A Taxing Situation: Ontario’s HST June 17, 2010Posted by rogerhollander in Canada, Economic Crisis, Humor.
Tags: Canada, economy, government, hst, Humor, humour, ontario, sales tax, tax dollars, taxes, taxpayers
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TIPS ON HOW TO SPEND YOUR HARMONIZED SALES TAX SOP
Tags: carbon capture, carbon derivitives, clean energy, climate change, co2, coal power, coal-based energy, corporate giveaway, Dennis Kucinich, dirty coal, dirty energy, emission reductions, energy, environment, epa, global warming, greenhouse gas, nuclear power, nuclear reactors, nuclear waste, renewable energy, roger hollander, taxpayers, toxic waste, trash incineration
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www.opednews.com, June 26, 2009
“I oppose H.R. 2454, the American Clean Energy and Security Act
of 2009. The reason is simple. It won’t address the problem. In fact,
it might make the problem worse.
“It sets targets that are too weak, especially in the short term,
and sets about meeting those targets through Enron-style accounting methods.
It gives new life to one of the primary sources of the problem that should be
on its way out”" coal “” by giving it record subsidies. And it is
rounded out with massive corporate giveaways at taxpayer expense. There is $60
billion for a single technology which may or may not work, but which enables
coal power plants to keep warming the planet at least another 20 years.
“Worse, the bill locks us into a framework that will fail.
Science tells us that immediately is not soon enough to begin repairing the
planet. Waiting another decade or more will virtually guarantee catastrophic
levels of warming. But the bill does not require any greenhouse gas reductions
beyond current levels until 2030.
“Today’s bill is a fragile compromise, which leads some to
claim that we cannot do better. I respectfully submit that not only can
we do better; we have no choice but to do better. Indeed, if we pass a
bill that only creates the illusion of addressing the problem, we walk away
with only an illusion. The price for that illusion is the opportunity to take
“There are several aspects of the bill that are problematic.
1. Overall targets are too weak. The bill is
predicated on a target atmospheric concentration of 450 parts per million, a
target that is arguably justified in the latest report from the Intergovernmental
Panel on Climate Change, but which is already out of date. Recent science
suggests 350 parts per million is necessary to help us avoid the worst effects
of global warming.
2. The offsets undercut the emission reductions.
Offsets allow polluters to keep polluting; they are rife with fraudulent claims
of emissions reduction; they create environmental, social, and economic unintended
adverse consequences; and they codify and endorse the idea that polluters do
not have to make sacrifices to solve the problem.
3. It kicks the can down the road. By
requiring the bulk of the emissions to be carried out in the long term and
requiring few reductions in the short term, we are not only failing to take the
action when it is needed to address rapid global warming, but we are assuming
the long term targets will remain intact.
4. EPA’s authority to help reduce
greenhouse gas emissions in the short- to medium-term is rescinded. It is our
best defense against a new generation of coal power plants. There is no room
for coal as a major energy source in a future with a stable climate.
5. Nuclear power is given a lifeline instead
of phasing it out. Nuclear power
is far more expensive, has major safety issues including a near release in my
own home state in 2002, and there is still no resolution to the waste problem.
A recent study by Dr. Mark Cooper showed that it would cost $1.9 trillion to
$4.1 trillion more over the life of 100 new nuclear reactors than to generate
the same amount of electricity from energy efficiency and renewables.
6. Dirty Coal
is given a lifeline instead of phasing it out. Coal-based energy
destroys entire mountains, kills and injures workers at higher rates than most
other occupations, decimates ecologically sensitive wetlands and streams,
creates ponds of ash that are so toxic the Department of Homeland Security will
not disclose their locations for fear of their potential to become a terrorist
weapon, and fouls the air and water with sulfur oxides, nitrogen oxides, particulates,
mercury, polycyclic aromatic hydrocarbons, and thousands of other toxic
compounds that cause asthma, birth defects, learning disabilities, and
pulmonary and cardiac problems for starters. In contrast, several times more
jobs are yielded by renewable energy investments than comparable coal
7. The $60 billion allocated for Carbon Capture and
Sequestration (CCS) is triple the amount of money for basic research
and development in the bill. We should be pressuring China,
India and Russia to slow and stop their power
plants now instead of enabling their perpetuation. We cannot create that
pressure while spending unprecedented amounts on a single technology that may
or may not work. If it does not work on the necessary scale, we have then spent
10-20 years emitting more CO2, which we cannot afford to do. In addition, those
who will profit from the technology will not be viable or able to stem any
leaks from CCS facilities that may occur 50, 100, or 1000 years from now.
8. Carbon markets can and will be manipulated
using the same Wall Street sleights of hand that brought us the financial
9. It is regressive. Free allocations doled
out with the intent of blunting the effects on those of modest means will pale
in comparison to the allocations that go to polluters and special interests. The
financial benefits of offsets and unlimited banking also tend to accrue to
large corporations. And of course, the trillion dollar carbon derivatives
market will help Wall Street investors. Much of the benefits designed to
assist consumers are passed through coal companies and other large corporations,
on whom we will rely to pass on the savings.
10. The Renewabble
Electricity Standard (RES) is not an improvement. The 15% RES
standard would be achieved even if we failed to act.
11. Dirty energy options qualify as “renewable“-:
The bill allows polluting industries to qualify as “renewable energy.”-
Trash incinerators not only emit greenhouse gases, but also emit highly toxic
substances. These plants disproportionately expose communities of color and
low-income to the toxics. Biomass burners that allow the use of trees as a
fuel source are also defined as “renewable.”- Under the bill,
neither source of greenhouse gas emissions is counted as contributing to global
12. It undermines our bargaining position in international
negotiations in Copenhagen
and beyond. As the biggest per capita polluter, we have a responsibility to
take action that is disproportionately stronger than the actions of other
countries. It is, in fact, the best way to preserve credibility in the
13. International assistance is much less than demanded by
developing countries. Given the level of climate change that is already in the
pipeline, we are going to need to devote major resources toward adaptation. Developing
countries will need it the most, which is why they are calling for much more resources
for adaptation and technology transfer than is allocated in this bill. This
will also undercut our position in Copenhagen.
“I offered eight amendments and cosponsored two more that
collectively would have turned the bill into an acceptable starting point. All
amendments were not allowed to be offered to the full House. Three amendments
endeavored to minimize the damage that will be done by offsets, a method of
achieving greenhouse gas reductions that has already racked up a history of
failure to reduce emissions “” increasing emissions in some cases “”
while displacing people in developing countries who rely on the land for their
“Three other amendments would have made the federal government a
force for change by requiring all federal energy to eventually come from
renewable resources, by requiring the federal government to transition to
electric and plug-in hybrid cars, and by requiring the installation of solar
panels on government rooftops and parking lots. These provisions would
accelerate the transition to a green economy.
“Another amendment would have moved up the year by which
reductions of greenhouse gas emissions were required from 2030 to 2025. It
would have encouraged the efficient use of allowances and would have reduced
opportunities for speculation by reducing the emission value of an allowance by
a third each year.
amendment would have removed trash incineration from the definition of
renewable energy. Trash incineration is one of the primary sources of
environmental injustice in the country. It a primary source of compounds in
the air known to cause cancer, asthma, and other chronic diseases. These
facilities are disproportionately sited in communities of color and communities
of low income. Furthermore, incinerators emit more carbon dioxide per unit of
electricity produced than coal-fired power plants.
“Passing a weak bill today gives us weak environmental policy
tomorrow,”- said Kucinich.
In for a Penny, In for $2.98 Trillion April 1, 2009Posted by rogerhollander in Economic Crisis.
Tags: AIG, auto bailout, auto workers, auto workers pensions, bailout, bailout fraud, bernard madoff, chrysler, congressional oversight, deregulation, derivitives, Federal Reserve, geithner, general moters, gm, gm bankruptcy, lawrence summers, Obama, president clinton, Robert Scheer, roger hollander, taxpayers, treasury, Wall Street, white house advisors
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Posted on Mar 31, 2009, www.truthdig.com
|AP photo / Mary Altaffer|
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?
The Real AIG Scandal March 18, 2009Posted by rogerhollander in Economic Crisis.
Tags: AIG, AIG bailout, aig bonuses, aig counterparties, aig scandal, bank of america, barclays, bernanke, deutsche bank, eliot spitzer, geithner, Goldman, Goldman Sachs, Henry Paulson, jpmorgan chase, lloyd balnkfein, Merrill Lynch, Morgan Stanley, roger hollander, tarp, taxpayers, treasury department, ubs
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The Real AIG ScandalIt’s not the bonuses. It’s that AIG’s counterparties are getting paid back in full.
Posted Tuesday, March 17, 2009, at 10:41 AM ET
Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?
For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.
It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG’s counterparties are justified with an appeal to the sanctity of contract. If AIG’s contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.
But wait a moment, aren’t we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off. Why can’t Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn’t we already give Goldman a $25 billion capital infusion, and aren’t they sitting on more than $100 billion in cash? Haven’t we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn’t they have accepted a discount, and couldn’t they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?
The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.
So here are several questions that should be answered, in public, under oath, to clear the air:
What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?
Was it already known who the counterparties were and what the exposure was for each of the counterparties?
What did Goldman, and all the other counterparties, know about AIG’s financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn’t they bear a percentage of the risk of failure of their own counterparty?
What is the deeper relationship between Goldman and AIG? Didn’t they almost merge a few years ago but did not because Goldman couldn’t get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG’s business model was not to pay on insurance it had issued.
Why weren’t the counterparties immediately and fully disclosed?
Failure to answer these questions will feed the populist rage that is metastasizing very quickly. And it will raise basic questions about the competence of those who are supposedly guiding this economic policy.
Bailout backlash December 17, 2008Posted by rogerhollander in Economic Crisis.
Tags: auto industry, bailout, banks, bernanke, Bloomberg, brent budowsky, ceo's, congress, Economic Crisis, fdic, Federal Reserve, govenment, ponzi, roger hollander, sec, taxpayers, treasury, trickle down
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|Posted: 12/16/08 05:17 PM [ET]
|Americans have begun an angry backlash against bailouts that could become a national revolt in 2009.
The Federal Reserve has cut interest rates by some 500 basis points. Government agencies have poured close to $8 trillion into banking bailouts. The Treasury secretary has promoted massive government support of troubled, failed and corrupted institutions.
This program is a 100 percent top-down exercise involving the largest amount of money in history.
Virtually none of this money directly helps average Americans. Virtually none of it trickles down to the people who suffer the most and pay for the program.
After $8 trillion we are still debating whether any money should be used to directly help average Americans.
The Fed has cut rates dramatically. It is shameful that after all of these rate cuts and all of these bailouts, banks continue raising credit card interest rates, lowering credit lines, refusing to lend to creditworthy businesses and allowing the Grapes of Wrath-like foreclosure crisis to continue with minimal effort to address it.
The banks don’t trust the banks. The banks don’t trust their customers. Business does not trust the banks or the government. Taxpayers don’t trust anyone.
The only trust is from the Fed and the Treasury Department that transfer huge sums of money to the large institutions that caused the problem, often in secret, often involving complicated financial derivatives that neither Congress nor many CEOs understand, based on trust that these institutions will use this money wisely, which often they have not.
The Securities and Exchange Commission is discredited. The Federal Reserve has failed in its duty as banking regulator. Congress has failed in its duty of oversight. The most wise and citizen-friendly regulator, Sheila Bair of the Federal Deposit Insurance Corporation, is treated with contempt by the Treasury secretary.
The public backlash is only beginning. It will rise with every new scandal and Ponzi scheme and every new increase in credit card rates. It has already infected good judgment in the auto case, where major support is needed, tied to major plans for industry renewal.
I do not oppose bailouts, I oppose bailouts managed with banana-republic standards of secrecy and incompetence in which recipients of massive taxpayer largesse work against those who pay for this largesse.
Today the Federal Reserve Board refuses to disclose information regarding some $2 trillion provided to financial institutions. Bloomberg business news has filed a historic freedom-of-information case seeking disclosure. Congress and the president-elect should support it.
Bailout money is not a private account that belongs to Fed Chairman Ben Bernanke, Fed governors, the Treasury secretary or the banks. It is the people’s money. It should be used to benefit the people. It should be monitored through the checks and balances of the democratic process.
Secrecy is the enemy of equity, integrity and common sense. Secrecy is the friend of negligence, misjudgment and corruption. There are probably selected instances where the Fed should not disclose, but show me $2 trillion of secretly spent money and I will show you trouble.
In the coming days I will be writing about the Bloomberg case and offering specific bailout proposals on The Hill’s Pundits Blog. The backlash is coming. Time is short. The dangers are extreme.
America needs new thinking and an informed national consensus — and we need it now.
Budowsky was an aide to former Sen. Lloyd Bentsen and Bill Alexander, then chief deputy majority whip of the House. He holds an LL.M. degree in international financial law from the London School of Economics. He can be reached at firstname.lastname@example.org and read on The Hill’s Pundits Blog.
Workers Laid Off, Executives Paid Off, Bernard Madoff December 16, 2008Posted by rogerhollander in Economic Crisis, Labor.
Tags: $700 billion bailout, amy goodman, bank of america, Barack Obama, denis moynihan, enron, executive bonuses, George Bush, Goldman Sachs, jobless, labor, labour, Lehman Brothers, madoff, Merrill Lynch, nasdaq, paulson, pelosi, ponzi, pyramid, roger hollander, sec, severnce pay, tarp, taxpayers, treasury, unemployment, Wall Street, workers
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Posted on Dec 16, 2008, www.truthdig.com
By Amy Goodman
The global financial crisis deepens, with more than 10 million in the U.S. out of work, according to the Department of Labor. Unemployment hit 6.7 percent in November. Add the 7.3 million “involuntary part-time workers,” who want to work full time but can’t find such a job. Jobless claims have reached a 26-year high, while 30 states reportedly face potential shortfalls in their unemployment-insurance pools. The stunning failure of regulators like the Securities and Exchange Commission was again highlighted, as former NASDAQ head Bernard Madoff (you got it, pronounced “made off”) was arrested for allegedly running the world’s largest criminal pyramid scheme, with losses expected to be $50 billion, dwarfing those from the Enron scandal. The picture is grim—unless, that is, you are a corporate executive.
The $700-billion financial bailout package, TARP (Troubled Assets Relief Program), was supposed to mandate the elimination of exorbitant executive compensation and “golden parachutes.” As U.S. taxpayers pony up their hard-earned dollars, highflying executives and corporate boards are now considering whether to give themselves multimillion-dollar bonuses.
According to The Washington Post, the specific language in the TARP law that forbade such payouts was changed at the last minute, with a small but significant one-sentence edit made by the Bush administration. The Post reported, “The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction.”
Read the fine print. Of the TARP bailout funds to be disbursed, only those that were technically spent “in an auction” would carry limits on executive pay. But Treasury Secretary Henry Paulson and his former Goldman Sachs colleague Neel Kashkari (yes, pronounced “cash carry”), who is running the program, aren’t inclined to spend the funds in auctions. They prefer their Capital Purchase Program, handing over cash directly. Recall Paulson’s curriculum vitae: He began as a special assistant to John Ehrlichman in the Nixon White House and then went on to work for a quarter-century at Goldman Sachs, one of the largest recipients of bailout funds and chief competitor to Lehman Brothers, the firm that Paulson let fail.
The Government Accountability Office issued a report on TARP Dec. 10, expressing concerns about the lack of oversight of the companies receiving bailout funds. The report states that “without a strong oversight and monitoring function, Treasury’s ability to ensure an appropriate level of accountability and transparency will be limited.” The nonprofit news organization ProPublica has been tracking the bailout program, reporting details that remain shrouded by the Treasury Department. As of Tuesday, 202 institutions had obtained bailout funds totaling close to $250 billion.
House Speaker Nancy Pelosi said recently, “The Treasury Department’s implementation of the TARP is insufficiently transparent and is not accountable to American taxpayers.” Barney Frank, D-Mass., chair of the House Financial Services Committee, said earlier, “Use of these funds … for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. … is a violation of the terms of the act.”
Republican Sen. Charles Grassley of Iowa said of the loophole, “The flimsy executive-compensation restrictions in the original bill are now all but gone.” Put aside for the moment that these three all voted for the legislation. The law clearly needs to be corrected before additional funds are granted.
The sums these titans of Wall Street are walking away with are staggering. In their annual “Executive Excess” report, the groups United for a Fair Economy and the Institute for Policy Studies reported 2007 compensation for Lloyd Blankfein, CEO of Goldman Sachs (Paulson’s replacement), at $54 million and that of John Thain, CEO of Merrill Lynch, at a whopping $83 million. Merrill has since been sold to Bank of America, after losing more than $11 billion this year—yet Thain still wants a $10-million bonus.
Paulson, Kashkari and their boss, President George W. Bush, might not be the best people to spend the next $350-billion tranche of U.S. taxpayer money, with just weeks to go before the new Congress convenes Jan. 6 and Barack Obama assumes the presidency Jan. 20. As Watergate leaker Deep Throat was said to have told Bob Woodward, back when Paulson was just starting out, “Follow the money.” The U.S. populace, its representatives in Congress and the new Obama administration need to follow the money, close the executive-pay loophole and demand accountability from the banks that the public has bailed out.
Denis Moynihan contributed research to this column.
Amy Goodman is the host of “Democracy Now!,” a daily international TV/radio news hour airing on more than 700 stations in North America.
© 2008 Amy Goodman
Distributed by King Features Syndicate
Fed Refuses to Disclose Recipients of $2 Trillion December 14, 2008Posted by rogerhollander in Economic Crisis.
Tags: bernanke, Bloomberg, citigroup, Federal Reserve, freedom of information, idc, jpmorgan, lehman, mark pittam, paulson, roger hollander, subprime, tarp, taxpayers, treasury
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Federal Reserve Bank Chairman Ben Bernanke is seen through a cracked door. The Fed is refusing to disclose exactly who is receiving $2 trillion in non-TARP bank loans. (Photo: Jonathan Ernst / Reuters)
Friday 12 December 2008, www.truthout.org
The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.
Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.
The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.
”If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.
The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.
Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.
Congress is demanding more transparency from the Fed and Treasury on bailout, most recently during Dec. 10 hearings by the House Financial Services committee when Representative David Scott, a Georgia Democrat, said Americans had “been bamboozled.”
Bloomberg News, a unit of New York-based Bloomberg LP, on May 21 asked the Fed to provide data on collateral posted from April 4 to May 20. The central bank said on June 19 that it needed until July 3 to search documents and determine whether it would make them public. Bloomberg didn’t receive a formal response that would let it file an appeal within the legal time limit.
On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It filed suit Nov. 7.
In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”
The Fed supplied copies of three e-mails in response to a request that it disclose the identities of those supplying data on collateral as well as their contracts.
While the senders and recipients of the messages were revealed, the contents were erased except for two phrases identifying a vendor as “IDC.” One of the e-mails” subject lines refers to “Interactive Data – Auction Rate Security Advisory May 1, 2008.”
Brian Willinsky, a spokesman for Bedford, Massachusetts- based Interactive Data Corp., a seller of fixed-income securities information, declined to comment.
”Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, multiple harms that might result from disclosure,” Jennifer J. Johnson, the secretary for the Fed’s Board of Governors, said in a letter e-mailed to Bloomberg News.
The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.
”In its considered judgment and in view of current circumstances, it would be a dangerous step to release this otherwise confidential information,” she wrote.
New York-based Citigroup Inc., which is shrinking its global workforce of 352,000 through asset sales and job cuts, is among the nine biggest banks receiving $125 billion in capital from the TARP since it was signed into law Oct. 3. More than 170 regional lenders are seeking an additional $74 billion.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would meet congressional demands for transparency in a $700 billion bailout of the banking system.
The Freedom of Information Act obliges federal agencies to make government documents available to the press and public. The Bloomberg lawsuit, filed in New York, doesn”t seek money damages.
“Right to Know”
”There has to be something they can tell the public because we have a right to know what they are doing,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.
”It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit and our financial system has completely collapsed,” she said.
The Fed’s five-page response to Bloomberg may be “unprecedented” because the board usually doesn’t go into such detail about its position, said Lee Levine, a partner at Levine Sullivan Koch & Schulz LLP in Washington.
”This is uncharted territory,” said Levine during an interview from his New York office. “The Freedom of Information Act wasn’t built to anticipate this situation and that’s evident from the way the Fed tried to shoehorn their argument into the trade-secrets exemption.”
The Fed lent cash and government bonds to banks that handed over collateral including stocks and subprime and structured securities such as collateralized debt obligations, according to the Fed Web site.
Borrowers include the now-bankrupt Lehman Brothers Holdings Inc., Citigroup and New York-based JPMorgan Chase & Co., the country’s biggest bank by assets.
Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group, said in an interview last month.
”Americans don’t want to get blindsided anymore,” Mendez said in an interview. “They don’t want it sugarcoated or whitewashed. They want the complete truth. The truth is we can’t take all the pain right now.”
The Bloomberg lawsuit said the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”
In response, the Fed argued that the trade-secret exemption could be expanded to include potential harm to any of the central bank’s customers, said Bruce Johnson, a lawyer at Davis Wright Tremaine LLP in Seattle. That expansion is not contained in the freedom-of-information law, Johnson said.
”I understand where they are coming from bureaucratically, but that means it’s all the more necessary for taxpayers to know what exactly is going on because of all the money that is being hurled at the banking system,” Johnson said.
The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).
Citigroup as the “Grim Reaper” December 10, 2008Posted by rogerhollander in Economic Crisis.
Tags: bank of america, banks, citigroup, Economic Crisis, fdic, Federal Reserve, financial crisis, general growth properties, ggp, grim reaper, jobs, Learsy, loans, malls, morgan chase, mortgages, roger hollander, tarp, taxpayers, toxic loans, treasury, Wall Street
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Raymond J. Learsy
www.huffingtonpost.com , December 10, 208
Brava Citigroup! From a broken institution you talked your compliant Wall Street buddies operating out of Washington to save your behind. Getting the Federal Deposit Insurance Corporation to provide protection against potentially debilitating losses from over $300 billion in toxic loans and securities which will now remain on Citigroup balance sheets as prime assets. Further the Federal Reserve stands ready to backup other residual risks in Citigroup’s asset pool of non recourse loans. And in addition the Treasury will be investing $20 billion in Citigroup from the TARP. Understand all of this? Just in case you don’t, the bottom line is that our government (read: taxpayers) put $300 to $400 billion on the line without which Citigroup would have in all probability been “bye-bye”.
Chastened and thankful? Give us a break. Charlie Gasparino in a “Citi’s Gossip Game” segment on CNBC yesterday reported that their Chief Finanacial Officer Gary Crittenden has been buttonholing anyone who would listen, bad mouthing Citigroups competitors such as Bank of America and JP Morgan Chase in order to boost Citigroup shares by putting down Citigroup’s competitors. Is that why we needed to save Citigroup?
And putting down JP Morgan Chase? An institution that has responded to the TARP assistance by announcing a policy that it will work with 400,000 homeowners to modify $70 billion in mortgages and loans, loans that have many homeowners scrambling to make payments they can no longer afford. Further it will stop foreclosures even in the most extreme cases for 90 days and has hired 300 mortgage counselors to help distressed homeowners. Speak of an example of civic responsibility.
What has Citigroup done in contrast? The Wall Street Journal reported on Friday that Citigroup is the lone holdout in a bank consortium comprised of Bank of America, Deutsche Bank, Eurohypo, Goldman Sachs and Wachovia who have all agreed to a nine month extension for debt laden General Growth Properties. GGP is the country’s second largest mall operator with over 200 malls in communities around the nation and with tens of thousands of jobs both directly and indirectly that could be impacted. Citigroup’s position would trigger a default in turn triggering cross defaults on other General Growth debt forcing the company to file for bankruptcy. A step that would not only effect General Growth, its employees and the communities wherein it operates, but would exacerbate, in a dramatically negative way, the commercial real estate market throughout the country. A Reuters article warns “Results of the negotiations [with General Growth Properties] are being closely watched in the $750 billion commercial mortgage backed securities market.”
In an earlier post, I ended by paraphrasing Lenin, “Wall Street will sell us the rope to hang American Capitalism.”
And in Citigroup we have created the perfect “Grim Reaper”.
Cutting Wages Won’t Solve Detroit Three’s Crisis December 9, 2008Posted by rogerhollander in Economic Crisis, Labor.
Tags: auto workers, automakers, automobile industry, bailout, bankers, bankruptcy, benefits, big three, bonuses, chevrolet, chrysler, concessions, congress, detroit, Economic Crisis, environment, executive salaries, ford, foreclosure, gas, general motors, global warming, healthcare, homeowners, insurance, jane slaughter, japan, jobs, labor, labor costs, labour, mark brenner, medicare, motor city, oil, pension, petroleum, roger hollander, steel, sticker price, suv, taxpayers, toyota, uaw, unemployment, uninsured, unions, wages, Wall Street, workers
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Automakers have blamed workers for the financial collapse of the Detroit auto industry. (Photo: motortrend.com)
Thursday 04 December 2008, www.truthout.org
by: Mark Brenner and Jane Slaughter, The Detroit News
In the 1980s, Chevrolet proclaimed itself the “Heartbeat of America,” but today the American auto industry barely registers a pulse. As Washington considers Detroit’s plea for life support, the only place where pundits, politicians and Big Three executives seem to agree is that auto workers must make do with less or watch their jobs disappear.
Some lawmakers have complained that unions are the source of the problem, but they fail to understand some inconvenient truths. According to the latest figures from the U.S. Commerce Department, every worker in Big Three factories could work for free and only shave 5 percent off the cost of their cars. The auto companies pay as much for hubcaps and fenders as they do in wages.
Data from the Harbour Report – the industry’s gold standard – reveal that even including their benefits, labor costs in the Big Three’s plants account for less than 10 percent of the sticker price.
No matter how you cut the numbers, demolishing auto workers’ living standards will not transform the industry. The Big Three have been trying for years. They have slashed at least 200,000 jobs since 2004, and last year they wrung billions of dollars in concessions from the United Auto Workers. The union instituted a second-tier wage of $14.50 an hour for new hires, lower than pay in the nonunion, foreign-owned auto companies in the South.
The impact is all too apparent in auto communities across the Midwest. Forty thousand Detroit homeowners are in foreclosure, and the unemployment rate has hit double digits in many auto towns. That suffering will multiply if one of the Big Three collapses, or if retired auto workers are punished for decisions they had no hand in.
Automakers’ decisions have been disastrous. While competitors developed gasoline-electric hybrids, Detroit mined the gas-guzzling truck and SUV market, making $104 billion in profits between 1994 and 2003. Wall Street and Congress weren’t calling for more research and development or curbing the company’s dividend payments and high-flying executive salaries back then.
Pundits crow for us to “Dump Detroit,” but they don’t advertise that through a bailout or the bankruptcy courts taxpayers will shoulder the burden of the automakers’ colossal missteps.
Washington shouldn’t back into a bailout – it should jump in feet-first. What’s needed is not a half-measure, a cash infusion in exchange for selling the corporate jets. Now is the time to take a sweeping look at the country’s needs.
Our first steps should confront global warming and oil dependence through a comprehensive overhaul of the transportation system. Federal policy hasn’t changed since the 1950s, when gas was a nickel a gallon.
Detroit, the Arsenal of Democracy, retooled in a matter of weeks when we needed tanks, not cars, in 1941. We could produce this century’s answer to the interstate highway system and build mass transit and high-speed trains.
That same sense of urgency is needed for vehicles that don’t run on petroleum. If American engineers can build satellites that read your license plate from outer space, they can develop an alternative to the gasoline engine.
Automakers need direction as much as financial support from Washington, just as Japan’s government molded Toyota into a world-class performer.
In every other industrialized nation, government has stepped in and given their auto companies a significant edge. Most important, they all adopted national health care and pension systems decades ago.
General Motors alone provides health coverage to a million people – workers, retirees and families. The annual price tag is about $5 billion, which, as CEO Rick Wagoner is fond of pointing out, is more than GM spends on steel.
That burden could be lifted, to the benefit of 47 million uninsured Americans, by adopting a Medicare-style program for everyone. It would save the nation as much as $350 billion per year now spent for insurance companies to shuffle paper and deny claims.
The fate of the Motor City captivates us because it speaks to our future. For 30 years, politicians have bowed to Wall Street, sitting by while wages for most workers stagnated. Big Three workers have maintained their living standards better than most, in no small part because they have a union. In a country where investment bankers gave themselves $30 billion in bonuses last Christmas, have we reached a point where $58,000 a year with benefits is too much to ask?
We once promised the pursuit of happiness to all, including the workers who make our factories run, not just those who trade credit default swaps. Now more than ever, we need to recapture that spirit with a thoroughgoing plan to rescue the environment, care for the sick and transform transportation.
Mark Brenner and Jane Slaughter work for Labor Notes, an independent monthly labor magazine in Detroit. It receives no support from the United Auto Workers.