You are browsing the archive for Wall Street.

Bridging The Fiscal Cliff: A Wall Street Sales Tax

7:40 am in Uncategorized by DSWright

Day after day, day after day,
We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean.
Water, water, everywhere,
And all the boards did shrink;
Water, water, everywhere,
Nor any drop to drink.
- The Rhyme of the Ancient Mariner

According to the latest reactionary brainwash scheme turned corporate media narrative America has a “spending problem.” We spend too much on taking care of people (stop laughing rest of the developed world) and therefore we have to go on a severe diet of austerity to enrich Wall Street banksters restore fiscal sanity. Because if we do not rich people and their friends the global bond market will punish us with fire and brimstone – like vigilantes they will say “make my day” and years later relive their glory by cursing at an empty chair.

But the question arises when considering government deficits – aren’t there two sides to deficits? Is not another way to balance a budget to increase revenues?

The response from the reactionaries in Congress is no new revenues, period. Taxation is theft! You looting moochers! Stop spending taxpayer money, unless it’s for military contractors who donate to our campaigns! You’ll kill the economy with new taxes, actually with existing taxes, speaking of which how about another tax cut?

In short, while there are revenue sources everywhere, none can be used to balance the budget.

The more reasonable of the lot point out that ending the Bush tax cuts will not make up the shortfall so deep cuts are necessary regardless. While it is true that just restoring the Clinton-era tax levels for higher income earners will not be enough to balance the budget there is another revenue stream that would not only be fair but productive to tap into – Wall Street. It is time for a financial transaction tax.

A financial transaction tax has numerous benefits but let’s talk about the most relevant one. Revenue.

According to a report by Political Economy Research Institute of the University of Massachusetts a financial transaction tax would bring in roughly $350 billion in revenue annually. Enough revenue to maintain the massive defense budget, if that’s something you are into.

Photobucket

And since we are talking about Wall Street let me move past greed to fear to offer another benefit of taxing sales on Wall Street – financial stability.

James Tobin, a Nobel-Prize winning economist, suggested levying a tax on speculative activity in the global currency market. A tax, Tobin believed, would help curb dangerous speculation such as occurred in Mexico, East Asia, and Russia in the 1990s. By exacting a cost on speculative activity the incentive to destabilize markets/countries through quick flows of money would be reduced as longer term investment would become more lucrative by contrast.

Curbing dangerous speculation was also the motive for one of the first proponents of the financial transaction tax, John Maynard Keynes, who wrote:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation…

The introduction of a substantial government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States.

Would the crash of 2008 have happened had there been a financial transaction tax on derivatives? Could a future financial crisis be averted by dampening speculative activity?

It is difficult to determine the positive effects of a financial transactions tax beyond revenue collection despite strong logic that it would reduce speculation – what is easy to determine is the lack of downside.

The Wall Street rejoinder to this tax proposal will surely be that it will hurt investment, and let me tell you right now why that is total bullshit – America once had a financial transactions tax.

Not only did America have a financial transactions tax, from 1914-1966, but the highest period of growth in American history occurred with it in place. If the tax hurt investment no one told the economy.

But putting aside any ancillary benefits, this is a tax that will collect needed revenues. If this revenue is not collected cuts to vital social programs will have to take place or be exacerbated. Social Security, Medicare, Medicaid, education assistance, anti-poverty programs – all on the chopping block without this revenue to make up the difference.

Budgets are about choices and priorities, they demonstrate our values. So what are our values? Should the poor suffer more, should we break our promises to seniors, or should speculators face a minor tax that may make them think twice about blowing bubbles?

The choice is up to you.

Re Vice President Biden: Is America In A Depression?

2:50 pm in Uncategorized by DSWright

Yesterday Vice President Biden made an important statement regarding the American economy, from ABC News:

Vice President Joe Biden today offered a blunt assessment of the plight of the unemployed, telling supporters at a campaign rally in Iowa that the economy remains “a depression for millions and millions of Americans.”

“The unemployed are in real trouble,” Biden said in a speech on the banks of the Mississippi River in Dubuque. “My grandpa used to say, from Scranton, he’d say, ‘Joe, when the guy in Dunmore…is out of work, it’s an economic slowdown. When your brother-in-law is out of work, it’s a recession. When you’re out of work, it’s a depression.’”

“It’s a depression for millions and millions of Americans,” he said.

Is Vice President Biden right and how many millions? Let’s take a look.

The Vice President specifically noted the unemployed as being in a Depression.

ui1may2012

The number of persons unemployed 15 weeks or longer, as a percent of the civilian labor force or U-1 unemployment rate has stayed above 8% for the last few years. But it is important to note that the ubiquitous U-1 measure is only a part of the overall employment story.

Read the rest of this entry →

Where are the JOBS Obama? Here, I’ll Show You

5:36 pm in Uncategorized by DSWright

I know many people are in election mode which narrows vision considerably, so let me just say upfront Mitt Romney may be the embodiment of all that is wrong with America: a self-absorbed Corporate Gangster that hides in esoteric dogma to rationalize his transgressive lifestyle. He won’t be getting my vote, it would be like electing Gordon Gekko president. By the way Mittens, if your plan was to fire everyone and sell the country for parts… too late.

That being said, what the hell is Obama’s plan to turn this economy around? Is there one?

Yes there is, and it’s really stupid.

From President Obama’s website:

When President Obama took office, the economy was losing more than 700,000 jobs per month. President Obama acted quickly to pass the American Recovery and Reinvestment Act, which cut taxes for small businesses and 95 percent of working families. It also included emergency funding to support about 300,000 educator jobs, more than 4,600 law enforcement positions, and investments in the clean energy sector that supported 224,500 jobs through 2010. Through April 2012, the economy has added more than 4.2 million private sector jobs over 26 consecutive months of job growth.

President Obama knows we still have more work to do. That’s why, in his State of the Union address, the President laid out a blueprint for an economy that’s built to last—an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

OK… so let’s see what that entails, from Whitehouse.Gov:

In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, encouraging companies to create manufacturing jobs in the United States while removing deductions for shipping jobs overseas and encouraging insourcing. During the past two years, we have begun to see positive signs in American manufacturing – with the manufacturing sector adding more than 300,000 jobs since December 2009, with companies engaging in the emerging trend of “insourcing” by bringing jobs back and making additional investments in the United States. Manufacturing jobs are growing for the first time since the late 1990s.

The proposals the President is describing today are designed to build on this progress. They include six proposals that Congress should act on immediately to encourage job growth in the United States and that are fully paid for by closing tax loopholes that encourage the shifting of jobs and shielding of profits overseas.

OK… what are the six proposals?

1. Removing tax deductions for shipping jobs overseas and providing new incentives for bringing them back home

2. Targeting the domestic production incentive on manufacturers who create jobs here at home and doubling the deduction for advanced manufacturing

3. Introducing a new Manufacturing Communities Tax Credit to encourage investments in communities affected by job loss

4. Providing temporary tax credits to drive nearly $20 billion in domestic clean energy manufacturing

5. Reauthorizing 100% expensing of investment in plants and equipment

6. Closing a loophole that allows companies to shift profits overseas

The Blueprint includes other provisions like enforcing trade agreements, making Wall Street “play by the rules” and keeping tuition costs from going “too high.”

In other words… Obama’s economic strategy is lame bullshit. No change, no vision, nothing.

This isn’t change you can believe in, it’s not even change at all.

If doing the same thing over and over again and expecting different results is insane then Obama needs a straightjacket. Neoliberalism doesn’t work, has never worked, and will never work in creating broad prosperity. You would think after 30 years of watching the overwhelming majority of the gains going to the Top 1% and an epic crash to rival the Great Depression we would have learned something. Nope.

“Enforce Trade Agreements”
– The agreements were written by multi-national corporations for their benefit not America’s.

“Make Wall Street Play By The Rules” – They literally write the rules: OCC, SEC, CFTC, Federal Reserve.. totally stacked with Wall Street cronies. Sometimes the firms get so greedy they break their own rules. But otherwise Wall Street has captured the regulators. They are the regulators.

“Keep tuition from spiraling ‘too high’”
– If higher education is an investment in the future why are people walking out of it with any debt?

What may be the saddest fact of all is Obama can’t even get the lame bullshit he is proposing through a Republican congress. That’s how far stupid Right America has moved. Even defeatist, weak, mostly ineffectual reforms are unpalatable to the reactionaries in Congress.

 

How About A Real Jobs Program?

Allow me to offer six proposals that would actually improve the lives of the 99%.

1. Wipe Out The Debt. The Too Big To Fail Banks should be nationalized, wound down, and destroyed with a total wipe out of the debts they hold. Free enslaved Americans so they can reset and begin to grow again.

2. Nationalize the Fed. The Federal Reserve is the third iteration of a corrupting institution two other Democratic Presidents destroyed – Thomas Jefferson and Andrew Jackson. Allowing private money interests to have a strangle hold on the nation’s money supply is a recipe for the kind of crony capitalism and subsequent inequality America now faces. The Fed is not “independent” at all. It is independent of democratic control but it is not independent of Wall Street. Nationalize America’s Central Bank and have it absorbed by the Treasury Department under democratic control.

3. Withdraw from the World Trade Organization. Neoliberal globalization is an economic, political, social, and environmental disaster. It has lead to unstable markets, democratic deficits, racial/ethnic/religious hatreds, and environmental degradation. It is time to restore bi-lateral trade agreements that value fair labor standards and protect the environment.

4. Protect and Invest in New American Industries. Even Ronald Reagan knew that new industries needed protection – that’s why he protected through anti-Free Trade measures the burgeoning Semiconductor Chip industry. One of the reasons Silicon Valley exists (besides the Pentagon creating it) is America protected its semiconductor industry when it counted.

China is now surpassing America in clean technology particularly solar energy – guess what? No. A 100% tariff on all foreign imports of clean energy technology including solar tech. We make it, we buy it, we put our people to work to make it happen. We are going to win the future by not playing a rigged game against slave drivers and reckless polluters.

5. Tax FIRE to build TECI. The Finance, Insurance, and Real Estate (FIRE) economy often euphemistically referred to as “Wall Street” creates no value – at best it is a utility that helps the REAL economy function, at worst it’s a parasitic gang of plutocrats who wreck markets and corrupt politics.

The next evolution within the REAL economy should be Transportation, Energy, and Communication Infrastructure (TECI). Investing in roads and public transportation, alternative energy, a reliable and robust broadband and phone tower network creates jobs while rebuilding the country. Production instead of finance means a reindustrialization program. Real jobs for a Real economy.

How do we pay for it? Taxing the FIRE with a Financial Transaction Tax. Take from the useless to fund the productive.

6. A War On Corporate Politics. To secure the jobs program corporations simply must be removed from the political process. Right now the Supreme Court is firmly pushing corporate interests and Congress is bought by corporate powers. Before legislation can be put forward to politically disenfranchise corporations an all out assault from the White House should be launched. Any corporation giving money or lobbying against the jobs agenda should be hit from all sides from federal lawsuits and continuous investigations utilizing new federal powers granted by Anti-Terrorism legislation.

The Department of Homeland Security, FBI, and other security services should begin infiltrating Corporate America and provoking them into engaging in securities fraud or regulatory abuses then arresting executives. Agent provocateurs could help shut down a possible Corporate response to the jobs program. Strangling a political movement in the cradle is the best strategy.

——-

While #6 may or may not have some satire interlaced within it (see if you can find it) this Six Point Proposal would create jobs, now. It would also build a better society so America could no only win the future but in so doing have a victory worth having.

Booker Exposed: The REAL Cory

9:50 pm in Uncategorized by DSWright

Many were surprised to watch Meet The Press and see Obama campaign “surrogate” Newark Mayor Cory Booker attack the message of the Obama Campaign, from Politico:

Newark Mayor Cory Booker, a rising Democratic star, criticized on Sunday the Obama campaign’s attack ad against Mitt Romney for his work at Bain Capital.

“It’s nauseating to the American public,” Booker said on NBC’s “Meet the Press.” “Enough is enough. Stop attacking private equity. Stop attacking Jeremiah Wright.”

“As far as that stuff, I have to just say from a very personal level I’m not about to sit here and indict private equity,” he added. “To me, it’s just we’re getting to a ridiculous point in America. Especially that I know I live in a state where pension funds, unions and other people invest in companies like Bain Capital. If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses [and] to grow businesses. And this, to me, I’m very uncomfortable with.”

It is nauseating to talk about a candidate’s business record? A record the candidate himself has have made fundamental to his candidacy? Stop attacking private equity?

Who is this Cory Booker fellow and why is he speaking for the Obama campaign let alone the Democratic Party?

Well, the people that know Mayor Booker were not surprised he was defending private equity and Big Business generally (admittedly we were surprised he would do it in the context of attacking the campaign he is speaking for). They were not surprised because Cory Booker would actually be much more at home in the Republican Party – an option unavailable to politicians who want public office in Newark, a city which is overwhelmingly Democratic. In fact, registered Democrats are so dominant within the city that the substantial election for power is in reality the Democratic Primary not the general election. If Booker had registered his more appropriate party affiliation he would have had zero chance of becoming a city councilman let alone Mayor.

Cory Booker’s position on private equity is both ideological and practical and not some aberration. But before going into that it should be noted Mayor Booker tried to walk back his comments and was, not surprisingly, very unconvincing. From Steve Kornacki:

It didn’t take long for Cory Booker to get the message. Just hours after undermining the Obama campaign’s main line of attack against Mitt Romney, the Newark mayor released a video late Sunday afternoon in an effort to repair some of the damage.

Booker had seemed to pronounce the Obama effort to highlight unflattering aspects of Romney’s private equity background “nauseating,” but in the video, he suggested he was making a broader statement about negative campaigning…

Booker’s new line is a bit hard to swallow
, though, because his “Meet the Press” comments clearly went beyond simply decrying the tone of the campaign. At one point, he offered a pointed defense of Romney’s Bain past, saying: “I’m not about to sit here and indict private equity. If you look at the totality of Bain Capital’s record, it — they’ve done a lot to support businesses, to grow businesses. And this to me — I’m very uncomfortable.”…

Booker has throughout his political career cultivated and maintained close ties to Wall Street and affluent, investor class donors
– people who, in many cases, believe the administration has declared war on their world and see the Bain attacks as an extension of that effort. Booker’s statewide political aspirations are no secret in New Jersey, and the presumption is that he’s eyeing a Senate run in 2014 (others have mentioned him for governor next year, but that’s less likely for a number of reasons).

Props to Mr. Kornacki for digging a little beneath the surface, but allow me to toss aside your shovel and bring in the drill bit.

 

The REAL Cory Booker

 

Let’s start here from Kornacki’s other Booker MTP post:

It’s easy to forget, but before the world met Barack Obama in 2004, many believed that the first black president would be Booker. Armed with Stanford, Yale and Oxford degrees and all of the invaluable personal connections he forged at those institutions, he set out in the mid-1990s to craft a uniquely appealing political biography, swearing off lucrative job offers to move to Newark’s Central Ward and take up residence in public housing. Within a few years, he won a seat on the City Council, where he showed an early and consistent knack for self-generated publicity, most notably with a ten-day hunger strike in the summer of 1999.

But there were more connections than “college buddies.” Cory Booker’s political rise is intertwined with the constellation of Right-Wing foundations, some you have probably even heard of like the Bradley Foundation and the Manhattan Institute. For example, where did Booker get much of his public policy agenda? Let’s take a look at some of the investigative reporting done during Booker’s first, unsuccessful, run for Mayor of Newark, from Glen Ford:

Cory Booker, Black mayoral candidate from the city’s Central Ward, a cynical pretender who attempts to position himself as the common people’s defender while locked in the deep embrace of institutes and foundations that bankroll virtually every assault on social and economic justice in America. His benefactors sponsor anti-affirmative action referendums, press for near-total disinvestment in the public sector, savage what’s left of the social safety net, and are attempting to turn public education over to private suppliers. Along the way, Booker’s soul mates are busy ravaging the environment and trampling civil liberties everywhere they find them.

But Booker only took their money and media support not their policies right? Wrong.

Booker’s anointment as a prince in the Hard Right pantheon is based on his support of public vouchers for private schools. This “movement,” the creation of right-wing paymasters like the Bradley Foundation, of Milwaukee, and the Walton Family Foundation, Bentonville, Arkansas, hopes to drive a wedge between urban Blacks and the teachers unions. Without amicable relations between these two Democratic pillars, the Party, as we know it, is finished.

Oh hi, Wisconsin. Booker then teamed up with Republican Mayor and future Chris Christie education secretary Bret Schundler.

Booker’s pal Schundler knows his way around that kind of money. He used a big chunk of a $500,000 Walton Foundation gift to his Scholarships for Jersey City Children non-profit to pay for advertisements featuring himself, during an election campaign. Walton’s executives didn’t object. Apparently, what’s good for their candidate is good for the kids.

After establishing their non-profit, the two Republicans and Booker went on a pilgrimage to Milwaukee, Mecca for school “choice” money, where the Bradley Foundation was concocting its newest invention: the Black Alliance for Educational Options (BAEO).

Naturally, Schundler couldn’t join. But Booker became a member of the board.

Now it was time for Booker to audition for those “elite donors” Kornacki references, and how!

The Manhattan Institute, home of a repulsive roster of right-wing writers and speakers, and recipient of $250,000 in Bradley money in 2000, invited Booker to one of its power lunches, where he effortlessly dropped Right-speak code words.

“The old paradigm,” he told the troglodytes, “was an entitlement program, in which large big city mayors controlled race-based machines.

“What that was really about was capturing big entitlements from the state and federal government and divvying them up among their cronies or among the people within their organizations to protect and preserve their organizations. It was about distributing wealth.”

In just two sentences, Booker managed to stimulate the Right’s erogenous zones by mentioning three of the phrases they most love to hate: “race-based,” “entitlements,” and “distributing wealth.” This guy is good, very good. He speaks two distinct languages – one to the people he wants to elect him mayor of Newark, the other to the financially endowed, whose mission in life is to resist redistribution of wealth to race-based groups that think the poor could use some entitlements

What many may be surprised to learn is that George F. Will endorsed Booker’s candidacy – along with most Corporate Media.

The latest benediction of the Booker campaign comes from columnist George F. Will, the high priest of privatization. Will has been busy for over three decades planting land mines along every step of Black people’s march toward equality. His endorsement should represent the kiss of death to Booker’s candidacy. Indeed, Will, whose prescription for urban unemployment is that the jobless move somewhere else, came close to giving away the entire Booker game.

“Booker’s plans for Newark’s renaissance,”
Will’s March 17 column informs us, “are drawn from thinkers at the Democratic Leadership Council and the Manhattan Institute think tank, and from the experiences of others such as Stephen Goldsmith, former Republican mayor of Indianapolis, a pioneer of privatization and faith-based delivery of some government services, and John Norquist, current Democratic mayor of Milwaukee, which has one of the nation’s most successful school-choice programs.”

George F. Will gloats that the Booker campaign “has raised $1.5 million, partly through reform-minded supporters in New York financial circles.” The venerable word “reform” is among the many progressive terms that have been stolen by the Hard Right. The people Will is really referring to are the same ultra-conservatives who fund the Manhattan, Heritage, Hoover and American Enterprise Institutes, as has been vastly documented. Cory Booker is just another of their projects, albeit an important one.

Booker is backed by Wall Street (private equity) and his policies are crafted by reactionary Right-Wing think tanks all masked by progressive rhetoric like “reform.” The real surprise is not that Booker attacked Obama for shining a light on private equity – it’s that a man like Booker would even be asked to surrogate for the campaign.

It’s almost… nauseating.

Think Progress has put out a story on Booker and Bain:

Yesterday, Newark, New Jersey Mayor Cory Booker (D) attacked the Obama campaign for making an issue of Mitt Romney’s tenure at Bain Capital during an appearance on Meet the Press. While the progressive leader later backed off the criticisms, Republicans have been quick to highlight his comments as an attack against the idea that scrutiny of Mitt Romney’s record as a businessman is fair game.

A ThinkProgress examination of New Jersey campaign finance records for Booker’s first run for Mayor — back in 2002 — suggests a possible reason for his unease with attacks on Bain Capital and venture capital. They were among his earliest and most generous backers.

Contributions to his 2002 campaign from venture capitalists, investors, and big Wall Street bankers brought him more than $115,000 for his 2002 campaign. Among those contributing to his campaign were John Connaughton ($2,000), Steve Pagliuca ($2,200), Jonathan Lavine ($1,000) — all of Bain Capital. While the forms are not totally clear, it appears the campaign raised less than $800,000 total, making this a significant percentage.

He and his slate also jointly raised funds for the “Booker Team for Newark” joint committee. They received more than $450,000 for the 2002 campaign from the sector — including a pair of $15,400 contributions from Bain Capital Managing Directors Joshua Bekenstein and Mark Nunnelly. It appears that for the initial campaign and runoff, the slate raised less than $4 million — again making this a sizable chunk.

In all — just in his first Mayoral run — Booker’s committees received more than $565,000 from the people he was defending. At least $36,000 of that came from folks at Romney’s old firm.

Mayor Booker has claimed he will not seek another term as Mayor of Newark leaving Senate and Governor as possible ventures. I think he is qualified for neither and should go where he belongs, private equity.

Hope And Cave: SEC and CFTC Fold on Regulating “Financial Weapons Of Mass Destruction”

4:24 pm in Uncategorized by DSWright

 

Photobucket

 

Remember that financial crisis we had four some odd years ago – the one that brought America and the world economy to its knees – a crisis that so shook the foundations of America’s faith in the system that millions voted for Change? Well one of the primary catalysts for the epic meltdown was a financial instrument known as a derivative. Or rather unregulated derivatives. So not surprisingly many Americans – experts and non-experts alike – demanded derivatives be regulated and given the outrage and fear the federal government almost seemed like it would side with the people over moneyed interests, almost.

Rather than real reform, the country got another dose of kabuki theater with Swiss Cheese legislation, known as Dodd-Frank. In theory Dodd-Frank would put the lid on what Warren Buffett called “financial weapons of mass destruction”. In practice the bill left the fine tuning and consequential decisions to federal agencies long captured by Wall Street.

So what happened next is really no surprise.

 

Photobucket

 

From HuffPo:

Corporate America, with help from the Obama administration, has struck yet another blow against the scary financial regulations it claims will hurt the economy.

On Wednesday they undercut new regulations on derivatives, which the detail-obsessed among us might point out didn’t just hurt the economy but nearly destroyed it. Just a few years ago.

Under heavy pressure from the energy industry and other corporate interests, the Commodity Futures Trading Commission and the Securities and Exchange Commission are retreating from a plan to regulate many reaches of the U.S. trade in financial derivatives known as swaps, including the credit derivatives that nearly brought down the financial system.

Yes, because why learn from your mistakes when you can just repeat them?

The decision boils down to who, for the purposes of regulation, will be considered a “Swap Dealer” and who will not be. Swaps or in the specific case of the 2008 Financial Crisis Credit Default Swaps, are bets taken out on someone or some organization defaulting on a loan or some other financial obligation. Essentially gambling on someone busting.

In fact, swaps resemble gambling so much that Wall Street successfully lobbied to have swaps legally exempt from state gaming laws:

The Commodity Futures Modernization Act of 2000 (“CFMA”), signed by President Clinton on December 21, 2000, created a “safe harbor” by (1) preempting state and local gaming and bucket shop laws except for general antifraud provisions, and (2) exempting certain derivative transaction on commodities and swap agreements, including credit default swaps, from CFTC regulation.

Nice try state and local governments, Wall Street will run this casino… well until it all comes crashing down then Wall Street is going to need taxpayer money paid by your residents. Suckers!

Back to the SEC and CFTC’s decision on who is and who is not a “Swap Dealer.” The original regulation was going to set the bar at $100 million, as in anyone that handled swaps less than $100 million a year was not a dealer. This was unacceptable to Wall Street. To be clear, under the original proposed regulation if you, or rather your firm, handled $99 million per year in swaps you were not regulated as a swaps dealer.

After Wall Street was done twisting arms the level was moved, to a whopping $8 billion. To be clear, if you or rather your firm handles $7.9 billion per year in swaps you are not any longer a “Swaps Dealer” and subsequently not subject to regulation as a swap dealer. An unbelievable and ridiculous cave to Wall Street by the public’s regulators.

And just in case it was not clear that Wall Street will continue to do exactly what it did before the crisis, another loophole was created by the regulators. Firms can rename their swap trades to bypass regulation. If a firm decides to call their trades “hedges” which takes them out of the $8 billion cap to be regulated:

After heavy lobbying from energy companies and big commodity traders, the final version bumps the threshold up to $8 billion for most asset classes as an initial phase-in. Eventually, that threshold could drop to $3 billion.

The CFTC also added a more explicit exemption for swaps that are done to hedge market risks, such as reducing exposure to interest-rate fluctuations or oil price moves. Those trades will not count toward the threshold that triggers the swap dealer designation.

For the love of God, really? So let me rephrase my previous statement to include the new loophole – a firm can handle $7.9 billion in swaps per year and another $7.9 billion (or more!) in swaps that it calls “hedges” and still not be subject to regulation. So really, there is no regulation of swaps. Or to put it another way, Wall Street has won again.

Americans For Financial Reform, weighed in on how worthless the regulation now is with a public comment:

Under an $8 billion de minimis exemption, a swaps entity could advertise itself as a dealer to the market and conduct 1,600 such transactions a year, without any requirement to register with the either the SEC or the CFTC. Commodity companies able to take advantage of the hedge exemption, or hedge funds and commodity trading desks able to use a possible own book trading exemption, could expand even further without designation.

Occupy The SEC, previously addressed swaps and the threshold in its public comment:

Risky products, such as illiquid bonds, credit default swaps (CDS), and other complex derivatives, were precisely those instruments that contributed to the financial crisis in 2008, and those that this legislation sought to expel from federally-backstopped banking entities. We find it disingenuous to suggest that this was not commonly understood by the banking entities, the regulators, and the public long before this Proposed Rule was drafted…

Consensus on the measurement of trading account size does not currently exist among the global regulators. The Market Risk Capital Rules referred to in the trading account definition in § _.3 refer to the current proposed Market Risk Capital rules. There is considerable debate among regulators and practitioners about appropriate measurement methodologies for structured products like credit default swaps. Therefore, should the Agencies decide not to require reporting across all banking entities, the final reporting trigger should be set low enough to compensate for these measurement shortcomings

But let’s face some facts, the failure to regulate Wall Street is not due to a lack of comprehension or nuance by the regulators. Wall Street is not subject to regulation because it is regulating the regulators with political influence bought with campaign cash.

As long as political leaders are concerned more with the welfare of Wall Street than the welfare of the country, regulating Wall Street will be a dream deferred. The crony capitalism now endemic in our system guarantees Wall Street a free pass on crimes and any societal restraints on its power. As long as money rules, Wall Street will remain above the law.

A Look At Occupy The SEC

7:28 pm in Uncategorized by DSWright

When a small band of citizens took to the streets on September 17th of last year few knew what to make of them. What followed was an explosion of creativity and activism – first leading to thousands coming to New York City to Occupy Zuccotti Park Liberty Plaza, then to sister occupations in cities and towns throughout the country and most recently to a series of offshoot movements like Occupy Our Homes.

The latest offshoot I have become aware of is Occupy The SEC which represents a different kind of activism because rather than physically trying to stop foreclosures or occupying a specific space, Occupy the SEC offers detailed policy responses to proposed financial regulations.

From the Occupy The SEC website:

Occupy the SEC is a group of concerned citizens, activists, and financial professionals with decades of collective experience working at many of the largest financial firms in the industry.

Why is this significant? Because despite public acknowledgements by Bankster CEOs and executives that Occupy Wall Street “is right, in general” the relentless attack from the Corporate Media has been that protesters are not sophisticated enough to understand the many splendored financial markets and the firms that operate in them and subsequently Wall Street and its activities are so complex that the average American can not understand them enough to critique them. This fallacy forms much of the basis for the elite and their media’s backlash against OWS. The trotting out of Wall Street apparatchiks (who happen to be in government at the moment) to deliver a consensus view of how the economy works and why Wall Street is indispensable has been a perpetual dog and pony show to confuse the citizenry on what is actually going on.

But is there really such a consensus among those with the suitable qualifications and knowledge bases? Au contraire mes amis réactionnaires.

If nothing else Occupy The SEC offers more proof that such a consensus is not overwhelming within the financial industry (if it ever existed at all). Below two members of the Occupy The SEC working group, Alexis Goldstein and Caitlin Kline, discuss a comment letter Occupy The SEC issued on the implementation of the Volcker Rule (Start at 5 mins).

If you are anything like me, and if you are lucky you aren’t, nothing beats schadenfreude. And oh how this Up with Chris Hayes segment, complete with an exchange between Congresswoman Maloney and Goldstein, serves up the schadenfreude. The Congresswoman is caught flat footed and tries to keep pivoting to the transportation bill then says one of her FinReg bills does something different than it actually does… but no. As someone that has worked for a few legislators I will only say in fairness that few to none of them actually write the bills they sponsor and vote for – most bills are written by staff in conjunction with various interests. Which is to say it is possible that Congresswoman Maloney is not being dishonest just genuinely doesn’t know what is in her own bills (if that makes it better?).

WATCH

Revenge of the technocrats! Now this does represent a real threat to the status quo’s modus operandi vis a vis Wall Street (there’s no such thing as too much Latin in one sentence etc.) because there is a standing media process to filter moralistic and partisan arguments regarding Wall Street’s greed and criminality – greed is necessary and “it’s just a few bad apples” – but there is currently no real filter for claims based on technical exactitude. So for now this seems to be a pretty effective tactic though I imagine Wall Street will resort to the tactical response conservatives use when opacity starts to fail, outright fantastic lying.

In any case, Occupy The SEC is definitely an offshoot of OWS to watch and I’m looking forward to see what they come out with next. Check out their Blog.

Goldman Sachs Tries To Get Into Islamic Banking or “Why They Hate Us”

1:16 pm in Uncategorized by DSWright

I am not in any way, shape, or form a Muslim. But you know what? I stand with many Muslims today as being offended and disgusted by Goldman Sachs’ presumption (and in fairness, their existence given that as a U.S taxpayer I bailed them out). From Reuters:

Goldman’s plan to become one of the first top Western banks to raise money through Islamic bonds, announced last October, has attracted controversy in the industry, and the bank has not so far proceeded with the plan.

Some analysts have suggested Goldman might use the proceeds of the sukuk to lend money to clients for interest, which would be against Islamic law, and that the issue might not trade at par value on the Irish exchange, which would also contravene sharia law.

Now what the fuck. Is it not enough that Goldman Sachs:

* Committed securities fraud in the mortgage securities market

* Which a congressional investigation revealed significantly contributed to the Financial Crisis of 2008.

* Or that Goldman Sachs directors have been caught insider trading.

* Or Goldman Sachs’ role in the Greek Crisis.

* Or that according to at least one 12 year veteran of the firm Goldman Sachs has a culture of screwing its clients.

And on and on.

No, that apparently is not enough. Now Goldman Sachs, our American Ambassadors Extraordinary of Greed and Connivance, are going to defraud and chisel their way through the Islamic world. Well I am sure this will do wonders for peace in the Middle East.

New York Times: The Banks Win, Again

3:44 pm in Uncategorized by DSWright

(image: dd392, photobucket)

(image: dd392, photobucket)

Despite some initial boasting and misdirection the Mortgage Fraud settlement by the Too Big To Jail Banks is actually… total bullshit. From the New York Times:

 

Under the terms of the settlement, the banks will provide $26 billion worth of relief to borrowers and aid to states for antiforeclosure efforts. In exchange, they will get immunity from government civil lawsuits for a litany of alleged abuses, including wrongful denial of loan modifications and wrongful foreclosures. That $26 billion is paltry compared with the scale of wrongdoing and ensuing damage, including 4 million homeowners who have lost their homes, 3.3 million others who are in or near foreclosure, and more than 11 million borrowers who are underwater by $700 billion.

The settlement could also end up doing more to clean up the banks’ books than to help homeowners…

This is actually another bailout under the guise of law enforcement.

When it comes to helping homeowners, banks are treated as if they still need to be protected from drains on their capital. But when it comes to rewarding executives and other bank shareholders, paying out capital is the name of the game. And at a time of economic weakness, using bank capital for investor payouts leaves the banks more exposed to shocks. So homeowners are still bearing the brunt of the mortgage debacle. Taxpayers are still supporting too-big-to-fail banks. And banks are still not being held accountable.

But it gets even better according to two policy experts in this Bloomberg Law discussion. Read the rest of this entry →

Jamie Dimon’s 1% Problems: People Don’t Like Rich Criminals Anymore

5:26 pm in Uncategorized by DSWright

 

Photobucket

 

Guys! You are being so mean to Jamie for realz!

Jamie Dimon, the head of JPMorgan Chase, would like to make it clear that he is not that kind of banker.

“I’ve disagreed right from the beginning of this blanket blame of all banks,” Dimon said in an interview with Charlie Gasparino of the Fox Business Network Tuesday. “I don’t like that. I think that’s just a form of discrimination that should be stopped.”

Dimon, who has been CEO of JPMorgan Chase since 2005, didn’t get specific about whom he’d rather not be lumped in with. He seemed, though, to be trying to draw a distinction between his own company — which accepted a bailout from the Troubled Asset Relief Program, but is generally seen as having weathered the financial crisis better than many other major firms — and banks that needed a greater degree of government assistance during and after the meltdown.

Whoah. I mean wow this is so tragic it’s one thing for millions of Americans to live in poverty and be thrown out of their homes, it’s quite another to guilt trip a CEO Banker – have a heart!

The interview was taped shortly before Dimon left for the World Economic Forum summit in Davos, Switzerland, where Dimon said he will be speaking with other attendees about financial regulation. At last year’s Davos summit, Dimon made similar remarks pushing back against the vilification of the banking industry, calling it “a really unproductive and unfair way of treating people.”

This is getting out of hand guys, srsly.

I think it’s time for Occupy Wall Street to start making It Gets Better videos for all the poor suffering Wall Street Banksters.

Hang in there Jamie I’m sure your $1.3 million salary and $64 million worth of stock options will help you get through the day – I guess that’s how the taxpayers show they care.

Stay strong Jamie, stay strong.

Donald Rumsfeld Uhhh Tim Geithner May Not Serve In Obama 2nd Term

12:24 pm in Uncategorized by DSWright

 

Photobucket
(Timothy Geithner by J Wohland)

 

Sometimes Presidents make horrible cabinet choices.

Bad cabinet choices can wound a good administration or damage one already spiraling down. It is easy to see how it could happen – someone comes highly recommended, with an impressive resume and lots of other credentials. They do well in the interview process and have a good rapport with the President-elect and his trusted aides or maybe he or she is a trusted aid. Given that dynamic, it’s not hard to see why George W. Bush chose Donald Rumsfeld and its not that hard to see why Barack Obama chose Tim Geithner. But in both instances Presidents made tragic errors.

Though I’m sure Bush was warned by people about Rumsfeld, it is well known Obama had a warning almost immediately from Senator Byron Dorgan that Summers, Geithner and crew were the wrong choices for his economic team, from New York Magazine:

There’s a poignant moment of sorts in December 2008 when the North Dakota senator Byron Dorgan implores the president-elect not to go with his economic team. “I don’t understand how you could do this,” he tells him. “You’ve picked the wrong people!” As indeed Obama did, under the tutelage of Robert Rubin, who also tried to finagle a White House guru role for himself, not unlike the perch from which he helped wreak havoc at Citigroup during its subprime orgy

Indeed, possibly the worst mistake of the Obama presidency. Larry Summers and his former Deputy Tim Geithner were the embodiment of the economic establishment that lead to the 2008 financial crisis. In fact, Summers and Geithner lead the campaign to oust Brooksley Born from the Commodity Futures Trading Commission – why? Because Mrs. Born wanted to regulate derivatives thinking they were dangerous and would lead to a financial meltdown. Summers, Geithner, Greenspan and Rubin destroyed Born then supported legislation that further deregulated derivatives. Woops.

Presidents also don’t like to admit they made a horrible mistake (who does really?) and so the most tacit admission is found when they dump people in the second term. This is what happened with Rumsfeld and why Tim Geithner is now, surely with White House consent, hinting he won’t be back:

Treasury Secretary Timothy F. Geithner said he doesn’t expect President Barack Obama to ask him to stay in office if he’s re-elected, and dismissed Wall Street’s concerns about financial regulations.

“He’s not going to ask me to stay on, I’m pretty confident,” Geithner said in an interview with Bloomberg Television today. “I’m confident he’ll be president. But I’m also confident he’s going to have the privilege of having another secretary of the Treasury.”

I’m confident if Obama isn’t re-elected Geithner will be one of the reasons why.

There are many good reasons to dump Tim Geithner like him being a blatant Wall Street puppet, not paying his taxes and being in charge of the IRS, having his fingerprints all over the Bankster give away that has people in the streets…but an even more compelling reason for Geithner to go is this -

 

What if Elizabeth Warren Becomes a Senator?

 

No one did more in the Obama Administration to undermine Elizabeth Warren than Tim Geithner.

From HuffPo:

Treasury Secretary Timothy Geithner has expressed opposition to the possible nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau, according to a source with knowledge of Geithner’s views.

The financial reform bill passed by the Senate on Thursday mandates the creation of a new federal entity charged with protecting consumers from predatory lenders.

But if Geithner has his way, the most prominent advocate for creating the agency may not be picked to lead it.

Simon Johnson:

And having Ms. Warren on the scene — providing an alternative, pro-consumer perspective — may not be to his liking.

President Obama missed his best opportunity to reform the financial system when advisers — including Mr. Geithner – recommended in March 2009 that he defer to top bankers

But forget the backroom, the contention became clear as day during the Financial Crisis Inquiry Commission when Warren grilled Geithner on his role in the bailouts and why AIG received 100 cents on the dollar and why banks are now MORE concentrated not less.

 

Needless to say relations would be much better between the White House and Massachusetts’ newest Senator if Tim Geithner was not the Treasury Secretary.

The tragedy of time or at least humans existence within it is the inability to go back and fix mistakes. Summers, Geithner and crew were bad choices that not only secured the power of Wall Street to keep putting the country at risk but deeply damaged the public’s trust in the Obama Administration and government generally.

Kicking Geithner to the curb after re-election will not undo what has been unfortunately done, but it will be a good start. What needs to happen for America to heal is not just a repudiation of certain individuals like Tim Geithner and Larry Summers but a repudiation of the philosophy they brought to government – that a Wall Street Elite should ruthlessly operate America for their own interests only stopping to confer with society through its representatives in DC with a check and a message “We own you.”