Monday, June 20, 2016

822 Only Bernie Sanders can rein in the Banks. And he will Ban Fracking

Only Bernie Sanders can rein in the Banks. And he will Ban Fracking

Newsletter published on 17 April 2016

(1) Only Bernie Sanders can rein in the Banks - Asher Edelman
(2) Sanders right about the Banks, they should be broken up - Matt Tabbibi
(3) Sanders will Ban Fracking. Hillary ‘Sold Fracking to the World’

(1) Only Bernie Sanders can rein in the Banks - Asher Edelman

http://www.theguardian.com/commentisfree/2016/apr/12/real-life-gordon-gekko-supports-bernie-sanders-wall-street-banks-regulation

  I'm the real-life Gordon Gekko and I support Bernie Sanders

Asher Edelman

The potential for a depression looms on the horizon. The Vermont senator
is the only candidate who can stop banks from spiraling out of control again

Tuesday 12 April 2016 21.30 AEST Last modified on Saturday 16 April 2016
06.36 AEST

Banking is the least understood, and possibly most lethal, of all the
myriad issues at stake in this election. No candidate other than Bernie
Sanders is capable of taking the steps necessary to protect the American
people from a repeat of the recent debacle that plunged the nation into
a recession from which we have not recovered.

The potential for a depression looms heavily on the horizon. As a
trained economist who has spent more than 20 years on Wall Street – and
one of the models for Gordon Gekko’s character – I know the financial
system is in urgent need of regulation and responsibility. Yet Hillary
Clinton is beholden to the banks for their largesse in funding her
campaign and lining her pockets. The likelihood of any Republican
candidate taking on this key issue is not even worthy of discussion.

The recession of 2007-2016, and the persistent transfer of wealth from
the 80% to the 1% is, mostly the result of banking irresponsibility
precipitated by the repeal of the Glass-Steagall Act in 1999. The law
separated commercial banking (responsible for gathering and
conservatively lending out funds) from investment banking (more
speculative activities).

A new culture emerged that rewarded bankers for return on equity rather
than sound lending practices. The wild west of risk-taking, staked on
depositors’ money, became the best sport in town. Why not? If management
won, they got rich. When they lost, the taxpayer took on the
responsibility. If that sounds like a good wager, it was (and is). I
worked on Wall Street. I am skeptical Hillary Clinton will rein it in
Chris Arnade Read more

The only problem is what happens when the music ends. Debt-to-capital
ratios for investment banking functions rose from 12:1 to 30:1. Options
on derivatives on other derivatives increased that leverage many fold.
Self-regulation became the rule and, lo and behold, in 2008: crash.
America and the world were nailed by a fastball from which the bottom
80% of the American population has yet to recover.

Remarkably, today the derivatives positions held by the large banks
approach 10 times those of 2007-2008. In four banks alone, they exceed
the GDP of the entire world. This is the interesting consequence when
unchecked risk management rests in bankers’ hands.

When Clinton repealed Glass-Steagall, it was the culmination of the
largest ever lobbying effort by the banking community to that date,
$300m spent to convince Congress that Clinton, aided by Robert Rubin (US
treasurer, previously with Goldman Sachs) and Alan Greenspan, a Milton
Friedman-style supply-side economist, that the restraints on speculation
should be removed. The banking community’s gratitude was and is
unending. Who can blame them?

Wait, there’s more. After the collapse of 2008, the Federal Reserve
invested more than $15tn to save the banks under the guise of monetary
stimulation. At the same time, little or no funds were channeled to the
needs of the American people. Yet today we face another crisis of
liquidity. This time Europe will break first, followed by their highly
leveraged US colleagues. Meanwhile, the bottom 80% of Americans remain
mired in a recession, having seen no increase in their incomes during
the last 20 years.

Poverty is at its highest level since the 1930s (in some areas of the
country, higher). More than 30% of all children live with families
subsisting below the poverty level. Employment is at a new all-time low
(the percentage of employed persons is at about 49%, having been at more
than 52% prior to 2008).

The average American is entitled to more. Only Bernie Sanders is
committed to honest solutions to these problems. The way to avert the
next banking crisis is the most clear. Assuming a Republican Congress,
which would prevent the reinstatement of Glass-Steagall, Bernie has only
to turn to regulation and responsibility.

Dodd-Frank provides the necessary structure with which to begin. Enforce
it. Put teeth into bank regulation. Determine the acceptable level of
risk at which banks can operate. Make management, not underlings or
stockholders, responsible for violating the law. Encourage the Justice
Department to be clear in seeking appropriate penalties for financial
crimes in large institutions, not by fines alone but by the prosecution
of those executives responsible.

Split up the banks that are speculating with depositor and government
funds. Investment banks are supposed to risk investors’ money but
commercial banks should return to lending fairly and carefully to help
create a foundation for future growth. Bernie Sanders is the only
independent candidate who escapes the malaise of being bought. He is
paid for by the people and represents their interests. And you can take
that to the bank.

(2) Sanders right about the Banks, they should be broken up - Matt Tabbibi

http://www.rollingstone.com/politics/news/why-the-banks-should-be-broken-up-20160408

Why the Banks Should Be Broken Up

Bernie or no Bernie, 'Times' columnist Paul Krugman is wrong about the banks

BY MATT TAIBBI  April 8, 2016

Paul Krugman wrote an op-ed in the New York Times today called "Sanders
Over the Edge." He's been doing a lot of shovel work for the Hillary
Clinton campaign lately, which is his right of course. The piece
eventually devolves into a criticism of the character of Bernie Sanders,
but it's his take on the causes of the '08 crash that really raises an
eyebrow.

By way of making a criticism of the oft-repeated Sanders charge that the
big banks need to be broken up, Krugman argues that banks were not "at
the heart of the crisis."

This is Krugman's assessment of who was responsible:

"Predatory lending was largely carried out by smaller, non-Wall Street
institutions like Countrywide Financial; the crisis itself was centered
not on big banks but on 'shadow banks' like Lehman Brothers that weren't
necessarily that big."

Forget about the Sanders-Clinton race, because it's irrelevant to the
issue. Krugman is just wrong about this.

The root problem of the '08 crisis lay in a broad criminal fraud scheme
in the mortgage markets. Real-estate agents fanned out into middle- and
low-income neighborhoods in huge numbers and coaxed as many people as
possible into loans, whether they could afford them or not.

Those loans in turn were bought up by giant financial companies on Wall
Street, who chopped them up into a kind of mortgage hamburger. Out of
this hamburger, they made securities. These securities were then sold to
institutional investors like pension funds, unions, insurance companies
and hedge funds.

In the typical scenario, the investors buying these toxic mortgage
securities weren't told how risky the merchandise was. Many thought they
were investing in AAA-rated real estate, when in fact they were buying
up the flimsy home loans of part-time janitors, manicurists, strawberry
pickers, people without ID or immigration status, and so on.

There were two major classes of victims in this scheme: homeowners and
investors. About five million people went into foreclosure after the
crash, and investor losses globally ran into the trillions. It was an
unparalleled event in the annals of white-collar crime.

Virtually the entire financial industry had a hand in this. The ratings
agencies were complicit because they blessed a lot of these mortgage
securities with high ratings when they knew they didn't deserve them.
Companies like AIG had a role because they created a kind of
pseudo-insurance for these mortgage securities that disguised the risk
they posed.

And Krugman is right that companies like Countrywide and First Century,
the sleazy "mortgage originators" who sent teams of over-caffeinated
real-estate hustlers into neighborhoods offering crooked loans, were
primarily responsible for a lot of the street-level predatory lending.

But Krugman neglects to mention the crucial role that big banks played.

The typical arc of this scam went as follows: Giant bank lends money to
sleazy mortgage originator, mortgage originator makes lots of dicey home
loans, the dicey home loans get sold back to the bank, the bank pools
and securitizes the loans, and finally the bank sells the bad
merchandise off to an unsuspecting investor.

The criminal scenario that was most common was a gigantic bank buying up
huge masses of toxic loans from a Countrywide or some other fly-by-night
operation and knowingly selling this crap as a good investment to some
investor.

We chronicled an example of this in "The $9 Billion Witness," the story
of JP Morgan Chase whistleblower Alayne Fleischmann, who lost her job
after trying to stop the bank from selling a parcel of bad mortgages. JP
Morgan Chase ended up saddled with a $13 billion settlement after it
admitted to making "serious misrepresentations" to mortgage investors.

What's so baffling about Krugman's column is that there is a massive
amount of documentary evidence outlining this behavior, committed by
virtually every major bank in America. There was a $7 billion settlement
paid by Citigroup, which incidentally is the company that Bill Clinton
originally repealed the Glass-Steagall Act to create. Citi admitted to
hawking merchandise that violated their own internal credit guidelines.

Citi also bilked investors out of huge sums, and we know a great deal
about its behavior because it too had a whistleblower, named Richard
Bowen. Bowen sent the SEC over 1,000 pages documenting "fraud and false
representations given to investors."

There were virtually identical billion-dollar settlements involving Bank
of America, Goldman Sachs (which is now a bank holding company,
remember) and Morgan Stanley (ditto).

Wells Fargo's settlement is another blunt repudiation of Krugman's
point, because in the case of Wells, the bank itself was engaging in
predatory lending at the street level, not just selling crappy mortgages
to investors.

Wells had to pay $175 million to settle charges of overcharging 4,000
minority homeowners in a case that saw evidence come out that the bank
specifically targeted black customers (referred to in one office as "mud
people") for "ghetto loans."

Let's not forget also that not only were the big banks intimately
involved in the signature fraud of the era — the creation and
repackaging of toxic mortgage loans — they were also involved in
wide-ranging foreclosure abuses.

Companies like Bank of America, Citi, Wells Fargo and Chase ended up
being stuck with an additional $25 billion settlement just for the
tawdry document-fudging "robosigning" scheme that helped accelerate the
foreclosure crisis.   David Paul Morris/Bloomberg/Getty

And did Krugman miss the other headlines from this era? Did he miss HSBC
being nailed for laundering hundreds of millions of dollars for Central
and South American drug cartels? How about the money-laundering scandals
involving Chase, the British Bank Standard Chartered, the German
Commerzbank AG and others, in which banks washed cash for crooks and
rogue states?

And did he miss the LIBOR rate-rigging scandal that forced the likes of
Barclays, UBS, Rabobank, the Royal Bank of Scotland, and Deutsche Bank
to pay massive settlements for manipulating interest rates? How about
the Forex manipulations that led to still more settlements for the likes
of Goldman, BNP Paribas, HSBC and Barclays?

Krugman would likely argue that all those little things like laundering
money for narco-terrorists, monkeying with world interest rates, and
systematic cheating in the currency markets had nothing to do with the
crash.

He would technically be correct in this. But the entire argument for
breaking up the banks, which incidentally didn't originate in the Senate
with Bernie Sanders or even Elizabeth Warren but with Ohio's Sherrod
Brown and then-Delaware Sen. Ted Kaufman, was conceived with the idea
that leaving over-large banks intact invited not only the potential for
future bailouts, but future regulatory problems.

As MIT economist Simon Johnson pointed out in 2010, these institutions
have become so big that they can confront and defy the government.
Moreover the failure to punish the banks for the great mortgage frauds
of the crisis years left all of these companies with the knowledge that
the authorities were afraid to aggressively enforce the law, for fear of
disrupting a fragile economy.

When UBS and HSBC escaped with slap-on-the-wrist settlements for the
LIBOR and money-laundering offenses, respectively, Sherrod Brown
redoubled his efforts to break up the banks, insisting that these
episodes proved these companies were now too big to be regulated. By
2013, Brown said, it was clear that "these megabanks are out of control."

The call to break up the banks is not some socialist clarion call to end
capitalism. (Well, it might be from Bernie, but not from everyone.)

In fact, it's just the opposite. The lessons of the crash era are that
these megabanks have grown beyond the organic controls of capitalism.
They were so big and so systemically important in '08 that the
government could not let them go out of business.

This alone was an argument for breaking them up. The banks emerged from
'08 with the implicit backing of the federal government. They became
quasi-state entities, almost immune to failure. Not just Bernie Sanders
worried about this. Voices as diverse as Louisiana Republican David
Vitter and Krugman's own New York Times editorial board have argued for
hard caps on bank size.

What's happened in more recent years, with LIBOR and the
money-laundering scandals and Forex and the London Whale episode and so
on, is that these firms also proved too "systemically important" to
regulate and prosecute. They grew too big not only for capitalism, but
for criminal law.

When a company is not only too big to fail, but too big to prosecute,
it's too big to exist. Krugman may believe otherwise, but he shouldn't
pretend that others – including his own paper – don't have legitimate
concerns.

(3) Sanders will Ban Fracking. Hillary ‘Sold Fracking to the World’

http://www.huffingtonpost.com/h-a-goodman/bernie-sanders-will-ban-fracking-_b_9156182.html

Bernie Sanders Will Ban Fracking. Hillary Clinton ‘Sold Fracking to the
World’

by H. A. Goodman

02/04/2016 09:18 am ET | Updated Feb 04, 2016

Nothing illustrates the primary difference between Bernie Sanders and
Hillary Clinton better than the following Huffington Post article by
Brad Johnson titled On Eve of Caucuses, Clinton Rakes in Fracking Cash:

     Less than a week before the Iowa caucuses, Hillary Clinton attended
a gala fundraiser in Philadelphia at the headquarters of Franklin Square
Capital Partners, a major investor in the fossil-fuel industry,
particularly domestic fracking. The controversial fracking industry is
particularly powerful in Pennsylvania, which will host the Democratic
National Convention this July.

     Clinton has avoided taking any clear stand on fracking...

     The pro-Clinton Super PAC Correct the Record, run by David Brock,
touts Clinton’s aggressive pro-fracking record.

Clinton’s brazen acceptance of funding from interests promoting
fracking, and all the hazards that result from fracking, speaks volumes.
 From an environmentalist’s perspective, this is the equivalent of
Hillary Clinton’s prison lobbyist donors.

Bernie Sanders never accepted money from corporations involved in
fracking, and certainly never accepted money from prison lobbyists. His
challenger, on the other hand, is linked to oil and gas contributions
that span across the globe. According to Reuters, "the Wall Street
Journal reported that the Bill, Hillary and Chelsea Clinton Foundation
and the Clinton Global Initiative have accepted large donations from
major energy companies Exxon Mobil and Chevron." Clinton’s foundations
also accepted money from an office of the Canadian government linked to
promoting Keystone XL.

For some reason, many Democrats overlook the fact that Clinton promises
to uphold a progressive value system, while simultaneously accepting
donations from corporations and governments working to undermine these
principles.

When evaluating a future president, voters must look towards the
candidate’s value system. Nothing exemplifies the value system possessed
by Bernie Sanders better than his desire to ban fracking. His plan to
save America from the scourge of fracking is illustrated in a Washington
Post piece titled Bernie Sanders puts forward ambitious plan to combat
climate change:

     Among other things, Sanders would ban Arctic oil drilling, ban
offshore oil drilling, ban fracking for natural gas, stop exports of
liquefied natural gas and crude oil and put a moratorium on nuclear
power plant license renewals in the United States.

     Sanders also proposes hefty investments in several clean energy
sources, including solar. He seeks to increase fuel economy standards
for automobiles, build electric vehicle charging stations, invest in a
"state-of-the-art" rail system and make U.S. cities more walkable.

If this sounds like a dream candidate, that’s because Sanders is a once
in a lifetime politician. You won’t find many leading political figures
who openly advocate that America bans fracking.

In contrast, his challenger for the Democratic nomination once "sold"
the concept of fracking to other countries. Clinton’s affinity for this
dangerous form of fossil fuel extraction is highlighted in a Mother
Jones piece titled How Hillary Clinton’s State Department Sold Fracking
to the World:

     Clinton urged Bulgarian officials to give fracking another chance...

     Under her leadership, the State Department worked closely with
energy companies to spread fracking around the globe — part of a broader
push to fight climate change, boost global energy supply, and undercut
the power of adversaries such as Russia that use their energy resources
as a cudgel.

     But environmental groups fear that exporting fracking, which has
been linked to drinking-water contamination and earthquakes at home,
could wreak havoc in countries with scant environmental regulation.

If this sounds like the antithesis of Bernie Sanders, that’s because
Hillary Clinton is the antithesis of Sanders on fracking, and many other
issues. Furthermore, exporting the dangers of fracking around the globe
undermines the efforts of environmental groups in those regions.

Another major difference between Clinton and Sanders on this topic is
evaluated in a brilliant piece by Michael Sainato in The Huffington Post
titled Hillary Clinton Touted Fracking Across the Globe, and Only Bernie
Sanders Can Be Trusted to Save Us From It:

     When it comes to the environment, Senator Bernie Sanders has a much
more extensive, honest, and clear record than Hillary Clinton. Any voter
who has a penchant for environmentalism in any capacity should take
these stark contrasts into consideration when debating between
supporting Hillary Clinton or Bernie Sanders.

In 2016, the choice is clear for voters longing to fix structural
issues, not just listen to lofty rhetoric about tackling climate change.
Because of fracking, Oklahoma experiences more earthquakes than anywhere
else in the world. Newsweek writes that Fracking Wells Tainting Drinking
Water in Texas and Pennsylvania, Study Finds. As for flammable water,
Time has a video titled Flaming Faucets: When Fracking Goes Wrong.

Ultimately, the difference between Bernie Sanders and Clinton involves a
grandiose difference in urgency between both candidates. Sanders wants
to transition the U.S. from a perpetual consumer of fossil fuels, into
an innovator in cleaner energy. His goal is to ban fracking; end of story.

With Hillary Clinton, not only will she accept money from oil, gas, and
coal companies (unlike Sanders), but Clinton will accept money from
virtually any corporation. The money trail speaks volumes, especially
when Mother Jones writes that one environmental activist told Clinton,
"I’m disappointed about the answer you gave to climate change... I’m
wondering if your answer... is due to contributions from the fossil fuel
industry to your campaign." ...


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