Banker Bait and Switch

[babe]

So here's a news blip on yahoo:

https://finance.yahoo.com/blogs/dai...-abysmal-failure-barofsky-says-161743679.html

This as bad as the LIBOR scandal. Bankers given the keys to the public treasury, with no thought of accountability. Both Bush and Obama, and all the minions of both wholly-owned subsidiaries of PartyPolitics, Inc, both Rep and Dem, and done this scam on us. They promised the bailout money would "trickle down" to the people through loans that would shore up homeowners gone upside down and stimulate the economy and keep people working. . . . The banks took the money, smiled, and gave themselves bonuses, and took the rest to the casino to hog positions in the derivatives betting games.

So why are any of you folks still going to vote for either subsidiary of this scam? You vote Rep, you're stupid. You vote Dem, you're stupid.

 

[Gyp Rosetti]

How is this news exactly? It was expected and inevitable.

 

[babe]

How is this news exactly? It was expected and inevitable.

That's like saying you expect to be robbed.

When you go to the grocery store, and load up your cart, and go to check out, do you expect the bagging boy to pull a gun on you and take your wallet and the groceries, too, and just shrug and say that's what you expect, and do the fatalist cop-out and say it's "inevitable"?

I might expect you to be a republican party partisan or completely mindless hack for your boys in power, but I do think you can do something better with yourself. And I consider it perfectly reasonable to try to hold you accountable for being an apologist/player for corrupt politics that are destroying people's financial security, personal security, and human rights.

Time for you to man up, man, and see the truth for what it is, and get on the team to make things actually better.

Here's what the LA Times is saying about this today:

https://www.latimes.com/news/opinio...weill-glass-steagall-20120727,0,1324289.story

Former Citigroup honcho Sanford I. Weill is widely seen as the man most responsible for the rise of "too big to fail" banks and, by extension, for the enormous federal bailouts they received in 2008 and 2009. This week, however, Weill shocked the financial industry when he said that megabanks should be broken into smaller pieces, separating the arms that take federally insured deposits from the ones making bets on Wall Street. Lawmakers resisted such a straightforward approach when they enacted the Dodd-Frank law to re-regulate the financial industry in 2010. But Weill's hindsight should prompt them to consider again how best to protect Americans from a repeat of the last meltdown.

The New Deal-era Banking Act of 1933, better known as Glass-Steagall, created deposit insurance and, to prevent those newly insured funds from being put at risk on Wall Street, barred banks from owning stock brokerages. That ban was dropped in 1999 after an intense campaign by bank lobbyists, led by Weill, who was in the process of building Citigroup into one of the world's largest financial institutions.

So here's someone who should know something about it, and even he is trying to get in front of the solution fast enough he won't just get put in prison for the rest of his life.

We need the Glass-Steagall law in place, now.

 

[Gyp Rosetti]

That's like saying you expect to be robbed.

No, I'm just not naive enough to think that the executives who ****ed up, got bailed out, and in turn got solid bonuses were going to change their practices or their ethics when not even a slap on the wrist happened the first time. Pull your head out of your ***.

 

[Gyp Rosetti]

By the way, if you're any type of spokesperson for "your team," I'll gladly sit out this election as a free agent.

 

[babe]

No, I'm just not naive enough to think that the executives who ****ed up, got bailed out, and in turn got solid bonuses were going to change their practices or their ethics when not even a slap on the wrist happened the first time. Pull your head out of your ***.

So I did a couple of quick edits, adding material to my post while you were doing this and the next one. You might want to revisit your comments before you look like the one with the tin foil hat, and the uncomfortable posture.

So I made my comments pretty personal, and just being mad about that is not the best I could expect from you, or is it?

"my team" is not mine, it's already got some congressmen working on restoring the Glass-Steagall provisions, some people from both political parties are actually trying to get this issue passed now. Call your congressman, and your senator, and tell them you see this legislation as vital and timely.

 

[Gyp Rosetti]

So I did a couple of quick edits, adding material to my post while you were doing this and the next one. You might want to revisit your comments before you look like the one with the tin foil hat, and the uncomfortable posture.

So I made my comments pretty personal, and just being mad about that is not the best I could expect from you, or is it?

"my team" is not mine, it's already got some congressmen working on restoring the Glass-Steagall provisions, some people from both political parties are actually trying to get this issue passed now. Call your congressman, and your senator, and tell them you see this legislation as vital and timely.

You just don't get it.

 

[babe]

You just don't get it.

The CitiBank executive referred to in the LA times op-ed is pretty clearly an impressive rebuttal to your theory. You use the terms "naive" and apparently do not read what the experts are saying. The guy who lobbied for dropping the Glass-Steagall restrictions is now saying we need to restore them. I don't know how to present you with a more clear-cut wake-up call.

The Financial Times, the leading London source for financial insights, called for restoration of Glass-Steagall regulations throughout Europe and the British/American "Empire", just a couple of weeks ago in response to the LIBOR scandal. There have been some CEOs, such as the head of JP Morgan caught up in huge losses related to these financial practices. Heads are rolling, more will. These folks are now "getting it".

 

[franklin]

Does G-S do anything to protect against runs on the money market? You start hitting the short term paper and **** hits the fan real quick.

 

[babe]

Does G-S do anything to protect against runs on the money market? You start hitting the short term paper and **** hits the fan real quick.

I don't know. Sounds like an important question.

I haven't read the current "G-S" legislation as it stands in the docket of the House of Representatives. Those who are arguing for it are saying it prevents some insider deals that make the bankers smile, and cost the smaller investors their shirts. I have also heard it argued that it requires separation of investment banks from savings/lenders banks, and prevents the bankers from indulging in risky speculation with our federally-insured savings, which insurance payouts we all will pay for in taxes or printing press runs on the values of our retirement/savings dollars.

"runs on the money market" in my imagination would be where banks are calling in their commercial short-term loans, used often in making payroll by businesses with enough cash flow to pay back the loan in a few days, having kept the workers or suppliers satisfied enough for business to go on. I think this is what Geitner might have been thinking of when he used the phrase "foam the runways so the banks can make a soft landing", although maybe it was just covering the mortgage crisis enough to keep the banks solvent. I think that is what many congressmen thought they were voting for in the bailout measures. The scandal here is that's not how the banks used the money. The banks put the bailout money right into the derivatives speculation bubble, and the big scare now is that that bubble is about to bust.

If that happens, we will not have a huge wave of inflation, but the opposite phenomena. There is serious concern among the major economic powers today, including China, that it might be necessary to float a lot more "Quantitative Easing" moolah to help keep this bubble plump and shiny. But just giving the money to the banks, and letting them bid up the speculative prices even more, isn't going to fix this problem. We need the G-S measures to make sure the public funds don't go into those speculation casinos, and that businesses can get money to operate with.

 

[franklin]

The problem from my perspective wasn't the public money being put into speculative instruments but the amount of leverage being taken on in risky assets and funding it all short term. Lehman went bust because their MM paper wasn't reissued and they had to take devaluing assets back onto their books. It doesn't take a rocket scientist to figure out that a 3% loss on a 40:1 leveraged book will bankrupt the entire institution.

The stricter Basel III capital requirements can go a long way to fixing this problem. I don't see how G-S will as it didn't stop the S&L crisis when it was still the law of the land. I support putting G-S back in regardless of this, but more needs to be done with the new territory that 1940 didn't wade into. The repo market is what needs to be protected against & that means higher cash/cash-like cushion requirements on banks (and hedge funds). That means the banks can't earn as much so they'll fight it tooth and nail even though it's in their best interest long term. It also means less lending which means more deleveraging which means slogging economic growth for some time to come. We've already de-levered total national debt down to 350% from 385%, and the effects on unemployment because of this are highly visible.

On a related side note--MMF's aren't banks and are highly liquid anyway, so limiting them because of the banking system's stupidity is putting the blame onto the wrong shoulders.

Another related side--we need to claw back the hundred million fortunes from the folks who caused this mess and breached their fiduciary duty to shareholders. There's not much threat of losing your ill-gotten fortune from playing in the casino until it is too late.


It's late and I'm tired so I hope this all made sense.

 

[babe]

I find your comments informative, worth reading for jolting my own thoughts out of old ruts, and while I'm not sure they really make sense, it's enough to cause me pause.

Sometimes it takes me a while when I'm on one of my "issues" to actually understand what someone is trying to say. Right now I'm wondering about a few possibilities as to how I "didn't get it" from Wes' comment. Probably I assumed some things not actually in his intended meaning. . . .

That's why I generally think time spent talking to some of the people in here is well spent. . . .

 

[leftyjace]

I don't see how G-S will as it didn't stop the S&L crisis when it was still the law of the land.

Sometimes you have to forge ahead and do the best you can right now until the point you can do the best that can be done. In the meantime, the S&L crisis is fresh and recent enough that the damage/pain caused works as a relative deterrent... unlike some practices implemented trying to pull us out of the Great Depression that actually made it worse. (I know, lame analogy, but the best I could do with 4 hours of sleep early on a Saturday morning.)

 

[Duck Rodgers]

Here's what the LA Times is saying about this today:

https://www.latimes.com/news/opinio...weill-glass-steagall-20120727,0,1324289.story



So here's someone who should know something about it, and even he is trying to get in front of the solution fast enough he won't just get put in prison for the rest of his life.

We need the Glass-Steagall law in place, now.

It was nice to see the usual tools come out of the woodwork to defend the monstrosities as soon as the Weill comments were getting press. That's how you know the world is still spinning. Meredith Whitney calling breaking up big breaks "draconian" was probably my favorite.

Just get Glass-Steagall done this second or else I'm bringing Marshall Law to America(said in my best Hank Paulson voice).

 

[Gyp Rosetti]

The Citybank executive referred to in the LA times op-ed is pretty clearly an impressive rebuttal to your theory. You use the terms "naive" and apparently do not read what the experts are saying. The guy who lobbied for dropping the Glass-Steagall restrictions is now saying we need to restore them. I don't know how to present you with a more clear-cut wake-up call.

The Financial Times, the leading London source for financial insights, called for restoration of Glass-Steagall regulations throughout Europe and the British/American "Empire", just a couple of weeks ago in response to the LIBOR scandal. There have been some CEOs, such as the head of JP Morgan caught up in huge losses related to these financial practices. Heads are rolling, more will. These folks are now "getting it".

And I'm supposed to listen to you when you can't even spell CitiBank correctly.

 

[babe]

And I'm supposed to listen to you when you can't even spell CitiBank correctly.

So I fixed it. It's a matter of focus, sometimes. Depends on whether you're looking for something you can actually wrap your mind around, or whether you want to have some kind of important excuse for not thinking, like somebody else's spelling mistakes.

I sometimes fix my mistakes when I realize them. It makes life better when you do.

Reminds me of another mistake I need to fix someday. Talking about the Cherokee nation, I put the name "Madison" in an attempted alleged quote from Andrew Jackson when it was John Marshall who was the Chief Justice of the Supreme Court who ruled Georgia had no right to regulate Cherokee territory until the Cherokee nation settled a treaty with the federal government of the United States. A whole lot of folks in Georgia who couldn't read, except for about 10% of them, that is, wanted to move in and just take the Cherokee farms and plantations and gold resources from the Cherokees, 90% of whom could read. The Cherokees had an elected government and a constitution based on the United States constitution, and most had converted to Christianity and had set aside the life of hunter/gatherers in the Great Smokey mountains. The had always had agriculture and settled homes, and had developed many of the technical trades of the day. But the election of the "Old Hickory", the Seminole genocide militarist, was achieved with the political votes of the southern white folks, and he was obliged to make sure they got the Cherokee land. So when the Supreme Court upheld human rights and exclusive power of the Federal government to make treaties with other nations, Andrew Jackson said "John Marshall has spoken, now let him enforce his decree" and he and Georgia just thumbed their nose at the US Supreme Court.

But we as a nation paid a high price. Not only did thousands of Cherokee wannabe Americans lose all their property, and most lost their lives, but it was intransigent stupidity like that that prevented the Courts from having the power to end slavery, and as a result hundreds of thousands of those greedy thieving white Americans lost their lives, and all they had, in the Civil War.

And it's stupidity like people caring more for spelling than truth or integrity in government that is still the chief problem we have as Americans.

And, oh yes, in regard to Duck's post above, I think he meant "Martial Law" not "Marshal Law". But at least I'm smart enough to get that point even if the spelling isn't right. Not sure "Martial Law" would be an answer, as it is in fact the suspension of civil rights under wartime conditions, replacing civil law with military expedience, presumably under federal or state orders rather than by some roving band of armed citizens, which is what I think Duck's quote was actually meant to say. But hey, I know we have idiots writing the scripts for Hollywood, and that hardly anyone in this country can actually get a handle on any subject for accuracy, let alone know what they are talking about, anymore.

 

[Duck Rodgers]

And, oh yes, in regard to Duck's post above, I think he meant "Martial Law" not "Marshal Law". But at least I'm smart enough to get that point even if the spelling isn't right. Not sure "Martial Law" would be an answer, as it is in fact the suspension of civil rights under wartime conditions, replacing civil law with military expedience, presumably under federal or state orders rather than by some roving band of armed citizens, which is what I think Duck's quote was actually meant to say. But hey, I know we have idiots writing the scripts for Hollywood, and that hardly anyone in this country can actually get a handle on any subject for accuracy, let alone know what they are talking about, anymore.

It was wordplay, old man. Note the capitalization of Marshall Law. Marshall Law is a semi-well known video game character that kicks a lot of ***. I was saying I was going to kick some *** by bringing Marshall Law to the streets of America to do my bidding(He's a Chinese-American that is in Japan illegally in the games) while referencing the Henry Paulson threat that martial law would come to America were the bailout not passed back in '08. My genius knows no bounds. (not really, I should probably refrain from dorky video game references in the future).

 

[Gyp Rosetti]

This is your M.O. Ramble on and on and challenge me. If to you, I produce a lengthier, worthwhile response, you accept me. Except I'm not looking for your acceptance. You ramble on and on about a broken political system. You go on and on at length about financial headlines and the rich stealing from the not so rich as if that's shocking. You talk about getting GS back into place as if you're original. And you can't even manage to respond to my points on topic. Bro, you are the epitome of not being able to see the forest through the trees. This country's ****ed any which way you like it and no matter how much you pom pom around with your megaphone and your naive notions, it doesn't matter. We are too big not to fail.

 

[franklin]

Sometimes you have to forge ahead and do the best you can right now until the point you can do the best that can be done. In the meantime, the S&L crisis is fresh and recent enough that the damage/pain caused works as a relative deterrent... unlike some practices implemented trying to pull us out of the Great Depression that actually made it worse. (I know, lame analogy, but the best I could do with 4 hours of sleep early on a Saturday morning.)

The S&L crisis wasn't the 2008 bust, it was back in the '80's and '90's. Instead of learning anything from it we pushed the gas pedal down harder and faster. I don't know what you're getting at with "made it worse", but if it's the typical Sean Hannity blather then please save it as it's the biggest bull **** anyone has come up with.

We are too big not to fail.

The world has always been too big not to fail in the eye of the beholders. Fixing the current situation will require intelligent lawmakers working behind the curtain to do what they find best to fix the instability issues. They'll have to do what they want in one cheek and tell their constituents what they want to hear out the other side because the average voter just doesn't know enough about this stuff to make an informed decision in their best interests. That's why we have representatives currently working to fix the mess without invoking the political process to do so. Here's to hoping they make the right choices that will last 30-40 years, at which time we'll face the exact same stuff again.

Basel III, the MMF discussion has been robust, as has been tighter controls on the repo market, off-balance sheet liabilities, CMBS, and even the conventional mortgage market.

 

[babe]

This is your M.O. Ramble on and on and challenge me. If to you, I produce a lengthier, worthwhile response, you accept me. Except I'm not looking for your acceptance. You ramble on and on about a broken political system. You go on and on at length about financial headlines and the rich stealing from the not so rich as if that's shocking. You talk about getting GS back into place as if you're original. And you can't even manage to respond to my points on topic. Bro, you are the epitome of not being able to see the forest through the trees. This country's ****ed any which way you like it and no matter how much you pom pom around with your megaphone and your naive notions, it doesn't matter. We are too big not to fail.

yah, I'm not sure what your point is. The central theme is that since you already know how the world is, other people should just be as indifferent to it all as you are. I consider that a pretty pointless opinion. Nobody cares what you want, either.

failure is always measured against some sort of purpose. I actually agree with the sentiment that global governance is too big not to fail. . . . it will fail at protecting the environment, it will fail at exploring space or promoting science, it will fail at regulating commerce or promoting even cartel/elite prosperity. . . . let alone giving humans a better life. The answer seen most often in nature is demonstrated by the plethora of diverse strategies that fill just about every niche with some sort of small-scale competent lifeforms, as well as some that are generally successful on very large scales. The reason global governance and most human cartels which have achieved megasize will all fail is because of centralized control in the hands of limited intellects.

yah, I ramble I suppose, as it may seem to the disinterested, or to those who don't see how an example drawn from another era demonstrates the same problem we are facing today. Peoples' disregard for the rights and property of others is a frequent phenomena, and the harm it causes can be seen by hindsight sometimes. And our actual welfare as a society, as humans who have to live with one another, begins with respect for good principles, good ethics, and for one another.

If we don't try to achieve these things, we fail no matter what our "size" is.