Published: Thursday 3 January 2013
“The fiscal cliff deal allowed a cut in the payroll tax to expire, raising taxes on every working American.”

The deal to avert the so-called “fiscal cliff” — which President Obama signed into law yesterday — included a host of corporate tax breaks, including breaks that benefit NASCAR and rum producers. As the Financial Times reported, another break will benefit big banks that park money overseas:

US banks and other large cross-border companies will retain a key tax break covering billions of dollars in foreign income under this week’s fiscal cliff deal.

Extending the so-called “subpart F exception for active financing income” will allow ...

Published: Sunday 18 November 2012
“While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.”

Today, Hostess Brands inc. — the company famed for its sickly sweet desert snacks like Twinkies and Sno Balls — announced they’d be shuttering after more than eighty years of production.

But while headlines have been quick to blame unions for the downfall of the company there’s actually more to the story: While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.

At the time, creditors warned that the decision signaled an attempt to “sidestep” bankruptcy rules, potentially as a means for trying to keep the executive at a failing company. The Confectionery, Tobacco Workers & Grain Millers International Union pointed this out in their written reaction to the news that the business is closing:

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Certainly, the company agreed to an out-sized pension debt, but the decision to pay executives more while ...

Published: Monday 12 November 2012
“Several Wall Street heavyweights have recently said that banks need to rethink the sky-high compensation they’ve been paying (which has helped exacerbate the nation’s income inequality).”

Citigroup CEO Vikram Pandit was pushed out the door of his company in October after overseeing a precipitous decline in his bank’s value. Overall, Citigroup lost nearly 90 percent of its stock price during Pandit’s tenure. But that won’t stop Pandit from walking off with $6.7 million for his last year on the job:

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Published: Friday 9 November 2012
“Looking closer, Jon Corzine may simply be the most poignant symbol of the incestuous relationship between bankers, business and Congress that is systemic in today’s political system.”

If you look up the individual "Jon Corzine" on Wikipedia, the first sentence you encounter is “Jon Stevens Corzine is an American finance executive and political figure.”

Those two positions strung together in the same sentence may make some people uneasy, but the fact is that you can apply this description to many people in Congress. Looking closer, Jon Corzine may simply be the most poignant symbol of the incestuous relationship between bankers, business and Congress that is systemic in today's political system.

Recently, Jon Corzine — CEO of MF Global from 2010 to 2011, CEO of Goldman Sachs from 1994 to 1999, Senator of New Jersey from 2001 to 2006 and Governor of New Jersey from 2006 to 2010 — was subpoenaed before a House committee to answer questions regarding the loss of approximately $1.6 billion of citizens' money.

The "honorable" Jon Corzine, as his name tag so colorfully and inaccurately described him, claimed he did not know where the funds went. The House committee asked him, along with other MF Global executives: "Where is the money?” His response: “I don’t know.”

“OK,” replied the committee.

Could lawmakers' passivity possibly be attributed to the amount of money those committee members received from financial agencies and trading groups to keep their mouths shut? Given the evidence, it's a worthwhile question.

According to the Center for Responsive Politics, Committee chairman Spencer Bachus has received $262,177 from securities and investment firms, $78,677 of which was individual donations, the other $183,500 from PACs. He has also received $259,400 from commercial banks and $241,960 from insurance companies, a blend of PACs and individual contributions.

Published: Friday 19 October 2012
“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.”

 

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’ ...

Published: Thursday 18 October 2012
Describing the deficiencies of the Republican program, a famous man once said, “it‘s arithmetic” — and as usual, the Romney campaign can‘t seem to add or subtract without cheating.

 

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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Published: Wednesday 3 October 2012
“President Obama: You have spoken eloquently of the need to reduce the influence of big money in politics.”

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 ...

Published: Tuesday 2 October 2012
Romney’s ads claim that he will declare China to be a currency manipulator and take retaliatory measures.

 

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 ...

Published: Tuesday 18 September 2012
Five big signs we are headed toward privatization.

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 ...

Published: Thursday 13 September 2012
Obama has followed the examples of Summers and Geithner instead of those of Warren and Harris, and that is what has made the election a tossup as voters continue to suffer in an economy that Democrats as well as Republicans wrecked.

 

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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Published: Wednesday 29 August 2012
“In 2010, 27 percent of all children in the country were reported as living below the poverty level.”

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 ...

Published: Wednesday 29 August 2012
“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.”

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 ...

Published: Saturday 25 August 2012
“AIG gave $750,000 to both the Republican and Democratic host committees.”

 

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 ...

Published: Friday 17 August 2012
Investment banks like that of JPMorgan Chase, WellsFargo, Bank of America, and Citigroup have been investing in private prisons.

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/

Published: Thursday 9 August 2012
“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.”

 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

Published: Wednesday 1 August 2012
“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.”

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 ...

Published: Thursday 26 July 2012
If any single person is responsible for Wall Street banks becoming too big to fail it’s Sandy Weill.

 

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 ...

Published: Sunday 22 July 2012
“Billions of dollars were skimmed from cities all across America by colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion.”

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 3rd 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

Published: Friday 13 July 2012
“The derivatives market, of which the vast majority is made up of interest rate products, is one manifestation of the political-financial monopoly.”

 

The Libor-Barclay’s scandal has made us increasingly aware of the collusion between politics and finance. The fix already lies in on our LIE MORE economy, where corporate raiders can easily siphon money out of our economy, leaving us fighting among ourselves for a shrinking economic pie. We debate safety nets, taxes, jobs, the deficit, and stimulus spending when the very first thing we should do is simply disconnect the siphon.

The derivatives market, of which the vast majority is made up of interest rate products, is one manifestation of the political-financial monopoly. As Goldman Sachs’ employee Fabrice Tourre so eloquently described in his emails to girlfriend Marrine Serres, he was the “fabulous Fab” creating “Frankenstein” products that were nothing more than “pure intellectual masturbation” for sale to unwitting clients.  The financial wizards of this monopoly include Wall Street banks, of which I will only highlight three.  These unregulated derivative products were very profitable and from 1998 to 2008, Bank of America reported profits of $135 billion, Citibank $145.8 billion, and JP Morgan Chase $97.6 billion. The political cronies of this monopoly included appointed and elected members of our federal government. A few of the top federal government regulators who ignored the warning signs to regulate the derivatives were Greenspan, Rubin, Levitt, Geithner, and Summers. Obviously the White House and Congress were active participants in the monopoly because of the benefits this collusion brought to them:

Published: Sunday 8 July 2012
“Suppose the bankers are manipulating the interest rate so they can place bets with the money you lend or repay them – bets that will pay off big for them because they have inside information on what the market is really predicting, which they’re not sharing with you.”

Just when you thought Wall Street couldn’t sink any lower – when its myriad abuses of public trust have already spread a miasma of cynicism over the entire economic system, giving birth to Tea Partiers and Occupiers and all manner of conspiracy theories; when its excesses have already wrought havoc with the lives of millions of Americans, causing taxpayers to shell out billions (of which only a portion has been repaid) even as its top executives are back to making more money than ever; when its vast political power (via campaign contributions) has already eviscerated much of the Dodd-Frank law that was supposed to rein it in, including the so-called “Volker” Rule that was sold as a milder version of the old Glass-Steagall Act that used to separate investment from commercial banking – yes, just when you thought the Street had hit bottom, an even deeper level of public-be-damned greed and corruption is revealed. 

Sit down and hold on to your chair.

What’s the most basic service banks provide? Borrow money and lend it out. You put your savings in a bank to hold in trust, and the bank agrees to pay you interest on it. Or you borrow money from the bank and you agree to pay the bank interest.

How is this interest rate determined? We trust that the banking system is setting today’s rate based on its best guess about the future worth of the money. And we assume that guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for the dough.

But suppose our assumption is wrong. Suppose the bankers are manipulating the interest rate so they can place bets with the money you lend or repay them – bets that will pay off big for them because they have inside information on what the market is really predicting, which they’re not sharing with you.

Published: Friday 15 June 2012
The Fed backed the bailout of Citigroup, the result of deals dreamed up by Dimon, who before his JPMorgan days had teamed with Sanford Weill to merge privately held investment firms with government-insured commercial banks, which would have been illegal under the Glass-Steagall law.

Statistics are boring, but it’s important to wrap your head around this latest one from the Federal Reserve as the definitive epitaph for the American dream. Wall Street’s financial shenanigans, the banking games that made some fat cats outrageously wealthy as they turned home mortgages into toxic securities, wiped out 20 years of growth in American families’ net worth.

“Americans saw wealth plummet 40% from 2007 to 2010, Federal Reserve says,” is how The Washington Post headlined the startling news that all of the economic gain of the past two decades had been destroyed by the banking meltdown. And with housing values—the bulk of middle-class savings—indefinitely moribund, the situation will not get better anytime soon.

“The recession caused the greatest upheaval among the middle class,” the Post noted. “... Their median net worth ... suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose slightly.”

That outcome, disastrous to the American ideal of a nation of mostly middle-class stakeholders competing on a relatively equal economic playing field, was preordained. When tens of millions lost their jobs and homes as a result of financial swindles that the Federal Reserve failed to prevent, this ostensibly public agency, with strong bipartisan support in the White House and Congress, adroitly directed the flow of public funds to save the bankers while abandoning their victims.

On Tuesday, Sen. Bernie Sanders, acting under authority of the Dodd-Frank financial regulations, released the conclusions of a Government Accountability Office report showing that ” ... during the financial crisis, at least 18 former and current directors from Federal Reserve Banks worked in banks and corporations that collectively received over $4 trillion in low-interest loans from the Federal Reserve.”

One of those Fed directors, Jamie ...

Published: Friday 18 May 2012
“Being one of the smartest bankers means you are among those who best know how to skirt the law or, if that cannot be done, how to successfully lobby to gut it.”

 

How did we end up with such smart scoundrels? Even after it was known that Jamie Dimon’s bank blew more than $2 billion on the same suspect derivatives trading that has bankrupted the world’s economy, Barack Obama still had praise for the intellect of his political backer and the integrity of the bank he heads: “JPMorgan is one of the best-managed banks there is,” the president told the hosts of ABC’s “The View” in an interview televised Tuesday, adding, “Jamie Dimon, the head of it, is one of the smartest bankers we got. And they still lost $2 billion and counting.”

A lesser bank would have gone under and needed to be bailed out, Obama argued: “That’s why Wall Street reform is so important.” But even when fully implemented, Obama’s tepid reforms would not have stopped this scam and will not stop the others that are sure to follow. Being one of the smartest bankers means you are among those who best know how to skirt the law or, if that cannot be done, how to successfully lobby to gut it.

Dimon understands and performs this drill well, for he was in cahoots with his mentor, Sandy Weill, in engineering a series of mergers and acquisitions that would have violated the Glass-Steagall law, which for decades had prohibited commingling investment and commercial banking. The two business executives were able to get Congress and President Bill Clinton to reverse Glass-Steagall, a change that made legal the creation of Citigroup, the too-big-to-fail bank that eventually was saved from bankruptcy only through an immense taxpayer bailout.

The best and the brightest in this case are the bane of the nation because their genius lies in outwitting all efforts to hold them accountable. Dimon, the most recent in a parade of now-disgraced Wall Street golden boys, was nonetheless just awarded $24 million in compensation for 2011 by JPMorgan. Like his mentor Weill, who ...

Published: Tuesday 15 May 2012
“This is the week of the third annual Deficit Fest where many of the people most responsible for the current downturn come together to tell us why we should be worried about the deficit.”

This is the week of the third annual Deficit Fest, the event sponsored by Wall Street billionaire Peter G. Peterson. At this event, many of the people most responsible for the current downturn come together to tell us why we should be worried about the deficit at a time when 25 million people are unemployed, underemployed or have given up looking for work altogether and millions face the prospect of losing their homes.

Past deficit fests included exchanges where Peter Peterson and former Treasury Secretary and Citigroup honcho Robert Rubin mused about their comparative net worth. We also got to witness President Clinton bemoan the fact that the Democratic and Republican leadership in Congress teamed up to prevent him from cutting Social Security. Had Clinton gotten his way, millions of seniors would be getting by on Social Security checks that are more than 10 percent smaller than what they now receive.

Peterson is also known for his sponsorship of the “Economic Sleepwalk” tour, which was officially billed as the “Fiscal Wakeup” tour. This involved sending a group of policy wonks around the country to complain about the budget deficit at a time when the housing bubble was growing to ever more dangerous levels. While some of us were doing our best to warn of the imminent disaster [2002], Peterson was using his money and political connections to dominate media space at a time when the country’s debt-to-GDP ratio was actually falling.

But why ...

Published: Monday 14 May 2012
“The über-rich, of course, are used to such coddling, but now a class of customers that bankers have dubbed the ‘mass affluent’ get cookies, too.”

Another way that the rich are different from you and me is that their bankers serve them freshly baked chocolate-chip cookies.

The über-rich, of course, are used to such coddling, but now a class of customers that bankers have dubbed the "mass affluent" get cookies, too. Think you might qualify? You do... if you have a minimum of $500,000 to open one of these mass-affluent accounts. Otherwise, you fall into a category called "lower-margin" customers — so go get in the ATM line, Bucko.

This half-million-dollar-and-up bunch are not the 1-percenters. Instead they are the 10-percenters, and they've suddenly become hotly coveted by JPMorgan Chase, Citigroup, Bank of America, and other big chain banks. To reel in these mid-level richies, bankers are offering to pamper them lavishly.

For example, rather than having to breathe the same air as the riff-raff, they get to bank in cushy, private lounges. The carpets are plush, the cookies fresh, and a nice touch of wine and cheese might be available. There are no lines and no tellers to deal with – instead, these affluent swells get "relationship managers" who cater to their banking needs, including being available after hours. And here's something completely astonishing: one bank president says of her advantaged clients, "We'll come to you. If you want us to meet you in your home on a Sunday, we'll do that."

The chain bankers are opening hundreds of these posh, new banking nests for the affluent in upscale neighborhoods across the country, even as they are feverishly inventing new fees and coldly shrinking services for you and me. It's another move by the Powers That Be to wall off the good fortunes of the privileged few from even having to be in the same room as America's non-affluent majority. Indeed, they're creating their own exclusive America.

 

Published: Wednesday 9 May 2012
“It’s an unprecedented era and has been so since the 1970s, which marked a major turning point in American history.”

The Occupy movement has been an extremely exciting development. Unprecedented, in fact. There’s never been anything like it that I can think of.  If the bonds and associations it has established can be sustained through a long, dark period ahead -- because victory won’t come quickly -- it could prove a significant moment in American history.

The fact that the Occupy movement is unprecedented is quite appropriate. After all, it’s an unprecedented era and has been so since the 1970s, which marked a major turning point in American history. For centuries, since the country began, it had been a developing society, and not always in very pretty ways. That’s another story, but the general progress was toward wealth, industrialization, development, and hope. There was a pretty constant expectation that it was going to go on like this. That was true even in very dark times.

I’m just old enough to remember the Great Depression. After the first few years, by the mid-1930s -- although the situation was objectively much harsher than it is today -- nevertheless, the spirit was quite different. There was a sense that “we’re gonna get out of it,” even among unemployed people, including a lot of my relatives, a sense that “it will get better.”

There was militant labor union organizing going on, especially from the CIO (Congress of Industrial Organizations). It was getting to the point of sit-down strikes, which are frightening to the business world -- you could see it in the business press at the time -- because a sit-down strike is just a step before taking over the factory and running it yourself. The idea of worker takeovers is something which is, incidentally, very much on the agenda today, and we should keep it in mind. Also New Deal legislation was beginning to come in as a result of popular pressure. Despite the hard times, there was a sense that, somehow, “we’re gonna get ...

Published: Tuesday 24 April 2012
“The issue of CEO pay goes beyond just the ripoff of shareholders.”

Last week the country saw one of the fruits of the Dodd-Frank financial reform bill. The bill requires that major corporations offer their shareholders the opportunity to vote on the pay package for their chief executive. The shareholders of Citigroup voted down the $14.9 million pay package for CEO Vikram Pandit by a margin of 55-45 percent.

The vote was non-binding (a very serious problem), but it was nonetheless a huge slap in the face for Pandit and Citigroup’s top management and directors. It is extremely difficult to organize shareholders for this sort of vote. Management controls the flow of information to shareholders in a way that would make incumbent members of Congress green with envy.

When shareholders see a poorly run company, it is far easier for even large investors to just dump their shares rather than try to gain the support needed to change the way the company is managed. That is why this vote was so striking in a huge corporation like Citigroup.

Of course the law is still tilted so much in management’s favor, that even when the shareholders – the actual owners of the company – vote down a pay package, it is still only an advisory vote which the board and top management is free to ignore. But this vote is still a big step forward.

The first question that people should ask is how Pandit managed to get a compensation package that was so out of line with his performance. The fact that executive pay packages bear little relationship to performance is well documented in Lucien Bebchuck and Jesse Fried excellent book Pay Without Performance.

The issue that Bebchuck and Fried examine is not whether CEO pay is too high in some abstract sense, but more specifically whether it can be justified by the extent to which CEOs increase a ...

Published: Friday 20 April 2012
“Corporate America has learned to fix the game so that their honchos walk away with fortunes, whether their companies do well or not.”

Lavishly paid executives have a new 1 percent number to ponder. It's not about their perch on the top branch of U.S. incomes. It's the lousy 1 percent rise in Citibank's quarterly revenues, which helped prompt the bank's stockholders to reject CEO Vikram Pandit's $15 million pay package. That they were earning a meager 1-cent-a-share quarterly dividend did not improve their mood.

A cornerstone of capitalism is that by richly rewarding successful managers who build up businesses, we all prosper. That makes sense but for one thing: Corporate America has learned to fix the game so that their honchos walk away with fortunes, whether their companies do well or not.

Defenders of the system insist that executive pay is no business of the government. The company owners — the stockholders — are the ones to set pay levels. A fair argument, except that CEOs have learned to fill their boards with other executives who want to run up pay levels for people like themselves.

To ...

Published: Friday 20 April 2012
“Sanford Weill, the banker most responsible for the nation’s economic collapse, has been elected to the American Academy of Arts & Sciences.”

How evil is this? At a time when two-thirds of U.S. homeowners are drowning in mortgage debt and the American dream has crashed for tens of millions more, Sanford Weill, the banker most responsible for the nation’s economic collapse, has been elected to the American Academy of Arts & Sciences.

So much for the academy’s proclaimed “230-plus year history of recognizing some of the world’s most accomplished scholars, scientists, writers, artists, and civic, corporate, and philanthropic leaders.” George Washington, Ralph Waldo Emerson and Albert Einstein must be rolling in their graves at the news that Weill, “philanthropist and retired Citigroup Chairman,” has joined their ranks.

This article was originally posted on Truthdig.

Weill is the Wall Street hustler who led the successful lobbying to reverse the Glass-Steagall law, which long had been a barrier between investment and commercial banks. That 1999 reversal permitted the merger of Travelers and Citibank, thereby creating Citigroup as the largest of the “too big to fail” banks eventually bailed out by taxpayers. Weill was instrumental in getting then-President Bill Clinton to sign off on the Republican-sponsored legislation that upended the sensible restraints on finance capital that had worked splendidly since the Great Depression.

Those restrictions were initially flouted when Weill, then CEO of Travelers, which contained a major investment banking division, decided to merge the company with Citibank, a commercial bank headed by John ...

Published: Thursday 19 April 2012
“The real news here is new-found activism among institutional investors – especially the managers of pension funds and mutual funds.”

The shareholders of Wall Street giant Citigroup are out to prove that corporate democracy isn’t an oxymoron. They’ve said no to the exorbitant $15 million pay package of Citi’s CEO Vikram Pandit, as well as to the giant pay packages of Citi’s four other top executives.

The vote, at Citigroup’s annual meeting in Dallas Tuesday, isn’t binding on Citigroup. But it’s a warning shot across the bow of every corporate boardroom in America.

Shareholders aren’t happy about executive pay.

And why should they be? CEO pay at large publicly-held corporations is now typically 300 times the pay of the average American worker. It was 40 times average worker pay in the 1960s and has steadily crept upward since then as corporations have morphed into “winner-take-all” contraptions that reward their top executives with boundless beneficence and perks while slicing the jobs, wages, and benefits of almost everyone else.

Meanwhile, too many of these same corporations have failed to deliver for their shareholders. Citigroup, for example, has had the worst stock performance among all large banks for the last decade but ranked among the highest in executive pay.

The real news here is new-found activism among institutional investors – especially the managers of pension funds and mutual funds. They’re the ones who fired the warning shot Tuesday.

Institutional investors are catching on to a truth they should have understood years ago: When executive pay goes through the roof, there’s less money left for everyone else who owns shares of the company.

For too long, most fund managers played the game passively and obediently. Some have been too cozy with top corporate management, forgetting their fiduciary duty to their own investors. How else do you explain the abject failure of fund managers to police Wall Street as it careened toward the abyss in 2008? Or to adequately ...

Published: Saturday 3 March 2012
“This is the first in-depth account of the Fed’s momentous decision and the fractious battles that led to it. It is based on dozens of interviews, most with people who spoke on condition of anonymity, and on documents, some of which have never been made public.”

In early November 2010, as the Federal Reserve began to weigh whether the nation’s biggest financial firms were healthy enough to return money to their shareholders, a top regulator bluntly warned: Don’t let them.

“We remain concerned over their ability to withstand stress in an uncertain economic environment,” wrote Sheila Bair, the head of the Federal Deposit Insurance Corp., in a previously unreported letter obtained by ProPublica.

Published: Friday 24 February 2012
“The Volcker rule will undeniably hurt profits at the nation’s biggest banks. But that’s a feature of the rule, not a bug.”

It’s no secret that the nation’s biggest banks have been trying to kill off the Volcker rule, the regulation named after former Federal Reserve Chairman Paul Volcker that is meant to rein in the banks’ riskiest trading. The banks, with the help of Sen. Scott Brown (R-MA), watered the rule down before it even became law, and have been heavily lobbying to make it even weaker ever since.

And according to Bloomberg News, the banks even ginned up ...

Published: Wednesday 22 February 2012
“The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an ‘event of default’ declared on European sovereign debt could jeopardize their $32 trillion derivatives scheme.”

In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:

Financial market cynics have assumed all along that Dodd-Frank did not end "too big to fail" but instead created a charmed circle of protected banks labeled "systemically important" that will not be allowed to fail, no matter how badly they behave.

That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS).  Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt. 

CDS are a form of derivative taken out by investors as insurance against default.  According to the Comptroller of the Currency, nearly 95% of the banking industry’s total exposure to derivatives contracts is held by the nation’s five largest banks: JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs.  The CDS market is unregulated, and there is no requirement that the “insurer” actually have the funds to pay up.  CDS are more like bets, and a massive loss at the casino could bring the house down.

It could, at least, unless the casino is rigged.  Whether a “credit event” is a “default” triggering a payout is determined by the International Swaps and Derivatives Association (ISDA), and it seems that the ISDA is owned by the world’s largest banks and hedge funds.  That means the house determines whether the house has to pay. 

The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an “event of default” declared on European sovereign debt could jeopardize their $32 ...

Published: Friday 10 February 2012
“Housing experts doubted, however, that the settlement the president described as a ‘landmark’ will have a broader impact on the struggling housing sector.”

State and federal regulators announced on Thursday a settlement worth at least $25 billion with Bank of America and four other large banks, ending several years of litigation over alleged foreclosure abuses. The deal offers some help to struggling homeowners, but experts view it more as a moral victory with limited impact on the broader housing market.

The announcement capped months of intense negotiations that involved federal regulators, state attorneys general, consumer advocacy groups and big players on Wall Street and in finance. It was the largest government-industry settlement involving states since the $200 billion-plus tobacco industry settlement in 1998.

The settlement effectively punishes the banks for alleged abuses in the foreclosure process, including robo-signing, which involves providing fraudulent documents in court proceedings when trying to take back properties from homeowners who are delinquent on their mortgages.

"Under the terms of this settlement, America's biggest banks, banks that were rescued by taxpayer dollars, will be required to right these wrongs. And that means more than just paying a fee," President Barack Obama said in a statement Thursday before the cameras.

The banks are required to dedicate $20 billion in relief to homeowners, including $10 billion toward reducing principal for struggling borrowers. The banks also must provide $5 billion in cash to federal and state governments to assist their foreclosure relief programs.

About 1 million households at risk of foreclosure should be able to reduce their loans. Another 750,000 Americans who lost their homes to foreclosures will receive about $2,000 each. The banks have three years to distribute the assistance, and the deal will be monitored for compliance.

The five banks that agreed to settle federal and state probes are Bank of America, which is on the hook for the biggest payout, as well as JPMorgan Chase, Citigroup, Wells ...

Published: Thursday 9 February 2012
“In order to cut corporations down to size, the people must strip corporations of the special artificial legal protections they have created for themselves.”

 

“Corporations are people, my friend.” Mitt Romney at Iowa State Fair

 

Corporations are obviously not people.  But Romney is accurate in the sense that corporations have hijacked most of the rights of people while evading the responsibilities. An important part of the social justice agenda is democratizing corporations.  This means we must radically change the laws so people can be in charge of corporations.  We must strip them of corporate personhood and cut them down to size so democracy can work.  People are taking action so democracy can regulate the size, scope and actions of corporations.

 

One of the most basic roles of society is to protect the people from harm.  The massive size of many international corporations makes democratic control over them nearly impossible.

 

Corporate crime is widespread.  The New York Times, ProPublica and others have revealed Wall Street giants like JPMorgan, Citigroup, Bank of America and Goldman Sachs have been charged with fraud many times only to get off by paying hundreds of millions.  Professors at University of Virginia have documented hundreds of corporations which have been found guilty or pled guilty in federal courts.

 

Corporate abuse is even more widespread.  For example, Corporate Accountability International named six to its Corporate Hall of Shame, including: Koch Industries for spending over $50 million to fund climate change denial; Monsanto for mass producing cancer causing chemicals; Chevron for dumping more than 18 billion gallons of toxic waste into the Ecuadorian Amazon; Exxon Mobil for being the worst polluter; Blackwater (now Xe) for killing unarmed Iraqi civilians and hiring paramilitaries; and Halliburton, the nation’s leading war profiteer.

 

Making corporations responsible to democracy of the people is challenging considering Wal-Mart, the ...

Published: Friday 3 February 2012
“Even Clinton, in a rare moment of honest appraisal of his record, conceded that his signing of the Commodity Futures Modernization Act (CFMA), legalizing those credit default swaps and collateralized debt obligations, was based on bad advice.”

That Lawrence Summers, a president emeritus of Harvard, is a consummate distorter of fact and logic is not a revelation. That he and Bill Clinton, the president he served as treasury secretary, can still get away with disclaiming responsibility for our financial meltdown is an insult to reason.

Yet, there they go again. Clinton is presented, in a fawning cover story in the current edition of Esquire magazine, as “Someone we can all agree on. ... Even his staunchest enemies now regard his presidency as the good old days.” In a softball interview, Clinton is once again allowed to pass himself off as a job creator without noting the subsequent loss of jobs resulting from the collapse of the housing derivatives bubble that his financial deregulatory policies promoted.

At least Summers, in a testier interview by British journalist Krishnan Guru-Murthy of Channel 4 News, was asked some tough questions about his responsibility as Clinton’s treasury secretary for the financial collapse that occurred some years later. He, like Clinton, still defends the reversal of the 1933 Glass-Steagall Act, a 1999 repeal that destroyed the wall between investment and commercial banking put into place by Franklin Roosevelt in response to the Great Depression.

READ FULL POST 14 COMMENTS

Published: Tuesday 17 January 2012
“It is up to county governments to restore the rule of law and repair the economic distress wrought behind the smokescreen of MERS, and new tools at the county’s disposal—including eminent domain, land banks, and publicly-owned banks—can facilitate this local rebirth.”

An electronic database called MERS has created defects in the chain of title to over half the homes in America.  Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray.  Meanwhile, foreclosed and abandoned homes are blighting neighborhoods.   Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it.  But how?  New legal developments are presenting some innovative alternatives.

John O’Brien is Register of Deeds for Southern Essex County, Massachusetts.  He calls his land registry a “crime scene.”  He is mad as hell and he isn’t going to take it anymore.  A formal forensic audit of the properties for which he is responsible found that:

• Only 16% of the mortgage assignments were valid.
• 27% of the invalid assignments were fraudulent, 35% were “robo-signed,” and 10% violated the Massachusetts Mortgage Fraud Statute.
• The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60%).
• There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called Mortgage Electronic Registration Systems (MERS).  MERS is a mere place holder for the true owners, a faceless, changing pool of investors owning indeterminate portions of sliced and diced, securitized properties.  Their identities have been so well hidden that their claims to title are now ...

Published: Thursday 8 December 2011
The Justice Department has decided that holding top Wall Street executives criminally accountable is too difficult a task.

It’s an issue we and others have noted again and again: Years after the financial crisis, there have still been no prosecutions of top executives at the major players in the financial crisis.

Why’s that? Well, according to a now-departed Justice Department official who used to be in charge of investigating such matters, the Justice Department has decided that holding top Wall Street executives criminally accountable is too difficult a task.

David Cardona, who recently left the FBI for a job at the Securities and Exchange Commission, told the Wall Street Journal that bringing financial wrongdoing to account is “better left to regulators,” who can bring civil cases. Civil cases, of course, can produce penalties from the banks -- as well as promises to be on better behavior -- but don’t put any executives behind bars. Here’s the Journal:

While at the FBI, Mr. Cardona oversaw dozens of criminal probes of large financial firms. The FBI's probes haven't led to any successful prosecutions of high-profile executives in relation to the financial crisis, despite demands from some lawmakers and angry Americans. In contrast, the SEC has filed crisis-related civil-fraud cases against 81 firms and individuals, and it has ...

Published: Friday 2 December 2011
We now know that the Fed’s secret $7.7 trillion lending program wasn’t just the most massive bank bailout ever seen, and it wasn’t just free money for mega-bankers - though it was certainly both of those things.

It took the journalists at Bloomberg News two years - and presumably lots of legal fees - to pry information out of the Federal Reserve that should have been made public long ago. We now know that the Fed's secret $7.7 trillion lending program wasn't just the most massive bank bailout ever seen, and it wasn't just free money for mega-bankers - though it was certainly both of those things. It was also the greatest hoax in stock market history.

No, scratch that. It was the greatest hoax in the history of money. And it was built on lies. How many? Let us count the ways.

Here's the first one: The banks paid back all the money back that they were given. No, they didn't. They paid back the principal on these loans. But by obtaining loans at rates far below market value, we now know they received the equivalent of $13 billion in cash giveaways.

Here's another lie: Fed economists support a free-market economy.

Ben Bernanke is a conservative economist who claims to support a free-market system. But we now know that the Federal Reserve lent astonishing sums to US banks in secret, and Bernanke fought with all the resources at his disposal to ensure that this information didn't become public. He didn't just want it to be held back to avoid a panic during the crisis. He wanted it kept secret forever.

I don't know what you call somebody like that, but I know what you don't call him: A capitalist. Free markets need transparency, so that investors and customers can make informed decisions and 'the wisdom of the market' can prevail. Nobody wanted the market to do its job. When it came to banks, they wanted it to be blind, deaf, and dumb, unable to make sound judgments about their financial ...

Published: Friday 18 November 2011
“Citizen movements are inconvenient for the people in power, but look at it this way: Isn't it time they had a dank, drizzly November of the soul?”

Suddenly the Occupy movement is under siege everywhere. There's been a wave of simultaneous, seemingly coordinated clampdowns on peaceful demonstrators in cities all across the country. Why now?

It could be nothing more than one heck of a coast-to-coast coincidence, at least theoretically speaking. But there are indications that this might have been at least partially planned and coordinated at a national level.

Either way the timing's very interesting - and, for some people, very convenient. The nation's expecting a deficit package from the undemocratic Super Committee, anticipating another possible free trade deal, and waiting to see whether Wall Street will go unpunished for its foreclosure crime wave. All that makes this a very good time for dissident voices to suddenly disappear.

Unfortunately for them, it's not going to be that easy.

READ FULL POST 4 COMMENTS

Published: Friday 11 November 2011
“The deal has been stalled by the refusal of California Attorney General Kamala Harris to accept this sellout.”

There is no three-strikes law for crooked bankers, not even a law for a fifth strike, as The New York Times reported in the case of Citigroup, cited last month in a $1 billion fraud case. Unlike the California third-striker I once wrote about whom a district attorney wanted banished forever to state prison for stealing a piece of pizza from the plate of a person dining outdoors, Citigroup executives get off with a fine and by offering a promise not to do it again, and again and again.

As the Times reported when Citigroup agreed to settle SEC charges last month: “Citigroup’s main brokerage subsidiary, its predecessors or its parent company agreed to not violate the very same antifraud statue in July 2010. And in May 2006. Also as far back as March 2005 and April 2000.”

Not that the bankers face prison time, since the Justice Department has refused to act in these cases, and the Securities and Exchange Commission is bringing only civil charges, which the banks find quite tolerable. This time, the fine against Citigroup was $285 million, which may sound like a lot except that the bank raked off as much as $700 million on this particular toxic securities deal. As the Bloomberg news service editorialized, “... there should be only one answer from Jed S. Rakoff, the federal judge in New York assigned to weigh the merits of the agreement: You’ve got to be kidding.”

READ FULL POST 25 COMMENTS

Published: Friday 4 November 2011
“Rubin’s destructive impact on the economy in enabling these giant corporate banks to run amok was far greater than that of swindler Bernard Madoff, who sits in prison under a 150-year sentence while Rubin sits on the Harvard Board of Overseers, as chairman of the Council on Foreign Relations and as a leader of the Brookings Institution’s Hamilton Project.”

Can we all agree that a $1 billion swindle represents a lot of money, and the fact that Citigroup agreed last week to pay a $285 million fine to settle SEC charges for “misleading investors” demonstrates a damning admission of culpability? 

So why has Robert Rubin, the onetime treasury secretary who went on to become Citigroup chairman during the time of the corporation’s financial shenanigans, never been held accountable for this and other deep damage done to the U.S. economy on his watch?

Rubin’s tenure atop the world of high finance began when he was co-chairman of Goldman Sachs, before he became Bill Clinton’s treasury secretary and pushed through the reversal of the Glass-Steagall Act, an action that legalized the formation of Citigroup and other “too big to fail” banking conglomerates.

Rubin’s destructive impact on the economy in enabling these giant corporate banks to run amok was far greater than that of swindler Bernard Madoff, who sits in prison under a 150-year sentence while Rubin sits on the Harvard Board of Overseers, as chairman of the Council on Foreign Relations and as a leader of the Brookings Institution’s Hamilton Project.

Rubin was rewarded for his efforts on behalf of Citigroup with a top job as chairman of the bank’s executive committee and at least $126 million in compensation. That was “compensation” for steering the bank to the point of a bankruptcy avoided only by a $45 billion taxpayer bailout and a further guarantee of $300 billion of the bank’s toxic assets.

Those toxic assets and other collateralized debt obligations and credit default swaps were exempted from government regulation by the Commodity Futures Modernization Act, which Rubin helped design while he was ...

Published: Thursday 27 October 2011
“With the financial crisis back in the nation‘s spotlight, take a look at where the people who got us here are.”

 

Widespread demonstrations in support of Occupy Wall Street have put the financial crisis back into the national spotlight lately.

So here’s a quick refresher on what’s happened to some of the main players, whose behavior, whether merely reckless or downright deliberate, helped cause or worsen the meltdown. This list isn’t exhaustive -- feel welcome to add to it.

READ FULL POST 4 COMMENTS

Published: Thursday 29 September 2011
“A cynic might say that it’s exactly because Citigroup and Pfizer have for so long spent money in the open to influence politics, that they resent the new secrecy.”

Massive amounts of money will be spent to influence upcoming federal elections, and if recent history is any guide, at least half of it will be totally secret. We won’t know who donated the money, nor for what exact purpose. In 2010, political committees and organizations spent $298 million—four times what was spent in the 2006 midterms—and about 50 percent was undisclosed.

report released Monday says this raging river of secret cash has the potential to create massive scandal and distort the democratic process, and it calls for complete transparency of political donations and public financing options for federal campaigns. That’s not a particularly remarkable conclusion, but what’s notable is who issued the report. 

Hidden Money: The Need for Transparency in Political Finance” was signed by thirty-two business leaders and university professors—including representatives from Citigroup, Prudential Financial and others. Executives from the pharmaceutical companies Pfizer and Merck helped promote the findings at a public event this week. 

The report enumerates some of the problems that post– READ FULL POST 3 COMMENTS

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