The New York Times points to bad news for Jon Corzine's MF Global. The firm's bets on European debt have apparently not worked out well and our former governor is reportedly calling "seemingly every major Wall Street firm" looking for a rescuer to buy it. Frankly it all seems like reckless gambling to me, even if I like Corzine. We can all at least hope this is a semi-isolated problem, and not the start of another general collapse of the financial firms.
Unless you have some sort of telepathic connection to the Internet, you are reading this article on a computer. Perhaps that computer is in your home – a place that provides you with shelter and comfort. Perhaps you are viewing this piece on a computer at work – you’re among the fortunate Americans who have a job. Or maybe you’re less well off, don’t have regular access to a computer, and are reading this on a system at one of the many struggling libraries in New Jersey.
Yet, there are hundreds of thousands of your fellow Garden State residents who don’t have the wherewithal to read this blog. They may be homeless or living in substandard housing. They may be too sick because they have no access to health care. Or they may be more worried about whether they can afford the bus fare to get to the food bank so their family can have a nutritious meal.
Reporting on poverty in New Jersey is not as exciting as following our well-to-do governor’s political rants or lamenting the Yankees’ performance. As liberals, we may be going through some self-satisfying self-congratulations about the fact that we are finally seeing activist protests on Wall Street and around the nation. But let’s remember what precipitated these demonstrations – it’s the growing chasm in our society between the rich and the poor – the extermination of the middle class. Hundreds of thousands of your fellow citizens can’t even afford fare to these demonstrations or, if they’re lucky, can’t get time off from their minimum wage jobs.
Somewhat contrary to our initial report on this, while some just stayed through the weekend of the 17th, others have tried to make the "Occupy Wall Street" protests into an actual occupation. The protesters have camped out in what they have calledLiberty Plaza aka Zuccotti Park (which apparently was at one point called Liberty Plaza Park) indefinitely.
So it went. From the Saturday the 17th up until last Saturday the 24th. The protesters camped out, ate their pizza, and spent the day highlighting the issues they cared about - which at one point was the execution of Troy Davis. No property destruction or violence was reported. No harm, no foul right?
(Protester and dog catch a nap, "Stay Clear of the Plants" sign in background)
Well it seems after a week of "occupation" the New York Police Department or rather their superiors, had had enough. Starting Saturday the 24th, a severe crackdown on the protests started.
(Police began a crackdown on protesters starting Saturday)
What was once a rather calm scene turned increasingly chaotic as police used force to breakup protests, including the deployment of non-lethal chemical weapons.
(Peaceful Protesters Sprayed With Irritant By Police)
(Hundreds gathered to protest on and near Wall Street on Saturday)
Today, unknown to many people including myself, was the launch of a three day long protest called "Occupy Wall Street" the event is apparently affiliated with the 99% movement whose core tenant is that the Top 1% of the wealthy in America have essentially rigged the economy for their benefit at the expense of the bottom 99% I want to also stress it is difficult to understand who or what is exactly behind this protest/movement because of the strategy known as "leaderless resistance." The group Anonymous is also believed to be involved.
Julianne Pepitone, of CNN, has been one of the few reporters on the scene. From her story:
Hundreds of demonstrators took to the streets of Manhattan's financial district on Saturday in a largely peaceful protest aimed at drawing attention to the role powerful financial interests played in wreaking havoc on America's economy.
Modeled on the "Arab Spring" uprisings that swept through Egypt, Tunisia, Syria and other countries this year, Occupy Wall Street is a "leaderless resistance movement" orchestrated through Twitter, Facebook and other social media tools. The Twitter hashtag #OccupyWallStreet lit up Saturday with coordination messages and solidarity tweets.
One of the solidarity tweets caught my eye:
(Haledon Mayor Domenick Stampone tweets his support)
The protests have, so far, been peaceful though the police were deployed and closed off Wall Street.
With the Governor on vacation and Senator Sweeney's bombast being supplanted by the hand wringing surrounding the Casey Anthony verdict, you would think that Trenton's name-calling and argumentative style would be on hiatus, and you would be wrong.
The Opportunity Scholarship Act, which would give corporations tax credits if they donated to a school voucher program, had all the hallmarks of a sure thing... But in Trenton, nothing is ever a sure thing, and an intense lobbying effort to push the bill through the Assembly faltered just over a week ago
Looks like its time for another inspirational lecture, take it away Derrell:
Yikes.
But don't worry:
Bradford said advocates will try again to pass the bill after the November election
I had a momentary surge of happiness when I read the headline on a press release that was published by my New Jersey legislators. It read:
Addiego, Rudder, & Delany Bills will Remove Illegals from Behind the Wheel.
"Finally!" I thought. Someone is doing something about Wall Street bankers and corrupt corporatists. If we can't put them in jail for destroying the American economy, at least we can take away their drivers licenses.
Of course, what my mean-spirited Republican legislators were referring to is undocumented immigrants. People who believe in the American Dream and come here to make a better life for their families. And unless you are a Native American, you or your ancestors did the same.
But the bills proposed by my Republican legislators are not only mean-spirited, but they place an undue burden on everyone. They require that individuals who sell a car ensure that the buyer is not undocumented.
Make no mistake about it. Those who are undocumented are not following the legal process. But their "crime" and its impact is much less than the crimes of the Bush administration, the crimes of the Wall Street financiers, and the crimes of the corporate cartels.
Instead of putting roadblocks in front of hard working folks who are trying to make ends meet and contribute to society, the Republicans, along with Democrats and Independents, should take positive action on immigration reform and clear the path for legal, compassionate, and comprehensive immigration.
And let's put the real "illegals", the ones that trashed the American economy, in jail.
Yes, this gets to New Jersey, and to Christie - toward the end. The phenomenon of a Christie or a Scott Walker, who go down so easy for the business class, doesn't just "happen". This post is one writer's view of the preamble.
- promoted by Rosi
The economy is a tenuous thing and so easily bruised and broken. We are teetering on a very terrifying edge and the right wing pro-corporate press and message machine is spending billions all over the country to push us over.
Between the manufactured news we see repeated on Fox News, with Rush Limbaugh and around the clock and right wing business interests paying for political ads and skewed polls, it gets harder and harder to hear the truth between the lies.
There was a time in this country that many communities lived in and under the control of what became known as "Company Towns". It seems that there is a calculated and concerted effort to return to that model of economic oppression for the whole of the country.
It wasn't unusual for a company to take ownership of an industry specific area and build a fiscal slave system on it. The premise was pretty simple, control the jobs and access to the money and you control the community. Now we have governors looking to the new "Company Store" owners for guidance and support in their efforts to kill off the last vestiges of labor rights and collective bargaining.
Between 1945 and 1975, the country enjoyed a period of pro-union, pro-labor middle class growth and prosperity, where a single income could buy a home, send a couple kids to college and afford a family a vacation once or twice a year. This period was considered America's "Golden age". We made what we used, what we bought what we needed from local businesses and had pride in our jobs and country.
Senator Menendez appeared on Morning Joe earlier today to talk with the panel about a variety of issues. He started talking about his plan to end tax breaks for oil companies, then moved on to the push back from Wall Street before talking about the housing problems and Sarah Palin. You can see the segment here:
The issue is that the House version of the protection agency is stronger and better than the Senate version. On the other hand, in other areas, the Senate version is better. The committee that will reconcile the two versions can make the bill much stronger or much weaker. Wall Street is gearing up to make sure it's weaker:
"There's no substitute for old-fashioned gumshoe lobbying," Scott Talbott, a senior executive with the lobbying group, told The New York Times. "The staff here knows it. We offer to resole their shoes when they wear them out." ...
The senators named to the conference committee have received a more than $57 million in total during the course of their careers from the finance, insurance and real estate (FIRE) sector, according to information from the Sunlight Foundation.
Holt is right, the conference committee members must strengthen reforms after Wall Street lead us into a disaster not seen in generations. Democrats need to be firm because Republicans are not going to play a helpful role.
The final vote today was 60-40 (yesterday it was 57-42). Next up is a final vote on passage, which is expected to take place within days.
After today's vote, Senate Majority Leader Harry Reid said there are "a couple of amendments that are germane post-cloture, but there the ones that we have to figure out a way to get resolved."
I'll confess my sympathies are with Senators Cantwell and Feingold who voted no over various loopholes and gaps in the legislation. I sure hope this is strong enough because I have my doubts.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."
According to the SEC's complaint, the deal closed on April 26, 2007, and Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded.
The political power of Goldman is incredible, with literally over $30 million of donations by employees over the last two decades and ex-Goldman people throughout the government. Of course, the vast majority of these people had nothing to do with this particular 2007 deal, and I do not consider them responsible for it. The company itself, however, is now involved in a major scandal, so their PAC may be considered tainted. I think it's also likely the scandal will grow as more documents are uncovered.
"The alleged actions of Goldman Sachs are emblematic of conflicts of interest that put our economy and families at risk," Potosnak said Friday. "We need common sense reforms to hold banks accountable for the risky practices that led our economy into the gutter. My opponent, a member of the House Committee on Financial Services, has opposed nearly every effort to improve the financial services industry, to provide consumer protections, or to hold banks accountable. He takes tens of thousands of dollars in financial contributions from the financial special interests and puts aside the interests of our working families."
"Our campaign is about fighting for the interests of our families against the influence of powerful special interests. If Lance returns the money Goldman Sachs invested in him, it would not undo his record when it comes to consumer protections, but it would, at the very least, indicate that he recognizes that residents in New Jersey's 7th Congressional District do not want this kind of money dictating the actions of their elected officials."
Let me be blunt: Potosnak is 100% correct in this statement. However, once you look at the FEC list of candidates supported by The Goldman Sachs Group PAC, you'll find many other many Democrats and Republicans on their list, including New Jersey ones. We need challengers in both parties, and responsible incumbents, to reject the bipartisan cozy relationship with Wall Street. To me, the donations look all too much like kickbacks for gutting regulations.
On Thursday, March 18, 2010, union members and community allies will join together at Owen Grundy Park in Jersey City to demand good jobs now. America needs 11 million jobs and big Wall Street banks should pay to rebuild jobs and the economy they helped destroy.
The rally will be held from 4:00 pm to 5:00 pm at Owen Grundy Park at Exchange Place in the heart of Jersey City's financial district, right across the Hudson River from Wall Street.
Let us know you'll be there to fight for good jobs. Register here.
In discussions with Wall Street executives, Republicans are striving to make the case that they are banks' best hope of preventing President Barack Obama and congressional Democrats from cracking down on Wall Street.
GOP strategists hope to benefit from the reaction to the White House's populist rhetoric and proposals, which range from sharp critiques of bonuses to a tax on big Wall Street banks, caps on executive pay and curbs on business practices deemed too risky.
It includes discussion of an approach to Democratic contributor James Dimon, the chairman and chief executive of J.P. Morgan, who donated to Democrats in the past. The Huffington Post got reaction from Senator Frank Lautenberg:
"Criticism of a group or organization has to be weighed in terms of the total context," he said. "When you see someone like Dimon, who's a pretty outstanding business leader, I can't imagine that he's going to want to be isolated from the Democratic presence. That doesn't bother me."
But isn't arguing that you deserve Wall Street support politically perilous? "I think that's harmful to their interests, but I'm not their doctor," said Lautenberg.
HuffPost clarified that the question was about Democrats fighting for Wall Street support. Isn't that the wrong message? "I don't think so. I think that unless there's some really egregious behavior, I think that they should support us and I think that we should be willing to accept their help," he said.
Not much to say here. Wall Street owns both parties and the elite like it that way. I'm reduced to hoping the big bonuses help close New Jersey's budget gap. I do wonder, though, what would constitute "egregious behavior" towards Wall Street.
The US Senate Banking, Housing and Urban Affairs committee has taken up legislation dealing with financial regulatory reform. Mondaq had more on the bill:
Senate Banking Committee Chairman Christopher Dodd has introduced a discussion draft of the Restoring American Financial Stability Act of 2009 (the "Dodd Bill"), which comprehensively addresses financial regulatory reform, encompassing the range of issues covered in the Obama Administration's proposed legislation and several bills pending in the House of Representatives. For further discussion of the Administration's proposed legislation, please see the July 28, 2009 Alert and the August 4, 2009 Alert and for the House legislation please see the October 20, 2009 Alert, the October 27, 2009 Alert and the November 3, 2009 Alert. Many provisions of the Dodd Bill are similar to other regulatory reform bills, such as the creation of a Consumer Financial Protection Agency ("CFPA"). However, the Dodd Bill also contains significant differences from other regulatory reform proposals, such as (a) combining all prudential bank supervision into a new agency, the Financial Institutions Regulatory Authority (the "FIRA"), (b) creating an entire new agency to regulate systemic risk, the Agency for Financial Stability (the "AFS"), and (c) reducing the powers of the FRB. Based on recent testimony, the Dodd Bill largely reflects the viewpoint of FDIC Chairman Sheila Bair, while the legislation introduced by House Financial Services Chairman Barney Frank largely reflects the viewpoint of FRB Chairman Ben Bernanke.
The Mondaq story has a pretty comprehensive breakdown of the components in the legislation. Here is the opening statement from Senator Menendez:Menendez said it's time to corral the Wall Street bulls who saw red and ran wild. He said he will introduce amendments to strengthen the bill:
It's time for transparency, Mr. Chairman. It's time to increase the enforcement budget at the SEC. It's time to help innocent victims of fraud and Ponzi schemes recoup their losses through the Security Protection Investor Corporation (SIPC) or other means. It's time for accountability and regulations that protect American families while allowing our market based economy to run smoothly - but not run amok. These are necessary reforms and I believe they are long overdue.
This will no doubt be a big fight in Congress as the Financial Industry has the resources to push back and lobby against tighter regulations on their business practices.
If our New Jersey Representatives and Senators have any sense at all, they'll ban this horrible idea now:
After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.
The bankers plan to buy "life settlements," life insurance policies that ill and elderly people sell for cash - $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to "securitize" these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.
The reporter, Jenny Anderson, goes on to show that people buying life insurance policies have a history of preying on seniors and that this plan will almost certainly lead to insurance companies increasing their rate. Furthermore, it will lead to widespread fraud as happened when Wall Street did this to mortgages. Oh, one more thing: investors in these "securitized" products may (surprise, surprise) end up with huge losses if people live longer than a model made by a PhD mathematician/nuclear engineer expects.
The article does not mention an interesting twist. I remember Bob Menendez once criticized companies for taking out life insurance policies on their own employees:
Recent news reports have revealed that many large companies purchase so-called "dead peasant" life insurance policies on low-wage employees without their consent or knowledge. When the employees die, their families receive nothing. Instead, the companies reap the benefits, and in some cases use the money to fund compensation packages for high-level executives.
I can't wait for the day when companies can collect cash from their own pension fund by "selling" their employees' insurance so the pension plan can "invest" in the idea that the employees will die young.
Evidently there have already been some sort of Senate hearings, so perhaps Bob Menendez and Frank Lautenberg know of this scheme, but I honestly hope everyone but Scott Garrett will work against it. I have no hope for Garrett.
I'll leave you with the Times quote where the investment banker admits Wall Street is trying to create a bubble:
"We're hoping to get a herd stampeding after the first offering"
The battle over the Wall Street bailout and future responses to the economic crisis is not over. Congressman Steve Rothman just put out this important statement on the bailout "in response to reports that Wall Street banks are planning to cut bonus checks for top executives, traders, and bankers despite accepting tens of billions of dollars in government assistance from the Federal Reserve:"
"I strongly oppose the use of the Bailout money or any U.S. taxpayer dollars to provide Wall Street executives with annual bonuses. The executives who dealt in high-risk mortgage-backed securities, that later turned toxic, do not merit any bonuses from anyone, especially taxpayers. Further, I believe that the nine banks that have accepted capital injections from the U.S. government as part of the financial Bailout should not be giving out bonuses of any kind, with anyone's money, until these firms have repaid the money given to them by the Treasury.
"Unfortunately, this is just more evidence that the Bailout that provided Wall Street with a $700 billion blank check was a mistake. I continue to believe that infinitely better solutions were right at hand and still can be implemented immediately to provide credit confidence and economic relief.
He goes on to advocate for an economic stimulus package, middle class tax cuts, and restructuring mortgages.
We're now a bit removed from the immediate panic, and the original proposed use of the bailout money has already been modified. What do you think of the bailout now?
Instead, well, we got what we got - a poorly designed initial plan that was unacceptable to congressional leaders from both parties, silence from non-governmental actors, and a rising public backlash against a mysterious and seemingly under-motivated plan.
I couldn't help but think this reminded me of Governor Jon Corzine's mistakes, particularly the asset monetization scheme, and it reminds that they have similar Wall Street backgrounds. Back in 1998, Paulson stabbed Corzine in the back to become Goldman Sachs' CEO. It seems Wall Street leadership is not well suited for crisis situations in politics.
So I ask our readers, am I on the right track here to understand Corzine's weaknesses?
It isn't immediately apparent to some how intimately tied to Wall Street their lives are. There are all kinds of statistics and scenarios that could be trotted out to explain it, but I think the case of Bayonne will be a cautionary tale here in the Land of Unfettered Debt Garden State.
The short side of the story is that Bayonne has about $49 million in bond payments that are coming due in the next month. There is no way - none - that the issuing agencies are going to pull enough rabbits out of their, uh, hats to make the payments. So they do the only thing left available to them - they refinance and hope that someday in the future they'll be able to make the payments. There's a weak point in their plan, though (other than the uncertainty of future payments).
What I'm worried about is that I see that people like Paul Krugman and Sebastian Mallaby are saying that, as proposed, the bailout is dangerous and that it should be rejected. So it's good to see Senator Menendez's statement:
Major action to help rescue our economy is certainly necessary, but what disappoints me about this proposal is that it's all Wall Street and no Main Street. We can't ignore the millions of Americans who may lose their homes, and there must be accountability to protect the taxpayers. It is both unfair and unwise to throw a lifeline to banks that were irresponsible without so much as offering a hand to homeowners and some real limits on risks for the taxpayers.
As we saw in House vote on offshore oil drilling, it doesn't seem like New Jersey liberals have any influence on the Democratic Leadership, but I think we need to see some accountability for this unprecedented government action, and an effort to help ordinary people.
