Category Archives: Politics

Matt Taibbi Takes Up SEC’s Andrew Bowden Regulatory Capture Scandal

Matt Taibbi has written a characteristically informative, incisive piece about the embarrassing spectacle of the SEC’s Director of Compliance Inspections and Examinations, Andrew Bowden, making sycophantic remarks about the private equity industry at a recent conference, a story we broke early last week.

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The Retirement Crisis

This interview, with Teresa Ghilarducci, who the Wall Street Journal called “the most dangerous woman in America,” discusses how and why pensions are under stress, and what can be done to fix them. While she agrees that the retirement crisis is real, she also argues that it is eminently fixable, particularly since there really is no free lunch. The alternative, of widespread poverty among the aged, also imposes costs on government and society.

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How Wall Street Used Swaps to Get Rich at the Expense of Cities

This post by Ed Walker provides a detailed description of how badly municipalities have been fleeced when they bought interest rate swaps from Wall Street as part of financings. It isn’t simply that these borrowers were exploited, but that the degree of pilfering was so extreme that the financiers clearly knew they were dealing with rubes and took full advantage of the opportunity.

But what is even more troubling than the fact set here is the failure of the overwhelming majority of abused borrowers to seek to recover their losses. Walker describes that multiple legal approaches lead you to the same general conclusion: the swaps provider, as opposed to the hapless city, should bear the brunt of the losses. So why haven’t cities like Chicago, that have been hit hard by swaps losses, fought back? Walker does not speculate, but in the case of Rahm Emanuel, it’s not hard to imagine that his deep ties to Big Finance are the reason.

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Bill Black: The DOJ and the SEC Spurn their Ace in the Hole – Richard Bowen

This is the second post in a devastating series on why major banks and their executives got away with large-scale, systematic fraud in the runup to the crisis. Bill Black uses Citigroup whistleblower Richard Bowen as a case example of how derelict the DOJ and SEC were in the performance of their duties.

Here, Black describes how historically frauds and criminal conduct were pursued primarily by regulators and the FBI. However, not only were regulations were weakened, but the Bush Administration ended criminal referrals: “References to the criminal referral coordinators disappeared or were removed from the bank examiners’ manuals.” FBI staffing for white collar crime was cut drastically as the war on terror was given precedence.

That meant, as Black describes, whistleblowers became more important than ever as not just a source of information for civil and criminal prosecutions, but as key witnesses. Yet in many cases they are problematic. They are often disaffected former employees who call out the bad conduct they saw after they were terminated, or were so badly roughed up by their former employer for becoming an internal dissident that they were traumatized and don’t hold up well on the stand. Hence, as Black explains, the failure to take advantage of a stellar whistleblower like Richard Bowen. As Bowen put it, “Not only did they bury my testimony, they locked it up.”

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Billl Black: The Lessons Richard Bowen’s FCIC Testimony Should Have Taught the Nation

Get a cup of coffee. This important post gives an in-depth analysis that helps explain how bad conduct was covered up or glossed over by the FCIC, and how much of the media fell in line with the official, sanitized story.

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The New Authoritarianism

In recent decades, new forms of dictatorship based on manipulating information rather than on mass violence, have emerged. This column explores the trade-offs and techniques of the modern dictator. Such dictators can survive using little violence in the face of moderate economic underperformance. Economic downturns often prompt an increase in censorship and propaganda. Though new information-based dictatorships are better adapted to a modernised society, modernisation and access to information, as well as economic contractions could undermine them.

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Tom Engelhardt: The New American Order: 1% Elections, The Privatization of the State, a Fourth Branch of Government, and the Demobilization of “We the People”

Based on developments in our post-9/11 world, we could be watching the birth of a new American political system and way of governing for which, as yet, we have no name.

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Bank Super Lawyer, Rodgin Cohen of Sullivan & Cromwell, Says Regulatory Capture is a Myth

Yesterday, the Wall Street Journal ran a credulity-straining account of how Rodgin Cohen, the dominant bank regulatory lawyer in the US, was trying with a straight face to convey a line that legitimates his role: move along, there is no such thing as regulatory capture.

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