In the spirit of the original tea party, activists should be demanding accountability from Wall Street

[one...two...tree 2,762]

By Bill Moyers, Michael Winship

With all due respect, we can only wish those Tea Party activists who gathered in Washington and other cities this week weren't so single-minded about just who's responsible for all their troubles, real and imagined. They're up in arms, so to speak, against Big Government, especially the Obama administration.

If they thought this through, they'd be joining forces with other grassroots Americans who in the coming weeks will be demonstrating in Washington and other cities against High Finance, taking on Wall Street and the country's biggest banks.

The original Tea Party, remember, wasn't directed just against the British redcoats. Colonial patriots also took aim at the East India Company. That was the joint-stock enterprise originally chartered by the first Queen Elizabeth. Over the years, the government granted them special rights and privileges, which the owners turned into a monopoly over trade, including tea.

It may seem a bit of a stretch from tea to credit default swaps, but the principle is the same: When enormous private wealth goes unchecked, regular folks get hurt — badly. That's what happened in 2008 when the monied interests led us up the garden path to the great collapse.

So the Tea Party crowd should be demanding accountability from Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, and scores of hedge funds and private equity firms that constitute what we loosely call Wall Street.

But are the culprits taking responsibility for devastating the lives of millions of ordinary Americans? Don't kid yourself. If you've been watching them appear before congressional committees and the Financial Crisis Inquiry Commission — the independent inquiry that's supposed to find out what really happened — you've no doubt been reaching for the Pepto-Bismol.

Here's Robert Rubin, former treasury secretary and director of Citigroup, testifying last week: "Almost all of us involved in the financial system, including financial firms, regulators, ratings agencies, analysts and commentators, missed the powerful combination of forces at work and the serious possibility of a massive crisis. We all bear responsibility for not recognizing this, and I deeply regret that."

OK, maybe you didn't have a crystal ball. But what about good old-fashioned business sense? How could you make so much money and not know the score? "You are talking about a level of granularity no board will ever have," Rubin claimed. Citi paid you $120 million as a senior advisor and rainmaker and you're not responsible for knowing what's happening below you? You didn't bother to assess the risk you were peddling to clients?

The committee heard a similar alibi from Chuck Prince, who served as CEO of Citigroup during its meltdown: "Let me start by saying I'm sorry. I'm sorry that the financial crisis has had such a devastating impact on our country … And I'm sorry that our management team, starting with me, like so many others, could not see the unprecedented market collapse that lay before us."

Commission chairman Phil Angelides, the former state treasurer of California, wasn't buying it. "The two of you, in charge of this organization, did not seem to have a grip on what was happening," he said, and to Rubin, "I don't know that you can have it two ways: You were either pulling the levers or asleep at the switch."

Nonetheless, the financiers wail, it was all an enormous accident, a once-in-a-century calamity, an act of God. But of course that's not true. Lots of people saw it coming and made a bundle, taking off with the loot at the expense of the millions who lost their jobs, homes and savings. There's no longer any question that many bankers continued to game the system after the collapse — still paying themselves exorbitant salaries and bonuses while hitting everyday people with usurious same-day paycheck loans, credit card fees and other charges — and refusing to help small and medium-sized businesses that could be creating employment.

The Tea Party gang really should have dropped by those Senate hearings this week looking into the failure of Washington Mutual, the bank that went belly up during the meltdown in September 2008 — the largest such failure in American history.

As an 18-month Senate investigation revealed, WaMu made subprime loans that its executives knew were rotten, then packaged them as mortgage securities and pawned them off on unsuspecting investors. Loan officers were paid by the number of mortgages they sold, and they ran up the numbers by lying to customers and falsifying data so they could make bigger bucks and win trips to Maui and the Caribbean. At one Washington Mutual office in Montebello, Calif., 83 percent of the housing loans contained bogus information.

Then there's Lehman Brothers. Their misfortune, apart from some chicanery only now coming to light, was being small enough to fail. During those black September days two years ago, the feds decided it was expendable and let it go, leading to America's biggest bankruptcy ever. In an admirable job of journalism this week, the New York Times reported that Lehman secretly controlled a company called Hudson Castle. Critics say it was used by Lehman to borrow money and to hide bad investments in commercial real estate and subprime mortgages.

But the week's award for sheer gall goes to a Chicago-area hedge fund called Magnetar, named after a kind of neutron star that spews deadly radiation across the galaxies. Thanks to the teamwork of the investigative reporting Web site ProPublica, as well as public radio's Planet Money project and "This American Life," we learned that Magnetar worked with Citigroup, JPMorgan Chase, Merrill Lynch and other investment banks to create toxic CDO's — collateralized debt obligations — securities backed by subprime mortgages that management knew were bad. Then Magnetar took that knowledge and bet against the very same investments they had recommended to buyers, selling short and making a fortune.

To simply call all of this "creative accounting" is to do it an injustice. This is corruption, cynicism and greed on a scale that would make the Roman emperor Caligula cringe. Or rather, the emperor Nero. He didn't just poison the citizens of Rome; legend has it that he burned the place down, fiddling around in the ashes, just like our Wall Street tycoons.

But since we know all this, why is it so hard to hold Wall Street accountable? Which brings us to what the Tea Party people should have been complaining about this week. The banking industry and corporate America are fighting against proposed financial reform with all the money and influence at their disposal, attempting to preserve a system that would enable them to ransack the country once again.

Look at Eric Lichtblau's report this week, also in the New York Times, under the headline. "Lawmakers Regulate Banks, Then Flock to Them." The financial services industry has hired more than 125 former members of Congress and congressional staffers from both parties to help them fight off accountability.

No wonder, too, that this headline appeared in the Times this week: "GOP Takes Aim at Plans to Curb Finance Industry." That's not surprising. Earlier this year Republican politicians told Wall Street: Give us the scratch and we'll scrap reform.

The GOP's SWAT team — also known as the U.S. Chamber of Commerce — has already spent $3 million to try to kill or cripple a key part of reform — the proposed new Consumer Financial Protection Agency. With the chamber as their front, corporations have bankrolled ads that make it seem like the Red Army is at our doorstep.

Advocates for reform have countered with ads of their own, but Democrats are deep in hock to Wall Street, too. Remember the hedge fund Magnetar that bet against its own products? The owners covered their bets with ample campaign contributions to Rahm Emanuel. Yep, the same — President Obama's White House chief of staff. At the time he was U.S. representative from Illinois and chair of the Democratic Congressional Campaign Committee, which collected millions of dollars from the financial services industry.

In fact, the Web site Politico.com reports that "the nation's ten richest hedge fund managers have dumped nearly one million dollars into campaign accounts over the past several years ... consumer advocates and critics from other financial sectors say hedge funds would get off pretty easily" under the Senate reform bill.

Bottom line: "The Wall Street banks are the new American oligarchy — a group that gains political power because of its economic power, and then uses that political power for its own benefit." So write Simon Johnson, former chief economist at the International Monetary Fund, and James Kwak, former management consultant and software entrepreneur, in their important new book, "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown."

Their words of warning and the past year and a half make you realize that as usual, Thomas Jefferson, whose birthday we celebrated this week, had it right. Back in 1816, he wrote, "I sincerely believe ... that banking establishments are more dangerous than standing armies."

link

[scandal 951]

But the week's award for sheer gall goes to a Chicago-area hedge fund called Magnetar, named after a kind of neutron star that spews deadly radiation across the galaxies. Thanks to the teamwork of the investigative reporting Web site ProPublica, as well as public radio's Planet Money project and "This American Life," we learned that Magnetar worked with Citigroup, JPMorgan Chase, Merrill Lynch and other investment banks to create toxic CDO's — collateralized debt obligations — securities backed by subprime mortgages that management knew were bad. Then Magnetar took that knowledge and bet against the very same investments they had recommended to buyers, selling short and making a fortune.

This was indeed on TAL this past week. An excellent segment, as all of TAL's segments on the financial crisis have been.

[one...two...tree 2,762]

This was indeed on TAL this past week. An excellent segment, as all of TAL's segments on the financial crisis have been.

I'll try to listen to the podcast. What a terrific radio program.

[rsn 135]

By Bill Moyers, Michael Winship

With all due respect, we can only wish those Tea Party activists who gathered in Washington and other cities this week weren't so single-minded about just who's responsible for all their troubles, real and imagined. They're up in arms, so to speak, against Big Government, especially the Obama administration.

If they thought this through, they'd be joining forces with other grassroots Americans who in the coming weeks will be demonstrating in Washington and other cities against High Finance, taking on Wall Street and the country's biggest banks.

The original Tea Party, remember, wasn't directed just against the British redcoats. Colonial patriots also took aim at the East India Company. That was the joint-stock enterprise originally chartered by the first Queen Elizabeth. Over the years, the government granted them special rights and privileges, which the owners turned into a monopoly over trade, including tea.

It may seem a bit of a stretch from tea to credit default swaps, but the principle is the same: When enormous private wealth goes unchecked, regular folks get hurt — badly. That's what happened in 2008 when the monied interests led us up the garden path to the great collapse.

So the Tea Party crowd should be demanding accountability from Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, and scores of hedge funds and private equity firms that constitute what we loosely call Wall Street.

But are the culprits taking responsibility for devastating the lives of millions of ordinary Americans? Don't kid yourself. If you've been watching them appear before congressional committees and the Financial Crisis Inquiry Commission — the independent inquiry that's supposed to find out what really happened — you've no doubt been reaching for the Pepto-Bismol.

Here's Robert Rubin, former treasury secretary and director of Citigroup, testifying last week: "Almost all of us involved in the financial system, including financial firms, regulators, ratings agencies, analysts and commentators, missed the powerful combination of forces at work and the serious possibility of a massive crisis. We all bear responsibility for not recognizing this, and I deeply regret that."

OK, maybe you didn't have a crystal ball. But what about good old-fashioned business sense? How could you make so much money and not know the score? "You are talking about a level of granularity no board will ever have," Rubin claimed. Citi paid you $120 million as a senior advisor and rainmaker and you're not responsible for knowing what's happening below you? You didn't bother to assess the risk you were peddling to clients?

The committee heard a similar alibi from Chuck Prince, who served as CEO of Citigroup during its meltdown: "Let me start by saying I'm sorry. I'm sorry that the financial crisis has had such a devastating impact on our country … And I'm sorry that our management team, starting with me, like so many others, could not see the unprecedented market collapse that lay before us."

Commission chairman Phil Angelides, the former state treasurer of California, wasn't buying it. "The two of you, in charge of this organization, did not seem to have a grip on what was happening," he said, and to Rubin, "I don't know that you can have it two ways: You were either pulling the levers or asleep at the switch."

Nonetheless, the financiers wail, it was all an enormous accident, a once-in-a-century calamity, an act of God. But of course that's not true. Lots of people saw it coming and made a bundle, taking off with the loot at the expense of the millions who lost their jobs, homes and savings. There's no longer any question that many bankers continued to game the system after the collapse — still paying themselves exorbitant salaries and bonuses while hitting everyday people with usurious same-day paycheck loans, credit card fees and other charges — and refusing to help small and medium-sized businesses that could be creating employment.

The Tea Party gang really should have dropped by those Senate hearings this week looking into the failure of Washington Mutual, the bank that went belly up during the meltdown in September 2008 — the largest such failure in American history.

As an 18-month Senate investigation revealed, WaMu made subprime loans that its executives knew were rotten, then packaged them as mortgage securities and pawned them off on unsuspecting investors. Loan officers were paid by the number of mortgages they sold, and they ran up the numbers by lying to customers and falsifying data so they could make bigger bucks and win trips to Maui and the Caribbean. At one Washington Mutual office in Montebello, Calif., 83 percent of the housing loans contained bogus information.

Then there's Lehman Brothers. Their misfortune, apart from some chicanery only now coming to light, was being small enough to fail. During those black September days two years ago, the feds decided it was expendable and let it go, leading to America's biggest bankruptcy ever. In an admirable job of journalism this week, the New York Times reported that Lehman secretly controlled a company called Hudson Castle. Critics say it was used by Lehman to borrow money and to hide bad investments in commercial real estate and subprime mortgages.

But the week's award for sheer gall goes to a Chicago-area hedge fund called Magnetar, named after a kind of neutron star that spews deadly radiation across the galaxies. Thanks to the teamwork of the investigative reporting Web site ProPublica, as well as public radio's Planet Money project and "This American Life," we learned that Magnetar worked with Citigroup, JPMorgan Chase, Merrill Lynch and other investment banks to create toxic CDO's — collateralized debt obligations — securities backed by subprime mortgages that management knew were bad. Then Magnetar took that knowledge and bet against the very same investments they had recommended to buyers, selling short and making a fortune.

To simply call all of this "creative accounting" is to do it an injustice. This is corruption, cynicism and greed on a scale that would make the Roman emperor Caligula cringe. Or rather, the emperor Nero. He didn't just poison the citizens of Rome; legend has it that he burned the place down, fiddling around in the ashes, just like our Wall Street tycoons.

But since we know all this, why is it so hard to hold Wall Street accountable? Which brings us to what the Tea Party people should have been complaining about this week. The banking industry and corporate America are fighting against proposed financial reform with all the money and influence at their disposal, attempting to preserve a system that would enable them to ransack the country once again.

Look at Eric Lichtblau's report this week, also in the New York Times, under the headline. "Lawmakers Regulate Banks, Then Flock to Them." The financial services industry has hired more than 125 former members of Congress and congressional staffers from both parties to help them fight off accountability.

No wonder, too, that this headline appeared in the Times this week: "GOP Takes Aim at Plans to Curb Finance Industry." That's not surprising. Earlier this year Republican politicians told Wall Street: Give us the scratch and we'll scrap reform.

The GOP's SWAT team — also known as the U.S. Chamber of Commerce — has already spent $3 million to try to kill or cripple a key part of reform — the proposed new Consumer Financial Protection Agency. With the chamber as their front, corporations have bankrolled ads that make it seem like the Red Army is at our doorstep.

Advocates for reform have countered with ads of their own, but Democrats are deep in hock to Wall Street, too. Remember the hedge fund Magnetar that bet against its own products? The owners covered their bets with ample campaign contributions to Rahm Emanuel. Yep, the same — President Obama's White House chief of staff. At the time he was U.S. representative from Illinois and chair of the Democratic Congressional Campaign Committee, which collected millions of dollars from the financial services industry.

In fact, the Web site Politico.com reports that "the nation's ten richest hedge fund managers have dumped nearly one million dollars into campaign accounts over the past several years ... consumer advocates and critics from other financial sectors say hedge funds would get off pretty easily" under the Senate reform bill.

Bottom line: "The Wall Street banks are the new American oligarchy — a group that gains political power because of its economic power, and then uses that political power for its own benefit." So write Simon Johnson, former chief economist at the International Monetary Fund, and James Kwak, former management consultant and software entrepreneur, in their important new book, "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown."

Their words of warning and the past year and a half make you realize that as usual, Thomas Jefferson, whose birthday we celebrated this week, had it right. Back in 1816, he wrote, "I sincerely believe ... that banking establishments are more dangerous than standing armies."

link

Tea baggers will never hold Wall Street accountable, it's not part of their marching orders. In fact, it never will be as long as they continue to associate with corporate lobbyists & allow them to speak at their gatherings. In fact, I was listening to Rush yesterday and he had the audacity to suggest that Americans should feel ashamed for rallying against Wall Street for their actions. His short-sided argument was something to the effect of "don't bite the hand that feeds you". I'm paraphrasing here, so to all the Rush zombies, don't jump down my throat by claiming this is not an exact quote.

[Kevin and 10]

They won't as long as they let the neo-cons take over their movement. They should have never let the McCains, Palins, Becks, and Rushs into the tea party.

[DEDixon 39]

i think the narrow focus is better for the tea party. i also think it is lame for anyone to say "what the tea party really should be doing is this or that." i think they are right in keeping the focus narrow so the message is clear. if they have a broad message then they are simply one of many.

[I AM NOT THAT GUY 5,715]

Perhaps you should resurrect the Bull Moose Party:

"To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day." - 1912 Progressive Party Platform, attributed to Theodore Roosevelt

[alienlovechild 75]

Tea baggers will never hold Wall Street accountable, it's not part of their marching orders. In fact, it never will be as long as they continue to associate with corporate lobbyists & allow them to speak at their gatherings. In fact, I was listening to Rush yesterday and he had the audacity to suggest that Americans should feel ashamed for rallying against Wall Street for their actions. His short-sided argument was something to the effect of "don't bite the hand that feeds you". I'm paraphrasing here, so to all the Rush zombies, don't jump down my throat by claiming this is not an exact quote.

It was primarily the Democrats who controlled Congress at the time and the fear stoking of the Obama campaign that fall that helped them win the election. Obama's transition team had almost unparalleled access on the bailouts to work with Bush officials prior to the election.

Now the Democrats say the bank bailouts were necessary as Obama saved the economy from a depression and that a lot of the money has already been paid back.

It's a little late to protest against bank bailouts that have already happened. What's worse the fools who lost money and wanted a bailout or the fools (from a populist POV)that gave it to them?

The Democrats are trying to get the tea party to vent against anyone but them because they know there's a big beatdown coming in 7 months.

[scandal 951]

Now the Democrats say the bank bailouts were necessary as Obama saved the economy from a depression and that a lot of the money has already been paid back.

It's a little late to protest against bank bailouts that have already happened. What's worse the fools who lost money and wanted a bailout or the fools (from a populist POV)that gave it to them?

a. The bank bailouts were necessary. Our society as we know it literally was 5 seconds from midnight from disintegration, and that's not hyperbole. The bailout began in Sept08 during the Bush/Paulson era and thank goodness it did. It was acute enough that it could not wait for the Nov08 election and the Jan09 inauguration.

b. One can be upset with the banks even as they are being bailed out. There is no contradiction in that. Sometimes you do what you have to do, not what you'd like to do. That's called maturity and reacting to the situation as a responsible adult.

[alienlovechild 75]

a. The bank bailouts were necessary. Our society as we know it literally was 5 seconds from midnight from disintegration, and that's not hyperbole. The bailout began in Sept08 during the Bush/Paulson era and thank goodness it did. It was acute enough that it could not wait for the Nov08 election and the Jan09 inauguration.

b. One can be upset with the banks even as they are being bailed out. There is no contradiction in that. Sometimes you do what you have to do, not what you'd like to do. That's called maturity and reacting to the situation as a responsible adult.

So I take you think the tea party shouldn't be "redirected" to go after the bank bailouts and take it Bush should get at least half credit making it happen.

Don't entirely understand your "b" so here's my take- Billions were loaned to private entities and that pisses off the little guy who doesn't see the macroeconomic picture. It was done fairly quickly without much debate thinking the alternative would be a domino collapse of major financial institutions which would trigger another Great Depression.

[scandal 951]

So I take you think the tea party shouldn't be "redirected" to go after the bank bailouts and take it Bush should get at least half credit making it happen.

Don't entirely understand your "b" so here's my take- Billions were loaned to private entities and that pisses off the little guy who doesn't see the macroeconomic picture. It was done fairly quickly without much debate thinking the alternative would be a domino collapse of major financial institutions which would trigger another Great Depression.

I don't give a damn what the tea party directs itself to do. They have their right to vent and rage at the machine, that doesn't mean I have to pay the slightest bit of attention to them.

Yes, I do think the Bush administration, and most particularly Hank Paulson, deserve tremendous credit for saving the country from the abyss. I think Bush did a lot of harmful things in 8 years in office, but I am always willing to recognize the good that our leaders do. Politics to me is not a black/white game of one party=good , the other=evil. There are always nuances and shades of gray.

I think your take on "b" is correct. The bailout had to happen urgently, there was no time to delay. People may not like the idea of the villains getting the handout , but the alternative was national suicide.

What I meant to say in "b" was that we had to do the bailout. That doesn't excuse the bailout recipients from our collective anger, however. Now that the acute crisis has passed and we are able to think things through one of the clearest lessons should be that we need much more substantive regulation of these "too big to fail" banks. Democrats are behind it, but not a single Republican is willing to sign on. What does that tell you?

[alienlovechild 75]

What I meant to say in "b" was that we had to do the bailout. That doesn't excuse the bailout recipients from our collective anger, however. Now that the acute crisis has passed and we are able to think things through one of the clearest lessons should be that we need much more substantive regulation of these "too big to fail" banks. Democrats are behind it, but not a single Republican is willing to sign on. What does that tell you?

We're not in crisis situation now so there should be some thought put into what kind of banking regulation is needed. The GOP position seems to be to restrict further bailouts without some kind of criteria laying out who gets the money. Sounds fair enough considering some firms went under and others were spared in the fall of 2008.

"Republicans in recent days have sought to argue that the legislation wouldn't put an end to the concept of "too big to fail." Senior GOP aides laid out their argument in a conference call with reporters Thursday, taking specific aim at provisions they said would give federal regulators too much discretion to pay off certain creditors and shareholders of a failing firm.

"They don't have to bail out everybody, they can bail out who they want," the aides said.

Mr. Corker expressed similar concerns in an interview but said any remaining problems could be fixed "in five minutes" if both parties agreed to negotiate in good faith.

"There were some loopholes built into the bill that gave the agencies and the administration a degree of flexibility where they could do things other than what is proscribed," Mr. Corker said. "We need to take those out."

http://online.wsj.com/article/SB10001424052702304510004575186321593310094.html?mod=WSJ_latestheadlines

[scandal 951]

I'll tell you what. If Republicans are opposed in principle to certain provisions but are willing to put together a bipartisan bill that gets broad support from both parties, I will tip my hat to them.

However, if all they are doing is being the "Party of No" just as they were on the Stimulus, on Healthcare, on Sotomayor, and on virtually every substantive issue brought before Congress in the past year, then I will assess them for the politically expedient opportunists they have proven to be since this Congress came into session.