Financial reform is something we all agree upon, or do we? We all agree we need it, we just don’t know how we need it or agree on the fix. The Senate Republicans voted Monday night against moving forward with debate on the financial reform bill. I guess both sides of the aisle will have to go back to the drawing board. Too bad they can’t kick the lobbyists out.
Meanwhile. the Senate continues to grill Goldman Sachs executives over suspected wrongdoing on their part during the 2008 financial crisis. Some of the highlights may be seen below. The senators seemed to fixate on some verbage that boils down to ‘one sh!tty deal.’ Perhaps that really is the crux of the matter.
There don’t seem to be many heroes out there but the big zero is one executive director Fabrice Tourre, who is the subject of a fraud lawsuit by the Securities and Exchange Commission. Fabrice nicknamed himself ‘fab Fab’. This ego driven maniac will not find U.S. Senators quite as taken by him as his girlfriends have been.
One of his emails to one of the 2 women he was dangling contained the following from the New York Daily News:
Six months later, Tourre joked about finding new suckers. “I have managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport,” he writes, adding, “Not feeling too guilty about this.”
In case you didn’t understand the Washington Post’s video from ABC News, I have included Jon Stewart’s take on these Senate Hearings. Jon Stewart made a lot more sense to me. He cut to the chase. The Timberwolf really does seem to be ‘one sh!tty deal.’ Then there is that real sleaze bag, the Fabulous Fab, making his fortune off the backs of widows and orphans. Stewart mourns the death of the elephonkey.
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Who Wants to Beat a Millionaire | ||||
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The GS people truly are playing with us. According to the Washington Post:
Goldman hired lawyers who formerly worked on the committee to prepare the executives; one of those lawyers once told a trade journal that the best strategy is “long, thoughtful pauses followed by rambling non-responsive answers.” The executives practiced the technique.
At one point, Sen. Susan Collins (R-Maine) asked Tourre about an e-mail he wrote that suggested he was looking to sell mortgage-backed investments only to unsophisticated investors. But, taking his time, he asked her three times to identify which e-mail she meant and to repeat her question.
“I cannot help but get the feeling that a strategy of the witnesses is to try to burn through the time of each questioner,” Collins responded in an exasperated tone.
These people seem to think they are above the law and far above the rest of us. They sicken me. So many people lost so much; people who trusted banks and financial institutions to do the right thing. Were we all duped? How close to financial ruin were we all? We were on the precipice while these bastards played the system. It wasn’t just Goldman Sachs. Apparently the problem was ubiquitous.
For those of you who need to be angry about something, this is it. Goldman made money off of people losing their homes. They made billions of dollars from investments that profited from mortgage defaults. They encouraged this type of lending.
These people are a far, far bigger threat to the security and prosperity of this country than the guy from Mexico working illegally at the carwash.
I wish Americans would get as outraged and angry about Wall St profiteers as they do about illegal aliens, or healthcare reform or a host of other issues.
Excellent point. This Fabulous Fab makes me madder than any human being should. What an arrogant, self-centered jerk who cares only for himself and his own self indulgence.
I suggest that this blog stay away from things you know absolutely nothing about. That the community organizer, socialist, anti-business democrates are – and will successfully – make political points by taking on Goldman is unfortunate and cheap politics.
Goldman is being investigated for selling largely sub-prime (unqualified and never should have been approved risky loans — largey let by others) on the expectation that the bubble would burst and foreclosures were just around the corner. This, in normal times, is called good financial management – when to get in and when to get out of a market. The politicains are calling it betting as if that was not a ral part of business. If anything, Goldman did not – legally – dump these clearly bad loans fast enough to protect their own investors/stockholders. Now, how do you do that in a free economy, you find a willing – get that a willing buyer – who may not see the same risk. Did they leave the martgage loan market – no. Did they have a better securitization of those loans – to minimize future risk – funny that never seems to come up. But the act of selling short is not and never has been illegal, absent an insider trader violation — which are not or have not yet been suggested.
In the larger picture, the concern is that the Goverment, who, through Famnny and Freddie, Dodd and others, who black-mailed the industry with more regulation in order to widen the opportunity of the bubble to more lower income families (mortgages), is seeking a scapegoat in order to interject itself even more into the financial markets — toward a more controlled economy. That is the real fear here, because once this crisis passess, we are all screwed. Remember that this issue is about private money and its investment, not public funding. Do you see the common thread here. Its not going to come in a single military coup, but in a lot of smaller movements.
Taxpayer, you actually have no idea what I know about or what I don’t know about. In fact, you might be very surprised.
You have been an arrogant, insufferable blowhard who is so partisan you cannot have a neutral discussion about anything. I expect conservative Bill 4 Dog Catcher would boot you off. It isn’t what you say, it is your general tone, smugness and rudeness.
I am strongly urging you to find another blog where bad manners are more of the accepted norm. I am only so patient. If you consider my comeback uncivil, then so be it.
Goldman Sachs is actually considered one of the better financial companies. It sounds like they made the right decision to hang Fabulous FAb out to dry. What a jerk he sounds like. And one bad employee can drag a good company through the mud.
I have a close relative, in a similar industry, who is spitting mad over what is being done to Goldman Sachs. He has sworn by them for years and felt they were the only financial equity to keep during the crisis. He says that what they are being charged with is standard operating procedure in the industry and that good people work for the company.
Interesting enough, Hank Paulson was the CEO of Goldman Sachs was was highly regarded, highly regarded enough to be selected for the Treasury Secretary position. He was at the helm during the Crash of 2008. I always had confidence in him.
Meanwhile, the Goldman Sachs people continue to sicken me because they represent an industry that ran wild and was empowered by greed and wealth. There is something wrong somewhere when they attempt to play us. Just answer the damn questions.
So what is the answer? Obviously something was wrong or we would not have been on the brink of financial disaster. Perhaps no one broke laws. Perhaps the system is just horribly flawed. Let’s get it all out in the open and fix it.
For the record, no one on this blog has ever claimed to be a financial expert.
This is not a topic we are going to steer away from. It is an important one and a current one. It needs discussion. There are 2 major issues: Financial reform and the Goldman Sachs investigation. Not talking about something never uncovers things that need changing. That will be our position.
The problem I have with many of my fellow Republicans is that some are ready at any moment to criticize big government but seem to want to give a pass to big corporations. I share their concern about big government, debt, taxes, etc. 100 percent. However, those with views such as PWCTaxpayer assume we have a free market and that anything and everything big business does is OK. That view cannot be farther from reality. If I’m getting screwed, I don’t really care whether it’s coming from the government or AIG, Goldman Sachs, etc. I want the problem corrected.
Whether you are looking at financial corporations making insane bets where they win if the play works out and they get a taxpayer bailout if it doesn’t, or developers and their attorneys buying off our own BOCS to get the rezonings they want, it’s the same thing. This situation is not going to get any better until people start educating themselves about where the money comes from, how the politicians are corrupted by it, and start voting out the elected officials acting in the interest of their corporate paymasters rather than citizens and taxpayers. That change can start right here with the PWC BOCS.
Maybe Moon and the moderators of this blog are not financial experts, but at least they are not blinded by an ideology that assumes that giving free reign to big business is always in the taxpayer’s interest.
Why is financial reform needed? The system works just fine in my opinion. I don’t see anything wrong with it except for too much regulation.
We need to move away from this ideal that government knows best and can fix everything – as in healthcare it just makes the problem worse.
And, taxpayer bailouts should have never been allowed to happen under anyone’s watch.
Goldman received $10 billion in bailout. That’s our money, dude. Did you not know thi? You’re in no position to chastize other for ignorance.
Moon-Howler,
PW Taxpayer is just upset that so much went wrong under the Republican reign of power. I think actually BOTH parties are culpable. How one can not clearly see that some huge disaster took place, and actually is STILL taking place, is beyond my comprehension. Greece is on the verge of collapse which could effect of all Europe and ultimately us also! To keep the status quo is not an option.
Marin, the system hasn’t worked fine. Not by a long shot. Did you miss the near depression during the finanacial crash fall 2008? The TARP money was critical in the fall of 2008, according to most financial experts. It unfroze credit.
Just for starters, do you think people making $20-25k a year should get a $300k loan for a house?
Financial reform is very much needed.
Starry, I think Goldman repaid the TARP money. They have been a financially solid group pretty much the entire time. I just want Fab Fab kicked to the curb.
I think financial reform is the most important task to be solved right now.
http://bit.ly/9b6INd
There was an article a couple of weeks ago about how state regulations seemed to help Texas avoid the real estate crash that the rest of the country suffered. Perhaps similar Federal regulations could have helped avoid the financial crisis.
LMAO.. Finally someone mentioned Greece. What a pile of crap that country is (has put itself into). S&P downgrading them to junk status made me giddy yesterday. That the Euro dropped and that Portugal also took a hit was icing. I won’t go off topic but I’ll say that Greece shot themselves in the foot and are sinking the EU like a lead anchor.
Credit markets are still not flowing anywhere near where they used to. TARP didn’t fix that. And, I’m actually hoping that any recovery will be slow so as to not create a hard rebound.
I’m not a lender (in the strict sense) but to me someone at that income level should not own a house nor should they believe they’re entitled to own a house. I’m sorry if it hurts someone’s feelings but the fine print on the ‘American Dream’ of home ownership is being able to afford a home and the costs associated with homeownership. Minimum wage shouldn’t mean you can buy a home or even a condo. That’s part of the incentive to get an education, learn a trade, etc – better jobs that lead to home ownership.
The other part of this ‘finance reform’ bandwagon that isn’t really talked about but MH kinda touched on is… maybe poor people shouldn’t have the easy access to credit that they had in the past. But, that’s not really talked about above a whisper – so, lets put it to the peanut gallary that believes in finance reform. The credit and capital markets allow for those with lesser means to have access to credit to buy autos, homes, whatever. Should those be clamped down in order to strengthen the system?
When Congress clamped down on credit card companies what happened? Credit card interest rates went up, they dropped tons of customers and people that used to have access to ‘easy’ money had the well dry up on them overnight. Are we prepared for much of the same on a grander scale?
I’m not trying to use a scare tactic – I’m really asking the question. Do we know what bill of goods we’re being sold her? And, are we prepared to make those hard decisions?
@Moon-howler
You really need to see this. Pictures as they saw speak loder than words
http://gawker.com/5525783/the-washington-post-cannot-tell-obama-from-malcolm-x
I’m astounded that marinm would say that things are just fine in the financial system. Maybe I’ve been living on a different planet than she does.
This crisis is without doubt a bi-partisan effort. One of the key causes, the Gramm-Leach-Bliley Act of 1999, which overturned the Glass-Steagall Act and allowed gigantic financial firms that mix banking with speculation to come into being, had both Republican and Democratic sponsors and was signed by President Clinton. We could go on and one about how members of each Party had their fingerprints on the causes of the financial collpse.
As I’ve been trying to say, the problem is not Democrat or Republican. That argument is the diversion. The real problem is the big corporate money and lobbying in the system that causes otherwise well-intentioned public officials from both Parties to go astray.
Excellent post Need to Know!
how can you prevent too big to fail, while also not allowing the feds to come in and break up a company because it is getting too big?
ask the economists, TARP is being viewed as a success – allowing virtually all the investments banks to collapse, bringing the large consumer banks with it, would have caused a global financial collapse unseen before in history.
The unregulated derivatives market allowed GS to let Paulson pick and choose bad CDO lots, and GS then packaged them for sale, knowing that Paulson hand picked those lots so that he could short them. If it were a normal security, they would have had to disclose that information (that is why GS is being investigated – it colluded to sell a slanted product)
Regulation, yeah, I do not like regulations – but regulations bring us:
cleaner fuel emissions
seat belts
air bags
child safety seats
clean restaurants
drinking water
FDIC
so, to the No Regulations folks, careful of what you ask for – some regulations are good, but how to get to the right balance is hard.
TARP was to help nudge credit not turn it into a free flowing river. Economics and people who deal in the financial sectors pretty much agree it did what it was supposed to do and it also made some money. Obviously I am not in the position to evaluate it.
I agree Elena, Needs to Know’s post was excellent.
Pat, I am not sure Paulson is a bad guy at all. He is fairly well respected in government and on Wall Street and all places in between.
Marin, your financial evaluation just doesn’t jive with anyone else’s. Not sure what you are basing it on, but …(whispering) change directions please.
Moon – I think Pat.Herve is referring to John Paulson (no relation to former Treasury Secretary Henry Paulson). John Paulson runs a hedge fund and is the guy with whom Goldman Sachs worked to create a bundle of s****y mortgages that he could bet against. (I’m usually offended by bad language but feel that Sen. Levin’s remarks yesterday were wholly appropriate under the circumstances.) John Paulson is a crook and no more deserving of respect than Fab Fab.
I doubt any of my questions will be responded to but I wanted to share along an email I sent to Senators Webb and Warner WRT finance reform and specifically the Volcker Rule. I still think the idea of reform is bull chips and no one has provided a good reason or anything resembling a good idea out of the current Dodd bill, but I leave it to any reader to make up there own mind.
As a USAA member, I am very concerned about a provision in the Restoring American Financial Stability Act of 2010 (S. 3217) that could harm USAA, which provides financial services to more than 7 million military personnel and their families. The Volcker Rule provision could cause significant disruptions to USAA’s business if passed.
Life in and after the military can be challenging and complicated, and USAA eases these challenges by offering affordable products and services tailored to the military community. However, the Volcker Rule in the Senate bill now being considered could dramatically change the way USAA operates and limit its ability to offer these products.
Please amend S. 3217 so that the Volcker Rule does not limit USAA’s ability to serve the military community. I can assure you USAA is not like the other banks that brought down the economy or took TARP funds. I can count on USAA to look out for my interests, and as your constituent, I hope I can count on you.
If you are a USAA member, I’d also encourage you to send along the same email to your Senators.
marinm – How does the reform bill harm USAA’s ability to serve military personnel? FYI – USAA is a private company and not part of the armed services. Their target market is the military but their funds and other investments have some of the highest fees and worst performance in the industry. Vanguard, iShares and others are much better and don’t try to make people think they are performing some public-spirited mission for our men and women in uniform.
Well stated and deserves to be repeated.
But I’ll go one step further. We Americans also need to accept some responsibility for our spendthrift ways as well. We could be the next Greece.
Because, NTK, USAA is both a bank and an insurance company. It stands to be regulated under the new Dodd rules even though it didn’t take TARP funds and didn’t do anything wrong.
The essence of what I’ve said above is we’re screwing over people that didn’t do anything wrong because we think something needs to be done. You aren’t thinking about the consequences of what your asking to be done.
To Starry, I’ll repeat my above. Are you OK with telling lower- and middle class Americans that they’re screwed for getting credit so that we can continue to provide the top 1% what they want in this bill.
Has anyone here read the Dodd bill? And, understand it?
I looked at the USAA web site since marinm’s #21 post. USAA’s CEO is urging their customers to oppose the Volcker Rule. Interestingly, many USAA customers are urging the CEO to can his opposition and support reform in the thread that follows the CEO’s post.
The Volcker Rule, in short, will apply to all banks (USAA has bank status so it will apply to them) and restrict their ability to make speculative investments (including derivatives) and prohibit investments in hedge and private equity funds. Duhhhhhhh – those activities were a major part of how we got into this financial mess. The Volcker Rule attempts to restore some of the sanity in the banking system that was lost when Glass-Steagall was repealed in 1999 and would be a first step in restoring the barrier between banking and more speculative finance.
The argument against the Volcker Rule from USAA and others is that they were not the cause of the financial meltdown and shouldn’t be punished because of the actions of others. I’ve never driven while intoxicated nor caused a traffic accident but don’t feel penalized because a law is there because others have done so in the past. In fact, I feel much more secure because of the existence of drunk-driving laws.
Moreover, risky investments are fine. Risk is a large part of what drives our economic growth and innovation. Just don’t do it with grandma’s savings account and your employer’s deposit that has everyone’s paychecks in it. Separate banking and speculative finance as was the case from the time Congress passed Glass-Steagall under FDR until 1999!!!!!!!!
By the way, Paul Volcker has served Republicans and Democrats. President Carter nominated him Federal Reserve Chair and President Reagan renominated him for a second term. His management of the Federal Reserve was a major factor in taming the inflation of the 1970s and putting the U.S. back on a sound economic footing in the 1980s. He now has the trust of and is advising President Obama. Isn’t he exactly the sort of person we want helping figure out how to clean up this mess?
“In fact, I feel much more secure because of the existence of drunk-driving laws.”
How exactly do you feel more secure? Do you feel more secure up until the crunch when a drunk driver hits you? Laws exist both as warnings and penalties against an action, but they don’t insure that someone won’t ever violate them and injure another party.
We had laws against murder. Doesn’t mean it doesn’t happen, right?
Why not use existing fraud laws? Why do we need to create new laws, new regulations, new rules? Why do we need more government when existing govt failed.
So, we have the same issue WRT home mortgages. Those that did right and pay there mortgages are being injured by those that failed to pay those mortgages, those that sold them the mortgages and those that bought those mortgages in a bundle. We penalize the little guy that did everything right on the hope that we’ll squash the others ‘next’ time.
I just don’t get it. How will this law help me as the little guy?
marinm – Sounds like you support repealing laws against drunk-driving, murder, etc. because those crimes occur with or without the laws. I feel more secure knowing that fewer people will drive drunk because of the law and those who do will be punished. Similarly, I would feel better knowing that banks (including the banking arm of USAA) can’t take anyone’s money to a casino that pays them when they win and uses my tax dollars to bail them out when they lose.
Actually, the Volcker Rule is not a new law. It’s an attempt to restore part of one of the Depression-era laws (Glass-Steagall) that helped avert the sort of financial crisis we suffered in 2008 for over 60 years.
I’m going to support sensible laws and regulations that protect everyone, especially the little guy, regardless of the Party occupying the White House. Pardon me if I don’t join your anarchist’s club.
Thanks, Need. I did think he meant Hank Paulson who was former CEO of GS.
NTK, no reason to call me an anarchist because you and I differ. I did not call you a name nor do I expect to be called a name – it takes away from your point when you attack the person and not the points.
I take issue with your use of the word ‘secure’. Because, a law doesn’t ‘secure’ you. You may still be injured because someone ignored that law and drove drunk. You might be injured if someone decides to contaminate water with a toxin or chemical. Saying that a law will keep you 100% protected is not in my opinion a smart thing.
In addition, the legislation allows for the take over and ‘controlled’ use of taxpayer funds for bailouts. Why would we want that as taxpayers? I *want* companies like AIG and BoA to fail. There has to be a consequence for screwing up. This legislation doesn’t provide for negative consequences. Why/how can a company be too big to fail? This has ‘moral hazard’ written all over it.
So, let me re-phrase my entire arguement. If I’m just a bump on a pickle and don’t have any clue of financial reform or the problems in the credit and equity markets… Sell this to me. How is this a good thing for ME as a consumer? How is this legislation good for a middle class taxpayer?
Not that I am encouraging name calling but I am not sure I see much difference in calling someone a socialist, a capitalist, or a anarchist other than the degree of personal repugnance to each of us.
On the other hand, I sure don’t like being called a socialist and I have never been called an anarchist either. marin, what do feel we should call you if we had to put a label on you? I am a great believer in people getting to define themselves.
marinm – I certainly meant no harm and apologize if you took offense, but Moon’s question is a good one. How do you define yourself? You’ve written that you don’t think laws prohibiting drunk driving and murder have done any good. You oppose government regulation of the financial markets. My reference to anarchism was not intended as an insult directed at you but merely a conclusion drawn from your comments. Anarchists don’t believe in government, or that government has any positive role.
I define myself as a Reagan conservative. That means that I believe in having the least government necessary to keep the economy and society functioning while infringing as little as possible on personal freedoms. In the case of financial regulations, I want the government involved to prevent oligopolistic financial corporations from cheating me or restricting my freedoms. In cases such as this where we do not have a free, competitive market, government intervention is essential. I don’t think President Reagan would have approved of allowing these firms to run roughshod over our citizens.
I’ve been a Republican all my life, and campaigned for Reagan in both the 70s and 80s. Neither my views nor my philosophy have changed. I’m quite distressed these days that when I support ideas put forward by a Reagan nominee (Paul Volcker) or advocate other ideas completely consistent with what Ronald Reagan would have thought I’m considered in some quarters as a liberal.
Some have reacted to the movement to the fringes by many in both Parties by becoming independent. I can’t bring myself to abandon the Party of Abraham Lincoln, Teddy Roosevelt and Ronald Reagan. I think I can do more good by staying there and trying to help bring it back to its roots. That might mean voting for a Democrat or independent on occasion when they are the better candidate, however (maybe the BOCS election next year?)
I think rather than worrying about labels that the debate itself is important. In this entire thread I’ve challanged the notion that reform is needed. Not once have I been debated on that point. To the average middle class taxpayer this reform package will only increase taxes, lower interest profits from investments (and in some ways limit what the average joe can invest in) and generally be legislation that’ll impact the middle of the road tax payer negatively.
To your question, I believe in a limited federal government with state governments taking more on there plate. I didn’t say that I oppose govt regulation simply that I oppose any increases in it. Do I think the SEC has a place at the table? Sure. Do I think we need a new financial regulatory clearinghouse? No.
If we’re going to regulate we have to be smart on how we’re doing it and what we’re asking to be done. And, we need to be able to communicate that down to the average joe that’ll be affected by this. Again, I see a lot of blind faith on this plan but not a lot of details on this thread.
You gave me a small chuckle when you mentioned oligopolistic financial corporations. We support 1 federal government with no competition and have no issue but a few banks suddenly makes it a cesspool. That government usually enchances, guards or ‘regulates’ that cesspool is overlooked.
To be clear, I have no issue with government regulating and charging cases of fraud (even when govt assists in that fraud). It appears we disagree on the extent of involvement and the role of govt as that regulator.
If you don’t define yourself, then others will. You were given the chance.
There is nothing to debate. You say we don’t need regulation and reform and the rest of us say we do. Various fiduiary rules need to be put in place to avoid some of the pitfalls that led us to the crash of 2008. We do, we don’t is just not productive.
I always go back to the buffalo. I believe it is human nature, at least in western culture to squander things because they are there. Perhaps it is a form of greed. Look what happened to the buffalo on the plains. In less than a century we went from millions and millions of majestic beasts roaming the great plains…down to near extinction.
Why were they killed? 2 reasons: They were there and someone made a profit.
I guess call me whatever you wish. Seems name calling is allowed on this blog.
I have put out that the empreror wears no clothes and have not yet been challanged on that point. I think anyone that reads can take what they will from this thread.
marinm – I give up. We’ve discussed at length the need to separate banking from speculative finance, lack of competition in the industry, etc., etc., etc. and you continue to claim that no one addresses your point. The other posters and I have provided a wealth of reasons and a solid case as to why the regulation is important. Just go back to your talking points from USAA and the rest of us will continue the discussion. I feel like Sen. Levin at the hearings with the Goldman Sachs guys this week.
Agreed, NTK.