More Bank Scams-- Barclays

Banksters at work:

Barclays was fined £290m ($450m) on Wednesday by the UK and US authorities after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.
Investigators say that Barclays' traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.
Barclays had acknowledged that its actions between 2005 and 2009 had fallen "well short of standards".

The head of Barclays naturally just blames it all on a few bad traders.

The Wall Street Crime Family Syndicate

Taibbi's latest:

....this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.

Read more: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620#ixzz1yjVG55QD

Jamie Dimon, Welfare Queen

Bloody outrageous, especially considering the losses they've had recently:

When JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon testifies in the U.S. House today, he will present himself as a champion of free-market capitalism in opposition to an overweening government. His position would be more convincing if his bank weren’t such a beneficiary of corporate welfare.

To be precise, JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy. (snip) In recent decades, governments and central banks around the world have developed a consistent pattern of behavior when trouble strikes banks that are large or interconnected enough to threaten the broader economy: They step in to ensure that all the bank’s creditors, not just depositors, are paid in full. Although typically necessary to prevent permanent economic damage, such bailouts encourage a reckless confidence among creditors. They assume the government will always make them whole, so they become willing to lend at lower rates, particularly to systemically important banks. Implicit Subsidy With each new banking crisis, the value of the implicit subsidy grows. In a recent paper, two economists -- Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz -- estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts. To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education. JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing. They’ve also provided more direct support: Dimon noted in a recent conference call that the Home Affordable Refinancing Program, which allows banks to generate income by modifying government-guaranteed mortgages, made a significant contribution to JPMorgan’s earnings in the first three months of 2012. Like all subsidies, the taxpayer largesse distorts supply. If the government supports corn farmers, you get too much corn. If the government subsidizes banks, you get too much credit. As of March, households, companies and government in the U.S. had amassed debts of $38.6 trillion, or 2.5 times the country’s gross domestic product. That’s up from 1.3 times in 1980. The picture is similar in the euro area, where debt outstanding is 1.8 times GDP, double the level of 1995.

I would have more faith in our system, if free-market capitalism actually actually didn't depend so heavily on government subsidies... as it is, this system is rotten, rotten, rotten, and fuck the enablers of this grotesquery.

Wall Street Psychology and Politics

No one went to jail, so why is Wall Street so mad? Not prosecuting any of the parties responsible for the recession has just served to embolden them. 

 America’s idiot rich: The 1 percent is complaining louder than ever. There can be no reasoning with people this irrational

How billionaires destroy democracy. Wall Streeters have rigged the economy and the government against the people. Here's how they did it.

Crony Capitalism: After Lobbying Against New Financial Regulations, JPMorgan Loses $2B in Risky Bet


Why Can't Obama Bring Wall Street to Justice?

The absence of prosecutions, and the fact that the cops on the beat hail from the place that represents the banks, does not sit right with many who hoped Obama would fulfill his promise to hold Big Finance accountable. The left's frustration fuels the Occupy movement, and chills the Democratic base. And it gives Romney, the career capitalist, an opening he is avidly exploiting. Through last fall, Obama had collected more donations from Wall Street than any of the Republican candidates; employees of Bain Capital donated more than twice as much to Obama as they did to Romney, who founded the firm. By this spring, however, resolution had come to the GOP contest, and Wall Street could see a friendly alternative to Obama. While most of Romney's contributions so far come mainly from the financial sector, Obama's donations from Wall Street have dropped sharply. But this turn may yet help Obama, playing into the Romney-as-plutocrat theme. Just the other week, the Republican candidate quietly slipped into a fundraiser at the home of hedge-fund king John Paulson, who made a killing shorting mortgage futures (including about $1 billion on the Abacus deal). The Obama campaign pounced. Obama may yet fully liberate his inner populist--that Obama who in 2010 in an off-Prompter moment uttered a sentence that made blood run cold on Wall Street: "I do think at a certain point you've made enough money."

Democrats and Bain-- Executives at Romney's old private-equity firm have donated more to the Democratic Party than the GOP. Why?
(friendly treatment in Washington, of course)

About That "JOBS Act"

It's a recipe for scamming investors and fraud, and shame on Obama for passing it.

The "Jumpstart Our Business Startups Act" (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

Ostensibly, the law makes it easier for startup companies (particularly tech companies, whose lobbyists were a driving force behind its passage) to attract capital by, among other things, exempting them from independent accounting requirements for up to five years after they first begin selling shares in the stock market.

The law also rolls back rules designed to prevent bank analysts from talking up a stock just to win business, a practice that was so pervasive in the tech-boom years as to be almost industry standard.

Even worse, the JOBS Act, incredibly, will allow executives to give "pre-prospectus" presentations to investors using PowerPoint and other tools in which they will not be held liable for misrepresentations. These firms will still be obligated to submit prospectuses before their IPOs, and they'll still be held liable for what's in those. But it'll be up to the investor to check and make sure that the prospectus matches the "pre-presentation."

Bank of America-- Too Crooked To Fail

Totally outrageous and unacceptable--

In his new article, "Bank of America: Too Crooked to Fail," Rolling Stone reporter Matt Taibbi chronicles the remarkable history of the rise of Bank of America, an institution he says has defrauded "everyone from investors and insurers to homeowners and the unemployed." Taibbi describes how the Bush and Obama administrations have repeatedly propped up the financial institution, which received a $45 billion taxpayer bailout in 2008. Bank of America has also received billions in what could be described as shadow bailouts. The bank now owns more than 12 percent of the nation’s bank deposits and 17 percent of all home mortgages. Taibbi also recounts how fraudulent practices by Bank of America and other companies ravaged pension funds. "Most people think of [the mortgage crisis] as some airy abstraction — you know, bankers ripping off bankers," Taibbi says. "That’s not what it is. It’s bankers stealing from old ladies and retirees."

The Rolling Stone piece.

Related-- NYTimes editorial on the banks settlement: "The Banks Win Again"

Jon Corzine's $1.6 Billion Rip-Off

By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business. Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.

Let’s not mince words here. These executives committed a crime. Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. Customer money is supposed to be sacrosanct. If a broker-dealer goes bankrupt, the segregated accounts are supposed to remain safe, a little like the way bank deposits remain protected if a bank goes under. Indeed, customers need to be able to trust the fact that their money is segregated and protected at all times. Otherwise, the markets can’t function.

Yet, a few weeks ago, Azam Ahmed and Ben Protess, who have done a remarkable job covering the MF Global bankruptcy for The Times, wrote an article suggesting that prosecutors were having trouble putting together a criminal case against anyone at MF Global. So far, wrote Ahmed and Protess, they’d been “unable to find a smoking gun.” In fact, they continued, “a number of federal prosecutors have expressed doubts” that MF Global “intentionally misused customer money.” Apparently, the current theory is that it was all just a big accident, the chaos of those final days causing the firm’s executives to tap into customer funds without realizing it.

Excuse me while I roll my eyes. Of course there isn’t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, “Hey, we’re desperate. Let’s break into the customer accounts!” And, of course, they are always going to say it was unintentional. They are saying it already, starting with Corzine, who told Congress last year that “there was no intention to violate segregation rules.”

Goldman Sucks, Continued

Truth and consequences:

Goldman Sachs employee Greg Smith excoriated the investment bank in a New York Times op-ed, resigning due to the banks “toxic and destructive” culture, one in which the bank’s trading profits took precedence over its customers’ financial well-being. Goldman managers allegedly called customers “muppets,” and traders routinely asked how much was being made ripping off one customer or another.

Goldman has been quick to push back on Smith’s claims, portraying him as just a disgruntled employee. Some employees told Fox Business’ Charlie Gasparino that Smith doesn’t know what he’s talking about because he “never made more than $750,000 a year.”

Smith's piece here.

Taibbi on this story here.

AIG Still a Scam

Disgusting-- "Despite Salary Caps, Treasury Approved Lucrative Exec Payouts at Dozens of Bailed-Out Firms"

I was shocked that this got very little attention earlier this week when the inspector general for the TARP program released his audit. The audit showed that as many as 49 executives at a handful of firms that received the biggest bailouts received from $5 million and up in compensation, approved by the special master that the Treasury Department appointed, Kenneth Feinberg, to review executive compensation. And we’re talking about the firms that got the largest payouts, including AIG, General Motors, the largest bailouts. And AIG was by far the worst. In fact, Feinberg told the auditors that that company represented 80 percent of his headaches over the past few years.

The most interesting part of the audit, though, I thought, was that Feinberg reported that the Treasury Department and officials at the Federal Reserve Bank of New York were regularly pressuring him to increase the pay of these bailed-out firms. Now, understand, AIG was 90 percent owned by the federal government, after receiving $180 billion in bailouts. It is still 70 percent owned by the taxpayers. And yet the CEO of AIG, Robert Benmosche, received $10.5 million in ’09, $10.5 million in ’10, and $10.5 million in 2011, including $3 million in cash every year, even though Congress and President Obama had said they were going to limit executive pay to $500,000 a year.

Then this:

A new report by a federal-watchdog agency questions whether the U.S. government will be able to recover over the short term—if ever—the investment it has made in American International Group.

The report by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) was also highly critical of AIG’s compensation policies, and the agency suggests that even after AIG exits the government-aid programs, that its regulators should keep a close eye on its compensation policies.

Punishment for the 99% and Not the 1%

Patrick Meighan, describing arrests at the OccupyLA protest:

As we sat there, encircled, a separate team of LAPD officers used knives to slice open every personal tent in the park. They forcibly removed anyone sleeping inside, and then yanked out and destroyed any personal property inside those tents, scattering the contents across the park. They then did the same with the communal property of the Occupy LA movement. For example, I watched as the LAPD destroyed a pop-up canopy tent that, until that moment, had been serving as Occupy LA’s First Aid and Wellness tent, in which volunteer health professionals gave free medical care to absolutely anyone who requested it. As it happens, my family had personally contributed that exact canopy tent to Occupy LA, at a cost of several hundred of my family’s dollars. As I watched, the LAPD sliced that canopy tent to shreds, broke the telescoping poles into pieces and scattered the detritus across the park. Note that these were the objects described in subsequent mainstream press reports as “30 tons of garbage” that was “abandoned” by Occupy LA: personal property forcibly stolen from us, destroyed in front of our eyes and then left for maintenance workers to dispose of while we were sent to prison.

When the LAPD finally began arresting those of us interlocked around the symbolic tent, we were all ordered by the LAPD to unlink from each other (in order to facilitate the arrests). Each seated, nonviolent protester beside me who refused to cooperate by unlinking his arms had the following done to him: an LAPD officer would forcibly extend the protestor’s legs, grab his left foot, twist it all the way around and then stomp his boot on the insole, pinning the protestor’s left foot to the pavement, twisted backwards. Then the LAPD officer would grab the protestor’s right foot and twist it all the way the other direction until the non-violent protestor, in incredible agony, would shriek in pain and unlink from his neighbor.

It was horrible to watch, and apparently designed to terrorize the rest of us. At least I was sufficiently terrorized. I unlinked my arms voluntarily and informed the LAPD officers that I would go peacefully and cooperatively. I stood as instructed, and then I had my arms wrenched behind my back, and an officer hyperextended my wrists into my inner arms. It was super violent, it hurt really really bad, and he was doing it on purpose. When I involuntarily recoiled from the pain, the LAPD officer threw me face-first to the pavement. He had my hands behind my back, so I landed right on my face. The officer dropped with his knee on my back and ground my face into the pavement. It really, really hurt and my face started bleeding and I was very scared. I begged for mercy and I promised that I was honestly not resisting and would not resist.

My hands were then zipcuffed very tightly behind my back, where they turned blue. I am now suffering nerve damage in my right thumb and palm.

I was put on a paddywagon with other nonviolent protestors and taken to a parking garage in Parker Center. They forced us to kneel on the hard pavement of that parking garage for seven straight hours with our hands still tightly zipcuffed behind our backs. Some began to pass out. One man rolled to the ground and vomited for a long, long time before falling unconscious. The LAPD officers watched and did nothing.

At 9 a.m. we were finally taken from the pavement into the station to be processed. The charge was sitting in the park after the police said not to. It’s a misdemeanor. Almost always, for a misdemeanor, the police just give you a ticket and let you go. It costs you a couple hundred dollars. Apparently, that’s what happened with most every other misdemeanor arrest in LA that day.

With us Occupy LA protestors, however, they set bail at $5,000 and booked us into jail. Almost none of the protesters could afford to bail themselves out. I’m lucky and I could afford it, except the LAPD spent all day refusing to actually *accept* the bail they set. If you were an accused murderer or a rapist in LAPD custody that day, you could bail yourself right out and be back on the street, no problem. But if you were a nonviolent Occupy LA protestor with bail money in hand, you were held long into the following morning, with absolutely no access to a lawyer.

I spent most of my day and night crammed into an eight-man jail cell, along with sixteen other Occupy LA protesters. My sleeping spot was on the floor next to the toilet.

Finally, at 2:30 the next morning, after twenty-five hours in custody, I was released on bail. But there were at least 200 Occupy LA protestors who couldn’t afford the bail. The LAPD chose to keep those peaceful, non-violent protesters in prison for two full days… the absolute legal maximum that the LAPD is allowed to detain someone on misdemeanor charges.

snip

Now let’s talk about a man who was not arrested last Wednesday. He is former Citigroup CEO Charles Prince. Under Charles Prince, Citigroup was guilty of massive, coordinated securities fraud.

Citigroup spent years intentionally buying up every bad mortgage loan it could find, creating bad securities out of those bad loans and then selling shares in those bad securities to duped investors. And then they sometimes secretly bet *against* their *own* bad securities to make even more money. For one such bad Citigroup security, Citigroup executives were internally calling it, quote, “a collection of dogshit”. To investors, however, they called it, quote, “an attractive investment rigorously selected by an independent investment adviser”.

This is fraud, and it’s a felony, and the Charles Princes of the world spent several years doing it again and again: knowingly writing bad mortgages, and then packaging them into fraudulent securities which they then sold to suckers and then repeating the process. This is a big part of why your property values went up so fast. But then the bubble burst, and that’s why our economy is now shattered for a generation, and it’s also why your home is now underwater. Or at least mine is.

Anyway, if your retirement fund lost a decade’s-worth of gains overnight, this is why.

If your son’s middle school has added furlough days because the school district can’t afford to keep its doors open for a full school year, this is why.

If your daughter has come out of college with a degree only to discover that there are no jobs for her, this is why.

But back to Charles Prince. For his four years of in charge of massive, repeated fraud at Citigroup, he received fifty-three million dollars in salary and also received another ninety-four million dollars in stock holdings. What Charles Prince has *not* received is a pair of zipcuffs. The nerves in his thumb are fine. No cop has thrown Charles Prince into the pavement, face-first. Each and every peaceful, nonviolent Occupy LA protester arrested last week has has spent more time sleeping on a jail floor than every single Charles Prince on Wall Street, combined.

The Absurd Zombie Lie About the Economy Right-Wingers Desperately Cling To -- And Why It's Totally Wrong

Joshua Holland:

Wall Street turned a few million home-loans into what Warren Buffet called "economic weapons of mass destruction," cratered the global economy and then, when the bubble burst, turned around and insisted on a massive bailout courtesy of the American tax-payer.

That rightly infuriated most Americans, but it has nonetheless become something of an article of faith among conservatives that Wall Street bears little blame for the Great Recession. The dominant narrative on the right today is that "big government" is ultimately responsible for the crash. In the words of one of Andrew Breitbart's bloggers, Democratic lawmakers like Barney Frank and Chris Dodd “brought down the banking industry by forcing banks to give loans to people who couldn’t afford them.”

That such a ludicrous claim could gain such wide traction is a testament to the intellectual debasement of modern conservative discourse. No bank was ever “forced” – or coerced or incentivized by the government in any way – to make a bad loan.

But the claim falls apart even before one digs into the particulars, for the simple reason that people's mortgages didn't bring down the banking system in the first place.

The entire subprime mortgage market was worth only $1.4 trillion in the fall of 2007, and that includes loans that were up-to-date. As former Goldman Sachs trader Nomi Prins noted in her book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street, the federal government could have bought up every single residential mortgage in the country – good, bad and in between – and it would have cost a trillion less than the bailouts.

Short of that, notes Prins, if the crisis were really about people buying McMansions that they couldn't afford, “we could have solved it much more cheaply in a couple of days in late 2008, by simply providing borrowers with additional capital to reduce their loan principals. It would have cost about 3 percent of what the entire bailout wound up costing, with comparatively similar risk.”

What brought down the global economy was as much as $140 trillion worth of financial gimmickery built on top of the mortgage industry. It was the alphabet soup of the credit meltdown – the CDOs, default swaps and other derivitaves that made less than a trillion dollars of foreclosed loans into an economic weapon of mass destruction that would cost the American economy alone $14 trillion in lost wealth.

Deregulation

A fair criticism of the government's role is that it didn't “meddle” in the free market sufficiently to protect borrowers, investors and the public – that $140 trillion house of cards was built in an environment created by decades of deregulation. But that situation is also the fault of Wall Street rather than an indication of the perfidy of "big government." It was bought at great cost by the banking lobby (and as powerful chairs of congressional banking committees, the right's bogeymen, Barney Frank and Chris Dodd, are two of the financial industry's top recipients).

snip

The reality is that no bank has ever been “forced to comply with government mandates about mortgage lending” – it's a bald-faced lie.

There are no “government mandates,” and there never were. In order to qualify for government-backed deposit insurance—a benefit that banks aren’t forced to accept but enjoy having—the Community Reinvestment Act – and similar measures designed to prevent discrimination in lending (to qualified individuals) – only encourage banks to lend in all of the areas where they do business. And Section 802 (b) of the Act stresses that all loans must be “consistent with safe and sound operations”—it’s the opposite of requiring that lenders write risky mortgages.

There are no penalties for noncompliance with CRA guidelines. The only “stick” hanging over banks that fail to meet those standards is that their refusal might be taken into account by regulators when they want to open new branches or merge with other financial institutions. What’s more, there are no defined standards for CRA compliance, and within the banking community, the loose guidelines are considered to be somewhat of a joke.

As Sheila Blair, the chairwoman of the FDIC, asked in a December 2008 speech, “Where in the CRA does it say: make loans to people who can’t afford to repay? Nowhere! And the fact is, the lending practices that are causing problems today were driven by a desire for market share and revenue growth...pure and simple.”

snip

The most important point here is that the bankers knew they were playing with fire. The Los Angeles Times reported, “Before Washington Mutual collapsed in the largest bank failure in U.S. history, its executives knowingly created a ‘mortgage time bomb’ by making subprime loans they knew were likely to go bad and then packaging them into risky securities.”

According to the Wall Street Journal, U.S. prosecutors are, as of this writing, investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against.” And the Securities and Exchange Commission charged Goldman Sachs with “defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.”

They needed some help laundering the risk out of those shaky loans, and they got it. According to a Senate investigation concluded earlier this year S&P and Moody's, the two dominant ratings agencies, “issued the AAA ratings that made ... mortgage backed securities ... seem like safe investments, helped build an active market for those securities, and then, beginning in July 2007, downgraded the vast majority of those AAA ratings to junk status.” And when they did so, it “precipitated the collapse of the [mortgage-backed securities] markets and, perhaps more than any other single event, triggered the financial crisis (PDF)."

According to the Senate investigation, in the years leading up to crash, “warnings about the massive problems in the mortgage industry” — including internal warnings from their own analysts — had been ignored because of “the inherent conflict of interest arising from the system used to pay for credit ratings.” The big “rating agencies were paid by the Wall Street firms” that were making a fortune selling that glossed-up garbage to credulous investors. This, again, was Wall Street's doing rather than a result of some public policy passed by Congress.

This isn't about ideology; it's about pushing back on some notably dangerous historical revisionism. Because there is one thing that’s as sure as death and taxes: Big Finance’s lobbyists will continue to resist calls to re-regulate the financial sector. And absent effective regulation of the financial markets, we can expect to continue to suffer through an endless series of booms and busts, while the fat cats of Wall Street continue to get fatter.

Fed Doled Out 16 TRILLION to Banks (Shut Down the Federal Reserve)

What you are about to read should absolutely astound you. During the last financial crisis, the Federal Reserve secretly conducted the biggest bailout in the history of the world, and the Fed fought in court for several years to keep it a secret. Do you remember the TARP bailout? The American people were absolutely outraged that the federal government spent 700 billion dollars bailing out the "too big to fail" banks. Well, that bailout was pocket change compared to what the Federal Reserve did. As you will see documented below, the Federal Reserve actually handed more than 16 trillion dollars in nearly interest-free money to the "too big to fail" banks between 2007 and 2010. So have you heard about this on the nightly news? Probably not. Lately Bloomberg has been reporting on some of this, but even they are not giving people the whole picture. The American people need to be told about this 16 trillion dollar bailout, because it is a perfect example of why the Federal Reserve needs to be shut down. The Federal Reserve has been actively picking "winners" and "losers" in the financial system, and it turns out that the "friends" of the Fed always get bailed out and always end up among the "winners". This is not how a free market system is supposed to work.

According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis comes to a whopping $16.1 trillion.

That is an astonishing amount of money.

Keep in mind that the GDP of the United States for the entire year of 2010 was only 14.58 trillion dollars.

The total U.S. national debt is only a bit above 15 trillion dollars right now.

So 16 trillion dollars is an almost inconceivable amount of money.

But some other dollar figures have been thrown around lately regarding these secret Federal Reserve bailouts. Let's take a look at them and see what they mean.

$1.2 Trillion

A recent Bloomberg article made the following statement....

The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The $1.2 trillion figure represents the peak outstanding balance on these loans, not the total amount of all the loans. On December 5, 2008 the "too big to fail" banks owed this much money to the Federal Reserve. Many of them could not pay these short-term loans back right away and had to keep rolling them over time after time. Each time a short-term loan got rolled over that represented a new loan.

$7.7 Trillion

Bloomberg is reporting that the Federal Reserve had made a total of $7.77 trillion in financial commitments to the big banks by the end of March 2009....

Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

But as mentioned above, a one-time limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act covered an even broader time period and revealed even more bailout loans.

According to the GAO audit, $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010. The following list of firms and the amount of money that they received was taken directly from page 131 of the GAO audit report....

Citigroup - $2.513 trillion
Morgan Stanley - $2.041 trillion
Merrill Lynch - $1.949 trillion
Bank of America - $1.344 trillion
Barclays PLC - $868 billion
Bear Sterns - $853 billion
Goldman Sachs - $814 billion
Royal Bank of Scotland - $541 billion
JP Morgan Chase - $391 billion
Deutsche Bank - $354 billion
UBS - $287 billion
Credit Suisse - $262 billion
Lehman Brothers - $183 billion
Bank of Scotland - $181 billion
BNP Paribas - $175 billion
Wells Fargo - $159 billion
Dexia - $159 billion
Wachovia - $142 billion
Dresdner Bank - $135 billion
Societe Generale - $124 billion
"All Other Borrowers" - $2.639 trillion

This report was made available to all the members of Congress, but most of them have been totally silent about it. One of the only members of Congress that has said something has been U.S. Senator Bernie Sanders.

The following is an excerpt from a statement about this audit that was taken from the official website of Senator Sanders....

"As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world"

So where is everyone else?

Why aren't leading Republicans and leading Democrats crying bloody murder over this report?

This scandal should have been front page news for months when it was revealed.

But it wasn't.

And Guess what?

Not only did the Federal Reserve give 16.1 trillion dollars in nearly interest-free loans to the "too big to fail" banks, the Fed also paid them over 600 million dollars to help run the emergency lending program. According to the GAO, the Federal Reserve shelled out an astounding $659.4 million in "fees" to the very financial institutions which caused the financial crisis in the first place.

In addition, it turns out that trillions of dollars of this bailout money actually went overseas. According to the GAO audit, approximately $3.08 trillion went to foreign banks in Europe and in Asia.

So why were our dollars being used to bail out foreign banks while tens of millions of American families were deeply suffering?

That is a very good question.

Also, it is important to remember that many of these bailout loans were made at below market interest rates, and this enabled many of these financial institutions to rake in huge profits.

According to a recent Bloomberg article, the big banks brought in an estimated $13 billion by taking advantage of the Fed’s below-market rates....

While the Fed’s last-resort lending programs generally charge above-market interest rates to deter routine borrowing, that practice sometimes flipped during the crisis. On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.

The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

So once the financial crisis was over, were adjustments made to the financial system to make sure that this type of thing would never happen again?

Of course not.

Today, the "too big to fail" banks are larger than ever. The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

So now they are more "too big to fail" than ever.

But this is what happens when we allow unelected central bank bureaucrats to run our financial system.

Most Americans do not realize this, but the truth is that the Federal Reserve is not part of the government. In fact, it is about as "federal" as Federal Express is. The Federal Reserve has admitted that they are a privately owned institution in court many times, and you can see video of a Federal Reserve employee admitting that the Federal Reserve is privately owned right here.

The Federal Reserve is an out of control monster that is throwing around trillions of dollars whenever it wants to. Nobody should be allowed to do this. Nobody should be allowed to give bailouts to banks and corporations without the express permission of the U.S. Congress and the president of the United States.

This is a point that I made in my article yesterday. The Federal Reserve decided this week that it is going to provide "liquidity support" to Europe. If the American people do not like this move, that is just too bad. We do not get a say in the matter.

Are you starting to understand why I keep pushing the idea that it is time to shut down the Federal Reserve?

Please share this information about the secret 16 trillion dollar Federal Reserve bailout with your family and your friends.

If we can get enough people to wake up, perhaps there is still time to change the direction that this country is headed.

Defiant Judge Stops Obama From Selling Immunity To Wall Street

A good thing:

In an audacious move against Citigroup, the SEC, and the practice of "selling immunity", a Federal Judge in a NY District Court abruptly put the brakes on a settlement agreement proposed between the Obama Administration and another giant Wall Street firm accused of betting against their own investors.

Judge Jed Rakoff sent a message today to Wall Street and the Securities Exchange Commission that may send shockwaves through the financial world, refusing to approve a $285 million dollar payout to drop an investigation against Citigroup for defrauding investors without admitting any guilt.

Business Insider's haunting pullquote is a somber reminder of a core message of the Occupy movement. : "Judge Rakoff: Truth is Confined to Secretive, Fearful Whispers"

You might recall last year Goldman Sachs paid a $535 million dollar settlement "without admitting guilt" in a case brought by investors claiming fraud in a somewhat similar collateralized debt obligation scam. Goldman squirmed by, conceding they had provided 'incomplete information' but in this case, Citigroup had profited more blatantly at the expense of their clients.

With prosecutions for bank fraud today at a twenty year low, the Occupy movement has widely decried the questionable glad-handing between Wall Street titans and federal officials who are supposed to keep them honest. On his way out in 2008, President Bush issued a DOJ directive that encouraged the practice of "deferred prosecutions" which gave DOJ and SEC desk jockeys incredible latitude to craft immunity deals in secret in exchange for millions in fines and promises to be better.

But you might be disgusted to learn that the fines paid out to the government were at times equal to the payments made to legal firms, enriched by banks as grants of immunity prevented victimized investors from seeking further damages.

Rakoff's stand is consequential because any finding of guilt at last empowers the little-guy investor to bring civil suits.

Matt Taibbi on this story.

The Big Lie -- Wall Street Style

What caused the financial crisis? The Big Lie goes viral.

By Barry Ritholtz, Nov. 5 (Washington Post)

I have a fairly simple approach to investing: Start with data and objective evidence to determine the dominant elements driving the market action right now. Figure out what objective reality is beneath all of the noise. Use that information to try to make intelligent investing decisions.

But then, I’m an investor focused on preserving capital and managing risk. I’m not out to win the next election or drive the debate. For those who are, facts and data matter much less than a narrative that supports their interests.

One group has been especially vocal about shaping a new narrative of the credit crisis and economic collapse: those whose bad judgment and failed philosophy helped cause the crisis.

Rather than admit the error of their ways — Repent! — these people are engaged in an active campaign to rewrite history. They are not, of course, exonerated in doing so. And beyond that, they damage the process of repairing what was broken. They muddy the waters when it comes to holding guilty parties responsible. They prevent measures from being put into place to prevent another crisis.

Here is the surprising takeaway: They are winning. Thanks to the endless repetition of the Big Lie.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.

The Big Lie made a surprise appearance Tuesday when New York Mayor Michael Bloomberg, responding to a question about Occupy Wall Street, stunned observers by exonerating Wall Street: “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.”

What made his comments so stunning is that he built Bloomberg Data Services on the notion that data are what matter most to investors. The terminals are found on nearly 400,000 trading desks around the world, at a cost of $1,500 a month. (Do the math — that’s over half a billion dollars a month.) Perhaps the fact that Wall Street was the source of his vast wealth biased him. But the key principle of the business that made the mayor a billionaire is that fund managers, economists, researchers and traders should ignore the squishy narrative and, instead, focus on facts. Yet he ignored his own principles to repeat statements he should have known were false.

Why are people trying to rewrite the history of the crisis? Some are simply trying to save face. Interest groups who advocate for deregulation of the finance sector would prefer that deregulation not receive any blame for the crisis.

Some stand to profit from the status quo: Banks present a systemic risk to the economy, and reducing that risk by lowering their leverage and increasing capital requirements also lowers profitability. Others are hired guns, doing the bidding of bosses on Wall Street.

They all suffer cognitive dissonance — the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility.

And what about those facts? To be clear, no single issue was the cause. Our economy is a complex and intricate system. What caused the crisis? Look:

1) Fed Chair Alan Greenspan dropped rates to 1 percent — levels not seen for half a century — and kept them there for an unprecedentedly long period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).

2) Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities. Nearly all of them failed to do adequate due diligence before buying them, did not understand these instruments or the risk involved. They violated one of the most important rules of investing: Know what you own.

3) Fund managers made this error because they relied on the credit ratings agencies — Moody’s, S&P and Fitch. They had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.

4) Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.

5) The Securities and Exchange Commission changed the leverage rules for just five Wall Street banks in 2004. The “Bear Stearns exemption” replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. In its place, it allowed unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage leaves very little room for error.

6) Wall Street’s compensation system was skewed toward short-term performance. It gives traders lots of upside and none of the downside. This creates incentives to take excessive risks.

7) The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations. The Fed could have supervised them, but Greenspan did not.

8) These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to get creative with underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.

9) “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.

10) To keep up with these newfangled originators, traditional banks developed automated underwriting systems. The software was gamed by employees paid on loan volume, not quality.

11) Glass-Steagall legislation, which kept Wall Street and Main Street banks walled off from each other, was repealed in 1998. This allowed FDIC-insured banks, whose deposits were guaranteed by the government, to engage in highly risky business. It also allowed the banks to bulk up, becoming bigger, more complex and unwieldy.

12) Many states had anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks. Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates skyrocketed.

Bloomberg was partially correct: Congress did radically deregulate the financial sector, doing away with many of the protections that had worked for decades. Congress allowed Wall Street to self-regulate, and the Fed the turned a blind eye to bank abuses.

The previous Big Lie — the discredited belief that free markets require no adult supervision — is the reason people have created a new false narrative.

Now it’s time for the Big Truth.

Occupy Wall Street Still Going Strong

Interesting story on the role of anarchist and anthropologist David Graeber in organizing the protests.

Veterans March For Occupy Wall Street — And It's Like Nothing You've Ever Seen Before

Teachers, auto workers, nurses and more have had their chance to show their support for the ideals of the Occupy movement.

Today, veterans had their turn.

There is no perfect way to describe what it looked like, we can only say that their demonstration was serious and somber unlike any other.

This was not a party with music and cheering, their signs were not funny either, this was a true march in protest. After all, these men and women are soldiers.

As they made their way to Zuccotti Park, the feeling was tense. People who watched from their offices did not smile or laugh, they stared and whispered quietly to each other.

And then the veterans took the human microphone. Like their steps, their voices rang in perfect time. The occupiers stood in silence, only opening their mouths to repeat what the soldiers said.

When one Navy veteran addressed Zuccotti Park he put it very simply: "If you continue to assemble in peace and solidarity, justice will come to pass. We are the 99%."

Money for Nothing, Risk for Free

Our insanely disgusting banking system:

Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as "standing in the middle and taking a gigantic cut when the government decides to lend money to itself."

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

Your average chimpanzee couldn't fuck up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the protesters go to sign up for their interest-free billion-dollar loans?

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system -- and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government's credit rating.

This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.

In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it's relatively safe to lend to them -- which means it's now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn't jack its debt-to-equity levels above 35-1 before the crash and didn't dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible. Click on freecreditscore.com to see if you got the same deal.

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's they're own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want “something for nothing.”

This is ironic because, as one of the Rolling Stone editors put it last week, “something for nothing is Wall Street’s official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.

The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under -- AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm -- but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

BOA Tries to Hook US Taxpayers for $75 TRILLION of Their Gambling Debts

SEVENTY-FIVE TRILLION.

The combined wealth of the US is less than that.

Fucking insanity, is what it is.

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position. (snip)

Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

More Police Brutality at OWS

More thuggery here:

By now, my cell phone video of two Citibank costumers being forcibly arrested outside the LaGuardia Place branch in New York City on October 15th 2011 has been seen by almost a million people.

As the person who unwittingly shot the video of the incident, I though it might be useful to respond to some of the media attention it has been getting.

A few friends and I attended a rally of college students, high school students, teachers, professors in Washington Square Park, which was connected to the ongoing Occupy Wall Street protests in lower Manhattan – and now around the country and around the world.

After the rally, I went into a nearby coffee shop and when I returned to the park I heard that a few dozen people had decided to head over to the local Citibank branch to talk about their student debt and close their accounts. I thought one of my friends might be among them so I walked the few blocks to the bank.

As I arrived I saw Citi Bank security guards locking the doors to the bank.

Contrary to the City Bank PR statement, the cops were not yet on the scene when Citi Bank officials chose to lock the doors to the branch– effectively kidnapping those inside.

Since I could see my friends were still inside the bank, I took out my blackberry and began recording through the window.

As I filmed an undercover, plain clothes police officer approached a women standing next to me outside the window. He accused her of having been inside the bank and said she had to come with him. As you can see on the video she repeats over and over, “I’m a customer,” and she holds up her Citibank check book. Though it’s not audible on the video, she also told him that she was just trying to close her account.

As my voice in the video will testify I was shocked and shaken by what happened next. The women, and the man standing next to her, were dragged inside the bank through a side door and arrested allow with 22 other people who were locked inside.

I watched in horror from the sidewalk as police dragged each person out one by one and loaded them into a line of paddy wagons. I could see that a few people were bleeding from their wrists where the police zip ties were cutting them.

I did not know the woman or man being arrested by the undercover cop in my video, but I desperately wanted to find them to give them the video to help with their court cases.

Today, I went down to Central Booking in Manhattan for the arraignments of the 24 people arrested. They were in jail for almost 30 hours. Most were charged with disorderly conduct, but a few have more serious charges–including trespassing and resisting arrest.

After waiting four hours in the courtroom they were finally released, along with my other friends. Their hands and wrists were cut up from the roughness of the police and zip ties. Everyone who was in jail was tired, hungry, and mentally and emotionally exhausted from spending the night in a cell–but no one was deterred from participating in the Occupy movement.

I asked my friends what had happened inside and they told me that they had all agreed they would leave the bank when asked. That no one had had any interest in being arrested that day. They all had thought, as citizens and as Citibank customers, they would be given a chance to leave the branch before action was taken against them. Sadly they were wrong.

I’m an underemployed recent college graduate with a degree in economics (of all things) and like many in my generation I have over $50,000 in student loans. I’m currently working as a babysitter to try and pay the bills.

This is why I organize with Occupy Wall Street. Because I am part of the 99%–and if you’re reading this, there’s a 99% chance that you are too! The most beautiful thing about the Occupy Movement is that we can create, on a small scale, a version of the society in which we would like to live. A society with free education and health care–where democracy is participatory and real and our social relationships are founded on community, mutual aid, equality, respect, and solidarity.

If you believe that what is happening in this country is wrong, if you believe that as a society we can do better than this, then find an Occupy event in your city or town! And remember to bring your cell phone or video camera – you might just need it!

– Meaghan Linick, Brooklyn NY

One Month of Occupy Wall Street

Olbermann on 10/17/11:


Global protests:


Matt Taibbi: Why Occupy Wall Street Is Bigger Than Left vs. Right

The reality is that Occupy Wall Street and the millions of middle Americans who make up the Tea Party are natural allies and should be on the same page about most of the key issues, and that's a story our media won't want to or know how to handle.

Take, for instance, the matter of the Too-Big-To-Fail banks, which people like me and Barry Ritholz have focused on as something that could be a key issue for OWS. These gigantic institutions have put millions of ordinary people out of their homes thanks to a massive fraud scheme for which they were not punished, owing to their enormous influence with government and their capture of the regulators.

This is an issue for the traditional "left" because it's a classic instance of overweening corporate power -- but it's an issue for the traditional "right" because these same institutions are also the biggest welfare bums of all time, de facto wards of the state who sucked trillions of dollars of public treasure from the pockets of patriotic taxpayers from coast to coast.

Both traditional constituencies want these companies off the public teat and back swimming on their own in the cruel seas of the free market, where they will inevitably be drowned in their corruption and greed, if they don't reform immediately. This is a major implicit complaint of the OWS protests and it should absolutely strike a nerve with Tea Partiers, many of whom were talking about some of the same things when they burst onto the scene a few years ago.

The banks know this. They know they have no "natural" constituency among voters, which is why they spend such fantastic amounts of energy courting the mainstream press and such huge sums lobbying politicians on both sides of the aisle.

The only way the Goldmans and Citis and Bank of Americas can survive is if they can suck up popular political support indirectly, either by latching onto such vague right-populist concepts as "limited government" and "free-market capitalism" (ironic, because none of them would survive ten minutes without the federal government's bailouts and other protections) or, alternatively, by presenting themselves as society's bulwark against communism, lefty extremism, Noam Chomsky, etc.

All of which is a roundabout way of saying one thing: beware of provocateurs on both sides of the aisle. This movement is going to attract many Breitbarts, of both the left and right variety. They're going to try to identify fake leaders, draw phony battle lines, and then herd everybody back into the same left-right cage matches of old. Whenever that happens, we just have to remember not to fall for the trap. When someone says this or that person speaks for OWS, don't believe it. This thing is bigger than one or two or a few people, and it isn't part of the same old story.

Bank of America earned billions of dollars in profits last quarter, even as banking officials expressed concern recently about the effects of new regulations on their bottom line.

The largest bank by assets reported third quarter gains of $6.2 billion, compared to a $7.3 billion loss during the same quarter last year. The boost in profits came largely from an accounting gain and the pre-tax benefits from the sale of its stake in a Chinese bank.

The increase in profits comes after Bank of America roiled customers by announcing that it will start charging customers $5 per month to use their debit cards for purchases in 2012. Shortly after the bank announced the fee, Bank of America CEO Brian Moynihan defended it, saying that the bank "has a right to make a profit."

Jeffrey Sachs:

The Wall Street elite seems completely befuddled by the Occupy Wall Street movement. The demonstrators are called "unsophisticated," or misguided, or much worse (mobs, communists, and more). Here's a short note to the titans of Wall Street to help them understand what's happening.

Let me start with the Wall Street Journal, which seems to be the most confused of all. In its Friday edition, the Journal editorial board couldn't understand why the protestors would want to protest JP Morgan and hedge fund manager John Paulson. The Journal also couldn't understand why the protesters were failing to champion something as wonderful as the Keystone Pipeline, which the Journal assures us would create many jobs.

The Journal can be forgiven for this basic confusion. It must be hard work to channel Rupert Murdoch's cynicism, greed, and ideology every day, so here are some answers so that the editorial board doesn't have to knock itself out with fresh research.

The protesters are annoyed with JP Morgan because it, like its fellow institutions on the street, helped to bring the world economy to its knees through unprincipled and illegal actions. The Journal editorial board apparently missed the news carried in the Journal's own business pages that JP Morgan recently paid $153.6 million in fines for violating securities laws in the lead-up to the 2008 financial collapse. JP Morgan, like other Wall Street institutions, connived with hedge funds to peddle toxic assets to unsuspecting investors, allowing the hedge funds to make a killing at the expense of their "mark," and the world economy.

The protestors are not enamored of Mr. Paulson either, since he played this role together with Goldman Sachs. Paulson made a fortune by teaming up with Goldman to bundle failed mortgages, which Goldman then peddled to its customers, in this case some unsuspecting German banks. Paulson shorted these assets and thereby profited as the bank's investments collapsed. For this little maneuver, Goldman paid $560 million to the SEC in fines. Of course this is a small amount compared to the profits that Goldman reaped for years playing in toxic assets. On Wall Street, misbehavior pays, at least up until now.

Mr. Paulson actually made some extraordinary statements in the New York Times on Friday (hard even to believe the nonsensical quotations are correct, but there they are, in the paper of record). He too expressed befuddlement about the protests against his business dealings. Didn't the protestors know that he had created 100 high-paying jobs in NYC? 100?

What the protestors do know is that Mr. Paulson's success in shorting toxic assets bundled for gullible investors has netted him billions. In 2007, he reportedly took home $3.7 billion by betting against the U.S. mortgage market. And the protestors can also do their arithmetic. Paulson's take home pay was enough to cover not just 100 jobs at $50,000 per year but rather approximately 70,000 jobs at $50,000 per year. Nice try, Mr. Paulson, but the people in Liberty Plaza don't think your hedge-fund play is really worth the compensation of 70,000 people. Nor do they understand why hedge fund managers pay a top tax rate of 15% on their hedge-fund earnings.

The Journal, Paulson, and others who accuse the protestors of being "unsophisticated," somehow have forgotten a basic point. It's not just Paulson, or Goldman, or JP Morgan that parlayed their unethical behavior into vast fortunes at the expense of hapless investors. Just name a big name on Wall Street in the past decade, scratch the surface, and uncover a financial scandal. Bank of America, Goldman, JP Morgan, AIG, Merrill Lynch, Countrywide Financial, Lehman Brothers are only the start of the list.

Maybe the Journal forgot to mention this because it itself is enmeshed in a series of scandals, ranging from hacking phones in the U.K. that has created a full-fledged crisis for its parent News Corporation, to last week's resignation of the European publisher. Murdoch is not just running an organization of corporate propaganda, but a criminal enterprise, at least in the U.K.

The protestors are not envious of wealth, but sick of corporate lies, cheating, and unethical behavior. They are sick of corporate lobbying that led to the reckless deregulation of financial markets; they are sick of Wall Street and the Wall Street Journal asking for trillions of dollars of near-zero-interest loans and bailout money for the banks, but then fighting against unemployment insurance and health coverage for those drowning in the wake of the financial crisis; they are sick of absurdly low tax rates for hedge-fund managers; they are sick of Rupert Murdoch and his henchman David Koch trying to peddle the Canada-to-Gulf Keystone oil pipeline as an honest and environmentally sound business deal, when in fact it would unleash one of the world's dirtiest and most destructive energy sources, Canada's oil sands, so that Koch can profit while the world suffers. And they are sick of learning how many Republican politicians - the most recent news is about Herman Cain - are doing the bidding of the Koch brothers.

Here, then, Wall Street and Big Oil, is what it comes down to. The protesters are no longer giving you a free ride, in which you can set the regulations, set your mega-pay, hide your money in tax havens, enjoy sweet tax rates at the hands of ever-willing politicians, and await your bailouts as needed. The days of lawlessness and greed are coming to an end. Just as the Gilded Age turned into the Progressive Era, just as the Roaring Twenties and its excesses turned into the New Deal, be sure that the era of mega-greed is going to turn into an era of renewed accountability, lawfulness, modest compensation, honest taxation, and government by the people rather than by the banks.

That, in short, is why Wall Street is filled with protesters and why you should wake up, respect the law rather than try to write it, and pay your taxes to a government that is ruled by people rather than by corporate power.

Jon Stewart joins in the comentary.

Top Ten Reasons to Protest Wall Street:

10) they drank champagne while they watched people protest that they crashed the economy
9) they got record bonuses after they crashed the economy
8) they made record profits after crashing of the economy
7) they got bailed out after they crashed the economy
6) they supported planet-raping industries, while they crashed the economy
5) they didn't care about American jobs while they crashed the economy
4) all they cared about was making money, and they crashed the economy
3) they BOUGHT OFF our politicians, and they crashed the economy
2) no one has gone to jail, after they crashed the economy
1) they freaking crashed the economy

And I would include the Federal Reserve as part of this indictment.