Tag Archives: Wall Street

Heckuva Job, Mr. President

30 Tuesday Nov 2010

Posted by in budget, Congress, economy, Obama, Politics, Republicans, Taxes, Wall Street

≈ 1 Comment

Tags

, , , , , , , ,

Good call, Mr. President. You’ve hit on the reason for the $1.3 trillion deficit. Nothing to do with the crooks savvy businessmen on Wall Street or wars that never end or tax cuts for the top 2 percent. It’s the Social Security Customer Service Reps making $35,000 a year. It’s the USDA Agricultural Inspector making $30,000. It’s Correctional Officers making $46,000. It’s those greedy Air Traffic Controllers pulling down the astronomical sum of $93,000 a year.

They all just make too damn much money, and denying them a whopping 1.4% increase is surely the solution to all our budget woes. Never mind that their health insurance premiums are scheduled to go up 7.2% next year so that a wage freeze amounts to a wage cut, not a freeze.

But hey, the Republicans love you for it, and apparently that’s what matters most. They always love it when you start making concessions before you even get to the bargaining table. A tactic that paid off so well in health care reform, why not use it again when it comes to deficit reduction.  Oh, by the way, what did you get in exchange for conceding this issue to the GOP? Absolutely nothing—as usual.

This just in, sir. Republicans don’t give a flying pile of horse manure about reducing the deficit. If they did, they wouldn’t be insisting on an extension of the Bush tax cuts which, given the prior record of your negotiating skills, I fully expect to see happen to some degree at today’s capitulation session bi-partisan meeting with Republican leadership.

Here’s an early “heckuva job” on that, too.

Foreclosure Fraud Just the Tip of the Iceberg

12 Tuesday Oct 2010

Posted by in bailout, Congress, economy, Financial Crisis, financial reform, financial regulation, Foreclosures, Justice Department, Obama administration, special interests, too big to fail, Wall Street

≈ 2 Comments

Tags

, , , , , , , , , , , , , , , , , , ,

Dylan Ratigan, Ohio Secretary of State Jennifer Brunner, and Karl Denninger of The Market Ticker unravel foreclosure fraud:

To reiterate, the fraud in foreclosures that we’re seeing now is just the tip of the iceberg. The purpose is to try and cover up, and cover for, the fraud in the mortgage process all the way back to the origination of the mortgages, which were then packaged into securities and fraudulently sold to investors as AAA quality, a rating gained by paying off the ratings agencies. As our parents always told us, one lie requires another one to cover up the first one, which requires another lie to cover up the second one, and so on, and so on, and…….

In my opinion, that’s why the Senate tried to sneak through the legislation that President Obama vetoed—it would have given the big banks protection from liability in this entire mess. As an aside–again just my opinion– but the only reason the president vetoed the bill was because of the attention it received and the light that was shone on its alleged “unintended consequences” (and if you’ll buy that….) My cynical nature when it comes to politicians tells me that “sending the bill back for modifications” translates into, ‘We’ll try again when the heat’s off.’

It’s also why, according to David Axelrod, the hope in the White House is that “this moves rapidly and that this gets unwound very, very quickly.” And why the White House opposes a national moratorium on foreclosures. A moratorium would give investigators and especially some 40 states’ attorneys general time to delve back into fraud and deceit at every level of the process

As Mr. Denninger explained, the only remedy is to force the big banks to buy back the toxic securities that they sold to investors under false pretenses. They can’t do that, which means Chase, BofA, et al, are insolvent. Actually, they’re insolvent now but for the phony profits from peddling this garbage to unsuspecting investors.

There is a provision in the financial reform legislation for resolution authority, that is breaking up large financial institutions that pose a “systemic risk” to the entire economy. Will Congress use it or will they do what they have done in the past and bail out their Wall Street cronies and contributors—again. If Republicans take control of Congress will they hold true to their campaign rhetoric of “no more bailouts” or will they dance to the tune of their big donors on Wall Street?

We may soon find out.

Why Tim Geithner Opposes Elizabeth Warren as Head of the CFPB

20 Tuesday Jul 2010

Posted by in bailout, economy, financial reform, financial regulation, Obama administration, Politics, too big to fail, Wall Street

≈ Leave a comment

Tags

, , , , , , , , , , , ,

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.

It’s True Harry, and You Have Only Yourself to Blame

15 Thursday Jul 2010

Posted by in Congress, Democrats, economy, financial reform, Politics, Unemployment, Wall Street

≈ Leave a comment

Tags

, , , , , , , , , , ,

Welcome to the party, Harry. You’re a little late, but glad you finally got here:

“Republicans hope unemployment rates jump higher to give them a better shot at retaking Congress, Majority Leader Harry Reid said Wednesday.

At a press conference announcing a package of proposals to help small business, the Nevada Democrat said Republicans were obstructing legislation to help the economy for political reasons.

“They think the worse the economy is come November, the better they’re going to do election-wise,” Reid said.

Reid cited an extension of unemployment benefits as an example of legislation that would help the economy but was being blocked by Republicans.”

They don’t care about extending unemployment benefits. That money goes mostly to the vanishing middle-class that Republicans have been trying to kill off since 1980 anyway. This will just accelerate the process in the direction of their goal of a two-class society—the very rich and the poor. The fat cats on Wall Street are hiring and doling out the big bonuses again, and that’s all that matters to the GOP.

BTW, Harry. If you’re looking for someone to blame, find a mirror. If you and the other Dems would have had the balls to change that stupid-ass 60 vote rule in the Senate 18 months ago, none of this would have been possible. We could have had a REAL stimulus package, REAL health care reform, and REAL financial reform.

Democrats didn’t want to change it because they were anticipating some time in the future when they were in the minority and could use the filibuster to their advantage.

That time will be here a lot sooner than they thought.

Social Security Cuts Straight Ahead

04 Sunday Jul 2010

Posted by in budget, Congress, economy, Obama, Obama administration, Politics, Wall Street

≈ 1 Comment

Tags

, , , , , , , , , ,

Reading the road signs along the highway that leads to cutting or privatizing Social Security:

In December Blue Dog Jim Cooper, said a report which showed “that the governments unfunded liabilities are roughly $56 trillion” was “shocking.”  He called for a commission to address it.”

In January the White House signed on:

“[President] Obama said that he has made clear to his advisers that some of the difficult choices–particularly in regards to entitlement programs like Social Security and Medicare – should be made on his watch. “We’ve kicked this can down the road and now we are at the end of the road,” he said.”

In February, Jane Hamsher at Firedog lake reported that:

“…people who have been briefed on the administration’s plans indicate that things like raising the retirement age and cutting benefits are under consideration.”

The president then packed the Debt Commission “with members who have an overwhelming history of support for both benefit cuts and privatization of Social Security.”

Among those are the chairman of the commission, Erskine Bowles, who sits on the board at Morgan Stanley, and whose wife sits on the board at JPMorgan Chase. Can you say conflict of interest? Seems to me both those firms stand to benefit handsomely if Wall Street gets its grubby fingers in the Social Security trust fund.

The rules are that the commission recommendation must be approves by 14 of the 18 members:

“There are certainly enough votes on the right to block any significant tax increase proposals. There certainly aren’t enough votes anywhere to propose deep spending cuts in the bloated military budget. The only real question is whether there are five votes — enough to block passage — against cutting social programs, particularly Social Security.”

And in what’s becoming a pattern in this administration, much of the commission’s work is behind closed doors. Openness and transparency, anyone?

Then last Thursday Speaker Pelosi, under the cover of funding for Afghanistan, sneaked in language calling for an up or down vote on the commission’s recommendation, by a lame duck Congress in December.

Now comes this from Crooks and Liars:

“It’s a cynical political strategy almost beyond belief, but it’s becoming obvious that President Obama and the Democratic leaders plan to let the Republicans do what they’ve tried to do since the days of FDR: Cut Social Security.

[…]

When I wrote about this last week, some readers insisted it would “never” happen, and questioned whether there was any logical reason Obama would support benefit cuts. So I talked to a couple of D.C. Social Security activists this week and posed that very question. I was told that Obama’s reelection strategy was based on allowing Social Security cuts to win over independent voters. (Apparently it polls well with the Tea Party crowd.)”

[…]

Now, seriously. How can any intelligent person convince themselves that the Obama administration isn’t backing this? The commission is stacked with deficit hawks; the national deficit is on track to be more fiscally sound if they let the Bush tax cuts expire; and Social Security, which is a tax-transfer program, doesn’t have a damned thing to do with the deficit.”

One solution I don’t see from the Debt Commission—lifting the Social Security earnings cap. According to John Irons of the Economic Policy Institute, “eliminating the cap on taxable earnings would be sufficient to fully close the projected shortfall.”

And it would only affect about 6% of the population. But then again, those are the 6% who sit on these useless (for everyone but the elites) bi-partisan commissions and who write large checks to those in Congress who vote on their recommendations.

With Gregg on Finance Reform Committee Prospects Aren’t Good

08 Tuesday Jun 2010

Posted by in economy, Financial Crisis, financial reform, financial regulation, lobbyists, Politics, special interests, too big to fail, Wall Street

≈ Leave a comment

Tags

, , , , ,

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.

Senate Votes on Financial Regulation Amendments

12 Wednesday May 2010

Posted by in bailout, Congress, Democrats, economy, financial reform, financial regulation, lobbyists, McCain, Politics, Progressives, too big to fail, Wall Street

≈ Leave a comment

Tags

, , , , , , , , , , , , , , ,

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..”

Blankfein Supports Financial Reform?

28 Wednesday Apr 2010

Posted by in economy, financial reform, financial regulation, Goldman Sachs, lobbyists, Politics, special interests, Wall Street

≈ 1 Comment

Tags

, , , , , ,

OK, now I’m suspicious. Goldman CEO Lloyd Blankfein says Wall Street will be the “biggest beneficiary” of financial reform:

“A financial regulatory reform bill has at least one supporter outside of Congressional Democrats, Lloyd Blankfein, the head of investment bank Goldman Sachs. “I’m generally supportive,” Blankfein told the Senate Permanent Subcommittee on Investigations. Wall Street will benefit from the bill because it will make the market safer, Blankfein said.

“The biggest beneficiary of reform is Wall Street itself,” he said.

I think one of the commenters at The Hill has the right analogy. “Oh please don’t throw me in the briar patch, said Br’er Rabbit.”

Or it could be that Blankfein and his fellow banksters are anticipating a favorable return on their investment:

“For the first time since 2004, the biggest Wall Street firms are now giving most of their campaign donations to Republicans.

A Wall Street Journal analysis of 12 large financial services companies, including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. shows that they have collectively made $1.4 million in political donations, with 52% going to Republicans so far this year.”

The “Secret Channel” at Lehman Brothers

13 Tuesday Apr 2010

Posted by in bailout, economy, Financial Crisis, Politics, Wall Street

≈ Leave a comment

Tags

, , , ,

Today’s New York Times has an account of a Lehman Brothers “alter ego” firm, Hudson Castle, part of the “vast financial system that operates in the shadows of Wall Street”:

“It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through Lehman Brothers.

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

“Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.”

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

[…]

And sadly, it’s still going on:

“Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.”

Banksters Up To Their Old Tricks

09 Friday Apr 2010

Posted by in bailout, economy, Financial Crisis, Politics, Wall Street

≈ Leave a comment

Tags

, , , , , , ,

Wall Street is up to its old tricks again, juggling the books to make their levels of debt appear lower at the end of the quarter which….drum roll please….increases their bonuses:

“Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Bank of America and Citigroup are the big names among 18 banks revealed by data from the Federal Reserve Bank of New York to be hiding their risk levels in the past five quarters by lowering the amount of leverage on the balance sheet before making it available to the public, The Wall Street Journal reported.

…There is nothing illegal about the practice, though it means that much of the time investors can have little idea of the risks the any bank is really taking.”

…“You want your leverage to look better at quarter-end than it actually was during the quarter, to suggest that you’re taking less risk,” William Tanona, a former Goldman analyst and current head of U.S. financials research at Collins Stewart, told The Journal.

Some things never change.