Never ever put all your eggs to one broker

[4xpipcounter]

Newbie, why don't you come to the United States and run for president. I think I could like you more than Cain.

Well, to be honest, my thinking is nothing different, it's been there for centuries, may be it's just that most of us aren't exposed to it as much as we should be but Internet & such communication networks are helping the spread of information & best ideas around the world to different parts of the world quicker than it used to.

Well, talking about politics & economics & such, these are very vast & intricate topics, & it isn't always possible to explain them in brief, not to mention, this forum isn't dedicated to that end anyway.

But my view is basically to move towards MORE FREEDOM & freer markets & LESS GOVERNMENT because as I've said, basic economics & psychology clearly tell us that humans are driven by perceived self-interest hence it's very naive of us to put people in a position of power (i.e. government) & to expect that they won't use that power to advance their self-interest, of course they will, you can see that in every democracy in the world, politics everywhere is just as muddled & corrupt because power attracts the power-hungry, as simple as that.

Most people talk about freedom but very few can define it for themselves so for my part, I'll define freedom as the condition of being free from violence, coercion, fraud or theft of ANY KIND (including theft & coercion by government through taxation); basically a society/country based on people interacting with each other based on MUTUAL CONSENT because that's what makes for a prosperous society, socially as well as economically.

Let's not forget India was suffocating under a strong socialist regime until the 1990s, after which, due to an economic crisis, Indian government was forced to open up the markets a little bit (in part by International-agencies which had their own self-interest in it), which unleashed vast untapped potential of the country & its people & put it on its current development-path while raising millions out of destitute poverty faced under a strong socialist government; no government can do this, only freedom & markets can, government can only hinder the process by sucking productivity & money out of the economy in a variety of ways. Even the communist-China was rotting under their policies until 1980s or so when they significantly opened up their markets & even there we've seen an explosion of growth & eradication of poverty, it's nothing but power of the markets & that's why it needs to be unleashed fully instead of governments holding it back for their own self-interest, for which the government's power must be curtailed first & kept to absolute minimum.

Again, it's a vast topic & not very easy to explain in brief so may be if you have any specific questions then it might be easier to address them. Cheers

 

[DanPickUp]

November 7, 2011, 2:33 pm Legal/Regulatory | White Collar Watch
By PETER J. HENNING

The Fifth Amendment

Will Jon S. Corzine take the Fifth?

To paraphrase Hamlet, to talk or not to talk, that is the question Mr. Corzine and other executives at the bankrupt firm MF Global will have to answer. The Federal Bankruptcy Court in Manhattan authorized the trustee for MF Global, James W. Giddens, to issue subpoenas to former officers, directors and employees to testify about issues related to the commodities and securities firms collapse and approximately $600 million in missing customer money.

In an opinion issued last week, the bankruptcy court stated that [w]hether management of [MF Global] or the debtors was involved in misconduct is clearly a proper subject for investigation. Mr. Giddens is not the only one looking into MF Globals demise, as investigators from the Federal Bureau of Investigation, the Securities and Exchange Commission and the Commodity Futures Trading Commission want answers about the firms operations.

Mr. Corzine was the face of MF Global since he became its chief executive in March 2010, responsible for its foray into derivatives tied to European sovereign debt that undermined confidence in the firm. He will be a prime candidate to be interviewed by federal investigators and examined by Mr. Giddens.

Whether Mr. Corzine and other executives are willing to talk, or instead assert the Fifth Amendment privilege against self-incrimination, this is a crucial decision they will have to resolve quickly because there is pressure to complete the investigation, especially with roughly $600 million in customer money that appears to be missing.

For Mr. Corzine, the decision whether to testify is especially difficult in light of his once-sterling reputation. As a former Democratic United States senator and governor of New Jersey, in addition to serving as chairman of Goldman Sachs, he has perhaps the most to lose because fairly or not an assertion of the Fifth Amendment will be viewed by the public as tantamount to admitting guilt.

The Fifth Amendment privilege is available to a witness in any proceeding, regardless of whether it is criminal or civil. In Hoffman v. United States, the Supreme Court explained that the constitutional protection not only extends to answers that would in themselves support a conviction under a federal criminal statute, but likewise embraces those which would furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime.

Asserting the Fifth Amendment is not an admission of guilt, and those who believe they have done nothing wrong can refuse to respond to questions until a later time when the issues are clearer and the potential for criminal liability diminishes. Mr. Corzine is reported to have retained Andrew J. Levander, a leading white-collar criminal defense lawyer, to represent him, so the decision will be an informed one.

There are plenty of recent examples of defendants whose cooperation early in an investigation turned out to cause significant problems later. Both I. Lewis Libby, known as Scooter, the former chief of staff to former Vice President Dick Cheney, and Martha Stewart were convicted for making false statements to the F.B.I and S.E.C., respectively, near the start of investigations of their cases. The former Enron chief executive, Jeffrey K. Skilling, was cross-examined at his criminal trial with testimony he gave to the S.E.C. and before two Congressional committees long before any charges were filed in the case.

When it is unclear what direction the investigation of MF Global might take, a seemingly innocuous statement could be viewed as misleading, or even obstructive, at a later time. Given the confusion surrounding the collapse of MF Global, the prudent course may be to take the Fifth Amendment now, which does not preclude later speaking to investigators or testifying in a judicial or administrative proceeding.

But the cost of taking the Fifth can be significant. For investigators, a potential witness who asserts the privilege often makes that person a focus of the investigation, on the theory that where there is smoke, there is fire. And while the federal investigations will be conducted privately, Mr. Giddens is required to file his findings with the bankruptcy court, so a refusal to cooperate by Mr. Corzine and others is likely to become public in the near future, with all of the attendant negative publicity.

Perhaps more ominously, there is likely to be significant interest in Congress on the largest collapse of a Wall Street firm since Lehman Brothers filed for bankruptcy in September 2008, so it would not be a surprise if hearings were held at which Mr. Corzine may be called as a witness. Unlike the criminal and administrative investigations, Congressional committees have not been shy about requiring witnesses to publicly assert the Fifth Amendment. This happened most recently with two senior executives of the bankrupt solar power company Solyndra, who were castigated by House committee members when they asserted their constitutional right to refuse to respond to questions.

If a Congressional hearing is held on MF Global, Mr. Corzine is a likely witness because of his position as chief executive, much like Mr. Skilling was in 2002. A Congressional committee may also feel pressure to call Mr. Corzine to avoid any perception that he was shown special favor because of his status as a former senator.

An incentive to speak now rather than take the Fifth is that Mr. Corzine can tell his side of the story to counter negative publicity about how he ran MF Global. From a public relations standpoint, it is better to control the message than have information about an assertion of the Fifth Amendment come out in a way that focuses on his unwillingness to cooperate, and the inferences that will inevitably be drawn from that.

After resigning last week as MF Globals chief executive, Mr. Corzine said in a statement, I intend to continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firms assets. This has been carefully drafted so that he has not committed himself to testify in response to a bankruptcy court subpoena or speak to federal investigators. Any assistance he does provide can be done through counsel, so that he does not say anything that can be used directly against him later on as an admission.

The decision whether to testify is fraught with risks either way, which makes it among the most important at this stage of the investigation. For Mr. Corzine and other MF Global executives, it is one they will have to confront in the near future as the demands for answers about the firms demise and the missing customer money grow more pressing.

http://www.scribd.com/doc/71965375/MF-Global-Order-Authorizing-Subpoenas

http://www.scribd.com/doc/71965745/MF-Global-Subpoena-Opinion

 

[DanPickUp]

The disaster continues and we learn an other, again not expected bad side of what many already went through. Read this and we only can ask our self how this story will end up? and what about all that traders which hang in this story, not can do anything about it and are cheated and cheated again from any side they can be cheated? The worst could still be ahead of us, when the big creditors from MfG, like JP Morgan or German Bank occur in the morning dust and bring there army's to demand for the open dept from MFG.

Data snag slows MF Global metals positions move-sources

Tue Nov 8, 2011 8:30am EST

* Most positions have been reconciled - source

* LME, MF Global work this week to reconcile remaining positions

* LME says unaware that data loss slowed process

By Susan Thomas

LONDON, Nov 8 (Reuters) - Metals clients of failed U.S. broker dealer MF Global's British unit face delays in their positions being transferred to new brokers after a problem with London Metal Exchange (LME) data slowed the migration process, industry sources said on Tuesday.

MF Global's European clients across commodities have become increasingly frustrated at the slow transfer to new brokers a week after the company filed for bankruptcy protection.

Metals traders said on Monday that clearing house LCH.Clearnet, which is handling the migration of positions, had told them it planned to make transfers by last Friday, but this had not happened.

A source with knowledge of the situation said on Tuesday the process of transferring positions had partly been bogged down by "a problem with LME data".

The source said MF Global and the LME would work together throughout this week and coming weekend to reconcile all outstanding positions.

"A whole batch of data was lost last Monday. That's one of the issues that has been holding everything up. The LME is working very hard on it, and the FOA (Futures and Options Association) is aware of it," the source said.

The source did not say how or by whom the data had been lost.

"Most positions have been reconciled," the source added.

A second industry source said that there had been a problem with reconciling and transferring positions.

An LME spokesman said he was "not aware that any loss of data has prompted any delay" and referred queries to LCH.Clearnet.

LCH.Clearnet declined to comment on the progress of transfers. The FOA was not immediately available for comment.

Another industry source said the process had possibly been slower and more complicated because MF Global UK's metals customers were smaller and more diverse than those of the company's U.S. operations, and because the LME does not conduct its own clearing, unlike other exchanges.

In a note to LME clearing members on Tuesday, the LME and LCH.Clearnet said instructions to transfer LME positions to a new clearing member must be received by 1700 GMT on Tuesday.

It also said it had transferred "a significant number of clients throughout last week across multiple markets".

Most U.S. customers of MF Global by Monday had regained access to their U.S. accounts with new brokers. But the process of untangling accounts in various assets outside the United States has moved more slowly.

In Britain, administrators KPMG said on Monday a total of 954,000 positions were open out of the 1.6 million positions in place when MF Global Holdings filed for bankruptcy protection on Oct. 31.

The delay in transferring positions was partly to blame for slow trading on the LME on Monday. Volumes were thin again on Tuesday.

 

[DanPickUp]

This article here shows the first signs connected to my comment in the last post, that the creditors may will have more rights then the traders with there commodity accounts, even the money in the commodity accounts belongs first and only to the traders and not to the creditors.

MF Global Clients May Be Required to Share Cash, SIPC Head Says
November 09, 2011, 12:55 AM EST

By Linda Sandler and Tiffany Kary

Nov. 9 (Bloomberg) -- MF Global Inc.s commodity customers may be required to share some of their cash with other clients unless money missing from some accounts is found, said the head of the group overseeing the liquidation of the broker-dealer.

Distribution of the assets will be pro rata, if theres insufficient there to fulfill all obligations, said Stephen Harbeck, president of the Securities Investor Protection Corp., or SIPC.

About $593 million in commodity customer funds are unaccounted for, according to a person with knowledge of regulatory probes into the failure of the New York-based firm.

The trustee liquidating the brokerage, James W. Giddens, has transferred 17,000 accounts to other firms, out of 50,000 commodity accounts that he said he would relocate, while releasing almost $1.6 billion in collateral, said Kent Jarrell, his spokesman. Many remaining accountholders may have to file claims for their assets, which have to be shared fairly with other claimants, Jarrell said.

Unless the missing cash is found, people hoping to recover 100 cents on the dollar may have to give up some of it to other customers, Harbeck said yesterday a phone interview.

Giddens cant let out more than a low percentage of assets before he knows what he owes to all commodity customers, Harbeck said.

By law, while SIPC can compensate securities customers for missing cash, it cant advance funds to commodity customers to replace cash, he said.

Corzine Resignation

MF Globals parent listed $39.7 billion in debt and $41 billion in assets in its bankruptcy filing on Oct. 31. The company was run by former New Jersey Governor Jon Corzine, who was previously co-chairman of Goldman Sachs Group Inc., until his resignation from MF Global, which was announced Nov. 4.

Customers of MF Global are asking when theyll get their cash back, according to e-mails to Bloomberg News. If they have to file claims, the trustee must first get court approval for a system to handle claims and mail forms, Jarrell said yesterday in an e-mail.

A trustees duty is to identify and marshal assets available to satisfy customer claims and to maximize the estate for all stakeholders in an orderly and fair process, he said.

Commodity accounts that havent been transferred, along with securities accounts, will most likely be subject to the claims process, he said. Giddens is trying to find brokers to take bulk transfers of security accounts, Jarrell said.

Commodities Accounts

Giddens froze 150,000 customer accounts on Oct. 31, including the 50,000 commodities accounts that he said he aimed to transfer to other futures brokers.

MF Global commodity traders sought court permission yesterday to transfer cash out of the brokerages accounts, saying they believe the company has the funds needed to make whole each of the account holders.

Thomas A. Butler Jr., James H. Barton Jr., Stuart Satullo and Adam Loos asked for an order that would let them withdraw 85 percent of their cash or transfer it to another registered future commission merchant, according to court papers. The men said they had all liquidated their accounts with the brokerage and held only cash. As customers, they should be given priority over creditors of the bankrupt estate, the group said.

Butler, president of Butler Brokerage Corp., is a floor broker at Intercontinental Exchange who said he regularly trades commodity futures contracts on behalf of himself and clients. He had $576,310.54 in his accounts after he liquidated his positions Oct. 31 upon hearing of the bankruptcy, Butler said in court papers.

Satullo had $200,020, Barton had $1.7 million and Loos had $6,000 in their respective accounts as of Nov. 7, according to court papers.

The case is In re MF Global Inc., 11-ap-2790, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: Andrew Dunn, Stephen Farr

To contact the reporter on this story: Linda Sandler in New York at [email protected]; Tiffany Kary in New York at [email protected]

To contact the editor responsible for this story: John Pickering at [email protected]

 

[HARESHRM]

good info thanks for sharing

 

[DanPickUp]

Some thing you may also have to question in India as I am not sure, if brokers in India are allowed to speculate as a company:

Should Brokers Be Allowed To Speculate?

From Martin Lowy (http://seekingalpha.com/author/martin-lowy)

The November 7 Financial Times reports that MF Global’s (MFGLQ.PK) retail customers have been placed at risk by the bankruptcy process:

"While customer positions were successfully moved, 40 per cent of their margin, or the deposit needed to make a transaction, was held back at clearing houses as ordered by a US bankruptcy judge.

This raised the risk of widespread margin calls, or demands for additional deposits, from brokers, which could lead to a sell-off in markets from stock index futures to oil.”

The CFTC and the exchanges stepped in to ameliorate the problem. But damage to retail customers who never stood to gain at all from MF Global’s risky investments remains a distinct possibility.

The law is supposed to protect customers’ accounts by requiring that they be segregated from other activities of the broker. But in practice, when a broker fails, it often takes several days for the customer accounts to be sorted out and transferred to a solvent institution. In the meantime, the markets do not stand still, possibly leaving the customers at the mercy of the markets’ movements.

Why should this be? Why should a broker not be a broker? Why should a broker be permitted, in the same entity, to speculate with its own funds?

I recognize that has been the traditional way that the business has been run. But why should it continue to be run that way?

After all, from the Buttonwood Agreement in 1792 until May 1, 1975, New York Stock Exchange brokers fixed commissions. That “tradition” did not prevent the SEC from, eventually, declaring price fixing to be illegal. And the markets have benefitted enormously from that action, as spreads dropped from an eighth to a penny or less, and transaction costs have plummeted.

Perhaps the MF Global failure should be the catalyst for a study of why retail customers should be at the mercy of their brokers’ speculations.

 

[timepass]

Should Brokers Be Allowed To Speculate?

Goodness !!! what a coincidence. I was about to post a poll on whether the brokers should also be traders. Here I find that my "Relationship Manager" is a trader herself and possibly biased about passing the trading messages from the broker. Almost all the staff at the local sharekhan office indulge in trading. mostly intraday or BTST.

 

[DanPickUp]

Goodness !!! what a coincidence. I was about to post a poll on whether the brokers should also be traders. Here I find that my "Relationship Manager" is a trader herself and possibly biased about passing the trading messages from the broker. Almost all the staff at the local sharekhan office indulge in trading. mostly intraday or BTST.

Poll is open. If you have more questions, just PM and I will expand the poll.

 

[DanPickUp]

Big clients have been informed, had enough time to move there money and thousands of smaller clients were choosed from the management of MfGobal to hold the bag for the bankruptcy ! But there exist a so called " Clawback law ", which could force the big clients to pay back some of this money.

Also interesting in this article is the part in which is explained, what the U.S. Commodity Futures Trading Commission legally permits the broker houses to do with there segregated customer funds. And here is an interesting point, as MFGlobal invested/ took bets in Bonds from Spain, Italy and also from Greece, which until then was looked at as security's with no risk. But the downgrading from the agency's to junk bonds and the poker games in Europe between Papandreou and the other EU prime ministers made this security to high risk papers.

By the way: What is legally permitted in India? Ever thought about it?

The clawback risk which insiders face

* MF seg funds outflow in August biggest in since Jan '09
* Unclear if MF Global used customer funds to trade
* Customers of other bankrupt FCM settled out-of-court

By Jeanine Prezioso

NEW YORK, Nov 10 (Reuters) - Former MF Global customers like Koch Industries, who pulled billions of dollars out of the stricken broker's accounts weeks or months before its collapse, have counted their blessings in recent days.

But their relief may prove premature depending on the outcome of a separate, four-year-old bankruptcy case involving Sentinel Management Group Inc. The lawyer overseeing that case has gone to court to try to force some of Sentinel's former clients to take a share of the losses.

Thousands of MF Global's commodity clients have been clamoring over more than $1 billion in cash and collateral that is still frozen. Yet many customers pulled out a large sum of cash before the company declared bankruptcy on Oct. 31, regulatory data and exchange estimates show.

"Everybody and their brother started pulling money out early," said one commodity hedge fund manager who withdrew some of his funds prior to MF Global's fall. "People pulled money out of Lehman and Bear segregated accounts when they knew they were going bankrupt and nothing happened to them. It doesn't mean it can't happen, but I don't see it."

At issue is MF Global's "segregated accounts" -- client money meant to be kept strictly separate from the broker's own funds, but which regulators say is now $600 million short.

That pot of money shrank by $1.5 billion in August alone, government data showed. Another $1.8 billion fled over the following two months, according to preliminary estimates. In total, customers pulled out more than a third of their accounts in the three months leading up to MF Global's downfall, much of that in the frenzied final days, traders reckon.

For instance, privately held Koch Industries -- whose businesses make it a leading commodities trader -- sent a letter to trading partners on Oct. 3 saying it was switching eight accounts from MF Global to Mizuho Securities USA. Koch Industries did not comment on the reason for its move.

It remains unclear how many customers who withdrew funds from MF Global were influenced by the broker's financial condition or Chief Executive Jon Corzine's euro zone debt trades that led to its collapse. Whether they will be able to keep the money they withdrew may depend on the outcome of legal
actions stemming from the Sentinel case.

Frederick Grede, trustee for the bankruptcy of futures commission merchant
(FCM) Sentinel, has sued 50 of its former customers to recoup some $600
million in funds that were withdrawn prior to its bankruptcy.

He has already settled out of court with some customers and recovered about $25 million. The rest remains in litigation, filed before the two-year statute of limitations ran out.

His view is that the loss of funds should be shared equally, on a pro-rata basis, among all customers, not only those who were left holding the bag
when Sentinel filed for bankruptcy.

Grede says his case differs from that of former customers of Bernard Madoff Investment Securities. For one thing, he insists that he does not have to prove fraud occurred in the 90 days preceding the Sentinel bankruptcy, the timeframe he is focusing on.

"Sentinel was a case of misappropriating funds," Grede said. "They used customer funds for speculation for their accounts. Ultimately it's my position that all customers should be treated equally. I don't have to prove that they knew the company was going bankrupt (before they took out the funds)."

CLAW BACK EXPOSURE

Sentinel was a different type of FCM than MF Global, and served as a professional "broker for brokers", clearing trades on behalf of other brokerages -- including MF Global itself.

But the Sentinel case still could set a precedent for MF Global if attorneys for former clients can show that MF Global used customer funds to trade its own book.

FCMs are strictly limited to what they can invest in using segregated customer funds, essentially the money that customers use to trade and post collateral.

Those monies are explicitly meant to be kept separate from those of the firm.

The U.S. Commodity Futures Trading Commission permits segregated customer funds to be invested in certain liquid, high-investment grade securities such as corporate and government bonds.

In Sentinel's case, those bonds were removed from segregation and used to pledge for bank loans, Grede said. Proceeds from the loans were then improperly used to trade in the firm's proprietary trading account.

Former MF Global customers are concerned that trustee James Giddens may seek a similar route to recoup funds unless he can find the roughly $600 million that is still missing.

Chris Hehmeyer, CEO of Chicago-based proprietary trading firm HTG and an advisor to futures brokerage Penson, moved "a chunk" of his business earlier this year to MF Global. But by June, he decided to take his business elsewhere because MF Global stopped offering a financing service that HTG needed.

"With the Sentinel bankruptcy, the industry did not pay nearly enough attention to the claw back issue, and it's still out there, four and a half years later," he said. "I understand I could still have some exposure because this issue hasn't been resolved."

Kent Jarrell, a spokesman for the MF Global bankruptcy trustee, told Reuters the trustee will "explore all possible causes of action."

UPHILL BATTLE

Experts say it would be a long shot to claw back withdrawals by clients who may have known nothing about MF Global's impending collapse. But that has not stopped several lawyers from attempting it.

Ronald Filler, a professor of law at New York Law School who also worked on the Lehman Brothers bankruptcy, said that to the best of his knowledge, case law on this matter is nonexistent. In the cases of Lehman Brothers, Bear Stearns and former FCM Refco, segregated funds were never at issue -- the money was never touched.

"It would be a case of first precedence," Filler said. "As long as they acted during the normal course of business and they didn't have knowledge of the bankruptcy, there's not enough case law to prove any of these theories."

In the Sentinel case, some of the customers who paid out-of-court settlements may have decided it was cheaper simply to settle than go to court and incur hundreds of thousands in legal fees, Filler added.

HOW MANY LEFT

While it's not yet clear exactly how many customers fled MF Global in its last ailing week after it suffered credit downgrades, regulatory and exchange data suggests the run may have occurred much earlier and been more severe than previously understood.

During August, as its share price began to slide but well before its Oct. 27 credit rating downgrade, segregated account funds fell by about $1.5 billion, data show, the biggest monthly drop in funds since at least Jan. 2009.

As of Oct. 31, the CME estimated that MF Global Inc.'s "current segregated funds requirement" was $5.45 billion, according to a bankruptcy court filing on Wednesday seeking permission to transfer customer accounts in bulk.

That compares to $7.27 billion reported to the CFTC as of Aug. 31, according to a monthly filing required of futures commission merchants. It was the lowest since July 2010.

Since reaching $8.8 billion in July, holdings fell by 38 percent in just three months. A last-minute scramble to extract cash from the broker in its final days was fruitless for some unlucky customers who reported this week that checks cut on the Thursday and Friday prior to its collapse were bouncing.

Of those customers who remained, the process of returning their funds has been frustratingly slow.

Of the CME's $2.5 billion share of the total $5.5 billion in segregated funds, about $1 billion in cash and collateral remains frozen at MF Global. With other exchanges having moved across similar funds, more than $2 billion may still be stuck.

Most agree it's far too early to tell whether former MFGlobal customers will have to return any money.

"We're in unchartered waters now and it's interesting to see what the outcome is going to be," said Filler. As Filler is not involved in any way, the word "interesting" is for him and for all involved traders it is just: Frustrating.

 

[DanPickUp]

Do you know how the big money companies organized them to do some of there most risky business? Here a deeper lock in to the business from big Wall street companies. It may would be interesting if any body could show some similar things from India.

The Next MF Global Collapse Could Be Goldman Sachs
(Nov. 8, 2011, 5:29 AM Business Insider)

Nouriel Roubini was in fine form yesterday, scaring the bejeezus out of his followers on Twitter by saying that several huge financial institutions could collapse in the blink of an eye like MF Global.

These houses of cards, Roubini tweeted, include:

Goldman Sachs
Morgan Stanley
Jefferies
Barclays

The problem, as Roubini has consistently warned, is the banks' dependence on short-term financing to maintain their long-term asset leverage and run their businesses.

What killed MF Global, Lehman Brothers, Bear Stearns, AIG, and other huge financial firms, after all, was the sudden refusal of short-term lenders to continue lending money to the firms.

Every day, the big Wall Street firms borrow tens of billions of dollars in low-cost short-term loans. They then use this money to make long-term bets on assets that yield more than the money costs to borrow. And then they happily keep the difference between the two.

In good times, the banks come to take this funding for granted: They just keep rolling over their huge debts every day, repaying the old loans with the money from new ones.

When the overnight lenders suddenly get suspicious and the money disappears, however, it's as if the oxygen is suddenly sucked out of the room.

In additional tweets, Roubini argued that JP Morgan and Citigroup were actually less at risk because more of their funding comes from insured deposits. So that's some good news for you.