Sunday, October 31, 2010

the looting of america

Now Goldman Sachs is giving us another chance. But it would be a monumental error to expect the Administration and Congress to do any heavy lifting. We need to get into gear to show how we feel about the financial travesty called Wall Street. The "Make Wall Street Pay" demonstration organized by AFL-CIO president Rich Trumka on April 29th on Wall Street needs our support.




April 23, 2010



HUFFINGTON POST

Author, "The Looting of America"
April 22, 2010 11:42 PM

WILL THE REAL OBAMA PLEASE STAND UP FOR REFORM?

OR IS HE EVEN CAPABLE OF NOT GOING LIMP WHEN AT THE FEET OF HIS CORPORATE BANKSTERS?


WILL THE REAL OBAMA PLEASE STAND UP FOR REFORM? SIX WAYS TO KNOW IF THE FINANCIAL REFORMS ARE FOR REAL (YOU’RE GUARANTEED THE “BANKSTER REGULATION” WILL NOT BE!)


"Ultimately there is no dividing line between Main Street and Wall Street. We rise or we fall together as one nation. So I urge you to join me," President Obama to Wall Street Executives at Cooper Union, April 22, 2010.
Now, in the wake of the Goldman Sachs lawsuit, is a golden moment for President Obama to rein in Wall Street -- and let the American public know whose side he's really on. But it seems he's working from a flawed theory: "There is no dividing line between Main Street and Wall Street. We are all in this together as one nation." Really?
It's hard to feel warm and cuddly about this togetherness. In March, according to the Bureau of Labor Statistics, the financial sector's unemployment rate was 7.7 percent. For manufacturing workers it was 24.9 percent. No dividing line? Wall Street "earned" $150 billion in bonus money in 2009 (thanks to taxpayer bailout support). Meanwhile over 29 million Americans were out of work or forced into part-time jobs. Rise and fall together?
The entire story of this crisis is about how we are not in this together. For the past three decades we have become more and more a nation divided between the super-rich and the rest of us. In 1970 the ratio of compensation of the top 100 CEOs to the average worker was 45 to one. By 2008 it was a whopping 1,081 to one.
Our tax system also reflects the dividing line. We are now allowing hedge fund honchos to be taxed at rates lower than their secretaries. The top 25 hedge fund managers in 2009 earned as much as 658,000 entry level teachers. But the teachers are too expensive -- they're getting laid off --- due to the crisis caused by Wall Street.
We could overlook President Obama's imagery of togetherness if, in fact, he was taking on the financial industry. Unfortunately, though, the administration's focus has been on "restoring investor confidence" by any means necessary. It started with Obama's first appointments: It's really hard to tell the difference between the Clinton, Bush and Obama administrations' key advisors. Summers, Geithner, Bernanke (with Robert Rubin in the background) would be (or were) at home in any of those administrations. (For a chilling account of this situation, see Bob Kuttner's Presidency in Peril.) It's hard to resist the feeling that the largest financial players (Goldman Sachs, JP Morgan Chase and Citigroup) engineered a financial policy coup d'etat.
But okay, here we are in April 2010, probably on the eve of financial reform. Maybe these money guys have had a change of heart. Maybe, after all we've been through, we'll see some substantive changes.

But how can we tell? Here are five yardsticks for measuring whether the proposed reforms will make a difference:
1. Will the reforms break up financial institutions that are too big to fail? This question seems to be taboo among the key administration officials and Congressional committee chairs. But Senators Sherrod Brown (D-OH) and Ted Kaufman (D-DE) have the right idea by proposing strict size limits on financial institutions. Some economists, like Paul Krugman (and Ben Bernanke), don't think size matters. [No wisecracks, please.] They point to the Great Depression, when thousands of smaller banks went under -- and that was even worse. But they don't want to talk about the other downsides: these gargantuan financial institutions horribly distort "fair market practices" and undermine the political process with their truckloads of cash. Even conservative president Howard Taft understood that we had to bust up the great "trusts" of the early 20th century. Power is even more concentrated right now -- on Wall Street. Unfortunately, the Administration is not likely to support the Brown-Kaufman amendment.
2. Will the reforms prevent banks from speculating with our deposits? Glass-Steagall was a good idea in the 1930s and still is. Right now financial institutions that gamble can stake themselves with our deposits which are insured by the government. That's a very profitable way to play the game, and very risky for the system as a whole. The proposed Volker Rule in the reform bills attempts to recreate some of the strict separation that we need between commercial banking (where our money is) and investment banking (where the hot casino games are). We can be sure an army of bank lobbyists are out to eviscerate anything like Glass Steagall.
3. Will the reforms outlaw "financial weapons of mass destruction"? You know we're in serious trouble when Warren Buffet and George Soros agree with me: We just have to outlaw financial instruments that are too complex to understand, starting with synthetic CDOs. It's absolutely crazy to allow financial institutions to sell the same assets again and again through synthetic products that even financial industry insiders can't parse. These fantasy finance products are precisely what took down the economy. (See the Looting of America for a layperson's explanation.) Unfortunately, the proposed reforms include no such ban. Instead they would either lightly regulate "customized" derivatives (including just about every kind of synthetic CDO) -or not regulate them at all. This will represent a major victory for Wall Street and a major blow for the rest of us.
4. Will the reforms end obscene executive compensation? When cows fly. The proposed legislation gives the idea a half-hearted wave. Some new rules would make it a bit harder for companies to rig the compensation game. Shareholder would be given a bit more say about executive pay. But the only effective way to stop the billion-dollar bonuses is to suck more profit out of the industry in the first place. It should not account for 40 percent of all corporate profits. There are two efficient ways to do that. We can put a financial transaction tax on short term speculative plays and/or we can slap very large windfall profits tax on financial sector compensation. Let's be very honest about this. Wall Street would have earned next to nothing last year had we not bailed them out. And lest we forget, these are the very people who tore a gaping hole in our economy, costing us millions of jobs and trillions of dollars. It's only fair and reasonable to go back to the 90 percent Eisenhower era tax on the150 billion bonus pool on those earning 3 million or more. Will proposals like these be part of the reform package? No.
5. Will the reforms provide a truly independent and powerful Consumer Financial Protection Agency? This one ought to be easy. Even shameless bank lobbyists find it very hard to argue in behalf of predatory lending, usurious interest rates, hidden fees and outright fraud. It's kind of like saying that mortgage brokers have a constitutional right to screw us. But by waving the bloody flag of Big Government (and Protect Financial Innovation), the lobbyists are doing a pretty good job of taming this new agency. For me the test is simple: Will this agency end up in the Federal Reserve? Can you imagine putting such an agency inside a bank? If they pull that off, Bernanke should get the Nobel prize for chutzpah.
6. Will the reforms lead to more jobs for the American people? Perhaps the gravest disconnect between the big Wall Street players and the rest of us concerns our understanding of what a bank is. Most of us think that banks are supposed to invest our savings in solid industries with the best returns. But that's not nearly as profitable for big banks as running an enormous casino for the super-rich. A quick review of Goldman Sachs near-record profits last quarter shows that they made most of their money by trading, not by investing working people's hard-earned money in the real economy. So how are they creating more jobs? Bloomberg just reported:
"Equities-trading revenue rose 18 percent to $2.35 billion from $2 billion a year earlier, Goldman Sachs said. Gains from principal investments, which includes the company's stakes in Industrial & Commercial Bank of China Ltd. as well as real estate and other companies, were $510 million compared with a net loss of $1.41 billion in the first quarter of 2009. Investment-banking revenue climbed 44 percent to $1.18 billion from $823 million last year. ...Compensation and benefits, the firm's biggest expense, increased 17 percent to $5.49 billion in the quarter..." Bloomberg News
Unfortunately, the financial reform bills won't shut down or even significantly regulate this casino.
This is the second chance we've had to get the big job done. The first was when the banks were on their knees begging for taxpayer money in the fall of 2008. We opened up the public trough for Wall Street, but we didn't have the nerve to make access to that trough contingent on meaningful reforms -- reforms that the American public would have gladly supported. Instead Wall Street took our money and used it to reboot their bonuses and hire an army of lobbyists to kill any and all reforms. We missed that moment (and helped spark the Tea Party movement in the process).
Now Goldman Sachs is giving us another chance. But it would be a monumental error to expect the Administration and Congress to do any heavy lifting. We need to get into gear to show how we feel about the financial travesty called Wall Street. The "Make Wall Street Pay" demonstration organized by AFL-CIO president Rich Trumka on April 29th on Wall Street needs our support.

They're hoping for 10,000 protestors. A million would really do the trick. If President Obama wants his financial reforms to pack some punch, he should exhort us all to take the train to Wall Street....and step onboard himself.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.
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You heard the bankster bought president on the senate floor. “I’m not here to punish (the banksters I took big money for and that destroyed the life savings of millions of Americans, loss of millions of jobs, and then sucked the welfare I handed them in no-strings bailouts)”.
IT’S BUSINESS AS USUAL FOR OBAMA’S SELLOUT OF THE AMERICAN PEOPLE.
NEXT IT’S THIS SELLOUT OF THE AMERICAN PEOPLE TO MEXICO! THE OBAMA LA RAZA “THE RACE” AMNESTY or NO ENFORCEMENT!

WSWS.ORG – get on their no ads emails!

Obama reassures Wall Street on bank regulation bill
23 April 2010
President Barack Obama went to lower Manhattan Thursday to deliver a message to Wall Street: Your profits and bonuses will not be disturbed by the regulatory overhaul making its way through Congress.
In a deferential speech pitched to top bankers in the Cooper Union audience, Obama urged what he called the “titans of industry” to call off their lobbyists and “join us” in passing his so-called reform. The subtext was that the White House and congressional Democrats had already removed most of the provisions to which the bankers objected, and were prepared to go even further in accommodating them.
The speech came less than a week after the Securities and Exchange Commission (SEC) indicted Goldman Sachs, the most profitable Wall Street bank, for defrauding its clients in order to cash in on—and encourage—the collapse of the subprime housing market in 2007. Obama did not mention the indictment. Nor did he suggest that what he called a “failure of responsibility” on Wall Street included criminal activities.
Among those in the audience to whom Obama appealed was Lloyd Blankfein, the CEO of Goldman, who attended the event to underscore his contempt and defiance of the SEC.
It was also a week in which the top five banks reported combined profits of more than $15 billion for the first three months of 2010—a huge increase over the previous year.
As the Goldman indictment makes clear, these profits are bound up with rampant fraud that helped crash the financial system--driving millions in the US and around the world into unemployment and poverty—followed by trillions of dollars in taxpayer bailouts and virtually free credit from the Federal Reserve.
Obama took pains to affirm his obeisance to capitalism. “I believe in the power of the free market,” he declared. “I believe in a strong financial sector …” To reassure Wall Street that his financial overhaul would not impose serious restrictions, he said, “We do not have to choose between markets that are unfettered by even modest protections against crisis, or markets that are stymied by onerous rules that suppress enterprise and innovation.”
There was no suggestion that a single banker or trader should be held accountable for the social catastrophe he helped create. Yet less than two months ago, addressing the US Chamber of Commerce, Obama hailed the mass firing of teachers in an impoverished school district in Rhode Island as a positive educational “reform” measure. “There’s got to be a sense of accountability,” Obama said.
With complete cynicism, Obama and congressional Democrats, with the assistance of the media, are presenting their regulatory proposals as a sweeping reform comparable to the banking measures implemented by the Roosevelt administration in the Great Depression.
In reality, the Senate measure, like the bill passed last December by the House of Representatives, proposes certain marginal changes in the way government agencies monitor financial firms, but does nothing to reverse the deregulation of banking carried out over the past three decades, which dismantled the restrictions imposed during the 1930s. It introduces no structural reforms to limit, let alone ban, the speculative practices that have become central to the accumulation of profit and personal wealth by the American ruling class.
Obama and the congressional Democrats have rejected capping executive pay or banning credit default swaps, collateralized debt obligations, structured investment vehicles and other exotic forms of speculation that played a major role in the financial crash and global recession. Provisions to regulate derivatives markets, a major source of profits for the top Wall Street banks, are loaded with loopholes and exemptions. A financial consumer protection body will have no power over 98 percent of banks or any car dealerships, and will be subject to a Federal Reserve veto.
The most important innovation in the House and Senate bills is the establishment of a procedure for the government to wind down large financial firms, including insurance companies and other non-bank entities, whose failure could trigger a systemic collapse. This is being billed as an end to “too-big-to-fail” financial companies and a guarantee against future taxpayer-funded bailouts.
It is nothing of the kind. The proposal would institutionalize government rescue operations to protect the interests of bank executives, shareholders and creditors and the wealth of the financial elite as a whole, ultimately at public expense. It is designed to keep the banking system in private hands while preparing for the inevitable consequences of allowing the banks and big investors to continue “business as usual,” i.e., another financial crisis on the order of the crash of 2008.
In his speech on Thursday, Obama declared that “a vote for reform is a vote to put a stop to taxpayer-funded bailouts.” This is a lie. The administration-backed bill passed by the House would give the Federal Deposit Insurance Corporation, with the consent of the treasury secretary and the Federal Reserve, the power to “extend credit or guarantee obligations … to prevent financial instability during times of severe economic distress.” This amounts to a blank check to use taxpayer funds for future bailouts.
Obama has continued Bush administration policies that, far from reining in Wall Street, have strengthened the power of the biggest financial firms. The share of all banking industry assets held by the top 10 banks rose to 58 percent in 2009, from 44 percent in 2000 and 24 percent in 1990.
Nothing other than a license for Wall Street to continue stealing from the American people could possibly emerge from a political system dominated by an all-powerful financial aristocracy and awash in corruption and bribery. The financial industry has to date spent $455 million to lobby Congress on the financial overhaul.
The securities and investment industry has thus far handed out $34 million for the 2010 election cycle. Goldman Sachs is the second biggest corporate donor to political campaigns, after AT&T. Since 1989, the bank’s political action committee and employees have given $31.6 million in campaign contributions, two-thirds of the total to Democratic candidates.
The financial industry funded Obama’s presidential election campaign to the amount of $15 million. Goldman was Obama’s single biggest donor, giving nearly $1 million.
One indication of the ties between Wall Street and the White House: Gregg Craig, who until January was Obama’s White House counsel, has been hired by Goldman Sachs to defend the firm against the SEC indictment.
Barry Grey
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THE PUSSY PRESIDENT! HE KNOWS TO GO LIMP WHEN HIS WALL STREET PAYMASTERS POINT TO THE GROUND!

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April 23, 2010
OP-ED COLUMNIST
Don’t Cry for Wall Street
By PAUL KRUGMAN
On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”
Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.
More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.
Now, the reforms currently on the table — which I support — might end up being good for the financial industry as well as for the rest of us. But that’s because they only deal with part of the problem: they would make finance safer, but they might not make it smaller.
What’s the matter with finance? Start with the fact that the modern financial industry generates huge profits and paychecks, yet delivers few tangible benefits.
Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.
These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.
So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was.
And what about the much-touted benefits of financial innovation? I’m with the economists Andrei Shleifer and Robert Vishny, who argue in a recent paper that a lot of that innovation was about creating the illusion of safety, providing investors with “false substitutes” for old-fashioned assets like bank deposits. Eventually the illusion failed — and the result was a disastrous financial crisis.
In his Thursday speech, by the way, Mr. Obama insisted — twice — that financial reform won’t stifle innovation. Too bad.
And here’s the thing: after taking a big hit in the immediate aftermath of the crisis, financial-industry profits are soaring again. It seems all too likely that the industry will soon go back to playing the same games that got us into this mess in the first place.
So what should be done? As I said, I support the reform proposals of the Obama administration and its Congressional allies. Among other things, it would be a shame to see the antireform campaign by Republican leaders — a campaign marked by breathtaking dishonesty and hypocrisy — succeed.
But these reforms should be only the first step. We also need to cut finance down to size.
And it’s not just critical outsiders saying this (not that there’s anything wrong with critical outsiders, who have been much more right than supposedly knowledgeable insiders; see Greenspan, Alan). An intriguing proposal is about to be unveiled from, of all places, the International Monetary Fund. In a leaked paper prepared for a meeting this weekend, the fund calls for a Financial Activity Tax — yes, FAT — levied on financial-industry profits and remuneration.
Such a tax, the fund argues, could “mitigate excessive risk-taking.” It could also “tend to reduce the size of the financial sector,” which the fund presents as a good thing.
Now, the I.M.F. proposal is actually quite mild. Nonetheless, if it moves toward reality, Wall Street will howl.
But the fact is that we’ve been devoting far too large a share of our wealth, far too much of the nation’s talent, to the business of devising and peddling complex financial schemes — schemes that have a tendency to blow up the economy. Ending this state of affairs will hurt the financial industry. So?

WHO WANTS TO BET THAT WHEN BANKSTER BOY DODD GETS HIS BANKSTER ASS KICKED OUT, HE GOES AND WORKS AS A LOBBYIST FOR THE BANKSTER FUCKERS?
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WHAT DID THE BANKSTERS KNOW ABOUT OUR ACTOR OBAMA THAT WE DIDN’T KNOW?
Records show that four out of Obama's top five contributors are employees of financial industry giants - Goldman Sachs ($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207) and Citigroup ($358,054).
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OBAMA’S CON JOB ON REGULATION WILL NOT IMPACT HIS LARGEST BANKSTER DONORS! WHO’D OF THOUGHT???

“Obama's rhetoric covered the whole financial industry, but the key changes will affect only a few high-profile players, including JPMorgan Chase & Co., while sparing investment banks like Goldman Sachs Group Inc.”
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Lou Dobbs Tonight
Thursday, July 9, 2009
And Harvard economics professor JEFFREY MIRON will weigh in on the state of the U.S. economy—and why the only plausible argument for bailing out banks crumbles on close examination.
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"There is a populist and conservative revolt against Wall Street and financial elites, Congress and government," Democratic pollster Stanley Greenberg warned in an analysis this week. "Democrats and President Obama are seen as more interested in bailing out Wall Street than helping Main Street."

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Lou Dobbs Tonight
Monday, November 12, 2007

Mortgage giants Wells Fargo and Countrywide Financial are accused of slapping dubious fees on homeowners struggling to save their homes. With fewer new mortgages being written, these
companies appear to be leaning on these lucrative fees to stay profitable—with devastating consequences for homeowners. We’ll have that report.
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After several weeks of strong showings in the media, President Barack Obama appears to have committed political suicide in an interview with Bloomberg focusing on bank bonuses. Just as bad, Obama's statements praising bailout barons and downplaying their bloated bonuses amount to outright economic insanity. Obama says he doesn't have a problem with bonuses at Goldman Sachs and JPMorgan. He's going to have a big problem at the polls in November. – Zach

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