10/27/2011 archive

Banking and Politics: On a Razor’s Edge

By Mike Lux, Crooks and Liars

October 27, 2011 11:00 AM

This is a do-over moment for the President. Ron Suskind’s book, “Confidence Men,” made clear: Obama wanted to do the right thing on the big banks in 2009. He wanted us to choose the path Sweden chose to get back to economic health in the 1990s -rather than the one that led to Japan’s lost decade - a path that involved directly taking on the big banks. He wanted to take over Citibank and send it to resolution authority. But Rahm Emanuel, Larry Summers and Geithner didn’t follow his orders, slow-walked things until they weren’t relevant anymore, and gave us the policies that are potentially sending us to our own lost decade. These missed policy chances gave us a terribly weakened economy, and gave the public the perception the President was soft on Wall Street. Obama now has a chance to get this economy back on the road to a real recovery, and to simultaneously show that he will stand up the Wall Street tycoons.

When Dodd-Frank was passed, we were promised there would be no more bank bailouts, and that our government was once again capable of doing what needs to be done in terms of bringing the Wall Street tycoons who wrecked our economy to heel. Now is the moment to prove that right. Start by putting the zombie bank Bank of America in receivership where they belong – the Dodd-Frank bill gives us the resolution authority to get that done. Next, drop efforts to give bankers immunity for the million-plus counts of perjury and fraud they have likely committed with the robo-signing and other foreclosure-related scandals, and force them to the table so they will finally write down the mortgage debt on all these underwater mortgages. Finally, get DOJ involved in helping to investigate fraudulent banking practices, and get the anti-trust division involved too, because unless these banks start to get broken up, our financial marketplace will continue to be badly warped by their overwhelming market power.

…

These are huge steps, but the Obama administration has the ability to do them. If the 2008 crisis proved nothing else, it is that our government in a financial crisis has the ability to do whatever needs to be done in a crisis. There’s a story that when Bear Stearns was being forced by Hank Paulson to merge with Morgan in 2008, that the Bear Stearns board was balking at the incredibly low price they would be getting on their shares of stock. Paulson calmly informed them he had brought a team of FBI agents with them, that if the merger was not agreed to he would be seizing every computer in the building and the FBI would start combing through the books and emails to see what illegal acts were committed. The Bear Stearns board immediately voted to go forward with the merger. The management of these huge banks on Wall Street know they have been blatantly violating all kinds of laws for a long time, which is why they are so eager to do a quick settlement with the state AGs and the feds for legal immunity. The administration has the tools, both legal and regulatory, to force them to the table and get things done. But they need to step up and make it happen. Given the deep and overwhelming problems in the financial and housing sectors, doing big things is the only way to get the economy back on track.

And they all lived in fairy-tale land happily ever after.

Or…

Not so much.

The Congressional Budget Office (CBO) recently released a report that added more evidence that income inequality between the top American income earners and the middle and lower classes continues to grow, as the top one percent saw its average after-tax income grow by 275 percent between 1979 and 2007.

Click on image to enlarge

The CBO report highlighted these points:

The share of after-tax household income for the top 1 percent of the population more than doubled, climbing to 17 percent in 2007 from nearly 8 percent in 1979.

The most affluent fifth of the population received 53 percent of after-tax household income in 2007, up from 43 percent in 1979. In other words, the after-tax income of the most affluent fifth exceeded the income of the other four-fifths of the population.

People in the lowest fifth of the population received about 5 percent of after-tax household income in 2007, down from 7 percent in 1979.

People in the middle three-fifths of the population saw their shares of after-tax income decline by 2 to 3 percentage points from 1979 to 2007.

There is also a great divide between how the Americans want the government to deal with this and the path that the government is headed down. The Occupy Wall Street protests across the country have started the news media talking about jobs and not the fake deficit/debt crisis. In a poll take by the New York Times and CBS, most Americans approve of the OCW movement:

and by two thirds believe that the wealthiest Americans should pay higher taxes:

and the wealthiest Americans agree. In a survey released by the Spectrum Group, 67% of those those with investments of $1 million or more support raising taxes on those with $1 million or more in income.

Their approval of Congress has hit a record low in the single digits:

nor do they approve of the way Barack Obama or Congress has handled creating jobs:

If anyone is still wondering why there are protests and people are fed up, then you are either not listening and reading or you are part of the problem.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Robert Sheer: Thirty Years of Unleashed Greed

It is class warfare. But it was begun not by the tear-gassed, rain-soaked protesters asserting their constitutionally guaranteed right of peaceful assembly but rather the financial overlords who control all of the major levers of power in what passes for our democracy. It is they who subverted the American ideal of a nation of stakeholders in control of their economic and political destiny.

Between 1979 and 2007, as the Congressional Budget Office reported this week, the average real income of the top 1 percent grew by an astounding 275 percent. And that is after payment of the taxes that the superrich and their Republican apologists find so onerous.

Robert Reich: Wall Street is Still Out of Control, and Why Obama Should Call for Glass-Steagall and a Breakup of Big Banks

Next week President Obama travels to Wall Street where he’ll demand – in light of the Street’s continuing antics since the bailout, as well as its role in watering-down the Volcker rule – that the Glass-Steagall Act be resurrected and big banks be broken up.

I’m kidding. But it would be a smart move – politically and economically.

Politically smart because Mitt Romney is almost sure to be the Republican nominee, and Romney is the poster child for the pump-and-dump mentality that’s infected the financial industry and continues to jeopardize the American economy.

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

Late last night, Scott Olsen, a former Marine, two-time Iraq war veteran, and member of Iraq Veterans Against the War, sustained a skull fracture after being shot in the head with a police projectile while peacefully participating in an Occupy Oakland march.  The march began at a downtown library and headed towards City Hall in an effort to reclaim a site-recently cleared by police-that had previously served as an encampment for members of the 99% movement.

Scott joined the Marines in 2006, served two-tours in Iraq, and was discharged in 2010.  Scott moved to California from Wisconsin and currently works as a systems network administrator in Daly, California.  

Scott is one of an increasing number of war veterans who are participating in America’s growing Occupy movement. Said Keith Shannon, who deployed with Scott to Iraq, “Scott was marching with the 99% because he felt corporations and banks had too much control over our government, and that they weren’t being held accountable for their role in the economic downturn, which caused so many people to lose their jobs and their homes.”

Scott is currently sedated at a local hospital awaiting examination by a neurosurgeon.  Iraq Veterans Against the Wars sends their deepest condolences to Scott, his family, and his friends.  IVAW also sends their thanks to the brave folks who risked bodily harm to provide care to Scott immediately following the incident.

Keith Shannon, the roommate of injured Occupy Oakland protester Scott Olsen and a fellow Iraq War veteran, shares what happened Tuesday night when the Oakland Police Department fired upon the crowd with rubber bullets, bean bags and tear-gas canisters, one of which gave Olsen a skull fracture and trip to the emergency room. Shannon, himself a vocal protester, provides an update on Olsen’s condition – saying Olsen is “stable, but critical” – and says the incident has only bolstered his resolve to continue working for the movement.

In tonight’s Special Comment, Keith calls out Jean Quan, mayor of Oakland, for her use of 500 police officers in a pre-dawn raid Tuesday morning, followed by more tear-gas bombs, rubber bullets and bean-bag rounds on Tuesday night. Quan, herself once a victim of the Oakland police’s bullying, now “is the bully,” Keith says. He calls on Quan to dismiss acting Police Chief Howard Jordan and allow protesters to return to their location, “or, having betrayed everything she’d supported and all those who have supported her, she must resign.”

Hundreds of protesters in New York City marched on Wednesday night to show solidarity with protesters in Oakland, Calif., where the police used tear gas to disperse crowds a night earlier. About a dozen demonstrators were arrested in New York, the police said.

Just after 9 p.m., about 500 people left the Occupy Wall Street base in Zuccotti Park and went on a winding march around the financial district and City Hall, accompanied by drummers and a man playing the bagpipes as a helicopter followed overhead.

Less than an hour later, a smaller group of protesters poured into the streets, ignoring orders from police officers to stay on the sidewalk, and began a frantic cat-and-mouse game. More than 250 protesters walked quickly and sometimes ran through the streets of SoHo and the West Village, at one point storming through a movie set on Macdougal Street as groups of police vehicles with lights and sirens pursued them closely. People emerged from bars along the way asking what was going on and offering encouragement.

Yesterday afternoon Occupy Wall Street group Healthcare for the 99% marched to the headquarters of Empire Blue Cross Blue Shield, WellCare and St Vincent’s Community Hospital, a casualty of profit-driven insurers and a healthcare system that leaves 50 million Americans uninsured. Last night Keith’s guest, Dr. Steve Auerbach of Physicians for a National Healthcare Program, spoke about the need for affordable, accessible national healthcare.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

October 27 is the 300th day of the year (301st in leap years) in the Gregorian calendar. There are 65 days remaining until the end of the year.

On this day in 1904, the New York Subway opens.

While London boasts the world’s oldest underground train network (opened in 1863) and Boston built the first subway in the United States in 1897, the New York City subway soon became the largest American system. The first line, operated by the Interborough Rapid Transit Company (IRT), traveled 9.1 miles through 28 stations. Running from City Hall in lower Manhattan to Grand Central Terminal in midtown, and then heading west along 42nd Street to Times Square, the line finished by zipping north, all the way to 145th Street and Broadway in Harlem. On opening day, Mayor McClellan so enjoyed his stint as engineer that he stayed at the controls all the way from City Hall to 103rd Street.

History

A demonstration for an underground transit system in New York City was first built by Alfred Ely Beach in 1869. His Beach Pneumatic Transit only extended 312 feet (95 m) under Broadway in Lower Manhattan and exhibited his idea for a subway propelled by pneumatic tube technology. The tunnel was never extended for political and financial reasons, although extensions had been planned to take the tunnel southward to The Battery and northwards towards the Harlem River. The Beach subway was demolished when the BMT Broadway Line was built in the 1910s; thus, it was not integrated into the New York City Subway system.

The first underground line of the subway opened on October 27, 1904, almost 35 years after the opening of the first elevated line in New York City, which became the Ninth Avenue Line. The heavy 1888 snowstorm helped to demonstrate the benefits of an underground transportation system. The oldest structure still in use opened in 1885 as part of the BMT Lexington Avenue Line, and is now part of the BMT Jamaica Line in Brooklyn. The oldest right-of-way, that of the BMT West End Line, was in use in 1863 as a steam railroad called the Brooklyn, Bath and Coney Island Rail Road. The Staten Island Railway, which opened in 1860, currently uses R44 subway cars, but it has no links to the rest of the system and is not usually considered part of the subway proper.

By the time the first subway opened, the lines had been consolidated into two privately owned systems, the Brooklyn Rapid Transit Company (BRT, later Brooklyn-Manhattan Transit Corporation, BMT) and the Interborough Rapid Transit Company (IRT). The city was closely involved: all lines built for the IRT and most other lines built or improved for the BRT after 1913 were built by the city and leased to the companies. The first line of the city-owned and operated Independent Subway System (IND) opened in 1932; this system was intended to compete with the private systems and allow some of the elevated railways to be torn down, but was kept within the core of the City due to the low amount of startup capital provided to the municipal Board Of Transportation, the later MTA, by the state.[3] This required it to be run ‘at cost’, necessitating fares up to double the five cent fare popular at the time.

In 1940, the two private systems were bought by the city; some elevated lines closed immediately, and others closed soon after. Integration was slow, but several connections were built between the IND and BMT, and now operate as one division called the B Division. Since the IRT tunnel segments are too small and stations too narrow to accommodate  B Division cars, and contain curves too sharp for B Division cars, the IRT remains its own division, A Division.

The New York City Transit Authority, a public authority presided by New York City, was created in 1953 to take over subway, bus, and streetcar operations from the city, and was placed under control of the state-level Metropolitan Transportation Authority in 1968.

In 1934, transit workers of the BRT, IRT, and IND founded the Transport Workers Union of America, organized as Local 100. Local 100 remains the largest and most influential local of the labor union. Since the union’s founding, there have been three union strikes. In 1966, transit workers went on strike for 12 days, and again in 1980 for 11 days. On December 20, 2005, transit workers again went on strike over disputes with MTA regarding salary, pensions, retirement age, and health insurance costs. That strike lasted just under three days.

Those of you that read this regular series know that I am from Hackett, Arkansas, just a mile or so from the Oklahoma border, and just about 10 miles south of the Arkansas River.  It was a redneck sort of place, and just zoom onto my previous posts to understand a bit about it.

When I was in grade school in the second through forth or so grade Bobby Gene was one of the pupils.  Hackett was so small that there was only one class for each grade, so everyone of roughly the same age were in the same room.  Bobby Gene was in my class.  I am not using his last name on the distant chance that he might still be living, but even if here were I promise you that he would not read this.

Bobby Gene was what now would be called a special needs student, and I shall explain why later.  He was not a little “slow”, he was profoundly disabled.  He also had some physical problems, such as being very slight, and poor motor coordination.  These days he would be put into a special needs program and not in a regular class.  But we are talking about early 1906s Hackett, Arkansas.