Debt Wish

The most perplexing question that arises out of the S&P downgrade of the U.S. debt is why we’re still worrying about what they think, after all the credit rating agencies’ previous political shenanigans.

The credit rating agencies claim they are entitled to their opinions under the First Amendment, even if they are bought and paid for by Wall Street.

But anything that the S&P offers should be taken with a huge grain of salt. As James Kwak pointed out on Baseline Scenario, the S&P’s latest insights into our financial/economic/political mess weren’t exactly earth-shattering. Apparently S&P wanted us to know that they recognized we’re suffering from political gridlock in Washington.

Thank you, S&P.

If the rating agency really wanted to offer a public service, it might have pointed out that the big banks’ bundled mortgages were nothing but trash before the economy collapsed.

But of course, as we know should all know by now, S&P and the other credit rating agencies are no more interested in peddling public service any more than they are interested in offering accurate information or thorough analysis.

S&P and the others are interested in serving the interests of Wall Street, and right now Wall Street is interested in forcing its austerity agenda on the rest of us. S&P is just trying to do its small part to batter any resistance we might offer.

Like the too big to fail banks, S&P has perfected the kind of lack of shame which allows it to dispense its financial opinions with a straight face, demanding to be taken seriously even though it missed the fraud, sloppiness and greed that led up the financial collapse.

Come to think of it, there is a more perplexing question about S&P: how come a swarm of federal investigators hasn’t taken the agency down, following up on the earlier Senate investigation?

Jane Hamsher has an interesting take on that question at firedoglake, posing the theory that S&P’s thrashing of the U.S. credit rating is an effort to pay back Republicans for keeping the authorities off S&P’s back. In the bigger picture, S&P is just trying to play its part in efforts by leaders of both parties to slash Social Security and other programs that benefit the middle class under the guise of balancing the budget.

But the S&P tipped its political hand by favoring cuts to social programs over tax loophole-closing, revenue-raising, or real defense cuts. When Wall Street and its cronies need help, the credit rating agencies will always do their part.

 

 

 

Around the Web / Congress / Martin Column - 08/07/2011

Consumer Protection Only Wall Street Could Love

When it comes to finding someone to head the Financial Consumer Protection Bureau that opened its doors this week, the Republicans remind me of that Groucho Marx bit: “Whoever it is, we’re against them.”

The Republicans have a pretty straightforward position:  they’ve made it clear they’ll only be satisfied with one kind of financial consumer protection agency: one that’s dead, buried and incapable of causing the big banks any trouble.

Meanwhile, President Obama is caught between his promises to create a powerful new agency to rein in Wall Street and his need to raise $1 billion to fuel his reelection campaign.

So the president dissd the highly articulate Elizabeth Warren, who came up with the idea for the new agency and who has been a down-to-earth, no-nonsense advocate for consumers for decades, in favor of the former Ohio attorney general, Richard Cordray.

Republicans don’t like Cordray, who enjoys a decent enough reputation any more than they liked Warren. Obama could have waged a political popular fight in favor of Warren and real protection but he didn’t.

How come? On the one hand President Obama would prefer not like to see one of the signature achievements of his financial reform effort strangled in its crib.

On the other hand Wall Street doesn’t like even the whiff of anybody   implying that the bankers might take advantage of their customers let alone anybody actually trying to do something about it.

Based on his weak negotiating efforts so far, Obama and the Democrats are perfectly capable of accepting some form of the proposal offered by Sen. Jim Moran, R- Kansas, which would turn the real power over the CFPB to a committee, preserving consumer protection in name only. Obama and the Democrats can run on that with the same gusto the president is pretending that the faux financial reform actually reined the Wall Street fraud and excess that led to the 2008 financial collapse and bailout.

Democrats and Republicans are competing hard, less for the affections of voters and more for the mountains of cash beckoning to them from Wall Street and corporate coffers.

In calculating whether to keep their promise to protect consumers or whether to bend to Wall Street, the president and the Democrats know that the Democratic voters have no other place to go right now; they are unlikely to swing to the “We’re against it” party even as much as Obama disappoints them

But Obama and the Democrats know Wall Street, which was generous to them in 2008, does have a choice. The Republicans are wooing Wall Street hard, though the Republicans’ knuckleheaded stance on the debt ceiling makes them look more like surly juvenile delinquents than a party with an interest in actually governing.

Time will tell whether the Democrats or the Republicans will actually allow the new agency to do real consumer protection or if they will thwart the majority’s will in favor of Wall Street’s.

 

 

Around the Web / Consumer Financial Protection Agency / Martin Column / President Barack Obama - 07/23/2011

With Watchdogs Like These...

It would be bad enough if our leaders were letting the high-finance big shots off the hook for their misdeeds because the authorities were just too incompetent to catch them.

But what’s worse is that those in power don’t want to hold the high rollers accountable and run the other way when any opportunity presents itself to shine a light on how we got here.

The most recent examples are the shenanigans of Rep. Darrell Issa, head of the House Committee on Oversight and Reform.

Issa’s committee could play a crucial role in highlighting the abuse and fraud that led to the crisis if he chose, similar to the one played by Ferdinand Pecora’s hard-hitting investigation into the financial corruption and speculation that led to the Great Depression.

But Issa, a Republican, has other agendas in mind – like embarrassing the Democrats and protecting Republican interests in winning more donations from Wall Street. His priorities have been in lock-step with the Republican attack on government regulation of corporations, rather than figuring out how government might do a better job of responding to corporate abuse.

This week he hastily canceled an inquiry into the Financial Crisis Inquiry Commission after emails surfaced that would have severely embarrassed Republicans on that bipartisan commission that investigated the causes of the financial collapse.

In response to Issa’s investigation, the Democrats on the commission issued another report, accusing the Republicans of rigging their conclusions to support their political goals – weakening the Dodd-Frank financial reform.

The commission itself had long ago collapsed along partisan lines, with Democrats issuing a report that reached bland conclusions – it was everybody’s fault, while three of the committee’s Republicans were reluctant to blame anybody except to the extent that they agreed with the bankers – it was the fault of an unforeseeable global housing collapse.

The fourth Republican, meanwhile, fixed the blame on the right’s favorite bogeymen – poor people, Fannie Mae and Freddie Mac.

But the FCIC’s Democrats have now unearthed an email sent by that fourth Republican, Peter Wallison, fellow at the right-wing American Enterprise Institute think tank, to another FCIC Republican, Douglas Holz-Eakins, the day after Republicans took the majority in the House of Representatives last year. In the Nov. 3 email, Wallison wrote that it is "very important" that the separate GOP statements "not undermine the ability of the new House GOP to modify or repeal Dodd-Frank."

Issa has a chance to redeem himself by joining the senior Democrat on the oversight panel, Elijah Cummings in scrutinizing the shameful foreclosures of members of the nation’s military.

I wouldn’t hold my breath for that to happen.

While Issa has shown some willingness to tackle an investigation of the Obama administration’s failed foreclosure relief program, he’s shown no interest in the robo-signing scandal or aspects of the housing crisis that might embarrass the big banks.

Martin Berg

 

Around the Web / Financial Crisis Inquiry Commission / Foreclosures / Martin Column - 07/13/2011

D.C. Disconnect: It's Just a JOBS Recession

According to one of the pontificators on NPR’s Marketplace, the economy is actually fine, we’re just in a “jobs recession.”

Now I feel better.

This is what passes for insightful commentary among the media elite on the day that unemployment shot back up to 9.2 percent.

“If you’re rich, it’s great,” says Felix Salmon, Reuters columnist. “But if you’re a working person it’s terrible.”
As for President Obama, he reacted to the terrible jobs report by saying: “We still have a long way to go.”

Except he shows no inclination to go there.

He’s wrapped up in the Republican austerity agenda so tight he can’t find his way to suggest anything to reduce unemployment.

He meekly suggested that reducing the deficit would help create jobs, though most economists acknowledge such cuts will hurt the economy – and the unemployed.

We all know that President Obama needs to raise $1 billion for his presidential campaign, and Republicans are falling over themselves to kill financial reform in their efforts to woo Wall Street. You have to admire the Republicans' focus: they don't give a damn about the economy, they only care about getting rid of Obama.

But both Obama and the Republicans they must be counting on only the rich voting.

The day before the jobs report, Obama’s top political adviser told Bloomberg News that the unemployment rate wouldn’t hurt Obama’s reelection chances. Obama adviser David Plouffe also asserted that people thought that the economy was getting better, based on anecdotal evidence.

Here’s what Plouffe had to say:

“You see, people’s — people’s attitude towards their own personal financial situation has actually improved over time. You know, they’re still concerned about the long-term economic future of the country, but it’s things like “My sister was unemployed for six months and was living in my basement and now she has a job.

There’s a — a “help wanted” sign. You know, the local diner was a little busier this week. Home Depot was a little busier. These are the ways people talk about the economy.”

Either Plouffe is drinking his own Kool-Aid or thinks he can play off the worst economic downturn since the Great Depression as a minor dip.

As emptywheel points out on Firedoglake, the measures of consumer confidence don’t agree with Plouffe’s blithe assessment. As emptywheel suggests, if they expect voters to keep them in their jobs, Plouffe, Obama and the rest of the administration need to get out of their bubble and start listening “to the pain of real people.”

Martin Berg

 

Around the Web / Martin Column / Uncategorized - 07/08/2011

Mortgage Frauds, Official Shenanigans

Just how did the biggest bank fraud in the nation’s history go on with the full knowledge of authorities for 7 years?

Apparently, without much trouble.

Earlier this week, a judge sentenced Brian Farkas to 30 years in prison. He was the head of one of the country’s largest non-depository mortgage companies, convicted of a multibillion-dollar fraud that has been labeled the largest in the country’s history. The case was brought to prosecutors by the bailout’s former special inspector general – after a bank associated with the mortgage company tried to rip off the Troubled Asset Relief Program for $550 million.

Prosecutors said they sought the tough sentence as a deterrent, though bankers might not get the message.

Writing in the New York Times, white-collar criminal law expert Peter Henning said more respectable executives at bigger companies “perceive themselves as different from – and often better than – those who have been caught and punished, even if they are not.”

But one of the most outrageous aspects of the case has nothing to do with Farkas’ behavior: It has to do with how a government-sponsored  agency, Fannie Mae, found evidence of his wrongdoing  in 2000 and didn’t report it. According to court testimony as reported by Bloomberg News and the New York Times, when Fannie Mae found out that the bank was selling loans that had no value, the agency merely cut its ties with the bank.

Another government-sponsored agency picked up the business a week later, Bloomberg reported.

William Black, a former bank regulator who has been a sharp critic of the current administration’s lack of aggressiveness in investigating fraud in the wake of the 2008 financial collapse, told Bloomberg: “If there had been a criminal referral, Farkas would have gone to jail in 2002.”

Farkas’ firm, Taylor Bean remained in business for another 7 years before it collapsed in August 2009.

The confidential agreement to disentangle Freddie Mac from Taylor Bean was overseen by Freddie Mac’s general counsel, Thomas Donilon, who now serves as national security adviser to President Obama.

It’s not the first time Donilon’s actions have been called into question: while he was a lawyer in private practice, he led lobbying efforts to undermine the credibility of an investigation into Fannie Mae’s shaky finances in 2004.

It’s worth cheering that prosecutors finally successfully prosecuted a major case stemming from mortgage crowd. But it’s also worth noting that the perp does not come from the ranks of the nation’s too big to fail banks.

It’s also worth noting that Donilon’s conduct in the financial collapse didn’t get him cast out as a pariah, it won him one of the most important jobs in this administration.

 

 

 

 

 

 

 


Around the Web / Financial Crisis / Martin Column / President Barack Obama - 07/01/2011

Get Off Corporate Crack

I spent last week at the Netroots Nation conference in Minneapolis, a gathering of activists who embrace the progressive label in one way or another.

The news media was there in force, churning out stories about how these progressives are dissatisfied with President Obama’s performance. That’s especially true in his handling of the economy, where unemployment is still too high, the foreclosure crisis is still rampant, the financial sector still hasn’t been adequately reformed after its excesses and Wall Street lobbyists have tangled up in knots even the meager attempts to regulate bankers.

One refrain summed up the frustration with the president’s performance on the economy: “No one has gone to jail.”

But beyond the venting that the media focused on was another, potentially bigger story that has the possibility of leapfrogging the divide between left and right.

That was the emerging demand for a mass movement to rid our politics of the corporate funding that has been as devastating as crack cocaine was in the streets.

Our politicians are hooked on corporate crack, and they will do anything and say anything to get it. They will break any promise, without caring how foolish and hypocritical they look.

This corporate money undermines both parties: Democrats promise to protect workers and consumers but end up promoting ineffective half-measures, while Republicans express support for the free market but actually support the unfettered power of a corporate oligarchy.

I had the opportunity to point out a recent example of how this corporate crack makes fools out of politicians and even the president of the United States during a Netroots session with Jeremy Bird, national strategy adviser to the Obama campaign.

I recounted how one day after reading about a secret meeting between Obama and his Wall Street donors at the White House, I received an email from Obama asking for five bucks, promising a different kind of fundraising campaign that didn’t rely on fat cats.

“Which is it?” I asked Bird. You can read Roll Call’s account here.

Bird responded that Obama’s “multi-faceted” fundraising wouldn’t take money from political campaign committees or lobbyists,  but Wall Street contributions are welcome.

Does the president really see a distinction, or is he just hoping no one is paying attention?

If the politicians are counting on people feeling too cynical and helpless to take action, that may be changing, sparked by the U.S. Supreme Court ruling in Citizens’ United, which said that corporate campaign contributions are a form of free speech so they cannot be restricted.

During another session, John Nichols, the Nation’s crusading Washington correspondent issued a fiery call for a nationwide movement to promote a constitutional amendment to undo Citizens’ United.

He compared the potential impact of such a movement to the impact of  the movement for a constitutional amendment to ban abortion. Though the “right to life” movement hasn’t achieved success. Nichols said, it has changed the nature of the debate.
Back on the subject of overturning Citizens’ United, Nichols said, “I can live without the actual constitutional amendment. But I can’t live without the movement.”

We need a movement that labels corporate crack exactly what it is.  It’s not speech. It’s bribery.

 

Action / Around the Web / Congress / Financial Reform Legislation / Martin Column / Outrage / President Barack Obama - 06/22/2011

Missing the Message

It’s absolutely clear that the Republicans mean to work with the big banks to block any financial reform, no matter how watered down, by any political means necessary.

The Republicans have opposed the president’s nominees in committee. As far as the Consumer Financial Protection Agency, they oppose not only the popular consumer champion Elizabeth Warren to be its chief, they will oppose anyone President Obama nominates. The Republicans have made their intentions clear – they want to gut the agency before it’s born.

Meanwhile the bank lobbyists have gone to work on the regulators who are writing the actual rules to implement last year’s financial reforms, and have effectively stalled the process in its tracks.

To make sure that no one is missing the message, J.P. Morgan Chase chief Jamie Dimon went on the offensive this week, publicly stating that excessive financial regulation was weakening the economic recovery. Without offering specifics, Dimon told Fed chair Ben Bernanke at a bankers’ conference, “I have a great fear someone’s going to try to write a book in 20 years, and the book is going to talk about all the things that we did in the middle of the crisis to actually slow down recovery.”

While the bankers have been working feverishly behind the scenes to further water down the weak Dodd-Frank version of financial reform, Dimon’s statements are the most aggressive public challenge yet to any attempts to rein in the big banks.

What’s unclear is why the president is not meeting this assault on one of his proudest achievements (Wall Street reform) head on, despite the Republicans’ and bankers’ clear signals that they have no intention to compromise. Rather than mounting a strong public case for Warren, for example, the White House continues to float alternative, less qualified, nominees. Obama seems to be laboring under the illusion that there is somebody else who satisfy the Republicans. What’s baffling is that he has no reason to think so: the Republicans haven’t exactly been ambiguous. The bankers are also taking off the gloves, with only a few lonely voices in Washington to make the case for stronger reform.

When will our president get the message?

 

 

Around the Web / Consumer Financial Protection Agency / Financial Reform Legislation / Martin Column / President Barack Obama - 06/10/2011

The Scandal That Won't Go Away

Despite the efforts of our public officials and bankers to ignore it, downplay it, paper it over or make it disappear, the fraud surrounding the mortgages at the heart of the financial collapse is the scandal that won’t go away.

Two big stories breaking over the past week showed what strong legs the scandal has. First, Huffington Post reported on a series of confidential audits that showed five of the country’s largest mortgage companies defrauded taxpayers in their handling of foreclosures on homes purchased with government-backed loans.

Then the New York Times and others trumpeted an investigation of the mortgage securitization process by New York’s new state attorney general, Eric Schneiderman. This investigation won strong praise from two of the toughest watchdogs on the financial beat, Matt Taibbi at Rolling Stone and Robert Scheer at Truthdig, who portrayed Schneiderman as a hared-charging prosecutor who unlike the feds and other state attorney generals, is not intimidated by Wall Street.

But Reuters financial blogger Felix Salmon argued that confidential audits, which were turned over to the Justice Department were a much bigger story than Schneiderman’s investigation.

Until Schneiderman’s investigation bear some fruit, I think history suggests we should be skeptical of officials who claim they are going to get tough on the banks and protect consumers.

Salmon pinpoints the real significance of the Schneiderman investigation – the continuing cracks in the state attorney general’s 50-state coalition that was negotiating with the banks to settle claims of mortgage fraud. Some Republicans had already criticized the state attorney generals for being too tough on the banks, referring to a proposed settlement as a shakedown. Other critics have raised questions about whether the attorney generals are being too soft, having sat down to negotiate without having done robust investigations first to gather ammunition.

Whatever the outcome of these on-going investigations’s, the week’s news guarantees one thing – the mortgage fraud scandal, and its offspring the foreclosure scandal, are not going away any time soon.

 

 

 

 

 

 

Around the Web / Foreclosures / Martin Column - 05/19/2011

P.R. Won't Fix Foreclosure Mess

Will one of the nation’s too big to fail banks succeed in buying its way out of a shameful scandal stemming from dozens of improper foreclosures of military families and overcharging thousands more?

J.P. Morgan Chase, which hauled in $25 billion in the bailout, is in full damage control mode, paying out $56 million to settle a class action brought by military families – about $4,500 per family – and temporarily lowering mortgage interest to 4 percent for other military families.

But the bank is still facing a federal investigation stemming from the allegations. Whether the Justice Department finds the nerve to hold accountable one of the big banks remains an open question.

It hasn’t so far, despite evidence of widespread fraud in the bank’s use of robo-signers who verified the accuracy of thousands of foreclosure documents without ever reading them.

But our political leaders haven’t worked up the courage to call it what it is.

The bank had no choice but to acknowledge it had screwed up. To show just how serious it was about doing right by the nation’s fighting men and women, J.P. Morgan Chase appointed an actual commission with some real-life celebrities on it, including retired general William McChrystal and former football legend Roger Staubach.

The Justice Department has no excuse not to go after J.P. Morgan and other banks that have been violating the Servicemembers Civil Relief Act, which is supposed to keep military families safe from foreclosure while they’re on active duty. Military families have been particularly hard hit by the foreclosure crisis, with 20,000 facing foreclosure last year, a 32 percent increase since 2008.

Federal investigators just made the Justice Department’s job easier – in a recent study GAO found more than a couple of dozen improper foreclosures of military families. You might not think that sounds too bad, until you realize they found those bad foreclosures in an examination of just 2,800 foreclosure files.

Instead of pretending that the foreclosure mess is just going to sort itself out on its own, our political leaders need to acknowledge how deep a hole the big banks have dug for the rest of us to figure a way out of.

We don’t need more hapless PR. A realistic first step would be a foreclosure moratorium. If anybody else but the big banks were engaged in these kind of shenanigans, it would just be labeled what it is: fraud, plain and simple.

 

Around the Web / Foreclosure / Martin Column - 05/09/2011

D.C. Disconnect: The Real Yes Men

While the political prank behind news reports that General Electric had decided to pay all its taxes was quickly uncovered, a much greater fraud continues undetected.

Behind the GE prank was a group of political satirists and activists who call themselves the Yes Men. But it’s the nation’s major media that’s really earned that name with its relentless unquestioning hype of deficit hysteria and the need for harsh cuts to social programs.

Anointing only those politicians willing to consider the most severe cuts as the most serious, the major media haven’t questioned who’s behind this austerity agenda, and who will profit from it: Wall Street.

It’s the same crowd that sold the politicians and the public on the benefits of financial deregulation in the 80s, and then scared the country into providing Wall Street with a no-questions asked bailout. We all know how that worked out for the rest of us.

Who would fall for their snake oil a second time without closer examination? The real yes men just keep out churning out the Wall Street-induced hysteria with a straight face. When regular folks insist they're more concerned with unemployment and foreclosures than they are with the deficit, the real yes men just tut-tut.

The little people will never understand.

For Wall Street and its political enablers, the austerity agenda hoax is a just a Trojan horse to carry them to their real goals: crippling government’s ability to regulate and keeping taxes low for the wealthiest Americans.

The financial industry plays the two teams off each other: Republicans claim the Democrats aren’t man enough to make real cuts, while Democrats argue we should go along with their version of austerity to avoid the Tea Party’s lunatic extremes.

After caving in and extending the Bush era tax cuts last year, President Obama has recently talked about sprinkling increased taxes for the wealthiest among the cutbacks on the poor and middle class. But so far in his presidency he has shown little stomach to fight for even his own positions when they encounter resistance from either Wall Street or Republicans.

One of the most bizarre aspects of the continuing hoax is the respect given to the credit rating agencies, which have been justly chastised, but so far escaped prosecution, for their irresponsible antics in the financial collapse. They have about as much credibility as the recently junked color-coded terror alerts.

Now we have credit rating agency Standard & Poor’s, which never raised alarms about toxic mortgage securities, and slept through the both the budget-busting Bush tax cuts and the Obama extension, throwing the stock market into conniptions over the deficit.

It’s not just a coincidence. The ratings agencies are bought and paid for by servants of Wall Street. They know that Wall Street was reaping big short-term profits off the mortgage securities, and favors tax cuts for the rich. They also know Wall Street favors government-crippling budget cuts.

Just how long will the real Wall Street, its servants and cronies get away with this ruse?

 

Around the Web / D.C. Disconnect / Martin Column - 04/22/2011