Checks balanced

I'm having a hard time playing optimistic after that last post, but I caught a good story today too...

In spite of Citigroup's success in exchanging re-election donations for feigned ignorance at the executive branch, the judicial put a bitta smackdown on their asses today.

The SEC, who is appointed by representatives of the people to keep the stock market humming along for the good of the people made a deal with Citigroup. This deal was to close the books on their part in a massive toxic mortgage scam. The deal looks like this:
Citigroup sold $1 BILLION in bunk mortgages to its customers. Knowing they were bunk and unlikely to be re-paid, Citi bet against them.

The investors lost $700 MILLION.

Citi earned $160 MILLION. (Good to be 'in' on it!)

In exchange for this blatant disregard of both ethics and rules, the SEC was going to charge Citi with negligence and fine them $285 MILLION.

Negligence... Well, I guess they should've tried harder to not screw their own customers over.

Luckily, this plea deal from the Executive had to be checked over by the Judicial. And, apparently, Citi was unable to bri*ahem* lobby Federal Judge Jed "Not on My Watch" Rakoff into seeing this as a fair and reasonable punishment for a billion dollar scandal.

(Think maybe the fine was fair? Let me take a shot at illustrating this. When a man is arrested with a kilo of heroin, they don't just take 250 grams of it and tell him he is a *bad* man, that he should have a nice day, and if he is ever in need of a job he's always welcome at the station. No. They take ALL the heroin, everything the guy owns and throws him in jail for at least a significant portion of his life.)

Judge Rakoff decided he thought maybe a closer look was necessary. He said:
"The court concludes, regretfully, that the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest"
"Although this [settlement] would appear to be tantamount to an allegation of knowing and fraudulent intent... the SEC, for reasons of its own, chose to charge Citigroup only with negligence"

Now THAT is some good solid judgin'...

THIS is whyipaytaxes.
read more:Citigroup-SEC $285m toxic mortgage deal rejected(bbc)

Of the people, but not for the people

This is it, folks... We've lost control of our government.

You guys will remember this little thing we liked to call the TARP, right? Everybody got their britches in a bundle over the "unprecedented" amount of $700 BILLION to be loaned to Wall Street to ostensibly avoid worldwide economic collapse.. Nobody liked it, but at that time, Bush was the lamest of ducks with at least one foot out the door and something [supposedly] HAD to be done.

That the economy eventually collapsed in every realistic and measurable way is irrelevant, but I certainly had to bring it up.

Notice my use of the quotes around "unprecedented" in the paragraph above. I use these quotes because there was plenty of precedence. In fact, the very same banks we bailed out were already into us for a LOT more than $700 BILLION at that time!

Prior to the TARP, the Fed had already made loans to the banks at a total cost that amounted to $7.77 TRILLION! In your face, puny little $700 BILLION.

Bullet points. Too frustrated to make paragraphs:

Magnitude

• $7.7 TRILLION is more than half the value of everything our country produced that year
• Our 6 largest banks turned their share into $13 BILLION in profit
• Morgan Stanley alone borrowed enough ($107 BILLION) to pay off a tenth of nation's delinquent mortgages
• Bank of America took $91.4 BILLION of these secret loans while simultaneously taking $45 BILLION from the TARP funds
• Banks that were declared too big to fail grew even larger
  
• Our largest banks enjoyed more profits in the last 2.5 years than they did in the 8 years preceding the crisis
• All the while, they continue to spend MILLIONS lobbying to derail or weaken laws designed to keep them in check
  

Transparency

• The loans to the banks were undisclosed
  
• The profits earned by the banks were undisclosed
• Shareholders, the "owners" of the banks were not told (Where did the profits go?!?)
  
• Taxpayers, the people that have given the authority to the Fed to watch over our money were not told
• Congress, which was actively writing an overhaul to our financial regulatory system was not told
• These loans were provided with no protections or guarantees for the taxpayers
  

THEY LOANED OUR MONEY VALUED AT MORE THAN HALF OF EVERYTHING OUR COUNTRY CAN MAKE IN A YEAR TO PRIVATE COMPANIES WITHOUT EVER TELLING ANYONE! The Fed knew, the Bank Managers knew. Not even the owners of the banks knew!

THIS is whyipaytaxes.
read more:Wall Street Banks Earned Billions In Profits Off $7.7 Trillion In Secret Fed Loans Made During The Financial Crisis(tp)

It ain't tricklin' down folks!

According to the Congressional Budget Office, since 1979:
After-tax income increased by 275% for the wealthiest 1% of Americans
After-tax income increased by 18% for the poorest 20%

in 2005-2007, right before the Great Recession, the top 20% of the population earned more after-tax income than the entire bottom 80%...

The obvious case that some will make in light of these statistics is that they deserve it. They work harder, they make the right decisions.
Am I to believe that I am that much lazier and that much more ignorant?It feels like I work really hard every day; I'm certainly very tired at the end of a day...
I certainly don't see a 275% increase in my after-tax income ANYtime soon.

Maybe the wealth isn't trickling back down after all...

Don't get me wrong... I don't feel entitled to an increase in my income. If you think about it on a world wide scale, I live a pretty fantastic life full of wonderful toys and comforts beyond the wildest dreams of billions of people.

What drives me nuts is that a vast amount of the 'wealth' in this country has been pooled among 1% of Americans and they have turned our elections into a war of campaign donations while appointing themselves to positions of power so they can use tax payer's money to 'bail' each other 'out.'

They've even stopped paying a reasonable amount of taxes. Again, don't get me wrong, I'm a staunch opponent of high taxes for everyone and loathe big governments.

Alas, we all have to pay our share of taxes to keep the system going. It wasn't until GE paid absolutely $0 (ZERO) in taxes on $5.1 BILLION in profits in 2010 that I realized maybe, just maybe, not everyone was paying their share of taxes.

The statistics from our own government:
http://www.cbo.gov/ftpdocs/124xx/doc12485/10-25-HouseholdIncome.pdf

Chip Bok

Thain to destroy CIT next

If you're anything like me, you'll suddenly discover that a thin layer of slime has covered you while reading this story: Former Merrill Lynch boss appointed CIT chief (bbc)

I'm not going to spend much time explaining why John 'How About Some Bonuses!' Thain costs taxpayer dollars. I already have. (twice)

But I will say this: He's gonna fit right in at CIT. These people know a thing or two about making taxpayer money disappear. Literally.

THIS is whyipaytaxes.

It should be mentioned that they are paying this man $6 MILLION a year. Some of that pay is in delayed stock but I'm not sure that is an appropriate amount to pay someone whose previous position was at the helm of a company he drove into the ground while lying to the shareholders in order to ensure BILLIONS of dollars in bonuses for him and his cronies.

Tell me more about the TARP

Thank heavens... Our government has finally decided that it might be in their interest to look into why just a few of our officials were able to funnel $180 BILLION of taxpayer money into AIG. Apparently some documents have come to light that were not submitted to the TARP Auditor.

AIG needed this money because they decided early on to pay the face value on their policies long after it was discovered that the face values were fictitious numbers made up by people who were content to drive their employers out of business in exchange for bonuses.

AIG paid much of this money to the folks at Goldman Sachs.

Goldman Sachs is the former employer of the few officials who funneled the $180 BILLION into AIG.

While I may be a bit taken aback by the fact that out of an entire country full of people, the only place we can find employees for the Fed and Treasury is Goldman, I'm not implying any dirty goings on. I don't know what happened and I don't know what decisions were made under duress, what decisions were about as wise as could be expected considering what they knew at the time and the tremendous pressures they faced.

I am a bit curious to know why those few officials did not provide all the information they had to the TARP auditor, why some documents are just coming to light now. Perhaps these documents were overlooked.

What I AM saying: Its a heck of a coincidence and it doesn't hurt to take a look at what really happened in the heat of the moment.

THIS is whyipaytaxes.

Interest swaps

Its a damn fine thing that we were able to bail out the banks long enough to for them to come calling on the bogus investments they sold to us as interest swaps and whatnot.

Follow the money:
Banks sell interest swaps to government agencies, pensions, school districts, and others that use taxpayer money to pay their bills. The idea is that they'll magically get lower interest rates on money borrowed because this banker in a really nice suit told them it would.
taxpayers 0 Banks 1

Suddenly, that very same banker almost goes out of business. A true travesty of justice as we picture him trading in that really nice suit to feed his family. Instead of letting them realize the consequences of their failures, our government uses taxpayer money to pay their bills for them.
taxpayers 0 Banks 2

Now that everything is running smooth, it comes time to think about how big of a bonus the banker in a really nice suit will get. Wait a minute, I know. He can tell all his interest swap customers that not only did they not get the lower interest rates, but things are so tough out there that they suddenly owe the banks MILLIONs of dollars.
taxpayers 0 Banks 3

Thats right. A fabricated product did not perform as promised. Though rather than losing your investment in the product outright, you actually owe more now!

THIS is whyipaytaxes.

read more: Auditor general looks to ban swaps(marketplace)

So long and thanks for all the cash

With the collapse of CIT was the elimination of any hope of getting the $2.3 BILLION taxpayers gave to them under Dubya's TARP fund.

You kinda gotta wonder where all that cash went... I mean, I know you're not supposed to. Its easier if you just don't think about it and try to forget it while wondering what team Brett Farve is playing for this week.

But... You kinda gotta think about it... That's a lot of money to give to someone who 3 months later comes to you and says paying you back just isn't gonna work out for him anymore.

Maybe we should be breaking some knees...

THIS is whyipaytaxes.

Fine

Bank of America gets $25 BILLION from taxpayers to facilitate the purchase of Merrill Lynch.

In spite of promising its shareholder it wouldn't, BOA summarily gave $3.6 BILLION of it to the management team at Merrill, apparently for the real bang up job they did driving it out of business.

Now, rather than letting the investigation of this douchebaggery unfold, BOA is settling with the government for $33 MILLION.

Not bad. $33 MILLION to cover up a $3.6 BILLION dollar scam. Not bad at all.

THIS is whyipaytaxes.

read more: Bonus fine for Bank of America(bbc)

To the rescue

No thanks to the government who has poured lavish amounts of taxpayer dollars into its competitors, it seems as though CIT will not have to file for bankruptcy this week. Apparently the bondholders have decided to double down and buy some more bonds that will then be exchanged for equity.

Why its good:
1.) Now, small and medium businesses across the country should be able to stock their shelves for the holidays instead of having a going out of business sale for the holidays.
2.) This should make it possible for CIT to pay back the $2.33 BILLION we gave them under the TARP.
3.) Apparently the credit markets are moving a bit again if they were able to drum up what they needed to get by.
4.) Banks are saving themselves without handouts from the government! (Was I premature in my bitching? Did our leadership say no because they knew CIT didn't really need it? I have my doubts; I'm still pretty certain that it was a matter of not having any close friends/ex-employees in the administration...)

Now, if only there was a way to get the CEO to loosen his death grip on the company and bring it back around to a fully functioning bank...

THIS is whyipaytaxes.

read more: CIT Grabs a Lifeline(tbm)

Conflicts of cozy interests

Am I the only one uncomfortable with the White House Chief of Staff sitting in on JPMorgan Chase's board meetings?

In an era where our federal government is handing out taxpayer dollars to private entities, picking and choosing which banks should fail and which banks will succeed, it seems wrong to have government officials at the highest levels getting so cozy with one particular bank. I'll bet that CIT wouldn't be forced into bankruptcy if they too had the opportunity to have the President's right hand man over for a visit...

I would guess this: Investing in JPM stocks is probably a pretty safe bet over the long term, 'cause they are apparently going to continue to get what they ask for...

THIS is whyipaytaxes.

read more: In Washington, One Bank Chief Still Holds Sway(nyt)

In spite of being Taken care of

This is an addendum to the post directly following (preceding, chronologically) the next post. Read that one first, then segue into this one:

Oh, and the banks, with their near record profits this quarter STILL aren't lending money, WHICH IS THE ENTIRE REASON WE GAVE THEM BAILOUTS IN THE FIRST PLACE!
quote from linked article below (tbm)(EA):
Underscoring the need for big banks to restart lending is the saga of CIT. The ailing specialty lender needs $2 billion to $3 billion in short-term financing, according to Fortune, and is seeking loans from JPMorgan Chase and Goldman Sachs. The deal could involve a piece of the company. "The New York Post reported Friday that JPMorgan Chase could acquire CIT's factoring unit, which finances more than $50 billion of wholesale inventory, at a time of the year when the collapse of the lender could disrupt retailers' holiday plans," says Fortune. One Alabama hardware company is already blaming CIT for its bankruptcy, writes Bloomberg, which also reports that [CIT] CEO Jeffrey Peek stands to earn $14.7 million, ahead of any repayment to the government of the $2.33 billion in TARP funds, should a bankruptcy or buyout occur.
JPM and GS, In spite of announcing near record profits last week, won't loan enough money to keep it and our retailers that count on it for purchasing goods to stock their shelves for the holiday season UNLESS THEY GET A PIECE OF OWNERSHIP. If the fact that thousands of small businesses will be forced to close due to their lines of credit disappearing meant nothing to the Obama administration when considering whether or not to bail out CIT, it sure isn't going to matter to JPM or GS.
This is EVEN THOUGH WE GAVE JPM AND GS BILLIONS OF DOLLARS WITHOUT A DROP OF OWNERSHIP.

Man... I am getting pissed! I knew it was going to be hard to watch this unfold back when the government started handing out our money to private firms late last year, but this is getting painful to watch...

AND: Why the hell does yet another CEO that successfully drove the business he was in charge of into the ground, to the point of begging for handouts to survive, gets MILLIONS OF DOLLARS in bonuses?

THIS is whyipaytaxes.

Taken care of (part 2)

Goldman Sachs, Bank of America, Citigroup, and JPMorgan Chase had second-quarter profits totaling $13.6 billion.

Larry 'Cocks=Brains' Summers: [the profits were made possible by] ‘the extraordinary public support provided by the federal government.'
Between the lines: I gave all your tax money to my buddies, suckers!

THIS is whyipaytaxes.

read more: These Bank Profits Made Possible by Taxpayers Like You (tbm)

AIG

Here's an idea everyone:
The next time you have a creditor on the phone demanding payment of the money you owe... Ask them if its ok to treat yourself first.
Hell, even if you're not being harassed, but simply debating whether you should pay off money you owe or just buy yourself something nice...
Either way, go with giving yourself a bonus and forgoing your responsibility.

Why not? If it works for AIG, it can work for you!
Over the next few months, AIG intends to hand out $238 MILLION in retention bonuses. Gotta retain that talent! After all, their talented employees managed to bring the world's economy to its knees and the company was handsomely rewarded with $180 BILLION.

Did I say rewarded? I meant bailed out. And there is NO need to pay it back anytime soon. Not when we have hungry executives to reward!

THIS is whyipaytaxes.

read more: found in CW in Newsweek. Just Google 'AIG Bonuses' and click on the news results...

Taken care of

Its nice to be favored by the government. A government that will one day, allow your biggest competitor go out of business and the next, bailout a firm that owes you money.

For, without our bailouts, without our help, and with the elimination of its competition, how else would it have been possible for Goldman Sachs to pay $6.65 BILLION in pay & bonuses THIS QUARTER (an average of $226,000 per employee FOR ONE 3 MONTH PERIOD!)?

Boasting profits for the quarter of $3.44 BILLION, I can see clearly now that our government was right. These poor poor bastards really needed our help...

THIS is whyipaytaxes.

read more: Goldman Sachs sees bumper profit(bbc)

Bailin' out the lawyers (Part 2)

Ok. For those of you not reading this blog backwards, in the order I've been posting, you'll see that a couple posts ago, I was bitchin' about banks suing each other with and for their bailout funds we gave them. In my apathy towards finding solid examples, I went with the first couple I found after googling the story I had heard on the radio. They were good enough examples to get my point accross, but little did I know: The PERFECT case of banks suing themselves was right under my nose.

Wells Fargo NA has sued itself in a mortgage foreclosure case in Hillsborough County, Florida.

Yes. Go ahead, read that again. Yes. Its true. It has even hired a lawyer to defend itself from itself.

Oh my.


Parsed, Cut, 'n Pasted details: (sweet, sweet apathy) Al Lewis: Wells Fargo Bank Sues Itself(fox)
In this particular case, Wells Fargo holds the first and second mortgages on a condominium. As holder of the first, Wells Fargo is suing all other lien holders, including the holder of the second, which is itself. [Court] documents clearly label "Wells Fargo Bank NA" as the plaintiff and "Wells Fargo Bank NA" as a defendant. Wells Fargo hired Florida Default Law Group., P.L., of Tampa, Fla., to file the lawsuit against itself. And then Wells Fargo hired another Tampa law firm -- Kass, Shuler, Solomon, Spector, Foyle & Singer P.A. -- to defend itself against its own lawsuit.

To be sure: Wells Fargo NA, which is considered by our government as 'Too Big To Fail' was given $25,000,000,000 (as of 2/2009) to ensure they'd have funds left over for the legal fees to sue itself. And what we're not spending in federal subsidies directly to the bank, we're spending on the Judge's salary, the court clerk's salary, building, maintenance, and upkeep fees to make sure all parties involved have a means to sue themselves whenever they see fit.

THIS is whyipaytaxes.

To give true credit where credit is due, this story was discovered at FailBlog.org.

Goldman Sachs

As Matt Taibbi runs through the evidence and coincidence of the apparent fact that Goldman Sachs has been at the forefront to profit from every bubble that has burst since the 20s he writes this paragraph (EA):

The history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman.

With so many people in positions of financial power having come through the rites of passage known as a job at Goldman Sachs, its hard to believe that its not just a big 'Good Ol' Boys' club. What better way to ensure free government handouts by putting your buddies in charge of the government?

THIS is whyipaytaxes.

read more: Matt Taibbi has long since entered my conscience as a potential Hunter Thompson of our time. Read the excerpted story from Rolling Stone.
The Great American Bubble Machine(rs)

Some more quotes, please read to see more evidence of a required career at Goldman to get a position of any power:

(One thing that has been noticed by just about everyone but the MSM)
Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers — one of Goldman's last real competitors — collapse without intervention. [...] The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets

a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds
In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bank-holding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding — most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs — and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.
Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs

the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite.

Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites.

The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Bailin' out the lawyers

Lets buy the line that the TARP and other bailouts had to happen or calamity would have ensued. (A calamity that would have leveled the playing fields a bit. A calamity that would have potentially brought many of the super-rich down to our levels. A calamity that would have voided their inherent superiority and MUST NOT BE.) Ok. So we buy that line. Bad things would happen if we didn't start pouring money from everyone's pocket into a handful of fat cat's pockets.

Having agreed to the necessity of giving rich people access to our co-op (tax pool) funds, we would like to assume that the money is used to make right the wrongs. To fix this problem that leaves us on the verge of a calamity. Instead, like a bum that takes your $5 to buy a bottle of booze instead of the sandwich they said they would buy, the banks are making relatively few changes. Sure, they're making it harder for us to borrow that money we gave them, but they are also sure to honor bond insurance claims on questionable funds that have already been bailed out.

Now they've found a new way to spend our money for us: Lawsuits! Somebody has got to be blamed for the financial meltdown and by God, we're going to use our lawyers to find out who it was. Ambac is suing JP Morgan. MBIA is suing Merrill Lynch. The shareholders at Citi Group ARE SUING THEIR OWN MANAGEMENT TEAM! (Apparently, those who bought into Citi within the last handful of years think they overpaid for their [obviously] worthless stocks and should be reimbursed by someone... Did NO ONE understand the word risk? Don't people know that if you invest in a company on the stock market, there is no guarantee of success? You could lose everything. And if that happens, no one is supposed to come along and give you your lost money back?)

At any rate. A significant portion of our bailout funds is now funding a giant mass of lawyers to sue each other. We'll be paying the prosecutors, defenders, court costs, awards, and settlements with the mountains of bailout funs we've given them to play with.

THIS is whyipaytaxes.

Moral hazards (Picking winners, choosing losers pt 4)

The CIT Group needs our help.
Being one of those companies that were allowed to change their status from a financial institution to a banking company in December to get their share of the TARP funds, CIT Group was awarded $2.33 BILLION. Which they've decided isn't enough and they must be given more.
'Cause, you know... If CIT Group fails, the world's economy will follow.
Right? That's still the official line, right?

Now lets flip that coin over.

The government may choose not to honor CGs request for another BILLION dollars. As a major lender to small and mid sized businesses, they don't have access to the lobbying teams the mega banks do, nor do they have conveniently placed ex-executives in the new government.
So, in spite of the Hundreds of BILLIONS of dollars given to AIG for backing up big name banks with their 'friends with benefits [in government]', our government now debates letting CIT Group go into bankruptcy over $1 BILLION. Because hey... Who needs small and mid sized businesses anyway?

Giving some banks free access to the Fed's printing press while busting chops over other banks seeking to grab up the money the others couldn't fit into their pockets on the way out...
Giving taxpayer dollars to anyone willing to call themselves a bank...

THIS is whyipaytaxes.

SEC

Drew Sheneman