Huffpo's Ryan Grim brings us up to speed on a broad coalition that is revving up to reform Wall Street:
On Thursday evening, a roomful of people more accustomed to fighting each other met to unite against a common enemy: Wall Street. The forces that are gathering against the bankers include energy companies, airlines, truckers, farmers and other end users of derivatives, along with unions, consumer advocates and a host of progressive organizations.
What would you think about the Federal Reserve Bank of New York telling AIG to intentionally withheld from public scrutiny that AIG was paying 100 cents on the dollar for credit default swaps at the same time that AIG was crying for a bailout from the public, thereby hiding from the public that the public was functionally bailing out Goldman Sachs and other large banks? What would you think about the fact that Tim Geithner headed the New York Federal Reserve when this was going on? Eliot Spitzer, William K. Black and Frank Partnoy sum up the issue:
Today, a Bloomberg story revealed that under Timothy Geithner's leadership, the Federal Reserve Bank of New York told AIG to withhold details from the public about its payments to banks during the crisis. This information was discovered when emails between the company and the Fed were requested by representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.
Who owns AIG? The taxpayers own 80% of it. Therefore, AIG should release the emails. Who can and should make this decision?
The taxpayer's stake in AIG is held by the A.I.G. Credit Facility Trust, whose three trustees are Jill M. Considine, a former chairman of the Depository Trust Company and a former director of the Federal Reserve Bank of New York; Chester B. Feldberg, a former New York Fed official who was chairman of Barclays Americas from 2000 to 2008; and Douglas L. Foshee, chief executive of the El Paso Corporation and chairman of the Houston branch of the Federal Reserve Bank of Dallas. We call on these three officials (interestingly all former Fed officials) to immediately release the documents we request. The value of these documents, if it were ever in doubt, was certainly proved by today's revelations.
Release the emails.
See also, this earlier post on a NYT op-ed by Spitzer, Black and Partnoy.
What can we do about the reckless and corrupt practices of big banks? Arianna Huffington and Rob Johnson suggest that you move your money:
The idea is simple: If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it's meant to be. It's neither Left nor Right -- it's populism at its best. Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest. It's time for Americans to move their money out of these reckless behemoths. And you don't have to worry, there is zero risk: deposit insurance is just as good at small banks -- and unlike the big banks they don't provide the toxic dividend of derivatives trading in a heads-they-win, tails-we-lose fashion. Think of the message it will send to Wall Street -- and to the White House. That we have had enough of the high-flying, no-limits-casino banking culture that continues to dominate Wall Street and Capitol Hill.
The four too-big-to-fail banks are JP Morgan/Chase, Citi, Wells Fargo, and Bank of America. If you have money in these banks, consider moving it to a local bank, where it has more of a chance of helping local businesses. For a video explaining this simple plan further, and for the names of your local banks based on zip code, go here.
What does it tell you when there is no independent Inspector General for a federal agency that oversees $6 trillion in mortgages? This is not a thought experiment. It is undisputed reality.
And there is good reason to suspect that something utterly corrupt is going on at Fannie Mae and Freddie Mac. There are pointed allegations jointly made by progressive blogger Jane Hamsher and fiscal ultra-conservative Grover Norquist, who don't see eye to eye on much of anything. But they have come together to urge that we allow the light of day to fall onto Fannie Mae and Freddie Mac. The allegations are detailed, and you can read them here. The center of the storm is the current White House Chief of Staff, Rahm Emanuel. A rejected FOIA request only makes these allegations more troubling. The allegations are exacerbated by the fact that the Acting Inspector General was dismissed early this year through the effects of legislation pushed through by Rahm Emanuel. The fact that $800 Billion in taxpayer funds is at stake (more than $7,000 for each one of the 111,000,000 American households) makes this all the more surreal. To put this $800B number in perspective, the Defense Secretary just made a big announcement that we should set aside a "mere" two billion dollars for "nation building."
A second set of allegations has also been made: that the White House is facilitating the cover up of potential malfeasance at Fannie Mae and Freddie Mac until the 10-year statute of limitations has run out on Rahm Emanuel.
All of this incredibly disturbing. If Mr. Obama is the man he portrayed himself to be during the campaign, he will immediately appoint an independent Inspector General in order to get to the bottom of this.
Hello, I invite you to subscribe to Dangerous Intersection by entering your email below. You will have the option to receive emails notifying you of new posts once per week or more often.
