Tag: credit default swaps
Eliot Spitzer discussed the economy of the United States with Amy Goodman of DemocracyNow. Has the economy recovered? No:
[W]e have a major crisis in this nation, and that crisis is jobs. That crisis is that we are seeing the elimination of the middle-class job foundation that permits most Americans to do better year after year after year. The reality is median family income has been stagnant for forty years, and the policies of what I call financialization, which is major banks trading assets back and forth, the Wall Street banks, such as Goldman, which is rightly a lightning rod right now for much of what’s going on, buying and selling, playing with tax dollars in proprietary trading—they make huge money, nothing is added to the economy, jobs are sent overseas. All of this going on simultaneously. That is what our economy has become. And Ben Bernanke and Tim Geithner were the architects of this.
Spitzer also commented on AIG and credit default swaps:
AIG was, to a great extent—their financial products division—a Ponzi scheme supposedly guaranteeing hundreds of billions of dollars of CDS collateral, credit default swaps, with no collateral behind it. That is part of what brought us down. But that is the system that the Fed was overseeing. They specifically rejected the effort back in ’94, ’95 to regulate this swamp. The derivatives, that are a quintessential Wall Street creation, have some small utility at an economic level, but became an enormous revenue stream for banks, and they were unregulated. People made a fortune. We taxpayers hold the bag.
What I am posting here is a gnawing, recurring and growing concern that sometimes seems like a nightmare to me. It embarrasses me that this thought keeps recurring because it makes me look like one of those crazy conspiracy theorists.
MARCY KAPTUR: Let me give you a reality from ground zero in Toledo, Ohio. Our foreclosures have gone up 94 percent. A few months ago, I met with our realtors. And I said, ‘What should I know?’ They said, ‘Well, first of all, you should know the worst companies that are doing this to us.’ I said, ‘Well, give me the top one.’ They said, ‘J.P. Morgan Chase.’ I went back to Washington that night. And one of my colleagues said, ‘You want to come to dinner?’ I said, ‘Well, what is it?’ He said, ‘Well, it’s a meeting with Jamie Dimon, the head of J.P. Morgan Chase.’ I said, ‘Wow, yes. I really do.’ So, I go to this meeting in a fancy hotel, fancy dinner, and everyone is complimenting him. I mean, it was just like a love fest.
They finally got to me, and my point to ask a question. I said, ‘Well, I don’t want to speak out of turn here, Mr. Dimon.’ I said, ‘But your company is the largest forecloser in my district. And our Realtors just said to me this morning that your people don’t return phone calls.’ I said, ‘We can’t do work outs.’ And he looked at me, he said, ‘Do you know that I talk to your Governor all the time?’ He said, ‘Our company employs 10,000 people in Ohio.’ And I’m thinking, ‘What is that? A threat?’ And he said, ‘I speak to the Mayor of Columbus.’
As I watched this, I was thinking how amazing it was that a bank president would dare to treat a U.S. representative as though she meant nothing to him, even though she is a sitting member of Congress and a member of the political party that controls both Houses and the Presidency. How is it that all the big financial players such as Chase, AIG, Goldman Sachs, always get exactly what they want out of Congress? How can Congress allow these entities to continue to grow (since the meltdown), even though it is clear that the reason Congress felt that they needed to be propped up with tax money is that they were considered “too big to fail?” Name even one other industry that can snap its fingers and watch meaningful Congressional regulation completely dissolve. Name another industry that can demand hundreds of billions of no-questions-asked tax dollars from Congress. Consider the vast power and potential abuses of the Federal Reserve, which works arrogantly and opaquely. Consider Matt Tabbi’s recent articles regarding these financial giants and Congressional Corruption (and see here). We’re not even finished paying off the damage from the S&L scandal from the 80’s, and now, in the past year, we’ve taken on a new debt that dwarfs that S&L debt. And consider that when someone like federal Judge Rakoff has the integrity to stand up to speak truth to power, he seems to be a lone voice calling from a distant hilltop, not part of any sort of chorus. Consider, too, the monumental struggle faced by Elizabeth Warren, Chair of the Congressional Oversight Panel , who is facing immense opposition in Congress to establishing a strong Consumer Financial Protection Agency (CFPA) to make sure that consumers stop getting ripped off by banks through the use of unintelligible contract language (how can this possibly be controversial?).
Pardon my French, but what-the-fuck?
Using Occam’s Razor (the principle that the simplest explanation is usually the best), how does one explain that huge numbers of our representatives have completely tanked on The People.