DURING OBAMA’S FIRST TWO YEARS ALONE, PROFITS FOR HIS CRIMINAL
BANKSTER DONORS HAVE SOARED GREATER THAN 8 YEARS UNDER BUSH!
OBAMA HAS TAKEN MORE LOOT FROM THE BANKSTERS THAN ANY
PRESIDENT IN HISTORY.
HE PROMISED HIS BANKSTER CRONIES NO JAIL TIME, NO-STRINGS
BAILOUT WELFARE AND NO PRISON TIME.
HAS HE DELIVERED?
BANKSTER PROFITS AND CRIMES ARE SOARING… SO ARE
FORECLOSURES!
The JPMorgan scandal also throws into
relief the government’s failure to prosecute those responsible for the 2008
financial meltdown. Despite overwhelming evidence of wrongdoing and criminality
uncovered by two federal investigations last year, those responsible have been
shielded from prosecution.
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).
*
Meanwhile,
an investigation into the mortgage abuses that led to the financial crisis,
promised by President Obama in January, has been slow to produce results.
September 1, 2012
Still No Justice for Mortgage Abuses
It has been six months since the big banks
settled with state and federal officials over evidence of widespread
foreclosure fraud, promising to provide $25 billion in mortgage relief in
exchange for not being sued over past foreclosure abuses.
At the time, it looked like a sweet deal for
the banks. The fines were paltry compared with the damage done to homeowners
and the economy. And much of the relief the banks were obliged to provide could
be met by continuing more or less with business as usual.
It still looks like a sweet deal.
The Office of Mortgage Settlement Oversight, the
monitor of the settlement, released a preliminary report last week showing that
138,000 homeowners had received some form of relief from March 1 through June
30. That is roughly the number that would have been expected under various aid
programs in effect before the settlement. Worse, with some three million
borrowers now in or near foreclosure, according to Moody’s Analytics, it is
nowhere near the level of relief needed to fix the housing market.
The type of relief provided — mostly short
sales, in which a bank allows a homeowner to sell for less than is owed on the
mortgage — had become increasingly common before the settlement.
Short sales are better than foreclosures, in
part because they prevent vacancies that depress house values. But they are not
punishment for wrongdoing in any meaningful sense; rather, they allow banks to
get higher prices for underwater properties than they could have gotten in
foreclosure sales.
Nor do they fulfill the settlement’s main
purpose: to keep underwater borrowers in their homes by reducing the principal
on their mortgage loans. According to the monitor’s report, $8.7 billion of
debt has been written off in short sales versus only $750 million of principal
reduction from loan modifications.
The settlement was not, of course, intended as a
cure for the housing bust. And future progress reports will no doubt show many
more homeowners receiving big loan modifications. But, based on the banks’
performance so far, it also seems likely they will be able to structure the
required relief in ways designed to tidy up their balance sheets, rather than
to save as many homes as possible.
Even the relief that is provided may turn out to
be less than meets the eye. That’s because much of the debt forgiven in short
sales and loan modifications will be counted as taxable income to the
borrowers, creating huge tax bills they will not be able to pay.
Mortgage debt that is forgiven is exempt from
taxation under current law, but only if the debt was used to buy or improve the
house. The law does not exempt debt forgiven on many home equity loans, even
though the foreclosure settlement envisions billions of dollars in
modifications to such loans.
Several bills in Congress call for extending the
law, which is set to expire at the end of the year. But what is obviously
needed is a broader law shielding all forgiven mortgage debt from tax.
Meanwhile, an investigation into the mortgage
abuses that led to the financial crisis, promised by President Obama in
January, has been slow to produce results. The settlement left open the possibility of civil and criminal
suits on mortgage securitizations and other practices that inflated the bubble.
The aim is to produce deeper accountability and larger fines with which to
provide even more mortgage relief, but no suits have yet been filed.
The economy will not recover and justice will
not be done unless and until the mortgage mess is resolved.
*
NO PRESIDENT IN HISTORY HAS TAKEN MORE LOOT FROM CRIMINAL
BANKSTERS THAN BARACK OBAMA! WHILE HIS DOJ IS OUT HARASSING LEGALS ON BEHALF OF
OBAMA’S LA RAZA PARTY BASE OF ILLEGALS, THE BANKSTER GO UNPUNISHED!
DURING OBAMA’S FIRST TWO YEARS ALONE, HIS CRIMINAL
BANKSTERS’ PROFITS SOARED GREATER THAN ALL EIGHT UNDER BUSH!
BANKSTERS’ PROFITS AND CRIMES ARE SOARING… so are
foreclosures!
OBAMA and HIS CRIMINAL BANKSTERS – THE
LOOTING OF A NATION CONTINUES!
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).
Consider the Obama
administration's choices for the four most important positions in financial
sector law enforcement. The attorney general (Eric Holder) and the head of the
Justice Department's criminal division (Lanny Breuer) both come to us from Covington &
Burling, a law firm that
represents and lobbies for most of the major banks and their industry
associations; indeed Breuer was co-head of its white collar criminal defense
practice, and represented the Moody's rating agency in the Enron case. Mary
Schapiro, the head of the SEC, spent the housing bubble in charge of FINRA, the
investment banking industry's "self-regulator," which gave her a $9 million severance for a job well done. And her head of
enforcement, perhaps most stunningly of all, is Robert Khuzami, who was general counsel for Deutsche Bank's North American
business during the entire bubble. So zero prosecutions isn't much of a
surprise, really.
Banking Is a Criminal Industry Because Its Crimes Go
Unpunished
Posted: 07/16/2012 8:23 am
Consider just this
month's news in financial services.
First,
Barclay's has been manipulating the Libor, the main interest rate upon which
most other interest rates and financial transactions are based, since 2005.
Moreover, Barclay's traders were colluding with traders in many other banks to
assist them in manipulating the Libor too, so that they could all profit from
their bets on it.
Second,
JP Morgan Chase is having a really great month. Recent reports describe how it
is resisting Federal subpoenas related to
price-fixing in U.S. electricity markets. It is also accused (by former
employees among others) of deliberately inflating the performance of its
investment funds to obtain business. And finally, JP Morgan's failed "London
whale"
trade, which has now cost over $5 billion, is being investigated to determine
whether the loss was initially concealed from regulators and the public.
Third,
HSBC is paying a fine because it allowed hundreds of
millions, perhaps billions, of dollars of money laundering by rogue states and
sanctioned firms, including some related to terrorist activities and Iran's
nuclear efforts. But HSBC is only one of at least 12 banks now known to have
tolerated, and in some cases aggressively courted, money laundering by rogue
states, terrorist organizations, corrupt dictators, and major drug cartels over
the last decade. Others include Barclay's, Lloyds, Credit Suisse, and Wachovia
(now part of Wells Fargo). Several of the banks created special handbooks on
how to evade surveillance, created special business units to handle money
laundering, and actively suppressed whistleblowers who warned of drug cartel
activities.
Fourth,
a new private lawsuit cites documents indicating that Morgan Stanley
successfully pressured rating agencies into inflating the ratings of
mortgage-backed securities it issued during the housing bubble.
Fifth,
Visa and Mastercard have just agreed
to pay
$7 billion to settle a private antitrust case filed by thousands of merchants,
who alleged that Visa and Mastercard colluded to fix fees and terms of service.
Just
another month in financial services. Is it unusual? No, it's not. If we go back
just a little further, we have UBS, HSBC, Julius Baer, and other banks actively
marketing tax evasion services to wealthy U.S. and European citizens. We have
senior executives of several banks (including JP Morgan Chase and UBS) strongly
suspecting that Bernard Madoff was running a Ponzi scheme, but deciding to make
money from him rather than turn him in. And then, of course, we have the
financial crisis and everything that led to it. As I show in great detail in my
book Predator
Nation,
we now possess overwhelming evidence of massive securities fraud, accounting
fraud, perjury, and criminal Sarbanes-Oxley violations by mortgage lenders,
investment banks, and credit insurers (including senior executives of
Countrywide, Citigroup, Morgan Stanley, Goldman Sachs, Bear Stearns, AIG, and
Lehman Brothers) during the housing bubble that caused the financial crisis. If
we go back to the late 1990s, we have the massively fraudulent hyping of
Internet stocks, and several banks (including Merrill Lynch and Citigroup)
actively aiding Enron in committing its frauds.
So,
July 2012 really isn't abnormal at all. The reason for this is very simple.
Over the past two decades, the financial services industry has become a
pervasively unethical and highly criminal industry, with massive fraud
tolerated or even encouraged by senior management. But how did that happen?
Well,
deregulation helped, of course. But something else was far more important. It
is the one critical factor that unites all of the episodes cited above,
including those of this month. This critical unifying factor is the total
number of criminal prosecutions of major firms and senior executives as a
result of all of these crimes combined.
And
what is that number?
Zero.
Literally zero. A
number that neither President Obama nor Mitt Romney shows the slightest
interest in changing.
Consider the Obama
administration's choices for the four most important positions in financial
sector law enforcement. The attorney general (Eric Holder) and the head of the
Justice Department's criminal division (Lanny Breuer) both come to us from Covington &
Burling, a law firm that
represents and lobbies for most of the major banks and their industry
associations; indeed Breuer was co-head of its white collar criminal defense
practice, and represented the Moody's rating agency in the Enron case. Mary
Schapiro, the head of the SEC, spent the housing bubble in charge of FINRA, the
investment banking industry's "self-regulator," which gave her a $9 million severance for a job well done. And her head of
enforcement, perhaps most stunningly of all, is Robert Khuzami, who was general counsel for Deutsche Bank's North American
business during the entire bubble. So zero prosecutions isn't much of a
surprise, really.
In
contrast, what do you think would happen to you if, as a lone individual, you
were caught supporting Iran's nuclear program? Do you think that you would get
off with a "deferred prosecution agreement" and a fine equal to a few
percent of your annual salary? No?
But
that's because you don't live right. You probably haven't been to the White
House a dozen times since President Obama took office, or attended White House
state dinners, like Lloyd Blankfein has. Nor have you probably overseen millions
of dollars in lobbying and campaign donations, or hired senior administration
officials, or sent your executives into the government in senior regulatory
positions, or paid $135,000 for a speech by someone who later became chairman
of the National Economic Council. And, well, you get the law enforcement that
you pay for.
Charles Ferguson is
the author of Predator Nation:
Corporate Criminals, Political Corruption, and the Hijacking of America.
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
The authors also recommend:
JPMorgan scandal: The tip of the iceberg
[17 July 2012]
[17 July 2012]
Libor scandal exposes banks’ rigging of global rates
[6 July 2012]
[6 July 2012]
THERE’S NO ONE IN AMERICAN HISTORY THAT HAS WORKED FOR
CRIMINAL BANKSTERS MORE THAN BARACK OBAMA! THERE’S NO ONE THAT HAS TAKEN MORE
MONEY FROM BANKSTERS THAN OBAMA.
DURING IS FIRST 2 YEARS IN OFFICE, BANKSTERS MADE MORE THAN
ALL 8 UNDER BUSH! AND NOT ONE HAS BEEN PROSECUTED!
Predator Nation: Corporate Criminals, Political Corruption,
and the Hijacking of America [Hardcover]
BY CHARLES H. FERGUSON
Book Description
Publication Date: May 22,
2012
Charles
H. Ferguson, who electrified the world with his Oscar-winning documentary Inside
Job, now explains how a predator elite took over the country, step by
step, and he exposes the networks of academic, financial, and political
influence, in all recent administrations, that prepared the predators’
path to conquest.
Over the last several decades, the United States has undergone one of the most radical social and economic transformations in its history.
· Finance has become America’s dominant industry, while manufacturing, even for high technology industries, has nearly disappeared.
· The financial sector has become increasingly criminalized, with the widespread fraud that caused the housing bubble going completely unpunished.
· Federal tax collections as a share of GDP are at their lowest level in sixty years, with the wealthy and highly profitable corporations enjoying the greatest tax reductions.
· Most shockingly, the United States, so long the beacon of opportunity for the ambitious poor, has become one of the world’s most unequal and unfair societies.
If you’re smart and a hard worker, but your parents aren’t rich, you’re now better off being born in Munich, Germany or in Singapore than in Cleveland, Ohio or New York.
This radical shift did not happen by accident.
Ferguson shows how, since the Reagan administration in the 1980s, both major political parties have become captives of the moneyed elite. It was the Clinton administration that dismantled the regulatory controls that protected the average citizen from avaricious financiers. It was the Bush team that destroyed the federal revenue base with its grotesquely skewed tax cuts for the rich. And it is the Obama White House that has allowed financial criminals to continue to operate unchecked, even after supposed “reforms” installed after the collapse of 2008.
Predator Nation reveals how once-revered figures like Alan Greenspan and Larry Summers became mere courtiers to the elite. Based on many newly released court filings, it details the extent of the crimes—there is no other word—committed in the frenzied chase for wealth that caused the financial crisis. And, finally, it lays out a plan of action for how we might take back our country and the American dream.
Over the last several decades, the United States has undergone one of the most radical social and economic transformations in its history.
· Finance has become America’s dominant industry, while manufacturing, even for high technology industries, has nearly disappeared.
· The financial sector has become increasingly criminalized, with the widespread fraud that caused the housing bubble going completely unpunished.
· Federal tax collections as a share of GDP are at their lowest level in sixty years, with the wealthy and highly profitable corporations enjoying the greatest tax reductions.
· Most shockingly, the United States, so long the beacon of opportunity for the ambitious poor, has become one of the world’s most unequal and unfair societies.
If you’re smart and a hard worker, but your parents aren’t rich, you’re now better off being born in Munich, Germany or in Singapore than in Cleveland, Ohio or New York.
This radical shift did not happen by accident.
Ferguson shows how, since the Reagan administration in the 1980s, both major political parties have become captives of the moneyed elite. It was the Clinton administration that dismantled the regulatory controls that protected the average citizen from avaricious financiers. It was the Bush team that destroyed the federal revenue base with its grotesquely skewed tax cuts for the rich. And it is the Obama White House that has allowed financial criminals to continue to operate unchecked, even after supposed “reforms” installed after the collapse of 2008.
Predator Nation reveals how once-revered figures like Alan Greenspan and Larry Summers became mere courtiers to the elite. Based on many newly released court filings, it details the extent of the crimes—there is no other word—committed in the frenzied chase for wealth that caused the financial crisis. And, finally, it lays out a plan of action for how we might take back our country and the American dream.
Guest
Reviewer: Simon Johnson on Predator Nation by Charles H. Ferguson
Simon
Johnson is coauthor of 13 Bankers: The Wall Street Takeover and the
Next Financial Meltdown and White House Burning: The Founding Fathers,
Our National Debt, and Why It Matters To You.
Predator Nation demolishes the view that the global financial
crisis was merely some sort of freak accident. Charles Ferguson makes a
convincing case that the world’s banking system was brought to the brink of
complete collapse in 2008–09 by a virulent combination of unchecked greed and
criminal behavior.
This is an epic crime story with an apparently clean getaway,
courtesy of the George W. Bush and Barack Obama administrations. Both
presidents proved unwilling to hold anyone to account—or even to launch
meaningful investigations.
Leading bankers walked away with billions of dollars in
unjustified compensation. The costs imposed on the rest of us can be measured
in the trillions of dollars.
Predator Nation provides a roadmap for prosecution,
systematically covering the banks involved, the names of culpable executives,
the obvious crimes, the precise laws broken, and the evidence hiding in plain
sight. No doubt it will be widely ignored by our legal officials.
Ferguson’s points are also intensely political. Reckless behavior
by bankers can be traced back to the bipartisan consensus around deregulating
finance in recent decades. This result is a socially destructive industry with
immense political power—and capable of defeating all attempts at meaningful
reform. The continued predominance of rogue finance is greatly facilitated by
its effective corruption of American academia and many so-called “independent
experts” (documented in Charles Ferguson’s Oscar-winning movie, Inside Job.)
Big banks hold American politics in a death grip. To understand
this—and to start to think about how to break this grip—read Predator Nation
and give a copy to everyone you know.
*
THE
BANKSTER-OWNED PRESIDENT PROMISED HIS CRIMINAL BANKSTER DONORS NO real
REGULATION, NO PRISON TIME, AND UNLIMITED PILLAGING OF THE NATION’S ECONOMY!
DESPITE
THE DEVASTATION THESE BANKSTERS HAVE CAUSED AMERICANS, THEIR PROFITS SOARED
GREATER DURING OBAMA’S FIRST TWO YEARS, THAN ALL EIGHT UNDER BUSH. SO HAVE
FORECLOSURES!
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).
*
“Barack Obama's favorite
banker faces losses of $2 billion and
possibly more -- all because of the complex, now-you-see-it-now-you-don't trading
in exotic financial instruments that he has so ardently lobbied Congress not to
regulate.”
Is JPMorgan's Loss a Canary in a Coal Mine?
Posted: 05/16/2012 4:49 pm
That sound of
shattered glass you've been hearing is the iconic portrait of Jamie Dimon splintering
as it hits the floor of JPMorgan Chase. As the Good Book says, "Pride
goeth before a fall," and the sleek, silver-haired,
too-smart-for-his-own-good CEO of America's largest bank has been turning every
television show within reach into a confessional booth. Barack Obama's favorite
banker faces losses of $2 billion and
possibly more -- all because of the complex, now-you-see-it-now-you-don't
trading in exotic financial instruments that he has so ardently lobbied
Congress not to regulate.
Once again, doing
God's work -- that is, betting huge sums of money with depositor funds knowing
that you are too big to fail and can count on taxpayers riding to your rescue
if your avarice threatens to take the country down -- has lost some of its
luster. The jewels in Dimon's crown sparkle with a little less grandiosity than
a few days ago, when he ridiculed Paul Volcker's ideas for keeping Wall Street
honest as "infantile."
To find out more
about what this all means, I turned to Simon Johnson, once chief economist of
the International Monetary Fund and now a professor at MIT's Sloan School of
Management and senior fellow at the Peterson Institute for International
Economics. He and his colleague James Kwak founded the now-indispensable
website baselinescenario.com. They co-authored the bestselling book
13
Bankers and a most recent
book, White
House Burning, an account every
citizen should read to understand how the national deficit affects our future.
Bill Moyers: If Chase began to collapse because of
risky betting, would the government be forced to step in again?
Simon Johnson: Absolutely, Bill. JPMorgan Chase is
too big to fail. Hopefully in the future we can move away from this system, but
right now it is too big. It's about a $2.5 trillion dollar bank in terms of
total assets. That's roughly 20 percent of the U.S. economy, comparing their
assets to our GDP. That's huge. If that bank were to collapse -- I'm not saying
it will -- but if it were to collapse, it would be a shock to the economy
bigger than that of the collapse of Lehman Brothers, and as a result, they
would be protected by the Federal Reserve. They are exactly what's known as too
big to fail.
Moyers: I was just looking at an interview I did with you in February of 2009, soon
after the collapse of 2008 and you said, and I'm quoting, "The signs that
I see... the body language, the words, the op-eds, the testimony, the way these
bankers are treated by certain congressional committees, it makes me feel very
worried. I have a feeling in my stomach that is what I had in other countries,
much poorer countries, countries that were headed into really difficult
economic situations. When there's a small group of people who got you into a
disaster and who are still powerful, you know you need to come in and break
that power and you can't. You're stuck." How do you feel about that
insight now?
Johnson: I'm still nervous, and I think that
the losses that JPMorgan reported -- that CEO Jamie Dimon reported -- and the
way in which they're presented, the fact that they're surprised by it and the
fact that they didn't know they were taking these kinds of risks, the fact that
they lost so much money in a relatively benign moment compared to what we've
seen in the past and what we're likely to see in the future -- all of this
suggests that we are absolutely on the path towards another financial crisis of
the same order of magnitude as the last one.
Moyers: Should Jamie Dimon resign? I ask that
because as you know and as we've discussed, Chase and other huge banks have
been using their enormous wealth for years to, in effect, buy off our
politicians and regulators. Chase just had to pay up almost three quarters of a billion
dollars in settlements and surrendered fees to settle one case alone, that of
bribery and corruption in Jefferson County, Alabama. It's also paid out
billions of dollars to settle other cases of perjury, forgery, fraud and sale of
unregistered securities. And these charges were for actions that took place
while Mr. Dimon was the CEO. Should he resign?
Johnson: I think, Bill, there should be an
independent investigation into how JPMorgan operates both with regard to these
losses and with regard to all of the problems that you just identified. This
investigation should be conducted separate from the board of directors.
Remember that the shareholders and the board of directors absolutely have an
incentive to keep JPMorgan Chase as a too-big-to-fail bank. But because it is
that kind of bank, its downside risk is taken by the Federal Reserve, by the
taxpayer, by the broader economy and all citizens. We need to have an
independent, detailed, specific investigation to establish who knew what when
and what kind of wrongdoing management was engaged in. On the basis of that,
we'll see what we'll see and who should have to resign.
Moyers: Dimon is also on the board of the
Federal Reserve Bank of New York, which, as everyone knows is supposed to regulate
JPMorgan. What in the world are bankers doing on the Fed board, regulating
themselves?
Johnson: This is a terrible situation, Bill. It
goes back to the origins, the political compromise at the very beginning of the
Federal Reserve system about a hundred years ago. The bankers were very
powerful back then, also, and they got a Federal Reserve system in which they
had a lot of representation. Some of that has eroded over time because of
previous abuses, but you're absolutely right, the prominent bankers, including
most notably, Jamie Dimon, are members of the board of the New York Federal
Reserve, a key element in the Federal Reserve system. And he should, under
these circumstances, absolutely step down from that role. It's completely inappropriate
to have such a big bank represented in this fashion. The New York Fed claims
there's no impropriety, there's no wrong doing and he doesn't involve himself
in supervision and so on and so forth. Perhaps, but why does Mr. Dimon, a very
busy man, take time out of his day to be on the board of the New York fed? He
is getting something from this. It's a trade, just like everything else on Wall
Street.
Moyers: He dismissed criticism of his dual
role yesterday by downplaying the role of the Fed board. He said it's more like an "advisory group
than anything else." I had to check my hearing aid to see if I'd heard
that correctly.
Johnson: Well, I think he is advising them on
lots of things. He also, of course, meets with some regularity with top
Treasury officials, and some reports say that he meets with President Obama
with some regularity. The political access and connections of Mr. Dimon are
second to none. One of his senior executives was until recently chief of staff
in the White House, if you can believe that. I really think this has gone far
enough. Under these kinds of circumstances with this amount of loss of control
over risk management, what we need to have is Mr. Dimon step down from the New
York Federal Reserve Board.
Moyers: He told shareholders at their annual
meeting Tuesday -- they were meeting in Tampa, Florida -- that these were "self-inflicted mistakes"
that "should never have happened." Does that seem reasonable to you?
Johnson: Well, it's all very odd, Bill, and
I've talked to as many experts as I can find who are at all informed about what
JPMorgan was doing and how they were doing it and nobody really understands the
true picture. That's why we need an independent investigation to establish --
was this an isolated incident or, more likely, the breakdown of a system of
controlling and managing risks. Keep in mind that JPMorgan is widely regarded
to be the best in the business at risk management, as it is called on Wall
Street. And if they can't do this in a relatively benign moment when things are
not so very bad around the world, what is going to happen to them and to other
banks when something really dramatic happens, for example, in Europe in the
eurozone?
Moyers: Some of his supporters are claiming
that only the bank has lost on this and that there's absolutely no chance that
the loss could have threatened the stability of the banking system as happened
in 2008. What do you say again to that?
Johnson: I say this is the canary in the coal
mine. This tells you that something is fundamentally wrong with the way banks
measure, manage and control their risks. They don't have enough equity funding
in their business. They like to have a little bit of equity and a lot of debt.
They get paid based on return on equity, unadjusted for risk. If things go
well, they get the upside. If things go badly, the downside is someone else's
problem. And that someone else is you and me, Bill. It goes to the Federal
Reserve, but not only, it goes to the Treasury, it goes to the debt.
The Congressional
Budget Office estimates that the increase in debt relative to GDP due to the
last crisis will end up being 50 percent of GDP, call that $7
trillion dollars, $7.5 trillion dollars in today's money. That's extraordinary.
It's an enormous shock to our fiscal accounts and to our ability to pay
pensions and keep the healthcare system running in the future. For what? What
did we get from that? Absolutely nothing. The bankers got some billions in
extra pay, we get trillions in extra debt. It's unfair, it's inefficient, it's
unconscionable, and it needs to stop.
Moyers: Wasn't part of the risk that Dimon
took with taxpayer guaranteed deposits? I mean, if I had money at JPMorgan
Chase, wouldn't some of my money have been used to take this risk?
Johnson: Again, we don't know the exact
details, but news reports do suggest that yes, they were gambling with
federally insured deposits, which just really puts the icing on the cake here.
Moyers: Do we know yet what is Dimon's
culpability? Is it conceivable to you that a risk this big would have been
incurred without his approval?
Johnson: It seems very strange and quite a
stretch. And he did tell investors, when he reported on first quarter earnings
in April, that he was aware of the situation, aware of the trade -- he called it a "tempest in a teacup,"
and, therefore, not something to worry about.
Moyers: He's been Wall Street's point man in
their campaign against tighter regulation of derivatives and proprietary
trading. Were derivatives at the heart of this gamble?
Johnson: Yes, according to reliable reports,
this was a so-called "hedging" strategy that turned out to be no more
than a gamble, but the people involved perhaps didn't understand that or maybe
they understood it and covered it up. It was absolutely about a bet on
extremely complex derivatives and the interesting question is who failed to
understand exactly what they were getting into. And how did Jamie Dimon, who
has a reputation that he burnishes more than anybody else for being the number
one expert risk manager in the world -- how did he miss this one?
Moyers:I've been reading a lot of stories
today about members of the House, Republicans in particular, saying this
doesn't change their opinion at all that we've got to still diminish
regulation. What do you think about that?
Johnson: I think that it is a recipe for
disaster. Look, deregulating or not regulating during the boom is exactly how
you get into bailouts in the bust. The goal should be to make all the banks
small enough and simple enough to fail. End the government subsidies here. And
when I talk to people on the intellectual right, Bill, they get this, as do
people on the intellectual left. The problem is, the political right largely
doesn't want to go there because of the donations. I'm afraid some people, not
all, but some people on the political left don't want to go there either.
Moyers: The Washington Post reported
that the Justice Department has launched a criminal investigation into
JPMorgan's trading loss. Have you spotted -- and I know this is sensitive --
but have you spotted anything in the story so far that suggests the possibility
of criminality? Dodd-Frank is not in existence yet, so where would any
possibility of criminality come from?
Johnson: Well Dodd-Frank is in existence but
the rules have not been written and therefore not implemented. So yes, it is
hard to violate those rules in their current state. And many of those rules, by
the way, violation would be a civil penalty, not a criminal penalty. If you
violate a securities law -- if you've mislead investors, if there was material
adverse information that was not disclosed in an appropriate and timely manner
-- that's a very serious offence traditionally.
I have to say that
the Department of Justice and the Securities and Exchange Commission have not
been very good at enforcing securities law in recent years, including and
specifically since the financial crisis. I am skeptical that this will change.
But if they have an investigation that reveals all of the details of what
happened and how it happened, that would be extremely informative and show us,
I believe, that the risk management approach and attitudes on Wall Street are
deeply flawed and leading us towards a big crisis.
Moyers: So what are people to do, Simon? What
can people do now in response to this?
Johnson: Well, I think you have to look for
politicians who are proposing solutions, and look on the right and on the left.
I see Elizabeth Warren, running for the Senate in Massachusetts, who is saying
we should bring back Glass-Steagall to separate commercial banking from
investment banking. I see Tom Hoenig, who is not a politician, he's a
regulator, he's the former president of the Kansas City Fed, and he's now one
of the top two people at the Federal Deposit Insurance Corporation, the FDIC.
He is saying that big banks should no longer have trading desks. That's the
same sort of idea that Elizabeth Warren is expressing. We need a lot more
people to focus on this and to make this an issue for the elections.
And I would say in
this context, Bill, it's very important not to be distracted. I understand for
example, Speaker Boehner, the Republican Speaker of the House of
Representatives, is proposing to have another conflict over the debt ceiling in
the near future. This is the politics of distraction. This is refusing to
recognize that a huge part of our fiscal problems today and in the future are
due to these risks within the financial system that are allowed because the
people running the biggest banks hand out massive campaign contributions across
the political spectrum.
Moyers: Are you saying that this financial
crisis, so-called, is at heart a political crisis?
Johnson: Yes, exactly. I think that a few
people, particularly in and around the financial system, have become too
powerful. They were allowed to take a lot of risk, and they did massive damage
to the economy -- more than eight million jobs lost. We're still struggling to
get back anywhere close to employment levels where we were before 2008. And
they've done massive damage to the budget. This damage to the budget is long
lasting; it undermines the budget when we need it to be stronger because the
society is aging. We need to support Social Security and support Medicare on a
fair basis. We need to restore and rebuild revenue, revenue that was absolutely
devastated by the financial crisis. People need to understand the link between
what the banks did and the budget. And too many people fail to do that.
"Oh, it's too complicated. I don't want to understand the details, I don't
want to spend time with it." That's a mistake, a very big mistake. You're
playing into the hands of a few powerful people in the society who want private
benefit and social loss.
Watch Moyers &
Company weekly on public television. See more web-only features like this
at BillMoyers.com
*
Why hasn’t Obama been impeached?
His violations of our borders laws, inducing illegals to vote, sabotage of jobs
for Americans, connections to criminal banksters…. WHAT DOES IT TAKE?
NO WORKS IN THE CORRUPT OBAMA WHITE HOUSE THAT IS NOT
CONNECTED TO THE BANKSTERS THAT OWN OBAMA, OR THE MEXICAN FASCIST PARTY of LA
RAZA!
THE REASON OBAMA BROUGHT IN DALEY WAS BECAUSE WAS FROM
JPMORGAN, AND AN ADVOCATE FOR OPEN BORDERS.
For much of Obama’s tenure, Jamie Dimon was known as the
White House’s “favorite banker.” According to White House logs, Dimon visited
the White House at least 18 times, often to talk to his former subordinate at
JPMorgan, William Daley, who had been named White House chief of staff by Obama
after the Democratic rout in the 2010 elections.
OBAMA PROMISED HIS CRIMINAL BANKSTER DONORS NO
PRISON TIME AND NO REAL REGULATION. DID HE DELIVER?
The JPMorgan scandal also throws into
relief the government’s failure to prosecute those responsible for the 2008
financial meltdown. Despite overwhelming evidence of wrongdoing and criminality
uncovered by two federal investigations last year, those responsible have been
shielded from prosecution.
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).
The
JPMorgan debacle
15
May 2012
The economic and
political fallout from JPMorgan Chase’s sudden announcement last Thursday night
that it lost more than $2 billion from speculative bets on credit derivatives
continued to grow on Monday. The biggest US bank announced the forced
retirement of Ina Drew, who headed up the bank’s London-based Chief Investment
Office, which placed huge bets on the creditworthiness of a collection of US
corporations. Other top executives and traders are expected to be sacked or
demoted.
The bank’s shares
fell another 3.2 percent, bringing its two-day market capitalization loss to
nearly $19 billion. The Wall Street Journal reported that JPMorgan was
prepared for a total loss of more than $4 billion over the next year from its
soured stake in credit default swaps—the same investment vehicle that played a
central role in the collapse of Lehman Brothers and the government bailout of
insurance giant American International Group (AIG) in September of 2008.
In an interview on
NBC’s “Meet the Press” program on Sunday, JPMorgan CEO Jamie Dimon sought to
present the loss as an innocent mistake, resulting from “errors, sloppiness and
bad judgment.” Only a month ago, Dimon, who has led the public campaign by Wall
Street against even the mildest restrictions on speculative banking practices,
dismissed warnings over the massive bets being made by his Chief Investment
Office as “a complete tempest in a teapot.”
The scale of the loss
and the denials that preceded it raise the likelihood that banking rules and
laws against investor fraud and deception were breached.
President Obama, however, rushed to the
defense of JPMorgan and Dimon, declaring on a daytime television talk show
Monday that JPMorgan was “one of the best managed banks there is” and Dimon was
“one of the smartest bankers we got.”
At the same time he cited the bank’s loss as a vindication of the Dodd-Frank
financial regulatory bill that he signed into law in July of 2010. “This is why
we passed Wall Street reform,” he said.
In fact, the JPMorgan debacle
demonstrates that nearly four years after the Wall Street crash nothing has
changed for the financial aristocracy. No measures have been taken to rein in
the banks, which received trillions of dollars in government handouts,
guarantees and cheap loans. The same forms of speculation and outright
swindling that led to the financial meltdown and the worst economic crisis
since the Great Depression continue unabated.
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