“Who Says Crime Doesn’t Pay?”: The Bottom Line Is Crime Can Actually Pay — If It’s Big Enough
Hey, can we all just stop complaining that our government coddles Wall Street’s big money-grubbing banks?
Sure, they went belly-up and crashed our economy with their frauds, rigged casino games, and raw greed. And, yes, the Bush and Obama regimes rushed to bail them out with trillions of dollars in our public funds, while ignoring the plight of workaday people who lost jobs, homes, businesses, wealth, and hope. But come on, Buckos, have you not noticed that the feds are now socking the bankers with huuuuuge penalties for their wrongdoings?
Wall Street powerhouse Goldman Sachs, for example, was recently punched in its corporate gut with a jaw-dropping $5 billion for its illegal schemes.
Wow, $5 billion! That’s a stunning amount that Goldman Sachs has agreed to pay to settle federal criminal charges over its shameful financial scams that helped wreck America’s economy in 2008. That’s a lot of gold, even for Goldman Sachs. It’s hard to comprehend that much money, so think of it like this: If you paid out $100,000 a day, every day for 28 years, you’d pay off just one billion dollars. So, wow, imagine having to pull Five Big B’s out of your wallet! That’s enough to make even the most arrogant and avaricious high-finance flim-flammer think twice before risking such scams, right? Thus, these negotiated settlements between the Justice Department and the big banks will effectively deter repeats of the 2008 Wall Street debacle… right?
Actually, no.
The chieftains of the Wall Street powerhouse say they are “pleased” to swallow this sour slug of medicine. It’s not because they’re contrite and eager to make amends. Wall Street bankers don’t do contrite. They are pleased (even thrilled) because this little insider secret: Thanks to Goldman’s backroom dealing with prosecutors, the settlement is riddled with special loopholes that could eliminate nearly $2 billion from the publicized “punishment.”
For example, the deal calls for the felonious bank to put a quarter-billion dollars into affordable housing, but generous federal negotiators put incentives and credits in the fine print that will let Goldman escape with paying out less than a third of that. Also, about $2.5 billion of the settlement is to be paid to consumers hurt by the financial crisis. But the deal lets the bank deduct almost a billion of this payout from its corporate taxes — meaning you and I will subsidize Goldman’s payment. As a bank reform advocate puts it, the problem with these settlements “is that they are carefully crafted more to conceal than to reveal to the American public what really happened here.”
Also, notice that the $5 billion punishment is applied to Goldman Sachs, not the “Goldman Sackers.” The bank’s shareholders have to cough up the penalty, rather than the executives who did the bad deeds. Goldman Sachs’ CEO, Lloyd Blankfein, just awarded himself a $23 million paycheck for his work last year. That work essentially amounted to negotiating the deal with the government that makes shareholders pay for the bankers’ wrongdoings — while he and other top executives keep their jobs and pocket millions. Remember, banks don’t commit crimes — bankers do.
One more reason Wall Street bankers privately wink and grin at these seemingly huge punishments is that even paying the full $5 billion would only be relatively painful. To you and me, that sounds like a crushing number — but Goldman Sachs raked in $33 billion in revenue last year, so it’s a reasonable cost of doing business. After all, Goldman sold tens of billions of dollars in the fraudulent investment packages leading to the settlement, so the bottom line is that crime can actually pay — if it’s big enough.
By: Jim Hightower, Featured Post, The National Memo, May 4, 2016
“A Gift For America’s Future”: To Get America Moving, Tax Financial Transactions
The financial transaction tax is not an idea whose time has just now come; it simply has returned. From 1914 to 1966, our country taxed all sales and transfers of stock. The tax was doubled in the last year of Herbert Hoover’s presidency to help us recover from the Great Depression. Today, 40 countries have FTTs, including the seven with the fastest-growing stock exchanges in the world. Eleven members of the European Union (including Germany and France) voted for a financial transaction tax to curtail poverty, restore services and put people back to work.
This is no soak-the-rich-idea. Rather than asking the Wall Street crowd to join us in paying a 6 to 12 percent sales tax, the major FTT proposal gaining support in the U.S. calls for a 0.5 percent assessment on stock transactions. That’s 50 cents on a $100 stock buy versus the $8.25 I would pay for a $100 bicycle.
Even at this minuscule rate, the huge volume of high-speed trades (nearly 400 billion a year) means an FTT would net about $300 billion to $350 billion a year for our public treasury. Plus, it’s a very progressive tax. Half of our country’s stock is owned by the 1 percenters, and only a small number of them are in the high-frequency trade game. Ordinary folks who have small stakes in the markets, including those in mutual and pension funds, are called “buy and hold” investors: They only do trades every few months or years, not daily or hourly or even by the second, and they’ll not be harmed. Rather it’s the computerized churners of frothy speculation who will pony up the bulk of revenue from such a transaction tax.
An FTT is a straightforward, uncomplicated way for us to get a substantial chunk of our money back from high-finance thieves, and we should make a concerted effort to put the idea on the front burner in 2016 and turn up the heat. Not only do its benefits merit the fight; the fight itself would be politically popular. One clue to its political potential is that the mere mention of FTT to a Wall Street banker will evoke a shriek so shrill that the Mars rover hears it. That’s because they know that this proposal would make them defend the indefensible: themselves.
First, the sheer scope of Wall Street’s self-serving casino business model would be exposed for all to see. Second, they would have to admit that they’re increasingly dependent on (and, therefore, making our economy dependent on) the stark-raving insanity of robotic, high-frequency speculation. Third, it’ll be completely ridiculous for them to argue that protecting the multi-trillion-dollar bets of rich market gamblers from this tax is more important than meeting our people’s growing backlog of real needs.
Unsurprisingly, then, Koch-funded operatives and other defenders of privilege are rushing out articles that amount to Wall Street gibberish: “FTT would hurt poor pensioners, farmers, long-term investors, job creation, liquidity … and blah, blah, blah.” There’s nary a mention of who will really be pinged: Wall Street’s gamblers and thieves. After all, to concede that they’ll be hurt, even a little, would elicit a coast-to-coast shout of, “Yes!”
A major push is being made under the banner of the “Robin Hood Tax.” This campaign offers a remarkable democratic opening. It widens America’s public policy debate from the plutocrats’ tired, narrow-minded mantra of defeat: “We’re broke. Big undertakings are beyond us. Shrink all expectations for yourselves, your children and your country’s future.” Instead, a new conversation can begin: “Look under that rock. There’s the money we need to invest in people. Let’s get America moving again!”
A sales tax on speculators can deliver tangibles that people need but Wall Street says we can’t afford — infrastructure, Social Security, education, good jobs, health care for all, etc. Just as important, it can deliver intangibles that our nation needs but Wall Street tries to ignore — fairness, social cohesion, equal opportunity, etc. It’s a gift for America’s future that literally would keep on giving. For more information and to join the fight, go to http://www.robinhoodtax.org.
By: Jim Hightower, The National Memo, March 2, 2016
“A Standard Of Absolute Purity”: His Respected Friend; But What Does Bernie Really Think Of Hillary?
What does Bernie Sanders really think of Hillary Clinton?
When they meet in debate, the Senator from Vermont usually refers to the former Secretary of State as his “friend” – not in the polite Congressional-speech sense of someone that he actually despises, but in what is presumably his authentic, Brooklyn-born candor. He speaks frequently of his “great respect” for Clinton. And he has said more than once that “on her worst day” she would be a far better president than any of the potential Republican candidates “on their best day.”
Even more often, however, Sanders suggests that Clinton has sold out to the financial industry for campaign contributions, or for donations to her SuperPAC, or perhaps for those big speaking fees she has pocketed since leaving the State Department. Certainly he has fostered that impression among his supporters, who excoriate Clinton in the most uninhibited and sometimes obscene terms on social media.
But if Sanders believes that Hillary Clinton is “bought by Wall Street” — as his legions so shrilly insist — then how can he say, “in all sincerity,” that she is his respected friend?
To date, his criticism of Clinton on this point is inferential, not specific. He hasn’t identified any particular vote or action that proves her alleged subservience to the financial titans she once represented as the junior senator from New York. As Sanders knows, Clinton’s actual record on such issues as the Dodd-Frank financial regulation bill and the Consumer Financial Protection Bureau ran opposite to the banksters.
Back in 2007, eight years before she could ever imagine facing the socialist senator in debate, she spoke up against the special “carried interest” tax breaks enjoyed by hedge-fund managers. Her proposals to regulate banks more strictly have won praise not only from New York Times columnist and Nobel economist Paul Krugman, but from Senator Elizabeth Warren (D-MA), the populist Pasionaria, as well.
Still, to Sanders the mere act of accepting money from the financial industry, or any corporate interest, is a marker of compromise or worse. Why do the banks spend millions on lobbying, he thunders, unless they get something in return? The answer is that they want access – and often donate even to politicians who don’t fulfill all their wishes. They invariably donate to anyone they believe will win.
Meanwhile, Sanders doesn’t apply his stringent integrity test to contributions from unions, a category of donation he accepts despite labor’s pursuit of special-interest legislation– and despite the troubling fact that the leadership of the labor movement filed an amicus brief on behalf of Citizens United, which expanded their freedom to offer big donations to politicians. (That case was rooted, not incidentally, in yet another effort by right-wing billionaires to destroy Hillary Clinton.)
By his own standard, Sanders shouldn’t take union money because the AFL-CIO opposed campaign finance reform, which he vociferously supports. Or maybe we shouldn’t believe that he truly supports campaign finance reform, because he has accepted so much money from unions.
Such assumptions would be wholly ridiculous, of course – just as ridiculous as assuming that Clinton’s acceptance of money from banking or labor interests, both of which have made substantial donations to her campaign, proves her advocacy of reform is insincere.
Political history is more complex than campaign melodrama. If critics arraign Clinton for the decision by her husband’s administration to kill regulation of derivatives trading, it is worth recalling that she was responsible for the appointment of the only official who opposed that fateful mistake. She had nothing to do with deregulation — but as First Lady, she strongly advocated on behalf of Brooksley Born, a close friend of hers named by her husband to chair the Commodity Futures Trading Commission. One of the few heroes of the financial crisis, Born presciently warned about the dangers of unregulated derivatives.
So it is fine to criticize Clinton’s big speaking fees from banks and other special interests, which create a troubling appearance that she should have anticipated. It is fine to complain that politicians are too dependent on big-money donors. And it is fine to push her hard on the issues that define the Sanders campaign, which has done a great service by highlighting the political and economic domination of the billionaire elite.
But it is wrong to accuse Clinton of “pay for play” when the available evidence doesn’t support that accusation. And if Sanders wants to hold her to a standard of absolute purity, he should apply that same measure to himself.
By: Joe Conason, Editor in Chief, Editor’s Blog, The National Memo, February 13, 2016
“Moneyed Elites Get Richer The Old-Fashioned Way; Stealing”: Preferential Tax Treatment For The Narcissistic Money Manipulators
With the 2016 presidential campaigns in full swing, the burdens of the working middle class have taken center stage. And believe it or not, there is bipartisan support from the frontrunners on a key issue brought up over and over again. Donnie Trump is for it. Hillary Clinton is for it. Jeb Bush is for it. Bernie Sanders is for it. Even Barack Obama is for it. And the American people are overwhelmingly for it.
The “it” that’s drawing such broad support is the idea of ending a ridiculous tax loophole that was written by and for the richest, most pampered elites on Wall Street. An obscurely titled “carried interest” tax break allows billionaire hedge-fund hucksters to have their massive incomes taxed at a much lower rate than the one retail workers, Main Street businesses, carpenters, and other modest-income people must pay.
Keep that carried interest tax loophole in mind when I tell you this number: 158,000. That’s the number of kindergarten teachers in America. Their combined income in 2013 was $8 billion. Here’s another number for you: 25. That’s the number of America’s highest-paid hedge fund operators whose combined income in 2013 was $21 billion. Yes, just 25 Wall Street greedmeisters hauled off $13 billion more in pay than was received by all of our kindergarten teachers — the people we count on to launch the education of the next generation.
Which group do you think is rewarded by law with the lowest rate of income tax? Right: the uber-rich Wall Streeters! Incredibly, Congress (in its inscrutable wisdom) gives preferential tax treatment to the narcissistic money manipulators who do practically nothing for the common good. Even flamboyant celebrity narcissist Donnie Trump sees through the gross inequality of this tax scam: “The hedge fund guys didn’t build this country,” The Donald recently barked. “These are guys that shift paper around, and they get lucky. The hedge fund guys are getting away with murder.” Indeed, while dodging through this loophole, they pay about half the tax rate that kindergarten teachers are assessed. In effect, Wall Street’s puppets in Congress let this tiny group of moneyed elites steal about $18 billion a year that they owe to the public treasury to finance the structure and workings of America itself.
This privileged treatment of pampered paper- and money shufflers over people who do constructive work in our society adds to America’s widening chasm of inequality. It’s so unfair and unpopular that even Donald, Hillary, Jeb, Bernie and others are saying that it has to go. So it’s bye-bye, loophole, right?
Ha — just kidding! Trump can mouth all he wants, but no animal hath such fury as a hedge funder whose special tax boondoggle is threatened. Trump had barely gotten the word “unfair” out of his puffy lips before the tax-loophole profiteers deployed battalions of lobbyists, PR flacks, and front-group operatives out to defend their precious carried-interest provision. One group, with the arcane name of Private Equity Growth Capital Council, rushed a dozen Gucci-clad lobbyists to Capitol Hill to “inform” lawmakers about the virtues of coddling Wall Street elites with tax favors.
Of course, “informing” meant flashing their checkbooks at key members of Congress. After all, even the loudest blast of political talk is cheap — and it’s the silent sound of a pen writing out a campaign check that makes Washington World keep spinning in favor of the rich.
Sure enough, Rep. Paul Ryan (R-WI) and Sen. Orrin Hatch (R-UT) , the two lawmakers who head Congress’ tax-writing committees, quickly announced that — the will of the people aside — there would be no repeal of the hedge-fund loophole anytime soon. The inequality that is presently ripping our society apart is not the result of some incomprehensible force of nature, but the direct result of collusion between financial and political elites to rig the system for the enrichment of the few — i.e., themselves — and the impoverishment of the many. There’s a word for those elites: thieves.
By: Jim Hightower, The National Memo, September 30, 2015
“Wall Street Vampires”: Lurking In Their Coffins, The Enemies Of Reform Can’t Withstand Sunlight
Last year the vampires of finance bought themselves a Congress. I know it’s not nice to call them that, but I have my reasons, which I’ll explain in a bit. For now, however, let’s just note that these days Wall Street, which used to split its support between the parties, overwhelmingly favors the G.O.P. And the Republicans who came to power this year are returning the favor by trying to kill Dodd-Frank, the financial reform enacted in 2010.
And why must Dodd-Frank die? Because it’s working.
This statement may surprise progressives who believe that nothing significant has been done to rein in runaway bankers. And it’s true both that reform fell well short of what we really should have done and that it hasn’t yielded obvious, measurable triumphs like the gains in insurance thanks to Obamacare.
But Wall Street hates reform for a reason, and a closer look shows why.
For one thing, the Consumer Financial Protection Bureau — the brainchild of Senator Elizabeth Warren — is, by all accounts, having a major chilling effect on abusive lending practices. And early indications are that enhanced regulation of financial derivatives — which played a major role in the 2008 crisis — is having similar effects, increasing transparency and reducing the profits of middlemen.
What about the problem of financial industry structure, sometimes oversimplified with the phrase “too big to fail”? There, too, Dodd-Frank seems to be yielding real results, in fact, more than many supporters expected.
As I’ve just suggested, too big to fail doesn’t quite get at the problem here. What was really lethal was the interaction between size and complexity. Financial institutions had become chimeras: part bank, part hedge fund, part insurance company, and so on. This complexity let them evade regulation, yet be rescued from the consequences when their bets went bad. And bankers’ ability to have it both ways helped set America up for disaster.
Dodd-Frank addressed this problem by letting regulators subject “systemically important” financial institutions to extra regulation, and seize control of such institutions at times of crisis, as opposed to simply bailing them out. And it required that financial institutions in general put up more capital, reducing both their incentive to take excessive risks and the chance that risk-taking would lead to bankruptcy.
All of this seems to be working: “Shadow banking,” which created bank-type risks while evading bank-type regulation, is in retreat. You can see this in cases like that of General Electric, a manufacturing firm that turned itself into a financial wheeler-dealer, but is now trying to return to its roots. You can also see it in the overall numbers, where conventional banking — which is to say, banking subject to relatively strong regulation — has made a comeback. Evading the rules, it seems, isn’t as appealing as it used to be.
But the vampires are fighting back.
O.K., why do I call them that? Not because they drain the economy of its lifeblood, although they do: there’s a lot of evidence that oversize, overpaid financial industries — like ours — hurt economic growth and stability. Even the International Monetary Fund agrees.
But what really makes the word apt in this context is that the enemies of reform can’t withstand sunlight. Open defenses of Wall Street’s right to go back to its old ways are hard to find. When right-wing think tanks do try to claim that regulation is a bad thing that will hurt the economy, their hearts don’t seem to be in it. For example, the latest such “study,” from the American Action Forum, runs to all of four pages, and even its author, the economist Douglas Holtz-Eakin, sounds embarrassed about his work.
What you mostly get, instead, is slavery-is-freedom claims that reform actually empowers the bad guys: for example, that regulating too-big-and-complex-to-fail institutions is somehow doing wheeler-dealers a favor, claims belied by the desperate efforts of such institutions to avoid the “systemically important” designation. The point is that almost nobody wants to be seen as a bought and paid-for servant of the financial industry, least of all those who really are exactly that.
And this in turn means that so far, at least, the vampires are getting a lot less than they expected for their money. Republicans would love to undo Dodd-Frank, but they are, rightly, afraid of the glare of publicity that defenders of reform like Senator Warren — who inspires a remarkable amount of fear in the unrighteous — would shine on their efforts.
Does this mean that all is well on the financial front? Of course not. Dodd-Frank is much better than nothing, but far from being all we need. And the vampires are still lurking in their coffins, waiting to strike again. But things could be worse.
By: Paul Waldman, Op-Ed Columnist, The New York Times, May 11, 2015
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