Archive for the ‘Obama administration’ Category
Very interesting post by Kevin Drum, and I think he’s right on how fables—false accounts—take hold and shape our perceptions.
James Fallows has an excellent column, specific and detailed, on why the Iran deal will pass. And he includes an analysis of Netanyahu’s speech and position, which, to be honest, are idiotic. Netanyahu used the term “no brainer,” and indeed his proposal seems to have been created without giving it any thought whatsoever: a true no-brainer.
Well worth reading.
And read as well Fallows’s account of Obama’s explanation of why we should sign the Iran deal.
The chart above is from this column by Paul Krugman. We have been repeatedly told by the GOP has Obamacare kills jobs, etc., but apparently it has not harmed the recovery. More info at the link. And do read the comments.
Banks—and therefore their hirelings in Congress—do not want homeowners declaring bankruptcy, so they simply made it illegal. David Dayen reports in The Intercept:
Donald Trump took advantage of the nation’s bankruptcy laws four times in the last 24 years, and if ordinary Americans in this country were allowed to do the same, the country would be in markedly better shape economically, with a far stronger post-recession recovery.
Asked during Thursday night’s Republican presidential debate whether his four corporate bankruptcies were a black mark on his economic stewardship, Trump sounded a bit defensive. “I have never gone bankrupt,” he said, making a distinction between a personal and a corporate bankruptcy, and anyway it was only four times among “thousands” of deals.
But he said flatly: “I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, for myself, for my employees, for my family, et cetera.”
Trump is absolutely correct. Every lending contract in America has the potential for bankruptcy lurking in the background. Lenders – who as Trump said “aren’t babies” but “total killers” — are sophisticated enough to know about this option when they lend people money. In fact, they not only assume the risk of bankruptcy, but price it into the deal when they lend Donald Trump or anyone else money.
Morals do not enter into the equation. No lender thinks less of Donald Trump for the using the bankruptcy process. They simply take their losses and move on.
In fact, only one group gets hit with this stigma. Only one group of people in America are denied this fully legal, fully rational, fully American opportunity to wipe the slate clean, and decried as deadbeats for even thinking about it: The homeowner of a primary residence, who by law cannot get mortgage debt discharged in bankruptcy.
During the foreclosure crisis, banks and their allies savaged homeowners who “walked away” from mortgage debt. They equated defaulting on payments with failing the duties of citizenship. They warned of “strategic defaults” by conniving homeowners who would deliberately stiff lenders to get a loan modification.
In reality, the highest-profile strategic default of the foreclosure crisis came from the leaders of the Mortgage Bankers Association, a trade group for the lending industry, who walked away from their 10-story headquarters in Washington. Just a few months earlier, their spokesman argued that borrowers had to keep paying: “What about the message they will send to their family and their kids and their friends” if they defaulted, the spokesman asked. Indeed.
The Tea Party, the very movement whose energy Trump has tapped into so successfully, was founded on the principle of not having to “subsidize the loser’s mortgages.”
Businesspeople defaulting on each other never raised this kind of ire: only if ordinary people wanted to allocate losses in the greatest crisis since the Depression onto the banks who caused it did the rage emerge.
When Congress made an effort to change the bankruptcy laws, these same banks howled in protest. Members of the Obama administration, despite expressing support for the idea of allowing judges to modify primary mortgages during the 2008 campaign, decided to sit on their hands and let Senators drowning in bank cash kill the idea, leading Senator Dick Durbin to pronounce about Congress that the banks “frankly own the place.”
In fact, everyone would have benefited from relieving primary mortgage debt, the absence of which led to at least six million foreclosures. Economists Amir Sufi and Atif Mian have shown how the post-recession recovery was markedly slower because of thefailure to discharge debt, which depressed consumer spending. This huge policy mistake created an unnecessary drag on the economy and made miserable the lives of millions, all so banks didn’t have to bear some of the pain of the post-housing bubble fallout.
Millions of lives were ruined by that asymmetry. . .
A normal person suffers a considerable psychic toll from killing hundreds of strangers, watching them as they die. Motherboard has a report on one such person:
One of the supposed advantages to the United States’ drone program is that by distancing pilots from their targets, the psychic scars of killing don’t form so easily. But even separated by thousands of miles and a computer screen, former drone pilot Brandon Bryant felt the shock of all 1,626 kills.
“I felt like it destroyed my soul,” Bryant told Motherboard. “For the longest time.”
And drone programs are proliferating. While only a few countries currently own armed drones, the eventual spread of drone technology is inevitable, and Germany is next in line. German Motherboard correspondent Theresa Locker tells us that “the combat drones of the Bundeswehr will be ready in ten years, at the latest.” German Minister of Defense Ursula von der Leyen cites the usefulness of drones as protectors of ground troops, with an ability to safely surveil a large area. But it’s naive to believe that it will end there.
“I stopped sleeping, because I started dreaming about my job. I couldn’t escape it,” Bryant says. And when he spoke out about his experiences, he says “I had people calling me a traitor, telling me I should eat a bullet.”
One of the last straws for Bryant was . . .
President Obama named Mary Jo White, a lawyer who worked for Wall Street firms, as chair of the SEC, presumably to allow her to protect Wall Street from any sort of enforcement of government regulations. And she’s done a fine job of that. Pam Martens and Russ Martens provide an example in Wall Street on Parade:
The Dodd-Frank financial reform legislation was signed into law five years ago to address the Wall Street abuses that led to the greatest financial crash since the Great Depression in 2008 and 2009. One of the requirements of that law was for the Securities and Exchange Commission to implement a rule making corporations publicly disclose the ratio of their CEO’s pay to the median worker’s pay.
Yesterday, after being publicly humiliated over not putting the law into force, the SEC finally adopted the rule. But it won’t go into effect until corporations complete their 2017 fiscal year, meaning it will be stalled for almost another three years.
Back on June 2, Senator Elizabeth Warren sent a scathing letter to SEC Chair Mary Jo White, berating her on a laundry list of broken promises. Warren told White: “You have now been SEC Chair for over two years, and to date, your leadership of the Commission has been extremely disappointing.” Among the long list of complaints was that the SEC Chair had failed to implement the CEO pay-ratio rule.
Two days ago, Richard Trumka, President of the 12.5 million member AFL-CIO, published an OpEd at CNN, furthering calling out the SEC for its foot-dragging. Trumka wrote:
“We have submitted a Freedom of Information Act request about the scheduling of final action on this rule. Nineteen organizations who represent investors and the public also submitted a letter in support of this request. In addition, petitions from more than 165,000 Americans demanding that the commission finally implement the CEO-to-worker pay rule were delivered to the SEC, and more than 1,000 calls placed as well.
“Public disclosures show that S&P 500 CEOs made 373 times the average rank-and-file worker in the United States in 2014. But we will not know the actual ratio at each individual company until the SEC enforces the CEO-to-worker pay rule.”
Stalling on regulatory rules has consequences. It gives Wall Street time to write its own legislation and find a compromised member of Congress to insert provisions to repeal the intended financial reform.
Take the so-called push out rule, where Dodd-Frank required those hundreds of trillions of dollars in derivative bets on the books of FDIC insured mega banks to be moved out of the commercial banking unit into non-insured affiliates.
That Dodd-Frank push-out rule had also been stalled from implementation for five years. Then, last December, Citigroup snuck legislation to repeal the rule into the must-pass $1.1 trillion spending bill needed to keep the country running. Congress and the President could have rejected this outrage but they didn’t. Congress approved the spending bill with the push-out rule repeal language intact and the President signed the bill into law.
Citigroup and other Wall Street banks are now able to keep their riskiest derivative gambles in the banking unit that is backstopped with FDIC deposit insurance, which is, in turn, backstopped by the U.S. taxpayer.
According to Bloomberg Business data, over the past five years – when Dodd-Frank financial reform was supposed to be making these mega banks safer – Citigroup has increased the notional amount of derivatives on its books by 69 percent. As of June 2014, according to Bloomberg, “Citigroup had $62 trillion of open contracts, up from $37 trillion in June 2009.” . . .
There’s a reason, of course: politicians are in on the take, getting a cut either in the form of “campaign contributions” or payment through well-compensated sinecures as lawyers or lobbyists: the revolving day payola.
Pam Martens and Russ Martens report in Wall Street on Parade:
Citigroup, the bank that played a central role in bringing America to its knees in 2008; received the largest taxpayer bailout in the history of finance to resuscitate its insolvent carcass; pleaded guilty to a felony count of rigging foreign currency trading in May and was put on a three year probation – is now under a string of criminal and civil investigations.
On August 3, Citigroup filed its quarterly report (10Q) with the Securities and Exchange Commission (SEC). Instead of reporting a pristine slate free of transgressions as one would expect from a felon on probation, Citigroup reported that it had settled allegations of money laundering with the Federal Deposit Insurance Corporation and the Commissioner of the California Department of Business Oversight involving its Banamex USA unit. The bank was, as typical, able to pay a penalty of $140 million and avoid an admission of guilt.
What Citigroup did not report on its 10Q is that it is also under another criminal money laundering probe by the Justice Department for its Mexican-based Banamex unit, according to a Bloomberg Business report. On July 24, Bloomberg reported the following:
“The U.S. Justice Department is investigating whether Citigroup Inc. let customers move illicit cash through its Mexico unit, setting the bank’s biggest international operation in the path of an expanding money-laundering probe.”
Publicly-traded companies are required to report material information to investors. Citigroup’s 10Q was filed on August 3 while the Bloomberg report was filed 10 days earlier, indicating that subpoenas had been issued to the company. Why Citigroup did not report the new investigation is unknown. Citigroup has a serial history of money laundering allegations, as Wall Street On Parade reported in 2013.
Also during the month of July, Citigroup reached a settlement with the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau (CFPB) over charges of bilking its credit card customers. The CFPB charged Citigroup’s commercial bank, Citibank, with a raft of illegal acts, including charging credit card customers for fraud and identity theft services that were never provided, and deceptive marketing practices to bilk customers out of illegal fees. The bank was ordered to return $700 million to 8.8 million customers and pay a penalty of $35 million.
A paltry penalty of $35 million dollars for ripping off 8.8 million customers for a felon bank on probation with a serial history of wrongdoing seems like a serious mismatch of punishment matching the crime.
Adding further to concerns that the four-year old CFPB, created under Dodd-Frank to stop these serial bank abuses of unsophisticated customers, is more lite-touch regulation, is the fact that as the CFPB was applying the wrist-slap of the $35 million penalty to Citigroup, which had $7.3 billion in profits last year, the CFPB was opening a new investigation into Citigroup’s abuse of student loans held by struggling college students. Citigroup reported the new investigation in its current 10Q.
In 2013, Wall Street On Parade took a hard look at Citigroup’s involvement in the student loan market. We reported the following: . . .