Tuesday, July 31, 2012

Ex-TARP overseer denounces US government cover-up of Wall Street Crimes - OBAMA, Geithner and their CRIMINAL BANKSTER PAYMASTERS AT WORK

Ex-TARP overseer denounces US government cover-up of Wall Street crimes

DURING OBAMA'S FIRST TWO YEARS ALONE, HIS CRIMINAL BANKSTERS' PROFITS and CRIMES SOARED GREATER THAN ALL 8 UNDER BUSH!

NOT ONE BANKSTER PROSECUTED! HOLDER IS TOO BUSY KISSING UP TO LA RAZA AND SABOTAGING STATES RIGHTS TO IMPOSE IDS ON ILLEGALS VOTING!


THE REASON OBAMA BROUGHT ON BUSH'S ARCHITECT FOR BANKSTER WRITTEN BAILOUTS TIM GEITHNER, WAS TO ASSURE HIS BANKS IT WOULD BE BUSINESS AS USUAL FOR WALL STREET BANKS... AND IT HAS BEEN!

Neil Barofsky, the former inspector general for the $700 billion US bank bailout program, has in recent days denounced Treasury Secretary Timothy Geithner and the Obama administration for covering up criminal activity by major banks.

Ex-TARP overseer denounces US government cover-up of Wall Street crimes

31 July 2012
In interviews prompted by the publication of his new book (Bailout) on the $700 billion US bank bailout scheme—the Troubled Asset Relief Program (TARP)—the former special inspector general for the program, Neil Barofsky, has denounced bank regulators and top officials in the Bush and Obama administrations for covering up Wall Street criminality both before and after the financial crash of September 2008.
In an interview last Thursday with the Daily Ticker blog, Barofsky accused Treasury Secretary Timothy Geithner of facilitating the banks’ manipulation of Libor, the global benchmark interest rate, when he was president of the Federal Reserve Bank of New York in 2007-2008, prior to his joining the Obama administration. Recently published documents show that as early as 2007, Geithner knew that London-based Barclays Bank was submitting false information to the Libor board to conceal its financial weakness.
Geithner merely wrote to the Bank of England suggesting certain changes in the Libor rate-setting mechanism, but made no public statement and failed to notify regulators at the US Justice Department, the Commodity Futures Trading Commission and the Securities and Exchange Commission, even though major US banks were alleged to be involved in the rate-rigging fraud.
In his interview, Barofsky rejected Geithner’s claims to have acted appropriately. Calling the Libor scandal a “global conspiracy to fix one of the most important interest rates in the world,” the former TARP inspector general said, “[Geithner] heard this information and looked the other way. Geithner and other regulators should be held accountable, they should be fired across the board. If they knew about an ongoing fraud, and they didn’t do anything about it, they don’t deserve to have their jobs. I hope to see people in handcuffs.”
In the same interview and others given over the past week, Barofsky has spoken in scathing terms of the domination of Washington by Wall Street and the subservience of both major parties to the financial elite. “It was shocking,” he told the Daily Ticker, “how much control the big banks had over their own bailout and how they often would dictate terms of some of the TARP programs and the overwhelming deference shown by Treasury officials to the banks. I saw no differences in these core issues between the Bush and Obama administrations.”
In an interview with CBS News’ Charlie Rose on July 23, Barofsky referred to key elements of his account of TARP, including the lack of any restrictions on the banks’ use of bailout funds and the fact that they were not even required to tell the government what they were doing with the taxpayer money that had been handed to them.
“When I got to Washington,” he said, “I saw that it had been hijacked by a small group of very powerful Wall Street banks... It’s not Democratic, it’s not Republican, it’s across political barriers… [Geithner] oversaw a policy that saw our largest banks, the too-big-to-fail institutions, get bigger than ever and more powerful, more politically connected.”
In his book, Barofsky derides the cynicism of the claims made when President Bush, candidate Obama and congressional leaders of both parties were seeking to ram through the TARP law over massive popular opposition that the bailout would benefit Main Street as well as Wall Street. He notes, for instance, that the government’s mortgage modification program—billed as a means to help millions of homeowners—has disbursed only $3 billion out of the $50 billion set aside for it.
Barofsky, who served as the Treasury Department’s special inspector general for TARP until his resignation last February, is well placed to document the collusion of the government with the banks. He issued numerous reports while in his TARP post exposing the lack of any real government oversight over the taxpayer money funneled to the banks, as well as decisions ensuring that Wall Street firms such as Goldman Sachs recouped tens of billions of dollars in potential losses at the public’s expense.
Deprived of any enforcement powers under the TARP law drafted by Wall Street lawyers and ratified by Congress, Barofsky was simply ignored by Geithner and the Obama administration and his reports were largely buried by the media.
Barofsky’s book has received a similar response from the media, as did reports issued last year by the Financial Crisis Inquiry Commission and the Senate Permanent Subcommittee on Investigations documenting in detail fraudulent and illegal activities by the banks in the lead-up to the financial crash of 2008.
Four years after the crisis precipitated by the banks, not a single top banker has been prosecuted, let alone convicted. Meanwhile, the same bankers, and the government officials who shielded them and ensured that they grew even richer, are demanding that American workers accept the “new normal” of wages at $13 or less, along with the destruction of pensions, health care and working conditions.
For all of his exposures, Barofsky, a Democrat, fails to draw the requisite conclusions, suggesting that popular rage can “sow the seeds for the types of reform that will one day break our system free from the corrupting grasp of the megabucks.”
The criminality of the financial system and the complicity of all of the official institutions are not, however, mere aberrations or blemishes on an otherwise healthy system. They are expressions of the putrefaction and failure of the capitalist system itself. Its mortal crisis is reflected above all in the ever-greater scale of social inequality.
There is no way to break the power of the financial oligarchy outside of a mass working class movement armed with a socialist program, including the seizure of the ill-gotten wealth of the financial mafia and the nationalization of the banks and major corporations under the democratic control of the working population.
Andre Damon and Barry Grey
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October 10, 2009
Talking Business
Have Banks No Shame? No, they have obama!
A few months ago, I asked Simon Johnson, the former International Monetary Fund economist, now a prominent critic of the banking industry, what he thought the banks owed the country after all the government bailouts.
“They can’t pay what they owe!” he began angrily. Then he paused, collected his thoughts and started over: “Tim Geithner saved them on terms extremely favorable to the banks. They should support all of his proposed reforms.”
Mr. Johnson continued, “What gets me is that the banks have continued to oppose consumer protection. How can they be opposed to consumer protection as defined by a man who is the most favorable Treasury secretary they have had in a generation? If he has decided that this is what they need, what moral right do they have to oppose it? It is unconscionable.”
I couldn’t have said it better myself.
Starting on Wednesday, the House Financial Services Committee will take up a number of reforms proposed by the Obama administration, hoping to push them through the committee so they can be voted on the House floor as part of a larger financial reform package. Among the proposals the committee will tackle is, yes, the establishment of a new consumer financial protection agency.
The administration’s outline for this new agency — which would regulate mortgages, credit cards, debit cards, installment loans and any other product issued by a financial institution — was sent up to Capitol Hill in July. Since then, Barney Frank, the committee chairman, has made a number of substantial changes, none of which, I have to say, have strengthened the proposed legislation. He stripped the bill of the much-promoted “plain vanilla” provision, which would have forced, say, mortgage brokers to offer customers a 30-year fixed mortgage alongside any exotic option A.R.M. mortgage they wanted to push.
He has changed the nature of an oversight panel, so that it would consist of the top bank regulators — the very same regulators who did such a miserable job looking out for consumers during the housing bubble. He has tinkered with the way the agency will be financed, making it less onerous for the banking industry and more onerous for nonbank financial institutions that will come under the agency’s purview.
Saddest of all — at least from where I’m sitting — he abandoned the so-called reasonableness standard, which would have forced bankers to make sure their customers both understood the products they were buying and could afford them. Mr. Frank has said that such a provision would put bankers in an “untenable position.” Yet that is precisely what brokers are required to do when they sell a stock or a bond to their customers. Why shouldn’t the same standard apply to a banker making a mortgage loan?
Part of the reason Mr. Frank made those changes is that he needs the support of conservative Democrats if he hopes to turn this bill into law. But it is also because he felt a need to mollify, at least to some extent, the bank lobby, especially the community bankers who populate every Congressional district in the country. Indeed, in a recent missive to its members, the American Bankers Association trumpeted its success in helping make the bill more palatable to the banking industry.
Yet even now, despite its success in reining in the proposed agency, the banking industry is still lobbying fiercely against it. Edward L. Yingling, the president of A.B.A., borrowed a line from “Casablanca” to describe the impulse behind the proposed consumer agency. “They’re rounding up the usual suspects,” he complained to me the other day. “We’re the usual suspects.”
Not long ago, the A.B.A. sent an “action alert” to its member banks, pleading with them to call their congressman in a last-ditch effort to stop the bill. (“Passing more laws that will overly complicate and restrict the products our customers need is detrimental to our banks,” the note read in part.) And even if the bill does pass, the industry is hoping to pervert its purpose, so that it will become a means to stifle competition from nonbank financial institutions.
To which one can only ask: Have they no shame?
“There needs to be more focus on consumers,” Mr. Yingling insisted. “We agree with that.”
Whenever you talk to bankers or their lobbyists about the proposed agency, you hear some variation of what I’ve come to think of as the party line. It’s not that they’re against consumer protection, they say. (Heaven forbid!) Rather, they say, this new agency — larded as it will surely be with thousands of newly deputized bureaucrats, each one eager to impose burdensome new regulations — is simply not the way to go about it.
The current bank regulators, they point out correctly, already have consumer protection as part of their portfolios. “All they need to do is enforce the regulations already on the books,” one top banker told me recently. (Like all top bankers these days, he would speak only anonymously, fearing the wrath of the Treasury.)
What’s more — and this is the part that is really unbelievable — they insist that bankers weren’t the cause of the financial crisis. The entities that were peddling all those awful subprime mortgages were the nonbanks — the mortgage originators and mortgage brokers — who were almost entirely unregulated. “We have no objection to them regulating the nonregulated firms,” said Camden R. Fine, the president of the Independent Community Bankers of America.
Well, of course, he doesn’t. If the bankers can persuade Congress to change this agency’s mission so that it only regulates the nonbanks — something they are trying to do, and which Mr. Frank insists will not be successful — they will have succeeded in putting sand in the engine of their nonbank competitors.
In fact, nonbank financial institutions do need to be regulated; they weren’t exactly the good guys during the housing bubble. But neither were the bankers, something they’ve conveniently forgotten.
Who do you think was creating all those subprime mortgages that the brokers and originators were peddling? The banks, that’s who. I’ve had mortgage brokers tell me how bank salespeople put enormous pressure on them to ratchet up their sales of, say, option A.R.M., no-doc mortgages —mortgages the banks were offering, through the brokers — so they could make the loans and then bundle them to Wall Street for a hefty fee. Bankers were every bit as complicit in pushing mortgages on customers who lacked the means to pay them back.
Even now, banks are engaged in practices that are, at best, dubious, and at worst deceptive. How about, for instance, those rapacious debit card overdraft fees? My colleagues Ron Lieber and Andrew Martin have pointed out in recent articles that a decade ago, such fees barely existed; instead, the card was routinely rejected when a consumer tried to make a purchase with an empty bank account. Now, whether customers want overdraft protection or not, most banks cover the purchase and charge an absurdly high fee for the “privilege.”
No one can doubt that these fees hurt the very people who can least afford to pay them. (If you have college-age children, as I do, you know this firsthand.) But none of the regulators who are now supposed to be looking out for consumers were the least bit concerned. Only after the articles exposing these practices ran on the front page of The New York Times did several banks agree to abandon the fees for small overdrafts. But should it really require newspaper exposés to get banks to do the right thing?
Alas, without a consumer agency, that is pretty much what it takes. The real reason current regulators don’t pay more attention to consumer problems is not that they are evil (well, mostly they’re not), but that they have another mission that takes priority. They are charged with insuring the safety and soundness of the banking system. And safety and soundness means making sure that banks have enough capital — and are compensating for loan losses. When a bank decides to raise a customer’s credit card interest rate to 35 percent to make up for losses elsewhere in the credit card portfolio, that believe it or not, is a good thing from the perspective of safety and soundness. Even though it is a terrible thing for consumers.
Which is also why the bankers’ line about having their current regulators look out for consumers is so bogus. At the Federal Reserve, consumers will never come first; Alan Greenspan had the power to curb abusive subprime loans, but he just wasn’t interested. Nor is it any different over at the Office of the Comptroller of the Currency, the nation’s other big bank regulator. Not long ago, John C. Dugan, the comptroller, gave a speech in which he said — channeling Mr. Yingling — that the banks had not been responsible for the financial crisis. Regulators who take their talking points from the American Bankers Association don’t exactly inspire confidence that they’re looking out for consumers.
A consumer protection agency, on the other hand, wouldn’t have that dual mission; its sole goal would be to try to keep bank — and nonbank — customers from being gouged, deceived or otherwise taken advantage of. Without question, it would occasionally come into conflict with the safety and soundness regulators. But that is why that oversight panel exists: to hash out such conflicts.
There are those who believe that Mr. Frank’s changes have essentially gutted the bill. John Taylor, the chief executive of the National Community Reinvestment Coalition, told me that he now opposed the bill because it had been so watered down.
But most others still think it is a strong bill. Michael Calhoun, the president of the Center for Responsible Lending, called it “a reasonably strong bill,” despite the changes. And although I was worried at first when I saw provisions like plain vanilla and the reasonableness standard falling by the wayside, I’m now convinced that the new agency, as currently conceived, can still do a lot of good. It will have the authority to outlaw unfair products, and to force financial institutions treat their customers like, well, customers — and not lambs to be slaughtered.
Who could possibly be against that? Oh, right. The bankers are against it. And just a few days ago, The Wall Street Journal editorial page, that knee-jerk defender of corporate interests, came out against it as well.
That clinches it for me. The sooner we can pass the thing, the better.

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