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“At The Mercy Of The Banks”: Trump Owes At Least $100 Million To Bank That Tried To Skirt Dodd-Frank

Republican presidential nominee Donald Trump has taken out 16 loans from 11 different lenders, totaling at least $335 million, according to a Mother Jones analysis of Trump’s financial disclosure form.

His favorite lender, according to the forms, was Deutsche Bank, a major German institution with American subsidiaries that attempted to dodge new regulations instituted by the Dodd-Frank Act.

Deutsche Bank lent Trump at least $295 million between two major projects of his, Trump National Doral golf course and Trump’s hotel on Pennsylvania Avenue in Washington, DC. Trump also has two outstanding loans worth at least $50 million from the German bank.

While this country has had wealthy presidents, none have been so deeply in debt as Trump. How much pressure could an institution like Deutsche Bank, upon which a sizable portion of Trump’s wealth is dependent, pile on the Republican nominee should he become president?

“They weren’t in a situation where someone could put pressure on them to do what they want,” said Richard Painter, who was the chief ethics lawyer for President George W. Bush from 2005 to 2007, to Mother Jones. “Whereas having a president who owes a lot of money to banks, particularly when it’s on negotiable terms—it puts them at the mercy of the banks and the banks are at the mercy of regulators.”

The industry Trump made his name, and wealth, in further added to the problem. “In real estate, the prevailing business model is to own a lot but also owe a lot, and that is a potentially very troublesome business model for someone in public office,” said Painter.

Recall that Trump has also promised to repeal Dodd-Frank, calling it “a very negative force, which has developed a very bad name.” But asides from the pantomimed denunciations of legislation reining in the excesses of the very banking practices that led to the 2008 global economic crash, Trump has revealed little of what he would replace Dodd-Frank with, if anything. Nevertheless, his creditors are likely pleased by his proposed anti-legislation.

Following the passage of the Dodd-Frank Act in 2010, Deutsche Bank tried to skirt the new regulations set up by the act. The bank rewrote its corporate structure to make it less American, thus avoiding having to inject up to $20 billion worth of capital, a regulatory requirement to avoid a repeat of the 2008 collapse.

The stricter regulations also placed limits on how easily a subsidiary of a foreign bank could invest and how much risk it could take on. The point of the stricter rules was to avoid another multi-trillion dollar taxpayer-funded bailout. But such regulations would require the raising of billions of dollars and authorizing new shares, which would cut into profits, Wall Street’s obsessive pursuit.

Trump’s biggest single creditor has already been fined for engaging in illegal activities. Last year, Deutsche Bank was fined $2.5 billion for rigging interest rates in the U.S. and abroad. “Deutsche Bank employees engaged in a widespread effort to manipulate benchmark interest rates for financial gain,” said New York State Superintendent Benjamin Lawsky in a statement at the time.

“While a number of the employees involved in misconduct have already left the bank, those that remain are being terminated or banned from the New York banking system. We must remember that markets do not just manipulate themselves: It takes deliberate wrongdoing by individuals.”

On top of being ordered to pay a $2.5 billion fine, Deutsche Bank was ordered to fire seven employees who played a role in manipulating interest rates. The bank was judged even more harshly in the UK, where its Financial Conduct Authority determined that 29 Deutsche Bank employees were involved in the misconduct.

“This wasn’t limited to a few individuals but, on certain desks, it appeared deeply ingrained,” said Georgina Philippou, the agency’s acting director of enforcement and market oversight, in a statement. “Deutsche Bank’s failings were compounded by them repeatedly misleading us. The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls.”

Given that sort of company, Trump has a clear conflict of interest in any banking “reforms” he says he would pursue.

 

By: Saif Alnuweiri , The National Memo, June 1, 2016

June 2, 2016 Posted by | Deutsche Bank, Donald Trump, Global Financial Crisis | , , , , , , | Leave a comment

“Caring About The Political Fortunes Of The Causes”: If Bernie Sanders Wins, Centrist Liberals Are Morally Obligated To Support Him

In modern electoral politics, moderate and centrist Democrats are well-known for browbeating leftists with the lesser-evil argument. Democrats might not be particularly concerned about, say, child poverty, but they’re still better than Republicans on just about any issue you care to name. Obama might drone strike American citizens, but at least he doesn’t start full-blown wars of aggression that kill hundreds of thousands of people.

And that’s true, so far as it goes. However, there is a small but distinct possibility that moderates might find themselves on the receiving end of such an argument in the next election, if a leftist like Bernie Sanders wins the presidential nomination. As Matt Bruenig points out, they don’t seem to like this possibility. But they better be prepared for it.

For an example of a Democratic partisan, here’s Mark Kleiman explaining why he doesn’t agree with “emo-progs” (i.e., left-wing critics of Obama), in a post from a couple years ago entitled “Confessions of an Obamabot”:

What the emo-progs refuse to remember — now, and in the run-up to the 2010 election — that I never for a moment forget is that, whatever the failings of Barack Obama the human being, “Barack Obama” the political persona is the leader of the Democratic Party (and thus, effectively, of the entire progressive coalition) in a battle with a well-organized, well-funded, and utterly dedicated plutocrat-theocrat-racist-misogynist-obscurantist-ecocidal Red Team, whose lunatic extremism is now actually a threat to republican governance. If I’m reluctant to help Rand Paul and Glenn Greenwald add NSA! to Benghazi! and IRS! and Solyndra! and all the other b.s. pseudo-scandals designed to make Obama into Richard Nixon, it’s not because I’m in love with “The One:” it’s because, for good or ill, the political fortunes of the cause I care about are now tied to Obama’s political fortunes. [Washington Monthly]

Interpreted narrowly, this is a reasonable point. It is very often taken too far, of course — as with the people who blame the 97,000 Nader voters in Florida in 2000 for Gore’s loss of that state, instead of the 2.9 million who affirmatively voted for Bush. I would further add that Democrats should not always be supported without question. Centrist hack Democrats like Andrew Cuomo do not care about left-wing priorities like affordable housing and quality public transit — indeed he has actively worked against both. In Cuomo’s case, it is worth risking a potential loss in order to change the political incentives in New York at the state level.

Still, in America, tactical voting must always be a consideration. And for voters in swing states, that consideration is powerful indeed. Republicans really could do spectacular damage — just look at the smoking wreckage the last GOP president left.

The question is whether moderates are willing to swallow such an argument if Sanders manages to clinch the Democratic nomination. It’s still an extreme long shot, but it’s not completely out of the question.

After all, something similar happened in the U.K. just last week, with the election of Jeremy Corbyn as leader of the Labour Party. The reaction was not encouraging. Moderate liberals, like New Labourite Tony Blair, who all but begged his nation on hands and knees not to vote Corbyn (and probably added 10 points to Corbyn’s victory margin in the process), are furious. Some Labour MPs have reportedly even approached the Liberal Democratic Party about defecting.

Of course, that’s in the U.K., a genuinely multi-party democracy. There is less of an obligation to support Labour when the Greens or Scottish National Party could end up being part of a liberal coalition. In the U.S., there are only two real national parties, thus greatly strengthening any lesser-evil argument.

So unless moderate liberals’ arguments were 100 percent hypocrisy, should Sanders lock down the nomination, they will be obliged to support him. If they really care about the political fortunes of the causes they care about — ObamaCare, climate change, women’s rights, a higher minimum wage, keeping 27-year-old Heritage interns off the Supreme Court, etc. — they best start saying “actually, democratic socialism is good” in front of a mirror. They may need the practice.

 

By: Ryan Cooper, The Week, September 20, 2015

September 22, 2015 Posted by | Bernie Sanders, Democrats, Hillary Clinton, Progressives | , , , , , , , | 4 Comments

CEO’s And Teapartiers, Shut Up And Pay Your Taxes: Starving The Government Is Not Patriotic

As I sit here in Germany’s financial capital, a few hours by train from where my forbearers set out for the United States a century ago, I’m remembering what antitax Americans are forgetting: Living in a stable and free society that supports economic initiative isn’t a given.

Those who think that U.S. corporations and wealthy individuals already pay too much in taxes and get too little in return are taking for granted social order and economic opportunity. Keeping the peace costs money, and paying police, fire and other emergency personnel requires tax revenue. Just ask U.K. Prime Minister David Cameron, whose plan to make substantial cuts in London’s Metropolitan Police budget now looks ill-timed, amid pictures of looters making off with stolen goods.

U.S. corporations benefit every day from operating in an environment where bricks aren’t flying through windows and gunshots aren’t going off in parking lots. Civil unrest can be expensive, as executives at Sony Corp learned this week after its London warehouse went up in flames.

It also costs money to educate a workforce, something that also seems glossed over by those who want to slash money for federal education grants.

When I first arrived in Germany, people asked me whether the news they saw on TV is true, that “everyone in the United States is lining up for food stamps,” as one Frankfurter put it. Their questions were a reminder that even though Germany’s tax burden is higher than that in the United States, its economy weathered the global recession of 2008-09 better than America’s did, and its unemployment rate today, at 7%, is significantly lower than ours at 9.1%.

People like Grover Norquist, who claim that high taxes are the root of all our economic problems, have no answer for facts like these.

Those who want to lower business taxes often say that the U.S. corporate tax rate of 35% is higher than the 25% average of the world’s developing economies. But that argument ignores the long list of tax loopholes that allow U.S. companies to pay much lower rates in actuality.

Go down the list of second-quarter earnings reports for companies in the S&P 500 Index  and stop when you get to one that paid 35% of earnings. That might take a while.

What the United States needs isn’t more tax cuts, but tax reform to eliminate the many loopholes that create an uneven playing field.

Tax corporate cash

Given the sluggish pace of U.S. economic growth, perhaps such reform could include a tax on the enormous amounts of cash that American companies now have sitting on their balance sheets.

Non-financial companies in the S&P 500 are sitting on more than $1 trillion in cash right now — an absurd amount given that many of those same companies are laying off workers. Some estimates put the total closer to $2 trillion.

Forcing corporations to spend that money, either by hiring workers or paying investor dividends, would go a long way toward spurring growth.

When I hear Norquist — along with the candidates active in the tea-party movement that are too weak to resist signing his so-called loyalty oath — complain about actually having to pay for government services, I think we’ve come to take those services for granted.

I also think such whining is the exact opposite of the can-do attitude of the waves of immigrants who helped build the U.S. economy and continue to do so today. I’d like to introduce them to some of the start-up CEOs that I interview every week in Silicon Valley.

During the past few months, I’ve been writing a series of profiles on tech entrepreneurs for the site Entrepreneur.com. Neither I nor my editors planned it this way, but given that recent immigrants tend to be among the hardest-working Americans, perhaps it’s no surprise that none of the first four that I’ve written about are native to the United States.

These executives are people who, like generations of immigrants before them, came to the States and put their energy into building companies, rather than sitting around complaining how terrible a place this is to do business. They also, by the way, create jobs.

They come from across the globe: Victoria Ransom and Alain Chuard of Wildfire Interactive grew up in New Zealand and Switzerland, respectively; Mikkel Svane and his Zendesk co-founders hail from Denmark; Rahim Fazal of Involver is from Vancouver, B.C.

Yet all of them came to the United States to build their businesses. Why would they do that if it’s so hostile to their efforts, as the antitax extremists claim the country to be?

The answer is it’s not. On the contrary, America’s still the most attractive country for entrepreneurs. Keeping it that way costs money — something that tax haters seem to forget.

 

By: John Shinal, MarketWatch, August 12, 2011

August 13, 2011 Posted by | Businesses, Capitalism, Class Warfare, Conservatives, Consumers, Corporations, Democracy, Economic Recovery, Economy, Education, Freedom, GOP, Government, Ideologues, Ideology, Immigrants, Liberty, Middle Class, Politics, Republicans, Right Wing, Small Businesses, Tax Evasion, Tax Loopholes, Taxes, Teaparty, Unemployed, Wall Street, Wealthy | , , , , , , , , , , , , , , | Leave a comment

Standard And Poor’s Should Be Embarrassed

The United States is simply not at risk of default. Default is impossible for a sovereign currency issuer.

The Standard & Poor’s rating firm should be embarrassed. If there is any political judgment at work here, it is S&P. falling for politically motivated scare mongering. But given its track record with mortgage securities and collateralized debt obligations, why should we be surprised to see a rating agency relying on conventional wisdom rather than analysis?

The whole premise of the rating is incorrect. The U.S. may eventually experience unacceptable levels of inflation, but the experience of Japan shows that stop-and-start fiscal stimulus is more likely to result in protracted near-term deflation.

Every time Japan tried to lower its public-debt-to-gross-domestic-product ratio by cutting spending, the resulting drop in economic activity actually made that ratio worse. We are seeing the same results in Ireland and Latvia. The United Kingdom tried the same experiment 10 times in the last 100 years, and every time it got the same results: cutting spending to reduce budget deficits results in a fall in G.D.P. that makes the debt burden worse, not better.

The remedy should be to get private sector debt loads down via encouraging debt restructuring and write-offs, and using well targeted fiscal stimulus to offset the impact of those efforts. But S&P instead would have us do the economic equivalent of trying to cure an infection by using leeches.

Misguided cures killed a lot of patients and are killing a lot of economies.

By: Yves Smith, Writer for Naked Capitalism. Original article appeared in The New York Times, April 18, 2011

April 19, 2011 Posted by | Capitalism, Congress, Conservatives, Corporations, Debt Ceiling, Debt Crisis, Economic Recovery, Economy, Federal Budget, Financial Institutions, Financial Reform, Government, Government Shut Down, Ideology, Lawmakers, Lobbyists, Media, Mortgages, Politics, Pundits, Standard and Poor's | , , , , , , , , , , | Leave a comment

   

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