Moyers Journal: Madoff Was A Piker — America’s Big Banks Are a Far Larger Fraudulent Ponzi Scheme

For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that “The Best Way to Rob a Bank Is to Own One.” In fact, the man you’re about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.

AlterNet

Hands-Off Attitude Towards Financial Regulation – Cause & Effect?

The real-world effects of corruption can feel distant and hard to understand. But this week via White House aide Larry Summers, we got a very concrete, easy-to-understand example of how our pay-to-play political system really works.

Open Left

GM Pensions May Be ‘Garbage’ With $16 Billion at Risk

As the biggest U.S. automaker teeters near bankruptcy, workers and retirees like Black are bracing for what may be $16 billion in pension losses if the Pension Benefit Guaranty Corp. has to take over the plans, according to the agency. As many as half of GM’s 670,000 pension-plan participants might see their benefits trimmed if that happened, an actuary familiar with the company’s retirement programs estimates.

Bloomberg

Detroit’s Beautiful, Horrible Decline

Two French photographers immortalize the remains of the motor city on film.

Time

As Crisis Loomed, Geithner Pressed But Fell Short

In September 2005, Timothy Geithner made one of his most visible moves as a supervisor of the U.S. banking system. He summoned the nation’s top financial firms and their regulators to streamline an antiquated system that threatened Wall Street’s boom.

Billions of dollars worth of financial instruments known as credit derivatives were being traded daily, as banks and investors worldwide tried to protect against losses on increasingly complex and risky financial bets. But the buying and selling of these exotic instruments was stuck in a pencil-and-paper era. Geithner, then head of the Federal Reserve Bank of New York, pressed 14 major financial firms to build an electronic network that would cut backlogs and make the market easier to monitor.

ProPublica

Cost Of Living Now Outweighs Benefits

A report released Monday by the Federal Consumer Quality-Of-Life Control Board indicates that the cost of living now outstrips life’s benefits for many Americans.

“This is sobering news,” said study director Jack Farness. “For the first time, we have statistical evidence of what we’ve suspected for the past 40 years: Life really isn’t worth living.”

The Onion

Offshore Tax Havens: A State-By-State Breakdown Of The Cost To Taxpayers

A Senate report estimated in 2008 that the United States loses up to $100 billion a year in tax revenue to offshore tax havens (PDF). In a report released Wednesday, the U.S. Public Interest Research Group offers a state-by-state breakdown of the cost to taxpayers of tax revenue lost to “shell companies and sham headquarters” in places like Switzerland and the Cayman Islands.

Huffington Post

Bailed-out banks face probe over fee hikes

Since the Troubled Asset Relief Program was launched in October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticised as predatory by consumer advocates.

The Australian

Congress Pushing Covert Bailout to Save Big Finance and Screw Homeowners

U.S. policymakers just dealt struggling homeowners another devastating financial blow by helping Wall Street banks cook the books on their mortgages.

The real outrage, however, is that federal policymakers know the strategy they’re adopting screws borrowers: they did the same thing in the 1980s to save banks from overwhelming losses on loans they’d made to developing nations, with horrific consequences for the global economy.

AlterNet

Pelosi calls for panel to probe Wall Street

Democratic House Speaker Nancy Pelosi, saying that the American people are demanding “discipline and accountability” after the multibillion-dollar federal bailouts, promised Wednesday to create a legislative commission with broad oversight to investigate the causes of Wall Street irregularities and their full costs to taxpayers.

SFGate

Union Intensifies Efforts to Organize Workers at Wal-Mart

The Bentonville, Ark., retailer, a leading opponent of the legislation, said managers have seen increased union activity at a number of stores, prompting mandatory meetings to discuss unionization. “We have noticed that the UFCW has been working harder lately in its attempts to get Wal-Mart associates to sign union cards, but we don’t think our associates have any reason to be more interested than before,” said Wal-Mart spokesman David Tovar.

Wall Street Journal

Jump in Foreclosures Reaches Historic High in March

A record jump in foreclosure activity in March that occurred just as a voluntary ban on foreclosures ended is raising troubling questions about whether lenders and servicers are genuinely willing and able to do loan modifications on a large scale. And it poses an even more worrisome possibility: That many borrowers can’t be helped at all.

The Washington Independent

Social Class and the Tax Burden

I recently came across two really fascinating figures. The United States has a system of “progressive taxation.” This means that the richer you are, the more you pay in taxes. This first figure, found at The American Prospect, shows the percentage of total income earned by Americans (split up into quintiles) and the tax rates for each group.

Sociological Images

How Immigration Policy Creates Dependent Spouses

The documentary, Hearts Suspended, points to one way that immigration policy disadvantages women. When a non-U.S. citizen is granted the permission to live and work in the U.S., their spouses are often given permission to accompany their spouse, but not to work. These spouses, wives more often than husbands, find themselves completely dependent on their husbands. The trailer gives us a pretty good idea of how this sometimes plays out:

Sociological Images

Fed data shows big losses on Bear Stearns deal

The U.S. Federal Reserve lifted the lid on its efforts to shore up the financial system on Thursday, and in the process, showed a $3 billion loss on the books from its deal to rescue investment bank Bear Stearns.

Reuters

Obama Lawyers Invoke “State Secrets” to Block Warrantless Spying Lawsuit

In a motion filed in a San Francisco court on Friday, attorneys for the Obama administration moved to dismiss a challenge to the National Security Agency’s notorious warrantless wiretapping program. “The information implicated by this case, which concerns how the United States seeks to detect and prevent terrorist attacks, would cause exceptionally grave harm to national security,” DOJ lawyers argued in the 36-page brief, echoing an argument made ad nauseum by the Bush administration.

AlterNet

More Immunity Claims on Wiretapping from Obama DOJ

In three separate cases in as many months, the Obama Justice Department has used the same arguments that the Bush administration Justice Department used to attempt to stop judicial review of extraordinary rendition and warrantless wiretapping. In the Mohamed v. Jeppesen extraordinary rendition case, the Obama administration reiterated the Bush administration argument that the case should be dismissed to preserve “states secrets.” Likewise, in the Al-Haramain wiretapping case, Obama’s DOJ used the arguments of the Bush administration to argue, again, that state secrets should prevent the Al-Haramain case–in which the only secret isn’t a secret because it was inadvertently shared with plaintiff’s attorneys–from moving forward.

Daily Kos

Officials Say U.S. Wiretaps Exceeded Law

The legal and operational problems surrounding the N.S.A.’s surveillance activities have come under scrutiny from the Obama administration, Congressional intelligence committees and a secret national security court, said the intelligence officials, who spoke only on the condition of anonymity because N.S.A. activities are classified. Classified government briefings have been held in recent weeks in response to a brewing controversy that some officials worry could damage the credibility of legitimate intelligence-gathering efforts.

NY Times

NSA Revelations Spark Push to Restore FISA

In 2007 and 2008, as the Democratic-led Congress and the Bush administration collaborated in rewriting several elements of the Foreign Intelligence Surveillance Act, civil libertarians in and outside of Congress warned that the changes would institutionalize wide-ranging surveillance by the National Security Agency on U.S. citizens. In the wake of the revelations that the NSA “overcollected” domestic communications even beyond the boundaries of the 2008 FISA Amendments Act, many are claiming vindication — and vowing to lead an effort, once thought to be a longshot, to restore old FISA protections.

The Washington Independent

President’s Statement On Torture Memos

The Department of Justice will today release certain memos issued by the Office of Legal Counsel between 2002 and 2005 as part of an ongoing court case. These memos speak to techniques that were used in the interrogation of terrorism suspects during that period, and their release is required by the rule of law.

Talking Points Memo

UN torture investigator: Obama has broken International law

The United Nation’s top torture investigator has suggested it is illegal under International law for President Barack Obama to announce that the United States government has no intention of prosecuting low-level CIA officers who carried out torture sanctioned by the Bush Administration.

The Raw Story

Official: Obama doesn’t want interrogation charges

President Barack Obama does not intend to prosecute Bush administration officials who devised the policies that led to the harsh interrogation of suspected terrorists, White House chief of staff Rahm Emanuel said Sunday.

Talking Point Memo

Is Eric Holder a Gonzalez-like Lackey?

How do we square this statement with the President’s announcement that those who waterboarded terrorism suspects, among other torture techniques, would not be prosecuted? By issuing such a statement it appears President Obama is the “legal decider” and he has decided, in explicitly political terms, that “nothing will be gained by spending our time and energy laying blame for the past.”

Open Left

Pragmatism on Torture Another ‘Sorry Kind of Wisdom’

Three of the saddest days in my life occurred in 1996 when I stood at the edge of a mass grave being excavated in Guatemala. It was a product of right-wing death squads who roamed at will in a country whose most murderous leaders were praised in Washington. After the 1954 CIA coup, the military there was trained in the United States and by visiting Green Beret advisers. Vigorous support by the ruling oligarchs for U.S. corporate interests marked one of the darkest episodes since the Monroe Doctrine and Roosevelt Corollary gave Washington “legal” support for meddling in the affairs of this hemisphere’s sovereign nations.

Daily Kos

Geithner Bank Plan Faces New Wave Of Criticism

Two weeks after being introduced, Timothy Geithner’s bank rescue plan is facing a new round of withering criticism from economists who say the proposal is likely to produce major losses for taxpayers as banks and investors game the system.

In public writings and interviews with the Huffington Post, some of the same figures that issued early warnings about the current financial crisis now say that Geithner’s designs for alleviating toxic assets from the nation’s banks are inherently flawed. As evidence, they point to the massive amount of federal funding, in the form of FDIC backing, being offered to prospective buyers of toxic assets.

Huffington Post

Geithner and Summers Want More Debt Bubbles: The Result Could Be Catastrophic

Are we standing at the edge of a Great Inflation (like Weimar Germany), a second Republican Great Depression, or a return to the middle class prosperity of the Roosevelt/Eisenhower New Deal era? Until Americans understand the difference between “money” and “debt,” odds are its going to be one of the first two, at least over the next few years.

AlterNet

Assessing Treasury’s Strategy: Six Months of TARP

The April oversight report for COP is entitled Assessing Treasury’s Strategy: Six Months of TARP. In this report, COP offers a preliminary look at Treasury’s strategy and offers a comparative analysis of previous efforts to combat banking crises in the past. Over the last six months, Treasury has spent or committed $590.4 billion of the TARP funds. Treasury has also relied heavily on the use of the Federal Reserve’s balance sheet which has expanded by more than $1.5 trillion (not including expected TALF loans) in conjunction with the financial stabilization activities it has undertaken beyond its monetary policy operations. This has allowed Treasury to leverage TARP funds well beyond the funds appropriated by Congress.

Congressional Oversight Panel

This Week in Scandals: TARP, Torture, and More

TARP cash was supposed to ultimately wend its way to borrowers, but it seems to have gotten stuck in bank coffers along the way: Lending actually fell [4] in February at the 21 largest banks receiving bailout bucks, the Treasury said this week. (Mortgage lending did see a significant boost, though.) Meanwhile, mortgage lenders are lifting foreclosure moratoriums, putting more people out on the street [5] just as the Obama administration unrolls its “homeowner bailout [6].”

ProPublica

Obama to allow travel, money transfers to Cuba

President Barack Obama directed his administration Monday to allow unlimited travel and money transfers by Cuban Americans to family in Cuba, and to take other steps to ease U.S. restrictions on the island, a senior administration official told The Associated Press.

MPR

Obama’s Reality Check

Many people, including most of the presidents and leaders of South America, were hoping that President Obama would initiate a serious change in US-Latin American relations, after the low point reached during the Bush years. Change will certainly come – it is happening every week – but there are few if any signs that the initiative will come from the north.

truthout

Obama’s “faith-based” FAIL

Obama has made his final appointments to his controversial council on Faith-Based and Neighborhood Partnerships. Sarah Posner summarizes what that means for reproductive rights:

With his council appointments now complete, Obama has given far more seats on his council to religious leaders who are anti-choice than to ones who are openly pro-choice, even though the majority of Americans favor legal abortion. There are only two pro-choicers, and they’re both Jewish. Reproductive-health advocates suggested several pro-choice Christians to the White House as worthy additions to the council. By not giving them seats, though, the administration shows that it is too afraid to challenge anti-choice evangelicals by putting their pro-choice brothers and sisters at the same table.

Feministing

What a Killer Was Watching

On April 6, two days after the 22-year-old Richard Poplawski allegedly murdered three police officers in Pittsburgh, a radio host named Alex Jones settled in before a microphone in his studio in Austin, Texas, to do some damage control. “The mainstream media has certainly enjoyed tying me into this story,” Jones complained. “They’re attacking me and saying I’m delusional and there’s no New World Order… The Second Amendment, what the country’s founded on—it’s all my fault!”

The Daily Beast

At Gun Show, Conservatives Panic About Obama

Other attendees were uncomfortable revealing their first or last names. As massive as the event is — the Knob Creek Gun Range estimated that around 15,000 people passed through the gates–it does not keep tabs on who comes in. This is a safe haven, where guns can change hands without a lot of paperwork, and where ammunition is relatively cheap, though the prices have skyrocketed in the last few years. A purchase of an old Mauser rifle that would take some red tape-cutting in a gun shop is hassle-free at the gun range.

The Washington Independent

DHS Report: After Obama’s Election, Right-Wing Extremists ‘May Be Gaining New Recruits’

Throughout the presidential campaign, the public saw extreme right-wing rhetoric on display at several McCain rallies, with some yelling “kill him” about President Obama — and others even calling him a “terrorist.”

The extreme right — those who are “hate-oriented,” “mainly antigovernment,” or those dedicated to a “single issue” — is a legitimate threat that law enforcement must deal with, according to a new assessment from the Office of Intelligence and Analysis at the Department of Homeland Security.

Think Progress

The Quiet Coup

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

The Atlantic

Administration Seeks an Out On Bailout Rules for Firms

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Washington Post

Bailout Watchdog: Treasury’s stonewalling

Elizabeth Warren, the law professor appointed as Congress’s oversight czar on bank bailouts, blasted the Treasury Department — saying new legislation might be needed to give the House and Senate more access to details of the $700 billion rescue program.

Warren, testifying before the Senate Finance Committee Tuesday morning, said keeping Congress in the loop isn’t a “priority” of Secretary Tim Geithner — and suggested a possible “next step” would be to pass legislation that would “require [Treasury] to consult” with her.

Glenn Thrush

Where Wall Street Trades in Political Currency

With sweeping reforms coming, the Wall Street-Washington connection may be more important than ever, and political connections may be the new currency for deal makers.

Below is a matrix of Wall Street chiefs and private-equity bosses, as well as their personal contributions to politicians in 2007 and 2008, as recorded by the Center for Responsive Politics. The list, which gives politicians’ titles at the time, also illustrates the political action committee money given by each chief’s firm and its employees.

NY Times

The Definition of Insanity

A few months ago, I did some posts and TV appearances discussing some of the problems that would inevitably occur with the appointment of Goldman Sachs lobbyist Mark Patterson as the chief of staff at the Treasury Department. As Mother Jones subsequently reported, we’ve already seen some of those problems happen.

Open Left

Mr. Taleb Goes to Washington

Nassim Taleb is an unlikely choice to play the Jimmy Stewart role in a 21st-century remake of the Depression-era classic Mr. Smith Goes to Washington. But the tale of a naive do-gooder who tries to remind a corrupt political class of its obligations was re-enacted this week when Taleb attended the Wall Street Journal’s Future of Finance conference in Washington, D.C.

The Big Money

Was Eliot Spitzer Taken Out Because He Was Going to Bust AIG?

Eliot Spitzer is back and he’s talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. Today Edward Liddy testified that there have been death threats made to or about executives who received bonuses, so no names will be put on the record, but these anonymous players must know that the jig is up in the land of easy-money. Isn’t what to do a no-brainer for these great Americans?

AlterNet

Specter Announces His Intention To Vote Against Employee Free Choice Act

Today on the Senate floor, Sen. Arlen Specter (R-PA) announced his intention to vote against cloture on the Employee Free Choice Act. Specter was the only Republican to vote for cloture when the measure was last considered in 2007. During his announcement, Specter noted his previous support for EFCA, but suggested that the current condition of the economy makes “this a particularly bad time to enact employee’s choice legislation”

Think Progress

Recruited to Serve and Sniff — Again

The wars in Iraq and Afghanistan aren’t just forcing thousands of soldiers and Marines to deploy for two and three tours. The sacrifice is being shared by a key, and growing, part of the U.S. military: highly trained German shepherds and Belgian Malinois. In a war with no front lines, they have become valuable at sniffing out makeshift bombs, which cause most U.S. casualties.

Washington Post

Around the Country, Calls for Lawmakers to Address “Real Problems, Not Imaginary Ones”

As several states enter critical phases in their legislative sessions, the debate for one of the most controversial election reforms continues to dominate headlines and legislative hearings. This year, more than 26 states introduced legislation to go above and beyond federal election law relating to voter ID, despite near consensus among voting rights advocates that it hurts the process far more than it helps. Last week, the hysteria around voter ID reached an all time high in six states, evoking public concern from advocates and citizens alike.

Open Left

The Woman Who Could Nail Bush: Are the Worst of the Torture Memos Still to Come?

On March 19, the nomination of Indiana University law professor Dawn Johnsen to head the OLC was endorsed by the Judiciary Committee with every Republican voting against her and Sen. Arlen Spector (R-PA) abstaining. The nomination was to have been brought to the Senate floor for a vote on Monday and then again on Wednesday, but it has been held back. Republican leaders, it appears, are playing with the notion of making Johnsen the target of their first filibuster.

AlterNet

Insurers shun those taking certain meds

Trying to buy health insurance on your own and have gallstones? You’ll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it.

Miami Herald

In 2008, the Minnesota state lottery contributed $116.3 million to state programs. As you can see below, in the (very cute and nonthreatening) figure from the 2007 lottery annual report (pdf), this is about a 3.5% increase from 2007′s contribution.

Contribution History

That’s not too shabby. It suggests that lottery revenue is at least keeping up with inflation. Of course, the trend in the down economic years of 2001–2003 is somewhat troubling, but we don’t yet show signs of a similar slump this time around.

At least, we don’t see a slump in lottery revenue. Tribal gaming is another matter.

An evening of gambling may offer a welcome diversion from hard times, but casinos are finding they aren’t immune from the recession, according to John McCarthy, executive director of the Minnesota Indian Gaming Association. He estimated that casino visits and revenues are down 3 to 5 percent since the slowdown took hold last fall.

In some places, the decline is more dramatic.

However, one source of hard data — revenue the Fond du Lac Ojibwe shares by special arrangement with the city of Duluth from the Fond-du-Luth casino — is telling: The figures show a $211,000 drop in revenue in the third quarter of 2008, compared with the same quarter in 2007. The 12 percent decrease was the largest drop in at least several years, according to the city’s figures.

Karen Diver, chairwoman of the Fond du Lac Reservation government, estimates that the late 2008 decline was more in the 5 percent range at the tribe’s much larger Black Bear Casino Resort, which benefited from the completion last year of a $119 million expansion.

And it seems to be getting worse as the economic news stays bad.

“I guess there are some recession-proof businesses out there, but we’re not in that group,” said Tad Johnson, special counsel to the Mille Lacs Band of Ojibwe, which operates Grand Casino Hinckley and Grand Casino Mille Lacs. “For a while we were getting a similar number of customers but they were spending less. Then, a couple weeks ago we started to notice that there were fewer people, too.”

Given that casino-style gambling, either through a metro-area casino or through adding video gaming machines at the airport, appears to be the path to new revenue most favored by the legislators who are talking about it, does it still make sense to move ahead with these proposals? Possibly. One of the reasons given for the large decline in revenue in Atlantic City is the presence of newer, shinier and presumably more convenient gaming in nearby Pennsylvania and New York.

The same could potentially happen here if new gaming is added in the metro, if we’re willing to just move money around the state. A casino in our largest population center could draw enough revenue from the more distant tribal casinos, even in an economy where fewer people are gambling.

However, there are reasons for caution. According to a 2005 legislative report on the history of gambling in Minnesota (pdf), only once before has Minnesota entered a gambling industry that was in decline.

The opening of Minnesota’s first pari-mutuel racetrack in June of 1985 was one of the Twin Cities’ most eagerly awaited events of the mid-1980s.  Named Canterbury Downs, the Shakopee track was a $70 million showpiece that could accommodate 30,000 fans.  The president of the Thoroughbred Racing Association of North America called it “one of the jewels of racing in the country,” and said it “should be a benchmark for other states to study.”  Its owners projected average daily attendance of 10,500, well above the national average for thoroughbred racing.

The first season of racing in 1985 seemed to justify this optimism.  In 83 racing days the track drew an average attendance of 13,163, putting it in the top 15 racetracks in the country.

Not bad so far, but…

One disturbing element was also noted: the average daily betting handle of $1.014 million was almost $200,000 below projections. The average Canterbury fan bet $77 per day, well below the national average of about $120. But the track still showed an operating profit for the first year of about $37,000.

Although many indicators from the first season seemed to point to prosperity for Canterbury Downs, subsequent events suggested that the track had opened several years too late for its early success to be sustained.

Over the next two decades, the track changed hands several times, eventually becoming less a destination for pari-mutuel betting than a prop and a showcase for Minnesota’s horse industry. During this time, many attempts were made to change the Minnesota’s gambling laws to help make the racetrack profitable by adding other forms of gambling.

The report does note that horse racing has specific barriers to participation that other forms of gambling don’t have. It requires knowledge of the sport and its handicapping. However, Canterbury Downs is still notable for being the least successful gambling endeavor in the state. It was only with the addition of a card club in 2001, as games like Texas Hold ‘Em grew in national popularity, that the track became a stable concern.

So the question becomes, as Minnesota faces declines in casino gambling revenue, are we willing to risk another Canterbury Downs? Once again, how big a gamble is the state willing to make?