Gretchen Morgenson on Bill Moyers: Why Too Big to Fail Still Lives

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This Bill Moyers segment gives a welcome view of Gretchen Morgenson recapping the sorry state of the “too big to fail” problem. She’s more of a believer than yours truly on the Brown Vitter bill as a potential solution, although correctly pessimistic as to the odds of its passing.

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  1. Chris Engel

    It reminds me of the gun bill debate.

    People were getting so excited about progress in the Senate — yet we forget that the House is packed with morons who wouldn’t let a single sensible bill pass the Senate without being diluted and teapartied out before going to Obama’s desk.

    At issue is whether B-V is any good (I’m inclined to believe Bill Black’s account of the shortfalls).

    But this isn’t a big deal anyway, since the House would never pass any bill that hurts their Wall Street daddies.

    As if gun safety was hard enough, bank regulation is impossible in an environment where the implementation of Dodd-Frank is being gutted or “defanged” as Gary Rivlin at The Nation described it:

    1. Paul Tioxon

      It not only reminds of the gun debate, it also is a part of the assault on the IRS. Not only are for profits not going to do anything but not pay taxes, and as Sen Levin has shown time and again in one report after another that they frequently DO NOT PAY ANY FEDERAL CORPORATE TAXES, but now, the IRS is being thrashed to permit the illegal slush funds for local, state and federal elections to receive an unlimited stream of anonymous donations. The battle over 501c4s is a battle to allow the comparative advantage of the Republican Party, money, to be deployed to take hold of elected offices without disclosing any information and take as much money as humanly possible and not be taxed on this either!

      People are forming these non profits by the thousands and accepting money in the tens of millions, and they do not want to have to pay taxes on the money handed to them by the wealthy. So, they hide behind this IRS non profit tax exempt status. This of course, does not impede political activity in anyway. You do not have to go and knock on the IRS’s door and ask for their status, they just happen to be doing so in a tidal wave immediately after the Citizens United decision in 2010. You do not have to be dunned with a long list of questions about your groups activity, if you stay the hell away from the IRS to begin with. But since the Teabag set wants to be so patriotic, they insist in the IRS Imprimatur so they gain further credibility when soliciting funds or speaking out on any issue. Any of course, they do not want to pay taxes on the funds received!! They also get US POST OFFICE discount mailing rates! Yes, for the all important solicitation letter or campaign broadside on who to vote for, the US Mail can do all of that nasty door to door stuff where the Democrats have a comparative advantage, you just pay for it with tax free donations and at a discount! Such a deal! What a country!!

      The Tea Party has the nerve to apply for tax exempt status, get it, and then complain that their voluntary decision to submit to IRS scrutiny targets them?!?! All the while appearing in public as much as possible with politicians and forming a political party with the same moniker. And they elect these jokers who proceed to form a TEA PARTY CAUCUS IN CONGRESS!!

      The tea party wants the equivalent of a NO ASSET NO INCOME NO JOB NO DOC MORTGAGE LOAN!!!!!!!!!!!!!!! With no taxes and a federal discount on postage. And this is undue, inappropriate attention by the IRS. Really, that they paid any attention at all to the applications and just didn’t send out the IRS’s black helicopters and throw free approvals over the entire Bible Belt and wheeeeeeeeeee! Collect money for free and elect candidates that will attack my job, thank you, more please.

      The connection between the political slush fund from Tea Party 501c4s and elected Congressmen/women and US Senators is a direct financial conflict of interest for the entire Tea Party Caucus that should be investigated for improper use of campaign funding. No wonder the crazies want to scare up the worst impeachable offense of all time, their campaign money conduit is being threatened. The loop hole of 501c4s needs to be shut down and the category eliminated. The rest of the loopholes that allow tax free for profits to operate needs to follow suit.

    2. Chris

      “yet we forget that the House is packed with morons who wouldn’t let a single sensible bill pass the Senate”

      at least you’re not blinded by partisanship. carry on.

      “But this isn’t a big deal anyway, since the House would never pass any bill that hurts their Wall Street daddies.”

      uh-huh and

      newsflash: both parties love that corporate lucre. both parties need the loot that corporate america & the TBTFs to provide to run their hate ads at each other. The tea party is actually a reaction to that, but you and the commenter above (Paul Tixion) are so blinded by your hatred of flyover white people that you can’t see it.

      1. LifelongLib

        I don’t know of anybody who hates “fly-over white people” — a lot of posters here could be described as part of that category. Like many I wonder why so many of them (us) keep voting against their political and economic interests for what seem to me to be ephemeral social concerns.

        1. Propertius

          Like many I wonder why so many of them (us) keep voting against their political and economic interests for what seem to me to be ephemeral social concerns.

          Well, that certainly explains the last two election cycles. Nothing says “voting against their political and economic interests for what seem to me to be ephemeral social concerns” like (re-)electing a Reaganesque, warmanogering neocon corporate toady on the basis of race and party affiliation.

      2. DolleyMadison

        Exactly – and Obama and the banksters use that hatred to continue to screw us all. Their avarice knows no party, no ideology, no discernment at all. They will strip our bones clean for a nickel dropped in the gutter.

      3. Paul Tioxon

        Don’t you fucking tell me anything about who I hate!! I’ll HATE ANYONE I damn well please and I can clearly see that I hate you! You freedom killing nazi ): Now go put on your Roger Corman movies, it’s going to be a long weekend.

  2. Jackrabbit

    Cretchen talks about Dodd-Frank’s TBTF resolution authority but fails to mention FSOC.

    IMO Dodd-Frank’s resolution provisions are unlikely to be used because FSOC’s ability to suspend consumer protections essentially allow for ‘bail-ins’ where Bank customers bail out the Bank(s).

    The problem with Dodd-Frank resolutions is that TBTF Banks are prone to getting into trouble at the same time AND there are so many connections among them (derivatives, mostly) that contagion is almost certain.

    Thus, FSOC safeguards essentially mean that when Banks fail, they fail together. And when that occurs, there will be another extraordinary crisis that requires a taxpayer bailout. The rationale will be as in 2008: the cost of financial system collapse is much more than the bailout, thus TINA is invoked.

    1. Susan the other

      Well, there’s no reason why they can’t use both bail-ins and bail-outs. For the banks to get their bail-out they will first make up a tiny fraction of their losses by confiscating deposits; then they will get their bail-outs. And if derivatives are not made illegal transactions, what a killing. Because they are stuffing the depository with derivatives. Nobody is stopping them. Derivatives probably don’t even qualify as negotiable instruments – which is what depositories are supposed to contain – because there’s no collateral behind them and the parties are entangled to the point that no party’s position can be defined. It sounds a lot like the land title system – the collateral has been divided up, resold, rehyypothecated to death and nobody really knows who is entitled to what. Where have our lawmakers been?

      1. Jackrabbit

        …here’s no reason why they can’t use both bail-ins and bail-outs.

        Well, my comment basically alludes to the likelihood that FSOC acts in way that reduces the needs for a bailout of any ONE institution but could result in the need for a massive bailout as misplaced confidence in FSOC risk control grows.

        FSOC safeguards create a Financial Titantic: Full speed ahead on the unsinkable SS TBTF!


        FSOC was created because bailouts complicate life for politicians and unsettle the status quo.

        As in so much that TPTB do, appearances count for more than substance. Anything controversial is hidden by layers of BS, and failures are swept under the rug.

        Shhh…. don’t wake the sheeple.>/i>

    2. liberal

      AND there are so many connections among them

      This is really the key point. It’s not so much “too big to fail” as “too complex to fail.”

  3. Andrew

    We need an expert and prestigious financial reporter to tell us this?

    Her criticisms are quite mild given the scope of the horror corp’s and financial institutions have inflicted on us and the global system.

    Does anyone believe it’s possible to regulate them? We need to break them up, but even that is only a first step. But if we can’t even get the mildest reform legislation through, how is something more dramatic like a breakup even conceivable?

    Without a movement, it aint gonna happen.

    No one knows how movements happen when they do. But one common element is a large number of people reaching a breaking point where they’re willing to sacrifice– I think that at some point, in all of us worn out by scandal fatigue, eventually something snaps, and we say enough!

    More and more people are getting to this point, and soon, I hope, there will be a critical mass to actually have a movement.

    It’s awful what these institutions have wrought, but the faces at the top are also just appalling, unbearable–whether it’s Jamie Diamnod and his smug condescension or Obama’s self serving lies and hot air.

    1. Carla

      “No one knows how movements happen when they do.”

      Unfortunately, we saw last year exactly how they get shut down, as Homeland Security, the FBI and the nation’s esteemed big-city mayors acted in concert to lower the boom on Occupy all across the country.

      It’s going to take a movement of several million, at least, and we don’t appear ready to mobilize that army.

    2. banger

      Indeed, you express what many of us are feeling. A great number of people who comment here and people across the political spectrum seem to be somewhere between a shrug of the shoulders to wanting to throw some rocks through some windows. Reform, as I’ve said many times, is really not possible under the current political arrangements. Both political parties are hopelessly corrupt at the core and the federal government, as a result, has become a burden more than an asset to the public and opinion polls show that.

      Again, what to do? Some band-aids do not cause too much harm unless the are bound together in huge bills like the ACA, sounds like better than nothing on the surface but who knows what hidden provisions lurk in the act that will just increase costs and lower benefits–some say that is indeed what will happen, yet taken individually, most of the provisions seem ok. Dodd-Frank clearly misses the mark and that is the best we can do. The Brown-Vitter bill appears to be a bit confusing. I would have rather seen outright charges of fraud and prison terms as a way to regulate the financial industry but that’s not going to happen because of the massive corruption I spoke of.

      My advice is, as usual, to create local networks, try to connect with others, work on becoming stronger and less hypnotized by the lying media narrative, grow spiritually and so on. But mainly we need to see all this from a positive POV. We are in a necessary stage of dissolution. The consumer society we are all addicted to is no longer healthy–we need to develop beyond the notion that life is about feeding ourselves with mass quantities of whatever we can get. More, more, more, more is not the meaning of life–that’s why growing spiritually (in the most inclusive sense of the word) is so important. Wanting less will not harm us or the commons–it will teach us to move away from relying on multi-national corporations which are destroying the natural and human environments. Morgenstern is just someone who wants to make the system work a little better–the system needs to dissolve and make way for a very different sort of idea–one, you might say, is based on the creative commons rather on trying to grab bits of creation for yourself and make a fortune as a result so that we can stress out even more.

      1. jake chase

        Yes. Sauve qui peut, and try to help family, friends and selected others.

        To expect anything good from authority is insane. Forty-five years ago I realized my Go’mint wanted to kill me in the name of National Defense. National Defense? We have oceans on the two most important sides, and Viet Nam was a stone age country six thousand miles away. Russia was a gulag absorbed in alcohol that had shortages of everything and needed to fence its people in. China was sending its intellectuals into the rice paddies for reeducation.

        People think things are worse now? Things are the same now. They just cost more and fall apart sooner.

  4. igor

    This “too big to fail” discussion just takes focus away from fraud perpetrated by their CEOs and directors.

    It’s not the JPMorgan that’s bad, it’s the people who manage it are the rot that shoud be extinguished.

    And those CEOs are just happy to see how you guys discuss the “too big to fail” till the end of time.

    Good job, people! Jamie Dimon is proud of you! Carry on!

    PS. for those who think “only small is good” – look at public utilities – huge, monopolistic, and no (big) problems.

    1. banger

      More imporartant than the structure of the financial industry is the fact our already multi-tiered justice system has fashioned a status for certain aristocrats such that they are immune from prosecution. The death of equal justice under law, habeas corpus and other protections is the most serious issue here–Brown-Vitter is largely irrelevant here.

      We will see, gradually, an increased contempt for the law as we are seeing a contempt for Congress and the Executive branch.

      1. DolleyMadison

        Its not contempt for the law as much as an infiltration and subversion…more like a lack of contempt BY the law.

      2. Carla

        Actually, I feel that those who write the law, practice the law, and enforce the law (Homeland Security, FBI, Justice Dept.) have demonstrated contempt for American citizens and our Constitutional rights. And that precedes the contempt for the law that you see coming.

        1. DolleyMadison

          Yes, well in NC a prime example of that is our non-judicial foreclosure process that allows anyone to substitute your trustee and foreclose – “because we say so.” They don’t even have to file a COPY of your note – just a “certificate of Compliance” claiming that they sent you a pre-foreclosure notice that is typically signed by FC Mill receptionist. And the clerk of courts who presides over hearing is not even allowed to determine if there was a default! Though a nuetral 3rd party trustee is required, the servicer typically serves as trustee and FC party. The law is so skewed that there is absolutely no provision for what happens when the bank loses and appeals – only lays out what steps a homeowner must take to appeal – which includes a bond of 10% of the amount the FC party claims is due and stipulates they must have an appeal hearing within 10 days, and if they want to raise any affirmative defenses they must file a separate suit. The bank appeal, conversely, requires NO bond and they have no deadline to perfect appeal. Sickening. And they are lobbying to have the laws LOOSENED. And they will win.

  5. impermanence

    Banking is THEFT, something known for thousands of years.

    People will do EVERYTHING in order to obtain, “something for nothing.”

    1. LifelongLib

      Checking and savings accounts are theft? Oh come on. That’s like saying we should get rid of police because they’re all corrupt. No, you create an honest police force. Same with banking. In the U.S. the federal government should provide basic banking services for everyone. Let the game-players and speculators go to private institutions and gamble at their own risk.

      1. Carla

        Good luck with that. As you may know, at, there’s a great blueprint for a banking system like the one you describe. I fully support it. Positive Money is a U.K. organization. Maybe you and I can start Positive Money U.S.A.

        1. LifelongLib

          Thanks for the link. Glancing at it quickly I find I’m in general agreement with their ideas, particularly debt-free money creation (OK, I’ve heard that all money is in some sense debt, but I mean money that does not depend on personal debt).

          I do have a selfish interest in guaranteed banking services. Knowing people who’ve done time in the twilight zone of check-cashing outfits and payday loans (and how much it cost to get them out of it) I am convinced that these things must be destroyed.

  6. Deloss

    On television on, I think Wednesday night, on NBC, a newscaster pointed out that the Congress created the 501[c]4 category using language that it would be “exclusively” for social welfare programs. At some point the IRS, on its own, w/o Congressional approval, changed “exclusively” to “primarily.” So the Tea Party, or any other political organization, feels entitled to use 49% of its funding for political purposes and still be a 501[c]4 organization. I’m sorry I can’t be more precise about the program. I was recovering from surgery; ordinarily I don’t watch much television.

  7. Timothy

    Can we now stop electing lawyers and others whom have had common sense bred out of them? We also now see the reasoning of mandating term limits so legislators are now more receptive and pliable about voting the interests of their future employers once they are term limited. The revolving door makes this all so obscene. Combine these things with the Citizens United decision, redistricting (gerrymandering) and the impossible cost of running for office for the first time, and you’ve got a septic sludge of corruption and a system where legislators choose their voters instead of the other way around. GET THE MONEY OUT OF POLITICS!

  8. Ms G

    With due respect to Gretchen Morgenson and Bill Moyer, who seem at least to grasp how things work now, isn’t the short answer to the question of “why TBTF still lives” that those who profit by TBTF hold the reins of power in government and every corner of the private sector and they do not wish to end their stream of incredible wealth (at the expense of the other 99.9%)?

    I mean, they created TBTF via, among other things, hijacking government — e.g. Rubin-Clinton and the earlier and later iterations — to allow it to blossom and to rescue it when it exploded. They don’t want it to be over. So it isn’t.

    Am I missing something?

  9. skippy

    America has always been about the self [maximizing personal potential] above all other considerations. Until this changes, nothing else will.

    Skippy… I wonder how long its been for some… to look in another humans eyes and thank them for helping… with out money exchanging, expectations ticked, advantage gained, self patted on the back…

    These days I find the recipient[s of such gestures to flinch at such honesty… almost fear such act… as it reminds them of something beautiful lost… and don’t wish to be reminded of that death… a small child lost… for convinces sake… sociopathy

    Profile of the Sociopath

    This website summarizes some of the common features of descriptions of the behavior of sociopaths.

    Glibness and Superficial Charm

    Manipulative and Conning
    They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims.

    Grandiose Sense of Self
    Feels entitled to certain things as “their right.”

    Pathological Lying
    Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.

    Lack of Remorse, Shame or Guilt
    A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way.

    Shallow Emotions
    When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises.

    Incapacity for Love

    Need for Stimulation
    Living on the edge. Verbal outbursts and physical punishments are normal. Promiscuity and gambling are common.

    Callousness/Lack of Empathy
    Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them.

    Poor Behavioral Controls/Impulsive Nature
    Rage and abuse, alternating with small expressions of love and approval produce an addictive cycle for abuser and abused, as well as creating hopelessness in the victim. Believe they are all-powerful, all-knowing, entitled to every wish, no sense of personal boundaries, no concern for their impact on others.

    Early Behavior Problems/Juvenile Delinquency
    Usually has a history of behavioral and academic difficulties, yet “gets by” by conning others. Problems in making and keeping friends; aberrant behaviors such as cruelty to people or animals, stealing, etc.

    Not concerned about wrecking others’ lives and dreams. Oblivious or indifferent to the devastation they cause. Does not accept blame themselves, but blames others, even for acts they obviously committed.

    Promiscuous Sexual Behavior/Infidelity
    Promiscuity, child sexual abuse, rape and sexual acting out of all sorts.

    Lack of Realistic Life Plan/Parasitic Lifestyle
    Tends to move around a lot or makes all encompassing promises for the future, poor work ethic but exploits others effectively.

    Criminal or Entrepreneurial Versatility
    Changes their image as needed to avoid prosecution. Changes life story readily.
    Other Related Qualities:

    Contemptuous of those who seek to understand them
    Does not perceive that anything is wrong with them
    Only rarely in difficulty with the law, but seeks out situations where their tyrannical behavior will be tolerated, condoned, or admired
    Conventional appearance
    Goal of enslavement of their victim(s)
    Exercises despotic control over every aspect of the victim’s life
    Has an emotional need to justify their crimes and therefore needs their victim’s affirmation (respect, gratitude and love)
    Ultimate goal is the creation of a willing victim
    Incapable of real human attachment to another
    Unable to feel remorse or guilt
    Extreme narcissism and grandiose
    May state readily that their goal is to rule the world

    (The above traits are based on the psychopathy checklists of H. Cleckley and R. Hare.)

    1. LifelongLib

      “America has always been about the self [maximizing personal potential] above all other considerations. Until this changes, nothing else will.”

      You’d rather live someplace where you’re defined by accidents of birth, like what social class you were born into or the color of your skin? God knows we still have too much of that in America, but the IDEAL is that you’re judged by what YOU YOURSELF do, not by what “your kind of people” are allowed to do.

      The notion that the American Dream is only about getting rich is a false one. It’s about being able to participate in the community based on who you really are, not your caste/color/gender what have you. Has the dream often failed? Sure. Have we lived up to it? Of course we haven’t. But it remains as something to be striven for.

      1. jake chase

        Actually, it was about access to land. Now, its about phony respect. What it boils down to is endless television commercials featuring three to four creepy stereotypes in sanitized work situations with the Black perenially in charge. Meanwhile, theft has been institutionalized and usury has been elevated to steroidal proportions.

      1. skippy

        I would like to advise that people are waking up around me, questioning the thunkit econned truisms. More concerned with getting on with life than chasing paper expectations dreams. Looking at each other as support groups and not just networking nodes for personal advancement. This is in the top 20ish%, even an expat american.

        Skippy… maybe some trickle down ethos is possible… early days yet… but down here there is still a memory… of before the neoliberal assault.

        PS. Could MBA’s be the ultimate expression of working ones self out of a job… eh.

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