Regulating The Money Changers

Regulate this! Albert J. Dunlap, also known as Chainsaw Al, graduated from West Point before becoming CEO of Lily Tulip Cup and Scott Paper. By firing thousands of employees at once and closing plants and factories, he forced up the share price of his companies and made billions. When shareholders were left holding an empty cup, he sometimes got fined a few million. Overall, toxicity's been profitable.

To be able to spit in their eye and do what you think is right and report the news and have enough readers to make some impact is such a pleasure that you forget, you forget what you are writing about. It becomes, you know, it like, you are like a journalistic Nero fiddling while Rome burns and having a hell of a good time or like a small boy covering a hell of a big fire. It's just wonderful and exciting. You are a cub reporter and God has given you big fire to cover. And you forget, you forget it is really burning.

---I.F. Stone

And when I was brought into the convention center to tell this story (of her arrest) to the networks, one of the reporters for the network said, "How come I didn't get arrested?" And I said, "Oh, were you out covering the protests?" And he said, "No."... You got to get out there. And if the problem with this... It's not just a violation of freedom of the press... It's a violation of the public's right to know. If they're just inside the convention, they get one message. The orchestrated message. And that's important to cover. You got to get into the corporate suites. Who's funding all of this? And you have to get into the streets. Democracy's a messy thing. And all of these voices must be heard.

---Amy Goodman

Watching the news over the over the last two days, while Obama, President Obama, is in London. Watching all of the demonstrators there, some of them violent and militant, but thousands of them not. Marching to a bank, and protesting. I thought of something you wrote recently. You said that for the magnitude of this financial crisis, there should be a lot more popular rage in this country. Why do you think there isn't? Because the taxi driver this morning, coming down here, to me, was angry as hell.

---Bill Moyers, on his PBS Journal, April 3, 2009

Obama's financial policy is coming under closer scrutiny in the media and on the Internet. The suspicion and anger on Main Street, to which supposedly this President listens and responds, is getting louder. Not a day goes by that some American doesn't walk into an office or factory somewhere and just start shooting. Are they all just nutcases, or is there a war starting? Are we going postal? It's time to take a closer look.

Who are these bankers and bosses who have emerged since Reagan? What is the free market like since Poppy Bush declared globalization, and Junior encouraged credit cards without limit and told us all to go shopping. It's your patriotic duty to go shopping. Under Obama, apparently it still is. The same guy seems to be running the show.

The 3 quotations above are from the transcript of Friday's Moyers Journal. I don't know about you, but here in Athens I can't find the show anymore. Our PBS station, with dozens of digital channels and one remaining analog, seems to broadcast it sometime...but between pledge drives and shifting schedules I have no idea where it is. Fortunately I still can go to http://www.pbs.org/moyers/journal/04032009/transcript3.html and find out what happened. Apparently Friday's show was all about journalism and economic regulation. Since Amy Goodman is on a 70 city tour, promoting a new book, and coming here Thursday (broadcasting from a station that doesn't carry Democracy Now!), maybe we need a crash course in cash meltdown.

The first part of the Journal was given over to an interview with William J. Black, author of a book titled The Best Way To Rob A Bank Is To Own One. You get the idea. Mr. Black was a government regulator during the savings and loan scandal of the 1980s. Moyers introduced him thus~~~

"The former Director of the Institute for Fraud Prevention now teaches Economics and Law at the University of Missouri, Kansas City. During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L's in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate's so-called 'Keating Five' were named — he sent a memo that read, in part, 'get Black — kill him dead.' Metaphorically, of course. Of course.

"Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname 'banksters.'"
You need to see or read the whole interview, but here's an excerpt~~~

WILLIAM K. BLACK: AIG all by itself, cost the same as the entire Savings and Loan debacle.
BILL MOYERS: What did AIG contribute? What did they do wrong?
WILLIAM K. BLACK: They made bad loans. Their type of loan was to sell a guarantee, right? And they charged a lot of fees up front. So, they booked a lot of income. Paid enormous bonuses. The bonuses we're thinking about now, they're much smaller than these bonuses that were also the product of accounting fraud. And they got very, very rich. But, of course, then they had guaranteed this toxic waste. These liars' loans. Well, we've just gone through why those toxic waste, those liars' loans, are going to have enormous losses. And so, you have to pay the guarantee on those enormous losses. And you go bankrupt. Except that you don't in the modern world, because you've come to the United States, and the taxpayers play the fool. Under Secretary Geithner and under Secretary Paulson before him... we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?
BILL MOYERS: And why...
WILLIAM K. BLACK: How mad is this?
BILL MOYERS: What is your explanation for why the bankers who created this mess are still calling the shots?
WILLIAM K. BLACK: Well, that, especially after what's just happened at G.M., that's... it's scandalous.
BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?
WILLIAM K. BLACK: There are two reasons. One, they're much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, they're outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, ‘contracts, sacred.' But the other element of your question is we don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.
BILL MOYERS: The cover up?
WILLIAM K. BLACK: Sure. The cover up.
BILL MOYERS: That's a serious charge.
WILLIAM K. BLACK: Of course.
BILL MOYERS: Who's covering up?
WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.
These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...
BILL MOYERS: What do you mean?
WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.

Frank Rich comes at it from a different angle this morning, but essentially he's covering the same story. Like Moyers, he's wondering why Rick Wagoner got singled out...but the bankers and brokers still are under cover~~~

"Sure, Rick Wagoner deserved his fate. He did too little too late to save an iconic American institution from devolving into a government charity case. He embraced the Hummer. G.M.’s share price fell from above $70 to under $3 on his watch. Yet few disputed the judgment of the Michigan governor, Jennifer Granholm, that Wagoner was a 'sacrificial lamb,' a symbolic concession to public rage ordered by a president who had to look tough after being blindsided by the A.I.G. bonuses. Detroit’s chief executive had to be beheaded so that the masters of the universe at the top of Wall Street’s bailed-out behemoths might survive.

"On this point even the left and the right could agree. The union leader Andy Stern publicly wondered why the administration didn’t also dethrone Ken Lewis of Bank of America. Thaddeus McCotter, a conservative Republican congressman from suburban Detroit, asked, 'When will the Wall Street C.E.O.’s receiving TARP funds summon the honor to resign? Will this White House ever bother to raise the issue?'

"When reporters did raise the issue of a double standard to the White House press secretary, Robert Gibbs, they got double talk: 'I don’t have anything specific on Bank of America.'
"But even as that unanswered question hangs in the air, a more revealing inquiry might be this: Why is there any sympathy whatsoever for a Detroit C.E.O. who helped wreck his company, ruined investors and cost thousands of hard-working underlings their jobs, when there is no mercy for those who did the same on Wall Street? Might we, too, have a double standard? Could we still be in denial of the reality that greed and irresponsibility were not an exclusive Wall Street franchise during our national bender?"

http://www.nytimes.com/2009/04/05/opinion/05rich.html?th&emc=th

But the most devastating writing I came across on this whole mess is at the Forum section of---sorry, folks---Playboy.com. The writer is named Mark Ames, and I guess he maintains a column there called Backstabber. This article is called "Class War 101," and sets forth they hypothesis that the "economic elite" are not the same kind of human like you and me. Their reptilian brains work differently...and so do the hormones that create their hunger. Sound too cynical for you? Maybe. Born in California in 1965, Ames went to a private Episcopalian school, then the University of California. During the Reagan, both Bushes, and the Clinton years, he became more and more disillusioned with the United States. So why didn't he move to Russia if he didn't like it here. He did. He started a newspaper there called The Exiled, but the government shut him down when he was critical of the Georgian invasion. He's written a book with Rolling Stones' Matt Taibbi, if that gives you an idea of his flavor. See if any of this makes sense to you~~~

"If we’d cared to look around us at any time since the Reagan Revolution, we’d realize that the CEOs, billionaires and finance stars are behaving no differently today than they have been for nearly three decades. When we look back, what will pain us most is the way we admired the billionaires even as they brought about our ruin, turning them into TV celebrities and magazine-cover heroes, worshipping them like rock stars right up to the end.

"A perfect example of the kind of person who benefited from the Reagan Revolution is Al 'Chainsaw' Dunlap, a corporate superstar during the peak Clinton years, when Reaganomics accelerated under the guiding hands of Alan Greenspan, Larry Summers, and Robert Rubin. It was during Clinton’s centrist pro-business presidency that innovations like the like mass-layoff (rebranded as 'downsizing') became a regular feature of economic booms, rather than of economic busts, as they had been in the past. Layoffs expanded right with the economy for the simple reason that each mass firing freed up millions or billions of dollars that had gone to workers, but now could be divided up between executives and major shareholders. The problem was finding people cold-blooded enough to do the job—which is to say, there was no problem whatsoever. As Dunlap himself boasted in a 1998 interview with Fortune magazine, 'Mickey Mouse could do the cost cutting.'...

"This same arc has been repeated all over the American economy—what we once thought were isolated cases turned out to be a pattern, and the pattern repeated so much up down corporate America that it finally became clear: These things are the rule. No wonder the SEC never came down hard on anyone: it would have meant shutting down the entire economy and starting from scratch. "In the past, when downsizings and payouts happened, they were seen as a necessary evil in the overall march to a free-market utopia. Now we understand that what really happened wasn’t as complicated or theoretical as it was made out to be. It was a straight-forward transfer of wealth out of the pockets of, say, 11,200 employees at Scott Paper into the pockets of Wall Street bankers and their CEO henchmen. No matter how many words like 'efficiency' and 'restructuring' you gloss it with, it’s still taking money that formerly went into one group’s pocket, and giving to another, much smaller group.

"What’s so strange, looking back, isn’t just the blatant, shameless plundering of thousands of American families for a few individual’s excessive profit, but the way we all adored them while they were in mid-plunder. They didn’t even try to pretend to be likeable or even human, and we still licked their boots."

Like Taibbi, Mark Ames writes graphically. Visits to the sites of Rolling Stone and Playboy, like purchasing the magazines, can be risky business if you seek to avoid cussing and the sight of flesh. But this is muckraking time...and it's not pretty.

http://www.playboy.com/articles/class-war-101/index.html?page=1

During the Obama campaign there were the same concerns, from Left and Right, about his Chicago connections, and beyond, to wealthy backers and financial interests. Is he just another front man? Except for this area...and maybe Afghanistan...he has stepped forward with answers when questions were raised. Hello Grassroots, do you have any questions?