It’s not as though there’s not important business and financial news today. For example, this item from the Wall Street Journal:
Officials at the Securities and Exchange Commission are looking closely at banks’ estimates of possible liability in the wake of a surprise June 29 announcement that Bank of America Corp. would take mortgage-related charges of $20.6 billion during the second quarter, the people added. The total cost was greater than some investors and analysts had expected.
The banks simply can’t admit how bad things are. Between eventually needing to take large writedowns on their second lien portfolios (roughly $400 billion among the four biggest banks plus Ally Financial) and their mortgage-related liability, the largest banks have severely impaired if not negative equity.
As I’ve been saying for years now the big banks do not face a liquidity problem but rather a solvency problem. There will inevitably come a moment when we say out loud that the emperor is running around stark naked, that policy has been directed towards the wrong goals for the last four years, and we’ve been spinning our wheels.
On a related topic no CEO of a big bank has stood in the docks yet over all of this. Is it possible that so much economic destruction could have taken place without any wrongdoing? It beggars credulity.
I read or listened to something yesterday claiming that the DOJ was told to not prosecute bankers for fear of further damaging the sector. I also find it unlikely that there was not major fraud occurring. Bill Black has done nice work showing that the GSEs were committing accounting fraud. This far out, I dont expect any bankers to be prosecuted.
Steve
I think this is what is driving the reluctance of many banks to foreclose. A house that isn’t in forclosure is going to be worth more on the books than a house that must be sold and liquidated. I seem to remember a few years ago bankers making the argument that the declining housing values weren’t that important because they would go back up once the economy improved and so they shouldn’t be required to account for their reduced value.
That’s my take. That and the lousy market which keeps prices low.
If it had been left up to me, I’d have declared a one week bank holiday, sent the federal marshalls into the big banks, and, at the first evidence of misconduct, I’d’ve put them into conservatorship and indicted top management.
On a related topic no CEO of a big bank has stood in the docks yet over all of this. Is it possible that so much economic destruction could have taken place without any wrongdoing? It beggars credulity.
The bankers essentially own the major governments of the world, so I don’t see why you would expect indictments over wrong-doing. The only nation (that I’m aware of) that has had the balls to stand up to them has been Iceland, which has all the advantages of being small and remote and inconsequential. (And Iceland still faces lawsuits from various banks, IIRC.) Greece threatens to default? The bankers instead insist that Greece strip itself bare in order to make certain the bankers get theirs, and the Greek government does it. So has the Irish government, and the Portugese, Spaniards and Italians aren’t far behind. Whenever something might not go their way, the bankers hold a gun to their own head and threaten to destroy themselves and take down the world economy with them. It’s the best scam going. In fact, it’s the best scam ever. Never have so many bled so much so that so few could suck the world dry. They don’t call them banksters for nothing, nor the system as a whole the Vampire Squid from Hell.
And the most important people in our governments have been in bed with them. Forget indicting the bankers over fraud, how about indicting Barney Frank for graft and treason, for surely bleeding the nation free must count as giving aide and succor to our enemies? He has had more to do with the lack of oversight of the biggest GSEs than anyone, and has personally profitted from it through his boyfriends.
Or how about the man that was most responsible for overall oversight of the big financial firms on Wall Street leading up to the crisis in the fall of 2008? That would be Turbo Timmay Geithner. He got rewarded for his miserable failures as the President of the New York FRB and was appointed Treasury Secretary under our current best friend of the bankers. And when Turbo Timmay finally resigns in the next few months he will be rewarded with a nice cushy job at one of the top Wall Street firms, where he will reap millions for a few years. (Anyone want to bet one whether or not he will (a) pay taxes on those millions, or (b) ever be audited by the IRS?)
But none of this causes any real stir. Instead we worry about some Congressman with a bundle of cash in his freezer. That was bad, but that was also small time stuff. The truly important graft has been right out their in the open, so few really care, and no one of consequence.
Hell, guys like Jamie Dimon and Vikram Pandit continue to make large sums of money off the banks they’ve ruined. If these guys can’t even get fired for incompetence, why would you expect anything else bad to happen to them?
So again, why are you surprised that the bankers aren’t being indicted?
Of course a cynic – not me, of course – would say Barney Frank and Chris Dodd – drenched in blood up to their elbows on the crisis, might want to take on exculpatory acts, and protect the banks………lest they tell all.
For that matter, look at what passes for being a “champion of the people” these days. Eliot Spitzer went after big Wall Street firms. He chased people out of their jobs. And he got his friends appointed to run those firms. What he did to Marsh McClennan and (especially) AIG was simply terrible, all so that buddies of his could profit from his work. I am sure those friends of Eliot have been funneling money back to him over the years, too. That kind of thing just doesn’t happen without some sort of quid pro quo, friendship or no.
Eliot’s friends ran Marsh & AIG into the ground, and in the case of AIG they took a big chunk out of the rest of the economy too. The worst of it is that it basically doesn’t even get written up. If you don’t know people at those companies, you likely have no idea what I’m talking about. A little of it has filtered out here and there, but no one (to my knowledge) has ever bothered to put all the pieces together in the media. That won’t happen, either.
(The real problems at Marsh were that it was trying to do too many things that were in conflict with each other, and also that it was providing some services that were essentially “you scratch my back and I’ll scratch yours, and we’ll let your shareholders pay each of us for the privilege”. The solution to the first set of problems would have been to break the company up (impossible in the then current regulatory environment, I’d imagine) and for boards of directors to grow a figurative pair – NOT let Eliot and his buddies loot the companies further.)
But that wasn’t what got Eliot, no. It was some tawdry deal with hookers that got him. Epic corruption counts as being a champion of the people, while getting a hummer on the side ruins careers. What a joke. Worst of all, not only did Eliot only suffer what was likely only a temporary glitch to his political career, he got a nice cushy job in the media afterwards.
If you really want to ask a question that needs answering, how about this: Where have all the “media watchdogs” gone? And is there anything that can be done to address THAT situation?
I’d give you my answers to those questions, but those answers are too depressing even by my standards.
Of course a cynic – not me, of course – would say Barney Frank and Chris Dodd – drenched in blood up to their elbows on the crisis, might want to take on exculpatory acts, and protect the banks………lest they tell all.
Okay then, I’ll say it, as I am cynical about almost all things these days.
Frank and Dodd will protect the banks at all costs, lest the banks tell all.
…
Hell, that’s not even all that cynical, Drew. The real cynic (me, again) will point out that a lot of terrible stuff has already come out about the two of them, and only Dodd paid any price. He was forced into retirement after FIVE TERMS as a US Senator. And for his sins he now works as a lobbyist, no doubt making big bucks to have expensive lunchs with other well-heeled and/or powerful low-lifes.
What else are “they” going to tell us about the two of them? That Barney likes boy-toy hookers? That Chris liked to make (girl) hooker sandwiches with Ted Kennedy? Oh wait, that’s all already known, and has been for decades.
The truly cynical position is that it just doesn’t matter what these scoundrels do – they’re part of the group of retarded monkeys that run the country (our erstwhile elite), and that there isn’t much they can do that will really hurt them, save not being powerful enough.
Gee guys. Dodd and Frank? What about the guys who failed to regulate? What about Bush naming an old school buddy to regulate the GSEs? What about Phil Gramm? What about decreasing the capital requirements for banks? What about keeping derivatives off of markets? What about not letting the state attorneys general try to stop the bad lending? Guess Bush and co. were innocents
Steve
No one sane believes Freddie, Fannie and the CRA caused the crisis, but if you are insane then believing they are can be the fig-leaf that holds your world together.
Investigate the banks? Banks? What have they got to do with anything, eh?
You don’t believe that bad behavior on the part of the banks caused the financial crisis? Does that mean that you think it was primarily bad behavior on the part of borrowers?
I think there was bad behavior all around, but that there was a single choke point which was removed to make it all possible:
Loan Qualifications
Banks and other initiators removed those when they went to securitization and it was no longer their own money.
(It’s sad really, some people see a NINJA loan and say who is more to blame, banks or borrowers. I’m saying no, look at what changed to make the NINJA possible. It was the decision by initiators not to give a shit.)
(Countrywide is the perfect example of a “bank” that didn’t care in the least about the quality of their loans. Their business model, and especially the business model of their executives, did not require it.)
Okay Steve, who said Bush wasn’t responsible? He was one of a great many actors involved in fucking things up. Dodd and Frank, though, have culpability as well, and theirs both predates and postdates Bush’s Presidency.
Above I also mentioned Geithner and Spitzer, and if you were paying attention I alluded to problems in the private sector.
As for your specific bitching, one could mention that Geithner, as an FRB President, must have been appointed by Bush at some point.
Just for the record, failure to mention all your favorite targets is NOT the same as thinking they’re all innocent. Typical doctor thinking – believe what you want to believe and then fail to get evidence.