Saturday, January 28, 2012

Occupied Winter of Our Discontent (continued)

I have to admit that when President Obama tapped New York Attorney General Eric Schneiderman to lead a brand spanking new investigation into banksterism, my first cynical thought was "co-optation." Schneiderman would be just the latest in a long line of Democratic malcontents and holdouts to be taken on a figurative ride on Air Force One, emerging chastened, rewarded and mouthing "don't let the perfect be the enemy of the good" platitudes.

But there is reason to hope today that the pending sweetheart deal between the banks and the Obama administration may not be as sweet as the Big Five Banks had been hoping for. Schneiderman last night announced a relatively limited proposal: in exchange for a $25bn payout to victims of the robo-signing foreclosure fraud, there will be no criminal prosecution from the states which agree to the deal.  But the blanket perpetual immunity from punishment for the entire panorama of financial felonies apparently is not to be. The state agreement would not preclude the feds (read: Schneiderman and his posse of IRS and FBI agents) going after mortgage fraudsters.

Some of those skeptical that Barack Obama would ever go after the banking hand that feeds him were expressing mild shock today that there might be a Grand Perp Walk of Bank CEOs after all.  Remember, the president has stated time and again that he had no interest in punishing the banks. But then something called Occupy Wall Street came along, and made him an offer he couldn't refuse: investigate and prosecute, or we will hound you wherever you go.  Plutocracy or not, the United States still requires that presidents be voted into office. And savvy politician that he is, Obama knows which way the wind is blowing.

Sam Stein of The Huffington Post reports that banks will still be vulnerable in the following categories:
  1. Criminal liability.
  2. Tax liability
  3. Fair lending, fair housing, or any other civil rights claim.
  4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
  5. CFPB claims for the period after they came into existence in July 2011
  6. SEC claims
  7. National Credit Union Association Claims
  8. FDIC claims
  9. Federal Reserve Board claims
  10. MERS claims
Early reports from the banking sector in the wake of Friday night's announcement and the revelation that Schneiderman's task force has already issued subpoenas show them to be borderline-panicked and indignant. Rupert Murdoch's New York Post ran a McCarthyesque red scare editorial screaming that Schneiderman was "shaking down the banks" and how dare he leave the door open to future criminal prosecution after the banksters pay up in good faith? It's the same old canard used by Timmy Geithner and Co.: if you upset the too-big-to-fail banks, the whole world will collapse. From the right-wing Post:

Besides, the prospect of future court action, should Schneiderman prevail, sure won’t help the economy.
On the other hand, demonizing financial institutions in populist fashion might help rile up the left — which, no doubt, is what Obama and Schneiderman care about most.
New York’s union cat’s-paw, the left-wing Working Families Party, is already tickled pinko — er, pink — with Schneiderman’s appointment, calling it “a big victory for the 99 percent.”
For America and New York, a world financial center, it sounds more like disaster.
Matt Taibbi of Rolling Stone is cautiously optimistic that Obama's back may finally be up against the wall on Wall Street. He says the robosigning scandal is really small potatoes compared to what really went on and what remains unpunished:
The securitization offenses were massive criminal conspiracies, identically undertaken by all of the big banks, to defraud investors in mortgage-backed securities. If you’re looking for an appropriate target for a massive federal investigation, one that would get right to the heart of the corruption of the crisis era... well, they picked the right target here. If they were to do a real clean sweep on securitization, the federal prisons would end up literally teeming with senior executives from the biggest banks. A lot of very big names would end up playing ping-pong and cards in Otisville and Englewood.
It may end up being a case of Neopopulist Obama being forced to act upon his own words as much as it pains him to do so. Taibbi adds: "One thing we do know: Obama’s decision to tap Schneiderman publicly, and dump Geithner, and whisper about a millionaire’s tax, signals a shift in its public attitude toward the Wall Street corruption issue. The administration is clearly listening to the Occupy movement. Whether it’s now acting on their complaints, or just trying to look like it’s doing something, is another question. It’s way too early to tell. But it’s certainly very interesting".

And as for Schneiderman's being co-opted, Dave Dayen of Firedoglake writes that the AG has promised to publicly disavow the task force and publicly walk away if he is in any way impeded. I think the only thing we can do for now is give him some time to put his money where his mouth is. But not too much time.

Gretchen Morgenson of the New York Times has written an excellent piece on Obama's task force for her "Fair Game" series about the nefarious banking system. The upshot: if they don't do something big very soon, what little credibility they have left will be shot.

Another glass-half-full observation: for the first time in its elite 0001% history, the World Economic Forum at Davos has heard the "inequality" word uttered. Occupiers are camped out in igloos. Severe income disparity may not be so healthy for capitalism. Greed may not be so good after all, even for the greedheads. The parasite eventually bleeds the host dry. The cancer dies right along with the victim.


Denis Neville said...

“Obama knows which way the wind is blowing.” Happy Talk In the Winter of Our Discontent ?

So instead of Schneiderman using his considerable powers as the AG of NY to go directly after the banksters, he instead becomes co-chair of a task force, where he will be in the minority?

Matt Stoller at Naked Capitalism points out two underlying structural problems with the Federal task force on financial fraud:

“One, it is the policy of the administration to protect the banking system’s basic architecture. Any real investigation into the financial collapse will inevitably lead to the collapse of this architecture. Thus, any real investigation will be impeded when it begins to conflict the basic policy framework of the Obama administration. And this framework is set by Obama. It’s what he believes in. He made this clear in his first State of the Union, when he said a priority of the administration was to ensure that ‘the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.’”

“Two, Obama personally believes in the legitimacy of the existing banking institutional framework and he strongly suspects that no crimes were committed.”

“The Obama administration’s posture is not passive because Obama is weak, it is passive because President Obama and his administration believe passivity towards business interests is the appropriate role of government. Schneiderman does not believe this, he wants to govern. And that’s why he wants this Federal task force, because the Federal government has more resources and tools (including legal authority, personnel, jurisdiction, and documents) that he needs to do a reasonable job explaining to the country through the use of the Justice system what happened in the multi-trillion theft and why.“

However, Stoller points out that the Financial Fraud Enforcement Task Force’s New Residential Mortgage-Backed Securities Working Group has a total of just 55 people, 10 of whom are FBI agents. “During the Savings and Loan crisis, Bill Black reminds us that there were about a thousand FBI agents working on the various cases. That’s one hundred times the number of people working on a scandal that is about forty times larger and far more complex…So we see that this is a not a serious deployment of government resources to unmask a complex economy-shaking financial scheme. It just isn’t.”

“My guess is that at least one reason (but not the only reason) for agreeing to this is that Schneiderman believes he needs the extra resources to investigate the mortgage crisis. But the resources of the Federal government have proven useless because the people who are in government are uninterested in and incapable of holding financial interests accountable for their behavior.”

“There are reasons Schneiderman wants to have Federal resources to bear on this problem, but this is a drop in the bucket compared to what is needed, and the leadership with whom Schneiderman needs to work simply doesn’t believe they have done anything wrong. To them, this is business as usual.”

“Depending on how it’s organized, this task force gives state AGs more jurisdiction, access to the investigative resources and documents done by the Feds so far, and a few FBI agents and lawyers. Still, that’s not nearly enough.”

“Will it work? I’d expect a few semi-significant actions in the months ahead, complaints or indictments perhaps. We’ve already seen some subpoenas. But without a major figure investigated and prosecuted (like if Vikram Pandit were really prosecuted for Sarbox violations), the administration’s policy of preserving the existing banking structure is the dominant policy framework.”

P.S. Scheiderman will be on Up w/ Chris Hayes Sunday morning.

James Singer said...

The Taibbi blog is good. I especially liked this paragraph:

"Seriously: despite what people think, the crimes we’re dealing with are not terribly complicated, and any veteran investigator would grasp the basic concept – taking worthless crap and selling it as high-end merchandise – within ten minutes. The most important element contributing to the success of a committee like this is a locked room full of clean hands. And {Schneiderman's co-chairs] Breuer and Khuzami are not a good start."

Jay - Ottawa said...


Matt Taibbi:
"The administration is clearly listening to the Occupy movement. Whether it’s now acting on their complaints, or just trying to look like it’s doing something, is another question. It’s way too early to tell."

I've been here before. So were you. November 4, 2008.

Even if there is follow-through on Schneiderman's offer, $25 billion is chump change when you're at the big table with gamblers playing with trillions.

Of other people's money.

Which makes no wrinkle in their pockets after you subtract $25 B.

Will that $25 B save the million homes on the conveyor belt to foreclosure this year alone? Will that $25 B come out of individual CEO pockets or the bottomless pool they siphoned away from the Fed and 401Ks?

Pure skepticism and a little memory will keep me from seeing Obama as the Prodigal Son come home -- just in time for November 6, 2012. I'll be available for conversion back into the Obama camp no sooner than, say, late 2016, when I have a fresh record to counterbalance the one in hand, which is long, real and uniformly wanting.

"Way too early to tell."

Zee said...

Ms. Garcia--

Per my comment of January 25 ("SOTU, Barackus?") I would absolutely LOVE to see a "Grand Perp Walk of Bank CEOS" as you so wonderfully put it.

Still, unless I see some serious jail time meted out between now and Nov. 6--unlikely at best--I will have to suspect this latest news to be a pre-election publicity stunt, "full of sound and fury Signifying nothing."

Anonymous said...

I vote with the cynics. It's probably a way to control that wildcard Schneiderman, and probably a ploy for votes and financial support from the Occupy-minded. But there is a third possibility I would like to throw out.

Maybe this is a thinly-veiled threat of real trouble for Wall Street in exchange for something valuable, like a shakedown for more money or support for Obama's re-election, or moving manufacturing here post-haste to boost the economy and ensure his re-election chances.

Obama he has already 'negotiated' with them in his hallmark way: give away the house, then politely ask for something back, all while having a secret agenda which will be worked out in backrooms with the biggest power players.

What we are seeing happening now is a result of Obama not getting anything back. The polite phase is over. Here comes the last quarter of his 'long game'. Obama has given them every key seat in the White House, a bunch of Get-Out-of-Jail-Free cards, and public assurances that nothing illegal happened and he doesn't want the banks to be punished anyway. His usual 'losing' position in negotiations. Ha, ha. Those were his signals that a bargain was being offered.

But the key question is this: What did Obama get in return? What have they done for him lately? Obama has his limits, especially when it comes to someone making him look bad and not reciprocating. And he can play hardball. Remember that his all-time favorite movie is The Godfather. He loves powerplays.

Here's some background to my speculation: Over the past year or so of watching CSpan, I have heard the Chamber of Commerce and even Jeffry Immelt, among others, openly complaining about the 'lack of leadership in this country'. They were messaging their troops, and it didn't sound supportive of Obama to me. I heard it repeatedly.

After the big shots didn't get absolutely everything they thought they were entitled to, they trash-talked him. They didn't uphold their part of the bargain as Obama thought they would, and now he is threatening to rescind it. He may seem soft, but he always has a backup plan, and the time has come to implement it. I don't think it has anything to do with the country though, or making things better. It's just a powerplay.

As with Simpson-Bowles, it now depends on how much Obama gets out of Wall Street now as to how much clout or effect the Commission will actually have. I think it is more like 'leverage' and kills two birds with one stone: puts a leash on Schneiderman, and Obama gets a weapon to threaten Wall Street with.

I think Shakespeare would agree.

Anne Lavoie said...

Oops. That Anonymous was me. My finger slipped and it got sent before I had a chance to preview my stream-of-consciousness musings.

DreamsAmelia said...

I tend to agree with the skeptics too, that this _is_ a shakedown for more campaign cash--Per copyright laws, I'm not allowed to clip and paste, and the New York Times newspaper articles from the 1920s-30s are just too numerous to cite--but most public libraries now have online collections via a free library card that give you unlimited online access to all the archives of newspapers--in the case of The Times, Tribune, and Post, since their inception--

To spend even one afternoon reading original, "real-time" reportage of the crashes of 1873-79, 1929, the very first Ponzi, and the Pecorra commission, is to read a moral tone that is so utterly different than today. The press seemed so much more 99 percenters, pretty much like bloggers are today. The predominant tone was of the Taibbis of their day-- Pecorra was a real folk hero and glorified by the press--his wimpy predecessors scalded--

With the implementation of the Glass-Steagall Act, he created a rule as simple and self-evident as the preamble to our Constitution: if you want to gamble, keep your hands off our money! Our money will be safe in depository-only banks--Investment banks will be house of gamble--and never the twain shall meet--and in those days, investment banks were with investors' own money, not borrowed from the U.S. government and other derivatives schemes. Bribery was more covert, not overtly legalized as our current lobbying system is. Yet corruption and predatory schemes that wiped out huge swaths of the 99percent abounded in too many schemes to name or regulate. That is why the moral winds of the Pecorra commission were so cleansing.

Here is one whiff of the typical tone of headlines from Sept 25, 1924:

"Judge Says Ponzi Will Fleece People Again; No Greater Idiots Than Investors, He Adds"

From the article:
Judge Anderson took occasion to predict that "Ponzi shortly will return to the financial field with a new scheme and the public, with the same old mob psychology, will turn to him again with their hard-earned savings.
"For egotism, arrogance, and fundamental scoundrelism, Ponzi had no equal," asserted the Court, characterizing "the wizard" as a "parasite."

Contrast that to the mealy-mouthed Judge Chin, who in sentencing our modern day ponzi, Madoff, could only blandly describe his conduct as "extraordinarily evil," while the Times runs sympathetic puff pieces about Ruth and the sons.

Y'ad think that the press has so much skin in this game of dire job loss they'd be rooting for a little modern day economic fairness. But I guess the press that still is employed thinks they'll do better casting their lot for the crumbs of the 1%. Or they're forced to report that way by their corporate sponsors. So we can count on them to thwart any efforts by Schneiderman, just like they blacked out reporting the findings of the Financial Crisis Commission.

Denis Neville said...

Neopopulist Obama?

Where are the banking fraud prosecutions, President Obama?

Financial theft has been a growth industry because of excessive reliance on the financial sector for advice, campaign donations, and the revolving door between Wall Street and Washington.

Michael Hudson writes, “The urgent issue is who will control the economy: governments, or the financial sector and monopolies with which it has made an alliance.”

“…the banks now browbeat governments – not by having ready cash but by threatening to go bust and drag the economy down with them if they are not given control of public tax policy, spending and planning. The process has gone furthest in the United States. Joseph Stiglitz characterizes the Obama administration’s vast transfer of money and pubic debt to the banks as a “privatizing of gains and the socializing of losses. It is a ‘partnership’ in which one partner robs the other.” Prof. Bill Black describes banks as becoming criminogenic and innovating “control fraud.” High finance has corrupted regulatory agencies, falsified account-keeping by “mark to model” trickery, and financed the campaigns of its supporters to disable public oversight. The effect is to leave banks in control of how the economy’s allocates its credit and resources…

“Already a century ago the outlines of a productive industrial banking system were well understood. But recent bank lobbying has been remarkably successful in distracting attention away from classical analyses of how to shape the financial and tax system to best promote economic growth – by public checks on bank privileges…

“Governments can create new credit electronically on their own computer keyboards as easily as commercial banks can. And unlike banks, their spending is expected to serve a broad social purpose, to be determined democratically. When commercial banks gain policy control over governments and central banks, they tend to support their own remunerative policy of creating asset-inflationary credit – leaving the clean-up costs to be solved by a post-bubble austerity. This makes the debt overhead even harder to pay – indeed, impossible…

“Banking has moved so far away from funding industrial growth and economic development that it now benefits primarily at the economy’s expense in a predator and extractive way, not by making productive loans. This is now the great problem confronting our time. Banks now lend mainly to other financial institutions, hedge funds, corporate raiders, insurance companies and real estate, and engage in their own speculation in foreign currency, interest-rate arbitrage, and computer-driven trading programs. Industrial firms bypass the banking system by financing new capital investment out of their own retained earnings, and meet their liquidity needs by issuing their own commercial paper directly. Yet to keep the bank casino winning, global bankers now want governments not only to bail them out but to enable them to renew their failed business plan – and to keep the present debts in place so that creditors will not have to take a loss.”

Denis Neville said...

“The Washington-Wall Street Revolving Door Keeps Spinning,” Bill Moyers and Michael Winship,

“We’ve already made our choice for the best headline of the year, so far: ‘Citigroup Replaces JPMorgan as White House Chief of Staff.’”

“It’s startling the number of high-ranking Obama officials who have spun through the revolving door between the White House and the sacred halls of investment banking…it says a lot about how Wall Street and Washington have colluded to create the winner-take-all economy that rewards the very few at the expense of everyone else.”

• Jack Lew, President Obama’s new chief of staff, used to work for the giant banking conglomerate Citigroup, were he ran hedge funds and private equity . His last job was as head of President Obama’s Office of Management and Budget, where he replaced Peter Orzag, who now works as vice chairman for global banking at Citigroup.
• Bill Daley, his predecessor used to work at the giant banking conglomerate JPMorgan Chase, where he was maestro of the bank’s global lobbying and chief liaison to the White House.
• Rahm Emanuel, Dailey’s predecessor, worked for the investment bank Wasserstein & Company, where in less than three years he was paid a reported eighteen and a half million dollars.
• Robert Wolf, Obama’s new best friend for playing basketball, golf, and talking economics (when Wolf is not raising money for the president’s campaign), runs the U.S. branch of the giant Swiss bank UBS.

“And so it goes, the revolving door between government service and big money in the private sector spinning so fast it becomes an irresistible force hurling politics and high finance together so completely it’s impossible to tell one from the other.”

Savvy politician that he is, Obama knows which way the wind is blowing. Indeed he does!

And it is definitely not blowing in our (the 99%) direction.

Zee said...

@Denis Neville--

I am slowly making my way through the various papers by Hudson, Galbraith and Bezemer to which you referred me a few days ago, at the cost of a tree or two; my tired old eyes can only read so much on the computer display and then I have to resort to hard copy.

I have also been following up on various other papers and books to which this reading has led me.

Is The Predator State by Galbraith a book that you would recommend?

Denis Neville said...

Revolving Doors

First Street 30’s Top Federal Lobbyists, the most influential and connected lobbyists, who pull in the most money, have the most clients, and represent the biggest corporations. They include ex-members of Congress, ex-congressional staffers, and professional lobbyists.

After every election, the Revolving Door spins a little faster, as headhunters for lobbying firms and interest groups snatch up departing government officials and aides. The members of Congress shown with the greatest number of staffers who either came to Capitol Hill after representing private interests, or left the member's staff for a lobbying position, are listed at

According to The Center for Responsive Politics, 370 former members are in the influence-peddling business; at least 285 are now registered as federal lobbyists; 85 are not formally registered as lobbyists, but provide “strategic advice” to corporate clients or perform work classified as public relations.

Just look at role of former Democrats in representing corporate America (the 1%) in those lists.

Look at the revolving door between the White House and the sacred halls of investment banking.

Thomas Frank, in “What’s the Matter with Kansas?” the lesson for the Democrat Party's [and for Obama] “utter and final repudiation of their historical decision to remake themselves as the other pro-business party” - “By all rights the people…should today be flocking to the party of Roosevelt, not deserting it. Culturally speaking, however, that option is simply not available to them anymore. Democrats [Obama] no longer speak to the people on the losing end of a free-market system that is becoming more brutal and arrogant by the day…But along the way the things that liberalism once stood for – equality and economic security – will have been abandoned completely. Abandoned, let us remember, at the historical moment when we need them most.”

Neil said...

The New York Daily News reported January 26, 2012 that the Treasury Department approved huge bonuses for executives at firms who received TARP bailout money.

The bullshit occurred despite a $500,000 salary cap that President Obama and Congress established in 2009 at firms receiving "exceptional assistance" under TARP.

"The government approved a $10.5 million package for AIG chief executive Robert Benmosche." Twice. Even though AIG is 70% owned by you and me as taxpayers.

"The Treasury Department approved pay packages worth $5 million or more for 49 executives at a handful of firms that received the biggest taxpayer bailouts between 2009 and 2011."

Do you recall that Ken Feinberg was supposed to control this bullshit? Read this quote:

"Treasury Department and Federal Reserve Bank of New York officials joined behind the scenes with the bailed-out firms to repeatedly pressure Kenneth Feinberg, the special federal master overseeing the compensation packages, to approve higher salaries, the audit found. Feinberg had the power to allow waivers to the cash cap, but the report found the program’s contradictory goals meant "he could not effectively rein in excessive compensation."

And for those Sardonicky readers who may feel "cash poor" at the moment, consider this quote:

"The CEO of one bailed-out firm, Ally Financial, actually complained that one of his underlings, who was paying for private school for his kids, would be "cash poor" if relegated to a salary of just $500,000."

Can you imagine the horror of being relegated to a salary of just $500,000?

But AIG takes the cake with this bullshit:

"The audit looked at seven of the biggest TARP recipients — Citigroup, Bank of America, AIG, General Motors, Ally, Chrysler, and Chrysler Financial. Two of those, Citigroup and Bank of America, paid back their government loans before the end of 2009, so they would be free to pay their execs whatever they wanted."

"Of the remaining companies, AIG repeatedly insisted on the biggest pay packages and represented 80% of Feinberg’s "headaches," the audit said. The company received more than $180 billion in federal bailout money in 2008, and even today, after paying back billions, it is still 70% owned by the federal government."

"But at the recession’s height in spring 2009, AIG had the audacity to press Feinberg for raises ranging from 20% to 550% for its top employees, the report said. Backed by top Treasury aides, AIG argued that unless it got those raises, key people would leave and the government would not get its money back."

But this, by far, is beyond bullshit:

"What’s more, AIG wanted those salaries in cash, not stock. Company execs confided to Feinberg that the firm’s common stock was "essentially worthless," the report said."

In my view if the firm’s common stock was "essentially worthless" it was time for bankruptcy rather than throw good money after bad.

Disabuse yourselves that Obama will give you, the 99 percent, anything more than crumbs. Mitt Romney may be just another capitalist whore, but in my view he is better positioned to deal with this bullshit than Obama, who is an incompetent worse than George Bush. (when you consider the NDAA, and his policy of using drones to kill American citizens on a hit list, etc. etc.)

Not only will the criminals WALK FREE, Obama will make sure their pockets are full of CASH, since the stock may be worth SHIT.

So this is our choice for president? Two lawyers, one incompetent, and the other a capitalist whore? Is this the best we can do?

James F Traynor said...

Oh yeah! You got it, Karen, our own little terrier, and so does Taibbi, Morgenson, Dayen et al. And it has been going on - lo this last 30 years or more. I saw the shapings of it when my wife dragooned me into managing, what seemed to be, our dismal financial future. While frantically charging around assembling information and keeping my eye on our infinitesimally
small financial ball I began to see a pattern emerging in the background.
The banking system was in turmoil. At the same time stock options were becoming the executive paycheck and there was resulting tension in the relation between accounting firms and Fortune Five Hundred board rooms to make the picture rosier on profits in order to goose the price of stocks. The cavalry in the person of politicians from both the Republican, especially the Republican, and Democratic (as personified by the likes of the Clintons and our own Obama) Parties came charging to the rescue. The laws were changed to suit what was formally fraud and make it oh so legal.

Neil said...

Link to a NYT story, U.S. Faulted Over Pay at Rescued Firms, January 24, 2012

"In one bargaining session, the chief executive of Ally Financial offered the example of an employee making $1.5 million, with $1 million of it in cash."

"This individual is in their early 40s, with two kids in private school, who is now considered cash poor," Ally’s chief explained, adding that such people "would not meet their monthly expenses" if the new rules were followed."

"A.I.G., G.M. and Ally still collectively owe the taxpayers about $87 billion."

Link to SIGTARP, Office of the Special Inspector General for TARP

Link to the SIGTARP Special Master’s 78 page report of January 23, 2012

The one percent have their winning strategy. What is the strategy of the 99 percent? More encampments that are shut-down, more protesters pepper-sprayed by the cops?

On this blog I have read criticism of Zee’s reference to, and knowledge of firearms. That is exactly what the one percent wants too. The one percent does not want any talk of violence because they are outnumbered - 99 to 1.

Denis Neville said...

@ Zee - Is The Predator State by Galbraith a book that you would recommend? Yes.

L. Randall Wray, UMKC /Kansas City School of New Economics and a Senior Scholar at the Levy Economics Institute, reviews the Predator State here:

I also recommend reading Galbraith’s written statement to members of the Senate Judiciary Committee, Subcommittee on Crime in May 2010.

“The appropriate response to the existence of pervasive fraud, involving millions of mortgages, thousands of appraisers, underwriters, analysts, and the executives of the companies in which they worked, as well as public officials who assisted by turning a Nelson’s Eye...”

“The complexity of the mortgage finance sector before the crisis highlights another characteristic marker of fraud. In the system that developed, the original mortgage documents lay buried – where they remain – in the records of the loan originators, many of them since defunct or taken over. Those records, if examined, would reveal the extent of missing documentation, of abusive practices, and of fraud…

“Control frauds always fail in the end. But the failure of the firm does not mean the fraud fails: the perpetrators often walk away rich. At some point, this requires subverting, suborning or defeating the law. This is where crime and politics intersect. At its heart, therefore, the financial crisis was a breakdown in the rule of law in America…

“Is it possible for mortgage originators, ratings agencies, underwriters, insurers and supervising agencies NOT to have known that the system of housing finance had become infested with fraud? Every statistical indicator of fraudulent practice – growth and profitability – suggests otherwise. Every examination of the record so far suggests otherwise. The very language in use: “liars’ loans,” “ninja loans,” “neutron loans,” and “toxic waste,” tells you that people knew. I have also heard the expression, “IBG,YBG;” the meaning of that bit of code was: “I’ll be gone, you’ll be gone.”

“You have to act. The true alternative is a failure extending over time from the economic to the political system. Just as too few predicted the financial crisis, it may be that too few are today speaking frankly about where a failure to deal with the aftermath may lead.

“In this situation, let me suggest, the country faces an existential threat. Either the legal system must do its work. Or the market system cannot be restored. There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case.”

Neil said...

@ Denis
"In this situation, let me suggest, the country faces an existential threat. Either the legal system must do its work."

Legal system must do its work? LOL!

The "work" of the legal system is self-perpetuation at hourly rates of $250+

What is the definition of a judge? A lawyer who can no longer earn a living practicing law.

BTW, hat tip to Matt Weidner’s blog for the SIGTARP story. Matt is one of the exceptions, a Florida lawyer fighting for the American people. He was recently summoned to Tallahassee explain himself.

From the Matt Weidner blog, January 22, 2012: Forgive Them, They Know Not What They Are Doing- A Gutwrenching Story

"Last week I made a pilgrimage of sorts. I traveled to Florida’s Capitol City, Tallahassee. The trip was long, inconvenient and expensive and quite frankly I did not exactly go willingly. I had been summoned to the Capitol as part of my punishment for speaking out, but I do not want to dwell on that. I decided that I would take in all the experience had to offer and truly use the experience to gain and deliver understanding."

"My core message is that our nation and our state are in grave peril because we are no longer a nation of laws. The legislative and executive branches are entirely captured by the corruption of corporations and the judicial branch has withered into a twig. This disturbing reality is most clearly demonstrated in the State of Florida where the corporations that own our government have whittled down the budget of our (their) entire judicial system to less than 1% of the state government budget. Fundamentally, I want judges, attorneys and all thinking people to wake up and begin speaking out against the tyranny that this disturbing situation presents. This profession of The Law especially, must especially stand up and begin advocating for a restoration of the Rule of Law that we have all taken an Oath to uphold."

"There is indeed a very real urgency because this nation is going to be rocked by revolution, of that I am sure. Whether it is relatively bloodless or chaotic and completely out of control depends entirely on when the existing power structures acknowledge that there is no turning back. The thinking population despises our corporate-owned government and is increasingly agitated by the void that exists between serving The People and rendering unto Wall Street all that it has purchased. The corporate/government contract will be broken and change will come… it or not."

Denis Neville said...

@ Neil – “this nation is going to be rocked by revolution, of that I am sure”

Yes, and that was Galbraith’s warning, which has not been heeded, and will continue to be ignored.

Witness our neopopulist POTUS getting out among every day, ordinary Americans last night.

Obama hung out with the most elite of them all, the Alfalfa Club, Saturday night.

“You’ve heard it from the pundits: ‘Obama is cloistered in the White House.’ ‘He’s aloof.’ ‘He’s in the bubble.’ ‘He’s not connecting.’ And that’s why one of my big goals this year was to get out and be among every day, ordinary Americans — like the men and women of the Alfalfa Club.” - POTUS

How every day, ordinary were they? What is the Alfalfa Club anyway?

A power-broker’s fraternity (and sorority, now, since it admitted women in 1994) that exists solely for the purpose of hosting an annual dinner on the last Saturday in January to honor the birthday of Robert E. Lee.

Notice that he didn't refer to them as "folks," like he does when referring to the rest of us in the bottom 99%.

Barry and Mittens, two peas in the same pod, two different versions of the status quo, one 1%-approved stooge taking on the other 1%-approved stooge.

Occupy D.C. also attended the Alfalfa Dinner. The who’s who of Washington elite had to walk a gauntlet of Occupy D.C. protesters, throwing glitter, to make it to their steak-and-lobster meal.


Neil said...


Revolution? Nah, that might affect someone’s FICO score…(thanks Cat)

Denis Neville said...

@ Neil - Revolution?

“Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin
slitting throats.” - H.L. Mencken

Mainstream Media Idiot Alert

“Democracy is the worship of jackals by jackasses.” - H.L. Mencken

Never before in the history of America have so few tried so hard to destroy so many.

Today on NBC Meet The Press, David Gregory:

“But if you look at how dire the fiscal situation is in the country, we just came off a debt debacle this past summer. Alan Simpson responding to the State of the Union said, where’s the guts? Where's the hard stuff? Where's beef? Where are the hard choices that Americans are going to have to make? What are Americans going to have to do with less of if this president gets re-election? But we're not dealing with the big drivers of the debt, as you know. The debt commission that the president convened is not advice that he acted on. And the reality is that the fiscal situation is dire. If we're not dealing with entitlements--what, you talk about shared sacrifice…There was a new healthcare entitlement, but there was nothing dealing with the big drivers of the day… why not say to everybody, everybody's going to have to do with less in terms of a social safety net, in terms of taxes and all the rest.”

“...economic fairness or requiring the rich to pay more in taxes… So what did Governor Romney do that was unfair? Did he not play by the rules? Why doesn't that appear to be a more poll-tested position, which is if you really want shared sacrifice, then the middle class should pay taxes, too. I mean, roll back the Bush tax cuts for everybody rather than looking at the, you know, just having the rich pay more, which you look at polling and see that you have some political for. If it's shared sacrifice, why not say to everybody, everybody's going to have to do with less in terms of a social safety net, in terms of taxes and all the rest.”

Annie Oakley said...

@Neil said:
'On this blog I have read criticism of Zee’s reference to, and knowledge of firearms. That is exactly what the one percent wants too. The one percent does not want any talk of violence because they are outnumbered - 99 to 1.'

That solar storm must have really been a doozy! Where to start. Hmmm, let me load my brain ammunition first... Ok.

Outnumbered? First, the figures 1% and 99% are misleading. As right wingers remind us constantly 'Don't count me in with your 99%!' Many of them aspire to be in the 1%. When it comes to Corporatism vs. Anti-Corporatism, it might be more like 75% for and 25% against, or worse. Most people are stuck in the old paradigm of Republican vs. Democrat, or rich and successful winners vs. poor losers who demand a handout (Occupy). So if you count the RepubliDem Duopoly lackeys and the poor wannabee-rich, the 1% have quite a large and powerful Army. Boom!

By the way, why aren't we seeing the gunslingers carrying their weapons around to protest opposition to the Patriot Act, NDAA, or Corporatism? Some sound curiously encouraging of Occupy taking up arms. For what? For an enemy for them to fight as they heroically rescue their women and children from the Commie Occupiers? To start a violent Revolution for them? If gunslingers want a violent Revolution, I'm sure they know how to start one, and they don't need Occupy to do it for them....or... maybe they do.

Second, 'the 1% doesn't want any talk of violence'? Since when? They have enough money to live anywhere on earth and to have private guards and personal armies, not that they need them with government troops to do that job. They have been the biggest promoters and benefactors of violence in the world. That's how they acquired enough money to buy all branches of government, and why they continue to demand unending wars, such as the now ubiquitous War on Terror. It's the best gig going, and all on the taxpayer dime. They absolutely love violence and have no remorse over the consequences. Violence = Money. Boom!

Finally, violence plays right into their plans. Any threats or obstacles to their financial interests will be dealt with harshly, and the heavy-handed NDAA and Patriot Act just happens to serve them well. Most importantly, that quaint document called the Constitution has been a real impediment, as is the Justice system itself, which is why both are rendered almost useless thanks to them. There is a lot of valuable public and private property and resources they would love to get their hands on under the conditions of a national emergency and suspension of rights. Violence = National Security Threat = Martial Law = End of Constitution/Rights = Privatization of Everything. Boom!

It is much like what the American Indians went through, and we are just as outgunned and overpowered as they were then. Bottom line: Create smart people-powered alternatives, coalitions, and sheer brainpower to avoid getting trapped in THEIR area of expertise - violence. Then dismantle the corporate state, piece by piece, until it is the servant to our country and not the master, non-violently.

Neil said...

@Annie Oakley

I appreciate, but do not understand your post directed to me. I simply made a comment about what I observed. I did not advocate any of the things you claim.

You wrote: "Bottom line: Create smart people-powered alternatives, coalitions, and sheer brainpower to avoid getting trapped in THEIR area of expertise - violence. Then dismantle the corporate state, piece by piece, until it is the servant to our country and not the master, non-violently. Then dismantle the corporate state, piece by piece, until it is the servant to our country and not the master, non-violently."

Please educate me on how to "dismantle the corporate state, piece by piece, until it is the servant to our country and not the master, non-violently".

How is that accomplished, realistically, in our lifetime?

BTW, I do not understand your revolution theory as expressed. It is my understanding that successful revolutions seize power, then give the orders. The cops, military, and justice system do whatever they are told, by whomever is in charge. Its about strategy.

Denis Neville said...

Want to know what a police state looks like?

@ Annie Oakley – “dismantle the corporate state, piece by piece, until it is the servant to our country and not the master, non-violently”

Meanwhile, the master violently…

Police actions cost the city of Oakland hundreds of thousands of dollars, and they repeatedly violated their own crowd control guidelines and protester’s civil rights. ..Was it worth the hundreds of thousands of dollars they spent?

“Through everything that has happened since September, from Occupy to the acceleration of “Bills” — NDAA, SOPA, PIPA, ACTA — never have I felt so helpless and enraged as I do tonight. These kids are heroes, and the rest of the country needs to open its collective eyes and grab what remains of its civil rights, because they are evaporating, quickly. Do you want to know what a police state looks like? Well, you sure as hell still do not know unless you were watching our citizen journalists.” – Cathy Jones, Attorney for Occupy Oakland

Karen asked a great question in Paul Krugman’s “Destructive Austerity, USA”

“Isn't it also strange that municipalities and states laying off teachers and other public workers by the thousands always seem to have plenty of money for paramilitary police manpower and hardware to do battle with Occupiers protesting these very same cutbacks?”

Karen Garcia said...

Paul Krugman has an excellent column up about austerity and how it's not working and never will. Here's my response:

It’s hard to believe that it was only last summer that Debt Ceiling Crisis was playing in the Austerity Multiplex of D.C. We were all on the edge of our seats as President Obama offered a grand bargain of trillions in cuts, and John Boehner boasted of getting 98% of what he wanted. But this was still not enough to appease the GOP deficit hawks, and they continued in their frenzied race to sell us out to the highest bidders. The transition from democracy to fascism was proceeding by leaps and bounds.

But then came Occupy Wall Street, and our leaders were served notice that we are onto them. Their ploy of manufacturing crises out of whole cloth to stun the population into fear and awe is not working any more. People may have been injured by the misbegotten policies of our government, but we still have brains enough to realize when we’ve been had. The corruption has been exposed for all to see.

For the first time, the economic inequality message is drowning out phony deficit phobia. Shared sacrifice must be discarded for shared prosperity. The Democratic corporatist in the White House is being forced to change his rhetoric from “the government is just like a family and we have to tighten our belts” into calling for fairness and an accounting from banksters.

Election year or not, greater evil or lesser evil, we have to continue to make our voices heard. The politicians can either shape up, or ship out.

Denis Neville said...

Classic Loser Liberals

Karen said, "Last summer it was Debt Ceiling Crisis playing in the Austerity Multiplex of D.C… For the first time, the economic inequality message is drowning out phony deficit phobia."

This year there will be a lot of fighting over the tax code.

Dean Baker asks, “Do progressives have to be loser liberals?”

“If progressives restrict ourselves to fighting over the tax code, then we are playing in the sandbox. This is classic ‘loser liberals’.”

“Anyone trying to understand the role of the government in the economy should know that whatever it does or does not do by way of redistribution is trivial compared with the actions it takes to determine the initial distribution. Rich people don't get rich exclusively by virtue of their talents and hard work; they get rich because the government made rules to allow them to get rich.”

“There are many other ways in which government policy has acted to redistribute money from ordinary workers to 'the one per cent'This was done through the setting of the rules. And the amount of money at stake in designing these rules dwarfs the amount of money that we might fight over when we talk about a tax policy that redistributes ‘resources from the affluent to the needy’.”

“The real battle is over setting the rules, not shuffling around a few crumbs after the fact. The issue is not, as some have put it, leaving our neighbor by the side of the road. The issue is that our neighbor has been thrown off the bus. The first step towards getting him back on the bus is to say as loudly and clearly as possible exactly what happened.”

Annie Oakley said...


1. Vote ONLY for candidates whose goal is to dismantle The Empire, which is literally and figuratively sapping the lifeblood out of people here and abroad, but which gives vitality, money, and power to the Corporate State. Neither the Justice nor Green Parties even mention that 800-pound gorilla in America's living room. It is mortifying that only a Republican/Libertarian does, but at least there is one.

If we 'Don't let the perfect be the enemy of the good', what is our preference for '#1 Good', and who will fight for it? If our preference for #1 Good is the Mass-Murder-For-Profit Corporate-Government scheme called Empire, our choice is any of them, except Ron Paul.

If the MassMurderEmpire/Abortion combo is preferred, Obama is the Champ. Boom!

2. Support and apply pressure for the revocation of Corporate Personood through legislation or the state-initiated Constitutional amendment process. Occupy.

3. Support and apply pressure for campaign finance reform. Occupy.

4. Move Your Money out of big corporations and Take Your Business Local. Occupy.

5. Work to control corporations through state and local charters. Occupy.

6. Taxes - Become minister of your own church, e.g. 'Home Baptist' and do God's work with our own money, like Lloyd Blankfein does, instead of supporting the Corporate War Machine

7. Social boycotts of politicians who are Champions of the Empire. Shame, haunt, and taunt those who support mass murder, and start by creating a list for the Hall of Shame - Obama is Champion #1.

It should be a DISGRACE to wage a continuing worldwide Mass-Murder-For-Profit scheme under color of freedom and flag, not a badge of honor cynically used for re-election and rewarded by voters. Boom!