Benny's World

Saturday, April 04, 2009

Financial Elite Are Bankrupting Our Gov't With Larry Summers' Help

BW Reader Cherbium posted this bit of news (from HuffPo) on another thread. I am republishing it on this thread, along with hers, my, and Glenn Greenwald's comments.

Summers Received Hundreds Of Thousands In Speaking Fees From TARP Recipients


Aside:
(Larry Summers is not being investigated. He is being embraced. )

Barack Obama's chief economic adviser, Larry Summers, received hundreds of thousands of dollars in speaking fees last year from firms that have direct financial interests before the government or are intimately involved in the White House's bank relief programs.

The White House released late Friday the personal financial disclosure forms of many high-ranking administration officials. The document provided for Summers, who serves as one of the president's closest confidants, underscores just how close some of these officials are to the industry over which they now have oversight.

Among the firms that paid Summers large amounts in speaking fees include J.P. Morgan Chase. That bank offered the former Harvard president and Treasury Secretary $67,500 for a February 1, 2008 engagement. It has received $25 billion in government bailout funds.

Citigroup, which has received $50 billion in taxpayer help, paid Summers $45,000 for a speech in March 2008 and another $54,000 for a speech that May.

Goldman Sachs, which has received $10 million in bailout funds, paid Summers $135,000 for a speech on April 16, 2008 and another $67,500 for a speech on June 18, 2008.

Summers also received about $5.2 million over the past year in salary from the major hedge fund D.E. Shaw. (note from Benny: many folks have worked for hedge fund companies, including JRE, but not for this much money)

The speech payments will undoubtedly raise questions as to the impartiality of the economic advice Summers is providing to the president. Already viewed as too favorably disposed to Wall Street interests, the lavish payments for speeches will provide further fodder for those who think the administration has been forgiving in their approach to the banking industry.

In a prepared statement, spokesman Ben LaBolt said that, "From the first days of the administration, we have bolstered accountability over banks and reformed the TARP process so that taxpayers can see how their money is being spent, the influence of lobbyists is curbed, executive compensation is reined in, and firms are required to show how they will preserve or expand lending using government funds. Dr. Summers has been at the forefront of this administration's work to shore up our nation's financial system and to put in place a regulatory framework that will strengthen the financial system and its oversight - all in an effort to help the families across America who have paid a very steep price for risky decisions made by Wall Street executives."

Below is a list of the notable speeches given by Summers last year, the amount he was paid, and the date of the address. Further down is a PDF of Summers' Personal Financial Disclosure form, released on late Friday afternoon. Tell us what you see.

Skagen Funds, $60,300, (1/9/2008)

Skagen Funds, $60,300, (1/10/2008)

Skagen Funds, $59,400, (1/11/2008)

JP Morgan, $67,500, (2/1/2008)

Itinera Institute, $62,876 (1/8/2008)

Citigroup, $45,000 (3/3/2008)

Goldman Sachs Co., $135,000, (4/16/2008) --and as Glenn Greenwald noted, that was for one day.

Associon de Bancos de Mexico, $90,000, (4/3/2008)

Lehman Brothers, $67,500, (4/17/2008)

State Street Corporation, $45,000, (4/18/2008)

Siguler Guff & Company, $67,500, (5/7/2008)

Hudson Institute, $10,000, (05/28/2008)

Citigroup, $54,000, (5/30/2008)

Investec Bank, $157,500, (6/13/2008)

Goldman Sachs, $67,500, (6/18/2008)

Lehman Brothers, $67,500, (7/30/2008)

Tata Consultance Services, $67,500, (9/21/2008)

State Street Corporation, $112,500, (10/2/2008)

McKinsey and Company, $135,000, (10/19/2008)

Charles River Ventures LLC, $67,500, (11/112008)

Pricewaterhouse Coopers, $67,500 (9/9/2008)

American Chamber of Commerce In Argentina, $135,000 (10/7/2008)

American Express, $67,500 (5/7/2008)

Greenwald also observed:

And the payment was made at a time -- in April, 2008 -- when everyone assumed that the next President would either be Barack Obama or Hillary Clinton and that Larry Summers would therefore become exactly what he now is: the most influential financial official in the U.S. Government (and the $45,000 Merrill Lynch payment came 8 days after Obama's election). Goldman would not be able to make a one-day $135,000 payment to Summers now that he is Obama's top economics adviser, but doing so a few months beforehand was obviously something about which neither parties felt any compunction. It's basically an advanced bribe. And it's paying off in spades. And none of it seemed to bother Obama in the slightest when he first strongly considered naming Summers as Treasury Secretary and then named him his top economics adviser instead (thereby avoiding the need for Senate confirmation), knowing that Summers would exert great influence in determining who benefited from the government's response to the financial crisis.


Yes, the Financial elite owns our government, and that is why it is taking all of our money. Might as well nationalize the damn banks, get rid of the idiots who made it crash, not just saving it from further ruin, and sell the good assets. Either that or let AIG go into bankruptcy. Either way, Larry Summers is behind this gig, and something is smelling pretty rotten with Geithner too.

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10 Comments:

  • Summers and Geithner were an integral part of the system that led to the current crisis. When Roosevelt appointed Joseph Kennedy to head the newly created SEC, he said it takes a crook to catch a crook. (More diplomatically stated, Kennedy was a successful speculator who knew all the loopholes so he was uniquely qualified to address the problems.)

    If Obama's logic is similar, then the rhetoric from the administration needs to change. More importantly, action needs to be taken to restrict the ability of companies to continue to engage in the behavior that created the conditions that led to the global financial meltdown. Investigations should be initiated into any illegal activities that may have contributed to the situation. (This includes failure of the government to act; such as the SEC failure to investigate Madoff despite repeated warnings.) Finally, to restore some sense of trust with those of us who don't have silver spoons in our mouths, executive compensation must be addressed immediately for the companies who received TARP funds.

    By Blogger indyvoter, at 6:53 AM  

  • Will the U.S. Justice Department ever investigate and find out who robbed the wealth of America?

    Watch the videos from the Bill Moyers Program:
    The Best Way to Rob a Bank is to Own a Bank.

    Copy and paste these addresses into your address bar.
    Part 1: http://www.youtube.com/watch?v=CQ4JXW_ErXQ
    Part 2: http://www.youtube.com/watch?v=WOA1RpK7ttg
    Part 3: http://www.youtube.com/watch?v=vMDLx_-f1L4

    Question: Who will tell the people?

    By Blogger Cherubim, at 2:15 PM  

  • Shorter Elizabeth Warren: Timothy Geithner,
    By: Jane Hamsher Saturday April 4, 2009 9:35 pm
    http://oxdown.firedoglake.com/diary/4594
    I guess Elizabeth Warren can forget about that invite to the AIG Christmas party:

    Elizabeth Warren, chief watchdog of America's $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration's approach to saving the financial system from collapse.

    Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade." She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

    Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said.

    She said she did not want to be too hard on Geithner but that he must address the issues in the report. "The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous."

    Well somebody had to play the Brooksley Born role in all of this. Though Larry Summers might have to break out the thesaurus, the word "shrill" has been a bit overworked.

    By Blogger Cherubim, at 2:54 PM  

  • 100 Year Crash: McCain advisor spurred $62 trillion derivatives market that will swamp global markets
    http://www.bloggingstocks.com/2008/09/15/100-year-crash-mccain-advisor-spurred-62-trillion-derivatives/print/

    Posted Sep 15th 2008 9:09AM by Peter Cohan
    Filed under: Federal Natl Mtge (FNM), Politics, Lehman Br Holdings (LEH)

    Lurking in the background of this weekend's collapse of two of Wall Street's biggest names, is a $62 trillion segment of the $450 trillion market for derivatives that grew huge thanks to John McCain's chief economic advisor, Phil "Americans are Whiners" Gramm. That's because in December 2000, Gramm, while a U.S. Senator, snuck in a 262-page amendment to a government re-authorization bill that created what is now the $62 trillion market for credit default swaps (CDSs).

    I realize it is painful to read about yet another Wall Street acronym, but this is important because it will help you understand why the global financial markets are collapsing. And it will give you information to consider when you vote in November. CDSs are like insurance policies for bondholders. In exchange for a premium, the bondholders get insurance in case the bondholder can't pay. As I posted, in the case of the $1.4 trillion worth of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) bonds, the government's nationalization last Sunday triggered the CDSs on those bonds. The people who received the CDS premiums are now obligated to deliver those bonds to the ones who paid the premiums.

    Gramm's 262-page amendment, dubbed "The Commodity Futures Modernization Act," according to Texas Observer, freed financial institutions from oversight of their CDS transactions. "Prior to its passage, they say, banks underwrote mortgages and were responsible for the risks involved. Now, through the use of [CDSs]-which in theory insure the banks against bad debts-those risks are passed along to insurance companies and other investors," wrote Texas Observer.

    How does this relate to Lehman's bankruptcy? "[CDSs] were a key factor in encouraging lenders to feel they could make loans without knowing the risks or whether the loan would be paid back. The Commodity Futures Modernization Act freed them of federal oversight," according to Texas Monthly. And it was due to these CDSs that Wall Street held an emergency session yesterday to try to minimize the damage of Lehman's CDSs and other derivatives. Unfortunately, this session did not produce much thanks to the built-in lack of knowledge of the risks in these transactions that Gramm's legislation ensured.

    You are going to be reading more and more about CDSs over the months ahead -- it will become as familiar as the phrase subprime mortgage was in 2007. Unfortunately, there were "only" $1.3 trillion worth of subprime mortgages and the CDS market is 48 times bigger than that -- and more than four times bigger than U.S. GDP. And since nobody has ever had to deal with this volume of CDS unwindings, it is impossible to calculate how much they will cost.

    One thing is clear. If you think America is a nation of whiners and this is a mental recession, I strongly urge you to vote for McCain. But if you take a look at how much you are paying at the gas pump, how much of your retirement will be wiped out in the months ahead, and how you will pay all those bills as the unemployment rate climbs higher, it might be worth considering whether you can afford to elect a man who relies on Phil Gramm for economic advice.

    By Blogger Cherubim, at 7:34 AM  

  • From the Atlantic

    The Quiet Coup
    by Simon Johnson
    May 2009

    The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

    Aside:
    (This is a must read, but it is a lengthy article; so it may take more than one sitting to read it all.)

    Copy and paste the link in your
    address bar.
    http://www.theatlantic.com/doc/200905/imf-advice

    By Blogger Cherubim, at 8:14 AM  

  • Thanks for a revealing! posting.

    The best perspective on the Wall Street scandal that I have found so far comes from Bill Moyers...

    http://www.pbs.org/moyers/journal/04032009/watch.html

    The transcript is here: http://www.alternet.org/workplace/135161/moyers_journal%3A_maddoff_was_a_piker_--_america%27s_big_banks_are_a_far_larger_fraudulent_ponzi_scheme/?page=entire

    In summary, the Obama administration does not trust the American people. Geithner is taking a "close the lid and look the other way" approach instead of getting rid of the Wall Street CEOs. As a result, these toxic mortgage assets will not be fully processed and accounted for, and they will be a huge drain on the economy for years and years. This is what Japan did, and they are still paying the price with a very stagnant economy. They and we lack the nerve.

    My reaction: I'm feeling very sad for the planet. If we don't even have the will to confront this, how will we have the will to confront the far worse problems of global warming?

    As a nation, we are better than this. America is a can-do, problem-solving nation. We can do anything if we set our minds and hearts to it. We are not setting our minds and hearts to this. For shame!

    By Blogger oklahomavoter, at 10:22 AM  

  • Oklahomavoter, I agree with you, and I am beginning to think we as Americans will have to find a way to work among ourselves to better things, and then when we have built up our strength push our government in the right direction.

    By Blogger Cherubim, at 10:26 AM  

  • All good points. Meantime, many of the Kossacks are in the River of Egypt about this whole thing: denial. They are blind followers of anything his administration does. I'm glad BW readers are questioning this, as JRE wouldn't put up with it for one WS/NY minute.

    By Blogger benny06, at 10:40 AM  

  • Soros: Obama "Lost a Great Opportunity" to Fix the Banks
    Posted Apr 09, 2009 07:17am EDT by Aaron Task in Newsmakers,

    George Soros was an early and avid supporter of Barack Obama, so it's probably no surprise he gives the President high marks for his handling of international affairs, the stimulus package, the budget (the famed financier calls it "very courageous") and for "stabilizing" the financial crisis.

    But President Obama "lost a great opportunity" by not taking a more radical approach in dealing with the banks, Soros says. "There's too much continuity with the bumbling and mishandling by the previous administration. Not enough discontinuity."

    Specifically, Soros wanted Obama to "come out of the gate with a well considered plan" to recapitalize the banks, rather than continuing with the TARP and related bailouts. But the President may have been hampered by his desire to create consensus, Soros says. "The nature of far from equilibrium situations is that public understanding is always lagging behind events. If you're guided by desire to have consensus, you'll always be a little bit slow."

    Essentially, Soros believes we should be following the so-called Swedish solution but fears we are heading down the same policy path as Japan. "We're effectively keeping zombie banks alive," he says.

    To those who rail about the dangers of nationalizing banks, Soros says: "You have to recapitalize the banks for them to function. As it is, we are nationalizing the debt of the banks, but not the banks themselves."

    To Check the accompanying video for more and to hear Soros' take on Ben Bernanke, Larry Summers and Tim Geithner.
    Copy and paste this address in your address bar.
    http://finance.yahoo.com/tech-ticker/article/228458/Soros-Obama-%22Lost-a-Great-Opportunity%22-to-Fix-the-Banks?tickers=XLF,SKF,FAS,C,BAC,JPM,%5EDJI

    By Blogger Cherubim, at 10:46 AM  

  • How much longer will people put up with this "tax evader" as our Sec of Treasury? Come on, we all know the severity of punishments if we were caught not reporting all our income. Yet Obama still have so much faith in him - hmmm... makes me wonder what it is Obama is hiding!

    By Blogger Jean, at 10:47 AM  

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