Who's Really Most To Blame For The Economic Collapse? Ever Hear Of Phil Gramm?

Where does a corrupt bankster end & a corrupt politician begin?

The manifestation of conservative Democratic 1%-er-turned-Republican 1%-er, Texas Senator Phil Gramm's "greatest" achievement-- at least in terms of making himself fabulously wealthy, but also in terms of impacting the people of the United States-- was the mortgage meltdown in the finally two years of George W. Bush's illegitimate presidency. Gramm was long gone from politics by then but he had years earlier helmed the victory in the Republican Party's-- and Wall Street's-- long-term jihad against Glass-Steagall. More about that anon. First a few words on how our government-- not Bush's but the one we elected based on Hope and Change to replace it-- has dealt with and is dealing with that manifestation of ultimate corruption. In short, the Obama Administration and most state governments are handing out Get Out Of Jail Free cards to the perps. We're talking about the foreclosure fraud settlement being embraced by every state with the exceptions of New York, Massachusetts, Nevada, possibly California, Delaware and Kentucky (if Kamala Harris, Beau Biden and Jack Conway are serious about national political careers) and maybe even Oregon, Arizona and Washington (state). The settlement the 40-some-odd states' attorneys general-- aided and abetted by the Obama Justice Department-- are about to tie a bow around and present as a fait accompli indemnifies the banksters from prosecution for their criminal behavior in the mortgage meltdown. Gretchen Morgenson writes that "the exact terms are under wraps," but everyone paying attention knows the inexact terms very well by now-- and Morgenson better than almost anyone.

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

This may not qualify as a shock. Accountability has been mostly A.W.O.L. in the aftermath of the 2008 financial crisis. A handful of state attorneys general became so troubled by the direction this deal was taking that they dropped out of the talks. Officials from Delaware, New York, Massachusetts and Nevada feared that the settlement would preclude further investigations, and would wind up being a gift to the banks.

It looks as if they were right to worry. As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash-- $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money.

The rest-- an estimated $20 billion-- would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

Sure, $5 billion in cash isn’t nada. But government officials have held out this deal as the penalty for years of what they saw as unlawful foreclosure practices. A few billion spread among a dozen or so institutions wouldn’t seem a heavy burden, especially when considering the harm that was done.

The banks contend that they have seen no evidence that they evicted homeowners who were paying their mortgages. Then again, state and federal officials conducted few, if any, in-depth investigations before sitting down to cut a deal.

Morgenson goes into a number of concerned she says as "justified because past settlements promising big help to borrowers have failed to live up to their hype. She makes the point, as did Beau Biden in filing his anti-bankster suit last week, that "rules matter... Abiding by the rules has not been the modus operandi in the foreclosure arena. That’s why any settlement must be tough, truly beneficial to borrowers and monitored for compliance. Otherwise, the deal would be another case where our government let the big banks win while Main Street loses."

Before we get back to the elusive, rarely mentioned Phil Gramm and his role in all this, let's take a look at a powerful cheat sheet by Pro Publica that asks what's happened to the big players in the financial crisis. (The criminality of the banksters will never be really examined because there is no one to examine the criminality of our political class-- if that class can even be separated from the banksters-- and that class has increased it's own wealth gigantically while Americans have sunk into economic desperation. "For example, Rep. Darrell Issa reported this year that his 2010 assets were worth at least $295 million, nearly double what they were the year before.") These political gangsters, like career criminal Issa, are not part of the Pro Publica "cheat sheet," although they do look at Gramm (and Bush Treasury Secretary Henry Paulson). Pro Publica breaks down their study into roughly 9 categories of criminals: mortgage originators, mortgage securitizers, people who created and dealt CDOs, the ratings agencies, the regulators, the politicians (though no one currently in Congress), executives of big investment banks and Fannie Mae and Freddie Mac.

Mortgage originators

Mortgage lenders contributed to the financial crisis by issuing or underwriting loans to people who would have a difficult time paying them back, inflating a housing bubble that was bound to pop. Lax regulation allowed banks to stretch their mortgage lending standards and use aggressive tactics to rope borrowers into complex mortgages that were more expensive than they first appeared. Evidence has also surfaced that lenders were filing fraudulent documents to push some of these mortgages through, and, in some cases, had been doing so as early as the 1990s. A 2005 Los Angeles Times investigation of Ameriquest-- then the nation’s largest subprime lender-- found that “they forged documents, hyped customers' creditworthiness and ‘juiced’ mortgages with hidden rates and fees.” This behavior was reportedly typical for the subprime mortgage industry. A similar culture existed at Washington Mutual, which went under in 2008 in the biggest bank collapse in U.S. history.

Countrywide, once the nation’s largest mortgage lender, also pushed customers to sign on for complex and costly mortgages that boosted the company’s profits. Countrywide CEO Angelo Mozilo was accused of misleading investors about the company’s mortgage lending practices, a charge he denies.  Merrill Lynch and Deutsche Bank both purchased subprime mortgage lending outfits in 2006 to get in on the lucrative business. Deutsche Bank has also been accused of failing to adequately check on borrowers’ financial status before issuing loans backed by government insurance. A lawsuit filed by U.S. Attorney Preet Bharara claimed that, when employees at Deutsche Bank’s mortgage received audits on the quality of their mortgages from an outside firm, they stuffed them in a closet without reading them. A Deutsche Bank spokeswoman said the claims being made against the company are “unreasonable and unfair,” and that most of the problems occurred before the mortgage unit was bought by Deutsche Bank.

Where they are now: Few prosecutions have been brought against subprime mortgage lenders. Ameriquest went out of business in 2007, and Citigroup bought its mortgage lending unit. Washington Mutual was bought by JP Morgan in 2008. A Department of Justice investigation into alleged fraud at WaMu closed with no charges this summer. WaMu also recently settled a class action lawsuit brought by shareholders for $208.5 million. In an ongoing lawsuit, the FDIC is accusing former Washington Mutual executives Kerry Killinger, Stephen Rotella and David Schneider of going on a "lending spree, knowing that the real-estate market was in a 'bubble.'" They deny the allegations.

Bank of America purchased Countrywide in January of 2008, as delinquencies on the company’s mortgages soared and investors began pulling out. Mozilo left the company after the sale. Mozilo settled an SEC lawsuit for $67.5 million with no admission of wrongdoing, though he is now banned from serving as a top executive at a public company. A criminal investigation into his activities fizzled out earlier this year. Bank of America invited several senior Countrywide executives to stay on and run its mortgage unit. Bank of America Home Loans does not make subprime mortgage loans. Deutsche Bank is still under investigation by the Justice Department.

Mortgage securitizers

In the years before the crash, banks took subprime mortgages, bundled them together with prime mortgages and turned them into collateral for bonds or securities, helping to seed the bad mortgages throughout the financial system. Washington Mutual, Bank of America, Morgan Stanley and others were securitizing mortgages as well as originating them. Other companies, such as Bear Stearns, Lehman Brothers, and Goldman Sachs, bought mortgages straight from subprime lenders, bundled them into securities and sold them to investors including pension funds and insurance companies.

Where they are now: This spring, New York’s Attorney General launched a probe into mortgage securitization at Bank of America, JP Morgan, UBS, Deutsche Bank, Goldman Sachs and Morgan Stanley during the housing boom. Morgan Stanley settled with Nevada’s Attorney General last month following an investigation into problems with the securitization process.

As part of a proposed settlement with the 50 state attorneys general over foreclosure abuses, several big banks were offered immunity from charges related to improper mortgage origination and securitization. California and New York have withdrawn from those talks.

The people who created and dealt CDOs

Once mortgages had been bundled into mortgage-backed securities, other bankers took groups of them and bundled them together into new financial products called Collateralized Debt Obligations. CDOs are composed of tiers with different levels of risk. As we’ve reported, a hedge fund named Magnetar worked with banks to fill CDOs with the riskiest possible materials, then used credit default swaps to bet that they would fail. Magnetar says that the majority of its short positions were against CDOs it didn’t own. Magnetar also says it didn’t choose what went its own CDOs, though people involved in the deals who spoke to ProPublica contradict this account.

American International Group’s London-based financial products unit was among the entities that provided credit default swaps on CDOs. Though the business of insuring the risky securities made AIG large short-term profits, it eventually brought the company to the brink of collapse, prompting an $85 billion government bailout.

Merrill Lynch, Citigroup, UBS, Deutsche Bank, Lehman Brothers and JPMorgan all made CDO deals with Magnetar. The hedge fund invested in 30 CDOs from the spring of 2006 to the summer of 2007. The bankers who worked on these deals almost always reaped hefty bonuses. From our story:

Even today, bankers and managers speak with awe at the elegance of the Magnetar Trade. Others have become famous for betting big against the housing market. But they had taken enormous risks. Meanwhile, Magnetar had created a largely self-funding bet against the market.

When banks found CDOs hard to sell, some of them, notably Merrill Lynch and Citibank, bought each other’s CDOs, creating the illusion of true investors when there were almost none. That was one way they kept the market for CDOs going longer than it otherwise would have. Eventually CDOs began purchasing risky parts of other CDOs created by the same bank. Take a look at our comic strip explaining self-dealing, and our chart detailing which banks bought their own CDOs.

Goldman Sachs and Morgan Stanley also made similar deals in which they created, then bet against, risky CDOs. The hedge fund Paulson & Co helped decide which assets to put inside Goldman’s CDOs.

Where they are now: Overall, the banks and individuals involved in CDO deals haven’t been convicted on criminal charges. The civil suits against them have produced fines that aren’t very big compared to the profits they made in the leadup to the financial crisis. JP Morgan paid $153.6 million to settle an SEC suit alleging they hadn’t disclosed to investors that Magnetar was betting against Morgan’s CDO. Citigroup just agreed to pay a $285 million fine to the SEC for betting against one of its mortgage-related CDOs. The lawsuit doesn’t mention dozens of similar deals made by Citi.

Magnetar is still thriving (the deals they made weren’t illegal according to the rules at the time). In 2007, Magnetar’s founder took home $280 million, and the fund had $7.6 billion under management. The SEC is considering banning hedge funds and banks from betting against securities of their own creation. As of May 2010, federal prosecutors were investigating Morgan Stanley over their CDO deals, and Goldman Sachs paid $550 million last year to settle a lawsuit related to one of theirs. Only one Goldman employee, Fabrice Tourre, has been charged criminally in connection to the deals.

Though recorded phone calls suggest that former AIG CEO Joseph Cassano misled investors about the credit default swaps that contributed to his company’s troubles, the evidence wasn’t airtight, and federal probes against him fell apart in 2010. Cassano’s lawyers deny any wrongdoing.

The ratings agencies

Standard and Poor’s, Moody’s and Fitch gave their highest rating to investments based on risky mortgages in the years leading up to the financial crisis. A Senate investigations panel found that S&P and Moody’s continued doing so even as the housing market was collapsing. An SEC report also found failures at 10 credit rating agencies
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Where they are now: The SEC is considering suing Standard and Poor’s over one particular CDO deal linked to the hedge fund Magnetar. The agency had previously considered suing Moody’s, but instead issued a report criticizing all of the rating agencies generally. Dodd-Frank created a regulatory body to oversee the credit rating agencies, but its development has been stalled by budgetary constraints.

The regulators

The Financial Crisis Inquiry Commission [PDF] concluded that the Securities and Exchange Commission failed to crack down on risky lending practices at banks and make them keep more substantial capital reserves as a buffer against losses. They also found that the Federal Reserve failed to stop the housing bubble by setting prudent mortgage lending standards, though it was the one regulator that had the power to do so.

An internal SEC audit faulted the agency for missing warning signs about the poor financial health of some of the banks it monitored, particularly Bear Stearns. [PDF] Overall, SEC enforcement actions went down under the leadership of Christopher Cox, and a 2009 GAO report found that he increased barriers to launching probes and levying fines.

Cox wasn’t the only regulator who resisted using his power to rein in the financial industry. The former head of the Federal Reserve, Alan Greenspan, reportedly refused to heighten scrutiny of the subprime mortgage market. Greenspan later said before Congress that it was a mistake to presume that financial firms’ own rational self-interest would serve as an adequate regulator. He has also said he doubts the financial crisis could have been prevented.

The Office of Thrift Supervision, which was tasked with overseeing savings and loan banks, also helped to scale back their own regulatory powers in the years before the financial crisis. In 2003 James Gilleran and John Reich, then heads of the OTS and Federal Deposit Insurance Corporation respectively, brought a chainsaw to a press conference as an indication of how they planned to cut back on regulation. The OTS was known for being so friendly with the banks -- which it referred to as its “clients”-- that Countrywide reorganized its operations so it could be regulated by OTS. As we’ve reported, the regulator failed to recognize serious signs of trouble at AIG, and didn’t disclose key information about IndyMac’s finances in the years before the crisis. The Office of the Comptroller of the Currency, which oversaw the biggest commercial banks, also went easy on the banks.

Where they are now: Christopher Cox stepped down in 2009 under public pressure. The OTS was dissolved this summer and its duties assumed by the OCC. As we’ve noted, the head of the OCC has been advocating to weaken rules set out by the Dodd Frank financial reform law. The Dodd Frank law gives the SEC new regulatory powers, including the ability to bring lawsuits in administrative courts, where the rules are more favorable to them.

The politicians

Two bills supported by Phil Gramm and signed into law by Bill Clinton created many of the conditions for the financial crisis to take place. The Gramm-Leach-Bliley Act of 1999 repealed all the remaining parts of Glass-Steagall, allowing firms to participate in traditional banking, investment banking, and insurance at the same time. The Commodity Futures Modernization Act, passed the year after, deregulated over-the-counter derivatives-- securities like CDOs and credit default swaps, that derive their value from underlying assets and are traded directly between two parties rather than through a stock exchange. Greenspan and Robert Rubin, Treasury Secretary from 1995 to 1999, had both opposed regulating derivatives.  Lawrence Summers, who went on to succeed Rubin as Treasury Secretary, also testified before the Senate that derivatives shouldn’t be regulated.

It’s worth noting the substantial lobbying efforts that accompanied the deregulation process. According to the FCIC [PDF], between 1999 and 2008 the financial industry spent $2.7 billion lobbying the federal government, and donated more than $1 billion to political campaigns. While deregulation took place mainly under Clinton’s watch, George W. Bush is faulted for not doing more to catch the out-of-control housing market.

As president of the New York Fed from 2003 to 2009, Timothy Geithner also missed opportunities to prevent major financial firms from self-destructing. As we reported in 2009:

Although Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued. That was largely because he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound.

Henry Paulson, Treasury Secretary from 2006 to 2009, has been criticized for being slow to respond to the crisis, and introducing greater uncertainty into the financial markets by letting Lehman Brothers fail. In a 2008 New York Times interview, Paulson said he had no choice.

Where they are now: Gramm has been a vice chairman at UBS since he left Congress in 2002. Greenspan is retired. Summers served as a top economic advisor to Barack Obama until November 2010; since then, he’s been teaching at Harvard. Geithner is currently serving as Treasury Secretary under the Obama administration.

Executives of big investment banks

Executives at the big banks also took actions that contributed to the destruction of their own firms. According to the Financial Crisis Inquiry Commission report [PDF], the executives of the country’s five major investment banks-- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley – kept such small cushions of capital at the banks that they were extremely vulnerable to losses. A report compiled by an outside examiner for Lehman Brothers found that the company was hiding its bad investments off the books, and Lehman’s former CEO Richard S. Fuld Jr. signed off on the false balance sheets. Fuld had testified before Congress two years before that the actions he took prior to Lehman Brothers’ collapse “were both prudent and appropriate” based on what he knew at the time. Other banks also kept billions in potential liabilities off their balance sheets, including Citigroup, headed by Vikram Pandit.

In 2010, we detailed how a group of Merrill Lynch executives helped blow up their own company by retaining supposedly safe-- but actually extremely risky--  portions of the CDOs they created, paying a unit within the firm to buy them when almost no one else would.

The New York Times’ Gretchen Morgenson described how the administrative decisions of some top Merrill executives helped put the company in a precarious position, based on interviews with former employees.

Where they are now: In 2009, two Bear Stearns hedge fund managers were cleared of fraud charges over allegedly lying to investors. A probe of Lehman Brothers stalled this spring. Merrill Lynch was sold to Bank of America in the fall of 2008. As for the executives who helped crash the firm, as we reported in 2010, “they walked away with millions. Some still hold senior positions at prominent financial firms.” Dick Fuld is still working on Wall Street, at an investment banking firm. Vikram Pandit remains the CEO of Citigroup.

Fannie Mae and Freddie Mac

The government-sponsored mortgage financing companies Fannie Mae and Freddie Mac bought risky mortgages and guaranteed them. In 2007, 28 percent of Fannie Mae’s loans were bought from Countrywide. The FCIC found [PDF] that Fannie and Freddie entered the subprime game too late and on too limited a scale to have caused the financial crisis. Non-agency-securitized loans had an increased share of the market in the years immediately preceding the crisis.

Many believe that The Community Reinvestment Act, a government policy promoting homeownership for low-income people, was responsible for the growth of the subprime mortgage industry. This idea has largely been discredited, since most subprime loans were made by companies that weren’t subject to the act. 

Still, Fannie and Freddie engaged in reckless behavior and sustained heavy losses as a result. The SEC slammed Fannie Mae for improper accounting under the leadership of Frank Raines in the years preceding the financial crisis. A report by the Office of Federal Housing Enterprise Oversight found that Fannie and Freddie didn’t accurately disclose the risks they were taking and “deliberately and intentionally manipulat[ed] accounting to hit earnings targets.” [PDF]

Richard Syron and Daniel Mudd were at the helm of Freddie and Fannie, respectively, when they began to buy large numbers of subprime loans. Current and former Freddie Mac employees have accused Syron of ignoring warnings about the health of the loans the company was buying. Syron and Mudd maintain they could not have foreseen the rapid decline in the housing market.

Where they are now: As borrowers defaulted on mortgages they’d insured, Fannie and Freddie received a nearly $200 billion federal government bailout, and the government took over their operations. They are close to a settlement in an SEC lawsuit, and will neither admit nor deny that they failed to inform investors about risks of exposure to subprime mortgages. The Dodd Frank financial reform law stated that serious reforms of Fannie and Freddie are needed, but didn’t address how they should be carried out. A report from Treasury Secretary Geithner called for the government to “ultimately wind down” the two mortgage giants. [PDF] In the meantime, taxpayers have been shouldering their legal fees. Former Freddie and Fannie executives Richard Syron and Daniel Mudd received Wells notices this spring, a sign that the SEC is considering legal action against them.

No mention of the Supreme Court's ruling that allows Big Business predators to buy the government outright and is the basis of almost all of these problems. But it is this identification with the interests of the 1% by the political class that is at the root of this catastrophe for Americans. I would imagine that if the guillotine is ever used to deal with this Scalia, Thomas, Alito, Roberts and Kennedy will be given precedence even over the banksters themselves. No one should go before Gramm though-- nor other 1%-ers whose existence is a toxic marriage between banksterdom and political crookery, Michael Bloomberg being an outstanding example. Yesterday:

"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp... [T]hey were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Does Bloomburg get this utter crap from Fox or does Fox get it from 1%-ers like Bloomberg? Does it matter in an endless loop?

A few days ago Robert Reich painted a picture of a different political establishment than the one we have. It was whimsy: "Next week," he wrote, "President Obama travels to Wall Street where he’ll demand-- in light of the Street’s continuing antics since the bailout, as well as its role in watering-down the Volcker rule – that the Glass-Steagall Act be resurrected and big banks be broken up. I’m kidding. But it would be a smart move-- politically and economically."

Politically smart because Mitt Romney is almost sure to be the Republican nominee, and Romney is the poster child for the pump-and-dump mentality that’s infected the financial industry and continues to jeopardize the American economy.

Romney was CEO of Bain & Company-- a private-equity fund that bought up companies, fired employees to save money and boost performance, and then resold the firms at a nice markups.

...Economically it would be smart for Obama to go after the Street right now because the Street’s lobbying muscle has reduced the Dodd-Frank financial reform law to a pale reflection of its former self. Dodd-Frank is rife with so many loopholes and exemptions that the largest Wall Street banks-- larger by far than they were before the bailout-- are back to many of their old tricks.

...In the wake of the bailout, the biggest banks are bigger than ever. Twenty years ago the ten largest banks on the Street held 10 percent of America’s total bank assets. Now they hold over 70 percent. And the biggest four have a larger market share than ever-- so large, in fact, they’ve almost surely been colluding. How else to explain their apparent coordination on charging debit card fees?

The banks aren’t even fulfilling their fiduciary duties to investors. Last summer, after Groupon selected Goldman Sachs, Morgan Stanley, and Credit Suisse to underwrite its initial public offering, the trio valued it at a generous $30 billion. Subsequent accounting and disclosure problems showed this estimate to be absurdly high. Did the banks care? Not a wit. The higher the valuation, the fatter their fees.

Just last week Citigroup settled charges (without admitting or denying guilt) that it defrauded investors by selling them a package of mortgage-backed securities rife with mortgages it knew were likely to default, but didn’t disclose the hazard. It then bet against the package for its own benefit-- earning fees of $34 million and net profits of at least $126 million. So what’s Citi paying to settle this outrage? A mere $285 million. Its CEO at time (Charles Prince) doesn’t pay a dime.

I doubt the President will be condemning the Street’s antics, or calling for a resurrection of Glass-Steagall and a breakup of the biggest banks. Democrats are still too dependent on the Street’s campaign money.

That’s too bad. You don’t have to be an occupier of Wall Street to conclude the Street is still out of control. And that’s dangerous for all of us.

Private Gains/Public Losses: Inside Job-- The Movie

I guess if you just arrived back on earth after hitching a ride on a passing meteorite from Alpha Centauri, you might be unaware that there has been a global financial and economic meltdown taking place-- the cherry on the cake of the right's ascension to power and their anti-regulatory, "greed-is-good" mania. Friday night I went to see the new Charles Ferguson film that puts it all together in a powerfully compelling, stark and ultra-informative documentary. That's the trailer above.

Oscar-nominated Ferguson seamlessly weaves together a narrative that exposes the selfish greed and corruption of Republicans from Reagan to Bush-- without sparing the equally culpable Clinton and his crew of bandits-- while graphically showing the devastation from Iceland to Singapore to Queens. Ferguson, who was brilliant on NPR last week, the reason I accepted the invitation to see the screening:

This film attempts to provide a comprehensive portrayal of an extremely important and timely subject: the worst financial crisis since the Depression, which continues to haunt us via Europe’s debt problems and global financial instability. It was a completely avoidable crisis; indeed for 40 years after the reforms following the Great Depression, the United States did not have a single financial crisis. However, the progressive deregulation of the financial sector since the 1980s gave rise to an increasingly criminal industry, whose “innovations” have produced a succession of financial crises. Each crisis has been worse than the last; and yet, due to the industry’s increasing wealth and power, each crisis has seen few people go to prison. In the case of this crisis, nobody has gone to prison, despite fraud that caused trillions of dollars in losses. I hope that the film, in less than two hours, will enable everyone to understand the fundamental nature and causes of this problem. It is also my hope that, whatever political opinions individual viewers may have, that after seeing this film we can all agree on the importance of restoring honesty and stability to our financial system, and of holding accountable those to destroyed it.

Although France's former Minister of Finance, Christine Lagarde, Trillion Dollar Meltdown author Charles Morris, Eliot Spitzer, and NYU Economics Professor Nouriel Roubini come off as the most astute and penetrating characters in Ferguson's documentary, it is through the interviews with the perpetrators and villains, lured unsuspecting into condemning themselves and their cronies, that one gets the true horror of what has been pulled off against the citizens of this country by the business and political elite. My favorite scumbags-- and, as a firm believer in the death penalty, I heartily disagree with Ferguson that any of these crooks belong in prison-- are Scott Talbot chief lobbyist for the Financial Services Roundtable (Banksters, Inc), Glenn Hubbard, Bush's Chief Economic Advisor and one of the main architects of the great heist, currently disgracing Columbia University as dean of their increasingly untrustworthy and very shady Business School, and the hapless/clueless David McCormick, former Under Secretary for International Affairs at the U.S. Department of Treasury (the guy in the video up top who asks for the filming to be stopped when it finally dawns on him that the movie isn't going to be a toast to the genius of Phil Gramm).

You've probably heard of most of these folks but Ferguson introduces two know are both delightful and previously unknown to the general public: Jonathan Alpert and Kristin Davis. He's a prominent Manhattan psychotherapist to Wall Street executives and to the sex workers they employee. And Kristin (photo above, right)? The former Madam to the investment banker community. Ferguson explores another aspect of the financial meltdown through them, and others: overgrown boys on cocaine trying to prove their dicks are the biggest. They cost the world economy over $20 trillion dollars, made out like bandits, are all still living like kings-- actually better than any king ever did-- and are about to get another huge tax break from their pals the Republicans plus cowardly and corrupt Democrats like John Adler (NJ) and Evan Bayh (IN).



SONY Pictures was kind enough to provide theatergoers with Ferguson's timeline of how deregulation, which Wall Street bribed Congress into providing, led to the development of a toxic Wall Street Culture and the financial collapse:

1930s (post-Great Depression)-1979: Traditional American finance

1933-35: Motivated by financial abuses that contributed to the Great Depression, new laws such as the Glass-Steagall Act and the Securities and Exchange Act place limits on financial risk-taking and require extensive disclosure of financial information

• Bankers/traders earned salaries in line with other professionals; tightly regulated financial sector

1980s: The Reagan Era: laissez-faire and trickle-down economics

• Substantial deregulation, especially the Garn-St. Germain Act which deregulates Savings and Loan companies, leading to the later S&L crisis

• Oliver Stone’s Wall Street immortalized financial sector greed and immorality

• S&L scandal: loose regulations, lax enforcement lead to massive fraud; hundreds of S&Ls fail lax enforcement lead to massive fraud; hundreds of S&Ls fail; $124 billion taxpayer-funded bailout

• Neil Bush approves $100 million of bad loans to business partners through Silverado S&L, which subsequently fails

• 1989: Keating Five: Four senators and CEO Charles Keating accused of improper influence in advocating against investigating Lincoln S&L, which collapses and Keating is convicted of fraud

• 1987-1990: Michael Milken, Ivan Boesky and other Wall Street executives convicted of fraud and insider trading

1990s: Clinton era: increasing revolving door between Washington and Wall Street

• 1999: Clinton administration members with Wall Street backgrounds help pass the Gramm-Leach-Bliley Act, aka the “Citigroup Relief Act,” repealing Glass-Steagall and allowing mergers that create Citigroup

• 1994: A new law gives the Federal Reserve power to regulate the mortgage industry, but Alan Greenspan refuses to enact any regulations, on the grounds that regulation was unnecessary

• 2000: Clinton Administration, particularly Larry Summers, Alan Greenspan and key Congress members including Senator Phil Gramm help enact the Commodity Futures Modernization Act, which bans all regulation of financial derivatives and exempts them from anti-gambling laws

• 2000: Dot-com bubble bursts

• 2000-2002: Eliot Spitzer sues 8 investment banks for conflict of interest and recommending dot-com stocks they thought were junk; reaches settlements totaling $1.4 billion in fines

2000s: George Bush pushes for further deregulation and relaxed enforcement

• 2000-2005: Investigations of Fannie Mae and Freddie Mac reveal massive accounting fraud

• 2002: Arthur Andersen, auditor, convicted of obstruction of justice for shredding Enron documents

• 2003: Worldcom revealed to have inflated assets by $11 billion

• 2000s: new crops of highly complex financial innovations flourish: securitization of mortgages, credit default swaps, synthetic CDOs

• 2000-2007: Fed by the investment banking industry, a massive housing and mortgage credit bubble sweeps the United States; mortgage lending quadruples, housing prices double

• 2004: After intense lobbying by investment banks, the SEC lifts the leverage limits on the investment banking industry, allowing them to borrow more

• 2005: IMF chief economist Raghuram Rajan warns of dangerous incentives and risks in the financial system; Larry Summers dismisses him as a “Luddite”

• 2005-2008: Goldman Sachs, Morgan Stanley, Deutsche Bank and other investment banks begin using credit default swaps to bet against the same mortgage securities that they are selling as extremely safe

• 2006: Hank Paulson, CEO of Goldman Sachs, becomes Treasury Secretary

• 2007: The housing bubble bursts, as the financial sector runs out of people willing to borrow and purchase more housing; home ownership reaches an all-time high, while savings rates are at historic lows

2008: Great Recession begins

• Collapse of Bear Stearns (March) and then Lehman Brothers (September)

• AIG rescued with $85 billion one day after Lehman declares bankruptcy

• Housing prices drop by 32 percent over three-year period

• Record foreclosures

• Unemployment rises from 5% to 10% in one year

• Tens of billions in bailout money go to AIG and Goldman Sachs

• $700 billion emergency bailout for the financial industry

2010s: The Obama era: Business as usual?

• Timothy Geithner becomes Treasury Secretary

• Larry Summers becomes director of the National Economic Council

• President Obama re-appoints Ben Bernanke

• Obama appoints many Wall Street executives to senior regulatory and economic policy positions

No one goes to prison and no one has to give back the ill-gotten gains. Ordinary citizens just have to eat it. And ordinary citizens probably deserve it since they keep reelecting the criminal political class that has made this all possible. Since we're about to go into an election, I thought I'd just mention in passing that there are several politicians up for reelection in November who voted on the Gramm-Leach-Bliley Act that effectively guaranteed the great heist by deregulating Wall Street. In the Senate, which passed it 54-44, every Republican voted YES and every Democrat (other than reactionary Dixiecrat Ernest Hollings of South Carolina) voted NO. Facing the voters in November we find Chuck Grassley (R-IA), and John McCain (R-AZ) on the YES side and Barbara Boxer (D-CA), Russ Feingold (D-WI), Blanche Lincoln (D-AR), Barbara Mikulski (D-MD), Patty Murray (D-WA), Harry Reid (D-NV), Chuck Schumer (D-NY) and Ron Wyden (D-OR), who tried stopping the catastrophic bill from passing. Why so few Republicans left in the Senate? Many of them, like Gramm, left to take get-rich-quick/thank-you jobs with the big banks, lobbyists and Wall Street firms.

It passed the House by far more lopsided numbers, 343-86, 16 Republicans and 86 Democrats (+ Independent then-Rep. Bernie Sanders) voting NO. Among the YES votes were Richard Burr, Jim DeMint and David Vitter, now sleazy and reactionary U.S. Senators seeking reeelction from the Carolinas and Louisiana; Charlie Bass and Steve Chabot (respectively a New Hampshire and an Ohio crook looking for their old jobs back); Roy Blunt and Pat Toomey (uber-corrupt political hacks jonesin' for a promotions to the Senate from Missouri and Pennsylvania); John Boehner, of course who is hoping voters are retarded enough to make him Speaker; Allen Boyd (Blue Dog-FL); Joseph Crowley (an extraordinarily corrupt New York New Dem fast rising in the House Democratic leadership); Nathan Deal and John Kasich (looking for jobs as governors of Georgia and Ohio, where their talents will be appreciated); Dick Armey (currently acting as king of the teabaggers); Rob Portman (whose economic activities have been so destructive to Ohio that he feels he deserves to be the next senator from that freaked out state); and the economic "brains" behind the Republican/Wall Street agenda, Paul Ryan; as well as a slew of the old Wall Street/K Street standbys like David Dreier (R-CA), Ken Calvert (R-CA), Brian Bilbray (R-CA), Steny Hoyer (D-MD), Peter King (R-NY), Steve LaTourette (R-OH), Jerry Lewis (R-CA), Buck McKeon (R-CA), Pete Sessions (R-TX) and Elton Gallegly (R-CA).

Go see the movie. Kenneth Turan summed it up perfectly for the L.A. Times: "It's a powerhouse of a documentary that will leave you both thunderstruck and boiling with rage," as did Roger Ebert (in the Chicago Sun-Times): "A very angry, very carefully argued, brutally clear documentary about how the American financial industry set out deliberately to defraud the ordinary American investor." People who played key roles in the collapse but who refused to appear on camera include Lawrence Summers, Alan Greenspan, Joseph Cassano, Lloyd Blankfein, Robert Rubin, Ben Bernanke, Henry Paulson and Tiny Tim Geithner.

Republicans To America: Stop Your Whining, Stop Your Exaggerating And Get To Work

I've been house-hunting with my friend Roland. There are a lot of houses on the market and an awful lot of them are either owned by banks (foreclosures) or are being offered as "short sales" (a pre-foreclosure sale by an owner with the bank agreeing to take a loss). And these sales are in every price range and in every neighborhood. One broker told us that one in nine houses in America has been foreclosed or is in the process of being foreclosed on. I was shocked; I still am. I wonder if he's exaggerating, something I want to come back to in a moment.

Last week my financial advisor-- a senior vice president at the biggest bank in America (and I think the world)-- told me every cent I have in banks needs to be insured by FDIC, no two ways about it. She also told me what she expected to happen this weekend on Wall Street. Her prediction was dismal. Reality was worse. I guess everyone already knew Lehman Bros was on the verge of collapse. Merrill Lynch was a shock.

In one the most extraordinary days in Wall Street’s in history, Merrill Lynch is near an 11th-hour deal with Bank of America to avert a deepening financial crisis while another storied securities firm, Lehman Brothers, hurtled toward liquidation, according to people briefed on the deal.

Bank of America has offered $50 billion or $29 a share for Merrill Lynch, people briefed on the negotiations said. Merrill shares closed at $17.05 on Friday.

The dramatic turn of events was prompted by the cataclysm of losses that has shaken the American financial industry over the last 14 months.

The moves came after a weekend of frantic negotiations between federal officials and Wall Street executives over how to avert a downward spiral in the markets. Questions still remain about how the market will react and whether other firms may still falter like A.I.G., the large insurer, and Washington Mutual, both of whose stocks fell precipitously last week.

Coming just a week after the government took control of mortgage lenders Fannie Mae and Freddie Mac, the magnitude of the industry’s reshaping is staggering: two of the most powerful firms on Wall Street, Merrill Lynch and Lehman, will disappear.

The weekend’s once unthinkable outcome came after a series of emergency meetings at the Federal Reserve building in downtown Manhattan in which the fate of Lehman hung in the balance. In the meeting Federal Reserve officials and the leaders of major financial institutions were trying to complete a plan to rescue the stricken investment bank.

But as the weekend unfolded, Barclays and Bank of America, which had both considered buying all or part of Lehman, decided that they could not reach a deal without financial support from the federal government or other banks.

As a result, people briefed on the matter said late Sunday that Lehman Brothers would file for bankruptcy protection, in the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago.

Most people who know of Donald Luskin's work know him as a purveyor of the GOP tenets of extreme Greed and Selfishness in Republican Party media outlets like National Review and on Larry Kudlow's CNBC propaganda program. A shady hedge fund predator, Luskin has made himself a darling of reactionaries by distorting economic news and attacking Paul Krugman's NY Times columns. Needless to say Luskin is also part of the McCain economic team.

So weren't we surprised yesterday to see him in a legitimate newspaper, the Washington Post which didn't bother warning readers that they were reading a distorted McCain advertisement disguised as journalism? His piece, reminiscent of his-- and McCain's-- pal Phil Gramm's "Nation of Whiners" screed, was called A Nation of Exaggerators: Quit Doling Out That Bad-Economy Line. Although many see the comparisons between the 1929 Wall Street meltdown that presaged the Great Depression and today's activities on Wall Street, Luskin, like Gramm, thinks it's all just psychological. This is where McCain, who admits he is clueless about economics and "out of touch" with the day to day lives of normal Americans-- other than the dozens of servants who work in his innumerable homes-- gets his economic policies from. Most people say blame for the economic collapse can be spread out evenly throughout the GOP (and the Republican wing of the Democratic Party-- Blue Dogs and such corporately bought trash) but others think Gramm deserves a larger share of the blame than many others.

Like Palin, Phil Gramm-- who got a time out a few weeks ago, has been back in the saddle on the Double Talk Express-- is another example of McCain's horrendous judgment. Luskin, a notorious delusional wingnut, is singing "Happy Days Are Here Again."

Things today just aren't that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression-- or exaggerated Depression comparisons.

Overall, the pessimists are up against an insurmountable reality: In the last reported quarter, the U.S. economy grew at an annual rate of 3.3 percent, adjusted for inflation. That's virtually the same as the 3.4 percent average growth rate since-- yes-- the Great Depression.

Why, then, does the public appear to agree with the media? A recent Zogby poll shows that 66 percent of likely voters believe that "the entire world is either now locked in a global economic recession or soon will be." Actually, that's a major clue to what started this thought-contagion about everything being the worst it has been "since the Great Depression": Politics.

He then, in the mode of the entire McCain campaign, goes on to blame Obama. Anyone who votes for McCain deserves four more years of the Bush Economic Miracle. Unfortunately, if there are enough of them, we all get that deadly virus. And while McCain's blowhards are denying everything, claiming Americans are bellyachers and whiners and that we don't work hard enough, Paul Krugman is trying to school ideologically-driven mental midgets like Gramm and Luskin and Kudlow. In their psychotic mania to destroy the federal regulatory controls that FDR and Democrats put in place to protect consumers and workers from another economic collapse caused by unregulated predatory capitalism, the Republican extremists have severely damaged the entire system. Right about now thank your lucky stars that Bush and McCain lost their battle to wreck Social Security through "privatization."

Early this morning Joe Biden spoke to voters in St Clair Shores, Michigan, reminding them that in movieland, "the sequel is always worse than the original."

If we forget this history, we're going to be doomed to repeat it -- with four more just like the last eight, or worse.
 
If you're ready for four more years of George Bush, John McCain is your man. Just as George Herbert Walker Bush was nicknamed "Bush 41" and his son is known as "Bush 43," John McCain could easily become known as "Bush 44."
 
The campaign a person runs says everything about the way they'll govern. John McCain has decided to bet the house on the politics perfected by Karl Rove.   
 
Those tactics may be good at squeaking by in an election but they are bad if you want to lead one nation, indivisible. 

...Take a hard look at the positions John has taken for the past 26 years, on the economy, on health care, on foreign policy… and you'll see why I say that John McCain is just four more years of George Bush. 
 
On the issues that you talk about around the kitchen table, Mary's tuition, the cost of the MRI, heating the home this winter--  John McCain is profoundly out of touch.

...John McCain stands with George Bush firmly in the corner of the wealthy and well-connected. 
 
He stands with the oil company CEOs who swore to me, under penalty of perjury, that they didn't need tax breaks to explore for oil.
 
John McCain is so firmly in their corner he'd hand the Exxon-Mobils of the world another $4 billion dollars a year.
 
He stands in the corner of the wealthiest Americans by extending tax cuts for people making over a quarter million dollars a year, and then adding more than $300 billion on top of that for corporations and the wealthy. 
 
There is simply no daylight-- at least none I can see-- between John McCain and George Bush.  On every major challenge we face, from the economy, to health care, to education and Iraq, you can barely tell them apart.

UPDATE: McCAIN DEMONSTRATES ONCE AGAIN THAT HE KNOWS NOTHING WHATSOEVER ABOUT THE ECONOMY

Despite the McCain campaign's claims that "the fundamentals of the economy are strong" and that "we've made great progress economically during the Bush years," most Americans know well that the economic problems go beyond Wall Street. No one other than McCain would be surprised to hear that industrial output plunged by over 1% in August.

Is McCain Still Planning To Make Gramm His Treasury Secretary?

Although the McCain lobbyist brigade put on a strong face and defended fellow lobbyist Phil Gramm, McCain's chief economic advisor-- and first choice for Treasury Secretary in an administration that will never be-- the handwriting was on the wall from the moment the public focused on what an ass he is. Giving a candid look at the thinking inside the Double Talk Express, the multimillionaire and elitist Gramm, who's gotten every cent he has by working the government for his own self interest while decrying the very concept of the government having any role in the common good, complained that Americans are a "nation of whiners." He claimed that there is no recession, and that the falling home prices, steadily growing unemployment numbers, bank failures, inflationary spiral are... no big deal and "just in people's minds."

And, indeed, among people like the Gramms, Bushes, Cheneys and McCains, who have profited so handsomely by sucking at the government teat, life is good. Life is very, very, very good. And they wouldn't change a thing-- except to bring on more of the same-- lots more.

This morning's NY Times makes it official: after trying to rehabilitate Gramm earlier in the day-- he's had his "time out," they said and was back on board-- McCain bowed to intense public pressure and finally jetisoned Gramm as his campaign's co-chairman, or at least says he did. McCain and his lobbyists and media allies keep calling Obama an elitist and an arugula eater. McCain has more corrupt multimillionaires on the Double Talk Express than even Bush had on his campaign, more, in fact, than any other candidate in history. There's another scandal every week and today's was all about a particularly sleazy operator and major McCain fundraiser, Juan Carlos Benitez, one of McCain's many connections to Jack Abramoff and the Republican Culture of Corruption that has ruined Washington during the Bush presidency.

But it was Gramm's inevitable "resignation" last night that got the most media attention.

Mr. Gramm, a multimillionaire banker, has been under fire since last week, when he dismissed concerns about the troubled economy by referring to “a mental recession.” He also said the United States had become “a nation of whiners,” a remark providing fodder for Democrats to portray Republicans as out of touch with the concerns of ordinary Americans.

Since the start of his campaign, but particularly since the onset of the most recent economic turmoil, Mr. McCain has been struggling to convince voters of his ability to manage the economy, an area he has acknowledged in the past as a weakness. Mr. Gramm, in addition to being a close friend, helped design his economic program and, until last week’s gaffe, was being mentioned as a possible treasury secretary in a McCain administration.

The Obama campaign, of course, pointed out what the media has missed here, what it far more important than another body tossed off the bus to nowhere. Hari Sevugan: “The question for John McCain isn’t whether Phil Gramm will continue as chairman of his campaign, but whether he will continue to keep the economic plan that Gramm authored and that represents a continuation of the polices that have failed American families for the last eight years."

Keith Olbermann summed it all up last night-- and very well:

Republicans And The Economy-- Like Oil And Water

When two oilmen, largely financed by the Oil Industry, took over the presidency, the average cost of gas at the pump was $1.52. Back then it used to cost me about $20 to fill up my car. On an average type week I use about a tank of gas, so I was spending a bit less than $1,100 a year on gas. Today I filled up that same car and it cost me nearly $70 because gas costs $4.89 at the cheapest station in my part of town. If gas stops going up-- which is unlikely-- gas will make a much bigger dent in my budget: a bit over $3,600. Thanks to the Bush Economic Miracle there has been a massive transfer of wealth from consumers to... to who? The oil company executives who financed Bush's and Cheney's careers? Arab terrorists? It's not the guy who operates the gas station. This morning's Washington Post features a column by Harold Meyerson looking and the Bush-McCain economic agenda and can't get beyond "voodoo economics."

McCain comes before the electorate doctrinally adrift.

By his own admission, McCain has never been a student of the economy-- but neither have any number of American presidents. When the economy is humming along, their economic illiteracy has been a problem they can elide. They take refuge in the economic bromides of the time. Their speeches are filled with reaffirmations of their party's economic doctrine.

But as McCain tries to balance the tattered libertarianism of Reaganomics with the financial exigencies of the moment, he and his campaign have moved beyond inconsistency into utter incoherence. He vows to balance the budget while also cutting corporate taxes and making permanent the Bush tax cuts for the rich-- even though the rich and corporations made out like bandits during the Bush "prosperity," while everyone else's incomes stagnated. McCain squares this circle by vowing to cut entitlements, a move that would reduce, rather than enhance, consumer purchasing power at a time of economic downturn (or any other time, for that matter).

Whether Americans are even experiencing a downturn has been a matter of some dispute in the McCain camp, since former senator Phil Gramm, until last week one of McCain's chief surrogates on economic issues, deemed America a nation of "whiners" mistaking subjective insecurity over the economy for an objective economic fact. For McCain, who had the misfortune to be campaigning in Michigan the day that Gramm's remarks dominated campaign news, Gramm's insensitivity was appalling. But McCain has never expressed any concern that Gramm wrote the legislation that enabled the $62 trillion credit default swaps market to remain unregulated, which, as David Corn documented in Mother Jones, meant that banks and hedge funds could accumulate liabilities that they could not cover if the markets-- most particularly, the subprime mortgage market-- went south. To the contrary, McCain has viewed Gramm as one of his economic gurus. "There is no one in America that is more respected on the issue of economics than Senator Phil Gramm," McCain declared in February.

On Tuesday night Harry Reid filed a hodgepodge bill filled with proposals meant to get oil futures speculation back under control. Republicans won't budge from their position of allowing more off shore drilling, even though there are millions and millions of acres that oil companies are already leasing where they aren't drilling. (Bribe-choked oil industry-allied Blue Dog Democrats have joined with Republicans to defend Big OIl and prevent passage of a use-it-or-lose-it bill in the House.) They refuse to talk about anything but "the law of supply and demand" and insist that speculation in oils futures isn't a real part of the problem. Their spokesperson-- and I'm sure this is just a peculiar coincidence-- is the senator who has taken the most contributions from Big Oil this year (other than John McCain, of course)-- John Cornyn (R-TX- $803,200).

Reid is insisting that the Senate reverse the Republican deregulation agenda, which has wreaked so much havoc on the economy, and empower the Commodity Futures Trading Commission to increase transparency and limit market speculation. Perhaps some of the Republican groups that want to see runaway speculation (and oil prices), like the airline industry need to take a page from the AMA and threaten Cornyn's re-election bid to get him to support their demands. Fact of the matter is that both Republican and Democratic pollsters are reporting that the public wants speculation curbed-- and they want it curbed now, regardless of how many bribes the Oil Industry has given John Cornyn, James Inhofe (R-OK-$301,800), Steve Pearce (R-NM-$201,434), Mitch McConnell (R-KY-$230,900), Mary Landrieu (D-LA-$247,200), and Pat Roberts (R-KS-$156,100) this electoral cycle.

John Boehner (R-OH), who has accepted $185,000 in bribes from Big Oil since being elected to Congress, poo-poo's the whole idea of speculation. Caught by reporters between golf games he barked that "it's just another excuse not to drill. Without speculators, you have no liquidity in these markets. You want to bring more transparency to the market? Fine ... But all this other chatter that's going on is reckless and will have no impact." Boehner's clueless Ohio constituents keep returning him to office and wonder why their home equity values are at 1991 levels and why their cars cost so much to fill up and their family member's jobs are in jeopardy. Boehner got 64% of the vote in 2006 in his suburban/exurban district in western Ohio. This year he has raised, mostly from corporate special interests, $2,399,951, to fight off a challenge from Nick Von Stein who has raised $16,159. Maybe Congressman Boehner should spend less time on the links and more time listening to the American people-- or at least to some traditional Republican constituency groups. Tim Evans, in CitiGroup Futures reports that "with the latest push to the upside, we see the crude oil market becoming even more completely divorced from any connection to fundamental factors and becoming even more obsessed with the simple question 'how high can it go?'"

The Stop Oil Speculation Now coalition is a diverse and growing organization of industries, businesses, labor groups and ultimately concerned citizens united in support of responsible energy policies and prices. The coalition includes: ABX Air, Inc., Aerolitoral, Agricultural Retailers Association, Air Canada Jazz, Air Carrier Association of America, Air Line Pilots Association, International Air Transport Association, Air Wisconsin, Aircraft Owners and Pilots Association, AirNet Systems Inc., Airports Council International - North America, AirTran Airways, Alaska Airlines, Inc., ALMA de Mexico, American Airlines, Inc., American Association of Airport Executives, American Bus Association, American Eagle, American Moving and Storage Association, American Society of Travel Agents, American Trucking Associations, Association of Corporate Travel Executives, ASTAR Air Cargo, Inc, Atlantic Southeast Airlines, Atlas Air, Inc., Cape Air, Cargo Airline Association, Chautauqua Airlines, Inc., Colgan Air, Inc., Comair, CommutAir, Compass Airlines, Continental Airlines, Inc., Delta Air Lines, Inc., Delta Connections, Empire Airlines, Era Aviation, Evergreen International Airlines, Inc., ExpressJet, Federal Express Corporation, Flight Options, Frontier Airlines, Inc., Gasoline & Automotive Service Dealers of America, GoJet Airlines, Grand Canyon Airlines, Great Lakes, Gulfstream, Hawaii Island Air, Hawaiian Airlines, Horizon Air, IBC Airways, International Brotherhood of Teamsters, JetBlue Airways Corp., Mesa Airlines, Mesaba Airlines, Messenger Courier Association of the Americas, Midwest Airlines, National Business Aviation Association, National Business Travel Association, National School Transportation Association, New England Airlines, New England Fuel Institute, Northwest Airlines, Inc., Petroleum Marketers Association of America, Piedmont Airlines, Inc., Pinnacle, PSA, Regional Airline Association, Republic Airlines, Salmon Air, Scenic Airlines, Shuttle America, Skybus Airlines, Skywest, Southwest Airlines Co., Spirit Airlines, Inc., Trans States, TripplerTravel.com, Truckers and Citizens United, TruthOnOil.org, Twin Otter International, United Airlines, Inc., United Motorcoach Association, UPS Airlines and US Airways, Inc.

If You Think Deregulating Banks Was A Good Idea, Then Maybe You Should Vote For John W. McCain

I never spoke with David Sirota about having a music soundtrack for his awesome new book, The Uprising, but if I had I would have recommended he get Mojo Nixon to write the songs and record them for him. If any musician is part of the Uprising, it's Mojo-- and if you don't know why, you will after you watch the little clip I just threw together for a swingin' ditty he did called "I Hate Banks" (below). If people start getting a good gander at more bankers like the ones McCain has around him-- take Phil Gramm, for instance, with his "Americans are whiners" comments and his assertion that there is no recession except in people's heads-- there will be more and more people who hate banks, as they should, and the politicians who give them license to steal. Tomorrow's NY Times talks about how the taxpayers are being forced to spend billions to bail out Fannie Mae and Freddie Mac, both brought to the brink of collapse because of ideologically-driven Republican mismanagement of the economy. But that isn't all, analysts say they expect more banks to fail and this, again, is due to the shortsighted greed and selfishness economics of Bush, McCain and the whole rotten Republican party.

This morning's Washington Post ran an ominous article, Many Retirees Face Prospect of Outliving Savings, Study Says. I'm damn glad people are living longer but outliving savings... that doesn't sound good.

Nearly three out of five middle-class retirees will probably run out of money if they maintain their pre-retirement lifestyles, a new study from Ernst & Young has concluded.

The study, set to be released tomorrow, finds that Americans will have to drastically reduce their standard of living before retirement to live comfortably, or even avoid destitution, later in life. Middle-income Americans entering retirement now will have to reduce their standard of living by an average of 24 percent to minimize their chances of outliving their financial assets, the study found. Workers seven years from retirement will have to cut their spending by even more-- 37 percent.

"People are going to have to adapt in a number of ways that they weren't anticipating or hoping for," said Tom Neubig, national director of the Quantitative Economics and Statistics practice at Ernst & Young. "I think a lot of people are hoping to maintain roughly the same standard of living after retirement. Our study suggests they are going to have to make some changes."

About 77 million baby boomers are expected to retire over the next few years. The study warns of an impending national crisis if workers, and lawmakers, do not react now to the changing pension structures in corporate America. Most companies have moved away from defined-benefit plans, in which they provided their retirees with a set benefit each month, to defined-contribution plans such as 401(k)s, in which the employee takes most of the responsibility for saving money. But with the U.S. savings rate abysmally low and people underestimating their life spans, economists warn that aspiring retirees will have to work longer if they do not spend less, no small feat at a time when inflation and the cost of living are rising. Fluctuating investment returns on 401(k)-style plans in this wobbly stock market are not helping matters.

Well... at least Democrats were able to derail the long-time Republican dream of destroying Social Security-- the one thing they managed to stymie Bush and his Republican rubber stamps on. Of course, virtually every single one of McCain's economic advisors harbors that dream and there is no domestic policy McCain wants to accomplish more than wrecking Social Security, the most successful government program in history.

If you think McCain wants to do anything significant different from George Bush-- except attack and bomb even more countries-- then you probably haven't had the time to pay close enough attention. Today on CNN one of McCain's chief surrogates-- and a potential running mate-- South Carolina Governor Mark Sanford basically admitted as much, although that wasn't part of his script since McCain's campaign is that he is the agent of change, the not-George-Bush-candidate. This is especially tough since he has a Senate record that clear shows he has supported almost every single hideous policy Bush has put forward in seven and a half disgraceful and disastrous years. Here was Sanford stuttering and stumbling on CNN today:

BLINTZER: Are there any significant economic differences between what the Bush administration has put forward over these many years as opposed to now what John McCain supports?

SANFORD: Um, yeah. For instance, take, you know, take, for instance, the issue of -- I'm drawing a blank, and I hate it when I do that, particularly on television. Take, for instance the contrast on NAFTA. I mean, I think that the bigger issue is credibility in where one is coming from, are they consistent where they come from.

Take it away, Mojo. Tell us what you and Jesus think of banks and the Republicans who enable what they do:




UPDATE: McCAIN PLANS TO KEEP GRAMM AWAY FROM REPORTERS AND VOTERS

Tomorrow's headlines will be that McCain is jettisoning his chief economic advisor and close friend, Phil Gramm. But that isn't accurate. Gramm's startlingly horrible approach to matters financial will still be official McCain policy; but Gramm will be kept away from reporters and voters.

Sen. John McCain is definitely done trotting his friend and former Senate colleague Phil Gramm out on the campaign trail, and he is minimizing the Texan's role among his team of advisers.

Gramm had played an important part in crafting McCain's economic plan, and he occasionally appeared at rallies or spoke to editorial boards on the presumptive GOP nominee's behalf. But no longer, according to two key McCain advisers, after Gramm told the Washington Times that the country was filled with "whiners" and the United States is merely in a "mental recession."

Now the McCain lobbyist brigade says Gramm is just a "volunteer." Yeah, like someone who licks envelopes and vandalizes Obama lawn signs. Expect to see Gramm's hallmark policies of deregulation, favors to rich corporations, disembowelment of government programs like Social Security and Medicare, and hardships for working families continue to dominate McCain's gloomy, backward-looking domestic message.

WHAT DO YOU KNOW ABOUT THE "SMART PEOPLE" McCAIN HOPES TO HIRE TO RUN THE U.S. ECONOMY WHILE HE DEALS WITH IRAN? MEET PHIL GRAMM

The top two died; the third is McCain's chief economics advisor

In the spring of 2002 Molly Ivins-- don't we miss her!-- wrote a hail and farewell column to "two of the meanest guys ever to serve in the U.S. Congress -- Senator Phil Gramm and House Majority Leader Dick Armey, both from Texas." We'll leave Armey out of this and if you've been reading DWT for the past couple of years you already know that time and distance from the Senate hasn't done anything to improve Phil Gramm as a human being. Today he is the economic and financial face of the John W. McCain campaign. A presidential candidate's chief economic advisor is always an important role, but in the case of McCain... well, as you know, McCain is disinterested in the economy beyond the bounds of whatever craps table he's playing at, admits not knowing much about it and promises to learn someday and hire "some smart people." Problem of, course, just as we thought the doltish and shallow Bush would hire some smart people-- ergo: Cheney, Rumsfeld, Rove, Richard Perle, Michael Brown, Paul Wolfowitz-- we are assuming McCain's idea of "smart people" is something different from what he has already shown it to be-- Carly Fiorina and, worse, Phil Gramm in economics and Lindsey Graham and Joe Lieberman, two Bush policy deadenders in foreign affairs. I guarantee you, Molly wouldn't have trusted McCain to pick a smart person if his life-- and ours-- depended on it (which, in a way, they do).

Molly starts her essay recalling one of Gramm's least endearing moments, when he proposed-- with a straight face and no sense of irony whatsoever-- denying "food stamps to elderly legal immigrants [think about your grandma and grandpa] on the splendid grounds that extending aid would only foster dependency, thereby inciting 'a new personal tragedy on the most vulnerable among us.'" Did you know the multimillionaire shady Swiss bank lobbyist/VP cared so deeply about the most vulnerable among us? Like Armey-- and for that matter, many Republicans-- Gramm built his political career "by opposing everything the government does to help people, constantly disparaging and attacking the institutional form of the people's power. Corporate welfare is fine with Gramm [which fits into his disgraceful revolving door career], just not anything to help people."

In the world of people who own their own jets, the recession really is just in the minds of whiners

Gramm has been in the news again lately, not because of the hogwash he feeds McCain and McCain dutifully repeats, but because he let his guard down long enough to blurt out that there is no recession except in people's minds and that Americans are a bunch of whiners. Although the McCain camp tried defending him at first, the response was so furious that it only took a few hours before McCain claimed that-- suddenly, since he always has-- Gramm doesn't speak for him. Let Molly take it from here, since everything she wrote in 2002 is as relevant today as it was then.

Phil Gramm is fond of posing as a picked-upon outsider whenever he screws up. But Gramm has done far more damage to the public interest-and his record of hypocrisy is remarkable, even by Washington standards. Gramm has always posed as a right-wing populist, looking out for the little guy against the terrible Washington politicians who are wasting the hardworking taxpayer's dollar: His Everyman was Dicky Flatt, a printer in Mexia, Texas, and Gramm's supposed lodestar has been, "What would Dicky do?" In fact, Gramm has been an assiduous servant of large corporate interests, routinely supporting legislation that screwed the Dicky Flatts of the world.

Gramm both looks like a snapping turtle and has the personality of one. When he ran for president in 1996 and finished fifth in Iowa, all the profiles written of him included the line "Even his friends don't like him." Self-righteous and strident, Gramm demonized his opponents and used bitter, polarizing rhetoric. During a Senate debate over Social Security, a member pointed out that the proposal under consideration would hurt 80-year-old retirees. "Most people don't have the luxury of living to be 80 years old," Gramm scoffed, "so it's hard for me to feel sorry for them." Well, there is that.

On another occasion, Gramm ridiculed a newspaper photo of poor people who were forced to cut corners to put food on the table. "Did you see the picture?" Gramm asked a crowd. "Here are these people who are skimping to avoid hunger and they are all fat!... We're the only nation in the world where all our poor people are fat." During the fight over health care reform, Gramm said, "We have to blow up this train and the rails and the trestle and kill everyone on board." When an elderly widow in Corsicana told him that cutting Medicare would make it more difficult for her to remain independent, Gramm said, "You haven't thought about a new husband, have you?"

When he first ran for Senate in 1984, Gramm's main attack ad focused on how his opponent, a young state senator, had received a check for $600 raised by a gay group at a male strip joint in San Antonio. He had not solicited the contribution and promptly returned it, but Gramm ran lurid ads about the gay strip show for months.

One has to wonder if Senator Larry Craig R-ID), Congressman Mark Foley (R-FL), Congressman David Dreier (R-CA), Karl Rove, Attorney General Troy King (R-AL), Senator Lindsey Graham (R-SC), and Congressman Ed Schrock (R-VA) were skulking around in the shadows hoping to sniff some discarded underpants.

Gramm, the great crusader against government spending, has spent his entire life on the government tit. He was born at a military hospital, raised on his father's Army pay, went to private school at Georgia Military Academy on military insurance after his father died, paid for his college tuition with same, got a National Defense Fellowship to graduate school, taught at a state-supported school, and made generous use of his Senate expense account. In 1987, a Dallas developer named Jerry Stiles flew a construction crew to Maryland to work on Gramm's summer home. Stiles spent $117,000 on the project but was kind enough to bill Gramm only $63,433. When Stiles got in trouble for misusing funds from a savings and loan he owned, Gramm did him some "routine" favors with regulators. Stiles was later convicted on 11 counts of conspiracy and bribery.

As a member of the Senate Finance Committee and the recipient of enormous banking contributions, Gramm did an even bigger favor for the financial industry in 1999 when he sponsored the Financial Services Modernization Act allowing banks, securities firms, and insurance companies to combine. The bill weakened the Community Reinvestment Act, which requires banks to help meet the credit needs of low- and moderate-income neighborhoods. Gramm described community groups that use the CRA as "protection rackets" that extort funds from the poor, powerless banks. The bill is also a disaster for the privacy of bank customers and weakens regulatory supervision. As Gramm proudly declared, "You're not going to find a single bank, insurance company, or securities company that will say they were hurt financially by this bill."

Instead Gramm's legislation and the onslaught of reactionary, anti-regulatory bills that Republicans and their Blue Dogs allies have pushed through since then have devastated the American middle class. Friday IndyMac Bank, once part of crooked mortgage lender Countrywide, and the largest OTS-regulated thrift ever to fail and the second largest financial institution to close in U.S. history, was taken over by the Federal Deposit Insurance Corporation. Meanwhile Fannie Mae and Freddie Mac are tottering and their crises certain presages higher interest rates, not something especially needed as part of the nadir of the of the Bush Economic Miracle.

Back to Gramm for a moment. After his Financial Services Modernization Act allowing banks, securities firms, and insurance companies to combine was passed, shady Swiss Bank UBS gobbled up --- and soon after hired made Phil Gramm a very, very wealthy man by giving him a job as a VP and lobbyist. His Commodities Futures Modernization Act of 2000, which led directly to the catastrophic Enron debacle, also padded the family budget since his wife, Wendy, was on the Enron Board of Directors. While he was working on these bills-- as Chairman of the Senate Banking Committee-- the Securities & Investment industry "donated" $1,000,914 to him.

To be fair, Gramm occasionally found it in his heart to assist the poor-- like the time he suggested that mothers on welfare would be better off working for $2.50 an hour. A more typical Gramm vote, though, came on an energy bill that benefited oil and gas companies at the expense of consumers. "There are winners and losers in every economic decision," Gramm said portentously. He was then getting more oil and gas money than any other member of the Senate.

Now John McCain is getting more oil and gas money than any other member of the Senate, $1,010,868 this year-- nearly as much as he's scooped up from commercial banks ($1,449,433) and insurance companies ($1,076,215).

LUCKY FOR OBAMA HIS OPPONENT IS SUCH A CLUELESS DOOFUS-- BAD DAY FOR McCAIN

McCain had a lot of bad slip-ups this week-- enough to hasten the sunset of his media-friendly, but otherwise unremarkable, political career. None of these slip-ups are reflected in a new Pew poll that was just released. Pew only polls registered voters, not the general public, so is a more reliable indication of electoral outcomes. Please recall that their previous poll, in late May, showed Obama beating McCain 47-44%. Since then, but before the latest round of gaffes and mishaps are factored in, McCain has slipped further while support for Obama has grown. Obama now leads McCain 48-40%. The poll also shows that John McCain's supporters are convinced that Obama is the candidate with new ideas (58%- 24%) and that Obama is more likable (45%- 34%).

One of the worst of the McCain camp's new problems this week came from McCain's would-be Secretary of the Treasury, former Texas Senator Phil Gramm, author of the Enron loop hole (sometimes called the Phil Gramm Loop Hole). Gramm was a radical right ideologue in the Senate and is now a lobbyist for the shadiest of the Swiss banks, UBS, currently under federal investigation on very serious swindling charges. Gramm is also co-chairman of McCain's presidential campaign and his chief economic advisor, a very powerful position given that McCain has no interest in economics-- other than at the craps tables-- and admits he knows nothing about it but ought to learn... some day.

Today's problem arises out of Gramm's interview with the Washington Times in which he claimed that there is no recession other than in peoples' minds and that America is "a nation of whiners." This went over badly. At first the Double Talk Express jumped on its high-horse and tried defending it's chief economics strategist. After all, he was discussing economics strategy. But as the media yowled, McCain backed down and distanced himself from Gramm. Gramm still insists he was correct about there not being a recession-- and claims the Moonies misquoted him about the whiners and that he really meant "our leaders" are whiners, not the American people. More straight talk from Camp McCain. It was extremists like Gramm in the late 20s and early 30s who kept telling millions of out of work American families that it was all in their minds. Something tells me, though, that Obama is no Roosevelt. I hope I'm proven wrong, although at this point I wouldn't be shocked if he actually does something that makes me not even vote for him-- like naming and arch-reactionary like Evan Bayh or Sam Nunn to be his running mate.

Today's straight double talk: