I get asked this all the time: what is the big deal about all these Occupy Wall Street Protestors? What’s their gripe? Certainly our news media seems more than a tad confused. Well, I can explain a large part of it best by the example of these two recent news stories:
First (but not the worst) Story:
Federal regulators have discovered that hundreds of millions of dollars in customer money has gone missing from MF Global in recent days, prompting an investigation into the brokerage firm, which is run by Jon S. Corzine, the former New Jersey governor, several people briefed on the matter said on Monday. […]
Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.[…]
In any case, what led to the unaccounted-for cash could violate a tenet of Wall Street regulation: Customers’ funds must be kept separate from company money. One of the basic duties of any brokerage firm is to keep track of customer accounts on a daily basis.
How much money? At least $700 Million. MF Global filed for bankruptcy on Monday. Odds of the people who invested in MF Global for their own account getting repaid in full for what I consider THEFT? Well let’s just say I wouldn’t bet on them doing too well in the bankruptcy.
But that’s peanuts compared to what Bank of America did to screw over the American Taxpayers in a Second, Far Worse Story: Bank of America transferring TRILLIONS of DOLLARS of WORTHLESS MORTGAGE BACKED DERIVATIVES to its FDIC insured bank unit. Why is this worse? Because in the event of a bankruptcy all the “counter-parties of those derivatives” (i.e., the people who would normally lose every penny they invested in the fraudulent scheme concocted by Merill Lynch–the investment house that sold these crappy securities as AAA rated investments– the same Merrill Lynch that Band of America purchased) would be paid first under the 2005 Bankruptcy Reform Law.
That would leave all of Bank of America’s other customers out in the cold. It would also force the FDIC to bail out all of Bank of America’s depositors. Needless to say this would cost the American taxpayers another who knows how many BILLIONS of DOLLARS as the FDIC insures the accounts of those depositors.
Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.
For perspective, the entire Federal bailout of the Savings and Loan Crisis, for all those Savings and Loan Associations that went belly up after Reagan deregulated the rules that restricted them to making residential mortgage loans, was roughly 153 BILLION DOLLARS as of 1999. That figure does not include state bailouts from their own thrift insurance funds.
So, the shift of derivatives to Bank of America’s FDIC insured bank unit has the potential to exceed the cost of the Savings and Loan Crisis (the previous largest banking crisis since the Great Depression) by a conservative estimate of at least 400 BILLION DOLLARS and quite possibly much more. As many Democratic Legislators have complained, what Bank of America is doing is shifting the risk of losses on these derivatives from its investors to the FDIC and thus the American taxpayers.
Oct. 27 (Bloomberg) — Congressional Democrats are asking regulators whether they explored possible risks connected to Bank of America Corp.’s moving of derivatives from Merrill Lynch into its deposit-taking unit after a credit downgrade.
Eighteen lawmakers signed onto letters from Representative Brad Miller and Senator Sherrod Brown seeking information about whether agencies consulted on the transfer considered the potential impact on the bank’s health and customer accounts.
“Because of the favored treatment of derivative contracts in receivership, it appears highly likely that losses on derivatives would result in losses to insured deposits ultimately borne by taxpayers,” Miller wrote in his letter, which was signed by eight House Democrats. The transfers were first reported by Bloomberg News on Oct. 18.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/27/bloomberg_articlesLTQVRY1A74E9.DTL#ixzz1cSZWzVif
In short, Wall Street owns the government, and is treating the Federal Treasury and the Federal Reserve as their own private piggy bank. And no one is stopping them. Meanwhile Republicans rail on Cable TV the street that the problems with America are all related to greedy unions, bad teachers, government workers, social security and Medicare recipients, the unemployed and federal regulations.
Considering unregulated Wall Street banks and investment houses crashed the Economy through their risky and fraudulent derivatives schemes, took billions of free money from the government it doesn’t take a genius to see why Occupy Wall Street has taken of like it has all around the country. Wall Street firms received federal bailouts and are now making obscene profits at a time when their actions crashed the economy, required billions of taxpayer funded bailouts, created massive unemployment, pay freezes or cutbacks in benefits for middle class and poor American workers, an increased loss of medical insurance coverage for millions of Americans and unprecedented rates of foreclosures. I think these two examples of Wall Street’s continuing piracy makes it very clear why people are angry with a political and economic system that favors corruption, greed and income inequality on behalf of individuals who caused this mess in the first place, and are now continuing to profit from it.
So: the people confused about OWS are taking their opinions from corporate representatives, rather than reaching their own conclusions based on their own lives.
I really can’t imagine why the system is so dysfunctional. Jesus Christ on a motorbike ..
Just look at “Bobo” Brooks today. He says that OWS is pissed because they all have liberal arts degrees while their college mates went to the business school, and therefore are just jealous. Of course, Brooks is above visiting OWS and talking to the people there.
And stuff like this, kids, is how you end up with Gov. Chris Christie. Great work as always, Corzine. Glad to have you on the “team.”
The sheer work that it takes ‘not to understand’ what OWS is is laughable.
It’s simple. Bumpersticker simple. They are looking for 2 things, REPRESENTATION and ACCOUNTABILITY.
And for anyone trying to join TParty elements to OWS this is where they will always part ways as the TParty advocates cutting the accountability part of govt and protecting the 1%’s mega representation at the cost of the 99%.
I think it’s pretty obvious what OWS is about, except to the deliberately obtuse. But I think the confusion is what it would take to make the occupiers happy. Most protests have some clear, concrete action as an objective, such as “End the Vietnam War”, “End the Iraq War”, “Mubarak must step down”.
What’s the analog for OWS? What would have to happen for the occupiers to go home happy with what they’ve accomplished?
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A mere $700 million …
"But I will not let myself be reduced to silence."
I don’t think I remember a week in politics where 3 frontrunning candidates have all had such disasters hit them at once.
Breaking over at Think Progress is the story of Romney’s association with the Stanford Ponzi scheme
Cain’s financial issues with Mark Bloch
Perry, well, he’s did it to himself in the New Hampshire speech
Huntsman must be glad he stayed in.
Occupy Wall Street explained in less than 3 minutes (h/t Occupy Raleigh):
George Carlin: The American Dream (NSFW)
Alan Grayson: On Occupy Wall Street
Dylan Ratigan: International Banking Cartel and Political Corruption
This move by Bank of America is just another data point in validating these three views.
If only Grayson was running for President, I’d take a chance on love one more time.
Did you all see this, Mike Lux‘s take on the bank/housing deal being floated.
This is exactly the kind of %@#$% that killed enthusiasm in 2010. It cost me my congressman and it f’d the country. What the heck are they thinking at the white house.
When I canvased for dems in 2010 (Murphy campaign) it was Geithner and Sumners that I couldn’t get past as a reason to vote dem. A lot of folks stayed on the side lines or went for Fitzpatrick because of this. They said why vote for an almost repug party instead of the real thing. It totally sucked then and now.
This has been debunked so often that it has to be considered a lie right now. Dodd-Frank supersedes that law, notional value not value at risk, not worth rehashing again and again, blah blah blah.
Where.
Link please.
You forget the basic flaw of Dodd-Franks: The Secretary of the treasury, the FDIC and the Federal Reserve must all agree to impose the Dodd-Franks receivership on an insolvent financial company. The FDIC cannot act independently to prevent a Bankruptcy Court from giving Counterparties first crack at assets.
At the present time I don’t believe either 2/3 of the Fed and/or Secretary Geithner would agree with the FDIC to impose the Dodd-Franks Title II liquidation procedure on BofA. Without complete agreement among all three, Bankruptcy Law would apply and the FDIC would be screwed. This makes Dodd-Franks a paper tiger in my view.
LINK: