Bankster Hypocrisy Surfaces (Again) Over CDS Contracts

It was less than a year ago that the U.S.'s accounting regulator, the Financial Accounting Standards Board (“FASB”) caved-in to Wall Street pressure – bringing in the “mark to fantasy” accounting rules which allowed insolvent Wall Street oligarchies to pretend to be “profitable” (see “FASB strong-armed into mark-to-fantasy accounting”).

The Oligarchs didn't like the valuations which the market was assigning to their fraud-ridden securities, so they whined that they should just be allowed to make up whatever numbers they liked. In fact, now three years after the (first) U.S. housing bubble burst, there has been little to no appreciation in the market value of these financial products – despite the fraudulent valuations which Wall Street insists on assigning to them on their balance sheets.

The proof can be seen in the statistics surrounding FDIC salvage operations of failed, U.S. banks (see “FDIC Salvage Op's Can't Hide Reek of Corpses”). Since the current wave of U.S. bank-failures began, the losses being “eaten” by the FDIC have gone from an average of 5% of the value of bank “assets” to 25% of bank assets. In other words, with few, new loans being originated by U.S. banks, the losses they are suffering today on those “assets” are 500% higher than at the start of the U.S. financial sector collapse.

Simply put, the “health” of U.S. banks is a complete sham, and without the fraudulent accounting rules, Wall Street would be mooching more trillions today. However, the hypocrites running these fraud-factories have a totally different attitude (surprise, surprise!) about the legitimacy of market valuations when it is someone else's assets/debts being valued.

As both European and U.S. authorities begin investigations as to whether U.S. traders deliberately sabotaged Greece's debt markets by causing the “spreads” on its credit-default swaps to “blow up” (see “U.S. Economic Terrorism the New Winning Trade”), now U.S. bankers are whining that governments should not question the sanctity of market valuations.

In a Reuters article today, a group of individuals referred to as “financial lawyers, industry officials, and analysts” had this to say about the market for Greece's credit-default swaps:

“CDS contracts are a health check on the underlying asset and governments just can't stomach the truth of prices” [emphasis mine].

Given that Wall Street bankers have already shown that there is no one on Earth who is less able to “stomach the truth of prices” than they are, one would have thought that some faint echo of shame would prevent the banksters from this despicable display of hypocrisy. However, hypocrisy is a way of life for the Wall Street oligarchs.