Re: [A-List] Is Michael Hudson still here?

["Gary Santos" <evs@xxxxxxxxxxxx>]

And, it I think it is happening all over the world now. Take the case  in
commercial papers and notes. There is only one market really for these
papers and that is the over the counter market. Papers originated by the
investment banking units are offered to trust banking clients. What they do
not disclose is that they are the only market maker for that security and
that the investment banking unit may choose not to buy the paper in the
future. Much like an illiquid stock. That is completely not discussed and
made to be understood.

Legally, they will tell you that these papers are "without" recourse but the
public is not fully aware of that. They still rely on the competence of the
trust banker only to offer securities of triple A quality. What is bizarre
is that after selling the paper, no advisory is given on the credit quality
of the issuer even as they charge "trust and advisory fees". The system
doesn't have a conscience. Some of their employees do and leave after a
while as they know what really happened.

----- Original Message -----
From: <Hudsonmi@xxxxxxx>
To: <a-list@xxxxxxxxxxxxxxxxxxx>
Sent: Tuesday, July 15, 2003 7:31 AM
Subject: Re: [A-List] Is Michael Hudson still here?



>        the best illustration of companies shifting good investments into
> their own accounts and bad ones to those of their customers is the
infamous
> Prudential Insurance case c. 1980. the Senate committees hearings on the
repeal of
> Glass-Steagall leading up to 1999 were rife with examples of why the
barriers
> between trust banking and commercial banking should be maintained to
prevent
> this kind of trading.
>        The situation was done by Ghanian coffee traders daily. They would
buy
> both "up" and "down" gambles. At the end of the day they would assign the
> winners to their personal accounts, the losers to the government accounts.
>        Regarding floating-rate mortgages, there are a number of real
estate
> advisory firms such as the National Association of Realtors who track
this. The
> Fed should be able to tell you where to get national statistics. FNMA and
> GNMA have statistics on their particular profiles in this respect.
>        Michael Hudson
>
>        Michael
>
>