Rep Gary Ackerman is feeling it today. Last month, he got to feast on the hapless SEC foils who couldn't figure out that Bernie Madoff was a crook, even though whistleblowers were banging their door for years.
This morning he gets to take a few swings at a pinata named AIG. He just delivered the quote of the day:
If they called credit default swaps 'I can't believe it's not insurance,' nobody would buy it!
Senator Schumer has finally realized that things have changed, perhaps permanently, and is saying so publicly. This is a good thing.
Sen. Chuck Schumer, who has raised millions in campaign dollars from Wall Street, had a stern message Monday for his one-time benefactors: your go-go days are over.
"Compensation will likely never return - and shouldn't - to the stratospheric levels that it reached," he said in his toughest comments to date on Wall Street's system of awarding giant bonuses to top executives.
But Schumer, the Senate's No. 3 Democrat, argued that new, tougher rules would actually boost confidence in Wall Street over the long-term.
"Going forward, strong regulation will cause money, business and jobs to come here and stay here," he told a Crain's NY Business breakfast.
The days of collecting absolutely absurd compensation completely divorced from any results are over. The sooner the Wizards of Wall St, many of whom are managing firms that now exist solely because of massive infusions of public money, realize that they'll never be able to take home billions for driving their companies and the global economy in to the ground, the better.
I'm glad to see that Senator Schumer gets this as well. Schumer's admission of this fact has to be the clearest indicator yet that the party is indeed over.
You remember John Thain, don't you? He's the thoroughly odious former CEO of Merrill Lynch, the guy who spent $1.2 million bucks redecorating his office as he was laying off employees left and right and driving his once thriving company off the proverbial cliff. He's also the guy who decided to speed up Merill's bonus payment schedule so as to loot what was left of the company before its forced absorption by Bank of America, essentially stealing a whopping $4 billion dollars from you. He's a real piece of work.
Andrew Cuomol rightly decided to look into this naked larceny last month. Apparently, Thain and BoA have decided to tell our Atorney General to stuff it.
New York State Attorney General Andrew Cuomo filed a motion Monday asking former Merrill Lynch Chief Executive John Thain to provide more information about bonuses paid out on the eve of the bank's merger with Bank of America last year.
Cuomo's office alleges that Thain is not answering the questions under instructions from Bank of America, and as a result, the bank is interfering with its investigation of the bonus payments.
In a deposition last week, Thain refused to answer questions about how the bonuses were determined for certain individuals, citing instructions from Bank of America attorneys.
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Two weeks ago, Cuomo accused Merrill Lynch of "secretly" accelerating bonus payments last year and giving at least $1 million to each of nearly 700 employees, even as the brokerage was amassing billions of dollars in losses.
The bonuses stirred controversy because Merrill's bigger than expected loss prompted Bank of America to seek more government bailout money to complete the acquisition. The government agreed to give Bank of America an additional $20 billion in January to absorb Merrill, which Bank of America agreed to buy last September amid the credit crisis.
Cuomo's office is focusing on allegations that the timetable for the bonus approval was accelerated given the $15 billion fourth-quarter loss at Merrill, sources said.
It was just this past Sunday that we witnessed something rather odd on This Week. Republican Senator Lindsay Graham stated that, though he wasn't thrilled with the prospect, that nationalizing some banks should remain an option. Wingnut wonder Peter King agreed. It was then that Chuck Schumer disagreed and said, "I would not be for nationalizing. I don't think government is good at making these decisions." (He failed to mention that the bankers apparently suck pretty bad at such decisions as well.)
Today, the de facto temporary nationalization of at least a couple of the largest "zombie banks" seems increasingly likely. Bank of America and Citi seem to be the likeliest targets and their stock has lost about a quarter of its remaining value today, making the prospect of being temporarily seized even greater.
Sen. Charles Schumer (D-N.Y.) believes that failed "zombie" banks, no matter what their size, should be taken over by the government, which should then wipe out shareholders, fire management, clean up the banks and quickly resell them into the marketplace. Such a move, he cautioned, should come only if the "stress tests" being conducted by Treasury Secretary Timothy Geithner determine a bank to be insolvent.
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There is a good type of nationalization. I think that the [Treasury] Secretary was wise to do these stress tests," he said. "They're going to find some banks that are hopeless, that are zombie banks."
Those zombie banks, once discovered, he said, should be nationalized.
"Instead of keeping them alive for a long time," he said, "I do agree with people like Roubini or Mishkin -- and I think people would support this -- that the government should come in. And what the government would do would be: wipe out the shareholders, put in new management -- wipe out the old management and put in new management -- and then let the bank run sort of independently without day-to-day government intervention."
The fact that Schumer has turned the corner on this issue is pretty much the clearest signal one could possibly have that this is indeed going to happen. Given that today is Friday and the last day of the week is now becoming known as "bank failure Friday", it could happen sooner than most folks think.
Queens Congressman Gary Ackerman has been on a roll lately. Last week, he launched withering questioning of the hapless SEC regulators who still couldn't uncover the $50 billion dollar ponzi scheme perpetrated by Bernie Madoff, even after having the entire case delivered to them wrapped in a bow several times over a decade. Today, he's got 8 CEOs of the largest banks in the country, banks that have taken well over $125 BILLION dollars in so called "TARP' funds over the last few months, though none of them seem to be lending any of it.
In this video from the folks at TPM, Ackerman asks JP Morgan CEO, Jamie Dimon, "What did you do with (our) $25 billion dollars?" The good stuff begins at about the 3:35 mark.
Dimon's response can be roughly translated as, "We didn't use it for new lending."
I was going to dub the new financial plan TANF 2 - temporary assistance to needy financial institutions, without, you know, any of the means-testing or work requirements involved when poor people get help.
But Jamie Galbraith (private communication) has trumped me; he says it's the Bad Assets Relief Fund.
Our Attorney General has subpoenaed John Thain, the former CEO of Merril Lynch. You may have read about this clown recently. He's the guy who spent over a million bucks redecorating his office as his company was sliding ever closer to oblivion. More importantly, he's the Wall St wizard who sped up Merrill's bonus schedule so as to pay out roughly $4 BILLION DOLLARS in bonuses to himself and the rest of the geniuses who had just presided over a $15 billion dollar loss for their company in the final three months of 2008. What makes this even worse is that Merrill was about to be absorbed by Bank of America with a ton of taxpayer money and Thain most likely knew that those bonuses for being so awesome would probably never paid out once the folks at B of A realized what a stupendous mess they were buying with, um, your money.
The New York attorney general on Tuesday issued subpoenas to former Merrill Lynch chief executive John Thain and Bank of America's chief administrative officer, J. Steele Alphin, amid an investigation into bonuses Merrill paid executives just before being sold to Bank of America.
Thain, 53, was serving as the head of the newly combined company's wealth management division before he resigned last week. The resignation came shortly after reports surfaced that billions of dollars were paid to Merrill executives in late December.
Those bonuses were paid as Merrill was about to report a $15 billion fourth-quarter loss, and while Bank of America was seeking more federal funds to help it absorb the mounting losses at the New York-based investment bank.
Attorney General Andrew Cuomo's investigation will center on trying to determine why the timetable for paying the bonuses was moved up to December from its normal period in January; who knew about the bonuses; and how Merrill could justify spending billions of dollars on bonuses knowing its was on the brink of reporting a multibillion loss for the quarter, a person familiar with the probe told The Associated Press. The person spoke on condition of anonymity because the investigation is ongoing.
At first glance, this looks like nothing more than simple theft, albeit on a rather grand scale. Thieves should go to prison.
The President-elect will be announcing key members of his economic team in about half an hour. All indications are that he really didn't want to have to this so soon, but the situation is deteriorating by the minute seems. This morning we have yet another new price tag on the bailout of the very wizards who got us into this mess in the first place.
The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department's $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
Read that again. $7.4 TRILLION dollars. Trillion. With a "T". That's roughly equivalent to half the GDP of the entire country last year. Hell, it's better than 10% of the GDP of the entire planet last year.
The money that's been pledged is equivalent to $24,000 for every man, woman and child in the country. It's nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country's mortgages.
So, where is all that money going? None of your damn business, apparently. I mean, when they came hat in hand to Congress back in September, they promised all sorts of transparency in the process. Looks like they were lying to our faces, folks.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
"Whether it's lending or spending, it's tax dollars that are going out the window and we end up holding collateral we don't know anything about," said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. "The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones."
Just give us the money. No questions asked.
I was one of those folks back in September who believed that something absolutely needed to be done. I also believed that just shoveling piles of taxpayer cash through Bernanke and Paulson was a terrible idea and would lead to corruption and larceny without doing all that much to solve the problem. I still believe that.
The secrecy and the ever expanding numbers lead me to believe that this is turning into one massive last stick up before they leave the stage. That's just too damn much money - being doled out by people no one voted for with no oversight and no transparency - for these greedy bastards to resist. In the end, I'm afraid we are going to be out of a fantastic amount of money and stuck with a massive pile of worthless crap that we never wanted in the first place.
They are quite simply looting the cupboards on the way out the door. Nothing more, nothing less. The whole spectacle is absolutely breathtaking when you take a step back and really appreciate it.
A group of evangelical Christians laid hands on and prayed for, well, for money, before a golden bull in Lower Manhattan yesterday.
In January of this year, Cindy Jacobs was in a worship service when the Lord spoke to her, "Cindy, the strongman over America doesn't live in Washington, DC - the strongman lives in New York City! Call My people to pray for the economy."
This word so shook Cindy; she knew she had to call the people of God to converge on New York City the week of October 29 for an emergency prayer rally to cry out against economic collapse in the midst of shaking.
The Lord further said, "October 29 was Black Tuesday, the day the stock market crashed, and Satan wants to do it again." We must be proactive in prayer. At the beginning of the year many intercessors began to hear from the Lord that without divine intervention, a major shaking was coming to Wall Street. This would spread until there were food shortages. Some think that 2009 would be worse than 2008. Of course, it goes without saying that this would affect markets around the world.
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"We are going to intercede at the site of the statue of the bull on Wall Street to ask God to begin a shift from the bull and bear markets to what we feel will be the 'Lion's Market,' or God's control over the economic systems," she said. "While we do not have the full revelation of all this will entail, we do know that without intercession, economies will crumble."
Cindy is encouraging prayer groups to intercede for banks and financial institutions in your area. Cindy says each of us has to be accountable to the Lord.
"Don't think you're going to be in sin and that God will take care of you in these hard economic times. Holiness is key," Cindy said. Each of us has a part to play and should not think that God will indiscriminately bless us without us dealing with personal areas that are wrong. We must repent of any misuse of money, think before we spend, get out of debt, etc., and allow God to do a course correction for us.
For all their devotion, did they not even read the Book their faith is based upon? Did not one of them stop and think, "Hey, I remember something like this happening before?" Did no one pause and say something like, "Wait a second. This sounds very, very familiar?"
That Caesar Trunzo and the Senate GOP has been pretty good to the Wizards of Wall St should go without saying. What really should be more of an issue this year is just how good those same folks have been to their champions in the New York State Senate. The Brian Foley campaign seems to get that.
Caesar Trunzo (Hearts) Wall St Trunzo and Senate Republicans give Wall Street Billions, Take in $1 million in campaign cash
Senate Republicans in Albany have worked overtime since 2000 to help Wall Street banks, brokerage firms, and other financial institutions secure billions in special tax breaks and to weaken state oversight and regulation of banks.
And in return, Wall Street interests have made over a million dollars in campaign contributions to the central Senate Republican Campaign Committees. To date, Senate Republicans have spent $921,651 of that money on 36-year incumbent Caesar Trunzo's reelection campaign.
"Caesar Trunzo and the Senate Republicans have been working for Wall Street, and they've been paid handsomely," said Foley, who's locked in a statistical dead heat with Trunzo. "It's the same old Albany story - Wall Street got the special deals, and Trunzo and the Senate Republicans got the money."
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A review of 26 key votes in the State Senate reveals that:
* Senate Republicans passed special-interest tax cuts and subsidies for Wall Street banks, securities firms, and insurance companies that added up to more than $3.4 billion over the last decade. Caesar Trunzo voted "Yes" on each of these giveaways. (7 key votes)
* On top of that, Senate Republicans passed laws to give big Wall Street banks and finance companies over two-and-a-half billion dollars in special every-year property tax cuts. Caesar Trunzo voted "Yes" on each measure. (6 key votes)
* And Senate Republicans voted thirteen separate times to protect their friends on Wall Street from the strong regulation that could have prevented the crisis we're in. Caesar Trunzo voted "Yes" on each measure. (13 key votes)
In return, Senate Republicans received $1,082,499.00 in campaign contributions from Wall Street banks and big financial companies since 2000. $921,651of that money trickled down to Trunzo's campaign through the Republican Senate Campaign Committee.
"Caesar Trunzo gave Wall Street banks a two-and-a-half billion dollar property tax cut when families right here in Suffolk County got massive property tax increases," said Foley. Trunzo and the Senate Republicans gave over three billion dollars in state subsidies to Wall Street while regular families saw health care, energy, and food prices go up and up."
While Trunzo was saying "Yes!" to every handout request and favor asked by his Wall Street pals, he was voting "No" on protecting the health of Suffolk families. Trunzo voted "No" on making insurance companies cover mammograms for Women, despite the fact that Long Island has the highest rate of breast cancer in the country. Trunzo even voted to allow chemical companies to conceal cancer causing sprays on our lawns and parks.
It's a compelling case to be made against Trunzo, but it's also a case that can be made against pretty much the entire GOP caucus in the Senate.
It seems pretty much all upstate Republicans are sticking to the tired old "ooga booga...NYC" messaging that has so successful as of late. (Hello, Senator Aubertine!) Just like clueless wingnut Dennis Delano, SD-61 GOP hopeful Mike Ranzenhofer is raking in big bucks from downstate fat cats all the while telling anyone who will listen that Joe Mesi is too beholden to downstate interests. Sound familiar?
Developers in NYC know that if Republicans lose power their gravy train in Albany will go out the window too. For decades Republicans have taken money from developers and then thanked them by loosening laws to protect tenants and giving developers tax breaks, sweetheart land deals, and other favors.
Glenwood Management, which has given Ranzenhofer over $19,000, was featured in a NYT’s article from last year as one of the main development companies involved in lobbying efforts to keep a loophole open that effectively lets them donate as much as they want to political interests.
It’s ironic that Mike Ranzenhofer and his cronies try to paint Mesi as a tool of downstate interests when in fact Ranzenhofer and his Republican buddies have been used as a pawn for downstate developers for decades.
Ranzenhofer even goes so far as to run this ad to drive his BS point home:
There is a negative Ranzenhofer ad out there hitting Mesi for taking downstate money. (Interesting that it's bad for Mesi, but OK for Ranzenhofer and Delano. But I digress).
This is how Ranzenhofer's ad illustrates the point about downstate money. In it, a stencil is applied over a white brick wall that has "NYC" drawn in stylized graffitti print. A spray can miraculously appears, causing the message carved into the stencil to appear on the brick wall. I don't even remember what the point being made is.
What's Ranzenhofer trying to say here? That downstate = urban blight, graffitti, and defacement of property? Gee, what a fascinating image to convey. I'd love to hear more about why that particular device was employed to make this point.
A friend who is much, much smarter than I writes in an email:
"This is a new epoch, until now the Fed sanitized inflation, and Congress and the President were free to spend. The deficits came at the price of higher interest rates, but we allowed some interest rates to be subsidized, namely housing. Housing was over-developed because it was under priced. Now the Fed is going to have to have interest rates pegged low, because of interest on the deficit, the need to keep housing propped up, the need to directly loan, and the need to provide such stimulus as can be had. Therefore, the fiscal authority will have to control inflation. One reason that politics had been so polarized is that those who controlled the treasury could rob everyone, to pay their constituencies with pork. When this decade we both spent, and had low interest rates, it gave out. Not in the ways that perhaps people expected, but a credit bubble leading to a panic is a perfectly 19th century thing to do. If Krugman joked that 2001 was "your grandfather's recession" then this is great-great grand pappy from 1873's "Panic".
The time when politicians could spend irresponsibly and allow the Fed to clean it up is over. This doesn't mean budget cutting per se, we are going to be running deficits. The question is what we are going to be buying with those deficits. Presently we are buying a war in Iraq, happy billionaires that get tax breaks that we then pay for by borrowing the money from them.
Everyone is a liberal now. The question is who is going to be a smart and honest liberal, and who is going to try and pretend that there is another round of Reaganomics for us all."
If the talking heads on CNBC this morning are to be believed, it happens right about now. The Dow has lost over 17% in the four trading days so far this week. The Asian markets tanked hard overnight and the European markets followed suit. Trading was suspended in Indonesia, Vienna and Moscow and bailout plans are being put together in Iceland, Japan and the Netherlands.
European stock markets slumped in early trading Friday following massive sell-offs on Wall Street and Asia as lending rates between banks continue to rise despite this week's efforts by central banks to break the logjam in credit markets.
At mid-morning London time, the FTSE 100 index of leading British shares was down 233.84, or 5.4 percent, at 4,079.96, having fallen below the 4,000 mark earlier for the first time in five years. Germany's DAX was 383.70, or 7.9 percent, at 4,503.30, and France's CAC-40 was 209.67, or 6.1 percent lower at 3,233.03.
In Vienna, the stock exchange has been suspended until midday after stocks tumbled 10 percent at the opening bell, and in Russia representatives of the MICEX and RTS exchanges said they suspended regular trading until further notice under orders from financial regulators.
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The Dow's seven-day decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
In Japan, the benchmark Nikkei 225 index in Japan 881.06 points, or 9.6 percent, to 8,276.43, its lowest closing level since May 2003. It was its biggest one-day percentage loss since the stock market crash of October 1987 and meant that the Nikkei lost nearly a quarter of its value during the week.
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Few places escaped the deepening gloom. In Australia, where the S&P/ASX200 plummeted a record 8.3 percent, market watchers were calling it "Black Friday." Key indices in Hong Kong, Singapore, the Philippines and India were all down about 8 percent. South Korea's Kospi closed down 4.1 percent, while the Shanghai Composite Index posted a more moderate decline of 2.8 percent.
And in Indonesia, authorities suspended trading indefinitely on the Jakarta Stock Exchange after they had halted trading Wednesday after the index plunged more than 10 percent.
If you had invested $100K in a Dow index fund at the beginning if the year, you'd now have about $63K. That hurts.
And John McCain spends his days telling people about how Barack Obama is black. No wonder he's tanking as fast as the market.
Chief Executive magazine's most recent polling of 751 CEOs shows that GOP presidential candidate John McCain is the preferred choice for CEOs. According to the poll, which is featured on the cover of Chief Executive's most recent issue, by a four-to-one margin, CEOs support Senator John McCain over Senator Barack Obama. Moreover, 74 percent of the executives say they fear that an Obama presidency would be disastrous for the country.
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"I'm not terribly excited about McCain being president, but I'm sure that Obama, if elected, will have a negative impact on business and the economy," said one CEO voicing his lack of enthusiasm for either candidate, but particularly Obama.
In expressing their rejection of Senator Obama, some CEOs who responded to the survey went as far as to say that "some of his programs would bankrupt the country within three years, if implemented." In fact, the poll highlights that Obama's tax policies, which scored the lowest grade in the poll, are particularly unpopular among CEOs.
"Overall, many CEOs are concerned about the future of the U.S. economy and its ability to compete in the global market, but they look to John McCain and hope that this self-described political maverick may yet shake up established thinking and not give into to the tired policies of the past," concluded Kopko.
Wall Street tumbled Monday, joining a selloff around the world as fears grew that the financial crisis will cascade through economies globally despite bailout efforts by the U.S. and other governments. The Dow Jones industrials skidded more than 300 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.
The markets have come to the sobering realization that the Bush administration's $700 billion rescue plan won't work quickly to unfreeze the credit markets, and that many banks are still having difficulty gaining access to cash. That's caused investors to exit stocks and move money into the relative safety of government debt.
Washington Mutual employees are likely to lose their current pensions and they might not find out for another two months whether they have a job, according to a JPMorgan Chase executive who spoke to employees from both companies in a frank, hourlong conference call Thursday.
The chief executive of the failed savings and loan Washington Mutual Inc could get $13.65 million for the 18 days he was on the job, a regulatory filing shows.
So fine, my position has changed. I was previously "skeptical" of the Paulson plan. Now I want it to die a hot, flaming death. I want its ashes to be fed to goats, and the goats fed to sharks, and the sharks put on a rocket and fired into the sun. I want the whole premise to be made Unspeakable, so that future generations shun anyone who even threatens to mention it.
A day after we learned that Treasury officials were on the phone to the wizards of Wall St on Sunday afternoon and telling them not to worry about the cosmetic concessions on things like CEO pay and whatnot because they were completely toothless BS thrown in to attract Dem votes, we learn that the RNC had already cut and distributed an attack ad on the bailout before the deal even fell apart.
The Republican National Committee's new advertisement critical of the the Wall Street "bailout" was produced and sent to television stations in key states before the package failed, officials at two stations said.
"Wall Street Squanders our money. And Washington is forced to bail them out with -- you guessed it -- our money. Can it get any worse?" asks the ad's narrator, as the words "BAILOUT WITH OUR MONEY" cross the screen. (The answer: Obama's plans would make it worse.)
The ad, however, seems to assume that it can safely attack a successful plan. And the reason may be the timing: Though it started airing this morning, the spot was released to stations yesterday morning, ad executives at stations in Michigan and Pennsylvania said.
Kae Buck of WLNS in Lansing said her station received the at at 7:55 a.m. Monday. Luanne Russell of Pittsburgh's WTAE said her station received it at 10:49 Monday morning.
The ad taps into deep resentment of the plan, but it comes at a time when the candidate it supports, John McCain, is urging its package, and asking that it not be referred to as a "bailout," but a "rescue."
That, my friends, is bad faith bargaining we can believe in.
