Goldman Sachs Stacked The Deck

After this reporting by McClatchy on how Goldman Sachs rigged their securities so that practically no matter what their investors would lose and they would win I have two thoughts running through my mind.

1. Why haven't the Goldman Sachs executives been summoned on the Hill for some hearings and grillings like the AIG and Citibank folks etc have?

2. Now that it turns out that many of the risky investments that helped bring down our financial system last year were dealing with mortgages in the Cayman islands rather than just mortgages here in the States, is there anyone still foolish enough to believe that the government forcing banks to give poor brown people mortgages was really the root cause?

I don't know how much longer the Obama administration and Congress can continue to effectively look the other way when it comes to Goldman Sachs and expect the people of this country not to act a damn fool.

Taibbi On AIG And The Financial Crisis

I was going to excerpt some of Matt Taibbi's column entitled "The Big Takeover" but there was so much information that I couldn't decide what to chose. So I am recommending you go over and read the whole thing. Its 8 pages but well worth your time.

Barney Frank Wants To Refresh Your Memory

Check out Barney Frank's post in HuffPo

Memory eventually fails us all, but apparently the decline strikes one party far more than the other.

In recent weeks, my friends across the aisle have expended a lot of breath proclaiming that the Democrats caused the present financial crisis by failing to pass legislation to regulate financial services companies in the years 1995 through 2006.

There is only small one problem with this story -- throughout this entire period the Republicans were in complete charge of the House and for the most critical years they controlled the House, the Senate, and the Presidency.

snip

That is why I find it particularly flattering the Republicans now claim that in the years 1995 to 2006 I personally possessed supernatural powers which enabled me to force mighty Republican leaders to do my bidding. Choose your comic book hero -- I was all of them.

I wish I had the power to force the Republican leadership to do my bidding! If I had had that power, I would have used it to block the impeachment of Bill Clinton, to stop the war in Iraq, to prevent large tax cuts for the extremely wealthy, and to stop government intervention into the private life of Terri Schiavo. Yet that power eluded me, and I was unable to stop those things.

According to the Republicans' misty memories of the period before 2007, I allegedly singlehandedly blocked their determined efforts to regulate Fannie Mae and Freddie Mac, and my supposed intransigence literally caused the worldwide financial crisis.

Fortunately, we have tools to aid memory -- pencil and paper, word processing, transcripts, newspapers, and the Congressional record. And as described in the most reputable published sources, in 2005 I in fact worked together with my Republican colleague Michael Oxley, then Chairman of the Financial Services Committee, to write a bill to increase regulation of Fannie Mae and Freddie Mac. We passed the bill out of committee with an overwhelming majority -- every Democrat voted in favor of the legislation. However, on the House floor the Republican leadership added a poison pill amendment, which would have prevented non-profit institutions with religious affiliations from receiving funds. I voted against the legislation in protest, though I continued to work with Mr. Oxley to encourage the Senate to pass a good bill. But these efforts were defeated because President Bush blocked further consideration of the legislation. In the words of Mr. Oxley, no flaming liberal, the Bush administration gave his efforts 'the one-finger salute.'

snip

Ironically, this is the period in which I and my Democratic colleagues actually did possess the magical power needed to make real change in Washington -- we became the majority party. In March 2007, just two months after I became the Chairman of the Financial Services Committee for the first time, I moved quickly to forge a bill which would regulate Fannie Mae and Freddie Mac. The bill passed the House in May, with all 223 Democrats voting for it, and 103 Republicans voting against it. President Bush later signed that legislation into law.

Later in 2007, I introduced legislation to restrict subprime mortgages. The bill passed the Financial Services Committee and the House, but it did not pass the Senate, where because of the filibuster rule, the Republican minority actually does have the power to hobble the majority. The bill passed the full House with all 227 Democrats and 64 Republicans voting for it, and 127 Republicans voting against.

Ironically, those Republicans who now attack me most viciously and whose memories are the most impaired were among those who voted against both bills.

I really feel guilty even excerpting this much because it definitely deserves the full read so go check the whole thing out.

(h/t wvng)

The Sky WAS Falling

Last year when the Congress and the President responded to the financial crisis by rushing to sign into law the 700 billion dollar TARP bill many Americans, myself included, were skeptical about it. In the ensuing months, many of our concerns were borne out as Secretary Paulson totally flipped the script when it came to implementing the first tranch of TARP money and instead of buying up toxic assets as he pledged that he would, he pushed the money off onto big banks with little to no oversight or accountability. Now personally I still felt like the TARP program must have done something right because the financial markets didn't totally crash. Still you would be hard pressed to find an average citizen who would have a lot of good things to say about TARP. One of the main criticisms is that it was rushed through Congress which all but ensured it would be done wrong.

Of course the one thing missing from the conversation was WHY it was rushed through so fast. For whatever reason most of the people involved on the hill have been reluctant to say what was the impetus for such bold and swift I action. I guess they didn't think that many Americans would react well to knowing how close we came to the going off a cliff. Well at balloon-juice, John Cole had this video up that I feel like needs to get more play along with a partial transcript. Check it out.

I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on… Here’s the facts. We don’t even talk about these things.

On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened.

If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

As I hear that and read the transcript I have to say that scared the shit out of me. We have gone all these months pointing fingers and casting aspersions on the people in Congress for voting for the TARP bill never knowing how close we came, literally a matter of hours away, to a total economic collapse not only in this country but worldwide. Now thats not to absolve the execution of the TARP bill which on a lot of counts has been an abject failure. But if you were in that room when you heard this kind of a dire warning could you have really said no to doing SOMETHING to avert the crisis? Mind you, many Republicans and a few Dumb Ass Blue Dog Democrats DID decided to play russian roulette with the world economy. That just sheds more light on how wreckless these people are. I don't take back all of what I had bad to say about the TARP bill but I admit now that at least I understand the motivation behind it.