| Bay National Bank | Baltimore | MD | 35462 | July 9, 2010 | |
| USA Bank | Port Chester | NY | 58072 | July 9, 2010 | |
| Home National Bank | Blackwell | OK | 11636 | July 9, 2010 | |
| Ideal Federal Savings Bank | Baltimore | MD | 32456 | July 9, 2010 |
In gold:
we see the same pattern developing:
The large specs (the hedge funds) decreased their long positions by a whopping 28,719. However those hedge funds that were short
increased those short positions by a rather large 6964 contracts.
Let us proceed to the commercial category where one can see first hand the damage that was done.
The commercials that were long (swap funds and intermediate bankers) increased their long positions by 11265 contracts
They seemed to be totally oblivious to the banking antics of JPMorgan and et.
Now take a look at the large commercials that are always short:
They reduced their short positions by a massive 29549 contracts.
The large commercials that were long in gold were fleeced.
In the small spec category, those that were long reduced their long positions by 2840 contracts. Those that were short strangely increased
their shorts by 2291 contracts.
When the small specs decide to increasingly go short on a raid, you get bet the farm that they will be fleeced the following week. Judging by the action on Friday,
that event looks to be right on track.
In gold, the commercials reduced their net short position in only 4 days to the tune of 40,000 contracts. That is as bullish as you can get.
I cannot recall ever seeing such a contraction in just 4 days. It must be a record but we will have to wait for Ted Butler to report on that aspect.
Now I will give you the closing inventory numbers and notices sent for gold and silver at the comex:
| Silver | |
| Withdrawals from Dealers Inventory | ZERO oz |
| Withdrawals from customer Inventory | 400,279 oz |
| Deposits to the dealer Inventory | N/A |
| Deposits to the customer Inventory | N/aoz |
| No of oz served 1 | 5000 oz |
| No of oz to be served 758 | 3.8 million oz |
| Gold | |
| Withdrawals from Dealers Inventory | ZERO |
| Withdrawals from customer Inventory | N/A |
| Deposits to the dealer Inventory | N/a |
| Deposits to the customer Inventory | 1661 |
| No of oz served zero | oz |
| No of oz to be served | xxxxx |
Subject: BofA Admits Hiding Debt
JULY 10, 2010.
BofA Admits Hiding Debt
Details Come as SEC Is Set to Unveil Review of Wall Street 'Window Dressing'
By MICHAEL RAPOPORT
Wall Street Journal
Bank of America Corp. admitted to making six transactions that incorrectly hid from view billions of dollars of debt, following a bid to cut the size of a unit's balance sheet and meet internal financial targets.
The disclosure, made in a letter to the Securities and Exchange Commission, comes as the agency prepares to unveil the results of an inquiry into banks' accounting for borrowing deals known as repurchase agreements, or "repos."
BofA's letter was sent in April in response to the inquiry, but this is the first time the details of the six trades in question have been disclosed. The bank had acknowledged in its last quarterly report that its accounting for the transactions, made at the ends of quarters from 2007 to 2009, was incorrect.
The bank's disclosure also suggests the trades may be an example of end-of-quarter "window dressing" on Wall Street, in which banks temporarily shed debt just before reporting their finances to the public. The practice, which The Wall Street Journal has uncovered in a series of articles, suggests the banks are carrying more risk most of the time than their investors or customers can easily see, and then juggling it during quarter-end reporting of financials.
Window dressing isn't illegal in itself. But intentionally masking debt to deceive investors violates regulatory guidelines. BofA said its incorrect accounting wasn't intentional.
Apart from requiring more disclosure about the bank's repo accounting, the SEC hasn't taken any action against BofA over the matter. The fact that the letter was released suggests the SEC has concluded its review.
Though much smaller in scope, Bank of America's accounting of the six trades is similar to what a bankruptcy-court examiner said Lehman Brothers Holdings Inc. did to make its balance sheet look better before it filed for bankruptcy in 2008. Lehman used a strategy dubbed "Repo 105" that helped the Wall Street firm move $50 billion in assets off its balance sheet, the examiner said in March.
Following the Lehman examiner's report and the Journal disclosures, the SEC said it is considering stricter disclosure and a clearer rationale from firms about quarter-end borrowing activities.
The SEC review on repo activity could be released as early as this coming week. A spokesman said Friday that the SEC will release the banks' responses after the agency completes its review.
In its letter to the SEC, which has been posted as a regulatory filing, Bank of America disclosed details of how it erroneously classified some short-term repos as sales when they should have been classified as borrowings over the past few years. Repos are short-term financing arrangements that allow banks to take bigger risks on securities trades. Classifying the transactions as sales instead of borrowings—as in the Repo 105 strategy—allows a bank to take assets off its balance sheet and thus reduce its reported leverage.
In the letter, Bank of America said its incorrect accounting for the six trades wasn't intentional. "We do not deliberately structure transactions that are economically disadvantageous" to serve its own purposes.
The bank says its overall efforts to manage its balance sheet are "appropriate" and that the "intent of these transactions was to reduce the specific business unit's balance sheet to meet its internal quarter-end limits for balance sheet capacity."
The classifications involved as much as $10.7 billion in repos, a relatively small amount for the bank, which has $2.3 trillion in total assets.
The six transactions are known as "dollar roll" trades, executed by Bank of America's investment-banking and capital-markets unit with an unidentified trading partner at the ends of fiscal quarters from 2007 to 2009. Dollar rolls are deals in which mortgage-backed securities are transferred to a trading partner with a simultaneous agreement to repurchase similar securities from the same partner soon thereafter.
The practice amounts to a bank renting out its balance sheet for short periods; the bank gets fees, and the client on the other end of the trade gets short-term cash.
BofA says it designed the trades so that the securities coming back to BofA would be similar to but not "substantially the same" as those it transferred out. That would require the trades to be treated as sales that would remove assets from the unit's balance sheet. But the securities that came back to Bank of America were in fact "substantially the same"—the same type, for instance, with the same guarantor and coupon. That means they should have been accounted for not as sales, but as borrowings that wouldn't have reduced the unit's balance sheet.
BofA says it hasn't entered into such trades since early 2009. The errors in accounting for the trades resulted from a deficiency in internal controls, according to a separate letter the bank sent the SEC.
The bank says it since has strengthened its controls and re-emphasized to its staff the need to "escalate" consideration of any unusual balance-sheet changes, in particular if they result from "non-normal" transactions near the end of a quarter.
The SEC sent letters in March to 19 large financial institutions asking about their repo accounting. SEC Chief Accountant James Kroeker said in May that the inquiry hadn't found any widespread inappropriate practices.
But Mr. Kroeker said the SEC had asked several companies to provide more disclosure about their repo accounting in their securities filings. At least three banks, including BofA, already have done so.
Bill also mentioned that the Baltic Dry Index plunged 4% on Thursday, the 31st straight daily decline. The BDI is a leading indicator... and, if you give the graph below a glance, you'll see that this "leading indicator" is pointing straight down.
Bill also mentioned that the Baltic Dry Index plunged 4% on Thursday, the 31st straight daily decline. The BDI is a leading indicator... and, if you give the graph below a glance, you'll see that this "leading indicator" is pointing straight down.
end.
Yesterday, we got this strange admission from Dennis gartman on the BIS affair:
This morning The Gartman Letter, in a chivalrous gesture, commented concerning the BIS swap news
"every once in a while the folks at GATA do make some sense, and their insights into what has gone on in this instance are worth our time.
and Chris Powell of GATA responds:
Including the statement
"the BIS arranged gold swaps must be suspected as part of a scheme to manipulate the gold market."
end.
Many of you kow that I also heavily lean on the data of the ECRI, a private think tank. They are generally very good and accurate:
from Reuters.
US growth gauge falls to lowest since July '09-ECRI
NEW YORK, July 9 (Reuters) - A measure of future U.S. economic growth fell to the lowest since July 2009, indicating that the economy will continue to slow, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 121.5 for the week ended July 2, down from 122.3 in the prior week.
That was the lowest level since July 24, 2009 when it stood at 120.3.
The index's annualized growth rate fell to -8.3 percent after a -7.6 percent growth rate a week earlier.
-END-
You may want to read John Embry's latest piece on the demise of the usa dollar:
John Embry’s latest…
U.S. dollar’s collapse inevitable
http://www.sprott.com/Docs/InvestorsDigest
/2010/MPLID_062510_pg204Emb.pdf
end.
I will leave you with this great report from Greg Hunter: from usawatchdog:
http://usawatchdog.com/two-stories-that-should-scare-the-heck-out-of-you/Dear CIGAs,
I was sitting here trying to find a way to wrap up the week and then, like a bolt of lightning, an idea hit me. Gold expert Jim Sinclair sent me this story: “Federal Budget Deficit Hits $1 Trillion For 1st 9 Months Of FY’10.” The story said, “The shortfall, reflecting $2.6 trillion in outlays for the first three quarters and $1.6 trillion in receipts, narrowed slightly compared with the same point in fiscal 2009.” So where did the “shortfall” come from? Try the more that 8 million who lost their jobs. The story went on to say, “. . . individual income and payroll tax receipts were down 4% over the nine-month period, suggesting that wages and salaries have not improved to the extent that corporate profits have.” Corporate profits have “improved”because they laid-off all those workers!! (Click here for the entire Dow Jones Newswires story)
Sinclair says, “Nothing has changed. Nothing has been rescued. The can that is being kicked daily down the path is going to turn around and bite the kickers.
Gold is the only insurance.” When things get bad enough, there will be more stimulus cash put into the economy and more bank bailouts. Sinclair is like legendary football quarterback Joe Montana–never bet against either of them.
The second story that should scare the heck out of you is one where the headline reads,“IMF presses US to cut debt.” The story goes on to say, “The International Monetary Fund on Thursday urged the United States to rein in its ballooning budget deficit without putting the “modest” economic recovery at risk. Amid jitters that high levels of unemployment may force a double dip recession, the IMF warned the slow U.S.recovery would continue and that debt problems loomed.” (Click here for the complete story from Yahoo News.)
Talk about a squeeze. The U.S. has lost millions of jobs; it has falling tax revenues and a ballooning deficit. Now is the time the International Monetary Fund picks to tell the U.S. to cut its debt? Not a chance going into the 2010 mid-term elections! People like Paul Krugman and Nancy Pelosi are pushing for more spending (money printing). I am betting they will get their wishes granted.
These two stories do not bode well for the so-called “recovery,” the value of the U.S. dollar and keeping interest rates held down to ridiculously low levels. These two stories scare the heck out of me. Not just because of what they say, but also because they’re making their way into the mainstream media. That means, before long, everybody will catch on America is in deep financial trouble. We do not have a “dip” coming our way but a swan dive off of Niagara Falls into a dry river bed.
