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Bailout Of World’s Oldest Bank In Jeopardy, Rests On Hope That “Ship Does Not Sink” | Zero Hedge

Bailout Of World’s Oldest Bank In Jeopardy, Rests On Hope That “Ship Does Not Sink” | Zero Hedge.

The ongoing debacle of Italy’s Banca Monte dei Paschi (BMPS) took a turn for the worst today. The bank’s largest shareholders (MPS Foundation) approved (read – forced through) a delay in a EUR 3 billion capital raise, which the bank needs to avoid nationalization, until May. The delay (which will cost the bank EUR 120 million in interest) allows MPS more time to liquidate their 33.5% holding before their stake is massively diluted. Management is ‘considering’ resignation and is “very annoyed,” but the city Mayor is going Nationalist with his delay-supporting comments that “we cannot let the third biggest bank in this country fall prey to foreign interests.” So Europe is recovering but they can’t even raise a day’s worth of POMO to save the oldest bank in the world?

Via Reuters,

Italy’s third-biggest bank Monte dei Paschi di Siena was forced to delay a vital 3 billion euro ($4.1 billion) share sale to raise capital until mid-2014 because of shareholder opposition, plunging its turnaround plan into uncertainty.

The bank’s chairman and its chief executive may now resign after their plan to launch the cash call in January was defeated at an extraordinary shareholder meeting on Saturday due to the vote of Monte Paschi’s top shareholder.

The world’s oldest bank needs to tap investors for cash to pay back 4.1 billion euros in state aid it received earlier this year and avert nationalization

Simple game theory really – why would the largest shareholder “guarantee” losses now when it can try and liquidate more of its exposure over time?

But the cash-strapped Monte dei Paschi foundation – whose stake in the bank is big enough to veto any unwanted decision – forced a postponement until at least mid-May to win more time to sell down its 33.5 percent holding and repay its own debts.

Antonella Mansi, a feisty 39-year-old businesswoman recently appointed head of the Monte dei Paschi foundation, said her insistence on a cash call delay did not amount to a no-confidence vote in the bank’s management.

But she said that carrying out the capital increase in January would massively dilute the foundation’s holding, leaving it with virtually nothing to sell to reimburse debts of 340 million euros.

We have a precise duty to ensure (the foundation’s) survival. You can’t ask us to let it collapse,” she said.

Management is “very annoyed”…

Chairman Alessandro Profumo, a strong-willed and internationally respected banker who was formerly the chief of UniCredit, said he and CEO Fabrizio Viola would decide in January whether to step down.

These are decisions one takes in cold blood and in the right place,” Profumo said at the meeting.

“What I have on my mind is a 3 billion euro cash call because we need to pay back 4 billion euros to taxpayers. Today this is uncertain and at risk,” he told a press conference.

Viola, sitting at his side, told reporters he would do everything “so that the ship does not sink”, but that he could not take responsibility for mistakes made by others.

Of course, there is risk either way…

“It’s important to carry out the capital increase as early as possible,” said Roberto Lottici, fund manager at Ifigest. “The risk is that the bank finds itself rushing into a cash call later at a lower price than what it could achieve now.”

It’s hard to think that the third largest Italian bank can’t find a pool of banks able to support the cash call after May 2014,” said Antonella Mansi, the president of the MPS foundation, at the shareholders’ meeting.

and given the number of jobs involved… local officials are now reacting in favor of the delay (hoping for domestic savior)…

But in Siena, where the bank is known as “Daddy Monte” and is the biggest employer, fears that the cash call might sever the umbilical cord between the lender and the city run high.

Siena mayor Bruno Valentini, whose city council is the top stakeholder in the Monte dei Paschi foundation, said on Friday a postponement might help keep the bank in Italian hands.

“We cannot let the third biggest bank in this country fall prey to foreign interests,” he said. “Monte dei Paschi is not just an issue in Siena, it is a big national issue.”

So, even after all the lqiuidty provision; yields and spreads on European debt back near record lows; calls from US asset managers that Europe is recovering and will be the growth engine; and hopes that Europe’s AQR stress test (and resolution mechanism) will be the gold standard for confidence in their banking system… they still can’t find a group of greater fools to pony up EUR3 billion in real (not rehypothecated) money to save the world’s oldest bank – that’s a day’s worth of Fed POMO!!!!

On an odd side note, we did note a major surge in ECB margin calls this week…

 

London’s Mayor Says We Should “Thank the Super Rich” – Calls Them “Tax Heroes” and Compares to the “Homeless and Irish Travelers” | A Lightning War for Liberty

London’s Mayor Says We Should “Thank the Super Rich” – Calls Them “Tax Heroes” and Compares to the “Homeless and Irish Travelers” | A Lightning War for Liberty.

If you thought you had seen it all when it comes to sob stories of the “super rich” following the comparison of the criticisms of banker bonuses to the lynching of black people in the south by AIG’s CEO in September, think again. The latest groveling, inane defense of the “super rich” comes from none other than the gatekeeper of the largest oligarch whorehouse on planet earth. The Mayor of London, Mr. Boris Johnson.

Now I warn you, do not read the following Op-Ed on a full stomach. The vapid, nonsensical, Onion-like prose may very well induce fits of nausea and uncontrolled regurgitation. This is quite frankly one of the worst things I have ever read in my life. It echoes like a sort of grandiose ass-kissing ritual one would have encountered in a Middle Age court from an aspiring manservant of the realm, desperately trying to rapidly advance a coupe of notches up the social strata of some decadent feudal kingdom. Simply put, Boris Johnson should be ashamed to show his face in public after writing such disingenuous garbage.

Now for some excerpts from the UK Telegraph:

The great thing about being Mayor of London is you get to meet all sorts. It is my duty to stick up for every put-upon minority in the city – from the homeless to Irish travellers to ex-gang members to disgraced former MPs. After five years of slog, I have a fair idea where everyone is coming from.

But there is one minority that I still behold with a benign bewilderment, and that is the very, very rich. I mean people who have so much money they can fly by private jet, and who have gin palaces moored in Puerto Banus, and who give their kids McLaren supercars for their 18th birthdays and scour the pages of the FT’s “How to Spend It” magazine for jewel-encrusted Cartier collars for their dogs.

I suspect that the answer, as Solon pointed out to Croesus, is not really, frankly; or no happier than the man with just enough to live on. If that is the case, and it really is true that having stupendous sums of money is very far from the same as being happy, then surely we should stop bashing the rich.

So he starts off right away with complete idiocy. Sure, I genuinely agree that having that much money is more of a curse than a blessing, but that doesn’t mean we should stop bashing oligarchs. Not all (but most) oligarch wealth has been created or maintained and coddled via Central Bank policies that favor their class, bailouts and crony capitalist deals. That’s why the rest of us aren’t benefiting from this phantom “economic recovery.” Perhaps he forgot the saying by Honore de Balzac:

“Behind every great fortune lies a great crime.”

Now back to bumbling Boris.

 

Canada’s electronic watchers enjoy secrecy second to none | Toronto Star

Canada’s electronic watchers enjoy secrecy second to none | Toronto Star.

John Adams, chief of the Communications Security Establishment, doesn’t think “oversight” is realistic, but supports a robust “review” of CSEC’s activities and sees the value in having a committee of security-cleared parliamentarians “fully briefed on what CSEC is doing."

JONATHAN HAYWARD FOR THE TORONTO STAR

John Adams, chief of the Communications Security Establishment, doesn’t think “oversight” is realistic, but supports a robust “review” of CSEC’s activities and sees the value in having a committee of security-cleared parliamentarians “fully briefed on what CSEC is doing.”

By:  Washington Bureau,  National Security Reporter, Published on Sat Nov 09 2013

Creepy truth: American spies with access to everyone’s data do occasionally succumb to the urge to snoop illegally through their love lives, peering into the private communications of former paramours.

Creepier truth: if you’re Canadian, you have no way of knowing whether one of your own spies does it to you.

Hypothetically, they don’t. Legally, they can’t. But that’s the problem, say critics of the fast-growing Communications Security Establishment Canada (CSEC), the Ottawa agency that scours global telephone logs, email and Internet trails for worrisome patterns — with CSEC it’s all hypothetical because Canada’s electronic watchers enjoy a secrecy second to none.

Nearly six months after former computer specialist Edward Snowden began tearing back the curtain on America’s National Security Agency with a series of stunning disclosures about the true extent of U.S. mass surveillance, Canada’s CSEC remains a silent bystander.

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Apart from a single report by journalist Glenn Greenwald accusing CSEC of eavesdropping on Brazil’s mining and energy ministry, Canada’s electronic spies have thus far escaped the brunt of Snowden’s cascading disclosures.

That’s good, right? Sure it is. But it also leaves Canadians, including Parliament, almost completely in the dark on what the underscrutinized CSEC actually does, even as outraged Americans and Britons shine a bright light on — and mobilize to change — the ways their own governments consume private data.

“Canadians who think they are in the clear on these ongoing scandals need to grasp that we are the ones who need the debate the most,” said Ron Deibert, director of the University of Toronto’s Citizen Lab.

“The Canadian checks and balances just aren’t there. We have no parliamentary oversight of CSEC, no adequate independent entity to watch the watchers and act as a constraint on misbehaviour. It just doesn’t exist now.

“It’s not a question of people shrugging and saying, ‘Well, I’ve got nothing to hide.’ The real problem is oversight — and the potential for abuse if left unchecked.”

It’s an idea that even CSEC’s former chief, John Adams, concedes would be helpful.

Adams doesn’t think “oversight” is realistic, but supports the robust “review” of CSEC’s activities and sees the value in having a committee of security-cleared parliamentarians “fully briefed on what CSEC is doing.

“It would be an opportunity for them to provide feedback and observations and raise concerns perhaps about what CSEC is doing and CSEC could also use that forum as an opportunity to talk about what they might be doing or consider doing or to bounce off of them some thoughts,” said Adams.

“It would be an opportunity for (Parliament) to have some public debate but it would be a limited public debate because they’d have to be sworn to secrecy.”

This review does exist in the United States, though many argue the checks and balances have been abused and subverted in light of Snowden’s NSA disclosures.

Yet in the U.S., as the scandal grew, so too did Congressional scrutiny, with American politicians like Sen. Ron Wyden of Oregon leading the pushback against secrecy.

A case in point came in August, when the leak of a top-secret document revealed the NSA broke privacy rules and overstepped its legal authority thousands of times a year after 2008, when the agency was granted broad new powers by Congress.

Most of the violations were “unintentional,” but that sparked congressional queries for details on cases involving wilful misconduct by NSA spies. As pressure mounted, the NSA took the extraordinary measure of a public statement, acknowledging that a handful of its officers had used the agency’s enormous eavesdropping power to spy on romantic interests.

Those instances, though rare, were common enough to warrant their own spycraft label — LOVEINT, or “love intelligence.” Most of the officials involved resigned, were dismissed or were demoted to a lower pay grade with limited security clearance, the agency said.

But that’s only one piece of a much broader debate taking place in Washington, as two competing pieces of legislation emerge with the intent to rein back NSA powers and place congressional checks and balances on a stronger footing. An important element of that debate is whether America’s massive metadata effort — the gathering up of the entire haystack of phone and Internet communications — is worth the cost.

These questions are hardly ever asked north of the border, even though Canada is a partner in the so-called Five Eyes, sharing intelligence-gathering chores alongside the U.S., Britain, Australia and New Zealand.

Little is known of what that entails, precisely, although the Globe and Mail penetrated one layer of the CSEC bubble in June. The newspaper disclosed that a secret Canadian metadata surveillance program first launched in 2005 under then-prime minister Paul Martin was frozen amid privacy concerns, only to be reinstated in 2011 under new rules.

Hundreds of pages of records on the program, obtained through Access to Information requests, came back with large passages blacked out on grounds of national security, the Globe reported.

The lone watchdog agency overseeing CSEC, the Office of the CSE Commissioner, has given its blessing to the metadata program. But critics say the office and its staff of eight, which until recently received its funding directly from the Department of National Defence, as does CSEC, remains too close to Canada’s security establishment to effectively safeguard privacy concerns.

Once a year CSEC’s watchdog reports to Canadians. But far more often, it reports secretly to the defence minister with recommendations for adjustments in how CSEC conducts its business. In his most recent public report, released in August, outgoing commissioner Robert Decary ended his three-year term proclaiming that all activities complied with Canadian law with the exception of “a small number of records (which) suggested the possibility that some activities may have been directed at Canadians, contrary to the law . . . I was unable to reach a definitive conclusion.”

Decary, in a final assessment of his time as CSEC watchdog, wrote that he saw little value in a confrontational relationship. “With my years of experience, I see the office more CSEC’s conscience than as a sword of Damocles,” he wrote.

But even Decary nudged Canada’s spymasters toward greater openness, writing that “I believe that the ice has been broken and that the security and intelligence agencies understand they can speak more openly about their work without betraying state secrets or compromising national security.

“The greater the transparency, the less skeptical and cynical the public will be.”

University of Ottawa scholar Wesley Wark, who specializes in national security and the history of intelligence agencies, says the CSEC watchdog is simply not enough.

Unlike Britain and the United States, Canadian oversight leaves a “gaping hole . . . a big gap” because Parliament is not involved in holding intelligence agencies to account as Adams suggested, Wark told The Star.

The issue has simmered for years, said Wark, with failed attempts, most recently in 2005, to create a British-style Committee of Parliamentarians on National Security.

But oversight actually grew worse in 2011, said Wark, when CSEC was deemed an independent agency within the Department of National Defence, effectively eliminating a requirement to report to the national security adviser and Privy Council office. “It took that away entirely,” said Wark, “and put it all within (DND), where it’s very easy for CSEC to disappear down its secret hole.

“There’s a question about who is really in charge and who’s deciding to apportion CSEC resources in terms of current operations,” he said.

Among the key questions Wark says remain unanswered is how much bang CSEC gets for its buck. And whether, in Canada’s haste to satisfy the obligations of its Five Eyes commitments, we sell Canadian interests short.

Deibert, who this year published Black Code: Inside the Battle for Cyberspace, argues that while parliamentary oversight remains an admirable goal, the evolving issue of privacy-versus-surveillance warrants something more ambitious.

“I would go further: There needs to be somebody who is not part of Ottawa culture, who is adversarial, something with the authority and credibility of the Privacy Commission’s office,” said Deibert.

“Parliamentary oversight is necessary. But you also need oversight that doesn’t depend on favours or look through the lens of partisan politics.

“I just don’t think, as a society, Canada has caught up with the epochal scope of what has changed in the last 10 years. We’ve gone through the most profound transformation in how we communicate. Mobile and broadband technologies have turned us inside out — and at the same time these Cold War agencies are now turning their gaze inwards on us.

“It’s no longer spy-versus-spy and concern over foreign states with nuclear weapons. Now it’s about somebody blowing themselves up in a shopping mall. And so the threat model has turned toward all of society.”

Canada’s security agencies cannot do their jobs in total transparency, of course. Some degree of secrecy is crucial. But that is no hindrance, if a committee of Parliament were to be vetted and cleared — a commonplace practice in other jurisdictions — and thus able to absorb firsthand the full heft of CSEC activities.

But if CSEC’s critics and former bosses agree on at least some increased scrutiny, Adams doesn’t buy into all the Snowden hype. He shrugs, for example, at the furor that followed October’s disclosure of U.S. eavesdropping on German Chancellor Angela Merkel’s cellphone.

“Every leader in the world knows that people would love to know what they’re thinking, where they’re heading . . . anyone who doesn’t think that is happening is in never-never land,” Adams said.

“It’s not illegal but it’s embarrassing. There are 12 rules and 11 of them are, ‘Don’t get caught.’ ”

 

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