Cross-posted at The Baseline Scenario.
Here's where we stand with regard to democratic discourse on the future our financial system: leading bankers will not come out to debate the issues in the open (despite being approached by reputable intermediaries after our polite challenge was issued) - sending instead their "astro turf" proxies to spread KGB-type disinformation.
Even Larry Summers, who has shifted publicly onto the side the angels (surprising and rather late, but welcome anyway), cannot - for whatever reason - bring himself to recognize the dangers inherent in our unstable and too-big-to-manage banks. Or perhaps he is just generating excuses that will justify not bringing the Brown-Kaufman amendment to the floor of Senate?
So let's take it up a notch.
I strongly recommend that the responsible congressional committees request and require all assistant secretaries at the US Treasury (and other relevant political appointees over whom they have jurisdiction) to appear before them early next week.
The question will be simple: Please share your calendar of meetings this weekend, and provide us with a complete accounting of people with whom you met and conversed formally and informally.
The finance ministers and central bank governors of the world are in Washington this weekend for the spring meetings of the International Monetary Fund. As is usual, the world's megabanks are also in town in force, organizing big meetings and small dinners.
Through these meetings dutifully troop US treasury officials, providing in-depth and off-the-record briefings to investors.
Banks such as JP Morgan Chase and the other top tier financial players thus peddle influence, leverage their access, and generally show off. They accumulate information from a host of official contacts and discern which way policymakers - their "good friends" - are leaning.
And what is the megabank whisper mill working on? Ignore the "economic research" papers these banks put out; that is pure pantomime for clients-to-be-duped-later. I'm talking about what they are telling the market - communicated in specific, personal conversations this weekend.
They are telling people that, based on their inside knowledge, Greece and potentially other eurozone countries will default on their debt. Perhaps they are telling the truth and perhaps they are lying. Most likely they are - as always - talking their book.
But the question is not the substance of their whisper campaign this weekend, it is the flow of information. Have they received material non-public information from US government officials? Show me the calendar of the top 10 treasury people involved, and then we can talk about whom to summon from the private sector to testify - under oath - about what they were told or not told.
There is no question that the megabanks derive great power and enormous profit from their web of official contacts. We should reflect carefully on whether such private flows of information between governments and "too big to fail" banks are entirely suitable in today's unstable financial world.
Large global banks make money, in part, through nontransparent manipulation of information - this is the heart of the SEC charges against Goldman Sachs. But the problem is much broader: the Wall Street-Washington corridor is alive and well on its way to another crisis that will empower, enrich, and embolden insiders (public and private) while impoverishing the rest of us.
The big players on Wall Street are powerful like never before - and they use this power to press for information and favors from sympathetic (or scared) government officials. The big banks also appear hell-bent on abusing that power. One consequence will be further destabilizing global financial markets - watch carefully what happens to Greece, Portugal, Ireland, and Spain at the beginning of next week.
It is time for Congress to step in with a full investigation of the exact flow of information and advice between our major megabanks and key treasury officials. Start by asking tough questions about exactly who exchanged what kind of specific, material, market-moving information with whom this weekend in Washington.
Michael Winship: Goldman Sachs: What Hath Fraud Wrought?
Law professor Bill Black, one time federal regulator, spoke with Bill Moyers this week. He questions whether the SEC and the Obama White House will fully push for answers in the Goldman fraud case or any others.
Goldman Sachs e-mails: We made money betting against mortgage market
SEC confident on IKB part of Goldman Sachs lawsuit
Goldman's Tourre Foresaw Subprime Chaos, Emails Show
Whitman, Brown have ties to Goldman Sachs
SEC targets Goldman Sachs with fraud suit - Los Angeles Times
Fire them first... then call them in to testify. Summers, Geithner and then the top three folks at SEC and Treasury. They are bank insiders and they work for the banks, not any Administration past present or future.
best,
DenverJJ
You are simply awesome. Watch your back please since you are the ONLY outspoken person trying to protect the middle class.
Banskter has a petition for you to sign to end too big to fail, make Dodd's bill better:
http://salsa.democracyinaction.org/o/632/p/dia/action/public/?action_KEY=3038%20BANKSTERUSA.ORG
If we do not change our politics, if we do not fundamentally change the way Washington works, then the problems we’ve been talking about for the last generation will be the same ones that haunt us for generations to come.
If we're not willing to take up that fight, then real change - change that will make a lasting difference in the lives of ordinary Americans - will keep getting blocked by the defenders of the status quo."
- Presidential Candidate Barrack Obama
Watch Harvard Law Professor Lawrence Lessig's presentation, Ctrl+Alt+Del, and learn how you can join a citizens movement to save our democracy.
http://iv-time.blogspot.com/2010/04/fix-congress-first-lawrence-lessig.html
We are already suffering. Gretchen Morgenson of the nytimes had an article last sunday.
It is logical. What happens to a nation that uses public money to support insolvent industries?
Not the way to prosperity
There are never enough people at any given time who are willing to do the moral, decent thing on any single issue to advance the cause of what's right.
Therefore the appearance of "progress" in this country only lasts a short time before we fall back on old, primitive habits and behavior (or to put it another way, history repeats itself).
Unless Americans can put aside our "me first" mentality and work together in some fundamental ways, we won't last.
That'd be nice, if one branch of our government was sufficiently uncorrupted by all of this to investigate the other branch. But that's not the case. And the "fourth estate", the press, well, they could investigate this as well, but they're too concerned with tea parties these days (which is to say, they've been told by their handlers to focus on nonsense issues and ignore corruption). The financial oligarchy that runs this country has been largely driven out of the rest of the Western world. They've based their stronghold here, and they've dug their roots in very deep.
The result was that despite the existence of many moral men within the organization, many immoral decisions were made."
http://pegasus.cc.ucf.edu/~janzb/courses/phi4804/crittheory8e.htm
The defective, timed-to-crash MBS tranches were sold worldwide, and thus fall under the jurisdiction of every developed country where the things were marketed. My understanding of the security rules is that a broker who knowingly sells a bad product is required to repurchase it at face value--that alone would roll up the fortunes of most of these too-big-to-fail entities to a more realistic level.
It's a question of who goes first. But surely the RICO statutes are applicable--this was as fully conceived as any drug shipment arrangement ever devised by the Medellin cartel.