Check out this example of what reporting should be. We so rarely see this kind of persistence in questioning bureaucrats in this country. We need more.
Update: The New York Times has details on what this fight is all about.
Disdain for the uber-rich was unthinkable until —
It wasn’t the crash of 2008 that led to their fall from grace, nor exposure of the greed and stupidity that required a massive public rescue. It was their graceless reaction to the bailouts: no apologies, remorse or gratitude — even faked; just more arrogance, bonuses, takeovers, foreclosures. Wall Street begged to be occupied. The Unrepentant Financier could have been Time’s Person [of the Year].
- Rick Salutin, The decline of deference, Toronto Star, Thursday, Dec. 29, 2011.[via Quotation of the Day Mailing List]
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Property monopolized or in the possession of a few is a curse to mankind.
It’s class warfare, my class is winning, but they shouldn’t be.
– Warren Buffett, CNN interview, May 25, 2005.
Barry Ritholtz writes that Wall Street is promulgating a “Big Lie” concerning the economic collapse that began in 2007. Their Big Lie is that the collapse was caused by government policies.
A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.
Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.
Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.
The Big Lie made a surprise appearance Tuesday when New York Mayor Michael Bloomberg, responding to a question about Occupy Wall Street, stunned observers by exonerating Wall Street: “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.”
I have outlined previously why the Big Lie is indeed a lie. I won’t repeat it here, but I agree with everything Ritholtz writes in this article. But read the full article as it outlines even more problems with this Big Lie.
(Caution: language NSFW)
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It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that.
But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and congress certainly isn’t going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for.
– New York Mayor Michael Bloomberg. Federal policy did not force the banks to create billions in collateralized debt obligations that sliced-and-diced mortgage pools into fictional “AAA-rated” debt. Federal policy did not force the banks to make “liar loans” with no documentation of income or ability to pay. Nor did Federal policy force the banks to make huge bets against their own customers without disclosure.
I, like you, get a little incensed when you think about how much good all of you do, whether it’s volunteer hours, charitable giving we do, serving clients and customers well. You ought to think a little about that before you start yelling at us.
– Bank of America’s CEO Bryan Moynihan, speaking to a townhall meeting of his bank’s employees. He is “incensed” by the criticism of his bank? A bank which was knee deep in the CDO collapse that was a core cause of the economic collapse? A bank which has been being challenged by multiple state attorneys general for failing to provide reasonable service to mortgagors seeking help or information? A bank that has deployed fleets of robosigners? A bank that charges checking account customers $5/month for the privilege of allowing BofA to hold their money? A bank that has performed this poorly in the stock market?
I am incensed that he is incensed.
Update: It now appears that BofA is at least reconsidering its $5/month fee to use debit cards for shopping.
More than three years after the crisis and the accompanying bailouts, the six largest American financial institutions are significantly bigger than they were before the crisis, having been encouraged to snap up Bear Stearns and other competitors at bargain prices. These banks now have assets worth over 66 percent of gross domestic product — at least $9.4 trillion, up from 20 percent of G.D.P. in the 1990s. There is no evidence that institutions of this size add sufficient value to offset the systemic risk they pose.
– Jon Huntsman, GOP candidate for President, inveighing against “too big to fail” financial institutions.
You can watch streaming feeds from various Occupy Wall Street events around the world here.
Image via Wikipedia
Check out this statement from Treasury Secretary Tim Geithner:
You’ve seen very, very dramatic enforcement actions already by the enforcement authorities across the U.S. government, and I’m sure you’re going to see more to come. You should stay tuned for that.
My first reaction is to ask for specifics on the “very, very dramatic” enforcement that has already occurred. Is he referring to a better-late-then-never prosecution of Bernie Madoff? A one-off prosecution of a mid-level Goldman employee? Did I miss something else?
Second, I promise to “stay tuned” but all I see right now is a test pattern on the screen.
Who do you think pays the taxes? Financial services are one of the last things we do in this country and do it well. Let’s embrace it. If you want to keep having jobs outsourced, keep attacking financial services. This is just disgruntled people.
– an unnamed longtime money manager, complaining about the Occupy Wall Street protestors. How can anyone involved in money management claim that our banking industry performs well, while we are still in the midst of a financial collapse caused directly by the financial sector taking unacceptable levels of risk? The arrogance, coupled with incompetence, is stunning.
They are starting to have the same sort of chutzpah that the Tea Party has. That’s what the political left sorely needs.
– Kalle Lasn, co-editor of Adbusters, on the growing anti-Wall Street protests in New York. The magazine’s July 2011 issue called for the occupation of Wall Street. (via Quotation of the Day Mailing List)
The super-rich (and their GOP supporters) appear to be running scared, given their shrill name-calling of the Occupy Wall Street protesters. Paul Krugman explains the panic:
The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.
Last year, you may recall, a number of financial-industry barons went wild over very mild criticism from President Obama. They denounced Mr. Obama as being almost a socialist for endorsing the so-called Volcker rule, which would simply prohibit banks backed by federal guarantees from engaging in risky speculation. And as for their reaction to proposals to close a loophole that lets some of them pay remarkably low taxes — well, Stephen Schwarzman, chairman of the Blackstone Group, compared it to Hitler’s invasion of Poland.
And then there’s the campaign of character assassination against Elizabeth Warren, the financial reformer now running for the Senate in Massachusetts. Not long ago a YouTube video of Ms. Warren making an eloquent, down-to-earth case for taxes on the rich went viral. Nothing about what she said was radical — it was no more than a modern riff on Oliver Wendell Holmes’s famous dictum that “Taxes are what we pay for civilized society.”
But listening to the reliable defenders of the wealthy, you’d think that Ms. Warren was the second coming of Leon Trotsky. George Will declared that she has a “collectivist agenda,” that she believes that “individualism is a chimera.” And Rush Limbaugh called her “a parasite who hates her host. Willing to destroy the host while she sucks the life out of it.”
What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is.
When was the last time you saw a major American corporation issue an official press release like this?
Either Mr. Lynch has a very poor memory or he’s lying.
Update: And now I am informed in the comments that Oracle has posted a follow-up. Terrific and now you can view Autonomy’s PowerPoint slides from the pitch meeting.
I am sure it is accurate. I wonder how many lawyers looked at this and, through an abundance of caution, warned against it? I am in awe of Larry Ellison and his apparent willingness to speak the truth directly.
And I think that this sort of press release is interesting, right now, because of how many major technology, media and retail companies are finding themselves at loggerheads with others, often in complicated ways. The disputes among companies now is not simply driven by the normal competitive environment, but rather by a large chess game on multiple levels, with literally billions at stake. Change is in the air (and in the cash register with the iPad/iPhone juggernaut) and the field is open for those with the guts to make big plays and carry them off. Alliances are ripe for creation and long-standing teams are at risk of destruction. Billions will be made and lost in the next year or two, from Wall Street to Hollywood to Silicon Valley to unnamed locales yet to be identified.
All of this is a result of rapid technological change (primarily driven by mobile device advances, social media and faster, broader Internet media streaming) and by fundamental realignments of profit opportunities brought on by the great recession. When banks don’t make money, but instead lose money in the billions, and when real estate collapses around the world and when China becomes by far the fastest growing economy, big money begins to reevaluate its opportunities. Bets are being placed on a grand scale by investment decisions and even more importantly by the decisions being made by the biggest enterprises of the day. There are multiple land rushes going on at the same time.
Perhaps this is all good news for the long run economy.
(via Daring Fireball)
