The financial services reform bill is on the Senate floor this week. The recently announced criminal investigation of Goldman Sachs, the bumbling testimony of Goldman's and the rocking Wall Street protest last Thursday show that momentum is with reformers. This bill could codify the "doom loop" of a "boom and bail" economy, or it could set us on the path to a more sustainable future. The good news is that a group of Senators has stepped forward to champion a critical set of issues worth getting excited about. Send a message to your Senator in support of these "too big to fail" amendments at BanksterUSA.org
Real Economy Project
Sign the petition at BanksterUSA. A financial services reform bill passed the House in December. Now the action moves to the Senate. The Republicans (and one Democrat) are currently obstructing a vote to debate the bill, but few think their resistance will last in the face of public outrage about bailouts, bonuses and other Bankster shenanigans.
On Monday night, Senate Republicans lined up like lemurs and voted “no” on a motion to bring the Senate bank reform bill to the floor for a debate. Forty Republicans and one Democrat, Senator Ben Nelson (D-Kansas), stood shoulder to shoulder with 1,500 bank lobbyists and said “no” to Wall Street financial reform. (Evidently, Nelson was displeased that his friend Warren Buffett did not get special treatment in the bill.)
Before gloom sets in, it is worth noting that on Tuesday, all eyes will be on the “Fabulous Fab,” the Goldman Sachs trader at the heart of the SEC’s recent charges against the firm. Some of us are rooting for the Fab, hoping that his testimony will put financial reform back on the floor and put us on the path to reform.
Last week’s Securities and Exchange Commission (SEC) action against Goldman Sachs landed like a bombshell on Wall Street. To the titans of Wall Street it must have seemed like the nice little kitty they had been stroking and cuddling over the years, viciously sank in teeth and claws.
The SEC has faced intense criticism from the public and media regarding the way it loosened leveraging rules, a key cause of the implosion of major investment banks and the meltdown as a whole. The SEC also took a pounding over its handling of the Bernie Madoff fiasco. SEC officials chose to ignore explicit warnings from whistleblowers that Madoff was running a Ponzi scheme. The SEC also mishandled its first major case related to the crisis, being roundly scolded by a federal judge for not being tough enough on Bank of America’s secret bonus and salary deal with Merrill Lynch.
One of the most salient analogies of the financial meltdown was offered by Financial Crisis Inquiry Commission chair Phil Angelides when he grilled Goldman Sachs CEO, Lloyd Blankfein, over the firm’s unsavory proprietary trading. Angelides was questioning Goldman’s practice of minting toxic, mortgage-backed securities and badgering credit-rating companies for the highest rating for those securities, while betting in the market that those securities would later fail.
Angelides likened this business practice to “selling someone a car with faulty brakes and then taking out an insurance policy on the driver.” With Friday’s Securities and Exchange Commission (SEC) filing of civil fraud charges against Goldman Sachs, we learned more about those faulty vehicles. We learned that Goldman had cut the brakes.
Foreclosure filings were at historic highs in March -- 367,056 -- an increase of nearly 19 percent from the previous month, and the highest monthly total since 2005, according to RealtyTrac. Almost two years after the onset of the financial crisis with unemployment at historic highs, nothing is being done to put a stop to this on-going tragedy.
Today, the Real Economy Project of the Center for Media and Democracy (CMD) released an update of our Wall Street Bailout accounting that, unlike other bailout assessments, includes Federal Reserve loans. CMD finds that the Federal Reserve, the U.S. Treasury and Federal Deposit Insurance Corporation (FDIC) combined have disbursed a total of $4.7 trillion on the bailout, of which $2 trillion is still outstanding.
According to Greenspan, Fannie Mae and Freddie Mac were to blame for the housing bubble. The Fed may have noticed, but it couldn’t really do anything about it. "Regulators cannot successfully use the bully pulpit to manage asset prices, and they cannot calibrate regulation and supervision in response to movements in asset prices. Nor can they fully eliminate the possibility of future crises,” said Greenspan.
After that self-serving drivel, no wonder the God’s zapped the electrical system. There was a lot Greenspan could have done to rein in the housing bubble, not the least of which was simply telling people there was a bubble as housing prices began following an unprecedented and unsustainable path.
If you, like me, are scrambling to complete your taxes, and feeling a bit disgruntled about being taxed more than the big boys on Wall Street, Jobs with Justice has a great plan on how to work out your angst.
Jobs with Justice, the feisty union representing workers in 25 states, is calling for a Tax Wall Street Day of Action on April 15th.
”Big banks helped plunge the nation into the worst financial crisis since the Great Depression. They lobbied for deregulation and corporate tax breaks, then went on a reckless gambling spree, creating complicated, risky mechanisms to make profits off of destabilizing the economy. They have tightened lending for consumers and small business, and they have refused to modify home mortgages. Millions of Americans have lost their homes, their jobs and their retirement savings,” says a Jobs with Justice flyer.
Almost every day, I read in the paper that the goverment is making money off of the bank bailout. Papers love good news, even if it is has little to do with reality. Today, the Financial Times reported that the U.S. made $10 billion off bank repayments on the bailout funds. $10 billion, hooray! We are in the black!
Unfortunately, our recent comprehensive bailout accounting puts taxpayers $2 trillion in the red. That is right, $2 trillion. While most of this money was in the form of loans, and American taxpayers might recoup those funds one day, it is foolish for the press to declare "Mission Accomplished" based on a thin study by the SNL Group. (Saturday Night Live strikes again?) Especially when taxpayers also lost $14 trillion in wages, retirement, college savings and housing wealth.
After an exhausting week, I was sticking to my usual routine of collapsing on the couch and tuning in to Bill Moyers Journal on PBS last Friday night. I was excited that one of the guests was www.eji.org Bryan Stevenson, the head of the Equal Justice Initiative, who has long been a hero of mine for his uncompromising, long-term battle against the death penalty.
The show was terrific, a wide-ranging discussion about the struggle for economic justice from Martin Luther King to Barack Obama for "those folks at the bottom of the well," with Stevenson and civil rights lawyer and author of "The New Jim Crow," Michelle Alexander. But deep into the show, well, to tell the shameful truth, I fell asleep. So I missed Moyer's great concluding essay and the big moment when he mentioned the Center for Media and Democracy and our Wall Street Bailout tally. The tally was the product of three months of hard work by our researcher, Conor Kenney, with contributions from half a dozen other staff.