Yet another hearing, yet more denials and refusal to accept any responsibility in the Financial crisis.
I'm sick to death of this frankly and say, put them in jail and be done with it. If one cannot put them in jail, pass laws to do so with ease and be done with it.
I also propose bloggers put together a financial reform bill, all publish it on their blogs, and demand Congress pass it. It seems every one monitoring these events knows exactly what to do (including break up the big banks), except our Government.
Seriously, is anyone else sick to death of Congressional continual pussy footin' around? An admonishment here, a scolding there, in some obscure hearing on capital hill? No consequences, no concrete changes in law, no real action. All hat, no cattle, pomp and circumstance.
With that, Dylan Ratigan did a segment, which sums up what's really going on with financial reform.
Here is Goldman Sachs denying they bet against clients:
Goldman has just issued an eight page letter to shareholders, in which it tries to defend itself against its critics, particularly regarding its conduct vis-a-vis AIG, with how it got short the residential mortgage market, and its compensation.
To be more terse than usual: the AIG argument is generally plausible (and not inconsistent with what Tom Adams’ analysis has found), the other two are problematic. to put it politely.
Here is Alan Greenspan denying his role or a too low Federal Funds rate in the financial crisis:
Here is former Fed Chair Greenspan claiming retrospect is useless and that he has a C- grade average during his Federal Reserve Tenure:
Here is Citigroup blaming the statistics (the I.T. geek blew up my computer! Offshore outsource those guys!)
Bankers told the panel yesterday they relied on statistical models that failed to predict the severity of the crisis.
Charles Prince, former Citigroup CEO, ran the dog ate my homework line, along with a nice apology (which of course he would never give back his executive compensation to back up his feelings of regret):
It's pretty astounding a corporation was creating products, selling products and then when those structured credit default obligations blew up, turn around and claim they just didn't understand them.
After all, Robert Rubin at least,lobbied heavily to get regulations dismantled which enabled these Banksters to create these glorified gambling casino products. To wit:
Richard Bowen, who was business chief underwriter during his time at Citigroup, said he warned executive committee chairman Robert Rubin about the destructive practices occurring in the company's mortgage arm.
Bowen said he discovered in 2006 that "60 percent of the mortgages bought and resold by the company were defective," meaning they were not up to Citi's guidelines.
When asked how Rubin responded, Bowen said, "I received a very brief phone call from a general counsel within the company. He said they were doing background research and didn't need to talk to me."
The Financial Crisis Commission's website is here. On the site they have recent press coverage of the hearing, the videos and all written testimony. Bowen's testimony is here.
In mid-2006 I discovered that over 60% of these mortgages purchased and sold were defective.
Because Citi had given reps and warrants to the investors that the mortgages were not defective, the investors could force Citi to repurchase many billions of dollars of these defective assets.
This situation represented a large potential risk to the shareholders of Citigroup.
C-SPAN has all of the video here.
Comments
It'll Never Change
Of course, I share your frustration with these things and hope for justice. We're hardly alone. But I'm beginning to suspect that this shared frustration, this being sick to one's stomach, is a harbinger of the solution to come and it has absolutely nothing whatsoever to do with parliamentary committees or investigations or new elections. Rather it has to do with the spontaneous response of the people to the theft of their democracy and to the consequences of that that they are now being required to endure. We have no representatives, no senators or advocates, we have only rulers that use us to their own ends. When the people fully realize that they are more subjects than citizens, things may change. And the key will be unemployment.
it becomes a stretch to even write up these latest hearings
I'm usually pretty good about amplifying Congressional hearing testimony. In the past, some of the best information I've learned has been via witness testimony, but in this case, to me this is a method to create glorified "noise" headlines, to avoid enacting the real reforms necessary, especially on derivatives.
To that end, others are comparing this to 1931, where there was additional complacency, problem there is we already have a Democrat in the white house and the "no choice" 2 party system means, uh....
guaranteed more of the same I will assume.
So, part of the function of EP should be to amplify, get public discussion, awareness going on what kind of policy we actually know will work and want.
So, I guess I hope EP readers will not only leave a comment but as expressed in this post, but I'm thinking I need to write up an additional post on the solutions, what we need in reform that would actually work.
Presuppositions
"...to me this is a method to create glorified "noise" headlines, to avoid enacting the real reforms necessary, especially on derivatives."
And that is precisely what it is with the lot of these hearings, investigations, etc. And why such simpletons as Elizabeth Warren - a living, breathing Potemkin Village if ever there were one - serve only to aid the ruling class in duping the people as to the underlying realities. Frankly - and it saddens me to say this - I see little utility in evaluating various "reforms" for the very simple reason that the system is now quite beyond reforming. Better, perhaps, to hammer this point home, the hopelessness of it all, so as to acquiant the people with their actual situation. In my view the problem was first political before it was ever economic. Lobbyists always needed maleable politicians to get their way with things. So there's an order to these things. Change the political calculus so radically that there simply are no whores to do the bidding of their johns in the financial, drug, munitions and Middle Eastern foreign policy areas and then see where you go. But we must first ourselves stop presupposing out-and-out fantasies, that the "reforms" we might evaluate are something more than abstractions.
Elizabeth Warren
I have no idea why you would put her down, she's one of the few voices out there piping up for the U.S. middle class! She also has some pretty serious research out there. The COP has covered derivatives in detail, about the only thing that's going on, which really isn't her fault, is her CFPA is being used as political masking, political cannon fodder to avoid regulating shadow banking and derivatives.
Black Hole
Oh, I suppose Elizabeth is well enough intentioned, Robert, its just that she's become so taken with her new found prominence that she can't see that she's being used so thoroughly by these slime. There are the TV cameos, the televised hearing (in which she's been just monumentally supine), and the liberal foundation appearances in which she's envisioned as a kind of god-woman. These things go to one's head, of course, and, in my view, its becoming quite clear that they've gone to hers. Elizabeth Warren is the typical Ivy League law school type, earnest, briming with compassion and just convinced that if we try hard enough we can right the system and bring justice to all those not quite as fortunate as we've been, you know, Mario Procacchino's quintessential "limosene liberal". This belief has always been at the core of the liberal mythos and grounds its naive romanticism. What we have in Elizabeth are all the imbecile enthusiasms of a recent member of the League Of Women Voters, a kind of big sis that one's terribly well educated daughter can emulate. Truth be known, Elizabeth Warren is no more or less than a creation of the powers that be, an enormous black hole into which they can safely funnel public anger. Why she almost makes it seem as though you've got a voice in Washington after all. But tell that to the guy who just lost his home and his job at the Lorain, Ohio, Ford Plant. He'll tell you whether he thinks he's got or has ever had "a voice" in Washington. And he understands that they've got Elizabeth Warren on a very tight leash and that if she barks too loudly or too effectively, they'll just throttle her then and there. If Elizabeth Warren wishes to do something meaningful for the middle class, let her help organize and participate in a massive general strike. Somehow I just can't see that happening any time soon, eh?
Very Well Said
Andrei,
Your comments are a breath of fresh air here and I absolutely agree that any kind of incremental change to our situation is DOA. I like Elizabeth, and Simon Johnson, and Dylan Ratigan, and many other "truth tellers", but the real "truth" is that the political system that controls all Americans is corrupt beyond repair. Anyone who believes that any kind of democracy, or democratic solutions, exist in today's America is delusional.
Robert, we all luv ya, but logic and mathematics go hand in hand. Look at the realities of our present day condition. The enormous number of unemployed, under employed and unemployable. Consider the manipulation of statistics by the government agencies over the past 20 - 30 years, and not just the fog of manipulated statistics presented on a weekly, monthly, quarterly basis.
Look at the equities markets and the relaxation of any kind of reasonable accounting methods. What do any of the quarterly reports of the megabanks and MNCs mean when they control the valuation of "assets"? We live in a made up, fantasy America and TPTB have allowed it to be! How many times and in how many ways do we need to report this tripe statistically to satisfy the "so what" test?
Elizabeth Warren, and many other "critics" of the status quo, may not be willing "potemkin villages", but that is indeed how the TPTB are using them.
in terms of any real action, any real change
or the globe is completely controlled by a few super rich elites and MNCs, I will not argue and I don't know how to change it.
History says it can be changed, the robber barons were finally brought somewhat down, we had a FDR, on the other hand we have loads and loads of dictatorships, bloody revolutions where things became even worse and so on.
But, what I think exposing the truth is critical, I too am completely disgusted (see my post this week) on no matter how much truth comes out, how much public outrage there is, how many people promote great policies....the people who have the power won't let any of that get enacted in law or policy. Puppets on a string.
Can It Be?
"I like Elizabeth, and Simon Johnson, and Dylan Ratigan, and many other "truth tellers", but the real "truth" is that the political system that controls all Americans is corrupt beyond repair. Anyone who believes that any kind of democracy, or democratic solutions, exist in today's America is delusional."
First, thank you for the kind words, commongood. They're very much appreciated.
Yes, indeed, Johnson, Warren and the like offer important insights but from the perspective of their audience all that one meaningfully takes away from what they are saying is the utter hopeless of it all. If one is not out simply to build a reputation and sell books, what point is there to speak in terms of reform and at the same time point to the operational impossibilty of there being any? All of these folks when they are courageous enough - and that's not frequently - point to the political cesspool from which our problems emerged and to the unlikelihood of it ever changing. It would seem to me almost obligatory, then, when speaking of solutions not to eschew the most obvious: Demonstrations and strikes. But that's not their personal style. They have appearance to keep, after all. Can you imagine Simon Johnson even raising his voice let alone leading a strike? I can't.
One must ask, then, why their prominence? As I'd speculated earlier, is it to sell books and to build and exploit an emerging public persona? Hard to say. There have been countless people in public life that have done that, of course. But, if so, what becomes of the exploited that draw absolutely no benefit from the moralizing of these academics? When the Warrens and the Johnsons go to sleep in their gated communities, how do they fare? I think we both know the answer to that question.
The American Hologram.
In his seminal 2007 book, "Dear Hunting With Jesus: Dispatches From America's Class War", Joe Bageant first raised the notion of the American Hologram. Later in 2007, he expanded on this idea in an essay on his weblog, entitled The Great American Media Time Warp.
{emphasis mine}
Of course Joe's holographic depiction of american reality is part and parcel of the larger idea of "American Exceptionalism" that has been promulgated for at least the last 2 generations of Americans. I like reading Joe Bageant a lot. And it is not just because he is an aging ex-hippie who is almost exactly my age. No, I like Joe more because he is a gifted observer and writer, who can relate the obvious reality without trying to analyze it.
I have very siimilar feelings about the blogger Ilargi at The Automatic Earth, when he has the awareness to write:
These are truly insightful individuals who can transcend the BS of the day and casually invite the reader to consider his/her real condition, for better or worse. Naturally, they are non-existent within the American Hologram.
they exist here
You probably realize I'm not too big on "personal stories" but maybe someone else, if they are of the mind, can show the fact that what should be high income earning upper middle class, highly educated, insightful, creative, hard working people are getting wiped out in a personal story sort of thing, maybe even taken by some of the bloggers who are financial but at the same time, kind of witness to their own destruction too. I don't have some issue that somehow "blue collar" should get screwed and white collar should not, neither should be financially wiped out, but I think it takes away a lot of myth when people who are "media presented as" these super accomplished types are in just as much trouble as the waitress working 3 jobs.
On a related note
It appears that the big banks of Wall Street have been masking the amount of risk they are taking on.
Minus the accounting fraud, this is what Lehman's was doing before they went under.
wow, just wow
This is a story in and of itself. Can you imagine if Joe 6-pack, when the IRS came knocking, just simply moved their assets to his cousin, declared he didn't have any income, IRS goes away and then it's all moved back?
Or say you are applying for a loan, so you quickly transfer your credit cards to your cousin, then get a new loan and then transfer the responsibility of those cards back to yourself?
A big overview post on legal methods of scamming and stealing, accounting 101 for multinational corporations.
WAMU Testimony
I watched some of that the other day. These people had clear cases of fraud ongoing and with knowledge of it under their watch.
My question where is the FBI on this same issue?
I'll know Wall Street is being treated properly when the criminal RICO Act is rolled out to clean it all up. They pay civil fines and the reasoning is that an investigation would be too costly and they may not get convictions. Thats complete BS. The RICO Act can convict anyone on slim evidence thats why it was created. They only want to use it selectively on 'real' criminals not people stealing billions and causing the collapse of the world economy - those people are upstanding citizens wearing suits. If you wear a suit to work in the US you can steal with impunity. Thats been proven aside from the occasional sacrificial lamb.