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Thursday, October 27, 2011

Watch Your Back Occupiers--The Dark Side Is Infiltrating

The mayor of Atlanta has stated that there was a guy with an assault weapon walking around the protest site and he did not feel it was safe for the public to have such a person doing that. Yet, it is legal in the state of Georgia to allow for the open carrying of weapons and assault rifles. This is their law, yet the mayor did not like the fact that a person protesting was carrying such a weapon and obeying the law. I guess, looking scary is a crime in Atlanta.

Hey Mayor--is it or is it NOT permitted to carry? It is YOUR law.

Who was this guy, anyway? Did the police question him? Was he an insider from the police, or the FBI, or the CIA? Was he from Homeland Security? Was he a plant from the Dark Side of the State House?
Sabotage and infiltration of groups is a way they do it.

What we have now is a push from the Wall Street elite pulling the strings of their political hacks running local and state governments to stop the Occupy movement.

They are afraid of the momentum. Currently, 33% are in favor with the protesters. In a month or two or three, it might grow to 50%. This cannot be stopped now.

The movement is growing. The energy is building. The support is mounting.

We have more and more working people stepping out onto the street in support.

The corporate and financial Wall Street elite who have corrupted the system, stolen the taxpayer's wealth from under their mattresses and bank accounts and retirement funds are upset that their golden apple cart is being tipped over.

Barack Obama has morphed into Warren G. Harding, a president who supported the corrupters. Obama has his head in the sand, his mouth is glued shut, and keeps his hands in his pockets. He is a disgrace. He should be vocal about the police brutality, the wounding of Americans who are protesting against the corruption and theft of our wealth, along with the transfer of our wealth worldwide to various foreign banks and financial institutions as America falls into decay and the unemployment figures grow; and, that being poor and low income has turned into a death sentence because not everyone has access to health care.

Obama is more about having Jeffery Immelt, from GE, raise cash for his re-election campaign.

Obama needs to step down from his office and allow other Democrats run against the GOPers, whose agenda is even scarier than what has gone on to-date.

We need regime change!!!! And, Mr. Magic Underpants Mitt Romney is NOT the change we need!!!


Occupy Wall Street: Not Here To Destroy Capitalism, But To Remind Us Who Saved It

(If the corporate Wall Street and political elite believe they can shut down this working class revolt against corporate corruption, and the theft of our financial system by the oligarchs, they are mistaken!)

Over at The New York TimesNicholas Kristof has enunciated an excellent defense of the Occupy Wall Street demonstrators, aimed at dispelling the notion that the Occupiers are some single-minded mass movement targeting the capitalist system for destruction. In fact, Kristof says, "while alarmists seem to think that the movement is a 'mob' trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability."
Kristof says that what Occupy Wall Street represents is "a chance to save capitalism from crony capitalists" and an entrenched system of "government-backed featherbed[ding]" that amounts to "socialism for tycoons and capitalism for the rest of us." As Kristof notes, he's seen this before: Years of covering the '90s-era Asian financial crisis brought Kristof face-to-face with the same critique. It's now unspooling in the United States and having its own deleterious effects, such as the near-intractable income inequality that was, at long last, reported on fully this week (perhaps thanks to the presence of the Occupiers themselves).
Kristof's right to suggest that the Occupiers aren't "half-naked Communists aiming to bring down the American economic system." This isn't the "Project Mayhem" of Chuck Palahniuk novels -- we're talking about a movement that's spurring people to move their money from "too big to fail" banks into credit unions. That's not exactly "smash the system." That's more like a group of people seeking out a means to maximize their power within the system, or using consumer choice to preserve, enhance and improve the best parts of the system. As Matt Taibbi notes in a fitting companion piece to Kristof's, "These people aren't protesting money. They're not protesting banking. They're protesting corruption on Wall Street."
Taibbi calls them "cheaters," Kristof calls them "cronies," but the concept of "corruption" is intrinsic to both critiques. In fact, one could well argue that the truest evidence of Wall Street corruption is the fact that prior to the economic collapse, what Wall Street was practicing wasn't really "capitalism" at all.
And here, Kristof absolutely nails it:
Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It's the possibility of failure that creates the opportunity for triumph. Yet many of America's major banks are too big to fail, so they can privatize profits while socializing risk.
Way back when Julie Satow and I were attempting to explain the role the credit derivatives and AIG played in destroying our future, there was one question that resonated with me: What happened to that elementary ingredient of capitalism known as risk? If you want to tell the story of what was going on prior to September of 2008 in one sentence, here you go: Wall Street came to believe that they had finally figured out how to rid themselves of risk -- that "possibility of failure" -- entirely, and thus outsmart capitalism. (Calvin Trillin puts this more artfully than I ever could, here.) Firm in that belief, they bet and they hedged and they overleveraged themselves to the point of pure abuse.
But as we all saw in the fall of 2008, the risk never went away. Rather, it was lying in wait to provide us with a dramatic demonstration of the folly of forgetting about risk. It was very quickly revealed that the pure product of Wall Street's easy-money casino game was actually a coiled-up cock-up cobra ready to bite the global economy in the face, and when it bit, it plunged the global economic system to the brink of calamity.

There are a lot of ways to tell the story about how the world was saved, but the Occupy Wall Street is starting to remind the world of one narrative in particular. When everything seemed ready to collapse, there was one group of people left in this world who had enough cred on the street to save the day -- the American taxpayers. They were the only people left in whom anyone would put their full faith and credit as a sure thing. And it's easy to see why, seeing as they had built the greatest nation on earth out of their combined blood, sweat and tears.
It was the American taxpayers who went to war, on everyone's behalf, with that dread cobra, and they sacrificed $4.7 trillion of their own money to bring everyone back from the brink. That's $4.7 trillion that the American taxpayer willingly parted with, money that could have been put to any other priority. There's still about a trillion and half that hasn't even been returned -- but that's not where our focus should be. Our focus should be on the other scars left by that sacrifice. A massive unemployment crisis, people being kicked out of their homes, college graduates leaving their institutions of higher learning without a clear grasp on a future and saddled with debt (because that's what they were told to do to get ahead in this world) -- that's where our focus should have been, but wasn't, until those folks started gathering in the streets.
Three years later, if you even allude to that sacrifice, you still elicit from all sides the cry of "class warfare." And I'll admit, it's a pretty seductive metaphor. Not long ago, my counter to that charge was to point out that the Occupiers were an encampment of casualties and refugees from the last class war. But I've since realized that while this is a good, glib line, the politics are too convenient. In reality, the people of Occupy Wall Street are the people who fought the last war on everyone's behalf. They are a neglected band of veterans from the Battle To Save The Global Economy. They're attempting to remind America that we all fought on the same side.
And, yes, as Kristof suggests, they are asking for accountability. From cronies, from cheaters -- if you really want to know who owes us accountability, go ahead and read this "Cheat Sheet" from ProPublica. All the devils are there.
Naturally, the Wall Street gentry want to get back to the old way of doing business, and they're calling for further deregulation and less oversight of their activities. They scoff at the notion that our bailout of their failure requires them to return to making productive investments in their saviors' futures. And they flaunt the fact that they've reneged on the social contract, using our bailout money to procure an army of lobbyists to return things to the status quo ante.
Three years on, Wall Street still believes they're smart enough to beat capitalism. But they should really stroll down to Zuccotti Park and take stock of the weakened and demoralized army that won't be strong enough to rescue them when they fuck up again.
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(Here are the cheaters, the thieves and crooks from Wall Street that made out like bandits with taxpayer dollars)

Widespread demonstrations in support of Occupy Wall Street have put the financial crisis back into the national spotlight lately.
So here’s a quick refresher on what’s happened to some of the main players, whose behavior, whether merely reckless or downright deliberate, helped cause or worsen the meltdown. This list isn’t exhaustive -- feel welcome to add to it.

Mortgage originators

Mortgage lenders contributed to the financial crisis by issuing or underwriting loans to people who would have a difficult time paying them back, inflating a housing bubble that was bound to pop. Lax regulation allowed banks to stretch their mortgage lending standards and use aggressive tactics to rope borrowers into complex mortgages that were more expensive than they first appeared. Evidence has also surfaced that lenders were filing fraudulent documents to push some of these mortgages through, and, in some cases, had been doing so as early as the 1990s. A 2005 Los Angeles Timesinvestigation of Ameriquest – then the nation’s largest subprime lender – found that “they forged documents, hyped customers' creditworthiness and ‘juiced’ mortgages with hidden rates and fees.” This behavior was reportedly typical for the subprime mortgage industry. A similar culture existed at Washington Mutualwhich went under in 2008 in the biggest bank collapse in U.S. history.
Countrywide, once the nation’s largest mortgage lender, also pushed customers to sign on for complex and costly mortgages that boosted the company’s profits. Countrywide CEO Angelo Mozilo was accused of misleading investors about the company’s mortgage lending practices, a charge he denies.  Merrill Lynch andDeutsche Bank both purchased subprime mortgage lending outfits in 2006 to get in on the lucrative business. Deutsche Bank has also been accused of failing to adequately check on borrowers’ financial status before issuing loans backed by government insurance. A lawsuit filed by U.S. Attorney Preet Bharara claimed that, when employees at Deutsche Bank’s mortgage received audits on the quality of their mortgages from an outside firm, they stuffed them in a closet without reading them. A Deutsche Bank spokeswoman said the claims being made against the company are “unreasonable and unfair,” and that most of the problems occurred before the mortgage unit was bought by Deutsche Bank.
Where they are now: Few prosecutions have been brought against subprime mortgage lenders. Ameriquest went out of business in 2007, and Citigroup bought its mortgage lending unit. Washington Mutual was bought by JP Morgan in 2008. A Department of Justice investigation into alleged fraud at WaMu closed with no chargesthis summer. WaMu also recently settled a class action lawsuit brought by shareholders for $208.5 million. In an ongoing lawsuit, the FDIC is accusing former Washington Mutual executives Kerry Killinger, Stephen Rotella and David Schneider of going on a "lending spree, knowing that the real-estate market was in a 'bubble.'" They deny the allegations.
Bank of America purchased Countrywide in January of 2008, as delinquencies on the company’s mortgages soared and investors began pulling out. Mozilo left the company after the sale. Mozilo settled an SEC lawsuit for $67.5 million with no admission of wrongdoing, though he is now banned from serving as a top executive at a public company. A criminal investigation into his activities fizzled out earlier this year. Bank of America invited several senior Countrywide executives to stay on and run its mortgage unit. Bank of America Home Loans does not make subprime mortgage loans. Deutsche Bank is still under investigation by the Justice Department.

Mortgage securitizers

In the years before the crash, banks took subprime mortgages, bundled them together with prime mortgages and turned them into collateral for bonds or securities, helping to seed the bad mortgages throughout the financial system. Washington Mutual,Bank of AmericaMorgan Stanley and others were securitizing mortgages as well as originating them. Other companies, such as Bear Stearns, Lehman Brothers, andGoldman Sachs, bought mortgages straight from subprime lenders, bundled them into securities and sold them to investors including pension funds and insurance companies.
Where they are now: This spring, New York’s Attorney General launched a probe into mortgage securitization at Bank of America, JP Morgan, UBS, Deutsche Bank, Goldman Sachs and Morgan Stanley during the housing boom. Morgan Stanley settled with Nevada’s Attorney General last month following an investigation into problems with the securitization process.
As part of a proposed settlement with the 50 state attorneys general over foreclosure abuses, several big banks were offered immunity from charges related to improper mortgage origination and securitization. California and New York have withdrawn from those talks.

The people who created and dealt CDOs

Once mortgages had been bundled into mortgage-backed securities, other bankers took groups of them and bundled them together into new financial products called Collateralized Debt Obligations. CDOs are composed of tiers with different levels of risk. As we’ve reported, a hedge fund named Magnetar worked with banks to fill CDOs with the riskiest possible materials, then used credit default swaps to bet that they would fail. Magnetar says that the majority of its short positions were against CDOs it didn’t own. Magnetar also says it didn’t choose what went its own CDOs, though people involved in the deals who spoke to ProPublica contradict this account.
American International Group’s London-based financial products unit was among the entities that provided credit default swaps on CDOs. Though the business of insuring the risky securities made AIG large short-term profits, it eventually brought the company to the brink of collapse, prompting an $85 billion government bailout.
Merrill Lynch, Citigroup, UBSDeutsche BankLehman Brothers andJPMorgan all made CDO deals with Magnetar. The hedge fund invested in 30 CDOs from the spring of 2006 to the summer of 2007. The bankers who worked on these deals almost always reaped hefty bonuses. From our story:
Even today, bankers and managers speak with awe at the elegance of the Magnetar Trade. Others have become famous for betting big against the housing market. But they had taken enormous risks. Meanwhile, Magnetar had created a largely self-funding bet against the market.
When banks found CDOs hard to sell, some of them, notably Merrill Lynch andCitibankbought each other’s CDOs, creating the illusion of true investors when there were almost none. That was one way they kept the market for CDOs going longer than it otherwise would have. Eventually CDOs began purchasing risky parts of other CDOs created by the same bank. Take a look at our comic strip explaining self-dealing, and our chart detailing which banks bought their own CDOs.
Goldman Sachs and Morgan Stanley also made similar deals in which they created, then bet against, risky CDOs. The hedge fund Paulson & Co helped decide which assets to put inside Goldman’s CDOs.
Where they are now: Overall, the banks and individuals involved in CDO deals haven’t been convicted on criminal charges. The civil suits against them have produced fines that aren’t very big compared to the profits they made in the leadup to the financial crisis. JP Morgan paid $153.6 million to settle an SEC suit alleging they hadn’t disclosed to investors that Magnetar was betting against Morgan’s CDO. Citigroup just agreed to pay a $285 million fine to the SEC for betting against one of its mortgage-related CDOs. The lawsuit doesn’t mention dozens of similar deals made by Citi.
Magnetar is still thriving (the deals they made weren’t illegal according to the rules at the time). In 2007, Magnetar’s founder took home $280 million, and the fund had $7.6 billion under management. The SEC is considering banning hedge funds and banks frombetting against securities of their own creation. As of May 2010, federal prosecutors were investigating Morgan Stanley over their CDO deals, and Goldman Sachs paid $550 million last year to settle a lawsuit related to one of theirs. Only one Goldman employee, Fabrice Tourre, has been charged criminally in connection to the deals.
Though recorded phone calls suggest that former AIG CEO Joseph Cassano misled investors about the credit default swaps that contributed to his company’s troubles, the evidence wasn’t airtight, and federal probes against him fell apart in 2010. Cassano’s lawyers deny any wrongdoing.

The ratings agencies

Standard and Poor’sMoody’s and Fitch gave their highest rating to investments based on risky mortgages in the years leading up to the financial crisis. A Senate investigations panel found that S&P and Moody’s continued doing so even as the housing market was collapsing. An SEC report also found failures at 10 credit rating agencies.
Where they are now: The SEC is considering suing Standard and Poor’s over one particular CDO deal linked to the hedge fund Magnetar. The agency had previouslyconsidered suing Moody’s, but instead issued a report criticizing all of the rating agencies generally. Dodd-Frank created a regulatory body to oversee the credit rating agencies, but its development has been stalled by budgetary constraints.

The regulators

The Financial Crisis Inquiry Commission [PDF] concluded that the Securities and Exchange Commission failed to crack down on risky lending practices at banks and make them keep more substantial capital reserves as a buffer against losses. They also found that the Federal Reserve failed to stop the housing bubble by setting prudent mortgage lending standards, though it was the one regulator that had the power to do so.
An internal SEC audit faulted the agency for missing warning signs about the poor financial health of some of the banks it monitored, particularly Bear Stearns. [PDF] Overall, SEC enforcement actions went down under the leadership of Christopher Cox, and a 2009 GAO report found that he increased barriers to launching probes and levying fines.
Cox wasn’t the only regulator who resisted using his power to rein in the financial industry. The former head of the Federal Reserve, Alan Greenspan, reportedlyrefused to heighten scrutiny of the subprime mortgage market. Greenspan later said before Congress that it was a mistake to presume that financial firms’ own rational self-interest would serve as an adequate regulator. He has also said he doubts the financial crisis could have been prevented.
The Office of Thrift Supervision, which was tasked with overseeing savings and loan banks, also helped to scale back their own regulatory powers in the years before the financial crisis. In 2003 James Gilleran and John Reich, then heads of the OTS andFederal Deposit Insurance Corporation respectively, brought a chainsaw to a press conference as an indication of how they planned to cut back on regulation. The OTS was known for being so friendly with the banks -- which it referred to as its “clients” -- that Countrywide reorganized its operations so it could be regulated by OTS. As we’ve reported, the regulator failed to recognize serious signs of trouble at AIG, anddidn’t disclose key information about IndyMac’s finances in the years before the crisis. The Office of the Comptroller of the Currency, which oversaw the biggest commercial banks, also went easy on the banks.
Where they are now: Christopher Cox stepped down in 2009 under public pressure. The OTS was dissolved this summer and its duties assumed by the OCC. As we’ve noted, the head of the OCC has been advocating to weaken rules set out by the Dodd Frank financial reform law. The Dodd Frank law gives the SEC new regulatory powers, including the ability to bring lawsuits in administrative courts, where the rules are more favorable to them.

The politicians

Two bills supported by Phil Gramm and signed into law by Bill Clinton created many of the conditions for the financial crisis to take place. The Gramm-Leach-Bliley Act of 1999 repealed all the remaining parts of Glass-Steagall, allowing firms to participate in traditional banking, investment banking, and insurance at the same time. The Commodity Futures Modernization Act, passed the year after, deregulated over-the-counter derivatives – securities like CDOs and credit default swaps, that derive their value from underlying assets and are traded directly between two parties rather than through a stock exchange. Greenspan and Robert Rubin, Treasury Secretary from 1995 to 1999, had both opposed regulating derivatives.  Lawrence Summers, who went on to succeed Rubin as Treasury Secretary, also testified before the Senate that derivatives shouldn’t be regulated.
It’s worth noting the substantial lobbying efforts that accompanied the deregulation process. According to the FCIC [PDF], between 1999 and 2008 the financial industry spent $2.7 billion lobbying the federal government, and donated more than $1 billion to political campaigns. While deregulation took place mainly under Clinton’s watch,George W. Bush is faulted for not doing more to catch the out-of-control housing market.
As president of the New York Fed from 2003 to 2009, Timothy Geithner also missed opportunities to prevent major financial firms from self-destructing. As we reported in 2009:
Although Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued. That was largely because he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound.
Henry Paulson, Treasury Secretary from 2006 to 2009, has been criticized for being slow to respond to the crisis, and introducing greater uncertainty into the financial markets by letting Lehman Brothers fail. In a 2008 New York Times interview, Paulson said he had no choice.
Where they are now: Gramm has been a vice chairman at UBS since he left Congress in 2002. Greenspan is retired. Summers served as a top economic advisor to Barack Obama until November 2010; since then, he’s been teaching at Harvard. Geithner is currently serving as Treasury Secretary under the Obama administration.

Executives of big investment banks

Executives at the big banks also took actions that contributed to the destruction of their own firms. According to the Financial Crisis Inquiry Commission report [PDF], the executives of the country’s five major investment banks -- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley – kept such small cushions of capital at the banks that they were extremely vulnerable to losses. A report compiled by an outside examiner for Lehman Brothers found that the company washiding its bad investments off the books, and Lehman’s former CEO Richard S. Fuld Jr. signed off on the false balance sheets. Fuld had testified before Congress two years before that the actions he took prior to Lehman Brothers’ collapse “were both prudent and appropriate” based on what he knew at the time. Other banks also kept billions in potential liabilities off their balance sheets, including Citigroup, headed by Vikram Pandit.
In 2010, we detailed how a group of Merrill Lynch executives helped blow up their own company by retaining supposedly safe – but actually extremely risky –  portions of the CDOs they created, paying a unit within the firm to buy them when almost no one else would.
The New York Times’ Gretchen Morgenson described how the administrative decisions of some top Merrill executives helped put the company in a precarious position, based on interviews with former employees.
Where they are now: In 2009, two Bear Stearns hedge fund managers were cleared of fraud charges over allegedly lying to investors. A probe of Lehman Brothers stalled this spring. Merrill Lynch was sold to Bank of America in the fall of 2008. As for the executives who helped crash the firm, as we reported in 2010, “they walked away with millions. Some still hold senior positions at prominent financial firms.” Dick Fuld is still working on Wall Street, at an investment banking firm. Vikram Pandit remains the CEO of Citigroup.

Fannie Mae and Freddie Mac

The government-sponsored mortgage financing companies Fannie Mae and Freddie Mac bought risky mortgages and guaranteed them. In 2007, 28 percent of Fannie Mae’s loans were bought from Countrywide. The FCIC found [PDF] that Fannie and Freddie entered the subprime game too late and on too limited a scale to have caused the financial crisis. Non-agency-securitized loans had an increased share of the market in the years immediately preceding the crisis.
Many believe that The Community Reinvestment Act, a government policy promoting homeownership for low-income people, was responsible for the growth of the subprime mortgage industry. This idea has largely been discredited, since most subprime loans were made by companies that weren’t subject to the act
Still, Fannie and Freddie engaged in reckless behavior and sustained heavy losses as a result. The SEC slammed Fannie Mae for improper accounting under the leadership ofFrank Raines in the years preceding the financial crisis. A report by the Office of Federal Housing Enterprise Oversight found that Fannie and Freddie didn’t accurately disclose the risks they were taking and “deliberately and intentionally manipulat[ed] accounting to hit earnings targets.” [PDF]
Richard Syron and Daniel Mudd were at the helm of Freddie and Fannie, respectively, when they began to buy large numbers of subprime loans. Current and former Freddie Mac employees have accused Syron of ignoring warnings about the health of the loans the company was buying. Syron and Mudd maintain they could not have foreseen the rapid decline in the housing market.
Where they are now: As borrowers defaulted on mortgages they’d insured, Fannie and Freddie received a nearly $200 billion federal government bailout, and the government took over their operations. They are close to a settlement in an SEC lawsuit, and will neither admit nor deny that they failed to inform investors about risks of exposure to subprime mortgages. The Dodd Frank financial reform law stated thatserious reforms of Fannie and Freddie are needed, but didn’t address how they should be carried out. A report from Treasury Secretary Geithner called for the government to “ultimately wind down” the two mortgage giants. [PDF] In the meantime, taxpayers have been shouldering their legal fees. Former Freddie and Fannie executives Richard Syron and Daniel Mudd received Wells notices this spring, a sign that the SEC is considering legal action against them.