President Barack Obama will deliver remarks in the Rose Garden on Monday to mark the 5-year anniversary of the financial crisis, discuss the progress we have made to grow the economy and create 7.5 million private sector jobs, and highlight the work we still need to do to strengthen the middle class and those fighting to get into it.
From the White House YouTube Channel:
If, like me, you are of the 96 million Americans who rely on a not-for-profit credit union for fairly priced financial services, it’s not too late to make your voice heard. Finance Committee leaders are working on a proposal for a new U.S. tax code and Big Banks are asking them to pick the pockets of Credit Union members.
Banks pushing for repeal of credit unions’ federal tax exemption
The Big Banks have armies of lobbyists loaded with cash and they are pressuring Congress to revoke the income tax exemption for not-for-profit Credit Unions. The Big Banks don’t like the competition and they especially don’t like the market pressure that forces them to rein in fees.
Credit Unions have their members, their voices, and their stories. It’s time to use them.
At last some progressives are awakening to the political reality of our economic condition:
Nothing in this year’s exit polling hurt more than this:
Got that? Of the 35 percent who think Wall Street is to blame for our economic problems, 57 percent voted Republican – the party that does nothing but carry water for Wall Street.
Kos – Get Wall Street out of the White House Daily Kos 18 Nov 10
Yeah. But what makes Democrats so different? Well… Not much, it seems:
…people think there is no difference between the parties when it comes to the rich and powerful. And why should they? Obama’s finance team is essentially a branch office of Goldman Sachs and company.Kos – Get Wall Street out of the White House Daily Kos 18 Nov 10
Time to get serious, folks. And big decision time for Obama. I think Kos has got this right:
Here’s the bottom line – Obama and the Democrats need to repair their relationship with voters. They can either focus on that, and the hell with Wall Street’s hurt feefees, or we’re headed for a Republican trifecta in the White House, Senate, and House in 2012.Kos – Get Wall Street out of the White House Daily Kos 18 Nov 10
The next president will be the one who has convinced a nation of confused and angry voters that he or she is going to lead an administration which will put a stop to this nonsense, and let the chips fall where they may.
It would have probably been fair to say of Sarah Palin that until a few days ago ‘policy wonk’ would have been an unlikely description, love her or loathe her, of any facet of her complex relationship with American politics.
But now this:
I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air.Sarah Palin via Robert Costa- Palin to Bernanke: ‘Cease and Desist’ National Review 7 Nov 10
That’s very interesting on a lot of levels. The piece is coherent and sober and, more importantly, it is aimed directly at a weak point in the current administration’s monetary policy and an electoral vulnerability in the allegiances of establishment Republicans in the newly constituted House of Representatives. Federal Reserve Chairman Ben Bernanke, the champion of this recently announced second round of ‘quantitative easing,’ promised Congress on 3 June 2009 that the Federal Reserve would not ‘monetise the debt‘ of the US government, in other words just print money “out of thin air.” But that seems to be exactly what we are now proposing to do and there are dissenting opinions within the Federal Reserve system itself:
For the next eight months, the nation’s central bank will be monetizing the federal debt.This is risky business. We know that history is littered with the economic carcasses of nations that incorporated this as a regular central bank practice. So how can the [‘quantitative easing’] decision made last Wednesday be justified?
Richard W Fischer – Recent Decisions of the Federal Open Market Committee: A Bridge to Fiscal Sanity? Federal Reserve of Dallas 8 Nov 10
So which is it? Well, that all depends on whose telling the story. But it’s already a done deal.
The bailout of failing financial institutions in 2008-09, while arguably necessary, missed an essential step which may now be stalling our economic recovery:
Specifically, [former Chairman of the Federal Reserve Alan Greenspan] said today in a panel discussion at a Fed conference in Jekyll Island, Georgia:
Banks operated with less capital because of an assumption they would be rescued by the government, he said. [Lehman Brothers] wouldn’t have failed with adequate capital, he said. “Rampant fraud” was also an issue, he said.“Fraud creates very considerable instability in competitive markets,” Greenspan said. “If you cannot trust your counterparties, it would not work.”
Greenspan is right.
George Washington – Even Greenspan Admits that Moral Hazard and Fraud are the Main Problems Washington’s Blog 7 Nov 10
This is highly out of character for Greenspan who once noted, “I don’t think there is any need for a law against fraud.” And he was hardly alone.
Underlying the outcome of the recent midterm shift in our political landscape is the almost universal acknowledgement that the electorate is not happy. Down on Congress, certainly, concerned about the direction the country is headed and pessimistic that things will change any time soon. We all seem to understand it’s because our economy is broken and we are broke, and more importantly the remedies we’ve applied are widely unpopular. Looking back to 2008 one is staggered by the cupidity of those whom ‘free market’ theory entrusted with our national economy:
Wall Street has turned the economy into a giant asset-stripping scheme, one whose purpose is to suck the last bits of meat from the carcass of the middle class.What really happened to [Bear Stern] and [Lehman Brothers] is that an economic drought temporarily left the hyenas without any more middle-class victims – and so they started eating each other, using the exact same schemes they had been using for years to fleece the rest of the country. And in the forensic footprint left by those kills, we can see for the first time exactly how the scam worked – and how completely even the government regulators who are supposed to protect us have given up trying to stop it.
This was a brokered bloodletting, one in which the power of the state was used to help effect a monstrous consolidation of financial and political power. Heading into 2008, there were five major investment banks in the United States: Bear, Lehman, Merrill Lynch, Morgan Stanley and Goldman Sachs. Today only Morgan Stanley and Goldman survive as independent firms, perched atop a restructured Wall Street hierarchy. And while the rest of the civilized world responded to last year’s catastrophes with sweeping measures to rein in the corruption in their financial sectors, the United States invited the wolves into the government, with the popular new president, Barack Obama – elected amid promises to clean up the mess – filling his administration with Bear’s and Lehman’s conquerors, bestowing his papal blessing on a new era of robbery.
To the rest of the world, the brazenness of the theft – coupled with the conspicuousness of the government’s inaction – clearly demonstrates that the American capital markets are a crime in progress.
Matt Taibbi – Wall Street’s Naked Swindle Rolling Stone 15 Oct 09
Could it really be that bad? America seems to think so and the widespread disaffection with both political parties will continue until it is fixed.
Back during Prohibition federal agents were used to break up the crime syndicate of Chicago’s Al Capone, using federal law, because local law enforcement was unwilling or unable to do so. Unsuccessful bribery attempts by the syndicate were widely publicised, hence their nickname.
Now the situation seems reversed, with state attorneys general taking virtually the only steps to investigate allegations of fraud, in this case state law governing evidence submitted by plaintiffs, which have arisen from foreclosures nationwide:
Ever since the financial crisis began two years ago, the federal overseers of the banking industry have been consistently unwilling to take the rod to the institutions they regulate. The robo-signing scandal – and it is, unquestionably, a scandal – hasn’t changed that attitude one iota.The Treasury Department and the Federal Reserve have made it clear that they are more concerned about keeping the foreclosure mill going full speed than they are about determining whether the banks broke the law. Somehow throwing people out of their homes quickly is supposed to help the economy.
Joe Nocera – The States Take on Foreclosures NYT 29 Oct 10
On 13 October forty-nine states, now joined by Alabama, announced a joint investigation into allegations of fraud and perjury resulting from submissions by mortgage servicers and their agents in foreclosure cases:
“This is not simply about a glitch in paperwork,” said Iowa Attorney General Tom Miller, who is leading the probe. “It’s also about some companies violating the law and many people losing their homes.” […]“What we have seen are not mere technicalities,” said Ohio Attorney General Richard Cordray. “This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgements based on fraudulent evidence.”
Alan Zibel – Officials in 49 states launch foreclosure probe AP via MSNBC 13 Oct 10
While there was initially some doubt that this probe would produce significant results there are signs the states’ attorneys general are increasingly concerned with their findings and may take an aggressive role in asserting state law, tightening requirements in their court procedures and establishing evidence which may eventually lead to criminal prosecutions.
Back in April the House of Representatives passed a bill known as HR 3808, the Interstate Recognition of Notarizations Act of 2010 and sent it to the Senate where it languished in the Judiciary Committee until late September. The circumstances of the passage of this bill in the Senate are curious, to say the least. It was discharged from committee and passed by unanimous consent, with no debate, just as the 111th session of Congress was coming to a close.
The bill is relatively simple:
Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if –(1) such notarization occurs in or affects interstate commerce; and
(2) (A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or (B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.
Superintendent of Documents – H. R. 3808 GPO 111th Congress
Seems pretty innocuous, really, but in the context of emerging reports of foreclosure fraud at the time it qualified for notorious distinction as the ‘silver bullet’ which banks were hoping would solve their documentation problems and earned itself a presidential veto.
The Federal Reserve has bought a ‘staggering’ $1.2 trillion of bad debt since the beginning of the sub-prime mortgage and credit crisis of 2008. There is considerable evidence that this bad debt was a direct consequence of faulty, if not outright fraudulent, processes which pervaded the securitisation of this debt during the housing boom:
Faulty underwriting appears to be prevalent across the board, with originators complicit in overvaluing both the lender and the collateral at the point of underwriting – and doing so systematically.Julian Fisher – How the mortgage mess could spread beyond sub-prime Reuters 22 Oct 10
Under the circumstances, with the failure of Lehman Brothers and the imminent collapse of credit threatening major financial institutions, an injection of public capital seemed prudent, perhaps even inevitable. Yet although these systemic problems were widely suspected there have been virtually no regulatory penalties or criminal prosecutions. In fact the government has simply absorbed the losses on our behalf:
The U.S. government and the Fed had a stark choice: either impose the rule of law and indict and convict hundreds, if not thousands, of people who perpetrated and profited from the systemic fraud and embezzlement at the heart of the mortgage and mortgage-securities industries, or socialize the corrupted, poisoned markets and use taxpayer funds to prop up the wizened shell of a stripmined market and reward the criminals with freedom.They chose to reward the criminals and prop up a simulacrum market with only one buyer: the Federal Reserve. You can go to the the Fed’s balance sheet and see the $1.2 trillion in mortgage-backed securities it owns.
Charles Hugh Smith – U.S. Financial Markets: The Well Has Been Poisoned Of Two Minds 23 Oct 10
From Karl Denninger’s chart you can see the debt is still there but it is now the taxpayers’ liability. The profits, however, have been retained by the financial institutions with the hope that their solvency will be the first step towards our economic recovery. But what are the consequences for consumers, homeowners and taxpayers?
So stock markets around the world are bouncing back this morning, mainly because Europe and the US are combining in a united effort to solve the liquidity crisis by buying equity in the banking system.
Unlike the US Treasury’s original bailout plan (which merely involved purchasing the toxic debt) this is a part emergency nationalisation of the banks. There are upsides and downsides. The main upside so far? The markets seem to believe it will work...
