home / subscribe / donate / tower / books / archives / search / links / feedback / events / faq
Red Alert for CounterPunchers!
Annual Fundraising AppealWe interrupt your regular reading habits to bring you the following important announcement: CounterPunch needs your financial support!
We're not in the habit of making idle threats and this isn't one. Either we meet our fundraising goal of $70,000 over the next three weeks or we'll be forced to drastically curtail the operation of our website. It's near the end of our year and the wolves are gathering at the door.
CounterPunch's website is supported almost entirely by subscribers to the print edition of our newsletter. We don't clutter the site by selling annoying popup ads. We tried getting money out of Google, but they gave us the boot. We aren't on the receiving end of six-figure grants from big foundations. George Soros doesn't have us on retainer. And we don't sell tickets on cruiseliners.
The continued existence of CounterPunch depends solely on the support and dedication of our readers. And we know there are a lot of you. We get thousands of emails from you every day. Our website receives nearly 100,000 visits each day-and those numbers grow by the month. Of course, all these readers chew up a lot of bandwidth and that costs money.
Through the Iraq war, the daily traumas of the Bush administration, hurricanes, fires, the loss of Habeas Corpus and the betrayals of the Democrats, many of you have found a refuge at CounterPunch and made us your homepage. You tell us that you love CounterPunch because the quality of writing you find here every day and because we never flinch under fire. We appreciate the support and are prepared for the fierce battles to come as the Bush administration desperately expands its wars abroad and at home. And, if the Democrats manage win back Presidency, you know that CounterPunch--almost alone on the Left--will hold them to account.
Unlike many other outfits, we don't hit you up for money every month ... or even every quarter, like our friends at Antiwar.com. We only ask for your support once a year. But when we ask, we mean it. Please, use our secure server make a tax-deductible donation to CounterPunch today or purchase a subscription and a gift sub for someone or one of our award winning books (or a crate of books!) as holiday presents. (We won't call you to shake you down or sell your name to any lists--even Dick Cheney's.)
To contribute by phone you can call Becky or Deva toll free at: 1-800-840-3683
Onward,
Alexander, Jeffrey, Becky. Alya and Deva
CounterPunch
PO Box 228, Petrolia, CA 95558
|
November 6, 2007 Andy
Worthington November 5, 2007 Alexander
Cockburn Russell
Mokhiber David
Macaray Gary
Leupp Dave
Lindorff Ludwig
Watzal Patrick
Cockburn Peter
Stone Brown Michael
Simmons Website
of the Day
November 3 / 4, 2007 Tariq
Ali David
Price Jeffrey
St. Clair Alan
Farago Paul
Krassner Rannie
Amiri P.
Sainath Ayesha
Ijaza Khan Robert
Fantina Seth
Sandronsky Ron
Jacobs Ramzy
Baroud Heather
Gray
November 2, 2007 Dr.
Mary Pipher Saul
Landau Andy
Worthington Sharon
Smith Gary
Leupp Gregory
Harms Christopher
Brauchli Peter
Morici Dave
Lindorff David
Penner Website
of the Day
November 1, 2007 Paul
Craig Roberts Patrick
Cockburn Dave
Lindorff Jonathan
Feldman Mike
Ferner William
S. Lind Diana
Johnstone Jacob
Hornberger A..K.
Gupta Lyuba
Zarsky / Felice
Pace Website
of the Day
October 31, 2007 Bill
Quigley Rev.
William E. Alberts Ray
McGovern Eric
Walberg V.
G. Smith Luis
J. Rodriguez Sheldon
Richman Walter
Brasch Website
of the Day
David
Price M.
Shahid Alam Andy
Worthington Patrick
Cockburn Anthony
Papa Floyd
Rudmin Sherwood
Ross Website
of the Day
October 29, 2007 Lisa
Hajjar Joe
DeRaymond Patrick
Cockburn Isabella
Kenfield / Fred
Gardner Farzana
Versey Stephen
Fleischman Marcelle
Cendrars Eamonn
McCann Martha
Rosenberg Website
of the Day
October 27 / 28, 2007 Alexander
Cockburn Jeffrey
St. Clair James
Bovard Ralph
Nader M.
Reza Pirbhai Robert
Sandels Jacob
G. Hornberger Missy
Beattie John
Ross Robert
Fantina Ron
Jacobs Ali
Moayedian David
Michael Green Poets
Basement Website
of the Day
October 26, 2007 Brian
Cloughley Saul
Landau Ahmad
Al-Akras Franklin
Lamb Mike
Whitney Dave
Lindorff Alan
Farago Yifat
Susskind Website
of the Day
Jeffrey
St. Clair / Manuel
Garcia, Jr. Paul
Craig Roberts Col.
Dan Smith Alan
Farago Chris
Kutalik Brian
McKinlay Cindy
Sheehan Website
of the Day
October 24, 2007 Natalie
Washington-Weik Andy
Worthington Michael
Birmingham Corporate
Crime Reporter Tariq
Ali Farzana
Versey Dave
Zirin James
Murren Todd
Chretien Martha
Rosenberg Website
of the Day
October 23, 2007 Ralph
Nader Lawrence
R. Velvel Vijay
Prashad Bonnie
Bricker / Dave
Lindorff Mike
Whitney Farzana
Versey Stanley
Heller / Marcelle
Cendrars Regan
Boychuk Website
of the Day
October 22, 2007 Ishmael
Reed Marjorie
Cohn Rannie
Amiri Diane
Farsetta Todd
Alan Price Robert
Jensen Stephen
Lendman Jemima
Khan Sunsara
Taylor Binoy
Kampmark Website
of the Day
October 20 / 21, 2007 Alexander
Cockburn Tariq
Ali Jeffrey
St. Clair Andy
Worthington Mike
Whitney Daniel
Wolff David
Rosen Saul
Landau Ron
Jacobs Robert
Fantina David
Heleniak Joe
Allen Prairie
Miller Poets'
Basement Website
of the Weekend
October 19, 2007 John
Ross Sheldon
Rampton Rahul
Mahajan Devra
Davis Christopher
Brauchli Wadner
Pierre Bill
Quigley Website
of the Day
October 18, 2007 Saree
Makdisi Meg
Dwyer Alevtina
Rea Norman
Solomon Kristoffer
Larsson Harvey
Wasserman Website
of the Day
October 17, 2007 Steve
Niva Andy
Worthington Alan
Farago Russell
Mokhiber Sharon
Smith Mike
Whitney Robert
Fantina Chris
Irwin Website
of the Day October 16, 2007 Peter
Linebaugh Paul
Findley Robert
Bryce Uri
Avnery Paul
Craig Roberts Ray
McGovern Norman
Solomon Martha
Rosenberg William
S. Lind Joel
S. Hirschborn Website
of the Day
![]()
![]()
Subscribe Online
|
November 6, 2007 The Toxic Giant and It's Own Black HoleWall Street Metes Out Street Justice to CitigroupBy PAM MARTENS After years of receiving slaps on the wrists by regulators for helping insolvent companies hide the true state of their finances from investors, Citigroup's day of reckoning has arrived in the form of "street" justice. Wall Street colleagues are publicly challenging the adequacy of Citigroup's capital, its accounting practices, and its own black hole-Cayman Islands debt structures. Some of the oldest Wall Street firms are also refusing to pony up billions for a grand scheme endorsed by the U.S. Treasury, ostensibly to unfreeze debt markets. Wall Street firms see it as a bail out of Citigroup and just one more free ride from the Feds. Citigroup has been repeatedly charged in investor lawsuits with creating off balance sheet structures to hide the debt of large U.S. firms such as Enron. In each case, it has been allowed to pay millions to regulatory bodies and billions to private plaintiffs to settle the charges without an admission of guilt and avoid a public trial. These trials, however, might have provided critical transparency and an early warning to the public and its colleagues on Wall Street. But next year, Citigroup will face trials in both Italy and the U.S. in two separate actions for creating off balance sheet structures that plaintiffs contend were significant contributors to the bankruptcy of the giant Italian milk company, Parmalat. Citigroup named one of these structures Buconero, Italian for "black hole." Another structure Citigroup set up for Parmalat sold commercial paper, backed by fake invoices, to U.S. money market funds. Citigroup contends it was "the victim" in all matters related to Parmalat. The U.S. trial, set for May of 2008 in a New Jersey State Court, is not being brought by a U.S. prosecutor, but an Italian trustee for Parmalat, Enrico Bondi. Dave Serchuk, a reporter for Securities Week at the time, reported in its February 2, 2004 issue that Citigroup had bundled essentially worthless Parmalat debt and sold it in the form of asset backed commercial paper to what U.S. investors thought were among the safest and most liquid investments: money market funds. Unfortunately, the incendiary Parmalat/Citigroup money market story failed to get picked up by mainstream media. Now, once again, one of the most troubling aspects of the current Citigroup debacle that has gone unreported is the extent to which these opaque and convoluted debt instruments managed by Citigroup, called CDOs (collateralized debt obligations), got dumped into Cayman Islands SIVs, transmuted into AAA-rated commercial paper, landed in the so-called safe money market funds in the U.S., including an astonishing amount at Citigroup's competitor, Merrill Lynch. According to Standard & Poor's Structured Finance research reports, Citigroup is managing the following Structured Investment Vehicles (SIVs), incorporated in the Cayman Islands and not consolidated on Citigroup's balance sheet: Centauri Corp., Beta Finance Corp., Sedna Finance Corp., Five Finance Corp., and Dorada Corp. (1) In addition, according to press reports, Citigroup created two more SIVs as recently as November 2006: Zela Finance Corp. and Vetra Finance Corp. (2) These SIVs contain approximately $80 Billion in what is increasingly being viewed as toxic debt. Knowing the history of Citigroup and knowing the safety and liquidity requirements for money market funds, how did one of the oldest and most sophisticated firms on the street, Merrill Lynch, end up with a boatload of this SIV paper in its various money markets? The most troubling of its money market exposure as of its July 31, 2007 filing with the SEC is its Citigroup managed SIV commercial paper positions in what one would think would be the safest of all its money market funds, the Merrill Lynch Retirement Reserves Money Fund. Merrill's SEC filing shows $52.9 Million in Beta Finance, $53 Million in Five Finance, $10 Million in Sedna Finance, and $10.7 Million in Zela Finance. (3) In a research report written by Meredith Whitney for CIBC World Markets on October 31, 2007, there is a key clue to why Citigroup has finally lost the confidence of the street: "While Citigroup has stated that it will not consolidate the assets of these 7 SIVs, it will continue to provide liquidity. As such, Citigroup's assets would increase as it extends short term funding to SIVs. With a bigger asset base, or denominator, Citigroup's capital ratios would decline. While not specifically disclosed, we know that part of the 6% sequential increase in Citigroup's 3Q07 total assets was from the addition of commercial paper issued to SIVs." (Translation: it can't find a new sucker to roll over its maturing SIV commercial paper; it has become the sucker of last resort along with its balance sheet.) Citigroup's ignoble beginning foreshadowed its sorry state today. It is the Frankenbank created back in 1998 out of the body parts of Travelers Insurance, Salomon investment bank, Smith Barney brokerage, and retail banking giant Citibank, with the brain of Wall Street titan, Sandy Weill, implanted firmly to run a confidence game of unprecedented proportions. (Mr. Weill retired from the firm a few years ago after it made him a billionaire.) Citigroup's creation required the repeal of depression-era investor protection legislation (Glass-Steagall Act) put in place to prevent stock brokerages and investment banks that are prone to high risk, speculation and collapse from merging with commercial banks that hold deposits earmarked for safety by a frequently gullible public. I recently found in my files from that time a letter addressed to me from one Robert Frierson, Associate Secretary of the Board of Governors of the Federal Reserve System. The letter is dated September 23, 1998. It is one of those quixotic examples of the relics of "we the people" government struggling for air in the "we the corporations" era. The letter is formal and polite and on watermarked paper with a faint outline of our Nation's capital silhouetted underneath its ominous text. The letter advises me that Frankenbank is going to move forward but my testimony had been considered. The letter was a followup to the public testimony I gave against the merger on Friday, June 28, 1996 at the Federal Reserve Bank of New York. Galen Sherwin, then President of the National Organization for Women in New York City (now a civil rights lawyer for the New York Civil Liberties Union) and I, then a naively optimistic civil rights litigant against one of Weill's firms, had planned to simply protest outside the building during the testimony by Sandy Weill sycophants. Instead, we were pleasantly surprised to be courteously ushered inside, giant protest signs and all, and afforded a slot to speak on one of the panels. (Both the Federal Reserve's typed transcript of the testimony and my hastily hand scribbled remarks are permanently archived on the web site of this peculiar institution.) (4) Here is an excerpt of what I had to say nine years and 90 Citigroup market manipulations ago:
Ms. Sherwin testified regarding the private justice system at Weill's Salomon Smith Barney that barred employees from accessing the nation's courts as a condition of employment. That system was successfully transplanted to the merged behemoth Citigroup and helps to explain how transparency vanished at what Ms. Sherwin predicted to the Fed in 1998 would "grow into a bloated corporate tyrant." In the end, all Ms. Sherwin and I had for our efforts was a letterhead souvenir from the Fed and a web site archive reminding us we tried. We were trumped by a stream
of sycophants, nonprofits receiving money from the subject under
scrutiny. The Bush administration would like to spin the current Wall Street crisis as the product of millions of hapless poor people with bad credit ("subprime") defaulting on their mortgages. Thus, it's been dubbed "the subprime mess" in headlines spanning the globe. That poor people were tricked into unconscionable mortgages predestined for foreclosure by a Citigroup subsidiary, CitiFinancial, and other predatory lenders, is but a symptom of the real disease and crisis. (6) The Citigroup debacle rises from the same ideology creating endless reports on failures of Federal agencies to perform their oversight roles in protecting the American people with the taxes we give them to do just that. Viewed collectively, one can only conclude that the Bush administration has reengineered these taxpayer supported agencies to stand down on corporate malfeasance with a mantra of corporate profits before people and the flimsy overt pretext that free markets will handily function in the place of regulators with subpoena power. After millions of lead paint infested toys slipped by the Consumer Product Safety Commission, dangerous drugs were rubberstamped by the Food and Drug Administration (FDA), (only to be recalled after hundreds of thousands of injuries, including death), FEMA, the Department of Defense and Attorney General's office discredited for political cronyism, along comes the Citigroup hubris as the poster child crying out for timely enforcement of rules and regulations. Citigroup's 10k filing with
the SEC states that as a bank holding company it is subject to
examination by the Board of Governors of the Federal Reserve.
Having failed to heed the warnings nine years ago, perhaps the
Fed will listen now and hold that long overdue examination.
(1) Standard
& Poor's on Citigroup's SIVs (2) Citigroup
creates two more SIVs in November 2006 (3) Merrill
Lynch's holdings of Citigroup SIVs as of 7/31/2007 in one money
market. (5) Alberto
Gotto's testimony to the Federal Reserve. See Panel 20. See additional Congressional
testimony here
STEPHEN GREEN reports on the real motivations behind Israel's MISSILE STRIKE on SYRIA. PETER MONTAGUE on the NUCLEAR RENAISSANCE or How the Nuke Industry is using Gore's Prize and Global Warming to Plot Its Big Comeback. WILLIAM BLUM on the DEVALUING of "ANTI-SEMITE" or How to Make a Term Meaningless. Get your copy today by subscribing online or calling 1-800-840-3683 Remember contributions to CounterPunch are tax-deductible. Click here to make a donation. If you find our site useful please: Subscribe Now ![]()
|
How the Press Led the US into War ![]() Buy End Times Now! CounterPunch Books of the Crossroads: HOW THE IRISH INVENTED SLANG By Daniel Cassidy AMERICAN BOOK AWARD! ![]() Click Here to Buy! Click Here for Dates & Venues Michael Neumann's Devastating Rebuttal of Alan Dershowitz ![]() Click Here to Buy! Saul Landau's Bush and Botox World with a Foreword by Gore Vidal ![]() Click Here to Order! How They Made a Killing on the War on Terrorism ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() The Occupation by Patrick Cockburn ![]() ![]() ![]() Humanitarian Imperialism By Jean Bricmont ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() CITY BEAUTIFUL By Tennessee Reed ![]() ![]() ![]() ![]() ![]() ![]() Bruce Springsteen On Tour By Dave Marsh ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() |