09 Saturday Oct 2010
Posted in Congress, economy, Financial Crisis, Politics, special interests, too big to fail, Wall Street
Tags
Congressman Alan Grayson explaining what is becoming known as Foreclosuregate. And if you think it just affects people who aren’t making their mortgage payments, think again. It concerns everyone:
“We are approaching a point where the easiest way to make a buck is to steal it.”
No, we’re already there. We have been and we will be until the perpetrators, and those who aid and abet this “factory of fraud,” (including our elected representatives) are behind bars.
24 Friday Sep 2010
Tags
big banks, David Axelrod, financial reform, health care reform, military-industrial complex, oligarchy, too big to fail, Washington Post
David Axelrod in yesterday’s Washington Post:
“Pundits will spend a lot of time predicting who will win in November. But more is at stake than the fate of Democrats or Republicans. What’s at stake is whether the powerful corporate special interests will go back to writing our laws or whether our democracy will remain where it belongs — in the hands of the American people.”
What color is the sky in the land where unicorns run free, Dave? “Go back?” They never left. Former insurance company lobbyists and executives wrote the lion’s share of health care “reform.” Your boss cut a backroom deal with the pharmaceutical industry to ensure their monopoly remained intact. Did the big banks get broken up by so-called financial reform? Hell no. Is too big to fail still around? Hell yes. Does the military-industrial complex still get the same blank check that they’ve always had? Absolutely.
FYI, Mr. Axelrod, we no longer have a democracy in America. The correct term is oligarchy.
20 Tuesday Jul 2010
Tags
bankers, CFPB, Consumer Financial Protection Bureau, Elizabeth Warren, Hank Paulson, Huffington Post, John Ralston, Larry Summers, President Obama, scheme, TARP, Timothy Geithner, Wall Street
Elizabeth Warren should be a no-brainer as President Obama’s choice to head the newly-created Consumer Financial Protection Bureau (CFPB). She is a long-time advocate for the rights of consumers, the person most responsible for the Bureau’s inclusion in the recently-passed financial reform legislation, and its most notable and vocal supporter. She has this crazy notion that a consumer protection agency should actually…you know…protect consumers against the abusive practices of the big banks.
As chair of the TARP oversight committee Warren regularly clashed with what those banks consider to be in their best interests, as well as those in the administration who make a habit of carrying the banker’s water, namely Treasury Secretary Timothy Geithner. Which is why it wasn’t surprising when Huffington Post reported last week that Geithner opposed Warren’s nomination.
Then came this, a piece by John Talbott (also in the Huffington Post) on Sunday. The reason for the treasury secretary’s opposition:
“The [financial reform] bill has been written to put a great deal of power as to how strongly it is implemented in the hands of its regulators, some of which remain to be chosen. The bank lobby will work incredibly hard to see that Warren, the person most responsible for initiating and fighting for the idea of a consumer financial protection group, is denied the opportunity to head it.
But this is not the only reason that Geithner is opposed to Warren’s nomination. I believe Geithner sees the appointment of Elizabeth Warren as a threat to the very scheme he has utilized to date to hide bank losses, thus keeping the banks solvent and out of bankruptcy court and their existing management teams employed and well-paid.”
The “scheme” to which Talbott refers began with Geithner’s predecessor as Treasury Secretary, Hank Paulson, and is being continued by Geithner and his partner in crime in the Obama administration, Larry Summers. In short it goes like this:
The $700 billion in TARP money was originally supposed to go to get bad loans, the so-called toxic assets, of the bank’s books. Immediately after TARP was passed, Paulson did a 180 and decided to use it as a direct cash infusion into the big banks rather than buying bad loans. (Nothing to do with him being a former Goldman CEO, I’m sure).
That left the banks with trillions of dollars of toxic assets still on the books, where they remain today. Geithner’s plan is for the banks to:
“…earn their way out of their solvency problems over time so the banks are continuing to slowly write off their problem loans but at a rate that will take years, if not decades, to clean up the problem.
And this is where defeat of the nomination of Elizabeth Warren becomes critical for Geithner. For Geithner’s strategy to work, the banks have to find increasing sources of profitability in their business segments to balance out their annual loan loss recognition from their existing bad loans in an environment in which they continue to recognize new losses in prime residential mortgages, commercial real estate lending, sovereign debt investments, bridge loans to private equity groups, leverage buyout lending and credit card defaults.
The banks have made no secret as to where they will find this increase in cash flow. They intend to soak their small retail customers, their consumer and small business borrowers, their credit card holders and their small depositors with increased costs and fees and are continuing many of the bad mortgage practices that led to the crisis
[…]
It is exactly these types of unwarranted fees on small consumers and poorly designed products that Elizabeth Warren will fight against as head of the new consumer finance protection group. And it is why Geithner sees her as so threatening. Unless the banks are allowed to raise fees and charges on their smaller consumer customers, Geithner’s and Summers’ scheme for dealing with the banking crisis by hiding problem loans permanently on the banks’ balance sheets will be exposed for what it is, an attempt at preserving the jobs of current bank executives at the cost of dragging out this recovery needlessly for years in the future.”
After much thought and careful consideration (which took about 1.5 seconds) I have a suggestion for how President Obama can resolve this conflict. Warren’s in, Geithner’s out. Problem solved.
08 Tuesday Jun 2010
Tags
conference committee, financial industry PACs, financial reform, Judd Gregg, status quo, Wall Street
Financial reform is once again on the agenda as the House—Senate conference committee attempts to reconcile the differences between the 2 bills beginning on Thursday. This article from McClatchy doesn’t give me reason to be optimistic about the outcome:
“A group of lawmakers who are about to write an historic overhaul of the nation’s financial regulatory system has been stacked carefully with veteran compromisers — and one wild card.”
“Veteran compromisers.” To me, that translates into someone who doesn’t stand for anything. A typical politician with a moistened finger of one hand in the air to see which way the wind is blowing, while the other hand reaches for the largest campaign contribution.
“That’s Sen. Judd Gregg, R-N.H., a flinty Yankee individualist who briefly was set to be President Barack Obama’s commerce secretary before he changed his mind. Gregg’s expected to be the leading proponent of GOP and financial sector views, and therefore a key player in shaping the final legislation.”
An “individualist” who is “expected to be the leading proponent of GOP and financial sector views?” Can you say oxymoron? More like a party-line hack who is in the pocket of the financial sector to the tune of $710,000 from financial industry PACs, and who has a 78% approval rating by the US Chamber of Commerce for his pro-business voting record.
“Gregg, who’s retiring from the Senate after this year, thinks some features of the legislation that initially passed the Senate and the House of Representatives amount to dangerous liberalism. He’s unenthusiastic about expanding government oversight of banks and other financial institutions, and creating a powerful new agency to protect consumers’ financial interests.”
In other words, Gregg is for the status quo. No new regulation necessary, leave it in the hands of private business. That’s worked so well in the Gulf of Mexico, why not do the same for Wall Street. “Dangerous liberalism?” Can it be any more dangerous than the hands-off, let the market fix itself attitude that nearly led to Great Depression, Part II?
“This bill doesn’t break down conservative-liberal. This bill breaks down populist-rational,” he said. He cited a desire in both parties to punish Wall Street and show voters that Congress can get tough with the financial sector, but he fears that could go too far.
Wrong, Senator. It breaks down along what’s in the best interest of the people vs. what’s in the best interest of the big bankers, and it’s pretty clear what side you come down on there. Go too far? These greedy SOBs nearly caused the collapse of our economy and put millions of people out of work. Is there such a thing as going too far?
“Financial interests, which also fear the bill will overreach, hope Gregg can bridge differences. “He will help to serve as an honest broker to achieve consensus among the conferees,” said Scott Talbott, the chief lobbyist for the Financial Services Roundtable, the trade group for big financial firms.
“Honest broker.” Right. As honest as $710,000 will allow. And as usual, Democrats are sending the fox an engraved invitation to the henhouse:
“Democrats say that not only will Gregg be invited in, he also could become a crucial voice as deliberations progress.”
Which tells me one of two things. Either Democrats have a serious case of amnesia and don’t remember that no matter what Republicans say, they are there to block what they can and weaken the rest until it amounts to nothing, or Democrats on the committee don’t want real reform and Gregg is their useful idiot.
I think the latter is more likely.
20 Thursday May 2010
Posted in economy, Financial Crisis, Goldman Sachs, too big to fail, Wall Street
The giant vampire squid gets the gold mine:
“Goldman Sachs makes more money from trading than any other Wall Street firm. In the first quarter, the bank’s $7.39 billion in revenue from trading fixed-income, currencies and commodities dwarfed the $5.52 billion made by its closest rival, Charlotte, North Carolina-based Bank of America Corp. In equities, Goldman Sachs’s $2.35 billion in revenue was about 50 percent higher than its nearest competitor.”
Their clients, whose “interests always come first” (now tell me the one about Goldilocks and the bears) get the shaft:
“Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse.
Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.”
And these are the people who want to get their hands on your 401k.
12 Wednesday May 2010
Tags
audit, Chris Dodd, conservatorship, David Vitter, derivative trading, Fannie Mae, Federal Reserve, Freddie Mac, Lincoln, lobbyists, McCain, Russ Feingold, Sanders amendment, Shelby, study, Wall Street
Any time anything passes in the Senate by a vote of 96–0 I’m suspicious. Those numbers are usually reserved for meaningless proclamations declaring ‘National Be Kind to Puppies and Kitties Day.’ But such a vote took place yesterday on Sen. Bernie Sanders’ amendment to audit the Federal Reserve.
Sanders’ original amendment would have required the Fed to submit to regular audits, but the watered-down version passed yesterday is for a one-time audit with a specific scope and time frame. This only adds to my suspicion that the newer version is more than likely toothless:
“A Fed spokeswoman declined to comment on the Senate action, but Fed leaders, who previously have objected to broader efforts to review monetary policy, have not opposed the most recent version of Sanders’s proposal.”
A more accurate gauge of where the Senate stands on REAL financial reform can be found in other amendments taken up yesterday, like the one proposed by David Vitter which called for the stronger provisions contained in Sanders’ original proposal. It was voted down 62 to 37 with only 6 Democrats voting “Yea”—Cantwell, Dorgan, Feingold, Lincoln, Webb, and Wyden.
Another amendment, proposed by Sen. McCain, called for a time frame for winding down and eventually ending the government’s conservatorship of Fannie Mae and Freddie Mac. That failed by a vote of 56 to 43 with only 2 Democrats–Bayh and Feingold–voting “Yea.” An alternative to the McCain amendment, proposed by Chris Dodd, called for “the Secretary of the Treasury to conduct a study on ending the conservatorship of Fannie Mae and Freddie Mac.” That passed by a margin of 63–36. Russ Feingold (I detect a pattern here) was the lone Democrat voting “Nay.”
Credit where credit is due, Sen. Shelby is right on the money (so to speak):
“Freddie Mac and Fannie Mae were at the heart of the financial crisis,” Shelby said Tuesday. “How we can have basic regulatory reform, financial reform, if we’re not going to include Fannie Mae and Freddie Mac?”
Also set for a vote this week is Sen. Lincoln’s amendment which would place strong restrictions on derivative trading. Needless to say, Wall Street is going all out to kill this:
“…the five [largest] banks together have mustered more than 130 registered lobbyists, including 40 former Senate staff members and one retired senator, Trent Lott. The list includes former staff members for the Senate majority and minority leaders, the chairmen and ranking members of the banking and finance committees, and more than 15 other senators. In the first quarter, the banks spent $6.1 million on lobbying.”
Why are the banksters fighting so hard to stop it? Follow the money:
“The change could cost the industry a lot of money. Banks reported $22.6 billion in derivatives revenue in 2009..”
08 Saturday May 2010
Posted in bailout, economy, Financial Crisis, Politics, too big to fail, Uncategorized, Wall Street
Sure, federal regulators (like the former head of the New York Federal Reserve pictured at left) were inept, incompetent, and inadequate when it came to their ability to first foresee and then to take proper pre-emptive action based on all the red flags that were waving leading up to the financial crisis.
Sure, they may have overlooked the dangers of subprime mortgages, of major financial institutions being leveraged 30 to 1, and of those financial institutions becoming so interconnected through the packaging, re-packaging, and re-re-packaging of toxic securities and selling them back and forth that the failure of one could lead to the failure of all.
Hey, just minor oversights. No need to think they don’t deserve to keep their jobs, or better yet, be given more authority. Treasury Secretary Geithner seems to think so:
“During an appearance on Capitol Hill, Geithner acknowledged failures in the Federal Reserve Bank of New York’s supervision of Citigroup and other large banks, said regulators were “not conservative enough” when it came to overseeing banks’ leverage ratios and criticized capital requirements as not having done a “good enough job” as a buffer against risk.
He also said that regulators like himself could have done more to prevent the worst financial crisis since the Great Depression…To ensure these kinds of failures are avoided in the future…Geithner wants to leave it up to federal regulators — the same ones that presided over the housing bubble, oversaw extreme risk-taking by banks and other financial firms, and tried (yet failed) to contain a subprime crisis from mushrooming into a financial meltdown.
[…]
In short, Geithner said he wants to give regulators more authority, leaving it up to them to exercise their best judgment.”
No thanks, Tim. We’ve seen what leaving crucial decisions up to the “best judgment” of federal regulators leads to, from Wall Street to the Gulf of Mexico.
06 Thursday May 2010
Posted in bailout, economy, Financial Crisis, Goldman Sachs, Politics, too big to fail, Wall Street
From Matt Taibbi’s latest at Rolling Stone, The Feds vs. Goldman:
“The bank will try and – who knows – might even succeed in defending itself in a court of law against these charges. But in the court of public opinion it was doomed the instant the SEC decided to put this ghastly black comedy of a fraud case on the street for everyone to see. Just as Pittsburgh Steeler Ben Roethlisberger will never recover from the image of him (allegedly) waving his dick at a scared 20-year-old coed in the darkened hallway of a Georgia nightclub, Goldman may never bounce back from the SEC’s brutal blow-by-blow account of how the bank conspired with a hedge-fund magnate to bend one gullible business partner after another over the edge of the subprime housing market.
Priceless.
06 Thursday May 2010
I’ve been considering relocating from Texas to the Sunshine State, since it looks like we may be in for another 4 years of Secessionist Rick here. Alan Grayson’s latest shot across the bow of the U.S.S Turbo Timmy might be enough to tip the scales. From Zero Hedge:
“In today’s ABC Top Line, Alan noted, “when Tim Geithner says that he doesn’t want to see the Fed audited, what he’s really saying is he doesn’t want to see Tim Geithner audited…”
“He was the head of the New York Fed for years and years. This audit would apply to him. And the actions he took — which he can now take in secret and, when this bill passes, will no longer be secret — we’ll be able to see and understand the decisions that he made that among other things put huge amounts of bailout money into the hands of private interests.” Grayson added: “It’s one of the biggest conflicts of interest I’ve ever seen.”
[…]
“The Fed doesn’t want to be audited. Who does? Do you want to be audited? I don’t want to be audited, but sometimes it’s necessary,” he said. “When you’re handing out a trillion dollars at a time — a trillion dollars at a time, which works out to $3,000 for every man woman and child in this country — don’t we have a right to know what happened to it?”
“It’s central to the bill. We’ve had secret bailouts from the Fed to private interests now for the past two years without any exposure whatsoever. … We need to know what happened to our money, because when the Fed hands out our money, every dollar in your pocket, every dollar in your checking account, every dollar in your 401(k) becomes that much cheaper and less in value.”
Dialing 1-800-MOVERS.
06 Thursday May 2010
Posted in Congress, economy, financial reform, financial regulation, Politics, too big to fail, Wall Street
Tags
amendments, Barbara Boxer, financial regulation, liquidation, Richard Shelby, Senate, taxpayer bailouts
Any time I see that the Senate has passed something by a vote of 93–5 or 96–1 I can be sure of one thing—it’s meaningless. It’s the equivalent of a proclamation naming Sunday as the official first day of the week. Such was the case yesterday with 2 amendments to the financial regulatory bill:
“The Senate on Wednesday approved two amendments to the financial regulatory bill that both Democrats and Republicans claimed would end the prospect of taxpayer-financed bailouts for companies deemed “too big to fail.”
[…]
By a vote of 93 to 5, the Senate approved an amendment by Senator Richard C. Shelby of Alabama, the ranking Republican on the Banking Committee [which] eliminated a $50 billion fund that was designed to help bridge financial shortfalls while a failing company was undergoing liquidation. Mr. Shelby said the fund was “a honey pot” that would facilitate “backdoor bailouts.” (Somewhere Frank Luntz is smiling).
[…]
The Shelby amendment also requires the Federal Deposit Insurance Corporation to oversee the liquidation of a systemically important financial company that is failing, using money provided by a special line of credit with the Treasury.”
And where does the Treasury get its money again?
“The Senate also approved, by a vote of 96 to 1, an amendment by Senator Barbara Boxer, Democrat of California, saying that no taxpayer money may be used to keep a ailing financial company alive.”
Wow, earthshaking stuff there too. Wake me up when (or should that be if) they get around to the Brown–Kaufman amendment.
Desperado's Outpost 