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The Hill

By Peter Schroeder 03/18/12 05:30 AM ET

Democrats have co-opted a fiery resignation letter from a Goldman Sachs employee to argue for rigid rules on the financial sector.

Lawmakers say the letter from Greg Smith, published in The New York Times, is evidence that the reforms Congress passed in the wake of the financial crisis should be strictly implemented.

“This is ammunition for our argument,” said Rep. Barney Frank (D-Mass.), who co-authored the Dodd-Frank financial reform law.

Senate Majority Whip Dick Durbin (D-Ill.) entered the piece into the congressional record, calling it “an indication of why we need to continue our vigilance over this industry to make certain that the right market forces prevail.”

Goldman executives have pushed back against the widely read letter and defended the firm’s behavior and corporate culture.

Dems see ‘ammunition’ against Wall Street in Goldman resignation – The Hill’s On The Money.

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Wall Street Executives Thrive Under Obama But Still Won’t Support Him

Huff Post- First Posted: 01/30/2012  4:43 pm Updated: 02/ 2/2012  8:48 am

By- Jennifer Bendery

WASHINGTON — They bristled when he called them “fat cats.” They fought every step of the way, unsuccessfully, to prevent his financial reform bill from becoming law. And some who supported him in 2008 are now throwing their money at Republican presidential candidate Mitt Romney.

But for all their grumbling, Wall Street executives have fared exceptionally well under President Barack Obama. In fact, some of Wall Street’s highest earners are making as much now, if not more, than they did under President George W. Bush.

Take Wells Fargo president and CEO John Stumpf. He made $18.9 million in 2010, compared to $21.3 million in 2009, $13.8 million in 2008 and $12.6 million in 2007. JPMorgan Chase CEO Jamie Dimon has also watched his paychecks fatten over the past three years: He took home $20.8 million in 2010, compared to $1.3 million in 2009 (when some bank executives took a pay cut because of the financial crisis), $19.7 million in 2008 and $27.8 million in 2007.

The list goes on. Goldman Sachs CEO Lloyd Blankfein made $14.1 million in 2010, compared to $862,657 in 2009, $1.1 million in 2008 and $70.3 million in 2007. Bank of America president and CEO Brian Moynihan earned $10 million in 2010, compared to his predecessor Ken Lewis, who made $4.2 million in 2009, $9.9 million in 2008 and $24.8 million in 2007.

Even Vikram Pandit, the CEO of Citigroup who worked for two years for just $1 a year as a symbolic gesture after the financial crisis, was awarded a $23.2 million retention package in May 2011.

MORE HERE

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Bill Moyers Journal March 27, 2009

BILL MOYERS: As you know, earlier this week Treasury Secretary Timothy Geithner proposed a vast expansion of government authority that would crack down hard on Wall Street’s reckless behavior.

Just in time, it seems. You could almost hear the mob in the streets of Washington as he spoke. Popular anger was beginning to evoke unhappy images among Washington elites of the French Revolution, guillotine and all.

On the Op-Ed page of Sunday’s “Washington Post” William Greider, the veteran political reporter of four decades, suggested a glass half full. He wrote that the public’s rage “has great potential for restoring a functioning democracy. Timely intervention by the people could save the country from some truly bad ideas now circulating in Washington and on Wall Street.”

Perhaps no journalist better understands the intertwining twists and turns of government and money, the collision of capitalism and democracy, than William Greider. He wrote the definitive account of the Federal Reserve system, SECRETS OF THE TEMPLE. In the spirit of Thomas Paine he produced, WHO WILL TELL THE PEOPLE? Followed it with, THE SOUL OF CAPITALISM. And now, COME HOME, AMERICA: THE RISE AND FALL (AND REDEEMING PROMISE) OF OUR COUNTRY.

Watch Video Here

Wall Street Trades in Political Currency

WILLIAM GREIDER: Unfortunately, Secretary Geithner, has a record- which we know about. When he was President of the New York Federal Reserve Bank. And he was at the table, in many of the bailout transactions. First Bear Stearns then A.I.G. and others. And this is, again, not my opinion, but people on Wall Street talk about it all the time. He got spun around again and again by the big Wall Street players. The bailout of Bear Stearns was really about protecting J.P. Morgan Chase.

The story was told backwards in the press, basically, because it’s a story the government told that J.P. Morgan came in to buy Bear Stearns at the behest of the government. But in fact, if Bear Stearns had gone down, J.P. Morgan Chase was vulnerable itself to a wave of derivative crashing crisis. When they bailed out A.I.G., the chief executive of Goldman Sachs was in the room. Why was he in the room? Well, because he had big exposure to- through derivatives, to A.I.G. So, when they pump money into A.I.G., it sends the same dollars out and buys back these derivative contracts at par value, not even discounted, to the banks and others who hold them. Goldman Sachs gets $12 billion out of that transaction. This is another scandal waiting to surface. And I trust good, smart reporters are already on the case. And following the dollars that moved around among the leading financial institutions in ways that politicians could not have not known about it. It defies reason to think that Washington didn’t know this was happening.

BILL MOYERS: “The New York Times” on Thursday had this remarkable full page graph, based upon the excellent work of the Center for Responsive Politics, a nonpartisan group you’re familiar with-

WILLIAM GREIDER: Yeah.

BILL MOYERS: That monitors money and politics. They said, where Wall Street trades in political currency, and if you look at this you realize that political connections may be the new currency for deal makers. Right? And it shows which of the financial elites have contributed to which elite politicians.

click to enlarge

Flashback to 1981, Ronny Raygun, and Trickle Down Economics

William Geider

The Education of David Stockman
About a similar situation during the Ronny Raygun administration where Stockman, as his finacial advisor, was spinning the numbers to boost the economy

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February 28, 2011 Pay Up, Corporate Tax Dodgers
We’re chumps unless we force Congress to stop tax haven abuse.

By Chuck Collins

Instead of cutting state and federal budgets, the United States should crack down on the corporate tax dodgers thumbing their noses at us.

Across the nation, states are making deep cuts that will wreck the quality of life for everyone to close budget gaps that total more than $100 billion.

But there’s a more sensible option. Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.

The next time you read a story about some politician bemoaning that “there’s no money” and “we have to make cuts,” just point to artful tax dodgers in our midst.

They include some of the banks that trashed the economy but gladly took our tax dollars to stay alive after the economic meltdown. Bank of America. Wells Fargo. Citigroup.

Goldman Sachs took a $10 billion taxpayer bailout but then gamed its effective tax rate down to one percent through what its shakedown-artist executives call “changes in geographic earnings mix.” Shame on them. Pay up.

See that FedEx delivery van go by on the roads you paid for? Pay up FedEx! Don’t pretend you’re not making billions in the U.S. Don’t lie and tell us you made all those profits on some island with more palm trees than people. We know the demand for coconut delivery isn’t that big.

These corporations are heavy users of our taxpayer funded public infrastructure and property rights protection systems. They use our regulated marketplace, call upon our law enforcement system and judiciary to remedy disputes. They’re protected by U.S. police forces and firefighters. They enjoy all the privileges and benefits of tax-paying citizens. They just don’t pay their fair share for them.

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Hat tip to Carl in the morning who interviewed Chuck Collins this morning on Air America. KPOJ 620 am radio.

Chuck Collins w/ Institute for Policy Studies IPS

extremeinequality.org

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Rolling Stone feature discusses issues explored in The American Ruling Class

facebook July 16, 2009

by Alive Mind

The American Ruling Class has never been more relevant to the current news cycle or to the collective consciousness of the American public. Goldman Sachs is announcing record profits and it is the subject of a big Rolling Stone expose in which Matt Taibbi discusses “The Great American Bubble Machine,” stating, “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Does Goldman Sachs still rule the world? Find out the back story with the feature documentary, The American Ruling Class.

John Kirby , the director for this film, also posts on the Providence Journal and has done an article on “Building What”. The ad and “Geraldo-at-Large” spot can be seen on the family-members’ campaign Web site, .buildingwhat.org.

The movie, about an hour and a half, can be seen on HULU

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Economists See Increased Chance Of Double-Dip Recession

Huffington Post |  Ryan McCarthy First Posted: 08-16-10 01:19 PM   |   Updated: 08-16-10 01:51 PM

Buried amidst the increasingly gloomy economic news of the last few weeks — which includes stubbornly high unemployment, rising foreclosures and a grim outlook from the Fed, among other factors — is a growing sense of doom among some prominent economists.

More than a few top economic thinkers have significantly upped the chances of a return to a recession. Today, the noted bear Nouriel Roubini, the president of RGE Monitor and a professor at New York University, delivered a grim prognostication via Twitter: “Risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%.”

Roubini is not alone in his concern. Last week, David Rosenberg, the Gluskin Sheff economist (formerly of Merrill Lynch), whose words have become must-read barometers of bear-ishness, said that the chances of a double-dip recession in the U.S. are now “higher than 50-50.”

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Taibbi: The Lunatics Who Made a Religion Out of Greed and Wrecked the Economy

April 26, 2010 |

The SEC’s lawsuit against Goldman Sachs is a chance to prevent greed without limits.

So Goldman Sachs, the world’s greatest and smuggest investment bank, has been sued for fraud by the American Securities and Exchange Commission. Legally, the case hangs on a technicality.

Morally, however, the Goldman Sachs case may turn into a final referendum on the greed-is-good ethos that conquered America sometime in the 80s – and in the years since has aped other horrifying American trends such as boybands and reality shows in spreading across the western world like a venereal disease.

When Britain and other countries were engulfed in the flood of defaults and derivative losses that emerged from the collapse of the American housing bubble two years ago, few people understood that the crash had its roots in the lunatic greed-centered objectivist religion, fostered back in the 50s and 60s by ponderous emigre novelist Ayn Rand.

While, outside of America, Russian-born Rand is probably best known for being the unfunniest person western civilisation has seen since maybe Goebbels or Jack the Ripper (63 out of 100 colobus monkeys recently forced to read Atlas Shrugged in a laboratory setting died of boredom-induced aneurysms), in America Rand is upheld as an intellectual giant of limitless wisdom. Here in the States, her ideas are roundly worshipped even by people who’ve never read her books or even heard of her. The rightwing “Tea Party” movement is just one example of an entire demographic that has been inspired to mass protest by Rand without even knowing it.

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Moyers: Six Banks Control 60% of Gross National Product — Is the U.S. at the Mercy of an Unstoppable Oligarchy?

Moyers and economists James Kwak and Simon Johnson wonder whether the financial powers are more profitable, and more resistant to regulation than ever.
April 23, 2010 |

The following is a transcript taken from Bill Moyers’ recent interview with Simon Johnson and James Kwak on Bill Moyers Journal.

So even if the Tea Party folks saw the light, what can ordinary Americans do?

That’s the question I want to put to my guests, Simon Johnson and James Kwak. They have written this new book, 13 Bankers: The Wall St. Takeover and the Next Financial Meltdown. It’s a must read – already a best seller — and it couldn’t have come at a better time. This book could change the debate over financial reform by tipping it in favor of the public.

Simon Johnson is a former chief economist at the International Monetary Fund. He now teaches at MIT’s Sloan School of Management and is a Senior Fellow at the Peterson Institute for International Economics.

James Kwak is studying law at Yale Law School – a career he decided to pursue after working as a management consultant at McKinsey & Company and co-founding the successful software company, Guidewire. Together James Kwak and Simon Johnson run the indispensable economic website BaselineScenario.com

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America must face up to the dangers of derivatives

George Soros | Financial Times | April 22, 2010

The US Security and Exchange Commission’s civil suit against Goldman Sachs will be vigorously contested by the defendant. It is interesting to speculate which side will win; but we will not know the result for months. Irrespective of the eventual outcome, however, the case has far-reaching implications for the financial reform legislation Congress is considering.

Whether or not Goldman is guilty, the transaction in question clearly had no social benefit. It involved a complex synthetic security derived from existing mortgage-backed securities by cloning them into imaginary units that mimicked the originals. This synthetic collateralised debt obligation did not finance the ownership of any additional homes or allocate capital more efficiently; it merely swelled the volume of mortgage-backed securities that lost value when the housing bubble burst. The primary purpose of the transaction was to generate fees and commissions.

This is a clear demonstration of how derivatives and synthetic securities have been used to create imaginary value out of thin air. More triple A CDOs were created than there were underlying triple A assets. This was done on a large scale in spite of the fact that all of the parties involved were sophisticated investors. The process went on for years and culminated in a crash that caused wealth destruction amounting to trillions of dollars. It cannot be allowed to continue. The use of derivatives and other synthetic instruments must be regulated even if all the parties are sophisticated investors. Ordinary securities must be registered with the Securities and Exchange Commission before they can be traded. Synthetic securities ought to be similarly registered, although the task could be assigned to a different authority, such as the Commodity Futures Trading Commission.

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Crooks and Liars- By Susie Madrak Tuesday Apr 20, 2010 2:00pm

This is really heating up. Stay tuned for further developments as Congress is emboldened by the SEC civil fraud charges:

Washington is suddenly looking very unkind to the firm that used to be known as “Government Sachs.” Now the Senate’s Permanent Subcommittee on Investigations, led by Carl Levin, Democrat of Michigan, is planning to focus hearings scheduled for next week at least in part on Goldman Sachs’s role in the financial disaster.

Levin’s staff has uncovered new documents “that link certain actions to specific people” at Goldman, according to a senior legislative official who spoke on condition of anonymity. The official would not divulge the nature of the allegation but said that Levin believes it amounts to “another big shoe to drop on Goldman.”

Spokespeople for Levin said they were not prepared to discuss the nature of the probe, but his committee has been conducting several weeks of hearings and one is planned for April 27 on “the role of the investment banks.” “We expect to have some information tomorrow,” spokesman Bryan Thomas said Monday.

Keep in mind that a win in the SEC case is by no means a slam dunk:

To a layperson, the case against Goldman may seem clear cut. After all, investors did not know some information about the product that they might have considered vital, and they lost $1 billion in the end. But the rules that govern these kinds of transactions are not so plain.

Several experts on securities law said fraud cases like this one, which focuses on context rather than content, are generally more difficult to win, because it can be hard to persuade a jury that the missing information might have led buyers to walk away.

They added, however, that the strength of the S.E.C.’s case is impossible to gauge until the agency discloses more of the evidence it has assembled. So far it has provided only a sketch.

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