I continue to be seriously skeptical as to whether the Dodd Frank regulatory regime passed in the wake of the financial crisis have any teeth in them what so ever. All indications have been that the financial industry was bailed out by the tax payers and essentially left free to do the same things all over again. However, the situation of J P Morgan Chase seems worth taking a look at what is happening.
Effective regulation, and on that note, it is a positive thing that the Summers of our discontent can finally be laid to rest. After all the damage Larry Summers has caused in being one of the architects of this crisis, from boxing in Brooksley Born and ignoring her warnings with regard to derivatives which brought down Long Term Capital Management during the Clinton administration, to his sexism among everything else. He has now thankfully taken himself out consideration for the job.
It's a good thing he did. Rather than fighting for something or someone that helps people suffering from this economic crisis, President Obama strongly recommended and fought for Larry Summers to be Chairman of the Federal Reserve, a guy who lost a billion dollars as President of Harvard betting on interest rates. Yeah, let that sink in for awhile.
It's really not OK. This is why making excuses for everything the President does, as too many Democrats do without thinking of the damage, is dangerous, immoral, and unprincipled. Now it looks like the front runner to replace Ben Bernanke as Chairman of the Federal Reserve is going to be Vice Chairwoman of the Board of Governors of the Federal Reserve System and once President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, Janet Yellin. Unlike Larry Summers, she at least saw the crisis coming as early as 2005.
A brief moment on a weekend show illustrates the way the notorious 2008 bailout is increasingly not acknowledged.
Cross posted from Pruning Shears.
On last Sunday's "Up With Chris Hayes" there was a discussion about political calculations for Republicans. The question was whether to work with Democrats or go with straight obstructionism. At one point Hayes said:
Bob Bennett was a fairly conservative senator from Utah, right, of long standing, he was not some super lefty heterodox guy, right? And his huge heterodoxy was that he had cosponsored a health care bill with Ron Wyden. It was not the health care bill that actually got passed. It was called the Wyden-Bennett, and in fact, a lot of Republicans later said, well, we really like Wyden-Bennett, right? But what happened to Bob Bennett just for cosponsoring this health care bill? He went back to Utah and got booted out in that state's Republican convention after serving, what, two or three terms, OK.
The quick summary is that the German equivalent of our Supreme Court has ruled against Deutsche Bank in a crucial case related to the ongoing financial collapse. DB is the largest German bank, and is also a prime dealer for the U.S. Federal Reserve, a recipient of bailout funds from U.S. authorities, and just as nasty a predator as J.P. Morgan Chase or Goldman Sachs. Speigel Online reports: Read more about Banksters Lose BIG Case in Germany
Fellow Correntians - a quick movie review. Yesterday, some pals and I stopped by the Ritz 5 theater in Philadelphia to see Inside Job, an outstanding and comprehensive examination of the financial crisis.
No matter how well versed you are on all the factors that pushed us into this crisis, this film does what I haven't really seen done before - it presents them all in a chronological and very accessible way.
There were so many darkly humorous moments throughout the film, especially the ones which occurred during the amazing interviews that director Charles Ferguson managed to get. (And I don't know HOW he got these interviews.) Read more about Movie Review - Inside Job
So I got in a little bit of a tiff earlier today with some joker parroting the banksters’ and conservatives’ line that all government spending has to be backed up by either tax revenues or borrowing. So I pointed out that it’s probably better to have new money created, by having the government of the United States simply crediting, out of thin air, the bank accounts of construction companies building new bridges and rail transit systems, rather than having JP Morgan Chase or Goldman Sachs create a few billion in "new money" as margin on credit default swaps, or oil futures contracts. Read more about A picture worth a thousand words
He says his name is Mr. Margin.
Lambert asked why they no share the monies. The NY Times article linked above is instructive.
Banks are holding on to the cash to prop up the stock price for investors (sure, sure) and especially to keep the stock prices propped so the top execs (whose lifestyles are dependent on borrowing money against the stocks they own in the companies they run) aren't busted out. Read more about Call in on Line 1
Please read Paul Jorian's blogpost regarding the implosion of the credit markets, the reasons, the influence of "The Chicago School" of economists whose assumptions continue to help us not understand how economies work, and "What it All Means".
Don't feel bad to reread each sentence, mouth-moving to form the words, just as I must do. Just read it. (plus it's fucking footnoted. My god, who footnotes a blog!!!????)
Here are some teasers:
The opener: Read more about Read Slowly and Carefully
Via Upset the Setup:
If you go to this, please take pictures and post about your experience. Read more about Action Alert: No Bail Out Protest on Wall Street
[Newberry's got the best perspective and policy, and, unlike some (me) knows finance. So, I urge you to drop by listen, learn, and lend perspective. -- lambert] Read more about Get Your Econ/Financial Crisis Questions Answered by an Expert