Posts tagged Wall Street

…we’ve got a crisis that’s approaching, and it’s a crisis in two parts. Part of the crisis is for Wall Street, and we’re not really worried about that part. These for-profit colleges, which collect between them $32 billion in federal student aid money of one kind or another, these are actually not educational institutions. They are set up as pass-throughs for those federal monies. And so the absence of these institutions may in fact be a very good thing. They sap what little economic vitality is left in poor and black communities by stringing out people on years of debt and giving out diplomas, when people do manage to graduate, that aren’t worth much in the workplace.

…the other part of the crisis is the one that hits those people who are the students who have flocked to these institutions because nobody else was serving them. And that’s why they were a group to be plundered by the shysters headquartered on Wall Street.

Robert Reich: President Obama is calling on Congress today to put more money into agencies responsible for enforcing new financial regulations.

Small chance. Wall Street lobbyists have made sure the Street can continue gambling with our money by

  1. delaying and watering-down Dodd-Frank (not even the Volcker Rule, designed to make sure federally-insured deposits aren’t used in the Street’s casino, is out yet)
  2. diluting and contesting (through endless litigation) regulations that agencies were supposed to devise under Dodd-Frank; and
  3. making sure those agencies haven’t had enough funding to enforce those regulations.

Five years after the Street almost melted down, requiring a massive taxpayer-funded bailout and propelling the economy into the deepest downturn since the Great Recession, not a single top executive has been indicted, and almost nothing has changed. One of the biggest failures of the Obama White House (and Tim Geithner as Treasurer) was not to condition the bailout on the willingness of the banks to resurrect the Glass-Steagall Act (separating commercial from investment banking — an act that Bob Rubin, Larry Summers, and Bill Clinton had allowed to be eviscerated), and to put limits to the size of the big banks. We’re not safe from another crisis, nor are we secure from the political power of the Street, until these are in place.

From Anonymity to Scourge of Wall Street

Firrea is unusually crafted, as it requires a criminal violation like wire fraud or mail fraud to set off the law’s penalties. But because it is a civil statute, it requires a lower burden of proof than criminal charges — finding guilt by a preponderance of the evidence versus beyond a reasonable doubt.

That broad authority has alarmed some defense lawyers, who have argued that the Justice Department has stretched the application of Firrea far beyond its original intent. Bank of America, in a motion to dismiss its case, described the prosecution as having “a wildly expansive reading” of the law.

Other critics question whether the government is overcompensating for the lack of criminal cases against Wall Street. Firrea’s civil actions are a cop-out, the critics say, since not one senior Wall Street executive has been charged criminally for a role in the crisis. The same office that employs Mr. Weidman — the United States attorney’s office in Los Angeles — has come under fire for dropping a criminal investigation of Angelo Mozilo, the former chief executive of Countrywide Financial, one of the biggest mortgage lenders before the financial crisis.

Some investigators at the Securities and Exchange Commission, which file civil cases against big banks, have also raised objections. Federal prosecutors, the S.E.C. officials privately grouse, are encroaching on their turf.

“Realistically, for the Justice Department, the civil cases are a Plan B,” said Stavros Gadinis, a professor at the University of California, Berkeley, law school who focuses on financial regulation.

The federal government’s deployment of the little-used law has inspired comparisons to Eliot Spitzer’s novel use of the Martin Act as a cudgel against fraud. As New York’s attorney general, Mr. Spitzer harnessed the powerful 1921 state law to pursue suspected wrongdoing at large Wall Street firms like Merrill Lynch.

Firrea carries similar potency. In addition to the lower burden of proof, it allows prosecutors to bring cases that take aim at misconduct as far back as 10 years — a generous statute of limitations compared with five years for criminal securities fraud. And in pursuing a Firrea lawsuit, prosecutors are allowed not only to issue subpoenas, but also to take the sworn testimony of individuals.

It also provides for hefty fines. The Justice Department used the law to sue S.& P. for more than $5 billion, accusing it of knowingly issuing misleading ratings on mortgage-backed securities. JPMorgan’s tentative $13 billion settlement over its sale of shoddy mortgage securities would be a record — a single company has never before paid that much to the government.

Defense lawyers say that Firrea gives the government a game-changing weapon in pursuing civil cases against banks.

“In retrospect, it’s surprising that prosecutors have waited so long to happen upon such a powerful statute,” said Susan E. Brune, a former federal prosecutor and now a partner at Brune & Richard.

For the $1,225 a month she pays for the three-bedroom house in the quiet suburb of Lilburn, Culpepper thinks it isn’t too much to expect that her landlord, Colony American Homes, make the necessary plumbing repairs to eliminate the smell. But her complaints have gone unanswered, she said. Short of buying a plane ticket to visit the company’s office in Scottsdale, Ariz., she is out of ideas.

"You can not get in touch with them, you can’t get them on the phone, you can’t get them to respond to an email," said Culpepper, whose family has lived with the problem since the day they moved in five months ago. "My certified letters, they don’t get answered."
But Warren, with a grass-roots army of enthusiastic supporters and a yen to deliver on her early promise, makes headlines crossing the street. And the foreclosure review debacle represented an excellent test case to expose the corrupt dealing between banks and the regulators who are supposed to curb their excesses, and also to pit Wall Street denizens getting rich off these crimes against ordinary victims who lost their homes. You couldn’t tee up a better issue for Warren, or a better entryway for traditional media to report it.

Last Thursday’s hearing on the reviews, the first congressional hearing on foreclosure fraud in over a year, provided the perfect set piece. Warren, along with Jack Reed, Sherrod Brown and other Senate Democrats, pounded the regulators for protecting the banks and ignoring homeowners suffering from illegal foreclosures. Warren highlighted that nobody will ever learn the precise extent of harm suffered at the hands of banks, and that without a true accounting, adequately compensating homeowners would be impossible. Brown focused on the role of the third-party consultants who operate as shadow regulators, performing work when the agencies lack capacity, but without any independence from the banks.

The Blood on Lanny Breuer's Hands

Lanny Breuer, the head of the Justice Department’s criminal division, is stepping down, leaving countless ruined lives in his wake.

It’s hard to know where to begin the list of colossal, and sometimes fatal, mistakes by Breuer—from the botched Fast & Furious gun-walking operation, to not prosecuting a single top Wall Street executive, to his brutal war on whistleblowers using the bludgeon of the Espionage Act.

Over the last decade, the UC Board of Regents has engaged in risky deals with Wall Street banks called interest rate swaps. Banks sold swaps to the university and other public institutions as insurance against rising interest rates on variable rate bonds. Under a swap agreement, borrowers such as the university paid a fixed rate to the bank in exchange for the bank paying the university a variable rate based on the markets’ interest rates for borrowing.

Now these swaps have turned out to be losing bets. UC is taking huge losses because interest rates plummeted following the financial crisis of 2008 - allegedly in part because of illegal manipulation by the same banks that sold the swaps - and have stayed at record lows. Swap deals already have cost UC nearly $57 million, with $200 million more in losses anticipated. Of the $250 million UC expects to receive from Prop. 30, some $10 million a year will go to swaps payments unless the deals are ended.

In other words, the UC Regents forgot the first rule of casino gambling: The house always wins. Now the rest of us are paying the price.

Prop. 30 funds for UC will go to Wall Street - SFGate

I saw it on a sign at a protest in the mid 80s and it still stands up today: Ruck The Feegents

You can see this work in Las Vegas from the I-15, which likely gets a lot less traffic from out-of-town…which probably has a lot to do with the recession created by the subprime mortgage crisis.

You can see this work in Las Vegas from the I-15, which likely gets a lot less traffic from out-of-town…which probably has a lot to do with the recession created by the subprime mortgage crisis.

Has anyone told you that the Democratic party represents the common people’s interests lately?

Has anyone told you that the Democratic party represents the common people’s interests lately?

buzzfeed:

The Zuckerberg GIF you deserve on a Friday.
Everything You Need To Know About Facebook In Two Minutes

Why not put up a monster banner ad offering users to buy in at $25 a pop instead of going through all of this trouble? Really, why not?

buzzfeed:

The Zuckerberg GIF you deserve on a Friday.

Everything You Need To Know About Facebook In Two Minutes

Why not put up a monster banner ad offering users to buy in at $25 a pop instead of going through all of this trouble? Really, why not?