Sunday, September 20, 2009

The New Depression Is Over (For The Rich) But the Reality for US Is Staggering!

I watched the movie Mindwalk (a fabulous treatment of lots of important subjects including the physics which proves our connectedness to each other and everything) again recently which led me to realize once again how far our country and our leaders are from the reality facing us (everywhere). The dialogue between Liv Ullman, Sam Waterston and John Heard as they traipse around Mont St. Michel discusses in unheated voices the concerns we earth denizens face because of our interconnectedness and what type of world we plan to leave for our successors. (No one speaking today mentions any reality approximating this one (as if this weren't the most pressing problem we have for now and far, far into the future)). I recommend it to all serious people. The poem "Enigmas" by Pablo Neruda, brought into the conversation by John Heard (who is the poet in this discussion) clearly establishes this philosophy's current relevance. Ben Barnanke, seer of all wisdom, announced that the recession is over (for those bailed-out lucky few) last week (or almost over if you don't actually need a job), so . . . what's your problem? Jim Hightower points out that at least one federal official thinks there is a problem and wants to know who done it. (Emphasis marks added - Ed.) (If you would like to make a contribution to this website's continuance, now is the time. Please either use the Paypal button on the top left of this site, or send me an email at for a snail mail address. My heartfelt thanks go out to the beautiful people who have supported me so generously in the past. As a terminally loud-mouthed critic of the defense policy of the U.S. since the 80's (from within the aerospace defense establishment) who will never be employed again but would accept any job or aid offered, I need your help.)

Don't you wish that someone in authority, someone with an ounce of chutzpah, someone with his or her head screwed on right, would direct a few obvious, pointed, even rude questions to the Wall Street honchos who have ripped off America?

Questions like: Who, exactly, in your bank directed the rip-off? Who made these stupid decisions? Who — by name — is accountable for this mess? The White House really doesn't seem interested in pressing these questions. The chairman of the Senate finance committee and the head of the house banking committee have been too polite to keep probing them. And, of course, Republican leaders don't even want to know the answers.

But, wait a second — who's this guy, this guy in New York who has dared to confront some of the biggest Wall Street elites and demand answers? You've probably never heard of Jed Rakoff, but he's a federal district judge whose Manhattan court gets many of the cases involving the financial powers.

He spent much of August grilling some bankers and bank regulators about the outrageous bonus payments that Merrill Lynch slipped to its top executives in the midst of last summer's Wall Street meltdown.

You might recall that Merrill had essentially collapsed in 2008, having lost an astonishing $27 billion dollars due to the greed and incompetence of its top investment bankers. Rather than letting this failed firm actually fail (as in, go kaput), however, the Bush regime engineered a quickie takeover of Merrill by Bank of America.

The key to this rescue was you and I — $45 billion from us taxpayers were doled out to Bank of America to grease the merger.

But — shhhhh — just before the deal was complete, those slap-happy bankers at Merrill quietly paid themselves $3.6 billion in bonuses! The shareholders of both Merrill and B of A were not informed of this heist. Nor were the White House, the Congress, and such oversight agencies as the Securities and Exchange Commission.

Merrill's grab for the cookie jar was so underhanded and shameless that even the SEC was compelled to investigate.

This agency has become more of a Wall Street lapdog than watchdog, so it was not surprising that the agency officials concluded in early August that the whole sorry mess could be swept under the rug by assessing a measly $33 million fine on Merrill (which had become a fully owned subsidiary of Bank of America). Thirty-three million bucks is chump change to these banks. Come on, some of the bonuses paid to individual Merrill bankers were bigger than that!

Still, the SEC had ruled, so that was that. Except for one little detail: The agreement between the government and the banks had to be rubber-stamped by the federal court.

Enter Judge Rakoff. Far from wielding a rubber stamp, he refused to OK the agreement and immediately began demanding answers from the big-shots involved.

Noting that the banks had "effectively lied to their shareholders," he wanted to know the names of the liars, suggesting that those "who made the wrongful decisions" should be held personally accountable. Also, Rakoff pointedly asked the kind of questions that folks all across the country would ask if they had the chance, such as, "Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?" The judge also went after the SEC, calling its meek fine "strangely askew" and bluntly telling the agency's lawyer that his feeble explanation for the low fine "seems so at war with common sense."

Bank and SEC officials are squawking and squirming, but Rakoff has not backed off even by an inch. After two full-fledged hearings, he still refuses to approve the sweetheart settlement and has set Sept. 9 for another hearing, demanding that both the banks and the agency present better explanations for their actions.

I like this guy! Can we dismiss Timothy Geithner and put Judge Rakoff in charge of the bailout scandal? Pretty please.

And in case you missed this warning previously, Professor Joseph Stiglitz, the Nobel Prize-winning economist, reports for our continuing edification that "Banking Problems Are Now Bigger Than Pre-Lehman"

. . . the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Bros. Holdings, Inc. “In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.” Stiglitz’s views echo those of former Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama’s administration to curtail the size of banks, and Bank of Israel Governor Stanley Fischer, who suggested last month that governments may want to discourage financial institutions from growing “excessively.” A year after the demise of Lehman forced the Treasury Department to spend billions to shore up the financial system, Bank of America Corp.’s assets have grown and Citigroup Inc. remains intact. In the U.K., Lloyds Banking Group Plc, 43 percent owned by the government, has taken over the activities of HBOS Plc, and in France BNP Paribas SA now owns the Belgian and Luxembourg banking assets of insurer Fortis. While Obama wants to name some banks as “systemically important” and subject them to stricter oversight, his plan wouldn’t force them to shrink or simplify their structure. Stiglitz said the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action. . . . “It’s an outrage,” especially “in the U.S. where we poured so much money into the banks,” Stiglitz said. “The administration seems very reluctant to do what is necessary. Yes they’ll do something, the question is: Will they do as much as required?”

. . . “The question then is who is going to finance the U.S. government,” Stiglitz said.

Read the rest here. Suzan _____________________


Distributorcap said...

in my small mind - when the history is finally written -- the US govt and US financial system will go down as the most damaging and corrupt in the history of civilized man

worse than rome, worse than britain, worse than the soviet union

the greed and selfishiness that is so endemic in our system cannot be weeded out by the people who benefit from the policies

we day we will realize that our system of economics and govt just doesnt work anymore

but when that happens.....

Suzan said...


I fear that day myself, DC.

And it will not be long in coming now that our change candidate has shown his true colors.


Thanks for commenting.

Love your blog,