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The times are few and far between that I am in agreement
with Senator Elizabeth Warren’s brand of Big Government liberalism. But I do
applaud her willingness to stand up to the Wall Street lobby machine; her
capacity to recognize and call-out the egregious gambling dens that have
metastasized there; and her insistence that never again should the hard-pressed
taxpayers of America be forced to bailout the crony capitalist plunder that is
enabled by the Fed’s free money madness.
* AMEN!
But now comes a naked Wall Street raid on the taxpayers
that’s beyond the pale; and it would have sailed right through in the dead of
night absent Elizabeth Warren’s intrepid opposition. Bravo, Senator!
I am referring to the Citigroup-drafted sneak attack on
Washington’s tepid effort to curtail the more egregious gambling habits of some
of the big banks. These incorrigible larcenists have been trying to gut the
“push out” provisions of Dodd-Frank for more than three years now, yet the
latter boils down to a simple and urgently necessary injunction to the banks.
Namely, you can’t roll the dice in the “derivatives” gambling halls with
taxpayer guaranteed deposits.
* THE PROBLEM BEING... INSTEAD OF ELIMINATING "TOO
BIG TO FAIL," DODD-FRANK INSTITUTIONALIZED IT INTO LAW!
In light of the inherent dangers of what even Warren
Buffet once called “financial weapons of mass destruction”, it is self-evident
that no bank — not even the mighty Citigroup — should be allowed to bring these
incendiary devices within a country-mile of the taxpayer enabled FDIC guarantee
program.
If Congress had really meant to fix the system that
supposedly brought us to the cusp of Armageddon in September 2008 it would not
have bothered with Dodd-Frank at all - and its incomprehensible 1,700 pages of
legislative pettifoggery and 10,000 pages of implementing regulations that
metastasize by the day, and will do so as far as the eye can see.
* CONGRESS - CONTROLLED BY THE DEMOCRATS (THUS
"DODD-FRANK") - WEREN'T TRYING TO FIX (AS IN REPAIR) THE SYSTEM. NO.
THE ONLY "FIX" ON THEIR AGENDA WAS AS IN "THE FIX WAS IN."
AGAIN... THE DEMOCRATS THRUST DODD-FRANK UPON US TO INSTITUTIONALIZE TOO BIG TO
FAIL. (NOTE THAT NEITHER DODD NOR FRANK ARE STILL "SERVING;" BOTH ARE
NOW RAKING IN THE CASH VIA THE "PRIVATE SECTOR."
Instead, it should have gone to the root of the problem
and passed a Super Glass-Steagall that would have dismembered the giant banks
by statutory edict, and kicked the Wall Street based gambling houses like
Citigroup out of the FDIC entirely.
* BUT THEY DIDN'T! THE PARTY OF WARREN DIDN'T! THE PARTY
OF OBAMA DIDN'T!
The fact is, deposit insurance has been co-opted and
abused by the Wall Street mega-banks for decades, and now stands as a vast
perversion of what had actually been intended - misguided or not - way back in
the dark hours of 1934. Back then there were three people in Washington who
counted when push came to shove - FDR, Senator Glass and Congressman Steagall.
FDR was against deposit insurance because he thought it would be abused by Wall
Street, and for once he was right. Senator Glass was against it, too, because
as one of the true financial statesman of modern times he did well and truly
understand the dangers of moral hazard and fractional reserve banking propped
up by the state.
Alas, Congressman Steagall was a demagogic foe of Wall
Street, and only wanted deposit insurance to protect the red-neck depositors of
Alabama, who had been taken to the cleaners by banksters of local origin. So we
got deposit insurance for the proverbial “little guy” and a sharp separation of
banking and commerce at the insistence of Senator Glass.
And for at least a generation, Wall Street - which was
still run by the chastened survivors of the 1920s gambling orgies and the Crash
of 1929 - kept its distance and its lobbyists at home. By contrast, today we
have almost the opposite history. Wall Street is run by a generation that has
been bailed-out too many times to count and that has been blatantly and
egregiously coddled by perverse central bank theories and practices that have
turned the nation’s capital and money markets into veritable gambling casinos.
* FOLKS. CONCENTRATE. IT'S REALLY IMPORTANT THAT YOU
UNDERSTAND THIS STUFF.
This includes such practices as the stock market “puts”,
the “wealth effects” doctrine and years and years of ZIRP (Zero Interest Rate
Policy).
The latter is nothing more than free gambling money that
can be used to fund the carry trades - that is, using free overnight money to
buy anything with a yield or prospect of short-term gain - and that can be
rolled over day after day with the assurance from the Eccles building that the
cost of carry is fixed and subject to change only upon ample notice.
* NICE "WORK" IF YOU CAN GET IT!
In fact, the spoiled rotten generation now running Wall
Street is the reason for this post, and why it is addressed to the Citigroup
CEO. The unconscionable raid on the taxpayers that Senator Warren is
desperately trying to forestall did not occur because Citigroup’s hirelings
were sitting around K-Street looking for an issue on which to bill their
client.
No, the command to mount this despicable attempt to take
the entire budget of the United States hostage in the middle of the night came
straight from the C-suite at Citigroup. So just consider the monumental hutzpah
of Michael Corbet and his Wall Street confederates.
* REMEMBER THAT NAME, FOLKS! MICHAEL CORBET. (BUT FOR
NOW... KEEP CONCENTRATING... KEEP READING...)
Owing to its usual dysfunction, Congress has once again
failed to pass the appropriations bills for the current fiscal year which has
been underway for 80 days now. Therefore it is again punting via a giant
omnibus appropriations bill authorizing $1.1 trillion of spending in 1600 pages
of fine print, bedecked with prodigious helpings of pork, that no one could
have possibly read or comprehended in the couple of days since it was fashioned
in the backrooms during the wee hours of the night.
In short, the so-called “Cromnibus” caper is disgusting
enough in its own right. But the fact that the CEO of Citigroup has ordered his
henchman to pile-on is stark testimony to the insuperable arrogance of the
generation which now runs Wall Street; and to its sheer sense of “entitlement”.
That is, its belief that Washington is there to do “whatever it takes” to
insure that Wall Street profits are fattened one more quarter so that the share
prices of the gambling halls which operate there, and the executive options and
bonuses of the executives who run them, will never fail to advance.
Yes, Michael Corbat is a Citigroup “lifer” and is just
doing his corporate duty in behalf of shareholders. But that’s precisely the
problem. There should be no Citigroup “lifers” whatsoever - because there
should have been no Citigroup left standing! In fact, “C” is testimony to the
financial folly of the last three decades.
Folks, banks are not free enterprise institutions; they
are wards of the state that would not even remotely exist in their current Wall
Street incarnation without the state subsidies and safety nets implicit in the
Fed’s discount window, where they can get unlimited zero cost money at a moment's
notice; and in deposit insurance, which essentially shields their balance
sheets and asset management practices from depositor scrutiny; and most especially,
their banking licenses from the state and Feds that shield them from a whole
range of legal liabilities and exposures that would otherwise prompt a far more
prudent and stable business model.
So the point is, the monstrous string of incomprehensible
and unmanageable bank and financial services mergers that Sandy Weill rolled-up
over two decades should never have been permitted.
The repeal of what remained of Glass-Steagall in 1999,
which permitted the merger of Travelers and Citibank, should never have
happened.
The regulatory acquiescence in the 30:1 leverage ratios
achieved by the Wall Street brokers, including the vast investment banking
operations inside Citigroup during the Greenspan housing and credit boom,
should never have been tolerated. The trillion dollar off-balance sheet SIVs
created by Citigroup on the eve of the last financial crisis should have been
stopped cold. And most crucially of all, this rogue financial behemoth should
have been put out of its misery by the FDIC when it failed in 2008 and its
screaming insolvency was covered up by multi-trillion bailouts from the Fed and
TARP.
* WHO OPPOSED THE BAILOUTS? THAT'S RIGHT... TEA PARTIERS
LIKE MYSELF! WHO SUPPORTED THE BAILOUTS? THE REPUBLICAN AND DEMOCRAT
ESTABLISHMENTS ALIKE! (AND THEIR MEDIA LACKEYS!) (AND ACADEMIA!)
Here’s the thing. Michael Corbat is a “lifer” from this
whole misbegotten chapter, going back to his days at Salomon Brothers and his
rise through the Sandy Weill machine and all the departments and far-flung
operations of Citigroup after it finally came together.
I have no clue about what he learned about banking along
the way. But there is absolutely no doubt that what he did learn over that
journey is that Washington exists to do Wall Street’s bidding.
The truth is, the generation represented by Michael
Corbat knows nothing about the idea of the “public interest” as opposed to
private advantage. It is steeped in the practice of crony capitalism, but it knows
nothing of free markets.
* FOLKS... DEMOCRATS... LEFTISTS... LIBERALS... AND ALL
TOO MANY RINOs BELIEVE IN THIS SAME CRONY CAPITALISM - ONLY THEY GIVE IT THE
FAR MORE PALATABLE NAME OF "PRIVATE/PUBLIC PARTNERSHIP." REMEMBER
THIS ARTICLE THE NEXT TIME YOU HEAR THAT FALSE FLAG PHRASE.
(*SIGH*)
And after all these years of Washington’s rank servility,
it now thinks taking the people of America hostage in the middle of the night
is all in a corporate day’s work.
Shame, indeed.
* WE SHOULD KNOW SOON WHO WINS THIS BATTLE!
