The Sanders speech video is gaining popularity just as the press is digesting the massive number of documents made public by the Federal Reserve detailing the $3.3 trillion raid on taxpayers made in 2008 by the too-big-to-fail Wall Street firms and their Washington enablers.

Sanders on the Bush tax cuts:

“We gotta own up to it. There is a war going on. The middle class is struggling for existence and they’re taking on some of the wealthiest most powerful forces in the world whose greed has no end. And if we don’t begin to stand together and start representing those families, there will cease to be a middle class in this country.”

The New York Times reviews the Great Wall Street bailout of 2008 in light of the newly released documents:

[I]t’s good to know who got what at the bailout banquet. This helps us understand how expensive it is to live in a nation where big, politically interconnected financial institutions are not allowed to fail — even after they mess up in the most catastrophic of ways.

[...]

All of the emergency lending data released by the Fed are highly revealing, but why weren’t they made public much earlier? That’s a question that Walker F. Todd, a research fellow at the American Institute for Economic Research, is asking.
Mr. Todd, a former assistant general counsel and research officer at the Federal Reserve Bank of Cleveland, said details about the Fed’s vast and various programs should have been available before the Dodd-Frank regulatory reform law was even written.

“The Fed’s current set of powers and the shape of the Dodd-Frank bill over all might have looked quite different if this information had been made public during the debate on the bill,” he said. “Had these tables been out there, I think Congress would have either said no to emergency lending authority or if you get it, it’s going to be a much lower number — half a trillion dollars in the aggregate.”

Better late with the data than never, of course. And the release of these figures just ahead of Friday’s grim employment data — the jobless rate rose to 9.8 percent in November — makes them even more compelling. Clearly, the federal government was much more willing to deliver mountains of money to big banks that made big mistakes than it was to lend a financial hand to rank-and-file Americans struggling through foreclosures.

Federal officials have always argued that plowing money into errant banks and trading shops was the best way to rescue the economy, but to Edward J. Kane, professor of economics at Boston College, details of the Fed’s largess are reminiscent of a famous Winston Churchill quotation.

“Never have so few owed so much to so many, and given them so small a return,” Mr. Kane said. “We see, for example, how little these institutions have given back to troubled homeowners whose houses are threatened with foreclosure.”

GOP senators debating the “fairness” of extending all the Bush tax cuts this week are certain not to mention the “government handout” to Wall Street in 2008, the biggest American welfare check ever written.

[T]he low interest rates the Fed charged to institutional borrowers during the disaster translate into a significant subsidy, indeed a gift, to many of the firms that set the financial collapse in motion.

But the Fed is silent on how big that subsidy actually was.

Estimating its size will be the subject of much work in the coming months and years. For now, here’s a quick and dirty estimate of how much the Fed subsidized borrowers in just one program — the Primary Dealer Credit Facility — for just two weeks in September 2008.

From Sept. 15 through the end of that month, borrowings averaged around $100 billion a day. The interest rate charged on those loans was 2.25 percent.
Given that markets were frozen at that time, and given the dubious quality of some of the collateral posted to the Fed to back the loans, an interest rate of 10 percent would be a reasonable benchmark for measuring the size of this subsidy.

On the one hand, Citigroup, Barclays, Morgan Stanley, Goldman and the others paid roughly $75 million in interest over that September fortnight. Had the Fed charged 10 percent, the firms would have paid about $325 million. For just those firms, over only that period, that’s a $250 million subsidy.

“The justification was, this was to prevent the markets from exploding and the economy from being ruined,” Mr. Kane said. “They always explain their actions against doing nothing: ‘If we had done nothing, this would have been a terrible mess.’”

But the Fed has never identified any alternative approaches it might have taken other than the one it chose: simply hurling huge snowballs of cash at Wall Street.

These documents come too late to the public to shape new financial regulations. No surprise there. They’re not too late, however, to influence the debate over the Bush tax cuts, which are yet another enormous handout to the same Wall Street billionaires who benefited directly from the historic behind the scenes too-big-to-fail government bailout of their catastrophically bad businesses.

Got a tip? Freelance story pitch? Send us an e-mail. Follow The Colorado Independent on Twitter.

When New York Attorney General Andrew M. Cuomo threatened to make their names public unless they returned their bonuses, they cried out against being “extorted” and “blackmailed” and made the subject of a “McCarthyite” witch hunt. In other words, they lived up in private to their public image as the entitled jerks of the financial class whose personal greed blotted out any perspective on their place in society and their role in a catastrophe that continues to bring real pain to millions.

McCarthyite witchunter

The Washington Post got hold of a transcript of one of the conference calls. One nameless particularly petulant participant makes repeat appearances in the Post write up. Here he is doing the impossible by making it clear he is a worse person even than the politicians in Washington whom he decries:

“They only care about the next election, just like we only care about the next bonus. Well, none of them cares about the country, none of us cares about the institution,” he said, adding: “They really don’t care, and I really don’t care. And frankly, if a trillion dollars gets lost, fine.”

Here is Pasciucco bending over backward to make the case to this group of nitwits that they should think twice about keeping their unearned money:

He agreed that the manner in which some Washington officials had responded to the furor was despicable. “I think it’s distasteful. It’s unfair. It’s unjust. I agree with you, it’s not American. It is McCarthy-ite. . . . It will be viewed as a horribly dark period.”

Still, he tried to offer a dose of realism. The retention payments might have been guaranteed by contract, he said, but Financial Products had made bad bets that cost taxpayers billions of dollars. Although the decision to return part of their money was voluntary, he said, such a pledge might help employees defuse some of the public anger.

Sen. Joe McCarthy hunted communist traitors that didn’t exist and forced people to name names of innocent people and suggested criminal subversion that never took place. AIG Financial Division execs have been paid and paid and they mostly didn’t lose their jobs and none of them are in jail or blacklisted or unemployable. They were criminal risk takers with other people’s money then criminal beneficiaries of tax payer largess and then criminal whiners to boot.

Here’s the coda, supplied artfully by Post writer Brady Dennis:

When another employee asked whether the staff would be getting a second round of bonuses promised for March 2010, his colleagues burst into laughter, apparently considering this a preposterous notion amid the public outrage.

Yet they did see that money, at least most of it. Last month, under a deal in which employees agreed to take a cut in their upcoming retention bonuses in return for an accelerated payment, AIG paid out about $100 million to employees at the firm. AIG is scheduled to pay the last of the bonuses this month.

Even so, neither time nor money has softened the employees’ feelings of wrongful persecution and their anger over becoming the subjects of scorn and ridicule.

AIG Financial Division execs don’t demand just to be wealthy and above the law, they also want to be loved. As Mike Lillis at the Washington Independent put it in his blog on this story, AIG employees make a very good case for just stashing your cash in your mattress.

Got a tip? Freelance story pitch? Send us an e-mail. Follow The Colorado Independent on Twitter.

The establishment of an independent Consumer Financial Protection Agency would give ordinary citizens a seat at the financial policy table for the first time and prevent the abuses in credit card and mortgage lending that have wreaked havoc on households all over the country.

The new agency is the brainchild of Harvard University Law School Professor Elizabeth Warren. As chair of a key oversight panel for the Treasury Department’s bank bailout program, Warren has uncovered major deficiencies in the government’s handling of the plan, including nearly $80 billion in overpayments to bailed-out banks. American News Project features footage of an interview with Warren, who explains why we need a separate agency to regulate on behalf of consumers.

Several bank regulatory agencies, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision are already charged with writing and enforcing consumer protection rules for credit cards and mortgages, but have generally abandoned these duties to act as cheerleaders for their banks.The current structure’s problems are two-fold. First, the current regulators are funded by fees levied on the very banks they regulate. When there are several different bank regulators, regulators compete to offer the weakest oversight and attract more banks, and, in turn, more funding. The process quickly becomes a race to the bottom. When the subprime mortgage boom was surging in 2003, the OCC, a federal bank regulator, went to court to ensure that the state of Georgia’s tough predatory lending laws could not be enforced.

Second, the regulatory agencies tend to look at the health of the bank, rather than the quality of the loans it makes. If a commercial bank like Citigroup makes a really outrageous predatory loan, then sells that loan to an unregulated investment bank like Goldman Sachs, Citi’s regulator doesn’t particularly care. A new regulatory agency that answers exclusively to consumers rather than banks would be a very meaningful change for the financial system.

The rest of the overhaul is a little frightening. As William Greider explains for The Nation, instead of crafting explicit rules to curb obvious abuses, Obama’s plan relies very heavily on ceding power to the Federal Reserve. Under the new framework, the Fed would both oversee “systemic risk” in the financial architecture and regulate the banks that have become “too big to fail.” This, Greider emphasizes, is a very bad idea. The Fed has repeatedly proven itself to be uninterested in regulating banks. Citi needed $45 billion in direct cash infusions from the U.S. taxpayer and hundreds of billions of dollars in other guarantees to stay afloat, as Nomi Prins writes for Mother Jones. Who was charged with regulating the company and making sure such an outrage never occurred? The Fed.

In a video spot for GritTV, former senior banking regulator William Black argues that it makes little sense to allow banks to become too big to fail at all. Sturdier regulations are better than nothing, but the real solution is to break them up. “Why would we allow banks to be so big that they threaten the global economy?” Black asks.

Going back to Prins in Mother Jones: Elsewhere, the regulatory revamp is simply too vague to be helpful. Regarding derivatives—the financial weapons of mass destruction that destroyed AIG—it’s not clear if Obama wants to regulate the entire industry, or a small, meaningless fraction. Obama’s plan is to require that “standardized” derivatives are traded on exchanges and allow “customized” derivatives to escape investor scrutiny. But the Treasury never explains what the difference is between these “standard” and “custom” products, or how it will make sure banks don’t game the system.

Lest we forget, this crazy finance system brought us the worst economic calamity since the Great Depression. The unemployment rate, by conservative measures, is at 9.4% and rising. You may have noticed the stories about “green shoots” signaling the first inklings of economic recovery circulating through the media. But these signs are only promising, AlterNet’s Joshua Holland explains, if you take them completely out of context and ignore all of the other terrible news. The economy is in great shape … except for the millions of foreclosures that will take place this year, the skyrocketing unemployment rate, the decimated retirement funds, and the mountains of credit card debt weighing down the average U.S. consumer.

Serious consumer protections are nothing to scoff at, especially after watching an outbreak of predatory mortgage lending spawn an economic collapse. It comes as no surprise then, as Tim Fernholz notes for The American Prospect, that the bank lobby is already working to water down the new consumer protection agency’s powers. But even if a regulator for consumers makes the final legislative cut, with so many drastic problems in the current financial regulatory structure, the Obama plan simply does not do what is necessary to fend off another crisis.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

Got a tip? Send us an e-mail. Follow The Colorado Independent on Twitter.

The Obama team’s regulatory proposal will only mark the beginning of a policy debate that will likely last for months. But make no mistake, serious bank reform is one of the most important steps the government can take to make the economy accountable to ordinary citizens and CEOs alike. Without substantive change in the financial sector, the next meltdown could already be underway.

As Laura Flanders explains in a video from GritTV, there is a difference between how “healthy” a bank appears to the U.S. Treasury and what it actually does for ordinary people. The TARP money was supposed to serve a public purpose by freeing up funds that could be lent out into the economy. But the very banks now going off the public payroll have been retroactively jacking up interest rates on credit cards all year and spending millions to lobby against legislation that would prevent foreclosures. Small surprise, then, that the state of the U.S. housing market is as bad as it has ever been.

“The lesson is pretty clear: you cannot stabilize the mortgage market and undercut the working family at the same time, you just can’t,” Flanders says.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

We all know that times are tough, and almost all of us agree on the cause: A massive Wall Street risk-binge combined with an almost total failure of regulatory oversight. It’s surprising that few meaningful criminal charges have been filed amid what may very well be the worst financial crisis in history. Bernie Madoff will likely spend the rest of his life behind bars, but the subprime mortgage brokers who specialized in predatory loans — and the Wall Street banks that bought them — have yet to face consequences in court.

Wall Street icon Goldman Sachs has weathered the economic downturn better than many of its Wall Street brethren. Much of the company’s resiliency, however, stems from its ability to secure billions upon billions of dollars of bailout financing from the U.S. government. Over at AlterNet, Jim Hightower blasts Goldman for its multiple avenues of taxpayer support and emphasizes that only the notorious Troubled Asset Relief Program (TARP) comes with any strings attached whatsoever. While Congress attached some very modest restrictions on executive compensation to the TARP bailout, the FDIC and the Federal Reserve have provided big banks with trillions in loans and guarantees completely free of restrictions on how these perks are deployed.

Goldman received $10 billion under TARP, which the company hopes to repay soon to shrug off those CEO pay limits. When the government bailed out AIG, $12 billion of the funds were directed Goldman’s way. But perhaps the greatest and lowest-profile outrage comes in the form of the FDIC’s Temporary Liquidity Guarantee Program. Hightower notes that the FDIC has guaranteed $28 billion of Goldman’s recently issued corporate debt without imposing any restrictions on the Wall Street giant. In short, if Goldman were to default, the government would pay off its investors. This taxpayer guarantee has allowed Goldman and many of its banking peers to secure capital at exceptionally low rates, helping the firms survive during a time when any financing is hard to come by.

Even if Goldman is able to repay its TARP money, the company remains thoroughly dependent on taxpayer assistance. Once the TARP funds are paid off, Goldman will be free to pay its executives whatever it wants — even when that salary is subsidized by American tax dollars.

That’s a pretty perverse definition of accountability.

The NYT piece uncovers no smoking gun — no bribes, no quid pro quos, etc, linking Geithner to the failing high-rollers — but it is utterly damning in its portrayal of Geithner as a full-on member of the club, restricted in his understanding of the economic crisis and of government and society by the same training in the high art of American finance capital as are his Wall Street peers. Geithner sees the world through the same lens as they do. He has been fed from the same steaming bowl of Four-Seasons bouillebasse! Is it any wonder his bold plan for economic recovery is to save the banks at all cost?

Kwak says our governance has suffered perhaps less from the direct corruption of cash than from the pernicious effects of “cultural capital,” where a certain kind of sophistication is passed down from parents to children, like a prep-school blazer, as a means of “perpetuating class dominance,” as they say in France.

He explains:

Upper-class parents take their children to fine art museums and teach them how to talk about Rembrandt, Monet, and Picasso; later in college, job interviews, and cocktail parties, the ability to talk about Rembrandt, Monet, and Picasso is one of the markers that people use, consciously or unconsciously, to identify people as being from their own tribe.

[...]

…[O]ne of the primary means by which Wall Street got its way in Washington was by creating and propagating the understanding — among sophisticated, educated, cultured people, as opposed to “populists” or the “rabble” that showed up at anti-globalization protests — that what was good for Wall Street was good for the country as a whole.

[...]

I don’t know Tim Geithner. I have no reason to believe he is corrupt. [But]… he has internalized a worldview in which Wall Street is the central pillar of the American economy, the health of the economy depends on the health of a few major Wall Street banks, the importance of those banks justifies virtually any measures to protect them in their current form, large taxpayer subsidies to banks (and to bankers) are a necessary cost of those measures – and anyone who doesn’t understand these principles is a simple populist who just doesn’t understand the way the world really works.

Getting beyond the parameters of debate established by the members of the finance elite is difficult. Our attempts to do so — ratcheted up by the now-pressing need for people outside the world of finance to try to make sense of what has happened to the economy — throw this dramatic cultural distinction of our national life into relief. The results can be heartbreaking and comic.

A good but not perfect example is the interview Terry Gross of NPR conducted with former International Monetary Fund economist and Baseline Scenario blogger Simon Johnson.

Johnson is not one of the country’s hedge fund buffoons. But he shares the culture. He can talk the talk. Terry Gross, on the other hand, is an outsider. She plays the part of everyman (everywoman) in the interview. She grapples with the ideas and with the language of contemporary finance. She is frustrated and a little angry. She wants someone to be responsible. You can tell what she’s thinking the whole time, something like: Errgh. But this incomprehensible financial Frankenstein stuff has deeply affected people’s lives!

Johnson, on the other hand, has dealt with the monster alreadyl. He has seen the destruction brought by financial elites and crony politicians in countries around the world. He is not glib or condescending, but he is just… inside and Gross is outside, like most of the rest of us — the uninitiated now forced to pick up the tab for the initiated and mad about it.

Listen if you have the time and imagine: Wouldn’t it have been so much better if CNBC had hired Terry Gross to do 24-hour coverage of the markets for the last ten years instead of the insider doofuses still on the air over there?

A root problem, as TV journalist Allan Dodds Frank put it, was the “posture of reverence” adopted by business reporters toward their subjects, a posture that sees CEOs as stars and “corporations as sexy.”

And it’s a posture they’re not likely to shake, even now, as overcompensated Wall Street tycoons run for cover from angry government officials and as entire national economies built on U.S. models of high finance collapse.

The registration email for the conference, for example, included this instruction on attire:

We’re declaring the annual conference a “business casual” event. We want you to be comfortable, but not so casual that the visiting CEOs think we’re a bunch of slobs. So take a step up from the jeans and running shoes…

That’s the kind of air they breathe in Backwards Land!

Did it occur to any of the reporters at the conference that it’s the train-wreck CEO “slobs” in attendance who should be looking to impress the wrinkled members of the press?

On a related note: Conde Nast’s great, revealing but ill-timed Portfolio experiment — the glossy mag that celebrated the topic of finance and finance personalities more than actually reporting and analyzing finance news– that experiment has come to an end. Goodbye to the Vanity Fair of finance.

After burying the economy under a mountain of unaffordable debt, bank CEOs are now finding ways to subsidize their own paychecks with taxpayer bailout funds.

Writing for The Nation, Christopher Hayes highlights a letter from a reader who questions malfeasance on the part of Goldman Sachs, which received $10 billion in taxpayer funds under the Troubled Asset Relief Program. Executives at Goldman recently decided to pay back the government before it paid off the investment from billionaire Warren Buffett, even though Buffett is reaping double the interest rate that the government is receiving from Goldman.

The scenario speaks volumes about just how lousy a deal taxpayers got under the bank bailout. Paying Buffett back first would clearly be the better deal for shareholders of the Wall Street titan, as it would save them years of payments at higher interest rates. But Buffett’s plan does not involve the same restrictions on executive compensation that are included under TARP. By prioritizing the TARP repayment, Goldman’s top brass are screwing their own shareholders to guarantee a bigger payday.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

Our Washington Independent colleague Mike Lillis has the skinny on just where the pitchforks and torches should be aimed.

House Dems Eye Overdraft Reform:

Now, as Congress is preparing to tackle a series of proposals tightening oversight and regulation of the finance industry, a growing chorus of lawmakers and consumer groups is urging Democratic leaders to include overdraft reform as a part of the package. In an economy where taxpayers have already bailed out Wall Street banks to the tune of billions of dollars, they argue, those institutions shouldn’t be permitted to turn around and slap abusive fees on their rescuers.

“They’re taking the TARP funds and then they’re raising fees and rates on the same people who funded TARP,” Pam Banks, policy counsel at Consumers Union, said of the banks benefiting from the Troubled Asset Relief Program. “They’re double dipping with the taxpayers’ money.”

But reform won’t come easy. Overdraft fees are a whirling profit engine for banks, and the industry is fighting tooth and nail to keep Congress at bay. Indeed, in a report released last November, the Federal Deposit Insurance Corporation found that overdraft fees range from $10 to $38, with a median charge of $27. And those fees add up. A 2007 report from the Center for Responsible Lending found that overdraft fees bring in roughly $17.5 billion each year — more than the estimated $15.8 billion in overdraft loans that generated them.

See you at the next rally with bank statements dangling from my hat.

The idea behind the protest is to act now before the bailout plan goes into effect, using the economic crisis to fundamentally alter the way the U.S. finance industry does business, to change direction instead of merely righting the ship, as critics say the Geithner plan will do, leaving it to sail along in the same direction by the same stars that led to disaster.

The organizers and main advocates — a loose coalition of digerati — cite a host of recent widely referenced works sharply critical of the Geithner plan, including articles by Simon Johnson, Paul Krugman and Mike Lux and the Bill Moyers PBS interviews with Johnson, William Greider and William Black.

At the blog Tiny Revolution, a post by Aaron Datesman titled “Making the Banks Run in the Direction We Want” references the protest but in the context of proposing a related alternative idea. Datesman suggests a nationwide “activist-organized bank run” to send a message with teeth to the banks and the government. The comment thread following the post is loaded with spinoff ideas and arguments on effectiveness and legality.

Datesman proposes people send out a version of this letter before they decide to withdraw their money from a too-big-to-fail bank for deposit at a local credit union:

Dear Congressperson,

If it’s too big to fail, it’s too big to exist. The nation’s largest banks and Wall Street firms have created a tremendous crisis with no accountability for their disgraceful behavior. Unless the Congress takes immediate action to nationalize and break up the nation’s largest financial firms, including Bank of America, I will withdraw my consent from the financial system. On May 5, 2009, I plan to close my accounts and withdraw my $xxxx balance in cash from Bank of America. This is my right as a citizen and as a depositor. I encourage the millions of my fellow citizens who also have accounts with BoA to do the same on this date.

Sincerely, etc.

cc: Kenneth D Lewis, CEO, Bank of America

Maybe Saturday’s protests will include marches from public parks and Capitol steps to bank lobbies and credit union deposit windows.

Such a move probably would make little practical difference, a mere shuffling of digital zeros and ones in the placeless double- and triple-booked globalized financial neverland we’ve created. Still, it has a nice ring: Kah-ching!