Thursday, December 17, 2009

US House passes pro-Wall Street banking bill


It's not the bankers fault, it's YOU who are to blame for the financial devastation we are in the midst of,  Mr & Mrs John Q Public.  Or so BO & his minions would have you believe.  Which is why Wall Streeters get to write the bills concerning revising government regulations for the banking industry.  This begs the question, why the hell are we letting them get away with this?!! ~jg


By Barry Grey  WSWS
14 December 2009


The US House of Representatives on Friday passed a bill, backed by the Obama administration, to revise government regulations covering banks and financial firms. The bill has been widely reported in the media as the most sweeping reform of bank regulations since the New Deal measures passed in the wake of the stock market crash of 1929. It is being cast as a rebuke to Wall Street for its role in precipitating the financial crash and recession, and a major tightening of government oversight of the banks.



In his weekly address on Saturday, President Barack Obama hailed passage of the House measure as a major step in restoring “free and fair markets in which recklessness and greed are thwarted.” He used the bill’s passage to strike a populist pose, decrying the “irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences.

At the same time, he made a point of allocating blame for the economic crisis on the American people as a whole, chastising “millions of Americans” who “borrowed beyond their means, bought homes they couldn’t afford, and assumed that housing prices would always rise and the day of reckoning would never come.”

Despite having pointed to pervasive fraud and corruption on Wall Street, Obama made clear that his “reforms” would not bar financial speculation, but only ensure that “the kind of risky dealings that sparked the crisis would be fully disclosed and properly regulated.”

As part of the Democrats’ public relations effort to placate popular anger against Wall Street, Speaker of the House Nancy Pelosi said, “We are sending a clear message to Wall Street. The party is over. Never again.”

Pelosi to the contrary, Wall Street’s “party” continues unabated, notwithstanding the social devastation its profiteering has inflicted on the American and international working class. There can be little doubt that Obama and the House Democrats were determined to pass a bank regulation bill in advance of the announcement of year-end bonuses on Wall Street, which are likely to surpass $28 billion and, at least for some of the biggest banks, set new records.

The Democrats’ claims for the administration’s financial regulatory overhaul are fraudulent. The measure passed by the House does nothing to reverse the deregulation of banking carried out over the past three decades—which has dismantled the restrictions imposed in the 1930s—or introduce serious structural reforms to limit, let alone ban, the speculative practices that have become increasingly critical to the accumulation of profit and personal wealth by the American ruling class.

Obama and the congressional Democrats have rejected capping executive pay or reining in credit default swaps, collateralized debt obligations, structured investment vehicles and other exotic forms of speculation that played a major role in the financial crash.

Far from limiting the size and power of the big banks, they have used the crisis to encourage a further consolidation of the banking system. As a result of the disappearance of Bear Stearns, Lehman Brothers, Merrill Lynch, Wachovia and Washington Mutual—to name just the biggest bank failures—the four largest US banks today account for 70 percent of the country’s bank assets, as compared to less than 50 percent at the end of 2000. The process of consolidation will accelerate under Obama’s regulatory scheme.

Its most important innovation is the establishment of a “resolution” process giving the Treasury and the Federal Reserve Board unilateral authority, without congressional approval, to seize large bank and non-bank financial institutions before they fail. The cost of such rescue operations is to be borne in the first instance by taxpayers, with major banks subsequently to be charged fees totaling $150 billion. Even if the banks were forced to pay these fees, the payments could be stretched out over years.

The “resolution” provision amounts to the institutionalization of government bailouts of the banking system, as opposed to the ad hoc methods that were employed after the financial meltdown of 2008.

One provision of the bill, which has garnered little comment either by its official proponents or the media, would give the Federal Deposit Insurance Corporation (FDIC), with the consent of the treasury secretary and the Federal Reserve Board, the power to “extend credit or guarantee obligations … to prevent financial instability during times of severe economic distress.”

The House bill passed by a vote of 223 to 202, with 37 Democrats joining all of the Republicans in voting “no.” For the measure to become law, it must also be passed by the Senate. That chamber is currently considering its own version of a regulatory overhaul, and is not expected to vote on a bill until some time next year.

Indicative of the social interests that determined the substance of the House bill was the body’s vote to reject an amendment which would have allowed bankruptcy judges to reduce the mortgage principals of homeowners facing foreclosure. More than 70 Democrats joined with the Republicans to kill the amendment, which has been fiercely opposed by the banking and mortgage lobbies. Obama has tacitly dropped his previous support for this revision of the bankruptcy laws, in deference to the banks.

In another open sop to the banks, the House bill significantly weakens the 2002 Sarbanes-Oxley Act, which was passed in the aftermath of the Enron and WorldCom scandals. Sarbanes-Oxley empowers the Securities and Exchange Commission (SEC) to conduct audits of the internal controls of publicly traded companies in order to detect the type of accounting and business fraud that contributed to the collapse of Enron, WorldCom and other corporations at the beginning of the decade.

The House bill contains a provision exempting companies with less than $75 million in publicly traded shares from such audits, a step that is seen on Wall Street as the precursor to similar exemptions for large corporations. The Wall Street Journal on Saturday hailed this provision in an editorial entitled “Sarbox Routed in House,” in which it urged the SEC to “consider relief for larger firms.”

Aside from the “resolution” authority provision, the House bill establishes a council of regulators, led by the Federal Reserve, to oversee major financial institutions. It requires so-called “too big to fail” institutions to increase their capital reserves as a hedge against future crises.

The much touted Consumer Financial Protection Agency to be established under the bill has been watered down to the point of near irrelevance. At the behest of the banks, the author of the bill, House Financial Services Committee Chairman Barney Frank (Democrat of Massachusetts), incorporated provisions exempting 98 percent of US banks from the agency’s oversight, as well as auto dealerships and retailers. He also included a provision giving the federal government the power to override more stringent state consumer protection laws.

Another major provision ostensibly brings the derivatives market under federal regulation. This currently unregulated market in credit default swaps and similar murky deals between banks, hedge funds and other corporations—estimated to total nearly $600 trillion—played a major role in the collapse of the insurance giant American International Group (AIG), which, in turn, nearly toppled the global financial system.

However, the House bill contains exemptions and caveats that, in practice, allow the major players in the derivatives market to continue to function without serious government oversight. The bill exempts so-called “customized” derivatives—among the most lucrative of such contracts—from oversight by federal regulators. Virtually all non-financial firms that employ derivatives are exempted. So-called “standard” derivatives are to be traded on privately owned and controlled clearing houses with close ties to Wall Street banks. The actual powers of federal agencies over the clearinghouses are tightly circumscribed.

The bill does not change the basic functioning of credit rating firms, which played a key role in the financial meltdown by awarding top ratings to mortgage-backed securities that were based on unviable sub-prime loans. These companies will continue to be paid, as before, by the very banks and financial firms whose securities they rate.

On executive pay, the bill includes a toothless provision for bank shareholders to cast an advisory vote on the compensation packages awarded to bank officials.

The legislative process that produced the House bill is a mockery of democracy. The banking industry has spent over $330 million to lobby House and Senate members on the regulatory scheme. Lobbyists have been hard at work for months wining and dining key legislators, whose elections were funded by millions in campaign contributions from the banks, insurance companies, hedge funds, etc.

Wall Street lawyers have helped draft the details of the House bill in closed-door meetings, while Obama and his top economic advisers have conferred repeatedly with the CEOs of the most powerful firms.

The character of the bill can be gleaned from the fact that both Treasury Secretary Timothy Geithner and Lawrence Summers, the director of the White House’s National Economic Council, were intimately involved in the deregulation of the banks that preceded the financial crash. Geithner was president of the Federal Reserve Bank of New York before being picked by Obama to become his treasury secretary. In his former post, he played a key role in orchestrating the bailout of the banks during the Bush administration.

Summers was treasury secretary under Bill Clinton and was instrumental in the repeal of the Depression-era Glass-Steagall Act, which separated commercial banking from investment banking, as well as the passage of a law deregulating the derivatives markets.

The guiding premise of the banking bills in the House and Senate is that the capitalist “free market” must at all costs be safeguarded, along with the personal fortunes of the financial oligarchy. The informing notion behind the proposed changes is to allow the banks to return to business as usual, recouping their gambling losses at the expense of this and future generations of working people, while setting in place mechanisms for the government to more effectively manage the next financial debacle.

12 comments:

  1. The Bill H.R.4173 The Wall Street Reform and Consumer Protection Act of 2009

    It's complete crap. And once again it does show my triad theory in work. It takes the need of World Order and they orchestrated and abetted the original swindle. They all made money as well.

    But they know that after the crime there will be no arrests or judgement day for the perpetrators. But the sheeple will look to the government to make sure it does not happen again.

    And it won't. Next time it will be the Fed and regulators for the government that will do it. And they'll do it by crushing the middle and lower class from ever getting what they need for the American Dream.

    The Financial thieves will move on to ClimateRape for their next heist. And the new triad has begun.

    That criminal freak, Barney Frank was with Ron Paul on Larry King last night talking about Bernanke's Time award and his future. Frank said though he was responsible in some way he saved the day. Dr. Paul said the Time Magazine mention was appropriate, as he was the biggest counterfeiter of the year.

    NEWSWITHVIEW CRITIQUE

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  2. Awesome graphics as the Header, Puddy...again. Every Freaking Day! You Rock!...naturally.

    O.K. another "sell out" by the public servants. When do we get to the part of the story where the Victims get their Revenge in this continuously repeating "Ground Hog Day" rhapsody?!!! Seriously!

    I was waxing melanchol...y...or something tonight. And started writing a piece revolving around the "Fire" M used to emanate and ignite around issues and objects of derision that required more than Tea Parties. Ugh. How "polite". I'll finish it soon.

    I would think Exposure, formal charges, and incarceration or death for Treason would be a fitting end for the perpetrators of the crimes we have been witnessing.

    Are Americans SHEEP?!!!

    Or lemmings? I really liked that pic Casa Zaza put up once upon a time of people running into a big hole. Let's hope it is not autobiographical of the American people. I keep hoping they're gonna wake up, and rise up in justified anger, and CLEAN UP THIS MESS WE'VE ALLOWED OUR COUNTRY TO FALL INTO...

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  3. yeh boomer, the committee keeps using the same trick over and over, like dunne said :

    crisis

    reaction

    solution

    one hand creates the crisis
    the herd reacts with fear, anger, reptile brain
    the other hand supplies the solution

    purrrr ....

    the amygdalae perform a primary role in the processing and memory of emotional reactions
    http://en.wikipedia.org/wiki/Amygdala

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  4. I am so happy to have sustained the core of coto with you boom and pod.

    With the crew we have held together, we will have to make some decisions of how to get further into the mainstream of internet and talk radio and get the message out.

    Your "devisive piece" is critical to the movement. Pod's gracious and kind acknowledgement to the TRIAD dialectic formula has been very gratifying for me.

    I have made predicitions and posted them before most have materaliized with near perfect accuracy. But I should state immediately, I AM NOT PSYCHIC nor THAT SMART.

    I can't read the future but I can read a map!

    Revelations and History confirm the KEY TRIAD and all the small interior ones. The Core Committee executes a TRIAD on an exact timetable. The Administrators are given this single timetable only. Never, do they know the complete itinerary (for a better word) . The adminitrators convert key enablers to action.

    Everyone including you and I are there for conversion if needed. When we look at the perpetr[aitors], we have to consider Greed, Ego, Politico-Ideology, Patriotism, Fear, Seduction, Intimidation or worse, of which one or many will provide the means by which you will inducted.

    "Conspiracy is inadequate to describe the TRIAD because it is incorrect to lump the perpetrators into this committee."

    "How easy it is for ATK to open up a manufacturing plant in PA, USA and offer good paying jobs to unemployed hungry Americans to enable the dispersing of a million land mines among the playgrounds in Afghanistan"

    "There we can find the best use of divisive social indoctrination in which cognitive dissonance manifests to doublethink, followed by false dichotomy transition into a seductive or seditious groupthink."

    As the enabler in question, I must rethink the dichotomy of War and Peace and confirm our status in the TRIAD [War-Warfare-Peace] and accept and confirm the COMMITTEE's master TRIAD [CHAOS-ORDER-CONTROL]

    I close with one of my favorite Christmas Carols

    God Bless all of you.







    Us, and them
    And after all were only ordinary men.
    Me, and you.
    God only knows it's noz what we would choose to do.
    Forward he cried from the rear
    And the front rank died.
    And the general sat and the lines on the map
    Moved from side to side.
    Black and blue
    And who knows which is which and who is who.
    Up and down.
    But in the end it's only round and round.
    Haven't you heard it's a battle of words
    The poster bearer cried.
    Listen son, said the man with the gun
    There's room for you inside.

    I mean, they're not gunna kill ya, so if you give em a quick short,
    Sharp, shock, they wont do it again. dig it? I mean he get off
    Lightly, cos I wouldve given him a thrashing - I only hit him once!
    It was only a difference of opinion, but really...i mean good manners
    Don't cost nothing do they, eh?

    Down and out
    It can't be helped but there's a lot of it about.
    With, without.
    And who'll deny it's what the fightings all about?
    Out of the way, it's a busy day
    Ive got things on my mind.
    For the want of the price of tea and a slice
    The old man died.

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  5. Harvard Swaps Are So Toxic Even Summers Won’t Explain (Update2)

    By Michael McDonald, John Lauerman and Gillian Wee
    Dec. 18 (Bloomberg) -- Anne Phillips Ogilby, a bond attorney at one of Boston’s oldest law firms, on Oct. 31 last year relayed an urgent message from Harvard University, her client and alma mater, to the head of a Massachusetts state agency that sells bonds. The oldest and richest academic institution in America needed help getting a loan right away.

    As vanishing credit spurred the government-led rescue of dozens of financial institutions, Harvard was so strapped for cash that it asked Massachusetts for fast-track approval to borrow $2.5 billion. Almost $500 million was used within days to exit agreements known as interest-rate swaps that Harvard had entered to finance expansion in Allston, across the Charles River from its main campus in Cambridge, Massachusetts...

    Read the article at http://www.bloomberg.com/apps/news?pid=20601087&sid=aHQ2Xh55jI.Q

    Now folks – Obama hired this guy (Larry Summers), this freaking narcissistic Criminal…as his Economic Advisor?!!! WTF!!! Do we the Proles not see through the charade, the Heist that is going on? Did this punk Summers bear any responsibility financially or otherwise for driving Harvard’s finances into the ditch? Nope – he got promoted among the elites and is lauded for his economic steering of the Bust Bus.

    Here in a capsule, a case study, we see what is so terribly, horribly, disfiguringly wrong with the systems and sickos making policy for the masses. Seriously – they should ALL be committed to life in prison at hard labor in a Halliburton or worse encampment. Force them to feed and haul water for the masses in Somalia or some other barren desert.

    Shit like this farce makes me Livid {think Billy Jack Mad}. I’m so sick of it. Its going to be up to the People to hand out the punishment to the layers and layers of these “parasites upon humanity” because we can see there is No Justice to be found among the marbled floors and hollow halls of power in our nation.

    This is just one more freaking instance piled upon so many more, but “somewhere” the line must be drawn where it will “snap” and decapitate these snakes.

    Mr. Obama has Proven he is “comrade” of this clique, a cheerleader, a crony, a plant and a lackey all-in-one. When Executives make the kind of decisions this Clown and his other Circus Freaks make with regularity, we see a pattern of criminal intransigence that must be recognized and dealt with – immediately and sternly.

    Letters to Corrupt Congresspersons don’t count.

    Impeachment is called for Now!

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  6. Good article and a view to the segmental operations during the meltdown.

    "Harvard was flush at the time, with an endowment of $22.6 billion that had returned an average of 16 percent during the previous 10 fiscal years."

    Sounds like Madoff returns.

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  7. Excellent tune Patrick. I remember listening to it back when I was seventeen. Gave me goosebumps then, and still does now.

    I forgot just how good a guitar player David Gilmour is. He was once voted 'Best Fender Guitar Player Ever' in a poll in Guitarist magazine. I only seen Floyd once back in the 70's in Philly, what a concert! However, at the time I was too young to really appreciate Floyd's music.

    Gilmour can play the blues too! http://www.youtube.com/watch?v=gKNHFX8Dua4
    The snowflakes, how appropriate? I guess you're getting a nice chunk of this man-made snow fall in the beautiful Blue Ridge's N.C.?

    Sorry for the digression, but the Blues are what helps keep me sane.

    Regarding Jersey Girl's article; They Own It All (Including You)!

    http://newpeopleorder.com/

    I plan on obtaining a copy of this read.

    Be careful drivin Patrick in those slick, steep mountains. Was only there once in the summer. Chimney Rock and Lake Lure, N.C. it was breath taking! As nice, if not nicer than the Adirondacks in upstate N.Y. What I remember most about the Blue Ridge is that they are "very steep!" Dam steep! And slick in the rain, and I guess even more so in the snow.

    Drive safe.

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  8. the sum of the angles
    equal 180 degrees

    purrrrrrrrr .........

    The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said. http://www.bloomberg.com/apps/news?pid=20601087&sid=aSp9VoPeHquI

    There is a need for a third currency
    to serve as a third pillar,
    which would also give an opportunity
    for the two weak pillars to heal.
    http://www.businessweek.com/globalbiz/content/dec2009/gb20091218_546021.htm

    you see in this world
    there are two kinds of people my friend
    those with loaded guns
    and those who dig

    http://www.youtube.com/watch?v=sXldafIl5DQ

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  9. Love"us and them". One of the best if not THE best of Pink Floyd my favorite band, bar none. Gilmour is fan bloody tastic .

    Thanks for sharing Patrick. And I'll echo Munich, please stay safe and warm in those mountains. We expect up to 20" where I live just 30 miles from the coast. It's a massive storm, I can't imagine how much you'll be digging out from.

    Here's another of my favorite Floyd songs with conscience where Dave plays like an absolute angel.






    On the turning away
    From the pale and downtrodden
    And the words they say
    Which we won't understand
    "Don't accept that what's happening
    Is just a case of others' suffering
    Or you'll find that you're joining in
    The turning away"
    It's a sin that somehow
    Light is changing to shadow
    And casting it's shroud
    Over all we have known
    Unaware how the ranks have grown
    Driven on by a heart of stone
    We could find that we're all alone
    In the dream of the proud
    On the wings of the night
    As the daytime is stirring
    Where the speechless unite
    In a silent accord
    Using words you will find are strange
    And mesmerised as they light the flame
    Feel the new wind of change
    On the wings of the night
    No more turning away
    From the weak and the weary
    No more turning away
    From the coldness inside
    Just a world that we all must share
    It's not enough just to stand and stare
    Is it only a dream that there'll be
    No more turning away?

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  10. Thanks cotopals. I took the dogs out this morning and lost the little man in a drift. He was shaken up but in good shape now by the fire.

    I have spent a lot of time lately listening to my old albums and revisiting the lyrics of the greats.

    Pink Floyd, Mooody Blues and Emerson, Lake and Palmer.

    Munich, I cut my teeth on a Gibson Firebird when I was a band member. Rock on Coto.







    Why do you stare
    Do you think that I care?
    You've been misled
    By the thoughts in your head

    Your words waste and decay
    Nothing you say
    Reaches my ears anyway
    You never spoke a word of truth

    Why do you think
    I believe what you said
    Few of your words
    Ever enter my head

    I'm tired of hypocrite freaks
    With tongues in their cheeks
    Turning their eyes as they speak
    They make me sick and tired

    Are you confused
    To the point in your mind
    Though you're blind
    Can't you see you're wrong
    Won't you refuse
    To be used
    Even though you may know
    I can see you're wrong
    Please, please, please open their eyes
    Please, please, please don't give me lies

    I ruled all of the earth
    Witnessed my birth
    Cried at the sight of a man
    And still I don't know who I am

    I've seen paupers as kings
    Puppets on strings
    Dance for the children who stare
    You must have seen them everywhere

    THE COTO ANTHEM FOR ME ( I rejected Brain Salad Surgery as you all did as well)

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  11. Twelve miles north Lake Lure Munich. You picked a pristine location there. I deposit a photo from the Blue Ridge Global Warming Site.

    http://puddydunne.files.wordpress.com/2009/12/12-19-09_1016.jpg?w=426

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  12. pod's not purring

    Under Cassano's direction, the division committed AIG to insure what turned out to be more than a trillion dollars of junk quality loans held by banks.
    http://abcnews.go.com/Blotter/popup?id=7218582

    Cassano answered to William N Dooley
    http://www.zoominfo.com/people/Dooley_William_5284479.aspx

    "what's duly his a man receives
    this law not even God can break
    I never cry nor do I grieve
    for what is mine no man can take"

    and Mr. Dooley answered to Win J. Neuger
    http://www.google.com/search?hl=en&client=firefox-a&channel=s&rls=org.mozilla%3Aen-US%3Aofficial&q=Win+J.+Neuger+%28+Council+on+Foreign+Relations+%29&btnG=Search&aq=f&oq=&aqi=

    Kevin McGinn, chief credit officer and chairman of the committee http://www.directorship.com/top-risk-officers-remain-at-aig/

    "By the way, the head of Risk Control for the whole of AIG, Bob Lewis, is still working in that role today." http://www.huffingtonpost.com/2009/03/27/aig-risk-officers-remain_n_179907.html

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