The bankers continue their stranglehold over Washington.

Bill Moyers interviewed economist Simon Johnson and U.S. Representative Marcie Kaptur of Ohio about the Wall Street/Washington connection and the picture isn't pretty. In fact, it's terrifying. I highly recommend that you make yourself watch this 30-minute segment. It's a massive problem with no hint of a solution. Here's an excerpt:

BILL MOYERS: Why have we not had the reform that we all knew was being was needed and being demanded a year ago?

SIMON JOHNSON: I think the opportunity the short term opportunity was missed. There was an opportunity that the Obama Administration had. President Obama campaigned on a message of change. I voted for him. I supported him. And I believed in this message. And I thought that the time for change, for the financial sector, was absolutely upon us. This was abundantly apparent by the inauguration in January of this year. . . . And Rahm Emanuel, the President's Chief of Staff has a saying. He's widely known for saying, 'Never let a good crisis go to waste'. Well, the crisis is over, Bill. The crisis in the financial sector, not for people who own homes, but the crisis for the big banks is substantially over. And it was completely wasted. The Administration refused to break the power of the big banks, when they had the opportunity, earlier this year. And the regulatory reforms they are now pursuing will turn out to be, in my opinion, and I do follow this day to day, you know. These reforms will turn out to be essentially meaningless.

MARCY KAPTUR: When Lincoln ran into trouble, during the Civil War, he got new generals. He brought in Grant. I hope that President Obama will bring in some new generals on the financial front.

BILL MOYERS: Should Geithner be fired? And Summers be fired?

MARCY KAPTUR: I don't think that any individuals who had their hands on creating this mess should be in charge of cleaning it up. I honestly don't think they're capable of it.

BILL MOYERS: Let me show you an excerpt from the speech President Obama made on Wall Street last month, September. Here is the challenge he laid down to the bankers.

PRESIDENT OBAMA: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.

BILL MOYERS: A reality check. Not one CEO of a Wall Street bank was there to hear the President. What do you make of that?

SIMON JOHNSON: Arrogance. Because they have no fear for the government anymore. They have no respect for the President, which I find absolutely extraordinary and shocking. All right? And I think they have no not an ounce of gratitude to the American people, who saved them, their jobs, and the way they run the world.

Continue ReadingThe bankers continue their stranglehold over Washington.

Krugman: Banks are back to business as usual

In the NYT, Paul Krugman notes that the banks are increasingly engaging in the same risky short-term profiteering that let to the economic meltdown:

In the grim period that followed Lehman’s failure, it seemed inconceivable that bankers would, just a few months later, be going right back to the practices that brought the world’s financial system to the edge of collapse. At the very least, one might have thought, they would show some restraint for fear of creating a public backlash. But now that we’ve stepped back a few paces from the brink — thanks, let’s not forget, to immense, taxpayer-financed rescue packages — the financial sector is rapidly returning to business as usual. Krugman further notes that Obama hasn't yet shown the courage to directly confront the bankers, a move that, according to Krugman, could be politically popular.

Continue ReadingKrugman: Banks are back to business as usual

Corrupt bankers and corrupt government regulators

Robert Scheer sums up the cozy relationship between the U.S. government and the financial sector and it's ugly. One federal judge has the guts to tell it straight, but where is the SEC and where is the Obama Administration? In the process of acquiring failed brokerage house Merrill Lynch, Bank of America sneaks more than $1 Million in bonuses each to 696 Merrill Lynch executives who ran the company into the ground (Merrill Lynch had lost $27 Billion). These outrageous payments occurred while BofA was receiving $45 Billion in taxpayer money as part of the "bailout." On top of that, 39,000 additional Merrill Lynch employees were each paid an average of $91,000 in bonuses, an amount that the Bank of America attorney suggested wasn't a significant amount. New York federal Judge Jed S. Rakoff disagreed, saying:

"I'm glad you think that $91,000 is not a lot of money; I wish the average American was making $91,000."

How corrupt is the government/banking relationship? The SEC did sue BofA of misleading it's shareholders, but this sweetheart settlement stinks to high hell. Consider this quote from Scheer's article:

The SEC complaint did accuse BofA of misleading its shareholders, but instead of digging deeply into how such decisions had been made and by whom, a deal was concocted in which BofA got off with a paltry $33 million fine. That is less than the bonus received by one of the Merrill execs. Yet the SEC deal would have closed the case on how that decision was made.

"You filed a rather uninformative, bare-bones complaint," Judge Rakoff told SEC lawyer David Rosenfeld, who lamely defended the decision to avoid going after the bankers involved, and it is instructive of whose interest he was serving that "[t]he lawyer for Bank of America periodically whispered what appeared to be suggestions to Mr. Rosenfeld," as a New York Times article put it. Whispering between government regulators and the Wall Street honchos ostensibly being regulated is what got us into this mess in the first place.

In the meantime, TARP watchdog Elizabeth Warren is repeatedly warning that the same toxic assets that triggered the meltdown are still on the banks' books. She's warning of the "looming commercial mortgage crisis."

Continue ReadingCorrupt bankers and corrupt government regulators

Banks and Republicans are blocking short-sales of homes

A middle-aged couple who bought a home in my neighborhood are in a terrible situation. They paid too much for their new house, which needed a lot of repairs, and they failed to aggressively work to sell their existing home. Therefore, they now have two houses. They continue to live in their original home while their new house (two houses away from where I live) has been vacant for three years and it is falling apart. I’m not talking about chipped paint. There are huge holes in the roof that are causing the house to rot out. Check out the garage roof too: Image by Erich Vieth[/caption] People who know a lot about rehabbing houses tell me that if this house and garage don’t get immediate attention, they will need to be completely torn down.

Continue ReadingBanks and Republicans are blocking short-sales of homes