Category Archives: Banking industry

Bill Black: Wall Street Urges Obama to Commit the Great Betrayal

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from Benzaga

Wall Street’s leading “false flag” group, the Third Way, has responded to the warnings that Robert Kuttner, AFL-CIO President Trumka, and I have made that if President Obama is re-elected our immediate task will be to prevent the Great Betrayal – the adoption of self-destructive austerity programs and the opening wedge of the effort to unravel the safety net (including Social Security, Medicare, and Medicaid).

The False Dodd-Frank Narrative: Occupy Wall Street Attacks Huge Hot Money Loophole in the Law

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.

Proponents of Dodd-Frank have an incentive to argue the law is a tough crack-down on Wall Street. It’s a core part of Barack Obama’s narrative, that he bailed out the banks, but then did what FDR did in the 1930s with a series of tight regulations. Of course, it was immediately obvious that Dodd-Frank was an afterthought of the Bush/Obama administrations, that the real policy framework involved three key fights – the Fannie/Freddie bailouts under the Housing and Economic Recovery Act of 2008 (the so-called bazooka law), TARP, and the reappointment of Ben Bernanke. These fights were supplemented by Eric Holder’s decision to give legal forbearance to Wall Street executives, to not prosecute for rigging the CDO market or any number of illegalities in the foreclosure space.

After this radical consolidation of banking power in the hands of bailed out Too Big To Fail institutions, the Obama administration went to work on Dodd-Frank, which was essentially a 2000 page mash note to regulators saying “please don’t let that crisis happen again, it was awkward’. And now the evidence is beginning to trickle out that Dodd-Frank is a nothingburger.

The False Dodd Frank Narrative on Bank Profits (No, Honey, Obama Did Not Shrink the Banks)

In the final hours of the 2012 Presidential campaign, Obama backers have been trumpeting the case for their candidate, and like most electioneering, some of the claims don’t stand up well to scrutiny, particularly regarding the impact of regulations on big financial firm profits.

Shock Doctrine, American-Style: Hurricane Sandy Devastation Used to Push for Sale of Public Infrastructure to Investors

As a result of fully warranted bad press for some privatization deals, such as the lease of Chicago’s parking meters, there has been a bit (stress only a bit) more critical scrutiny of the de facto sale of public assets to consortia of private investors. Nevertheless, major banks have been using the financial distress of states and municipalities to push these deals as a solution to budget woes, when it’s a short-term expedient that leaves the public worse off.

Let Us Now Shed Crocodile Tears for Jon Corzine

With Hurricane Sandy dominating the news, quite a few business stories from early in the week got only cursory notice. In some ways, that’s not a bad thing.

The Wall Street Journal had a bizarre sequence of reports on Jon Corzine.

Neil Barofsky Discusses “Incestuous Orgy” Between Washington and Wall Street on Bill Moyers

It was Bill Moyers who used the expression “incestuous orgy” in this interview with former head of SIGTARP Neil Barofsky to describe the relationship between major financial firms and the Federal government. That beats the anodyne “revolving door” all day and I hope becomes part of the lexicon for describing the capture of Washington by Wall Street.

Neil Barofsky on Pandit and Obama Administration Bankster Friendliness on Bill Moyers

Bill Moyers was taken enough with his chat with former SIGTARP chief Neil Barofsky that he’s having two segments with him.

How Botched Derivatives Risk Taming Regulations are Again Going to Leave Taxpayers Holding the Bag

An important piece in the Financial Times by Manmohan Singh, a senior economist at the International Monetary Fund, describes persuasively how one of the central vehicles for reducing derivatives risk, that of having a central counterparty (CCP) and requiring dealers to trade with it rather than have a web of bi-lateral exposures, or rely on banks to act as clearers (making them too big to fail) has gone pear shaped. While the immediate reason for this outcome is the unwillingness of national banking regulators to cede powers to an international clearinghouse, Singh fingers an equally important cause: the reluctance to recognize that the underlying problem was and remains undercollateralized derivatives positions. His introduction to the mess:

EU Summiteers Feast While Eurozone Smolders

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

So it’s yet another two days where the leaders of the EU get together for a dinner (this time it’s tarte, fine eggs/mushrooms, braised veal on bed of fresh spinach followed by a chocolate trio) and attempt to thrash out greater economic integration.