I had fun on this interview, although there was one point where the host, Erin Ade, hit me with a remarkably broad question: what was the worst pre-crisis bank abuse? I neglected to include chain of title, the pretty much pervasive failure to transfer the mortgage rights as stipulated in securitization agreements to the trusts used to hold them. That actually was the most stunning thing I came across as more and more information came out after the the dust had settled. But it didn’t play directly into the meltdown, so I neglected to include it.
Hope you enjoy this chat!
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Nice interview Yves!
Your World Wide Yves…unlike the petty reforms touted from the Continent of ill repute.
But im Ecstatic you grabbed air time on recent ‘penalties & bogus settlements’.
There can be no settlement of a great cause without discussion, and people will not discuss a cause until their attention is drawn to it.
William Jennings Bryan
International is good. On the early a.m. of Jan 1 (or 2) the BBC aired a brief interview with the acclaimed blogger Yves Smith of Naked Capitalism in which she did a brief but scathing expose on rogue traders. I woke up in the middle of it and thought, gee that voice sounds familiar! This was a good one too on the scathing scale. I’m sorry about the omission of trashed titles and fraudulently securitized MBS because that mess is so devastating to the banks that nobody has been allowed to even talk about it. Except people like Lynn Szymoniak and a few others. Here’s what I’d love to see on NC – a series on money laundering in US banks beginning with drug money in the early 90s. I keep telling myself that the frenzy to write mortgages was because they were such good, unregulated securities and could be obfuscated like mad. So I conclude (for lack of any information to the contrary) that all those trashed titles were a feature and not a bug.
google:
“BBCI”
And
“The Politics of Heroin”
If you’re searching for more info…….
I would also add to books/stories surrounding “BCCI”,a full service bank”; there was mike ruppert’s “crossing the rubicon”, which came out @ 2003… or so.. and had used a world bank estimate at illegal money laundering for drug proceeds which was an estimated 600 billion dollars PER YEAR.(in 2000),That was 600 billion dollars CASH ,laundered 1/2 by American banks and the other half at banks around the world.Now this is obviously an estimate of something everyone is trying to keep secret.But, considering the “fractional reserve banking system” we have;this means these us banks are allowed to loan out whatever multiple of whatever cash they have on hand. So American banks taking in 300 billion dollars per year in cash in the money laundering side, means they can loan out over a trillion, just by having this cash on hand.
This is part of the world, where bankers are the ones who don’t want legal drugs.They benefit immensely.
and I always like to point out another great book on the savings and loan scandal. ” The Mafia, The CIA, and George bush”,by pete brewton.The Houston journalist who first started doing stories that eventually became the savings and loan scandal, where the bankers stole enough money as made the taxpayers fork over 500 billion dollars to bail them out.In it before 9-11 happened, the connections of the bush family, and bin laden family, and jim bath in texas.Or George w bushes ties with jim bath and salem bin laden, being business partners, the was before the senior bush was on the board of the Carlyle group with the elder bin laden, when they were owners of defense industry companies after 9-11, which led to increased military spending which made the bushes and bin laden some more money… .
Bush the elder of course.This book came out in the 90’s.,when the bush family, niel and jeb who were both running banks involved in the savings and loan scandal, were in between public jobs.
Nice comment. I would also add that the Taliban and NATO had an agreement to cut heroin production and that the Taliban had reduced production to around 10% of the worlds supply. Within months of the start of America’s war there the heroin production started rising dramatically to where they now, again, produce about 90% of the worlds heroin. Why were we there???
So…..so much time has been spent on the criminals. Yves, when will someone spend some time on the victims. 6-10 million men women and children caught up in this banking scandal and then cast down and out. Loss of homes, jobs, relationships, families destroyed, separated. Men and women who can’t get jobs or decent jobs because of ruined credit.
Bad banker blah blah, bad regulator blah blah, victim……..silence. Put a face on their crimes and maybe something will happen. But probably not.
That’s a good point. We don’t hear from the victims enough.
You were well spoken and informative, Yves. What an awkward presenter though. And I dislike this kind of American format where everyone is always in a hurry.
Elizabeth Warren and Yves Smith for President.
Extremely well presented synopsis of the causes of the GFC.
I whole-heartedly agree with that sentiment !
Great interview ! I’m still of the opinion that because Dodd/Frank was written by bank lobbyists (Obama campaigning said no new laws would be written by lobbyists – add that to the list of lies) that it was purposely written to be so complicated that it would take years to decipher completely (2,300+ pages), allowing banks a lot of time to water down any real regulation. As they have done. Glass-Stegall was only a handful of pages and was written so there could be no misunderstandings about it’s purpose and intent and implementation.
Previous to the Great Depression there were booms and busts where the banks were bailed out like today. The difference between those booms and busts is that they didn’t affect nearly every single American. Then, overlooking the banks crimes was no big deal with the majority of the populous. This recent meltdown affected a majority of people globally and just forgiving the banks with a wink and nod like in the past just can’t and shouldn’t work anymore. They must be held accountable. I don’t mind people getting rich, as long as they don’t cheat to win.
Wall Street paid themselves record bonuses after the crisis because they got the mark-to-market requirement (FASB 157) suspended. Simply by not having to show record losses, they could siphon-off billions with virtually no public outcry.
We are now coming up on the 5th anniversary (April 2nd) of “mark-to-fantasy” accounting and AFAIK no official is even considering raising the issue anytime soon. Among other things, QE was supposed to solve the bank insolvency problem by raising housing values. It was a simple answer to a simple problem. But the Bernanke miscalculated. And his industry-friendly, politically-motivated bungling has made the ultimate cost to all of us much higher (althought the Fed may ‘win’ in the end, it is a pyrrhic victory).
PS I suspect that much of the QE paper profits goes to financial speculation, ‘portfolio investments’ (off-shore, etc.), and asset-price inflated assets (manhattan real estate) so only a fraction actually makes its way to home purchases from wealthy/corp buyers (despite some high-profile corporate investments). And no real economic recovery means tepid demand from actual home-buyers.
Bravo!!!!
the change in early 2009 of mark to market rules changed the face of “the market”……
If you go back to then it is ” in your face” apparent that the “market” immediately turned around and moved in an upward curve that has really not stopped…..
This is a “key” to understanding how corrupt the system is…..
Try doing something like that with your home personal finance!!!!!!!!
I love the dubstep at the beginning of the vid. Drop the bass! :)
Content as always spot on. However “your ‘umble blogger” reeks of Uriah Heep and false modesty. How about you substitute circumlocution for a pronoun. I? Maybe.
I was a guest on some TV show.
There,
Much better
Now give them hell.
“humble blogger” always reminds me of “humble nar’rator” from Clockwork Orange. This is a good thing.