Welcome to our Incestuous Fiscal Orgy – State Farm Privacy Policy

Take notice of this text of the upper area of the note:
“Why are we sending you a Notice of our Privacy Policy?

“Federal law permits banks, investment companies, and insurance companies to provide all their services under one organization. This same law requires State Farm to share our Notice of Privacy Policy in writing with you each year you are insured with us or maintain an account with us.”

Let me re-emphasize this point:
“Federal law permits banks, investment companies, and insurance companies to provide all their services under one organization.”

This law – the Glass-Steagall Act – since its inception in Great Depression era America in 1933, FORBADE the incestuous fiscal orgy under which this nation now suffers.

The Glass-Steagall Act was the subject of intense lobbying efforts by Banks, Insurance Companies and Stock Brokerage Houses to repeal the law, and especially intensified circa 1960’s, climaxing in the late 1990’s under a Republican-controlled House and Senate.

The 1999 repeal of the Glass-Steagall Act allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate, or commingle, their business.

Previously, it prohibited any of those institutions (banks, insurance companies, and stock brokerage houses) from acting as any combination of an investment bank, a commercial bank, or insurance company.

The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, (Public Law 106-102, 113 Stat. 1338, enacted November 12, 1999), was signed into law by President Clinton.

WHY IS THIS IMPORTANT TO YOU and ME, AND HOW DOES THIS AFFECT YOU and ME?

The recent financial melt-down in this nation – now being called “The Great Recession” – is due in large part to the elimination of the Glass-Steagall Act, because the banks that made bad loans, the insurance companies that insured the real estate and commercial paper, and the stock brokerage houses that traded the stocks of both, and owned both, were greedy for more gain, and eventually began to invent complex mechanisms and artificial commercial paper which came to be known as “derivatives.”

In essence, those “derivatives” were based upon Credit Default Swaps – another complex and inherently evil type of financial thing/device – which was described by German Chancellor Angela Merkel, in March 2010 as “Credit-default swaps, where you insure your neighbor’s house just to destroy it and make money from it, that’s exactly what we have to curb. We must succeed at putting a stop to the speculators’ game with sovereign states.”

The types of investments that most people tend to be familiar with, such as stocks and bonds, involve betting that a company or government will do well. In stark contrast, a credit default swap (CDS) allows an investor to bet that a certain bond issuer will do poorly, or fail – not be able to meet its obligations. In financial markets, the CDS is sometimes thought of as a form of insurance against default. If you buy a bond and the borrower defaults, the CDS seller is obliged to cover your loss.

It’s important to understand, however, that you do not need to actually own bonds from a borrower in order to purchase a CDS contract. Buying a CDS contract without any personal ownership stake in the bonds it insures is known as making a “naked” wager. It is essentially a bet that the borrower will default or that the borrower’s risk of defaulting will go up, thereby increasing the value of the CDS contract.

In other words, it’s a bet that failure will occur. It’s like betting on a team to lose, rather than win.

Now, think about it for just a moment.

Does anyone go to the Kentucky Derby to bet on a horse to lose? What about sports games, like football, or basketball? Does anyone bet on a team to lose?

No.

Why would someone want to bet on things getting worse, or failure?

Where do we see folks betting to lose?

When people bet on a team to lose, such bettors are often deeply involved with fraud, and dishonest play.

It’s insane, and corrupt.

A credit default swap (CDS) is a swap contract in which the protection buyer of the CDS makes a series of payments to the protection seller and, in exchange, receives a payoff if a credit instrument (typically a bond or loan) goes into default. A derivative is an agreement or contract that is not based on a real, or true, exchange, i.e., There is nothing tangible like money, or a product, that is being exchanged. A derivative is incapable of having value of its own.

Goldman Sachs sold CDSs to Greek national officials, and purposely hid the sale to regulators, and further deceived Greek national officials about the inherent risks. Now, Greece is in a Goldman Sachs-caused debt crisis.

Are you NOW beginning to see how the repeal of the Glass-Steagall Act – at the behest of the banks, stock brokerage houses and insurance companies – is an inherently dangerous and evil thing?

Previously, Paul Volker, speaking in Berlin to the American Academy called for tighter regulations on derivatives in American financial markets saying, “Surely the recent revelations about the use and abuse of complex derivatives in obscuring the extent of Greek financial obligations reinforces the need for greater transparency and less complexity.“

Mr. Volker served as chairman of the Board of Governors of the Federal Reserve System under presidents Carter and Reagan, and now serves as chairman of the Economic Recovery Advisory Board under President Obama.

Saying that it is necessary to “corral the excesses in the derivatives markets,” he called for “system-wide surveillance, backed by clear legislative directives and authority,” limits on bank size, and bans to prevent banks from creating hazardous trade.

American lawmakers are scrutinizing the role that Goldman Sachs Group may have had in Greece’s debt crisis, considering specifically if credit-default swaps aided and abetted in concealing the size of Grecian deficit. Goldman Sachs assisted Greek officials raise $1,000,000,000 (one billion) of off-the-books funds in 2002 specifically through credit-default swaps, and did so without EU regulators’ knowledge.

Here’s an interesting excerpt from Forbes magazine about derivatives:
The Great Derivatives Smackdown
Ari Weinberg, 05.09.03, 3:15 PM ET
www.forbes.com/2003/05/09/cx_aw_0509derivatives.html

“…$56 trillion notional value of derivatives contracts between U.S. commercial banks and counterparties, measured by the Office of the Comptroller of the Currency at the end of 2002. The entire market, around the world, is estimated at over $100 trillion. But such notional amounts–the face amount of the underlying security–are rarely realized.

Derivative instruments, most often used to mitigate interest-rate risks, can be used to hedge any type of risk exposure in any market. In light of the use of corporate credit derivatives and products peddled by Enron (otc: ENRNQ), such as bandwidth and weather, Buffett has soured on the efficacy of derivatives. At Berkshire-owned General Re, its General Re Securities unit, though shuttered, is still stuck with 14,384 contracts outstanding with 672 counterparties, so far amounting to $6.5 billion in receivables.

How does that compare to other institutions? Well, both Greenspan and Buffett claim that derivatives values and liabilities are difficult for even their holders to track. Insurance giant American International Group (nyse: AIG), by nature of its business, provides extensive disclosure in its annual report. At the end of 2002, AIG’s Financial Products unit had $14.9 billion in risk related to credit derivatives and a notional amount in its credit-derivative portfolio of $126 billion.”
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ADDENDUM: 24 December 2015

New Law Eliminates the Requirement for Financial Institutions to Mail Annual Privacy Notice if Certain Conditions are Met
12/16/2015
by Joseph D. Simon – Cullen and Dykman LLP

A new law signed by President Obama on December 4, 2015 eliminates the need for financial institutions to send consumers an annual privacy notice if certain conditions are met.

While the Fixing America’s Surface Transportation (“FAST”) Act mainly focuses on reforming and strengthening transportation networks, the law also amends Section 503 of the Gramm-Leach-Bliley Act (“GLBA”) by adding an exemption to the annual privacy notice requirement for financial institutions if two conditions are met.

The first condition is that the financial institution only provides consumers’ nonpublic personal information to nonaffiliated third parties in accordance with exceptions under the GLBA permitting such disclosures without an opt out. For instance, the financial institution can provide nonpublic personal information to a nonaffiliated third party to perform services for or functions on behalf of the financial institution, as long the third party is bound by a confidentiality requirement. This includes disclosures to any nonaffiliated third parties that market the financial institution’s own products or services, or any products or services offered pursuant to joint marketing agreements.

The second condition is that the financial institution has not changed its policies and practices of disclosing nonpublic personal information from its most recent GLBA disclosures sent to consumers.

Please note that the financial institution will no longer be subject to this exemption, and will have to resume providing annual privacy notices to consumers, when the institution fails to meet either one of the above two conditions.

To be continued…

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