It’s been a over a month since we’ve had a bank failure Friday, there has not been a bank failure since early November, but we just had a couple more credit union failures:
Here is the Full NCUA list.
I’m still not sure why the ratio between credit union failures and bank failures is some where between 3 and 4:1.
Elizabeth Warren just opened up a serious can of whup ass on the Obama toadies who are pushing for the nomination of Antonio Weiss for Treasury undersecretary for domestic policy:
Sen. Elizabeth Warren (D-MA) made clear on Tuesday that she is not swayed by supporters of Obama administration nominee for Treasury undersecretary for domestic policy Antonio Weiss. Warren upped the ante in the unusually heated nomination fight, even mocking his defenders who point out that he supports “poetry.”
………
Warren, in her speech at an event hosted by the Economic Policy Institute, the Roosevelt Institute and Americans for Financial Reform, ticked off the most common points defenders of Weiss have made about his nomination.
“He spent the last 20 years at the investment bank Lazard and has been named to be under secretary for domestic finance at the Treasury Department. He is focused on international corporate mergers — companies buying and selling each other,” Warren said. “Now, it may be interesting, challenging, but it does not sufficiently qualify him to oversee consumer protection and domestic regulatory functions at the Treasury Department.”
………
Weiss’s nomination contradicts the Obama administration’s opposition to bringing in personnel who won’t have conflicts of interest with Wall Street, Warren said.
“Now, this matters because at the end of the day the administration undercuts its own opposition to this practice by nominating someone who was involved in a high profile, cross boarder inversion and who, by the way, made $15 million in the last few years, working for Lazard, a firm that did three of the four major announced inversions,” Warren said “And by the way, Lazard isn’t an American company anymore either. It already moved to Bermuda to cut its taxes.”
Recent profiles of Weiss, oddly, have included the fact that he’s been involved in publishing the Paris Review in ticking off his Democratic bona fides. That wasn’t lost on Warren.
“Third, and maybe you can help me understand this argument, people say opposition to Weiss is unreasonable because, wait for it, he likes poetry,” Warren said. “I’m actually not kidding on this one. Supposedly because he helps publish a literary magazine called the Paris Review we should trust that he will zealously pursue financial reform. Now I confess, I don’t read many literary magazines but, really?”
In leaving Lazard, Warren noted that Weiss would receive a golden parachute of about $20 million.
“For me, this is just one spin of the revolving door too many. Enough is enough,” Warren said. “The response to these concerns has been, let’s say, loud. First his supporters say ‘come on, he’s an investment banker so of course he should be qualified to oversee complicated financial work at treasury. But his defenders haven’t shown his actual experience that qualifies him for this job at treasury.”
One of the more substantive arguments against Warren’s opposition to Weiss is that he’s as good as could possibly be gotten in a nominee for a top treasury position. Warren said she has supported qualified people with ties to Wall Street but that’s not what Weiss is.
“Look, when I set up the new Consumer Financial Protection Bureau I interviewed, I hired, and I worked alongside many people with Wall Street experience and I was glad to do so. In the Senate I have voted for plenty of nominees with Wall Street experience,” Warren said. “But we need a balance. Not everyone who swoops in through the revolving door should be offered a top job without some serious examinations. Qualifications matter and Weiss doesn’t have them.”
Ouch.
Instead, I’m going to have to hold my nose and vote for some corporate Democrat.
Unless Bernie Sanders run.
Run Bernie!!! Run!!!
Case in point, perhaps the highest profile financial reporter in the United States, the New York Times‘ Andrew Ross Sorkin, who has gotten the vapors over Elizabeth Warren’s opposition to the revolving door between Washington and Wall Street:
Wall Street stenographer Andrew Ross Sorkin of the New York Times complains this morning that Massachusetts Sen. Elizabeth Warren is making it harder for Wall Street veterans to take on government jobs overseeing the financial industry, calling the former Harvard law professor and longtime industry critic “misinformed” in her opposition to investment banker Antonio Weiss’ nomination to a key Treasury Department post.
Weiss, President Barack Obama’s nominee to be under secretary of Treasury for domestic finance, is currently head of global investment banking at Lazard, which advised Burger King on its merger with Canadian coffee and doughnut chain Tim Hortons — a so-called inversion that will help Burger King avoid taxes. Warren cited Lazard’s work on inversions in explaining her opposition to Weiss’ nomination, but Sorkin contends that her concerns are “misplaced.” Sure, tax avoidance may have been “a consideration” in the BK-Tim Hortons deal, Sorkin concedes, but they weren’t the “primary factor.” At any rate, Weiss was “simply as one of several advisers” of the merger — hardly its mastermind.
Sorkin — who has criticized some inversions in the past — apparently finds no fault with the Obama administration seeking to enlist Weiss even as it pledges to crack down on corporate tax avoidance schemes.
While the inversion issue formed the crux of Sorkin’s substantive defense of Weiss, Warren has also pointed to the nominee’s financial industry background as a broad concern in itself.
Sorkin has been thoroughly captured by the financial industry, and he cannot be trusted to report on wrongdoing in the financial industry.
It could be argued that his role never was to reporting on wrongdoing, but instead his job is to document the official actions of the banking sector.
He reports on things like mergers, interviews CEOs, etc.
Of course, if that IS is real role, he is not a journalist. He is a stenographer.
At a hearing before the Senate Banking Committee, the senior Senator from the Commonwealth of Massachusetts cut Mel Watt, the Chairman of the Federal Housing Finance Agency, a well deserved new asshole:
What started as a dry, lame-duck session hearing on the Federal Housing Finance Agency in the Senate Banking Committee on Wednesday, got heated when U.S. Sen. Elizabeth Warren, D-Mass., went guns blazing after the FHFA director.
Warren, an outspoken progressive and a likely candidate for the 2016 Democrat presidential nomination, went on the attack during FHFA Director Melvin Watt’s first hearing before the committee, saying that he’s never done anything to help homeowners who are underwater and facing foreclosure.
The hearing started benignly enough, with Watt’s prepared remarks delivered in a measured tone. That soon ended, when Warren took the mic.
Warren is known for aggressively grilling witnesses, but this was an unusual case of a “blue on blue” attack, as Watt is a former congressional Democrat and Obama appointee, and considered a strong advocate for affordable housing and homeowner assistance.
It does not matter what Watt was.
If you are working on housing in the Obama administration, your role is to coddle the criminals working for Wall Street at the expense of the ordinary American citizen, even if it costs the taxpayer money:
Five million families lost their homes during the financial crisis and millions more are still struggling,” Warren said, prefacing her questions to Watt. “According to the latest data from CoreLogic…another 5.3 million homeowners remain underwater on their homes. And people are continuing to lose their homes every day in foreclosure.
“We talk a little bit about the law here, now one of your duties under the law. One of your duties is to conserve the assets of Fannie and Freddie, but another duty given equal importance by Congress … is to implement a plan that seeks to maximize assistance for homeowners and take advantage of available programs to minimize foreclosures,” Warren said.
She went on to recite that Congress explicitly included reduction of loan principal as an option for the FHFA to use.
“Principal reduction is often a win-win that both helps Fannie and Freddie and helps a family,” she said.
She cited a 2013 Congressional Budget Office study found that even a modest principal reduction plan for Fannie and Freddie mortgages could help 1.2 million underwater homeowners, prevent 43,000 defaults and save Fannie and Freddie about $2.8 billion.
………
Watt appeared a little shaken by the line of attack.
“It’s probably an overstatement to say it’s not been a priority,” Watt stammered. “It’s just a very difficult issue. The reason it is difficult is because we are looking for exactly what you said – a win-win situation. We have to do this in a way that is responsible, otherwise we just reduce principal for everybody across the board…is not what anybody I think is advocating for, so then we have to decide what is a responsible way to do that—”
Warren cut him off.
“Chairman Watt, you have had a year to do that, you have known for five years before that what the problem was, we have two studies coming out showing that Fannie and Freddie could make money by doing this,” she said. “In the meantime you have done the reps and warranties, the buyback policy, private mortgage insurance rules, a whole list of tough technical things, and I applaud you for doing that, but people have lost their homes in the last year and every day that you delay more families lose their homes. There are 5.4 million families out there underwater so I want to know when are you going to have an answer on this?”
See my earlier comment about Obama’s priorities.
For all the flak that I have thrown at exiting Attorney General Eric “Place” Holder, the buck stops at 1600 Pennsylvania Avenue, and the reason that nothing has been done to fix the cesspools of corruption is because Barack Obama does not want the swamps drained.
Standard Chartered Is Outraged That It Is Treated Like A Criminal For Its Criminal Acts.
Just read the whole thing.
Elizabeth Warren has announced that she is opposing the nomination of Antonio Weiss as Treasury undersecretary, because he is a creature of the corrupt Wall Street establishment who arranged a huge “inversion” deal to avoid US taxes:
Sen. Elizabeth Warren plans to oppose President Barack Obama’s nomination of Antonio Weiss, a Wall Street investment banker, to be Treasury Undersecretary for Domestic Finance, another sharp-elbowed move by the progressive movement’s most prominent leader.
Weiss, head of global investment banking at Lazard, is widely respected on Wall Street. But he advised on Burger King’s acquisition of Canadian doughnut chain Tim Horton’s, a so-called “tax inversion deal.” Defenders say the deals are commonplace across Wall Street and Weiss did not advise on the tax portion. Such arguments have not swayed the Massachusetts Democratic senator, a persistent Wall Street critic who appears headed to a leadership role in the next Congress.
A Warren adviser told POLITICO: “She is a no on Antonio Weiss. She was a Treasury official herself, she cares a lot about who is in the domestic finance role. It oversees Dodd-Frank implementation and other core economic policy-making.”
The adviser added that Warren “agrees with Senator Grassley that his past work with corporate inversions is a major issue, and she’s had growing concerns with the Administration being loaded with so many appointees from Wall Street rather than more people who would bring different perspectives.”
The adviser also argued that Weiss’ mergers and acquisitions background on Wall Street was not a good fit for the domestic finance post. “She also doesn’t believe that his investment banking background – which focuses almost entirely on Europe and on international mergers and acquisitions – puts him in a good position to oversee domestic issues like consumer protection and US financial regulation,” the adviser said.
The fact that Obama has nominated is a Wall Street type who is unsuited, and probably disinclined, to protect consumers from the banksters is not an unintentional oversight.
Neither it is Obama practicing eleventy dimensional chess.
If the past 6 years have shown anything, it is that Barack Obama and Eric “Place” Holder have put the wealth and impunity of the financial sector above all other policy concerns.
We had the 17th bank failure of the year, Frontier Bank, FSB D/B/A El Paseo Bank, in Palm Desert, CA.
Not much to add, except that this is the clearly going to be the fewest FDIC closings in over 5 years.
So, here is the graph pr0n with last few years numbers for comparison (FDIC only):
Now that Matt Taibbi is no longer being gaslighted by FirstLook media, he’s back to writing about corruption in finance, and this one is a doozy.
Basically, he has found a whistle blower who taking the step of breaching her confidentiality agreement to reveal extensive and systematic fraud at J.P. Morgan Chase:
She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.
“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'”
Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.
leischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.
Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.
Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”
………
She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.
This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.
And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”
Read the rest.
It’s a long read, but well worth it.
The fact that all the big banks are criminal enterprises is now a surprise to anyone who reads the paper, but Taibbi’s description of Fleischmann’s experience with the so called regulators and so called authorities a searing indictment of the deeply craven and corrupt people at the Justice Department, particularly Eric “Place” Holder.
Needs no explanation:
First, Matt Taibbi has left First Look:
Matt Taibbi, the star magazine writer hired earlier this year to start a satirical website for billionaire Pierre Omidyar’s First Look Media, is on a leave of absence from the company after disagreements with higher-ups inside Omidyar’s organization, a source close to First Look confirmed today. (UPDATE: Taibbi has left the company. See statement below.)
Taibbi’s abrupt disappearance from the company’s Fifth Avenue headquarters has cast doubt on the fate of his highly anticipated digital publication, reportedly to be called Racket, which First Look executives had previously said would launch sometime this autumn.
………
UPDATE: Omidyar announced on Tuesday night that Taibbi has left the company. Here’s the full statement posted on FirstLook.org:I regret to announce that after several weeks of discussions, Matt Taibbi has left First Look. We wish him well.
Our differences were never about editorial independence. We have never wavered from our pledge that journalistic content is for the journalists to decide, period.
We’re disappointed by how things have turned out. I was excited by Matt’s editorial vision and hoped to help him bring it to fruition. Now we turn our focus to exploring next steps for the talented team that has worked to create Matt’s publication.I remain an enthusiastic supporter of the kind of independent journalism found at The Intercept and the site we were preparing to launch. As a startup, we’ll take what we’ve learned in the last several months and apply it to our efforts in the future.
Above all, we remain committed to our team and to the First Look mission.
The word for Mr. Omidyar’s claim about it not being editorial independence is best described as a lie.
When this enterprise was announced, Taibbi noted in interviews it would be “focusing on financial and political corruption,” while Omidyar described it as, “A new digital magazine with a satirical approach to American politics and culture.”
These are not the same things, and Taibbi’s understanding was that he would be going after people who are very much like Pierre Omidyar friends and business associates.
There is also the issue of Marcy Wheeler’s brief tenure with First Look, which appeared to be caused by her writing about entities linked to Pierre Omidyar being linked to the coup in the Ukraine. (Though Wheeler denies that this the proximate cause of her exit.)
When all this is juxtaposed along with Omidyar’s own statements about how First Look was moving from news organization to news platform, (think eBay for journalists) will leave him with very little in the way of a news organization:
I mean, I get it. Editorial is expensive. Christ, it’s so expensive… But it gets worse: Not only is editorial expensive, but nobody wants to pay for it. Readers, we’re told, don’t want to pay for it (I’ll deal with that bullshit another time). And investors certainly don’t want to pay for it… No investor of sound mind thinks he or she will make money from a magazine, any more than they think investing in restaurants or airlines is a smart move.
A platform, on the other hand… well, that’s the answer to everything. Noone ever went broke building a platform. For one thing, a platform doesn’t need to commission editorial: some other sap takes care of that — either clients (Atavist, Punch!) or Joe User (GOOD magazine).
First Look is not going to mature into an internet news org like Pro Publica, Talking Points Memo, or Pando, and I expect to see further staff defections in the not too distant future.
This Friday was another bank failure Friday.
We’ve had the 16th bank failure of the year, The National Republic Bank of Chicago, in Chicago, Illinois. (Full FDIC list)
Wouldn’t you know it, I comment on how commercial bank failures were low relative to Credit Unions on October 10, and there are failures in each of the following weeks.
Go figure.
Here is the graph pr0n with last few years numbers for comparison (FDIC only):
And here they are, ordered, and numbered for the year so far.
It’s the first bank failure in almost 3 months, much better than the peak in 2010.
So, here is the graph pr0n with last few years numbers for comparison (FDIC only):
Another bank failure Friday with a credit union failure, the 10th of the year, County & Municipal Employees Credit Union of Edinburg, TX.
The last commercial bank failure was July 15.
Since then, 3 credit unions have been closed.
This is just weird.
Which means that the Supreme Court has begun its new session.
Rather unsurprisingly, the court punted on gay marriage, declining to hear any of the appeals of the recent ruling striking down gay marriage bans.
This has the effect of massively expanding gay marriage, or the recognition of gay marriage:
With not a single dependable hint of its own constitutional view of same-sex marriage, the Supreme Court in one fell swoop on Monday cleared the way for gays and lesbians to wed in a batch of new states — starting first in five more states, and probably adding six more in the coming weeks. If that happens in all eleven, it will mean that same-sex marriages would then be legal in thirty states and Washington, D.C.
In seven one-line orders, released without explanation and with no report on how any Justice voted, the Court surprisingly refused to review any same-sex marriage case now before it and, in the process, prepared to lift a series of orders that had delayed such marriages while the issue remained in the Court. Almost no one had expected that to happen.
It may take a few weeks for the Court’s action to take effect in real-world terms, in the geographic areas where federal appeals courts have struck down bans in five states — the decisions that the Justices have now left intact. Because those appeals court rulings are binding on all federal courts in their regions, those decisions almost certainly dictate the outcome in six more states.
As Maddow noted, it only takes 4 judges to put a case up for review, and the 4 right wing judges voted to support DOMA in US v. Windsor, it means that at least one judge (My money is on Roberts) who voted against gay rights voted against reviewing the cases.
It is either an acknowledgement by one of the conservative justices that society has changed, or it it a tactical decision, hoping that the next justice will be appointed by a Republican to replace Ginsbert.
In addition, we have a very interesting 4th amendment case, where the question of whether a search is legal if the stop is is based on a misunderstanding of the law.
We also have a patent case, Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., where the court is going to review whether the United States Court of Appeals for the Federal Circuit (Patent Court) can review the facts presented in the district court on appeal, or only address matters of law or “clear error.” (Interestingly enough, the Patent Court ruled against the patent, and the district judge ruled for the patent.)
The fact that the Supreme Court is taking it implies to me that at least 4 justices are looking to slap down the Patent Court yet again, which has for a while engaged in a de novo review of patents when it heard appeals.
I’m also interested in Tibble v. Edison International, where workers sued their employer, because their retirement plans were high fee plans, because Edison was getting kickbacks from the plan manager.
It’s actually a statute of limitations case, since the investment choices were initially made more than 6 years before the suit was filed, but the plan was maintained for long enough that the last day was within the statute of limitations.
More on other cases here.
The huge cyberattack on JPMorgan Chase that touched more than 83 million households and businesses was one of the most serious computer intrusions into an American corporation. But it could have been much worse.
Questions over who the hackers are and the approach of their attack concern government and industry officials. Also troubling is that about nine other financial institutions — a number that has not been previously reported — were also infiltrated by the same group of overseas hackers, according to people briefed on the matter. The hackers are thought to be operating from Russia and appear to have at least loose connections with officials of the Russian government, the people briefed on the matter said.
I have a real hard time choosing sides between Russian Hackers and Wall Street.
Various players in companies rescued by the US Treasury have taken to filing lawsuits in an attempt to get a share of the profits after the bailouts:
Fannie Mae and Freddie Mac (FMCC) plunged in New York trading after investors including Bruce Berkowitz’s Fairholme Capital Management LLC lost a legal bid yesterday to force the bailed-out companies to share profits with private shareholders.
Fannie Mae fell 29 percent to $1.92 at 11:10 a.m. Freddie Mac dropped 26 percent. Their preferred shares, which drew investments from private-equity and hedge funds, also tumbled, with one series plummeting 54 percent. The mortgage giants had surged for more than two years on speculation that shareholder rights to the earnings could be restored.
The investors sued for breach of contract over allegedly promised dividends and liquidation preferences, and what they called an illegal “taking” under the U.S. Constitution. U.S. District Judge Royce Lamberth rejected their claims, finding that the government is allowed under a 2012 amendment to the companies’ bailout agreements to sweep “nearly all” profits from Fannie Mae and Freddie Mac to the U.S. Treasury.
Here is the crux of what they were looking for:
Fannie Mae and Freddie Mac each surged more than 1,000 percent in 2013 on speculation that courts or lawmakers would allow private investors to share in the companies’ profits, which have rebounded along with the housing recovery. The mortgage-finance firms extended their rally through July, then lost their gains for the year in September, when they each fell more than 30 percent.
There you have it.
The vultures figured that they could buy worthless shares, and convince the Congress of the courts to give them free money at the taxpayer’s expense.
Lamberth just told them to go pound sand.
BTW, it ain’t just these parasites trying to do this.
Like a bad penny, Maurice “Hank” Greenberg is back:
The government today entered its third day of trial defending its $182 billion rescue of American International Group Inc. in another Washington federal court. Maurice “Hank” Greenberg’s Starr International Co., the insurer’s biggest shareholder when the financial crisis struck, claims the assumption of 80 percent of AIG stock by the U.S. in September 2008 in exchange for an $85 billion loan amounted to an unconstitutional taking of private property.
The timeline here is pretty clear:
Seriously. This sort of sh%$ is why Eric “Place” Holder will be remembered by history for his refusal to prosecute the banksters.
This will happen, because the people who wrecked the world still don’t feel that they have done anything wrong.
Friday was Yom Kippur, so I did not check for closings until now.
It turns out that the Republic Hose Employees Federal Credit Union of Youngstown, OH was closed on September 30.
It was the 9th credit union closing of the year.
I’m not sure why the number of closed credit unions is so close to the number of closed banks (14 so far this year).
Typically, the ratio is at least 2:1.
Aviation Week, in reporting a leadership change at JetBlue, notes that much of the impetus for removing the current CEO was because he was too passenger centric: (paid subscription required)
When the JetBlue Airways Board of Directors decided not to renew CEO Dave Barger’s contract but instead elevate airline President Robin Hayes to the top spot, it implicitly endorsed a view held by many on Wall Street that the carrier, while profitable, lags too far behind its rivals.
Barger, an original JetBlue executive, took over in 2007 after the board determined the carrier’s visionary founder, David Neeleman, struggled at running day-to-day operations. Barger quickly fixed the operation, helping it recover from a devastating “valentine” that was delivered on Feb. 14, 2007, when the airline failed to properly prepare for and react to an ice storm that hit the New York area. But like Neeleman, who insisted JetBlue be more refined than its competitors, Barger kept the focus on the customer, preferring not to add baggage fees or seats to aircraft even when most other U.S. carriers adopted both practices.
His resistance to some revenue-generating ideas may have been Barger’s downfall. Despite signaling in recent months he might remain at JetBlue, Barger will be replaced on Feb. 16 by Hayes, a former British Airways executive vice president for the Americas. Hayes is not talking revenue—he has not been saying much at all—but Wall Street analysts say they are hopeful JetBlue will start acting more like competitors. In arguing this summer for a CEO change, Cowen & Co. analyst Helane Becker wrote: “JetBlue is an overly brand-conscious and customer-focused airline, which has resulted in lagging fundamentals.”
………
“What I see Dave Barger doing is leading the company through difficult times and not going into bankruptcy,” says George Hamlin of Hamlin Transportation Consulting. “If there’s something wrong with that, I am living in a strange world.”
(emphasis mine)
If you are wondering why flying sucks wet farts from dead pigeons, just look at this.
“Activist investors” have decided that JetBlue gives an excessively positive experience to its customers, and this must not be allowed to stand.
Occupy the SEC now has a simple rating of your Congress critter.
It’s a pretty simple system:
Methodology
Our methodology was rather straightforward. We created a simple formula that allowed us to produce a score between 0 and 100 for each member of the House . A score of 100 means that a member voted in a manner that was consistent with our positions on every bill. Conversely, a score of 0 means that the member took the opposite view of OSEC on all considered bills.
Additionally, we gave some weight to the sponsorship and cosponsorship of bills. If a bill was “good” then we viewed sponsoring (or introducing) the bill as good and therefore rewarded that individual with what amounts to additional good votes. If the individual introduced a “bad” bill then we subtracted from the member’s score by counting the sponsorship as if it constituted additional bad votes. Co-sponsorship of bills was treated in a similar fashion but the weight we applied was smaller. Lastly, we added a multiplier to each bill that reflected the importance of the bill and its potential impact. For instance, if the bill was just a minor “technical fix” then it received a small multiplier, but if the bill was aimed at, say rehauling an entire agency (as HR 3193 aims to do by changing the makeup of the CFPB), then we viewed votes on that bill as being more significant, and consequently applied a larger multiplier to it.
Rather unsurprisingly, the Dems score better than the Republicans, but I would note that any Dem under 50 should be considered for a primary challenge.
H/t naked capitalism.
In looking at the recent ProPublica and This American Life coverage of the capture of the Federal Reserve regulators by the Vampire Squid (Goldman Sachs) it’s important to note that they miss a basic point, which is that, as
Justin Fox so ably points out in the Harvard Business Review, Goldman Sachs has been using conflicts of interest as a mechanism to generate much, if not most of their profits.
I recommend that you read the ProPublica story, and then listen to the This American Life podcast, but Mr. Fox does make a legitimate complaint about the coverage.
Specifically one of the big reveals is that a Goldman executive said that consumer protection laws do not apply to rich clients.
This is in fact true under US law:
In the first, Carmen Segarra, the former Fed bank examiner who made the tapes, tells of a Goldman Sachs executive saying in a meeting that “once clients were wealthy enough, certain consumer laws didn’t apply to them.” Far from being a shocking admission, this is actually a pretty fair summary of American securities law. According to the Securities and Exchange Commission’s “accredited investor” guidelines, an individual with a net worth of more than $1 million or an income of more than $200,000 is exempt from many of the investor-protection rules that apply to people with less money. That’s why rich people can invest in hedge funds while, for the most part, regular folks can’t. Maybe there were some incriminating details behind the Goldman executive’s statement that alarmed Segarra and were left out of the story, but on the face of it there’s nothing to see here.
The theory here is that the very rich, by virtue of having a lot of money, are assumed to be knowledgeable investors, and so are more able to protect themselves.
Simply put, they are saying that they are not the general public, because they either have, or can hire, financial knowledge.
In highlighting this, they underplay the 2nd reveal of the story, and what is clearly the reason for Ms. Segarra’s unjustified termination, the fact that Goldman Sachs never had a meaningful conflict of interest policy:
The other smoking gun is that Segarra pushed for a tough Fed line on Goldman’s lack of a substantive conflict of interest policy, and was rebuffed by her boss. This is a big deal, and for much more than the legal/compliance reasons discussed in the piece. That’s because, for the past two decades or so, not having a substantive conflict of interest policy has been Goldman’s business model. Representing both sides in mergers, betting alongside and against clients, and exploiting its informational edge wherever possible is simply how the firm makes its money. Forcing it to sharply reduce these conflicts would be potentially devastating.
(emphasis mine)
Mr. Fox makes another interesting point, that any organization that is responsible for the stability and the viability of the banks, such as the Federal Reserve, have an inherent interest in ensuring that those organizations are profitable, because profitable banks are more stable than unprofitable.
Carmen Segarra, in pushing for Goldman having a conflict of interest policy, was attacking the attacking the viability of a bank.
This raises a larger question, whether we really want to have an organization for which has unethical behavior at the core of both its culture and profits to remain viable.
This was the question that no one has asked about Wall Street in general, and Goldman Sachs in particular.
It needs to be asked.