One Citizen Speaking

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February 2014

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DOES YOUR AIRPORT HAVE THIS MAJOR SECURITY FLAW AND IS IT BEING IGNORED BY THE TSA AND LAW ENFORCEMENT OFFICIALS?

The media story …

LAX BAGGAGE HANDLER THEFT: 25 SEARCH WARRANTS, 6 ARRESTS, 8 DETAINEES

According to media reports, the Los Angeles Police Department (LAX Division), moved against baggage handlers who they alleged stole “thousands of dollars in small but pricey items” out of baggage moving through the airport system.

It appears that those who were arrested and detained worked for a single company, Menzies Aviation, who contracts to provide baggage-handling services to the airlines. Of course, the company was quick to issue a statement claiming that its employees go through a rigorous background check and the thefts appeared to involve a small number of employees, all of who were acting individually. Characterizing the theft from passenger baggage as crimes of opportunity rather than a far more serious baggage theft ring.

Why is this important?

In normal airport operations, it appears that a certain amount of theft and criminality is allowed – mostly an economic and manpower decision – until the number of complaints rises to the attention of the media or represents a media-worthy law enforcement intervention with guaranteed prosecutions and convictions. And, as egregious as airport thefts from individual’s may appear to be, it is nothing compared to the theft of commercial cargo flowing through our nation’s ports and trucking system.

It is simply another demonstration of the Kabuki Theatre that is airport and TSA security. Where ill-trained and substandard “security”personnel do not provide security. Why the TSA classifies as a state secret the percentage of failed detection tests in interdiction of prohibited materials testing. And, why the authorities will do anything and everything in their power to minimize the impact of an adverse story that may deter visitors from using Los Angeles International Airport or visiting Los Angeles as a destination for business or pleasure.

But it really does not solve an important security breach …

While enforcing the law, even in highly publicized “deterrent raids” such as this, there are fundamental systemic security flaws that are not being addressed.

For the price of a throwaway ticket, a person having checked no luggage, can enter the sterile area of an airport and simply wait for a co-conspirator to show up in a bathroom to transfer prohibited or stolen merchandise. The merchandise can be anything from drugs to guns, and even explosives.

It appears that baggage handlers and other on-scene personnel are permitted to use the restrooms located in the sterile area of airport terminals. This allows them to take stolen merchandise from outside the building into the terminal and hand it off to co-conspirators who simply walk out of the terminal undetected and unchallenged with the stolen merchandise. The perpetrator ends his shift totally clean and walks out through an employee gate where they may conduct random searches.

Bottom line …

Like the locks that keep honest people honest, it is all part of an attempt to encourage the perception of security without the time, effort, and expense of providing real security.

It is similar to installing a “dial-up” alarm system that will notify the authorities if the system is breached – instead of a continually monitored circuit where any disruption in the power or the circuit is cause for alarm.

Like installing an expensive lock on your front door and not using a steel-core door and reinforcing the door jambs. Or even worse, having a secure front door and a plate-glass sliding door to the patio that can be lifted out of its tracks or simply broken in a smash-and-grab theft.

Security must be comprehensive and continually tested for flaws. Or, you, as a property owner, must have insurance and well-documented receipts that will assist in the recovery or partial replacement of the stolen items. I say partial replacement because insurance companies rarely pay for the replacement value of an item if it depreciates over time. There is no commensurate value for sentimental items and keepsakes unless they have documented intrinsic value. In the final analysis, much of what you may be protecting is often not worth the insurance premium.

Best practices, do not check valuables unless absolutely necessary. Make sure they are well documented and if possible identifiable with overt or covert ownership codes. A great idea is to photograph each item on your smart phone and send those photos to a secure server – do not accidently post them to a public site.

-- steve

“Nullius in verba”-- take nobody's word for it!
"Acta non verba" -- actions not words

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS

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STRESS TEST ON "TOO BIG TO FAIL" FINANCIAL INSTITUTIONS MAY BE "TOO GOOD TO BELIEVE?"

It appears that Citigroup and HSBC failed their stress tests, and that the Bank of America and Goldman Sachs passed only with modifications to their capital plans …

The Federal Reserve on Wednesday announced it has approved the capital plans of 25 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). The Federal Reserve objected to the plans of the other five participating firms--four based on qualitative concerns and one because it did not meet a minimum post-stress capital requirement.

The Federal Reserve can object to a capital plan based on qualitative or quantitative concerns, or both. The Federal Reserve can require a new capital plan from an institution outside of the annual review at any time if there is a material change in the condition of an individual institution or in the economy or financial markets that could potentially lead to a change in a firm's capital position.

The Federal Reserve did not object to the capital plans for: Ally Financial Inc.; American Express Company; Bank of America Corporation; The Bank of New York Mellon Corporation; BB&T Corporation; BBVA Compass Bancshares, Inc.; BMO Financial Corp.; Capital One Financial Corporation; Comerica Incorporated; Discover Financial Services; Fifth Third Bancorp; The Goldman Sachs Group, Inc.; Huntington Bancshares Incorporated; JP Morgan Chase & Co.; Keycorp; M&T Bank Corporation; Morgan Stanley; Northern Trust Corporation; The PNC Financial Services Group, Inc.; Regions Financial Corporation; State Street Corporation; SunTrust Banks, Inc.; U.S. Bancorp; UnionBanCal Corporation; and Wells Fargo & Company. Bank of America Corporation and The Goldman Sachs Group, Inc., met minimum capital requirements after submitting adjusted capital actions.

Based on qualitative concerns, the Federal Reserve objected to the capital plans of:

Citigroup Inc.;
HSBC North America Holdings Inc.;
RBS Citizens Financial Group, Inc.; and
Santander Holdings USA, Inc.

The Federal Reserve objected to the capital plan of Zions Bancorporation because the firm did not meet the minimum, post-stress tier-1 common ratio of 5 percent.

Sources:

One wonders how much of the final decision was based on a “negotiated” deal rather than the “hard numbers” that were originally submitted?

Citigroup Fails Fed Stress Test as Goldman, BofA Alter Plans

Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress tests, while Goldman Sachs Group Inc. and Bank of America Corp. passed only after reducing their requests for buybacks and dividends. <Source: Bloomberg Financial News>

I have always been suspicious of certain financial institutions …

On December 3, 2007, I posted a list of financial institutions and asked if the top three banks were candidates for merger/acquisition to prevent their collapse, I updated the list on November 29. 2011 with a blog post, A CRISIS OF FINANCIAL FAITH: IT IS ALL BEGINNING TO MAKE SENSE.

Borrower

Amount

Citibank, N.A.

$98,682

~~Countrywide Bank, NA~~

~~$51,050~~

~~Washington Mutual Bank~~

~~$43,711~~

World Savings Bank, FSB

$24,241

RBS Citizens, NA

$21,856

Sovereign Bank

$21,078

Bank of America
Rhode Island, NA

$19,581

World Savings Bank, FSB

$17,263

U.S. Bank

$16,806

Bank of America
California
$14,750

Citibank, being one of the nation’s signature financial institutions is still in business – apparently by the grace of unseen hands at the U.S. Department of the Treasury and the Federal Reserve.

Countrywide Bank is no longer in existence, the assets were acquired by the Bank of America.

Washington Mutual Bank is no longer in existence, the assets were acquired by JPMorgan Chase.

RBS Citizens Bank still operates as a wholly owned subsidiary of the Royal Bank of Scotland Group, with the company's controlling shareholder being the British government.

Sovereign Bank is still operating and is a wholly owned subsidiary of the Spanish Grupo Santander.

World Savings Bank is no longer in existence, the assets were acquired by Wachovia. Wachovia was acquired by Wells Fargo.

U.S. Bank is still operational and appears to be one of the best managed banks in the group.

Looking back over the list, we find that, in spite of the Federal Reserve and the U.S. Department of Treasury screwing over depositors and investors with its “ZIRP” --Zero Interest Rate Policy -- to recapitalize technically insolvent banks by allowing them to borrow good funds at a near zero cost and insuring a profit, certain financial institutions continued to grow in size and pose a greater systemic risk.

Depositors and investors, especially senior citizens who get a meager 1% or 2% on their hard-earned money cannot even break even in a world of rising inflation and lessening purchasing power. Meanwhile, the executives that run these behemoth institutions bank their bonuses – possibly off-shore and in hard assets -- while doing little more than sitting on their assets.

As for the regulators, we have a new super-regulator that is more interested in socialist ideology and wealth re-distribution than demanding that certain financial institutions downsize and improve their core capital ratios above the bare minimums needed to pass phony-baloney stress tests. Almost as if the government’s regulatory agencies were hyper-politicized and directed by a fifth column who was determined to destroy America and capitalism from within.

Bottom line …

Due to the revolving door between the large financial firms and the government’s regulatory agencies, plus the cronyism and corruption within the Obama Administration, I wonder if any government numbers or stress testing can be relied on to actually tell the truth when it comes to reducing the systemic risk posed by the so-called “too big to fail” financial institutions. Or, given the magnitude of the problem, whether or not any government action can safely and soundly resolve a technical insolvency in the case of a severe market downturn.

As I mentioned in my previous blog post, FED STRESS TEST A JOKE: $501 BILLION IN LOSSES MAY BE A DROP IN THE BUCKET, I have every reason to believe that the current stress tests only highlight the tip of a very large iceberg and unless these firms voluntarily downsize and divest themselves of non-core activities, we are due for another recession or worse.

It appears that those in control are repeating the exact same bubble scenario we have seen with billion dollar technology companies that failed in the dot com bubble, the mortgage operations we saw in the mortgage bubble, and the derivatives scenario we saw almost destroy our financial system.

We need to remove the radical progressive socialist democrats from the House and the Senate in 2014 and the White House and government agencies in 2016. We need to clean up the corruption in the government, reduce or remove corrupt public employee unions, and above all, start investigating and prosecuting those who have committed the financial crimes against consumers and taxpayers than make Bernie Madoff look like a choir boy.