What Americans don't know about their own economy

Bill Moyers, Matt Taibbi and Yves Smith discuss what the banks do and have done and why it's all so very criminal.
Things Americans aren't paying attention to and, it seems like, won't pay attention to, either.

The biggest way America is broken

The reason our gov't doesn't represent the people is because "campaign contributions" have gotten so out of hand. We need to, finally, institute true, accountable, tough, prosecutable campaign finance reform so the wealthy and corporations can no longer buy our representatives and so, their legislation, thereby buying our laws and government. Untiil we do that, nothing will change. Until we do that, they will continue legislating for those same wealthy and corporations, instead of for the country and people. Right now, it's not "for the people" at all. We need to get the money out, that's all there is to it.

Five facts about Congressman Roy Blunt

1) He accepted a $1,000 contribution from Halliburton's PAC after the Gulf of Mexico oil spill began--even though, as the second-highest-ranking Republican on the Energy and Commerce Committee, he is responsible for regulating the company; 2) He's been named as one of "the 13 Most Corrupt Members of Congress" in a report by Citizens for Responsibility and Ethics in Washington; 3) Challenged by his opponent to return more than $25,000 in big oil donations, he refused -- and has said in the past that he "doesn't know" how much he's pulled in from oil and energy interests; 4) He has received almost $3.6 million from banking, securities, and other financial special interests in his career -- and opposed Wall Street reform legislation that will help protect consumers from these industries' risky practices; 5) He said it would have been "best" if the federal government had never gotten "into the health care business" by providing Medicare, Medicaid and coverage for veterans -- programs upon which hundreds of thousands of Missourians rely. Back to me: No matter your political party, Roy Blunt is not fit for this office. Let's vote him out, at last. Have a great day, y'all.

Another success for the Obama Administration--and us: financial reform

Creating a consumer agency: Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Fees paid by banks fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It would not have power over auto dealers. Credit scores: All consumers have been able to get one free credit report a year from the credit rating agencies. But the bill would also allow a consumer to get an actual credit score along with a report. Interchange fees: Lawmakers want the Fed to crack down on debit card swipe fees, which retailers pay to banks to cover the operational cost of transferring money. The Fed could cap the fees and make them more reasonable and proportional. Banning 'liar loans': Lenders would have to document a borrower's income before originating a mortgage and verify a borrower's ability to repay the loan. Mortgage help for unemployed: Unemployed homeowners with good credit would be eligible for low-interest loans to help them avoid foreclosures. The bill would spend $1 billion on such relief, using funds that had been directed for Troubled Asset Relief Fund bailing out the financial system. Fixed-equity annuities: Prohibits tougher federal rules on life insurance products, in which customers pay a lump sum upfront in exchange for monthly income over time, pegged to an index. The Securities and Exchange Commission had been gearing up to step in and start requiring more disclosure for these products, often sold to seniors, that are currently regulated by state insurance commissioners. Lawmakers decided to stop the SEC from tougher federal regulation. Too big to fail New oversight power: Creates a new 10-member oversight council consisting of financial regulators to look out for major problems at financial firms and throughout the financial system. The Treasury Secretary gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council also has veto power over new rules proposed by new consumer regulator. Unwinding powers: Gives the FDIC new powers to take down giant financial firms in the same way it takes down banks. Banks would be taxed to reimburse the federal government for the cost of resolving these firms after a failure occurs. Breaking up banks: Gives regulators strengthened powers to break up financial companies that have grown too big, but only if the firms threaten to destabilize the financial system. Checking on the Fed: Allows Congress to order the Government Accountability Office to review Fed activities, excluding monetary policy. Audits would be allowed two years after the Fed makes emergency loans and gives financial help to ailing financial firms. Forcing 'skin in the game': Firms that sell mortgage-backed securities must keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk. Financial system fee: Banks and financial firms would be taxed to pay for the $19 billion cost of implementing the Wall Street reform bill. Risky bets Regulating derivatives: Attempts to shine a light on complex financial products called derivatives that many blame for bringing down American International Group (AIG, Fortune 500) and Lehman Brothers. Would force most derivatives to be bought and sold on clearinghouses and exchanges. Some derivatives, including those traded by agriculture companies and airlines to mitigate risk, would still be unregulated. Spinning off swaps desks: Big banks that want to engage in nontraditional bets, such as on mortgage products or certain commodities, would have to spin off their swaps divisions. Reining in risky bets: Limits giant Wall Street banks from making trades on their own accounts, although with a long lead time and opportunities for delays up to seven years. While the original proposal would have banned banks from owning hedge funds, the bill would allow banks to sink up to 3% of capital into hedge funds or private equity funds. Improving credit ratings: Agencies that rate securities must disclose their methodologies. The Securities and Exchange Commission would have to study a way to find an independent way to match credit rating agencies with financial firms seeking ratings. After two years, they'd have to implement such a process, or appoint a panel to independently match ratings agencies with firms that need securities rated. Curbing executive pay: The bill would also impose new rules for how all publicly-traded companies, not just banks and other financial firms, pay top executives. Shareholders will be given a nonbinding advisory vote on how top executives are paid while in office. Shareholders also get a nonbinding advisory vote on executives' outsized severance payments, or so-called "golden parachutes." The new rules would also beef up oversight of pay practices within the financial industry, which some critics have suggested helped fuel the crisis by encouraging workers to place risky bets. The bill, for example, would require industry regulators to draft their own set of rules aimed at eliminating risky pay practice among banks and other financial firms. Link to original post: http://www.cnnmoney.com/2010/06/25/news/economy/whats_in_the_reform_bill/index.htm

Libertarians get my goat

I got a request on Facebook (yes, I'm on Facebook--whatever) to "like" the Libertarian Party and I read and learned some things. To wit: They say they are the "Third Largest Political Party". (Yeah, well, yeehaw, right?, since there have only been, really, two political parties for almost ever?) and they are for the following: --Smaller government --Lower taxes --bringing home American troops from Afghanistan and Iraq and --stopping the rewarding of failed companies with bailouts. All good, right? Of course. Then, there was this, last zinger--they want to "Cut taxes and spending and let the free market work." This, of course, is where they lose me. Don't get me wrong--even as a staunch, Liberal and Democrat (and I mean staunch), I'm all for shrinking the size of the Federal government. I've written that before. We should never have added the Homeland Security Department. I mean, what are the CIA and FBI for, anwyay? But I digress. It's this whole "cutting taxes" now, when we have HUGE deficits that is disturbing. I mean, no, none of us want to pay more or higher taxes, for sure but we do have our obligations, you know? And as for letting "the free market work"--if I hear this one more time, I'm going to scream. (not literally, so don't start). Does the Gulf oil spill mean nothing to anyone? Does the banking industry collapse mean nothing to these people? Do they not want clean water, air and soil? How, exactly, for a specific instance, do you get and keep clean air, water and Earth, if corporations are not forced into it with laws, regulations and government oversight? News flash: The answer is, you don't. You don't get and keep a clean environment, to choose one important issue, if you don't have a Congress pass laws and then a government department who makes sure the corporations do what they are legally supposed to do. It just doesn't happen. So smaller government? Sure. Heck yeah. Bring it on. But very little government and "free market" instead? You'd have to be out of your selfish, pea-picking mind.

To all Republicans and Libertarians out there...

From Yahoo News just now: Canada thinks it can teach the world a thing or two about dodging financial meltdowns. The 20 world leaders at an economic summit in Toronto next weekend will find themselves in a country that has avoided a banking crisis where others have floundered, and whose economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered. World leaders have noticed: President Barack Obama says the U.S. should take note of Canada's banking system, and Britain's Treasury chief is looking to emulate the Ottawa way on cutting deficits. The land of a thousand stereotypes -- from Mounties and ice hockey to language wars and lousy weather -- is feeling entitled to do a bit of crowing as it hosts the G-20 summit of wealthy and developing nations. "We should be proud of the performance of our financial system during the crisis," said Finance Minister Jim Flaherty in an interview with The Associated Press. He recalled visiting China in 2007 and hearing suggestions "that the Canadian banks were perhaps boring and too risk-adverse. And when I was there two weeks ago some of my same counterparts were saying to me, 'You have a very solid, stable banking system in Canada,' and emphasizing that. There wasn't anything about being sufficiently risk-oriented." The banks are stable because, in part, they're more regulated. As the U.S. and Europe loosened regulations on their financial industries over the last 15 years, Canada refused to do so. The banks also aren't as leveraged as their U.S. or European peers. There was no mortgage meltdown or subprime crisis in Canada. Banks don't package mortgages and sell them to the private market, so they need to be sure their borrowers can pay back the loans. To repeat the song again: "When will we ever learn? When will we ever learn?" Have a great week, y'all. Link to original post: http://finance.yahoo.com/news/Canadas-economy-is-suddenly-apf-807130582.html?x=0

Banking trivia questions

1) How many banks has the FDIC had to close, to date, so far this year?

140

2) How much has the closing of these banks cost us, to date?

30 billion dollars

The correct answers to the above questions begs the following question:

Should the US more stringently regulate the banks, the banking system and the bankers, here in the US?

It seems the answer is clear.

And yet, check this out:

"The American Bankers Association issued a "Call to Action" on Wednesday, urging its lobbyists and member banks to make an all-out effort to crush regulatory reform in Senate. As part of that campaign, it lashed out at its community-bank rival, charging it with being too soft on bank reform efforts."

"In an unusually frank memo from ABA Chairman Art Johnson, the lobby group congratulates bankers for sending some 300,000 letters to Congress opposing reform, crediting the effort with killing several significant provisions."

What chutzpah.

Contact your Congressperson---Senators, Representatives, both--and tell them we need this regulation back. We used to have it. We need it to return.


Find answers here:
http://www.huffingtonpost.com/2009/12/19/fdic-shuts-down-seven-mor_n_398071.html
http://www.huffingtonpost.com/2009/12/16/bank-lobbyists-launch-cal_n_394673.html

We've been sold out on reform, health care and otherwise

From a friend--Michael--and "Crooks and Liars", the blog. This is another rare case of wanting to put something up that expresses my feelings, particularly about living in this sick society we call America, where the corporations and their huge profits are far more important than the citizens of the state.

Notes on the Moral and Political Degradation of America

By Ian Welsh Wednesday Dec 16, 2009 2:15pm

The news in the last few days has continued the drumbeat of demoralizing events which started in the Bush administration, and with only a few hiccups has continued through the Obama administration. It is clear that Obama is, fundamentally, Bush's 3rd term.

First we have the health care "reform" debacle, where it has been confirmed that the White House pushed Harry Reid to accept Lieberman's ultimatum, not go to reconciliation. There will be no public option in the Senate bill. There will be no Medicare expansion. There will be no cap on yearly limits. What there will be is a mandate forcing people to buy insurance, some subsidies which can still leave people spending money they can't afford, and guaranteed issue of lousy plans (Plans where only 70% of the premiums have to be spent on care, for example.) Unless progressive Senators are willing to filibuster, or House progressives are willing to vote against en-masse, something very close to the Senate plan is what will pass, because as I noted some time ago, the White House's bottom line is that something, anything must pass, and conservative Dems are willing to kill the bill to make sure it doesn't actually threaten health industry profits in any way, shape, or form. (Thus why drug importation, which would cost Pharma money, will be made illegal.)

All of this was completely predictable. Furthermore the weakness of progressive and liberal legislators, is largely to blame:

Obama and the Democratic leadership's bottom line is they must pass some bill called "health care reform". Unless you threaten to take away their bottom line, they will take away anything that isn't progressives bottom line

This is Negotiation 101, and progressive legislators either don't understand it, or are spineless. As a result they, and Americans, have been rolled yet again. What is depressing about this is that it should be a surprise to no one, but apparently has surprised many.

It is also noteworthy that spending billions on turning brown people into a fine red mist (a.k.a. the Afghan war) is acceptable, but health care (a.k.a. saving actual American lives) is something which can't cost money. What an interesting--and clearly evil--set of priorities that reveals. I guarantee that real healthcare reform would save more American lives than the entire war on terror—assuming said "war" hasn't cost more American lives than it's saved, which is almost certainly the case.

Next we have what Glenn Greenwald is calling the creation of Gitmo North, in which people whom the government judges there is not enough evidence to convict, will be held indefinitely without trial. This is the very definition of tyranny. Any nation which does this is a nation of men, not laws. America has forsaken its fundamental premise and proved its degradation. Yes, this started under Bush, but as Obama embraces this, it because a bipartisan project and the new elite consensus. This is now something which has been confirmed as US policy which is extremely unlikely to change no matter who is in power.

Then we have bankers are giving themselves bonuses larger than the entire economy's GDP growth this year.

As Peter Morici notes:

How much is $140 billion?

The U.S. economy grew at a $89 billion annualized rate in the third quarter. That was the first growth since the second quarter of 2008 and came to $22 billion in actual growth in the third quarter.

The bankers, after causing the greatest economic calamity since the Great Depression, are rewarded with six times the growth accomplished so far in the much heralded “economic recovery.”

Meanwhile, seven million families face foreclosure and 25 million Americans can’t find full time work.

To add this sad state, we have the sad spectacle of Obama lecturing the bankers. Meanwhile in Britain, instead of lecturing, the government has imposed a 50% tax on bonuses, and France looks like to follow suit. The British government's response to threats to move employees out of the country? "That's nice, you do that."

The fact of the matter, as I've long said, is that bankers at the big banks are a net drain on the economy. Their venality and recklessness has wiped out the entire economic gains of the last decade and plunged the economy into its worst crisis since the Great Depression.

Now I'm not surprised they have the gall to pay themselves these bonuses. The entire profits of most large banks in the last expansion were based on open fraud. Of course criminals who have not been punished, but have been rewarded for their crimes are going to continue to steal. What is shocking is that the government is essentially doing nothing. Obama's "Pay Czar" is a sick joke, especially compared to just taxing all bonuses at 50%. Heck, even taxing bonuses at 50% is sad—they should be taxed a good confiscatory 90%. A class of people who caused an economic calamity of this magnitude do not deserve to be paid more than janitors.

Why? Because, as a British study noted, janitors actually create value. So do homemakers. So do assembly-line workers. Modern bankers, on the other hand, destroy value. They make the economy weaker. That isn't the way it should be, but when you bail out the banks for trillions and they decrease their lending to businesses and increase their credit card interest rates to as much as 29% it's clear that all they are is parasites, sucking blood from their hosts.

In a healthy, non-degraded society, none of the behavior listed above would be allowed. Not only would there be confiscatory taxes leveled, there would be massive ongoing criminal investigations into what happened.

In a healthy, non-degraded society, saving American lives by making sure they have health care would be a priority. Especially since the US pays twice as much per person as many countries which get far better results. This would be considered much more important than a war in a far away country, because it would be understood that even if you believe that turning brown people into a fine red mist saves American lives, health care would save more lives. And, done right (a.k.a. single payer) it would even save money. But that was never on the table, and even the limp-wristed compromise of a weak public option was too much for the rich and powerful to tolerate. Americans exist to be looted systematically by their elites, and if they die young and live sick, who cares? They are just sacks of money and the goal of government is to make dipping your hand into that sack as easy as possible for industries which can afford to buy government.

And, last but not least, in a healthy, non-degraded society, the government is not allowed to lock up people indefinitely without trial. If you don't understand why this is, I can't explain it to you, any more than it is apparently possible to explain to a plurality of Americans why torturing people is evil, and beyond the pale. The fact that it can't be explained any more to many Americans, of course, is exactly why it is fair to call this degradation.

Moral and political degradation.

Original link:
http://crooksandliars.com/ian-welsh/notes-moral-and-political-degradation-am

Dead-on posting from "A New Way Forward"

Another rare posting I didn't create, but want to enter because it's that good:


This is the age old fight for power between large corporations and regular people

June 3rd, 2009 by tyc

People are starting to wage a battle with the financial companies, but if people don’t really start to see the battle for what it is — a fight for power between the banks who currently control Congress and the public who untimately pays for it — we’ll again lose any chance for real reform that restores our political system and economy in the interest of working families doing better than they are now.

Arianna Huffington argues that we could have had some structural reform happen after Enron, but the way politics are usually played, the fight for reform usually is assuaged by the companies for politeness’ sake and then completely dwindles:

Remember how during the 2008 campaign there came a moment when candidates hoping to win the White House realized they had to declare that, like Obama, they were all in favor of “change”? Hillary did it. McCain did it. So did Romney. Giuliani too.

In the same way, today everyone agrees that we need reform of our financial system. Even Wall Street knows it is inevitable.

So the question becomes: are we going to get real reform or are we going to get the DC version of “reform”?

The citizens who are fighting with ANWF are trying their hardest to not let that happen. We simply can’t lose our chance to create real structural reform that can ACTUALLY put large corporations back in their place. Push for breaking up the banks, please!

As Rep. Brad Miller wrote on Talking Points Memo,

It will be a fierce battle, even with the full support of the Obama Administration. “All of the signature economic reforms the President has promoted…are under siege,” The Nation reports. “Without a grassroots uprising that challenges business as usual in Washington, we aren’t likely to get the change we were promised, much less the change we need.”

We’ve won some battles. A couple of weeks ago the President signed into law the credit card reform bill that Carolyn Maloney introduced. A few weeks ago the House passed a solid bill–not perfect, but solid–to reform mortgage lending that I introduced along with Mel Watt and Barney Frank.
But we can’t possibly anticipate and prohibit every new predatory financial product that the industry claims is “innovation.” Requiring the industry to show that innovative new financial products are a positive contribution to society–and get approval before selling the products to consumers–fundamentally changes an industry desperately in need of fundamental change.

That is the kind of change that we cannot achieve without a “grassroots uprising that challenges business as usual in Washington.”

Link to original post here:
http://anewwayforward.org/blog/?p=344

Back from Mo Rage:

And folks, the foxes who raided the chicken coop--the big bankers who screwed us all, individually and nationally and got us into this financial crisis, Goldman/Sachs, etc.--are the very same foxes who are supposed to be cleaning up this banking mess, now.

And they're getting paid handsomely, now, too--again--to do it.

What The New York Times thinks, anyway

In today's New York Times, it seems very clear what they, at least, think should happen.

First, they covered John Thain's fleecing of his company and the American people, when he was at the head of Merrill Lynch. You probably heard about this guy--he had his private bathroom done for $1.2 million dollars, for starters and then gave away billions of dollars of bonuses, for God's sake, just before Bank of America bought them and just before B of A had to get billions of dollars of your and my tax money to cover all their lossed, these included.

Let it be said now and into the future and in the American history books that John Thain is and was a thief and scumbag.

Second, the Times had an editorial by Paul Krugman, saying we need, as a country, to nationalize banks in the country and the sooner the better.

Third, there was an editorial column saying the same thing.

Finally, there is a fourth separate article pointing out how Sweden's advice to the US in the financial mess we're in would be to, repeat after me--nationalize the banks--or some of them, anyway.

So it's pretty clear what some people and groups in the US think we should be doing.

It will likely happen, too, for a few reasons:

1) It will be called "nationalizing" the banks, not socialism;

2) It will be stated that it's intended to be temporary and finally

3) We're in one hell of an ugly financial crisis and our government leaders don't know what else to do, other than also borrow and hand out trillions of dollars of money.

The banks and their leaders were incredibly irresponsible and greedy, which is why we're in this mess, and that's what the John Thain piggery makes so clear.

One thing is for sure--we need a quick return to good, strong, clear and complete regulation of our banking system, now and forever.

Joe Biden?

That's the best we can do?

Joe Biden?

What is that about?

What is this, the "reassuring old white guy to calm down the racists"?

Let's face it, the racists aren't going to vote for Obama, no matter what.

Who, exactly, does Joe Biden bring to the table, in terms of votes come November, that we wouldn't already have gotten?

Hillary would have brought more votes.

Same with Kathleen Sebelius of Kansas--or any intelligent, capable woman on the ticket.

But Joe Biden?

Don't get me wrong, I think he's smart and capable and, yes, God knows he's experienced and he's on the correct side of a lot of issues. His work has been good and admirable. And, sure, he knows how the system works and yeah, we hope he won't just be a "yes man" in Obama's Administration but geez, what exactly does he add to the ticket?

What, we didn't have the requisite "old white guy" on the ticket so we have to counter-balance the opposition?

I don't get it.

What part of "Change" is this?



On a completely different subject and as part of a trend I've described and discussed here in the past, the nation's 9th bank failure occurred last evening, in case you didn't see or hear of it.

USA Bank: The next one to close?

USA Bank Reports Operating Results for the Quarter Ended June 30, 2008
Saturday August 9, 11:34 am ET

PORT CHESTER, NY--(MARKET WIRE)--Aug 9, 2008 -- USA Bank (OTC BB:USBK.OB - News) reported a net loss of $383 thousand ($0.07 per share) for the quarter ended June 30, 2008, which is a marked improvement compared to the net loss of $481 thousand ($0.08 per share) for the quarter ended June 30, 2007. This marks the third successive quarter of reduced losses by the Bank. For the six months ended June 30, 2008, the Bank's net loss was $1,129,000 ($0.20 per share) as compared to a net loss of $1,995,000 ($0.35 per share) for the six months ended June 30, 2007.

Complete, orginal story here:
http://biz.yahoo.com/iw/080809/0423542.html

Stay tuned.

Unfortunately correct and vindicated

Well, ladies and gentlemen, I was correct.

Do you remember last week I said there was a good possibility that we might see a bank--or two--failing each Friday night for a while?

Let me repeat: I was right.

I wish I weren't, truth be told.

According to the news this morning, a small bank in Florida failed last night. It was taken over by the FDIC, of course, and will be quickly sold. See the full story here: http://www.reuters.com/article/ousiv/idUSN0136691620080802

It was the 8th bank to fail so far this year. (Wouldn't you think Keith Olbermann--or some news junkie--would set up a weekly "bank watch"? Maybe they don't want to give the public reason to panic, since the American public doesn't want to pay attention, by and large).

The good news? It was a relatively small bank. First Priority Bank had "only" $259 million in assets and $227 million in deposits.

The bad news? Its failure will cost the federal fund that insures deposits--read: you and I, the taxpayers--an estimated $72 million.

Chalk it up to our account.

As I also said earlier here, in the 1st quarter of this year, the FDIC had 90 banks on its "watch" list. This article recounts that and states that they also won't tell which 90 banks they are. It's understandable--can you imagine the runs on those banks if they told which 90 they were?

Still, wouldn't you like to know if YOUR bank were, maybe, in trouble?

Once more, I'd like to take a moment to personally thank, with dripping sarcasm, the Republicans, for deregulating the banking industry.

Oh, well, for now, it's the weekend. Go out, work, relax, enjoy, keep cool.

Let's hope there either aren't any more banks that fail (I'm not counting on it) or, that, if they do fail, they are small and few in number.

Cross your fingers.

A weekly Friday night occurrence?

Okay, campers, last week it was the big Indymac implosion on a Friday evening.

Were you ready for this week's? No, I thought not.

This week, they weren't as big, by themselves, as Indymac, but there were 2--count 'em, 2--banks that "went down": First National Bank of Nevada and First Heritage Bank of Newport Beach (both were units of the First National Bank Holding Company, based in Scottsdale, Ariz.).

So the thing is, were you paying attention? Did you even notice this happened? They do these on Friday evenings so people won't notice and panics don't set in, of course, just like political announcements out of Washington, when they're negative. Mind you, this is big news, right? But try finding mention of it now, on your regular search engine. Pull up Yahoo! and see if it's listed there, on the first page.

It's not.

The thing is, there's more to come, apparently. Certainly we all hope not but information seems to lean otherwise. I searched yesterday on the internet and, from what I read, the FDIC was watching 90 banking institutions, that may be on less than solid ground.

So for the foreseeable future, you might want to watch for those Friday night announcements. It's like I keep saying, pay attention.

Oh, and if one or more starts happening mid-week, and they can't contain the collapse of this or that financial institution(s)? It means things have really gone to heck--either for that one institution or, God forbid, for the banking sector in general, and in a much larger scope.

Here's hoping there aren't too many more weeks of this stuff.

new news

So now we learn that we have more houses abandoned in the United States than we've ever had, since they started tracking such statistics--in 1956. 18.6 MILLION homes abandoned. Empty. No one home. Zilch. 2.9% of all homes in the United States. Abandoned. There's some cheery little news on a Monday, huh?


Thanks for not regulating that banking industry much, George!