Mark Levin: Mark Blasts the Republican Establishment and Explains Corporatism vs Capitalism

http://www.mrctv.org/audio/mark-levin-mark-blasts-republican-establishment-and-explains-corporatism- ^ | January 12, 2012 | Mark Levin

[sheikdetailfeather]

Mark Levin: Mark blasts the Republican Establishment and Explains Corporatism vs Capitalism

[sheikdetailfeather]

I heard Mark talking about this the other day on his radio show in regard to the recent Bain discussion.

[Utmost Certainty]

As somebody else explained to me recently:

Too many people are defending Romney as just being a good little capitalist, when this isn't really the case. He was playing shell games and essentially committing fraud with investors. I think most agree that the government should probably punish somebody selling watered gas… so why not punish dishonest debt instruments? I think most agree that if a minority shareholder uses company money to issue himself a big paycheck, this is embezzlement from the other shareholders. When Romney does this with his multi-million dollar consulting fees, this isn't different?

Now the crux of this problem is of course the government. Their corporate limited liability laws unfairly rip up contracts between creditors and debtors. Making debt financing tax deductible, but not equity financing, has seriously skewed the corporate structure. And lastly, the Federal Reserve issuing so much debt (largely indirectly) and then bailing out said debt (→ moral hazards) is a significant problem in aiding and abetting private equity craziness of reckless LBOs, etc..

Specifically how the system works: A bank overflowing with money they created from low Fed Reserve interest rates meets with a private equity firm to talk about taking over firm. The bank provides ~80/20 the money and they together purchase the take over target. The PE firm immediately loads up the acquired firm with debt for the bank to get their money. The debt is structured as a huge balloon payment set to self-destruct in about 5 years. The bank realizes this is ticking time bomb, so unloads this debt ASAP to other banks, hedge funds, insurance companies and pension funds. The smarter investors realize this is a hot potato and keep passing it around. Recently they've been hiding this bad debt in CLOs (almost identical in concept to real estate CDOs). Hidden amongst other debt, people have no idea the mess they purchased. The PE firm on the other hand wastes no time in borrowing HEAVILY again to finance corporate mergers (they don't want to do it from the PE firm directly because they could be liable for the debt). They also borrow heavily to finance huge dividends that more than make up for what they paid for the firm. They justify the dividend legally by jacking up short term profits (price increases, job cuts, quality reductions) that threaten the long term health of the company, and by money saved from tax deductible interest as well. If possible, the PE firm tries to dump their acquired firm before the balloon payment comes up… but even if they're stuck with the firm they usually do very well given all the consulting fees they charge and the huge dividends they give themselves.

Also note that Romney relied on corporate welfare. Take a walk down the list here:

A comparison of the 1999 Bain portfolio obtained by the Los Angeles Times to the information in the Subsidy Tracker database my colleagues and I at Good Jobs First created (as well as other sources), yields examples such as the following:

Steel Dynamics Inc. In 1994 this company, among whose financial backers at the time was Bain, got a $77 million subsidy package—including grants, property tax abatements, tax credits and reimbursement for training costs—for its steel mill in DeKalb County, Indiana (Fort Wayne Journal Gazette, June 23, 1994).

GS Industries. In 1996 American Iron Reduction LLC, a joint venture of GS Industries (which had been taken private by Bain in 1993) and Birmingham Steel, sought some $20 million in tax breaks in connection with its plan to build a plant in Louisiana’s St. James Parish (Baton Rouge Advocate, April 6, 1996). As the United Steelworkers union noted recently, GS Industries later applied for a federal loan guarantee, but before the deal could be implemented the company went bankrupt.

Sealy. A year after the 1997 buyout of this leading mattress company by Bain and other private equity firms, Sealy received $600,000 from state and local authorities in North Carolina to move its corporate offices, a research center and a manufacturing plant from Ohio (Greensboro News & Record, March 31, 1998). In 2004 Bain and its partners sold Sealy to another private equity group.

GT Bicycles. In 1997 GT, then owned by Bain and other investors, decided to move its manufacturing operations to an enterprise zone in Santa Ana, California. Being in the zone gave the company, which was later purchased by Schwinn, special tax credits relating to hiring and the purchase of equipment (Orange County Register, July 9, 1999).

[Chunga85]

What about the GSE bananas...how are they doing with this corporatism baloney?

Here's a brief half-azzed history on these weasels:

FRANKLIN RAINES [D] – FNMA CEO (1999 – 2004) Raines accepted “early retirement” from his CEO position while the SEC pretended to investigate accounting irregularities. Fannie’s own OHFHEO also accused him of abetting widespread accounting errors, including the shifting of losses, so he and his fellow execs could “earn” large bonuses. The WSJ reported back in 2008 that Raines was one of several cronies that received below market rates for mortgages from Countrywide. Raines alone receive loans for over $3 million while CEO of FNMA. Raines’ compensation for his “work” at FNMA - $90 million.

RAINES GRADE – F

DANIEL MUDD [R] – FNMA CEO (2005 – 2008) Before becoming CEO of FNMA, Mudd worked at the Office of the Secretary of Defense, was an advisor to Asia-Pacific Economic Corp., “served” on the board of the Council of Foreign Relations, “consulted” at the World Bank, and held many positions at GE Capital including president and CEO. Mudd was dismissed as CEO of FNMA when FHFA became conservator in 2008. In 2011 Mudd and other GSE execs were charged by SEC with securities fraud. After his career at FNMA Mudd became CEO of a NYC hedge fund named “Fortress”. Fortress invested in purchasing tax liens on delinquent property taxes from local governments under many benign corporate names such as “Pleasant Valley Capital” and “Travis Farm Investments”. Cozy. Mudd’s compensation for his “work” at FNMA - $80 million.

MUDD GRADE – F

NEEL KASHKARI [R] – FNMA CEO (Tenure is murky) Kashkari was a former investment banker for Goldman Sachs, was tapped by Hank “The Shank” Paulson to lend his skills over at TARP HQ, and now rather ironically, continues God’s work as a Managing Director at PIMCO. Kaskari’s compensation for his “work” at FNMA is also murky; I’ll just assume it was too much.

KASHKARI GRADE - F

HERB ALLISON [D] – FNMA CEO (2008 – 2009) The esteemed Mr. Allison was quickly whisked off to oversee the wildly successful TARP program. I didn’t find much on his compensation during his brief stint as FNMA CEO. Allison served in various positions at Merrill Lynch and became a member of the board in 1997. He was a director of the NYSE from 2003 – 2005.

ALLISON GRADE – F

MICHAEL WILLIAMS [?] – FNMA CEO (2009 – Jan 1, 2012) Mr. Williams is a 20 year veteran at FNMA. While “serving” as FNMA CEO, Williams managed to scrape by on less than $6 million in 2011 alone. This could and should be considered a hardship, given the complexities involved in purloining ~ $60 billion of Fed bailout money.

WILLIAMS GRADE – F

Fannie’s major dance partner – Freddie – has performed equally abysmally.

Charles (my friends call me “Ed”) Haldeman has announced his retirement plans but intends to be a good sport and stay on with insolvent FHLMC until another crony can be found to fill his wing-tips.

That might take a while. “Serving” as CEO of the ultimate backstops for the lion’s share of the MBS Ponzi is very stressful.

We’ll have to accept former Freddie exec David Kellermann’s testimony posthumously. Mr. Kellermann was found hanging by the neck in the basement of his posh Vienna, VA home in the affluent suburb of Washington. D.C. way back in April of 2009. It is presumed he had no help and local police have stated there was no evidence of foul play.

Last week, a wisp of political fresh air was carried in the breeze.

For Immediate Release FROM Senator Bethany Moura [R-RI] Jan. 10, 2012

"Freshman RI Senator levels serious allegations at Fannie Mae & Freddie Mac - Jan. 10, 2012"

This press release came on the heels of this fax to US Senator Jack Reed...

URGENT FAX FROM RI SENATOR MOURA TO SENATOR JACK REED

"I DEMAND THIS BE PUT TO AN END, AND SANCTIONS IMPOSED WHAT I PERCEIVE TO BE TWO CRIMINAL ORGANIZATIONS."

...and before that...

R.I. Senator Moura Complaint To The Department of Treasury RE: Wells Fargo

"Please be advised that I will be filing a complaint with the Department of the Treasury, against Wells Fargo..."

"I have access to piles of detailed notes, emails, faxes and requests to explain in great detail the poor practices of Wells Fargo."

Yesterday, the firebrand freshman was on the Dan Yorke show for an hour. It is archived here.

The show's host kept a tight rein on her but she vows not to stop. Twitter users can show support @Senator_B_Moura

Disclosure: I do not reside in RI but if I did I'd be volunteering in her campaign...for US Senate.

[org.whodat]

Duh, do you not think you should first attack the former members of congress, both federal and state, that write the laws that make this crap possible. With your thinking, if I take advantage of a special business tax deduction I am a damn crook. These people could not do this crap if some politician did not make it possible. Look at some of the loony deals perry made to his crony’s in texas. Not much different than the scams obummer is running except obummer is wasting a thousand times more money.

[cripplecreek]

Yup, its been going on for decades.

So far I haven’t seen any candidate talking about changing the laws and punishing the guilty. Too busy protecting their own donors I guess.

[Matchett-PI]

bttt

[Utmost Certainty]

These people could not do this crap if some politician did not make it possible.

Which is really what the focal point of the argument should be about. But in order to focus on that, people first have to stop conflating corporatism with capitalism.

[Yollopoliuhqui]

This citizens of this nation are getting a lesson on the perils of stupidity. We’ve about lost the ethical fitness to survive. The worship of money will do that to you. School’s in.

[Terry Mross]

The GOP was taken over decades ago. Reagan was a fluke that wasn’t supposed to happen.

[Terry Mross]

When KKR “bought” Jim Walter Homes in the 80s they did it with Jim Walter Homes’ land as collateral for the loan. I was one of the many people going around to courthouses filing release of liens then refiling them in the name of KKR. With the “land” as collateral KKR got a $1.1 billion loan to buy the company.

[aldabra]

...So far I haven’t seen any candidate talking about changing the laws and punishing the guilty. Too busy protecting their own donors I guess.

Kinda neat circle. You can blame the pols and be correct, and blame the donors (aka corporations) and be correct. That's the beauty of crony capitalism / corporatism / fascism.

[LZ_Bayonet]

"That's the beauty of crony capitalism / corporatism / fascism."

One might argue, that IS fascism.

[Neidermeyer]

The tax code enabled this ... I’m 100% in favor of abolishing the income tax and going to a sales tax only base.