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Who’s Behind the Financial Meltdown? | Press Release
Center for Public Integrity Investigation Identifies Top 25 Subprime Lenders and their Wall Street Backers The top subprime lenders whose loans are largely blamed for triggering the global economic meltdown were owned or backed by giant banks now collecting billions of dollars in bailout money, according to Who’s Behind the Financial Meltdown?, a new investigation by the Center for Public Integrity.
“The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves,” said Center Executive Director Bill Buzenberg. “These banks were deliberate enablers that bankrolled the type of lending that's now threatening the financial system.”
These are among the findings that emerged from the Center’s computer analysis of government data on nearly 7.2 million “high-interest” or subprime loans made from 2005 through 2007, a period that marks the peak and collapse of the subprime boom. The analysis also revealed The Subprime 25 — the top 25 originators of the high-interest loans, accounting for nearly $1 trillion and about 72 percent of industry — who reported subprime loans during that period.
By Norman Solomon
In the Arctic, sea ice is melting. In the United States, houses are foreclosing.
And in Washington, the Senate is becoming a real-life Bermuda Triangle for progressive agendas.
Proposals for major limits on carbon emissions aren’t getting far in the Senate, where the corporate war on the environment has an abundance of powerful allies.
As for class war, it continues to rage from the top down. Last week, a dozen Democratic senators teamed up with Republicans to defeat a bill that would have allowed judges to reduce mortgages in bankruptcy courts.
President Obama supported that bill. But as the Associated Press reported, he was “facing stiff opposition from banks” and “did little to pressure lawmakers” on behalf of the measure. The Senate “defeated a plan to spare hundreds of thousands of homeowners from foreclosure through bankruptcy.”
I know saving or economy has gotten a REALLY bad name, but I'm talking about the actual economy, jobs, people, people's jobs producing actual useful things. Here's a plan that begins with a one-year mortgage holiday: http://www.saveoureconomy.com
In fact, other Wall Street insiders -- many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest -- privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America's taxpayers down a path toward further economic disaster. This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, "The banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place." He could say the same of the White House.
‘Great Recession’ Will Redefine Full Employment as Jobs Vanish
By Matthew Benjamin and Rich Miller | Bloomberg
Post-recession America may be saddled with high unemployment even after good times finally return.
Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump.
It is inexcusable and shameful for even a Democratic House to pass a bill to allegedly combat abuses against citizens, and make that bill effective a full year later, which means all of those abuses will continue for least 12 more months. To call this a consumer protection bill is an abuse of language and a fraud against consumers and voters who do not want these abuses continuing for another year, and supported by Democrats as well as Republicans in Congress for another year. Banks given trillions of dollars to lend should lend. Those of either party who tolerate these abuses are betraying the largest financial trust ever given to public officials in the history of the nation, the world or any generation.
This week America witnessed Black Thursday for workers and families as the Senate defeated a bankruptcy bill that would have protected distressed homeowners and the House passed a bill that encourages and guarantees banks will continue abuses the bill pretends to remedy for a full year.
What will China become in this century? There can hardly be a more important question to ask. TomDispatch regular Dilip Hiro, who has followed shifting global power balances as the planet's former "sole superpower" edged into decline, offers a vivid picture below of a potential rising superpower weathering bad times as we head toward a multipolar planet.
There is, however, a more negative take on where China might be headed. Consider, for instance, Peter Kwong's recent article, "No Reform or Relief in China," which suggests a far more dismal view of that country's circumstances, or James Fallows's fascinating recent essay in the Atlantic, "Interesting Times," which presents a China capable of using this harsh economic moment (as the U.S. may not) to launch a new Great Economic Leap Forward, but offers a striking summary of the bad news in store for China right now. I find Hiro persuasive largely because I've long been convinced that American power is in decline, but I have my own caveats when it comes to China's future success. For one thing, I'm old enough to remember the period in the 1980s when Japan was being pre-anointed as the new economic superpower of Planet Earth. (There was even a much-touted book then entitled, "Japan as Number One: Lessons for America.")
By Dave Lindorff
What’s wrong with this picture: Four groups invest in a company. One group puts in a 55% investment, a second puts in a 20-35% investment, a third puts in an 8% investment and a fourth goes in for 2%. The group putting in the 20-35% stake gets three seats on the company’s nine-member board of directors, which will be appointing the new company’s management team. The group investing 8% gets four board members, and the group investing 2% gets 1 seat. Finally, the group that will hold the majority stake in the company, 55% of the shares, gets…the one remaining seat on the board.
Why would anyone buy a majority stake in the company and accept only a 1/9 representation on the board, and thus virtually no say in the selection of management or in management decisions?
Since I began to write on economics and monetary policy I have argued that we should abolish our bank-centered, debt-based monetary system and replace it with a system where credit is viewed as a public utility. This would lead to money controlled by the people’s elected government and issued both for common needs, such as education, health care and infrastructure, and as a citizens’ dividend reflecting our fair share in the bounty of our producing economy.
FDR'S New Deal v. Obamanomics in Their First 100 Days
By Stephen Lendman
With good reason, progressive economists reflect positively on Roosevelt's New Deal even though:
- it failed to end the Great Depression;
- had many flaws;
- did too little for blacks, women, immigrants, small farmers, agricultural workers, and the poor;
- let blacks be persecuted, discriminated against, and in the South denied their voting rights and lynched;
- 10 weeks after Pearl Harbor, he signed an Executive Order interning loyal Japanese American citizens because of their ethnicity; smaller numbers of German and Italian Americans as well;
- despite popular discontent with US broadcasting, he signed the 1934 Communications Act establishing permanent broadcasting law that handed the public airwaves to entrenched interests and laid the foundation for today's corrupted media; he called it a "New Deal in Radio Law," indeed for the broadcasters that profited;
- his main task was to save capitalism, not remake America into a social democracy beyond what was necessary at the time;
- like all elected officials, Roosevelt was above all a politician who wanted to be re-elected; and
- it took a world war to restore prosperity.
CFR Corporate Members Get Lion's Share of Bailout Funds
By Thomas R. Eddlem | New American
The man in charge of administering the bailouts is Treasury Secretary Timothy Geithner, who served as a staff member of the New York City-based Council on Foreign Relations before being hired in 2003 to head the New York City branch of the Federal Reserve Bank (Fed). As the vice chairman of the Fed’s Open Market Committee, Geithner is probably a poor choice to get the nation out of it’s current economic mess. He served as Alan Greenspan’s number two man at the Fed, so Geithner is as responsible as anyone for facilitating the severity of the real estate and financial bubble and its subsequent collapse. After all, the Fed was the driving force behind the asset bubble, inflating the bubble larger and larger through artificially low interest rates and an inflationary easy-money policy.
Former U.S. Senator Ernest F. (“Fritz”) Hollings on “Silent Conspiracies”
by Richard C. Cook | www.RichardCCook.com
I met Senator Ernest F. “Fritz” Hollings (D-SC) in 1985 in the aftermath of the Space Shuttle Challenger disaster. I had testified before the Rogers Commission after I leaked documents to the New York Times about NASA’s past knowledge of flaws with the O-ring joints whose failure caused Challenger to blow up. Later I told commission investigators and the press it was political pressure from the Reagan White House that likely caused NASA to overrule the engineers who tried to stop the launch.
Senator Hollings, then senior Democratic member of the Republican-controlled Senate Commerce Committee, thought the same thing. He wanted the Senate to conduct its own investigation, but the Republicans blocked it.
More than 100 people were arrested during a series of demonstrations in Washington yesterday, including five members of Congress who were part of a group that gathered outside the Sudanese Embassy to condemn the expulsion of aid agencies from Darfur.
All told, police squared off with demonstrators at three unrelated protests that began in the morning and continued into the afternoon. Eight people were arrested outside the embassy, seven Greenpeace activists were arrested near the State Department, and 91 others were arrested during a demonstration by disability rights advocates outside the White House.
The activities followed a weekend of other protests connected to the meetings of the World Bank and International Monetary Fund.
Yesterday began with a show of civil disobedience that snarled rush-hour traffic as seven Greenpeace activists scaled a construction crane at 23rd Street and Constitution Avenue NW, near the State Department, and unfurled a huge banner to call attention to global warming. The crane was on the site of a future institute for peace.
By Harry Giroux | Truthout
With the election of Barack Obama, it has been argued that not only will the social state be renewed in the spirit and legacy of the New Deal, but that the punishing racial state and its vast complex of disciplinary institutions will, if not come to an end, at least be significantly reformed. From this perspective, Obama's presidency not only represents a post-racial victory, but also signals a new space of post-racial harmony. In assessing the Obama victory, Time Magazine columnist Joe Klein wrote, "It is a place where the primacy of racial identity - and this includes the old Jesse Jackson version of black racial identity - has been replaced by the celebration of pluralism, of cross-racial synergy." Obama won the 2008 election because he was able to mobilize 95 percent of African-Americans, two-thirds of all Latinos and a large proportion of young people under the age of 30. At the same time, what is generally forgotten in the exuberance of this assessment is that the majority of white Americans voted for the John McCain-Sarah Palin ticket. While "post-racial" may mean less overt racism, the idea that we have moved into a post-racial period in American history is not merely premature - it is an act of willful denial and ignorance. Paul Ortiz puts it well in his comments on the myth of post-racialism:
The idea that we've moved to a post-racial period in American social history is undermined by an avalanche of recent events. Hurricane Katrina. The US Supreme Court's dismantling of Brown vs. Board of Education and the resegregation of American schools. The Clash of Civilizations thesis that promotes the idea of a War against Islam. The backlash facing immigrant workers. A grotesque prison industrial complex. [Moreover] ... [w]hile Americans were being robbed blind and primed for yet another bailout of the banks and investment sectors, they were treated to new evidence from Fox News and poverty experts that the great moral threats facing the nation were greedy union workers, black single mothers, Latino gang bangers and illegal immigrants.
How Geithner forged ties to finance club: Treasury secretary's relationships with banking giants raises questions
By Jo Becker and Gretchen Morgenson | NYTimes
Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation’s most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele Davis, then an assistant Treasury secretary.
The proposal quickly died amid protests that it was politically untenable because it could put taxpayers on the hook for trillions of dollars.
“People thought, ‘Wow, that’s kind of out there,’ ” said John C. Dugan, the comptroller of the currency, who heard about the idea afterward. Mr. Geithner says, “I don’t remember a serious discussion on that proposal then.”
But in the 10 months since then, the government has in many ways embraced his blue-sky prescription. Step by step, through an array of new programs, the Federal Reserve and Treasury have assumed an unprecedented role in the banking system, using unprecedented amounts of taxpayer money, to try to save the nation’s financiers from their own mistakes.
The centerpiece of President Barack Obama's plan to keep thousands of people from losing their homes amid the worst economic crisis in decades is headed for defeat next week in the Senate.
Allowing people to seek mortgage relief in bankruptcy court is opposed by Republicans and enough Democrats to block it. They remain worried that the legislation would unleash a torrent of loan defaults, ultimately driving up mortgage rates and introducing fresh uncertainty to an already ailing economy.
The rejection would deal a blow to the popular president pushing an ambitious agenda to stabilize the economy.
The global financial crisis could become "a human and development calamity" for many poor countries, the World Bank said, urging donor nations to speed delivery of money they have pledged and consider giving more.
Developing countries, its main constituency, face "especially serious consequences with the crisis driving more than 50 million people into extreme poverty, particularly women and children," the bank said Sunday.
Bank President Robert Zoellick said some of the poorest economies are being hit by "second and third waves of the crisis." He said no one knows how long it will last or when recovery will begin.
"There is a widespread recognition that the world faces an unprecedented economic crisis, poor people could suffer the most and that we must continue to act in real time to prevent a human catastrophe," Zoellick said.
Do you remember the TV cartoon show “Pinky and The Brain”?
The show was about two white mice. Pinky was a gangly nutcase who talked like the Walt Disney character Goofy, with a similar personality. The Brain was this little conniving, scowling kind of guy who woke up every morning with his latest plan to take over the world.
Each episode of “Pinky and The Brain” showed how The Brain tried and failed on a given day to implement his nefarious intent. Sometimes he would try to get elected as president of the U.S. or stage a military coup or put something in the drinking water so the people would obey his will, or whatever.
In other words, “Pinky and The Brain” was not far from the truth! Today we have a cabal of financiers centered mainly in London and New York who have been trying to take over the world for the last 500 years. One term for this conspiracy is the New World Order.
With today’s worldwide economic crash, the plan is moving to its latter stages. The cabal works through the world financial system, with the world’s central banks like the Bank of England and Federal Reserve playing major roles and the Bank of International Settlements in Basel, Switzerland, at the top. They maintain control by assuring that every bit of currency used in the world derives at some point through a debt owed to a bank. That’s why it’s called a debt-based monetary system.
On Monday, April 27th we will follow up our nationwide End the Fed! rallies with an "Audit the Fed! Melt the Switchboard Day".
We must all call in on that day and get EVERYONE we know to also call in to our Congressional Representatives.
The Congressional Switchboard number is: 1-877-851-6437.
Let's focus particularly on the members of the House Financial Services Committee, listed below. The Democratic Staff phone number is: (202) 225–4247. Linked listing of Committee Members below. Read the petition below. Sign the petition here.
In recent weeks, President Obama has gotten great press for winning speeches and handshakes globally, as well as for setting a new tone for American policy abroad, while administration figures, including Secretary of the Treasury Geithner and the President himself, have begun talking up "glimmers of hope" on the economic horizon. The International Monetary Fund (IMF) was setting another tone entirely, however -- no smiles, no handshakes, no glimmers, lots of gloom.
It issued a sobering report last week indicating that the global financial sector has lost a staggering $4.1 trillion (yes, you read that right) in value in the last 20 months. The report also predicted a global "credit famine," and sharply lowered its previous predictions of global economic health. The IMF now expects the world economy to contract by 1.3% in 2009 (previously it had suggested a 0.5% growth rate). It also suggested that 30 of the world's 34 most advanced economies would actually shrink this year. It indicated as well that it believes the U.S. economy is set to contract by 2.8% and the European Union's by a startling 4%, far worse than expected.
Closer to home, U.S. job losses and cutbacks continue to pour in as "mass layoffs" rose to record levels and initial claims for unemployment insurance jumped for the 12th straight week. There are now a total of 6.1 million applicants and the official U.S. unemployment rate, now at 8.5%, is expected to crest above 10% early next year, if not before. (The unofficial rate, including all those out of work or significantly underemployed, is far higher.) Similarly, rents and apartment occupancy nationwide dropped for the third straight quarter.
Warning: Graphic language
Wall Street’s Best Investment: Ten Deregulatory Steps to Financial Meltdown
By Robert Weissman and James Donahue | Multinational Monitor
Wall Street has no one but itself to blame for the current financial crisis. Investment banks, hedge funds and commercial banks made reckless bets using borrowed money. They created and trafficked in exotic investment vehicles that even top Wall Street executives — not to mention firm directors — did not understand. They hid risky investments in off-balance-sheet vehicles or capitalized on their legal status to cloak investments altogether. They engaged in unconscionable predatory lending that offered huge profits for a time, but led to dire consequences when the loans proved unpayable. And they created, maintained and justified a housing bubble, the popping of which has thrown the United States and the world into a deep recession, resulted in a foreclosure epidemic ripping apart communities across the country, and caused the financial crisis itself.
But while Wall Street may not have anyone else to blame, and is culpable for the financial crisis and global recession, others do share responsibility.
For the last three decades, financial regulators, Congress and the executive branch have steadily pulled back the regulatory system that restrained the financial sector from acting on its own worst tendencies. The post-Depression regulatory system aimed to force disclosure of publicly relevant financial information; established limits on the use of leverage; drew bright lines between different kinds of financial activity and protected regulated commercial banking from investment bank-style risk taking; enforced meaningful limits on economic concentration, especially in the banking sector; provided meaningful consumer protections (including restrictions on usurious interest rates); and contained the financial sector so that it remained subordinate to the real economy. This hodge podge regulatory system was, of course, highly imperfect, including because it too often failed to deliver on its promises.
But it was not its imperfections that led to the erosion and collapse of that regulatory system. It was a concerted effort by Wall Street, steadily gaining momentum until it reached fever pitch in the late 1990s and continued right through the first half of 2008. Even now, Wall Street continues to defend many of its worst practices. Though it bows to the political reality that new regulation is coming, it aims to reduce the scope and importance of that regulation and, if possible, use the guise of regulation to further remove public controls over its operations.
Mike Farrell Videos Done: Put Them on TV Now
Mike Farrell ("BJ Hunicutt" from TV's MASH) supports Medicare For All
You can support Medicare For All too. Send a fax to the White House and to key Senators and Congressmen by clicking on the "send a fax" link in the video or just send your fax to Congress and the White House right now.
NEW YORK (Reuters) - Nobel Peace Prize winner Muhammad Yunus, known as the "banker to the poor" for making small loans in impoverished countries, is now doing business in the center of capitalism -- New York City.
In the past year the first U.S. branch of his Grameen Bank has lent $1.5 million, ranging from a few hundred dollars to a few thousand dollars, to nearly 600 women with small business plans in the city's borough of Queens.
People around the country are struggling to repay mortgages and credit card debts, but Grameen America says its loan repayment rate is more than 99 percent.
Law enforcement sources said David Kellermann, acting chief financial officer of mortgage company Freddie Mac, was found hanging in the basement of his Reston, Va., home, dead from an apparent suicide early this morning.
The death was "an active investigation" and there were "no signs of foul play," Fairfax County police officer Sabrina Ruck said.
Local police said they were called to Kellermann's home at 4:48 a.m., but would not say who'd placed the call to 911.
Kellermann, 41, and a 16-year veteran of Freddie Mac, had been the company's CFO since September, after a government takeover of the company following the housing crisis.
Freddie Mac had been criticized for reckless business practices that some argued contributed to the housing and financial crisis. The company is controlled by the government and owns or guarantees about 13 million home loans.
Freddie Mac and sibling company Fannie Mae, which together own or back more than half the home mortgages in the United States, have been hobbled by skyrocketing loan defaults and have received about $60 billion in combined federal aid.
Kellermann was named acting chief financial officer in September 2008, after the resignation of Anthony "Buddy" Piszel, who stepped down after the government takeover.