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January 17, 2010

Obama’s “Get Tough on Banks” Again Tries to Play the Public for Fools

Editor's Note:  This post was posted to this site (and to GoldmanSachs666) as a comment by an Anonymous reader.  I felt it was worthy of its' own post.  The post was taken from an article posted in naked capitalism.  Thank you to the reader who commented.   Read the full here

But more is that FDR from the very outset set himself up as an opponent of rule by the banking classes. He depicts them as failures and calls them unscrupulous and selfish. By contrast, have were ever heard Obama even hint that bankers were less than ethical? Let’s see, last December, he called them “fat cats“! Ah yes, of course, everyone knows a cat will steal a sardine if you aren’t watching. Yeah, that Obama sure knows how to dress those bankers down!

As we discussed at greater length earlier this week, this new “get our money back” idea is pure three card Monte. Put the spotlight on the TARP so everyone will ignore all the other massive subsidies that the banks have gotten, continue to receive, and are abusing. Those who claim many banks have “paid back the TARP” are missing (more likely choosing to obfuscate) the point: the TARP calculus grossly understates of the gives and the gets here (although as we have said before and will say again, Obama’s focus on the TARP is pure political expediency).

But this time, the Fed supports are far less covert (kinda hard to miss the ballooning of its balance sheet) and the banks are being pigs and undermining the purpose of this operation by skimming way too much off in employee pay. But it certainly appears no one has called the bankers into a private meeting and threatened them (and the regulators do hold the whip hand, even if they have been brainwashed into not recognizing that). Bernanke seems unable to see how his whole market manipulation program has been repurposed by the industry into welfare for the rich.

More important, despite the firms’ claims otherwise, >they are now effectively backstopped by the government, and they know it. They should be paying insurance premiums, NOW, hefty ones, for being beneficiaries of the “No more Lehmans” policy. But there is no desire for anything remotely resembling a full accounting from the crew in the Administration.

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  1. If we saw Black or Warren in real positions in the administration then we could start believing in change again:

    Bill Black: We Must Solve the Wall St. Bonus Problem

  2. Eliot Spitzer Talks To Fareed Zakaria About Wall Street Bonuses (VIDEO)

    Spitzer made the point that when it comes to holding banks accountable, the political divisions of left versus right are disappearing:

  3. Monday, January 18, 2010
    Are Securitized Mortgages Subject to Usury Laws?

    His argument is effectively the routes that allowed banks to evade state usury laws (a Supreme Court decision plus adept jurisdiction-shopping) may not extend to securitization trusts. And note this logic would apply to other types of securitizations, such as auto loans.

    These aren’t mere academic questions. Securitization trusts hold around 60% of mortgage debt and 25% of other consumer debt. There’s no law directly on point, but if I’m correct, then usury could be raised as a viable defense to the collection of a sizable portion of consumer debt. And states would have pretty broad rein to regulate the collection of debts held by securitization trusts.

  4. change...of leadership may help

    JANUARY 19, 2010.U.S. Aid Benefits Banks, not Homeowners

    Government support for the economy has helped banks make all manner of windfall profits. But have outsize returns in banks' mortgage operations deprived borrowers of lower mortgage rates?

    In 2009, there was a big jump in an industry margin used to gauge the profitability of banks' main mortgage business, selling home loans to government-supported Fannie Mae and Freddie Mac.

    In theory, if that margin had remained at narrower, historical levels, mortgage rates for borrowers could have been lower. That might have created sizable savings for homeowners over the life of their loans and breathed more life into the housing market.

  5. This is like the sheriff of Nottingham arresting one of the king's ain't gonna happen...I guess they do really take the public for fools........

    More Intentional Media Misdirection (Wall Street)

    But there are multiple crimes committed when one intentionally obscures, either through omission or commission, risks that one knows of and/or has been explicitly warned about.

    Henry Boerner, chairman of the Governance and Accountability Institute, said the publics rage against Wall Street is focused not so much on suspected criminal activity as on the unfairness, lack of ethics and irresponsibility of bankers. However, he said, it is the regulators who should be faulted for allowing Wall Street bankers to take risks, shatter the economy and walk away with big bonuses.

    "Voters, constituents, investors, employees, borrowers, homeowners, public officials, entrepreneurs — all have been impacted by the risky and at times reckless behavior of the leaders of the nations largest financial services organizations," he said.

  6. Watch starts @12:20

  7. US Does Not Have Capitalism Now: Stiglitz

    "An awful lot of people are not managing their own money," Stiglitz said. "In old-style 19th Century capitalism, I owned my company, I made a mistake, I bore the consequences."

    "Today, (at) most of the big companies you have managers who, when things go well, walk off with a lot of money. When things go bad the shareholders bear the costs," he said.

  8. Oh, The Truth Is The Banks Are Insolvent? (Still)

    RealtryTrac says that three million foreclosures are likely this year and that as much as 23% of all mortgages are currently in negative equity - that is, any second line is severely impaired on that property and may be worthless.

    All the BS and games has not changed a thing. The big banks all claim to be "committed" to working with the Treasury on these programs, but the fact of the matter is that if they are forced to recognize reality they are insolvent.

    But the conundrum is that in order to normalize the economy and lending environment we must stop playing games with home prices. House prices must contract to where average Americans can afford to buy them without using exotic and tricky loans.,-The-Truth-Is-The-Banks-Are-Insolvent-Still.html

  9. 10 reasons Obama is failing 95 million investors
    Commentary: Why his fat-cat bankers are destroying capitalism and democracy