I just watched the film “Inside Job” (link to trailer) that dissects the causes of the “great recession” we are still suffering from. It is the most cogent and understandable explanation of a very complex set of issues I have seen yet. The film won a 2011 Academy Award for best documentary. Now out on Blue Ray and DVD. Watch it.
Update: And it looks like the Federal and New York regulators and prosecutors are finally getting serious about all this.
You have to read the latest Matt Taibbi essay on Goldman Sachs.
They weren’t murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn’t leave much doubt: Goldman Sachs should stand trial.
It is scathing, and apparently true. The New York Times today also highlights the growing pressure to bring charges against Goldman.
Senator Carl Levin, who headed up the Congressional inquiry, has sent his findings to the Justice Department to figure out whether executives broke the law.
Such was the topic of the latest piece by Mr. Taibbi, who famously called Goldman Sachs a “vampire squid” in a 2009 article on the bank. His recent article was titled: “The People vs. Goldman Sachs. A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges.”
Goldman’s stock was down more than 3 percent in early trading on Thursday. It is currently trading around $142. It closed 2010 at $168.16.
Watch all these clips about the suffering that is still plaguing Americans and largely caused by mortgage lenders. It makes so sad and so angry as well. Besides the terrible suffering for the homeowners involved, this type of behavior continues the decline in real estate values for everyone. Over 5 million foreclosures and counting. Where is the outrage? Why is all the governmental support going to the banks and not to people?
Visit msnbc.com for breaking news, world news, and news about the economy
Visit msnbc.com for breaking news, world news, and news about the economy
Visit msnbc.com for breaking news, world news, and news about the economy
Visit msnbc.com for breaking news, world news, and news about the economy
The text version of this story is available here.
Matt Taibbi is back and has reviewed some of the recipients of Fed bail-out funding, now that Congress has ordered a release of the information. I am sure you will be surprised to note the many of the recipients were neither in financial distress or even located in the United States.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the “other” budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. “Our jaws are literally dropping as we’re reading this,” says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. “Every one of these transactions is outrageous.”
And there is more available from Michael Lewis here.
How much do we have to subsidize the big banks and how long will this go on?
Right now, these banks, who have received billions of taxpayer bail-outs and were largely responsible for the severe recession of the past three years, are trying to gouge consumers and small business by increasing repealing a reduction in debit card fees. You might think this is chump change, but it is not.
The United States has very high debit-card fees, colloquially known as swipe fees –- 44 cents on average (that amounts to 1.14 percent of the average purchase price of $39) and up to 98 cents for some kinds of cards. These fees are per transaction and although the formula is complex, the payment is a significant percentage of many purchases and poses a particular problem for smaller merchants. These fees are estimated to amount to $16 billion to $17 billion annually.
Other countries, including Australia and members of the European Union, have acted to reduce interchange fees – because the actual cost of such transactions is quite low. Think about it: the interchange fee for checks, which also draw directly on bank deposits, is zero.
The Federal Reserve is requiring a maximum charge of $.12 per transaction and the banks are fighting.
Here is a summary of the problem and what the TARP-baby banks are fighting.
There is not a word in this essay by Charles Simic with which I disagree. This country is being destroyed by corruption funded by the (very) monied class and across political party lines.
It must be difficult for any hostess nowadays to stop her dinner guests from reciting to each other over the course of an evening the endless examples of lies and stupidities they’ve come across in the press and on TV. As they get more and more wound up, they try to outdo each other, losing all interest in the food on their plates. I know that when I get together with friends, we make a conscious effort to change the subject and talk about grandchildren, reminisce about the past and the movies we’ve seen, though we can’t manage it for very long. We end up disheartening and demoralizing each other and saying goodnight, embarrassed and annoyed with ourselves, as if being upset about what is being done to us is not a subject fit for polite society.
In an atmosphere of growing anxiety and hysteria, in which the true causes and the scale of our dire national predicament are deliberately concealed and obfuscated by our political establishment and by the corporate media, no wonder there’s confusion and anger everywhere. As anyone who has traveled around this country and talked to people knows, Americans are not just badly informed, but downright ignorant about most things that affect their lives. How nice it would be if our President leveled with us and told us that our deficit is caused in significant part by the wars we are fighting in Afghanistan and Pakistan, the hundreds of military bases we are maintaining around the world, the huge tax breaks for the rich, and the bailout of Wall Street. As we know, we are not about to hear anything of the kind.
By the president’s calculation, telling the truth to the American people would doom his reelection campaign, since he would not be able to raise the billion dollars he needs this time around. The kind of people who have that kind of money and will agree to contribute to his campaign know very well what informed voters in a working democracy would to do to them once they understood just who has depleted the national treasury to line their own pockets. No doubt, he and his political party will do anything to avoid the truth and will propose outwardly attractive solutions—like the health care bill that not only expands coverage but greatly benefits insurance companies and does little to reduce healthcare costs. They hope that these kinds of measures will lure the majority of voters who won’t bother to learn the details, but they will also send a clear signal to the moneyed classes that they won’t be inconvenienced in the least.
Matt Taibbi’s latest article questions the lack of prosecutions of Wall Street bankers following the collapse. Other than Bernie Madoff, it seems clear that the regulatory/enforcement system is not working. Taibbi notes that the enforcers leave the regulators or the US Attorneys Office after a few years and then move to the law firms and banks they previously regulated. Does this lead to lax enforcement? Why does no one prohibit the revolving door?
But the real fireworks came when Khuzami, the SEC’s director of enforcement, talked about a new “cooperation initiative” the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.
“We are going to try to get those individuals answers,” Khuzami announced, as to “whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client.”
Aguirre, listening in the crowd, couldn’t believe Khuzami’s brazenness. The SEC’s enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. “First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC,” Aguirre says. “Then the Justice Department commits itself to pass, so that the player knows he’s ‘safe.’ Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department.”
When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants “get answers” regarding the status of their criminal cases, he initially doesn’t believe it. Then I send him a transcript of the comment. “I am very, very surprised by Khuzami’s statement, which does seem to me to be contrary to past practice — and not a good thing,” the former prosecutor says.
Earlier this month, when Sen. Chuck Grassley found out about Khuzami’s comments, he sent the SEC a letter noting that the agency’s own enforcement manual not only prohibits such “answer getting,” it even bars the SEC from giving defendants the Justice Department’s phone number. “Should counsel or the individual ask which criminal authorities they should contact,” the manual reads, “staff should decline to answer, unless authorized by the relevant criminal authorities.” Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. “We collaborate with the SEC, but they do not consult with us when they resolve their cases,” Assistant Attorney General Lanny Breuer assured Congress in January. “They do that independently.”
Glenn Greenwald, one of the targets of the planned smear campaigns for the benefit of the US Chamber of Commerce (outlined in a previous post), responds. Read the whole post to understand what if feels like to be targeted in a smear campaign. He gets to the heart of the matter.
But the real issue highlighted by this episode is just how lawless and unrestrained is the unified axis of government and corporate power. I’ve written many times about this issue — the full-scale merger between public and private spheres – because it’s easily one of the most critical yet under-discussed political topics. Especially (though by no means only) in the worlds of the Surveillance and National Security State, the powers of the state have become largely privatized. There is very little separation between government power and corporate power. Those who wield the latter intrinsically wield the former. The revolving door between the highest levels of government and corporate offices rotates so fast and continuously that it has basically flown off its track and no longer provides even the minimal barrier it once did. It’s not merely that corporate power is unrestrained; it’s worse than that: corporations actively exploit the power of the state to further entrench and enhance their power.
That’s what this anti-WikiLeaks campaign is generally: it’s a concerted, unified effort between government and the most powerful entities in the private sector (Bank of America is the largest bank in the nation). The firms the Bank has hired (such as Booz Allen) are suffused with the highest level former defense and intelligence officials, while these other outside firms (including Hunton & Williams and Palantir) are extremely well-connected to the U.S. Government. The U.S. Government’s obsession with destroying WikiLeaks has been well-documented. And because the U.S. Government is free to break the law without any constraints, oversight or accountability, so, too, are its “private partners” able to act lawlessly. That was the lesson of the Congressional vesting of full retroactive immunity on lawbreaking telecoms, of the refusal to prosecute any of the important Wall Street criminals who caused the 2008 financial crisis, and of the instinctive efforts of the political class to protect defrauding mortgage banks.
This is almost impossible to believe, but the Chamber of Commerce either hired or considered hiring a group of businesses, including a prominent law firm, to smear groups and individuals that criticised their members. Update: Here is a link to the report prepared by HB Gary outlining the campaign.
Once again, it is big money against the people. Wake up America.
John Cole offers the best summary:
One thing that even the dim bulbs in the media should understand by now is that there is in fact a class war going on, and it is the rich and powerful who are waging it. Anyone who does anything that empowers the little people or that threatens the wealth and power of the plutocracy must be destroyed.
***
You have to understand the mindset- they are playing for keeps. The vast majority of the wealth isn’t enough. They want it all. Anything that gets in their way must be destroyed. They don’t care if they poison every stream or crack the foundation to your house or if your daughter dies getting a back alley abortion or if every one in your mining town has an inoperable tumor. They just don’t give a shit.
And they are well financed, have a strong infrastructure, a sympathetic media, and entire organizations dedicated to running cover for them. They’ve even created their own mythical ideology in which they are superhero Galtian overlords, and this lets a few rubes who babble ignorantly about the free market get to feel like they are playing along, when they are really just being played. It’s these guys versus all of us, yet half the people being rogered (Republicans and glibertarians and hell, half the Democrats) have been convinced the other side is a bigger threat to their well being than the people with all the power, money, and resources. Hell, even in this post I can guarantee that at least five shitheads will come in and tell me they don’t like Glenn Greenwald because he uses too many words or that Jane Hamsher is shrill or because neither of them fellate Obama to satisfaction. Talk about not fucking getting it.
I don’t even know why we bother to hold elections any more, to be honest, the game is so rigged. We’re a banana republic, and it is just a matter of time before we descend into necklacing and other tribal bullshit.
Update: More from the New York Times:
The bank and the chamber do not appear to have directly solicited the spylike services of HBGary Federal. Rather, HBGary Federal offered to do the work for Hunton & Williams, a corporate law firm that has represented them.
A Hunton & Williams spokesman did not comment. But spokesmen for Bank of America and the chamber said Friday that they had not known about the presentations and that HBGary Federal was never hired on their behalf. A chamber spokesman characterized the proposal as “abhorrent.”
Since the hacked e-mails appeared on a file-sharing network several days ago, a broad range of bloggers and journalists have been scouring them and discussing highlights on the Internet. The New York Times also obtained a copy of the archive.
One document that has received particular attention is a PowerPoint presentation that said a trio of data-related companies — HBGary Federal, Palantir Technologies and Berico Technologies — could help attack WikiLeaks, which is rumored to be preparing to release internal e-mails from Bank of America.
One idea was to submit fake documents covertly to WikiLeaks, and then expose them as forgeries to discredit the group. It also suggested pressuring WikiLeaks’ supporters — notably Glenn Greenwald of Salon.com — by threatening their careers.
“Without the support of people like Glenn, WikiLeaks would fold,” the presentation said.
Another set of documents proposed similar ways to embarrass adversaries of the Chamber of Commerce for an initial fee of $200,000 and $2 million later.
Lot 354: America’s Housing Meltdown is great special from KCET in Los Angeles that puts a human face on the residential real estate collapse.
SoCal Connected and the acclaimed public radio show Marketplace have teamed up to take a tough look at the housing market crisis through one Los Angeles home. This special, reported by Marketplace’s Kai Ryssdal, traces the property from savvy investment boom to foreclosure bust and back again. We’ll meet the couple who bought the home low in 2002, improved it, and sold it four years later at almost triple the price; the couple who bought high and lost the home to foreclosure; and the couple who bought it this year at a fraction of the price it sold for in 2006.
Investigations of the process used by large banks to foreclose on homeowners are underway in every state. An early report has come out from Florida’s Attorney General. Check out this presentation, particularly beginning around page 23. Click the full screen button to read clearly. Despite the documented abuse, however, there is no indication from the Florida AG that the state will do anything like bring charges against the banks and servicers involved.
And, on Friday, in Massachusetts, the state supreme court voided two mortgage forclosures due to faulty procedures and opened the door to more challenges of prior foreclosures.
Legal experts said that while this ruling did not set a precedent for other states, the outcome will be closely watched across the country because it is the first such ruling from a state’s highest court. Investors viewed the ruling as negative for banks; an index of financial company shares fell almost 1 percent on the day.
“The broad implication is you’ve got to dot your i’s and cross your t’s,” said Kathleen G. Cully, an expert in bankruptcy and lender regulatory law in New York. “You need a proper chain of title, and in both of these cases there was a gap in the chain.”
The banks involved should be ashamed of their behaviors, and regulators should not hesitate to protect the property rights of homeowners.
Matt Taibbi’s new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America
There was a favorable review in Sunday’s NYT:
Taibbi persuasively dismisses the argument that the financial crisis was caused by poor people with a taste for real estate, delineating how Wall Street eagerly handed out mortgages to anyone with a pulse, and then used the home loans as the material for a far more lucrative enterprise — the exotic investments known as derivatives. The derivatives market depended upon a steady supply of mortgages. But when too many of the bets went bad, Wall Street persuaded the Treasury to construct bailouts that Taibbi describes as a “labyrinthine financial sewage system designed to stick us all with the raw waste and pump clean water back to Wall Street.”
Much of this story is familiar. The shelves are full of books describing how Wall Street turned mortgage markets into a casino. Goldman’s dealings with A.I.G. have been probed in the pages of this newspaper, among others. What Taibbi brings is a broader context and his trademark snarky prose. He has written a polemic, a full-scale indictment of Wall Street and Washington, one that sometimes veers toward ranting, yet serves as a needed antidote to the more even-tempered but fatuous accounts already available.
In Taibbi’s telling, contemporary finance has perverted markets that once served important functions, turning them into frontier-style betting parlors. Futures markets, for example, were created to allow farmers to hedge themselves against fluctuations in crop prices, and were traditionally regulated to prevent investors from amassing holdings large enough to manipulate prices. But over the last two decades, the federal government, at Wall Street’s behest, pared down its rules, allowing speculators to dominate commodities markets. Wall Street then steered pension funds into commodities. This, Taibbi claims, was the real cause of the commodities bubble that sent oil prices soaring to ludicrous heights in the summer of 2008. And now, with many local authorities hurting for cash, Wall Street is increasingly brokering deals that turn municipal facilities like Chicago’s parking meters into investment vehicles controlled by overseas governments — deals that Taibbi presents as a taxpayer rip-off.
Nevada and Arizona Attorneys General have filed suit against Bank of America over fraud in connection with homeowners seeking loan modifications and foreclosure practices. It is about time.
In withering complaints filed in state courts in both states, the attorneys general accused Bank of America of assuring customers that they would not be foreclosed upon while they were seeking loan modifications, only to proceed with foreclosures anyway; of falsely telling customers that they must be in default to obtain a modification; of promising that the modifications would be made permanent if they completed a trial period, only to renege on the deal; and of conjuring up bogus reasons for denying modifications.
“Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious,” Catherine Cortez Masto, the attorney general of Nevada said in a statement.
Many Nevada homeowners continued “to make mortgage payments they could not afford, running through their savings, their retirement funds or their children’s education funds.”
I had been a multi-decade Bank of America customer with bank accounts and credit cards. I ended that relationship a few months ago based on behavior like this toward their customers. Bank of America received $45 Billion in bailout/TARP money during the crisis. Yet, they deceive homeowners looking for loan modifications and they foreclose on homes despite promises not to do so. Shameful.
There is also a multi-state investigation of such practices underway.
Update: Further demonstrating that Bank of America acts solely in its own interest, it has announced it will no longer process payments going to Wikileaks. As you have probably heard, Julian Assange of Wikileaks has threatened to release insider documents relating to bank wrong-doing, and there is speculation that BofA is at the center of those documents. This should trigger the release. Could be interesting to see what happens.
What is debt? Does a borrower have more than a contractual duty to repay a loan? Is it immoral to default on a debt? And where, by the way, do creditors get the money they loan?
David Graber, in an excerpt from an upcoming book called Debt: The First 5,000 Years
But if the welfare state must be destroyed in order, ostensibly, to settle our debts, we should ask ourselves: To whom, exactly, are those debts owed? And where did our creditors get the money that was loaned to us? (The answer, of course: We owe the very financial institutions we recently bailed out for making fraudulent and idiotic loans; they didn’t get the money anywhere, they just made it up.) Whenever such questions have been openly asked in Europe, riots have tended to ensue.
Such eruptions make it clear that debt must be removed from that rarefied sphere of morality arbitrated by transnational institutions (whose representatives are also its main beneficiaries), where it has become ensconced, and returned to the sphere of open political debate. In the ancient world, it was not debt that was considered sacred, but rather the power to make it disappear. We are, it seems, long overdue for a contemporary Jubilee, one that would affect consumer debt as well as international debt, and that would not only relieve a great amount of human suffering but also remind us that money is not ineffable, that paying one’s debt is not the essence of morality, that borrowing and lending are human arrangements, and that if democracy is to mean anything, it is the ability to all agree to arrange things differently.
It is significant that, since Hammurabi, great imperial states have invariably resisted this kind of politics. Athens and Rome established the paradigm: Even when confronted with continual debt crises, they insisted on legislating around the edges, softening the impact; they eliminated obvious abuses like debt slavery and used the spoils of empire to throw all sorts of extra benefits at their poorer citizens (who, after all, provided the rank and file of their armies) so as to keep them afloat. They did all this in such a way as to fend off any challenge to the principle of debt itself. The US has taken a remarkably similar approach: eliminating the worst abuses (e.g., debtors’ prisons), using the fruits of empire to provide subsidies, visible and otherwise, and, recently, manipulating currency rates to flood the country with cheap goods from China. Never has the governing class allowed anyone to question the sacred principle that we all must pay our debts. That principle has recently been exposed to be a flagrant lie. As it turns out, we all don’t have to pay our debts. Only some of us do.
Rich People Officially Win Class War
– Wonkette. I couldn’t have put it better myself.
Update: More scholarly analysis on the war against the poor that has been won by the rich here.
