Grifters and Swindlers
Wall Street was once a venerable institution, but is now little more than a den of thieves. Maybe there are decent people, but the culture itself is one of grifters and swindles, cons and it's been this way for a while with the help of corrupt lawyers like Eric Holder, and corrupt political-pundits like Rubin and Larry Summers. Okay, it always has had a sleazy side, ever since markets were places where animals were bought, sold, and slaughtered. There have always been hucksters, grifters, fraudsters, and thieves. But never so brazen and so many. And so transparently so! And they always manage to "dirty" their marks so that they think they are at fault.
I had other subjects in mind, but several news topics pushed them aside today. In the context of these news items I'm hearing that Larry Summers wants to be Federal Reserve Chairman and the logical and Obama wants to pass up the integral (person with integrity) choice for the job; Janet Yellen. This would be a disaster. Larry Summers should be in jail not the Fed. Janet Yellen is well qualified and what we need right now. But Summers is a corrupt insider and Obama likes him for some reason.
Champion putting hungry foxes in the hen houses
He's been involved in nearly every corrupt short sighted decision in this country since before he championed repeal of Glass Steagle in the waning days of the Clinton Administration. Wikipedia summarizes well [sorry this would take three blogs otherwise]:
- "Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass–Steagall Act):
- As a member of President Clinton's Working Group on Financial Markets, Summers, along with U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Fed Chairman Greenspan, and Secretary Rubin, torpedoed an effort to regulate the derivatives that many blame for bringing the financial market down in Fall 2008."
- And there is his role in bringing down Gray Davis in California and enabling Enron to replace him with the Terminator (Arnold Schwarzenegger) Summers excused Enron's financial manipulation in that incident.
"Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Summers said. "This historic legislation will better enable American companies to compete in the new economy."
Indeed he still supports financial deregulation, is still blocking regulation of the derivatives market and enabling banks to acquire rent seeking opportunities. Heaven help us if he gets access to the Federal Reserves regulatory apparatus! In the Daily Beast Steven Senne quotes Kurt Eichenwald saying:
In his book about Enron, Conspiracy of Fools, Kurt Eichenwald describes Summers’ role in the early stages of the California energy crisis when the state was suddenly faced with power shortages and energy costs that were soaring up to 20 times normal levels. Then-Governor Gray Davis, convinced that Enron and others were manipulating the market, begged the federal government to intervene.
And of course it turned out that Enron really was engaging in swindles and frauds, and that the program of deregulation that the Summers/Rubin school was pursuing would eventually lead to other companies immitating and multiplying frauds -- which are still continuing to this day. And was there quid pro quo? You decide. Tony Wikrent posted this excerpt from emails from around that same time in "Real Economics":
"As you know, Ken has talked to Larry Summers about serving on Enron's Board of Directors. Larry told Ken that in light of his selection to head Harvard, he wants to hold off going on any corporate boards for now. My understanding is that Larry will most likely accept Ken's offer at the end of the year."
Looks like Quid Pro Quo to me. But that's not all. He's also been a champion of bankers and wealth over just about every other priority. During his stint at the World Bank he helped engineer our current trade imbalances by engineering a bailout of East Asian Countries based on letting them arbitrage the dollar. He:
"engineered a bailout that gave countries the money they needed to get through the crisis, but required that they would pay their debts in full. The flip side was that the United States would maintain an open door to exports from the region.
If he'd learned anything from these things it might be one thing but he still champions corporate power, is against regulation and is out to deregulate just about anything that wants to be deregulated. And Obama seems to feel the same way. The times Rana Foroohar quotes him in 2011:
“I’ve been more cautious than many about constraining financial innovation,” he said, adding that he didn’t believe the financial crisis had its roots in “new-fangled financial instruments” but rather in a simple real estate bubble.
If he can say that despite Enron and everything that has happened since, then he's also a prevaricator.
But that should be no surprise. Money leads people to moral blindness and eyes open recklessness, and the pursuit of money and power is what is behind most corruption. Wall Street is unrepentant. Goldman Sachs has been accused of manipulating aluminum prices, and other companies Copper and other metals. Without laws forbidding them using "other people's money" recklessly they'll continue using their corrupt control over congress, courts and executives to make more money and take over and loot one industry after another. With Summers at the Fed at least he won't be provoking stupid policy decisions such as getting rid of the mortgage option for ordinary people trying to buy a house:
Rules are meant to be Broken
Summers is an awful choice for a human being (could be worse of course), much less to be a trusted advisor or in any position of trust. Yet a lot of folks think Summers is a genius and continue to believe him despite his track record of being wrong and the corrupt results of his prescriptions. This is because he reflects the Wall Street mindset that Alexis Goldstein wrote about after he left it more than 2 years ago. Nothing has changed about it or the people who shill for it:
"But the key to truly understanding superiority on Wall Street is by looking at how it’s measured: with cold, hard numbers. Numbers can be amplified by honest work, but they can also be amplified by betrayal, manipulation, and cheating. And when everything is a cold cost-benefit analysis, why wouldn’t you break regulations—provided you knew the profits you stood to make would dwarf the fines you would pay should you get caught?"
Wall Street's modus operandi for nearly a century has been to "promise the moon" and then laugh at people when the promise turns out to be a lie. And folks like Larry Summers are there to make sure that they can ignore regulations, engage in "new-fangled" swindles and not even get fined in the first place -- to their hearts content. Deregulation and prosecutors who tell Congress that Wall Street firms are "too big to jail" have contributed to the current attitude that Goldstein refers to in this quote:
"This is why paying fines when you are caught breaking the rules is simply deemed “the cost of doing business” on Wall Street. "
Summers has already been handsomely rewarded, and once he leaves office he'll get more rewards still. I suspect his membership in boards and he'll draw good speech fees once he leaves office. And he's still at it. His current project is an attack on government supported mortgages for the remaining middle class: BINYAMIN APPELBAUM writes in the New York Times;
The president praised a bipartisan Senate effort to replace Fannie and Freddie with a system that would charge lenders for explicit government guarantees of some mortgage loans. And while there is a risk that the cost of borrowing would increase, Mr. Obama also said that he wanted to preserve the wide availability of the 30-year, fixed-rate loans that are preferred by most Americans.
A risk? No the word is certainty. And all of us know that their promises are worthless. The end of Fannie and Freddie means the end of the 30 year fixed rate mortgages and folks locked into Usurious interest rates. Wall Street has a massive power over both parties -- and this has to be fought. The first step is defeating Summers.
But of course the Grifters label these frauds and corrupting laws "reform" and act like it will benefit the people it assaults. The same article notes:
"“Washington has suddenly come alive on housing finance reform,” said David Stevens, president of the Mortgage Bankers Association"
Mike Papantonio notes that we should be deliberative as we fight, and neither get furious, nor let nasty people rattle our nerves. It is hard sometimes. But worth the effort. Because once you open your eyes and learn how to see and analyze you can tell the scoundrels from more integral people. I didn't mention that Yellen is more than qualified, a lot smarter, teaches economics, serves on the Federal Reserve Board now, and is honest. Nor did I mention that Larry Summers has a reputation as a macho misogynist. That is because the current in crowd thinks that being a woman or having integrity is a drawback for the job.
- Sources for this post:
- http//business.time.com/2011/04/12/larry-summers-no-regrets-on-deregulation/ Aluminum scam:
- Rolling Stone's narrative on the 2008 bailout includes details on Summer's swindling role in it: