Big Criminal Banks Get Break in Rules to Limit Risks

- By BEN PROTESS - May 15, 2013- The New York Times

Under pressure from Wall Street lobbyists, federal regulators have agreed to soften a rule intended to rein in the banking industry’s domination of a risky market.

The changes to the rule, which will be announced on Thursday, could effectively empower a few big banks to continue controlling the derivatives market, a main culprit in the financial crisis.

The $700 trillion market for derivatives — contracts that derive their value from an underlying asset like a bond or an interest rate — allow companies to either speculate in the markets or protect against risk.

It is a lucrative business that, until now, has operated in the shadows of Wall Street rather than in the light of public exchanges. Just five banks hold more than 90 percent of all derivatives contracts.

Yet allowing such a large and important market to operate as a private club came under fire in 2008. Derivatives contracts pushed the insurance giant American International Group to the brink of collapse before it was rescued by the government.

In the aftermath of the crisis, regulators initially planned to force asset managers like Vanguard and Pimco to contact at least five banks when seeking a price for a derivatives contract, a requirement intended to bolster competition among the banks. Now, according to officials briefed on the matter, the Commodity Futures Trading Commission has agreed to lower the standard to two banks.

About 15 months from now, the officials said, the standard will automatically rise to three banks. And under the trading commission’s new rule, wide swaths of derivatives trading must shift from privately negotiated deals to regulated trading platforms that resemble exchanges.

But critics worry that the banks gained enough flexibility under the plan that it hews too closely to the “precrisis status.”

“The rule is really on the edge of returning to the old, opaque way of doing business,” said Marcus Stanley, the policy director of Americans for Financial Reform, a group that supports new rules for Wall Street.

Making such decisions on regulatory standards is a product of the Dodd-Frank Act of 2010, which mandated that federal agencies write hundreds of new rules for Wall Street. Most of that effort is now complete at the trading commission. But across several other agencies, nearly two-thirds of the rules are unfinished, including some major measures like the Volcker Rule, which seeks to prevent banks from trading with their own money.

The deal over derivatives was forged from wrangling at the five-person commission, which was sharply divided. Gary Gensler, the agency’s Democratic chairman, championed the stricter proposal. But he met opposition from the Republican members on the commission, as well as Mark Wetjen, a Democratic commissioner who has sided with Wall Street on other rules.

Mr. Wetjen argued that five banks was an arbitrary requirement, according to the officials briefed on the matter. In advocating the two-bank plan, he also noted that the agency would not prevent companies from seeking additional price quotes. Other regulators have proposed weaker standards.

Mr. Gensler, eager to rein in derivatives trading but lacking an elusive third vote, accepted the deal. By his reckoning, the compromise was better than no rule at all.

In an interview on Wednesday, Mr. Gensler said that, even with the compromise, the rule will still push private derivatives trading onto regulated trading platforms, much like stock trading. He also argued that the agency plans to adopt two other rules on Thursday that will subject large swaths of trades to regulatory scrutiny.

“No longer will this be a closed, dark market,” Mr. Gensler said. “I think what we’re planning to do tomorrow fulfills the Congressional mandate and the president’s commitment.”

Yet the deal comes at an awkward time for the agency. Mr. Gensler, who was embraced by consumer advocates but scorned by some on Wall Street, is expected to leave the agency later this year now that his term has technically ended.

In preliminary talks about filling the spot, the White House is expected to consider Mr. Wetjen, a former aide to the Senate majority leader, Harry Reid. The administration, according to people briefed on the matter, is also looking at an outsider as a potential successor: Amanda Renteria, a former Goldman Sachs employee and Senate aide.

The prospect of someone other than Mr. Gensler completing the rules provided some momentum for the compromise, officials say. The officials also noted that Mr. Gensler had set a June 30 deadline for completing the plan.

The White House declined to comment. Mr. Gensler, who has not said whether he will seek a second term at the agency, declined to discuss his plans on Wednesday.

While the regulator defended the derivatives rule, consumer advocates say the agency gave up too much ground. To some, the compromise illustrated the financial industry’s continued influence in Washington.

“The banks have all these ways to reverse the rules behind the scenes,” Mr. Stanley said.

The compromise also alarmed Bart Chilton, a Democratic member of the agency who has called for greater competition in the derivatives market. Still, Mr. Chilton signaled a willingness to vote for the rule.

“At the end of the day, we need a rule and that may mean some have to hold their noses,” he said.

The push for competition follows concerns that a handful of select banks — JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs — control the market for derivatives contracts.

That grip, regulators and advocacy groups say, empowers those banks to overcharge some asset managers and companies that buy derivatives. It also raises concerns about the safety of the banks, some of which nearly toppled in 2008.

“It’s important to remember that the Wall Street oligopoly brought us the financial crisis,” said Dennis Kelleher, a former Senate aide that now runs Better Markets, an advocacy group critical of Wall Street.

With that history in mind, Congress inserted into Dodd-Frank a provision that forces derivatives trading onto regulated trading platforms. The platforms, known as swap execution facilities, were expected to open a window into the secretive world of derivatives trading. But Congress left it to Mr. Gensler’s agency to explain how they would actually work.

There was a time when Mr. Gensler envisioned the strictest rule possible. In 2010, he pushed a plan that could, in essence, make all bids for derivatives contracts public. Facing complaints, the agency instead proposed a plan that would require at least five banks to quote a price for derivatives passing through a swap execution facility.

But even that plan prompted a full-court press from Wall Street lobbyists. Banks and other groups that opposed the plan held more than 80 meetings with agency officials over the last three years, an analysis of meeting records shows. Goldman Sachs attended 19 meetings; the Securities Industry and Financial Markets Association, Wall Street’s main lobbying group, was there for 11.

The banks also benefited from some unlikely allies, including large asset managers that buy derivatives contracts. While money managers may seem like natural supporters of Mr. Gensler’s plan — and some in fact are — the industry’s largest players already receive significant discounts from select banks, providing them an incentive to oppose Mr. Gensler’s plan.

The companies cautioned that, because Mr. Gensler’s plan would involve a broader universe of banks, it could cause leaks of private trading positions. The plan, the companies said, would not necessarily benefit the asset managers.

“If someone told me I needed to shop five different places for a pair of jeans, I don’t see how that would help me,” said Gabriel D. Rosenberg, a lawyer at Davis Polk, which represents Sifma and the banks.

The banks and asset managers also warned that many derivatives contracts are traded too infrequently to even generate attention from five banks.

Some regulators dispute that point. They point to the industry’s own data, which shows that 85 percent of derivatives trading in a recent 10-day span occurred in four products that are arguably quite liquid. (Each traded more than 500 times.)

As such, according to officials briefed on the matter, Mr. Chilton proposed a plan to require quotes to be submitted to at least five banks for the most liquid contracts. Under his plan, contracts that were less liquid could still be subject to at least two.

Mr. Wetjen, who saw the effort as too complicated, continued to favor the two-bank plan. While the requirement jumps to three banks in about 15 months, the agency might also have to produce a study that could undermine that broader standard.

In an interview, Mr. Wetjen explained that he was seeking to grant more flexibility to the markets. “If flexibility means it’s more beneficial to the banks, so be it,” he said. “But it also means it’s more flexible to all market participants and the marketplace as a whole.”

Some consumer advocates have raised broader concerns about Mr. Wetjen, who once advocated a wider than expected exemption to part of a derivatives rule. They also complained that Mr. Wetjen has split with Mr. Gensler on aspects of a plan to apply Dodd-Frank to banks trading overseas. He has, however, voted with Mr. Gensler on every rule, unlike the other commissioners.

Mr. Wetjen also noted that his actions often upset the banks. On only a few issues, he happened to agree with them.

The criminal evil bastards families are: Rothschild, Morgan, Rockefeller, Carnegie, Schiff, Herminie and Warburg, for centuries these criminal families have been instigating and funding wars, murder, countless fake revolutions, creating and funding terrorist organizations through their secret societies, rewriting the true history as fiction to only benefit themselves and their racketeering businesses at all costs.

“I’m not driven by who wages the argument,” he said. “It’s about what policy makes sense.”

The Five Kilowatt E-Cat Cold Fusion Device

- By Hank Mills - Pure Energy Systems News - October 20, 2011

When the research and development phase is complete, Leonardo Corporation will offer a 5 (five) kilowatt home heating unit for sale to the general public. This unit will be capable of providing up to five kilowatts of heat -- in the form of hot water -- non stop and continually, twenty four hours a day, if needed; or it can provide less heat, governable according to the demand. It is slated to be the first cold fusion product marketed to ordinary individuals, families, and small businesses, in the history of human civilization. 

The home heating unit will require a connection to a source of input power, but will be guaranteed to produce a minimum output of six times the power consumed. In reality, the power consumption will be far lower, because the unit will operate in a self-sustained manner for extended periods of time. During self-sustained operation, the heat produced by the cold fusion reactions inside of the unit, will provide the energy needed to maintain operation of the device. In this self sustaining mode, without a need for any significant external power, the unit will continue producing up to five kilowatts of output. When external power is needed for a short period of time, on board electronic controls will draw it from the grid.

This game changing home heating unit will utilize no radioactive elements, emit zero radiation, release no pollution, and utilize only tiny quantities of fuel. Less than fifty grams of specially processed nickel powder and around one gram of hydrogen will provide enough fuel to keep the unit running for a minimum of six months. Approximately every six months, a trained and certified technician will arrive to inspect the unit, and provide re-fueling services. The re-fueling fee is yet to be determined. 

Due to the low cost of the fuel, the most significant portion of the cost will be the technician's labor. The actual cost for the nickel powder and hydrogen will be almost insignificant. 

The exact purchase price of the home heating unit has not been finalized. Every effort is being made to ensure that the up front price will be affordable. However, when an individual considers purchasing a unit he or she should not only consider the initial cost of buying the hardware. The long term energy savings the device offers should also be factored into the decision. In a short period of time -- perhaps only a year -- the unit could pay for itself.

The form factor of the five kilowatt home heating device is expected to be small and compact. It will be rectangular in shape, and should be no larger than a small outdoor central air conditioning unit. All the components of the home heating device will be contained in this rectangular box, except for a small hydrogen canister. The unit will also be quiet, produce very little sound. 

Another attractive feature of the home heating unit is the safety mechanisms it features. To begin with, it utilizes no radioactive substances, produces no nuclear waste, and even in a worst case scenario (such as a natural disaster) would not emit any radiation into the environment if damaged. Also, it features two layers of lead shielding that block the very low levels of radiation produced in the reactor cores from escaping into the environment. If built-in sensors detect any abnormalities during operation, the on board electronic control system will shut off the entire system. It is important to note that when the system is shut off, all nuclear reactions cease. If a trained expert were to open the reactor moments after shut down, no radioactivity -- whatsoever -- could be detected.



Cold Fusion: How it works

Cold Fusion. Explain this, if you can. This was gathered April 20th 2009, roughly 20 years after the initial 1989 press conference where their findings were shot to shreds, instead of the scientific community pulling together and trying experiments to make it work.

Landlords Double as Energy Brokers

Landlords Double as Energy Brokers

- By JAMES GLANZ - May 13, 2013 - The New York Times

The trophy high-rises on Madison, Park and Fifth Avenues in Manhattan have long commanded the top prices in the country for commercial real estate, with yearly leases approaching $150 a square foot. So it is quite a Gotham-size comedown that businesses are now paying rents four times that in low, bland buildings across the Hudson River in New Jersey.

Why pay $600 or more a square foot at unglamorous addresses like Weehawken, Secaucus and Mahwah? The answer is still location, location, location — but of a very different sort.

Companies are paying top dollar to lease space there in buildings called data centers, the anonymous warrens where more and more of the world’s commerce is transacted, all of which has added up to a tremendous boon for the business of data centers themselves.

The centers provide huge banks of remote computer storage, and the enormous amounts of electrical power and ultrafast fiber optic links that they demand.

Prices are particularly steep in northern New Jersey because it is also where data centers house the digital guts of the New York Stock Exchange and other markets. Bankers and high-frequency traders are vying to have their computers, or servers, as close as possible to those markets. Shorter distances make for quicker trades, and microseconds can mean millions of dollars made or lost.

When the centers opened in the 1990s as quaintly termed “Internet hotels,” the tenants paid for space to plug in their servers with a proviso that electricity would be available. As computing power has soared, so has the need for power, turning that relationship on its head: electrical capacity is often the central element of lease agreements, and space is secondary.

A result, an examination shows, is that the industry has evolved from a purveyor of space to an energy broker — making tremendous profits by reselling access to electrical power, and in some cases raising questions of whether the industry has become a kind of wildcat power utility.

Even though a single data center can deliver enough electricity to power a medium-size town, regulators have granted the industry some of the financial benefits accorded the real estate business and imposed none of the restrictions placed on the profits of power companies.

Some of the biggest data center companies have won or are seeking Internal Revenue Service approval to organize themselves as real estate investment trusts, allowing them to eliminate most corporate taxes. At the same time, the companies have not drawn the scrutiny of utility regulators, who normally set prices for delivery of the power to residences and businesses.

While companies have widely different lease structures, with prices ranging from under $200 to more than $1,000 a square foot, the industry’s performance on Wall Street has been remarkable. Digital Realty Trust, the first major data center company to organize as a real estate trust, has delivered a return of more than 700 percent since its initial public offering in 2004, according to an analysis by Green Street Advisors.

The stock price of another leading company, Equinix, which owns one of the prime northern New Jersey complexes and is seeking to become a real estate trust, more than doubled last year to over $200.

“Their business has grown incredibly rapidly,” said John Stewart, a senior analyst at Green Street. “They arrived at the scene right as demand for data storage and growth of the Internet were exploding.”

Push for Leasing

While many businesses own their own data centers — from stacks of servers jammed into a back office to major stand-alone facilities — the growing sophistication, cost and power needs of the systems are driving companies into leased spaces at a breakneck pace.

The New York metro market now has the most rentable square footage in the nation, at 3.2 million square feet, according to a recent report by 451 Research, an industry consulting firm. It is followed by the Washington and Northern Virginia area, and then by San Francisco and Silicon Valley.

A major orthopedics practice in Atlanta illustrates how crucial these data centers have become.

With 21 clinics scattered around Atlanta, Resurgens Orthopaedics has some 900 employees, including 170 surgeons, therapists and other caregivers who treat everything from fractured spines to plantar fasciitis. But its technological engine sits in a roughly 250-square-foot cage within a gigantic building that was once a Sears distribution warehouse and is now a data center operated by Quality Technology Services.

Eight or nine racks of servers process and store every digital medical image, physician’s schedule and patient billing record at Resurgens, said Bradley Dick, chief information officer at the company. Traffic on the clinics’ 1,600 telephones is routed through the same servers, Mr. Dick said.

“That is our business,” Mr. Dick said. “If those systems are down, it’s going to be a bad day.”

The center steadily burns 25 million to 32 million watts, said Brian Johnston, the chief technology officer for Quality Technology. That is roughly the amount needed to power 15,000 homes, according to the Electric Power Research Institute.

Mr. Dick said that 75 percent of Resurgens’s lease was directly related to power — essentially for access to about 30 power sockets. He declined to cite a specific dollar amount, but two brokers familiar with the operation said that Resurgens was probably paying a rate of about $600 per square foot a year, which would mean it is paying over $100,000 a year simply to plug its servers into those jacks.

While lease arrangements are often written in the language of real estate,“these are power deals, essentially,” said Scott Stein, senior vice president of the data center solutions group at Cassidy Turley, a commercial real estate firm. “These are about getting power for your servers.”

One key to the profit reaped by some data centers is how they sell access to power. Troy Tazbaz, a data center design engineer at Oracle who previously worked at Equinix and elsewhere in the industry, said that behind the flat monthly rate for a socket was a lucrative calculation. Tenants contract for access to more electricity than they actually wind up needing. But many data centers charge tenants as if they were using all of that capacity — in other words, full price for power that is available but not consumed.

Since tenants on average tend to contract for around twice the power they need, Mr. Tazbaz said, those data centers can effectively charge double what they are paying for that power. Generally, the sale or resale of power is subject to a welter of regulations and price controls. For regulated utilities, the average “return on equity” — a rough parallel to profit margins — was 9.25 percent to 9.7 percent for 2010 through 2012, said Lillian Federico, president of Regulatory Research Associates, a division of SNL Energy.

Regulators Unaware

But the capacity pricing by data centers, which emerged in interviews with engineers and others in the industry as well as an examination of corporate documents, appears not to have registered with utility regulators.

Interviews with regulators in several states revealed widespread lack of understanding about the amount of electricity used by data centers or how they profit by selling access to power.

Bernie Neenan, a former utility official now at the Electric Power Research Institute, said that an industry operating outside the reach of utility regulators and making profits by reselling access to electricity would be a troubling precedent. Utility regulations “are trying to avoid a landslide” of other businesses doing the same.

Some data center companies, including Digital Realty Trust and DuPont Fabros Technology, charge tenants for the actual amount of electricity consumed and then add a fee calculated on capacity or square footage. Those deals, often for larger tenants, usually wind up with lower effective prices per square foot.

Regardless of the pricing model, Chris Crosby, chief executive of the Dallas-based Compass Datacenters, said that since data centers also provided protection from surges and power failures with backup generators, they could not be viewed as utilities. That backup equipment “is why people pay for our business,” Mr. Crosby said.

Melissa Neumann, a spokeswoman for Equinix, said that in the company’s leases, “power, cooling and space are very interrelated.” She added, “It’s simply not accurate to look at power in isolation.”

Ms. Neumann and officials at the other companies said their practices could not be construed as reselling electrical power at a profit and that data centers strictly respected all utility codes. Alex Veytsel, chief strategy officer at RampRate, which advises companies on data center, network and support services, said tenants were beginning to resist flat-rate pricing for access to sockets.

“I think market awareness is getting better,” Mr. Veytsel said. “And certainly there are a lot of people who know they are in a bad situation.”  

The Equinix Story

The soaring business of data centers is exemplified by Equinix. Founded in the late 1990s, it survived what Jason Starr, director of investor relations, called a “near death experience” when the Internet bubble burst. Then it began its stunning rise.

Equinix’s giant data center in Secaucus is mostly dark except for lights flashing on servers stacked on black racks enclosed in cages. For all its eerie solitude, it is some of the most coveted space on the planet for financial traders. A few miles north, in an unmarked building on a street corner in Mahwah, sit the servers that move trades on the New York Stock Exchange; an almost equal distance to the south, in Carteret, are Nasdaq’s servers.

The data center’s attraction for tenants is a matter of physics: data, which is transmitted as light pulses through fiber optic cables, can travel no faster than about a foot every billionth of a second. So being close to so many markets lets traders operate with little time lag.

As Mr. Starr said: “We’re beachfront property.”

Standing before a bank of servers, Mr. Starr explained that they belonged to one of the lesser-known exchanges located in the Secaucus data center. Multicolored fiber-optic cables drop from an overhead track into the cage, which allows servers of traders and other financial players elsewhere on the floor to monitor and react nearly instantaneously to the exchange. It all creates a dense and unthinkably fast ecosystem of postmodern finance.

Quoting some lyrics by Soul Asylum, Mr. Starr said, “Nothing attracts a crowd like a crowd.” By any measure, Equinix has attracted quite a crowd. With more than 90 facilities, it is the top data center leasing company in the world, according to 451 Research. Last year, it reported revenue of $1.9 billion and $145 million in profits.

But the ability to expand, according to the company’s financial filings, is partly dependent on fulfilling the growing demands for electricity. The company’s most recent annual report said that “customers are consuming an increasing amount of power per cabinet,” its term for data center space. It also noted that given the increase in electrical use and the age of some of its centers, “the current demand for power may exceed the designed electrical capacity in these centers.”

To enhance its business, Equinix has announced plans to restructure itself as a real estate investment trust, or REIT, which, after substantial transition costs, would eventually save the company more than $100 million in taxes annually, according to Colby Synesael, an analyst at Cowen & Company, an investment banking firm.

Congress created REITs in the early 1960s, modeling them on mutual funds, to open real estate investments to ordinary investors, said Timothy M. Toy, a New York lawyer who has written about the history of the trusts. Real estate companies organized as investment trusts avoid corporate taxes by paying out most of their income as dividends to investors.

Equinix is seeking a so-called private letter ruling from the I.R.S. to restructure itself, a move that has drawn criticism from tax watchdogs.

“This is an incredible example of how tax avoidance has become a major business strategy,” said Ryan Alexander, president of Taxpayers for Common Sense, a nonpartisan budget watchdog. The I.R.S., she said, “is letting people broaden these definitions in a way that they kind of create the image of a loophole.”

Equinix, some analysts say, is further from the definition of a real estate trust than other data center companies operating as trusts, like Digital Realty Trust. As many as 80 of its 97 data centers are in buildings it leases, Equinix said. The company then, in effect, sublets the buildings to numerous tenants.

Even so, Mr. Synesael said the I.R.S. has been inclined to view recurring revenue like lease payments as “good REIT income.”

Ms. Neumann, the Equinix spokeswoman, said, “The REIT framework is designed to apply to real estate broadly, whether owned or leased.” She added that converting to a real estate trust “offers tax efficiencies and disciplined returns to shareholders while also allowing us to preserve growth characteristics of Equinix and create significant shareholder value.”

On May 25, activists around the world will unite to March Against Monsanto.

On May 25, activists around the world will unite to March Against Monsanto

Why do we march?

  • Research studies have shown that Monsanto’s genetically-modified foods can lead to serious health conditions such as the development of cancer tumors, infertility and birth defects.
  • In the United States, the FDA, the agency tasked with ensuring food safety for the population, is steered by ex-Monsanto executives, and we feel that’s a questionable conflict of interests and explains the lack of government-led research on the long-term effects of GM products.
  • Recently, the U.S. Congress and president collectively passed the nicknamed “Monsanto Protection Act” that, among other things, bans courts from halting the sale of Monsanto’s genetically-modified seeds.
  • For too long, Monsanto has been the benefactor of corporate subsidies and political favoritism. Organic and small farmers suffer losses while Monsanto continues to forge its monopoly over the world’s food supply, including exclusive patenting rights over seeds and genetic makeup.
  • Monsanto's GM seeds are harmful to the environment; for example, scientists have indicated they have contributed to Colony Collapse Disorder among the world's bee population.
 
What are solutions we advocate?

  • Voting with your dollar by buying organic and boycotting Monsanto-owned companies that use GMOs in their products.
  • Labeling of GMOs so that consumers can make those informed decisions easier.
  • Repealing relevant provisions of the US's "Monsanto Protection Act."
  • Calling for further scientific research on the health effects of GMOs.
  • Holding Monsanto executives and Monsanto-supporting politicians accountable through direct communication, grassroots journalism, social media, etc.
  • Continuing to inform the public about Monsanto's secrets.
  • Taking to the streets to show the world and Monsanto that we won't take these injustices quietly.

We will not stand for cronyism. We will not stand for poison. That is why we March Against Monsanto.

activists around the world will unite to March Against Monsanto on May 25