Tag Archives: Wall Street

Bailout quote of the day

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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]

Economics quotes of the day

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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.

– Thomas Jefferson

Property monopolized or in the possession of a few is a curse to mankind.

– John Adams

It’s class warfare, my class is winning, but they shouldn’t be.

– Warren Buffett, CNN interview, May 25, 2005.

We are long on pepper spray

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English: Wall Street sign on Wall Street

Excellent “memo” from Michael Lewis.  Read the whole piece.

We have identified two looming threats:

The first is the shifting relationship between ambitious young people and money. There’s a reason the Lower 99 currently lack leadership: Anyone with the ability to organize large numbers of unsuccessful people has been diverted into Wall Street jobs, mainly in the analyst programs at Morgan Stanley and Goldman Sachs. Those jobs no longer exist, at least not in the quantities sufficient to distract an entire generation from examining the meaning of their lives.

Our Wall Street friends, wounded and weakened, can no longer pick up the tab for sucking the idealism out of America’s youth. But if not them, who? We on the committee are resigned to all elite universities becoming breeding grounds for insurrection, with the possible exception of Princeton.

The second threat is in the unstable mental pictures used by Lower 99ers to understand their economic lives. (We have found that they think in pictures.)

For many years the less viable among us have soothed themselves with metaphors of growth and abundance: rising tides, expanding pies, trickling down. A dollar in our pocket they viewed hopefully, as, perhaps, a few pennies in theirs. They appear to have switched this out of their minds for a new picture, of a life raft with shrinking provisions. A dollar in our pockets they now view as a dollar from theirs.

Fearing for their lives, the Lower 99 will surely become ever more desperate and troublesome. Complaints from our membership about their personal behavior are already running at post-French Revolutionary highs.

The Big Lie

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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.

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Couldn’t have said it better myself

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(Caution: language NSFW)

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(via Nothing To Do With Arborath)

Jackass quote of the day

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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.

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Jackass quote of the day (updated)

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Photo of Bank of America ATM Machine by Brian ...

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.

Economics quote of the day

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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.

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Wrong people arrested on Wall Street

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From the Borowitz Report:

NYPD spokesman Frank Hannefy explained the controversial decision to arrest Occupy Wall Street protesters while leaving the people who had brought the nation’s economy to the brink of Armageddon unmolested.

“As far as soulless individuals pillaging the country for their personal gain, that’s none of our business,” he said.  “But we’ll be damned if we’re going to let people march on newly seeded grass.”

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I’ll believe it when I actually see it

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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.

Arrogant quote of the day

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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.

The super-rich run scared

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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.