Yves Smith of Naked Capitalism has released an ebook based on testimony from whistleblowers at Bank of America and PNC on the whitewash more formally known as the Independent Foreclosure Reviews. You can download the pdf here.
Read more about the book here.
U.S. Senator Bernie Sanders (Ind- VT) on corporate takers:
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.
On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country.
Read more here.
Gretchen Morgenson recounts Tim Geithner’s accomplishments as Treasury Secretary for Obama 1.0:
How did Treasury favor the banks? Consider its answer to the foreclosure mess. After promising to help four million borrowers, its Home Affordable Modification Program at last count had helped about one-quarter of that number.
One reason for this is that the program was flawed from the start.
First, the Treasury made the program voluntary, awarding funds to participating banks but failing to penalize those that did not. The program was all carrot, no stick.
Worse, the initial plan didn’t require the banks to write down second liens they may have held — like home equity lines — from borrowers whose original loans were modified. This let the banks put their interests ahead of both borrowers and those who held the first mortgages.
Read how HAMP was hampered here.
The Times reports free-market funnies from documents unearthed in a case now before the New York State Supreme Court:
On March 16, 2007, Morgan Stanley employees working on one of the toxic assets that helped blow up the world economy discussed what to name it. Among the team members’ suggestions: “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust” and “Mike Tyson’s Punchout,” as well a simple yet direct reference to a bag of excrement.
Ha ha. Those hilarious investment bankers.
Then they gave it its real name and sold it to a Chinese bank.
Read here what they don’t teach about banking in B-school.
Dani Rodrik explains how rich countries could promote development overseas:
First, a new global compact should focus more directly on rich countries’ responsibilities. Second, it should emphasize policies beyond aid and trade that have an equal, if not greater, impact on poor countries’ development prospects.
A short list of such policies would include:
- carbon taxes and other measures to ameliorate climate change;
- more work visas to allow larger temporary migration flows from poor countries;
- strict controls on arms sales to developing nations;
- reduced support for repressive regimes; and
- improved sharing of financial information to reduce money laundering and tax avoidance.
Notice that most of these measures are actually aimed at reducing damage—for example, climate change, military conflict, and financial crime—that otherwise results from rich countries’ conduct. “Do no harm” is as good a principle here as it is in medicine.
Read his piece here.
Stacey Mitchell of the Institute for Self-Reliance says changing where you shop is only the first step:
Nobel laureate Joe Stiglitz writes on revealed preference in our political system:
President George W. Bush claimed that we did not have enough money for health insurance for poor American children, costing a few billion dollars a year. But all of a sudden we had $150 billion to bail out AIG, the insurance company. That shows that something is wrong with our political system. It is more akin to “one dollar, one vote” than to “one person, one vote.”
Read the whole interview here.
Robert Scheer, writing in Truthdig, applauds Sheila Bair’s new book:
If you want a compelling-if-unintended reason to loathe the two-party choice, check out the new book “Bull by the Horns” by former FDIC Chairman Sheila Bair. Her principled but ultimately futile effort to check the overwhelming power of the Wall Street lobby under both Republican and Democratic administrations indelibly documents the hoax that now passes for our representative democracy.
Read his take on the first presidential debate here.
James Henry, author of “The Price of Offshore,” interviewed by Democracy Now’s Amy Goodman:
Does “Too Big To Fail” also mean Too Big To Regulate?
Gretchen Morgenson talks with Neil Barofsky, former special inspector general for TARP (the Troubled Asset Relief Program) about his new book, Bailout:
“So much of what’s wrong with Dodd-Frank is it trusts the regulators to be completely immune to the corrupting influences of the banks,” he said in the interview. “That’s so unrealistic. Congress has to take a meat cleaver to these banks and not trust regulators to do the job with a scalpel.”
Finally, Mr. Barofsky joins the ranks of those who believe that another crisis is likely because of the failed response to this one. “Incentives are baked into the system to take advantage of it for short-term profit,” he said. “The incentives are to cheat, and cheating is profitable because there are no consequences.”
Read her piece here.
Meanwhile Gar Alperovitz finds a surprising source of support for nationalization of banks that are TBTF and TBTR:
Most liberals in Washington — President Obama included — keep hoping the banks can be more tightly controlled but otherwise left as is. That’s the theory behind the two-year-old Dodd-Frank law, which Republicans and Wall Street are still working to eviscerate.
Some economists in and around the University of Chicago, who founded the modern conservative tradition, had a surprisingly different take: When it comes to the really big fish in the economic pond, some felt, the only way to preserve competition was to nationalize the largest ones, which defied regulation.
Read his column here.