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Obama’s Common Sense Approach To Financial Reform Mirrors Health Care Reform: Hold On To Your Wallet

7:13 pm in Uncategorized by masaccio

In his Cooper Union Speech, President Obama called for common sense financial reforms. He was talking to a bunch of the thugs on Wall Street, voracious zombies who don’t deal in common sense any more than the leeches at Wellpoint. They deal in profits, and there is absolutely nothing they won’t do to protect their ability to profit at the expense of every single human on the planet, including their cubicle mates.

The common sense reforms the President supports are meaningless in the face of the depredations of Wall Street which have destroyed the lives and fortunes of millions of their fellow citizens.

1. A liquidation authority for institutions of a certain size, which will shut them down with the “… least amount of collateral damage to innocent people and businesses”. I’m sure you and your grandkids can afford that.

2. “Some limits” on the size of banks and the kinds of risks they can take, set by regulators who are appointed by the same people who did nothing last time.

3. Transparency in derivatives. These apply only to “standard” derivatives, an undefined term, to be defined by regulators appointed by the same people who watched Wall Street set fire to your money.

4. Consumer protection. The President thinks banks want to compete offering better products rather than selling confusing and expensive products. OK, that’s funny.

5. Shareholder “say on pay”, and more power to act in corporate elections if the SEC allows it. Mutual funds own most of the stock of these giants, and they have their hands in your pockets just like Wall Street does.

I’m having trouble believing my eyes. This pathetic set of reforms is the change we get to deal with the worst financial disaster in decades? The economy was crushed by an industry which functions on fraud, cheating consumers, wasting money on obviously fraudulent loans, paying itself gigantic bonuses, setting up transactions to screw their customers, raising interest and fees to the sky at the expense of a damaged group of workers, and this is what we get?

This is pathetic. No wonder the Republicans are willing to negotiate from this ludicrous starting point. By the time the negotiations are over, we can expect a mandate that each of us open three credit card accounts and use them for all purchases, paying 30% interest compounded daily, with no grace period. And if you don’t, the IRS will collect a fee equal to 1% of your income to pay for the salaries of the banksters and their lobbyists.

Rewarding Failure is the New American Ethos

10:30 am in Uncategorized by masaccio

The NYT tells us that the financial elites who destroyed $14tn of wealth last year are doing just fine. Let’s see:

Richard Fuld, Failed CEO of Lehman: likes to commute to his vacation homes in Florida and Idaho.

E. Stanley O’Neal, Failed CEO of Merrill Lynch: serves on boards and concentrates on his squash game.

John Thain, another Failed CEO of Merrill Lynch: managed big wedding for his son, negotiating for board job.

Charles Prince, Failed CEO of Citigroup: lives in Palm Beach, works for consulting firm and plays golf.

Robert Rubin, Wildly successful at staying in power.

Christopher Cox, Failed head of SEC: lobbyist.

Zoe Cruz, failed highest ranking woman on Wall Street: returning to investment management.

Angelo Mozillo, Failed founder of Countrywide: devotes time to legal defense.

Joseph Cassano, Failed Credit Default Swap trader for AIG: devotes time to legal defense.

Other regulators are doing just fine too, as Gretchen Morgenson tells us:

Senior regulators who stood idly by for years as financial firms built their houses of cards have been rewarded with even bigger jobs or are jockeying for increased responsibilities. The Federal Reserve Board, for example, wants to become the financial system’s uber-regulator, even though its officials did nothing as banks made deadly decisions to lend recklessly and leverage themselves to the max.

Lehman’s rank and file are doing just fine too, despite the whining.

Those much further down the corporate ladder from Mr. McKinney, including about two dozen people interviewed for this story, say they don’t feel they deserve much blame for what happened at their firm. They were just following orders, they say.

Here’s a guy who headed up Aurora Loan Services, a major supplier of “no-doc” loans to the Lehman securitized mortgage machine:

“I spent a long time being very angry,” says Mr. Schaefer, the former Lehman executive turned gas station owner. “Angry for working so hard and doing so much. More importantly, for my family and all the time I was away traveling — the time I put in away from them. Now all that money I earned, the money paid in stock, is gone. I can’t go back and remake it.”

And my favorite, Mr. Linton, whose job was to evaluate the mortgages that went into pools. His models predicted disaster, but he didn’t do anything wrong, and when he got fired, he bet against Lehman Bros. stock, and made tons of money. He loves flying his airplane or riding around on his 37 foot boat.

He says he has no qualms about his work at Lehman or its economic aftereffects. “Anyone at our level who had a different view from senior management would find themselves going somewhere else quick,” he says. “You are not paid to rock the boat.”

And, for those who wonder about the charm offensive of Lloyd Blankfein, here’s some CEO worship from the NYT. As you know, he has a life story just like Sonia Sotormayor.

Just ignore those not-so-good stories. It’s your fault if you failed.

Millions of Americans have lost homes, jobs and savings to the financial crisis and recession. While greed and extravagance played roles, many lived beyond their means because their paychecks shrank. This article is adapted from “Past Due: The End of Easy Money and the Renewal of the American Economy,” by Peter S. Goodman, a reporter for The New York Times.