Tag: ek Politics

Now frankly I still think the appropriate historic parallels are Late Imperial Rome and Nazi Germany, but for some reason (I can’t quite figure out why) people object when you point out their irrational worship of all things Obama is nothing more than Führerprinzip and the United States an exceptional example of decadence.

Matt Taibbi gives a more contemporary perspective-

Democrats Must Stop Ted Cruz’s Hollywood Ending

By Matt Taibbi, Rolling Stone

POSTED: October 11, 11:28 AM ET

Having lived in the former Soviet Union for 10 years, I will forever have plastered to the back of my cerebellum the commemorative bumper sticker: “WWSD?”

What Would Stalin Do? It’s a useful question to ask sometimes, because it offers valuable perspective. What would Stalin have done with Britney Spears? Have her declared a People’s Artist of the Soviet Union, with the Leningrad-Murmansk train line named after her. Dan Dierdorf would have been made Secretary of the Sverdlovsk Region. Shepard Smith would probably get to head up the Press Ministry to start, then maybe work his way up to Foreign Affairs. It’s hard not to look at the American cultural landscape and see all sorts of people the old seminarian would really have liked.

But the main reason I’m thinking of this now is the debt ceiling/government shutdown issue. How would Stalin have handled all of this? Reflexively, I can’t help but wonder.

I’m guessing he would have taken Tea Party Sen. Ted Cruz’s caucus members, loaded them onto cattle cars, and relocated them to a piece of woodsy wilderness in Alaska’s Chugach National Forest. Once there, guards would have handed saws and hammers to the esteemed legislators (still dressed in suits and heels – no wasteful government spending on parkas!) and instructed them to build new congressional “branch offices” out of the still-living trees surrounding them. Always conscious of cost, Stalin preferred, whenever possible, to relocate pesky populations to remote deserts and taigas rather than waste bullets liquidating them. Tea Party congresspersons would naturally be one of the first nationalities moved.

Leaders of movements were a different matter. Of those, one had to make very public examples. In this instance, with Cruz and company, Old Koba would likely go the “Kirov’s Assassins” route. First, he’d have someone like Ted Yoho bite an exploding apple during a live CNBC broadcast. Then he’d immediately send Eric Holder out for a massive impromptu press conference in which the White House, furious over the loss of so great a patriot, would announce a sweeping, coast-to-coast search for Yoho’s killers.

Eventually, the chief suspects would be arrested, and they would be everyone you would expect – the Koch Brothers, Rand Paul and of course Cruz himself, who, weeping and begging for forgiveness, would confess in lurid detail to the crime in a live televised trial. He got Michelle Bachmann to design the exploding apple! They conspired to have it delivered on-set by Maria Bartiromo! And they all removed Yoho out of jealousy (he was getting too much ink for out-dumbing the field, saying a default would “bring stability to world markets”)!

Not making any value judgments at all, but that’s what Stalin would do. What is Barack Obama doing? Well, something much less than that. Much, much less, to the point where it’s getting a little weird.  

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The 2008 crash was triggered by the failure of one investment bank, Lehman Brothers, and when that bank collapsed, the world discovered that it was now so interconnected financially that one significant and unexpected failure could start a nuclear chain-reaction of losses. The Lehman impact stunned everyone. The average American family lost 18 percent of its wealth within months. The stock market lost half its value. The repo market collapsed, freezing economic activity and leading to massive declines in asset prices. Unemployment soared past 10 percent almost instantly.

And that was just one bank failure. Can one imagine the consequences of the failure of the United States? The $12 trillion in outstanding government debt is 23 times bigger than the $517 billion Lehman owed when it went under in September 2008. In every way that Lehman’s failure played havoc with the economy, the failure of U.S. debt would repeat the disaster, only it would do it on an almost inconceivably huger scale.

The entire world financial system revolves around the notion that the U.S. will never default, because under normal, rational circumstances, it can’t. (It can always print enough money to meet its obligations, as even Alan Greenspan conceded two years ago.) Before this latest political madness, no one could ever have conceived of a sovereign state intentionally defaulting. But we’re, like, a week away from this happening, and where’s the emergency mobilization?

I’m not saying that this is the case, but one wonders whether the Democrats have made a miscalculation here, based upon their own narrow, transactional, materialistic view of politics. The Democrats may be sitting back just a little bit, content to let this felicitous political situation develop just a little longer, perhaps (and I have no proof of this) convinced that the other party will come to its senses and stand down at the last minute.

But Cruz and his people are something we never see in Washington – believers.

Obama and his Neoliberals are believers too, and it’s not in democracy.

((Note- In addition to a transcript, this link auto-plays)

Government Close Down – Another Grand Betrayal in the Works?

The Real News

October 7, 2013

William K. Black-

(T)he Koch brothers don’t care about the Republican Party. They don’t care about the United States of America. And they are incredibly wealthy. They are pure ideologues, in very large part.

What they do care about is making sure there’s no effective regulation, no effective environmental laws, no effective prosecutions of elite businesses. And they believe that this kind of power, which after all has taken offline, for example, a number of the regulatory agencies–and, you know, the EPA has lost all kinds of folks and such–they, the Koch brothers, love all of this. And what they mostly love is that they have demonstrated that they can take over one of the two major parties in the United States of America and use it for what is obviously an improper means, right, that we will extort you to get rid of legislation that was validly passed by both houses of Congress and signed by the president of the United States. And this is, from their purpose, a demonstration of raw power that is supposed to make people fear them in the future. That’s what the Koch brothers get out of it.

James Clapper Thinks That NSA Employees Will Sell Out Our Nation After A Few Days Without A Paycheck

by Tim Cushing, Tech Dirt

Tue, Oct 8th 2013 7:45am

According to James Clapper, nearly 70% of the intelligence workforce has been furloughed. The recently-passed Pay Our Military Act should put most of those civilian contractors back to work, but early last week, Clapper was very, very concerned about the damaging effects a layoff could have.

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Clapper expounded on how exactly a shutdown would harm national security. It’s not so much that the massive servers might be powered down temporarily or that it might not be able to write checks to telcos and tech companies for backdoor rentals. No, the real problem is that a single missed paycheck is all that stands between any NSA contractor and complete subversion by foreign agencies.

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According to Clapper, our national security is reliant on uninterrupted payments to a mercenary group of extortionate contractors. A few missed paychecks is a risk this country simply can’t take, not if we’re going to stay ahead of the terrorists.

This sort of statement from Clapper has to do wonders for troop morale. “Hey, guys! The boss says we’re all just opportunistic jerks with no loyalty and the willingness to sell out an entire nation if Uncle Sam doesn’t keep topping off the bank account.”

This paints a very different picture of the average intelligence analyst than the comparatively glowing portrait former NSA director Michael Hayden whipped up for a CNN interviewer while dodging the "ability" question.

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According to Clapper, the American population values a continued paycheck more than it values loyalty and would gladly sell out its employer (and nation) rather than consider other options like short-term unemployment, job hunting or cutting expenses. If that’s how Clapper views the civilians the NSA employees, the biggest surprise is that, so far, only Snowden has skipped town with a few hard drives’ worth of documents.

Hayden, on the other hand, seems to feel NSA analysts are just Americans with bigger, faster computers and a frighteningly in-depth search engine. They’re people just like us, who would never, ever consider exceeding their “authorization,” no matter what amazing “abilities” the system provides.

NSA Center for Spy Data Suffers Electrical Failures

By Chris Strohm, Bloomberg News

Oct 8, 2013 12:00 AM ET

A $1.2 billion data center being built in Utah for the National Security Agency to house U.S. intelligence secrets has been plagued by electrical failures, according to an agency official.

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The causes of the center’s problems, which include 10 electrical meltdowns in the past 13 months, have destroyed hundreds of thousands of dollars worth of machinery and delayed the its opening by a year, according to the Wall Street Journal.

Giant NSA Data Center Won’t Stop Blowing Up

By Adam Martin, New York Magazine

10/8/13 at 12:29 AM

The N.S.A.’s enormous new data storage center in Bluffdale, Utah, will eventually blow up (in the cell phone sense of the phrase) with quantities of data thought to be thousands of times larger than the printed collection of the Library of Congress. But first, its builders must figure out how to stop the machines inside from literally blowing up in electrical surges. … “One project official described the electrical troubles-so-called arc fault failures-as ‘a flash of lightning inside a 2-foot box.’ These failures create fiery explosions, melt metal and cause circuits to fail, the official said.” Each arc failure, the most recent of which happened Sept. 25, has caused up to $100,000 in damage, according to The Journal. And the site’s builders and managers can’t agree on exactly what’s causing them or how to fix it.

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(A) statement from the joint venture of construction contractors said “the causes of those problems have been determined and a permanent fix is being implemented.” But a report by an investigative “Tiger Team” in the Army Corps of Engineers said the fix was inadequate. “We did not find any indication that the proposed equipment modification measures will be effective in preventing future incidents.” It said the causes of eight of the meltdowns hadn’t been determined.

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So far, the Tiger Team is unconvinced the contractors know how to fix this, writing that the problems “are not yet sufficiently understood to ensure that [the NSA] can expect to avoid these incidents in the future.” When it’s finally up and running, the data storage center is expected to be bigger than anything operated even by Google (though its exact size is classified). Until then, it’s more like a zettabyte-sized headache.

Economic Confidence Craters As Shutdown, Income Stagnation, and Poverty Roil Americans

By: DSWright, Firedog Lake

Tuesday October 8, 2013 10:32 am

We are now in day 8 of the federal shutdown and it seems Americans are rapidly losing faith that the powers that be can turn the economy around. Confidence in the economy has deteriorated more in the past week than in any week since Lehman Brothers collapsed on Sept. 15, 2008.

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And why not? Is there any evidence the economy is turning around for the vast majority/99% of Americans? No.

If anything the shutdown has jarred people awake to the fact that poverty and income stagnation remain at record levels. If things remain as they are we will continue to have massive inequality and little hope of social mobility. The economy is broken for most Americans which even the New York Times is recognizing as seniors are now falling back into poverty.

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To recap the state of affairs – the government is shutdown and the economy is rigged for the rich. Now tell me the Koch Brothers lost the 2012 election, seriously, I need a laugh.

As Citigroup proved long ago, an economy run for the benefit of the rich or “plutonomy” is economically sustainable. But is it politically sustainable? Are the vast majority of Americans going to accept slavery and poverty from plutocrats and their extremist attack dogs in Congress?

Kathleen Sebelius’ Incoherent Defense of Obamacare’s Design on The Daily Show

By: Jon Walker, Firedog Lake

Tuesday October 8, 2013 10:03 am

When pressed on the Daily Show why Democrats went with a Rube Goldberg health care plan instead of single-payer, HHS Secretary Kathleen Sebelius’ incoherent defense was that tje Republicans called even this “market based” plan super socialism.

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Sebelius sarcastically responded to Stewart’s question about single-payer by saying, “As you know we are facing the end of Western Civilization by having a market based strategy. We are bringing Western Civilization to its knees by selling private insurance plans on a website where people pick and choose.”

I have heard this same basic argument made by several defenders of Obamacare. The point is “look at how badly Republicans flipped out over this conservative law, so imagine how bad they would have flipped out over single-payer.” The problem is this argument makes no sense because, as Sebelius points out, the Republicans already turned their freakout dial to 11. They can’t going any higher. There is nothing worse than the end of “Western Civilization.”

This is not an argument against going to single-player, this is an argument for why you should have gone for single-payer. If the Republicans are going to completely freak out regardless, there is no reason to compromise. The political response from the GOP will be the same.

This highlights why the Democrats are having such a hard time selling the law. Early on they chose to go with bad design to buy off the big industry lobbyists, but they planned to blame the bad design on needing to get Republican votes for a great compromise. When Republican refused to play along it left Democrats holding the bag. Democrats had pro-lobbyists laws, but they don’t want to publicly say they made the law needlessly complex to make lobbyists happy. So the administration is still trying to use the original excuse they planned – even though it now doesn’t make sense.

70% of intelligence staff out in government shutdown

Al Jazeera

October 2, 2013 12:04PM ET

Director of National Intelligence James R. Clapper said at a Senate Judiciary Committee hearing that roughly 70 percent of the intelligence workforce – including staff from the Central Intelligence Agency, National Security Agency and Defense Intelligence Agency – have been furloughed.

“I’ve been in the intelligence business for about 50 years. I’ve never seen anything like this,” Clapper said at the hearing on the controversial spy programs.

“I think this, on top of sequestration, seriously damages our ability to protect the security and safety of this nation and its citizens,” Clapper said.

He added that the agencies risk losing valuable staff, especially after layoffs forced by the so-called “sequestration” budget cuts that went into effect earlier this year.

Clapper: U.S. shutdown ‘a dreamland’ for foreign spy services

By JOSH GERSTEIN, Politico

10/2/13 10:39 AM EDT

Clapper said the law only allows civilian workers to be kept at work if their work addresses “an imminent threat to life or property.”

“Our applying that standard is what results across the board in furloughing roughly 70%,” he said. “I think that will change if this drags on.”

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The ranking Republican on the panel, Sen. Chuck Grassley of Iowa, said he was puzzled by reports that 72% of intelligence agency civilian workers have been furloughed as non-essential.

“The intelligence community either needs better lawyers who can make big changes to the workforce or are you over-employing in those areas?” he asked.  “It can’t be that 70% of the intelligence community is being furloughed and we’re still able to meet our national security responsibilities.”

Talking Jamie Dimon With Sam Seder of ‘The Majority Report’

By Matt Taibbi, Rolling Stone

POSTED: October 1, 11:20 AM ET

Pareene hilariously told the CNBC panel that anybody could do Jamie Dimon’s job as badly as he’s done it, offered himself in half-seriousness as an option and made the absolutely accurate point that any other boss in any other industry who had overseen the regulatory problems that took place at Chase under Dimon would be looking for work.

“If you managed a restaurant, and it got the biggest health department fine in the history of restaurants,” Pareene said sensibly, “no one would say ‘Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.'”

I hadn’t seen the exchange until yesterday when Sam played it on his show. It’s an amazing piece of tape that tells you everything about why the financial press constantly misses major scandals – their only sources of information are bank spokestools and they have no clue about even the most obvious things, like the fact that the whole country north of TriBeCa and south of Battery Park cringes at the sound of Dimon’s name.

Bill Black: Why do Conservatives Oppose Prosecuting Elite Corporate Frauds?

William K Black, Naked Capitalism

Tuesday, October 1, 2013

There are at least four principles that virtually all conservatives purport to support – except when the potential defendant is socially elite. I have written previously about two of these principles on several occasions – the need for accountability and “broken windows” theory that calls for the prosecutors to make the prosecution of even minor street crimes a high priority if they have, even indirectly, a material effect on the community.

The third principle is that it is vital to punish in order to deter crime. Gary Becker, the very conservative Nobel laureate in economics, emphasized this point (again, in the context of street crime). Under Becker’s theory of crime our current practices of allowing elite banksters to become wealthy through leading the “sure thing” of accounting control fraud with immunity from the criminal laws will predictably lead to new, larger epidemics of fraud that will continue to cause our recurrent, intensifying financial crises. It is rare, however, to find a prominent conservative who is demanding a priority effort to prosecute the elite bank officers who ran those frauds. I know of no conservative member of Congress publicly making that demand today. Senator Chuck Grassley has previously criticized the Obama administration’s failure to prosecute elite bankers.

The fourth principle, the one this column addresses, is the conservative love of “creative destruction” – a concept made famous by the economist Joseph Schumpeter. I have a simple proposition – there is no more creative destruction than putting a control fraud out of business through a prosecution, receivership, or enforcement action. I have never met personally a conservative, however, who agrees with that proposition in the context of a large, elite corporation. When blue collar workers complain that their clothing manufacturing firm was put out of business by a rival firm that locates its plants in Bangladesh and is able to charge less for their goods because they pay their workers a pittance and “save” money by building factories that are death traps the conservative answer is to tell the U.S. workers to stop whining and light a candle on the altar devoted to the worship of capitalism celebrating the “creative destruction” of their jobs.

Conservatives should view control frauds as the supreme evil that they will devote their lives to eradicating. Control frauds are the ultimate betrayal of capitalism. First, they are the elite face of capitalism that gives capitalism a terrible name. They become wealthy not because they are skilled, innovative, or willing to take risk but because they cheat.

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Second, control fraud harms not only the primary intended victim, e.g., the bank’s creditors and shareholders, but also honest firms by creating a “Gresham’s” dynamic in which bad ethics can drive good ethics out of the markets. George Akerlof was the first modern economist to explain this point in his famous 1970 article on anti-purchaser control frauds (“lemons”) that led to him becoming a Nobel laureate.

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Third, control frauds are the agents of crony capitalism. Their CEOs may spout Randian sayings, but they are ultimate moochers who delight in translating their immense economic power into dominant political power that they use to defraud with impunity. Control frauds betray and destroy capitalism. If they are not stopped by the regulators and prosecutors (the “cops on the beat”) they destroy capitalism and democracy.

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I urge conservatives to lead the charge for the creative destruction of the elite control frauds. This is one of the many critical areas in which people of different political views should be able to find common cause.

Once Again, Punishing the Bank but Not Its Top Executives

By PETER EAVIS, The New York Times

September 19, 2013, 3:48 pm

The government says there is wrongdoing at a large bank and makes it pay a fine. But senior executives who seemed to play a role in the missteps are not singled out for individual punishment.

It happened again on Thursday, when regulators in the United States and Britain hit JPMorgan Chase with nearly $1 billion in fines for the bank’s failure to properly handle a trading debacle last year.

The traders, based in JPMorgan’s London office, made wagers in complex financial instruments that saddled the bank with over $6 billion in losses. The bank’s problems became known as the London Whale affair, because the traders involved accumulated such large positions. In recent months, regulators have identified and gone after some of the employees who worked on the trades, saying that they had incorrectly valued the trades on JPMorgan’s books to make their losses look substantially smaller.

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But not only did the agencies fail to take action against any of the executives, they did not even identify them (although it is clear who some of them are).

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“JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses,” George S. Canellos, co-director of the S.E.C’s division of enforcement, said in a statement. “While grappling with how to fix its internal control breakdowns, JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors and regulators.”

Given language like that, those who favor stricter sanctions for bankers raised questions on Thursday about why the regulators did not take individual actions against the JPMorgan executives.

In JPMorgan Case, a Missed Opportunity to Charge Its Executives

By JESSE EISINGER, ProPublica, The New York Times

September 25, 2013, 12:30 pm

By cracking down on the bank for its faulty internal controls in the $6 billion London Whale trading loss, the S.E.C. can claim to be the ferocious regulator we have all been waiting for. JPMorgan and its chief executive, Jamie Dimon, got the best coverage they could have hoped for under the circumstances: the sense that the bank is beleaguered, surrounded by regulators, but at least it could put the trading loss behind it.

Yes, the S.E.C. wrung an admission of wrongdoing out of the bank, and the regulators scored a large settlement. It’s an improvement for a regulator to display the ferocity of a mealworm, rather than a banana slug, but let’s hold the celebrations until it reaches at least the level of a garter snake.

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The admission was nice, but the S.E.C. did not charge any top executives with misleading disclosure. Why not?

Financial markets depend on true and accurate information. Disclosure isn’t some i-dotting, t-crossing regulatory nicety; it’s fundamental. And the Senate Permanent Subcommittee on Investigations, in its huge report on the trading loss, made a convincing case that the chief financial officer at the time, Douglas L. Braunstein, made several highly misleading statements in an April 13, 2012, conference call with shareholders and the public.

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On that April 13 call, Mr. Braunstein made four statements that the Senate subcommittee found erroneous about the trades made by the bank’s chief investment office. He said the trading was “fully transparent to the regulators.” He said of the trading that “all of those positions are put on pursuant to the risk management at the firmwide level.” He said they were “made on a very long-term basis.” And most important, he emphasized that the traders were hedging.

It wasn’t only Mr. Braunstein. His comments mirrored talking points the bank had prepared days earlier. The Senate subcommittee report says the bank’s communications officer and chief investor liaison circulated talking points and met with reporters and analysts with the “primary objectives” to communicate that the chief investment office’s activities were ” ‘for hedging purposes’ and that the regulators were ‘fully aware’ ” of the trading. “Neither of which was true,” the Senate report says.

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The trading wasn’t disclosed to regulators, the bank’s top risk managers had no window into it, and the traders were actively buying and selling. Most significant, it wasn’t hedging. The trading in the London group of the chief investment office was proprietary, intended to create profit for the bank. That’s the kind of activity that will presumably be banned under the interminably delayed Volcker Rule, should the regulators deign to finish it and not permit large exemptions.

“Given the information that bank executives possessed in advance of the bank’s public communications on April 10, April 13, and May 10, the written and verbal representations made by the bank were incomplete, contained numerous inaccuracies, and misinformed investors, regulators and the public,” the Senate report says.

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The S.E.C. says it isn’t finished yet. The investigation has three parts: the case against the traders for mismarking the value of the trades, for which two have been charged criminally; the look into the company for internal controls, which was settled last week; and a third, against senior individuals for misrepresentations. The third continues. The agency may yet come down on top executives for their misleading statements.

I got a different sense from the company, however. The S.E.C. investigated the April 13 statements and the bank regards its senior executives to be in the clear, a person at JPMorgan told me. Mr. Dimon, for one, has been cleared, according to bank statements that were approved by the S.E.C.

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The one unshakable talking point, repeated like a drumbeat, is the executives emphasizing their good faith.

The implications for the public are larger than this single case. One of the important aspects for the Volcker Rule, which aims to bar banks from speculating with money that is backed by taxpayers, will be how much disclosure regulators require.

Clear and complete disclosures would allow institutional investors, regulators, counterparties and financial experts to sort out whether the banks are complying with the law or not.

A slap for lesser sins darkens the future of the already enfeebled rule. Without serious disclosure and serious enforcement, the risk of another calamity rises.

You may think this represents the lamest sort of regulation.  Not so.

This is America’s worst regulator (and JPMorgan’s best pal)

By David Dayen, Salon

Wednesday, Sep 25, 2013 11:45 AM UTC

At times it doesn’t seem like JPMorgan Chase runs any legal businesses. The good news is that some in the federal government appear to be slowly catching up to their illicit enterprises. Unfortunately, there’s one regulator whose negligence is beyond problematic, and damaging the country. Meet Thomas Curry, head of the Office of the Comptroller of the Currency (OCC).

The OCC is the obscure yet powerful primary regulator for JPMorgan Chase and other national banks – and is frankly the reason why JPMorgan believes it can run multiple illegal businesses and get away with it. The OCC has been more of the mega-bank’s pal within the government, rather than a tough-minded regulator. And a settlement in yet another case of malfeasance at JPMorgan, released late last week, shows that nothing has changed.

The case involves litigation practices by JPMorgan in various collections, and a failure to comply with the Servicemembers Civil Relief Act (SCRA), a statute that protects members of the military in financial transactions. It turns out that JPMorgan conducted its credit card, auto and student loan collections in the same illegal fashion as it did its foreclosure operations: using affidavits where low-level employees testified to personal knowledge of the cases without actually knowing anything about them.

This is called “robo-signing,” and it means that fraudulent sworn documents were filed as evidence in court so JPMorgan could obtain judgments against borrowers. Often the sworn documents would have inaccurate financial information, so the bank was attempting to collect false sums from the borrowers. And it rarely complied with the SCRA, which sets maximum interest rates charged to service members and bans legal proceedings for service members in active duty in a war zone. JPMorgan couldn’t even manage that, suing soldiers while they served in Iraq or Afghanistan or elsewhere.

Unlike the SEC, the OCC agreed to a settlement without forcing JPMorgan Chase to admit or deny wrongdoing. Worse, they are giving the bank several months to design their own punishment, a fairly common but nonetheless appalling practice. It’s like arresting someone who knocked over a 7-Eleven and telling them they have 180 days to figure out how much of the money they stole they should have to give back. Needless to say, the criminal is an unreliable judge of the proper punishment.

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The other federal agencies attempting to render judgment on JPMorgan Chase certainly aren’t doing enough. The Justice Department did indict two ex-traders of the bank after it admitted fault in hiding their London Whale derivatives trading loss from regulators and investors, but they are both living in Europe and don’t expect to get extradited, rendering ineffective any effort to pursue them or their superiors. Senior management has faced no punishment in the Whale case or any others, up to and including CEO Jamie Dimon, despite obvious culpability. The bank has been forced to sell their physical commodities business after questions about market manipulation, and Dimon has promised to further simplify JPMorgan’s lines of business, reflecting a cumulative effect of the constant fines and lawsuits to their reputation. They’ve suffered billions in litigation costs and plan to spend another $4 billion this year to comply with regulations (don’t cry for them; they make about $6.5 billion every quarter). That’s about the best you can say about this sorry attempt at taking down the biggest crook on Wall Street.

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This negligence is particularly stark considering how many others are finally onto JPMorgan’s shenanigans. Just over the past week, it paid $920 million in fines and admitted fault in the aforementioned London Whale case; paid another $389 million in fines and reimbursements over charging credit card customers for services they never received; were informed of an imminent enforcement action over their manipulation of the commodities market; faced bribery investigations over hiring the children of well-connected Chinese politicians; faced another investigation from the state of Massachusetts over credit-card collection practices; were uncovered as the main beneficiary of ultra-cheap borrowing from the Federal Home Loan Banks, a program meant to help small community-based lenders; and just yesterday, learned of a civil lawsuit from the U.S. Justice Department over selling mortgage-backed securities to investors without informing them of the poor quality of the loans in the portfolio.

AIG CEO Robert Benmosche Compares Bonus Criticism to Lynch Mobs

By Matt Taibbi, Rolling Stone

POSTED: September 24, 3:50 PM ET

(W)hen you’re a white guy who just presided over a year of declining across-the-board sales but got a 24% pay raise anyway, to $13 million a year, largely because your company is invested in a market that’s overheating due to massive Fed intervention, and you’re so grateful for your cosmic good fortune that you immediately go out and publicly nail yourself to the cross of black victimhood – and not while stone drunk and with buddies at a bar, mind you, but sober and sitting in front of a Wall Street Journal reporter – that’s like a whole new category of asshole. Try to compute just exactly how obnoxious that is – you’ll be doing it until the end of time, like someone trying to figure pi.

Benmosche’s nooses-and-pitchforks fantasies have their origins in stories about some AIGFP executives who were made to feel uncomfortable by angry crowds on their way home from work, and one about a teacher somewhere in the Midwest who ridiculed in her third-grade class a child whose father worked at the firm. That last bit of course would be very wrong if it did happen, and it may very well have.

Still, comparing being leered at on a train for continuing to collect a huge undeserved bonus from the taxpayer to being taken from your wife and family and hung from a tree for no reason at all is preposterous on at least a hundred different levels.

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Those FP workers would normally have been counting on performance bonuses, but since AIGFP not only didn’t perform that year, but created a historically bottomless suckhole of losses that nearly destroyed the universe, there were, alas, no performance bonuses to be had.

So management cooked up a bunch of “retention bonuses” for many of the unit’s employees. This always seemed like a scam, a way of yanking a little last bit of value out of a company most thought was headed for collapse. Moreover, the notion that anyone (but especially the taxpayer) needed to pay millions in “retention bonuses” to prevent other financial firms from poaching employees of the biggest financial disaster/PR-cancer firm since Enron or Union Carbide – and this at a time when mass layoffs on Wall Street had flooded the labor market with thousands of other highly-qualified financial professionals who would have taken huge pay cuts to fill those slots – was always absurd.

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In tossing out this “everyone was a villain” line, the CEO, of course, only mentioned the small subset of ordinary people who were “villains” in those days, the low-level speculators who flipped houses and the homeowners who lied on their mortgage applications.

He conveniently left out the bigger institutional players who birthed this scheme, like the giant investment banks (including for instance Credit Suisse, where he worked) that not only knew that mass fraud was being committed at the mortgage application level but encouraged it, so that they could speed up the process of pooling and securitizing those mortgages and selling them off to unsuspecting third parties. Just to take the one example of his own former bank, investors in the mortgage securities sold by Credit Suisse incurred over $11 billion in losses, according to a complaint filed by New York AG Eric Schneiderman against the firm last year.

Banks knew, lenders knew, ratings agencies knew, and then of course firms like AIG knew that something was deeply wrong with the booming mortgage markets in the years leading up to 2008. The peculiar trade of AIGFP was the obviously crazy practice of selling hundreds of billions of uncollateralized insurance to the Goldmans and Deutsche Banks of the world, who in many cases were using these policies to bet against their own products. The 377-odd employees of that sub-unit of AIG took home over $3.5 billion in compensation for such socially-beneficial service in the seven years before it all went bust. If finance-sector pros in those years had reservations about where all that money came from, most, like Benmosche himself, kept them to themselves.

Stories like this “hangman nooses” thing give some insight into the oft-asked question of how the 2008 crisis could ever have happened, the answer being that the people who run our economy, like Benmosche, are basically idiots. They can read a spreadsheet and get through an investor conference call sounding like they know what they’re talking about, but in real-world terms, your average pimp is usually an Einstein in comparison.

These people are so used to being told by interns and finance reporters and other ballwashers that they’re geniuses that they pretty soon come to believe it, which is how concepts like “We’ll never lose a dollar – it’s all hedged” go unchallenged in rooms full of econ majors who’ve just bet the whole store on the mortgages of underemployed janitors and palm-readers. Somebody, please, tell these guys quick how smart they’re not, or else we’ll be in another crisis before we know it.