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Facing Forcelosure, Man Screws Bank by Bulldozing Home
By Joshua Holland | Alternet
Like many people, Terry Hoskins has had troubles with his bank. But his solution to foreclosure might be unique.
Hoskins said he’s been in a struggle with RiverHills Bank over his Clermont County home for nearly a decade, a struggle that was coming to an end as the bank began foreclosure proceedings on his $350,000 home.
“When I see I owe $160,000 on a home valued at $350,000, and someone decides they want to take it – no, I wasn’t going to stand for that, so I took it down,” Hoskins said. Read more.
"The (US) economy has reached its debt limit and is entering its insolvency phase. We are not in a cycle but (at) the end of an era. The old world of debt pyramiding to a fraudulent degree cannot be restored..."
Project Censored's top 2010 story was "US Congress Sells Out to Wall Street," highlighting that since 2001, "eight of the most troubled firms have donated $64.2 million to congressional candidates, presidential candidates and the Republican and Democratic parties." It's no surprise that they own them, what Wall Street Watch.org showed in a March 2009 Essential Information and Consumer Education Foundation report titled,"Sold Out: How Wall Street and Washington Betrayed America."
The accompanying press release said:
Over the past decade, "$5 billion in political contributions bought Wall Street freedom from regulation, (and) restraint." From 1998 - 2008, "Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates (the FIRE sector)" spent over $1.7 billion in political contributions and another $3.4 billion on lobbyists, in return for which:
- they were freed from regulation;
- could speculate on financial derivatives and an alphabet soup of securitized garbage, including asset-backed securities (ABSs), mortgage-backed securities (MBSs), collateralized mortgage obligations (CMOs), collateralized debt obligations (CDOs), collateralized bond obligations (CBOs), credit default swaps (CDSs), and collateralized fund obligations (CFOs) - combined, sliced, diced, packaged, repackaged, and sold in tranches to sophisticated and ordinary investors, many unwittingly through mutual funds, 401(k)s, pensions, and the like;
- could merge commercial and investment banking and insurance operations;
- bilk investors and the public through fraudulent schemes; and
- get trillions of bailout dollars when the economy crashed.
Washington D.C. (February 19, 2010) – Chairman Kucinich (D-OH) today announced that the Domestic Policy Subcommittee will hold a hearing on Tuesday, February 25, 2010 entitled “Foreclosures Continue: What needs to Change in the Administration’s Response.” The hearing will be held at 2:00 p.m. in Room 2154 of the Rayburn House Office Building.
The purpose of this hearing is to examine the function and the impact of the Administration’s response to the ongoing foreclosure crisis. The Subcommittee will hear testimony from a Treasury Department official, as well as other experts who will provide insight as to the impact of the Administration’s program, and suggestions for its improvement.
Part III: Exposing Our Enemy - Meet the Economic Elite
By David DeGraw | AmpedStatus | Friday, February 19th, 2010
- I: Casualties of Economic Terrorism, Surveying the Damage
- II: The Rise of the Economic Elite
- III: Exposing Our Enemy - Meet the Economic Elite
- IV: The Financial Coup d’Etat
- V: Overcoming the Divide and Conquer Strategy
- VI: How to Fight Back and Win: Common Ground Issues That Must Be Won
III: Exposing Our Enemy - Meet the Economic Elite
"Chinese leaders are deploying their reserves to try and pressure the US to stop haranguing China about its currency and trade policies and to back off from interference in its domestic political and human rights issues,"..."While China may reduce its holdings of US debt in order to send a signal to Washington - though this is not necessarily the only reason it would do so - it has no intention of selling debt to the point that it wrecks the US economic recovery, since doing so would destroy China's own economic and socio-political stability,"...
China sold a record amount of its US Treasury holdings in December, ceding its place as the world's biggest foreign holder of US debt to Japan.
According to Treasury figures released on Tuesday, Beijing sold off more than $34bn of its holdings in the final month of 2009, cutting its holding of US debt by just over 4 per cent to $755.4bn.
Japan now holds almost $11bn more US debt than China, with a total of nearly $769bn.
Japan had been the largest holder of US Treasury bonds until September 2008, when it was overtaken by China. Read more.
Drowning in Debt: What the Nation's Budget Woes Mean for You
Economists Predict Cutbacks, Tax Increases That 'Aren't Even Imaginable'
By Devin Dwyer | ABC News
Over the past year alone, the amount the U.S. government owes its lenders has grown to more than half the country's entire economic output, or gross domestic product. Even more alarming, experts say, is that those figures will climb to an unprecedented 200 percent of GDP by 2038 without a dramatic shift in course.
American political and economic leaders have sounded the alarm for years about the red ink rising in reports on the federal government's fiscal health.
But now the problem of mounting national debt is worse than it ever has been before with -- potentially dire consequences for taxpayers, according to a report by the nonpartisan Peterson-Pew Commission on Budget Reform.
"It keeps me awake at night, looking at all that red ink," said President Obama in Nashua, N.H., on Feb. 2. "Most of it is structural and we inherited it. The only way that we are going to fix it is if both parties come together and start making some tough decisions about our long-term priorities."
Obama will sign an executive order tomorrow that establishes a bipartisan National Commission on Fiscal Responsibility and Reform to make recommendations on how to reduce the country's debt. Read more.
From TomDispatch this afternoon, a striking account of how the United States has captured the global market in advanced weapons sales and why that's not news in this country: Frida Berrigan, "America's Global Weapons Monopoly, Don't Call It 'the Global Arms Trade'"
When the media focus on the export of weaponry to the world -- and it's seldom a big story -- they invariably write about "the global arms trade" and "competition." Tom Dispatch regular Frida Berrigan, senior program associate with the New America Foundation’s Arms and Security Initiative, suggests that the language is all wrong. As it happens, the U.S. has a near stranglehold on the "trade" -- "If we’re looking at the figures for that 'trade' in a clear-eyed way," she writes, "there is really just one seller and so many buyers." After all, the U.S. controls nearly 70% of global arms exports today and the nearest "competitor," Italy (not Russia or China), a mere 9%. Imagine that.
It used to be that the United States exported goods, products, and machinery of all sorts in prodigious quantities: cars and trucks, steel and computers, and high-tech gizmos. But those days are largely over. Now, what we successfully export are things that go boom in the night -- and the Pentagon is working hard to insure that U.S. weapons makers are even more "competitive" by relaxing what export controls on weaponry now exists.
Berrigan concludes, speaking of recent multi-billion dollar U.S. arms deals: "Such deals are staggering. They contribute more bang and blast to a world already bristling with particularly lethal weaponry. They are a striking American success story in a time filled with failures. Put in the lurid but everyday terms of a nation weaned on reality television, the Pentagon is pimping for the U.S. weapons industry. The weapons industry, for its part, is a pusher for every kind of lethal technology. The two of them together are working to ensure that more of the same will flow out of the U.S. in ever easier and more lucrative ways.
"Global arms trade? Send that one back to the Department of Euphemisms. Pimps and pushers with a lucrative global monopoly on a killing drug -- maybe that’s the language we need. And maybe, just maybe, it’s time to launch a 'war on weapons.'”
America’s Global Weapons Monopoly
Don’t Call It “the Global Arms Trade”
By Frida Berrigan | TomDispatch
On the relatively rare occasions when the media turns its attention to U.S. weapons sales abroad and shines its not-so-bright spotlight on the latest set of facts and figures, it invariably speaks of “the global arms trade.”
Let’s consider that label for a moment, word by word:
*It is global, since there are few places on the planet that lie beyond the reach of the weapons industry.
*Arms sounds so old-fashioned and anodyne when what we’re talking about is advanced technology designed to kill and maim.
*And trade suggests a give and take among many parties when, if we’re looking at the figures for that “trade” in a clear-eyed way, there is really just one seller and so many buyers.
How about updating it this way: “the global weapons monopoly.” Read more.
——-I: Causalities of Economic Terrorism, Surveying the Damage
——-II: The Rise of the Economic Elite
——-III: Exposing Our Enemy: Meet the Economic Elite
——-IV: The Financial Coup d’Etat
——-V: Overcoming the Divide and Conquer Strategy
——-VI: How to Fight Back and Win: Common Ground Issues That Must Be Won
“The war against working people should be understood to be a real war…. Specifically in the U.S., which happens to have a highly class-conscious business class…. And they have long seen themselves as fighting a bitter class war, except they don’t want anybody else to know about it.” — Noam Chomsky
As a record number of US citizens are struggling to get by, many of the largest corporations are experiencing record-breaking profits, and CEOs are receiving record-breaking bonuses. How could this be happening; how did we get to this point?
The Economic Elite have escalated their attack on US workers over the past few years; however, this attack began to build intensity in the 1970s. In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970 - 2000. With the lion’s share of increased profits going to the CEOs, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.
Paul Buchheit, from DePaul University, revealed, “From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.” Robert Freeman added, “Between 2002 and 2006, it was even worse: an astounding three quarters of all the economy’s growth was captured by the top 1%.”
Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the US population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all-time record.
VR Celebrates 5-Year Anniversary By Exposing Chamber of Commerce's Campaign for Corporate Takeover of America
VR’s Five Year Anniversary:Help Us Celebrate With Ads Exposing The Chamber Of Commerce’s Campaign For The Corporate Takeover Of America
Join Our Stop The Chamber Campaign
This week, thanks to all your participation, VR celebrates its five year anniversary of grassroots activism and government accountability. We look forward to the next five years with more campaigns and greater citizen involvement. Let’s start with a full page ad in Washington and Internet ads exposing the Chamber of Commerce for its billion dollar campaign to put elections in the hands of corporations rather than the American people.
Last month, the Supreme Court ruled that corporations can spend unlimited amounts of money to manipulate elections. The driving force behind this decision was the Chamber of Commerce and its army of corporate bad guys. Since the decision, we have learned that the Chamber spent $144 million for lobbying in 2009 — more than either the Democrats or Republicans. The Chamber has announced plans to spend more than ever in 2010 to elect candidates that support polluters and robber barons.
Two weeks ago, Congress held hearings on ways to blunt the Chamber’s takeover of all branches of government. The Brennan Center testified about the Chamber’s shameful and illegal practice of laundering money for big corporations in order to avoid disclosure requirements, comparing it to people using Swiss bank accounts to avoid paying US taxes.
We want to expose the Chamber’s illegal, unethical and opaque practices with a full page print ad in Washington and ads across the Internet. Our last print ad drew lots of attention from the mainstream media, with Fox News and Rush Limbaugh calling us out for taking on big corporations, and their fans warning us to back off of the Chamber. We had to complain to the FBI to stop the threats.
Let’s let them know that we are not intimidated and we will continue to expose the Chamber’s corruption. Our ads will call on Congress and the Department of Justice to investigate the Chamber’s money laundering operation with full subpoena power, grand jury action and public hearings. We need your help.
Sen. Sanders questioned Treasury Sec. Geithner at a Budget Committee hearing and talked about Republican efforts to shift blame for record deficits away from their own unpaid-for spending habits during the Bush presidency. Watch Secretary Geithner bob and weave his way around the questions, appearing to agree without directly doing so.
Federal Lobbying Climbs in 2009 as Lawmakers Execute Aggressive Congressional Agenda | Open Secrets
Efforts by Health, Business Industries Help Push Influence Peddling to New Heights
At nearly $266.8 million, the pharmaceutical and health products industry’s federal lobbying expenditures not only outpaced all other business industries and special interest areas in 2009, but stand as the greatest amount ever spent on lobbying efforts by a single industry for one year....In 2009, this sector spent nearly $544 million on federal lobbying efforts, up almost 12 percent from its 2008 total of about $487 million.
The economy stunk. Corporations slashed jobs. And some firms, once juggernauts of American industry, simply ceased to exist.
But for federal lobbyists, 2009 proved to be a year of riches unlike any other, a Center for Responsive Politics analysis indicates.
In all, federal lobbyists’ clients spent more than $3.47 billion last year, often driven to Washington, D.C.’s power centers and halls of influence by political issues central to the age: health care reform, financial reform, energy policy.
That figure represents a more than 5 percent increase over $3.3 billion worth of federal lobbying recorded in 2008, the previous all-time annual high for lobbying expenditures. And it comes in a year when a recession persisted, the dollar’s value against major foreign currencies declined and joblessness rates increased....
To explore the Center for Responsive Politics' full lobbying database, go here.
New Mexico's House of Representatives voted Monday to pass a bill that allows the state to move $2 billion - $5 billion of state funds to credit unions and small banks.
The municipal funds bill was approved 65-0 (roll call - PDF), and is subject to a vote by New Mexico's Senate. Governor Bill Richardson told the bill's sponsor that he supports the legislation.
The altered view of New Mexico lawmakers in favoring local control of state funds, officials said, follows national mention of the New Mexico effort in the "Move Your Money" campaign of New York pundit Arianna Huffington in her online Huffington Post columns. Read more.
Washington D.C. (February 8, 2010) – Congressman Dennis Kucinich (D-OH) today sent a letter to President Obama commending him for calling for new ideas and a renewed discussion about health care reform. Kucinich requested that supporters of Medicare for All be represented at the upcoming February 25 health care summit.
“I hope you will invite a representative of the community that is advocating for the only health care that has consistently proven to address each of the criteria you have outlined for a satisfactory health care plan: Medicare for All,” wrote Kucinich.
Kucinich, who co-authored HR 676, Medicare for All, with Representative John Conyers (D-MI), further pointed out that many states have embraced a single-payer system of health care. Most recently, the California State Senate passed a single-payer health care bill on January 27, 2010.
Read the full letter here.
The Defense Department just released its king-sized, $708 billion budget for the next fiscal year. Much of the proposed spending is fairly detailed — noting exactly how many helicopters the Pentagon plans to buy and how many troops it plans on playing. But about $56 billion goes simply to “classified programs,” or to projects known only by their code names, like “Chalk Eagle” and “Link Plumeria.” That’s the Pentagon’s black budget.
Cobbling together this round figure for the military’s hush-hush projects is easier than it seems. The Pentagon’s separate ledgers for operations, research and procurement all contain line items for “classified programs.” Add those to the nonsensically-named programs, and you’ve got yourself an estimate for the Pentagon’s secretive efforts. Read more.
U.S. President Barack Obama calls the $3.8-trillion US budget he just sent to Congress a major step in restoring America’s economic health.
In fact, it’s another potent fix given to a sick patient deeply addicted to the dangerous drug — debt.
More empires have fallen because of reckless finances than invasion. The latest example was the Soviet Union, which spent itself into ruin by buying tanks.
Washington’s deficit (the difference between spending and income from taxes) will reach a vertiginous $1.6 trillion US this year. The huge sum will be borrowed, mostly from China and Japan, to which the U.S. already owes $1.5 trillion. Debt service will cost $250 billion.
To spend $1 trillion, one would have had to start spending $1 million daily soon after Rome was founded and continue for 2,738 years until today.
Obama’s total military budget is nearly $1 trillion. This includes Pentagon spending of $880 billion. Add secret black programs (about $70 billion); military aid to foreign nations like Egypt, Israel and Pakistan; 225,000 military “contractors” (mercenaries and workers); and veterans’ costs. Add $75 billion (nearly four times Canada’s total defence budget) for 16 intelligence agencies with 200,000 employees.
The Afghanistan and Iraq wars ($1 trillion so far), will cost $200-250 billion more this year, including hidden and indirect expenses. Obama’s Afghan “surge” of 30,000 new troops will cost an additional $33 billion — more than Germany’s total defence budget.
No wonder U.S. defence stocks rose after Peace Laureate Obama’s “austerity” budget. Read more.
Kucinich Subcommittee Investigation Found Possible Securities Law Violations by Bank of America in December 2009
Kucinich on new NY AG fraud charges against Bank of America and SEC settling charges against BofA for misleading shareholders
Kucinich Subcommittee Investigation Found Possible Securities Law Violations by Bank of America in December 2009 | Press Release
Washington D.C. (February 4, 2010) – Congressman Dennis Kucinich (D-OH) today made the following statement after New York Attorney General Andrew Cuomo announced civil fraud charges against former Bank of America CEO Ken Lewis and CFO Joseph Price for misleading shareholders, and the SEC announced it would settle similar charges. Kucinich’s investigative subcommittee conducted a 9 month investigation into the matter and concluded in December 2009 that Bank of America had possibly violated securities law for failing to disclose to shareholders mounting losses at Merrill Lynch. Kucinich chairs the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee.
“Attorney General Cuomo today stood up for shareholders, taxpayers and the rule of law in bringing charges against the individuals at Bank of America whose actions concealed from shareholders the mounting losses at Merrill Lynch, known before the shareholder vote on the merger. Attorney General Cuomo’s enforcement action is a critical step towards ending the culture of corruption on Wall Street. Mr. Cuomo did the country a service today,” said Kucinich.
Additionally, The Securities and Exchange Commission (SEC) today announced they are seeking court approval for a $150 million settlement with Bank of America for failing to inform shareholders of accelerating losses, and for concealing $3.57 billion in bonuses, at Merrill Lynch before a vote to approve the merger.
But this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn't provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance. Read more.
By Dave Lindorff
There were two points in President Obama’s State of the Union address that provoked resounding and universal applause in the chamber from the assembled senators and representatives of both parties. One point was when the president said he wanted to start his job-creation program “in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides its time she became her own boss.” The other point was when he said, “While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment.”
By Dave Lindorff
For months, the various government departments dealing with things economic--Treasury, Commerce, Labor and of course the Council of Economic Advisers and the Federal Reserve, have been issuing soothing words that the nation’s economy is headed back up from the Great Recession that allegedly began in December 2007.
But now comes word from the Department of Labor that, whoops, we minsunderestimated, as former President George W. Bush would say, the number of jobs lost. The Department of Labor’s Bureau of Labor Statistics is reporting that because of a “modeling error,” it misstated the number of jobs lost between March 2008 and March 2009 by 17%. In hard numbers, that is to say, the BLS was reporting that a record 4.8 million jobs were lost during those 12 months of economic collapse, when in fact the job loss total was actually 5.6 million.
Questions Linger About Full Payments to Goldman Sachs: Kucinich Dissatisfied With Geithner's Answers
Questions Linger About Full Payments to Goldman Sachs
Kucinich Dissatisfied With Geithner's Answers
By Mike Lillis | Washington Independent
To hear Treasury Secretary Tim Geithner tell the tale, the federal officials negotiating the taxpayer bailout of American Insurance Group had no choice but to provide full payment to the company’s trading partners, including Goldman Sachs.
“There was no way, financial, legal, or otherwise, we could have imposed haircuts, selectively default on any of those institutions, without the risk of downgrade and default,” Geithner told lawmakers on the House Oversight and Government Reform Committee last week.
Don’t tell that to Rep. Dennis Kucinich. The Ohio Democrat — who heads the committee’s domestic policy subpanel — says that federal officials had plenty of leverage to push Goldman for a lesser payout, but simply chose not to use it. Indeed, an investigation by his office, Kucinich says, found that Goldman was already preparing to take less than 100 cents on the dollar for the complex, AIG-backed securities it held at the time. He’s charging that Geithner — who headed the New York Federal Reserve when it funneled billions of dollars through AIG to other firms — simply put Goldman’s interests above those of taxpayers.
“There was only one way for Goldman Sachs to get all of the billions they claimed from AIG, and that was if the New York Fed voluntarily agreed to give it to them,” Kucinich, the populist former mayor of Cleveland, said in a little-noticed exchange with Geithner last week. “If the Fed had fought for taxpayers, Goldman would have had to take some losses and the cost to the people could have been minimized.” Read more.
Pelosi Demands Any Budget Freeze Also Apply To Military Spending
By: David Dayen | FireDogLake
In her weekly press conference today, House Speaker Nancy Pelosi was fairly adamant – a proposed spending freeze should apply to defense, not merely non-security discretionary spending, as the President seeks. “I don’t think we have to protect military contractors. I do not think the entire military budget has to be exempted,” Pelosi said.
“We want them to have everything they need,” Pelosi said of military forces abroad and their families. “But we do not support an entitlement program for overruns in defense contracting,” she quickly added, noting millions could be saved if lawmakers ensured Defense contracts did not overshoot spending targets.
Defense contracting waste really does not flow to other areas of the economy, and a “freeze” where discretionary spending can rise as defense spending falls would actually create more jobs and improve the economic outlook. We really cannot afford a military-based stimulus.
Pelosi has some powerful support for her criticism of the exemption of the military budget – military analysts who face the bloat in the contracting system every day.
Steve Kosiak has spent much of his career as a defense analyst frustrated by military bloat. In early 2003, he found it was “impossible to say precisely” how much of the Bush administration’s military buildup was actually attributable to the post-9/11 emergency and how much was pre-existing defense pork. A 2005 paper he authored for the Center for Strategic and Budgetary Assessments, a leading Washington defense think tank, warned that rising defense costs could add “some $900 billion to projected deficits.” And in December 2008, he devoted almost 100 pages to carefully itemizing the costs of the Iraq and Afghanistan wars — $970 billion as of then, he found — and placing them in a broader social, economic and budgetary context.
The Obama administration is deeply familiar with Kosiak’s work. A year ago, the White House tapped him to oversee defense spending for the Office of Management and Budget. And that makes President Obama’s decision to exempt the hundreds of billions spent annually on defense and homeland security from a proposed overall freeze in discretionary spending — a policy he formally unveiled in his State of the Union address Wednesday night — particularly difficult for defense analysts to understand. Read more.
Yesterday the Senate approved legislation to increase the national borrowing limit to $1.9 Trillion. The vote was along party lines, raising the debt ceiling to $14.3 Trillion dollars. Watch Dylan Ratigan explain the ominous implications of that debt load for our national security.
Senate Vote Sends Strong Message to the Fed | Press Release
Sen. Bernie Sanders (I-Vt.) said today that the Senate sent a clear signal to the Federal Reserve with an historic number of “no” votes against confirming Ben Bernanke to a second term as chairman of the central bank.
The Senate confirmed Bernanke by a vote of 70 to 30, more “no” votes than were ever cast in opposition to a nominee for Fed chairman.
“The Senate vote sends a loud and clear message to the Fed and to Chairman Bernanke: Start representing the needs of the middle class and working families, not just Wall Street CEOs. Stop credit card ripoffs. Free up credit for small businesses. Break up big banks, and stop the secrecy surrounding trillions of dollars in blind loans,” said Sanders, a leader of the opposition to Bernanke.
The number of votes against Bernanke far outstripped the opposition to a second term for Paul Volcker, who was confirmed in 1983 to a second term at the Fed by a vote of 84 to 16.
The roll call vote also was a stark contrast to the voice vote in 2006 when the nomination of Bernanke by President George W. Bush sailed through the Senate on a voice vote.
Sanders said the Fed has the power today to require bailed-out banks to stop ripping off consumers and small businesses by charging interest rates of 30 percent or more on credit cards and other loans.
The new restraints on bank lending for speculation proposed by President Barack Obama follow the advice of former Fed Chairman Paul Volcker but will be much more credible if the president now fires Secretary of the Treasury Timothy Geithner and National Economic Council director Lawrence Summers.
What President Obama is calling the “Volcker Rule” would take us back in the direction of the 1932 Glass-Steagall Act which kept commercial and investment banking separate for 67 years, until 1999 when it was foolishly repealed by President Bill Clinton. Then-Treasury Secretary Summers strongly supported the repeal.
It was the demise of Glass-Steagall that allowed commercial banks to create the vast amounts of unbacked credit which fueled the gigantic financial bubbles in housing, commercial real estate, hedge funds, equities, and derivatives during the catastrophic years of the George W. Bush presidency. It was the blowing up of these bubbles that brought the financial crash of 2008-9, the multi-trillion dollar bailouts of the financial industry by the Treasury and Federal Reserve, and the worst recession since the Great Depression.
American financiers became filthy rich in the meantime. Timothy Geithner, as president of the Federal Reserve Bank of New York from 2003-2009, worked closely with Bush’s Treasury Secretary Henry Paulson in overseeing the bailouts of Bear Stearns and AIG. He also favored reducing the capital required to operate a bank which would have exposed the financial system to even greater risk of failure.
A shareholder sued Goldman Sachs Group Inc's (GS.N) board for excessive bonuses and wants bank executives to pay the $500 million in charitable donations that Goldman is making after being criticized for its compensation policy.
Goldman Sachs bonuses substantially exceed what competitors pay "even though, on a risk-adjusted basis, Goldman's officers and managers have performed over the past several years in a manner that is, at best, only average," the lawsuit says.
The Southeastern Pennsylvania Transportation Authority (SEPTA), which runs public transit in the Philadelphia area, filed the lawsuit on Wednesday in Delaware's Chancery Court.
SEPTA said Goldman has been allocating nearly half of its revenues to staff bonuses even though the company's performance has been less a benefit of management skill than risks it has taken with investors capital.
"Goldman's employees are unreasonably overpaid for the management functions that they undertake, and shareholders are vastly underpaid for the risks taken with their equity," it said. Read more.