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March 03rd, 2014

3/3/2014

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CORPORATE FRAUD RECOVERY AND TPP ARE THE TWO TOP ISSUES IN THIS ELECTION RACE. IF YOUR POL IS NOT MAKING THAT FRONT AND CENTER....THEY ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFIT-----LOOK BELOW AT BERNIE SANDERS SHOUTING FRAUD NEEDS TO BE RECOVERED!!!!


Regarding the continued error in the phrase 'wealth inequity':

Again Basu tries to inform listeners of regional economic prosperity while failing to speak of the economic balance that will come when massive corporate fraud of tens of trillions of dollars comes back to government coffers and individual's pockets.  Until that rebalancing occurs, we cannot know one region's economic health over another.  Now, it so happens that the areas listed by Basu are indeed the areas front and center in these massive frauds along with the national corporate headquarters around Washington DC.  

WE ARE TELLING PEOPLE REPORTING THAT THERE IS GREAT WEALTH INEQUITY THAT YOU DO NOT CLAIM A BANK ROBBER RICHER THAN THE BANK FROM WHICH HE STOLE THE MONEY.

If you listen to pundits or politically align media like neo-liberal MSNBC you will hear this mantra....WE HAVE TO REVERSE WEALTH INEQUITY and not once do they say IT'S RULE OF LAW THAT WILL DO IT! They are pretending we are back in the 1960s and simply need progressive policies as if the massive public wealth fraud never happened.  Robert Reich is a neo-liberal economist who was part of the Clinton Administration as Labor Secretary when all the policy creating this third world status of our country to gain hold.  Nafta and breaking Glass Steagall assured this massive wealth inequity and unaccountable global corporate rule would occur.  Neo-liberals like Clinton, Reich, and Obama work to see that wealth consolidation indeed occurs in any way possible...ergo, suspension of Rule of Law.

IF A POLITICIAN OR PUNDIT IS SHOUTING THERE IS WEALTH INEQUITY WITHOUT SHOUTING FOR JUSTICE FROM MASSIVE CORPORATE FRAUD-----WHICH WILL ITSELF REVERSE THIS WEALTH INEQUITY----THEY ARE WORKING FOR THOSE COMMITTING THE FRAUD.

We know of course that New York City is ground zero for the frauds and therefor little of the wealth they claim is actually theirs......it is our home equity, retirement, pensions, health care, and public assets.  WE OWN MUCH OF NYC WEALTH.  San Francisco has legitimate wealth with the TECH industry although they are evading taxes.  This area is ground zero for subprime mortgage, defense, and for-profit education industry frauds.  So, when all of that wealth is taken from San Francisco's economy....they will be ranked differently in wealth inequity.  Washington is of course ground zero for all of the Federal contract fraud in the trillions of dollars and with it are the headquarters of all of the global corporations fat with fraud.  When those fraudulent gains come back to the citizens and government coffers, that area will be ranked differently.  So, you can see that Basu's willingness to spout stats that have no basis in reality makes US media on par with the Romanian media in free press.  FREE PRESS HOLDS POWER ACCOUNTABLE....IT DOES NOT PROPAGATE PROPAGANDA.  If the people at the top think the American people are going to let the stealing of tens of trillions of dollars go------they are indeed out of touch!





Should the federal government being doing more to investigate fraud in the financial industry?  Bloomberg Poll

Yes - 93% (4385 votes)

No - 7% (322 votes)

Total Votes: 4,707 Percentages may not add up to 100% due to rounding





The assets of the big banks mostly belong to the public as bringing back fraud and recovering damages would make these global banks into the regional banks we need them to be.  There is not a bank executive known to play the most obvious roll in these massive frauds that is not back working in finance earning tons of money again.  THIS IS SUSPENSION OF RULE OF LAW AND WHEN A GOVERNMENT SUSPENDS RULE OF LAW, IT SUSPENDS STATUTES OF LIMITATION.

Below you see only an example of the costs of damages to the American people.....there are tens of trillions in actual corporate frauds yet to be recovered.  Imagine allowing rogue financial firms like Moody's and Standards and Poor (S & P)......tell government pension managers that pensions have to be cut because 1/2 their value was lost in financial fraud that has yet to be recovered.

 THIS IS THIRD WORLD AND SHOWS WE HAVE A KLEPTOCRACY IN PLACE AND WE NEED TO SHAKE THESE BUGS FROM THE RUG.  NEO-CONS AND NEO-LIBERALS ARE THE BUGS MOVING ALL WEALTH TO THESE GLOBAL CORPORATE COFFERS.


Now, we know as well that all that time writing the Financial Reform Bill and yet not implemented and enforced has the economy ready to collapse yet again.  We know as well that neo-liberals took over from the neo-cons the oversight of corporate writing of TPP.  TPP negates all of what the Financial Reform Bill does.  Do you really think your pol did not know that ending US sovereignty with all the US Constitutional protections of WE THE PEOPLE AND BILL OF RIGHTS would of course make the Financial Reform Bill null and void?  OF COURSE THEY KNEW AS THEY SPENT THE TIME SUSPENDING FRAUDULENT ACCOUNTABILITY.  We will act as though we are doing something as we ignore that no justice in massive fraud occurs.





Five years ago today, Lehman Brothers went bankrupt.


Instantly and inevitably, the house of cards otherwise known as Wall Street collapsed.

But after getting bailed out by the American taxpayers, Wall Street is doing just fine.

The people of Main Street? Not so much.

Here are some numbers to think about this Sunday morning.

    Amount the crash cost the U.S. economy: $22 trillion

    How much everyone would get if that $22 trillion were divided equally among the U.S. populace: $69,478.88

    Assets of the four biggest banks in America — JPMorgan Chase, Bank of America, Citigroup and Wachovia/Wells Fargo — when they were “too big to fail” in 2008: $6.4 trillion

    Assets of those four banks today: $7.8 trillion

    Of the 63 former Lehman Brothers employees identified by a bankruptcy examiner as being aware of an accounting scheme Lehman used to mask its true finances, number who are employed in senior financial services positions today: 47

    Number of the 25 banks responsible for the bulk of risky subprime loans leading up to the crash that are back in the mortgage business: 25

    Chances that an American voter thinks that regulating financial products and services is “important” or “very important”: 9 in 10

____________________________________________



BERNIE SANDERS IS THE ONLY NATIONAL POL THAT SHOUTS OUT RECOVERING CORPORATE FRAUD IS A MUST.  WHETHER DEFENSE INDUSTRY FRAUD TO PROTECT VETERANS....WALL STREET FRAUD RECOVERY....OR THE FEDERAL RESERVE....GROUND ZERO FOR GREAT FRAUD-----

IF A POL IS NOT SHOUTING THIS---THEY ARE AIDING AND ABETTING.

See why saying there is wealth inequity in America before justice reverses much of this fraud is propaganda?




    
The Fed Audit

Thursday, July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

To read the GAO report, click here.


_________________________________


Below is a good analysis of the problem in Europe which of course is the same as that in the US.  This analysis has a second value because it shows that the same model of throwing Europe into sovereign debt crisis is now being used by US neo-liberals for the next Bain's Capital gutting of wealth assets from the public sector.  Remember, it was Iceland that from the start simply allowed the banks to default from the fraud and their economy is well on its way to being healthy while the US and Europe are still held hostage by TROIKA and WALL STREET/FED.  American academics have the same analyses showing direct cause and effect....proof of conspiracy to defraud.  We have all the data needed to show all of this CDS policy was a planned conspiracy that can be easily tried in court and won.

WE NEED LABOR UNION LAWYERS TO START ACTING AS US JUSTICE DEPARTMENT IN TAKING ALL OF THIS TO COURT AND DECRYING THE JUSTICE DEPARTMENTS SUSPENSION OF RULE OF LAW!


Anyone as nerdish as I am will like this research and analysis of how the same financial scheme brought to us with the subprime mortgage loan fraud with trillions of dollars of fraudulent loans insured with Credit Default Swaps by mainly one large insurance agency.....AIG all the time knowing these loans were toxic and all would collapse.  So, the Dodd Frank financial reform was to address this and of course nothing has been done and these same people are now thinking the subprime mortgage loan fraud was such a success as tens of trillions of dollars in fraud was left with the looters now think......let's do it again.

This time rather than the goal of capturing all of the nation's real estate holdings and consolidating land ownership to a few at the top.....this fraud has as its goal blowing up the public sector by super-sizing municipal debt and imploding the economy to make a crash that would create huge sovereign debt default.  You can do that only if you again use the Credit Default Swap insurance so that as everyone else loses all their wealth, you have this insurance that protects the very people imploding the economy.  None of this is legal as banks deliberately hid sovereign debt and municipal debt with financial instruments so more debt could be taken on.....ergo, the implosion we have in Europe in 2008.

This is important because the same thing is now happening in the US these few years of Obama's term as US state governors and mayors.....like O'Malley and Rawlings-Blake are doing to you and me what was done in the PIIGS nations in Europe.  Loading up municipal debt while insuring it all with Credit Default Swaps.  You know this is a plan as municipal bonds and public debt have never been allowed to use these CDS and now they are.  So, as governors and mayors load our government coffers with tons of debt tied to Wall Street financial instruments, the investment firms are protecting themselves from loss when the economic crash comes while the public sector.......MECU and the State of Maryland/City of Baltimore will default on their terms and lose most of the investment.

AGAIN, THIS IS ALL PUBLIC MALFEASANCE....IT IS ILLEGAL AND ALL TERMS CAN BE VACATED BECAUSE INVESTMENT FIRMS KNOW THIS IS ALL FRAUDULENT.

This article below is great and it is very long so I could not copy it here.......go to the webpage to see it in its entirety to see how these 1% are working to steal all that is public!


Analysis of European Sovereign Credit Default Swap during theSovereign Debt Crisis in Portugal, Ireland, Italy and Spain.
 byBerkay OrenA dissertation submitted in partial of theMSc Finance and InvestmentAtThe University of BrightonFaculty of Management and Information SciencesBrighton Business School(May 2013)


  Abstract

This thesis has represented the determinants of sovereign CDS spreads during currentsovereign debt crisis in periphery countries namely Ireland, Italy, Portugal and Spain. The period of analysis is between 4 March 2008 and 3 May 2012. After the demise of LehmanBrothers, the sovereign CDS market has attached significant attention and the credit marketshave been issue to an unprecedented re-pricing of credit risk. Moreover, Lehman Brothersdevastated investor confidence and decrease in the availability of credit. Massive assistanceof the banks was heightened public sector deficit. Thus it has led to high level sovereign debt.This means that the risk of default of sovereign became real in periphery countries. Thisthesis has been classified three phases. Firstly an analysis of credit default swaps and their use in the financial World. Secondly development of the European periphery economy on amacro level in Portugal, Ireland, Italy and Spain. Finally the statistical approach of ordinaryleast square is to be analysed. Main purpose of this thesis will identify sovereign creditdefault swaps associated with the current sovereign debt crisis.


___________________________________________

We want to remember that the reason Clinton and Bush targeted the low-income mortgage market for the subprime mortgage frauds was first, they wanted to consolidate real estate ownership and second they used the Federal assistance for these loans over and over again....this is where a large part of the fraud fleecing government coffers came.  They did it on purpose because they knew they would have someone in office that would suspend Rule of Law....if not Obama, Hillary, or Romney.  Sending low-income people to higher education and placing them in homes.....under programs filled with fraud was only cover for this massive fraud.  WE KNOW IF THE INTENT IS TO DO GOOD, YOU DO NOT ALLOW MASSIVE FRAUD OF THE PROGRAM TO OCCUR.  The same is happening today in the GREEN industry as a good program is riddled with fraud allowing 1/2 of the green spending to be defrauded.  

IF NO OVERSIGHT IS GIVEN AND NO JUSTICE IN PLACE....THE INTENT WAS INDEED TO DEFRAUD.

Below is a look at just the subprime mortgage fraud....we know that financial fraud was widespread and across corporate industries as well.  So, the few hundreds of billions of dollars collected in 'settlements' does nothing for tens of trillions of dollars in fraud.  THIS IS WHY ALL PUBLIC PROGRAMS, SERVICES, AND ASSETS ARE BEING HANDED TO PRIVATE ENTITIES UNDER THE GUISE OF STARVED GOVERNMENT BUDGETS.



Wall Street Bank Fraud Massive

Details
    Written by Dan McGookey

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The New York Times reported this week that Wall Street is now predicting that its Banks will be anteing up over $50 Billion in settlement payouts with the government and others as a result of their massive fraud perpetrated through the securitized lending system during the first eight years of this Century. Even this astounding number doesn't begin to tell the story of how widespread that fraud was, or the toll it took on this Country's economy, however.

Consider the fact that tens of trillions of dollars of wealth changed hands from Main Street to Wall Street in less than a decade through the vehicle known as securitized lending. That is the process whereby a mortgage loan is magically transformed into a stock certificate or security simply by bundling it with thousands of others and then selling "mortgage-backed certificates" (or stock) in that pool of loans. The problem was that the Wall Street Bankers were able to sell the stock in the loan pool at 10-20 times the face value of the loans. And the reason we say that tens of trillions of dollars shifted from Main Street to Wall Street by virtue of the corrupt securitized lending system is because it was city and state governments, retirement funds, insurance companies and the like who were the suckers buying up the absurdly over-priced stock. In other words, the money was stolen out of the wallets and purses of all Americans.

Even through the estimated amount of the penalties is tantamount to a slap on the wrist for the Banks, it at least serves to highlight the significance of Wall Street's corruption. And the news reports of that corruption will no doubt keep coming with increasing frequency as the depth of the fraud continues to be exposed. All we can hope for is that as that happens, our own Government's complicity in the scandal will be exposed as well.

Reverse Bank Robbery

The Wall Street Banksters obviously never read or simply didn't take heed of the following preaching of Socrates:

"Rather fail with honor than succeed by fraud."

Avoiding the Foreclosure Trap

As a homeowner struggling for mortgage relief with your bank, don't forget to be mindful of the following time-honored sage advice; "Forewarned is forearmed". Realize that the fraud involved with your mortgage didn't end after your loan's origination. Because foreclosure is a profitable business, there is a very good chance the fraud is continuing, along with your victimization.


Kate Eyster and Lauren McGookey contributed to this article.

Copyright 2014 Daniel L. McGookey


_____________________________

Let's look at one other corporate fraud...this one tax fraud that is wide-spread and easy to find.  The IRS could  pay down much of the national debt itself by recovering corporate tax fraud yet we are told by neo-liberals those bad republicans are defunding the IRS.....indeed, it is being starved.  Yet, the financial settlements in the hundreds of billions requires that a percentage of all settlements go to rebuilding and strengthening fraud detection and prosecution......IT IS SELF-FUNDING.  So, all we need are state pols that shout loudly that none of this is happening----IT IS THE VOICE OF PUBLIC OFFICIALS THAT WOULD FORCE THESE CROOKS TO DO THE RIGHT THING.  IT IS THEIR SILENCE THAT IS DUPLICITOUS.  

IN MARYLAND, IT WAS ALL OF THE CURRENT POLS IN OFFICE THAT ALLOWED THIS MASSIVE CORPORATE FRAUD TO HAPPEN AND INDEED MUCH WEALTH INEQUITY IN MARYLAND IS A RESULT OF THIS FRAUD AND LACK OF JUSTICE!

Joe Biden's Delaware and Harry REid's Nevada are the two states with the most international business geared to off-shoring and hiding wealth.

THIS BILL WAS PASSED IN 2006 JUST AS THE DISMANTLING OF OVERSIGHT AND DEFUNDING WAS AT ITS HEIGHT.  REMEMEBER, THE RECOVERY OF FRAUD BY THE IRS SUPPORTS ALL THE OVERSIGHT AND ACTION NEEDED. THE IRS HAS PLENTY OF MONEY TO DO THE JOB WITHOUT CONGRESSIONAL FUNDING.

Trillions in fraud here....tens of trillions there.....makes for tons of lost revenue to the economy from corporate fraud at Federal, state, and local level.  When people like Basu or Robert Reich speak of wealth inequity as needing legislation and not Rule of Law...THEY ARE WORKING FOR WEALTH AND PROFIT.





Illegal Offshore Account Tax Fraud and Transfer Price Schemes Are Two Forms of IRS Tax Fraud That Can Be the Basis Of An IRS Whistleblower Reward Lawsuit



 by Illegal Offshore Account Tax Fraud Lawyer and Transfer Payment Tax Fraud Whistleblower Reward Lawyer Jason Coomer

Illegal Offshore Account Tax Fraud and Transfer Payment Tax Fraud are two forms of corporate tax fraud that are committed by large multinational corporations.  The IRS is offering rewards and protections for IRS whistleblowers and IRS informants that work through Illegal Offshore Account Tax Fraud Whistleblower Lawyers, Multinational Corporate Tax Fraud Whistleblower Lawyers, and Transfer Payment Tax Fraud Whistleblower Lawyers to identify tax fraud schemes that cost the United States millions of dollars.

Illegal Offshore Account Tax Fraud Whistleblower Lawyer, Multinational Corporate Tax Fraud Whistleblower Lawyer, and Transfer Payment Tax Fraud Whistleblower Lawyer, Jason S. Coomer, works with corporate tax fraud whistleblowers, illegal offshore account tax fraud whistleblowers, transfer payment tax fraud whistleblowers, and other corporate tax fraud whistleblowers to expose corporate tax fraud and other forms of tax fraud.  If you are the original source with special knowledge of tax fraud and are interested in learning more about a tax whistleblower lawsuit, please feel free to contact Illegal Offshore Account Tax Fraud Whistleblower Lawyer and Transfer Payment Corporate Tax Fraud Whistleblower Lawyer Jason Coomer via e-mail message.

Illegal Offshore Account Tax Fraud Lawsuit, Corporate Tax Fraud Whistleblower Reward Lawsuit, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawsuit, Transfer Price Scheme Tax Fraud Lawsuit, IRS Whistleblower Reward Lawsuit, & IRS Whistleblower Payment for Detection of Fraud Lawsuit Information

In 2006, the Tax Relief and Health Care Act that was signed into law included a whistleblower reward amendment that created mandatory reward language to the IRS to create a mandatory economic incentive to encourage tax fraud whistleblowers to step forward to help the government detect large scale fraudulent schemes.  By offering large potential rewards for reporting multimillion tax fraud schemes, the IRS has received hundreds of tax fraud tips from tax fraud informants regarding taxpayer fraud and massive violations of the tax code costing taxpayers Billions of dollars.  Many of the tips already received include fraud schemes of hundreds of millions and tens of millions of dollars.  It is estimated that this programs will result in hundreds of billions of dollars or even Trillions of dollars in tax fraud being detected.

The economic incentives in the Tax Whistleblower Reward Programs are designed to encourage insider tax fraud informants and tax fraud whistleblowers with knowledge and evidence of large tax violations and tax fraud schemes to step forward and report the massive tax fraud.  The IRS is hoping that there will be several tax fraud whistleblowers and tax fraud informants that will help them detect and collect on an estimated $3 Trillion in illegal offshore accounts as well as several other tax-avoidance schemes that have been perpetrated by billionaires and millionaires as well as large corporations.

The IRS Whistleblower Reward Amendment requires the Internal Revenue Service to pay rewards to whistleblowers who exposed large scale tax fraud and taxpayer fraud including major tax underpayments, violations of the Internal Revenue Code, or other fraudulent schemes to unlawfully not pay taxes.  The IRS Whistleblower Reward Program is aimed at large multimillion dollar fraud schemes and tax violations in that the total amount of fraud or underpayment of taxes in dispute would have to exceed $2 millions.

The IRS will pay the tax fraud whistleblower or tax fraud informant if the information presented substantially contributes to the collection of money by the IRS.  As such, the tax fraud whistleblower should have inside knowledge of and documentation of the tax fraud to be successful.     

Illegal Offshore Account Tax Fraud Lawyer, Corporate Tax Fraud Whistleblower Reward Lawyer, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawyer, Transfer Price Scheme Tax Fraud Lawyer, and IRS Whistleblower Reward Lawyer

Transfer pricing schemes involve the overpricing of imports and/or the underpricing of exports between related companies in different countries for the purpose of transferring profits or revenue out of the United States in order to evade taxes. The profits and revenue end up in a country that has a lower corporate tax rate than the US.  These fraudulent pricing schemes can be used both for stock manipulation and corporate tax fraud.  For more information on Corporate Tax Fraud Whistleblower Actions, please go to the following: Tax Fraud Whistleblower Reward Lawsuit, IRS Tax Fraud Whistleblower Award Lawsuit, and Corporate Tax Fraud Lawsuit Information web page.

Illegal Offshore Account Tax Fraud Lawsuit, Corporate Tax Fraud Whistleblower Reward Lawsuit, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawsuit, Transfer Price Scheme Tax Fraud Lawsuit, IRS Whistleblower Reward Lawsuit, & IRS Whistleblower Payment for Detection of Fraud Lawsuit Information

To qualify for a whistleblower award under section 7623 (b), the information must:

    Relate to a tax noncompliance matter in which tax, penalties, interest, additions to tax and additional amounts in dispute exceed $2,000,000.00

    Relate to a taxpayer, and in the case of an individual taxpayer, one whose gross income exceeds $200,000.00 for at least one of the tax years in question

If the information meets the above criteria and substantially contributes to a decision by the IRS to take administrative or judicial action that results in the collection of tax, penalties, interest, additions in tax and additional amounts, then the IRS will pay an award of at least fifteen percent, but not more than thirty percent of what the IRS collects.  26 U.S.C. at 7623(b)(1).

The IRS has authority to reduce the award to ten percent if the claim is based upon specific allegations disclosed in certain public information (e.g. government audits) and determines that the whistleblower's information was not the original source of information.  Further, the IRS also has the authority to reduce the award or not give an award if the whistleblower planned and initiated the actions that led to the tax underpayment.

The IRS Whistleblower Reward Program, Whistleblower Recovery Program, and IRS Corporate Tax Fraud Whistleblower Rewards

The Tax Relief and Health Care Act of 2006, signed into law on December 20, 2006 amended the Internal Revenue Code to provide rewards for turning in tax cheats including corporations and people that are committing tax fraud.  According to the IRS, the primary purpose behind the Tax Relief and Health Care Act of 2006 "was to provide incentives for people with knowledge of significant tax non-compliance to provide that information to the IRS."  The new program generally requires the IRS to pay rewards to whistleblowers if the information presented substantially contributes to the collection of money by the IRS.  The law created the IRS Whistleblower Office to receive, evaluate, and determine whether to pay the whistleblower an award.

The IRS has funded a robust IRS Whistleblower Program.  The new program focuses on large tax fraud and tax underpayment claims.  To qualify for the rewards, $2 million of taxes, penalties, and interest must be involved.  Individual taxpayers must have $200,000.00 of taxable income in any year.   The reward is from fifteen to thirty percent of the tax collected, depending upon the extent to which the whistleblower contributed to the additional collection.  If the IRS determines that the whistleblower's information was not the original source of information, but still contributes to the additional collection, the IRS can still award up to ten percent of the amount collected.

It is interesting to note that Congress passed the original tax whistleblower rewards law in March 1867 for people who reported tax crimes.  The law was enacted prior to a federal income tax, but was not effective because payment of the tax whistleblower reward was voluntary and no rewards were paid out until the rewards became mandatory through the 2006 amendment.

SEC Violation Whistleblower Lawyer, Financial Fraud Whistleblower Bounty Lawyer, SEC Whistleblower Incentive Program Lawyer, SEC Violation Lawyer, and Securities Fraud Whistleblower Lawyer

As a Financial Fraud Whistleblower Lawyer and Securities Fraud Whistleblower Lawyer, Jason S. Coomer commonly works with other powerful financial fraud and securities fraud whistleblower lawyers to handle large Securities Fraud Whistleblower Lawsuits, Securities Fraud Bounty Actions, Commodity Fraud Bounty Claims, and other Financial Fraud Lawsuits.  He also works on Medicare Fraud Whistleblower Lawsuits , Defense Contractor Fraud Whistleblower Lawsuits, Stimulus Fraud Whistleblower Lawsuits, Government Contractor Fraud Whistleblower Lawsuits, and other government fraud whistleblower lawsuits.

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by Illegal Offshore Account Tax Fraud Paid Informant Lawyer and Transfer Payment Tax Fraud Paid Informant Lawyer Jason Coomer

Illegal Offshore Account Tax Fraud Whistleblower Lawyer, Multinational Corporate Tax Fraud Whistleblower Lawyer, and Transfer Payment Tax Fraud Whistleblower Lawyer, Jason S. Coomer, works with corporate tax fraud whistleblowers, IRS tax fraud whistleblowers, and other tax fraud whistleblowers that are stepping up and blowing the whistle on IRS tax fraud, corporate tax fraud, IRS code violations, and other forms of tax fraud.  If you are the original source with special knowledge of tax fraud and are interested in learning more about a tax whistleblower lawsuit, please feel free to contact Illegal Offshore Account Tax Fraud Whistleblower Lawyer and Transfer Payment Corporate Tax Fraud Whistleblower Lawyer Jason Coomer via e-mail message.



_________________________________


Much of the wealth Basu speaks is tied to the Washington and San Franscisco, NYC is from this massive corporate fraud.  it is not real wealth.  Keep in mind that the defense industry budget is one of the largest.  NSA can see all, yet they could not build accountability into these computer systems.  Luckily, WIKILEAKS had a download of defense industry contracting and is now being reviewed by investigative journalists and international justice organizations.


JUST RECOVERING CORPORATE FRAUD WOULD PAY DOWN GOVERNMENT DEBT AT ALL LEVELS AND MAKE ALL PUBLIC TRUSTS AND PENSIONS FLUSH WITH MONEY! DO YOU HEAR YOUR POLS SHOUTING THIS?


 Grand Theft Pentagon, Massive Waste and Fraud

Politics / US Military Nov 21, 2013 - 12:39 PM GMT

By: Stephen_Lendman

Politics

Longstanding Pentagon operations reflect a black hole of unaccountability. Reuters published a two-part report. In July, it discussed the Defense Department’s “payroll quagmire.”

It’s bureaucracy is stifling. It’s “unyielding,” said Reuters. Active duty and retired military personnel are routinely cheated. Pay errors are widespread.

Correcting “or just explaining them can test even the most persistent soldiers.” Weeks or months pass without resolution.

Some personnel are cheated on pay. Others are penalized for overpayments. Their earnings are “drastically cut” unfairly. Precise figures are impossible to calculate.

At issue is “the Defense Department’s jury-rigged network of mostly incompatible computer systems for payroll and accounting, many of them decades old, long obsolete, and unable to communicate with each other,” said Reuters.

“The Defense Finance and Accounting Services (DFAS) still uses a half-century-old computer language that is largely unable to communicate with the equally outmoded personnel management systems employed by each of the military services.”

A December 2012 Government Accountability Office (GAO) report revealed unaccountable accounting. No way exists to assure correct amounts are paid. Errors can’t be tracked.

________________________________

As neo-liberals now pretend that wealth inequity exists and not simply a failure of justice to occur in moving money back to government coffers and individual's pockets, WE THE PEOPLE MUST SHOUT LOUDLY THE TRUTH---THAT JUSTICE WILL BE SERVED!!!



Bill Black: How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics



Posted on June 6, 2013 by Yves Smith

This article is part of an ongoing AlterNet series, "The Age of Fraud."

What do you get when you throw together economic fraudsters, plutocrats and opportunistic criminals? A financial crisis, that’s what. If you look back over the massive frauds that have swept the country in recent decades, from the savings and loan crisis of the 1980s to the 2007-'08 financial crash, this deadly combination always appears.

A dangerous cycle begins when prominent economists pander to plutocrats and bought politicians, who reward them with top posts, where they promote the perverse economic policies that cause fraud epidemics. Crises develop, and millions of people are ripped off. Those who fight for truth are ignored or ruined. The criminals get wealthier, bolder and more politically powerful, and go on to hatch even more devastating cons.

The three most recent financial crises in U.S. history were driven by a special type of fraud called “control fraud” — cases where the officers who control what look like legitimate entities use them as “weapons” to commit crimes. Each time, Alan Greenspan, former chairman of the Federal Reserve, played a catastrophic role. First, his policies created the fraud-friendly (criminogenic) environment that produces epidemics of control fraud, then he failed to identify those epidemics and incipient crises, and finally, he failed to counter them.

At the heart of Greenspan’s failure lies an ethical void in the brand of economics that has dominated American universities and policy circles for the last several decades, a brand known as “free market fundamentalism” or the “neoclassical school.” (I call it “theoclassical economics” for its quasi-religious belief system.) Mainstream economists who follow this school assert a deeply flawed and controversial concept known as the “efficient market hypothesis,” which holds that financial markets magically regulate themselves (they automatically “self-correct”) and are thus immune to fraud. When an economist starts believing in that kind of fallacy, he is bound to become blind to reality. Let’s take a look at what blinded Greenspan:

    Greenspan knew that markets were “efficient” because the efficient market hypothesis is the foundational pillar underlying modern finance theory.
    Markets can’t be efficient if there is control fraud, so there must not be any.
    Wait, there are control frauds! Tens of thousands of them.
    Then control fraud must not really be harmful, or markets would not be efficient.
    Control fraud, therefore, must not be immoral. As crime boss Emilio Barzini put it in The Godfather, “It’s just business.”

As delusional and immoral as this “logic” chain is, many elite economists believe it. This warped perspective has spawned policies so perverse that they turn the world of finance into the optimal environment for criminals. The upshot is that most of our elite financial leaders and professionals have thrown integrity out the window, and we end up with recurrent, intensifying financial crises, de facto immunity for our most elite criminals, and the rise of crony capitalism. Let’s do a little time travel to see exactly how this plays out.

How to Stoke a Savings and Loan Fiasco

The Lincoln Savings and Loan Association of Irvine, California was at the center of the famous crisis that rocked the financial world in the 1980s. A once prudently run company morphed into a casino when S&L associations became deregulated and started doing risky business with depositors’ money. Businessman, GOP darling, and anti-pornography crusader Charles Keating, ironically nicknamed “Mr. Clean,” took over Lincoln in 1984 and got the casino rolling. (It was a special kind of casino where the games were rigged – and not in favor of newlywed brides who were the subject of sexual extortion in Casablanca.) In a classic case of control fraud, Keating devoted himself to turning the company into a weapon of mass financial destruction and a source of wealth for his family. Keating’s “weapon of choice” for his frauds was accounting.

Keating went on a spree buying land, taking equity positions in real estate projects, and purchasing junk bonds. In 1985, the Federal Home Loan Bank Board (FHLBB), where I was the staffer leading the regulation efforts, grew alarmed at the new activities of savings associations like Lincoln. So we made a rule: S&Ls could not put more than 10 percent of company assets in "direct investments” – an activity that led to very large losses.

Alan Greenspan, chairman of an economic consulting firm at the time, urged us to permit Lincoln Savings to go full steam ahead. His memo supporting Lincoln’s application to make hundreds of millions of dollars in direct investments praised the company’s management (Keating) and claimed that Lincoln Savings “posed no foreseeable risk of loss.”

The FHLBB rejected Lincoln’s request to exceed the rule’s threshold because direct investments were a superb vehicle for accounting fraud – they made it easy to hide losses and to create fictional income. Nevertheless, Lincoln continued to violate the rule and created fictional (backdated) board consents with hundreds of forged signatures to make it appear that the investments were “grandfathered” under the rule. The hundreds of millions of dollars in unlawful direct investments were used for fraudulent purposes by Lincoln Savings’ controlling officers and caused enormous losses – many of them to elderly citizens who were conned into buying the junk bonds of Lincoln Savings’ holding company. The massive losses on Lincoln’s illegal direct investments were a major reason those bonds were worthless.

Hoping to use his political clout to continue the fraud, Keating hired Greenspan to lobby the senators who eventually became the known as the “Keating Five.” I remember well when these senators intervened at Keating’s request to try to prevent me and my colleagues from taking an enforcement action (or conservatorship) that would have saved over a billion dollars. (I took the notes of that meeting, which led to the Senate ethics investigation of the Keating Five.) The cronyism was so thick in Washington that William Weld, then a top Department of Justice official and later the Republican governor of Massachusetts, actually tried to gin up a criminal investigation of the regulators rather than Keating at the request of Lincoln’s lawyers who had just left the DOJ! Eventually, Keating and many of the senior managers of Lincoln Savings were convicted of felonies and Lincoln Savings became the most expensive failure of the S&L debacle.

When you look back on this expensive fiasco, you see that the work of respected professional economists was frequently called upon to support the fraudulent activities. One of the ways Greenspan tried to advance Keating’s effort to have the courts strike down the direct investment rule was to use a study conducted by a less famous economist, George Benston, who showed that S&Ls that violated the direct investment rule earned higher profits than those who didn’t. So he recommended the rule be dropped. Small problem: In less than two years all 33 of the companies Benston studied had failed. Most were accounting control frauds in which executives cooked the books to show fictional profits.

Keating had a talent for obtaining endorsements from prominent economists. He got Daniel Fischel to conduct a study that purported to show that Lincoln Savings was the best S&L in America. Fischel invoked the efficient market hypothesis to opine that our examiners provided no useful information because the markets had already perfectly taken into account any information to which we had access.  In reality, of course, this was nonsense, and Lincoln Savings was the worst S&L in the country.

Economists who pander to plutocrats have a great advantage over scholars in other fields: There is no reputational penalty among your peers for being dead wrong. Benston got an endowed chair at Emory, Fischel was made dean of the Univerisity of Chicago’s Law School, and Greenspan was made Chairman of the Fed. Those who got control fraud right and fought the elite scams and their powerful political patrons – people like Edwin Gray, head of the FHLBB, and Joe Selby, head of supervision in Texas – saw their careers ended.

Consider what that perverse pattern indicates about how badly ethics have fallen in the both economics and government.

How to Create a Regulatory Black Hole

Alan Greenspan was Ayn Rand’s protégé, but he moved radically to the wacky side of Rand on the issue of financial fraud. And that, friends, is pretty wacky. Greenspan pushed the idea that preventing fraud was not a legitimate basis for regulation, and said so in a famous encounter with Commodities Futures Trading Commission (CFTC) Chair Brooksley Born. “I don’t think there is any need for a law against fraud,” Born recalls Greenspan telling her. Greenspan actually believed the market would sort itself out if any fraud occurred. Born knew she had a powerful foe on any regulation.

She was right. Greenspan, with the rabid support of the Rubin wing of the Clinton administration, along with Republican Chairman of the Senate Banking Committee Phil Gramm, crushed Born’s effort to regulate credit default swaps (CDS). The plutocrats and their political allies deliberately created what’s known as a regulatory black hole – a place where elite criminals could commit their crimes under the cover of perpetual night.

Greenspan chose another Fed economist, Patrick Parkinson, to testify on behalf of the bill to create the regulatory black hole for these dangerous financial instruments. Parkinson offered the old line that efficient markets easily excluded fraud — otherwise, they wouldn’t be efficient markets! (Parkinson would later tell the Financial Crisis Inquiry Commission in 2011 that the “whole concept” of a related financial instrument known as an “ABS CDO” had been an “abomination”). Greenspan’s successor richly rewarded Parkinson for being stunningly wrong in his belief: Ben Bernanke appointed Parkinson — who had no experience as a supervisor or examiner — as the Fed’s head of supervision.

Lynn Turner, former chief accountant of the SEC, told me of Greenspan’s infamous question to his group of senior officials who met at the Fed in late 1998 or early 1999 (roughly the same time as Greenspan’s conversation with Born): "Why does it matter if the banks are allowed to fudge their numbers a little bit?" What’s wrong with a “little bit” of fraud?

Conservatives often support the “broken windows” theory of criminal activity, which asserts that you stop serious blue-collar crime by cracking down on minor offenses. Yet mysteriously, they never apply the concept to white-collar financial crimes by elites. The little-bit-of fraud-is-ok concept got made into law in the Commodities Futures Modernization Act of 2000, which created the regulatory black hole for credit default swaps. That black hole was compounded by the Commodity Futures Trading Commission under the leadership of Wendy Gramm, spouse of Senator Phil Gramm.

Enron’s fraudulent leaders were delighted to exploit that black hole, because they were engaged in a massive control fraud. They appointed Wendy Gramm to their board of directors and proceeded to use derivatives to manipulate prices and aid their cartel in driving electricity prices far higher on the Pacific Coast. In a bizarre irony, the massive increase in prices led to the defeat of California Governor Gray Davis (the leading opponent of the cartel) and his replacement by Governor Schwarzenegger – a man who was part of the group that met secretly with Enron’s leadership to try to defeat Davis’s efforts to get the federal regulators to kill the cartel.

How damaging was Greenspan’s dogmatic and delusional defense of elite financial frauds in the case of Enron? If you look closely, you can see that Enron brought together all the critical elements of a financial crisis: big-time accounting control fraud, derivatives, cartels, and the use of off-balance sheet scams to inflate income and hide real losses and leverage. On top of all that, many of the world’s largest banks aided Enron and its extremely creative CFO Andrew Fastow to create frauds. The Fed could have responded by adopting and enforcing mandates to end the criminal practices that were driving the epidemic, but it didn’t. Instead, Greenspan and other Fed economists championed Enron’s leadership and cited the company as proof that regulation was unnecessary to prevent control fraud. They were so extreme that they attacked their own senior supervisors for daring to criticize the banks’ role in aiding and abetting Enron’s activities.

Later, when risky derivatives activities and control frauds at large financial institutions were pushing us toward the catastrophic crash of 2007-2008, the Fed took no meaningful action based on the lessons learned from Enron. Greenspan and the senior leadership of the Fed had learned absolutely nothing, which shows how disabling economic dogma is to regulators – making them worse than simply useless. They become harmful, again attacking their supervisors for criticizing the banks’ fraudulent “liar’s” loans. When Bernanke placed Patrick Parkinson (an economist blind to fraud by elite banksters) in a supervisory role at the Fed, he sealed the fate of millions of Americans whose financial well-being would be sucked right into that regulatory black hole – and removed the ability of the accursed supervisors to criticize the largest banks.

How to Protect Predatory Lenders

Finally, we come to the mortgage meltdown of 2008, when the entire housing industry went into freefall. Central to this crisis is the story of the liar's loan — mortgage-industry slang for a mortgage that a lender gives without checking tax returns, employment history, or anything else that might reliably indicate that the borrower can make the payments.

The Fed, and only the Fed, had authority under the Home Ownership and Equity Protection Act (HOEPA) to ban liar’s loans by all lenders. At a series of hearings mandated by Congress, dozens of witnesses representing home mortgage borrowers and state and local criminal investigators urged the Fed to do this. The testimony included a study that found a 90 percent incidence of fraud in liar’s loans.

What did Greenspan and Bernanke do? Exactly nothing. They consistently refused to act.

Greenspan went so far as to refuse pleas to send Fed examiners into bank holding company affiliates to find the facts and collect data on liar’s loans. Simultaneously, the Fed’s economists dismissed the warnings from progressives about fraudulent liar’s loans as “merely anecdotal.” In 2005, the desperate Fed regulators, blocked by Greenspan from sending in the examiners to get data from the banks, resorted to simply sending a letter to the largest banks requesting information. The Fed supervisor who received the banks’ response to that letter termed the data “very alarming.”

If you suspect that the banks would typically respond to such requests by understating their problem assets significantly, then you have the right instincts to be a financial regulator.

By 2003, loan quality was so bad that it could only be explained as the inevitable product of endemic accounting control fraud and it continued to collapse through 2007 until the bubble burst. By 2006, over two million fraudulent liar’s loans were originated annually. We know that it was overwhelmingly lenders and their agents who put the lies in liar’s loans. Liar’s loans make the perfect “natural experiment” because no governmental entity ever required a lender or a purchaser (and that includes Fannie and Freddie) to make or purchase a liar’s loan. Banks made, and purchased, trillions of dollars in liar’s loans because doing so lined the pockets of their controlling officers.

The Fed’s leadership, dominated by economists devoted to false theory, was enraged when the Fed’s supervisors presented evidence of endemic control fraud by the most elite lenders, particularly in the making of fraudulent liar’s loans. How dare the supervisors criticize our most reputable bank CEOs by showing that they were making hundreds of thousands through scams?

Bernanke finally acted under Congressional pressure on July 14, 2008 to ban liar’s loans. He cited evidence of endemic fraud available since early 2006 – evidence which would have been available way back in 2001 had Greenspan moved to require examiners to study liar’s loans. Even in the face of overwhelming evidence, Bernanke delayed the ban for 18 months — one would not wish to inconvenience a fraudulent lender, after all.

We did not have to suffer this crisis. Economists who were not blinded by neoclassical theory, like George Akerlof (who won the Nobel Prize in 2001) and Christina Romer (adviser to President Obama from 2008-2010), had warned their colleagues about accounting control fraud and liar’s loans, as did criminologists and regulators like me. But Greenspan (and Timothy Geithner) refused to see the obvious truth.

Alan Greenspan had no excuse for assuming fraud out of existence, and his exceptionally immoral position on fraud and regulation proved catastrophic to America and much of the world. We cannot afford the price, measured in many trillions of dollars, over 10 million jobs, and endless suffering, of unethical economists.
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September 18th, 2013

9/18/2013

0 Comments

 
WE NEED TO SET THE RECORD STRAIGHT!
What we have is systemic fraud and corruption in government and business and when a government suspends Rule of Law, it suspends Statutes of Limitations and

IT MAKES ALL OF POLITICIAN'S ACTIONS WHILE IN OFFICE NULL AND VOID....AS WITH FRAUD SETTLEMENTS AND OFFICE APPOINTMENTS!




Economics and financial policy is really, really boring to most.  What we can do is just look at some issues that show us which pols are working for us.  Most people understand that it was no regulation and massive, systemic fraud in the financial system that created the mess we have today.  Let's look at a few issues that our next round of candidates should be shouting.  Also, your political pundit and organizations should be as well.....if they are not including recovery of massive fraud and downsizing the banks/corporations in their campaign....they are neo-liberals, not democrats!

Below I talk about the Fed appointment but I would like you to consider that Obama will have lots of appointments coming in both the Fed and possibly the Supreme Court.  We know that Obama is a raging neo-liberal working for wealth and profit so his appointments will be the same as if a republican was on board.  When a democratic led Senate pretends they cannot get the votes for a more progressive appointment, what they are telling you is that Harry Reid and Senate leaders keep the 60 vote super-majority rule so NO PROGRESSIVE POL WILL GET APPOINTED!  THE SUPER-MAJORITY RULE KEEPS ALL APPOINTMENTS CORPORATE AND WEALTH ORIENTED.

Apart from these constitutional requirements, a Senate rule requires a supermajority of three fifths to move to a vote through a cloture motion, which closes debate on a bill or nomination, thus ending a filibuster by a minority of members. In current practice, the mere threat of a filibuster prevents passing almost any measure that has less than three-fifths agreement in the Senate, 60 of the 100 senators if every seat is filled and voting.

So far Obama has appointed two neo-liberals to the Supreme Court who we will watch give corporate rule and allowed the Fed to wage war on Main Street while making the rich fabulously richer.  An OK on these free trade deals called TPP with these Supreme Court appointments?.....I BET!  These appointments are called progressive because these were female neo-liberals!

Look at who Obama appointed to a lower level Fed post.....yet another Maryland pol.  Maryland is ranked at the bottom for fraud, corruption, and lack of transparency and Obama likes that!

I describe below what policy is bad and why but I would like to remind everyone that when a government suspends Rule of Law and shows itself corrupt and criminal

  THINGS LIKE APPOINTMENTS ARE NOT LEGITIMATE-----WE CAN/WILL REVERSE THEM!



Sarah Bloom Raskin took office on October 4, 2010, to fill an unexpired term ending January 31, 2016.

Prior to her appointment to the Board, Ms. Raskin was the Commissioner of Financial Regulation for the State of Maryland.



Regarding Bernanke's replacement at the Fed:

As we know, Elizabeth Warren is being built up in the media as the next stealth neo-liberal posing as a middle-class champion just as Obama was marketed.  Again, if Warren actually supported the progressive issues she shouts for....she would be outing the pols keeping us from those goals and she would not be supporting Yellen for the Fed post.

There are two things killing the American people with high-unemployment and wages......the Fed's 0% interest rate and the failure to recover tens of trillions of dollars in financial fraud back to government coffers and into individual pockets.  Both of these are controlled to a great extent by the Fed.  Yellen supports the current Fed policy of easy money for the richest and she only sees interest rates climbing to 2%.  Have you heard Yellen and Warren shouting out that the Fed policy of low interest rates directly impoverishes Main Street?  No, what you do hear is Warren calling for student loans having an interest rate same as the Fed rate.  It's like the Buffet tax slogan of Wall Street paying what a secretary pays in taxes when the idea is to raise corporate taxes progressively to 70% to reverse income inequity and recover massive corporate fraud.  Student loans need to be written off by private lenders because for-profit schools infused hundreds of billions of dollars in fraud and universities have inflated tuition because corporatizing universities now has corporate R and D subsidized by taxpayers and student tuition.  SEE HOW YOU SPOT A NEO-LIBERAL IN DISGUISE?

We read that all of the Fed Presidents across the country except Summers and Yellen are against Bernanke's policies.  Some are right leaning and hate it because it undermines the 'free' in free markets and some to the left hate it because it is crony and works against Main Street.  Warren and Yellen support the status quo.  The bottom line is that as the Fed pretends to use these policies to lower unemployment.....the unemployment is now around 25% ....Great Depression level and one of the worst in the developed world.  IT IS NOT LOWERING UNEMPLOYMENT.  CORPORATE MEDIA ONLY PRETENDS IT IS!

What we have today in Fed policy is the far right with the Libertarians who want to end the Fed.....and the democrats of labor and justice wanting to reign in the Fed's powers both shouting for reform of some kind.  Then, in the center, neo-cons and neo-liberals are shouting 'Let the good times roll' as this Fed policy makes the richest richer.  When the media says the 'left' backs Yellen, they are pretending Elizabeth Warren is left and not center.

In order to get our money out of a criminal stock market and into bank savings we must have interest rates above 4-5%.  Rates this high will stop corporate reliance on free money for profits and make then work for a living.  These rates will raise the increases to social program payments like SS and Veteran's benefits that are tied to these rates.

Lastly, it is the Fed that does a great deal of regulating of banks and it was completely responsible for the massive financial frauds of last decade in its failure to regulate.  When Obama placed a Greenspan deputy as chief just as if he places Yellen in Bernanke's place....he is continuing to allow the Fed to be crony, criminal, and corrupt.  HAVE YOU HEARD YELLEN SHOUTING FOR TENS OF TRILLIONS OF DOLLARS TO HEAD BACK TO THE AMERICAN PEOPLE FROM MASSIVE BANK FRAUD? 

All these policies are happening because we have neo-liberals in office and not democrats.  We simply need to run and vote for labor and justice candidates next elections.  Locally, state and city attorney's would be shouting at the failure of the US Attorney to bring justice because it creates the condition of Maryland and Baltimore losing tens of billions of dollars and more to fraud.  If you remember, it was a Maryland attorney given a Fed post....Maryland is ranked at the bottom for fraud, corruption, and lack of transparency so choosing Maryland pols for appointment shows the intent to continue crime and corruption in government and business!

Read this media blurb about 'democrats' wanting this bad Fed stimulus and remember, the right thing to do for Obama and Congress was to declare War on Fraud with a super-employment of US citizens to rebuild white collar criminal agencies bringing back tens of trillions in fraud at no cost to taxpayers and no republican votes needed.  THAT WAS THE ONLY STIMULUS IN TOWN FOR DEMOCRATS.  What the statement below means is continuing to give easy money to the rich is the only game for neo-liberals!



“Democrats, when they pay attention to the Fed, understand it’s the only sort of stimulus in town and they’ll want commitments that the Fed is not going to withdraw that level of stimulus.” 




Bernanke Departure With Duke Heralds Cascade of Fed Appointments

By Joshua Zumbrun - Jul 12, 2013 12:00 AM ET

   
Elizabeth Duke’s resignation from the Federal Reserve Board and Chairman Ben S. Bernanke’s potential departure in January could set off a series of vacancies and appointments that give President Barack Obama the opportunity to leave his mark on the Fed for a decade or longer.




Elizabeth Warren shows her neo-liberalism by giving a shout out for the Fed's policy that made the richer super rich while driving the middle/lower class ever poorer. Yellen will indeed keep the Fed policy aimed squarely at the rich. But Bernanke is doing this to create jobs you say! NO, THIS POLICY HAS NOT CREATED A SINGLE JOB IN AMERICA BUT GAVE CORPORATIONS HUNDREDS OF BILLIONS IN FREE MONEY TO EXPAND OVERSEAS. IT CREATED JOBS OVERSEAS! Yellin is a neo-liberal and is one of two (Summers the other) who support the current Fed policy. THAT IS WHY OBAMA WILL SUPPORT HER. Who is the left that supports her? 2% inflation means we still will not be able to place our money in bank savings accounts and earn decent interest which is what most people want to do. We need higher interest rates to get corporations working rather than getting rich on Wall Street investing. Social Security increased at 3% or higher since its beginning until the crash and this Fed policy...now increases are nil.


Push for Yellen to Lead at Fed Gathers Steam
www.nytimes.com


After Lawrence H. Summers withdrew from consideration, Janet L. Yellen became the presumptive nominee for the top job at the Fed.



Bernanke Departure With Duke Heralds Cascade of Fed Appointments

By Joshua Zumbrun - Jul 12, 2013 12:00 AM ET

Elizabeth Duke’s resignation from the Federal Reserve Board and Chairman Ben S. Bernanke’s potential departure in January could set off a series of vacancies and appointments that give President Barack Obama the opportunity to leave his mark on the Fed for a decade or longer.

Duke announced yesterday she is leaving the board in August, and Obama signaled last month that he expects Bernanke to leave when his current term expires next year, saying the central bank chief had stayed in his post “longer than he wanted.”


Ben S. Bernanke, chairman of the U.S. Federal Reserve, from left, Janet Yellen, vice chairman of the Federal Reserve, and Elizabeth Duke, governor of the Federal Reserve, are seen in this 2011 photo. Duke announced yesterday she is leaving the Federal Reserve Board in August. Photographer: Andrew Harrer/Bloomberg

“There’s an opportunity for the president to shape the composition of the board for a long time,” said Roberto Perli, a Washington-based partner for Cornerstone Macro LP and a former senior staff economist in the Fed’s division of monetary affairs. “Obama is unlikely to nominate someone who differs from the current policy framework. It cements the fact that monetary policy is likely to remain very accommodative for the next couple of years, if not longer.”

The pending vacancies at the Fed will require confirmation by the Senate, which has posed an obstacle to previous financial regulatory appointments by Obama, including at the central bank. Nobel-prize winning economist Peter Diamond was unable to win confirmation to the central bank in 2010 amid Republican opposition. The Senate approved Bernanke for his second term with the thinnest margin of any recent chairman, as senators registered outrage at bailouts during the financial crisis.

Senate Gridlock


With Senate gridlock repeatedly thwarting Obama’s agenda, any appointments could be a challenge, said Michael Hanson, senior U.S. economist at Bank of America Corp. in New York.

“There’s a little risk of course, given how productive the Senate has been in recent years, that we end up with a very short-handed Fed,” said Hanson, a former Fed economist. “That could be a problem.”

The first task is filling Bernanke’s seat with a chairman who will serve through 2018. Economists in a June 19-20 Bloomberg survey assigned 65 percent odds that Obama will pick Janet Yellen, the central bank’s current vice chairman.

If Yellen becomes chairman, that would leave open the influential number-two position at the central bank. If Obama instead opts to appoint one of his former advisers, such as former Treasury Secretaries Lawrence Summers or Timothy F. Geithner, then Yellen may depart the central bank when her term as vice chairman expires in October 2014.

Obama also confronts another opening on the board: Governor Jerome Powell’s term expires the same month as Bernanke’s, in January 2014.

Obama’s Opportunity


The Duke and Powell seats present a particular opportunity for the president because of the length of a Fed governor’s tenure. Duke’s replacement will have an appointment that lasts through 2026 and the nominee for Powell’s seat will have a term that lasts through 2028.

Even with Obama’s four potential appointments to the Fed board, including the top two officials, there are limits to the president’s influence on future policy. Obama has no say in who serves as president of the 12 regional Fed banks. The Fed’s presidents rotate voting on the Federal Open Market Committee with five voting in any given year. The seven governors always vote on monetary policy.

“Even though you have a lot of appointments, it’s a smaller percentage of the FOMC group,” said former Richmond Fed President J. Alfred Broaddus. The presidents are often more vocal in their views, he said: “Just look around, the people who were dissenting and making noise are not the governors.”

Banking Background


Duke’s seat in the past has been filled by someone with a “background in banking” and “the person they may want to replace her may have that same background,” Hanson said.

Duke took over an unexpired term at the Fed that had previously been filled by Susan Bies, a former banker at First Tennessee National Corp. Bies was appointed by President George W. Bush in 2001 and left the Fed in 2007, before her full term expired.

Press secretary Jay Carney said yesterday he had no personnel announcements to make on a replacement for Duke. He declined to say whether there will be any effort by the president to nominate a successor before the August recess by Congress.

Appointing a high-profile economist to one of the open seats could strengthen the Fed’s credibility, Hanson said.

“If you have someone who is a face of the committee, not upstaging the chairman or chairwoman, but giving an explicit message that the Fed is committed to its path, it helps credibility,” Hanson said.

Bank Supervision


By statute, the Fed has two vice chairmen, though the second seat has never been occupied. The Dodd-Frank Act overhauling U.S. financial regulation created a second vice chairman’s position at the Fed focused on bank supervision. The vice chairman of supervision seat has been empty for more than 1,000 days.

Fed Governor Daniel Tarullo has taken the lead on regulation, though he has not been appointed to the vice chairmanship.

“Given the fact that the Fed will still be in uncharted territory implementing financial reforms and dealing with the exit from a more than $3 trillion balance sheet, I think there’s a role to be played by the board of governors,” said Sarah Binder, a senior fellow at the Brookings Institution who researches the relationship between the Fed and Congress. The appointments may be contentious, Binder said.

“Republicans still want to see a much tighter monetary policy and more quickly,” said Binder. “Democrats, when they pay attention to the Fed, understand it’s the only sort of stimulus in town and they’ll want commitments that the Fed is not going to withdraw that level of stimulus.”

Once Bernanke and Duke leave, none of the governors who served during the height of the financial crisis will remain at the central bank. Yellen was the San Francisco Fed President during the financial crisis. She didn’t join the board of governors until October 2010.


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See why Elizabeth Warren was tapped to be the 'voice of the left' ......she is now using that to advance neo-liberal policy!

I'd like people to look at Warren's academic career as she worked in bankruptcy law through the entire period corporate bankruptcy laws were unleashed allowing labor benefits to be discharged in bankruptcy court.  I DOUBT THAT SHE WOULD HAVE ADVANCED TO HARVARD IF SHE WAS SHOUTING AGAINST THESE CORPORATE PROTECTIVE BANKRUPTCY LAWS IN THE 1970s and 1980s. 

Academic career

During the late-1970s, the 1980s, and the 1990s, Warren taught law at several universities throughout the country, while researching issues related to bankruptcy and middle-class personal finance.[12] Warren taught at the Rutgers School of Law–Newark during 1977–1978, the University of Houston Law Center from 1978 to 1983, and the University of Texas School of Law from 1981 to 1987, in addition to teaching at the University of Michigan as a visiting professor in 1985 and as a research associate at the University of Texas at Austin from 1983 to 1987.[16]

She joined the University of Pennsylvania Law School in 1987 and became a tenured professor. She began teaching at Harvard Law School in 1992, as a visiting professor, and began a permanent position as Leo Gottlieb Professor of Law in 1995.[16]



There are exceptions. A famous 1993 article entitled "Looting: Bankruptcy for Profit," by George Akerlof and Paul Romer, drew exceptionally on the experience of regulators who understood fraud.


Push for Yellen to Lead at Fed Gathers Steam

Franck Robichon/European Pressphoto Agency

The choice of Janet L. Yellen is likely to be seen as President Obama’s reluctant capitulation to his party’s left wing. OH REALLY?

By JACKIE CALMES and BINYAMIN APPELBAUM Published: September 16, 2013 326 Comments

WASHINGTON — Janet L. Yellen told friends in recent weeks that she did not expect to be nominated as the next chairman of the Federal Reserve. Although she had been the Fed’s vice chairman since 2010 and would make history as the first woman to hold the job, President Obama’s aides made clear throughout the summer that he wanted Lawrence H. Summers, his former chief economic adviser.

Now, awkwardly, it appears that the president may have to circle back to Ms. Yellen after Mr. Summers withdrew from consideration on Sunday, bowing to the determined opposition of at least five Senate Democrats. On Monday, Ms. Yellen became the front-runner by elimination, officials close to the White House said.

Supporters of Mr. Summers, including many of the president’s closest advisers, had raised some concerns about Ms. Yellen in recent months. Perhaps most potently, they said that institutions benefited from fresh leadership and argued that Ms. Yellen’s crucial role in creating the Fed’s current policies could inhibit her ability to make necessary changes.

Some presidential advisers also argued that Mr. Summers brought crisis management experience and a working knowledge of financial markets that Ms. Yellen lacks — although so did Ben S. Bernanke when President George W. Bush selected him as chairman.

There have been tensions between Ms. Yellen and Daniel Tarullo, a Fed governor with close ties to the president’s economic team who has taken a leading role on issues of regulatory policy. Ms. Yellen also clashed with Gene B. Sperling, head of the National Economic Council, when both were advisers to President Bill Clinton in the 1990s.

Nonetheless, the president’s advisers insisted throughout the summer that Mr. Obama was not averse to Ms. Yellen but simply more comfortable with Mr. Summers, a former Treasury secretary to President Clinton who was Mr. Obama’s chief White House economic adviser through the height of the financial crisis and recession in 2009 and 2010. In those years he formed a bond with Mr. Obama and others in the White House despite a tendency toward arrogance.

Stock markets soared on Monday on the withdrawal of Mr. Summers. Many investors regarded him as less committed to the Fed’s monetary stimulus campaign than Ms. Yellen. In trading, the Dow was up 118 points and interest rates down in a show of increased confidence that the Fed would withdraw more slowly from its efforts to stimulate the economy, including bond purchases.

Ms. Yellen’s supporters waited with a mixture of elation and apprehension for the president’s next step. “Janet Yellen, I hope, will make a terrific Federal Reserve chair,” Senator Elizabeth Warren, a Massachusetts Democrat who was one of those warning the White House against a Summers nomination, said on MSNBC. “The president will make his decision, but I hope that happens.”   Remember, MSNBC is a neo-liberal media station!

Administration officials and supporters acknowledged that the president would enrage his party’s base if he were now to reject Ms. Yellen and forfeit the chance to name the first woman to the most influential economic job in the world. On the other hand, with no obvious alternatives, the choice of Ms. Yellen — which months ago might have been celebrated as historic — is likely to be seen as Mr. Obama’s reluctant capitulation to his party’s left wing.

That prospect, and Mr. Obama’s distaste for being pressured into some action, could prompt him to consider other candidates, several former administration officials said.

The president had already interviewed Donald L. Kohn, a former Fed vice chairman, before Ms. Yellen got the job in 2010 on Mr. Obama’s nomination. For years, Mr. Kohn was among the most influential advisers to former Fed chairman Alan Greenspan and thus would have drawn criticism from Democrats, many of whom blame the Greenspan Fed for an antiregulatory stance that encouraged financial excesses that led to crisis.


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When Greenspan famously said 'I DID NOT SEE THAT COMING' referring to the economic collapse by fraud....he was lying.  People were pounding on his door shouting 'massive fraud' all through the 2000s.  Any commentary that pretends regulators were not aware and all of this fraud was 'under the radar' is revisionist. 

WE NEED TO SET THE RECORD STRAIGHT!
What we have is systemic fraud and corruption in government and business and when a government suspends Rule of Law, it suspends Statutes of Limitations and

IT MAKES ALL OF ITS ACTIONS WHILE IN OFFICE NULL AND VOID....AS WITH FRAUD SETTLEMENTS AND OFFICE APPOINTMENTS!

If your political pundit or elected official does not make this the top priority for justice and are not willing to discuss it.....THEY ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFIT!  If I hear one more neo-liberal economist feel our pain without mentioning fraud as the reason for the crash.....

AlterNet / By James K. Galbraith 41 COMMENTS James K. Galbraith:

Why the 'Experts' Failed to See How Financial Fraud Collapsed the Economy

Galbraith to senators: "I write to you from a disgraced profession. Economic theory ... failed miserably to understand the forces behind the financial crisis." May 14, 2010  |           Editor's Note: The following is the text of a James K. Galbraith's written statement to members of the Senate Judiciary Committee delivered this May.

Chairman Specter, Ranking Member Graham, Members of the Subcommittee, as a former member of the congressional staff it is a pleasure to submit this statement for your record.

I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including "rational expectations," "market discipline," and the "efficient markets hypothesis" led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did.   I WOULD LIKE TO SAY THAT THE ENTIRE REGULATORY SYSTEM KNEW SYSTEMIC FRAUD WAS HAPPENING!

Thus the study of financial fraud received little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students. Economists have soft- pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now. At a conference sponsored by the Levy Economics Institute in New York on April 17, the closest a former Under Secretary of the Treasury, Peter Fisher, got to this question was to use the word "naughtiness." This was on the day that the SEC charged Goldman Sachs with fraud.

There are exceptions. A famous 1993 article entitled "Looting: Bankruptcy for Profit," by George Akerlof and Paul Romer, drew exceptionally on the experience of regulators who understood fraud. The criminologist-economist William K. Black of the University of Missouri-Kansas City is our leading systematic analyst of the relationship between financial crime and financial crisis. Black points out that accounting fraud is a sure thing when you can control the institution engaging in it: "the best way to rob a bank is to own one." The experience of the Savings and Loan crisis was of businesses taken over for the explicit purpose of stripping them, of bleeding them dry. This was established in court: there were over one thousand felony convictions in the wake of that debacle. Other useful chronicles of modern financial fraud include James Stewart's Den of Thieves on the Boesky-Milken era and Kurt Eichenwald's Conspiracy of Fools, on the Enron scandal. Yet a large gap between this history and formal analysis remains.

Formal analysis tells us that control frauds follow certain patterns. They grow rapidly, reporting high profitability, certified by top accounting firms. They pay exceedingly well. At the same time, they radically lower standards, building new businesses in markets previously considered too risky for honest business. In the financial sector, this takes the form of relaxed – no, gutted – underwriting, combined with the capacity to pass the bad penny to the greater fool. In California in the 1980s, Charles Keating realized that an S&L charter was a "license to steal." In the 2000s, sub-prime mortgage origination was much the same thing. Given a license to steal, thieves get busy. And because their performance seems so good, they quickly come to dominate their markets; the bad players driving out the good.

The complexity of the mortgage finance sector before the crisis highlights another characteristic marker of fraud. In the system that developed, the original mortgage documents lay buried – where they remain – in the records of the loan originators, many of them since defunct or taken over. Those records, if examined, would reveal the extent of missing documentation, of abusive practices, and of fraud. So far, we have only very limited evidence on this, notably a 2007 Fitch Ratings study of a very small sample of highly-rated RMBS, which found "fraud, abuse or missing documentation in virtually every file." An efforts a year ago by Representative Doggett to persuade Secretary Geithner to examine and report thoroughly on the extent of fraud in the underlying mortgage records received an epic run-around.


________________________________________________

Kessler wrote:

[T]he Federal Reserve’s policy—to stimulate lending and the economy by buying Treasurys—is creating a shortage of safe collateral, the very thing needed to create credit in the shadow banking system for the private economy. The quantitative easing policy appears self-defeating, perversely keeping economic growth slower and jobs scarcer.

That explains what he calls the great economic paradox of our time:

Despite the Federal Reserve’s vast, 4½-year program of quantitative easing, the economy is still weak, with unemployment still high and labor-force participation down. And with all the money pumped into the economy, why is there no runaway inflation? . . .

The explanation lies in the distortion that Federal Reserve policy has inflicted on something most Americans have never heard of: “repos,” or repurchase agreements, which are part of the equally mysterious but vital “shadow banking system.”


Let's be clear....it is the Fed policy that has created the job stagnation these few years and there is no intent to allow unemployment to get much lower!  We need media in Maryland providing the right information and not the propaganda provided by Wall Street.  It is the 0% interest rate that has allowed the corporations free money to invest in the stock market making billions of dollars doing nothing.  Corporations have then used all that money to expand overseas where all the growth in jobs has been for 4 years.  So, each job stimulus with corporate tax breaks and all Fed policy simply gave these corporations billions of dollars to expand to India or Indonesia.  Wall Street/ the Fed never had any intent of growing jobs domestically because they want to keep labor desperate to cheapen labor costs and maximize profit.

So why are they now pretending that ending all of the 0% and the QE bond buying will hurt job creation?  They could care less about job creation.  What it will do is remove all that easy money and profits will not be had .......unless they actually do work here in the US and raise wages so US workers can be the consumers they need to fuel growth.

The last few years has been nothing but a ponzi scheme with the Fed just creating money and moving it around.  The amount of money the Fed created in this scheme is in the trillions and they can no longer afford it...that is why they are stopping.  When it stops....next year will see another economic crash worse than the one in 2007.....and it will happen because your neo-liberal did not break up the banks while they had the chance....they worked to protect wealth and profit.  All of Maryland's democrats are neo-liberals and contributed to this situation!


For those who read my blog you know I've been stating this for years.  QE was never about creating jobs it was only about buying mortgage bonds that cleared toxic subprime mortgages from bank accounting sheets while lowering mortgage interest rates at a time that millions of bundled foreclosures and high-end buyers were in the housing market.  It was purely a profit-making vehicle once again given by the Fed.  Do you know what the Fed plans to do with those trillions in bond buy-backs?  They are sending them to the Treasury where taxpayers and payroll taxes will pay for them!

THIS IS TREASON FOLKS.....WE ARE WATCHING AS EVERY TRICK IS USED TO MOVE WEALTH FROM THE MIDDLE/LOWER CLASS UP AND MUCH OF IT IS NOT LEGAL!



Kessler wrote:

    [T]he Federal Reserve’s policy—to stimulate lending and the economy by buying Treasurys—is creating a shortage of safe collateral, the very thing needed to create credit in the shadow banking system for the private economy. The quantitative easing policy appears self-defeating, perversely keeping economic growth slower and jobs scarcer.


Collateral Damage: QE3 and the Shadow Banking System

Wednesday, 24 July 2013 00:00 By Ellen Brown, Web of Debt | News Analysis

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Ben Bernanke. (Photo: Medill DC / Flickr)Rather than expanding the money supply, quantitative easing (QE) has actually caused it to shrink by sucking up the collateral needed by the shadow banking system to create credit. The “failure” of QE has prompted the Bank for International Settlements to urge the Fed to shirk its mandate to pursue full employment, but the sort of QE that could fulfill that mandate has not yet been tried.

Ben Bernanke’s May 29th speech signaling the beginning of the end of QE3 provoked a “taper tantrum” that wiped about $3 trillion from global equity markets – this from the mere suggestion that the Fed would moderate its pace of asset purchases, and that if the economy continues to improve, it might stop QE3 altogether by mid-2014. The Fed is currently buying $85 billion in US Treasuries and mortgage-backed securities per month.

The Fed Chairman then went into damage control mode, assuring investors that the central bank would “continue to implement highly accommodative monetary policy” (meaning interest rates would not change) and that tapering was contingent on conditions that look unlikely this year. The only thing now likely to be tapered in 2013 is the Fed’s growth forecast.

It is a neoliberal maxim that “the market is always right,” but as former World Bank chief economist Joseph Stiglitz demonstrated, the maxim only holds when the market has perfect information. The market may be misinformed about QE, what it achieves, and what harm it can do. Getting more purchasing power into the economy could work; but QE as currently practiced may be having the opposite effect.

Unintended Consequences

The popular perception is that QE stimulates the economy by increasing bank reserves, which increase the money supply through a multiplier effect.  But as shown earlier here, QE is just an asset swap – assets for cash reserves that never leave bank balance sheets. As University of Chicago Professor John Cochrane put it in a May 23blog:

QE is just a huge open market operation. The Fed buys Treasury securities and issues bank reserves instead. Why does this do anything? Why isn’t this like trading some red M&Ms for some green M&Ms and expecting it to affect your weight? . . .

[W]e have $3 trillion or so [in] bank reserves. Bank reserves can only be used by banks, so they don’t do much good for the rest of us. While the reserves may not do much for the economy, the Treasuries they remove from it are in high demand.

Cochrane discusses a May 23rd Wall Street Journal article by Andy Kessler titled “The Fed Squeezes the Shadow-Banking System,” in which Kessler argued that QE3 has backfired. Rather than stimulating the economy by expanding the money supply, it has contracted the money supply by removing the collateral needed by the shadow banking system. The shadow system creates about half the credit available to the economy but remains unregulated because it does not involve traditional bank deposits. It includes hedge funds, money market funds, structured investment vehicles, investment banks, and even commercial banks, to the extent that they engage in non-deposit-based credit creation.

Kessler wrote:

[T]he Federal Reserve’s policy—to stimulate lending and the economy by buying Treasurys—is creating a shortage of safe collateral, the very thing needed to create credit in the shadow banking system for the private economy. The quantitative easing policy appears self-defeating, perversely keeping economic growth slower and jobs scarcer.

That explains what he calls the great economic paradox of our time:

Despite the Federal Reserve’s vast, 4½-year program of quantitative easing, the economy is still weak, with unemployment still high and labor-force participation down. And with all the money pumped into the economy, why is there no runaway inflation? . . .

The explanation lies in the distortion that Federal Reserve policy has inflicted on something most Americans have never heard of: “repos,” or repurchase agreements, which are part of the equally mysterious but vital “shadow banking system.”

The way money and credit are created in the economy has changed over the past 30 years. Throw away your textbook.

Fractional Reserve Lending Without the Reserves

The post-textbook form of money creation to which Kessler refers was explained in a July 2012 article by IMF researcher Manmohan Singh titled “The (Other) Deleveraging: What Economists Need to Know About the Modern Money Creation Process.” He wrote:

In the simple textbook view, savers deposit their money with banks and banks make loans to investors . . . . The textbook view, however, is no longer a sufficient description of the credit creation process. A great deal of credit is created through so-called “collateral chains.”

We start from two principles: credit creation is money creation, and short-term credit is generally extended by private agents against collateral. Money creation and collateral are thus joined at the hip, so to speak. In the traditional money creation process, collateral consists of central bank reserves; in the modern private money creation process, collateral is in the eye of the beholder.

Like the reserves in conventional fractional reserve lending, collateral can be re-used (or rehypothecated) several times over. Singh gives the example of a US Treasury bond used by a hedge fund to get financing from Goldman Sachs. The same collateral is used by Goldman to pay Credit Suisse on a derivative position. Then Credit Suisse passes the US Treasury bond to a money market fund that will hold it for a short time or until maturity.

Singh states that at the end of 2007, about $3.4 trillion in “primary source” collateral was turned into about $10 trillion in pledged collateral – a multiplier of about three. By comparison, the US M2 money supply (the credit-money created by banks via fractional reserve lending) was only about $7 trillion in 2007.  Thus credit-creation-via-collateral-chains is a major source of credit in today’s financial system.

Exiting Without Panicking the Markets

The shadow banking system is controversial. It funds derivatives and other speculative ventures that may harm the real, producing economy or put it at greater risk. But the shadow system is also a source of credit for many businesses that would otherwise be priced out of the credit market, and for such things as credit cards that we have come to rely on. And whether we approve of the shadow system or not, depriving it of collateral could create mayhem in the markets. According to the Treasury Borrowing Advisory Committee of the Securities and Financial Markets Association, the shadow system could be short as much as $11.2 trillion in collateral under stressed market conditions. That means that if every collateral claimant tried to grab its collateral in a Lehman-like run, the whole fragile Ponzi scheme could collapse.

That alone is reason for the Fed to prevent “taper tantrums” and keep the market pacified. But the Fed is under pressure from the Swiss-based Bank for International Settlements, which has been admonishing central banks to back off from their asset-buying ventures.

An Excuse to Abandon the Fed’s Mandate of Full Employment?

The BIS said in its annual report in June:

Six years have passed since the eruption of the global financial crisis, yet robust, self-sustaining, well balanced growth still eludes the global economy. . . .

Central banks cannot do more without compounding the risks they have already created. . . . [They must] encourage needed adjustments rather than retard them with near-zero interest rates and purchases of ever-larger quantities of government securities. . . .

Delivering further extraordinary monetary stimulus is becoming increasingly perilous, as the balance between its benefits and costs is shifting.

Monetary stimulus alone cannot provide the answer because the roots of the problem are not monetary. Hence, central banks must manage a return to their stabilization role, allowing others to do the hard but essential work of adjustment.

For “adjustment,” read “structural adjustment” – imposing austerity measures on the people in order to balance federal budgets and pay off national debts. The Fed has a dual mandate to achieve full employment and price stability. QE was supposed to encourage employment by getting money into the economy, stimulating demand and productivity. But that approach is now to be abandoned, because “the roots of the problem are not monetary.”

So concludes the BIS, but the failure may not be in the theory but the execution of QE. Businesses still need demand before they can hire, which means they need customers with money to spend. QE has not gotten new money into the real economy but has trapped it on bank balance sheets. A true Bernanke-style helicopter drop, raining money down on the people, has not yet been tried.



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September 12th, 2013

9/12/2013

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As you listen to all of the revisionism of the financial collapse in 2008 at the same time we are memorializing 9-11, take time to see how the two are tied to each other.  Jihadists attacked Wall Street because they see US markets as evil and dangerous.  Several years later we have the economic crash and see that Wall Street is evil and dangerous!

PLEASE DO NOT ALLOW THESE NEO-LIBERALS TO REVISE WHAT HAPPENED AS THEY TRY TO SKIRT THE TRUTH AS TO HOW CRIMINAL THE US FINANCIAL SYSTEM IS AND HOW TENS OF TRILLIONS OF DOLLARS IN FRAUD NEED TO COME BACK TO GOVERNMENT COFFERS AND INDIVIDUALS!



Regarding a revisionist look at the 2008 financial collapse:

I think anyone left listening to NPR/Marketplace on WYPR knows what was presented was propaganda and not journalism so I will just give snippets that show most of what was presented was untrue. We do want to thank public media journalists before the 2010 corporate takeover of public media for their professional and accurate journalism. We know they did so knowing their jobs may be in peril. Professionalism requires commitment to integrity and honesty and those journalists pre-2010 had just that!

In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.[59]

As we all know, this mortgage fraud was conceived at the same time Clinton and his Administrative team, Larry Summers and Robert Rubin were breaking the Glass Steagall wall and this fraud had as its goal the movement of massive amounts of wealth to the top earners through fraud. A goal was to clear the poor and working class from urban centers where Master Plans across the country set affluent development and blowing up the FHA with debt as Wall Street wanted control of all mortgage business.

For anyone not believing when this collapse happened that the entire massive fraud was not planned, there is no doubt today. As the current report on NPR pointed out.....every single bank had credit default swaps (insurance) for all of these mortgage investments with AIG. It is ironic that the 9-11 memory falls at the same time as the anniversary of the 2008 collapse. The jihadist attacked Wall Street for the very reasons that brought the economic collapse just years later!

Five years from the collapse we have the same conditions as existed then....no financial reform, 600 trillion dollars in derivative leverage......little capitalization and an economy ready to collapse this time with bond debt. Again, this collapse will be fueled by fraud as all of the municipal bond/sovereign debt that has happened these several years happened through public malfeasance in collusion with Wall Street just as with the pensions thrown into the stock market in 2007 as the market crashed. Loading municipalities with debt so the next economic collapse created by the bond bubble would move more public assets to the top earners. This is a second phase of wealth redistribution to the top. As everyone in Maryland knows, O'Malley and Rawlings-Blake have leveraged the state and city with so much bond debt that when this crash happens next year.....and it will be much bigger than the 2008 crash....there will be no Federal rescue. Don't worry for the banks.....they already have their credit default swaps for bond investments!

THE AMERICAN PEOPLE HAVE YET TO RECOVER TENS OF TRILLIONS OF DOLLARS IN FINANCIAL FRAUD FROM THE PAST DECADE. REMEMBER, WHEN RULE OF LAW IS SUSPENDED....SO IS STATUTES OF LIMITATION.

Why do you think Maryland is still listed as the state still having mortgage foreclosures? We were ground zero for the mortgage fraud with MERS operating from the Washington beltway. Gansler gave what was the parking ticket settlement of $1 billion to the state fund so O'Malley could claim he balanced the budget (O'Malley used huge cuts in Medicaid to do the same----what a guy...he did that for families!) The money that should have gone to communities and people effected by the fraud went to developers to pad the cost of building new and affluent homes. Baltimore now has such high homelessness, crime, and poverty because in part  politicians have refused to demand justice for the citizens of Baltimore and Maryland. Almost nothing has been done to mitigate the damages of job loss and personal savings lost from the massive mortgage fraud in Maryland. We will bring the corporate fraud back as we rebuild the public justice system state by state!

Below you see some articles that completely negate the report just given by NPR/Marketplace. There have been no real stress tests....there is no real bank capitalization.....none of the financial reform has been enacted and most has been watered away.....the banks are as leveraged and bigger than before.....AND THEY ARE STILL COMMITTING FRAUD EVERY DAY WITH NO JUSTICE!



Class Dunce Passes Fed’s Stress Test Without a Sweat.

Bank Stress Tests Viewed As Fed Deception By Critics

Posted on March 19, 2012 in Bank Lending, Banking News

Every banker knows that public confidence in the banking industry is essential.

With the banking industry approaching a near meltdown last year, the Federal Reserve decided to conduct a series of “stress tests” on the country’s largest banks in order to restore confidence in the banking system. After reviewing the results of the stress tests, many critics now say that the tests were a deception by the Federal Reserve designed to deceive the public into believing that the banking system is sound when, in fact, it is not.

Gary Shilling, who remains bearish on housing and the economy, argues that the fundamentals for the banking industry remain weak in
Bank Stress Tests Don’t End The Pain.

The business climate for major banks around the world has changed remarkably in just four years. Decades ago, they set off on a huge leveraging spree. Then, starting in 2007, many institutions holding bad private and sovereign assets had to be bailed out by central banks and governments to prevent a collapse of the global financial system.

Even with help from the release of reserves for bad loans, U.S. banks’ return on equity was 6.8 percent in the fourth quarter, compared with 15 percent in the pre-crisis salad days. Return on assets, which skips leverage, is 0.76 percent, down from 1.4 percent.

Banks will also be faced with low returns on their basic business as slow economic growth, falling house prices, small returns on stocks, low interest rates and a flat yield curve persist in the remaining five to seven years of global deleveraging that I foresee. Consumer loans will be repaid on balance, and record nonfinancial corporate liquidity and slow economic growth will continue to curb borrowing and mergers-and- acquisitions activity. Then there are the huge counterparty risks on derivatives and potential large further write downs of troubled assets.


Do current prices reflect the continuing deleveraging of banks, persistent slow loan growth, further write-offs of bad real estate and other assets, compressed interest-rate margins, increased capital requirements and increasingly stringent regulation? I’m not convinced they do.  NO!

Jonathan Weil argues in a Bloomberg article that Fed testing of regulatory capital has no connection to reality when it comes to big banks surviving another financial crisis since banks that failed or needed huge bailouts during the crash of 2008 were classified at the time as “well capitalized” by regulators.  Weil goes on to describe the Fed stress tests as a “joke” when they tested Regions Financial Corp which still hasn’t paid back TARP money and has a negative tangible common equity of $525 million


_________________________________________________

1000x Systemic Leverage: $600 Trillion In Gross Derivatives "Backed" By $600 Billion In Collateral

Submitted by Tyler Durden on 12/24/2012 10:07 -0400

There is much debate whether when it comes to the total notional size of outstanding derivatives, it is the gross notional that matters (roughly $600 trillion), or the amount which takes out biletaral netting and other offsetting positions (much lower). We explained previously how gross is irrelevant... until it is, i.e. until there is a breach in the counterparty chain and suddenly all net becomes gross (as in the case of the Lehman bankruptcy), such as during a financial crisis, i.e., the only time when gross derivative exposure becomes material (er, by definition). But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world's combined GDP, because as the "derivative" name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled "Shadow Banking: Economics and Policy" where quietly hidden in one of the appendices it answers precisely this critical question.
The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage.
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Keep in mind that US bank capital was as high as 70% before the Reagan/Clinton bank deregulation started and most financial experts wanted financial reform to have it restored to around 40%.  Neo-liberals moved it from what was 2% at the time of the 2008 crash to what you see below. I think these numbers are high. Needless to say.....this does nothing for bank health.

Bank capitalization means how much physical assets does a bank have to back loans and credit.  As we saw with the article above on the amount of leverage now....your neo-liberal and Obama found it hard to just raise the requirement to 9-10%.   This is what causes the need to bailout these banks....they  bet $600 trillion with just a few hundred billion of capital.

US Bank Capitalization

                                 2008       09         10         11          12
United States          9.3      10.9       11.1       11.2       11.3


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Giant Banks Now 30% Bigger than When Dodd-Frank Financial “Reform” Law Was Passed
Posted on April 17, 2012 by WashingtonsBlog

Size of Banks Killing Economy … But Giant Banks Have Only Gotten Bigger Since Financial “Reform” Enacted


For years, many high-level economists and financial experts have said that – unless we break up the giant banks – our economy will never recover, real reform will be blocked, and democracy and the rule of law will be corrupted.

So how did the government respond to the financial crisis which started in 2007?

Let the giant banks get even bigger.

As Bloomberg notes, the five banks that held assets equal to 43% of the US economy in 2007 before the financial crisis and the bank bailout now control assets that equal 56% of the US economy:

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis.



Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch.

“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

***

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

Simon Johnson, a former chief economist of the International Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

***

Regulatory burden could promote further industry consolidation, according to Wilbur Ross, chairman of WL Ross & Co., a private-equity firm.

“We think the little tiny banks, the 90-odd percent of banks that are under $1.5 billion in deposits, are pretty much an obsolete phenomenon,” he told Bloomberg Television on March 14. “We think they’ll all have to merge with each other, be acquired by bigger banks or something.”

***

In 2011, funding costs for banks with more than $10 billion in assets were about one-third less than for the smallest banks, according to the FDIC.

Some presidents of regional Federal Reserve banks have lambasted too big to fail. As Bloomberg notes:

In recent weeks, at least four current Fed presidents — Esther George of Kansas City, Charles Plosser of Philadelphia, Jeffrey Lacker of Richmond and Richard Fisher of Dallas — have voiced similar worries about the risk of a renewed crisis.

But the most powerful Fed bank – the New York Fed – and Bernanke’s Federal Open Market Committee, as well as Tim Geithner’s Treasury Department, have done everything possible to ensure that the the giant banks become too bigger to fail.



_____________________________________________

As those getting their news other than WYPR/NPR/Marketplace know.....the Fed policy and a bond bill written by Obama and neo-liberals in Congress is blowing up the bond market. THIS IS DELIBERATE....REMEMEBER, THE EUROPEAN DEBT IS SO BAD BECAUSE GOLDMAN SACHS AND DEUTSCHE BANK COLLUDED WITH FINANCIAL MINISTERS TO HIDE SOVEREIGN DEBT SO MORE AND MORE DEBT COULD BE TAKEN ON, JUST AS IS HAPPENING IN THE US TODAY!

Dennis Slothower – the financial analyst responsible for 2011's "Letter of the Year" according to MarketWatch.com - now warns...

Why Stocks Could Collapse...
Beginning as Soon as September 30th!

The Fed has propped up the equity markets for months...
but that could soon come to a disastrous end!

According to Marketwatch.com, Dennis Slothower is the guru behind “The investment letter that evaded the 2008 crash...(and) is now the top performer." -- Marketwatch.com, October 6, 2011

Right now, Dennis is issuing another dire warning.

His technical indicators suggest that the market manipulation we’ve seen over the last several months is about to come to an end.

And with very real threats to this artificially inflated market coming from a potential U.S. debt downgrade...for the possibility of a European collapse...and a sluggish U.S. economy - the bottom could fall out of the U.S. stock market at any time.

This correction could begin as soon as September 30th – so it’s important that you take action now to prepare yourself.

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Whiteout Press Independent News for independent thinkers and independent voters!

November 30, 2011  Special thanks to Bloomberg Marketplace for their detailed reporting.

$700 Billion Bank Bailout was Secretly $7 Trillion November 30, 2011. Washington.

In 2008, President Bush, Secretary Paulson and Chairman Bernanke crafted a bank bailout program they termed TARP or the Toxic Asset Relief Program. It was created in the middle of the night, over a weekend, because if they didn’t act by Monday they said, there wouldn’t be an America anymore. With confusion and fear in his eyes, President Bush handed the reins of power to the former CEO of Goldman Sachs. And instead of limiting himself to the $700 billion Congress grudgingly approved, Hank Paulson printed $7 trillion dollars, funneled it through the Federal Reserve and handed it over to the world’s biggest banks with no strings attached and in total secrecy.

Hank Paulson, former Goldman Sachs CEO and architect of the bank bailouts

While watching Whiteout Press’ favorite morning business show, 'In Business with Margaret Brennan' on Bloomberg TV, the show was interrupted by a startling announcement. Bloomberg investigators had uncovered details that the most powerful men in Washington and New York were desperate to keep secret. In fact, Bloomberg had to sue the Federal government for access to the events of 2009 and 2010 regarding the US bank bailout. The Federal Reserve however, insisted all details of the largest bank bailout in the history of the world had to be kept completely secret from the American people.

The government fought releasing the secret details all the way the US Supreme Court. Earlier this year, Bloomberg won their lawsuit. Treasury and the FED weren’t going to surrender to the American people that easy however. The FED turned over 29,000 documents and details of 21,000 transactions made during the time period covered by TARP and the nation’s bank bailout. Attempting to handcuff Bloomberg investigators with an avalanche of documentation, imagine their surprise when Margaret Brennan’s show was interrupted yesterday with the unbelievable news that the bank bailout American’s were led to believe was only $700 billion, was actually $7.77 trillion. According to the NY Fed, the total amount of US currency in circulation in the entire world at the time was only $829 billion.

While the events are difficult to follow for anyone who’s not familiar with the strange way America’s banking and economic system works, not to mention all the government and Wall Street secrecy, here’s a novice’s view of what happened during the panicked early days of America’s economic collapse. When the $700 billion bank bailout authorized by Congress wasn’t going to be anywhere near enough to save banks like Goldman Sachs, JP Morgan, Citigroup and Bank of America, Ben Bernanke and the FED opened up the nation’s discount borrowing window – to the tune of $7.77 trillion dollars.


Republican Presidential candidate Ron Paul (R-TX) could do a much better job of explaining the almost criminal nature of the FED than this Whiteout Press author ever could. With his pledge to abolish the FED, Rep Paul might explain – imagine you Joe Citizen walk into your city hall and ask for a $10 billion dollar loan at zero percent interest. They give you, and only you, that loan because you’re ‘special’. You then loan that $10 billion out to others at 5, 10 or 20 percent yearly interest for things like homes, which are guaranteed by the taxpayers, so there’s no risk of nonpayment. When that $15 or $20 billion is paid back to you, you pay back the FED the original $10 billion and keep the rest.

Instead of loaning that $7.77 trillion to the American people as the American government intended, banks throughout the world took advantage of the US taxpayer and used that money to secretly cover massive losses the banks were suffering from their stupidly investing in their own worthless financial instruments – instruments the banks knew were worthless and doomed to fail. Like a modern day shell game, trillions of dollars floated from one banking institution to another, appearing to fill all balance sheet holes everywhere. Not all the banks used the money to fill holes however. Some used it to make massive profits.

The Bloomberg reporting revealed banks like Barclays, Banco Santander and BNP Parabas made a fortune on the US taxpayer program. Barclays turned their money into a $26.7 billion profit. Banco Santander profited $29.2 billion and BNP Parabas made $17.1 billion.

They weren’t alone. According to Bloomberg’s data, 97 different financial institutions around the globe turned their ‘discount window’ into profits during the two years of the financial crisis. The most suspicious part – the US government insisted on keeping every single transaction a secret. In one day alone at the end of 2008, the Federal Reserve gave out $1.2 trillion dollars to banks – the most on any day before or since.

For those who remember, Bank of America was accused of using its funds not to bailout underwater homeowners, but instead to purchase a bank in China. Bank of America made a profit of $14.2 billion using their ‘special’ discount borrowing privilege. Bank of America wasn’t the only player in the middle of the US financial collapse that made massive profits off the US taxpayer. Wells Fargo made $12.1 billion. JP Morgan made $13.8 billion, Goldman Sachs made $12.7 billion, American Express made $1.4 billion, Discover made $1.4 billion, US Bancorp profited $7.2 billion, HSBC made $11.6 billion, PNC Financial $1.4 billion, Lloyds made $9.6 billion and the list goes on and on.

Not all the banks that made massive profits off the US taxpayers during the peak of the financial crisis were well-known American brands. Foreign banks also made billions in profits, including the National Australia Bank, Bank of Toronto, Mitsubishi, Skandinavista, Chang Hwa, the Israel Discount Bank and dozens more.



Not all banks used the US taxpayers to make billions in extra profits. Some banks tried, and lost.

Among the banks that lost money on the secret loan program were Citigroup, losing $29.3 billion, Royal Bank of Scotland lost $45.3 billion, Credit Suisse lost $4.1 billion, Deutsche Bank lost $433 million, Fifth Third lost $1 billion, Wachovia lost $31.6 billion, Merrill Lynch lost $35.9 billion, Arab Banking lost $77 million, Allied Irish Banks lost $3.4 billion, Morgan Stanley lost $3 billion, Industrial Bank of Korea lost $559 million and the list goes on and on.

Readers can take their pick regarding which aspect of this story to be most angry about. Some will be outraged that for-profit banks are taking advantage of the US taxpayer and making billions in free money. Others will be angry that based on the above list, it appears the US taxpayer is also guaranteeing the profits of foreign banks all over the world. And some will be outraged by the fact that the entire story was kept secret from not only the American people, but also their representative in Congress and even officials at the FED.

Bloomberg asked one longtime critic of giant banks, Rep. Sherrod Brown (D-OH), to comment. “When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” she says, “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

Bloomberg also quotes other individuals who should have been aware of what was going on, but weren’t. Gary H. Stern, Minneapolis FED Chairman at the time, insists he, “wasn’t aware of the magnitude.” Rep. Brad Miller (D-NC), member of the House Financial Services Committee, says, “TARP at least had some strings attached. With the Fed programs, there was nothing.”

Misleading Shareholders

With hindsight being 20/20, Bloomberg looked at some of the biggest emergency borrowers and compared their financial situation with the outlook and forecasts made by the bank’s CEO’s to their shareholders. One such example is Ken Lewis, CEO of Bank of America. On November 26, 2008 he informed shareholders that BofA was, “one of the strongest and most stable major banks in the world.” We’ll let you the reader decide - Bank of America owed the US government a staggering $86 billion on that day.


Another example is JP Morgan Chase’s CEO Jamie Dimon. On March 26, 2010, he reassured his shareholders that JP Morgan didn’t need a bailout and only participated in the program in the beginning, “at the request of the Federal Reserve to help motivate others to use the system.” In reality, JP Morgan was still taking advantage of the emergency program and owed the US government $48 billion dollars more than a year after the program began.

As far as the American people go, the two Representatives of theirs in Congress that should have been made aware of what was going on, weren’t. Both the Republican and Democratic overseers of the massive bank bailout, Rep. Judd Gregg (R-NH) and Rep. Barney Frank (D-MA), both confirmed to Bloomberg they were kept in the dark.

“We were aware emergency efforts were going on” Frank said, “We didn’t know the specifics.” Congressman Frank announced his retirement earlier this week. Rep. Judd Gregg simply responded, “We didn’t know the specifics.” Former Congressman Judd Gregg is now employed by Goldman Sachs.

What’s Changed

Most Americans couldn’t explain how banks function or how the bank bailout worked if their lives depended on it. But most assume the US taxpayer loaned billions to banks to save the industry and avoid economic collapse, rampant unemployment and a housing crash. But if one were to take a step back and look at the new landscape, a new picture emerges of what the bank bailout was really about. In the five years from before the crisis in 2006 to after the crisis in 2011, the six largest US banks increased their assets, or money and property they own, from $6.8 trillion dollars to $9.5 trillion.

Dallas Federal Reserve President Richard Fisher summed up the thoughts of many when he called that fact, “un-American”.




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July 08th, 2013

7/8/2013

0 Comments

 
WHEN IT COMES TO BEING RANKED AT THE BOTTOM NATIONALLY IN FRAUD, CORRUPTION, AND TRANSPARENCY.....STATE ASSEMBLYMEN JON CARDIN AND PETER FROSH WORK TO PROTECT THE FRAUDSTERS AS DOES ATTORNEY GENERAL DOUG GANSLER WHO IS RUNNING FOR GOVERNOR 

WRITE TO MICHAEL GREENBERGER AT U OF M LAW SCHOOL AND TELL HIM MARYLAND WANTS A RULE OF LAW ATTORNEY GENERAL!!!



I want to move away from the attack on health care in America to reminding people that all of the austerity cuts, rise in local and state taxes, cutting and privatization of public programs and assets are all caused by revenue lost to corporate fraud with no attempt by Justice to recover.  When they give a press release saying they are fighting fraud and give an amount of a few billion.....largest ever.....we know there are tens of trillions of dollars owed the American people.  WE CANNOT LET STAND THE THEFT OF WHAT IS OUR AND OUR CHILDREN'S FUTURE.

Do not believe the corporate media favorite for health fraud numbers.....80 billion dollars,......we all know that number is more like $600 billion each year for these few decades.  So it is clear, if anything is done with health care costs....they need to use universal care to bring back all that stolen taxpayer and individual health care money!


In Maryland, our State Attorney General Doug Gansler who has the distinction of being the deputy dog for a state ranked at the bottom for fraud and corruption and has suspended Rule of Law in Maryland has a campaign sign with his picture saying he is fighting for health insurance coverage for the little guys.  This is such garbage as to make the strongest stomach weak.  He single-handedly ignores all health fraud that has billions of dollars lost in Maryland alone to fraud and he is silent as Maryland Assembly makes sure the laws protect the health industry from public ability to recover fraud.  GANSLER IS AIDING AND ABETTING CORPORATE FRAUD AND RUNNING FOR HIGHER OFFICE!


We are going to see over this next year a release of millions of bank and government documents from Wikileak and from NSA Snowden that give the public ever more of a view as to the extent of criminal fraud whether corporate tax evasion or other fraud.  I am sure we will see as well that NSA was not only surveilling for terrorist activity....they were data mining to give US corporations advantage in markets.....all of which is illegal.  You are not seeing any attempts at stopping the economic chaos and it is because we have neo-liberals who 'WIN AT ALL COSTS' when it comes to corporate profits!

VOTE YOUR INCUMBENT OUT OF OFFICE AT ALL LEVELS....DO YOU HEAR YOUR DEMOCRATIC POL SHOUTING LOUDLY AND STRONGLY TO PAY ALL GOVERNMENT DEBT WITH RECOVERY OF CORPORATE FRAUD?  THEN THEY ARE NOT A DEMOCRAT WORKING FOR LABOR AND JUSTICE!!!


Medical Fraud’s Staggering Price Tag


August 18, 2009

As the nation engages in a contentious debate over health care, one thing that almost everyone agrees on is the need to fight rampant fraud.  Rip-offs add billions of dollars a year to the tab for health care in America. How much money could be saved by eliminating fraud?  "It's just an extraordinary sum," Malcolm Sparrow of Harvard University told National Public Radio. Unsure if fraud costs $100 billion or $600 billion, Sparrow told NPR he is sure that whatever the first digit is, it has 11 zeroes after it. To address the problem, the Senate health committee on July 23 voted 23 to 0 for an amendment by Senator Bernie Sanders  that would double penalties for health care fraud. “What we have seen for many years is the systemic fraud perpetrated by private insurance companies, private drug companies, and private for-profit hospitals ripping off the American people and the taxpayers of this country to the tune of many billions of dollars,” Sanders said.

Sanders’ amendment would authorize double the current penalties under the False Claims Act for fraudulently billing new health exchanges created by the reform bill. Convicted companies would face fines of up to six times the amount of the fraud. “I worry very much that for many international corporations getting hit with treble damages may well be worth it and passed along as a cost of doing business,” Sanders said. “What we have to tell these big multi-national corporations is that if they are going to engage in fraud they’re going to pay for it dearly.”

Virtually all of the major hospital chains, private insurance companies, and pharmaceutical companies have been involved in massive health care fraud over the past decade, the senator added. He also pointed to a string of criminal and civil cases against many of the leading corporate health care providers in the country, including:

  • Earlier this year, a jury found Pfizer owed Wisconsin $9 million for violating the state Medicaid fraud law more than 1.4 million times by purposely overcharging the state for prescription drugs. The company faces potential fines from $140 million to $21 billion.  (Now, how does the public have any faith in these figures up to $21 billion, as we are never allowed to see these settlement details....the answer is we should have no faith)!
  • Also in 2009, UnitedHealth, a leading insurance company, paid $350 million to settle lawsuits brought by the American Medical Association and other physician groups for shortchanging consumers and physicians for medical services outside its preferred network.
  • In 2003, GlaxoSmithKline paid $88 million in civil fines for overcharging Medicaid for its anti-depressant Paxil.
  • Also in 2000, Humana paid $14.5 million to settle federal charges of overcharging government health programs.
  • In 2000, the Hospital Corporation of America agreed to pay $745 million to settle civil charges that it systematically defrauded Medicare, Medicaid and other federally-funded health programs.
    (The head of HCA when this fraud happened is now Governor of Florida having a field day with health care reform....HCA has the most profit of all health care companies)
In addition to the Sanders Amendment, other initiatives to fight fraud include a new Obama administration task force made up of officials from the Department of Justice and the Department of Health and Human Services. A House version of the health care overhaul bill also includes anti-fraud provisions, such as $100 million a year to fight fraud and increased penalties for perpetrators, according to NPR.

To give an idea of what $100 million to fight fraud would do....we have one business in Baltimore getting $100 million in tax breaks.  It is nothing.  But all of fraud recovery would pay for itself, no republicans or taxpayer money needed.
________________________________________________


We must not let this stand as we allowed ourselves to lose political representation by not paying attention to whom we elected......from Clinton on we simply sent neo-liberals back to work with republicans to hand the country over to corporate interests!  These pols have watched as all fraud was left without justice, the financial oversight agencies worked double-time to protect Wall Street from loses and manipulated great gains while the rest of the country falls into poverty.  NONE OF THE FINANCIAL REFORM HAS HAPPENED AND NO JUSTICE FOR TENS OF TRILLIONS IN BANK FRAUD HAS OCCURRED.  THIS IS TREASONOUS AND YOUR POLITICIAN IS AIDING AND ABETTING CRIME!

Wall Street Dodges Financial Reform Again --

By Erika Eichelberger

| Fri Jul. 5, 2013 2:01 PM PDT  Mother Jones
    30

The Dodd-Frank financial reform act, the law designed to clean up the abuses that led to the financial crisis, celebrates its third birthday this month. But only about a third of the rules required by the legislation have been finalized so far, and even those are not going into effect as scheduled. This week provided a perfect example of why that is: The Federal Reserve granted Goldman Sachs a two-year extension to implement a key Dodd-Frank rule that would require banks to move risky trading into separate affiliates that are not backed by the Federal Deposit Insurance Corporation (FDIC). Several other of the nation's biggest banks won the same exemption last month.

Financial reformers are not shocked. "Quelle surprise!" quips Bart Naylor, a policy advocate at the consumer advocacy group Public Citizen. "The Federal Reserve decides to heed the crush of Wall Street lobbyists."

The Dodd-Frank rule, which Goldman Sachs was supposed to implement by July 16, requires FDIC-insured banks to move most of their derivatives trades into separate firms so that when a trade goes bad the bank will have to handle the fallout, not taxpayers. (Derivatives are financial products with values derived from underlying variables, like crop prices or interest rates; they were a major catalyst in the economic meltdown of 2008.) In its request for an extension, Goldman told the Federal Reserve—the main overseer of derivatives dealers—that complying with the deadline would mean the firm would need to either divest or stop a big portion of its swaps trading; a transition period, Goldman said, would be needed to ensure that the rest of the economy is not damaged by the shift. On Tuesday, the Fed agreed.

There is a provision in the Dodd-Frank law that allows banks to request a two-year transition period, if complying with the rule will damage the wider financial system. But banks were already given three years to phase in compliance with the rule. "If the regulators hadn't let them waste [that] three-year period…then they could have been prepared to execute [the rule] in a way that was less disruptive," says Marcus Stanley, policy director at the financial reform advocacy group Americans for Financial Reform. "It's like saying I need an extension on my homework because it would be disruptive for me to to have do it all the night before," he adds. "This is just a generalized excuse for postponing action."

In June, other major banks, including JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo, were granted two-year extensions on the same rule. Along with Goldman Sachs, those banks control more than 90 percent of the $700 trillion derivatives market.

"The procrastination of both regulators and the banks on this portion of Dodd-Frank has been pretty amazing," Stanley told Bloomberg Businessweek in January.

This particular Dodd-Frank rule is also under assault by Wall Street's allies in Congress. A bill that would exempt a large number of derivatives trades from the so-called pushout rule sailed through the House financial services committee in May. It could come to the House floor for a vote as soon as next week.


_____________________________________________

Freddie Mac was the dumping ground for all of the millions of dollars of fraudulent subprime loans along with AIG Insurance insuring these same fraudulent loans against default.  Both are taxpayer liabilities as AIG was nationalized and Freddie is a private company that partners with the government so the taxpayers can pay all costs.....just as with all public private partnerships!

The massive subprime loan fraud involved trillions of dollars in fraud and Freddie and Fannie had/have $600 billion in bad loans on their books.  If we had a Rule of Law nation the banks would have been forced to write down/off those bad loans on Freddie's books as they were criminal and the taxpayer would have taken a far lesser hit for this Wall Street Freddie.  Rather, Obama and Third Way corporate neo-liberals worked hard to see that banks and shareholders lost little or nothing....actually gaining from the massive fraud.  We saw a nationalized AIG pay 100% on insurance claims which never happens to a bankrupt corporation.  So while main street was losing big time in investments, lost homes, and jobs.....the neo-liberals turn the banks fraud into massive gains.  The Federal Reverve's policy of QE was simply a way of removing all toxic loans from the banks balance sheet and all of those trillions in bad debt are going to the Treasury for the taxpayer to pay.  Now, the taxpayer is going to lose on the fraudulent Freddie loans that were never written down/off because they are auctioning at a huge loss those loans and it will be the same banks and investment firms that will buy these discounted loans that they created through fraud.  Remember as well, these few years have seen foreclosures bundled and sold in bulk to these same players at discount.

Sp these 5 years of Obama's term and a neo-liberal Senate has seen all the massive mortgage fraud stay with the criminal banks, watched as the Fed and Treasury turned those fraudulent gains into a watershed of profit through manipulated markets, and sold most of the millions of homes involved in fraud and foreclosed because of the economic crash back to the same people.  The money made by all of this fraud and corruption is in the trillions and the cost to taxpayers stuck with the fraud debt and economic damage in the tens of trillions.  THIS IS JUST FOR THE SUBPRIME MORTGAGE FRAUD.  IT DOES NOT INCLUDE ALL OF THE TENS OF TRILLIONS IN CORPORATE FRAUD.

YOUR LONG-TERM THIRD WAY NEO-LIBERAL HAS WORKED ON THIS SCHEME SINCE THE CLINTON ADMINISTRATION ALONG WITH BUSH.....OBAMA AND THE SUPERMAJORITY OF NEO-LIBERALS COULD HAVE PROTECTED THE PEOPLE SIMPLY BY APPLYING RULE OF LAW.


RUN AND VOTE FOR LABOR AND JUSTICE NEXT ELECTIONS!  IF YOUR LABOR LEADERS AND JUSTICE LEADERS ARE NOT RUNNING CANDIDATES IN PRIMARIES AGAINST NEO-LIBERALS.....THEY ARE NOT WORKING FOR YOU AND ME!




Freddie Mac to $3 billion bills July 8
(Reuters) - Freddie Mac, the No. 2 U.S. home funding company, said it will sell $3 billion of reference bills on Monday.

Freddie Mac said it plans to sell $1 billion of three-month bills due Oct. 7, 2013, $1.5 billion of six-month bills, due Jan. 6, 2014, and $500 million of 12-month bills due July 7, 2014.

The bills will be sold over the Internet in a Dutch auction. In such uniform price auctions, successful bidders pay only the price of the lowest accepted bid rather than the actual price as in a conventional multiple-price auction.

Bids will be accepted from authorized dealers until 9:45 a.m. EDT (1345 GMT).

Settlement is July 9.


XXXXXXXXXXXXXXXXXXXXXX

Reference Bills® securities are unsecured general corporate obligations. This program supplements our Discount Notes program.

  • Provide a predictable supply of short-term debt at popular maturities, from one-month through one-year
  • Are offered in sizeable volumes on a regular, standardized issuance cycle
  • One-month Reference Bills auctions will be optional each week, with a minimum of one auction per month. Three- and six-month Reference Bills will be auctioned every week. Auctions of 12-month Reference Bills securities will be optional each week
  • Are globally sponsored and distributed
  • Are intended to encourage active trading and market-making
  • Facilitate term repo market development
  • Are designed to offer predictable supply, pricing transparency and liquidity, thereby providing premium-quality alternatives to Treasury bills.
________________________________________________

We really need to know that what is happening with the TPP and with the recent Supreme Court rulings violates the US Constitution.....it is not another interpretation, it is rewriting.  Corporations are not people, they cannot be allowed to circumvent Constitutional rights simply by including a clause in a business contract, and they cannot be given the rights of writing law that excludes the people's rights to legislate change.  All of this is a COUP by the politicians you re-elect each year......THEY ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFITS AND NOT FOR THE PEOPLE!!

In Maryland we are starting to hear lectures in the community that describes Maryland as a corporation and that as a colony in the times described below they were chartered by the Queen as a corporation.....and that is what they are trying to do right now with all these public private partnerships.....make the state into one big corporation with the 1% as shareholders and the citizens as peasants!  THIS IS NOT HYPERBOLE....IT IS HAPPENING!  WE NEED TO SEE PEOPLE FORMING DEMOCRACY NOW ORGANIZATIONS IN THEIR COMMUNITIES!

What We Can Learn From America's First Tea Party About Countering Corporate Power

Saturday, 06 July 2013 09:57 By Thom Hartmann, Yes! Magazine | News Analysis

(Image: Wikimedia)Before there was Citizens United, a modern Tea Party movement, or national momentum to ban corporate personhood, Thom Hartmann shows that resistance to corporate power is just as patriotic as Boston’s original Tea Party.

On a cold November day, activists gathered in a coastal town. The corporation had gone too far, and the two thousand people who'd jammed into the meeting hall were torn as to what to do about it. Unemployment was exploding and the economic crisis was deepening; corporate crime, governmental corruption spawned by corporate cash, and an ethos of greed were blamed. “Why do we wait?” demanded one at the meeting, a fisherman named George Hewes. “The more we delay, the more strength is acquired” by the company and its puppets in the government. “Now is the time to prove our courage,” he said. Soon, the moment came when the crowd decided for direct action and rushed into the streets.

That is how I tell the story of the Boston Tea Party, now that I have read a first-person account of it. While striving to understand my nation's struggles against corporations, I came upon a first edition of Retrospect of the Boston Tea Party with a Memoir of George R.T. Hewes, a Survivor of the Little Band of Patriots Who Drowned the Tea in Boston Harbor in 1773, and I jumped at the chance to buy it. Because the identities of the Boston Tea Party participants were hidden (other than Samuel Adams) and all were sworn to secrecy for the next 50 years, this account (published 61 years later) is the only first-person account of the event by a participant that exists, so far as I can find. As I read, I began to understand the true causes of the American Revolution.

I learned that the Boston Tea Party resembled in many ways the growing modern-day protests against transnational corporations and small-town efforts to protect themselves from chain-store retailers or factory farms. The Tea Party's participants thought of themselves as protesters against the actions of the multinational East India Company.

Although schoolchildren are usually taught that the American Revolution was a rebellion against “taxation without representation,” akin to modern day conservative taxpayer revolts, in fact what led to the revolution was rage against a transnational corporation that, by the 1760s, dominated trade from China to India to the Caribbean, and controlled nearly all commerce to and from North America, with subsidies and special dispensation from the British crown.

Hewes notes: “The [East India] Company received permission to transport tea, free of all duty, from Great Britain to America…” allowing it to wipe out New England–based tea wholesalers and mom-and-pop stores and take over the tea business in all of America. “Hence,” he told his biographer, “it was no longer the small vessels of private merchants, who went to vend tea for their own account in the ports of the colonies, but, on the contrary, ships of an enormous burthen, that transported immense quantities of this commodity ... The colonies were now arrived at the decisive moment when they must cast the dye, and determine their course ... ”

A pamphlet was circulated through the colonies called The Alarm and signed by an enigmatic “Rusticus.” One issue made clear the feelings of colonial Americans about England's largest transnational corporation and its behavior around the world:“Their Conduct in Asia, for some Years past, has given simple Proof, how little they regard the Laws of Nations, the Rights, Liberties, or Lives of Men. They have levied War, excited Rebellions, dethroned lawful Princes, and sacrificed Millions for the Sake of Gain. The Revenues of Mighty Kingdoms have entered their Coffers. And these not being sufficient to glut their Avarice, they have, by the most unparalleled Barbarities, Extortions, and Monopolies, stripped the miserable Inhabitants of their Property, and reduced whole Provinces to Indigence and Ruin. Fifteen hundred Thousands, it is said, perished by Famine in one Year, not because the Earth denied its Fruits; but [because] this Company and their Servants engulfed all the Necessaries of Life, and set them at so high a Rate that the poor could not purchase them.”

After protesters had turned back the Company's ships in Philadelphia and New York, Hewes writes, “In Boston the general voice declared the time was come to face the storm.”

The citizens of the colonies were preparing to throw off one of the corporations that for almost 200 years had determined nearly every aspect of their lives through its economic and political power. They were planning to destroy the goods of the world's largest multinational corporation, intimidate its employees, and face down the guns of the government that supported it.

The Queen's Corporation

The East India Company's influence had always been pervasive in the colonies. Indeed, it was not the Puritans but the East India Company that founded America. The Puritans traveled to America on ships owned by the East India Company, which had already established the first colony in North America, at Jamestown, in the Company-owned Commonwealth of Virginia, stretching from the Atlantic Ocean to the Mississippi. The commonwealth was named after the “Virgin Queen,” Elizabeth, who had chartered the corporation.


Elizabeth was trying to make England a player in the new global trade sparked by the European “discovery” of the Americas. The wealth Spain began extracting from the New World caught the attention of the European powers. In many European countries, particularly Holland and France, consortiums were put together to finance ships to sail the seas. In 1580, Queen Elizabeth became the largest shareholder in The Golden Hind, a ship owned by Sir Francis Drake.

The investment worked out well for Queen Elizabeth. There's no record of exactly how much she made when Drake paid her share of the Hind's dividends to her, but it was undoubtedly vast, since Drake himself and the other minor shareholders all received a 5000 percent return on their investment. Plus, because the queen placed a maximum loss to the initial investors of their investment amount only, it was a low-risk investment (for the investors at least—creditors, such as suppliers of provisions for the voyages or wood for the ships, or employees, for example, would be left unpaid if the venture failed, just as in a modern-day corporation). She was endorsing an investment model that led to the modern limited-liability corporation.

After making a fortune on Drake's expeditions, Elizabeth started looking for a more permanent arrangement. She authorized a group of 218 London merchants and noblemen to form a corporation. The East India Company was born on December 31, 1600.

By the 1760s, the East India Company's power had grown massive and worldwide. However, this rapid expansion, trying to keep ahead of the Dutch trading companies, was a mixed blessing, as the company went deep in debt to support its growth, and by 1770 found itself nearly bankrupt.

The company turned to a strategy that multinational corporations follow to this day: They lobbied for laws that would make it easy for them to put their small-business competitors out of business.

Most of the members of the British government and royalty (including the king) were stockholders in the East India Company, so it was easy to get laws passed in its interests. Among the Company's biggest and most vexing problems were American colonial entrepreneurs, who ran their own small ships to bring tea and other goods directly into America without routing them through Britain or through the Company. Between 1681 and 1773, a series of laws were passed granting the Company monopoly on tea sold in the American colonies and exempting it from tea taxes. Thus, the Company was able to lower its tea prices to undercut the prices of the local importers and the small tea houses in every town in America. But the colonists were unappreciative of their colonies being used as a profit center for the multinational corporation.

Boston's Million-Dollar Tea Party

And so, Hewes says, on a cold November evening of 1773, the first of the East India Company's ships of tax-free tea arrived. The next morning, a pamphlet was widely circulated calling on patriots to meet at Faneuil Hall to discuss resistance to the East India Company and its tea. “Things thus appeared to be hastening to a disastrous issue. The people of the country arrived in great numbers, the inhabitants of the town assembled. This assembly, on the 16th of December 1773, was the most numerous ever known, there being more than 2000 from the country present,” said Hewes.

The group called for a vote on whether to oppose the landing of the tea. The vote was unanimously affirmative, and it is related by one historian of that scene “that a person disguised after the manner of the Indians, who was in the gallery, shouted at this juncture, the cry of war; and that the meeting dissolved in the twinkling of an eye, and the multitude rushed in a mass to Griffin's wharf.”

That night, Hewes dressed as an Indian, blackening his face with coal dust, and joined crowds of other men in hacking apart the chests of tea and throwing them into the harbor. In all, the 342 chests of tea—over 90,000 pounds—thrown overboard that night were enough to make 24 million cups of tea and were valued by the East India Company at 9,659 Pounds Sterling or, in today's currency, just over $1 million.

In response, the British Parliament immediately passed the Boston Port Act stating that the port of Boston would be closed until the citizens of Boston reimbursed the East India Company for the tea they had destroyed. The colonists refused. A year and a half later, the colonists would again state their defiance of the East India Company and Great Britain by taking on British troops in an armed conflict at Lexington and Concord (the “shots heard 'round the world”) on April 19, 1775.

That war—finally triggered by a transnational corporation and its government patrons trying to deny American colonists a fair and competitive local marketplace—would end with independence for the colonies.

The revolutionaries had put the East India Company in its place with the Boston Tea Party, and that, they thought, was the end of that. Unfortunately, the Boston Tea Party was not the end of that. It was only the beginning of the power of corporations in America.

The Birth of the Corporate “Person”

Fast forward 225 years.

The American war over corporate power is heating up again. A current struggle centers on the question of whether corporations should be “people” in the eyes of the law.

In October 2002, Nike appealed a lawsuit against it to the Supreme Court, asking it to rule that Nike's letters to newspapers about treatment of workers in Indonesia and Vietnam are protected by the First Amendment.

In Pennsylvania, several townships recently passed laws forbidding corporate-owned farms. In response, agribusiness corporations threatened to sue the townships for violation of their civil rights—just as if these corporations were persons.

Imagine. In today's America, when a new human is born, she is instantly protected by the full weight and power of the US Constitution and the Bill of Rights. Similarly, when papers called articles of incorporation are submitted to governments in America (and most other nations of the world), another type of new “person” is brought forth into the nation.

The new corporate person is instantly endowed with many of the rights and protections of personhood. It doesn't breathe or eat, can't be enslaved, can live forever, doesn't fear prison, and can't be executed if found guilty of misdoings. It is not a human but a creation of humans. Nonetheless, the new corporation gets many of the Constitutional protections America's founders gave humans to protect them against governments or other potential oppressors. How did corporations become persons?

After the Revolutionary War, Thomas Jefferson proposed a Bill of Rights with 12 amendments, one of which would “ban commercial monopolies,” forever making it illegal for corporations to own other corporations, to do business in more than one specific product or market, and thus forever preventing another oppressive commercial juggernaut like the East India Company from arising again in North America to threaten democracy and oppress the people.

But Jefferson's amendment failed and the corporations fought back. Now those corporations use the club of the amendments that did pass to influence elections and legislation favoring them—in the name of their rights as persons.

An Historic Goof?

What most people don't realize is that this is a recent agreement—and it is based on an historic error. Only since 1886 have the Bill of Rights and the 14th Amendment been applied explicitly to corporations. For 100 years people have believed that the 1886 case Santa Clara County v. Southern Pacific Railroad included the statement “Corporations are persons.” But looking at the actual case documents, I found that this was never stated by the court, and indeed the chief justice explicitly ruled that matter out of consideration in the case.

The claim that corporations are persons was added by the court reporter who wrote the introduction to the decision, called “headnotes.” Headnotes have no legal standing.

It appears that corporations acquired personhood by persuading a court reporter and a Supreme Court judge to make a notation in the headnotes of an unrelated law case. In Everyman's Constitution, legal historian Howard Jay Graham documents scores of previous attempts by Supreme Court Justice Stephen J. Field to influence the legal process to the benefit of his open patrons, the railroad corporations. Field, as judge on the Ninth Circuit in California, had repeatedly ruled that corporations were persons under the 14th Amendment, so it doesn't take much imagination to guess what Field might have suggested Court Recorder J.C. Bancroft Davis include in the transcript, perhaps even offering the language, which happened to match his own language in previous lower court cases.

Alternatively, Davis may have acted on his own initiative. This was no ordinary court reporter. He was well-connected to the levers of power in his world, which in 1880s America were principally the railroads, and had, himself, served as president of the board of a railroad company.

Regardless of how it happened, an amendment to the Constitution, designed to protect the rights of African Americans after the Civil War, passed by Congress, voted on and ratified by the states, and signed into law by the president, was re-interpreted in 1886 for the benefit of corporations. The notion that corporations are persons has never been voted into law by the people or by Congress, and all the court decisions endorsing it derive from the precedent of the 1886 case—from Davis' error.

Other legal errors have been corrected with time. The notions that women aren't persons under the law, (affirmed, for example, in the 1873 Bradwell v. State case) and that blacks aren't entitled to equal protection (decided in the Dred Scott and Plessy cases) were superseded by court cases affirming the full rights of African Americans and women under the law. The establishment of corporate personhood, on the flimsy foundation of a court reporter's insertion of a phrase into a legal summary, may be the next mistake to be corrected, particularly if grassroots efforts continue to challenge the legitimacy of corporate personhood.

(Adapted from Thom Hartmann's book Unequal Protection: The Rise of Corporate Dominance and The Theft of Human Rights)


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THIS IS FROM A WIKLEAKS RELEASE....THERE ARE MILLIONS OF PAGES FROM HACKED BANK DATA THAT IS TRICKLING OUT.....REMEMBER, MUCH OF THESE TRILLIONS STASHED IN OFFSHORE ACCOUNTS ARE FRAUD.

Below you see just the tip of the iceberg with corporate tax evasion......the wealthy have all their wealth in corporations and these corporations are avoiding all taxes.  As is said below....there are lots of ways to get that money back other than hunting and taking these corporations to court!

DO NOT STOP SHOUTING FOR JUSTICE IN GETTING THIS MONEY BACK INTO GOVERNMENT COFFERS....IT IS WHY THEY ARE CUTTING ALL PROGRAMS AND SERVICES FOR PUBLIC INTEREST AND LOCALLY RAISING TAXES ON THE MIDDLE/LOWER CLASS TO MAKE UP FOR LOST CORPORATE REVENUE!


You will be taxed to death and get nothing for it if we do not reverse this
!


Commenter on the article below:


Sigh, what a racket Submitted by beowulf on Tue, 01/18/2011 - 1:00am If this were something the government was serious about stopping, they'd treat these accounts like they do any cash held by suspected drug mules. They take the money (even if they let the suspect go) and tell them, if you want the money back, you can sue us and explain to the judge where the money came from.

One of my pet peeves about the tax system is that the capital gains tax, which is already taxed at a lower rate than earned income, does not apply to unrealized (or "accrued") capital gains. And since capital gains tax liability dies with the capital holder, their heirs inherit the property with all prior capital gains wiped clear. That's kind of a big tax loophole. For liquid property like stocks and bonds, cap gains could easily be taxed annually (so-called "accrual taxation"). For illiquid property like real estate or closely held company stock, cap gains could still be taxed at realization but with an interest penalty for every year their accrued cap gains were not taxed ( "retrospective taxation"). And if you don't sell it, death should be a realization event (last year when there was no estate tax, for once, heirs WERE required to pay capital gains taxes on the accrued gains).

For anyone who thinks its unconstitutional or impracticable to write accrual or retrospective taxation into the tax code, they're both already in the tax code. Futures contracts are taxed on an accrual basis and retrospective taxation already applies to passive foreign investment company stock.

What I'm driving out is, if the government traced the money from offshore bank accounts to offshore stock holdings, there would be a LOT of unpaid taxes owed simply from the interest penalty. Since they won't do that, if Congress simply applied accrual taxation to all securities and retrospective taxation to all other property. It would at least triple (key words being "at least") the $100 billion in capital gains taxes collected now without raising tax rates. I expect Lambert to get a tax credit for his compost pile before we see that happen.

Accrual taxation, 26 USC 1256 "contracts marked to market"
http://www.law.cornell.edu/uscode/html/u...
Retrospective taxation, 26 USC 1291 "interest on tax deferral"
http://www.law.cornell.edu/uscode/26/usc...


Check Out Who's Hiding $32 Trillion in Offshore Accounts
  • Greg Madison, Associate Editor - May 1, 2013


More than two million emails that shed light on the biggest tax dodge in history - trillions of dollars hidden in offshore accounts - have been uncovered by the British newspaper The Guardian and the Washington, D.C.-based International Consortium of Investigative Journalists (ICIJ).

Some $32 trillion has been hidden in small island banking hubs which host a bevy of trust funds, shell corporations and other tax havens, the Tax Justice Network estimates.

This money is to the financial world what the Higgs boson and dark matter are to particle physics: It's tough to prove it's there, but the universe doesn't make much sense without it. It's just a matter of connecting the money to the people hiding it.

That's been a tall order... until now.

An Unprecedented Tax Dodge Next to this bombshell, Wikileaks looks like a first-grader's game of Telephone.

In fact, the leak contains more than 200 gigabytes of data, compared with Wikileaks' two gigabytes.

The information is still being sifted through, even as it's being released to the public, but here's some of what's been found so far:

  • American Denise Rich, ex-wife of pardoned tax cheat Marc Rich, has been uncovered as the settlor and beneficiary of two large trusts based in the tiny Cook Islands. The ICIJ found that Denise Rich gave up her American citizenship in 2012. Her citizenship was convenient enough when President Clinton had the authority to pardon her ex-husband.
  • French President Francois Hollande, ardent socialist and tireless champion of the 75% marginal tax rate, appears in these documents, mostly by association. His campaign co-treasurer, Jean-Jacques Augier, has been forced to reveal the name of his Chinese business partner in a Caymans-based distribution company. Augier says he used his offshore company to make a large investment in China.
  • Australian actor Paul Hogan, of "Crocodile Dundee" fame, has lost about $35.3 million from an account that he used to offshore his "bonza" film royalties. His once-trusted tax adviser Philip Egglishaw ran off with Hogan's sizeable hidden offshore stash.
  • French banking scion Elie de Rothschild, of the famous banking family, has been named in the leaks. He was instrumental in setting up some 20 trusts and 10 holding companies in the Cook Islands, all extremely opaque in nature. His heirs have, not surprisingly, refused comment.
  • Brigitte Bardot's third ex-husband, Gunter Sachs, a millionaire industrialist, has been revealed as the owner of a huge, obscure wealth-masking machine: trust upon shell company upon holding company, almost ad infinitum, mostly based in the Cook Islands. The ICIJ has constructed an interactive map of Sachs' extensive offshore holdings and business networks. The network is fairly representative of the steps that many on this list have taken to hide their wealth away. You can marvel at its imponderable complexity here.
And these names are barely the tip of the iceberg. The shockwaves have already begun to spread through the corridors of wealth and power all over the world.

How Much is $32 Trillion? It bears repeating: $32 trillion has been stashed away, off the books, by corporations and wealthy individuals.

Let that sink in for a moment. The implications are stupefying. The real effects of this are far more subtle, and pernicious, but this makes for a fun thought exercise - even setting aside the fact that only some percentage of this huge sum would be fair game for the tax man.

In the extremely unlikely event that all $32 trillion was added to government coffers, that would be enough to give every man, woman and child alive on Earth today a roughly $4,600 "stimulus" check.

Maybe we could all enjoy a two-week vacation in the British Virgin Islands. After all, it seems to be the destination of choice for monied types...

A Bright, Sunny Hub for Dark Business The British Virgin Islands appear to be at the epicenter of this huge offshore stash.

The small Caribbean islands specialize in tourism and financial services. Along with far-flung places like Liechtenstein, Sark in the English Channel, the Cook Islands in the South Pacific, the Caymans and others, the British Virgin Islands are home to thousands of shadowy front companies, trusts and funds that host the bulk of this $32 trillion stash.

As of 2000, the last year verifiable data was available, roughly 400,000 companies were listed in the BVI offshore registry. The number certainly has increased. Some of these countries remain underdeveloped, their citizens impoverished, even though they have high per-capita GDPs, and trillions flow to and from their shores.

Tax havens like these tend to have in common secretive banking laws and loose residency requirements, which make them appealing to those with money to hide. In once extreme case, The Guardianlocated an erstwhile British subject, Sarah Petre-Mears, who was the "nominal director" of nearly 1,200 companies across the world.

Less a captain of industry and more a shill for dodgy investors, Petre-Mears ran companies fronting everything from porn sites to time-share vacation properties. She used dozens of different addresses across the globe, with most turning out to be post office boxes and mail drops.

The consequences of this enormous tax dodge are hard to calculate. How does one reckon who's entitled to what? Which country's tax rate do you use - Canada? Azerbaijan? Slovenia?

There's almost certainly an impact to national budgets, from highway construction to military spending to social programs.

It's safe to say that whenever anyone anywhere feels the sting of budget cutbacks, whether a brigadier-general in South Africa or a primary school teacher in England, they'll have a world-class selection of tax cheats in part to blame.

Journalists are still sifting through the data contained in this massive leak, but as they go along, there're no telling who will appear in the data - and those people are running out of time and places to hide.

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Neo-liberals will be working with republicans and Obama to lower the corporate tax rate and gave $4 trillion in corporate tax breaks in the past 4 years!
  They are moving to end all corporate taxes and have

Despite National Crackdown On Whistleblowers, IRS Relying On Informers To Report Tax Fraud
By Martin Michaels | September 13, 2012



In this Jan. 8, 2010 file photo, Bradley Birkenfeld, a whistleblower in the tax evasion case against Swiss bank UBS AG, pauses during a press conference outside the Schuylkill County Federal Correctional Institution in Minersville Pa, before reporting to the federal prison. (AP Photo/Carolyn Kaster, File )

(MintPress) — The Internal Revenue Service (IRS) is increasingly relying upon the whistleblower program to investigate cases of tax evasion and fraud. While estimates vary, wealthy U.S. citizens could be hiding up to $5 trillion in offshore accounts, according to a Senate report published in 2008. By providing rewards for successful indictments, the government could significantly reduce the multi trillion dollar deficit by recovering lost tax revenue.

While the program has netted more than $5 billion, critics believe the U.S. government is promoting an unfair double standard. Despite being financially compensated, those who expose tax fraud are still subject to prosecution despite bringing valuable information to the attention of authorities. This has occurred at a time when the Obama administration has cracked down on a record number of whistleblowers.

Bradley C. Birkenfeld, a former employee at UBS AG bank was awarded a $104 million “whistleblower award” earlier this week for reporting widespread tax fraud committed by his former employer. During his career at the financial services firm, Birkenfeld helped thousands of wealthy Americans move their money to Swiss banks in order to avoid taxation by the U.S. government.

UBS tax evasion The UBS case is one of the biggest cases of tax fraud in U.S. history. In 2009, UBS was found to have helped 19,000 clients move more than $20 billion to Swiss bank accounts, tax shelters outside the purview of U.S. financial regulation and taxation. Birkenfeld an employee of UBS at the time, played an integral role in helping UBS clients move their money to these tax shelters.

Birkenfeld would later divulge the details of widespread UBS fraud. After his testimony, the bank was forced to pay more than $780 million in fines. UBS closed the division responsible for the tax evasion and also agreed to hand over account information for more than 4,500 clients. An additional 33,000 tax evaders chose to report offshore accounts on their own accord, generating an additional $5 billion.

Birkenfeld, who himself was complicit in the tax fraud as a UBS employee was tried and sentenced to 40 months in prison for his role. Earlier this week the IRS rewarded the 47-year-old for his efforts in the UBS case, a case that many tax experts believe could lead to investigations in other financial institutions.

Stephen Kohn, Birkenfeld’s co-counsel in the case commented on his client’s actions in a recent interview, saying:

“It’s the largest whistleblower award in history. But Birkenfeld turned in the largest financial fraud. He turned in 19,000 felons, and $20 billion in one unit. We also know that 33,000 people are turning themselves in. The total amount of U.S. dollars in illegal offshore accounts is over $5 trillion. That is the estimation by a Senate report.”

Although Birkenfeld was rewarded generously for his cooperation, Kohn believes that it was wrong of the Justice Department to prosecute his client, adding, “When the Justice Department prosecuted Bradley Birkenfeld in one of the most absurd and misguided efforts, they took an asset, a person who turned in the keys to the kingdom, the first whistleblower to expose exactly how illegal Swiss banking worked, and instead of using him, they persecuted him.”

However, Swiss authorities believe that the U.S. government has displayed “hypocrisy” for prosecuting Birkenfeld, then later rewarding him. Pirmin Bischof a member of the upper house in the Swiss Parliament commented, saying, “It’s the height of hypocrisy if the U.S. is one day sentencing the guy to 40 months in prison and the next give him the highest reward.”

Regardless of the duplicitous actions by the U.S. government, Kohn’s client is by no means the the only whistleblower to be prosecuted for exposing crimes, fraud and misdeeds.

Crackdown on whistleblowers Other whistleblowers reporting crimes have similarly been prosecuted for their actions. Bradley Manning, a member of the U.S. army has been held in solitary confinement since 2010 on 22 charges, including conspiracy and “aiding the enemy.” Manning allegedly released a cache of documents exposing U.S. military corruption and the murder of innocent civilians in Iraq and Afghanistan.

A video titled, “Collateral Murder,” was released in the vast cache, implicating the U.S. military in the murder of innocent Iraqi civilians and members of the international press. Filmed in 2007, the video has gone viral, viewed more than 12 million times on YouTube. While the video has stirred controversy, there have been no arrests or prosecutions since the video’s release.

Similarly, WikiLeaks founder Julian Assange is currently involved in a diplomatic standoff, unable to leave the Ecuadorian Embassy in London. Assange’s WikiLeaks project has brought to light hundreds of thousands of diplomatic cables exposing corruption and war crimes committed by the U.S. armed forces and the U.S. government. U.S. authorities have sought his extradition for releasing classified information despite his being granted asylum in Ecuador last month.

The cases of Assange and Manning are, of course, different than that of Birkenfeld. However, all three are subject to a crackdown that occurs when the U.S. government has been found guilty of committing crimes, or has proven unwilling to prosecute crimes committed by its own citizens.

Unlike other whistleblowers, Birkenfeld received relative leniency for his crimes and was later compensated generously for his cooperation. While the case could lead to more investigations into offshore banking fraud, the unwillingness to properly tax major corporations remains a much larger, unaddressed issue.

Closing corporate tax loopholes Major U.S. corporations are able to move their corporate headquarters outside the U.S. while maintaining production and sales inside U.S. borders. When headquarters are moved offshore, corporations can avoid taxation despite being subject to other government regulations.

Consumer advocacy groups believe that this major loophole has cost the U.S. government more than $100 billion in annual tax revenue. U.S. PIRG, a consumer advocacy group, has advocated for closing corporate tax loopholes, a necessary component of tax reform, saying on its website:

“No company should be able to game the tax system to avoid paying what it legitimately owes. And, yet, establishing shell companies in offshore havens for the purpose of tax avoidance is becoming more the rule than the exception for at least 83 of the nation’s top 100 publicly traded companies. GE, Google, Goldman Sachs and dozens of others have created hundreds of phantom entities with nothing more than a clever tax attorney and P.O. box.”

According to its website, U.S. PIRG is “a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.”

General Electric, a company that boasted $14.2 billion profit in 2010 adeptly avoided taxation altogether despite earning over $5 billion from U.S. sales. The company moved its address outside the U.S. and continues to avoid the 35 percent corporate tax rate.

Instead of prosecuting GE, Goldman Sachs and others for tax evasion, the U.S. government  has consistently raised taxes on the middle class in order to close budget deficits and fund social programs.

This issue has become a cause celebre of Occupy Wall Street and sympathetic tax reform advocates in Washington. However, few voices have emerged calling for comprehensive corporate tax reform. The main issue is because Washington policies are largely dominated by corporations and wealthy donors able to shape policy by financing costly elections.

Sen. Bernie Sanders (I-Va.), one of the few advocates for corporate tax reform, commented on the issue in a statement last year saying, “We have a deficit problem. It has to be addressed, but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”




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March 30th, 2013

3/30/2013

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PROGRESSIVES NEED TO LOOK AT HOW THIRD WAY IS PRETENDING TO  BE PROGRESSIVE ON ISSUES FROM HEALTH CARE TO ENVIRONMENT BUT IN EACH CASE THEY SELL OUT THESE ISSUES TO CORPORATE PROFIT.  MAINSTREAM MEDIA PLAYS ALONG AS IT CREATES HEADLINES THAT ARE THEN USED IN THE NEXT ELECTIONS!!!! 

STOP VOTING FOR THIRD WAY CORPORATE DEMOCRATS AND RUN AND VOTE FOR LABOR AND JUSTICE!!!!

I was speaking to a Maryland Education Coalition member who was frustrated at the annual degradation of the Thornton Bill for education funding and with United Workers speaking of the total disregard of Baltimore's Living Wage bill passed a few decades earlier. I gave them this analogy showing them a pattern of deliberately behavior in public policy....the Seinfeld show had an episode in which Jerry and Elaine were at a car rental agency to claim a car they had reserved...a middle-sized car. The agency employee looked in the computer and stated 'Sorry Mr. Seinfeld we don't have a middle-sized car would you like a compact'? Seinfeld understandably said 'But I had a reservation, how can there be no car'? The rental agency employee told Seinfeld they know their business and Seinfeld famously said....'you know how to take the reservation, you just don't know how to keep the reservation'. The MEC person and the United Worker person knew immediately to what I refer.

Baltimore and Maryland are the greatest of states in passing 'progressive' legislation and then ignoring it. Whether turning their heads to outright criminal activity regarding legal infringements or by writing laws that circumvent existing law. It is all smoke and mirrors. Raskin famously said 'we will fight for our working-class and underserved citizens'. OMG

Baltimore is ground zero for the largest attack on housing law and equal protection under law in the nation. I had a real estate agent tell me the housing market in Baltimore is a ponzi scheme as the city works with wealthy developers to scoop up large sectors of housing no matter the legality. Whether city owned or whether handed to churches for later development by the chosen connected people, Baltimore's real estate is one long line of law-breaking with no justice all at the expense of the working-class and poor for which Maggie McIntosh and Raskin are pretending to work. Just enforcing laws on the books already would bring copious amounts of housing and financial penalty for fraud to rebuild all the housing for working-class and poor we need in this city.....LEARN HOW TO KEEP THE RESERVATION, NOT ONLY TAKE THE RESERVATION!


The laws regarding free trade are being released as votes necessary to make them permanent are being taken.  We just heard that Monsanto won as GM foods are given a platform in trade law.  All Third Way corporate pols including Obama campaigned on GM labeling ...... now they don't.


This appointment by Obama and Third Way signaled the stance they would take in trade agreements overseas. Did you hear Barbara Mikulski and all Maryland Third Way pols who voted for GMO say they didn't see the hidden rules as regards GMO?

THAT IS TYPICAL MARYLAND THIRD WAY ....


Pro-GMO chemical polluter becomes Obama's ag trade negotiator April 2nd, 2010

(PeoplesVoice) –

Despite declining bee and butterfly populations from agricultural chemicals, on Saturday the US Senate approved President Barack Obama’s nomination for chief agricultural negotiator in the Office of the U.S. Trade Representative, Monsanto lobbyist Islam Siddiqui.

“Dr. Siddiqui’s confirmation is a step backward,” said Tierra Curry, a scientist at the Center for Biological Diversity (the “Center”). “His appointment ensures the perpetuation of pesticide- and fossil-fuel-intensive policies, which undermine global food security and imperil public health and wildlife.”

As undersecretary for marketing and regulatory programs at the U.S. Department of Agriculture, Siddiqui oversaw the development of the first national organic labeling standards, which allowed sewage sludge-fertilized, genetically modified, and irradiated food to be labeled as organic, reports the Center. After a nationwide campaign spearheaded by the Organic Consumers Association (OCA) in which the USDA was deluged with 280,000 irate letters and emails, Siddiqui, Monsanto, and the USDA backed off.



Apparently to no avail.

Siddiqui is a former pesticide lobbyist and is currently vice president of science and regulatory affairs at CropLife America, a biotech and pesticide trade group that lobbies to weaken environmental laws. He takes the absurd position that pesticides are not pollutants because they’re not intended to be pollutants.

He also posits that regulations of pesticide use in the name of human health and other concerns violates international trade laws. Spoken like a true corporatist: profits supercede health.

CropLife has lobbied to allow pesticides to be tested on children and to allow the continued use of persistent organic pollutants and ozone-depleting chemicals, like methyl bromide, Dr. Marcia Ishii-Eiteman reports. CropLife also petitioned Michelle Obama to use pesticides in the organic White House garden and fought county initiatives in California banning genetically modified foods.

Siddiqui vowed to further pressure the European Union to accept more genetically modified crops (GMOs). As an Indian-American, Siddiqui’s appointment will likely assist Monsanto’s spread in India, where the press already welcomes him. In February, we saw a dramatic power play between the biotech industry, along with its supporting governmental agencies, and a well-organized public resistance to the spread of GMOs.

Choosing Siddiqui, according to OCA, “signals to the rest of the world that the United States plans to continue down the failed path of high-input and energy-intensive industrial agriculture by promoting toxic pesticides, inappropriate seed biotechnologies and unfair trade agreements on nations that do not want and can least afford them.”

Third World Ag Experiment in Detroit

In a related current event, biotech ag developers and investors are buying up parcels of land throughout the economically depressed city of Detroit, Michigan, which was once the fourth most-populated city in the U.S. Lots are monocultured with genetically modified corn for use as a biofuel, or monocultured with organic vegies for food, or with trees.

Several questions arise with this plan. Is biotech the best use of that land, considering all the petro-ag chemicals that will toxify the lake and the groundwater? Also consider that that land and water table has suffered decades of industrial waste abuse, and now will endure chemical runoff. How lot owners plan to protect organic lots from contamination by petro-ag chemicals remains to be seen.

When biotech ag developers go after the land of poor folks (as in Africa or India, Brazil or Peru), poor folks lose. One has to wonder if in the Detroit experiment we see a recipe for Love Canal, Motown Style.


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This is about the most evil issue for Third Way corporate democrats in a long list of evils.  People are being made immune to antibiotics making them susceptible to death from even the simplest of infections AND THESE SAME POLS ARE REQUIRING THAT THIS AMERICAN MEAT BE SOLD AROUND THE WORLD. 



YOU SEE MARYLAND'S THIRD WAY CORPORATE POLS ARE JOINING IN ON ALL THESE ISSUES THAT ARE BAD FOR PEOPLE AND GOOD FOR PROFIT!!!!


RUN AND VOTE FOR LABOR AND JUSTICE NEXT ELECTIONS!!!



Animal Antibiotic Legislation Reintroduced


Reps. Slaughter and Waxman continue push to improve transparency animal antibiotic use; ask FDA for better regulation Compiled by staff  Published: Mar 1, 2013 Reps. Henry Waxman, D-Calif., and Louise Slaughter, D-N.Y., Wednesday introduced legislation to provide more information on the amount and use of antibiotics and other antimicrobials given to animals raised for human consumption.

The bill, "Delivering Antimicrobial Transparency in Animals Act" (H.R. 820) will require drug manufacturers to obtain and provide better information to the Food and Drug Administration on how their antimicrobial drugs are used in the food-producing animals for which they are approved.  It will also alter the timing and quality of the data that FDA publicly releases.


"We are on the cusp of a monumental public health crisis in America:  the end of antibiotics as a tool for fighting disease," Slaughter said.

Slaughter said 80% of all antibiotics used in the United States are used not on humans, but on food-animals, a figure that has been disputed by several stakeholders in the ag and veterinary industry.

"Antibiotic-resistant bacteria now kill more Americans every year than HIV/AIDS," Slaughter continued. "We must bring more attention to this issue before one of the most important breakthroughs in medical science – the discovery of antibiotics – is rendered obsolete."

Farm groups, including the American Farm Bureau Federation, American Feed Industry Association, American Meat Institute, Animal Health Institute and American Veterinary Medical Association joined together last year to argue some of the issues in Rep. Slaughter's bill.

The groups said careful use of antibiotics are a key priority for the livestock industry, and urged public that policy decisions about antibiotics be based on science and risk assessment.

Democrats by Rank Tom Harkin (IA)
Barbara A. Mikulski (MD)
Patty Murray (WA)
Bernard Sanders (I) (VT)
Robert P. Casey, Jr. (PA)
Kay R. Hagan (NC)
Al Franken (MN)
Michael F. Bennet (CO)
Sheldon Whitehouse (RI)
Tammy Baldwin (WI)
Christopher S. Murphy (CT)
Elizabeth Warren (MA)


Republicans by Rank Lamar Alexander (TN)
Michael B. Enzi (WY)
Richard Burr (NC)
Johnny Isakson (GA)
Rand Paul (KY)
Orrin G. Hatch (UT)
Pat Roberts (KS)
Lisa Murkowski (AK)
Mark Kirk (IL)
Tim Scott (SC)


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HEAVEN FORBID IF MARYLAND ACTUALLY HAD A SYSTEM TO OVERSEE WHAT IS A BILLION DOLLAR INDUSTRY OF CORPORATE TAX BREAKS!!!!  EVEN AS WATCHDOGS STATE PUBLICLY THIS TAX CREDIT SYSTEM IS RIFE WITH FRAUD.

Tax credit oversight

Republican Anne Arundel delegate Herb McMillan's bill to require Maryland companies benefiting from tax credits of at least $25,000 to disclose specific data on how the money was spent. House Bill 1231, the Business Transparency and Financial Disclosure Act, would require the government agency issuing the credit to compile data and publish it online. The bill missed the March 25 deadline of passing one chamber of the Statehouse and is unlikely to pass.





R&D tax credit

Bill HB 386/SB 203 will expand the state's allocated research and development tax credits from $3 million to $18 million annually. This increase would allow more money to be distributed by the state to eligible businesses for R&D expenses.

It has passed the House of Delegates where it was amended to cap allocations at $8 million. It is still working its way through the Senate where it is expected to pass.



Biotech tax credit

The state's biotech tax credit is only available for the first 10 years a business is active. Filed bills SB 779/HB 328 amends that to 10 years after a business receives its first tax credit. It is on schedule to pass both houses.


Here you see yet another tax give-away to corporations all under the pretense of getting corporate headquarters to Maryland. Now, if the people are fighting to end corporate rule.....why do we want corporate headquarters that bring no tax base and usurp all public policy? WE HAD A LAW REQUIRING THE AUDITING AND OVERSIGHT OF BUSINESS TAX CREDITS FAIL, BUT MARYLAND IS BUSY GIVING COPIOUS TAX BREAKS IN WHATEVER WAY THEY CAN. Lockheed Martin is the biggest corporate tax evaders in the country paying very little income tax. Now they are trying to eliminate even the state and local taxes.


Friday, March 29, 2013

Hotel tax exemption moves to House committee Hearing focuses on public access by Holly Nunn Staff writer

Members of the House Ways and Means Committee questioned public access to a 180-room Bethesda lodging facility that would be exempt from hotel taxes under a bill proposed by Sen. Nancy J. King.

The bill would exempt corporate training facilities that provide accommodations to employees and others from paying county hotel taxes, and it sparked days of debate in the Senate before the chamber voted to send it on to the House.


Currently, defense firm Lockheed Martin’s Center for Leadership Excellence in Bethesda, where company employees and guests stay during retreats and training, is the only such corporate training facility that qualifies for exemption under the bill.

Committee members’ questions at a Thursday hearing revolved around the issue of public access to the facility and how the company charges those staying there.

King assured the committee that only employees and contractors participating in corporate training can stay at the facility. No one pays to stay there, though departments are billed internally, King said.

“We had someone, as a decoy, call the training center, just to find out if they could make a reservation, and they were immediately asked for their employee number before they would even talk to them any further,” King said.

Already the company is exempt from state sales tax on the use of the facility, per a 2010 law.

The county collects about $19 million each year from its 7 percent hotel tax, and $450,000 of that comes from Lockheed Martin.

The firm pays more than $100 million in state and local taxes each year, said King (D-Dist. 39) of Montgomery Village.

The bill is backed by Gov. Martin O’Malley (D), the Department of Business and Economic Development, the comptroller and the Montgomery County Chamber of Commerce, who all say the hotel tax discourages companies from locating their headquarters and similar training facilities in the state.

Opponents, including progressive advocacy groups, some unions and the Montgomery County Council, call the bill “corporate welfare” and say it violates home rule to take taxing power from the county.




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You will hear all kinds of claims by Maryland's Martin O'Malley about being a friend to the environment. Each time these claims are spun on what is bad policy. Take fracking. He will tell you he did due diligence in delaying fracking for studies. They are refusing to pay the law to fund and complete baseline studies of the Marcellus Aquifer to document fracking chemicals aren't there. This is necessary for citizens to sue the fracking companies when the chemicals leech into the aquifer. He is also promoting Maryland as an export terminal for this fracked gas. THERE IS NO MEANINGFUL ENVIRONMENTAL PROTECTIONS HERE....IT IS PURELY FINANCIAL.
 
MAGGIE MCINTOSH IS BEHIND THIS AS WELL!!!

AS ARE ALL THIRD WAY CORPORATE DEMOCRATS.

Natural gas 'fracking' test could come within a year in Md.
Posted: Wednesday, March 14, 2012 8:00 am

Capital News Service

Hydraulic fracturing test drilling could begin in Maryland within a year, according to  the chair of the House Environmental Matters Committee.

Delegate Maggie McIntosh, D-Baltimore, said drilling on a handful of test wells could potentially begin following the release of the Marcellus Shale Safe Drilling Initiative Advisory Commission's next report, set to be issued Aug. 1.

The report, the second of three studies assigned to the commission, will recommend best practices for fracking in the state.

McIntosh testified at a House Ways and Means Committee hearing for HB 907, which would create a 15 percent severance tax on the wholesale market value of natural gas extracted from the Marcellus Shale region in Western Maryland.

The bill would also create a designated section in the Oil and Gas Fund to hold this revenue. Some studies estimate the natural gas industry in the state could be worth about $7.5 billion over 30 years.

The major debate over the legislation is not about whether there should be a severance tax, but what that rate should be.

Some argue the rate in McIntosh's bill, co-sponsored by Delegate Sheila Hixson, D-Montgomery, is too high.

Local severance taxes are already in place in both Allegany and Garrett counties, where the drilling would occur.

Garrett County has set the tax at 5.5 percent, and Allegany's is slightly higher at 7 percent.

Combining both local and state severance taxes, the cost to companies could be more than 20 percent of the wholesale market value of the natural gas they drill.

Sen. George Edwards, R-Garrett, has proposed his own legislation, which calls for a 2.5 percent severance tax.

Combined with local severance taxes, the overall price under Edwards' bill would hover at around 8 percent.

Maryland has not yet issued permits for drilling in the Marcellus Shale formation using the controversial gas extraction method known as hydraulic fracturing, or "fracking." O'Malley's creation of the Marcellus Shale Safe Drilling Initiative Advisory Commission introduced an effective moratorium on fracking in the state.

The commission's final report is set to be released in August 2014.

The Marcellus Shale cuts across much of northern Appalachia and underlies a portion of Maryland's western panhandle, including all of Garrett County and part of Allegany County.

If permits are approved, energy companies would drill horizontally into the shale layer and inject a pressurized mix of water, sand and chemicals to release the trapped gas - a process that some say endangers the environment.

McIntosh emphasized the importance of creating a severance tax before drilling commences. She said all other states with a severance tax have set it up beforehand.

After drilling for years, Pennsylvania is now having difficulty imposing a severance tax through its state legislature, McIntosh said.

"We do not want to do it like Pennsylvania," she said repeatedly.

Drew Cobbs, executive director of the Maryland Petroleum Council, said a 15 percent severance tax could make Maryland less attractive to the fracking industry.

A 15 percent rate is significantly higher than other states within the Marcellus Shale area, Cobbs said.

"We're sort of a captive audience here in Maryland because there isn't activity (yet)," Cobbs said. "The question is can we attract (companies) here?"

Fracking is being championed by 1st District Cong. Andy Harris. The Republican congressman has defended the drilling practice in committee hearings to the point of tossing out a film crew and also verbally attacking a scientist.  Harris' Eastern Shore District is a long distance from the western Maryland area where drilling would take place.


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Please make the State Attorney General position a priority all across the country.  We can make change if we have Rule of Law people in office.  IF A CANDIDATE FOR ATTORNEY GENERAL LIKE FROSH AND CARDIN IN MARYLAND ARE NOT SHOUTING AGAINST THE SUSPENSION OF RULE OF LAW AND PRETENDING THERE IS NO CORPORATE FRAUD.....IF THEY ARE LONG-TIME INCUMBENTS WHO HAVE WATCHED AND HELPED THIS SITUATION UNFOLD.......THEY ARE NOT THE RIGHT CANDIDATES.

In Maryland we have Michael Greenberger who from the earliest of Clinton era policies that broke the banking wall to start this wealth inequity and unaccountability spoke loudly and strongly against these policies and shout that fraud is systemic and reform needed.  LET'S GET GREENBERGER TO RUN FOR ATTORNEY GENERAL IN MARYLAND!!!

Read his books to see his commitment to Rule of Law!!!



... How high is [then-Federal Reserve Board Chair] Alan Greenspan riding in the mid-90s?

... In October, I think it was Oct. 22, '97, the stock market crashed again, went down I think 522 points, something like that. And boom, the President's Working Group is called together. ... So I attend the first meeting … and it's clear at that point that Greenspan is a very, very powerful person. He has got the attention of everybody in the room. He's held in great esteem. ...

And of course that problem, the failure and break in the stock market, wasn't a direct impact on the CFTC [Commodity Futures Tradition Commission], although when you have a crash of that kind it affects all markets. And what you're especially worried about is the ability of investors to make margin calls. The equities market, you can buy a stock on 50 percent margin. In other words, you can borrow 50 percent of the money. The futures market is you only have to put down 4 percent to 7 percent; the rest is all borrowed money. And the reason for that, in its best and most important phase, it's a risk-shifting market where people in the commercial businesses are hedging their risk. And it's more of an insurance policy than it is an investment. ...

So when this crash took place, somebody who's taking a beating in the stock market may not be able to make their margin calls in the futures market. And simply put, the burden that I had was checking with all the futures exchanges, "Are you going to make your margin calls? Are people reporting?," because if they don't, the exchangers are exposed. They're the ones who are effectively lending the money. And if they don't get paid the margin, they could go busto [sic], and that would cause systemic risk for the economy. And that's what everybody's worried about. Just as we know from the present credit crisis -- one big institution fails; it can't pay its obligations; it forces somebody else into a dangerous territory who can't pay their obligations; and pretty soon it's a falling domino effect through the economy. ...

... When you start, even knowing [then-CFTC Chair] Ms. [Brooksley] Born just a little bit, what could you tell fairly early on ... she was up against?

First of all, I knew she was very bright, but now I'm getting to see it firsthand. She's very bright; she knows everything. She's got a phenomenal memory. She manages people well. And you really feel like you're in the presence of somebody who's a very special person personality-wise, intelligence-wise and management-wise. And I can't emphasize enough, when the market goes down like it did then, which is a very substantial drop, there's panic in the streets. She is calm, cool and collected through the entire process. And it's not that she's delegating out responsibility. She is really managing the ship. ...

Did she know anything about the business? ...

Brooksley, who is a very well-established, broad-agenda lawyer at a very prominent firm, knows about commodities. She's been involved in the Hunt brothers' investigation, which is the famous cornering of the silver market. She's represented I think the London Stock Exchange or the London Futures Market, so she knows this statute, the Commodity Exchange Act, which is terribly written, very, very complicated. You can't just pick it up and read it. She knows it. She knows the players; she knows the people. So she comes into this job fully armed with the knowledge to be able to deal with it effectively.

But [the CFTC is] not a big agency. Is it overwhelmed in terms of what's out there that it needs to do, if it can do it?

That's an interesting thing. I never viewed us as being overwhelmed. ... What I did feel was, ... too often the agency was in a situation of being captured where instead of regulating the industry, the industry was regulating the commission. And ... there were exceptions to that, but that's the overall history.

It doesn't sound like Brooksley Born is somebody who wants to take a job and just kind of work for the industry. She wants to regulate?

Brooksley comes in; she wants to be an effective regulator. Part of her job was to bring in top-flight lawyers and other professionals, and she built an infrastructure that was very effective and smooth-working. So the only change here is not a sense that we're overwhelmed. The change is that the industry is saying: "Whoa, wait a minute. We can't tell these people to jump and then when they ask how high to tell them how high. Now they're telling us what needs to be done. They're enforcing the law."

In this vein, I don't want to take you too far off track, but in my division there was a policy that lawyers could come in and say, "Look, we have a question that we view as being ambiguous under the law, and we want to get a staff letter from you that tells us we can go ahead and do this, and we won't be subject to enforcement." And these are called no-action letters, "no-action" meaning the enforcement division will take no action if you commit to do what you tell us you're going to do.

One of the first things Brooksley tells me when I walk in the door, "You be very careful of this no-action process, because this is not a question of what the letter says; it's a question of who signs the letter." And there are a group of highly favored lawyers who whatever they say they want to do, arguably ambiguous, in many instances clearly in conflict with the law, they're going to get a letter back saying, "It's fine." ... So there's all this low-level favoritism going on.

Now, Brooksley and I look at this, and we say: "This is not the way the system is going to work. If you need these kinds of exemptions" -- we established a rule -- "here's the way it needs to be filed. Here are the set of facts you have to set out. Here's the law you have to cite. And this has to be a regularized, objective, neutral process." Before we got there, it was a matter of who signed the letter. ...

I read that she was one of the finalists for attorney general. True?

She had developed a very close relationship with Hillary Clinton when Hillary Clinton was a very prominent lawyer in Little Rock, Ark. ... When [President Bill] Clinton got elected, I remembered hearing the story that [Mrs. Clinton] and Clinton and a group were bandying about who would be the attorney general, and somebody said, "Well, Brooksley Born would be a good attorney general." ... And Brooksley went in for an interview with Clinton. The story comes back was that Clinton found her boring and that it never went anywhere. ...

I think to some extent you could view this [position as head of the CFTC] as a consolation prize. ... To the general world, people who knew Brooksley, the circles she traveled, the American Bar Association, the D.C. Bar, all the prestigious boards she served on, people were probably scratching their heads. ...

... [Former Treasury Secretaries Robert] Rubin, [Larry] Summers, [former Securities and Exchange Commission Chair Arthur] Levitt and Greenspan, I wonder what they thought of this woman who comes in and takes this job. ...

I don't think that either Rubin, Greenspan or Levitt or Summers knew who Brooksley Born was. And one of the messages of this story is that although they're 200-and-some miles apart, Wall Street and the D.C. Bar, the prominent lawyers in Washington, D.C., could be on opposite sides of the world. They just didn't know who she was. And moreover, they didn't really care. ...

Secondly, they don't have a real good understanding, from where I'm sitting, of what the CFTC does. They think it's backwater; they think it's pork bellies. ... And I think throughout the entire crisis we went through, they had no idea who they were dealing with. They never took the time to figure out that this was a very accomplished, smart, highly ethical and charming woman.

You mentioned, and we've read some about, this lunch that she has early on in her tenure with [Greenspan]. Tell me what you know about it.

When I went to work with her and she was telling me, "This is what you're up against," she told me that she had had this lunch with Alan Greenspan, and he had said to her probably that she and he were going to have a disagreement about something, and the subject was fraud. And he didn't believe that fraud was something that needed to be enforced or was something that regulators should worry about, and he assumed she probably did. And of course she did. I've never met a financial regulator who didn't feel that fraud was part of their mission, but that was her introduction to Alan Greenspan.

What does it tell you -- what did it tell her -- that he didn't believe fraud was a problem?

From what it told her and from what I could see in my observations of Alan Greenspan was that this was a man who was living almost in another era; that he was a total believer that the markets were self-correcting. For example, the reason he thought that fraud shouldn't be the worry of regulators is, well, if somebody committed fraud in the business community, the rational workings of the market would be that people wouldn't do business with that person, and therefore they would die on the vine. And so the free market self-corrects and takes care of fraudulent actors. ...

... Is [Greenspan] admired, elevated, unquestioned? Is there something about him by then -- is [he] just untouchable?

Yes. Look, the economy, by and large in this period, is booming. There are hiccups. You have the Asian financial crisis, the default on the Russian ruble. Later on, you have the Long-Term Capital Management [LTCM] fiasco. But basically it's an upward move. We're in the middle of the dot-com bubble. ... He is a force to contend with. He's very, very highly regarded, although there's an understanding that he's coming at issues from a very orthodox free-market view, and he's not happy with the regulatory structure. He's tolerating it. He's not happy about it. ...

Rubin spent a lot of time catering to Alan Greenspan's whims. ... But as much as he was inclined to cater to Greenspan, for one reason or another, he only dealt with Brooksley as a sort of foreign power, and maybe a banana republic foreign power, rather than somebody he needed to spend the same amount of time catering to.

Do you have any explanation for that?

A lot of people have guessed about it. Some people have said, "Oh, she was a woman," whatever. I don't put a lot of stock in the fact that she was a woman. I put a lot of stock in the fact he never took the time to understand who she was and that she was a person in her own right who should have been listened to, even if on first blush you didn't agree with the direction she was going in. I feel very confident Bob Rubin didn't agree with everything Alan Greenspan told him, but he made it a high priority to deal with and embrace and work with Alan Greenspan. Had he done the same thing with Brooksley Born, I think there's a good chance we would today be sitting here on a very healthy, thriving economy. ...

[What were the early warning signs about derivatives?]

In 1994, you have the failure of Orange County, [Calif.]; goes bankrupt dealing in these unregulated, over-the-counter derivatives. The financial officer of Orange County doesn't understand the products he's dealing with, gets taken to the cleaners by the banks he's dealing with. And if you go to the popular media, everybody knows Orange County has failed. Everybody knows they failed because they were dealing with these highly toxic, complex, unregulated instruments. And it's a source, almost, of common parlance: a county, at that point, a county had actually gone bankrupt. It was rather remarkable.

At the same time within the financial services industry, there's this major scandal at Bankers Trust, where they have taken two of their customers, Procter & Gamble and Gibson Greeting Cards, to the cleaners with these complex over-the-counter derivative products. And unfortunately for Bankers Trust, it's all caught on tape in the exchanges not only between Bankers Trust and their customers, but the laughing up the sleeves of the salespeople about how they've taken these Fortune 500 companies to the cleaners. ...

And in fact, legislation is introduced. They wanted to set up a derivatives regulatory commission that would focus expressly on this subject. But at the time, the urban legend is that Lloyd Bentsen, who was then-secretary of the Treasury, went up to the Hill and said: "Look, we have this thing called the President's Working Group on Financial Markets. This is really a problem of a lack of coordination between the Fed, the Treasury, the SEC and the CFTC. We will make this our highest priority. We can deal with this within the existing structure, and don't you worry your pretty little heads about this."

So '94 goes by; '95 goes by; '96 goes by; '97 goes by. By '98, nobody's done anything about it. And while there aren't the kinds of dramatic scenarios that Orange County and Bankers Trust revealed in '94, there's a series of school boards being taken to the cleaners, cities being taken to the cleaners, and Brooksley just finally said: "These guys are operating outside of the legal structure. Somebody has got to do something about it, because if they don't, there's going to be a calamity." ...

And when you guys take over, how big is [the over-the-counter derivatives] market?

When I first walk in the door, Brooksley said to me, "This is a $13 trillion market." ... By the time in May 1998 that we actually try to do something about it, it is a $27 trillion market. By the time Congress in December of 2000 deregulates it, it's an $80 trillion market. As we sit here today, the market has dropped from above $600 trillion to $592 trillion notional value. It's dropped because of the meltdown. ...

And obviously, it went from $13 to $27 to $80 to $600 trillion because nobody's watching the market. And in fact, as we went through the economic collapse, these products are exploding all over the place, coming to us in the form of, most prominently, credit default swaps. And the panic in the market and the tightness of credit is a direct reflection that these products are spread all over the place, and somebody who today looks highly profitable has got these products' off-balance sheets on things called structured investment vehicles, so they're hidden like land mines in a battlefield. Nobody wants to give money to anybody else because they don't know, are you sitting on top of products like AIG [American International Group] was sitting on top of that takes you from the biggest insurance company in the world to bust to 80 percent owned by the United States government?

... Here's a contagion that literally metastasizes exponentially across the '90s and the early part of the 2000s.

Absolutely. ... The template is clear. Crisis caused '94 Orange County-Bankers Trust. Panic in the streets, we're going to fix it. Time passes; it cures itself. Lobbying takes over by the financial [services industry]. All is forgotten.

It happens again in late '98 when Long-Term Capital Management fails. ... You have a crisis that now looks like a picnic. But at the time, everybody, including Alan Greenspan, was sobered by that episode. Even the conservative House Financial Services Committee: "What can we do to make sure this doesn't happen again?" Opportunity for regulation, time passes, problem solved, it solves itself, all is forgotten. ...

By [Jan. 1, 1998], there was stuff in The Wall Street Journal, school boards taken to the cleaners over these things, and I don't remember exactly how it developed within the agency, but Brooksley and I talked about it. Something needs to be done. I said, "Let me think about it." And I assembled a small team of people within the Division of Trading and Markets, and we sort of gave it the name the Manhattan Project.

And we put people to work on -- in the financial services regulatory system, there is a regulatory vehicle called a concept release, and essentially what it is, it's a very preliminary white paper delivered by the regulatory agency, most often used by the CFTC and the SEC. ...

Our two goals were, one, to present the problem, and two, to propose a broad range of possible solutions to the problem without reaching any conclusions. So we began working on this. Brooksley had the conception that she wasn't worried about the rest of the administration. She was worried about the financial services industry, that we were effectively now going to say swaps are futures, the dirty words, and that this would meet a lot of resistance.

Because?

Because it meant that this multitrillion-dollar market would now have to be traded transparently with capital reserves, with fraud and manipulation requirements, with the regulation of intermediaries, and on organized exchanges rather than this private little gamesmanship where it was. ...

We aren't going to take it over. It's not going to be government-run, but it's got to be done transparently. Everybody needs to know what's happening. It's got to be overseen by a regulator who ensures that fraud and manipulation are not conducted within those markets. We've got to make sure that when people make commitments, they have the capital to back those commitments up. ...

Now, we're not saying [in the concept release] we're going to put the full regulatory template in place. We have the authority to exempt it from the full regulatory template, but something's got to be done, and here's a list of questions and a list of proposals about what might be done. Should it be a transparent market? Should we ensure adequate capital reserves? Should it be subject to fraud? Should it be subject to manipulation? Should the intermediaries be regulated? Should there be adequate capital protections? That's what the concept release was. ...

One thing I think must be made very clear is we didn't do this in secret. Brooksley called in every representative of every leading financial trade association, institution. I sat in some of those meetings. She brought them into her personal office and said: "This market has caused problems. It's subject to the Commodity Exchange Act. It's supposed to be a transparent, protected market. It's not. We think the time has come to address it." And they were then called the International [Swap] Dealers Association -- it's now the International Swaps and Derivatives Association, a branding issue there -- they all came in, they all were explained this, and nobody said, "Oh, my God, you're going to cause the worst financial crisis." I mean, they either sat there and said nothing, or some people said, "You know, it's about time somebody's going to do this."

The second transparent thing we did is sometime in March, we had a draft of the concept release. We sent it far and wide. Whoever wanted it, we sent it to all the other regulators, all the financial institutions; we sent it to Congress. ...

There were two first shots across the bow, a double shot. One was I walk into Brooksley's office one day; the blood has drained from her face. She's hanging up the telephone; she says to me: "That was Larry Summers. He says, 'You're going to cause the worst financial crisis since the end of World War II'"; that he has, my memory is, 13 bankers in his office who informed him of this. "Stop, right away. No more." ... It was not done in a tactful way, I'm quite confident of that.

Why is he acting that way? What power do the 13 in his office have? What's that all about?

... A lot of this has to do with finance contributions, political contributions.

I mean, 1998 is an election year, right, a midterm election year?

Look, every two years is an election year, and what is a lot of campaign contributions to members of Congress is chump change to the financial services industry. There was a recent report in the House Ag[riculture] Committee, which is the committee of jurisdiction [for the CFTC], I think the figure was $27 million from financial services, $9 million from the agriculture community. Now, to them, $27 million is a lot of money. Do you think $27 million is a lot of money to Goldman Sachs or Morgan Stanley?

But these people speak with tremendous power, and we see the template -- crisis, worry, threatened reform, pull back from the crisis, 24/7 lobbying, all is forgotten. And as we sit here today, we're experiencing that, a feeling that the crisis of the fall of 2008/winter of 2009, [we've] now survived. Goldman Sachs just reported record profits, and the pushback is coming to the reforms that have been proposed.

But at that time, why do the banks have such clout inside the Clinton administration?

It's a very interesting question. But I think one of the driving forces, politically at that time, was that the financial services industry was essentially a Republican-captured institution and that these were the New Democrats that were going to prove to the financial services industry that they could do better. The economy is booming. You've never made so much money. Don't look to the Republicans as your saving grace. Look to the Bob Rubins of this world, who are melding Democratic politics with a growth economy. ...

When Born gets the call from Summers, what's her aspect and counsel to you and others? ...

Look, we're all grown people; we're all heavily experienced. We've all been around the block before. Each of us has gone through various crucibles in our lives. I was a litigator for 25 years; I appeared in courts across the country. I argued cases in the United States Supreme Court. My colleagues that she had brought in were the same way.

There was just a feeling -- it was an unspoken assumption -- we're going forward. We'll deal with whoever we need to deal with. We'll be open and candid, we'll make our best arguments, but this is the right thing to do.

Did you worry about how vociferous it could be?

I think the first thing that caused me to worry about it was the April 21 meeting [of the President's Working Group], which was a very, very, very tense meeting. But up until that point, I think we felt, look, this wasn't a matter of discretion. We were given the responsibility to regulate futures markets, to make sure they were transparent, that there were capital reserves, there was no fraud, no manipulation. Here's a market that's a futures market, it's got nothing, and it's up to $27 trillion notional value. You can tell us, "Don't do this," ... but this is our constitutional job. Brooksley took an oath to uphold the laws of the United States. These are the laws of the United States. And we didn't bat an eyelash about it. And frankly, she has the support of the other commissioners on the CFTC up to that point as well.

Republican and Democrat?

Republican and Democrat.

OK, so the meeting is called for the 21st. … Is it a walk? Where is the meeting?

The meeting is at the Treasury in this ornate conference room off the secretary's office where these meetings are held. The meetings are usually well attended. This was standing room only.

Why?

Because it was known this was going to be a major showdown, that Rubin, Greenspan and Levitt were going to try and stop Brooksley from doing this.

Shootout at the O. K. Corral?

... You would think that if this issue has reached the level it's reached that Bob Rubin would pick up the phone and say, "Brooksley, let's sit down and talk about this. I want to understand what you're doing. Let's see." No, it is the shootout at the O.K. Corral. No diplomacy, no picking up the phone. And by the way, during this period, Rubin would not take Brooksley's phone calls. He would not take Brooksley's phone calls. ...

So it's April 21, 1998. The players are arrayed.

... It was Brooksley, [then-CFTC General Counsel] Dan [Waldman], [then-Chief of Staff] Susan Lee and me go to this meeting. We're driven there. We get out at the entrance of the Treasury, go up to the room, everybody assembles. The secretary walks in; the meeting is called to order. And the subject of the meeting was to discuss the concept release, and the clear mission of it was to convince Brooksley that it shouldn't be issued.

What's she like at that moment? Is she tense? Was she nervous? How do you read her?

She's extremely professional. She has a capability of being a very charming and funny person, but I think quite appropriately in that setting, she's dealing with it as she would in litigation, or I would in litigation, as a very serious matter. So she is professional, organized, orderly and matter-of-fact about what she's doing. It was a very, very tense meeting. Nobody lost their temper; nobody shouted. But short of that, it was made absolutely clear that virtually everyone in that room wanted her to stop that concept release and used very strong terms in making those arguments, including that this would cause a financial calamity.

So you've told us before of an exchange you witnessed where Greenspan turns to her. Tell me about that.

Each of the principals in turn -- that is to say, Rubin, Greenspan and Levitt -- take their shot at telling Brooksley that she shouldn't do what she's doing.

I happen to be sitting behind Brooksley and behind Greenspan. They're sitting next to each other. Greenspan turns to her, she turns to him; his face is red, and he's clearly quite upset. He certainly did not in any way raise his voice or do anything that would be unprofessional, but he was very adamant that this was a serious, serious mistake, that it would cause untold damages to the financial services market and that she should stop and not do this; that it was unwise and would cause tremendous damage. ...

Did she fight back?

Oh, yeah. Well, fight -- I want to be careful. She, in a very professional, orderly fashion, met each argument head on and gave her response to it. ... But people were coming at her from all sides.

The point has been made by some of these gentlemen that she's strident or difficult to deal with. Many of them wouldn't talk to her on the phone. But in that meeting, she was not a charming, motherly person. She was a professional, and they may have been looking for something softer in their images. But she acted as anybody would act under those circumstances. And it was not a comfortable setting, because she had no allies at the table.

How long did it last?

My memory is that it was about an hour, hour and 15 minutes. The interesting exchange came at the very end. Rubin said to her, "I am told that you do not have the jurisdiction to do this." And Brooksley said: "Well, that's interesting. That's the first time I've ever heard that. All my lawyers at the CFTC have assured me that we have the exclusive jurisdiction to do this." And Rubin said: "Oh, you're listening to government lawyers. You shouldn't be listening to government lawyers; you should be listening to private lawyers. All the private lawyers representing the banks say you don't have the jurisdiction." ...

As someone who has spent five years in the federal government, I will tell you that you could give me a list of 500 lawyers from the Department of Justice, people I do not know, and I would take any of those 500 over the "private lawyers" he was referring to in terms of competence in understanding the law. It was a tremendous insult to the professional government-lawyer staff in the United States government at that point in time. ...

At the end of this lecture on listening to private lawyers rather than government lawyers, Rubin says to Brooksley, "Will you assure me that before you do anything with this concept release, you will discuss this with the Treasury Department lawyers?" And my remembrance is Brooksley said, "Of course." I was very comfortable with that, because I felt -- all four of us felt -- there was no doubt that there was nobody at the Treasury Department who was going to convince us that we didn't have jurisdiction.

Rubin physically relaxed at that point. It was as if he had won the major purpose of the meeting. And all I could intuit from that was he was convinced that when these hicks from the CFTC talked to the powerful lawyers at the Department of Treasury, we would see the light of day, and the concept release was done. ...

We go back to the CFTC and wait for the call from the Treasury Department. This is April 21. One week goes by, no call. Two weeks go by, no call. So Dan Waldman, who was the general counsel, my memory is, starts calling over there and saying, "Where's the meeting?" No response. May 6, 7 comes along, and I go to see Brooksley, and she says: "Look, we can't be slow-rolled into inaction by their refusal to talk to us. We're going to issue the concept release." I agreed completely. We had acted in the best of faith. They didn't call us; we tried to call them; they didn't call us back. We're an independent regulatory agency. This is our statutory mission.

So we issued the concept release. The release, my best memory is, is publicly released on May 8, doesn't appear at the Federal Register until May 12, the Federal Register being the government publication. It was released in the morning. By the afternoon, Rubin, Greenspan, Levitt put out a statement saying this is a very bad thing, and Congress should act with all deliberate speed to block it. ...

… This is really playing the next heavy card by them, I take it. Is that what that's about?

It was a serious card. Again, going back to that point in time, you're dealing with a group of people who were deemed to be the, as Time magazine said, "The Committee to Save the World." And they wanted Congress to stop us, and I think it was almost a foregone conclusion that that was going to happen.

Legislation was introduced to block us for one year from doing anything in the concept release. Hearings were held on it; Brooksley testified. She had no support anywhere. The people who had previously said, "This makes sense," or, "Let's look at it," or, "These are only questions," were now of the view that we were causing serious problems that would lead to a systemic break in the economy. And she started receiving hostile communications from every direction. ...

Bear in mind through all this, too, the Democratic Party is basically not a party highly skilled in the financial services sector. That was what Bob Rubin brought to the table, a Democrat who understood the sector and was going to deal with it. And so Brooksley is a person who fights for the homeless, women's rights, civil liberties, all sorts of issues that if she had been attacked on those grounds for doing any of those things, any number of Democrats would have said: "Hands off. She's doing the right thing." But here we're talking about a time when the Democratic Party, save these Rubinistas, don't know the first thing about these markets. This is like off everybody's radar screen, so there's no natural constituency anywhere to come to her defense. And the people who are being lobbied about it are angry as they could be, not returning phone calls, being mean to her, hostile. It's a very, very unfriendly environment. ...

And Brooksley's oft-repeated mantra [was] that: "If you're troubled by us doing this, fine. Someone's got to do it. You want the SEC to do it? Fine. You want the Treasury to do it? Fine. But this is a world-class problem." And she used to say she would lay awake at night turning in her bed because she could see coming down the road [that] the crisis kept building and building, and now we've seen [that] historically. ...

Were you amazed by the vehemence of the reaction? ...

What amazed me more than anything else when I became adjusted to it was the ... refusal to sort of sit down, get everybody in a room and sit down and say, "Let's work this thing out," the refusal to sort of let us explain ourselves. ...

How do you know about LTCM melting down? What are you thinking? How are you hearing about it?

You start seeing articles in The Wall Street Journal. LTCM, this market is private, opaque; nobody in the federal government knows what's going on. ... LTCM was like, wow. They had had 46 percent, 40 percent, 20 percent returns in the prior three years before the collapse. In January 1998, they're giving money back to their investors because they don't know how to invest it all. Those investors are suing LTCM for turning back money that they want them to invest.

So LTCM is a black box. But the Journal in September '98 starts reporting they're experiencing losses. I think they started in 1998 with $4.4 billion. I know by the time of the collapse they're down to $400,000. So somebody's lost $4.4 billion. What does that mean? Nobody knows that $4.4 billion, they're leveraged 125:1. It's not 4.4. It's 4.4 times 125. ...

If you want to invest in Long-Term Capital Management, you've got to walk into a conference room, abandon computers, abandon pencils, abandon yellow pads, no notes, and you're told there's a black box. Look at these returns: 46 percent, 40 percent, 20 percent. People are fighting to get in to invest. People are fighting to lend money to Long-Term. They know they're leveraged, but nobody knows they're leveraged like this. People are fighting to be their counterparties because they're transacting all these things in these swaps transactions. They need to have a counterparty to take the other end of the transaction. And banks will do that for a very nice price. There's a great commission that goes with that. ... But every bank thinks it's the sole lender to Long-Term; it's the sole counterparty. ...

It's Friday afternoon when ... the president of the New York Fed [receives a call]. ... What we know historically [is] that Monday, Tuesday and Wednesday, the banks are informed. They're sitting around, again, another ornate conference table in the New York Fed, which is like a fortress on Wall Street. And look to your left, look to your right. Each of you has loaned enormous sums of money to Long-Term Capital Management. For every dollar they have now, they've borrowed $125. That is yours. If they collapse and go bankrupt, it's going to be a house of cards, and it is our belief that your financial stability is in jeopardy. And the way to solve this problem is for you each to pony up $400 million and buy the fund, prevent it from collapsing, and try and work the thing out.

And the fact that this happens between Monday morning and Wednesday morning is remarkable and only evidences the fact of how serious the problem was. The banks are shocked. They don't know that all these other banks are involved; they don't know all the other banks are lending, all the other banks are counterparties. But they agree, unhappily, because in those days, $400 million was a lot of money. They unhappily agree to buy the fund. ...

There is a conference call that is set up for the steering committee of the President's Working Group, and I believe we took the call in Brooksley's conference room off her office. And I believe she listened into the call. And the chief operating officer of the New York Fed made the call, and he articulated to the rest of the federal financial regulatory system what had happened. This was all unknown that [LTCM] had called [then-New York Fed Chair Bill] McDonough on Friday. They'd gone out, the world was going to come to an end, and they've saved the day by getting all the banks to agree to buy the fund out.

You mean you're all sitting there, and you had no idea this had happened?

No, nobody told anybody about it.

So stunning.

Very stunning. Very stunning. And of course it's clear that the transactions that Long-Term is involved in are the over-the-counter derivative transactions, which we say should not be hidden from the federal government, should not be leveraged 125:1; that there should be capital reserves to make sure payments are made; that this should not come as a surprise and require a -- thank God -- call from Long-Term that they're in trouble, because if they hadn't, it would have collapsed with nobody knowing about it. ...

This is a big earthshaking event, and they have dodged not a bullet but a nuclear weapon by getting the banks to buy this, propping it up. And they are very sobered and very worried about this.

… It's a Cassandra-like moment, yes?

... We all looked at each other. I mean, it was like, you know, vindication. Vindication. Yeah, it was a big event. …

Oct. 1, 1998, [then-House Banking Committee Chair Jim] Leach [R-Iowa] calls the mother of all oversight hearings, and Greenspan, McDonough, Levitt, Rubin and Brooksley are individually called to opine on what happened. And this is a Republican-controlled House Financial Services Committee.

The moment is ripe. They are angry as they can be. If you go back to the transcript, these Republicans are saying: "This is the savings and loan crisis all over again. How could this happen? This is a moral hazard. This is too big to fail." Do those words sound familiar? ...

The message that goes forth from that hearing is, to Rubin: "You are the chair of the President's Working Group on Financial Markets. We want right away a report from you on what happened and how we can prevent this from ever happening again. Fast." ...

Rubin now is trying to form a consensus within the four big players, and he's getting Greenspan to make a lot of compromises toward a regulatory posture. Not quite far enough, though, that he's not got to worry about Brooksley coming from the other side. ...

The bank financial services community is in a state of high panic at this point, and they get the idea, "We're going to be facing legislation; the game is going to be up." So the idea is that the financial services industry will start its own self-regulatory study of the problem. And they create a group called the Counterparty Risk Management [Policy] Group, and every big name on Wall Street is either on the board of overseers or the staff of this group, and they are going to mimic the President's Working Group on Financial Markets, and they are going to come up with their own report. It is clearly designed to head off any kind of mandatory regulation.

So the President's Working Group comes out in April '99 with a decent report (PDF) -- not a great report, but a decent report. That's probably Bob Rubin's last act as secretary of the Treasury. He steps down; Summers takes over.

In June '99, the Counterparty Risk Management Group -- that is, the banks -- issue their report, and it is a scathing discussion of how this market operates. There's a wonderful passage in it, which I have my students read, that says, "While oral contracts are enforceable, the better practice is to write these transactions down and execute them." And the tenor of the report is: "This market is the Wild West, and the problem is there's no adult supervision." And the industry commits itself to bringing this market under control and to put all these risk management controls to make sure that these 28-year-old salesmen who are selling these products are supervised by people who understand what's going on. No regulation is needed; we will take care of this ourselves, thank you very much.

Two things then happen. The bets that Long-Term Management placed that got them into trouble suddenly start paying off. So the banks who think they're losing all this money get all their money back, close the shop down, all is forgotten. ...

In November '99, the President's Working Group on Financial Markets issues a report (PDF). Brooksley is gone; I'm gone; Dan's gone. "These markets should be unregulated because there has been so much uncertainty about them. Because of the CFTC saying that they should be, this has been troubling to these markets. It hasn't allowed them to grow. The market will be limited henceforth to 'sophisticated investors,' not the widow and orphan. [They] won't be able to invest in it. But companies with names like Lehman Brothers, Bear Stearns, AIG, Merrill Lynch -- they're savvy -- will take control of these markets." And actually the thresholds are companies with over $5 million in assets are entitled to trade these unregulated.

They push the recommendation forward to Congress: Deregulate it. ...

On the very last day of the lame-duck Congress, Dec. 15, 2000, suddenly out of the conference committee report on the 11,000-page omnibus appropriation bill is a 262-page deregulatory bill for the over-the-counter derivative market. ... I doubt very much that there is one member of Congress or one staff member in Congress who read from end to end that legislation. I firmly believe it was written on Wall Street. When they suddenly saw that they had a chance to pass it, they just threw everything under the kitchen sink into this bill. There are little exceptions to regulation that are next to bigger exceptions to regulations that make the little ones irrelevant. It's a dog's breakfast. But that is the law that, as we sit here today, we operate under.

There's no doubt the CFTC cannot do anything about this. The SEC can do virtually nothing about it. This is an unregulated market -- no transparency, no capital reserve requirements, no prohibition on fraud, no prohibition on manipulation, no regulation of intermediaries. All the fundamental templates that we learned from the Great Depression are needed to have markets function smoothly are gone. ...

Back in the Oct. 1, 1998, House hearings that you talked about that Leach says Born has some reason to be vindicated --

To feel vindicated, I think he said.

Greenspan also testifies. And I think it's just an interesting point how stubbornly insistent Greenspan is at that point. He sees Long-Term Capital as proof that his philosophy is appropriate.

Yes. ... He had this utopian vision of markets working rationally the way gentlemen function in the best clubs in London. And the market blew up in his face. It's not self-regulating. ...

The big thing for me is the quandary that the Obama people now face. ... In a world where the banks contribute this much money, can anything ever be done?

Well, those are very good questions, and it's ironic, because Obama has essentiality brought back many of the actors who were unsympathetic to our point of view in 1998, 1999, 2000.

However, from my perspective, and I believe from Brooksley's perspective as well, the lessons have been learned. Recently, the Treasury proposed a white paper. It's confused and not as clear as one would like, but embedded within it is a program that comes in the direction of where Brooksley and I were 10, 11 years ago. And many progressives have now reached the point where after the bailout of the banks and the banks now profiting while everybody else is unemployed, they've become disenchanted with the Department of Treasury and Secretary [Timothy] Geithner and are not willing to give any credit to efforts that are being made. My view is, I believe Brooksley's view is right now, that they have put forward proposals that are meaningful and strong. ...

The benefit now, and the difference now, for Obama and the Treasury is, a, the understanding of what just happened; b, people like [CFTC Chair] Gary Gensler, who was a Goldman Sachs partner and a protégé of Bob Rubin, have come back into power, and they have given every evidence of the fact that they have learned their lesson. They are advocating the kinds of things that we advocated 10 or 11 years ago.

Right now, all I can tell you is that the battle is evenly matched. You would think after everything we've been through there shouldn't be a battle; it should be understood. No, no, the financial services industry has organized itself and will pitch very, very hard for continuing to have these markets be unobserved by anybody outside of the banking system or their customers. No capital requirements, no fraud controls, no manipulation controls and no regulation of the intermediaries. It's going to be a close-fought battle.


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March 23rd, 2013

3/23/2013

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I had a friend say to me last month in regards my fight against a $2.4 billion Wall Street deal to build public schools that he did not support my view because I was the only person speaking out about the crisis the banks are in again and how municipal bonds were ready to implode.  He said I am not hearing that on MSNBC or any of those 'progressive' news stations.  As we all know there is a lock on the media these days that makes the Kremlin look like it embraces its reporters.  Liberals as well as conservative pundits work for this corporate transition so they are not going to give a heads up......it is why mainstream didn't know about the 2008 collapse until the last minute.....academics, legal and financial professionals knew for years as they know now.  Again, we see the news of the next crash leaking out now that it is almost upon us as the article below relates.  The Atlantic Monthly article is long but gives a great look at what can only be called crony and criminal.....only the sophisticated investors are saying that now!

The gist is that the financial system is so systemically criminal and corrupt that even the most sophisticated investors are not investing in the banks and are now publicly stating as such.  Know who are the single investors propping up not only the US big banks and Europe's banking?  MUNICIPAL BONDS, PUBLIC AND PRIVATE PENSIONS, AND INSURANCE INVESTMENTS.......ALL THE SAME INVESTORS IN THE MARKET WHEN IS CRASHED IN 2008.  Just as before the last crash crooked politicians moved pensions from safe bonds into the toxic market and tied municipalities to bond bets on these banks......and they are doing that now.

I've spoken about the school building fund scam at length.....the Maryland legislature did scale down the size after much public outing as to the malfeasance of such a deal but we will take the bill that did meet approval to court as well.  Today I wanted to visit Baltimore's Mayor Rawlings-Blake and Johns Hopkins University....driver of all public policy in Baltimore.....and their move to make public sector pensions into private 401Ks.  Baltimore County has already made that move and Third Way are doing it all across the country.  Remember, the only investment in banks right now are public sector and private pensions because NOBODY TRUSTS THE BANKS AND FEAR THEY ARE READY TO CRASH.  So, as with O'Malley we have the farm team coming behind to throw public assets into a risky market simply to prop it up before the fall.  THIS IS THE EXACT MOVE FROM 2008 AND IT WILL END WITH PENSIONS AND CITY BALANCE SHEETS TAKING LOSSES INTO THE HANDS OF WALL STREET.


SOME FOUR YEARS after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as "black boxes" that may still be concealing enormous risks -- the sort that could again take down the economy. A close investigation of a supposedly conservative bank's financial records uncovers the reason for these fears -- and points the way toward urgent reforms.

Keep in mind that Bain Capital corporate bankruptcy policy crashed and burned private sector pensions and benefits so this is the public sector attack by politician disguised as Democrats......THIRD WAY CORPORATE DEMOCRATS.  Can you imagine returning to a middle-class first world quality of life with no pensions and benefits?  Of course not.....we see we are not able to access health care now as it is.  So this push by republicans and Third Way democrats to throw public pensions into a systemically criminal financial industry shows them as AIDING AND ABETTING WHAT WE KNOW WILL BE LOSSES TO PUBLIC ASSETS.

As you see below this is a politician.....Governor O'Malley's (President 2016) protege who is taking the Republican stance of sending public sector pensions to 401Ks and ending pensions for future public employees. Now, these pensions were defunded by O'Malley two decades ago and thrown into the 2008 market crash just in time to incur huge losses. Pensions and benefits are what define middle-class first world quality of life and it is towards what we are working......SO WHY ARE THIRD WAY CORPORATE DEMOCRATS KILLING PEOPLE'S RETIREMENTS AS FAST AS REPUBLICANS?

This bankruptcy claim is manufactured....Baltimore has plenty of money, the pols have just fenced it off from the government coffers and have allowed billions of dollars in corporate fraud go with no justice.

THIRD WAY WORKS FOR WEALTH AND PROFITS AND THAT MEANS LABOR IS CHEAP AND PEOPLE FEND FOR THEMSELVES!!! RUN AND VOTE FOR LABOR AND JUSTICE!!!



Baltimore mayor wants no pensions for new hires Baltimore mayor proposes major pension reform, work force cuts, in bid to stave off bankruptcy


By Ben Nuckols, Associated Press | Associated Press – Tue, Feb 12, 2013

Responding to projected budget deficits that could bankrupt city government, Baltimore Mayor Stephanie Rawlings-Blake has proposed ending pensions for newly hired civilian employees and moving to a hybrid pension plan for new police hires.

The proposed pension reforms were part of a broad package of cuts that Rawlings-Blake announced Monday in her State of the City address. The Democratic mayor also wants to cut the city work force by at least 10 percent over eight years and increase the number of hours that firefighters work.

The city faces $750 million in budget deficits over the next decade, according to a forecast from an outside consultant hired by the Rawlings-Blake administration. The report concluded that major reforms are needed to prevent bankruptcy.

In addition to ending pensions for new hires and implementing a defined-contribution retirement plan, Rawlings-Blake also proposed forcing current city employees to contribute to their pension plans for the first time. The contributions would be offset by pay increases but would still save the city money.

"We must shift to a 401(k)-style retirement plan for all new civilian hires," Rawlings-Blake said. "The private sector has adjusted to this model. It's time for Baltimore to change."

New police officers would get a 50-50 split between a defined-benefit pension and a defined-contribution plan under the mayor's proposal.

Robert Cherry, president of the city's police union, said the union was willing to discuss pension reform but that the city risks attracting less qualified or capable police recruits if it moves to a hybrid plan.

Baltimore firefighters currently work 42 hours a week, and if that schedule continues, the city will have to close more firehouses, according to the mayor. Firefighters work longer hours in 19 of the 25 largest U.S. cities, with a median work week of 52 hours, city officials said. Any change to the firefighters' schedule would have to be negotiated with the union and would be accompanied by a pay raise, officials said.

Rawlings-Blake also wants to impose a fee on residents for trash collection and use that money to lower the city's property tax rates, which are the highest in Maryland by a wide margin. She also proposes streamlining the city's vehicle fleet to reduce maintenance costs and make some jobs obsolete.

The forecast performed for the city by Philadelphia-based Public Financial Management Inc. found that the city's anticipated expenditures would continue to outpace revenues over the next 10 years. Health care benefits for retired workers will be a major driver of the projected deficits, the report found.

Baltimore's tax base has been eroding for decades. The city's population peaked at 950,000 in 1950 and now stands at 619,000. Although the decline has slowed, there have been few signs of the trend reversing. The median income is $40,000, and 22 percent of the city's residents live in poverty, according to Census data. Baltimore also has 16,000 vacant structures.

If the reforms are enacted, the city could afford to spend $100 million over 10 years to tear down about a quarter of those vacant buildings, according to the mayor's remarks.

The City Council would have to approve Rawlings-Blake's proposals.

Councilman Nick Mosby said he appreciated the mayor's attempt to take a longer-term approach to the city's financial problems and that he was interested in seeing details of her proposals.

"If it's effective, it could, for generations, put Baltimore in a better financial light," Mosby said. "There has to be some sort of pension reform across the board."


_________________________________________________
Regarding the article in the Sun on Attorney General Doug Gansler and Fannie write-downs:

Didn't you like that profile shot of Gansler?  It just spoke 'mug shot' with a caption.....'Aiding and Abetting'.  We have never seen such lawlessness in America have we?

What Doug is now doing on Wall Street's behalf is trying to rid the last sector of toxic loans from balance sheets by making the taxpayer do the mortgage write-down that the Attorney General Holder/Gansler should have had the banks do 4 years ago as a settlement for this massive fraud.  That was all that was necessary to get the economy and mortgage market on its feet and it only involved enforcing Rule of Law.  BANKS CREATE BAD AND FRAUDULENT LOANS/BANKS WRITE OFF BAD AND FRAUDULENT LOANS....EASY/PEASY.

Now, we know the Fed's 0% interest has been all about giving free money to the banks which then make tons of profits on the market and that raises capital to rid them of the massive debt of toxic subprime loans on their bank balance sheet.  Oh, if only the public had that same policy washing away public debt from massive corporate fraud....but alas....that will take electing honest politicians.  So now that the Fed has washed these toxic loans off the charts and now sold as bundled foreclosure to the same people having created them in the first place, it is time to get rid of the rest of the evidence/damages.....Fannie and Freddie....the taxpayer dumping site for spent toxic subprime loans.  Freddie and Fannie have played with making banks write down these loans but, as with the $25 billion interest payment of a settlement....only a teeny, tiny dent for justice was made.  We yet have hundreds of billions of these bad/fraudulent loans and underwater loans on taxpayer hands.  Obama and Third Way corporate democrats who have shielded all tens of trillions in fraudulent gains from justice by simply saying 'I don't see fraud' are now moving to make you and I......taxpayers write down those mortgage loans to make the mortgage market happy.  A taxpayer write-down of loans that are bad or underwater because of massive corporate fraud.....that is a mastermind of criminality straight from the halls of elite university grads!!!!

I'm making lite of this because it is THEATER OF THE ABSURD' and shows total disregard of the American people.  It is all illegal and because the crimes continue in the form of Aiding and Abetting there is no statute of limitations.  Suspended Rule of Law suspends statutes as well!!!!!  WE'LL GET OUR MONEY AS SOON AS WE RUN AND VOTE FOR LABOR AND JUSTICE CANDIDATES NEST ELECTIONS!!!



Gansler wants new Fannie, Freddie leadership
March 20, 2013|By Steve Kilar | The Baltimore SunMaryland


Attorney General Douglas F. Gansler and nine other attorneys general sent a letter Monday to President Obama and the U.S. Senate’s leaders demanding new management at the government entity that oversees Fannie Mae and Freddie Mac.

The housing finance firms, which have been controlled by the federal government since 2008, have become an “obstruction” to economic recovery, said the letter signed by Gansler and the attorneys general of Massachusetts, New York, California, Delaware, Illinois, Nevada and Oregon.

The Federal Housing Finance Agency, which regulates Fannie and Freddie, should offer mortgage principal reductions to homeowners struggling to pay off their loans, the attorneys general said. Other financial institutions have brought relief to homeowners with reductions, they said.

“Simply put, by refusing to allow for principal writedowns that would result in more loan modifications, FHFA stands as a direct impediment to our economic recovery,” the letter said.

The attorneys general are asking Obama to replace Acting FHFA Director Edward DeMarco with a manager who will allow Fannie and Freddie to offer principal reductions.

DeMarco has said offering principal reductions would threaten the financial stability of Fannie and Freddie. That, the attorneys general said, is “not supported by reality.”

“The FHFA’s current policy actually reduces the value of its holdings portfolio,” their letter said. “It is far more profitable for any financial institution to hold a portfolio of performing $200,000 mortgages that keeps families in their homes than a portfolio of non-performing $250,000 mortgages headed toward default.”

“Fannie Mae and Freddie Mac are refusing to assist thousands … thus holding back the economic recovery for everyone,” Gansler said in a statement.
Have a real estate news tip or experience to share? Email me at steve.kilar@baltsun.com.

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AMISS ALL OF THIS UGLINESS OF FRAUD AND CORRUPTION I WANTED TO SHOW HOW PEOPLE ARE BEGINNING TO BECOME ENGAGED........FIGHTING FOR PUBLIC EDUCATION.  EDUCATION IS WHAT WALL STREET WANTS AS ITS NEXT MARKET AND THIRD WAY CORPORATE POLITICIANS ARE WORKING HARD TO GIVE IT TO THEM!!!


Thursday Mar 21, 2013 3:20 pm

Could New York Be the Next Chicago?
By James Cersonsky

Members of New York's Movement of Rank-and-File Educators (MORE) turned out to support striking Con Ed workers in July of 2012. Founded last year, MORE plans to challenge the reign of the Unity caucus in upcoming UFT elections.   (Photo via Facebook)

Last September’s Chicago teachers strike, organized—and won—by an unapologetically democratic, community-centered union, gave hope to laborites across the country that there could be a functional American labor movement.

Now, a caucus of unionists seeks to remake New York’s United Federation of Teachers, the city’s local of the American Federation of Teachers, in the CTU’s mold. The Movement of Rank-and-File Educators (MORE) was founded last spring as an alliance of teacher caucuses and activist groups. The caucus stands unconditionally opposed to school closings, retributive punishment of students, and the “junk science” of evaluating teachers based on student tests. “Teachers need to play the role in laying a platform for parents and students,” says Marissa Torres, MORE’s candidate for assistant treasurer in next month’s elections. Torres calls for the UFT, like the Chicago Teachers Union, to foreground explicit anti-racism and collective struggle.


MORE’s sharpest point of departure from current leadership is over union governance. It demands elections for district representatives, which became appointed positions in 2003 under then-president Randi Weingarten (now the head of the AFT). As a caucus that counts parents among its members, it also advocates parent representation on the union’s executive board.

Unlike Chicago’s governing Caucus of Rank-and-File Educators (CORE), though, MORE faces safely ensconced union leadership. The Unity Caucus has been in power ever since the union’s founding in 1960. Former UFT member Lois Weiner argues in her recent book, The Future of Our Schools: Teachers Unions and Social Justice, that Unity’s unchecked reign has ossified the union. “The UFT has indeed been able to protect many of the vestiges of the old system by calling in its political chops,” she writes, but “has done so at the expense of alienating its natural allies, insulating the bureaucracy and allowing the union to all but disappear at the school.” At a February panel organized by MORE, Weiner cautioned caucus members not to focus only on capturing union leadership, but to reinvent the union through organizing, inside and out.

With union elections coming up and a fight with the city over teacher evaluation still raging, MORE has a host of opportunities to build support for its alternative model of teacher unionism.

Bloomberg-style elections

This spring’s UFT elections are unlikely to propel MORE into union leadership, but will serve as a test of its ground game. Elections are a time for “accountability, conversation, outreach, relationship building,” says Julie Cavanagh, MORE’s candidate for union president. Describing the union culture that MORE is trying to create, she says, “Spaces would exist for discourse, dialogue, and analysis. Questions could be asked and answered. A vision for the next three years would be presented and collectively discussed.”

To this end, MORE has used the elections as a launching pad for member-to-member outreach. Teachers have held countless regional forums and meet-ups to build a network of chapter leaders and members and organize at school sites. The caucus also maintains an active online presence and, like its counterparts in Chicago, hosts a reading group (covering Weiner’s book, among others). 

Although the UFT has a long history of dissident caucuses, none have been able to unseat Unity leadership—thanks in part to the union’s heavy incumbent bias. Of the 90 members on its executive board, only 23 are elected exclusively by teachers from particular strata—elementary, middle and high school. The rest of the board—19 “functionals” (non-teaching staff) and 48 at-large positions—are, like the 12-person leadership slate, voted on by workers and retirees alike. The retiree vote puts non-incumbents in a fix: Although challenger caucuses like MORE can access every teacher’s mailbox and buy a chapter leader list for mailings, they have no way of directly reaching out to retirees.

“Unity has been the only game in town,” says one retiree who taught high school social studies in Brooklyn for 24 years and agreed to speak on condition of anonymity. Though he expressed disappointment with union leadership over its handling of laid off teachers and its inability to roll back the mayor’s yearly tide of school closings—which included his own—he hasn’t heard from MORE and retains de facto Unity membership.

Compromise to the top?

Meanwhile, labor-management negotiations have become a theater of contention between MORE and Unity over how assertive—and how democratic—the union should be.

Last year, the Unity leadership decided to sign onto the city’s application for $40 million in federal Race to the Top funds, drawing criticism from MORE. Cavanagh slammed the leadership for accepting a greater role for standardized tests in teacher evaluations—a precondition for Race to the Top funding—in exchange for online learning grants with unproven benefits. “We should take a look at what we know works,” she said, “and not spend millions of dollars on experiments on other people’s children.”

New York City ultimately lost its Race to the Top bid for declining to provide requested information about its budget.

In response to MORE’s criticisms, Leo Casey, co-chair of the UFT’s evaluation negotiation committee, stressed the importance of finding common ground with the city. “The union’s position was that we needed to engage,” he said in an interview with Working In These Times, “and we needed to get the best possible evaluation system for our members that we could.”

Casey dismissed those opposed to the Unity leadership as “in the thrall of the apolitical romance of ‘revolutionary virtue’” and of the belief that “it is better to die gloriously on the field of battle protecting one’s virtue than to live to fight another day.” He accused dissidents of ignoring “the balance of power and of different forces” and using “rank-and-file empowerment and mobilization” as “the answer to every question.”

Who negotiates?

MORE’s emphasis on “empowerment and mobilization” has been evident in the union’s ongoing battle with the Bloomberg administration over a new evaluation system. Governor Andrew Cuomo demanded last spring that all districts negotiate new formulas for rating teachers by January 17, 2013, or risk hundreds of millions in sanctions. MORE maneuvered to involve rank-and-filers in the negotiations, gathering some 1,000 signatures on a petition calling for a member-wide referendum on all extra-contractual agreements. The UFT’s December 12 Delegate Assembly, however, dominated by the governing Unity Caucus, overwhelmingly voted down the proposal.

Negotiations between the union and the city on the new evaluation system fell through at the eleventh hour—which the union (and an unusually sympathetic New York Times) laid at the feet of the administration. While parent advocates won a legal battle to recoup the $250 million in punishment levied by the state, if no deal is reached by May 29, negotiations fall in the hands of a dubiously impartial arbitrator—state education commissioner John King.

The union leadership issued a statement expressing general approval of the arbitration process: “We’ve seen the kinds of plans the state has approved and we are comfortable with them because they are about helping teachers help kids.” MORE responds, “Any responsible union, led by people who care about the status of their members, would seek only a fair and independent arbitration process.”

As evidence of a current lack of democracy in negotiations, those clamoring for a new unionism cite emails such as one sent by a district representative to chapter leaders after a meeting in January. “It is not the place nor the time to get on a soapbox and speak about what you want to speak about,” the email reads. “We present the information, not to be filtered by you or to be changed in any way, it is to be presented to your members as you have heard it from me or any of the leadership in this union.”

The same day that email was sent, the union was criticized for being antidemocratic by a very different dissenter: Mayor Bloomberg. Responding to a union television ad blasting him for injecting dirty politics into evaluation negotiations, he compared it to the National Rifle Association, “another place where the membership, if you do the polling, doesn’t agree with the leadership.”

The union issued a stern rebuke—and the progressive media joined the uproar. But how the union can prevail in negotiations and defeat Bloomberg-allied forces in the long term is less obvious. Reacting to the Chicago teachers strike, UFT President Michael Mulgrew said, “The lesson for us here in New York is simple: Our ability to push back those so-called ‘reformers’ with their anti-teacher agenda depends in large measure on electing local and state representatives who understand and appreciate the importance of the work that we do every day in the classroom.”

The union is hopeful that Bloomberg’s successor, elected this year, will be more labor-friendly. By contrast, MORE’s approach is to take Bloomberg’s statement on the UFT’s member-leader rift and run with it—“occupying the union,” as Weiner’s book advocates, by elevating the voices of rank-and-filers and pushing for a CTU-style leadership that leverages these voices for political power.

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FINALLY, THIS IS A GOOD OVERVIEW OF JUST HOW SICK BANKS ARE BOTH FINANCIALLY AND SOCIOPATHY.  NOTHING HAS BEEN DONE TO REIGN THEM IN OR MAKE THEM HONEST AND NO ATTEMPT AT JUSTICE LEAVES THEM FEELING THEY HAVE IMPUNITY!!



Atlantic Monthly
WHAT'S INSIDE AMERICA'S BANKS? Contents
  1. MORE ONLINE
THE FINANCIAL CRISIS had many causes -- too much borrowing, foolish investments, misguided regulation -- but at its core, the panic resulted from a lack of transparency. The reason no one wanted to lend to or trade with the banks during the fall of 2008, when Lehman Brothers collapsed, was that no one could understand the banks' risks. It was impossible to tell, from looking at a particular bank's disclosures, whether it might suddenly implode.

For the past four years, the nation's political leaders and bankers have made enormous -- in some cases unprecedented -- efforts to save the financial industry, clean up the banks, and reform regulation in order to restore trust and confidence in the American financial system. This hasn't worked. Banks today are bigger and more opaque than ever, and they continue to behave in many of the same ways they did before the crash.

Consider JPMorgan's widely scrutinized trading loss last year. Before the episode, investors considered JPMorgan one of the safest and best-managed corporations in America. Jamie Dimon, the firm's charismatic CEO, had kept his institution upright throughout the financial crisis, and by early 2012, it appeared as stable and healthy as ever.

One reason was that the firm's huge commercial bank -- the unit responsible for the old-line business of lending -- looked safe, sound, and solidly profitable. But then, in May, JPMorgan announced the financial equivalent of sudden cardiac arrest: a stunning loss initially estimated at $2 billion and later revised to $6 billion. It may yet grow larger; as of this writing, investigators are still struggling to comprehend the bank's condition.

The loss emanated from a little-known corner of the bank called the Chief Investment Office. This unit had been considered boring and unremarkable; it was designed to reduce the bank's risks and manage its spare cash. According to JPMorgan, the division invested in conservative, low-risk securities, such as U.S. government bonds. And the bank reported that in 95 percent of likely scenarios, the maximum amount the Chief Investment Office's positions would lose in one day was just $67 million. (This widely used statistical measure is known as "value at risk.") When analysts questioned Dimon in the spring about reports that the group had lost much more than that -- before the size of the loss became publicly known -- he dismissed the issue as a "tempest in a teapot."

Six billion dollars is not the kind of sum that can take down JPMorgan, but it's a lot to lose. The bank's stock lost a third of its value in two months, as investors processed reports of the trading debacle. On May 11, 2012, alone, the day after JPMorgan first confirmed the losses, its stock plunged roughly 9 percent.

The incident was about much more than money, however. Here was a bank generally considered to have the best risk-management operation in the business, and it had badly managed its risk. As the bank was coming clean, it revealed that it had fiddled with the way it measured its value at risk, without providing a clear reason. Moreover, in acknowledging the losses, JPMorgan had to admit that its reported numbers were false. A major source of its supposedly reliable profits had in fact come from high-risk, poorly disclosed speculation.

It gets worse. Federal prosecutors are now investigating whether traders lied about the value of the Chief Investment Office's trading positions as they were deteriorating. JPMorgan shareholders have filed numerous lawsuits alleging that the bank misled them in its financial statements; the bank itself is suing one of its former traders over the losses. It appears that Jamie Dimon, once among the most trusted leaders on Wall Street, didn't understand and couldn't adequately manage his behemoth. Investors are now left to doubt whether the bank is as stable as it seemed and whether any of its other disclosures are inaccurate.

The JPMorgan scandal isn't the only one in recent months to call into question whether the big banks are safe and trustworthy. Many of the biggest banks now stand accused of manipulating the world's most popular benchmark interest rate, the London Interbank Offered Rate (LIBOR), which is used as a baseline to set interest rates for trillions of dollars of loans and investments. Barclays paid a large fine in June to avoid civil and criminal charges that could have been brought by U.S. and U.K. authorities. The Swiss giant UBS was reportedly close to a similar settlement as of this writing. Other major banks, including JPMorgan, Bank of America, and Deutsche Bank, are under civil or criminal investigation (or both), though no charges have yet been filed.

LIBOR reflects how much banks charge when they lend to each other; it is a measure of their confidence in each other. Now the rate has become synonymous with manipulation and collusion. In other words, one can't even trust the gauge that is meant to show how much trust exists within the financial system.

Accusations of illegal, clandestine bank activities are also proliferating. Large global banks have been accused by U.S. government officials of helping Mexican drug dealers launder money (HSBC), and of funneling cash to Iran (Standard Chartered). Prosecutors have charged American banks with falsifying mortgage records by "robo-signing" papers to rush the process along, and with improperly foreclosing on borrowers. Only after the financial crisis did people learn that banks routinely misled clients, sold them securities known to be garbage, and even, in some cases, secretly bet against them to profit from their ignorance.

Together, these incidents have pushed public confidence ever lower. According to Gallup, back in the late 1970s, three out of five Americans said they trusted big banks "a great deal" or "quite a lot." During the following decades, that trust eroded. Since the financial crisis of 2008, it has collapsed. In June 2012, fewer than one in four respondents told Gallup they had faith in big banks -- a record low. And in October, Luis Aguilar, a commissioner at the Securities and Exchange Commission, cited separate data showing that "79 percent of investors have no trust in the financial system."

When we asked Dane Holmes, the head of investor relations at Goldman Sachs, why so few people trust big banks, he told us, "People don't understand the banks," because "there is a lack of transparency." (Holmes later clarified that he was talking about average people, not the sophisticated investors with whom he interacts on an almost hourly basis.) He is certainly right that few students or plumbers or grandparents truly understand what big banks do anymore. Ordinary people have lost faith in financial institutions. That is a big enough problem on its own.

But an even bigger problem has developed -- one that more fundamentally threatens the safety of the financial system -- and it more squarely involves the sort of big investors with whom Holmes spends much of his time. More and more, the people in the know don't trust big banks either.

AFTER ALL THE PURPORTED "cleansing effects" of the panic, one might have expected big, sophisticated investors to grab up bank stocks, exploiting the timidity of the average investor by buying low. Banks wrote down bad loans; Treasury certified the banks' health after its "stress tests"; Congress passed the Dodd-Frank reforms to regulate previously unfettered corners of the financial markets and to minimize the impact of future crises. During the 2008 crisis, many leading investors had gotten out of bank stocks; these reforms were designed to bring them back.

And indeed, they did come back -- at first. Many investors, including Warren Buffett, say bank stocks were underpriced after the crisis, and remain so today. Most large institutional investors, such as mutual funds, pension funds, and insurance companies, continue to hold substantial stakes in major banks. The Federal Reserve has tried to help banks make profitable loans and trades, by keeping interest rates low and pumping trillions of dollars into the economy. For investors, the combination of low stock prices, an accommodative Fed, and possibly limited downside (the federal government, needless to say, has shown a willingness to assist banks in bad times) can be a powerful incentive.

Yet the limits to big investors' enthusiasm are clearly reflected in the data. Some four years after the crisis, big banks' shares remain depressed. Even after a run-up in the price of bank stocks this fall, many remain below "book value," which means that the banks are worth less than the stated value of the assets on their books. This indicates that investors don't believe the stated value, or don't believe the banks will be profitable in the future -- or both. Several financial executives told us that they see the large banks as "complete black boxes," and have no interest in investing in their stocks. A chief executive of one of the nation's largest financial institutions told us that he regularly hears from investors that the banks are "uninvestable," a Wall Street neologism for "untouchable."

That's an increasingly widespread view among the most sophisticated leaders in investing circles. Paul Singer, who runs the influential investment fund Elliott Associates, wrote to his partners this summer, "There is no major financial institution today whose financial statements provide a meaningful clue" about its risks. Arthur Levitt, the former chairman of the SEC, lamented to us in November that none of the post-2008 remedies has "significantly diminished the likelihood of financial crises." In a recent conversation, a prominent former regulator expressed concerns about the hidden risks that banks might still be carrying, comparing the big banks to Enron.

Jamie Dimon, JPMorgan's CEO, testifying last summer before the House Financial Services Committee about his bank's sudden $6 billion loss. JPMorgan's risk-management abilities had been touted as the best in the industry.

A recent survey by Barclays Capital found that more than half of institutional investors did not trust how banks measure the riskiness of their assets. When hedge-fund managers were asked how trustworthy they find "risk weightings" -- the numbers that banks use to calculate how much capital they should set aside as a safety cushion in case of a business downturn -- about 60 percent of those managers answered 1 or 2 on a five-point scale, with 1 being "not trustworthy at all." None of them gave banks a 5.

A disturbing number of former bankers have recently declared that the banking industry is broken (this newfound clarity typically follows their passage from financial titan to rich retiree). Herbert Allison, the ex-president of Merrill Lynch and former head of the Obama administration's Troubled Asset Relief Program, wrote a scathing e-book about the failures of the large banks, stopping just short of labeling them all vampire squids. A parade of former high-ranking executives has called for bank breakups, tighter regulation, or a return to the Depression-era Glass-Steagall law, which separated commercial banking from investment banking. Among them: Philip Purcell (ex-CEO of Morgan Stanley Dean Witter), Sallie Krawcheck (ex-CFO of Citigroup), David Komansky (ex-CEO of Merrill Lynch), and John Reed (former co-CEO of Citigroup). Sandy Weill, another ex-CEO of Citigroup, who built a career on financial megamergers, did a stunning about-face this summer, advising, with breathtaking chutzpah, that the banks should now be broken up.

Bill Ackman's journey is particularly telling. One of the nation's highest-profile and most successful investors, Ackman went from being a skeptic of investing in big banks, to being a believer, and then back again -- with a loss of hundreds of millions along the way. In 2010, Ackman bought an almost $1 billion stake in Citigroup for Pershing Square, the $11 billion fund he runs. He reasoned that in the aftermath of the crisis, the bigbanks had written down their bad loans and become more conservative; they were also facing less competition. That should have been a great environment for investment, he says. He had avoided investing in big banks for most of his career. But "for once," he told us, "I thought you could trust the carrying values on bank books."

Last spring, Pershing Square sold its entire stake in Citigroup, as the bank's strategy drifted, at a loss approaching $400 million. Ackman says, "For the first seven years of Pershing Square, I believed that an investor couldn't invest in a giant bank. Then I felt I could invest in a bank, and I did -- and I lost a lot of money doing it."

A crisis of trust among investors is insidious. It is far less obvious than a sudden panic, but over time, its damage compounds. It is not a tsunami; it is dry rot. It creeps in, noticed occasionally and then forgotten. Soon it is a daily fact of life. Even as the economy begins to come back, the trust crisis saps the recovery's strength. Banks can't attract capital. They lose customers, who fear being tricked and cheated. Their executives are, by turns, traumatized and enervated. Lacking confidence in themselves as they grapple with the toxic legacies of their previous excesses and mistakes, they don't lend as much as they should. Without trust in banks, the economy wheezes and stutters.

And, of course, as trust diminishes, the likelihood of another crisis grows larger. The next big storm might blow the weakened house down. Elite investors -- those who move markets and control the flow of money -- will flee, out of worry that the roof will collapse. The less they trust the banks, the faster and more decisively they will beat that path -- disinvesting, freezing bank credit, and weakening the structure even more. In this way, fear becomes reality, and troubles that might once have been weathered become existential.

AT THE HEART of the problem is a worry about the accuracy of banks' financial statements. Some of the questions are basic: How do banks account for loans? Can investors accurately assess the value of those loans? Others are far more complicated: What risks are posed by complex financial instruments, such as the ones that caused JPMorgan's massive loss? The answers are supposed to be found in the publicly available quarterly and annual reports that banks file with the Securities and Exchange Commission.

The Financial Accounting Standards Board, an independent private-sector organization, governs the accounting in these filings. Don Young, currently an investment manager, was a board member from 2005 to 2008. "After serving on the board," he recently told us, "I no longer trust bank accounting."

Accounting rules have proliferated as banks, and the assets and liabilities they contain, have become more complex. Yet the rules have not kept pace with changes in the financial system. Clever bankers, aided by their lawyers and accountants, can find ways around the intentions of the regulations while remaining within the letter of the law. What's more, because these rules have grown ever more detailed and lawyerly -- while still failing to cover every possible circumstance -- they have had the perverse effect of allowing banks to avoid giving investors the information needed to gauge the value and risk of a bank's portfolio. (That information is obscured by minutiae and legalese.) This is true for the complicated questions about financial innovation and trading, but it also is true for the basic questions, such as those involving loans.

At one point during Young's tenure, some members of the Financial Accounting Standards Board wanted to make banks account for loans in the same way they do for securities, by recording them at current market values, a method known as "fair value." Banks were instead recording the value of their loans at the initial loan amount, and setting aside a reserve based on their assumptions about how likely they were to get paid back. The rules also allowed banks to use different methods to measure the value of the same kind of loans, depending on whether the loans were categorized as ones they planned to keep for a long time or instead as ones they planned to sell. Many accounting experts believed that the reported numbers did not give investors an accurate or reliable picture of a bank's health.

After bitter battles, turnover on the board, worries about acting in the middle of the financial crisis, and aggressive bank lobbying, the accounting mandarins preserved the existing approach instead of switching to fair-value accounting for loans. Young believes that the numbers are even less reliable now. "It's gotten worse," he says. When we asked another former board member, Ed Trott, whether he trusted bank accounting, he said, simply, "Absolutely not."

The problem extends well beyond the opacity of banks' loan portfolios -- it involves almost every aspect of modern bank activity, much of which involves complex investment and trading, not merely lending. Kevin Warsh, an ex-Morgan Stanley banker and a former Federal Reserve Board member appointed by George W. Bush, says woeful disclosure is a major problem. Look at the financial statements a big bank files with the SEC, he says: "Investors can't truly understand the nature and quality of the assets and liabilities. They can't readily assess the reliability of the capital to offset real losses. They can't assess the underlying sources of the firms' profits. The disclosure obfuscates more than it informs, and the government is not just permitting it but seems to be encouraging it."

Accounting rules are supposed to help investors understand the companies whose shares they buy. Yet current disclosure requirements don't illuminate banks' financial statements; instead, they let the banks turn out the lights. And in that darkness, all sorts of unsavory practices can breed.

WE DECIDED TO GO on an adventure through the financial statements of one bank, to explore exactly what they do and do not show, and to gauge whether it is possible to make informed judgments about the risks the bank may be carrying. We chose a bank that is thought to be a conservative financial institution, and an exemplar of what a large modern bank should be.

Wells Fargo was founded on trust. Its logo has long been a strongly sprung six-horse stagecoach, a fleet of which once thundered across the American West, loaded with gold. According to the firm's official history, "In the boom and bust economy of the 1850s, Wells Fargo earned a reputation of trust by dealing rapidly and responsibly with people's money." People believed Wells Fargo would keep their money safe -- the bank's paper drafts were as good as the gold it shipped throughout the country.

For a century and a half, Wells Fargo stock was also like gold, which is what led Warren Buffett to buy a stake in the bank in 1990. Since then, Buffett and Wells Fargo have been inextricably linked. As of fall 2012, Buffett's firm, Berkshire Hathaway, owned about 8 percent of Wells Fargo's shares.

Today, Wells Fargo still prominently displays the stagecoach logo at branches, in advertising, on the 12,000-plus ATMs that dot the country, and even at the bank's museum stores. There, visitors can buy wholesome, family-friendly items: a stagecoach night-light; stagecoach salt and pepper shakers; a hand-painted ceramic stagecoach pillbox. These are more than tchotchkes. They are emblems of the bank's honest and honorable mission.

Buffett's impeccable reputation has rubbed off on the bank. Wells Fargo is widely regarded as the most conservative of the nation's biggest banks. Many investors, regulators, and analysts still believe its financial reports reflect a full, fair, and accurate picture of its business. The market value of Wells Fargo's shares is now the highest of any U.S. bank: $173 billion as of early December 2012. The enthusiasm for Wells Fargo reflects the bank's good reputation, as well as one seemingly simple fact: the bank earned solid net income of nearly $16 billion in 2011, up 28 percent from 2010.

To find out what's behind that fact, you have to read Wells Fargo's annual report -- and that is where we began our adventure. The annual report is a special document: it is the place where a bank sets forth the audited details of its business. Although banks also submit unaudited quarterly reports and other periodical documents to the SEC, and have conference calls with analysts and shareholders, the annual report gives investors the most complete and, supposedly, reliable picture.

(Today, big banks have to answer to a dizzying litany of regulators -- not only the SEC, but also the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, the newly created Consumer Financial Protection Bureau, and so on. The disclosure regimes vary, adding to the confusion. Banks confidentially release additional information to these regulators, but investors do not have access to those details. That regulators have these extra, confidential disclosures isn't much comfort: given the inability of regulators to police the banks in recent years, one of the only groups that investors trust less than bankers is bank regulators.)

Wells Fargo's most recent annual report, covering 2011, is 236 pages long. It begins like a book an average person might enjoy: a breezy journey through a year in a bank's life. On the cover, that stagecoach appears. The first page has a moving story about a customer. The next few pages are filled with images of guys in cowboy hats, a couple holding hands by the ocean, cupcakes, and solar panels. In bold 50-point font, Wells Fargo reports that it contributed $213.5 million to non-profits during the year, and it even does the math to make sure we appreciate its generosity: "$4.1 million every week or $585,000 every day or $24,000 every hour." The introduction's capstone is this: "We don't take trust for granted. We know we have to earn it every day in our conversations and actions with our customers. Here's how we try to do that."

Fortunately for Wells Fargo, most people do not read past the introduction. In the pages that follow, the sunny faces of satisfied customers disappear. So do the stories. The narrative is replaced by details about the bank's businesses that range from the incomprehensible to the disturbing. Wells Fargo told us it devotes "significant resources to fulfilling all reporting requirements of various regulators." Nevertheless, these disclosures wouldn't earn anyone's trust. They are littered with language that says nothing, at length. The report is riddled with progressively more opaque footnotes -- the financial equivalent of Dante's descent into hell. Indeed, after the friendly introduction, the report ought to bear a warning to the inquisitive reader intent on truly understanding the bank's financial positions: "Abandon all hope, ye who enter here."

The first circle of Wells Fargo's version of the Inferno, like Dante's Limbo, merely hints at what is to come, yet it is nonetheless unsettling. One of the main purposes of an annual report is to tell investors how a company makes money. Along these lines, Wells Fargo splits its businesses into two apparently simple and distinct parts -- "interest income" and "noninterest income." At first blush, these two categories appear to parallel the two traditional sources of banking income: interest from loans and customer fees.

But here the descent begins. Suddenly, this folksy mortgage bank starts showing signs of a split personality. It turns out that trading activities, the type associated with Wall Street firms like Goldman Sachs and Morgan Stanley, contribute significantly to each of Wells Fargo's two categories of income. Almost $1.5 billion of its "interest income" comes from "trading assets"; another $9.1 billion results from "securities available for sale."

One billion dollars of the bank's "noninterest income" are "net gains from trading activities." Another $1.5 billion is income from "equity investments." Up and down the ledger, abstruse, all-embracing categories appear: "other fees earned from related activities," "other interest income," and just plain "other." The income statement's "other" catchalls collectively amounted to $6.6 billion of Wells Fargo's income in 2011. It will take the devoted reader 50 more pages to find out that the bank derives a big chunk of that "other" income from, yes, "trading activities." The sheer volume of "trading" at Wells Fargo suggests that the bank is not what it seems.

Some bank analysts say these trading numbers are small relative to the bank's overall revenue ($81 billion in 2011) and profit (again, $16 billion in 2011). Other observers don't even bother to look at these details, because they assume Wells Fargo is protected from trading losses by its capital reserves of $148 billion. That number, assuming it is accurate, can make any particular loss appear minuscule. For example, buried at the bottom of page 164 of Wells Fargo's annual report is the following statement: "In 2011, we incurred a $377 million loss on trading derivatives related to certain CDOs," or collateralized debt obligations. Just a few years ago, a bank's nine-figure loss on these sorts of complex financial instruments would have generated major headlines. Yet this one went unremarked-upon in the media, even by top investors, analysts, and financial pundits. Perhaps they didn't read all the way to page 164. Or perhaps they had become so numb from bigger bank losses that this one didn't seem to matter. Whatever the reason, Wells Fargo's massive CDO-derivatives loss was a multi-hundred-million-dollar tree falling silently in the financial forest. To paraphrase the late Senator Everett Dirksen, $377 million here and $377 million there, and pretty soon you're talking about serious money.

EVEN CONSERVATIVELY RUN BANKS Can be risky, as George Bailey learned in It's a Wonderful Life. But the Bailey Building and Loan Association did not earn money from trading. Trading is an inherently opaque and volatile business. It is subject to the vagaries of the markets. And yet in the past two decades, as profits from traditional lending and brokering activities have been squeezed, banks have turned more and more to trading in order to make money.

Today, banks' trading operations involve more leverage, or borrowed money, than in the past. Banks also obtain a form of leverage by promising to pay money in the future if some event doesn't go their way (much like an insurance company must pay out a lot of money if a house it covers burns down). These promises come in the form of derivatives, financial instruments that can be used to hedge against various risks -- like the possibility that interest rates will rise or the likelihood that a company will default on its debts -- or simply to place bets on those same possibilities, hoping to profit. Because many of these bets are both large and complex, trading carries the potential for catastrophic losses.

The cryptic way Wells Fargo describes its trading raises many questions. The bank breaks what it calls "net gains from trading activities" -- which doesn't cover all of its trading income, but is an important part -- into three subcategories, leaving the annual-report reader to play a kind of shell game.

Look first at "proprietary" trading -- activity a firm undertakes to make money for its own account by buying or selling stocks, bonds, or more-exotic financial creations. Self-evidently, this activity might involve big risks. When this shell is lifted, the bank's exposure seems reassuringly inconsequential: the reported loss is just $14 million. Still, there may be more under this shell than meets the eye: that $14 million might not be indicative of the bank's true exposure. Was Wells Fargo just lucky to finish slightly down after a roller-coaster year of wild gambling with much bigger gains and losses? Without more information about the size of the bank's bets, it is impossible to know.

A second subcategory is "economic hedging." An activity labeled "hedging" might sound soothing. Wells Fargo says it lost an inconsequential $1 million from economic hedging in 2011. So maybe there is nothing to worry about under this shell, either. In its pure form, hedging is supposed to reduce risk. A person buys a house and then hedges the risk of a fire by purchasing insurance. But hedging in the world of finance is more complex -- so much so that it requires advanced mathematics and computer modeling, and still can be little better than guesswork. It is difficult to anticipate how a portfolio of complicated financial instruments will respond as variables like interest rates and stock prices go up and down. As a result, hedges don't always work as intended. They may not fully eliminate large risks that banks think they've taken care of. And they may inadvertently create new, hidden risks -- "unknown unknowns," if you will. Because of all this complexity, some traders can disguise speculative positions as "hedges" and claim their purpose is to reduce risk, when in fact the traders are purposely taking on more risk to try to make a profit. That is what the traders within JPMorgan's Chief Investment Office appear to have been doing. Was Wells Fargo's "economic hedging" like buying straightforward insurance? Or was it more like speculation -- what JPMorgan did? Do the reported numbers suggest low risk when in fact the opposite is true? The bank's disclosures don't answer these questions.

Finally we come to a third shell -- and there's unquestionably something to see under this one. It carries an innocuous label: "customer accommodation." Wells Fargo made more than $1 billion from customer-accommodation trading in 2011. How did it make so much money merely by helping customers? This should be a plain-vanilla business: a broker sits between a buyer and a seller and takes a little cut of the transaction. But what we learned from the 2008 financial crisis, and what we keep learning from incidents such as the JPMorgan scandal, is that seemingly innocuous activities that appear highly profitable can be dangerous to a bank's health -- and to our economy.

Don't look to the annual report for clarity. Here is the bank's definition: "Customer accommodation trading consists of security or derivative transactions conducted in an effort to help customers manage their market price risks and are done on their behalf or driven by their investment needs."

That might seem safe, but the report notably fails to explain why this activity would be so profitable. In fact, at many large banks, customer accommodation can be a euphemism for "massive derivatives bets." For Wells Fargo, the sub-category of "customer accommodation, trading and other free-standing derivatives" included derivatives trades of about $2.8 trillion in "notional amount" as of the end of 2011, meaning that the underlying positions referenced in the bank's derivatives were that large then. By way of explanation: if we were to make a bet with you about how much the price of a $70 share of Walmart would change this year -- we pay you any increase, you pay us any decrease -- we'd say the "notional amount" of the bet is $70.

Wells Fargo doesn't expect to gain or lose $2.8 trillion on its derivatives, any more than we would expect the payment on our Walmart bet to be $70. Bankers generally assume that the likely risk of gain or loss on derivatives is much smaller than their "notional amount," and Wells Fargo says the concept "is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments." Moreover, Wells Fargo reports that many of its derivatives offset each other, as yours might if you placed several wagers that Walmart stock would go up, along with several other bets that it would go down.

Yet, as investors in bank stocks learned in 2008, it is possible to lose a large portion of the "notional amount" of a derivatives trade if a bet goes terribly wrong. In the future, if interest rates skyrocket or the euro unravels, Wells Fargo might sustain huge derivatives losses, just as you might lose the full $70 you bet on Walmart if the company went bust. Wells Fargo doesn't tell investors how much of the $2.8 trillion it could lose in a worst-case scenario, nor is it required to. Even a savvy investor who reads the footnotes can only guess at what the bank's potential risk exposure to derivatives might be.

One reason Wells Fargo is trusted more than other big banks is that its notional amount of derivatives is comparatively small. At the end of the third quarter of 2012, JPMorgan had $72 trillion in notional amount on its books -- about five times the size of the U.S. economy. But even at Wells Fargo levels, the numbers are so large that they lose their meaning. And they put Wells Fargo's seemingly immense capital reserves -- $148 billion, you'll recall -- in a rather different light.

How much risk is the bank actually taking on these trades? For which customers does it place a requested bet, then negate its risk by taking an exactly offsetting position in the market, so that it is essentially acting as an agent simply taking a commission? And for all these trades, what risk is Wells Fargo taking on its customers? Many of these bets involve the customers' promises to pay Wells Fargo depending on how certain financial numbers change in the future. But what happens if some of those customers go bankrupt? How much money would Wells Fargo lose if it "accommodates" customers who can't pay what they owe?

We asked Wells Fargo officials if we could talk to someone at the bank about its disclosures, including those concerning its trading and derivatives. They declined. Instead, they suggested we submit questions in writing, which we did.

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In response, Wells Fargo public-relations representatives wrote, "We believe our disclosures on the topics you raised are comprehensive and stand on their own." In answering our written questions about the annual report, the representatives simply pointed us back to the annual report. For example, when we inquired about the bank's trading activities, Wells Fargo responded: "We would ask you to refer to our discussion of 'Market Risk-Trading Activities' on pages 80-81 in the Management Discussion and Analysis section of the Wells Fargo 2011 Annual Report."

Yet it was precisely those pages that generated our questions about the bank's various categories of trading. When we specifically asked Wells Fargo to help us quantify the risks associated with customer-accommodation trading, its representatives pointed us to those same pages. But those pages don't answer that question. Here is the most helpful of the bank's disclosures related to customer-accommodation trading:

For the majority of our customer accommodation trading we serve as intermediary between buyer and seller. For example, we may enter into financial instruments with customers that use the instruments for risk management purposes and offset our exposure on such contracts by entering into separate instruments. Customer accommodation trading also includes net gains related to market-making activities in which we take positions to facilitate expected customer order flow.

Bankers, and their lawyers, are careful about the language they use in annual reports. So why did they use the word expected in discussing customer order flow in that last sentence? Is Wells Fargo speculating based on what one of its traders "expects" a customer to do, instead of responding to what a customer actually has done? The language the bank pointed to for answers to our questions only raises more questions.

Wells Fargo's annual report is filled with similarly cryptic declarations, but not the crucial information that investors actually need. It doesn't describe worst-case scenarios for customer-accommodation trades, or even include any examples of what such trades might involve. When we asked straightforward questions -- such as "How much money would Wells Fargo lose from these trades under various scenarios?" -- the bank's representatives declined to answer.

Only a few people have publicly expressed concerns about customer-accommodation trades. Yet some banking experts are skeptical of these trades, and suspect that they hide huge risks. David Stockman, who was the federal budget director under President Reagan, an investment banker at Salomon Brothers, and a partner at the private-equity firm Black-stone Group, calls the big banks "massive trading operations." Stockman has become so disillusioned by America's financial system that he is now regarded, in some quarters, as a wild-eyed heretic, but his expertise is undeniable. He recently told reporters for "The Gold Report," an online newsletter, "Whether they called it customer accommodation or proprietary is a distinction without a difference."

Bankers and regulators today might dismiss warnings that customer-accommodation derivatives could bring down the financial system as implausible. But a few years ago, they said the same thing about credit-default swaps and collateralized debt obligations.

THE PENULTIMATE STOP on our expedition through Wells Fargo's annual disclosures brings us to one of the most important concepts in bank reporting: fair value. It's the topic that led Don Young to conclude that he could not trust banks' accounting after fighting about it on the Financial Accounting Standards Board. Banks hold huge amounts of assets and liabilities, including derivatives, and are supposed to record them at their "fair value." Fair enough? Not so fast.

Like other banks, Wells Fargo uses a three-level hierarchy to report the fair value of its securities. Level 1 includes securities traded in active, public markets; it isn't too scary. At Level 1, fair value simply means the reported price of a security. If Wells Fargo owned a stock or bond traded on the New York Stock Exchange, fair value would be the closing price each day.

Level 2 is more worrisome. It includes some shadier characters, such as derivatives and mortgage-backed securities. There are no active, public markets for these investments -- they are bought and sold privately, if at all, and are not listed on exchanges -- so Wells Fargo uses other methods to figure out fair value, including what it calls "model-based valuation techniques, such as matrix pricing." At Level 2, fair value is what accountants would charitably describe as an "estimate," based on statistical computer models and what they call "observable" inputs, such as the prices of similar assets or other market data. At Level 2, fair value is more like an educated guess.

Level 3 is hair-raising. The bank's Level 3 estimates are "generated primarily from model-based techniques that use significant assumptions not observable in the market." In other words, not only are there no data about the prices at which these types of assets have recently traded, but there are no observable data to inform the assumptions one might use to generate prices. Level 3 contains the most-esoteric financial instruments -- including the credit-default swaps and synthetic collateralized debt obligations that became so popular and prevalent at the height of the housing boom, filling the balance sheets of Bear Stearns, Merrill Lynch, Citigroup, and many other banks.

At Level 3, fair value is a guess based on statistical models, but with inputs that are "not observable." Instead of basing estimates on market data, banks use their own assumptions and internal information. At Level 3, fair value is an uneducated guess.

Surely, one would assume, Wells Fargo's assets would mostly reside on Level 1, with perhaps a small amount on Level 2. It's just a simple mortgage bank, right? And it seems inconceivable that Wells Fargo would be loaded with Level 3 investments long after regulators have supposedly purged the banks of toxic assets and nursed them back to health.

Yet only a small fraction of Wells Fargo's assets are on Level 1. Most of what the bank holds is on Level 2. And a whopping $53 billion -- equivalent to more than a third of the bank's capital reserves -- is on Level 3. All three categories include risky assets that might lose value in the future. But the additional concern with Level 2 and Level 3 assets is that banks might have errantly recorded them at values that were inflated to begin with. There is no way to check whether reported values are accurate; investors have to trust the bank's managers and auditors. Scholarly research on Level 3 assets suggests that they can be misstated by as much as 15 percent at any given time, even if the market is stable. If Wells Fargo's estimates are that far off, the bank could be sitting on billions of dollars of hidden losses.

Wells Fargo discloses in a quiet footnote in small print on page 133 of the annual report that its Level 3 assets include "collateralized loan obligations with both a cost basis and fair value of $8.1 billion, at December 31, 2011." In English, that means that the bank is recording the value of some of its most complicated investments (composed of packages of loans to companies) at exactly the price it paid for them (the "cost basis"). Were these products bought a year ago? Two? Before the crash of 2008? Have they actually retained their value? Don Young finds it curious that the fair value and cost basis would be the same. "With interest rates much lower than most expected, why didn't the CLOs rise in value?" he asks. But he's the first to admit that he's really in no position to say. Without more information about the composition of the loan packages and when they were purchased, an outsider cannot determine what these assets might be worth.

Accountants and regulators insist that categorizing an investment as Level 1, 2, or 3 is better than simply recording the investment's original cost. But the current system permits bankers to use their own internally generated estimates. Who oversees those estimates? Auditors who are dependent on the bank for significant revenue, and regulators who are endemically behind the curve. Such a setup erodes trust. And when that trust disappears, so does any confidence in what the bank says its investments are worth.

The Level 3 issue isn't simply theoretical. One major problem during the 2008 crisis was that banks and investors didn't know what to trust about Level 3, so they panicked. We just suffered through a crisis in Level 3 assets. We can't afford another.

THERE IS AN EVEN LOWER CIRCLE of financial hell. It is populated with complex financial monsters once known as "special-purpose entities." These were the infamous accounting devices that Enron employed to hide its debts. Around the turn of the millennium, the Texas energy-trading firm used these newly created corporations to borrow money and take on risks without recording the liabilities in its financial statements. These deals were called "off-balance-sheet" transactions, because they did not appear on Enron's balance sheet.

Suppose a company owns a slice -- just a small percentage -- of another company that has a lot of debt. The first company might claim that it doesn't need to include all of the second company's assets and liabilities on its balance sheet. Let's say we owned shares of IBM. We aren't suddenly on the hook for all of the company's liabilities. But if we owned so many IBM shares that we effectively controlled it, or if we had a side agreement that made us responsible for IBM's debts, common sense dictates that we should treat IBM's liabilities as our own. A decade ago, many companies, including Enron, used special-purpose entities to avoid common sense: they kept liabilities off the balance sheet, even when they had such control or side agreements.

As in a horror film, the special-purpose entity has been reanimated, and is now known as the variable-interest entity. In the alphabet soup of Wall Street, the acronym has switched from SPE to VIE, but the idea is the same. Big companies create these entities to borrow money and buy assets, but -- like Enron -- they do not include them on their balance sheets. The problem is especially worrisome at banks: every major bank has substantial positions in VIEs.

As of the end of 2011, Wells Fargo reported "significant continuing involvement" with variable-interest entities that had total assets of $1.46 trillion. The "maximum exposure to loss" it reports is much smaller, but still substantial: just over $60 billion, more than 40 percent of its capital reserves. The bank says the likelihood of such a loss is "extremely remote." We can hope.

However, Wells Fargo acknowledges that even these eye-popping numbers do not include its entire exposure to variable-interest entities. The bank excludes some VIEs from consideration, for many of the same reasons Enron excluded its special-purpose entities: the bank says that its continuing involvement is not significant, that its investment is temporary or small, or that it did not design or operate these deals. (Wells Fargo isn't alone; other major banks also follow this Enron-like approach to disclosure.)

We asked Wells Fargo to explain its VIE disclosures, but its representatives once again simply pointed us back to the annual report. We specifically asked about the bank's own reported corrections of these numbers (in one footnote, Wells Fargo cryptically says, "'VIEs that we consolidate' has been revised to correct previously reported amounts"). But the bank would not tell us anything about those corrections. From the annual report, one cannot determine which VIEs were involved, or how big the corrections were.

Don Young calls variable-interest entities "accounting gimmicks to avoid consolidation and disclosure." The Financial Accounting Standards Board changed the accounting rules that govern them in recent years, but the new rules, he says, are easy to manipulate, just like the old ones were. The presence of VIEs on Wells Fargo's balance sheet "is a signal that there is $1.5 trillion of exposure to complete unknowns."

These disclosures make even an ostensibly simple bank like Wells Fargo impossible to understand. Every major bank's financial statements have some or all of these problems; many banks are much worse. This is an untenable situation. Kevin Warsh, formerly of the Fed, argues that the SEC should tell the biggest banks that their accounts are unacceptably opaque. "The banks should give a full, fair, and accurate account of their financial positions," he says, "and they are failing that test."

IN THE DECADES following the 1929 crash, banks were understandable. That's not because they were financially simple -- that era had its own versions of derivatives and special-purpose entities -- but because the banks' disclosures were more straightforward and clear. That clarity sprang from the fear of consequences. The law, as Oliver Wendell Holmes Jr. said, is a prediction of what a court will do. And the broadly scoped laws of that time gave courts wide latitude.

Going to jail for financial fraud was a real risk back then, and bank executives worried that their reputations would be destroyed if a judge criticized what they had done. Richard Whitney, a broker who had been the president of the New York Stock Exchange, was sent to Sing Sing prison in 1938 for embezzlement. "Sunshine Charlie" Mitchell, the president of National City Bank, the predecessor to Citibank, was indicted for tax evasion after the 1929 crash and was also the first of many bankers to testify before the famous Senate Pecora Committee in 1933. The Pecora investigation galvanized public opinion, and helped usher in the landmark banking and securities laws of 1933 and 1934. The scrutiny and continuing threat of prosecution convinced many bank executives that they should keep their business simple and transparent, or worry about the consequences if they did not.

In the wake of the recent financial crisis, the government has moved to give new powers to the regulators who oversee the markets. Some experts propose that the banking system needs more capital. Others call for a return to Glass-Steagall or a full-scale breakup of the big banks. These reforms could help, but none squarely addresses the problem of opacity, or the mischief that opacity enables.

The starting point for any solution to the recurring problems with banks is to rebuild the twin pillars of regulation that Congress built in 1933 and 1934, in the aftermath of the 1929 crash. First, there must be a straightforward standard of disclosure for Wells Fargo and its banking brethren to follow: describe risks in commonsense terms that an investor can understand. Second, there must be a real risk of punishment for bank executives who mislead investors, or otherwise perpetrate fraud and abuse.

These two pillars don't require heavy-handed regulation. The straightforward disclosure regime that prevailed for decades starting in the 1930s didn't require extensive legal rules. Nor did vigorous prosecution of financial crime.

Until the 1980s, bank rules were few in number, but broad in scope. Regulation was focused on commonsense standards. Commercial banks were not permitted to engage in investment-banking activity, and were required to set aside a reasonable amount of capital. Bankers were prohibited from taking outsize risks. Not every financial institution complied with the rules, but many bankers who strayed were judged, and punished.

Since then, however, the rules have proliferated, the arguments about compliance have become ever more technical, and the punishments have been minor and rare. Not a single senior banker from a major firm has gone to prison for conduct related to the 2008 financial crisis; few even paid fines. The penalties paid by banks are paltry compared with their profits and bonus pools. The cost-benefit analysis of such a system tilts in favor of recklessness, in large part because of the complex web of regulation: bankers can argue that they comply with the letter of the law, even when they violate its spirit.

In an important call to arms this past summer, Andrew Haldane, the Bank of England's executive director for financial stability, laid out the case for an international regulatory overhaul. "For investors today, banks are the blackest of boxes," he said. But regulators are their facilitators. Haldane noted that a landmark regulatory agreement from 1988 called Basel I amounted to a mere 18 pages in the U.S. and 13 pages in the U.K. Likewise, disclosure rules were governed by a statute that was essentially one sentence long.

Basel II, the second iteration of global banking regulation, issued in 2004, was 347 pages long. Documentation for the new Basel III, Haldane noted, totals 616 pages. And federal regulations governing disclosure are even longer than that. In the 1930s, a bank's reports to the Federal Reserve might have contained just 80 entries. Yet by 2011, Haldane said, quarterly reporting to the Fed required a spreadsheet with 2,271 columns.

The Glass-Steagall Act of 1933, which Haldane said was perhaps "the single most influential piece of financial legislation of the 20th century," was only 37 pages. In contrast, 2010's Dodd-Frank law was 848 pages and required regulators to create so many new rules (not fully defined by the legislation itself) that it could amount to 30,000 pages of legal minutiae when fully codified. "Dodd-Frank makes Glass-Steagall look like throat-clearing," Haldane said.

What if legislators and regulators gave up trying to adopt detailed rules after the fact and instead set up broad standards of conduct before the fact? For example, consider one of the most heated Dodd-Frank battles, over the "Volcker Rule," named after former Federal Reserve Chairman Paul Volcker. The rule is an attempt to ban banks from being able to make speculative bets if they also take in federally insured deposits. The idea is straightforward: the government guarantees deposits, so these banks should not gamble with what is effectively taxpayer money.

Yet, under constant pressure from banking lobbyists, Congress wrote a complicated rule. Then regulators larded it up with even more complications. They tried to cover any and every contingency. Two and a half years after Dodd-Frank was passed, the Volcker Rule still hasn't been finalized. By the time it is, only a handful of partners at the world's biggest law firms will understand it.

Congress and regulators could have written a simple rule: "Banks are not permitted to engage in proprietary trading." Period. Then, regulators, prosecutors, and the courts could have set about defining what proprietary trading meant. They could have established reasonable and limited exceptions in individual cases. Meanwhile, bankers considering engaging in practices that might be labeled proprietary trading would have been forced to consider the law in the sense Oliver Wendell Holmes Jr. advocated.

Legislators could adopt similarly broad disclosure rules, as Congress originally did in the Securities Exchange Act of 1934. The idea would be to require banks to disclose all material facts, without specifying how. Bankers would know that whatever they chose to put in their annual reports might be assessed at some future date by a judge who would ask one simple question: Was the report complete, clear, and accurate?

The standard of proof for securities-fraud prosecutions, meanwhile, could and should be reduced from intent, which requires that prosecutors try to get inside the heads of bankers, to recklessness, which is less onerous to prove than intention, but more so than negligence. The goal of this change would be to prevent bankers from being able to hide behind legalese. In other words, even if they did not purposefully violate the law, because they had some technical justification for their conduct, they still might be liable for doing something a reasonable person in their position would not have done.

Senior bank executives should face the threat of prosecution the same way businesspeople do in other areas of the economy. When a CEO or CFO sits holding a pen, about to sign a certification that his or her bank's financial statements and controls are accurate and adequate, he or she should pause and reflect that the consequences could include jail time. If bank directors and executives had to think through their institution's risks, disclose them, and then face serious punishment if the disclosures proved inadequate, we might begin to construct a culture of accountability.

A bank seeking to comply with the principles we've laid out wouldn't need to publish a 236-page report with appendices. Instead, it could submit a statement perhaps one-tenth as long, something that a reader who made it through the introduction to Wells Fargo's current annual report might actually continue reading. Ideally, a lay reader would be able to understand how much a bank might gain or lose based on worst-case scenarios -- what would happen if housing prices drop by 30 percent, say, or the Spanish government defaults on its debt? As for the details, banks could voluntarily provide information on their Web sites, so that sophisticated investors had enough granular facts to decide whether the banks' broader statements were true. As the 2008 financial crisis was unfolding, Bill Ackman's Pershing Square obtained the details of complex mortgages and created a publicly available spreadsheet to illustrate the risks of various products and institutions. Banks that wanted to earn back investors' trust could publish data so that Ackman and others like him could test their more general statements about risk.

IS THIS JUST A FANTASY? The changes we've outlined would certainly be difficult politically. (What isn't, today?) But in the face of sufficient pressure, bankers might willingly agree to a grand bargain: simpler rules and streamlined regulation if they subject themselves to real enforcement.

Ultimately, these changes would be for the banks' own good. Banks need to be able to convince the most-sophisticated people in the markets -- investors like Bill Ackman -- that they are once again "investable." Otherwise, investors will continue to worry about which bank will be the next JPMorgan -- or the next Lehman Brothers. Today, Ackman says the risk of investing in a big bank is too great: "I think the JPMorgan loss was a really bad loss for confidence. If the best CEO in the industry has a loss like that, what about the other banks?" he says. "If JPMorgan can have a $5.8 billion derivative problem, then any of these guys could -- and $5.8 billion is not the upper bound."

The banks provide "a ton of disclosure," Ackman notes. There are a lot of pages and details in any bank's annual report, including Wells Fargo's. But "it's what you can't figure out that's terrifying." In the gargantuan derivatives-trading positions, for instance, he says, "you can't figure out whether the bank has got it right or not. That's faith."

A combination of clearer, simpler disclosure and stronger enforcement would help clean up the system, just as it did beginning in the 1930s. Not only would shareholders better understand banks' businesses, but managers would have the incentive to run their businesses more ethically. The broad cultural failure on Wall Street has arisen in part because disclosure rules encourage the banks to be purposefully opaque. Today, their lawyers don't judge whether statements are clear and meaningful but rather whether they are on the bleeding edge of legality. If bank managers faced real consequences when their descriptions proved inaccurate or incomplete, they would strive to make those descriptions as clear and simple as Strunk and White's The Elements of Style.

Perhaps there is a silver lining in the loss of sophisticated investors' trust. The disillusionment of the elites, on top of popular outrage, could foment change. Without such a mobilization, all of us will remain in the dark, neither understanding nor trusting the banks. And the rot will spread.

MORE ONLINE A video interview with Jesse Eisinger: theatlantic.com/ bigbanks THEATLANTIC.COM

SOME FOUR YEARS after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as "black boxes" that may still be concealing enormous risks -- the sort that could again take down the economy. A close investigation of a supposedly conservative bank's financial records uncovers the reason for these fears -- and points the way toward urgent reforms.

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By FRANK PARTNOY and JESSE EISINGER



Frank Partnoy is a law and finance professor at the University of San Diego and the author of Wait: The Art and Science of Delay.

Jesse Eisinger is a senior reporter at ProPublica and a columnist for The New York Times' Dealbook section.




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October 02nd, 2012

10/2/2012

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I want to return to pensions and wages again for this week.  We heard last year that longevity for African-American men and women fell and this year it fell for low-wage white males.  We are seeing, since Clinton's Welfare Reform, a steady decline in longevity due to poverty and lack of access to health care. AS YOUR INCUMBENT TELLS YOU ENTITLEMENTS AND SOCIAL SECURITY RETIREMENT AGE NEEDS TO GO UP BECAUSE OF LONGEVITY, WE SEE AGES DECLINING IN JUST 20 YEARS FROM THE START OF THE  WAR AGAINST THE POOR.  As we know there is a steady push by corporations to shed benefits, both pensions and health care as part of this financial crisis.  Companies are feeling a pinch after all!  This is happening in the public sector as well with the economic downturn again being the driver.  We have watched this shedding of benefits for the past few decades by bankruptcy so this is a concerted effort, not necessity.  NOW WE ARE WATCHING AS LOCAL GOVERNMENTS DEFUND WHAT'S LEFT OF PUBLIC SECTOR PENSIONS.

Meanwhile corporate profits are soaring as your Third Way corporate Democratic incumbent votes for policy after policy that keeps those profits coming all at the people's expense.

VOTE FOR A WRITE-IN FOR SARBANES, CARDIN, AND CUMMINGS THIS NOVEMBER!

VOTE YOUR INCUMBENT OUT!!!
BE SURE TO READ TO THE BOTTOM AS AN ARTICLE EXPLAINS HOW PENSIONS WERE SERVED UP AS FODDER DURING THE LAST DAYS BEFORE THE CRASH.  PRIVATE AND PUBLIC PENSIONS ARE USED BY WALL STREET TO THE BENEFIT OF THE 5% OF SHAREHOLDERS!



Maryland benefit systems in peril  Posted: 3:00 pm Sun, September 30, 2012
By Alexander Pyles
Daily Record Business Writer

Maryland counties are funding only about 50 percent of their retiree pension and benefit systems, according to a study by the Maryland Public Policy Institute, in part because almost no local money is being spent on some post-employment benefits.
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THIS IS WHAT THE FEDERAL RESERVE'S QUANTITATIVE EASING 3 IS REALLY ADDRESSING......FREE MONEY FOR CORPORATE PROFIT.  THESE CORPORATIONS HAVE WATCHED THEIR PROFITS SOAR AND INCOME INEQUITY WIDENS WITH THIS POLICY BY BERNANKE AS HE TELLS US IT IS FOR JOB CREATION.  I GUESS HE THINKS THAT WHEN THE CORPORATIONS HAVE MORE MONEY THAN GOD, THEN THEY WILL HIRE DOMESTICALLY.  DO YOU HEAR YOUR DEMOCRATIC INCUMBENT SHOUTING LOUDLY AGAINST THIS INCREDIBLE INJUSTICE?????

VOTE YOUR INCUMBENT OUT OF OFFICE!!!!


GE Ignores $100 Billion of Cash to Borrow $7 Billion By Charles Mead and Tim Catts - Oct 2, 2012 11:17 AM ET   Bloomberg Financial


General Electric Co. (GE) is refinancing $5 billion of debt even as it expects to generate $100 billion of cash in the next four years, showing confidence in its ability to invest at returns four times its borrowing costs.

The biggest maker of power-generation equipment sold $7 billion of bonds yesterday at an average 2.58 percent yield in the parent company’s first issue in almost five years. That compares with a 12 percent return that Chief Executive Officer Jeffrey Immelt said last week the Fairfield, Connecticut-based firm generates on its capital.

Enlarge image GE borrows at lower rates than the average for U.S. investment-grade issuers, whose bond yields dropped to an unprecedented 2.85 percent yesterday, according to Bank of America Merrill Lynch index data. Photographer: Matthew Lloyd/Bloomberg

The offering allows the company to use the cash it brings in for stock buybacks, dividends and acquisitions. While Immelt seeks to pare debt at GE’s finance arm, the offering may boost bonds of the parent by 22 percent to $11 billion next year.

“It’s a no-brainer,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. “It costs nothing to issue, so why would they use cash on hand” to pay off maturing obligations?


Total Assets   $700 billion
Samuels said at a tax forum in February that GE needs a tax system that will let it compete effectively with giant, foreign-based multinationals like Mitsubishi, Siemens (SI), and Phillips. However, their effective tax rates for earnings purposes last year were 40%, 31% and 26% respectively, compared with 7% for GE. (GE says its tax rate's been artificially low the past few years, and will soon rise.)
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WE ALL REMEMBER IN 2008 WHEN THE ECONOMIC COLLAPSE BROUGHT ALL THIS PUSH TO GUT LABOR CONTRACTS BECAUSE OF THE DOWNTURN.  LABOR LOST SOOO MUCH UNDER THE GUISE OF STRESSED CORPORATE BALANCE SHEETS.  CORPORATE STOCKS WERE WELL PROTECTED BY BANK BAILOUTS AND THE FEDERAL RESERVES FREE MONEY.  THIS IS WHY SHAREHOLDERS RECOVERED THEIR WEALTH RIGHT AWAY.


Union approves GE labor deal Favorable vote expected to help chances for a local battery plant

By Scott Waldman and Eric Anderson Staff writers Published 1:00 a.m., Wednesday, August 5, 2009
Read more: http://www.timesunion.com/local/article/Union-approves-GE-labor-deal-545829.php#ixzz289yumOEj

SCHENECTADY — Union members, by a 2-to-1 ratio, approved a proposed labor agreement with General Electric Tuesday night.

The 785-363 vote was a major step in bringing a new $100 million GE battery plant to Schenectady County that would create 350 jobs. While union members voted for some concessions, the contract change also prevents permanent job cuts for years amid the nation's economic turmoil.

"It's job security," said IUE-CWA Local 301 Business Agency Carmen DePoalo. "That makes me feel good for the younger kids, and the older guys get out of here with a chunk of change."

The agreement's ratification comes as GE prepares to build heavy-duty, high-density batteries in the Capital Region. CEO Jeffrey Immelt announced the plans to build the plant at an appearance at GE's Global Research Center in Niskayuna in May.



GE also is seeking federal stimulus funds from the U.S. Department of Energy for the project. A decision is expected this week.

"We're delighted with the results," GE spokeswoman Chris Horne said after the vote. "This is a critical step in investing in the future of our Schenectady manufacturing."

She said the company expects to make a "formal announcement" as a result of the vote in the near future, but did not elaborate.

The state, meanwhile, is contributing $15 million of the cost of the battery plant.

GE turned to the union to get more savings; Tuesday's approval is expected to help.

The company wants to offer a voluntary retirement incentive program next year and a new competitive wage schedule that would reduce hourly wage rates by $10 for new hires at Schenectady and at the Global Research Center in Niskayuna.

The labor agreement will extend plant shutdowns next summer from two weeks to nine and during Thanksgiving week in 2010 at the Schenectady plant. It includes a cost-of-living wage increase freeze for the rest of the current contract, which expires in June 2011.

DePoalo has said his union has been talking with GE about bringing more work to Schenectady "for years." GE's requests were no surprise, he said.

DePoalo said the economy has been tough on local GE operations.

"The workload has been cut by 50 to 60 percent," he said. "It's actually horrific right now."

That's why the job security measures, which also include a moratorium on plant closings in Schenectady and Niskayuna through June 2011, were an important part of the agreement.

Schenectady County Legislature Chairwoman Susan Savage said after the vote that the union members acted in the best interest of the community.

"This is the biggest economic development announcement that would take place in the county in many, many years," she said. "This is a transformative vote today. It shows we're making a lot of progress as a community."

Mayor Brian U. Stratton, who has worked with the county for nine months to try to draw the new battery plant, called it the biggest economic news Schenectady has had in a decade. "This impact has yet to be seen," he said.

Though the downtown will benefit from 350 more people working nearby, DePoalo said the vote was bittersweet because it's a financial hit to his members.

"I hate losing money," he said. "I hate new employees coming in making less money."

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THE REASONS THAT CORPORATIONS ARE PUSHING EMPLOYEE PAID PENSION PLANS RATHER THAN EMPLOYER CONTRIBUTION IS THAT THEY NEVER PAID INTO THEM TO BEGIN WITH AND NOW THE STOCK MARKET WON'T PERFORM WELL ENOUGH TO KEEP THEM FREE.  EMPLOYER CONTRIBUTION WAS ALWAYS A HOAX.  DID YOU HEAR COMPANIES COMPLAINING ABOUT COSTS?  SO NOW, IF THESE PLANS WEREN'T SHED IN BANKRUPTCY, YOU ARE BASICALLY PAYING INTO THEM AS A SAVINGS ACCOUNT (TAX FREE).  SO WE SEE CORPORATIONS WITH LITTLE LABOR COSTS, PAYING LITTLE TAX, AND GETTING FREE MONEY FROM THE FED.  THIS IS WHY THEY ARE NOT HIRING.


GE makes first pensions payment in 24 years Mark Cobley Financial News

28 Feb 2011 General Electric, the US conglomerate, is set to pay into its pension scheme for the first time in a quarter of a century - ending what may be the longest company 'pensions holiday' ever.

GE, founded in 1890 by Thomas Edison, is one of the biggest companies in the world and runs one of the world's biggest pension plans, too - the 38th biggest, in fact, according to consultancy Towers Watson.

It is also one of the best-funded - or at least it was, until the financial crisis took its toll. With $45bn in assets but a $2.8bn deficit, according to GE's 10-K form, filed on Friday, the time has finally come for the US conglomerate to bail out its fund.

GE hasn't made a payment into its pension fund since 1987, when it stopped for tax reasons, according to various online sources, including US pensions trade newspaper P&I [ http://bit.ly/hDdoze ].

Up until the latest crash, GE's plan was doing well financially, kept afloat by employee contributions and investment returns alone. It is mostly invested in equities and real estate and by 2007 it had a surplus of about $16bn.

That happy tale has been brought to a crunching end by the bond markets. Even while the equity markets have recovering from the crisis, pension funds everywhere have continued to suffer from low bond yields, which make their liabilities appear huge.

According to GE's 10-K filing: "The GE Pension Plan was underfunded by $2.8bn at the end of 2010 as compared to $2.2bn at December 31, 2009 ... the increase in underfunding from year-end 2009 was primarily attributable to the effects of lower discount rates, partially offset by a [13.5%] increase in GE Pension Plan assets."

The company also has a further $4.4bn obligation to the GE Supplementary Pension Plan, which isn't funded.

The company points out this still means its fund is 98% solvent, which is pretty good going compared to most of its peers in the US (and UK). It won't be making any pension payments this year. But in 2012, "we will be required to make about $1.4bn in contributions".

Pensions holidays used to be a common occurrence in the 80s and 90s - a way for companies to effectively claw back cash from pension funds running huge surpluses. But troublesome markets, stricter regulation and of course, improvements in life expectancy, have generally put paid to that.

Now it seems that not even GE, one of the biggest companies on Earth, can run a pension plan for free.

GE's spokespeople in London couldn't immediately be reached for comment this morning.

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THIS IS WHERE ALL THE PRIVATE PENSION PLANS HAVE GONE OVER THESE FEW DECADES......SHED IN BANKRUPTCY AND HANDED TO THE GOVERNMENT AT CONSIDERABLE DOWN-SIZING TO THE WORKER.  BANKRUPTCY LAWS ARE WRITTEN TO MAKE IT EASY FOR CORPORATIONS TO DO AND IT HAS GOTTEN TO THE POINT THAT CORPORATIONS DELIBERATELY GO TO BANKRUPTCY COURT TO SHED PENSIONS.  LOOK CLOSELY AT THE BOLDED SENTENCE BELOW TO SEE THAT THESE PENSION INVESTMENTS WERE SAFELY INVESTED IN BOND FOR YEARS AND IN 2008, JUST AT THE TIME OF THE CRASH......THEY MOVED THESE PENSIONS TO STOCKS CAUSING A 23% LOSS. 

THIS IS FRAUD!!!!!       AND IT HAPPENED WITH ALL PENSION FUNDS.



Pension Benefit Guaranty Corporation

From Wikipedia,

Formed September 2, 1974[1] Headquarters 1200 K Street, NW
Washington, D.C.
38°54′8″N 77°1′43″W Employees 800 (2010) Annual budget $445 million (2009) Agency executives Joshua Gotbaum, Director
Vince Snowbarger, Deputy Director

Website www.pbgc.gov

The Pension Benefit Guaranty Corporation (PBGC) is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations. Subject to other statutory limitations, the PBGC insurance program pays pension benefits up to the maximum guaranteed benefit set by law to participants who retire at age 65 ($54,000 a year as of 2011).[2] The benefits payable to insured retirees who start their benefits at ages other than 65, or who elect survivor coverage, are adjusted to be equivalent in value.

During fiscal year 2010, the PBGC paid $5.6 billion in benefits to participants of failed pension plans. That year, 147 pension plans failed, and the PBGC's deficit increased 4.5 percent to $23 billion. The PBGC has a total of $102.5 billion in obligations and $79.5 billion in assets.[3]

CRevenues and expenditures The PBGC is not funded by general tax revenues. Its funds come from four sources:

  • Insurance premiums paid by sponsors of defined benefit pension plans;
  • Assets held by the pension plans it takes over;
  • Recoveries of unfunded pension liabilities from plan sponsors' bankruptcy estates;[4] and
  • Investment income.
PBGC pays monthly retirement benefits to approximately 631,000 retirees of 3,800 terminated defined benefit pension plans. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, the PBGC is responsible for the current and future pensions of about 1.3 million people.[5]

The PBGC regularly updates its investment strategy. In 2004, it chose to invest heavily in bonds.[6] Under new leadership, the agency in 2008 shifted a substantial portion of its assets into stocks.[7] Because of the market decline, PBGC's equity investments lost 23% during the year ending September 30, 2008.[8]


Pensions and bankruptcy Several large legacy airlines have filed for bankruptcy reorganization in an attempt to renegotiate terms of pension liabilities. These debtors have asked the bankruptcy court to approve the termination of their old defined benefit plans insured by the PBGC. The PBGC has attempted to resist these requests.

The PBGC would like required contributions (a.k.a. minimum contributions) to insured defined benefit pension plans to be considered "administrative expenses" in bankruptcy, thereby obtaining priority treatment ahead of the unsecured creditors. The PBGC has generally lost on this argument, sometimes resulting in a benefit to general unsecured creditors.

In National Labor Relations Bd. v. Bildisco, 465 U.S. 513 (1984), the U.S. Supreme Court ruled that Bankruptcy Code section 365(a) "includes within it collective-bargaining agreements subject to the National Labor Relations Act, and that the Bankruptcy Court may approve rejection of such contracts by the debtor-in-possession upon an appropriate showing." The ruling came in spite of arguments that the employer should not use bankruptcy to breach contractual promises to make pension payments resulting from collective bargaining.


PBGC BENEFITS MARYLANDSTATEWIDE IN MARYLAND:
  • In 2011 PBGC paid approximately $146 million to more than 17,600 Maryland retirees in failed plans.
  • PBGC insures 490 pension plans sponsored by Maryland companies, covering more than 640,000 people.
NATIONWIDE:
  • In 2011 PBGC paid $5.3 billion to 787,000 retirees.
  • 700,000 more Americans will get their pension from PBGC when they're eligible to retire.
PBGC WORKS TO KEEP PENSION PLANS FROM FAILING:
  • In 2010-2011 PBGC helped dozens of companies keep their pension plans when they emerged from bankruptcy, saving benefits for 300,000 Americans.
  • Since 2007 PBGC has worked with companies to get an additional $750 million put into the pension plans of 80,000 workers.
BENEFITS TO YOUR CONGRESSIONAL DISTRICT:
  • Check the table below to see how much PBGC paid retirees in your district in 2011. Don't know your congressional district? Hover over the map to find it.

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September 24th, 2012

9/24/2012

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BY NOW WE ALL KNOW THAT THERE HAS YET TO BE FINANCIAL REFORM.  YOU SHOULD NOTE THAT IN THE FIRST YEAR OF THE DEMOCRATIC SUPERMAJORITY MAIN STREAM MEDIA HAD THESE POLITICIANS FEVERISHLY STANDING FIRM ON WRITING REFORM.....WE HAD BARNEY FRANK AND CHRIS DODD THE 'DEMOCRATIC' BANKING CHAIRS ALL THROUGH THIS BANK FRAUD ON TV SHOUTING FOR REFORM.  YOU HEAR NOTHING ON MAINSTREAM MEDIA ABOUT THE FAILURE TO ENACT ALMOST NONE OF IT.  FOR PEOPLE LIKE ME WHO SAY HOW DID I MISS THIS ALL THROUGH THE 1990s-2000s?  THIS IS WHY.  THE MEDIA GAVE A PERCEPTION THAT ONE THING WAS HAPPENING WHEN ANOTHER ACTUALLY DID.

THE CONFERENCE AT UNIVERSITY OF MARYLAND REAFFIRMED THE EXISTENCE OF CRIME, IT REAFFIRMED THE ABANDONMENT OF ENFORCEMENT, AND IT HIGHLIGHTED THE SIMPLE CHANGES THAT WERE NEEDED TO REVERSE THIS FINANCIAL DEBACLE.  RATHER THAN THE HUNDREDS OF PAGES OF DOCUMENTS CREATED IN THE FINANCIAL REFORM (ONE ALMOST THINKS THEY WERE COPYING THE COMPLEX FINANCIAL INSTRUMENT MODEL TO HIDE AND CONFUSE THE PUBLIC) THE FOLLOWING ARE THE PRIMARY CONCERNS, ALTHOUGH NOT EXCLUSIVE:

1)  WE SIMPLY NEEDED TO REINSTATE GLASS STEAGALL SEPARATING BANKING AND INVESTMENT TO END 'TOO BIG TO FAIL'.

2)  WE NEEDED TO REMOVE THE RIGHT OF THE TREASURY/FED TO DECLARE FEDERAL DOMAIN OVER NATIONAL BANK REGULATION, LEAVING STATES UNABLE TO ENFORCE LAW.......THIS IS STILL THE CASE.

3)  WE NEEDED A WELL-DEFINED LEGAL DEFINITION OF FINANCIAL FRAUD SO THE PUBLIC DOESN'T HAVE TO BE TOLD THAT NOTHING DONE WAS ILLEGAL OR TOO HARD TO PROVE......NO ENHANCEMENT TO FRAUD DEFINITIONS AT STATE OR NATIONAL LEVEL HAVE OCCURRED.

4)  THE CAPS ON FINANCIAL REWARDS FOR CRIMINAL ACTIONS BY CORPORATIONS THAT GIVE US PARKING TICKET AWARDS FOR ALL THESE FRAUDS IS STILL ON THE BOOKS AT BOTH STATE AND NATIONAL LEVEL.......WE CANNOT RECEIVE A PUNITIVE AMOUNT AND WE CANNOT RECEIVE DAMAGES WITH THESE CAPS.......WHICH IS THE POINT.

5)  THE LAWS MEANT TO CURB THE PRACTICE OF SHORT TERM GAINS THAT SPURRED RECKLESS RISKS ARE SPECIOUS AT BEST, NOT ENACTED FOR THE MOST PART.


THESE ARE THINGS A SUPERMAJORITY OF DEMOCRATS COULD HAVE DONE IMMEDIATELY TO REVERSE THE COURSE OF CRIMINALITY IN WALL STREET.  NATIONALIZING THE BANKS WOULD HAVE ALLOWED FOR ACCESS TO DOCUMENTS FOR PROSECUTION.  THAT IS IT.  NONE OF THIS WOULD HAVE BROUGHT THE ECONOMY DOWN......WE ARE IN PROLONGED RECESSION AS IT IS.  THAT IS WHY THESE POLITICIANS DID NOT DO THAT.  THEIR JOB WAS TO PROTECT THE FRAUDULENT GAINS.....AND THEY HAVE SO FAR.  BELOW YOU SEE THE MECHANISM THESE POLITICIANS HAVE DEVELOPED TO SECRET ALL THIS MONEY OUT OF THE COUNTRY....SHELL COMPANIES ......THAT CANNOT BE TOUCHED BECAUSE THE US HAS OPTED OUT OF INTERNATIONAL LAW/TREATIES THAT WOULD ALLOW PURSUIT OF THIS MONEY. 

YOU CAN SEE HOW DEEPLY THOUGHT OUT THIS MASSIVE FRAUD OF THE TWO DECADES FROM CLINTON TO BUSH WAS.  THEY EMPTIED OUR PENSIONS, RETIREMENT TRUSTS, HEALTH CARE TRUSTS, TOOK PERSONAL ASSETS LIKE HOMES AND STASHED IT IN SHELL ACCOUNTS OFF-SHORE.  THE STAGNATION IN OUR ECONOMY IS THAT SUCKING SOUND, THAT MISSING MONEY CANNOT BE REPLACED.  THEY ARE SPENDING IT FREELY OVERSEAS OUT OF OUR SIGHT.  SO WHEN YOU HEAR THAT GREECE OR SPAIN IS ENDURING AUSTERITY WITH HIGHER TAXES ......THE ONES TAKING ALL THE MONEY ARE FACING NO PENALTY YET AGAIN AS YOU CAN'T TAX HIDDEN GAINS.  IT IS HAPPENING IN THE US AS WELL.  YOU WILL SEE THAT YOU AND I WILL BE THE ONLY ONES PAYING THE $14 TRILLION DEFICIT DOWN......IF WE REELECT THESE SAME PEOPLE TO OFFICE!


VOTE YOUR INCUMBENT OUT OF OFFICE!!!!



IT IS IMPORTANT TO KNOW THAT THE STATES LEADING THIS SHELL COMPANY CULTURE OF MONEY LAUNDERING AND HIDING MONEY IS DELAWARE, HOME OF JOE BIDEN AND NEVADA, HOME OF HARRY REID.......BOTH THIRD WAY DEMOCRATIC LEADERS.


Shell companies Launderers Anonymous A study highlights how easy it is to set up untraceable companies
Sep 22nd 2012 | NEW YORK | from the print edition   The Economist



SHELL companies—which exist on paper only, with no real employees or offices—have legitimate uses. But the untraceable shell also happens to be the vehicle of choice for money launderers, bribe givers and takers, sanctions busters, tax evaders and financiers of terrorism. The trail has gone cold in many a criminal probe because law enforcers were unable to pierce a shell’s corporate veil.

The international standard governing shells, set by the inter-governmental Financial Action Task Force (FATF), is clear-cut. It says countries should take all necessary measures to prevent their misuse, such as ensuring that accurate information on the real (or “beneficial”) owner is available to “competent authorities”. More than 180 countries have pledged to follow it. A study* scrutinises the level of compliance worldwide. The results are depressing.
  (YOU SHOULD READ THE STUDY)


Posing as consultants, the authors asked 3,700 incorporation agents in 182 countries to form companies for them. Overall, 48% of the agents who replied failed to ask for proper identification; almost half of these did not want any documents at all. Contrary to conventional wisdom, providers in tax havens, such as Jersey and the Cayman Islands, were much more likely to comply with the standards than those from the OECD, a club of mostly rich countries. Even poor countries had a better compliance rate, suggesting the problem in the rich world is not cost but unwillingness to follow the rules (see chart). Only ten out of 1,722 providers in America required notarised documents in line with the FATF standard.

Providers were often strikingly insensitive even to clear criminal risks. The authors sent three main types of e-mail: the first from a low-risk alias from a country such as Norway or Australia; the second from a high-corruption-risk individual purporting to work in government procurement in such places as Kyrgyzstan and Equatorial Guinea; the third a terror-financing risk, working for a Muslim charity in Saudi Arabia. Providers were less likely to respond to the corruption category than the low-risk one, but also less likely to ask for identification when they did reply. Finding takers for the terrorist financier was harder, but not impossible: one in every 17 providers was willing to set up an anonymous shell for him.

Informing the incorporators of the international rules they should be following made them no more likely to do so, even when penalties were mentioned. When the undercover authors offered to pay a premium to flout the rules, the rate of demand for identity documents fell precipitously. “Your stated purpose could well be a front for funding terrorism,” one American provider replied—and then indicated he would consider establishing and administering the shell for $5,000 per month.

This study, by far the most thorough of its kind, makes sobering reading for anyone who worries about the link between financial crime and corporate secrecy. OECD countries show little willingness to tackle their own weaknesses and end their hypocrisy. In America, by some measures the least compliant of all, the incorporation-friendly states and business groups opposing reform continue to have the upper hand, despite valiant attempts by Senator Carl Levin to push through legislation that would require the registration of beneficial owners. Movers of dirty money know where the best shells are to be had, and it is not on a Caribbean island.

* “Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies”, by Michael Findley, Daniel Nielson and Jason Sharman, 2012.

from the print edition | International


DO YOU HEAR THIS IN AMERICAN MEDIA?  YOU BET YOU DON'T.....I'M GOING TO SHARE THIS WITH NPR NEWS----
___________________________________________


THE ARTICLE BELOW SHOWS THE RENAISSANCE OF WASHINGTON DC.....IT IS NOW INHABITED BY THE CORPORATIONS RUNNING THE COUNTRY AND THE WEALTH THEY ACCUMULATED FROM THEIR POLITICIANS IS REFLECTED IN THESE URBAN FACELIFTS.  THAT IS WHAT WE ARE SEEING IN BALTIMORE.....THE MONEY-LAUNDERING OF FRAUDULENT GAINS INTO CORPORATE INFRASTRUCTURE.  THOSE BUILDINGS ARE OUR HOMES, PENSIONS, RETIREMENT, AND HEALTH CARE.


THE AMOUNT OF WEALTH IN THE WASHINGTON SUBURBS IS STRIKING AND WHEN YOU LOOK AT WHERE 14 TRILLION IN FRAUD  WENT.......THERE IT IS.  PEOPLE ARE DYING AS POVERTY BECOMES EPIC AND WE KEEP ELECTING THE SAME PEOPLE OVER AND AGAIN.  YOU KEEP HEARING THEY ARE SHRINKING GOVERNMENT....WHAT THEY ARE DOING IS MOVING ALL THAT WORK TO  PRIVATE BUSINESS AND IT IS EXPANDING THE COSTS OF GOVERNMENT.
  WHEN THIRD WAY DEMOCRATS SAY GOVERNMENT IS GOOD......THIS IS THE MODEL THEY ARE CREATING WITH PUBLIC-PRIVATE PARTNERSHIPS!

VOTE YOUR INCUMBENT OUT OF OFFICE!


Op-Ed Columnist
Washington Versus America
By ROSS DOUTHAT Published: September 22, 2012   New York Times


WHEN I moved to Washington, D.C., in 2002, you could sense that the nation’s capital had turned a corner after decades of decline. But the Washington of 10 years ago still looked basically like the city that had been scarred by riots in the 1960s and then emptied by white flight, with a prosperous northwest divided from a blighted south and east, and frontiers of gentrification that weren’t that many blocks from the Capitol itself.

No doubt there were boomtowns in the 19th-century Wild West that changed faster than D.C. did over the ensuing decade. But the changes to Washington have been staggering to watch. High-rises have leaped up, office buildings have risen, neighborhoods have been transformed. Streets once deserted after dusk are now crowded with restaurants and bars. A luxurious waterfront area is taking shape around the stadium that the playoff-bound Nationals call home. Million-dollar listings abound in neighborhoods that 10 years ago were transitional at best.

And that’s just inside the District proper. Cross the bridges into Virginia or shoot north into Maryland, and you’ll find concentrations of wealth greater than in the richest counties around New York and Los Angeles and San Francisco. Last week, new census data revealed that 7 of the 10 richest American counties in 2011 were in the Washington, D.C., region. Fairfax, Loudoun and Arlington Counties, all in Northern Virginia, have higher median incomes than every other county in the United States.

Whence comes this wealth? Mostly from Washington’s one major industry: the federal government. Not from direct federal employment, which has risen only modestly of late, but from the growing armies of lobbyists and lawyers, contractors and consultants, who make their living advising and influencing and facilitating the public sector’s work.

This growth is a bipartisan affair. It’s been driven by the contracting-out of government services under both Bill Clinton and George W. Bush (as Andrew Ferguson put it in a wonderful Time magazine essay on the new Washington, “government hasn’t shrunk; it’s just changed clothes”); by the Bush-era security buildup, whose ripples are spreading to this day (witness the new Department of Homeland Security facility intended for still-impoverished Anacostia); and by the bright young college graduates who flooded the city at the dawn of Barack Obama’s presidency and the lobbyists who followed to claim a piece of his attempt at a new New Deal.

If you don’t mind congested roads and insanely competitive child rearing, all this growth is good news for those of us inside the Beltway bubble. But is it good for America? After all, like the ruthless Capital in “The Hunger Games,” the wealth of Washington is ultimately extracted from taxpayers more than it is earned. And over the last five years especially, D.C.’s gains have coincided with the country’s losses.

There aren’t tributes from Michigan and New Mexico fighting to the death in Dupont Circle just yet. But it doesn’t seem like a sign of national health that America’s political capital is suddenly richer than our capitals of manufacturing and technology and finance, or that our leaders are more insulated than ever from the trends buffeting the people they’re supposed to serve.

For Mitt Romney and the Republican Party, what’s happened in Washington these last 10 years should be a natural part of the case against Obamanomics. Our gilded District is a case study in how federal spending often finds its way to the well connected rather than the people it’s supposed to help, how every new program spawns an array of influence peddlers, and how easily corporations and government become corrupt allies rather than opponents.

The state of life inside the Beltway also points to the broader story of our spending problem, which has less to do with how much we spend on the poor than how much we lavish on subsidies for highly inefficient economic sectors, from health care to higher education, and on entitlements for people who aren’t supposed to need a safety net — affluent retirees, well-heeled homeowners, agribusiness owners, and so on.

There’s a case that this president’s policies have made these problems worse, sluicing more borrowed dollars into programs that need structural reform, and privileging favored industries and constituencies over the common good.

But this story is one that Romney and his party seem incapable of telling. Instead, many conservatives prefer to refight the welfare battles of the 1990s, and insist that our spending problem is all about an excess of “dependency” among the non-income-tax-paying 47 percent.

In reality, our government isn’t running trillion-dollar deficits because we’re letting the working class get away with not paying its fair share. We’re running those deficits because too many powerful interest groups have a stake in making sure the party doesn’t stop.


When you look around the richest precincts of today’s Washington, you don’t see a city running on paternalism or dependency. You see a city running on exploitation.

_______________________________________________

THE BALTIMORE SUN PRINTED THIS EDITORIAL LAST WEEK.  IT APPEARS TO BE FROM A TENNESSEE NEWSPAPER, BUT THE TOPIC IS TIMELY HERE IN BALTIMORE AS THERE IS A MOVEMENT TO PETITION TO REFERENDUM RECALL/TERM LIMITS FOR CITY OFFICIALS.  IT APPEARS AS THOUGH THE BALTIMORE SUN IS HINTING TO THE COUNCIL THAT  IT NEEDS TO TAKE STEPS TO PROTECT ITSELF FROM A PUBLIC CHANGE OF CHARTER.  ONLY IN BALTIMORE, IT WON'T BE THE REPUBLICANS TRYING TO UNSEAT DEMOCRATIC POLITICIANS, IT WILL BE EVERYONE TRYING TO UNSEAT CORPORATE POLITICIANS.  THIS IS HAPPENING ACROSS AMERICA AND WE WILL PREVAIL!!!!!!!

GET OUT TO PUSH THE PETITIONS FOR RECALL AND RETROACTIVE TERM LIMITS IN BALTIMORE!!!



EDITORIAL: City needs a new recall law
Baltimore Sun

Chattanooga Times Free Press, Tenn. 5:14 a.m. EDT, September 14, 2012

It's been clearly evident for two years that the fringe attempt to recall Mayor Ron Littlefield was groundless to a fault, and fatally flawed under legal guidelines. The recall's chief supporter, Jim Folkner, has refused to give up, however. We hope Wednesday's appeals court verdict, upholding most of the trial court's findings, will finally be acknowledged as the last word.

The court of appeals affirmed the trial court's ruling on the recall's key deficiencies: the city's two-step recall statute failed to meet the state's superior mandate for a three-step recall process, and there were too few qualified and dated signatures to meet recall petition requirements.

The former will absolutely require the City Council to adopt a revised recall charter to meet state guidelines. The latter should shame the Election Commission, and the majority Republic bloc that ap proved the petitions.

Commission workers allegedly told recall organizers that signatures on their petitions didn't have to be dated -- a requirement under state law to allow signers to change their mind and retract their signatures within 10 days. The partisan Republican Election Commissioners, who hold a 3-2 majority edge, negligently approved undated signatures to be counted anyway. Then they rushed to approve the recall petitions and put the question on the ballot despite warnings of flaws by the panel's two Democrats -- one of whom is Jerry Summers, a highly successful trial lawyer who formerly served as the Election Commission's attorney.

In fact, the Republicans' excessive partisanship seemed apparent at every turn. They also supported their attorney, Chris Clem, in the filing of lengthy petitions supporting the recall process and futilely challenging the constitutionality of the state's recall statute. Clem's fees pushed the Election Commission's $25,000 annual legal budget up to $35,000 by the end of the last fiscal year on June 30. His final bills for the last appeal, Election Commission administrator Charlotte Mullis-Morgan confirmed Thursday, have yet to be tallied.

There's a good argument to be made that the commission's members and Clem didn't have to get so heavily involved in the legal tangle over the recall petition. All they really had to do was acknowledge the court's authority and await the ruling in the legal contest between Folkner and Mayor Littlefield, who properly challenged the recall petition's flaws.

City officials must now move promptly to adopt a recall process that overrides their illogical two-step recall. Because of an exceedingly low turnout of 18,000 voters in the last mayoral election, it would have allowed the mayor's opponents to effectively accomplish a recall of the mayor with just 9,000 valid signatures on the petitions; that's less than 10 percent of the city's registered voters. Had the petitions and signatures been found adequate, the mayor automatically would have been removed, and a new election would have held.

State law prevents such an exceedingly low recall vote by requiring a three-step process: a successful petition, then a vote on whether to recall the mayor, and, then, if needed, a new election. That's a far fairer process. A revised charter is in order. ___

(c)2012 the Chattanooga Times/Free Press (Chattanooga, Tenn.)

Visit the Chattanooga Times/Free Press (Chattanooga, Tenn.) at http://www.timesfreepress.com

Distributed by MCT Information Services
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September 21st, 2012

9/21/2012

0 Comments

 
THE FAILURE TO EXACT JUSTICE IN THIS MASSIVE FRAUD AND THE FAILURE IN ENACT FINANCIAL REFORM WILL HAVE A DEVASTATING EFFECT ON AMERICAN SOCIETY!!!!!

I attended two conferences within a week, both very pertinent to the issues supported on the website.  One was a second of three sessions on the "New Economy' given by the Baltimore branch of the Federal Reserve and the other today at the University of Maryland Law School called 'TOO BIG TO JAIL:  THE ROADBLOCKS TO REGULATORY ENFORCEMENT.  I want to give a personal acknowledgement to the Keynote Speaker......Brooksley Born as one of the voices of reason who fought against the ending of Glass Steagall and the deregulation of banks when to do so at an early stage in her career could have sidelined her future.  We remember Senator Dorgan of North Dakota for the same voice......shouting loudly and strongly.  Do you hear your incumbent's voice?

ALL OF MARYLAND'S INCUMBENTS ARE BEHIND THIS DEREGULATION! THEY WERE IN THE MEDIA AS WORKING FEVERISHLY ON WRITING THESE FINANCIAL REFORMS.....WHERE ARE THEY AS THESE REFORMS ARE COMPLETELY WASHED AWAY! 
I wanted to emphasize that your incumbent knew the consequences of this vote and they did it anyway.  What is most helpful in these conferences is the public discussion of the fraud and failure to enforce it because we hear it no where else.  We know as well there are people working on these issues that are not co-opted........many are feeling pressure from government/private officials not to discuss it. EVENTS ARE NOT ON AN INEVITABLE PATH!  QUITE THE CONTRARY!

We mentioned earlier the twilight of the publicly listed company. As with the fraudulent Facebook IPO and with the hedge-funds with more money than God not needing a public listing for investment funds, we are witnessing the movement of corporations to private holdings.   Today I wanted to use one example as to why this is bad for America.  Public listings did many things to hold corporations accountable.  Shareholders have a say with their voting rights and ability to sue for wrongdoing.  Regulators are assigned to oversee these corporations so transparency is proscribed.  Securing documents for accountability is easier. 
While all this is now broken as regulators are corrupted, we would want to aspire to returning to a healthy transparent oversight system.  Your incumbent is allowing the opposite to occur.  By allowing these financial corporations to keep their ill-gotten gains......which is what made these corporations richer than God, by not forcing them to downsize with Financial Reform......your incumbent is allowing these corporations to become more than shadowy figures........but dangerous entities.

Below you see an example of this in Baltimore.  We are watching our City Health Commissioner consolidating our health services for seniors to one corporation......ManorCare.  ManorCare was a publicly listed corporation that was purchased by the world's largest hedge fund.......The Carlyle Group just as the economy crashed.  These guys were the driver of the sub-prime mortgage fraud and were greatly enriched by it.  It immediately took ManorCare private.  So Baltimore has as its main senior health care agent a hedge fund who is completely unaccountable.  Think Medicare fraud and the 50 million baby boomers heading towards retirement and Medicare.

Everyone can see this is the last thing you would want to see for health care.  First you want it public.  Then you want it local and accountable.  Then you want it well regulated.  This is the only way we will reform health care making it affordable and offering quality care.  WHY ARE OUR INCUMBENTS ALLOWING THESE CORPORATIONS TO CREATE MEGA-HEALTH SYSTEMS WITH SOMETHING SO CRITICAL TO OUR LIVES?  MARYLAND IS DRIVING THIS PRACTICE!   BALTIMORE IS GROUND ZERO.  This is not simply happening in health care, it is happening across all business sectors.  Hedge funds like Carlyle are buying up huge chunks of an industry so as to create monopolies around the world.  WE CAN CHANGE THIS POLICY IF YOU:

VOTE YOUR INCUMBENT OUT OF OFFICE!

Byron Dorgan Former U.S. Senator Byron Dorgan began his career in the public sector in 1969 as the Tax Commissioner of North Dakota, a position he held until 1980.  He was then elected to the House of Representatives for the first of six terms, and in 1992 he was elected to the U.S. Senate where he would serve until 2011.

During his time in Congress he became known as a strong progressive voice, defending the economic needs of rural Americans, pushing for energy independence and promoting sound economic policies. Dorgan served as a senior member of the Senate Appropriations, Energy and Commerce Committees and Chairman of key subcommittees on Aviation, Energy and Water and Indian issues.

In 1999, he was one of only eight Senators to vote against the Financial Services Modernization Act (also known as the Gramm-Leach-Bliley Act), which repealed parts of a Depression-era law that had kept commercial banks from engaging in speculative investment activity. On the Senate floor, Dorgan gave an impassioned speech warning that the legislation would lead to greater risks being taken on Wall Street, and to huge conglomerates that would become “too big to fail.” After the financial meltdown of 2008, archival video of Dorgan’s nine-year-old speech went viral on the Internet, and he was cited by many as having “predicted” the banking crisis.

Following his retirement from public life in 2011, Dorgan joined the law and lobbying firm Arent Fox as a Senior Policy Advisor. He serves as co-chair of the firm’s Government Relations division.

Senator Dorgan is the author of two books, Reckless! How Debt, Deregulation and Dark Money Nearly Bankrupted America and Take This Job and Ship It: How Corporate Greed and Brain-Dead Politics Are Selling Out America.
___________________________________________________

WHAT WE ARE SEEING IS A HANDOVER OF ALL THINGS MARYLAND TO MEGA-CORPORATIONS.  BELOW YOU SEE BALTIMORE IS COMPLETELY RUN BY MANOR CARE OWNED BY THE CARLYLE GROUP.  IS THAT WHO YOU WANT RUNNING YOUR LOCAL CARE FOR SENIORS?



Other Senior Care providers near: Baltimore, MD
Assisted Living Home Care Nursing Home

ManorCare Health Services - Rossville

Quail Run Assisted Living Yes

ManorCare Health Services - Roland Park

ManorCare Health Services - Towson

ManorCare Health Services - Ruxton

ManorCare Health Services - Ruxton

ManorCare Health Services - Woodbridge Valley

Springhouse of Pikesville
Yes


THIS IS WHO MANOR CARE IS:  THE CARLISLE GROUP AND THEY JUST WENT PRIVATE IN 2008.  THAT MEANS WE CAN'T SEE WHAT THEY ARE DOING.  CARLYLE GROUP IS THE LARGEST HEDGE FUND IN THE WORLD.

Stock/Bond Holders On December 21, 2007, Manor Care, Inc. completed its transaction with The Carlyle Group to take the company private. Shares of Manor Care stock ceased trading on the New York Stock Exchange at the closing of the stock market on December 21.  Shareholders who hold stock certificates should have received instructions from Manor Care’s stock transfer agent, National City Bank, on how to surrender their shares in exchange for $67 cash per share.  If you were a Manor Care stockholder and need information on surrendering your shares of Manor Care stock or have any questions related to your share ownership, please contact:

National City Bank Shareholder Services Operations

Dept. 5352 


3rd Floor - North Annex


4100 W. 150th Street


Cleveland, Ohio 44135


Phone: (800) 622-6757

Mailing Address:  


National City Bank Shareholder Services Operations

P.O. Box 94720

Cleveland, Ohio 44101-4720

To read the press release announcing the closing of the transaction with The Carlyle Group, please click on this link. News Release: Carlyle Closing

___________________________________________________________
AS YOU CAN SEE THESE INVESTMENT GROUPS WORK TO MAXIMIZE PROFITS FOR THEIR CLIENTS....THE INVESTORS.  MAXIMIZING PROFITS MEANS LOWER OPERATING COSTS LIKE WORKER WAGES AND QUALITY OF CARE, LOW OR NO TAXES, FIGHTING ACCOUNTABILITY AND OVERSIGHT.  NONE OF THAT WILL GIVE SENIORS GOOD CARE......IT WILL LEAVE SENIORS EXPLOITED AND ENTITLEMENTS/GOVERNMENT SUBSIDIES GUTTED WITH FRAUD.

THIS IS WHAT CARDIN, SARBANES, CUMMINGS, O'MALLEY, BROWN, MAGGIE MCINTOSH, AND RAWLINGS-BLAKE THINK IS GOOD ENOUGH FOR YOU AND I.  WHAT SENIORS END UP IN THESE HEALTH FACILITIES?  ALL OF THEM AT SOME POINT.



The Carlyle Group

Corporate Overview “Our purpose is to invest wisely and create value on behalf of an array of global investors, many of whom are public pensioners. We work for our investors.” Bill Conway, Chief Investment Officer The Carlyle Group is a global alternative asset manager with more than $156 billion in assets under management across 99 funds and 63 fund of funds vehicles. Founded in 1987 in Washington, DC, Carlyle has grown into one of the world’s largest and most successful investment firms, with more than 1,300 professionals operating in 32 offices in North America, South America, Europe, the Middle East, North Africa, Sub-Saharan Africa, Japan, Asia and Australia.

We Work For Our Investors
More than 1,400 investors from 75 countries rely on Carlyle to achieve premium returns on their invested capital. Our investors range from public and private pension funds to wealthy individuals and families to sovereign wealth funds, unions and corporations. Through an array of products and geographic specific-funds, we work to meet the dynamic needs of the world’s most sophisticated investors.

Four Business Segments

  • Corporate Private Equity – buyout and growth capital
  • Real Assets – real estate, infrastructure and energy and renewable resources
  • Global Market Strategies – distressed and corporate opportunities, corporate mezzanine, energy mezzanine, hedge funds and structured credit
  • Fund of Funds Solutions – private equity fund of funds program and related co-investment and secondary activities
Carlyle Creates Value

Carlyle uses its One Carlyle global network, deep industry knowledge, Executive Operations Group and portfolio intelligence to create and execute a customized value creation plan for each of our corporate private equity and real asset investments.


0 Comments

September 20th, 2012

9/20/2012

0 Comments

 
WE HAVE SPOKEN OF THE NEW FRONT FOR WALL STREET AND CORPORATE POLITICAL ATTACK THROUGH FRAUD.......OUR ENTITLEMENTS.  TODAY I'D LIKE TO BE SURE EVERYONE IS AWARE THAT IT IS HAPPENING TO SOCIAL SECURITY AS WELL.  BELOW YOU SEE THAT SOCIAL SECURITY DISABILITY HAS BEEN ALLOWED TO BE GUTTED BY FRAUD.  WE HAVE KNOWN FOR A DECADE OR MORE THAT CLINTON AND BUSH HAVE ALLOWED FOR ATTACKS ON SOCIAL SECURITY.....FIRST BY REAGAN'S MOVEMENT OF PAYROLL TAX FUNDS FROM THE TRUST TO THE TREASURY STARTING IN THE 1980S-----$3 TRILLION  HAS FAILED TO BE APPLIED TO THE TRUST.  DID YOU HEAR CLINTON OR YOUR INCUMBENT SHOUT LOUDLY ABOUT THIS? DO YOU HEAR THEM SHOUT NOW AS THE TREASURY USES BILLIONS TO BAIL OUT THE BANKS OF MONEY THAT IS FROM THESE SOCIAL SECURITY FUNDS FUNNELED TO TREASURY?  NO.

WE ALSO KNOW THAT THE GOVERNMENT ACCOUNTABILITY ORGANIZATIONS PROJECT THAT AS MANY AS 3/4 OF CITIZENS IN PUERTO RICO HAVE BEEN ON SOCIAL SECURITY DISABILITY AND NOW WE HEAR THE STATISTIC OF A 20% INCREASE IN SOCIAL SECURITY DISABILITY CLAIMS THESE FEW YEARS OF THE RECESSION AS MILLIONS OF UNEMPLOYED LOSING THEIR EMPLOYMENT BENEFITS APPLY FOR DISABILITY TO SURVIVE.  POLITICIANS THINK IT IS GREAT TO BLOW THIS ENTITLEMENT OUT OF THE WATER RATHER THAN HAVE THE BANKS PAY FOR THEIR CRIMES  ALL OF THIS WHILE THIRD WAY DEMOCRATS USE THE PAYROLL TAXES AS A TOOL TO REDUCE TAXES ON THE MIDDLE-CLASS.  REDUCING PAYROLL TAXES REDUCES INPUT INTO THE ENTITLEMENT AND SOCIAL SECURITY FUNDS BURDENING THESE PROGRAMS EVEN MORE.

THIS POLICY IS DELIBERATE AND IS MEANT TO IMPLODE THESE PROGRAMS.  THIRD WAY CORPORATE POLITICIANS ARE NOT BEING FORCED BY THE TEA PARTY TO FIGHT FOR PAYROLL TAX REDUCTIONS.  TEA PARTY PEOPLE AREN'T FORCING YOUR MARYLAND INCUMBENT TO BE SILENT ABOUT THE LEVEL OF FRAUD KILLING SOCIAL SECURITY DISABILITY OR TO BE SILENT ON THE FAILURE TO BRING TRILLIONS OF DOLLARS IN FRAUD BACK TO OUR STATE AND LOCAL COFFERS TO REPLACE THE LOSSES.

DO YOU HEAR YOUR LOCAL MEDIA TALKING TO YOU ABOUT ALL THESE EVENTS AND BAD PUBLIC POLICY?  THEY ARE CAPTURED AND WE NEED TO DEMAND THEY RETURN TO BEING JOURNALISTS AND NOT MOUTHPIECES!  THEY WILL SIMPLY CONTINUE IF YOU DO NOT SHOUT LOUDLY AND STRONGLY AGAINST THIS.

ARE YOU WRITING, CALLING, EMAILING, AND ATTENDING RALLIES?  ARE YOU COMMENTING TO MEDIA AND INSTITUTIONS FAILING TO WORK IN PUBLIC BEHALF?

VOTE YOUR INCUMBENT OUT OF OFFICE!!!!!

WE SEE BELOW THAT SOME NOISE IS STARTING TO SURFACE.  IT IS LATE, BUT IT WILL NOT BE EFFECTIVE IF ALL OF US DO NOT GET OUT AND SPREAD THE WORD!



_________________________________________________
BELOW WE SEE A SYMPOSIUM THAT ADDRESSES MUCH OF WHAT I SPEAK.  IT WAS ANNOUNCED THE DAY OF THE EVENT DO THERE ISN'T MUCH CHANCE OF ANYONE OTHER THAN THOSE LOOKING AT THE WYPR WEBSITE WILL KNOW ABOUT IT.  THE SAME WENT FOR THE LECTURE BY CORNEL WEST AT MARYLAND INSTITUTE OF THE ARTS ON LOSS OF CIVIL LIBERTIES.

WE ARE SEEING A DIRECT ATTEMPT TO KEEP MOST PEOPLE OUT OF THE INFORMATION LOOP.  A BLOGGER LIKE ME CANNOT OF COURSE PERUSE EVERY INSTITUTION'S CALENDAR FOR EVENTS AND AS I AM ACTIVELY LOOKING FOR THESE EVENTS,  YOU CAN SEE THE NEED FOR CHANGE IN HOW INFORMATION IS DISSEMINATED IN THE CITY.

I AM GLAD TO SEE A PROGRESSIVE SPEAKER AND SEE IT AT THE MARYLAND LAW SCHOOL.  THIS LAW SCHOOL HAS BEEN MORE AGGRESSIVE ON SOCIAL ISSUES THAN OTHERS IN THE AREA AND WE THANK THEM FOR THIS OPPORTUNITY.  I WILL SAY THEY WAITED TO PRESENT THIS SYMPOSIUM UNTIL AFTER MOST OF THE STATUTES OF LIMITATION EXPIRED ON THE FRAUDS AND AFTER ALL THE POLITICIANS INVOLVED IN THE CONSPIRACY ARE SET TO RUN AGAIN FOR REELECTION.

THIS WAS DELIBERATE!

The Maryland Law Review and Center for Progressive Reform
In Collaboration with the Center for Health and Homeland Security and

the Environmental Law Program
Proudly present

The 2012 Ward Kershaw Symposium
Too Big to Jail: The Roadblocks to Regulatory Enforcement


The Maryland Law Review will host the 2012 Ward Kershaw Symposium, "Too Big to Jail: The Roadblocks to Regulatory Enforcement," which will address the failure of the regulatory system to respond to the housing crisis, the BP oil spill, and other disasters in a proactive and effective manner. The regulatory system is meant to ensure that statutes enacted to improve quality of life and protect against potential dangers are fairly, efficiently, and effectively enforced across the country. From the mundane to the arcane, the regulatory system touches almost every aspect of modern life: banking, workplace safety, environmental protection, taxes, social security, food safety, the availability of medicine, natural disaster response, and many more. It is no surprise then, that when a disaster occurs, the media, politicians, and the public are quick to ask: where were the regulators? This question has only become more meaningful in recent years as incidents like the housing collapse, the BP oil spill, the Big Branch Mine Collapse, and salmonella outbreaks in multiple types of food have not resulted in many, if any, consequences from regulators. In light of these problems, this symposium will bring together scholars, practitioners, and regulators from different regulatory areas: health and safety, labor, banking, finance, and the environment, to discuss potential solutions to the current regulatory mess.

Schedule of Events:

Thursday, September 20th                    Ceremonial Courtroom

5:00pm - 6:00pm        Keynote Address: Brooksley Born, Former Chairwoman of the Commodities Futures Trading Commission (CFTC) and Retired Partner at Arnold & Porter

6:00 - 7:00 PM            Light reception in Atrium

7:00 PM - ??                Speakers' Dinner

Friday, September 21st                           Krongard Room

8:15am - 9:00am            Continental Breakfast
9:00am - 9:15am            Introduction and Welcome
9:15am - 10:15am          Identifying the Roadblocks to Regulatory Enforcement

          Moderator:        Rena Steinzor,
                                   Professor of Law, Univ. of Maryland Carey Law


          Presenters:        Michael Greenberger
,
                                   Law School Professor, Univ. of Maryland Carey Law


                                      Robert Weissman
,
                                   President, Public Citizen


                                      Tom McGarity,
                                   Joe R. and Teresa Lozano Long Endowed Chair in
                                   Administrative Law, University of Texas School of Law


10:15am - 12:00pm       Regulatory Enforcement and the Financial Regulatory
                                      System


          Moderator:        Michael Greenberger,
                                   Law School Professor, Univ. Maryland Carey Law


          Presenters:        Lynn Stout,
                                   Distinguished Professor of Corporate and Business Law,
                                   Clarke Law Institute, Cornell Law School


                                     Arthur E. Wilmarth, Jr.,
                                   Professor of Law & Executive Director, Center for Law,
                                   Economics & Finance (C-LEAF), George Washington
                                   University Law School


                                     William Black,
                                   Associate Professor of Economics and Law at the
                                   University of Missouri – Kansas City

                                 
                                   Wallace C. Turbeville,
                                   Senior Fellow, Demos


                                     Meyer “Mike” Eisenberg,
                                   Visiting Professor of Law, Willamette Univ. College of Law


12:00 - 12:15pm           Break

12:15pm – 1:00pm        Lunch

1:00 - 1:15pm               Break

1:15pm - 3:00pm           Enforcing Health, Safety, and Environmental
                                      Requirements


          Moderator:        Jane F. Barrett,
                                   Law School Professor and Director, Environmental Law Clinic,
                                   Univ. of Maryland Carey Law


          Presenters:        Brian Wolfman, Visiting Professor and Co-Director,
                                   Institute for Public Representation,
                                   Georgetown University Law Center

                                  
                                   David Uhlmann,
                                   Jeffrey F. Liss Professor from Practice, Director, Environmental
                                   Law and Policy Program, Univ. of Michigan Law School
                                  
                                   W. Warren Hamel,
                                   Partner, Venable LLP


                                      Lois Schiffer,
                                   General Counsel, National Oceanic and Atmospheric
                                   Administration


                                      Victor Flatt,
                                   Tom & Elizabeth Taft Distinguished Professor of Environmental
                                   Law, Director, Center for Law, Environment, Adaptation and
                                   Resources (CLEAR), Univ. of North Carolina Chapel Hill School of
                                   Law


3:00pm - 3:15pm            Wrap Up

Please contact conference coordinator, Brendan Hogan for more information. ______________________________________________
THIS IS AN ARTICLE THAT STATES VERY SIMPLY THAT THE FAILURE TO PROSECUTE AND EXACT MEANINGFUL FINANCIAL PENALTIES WILL BECOME THE NORM BECAUSE PEOPLE ARE NOT SHOWING THEIR OUTRAGE.  IF THIS IS ALLOWED TO STAND, WE WILL HAVE A SOCIETY WHERE IT IS IMPOSSIBLE FOR THE MIDDLE-CLASS TO MAINTAIN ITSELF AS FRAUD DIRECTLY HITS THEIR ASSETS AND BOOM AND BUST FROM THE FRAUD KILLS THE ECONOMY OVER AND AGAIN.

STAND UP AND FIGHT BACK!!!!
VOTE YOUR INCUMBENT OUT OF OFFICE!!

Deferred Prosecution Agreements and Cookie-Cutter Justice
By PETER J. HENNINGCarolyn Kaster/Associated Press

Lanny A. Breuer, the head of the Justice Department’s criminal division.Lanny A. Breuer, the head of the Justice Department’s Criminal Division, last week spoke to the New York City Bar Association, extolling the virtues of deferred and nonprosecution agreements as the new standard for how the Justice Department deals with criminal conduct by corporations.

It is not just corporate investigations that are being concluded with these agreements. They have been used recently with individuals to resolve investigations, like the recent agreement with the cyclist Floyd Landis over possible fraud charges. The Securities and Exchange Commission has also embraced them as a means to wrap up civil securities fraud cases.

But are these agreements all they are cracked up to be as an enforcement tool? Or do they let corporations off too easily? Like anything in the world of white-collar crime, there are good reasons to use them, but questions remain about whether they should be the norm for policing corporate misconduct.


Deferred and nonprosecution agreements are contracts with the government in which a company (or individual) undertakes specified actions in exchange for charges being dismissed or not filed altogether. The terms usually require payment of a fine, continued cooperation with any investigations or trials and a commitment to enhance internal controls. If the agreement is breached, the agreement typically permits prosecutors to restart the case and use any admissions by the company in the a subsequent proceeding.

A significant advantage to these agreements is that there is no judicial involvement, so the Justice Department does not have to worry about a judge second-guessing its terms or questioning the fairness of the resolution.

Mr. Breuer stated that the growing use of these agreements had meant “unequivocally, far greater accountability for corporate wrongdoing – and a sea change in corporate compliance efforts.” He pointed to the recent agreement with Barclays over manipulation of the London interbank offered rate, or Libor, as an example of how companies pay a heavy price when the settle, citing the replacement of the bank’s top management.

But a close look at the Barclays settlement does not show the Justice Department being as tough as advertised. The only discussion of the involvement of senior managers is buried in the press release with a bland reference that “members of Barclays management directed that Barclays’s Dollar Libor submissions be lowered.”

There was no specific mention of the former chief executive, Robert E. Diamond Jr., or the chief operating officer, Jerry del Missier, who lost their positions only after significant pressure from the British Parliament, not the Justice Department.

The promised accountability from the agreements does not always mean companies will be completely reformed. James B. Stewart of The New York Times, in a column in July, discussed multiple settlements by the Swiss bank UBS with the government for violations, including receiving immunity in the Libor investigation, which seem “to have had scant, if any, deterrent effect.”

Deferring charges is nothing new in the criminal justice system. Many drug- and alcohol-related prosecutions of first-time offenders permit the dismissal of a case when the person completes treatment. The juvenile justice system often uses diversion programs to allow offenders to avoid punishment through education and counseling.

The pivotal event in the rise of deferred and nonprosecution agreements in the corporate context was the demise of accounting firm Arthur Andersen, whose conviction for obstruction of justice in 2002 was later reversed by the Supreme Court. Thousands of employees lost their jobs because of conduct in firm’s Houston office related to its auditing work on behalf of Enron.

Mr. Breuer acknowledged that he had heard, and responded to, companies bemoaning the potential effects of a criminal prosecution on innocent employees and financial markets – the specter of Arthur Andersen. He frankly acknowledged that “Sometimes – though, let me stress, not always – these presentations are compelling.”

Companies facing potential criminal charges know they need to argue that a criminal conviction would be just this side of Armageddon, making sure to highlight the threat of lost jobs and economic turmoil to persuade prosecutors to give a deferred or nonprosecution agreement.

And those arguments certainly seem to work for publicly traded companies. This year, there have been 20 deferred and nonprosecution agreements so far, and over 150 since 2007.

Mr. Breuer is certainly right when he points out that criminal charges are not a very useful means of regulating corporations, so that prosecutors “sometimes had to use a sledgehammer to crack a nut. More often, they just walked away.”

Deferred and nonprosecution agreements allow for a more nuanced approach that extracts a penalty and imposes conditions on a company that are similar to the punishment it would receive from a conviction, but without all of the collateral consequences.

But use of the “sledgehammer” seems to have largely disappeared, so that a full-scale prosecution of a large corporation is at best a rarity. The banks caught up in the Libor investigation can certainly expect to settle with the Justice Department and other regulators, using the Barclays agreement as the template for resolving the case.

It seems as if we are coming perilously close to cookie-cutter justice in corporate criminal investigations. Everyone by now knows the drill: turn over the results of an internal investigation, highlight how damaging a conviction would be and then offer to pay the fine and put in place an enhanced compliance program. The press release almost writes itself, but it is the rare case in which senior management pays any price.

Deferred and nonprosecution agreements are here to stay because they give the Justice Department a means to police corporations while mitigating the full impact of the criminal law. They occupy a middle ground between the sledgehammer of criminal charges and giving a company a free pass. Whether they are the unalloyed good that Mr. Breuer portrayed them as is another question.


______________________________________________
WE HEAR MORE FROM EUROPEAN JOURNALISM THE SOCIAL UNREST CAUSED BY THESE FINANCIAL CARTEL'S CRIMINAL ACTS AND THE TROIKA.......THE IMF, THE ECB (OR OUR FED), AND BRUSSELS (OUR TREASURY).  WHAT IS HAPPENING THERE IS HAPPENING HERE AND THE TAXPAYERS ARE SAYING 'NO' REGARDLESS OF US GEITHNER'S ATTEMPTS TO GET EUROPE TO HAVE TAXPAYERS PAY FOR THE COLLAPSE!

Bank bondholders Burning sensation Taxpayers should not pay for bank failures. So creditors must
Jul 21st 2012 | from the print edition  The Economist



“THE only way to deal with moral hazard is to take out bank bondholders and have them shot,” says a hedge-fund manager. By “shot” he is not recommending actual executions, but saying that investors should suffer losses when the banks whose bonds they hold need rescuing. To date during the financial crisis this has been a rarity. Bondholders have been the Scarlet Pimpernels of finance—investors who prove elusive every time a bank’s losses are divided up.



The era of impunity is coming to an end. In the short term some creditors of Spanish banks may be forced to suffer losses as a result of a planned euro-zone rescue of that country’s financial system. Over the longer term regulators in Europe and America are rewriting rules to “bail in” bondholders by converting debt to equity. These moves may have a far-reaching impact on the price banks pay to borrow, and thus on what they end up charging for credit. And the transition to a system designed to protect taxpayers from expensive bail-outs may be a bumpy one.


To understand how bank bondholders ended up in their privileged position, you need to look at the capital structure of banks. Imagine a cake of many layers, each representing the bank’s liabilities. At the very bottom is a thin sliver of costly equity. This is the money that a bank’s shareholders have put into the business. Next comes a layer of “hybrid” or “junior” debt that is supposed to pad out the equity layer but is made of somewhat cheaper ingredients. Above that come various layers of debt that make up the main body of the cake. The thickest slices are bank bonds, or “senior unsecured debt”, and bank deposits. The icing on top is its “secured” debt, such as covered bonds or other loans and derivatives, where creditors can grab hold of assets if their loan is not repaid.

Dessert storm

These layers serve two purposes. When money is collected by the bank it is first paid out to those in the upper tranches, usually as fixed-interest payments on deposits or bonds. If anything is left it trickles down to the shareholders. But when losses are incurred, bites are taken out of the cake from the bottom first. In return for taking a chunk of the profits in good times, shareholders get wiped out in bad times.

This system worked very badly in the financial crisis. The first problem was that the equity layer was far too thin, and that banks were wary of imposing losses on holders of hybrid debt. There was not enough loss-absorbing capital in the banks to cope with the losses they incurred. So more equity had to be found.

The second problem was that this money tended to come from taxpayers. Senior bondholders were repaid in full in all but a handful of cases. Ireland is the most egregious example of a country plunging into debt in order to repay its banking system’s bondholders. This was partly for legal reasons: in many countries bank deposits and senior bank debt were in the same layer of the cake, so that one couldn’t take losses without the other also doing so, a politically unthinkable prospect. But the bigger reason was that regulators were terrified that if they imposed losses on bondholders they would cause a wave of panic across the financial system that would hit funding for all banks.

The pendulum has now swung. This is evident in the Spanish bail-out, where euro-zone governments are reluctant to put their own taxpayers’ money at risk while seeing Spanish bondholders and holders of hybrid debt being repaid in full. Holders of the lowest layers of debt in bailed-out banks are likely to see their debt converted into equity and to take losses. This is particularly controversial in Spain, because many of the holders of this type of debt are unsophisticated retail customers: horror stories are emerging of illiterate customers signing up for risk-bearing debt with their thumbprints.

Imposing losses on junior debtholders is one thing; trying to bail in senior bondholders is quite another. In a significant U-turn, the European Central Bank (ECB) has reportedly proposed imposing losses on bondholders in Spanish banks that collapse. That idea was rejected by European finance ministers because they worried it would spook markets.

It is only a matter of time. In Britain, Switzerland and the European Union rules are either now in force or being drafted that will force banks to ensure that at least some of their debt can be turned into equity in a crisis. Some of this debt may take the form of convertible bonds that convert at a specific trigger-point: Credit Suisse issued SFr3.8 billion ($3.9 billion) of this sort of debt on July 18th. Most will be ordinary bank bonds that can be converted by the regulator. Rules empowering the Federal Deposit Insurance Corporation to take over failing American banks achieve much the same result.



Yet imposing losses on bondholders risks unintended consequences. The first is that the cost of bank debt may rise a lot more than it has already. A decade ago big companies paid more to borrow than banks did. Now the opposite is true (see chart). This gap may widen further as investors price in the risk that governments will do all they can to avoid bailing out banks (although higher equity levels, the thicker bottom slice of the cake, also offer bondholders more protection from losses).

A second risk is that senior bank creditors will respond to the potential for losses in a way that makes the system less stable. They may make sure their loans are secured—which in turn increases the losses inflicted on the remaining unsecured creditors and thus the price they will demand. Or they may plump for short-term debt so that they can pull their money out in a flash. Such dangers underpin the case for a gradual transition to a bail-in regime, but do not undermine its desirability. A world in which bank bondholders expect to get shot is one in which taxpayers are safer.

____________________________________________________

STATISTICS SHOW THAT OVER THIS PAST DECADE ALMOST 3/4 OF THE CITIZENS OF PUERTO RICO WERE ON SOCIAL SECURITY DISABILITY.  NOW WE SEE DISABILITY SERVING AS AN EXTENSION OF UNEMPLOYMENT BENEFITS AS PEOPLE STRUGGLE TO SURVIVE.  ONCE AGAIN OUR SAFETY NETS ARE BEING DELIBERATELY IMPLODED BY FRAUD AND YOUR INCUMBENT IS JUST LETTING IT HAPPEN.  DO YOU HEAR YOUR INCUMBENT SHOUTING LOUDLY AND STRONGLY ABOUT THIS INCESSANT THEFT OF OUR BENEFITS?  NO.  YOU WILL HEAR HIM/HER TELL YOU THAT BENEFITS WILL HAVE TO BE CUT BECAUSE THE TRUST IS RUNNING OUT.  ALL OF MARYLAND'S THIRD WAY DEMOCRATS VOTED FOR THIS DURING THE DEBT CEILING DEBATE.

VOTE YOUR INCUMBENT OUT!!!!!



Report: Disability benefits wrongly awarded
By Sam Baker - 09/18/12 01:37 PM ET The Hill Blog

Lax oversight is leading the government to approve disability benefits for people who can't prove that they're disabled, according to a report released Tuesday by a Senate subcommittee.

The report, spearheaded by Sen. Tom Coburn (R-Okla.), says more than a quarter of disability claims are approved despite inadequate or conflicting information.

That doesn't necessarily mean all of those claims should have been rejected, Coburn said at a hearing Tuesday — but some unfounded approvals are surely slipping through the cracks of an inadequate review process. The report does not address people who might have been wrongly denied disability benefits.


Coburn's report examined 300 approved applications for Social Security disability benefits. Its findings mirror an internal review the Social Security Administration conducted in 2011, which found insufficient reviews in 22 percent of disability determinations made by administrative law judges.

"I think Social Security is right on top of this," Coburn said.

Administrative law judges are under immense pressure to clear away a deep backlog of applications. Coburn's review uncovered examples of judges holding hearings that lasted only 10 minutes, at which the disability recipient didn't even speak. Some judges seemed to overtly ignore evidence indicating that applicants were probably able to return to work.

Coburn recommended a series of changes to the disability system, including updated standards for disability payments and a stronger quality-review process. Sen. Carl Levin (D-Mich.), who leads the investigative subcommittee that produced the report, said he disagreed with just one recommendation: requiring a government representative at all hearings held by administrative law judges.

Because the government wants to cut down on improper payments, leaving more money to help people who are actually in need, a government representative would reduce the number of cases in which judges overlook relevant evidence, Coburn said. Levin said it would be an "expensive and time-consuming duplication."


____________________________________________________________
LET'S BE CLEAR.....OBAMA AND ALL MARYLAND POLITICIANS PLAN TO CUT SOCIAL SECURITY.  IT IS THE ONE PROGRAM THAT IS HEALTHY AND IN NEED OF LITTLE ADJUSTMENT.  $3 TRILLION WAS SENT TO TREASURY FROM REAGAN'S TIME INSTEAD OF THE TRUST  AND WE LOST REVENUE WITH THESE PAYROLL TAX CUTS THESE FEW YEARS.  SIMPLY RAISING PAYROLL TAXES A SMALL BIT WILL SET SOCIAL SECURITY ON COURSE. 


THERE IS NO NEED TO CUT SOCIAL SECURITY!!!!!  

VOTE YOUR INCUMBENT OUT!!!!

Don't Call It 'Raising the Retirement Age,' Because That's Not What They're Doing
Posted on 09/07/2012 by Jim Naureckas 11As Dean Baker noted (Beat the Press, 9/7/12), corporate media mostly missed one of the major pieces of news in President Barack Obama's speech to the Democratic National Convention.

Barack Obama

Talking about the federal budget deficit, Obama said, "Now, I’m still eager to reach an agreement based on the principles of my bipartisan debt commission." Then, as he talked about what he would and wouldn't do to reduce the deficit, he included this line: "And we will keep the promise of Social Security by taking the responsible steps to strengthen it–not by turning it over to Wall Street."

"Responsible steps to strengthen it"–what does that mean? Dean Baker helpfully paraphrases:

President Obama implicitly called for cutting Social Security by 3 percent and phasing in an increase in the normal retirement age to 69 when he again endorsed the deficit reduction plan put forward by Erskine Bowles and Alan Simpson, the co-chairs of his deficit commission.

This would be a good thing for voters to know about, wouldn't it?

Baker's blog post explains the 3 percent thing–the result of proposed games with the cost of living adjustment. As for raising the retirement age, that requires further discussion–because that's one of the big lies of the Social Security discussion.

The thing is, nobody who proposes raising the retirement age is really proposing raising the retirement age. If you were just raising the retirement age, you'd have to wait until you were (say) 69 to stop working, but when you did, you get the same benefits that you would now if you retired at age 69.

But no one's proposing that–because that would save hardly any money. The way Social Security works is that you can retire whenever you want starting at age 62–but the longer you wait, the more money you get. The government tries to calculate it based on life expectancy so that whatever date you pick, you end getting (on average) about the same amount of money.

So when they "raised the retirement age"–as they've been in the process of doing for decades now–they didn't say that you couldn't retire at 62 anymore. They said that if you retired at 62, you'd get less money. And you'd get less money if you retired at 63, or 64, or 65, or….

There's a more accurate way than "raising the retirement age" to describe this policy of lowering the amount of money someone at any given age receives when they retire. It's "cutting Social Security benefits."




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    Cindy Walsh is a lifelong political activist and academic living in Baltimore, Maryland.

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