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If you've been reading this blog for long at all you know I predicted these current events from the very first. Actually, from the moment I saw and heard not-so-Dumbya's glazed-eyed, long-faced (fraudulent long-faced in my opinion) apologia for the "unintended" financial screwups, appearing at the side of a much-worried (or having the pretense of being) Hankie Paulson, Treasury Secretary and ex-Goldman Sachs Chairman and CEO, just before election time 2008 and right before they exited the Oval office with all the Treasury funds given away/promised to their cronies and then handing the keys over to the Democratic "winner."
Too bad "our guys" like Geithner wouldn't be interviewed for Inside Job, where Matt Damon exposed the damning facts about our banking rulers years ago. Read these essays after you've taken your blood pressure meds, folks. (Emphasis marks and some editing inserted - Ed.)
(Compliments of the paywall!)
Letting the Banks Off the HookJoe Nocera
Judging by last week’s performance, it sure looks as though the country’s top bank regulator is back to its old tricks.
Though, to be honest, calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.
Back during the subprime bubble, for instance, it was so eager to please its “clients” — yes, that’s how O.C.C. executives used to describe the banks — that it steamrolled anyone who tried to stop lending abuses. States and cities around the country would pass laws requiring consumer-friendly measures such as mandatory counseling for subprime borrowers, or the listing of the fees the banks were going to charge for the loan. The O.C.C. would then use its power to either block or roll back the legislation.
It relied on the doctrine of pre-emption, which holds, in essence, that federal rules pre-empt state laws. More than 20 times, states and municipalities passed laws aimed at making subprime loans less predatory; every time, the O.C.C. ruled that national banks were exempt. Which, of course, rendered the new laws moot.
You’d think the financial crisis would have knocked some sense into the agency, exposing the awful consequences of its regulatory negligence. But you would be wrong. Like the banks themselves, the O.C.C. seems to have forgotten that the financial crisis ever took place.
It has consistently defended the Too Big to Fail banks. It opposes lowering hidden interchange fees for debit cards, even though such a move is mandated by law, because the banks don’t want to take the financial hit. Its foot-dragging in implementing the new Dodd-Frank laws stands in sharp contrast to, say, the Commodity Futures Trading Commission, which is working diligently to create a regulatory framework for derivatives, despite Republican opposition. Like the banks, it views the new Consumer Financial Protection Bureau as the enemy.
And, as we learned last week, it is doing its darndest to make sure the banks escape the foreclosure crisis — a crisis they created with their sloppy, callous and often illegal practices — with no serious consequences. There is really no other way to explain the “settlement” it announced last week with 14 of the biggest mortgage servicers (which includes all the big banks).
The proposed terms call on servicers to have a single point of contact for homeowners with troubled mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings while supposedly working on a mortgage modification. They would have to hire consultants to do spot-checks to see if people were foreclosed on improperly. (Gee, I wonder how that’s going to turn out?)
If you’re thinking: that’s what they should have done in the first place, you’re right. If you’re wondering what the consequences will be if the banks don’t abide by the terms, the answer is: there aren’t any. And although the O.C.C. says that it might add a financial penalty, I’ll believe it when I see it. While John Walsh, the acting comptroller, called the terms “tough,” they’re anything but.
No, the real reason the O.C.C. raced to come up with its weak settlement proposal is that last month, a document surfaced that contained a rather different set of terms with the banks. These were settlement ideas being batted around by the states’ attorneys general, who have been investigating the foreclosure crisis since late October. The document suggested that the attorneys general were not only trying to fix the foreclosure process but also wanted to penalize the banks for their illegal actions.
Their ideas included all the terms (and then some) included in the O.C.C. proposal, though with more specificity. Unlike the O.C.C., the attorneys general had devised a way to actually enforce their settlement, by deputizing the new consumer bureau, which opens in July. And they wanted to impose a stiff fine — possibly $20 billion — which would be used to modify mortgages. In other words, the attorneys general were trying to help homeowners rather than banks.
By jumping out in front of the attorneys general, the O.C.C. has made the likelihood of a 50-state master settlement much less likely. Any such settlement needs bipartisan support; now, thanks to the O.C.C., there’s a good chance that Republican attorneys general will walk away. The banks will be able to say that they’ve already settled with the federal government, so why should they have to settle a second time? If they wind up being sued by the states, the federal settlement will help them in court.
“It’s a vintage O.C.C. move,” said Prentiss Cox, a law professor at the University of Minnesota who was formerly an assistant attorney general. “It is clearly an attempt to undercut the (Attorney Generals) A.G.’s.”
Old habits die hard in Washington. The O.C.C.’s historical reliance on pre-emption should have died after the financial crisis. Instead, it’s merely been disguised to look like a settlement.
Senate Panel: 'Goldman Sachs Profited From Financial Crisis'Remember James P. Hoffa? You should.Jim Puzzanghera and Nathaniel Popper
Los Angeles Times
April 11
A two-year investigation says the investment bank deceived investors and Congress about its bets against the subprime mortgage market.fter a two-year bipartisan probe, a Senate panel has concluded that Goldman Sachs Group Inc. profited from the financial crisis by betting billions against the subprime mortgage market, then deceived investors and Congress about the firm's conduct.
Some of the findings in the report by the Senate's Permanent Subcommittee on Investigations will be referred to the Justice Department and the Securities and Exchange Commission for possible criminal or civil action, said Sen. Carl Levin (D-Mich.), the panel's chairman.
"In my judgment, Goldman clearly misled their clients and they misled the Congress," Levin told reporters before the report was made public late Wednesday.
Goldman said it disagreed with many of the subcommittee's conclusions and denied its executives misled Congress. The firm agreed last year to pay $550 million to settle a civil fraud case brought by the SEC regarding its actions in the market for mortgage securities. The latest allegations go beyond the conduct covered by the SEC suit.
The giant investment bank was just one focus of the subcommittee's probe into Wall Street's role in the financial crisis. The 639-page report - based on internal memos, emails and interviews with employees of financial firms and regulators - casts broad blame, saying the crisis was caused by "conflicts of interest, heedless risk-taking and failures of federal oversight."
"It shows without a doubt the lack of ethics in some of our financial institutions," said Sen. Tom Coburn (R-Okla.), the subcommittee's top Republican, who approved the report along with Levin.
Among the culprits cited by the panel are Washington Mutual, a major mortgage lender that failed in 2008, as well as the Office of Thrift Supervision, a federal bank regulator, and credit rating firms. The report makes 19 recommendations about how to prevent a future crisis, many of which were adopted in last year's overhaul of financial rules.
The subcommittee's conclusions about the cause of the crisis are similar to those of the Financial Crisis Inquiry Commission created by Congress. But that body's findings were marred by an inability to reach bipartisan consensus.
Much of the report centers on Goldman, whose executives were called before the committee last year for an intensive grilling. Levin was one of the chief inquisitors at that hearing and has been outspoken about Goldman's role in the crisis.
"Goldman was, I think, the only major bank that did well during the recession. We tried to find out, 'How is it they did well?' " Levin said Wednesday. "The tactics that they used … were disgraceful. And sticking it to their own clients violates their own claim that the clients come first."
Asked if he was disappointed that no Wall Street figures had gone to jail in connection with the crisis, Levin responded, "There's still time."
The report could be damaging for Goldman, particularly if it results in fresh charges against the firm. But from a public relations point of view, it's unclear whether the latest allegations will be seen as significant revelations.
"Everyone already kind of has a feeling that whatever the report stipulates, that Goldman has already done that," said Morningstar Inc. bank analyst Michael Wong. "They've already been put through the wringer."
One of the report's main allegations against Goldman was that it deceived clients who bought its mortgage-related securities, failing to tell those investors the firm was betting against those investments at the same time.
The SEC suit that Goldman settled last year alleged that the firm had misled investors in a complex mortgage-related security known as Abacus. The Senate report cites three similar securities that it said Goldman betted against, or shorted, without informing its clients.
The report also says Goldman Chief Executive Lloyd Blankfein and other executives misled the subcommittee when they appeared before the subcommittee last April and testified that the investment bank had not consistently tilted its own investments heavily against the housing market - a position known as being "net short."
The subcommittee has estimated that in 2007 Goldman's bets against the mortgage markets more than balanced out the bank's mortgage losses and led to a $1.2-billion profit in the mortgage department alone that year.
Goldman was so focused on shorting the market it even tried a strategy called a "short squeeze" to drive down the price of obtaining short positions, the report said.
In a statement issued Wednesday, Goldman said that during the subcommittee's hearing last year, its executives "repeatedly and consistently acknowledged that we were intermittently net short during 2007. We did not have a massive net short position because our short positions were largely offset by our long positions, and our financial results clearly demonstrate this point."
But the subcommittee report says such denials by Goldman "are directly contradicted by its own financial records and internal communications."
Scott Walker and the Koch BrothersJames P. HoffaAnd anytime you want to see the latest news (all bad) about Goldman Sachs' chicanery: http://www.goldmansachs666.com/Reader Supported News
17 April 2011
isconsin Gov. Scott Walker will be among friends today when he testifies before the House Committee on Oversight and Government Reform.
Nearly half the Republican committee members receive funding from the notorious union-busters, Charles and David Koch. Three of the witnesses - including Walker - are supported by the Kochs.
Walker will present the fiction that he solved a budget problem by stripping government workers of their collective bargaining rights.
We've all heard Walker's fantasies before. They're an attempt to disguise the ugly reality that he's doing the bidding of the billionaires and CEOs who fund his political ambitions. They want two things: more for themselves and less for workers.
The truth is that Scott Walker doesn't have a clue how to create jobs, and he has no intention of doing it.
His fellow Koch-ticians are all in on the game. They won't ask Walker why Wisconsin was projected to have a budget surplus when he took office. It was only after Walker rammed through corporate tax breaks that the budget was projected to be in deficit.
The Koch-funded committee members sure won't ask him about killing 20,000 government jobs through his budget cuts - or the 9,900 private sector jobs that will also be lost because of reduced economic activity in Wisconsin.
And they won't say a word about the high-speed rail project that Walker pulled the plug on, along with 15,000 jobs that go along with it.
Walker's attacks on workers put $47 million of federal transit funding at risk in Wisconsin because bus systems must maintain the collective bargaining rights in place when they first received federal funds.
He gave back $23 million to the federal government, money that was to expand high-speed Internet in Wisconsin. It would have been used in libraries and schools and to improve police, fire and hospital communications in rural areas.
Walker's testimony will be pure political theater, bought and paid for by the Koch brothers.
Who Would Miss Goldman Sachs If It Weren't Around?____________________________
It makes my blood boil when I read an opinion article like the one Robert Lenzner (Streettalk, Forbes) wrote entitled, "There Can't Be A Criminal Prosecution Of Goldman Sachs." Oh, yes, there can be; there just isn't the will to follow the rule of law and prosecute where corruption occurs. To my mind, it is corrupt not to prosecute. According to Mr Lenzner, a criminal prosecution of Goldman Sachs would threaten Goldman Sachs's status as a dealer in government securities. To which I reply, GS's status already threatens the work of the government, and in the future that may include securities. We still do not know what the end will look like. Mr Lenzner says that a criminal case would hinder Goldman Sachs's ability to borrow money in global markets. To which I reply, there are other banks who can do the borrowing. TARP money alone could have created a bank in each state that would have performed the borrowing and lending role that was needed (an idea obtained from the videos on Geithner by Khan Academy). Another idea put forth by Khan Academy is that the big six banks should have been wound down and the TARP money paid to Main Street for the Wall Street losses (in pension funds, insurance companies, municipalities, university endowments, small business, savings, etc.). Mr Lenzner says that Goldman Sachs would suffer when other banks do not want it as a counterparty. To which I reply, knowing what I do now about Goldman Sachs's actions before the financial crisis, I wouldn't want the risk of having GS as a counterparty or the risk of being one of its clients. Finally, the zinger, If Goldman Sachs were accused or found guilty of criminal acts, "the entire fabric of the global financial system would be threatened." To which I say, it has already happened and but for a few well-placed people objecting to any prosecutions (Geithner?), many people should have been prosecuted already for all the illegal, immoral and unethical behavior of banks like Goldman Sachs. And the penalty should have been paid in time, not cash. It is not the "wiser heads" that will prevail when Goldman Sachs escapes any censure for its fraudulent, criminal or corrupt actions. It is the stupider ones--the banks, including Goldman Sachs, share a large share of the responsibility for the collapse of the financial system and now they play the role of The Great Transfer-or of Wealth to the richest members of society which, of course, includes Blankfein and all his partners.
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