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On March 11, 2008 someone bought $1.7 million worth of put options on Bear Stearns stock giving that person the right to sell 5.7 million shares of Bear stocks at $30 per share seven trading days in the future.
Bear was trading at $65 per share when those options were bought.
This one item of fact did not go unnoticed at Bloomberg: "It's not even on the page of rational behavior unless you know something" was how one financial writer summed it up.
What someone knew was that over the next seven trading days millions of shares of Bear Stearns stock would be bought but never delivered. Delivery failure happens regularly, often for innocent reasons.
In this case millions of shares of Bear stock went undelivered over the seven trading day period between when the put options were bought and sold, artificially increasing the supply of Bear Stearns stock while demand remained constant.
Increase supply while demand remains fixed and price plummets.
Which is exactly what happened to Bear Stearns in March of '08 and now two years later we've just learned the Fed covered up this apparent fraud by using tens of billions of taxpayer dollars to cover Bear's toxic assets and smooth the way for JP Morgan's takeover of Bear Stearns.
This is an example of the true "genius" of central banks.
See: You Tube: Bear Stearns Collapse (about 50,000 views)
Did the Fed violate its charter on June 25 & 26, 1998 when it decided to repeal the Glass-Steagall Act by allowing the merger of Travelers and Citicorp to form Citigroup?
The public hearing held at the Federal Reserve on June 25 and June 26, 1998 effectively allowed the Fed to sign off on the merger between Travelers and Citicorp months before congress officially repealed Glass-Steagall in November of 1999.
Matthew Lee testified to the denial of legal ethics, the legislative branch, and the truth at that Federal hearing:
"...we think (the merger application) should be dismissed based on improper communications that have taken place between Travelers, Citicorp, and the Federal Reserve Board.
"Prior to the deal even being announced and the application being submitted, not only did the two CEOs of the two institutions meet with Chairman Greenspan we found that, in fact, there was very detailed preapproval sought for particular processes...We think it is tainted."
See: CounterPunch>Obama's Economic Brain Trust by Pam Martins (April 2-4, 2010)