November 5, 1999: ''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.'' [...]
''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''
Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''
''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''
Decisions made during the final months of the Bush administration created an environment in which the most politically connected investment banks, Goldman Sachs and Morgan Stanley, not only flourished, but saw their competitors laid waste, with firms like Lehman in bankruptcy, and others, like Merrill Lynch and Bank of America, forced to merge in desperate hope of surviving. [...]
The roots of the linkage between Goldman Sachs and AIG go back to the closing months of the Bush administration, as the financial meltdown reached crisis proportions and key decisions were made that are now reaping the whirlwind. Remember who played a key role in deciding to bail out AIG? Henry Paulson, the Goldman CEO-turned George W. Bush Treasury Secretary. Paulson, according to a September 27, 2008 New York Times piece by Gretchen Morgenson, led a team of regulators and bankers in early September to determine what to do with the most severely wounded financial institutions. One of the participants in those meetings was Lloyd C. Blankfein, Paulson's successor at Goldman Sachs.
Out of those meetings came the controversial and heavily criticized decision to allow Lehman Brothers, a Goldman competitor, to go belly up, and to bail out AIG. Starting with $85 billion from the Fed, taxpayers have pumped a total of $170 billion into the giant insurance company. The bailout was crucial to Goldman in that it permitted AIG to pay off its $12.6 billion debt to the firm, $8.1 billion of which was to cover AIG-backed credit derivatives.
The key words above: "during the final months of the Bush administration."
During the final month of the Clinton adminstration, the USS Cole was attacked by Al Qaeda — an event that is still actively criticized as evidence of Democrats' "softness" on terrorism.
During the final months of the Bush administration, Hank Paulson demanded and received $700 billion to save his corporate legacy. The difference between the terrorists during the two administrations is that the terrorists during the Clinton era live in caves in central Asia, while the terrorists during the Bush era were in Bush's cabinet, running the Treasury Department.
GOP soft on terrorists? No way — they are the terrorists, financially speaking. Heckuva job, Hank!
CNBC and the Wall Street Journal are both notorious for presenting opinions that are clearly disconnected from any of the quantitative, reality-based information they manage to report. The Journal's opinion page, always a hotbed of right-wing talking points and ludicrous extrapolations, consistently and systematically ignores whatever objective evidence is there to see on the front page.
Today's WSJ provides the cognitive-dissonance-du-jour. Pieces on the opinion page are hysterically headlined, "Obama's radicalism is killing the Dow," and "Obama repeats Bush's worst market mistakes," but the front page shows the real culprit: the job loss that will undermine the potential for any recovery. This job loss started well before Obama was even a front-runner, and yet the opinion page manages to paint him as some sort of über-villain who brought Wall Street to its dirty, dirty knees within six weeks.
If you have ever gone sledding or skiing, you know there's an inflection point on the hill where gravity will pull you down pretty fast. Look at the chart from today's Journal and tell me with a straight face that it's all Obama's fault. [Blue text is mine; everything else WSJ.]
The financial services industry spent more than $5 billion on political contributions and lobbying from 1998 through 2008, according to a study released today.
The study, issued by Essential Information, a Washington-based non-profit that seeks to curb corporate influence, and the Los Angeles-based Consumer Education Foundation, a non-profit consumer organization, blames influence peddling for the financial crisis.
Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurers made $1.7 billion in political contributions and spent another $3.4 billion on lobbyists, the study found.
Securities firms spent more than $504 million in campaign contributions and $576 million on lobbying over the period.
Spending by the major New York-based firms was:
The Goldman Sachs Group Inc.: $46 million
Merrill Lynch & Co. Inc.: $68 million
Citigroup Inc.: $108 million
JPMorgan Chase & Co.: $65 million
In addition, Bank of America Corp. of Charlotte, N.C., spent $39 million; the former Wachovia Corp. of Charlotte spent $15.9 million; and Wells Fargo & Co. of San Francisco spent $21.9 million.
Lawmakers and regulators “responded to the legal bribes from the financial sector” by rolling back standards, barring new rules to address “trashing enforcement efforts,” Robert Weissman, director of Essential Information and the lead author of the report, said in a statement.
Only $46 million in bribes from Goldman Sachs? Such a deal!
Hank Paulson's "By Monday I need $700 billion, no strings attached" ransom note last fall — before the election — seems literally a steal. Talk about leverage! A mere $46 million will buy you $700 billion in deleveraging magic, which you can use as a wand to wish away your catastrophic management of the global financial system. Killing Lehman and "saving" AIG was all part of Paulson's plan to secretly save Goldman, Lehman's rival and AIG's pivotal trading partner, which was facing disaster thanks to Paulson's own leadership as former CEO.
(By analogy, you could regard Cheney's whoops-no-WMD adventure in Iraq as a way of secretly saving no-bid Halliburton, which was likewise facing disaster thanks to his own leadership as former CEO. Apparently "public service" is the last resort of Republican CEOs who fuck their companies up so badly that they feel obliged to empty the US Treasury to compensate for their multitrillion dollar errors of judgment and outright chicanery.)
