We are a nation in severe crisis. According to William K. Black, a white-collar criminologist, President Obama doesn’t deserve any more of our patience:
The Obama administration promoted Bush’s architects of the financial disaster and demands that we hail them as heroes. President Bush was ridiculed for saying: “Brownie, you’re doing a heck of a job.” FEMA administrator Michael Brown stood by while Hurricane Katrina reduced a single large city to ruin. Geithner and Bernanke stood by while scores of large cities were devastated.
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Black offer much more than criticism. He offers ten opportunities for digging us out of this mess. It will be difficult to attain any of these while the banks own Congress, but we need to dig deeply an somehow find the political will. Here are two of Black’s points that stand out to me:
Can the Wrecking Crew. Fire the senior leaders of Bush’s and Clinton’s financial Wrecking Crews and stopping treating them as financial experts. President Obama should not reappoint Bernanke as Fed Chairman. He should dismiss Geithner and Summers and cease to take any advise from Rubin. Replace them with the Reconstruction Crew — people with a track record of getting things right and being effective economists, regulators, and prosecutors . . .
End “too big to fail.” These banks are “systemically dangerous institutions” (SDIs). They should not be allowed to grow. They should be shrunk to the point that they no longer pose systemic risk, and they should be subject to vigorous regulation while shrinking. They are too big to manage and too big to regulate. They are ticking time bombs that will cause recurrent global crises as long as they are SDIs.
Here are some of Black’s other suggestions. I agree with all of them whole-heartedly:
– We need to provide the FBI with 1,000 more specialized white-collar crime investigators.
– No more executive compensation looting.
– Kill TARP and PPIP. (“Use the funds to help honest homeowners that would otherwise lose their homes because of predatory loan terms.”)
– Make the Federal Reserve System public.
– Defeat any proposal to make the Fed the “Uberregulator.”
– Create a robust “Consumer Financial Product Agency.
– End the waste of long-term unemployment (Instead, of paying them to do nothing, pay them to do public works)
Erich Vieth is an attorney focusing on civil rights (including First Amendment), consumer law litigation and appellate practice. At this website often writes about censorship, corporate news media corruption and cognitive science. He is also a working musician, artist and a writer, having founded Dangerous Intersection in 2006. Erich lives in St. Louis, Missouri with his two daughters.
I think we should start by replacing the function of the Federal Reserve with a government panel.
In the economic collapse that started in the Bush years, was well orchestrated by the international banks setting up power play that made a few people disgustingly rich through fraudulent financial instruments such as debt derivatives and speculative adjustable rate mortgages. However it was the Federal Reserve, that not only made all this possible, but delivered the final slam-dunk that wrecked the economy, by failing to adequately cap the rates of existing ARMs.
Whether this was done out of incompetence or as part of the orchestrated fraud, does not matter. They dramatically and drastically failed to address the mission of their existence, and allowed for a massive redistribution of wealth from the poor to the wealthy through means that were decidely anti-consumer.
Bo Cutter was a managing partner of Warburg Pincus, a major global private equity firm, and led President Obama's Office of Management and Budget (OMB) transition team. He recently made this statement:
In fact, by 2006 and early 2007 everyone thought we were headed to a cliff, but no one knew when or what the triggering mechanism would be. The capital market experts I was listening to all thought the banks were going crazy, and that the terms of major loans being offered by the banks were nuttiness of epic proportions.
William Black had this reaction to Cutter's analysis:
By early 2006 — roughly four years ago — "everyone" agreed "we were headed to a cliff" and that the banks' "major loans" were "nuttiness of epic proportions." An industry whose claimed expertise is the sophisticated evaluation of risk and value universally failed to come remotely close to valuing either. As Bo emphasizes, these were massive errors. These managers got immensely wealthy because — not despite — their willingness to make hundreds of thousands of loans that were certain to crash and burn as soon as the bubble ceased to inflate (which it did in 2006). Bo knows them, and Bo says that every independent (sic) director betrayed their fiduciary duties to shareholders. Every senior officer at the major banks failed. Bo portrays them as incompetents, cowards, and moral failures.
Black's comment is spot on. Are we to believe that armies of accounts, MBA's and lawyers didn't see something that should have been obvious to all of them, given their specialized training? The only reasonable assumption is that they did appreciate the mess they were making (and are continuing to make), but did it anyway. Why they would act this way in the face of disaster begs an explanation, but a component of that would likely be that they assumed that they would not be ultimately be held accountable, which has been proven to be correct.
George Soros argued that CDS should be banned. The billionaire investor likened the widely traded securities to buying life assurance and then giving someone a licence to shoot the insured person.
“They really are a toxic market,” he said. “Credit default swaps give you a chance to bear-raid bonds. And bear raids certainly can work.”
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I think we should start by replacing the function of the Federal Reserve with a government panel.
In the economic collapse that started in the Bush years, was well orchestrated by the international banks setting up power play that made a few people disgustingly rich through fraudulent financial instruments such as debt derivatives and speculative adjustable rate mortgages. However it was the Federal Reserve, that not only made all this possible, but delivered the final slam-dunk that wrecked the economy, by failing to adequately cap the rates of existing ARMs.
Whether this was done out of incompetence or as part of the orchestrated fraud, does not matter. They dramatically and drastically failed to address the mission of their existence, and allowed for a massive redistribution of wealth from the poor to the wealthy through means that were decidely anti-consumer.
Bo Cutter was a managing partner of Warburg Pincus, a major global private equity firm, and led President Obama's Office of Management and Budget (OMB) transition team. He recently made this statement:
William Black had this reaction to Cutter's analysis:
http://www.huffingtonpost.com/william-k-black/fra…
Black's comment is spot on. Are we to believe that armies of accounts, MBA's and lawyers didn't see something that should have been obvious to all of them, given their specialized training? The only reasonable assumption is that they did appreciate the mess they were making (and are continuing to make), but did it anyway. Why they would act this way in the face of disaster begs an explanation, but a component of that would likely be that they assumed that they would not be ultimately be held accountable, which has been proven to be correct.
Boycott Banks.
George Soros: Ban credit default swaps:
http://business.timesonline.co.uk/tol/business/in…