“The Corruption Is Complete”: Where’s The Cop On The Wall Street Beat?
Bankers gone wild! Let’s tally some of their crimes:
JPMorgan Chase engaged in massive, systematic fraud to foreclose without cause or due process on innocent homeowners, tossing thousands of families into the streets.
Goldman Sachs profited by marketing an investment package that was designed to fail, collecting fat fees on each sale to unsuspecting investors who lost millions, while the bank also collected millions more from a side bet it made that, sure enough, its package would be a loser.
For years, HSBC has been butt-deep in a swamp of despicable, illegal money-laundering schemes, willingly processing billions of dirty dollars for vicious drug cartels and peddlers of arms to terrorist forces at war with America.
Many more examples abound. These are not poor saps desperately robbing a bank branch for a few hundred dollars, but criminal enterprises run by multimillionaire Wall Streeters who run in the finest social circles, are celebrated by the media and hobnob with the nation’s political elite.
Their corruption is complete; their crimes are documented. Yet, unlike sad-sack bank robbers, none of these Robbing Bankers have even been prosecuted, much less jailed. In fact, as revealed on PBS’s Frontline program earlier this year, frustrated prosecutors who served in the Justice Department’s criminal division two years ago report that “when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”
Why is that? Where are the cops on the Wall Street beat?
Up in the suites, coddling the culprits, whom they know on a first-name basis. That’s because Attorney General Eric Holder and the chief of his criminal division, Lanny Breuer, have previously enjoyed lucrative careers as lawyers defending the very barons they’re now supposed to be prosecuting. Holder and Breuer both hail from the same Washington law firm, Covington & Burling, that specializes in representing corporate clients with legal issues at the Justice Department.
The moral here is clear: When engaged in high crimes, it literally pays to have friends in the highest places.
To transport them there, a secret cosmic door connects the parallel universes of Washington and Wall Street. It’s not the proverbial revolving door, but a wide-open passageway for easy flow back and forth — reserved for those in the know.
Lanny Breuer is one definitely in the know, passing with impunity from the job of defending Wall Street wrongdoers in cases before the Justice Department to being the department’s chief prosecutor of Wall Street wrongdoing.
Four years ago, he left Covington & Burling, where he represented Wall Street clients, to head the criminal division of Justice. Dismissing criticism that his long service to Wall Street banksters created an inherent conflict of interest with his new duty to the public, Breuer insisted that he’d be a better prosecutor “because of my deep experience in the private sector.”
That claim would’ve proven more convincing had he brought even a single case against the Wall Street executives who’ve been publicly exposed as self-enriching perpetrators of widespread fraud and other destructive financial crimes. But, no, not one.
Why? Call me cynical, but perhaps because he was using his four years at Justice to pad his résumé and enhance his value to Wall Street. Protecting bankers from prosecution could be a good career move.
No surprise, then, that Breuer headed back through that cosmic door, rejoining Covington in a specially created position to expand its role in defending corporate clients charged with foreign bribery, money laundering, securities fraud and such. “I’m a zealous advocate,” said the guy who studiously refrained from being a zealous prosecutor. “I look forward to being a zealous advocate for our clients again,” he added.
Sheesh, couldn’t he at least pretend to have some ethics? Instead, Lanny was relieved to be back on Wall Street’s side: “It’s my professional home,” he confessed.” Oh, did I mention that his starting salary at Covington will be $4 million a year?
By: Jim Hightower, The National Memo, April 10, 2013
“Too Big To Exist”: Wall Street Hogs Still Running Wild
Wall Street is a beast.
And proud of it! In fact, a pair of animals are the stock market’s longtime symbols: One is a snorting bull, representing surging stock prices; the other is a bear, representing a down market devouring stock value.
But I recently received a letter from a creative fellow named Charles saying that we need a third animal to depict the true nature of the Wall Street beast: a hog.
Yes! And we could name it “Jamie.” Jamie Dimon — I mean the multimillionaire, silver-haired, golden-tongued CEO of JPMorgan Chase, America’s biggest bank.
For years, Dimon has wallowed in the warm glow of America’s financial, political and media limelight, hailed as a paragon of sound management and banker ethics. He’s been publicly lauded by President Obama, celebrated by The New York Times and courted by leaders of both parties.
But, suddenly last summer, a big “oink” erupted from Chase, and Jamie’s inner hoggishness was revealed. It started when one of Chase’s investment arms went awry and lost $2 billion. At first, Dimon haughtily dismissed this as “a tempest in a teapot.” But the loss of investors’ money soon grew to a staggering $6 billion. Criminal probes began, investors squirmed, media coverage grew testy, and then came the revelation that took all the glitter off of Dimon.
On March 14, a U.S. Senate committee issued a scathing 300-page report documenting that the loss was not a mere “trade blunder” by Chase underlings, but the product of a systemic corporate culture of recklessness, greed and deception. An internal email from Jamie himself, with the words “I approve,” traced the stench all the way to the top. Not only did Dimon know what was going on, he enabled it.
JPMorgan’s mess stems from the same dangerous combo that rocked America’s financial system in 2007 and crashed our economy: ethical rot in executive suites, sycophantic politicians and reporters and willfully blind regulators. Meanwhile, Jamie is still Boss Hog at the giant bank and still drawing millions of dollars in annual pay and perks. Also, only one week after the Senate report came out, he was even given a media award for best 2012 performance by a CEO facing a corporate crisis. E-I-E-I-O!
For a better performance on containing banker narcissism, our lawmakers might look to Europe. I know that it’s considered un-American to like anything those “namby-pamby” European nations do, but still: Let’s hear it for the Swiss!
In a March 3 referendum, the mild-mannered, pacifist-minded Swiss people rose up and hammered their corporate executives who’ve been grabbing ripoff pay packages, despite having made massive financial messes.
Two-thirds of voters emphatically shouted “yes” to a maverick ballot proposal requiring that shareholders be given the binding say on executive pay. Violators of the new rules would sacrifice up to six years of salary and face three years in jail. That’s hardly namby-pamby.
Indeed, America’s lawmakers and regulators are the ones who’ve been squishy-soft on banksterism. Jamie is not the only one being coddled — none of the Wall Street titans whose greed wrecked our economy have even been pursued by the law, much less put in jail.
It’s no surprise, then, that those bankers have gone right back to scamming — and gleefully enriching themselves. Hardly a week goes by without another revelation of big-bank fraud, yet the banks simply pay an inconsequential fine and the culprits skate free.
Forget about too big to fail, banks have become “too big to jail.” Our nation’s top prosecutor, Attorney General Eric Holder, recently conceded that finagling financial giants are being given a pass: “It does become difficult for us to prosecute them,” he told a Senate subcommittee, “when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy.”
Meanwhile, just four giants — Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo — put nearly $20 million into last year’s elections, mostly to back Republicans promising to weaken the few feeble restraints we now have on banker thievery. With such Keystone Kops overseeing them, why would any Wall Streeter even think of going straight? Nothing will change until officials gut it up, go after lawless bankers and bust up the banks that are too big to exist.
By: Jim Hightower, The National Memo, April 3, 2013
“Quaking In Their Boots”: Watch Out Wall Street, Sherrod Brown Is Coming
With Sen. Tim Johnson, D-S.D., officially headed for retirement, speculation regarding who will replace him as chairman of the Senate Banking Committee is well underway. And one option reportedly has Wall Street quaking in its boots: Sen. Sherrod Brown, D-Ohio.
As the Huffington Post’s Ryan Grim reported, Brown is fourth in line to head the Banking Committee – which oversees most financial regulatory matters for the upper chamber – but the three senators ahead of him all have reasons to take a pass. And if Brown were to become chairman, he would have a powerful new platform from which to continue his efforts to bust up the nation’s biggest banks. “I think everything from too-big-to-fail banks all the way down to issues impacting the unbanked and underbanked would suddenly see a new energy behind them,” one analyst told Politico.
Since the financial crisis of 2008, Brown has been one of the foremost critics of Wall Street’s mega-financial institutions. During the debate over the Dodd-Frank financial reform law, Brown tried unsuccessfully to secure passage of the SAFE Banking Act, which would have capped bank size as a percentage of the economy and reduced the amount of non-deposit liabilities that a firm could hold.
Brown’s plan would have gone much further than anything that ultimately wound up in Dodd-Frank, and would have been far preferable to the Volcker Rule, the unwieldy regulation meant to deter banks from threatening the financial system via risky trading.
Recently, Brown has joined with Sen. David Vitter, R-La., to once again call for breaking up big banks.
“How many more scandals will it take before we acknowledge that we can’t rely on regulators to prevent subprime lending, dangerous derivatives, risky proprietary trading, and even fraud and manipulation?” he asked. “We simply cannot wait any longer for regulators to act. These institutions are too big to manage, they are too big to regulate, and they are surely still too big to fail.”
It is certainly true that the last few years have seen the banking sector commit a slew of misdeeds: rampant foreclosure fraud; fixing of global interest rates; and the so-called “Whale Trade” that cost JP Morgan Chase billions of dollars (and yet still won the firm an award). And the root of the problem is that the largest banks aren’t only too-big-to-fail, they’re too-big-to-jail.
The Justice Department, in fact, explicitly said earlier this month that it is not prosecuting some of the biggest banks for fear of causing them to fail, which would endanger the rest of the financial system. Instead, banks have gotten off with slaps on the wrist and penalties that barely dent their bottom lines.
“Declining to prosecute either the banks themselves or individuals at the banks for financial fraud sends the message that crime pays,” said Sen. Charles Grassley, R-Iowa, another Brown ally. Indeed, if a bank is so big that prosecuting it is deemed too risky to the economy, that bank is too big, period!
As Brown joining with Vitter and Grassley shows, a coalition of left and right can be cobbled together when it comes to reining in banks for the good of the financial system. (The Senate even voted 99-0 recently to end federal advantages for too-big-to-fail banks, though the measure is non-binding.) Having Brown at the helm of the Senate Banking Committee certainly wouldn’t hurt that cause, and the economy would be better off for it.
By: Pat Garofalo, U. S. News and World Report, March 27, 2013
“The Corporate Predator State”: This Isn’t The Free Market, It’s A Rigged Market
Bipartisan agreement in Washington usually means citizens should hold on to their wallets or get ready for another threat to peace. In today’s politics, the bipartisan center usually applauds when entrenched interests and big money speak. Beneath all the partisan bickering, bipartisan majorities are solid for a trade policy run by and for multinationals, a health-care system serving insurance and drug companies, an energy policy for Big Oil and King Coal, and finance favoring banks that are too big to fail.
Economist James Galbraith calls this the “predator state,” one in which large corporate interests rig the rules to protect their subsidies, tax dodges and monopolies. This isn’t the free market; it’s a rigged market.
Wall Street is a classic example. The attorney general announces that some banks are too big to prosecute. Despite what the FBI called an “epidemic of fraud,” not one head of a big bank has gone to jail or paid a major personal fine. Bloomberg News estimated that the subsidy they are provided by being too big to fail adds up to an estimated $83 billion a year.
Corporate welfare is, of course, offensive to progressives. The Nation and other media expose the endless outrages — drug companies getting Congress to ban Medicare negotiating bulk discounts on prices, Big Oil protecting billions in subsidies, multinationals hoarding a couple of trillion dollars abroad to avoid paying taxes, and much more.
But true conservatives are — or should be — offended by corporate welfare as well. Conservative economists Raghuram Rajan and Luigi Zingales argue that it is time to “save capitalism from the capitalists,” urging conservatives to support strong measures to break up monopolies, cartels and the predatory use of political power to distort competition.
Here is where left and right meet, not in a bipartisan big-money fix, but in an odd bedfellows campaign to clean out Washington.
For that to happen, small businesses and community banks will have to develop an independent voice in our politics. Today, they are too often abused as cover for multinational corporations and banks. The Chamber of Commerce exemplifies the scam. It pretends to represent the interests of millions of small businesses, but its issue and electoral campaigns are defined and paid for by big-money interests working to keep the game rigged.
An authentic small-business lobby has finally started to emerge, as William Greider reports in the most recent issue of the Nation. The American Sustainable Business Council, along with the Main Street Alliance and the Small Business Majority, are enlisting small business owners to speak for themselves — and challenging the corporate financed propaganda groups such as the Chamber and the National Federation of Independent Business. Their positions often align with those of progressives. They loathe the big banks and multinationals that work to undermine competition.
Greider reports on the antipathy these small business owners have for the big guys. Camille Moran, president and chief executive of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, La., rails against the “Wall Street wheelers and dealers.” They knew, she argues, that they “ would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it. . . . That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.”
ReShonda Young, operations manager of Alpha Express, a family-owned delivery service in Waterloo, Iowa: “We’re not afraid to compete with the biggest delivery companies out here, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab.”
Polls show these aren’t isolated views. The ASBC, the Main Street Alliance and the Small Business Majority sponsored a poll by Lake Research of small business owners. Ninety percent believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it.
The ASBC and its allies have the potential to become what Jamie Raskin, a Maryland state senator, dubbed a “Chamber of Progress,” a small-business voice that is willing to take on the big guys that tilt the playing field.
The possibilities are endless. Wall Street argues for rolling back financial regulation on the grounds that it hurts community and small banks. What if community and small bankers joined the call of conservative Dallas Federal Reserve President Richard Fisher to break up the big banks?
Multinational executives have just launched the “LIFT America” Coalition to push for a territorial tax system that would exempt from U.S. taxes all profits reported abroad. ASBC and its allies could rally small businesses to demand closing down overseas tax havens and imposing a minimum tax on profits sitting abroad, so that they didn’t face a higher tax burden that their global competitors.
In today’s Washington, powerful corporate interests stymie progress on areas vital to our future. Can a right/left, small-business/worker odd bedfellows alliance emerge to counter the predatory interests? We can only hope so.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 26, 2013
“It’s Time To Tax Financial Transactions”: Here At Last Is An Idea Whose Time Has Come
On Friday at midnight, the sequester kicked in, triggering $85 billion in deep, dumb budget cuts that sent “nonessential personnel”— such as air traffic controllers — packing.
Not to worry, though: Wall Street’s day was pretty much like any other. Billions of dollars in profits were made off of trillions of dollars in financial transactions. And the vast majority of those transactions were conducted tax-free.
Moral of the story: What else is new?
Crash the economy? Free pass. Prevent planes from crashing? Pink slip.
We don’t need a team of policymakers to tell us this isn’t good policy, or that it needs changing. But on Thursday, we heard policymakers propose exactly that: a change.
Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), along with Rep. Pete DeFazio (D-Ore.), unveiled a bill that would place a light tax on all financial transactions — three pennies on every $100 traded.
The good news is that it’s a tax so small it could be mistaken for a rounding error. It’s so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it. If this were a tax on coffee, it would cost you $1 for every 800 cups you bought at Starbucks.
But there’s even better news. This insignificant tax raises a significant amount of revenue — $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. It’s also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.
As the saying goes, “Nothing can resist an idea whose time has come.”
And after years of Wall Street excess, and at a moment when new revenues are badly needed, the time has surely come for a financial transaction tax .
Indeed, support for such a tax has never been stronger — or broader. Many on the progressive left have long favored it . Now, though, another group of bleeding-heart liberals, otherwise known as the American people, is on board. When it comes to cutting the deficit, 6 in 10 Americans prefer taxing the financial industry to cutting social spending.
But this idea doesn’t just have the masses on its side; it has the elites, and even some Republican elites. Once championed by the granddaddy of liberal economics, John Maynard Keynes, the banner of a financial transactions tax has been picked up by conservative economists including Sheila Bair, George W. Bush’s appointee to the Federal Deposit Insurance Corp.
After all, the tax isn’t just a good revenue raiser. It’s smart regulatory reform.
The high-frequency traders that now dominate our markets would be hardest-hit by the tax. A top economist recently concluded that their lightning speed, algorithm-driven trading drains profits from traditional investors. And analysts fear that such mass trading strategies could lead to disaster if markets behave unexpectedly.
The new tax would discourage these kinds of trades, which would be a good thing.
Europe, at least, seems to agree. Eleven nations, led by the conservative German government, are on track to start collecting the tax by January 2014. Expected revenues: $50 billion per year.
Of course, we’re talking about a tax on Wall Street.
It’s no wonder that, over the past few weeks, K Street appears to have upped the financial sector’s retainer. Their lobbying effort against the tax — here and in Europe — is in full swing.
Even the Obama administration has been convinced to come out against the tax in the United States. And they’re pressuring Europeans to water down their version by insulating American banks. What’s the logic driving this opposition?
Some have argued that, historically, these taxes have been ineffective because of widespread evasion. But they’re cherry-picking a few badly designed examples, such as Sweden’s lemon of a tax from nearly 30 years ago. This is like saying cars don’t work because you bought a Datsun in the ’70s.
Many countries have implemented such taxes effectively. The United Kingdom, for example, manages to raise more than $5 billion per year on a 0.5 percent tax on stock trades alone.
Another common argument is that the tax will be passed on to mom-and-pop investors. The just-introduced U.S. legislation addresses these concerns by providing tax credits for contributions to typical middle-class investment accounts, including 401(k)s. Investment funds would still be taxed on their trades, but this could encourage longer-term productive investment instead of the short-term speculation that adds little to no value to the real economy.
If the Obama administration is serious about fair taxation and a smart approach to the deficit, it should change its position. Rather than trying to derail Europe’s efforts, it should cooperate with Europe to ensure that the tax there is effectively enforced. And the administration should build support in Congress, including among Republicans.
Yes, we’ve all heard House Speaker John Boehner’s line that the debate over revenue raising is over. We also remember former President George H.W. Bush’s line, “Read my lips, no new taxes,” and how quickly his lips starting saying something else.
For tea partyers, wouldn’t a tax on Wall Street, the beneficiaries of the bailout they so reviled, be less objectionable than most other revenue options?
Sequestration is a septic wound, self-inflicted by lawmakers who can’t agree on anything. Here, at last, we have a smart idea with widespread support — Americans and Europeans, populists and economists, progressives and conservatives.
After Friday’s dumb budget cuts, a little smart policymaking would be nice for a change.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 5, 2013
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