The American Bear

Sunshine/Lollipops

Mr. Obama’s unconditional bailout of Wall Street, with upwards of $25 trillion of public funds made available to ‘save’ the banks, is the single greatest gift from working people to the forces of their own demise in world history. Rob Urie

Everything is Rigged, Vol. 9,713: This Time, It's Currencies | Matt Taibbi

[This] story just landed. Given the LIBOR story, the Interest Rate Swap manipulation story, the Euro gas price manipulation story, the U.S. energy price manipulation story, and (by now) countless others of the “Everything is Rigged” variety, this screams out for immediate notice. Via Bloomberg:

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice …

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

This time the rates allegedly being rigged are in the foreign-exchange or “FX” markets, meaning that if this story is true, it would almost certainly trump LIBOR for scale/horribleness.

As one friend of mine who works on Wall Street put it, “It’s endless! This is the biggest market in the world.” Bloomberg suggested the story is just the tip of the iceberg:

“The FX market is like the Wild West,” said James McGeehan, who spent 12 years at banks before co-founding Framingham, Massachusetts-based FX Transparency LLC, which advises companies on foreign-exchange trading, in 2009. “It’s buyer beware.”

The $4.7-trillion-a-day currency market, the biggest in the financial system, is one of the least regulated. The inherent conflict banks face between executing client orders and profiting from their own trades is exacerbated because most currency trading takes place away from exchanges.

… [T]he key thing here is the, uh … well, the consistent leitmotif of all these stories. One after another, it’s the same thing: Insiders rigging benchmark rates, shaving money from basically everyone on earth, systematically and over periods of many years. It’s the ultimate taxation-without-representation story – crazy stuff.

In reality, of course, about the only things that would be ‘destabilized’ if [Too-Big-To-Fail] ended would be the compensation packages for a small group of overpaid banking executives like Jamie Dimon. Another consequence might be that ratings agencies would actually have to work for a living, and earn reputations for honesty and integrity in the market, instead of getting endless streams of free money from big banks to give sparkly AAA ratings to every half-baked security or derivative instrument their obese, Fed-fattened clients cranked out.

Too-Big-To-Fail takes another body blow

Matt Taibbi writes about the new anti-TBTF legislation floated by Sherrod Brown and, rightly, takes the shit-heels at Standard and Poor’s to task for attempting to quash it.

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation’s GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it’s increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system. If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it’s no secret. You can stare right at it, anytime you want. The Biggest Price-Fixing Scandal Ever | Rolling Stone (via gonzodave)

(via gonzodave)

Most Payments in Foreclosure Settlement Under $1,000 | WSJ.com

The vast majority of borrowers being compensated for mortgage-related abuses will get less than $1,000 apiece, a sobering coda to a protracted attempt to help those who may have been placed into foreclosure as a result of banks’ mistakes.

About 4 million borrowers will share $3.6 billion in cash as part of a settlement between federal regulators and banks accused of foreclosure-processing mistakes. U.S. regulators said Tuesday that banks wrongfully took away homes from 1,082 borrowers who were members of the U.S. military. Another 53 borrowers were found to have lost their homes despite not actually defaulting on their loans. Those 1,135 individuals will receive checks of $125,000.

Most borrowers, however, will see far less, with about 80% receiving checks ranging from $300 to $1,000, according to data released by the Office of the Comptroller of the Currency and the Federal Reserve.

Because the foreclosure review was shut down by regulators, it isn’t clear in many cases how badly the borrowers were wronged, if at all.

And even though banks compensated borrowers, they didn’t acknowledge wrongdoing.

Wall Street’s Role in the Crisis in Cyprus | Rob Urie

Finance capitalism is fatally flawed in theory and in practice. Its ultimate product is that which is before us: a global plutocracy dependent on state capture, power and control to plunder and loot what will become, by necessity, increasingly resistant populations. The post-War ‘moderation’ cited by mainstream economists worked to the extent it did by limiting private debt creation. However, the base imperative of finance capitalism today is infinitely expanding (private) debt—it is the source of its political and economic power. Those in the U.S. who remain in the Democrat / Republican divide are blind to where real power lies. Events in Cyprus have provided a glimpse for those who care to see. [read]

Freddie Mac Sues More Than A Dozen Banks Over Libor Losses

Mortgage finance company Freddie Mac is suing more than a dozen banks for losses from the alleged manipulation of the benchmark interest rate known as Libor.

Bank of America Corp, JPMorgan Chase & Co, UBS AG and Credit Suisse Group AG are among the banks named as defendants in the lawsuit.

Freddie Mac, which invested in mortgage bonds and swaps tied to U.S. dollar Libor, claims the banks colluded to rig the benchmark from 2007 to 2010, according to the complaint, which was filed March 14 in U.S. District Court for the Eastern District of Virginia.

Freddie Mac sued for undetermined damages.

The inspector general of the Federal Housing Finance Authority, which oversees Freddie Mac and Fannie Mae, said the two government-controlled mortgage companies may have suffered more than $3 billion in losses as a result of Libor manipulation, according to an internal memo obtained by Reuters in December.

In the memo, the watchdog urged the companies’ regulator to consider legal action.

Bank of America, JPMorgan Chase, UBS, Credit Suisse and other banks did not immediately respond to calls for comment or declined to comment.

More than a dozen banks have been under scrutiny by authorities in the United States, Japan and Europe over claims they altered the Libor to hide financial problems and boost profits.

Freddie Mac said it discovered the fraud and collusion when Britain’s Barclays admitted in June it submitted false Libor submissions, according to the complaint. The bank agreed to pay $453 million that month to settle with British and U.S. authorities.

UBS was fined $1.5 billion in December for fiddling with interest rates, and Royal Bank of Scotland Group settled with authorities for $612 million in February.

The case is The Federal Home Loan Mortgage Corporation v Bank of America, U.S. District Court for the Eastern District of Virginia 13-cv-00342.

Too Big to Jail | Dan DeWalt

The attorney general of the United States has now admitted that the biggest American financial corporations have created such a labyrinth of their structures and practices that the Justice Department has given up trying to police them in matters ofcorruption or criminal malfeasance, saying that bringing down any of these mega-banks or businesses could cause crash the economy.

In 2008, the Justice Department announced a shift in policy, deciding to be cooperative with the big banks, and to encourage self-policing and self-reporting by the corporations, rather than vigorously prosecuting lawbreaking. After all, according to a DOJ directive of August of that year, “federal prosecutors and corporate leaders typically share common goals.”

As Elizabeth Warren pointed out this week in a Senate hearing with Treasury department officials, even though HSBC bank has admitted laundering over 800 million dollars for drug cartels, not one of their bankers has even been charged, let alone convicted for the crime; “If you’re caught with an ounce of cocaine, the chances are good you go to jail. If you’re caught repeatedly, you can go to jail for life. Incidentally, if you launder nearly a billion dollars in drug money, your company pays a fine and you go home and sleep in your own bed at night.”

And it’s not just banks. Corporate America has successfully engineered a coup d’etat under our noses without firing a shot. They have paid Congress and the Executive branch to enable this unprecedented power grab through tax laws, finance policy and the gutting of traditional concerns for the welfare of the common citizen. They have enjoyed the collusion of the courts, culminating in the Supreme Court’s preposterous Citizens United ruling that corporations are “people” in the “original intent” of the Constitution. NOW, even the regulators have come out and admitted that they are no longer really in the game. [++]

Fortress of Lies | Clusterfuck Nation

History has a special purgatory where it sometimes stashes feckless nations punch drunk on their own tragic choices: the realm where anything goes, nothing matters, and nobody cares. We’ve surely crossed the frontier into that bad place in these days of dwindling winter, 2013.

Case in point: Mr. Obama’s choice of Mary Jo White to run the Securities and Exchange Commission. A federal prosecutor back in the Clinton years, Ms. White eventually spun through the revolving door onto the payroll of Wall Street law firm Debevoise & Plimpton, whose clients included Too Big To Fail banks JP Morgan, Bank of America, Morgan Stanley, and UBS AG, defending them in matters stemming from the financial crisis that began in 2008, as well as other companies that needed defending from allegations of financial misconduct, such as the giant HCA hospital chain (insider trading), General Electric (now a virtual hedge fund with cases before the SEC), and the German-based Siemens Corporation (federal bribery charges).

A republic with a sense of common decency — and common sense — would have stopped the nomination right there and checked the “no” box on Mary Jo White just for violating the most basic premise of credibility: that trip through the revolving door that shuttles banking regulators from the government agencies to the companies they used to oversee and sometimes back again.

Has there not been enough national conversation about the scuzziness of that routine to establish that it’s not okay? Does it not clearly represent the essence of dysfunction and corruption in our regulatory affairs? Didn’t President Obama promise to seal up the revolving door? So how could Mary Jo White possibly be taken seriously as a candidate for the job? And how is it possible that everyone and their uncle, from The New York Times editorial page to the Sunday cable news political shows to the halls of congress, is not jumping up and down hollering about this? Well, because anything goes, nothing matters, and nobody cares.

The funny part is that, when challenged over her past connections to the banks and companies she would now have to regulate, Mary Jo White offered to recuse herself from future cases involving them. So, from the get-go as SEC head, Ms. White would not concern herself with the doings of JP Morgan, Bank of America, and Morgan Stanley? How is it that gales of laughter did not blow Mary Jo White clean out of the hearing room? Is there not another qualified person from sea to shining sea who could come in and do the job without one hand tied behind his or her back?

Now it also turns out that upon leaving Debevoise & Plimpton, Ms. White is scheduled to collect monthly retirement checks from the company amounting to a half million dollars a year — that’s for life, by the way — while she supposedly runs the SEC. How is that not a conflict of interest? The remedy proposed by Ms. White and her attorneys was for her to take the retirement loot as a lump sum during her tenure as SEC chair, after which she could revert to collecting her pension in the $42,500 monthly payouts. Pardon me, but, well …what the fuck? What planet are we on?

As if that’s not enough, Ms. White’s husband, John W. White, is a partner at another giant Wall Street law firm, Cravath, Swaine & Moore, which frequently tangles with the SEC on behalf of its clients. Mr. White proposed to change his pay structure while his wife runs the SEC. More gales of laughter. He is also on the advisory committee of the Financial Standards Accounting Board, the group that oversees national accounting practices and which, in 2009, infamously changed its Rule157 so that TBTF banks could “mark to fantasy” the fraudulent CDOs and other bond-like “innovative” securities that they created — many of which they had to eat after the housing bubble bust when the collateral for these swindles lost its value and the “innovators” could no longer pawn the stuff off on credulous pension funds and other client “muppets.”

The silence over this disgraceful matter — and many others like it, including the dead hand in the empty suit posing as US Attorney General — indicates that not only is the rule of law extinct in this country, but so are public figures of principle and credible news organs. Nobody has made a noise about it. Anything goes, nothing matters, and nobody cares. So, the objection to it has to come from outside the authorized channels. And the consequences will mount outside the fortress of lies that the establishment has become.

Holder’s comments don’t come as a total surprise. His underlings had already made similar confessions to The New York Times last year, after they declined to prosecute HSBC for flagrant, years-long violations of money-laundering laws, out of fear that doing so would hurt the global economy. Lanny Breuer, formerly in charge of doling out the Justice Department’s wrist slaps to banks, told Frontline as much in the documentary “The Untouchables,” which aired in January. Some observers have defended the Justice Department, suggesting that prosecuting law-breaking banks would amount to a death penalty that could upset the financial system and trigger another recession — although nobody really knows if it would do any such thing. But by not prosecuting law-breaking banks, and confessing to its terror of prosecuting those banks, the Justice Department has waved a big checkered flag to the biggest banks to go ahead and break all of the laws they want. Eric Holder Admits Some Banks Are Just Too Big To Prosecute (via gonzodave)

(via gonzodave)

Sen. Bernie Sanders: A Choice For Corporate America: Are You With America Or The Cayman Islands

When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country - and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.

But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.

In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.

On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change …

That’s what the Corporate Tax Dodging Prevention Act (S.250) that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all about …

(Source: gonzodave)

Barack Obama, Wall Street Co-Conspirator? | David Sirota

[…] Though my father is no Obama apologist by any stretch, his politics lean liberal, and so in response to watching last week’s PBS Frontline report, he asked me questions that were similar to those I’ve heard before. He wants to believe Obama really hopes to “hold Wall Street accountable,” as the president claimed, and so my dad wonders whether the president’s refusal to do so can be explained by something other than corruption. He wants to believe — or at least to explore the possibility — that the depressing situation isn’t simply about Obama raking in massive Wall Street contributions and then paying back his donors with immunity from prosecution — immunity, mind you, that the rest of us are not afforded.

It goes without saying, of course, that when this line of discussion is initiated by liberals about Obama, there is a serious double standard at work. Simply put, if a Republican was president right now and hadn’t prosecuted a single banker and had appointed a scandal-plagued Wall Street defense lawyer to head the SEC, liberals would be — rightly — screaming bloody murder on Twitter, on Facebook, on blogs and on cable television. They wouldn’t be looking for ways to excuse that president from personal culpability, nor would they be looking to claim the situation exemplified anything other than the kind of ugly-but-legal bribery that dominates American politics.

No doubt, that depressing double standard illustrates a deeply problematic red-versus-blue-ification of our society — one that blinds Americans to their responsibilities as citizens. However, let’s set that whole crisis aside for a moment and go to the substance of my dad’s question. Regardless of why he and others may be asking them, the queries are important: How can we explain Obama’s servile posture toward and genuflecting reverence of Wall Street? Is it possible Obama is not at fault?

To my mind, the only school of thought that could even slightly reduce the amount of blame Obama deserves is the one so harrowingly evinced in Oliver Stone’s 1995 film, Nixon. In that movie’s scene at the Lincoln Memorial, the sullen president tries to have a rational discussion with anti-war protestors about his escalation of the Vietnam War. Nixon claims to sympathize with those who want to end the conflict. Yet, when he is asked why he doesn’t just use his presidential authority to stop the war, Nixon has no answer, leading the students to conclude that the president actually doesn’t have the power to stop the war, because the Military-Industrial Complex is just too big for even a commander in chief to assert his will.

In theory, you could try to make the same argument about Obama and Wall Street. You could argue that through campaign contributions to Congress, through revolving-door promises of future riches to current regulators and through an army of lawyers who tilt the judicial system in its favor, Wall Street has so much political power that a president simply has no ability to change things, even if he wanted to.

The problem with this argument, though, is that it doesn’t make sense when it comes to actions over which the executive has complete control.

A president, for instance, has the unilateral power to at least propose tough Wall Street regulations, even if Congress is too corrupt to pass them. A president, likewise, has the unilateral power to nominate genuinely independent regulators, even if a Wall Street-dominated Senate might try to halt such a nomination. In short, a president has the unilateral power to at least force a serious fight over these issues — and Obama has refused to even do that. Instead, he championed bailouts and a Wall Street “reform” package that let the banks off the hook, and he has appointed Wall Street pals like Lanny Breuer at Justice and Mary Jo White at the Securities Exchange Commission.

One hackneyed retort to all that is to cast Obama as a “realist” who doesn’t want to pick fights with Congress that he knows he cannot win. That logic is predicated on the absurd notion that a president cannot use the bully pulpit to change public opinion — that is, to actually lead and, ultimately, to win. But even if you accept such apologism, it still cannot account for how the president has used — or, really, not used — his unilateral power to prosecute.

Obama is a president who asserts the right to execute American citizens without judge, jury or trial. That means that in his role overseeing the Department of Justice, he (like his predecessors) clearly retains the lesser-but-still-serious power to tell his political appointees at the Justice Department to prioritize certain kinds of prosecutions. In fact, this is exactly what he just did when this month he issued an executive order instructing the Department of Justice to “maximize enforcement efforts to prevent gun violence and prosecute gun crime.”

He could just as easily have a similar executive order after winning a presidential election on promises to “hold Wall Street accountable.” But he chose not to back then, just as he chooses not to today. [++]

Lanny Breuer Now Blames 94 US Attorneys for Immunizing Banksters | Marcy Wheeler

Lanny [Breuer has] adopted a new excuse to deny responsibility for letting the most destructive criminals in the country walk free (note, Lanny appears to be ignorant of SarBox regulations that wouldn’t even require this kind of intent):

“I understand why people are upset,” Breuer said. “But we have 94 U.S. attorneys and they don’t report to me. Not one of them determined that there was a criminal case to be had. These are very complicated cases and they were just simply, on the merits, not cases that could be brought criminally.”

Breuer said Wall Street executives would have been prosecuted if the investigators could have proved criminal intent. “I have the same DNA in all of these cases,” Breuer said. “It’s just not plausible that in one area we would be overly scared and in all the other areas we would be aggressive.”

Well okay then. In this article, Lanny takes or is given credit for the BP pleas, two Medicare cases, 40 corporate cases (by Robert Khuzami, almost all of which resulted in settlements), the La Cosa Nostra take down, and LIBOR “prosecutions” (reportedly DOJ will charge UBS shortly). Of those, I’m only aware of the BP investigation being led by a task force rather than a traditional US Attorney structure. Yet Lanny wants to claim credit for all these prosecutions and settlements, but blame his US Attorneys–all 94 US Attorneys (!) when we’re really talking maybe 4 or 5 who would face a complex bankster case, and really just New York’s Preet Bharara, whom Lanny himself gave jurisdiction over some of the highest profile cases–for not prosecuting the banksters.

It’s not Lanny’s fault the banksters have gone free, you see, it’s the fault of people like John Leonardo, Arizona’s US Attorney, Alicia Limtiaco, Guam’s US Attorney, or Felicia Adams, Northern Mississippi’s US Attorney, all of whom had no hint of jurisdiction in these cases.

This, in spite of the fact that Lanny has repeatedly admitted being personally involved in the bankster cases.

This, in spite of the fact that Lanny did play a leadership role in one of the few cases that had a similar task force structure as BP–the mortgage fraud settlement. In that case, Lanny under-resourced the investigative team, ensuring it would be unable to do adequate investigation to reach adequate settlement. And he didn’t even show up for the big announcement that–basically–the settlement was immunizing the banksters for stealing millions of people’s homes. Somehow, now that it’s time to claim credit, Lanny has forgotten about that willful attempt to help banks bury their crimes.

Lanny has, in the past, clearly admitted to actions that led directly to amnesty for banksters. But in his effort to shore up his reputation as he heads out the door (though not until March 1, unfortunately), he’s gonna blame everyone else for the fact that, on his watch, the most destructive criminals in the country got a pass.

If Dimon means what he says, he shouldn’t be complaining about how society at large is obliged to fix the problem. JPMorgan should be doing something about JPMorgan to make sure it’s not too-big-to-fail — like break itself up. That’s a pipe dream. JPMorgan isn’t going to voluntarily give up the reduced cost of capital and other competitive advantages that come with the federal government’s backing of systemically important financial institutions. Jamie Dimon complaining that the world must end too-big-to-fail is like Darth Vader bemoaning the intergalactic dominance of the Death Star. Jonathan Weil, Jamie Dimon Laments Too-Big-to-Fail? Give Me a Break