How Wall Street Bought Washington

http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html

What Gramm-Leach-Bliley did was to allow commercial banks to get into investment banking. Commercial banks are the type that accept deposits and make loans such as mortgages; investment banks accept money for investment into stocks and commodities. In 1998, regulators had allowed Citicorp, a commercial bank, to acquire Traveler’s Group, an insurance company that was partly involved in investment banking, to form Citigroup. That was seen as a signal that Glass-Steagall was a dead letter as a practical matter, and Gramm-Leach-Bliley made its repeal formal. But it had little to do with mortgages.

Actually, deregulated banks were not the major culprits in the current debacle. Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase have weathered the financial crisis in reasonably good shape, while Bear Stearns collapsed and Lehman Brothers has entered bankruptcy, to name but two of the investment banks which had remained independent despite the repeal of Glass-Steagall.

Gramm and his wife seem to have made a career out of selling us down the river.
http://www.mydd.com/...

A brief history of the Glass-Steagall Act of 1933:

In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) — giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses — most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm … set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm … had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of “megamergers” took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm’s Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm’s Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision — lobbied for by Enron, a major campaign contributor to Gramm — that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm’s wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

This article hits the nail on the head; Wash DC is rotten to the core with corruption and incestuous favor-trading relationships. the entire aristocracy that runs america is part of the game, and of course the little people are getting screwed every which way.

is it any wonder that america is going down the tubes? the parasites at the top can only squeeze so much blood out of the american turnip before the whole country starts to die.

We need to drastically shrink the federal government across the board, and get power and money back to the states, where citizens can exercise a little more oversight.

Bart…the link embedded in the story has every name but to caution you the listing goes by firm and by year (for example Bear Stearns 2008, 2006, 2004, 2002, 200, 1998) and then Goldman, Lehman, et al…Also cover commercial banks and hedge funds.

The total listing runs almost 80 pages.

It may be easier to list who is NOT included as it is to list who is. Wall Street was seemingly buying favors from EVERYBODY, but especially those on the banking and finance committees.

I listed the 2008 only because last year was the year in which the govt injected so much capital into these companies.

O’Neill is not referenced in the report. I also found it interesting how little Bush was referenced.

So what about your criticism of the “owners of capital” who told the citizens go to “buy more and more”? Or will this be a one sided statement?

Sorry, you presume so much about this green neophyte president to call him a Marxist. You give him too much credit to call him a Marxist. And at the same time you ignore the bourgeois who preceded him who said, spend spend spend.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301977.html

He Told Us to Go Shopping. Now the Bill Is Due.

By Andrew J. Bacevich
Sunday, October 5, 2008; B03

It’s widely thought that the biggest gamble President Bush ever took was deciding to invade Iraq in 2003. It wasn’t. His riskiest move was actually one made right after the Sept. 11, 2001, terrorist attacks when he chose not to mobilize the country or summon his fellow citizens to any wartime economic sacrifice. Bush tried to remake the world on the cheap, and as the bill grew larger, he still refused to ask Americans to pay up. During this past week, that gamble collapsed, leaving the rest of us to sort through the wreckage.

To understand this link between today’s financial crisis and Bush’s wider national security decisions, we need to go back to 9/11 itself. From the very outset, the president described the “war on terror” as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war. “Get down to Disney World in Florida,” he urged just over two weeks after 9/11. “Take your families and enjoy life, the way we want it to be enjoyed.” Bush certainly wanted citizens to support his war — he just wasn’t going to require them actually to do anything. The support he sought was not active but passive. It entailed not popular engagement but popular deference. Bush simply wanted citizens (and Congress) to go along without asking too many questions.

So his administration’s policies reflected an oddly business-as-usual approach. Senior officials routinely described the war as global in scope and likely to last decades, but the administration made no effort to expand the armed forces. It sought no additional revenue to cover the costs of waging a protracted conflict. It left the nation’s economic priorities unchanged. Instead of sacrifices, it offered tax cuts. So as the American soldier fought, the American consumer binged, encouraged by American banks offering easy credit.

From September 2001 until September 2008, this approach allowed Bush to enjoy nearly unfettered freedom of action. To fund the war on terror, Congress gave the administration all the money it wanted. Huge bipartisan majorities appropriated hundreds of billions of dollars, producing massive federal deficits and pushing the national debt from roughly $6 trillion in 2001 to just shy of $10 trillion today. Even many liberal Democrats who decried the war routinely voted to approve this spending, as did conservative Republicans who still trumpeted their principled commitment to fiscal responsibility and balanced budgets.

Bush seems to have calculated — cynically but correctly — that prolonging the credit-fueled consumer binge could help keep complaints about his performance as commander in chief from becoming more than a nuisance. Members of Congress calculated — again correctly — that their constituents were looking to Capitol Hill for largesse, not lessons in austerity. In this sense, recklessness on Main Street, on Wall Street and at both ends of Pennsylvania Avenue proved mutually reinforcing.

For both the Bush administration and Congress, this gambit has turned out to be clever rather than smart. The ongoing crisis on Wall Street has now, in effect, ended the Bush presidency. Meanwhile, a month before elections, panic-stricken members of Congress are desperately trying to insulate Main Street from the effects of that crisis — or at least to pass the blame onto someone else.

But in less obvious ways, the economic crisis also renders a definitive verdict on the country’s post-9/11 national security strategy. The “go to Disney World” approach to waging war has produced large, unanticipated consequences. When the American people, as instructed, turned their attention back to enjoying life, their hankering for prosperity without pain deprived the administration of the wherewithal needed over the long haul to achieve some truly ambitious ends.

Even today, the scope of those ambitions is not widely understood, in part due to the administration’s own obfuscations. After September 2001, senior officials described U.S. objectives as merely defensive, designed to prevent further terrorist attacks. Or they wrapped America’s purposes in the gauze of ideology, saying that our aim was to spread freedom and eliminate tyranny. But in reality, the Bush strategy conceived after 9/11 was expansionist, shaped above all by geopolitical considerations. The central purpose was to secure U.S. preeminence across the strategically critical and unstable greater Middle East. Securing preeminence didn’t necessarily imply conquering and occupying this vast region, but it did require changing it — comprehensively and irrevocably. This was not some fantasy nursed by neoconservatives at the Weekly Standard or the American Enterprise Institute. Rather, it was the central pillar of the misnamed enterprise that we persist in calling the “global war on terror.”

At a Pentagon press conference on Sept. 18, 2001, then-defense secretary Donald H. Rumsfeld let the cat out of the bag: “We have a choice, either to change the way we live, which is unacceptable, or to change the way that they live, and we chose the latter.” This was not some slip of the tongue. The United States was now out to change the way “they” — i.e., hundreds of millions of Muslims living in the Middle East — live. Senior officials did not shrink from — perhaps even relished — the magnitude of the challenges that lay ahead. The idea, wrote chief Pentagon strategist Douglas J. Feith in a May 2004 memo, was to “transform the Middle East and the broader world of Islam generally.”

But if the administration’s goals were grandiose, its means were modest. The administration’s governing assumption was that the U.S. military, as constituted in late 2001, ought to suffice to transform the Middle East. Bush could afford to tell the American people to go on holiday and head back to the mall because the indomitable American soldier could be counted on to liberate (and thereby pacify) the Muslim world.

For a while, that seemed to work: The Taliban fell quickly, with little need for the U.S. taxpayer to shell out for a larger military. But the Bush team turned quickly to Iraq, hoping to demonstrate on an even grander scale what the determined exercise of U.S. power could achieve. This proved a fatal miscalculation. After five and a half years of arduous effort, Iraq continues to drain U.S. resources on a colossal scale. Violence is down, but expenditures are not. An end to the U.S. commitment is nowhere in sight.

The achievements of Gen. David H. Petraeus notwithstanding, the primary lesson of the Iraq war remains this one: To imagine that the United States can easily and cheaply invade, occupy and redeem any country in the Muslim world is sheer folly. That holds true in Afghanistan, too, where the reinforcements that Gen. David D. McKiernan, the recently appointed U.S. commander, says he needs to turn things around will be unavailable until at least next spring.

Yet there is an economic lesson here too. “We have more will than wallet,” the president’s father said in 1989 during his own inaugural address. That is again painfully true today. The 2008 election finds the Pentagon cupboard bare, the U.S. Treasury depleted, the economy in disarray and the average American household feeling acute distress. Profligacy at home and profligacy abroad have combined to produce a grave crisis. This time around, telling Americans to head for Disney World won’t work. The credit card’s already maxed out, and the banks are refusing to pony up for new loans.

It’s not surprising that people don’t cotton to the idea of spending $700 billion to bail out Wall Street. Nor should they find it acceptable to spend as much as that, or more, to perpetuate a misguided and never-ending global war. But like it or not, the bill collector is pounding on the door. Bush’s parting gift to the nation will be to let others figure out how to settle accounts.

Andrew J. Bacevich is a professor of history and international relations at Boston University. His new book is “The Limits of Power: The End of American Exceptionalism.”

Frankly I hold pretty equal contempt for capitalist zealots as I do for ignorant Marxists. But at least have a balanced commentary, SM. It isn’t too much to ask.

And one more thing…the above quote never was printed in Das Kapital, it is a hoax.

http://clockbackward.wordpress.com/2009/02/04/did-karl-marx-predict-financial-collapse/

Sorry, you’ve been had.

I’m sure you’ll find it in the text of Das Kapital next to the marsh mouse that never existed in the stimulus bill.

Guys, we have real issues to solve and this neophyte president isn’t going to solve them, nor are his people going to be able to solve them. But we aren’t helping the situation when we buy into garbage emails that fit our biases and our anger. That isn’t the way to the truth.

Be cynical please.

Damn SM, you’re filling up my “favorites” with these great links. My son and I have been trying to purchase some Zimbabwean 100 trillion dollar bills on e-bay. They’re worth about 33 U.S. dollars right now, but in the near future, who knows?

My pleasure. Thanks for the plug.