The Mega Banks' Most Devious Scam Yet

[Amskeptic]

Bad enough that the banks ate your real estate portfolios and savings accounts, now they are going to screw with the rest of the economy . . .
Colin

The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet

Banks are no longer just financing heavy industry. They are actually buying it up and inventing bigger, bolder and scarier scams than ever
By MATT TAIBBI
February 12, 2014


http://www.rollingstone.com/politics/ne ... z2vbPwEzoE

[hippiewannabe]

"Vampire squid"? You want me to read and take seriously an article that uses the term "vampire squid"?

The economy depends on the efficient allocation of capital. The banks and capital markets provide a vital function in directing savings to productive investments to provide profits to make those savings grow. For that, Wall Street deserves a reasonable cut of the profit. But I agree they have abused their position at the nexus of capital flows to extract an unreasonable slice of the pie. Appropriate regulation is called for, but we must be careful to not slay the goose that lays the golden eggs.

[Amskeptic]

"Vampire squid"? You want me to read and take seriously an article that uses the term "vampire squid"?

A 2009 Rolling Stone article by Matt Taibbi likened investment bank Goldman Sachs to "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." It was later used by other critics of Goldman Sachs, such as the Occupy Wall Street movement. It even has a place in Wikipedia, put there by the cognoscenti, who are not squeamish at all by colorful language.

Colorful language is no reason not to read or listen. Samuel Clemens also pissed off the status-quo, as did George Carlin, Richard Pryor, and John Lennon.

The economy depends on the efficient allocation of capital. The banks and capital markets provide a vital function in directing savings to productive investments

You can stop right there. It has been proven that banks have done *terribly* with people's money when they decide to go all casino-rogue.

As for capital markets, they should be absolutely firewalled away from people's savings and pensions and mortgages. We have already determined that (Wall Street Journal contest) throwing darts at financial pages get just as good results in the real world as using financial managers with their dasdardly fees.

Wall Street deserves a reasonable cut of the profit. we must be careful to not slay the goose that lays the golden eggs.

Wall Street is not laying any eggs. They are annoying little racoons stealing eggs.
Colin

* please enjoy the following evidence that muckraking journalism is not yet dead*

Featuring Matt Taibbi:

How Wall Street Hedge Funds Are Looting the Pension Funds of Public Workers

In his latest article for Rolling Stone, Matt Taibbi reports that Wall Street firms are now making millions in profits off of public pension funds nationwide. "Essentially it is a wealth transfer from teachers, cops and firemen to billionaire hedge funders," Taibbi says. "Pension funds are one of the last great,...
September 26, 2013
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U.S. Student Loan Bubble Saddles a Generation With Debt and Threatens the Economy

On the heels of President Obama’s signing of a measure keeping federally subsidized student loans at a relatively low rate through 2015, Rolling Stone political reporter Matt Taibbi joins us to discuss how the high price of U.S. college tuition and the federal expansion of student debt to pay for it pose a major threat...
August 20, 2013
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"Failure of Epic Proportions": Treasury Nominee Jack Lew’s Pro-Bank, Austerity, Deregulation Legacy

Former bank regulator William Black and Rolling Stone’s Matt Taibbi join us to dissect the career of Jack Lew, President Obama’s pick to replace Treasury Secretary Timothy Geither. Currently Obama’s chief of staff, Lew was an executive at Citigroup from 2006 to 2008 at the time of the financial crisis. He backed...
January 11, 2013
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Matt Taibbi & William Black
Bailout Secrets & How New Foreclosure Deal Spares Banks from Justice

Four years after the massive bailout that rescued Wall Street, we look at the state of the financial sector with Rolling Stone’s Matt Taibbi and former financial regulator William Black. In a new article for Rolling Stone, Taibbi argues the government did not just bail out Wall Street, but also lied on the financial sector’s...
January 11, 2013
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After Laundering $800 Million in Drug Money, How Did HSBC Executives Avoid Jail?

The banking giant HSBC has escaped indictment for laundering billions of dollars for Mexican drug cartels and groups linked to al-Qaeda. Despite evidence of wrongdoing, the U.S. Department of Justice has allowed the bank to avoid prosecution and pay a $1.9 billion fine. No top HSBC officials will face charges, either. We’re...
December 13, 2012
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Matt Taibbi on the Unfolding Libor Scandal and What Sen. DeMint’s Departure Means for Fractured GOP

News of HSBC’s $1.9 billion fine comes as three low-level traders were arrested in London as part of an international investigation into 16 international banks accused of rigging a key global interest rate used in contracts worth trillions of dollars. The London Interbank Offered Rate, known as Libor, is the average interest...
December 13, 2012
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The Secret to Mitt Romney’s Fortune? Greed, Debt and Forcing Others to Foot the Bill

A new article by reporter Matt Taibbi in Rolling Stone sheds new light on the origin of Republican presidential candidate Mitt Romney’s fortune, revealing how Romney’s former firm, Bain Capital, used private equity to raise money to conduct corporate raids. Taibbi writes: "What most voters don’t know is the...
August 30, 2012
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Matt Taibbi Explains Wall Street’s "License to Steal," Offshore Tax Havens and Private Equity Firms

In part two of our interview with Matt Taibbi, he describes recent Wall Street scandals — including a decade-long Wall Street scandal that drained money from every county and state in the United States — and notes not a single bank executive has faced individual consequences. He also explains how Republican presidential...
July 30, 2012
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Matt Taibbi: Libor Rate-Fixing Scandal "Biggest Insider Trading You Could Ever Imagine"

Rolling Stone’s Matt Taibbi joins us to discuss the pattern of systemic corruption by 16 banks accused of rigging a key global interest rate used in contracts worth trillions of dollars. The London Interbank Offered Rate, known as Libor, is the average interest rate at which banks can borrow from each other.
July 19, 2012
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Matt Taibbi on the Explosive Resignation of Goldman Sachs Executive Greg Smith

Financial reporter Matt Taibbi talks about Goldman Sach’s history of denigrating its own clients, as recently highlighted by former Goldman executive Greg Smith’s explosive resignation letter in the New York Times. Decrying what he called Goldman’s "toxic" culture, Smith said bosses at the firm called...
March 22, 2012
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"Too Crooked to Fail": Matt Taibbi Says Bailouts, Fraud are the Secrets to Bank of America’s Success

In his new article, "Bank of America: Too Crooked to Fail," Rolling Stone reporter Matt Taibbi chronicles the remarkable history of the rise of Bank of America, an institution he says has defrauded "everyone from investors and insurers to homeowners and the unemployed." Taibbi describes how the Bush and Obama...
March 22, 2012
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Covering Up Wall Street Crimes: Matt Taibbi Exposes How SEC Shredded Thousands of Investigations

An explosive new report in Rolling Stone magazine exposes how the U.S. Securities and Exchange Commission destroyed records of thousands of investigations, whitewashing the files of some of the nation’s largest banks and hedge funds, including AIG, Wells Fargo, Lehman Brothers, Goldman Sachs, Bank of America and top Wall...
August 23, 2011
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Matt Taibbi: "Why Isn’t Wall Street in Jail?" (Complete Interview)

"Nobody goes to jail,” writes Matt Taibbi in the new issue of Rolling Stone magazine. “This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions,...
February 22, 2011
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Goldman Sachs Settles Civil Fraud Case for $550M — Less Than It Reportedly Expected, and With No Admission of Criminal Wrongdoing

Goldman Sachs has agreed to pay $550 million to resolve a civil fraud lawsuit over selling a mortgage investment that was established to fail. While the SEC hailed the $550 million settlement as the largest in Wall Street history, many outside analysts questioned why the government didn’t demand more. Investors responded favorably...
July 16, 2010
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"Looting Main Street"–Matt Taibbi on How the Nation’s Biggest Banks Are Ripping Off American Cities with Predatory Deals

In a new article in Rolling Stone magazine, journalist Matt Taibbi takes an in-depth look at the experience of one small Alabama town and its disastrous dealings with Wall Street. Taibbi writes, "The destruction of Jefferson County reveals the basic battle plan of these modern barbarians, the way that banks like JP Morgan...
April 12, 2010
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As Goldman Sachs Posts Record Profits, Matt Taibbi Probes Role of Investment Giant in US Financial Meltdown

Goldman Sachs, the nation’s most powerful financial company, has reported the richest quarterly profit in its 140-year history: $3.44 billion between April and June. Goldman’s record profits come just one month after it repaid $10 billion of TARP money to the US Treasury, freeing itself from restrictions on year-end bonuses. We speak to Matt Taibbi, whose new Rolling Stone article argues...
July 15, 2009
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"How Wall Street Insiders Are Using the Bailout to Stage a Revolution"

In a new article in Rolling Stone Magazine, journalist Matt Tabbi takes an in-depth look at the story behind AIG. "The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état," writes Taibbi. "They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of...
March 25, 2009
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You will want to put this in your favorites folder, Hippiewannabe:
Colin ; )
http://www.democracynow.org/appearances/matt_taibbi

[hippiewannabe]

The economy depends on the efficient allocation of capital. The banks and capital markets provide a vital function in directing savings to productive investments

You can stop right there. It has been proven that banks have done *terribly* with people's money when they decide to go all casino-rogue.

As for capital markets, they should be absolutely firewalled away from people's savings and pensions and mortgages. We have already determined that (Wall Street Journal contest) throwing darts at financial pages get just as good results in the real world as using financial managers with their dasdardly fees.

"Capital markets" includes FDIC insured bank deposits, where no-one has ever lost a a penny. But those safe returns are quite low, so a little risk must be taken. S&P 500 index funds charge a tiny fee, and:

The annualized return for the S&P 500 Index (and its precursor S&P 90 Index) between 1926 and 2011 was about 9.77%

http://financeandinvestments.blogspot.c ... s-500.html

Savings and pensions must include stocks, bonds and real estate to be diversified and have enough growth to pay for future needs. There is no free lunch, higher returns come with higher risk. The S&P is a good proxy for the overall economy; whether you think pensions should be paid for by taxes, companies, personal savings or whatever, the only thing that provides the money is economic growth.

How Wall Street Hedge Funds Are Looting the Pension Funds of Public Workers

In his latest article for Rolling Stone, Matt Taibbi reports that Wall Street firms are now making millions in profits off of public pension funds nationwide. "Essentially it is a wealth transfer from teachers, cops and firemen to billionaire hedge funders," Taibbi says. "Pension funds are one of the last great,...

I don't need to read any more to know this is an example that shows he is clueless. Pension fund managers have a fiduciary responsibility to maximize the return to their bosses, the beneficiaries. The big pension funds negotiate down the fees paid to hedge funds, and only put their money where they earn the best possible risk-adjusted return, after paying all fees. If the hedge funds are taking too big of a slice, resulting in a less attractive return, the money should be invested elsewhere, such as index funds that charge only a tenth of a percent for management.

You will want to put this in your favorites folder, Hippiewannabe:
Colin ; )
http://www.democracynow.org/appearances/matt_taibbi

No need. I already see more than enough unfortunate, uninformed, anti-capitalist propaganda to make me sad.

[Amskeptic]

I don't need to read any more to know this is an example that shows he is clueless. I already see more than enough unfortunate, uninformed, anti-capitalist propaganda to make me sad.

He goes much deeper than that. His research spells it out thoroughly. "Unfortunate, uninformed propaganda" are the words of a person who hasn't read a tenth of it.

Just a little look into public pension funds, it is public information.

Are you aware of how many states have not paid into their Annual Required Contributions?
These states may also be committing securities fraud. If a city or state hasn't been making its required contributions, and this hasn't been made plain to the ratings agencies, then that city or state is actually concealing what in effect are massive secret loans and is actually far more broke than it is representing to investors when it goes out into the world and borrows money by issuing bonds.
In August 2010, the SEC reprimanded the state of New Jersey for serially lying about its failure to make pension contributions throughout the 2000s. "The state was aware of . . . the potential effects of the underfunding." Illinois was similarly reprimanded by the SEC for lying about its failure to make its required pension contributions. But the states get off with no monetary fines at all. Massachusetts, 27% of its legal obligation, Kentucky barely 50%, Illinois 68%. Then they cry that their pension funds are killing them.

Remember what went on in the immediate aftermath of the crash of 2008, when the federal government was so worried about the sanctity of private contracts that it doled out $182 billion in public money to AIG? That bailout guaranteed that firms like Goldman Sachs and Deutsche Bank could be paid off on their bets against a subprime market they themselves helped overheat, and that AIG executives could be paid the huge bonuses they naturally deserved for having run one of the world's largest corporations into the ground?

When asked why the government was paying those bonuses, Larry Summers said, "We are a country of law. . . . The government cannot just abrogate contracts."

Now, though, states all over the country are claiming they not only need to abrogate legally binding contracts with state workers but also should seize retirement money from widows to finance years of illegal loans, giant fees to billionaires like Dan Loeb and billions in tax breaks to the Curt Schillings of the world. It ain't right. Asking cops, firefighters and teachers to take the first hit for a crisis caused by reckless politicians and thieves on Wall Street is low, even by American standards.

I posted the bank's most devious scam yet, commodities manipulation, like Nelson and Bunker Hunt's silver game, yet I get some fingers-in-your-ears LALALALALALA,
"Pension fund managers have a fiduciary responsibility to maximize the return to their bosses, the beneficiaries. The big pension funds negotiate down the fees paid to hedge funds, and only put their money where they earn the best possible risk-adjusted return, after paying all fees" well that is utterly unreal in today's financial world and it ignores a treasure trove of evidence that Wall Street is screwing us anew.
Colin

[Lanval]

The economy depends on the efficient allocation of capital. .

That's actually not true. A capitalist economy depends on efficient allocation of capital; that is true. But capitalism is a historical accident; nor is it necessarily the best form of economic organization. It's just the one we've stuck with since:

1. The British invented it, coming out of the rise of a money economy in medieval Europe
2. The British exported capitalism worldwide with their empire
3. Capitalism is in the best interests of the wealthy, especially if it's only capitalism in name

As an aside, even the least sophisticated reader recognizes that capitalism, as Adam Smith describes it, doesn't exist in America. Our "capitalist" (the US does NOT have a true capitalist system) system is rigged by the wealthy to promote their own interests in the face of capitalism's demands... free market? Competition? Not a chance. Those things do not exist now, and have not since the origins of the colonies in the 17th century.

So you'd do better here to recognize that arguing that America's capitalism has been co-opted by the wealthy and broken in order to enrich themselves ~ just as they did in the late 19th century. No one then thought monopolies were a natural outcome of capitalism; on the contrary, it was recognized that they were the opposite of what should happen in a true capitalist system. Then, as now, it's apparent that the baser, greed-driven impulses of the wealthy need to be reigned in by governmental management, for their own good. Few will benefit from a revolution, yet that has been the outcome of every period of excessive wealth disparity in the last 300 years that wasn't ameliorated by governmental intervention, unions and other balancing actors in the marketplace.

If you give it some thought, I'd think you'd find that many of us here embrace capitalism, but one in which the wealthy and elite aren't given substantial advantages in the marketplace by the mere virtue of their wealthy and elite status. Colin, I think, is among the purest capitalists I know ~ driven by an idea, but a capitalist none-the-less. Unlike the wealthy though, he doesn't use money/power to bend or subvert the marketplace to drive superior competitors out of business. That marks him as a true avatar of the capitalist spirit, and lack of the same disfigures the "good name" of people like the Koch Brothers, who seek to use their wealth as a means to distort or manipulate the market. Like the Hunt brothers, they are perfectly willing to do whatever it takes in order to arrogate to themselves the right to determine how the market will function.

If you can't acknowledge the obvious failings of capitalism in the US, particularly in the realm of corporate business, it's hard to imagine we're going to have much of a productive discussion.

[Amskeptic]

Colin, I think, is among the purest capitalists I know ~ driven by an idea, but a capitalist none-the-less. Unlike the wealthy though, he doesn't use money/power to bend or subvert the marketplace to drive superior competitors out of business.

You know? . . . . . . I think you are right about that.

I celebrate the corporate visionary, Heinz Nordhoff, for his idea/ideal . . . Quality For The Masses.
I have been mourning its loss to the visionless Volkswagenwerk AG managers since 1969.

My mouse trap is out there in the marketplace, and I invite all other mousetraps to have a go at trapping you mice.
ColiCo

[hippiewannabe]

The economy depends on the efficient allocation of capital. .

That's actually not true. A capitalist economy depends on efficient allocation of capital; that is true. But capitalism is a historical accident; nor is it necessarily the best form of economic organization.

An example of why I'm sad. This is utterly, fundamentally, depressingly wrong. Capital is not just the money that Wall Street types play with, it is all the assets available to invest for productive purposes. Capital, by whatever term you use, has been around as long as human history. The reason communism failed is that capital was staggeringly misallocated, because market signals weren't used to allow resources to flow to their most efficient use. When people stand in line to get toilet paper, you know capital has been improperly allocated, because politicians think they know better than the market.

If you can't acknowledge the obvious failings of capitalism in the US, particularly in the realm of corporate business, it's hard to imagine we're going to have much of a productive discussion.

Yeah, I know. If I don't agree with your world view, you don't want to listen to me or let me in to your club, So MSNBC, Fox, and IAC play to their own echo chambers, and nobody learns, grows or alters their position. But I like Colin. He makes me think, and with any luck, maybe I make him think. So I'll pop in from time to time, irrespective of your productivity assessment.

[Amskeptic]

A capitalist economy depends on efficient allocation of capital; that is true. But capitalism is a historical accident; nor is it necessarily the best form of economic organization.

An example of why I'm sad. This is utterly, fundamentally, depressingly wrong. Capital is not just the money that Wall Street types play with, it is all the assets available to invest for productive purposes.

You both agree! "A capitalist economy depends on the efficient allocation of capital" So what makes you sad, hippiewannabee? What is "fundamentally, depressingly wrong"?
I was intrigued to hear Lanval's historical perspective which, I might add, is way beyond the MSNBC bubble and is not even in the same Reality as Faux Snooze.

If you are going to call his opinion/perspective "wrong" you need to say why exactly. If your point of contention is "it is not just capital, stupidhead, it is all the assets available to invest for productive purposes (like building bombs and bombers, perchance?)" that is a minor quibble. What was "wrong" with his assessment? Don't confuse his definitions and historical facts with his opinions about same.
None of us here has a "wrong" opinion, but if our facts are off, it is your IACFIDUCIARY duty to set us straight.

So, I have seen all number of asset classes get wrecked by manipulation, greed, misrepresentation, tricks and lies. Savings? Plundered. Homes? Plundered. Pensions? Plundered. Local water supply? Destroyed (benzene, hippiewannabee, and the oil companies that saturated the water supply are long gone). Our current capitalist system is turning on its workers, and is destroying the planet with rapacious disregard (planet? I got shareholders to worry about). I have said many many times right here, that our capitalist system would be thing of friggen beauty if everybody played by the real true rules of capitalism. Come on, big guy, call me "wrong" about that. You and Chris Christie can be sad/saddened by all the depressing misunderstanding that surrounds you, I ain't buyin it.
I am a true cold-blooded Republican Get It Done Correctly kind of guy, but this current crop of rotten immoral mendacious circle-jerk of plutocrats [giving each other bjs in their membership on mutually advantageous respective boards (I vote to increase his pay!) (I vote to increase her pay!) robbing us of our futures and now they are invading our present with ever more tightly scripted employee rules], needs a Serious Reality Adjustment, and if history (Lanval?) is any guide, it might not be pretty.

Capital, by whatever term you use, has been around as long as human history. The reason communism failed is that capital was staggeringly misallocated, because market signals weren't used to allow resources to flow to their most efficient use. When people stand in line to get toilet paper, you know capital has been improperly allocated, because politicians think they know better than the market.

This makes me sad. It is so fundamentally depressingly wrong. Communism did NOT fail because they ran out of toilet paper.
Colin
(it failed because it suppressed the human spirit . . . just like modern day corporate capitalism is threatening to do )