Banks Lobbying, Financial Reforms & Who’s Recovering?
Seems like lots of good news lately. Have you noticed how well we’re now doing economically speaking. It’s really quite remarkable, don’t you think? I mean… it would seem that we went from the worst financial catastrophe and economic downturn since the Great Depression, to Happy-Days-Are-Here-Again-Bonuses-and-Profitability on Wall Street in under 18 months. Well, Bravo to the Obama Administration… Bravo!
It’s amazing that the administration has been able to get our economy back on track as quickly as they have, because they did seem to have done it without actually doing much of anything.
No financial reforms needed to be passed, no second economic stimulus bill… obviously we didn’t need tax cuts… the banks didn’t need to start lending again, foreclosures don’t seem to matter a lick, in fact our real estate markets are on their way up, as I’ve heard tell.
Heck, we even figured out how to have a “jobless” recovery… that’s right… apparently folks don’t even need jobs to bring our economy back from almost total insolvency in the financial sector to one that oozes prosperity from every pore.
Our stock market is on its way back to 14,000 where it was before, and should always be… oh sure, it inexplicably takes the occasional 1,000-point dive for an afternoon, but you’ve got to expect a glitch here and there. We’re even set to fix our health care system for something like 30 or 40 million people without it costing taxpayers a nickel. And toxic assets? Toxic… schmoxic. Maybe our streets really were paved with gold after all.
What were all those gloom and doomers all concerned about related to commercial real estate, Option Arms, and Alt-A loans anyway? I think the people that were saying all the negative stuff were obviously just part of the “Blame America First Crowd”.
I hope the next time this happens… you know, say a couple months from now… I, for one, hope the government just keeps it to themselves, because honestly, if it’s going to get fixed in under 18 months, I don’t really need to know about it. They had me all worked up over nothing, reading all those books… I’m so embarrassed.
Now, I have been reading that Europe has been nowhere near as fortunate. According to the financial press, beyond Greece, there is a whole list of European vacation destinations that are living on a razor’s edge, as far as financial turmoil is concerned. And the Euro, which is lower against the dollar than anyone expected, and is still falling… could potentially collapse, some say.
Well, I want to be the first to tell our European brothers and sisters not too worry, because I’m absolutely certain that we’ll be okay with sending our guys over there to show you all how to fix things up in a jiffy. I mean, we’ve done it here… from absolute disaster to prosperity all around us… and faster than you can say “Geithner, Bernanke and Bair… Oh my!”
Hey, if they can fix us in under 18 months, they can probably take care of you guys in a year, tops… I would think, anyway. We’ll tell them to bring the Goldman guys too. Just offer them a bonus for getting everything back on track. You’ll see, those guys will have you farting in silk in no time, if you’ll pardon the expression. And the best part is you won’t even have to change anything. Once everything’s too big to fail, you don’t have to worry about anything failing anymore. It’s a beautiful system.
I’ll tell you this… Americans have become an easy bunch to mollify, that’s for damn certain. Some people have said that we’ve got short memories in this country, but obviously that’s wrong, because no question about it… we’ve got absolutely no collective memory whatsoever. I don’t know whether we took one bong hit too many back in college or what, but we’ve got less ability to retain information than some farm animals.
William Black is a former bank regulator at the Federal Savings and Loan Insurance Corporation. Interviewed by Democracy Now! just last year, on October 15, 2009, he stated that our country’s current economic crisis was caused by “horrific, endemic fraud” on the part of the banking and finance industry, also saying that it was supported by essentially all sectors of our government.
“… Reform efforts on derivatives, for example, are a scandal,” said Black. The so-called reforms are designed to exempt “virtually all of the problem derivatives.”
Well, its certainly a good thing that those pesky derivatives, like credit default swaps and the like, didn’t cause too much problem this last time Wall Street took a shot at knocking the world off its financial axis.
Black also pointed out that foreclosures today are actually quite low as compared with delinquent mortgages.
He explained that there are many more seriously delinquent mortgages that are not being categorized as “foreclosures” in order to avoid recognizing losses. These understated losses combined with overstated gains, which are being enabled by accounting requirements “temporarily suspended” by the Treasury Department, as far as banks are concerned, are what’s fueling the unprecedented bonuses on Wall Street.
Well, I’ll be a monkey’s significant other.
And here I heard they were making all that money from the free unlimited borrowing from the Federal Reserve, and then the ability to lend it back to the Treasury Department through the purchase of bonds and the like. Yeah, so I guess that was all wrong… never did make much sense anyway… like who would ever allow anything like that to happen?
The shocking fact is that, since September of 2008, when the economic downturn imploded into a financial crisis, Congress has done almost nothing to impose new regulations on the banking and finance industries, and Treasury seems to be just fine with “extend and pretend” being the lead recovery strategy.
It’s as if the crisis never happened as far as Wall Street is concerned. Even as this is being written, proposals to impose regulations designed to prevent a reoccurrence of this financial catastrophe, and increase the protections of American consumers are being continually watered down by banking and finance industry lobbyists who have descended on Washington like locusts during a Biblical plague and whose job it is to make sure that only the most minimal reforms ever become reality.
The relationship between Congress and Wall Street has been compromised. According to the Washington Post, the number of lobbyists on “The Hill” doubled between 2000 and 2005, to 34,750… almost 70 per congressional representative! How can we expect our elected representatives to place the interests of the American citizen over those of banks and large corporations? It would seem obvious that we cannot.
The situation is dire. While bank executives are claiming record profits and taking home record bonuses as a result, American families are increasingly circling the proverbial drain.
To-date, seven million homes have been lost to foreclosure, and Goldman Sachs sees 14 million more coming over the next several years. The homebuyer tax credit is over and home prices, like rents, are continuing to fall. Even in areas claiming to be experiencing some appreciation, the shadow inventory, homes that have gone back to the bank, but have not been put back on the market, is still large enough to keep Africa in the shade, and getting larger all the time.
Headline unemployment is now 9.9%, although, if you count those that want a job but have given up looking for one, those that have part-time jobs but want full-time work, and the number of people no longer appearing on the unemployment rolls because their benefits have run out, et al, you get a more meaningful picture of the unemployment rate in this country today. Referred to as “U6,” by the Bureau of Labor Statistics, and never seen in the headlines, that rate is now 17.1%.
And the number of Americans unemployed for more than 26 weeks has continued to rise, reaching 6.7 million in April, and representing over 45% of the total number of unemployed Americans.
At the end of the first week of May, the Bureau of Labor Statistics reported an increase of 290,000 jobs, and headline unemployment went up, from 9.7% to 9.9%. But, the Bureau’s “Birth/Death Model,” which determines the number of monthly jobs based on assumptions about the “birth and death” of businesses in this country, added 188,000 of those jobs.
Now, as Mike “Mish” Shedlock’s Global Economic Analysis has pointed out on countless occasions, the Bureau’s Birth/Death Model is so screwed up that you cannot simply subtract that number from the total to arrive at the actual number, but unquestionably some percentage of the 290,000 jobs being reported is hogwash.
Also, someone should probably take note that the Bureau’s reported 290,000 jobs is just slightly higher than the number reported by the ADP April 2010 National Employment Report, which estimated just 32,000 jobs. As Mish said: “Someone is wildly off, and I expect that to be the Bureau of Labor Statistics, not ADP.” Golly-gosh, he’s so cynical, don’t you think? I don’t know why he’d think a thing like that, do you? He must not trust our government’s numbers. Well, shame on him.
The Bureau of Labor Statistics says that the Birth/Death Model assumptions are made according to estimates of where the Bureau believes we are in the economic cycle, so we know that the model contributed to some percentage of the total jobs reported, but the Bureau will not disclose how much. Ahhh, I love the smell of transparency in the morning… it smells like… horse pucky.
Also in this month’s reported jobs were found the 66,000 temporary workers hired by the U.S. Census, so you can safely subtract that number from the “recovery”. And next month, the “Census Effect” is slated to add 500,000 temporary positions to the “Happiness Report”. As Mish points out, these poor souls will be fired by August, but so what? Don’t expect our government not to be bragging about how next month’s numbers are further evidence of our recession having ended.
He also shows that the details of May’s report only show 59,000 government jobs being added, which means that the states have cut back by 73,000 jobs, and Mish says we should expect this trend to continue.
Other happy news about our economic recovery being all but assured should also be tempered by the release of April’s “Ceridian-UCLA Pulse of Commerce Indexâ„¢ (PCI)” report, which is published by UCLA’s Anderson School of Management. The PCI dropped by 0.3 percent in April, which suggests that the recovery may have stalled.
“The latest PCI numbers are disappointing and cast considerable doubt on the strength of the recovery and the strength of GDP numbers for 2010,” said Ed Leamer, the PCI’s chief economist.
“The PCI is based on an analysis of real-time diesel fuel consumption data from over the road trucking tracked by Ceridian, a global provider of electronic and stored value card payment services and human resources solutions.”
Click here for a 2 minute animated video on the Ceridian Index, courtesy of Global Economic Analysis reporting on the PCI report for April.
Mish points out that, to begin with, the first quarter’s reports of “strong” increases in retail sales are “only in comparison to extremely weak, easy to beat numbers at very depressed levels.” Writing about the drop in the PCI, Mish says the following:
“The falloff in real-time diesel fuel consumption is suggestive of an inventory replenishment cycle that has run out of steam. Also, with the expiration of $8,000 home tax credits, home prices have again started to drop. Moreover, barring another Federal bailout to the states, mass-layoffs at the state and local level are coming. Those effects have not yet been felt, but they will.”
Not only will they, but they will… soon.
Governor Arnold Schwarzenegger of California says he will be seeking “terrible cuts” in an effort to eliminate the state’s $18.6 billion budget deficit. Schwarzenegger spokesman, Aaron McLear, recently told reporters in Sacramento:
“We can’t get through this deficit without very terrible cuts, and we don’t believe that raising taxes right now is the right thing to do.”
The governor has said, earlier in the year, that California may have to eliminate entire welfare programs, including those that provide cash and job assistance to families below the poverty line, unless the state gets a large influx of cash from the federal government. And, California is far from alone in this crisis. Illinois and New York are in the running for the state with the least-est.
Again, as Mish Shedlock phrased it: “Illinois, California, and New York are flopping around like a 50 pound sea bass in 3 inches of water.” He does have a certain way with words, doesn’t he?
I wonder why the states are having so much trouble all of a sudden. I’m not sure, but if I had to guess I’d say it has something to do with foreclosures… because there are so few homeowners that keep paying their property taxes after they lose their home. And unemployment too, because it has the very definite tendency to change most folks’ spending habits, which has something to do with sales tax… I think, anyway.
So, maybe California, New York and Illinois aren’t going to be the only states that end up in the red. I wonder why they were the first ones to fall off a cliff, budget-wise. Hmmm… New York, Chicago and L.A. Nope, I can’t think of anything those three have in common. Oh well… guess it’s just another mystery… we’ll just have to wait and see what happens next… I guess.
Okay, so maybe the whole recovery thing is being a bit over-played?
Could it be? Maybe? I’m not sure. Maybe if I close my eyes and keep saying over and over: There’s no place like home… there’s no place like home?
There’s nothing like good economic news that makes Americans lay on the couch and watch Idol. While Washington D.C. is under siege by an army of financial industry lobbyists, the rest of the country seems to be just waiting for the recovery to carry them back to the prosperity of days gone by.
Ahhh, the good old days… when houses went up by 20% a year, and if you lost your job you could always refinance your mortgage, pull out some cash to buy a new car and take a vacation, and then when you came home, pay off your credit cards simply by getting a new deck of credit cards.
Like the flying monkeys from the Wizard of Oz, they’ve been summoned by the bankers to our nation’s capital; flying in from around the country until they hit the steps of the U.S. Capital building… when they’re transformed into lobbyists carrying briefcases, and they continue walking straight up the stairs and into the halls of Congress.
According to a recent report published by the Institute for America’s Future, a nonpartisan center for education and research, as you are reading this article, the banking lobby is spending $1.4 million a day to influence our elected officials in Washington. And they’ve hired 70 ex-members of Congress and 940 former federal employees to lobby on their behalf.
During the early1930s, the U.S. Senate established the Pecora Commission, named for attorney Ferdinand Pecora, to investigate the stock market crash of 1929. Pecora exposed a wide range of high-level criminal activity, which woke people up in this country and led to significant reforms, including the Glass-Steagall Act of 1933, which protected depositors from high-risk speculation by separating commercial banks from investment banks.
This time around, although investigative commissions have been established, and the beginnings of the mammoth fraud committed by Wall Street’s bankers has begun to come out in the main stream press, we still seem to lack the political will to stand up to bankers in Washington.
What will it take to wake Americans up to what’s ahead this time around? Gay marriage… on either side of the aisle we’re outraged to the point of marching in the streets. But let the financial sector rape us repeatedly… and it’s no problem, we’ll just take a shower and go back to whatever we were doing. We were probably asking for it anyway, right?
While we’re dancing to the tune of happy economic news, there’s one group of folks in this country who aren’t buying any of it, and they’re in Washington fighting tooth and bail-out every single day to make sure their interests are attended to by our government… the banksters and their lobbyists. They know there are going to be hard times ahead and they’re in Washington in unprecedented numbers to make sure that those hard times are not felt by any of them.
You’ve heard of Gansta’ Rap… I think we need Banksta’ Rap… with my sincere apologies to NWA, and if any of my readers know how funny this actually is, please write in so I know you’re out there.
Straight Out’a Wall Street
Lyrics by Me!
Crazy Jamie Dimon’s a pranksta’,
With a gang they call the Banksta’s,
When he’s failed out… he gets bailed out,
Squeezes Geithner, and money gets mailed out.
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There’s another brotha’ called Lloyd Blankfein
No matter what, he refuses to resign
He’s from Goldman, he ain’t never gonna’ stop
Defrauding pensions with credit default swaps.
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And don’t forget about the boss named Kenny Lewis
He’s too stupid, he could never be Jewish
He bought Countrywide, and then Merrill Lynch
Millions in his piggy bank… a lead pipe cinch.
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Straight Out’a Wall Street… Wall Street… Wall Street…
Straight Out’a Wall Street… that’s Fraud Street…
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And then at Citi there is Vikram Pandit
His name is scary, he’s real life bandit
Obama summoned, said stop being such a hog
He said no way, he don’t travel in the fog.
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At Wells Fargo, there’s a CEO that’s Stumped
This list would not be right… if he got bumped
He’s not afraid to travel… rain, fog or sleet
He only fears putting assets on his balance sheet.
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Straight Out’a Wall Street… Wall Street… Wall Street…
Straight Out’a Wall Street… that’s Fraud Street…
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Last up Morgan’s CEO, just call him Mack
He don’t take no blame, he goes on the attack
His plan is simple, and we’ll all soon see
He’ll pin it all on Moody’s or on AIG.
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Straight Out’a Wall Street… that’s Fraud Street…
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Power and the money… money and the power
Minute after minute, hour after hour
The Banksta’s are in Washington
You better understand…
They got their own agenda,
They got their own plan
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They’re not looking out for you
Don’t even know my name
Handing out so many millions
It’s straight up insane
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It’s time for us to wake up
Make our voices known
Knock those bangin’ Banksta’s
Right off of their thrones.
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Straight Out’a Wall Street… Wall Street… Wall Street…
Straight Out’a Wall Street.
Word, ya’ll.