President Obama should propose that the nation’s biggest banks be broken up and their size capped, and that the Glass-Steagall Act be resurrected. 

It’s good policy, and it would smoke out Mitt Romney as being of, by, and for Wall Street — and not on the side of average Americans. 

It would also remind America that five years ago Wall Street’s excesses almost ruined the economy. Bankers, hedge-fund managers, and private-equity traders speculated on the upside, then shorted on the downside — in a vast zero-sum game that resulted in the largest transfer of wealth from average Americans to financial elites ever witnessed in this nation’s history. 

Most of us lost big — including over $7 trillion of home values, a $700-billion-dollar bailout of Wall Street, and continuing high unemployment.

But the top 1 percent have done just fine. In the first year of the recovery they reaped 93 percent of the gains. The latest data show them back with 20 to 25 percent of the nation’s total income — just where they were in 2007.

The stock market has about caught up to where it was before the crash. The pay and bonuses on the Street are once again sky-high. So are the pay and perks of top corporate executives. The Forbes list of richest Americans contains more billionaires than ever. 

And the tax rates of the top 1 percent are lower than ever — courtesy of their armies of lobbyists.

Mitt Romney, private equity manager and financier — well within the top one-tenth of 1 percent, collecting more than $20 million a year yet paying 14 percent in taxes because of tax preferences for capital gains and for private-equity — is the avatar for all that’s happened.

Just like the rest of the Street, Romney used other peoples’ ...

When innocent citizens asked about unemployment last night at the town hall presidential debate on Long Island, would Mitt Romney again tout his plan to create 12 million jobs? Unable to Etch-a-Sketch away that often repeated claim — one that he has hired several conservative economists to endorse — the Republican candidate had little choice. It's up on his campaign website, it's there in his own well-advertised words, and it is the central appeal of his candidacy for the non-billionaire voting bloc.

But there is a serious problem with that promise. It now stands exposed as a complete fraud by Glenn Kessler, the Washington Post fact-checker, who pinned upon it his highest (lowest?) prize of four “Pinocchios.”

Here is how Kessler reached that troubling conclusion. After requesting the specific numbers behind Romney's jobs claim, he soon discovered that the citations offered by the campaign made no sense, and, in fact, the attempted deceptions were transparently obvious.

Romney's economic program has three basic elements that he says will produce those 12 million jobs, as outlined in a TV ad quoted by Kessler:

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Governor Romney: You’ve said that you have used every legal method to reduce your tax liability. You’ve also said that as president you would close tax loopholes in order to help finance a major across-the-board tax cut. What specific tax loopholes have you used that you would close? A followup: Would you close the loophole that allows private-equity managers to treat their income as capital gains, subject to a 15 percent tax, even when they risk no capital of their own?

President Obama: You have spoken eloquently of the need to reduce the influence of big money in politics. What specific measures will you advance if you are reelected to accomplish this goal?

Governor Romney: You have promised to repeal the Dodd-Frank bill if you’re elected. Yet our largest Wall Street banks are significantly larger than they were before the near meltdown of 2008. How would you prevent another bank from being too big to fail?

President Obama: The Dallas Federal Reserve Board, one of the most conservative in the nation, has called for a limit to the size of Wall Street banks. Sanford Weill, the creator of Citigroup – one of the largest Wall Street banks – says Wall Street banks should be broken up. If you are reelected, will you support capping the size of Wall Street banks?

Governor Romney: You have said you’d repeal the Affordable Care Act if you’re elected. That would leave 30 million Americans without health insurance. You championed a small version of the Affordable Care Act in Massachusetts. Does that mean you believe it’s more efficient for each state to have its own system for insuring the uninsured?

President Obama: Last December, in a speech you gave in Osawatomie, Kansas, you noted that in the last few decades the average income of the top 1 percent has gone up by more than 250 percent, to $1.2 million per year. For the top one hundredth of 1 percent, the average income is now $27 million ...

One of the themes that Governor Romney has been hitting at aggressively in his campaign ads is that he will get tough on China. The ads complain that China is a cheater, most importantly by “manipulating” the value of its currency. This means that China has been deliberately keeping down the value of its currency against the dollar.

A lower value for the yuan, which means a higher valued dollar, makes Chinese goods cheaper for people in the United States. It is the same thing as if China were to subsidize its exports to the United States. On the other side, the over-valuation of the dollar makes our goods more expensive to people in China, meaning that they will buy less of them. It is comparable to putting a tariff on U.S. exports to China.

Romney promises to be the tough guy who will reverse this situation. His ads claim that he will declare China to be a currency manipulator and take retaliatory measures.

President Obama has responded to Romney’s charges by pointing out that Romney personally has profited from dealings with China. His ads point out that Bain Capital, Romney’s former company, was a pioneer in outsourcing jobs to China.

While people will have to decide for themselves what they think of Romney’s business dealings in China, the Obama ad helps to clarify the issues in U.S. negotiations with China. The reality is that there are many U.S. businesses that are profiting enormously ...

With the breakdown of the private financial industry, and with the decision by corporations to stop meeting their tax responsibilities, and with the dramatic surge in tax haven abuse, less tax revenue is available to state and local governments. Deprived of funding, governments are forced to consider privatization schemes to balance their budgets. But any such scheme comes with adversity and pain. 

The futility of diverting public funds into the hands of profitseekers has been well-documented. Here are a few of the gathering curses of privatization. 

1. Public treasures sold off for short-term budget ...

Bill Clinton bears as much responsibility as any politician for the worst economic crisis since the Great Depression, and the wild applause for his disingenuous speech at the Democratic National Convention last week is a sure sign of the poverty of what passes for progressive politics.

Do those convention delegates, and the fawning media that were wowed by the former president’s rhetorical seductions, not recall that just before he left office Clinton signed off on the game-changing legislation that ended the sensible rules imposed on Wall Street during the Great Depression? It was Clinton who cooperated with the Republicans in reversing the legacy of FDR’s New Deal, opening the floodgates of unfettered avarice that almost drowned the world’s economy during the reign of George W. Bush. 

How convenient to ignore the Financial Services Modernization Act, which Clinton signed into law to summarily end the Glass-Steagall barrier against the commingling of investment and commercial banking. Do the Democrats not remember that Citigroup, the first too-big-to-fail bank made legal by the law Clinton signed, became the $15 million employer of Robert Rubin, the Clinton treasury secretary who led the fight for the law that legalized the creation of Citigroup? Or that Citigroup—led by Sanford Weill, to whom Clinton gave one of the souvenir pens he used to approve that onerous legislation—went on to be a major player in the subprime mortgage swindles and had to be bailed out with more than $50 billion of taxpayer funds?

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Recent trends in poverty rates should have the country furious at its leaders. When we get the data for 2011 next month, we are likely to see yet another uptick in poverty rates, reversing almost 50 years of economic progress. The percentage of people in extreme poverty, with incomes less than half of the poverty level, is likely to again hit an all-time high since the data has been collected.

The situation is made even worse by the fact that so many of those in poverty are children. In 2010, 27 percent of all children in the country were reported as living below the poverty level. For African-American children, the share in poverty is approaching 40 percent.

Many will blame the welfare reform law in 1996 that passed with bipartisan support. That is appropriate. This bill involved a great deal of political grandstanding and removed guarantees that could have protected millions of families in a severe downturn like what we are now seeing.

Advocates of this bill who now profess surprise at the result need to turn to a new line of work. There were plenty of people at the time who warned that the lack of federal guarantees could lead to severe hardship in an economic downturn. No one has a right to be surprised on this one. The surge in the poverty rate in a downturn like the present one was a predictable and predicted outcome of the legislation.

However, there is the other side of the story, the overall state of the economy, which is the more important cause of the increase in the poverty rate. The vast majority of the people in this country rely on work for the bulk of their income and that would also be true for the tens of millions of people in poverty, if work was available. These people cannot find jobs in today's economy, or at least not full-time jobs that pay anything close to a living wage.

The reason why so many of these people cannot find jobs is the incredible ...

Almost daily we read about another apparently stiff financial penalty meted out for corporate malfeasance. This year corporations are on track to pay as much as $8 billion to resolve charges of defrauding the government, a record sum, according to the Department of Justice. Last year big business paid the Securities and Exchange Commission $2.8 billion to settle disputes.

Sounds like an awful lot of money. And it is, for you and me. But is it a lot of money for corporate lawbreakers? The best way to determine that is to see whether the penalties have deterred them from further wrongdoing.

The empirical evidence argues they don’t. A 2011 New York Times analysis of enforcement actions during the last 15 years found at least 51 cases in which 19 Wall Street firms had broken anti fraud laws they had agreed never to breach.

Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America, among others, have settled fraud cases by stipulating they would never again violate an anti fraud law, only to do so again and again and again. Bank of America’s securities unit has agreed four times since 2005 not to violate a major anti fraud statute, and another four times not to violate a separate law. Merrill Lynch, which Bank of America acquired in 2008, has separately agreed not to violate the same two statutes seven times since 1999.

Outside the financial sector the story is similar. Erika Kelton at Forbes reports that Pfizer paid $152 million in 2008; $49 million a few months later; a record-setting $2.3 billion in 2009 and $14.5 million last year. Each time ...

The Republican nominating convention that kicks off Monday in Tampa (weather permitting), has been funded by tens of millions of dollars in corporate contributions, the exact source of which won’t be known until after the party is over.

But it’s a sure bet that there are at least two big donors from the 2008 event that won’t be giving this time around — American International Group and Freddie Mac.

The two institutions together gave $1 million to the Republican convention host committee. A few months after the conclusion of the convention they were in danger of collapse, and would ultimately receive a combined $139 billion taxpayer bailout.

The donations are possible thanks to a loophole in campaign finance rules that allow corporations, unions and wealthy individuals to give unlimited sums to support the conventions.

It is “absolutely ridiculous” that corporations are able to make such donations, says Craig Holman, a lobbyist for the consumer advocacy group Public Citizen. He calls it “nothing but throwing money at the feet of congressional and White House leaders, presumably with the assumption of getting something in return.”

The two groups were bipartisan in their giving.

AIG gave $750,000 to both the Republican and Democratic host committees. The government would eventually sink $71 billion into the insurance giant. Mortgage buyer Freddie Mac gave $250,000 to both committees. Three days after the close of the Republican event, the government took it over along with Fannie Mae. Taxpayers ultimately sunk $70 billion into the floundering institution.

In all, $6 million was donated by financial institutions that received bailout money to both party conventions, according to a Center for ...

Christopher Petrella joins David Pakman in an interview about the private prison industry's efforts to profit from the detention of undocumented immigrants.  Christopher is a Ph.D. student at U.C. Berkeley and columnist for NationofChange.org.  Christopher provides his analysis of the prison industrial complex and offers an overview of the web of  political influence as prison labor becomes a mode of generating profits for state departments of corrections.  Over 200,000 undocumented immigrants were detained last year in the two largest private prisons that are being backed by big investment banks such as Citigroup, Bank of America, JPMorgan Chase, and WellsFargo. For more, please see http://www.davidpakman.com/

 A year ago, economic analysts were giddy with optimism about the prospects for economic growth in the developing world. In contrast to the United States and Europe, where the growth outlook looked weak at best, emerging markets were expected to sustain their strong performance from the decade preceding the global financial crisis, and thus become the engine of the global economy.

Economists at Citigroup, for example, boldly concluded that circumstances had never been this conducive to broad, sustained growth around the world, and projected rapidly rising global output until 2050, led by developing countries in Asia and Africa. The accounting and consulting firm PwC predicted that per capita GDP growth in China, India, and Nigeria would exceed 4.5% well into the middle of the century. The consulting firm McKinsey & Company christened Africa, long synonymous with economic failure, the land of “lions on the move.”

Today, such talk has been displaced by concern about what  READ FULL POST DISCUSS

Hallelujah and Holy Smokes! Wall Street has had a "come to Jesus" moment — the biggest sinner on the Street has repented!

He is Sandy Weill, the once-lionized dealmaker who turned our banks into financial "supermarkets" that tie us everyday depositors and Main Street borrowers to the profiteering schemes of unbridled Wall Street traders and the whims of global speculators. Thanks, Sandy — for nothing.

Beginning in the late 1980s, Weill went on a decade-long merger binge, taking over Travelers Insurance, Smith Barney, Aetna, Solomon Brothers and other powerhouses of high finance, culminating in 1998 with his grabbing of Citibank. The whole empire was named Citigroup, Weill was paid a king's ransom, and his conglomerated entity was widely hailed as a work of genius. Only one problem: It was illegal.

After the financial collapse of 1929 led to the Great Depression, the Glass-Steagall Act was passed to protect people's deposits from another system-wide crash by prohibiting banks from also owning stock brokerages, insurance corporations, hedge funds and other shadowy, high-risk financial operations.

Picky-picky, said Weill, who hired a hoard of lobbyists to demand that Washington legalize his illegal structure by simply repealing the pesky law he was blatantly violating. He even brought former President Gerald Ford and former Clinton Treasury Secretary Robert Rubin onto Citigroup?s board of directors to be bipartisan front men leading the charge to kill Glass-Steagall.

Sure enough, in 1999, Congress dutifully went along with Weill?s push for repeal, and Wall Street promptly rushed to amalgamate more Citigroups, thus creating the "too-big-to-fail" system that — only eight years later — did indeed fail. Weill's "work of genius" forced a multitrillion-dollar bailout on us taxpayers (including $45 billion that ...

I’m in Alaska, amid moose and bear, trying to steal some time away from the absurdities of American politics and economics. But even at this remote distance I caught wind of Sanford Weill’s proposal this morning on CNBC that big banks be broken up in order to shield taxpayers from the consequences of their losses. Forget the bear and moose for a moment. This is big game. 

If any single person is responsible for Wall Street banks becoming too big to fail it’s Sandy Weill. In 1998 he created the financial powerhouse Citigroup by combining Traveler’s Insurance and Citibank. To cash in on the combination, Weill then successfully lobbied the Clinton administration to repeal the Glass-Steagall Act – the Depression-era law that separated commercial from investment banking. And he hired my former colleague Bob Rubin, then Clinton’s Secretary of the Treasury, to oversee his new empire.

Weill created the business model that Wall Street uses to this day — unleashing traders to make big, risky bets with other peoples’ money that deliver gigantic bonuses when they turn out well and cost taxpayers dearly when they don’t. And Weill made a fortune – as did all the other executives and traders. JPMorgan and Bank of America soon followed Weill’s example with their own mega-deals, and their bonus pools exploded as well.

Citigroup was bailed out in 2008, as was much of the rest of the Street, but that didn’t alter the business model in any fundamental way. The Street neutered the Dodd-Frank act that was supposed to stop the gambling. JPMorgan, headed by one of Weill’s protégés, Jamie Dimon, just lost $5.8 billion on some risky bets. Dimon continues to claim that giant banks like his can be managed so as to avoid any risk to taxpayers.

Sandy Weill has finally seen the light. It’s a bit late in the day, but, hey, he’s already cashed in. You and I and ...

At one time, calling the large multinational banks a “cartel” branded you as a conspiracy theorist.   Today the banking giants are being called that and worse, not just in the major media but in court documents intended to prove the allegations as facts.  Charges include racketeering (organized crime under the U.S. Racketeer Influenced and Corrupt Organizations Act or RICO), antitrust violations, wire fraud, bid-rigging, and price-fixing.  Damning charges have already been proven, and major damages and penalties assessed.  Conspiracy theory has become established fact.

In an article in the July 3^rd Guardian titled “Private Banks Have Failed – We Need a Public Solution”, Seumas Milne writes of the LIBOR rate-rigging scandal admitted to by Barclays Bank:

It's already clear that the rate rigging, which depends on collusion, goes far beyond Barclays, and indeed the City of London. This is one of multiple scams that have become endemic in a disastrously deregulated system with inbuilt incentives for cartels to manipulate the core price of finance. 

 

. . . It could of course have happened only in a private-dominated financial sector, and makes a nonsense of the bankrupt free-market ideology that still holds sway in public life.

. . . A crucial part of the explanation is the unmuzzled political and economic power of the City. . . . Finance has usurped democracy. 

Bid-rigging and Rate-rigging