Journalism in the Public Interest

Finally, Bank Regulators Have Had Enough

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With their simultaneous display of hubris, remorselessness, incompetence and corruption, the banks have finally ignited a modicum of courage in banking regulators.

The postcrisis bad behavior — reckless trading at a JPMorgan Chase unit in London, the rampant mortgage modification and foreclosure abuses, manipulation of the key global interest rate benchmark — went just a tad too far. For the first time since the financial crisis, the banks are losing some battles on tougher regulation.

Last week, banking regulators, led by the Federal Deposit Insurance Corporation, but including the Federal Reserve and the Office of the Comptroller of the Currency, proposed a rule to raise the capital at the largest, most dangerous banks.

Separately, Gary Gensler, the head of the Commodity Futures Trading Commission, who has been waging an underfunded and lonely fight to tighten the markets for those side bets called derivatives, managed to push forward a rule to regulate the complex markets. Banks and his fellow commissioners had resisted, pushing for more delay and more study. Nothing is ever killed in Washington; it’s just studied into a perpetual coma.

These moves are heartening, if only because financial regulation has been so parched in the years since the financial crisis. There are many caveats, and I will get to them. But it’s worth enumerating and celebrating some of the positives because reform advocates have been wandering this desert, searching futilely for honest regulators.

For the bank safety rules, regulators are going to require a higher capital ratio. Basel III, the international agreement on bank rules, put the rate at $3 for every $100 in assets. The new rules would raise it to $5 for the holding company, and $6 at its banking subsidiaries.

The measure is a victory for reality-based thinking in an important respect: how banks measure their assets. Under current accounting rules, assets are disclosed so poorly that banks are allowed to keep mysterious exposures out of view. Banks own pieces of businesses that reside off the balance sheet. They also make commitments using derivatives, creating obligations that are complex and difficult to quantify. The specifics of these vulnerabilities are poorly understood by everyone, including bankers themselves, but we know for sure that they can cause implosions.

Now regulators are making clear that they know what they don’t know. So in addition to traditional measures, they are also going to emphasize the “leverage ratio.” That’s good news, because the leverage ratio doesn’t allow for such accounting sleights-of-hand as adjusting the value of assets for their perceived riskiness. In that game, some investments — say, picking purely randomly, top-rated mortgage securities or Greek government debt — could be judged less risky than other assets.

The new rules’ effect will be straightforward: banks will have to raise the amount of assets they report and sell more shares or retain more earnings based on that larger number. Analysts from Credit Suisse estimate that the average increase among the biggest banks will be 36 percent.

Banks will resist these measures, crying that they make our banks less competitive globally. And there’s still plenty of time for the regulators to back away, as they so often have. That’s why reformers and some voices in Congress — the senators Sherrod Brown, Democrat of Ohio; David Vitter, Republican of Louisiana; and Elizabeth Warren, Democrat of Massachusetts, mainly — have done much good. By pushing for more extreme overhauls, such as much higher capital requirements or the return of Glass-Steagall, they have both pressured regulators and provided them cover.

There are caveats: the capital measures are probably not high enough. The derivatives compromise allows foreign countries to substitute their own rules if they are “comparable,” raising the fear that banks will circumvent the rules by harboring activities in the most lenient country. And finally, we still have the essential cancer of a “too big to fail” banking system that takes up too great a share of the economy and dominates our political system.

Still, it’s important to recognize incremental victories where we have them. The message from these moves is that the United States is taking the lead in global change, at long last. It may sound like a jingoistic declaration, but the United States is the most important voice on banking regulation. Just as Congressional pressure creates safety for regulators, an American push for stronger regulation might help bring the world around.

And if it doesn’t, American banks will be at a competitive advantage, the exact opposite of what bankers argue. Jamie Dimon, the chief executive of JPMorgan, raised the ominous specter that global rules are out of “harmonization” and that United States banks are now held to a higher standard.

“We have one part of the world at two times what the other part of the world is talking about,” he said. “And I don’t think there’s any industry out there that would be comfortable with something like that in a long run.”

To rebut that, I bring in a banking expert: Jamie Dimon. This side of Mr. Dimon’s mouth has repeatedly boasted about what a competitive advantage JPMorgan’s “fortress balance sheet” is, how the bank was a port in the 2008 storm. He’s not the only one; Warren E. Buffett regularly makes the same argument about Berkshire Hathaway. Higher capital allows a company to be aggressive when others are weak.

Yes, American banks will be subject to American regulations. But the United States may well bring the rest of the world along. Small financial centers from Iceland to Ireland to Cyprus and even Switzerland have all seen how vulnerable they are to financial beasts that dwarf their economies.

If they don’t come around, so be it. Let other countries race to the bottom on regulation, setting themselves up for financial crises. By raising capital standards and installing tougher derivatives rules, regulators are helping banks that are too foolish (or rather, the top executives who are too narrowly self-interested in increasing their own compensation in the short term) to recognize their own interests.

Bruce J Fernandes

July 17, 2013, 1:04 p.m.

I don’t think the regulations go far enough.  I don’t think any bank should be allowed to buy back its common stock so they can gin up false earnings so management can get juicier bonuses UNLESS they replace common stock with a type of preferred stock that can/must be converted to common if the bank reaches any levels of distress as defined by the government agencies charged with their regulation.

This type of preferred can exist and would offer taxpayers some protection against future bank profligacy…..

Banks should never be trusted again and going back to Glass makes sense to me.  The fact that a bank holding company keeps pure banking and other operations separate does not comfort me because it was that comfort that almost led to the end of the world in 2008/9.

I will never forget what Warren Buffett and Alan Greenspan said…. Buffett believed, acknowledging his mistake, that banks balance sheets could not be weakened by such relatively small amounts of defaults on homes.  Greenspan thought banks were always taking better care to keep their balance sheets fortress-like.

Both acknowledged they were wrong and we all paid for this mess and banks were given a free pass and no one has gone to prison.  So now the last chance at justice for all of us is to permanently relegate banks to a form of utility where there is so much capital, so much protection for taxpayers they can never be in a position to destroy the world’s financial system.

Stephanie Palmer

July 17, 2013, 1:12 p.m.

I agree that the new regs don’t go far enough, but it’s a good start. As far as the “banking” expert goes, does anyone really expect him to say that it’s a good idea to tie up more of his bank’s money?  He was part and parcel of the crash of 2008, but it didn’t matter to him, he still made huge amounts of money that the rest of us are trying to pay off.

I think all of the countries including USA should follow Canada’s banking regulations. There last crash was 1790

HAH!, What are you trying to do, Bruce J. Fernandes? Rehabilitate your image? I actually AGREE with most of what you say here, but you do sing a very different tune than the LIES you sing about “fracking”...
How are “Too Big To Fail” banks&banksters; raping the global economy, any different from “Too Big To Fail” Oil&Gas; Co.s raping the global environment…???...
Same ideas, Bruce…Big Corps. should NEVER be allowed to prosper, profit, or drill, at the expense of the worlds’ people, and the health of the environment…
How is it that you so freely acknowledge the corruption at the top of the Global Banksters Racket, but can’t see the same corruption at the top of the Global Oil&Gas; Scam…???...
Remind us again, Bruce, what branch of FedGov *IS* the “Federal Reserve”...???...Is the Fed an executive, legislative, or judicial branch operation…???...Just wanna see how HONEST you are, Bruce!...

Fair start to what must be greater regulation to the point that commercial banks lend money and investment banks can do their thing. Those who scream that government is too big already, has been fed a dose of sleeping pills by propaganda writers for Fox News and the Koch brothers ala ALEC. Enough is enough.

The only way to regain our democracy is to systematically remove monied interests from our public sector - piece by piece, until our “public servants” begin serving the public. The money changers and their narcissistic leaders must be the first to be reigned in. It should have happened in 2008 in exchange for their taxpayer bailouts. Who gets assisted from bankruptcy and financial ruin in better shape than they were before without any negative consequences? Nobody, and it should have happened with the money changers either.

The regulations don’t go far enough. All deferred comp money for Executives should be put in a Trust Subject to recapture in the event of failure. And in the event of a bailout, all executive stock options become owned by FDIC. And any executive involved with the failure is restricted from owning ANY bank stock options for the following 5 years. That will keep them from receiving options at a depressed price and benefiting from the banking problems they had created! And keep them from going to another banking firm and getting new opions at a rock bottom price. Problem which cannot be solved; Wall Street owns Washington!

Bruce J Fernandes

July 17, 2013, 1:53 p.m.


Your problem is you are a simple-minded liberal that thinks the world view should be all or none.

Banks represent the life blood, the circulatory system of an economy.  We already see the damage done as banks have gone so far in the other direction that small businesses are unable to get loans needed to grow their businesses which in turn increases employment which in turn increases GDP and taxes to government.

Fracking is doing nothing of the kind and you refuse to believe your own EPA and your own president in this regard.  Your agenda is green renewable energy regardless of cost to consumers and regardless of loss of jobs, income, and wealth.  None of you including ProPublica are getting the story right.

Tell me, why is it Halliburton announced a huge clean water initiative in the context of fracking water and the work they are doing with exploration and production firms in that regard?  You act as though these companies are modern day robber-barons and that is not so.

That being said Cabot behaved very badly and government should take all necessary action to punish Cabot for their wreckless approach to drilling.  But you do not set out to make the solution 100% extinction of an industry that provides fossil fuels at low prices so consumers can consume as much as they need.  You do not set an agenda of idealism that is based upon some nirvana complex that says we can go 100% green, 100% renewable NOW when the costs are so enormous and unaffordable based upon today’s technology all that will be accomplished is uncreative destruction.

Over time, there are solutions to problems associated with wind and solar but government throwing money at the problems has only resulted in Obama insiders who are true crony capitalists taking advantage and destroying taxpayer’s hard earned tax dollars accomplishing NOTHING in return.

Investors who understand issues differentiate between industries and their importance to an economy.  Liberals just want to control everything and give everything away to takers for as long as there are makers stupid enough to keep making and giving it to Obama’s socialist government agenda.

Seems big labor no longer likes ObamaCare.  Its a shame big labor had to take so long to figure out its ox was going to be gored to before turning against ObamaCare last week.

Bradford, please take your fracking dispute with Bruce elsewhere… get a room guys.  Or perhaps just a blog.

hey Bruce, Halliburton announcing Clean Water initiative is similar to “CLEAN COAL”!!!! OXYMORON…... why don’t you go buy land in Wyoming where the citizens there are being plagued by toxic water. You are funny saying for us to believe ANY POLITICIAN!!!! THEY ARE BRIBED BY ENERGY AND BANKS. Gov’t throws money at a lot of new projects, but why do they continue to subsidize BIG OIL. No start up there. They have record profits and are price gouging us to support fracking. If USA is producing 85% of our oil demands, why is gas going up? Don’t insult us with supply and demand .

Muncie is right. MONEY OUT OF POLITICS!!!!!

Regulations in the mutli-thousand page Dodd-Frank bill are not enforceable.  There is no way every regulation can be enforced without hiring everyone in this nation. 

There is effective regulation and then there is regulation that allows criminal behavior to continue but at some lesser rate of criminality.  This is so the state can still collect its tax.  Just like the chemical-laden cigarettes.  Rather than ban the use of chemicals in the cigarettes the settlement allowed for survival of these criminal enterprises to the state could continue to collect on its extortion racket.

The proper regulation for a banking industry allows for lending for capital wealth creation.  That’s it.  Glass Steagall was 20 pages.  It worked for 70 years.  This new bill is still growing and around 5,000 pages.  It almost certainly won’t last ten.

Please excuse an off topic wiki paste on a kinda’ unrelated :-) The New Testament contains references to usury, notably in theParable of the talents:
“Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury.”
—Matthew 25:27
“Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest..”
—Matthew 25:27
“…Out of thine own mouth will I judge thee, thou wicked servant. Thou knewest that I was an austere man, taking up that I laid not down, and reaping that I did not sow. Wherefore then gavest not thou my money into the bank, that at my coming I might have required mine own with usury?”
—Luke 19:22-23
Clarifying confusion or the lack of clarity:
The above scriptures teach about putting your talents to work, not so much about business savvy or how to lend money ( please read the above passages in context for clarity ).
The following scriptures teach about lending:
“Give to the one who asks you, and do not turn away from the one who wants to borrow from you.”
—Matthew 5:42
“And if you lend to those from whom you expect repayment, what credit is that to you? Even sinners lend to sinners, expecting to be repaid in full. But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be children of the Most High, because he is kind to the ungrateful and wicked.”
—Luke 6:34-35
“Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.”
—Luke 6:38
Main articles: Riba and Islamic banking
The following quotations are English translations from the Qur’an:
Those who charge usury are in the same position as those controlled by the devil’s influence. This is because they claim that usury is the same as commerce. However, God permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with God. As for those who persist in usury, they incur Hell, wherein they abide forever (Al-Baqarah 2:275)
God condemns usury, and blesses charities. God dislikes every disbeliever, guilty. Those who believe and do good works and establish worship and pay the poor-due, their reward is with their Lord and there shall no fear come upon them neither shall they grieve. O you who believe, you shall observe God and refrain from all kinds of usury, if you are believers. If you do not, then expect a war from God and His messenger. But if you repent, you may keep your capitals, without inflicting injustice, or incurring injustice. If the debtor is unable to pay, wait for a better time. If you give up the loan as a charity, it would be better for you, if you only knew. (Al-Baqarah 2:276-280)
O you who believe, you shall not take usury, compounded over and over. Observe God, that you may succeed. (Al-‘Imran 3:130)
And for practicing usury, which was forbidden, and for consuming the people’s money illicitly. We have prepared for the disbelievers among them painful retribution. (Al-Nisa 4:161)
The usury that is practiced to increase some people’s wealth, does not gain anything at God. But if people give to charity, seeking God’s pleasure, these are the ones who receive their reward many fold. (Ar-Rum 30:39)
Scholastic theology[edit]
The first of the scholastics, Saint Anselm of Canterbury, led the shift in thought that labeled charging interest the same as theft. Previously usury had been seen as a lack of charity.
St. Thomas Aquinas, the leading theologian of the Catholic Church, argued charging of interest is wrong because it amounts to “double charging”, charging for both the thing and the use of the thing. Aquinas said this would be morally wrong in the same way as if one sold a bottle of wine, charged for the bottle of wine, and then charged for the person using the wine to actually drink it.[34]Similarly, one cannot charge for a piece of cake and for the eating of the piece of cake. Yet this, said Aquinas, is what usury does. Money is exchange-medium. It is used up when it is spent. To charge for the money and for its use (by spending) is to charge for the money twice. It is also to sell time since the usurer charges, in effect, for the time that the money is in the hands of the borrower. Time, however, is not a commodity that anyone can sell. (For a detailed discussion of Aquinas and usury, see Thought of Thomas Aquinas).
Though time cannot be sold, the difficulty of quantifying effort and theopportunity cost of performing labor leads laborers to be typically compensated by the hour, day, week, or month). (As an example of labor without the expenditure of energy, a security guard’s primary responsibility may simply be to be present; time spent at the job cannot be spent providing for his own survival, so he must be compensated for the opportunity cost. He is paid (compensated) for his time, not necessarily for his effort).
Outlawing usury did not, as one might guess, prevent investment. What it stipulated was that in order for the investor to share in the profit he must share the risk. In short he must be a joint-venturer. Simply to invest the money and expect it to be returned regardless of the success of the venture was to make money simply by having money and not by taking any risk or by doing any work or by any effort or sacrifice at all. This is usury. St Thomas quotes Aristotle as saying that “to live by usury is exceedingly unnatural”. Islam likewise condemns usury but allowed commerce (Al-Baqarah 2:275) - an alternative that suggests investment and sharing of profit and loss instead of sharing only profit through interests. Judaism condemns usury towards Jews, but allows it towards non-Jews. St Thomas allows, however, charges for actual services provided. Thus a banker or credit-lender could charge for such actual work or effort as he did carry out e.g. any fair administrative charges. The Catholic Church, in a decree of the Fifth Council of the Lateran, expressly allowed such charges in respect of credit-unions run for the benefit of the poor known as “montes pietatis”.[35]
In the 13th century Cardinal Hostiensis enumerated thirteen situations in which charging interest was not immoral.[36] The most important of these was lucrum cessans (profits given up) which allowed for the lender to charge interest “to compensate him for profit foregone in investing the money himself.” (Rothbard 1995, p. 46) This idea is very similar to Opportunity Cost. Many scholastic thinkers who argued for a ban on interest charges also argued for the legitimacy of lucrum cessans profits (e.g. Pierre Jean Olivi and St. Bernardino of Siena).

Super.  So why haven’t ‘bad’ bankers been thrown in jail?  THEY brought the whole world to the brink with their greed and now finally the regulators have had enough?  The slate gets wiped clean?  There aren’t enough regulators to keep on top of banks and if the GOP have their way they’ll under fund the regulatory agencies so that they cannot adequately regulate and the big banks keep gaming the system.  The only way that these scoundrels will learn and ‘profit’ is if the bankers spend some time behind bars.  What a joke.

Michael E McCarthy

July 17, 2013, 6:50 p.m.

What’s your point?

Bruce J Fernandes

July 17, 2013, 8:21 p.m.

Bankers going to jail isn’t about teaching those particular bankers a lesson. 

It is about sending a clear message to the next generation of bankers coming down the pike that if you cook up some creative investment it better not be 100% certified horse manure that can bring down an entire financial system.

There are more than enough regulators.  The problem is regulators are spending too much time focusing on bad loans and not enough time on financial products including synthetic products and derivatives that have nothing to do with a buyer and a seller trying to protect their respective businesses in terms of futures and commodity pricing…. I am talking about pure gambling derivative contracts.  There is no place for most of this garbage and the regulators need to understand these products rather than wasting so much time looking at loan quality.  It was the multiplier effect of highly leveraged three-letter acronym creative instruments that brought the system to its knees.

Elizabeth Warren is suggesting that we bring back the Glass Steagall Act.  Why did we ever abandon the advice of of our grandfathers?

Howard T. Lewis III

July 18, 2013, 12:56 a.m.

Street language translation: Bankers have made their haul with the deregulation and only now realize the real law enforcement bodies of this country are moving in on them.

What is this guy, (Eisinger) , living in a box? 2006? You are just now saying the Banks might need some regulation other than a Golf Slap and a Monetary Fine that is less than their Club Membership?
Get real, idiot-apologist. Get out of your time-warp. The future is serious jail time for White Collar Fraud, or it’s the end of the middle class and you can join the rest of us in peasantry.
Its gonna mean you quit shining the shoes of the rich 5% with your literary rags.

Malcolm Henry

July 18, 2013, 9:55 a.m.

Raising the capital reserve requirement from 3% to 6% will have a minor (positive) effect on the stability of the US banking system but will do nothing to protect depositors from a failure of confidence in any particular bank. When confidence goes, every depositor wants to get every last dollar of their money out as fast as possible. Nothing except 100% reserve deposit accounts will protect depositors’ money.

Dave Yesterday, 6:16 p.m.

Super.  So why haven’t ‘bad’ bankers been thrown in jail?

Quite simple Dave,

deregulation = decriminalization

Bruce J Fernandes

July 18, 2013, 10:17 a.m.

For all that happened and I am not intentionally downplaying anything we lost fewer than 500 banks in this crisis.  Most were merged into larger institutions with the larger institution leaving losses with FDIC and taking the good parts of the bank being swallowed up.  Very few were pure liquidation.  In any event, there will always be a place for FDIC insurance. 

I think most depositors concerns were about timing issues.  Most failed institutions were shut down on Fridays and reopened under a new name on Monday.  The only matter affecting depositors is changing account numbers and getting new checks. 

Raising reserve requirements from 3-6%.... for most pure banking operations…. will have much more than a minor positive effect on stability of the system.  I speak to the pure lenders that are not large banks with holding companies and trading and brokerage and other operations going on. 

We have to remember the vast majority of banks came through the financial crisis of 2008 just fine.  There were banks out there that had not had a single home foreclosure prior to June of 2008 even though the wheels started coming off housing in July 2006.  There were a lot more responsible lenders out there than were given credit.  Markets like Minneapolis held up remarkably well until the crisis resulted in so much more unemployment in their metro area that forced more home foreclosures….. not overpriced real estate or liar loans, etc.

If we remember the crisis had multiple levels.  First was bad loans made and many of them went bad within months of making those loans.  The vintage of the 2006 loans was terrible.  Then higher unemployment forced homeowners into default and then we spiraled.

In the final analysis, to the best of my recollection, we went from traditional 2% default rates on home loans to 9% but have fallen back since then….  it doesn’t take much to set off a crisis in banking and that is why the higher reserve requirement should stave off that portion of a future crisis IF it is combined with more responsible lending that for the time being is way too tight.  Lenders are overcompensating for past mistakes and it is painful to get a loan today.

While the idea of re-regulating the banking industry is nice, I’ll believe it when I see it.

You know what I want to see instead?  Rule of law.  If I were to sell something I’ve engineered to be bad to someone, I get arrested for fraud and my assets are seized.  If I had companies reliant on me and then threatened to shut them all down, I’d be in court for breach of contract and forced to come through or compensate.  If I evicted a tenant without notice and without reason, the tenant would be living on my dime for a long while.

Better, if I had employees doing these things on my watch, the prosecutor would bring racketeering/RICO laws into play, to make sure the man at the top of the pyramid is held responsible.

This seems simple.  Eliminate the “regulators” and let them deal with criminal court like the rest of us would.  The SEC and the like are easy targets, former and future bankers who don’t want to burn bridges.  The DA, however, isn’t going to be swayed by a CEO offer, and probably wasn’t the defendant’s apprentice.

Bruce J Fernandes

July 18, 2013, 10:48 a.m.

Atty General Holder came out a few weeks ago and said that they haven’t found enough to prosecute….. most people even on Wall Street thinks that is hoooey.  The present Wall Street take is the Obama administration is fearful that any backlash against banks would hit the markets and shake confidence.

Well, speaking as an investor we have had prosecutions in the past… Enron, MCI, etc. and while there is immediate shaking and shuddering in the markets the markets in time recover and I think it is more important for investors…. especially the little guy to feel as though the game isn’t completely rigged….

The game is substantially rigged let there be no doubt about that but if you believe it is 100% and complete then you believe you cannot get ahead investing and that is a long term mistake if that same person has any hope of having something akin to a decent retirement sometime in the future.

Bruce J Fernandes

July 18, 2013, 11:02 a.m.

As we are writing these posts JPMorgan is trying to get the biggest settlement in history, estimated at $500M to escape prosecution for their handling of energy market transactions in the late 90s.

I lived in CA and then Gov. Grey Davis was so scared by the movement of natural gas he committed the state to ten years of outrageous natural gas pricing for CA public utilities.  We paid up, government refused any attempt to abrogate those contracts even after all these accusations of fraud by the financial market manipulators of the natural gas markets.

To let JPMorgan off the hook without people going to jail is unacceptable.  We in CA suffered a great deal.  I couldn’t run my pool heater because the start up cost each summer just for initial water warmth was over $400.  To run the spa was $10 each time.  Normal market circumstances would have been around 1/4 those amounts.

I feel as damaged parties everyone in CA and anywhere else this happened should be sharing in any settlement and it should be a lot higher.

I have reached a point in my life where I offer the question as to whether banks can make real returns based upon decent conduct or whether they have to behave like some combination of Toni Soprano and the south American drug lords in order to turn profits.

On January 2015 the Basel Committee has instructed the banks to publish their real total unweighted assets to equity ratio… That is going to scare the shit out of the markets whonhas no idea of what banks are up to and at that moment the US banks are going to count their blessings, looking so much better than their European counterparts. Thanks to FDIC thanks to Thomas Hoenig

Christina Marlowe

July 18, 2013, 2:50 p.m.

There is one and only one solution to both the American and the entire Global problem of the thorough “financialization” of the Kleptocratic, Corporate-owned and Corporate-Run [Global Corporate Takeover] Fascist, War-mongering Dictatorships that have enthroned themselves to power.  Here it is:

The CRIMINALS must be PROSECUTED for their CRIMES. Absolutely NOTHING will “change,” much LESS get “better” until and unless THAT happens. Indeed, if the CRIMINALS are ALLOWED to continue to PLUNDER and PILLAGE, it will, in FACT, only get WORSE. MUCH WORSE.

ALL criminals involved in these monstrous, reprehensible, PATHOLOGICAL financial [TERRORISM] CRIMES, which were clearly, totally and willfully collaborated as a gigantic Scheme to Defraud and totally BILK the very citizens of this, our country, the United States, and, um, the entire world, MUST PAY.

Each one of these Criminals must be Indicted, Prosecuted to the fullest extent of THE NEW LAWS, (all of which will be made retroactive) and, finally, actually PUNISHED SEVERELY; Let me be perfectly clear: Each CRIMINAL that is found GUILTY in the Courts of Law, whether by a judicious Judge who has NOT been paid off, or by a Jury of his/her (HA!!) “peers,” shall be held fully accountable for their impudent CRIMES, and penalties will surely entail STIFF terms of imprisonment, along with the lawful SEIZURE of ALL ill-gotten gains.

We all know, for example, that George Bush, Dick Cheney, OBAMA…that list goes on and on; And let’s not forget Ben Bernanke, Jamie Dimon, Lloyd Blankfein, Richard Fuld, Hank Paulson, Larry Sommers, Timothy Geithner, Alan Greenspan; And an astonishingly dizzying and countless number of all the other CRIMINALS; All should be on the TOP of the list for the vigorous investigations and thorough prosecutions.

We MUST HOLD each of these Serial PREDATORS/Criminals FULLY ACCOUNTABLE for their outrageous crimes of Fraud, Scheme to Defraud, Financial Elder Abuse, and countless other very serious Felonies;  Not to mention, of course, WAR CRIMES.

Bruce J Fernandes

July 18, 2013, 3:20 p.m.


How is it you forgot Bill Clinton and Robert Rubin?

These two are primarily responsible for the end of Glass-Steagall Act.

You also forgot the two poverty pimps, Jesse Jackson and Al Sharpton.  They both blackmailed banks into agreeing to lend money to poor people who could not account for their income or their assets which was the main impetus allowing for the creation of liar and no income and asset verification loans to the broader public.  After all, if banks were going to bend over for poor people it seemed safer to lend to supposed middle class people who couldn’t account for income and assets.

Your list is silly and over the top.  But if you insist on your list being the list then I wanted in the interest of fundamental fairness make appropriate additions to your list.

Christina Marlowe

July 18, 2013, 3:49 p.m.

I’ll just quote myself to respond to the likes of you:

“...Clinton, of course, was among the most destructive of these twisted men, as he is the one that repealed the Glass-Stegal Act that had been put into place by FDR after the Great Depression of the 1930s. Clinton did it, fully knowing very well history and the certain ramifications [of giving a gigantic idiot-child a machine gun, i.e. DEREGULATION]; So, doing it anyway for his billionaire buddies in the Banks and on Wall Street; That, along with the passing of the Graham-Leech Bill, took away any and all restraints, i.e. REGULATIONS, from the banking industry and the financial sector..”


It’s like complementing a three year old child for not taking a cookie out of the cookie jar, except that bankers and financial firms are not three years old and they will be on their phones with their congressional lobbyists who will diluge corrupt congressmen with sweet tooths for campaign funds within 24 hours. If we are taking the lead in global financing, the world is doomed. It’s kind of like giving a three year old a hammer and making them in charge of all the world’s cookies. Regulators are government employees who are waiting for a wink, smile and phone call from three year olds who are ready to hire them away. We need uncorruptable adults to take seat at the table. Currently, all we are seeing is a concacted pupet show for 3 year olds who don’t understand the disclaimers on the cookie packages.

That’s really amazing, Bruce Fernandes…
So, you’re saying that Jesse Jackson, and Al Sharpton, “blackmailed” banks into making bad loans…???...
Yeah, I know you don’t mean “blackmail” literally, but come ON, Brucie,
why do you think that Jackass&Sharptongue; really have so much power…???...
They are far more “powerful”, in YOUR MIND, Brucie, than they are in REALITY…Same with Clinton & Rubin…
Go soak in yur hot-tub, or something, OK…???...

One of the few things that bother me about the Obama Administration is their unwillingness to investigate and prosecute the perceived wrong doing by the banksters during the crisis of 2008-09. This kind of behavior does not stop until someone goes to jail.  (It’s more often than not it is some low level clerk goes to jail.) Eric Holder was a corporate lawyer in NYC, maybe on Wall Street. So far it’s been business as usual, with the banksters and Wall Streeters continuing to rip off the Feds; Their people are still getting bonuses! Somethng is still wrong in River City!

I’ll believe in these changes when it’s shown they work.  I’m in favor of bringing back Glass Stegal, with sharper teeth.  The thing is, to only losers in all this are the bottom 90% of the country.  They lost homes, retirement and assets.  Not everyone, but enough.  And they are still losing those things in the backwash, such as retirement of government employees in Detroit.  No one in power is talking about what to do for the little guys, but they sure know how to throw money ant the top 10% who are great contributors to campaigns. 

In the last Great Bank Failure, 1970’s and 80’s, we put over 3,000 bankers in jail.  Why not this time?  I call BS on the idea that we can’t because we can’t find the evidence.  I supported Obama after his Cooper Union speech.  But, once in office, he completely forgot that speech and rewarded Wall Street.  Well, Wall Street is doing very well but the rest of the country is still in bad shape.  The Stock Market is roaring but Main Street is struggling.  I lay that on Obama’s door. 

We have been heading for this crash since Reagan foisted Supply Side on us in the 1980’s.  NAFTA didn’t help either.  The requisit deregulation under Supply Side went so far that there were only 3 investigators responsible for policing all of Wall Street.

To me it is of littel consequence.  I saw the crash coming and got out well in advance.  I’m old and won’t live long enough to see any real change.  But, just once, I would like to see someone like Jamie Dimon or one of the other CEO’s get perp-walked, tried, convicted, stripped of their wealth and sent to a real prison where a big guy named Bruce will make them really pay for their crime.  Just once.

Christina Marlowe

July 22, 2013, 6:17 p.m.

Peter, I agree wholeheartedly;  I don’t know if it will happen in MY lifetime either.  The entire system is so corrupt from within that it—ALL OF IT—needs to been DISMANTLED.


Kleptocracy means ruled by thieves;  the corporations have well-paid lobbyists who are devoted full time to passing legislation that solely benefits the corporate titan;  they pass legislation for fewer and less regulations so that they have no rules to follow, no obligations to honor, no accountability whatsoever.

So, why is it that these people, both controlling industry and those in our government, why don’t these people just do what is RIGHT, FAIR and HONEST?  It really isn’t that difficult, yet the fact of the matter is that obscene greed, pathological lying, cheating, stealing, whoring, thieving…and the unbelievably blatant hypocrisy is the norm amongst the VAST MAJORITY of politicians, whether Left or Right, the top echelons (CEOs, CFOs, etc.) of almost all corporations, and the lobbyists for the special (corporate) interests.

It is abundantly clear, after more than forty years of DEREGULATION, that people simply CANNOT be TRUSTED.  It is also quite evident that, left unchecked as it is, there are no boundaries at all with these people. Those with ghastly wealth are indeed either directly in cahoots with, or are in fact those with dangerous power.  None of them even live among any of us, really; further, they apparently don’t care at all. About any one or anything but themselves, their own self interests and mind-boggling covetousness, as if to say, “I have mine and I want it all; To hell with the rest of you.” Like a two year-old totally undeveloped and bratty, spoiled child who has never been taught to share.

So, Have we in fact been duped by a bunch of sociopaths? Because these people display absolutely no conscience at all. So when did it start going so wrong? I do believe that it did start under Ronald Reagan and his “greed is good” mentality and his ambitions to DEREGULATE ALL INDUSTRY (though Carter actually started THAT).

And with all the totally reckless and utterly ruinous deregulation of every industry, i.e. no rules to follow, no legal obligations to honor, no recourse for anyone if they get trampled—and we are ALL getting trampled (Actually, I feel as if I am being RAPED REPEATEDLY IN BROAD DAYLIGHT), and left to run amok by, really, a bunch of greedy, stingy, totally AMORAL people who sold their souls to the DEVIL itself!!  We can all see the results.

Conclusion: People cannot and SHALL NOT be trusted; Trusted especially to be good samaritans on good faith; It is pretty clear to me that we, as a nation, must FORCE them to follow and obey some basic rules of conscience. I do truly believe that the entire government, along with the institutionalized parasites whom cling to it’s teat year after year, is fundamentally and systemically diseased; Only by raising it entirely and completely, starting from the level, will affect the systemic change that we so desperately need.

Most Urgent Goal, In My Opinion:
The first and most urgent GOAL, in my opinion, is to THOROUGHLY INVESTIGATE, immediately INDICT, painstakingly PROSECUTE, and IMPRISON for Life…THE CRIMINALS!!! Oh, and forcibly yank every last bit of their ill-gotten gains, ie. all mansions, all yachts, all on and off-shore accounts, every last dime, Repossess it ALL from the CRIMINALS.

If and only if THAT happens, can any of us go about restoring some semblance of law and order, basic civility, a measure of justice for ALL.

The fact of the matter is that, as it stands, the U.S. Department of Justice, along with any and all other law enforcement agencies, do absolutely NOTHING; In fact, the habitual, serial Felons, the criminals, get FULL Pardons, Full ASYLUM, right here in America; None are ever investigated, indicted, prosecuted or punished. In fact, each of them are ABOVE ALL LAWS.

And Just Remember: It was President Obama that clearly stated that he would not get involved in prosecutions of these (war crimes and financial terrorism) crimes; He said, “I want to look forward, not go backward.”

Well, I say to him, I want to move forward by upholding both the U.S. laws and the world’s laws. If we continue to totally ignore SERIOUS CONSTANT crimes and the criminals walk away Scott-free every time, it only gives both the criminals and the would-be criminals license to behave as if they’re above the law. And lo’ and behold;  That is precisely how they conduct themselves.

The funny thing is, I’m an old time conservative.  When Reagan courted the Religious Right I began to get worried.  Since they have been in the party they have gotten control and have taken the party into lunacy land.  Politicians will talk the talk that brings votes and money.  The Christian Right, mostly Protestant and Baptist denominations, delivers the votes and the Big Money People deliver the cash.  The Republican politicians of today just dance to their tune.  There are no Statesmen in the party anymore, no men of Honor who do what is best for the country and know how to compromise on some things to get others.  The party is going to crash and burn soon, because the moderates have been sidelined and the whacko’s are running the show. 

Not that the Dems are any better, well, maybe a little better, but they have sold out to Wall Street.  The stock market is not going to save this country.  The other shoe has not dropped.  There is over a trillion in Student Loans outstanding, and unless they jump-start the economy and cut down on the H1b visas, a whole lot of college educated people are going to massively default.  That is tomorrows middle class, and they are saddled with debt because of deregulation and Supply Side rules, and, to no small degree, because of the missguided policies of the Republican party. 

I could go on, but it is pointless unless we get the money out of politics.  With the way things are going right now, Congress is Dysfunctional.  If I channeled Jefferson I’m sure of the advice he would give.  But that would take effort and we have been lulled into inaction for too long.  There will be more smaller cities like Detroit over the next few years.  With a Dysfunctional Congress there will be no action except to ‘rescue’ the top 10% in some way.  Both parties seem to agree on that.  Once all teh assets have been sold off, what is left for a city to keep going on?  You get the government you pay for, and the top 10% have out bid everyone else.

Christina Marlowe

July 22, 2013, 10:55 p.m.


I don’t think that the Republicans’ policies were “misguided.” Please READ:

Mission Accomplished: The Reagan Occupation and the Destruction of the American Middle Class

by David Michael Green | June 25, 2010

Eighty years ago, something occurred in America that was never supposed to happen. An aristocrat came to the presidency and engineered a policy revolution that created a broad and prosperous middle class where it had not existed as such before.

To do this, Franklin Roosevelt and his party had to rewrite the existing rules of wealth redistribution in the United States such that the traditionally fantastically wealthy overclass (which had grown even fatter as the industrialism of the prior century concentrated wealth yet further) would become merely tremendously wealthy from that point forward, in order to leave enough for others to live a decent life.

Needless to say, this rankled the country club set, but, remarkably, they more or less made peace with this development during the early decades of the post-war era, and largely cooperated with the new economic order. So did their political representatives. The Eisenhower administration was the first chance after twenty years of the New Deal to dismantle the newly created American welfare state, and Ike not only refused to take that opportunity, but famously labeled those in his party who wanted to as “stupid”.

If Eisenhower, in his gray suit, black-and-white photos and de rigueur businessman’s hat from the era seems quaint today, so does his political restraint. By the 1980s that was ancient history, and remains so to this day, including through (and via) two Democratic presidencies now.

If Americans understood the real ambitions of Ronald Reagan and his puppeteers, and if they knew the degree to which the supposed patriotism of those folks extended beyond falsity and into the far darker waters of being an irritating irrelevance put on purely for show, then they would not only stop seeing Reagan as some sort of national hero, but would also understand that he instead launched a process far more equivalent to an invasion and occupation of this country.

The goal of the right - which cares about America about as much as it does about Burkina Faso - has been to restore the economic order last seen under Herbert Hoover, in which a tiny minority possess vast sums of wealth and there is (therefore) essentially no remaining middle class. It is nothing short of a breathtaking display of a world class greed, worthy of the ages.

It has also been a work of strategic genius (in much the same way one might appreciate the Germans’ engineering prowess in figuring out the logistics of how to mass murder ten or twelve million civilians in a year or two), one which has drawn upon deep psychological insights, absolutely sociopathic amoralism, and clever tactics that have all simultaneously pushed in the same direction. In plain English, they hired some politicians of hit-man level moral integrity, who then marshaled fear, insecurity, hate and deceit into a witch’s brew of self-destruction that would prove highly attractive to a large segment of the population already sinking from the effects of a global economic order rebalancing after decades of post-war American dominance.

Of course, you couldn’t just come right out and say, “Vote for me and I’ll give your money to people so rich they can’t even imagine what they’ll do with it (but they still demand to have it anyhow)”, so slightly more subtle tactics had to be employed. It is telling that the most honest thing Barack Obama ever said was when he thought there were no microphones in the room. But he was right when, at a presidential fundraiser in San Francisco he told the wine and cheese set that the right uses guns, god and gays (I would add Gaddafis) to scare people out of their money. I’ll believe that Republicans are serious about protecting heterosexual marriage on the day that you can’t find half of them prowling the gay bars of DC every night (and you don’t even want to know what the other half are into).

This bait-and-switch tactic worked perfectly well whenever it was applied. It didn’t hurt that the regressive Billy-Bobs who vote for these folks are as dumb as a tree. With bags of hammers for leaves. But stupid is really only the facilitating quality, and often one that is neither present nor required. What really drives this stuff is fear. If you can turn that into a loathing of fur’ners, fags, bitches, blackies and brownies, you got their vote. Then you can do what you really set out to accomplish in the first place. George W. Bush’s 2004 campaign was the paradigmatic example. All year he talked about jamming through a constitutional amendment to ban gay marriage. Big priority. Urgent national issue. The religitarded across America just about peed themselves, they were so excited. Then he gets elected and is brazen enough to announce that there’ll be no such effort, after all, and that his signature legislative initiative will be an attempt to hand over the fat Social Security pot of money to Goldman Sachs. The redneck dolts with their Bush/Cheney ‘04 bumper-stickers didn’t know what to think. So, of course, they just didn’t.

Meanwhile, to say that this kleptocratic revolution worked really well is only untrue by means of the verb tense employed. It is still working really well. And the final leg of Reagan’s March to the Sea is now upon us. Chunks of middle class body parts have been hacked off, bit by bit, over the decades, ‘til there’s little remaining anymore. Remember how they told us that ‘free trade’ wouldn’t decimate our jobs, our unions and our bargaining power? Is that why little old ladies serve Happy Meals at McDonald’s all across the country, assuming they’re lucky enough to get that job? Remember how they said that massive tax cuts for the wealthy would be ‘revenue neutral’ and would jump-start the economy? Which is confusing since the national debt doubled under George W. Bush, and then he proceeded to hand us the worst economy since the Great Depression. Remember how they told us that we needed to slash wasteful government spending on benefits? Now that we’ve become the ones who need those, they’re gone. Remember when they said that government is our enemy and corporations should be free to do whatever they want? You know, like spill oil or trade derivatives?

There’s another little trick that is about to become especially prominent in the coming years. When Reagan came to office and began his “voodoo economics” project of nearly quadrupling the national debt, after having promised to cut it instead, many people were puzzled by this. Personally, I figured that they just did the math and realized that in the real world (where governments sometimes live but campaigns rarely do) something simply had to give. If you slash tax revenues and massively increase military spending, guess what’s gonna happen to your budget? Others, however, saw a more nefarious game being played, and perhaps they were right. This is the idea that they intentionally ran up deficits so large that the national government would be forced to do what it otherwise would not, which is to slash spending on popular entitlements and other social programs.

Whether or not the conspiracy was real, it is the case that the federal government is running humongous deficits every year, which pile up further on the massive national debt. And it is also the case that we are now hearing a rising chorus on the right - especially from the tea party know-nothings - about slashing government spending as the top priority for Washington. Even though, according to the principles of Keynesian economics, this is the last thing we should be doing during a recession.

And, of course, something tells me that as the pinch is increasingly felt, the call for cuts won’t be in the domain of military spending, even though our allocation there is obscenely out of proportion to any imaginable threat in the world, and is roughly equal to what almost the entire rest of the world spends on defense - that’s one country equal to almost two hundred others, combined. I’m also guessing that we won’t be raising taxes on the wealthiest Americans either, even though they pay far less than they did in the pre-Reagan era, when the country was generally very prosperous, and even though they often pay a lower percentage in taxes than the secretaries and janitors who work for them. No, we can’t touch those folks.

Instead, the intense pressure now will be to finish the job of eviscerating the middle class and transferring every last nickel of their wealth to the oligarchs who fancy themselves masters of the universe. Unemployment insurance, for example. Never mind that we have ten percent official unemployment and closer to twenty percent in reality, or that whole cities like Detroit are being wiped out. The Republican minority in the Senate, along with the Democratic “moderates” there, are now refusing to extend expiring unemployment benefits (which are already a pittance when they exist). Nine hundred thousand laid-off workers have thus lost their meager sub-subsistence benefits, and that number will grow to more than a million-and-a-half in a few days now. Guess why. Because regressive senators - including John Kerry and Maria Cantwell - are holding unemployment insurance extensions hostage to protecting a loophole that allows wealthy fund managers to be taxed on their profits at an obscenely low percentage rate. How’s that for national priorities? How’s that for compassionate conservatism?

Next, inevitably, will come entitlements. Indeed, most of the states in the union are already heading that way, cutting pensions for employees. Not to mention certain low priority areas like education, which is getting slashed from California to New York. How long can it be before Medicare and Social Security are put on the chopping block? And why? Because we have our priorities good and straight, pal: a morbidly bloated military and pathetically low tax rates for the wealthiest among us comes first. Then, if we could somehow do it for free I suppose we could allow decent education, or health care, or retirement with dignity for our elders. But, of course, since that can’t be done without cost, those things must go.

The other strategic initiative now reaching fruition during the right’s three decade-long campaign to massively redistribute wealth in this country - literally, the crime of the century - is the evisceration of the state. This must be done (or, more accurately, it must be done in some respects but absolutely not in others) because the state is the only force capable of standing up to the power of concentrated wealth, and because the state sets the very rules by which such wealth either is or isn’t concentrated. It also must be done because the state nominally speaks for the public and the public interest, as against the private interest.

Since Reagan, regressive puppet politicians have been spouting anti-state rhetoric and sarcastic venom with increasing intensity. Saint Ron of Hypocrisy told us that government was the problem, not the solution, seemingly without noticing the irony of his massive military build-up or the government-enforced restrictions the right favors on everything from abortion to gay marriage to euthanasia. Now, as gutted and corrupted regulatory institutions have permitted massively harmful meltdowns ranging from Wall Street to coal mines to oil wells, we are forced to listen to sermons from those on the right about the incompetence of government. Well, yeah. If in fact you staff government regulatory bodies with industry shills who are explicitly ordered not to actually, er, regulate, and if you legislate away their power to effectively do so anyhow, and if you pulverize conscientious whistleblowers to within an inch of their lives, then guess what? That little bit of government will in fact be incompetent. In fact, it will be nearly as bad at the competence thing as, say, all the big banks on Wall Street (which had to be rescued by the, uh, government), or all the big auto companies in Detroit (ditto), or British Petroleum, or Enron, or the savings-and-loan industry, or…

And so, despite the astonishing illogic of it all, the American people now clamor for more harm to be brought upon themselves and more of their money to be looted for the further enrichment of the wealthiest one-tenth of one percent of the population. It certainly doesn’t help that the supposed “party of the people” is every bit as much a part of the problem as anyone else, and arguably far more so given the extra measure of disingenuousness involved. From NAFTA to WTO to welfare ‘reform’ to the Telecommunications Bill, Wall Street never had better friend in the White House than Bill Clinton. That is, until Barack Obama simply outright changed the address of Goldman Sachs’ headquarters to 1600 Pennsylvania Avenue. As we speak, the president and his party in Congress are busy gutting meaningful ‘reform’ of the shamelessly gluttonous finance industry, just as their masters have ordered them to do. And if you think Obama’s bad now, wait until after November. Like Clinton in 1994, he will take the trouncing he’s about to receive in the election as a signal to move even further to the right.

And thus the Reagan Occupation inches closer yet to a full-blown “mission accomplished”. The middle class is on its knees and shrinking fast. Unions have been broken into irrelevance. Government, supposedly an agent of the public interest, has become a complete tool of those it is meant to monitor. Both political parties are fully owned by the oligarchy. The public has been brainwashed into seeing its allies as enemies and its enemies as allies. We have been drained of hope that any actor on the horizon can come to our rescue.

Bad policy choices by self-serving politicians? Would that ‘twere only thus.

We are occupied.

Jesse Eisinger

About The Trade

In this column, co-published with New York Times' DealBook, I monitor the financial markets to hold companies, executives and government officials accountable for their actions. Tips? Praise? Contact me at .(JavaScript must be enabled to view this email address)