumers have closed their bank accounts and opted for credit union membership over the past four weeks, according to CUNA, bringing the approach to Saturday’s Bank Transfer Day to a crescendo. In a survey of 5,000 of its credit union members CUNA estimates that at least 650,000 consumers across the nation have joined credit unions since Sept. 29, the day Bank of America unveiled its now-rescinded $5 monthly debit card fee. Also during that time, CUNA estimates that credit unions have added $4.5 billion in new savings accounts, likely from the new members and existing members shifting their funds. The survey results also show that more than four in every five credit unions experiencing member growth since Sept. 29 attributed the growth to consumer reaction to new fees imposed by banks, or a combination of consumer reactions to the new bank fees plus the social media-inspired “Bank Transfer Day,” Nov. 5. “These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings.” said CUNA President Bill Cheney. Cheney said the growth is particularly noticeable at larger credit unions (those with $100 million or more in assets, which account for about 20% of all credit unions – but count about 80% of all credit union members). The CUNA survey shows that more than 70% of these credit unions reported they have seen growth in memberships and deposits since Sept. 29.

HOW to JOIN a CREDIT UNION
http://motherjones.com/politics/2011/11/how-to-move-money-big-banks-credit
How Do I Move My Money Out of a Big Bank?
by Josh Harkinson / Nov. 3, 2011

Saturday is the deadline for Bank Transfer Day, the call for a mass money exodus from big banks to credit unions and small community banks. Over 80,000 have pledged online to punish “too big to fail” banks by withdrawing their funds. Still on the fence? Wondering where to start? We’ve got a handy primer below on how it works, and check out what happened when MoJo reporter Josh Harkinson tried moving his money out of Wells Fargo.

Why would I want to move my money out of my existing bank?
You’ll probably save money in the long run. According to a 2009 year study by the Filene Research Institute, the average credit union account holder paid $71.47 in annual fees, compared to $183.14 paid by the typical bank customer. And new restrictions on debit card fees imposed last month by the Dodd-Frank Act have sent banks scrambling for even more ways to nickel and dime their customers in pursuit of profits. Nonprofit credit unions, on the other hand, only need to break even. They also tend to plow their money into back into basic loans in their own communities, instead of dabbling in the kind of complex and risky securitized investments that caused large banks to go bust and drag down the economy. It’s important to note that credit unions and small local banks aren’t recession-proof: a striking 17 percent of Florida’s bank failures since 2008 were community banks.
What’s the process?
Don’t expect to be able to open a credit union account and close your old bank account in one day. You’ll need to receive new checks and a debit card in the mail, switch over any automated deposits and electronic bill paying services, and wait for pending financial transactions to clear. Only then should you give your old bank the boot. Here’s a searchable map that locates credit unions near you.
How long does it take?
You’ll probably need to wait one or two weeks to get a debit card and checks in the mail, though some credit unions will issue you temporary versions. Besides that, it’s just a matter of finding the time to switch over your bills.
Aren’t credit unions less convenient than big banks?
Not necessarily. While individual credit unions typically have fewer branches than corporate banks, many participate in “shared branching,” allowing customers to make a deposit or withdrawal at other participating credit unions. Also, many credit unions have implemented advanced online banking options including direct-deposit, online bill-pay, and mobile banking using your cell phone.
What about ATMs?
Ask your local credit union if it’s a member of the Co-op Network. Customers at credit unions in the network can use a smart phone app to find any one of 24,000 fee-free ATMs across the country. “You actually get access to more fee-free ATMs than if you were at Bank of America,” says Ben Rogers, research director for the Filene Research Institute, a think tank that studies Credit Unions. Some Credit Unions will even refund any fees that you rack up using other banks’ ATMs.
If everyone moves their money out of big banks, how much money do the banks stand to lose?
Currently, total deposits for all banks and savings and loans, including personal and business accounts, come to $7.5 trillion.
Are big banks freaking out over this?
Most big banks rely on their vast numbers of personal checking and savings accounts to shore up their cash reserves and make lucrative investments. “If everybody moved their money, it would make a huge difference,” Rogers says. Still, the nearly 80,000 people who’ve made online pledges to join Bank Transfer Day probably won’t cause bankers to break a sweat—at least not yet. Add another 400,000 of them, and “you’d get not just frowns, but maybe gasps in the board room.”
How are credit unions benefiting from this?
Credit unions across the country have added upwards of 650,000 new customers since September 29 (the day Bank of America unveiled its now-defunct $5 monthly fee for debit cards), according to a survey of 5,000 credit unions by the Credit Union National Association. The group also estimates that credit unions have added $4.5 billion in new savings since then, likely from these new members and transfers from other banks. But CUNA spokesman Patrick Keefe says these numbers barely move the needle for big banks: “It’s actually a drop in the ocean for them. They are huge.”
Is there any scenario in which my big bank actually benefits if I do this?
Yes and no. If you have about $400 in a savings account and average about $1000 in a checking account and have nothing else with your bank, then you’re probably what your bank would call an “unprofitable customer.” But most banks want to keep unprofitable customers onboard in hopes of later cross-selling them on credit cards and loans. “I don’t think that there’s a ton of banks actively smiling and smirking because they are scaring away all these unprofitable customers,” Rogers says. “Nobody really wants to lose customers.”



“EXODUS”
http://techpresident.com/blog-entry/mass-exodus-big-banks-organizing-online
Mass Exodus from Big Banks is Organizing Online
by Nick Judd / November 2, 2011

Over 35,000 people have indicated support on Facebook for a mass Nov. 5 exodus of personal bank accounts from big banks and into credit unions, called “Bank Transfer Day” — one of several online groups with the same basic message, popularized by Anonymous, Occupy Wall Street and others, and just the latest in a series of ground-up actions protesting the practices of big banks. These online efforts trace their origin back to news from September, in response to new provisions in the Dodd-Frank financial overhaul law that would limit the amounts that banks could charge merchants for the use of debit cards. News broke at the time that banks would seek instead to pass the fees along to customers in the form of monthly charges for the use of the cards. As anger at a new fee during tough economic times met the current direct-action national zeitgeist, fueled by Occupy Wall Street, initiatives began to spring up online.

The “Bank Transfer Day” Facebook page belongs to an L.A. gallery owner named Kristen Christian, but the idea might actually be the brainchild of Arianna Huffington, who floated the idea in 2009 as a response to financial institutions not lending much of the money they received from the federal bank bailout. That call to action didn’t make a lasting splash at the time, but has found new life. From Santa Cruz to New Mexico to Wisconsin, credit unions are reporting an uptick in new accounts. The Progressive Change Campaign Committee, on the occasion of Bank of America’s announcement yesterday that it would not impose a planned $5 monthly fee for debit card purchases, said that over 51,000 have pledged through their platform to move their money from big banks, including 21,500 from Bank of America. PCCC co-founder Adam Green also wrote in an email that the wired progressive group plans to release an online tool, “Banxodus,” that will help people find “good-guy” banks near them.

Yesterday was a big day for online organizing against big-bank behavior. Also on occasion of the Bank of America announcement, Change.org released an announcement pointing to a 300,000-signatory petition hosted on their online petitions platform. “Bank of America announced Tuesday that it will drop its $5 debit card fee after more than 300,000 people from all 50 states joined a viral campaign on Change.org started by 22-year-old Bank of America customer Molly Katchpole,” Change.org proclaimed in a press release sent yesterday. Katchpole is enjoying national media attention, but her online petition also came amid a nationwide upheaval against the current structure of the financial services industry — and with droves of people actually taking their money away from Bank of America.

Bank of America officials said in a statement that customer input was the reason they canceled their plans. Decisions by JP Morgan Chase & Co. and Wells Fargo to walk back their own debit card fees came last week. “We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, Bank of America’s co-chief operating officer, said in a statement. “Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.” The fee reversal may have come too late for Bank of America. Local newspapers across the country are full of stories like this one, from the Worcester (Mass.) Telegram & Gazette:

For many months, Sean J. McLoughlin considered leaving Bank of America and switching to a bank that didn’t charge him fees just for having checking accounts. When Bank of America said in September it would charge customers $5 a month for using debit cards, his decision to leave the big bank became easier. “I said ‘Forget it, I’m done,’ ” he said.

TOO BIG to JAIL?
http://www.zerohedge.com/contributed/only-way-save-economy-break-giant-insolvent-banks
The Government Created the Giant Banks

As MIT economics professor and former IMF chief economist Simon Johnson points out, the official White House position is that:

(1) The government created the mega-giants, and they are not the product of free market competition

(2) The White House needs to “regulate and oversee them”, even though it is clear that the government has no real plans to regulate or oversee the banking behemoths

(3) Giant banks are good for the economy

This is false … giant banks are incredibly destructive for the economy.

We Do NOT Need the Big Banks to Help the Economy Recover

Do we need the Too Big to Fails to help the economy recover?

No.

The following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:

  • Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
  • The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
  • Economics professor and senior regulator during the S & L crisis, William K. Black
  • Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales

Others, like Nobel prize-winning economist Paul Krugman, think that the giant insolvent banks may need to be temporarily nationalized.

In addition, many top economists and financial experts, including Bank of Israel Governor Stanley Fischer – who was Ben Bernanke’s thesis adviser at MIT – say that – at the very least – the size of the financial giants should be limited.

Even the Bank of International Settlements – the “Central Banks’ Central Bank” – has slammed too big to fail. As summarized by the Financial Times:

The report was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.

This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.

And as I noted in December 2008, the big banks are the major reason why sovereign debt has become a crisis:

 BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.

In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.

Similarly, a study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent hurts the economy:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to befiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

The big banks have been bailed out to the tune of many trillions, dragging the economy down a bottomless pit from which we can’t escape. See thisthisthis and this. Unless we break them up, we will never escape.

If We Break Up the Giants, Smaller Banks Will Thrive … And Loan More to Main Street

Do we need to keep the TBTFs to make sure that loans are made?

Nope.

USA Today points out:

Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.

***

The amount of loans outstanding to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009, at banks that participated in TARP compared with a 6.2% drop at banks that didn’t.

Dennis Santiago – CEO and Managing Director of Institutional Risk Analytics (Chris Whalen’s company) – notes:

The really shocking numbers are in the unused line of credit commitments of banks to U.S. business. This is the canary number I like to look at because it is a direct expression of banking and finance confidence in Main Street industry. It’s gone from $92 billion in Dec -2007 to just $24 billion as of Sep-2010. More importantly, the vast majority of this contraction of credit availability to American industry has been by the larger banks, C&I LOC from $87B down to $18.8B by the institutions with assets over $10B. Poof!

Fortune reports that smaller banks are stepping in to fill the lending void left by the giant banks’ current hesitancy to make loans. Indeed, the article points out that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition:

Growth for the nation’s smaller banks represents a reversal of trends from the last twenty years, when the biggest banks got much bigger and many of the smallest players were gobbled up or driven under…

As big banks struggle to find a way forward and rising loan losses threaten to punish poorly run banks of all sizes, smaller but well capitalized institutions have a long-awaited chance to expand.

BusinessWeek notes:

As big banks struggle, community banks are stepping in to offer loans and lines of credit to small business owners…

At a congressional hearing on small business and the economic recovery earlier this month, economist Paul Merski, of the Independent Community Bankers of America, a Washington (D.C.) trade group, told lawmakers that community banks make 20% of all small-business loans, even though they represent only about 12% of all bank assets. Furthermore, he said that about 50% of all small-business loans under $100,000 are made by community banks…

Indeed, for the past two years, small-business lending among community banks has grown at a faster rate than from larger institutions, according to Aite Group, a Boston banking consultancy. “Community banks are quickly taking on more market share not only from the top five banks but from some of the regional banks,” says Christine Barry, Aite’s research director. “They are focusing more attention on small businesses than before. They are seeing revenue opportunities and deploying the right solutions in place to serve these customers.”

Fed Governor Daniel K. Tarullo said:

The importance of traditional financial intermediation services, and hence of the smaller banks that typically specialize in providing those services, tends to increase during times of financial stress. Indeed, the crisis has highlighted the important continuing role of community banks…

For example, while the number of credit unions has declined by 42 percent since 1989, credit union deposits have more than quadrupled, and credit unions have increased their share of national deposits from 4.7 percent to 8.5 percent. In addition, some credit unions have shifted from the traditional membership based on a common interest to membership that encompasses anyone who lives or works within one or more local banking markets. In the last few years, some credit unions have also moved beyond their traditional focus on consumer services to provide services to small businesses, increasing the extent to which they compete with community banks.

Thomas M. Hoenig pointed out in a speech at a U.S. Chamber of Commerce summit in Washington:

During the recent financial crisis, losses quickly depleted the capital of these large, over-leveraged companies. As expected, these firms were rescued using government funds from the Troubled Asset Relief Program (TARP). The result was an immediate reduction in lending to Main Street, as the financial institutions tried to rebuild their capital. Although these institutions have raised substantial amounts of new capital, much of it has been used to repay the TARP funds instead of supporting new lending.

On the other hand, Hoenig pointed out:

In 2009, 45 percent of banks with assets under $1 billion increased their business lending.

45% is about 45% more  than the amount of increased lending by the too big to fails.

Indeed, some very smart people say that the big banks aren’t really focusing as much on the lending business as smaller banks.

Specifically since Glass-Steagall was repealed in 1999, the giant banks have made much of their money in trading assets, securities, derivatives and other speculative bets, the banks’ own paper and securities, and in other money-making activities which have nothing to do with traditional depository functions.

Now that the economy has crashed, the big banks are making very few loans to consumers or small businesses because theystill have trillions in bad derivatives gambling debts to pay off, and so they are only loaning to the biggest players and those who don’t really need credit in the first place. See this and this.

So we don’t really need these giant gamblers. We don’t reallyneed JP Morgan, Citi, Bank of America, Goldman Sachs or Morgan Stanley. What we need are dedicated lenders.

The Fortune article discussed above points out that the banking giants are not necessarily more efficient than smaller banks:

The largest banks often don’t show the greatest efficiency. This now seems unsurprising given the deep problems that the biggest institutions have faced over the past year.

“They actually experience diseconomies of scale,” Narter wrote of the biggest banks. “There are so many large autonomous divisions of the bank that the complexity of connecting them overwhelms the advantage of size.”

And Governor Tarullo points out some of the benefits of small community banks over the giant banks:

Many community banks have thrived, in large part because their local presence and personal interactions give them an advantage in meeting the financial needs of many households, small businesses, and agricultural firms. Their business model is based on an important economic explanation of the role of financial intermediaries–to develop and apply expertise that allows a lender to make better judgments about the creditworthiness of potential borrowers than could be made by a potential lender with less information about the borrowers.

A small, but growing, body of research suggests that the financial services provided by large banks are less-than-perfect substitutes for those provided by community banks.

It is simply not true that we need the mega-banks. In fact, as many top economists and financial analysts have said, the “too big to fails” are actually stifling competition from smaller lenders and credit unions, and dragging the entire economy down into a black hole.

The Failure to Break Up the Big Banks Is Causing Rampant Fraud


Top economists and experts on fraud say that fraud is not only widespread, it is actually the business model adopted by the giant banks. See thisthisthisthisthis and this.

In addition, Richard Alford – former New York Fed economist, trading floor economist and strategist – showed that banks that get too big benefit from “information asymmetry” which disrupts the free market.

Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:

“The main problem that Goldman raises is a question of size: ‘too big to fail.’ In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information.”

Further, he says, “That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that’s why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you’re going to trade on behalf of others, if you’re going to be a commercial bank, you can’t engage in certain kinds of risk-taking behavior.”

The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets– making up more than 70% of stock trades – but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See thisthisthisthis and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).

Goldman also admitted that its proprietary trading program can “manipulate the markets in unfair ways”. The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with thegovernment’s blessings.

In other words, a handful of giants doing it, it can manipulate the entire economy in ways which are not good for the American citizen.

The Failure to Break Up the Big Banks Is Dooming Us to a Derivatives Depression

All independent experts agree that unless we rein in derivatives, will have another – bigger – financial crisis.

But the big banks are preventing derivatives from being tamed.

We have also pointed out that derivatives are still very dangerous for the economy, that the derivatives “reform” legislation previously passed has probably actually weakenedexisting regulations, and the legislation was “probably written by JP Morgan and Goldman Sachs“.

As I noted last year

Harold Bradley – who oversees almost $2 billion in assets as chief investment officer at the Kauffman Foundation – told the Reuters Global Exchanges and Trading Summit in New York that a cabal is preventing swap derivatives from being forced onto clearing exchanges:

There is no incentive from the moneyed interests in either Washington or New York to change it…

I believe we are in a cabal. There are five or six players only who are engaged and dominant in this marketplace and apparently they own the regulatory apparatus. Everybody is afraid to regulate them.

That’s bad enough.

But Bob Litan of the Brookings Institute wrote a paper (here’s asummary) showing that – even if real derivatives legislation is ever passed – the 5 big derivatives players will still prevent any real change. James Kwak notes that Litan is no radical, but has previously written in defense in financial “innovation”.

Here’s a good summary from Rortybomb, showing that this is yet another reason to break up the too big to fails:

Litan is worried about the “Dealer’s Club” of the major derivatives players. I particularly like this paper as the best introduction to the current oligarchy that takes place in the very profitable over-the-counter derivatives trading market and credit default swap market. [Litton says]:

I have written this essay primarily to call attention to the main impediments to meaningful reform: the private actors who now control the trading of derivatives and all key elements of the infrastructure of derivatives trading, the major dealer banks. The importance of this “Derivatives Dealers’ Club” cannot be overstated. All end-users who want derivatives products, CDS in particular, must transact with dealer banks…I will argue that the major dealer banks have strong financial incentives and the ability to delay or impede changes from the status quo — even if the legislative reforms that are now being widely discussed are adopted — that would make the CDS and eventually other derivatives markets safer and more transparent for all concerned…

Here, of course, I refer to the major derivatives dealers – the top 5 dealer-banks that control virtually all of the dealer-to-dealer trades in CDS, together with a few others that participate with the top 5 in other institutions important to the derivatives market. Collectively, these institutions have the ability and incentive, if not counteracted by policy intervention, to delay, distort or impede clearing, exchange trading and transparency

Market-makers make the most profit, however, as long as they can operate as much in the dark as is possible – so that customers don’t know the true going prices, only the dealers do. This opacity allows the dealers to keep spreads high…

In combination, these various market institutions – relating to standardization, clearing and pricing – have incentives not to rock the boat, and not to accelerate the kinds of changes that would make the derivatives market safer and more transparent. The common element among all of these institutions is strong participation, if not significant ownership, by the major dealers.

So Bob Litan is waving a giant red flag that the top dealer-banks that control the CDS market can more or less, through a variety of means he lays out convincingly in the paper, derail or significantly slow down CDS reform after the fact if it passes.

***

If you thought we’d at least get our arms around credit default swap reform from a financial reform bill, you should read this report from Litan as a giant warning flag. In case you weren’t sure if you’ve heard anyone directly lay out the case on how the market and political concentration in the United States banking sector hurts consumers and increases systemic risk through both political pressures and anticompetitive levels of control of the institutions of the market, now you have. It’s not Matt Taibbi, but it’s much further away from a “everything is actually fine and the Treasury is in control of reform” reassurance. Which should scare you, and give you yet another good reason for size caps for the major banks.

53246864840716464 2380196514216991388?l=georgewashington2.blogspot The Only Way to Save the Economy:  Break Up the Giant, Insolvent BanksMoreover, the big banks are still dumping huge amounts of their toxic derivatives on the taxpayer. And see this.

Why Aren’t They Be Broken Up?

So what is the real reason that the TBTFs aren’t being broken up?

Certainly, there is regulatory capture, cowardice and corruption:

  • Joseph Stiglitz (the Nobel prize winning economist) said recently that the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action
  • Economic historian Niall Ferguson asks:

    Guess which institutions are among the biggest lobbyists and campaign-finance contributors? Surprise! None other than the TBTFs [too big to fails].

  • Manhattan Institute senior fellow Nicole Gelinas agrees:

    The too-big-to-fail financial industry has been good to elected officials and former elected officials of both parties over its 25-year life span

  • Investment analyst and financial writer Yves Smith says:

    Major financial players [have gained] control over the all-important over-the-counter debt markets…It is pretty hard to regulate someone who has a knife at your throat.

  • William K. Black says:

    There has been no honest examination of the crisis because it would embarrass C.E.O.s and politicians . . .Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well. There have been no prosecutions of the chief executives of the large nonprime lenders that would expose the “epidemic” of fraudulent mortgage lending that drove the crisis. There has been no accountability…

    The Obama administration and Fed Chairman Ben Bernanke have refused to investigate the nature and causes of the crisis. And the administration selected Timothy Geithner, who with then Treasury Secretary Paulson bungled the bailout of A.I.G. and other favored “too big to fail” institutions, to head up Treasury.

    Now Lawrence Summers, head of the White House National Economic Council, and Mr. Geithner argue that no fundamental change in finance is needed. They want to recreate a secondary market in the subprime mortgages that caused trillions of dollars of losses.

    Traditional neo-classical economic theory, particularly “modern finance theory,” has been proven false but economists have failed to replace it. No fundamental reform can be passed when the proponents are pretending that there really is no crisis or need for change.

  • Harvard professor of government Jeffry A. Frieden says:

    Regulatory agencies are often sympathetic to the industries they regulate. This pattern is so well known among scholars that it has a name: “regulatory capture.” This effect can be due to the political influence of the industry on its regulators; or to the fact that the regulators spend so much time with their charges that they come to accept their world view; or to the prospect of lucrative private-sector jobs when regulators retire or resign.

  • Economic consultant Edward Harrison agrees:Regulating Wall Street has become difficult in large part because of regulatory capture.

But there is an even more interesting reason . . .

The number one reason the TBTF’s aren’t being broken up is [drumroll] . . . the ‘ole 80?s playbook is being used.

As the New York Times wrote in February:

In the 1980s, during the height of the Latin American debt crisis, the total risk to the nine money-center banks in New York was estimated at more than three times the capital of those banks. The regulators, analysts say, did not force the banks to value those loans at the fire-sale prices of the moment, helping to avert a disaster in the banking system.

In other words, the nine biggest banks were all insolvent in the 1980s.

Indeed, Richard C. Koo – former economist at the Federal Reserve Bank of New York and doctoral fellow with the Fed’s Board of Governors, and now chief economist for Nomura –confirmed this fact last year in a speech to the Center for Strategic & International Studies. Specifically, Koo said that -after the Latin American crisis hit in 1982 – the New York Fed concluded that 7 out of 8 money center banks were actually “underwater” and “bankrupt”, but that the Fed hid that fact from the American people.

So the government’s failure to break up the insolvent giants – even though virtually all independent experts say that is the only way to save the economy, and even though there is no good reason not to break them up – is nothing new.

William K. Black’s statement that the government’s entire strategy now – as in the S&L crisis – is to cover up how bad things are (“the entire strategy is to keep people from getting the facts”) makes a lot more sense.

CENTRAL BANKS MASTER LIST | BANK for INTERNATIONAL SETTLEMENTS
http://www.bis.org/cbanks.htm


http://www.nationaljournal.com/the-homemade-weapons-of-libya-s-rebel-forces-20110615
“A Libyan rebel fighter smokes a cigarette next to an improvised multiple rocket launcher in the back of a pickup truck, as the rebels prepare to make an advance, in the desert on the outskirts of Ajdabiya, on April 14.” (AP Photo/Ben Curtis)”

UNPRECEDENTED
http://www.bloomberg.com/news/2011-03-21/libyan-rebel-council-sets-up-oil-company-to-replace-qaddafi-s.html
Libyan Rebel Council Forms Central Bank to Replace Qaddafi’s
by Bill Varner  /  Mar 22, 2011

Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by leader Muammar Qaddafi whose assets were frozen by the United Nations Security Council. The Transitional National Council released a statement announcing the decision made at a March 19 meeting to establish the “Libyan Oil Company as supervisory authority on oil production and policies in the country, based temporarily in Benghazi, and the appointment of an interim director general” of the company.

The Council also said it “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.” The Security Council adopted a resolution on March 17 that froze the foreign assets of the Libyan National Oil Corp. and the Central Bank of Libya, both described in the text as “a potential source of funding” for Qaddafi’s regime.

Libya holds Africa’s largest oil reserve. Output has fallen to fewer than 400,000 barrels a day, Shokri Ghanem, chairman of the National Oil Corp., said on March 19. The country produced 1.59 million barrels a day in January, according to estimates compiled by Bloomberg. Exports may be halted for “many months” because of sanctions and unrest, the International Energy Agency said. Brent crude for May settlement on the London-based ICE Futures Europe exchange fell 0.3 percent to $114.62 as of 8:50 a.m. It surged to a 2 1/2-year high of $119.79 on Feb 24 as geopolitical tensions spread throughout the Middle East and North Africa. The European benchmark will average $109 a barrel this year, up from a previous forecast of $98, on expectations of an “extended shutdown” of Libyan oil supplies, Societe Generale SA said in a monthly review dated yesterday.

The statement by the Transitional National Council also said the rebels would “urgently prepare a file on the referral of Qaddafi and his gang and his associates involved in the killing of Libyans to the International Criminal Court.” The Security Council referred allegations of human rights violations by the Qaddafi regime to the court in a resolution adopted on Feb. 26. The statement said the council would begin choosing ambassadors to foreign countries. The UN said yesterday that Deputy Ambassador Ibrahim Dabbashi, who broke with the regime last month and said he was then representing the rebels, was no longer Libya’s accredited ambassador. Ambassador Mohammed Shalgham, who also broke with the regime, similarly lost his accreditation when Qaddafi appointed former UN General Assembly President Abdussalam Treki as envoy to the world body. Treki hasn’t presented his credentials yet to Secretary- General Ban Ki-moon, a prerequisite for officials taking the post.


“A convoy of Libyan rebels deploy around the western gate of Ajdabiya on April 19.” (AP Photo/Nasser Nasser)

BROUGHT to YOU BY
http://www.ntclibya.org/english/meeting-on-19-march-2011/

the Interim Transitional National Council

“Meeting Outcomes of the Interim National Council held on 19 March 2011 BENGHAZI, LIBYA – The Interim National Council met on Saturday, 19 March 2011, and discussed a number of important national issues on the current circumstances of the country and the importance of taking necessary actions. The outcome of the meeting is summarized as follows:

First: The Council discussed all the developments on the ground, including the crimes committed by the Qadhafi regime against the Libyan people the Libyan people as well as the report submitted on the implementation of Security Council Resolutions 1970 and 1973 decided accordingly the following:

1-      To welcome the mentioned resolutions and urge the international community to expedite the initiative to implement the resolutions in order to protect the Libyan people and assist them in achieving the legitimate demand.

2-      To call upon the Libyans throughout the country to be cautions and to continue to demonstrate peacefully in order to achieve their legitimate demands by going out to the streets and peaceful sit-ins, particularly after the international community ensured the protection of Libyan civilians in accordance with Resolution 1973 and demanding the international community to ensure the safety of Libyan civilians.

3-      To urgently prepare a file on the referral of Qadhafi, his gang and his associates involved in killing of Libyans, to the international Criminal Court and entrusting a technical and legal team to complete the procedures.

4-      To intensify contacts with brotherly and friendly countries for the recognition of the Transitional National Council and welcome the positive response of many countries to deal with the Transitional National Council and urge other nations to an early recognition of the Council and urge other nations to an early recognition of the Council as the sole legitimate representative of Libyan People.

5-      To choose a number of ambassadors and representatives of Libya to foreign countries, according to proposal submitted by Foreign Affairs submitted for approval.

Second: The Designation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.

Third: The establishment of Libyan Oil Company as supervisory Authority on oil production and policies in the country, based temporarily in Benghazi and appointment of an interim Director-General for the Libyan Oil Company.”


“A rebel fighter rests on a weapon mounted on the back of a pickup truck on the front line between them and Muammar el-Qaddafi forces, 30 km south of Misurata, on May 27.” (AP Photo/Rodrigo Abd

SKEPTICISM
http://thenewamerican.com/world-mainmenu-26/africa-mainmenu-27/6915-libyan-rebels-create-central-bank-oil-company

As analysts debate possible motives behind President Obama’s United Nations-backed military intervention in Libya, one angle that has received attention in recent days is the rebels’ seemingly odd decision to establish a new central bank to replace dictator Muammar Gadhafi’s state-owned monetary authority — possibly the first time in history that revolutionaries have taken time out from an ongoing life-and-death battle to create such an institution, according to observers. In a statement released last week, the rebels reported on the results of a meeting held on March 19. Among other things, the supposed rag-tag revolutionaries announced the “[d]esignation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

The Gadhafi regime’s central bank — unlike the U.S. Federal Reserve, which is owned by private shareholders — was among the few central banks in the world that was entirely state-owned. At the moment, it is unclear exactly who owns the rebel’s central bank or how it will be governed. The so-called Interim Transitional National Council, the rebels’ self-appointed new government for Libya purporting to be the “sole legitimate representative of Libyan People,” also trumpeted the creation of a new “Libyan Oil Company” based in the rebel stronghold city of Benghazi. The North African nation, of course, has the continent’s largest proven oil reserves. The U.S. government and the U.N. have both recently announced that the rebels would be free to sell oil under their control — if they do it without Gaddafi’s National Oil Corporation. And the first shipments are set to start next week, according to news reports citing a spokesman for the rebels.

But the creation of a new central bank, even more so than the new national oil regime, left analysts scratching their heads. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” noted Robert Wenzel in an analysis for the Economic Policy Journal. “This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.” Wenzel also noted that the uprising looked like a “major oil and money play, with the true disaffected rebels being used as puppets and cover” while the transfer of control over money and oil supplies takes place. And other analysts agreed. A popular blog called The Economic Collapse used sarcasm to express suspicions about the strange rebel announcement. “Perhaps when this conflict is over those rebels can become time management consultants. They sure do get a lot done,” joked the piece, entitled “Wow That Was Fast! Libyan Rebels Have Already Established A New Central Bank Of Libya.” The blog also commented, sarcastically again, on the possibility of outside involvement. “What a skilled bunch of rebels — they can fight a war during the day and draw up a new central bank and a new national oil company at night without any outside help whatsoever. If only the rest of us were so versatile! … Apparently someone felt that it was very important to get pesky matters such as control of the banks and control of the money supply out of the way even before a new government is formed,” read the piece.

Even mainstream news outlets were puzzled. “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power?” wondered CNBC senior editor John Carney. “It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.” But some observers are convinced that the central bank issue was actually the primary motivation for the international war against Libya‘s dictatorship. In an article that has spread far and wide across the web, entitled “Globalists Target 100% State Owned Central Bank of Libya,” author Eric Encina maintains that the world’s “globalist financiers and market manipulators” could not stand the Libyan monetary authority’s independence, explaining:

Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations. And when Gadhafi is gone and the dust has settled, according to Encina, “you will see the Allied reformers move in to reform Libya’s monetary system, pumping it full of worthless dollars, priming it for a series of chaotic inflationary cycles.” The future of Libya’s vast gold stockpiles could also be in jeopardy, he noted.

Numerous other analysts and experts have also pointed to the central banking issue as one of the top factors leading up to the Western backing of Libyan rebels. Monetary historian Andrew Gause, for example, recently shared his concerns about the matter publicly. Other points made in the rebels’ odd announcement last week included preparations to send Gadhafi to the U.N.’s International Criminal Court for trial, the selection of diplomats to send abroad, and the desire for other governments to recognize the Transitional National Council as the legitimate new rulers of Libya. France has already done so, and other governments may soon follow suit.

Of course, the U.S. government claims to have very little knowledge about who the rebels actually are. But the U.S. Commander of NATO forces recently admitted to the Senate that hints of al Qaeda involvement have been detected among the rebels. The terror group was created, armed, funded, and trained by the U.S. government decades ago, as Secretary of State Hillary Clinton admitted even recently. But since then, it has targeted American embassies and other U.S. targets. As The New American reported over the weekend, elements of al Qaeda and affiliated terror groups are indeed among the leadership of the revolution. But despite that fact, the U.S. government and the international coalition are providing air support and weapons for the new central-bank-creating rebels. Where the conflict goes from here is uncertain, but Western regimes have vowed not to let Gaddafi remain in power.


“A rebel poses with an armful of rocket-propelled grenades taken from an armored personnel carrier captured from forces loyal to Libyan leader Muammar el-Qaddafi on the outskirts of the town of Zliten, west of the rebel-held port city of Misurata, on June 10.” (Reuters/Abdelkader Belhessin)

MEANWHILE: QADDAFI HAS $100+ BILLION STASHED
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/07/15/bloomberg1376-LOF9MG6S972901-254BJ5BEJ5PGELCM4FF1HAHRT3.DTL

July 16 (Bloomberg) — Muammer Qaddafi has at least $100 billion of assets abroad and Libya’s Transitional National Council expects a portion of the frozen funds to be released or to obtain borrowing against them. “To be safe we’re saying there’s over $100 billion,” spokesman Mahmoud Shammam said today by telephone from Istanbul, where the U.S. and its allies recognized the council as the sole legitimate governing authority in Libya at a meeting yesterday. “We need some necessity expenses and to get loans against a percentage.” The council requires $3 billion over six months to cover the budget and expects to get a $100 million loan from Turkey in the next three days, Shammam said. Kuwait has pledged $180 million, while Italy and other governments said yesterday that Libyan assets held by their countries “will be released or we’ll get loans against them,” he said. The TNC is saying the unfrozen funds won’t be spent, rather used as collateral to cover borrowing until an elected government is in place, Shammam said.

the LIBYA CONTACT GROUP
http://www.reuters.com/article/2011/07/15/us-libya-meeting-usa-idUSTRE76E2QF20110715
Seeking to free funds, U.S. recognizes Libya rebels
by Andrew Quinn / Jul 15, 2011

(Reuters) – The United States Friday recognized Libya’s rebel National Transitional Council (TNC) as a legitimate government, a diplomatic boost which could unlock billions of dollars in frozen assets. U.S. Secretary of State Hillary Clinton said Washington would extend formal recognition to the Benghazi-based TNC until a fully representational interim government can be established. “The TNC has offered important assurances today, including the promise to pursue a process of democratic reform that is inclusive both geographically and politically,” Clinton said in prepared remarks. “Until an interim authority is in place, the United States will recognize the TNC as the legitimate governing authority for Libya, and we will deal with it on that basis.”

Clinton’s announcement came as the Libya Contact Group, meeting in Istanbul, formally recognized the opposition as the representative of the Libyan people — sealing its diplomatic status as the successor government to embattled leader Muammar Gaddafi. The contact group, made up of more than 30 governments and international and regional organizations, also authorized U.N. special envoy Abdul Elah Al-Khatib to present terms for Gaddafi to leave power in a political package that will include a ceasefire to halt fighting in the civil war. Clinton said any deal “must involve Gaddafi’s departure” from power and a halt to violence. “Increasingly the people of Libya are looking past Gaddafi. They know, as we all know, that it is no longer a question of whether Gaddafi will leave power, but when,” she said. U.S. officials said the decision on formal diplomatic recognition marked an important step toward unblocking more than $34 billion in Libyan assets in the United States but cautioned it could still take time to get funds flowing to the cash-strapped Benghazi council. “We expect this step on recognition will enable the TNC to access additional sources of funding,” Clinton told reporters after the meeting, saying Washington would discuss with allies “the most effective and appropriate method” to do this. They also said no decisions had been made on upgrading U.S. representation in Benghazi — now a small office headed by special envoy Chris Stevens — or on bringing the TNC into the United Nations and other international organizations. Clinton acknowledged that the United States had “taken its time” in deciding on formal recognition of the TNC, but now firmly believed this was the way forward. “We think they are have made great strides and are on the right path,” she said.

U.S. President Barack Obama signed an executive order on February 25 freezing the assets of Gaddafi, his family and top officials, as well as the Libyan government, the country’s central bank and sovereign wealth funds. Most of the frozen assets are liquid in the form of cash and securities. U.S. officials have pledged to free up some of the money for the TNC, which has run dangerously short of cash to pay for salaries and basic services even as it takes on more of the responsibilities of government. But discussions with Congress on mechanisms to free up the money ran into legal complications — some of which could be swept away by U.S. recognition of the TNC as Libya’s legitimate government. “Our hope is that in a relatively short time frame we will be able to make progress (on funds) but there’s a lot of moving pieces here,” one senior State Department official said. The United States could direct banks to transfer frozen funds directly to the TNC, but this might still run foul of U.N. financial sanctions in place on Libya. A second option would be for the United States to establish a line of credit backed by the frozen assets as several other countries have done.

Clinton’s announcement formally recognizing the TNC marked the end of a process which began in February when Obama declared that Gaddafi had lost his legitimacy as Libya’s leader because of his brutal response to anti-government protesters. “We wanted to send a very clear signal to Gaddafi and the people around him that we are looking past Gaddafi to a future without him,” the senior U.S. official said. “We felt that taking this step today sends that message loud and clear.” The United States closed its embassy in Tripoli in February and withdrew its diplomatic staff, but maintains embassy staff working in Washington to develop ties with the TNC. The United States and Gaddafi’s government have been estranged for most of the past four decades, and only resumed contacts in 2003 when Tripoli gave up its pursuit of weapons of mass destruction and took responsibility for its role in the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland.


Central Bank of Libya offices in Tripoli

the CENTRAL BANK of LIBYA
http://en.wikipedia.org/wiki/Central_Bank_of_Libya
http://cbl.gov.ly/en/
http://cbl.gov.ly/en/home/index.php?cid=94
“The Central Bank of Libya (CBL) is 100% state ownership and represents the monetary authority in The Great Socialist People’s Libyan Arab Jamahiriya and enjoys the status of autonomous corporate body.”

DEFECTED CENTRAL BANK GOVERNOR: ‘CASH MAY BE HIDDEN in DESERT”
http://video.ft.com/v/946393675001/Libyan-cash-may-be-hidden-in-desert
May 17 2011 : “Farhat Bengdara was, until he defected, at the heart of the Libyan regime as central bank governor. As rebels began the uprising against Muammer Gaddafi, Bengdara flew to Turkey and began to help the other side. In this revealing interview with the FT’s Middle East editor Roula Khalaf, he describes where Libya’s gold is kept, how Gaddafi may have foreign reserve cash hidden in the desert and the powerful effect of western sanctions.” (video 8m 44sec)

100% STATE-OWNED
http://www.marketoracle.co.uk/Article27208.html
Globalists Target 100% State Owned Central Bank of Libya
by Patrick_Henningsen / Mar 28, 2011

Eric V. Encina writes: One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned. The world’s globalist financiers and market manipulators do not like it and would continue to their on-going effort to dethrone Muammar Muhammad al-Gaddafi, bringing an end to Libya as independent nation. Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations. When the smoke eventually clears from all the cruise missiles and cluster bombs, you will see the Allied reformers move in to reform Libya’s monetary system, pumping it full of worthless dollars, priming it for a series of chaotic inflationary cycles.

The CBL is currently a 100% state owned entity and represents the monetary authority in The Great Socialist People’s Libyan Arab Jamahiriya. The financial structure and general operation procedures of a state bank is of course much different than that of an American or European based central bank. Form starters it is not privately owned, for-profit bank with a undisclosed list of private shareholders like the US Federal Reserve and the Bank of England are. Libyan constitutional law establishing the CBL stipulates that its central bank maintains monetary stability in Libya and promotes sustained growth of its national economy. Libya also holds more bullion as a proportion of gross domestic product than any country except Lebanon, according to the London-based World Gold Council using January data from the International Monetary Fund. The value of gold is based on the March 25 close of $1,429.74 an ounce. Will this gold remain in Libya once Allied forces have taken control of Tripoli, or will it lost, or exchanged for pallets upon pallets of paper aka US dollars?



“THE PLAN”
http://www.atimes.com/atimes/Middle_East/MD14Ak02.html

There is no denying at least one very popular achievement of the Libyan government: it brought water to the desert by building the largest and most expensive irrigation project in history, the US$33 billion GMMR (Great Man-Made River) project. Even more than oil, water is crucial to life in Libya.  The GMMR provides 70% of the population with water for drinking and irrigation, pumping it from Libya’s vast underground Nubian Sandstone Aquifer System in the south to populated coastal areas 4,000 kilometers to the north. The Libyan government has done at least some things right.

Another explanation for the assault on Libya is that it is “all about oil”, but that theory too is problematic. As noted in the National Journal, the country produces only about 2% of the world’s oil. Saudi Arabia alone has enough spare capacity to make up for any lost production if Libyan oil were to disappear from the market. And if it’s all about oil, why the rush to set up a new central bank?

Another provocative bit of data circulating on the Net is a 2007 “Democracy Now” interview of US General Wesley Clark (Ret). In it he says that about 10 days after September 11, 2001, he was told by a general that the decision had been made to go to war with Iraq. Clark was surprised and asked why. “I don’t know!” was the response. “I guess they don’t know what else to do!” Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”  According to a Russian article titled “Bombing of Libya – Punishment for Ghaddafi for His Attempt to Refuse US Dollar”, Gaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gaddafi suggested establishing a united African continent, with its 200 million people using this single currency.

During the past year, the idea was approved by many Arab countries and most African countries. The only opponents were the Republic of South Africa and the head of the League of Arab States. The initiative was viewed negatively by the USA and the European Union, with French President Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Gaddafi was not swayed and continued his push for the creation of a united Africa.  And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed: “One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned … Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.”

Libya not only has oil. According to the International Monetary Fund (IMF), its central bank has nearly 144 tonnes of gold in its vaults. With that sort of asset base, who needs the BIS, the IMF and their rules? All of which prompts a closer look at the BIS rules and their effect on local economies. An article on the BIS website states that central banks in the Central Bank Governance Network are supposed to have as their single or primary objective “to preserve price stability”.

They are to be kept independent from government to make sure that political considerations don’t interfere with this mandate. “Price stability” means maintaining a stable money supply, even if that means burdening the people with heavy foreign debts. Central banks are discouraged from increasing the money supply by printing money and using it for the benefit of the state, either directly or as loans.

In a 2002 article in Asia Times Online titled “The BIS vs national banks” Henry Liu maintained: “BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. The BIS does to national banking systems what the IMF has done to national monetary regimes. National economies under financial globalization no longer serve national interests. FDI [foreign direct investment] denominated in foreign currencies, mostly dollars, has condemned many national economies into unbalanced development toward export, merely to make dollar-denominated interest payments to FDI, with little net benefit to the domestic economies.” He added, “Applying the State Theory of Money, any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation.” The “state theory of money” refers to money created by governments rather than private banks.

The presumption of the rule against borrowing from the government’s own central bank is that this will be inflationary, while borrowing existing money from foreign banks or the IMF will not. But all banks actually create the money they lend on their books, whether publicly owned or privately owned. Most new money today comes from bank loans. Borrowing it from the government’s own central bank has the advantage that the loan is effectively interest-free. Eliminating interest has been shown to reduce the cost of public projects by an average of 50%.  And that appears to be how the Libyan system works. According to Wikipedia, the functions of the Central Bank of Libya include “issuing and regulating banknotes and coins in Libya” and “managing and issuing all state loans”. Libya’s wholly state-owned bank can and does issue the national currency and lend it for state purposes.  That would explain where Libya gets the money to provide free education and medical care, and to issue each young couple $50,000 in interest-free state loans. It would also explain where the country found the $33 billion to build the Great Man-Made River project. Libyans are worried that North Atlantic Treaty Organization-led air strikes are coming perilously close to this pipeline, threatening another humanitarian disaster.

So is this new war all about oil or all about banking? Maybe both – and water as well. With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors. And that may be the real threat of Libya: it could show the world what is possible.  Most countries don’t have oil, but new technologies are being developed that could make non-oil-producing nations energy-independent, particularly if infrastructure costs are halved by borrowing from the nation’s own publicly owned bank. Energy independence would free governments from the web of the international bankers, and of the need to shift production from domestic to foreign markets to service the loans.  If the Gaddafi government goes down, it will be interesting to watch whether the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and healthcare continue to be free.

{Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are  http://webofdebt.com and http://ellenbrown.com.}