Fed Officials Secretly Plotting to Get at $3 Trillion in Money Market Accounts – Wall Street Underground

By Nick Guarino | June 26, 2008

It seems like forever that I’ve been screaming to you about dead broke banks. A lot of people probably think I’m nuts. After all, how can these enormous financial institutions like Citibank and Lehman’s Brothers actually be broke – as in, out of money? It sounds crazy, I know.

But let me tell you: That is precisely the situation. And now I have proof for you of just how bad it really is. I’ve recently uncovered an even more diabolical trick the Fed and the SEC have cooked up to save their banker buddies – at YOUR expense!

The Federal Reserve and the U.S. Securities and Exchange Commission (SEC) have just proposed making a rule change that will fundamentally alter how Money Market Accounts and Savings Deposits are invested. In a nutshell, the debt instruments held in Money Market and Savings accounts will no longer be required to have credit ratings.

That sounds like a minor change but it’s actually unprecedented. What this seemingly esoteric rule change means is that your supposedly “safe” Money Market Fund and Bank Savings Accounts – which are now invested exclusively in highly-rated debt (such as T-Bills) – can now be invested in super-risky junk debt that carries no ratings. And guess who just happens to have LOTS of these junk debts they would love to unload on the unsuspecting masses? If you guess Wall Street bankers, you’d be right.

To hear the whole story… and how it directly impacts YOUR savings accounts and money market funds, click here.

In other words: Just at the time when the Fed and the SEC should be cracking down to ensure that all debt obligations in your Money Market Funds and Bank Accounts are of the highest possible quality, they are secretly making moves to do just the opposite.

One proposal would make it possible for U.S. money-market funds to invest in short-term debt without regard to ratings put on those securities. That means the thieves could load your money market up with trillions’ worth of soon-to-be-worthless derivatives debts. And as if that were not enough, the SEC bureaucrats are also proposing rules that may diminish the importance of credit ratings in determining the amount of capital that investment banks are required to hold. Banks holding near-worthless derivatives debt and which are seeing their ratings plunge will no longer be required to come up with more capital reflecting the increased risks.

To hear the whole story… and how it directly impacts YOUR savings accounts and money market funds, click here.

Listen to me: I’m not kidding when I tell you that these mega-bankers are diabolical in their cleverness. They have one goal at the moment: That is to save their asses from the wipeout they know is coming, to offload their near worthless derivative debts onto the trusting masses and skate off Scot-free.

What the Fed and the SEC are doing is frankly incredible. They’ve made a decision with no public debate or Congressional oversight whatsoever. In fact, most people are unaware that Fed bureaucrats have decided to pour trillions into the banking system to save it. That is trillions of dollars of your money. I believe that they are looting the wealth of the sleeping mases to give to the banks – and it will still not be enough.

To hear the whole story… and how it directly impacts YOUR savings accounts and money market funds, click here.

Now, with this new proposed rule change – this seemingly esoteric rule change – they’re doing something even more insane. They’re putting the life savings of ordinary Americans at risk!

Why would the Fed and the SEC do this, you ask? The reason is simple: They literally have no money money left to loan these insolvent banks. So, like bankrupt people everywhere, the Fed is desperately hunting for any source of available cash. And guess what? Right in front of their noses there sits an enormous mountain of money, the $3 trillion of cold hard readily available cash parked in Americans Money Market Funds. That $3 trillion dollars in money market funds is like raw meat in front of a starving, junk yard dog. Money Market accounts are the largest pool of untapped money in the US.

Think of it this way. Think of a shiftless brother-in-law who has massive business debts, unpaid obligations and outstanding invoices. He keeps borrowing more and more money from you. One day he gets hold of your savings account passbook with, say, a few hundred thousand dollar in it. Your brother-in-law wants to “borrow” that money – and in its place, he says, he’ll give you as collateral some IOUs and outstanding invoices he has from other failing businesses. “Those invoices are as good as gold,” your brother-in-law says. “I’ll give you those IOUs and invoices, and you give me $200,000 in cash.”

That, in a nutshell, is what the Federal Reserve and the SEC are now proposing to do by allowing money market managers to invest in low-grade derivative debt instruments.

They’re letting these insolvent banks take their bad IOUs and exchange them for the cold, hard CASH sitting in Americans’ savings accounts and money market funds. For the first time since the Great Depression, ordinary bank savings accounts are now threatened by the same kind of super-risky Wall Street derivative gambles that wiped out Bear Stearns.

To hear the whole story… and how it directly impacts YOUR savings accounts and money market funds, click here.

I am only one person. The best I can do is to show you what is happening and help you protect your money so it’s not part of the trillions of dollars the Fed is handing over to insolvent banks.

Oh yes, one other thing: I also believe I can show you could turn this great tragedy into the biggest payday of your life.

To hear the whole story… and how it directly impacts YOUR savings accounts and money market funds, click here.


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