Tag: Wall Street

I have 4 articles for you this morning!

First, 3 regarding free speech, consistency, and hypocrisy in the wake of the Charlie Hebdo killings:

These are the biggest hypocrites celebrating free speech today in Paris

But as Daniel Wickham points out (as amplified by the journalist Glenn Greenwald), many of the 40 leaders attending the rally in Paris don’t have the best record of defending the principle of free speech so viciously attacked earlier this week:

Jump!

Attorney General Eric Holder claimed that the banks were too big and too hard to prosecute for the “massive criminal securities fraud” behind the high risk mortgage securities that led up to the 2008 financial collapse. Instead the Justice Department opted for civil settlements with large fines with no admission of any wrong doing.

Actually, it wasn’t. It appears that the Obama administration’s chief law enforcement officer chose not to prosecute despite all the evidence at his disposal. In his return to Rolling Stones, investigative journalist Matt Taibbi introduces Alayne Fleischmann, JPMorgan Chase’s $9 billion nightmare:

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'” [..]

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

Matt and Ms. Fleischmann joined Democracy Now‘s hosts Amy Goodman and Juan González to discuss ow JPMorgan wrecked the economy and avoided prosecution.

From wikipedia-

Lennon originally titled the song “Maharishi”, but changed the title to “Sexy Sadie” at George Harrison’s request. Lennon was disillusioned after Maharishi Mahesh Yogi had allegedly made a sexual advance at one of the female members attending the course the Maharishi was teaching at his ashram.

Leaders or spiritual gurus making fools of everyone….

There are entire political establishments that routinely screw the people they claim to be advocates for.

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover  we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:30am (ET) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.  

(Truth be told, friends, we’re really not that disorganized; the fact that we’ve managed to put this series together and stick with it disabuses the notion that we’re disorganized, right?  Also, I wish I had a censored night once in awhile, but alas, this is something my producers made me say.)

This Day in History

In an interview with economist Richard Wolff, Bill Moyers discusses discuss the fight for economic justice, including a fair minimum wage and how to tame capitalism run wild.

“We have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, [and] a growing majority in this society facing harder and harder times,” Wolff tells Bill. “And that’s what provokes some of us to say it’s a systemic problem.”

In Part 5 of a series of interviews by Paul Jay of Real News Network, journalist and author, Chris Hedges discusses how the Democratic Party and the so-called Liberal Elite betrayed the people they said they would protect. He talks about how that changed with Bill Clinton and has gotten worse with Barack Obama.

“Barack Obama can get up and say all the right things, but in the end, you know, it’s Wall Street and the corporations that are pulling the strings on the puppets,” he says.  [..]

“When you have the figures like Obama who continue to speak in that traditional language of liberalism and yet cannot respond to chronic unemployment, underemployment, you know, foreclosures, bank repossessions, and everything else, and in fact are running a system where the assaults against the underclass are only getting worse, then what happens is there becomes a deep disdain for not only liberal ideology but traditional liberal institutions-you saw the same thing in Weimar-so that when there is an uprising, oftentimes people want nothing to do with not only liberal elites, but the supposed liberal values, quote unquote, that these elites were purportedly espousing,” Hedges says.

“And that is a very real danger,” he continues, “because when you have figures like Obama that present themselves as traditional liberals and yet are unable to be effective in terms of dealing with the suffering and the misery of the underclass, that-and this is what happened in Yugoslavia-that when things exploded, you vomited up these very frightening figures-Radovan Karadzic, Slobodan Milosevic, Franjo Tudman-in the same way that the breakdown in Weimar vomited up the Nazi Party. And that’s what frightens me, because we don’t have the movements, the populist movements on the left, and because we live in a system of political paralysis.”

Why is the financial world freaking out over the possibility of former New York State Governor Eliot Spitzer becoming New York City’s Comptroller? Professor of Political Science at the University of Massachusetts Thomas Ferguson laid it out in his article republished at naked capitalism:

Who, when the Justice Department, Congress, and the Securities and Exchange Commission all defaulted in the wake of a tidal wave of financial frauds, creatively used New York State’s Martin Act to go where they wouldn’t and subpoena emails and corporate records of the malefactors of great wealth, winning convictions and big settlements.

Who in 2005, as New York State Attorney General, actually sued AIG instead of thinking up ways to hand it billions of dollars of taxpayers’ money.

Who brought a suit over the Gilded Age compensation package Stock Exchange head Richard Grasso had been awarded by his chums on the board.

And who in 2013 with business as usual once again the order of the day, is promising to review how the Comptroller’s Office, which controls New York City’s vast pension funds, does business with Wall Street and corporate America. With his incisive questions about Wall Street’s fee structures and criticism of the passive stances most pension funds take to skyrocketing executive compensation in the companies they invest in, Eliot Spitzer is the last person on earth Wall Street wants to see in that slot.

The chorus of outrage from Wall Street pundits and media over Spitzer’s return after embarrassing exit from the governor’s office after his out of state tryst with prostitutes (omg, he had the nerve to use his own money) and, according to a New York Times article, his out of control ego and combative, go-it-alone style.

Prof. Ferguson dismisses the hyperbole as a “smoke screen” for the real objections that Spitzer would stop Wall Street from using the city’s pension funds to make profits for the 1% while cheating the workers out of a lifetime of investment. Spitzer as an activist for the 99% scares the crap out of them.

The compelling case for activism in the Comptroller’s Office by somebody of Spitzer’s intelligence, knowledge, and experience rests mostly on quite different grounds. As Spitzer has observed, most pension funds put up little or no resistance to management’s soaring claims for compensation. These come massively at the expense of investors as a group; pushing back would benefit investors in general and, obviously, beneficiaries of City pension funds. At a time when the air is filled with sometimes dubious claims of pension fund inadequacies, increasing returns to the City pension funds would be a real triumph. You can be sure, however, that the threat to ever-escalating executive salaries fuels a lot of the animus to Spitzer within much of big business and finance.

No less important, though, is another reality to which Spitzer has alluded to from time to time. Wall Street overcharges for financial advice and pension funds often find it expedient to tolerate this, rather than shop vigorously around. Studies of pension funds returns routinely note the frequency with which high fees accompany relatively shoddy performance, often over many years. It is high time attention was focused on this situation; Spitzer would likely do that.

And the Office of the Comptroller has subpoena power, that’s a lot of power:

First, part of the comptroller’s job is ensuring that private sector employees working on city projects are paid the prevailing wage. If an employer, for example a construction company, is reported to be paying workers below-market rates, the comptroller can open an investigation and subpoena payroll records if the employer won’t cooperate.

In addition, the comptroller has the authority to review all legal settlements entered into by the city’s corporation counsel. Last fiscal year, the city paid $486 million to settle lawsuits filed against its agencies or employees, the comptroller’s office said in a report last month. The settlements were for cases such as malpractice at city hospitals or police misconduct.

That’s just for starters.  

Since the 2008 financial crisis, the five Too Big Too Fail banks are 30% larger. Dodd-Frank has yet to be implemented and already banking lobbyists are working with congress to derail it. In March, Attorney General Eric Holder testified that some banks are just too large which makes them too hard to prosecute. Part of Holder’s justification that bringing criminal charges against large financial institutions would harm the economy, doesn’t quire hold water:

The U.S. Department of Justice appears to have neither conducted nor received any analyses that would show whether criminal charges against large financial institutions would harm the economy, potentially undermining a key DOJ argument for why the world’s biggest banks have escaped indictment.

Testimony by a top Justice official and fresh documents made public on Wednesday during a House financial services committee hearing revealed that financial regulators and the Treasury Department did not provide warnings to prosecutors weighing the economic consequences or fallout in the financial system of criminal indictments against large financial groups. DOJ also could find no records that would substantiate its previous claims that it weighed potentially negative economic or financial impacts when considering criminal charges, said Mythili Raman, acting assistant attorney general for the criminal division.

Wednesday’s revelations are likely to increase criticism of the Obama administration, which has been accused of a lackluster enforcement record against big banks in the financial crisis and other matters.

This week Treasury Secretary Jack Lew appeared at a Senate banking committee hearing where Sen. Elizabeth Warren (D-MA) questioned him on whether it’s time to cap the size of the banks deemed “too big to fail”:

Can we have more Liz Warrens? Like 60 of her?

Within one week Republicans are going to grab the national spotlight on two huge issues that should be the realm of the party who stands up for the little guy.  That party used to be the Democratic party.  How can they let this happen?

On Friday, at the CPAC convention, Federal Reserve Bank of Dallas President Richard Fisher is going to call for breaking up the big banks in the wake of a failed Dodd-Frank bill.

This is mind blowing. First a Republican, Rand Paul, filibusters to get answers about the targeted killing program and now at CPAC, a speech calling for breaking up the TBTF banks.  Where are the Democrats??  The last thing we heard from the party was that the executives can’t be held criminally liable, via Eric Holder and Lanny Breuer.

End “Too Big to Fail” Once and for All

In advance of his speech on Friday to the Conservative Political Action Conference, Federal Reserve Bank of Dallas President Richard Fisher writes with Harvey Rosenblum about the failure of the Dodd-Frank financial reform law to adequately address financial institutions that are “too big to fail.”

[…]

“Third, we recommend that the largest financial holding companies be restructured so that every one of their corporate entities is subject to a speedy bankruptcy process, and in the case of banking entities themselves, that they be of a size that is ‘too small to save.'”

[Emphasis added]

Journalist Steve Brill wrote brilliant cover story for Time magazine, Bitter Pill: Why Medical Bills Are Killing Us, which lays out the reason US health care costs are out of control, just follow the money. He explains how the hospitals and their executives are scamming the system through billing to maximize profits. As an examples of the absurd charges, for a 15 cent Tylenol tablet hospitals charge as much as $1.50, $6 for a marker used to mark the body before surgery and as much as $77 for each of four boxes of gauze used. In hospital a patient can be charges as much as $450 for an electrocardiogram that in a doctor’s office would only cost $150.

This doesn’t happen in other countries where costs are controlled by government set rates for what both private and public plans can charge for various procedures. The problem here in the US isn’t that we don’t have single payer, it’s that the government doesn’t regulate the prices that health-care providers can charge. But in an article at the Washington Post by Sarah Kliff for the Wonkblog writes that we don’t need to look to other countries:

Maryland has succeeded in controlling costs for about four decades now. It is the only state that sets rates for hospitals, with the state government deciding what every Maryland hospital can charge for a given procedure..

That system started in 1976, when Maryland had hospital costs 26 percent higher than the rest of the the country. In 2008, the average cost for a hospital admission in Maryland was down to national levels. “From 1997 through 2008, Maryland hospitals experienced the lowest cumulative growth in cost per adjusted admission of any state in the nation,” the state concluded in a 2010 report (pdf).

Here is a brief summery of the article and what you should know about why health care in this country costs so much (and it isn’t malpractice lawsuits, as some would have you believe):

Hospitals arbitrarily set prices based on a mysterious internal list known as the “chargemaster.” These prices vary from hospital to hospital and are often ten times the actual cost of an item. Insurance companies and Medicare pay discounted prices, but don’t have enough leverage to bring fees down anywhere close to actual costs. While other countries restrain drug prices, in the United States federal law actually restricts the single biggest buyer-Medicare-from even trying to negotiate the price of drugs.

Tax-exempt “nonprofit” hospitals are the most profitable businesses and largest employers in their regions, often presided over by the most richly compensated executives.

Cancer treatment – at some of the most renowned centers such as Sloan-Kettering and M.D. Anderson – has some of the industry’s highest profit margins. Cancer drugs in particular are hugely profitable. For example, Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma. Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the hospital paid for it, an estimated $1400.

Patients can hire medical billing advocates who help people read their bills and try to reduce them. “The hospitals all know the bills are fiction, or at least only a place to start the discussion, so you bargain with them,” says Katalin Goencz, a former appeals coordinator in a hospital billing department who now works as an advocate in Stamford, CT.

Recently, Mr Brill sat down with Hardball guest host Michael Smerconish  and Neera Tanden from Center for American Progress to discuss how the rising health care costs are killing Americans:

   And it actually that bears on the conversation we’re having, because a chunk of that money is paid by Medicare. Medicare is I point out in the article is very efficient at most things. It buys health care really efficiently, which is a great irony, because it’s supposed to be the big government of bureaucracy.

   Where Medicare is not efficient is where Congress, because of lobbyists have handcuffed Medicare. Medicare can’t negotiate what it pays for any kind of drugs. It can’t negotiate what it pays for wheelchairs, diabetes testing equipment. And if Congress took those handcuffs off of Medicare, you could get about half of the spending cuts that we’re sitting around here talking about.

Raising the eligibility age and/or applying a means test as ways to reduce the cost of Medicare will not fix the rising costs. Only government regulation of the hospitals and the ability of Medicare to negotiate pricing for procedures, equipment and supplies will cut the cost for the patient and the tax payers. Take the profit motive out of saving lives and keeping Americans healthy.