April 2010


Americans March on Wall Street

By Team at April 30, 2010 - 11:07am

When a few so-called "tea partiers" show up on a street corner, it's big news. When thousands of working Americans march on Wall Street, it's buried in the business section. It shouldn't be. Yesterday's march on Wall Street sent a strong message that working Americans are sick and tired of the rigged Wall Street casino and we want reform.

“People in New York and across the country who did nothing wrong and want to work have paid for the misdeeds of the big banks with their jobs, homes and retirement savings,” said Richard Trumka, the A.F.L.-C.I.O. president.

The A.F.L.-C.I.O., the rally’s main sponsor, is urging Congress and the president to be tougher on the banks. It called for significantly higher taxes on bankers’ bonuses and private equity managers, as well as a new tax on short-term financial transactions.

The Senate recently began moving forward on a sweeping overhaul of the regulations of the financial industry, though many provisions are already likely to be contentious.

At a rally alongside City Hall Park, Mr. Trumka shouted, “Anyone out there think Wall Street ought to pay for the jobs they destroyed?” The crowd roared yes...

At the afternoon rally in Lower Manhattan, George Goehl, the executive director of National People’s Action, chided Congress for not having already enacted far-reaching financial legislation.

“Our goal is to force a which-side-are-you-on movement for U.S. senators on the issue of Wall Street reform,” he said. “Are they with the American people or are they with the Wall Street banks?”

Slogans at the rally were “good jobs now” and “hold banks accountable.”

“We’re 11 million jobs in the hole, and it’s time for the financial industry to pay up to create them,” Mr. Trumka said.

This was the biggest march against Wall Street in decades. People are sick and tired of banksters who swindle investors and bet against the economy so they can get rich even as we suffer. Americans want Wall Street Reform, and, we want it now.


Chris Cox: A Record of Failure

By Team at April 29, 2010 - 4:39pm

Today, Accountable America's Tom Matzzie praised the news that former SEC Chair Christopher Cox will testify before the Financial Crisis Inquiry Commission (FCIC). Matzzie highlighted Mr. Cox's record of failure and called on the FCIC to hold him accountable. Matzzie:

The truth is that Christopher Cox was ill suited for the post of SEC Chair from the start—like so many other Bush appointees. Cox was ideologically opposed to the type of regulation and oversight the SEC is charged with conducting.

As a member of Congress he raised more than $1,297,9661 from Wall Street, including banks and financial, insurance firms. Did anybody think Cox forgot who was buttering his bread? Or maybe George W. Bush was expecting that he didn’t forget?

Cox’s tenure at the SEC was marked by one trait: no protection for the small investor. Among other things,

The Cox SEC failed to recognize Bernard Madoff’s massive securities fraud despite repeated warnings.

  • Cox failed to enforce accounting standards. The SEC had authority over the financial statements over all public companies and can set its own accounting standards if needed.
  • Cox failed to supervise the rating agencies. The Credit Rating Agency Reform Act of 2006 gives the SEC the right to suspend or revoke the license of any rating agency. The SEC was their only regulator.
  • Cox declined to protect the SEC’s authority by appealing a court ruling regarding hedge funds—sending a clear signal that the SEC wasn’t going to be very active during his tenure.
  • Cox didn’t move quickly to appropriately curb short sellers early in the crisis.
    Cox did nothing about Credit Default Swaps—only making remarks after it was clear they posed a massive threat.
  • Cox was reassuring the public about Bear Stearns only days before its dramatic collapse yet the agency had failed to adequately supervise Bear and limit risk, according to an Inspector General’s report. At the time, it was reported that Cox failed to attend meetings and phone calls regarding the failing firm.
  • The Government Accountability Office (GAO) repeated that Cox’s SEC slowed, hindered and hobbled investigations and enforcement, noting that, Cox’s policies, “contributed to an adversarial relationship between enforcement and the Commission.”
  • Cox cut transparency inside the SEC—barring enforcement personnel at the SEC from more than 40 percent of the meetings considering sanctions or legal actions.
  • Cox undercut morale deeply at the SEC. At one point in his tenure the Bush Treasury Department proposed abolishing the SEC—Cox failed to quickly protest the idea leaving many to think he supported it.

Cox has a lot to account for in front of the Financial Crisis Inquiry Commission. It will be a hearing worth watching.

We encourage FCIC Commissioners to challenge Mr. Cox for his many failures.


Chris Cox, Hank Paulson to Testify Before FCIC

By Team at April 29, 2010 - 2:22pm

Victory! Two of President George W. Bush's top financial officers are set to take questions from the Financial Crisis Inquiry Commission. Former SEC head Chris Cox will get grilled for his many failures holding Wall Street accountable on Wednesday, May 5th. And, Bush's Treasury Secretary Hank Paulson will testify on the bailout boondoggle on Thursday, May 6th. Here's the full schedule:

Day One – Wednesday, May 5

Session 1: Investment Banks and the Shadow Banking System

Paul Friedman, former Chief Operating Officer of Fixed Income
Bear Stearns

Samuel Molinaro, Jr., former Chief Financial Officer and Chief Operating Officer
Bear Stearns

Warren Spector, former President and Co-Chief Operating Officer
Bear Stearns

Session 2: Investment Banks and the Shadow Banking System

James E. Cayne, former Chairman and Chief Executive Officer
Bear Stearns

Alan D. Schwartz, former Chief Executive Officer
Bear Stearns

Session 3: SEC Regulation of Investment Banks

Charles Christopher Cox, former Chairman
U.S. Securities and Exchange Commission

William H. Donaldson, former Chairman
U.S. Securities and Exchange Commission

H. David Kotz, Inspector General
U.S. Securities and Exchange Commission

Erik R. Sirri, former Director Division of Trading & Markets
U.S. Securities and Exchange Commission

Day Two – Thursday, May 6

Session 1: Perspective on the Shadow Banking System

Henry M. Paulson, Jr., former Secretary
U.S. Department of the Treasury

Session 2: Perspective on the Shadow Banking System

Timothy F. Geithner, Secretary, U.S. Department of the Treasury; former President,
Federal Reserve Bank of New York

Session 3: Institutions Participating in the Shadow Banking System

Michael A. Neal, Vice Chairman, GE and Chairman and Chief Executive Officer
GE Capital

Mark S. Barber, Vice President and Assistant Treasurer
GE Capital

Paul A. McCulley, Managing Director

Steven R. Meier, Chief Investment Officer
State Street


Time for Investigations

By Team at April 29, 2010 - 1:58pm


Rep. Marcy Kaptur (D., Ohio), showed up with an entourage to deliver a letter signed by 62 members of Congress to urge the department to investigate Goldman Sachs and other Wall Street banks.

Also at the event were members of the Progressive Change Campaign Committee, which says it has collected more than 142,000 signatures on an online petition demanding the same. The slogan on the petition: “Nobody on Wall Street is too big for jail.”

That's people powered pressure. And, it's producing results:

Attorney General Eric Holder has said that the department is investigating many cases related to the financial crisis and that it will bring cases where it finds wrongdoing. The Justice Department said it accepted the petition and that is reviewing the letter. The department said it doesn’t comment, confirm or deny the existence of investigations.

The Securities and Exchange Commission earlier this month brought a civil securities fraud action against Goldman related to its sale of a mortgage back security that allegedly was designed to fail. Goldman says it did nothing wrong in its dealings with sophisticated investors.

We have the banksters scared. Let's keep up the pressure, pass real Wall Street reform and hold the banksters and the failed Bush era regulators accountable at the FCIC.

Big Business

Goldman Lobbyists Targeting FCIC

By Team at April 29, 2010 - 1:32pm

The mandate of the Financial Crisis Inquiry Commission (FCIC) is to discover the root causes of the financial crisis. It's a bipartisan commission that should be free of political intervention. Goldman Sachs disagrees. It's hired a team of lobbyists and stepped up it's advocacy in Washington to put pressure on the FCIC. This gem was buried deep in today's Washington Post:

Until a few years ago, Goldman Sachs operated a sleepy lobby shop in the nation's capital.

But now, faced with fraud charges, investigations, a firestorm of criticism and a regulatory overhaul bill that could seriously damage its profitability, the venerable Wall Street firm is assembling a team of veteran lobbyists, well-connected former Hill staffers and top public relations strategists to confront what is arguably the most traumatic moment in its 140-year history...

Together, the team is plowing forward with a more aggressive lobbying and public relations campaign, one aimed at making sure that when the history books are written, Goldman's side of the story is told. One focus will be the Financial Crisis Inquiry Commission, the independent group set up by Congress which is putting together a massive report on the causes of the financial collapse.

The FCIC must not let lobbyists from Goldman Sachs rewrite history. The FCIC has a mandate and that mandate should be fulfilled free of influence from corrupt Wall Street banksters.


Victory: Republicans Cave to Your Pressure

By Team at April 28, 2010 - 5:42pm

Big news:

Senate Republicans are prepared to end their stalling tactics on new banking regulations...

Looks like Mitch McConnell wants to go to the Kentucky Derby after all. Big win for Main Street. Big loss for the banksters.

Big Business

Wall Street Banksters Reward Washington Republicans for their Loyalty

By Team at April 27, 2010 - 5:40pm

The banksters are paying off the Republicans for shilling for their interests:

Republicans may lose the fight over Wall Street regulations, but the fight has helped their campaign accounts.

For the first time since 2004, the biggest Wall Street firms are now giving most of their campaign donations to Republicans.

A Wall Street Journal analysis of 12 large financial services companies, including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. shows that they have collectively made $1.4 million in political donations, with 52% going to Republicans so far this year.

But, that's not enough for the Washington Republicans. Republican insiders want more.

Meanwhile, the Wall Street firms have also begun writing large checks to the Republican Party, while stiffing the Democratic Party. Goldman, KPMG, and FMR Corp. (the owner of Fidelity Investments) each gave $15,000 to the Republican Party in March.

The change of allegiance comes as Congress closes in on legislation that would overhaul financial services regulations. Democrats back an aggressive bill that has been so far blocked in the Senate by Republicans.

Republicans have grown frustrated by the fact that Wall Street companies and employees continue to write big campaign checks to Democrats even as the GOP stands up for the industry on Capitol Hill.

Republican insiders admit that they're shilling for Wall Street! And, they expect to be paid handsomely for it. The American people need to know that the Republican Party is doing Wall Street's bidding in Washington.

Big Business

How Many Times Will Republicans Carry Water for Wall Street?

By Team at April 27, 2010 - 5:21pm

Good call, Senator Reid:

Sen. Harry Reid will force Republicans to vote repeatedly against Wall Street reform to put pressure GOP centrists.

A senior Democratic aide said Reid would schedule votes to end a Republican filibuster of the reform bill on Tuesday and Wednesday of this week.

“We need to keep the pressure up to get a deal,” said the Democratic aide.

How many times will the GOP stand up for the banksters against Wall Street reform? How many times will the GOP say no to more transparency on Wall Street? How many times will they say no to new rules to shut down the dangerous casino on Wall Street? Thanks to Harry Reid, we'll know the answer.

Big Business

Questions for Goldman

By Team at April 26, 2010 - 3:00pm

William Black and Eliot Spitzer reveal some essential questions that the SEC and Goldman have yet to answer:

Did John Paulson and ACA know that Goldman was making these false disclosures to the CDO purchasers? Did they “aid and abet” what the SEC alleges was Goldman’s fraud? Why have there been no criminal charges? Why did the SEC only name a relatively low-level Goldman officer in its complaint? Where are the prosecutors?

Under President Obama, the SEC is starting to wake up from an eight year slumber under George W. Bush - but, they still have much work to be done. Under George W. Bush and his SEC head Christopher Cox, the SEC was asleep at the wheel. Not only did the SEC under Bush and Cox make few major moves against fraudulent banksters, they were so incompetent that a senior attorney and accountant nearly got away with downloading tens of thousands of pornographic images on the job. It's time for groups like the Financial Crisis Inquiry Commission (FCIC) to investigate the SEC under Bush and Cox.


Poll: 65% Support Stronger Regulations Against Banks

By Team at April 26, 2010 - 1:15pm

The facts are in. Americans stand with Main Street, not Wall Street. We support tougher laws against the banksters who helped contribute to the worst financial crisis since the Great Depression. CNN:

According to an ABC News/Washington Post survey released Monday morning, 65% of the public supports stricter federal regulations on the way banks and other financial institutions conduct their business, with 31% opposed.

A majority of people questioned in a CNN/Opinion Research Corporation poll conducted last month also favored greater government regulation of banks and other financial institutions.

Taking a look at some of the provisions in the legislation, the ABC News/Washington Post survey indicates that nearly six in ten back increasing federal oversight of the way banks and other financial companies issue credit cards and make consumer loans, such as mortgages and auto loans.

By a margin of 2:1, the American people support tough new laws to reign in the out of control excesses of the Wall Street banksters. It's clear that the public is with us. Now, it's time for Congress to act.


Reforms Worth Fighting For...

By Team at April 26, 2010 - 1:09pm

Mike Konczal over at the Roosevelt Institute put together a handy tip sheet. He explains:

I’ve created a quick two-page backgrounder here: Six Critical Elements of Financial Reform, laying out six pieces of financial reform that are still in play but could change by the hour. Each one of them is necessary to really doing this right, and if you are interested in making this bill better at the margins these are the things that will really make a difference.

Check out the chart.

These six reforms are critical. It's time to fight for them. Let your Senator know where you stand on these six reforms.

Big Business

The Ticking Wall Street Time Bomb

By Team at April 26, 2010 - 12:57pm

Warren Buffet warned us about the financial crisis in 2002. We did nothing. Then, the collapse happened. We did nothing. If we continue to do nothing, another crash is sure to come. Watch and learn:

Big Business

Guess Who Shilled for Goldman Sachs Behind Closed Doors?

By Team at April 23, 2010 - 4:27pm

The Republicans:

Behind closed doors, the two Republican members of the Securities and Exchange Commission sharply questioned senior investigators last week about whether the evidence they had assembled was strong enough to file a fraud case against Goldman Sachs, according to current and former SEC officials familiar with the matter.

The two commissioners... voted against approving it.

Courts should decide whether or not Goldman should pay damages - not Republicans. First it's Mitch McConnell meeting with Wall Street executives behind closed doors and, hours after the meeting, taking action to stymie real reform. Now, it's Republicans on the SEC saying no to letting the courts decide Goldman's fate. More and more, it seems that the Republicans who would rather do Wall Street's bidding than hold them accountable.


Time: "SEC Staff Watched Porn as Economy Crashed"

By Team at April 23, 2010 - 12:06pm


A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet, he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense and received a 14-day suspension.

This occurred under Christopher Cox's watch. Christopher Cox, George W. Bush's SEC Chairman, was asleep at the switch during the run up to the global financial crisis and he needs to be held accountable for failures like this. This failure to crack down on employees' porn habit is a sign of of the kind of inefficient and incapable office he ran. He needs to answer questions about his incompetence and failures. The Financial Crisis Inquiry Commission should subpoena Cox and hear his testimony.


FCIC Getting Tough?

By Team at April 22, 2010 - 4:04pm

This is a good sign:

A federal panel said Wednesday that it had issued a subpoena to the credit-rating agency Moody’s Investors Service after the firm failed to promptly respond to its request for documents and e-mail messages, Sewell Chan writes in The New York Times.

The subpoena suggested an intensified activity by the bipartisan panel, known as the Financial Crisis Inquiry Commission, which was created to examine the causes of the financial crisis.

It was the first such subpoena issued by the panel, which was created by Congress last year and is required to complete its findings by Dec. 15. The panel has been criticized for getting off to a slow start and being unfocused in its inquiry, given the wide scope of its mandate.

The FCIC needs to do more of this. They should continue by issuing a subpoena to Christopher Cox, Bush's man at the SEC. Cox was asleep at the switch and has a lot of questions to answer. It's high time for him to answer them and be held accountable for his role in bringing about the financial crisis.

Big Business

On the Offensive: Citizen's Groups Target Banksters and their Right Wing Allies

By Team at April 21, 2010 - 1:33pm

Mitch McConnell and his bankster friends are on the defensive for cozying up to Wall Street bankers and then doing their bidding in Washington in these new ads:

Pass them on.

Special Interests

Sue Lowden: Loves Bailouts, Opposes Real Wall Street Reform

By Team at April 21, 2010 - 9:31am

Nevada politician Sue Lowden's casino corporation received a $29 million line of credit from her failed bank - a bank that was bailed out by U.S. and Nevada taxpayers. It's all in the family. Here's the sordid story:

Sue and her husband Paul Lowden are top executives at Archon Corporation, a casino holding company. Paul Lowden is the President and CEO. Sue Lowden is the Executive Vice President, Secretary, Treasurer and Director of Archon. They control the company. And, when the company needed a line of credit, they knew where to get one.

Sue Lowden was a founding member of the Commercial Bank of Nevada, which was acquired by Colonial Bank in 1998. She sat on the Board of Directors of Colonial Bank of Nevada until June 2009. While Colonial Bank was set to receive a $550 million bailout thanks to TARP, the bank failed before it received the funds. Soon after it failed, it was taken over by BB&T which received over $3.1 billion in taxpayer bailouts thanks to TARP. One day after BB&T took control over Colonial Bank, on August 18, 2009, it extended to the Lowden's casino company, Archon, a $29 million line of credit.

Sue Lowden benefited from a bailed out bank and received the credit line she wanted.

After benefiting from the taxpayer bailout, politician Sue Lowden refuses to support Wall Street reform that gets tough on the cheating banksters and protects consumers. As the Las Vegas Sun reports, "In an interview, she went further, saying that the financial meltdown was the result of too much government regulation, not too little." She's clearly out of touch. It's not regulations that allowed banksters to create exotic financial instruments that allowed the super rich to gamble with our economy. It was the dismantling of rules that protect consumers that turned Wall Street into a dangerous casino. If Sue Lowden had her way, Wall Street rules would be further dismantled to allow the banksters to mislead investors and take riskier bets that benefit them. That's exactly the wrong approach.

We need real Wall Street reform. Call Sue Lowden at 702-302-4097, and tell her Nevadans need leaders who will crack down on predatory CEOs, and Wall Street Ponzi schemes; not politicians that profit from bank bailouts.

Big Business

These Guys... Are Crooks

By Team at April 20, 2010 - 2:10pm

Jon Stewart explains Goldman Sachs' appalling behavior and how much if it is actually still legal:

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
These F@#king Guys - Goldman Sachs
Daily Show Full Episodes Political Humor Tea Party

This is why we need Wall Street Reform. We need it to stop the banksters from misleading and thieving.

Big Business

Goldman Posts $3.46 Billion Profit, Wall Street Steps Up Lobbying Effort

By Team at April 20, 2010 - 2:09pm

While many Americans continue to suffer, Wall Street is raking in the cash:

Goldman Tops Forecast, With $3.46 Billion in Earnings

And, Goldman and the rest of the Wall Street banksters are using that money not to protect consumers and strengthen our economy, but, to protect their profits:

With so much money at stake, it is not surprising that more than 1,500 lobbyists, executives, bankers and others have made their way to the Senate committee that on Wednesday will take up legislation to rein in derivatives, the complex securities at the heart of the financial crisis, the billion-dollar bank bailouts and the fraud case filed last week against Goldman Sachs.

Wall Street isn't looking after us. They're looking after themselves. And, Washington Republicans are happily doing their bidding by pledging to block meaningful reform.


Republicans Stand United Against Wall Street Reform

By Team at April 20, 2010 - 9:44am

The Party of No is shilling for their Wall Street buddies and saying NO to reforming Wall Street. Politico reports:

Senate Minority Leader Mitch McConnell (R-Ky.) has commitments from every Republican senator to block consideration this week of the Democrats’ Wall Street reform bill, a McConnell spokesman said Saturday.

Mitch McConnell stepped up his opposition to Wall Street reform after he met with 25 banksters earlier this month. Those banksters must be pleased that McConnell is doing their bidding in Washington. They will get McConnell back for looking after their profits by generously funding and securing funds for the Republicans' 2010 campaign.


SEC Fail. Massive Fail.

By Team at April 19, 2010 - 4:10pm

A $7 BILLION ponzi scheme. The SEC knew about it in 1997. But, no action was taken against the scheme until 2009. TPM Muckracker has the story:

In news buried by the Goldman fraud charges, the Inspector General for the SEC issued a blistering 159-page report Friday concluding that the agency's Fort Worth office knew that Texas businessman Allen Stanford was operating a Ponzi scheme in 1997 -- but didn't make a serious effort to pursue the matter for eight years, until 2005.

Stanford, a flamboyant Texas billionaire, is currently in jail facing charges of operating a $7 billion Ponzi scheme.

The inspector general's report paints the enforcement section of the Fort Worth office as the main culprit. The IG concludes:

"[T]he SEC's Fort Worth office was aware since 1997 that Robert Allen Stanford was likely operating a Ponzi scheme, having come to that conclusion a mere two years after Stanford Group Company ('SGC'), Stanford's investment adviser, registered with the SEC in 1995. We found that over the next 8 years, the SEC's Fort Worth Examination group conducted four examinations of Stanford's operations, finding in each examination that the CDs could not have been 'legitimate,' and that it was 'highly unlikely' that the returns Stanford claimed to generate could have been achieved with the purported conservative investment approach.

Fort Worth examiners dutifully conducted examinations of Stanford in 1997, 1998, 2002 and 2004, concluding in each case that Stanford's CDs were likely a Ponzi scheme or a similar fraudulent scheme. The only significant difference in the Examination group's findings over the years was that the potential fraud grew exponentially, from $250 million to $1.5 billion."

This is a massive failure on the part of the SEC. For too long, a revolving door between the SEC and Wall Street has created an agency that is incapable of enforcing the law. SEC leaders sat idly buy as more and more innocent people fell victim to Allen Stanford. That must not happen again. The SEC and our financial regulatory environment need reform.

Cox Was Asleep at the Switch

By Team at April 16, 2010 - 1:55pm

This is encouraging. But, it's also a sign that George W. Bush's SEC chair Christopher Cox should've done more to bring these schemes to light before the global financial crisis. Accountable America's Tom Matzzie:

The SEC's action against Goldman Sachs is a good step in the right direction but more is needed urgently. More than any other Wall Street bank, Goldman Sachs gamed the system to the bank's benefit and to the detriment of the public, taxpayers, investors and the U.S. economy. What Goldman Sachs did was no different than a baseball player placing bets against his own team. In addition to civil action, there should be criminal investigations.

One thing that is also becoming clear is that the SEC under former Chairman Christopher Cox was asleep at the switch. This fraud happened 20 months before Cox left his post as SEC Chair. It is clear that Cox hobbled the SEC when it was most needed to protect the public. We need financial reform to setup structures and rules that make it impossible for a regulator to hobble investor protections. But we also need public accountability for Christopher Cox and other regulators who failed to do their job. The Financial Crisis Inquiry Commission should immediately subpoena Cox to appear at their next hearing. Cox should answer as to why he didn't stop these frauds before they spun out of control and wrecked the U.S. economy. If there was any impropriety by Cox that should not be swept under the rug--it must be exposed.

While this action by the SEC is encouraging, the pace and volume of civil and criminal actions related to the financial crisis is woefully inadequate. During the S&L crisis, a series of strike forces based in 27 cities were staffed with 1,000 FBI agents, analysts and dozens of federal prosecutors. The result was no less than 1,852 S&L officials were prosecuted and 1,072 were jailed. More than 500 of these were top officers. Where are those task forces today? Where are those prosecutors? Where are those investigations? The SEC, the Department of Justice and other agencies need to do more and do it now.

The Financial Crisis Inquiry Commission (FCIC) can hold Christopher Cox accountable. They can seek subpoena powers and make him testify before the committee. It's time for the FCIC to act.

Big Business

Abolish Fire Departments?!

By Team at April 16, 2010 - 10:55am

Paul Krugman has the story:

On Tuesday, Mitch McConnell, the Senate minority leader, called for the abolition of municipal fire departments.

Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”

This is clearly ridiculous. But, it illustrates an important point. Krugman:

O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform. In particular, he was objecting not to the existence of fire departments, but to legislation that would give the government the power to seize and restructure failing financial institutions.

But it amounts to the same thing.

Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding. But before I get to that, let’s talk about why he’s wrong on substance.

In his speech, Mr. McConnell seemed to be saying that in the future, the U.S. government should just let banks fail. We “must put an end to taxpayer funded bailouts for Wall Street banks.” What’s wrong with that?

The answer is that letting banks fail — as opposed to seizing and restructuring them — is a bad idea for the same reason that it’s a bad idea to stand aside while an urban office building burns. In both cases, the damage has a tendency to spread. In 1930, U.S. officials stood aside as banks failed; the result was the Great Depression. In 2008, they stood aside as Lehman Brothers imploded; within days, credit markets had frozen and we were staring into the economic abyss.

So it’s crucial to avoid disorderly bank collapses, just as it’s crucial to avoid out-of-control urban fires.

Since the 1930s, we’ve had a standard procedure for dealing with failing banks: the Federal Deposit Insurance Corporation has the right to seize a bank that’s on the brink, protecting its depositors while cleaning out the stockholders. In the crisis of 2008, however, it became clear that this procedure wasn’t up to dealing with complex modern financial institutions like Lehman or Citigroup.

So proposed reform legislation gives regulators “resolution authority,” which basically means giving them the ability to deal with the likes of Lehman in much the same way that the F.D.I.C. deals with conventional banks. Who could object to that?

Well, Mr. McConnell is trying. His talking points come straight out of a memo Frank Luntz, the Republican political consultant, circulated in January on how to oppose financial reform. “Frankly,” wrote Mr. Luntz, “the single best way to kill any legislation is to link it to the Big Bank Bailout.” And Mr. McConnell is following those stage directions.

It’s a truly shameless performance: Mr. McConnell is pretending to stand up for taxpayers against Wall Street while in fact doing just the opposite. In recent weeks, he and other Republican leaders have held meetings with Wall Street executives and lobbyists, in which the G.O.P. and the financial industry have sought to coordinate their political strategy.

And let me assure you, Wall Street isn’t lobbying to prevent future bank bailouts. If anything, it’s trying to ensure that there will be more bailouts. By depriving regulators of the tools they need to seize failing financial firms, financial lobbyists increase the chances that when the next crisis strikes, taxpayers will end up paying a ransom to stockholders and executives as the price of avoiding collapse.

Even more important, however, the financial industry wants to avoid serious regulation; it wants to be left free to engage in the same behavior that created this crisis. It’s worth remembering that between the 1930s and the 1980s, there weren’t any really big financial bailouts, because strong regulation kept most banks out of trouble. It was only with Reagan-era deregulation that big bank disasters re-emerged. In fact, relative to the size of the economy, the taxpayer costs of the savings and loan disaster, which unfolded in the Reagan years, were much higher than anything likely to happen under President Obama.

To understand what’s really at stake right now, watch the looming fight over derivatives, the complex financial instruments Warren Buffett famously described as “financial weapons of mass destruction.” The Obama administration wants tighter regulation of derivatives, while Republicans are opposed. And that tells you everything you need to know.

So don’t be fooled. When Mitch McConnell denounces big bank bailouts, what he’s really trying to do is give the bankers everything they want.

Krugman lays out the case - either you're with the banksters and their Republican allies - or, you're with Main Street. You decide, and, then, call your Senators and let them know where you stand.

Big Business

Exposed! An Unholy Alliance Between Pigs and Elephants

By Team at April 15, 2010 - 12:57pm


Pass it on.

Big Business

'Karaoke-style Ode to Greed'

By Team at April 14, 2010 - 2:41pm

Ever wonder if Wall Street fat cats care more about a healthy economy or their fat profits? Wonder no more:

In the years before it became the largest bank failure in American history, mortgage lenders at Washington Mutual liked to party hearty at the company’s annual retreats.

But a 2006 WaMu retreat produced one of the more cringe-worthy moments of the mortgage meltdown: Lenders, on the eve of their industry’s collapse, singing “I Like Big Bucks” to the tune of Sir Mix-a-Lot’s 1992 hip-hop hit “Baby Got Back....”

The Karaoke-style ode to greed – complete with faux WaMu rappers tossing play money into the crowd — took place in a room full of mortgage lenders who at the time were still churning out billions of dollars in high-risk mortgages. Their borrowers often had little chance of repaying the money and some had to forfeit their homes.

Time and again, Wall Street has proven itself to be driven by greed. They'll do whatever it takes to make a quick buck. That's why we need reform to ensure that their greed is checked and doesn't do lasting harm to our economy.

Big Business

Look Who is Cozying Up to Wall Street

By Team at April 14, 2010 - 2:07pm

Late last week, America's most powerful Republican Senators met with 25 Wall Street executives for a private meeting. Wall Street's most powerful fat cats got the chance to bend the ears of these powerful Republican leaders. Fox Business:

About 25 Wall Street executives, many of them hedge fund managers, sat down for a private meeting Thursday afternoon with two of the most powerful Republican lawmakers in Congress: Senate minority leader Mitch McConnell of Kentucky, and John Cornyn, the senior senator from Texas who runs the National Republican Senatorial Committee, one of the primary fundraising arms of the Republican Party.

The stated topic of the meeting: The Financial reform bill being sponsored by Senator Chris Dodd, the Democrat and chairman of the senate banking committee. Both McConnell and Cornyn listened to numerous complaints the executives have with the bill. These included complaints about provisions that allow the government to continue to prop up financial institutions
that are “too big to fail.”

Just a few days after McConnell met with his Wall Street benefactors, he came out, guns blazing, against financial regulatory reform.

Senate Minority Leader Mitch McConnell (R-Ky.) came out in opposition Tuesday to the Democratic financial regulatory reform bill...

You can bet that their Wall Street friends are pleased with McConnell's opposition. Look for Mitch's Wall Street friends to start rolling the campaign contributions into the coffers of the National Republican Senatorial Committee.


Take Action: Have Your Say on Pay

By Team at April 13, 2010 - 1:13pm

The trends are clear. In today's economy, the rich are getting richer and the poor are getting poorer. Now, you have the power to fight back against outlandish executive pay. Over the next few weeks, shareholders will meet to decide just how much to pay the banksters.

Read case studies on how much some of the biggest banksters who contributed to the ruin of our economy are making. Find out how much the CEO at your company is making. And then, take action to ensure that the banks don't kill financial regulatory reform.


Wanted: More Heroes

By Team at April 12, 2010 - 11:40am

Judge Jed Rakoff is a hero. He's taking on the Wall Street banksters and holding them accountable for their misdeeds. The LA Times has his profile:

When Bank of America Corp. was trying to settle civil charges over its conduct in its purchase of Merrill Lynch, U.S. District Judge Jed Rakoff wrote that the bank's executives had led what "could have been a bank-destroying disaster if the U.S. taxpayers had not saved the day."

Addressing how the firm pays its top people, the judge spoke in February of "the incredibly bloated compensation of too many executives in too many American companies."

In another case, Rakoff called JPMorgan Chase & Co.'s handling of a major client improper at the very least, "if not a downright sham."

He condemned not only big banks but also their regulators, saying the Securities and Exchange Commission's enforcement in the Bank of America case did "not comport with the most elementary notions of justice and morality."

Read the full profile and meet the financial hero. Today, more than ever, we need more Judge Rakoffs holding the big banks and the financial industry accountable.We could use some on the FCIC. Instead, the FCIC is being undermined by right wing obstructionists. Any commissioner obstructing the work should be publicly exposed for siding with the big banks. The big banks are back to business as usual.


"Sorry, Indeed"

By Team at April 12, 2010 - 11:07am

Some of the biggest news coming out of last week's Financial Crisis Inquiry Commission were the apologies from the banksters. But, the FCIC is not a body for bankster catharsis. As the New York Times points out, the commission should be aggressively pursuing the truth.

The latest public hearings of the Financial Crisis Inquiry Commission, held last week, made headlines for eliciting more apologies from financiers who presided over the market collapse.

You may recall a similar flurry last year, when Lloyd Blankfein, the chairman and chief executive of Goldman Sachs, was widely credited for having apologized for his firm’s role in the financial crisis.

We did not buy it then; Mr. Blankfein never said what he was sorry for or to whom he was apologizing. And we are not buying it now.

Mr. Prince says he “could not” foresee the impending collapse, when he could have and should have seen it coming. Certainly, others did. Mr. Rubin has said that under his employment agreement, he was not responsible for the bank’s operations. But he was a towering figure at Citi, a source of its credibility and prestige. That implies responsibility, no matter what his contract said. Add all that to the “I wasn’t the only one” context of both men’s comments, and their regret translates as, “We feel bad about an accident we were powerless to prevent.”

Except that the financial crisis was not an accident and they were not powerless. The crisis was the result of irresponsibility and misjudgments by many people, including Mr. Prince and Mr. Rubin. Citi, under their leadership, epitomized the financial recklessness that ruined the economy.

More important, the “apologies” are distractions. The purpose of the inquiry is not catharsis. It is to determine the causes of the crisis and present the truth. A successful inquiry would compel the government to take appropriate corrective action.

The commission has managed to unearth some compelling testimony. (Last week’s hearings produced detailed evidence of how the mortgage-investment pipeline came to be stuffed with toxic loans.) But the inquiry can strangely lack vigor. It has not issued any subpoenas for documents — satisfied so far with voluntary submissions — and does not administer oaths to witnesses it interviews in private. Lying to a federal investigator is illegal under oath or not, but experience shows that taking an oath is a powerful incentive to tell the whole truth.

The commission is supposed to finish its work by Dec. 15. In the meantime, Congress’s efforts at financial reform appear to be weakened daily by politicians who are more concerned with campaign donations than regulating the financial system. This week, for instance, a Senate committee is expected to propose new regulations for derivatives that are more loophole than rule.

Sorry, indeed.

The Commission needs to hold more hearings, issue subpoenas, get to the bottom of what happened and hold people accountable. In particular, the failures of former regulators like Christopher Cox need to be exposed. Never again should the people writing and enforcing the rules be beholden to the big banks instead of the public.

Big Business

More Shenanigans from the Big Banks

By Team at April 9, 2010 - 1:29pm

The big banks are still using the same kind of deceptive tricks and shenanigans that led to the financial crisis. The Wall Street Journal:

Major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York.

A group of 18 banks—which includes Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters.

Excessive borrowing by banks was one of the major causes of the financial crisis, leading to catastrophic bank runs in 2008 at firms including Bear Stearns Cos. and Lehman Brothers. Since then, banks have become more sensitive about showing high levels of debt and risk, worried that their stocks and credit ratings could be punished.

That practice, while legal, can give investors a skewed impression of the level of risk that financial firms are taking the vast majority of the time.

We need real regulatory reform to stop the banks from deceiving the public. It gets worse:

The practice of reducing quarter-end repo borrowings has occurred periodically for years, according to the data, which go back to 2001, but never as consistently as in 2009.

The repo market played a role in recent accusations leveled by an examiner in Lehman's bankruptcy case. But rather than reducing quarter-end debt, Lehman took steps to hide it.

Anxious to maintain favorable credit ratings, Lehman engaged in an accounting device known within the firm as "Repo 105" to essentially park about $50 billion of assets away from Lehman's balance sheet, according to the examiner. The move helped Lehman look like it had less debt on its books, the examiner said.

Other Wall Street firms, including Goldman and Morgan Stanley, have denied characterizing their short-term borrowings as sales, the way Lehman did in employing Repo 105. Both of those firms also make standard disclaimers about debt...

Some banks make big trades that don't show up in quarter-end balance sheets. That is what happened recently at Bank of America involving a trade designed to mature before the end of 2009's first quarter, people familiar with the matter say.

Two Bank of America traders bought $40 billion of mortgage-backed securities from clients for one month, while at the same time agreeing to sell the securities back before quarter's end, according to people familiar with the matter. This "roll" trade provided the clients with cash and the bank with fees.

Nothing has changed. The banksters are still playing the same old games that brought our economy to it's knees. We need reform.

Big Business

Sorry is Not Good Enough

By Team at April 8, 2010 - 1:30pm

When a child spills his drink all over the table, that's worthy of a "sorry." When you contribute to the collapse of the global economy, you think we'd deserve a bit more. But, that's not what we got:

Charles O. Prince III, Citigroup’s former chairman and chief executive, apologized for the billions of dollars of losses that caused the company he helped build to nearly collapse. Instead, the bank required three government rescues and some $45 billion in taxpayer aid.

“I’m sorry the financial crisis has had such a devastating impact for our country,” Mr. Prince told the commission. “I’m sorry about the millions of people, average Americans, who lost their homes. And I’m sorry that our management team, starting with me, like so many others could not see the unprecedented market collapse that lay before us.”

Sorry, Charles. That's not good enough. We need more than just apologies from the banksters whose greedy and reckless behavior cost millions of Americans their jobs.

We demand accountability. And, we demand reform to protect consumers from the greed of the banksters. Their contrition is not enough. We need financial reform to protect consumers and hold accountable the people who preyed on the public lest the big banks will act recklessly again.


Greenspan Admits He Was Wrong 30% of the Time

By Team at April 7, 2010 - 7:57pm

Alan Greenspan himself admitted that he was wrong 30% of the time. Tom Matzzie:

In testimony before the Financial Crisis Inquiry Commission former Federal Reserve Chairman Alan Greenspan defended his record during questions by Chairman Phil Angelides by saying he was "right 70 percent" and "wrong 30 percent" of the time.

When asked whether the financial crisis was one of the times he got it wrong he answered, "I don't know."

If there is a photo in the dictionary next to the word "clueless" it should look like Alan Greenspan.

These are outrageous statements by a financial regulator whose job was to protect the entire U.S. economy. The fact that the lead-up to the financial meltdown in 2008 happened under Greenspan's watch seems to have escaped his grasp.

Imagine if airline pilots only landed 70 percent of airplanes, crossing guards only protected 70 percent of students or if your bank only honored 70 percent of your checks. It would be a public scandal. There would be indictments; prosecutions and surely the perpetrators would face consequences. We need the same expectation of safety for our banks that we have for airplanes flying America's skies--that they won't crash.

Nobody is asking anybody to predict the future, but there were other economists who saw what was happening and who didn't have the job of protecting the public. It would seem that Greenspan had the wrong personality and outlook for the job of Federal Reserve Chairman. He acted more like "Wall Street's man in Washington" than "the most powerful person in banking."

What we really learned from his testimony is what many already know: Alan Greenspan was and still is ideologically opposed to oversight of Big Banks and Wall Street. He didn't take action to stem the financial crisis because he didn't believe in action. That is the worst quality in a financial regulator. We want our sheriffs to catch the bad guys just like we want financial regulators to keep the Big Banks in line.

The failures in Washington over the last ten years--like the failures at the Big Banks--had two things going on: bad laws and regulators who didn't believe they had a role to play. Both things need to change.

Financial reform is already underway in Congress and it is still undecided as to whether reform will truly rein in the most dangerous Wall Street practices that ultimately hurt the entire economy or whether it will paper over the need for reform.

But what has to happen even if Congress won't do it is a complete repudiation of the regulators who were asleep at the switch during the financial crisis. Only if future regulators know that public shame or worse is the cost of their failures will laws--even new ones--work effectively.

That is why the Commission needs to call or subpoena former Securities and Exchange Commission Chairman Christopher Cox. The public was promised testimony by Cox in January but he has yet to appear. Cox, like Greenspan, was ideologically opposed to a strong SEC to protect consumers. During his tenure leading up to the crisis Cox hobbled the SEC in a range of areas. Cox is now tied directly to the collapse of Lehman Brothers (here, here and here).

And, the new laws and rules should be written so they're bulletproof against even a shortsighted Federal Reserve chairman with a very thin briefcase or an SEC chairman with a campaign war chest full of Wall Street money.

When you and I make mistakes, the lawn doesn't get mowed. When Alan Greenspan makes mistakes the economy trembles.

There's a lot more mistakes the Commission needs to uncover. That's why they need to get tough. They hold more hearings, issue subpoenas and hold people like Alan Greenspan and Christopher Cox accountable.


'Today's Hearings Are Not Enough'

By Team at April 7, 2010 - 12:56pm

Today, Accountable America's Tom Matzzie called for more hearings and called on the FCIC to subpoena former SEC head Christopher Cox. Matzzie:

It is good to see the Financial Crisis Inquiry Commission finally call more witnesses including whistleblowers and Alan Greenspan. It is clear that Greenspan’s blind faith in deregulated rules was a factor causing the entire financial crisis. Greenspan admitted today that as early as 1998 the Federal Reserve was aware of brewing problems—yet Greenspan failed to act repeatedly.

Former SEC Chair Christopher Cox was Greenspan’s twin in the lead up to the crisis. Future hearings should focus on Cox. Mounting evidence implicates Cox’ failures particularly around Lehman Brothers. Cox hobbled the SEC just like Greenspan kept the Federal Reserve from taking action. The SEC under Cox was supervising Lehman in 2007 and 2008 when things spun out of control. The Commission needs to get to the bottom of this. Subpoena Chris Cox if he won’t appear.

Financial Reform should take note of the failures of regulators like Cox and Greenspan and write unmerciful rules to protect consumers. We need a tough cop on the beat.

Today’s hearings are not enough. There must be more hearings, more transparency into the investigations, subpoenas and, yes, criminal referrals. It is time for the Commission to get serious and if certain commissioners are obstructing the work they should be held publicly accountable. No more games—only action.

It's time for the FCIC to hold more hearings, issue subpoenas, get to the bottom of what happened and hold people accountable.


Whistleblower Alerted Citi Officials

By Team at April 7, 2010 - 12:44pm

Tomorrow, the FCIC will hear testimony from whistleblower Richard M. Bowen. He makes it crystal clear that the warning signs were there:

In prepared statements, a former Citi mortgage lending officer and whistle-blower, Richard M. Bowen III, testified before the Financial Crisis Inquiry Commission that he had alerted his bosses about problems in the bank’s mortgage portfolio... Mr. Bowen planned to tell the panel that he alerted top officers that as many as 80 percent of the loans the bank sold to Fannie Mae, Ginnie Mae and other investors were defective.

“Since mid-2006, I have continually identified these breakdowns in processes and internal controls,” Mr. Bowen writes in a detailed November 2007 e-mail memorandum sent to Robert E. Rubin, an influential Citi executive and board member, as well as the bank’s risk and finance chiefs. “I know this will prompt an investigation into the above circumstances, which will hopefully be conducted by the officers outside the consumer lending group.”

There were warning signs, but, the greedy banksters ignored them. They drove the economy off the cliff. Testimony from whistle blowers like Richard Bowen show why we need strong protections for consumers and accountability for the banksters who preyed on the public.


Greenspan Testifying Before FCIC Now

By Team at April 7, 2010 - 11:22am

Alan Greenspan is testifying now before the Financial Crisis Inquiry Commission (FCIC). Watch now.

Tomorrow, Chuck Prince and Robert Rubin from Citi testify and Robert J. Levin and Daniel H. Mudd formerly of Fannie Mae will testify on Friday.

It's clear from this and past hearings that the big banks need to be held accountable. The greedy and reckless behavior of big banks on Wall Street caused a financial crisis that cost Americans millions of lost jobs, billions in taxpayer funded bailouts and trillions in last retirement savings.

Financial reform is more urgent now than ever before. And, it's clear that the FCIC needs to hold more hearings, issue more subpoenas and find out even more about what happened. In particular, the failures of former regulators like Christopher Cox need to be exposed. Never again should the people writing and enforcing the rules be beholden to the big banks instead of the public.

Stay tuned today, tomorrow and Friday to the FCIC hearings on C-SPAN2.

Big Business

Time for FCIC to Get It's Act Together

By Team at April 5, 2010 - 11:41pm

The Financial Crisis Inquiry Commission (FCIC) was supposed to get to the bottom of what caused the financial crisis. Instead, they're busy fighting among themselves:

In recent months, a top investigator resigned, frustrated by delays in assembling a staff. Behind closed doors the panel’s chairman and vice chairman have had heated disagreements over whether to make public preliminary findings or revelatory documents. Entities like Citigroup and the Treasury have complained that the panel’s requests for information have been vague and voluminous.

The people appointed to the Financial Crisis Inquiry Commission last July, six by Democrats and four by Republicans, say they hope to publish, by the Dec. 15 deadline, a volume much like the 9/11 Commission report, which was acclaimed for its narrative sweep and became a surprise best seller.

But that goal seems increasingly out of reach, given what the commissioners themselves acknowledge has been a haphazard approach and a lack of time and resources. Given the delays, the commission’s impact on policy could be modest; the House has already voted on a sweeping financial reform bill, and the Senate could vote on it by summer.

The FCIC meets this week. They will question Alan Greenspan and CitiGroup executives. It's time for the FCIC to put aside their petty disagreements and focus on the matter at hand: examining the roots of the financial crisis. Once they do, they'll realize that years of right wing driven deregulation gave Wall Street a blank check to develop a system that put their profits first and our economic health second.

Big Business

'Not Good Enough'

By Team at April 5, 2010 - 11:28pm

Paul Krugman is worried. He's worried that Chris Dodd's financial regulatory reform legislation isn't strong enough and he worries that it will only get worse as the administration panders for Republican votes. Krugman explains:

The White House is confident that a financial regulatory reform bill will soon pass the Senate. I’m not so sure, given the opposition of Republican leaders to any real reform. But in any case, how good is the legislation on the table, the bill put together by Senator Chris Dodd of Connecticut?

Not good enough. It’s a good-faith effort to do what needs to be done, but it would create a system highly dependent on the wisdom and good intentions of government officials. And as the history of the last decade demonstrates, trusting in the quality of officials can be dangerous to the economy’s health.

Krugman concludes that the legislation needs explicit rules, but, fears that the bill will be scaled back:

So what the legislation needs are explicit rules, rules that would force action even by regulators who don’t especially want to do their jobs. There should, for example, be a preset maximum level of allowable leverage — the financial reform that has already passed the House sets this at 15 to 1, and the Senate should follow suit. There should be hard rules determining when regulators have to seize a troubled financial firm. There should be no-exception rules requiring that complex financial derivatives be traded transparently. And so on.

I know that getting such things into the bill would be hard politically: as financial reform legislation moves to the floor of the Senate, there will be pressure to make it weaker, not stronger, in the hope of attracting Republican votes. But I would urge Senate leaders and the Obama administration not to settle for a weak bill, just so that they can claim to have passed financial reform. We need reform with a fighting chance of actually working.

There's still time to make the bill even stronger. Now is the time to be strong and stand up to Wall Street. Let's make it clear who is on the side of Wall Street and who is on the side of Main Street.

Big Business

Hedge Funds Record Profits, Step Up Spending on Lobbyists

By Team at April 2, 2010 - 10:59am

What recession? That's what Hedge Fund managers who are pulling in record profits must be saying considering the big money they're pulling in. While so many Americans are suffering, these guys are profiting off of our misery. Check it out:

For the richest hedge fund managers the global recession proved to be very profitable.

In 2009 the 25-top earning hedge fund managers were paid a collective $25.33 billion, more than double the amount they took home in 2008, according to data provided by the NYT.

Leading the way was David Tepper, who runs Appaloosa Management. Mr. Tepper’s fund gained more than 130% last year, earning him $4 billion in fees and investment gains.

The Hedge Fund managers are eager to protect their profits and the status quo. They are big fans of a broken system that lets them make big profits even as millions suffer. So, they're stepping up their lobbying efforts against reforms that will put consumers first.

With all the political and media focus on healthcare reform over the past few months, the financial industry enjoyed a brief respite from attacks and, as would be expected, spent its time and money wisely.

The hedge fund lobby, called the Managed Funds Association, doubled its spending during the last three months of 2009, according to data recently released by the Federal Election Commission. The MFA strategically sprinkled more than $1 million around Washington in the fourth quarter, compared to just $520,000 spent during the same period in 2008.

All-told, the association spent more than $3.7 million lobbying last year, a big jump from the $2.4 million it spent the year before, according to OpenSecrets.org, which tracks political spending.

They're spending their money to preserve a status quo that benefits them and leaves us behind. Do you stand with the Hedge Fund managers or do you stand for reform?

Big Business

No Joke: 'Big Banks Are Blackmailing the Country'

By Team at April 1, 2010 - 2:08pm

Wall Street's on the rebound and now they feel invincible. That's dangerous for the country. Yahoo Finance reports:

Treasury Secretary Timothy Geithner says "it's not fair. It's deeply unfair," that Wall Street has recovered so strongly from the financial crisis while millions of Americans are still struggling.

As we all know, when America’s banking system nearly imploded in 2008, our entire economy was nearly destroyed. Eight million jobs were lost, trillions of dollars in personal wealth evaporated, and bailouts turned our growing deficit into a black hole we may never be able to escape.

Simon Johnson, professor at MIT’s Sloan School of Business and author of 13 Bankers, says it's not only unfair, but that the bailouts Geithner and others engineered for the nation's biggest banks are dangerous. "They (the banks) really feel they're completely invulnerable," he tells Aaron and Henry in the accompanying clip. The prevailing thought on Wall Street is, "if things go badly it’s not your problem," he says....

The cost of the bailouts are far greater than TARP.

Johnson, who is also a member of the CBO’s Panel of Economic Advisers, estimates the debt-to-GDP levels have gone from 40% pre-crisis to 80% post-crisis. "We've doubled our government debt for what?,” he asks. “Because the financial sector screwed up in such a massive, enormous and stupid way."

So, should we continue doing nothing and letting Wall Street run amuck? Or, should we introduce tough new rules to protect Main Street from another Wall Street screw up? You decide.