The Other Plot to Wreck America (Frank Rich finally buys a clue about Wall Street bankers.)

NY Times ^ | January 10, 2010 | By FRANK RICH

[neverdem]

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy...

--snip--

As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth.

--snip--

Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.

Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldman’s Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.

If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Street’s status quo largely intact. That’s the ticking-bomb scenario that truly imperils us all.

[neverdem]

Obama's Big Sellout

The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

Neither Taibbi or Rich take it all the way back to the Community Reinvestment Act, but it's a start.

[mulligan]

It goes way back to the FDR era. Government begins to promise we will take care of you. Never fear your friendly government is here. And the promises have just grown and grown, people have bought the free lunch mindset and the debt just grows and grows. And today with the Obama administration in office the process has quickened and the dollars being spent for worthless programs are beyond belief and our financial capability. We are a bankrupt Nation in more ways than one. Until the people realize just how evil and incompetent is our government leadership the messes will become ever larger. Blame the financial area if you like but it cannot raise taxes, cause inflation, pass rules and laws to prevent the private sector from doing an effective job of creating new businesses and jobs, create a huge national debt and interfere almost daily in your personal life. Only a greedy and selfish and controlling government can do that to you and yours. And most of us are the worse for it.

[NoLibZone]

"“financial weapons of mass destruction” that wrecked our economy."

NYC has done more to harm the US than Al Qeda has.

[ding_dong_daddy_from_dumas]

[sickoflibs]

Wasnt there a similar deal where the bank was pressured to keep bad information secret from stockholders, which was illegal under federal law? I cant remember the case but it was posted last Spring.

[ding_dong_daddy_from_dumas]

Wasnt there a similar deal where the bank was pressured to keep bad information secret from stockholders, which was illegal under federal law? I cant remember the case but it was posted last Spring.

I'll bet stephenjohnbanker has some insight into this. I think that both the GWB and Obama administrations are more than willing to sacrifice investors in the cause of "sealing the deal."

Lewis Testifies U.S. Urged Silence on Deal

Paulson and Bernanke Held a Gun to Bank of America's Head!

[sickoflibs]

Thanks for the links. That was one that urked me because feds are always quick to throw americans in jail like Stewart.

GWB had to destroy capitalism to save it. And destroy conservatism to save it too.

Ironically GWB getting O elected could be turning the country more conservative in the longer run. At least till we get another compassionate Republican president(code name ‘Death panels’) .

[ding_dong_daddy_from_dumas]

Ironically GWB getting O elected could be turning the country more conservative in the longer run.

DoughtyOne has been saying that for some time now. Indeed, there is definitely a political pendulum at play. I am hoping this swing will result in a Reagan (without the amnesty).

[stephenjohnbanker]

Looky here! Nothing about the thug who engineered the whole scam. Ever hear of John Thain? The former head of Goldman Sachs? The former head of Merrill Lynch? The former head of B of A international investment banking ?(until the B of A chief Ken Lewis threw him out on his ear)

John Thain engineered the whole deal whereby B of A would acquire Merrill Lynch. Thain never disclosed to B of A all the bad paper Merrill had, that is, until a deal had already been struck. Then Lewis(a few weeks later) discovered he had been snookered by Thain. Lewis flew to D.C. to back out of the deal. Thain’s pals,Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke told Lewis that he COULDN’T back out, and if he tried, the whole fed mob would go after Lewis, and B of A!!

1) Thain had the “fedgov machine” with him all the way back to his days heading Goldman Sachs.

2) Lewis was not a member of the Wall Street Mafia, so he was ORDERED what to do.

3) Paulson is the man who snookered Bush into the bailout.

4) Paulson is the man who let Lehman Bros.fail. Lehman was a major competitor with Goldman Sachs. How nice for Goldman Sachs! AIG was bailed out for much much more, but they owed Goldman billions, so they got bailed, and Goldman got 100 % of their money back, (thank you, American taxpayer). How nice for Goldman Sachs!

[stephenjohnbanker]

Ping to post 9. Meant to put you on but F’ed up ;-)

[ding_dong_daddy_from_dumas]

stephenjohn, thanks for your expertise!

[BiggieLittle]

stephenjohnbanker,
Agree with much of what you say but what about some due diligence on the part of Lewis.

[mo]

AIG slush Fund

http://www.nakedcapitalism.com/2010/01/the-most-stunning-and-uncommented-on-revelation-in-too-big-too-fail.html

How much of that is on Capitol Hill....or in the White House...or some offshore bank accounts...

[sickoflibs]

RE :”DoughtyOne has been saying that for some time now. Indeed, there is definitely a political pendulum at play. I am hoping this swing will result in a Reagan (without the amnesty).”

At this stage (after Bush and Obama) we need a swing towards conservative-libertarianism. Reagan was critical in repairing the military after the disastrous 70s as well as the dollar, ending the cold war, but ran up the national debt in the process(with a dem congress) . The problem we have now is different. We need a reduction of both the federal government and service industry with a revival of private industry.

Speaking of conservatism we have so many types of conservatives here, not all have the same priorities. This means they are willing to abandon the others objectives to meet theirs which is why we argue so much.

Here's a thought:

The Cheney conservatives (#1 = anti-terrorism)
The Palin Conservatives (#1 = anti-abortion)
The Ron Paul conservatives (#1 = anti-federal power)

[stephenjohnbanker]

I believe that Thain held back critical info on the non performing assets, as well as large portions of the portfolio which were quickly coming due. Lewis was greedy, but he wasn’t stupid.

[stephenjohnbanker]

“The Cheney conservatives (#1 = anti-terrorism)
The Palin Conservatives (#1 = anti-abortion)
The Ron Paul conservatives (#1 = anti-federal power)”

Well done. But you forgot one which is crucial, and you can add me as a member.

Anti-amnesty conservatives

If amnesty passes, America will be irreversibly destroyed within 5 to ten years. Cap N Trade is reversible
Even Obamacare is at least partially reversible. Amnesty with chain migration is not.

[sickoflibs]

You are right. Amnesty doesnt fit neatly into any of the others. Try :

1) The Cheney conservatives (#1 = anti-terrorism)
2) The Palin Conservatives (#1 = anti-abortion)
3) The Ron Paul conservatives (#1 = anti-federal power)
4) Tancredo conservatives (#1 = anti-invasion, protect the borders first)

There was speculation at one time the poor mexicans would oppose abortion causing a #2(who would then want amnesty to outlaw abortion at federal level) and #4 contradiction that some of us still worry about.

#4 is needed to reduce or control government #3. Libertarians used to be pro-amnesty, but finally realized what a disaster it would be with a democratic welfare state that never shrinks.

I specified the types as personalities because people seem to think that way. It’s all about that rock star president LOL

[stephenjohnbanker]

For the record, I am all of the above.

[neverdem]

Reagan was critical in repairing the military after the disastrous 70s as well as the dollar, ending the cold war, but ran up the national debt in the process(with a dem congress).

The GOP had a majority in the Senate from 1981 to 1987.

Biden was a long-time member of the U.S. Senate Committee on the Judiciary, which he chaired from 1987 until 1995 and on which he served as ranking minority member from 1981 until 1987...

[DoughtyOne]

Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble.

Bad debt...

Tucked away in this article is mention of bad debt being the cause for earlier problems, and bad debt being the cause for the current problem.

Other than that, this is a drive by shooting of Wall Street. Congress is in the car, the President and the Senate in the back seat.

Drop to the ground people, the lead is flying fast and furious.

Folks, the investigation out of Congress is something similar to the fox setting up a commission of other foxes to figure out what happened to the chickens in the hen house.

While Bwaney Fwank sits high on his throne, the folks that were tasked with cleaning up his and his party's poop (the devastating bad paper created by forced loans to people who couldn't afford them), will be grilled on Capital Hill for being tantamount to Al Capone, public enemy number one.

So who investigates Capital Hill? Who calls in Bwany Fwank, Janet Reno, Barack Obama and others who either devised criminal level legislation on Capital Hill and forced it on lenders, or took legal action to make sure our nation would be forced to deal with tens of millions of home loans the holders never had a dream of paying back?

The commentary is framed around Wall Street and those nasty people up there. The narrative is that they made money while John and Jane Mainstreet took it in the shorts. To my way of thinking, John and Jane did get taken to the cleaners. So did the lending institutions. So did Wall Street. The only group who didn't, and who never does, was Capital Hill. Those fat cats party on like it's 1999. And they'll continue to do so.

For the record, the Republicans didn't object to any of this more than to effectively whisper faint warnings.

Both parties have concocted a 'not on my watch' defense here. It's disgusting. Investigate that. And if there's any money left over, then start investigating how many people Congress screwed, before moving on to the tools Congress very efficiently used to screw not just us, but this nation right into the dirt.

As usual, a few 'really bad people' will be held up for ridicule. It was their fault all that bad paper was flying around like giant flakes of snow. Thanks goodness, Congress will be there to rescue us, look out for us, and prevent this sort of thing from taking place again.

As if! The refied loans are already out there waiting to default. Round two is coming folks. And don't kid yourself, Congress will be there to investigate what they carefully set up to happen again.

If I worked on Wall Street, I'd be heading for the hills before the next blow out.

Full blown communism is the goal. Congress for whatever reason has Capitalism in it's sights, and it's evidently hunting season.

Now, please forgive me for not playing along. Back to this most austere investigation. I'm sure Congress will get to the bottom of things...