jump to navigation

Obama and Holder Let Gangsters Pay Fine, Continue Business As Usual November 21, 2013

Posted by rogerhollander in Barack Obama, Criminal Justice, Economic Crisis.
Tags: , , , , , , , , , , , , , , , , ,
add a comment

Roger’s note: Black Agenda Report’s Glen Ford is one of the most incisive journalists on the Internet.  Unlike the legions of mind/ethics challenged Obamabots, who for reasons of race or party loyalty are willfully blind to the Obama Administrations Wall Street/Military-Industrial Complex agenda, Black Agenda Report does not hesitate to speak the truth about the first Afro-American Emperor’s mythical new clothes.

 

 

 

 

 

Going on five years into the Obama regime, it is clear that Wall Street is immune from prosecution, no matter the savagery of the economic crime. Attorney General Eric Holder “has ruthlessly maneuvered every case against the oligarchs into his own jurisdictional arena, in order to protect the banksters from aggressive prosecution.” JP Morgan’s Jamie Dimon is a far bigger bandit than Lucky Luciano.

 

 

 

Obama and Holder Let Gangsters Pay Fine, Continue Business As Usual

 

by BAR executive editor Glen Ford

 

The Obama administration has assessed a total of $28 billion in penalties against the Dimon mob, with no discernible effect.”

 

Imagine if Charles “Lucky” Luciano and his “Commission” representing the five reigning New York Mafia families plus the Chicago mob had been immune from law enforcement meddling in their activities, from the establishment of the “Syndicate” in 1931 to the present day. By now, Luciano’s gangster heirs would be the unchallenged rulers of economic and political life in the United States and, by imperial extension, the entire capitalist world.

 

JP Morgan chief executive Jamie Dimon is the man Lucky Luciano dreamed of becoming. A friend and golfing partner of President Obama, Dimon sits at the top of the ruling financial pyramid whose “commissioners” include the heads of Bank of America, CitiGroup, Wells Fargo, Goldman Sachs and Morgan Stanley. Their syndicate owns the cops, prosecutors, judges and major political parties and is, therefore, immune from criminal prosecution: the true “Untouchables,” too big to jail. So big, it will require a revolution to dislodge them from hegemonic power.

 

The latest Obama administration “settlement” of JP Morgan’s ongoing criminal enterprise amounts to a $13 billion fine, a mere speed bump in the unbroken spree of lawlessness that “helped create a financial storm that devastated millions of Americans,” in the words of Associate Attorney General Tony West. Although it is “the largest penalty in history,” Dimon and his fellow banksters are also the richest criminals in history – the most powerful cartel of all time – who can easily afford the levy. The bursting of their housing securities bubble may have wrecked much of the global economy in 2008, but Dimon and his boys made out like pure bandits in the aftermath, consolidating their positions at the center of a dying system. JP Morgan emerged as the biggest U.S. bank in terms of assets, a gleaming tower standing amid the ruins it created. Such is the logic of late stage finance capitalism: catastrophe becomes “creative destruction,” which begets greater economic monopoly, resulting in unchallengeable political supremacy, which makes Dimon too big to jail, whether he’s actually a friend of Obama, or not.

 

Dimon and his fellow banksters can easily afford the levy.”

 

There is no reason whatsoever to believe that the $13 billion fine will have any measurable impact on JP Morgan’s business plan. So far, the Obama administration has assessed a total of $28 billion in penalties against the Dimon mob, with no discernible effect. This time around, however, Obama’s prosecutors have imposed the equivalent of mandatory community service on the corporate malefactor, as an alternative to actual justice. Part of the $4 billion set aside to help struggling homeowners will go towards knocking down abandoned or foreclosed homes in the urban neighborhoods laid waste by JP Morgan and its cohorts in the racially-targeted subprime mortgage frenzy. That’s like compelling the Mafia to do upkeep on the cemeteries where its victims are buried, in lieu of prison terms or execution.

 

Yet, Justice Department mouthpiece Tony West claims the eyesore clearance penalty will “rectify” some of the harm done to “areas hardest hit by the financial crisis.” But, of course, it doesn’t even come close. Whole communities have been wounded beyond repair. Black wealth took its deepest dive in history, with reverberations that will impact future generations. Many thousands of people have died from the social trauma inflicted by Jamie Dimon and his syndicate – and that’s just in the United States. Globally, millions have perished due to the actions for which the settlement is supposed to atone.

 

Back in the Spring, the Huffington Post noted that Attorney General Eric Holder was attempting to retract his famous admission that banks like JP Morgan are too big to jail. Holder’s original statement, in March, was:

 

“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large.”

 

Two months later, in May, Holder amended his remarks, to say:

 

“Let me make something real clear right away. I made a statement I guess in a Senate hearing that I think has been misconstrued. I said it was difficult at times to bring cases against large financial institutions because [of] the potential consequences that they would have on the financial system. But let me make it very clear that there is no bank, there’s no institution, there’s no individual who cannot be investigated and prosecuted by the United States Department of Justice…. Let me be very, very, very clear. Banks are not too big to jail. If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought.”

 

Clearly, Holder was lying, second time around. If there were ever a serial financial gangster, it’s Dimon. There are no better candidates for racketeering prosecution on the face of the Earth than the Big Six banks and their executives: the pinnacle of the ruling class.

 

Globally, millions have perished due to the actions for which the settlement is supposed to atone.”

 

However, it is wrong to deride Holder and Obama as merely timid in the face of Wall Street’s awesomely destructive power. Rather, they are instruments of finance capital’s hegemony. Holder has ruthlessly maneuvered every case against the oligarchs into his own jurisdictional arena, in order to protect the banksters from aggressive prosecution by wayward state officials. Holder’s “settlements” are designed to insulate the banks from the rule of law, since, at this stage of systemic decay, the Lords of Capital can no longer function within existing legal constraints. The public sphere must be privatized; the urban centers, like Detroit, must be disenfranchised; the financial cartel must be allowed to absorb an ever greater proportion of the real economy into its derivatives casino; wealth must flow from the bottom to the top, without pause; and a planetary corporate code must be established through “free trade” treaties that supersede the sovereign laws of nations. All of the Obama administration’s marching orders flow from these imperatives.

 

Obama and Holder are guardians of the emerging new order, which does not yet have a legal code – and may well prefer to forgo such niceties, entirely. In the meantime, corporate Democrats and Republicans will give lip service to the law while the Mafia of Money runs the show.

 

And, you can take that to the bank.

 

BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.

 

 

 

Larry Summers: Goldman Sacked September 17, 2013

Posted by rogerhollander in Barack Obama, Economic Crisis.
Tags: , , , , , , , , , , , , , , , , ,
add a comment

 

GregPalast.com

Larry Summers:  Goldman Sacked

By Greg Palast for Vice Magazine
Monday, 16 September 2013

Joseph Stiglitz couldn’t believe his ears.  Here they were in the White House, with President Bill Clinton asking the chiefs of the US Treasury for guidance on the life and death of America’s economy, when the Deputy Secretary of the Treasury Larry Summers turns to his boss, Secretary Robert Rubin, and says, “What would Goldman think of that?”

Huh?

Then, at another meeting, Summers said it again:  What would Goldman think?

A shocked Stiglitz, then Chairman of the President’s Council of Economic Advisors, told me he’d turned to Summers, and asked if Summers thought it appropriate to decide US economic policy based on “what Goldman thought.”  As opposed to say, the facts, or say, the needs of the American public, you know, all that stuff that we heard in Cabinet meetings on The West Wing.

Summers looked at Stiglitz like Stiglitz was some kind of naive fool who’d read too many civics books.

R.I.P. Larry Summers
On Sunday afternoon, facing a revolt by his own party’s senators, Obama dumped Larry as likely replacement for Ben Bernanke as Chairman of the Federal Reserve Board.
Until news came that Summers’ torch had been snuffed, I was going to write another column about Larry, the Typhoid Mary of Economics.  (My first, in The Guardian, 15 years ago, warned that “Summers is, in fact, a colony of aliens sent to Earth to turn humans into a cheap source of protein.”)

But the fact that Obama even tried to shove Summers down the planet’s throat tells us more about Obama than Summers—and whom Obama works for.  Hint:  You aren’t one of them.

All these Cabinet discussions back in the 1990s requiring the blessing of Goldman Sachs revolved around the Rubin-Summers idea of ending regulation of the US banking system.  To free the US economy, Summers argued, all you’d have to do is allow commercial banks to bet government-guaranteed savings on new “derivatives products,” let banks sell high-risk sub-prime mortgage securities and cut their reserves against losses.

What could possibly go wrong?
Stiglitz, who would go on to win the Nobel Prize in Economics, tried to tell them exactly what would go wrong.  But when he tried, he was replaced and exiled.
Summers did more than ask Rubin to channel the spirit of Goldman: Summers secretly called and met with Goldman’s new CEO at the time, Jon Corzine, to plan out the planet’s financial deregulation. I’m not guessing:  I have the confidential memo to Summers reminding him to call Corzine.

[For the complete story of that memo and a copy of it, read The Confidential Memo at the Heart of the Global Financial Crisis.]

Summers, as Treasury official, can call any banker he damn well pleases.  But not secretly.  And absolutely not to scheme over details of policies that could make a bank billions.  And Goldman did make billions on those plans.

Example:  Goldman and clients pocketed $4 billion on the collapse of “synthetic collateralized debt obligations”—flim-flam feathers sold to suckers and dimwits i.e. the bankers at RBS.  (See Did Fabrice Tourre Really Create The Global Financial Crisis?)

Goldman also cashed in big on the implosion of Greece’s debt via secret derivatives trades permitted by Summers’ decriminalization of such cross-border financial gaming.

The collapse of the euro-zone and the US mortgage market caused by Bankers Gone Wild was made possible only by Treasury Secretary Summers lobbying for the Commodities Futures Modernization Act which banned regulators from controlling the 100,000% increase in derivatives assets, especially super-risky “naked” credit-default swaps.

The CMFA was the financial equivalent of a fire department banning smoke alarms.

Summers took over the Treasury’s reins from Rubin who’d left to become director of a strange new financial behemoth:  The combine of Citibank with and an investment bank, Travelers. The new bank beast went bankrupt and required $50 billion in bail-out funds.  (Goldman did not require any bail-out funds–but took $10 billion anyway.)

Other banks-turned-casinos followed Citi into insolvency.  Most got bail-outs … and got Larry Summers–or, at least, Larry’s lips for “consulting” or for gold-plated speaking gigs.

Derivatives trader D.E. Shaw paid Summers $5 million for a couple of years of “part-time” work.  This added to payments from Citigroup, Goldman and other finance houses, raising the net worth of this once penurious professor to more than $31 million.

Foreclosure fills the Golden Sacks
When Summers left Treasury in 2000, The New York Times reports that a grateful Rubin got Summers the post of President of Harvard University—from which Summers was fired. He gambled away over half a billion dollars of the university’s endowment on those crazy derivatives he’d legalized.  (Given Summers’ almost pathological inability to understand finance, it was most odd that, while President of the university, he suggested that humans with vaginas aren’t very good with numbers.)

In 2009, Summers, Daddy of the Deregulation Disaster, returned to the Cabinet in triumph. Barack Obama crowned him “Economics Tsar,” allowing Summers to run the Treasury without having to be questioned by Congress in a formal confirmation hearing.

As Economics Tsar in Obama’s first term, did Summers redeem himself?

Not a chance.

In 2008, both Democrat Hillary Clinton and Republican John McCain called for using the $300 billion remaining in the “bail-out’ fund for a foreclosure-blocking program identical to the one Franklin Roosevelt had used to pull the US out of the Great Depression.  But Tsar Larry would have none of it, although banks had been given $400 billion from the same fund.

Indeed, on the advice of Summers and his wee assistant, Treasury Secretary Tim Geithner, Obama spent only $7 billon of the $300 billion available to save US homeowners.

What would Goldman think? 
As noted, Goldman and clients pocketed billions as a result of Obama’s abandonment of 3.9 million families whose homes were repossessed during his first term.  While American homeowners were drowning, Tsar Summers torpedoed their lifeboat:  a plan to prevent foreclosures by forcing banks to write-off the overcharges in predatory sub-prime mortgages.  Notably, Summers’ action (and Obama’s inaction) saved Citibank billions.

Loan Shark Larry
The deregulation disaster machinery is not done with mangling Americans.  While not-for-profit credit unions, lenders of last resort for working people and the poor in the US, have been under legal and political attack, a new kind of banking operation has bubbled out of the minds of the grifters looking for a way to make loan-sharking legit.

One new outfit, for example, called “Lending Club,” has figured out a way to collect fees for arranging loans charging as much as 29%.  Lending Club claims it cannot and should not be regulated by the Federal Reserve or other banking police.  The recent addition to its Board of Directors:  Larry Summers.

If you want to know why Obama would choose such a grifter and gamer to head the Fed, you have to ask, Who picked Obama?  Ten years ago, Barry Obama was a nothing, a State Senator from the South Side of Chicago.

But then, he got lucky.  A local bank, Superior, was shut down by regulators for mortgage shenanigans ripping off Black folk.  The bank’s Chairwoman, Penny Pritzker was so angry at regulators, she decided to eliminate them:  and that required a new President.

The billionaires connected Obama to Jamie Dimon of J.P. Morgan, but most importantly to Robert Rubin, former Treasury Secretary, but most important, former CEO of Goldman Sachs and mentor of Larry Summers.  Without Rubin’s blessing and overwhelming fundraising power, Obama would still be arguing over zoning on Halsted Street.

Rubin picked Obama and Obama picks whom Rubin picks for him.

Because, in the end, Obama knows he must choose a Fed chief based on the answer to one question:  What would Goldman think?

Special thanks to expert Lori Wallach of Public Citizen without whom our investigation could not have begun.

For the complete story of the investigation of Larry Summers, the “End Game” memo and the finance crisis, see Palast’s highly acclaimed book Vultures’ Picnic.
Get a
signed hardbound copy and support our work with a tax-deductible contribution of $50. 

Also visit the Palast Investigative Fund’s store or simply make a tax-deductible contribution to keep our work alive!

Greg Palast is also the author of the New York Times bestsellers, Billionaires & Ballot BanditsThe Best Democracy Money Can Buy and Armed Madhouse.

Follow Palast on Twitter | Like Palast on Facebook | Forward to a friend 
Subscribe to Palast’s Newsletter | Podcasts

Share this with

Copyright © 2013 Greg Palast, All rights reserved.
Email Marketing Powered by MailChimp

 

Bill Clinton’s $80 Million Payday, or Why Politicians Don’t Care That Much About Reelection August 4, 2012

Posted by rogerhollander in Democracy, Economic Crisis.
Tags: , , , , , , , , , , ,
1 comment so far
 

Future Millionaires

Tuesday, May 22, 2012

 

“There was a kind of inflection point during the five-year period between 1997 and 2003 — the late Clinton and/or early Bush administration — when all the rules just went away. You went from a period, a regime, where people did have at least some concern about going to jail, to a point where everything is legal, and derivatives couldn’t be regulated at all and nobody went to jail for anything. And looking back I would say that this period definitely started under Clinton. You absolutely cannot blame this on George W. Bush.” – Charles Ferguson of Inside Job

“I never had any money until I got out of the White House, you know, but I’ve done reasonably well since then.” Bill Clinton

On December 21, 2000, President Bill Clinton signed a bill called the Commodities Futures Modernization Act. This law ensured that derivatives could not be regulated, setting the stage for the financial crisis. Just two months later, on February 5, 2001, Clinton received $125,000 from Morgan Stanley, in the form of a payment for a speech Clinton gave for the company in New York City. A few weeks later, Credit Suisse also hired Clinton for a speech, at a $125,000 speaking fee, also in New York. It turns out, Bill Clinton could make a lot of money, for not very much work.

Today, Clinton is worth something on the order of $80 million (probably much more, but we don’t really know), and these speeches have become a lucrative and consistent revenue stream for his family. Clinton spends his time offering policy advice, writing books, stumping for political candidates, and running a global foundation. He’s now a vegan. He makes money from books. But the speaking fee money stream keeps coming in, year after year, in larger and larger amounts.

Most activists and political operatives are under a delusion about American politics, which goes as follows. Politicians will do *anything* to get reelected, and they will pander, beg, borrow, lie, cheat and steal, just to stay in office. It’s all about their job.

This is 100% wrong. The dirty secret of American politics is that, for most politicians, getting elected is just not that important. What matters is post-election employment. It’s all about staying in the elite political class, which means being respected in a dense network of corporate-funded think tanks, high-powered law firms, banks, defense contractors, prestigious universities, and corporations. If you run a campaign based on populist themes, that’s a threat to your post-election employment prospects. This is why rising Democratic star and Newark Mayor Corey Booker reacted so strongly against criticism of private equity – he’s looking out for a potential client after his political career is over, or perhaps, during interludes between offices. Running as a vague populist is manageable, as long as you’re lying to voters. If you actually go after powerful interests while in office, then you better win, because if you don’t, you’ll have basically nowhere to go. And if you lose, but you were a team player, then you’ll have plenty of money and opportunity. The most lucrative scenario is to win and be a team player, which is what Bill and Hillary Clinton did. The Clinton’s are the best at the political game – it’s not a coincidence that deregulation accelerated in the late 1990s, as Clinton and his whole team began thinking about their post-Presidential prospects.

Corruption used to be more overt. Lyndon Johnson made money while in office, by illicitly garnering lucrative FCC licenses. It was the first neoliberal President, Jimmy Carter, who began the post-career payoff trend in the Democratic Party. In 1978, Archer Daniels Midland CEO Dwayne Andreas convinced Carter to back ethanol subsidies. After Carter lost to Reagan, he faced financial problems, as his peanut warehouse had been mismanaged and was going bankrupt. AMD stepped in, overpaying for the property. But Carter wasn’t nearly as skilled as Clinton, because he didn’t stay in the club.

Over the course of the next ten years after his Presidency, Clinton brought in roughly $8-10 million a year in speaking fees. In 2004, Clinton got $250,000 from Citigroup and $150,000 from Deutsche Bank. Goldman paid him $300,000 for two speeches, one in Paris. As the bubble peaked, in 2006, Clinton got $150,000 paydays each from Citigroup (twice), Lehman Brothers, the Mortgage Bankers Association, and the National Association of Realtors. In 2007, it was Goldman again, twice, Lehman, Citigroup, and Merrill Lynch. He didn’t just reap speaking fee cash from the financial services sector – corporate titans like Oracle and outsourcing specialist Cisco paid up, as did many Israel-focused groups, Middle Eastern interests, and universities. Does this explain the finance-friendly, oil-friendly and Israel First-friendly policies pursued by the State Department under Hillary Clinton? Who knows? But if you could legally deliver millions in cash to the husband of a high-level political official, it wouldn’t hurt your policy goals.

Speaking fee money isn’t just money, it is easy money. In one appearance, for one hour, Clinton can make $125,000 to $500,000. At an hourly rate, that’s between $250 million to $1 billion annually. It isn’t the case that Clinton is a billionaire, but it is the case that Clinton can, whenever he wants, make money as quickly and as easily as a billionaire. He is awash in cash, and cash is useful. Cash finances his lifestyle. Cash helped backstop his wife’s Presidential campaign when it was on the ropes.

And these speaking fees aren’t the only money Clinton got, it’s just the easiest cash to find because of disclosure laws. Apparently, Clinton’s firm apparently had a paid $100k+ a month consulting relationship with MF Global, and Clinton and Tony Blair have teamed up to help hedge funds raise money. His daughter worked for a giant hedge fund and political ally (Avenue Capital). And Clinton has unusual relationships with billionaires and Dubai-based investors.

Bill and Hillary Clinton are the best at what they do, but they aren’t the only ones who do it. In fact, this is what politics is increasingly about, not elections, but staying in the club. Erskine Bowles, former White House Chief of Staff, lost two Senate elections. But he’s on the board of Facebook and Morgan Stanley, as well as authoring the highly influential Simpson-Bowles plan to gut Social Security and Medicare. Tom Daschle, who lost a Senate race in 2004, is a millionaire who in large part crafted Obama’s health care plan. Former Senator Judd Gregg is now at Goldman Sachs. Current Chicago Mayor Rahm Emanuel made $12 million in between his stint at the Clinton White House which ended in 2000 and his election to Congress in 2002. Former Congressman Harold Ford, now at Morgan Stanley, is routinely on TV making political claims. Larry Summers is on the board of the high-flying start-up Square. Meanwhile, Russ Feingold, a Senator who did go after Wall Street, is a professor in the Midwest. Eliot Spitzer is a struggling TV host and writer.

In other words, Barack Obama and his franchise are emulating the Clinton’s, and are speaking not to voters, but to potential post-election patrons. That’s what their policy goals are organized around. So when you hear someone talking about how politicians just want to be reelected, roll your eyes. When you hear an argument about the best message or policy framework to use for reelection, stop listening. That’s not what politicians really care about. Elections in many ways are just like regular season games in basketball – they are worth winning, but it’s not worth risking an injury. The reason Obama won’t prosecute bankers, or run anything but a very mild sort of populism, is because he’s not really talking to voters. He just wants to be slightly more appealing than Romney. He’s really talking to the people who made Bill and Hillary Clinton a very wealthy couple, his future prospective clients. We don’t call it bribery, but that’s what it is. Bill Clinton made a lot of money when he signed the bill deregulating derivatives and repealed Glass-Steagall. The payout just came later, in the form of speaking fees from elite banks and their allies.

Ironically, Clinton has come to express regret about deregulating derivatives. He has not given the money back.

Topics: Guest Post

Email This Post Email This Post Posted by Matt Stoller at 9:00 am

Too Big to Jail May 24, 2011

Posted by rogerhollander in Criminal Justice, Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,
add a comment

 Goldman Sach’s Lloyd Blankfein

Published on Tuesday, May 24, 2011 by CommonDreams.org

  by  Danny Schechter

This week the financial crisis finally went prime time in the form of a big budget HBO docudrama called “Too Big To Fail.”Goldman Sach’s Lloyd Blankfein. (File)

It was a well-acted docudrama focused on the BIG men and some women in the banks and in government who tried to put Humpty Dumpty back together again up on that wall to prevent a total economic collapse when panic dried up credit and financial institutions faced failure.

Based on the work of a New York Times reporter, it offered a skillfully-made but conventional narrative which, like most TV shows, showcase events but miss their deeper context and background.

We heard all the explanations, save one.

There was greed, ambition, ego and money lust. There were personal rivalries and ideological battles, parochial agendas and narrow self-interest. There was panic on THE Street and in the halls of mighty institutions. In many ways, the program recycled and made an official narrative compelling viewing. In the end, everyone was to blame so no one was to blame.

But… what was missing was any notion of intentionality and premeditation, almost no mention of systemic fraud and CRIME, that one word that sums up what really happened for those millions of Americans who have lost jobs and homes. We never saw victims or felt their pain and bewilderment. We were never shown how a shadow banking system emerged or how the finance industry worked with their counterparts in finance and insurance to transfer wealth from the poor and middle class to the superrich,

When I was but a precocious lad, my elementary school encouraged students to take out a savings account at the nearby Dime Bank in the Bronx. We were each given a bankbook and taught to put in $.50 a week to show us how to build wealth by being thrifty. It was with a sense of pride that I watched my balance grow.

It may have been peanuts in the scheme of things, but to me, at the time, it was the way to plan for the future.

At the same time, in those year I watched TV shows glamorize the bank robbing antics of a man named Willie Sutton who also staged jail breaks wearing masks and costumes. When he was asked why he robbed banks, he responded famously, “That’s where the money is.”

And it still is, except in our era, it is the banks that are robbing us.

That’s because what’s now called the “financial Services sector” has gone from about 30 percent of our economy to over 60 percent. Through a process called financialization, they have transformed how all business is done.

Making money from money soon began to surpass making money from making things. What we were never warned about was the danger of getting too deeply in debt, or how the economy was shifting from production to consumption.

Private equity, credit swaps, derivative deals and collateralized debt obligations soon drove the economy. Markets became captives of high performance trading by powerful computers.

When Wall Street became the defacto capital of the country, the bankers accrued more power than the politicians who they bought up with impunity. Their lobbying power deregulated the economy and decriminalized their activities. They killed many of the reforms enacted during the New Deal designed to protect the public. They built a shadow (and shadowy) banking system beyond the reach of the law.

And now, here we are, in 2011, five years after the meltdown of 2007, four years after the crash of 2008 and the passage of the TARP bailout that pumped money into their treasuries at taxpayer expense. Since then, there has been a steady parade of scandals and the disclosures that have come out since. Every week, more banks close and or consolidate and run into problems with regulators.

Take “my” old bank in the Bronx. It has been through as many changes as I have been. A website on bank histories runs it down:

Dime Savings Bank of New York, The
04/12/1859 NYS Chartered Dime Savings Bank of Brooklyn
09/10/1930 Acquire By Merger Navy Savings Bank
06/30/1970 Name Change To Dime Savings Bank of New York, The
09/30/1979 Acquire By Merger Mechanics Exchange Savings Bank
07/01/1980 Acquire By Merger First Federal S & L Assoc. of Port Washington
08/01/1981 Acquire By Merger Union Savings Bank of New York
06/23/1983 Convert Federal Dime Savings Bank of NY, FSB
01/07/2002 Purchased By Washington Mutual Inc.
01/07/2002 Name Change To Washington Mutual Bank

And then, of course, some years later, Washington Mutual itself, went bust and was bought up for a song by JP Morgan Chase. Here are some of the latest headlines about the bank now known as WAMU:

WaMu agrees on post-bankruptcy control — report‎ – Reuters
WaMu, Shareholders, Biggest Creditors Said to Settle …‎ – Bloomberg
WaMu shareholders are offered $25M-plus to drop claims

On the day I wrote this commentary, the New York Times reported:

“The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac.”

And to whom does the Times turn for expertise on the subject, but a key former operative at Washington Mutual who was with the bank in the go-go era of shoveling out subprime mortgages? Now, he gives advice on risk management:

“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”

What were people’s homes are now “inventory” to be stockpiled even though it has a negative cumulative effect on economic recovery of the housing market.

The banks that are increasingly despised and blamed for their role in engineering the financial disaster, are now trying to play nice to change their negative image.

Explains the Times:

“Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”

So, they are still foreclosing, but with a smile. Is it a ‘lot different than it used to be’?
Just last month, Huffington Post reported:

“Top executives at Washington Mutual actively boosted sales of high-risk, toxic mortgages in the two years prior to the bank’s collapse in 2008, according to emails published in a wide-ranging Senate report that contradicts previous public testimony about the meltdown.

The voluminous, 639-page report on the financial crisis from the Senate Permanent Subcommittee on Investigations singles out Washington Mutual for its decision to champion its subprime lending business, even as executives privately acknowledged that a housing bubble was about to burst.”

The truth is that most of the bigger banks have emerged from the financial crisis stronger than ever, with executives cashing in with higher salaries and bigger bonuses. That old saying about criminals who “laughed all the way to the bank” has to be revised because in this case they never left the bank.

More shocking has been the largely passive response by our government and prosecutors. At last, the Attorney General of New York is said to be investigating but none of the big bankers have yet gone to jail or suffered for the scams and frauds they committed. Most of the State officials who vowed to after the banks in the absence of aggressive federal actions have backed down.

So what can “we the people” do? We can do nothing and watch more of what’s left of our wealth vanish, or we can join others in demanding a “jailout,” not a bailout.

A well-known international banker was just arrested for a high profile alleged sex crime but not one of possibly thousands have been prosecuted for well documented financial crimes.

Where are the political leaders and activist groups willing to “fight the power” and demand accountability and transparency on Wall Street?

Why are so many us banking on a financial recovery to bring back jobs and a modicum of justice created by the very people and institutions responsible for the crisis?

And why didn’t I learn about these dangers when I first discovered the wonderful world of banking? Isn’t that what schools are for?

<!–

–>

Danny Schechter

Mediachannel’s News Dissector Danny Schechter investigates the origins of the economic crisis in his book Plunder: Investigating Our Economic Calamity and the Subprime Scandal (Cosimo Books via Amazon). Comments to dissector@mediachannel.org

In for a Penny, In for $2.98 Trillion April 1, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , , , , , ,
add a comment
Posted on Mar 31, 2009, www.truthdig.com
toxic schmoxic
AP photo / Mary Altaffer

Toxic schmoxic: The ABC news ticker in New York’s Times Square on March 23, a day when the Dow average surged nearly 500 points.

By Robert Scheer

The good news on the government’s “No Banker Left Behind” program is that according to the special inspector general’s report on Tuesday, the total handout to date is still less than 3 trillion dollars. It’s only 2.98 trillion to be precise, an amount six times greater than will be spent by federal, state and local governments this year on educating the 50 million American children in elementary and secondary schools. 

The bad news is that even greater amounts of money are to be thrown down what has to be the world record for rat holes.

Where did the money go? Almost all of it went to the bankers and stockbrokers who got us into this mess by insisting that the complex-by-design derivatives they trafficked in should not be regulated by government since they were private transactions between consenting professionals. Sort of like a lap dance: If it doesn’t work out, that’s the problem of the parties involved and no concern of the government. 

For the government to intervene would have created “legal uncertainty” in the derivatives market, an argument that a Republican-dominated Congress and President Clinton bought in authorizing the Commodity Futures Modernization Act in December of 2000. That law brought “legal certainty” to the market, a phrase that Lawrence Summers, then Clinton’s secretary of the treasury and now Barack Obama’s top White House economics adviser, deployed incessantly as a calming mantra as the financial derivatives market swirled out of control.

Now Summers and the other finance gurus who move so easily from Wall Street to Pennsylvania Avenue assure us that those professionals who made the toxic swap deals are too big to fail and must be entrusted with 3 trillion of our dollars to save themselves from disaster. And thanks to the laws they wrote, the bankers are likely to be covered for their socially destructive behavior by a get-out-of-jail-free card.

Well, maybe not all of them. A shudder must have run through the former Wall Street buddies of Bernie Madoff—once the highly respected chairman of the Nasdaq stock exchange—when Inspector General Neil Barofsky warned on Tuesday that “we are looking at the potential exposure of hundreds of billions of dollars in taxpayer money lost to fraud.”

How naive. The fraud no doubt has occurred and will occur again, but the exposure part is more questionable, if by that is meant bringing the criminals to account. As opposed to welfare cheats who end up imprisoned over scams that involve hundreds of dollars, these guys have brilliant lawyers who tell them how to steal legally when it comes to billions in fraud.

But most likely the white-collar criminals, if they are high enough up the food chain, will not even be quizzed about their activities. As the independent Congressional Oversight Panel has reported, there has been no serious accounting of the bailout money. It took major pressure from a Congress reacting to an outraged public to discover that AIG, in addition to handing out hundreds of millions in bonuses to the very hustlers who created the firm’s swindles, was a conduit for at least $70 billion in taxpayer money to reimburse the banks and stockbrokers who got us into this crisis with their bad bets. 

No surprise there, given the incestuous world of finance, where the revolving doors between the Treasury Department, the Fed and executive offices in the industry have been swinging throughout both Republican and Democratic administrations. As a result, those orchestrating the bailout and those grabbing the money are for the most part friends and former colleagues, with enormous respect for each other but not for the American taxpayer and homeowner. Or for the autoworkers who had nothing to do with creating this problem but stand to lose their retiree health benefits and pensions if the Obama administration goes though with its threat to use bankruptcy to discharge GM and Chrysler from their obligations to their workers.  Why float a company like AIG to the tune of $170 billion to keep that massive conglomerate from bankruptcy but balk at a much smaller commitment to keep GM solvent?

The money involved in the auto bailout is chump change compared with what Wall Street got, and it is far better spent. As opposed to the financial high rollers richly rewarded for crawling in and out of balance sheets, the folks who crawl in and out of cars along an assembly line are left with permanent aching backs and hard-won health care and retirement plans about to disappear through their company’s bankruptcy. Where’s their bonus package? 

Follow

Get every new post delivered to your Inbox.

Join 228 other followers