Direct KEATING 5 link to the proposed $700B bailout: Last 2 left of 5 firms who in 2004 received special SEC exemptions

[ProgressiveEconomist]

Direct KEATING 5 link to the proposed $700B bailout: Last 2 left of 5 firms who in 2004 received spe...

special SEC exemptions from regulations on "leverage"--the dollars in assets that each dollar of reserves stood behind--are Goldman Sachs and Morgan Stanley.

Now Bloomberg News identifies Goldman Sachs and Morgan Stanley as likely chief beneficiaries of the $700 billion WH bailout proposal (see http://www.bloomberg.com/apps/news?pid=20601087&sid=aUj_9.k13q7s&refer=home ).

What I'd like to know is--WHO were the lobbyists who won those exemptions for the five firms, and how many of them now are associated with John McCain's campaign?

Remember, this was the same issue that got McCain into the Keating 5 two decades ago--intercession with regulators on behalf of an individual firm (Lincoln Savings and Loan) that later was bailed out at great public expense. IMO, if Democrats can find an effective way to frame this, McCain is TOAST.

From http://www.rgemonitor.com/us-monitor/253651/how_sec_regulatory_exemptions_helped_lead_to_collapse :

"How SEC Regulatory Exemptions Helped Lead to Collapse

Barry Ritholtz--Sep 18, 2008

Is Financial Innovation just another word for excessive and reckless leverage? Apparently so. As we learn this morning via Julie Satow of the NY Sun, special exemptions from the SEC are in large part responsible for the huge build up in financial sector leverage over the past 4 years -- as well as the massive current unwind Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms. You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.

Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.

Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley. As Mr. Pickard points out that "The proof is in the pudding--three of the five broker-dealers have blown up.""

See also the LBN thread at http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3505486&mesg_id=3505486 .

[mrJJ]

1. McCain K5

Wish someone would put together & air a good K5 ad

McCain K5

http://www.youtube.com/watch?v=kJ2eayWR3dU

[Gman]

2. OMG! K&R Great post! If we find out these lobbyists work for McCain

Obama wins. This will sink McCain. It will be over, game, set, match.

[ProgressiveEconomist]

3. With a list of McCain's top staff, searches at opensecrets.org could get us close

Use the last name of the McCain staffer in a search like http://www.opensecrets.org/lobby/lookup.php?type=l&lname=Davis&B1=OK (Substitute any other last name for "Davis").

You'll get a list of lobbyists with that last name. Click through to the right one, then to the year 2004 on the pull-down menu, and you'll get a client list that may or may not include one of the SEC Exemption 5.

[druidity33]

4. I'm sure there are DUers capable of doing this!

I'll help with kicking this occasionally!

And Ring it too!

Off to phone my Reps...

:)

[ProgressiveEconomist]

5. Thanks for your help!

[druidity33]

6. no problem at all... nt.

[ProgressiveEconomist]

13. Extensive, categorized list of McCain advisors, campaign financiers, and supporters

http://www.vote-john-mccain-2008.com/supporters/

[ProgressiveEconomist]

17. The Obama Campaign's list of 177 lobbyists among McCain campaign staff and fundraisers

is on pages 60-61 of http://www.democrats.org/page/-/pdf/noreformer.pdf . I've found a few preliminary hits already on some of their 2004 client lists--more later .

[redqueen]

7. K&frickinR

Jesus... what I wouldn't give for a functioning press corps.

[ProgressiveEconomist]

11. "What I wouldn't give for a functioning press corps". Did you notice 'Fannie Mae' was

the most common phrase mouthed by Republicans at today's Senate Banking Committee hearing? I'm wondering whether MSM coverage of the hearing will echo that Republican talking point, designed to somehow make Jimmy Carter the fall guy for a 2008 credit market meltdown.

Why aren't people in the MSM financial "press corpse" seeing the obvious pattern in epic fails of financial firms this year? 5 out of 5 recipients of regulation exemptions from the SEC in 2004 need to be rescued four years later.

[redqueen]

12. Some would say it's ignorance. I say it's complicity - project mockingbird never ended...

they just changed the name.

[KittyWampus]

8. this is prime target

[blm]

9. Did they rush those exemptions in case Bush's election theft didn't hold? Read 2004 Dem platform

August 27, 2004
THE 2004 CAMPAIGN: THE DEMOCRATIC PLATFORM; Kerry Sees Credit Card Abuses, And Promises Steps to End Them
By LOUIS UCHITELLE

Senator John Kerry added a plank to his platform yesterday, promising to push for legislation that would curb what his campaign describes as abusive practices in credit card and mortgage lending.

The proposals coincided with the announcement of new Census Bureau data showing that family and household income, adjusted for inflation, had fallen over the first three years of the Bush administration. The decline came as consumer debt rose, and the new plank promised relief for wage earners in straitened circumstances.

''Abusive lending practices can take a huge bite out of the incomes of families who are working and can barely pay their credit card bills,'' Robert Gordon, Mr. Kerry's director of domestic policy, said.

Companies that issue credit cards, mainly banks, often double the interest rates if a cardholder is late with a monthly payment or the holder's creditworthiness is challenged. Mr. Kerry would require notice before each rate increase and limit the increase to a few percentage points.

''There is no proportionality now in these increases,'' Gene Sperling, an economic adviser to Mr. Kerry, said. ''They can go from 8 to 28 percent.''

A Kerry administration ''would ask Congress to legislate standards and to direct the Federal Trade Commission and bank regulators to impose regulations consistent with those standards,'' Mr. Sperling said. Much of this would be achieved through amendments to the Truth in Lending Act, he and Mr. Gordon said.

Credit card lenders would also be required to disclose, in prominent type on bills, how long it would take to pay off a debt, and the cost in interest if the card holder made only minimum monthly payments.

A California law imposed this standard, but credit card issuers challenged it in court in 2002, and the Bush administration's Office of the Comptroller of the Currency sided with the issuers. The comptroller argued that only federal regulators could impose such a restriction on nationally chartered banks and that his office did not plan to do so. The state lost the case.

Mr. Gordon said that some minimum payments were so low that they barely kept up with interest costs or fell behind them, in which case the balance could never be repaid.

Other changes proposed by the Kerry campaign would require lenders to forgo penalty charges when they allowed card holders to go beyond their borrowing caps. A cardholder with a $5,000 credit limit, for example, can face a penalty for reaching $5,200 even if the card company approved the charge that put the total over $5,000.

Mr. Kerry's principal mortgage proposal would prohibit lenders from using balloon mortgages in most subprime loans, which often go to low-income people at higher rates.

[ProgressiveEconomist]

10. Interesting--but that's not what the SEC Exemption 5 were doing. You don't get 40-1

leverage from contracts with consumers--you get it with "derivatives" of those contracts.

For instance, there's "only" $14 trillion in outstanding mortgage debt, but there are about $70 trillion in "derivative instruments" largely based on those mortgages. Think about it.

[Major Hogwash]

14. The 30-year plan to rob us blind started in Reagan's administration. The same people in Bush's admin

The same ones on McCain's campaign staff.

Gramm has been in the middle of this mess for 30 gawd damned years!!!
His wife was the comptroller for Enron!

[AzDar]

15. Wowzer.

:wow:

[cyberpj]

16. this is a good one folks, can we rate it up to get it on the greatest page?

It was there earlier today.