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Lee Camp is never that subtle when depicting how ignoring global climate change will screw up our lives.
Permanently.
Although he does exhibit a tad more discretion when pointing out that entities (like the oil/gas/coal/nuclear vampires and Hillary) that are pushing the full-scale destruction of fracking on our way of life are the full-blooded villains of today. With not a hint of sarcasm or irony.
Pure murderous intent.
Brought to us in their least purple prose by our "liberal" paper of record.
Our favorite cute financial troll chimes in today:
At 6:15 P.M. last Friday, just as Janet Yellen was presumably enjoying her first post-retirement cocktail, the Federal Reserve put out a press release that could be regarded as Yellen’s parting gift to San Francisco lender Wells Fargo. But instead of a bottle of wine, or a handwritten note saying, I’ve loved working together and hope we can collaborate in the future, Yellen chose to leave the regulatory equivalent of a giant, flaming bag of shit.
In response to the fact that, over the past few years, Wells Fargo has basically made a name for itself as the No.1 destination for customers dying to be ripped off, the Federal Reserve board announced that in addition to requiring Wells to fire three board members by April and a fourth by the end of 2018, it would “restrict the growth of the firm until it sufficiently improves its governance and controls.” That means that until Wells Fargo reels in its tendency to create millions of fake customer accounts, or to overcharge hundreds of clients through its foreign-exchange service, it can’t get any bigger than $2 trillion in assets — its total asset size as of the end of last year.Though this may not seem like much of a punishment, it in fact stands to be much more impactful than the multi-billion-dollar fines that banks like Wells have become accustomed to paying without blinking an eye. As Bloomberg View’s Matt Levine writes, “To the extent a big bank can be said to want anything, it wants to grow; its Darwinian urge is to keep doing more banking and gathering more assets. And in particular, a big bank’s chief executive officer really wants it to grow. The C.E.O. may not pay attention to legalistic trivia like private-placement bad-actor bars. He may not even pay attention to nine-digit fines; he runs a big budget with a lot of line items. But a cap on growth he will notice . . . Limiting growth is about the most painful thing the Fed could do short of, you know, forcing Wells Fargo to shrink.” Furthermore, capping Wells’s growth could actually serve as a deterrent to other banks, sending the message that they should think twice before engaging in a cornucopia of customer-related fraud. Naturally, people like Senator Elizabeth Warren — whose favorite pastime is to verbally disembowel public-company C.E.O.s in general, and Wells Fargo C.E.O.s in particular — are over the moon.Unfortunately for the Warren disciples out there, it’s far from clear whether Yellen’s successor, Jerome Powell, will continue her last-ditch crusade or if he’ll take a friendlier approach in dealing with banks. But when it comes to other regulatory bodies, the last year has proven that the tone set by the Trump administration is less do wrong and we’ll punch you in the jugular than it is "When can we give you that hot stone massage?" Or maybe you'd prefer a nice foot rub? Over at the Consumer Financial Protection Bureau, acting director Mick Mulvaney — apparently a big fan of payday lenders — reportedly believes that Equifax — the credit reporting agency that may have allowed hackers to access nearly half of all of America’s most sensitive information — needn’t be investigated as thoroughly as his predecessor, Obama-appointee Richard Cordray, desired. According to Reuters, Mulvaney has “pulled back from a full-scale probe” and, according to three people familiar with the matter, failed to take routine steps such as ordering subpoenas against the company or gathering sworn testimony from executives. In addition, the C.F.P.B. has reportedly “shelved plans for on-the-ground tests of how Equifax protects data.”
“With half of the U.S. population victimized, you think there’d be universal agreement that Equifax should be held accountable for its incompetence,” National Consumer Law Center attorney Chi Chi Wu told Reuters. Apparently, you’d think wrong!Markets humiliate Trump in the cruelest way possibleQuestion: What’s the meanest way to humble a guy who 1) has taken credit for stock-market gains on a near daily basis since moving into the White House, and 2) loves the sound of his own voice? Answer: by falling so hard, so fast that all the major networks — including Fox! — interrupt his speech to cover the plunging market:
Trump, of course, is incapable of being humbled, so this little blip is unlikely to quell his instinct to pat himself on the back via tweet about any future stock-market gains. The White House, which has also heaped Trump with praise over the state of the stock market, suddenly became decidedly less interested in the short term on Monday, telling CNBC in an official statement that the administration is focused on “long-term economic fundamentals, which remain exceptionally strong.”
Speaking of Trump’s big tax speech
Before the Dow fell off a cliff, necessitating a quick cutaway from Trump’s Ohio speech to cover the carnage, the president of the United States told the crowd that Democrats’ failure to clap for him during last week’s State of the Union address was “un-American,” and maybe even worthy of capital punishment. “Shall we call that treason?“ he wondered aloud, adding, “Why not? [It] certainly didn’t seem [like they] love our country.” He then went on to trash Nancy Pelosi for saying that the tax bill offered only “crumbs” to some of the middle class.Republicans are spending money like Marie Antoinette with a Black cardOnce upon a time — as in, prior to January 20, 2017 — any Democrat to utter the phrase “domestic spending” was immediately silenced by a Greek chorus of G.O.P. lawmakers squawking about the deficit. In 2009, when the Senate passed a $787 billion economic stimulus measure to combat the financial crisis, Senate Majority Leader Mitch McConnell called the vote “one of the most expensive . . . in history,” and added, “Americans are wondering how we’re going to pay for all this”; not a single House Republican voted for the measure. Eight years later, Donald Trump’s Republican party voted in favor of a far more expensive measure: the deficit-busting tax bill, which, despite Senator Bob Corker’s feeble protests, is expected to add anywhere between $1 trillion and $1.5 trillion to the deficit over the next decade. But with tax cuts in the bag and a gold-penthouse-owning mogul at the helm, Republican lawmakers seem to have completely abandoned their fiscally conservative brand.According to The New York Times, annual deficits are getting very close to $1 trillion, with the national debt having already breached the $20 trillion mark; this quarter alone, the U.S. will have to borrow $441 billion in privately held debt, the largest amount of money borrowed since 2010, just after a severe economic depression. Adding to the tab, Congress is expected to pass a spending bill of more than $300 billion, in part to raise defense and domestic caps by $80 billion and $63 billion, respectively, over the next two years. And Republicans can’t even be bothered to keep up with appearances.“There . . . seems to be much less of a demand to at least appear to offset spending,” a person familiar with the matter told Politico, adding, “Republicans seem more interested in increasing defense spending than in offsetting costs.” (To give you an idea of the extent to which Republicans have abandoned the principles of their forefathers: The stopgap bill recently approved to end the government shutdown delayed or suspended $31 billion worth of taxes imposed under the Affordable Care Act.)Team Trump, of course, is still in delusion mode, trying to suggest that the president — who has demanded $25 billion for “border security” (i.e. his useless wall), and is seeking $200 billion in government funds for his big infrastructure project — is totally focused on bringing down the debt. “The president is very much concerned about the rate of increase of the debt and particularly the rate that it grew over the last eight years,” Treasury Secretary Steve Mnuchin said during a Senate Banking Committee hearing last week. “Over time we need to figure out where we can have government savings to deal with the deficit.” Naturally, he dismissed the suggestion that the tax bill will further exacerbate the problem.In prior days, the administration’s faux concern may have damaged its reputation with G.O.P. voters, who deplore programs for lazy takers on principle. But evidence suggests that president tweets-a-lot has had a fundamental effect on the way his base thinks about fiscal policy. As Axios points out, Trump’s ascendance has revealed a “massive cohort” of Republicans who rely on programs like Medicaid and Social Security, and who are therefore socially conservative but fiscally liberal . . . even if they don’t know it. “All evidence in the last two years points to the fact that the [Republican] base was never as ‘conservative’ on economic policy as we portrayed them during the Obama years,” a source close to Republican leadership said, which may help explain why Trump has been suspiciously quiet about his campaign-trail pledge to eliminate the national debt over a period of eight years.Report: Steve Wynn set up an LLC to pay off his accuserHow else would he keep (alleged) payments in the $7.5 million ballpark on the down low?The limited-liability company, called Entity Y, was created in 2005, Nevada records show, after a manicurist at Mr. Wynn’s flagship Wynn Las Vegas casino-resort made the accusation, according to people familiar with the matter. Entity Y was created solely as a vehicle to handle the settlement funds, a Wynn Resorts lawyer confirmed to a judge in a hearing in October, according to a court transcriptWynn has claimed it that it is “preposterous” to think he would assault a woman, and declined to provide further commentary on the matter to The Wall Street Journal, which first reported the barrage of allegations against the casino mogul.
#MemoDay: Welcome to 'Shit Show of Dishonesty Across the Board'
"Who Let Dr. Strangelove Write the Nuclear Posture Review?"
ICE Director Brags About How Much He's 'Enjoying' Tearing Immigrant Families Apart
Following up on the earlier news regarding the shootdown of a Russian piloted Su-25:
Russia Confirms Su-25 Downed in Syria - Repercussions?
That was fast.
Interesting that we now have two terror groups taking credit for shooting down the plane. Though original video/claim of shoot down was made by Jaysh al Nasr. Their logo featured prominently in the video. RT
"Tahrir al-Sham, the extremist group linked to Al-Nusra terrorists, has claimed responsibility for the downing of the Russian aircraft, according to Reuters.
Earlier, another militant group, Jaysh al-Nasr, which claims affiliation to the Free Syrian Army, also posted videos and statements about the Russian plane on its Twitter account"
Whole Foods Becomes Amazon Hell Foods as Employees, Managers Quit, Cry on the Job … and These People Want to Run Your Healthcare?
February 2, 2018 by
As we’ve said, Jeff Bezos clearly hates people, except as appendages to bank accounts. All you need to do is observe how he treats his workers.
In a scoop, Business Insider reports on how Amazon is creating massive turnover and pointless misery at Whole Food by imposinga reign of terrorimpossible and misguided productivity targets.
Anyone who has paid the slightest attention to Amazon will see its abuse of out of Whole Foods workers as confirmation of an established pattern. And even more tellingly, despite Whole Foods supposedly being a retail business that Bezos would understand, the unrealistic Whole Foods metrics aren’t making the shopping experience better.
As we’ll discuss below, we’d already expressed doubts about how relevant Bezos’ hyped Amazon model would be to Whole Foods. Proof is surfacing even faster than we expected.
But first to Bezos’ general pattern of employee mistreatment:
Slavery, Amazon Version
2018 February 2
Because Hell (aka. working at an Amazon warehouse and plenty other places) is about to get worse. Amazon has patented wristbands which track where your hand is at all times AND can nudge you.
Amazon already tracks warehouse workers by the second, with supervisors watching their location.
This is hell. Absolute hell. It extends assembly line horror to a vast range of other jobs, allows a smaller number of supervisors (and soon AI) to watch them and control them like flesh-robots.
Revolution is the only sane response to the extension of such technologies. And quite probably, revolution French style.
Comments:
February 2, 2018
As this is a labor thread, this is not so far off topic. The BLS jobs report covering January 2018 came out today. The first thing to know is that 200,000 were not created in January. In no month is the discrepancy between the reality (the seasonally unadjusted numbers) and the official stats so striking as January. In fact, with the end of the holiday season, the economy lost 2.59 million jobs in the private sector and 3.085 million overall (private and public sectors, together).
If you look at the January-December 2017 build in jobs in the private sector, take out the December-January drop off, you end up with the net 2017 jobs increase, 2.07 million or 173,000 a month, slightly off from 2017’s 176,000. This is a pretty mediocre number, and far below the benchmark 2014 number of 240,000.
In terms of total nonfarm jobs (the private and public sectors combined), because of job losses on the government side, the monthly increase remains at 173,000 a month compared to 2017’s 192,000 and 2014’s 252,000.
Other points: The percentage of production and nonsupervisory employees increased to 82.2% of private jobs. The average work week for this group plunged to 33.1 hours, down 0.7 hour from December and 0.4 hour from January 2017. This is a big deal and has a lot to do with a measly 0.78% January over January increase in their average weekly wages and this is nominal not real. Parenthetically, Trump has made a big deal about coal. Coal jobs did increase January over January by a whopping 800 jobs to 51,800. That is out of 123 million private sector and 145 million nonfarm jobs.
Wall Street Made Bank on Trump in 2017
A new report documents record-high Wall Street political spending, executives in the administration, a tax cut bonanza for the finance industry, and a deregulatory free-for-all.
by
It’s been a very good year for Wall Street. The S&P 500 reached record highs week after week, and analysts are upgrading U.S. profit estimates at a brisk pace. The finance industry spent nearly twice the amount of any other industry on campaign contributions in the 2017-2018 electoral cycle so far, and their investment in Trump and the GOP is clearly paying off. The Wall Street wins since Trump took office are almost too numerous to count, but we’ve cataloged them in our new report. Here are some of the lowlights:
Candidate Donald Trump referred to Wall Street as a cabal of global financiers who had robbed the working class, but instead of “draining the swamp,” the Trump administration filled top positions in the White House with former Goldman Sachs insiders.
In 17 out of 20 broad policy areas, the Treasury proposals released after the inauguration mirrored those of The Clearing House, the trade association for the country’s biggest banks.
Last summer, House Republicans passed the Financial CHOICE Act, a radical bill that would repeal all manner of Dodd-Frank rules that make finance safer and less abusive.
Just since October, the House Financial Services Committee has passed over 50 bills that either benefit Wall Street directly or weaken consumer or investor protections, paving the way for future Wall Street profits.
A Penn/Wharton Business School study revealed that the finance industry is the largest long-term beneficiary of corporate tax cuts, and is expected to gain $250 billion over the next decade from tax cuts for “C corporations” alone.
JPMorgan and Wells Fargo’s tax cuts will total $7 billion in the first year alone. Private equity funds stand to rake in $19 billion over 10 years from the carried interest loophole remaining intact.
Big banks have no current plans to share this windfall with employees or consumers. Bank of America’s bonuses will cost it roughly $145 million — only four percent of the $3.5 billion the bank will receive from the tax cut. Worse still — soon after it announced bonuses, it also laid out plans to start charging fees for checking accounts for its poorest customers. Wells Fargo’s commitments to raise its minimum wage to $15 an hour and to boost its charitable contributions will equal only about five percent of the additional profits the tax cut will provide for the bank.
Bank of America and Wells Fargo are not alone: four out of five analysts expect companies to pass the windfall along to investors as stock buybacks and dividends. Only one in five expect companies to raise wages.
Far from adding jobs, the top six Wall Street banks together actually cut 8,000 jobs in the last six months of 2017, a higher rate than in the past two years.
Wall Street secured billions in windfall gains for themselves through lower taxes, looser rules, and deliberately weakened oversight and enforcement. All of these presents for Wall Street come at a cost to the rest of us. The American people will be paying for it for years in more potholes, larger class sizes, and climbing rents.
How Did Trump Win? Follow the Dark Money
AARON MATÉ: It’s "The Real News," I’m Aaron Maté. It’s been over a year since Donald Trump pulled off what is likely the biggest upset in U.S. political history, but we have yet to fully understand how it is that a reality television host with no political experience managed to do it. The widespread perception is that it was a combination of Russian meddling and a last minute October surprise from then FBI director James Comey. Well, a new study takes a much deeper look than has been done to date and a very different picture emerges. It points to, among other things, a major last minute infusion of secretive dark money on Trump’s behalf. The study is put out by the Institute for New Economic Thinking and it’s called, “Industrial Structure and Party Competition in an Age of Hunger Games: Donald Trump and the 2016 Presidential Election.”
I’m joined by one of its three co-authors. Thomas Ferguson is professor emeritus of political science at the University of Massachusetts, Boston. Before we get into the overlooked factors that you found, let’s look at the dominant narrative, which is that it was indeed Russian meddling and Comey that helped sway voters to turn on Clinton, who was leading in the polls, and vote for Trump. What is your though on that?
T. FERGUSON: This is the real heart of the problem with both the Comey and the Russian internet story — it’s that when you actually look at what happened, not only did Hillary dip in the polls, but at the very same time the chances of the Democrats taking the Senate collapsed. When you’ve got two collapses, not one, and they very closely tracked each other, as we show in a figure in our paper, so, what’s going on there? Well, when you look, first of all, you can take the Senate one very straightforwardly. There’s no doubt about what happened. Mitch McConnell and company were going to donors and saying, as nice articles in Bloomberg and elsewhere on this that we cite, they’re saying, “You guys can’t afford to lose both the presidency and the Senate. So, you better help us.”
They did. An enormous wave of cash came in for the Senate and the other thing we discovered when we looked was we created a day by day … Paul Jorgensen, Jie Chan and I created a day-by-day file of contributions into the Trump campaign and included dark money. You say, how do you know it’s dark money? Obviously, it’s not all provided. The answer is very straightforward. We’ll see this cash coming in from an entity, usually has kind of a fake charitable name attached, and then you will see the cash coming out but no cash going in. That’s what they’re legally allowed to do because everybody knows these are not charities. They are in fact there to do politics. And so, you can tell the dark money easily. When we look at the dark money for Trump in the final weeks we were astonished, ’cause Trump had — and there’s actually a clip of Trump saying he wouldn’t take dark money.
DONALD TRUMP: They’re raising all of this money and they’re gonna spend it on the campaign and we have … The candidates aren’t supposed to be involved in all that stuff but they have all this money going. Nobody even knows who the people are. Nobody knows where they are. Nobody knows what they’re doing with the money. It’s a whole big scam.
T. FERGUSON: Well, he had a bigger wave of dark money than Romney did in 2012. That’s what we used as comparison. We thought two Republican presidential campaigns with a lot of dough. That should be pretty fair. In that sense, the real problem with the Comey or the Russian story, just to repeat is, hey, you’ve got two waves of collapses and two big waves of money. More than likely than not what you’re seeing in both cases is the sound of money talking. It’s that simple.
AARON MATÉ: You are known for having developed the investment theory of politics, the theory that it is big business, big corporations and elites who play the most decisive role in the outcome of elections, in this case in terms of seeing Trump as an investment, how did so much money come into him if it was widely perceived that he was gonna lose?
T. FERGUSON: Well, I think I’ve made the joke elsewhere, it might be the greatest out of the money options in world history and one you could take up cheap. But seriously, the story, never mind my take, my colleagues and I have a pretty careful analysis of the money in the Trump’s campaign. And what we basically find is in the early stages he did attract a lot of individual money from small donors, and overall his campaign was remarkable. I never saw anything like it in the Republican party, unless it were maybe the Goldwater ’64 campaign — and I know that this immediately betrays that I’m as old as the Egyptians on that point. But I mean, that was full of small donors too. But I mean, normally Republican campaigns are not full of small donors. They are dominated by big donors but Trump in the early stages of the campaign was just by himself, pretty much. Financing his campaign along with this big wave of small money. In May, he’s actually telling reporters, we cite in the paper, that he doesn’t need the usual billion dollars to run.
And so, by June the campaign has a different tack. And Priebus and Manafort and these people are all out trying to raise cash and they do raise money. They raised a substantial amount around the time of the convention. That money doesn’t keep coming though, and so, by the end of July they got a fairly serious problem. When Bannon and Conway take over, then the dam breaks and we sort of show you there’s a big wave of money from casinos and especially from private equity. And if you look at private equity, those are the odd folks out on just about everything. These are people who have often personally not wonderful relations with the rest of the business community and certainly not with the business round-table types. And my suspicion is, is that they knew that Bannon — I don’t try to read minds and neither do my colleagues, but if I had to guess — I’d say they knew they didn’t like Hillary Clinton.
They knew Bannon and Conway were conservatives to their stripe, which is basically cut the stake to everything except the military expenditure down to just about nothing. And de-regulate and cut taxes, the other obvious inference there. And so, they piled in, at any rate, they did it. And the other point to make and you should remember this when anybody says its Comey and/or the Russians. It’s very obvious that the Trump campaign was very well targeted. The day after Bannon takes over, in the Washington Post there’s a — we quote it — there’s an article that just says, they will now concentrate on a few industrial states where they think they can actually win over voters, poor, poorer voters, and they did that. And whereas, famously the Clinton campaign was campaigning all over the place in places that probably didn’t matter.
AARON MATÉ: Well, you know what? Professor on that point, let me say — and by the way in terms of investment, investor confidence in the Trump campaign, I’m sure was boosted when Robert Mercer, the hedge-fund billionaire, he was the one who brought in Kellyanne Conway and Steve Bannon, essentially.
T. FERGUSON: Careful, it was following a conversation between Rebekah, his daughter, and Trump. And there’s no reason to think there probably weren’t some other contacts there but that’s the one that’s been heavily written up.
AARON MATÉ: Right. So, the Mercer family endorses, essentially, the Trump campaign and brings in its people, Bannon and Conway, and after that is when you have the rise in dark money that you tracked. But let me ask you about in terms of messaging, you have Trump meanwhile trying to appeal to working-class voters in a way that Clinton did not. And as a sample of that, this is Trump speaking in Pennsylvania in June 2016.
DONALD TRUMP: Globalization has made the financial elite who donate to politicians very, very wealthy. I used to be one of them. Hate to say it but I used to be one. But it’s left millions of our workers with nothing but poverty and heartache. When subsidized foreign steel is dumped into our markets, threatening our factories, the politicians have proven, folks, have proven: they do nothing. For years, they watched on the sidelines as our jobs vanished and our communities were plunged into depression-level unemployment.
AARON MATÉ: So, that’s Donald Trump, then candidate Trump, speaking in Pennsylvania in June 2016. Now, along with Pennsylvania, Trump also won the key battleground states of Wisconsin and Michigan. And Professor Ferguson you point out, and this is a factor that has not gotten any attention, is that these three states were all targets of major anti-union drives before the campaign.
T. FERGUSON: Targets of cesspool anti-union drives meaning that they show, I think, in the top eight states a loss of the union members under the Obama administration. When they’re in power. 2009 to ’16. They’re right in that very highest levels and if you do simple math … The margin in those states is something 70,000 votes sometimes, or fewer. And you gotta wonder if the union rights had just been the same, knowing the rate at which unionized workers vote Democratic rather than un-unionized workers, it would have been a different race perhaps. I mean, there’s a lot of other … It’s a hard call, ’cause there’s a lot of other things that weren’t constant too, but that does seem to be quite striking.
And more broadly, I have to tell you that whenever I hear Democratic Party politicians talking about bringing back the Democratic Party, making a big fight in states and local areas … the truth of the matter is that for much of the United States where there’s a Democratic Party, if you have no unions you have not much of a Democratic Party unless it’s built on some ethnic organization, some of the Hispanic organizations in Texas or something like that. And I mean, there’s an awful lot of self-deception in the discussions about rebuilding the Democratic party. It can’t be done, I suspect, in any normal Midwestern, northeastern state while unions continue to just bleed members. It’s just not gonna happen. It’s like a round square.
Comments
Altandmain February 2, 2018
Nomi Prins: Trump’s Financial Arsonists
Yves here. While Prins is correct to call out the Trump administration’s enthusiasm for financial deregulation, it’s not as if the Democrats have a great track record on that front. As we chronicled at nauseating length, Dodd Frank was weak and designed to be weakened further via having many provisions kicked over to further study before being finalized, which allowed lobbyists to have a second go at diluting them, and better yet, when public and press interest in the crisis abated. One important force for strengthening regulations came about by accident, via Danny Tarullo at the Fed taking on bank regulation and being determined and sharp-elbowed about it. Another was Gary Gensler at the CFTC, who was not expected to be a reformer.
By contrast, Mary Jo White at the SEC was widely seen as not interested in enforcement, with Commissioner Kara Stein regularly opposing White’s mere gestures. Yes, White did some more enforcing tha(n) her replacement Jay Clayton is doing … but she had to at least feign taking a Democratic party, “we’re not really in the banks’ pocket” posture, as opposed to the Republicans being open about it.
The CFPB has also been underwhelming under Obama. Obama chose Richard Cordray, who from his days as Ohio attorney general was a known “all hat, no cattle” type. He was late to implement a payday lending rule, and by virtue of it not becoming effective until after Trump took office, it was reversed. The CFPB’s biggest accomplishment is arguably its complaints database, but even then, it did not use it to maximum advantage. The Los Angeles Times, and following them, the Los Angeles prosecutor, identified the Wells Fargo fake account abuses. As regular readers know, when the press reported on the scale of the violations, the CFPB, which acted as the lead regulator on the sanctions, was criticized for not going after Wells executives.
(By Nomi Prins, whose new book, Collusion: How Central Bankers Rigged the World (Nation Books), will be published this May. Of her six other books, the most recent is All the Presidents’ Bankers: The Hidden Alliances That Drive American Power. She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece. Originally published at TomDispatch.)
There’s been lots of fire and fury around Washington lately, including a brief government shutdown. In Donald Trump’s White House, you can hardly keep up with the ongoing brouhahas from North Korea to Robert Mueller’s Russian investigation, while it already feels like ages since the celebratory mood over the vast corporate tax cuts Congress passed last year. But don’t be fooled: none of that is as important as what’s missing from the picture. Like a disease, in the nation’s capital it’s often what you can’t see that will, in the end, hurt you most.
Amid a roaring stock market and a planet of upbeat CEOs, few are even thinking about the havoc that a multi-trillion-dollar financial system gone rogue could inflict upon global stability. But watch out. Even in the seemingly best of times, neglecting Wall Street is a dangerous idea. With a rag-tag Trumpian crew of ex-bankers and Goldman Sachs alumni as the only watchdogs in town, it’s time to focus, because one thing is clear: Donald Trump’s economic team is in the process of making the financial system combustible again.
Collectively, the biggest U.S. banks already have their get-out-out-of-jail-free cards and are now sitting on record profits after, not so long ago, triggering sweeping unemployment, wrecking countless lives, and elevating global instability. (Not a single major bank CEO was given jail time for such acts.) Still, let’s not blame the dangers lurking at the heart of the financial system solely on the Trump doctrine of leaving banks alone. They should be shared by the Democrats who, under President Barack Obama, believed, and still believe, in the perfection of the Dodd-Frank Act of 2010.
While Dodd-Frank created important financial safeguards like the Consumer Financial Protection Bureau, even stronger long-term banking reforms were left on the sidelines. Crucially, that law didn’t force banks to separate the deposits of everyday Americans from Wall Street’s complex derivatives transactions. In other words, it didn’t resurrect the Glass-Steagall Act of 1933 (axed in the Clinton era).
Wall Street is now thoroughly emboldened as the financial elite follows the mantra of Kelly Clarkston’s hit song: “What doesn’t kill you makes you stronger.” Since the crisis of 2007-2008, the Big Six U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — have seen the share price of their stocks significantly outpace those of the S&P 500 index as a whole.
Jamie Dimon, chairman and CEO of JPMorgan Chase, the nation’s largest bank (that’s paid $13 billion in settlements for various fraudulent acts), recently even pooh-poohed the chances of the Democratic Party in 2020, suggesting that it was about time its leaders let banks do whatever they wanted. As he told Maria Bartiromo, host of Fox Business’s "Wall Street Week." “The thing about the Democrats is they will not have a chance, in my opinion. They don’t have a strong centrist, pro-business, pro-free enterprise person.”
This is a man who was basically gifted two banks, Bear Stearns and Washington Mutual, by the U.S government during the financial crisis. That present came as his own company got cheap loans from the Federal Reserve, while clamoring for billions in bailout money that he swore it didn’t need.
Dimon can afford to be brazen. JPMorgan Chase is now the second most profitable company in the country. Why should he be worried about what might happen in another crisis, given that the Trump administration is in charge? With pro-business and pro-bailout thinking reigning supreme, what could go wrong?
Protect or Destroy?
There are, of course, supposed to be safeguards against freewheeling types like Dimon. In Washington, key regulatory bodies are tasked with keeping too-big-to-fail banks from wrecking the economy and committing financial crimes against the public. They include the Federal Reserve, the Securities and Exchange Commission, the Treasury Department, the Office of the Comptroller of the Currency (an independent bureau of the Treasury), and most recently, under the Dodd-Frank Act of 2010, the Consumer Financial Protection Bureau (an independent agency funded by the Federal Reserve).
These entities are now run by men whose only desire is to give Wall Street more latitude. Former Goldman Sachs partner, now treasury secretary, Steven Mnuchin caught the spirit of the moment with a selfie of his wife and him holding reams of newly printed money “like a couple of James Bond villains.” (After all, he was a Hollywood producer and even appeared in the Warren Beatty flick "Rules Don’t Apply.") He’s making his mark on us, however, not by producing economic security, but by cheerleading for financial deregulation.
Despite the fact that the Republican platform in election 2016 endorsed reinstating the Glass-Steagall Act, Mnuchin made it clear that he has no intention of letting that happen. In a signal to every too-big-not-to-fail financial outfit around, he also released AIG from its regulatory chains. That’s the insurance company that was at the epicenter of the last financial crisis. By freeing AIG from being monitored by the Financial Services Oversight Board that he chairs, he’s left it and others like it free to repeat the same mistakes.
Elsewhere, having successfully spun through the revolving door from banking to Washington, Joseph Otting, a former colleague of Mnuchin’s, is now running the Office of the Comptroller of the Currency (OCC). While he’s no household name, he was the CEO of "OneWest" (formerly, the failed California-based bank IndyMac). That’s the bank Mnuchin and his billionaire posse picked up on the cheap in 2009 before carrying out a vast set of foreclosures on the homes of ordinary Americans (including active-duty servicemen and -women) and reselling it for hundreds of millions of dollars in personal profits.
At the Federal Reserve, Trump’s selection for chairman, Jerome Powell (another Mnuchin pick), has repeatedly expressed his disinterest in bank regulations. To him, too-big-to-fail banks are a thing of the past. And to round out this heady crew, there’s Office of Management and Budget (OMB) head Mick Mulvaney now also at the helm of the Consumer Financial Protection Bureau (CFPB), whose very existence he’s mocked.
In time, we’ll come to a reckoning with this era of Trumpian finance. Meanwhile, however, the agenda of these men (and they are all men) could lead to a financial crisis of the first order. So here’s a little rundown on them: what drives them and how they are blindly taking the economy onto distinctly treacherous ground.
Joseph Otting, Office of the Comptroller of the Currency
The Office of the Comptroller is responsible for ensuring that banks operate in a secure and reasonable manner, provide equal access to their services, treat customers properly, and adhere to the laws of the land as well as federal regulations.
As for Joseph Otting, though the Senate confirmed him as the new head of the OCC in November, four key senators called him “highly unqualified for [the] job.” He will run an agency whose history snakes back to the Civil War. Established by President Abraham Lincoln in 1863, it was meant to safeguard the solidity and viability of the banking system. Its leader remains charged with preventing bank-caused financial crashes, not enabling them.
Fast forward to the 1990s when Otting held a ranking position at Union Bank NA, overseeing its lending practices to medium-sized companies. From there he transitioned to U.S. Bancorp, where he was tasked with building its middle-market business (covering companies with $50 million to $1 billion in annual revenues) as part of that lender’s expansion in California.
In 2010, Otting was hired as CEO of OneWest (now owned by CIT Group). During his time there with Mnuchin, OneWest foreclosed on about 36,000 people and was faced with sweeping allegations of abusive foreclosure practices for which it was fined $89 million. Otting received $10.5 million in an employment contract payout when terminated by CIT in 2015. As Senator Sherrod Brown tweeted all too accurately during his confirmation hearings in the Senate, “Joseph Otting is yet another bank exec who profited off the financial crisis who is being rewarded by the Trump Administration with a powerful job overseeing our nation’s banking system.”
Like Trump and Mnuchin, Otting has never held public office. He is, however, an enthusiastic proponent of loosening lending regulations. Not only is he against reinstating Glass-Steagall, but he also wants to weaken the “Volcker Rule,” a part of the Dodd-Frank Act that was meant to place restrictions on various kinds of speculative transactions by banks that might not benefit their customers.
Jay Clayton, the Securities and Exchange Commission
The Securities and Exchange Commission (SEC) was established by President Franklin Delano Roosevelt in 1934, in the wake of the crash of 1929 and in the midst of the Great Depression. Its intention was to protect investors by certifying that the securities business operated in a fair, transparent, and legal manner. Admittedly, its first head, Joseph Kennedy (President John F. Kennedy’s father), wasn’t exactly a beacon of virtue. He had helped raise contributions for Roosevelt’s election campaign even while under suspicion for alleged bootlegging and other illicit activities.
Since May 2017, the SEC has been run by Jay Clayton, a top Wall Street lawyer. Following law school, he eventually made partner at the elite legal firm Sullivan & Cromwell. After the 2008 financial crisis, Clayton was deeply involved in dealing with the companies that tanked as that crisis began. He advised Barclays during its acquisition of Lehman Brothers’ assets and then represented Bear Stearns when JPMorgan Chase acquired it.
In the three years before he became head of the SEC, Clayton represented eight of the 10 largest Wall Street banks, institutions that were then regularly being investigated and charged with securities violations by the very agency Clayton now heads. He and his wife happen to hold assets valued at between $12 million and $47 million in some of those very institutions.
Not surprisingly in this administration (or any other recent one), Clayton also has solid Goldman Sachs ties. On at least seven occasions between 2007 and 2014, he advised Goldman directly or represented its corporate clients in their initial public offerings. Recently, Goldman Sachs requested that the SEC release it from having to report its lobbying activities or payments because, it claimed, they didn’t make up a large enough percentage of its assets to be worth the bother. (Don’t be surprised when the agency agrees.)
Clayton’s main accomplishment so far has been to significantly reduce oversight activities. SEC penalties, for instance, fell by 15.5% to $3.5 billion during the first year of the Trump administration. The SEC also issued enforcement actions against only 62 public companies in 2017, a 33% decline from the previous year. Perhaps you won’t then be surprised to learn that its enforcement division has an estimated 100 unfilled investigative and supervisory positions, while it has also trimmed its wish list for new regulatory provisions. As for Dodd-Frank, Clayton insists he won’t “attack” it, but thinks it should be “looked” at.
Mick Mulvaney, the Consumer Financial Protection Bureau and the Office of Management and Budget
As a congressman from South Carolina, ultra-conservative Republican Mick Mulvaney, dubbed “Mick the Knife,” once even labeled himself a “right-wing nut job.” Chosen by President Trump in November 2016 to run the Office of Management and Budget, he was confirmed by Congress last February.
As he said during his confirmation hearings, “Each day, families across our nation make disciplined choices about how to spend their hard-earned money, and the federal government should exercise the same discretion that hard-working Americans do every day.” As soon as he was at the OMB, he took an axe to social programs that help everyday Americans. He was instrumental in creating the GOP tax plan that will add up to $1.5 trillion to the country’s debt in order to provide major tax breaks to corporations and wealthy individuals. He was also a key figure in selling the plan to the media.
When Richard Cordray resigned as head of the Consumer Financial Protection Bureau in November, Trump promptly selected Mick the Knife for that role, undercutting the deputy director Cordray had appointed to the post. After much debate and a court order in his favor, Mulvaney grabbed a box of Dunkin’ Donuts and headed over from his OMB office adjacent to the White House. So even though he’s got a new job, Mulvaney is never far from Trump’s reach.
The problem for the rest of us: Mulvaney loathes the CFPB, an agency he once called “a joke.” While he can’t unilaterally demolish it, he’s already obstructed its ability to enforce its government mandates. Soon after Trump appointed him, he imposed a 30-day freeze on hiring and similarly froze all further rule-making and regulatory actions.
In his latest effort to undermine American consumers, he’s working to defund the CFPB. He just sent the Federal Reserve a letter stating that, “for the second quarter of fiscal year 2018, the Bureau is requesting $0.” That doesn’t bode well for American consumers.
Jerome “Jay” Powell, Federal Reserve
Thanks to the Senate confirmation of his selection for chairman of the board, Donald Trump now owns the Fed, too. The former number two man under Janet Yellen, Jerome Powell will be running the Fed, come Monday morning, February 5th.
Established in 1913 during President Woodrow Wilson’s administration, the Fed’s official mission is to “promote a safe, sound, competitive, and accessible banking system.” In reality, it’s acted more like that system’s main drug dealer in recent years. In the wake of the 2007-2008 financial crisis, in addition to buying trillions of dollars in bonds (a strategy called “quantitative easing,” or QE), the Fed supplied four of the biggest Wall Street banks with an injection of $7.8 trillion in secret loans. The move was meant to stimulate the economy, but really, it coddled the banks.
Powell’s monetary policy undoubtedly won’t represent a startling change from that of previous head Janet Yellen, or her predecessor, Ben Bernanke. History shows that Powell has repeatedly voted for pumping financial markets with Federal Reserve funds and, despite displaying reservations about the practice of quantitative easing, he always voted in favor of it, too. What makes his nomination out of the ordinary, though, is that he’s a trained lawyer, not an economist.
Powell is assuming the helm at a time when deregulation is central to the White House’s economic and financial strategy. Keep in mind that he will also have a role in choosing and guiding future Fed appointments. (At present, the Fed has the smallest number of sitting governors in its history.) The first such appointee, private equity investor Randal Quarles, already approved as the Fed’s vice chairman for supervision, is another major deregulator.
Powell will be able to steer banking system decisions in other ways. In recent Senate testimony, he confirmed his deregulatory predisposition. In that vein, the Fed has already announced that it seeks to loosen the capital requirements big banks need to put behind their riskier assets and activities. This will, it claims, allow them to more freely make loans to Main Street, in case a decade of cheap money wasn’t enough of an incentive.
The Emperor Has No Rules
Nearly every regulatory institution in Trumpville tasked with monitoring the financial system is now run by someone who once profited from bending or breaking its rules. Historically, severe financial crises tend to erupt after periods of lax oversight and loose banking regulations. By filling America’s key institutions with representatives of just such negligence, Trump has effectively hired a team of financial arsonists.
Naturally, Wall Street views Trump’s chosen ones with glee. Amid the present financial euphoria of the stock market, big bank stock prices have soared. But one thing is certain: when the next crisis comes, it will leave the last meltdown in the shade because our financial system is, at its core, unreformed and without adult supervision. Banks not only remain too big to fail but are still growing, while this government pushes policies guaranteed to put us all at risk again.
There’s a pattern to this: first, there’s a crash; then comes a period of remorse and talk of reform; and eventually comes the great forgetting. As time passes, markets rise, greed becomes good, and Wall Street begins to champion more deregulation. The government attracts deregulatory enthusiasts and then, of course, there’s another crash, millions suffer, and remorse returns.
Ominously, we’re now in the deregulation stage following the bull run. We know what comes next, just not when. Count on one thing: it won’t be pretty.
Comments:
Synoia
Not a single major bank CEO was given jail time for such acts.
That’s because they has a get out of jail card. The Bush Jr administration pushed increased home ownership. That drove loose underwriting standards, and as a reward the Banker got:
1. The removal of cram-down for residential mortgages in Bankruptcy.
2. Removal of blame for the loose (NINA, SISA) underwriting programs.
The acts of lobbying for the removal cram-down and the concurrent change in underwriting standards provide a clear chain of cause and known effect. A conspiracy.
IT WAS THE CHANGE OF UNDERWRITING STANDARDS WHICH CAUSED THE PROBLEM.
The authorship of these underwriting standards, changed by a very small group somewhere in DC, and very close the Fannie Mae and Freddy Mac, was the cause. As far as I know this act of control fraud was never discussed in public and never investigated.
RWood February 2, 2018
We’ll all be out of jake…
Sound of the Suburbs February 3, 2018
Understanding the system and its problems enables simple and effective regulation.
Why was Glass-Steagall so simple and effective?
After 1929 they looked into things and gained a thorough understanding of what had gone wrong, they didn’t attribute it to a “black swan”.
Glass-Steagall separated the money creation side of banking from the investment side of banking. It also stopped the money creation side of banking from trading in securities.
When the money creation side of banking can only trade in real assets there are limits on its money creation.
When the money creation side of banking can trade in securities produced by the investment side, the sky’s the limit and only dependent on the ingenuity of investment bankers in coming up with new securities. They got to work producing CDO squareds, synthetic CDOs, etc …. knowing there was a ready market that can create money out of nothing.
The banks buy the securities off each other with money they create out of nothing and you have a ponzi scheme. The debt-fueled ponzi schemes before 1929 and 2008 can be seen building in the graph of debt-to-GDP below.
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png
Obama's personnel choices always raised my hackles.
If you can read the above essay without feeling yours arise anew, you are way more gifted in diplomacy than I.
And, yes, I know Dickie Betts. (Not that well, but still. What a pleasure to hear him and Gregg play our way out.)
