Thursday, October 29, 2015

Wondering Why You Can’t Get Ahead? The Goal Of The Federal Reserve Is To Decrease Your Purchasing Power By 18.3% Every Ten Years!!

by James Quinn 
Remember the GOAL of the Federal Reserve is to ACHIEVE 2% inflation over time. So, their goal is to decrease your purchasing power by 18.3% every ten years. Even using their fake under-reported CPI, they have managed to decrease the dollar’s purchasing power by 91.8% since 1950. And you are wondering why you can’t get ahead?
Inflation by Decade
Via Bullion Buzz

IBM Discloses SEC Investigation, Plunges to Worst Level since 2010, Even Share Buybacks Don’t Work Anymore

Wolf Richter,

Financial Engineering bites back.

When IBM announced earnings last week, it talked about all the great things it was accomplishing to compensate for the fact that revenues had plunged 14% from a year ago to $19.28 billion, and that even “revenues from continuing operations,” after accounting for operations it had shed, dropped 1%. It was the 14th quarterly revenue decline in a row. Three-and-a-half years!
It’s not the only American tech company with declining revenues. There are a whole slew of them, mired in the great American revenue recession, including Microsoft, whose revenues plunged 12%. So they – big tech – are in this together.
But turns out, IBM’s revenues, as bad as they have been, might have been subject a little more financial engineering than normally allowed.
Today, IBM disclosed that the Securities and Exchange Commission is investigating how it has accounted for these lousy revenues. The one-sentence disclosure was tucked away in a footnote on page 45 of its SEC Form 10-Q, which it filed today:
In August 2015, IBM learned that the SEC is conducting an investigation relating to revenue recognition with respect to the accounting treatment of certain transactions in the U.S., U.K. and Ireland. The company is cooperating with the SEC in this matter.
“A company spokesperson wasn’t immediately available to elaborate on the probe,” according to the Wall Street Journal.
As I’m writing this, IBM is down 4% to $138, a new 52-week low:
Timing was impeccable: IBM had “learned” about this debacle in August. In order not to unduly disturb its already frazzled shareholders – August was a rough month for stocks – it mercifully kept quiet about it.
So today, mere hours before the disclosure, IBM announced a $4-billion stock buyback program, which brought the total current authorization to $6.4 billion, in order to put a floor under its shares in advance of the announcement.
Shareholders should be furious that IBM would blow another $4 billion on a scheme that over the past few years has done nothing but drive IBM deeper into the mire and enrich Wall Street entities that handle the process and extract their fees. Shares have now hit their worst level since late 2010 – despite the incessant share buybacks:
Instead of blowing tens of billions of dollars on stock buybacks to engineer its financial reports and pull, in cahoots with Wall Street analysts, a bag over investors’ heads with its per-share metrics, IBM should have invested those funds in actual engineering and in people, which might have helped it become great again. But this is unlikely to ever happen, given that Wall Street dominates the show.
“It’s been a rotten year for distressed and defaulted loan paper.” That’s how S&P Capital IQ LCD starts out its report on leveraged loans. “Rotten” may be a euphemism, as “fear has become a strong undercurrent.” Read… And Now Defaulted “Leveraged Loans” Go Kaboom

12 Days Before ’08 Crash, Congress was Secretly Told to Sell Off Their Stocks

Earlier this month, it was reported that less than two weeks before the economic collapse of 2008, several members of Congress took their money out of the stock market. Many high-ranking government employees were given a heads-up about the impending market crash in secret meetings with the Federal Reserve and the Treasury Department. Then they used that information to engage in insider trading.
It was revealed that Senator Shelley Capito and her husband sold $350,000 worth of Citigroup stock at $83 per share, just one day before the stock dropped to $64 per share. Another shady trader was Congressman Jim Moran, who had his biggest trading day of the year days after the secret meeting, sellings stock in nearly 100 different companies.
These actions would be illegal for any American in any other circumstance, but members of Congress and high-ranking government officials are actually exempt from insider trading laws.

Years later, a 60 Minutes investigation aired on television which highlighted the government’s deep history of insider trading. The investigation sparked outrage, prompting Congress to pass “the STOCK Act” which was said to hold members of the government to the same standards as any American when it came to insider trading.
However, Congress watered down the bill and changed key elements that would hold them accountable, allowing them to return to business as usual, and escape any consequences for their prior crimes.
In an interview during the 60 Minutes investigation, Peter Schweizer of the Hoover Institute told Steve Kroft that “It’s really the way the rules have been defined. And the people who make the rules are the political class in Washington and they’ve conveniently written them in such a way that they don’t apply to themselves.”
“These meetings were so sensitive– that they would actually confiscate cell phones and Blackberries going into those meetings. What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and treasury secretary. I mean, talk about a stock tip,” he added.
Since it was passed, the STOCK Act has been more or less worthless. Whenever a politician is accused of anything, they are defended by other politicians and the investigation is immediately stonewalled. For example, a former staffer for the House Ways and Means Committee, Brian Stutter was guilty of insider trading. However, he avoided charges because House Speaker John Boehner refused to hand over the evidence, and claimed that Sutter had legal immunity.


Americans are more likely than they were a year ago to have positive views of the nation’s economy, but they’re still feeling more pessimism than optimism, according to a new Associated Press-GfK poll conducted ahead of CNBC’s GOP primary debate on Wednesday.

The candidates will attempt to impress Republicans in particular, who the poll finds feel much gloomier about the economy than Democrats.

Here are some things to know about opinions on the economy from the latest AP-GfK poll:


A majority of Americans – 54 percent – say the nation’s economy is poor, the new poll shows. Just 45 percent call it good. Still, views of the economy are slightly rosier than they were over the summer, when a July AP-GfK poll found 41 percent of Americans described the economy as good, and more positive than they were a year ago, when just 38 percent said so.

Half of men, but just 4 in 10 women, describe the economy as good.

Americans are even less likely to see the nation heading in a positive direction overall. Just 36 percent think the country is heading in the right direction, while 63 percent think it’s headed in the wrong direction.

More than 8 in 10 Americans in the new poll described the economy as an extremely or very important issue, down slightly since July. Still, the economy rates higher in importance than any other issue in the poll.

The candidates will aim their messages at a Republican Party that has a particularly negative view of the economy.
While 65 percent of Democrats describe the economy as good, just 29 percent of Republicans say the same. Seven in 10 Republicans say the economy is poor, including more than 8 in 10 GOP supporters of the tea party. Eight-five percent of Republicans say the country is heading in the wrong direction.

Independents, too, are unhappy with the economy, with 33 percent seeing it as good and 62 percent poor.


Few Americans – just 17 percent – think the economy has improved over the past month, while 21 percent think it has gotten worse and the bulk – 60 percent – think it’s stayed about the same.

Most Americans don’t expect to see improvement in either the nation’s economy or their own financial situations in the next year, either.

Thirty-one percent say they expect the general economic situation to get better, 32 percent expect it to get worse, and 34 percent expect it to stay about the same. Likewise, 29 percent expect their household financial situation to get better, 25 percent expect it to get worse, and 44 percent expect it to stay the same.

Republicans are more likely than Democrats to say the economy has gotten worse in the last month, 31 percent to 13 percent. Democrats are more likely than Republicans to expect it to get better in the next year, 40 percent to 21 percent.


Whichever GOP candidate emerges victorious in next year’s presidential primaries will need to convince Americans that the party can do a better job than Democrats at handling economic issues.

Americans are slightly more likely to say they trust Democrats than Republicans more on handling the economy, 29 percent to 24 percent, the poll shows.

But neither party’s a clear winner on the issue – 15 percent say they trust both equally and 30 percent say they trust neither party.

Republicans are more likely than Democrats to say they trust neither party, 29 percent to 17 percent. A majority of independents – 55 percent – don’t trust either party.


'Isolated Iran' Set to Join BRICS Bank

Originally appeared at Zero Hedge

As US hegemony wanes in the face of dysfunctional domestic politics, foreign policy confusion, and a “lead from behind” mentality, the world has begun to transition towards a kind of new world order both politically and economically.
On the geopolitical front, we’ve seen a resurgent Russia take charge in Syria after the situation spiraled out of control, leaving hundreds of thousands dead and creating the worst migrant crisis in Europe’s history.
On the economic front, the BRICS nations have embarked on a series of projects designed to supplant the US-led multinational institutions that have dominated the post-war world.
In what has become one of the bigger stories of the year, China has established its own development bank (the AIIB) and after the UK broke with Washington to support the new venture back in March, the floodgates opened with US ally after US ally jumping on the bandwagon. Although Beijing has promised it doesn’t intend to use the bank as an instrument of foreign policy or as a means of promoting yuan hegemony, the renminbi is set to play a prominent role in loans issued by the bank and there’s little question that development lending will bolster China’s attempt to establish a kind of Sino-Monroe Doctrine. Beijing has similar ambitions with the Silk Road Fund (see our full breakdown here), although part of the story there looks to revolve around an effort to provide a kind of pressure valve for the country's excess industrial capacity.
And then there is of course the BRICS bank, which officially launched along with a reserve currency pool back in July. The following chart does a nice job of demonstrating why the bank matters:
Much like the AIIB, the BRICS bank is in many respects a response to what the emerging world views as an abject failure on the part of existing multilateral institutions to provide representation that’s commensurate with the growing clout of influential emerging economies.
Given this, and given what we know about the extent to which the current situation in the Mid-East has served to strengthen ties between Moscow and Tehran, it should come as no surprise that Iran is now set to join the BRICS bank. Here’s RT:
Tehran intends to participate in the BRICS New Development Bank, the Iranian Tasnim news agency reported on Monday, citing an Iranian official.
The Iranian Deputy Minister of Economic Development Mohammad Khazaee said at a meeting of a joint Iran-Brazil economic council that the country is aiming to join the BRICS bank.
More, from PressTV:
Iranian officials said on Monday that the country plans to join an independent bank established by BRICS member states.

The announcement was made by Mohammad Khazaei, Iran’s deputy economy minister for development affairs, at conference on Iran-Brazil economic cooperation.
The agreement to establish the BRICS New Development Bank (NDB), with an initial capitalization of $100 billion, was signed by the BRICS member states — Brazil, Russia, India, China and South Africa — during the group's 6th summit in Fortaleza, Brazil, in July 2014.
The bank is meant to act as an alternative to the existing American and European-dominated financial institutions such as the World Bank and International Monetary Fund.
It was officially launched at the last BRICS summit in the Russian city of Ufa earlier this year.
Khazaei said Iran’s joining the NDB will help the expansion of economic relations with all BRICS states, specifically Brazil. 
And while now might not be a particularly opportune time to be aligning with Brazil economically, the following (again from state affiliate PressTV) underscores the extent to which Tehran is quickly shedding the pariah state label and marking a swift return to the world stage:
Iran’s Foreign Minister Mohammad Javad Zarif has stressed the importance of improving relations with Brazil given the country’s special position in Latin America and in the BRICS group of major emerging economies.
“This country (Brazil) has always been among priorities of the Islamic Republic of Iran’s foreign policy,” Zarif said in a meeting with Brazilian Minister of Development, Industry and Trade Armando Monteiro in Tehran on Monday.
He added that Iran has great potentialities to open new markets and can help Brazil’s access to the Central Asian region.
Zarif said Tehran and Brasilia are seeking a new roadmap to develop common interests, adding that the two sides’ enterprises and banking and economic institutes can play an important role in this regard.
He noted that Iran and Brazil enjoy great opportunities for strengthening cooperation in different fields such as technology, biotechnology, energy and gas.
The Iranian minister expressed his country’s readiness to remove obstacles in the way of banking cooperation with Brazil through constant consultation.
Yet again, we see further evidence that the “isolation” line being pushed by the West with regard to Moscow and Tehran bears little resemblance to reality.
Admittedly, the nuclear deal shows that Washington has to a certain extent come to terms with the fact that attempting to bankrupt a geopolitically imporant state as “punishment” for that state's legitimate attempt to develop the same deterrent capabilities as its sworn enemy is a fool's errand. That is, whatever you want to say about the P5+1 accord, and the Ayattolah's ranting notwithstanding, the deal was at least a step towards recognizing that Washington's foreign policy towards Tehran has been a miserable failure and isn't at all sustainable going forward.
Now, with sanctions set to be lifted and Iranian crude exports set to get a boost in Q1 or Q2 2016 at the latest, Tehran is marking a dramatic comeback both with its involvement in Syria and with efforts to prove that it is not, as the West would have you believe, completely “isolated.” Time will tell if this is ultimately a positive development. We'll leave it to readers to make their own predictions in that regard.
Did you enjoy this article? - Consider helping us!

10 Taxpayer Handouts to the Super Rich That Will Make Your Blood Boil

The next time you hear someone complain about how the poor get “all this free stuff,” show them this.

A small number of incredibly wealthy Americans are ridiculing Bernie Sanders’ base for wanting “free stuff” when the costliest programs are, by far, corporate welfare and entitlements for the top 1 percent. Fox News has been working hard to tear down Sanders’ proposals to provide Medicare for all, institute tuition-free public college, boost infrastructure spending, and expand Social Security.
“That’s not fiscally possible unless the federal government starts seizing private assets,” said Bill O’Reilly.
But O’Reilly is wrong. The money for Sanders’ platform can easily come from eliminating the costliest entitlement programs for the top 1 percent and multinational corporations. Here’s a breakdown of the most superfluous giveaways to the rich and how much they cost the rest of us:

1. Tax Breaks for obscene CEO bonuses ($7 billion/year)

Currently, the biggest corporations are exploiting a 20-year-old loophole that allows them to write off inflated compensation packages for CEOs, billing stock options, and performance-based bonuses to taxpayers. In 2010, the Economic Policy Institute found out that the biggest corporations cost Americans $7 billion by writing off inflated executive pay. Between 2007 and 2010, this loophole accounted for more than $30 billion in corporate welfare. According to The Guardian, fast food industry CEOs cost taxpayers $64 million through this loophole.
That $7 billion could singlehandedly fund the annual budget for the National Science Foundation — which, as I recently reported for US Uncut, funds 11,000 scientific research projects each year and has funded 26 Nobel laureates in the last 5 years.

2. Tax cuts for luxury corporate jets ($300 million/year)

Currently, corporations can claim a huge tax deduction every year by writing off purchases of corporate jets, lavish cars, and chauffeurs as “security” for their top executives. A Bloomberg analysis from 2011 showed that these tax breaks for some of the wealthiest Americans cost the rest of us $300 million each year. While that may not sound like much, that’s approximately 50 percent of the annual budget for the Consumer Financial Protection Bureau, the brainchild of Elizabeth Warren that protects Americans from the financial sector’s most predatory schemes.

3. Big oil subsidies ($37.5 billion/year)

According to Oil Change International (OCI), the U.S. government spends anywhere between $10 billion and $52 billion per year on corporate welfare for the fossil fuel industry — one of the wealthiest industries in the world. OCI estimated that total combined subsidies to big oil approached $37.5 billion in 2014, which includes $21 billion on production and exploration subsidies.
These subsidies alone cost more than what we currently spend on providing rental assistance for low-income families. In 2013, the department of Housing and Urban Development allocated a total of $34.3 billion toward tenant-based rental assistance ($19 billion), project-based rental assistance ($8.7 billion), and general public housing programs ($6.6 billion). These programs helped 4.5 million families — half of whom are elderly — keep a roof over their head.

4. Pharmaceutical subsidies ($270 billion/year)

As US Uncut has previously reported, the pharmaceutical industry costs taxpayers roughly $270 billion a year when accounting for the cost we pay for life-saving drugs whose patents have been bought up by Big Pharma. This is over $1,914 per household in corporate welfare. This is partly due to the Medicare Part D bill that George W. Bush signed into law in 2003, which prevents Medicare from negotiating drug prices with pharmaceutical companies. But the biggest drug companies also make a pretty penny (a combined $711 billion in profits between 2003 and 2012) by buying patents for drugs that were largely developed with taxpayer-funded research, then jacking up the price by absurd amounts after cornering the market.
Combined profits of top pharma companies. Data courtesy of
This $270 billion annual subsidy could be virtually eliminated by passing Bernie Sanders’ bill to establish a government fund that buys up drug patents as soon as they become available for purchase. Then, the government would sell drugs at-cost to save money for those who need them. The money saved could pay for the annual $270 billion in insurance costs from Obamacare that would help more Americans get access to healthcare.

5. Capital gains tax breaks ($51 billion/year)

When anyone makes money from selling off investments, the IRS classifies that as capital gains, which are taxed at a lower rate (20 percent as of 2012) than real, actual work (35 percent). Pew Research found that 53 percent of Americans own no stock at all, and out of the 47 percent who do, the richest 5 percent own two-thirds of that stock. And only 10 percent of Americans have pensions, so stock market gains or losses don’t affect the incomes of most retirees. The Century Foundation found that the total amount of lost revenue by taxing capital gains at a lower rate than wages cost $256 billion between fiscal years 2012 and 2016, or $51 billion a year over the last 5 years. According to the Tax Policy Center, if investment income was taxed at the same rate as wages, 75 percent of that new revenue would come from the richest 0.3 percent of Americans; 92 percent of that revenue would come from those making $200,000 or more per year. The chart below shows what percentage of income each tax bracket makes from capital gains — not surprisingly, the wealthiest Americans get most of the benefit from capital gains.
Chart courtesy of The Century Foundation.
If we taxed wealth like work, the extra $51 billion per year in savings could fund two-thirds of the annual budget for food stamps.

6. Corporate tax subsidies from state and local governments ($80.4 billion/year)

In 2012, the New York Times did an analysis of every existing tax break in each of the 50 states and learned that 1,874 programs cost taxpayers $80.4 billion every year for corporate welfare in their state. Compare that cost with the cost of providing tuition-free public college to every student, which The Atlantic estimated would be a mere $62.6 billion. As the chart below shows, this is actually way cheaper than what we currently spend on federal student aid.
Current cost of existing federal college aid. (courtesy of The Atlantic)

7. Handouts to Big Ag ($18 billion/year)

Crop insurance — a program originally intended to help farmers recover from the dust bowls of the 1930s — has become a slush fund for wealthy corporate farmers who have become experts at manipulating the system for their own means. As Bloomberg reported, the median income of commercial farm households (in which farming makes up more than 50 percent of a household’s income) was $84,649 in 2011 — 70 percent more than the average American household. Farmers have learned to exploit the program by growing crops on land they know will be unproductive, then making money from insurance claims rather than crops. In 2011, 26 farmers each got an annual subsidy of $1 million, including one tomato farmer in Florida who got a $1.9 million subsidy.
This $18 billion in corporate welfare is more than NASA’s annual budget, which has hovered around the $17 billion mark since 2009.

8. Welfare for Wall Street ($83 billion/year)

The biggest banks have grown even bigger than they were just before the 2008 financial meltdown. And due to their size, these banks are perceived as “too big to fail,” as their demise would spell doom for the US financial sector as a whole. So as these big banks grow bigger, the Federal Reserve allows them to borrow at lower interest rates than other big banks — essentially subsidizing the continued growth of the big banks. In 2013, Bloomberg estimated the ten biggest TBTF banks suck up $83 billion per year in corporate welfare.
If we were to force the big banks to borrow at the same interest rates as every other bank at a rate of $83 billion per year, that would be enough to double the current federal budgets for highway spending ($48.6 billion), Head Start ($10.1 billion), the Environmental Protection Agency ($7.89 billion), nutrition assistance for women, infants, and children ($6.2 billion), the National Parks Service ($3 billion), and the Federal Deposit Insurance Corporation ($2.39 billion), with $5 billion left over.

9. Export-Import bank subsidies ($112 billion)

This week, the House of Representatives voted to revive the Export-Import (Ex-Im) bank, which has been maligned as a slush fund for large, multinational corporations. In its most recent year, the Ex-Im bank had a $112 billion portfolio, of which $90 billion went to multinationals. If that wasn’t bad enough, a huge portion of that money went to just 10 wealthy corporations.
According to the New York Times, the federal government spends roughly $105 billion on public K-12 schools. If we allow the Ex-Im bank to fade away, the money formerly set aside for corporate subsidies could instead double that investment in public education.

10. Federal contracts for the top 200 biggest companies ($880 billion/year)

The biggest 200 corporations have an excessively unfair advantage over their competitors due to their influence in Washington. According to the Sunlight Foundation, the top 200 companies spent a combined $5.8 billion on lobbying Congress between 2007 and 2012. And in those same years, those companies received $4.4 trillion in federal contracts. That $4.4 trillion is $100 billion more than what the U.S. government spent on providing a basic income to the nation’s 50 million Social Security recipients. This chart shows how much the top ten corporations spent on lobbying and how much they got in return:
The combined cost of these 10 corporate welfare programs is $1.539 trillion per year. The three main programs needy families depend upon — Temporary Assistance for Needy Families ($17.3 billion), food stamps ($74 billion), and the Earned Income Tax Credit ($67.2 billion) — cost just $158.5 billion in total. This means we spend ten times as much on corporate welfare and handouts to the top 1 percent than we do on welfare for working families struggling to make ends meet.

Tom Cahill is a writer for US Uncut based in the Pacific Northwest. He specializes in coverage of political, economic, and environmental news. You can contact Tom via email at

House Passes Budget Deal for Debt Limit Increase



WASHINGTON (AP) — The House has passed a bipartisan budget-and-debt deal that prevents an unprecedented government default.

A coalition of Democrats, GOP defense hawks and pragmatic Republicans supported the measure.
The legislation now heads to the Senate, which is on track to pass it before Tuesday’s deadline for increasing the so-called debt limit. It gives the government authority to borrow freely through March 2017.
The measure is the result of hard-fought negotiations between congressional leaders and President Barack Obama.
The bill also calls for approximately $112 billion in additional spending over two years, to be allocated in upcoming legislation negotiated by the House and Senate.
About $80 billion would be offset by spending cuts elsewhere in the budget.

Massive Debt, Budget Deal Introduced In Dead of Night, Vote Violates Another Boehner Pledge

The text is 144 pages long and increases the debt ceiling beyond when President Barack Obama leaves office, all the way until March 2017.  It also, according to Politico, increases spending by $50 billion this year and $30 billion more the following year.
As AP reports, House Speaker
Rep. John Boehner (R-OH)
is pushing for a Wednesday vote, this would be yet another instance in which he has broken his promise to give members and the public three full days—72 hours—to read legislation before voting on it. “We will ensure that bills are debated and discussed in the public square by publishing the text online for at least three days before coming up for a vote in the House of Representatives,” Boehner’s “Pledge to America” reads. “No more hiding legislative language from the minority party, opponents, and the public. Legislation should be understood by all interested parties before it is voted on.”
In a speech to the Conservative Political Action Conference (CPAC) in February 2010, Boehner also promised that three full days meant “at least 72 hours.”
By scheduling a vote on Wednesday—any time before 11:36 p.m. on Thursday, actually—Boehner would be violating that pledge.
Boehner is also putting the chances of his likely successor, House Ways and Means Committee chairman
Rep. Paul Ryan (R-WI)
, at risk. Ryan has indicated he thinks the “process stinks” on this, but is planning to review the deal in its entirety before making a decision one way or the other. Ryan’s office has refused to answer a series of basic questions from Breitbart News on whether he believes all Republicans in the House should support or oppose the deal, what took him so long to comment on the deal at all (he still hasn’t weighed in on the substance just the process), whether he would support
Rep. Kevin McCarthy (R-CA)
remaining on as Majority Leader if he becomes Speaker after McCarthy contradicted him on the process of the deal, and whether Ryan would allow staffers who were involved in this process who currently work for Boehner to remain working for the Speaker’s office if and when this takes over. Ryan spokesman Brendan Buck, over the course of several emails on Tuesday, openly refused to answer each of those questions. Buck used to work for Boehner. The Associated Press captured in its piece on Tuesday just how high stakes this game is for Ryan’s chances.
“The House budget vote slated for Wednesday would come on the same day as the GOP caucus nominates its candidate, widely expected to be Wisconsin Rep. Paul Ryan,” the Associated Press wrote.
That means that as the House votes on this monstrosity, it will also be voting to nominate Ryan as the GOP conference official candidate for the Speakership—setting him up for a floor vote on Thursday at which Ryan needs to win a majority of those present and voting for a person.
If he fails to achieve that absolute majority on the floor—something absolutely possible since
Rep. Daniel Webster (R-FL)
is still running against him—then it could set up a catastrophic-for-Ryan second ballot fight at which point Ryan would likely eventually step aside. It’s still entirely uncertain what is going to happen between now and Thursday, but with Ryan siding with the establishment in Washington on things like this it’s highly unlikely there will be a clear answer until it all goes down. Making matters more interesting, too, is that GOP presidential candidates are arriving in Boulder, Colorado. All are likely going to face questions about this highly unpopular deal going down in Washington.

The Full Details Of How Goldman Criminally Obtained Confidential Information Form The New York Fed

Two days ago we reported that the saga of Rohit Bansal, Goldman's "leaker" at the Fed is coming to a close with the announcement of a criminal case filed against Goldman's deep throat who had previously spent 7 years at the NY Fed, and was about to spend some time in prison, and who had been providing Goldman with confidential information sourced from his contact at the NY Fed for months, as a result of which Goldman would be charged a penalty.
Moments ago the NY DFS announced that the best connected hedge fund in the world would pay $50 million to the New York State Department of Financial Services and "accept a three-year voluntary abstention from accepting new consulting engagements that require the Department to authorize the disclosure of confidential information under New York Banking Law"
Goldman Sachs would also admit that a Goldman employee engaged in the criminal theft of Department confidential supervisory information; Goldman Sachs management failed to effectively supervise its employee to prevent this theft from occurring; and Goldman failed to implement and maintain adequate policies and procedures relating to post-employment restrictions for former government employees.
Below are the unbelievable, details of just how Goldman was getting material information from the NY Fed, from the FDS:
Violation of Post-employment Restrictions
On July 21, 2014, an individual began work at Goldman, Sachs & Co. as an Associate in the Financial Institutions Group ("FIG") of the Investment Banking Division ("IBD"). The Associate reported to a Managing Director and a Partner at Goldman.
Prior to his employment at Goldman, from approximately August 2007 to March 2014, the Associate was a bank examiner at the U.S. Federal Reserve Bank of New York ("the New York Fed"). His most recent position at the New York Fed was as the Central Point of Contact ("CPC") – the primary supervisory contact for a particular financial institution – for an entity regulated by the Department (the "Regulated Entity").
In March 2014, the Associate was required to resign from his position at the New York Fed for, among other reasons, taking his work blackberry overseas without obtaining prior authorization to do so and for attempting to falsify records to make it look like he had obtained such authorization, and for engaging in unauthorized communications with the Federal Reserve Board.
The Associate was hired in large part for the regulatory experience and knowledge he had gained while working at the New York Fed. Prior to hiring him, the Partner and other senior personnel interviewed and called the Associate several times, and the Partner took him out to lunch and dinner.
Prior to starting at Goldman, in May 2014, the Associate informed the Partner of potential restrictions on his work, due to his previous employment at the New York Fed, and specifically as the CPC for the Regulated Entity. The Partner advised the Associate to consult the New York Fed to obtain clarification regarding any applicable restrictions.
Accordingly, the Associate inquired with the New York Fed Ethics Office and was given a "Notice of Post-Employment Restriction," which he completed and signed with respect to his supervisory work for the Regulated Entity. The Associate provided this form to Goldman. This Notice of Post-Employment Restriction read that the Associate was prohibited "from knowingly accepting compensation as an employee, officer, director, or consultant from [the Regulated Entity]" until February 1, 2015.
On May 14, 2014, the Associate forwarded this notice of restriction to the Partner, the Managing Director, and an attorney in Goldman's Legal Department. In his email, the Associate also included guidance from the New York Fed, stating, in short, that a person falls under the post-employment restriction if that person "directly works on matters for, or on behalf of," the relevant financial institution.
Despite receiving this notice and guidance, Goldman placed the Associate on Regulated Entity matters from the outset of his employment. As further detailed below, the Associate also schemed to steal confidential regulatory and government documents related to that same Regulated Entity in advising that client.
Unauthorized Possession and Dissemination of Confidential Information
During his employment at Goldman, the Associate wrongfully obtained confidential information, including approximately 35 documents, on approximately 20 occasions, from a former co-worker at the New York Fed (the "New York Fed Employee"). These documents constituted confidential regulatory or supervisory information – many marked as "internal," "restricted," or "confidential" – belonging to the Department, the New York Fed or the Federal Deposit Insurance Corporation (the "FDIC"). The Associate's main conduit for receiving information from the New York Fed was his former coworker, the New York Fed Employee, who has since been terminated for this conduct. While still employed at the New York Fed, the New York Fed Employee would email documents to the Associate's personal email address, and the Associate would subsequently forward those emails to his own Goldman work email address.
On numerous occasions, the Associate provided this confidential information to various senior personnel at Goldman, including the Partner and the Managing Director, as well as a Vice President and another associate who perform quantitative analysis for Goldman. In several instances where the Associate forwarded confidential information to other Goldman personnel, the Associate wrote in the body of the email that the documents were highly confidential or directed the recipients, "Please don't distribute." At least nine documents that the Associate provided to Goldman constituted confidential supervisory information under New York Banking Law § 36(10). Pursuant to the statute, such confidential supervisory information shall not be disclosed unless authorized by the Department. The documents included draft and final versions of memoranda regarding and examinations of the Regulated Entity, as well as correspondence related to those examinations.
At least 17 confidential documents that the Associate had improperly received from the New York Fed – seven of which constituted confidential supervisory information under New York Banking Law § 36(10) – were found in hard copy on the desk of the Managing Director. Additional hard copy documents were found on the desks of the Vice President and the other associate, including at least one document constituting confidential supervisory information under New York Banking Law § 36(10).
On August 18, 2014, the Associate shared three documents pertaining to enterprise risk management with the Managing Director, writing, "Below is the ERM request list, work program and assessment framework we used for ERM targets. Again this is highly confidential as its not public and has not been issued a[s] guidance yet. Not sure where it is at anymore due to internal politics. I worked on this framework and guidance within the context of a system working group with the Fed system. We ran several pilots to test it was well. Please don't distribute." The Managing Director replied, "I won't. Will review on plane tomorrow to DC." The documents were marked as "Internal-FR" or "Restricted-FR."
Part of Goldman's work for the Regulated Entity included advisory services with respect to a potential transaction. A certain component of the Regulated Entity's examination rating was relevant to the transaction. The Regulated Entity's examinations were conducted jointly by the FDIC, DFS and the New York Fed. As described below, the Associate used confidential information regarding the Regulated Entity's examination rating – obtained both from his prior employment at the New York Fed and from his contacts there – and conveyed this information to the Managing Director, who then conveyed the information to the Regulated Entity on September 23, 2014, in advance of it being conveyed by the regulators.
On August 16, 2014, the Associate emailed the Managing Director regarding the regulators' perspective on the Regulated Entity's forthcoming examination rating, writing "You need to speak to [the CEO of the Regulated Entity] about scheduling a meeting with all 3 agencies ASAP. He needs to meet with them and display and discuss all the improvements and corrections they have made during the last examination cycle."
On September 23, 2014, the Associate attended the birthday dinner of the New York Fed Employee at Peter Luger Steakhouse, along with several other New York Fed employees. Immediately after the dinner, the Associate emailed the Managing Director, divulging confidential information concerning the Regulated Entity, specifically, the relevant component of the upcoming examination rating. The Associate wrote, "…the exit meeting is tomorrow and looks like no [change] to the [relevant] rating. I heard there won't be any split rating… [The Regulated Entity] should have listened to you with the advice…hopefully [the CEO] will now know you didn't have phony info."
In this email, the Associate also provided advice to relay to the Regulated Entity's management, stating that they should "keep their cool, not get defensive and not say too much unless the regulators have a blatant fact wrong" as it "will go off better for them in the long run. Believe it or not the regulator's [sic] look for reaction and level of mgmt respectiveness [sic] during these exit meetings." The Managing Director replied "Let's discuss . . . I'm seeing [the CEO of the Regulated Entity] tmw afternoon alone."
Later that night, the Associate followed up with another email to the Managing Director, writing, "I feel awful not being there to wrap up 2013. I would have been able to pull all this through. I was a real advocate for all the work they have done." He also offered to join a meeting with the CEO of the Regulated Entity if the Managing Director wanted.
On September 26, 2014, Goldman had an internal call regarding the calculation of certain asset ratios, during which there was disagreement over the appropriate method. During the call, the Associate circulated an internal New York Fed document – which the Associate had recently obtained from the New York Fed Employee – relating to the calculation, to the call participants, writing, "Pls keep confidential?" Following the group call, the Partner called the Associate to discuss the document, including where he had obtained it, and the Associate told him that he had obtained it from the New York Fed. The Partner then called the Global Head of IBD Compliance to report the matter and forwarded the document.
Compliance Failures, Failure to Supervise and Violation of Internal Policies
After receiving notice of the Associate's prohibition on working on matters for the Regulated Entity, Goldman, including the Partner and the Legal Department, failed to take any steps to screen the Associate from such prohibited work. Instead, Goldman affirmatively placed the Associate on matters for the Regulated Entity beginning on his first day, and added the Associate to the official Goldman database as a member of the Regulated Entity "Team" – a team led by the Partner.
Goldman failed to provide training to personnel regarding what constituted confidential supervisory information and how it should be safeguarded. While Goldman policies provided that confidential information received from clients should only be shared on a "need to know" basis, Goldman did not distinguish between this broader category of confidential information and the type of confidential supervisory information belonging to a regulator or other government agency, which is protected by law, such as confidential supervisory information under New York Banking Law § 36(10). Indeed, Goldman policies failed to adequately address Department confidential supervisory information.
As noted above, the Associate also violated Goldman's internal policy on "Use of Materials from Previous Employers," which states that work that personnel have done for previous employers, and confidential information gained while working there, should not be brought into Goldman or used or disclosed to others at Goldman without the express permission of the previous employer.
* * *
The Managing Director is safe, as are all other Goldman employees: nobody aside for Bansal who was merely trying to impress his superiors, has anything to worry about.
Anyone else found to have obtained at least "35 confidential documents" from the Fed on at least "20 occassions" would be sent straight to jail with a prison sentence anywhere between several decades and life. 
Goldman's punishment? 0.6% of its 2014 Net Income.

EU lawmakers block opt-out from GMO rules

BRUSSELS (AP) — European Union lawmakers have rejected a draft law that would have allowed countries to ban certain genetically modified food and animal feed even if the produce was authorized by EU authorities.
Lawmakers fear the move could force a return to border controls to keep GMO produce out of some countries. The decision to reject the law was taken on Wednesday by an overwhelming majority.
The environment spokesman for the assembly's biggest political group, Peter Liese, said that "we need to avoid chaos for consumers and farmers."
He warned that "having national bans would mean re-introducing border controls for foodstuff and feedstuff."
The use of GMOs remains controversial in Europe. Fifty-eight such crops have been authorized for consumption, including maize, cotton, soybean, oilseed rape and sugar beet. A further 58 are awaiting approval.
The lawmakers called on the EU's executive Commission to come up with new reforms to address problems posed by nations who oppose certain GMOs.
The Commission said it was disappointed by the vote and that it stands by its proposal.
Environmental group Greenpeace welcomed the decision, saying in a statement that the "plan would have failed to provide additional protection of European citizens and the environment from the risks posed by GM crops."

Global Currency Wars in One Picture. (via BBG)

Global Currency Wars in One Picture. (via BBG)

AP/GfK Poll: Americans Want Gov’t. Shutdown Unless Federal Spending Is Cut

According to the AP/GfK Poll published on October 27th, 50% of Americans agree with the statement, “Congress should ONLY increase the debt ceiling if it makes significant spending cuts at the same time, even if that means there will be considerable reductions in government services and programs.” 35% disagree. 11% marked a third box: “Congress should NOT increase the debt ceiling under any circumstances, even if that means the U.S. defaults on its debt.” (And, it does, in fact, mean  that: the government would default on its existing debt.) So: a solid 61% favor the position of congressional Republicans on this matter — the Federal Government should default on its existing debts unless federal spending going forward will be slashed (drastically slashed, as will be explained subsequently here).
However, Americans are confused about the matter: though they strongly favor the Republican position in the abstract, they slightly favor the Democratic position in reality. The 1,027 respondents slightly favored the position of “Democratic leaders in Congress” over that of “Republican leaders in Congress” on the issue. 51% disliked the Democrats on it, but 58% disliked the Republicans on it. 17% liked the Democrats on it, but only 10% liked the Republicans on it. 32% had no opinion on it.
When asked “Do you support, oppose, or neither support nor oppose, raising the federal debt limit in order to avoid defaulting on U.S. government debts?” 24% support, 29% oppose, and 44% neither. So: a massive 44% don’t even care whether the country defaults, but the rest are slightly opposed to such default.
56% say that “Reducing government spending” is “so important that it would be worth shutting down the government to achieve it.”
At present, 54% of discretionary (or non-mandatory) federal spending is for the military. 9% is for Health & Human Services. 7% is for EPA and Energy Departments. 6% is for the Education Department. 5% is for the State Department and foreign aid. 3% is for HUD. Those are 84% of the total; so, all the rest of the government is just 16%. That includes, for examples: VA, Labor Department, DOT, NASA, and Agriculture. 
The lion’s shares of non-discretionary spending goes to HHS, SS, Medicare and Medicaid.
The person who is likely to become the new Speaker of the House, Republican Paul Ryan,  committed himself in 2011 to the goal of eliminating by 2050 all federal spending except for the military. The rest would be privatized — available only on the basis of an individual’s ability-to-pay. As for regulatory agencies, they’d be eliminated: no EPA, no FDA, no laws or regulations at all regarding product-safety or the environment, and nothing to protect workers’ rights. All rights would belong only to owners: stockholders, lenders, and their hired executives who represent their interests. (But no collective bargaining to represent the interests of employees.) Even enforcing any existing laws against slavery could become problematic. Ryan is a libertarian, and libertarians derive their views from the economist Adam Smith. Smith said, in his Wealth of Nations (Book 4, Ch. 7, Part II), that the French system of slavery was superior to the British, because in the former, “the government is in a great measure arbitrary” (i.e., there was no regulation  of slavery, at all, by the French government), whereas the latter, the British, system, “intermeddles in some measure in the management of the private property of the master.” The supremacy of private property rights (and slavemasters’ rights) was consistently affirmed. Ryan affirms owners’ rights, over and above the rights of any mere taxpayers (the people who must pay the debts of government), and this position is resoundingly affirmed, even by President Barack Obama. Polling confirms that this view dominates also among the American public, though the public are very confused about it. (The President certainly is not.)
That’s the direction in which Americans are heading, if one is to believe what they tell to pollsters, and if one is to read carefully the statements by Paul Ryan, as the economist Dean Baker has done. This seems to be America’s future. Unless something happens that will place it finally in America’s past.
One could reasonably doubt the findings in the latest AP/GfK poll, especially because no other polling firm has asked these questions or anything close; and a mere single poll on a topic could show nothing but a fluke. However, seeing how lopsided the findings are in this poll in favor of slashing government spending, instead of redirecting it towards the poor after trillions of dollars have already been doled during the past six years in Wall Street bailouts, no one can reasonably doubt that the American public are more anti-government than they are anti-bankster. There’s lots of anger against the government, but the banksters who have benefited from ripping off the American public got off scot-free, and the public aren’t enraged about that. Occupy Wall Street left no mark at all, but the Tea Party and other slash-government freaks took over one Party and constitute also a substantial “DLC” voice in the other Party. Obama even came into office aiming to cut Social Security. Generally speaking, propaganda (or ‘public relations’ — such as that “Adam Smith was a good guy”) works. Especially in a country where that PR is called ‘journalism’ instead. In order to clean one’s mind of an ounce of fake ‘history,’ one needs at least a ton of the real stuff. But what we’ve had all our lives isn’t an ounce of the fake stuff. It’s many many tons of those mental toxins. (For a typical example: “Adam Smith was a good guy.”)
That could explain poll-findings such as these.

SWAT Teams Deployed to Destroy Homes Built by Charity Group for the Homeless

Source: William N. Grigg

SWAT operators were among the estimated 70 officers deployed to Denver’s Sustainability Park on October 24 to tear down “tiny homes” erected the group Denver Homeless Out Loud (DHOL). Protest organizers explained that the park had been selected because the Denver Housing Authority, which owns the property, has demolished hundreds of low-income housing units, exacerbating an already critical shortage of affordable homes. Zoning and building code restraints have frustrated efforts to build the “tiny homes” elsewhere in the city.
Had the demonstration proceeded as planned, activists would have erected a makeshift community called Resurrection Village modeled after the 3,000-person tent city built in Washington, D.C. by Martin Luther King, Jr..’s Poor People’s Human Rights Campaign nearly fifty years ago. Ten activists were arrested during the Denver crack-down.
“Little Denver is a project being built by, with, and for people without housing in Denver, CO.,” explains DHOL. “We seek to create affordable, sustainable alternatives to the current housing system. Tiny homes, residential structures between 100 and 200 square feet in size, [are] what we propose. Our vision is to create a community of micro-houses grouped together in a Tiny Home Village.”
The group notes that Denver is experiencing a “housing crisis” with record-high rents and “cutbacks for affording housing construction and maintenance.” According to Mile-High Connects, in the Denver area there are at least 6,300 homeless persons, and more than 106,000 residents who spend half of their monthly income on rent. The Denver Post reports that soaring costs of housing are overtaking household incomes, leaving many young professionals and middle-income families facing the prospect of homelessness.
Denver is among the top ten “least affordable counties for Millennials who want to buy homes,” observes the National Journal. The city has long sought to attract young professionals in tech-related industries – including the newest version of “high” tech, the production and marketing of recreational marijuana.
“Out of the ashes of the global recession that started in late 2007 has risen a city where everyone wants to be,” narrates an article in the current edition of Denver Magazine. “People have flooded into the capital of the New West with dreams of the snowcapped Rocky Mountains, of youthful entrepreneurship, of city streets teeming with restaurants and bars and boutiques. They have come from California, from Texas, from Florida, and from the Midwest. Close to 1,000 new souls are moving into the city each month—an estimated 12,000 people this year. Every one of them needs a place to live.”
New arrivals in Denver have “moved into apartment complexes faster than units can be built,” continues the magazine. “Rents are up nine percent this year alone, pushing Denver’s average rents past other destination cities such as Miami and Portland, Oregon. A one-bedroom apartment downtown now can cost more than $2,000 a month. A planned complex at the remodeled Union Station will soon have two-bedroom units available for up to $3,545.”
A decade ago, roughly one-quarter of Denver’s newly built homes were condominiums, an affordable middle option between an apartment and a stand-alone home for young professionals. As is the case in too many other cities, however, Denver’s housing market fell prey to the inevitable distortions of the Federal Reserve-engineered housing boom.
“Like most cities in the years after the late 2008 stock-market collapse, Denver’s housing market came to a virtual halt,” recalls Denver Magazine. “Potential buyers suddenly found themselves without work or in jobs where they took home less than they had previously. With wages slashed or salary freezes in place, people cut expenses. Without buyers, developers stopped building. People who were underwater on their mortgages couldn’t sell—and many people with solid incomes and job security still found it difficult to get loans.” The result was what Ron Throupe, associate professor at the University of Denver’s Daniels College of Business, calls “pretty much a perfect storm that killed development.”
In 2010, reacting to horror stories about poorly constructed condos, the Colorado State Legislature exacerbated the problem by enacting a law allowing homeowner associations to file class-action lawsuits against builders if two or more units in a given condo have “defects.” The results were, or at least should have been, predictable: Amid proliferating lawsuits, condo construction simply stopped. Since then, construction has recovered somewhat – but new condos are much smaller, each of them having fewer than the 30 units that would trigger Denver municipal mandates on affordable housing.
By the spring of this year, the Denver Post was describing the local housing market as “a version of `The Hunger Games,’ with buyers scrounging for whatever weapons they can find to remain the last bidder standing.”
“If my wife and I tried to buy our house now, there’s no way we could live here,” observes Denver City Councilman Rafael Espinoza, an architect by profession. “We wouldn’t have been part of this neighborhood. It’s not like it was gradual, either. It went from affordable to priced out just like that.”
Over the past several decades, various municipal administrations in Denver have embarked on federally subsidized initiatives to build affordable housing – and the problem has grown consistently worse. DHOL’s quixotic and largely symbolic response was to ignore the onerous regulations and crony arrangements that have wrecked Denver’s housing market and simply start building homes.

Share This Article...


Volkswagen posts first quarterly loss in 15 years after putting aside £4.8bn to cope with emissions test rigging scandal

  • Carmaker announced £2.5billion loss in the third quarter
  • Drop in global sales following emissions scandal puts VW behind Toyota
  • €6.7billion set aside to recall models fitted with emissions defeat devices
  • Manufacturer to make €1billion cutbacks on research and development 
Volkswagen announced a quarterly loss of £2.5billion on Wednesday in the wake of the emissions test cheating scandal revealed in September.
It is the first quarterly loss made by the German carmaker in 15 years, it confirmed.
The drop is the result of the manufacturer setting aside €6.7billion (£4.8billion) in the July to September period to cover cost of recalling the 11million cars worldwide fitted with emissions defeat devices - a figure that has slightly risen from the €6.5billion announced a week after the scandal first emerged.
Feeling the impact: The £4.8billion set aside to fund the recall of 11 million cars worldwide fitted with emissions cheating software has seen VW make a quarterly loss for the first time in at least 15 years
Feeling the impact: The £4.8billion set aside to fund the recall of 11 million cars worldwide fitted with emissions cheating software has seen VW make a quarterly loss for the first time in at least 15 years
As a result, the German group said it now expected its operating profit to drop 'significantly below' last year's record €12.7billion (£9.2billion).
Excluding costs of the scandal, the carmaker still expects its group operating margin to come in between 5.5 and 6.5 per cent this year, after 6.3 per cent in 2014.
Volkswagen plans to cut investments by €1billion a year at its core division, mainly in the research and development departments. 

Luxury division Audi, source of about 40 per cent of VW group profit, will also cut planned spending.
Volkswagen confirmed the loss was the first of its kind in at least 15 years but, due to accounting changes, was unable to say precisely when the last loss occurred.
VW may need to set aside more money for measures to stabilise sales if deliveries take a hit from the scandal as many have predicted, Chief Executive Matthias Mueller said.
Chief Executive Matthias Mueller (right) said VW will do everything in its power to win back trust.
Chief Executive Matthias Mueller (right) said VW will do everything in its power to win back trust.
Steps could include discounts on new cars if owners turn in old models as well as cheap loans and incentives to dealers to buy back older cars. 
'The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear,' Mueller said in the announcement.
'We will do everything in our power to win back the trust we have lost.' 

Group deliveries, which also include premium brands Audi and Porsche, slid 1.5 per cent in September to 885,300 cars and fell 3.4 per cent in the third quarter to 2.39 million cars, causing VW to drop behind Japanese rival Toyota in nine-month global auto sales charts after clinching the top spot just three months earlier. 
Despite the loss, Volkswagen shares rose 3.2 per cent following the results announcement, making it the best performing stock on the German Dax 30 index in the first hour of trade. 

Arches Health Plan to stop operations

SALT LAKE CITY — About 45,000 Utahns who use Arches Health Plan will need new health coverage beginning in 2016 because of a severe shortfall in expected federal funding, the Utah Department of Insurance announced Tuesday.
Arches customers will continue to receive full coverage through Dec. 31, the department said.
The Department of Insurance will take Arches into receivership, meaning it will supervise the processing of the health co-op's remaining claims.
Arches, the only co-op health plan in Utah, began offering insurance through the Affordable Care Act in fall 2013, beginning coverage in January 2014. The nonprofit group says it's ceasing operations because of a lack of funding from the federal "risk corridor" program, which was built into the Affordable Care Act and intended to protect insurance companies from their losses.
"As one of the carriers on the (health care) exchange, we stood to benefit by our calculations in excess of $30 million for those 'risk corridor' payments," Tricia Schumann, chief marketing and communications officer for Arches, told KSL. "We did anticipate those cash payments coming in … this quarter."
The point of the fund was to mitigate losses among insurance companies and co-ops that suffered large financial risk associated with the Affordable Care Act because of unprecedented enrollment for coverage.
However, federal officials announced Oct. 1 that only 12.6 percent of the expected windfall from that risk management fund would be awarded to insurance companies.
Schumann said Arches was stunned by the announcement of the shortfall.
"Honestly, if this had not occurred, we were in a very good trend moving forward, and it was a complete surprise to us," she said. "We did not know the federal corridor program would not pay out 100 percent until the first of October."
What is a CO-OP?
A CO-OP is a new type of nonprofit health insurer that is directed by its customers, uses profits for customers' benefit, and is designed to offer individuals and small businesses affordable, customer-friendly, and high-quality health insurance options. Source:
Arches now has an unanticipated $27 million cash shortfall on its books as a direct result, Schumann said, but will be able to meet all of its obligations on current plans. She urged health care providers to honor Arches insurance plans for the remainder of 2015, saying they will be compensated.
"We don't want anyone's health compromised during this circumstance," Schumann said.
Other insurance companies in Utah suffered more financial risk from an influx of consumers, Schumann said, but were in a better position to handle those setbacks.
"Arches is a startup. We are 3 years old, and we are more vulnerable to not having this cash come in," she said. "We do not have cash reserves that some other large health plans in our market do to fall back on."
The Utah Department of Insurance allowed Arches until Tuesday to find financial partners or come up with other ways to make up the millions lost in expected funding, but the company was unable to do so.
Schumann said she didn't know the detailed explanation for why the risk corridor fund, which was intended to reallocate funds between health insurance companies depending on financial risk incurred, failed to approach its projected payout.
Frequently Asked Questions
What will happen to my insurance?
You will need to purchase health insurance from another company. If you have an individual plan, contact your insurance agent or shop on starting November 1. If you are on a group plan at work, talk to your human resources representative.

Should I keep paying my premium?
Yes. You must keep paying your premium through the end of your plan year to keep your coverage. If you have an individual policy through, your plan year ends December 31, 2015. You will need to have new coverage effective January 1, 2016.

Will my claims still be paid?
Yes. As long as you have been paying your premium, any doctor visits or procedures that you make prior to the end of your plan year will be paid by Arches.

(Answers from Arches Health Plan)
"It could be as simple that no one anticipated the degree of risk that's in the market," she said.
Todd Kiser, commissioner of the Utah Insurance Department, said the agency's main priority is helping Arches customers transition to a new carrier with as much ease as possible.
"We want to make sure they have a soft landing," Kiser said. "There are going to be people that … don't know what to do. They're going to be nervous, perhaps a little fearful, and we want to alleviate those fears and challenges that they're going through. We want them to call us. We want to help them."
Those who wish to be enrolled in a new health insurance plan by Jan. 1, ensuring no lapses in their coverage, must apply for insurance on by Dec. 15. Enrollment on the website opens Nov. 1.
Kiser said rural Utahns will be most affected by the shuttering of Arches. In 20 of the state's 29 counties, including Washington and Cache counties, only one other health care provider is available as an option in open enrollment through
"It's regrettable that this has happened," Kiser said. "We didn't want to see it come to this. We would have preferred another resolution, but it didn't happen, so we want to take care of those people."
Kiser anticipates some 60 or so Arches employees will be temporarily retained to help his department process remaining claims, but others will be let go, he said.
At least seven co-op health plans, which are active in 23 states around the country, have failed and have or will shut their doors at some point, according to Kiser. Two other insurance companies are also on the brink of failure after not receiving adequate "risk corridor" funding from the federal government, he said.
Kiser urged any Utahns with questions about how their coverage will be affected to visit or call his department at 801-538-3077.