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Kaptur's letter calling for criminal investigation into Goldman heads to DOJ
By Vicki Needham | The Hill | Reprinted in its entirety courtesy of The Hill
A letter signed by more than 60 lawmakers calling for a criminal investigation against Goldman Sachs will be delivered to the Justice Department on Wednesday.
Rep. Marcy Kaptur, (D-Ohio), who spearheaded the charge, will take the letter with the support 62 Members and a petition with 140,000 signatures to Attorney General Eric Holder.
Kaptur has worked with the Progressive Change Campaign Committee and MoveOn.org, to collect signatures backing the call for criminal charges.
Several Goldman Sachs employees, including CEO Lloyd Blankfein spent all day Tuesday on Capitol Hill discussing their firm's actions leading up to the 2008 financial crisis.
To see a copy of Kaptur's letter, click here.
To view the petition, click here.
Ryan Grim reports that a bipartisan group of Senators is backing an amendment that will restore the Grayson-Paul “audit the fed” language to the Senate Financial Reform bill after Chris Dodd gutted it.
An amendment by Bernie Sanders would restore the teeth of the Paul-Grayson language, and he’s joined by Republicans John McCain (Ariz.), Jim DeMint (S.C.), David Vitter (La.) and Sam Brownback (Kan.), as well as Russ Feingold and chairman of the Judiciary Committee, Sen. Pat Leahy (D-Vt.).
“The group is actively gathering cosponsors as the Senate continues to vote to break a GOP filibuster which is preventing debate from beginning,” writes Grim.
Last year, FDL circulated a letter signed by Richard Trumka, Andy Stern, Leo Gerard, Bill Black, Tyler Durden, Dean Baker and Jamie Galbraith in support of the Grayson-Paul language. Campaign for America’s Future also circulated a letter signed by Robert Borosage, Adam Green (PCCCO), Matt Kibbee (Freedomworks), Grover Norquist, Robert Weisman (Public Citizen), Chris Bowers and Ryan Alexander (Taxpayers for Common Sense) in support of Grayson-Paul. Read more.
Not only did Goldman Sachs profit on betting against CDOs they designed to fail; more importantly, they insured them through AIG which led to a $182 billion taxpayer bailout.
Have you heard the news? It’s everywhere! The SEC and Congress have all of a sudden sprung to life and are now “getting tough” on Goldman Sachs. Is this all the first phase of a long-awaited investigation that will reveal the causes of our current economic crisis, or is this just more show trials and psychological operations designed to manipulate public opinion and make the American people feel that our elected officials are finally standing up to their campaign funders on Wall Street?
First off, let’s address these SEC charges against Goldman Sachs. At first glance you might think, oh big deal, this is just a minor civil suit that only indicts a low-level Goldman employee. Goldman will just throw some money at it and it will most likely go away. After all, Wall Street firms have already thrown over $430 billion out to derail 1500 cases against them, so what will make this any different?
We are also left wondering, if the SEC was serious about this case, why aren’t they investigating and prosecuting John Paulson and top Goldman executives under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) statutes? Even the NY Times reported that top executives were involved in the process. If you think Lloyd Blankfein wasn’t fully aware of this billion dollar deal involving John Paulson, you’re delusional. Blankfein became CEO of Goldman due to his outstanding expertise in this particular area, serving as Goldman’s head of the Fixed Income, Currency and Commodities Division (FICC) since its formation in 1997.
So unless this is just the first of many moves on the part of the SEC, this whole case amounts to a psychological operation designed to once again quell popular outrage. These indications lead me to believe that this is a classic “limited hang-out.” As Wikipedia explains it:
Henry Blodgett chronicles the Goldman Sachs timeline in Business Insider's Clusterstock. Fast, easy, incriminating reading: Goldman Shorted The Housing Market BEFORE It Sold Abacus To Those Idiot German Banks.
Acts of rebellion which promote moral and political change must be nonviolent. And one of the most potent nonviolent alternatives in the country, which defies the corporate state and calls for an end to imperial wars, is the secessionist movement bubbling up in some two dozen states including Vermont, Texas, Alaska and Hawaii.
These movements do not always embrace liberal values. Most of the groups in the South champion a “neo-Confederacy” and are often exclusively male and white. Secessionists, who call for statewide referendums to secede, do not advocate the use of force. It is unclear, however, if some will turn to force if the federal structure ever denies them independence.
These groups at least grasp that the old divisions between liberals and conservatives are obsolete and meaningless. They understand that corporations have carried out a coup d’état. They recognize that our permanent war economy and costly and futile imperial wars are unsustainable and they demand that we take popular action to prevent citizens from being further impoverished and robbed by Wall Street speculators and corporations.
“The defining characteristic of the Second Vermont Republic is that there are two enemies, the United States government and corporate America,” Thomas Naylor, who founded Vermont’s secessionist movement, told me when I reached him by phone at his home 10 miles south of Burlington. “One owns the other one. We are not like the tea party. The underlying premise of the tea party movement is that the system is fixable.”
Naylor rattles off the stark indicators of the nation’s decline, noting that the United States stands near the bottom among industrialized countries in voter turnout, last in health care, last in education and highest in homicide rates, mortality, STDs among juveniles, youth pregnancy, abortion and divorce. The nation, he notes grimly, has trillions in deficits it can never repay, is beset by staggering income disparities, has destroyed its manufacturing base and is the planet’s most egregious polluter and greediest consumer of fossil fuels. With some 40 million Americans living in poverty, tens of millions more in a category called “near poverty” and a permanent underclass trapped by a real unemployment rate of 17 percent, there is ample tinder for internal combustion. If we do not undertake a dramatic reversal soon, he asserts, the country and the global environment will implode with catastrophic consequences.
The secessionist movement is gaining ground in several states, especially Texas, where elected officials increasingly have to contend with secessionist sentiments.
No matter what the Dodd bill says, if one of the big 4 banks fails, they're going to have to get bailed out -- their assets equal 50% of GDP! Incremental steps are nice, but that's not what we will fight for. They're going to have to be broken up!
Loud support for Breaking up the Banks is growing! The power of too-big-to-fail banks to skirt regulations and get a bailout is too big.
Yesterday, Baseline Scenario blogged the petition. Democrats.com is now running it too. Lawrence Lessig, key advocate against political corruption, signed onto our petition, among some of your favorite thinkers: McJoan of Daily Kos, Nomi Prins, Economist Dean Baker, Chris Hayes of the Nation, Zephyr Teachout, Law Professor, Heather Booth of AFR, Adam Quinn of Credo, David Arkush of Public Citizen, Jan Frel of Alternet, Cryn Johannsen of AllEducationMatters, David Cobb, 2004 Green Party Presidential Candidate, Rob Johnson of Roosevelt Institute, and Dana Balicki of Code Pink, Doug Rushkoff of Life Inc.
For those of us against the bailouts and too-big-to-fail, this is our bill. For those of us for fair and safe competition, this is our bill. For those of us railing against political corruption, this is our bill.
Breaking up the banks is supported by Alan Greenspan, Thomas Hoenig of the St. Louis Fed, Robert Reich, Joe Stiglitz, Paul Krugman, Michael Moore, Paul Volcker, Simon Johnson, Arnold Kling, George Soros, and ... Citigroup (seriously).
SEC Porn Problem: Officials Surfing Sites During Financial Crisis, Report Finds
SEC Employees Exposed Downloading, Uploading Pornography at Work
By Jonathan Karl | ABC News
The Securities and Exchange Commission is the sheriff of the financial industry, looking for crimes such as Bernard Madoff's Ponzi scheme, but a new government report obtained by ABC News has concluded that some senior employees spent hours on the agency's computers looking at sites such as naughty.com, skankwire and youporn as the financial crisis was unfolding.
"These guys in the middle of a financial crisis are spending their time looking at prurient material on the Internet," said Peter Morici, a professor at the University of Maryland and former director of the Office of Economics at the U.S. International Trade Commission.
"It's reckless, and indicates a contempt for the taxpayer and the taxpayer's interest in monitoring financial markets," Morici said.
The investigation, which was conducted by the SEC's internal watchdog at the request of Sen. Chuck Grassley, R-Iowa, found 31 serious offenders during the past two and a half years. That's less than 1 percent of the agency's 3,500 employees but 17 of the alleged offenders were senior SEC officers whose salaries ranged from $100,000 to $222,000 per year. (Emphasis mine. ~Chip :)) Read more.
Today, we FINALLY have a bill that we can call our own. This is our moment - the best chance for the biggest reform to Wall St, big corporations and political corruption in 80 years -- Senator Kaufman and Sherrod Brown have introduced the bold SAFE Banking Act that will break up the biggest banks and keep future banks from becoming too-big-to-fail ad infinitum... to end the bailouts and political handouts.
I personally am giving this my all because this is a big chance to set a precedent for government and Wall St forever. Please, sign onto the petition with me and tell your friends and all the groups you know. We have two days left in this week.
Over a year of work and we may be a part of the slaying of the political corruption that undermines our democracy. If you support ending "too big to fail" banks please, please show your support:
1) Sign the petition we're doing with Progressive Change Campaign, you'll be asked to Whip Congress too!
2) Make it your job to forward this email to anyone you can think of who might want to know.
I promise this is not going to be just a petition, there's more coming. If you want to donate, we can do even more and we'll send you a batch of our yet unrevealed, new stickers, especially if you use Paypal.
Sign on today, fight concentrated power now. And best wishes,
Tiffiniy Cheng and Donny Shaw
Links to info on the bill: "Financial Scrutiny Renews Debate on Size", New York Times; "A Short Citizen's Guide to Reforming Wall Street", Robert Reich; "An Amendment to Break up the Banks", Open Congress; "The Bill/Political Corruption", ANWF; "Breaking up the Banks", Simon Johnson. More on Facebook and our blog.
The financial services reform bill will be debated in the Senate next week. The great test for the bill will be what it does to rein in Goldman Sachs, the Wall Street institution famously described by Rolling Stone journalist Matt Taibbi as “a vampire squid jamming its blood funnel into anything that smells like money.”
The bill is being taken up just a week after the Securities and Exchange Commission issued civil fraud charges against Goldman for creating mortgage-backed investment vehicles deliberately designed to fail in order to benefit preferred clients. Everyone knows it’s tough to handcuff a squid. So some are advocating for a simpler solution.
Today, Senators Sherrod Brown and Ted Kaufman proposed a tasty dish of calamari. They unveiled the “Safe Banking Act of 2010” a commonsense measure to cap the size of the biggest banks as the single best way to prevent future taxpayer bailouts. Their bill will be offered as an amendment in the Senate and will result in the break up of the largest “too big to fail” institutions.
“We can either limit the size and leverage of 'too big to fail' financial institutions now, or we will suffer the economic consequences of their potential failure later," said Kaufman. “Breaking apart too-big-to-fail banks is the necessary first step in preventing another cycle of boom-bust-and-bailout.” Read more.
On April 20, 2010, author and political gadfly Ralph Nader gave a lecture at the Maryland Institute College of Art (MICA), in Baltimore, MD. He spoke before a near capacity audience for over an hour. Mr. Nader said corporate crimes, as opposed to “street crimes,” go mostly under-reported by the establishment media in the U.S. and are “rarely prosecuted.” He detailed how corporate “misbehavior, negligence and crimes” cost thousands of deaths every year in the country from “preventable” work-related diseases and injuries, [the Massey Mine Explosion]; air pollution; negligence in hospitals; and from medical malpractice cases. He also spotlighted how Wall Street insiders, using various schemes, looted “trillions of dollars” from workers’ pension funds. Mr. Nader added: “Forty-five thousand people die every year because they don’t have any health insurance.” Professor Fimin DeBrabander of MICA introduced Mr. Nader. For more information on Mr. Nader, go here.
From TomDispatch: Today's offering, a new word to describe how our country works -- kleptocracy -- and an original analysis to go with it -- William J. Astore, "American Kleptocracy, How Fears of Socialism and Fascism Hide Naked Theft."
Close your purse or keep your hand on that back pocket where your wallet's lodged while you read the latest post at TomDispatch.com, or you could find yourself without a cent. Americans, right and left, express fears about the coming of "socialism" or "fascism," writes historian and TomDispatch regular William J. Astore, but "what if instead of looking at where our government might be headed, we took a closer look at where we are -- at the power-brokers who run or influence our government, at those who are profiting and prospering from it? "
"If we were to take an honest look at America’s blasted landscape of 'losers' and the far shinier, spiffier world of “winners,” he adds, "we’d have to admit that it wasn’t signs of onrushing socialism or fascism that stood out, but of staggeringly self-aggrandizing greed and theft right in the here and now. We’d notice our public coffers being emptied to benefit major corporations and financial institutions working in close alliance with, and passing on remarkable sums of money to, the representatives of 'the people.' We’d see, in a word, kleptocracy on a scale to dazzle."
"Kleptocracy" is, of course, a word normally associated with corrupt and exploitative governments that steal ruthlessly and relentlessly from the people. It’s a word, in fact, that’s usually applied to flawed or failed governments in Africa, Latin America, or the nether regions of Asia, not the mature republic of the United States. Well, says Astore, think again -- and he makes a compact, brilliant argument for just why kleptocracy is now the word for us.
He concludes: "Is it any surprise then that, in seeking to export our form of government to Iraq and Afghanistan, we’ve produced not two model democracies, but two emerging kleptocracies, fueled respectively by oil and opium?... Why do we bother to feign shock when Iraqi and Afghan elites, a tiny minority, seek to enrich themselves at the expense of the majority? Shouldn’t we be flattered? Imitation, after all, is the sincerest form of flattery. Isn’t it?" This is an original. Don't miss it. Read it now.
Goldman Sachs: Master of the Universe
By Stephen Lendman
The status applies to all Wall Street giants, none, however, the equal of Goldman, the Grand Master. Like the fabled comic book Superman hero, it's:
- faster than its competitors, thanks to its proprietary software ability to front run markets (illegal, but no matter);
- more powerful than the government it controls; and
- able to leap past competitors, given its special status.
Founded in 1869, GS calls itself "a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide."
Since going public in 1999, the same year Glass-Steagall ended letting banks, insurers and securities companies combine, GS became a giant hedge fund trading against the advice given clients with the full faith and blessing of Washington - the same thing other Street giants did and profited handsomely.
On April 20, 2010, author and political gadfly Ralph Nader gave a lecture at the Maryland Institute College of Art (MICA), in Baltimore, MD. He spoke before a near capacity audience for over an hour. Mr. Nader spotlighted corporate power and abuses in the U.S., and how AIG, the insurance titan, is the biggest recipient of “welfare--$182 Billion!” He showed how the workers in Western Europe have long had splendid social programs, like: “universal health insurance,” that are regularly denied our citizens. Mr. Nader submitted that the American psyche is dominated by a “fundamentalist market” ideology. Corporation loyalty, he also charged, citing various examples of gross abuse, is to the “dollar sign,” and not to the country. Professor Fimin DeBrabander of MICA introduced Mr. Nader. For more information on Mr. Nader, go here.
Ralph Nader Rips Obama, Praises Rep. Ron Paul On April 20, 2010, author and political gadfly Ralph Nader gave a lecture at the Maryland Institute College of Art (MICA), in Baltimore, MD. He spoke before a near capacity audience for over an hour. During the Q&A, he was asked his opinion of President Barack Obama. Mr. Nader labeled Obama as “conflict-averse,” and criticized both his foreign and domestic polices. In response to a question about Rep. Ron Paul (R-TX), Mr. Nader said Rep. Paul was a “fresh voice,” and that he was “right” about ending the current privately owned Federal Reserve System, (“The Fed”), and that it should be a public agency and held “accountable” to the U.S. Congress. Mr. Nader also praised Rep. Paul’s opposition to “the wars of aggression” and to “empires,” but disagreed with him on other social justice issues. Professor Fimin DeBrabander of MICA introduced Mr. Nader.
Velvet Revolution Seeks Justice for Victims - Calls for Blankenship / Massey Energy Criminal Prosecution
Last Monday, our StopTheChamber.com spokesman and attorney, Kevin Zeese, wrote a letter to Attorney General Holder demanding a full scale criminal racketeering investigation against Massey Energy CEO and U.S. Chamber of Commerce director Don Blankenship for creating the safety hazards that led to the deaths of 29 miners in West Virginia. We followed with two press releases and, within hours, the disaster was no longer called “an accident,” but instead, the intentional and preventable act of a callous corporate CEO.
We were inundated with press inquires and Kevin gave interviews to the Wall Street Journal, National Public Radio, Huffington Post and even Dylan Ratigan on MSNBC, where Kevin appeared with Arianna Huffington and said that there would be no accountability or real reform without criminal prosecution of Blankenship. We posted that interview on YouTube and you can watch it here.
We now need to keep the pressure on to convince the Attorney General to launch a criminal probe into the actions of Massey Energy and the U.S. Chamber of Commerce. We need to let all those in Congress understand that there is no more business as usual and that they must stop meeting with and doing the bidding of the U.S. Chamber of Commerce, an organization that opposes worker safety and environmental protection.
You can help us with a sustained PR campaign consisting of dozens of press releases, online ads and lots of media appearances by our terrific spokespersons — attorney Kevin Zeese, best selling author David Swanson and award winning writer Brad Friedman. Please donate to this campaign here.
Here is the ad our StopTheChamber.com campaign started running today:
All The Best,
We can't do this without you!
Help us push this campaign into the media by writing letters to the editor, linking to it on your websites and Facebook pages, and Twittering. Donate to VR today to increase the volume on this campaign!
If you prefer to send check or money order, you can mail it to:
PO Box 9576
Washington DC, 20016
Goldman Sachs was charged with fraud last week by the Securities and Exchange Commission. The investment bank says the charges are “unfounded in law and fact.” Regulators allege “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party,” SEC Enforcement Director Robert Khuzami said in a statement. In other words, Goldman and a hedge fund client put together a ball of sub-prime crap designed to fail and bet against it. Goldman also took out insurance on those same mortgage backed securities from AIG–yes, the same AIG taxpayers bailed out to the tune of $180 billion. Goldman was paid a total of nearly $13 billion from AIG at the direction of Treasury Secretary Tim Geithner. What a mess and it is going to get much worse before it gets better.
Plaintiff attorneys are preparing for a deluge of future lawsuits written about in this recent Reuters article: The SEC’s charges against Goldman are already stirring up investors who lost big on the CDOs, according to well-known plaintiffs lawyer Jake Zamansky. “I’ve been contacted by Goldman customers to bring lawsuits to recover their losses,” Zamansky said. “It’s going to go way beyond ABACUS. (name of Goldman security in question) Regulators and plaintiffs’ lawyers are going to be looking at other deals, to what kind of conflicts Goldman has.” (Click here for the full Reuters story.) Also, the UK and German governments are asking for their own investigation into Goldman Sachs deals.
If you think this was the only shady deal dreamed up by Wall Street banks, you have another thing coming. All of the big banks have been selling securities called derivatives for at least two decades. Derivatives are usually bundles of debt. There are derivatives for mortgages, car loans, credit cards, student loans and all types of government debt, to name a few. Derivatives are complex, but when it comes right down to it, you can sum them all up as debt bets. Read more.
Noam Chomsky is America’s greatest intellectual. His massive body of work, which includes nearly 100 books, has for decades deflated and exposed the lies of the power elite and the myths they perpetrate. Chomsky has done this despite being blacklisted by the commercial media, turned into a pariah by the academy and, by his own admission, being a pedantic and at times slightly boring speaker. He combines moral autonomy with rigorous scholarship, a remarkable grasp of detail and a searing intellect. He curtly dismisses our two-party system as a mirage orchestrated by the corporate state, excoriates the liberal intelligentsia for being fops and courtiers and describes the drivel of the commercial media as a form of “brainwashing.” And as our nation’s most prescient critic of unregulated capitalism, globalization and the poison of empire, he enters his 81st year warning us that we have little time left to save our anemic democracy.
“It is very similar to late Weimar Germany,” Chomsky told me when I called him at his office in Cambridge, Mass. “The parallels are striking. There was also tremendous disillusionment with the parliamentary system. The most striking fact about Weimar was not that the Nazis managed to destroy the Social Democrats and the Communists but that the traditional parties, the Conservative and Liberal parties, were hated and disappeared. It left a vacuum which the Nazis very cleverly and intelligently managed to take over.”
“The United States is extremely lucky that no honest, charismatic figure has arisen,” Chomsky went on. “Every charismatic figure is such an obvious crook that he destroys himself, like McCarthy or Nixon or the evangelist preachers. If somebody comes along who is charismatic and honest this country is in real trouble because of the frustration, disillusionment, the justified anger and the absence of any coherent response. What are people supposed to think if someone says ‘I have got an answer, we have an enemy’? There it was the Jews. Here it will be the illegal immigrants and the blacks. We will be told that white males are a persecuted minority. We will be told we have to defend ourselves and the honor of the nation. Military force will be exalted. People will be beaten up. This could become an overwhelming force. And if it happens it will be more dangerous than Germany. The United States is the world power. Germany was powerful but had more powerful antagonists. I don’t think all this is very far away. If the polls are accurate it is not the Republicans but the right-wing Republicans, the crazed Republicans, who will sweep the next election.”
“I have never seen anything like this in my lifetime,” Chomsky added. “I am old enough to remember the 1930s. My whole family was unemployed. There were far more desperate conditions than today. But it was hopeful. People had hope. The CIO was organizing. No one wants to say it anymore but the Communist Party was the spearhead for labor and civil rights organizing. Even things like giving my unemployed seamstress aunt a week in the country. It was a life. There is nothing like that now. The mood of the country is frightening. The level of anger, frustration and hatred of institutions is not organized in a constructive way. It is going off into self-destructive fantasies.” Read more.
In late 2005, the booming U.S. housing market seemed to be slowing. The Federal Reserve had begun raising interest rates. Subprime mortgage company shares were falling. Investors began to balk at buying complex mortgage securities. The housing bubble, which had propelled a historic growth in home prices, seemed poised to deflate. And if it had, the great financial crisis of 2008, which produced the Great Recession of 2008-09, might have come sooner and been less severe.
At just that moment, a few savvy financial engineers at a suburban Chicago hedge fund helped revive the Wall Street money machine, spawning billions of dollars of securities ultimately backed by home mortgages.
When the crash came, nearly all of these securities became worthless, a loss of an estimated $40 billion paid by investors, the investment banks who helped bring them into the world, and, eventually, American taxpayers.
Yet the hedge fund, named Magnetar for the super-magnetic field created by the last moments of a dying star, earned outsized returns in the year the financial crisis began.
How Magnetar pulled this off is one of the untold stories of the meltdown. Only a small group of Wall Street insiders was privy to what became known as the Magnetar Trade. Nearly all of those approached by ProPublica declined to talk on the record, fearing their careers would be hurt if they spoke publicly. But interviews with participants, e-mails, thousands of pages of documents and details about the securities that until now have not been publicly disclosed shed light on an arcane, secretive corner of Wall Street. Read more.
QUESTION: As the nation's largest banks have regained their footing, what, if anything, can or should they do to help Americans still struggling as a result of the financial crisis and recession? Are there specific solutions or actions the banks should take or HAVE they already done enough? Do the banks have an "ethical obligation" to help those average American families still struggling?
ANSWER: First, banks have not recovered. It is essential to remember that the banks used their political clout last year to induce Congress to extort the Financial Accounting Standards Board (FASB) to change the accounting rules such that banks no longer have to recognize losses on their bad assets unless and until they sell them. Absent this massive accounting abuse, hiding over a trillion dollars in losses, banks would (overall) not be reporting these fictional "profits" and would not be permitted to award the exceptional executive bonuses that they have paid out.
Second, banks have, in reality (as opposed to their fictional accounting ala Lehman) been suffering large losses for at least five years. They only appeared to be profitable in 2005-2007 because they provided only trivial loss reserves (slightly over 1%) while making nonprime loans that, on average, suffer roughly 50% losses. Loss reserves fell for five straight years as bank risks exploded during those same five years. Had they reserved properly for their losses the industry would have reported large losses no later than 2005.
Third, banks have performed dismally when they were supposedly profitable. They funded the nonprime and the commercial real estate (CRE) bubbles that not only cause trillions of dollars of losses and the Great Recession, but also misallocated assets (physical and human) during those bubbles. Far too few societal resources went to productive investments that would increase productivity and employment. Our nation has critical shortages of workers with expertise in physics, engineering, and mathematics -- precisely the categories that we misallocated to finance instead of science and production. In finance, they (net) destroyed wealth by creating "mark to myth" financial models that maximized executive bonuses by inflating asset values and understating risk. Read more.
At a press conference in Annapolis, Maryland, on Tax Day, April 15, 2010, social justice activists charged: “Fully one-third of the biggest corporations in Maryland paid absolutely nothing in state income taxes in 2007!” Matthew Weinstein, Fiscal Policy Director for “Progressive Maryland,” added: “The Maryland Chamber of Commerce (MCC) has played our state legislators for suckers for years...Maryland families are subsidizing business to the tune of $2 billion a year.” The event was held in front of the MCC’s office on West Street. It was sponsored by “The Heart of Maryland Coalition,” which is an ad hoc group comprising “non-profits, labor and progressive” organizations.
We are in a Massive Unemployment Crisis in this Country
By Dave Lefcourt | OpEd News
We are in a massive unemployment crisis in this country that a rising DOW above 11,000 has no connection to and if anything masks the true state of the American economy....
Our "official" unemployment level is close to 10% but unofficially is closer to 20% when including those no longer looking for work, people working part time but want (and need) full time jobs as well as those who have exhausted their unemployment benefits. So the reality of joblessness (close to 30 million) doesn't match the "official" figures....
In the immediate dire situation, short term deficit spending will be needed to achieve large scale job creation. But over the long haul, considering our existing trillion dollar deficits where can we find the resources to fund and sustain these type programs long term (as is likely)? The answer ; the bloated defense budget of unnecessary military hardware (planes, aircraft carriers, atomic submarines, tanks and other military hardware that are still being built for an enemy (the USSR) that ceased to exist over 20 years ago.
Couple this unnecessary spending with our undeclared wars in Afghanistan and Iraq (not to mention our clandestine war in Pakistan) funded through Congressionally approved supplements not included in the yearly approved Defense Department budget) there exists yearly, well over a trillion dollars in wasteful and unnecessary government spending directed to the military/industrial complex.
This unnecessary military spending has been all but a sacrosanct and virtually untouchable to serious cuts (or for that matter even given to serious political debate).
But that situation has to change and the American people must be made aware that our endless war driven economy is depleting us financially and is a political straitjacket preventing us from providing the necessary resources that can help us return to and sustain a full employment economy. Read more.
To Organize Against Wall Street, We Need a Narrative Focusing on Crime and Massive Fraud
By Danny Schechter, Independent Filmmaker, Plunder | Global Research
In politics, it’s always all about the narrative, about how issues are framed.
As we ask ourselves, how we can be experiencing the largest economic meltdown in decades with millions out of work, and millions more losing their homes, and yet, with no real mass mobilization or ongoing response from the progressive world.
To understand this paradox, we need to reflect on how most of us we define the problem.
To this day, there has not been an aggressive investigation of who and what brought down the system ala the Pecora Commission appointed by FDR. Instead we have a wimpy ineffectual body that can’t get its act together. The New York Times, which hailed its appointment, now buries its defacto obit way back in the business section, noting it has “been hobbled by delays and internal disagreements and a lack of focus,”
At the same time, the bookshelves are filling up with volumes of complicated treatises on the complexities of derivatives, risky profit models and credit default swaps. The practitioners of the “dismal science” of economics are having a field day with longwinded dissertations that fail to engage the popular imagination.
We had a word for this when I worked in network television—MEGO, standing for “My Eyes Glaze Over!”
More popular writers are spinning catchy “yarns” like “The Big Short” which put it all down with psychologically-driven, character-based storytelling to how deluded everyone on Wall Street was. That leaves us feeling superior to the dunderheads who lost us trillions and, then, laughed all the way to their mansions in the Hamptons.
Missing is a hardnosed look at the financial crisis as a crime story---an approach that allows for morality as well as indignation, and resonates with public anger. It touches the nerve that most people feel. Read more.
A critical moment in banking reform
By Kevin Zeese | Prosperity Agenda US
Last month saw record bankruptcies since the federal personal bankruptcy law was tightened in October 2005, the underemployment rate increased to 20%, and the percentage of borrowers three months behind in mortgage payments is at 6.67% up from 2% in 2005.
People are hurting and the banks are taking advantage of them. Major banks are now part of the pay day loan scam charging up to 120% or higher interest rates. The rich are getting richer - the number of billionaires is increasing, the wealth divide is expanding with 70% of wealth now owned by the top 1%, CEO pay is $500 to every $1 made by the average worker. Wall Street is paying themselves record bonuses and salaries only because the taxpayers have provided them with trillions of dollars of our money.
The financial interests who dominate the Congress are doing a very effective job of preventing real financial reform. Rather than breaking up the big banks whose existence assures another financial collapse, the "reform" actually includes a back door bailout that gives the Fed emergency lending authority. And the Fed, which many criticized as a cause of the collapse, is gaining power under the proposed "reforms" including controlling the consumer protection agency.
I believe that during the past 18 months, there were very few instances of serial default and contagion that could have not been contained by adequate risk-based capital and liquidity. I presume, for example, that with 15% tangible equity capital, neither Bear Sterns nor Lehman Brothers would have been in trouble. Increased capital, I might add parenthetically, would also likely result in smaller executive compensation packages, since more capital would have to be retained in undistributed earnings.
FCIC Testimony, 4/7/10
It’s a question on everyone’s mind: how much capital must banks be made to hold? No other regulatory change can do as much to prevent another financial collapse. A bigger equity cushion not only buffers bank creditors from losses — preventing cascading bank runs — it by definition would reduce frothy lending that inflates bubbles in the first place.
The issue has new immediacy today, in the wake of revelations published by WSJ that major banks are masking their leverage. Because balance sheets are reported at a single point in time, i.e. the last day of the quarter, there’s an incentive to reduce risk around that particular day in order to present a pretty face to the world. Meanwhile, during the quarter banks are jacking up leverage in order to boost profits. While Lehman actually hid leverage (with Repo 105), other banks are temporarily reducing it, “understating debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five” quarters.
This is just another reason that, when setting new capital standards, regulators should err on the high side. Not only are banks sitting on large embedded losses with the help of extend and pretend accounting, there’s now strong evidence they’ll game whatever standards are set. Read more.
Last week the federal government’s Financial Crisis Inquiry Commission held hearings as part of their continuing investigation into the causes of the acute economic meltdown which occurred in late summer 2008. This bipartisan commission, partly inspired by the Pecora Commission- which investigated the causes of the Great Depression- is expected to report back to Congress before the end of the year.
Things don’t seem to be going well. The individuals questioned by the commission mostly seem to be diverting blame for the whole fiasco to someone else. Nobody is offering any tangible insights into the causes of the financial crisis.
Predictably, the commission will avoid calling any witnesses who might unequivocally indict the federal government for its role in the crisis, or suggest solutions which take away government power. Government commissions have a remarkable tendency to recommend granting even more power to the same useless government agencies that so utterly fail to prevent crises in the first place. We saw this with the Pecora Commission, we saw it after 9-11, and we’re seeing it again today with regard to financial regulations. For example, this latest commission almost certainly will suggest granting more power to the SEC, when in fact the SEC should be abolished as an embarrassing farce. Rest assured that this recommendation will be made without apology or sense of irony. Read more.
More Banker Outrage: Protesters Plan Marches on Wall Street Banks
Activists, Union Members Will Take to the Streets Again, but Are They Having any Impact?
By Alice Gomstyn and Rachel Humphries | ABC News
- "There's something fundamentally wrong with an economic and political system that allows the big banks to rewrite all the rules to stay afloat while allowing entire communities to collapse in the wake of the disaster caused by Wall Street," Anna Burger, the secretary-treasurer of the Service Employees International Union, said on a conference call with reporters Thursday. "That's why we're escalating and expanding this campaign."
- Organizers are calling on banks to help people stay in their homes, offer more small business loans, stop offering financing to payday lenders and stop attempts to block financial reforms. They say they're targeting their demands at the country's biggest banks: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
- When it comes to changing public policy, behind-the-scenes moves, including lobbying politicians and bureaucrats, typically work better than "outsider tactics" like demonstrations, said Dean Lacy, a professor of government at Dartmouth College.
- While much attention is paid to the massive amounts of cash that banks and lobbying groups pump into political campaigns, Lacy said lobbyists also have an advantage over grassroots protesters because they can make more targeted moves, such as urging a Congressional committee to block a specific provision in a bill or influencing an agency to change its enforcement of an existing policy. Read more.
More Banker Outrage: Protesters Plan Marches on Wall Street Banks
Activists, Union Members Will Take to the Streets Again, but Are They Having any Impact?
By Alice Gomstyn and Rachel Humphries | ABC News
Outrage over bonuses, bailouts and home foreclosures have prompted angry demonstrations at bank office buildings, bank conferences and even bankers' homes since the financial crisis began. With Wall Street reform proposals up for debate in Congress and bank shareholder meetings taking place later this month, protest organizers say they're getting ready to rally the troops again with several new demonstrations expected to draw thousands.
"There's something fundamentally wrong with an economic and political system that allows the big banks to rewrite all the rules to stay afloat while allowing entire communities to collapse in the wake of the disaster caused by Wall Street," Anna Burger, the secretary-treasurer of the Service Employees International Union, said on a conference call with reporters Thursday. "That's why we're escalating and expanding this campaign."
The SEIU, one of the most vocal critics of Wall Street and big U.S. banks, is part of a coalition of at least six groups -- including the AFL-CIO; the National People's Action, a racial and economic justice advocacy group; PICO National Network, a faith-based group; and North Carolina United Power, an organization of religious and community groups -- planning demonstrations across the country later this month.
Organizers are calling on banks to help people stay in their homes, offer more small business loans, stop offering financing to payday lenders and stop attempts to block financial reforms. They say they're targeting their demands at the country's biggest banks: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo. Read more.
- Economists at the International Monetary Fund project that the amount of government debt held in the world's advanced economies will soon be so great that it surpasses the value of what they produce in a year.
- In the United States, where the federal government's debt has reached 84 percent of GDP, Federal Reserve Chairman Ben S. Bernanke spelled out the risks in a speech this week calling for restraint of public spending on entitlement programs.
- But the same discourse is being heard across the world's mature economies, and IMF officials have begun to spell out the options -- tax hikes that might amount to as much as 3 percent of total economic output, a cap on increases in health and retirement benefits, and restrictions on spending on all other government programs.
- Economists disagree on the level at which government debt becomes a problem. Even the amounts currently forecast -- an average of 118 percent of GDP among the world's top developed economies by 2014 -- might be sustained if countries were willing to pay the price of high interest costs and slower growth. Some see 90 percent of GDP as a point at which government debt begins to influence growth. Read more.
The solution is simple though paradoxical: sufficient numbers of adult persons should be given enough money to purchase the necessities of life without having to work at all.
This is so because the benefits of technology have brought us to the point where distribution of purchasing power without reference to labor is the most efficient and least wasteful economic model available. The borrowed or printed federal dollars currently lavished on the banks, the armed forces, and the government bureaucracies that implement stimulus programs would be much more efficiently spent if simply given away.
No one can seriously doubt that the huge amounts of borrowed federal dollars poured into the economy since Barack Obama became president has prevented even more jobs from being lost than might otherwise have been the case in the current devastating recession. It’s impossible, however, to come up with a “real” number, because no economist has a good enough handle on matters to sort out all the variables at play, including readjustments due to the fall of housing prices, low interest rates, a slightly improved export environment, rebounding of depleted inventories, new highway construction resulting from stimulus spending, etc. Still, let’s look at some facts about the current so-called “recovery”:
- Un- and under-employment remains high–officially over 17 percent, not including people who have given up looking for work.
- The cost to create (or save) jobs has been ludicrously high. Estimates of what it has cost the federal government–meaning the taxpayer–to create a single job range from $70,000 to $500,000, depending on whether bailouts lavished on the failed banking system are included.
- While Wall Street rakes in record profits and the stock market creeps back with the DJIA now approaching 11,000, the rest of the economy is sputtering. Public service jobs at the state and local level, including teacher positions, are disappearing like shredded newspaper in a blast furnace. The best the Obama administration can come up with for the next phase is some extremely convoluted encouragement for more bank lending to small businesses, even though these businesses are operating in an environment of crippled consumer demand that may last for years to come.
- The two economic sectors that are reasonably “strong”–the military and health care–are essentially non-productive. The military uses Keynesian deficit-spending to support its gargantuan job base, while the health care industry feasts at the public trough through the ever-increasing cost of Medicare and other spending programs. But like the bailouts and stimulus, it’s being done by both sectors with borrowed or printed money through marketing of Treasury bonds whose value becomes more precarious by the day.
- What stimulus there is has been is coming to an end as the Federal Reserve reduces “quantitative easing” and the Obama administration launches its bipartisan deficit reduction commission. Read more.