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amborin Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-25-10 11:05 PM
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Banksters got their $$$$ Obama draws the line: article:
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Edited on Tue Jan-26-10 12:03 AM by amborin /

"Will Obama Put Muscle Into the White House's New Populist Ploy?"


"Even the personnel remain the same. Over the weekend, Obama reiterated his endorsement for reappointing Helicopter Ben Bernanke as Federal Reserve Chairman.

As the lobbyist for high finance, Bernankes money drop seemed to land only on Wall Street. Now it has emptied out the governments credit in an unparalleled deficit. So now, Obama is saying, No more. Im drawing the line. No further deficit. There goes any hope for stimulating the real economy. Treasury apparatchik Tim Geithner, backed with his armada of administrators on loan from Goldman Sachs, is unlikely to support indebted labor, consumers or their companies in any way that does not benefit Wall Street first.

Even worse has been Obamas rehabilitation of Clinton Rubinomics deregulator Larry Summers as chief advisor, sidelining Paul Volcker until he was hurriedly flown back from political Siberia, in reaction to the Massachusetts debacle and to soften the leak by the Wall Street Journal on January 15 that Obama and the Democrats were not unhappy to see Elizabeth Warrens Consumer Financial Products Agency die stillborn, despite the presidents promise that the agency was non-negotiable.

Hence the sudden passion of the Obama administration for the Volcker rule to re-separate commercial banking from its casino capitalist outgrowth. The photo-op with Volcker was intended to provide at least a semblance of regulation of the sort that was normal before Summers and other Clinton-Gore era Democratic Leadership Committee operatives had formed common cause with Republicans to repeal Glass-Steagall. Across the last year Democrats have failed every litmus test involving finance, insurance and real estate the FIRE sector, which remains the major campaign contributor and lobbyist for both parties."


"Obama's Latest Ruse: The Bank Tax"

The president has regularly taken verbal pot shots at the financial oligarchy in a cynical effort to convey the impression that he shares the publics outrage at the behavior of the plutocrats. But he has thrown no sticks and stones at the banksters, who know as well as you and I that mere words can never hurt them.

None of Obamas faux outrage has been as disingenuous as his Wednesday announcement that he will finally respond sympathetically to the publics deep resentment of the administrations tolerance -and therefore encouragement- of the bad guys looting of the public treasury.

Obama assured his constituents that he would recoup every last penny for American taxpayers by taking back, in the form of taxes on the banks, the wealth that households have been forced to transfer to the coffers of the instigators of the financial crisis.

The announcement was timed to offset what will surely be another surge of public anger at the expected announcement this week of the banks year-end bonus payments.

The proposed taxes would apply to financial institutions with more than $50 billion in assets and would extract about $90 billion from them over ten years. Obamas central claim is that this would cover all losses incurred by the government under the Troubled Asset Relief Program (TARP). We are supposed to be relieved that households will in the end be repaid all that has been transferred from them by TARP. We want our money back, and were going to get it, said Obama.

Obama is perpetrating a massive ruse. The tax-the-banks proposal rests on conspicuously false empirical assumptions and appalling math.


"Wall Street's Power Grab"

"You almost could hear the bankers heave a sigh of relief when Haitis earthquake knocked the Financial Crisis Inquiry Commission hearings off the front pages and evening news broadcasts last week. At stake is Wall Streets power grab seeking to centralize policy control firmly in its own hands by neutralizing the governments regulatory agencies."


"By far the major enabler has been the Federal Reserve Board (FRB). Acting as the banking systems lobbying organization, its tandem of Alan Greenspan and Ben Bernanke fought as a free-market Taliban against attempts to introduce financial regulation. Working with the Goldman Sachs managers on loan to the Treasury, the Fed managed to block attempts to rein in debt pyramiding.

Mr. Bernanke ignored the very first lesson taught in business schools. This was the lesson taught by William Petty in the 17th century and used by economists ever since: The market price of land, a government bond or other security is calculated by dividing its expected income stream by the going rate of interest that is, capitalizing its rent (or any other flow of income) into what a bank would lend. The lower the rate of interest, the higher a loan can be capitalized. At an interest rate of 10 per cent , a $10,000 annual income is worth $100,000. At 5 per cent , this income stream is worth $200,000; at 4 per cent , $250,000. Mr. Bernanke thus rejected over three hundred years of economic orthodoxy in testifying recently that the Fed was blameless in fueling the real estate bubble by slashing interest rates after 2001. Financial fraud also was not to blame. Anointed with the reputation for being a student of the Great Depression, he showed himself to be clueless.


Sheila Bair's testimony at the Angelides hearings:

"Alas, she acknowledged, the Basel agreements regarding capital adequacy standards are being loosened rather than tightened. In 2004, the Basel Committee published a new international capital standard, the Basel II advanced internal ratings-based approach (as implemented in the United States, the Advanced Approaches), that allows banks to use their own internal risk assessments to compute their risk-based capital requirements.


The overwhelming preponderance of evidence is that the Advanced Approaches will lower capital requirements significantly, to levels well below current requirements that are widely regarded as too low. She criticized the new, euphemistically termed Advanced Approach as producing capital requirements that are both too low and too subjective. The result is to increase rather than mitigate financial risk."


"On the institutional level, Wall Streets managers want to ward off any threat that the Glass-Steagall legislation might be revived to separate consumer deposit banking and money management from todays casino capitalism.

This is what Paul Volcker has urged, but it is now obvious that Pres. Obama appointed him only for window dressing, much like that of Pres. Johnson said of J. Edgar Hoover: he would rather have him inside his tent pissing out than outside pissing in. Appointing Mr. Volcker as a nominal advisor effectively prevents the former Fed Chairman from making hostile criticisms.

Pres. Obama simply ignores his advice to re-instate Glass-Steagall, having appointed as his senior advisor the major advocate of the repeal in the first place Larry Summers, along with the rest of the old Rubinomics gang taken over from the Clinton administration."


"Warning that the consequences we have seen during this crisis will recur, Ms. Bair reiterated a recommendation she had earlier made to the effect that an ability to repay standard should be required for all mortgages, including interest-only and negative-amortization mortgages and home equity lines of credit (HELOCs).

Interest-only and negative-amortization mortgages must be underwritten to qualify the borrower to pay a fully amortizing payment. The Fed blocked this common-sense regulatory policy. And by doing so, it became an enabler of fraud."

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