Saturday, April 05, 2008

Who's To Blame

These ain't all, there's more....
This week, the Iraq war claimed its 4,000th American killed in action, but that sad and tragic milestone came as the war seems to have slipped off the evening news, off the front pages and from the minds of the American people.

I suppose this benign neglect of so important and damaging an event is combat fatigue on the part of the public. No doubt the White House is happy to see Iraq shoved to a back burner, just as all three presidential candidates are relieved to talk about something else, anything else, but their half-baked ideas about the war.

Shame on them, and shame on us, for such callous indifference to the service, sacrifice and suffering of the families of the dead, wounded and injured troops who've given so much for so little in return.

Vice President Cheney again stuck both feet in his mouth by saying and then repeating that we should remember that our military is composed entirely of volunteers; that our troops all volunteered for this duty, this burden, this sacrifice.

What's your point, Mr. Vice President? That because they volunteered to serve our country in uniform it’s okay to squander their lives in a war of choice, your choice and your president’s, and that it somehow matters less than if they'd been dragooned into service by press gangs or a draft like the one you dodged with five deferments during the Vietnam War because, you said, you had “better things to do”?

The 58,249 Americans who were killed in the war of your youth had better things to do than rest under their white marble, government-issue tombstones. I’m certain, too, that the 4,000 Americans who've died in the war that you and President Bush launched five years ago for no good reason and several that weren't true had better things to do than die under your command.

No sooner did you and your boss begin celebrating “victory” in the surge in Iraq than new problems erupted in one of the most critical parts of the country, the southern Shiite Muslim city of Basra and nearby oilfields and ports.

Iraq government soldiers are fighting it out with the Mahdi Army of radical Shiite cleric Muqtada al Sadr for control of Basra, and the truce that's helped keep a fragile peace in Baghdad’s toughest neighborhoods began to unravel. Sadr’s militiamen rained mortars and rockets on the Green Zone — the headquarters of the Iraqi government and American diplomats and military commanders — as a pointed reminder of who still holds some good cards in this game.

Sadr turned off his murderous militia for reasons of his own last August, and casualty figures for American forces began falling sharply because Shiite militias were responsible for as much as 65 percent of U.S. casualties. If Sadr now turns his war back on, our casualty figures could rise as swiftly as they fell.

We'll get a good idea from the fighting in Basra about how strong the American-trained Iraqi Army really is as it goes up against Sadr’s militiamen. The Iraqi police — American-trained but heavily infiltrated by another militia, the Iranian-backed Badr Organization — ran for their lives early in the fighting.

By the time the U.S. commander in Iraq, Army Gen. David Petraeus, arrives in Washington during the second week of April to report to the president and the Congress on the achievements of the surge, he may have less good news to report.

But none of this makes a damn bit of difference if most Americans don’t care and don’t want to know anything, good or bad, about Iraq, the war and our troops.

That's the sort of apathy and know-nothingness that elected and then re-elected Mr. Bush and Mr. Cheney. They're what happens when fewer than half the eligible voters in this great experiment in democracy and freedom even care enough to vote on Election Day.

Meantime, our volunteer troops — who comprise about one-half of 1 percent of our population of 300 million — soldier on, bearing the burden and making all the sacrifices on behalf of all the rest of us.

The war that Americans don’t want to know about drags on because its authors don’t care what you think or even if you think. In fact, they'd prefer that you didn’t think or ask any pesky questions that they can’t answer without lying.

Exciting New Parlor Game: What's Next? Inflation Or Recession?


Of course, stagflation is a possibility too, now more than (historically) ever....

A Gitmo Martyr

Someone who remembers what this country is supposed to be about. Link.

17 Year Old Prediction Of Current Banking Crisis

First, a little "Forbesian" perspective: In those seventeen years, how much wealth was created? And is surviving the current crisis? And, just for a little moral balance, how did all that wealth creation help make the world better? These are, I'm kind of sorry to say, better questions than one might think. And not as clear as one might think. The questions then segue into What ifs.... Did the banks freedom to be reckless create a flow of global wealth and investment that would not have happened otherwise? Or did it actually hamper global growth by moving resources away?

Too much for me to figure out. I have no answers....

From the wayback machine and 1991....
September 13, 1991

Hearing Before
Subcommittee on Telecommunications and Finance
Committee on Energy and Commerce
102nd Congress
A bill to Amend the Federal Securities Laws to Equalize the Regulatory Treatment of Participants in the Securities Industry


Co-Authors, INSIDE JOB: The Looting of America's Savings and Loans

Distinguished members of the committee:

Keeping bank deregulation from becoming a replay of thrift deregulation and the carnage that followed is one of the most serious challenges facing this Congress. Echoing, almost to a word, the pleas of thrift industry lobbyists 10 years ago, bankers and their lobbyists are pushing Congress hard for bank deregulation:

In 1981 savings and loans were clamoring for deregulation because, they said, they couldn't make a profit making home loans. They needed to be able to diversify, to get into ventures that

offered the promise of a higher return. Competition from money market funds, they said, was killing them. (Note: Many healthy S&Ls opposed that deregulation.)

Now, almost exactly a decade later the nation's big banks are clamoring for their own deregulation because, they too claim, they can't make a profit making commercial and consumer loans. They say they need to diversify, to get into ventures that offer the promise of higher returns. Competition from investment banks, financial conglomerates and international banks, they say, is killing them. (Note: Many independent community banks are opposing this deregulation.)

Commercial Banking vs. Investment Banking:

High on bankers' list of wants is the dismantling of the Glass- Steagall Act, which was passed in 1933 because many of the bank failures following the market crash in 1929 were caused by risky transactions conducted between banks and their securities affiliates. The Glass-Steagall Act removed banks from Wall street and, to entice a gun shy public back to banks, it created federal deposit insurance. (Bankers today want only one of these Glass-Steagall provisions retained .These would-be speculators still want deposit insurance. Free enterprise and level playing fields is one thing, but removing their federally-backed insurance safety net is quite another.)

If Congress again opens up banking to Wall Street speculation, as it opened up S&Ls and banks to real estate speculation, regulators will quickly lose control over the complex series of events that a pervasive marketplace will immediately set in motion. Insider abuse, self-dealing, and back scratching relationships between institutions will run rampant.

While speculators play an important role in a free market economy, their instincts and perspectives are exactly the opposite of those we want in our bankers. Wall Street investment bankers are to commercial bankers what fighter pilots are to airline pilots. One takes risks, the other avoids them. Investment bankers put their investors' money at total risk. On this high wire, there is no collateral and no federal insurance net below. An unlucky investor can take a plunge - not only to the floor but right through it, in some cases losing far more than just the money he invested. This is the world that commercial bankers want to re-enter.

And the Bush administration wants to accommodate this wish, hoping the repeal of the Glass-Steagall Act will attract new money to the banking industry, so the government won't have to recapitalize failing banks itself. Treasury Secretary Nicholas Brady is almost giddy over the prospect of merging banks and Wall Street. It makes sense, he says, because investment banking shares a "natural synergy" with commercial banking.

Sound familiar? The same argument was used a decade ago when savings and loans wanted to get into the construction and development business. Developers needed loans - thrifts made loans. Bingo. Natural synergy. Regulations prohibiting such joint ventures were abolished, and sure enough private capital poured into the thrift industry as developers bought thrifts and thrifts acquired their own construction companies.

"My God! This is what I've been waiting for all my life!" gasped the owner of (now defunct) San Marino Savings and Loan.

Almost immediately the predictable happened. The historical arms-length relationship that had existed between lender and borrower vanished, and with it went due diligence, common sense and, in too many cases, ethics. Thanks to facilitating that bit of synergy the taxpayer is stuck with $300 billion dollars worth of repossessed real estate from failed thrifts. If we sold $1 million worth of this stuff a day, it would take 3OO years to sell it all.

Deregulated banks can look forward to a similar script, with some of the same bad actors. U.S. Attorney Joe Cage in Shreveport,Louisiana, told us, "Some of the same people who took down savings and loans, are out in the securities business and banking now, already in place. And they're just waiting for Congress to abolish the Glass-Steagall Act. If that happens I'm afraid they'll take the banks just like they did the savings and loans."

Bankers want a piece of the insurance business as well. This idea was also tried by the S&Ls and proved just another way to loot the system. Many of the old S&L crowd - Gene Phillips, Charles Keating, Jr., Herman Beebe, Mike Milken - also had their hooks in insurance companies that have since failed: Pacific Standard Life, Executive Life, AMI Life, and a daisy chain of Texas insurance companies, to mention a few. An associate of a major S&L defaulter testified in court recently... "Wayne told me -that the S&Ls were tapped out and that we should find a new source for money. He told me we should consider getting into the insurance business."

Treasury wants corporate America to be able to own these banking securities-insurance conglomerates. But the benefits of corporate ownership and securities and insurance underwriting, would accrue primarily to (1) major companies that would like to have a bank (with its federally insured deposits) in their stables and to (2) bankers who have proven themselves so inept that they must have a huge infusion of private capital - from a new corporate owner - or a chance to "double down" on Wall Street in a desperate attempt to win big. A new breed of banker will use deposits to inflate the value of stock, extortion to sell insurance and investor's capital to benefit the bank or the bank's corporate ownership. Forget for a moment what bankers say they need and instead ask yourself if their customers, and your voters - taxpayers - need any of this;'

The big "money center" bankers argue that without deregulation American banks will not be able to compete with European banks after 1992, when the European Common Market will combine in a universal banking system with broad banking and securities powers. They also complain that they can't compete with the Japanese banks that are flooding U. S. markets. They pointedly note that no Am~rican bank ranks among the world's 10 largest banks.

So what? While European and Japanese banks appear more fragile every day, American regional and community banks grow stronger. Could that be why Japanese banks - widely believed to be under severe stress in spite of their happy-talk annual reports - are tapping into our regional markets? Why should Congress move in the direction of weakness instead of strength? If American mega-banks want to compete without restriction in the international arena, fine. Deregulate them, wish them well, withdraw their deposit insurance and let them have at it.

These bankers say they want a level playing field, so give it to them .. we halt the 50-year-old tradition of exempting foreign deposits from deposit insurance premiums. It's interesting that, though bankers are complaining about all the so-called "outdated" regulations which are impairing their profitability, they have somehow forgotten this particular one. How convenient this "outdated" regulation is for a bank like Bankers Trust - recently approved for securities underwriting by the Federal Reserve Board -
which has about twice as many foreign as domestic deposits.

Many smaller banks, primarily represented by the Independent Bankers Association of America, are bitterly fighting the big banks' deregulation agenda - and their reward for sounding the alarm is that they are seen on Capitol Hill as "whiners." Interesting. The healthy regional banks are whiners and the nearly insolvent tumor-like, mega-banks - bearing about them a legion of past mistakes like the chains around Ebenezzer' s dead business partner's ghost - are welcomed by Congress with open ears. It's most curious, and if this legislation passes, and results in another disaster, voters will want to know why.

Some banks sorry that other industries are encroaching on traditional banking services. American Express, for example, offers through its subsidiaries: depository services, real estate services, securities, credit cards, mutual funds, financial planning, investment banking, merchant banking, international banking, international currency transactions, insurance and data processing. What they do not offer are insured deposits and community lending.

vIe favor letting banks become financial service centers in their communities -selling insurance, stocks, bonds and mutual funds, offering financial planning services and in general meeting the financial needs of their customers. But, to do this, banks do not need the inevitable conflicts of interest inherent in corporate ownership or the enormous risks inherent in securities and insurance underwriting. What advantages occur to the American public by allowing banks into these fields? None-- 0


Bankers assure their critics that the potential dangers of corporate ownership and securities and insurance underwriting are moot issues because bankers will agree to impenetrable firewalls between their corporate, banking, securities and insurance affiliates. If the securities company gets into trouble, for example, firewalls will protect the bank's federally insured deposits - they claim. Apparently, through some magical osmosis that only works one way, Americans are asked to believe that banks will enjoy the benefits of having securities affiliates without ever being affected by their problems.

But even as pro-deregulation forces pay lip service to firewalls, they attack them. Federal Reserve Board chairman Alan Greenspan, v,ho has been leading the charge toward bank deregulation evidently undaunted by his doomed infatuation back in 1985 with S&L deregulation and Charles Keating, Jr. - cut to the heart of the firewalls matter when he admitted that firewalls "undercut the reason for granting any additional powers to banking organizations in the first place."

And this time Greenspan might just be right. Firewalls proved quite unreliable during the S&L debacle. In the 1980s, when a thrift's risky investments started going sour, regUlatory firewalls were easily breached. For example, thrift executives were forbidden by regUlations from making loans to themselves, their families, business associates or interests - a firewall. To get around this firewall, thrift management simply found like-minded management at other thrifts and each made loans to one another. So much for fire walls.

Our expensive S&L lessons should have taught Congress that if banks are allowed back into the securities business something like this would almost certainly occur the next time Wall Street crashes:

A bank's securities clients would suddenly be strapped for hundreds of millions of dollars to cover margin calls as programmed trading plunged the market to new depths.

- The bank's securities affiliate itself would be trying to support stocks it had underwritten and would need a big cash infusion fast.

So what do we have? We have a group of frantic, cash-starved players who own a bank but can't use its cash to bail themselves out of trouble. In this scenario it wouldn't take these desperate bankers long to figure out that a like-minded - and similarly strapped - bank holding company was just a phone call away. They eQuId quickly arrange millions in loans to each other and to each other's clients just like thrift officers did. In the flash of a wire transfer and a programmed trade, hundreds of millions of dollars, maybe billions, would go right down another federally-insured rat hole. They'd worry about dealing with irate regulators later.

Though these scenarios are simplified versions of what would no doubt be almost incomprehensibly complex transactions - to hide them from regulators - the fundamental point is this: A business in deep trouble, seeing a chance to make a killing, will use all the assets at its disposal (particularly those belonging to someone else), even federally insured ones, and will worry about the consequences later.

Banking consultant David Silver has studied the question of firewalls and has concluded, "History indicates that, while firewalls work in normal times, even strong firewalls are inadequate when they are needed most -- in times of fire."

Walter Wriston, former chairman of Citicorp, candidly admitted the futility of firewalls when he said, "Lawyers can say you have separation, but the marketplace is persuasive and it would not see it that way."

An historical look at one bank, Continental Illinois Bank & Trust Co. of Chicago, says reams about bank deregulation. In 1933 it was the first major bank in the country to be bailed out by the federal government as a result of the Great Depression. In 1984 the federal government bailed it out again, to the tune of $4.5 billion. Both times, according to FDIC chairman Irvine Sprague, the problems were the same:

"Concentration of assets, out-of-territory lending, pursuit of growth at any cost encourage institutions to go for the fast buck; a bigger bank means more compensation for its management." Prior to the second bailout, Continental had hooked up with the flim-flam crowd at Penn Square Bank in Oklahoma City, where wild speculation, insider abuse and fraud sucked the life from both Penn Square and Continental.

Did those two lessons teach Continental anything about prudence and risk? Apparently not. In 1987 when the stock market crashed Continental (still owned primarily by the federal government) was caught with its options down - which gave Continental an opportunity to show Americans how firewalls don't work. It made an emergency $385 million loan to its options trading subsidiary in spite of a firewall (regulation) that prohibited such a transaction. Reportedly, the bank was never censured by regulators because they agreed the loan was critical to Continental's survival - but they did require that Continental route the money to its holding company, to avoid a direct violation of the regulation against a bank making a loan to its own securities affiliate.

None of these concerns has deterred the Bush Administration and many on Capitol Hill from supporting a two-tiered hOlding company structure that is so ludicrous it must be a parody on bank deregulation. In these two-tiered New World conglomerates, commercial and industrial companies would own a Diversified Holding Company that would own a string of companies (engaged in real estate, insurance and various commercial enterprises). The Diversified Holding Company would also own a Financial Services Holding Company that would own a bank, a securities affiliate and other subsidiaries.

The Financial Services Holding Company and its subsidiaries would be "absolutely prohibited" from lending "upstream" to its parent Diversified Holding Company and subsidiaries, yet according to one
summary the structure "would permit non-banking firms to invest their significant resources in the capital deficient banking industry. " Why, one might ask, would they want to do that, if they can't use the bank's money? Maybe as a selfless act of public service?

How examiners might detect lending within that maze has not been explained. There's not a bank examiner in this country who could control such a corporate banking octopus. If S&L regulators couldn't stop the looting at savings and loans - which are by comparison a fairly straight forward corporate structure - what hope is there that bank regulators will be able to monitor a two-tiered holding company structure with multiple affiliates and subsidiaries?

In fact, bankings high flyers will be encouraged in their deceptions by an examination system that - according to George Champion, retired chairman of Chase Manhattan Bank, and Paul Craig Roberts, a former assistant secretary of the Treasury, writing in 1989 - is incompetent, rife with conflict of interest and has broken down. The General Accounting Office said in March that in 37 out of the 72 cases it studied, regulators weren't aggressive enough in dealing with troublesome banks. In candid moments bankers themselves will tell you that lax accounting guidelines permit troubled banks to distort the truth and hide their problems until another day.

It is this antiquated and inadequate system Congress that is about to ask to monitor banks involved in securities and insurance underwriting. Regulators will have to unravel the dealings of complex bank holding company structures, foreign transactions, national and international activities, sophisticated hedges and straddles and options and swaps, and thousands of daily electronic transfers among affiliates and subsidiaries and brokers.

At the same time the current legislation pays only lip service to a strong regulatory structure. It does not outline how the regulatory structure will be beefed up, or where the money will come from to attract the thousands of additional first-rate examiners that will be needed. If specific provisions for funding this examination force are not included in any bank deregulation legislation, the legislation should be dropped like a hot potato. If Congress tries to enact it later, the same bankers who are now purring like kittens, to get what they want, will become tigers who will attack any plan that increases their deposit insurance premiums or asks them to contribute to the regUlatory kitty.

Interstate Branching

Bankers pleas for interstate branching should also be ignored. It isn't needed - banks can already loan everYWhere and draw deposits from everywhere (and both powers have been a major source of problems for banks). Allm,ing them to have branches everY\'lhere will only encourage the creation of more mega-banks as the tumor-banks gobble up, PackMan style, heal thy community banks across the country to feed their lust for a nationwide branching structure.

The net result of interstate branching will be fewer banks and the consolidation of the industry into a group of mega-banks, each of which will then be perceived by regulators as being decidedly Too Big To Fail. Instead of a small percentage of the industry falling into that questionable category, nearly the entire industry will fall on the taxpayer's shoulders.

Another unpleasant fallout of interstate banking will be increased unemployment. The reason is simple. Small business supplies and creates the majority of jobs in America, not the big corporations which, in fact, move jobs offshore.

Once America's community banking structure has been absorbed by the big banks, which in turn have been absorbed by Fortune 500 corporations, the commercial lending patterns which made America the world capital of small business and entrepreneurship will change course. Banks steeped in the corporate culture will not understand the needs of small business and will prefer channeling their loans into more familiar corporate ventures. Slowly small business will be choked off as operating loans, inventory loans and start-up capital dry up. In the end Congress will be faced with only one alternative - a massive government loan guarantee program for small business finance - a government program which, we can all rest assured, will be mismanaged and very expensive.

Banks' demands for dramatic changes come at a time when banks are weaker than they have been since the Great Depression. Almost 1,000 banks have failed in the last four years, more than failed in the first 50 years after Glass-Steagall was passed. Restrictive regulations did not cause these problems, as the big banks would have Congress believe. Instead, in the last five years American bankers have discovered about $75 billion in bad loans on their books. vii th judgment that faulty, it's terrifying to think what they could have done on Wall street. Never ones to be contrite about losing other people's money, however, the bankers explain that in essence the devil made them do it. They say that it was those "old-fashioned federal regulations" barring banks from other, potentially greener pastures that forced them into those bad deals.

others disagree. Irvine Sprague, FDIC chairman until 1986, said most bank failures are caused by one thing - greed. The Comptroller of the Currency said bad management is to blame. The General Accounting Office found insider abuse at 64 percent of the bank failures it studied. The FDIC reported that criminal misconduct by insiders was a major contributing factor in 45 percent of recent bank failures.

Swindlers have always been attracted to banks because, as legendary bank robber Willie Sutton explained, "that's where the money is." During our eight-year study of savings and loans, the biggest S&L rogues we identified had cut their teeth by looting banks first. An FBI agent in Texas told us, "The only difference (between banks and thrifts in Texas) is that the FDIC still has its head in the sand on banks. When I looked at the banks that closed between 1984 and 1987, in many of them I found people I knew, the same S&L crowd I'm investigating from the failed thrifts there."

High flyers like these make it a point to know where the money is and to get at it before regulators know its gone. And they stand today straining at the starting gate, with their eyes on Congress and the banks. A man who arranges mezzanine financing for leveraged buyouts told us not long ago, "I think I'll go buy a bank. They only cost $3 million." When an LBO player thinks a stodgy old bank is suddenly attractive, should Congress begin to worry?

As for bankers who find themselves locked in this fatal attraction, they should turn for advice to some of their former cousins who pushed so hard for savings and loan deregulation. These former thrift operators might tell bankers to be careful what they ask for - they might just get it.

What should Congress do?

The lesson of the S&L crisis is that deregulation of the financial services industry should be treated like brain surgery - a little bit goes a long way. Cut away too much and the patient you were trying to help will wake up acting in strange and self destructive ways.

Some banks are sick and they need congressional medicine. But not the narcotics they are begging for. What they need is:

Risk-based deposit premiums, and:
Insurance premiums on foreign deposits.
No insurance coverage for banks that underwrite securities and insurance or are owned by industrial corporations.
Increased insurance premiums for banks that involve themselves in the risky worlds of foreign exchange contracts, interest-rate swap contracts and the like.
Early closure and no forbearance regardless of asset size.
Capital standards as negotiated through the Bank for International Settlements in 1988.
Allowing banks to sell (not underwrite) stocks, bonds and insurance and offer a broad range of financial services.
Rebuilding the Bank Insurance Fund immediately, so no forbearance is necessary, even if taxpayers have to kick into the pot.
Downsizing banks until they all have plenty of capital (Bank of America showed how it's done.)
Hiring enough examiners to examine every bank once a year.
Making bank examination reports public. (If $500 billion in bad news in the S&L industry didn't start a run on deposits, a negative bank examination sure won't.)
Requiring a bank's quarterly and annual reports to be more detailed, like the 10Ks required by the Securities and Exchange Commission.
Requiring foreign banks to operate under U.S. bank regulations and requiring U.S. banks to conduct their foreign operations in conformance with U.S. regulatory standards (unless of course they wish to relinquish their deposit insurance coverage.)
Limiting, but not eliminating, the use of brokered deposits.
Legislating a stop to the Federal Reserve Board's de facto deregulation of banks.

But the bottom line is really this: Most banks are healthy. They know what they're doing. Leave them alone. Don't be spooked into a big 'operation when some delicate surgery will do.

It would be nice to think that Congress will apply the lessons of S&L deregulation to bank deregulation, but the record says Congress doesn't learn from history. Ferdinand Pecora's "Wall Street Under Oath," for example, which is the story of congressional hearings held in 1933 and 1934 on the collapse of Wall Street and the banking industry, reads as though it were written today. Even the players are the same: J.P. Morgan and Company, Chase National Bank, Bankers Trust Company, Dillon, Read and Company, Drexel and Company, Lehman Brothers, Kuhn Loeb and Company (Lehman and Kuhn Loeb are now part of Sherson/Lehman).

More recently, in 1976 the House Banking Committee held hearings in Texas to investigate bank failures, and the chairman of the committee, Fernand st Germain, said at those hearings, "We have been repeatedly told that most major bank failures have been caused by criminal conduct."

Committee member Henry Gonzalez said, "Inadequate regulation is what has made possible the kind of outlandish sordid conduct we have discovered."

Yet six years later st Germain sponsored the Garn-St Germain legislation to deregulation savings and loans, as though his hearings in Texas had never taken place. (Gonzalez voted against it.) Thus unleashed, S&Ls during the unregulated 1980s united with securi ties firms and insurance companies, and the results were thoroughly predictable. Drexel Burnham Lambert, Lehman Brothers, Lincoln Savings, Columbia savings, San Jacinto Savings, Pacific Standard Life Insurance, Executive Life Insurance, AMI Insurance, Vernon Savings - for a brief moment in time they enjoyed a deregulated relationship. Now they no longer exist.

Is that what Americans want for their banks?


In addition to the attached material, we refer readers of this congressional record to two important books: "Bailout" by Irvine Sprague (FDIC chairman until 1986), published by Basic Books, Inc., in 1986, and "Wall Street Under Oath" by Ferdinand Pecora (Counsel to the United States Senate Committee on Banking and Currency, 1933-1934), published by Augustus M. Kelley in 1939 and reprinted in 1968. Because both books are out of print and may be difficult to acquire, we are attaching important passages:

From Irvine Sprague in "Bailout:"

"The list of super banks is sure to grow as interstate banking, an inevitable fact of the future, will just as inevitably produce combinations that will dwarf the present giants of the industry ... Major banks will continue to be treated differently than small ones. I cannot believe that any future FDIC board would allow the collapse of one of the giants of American banking."


"The major banks of the nation today range virtually unchecked throughout the world, gathering deposits, lending money with abandon, and piling up off-book liabilities - some risky and few capitalized. "


"The record of repeat behavior points to the greed factor that remains the major - often the only - reason for a bank's failure. Banks fail in the vast majority of cases because their managements seek growth at all cost, reach for profits without due regard to risk, give privileged treatment to insiders, or gamble on the future course of interest rates. Some simply have dishonest management that loots the bank."


From Ferdinand Pecora in "Wall Street Under Oath" (written, remember, in 1939):

"Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speCUlative excesses of the 'wild bull market' of 1929 still give evidences of their existence and influence. Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back into pernicious activity.

"Frequently we are told that this regulation has been throttling the country's prosperity."


"The public is sometimes forgetful. As its memory of the unhappy market collapse of 1929 becomes blurred, it may lend at least one ear to the persuasive voices of The Street subtly pleading for a return to the 'good old times.' Forgotten, perhaps, by some are the shattering revelations of the Senate Committee's investigation; forgotten the practices and ethics that The Street followed and defended vlhen its own sway was undisputed in those good Old days.

"After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempt be made to abolish that post."


"National City Bank grew to be not merely a bank in the oldfashioned sense, but essentially a factory for the manufacture of stocks and bonds, a wholesaler a~d retailer for their sale, and a stock speculator and gambler participating in some of the most notorious pools of the 'wild bull market' of 1929.

"But how was this possible? For surely, the layman will protest, the law does not permit a bank to engage in such activi ties. A bank, especially a national bank, is, or is supposed to be, sacrosanct, its power strictly limited by Act of Congress, and its activities carefully and regularly examined by skilled examiners.

"The layman is right. But he has reckoned without the ingenuity of the legal technicians and the complaisance of governmental authorities toward powerful financial and business groups during the lamented pre-New Deal era. With their superior advantages, a method was worked out I1hereby a bank could assume a veritable dual personality. In one aspect - the aspect which it presented to the bank examiner and as to which it was subj ect to governmental control - it observed strictly all the proprieties of a properly managed bank. In the other aspect, it knew no regulation and no limitations: it could, and did, engage in the most diverse, risky and un-banklike operations.

"The technical instrument which enabled the bank to carry on in this Dr. Jekyll-Mr. Hyde fashion was known as the 'banking affiliate. '"


"Altogether, during the years 1928-1932, inclusive, and after deducting heavy losses of about $4 million for the depression years, 1931 and 1932, Albert Wiggin, the head of Chase National Bank, and his family corporations still showed a net income for the whole period of over $8.6 million. Not many Americans could look back, in 1933, upon so satisfactory a balance sheet.

"How were these millions made? Mr. Wiggin was able to make an income many times in excess of his ($175,000) salary, in large part by using his unique opportunities as the trusted and all-powerful head of a great bank, for his personal advantage.

"To assist him in his private operations, Mr. Wiggins formed no less than six corporations, all of them owned and controlled by himself or members of his immediate family. Three of these were Canadian corporations organized in the hope that they might prove useful in reducing income taxes ....

"Mr. Wiggin's private operations in Chase Bank stock for his own benefit, moreover, they were intimately intertwined with extensive and intricate manipulations of the same stock undertaken by the bank's own affiliates. The full story of these involved relationships is an incredible one."

As will be the relationships which inevitably grow from the legislation now being considered.

So? The Slick Willies Cashed In Since He Left The White House

Sen. Hillary Rodham Clinton and former President Clinton made nearly $109 million since they left the White House, capitalizing on the world's interest in the former first couple and lucrative business ventures.
My question is: What did George Herbert Walker Bush make in his years post-presidency?

Meanwhile.... Almost $40 million alone represents book advances and sales income.

And what about the Saint?
McCain's wife, Cindy, is heiress to her father's stake in Hensley & Co. of Phoenix, one of the largest beer distributorships in the country and her worth could exceed $100 million. But the couple has a prenuptial agreement that has kept most assets in her name. In his financial disclosures, McCain lists his major sources of income as his Senate salary of $169,300 and a Navy pension of about $56,000.

Report From Tibet, Unfiltered By Mainstream Journalism

Friday, April 04, 2008

Direct Action In Action

More here.

Incredible Photos

I love photos of old New York City and here's a bunch.

Rightist Crap

Rightist crap is based on such gross dishonesty and distortion. See the following. While the abuse Stossel references did occur, the underlying claims, by and by and were either legit or tossed by the courts. Rightist tort reform would keep the truly injured from recourse while the system as it is, by and by, provides it own reform: judges tossing meritless cases.

Assholes like Stossel are dangerous idiots....

Fox Bidness Journal:
Foes of lawsuit abuse have been writing gleefully about the fall of Dickie Scruggs, Bill Lerach and Melvyn Weiss. All three lawyers are likely to spend time in jail for plotting to bribe a judge (Scruggs) or paying kickbacks (Lerach and Weiss).

Good riddance.

Locking them up will stop them from further damaging America – at least for a few years. But it's a small victory for reformers.

New members of the parasite circus will just step forward to take their place. And what these aggressive class-action and securities lawyers do legally is more damaging to America than the crimes that Scruggs, Lerach and Weiss committed. They broke laws to cheat other lawyers out of some loot, but at least that barely hurt the public.

An editorial in this newspaper justifiably mocked Lerach for declaring his lawbreaking a mere "foot fault" ("I stepped over the line," he said). But at least paying off plaintiffs honestly reflects how such lawyers get rich. Often, they are less "officers of the court seeking justice" than businessmen colluding with plaintiffs in a lucrative extortion business. Legal extortion. But still extortion. Companies pay the lawyers to go away even when it's unclear that they did anything wrong.

Once companies pay, it's logical that the plaintiff/partner who helped the lawyers enrich themselves should get a cut of that loot. That's a fairer deal than what typical plaintiffs in class actions get: coupons or a check for perhaps $1.26.

A federal judge will soon decide whether to award Lerach his cut of what may be the biggest class-action legal fee ever. Lerach extorted – I mean persuaded – J.P. Morgan, Citigroup and a Canadian bank to give $695 million to him and other lawyers who claimed the banks were culpable in the Enron debacle. On March 19, 2007 an appellate court ruled that the banks were not culpable. But so what? Fairness doesn't necessarily govern this game. The game is more about rounding up lots of complainants and using America's one-sided legal system to terrorize businesses into settling.

Companies could fight and win, but that distracts managers from what they ought to be doing. And they might get a bad jury and lose the entire company. It's safer to settle.

Our legal system invites lawyers to act like bullies. For "20/20" tonight, I report on a class-action lawyer who's suing his neighbor for smoking in her own apartment. Toxins are "being breathed every day by our 4-year-old," says Jonathan Selbin of Lieff, Cabraser, Heimann & Bernstein. His frightened neighbor had the apartment manager seal off air ducts between the two apartments, but Mr. Selbin sued anyway, claiming smoke was in the hallway. Mr. Selbin's neighbor was unusually feisty in going to the media to fight back, at least for a while. But last night, she decided to settle. After all, Mr. Selbin had written her that he had a legal advantage, because he and his wife "are both lawyers, and both litigators, for whom the usual barriers to litigation are minimal." Right. Mr. Selbin wrote ABC, "I have recovered more than $2 billion in cash for consumers defrauded by companies. I am proud of what I do." He wouldn't tell us how much of the $2 billion he kept.

What do we get from this kind of "private law enforcement"? Very little. James Copland of the Manhattan Institute points out, "The small, diversified investor is as likely to be a buyer as a seller and thus a payer in a class action settlement. The 'little guy' pays money to himself." Actually, it's worse than that: Little guys come out behind because the lawyers pocket so much.

If securities class actions really deterred fraud, their high cost might be justified. But research from St. John's Law School Prof. Michael Perino shows that most of these lawsuits follow SEC investigations. The lawyers don't unearth frauds. They come in like vultures after the problem is already revealed. We pay for that.

Onerous as the legal fees are, the nastier cost is the loss of so many good things. Weiss's former firm got companies to pay $45 billion in damages. That's $45 billion that will not create new jobs or life-saving drugs.

The fear also reduces options. After Dickie Scruggs filed his post-Katrina class action against insurance companies, State Farm, citing an "untenable legal environment," stopped insuring homes in Mississippi.

America needs judges willing to say "no" to legal bullies. America also needs the legal standard that works in most of the world: "loser pays." Without reform, the parasites will take away your money and your choices.

Fascinating Pix

No, really.

How Else Lenders Are Screwing The Economy

Foreclose then don't take title, don't pay property taxes, leave property abandoned. In the corporatist state, corporations rule, we don't just slave for them, we're also their victims -- and Our Leaders enable all this because the corporatists corrupt them. It's the way the modern world work. To Our leaders, you're nothing, just schmucks that empower them, give them the opportunity to screw you. (Jeez, this all makes Eliot Spitzer look good!)

Americans' Hate For Their Leaders' Policies

The Times:
Americans are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News poll began asking about the subject in the early 1990s, according to the latest poll.

In the poll, 81 percent of respondents said they believed “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2002.
I don't care what they say. With one caveat (no time to discuss it though), I belive McCain is as good as elected.

Sorry: there's a second caveat: I've been wrong before.

Continuing Failed Policies: See The Saint's Love Of Our Troops

Support the troops -- by bringing them home?


First you have to get rid of Our leaders, including keeping Johnny Mac out of the White House. You know, not every pol lies and panders on the stump, saying crap you know they won';t come through with. When The Saint says he'll continue Beloved Leader's (not really his, of course) policies, I believe him 1005.

See this for a clue how much you can count on him to continue the crap:

Our Wonderful, Weird World....

Thursday, April 03, 2008

The Success Of The Takeover Of This Nation By The Corporations

An explanation and description.

Not A Joke: Our Leaders Claim Presidential Fiat Overrules The Bill Of Rights

So it's official: There may as well be no rights left in this country, it's all meaningless.
The Justice Department sent a legal memorandum to the Pentagon in 2003 asserting that federal laws prohibiting assault, maiming and other crimes did not apply to military interrogators who questioned al-Qaeda captives because the president's ultimate authority as commander in chief overrode such statutes.

The memo is here and here.

When She's Right, She's Right....

Wednesday, April 02, 2008

History Lesson Of The Day

Read it now.

Flash! The Saint Is A Lying Hypocrite

Okay, just a reminder....

A Genius Speaks

Kevin Phillips is one of a whopping two old-fashioned conservatives I love. (You know, guys who are conservative not anti-American extremists. You know, old-fashioned conservatives are just to the immediate right of modern liberals.) He's brilliant and knows everything. And he's, like, always right. Like now.
Economic, financial and regulatory issues should dominate politics and government in the United States for the next two or three years, which is important enough. National discourse may also have a new and deserving bogeyman. Franklin D. Roosevelt had Big Business, Ronald Reagan had Big Labor, and my guess is that the new president inaugurated next January will have Big Finance.

True, finance has been whupped by presidents before. Thomas Jefferson and Andrew Jackson, for example. But that was in the quill-pen era when the financial sector was a pup. Today's financial services sector, by contrast, is a grasping, gargantuan combination of banks, stockbrokers, insurancemen, loan sharks, credit-card issuers, hedge fund speculators, securitization mavens and mortgage operators. Over the last five years, financial services has reached a swollen 20-21% of U.S. GDP -- the largest sector of the private economy.

Manufacturing led financial services by 2:1 back in the 1970s, but by 2006 beaten goods production had shrunk to just 12% of GDP.

Do most Americans understand this? Of course not. Newspaper front pages have shunned any discussion; 60 Minutes has not even spared the transformation sixty seconds, despite its vast implications. This upheaval is probably "the greatest story never told" about the two decades between, say, 1986 and 2006.

Nor was it an economic accident. Computerization was a prequisite, as was the rise of financial mathematics. However, I would say that the two most important underpinnings of financialization lay in the rise of public and private debt as a mainstay of American culture and economics and the perpetual liquidity and bail-out support of the Federal Reserve Board under Alan Greenspan. During Greenspan's 1987-2005 tenure, the sum of public and private debt in the United States quadrupled from just over $10 trillion to $43 trillion. Finance became the industry that was not allowed to fail but was permitted to enlarge and metastasize its behavior almost at will. Regulation was minimal. Favoritism was omnipresent.

The result, alas, has been all over recent headlines. America's biggest ever housing bubble, with 57 varieties of exotic mortgages and home prices now plummeting at rates unseen since the 1930s. The United States turned Credit Card Nation, with a citzenry in thrall to plastic, 20% interest rates and late fees for just about everything. Huge banks like Citigroup feel no shame in paying billion-dollar fines for colluding with Enron's tax and accounting deceits. And since mid-2007, national and world credit markets have been panicked and paralyzed by hitherto obscure instruments -- the stand-outs are collateralized debt obligations (CDOs) -- that not even their designers and packagers can explain.

Adolescent versions of Frankenstein finance became a crash and a disaster for Americans in 1929 when the industry was new and represented only 10-15% of the economic weight of American manufacturing. Now, by contrast, the unraveling of a second financial sector-turned casino involves literally the biggest force in the American economy. Who knows how much of this hubris and malfeasance is going to unwind unpleasantly or how long that will take?

In fact, phony Washington statistics and warped market measurements make it doubly hard to tell. The federal Consumer Price Index is already regarded by many Americans as a con job, and the press periodically quotes investors who state their belief that current U.S. inflation is really 6 to 9 percent a year, not the 2-4 percent the government alleges. I agree. On top of which, because the value of the dollar has dropped so far, the Dow Jones Industrial Average at the end of March was not really 12,200, a number barely up from its 11,700 peak in 2000. If you measure the Dow in Swiss francs or euros, two strong currencies, it has already lost some forty percent of its 2000 value. Too many Americans live in a dream-world of economic misinformation.

I began writing about these matters with a 1990 book entitled The Politics of Rich and Poor, and in several other volumes since then. Today, the economic negligence of Washington and Wall Street, more than two decades in the making, has led to a multi-dimensional crisis in which this country faces an unprecedented convergence of problems: unprecedented debt, tumbling home prices, reckless money supply expansion, growing inflation, insufficient and expensive oil, and an eroding dollar. Sadly, there may no longer be a plausible way out.

:( Sad But True....

No. 6....

Geek Image Of The Day


Torture Is US Policy

See the proof.

Get the short version here.

Global Corporatism On The March; Website Gets A "Cease And Desist" -- From Using A Color

Some asshole major corporation believes they have rights in a color. Not in a product-confusion way but in an absolute way. Welcome to the 21st century and the triumph of Global Capitalism over the rule of law and freedom of individuals.

Scandal Of The Day; Keeping Things In Perspective

No wonder Formula 1 is so popular....
Max Mosley said Tuesday he will remain president of auto racing's governing body despite calls for him to resign because of his role in a sex scandal.

He wrote to officials at his organization, acknowledging his embarrassment and asking for their support. A copy of the letter was obtained by The Associated Press.

The News of the World, a British tabloid, accused the 67-year-old Mosley on Sunday of engaging in sex acts with five prostitutes in a scenario that involved Nazi role-playing. Although he didn't deny his participation, Mosley said there was no "Nazi connotation to the matter."

The Viddie, Like, Everyone's Posting; Goodbye, Monica, Hil's The One Who's %$#&ing -- Obama

Tuesday, April 01, 2008

Who Loses Because Of Spitzer's Hubris And Sex Addiction

Last fall, former New York governor Eliot Spitzer appointed a task force to address the state's high rates of malpractice by hospitals and doctors. The task force was also charged with making recommendations for lowering doctors' med mal premiums, which soared 14 percent last year. The insurance industry and doctors' groups seized the opportunity to press for new restrictions on medical malpractice lawsuits, which they claim would reduce the premiums. As other states have learned, though, such limits usually only result in windfall profits for insurance companies while leaving injured patients with no recourse should their doctor, say, amputate the wrong leg.

Consumer groups in New York had long suspected Spitzer of siding with the doctors on this issue, largely because his brother is a downstate neurosurgeon. Their suspicions were confirmed when Spitzer stacked his medical liability task force with more than 20 representatives from the hospital, medical and insurance industries, while consumer protection and patient safety groups got just three spots. The consumer reps have largely been shut out of the task force deliberations, and despite repeated demands, they've been denied access to the insurance industry data, which supposedly justified the limits on lawsuits. Recently, the consumer members learned from local newspapers that the task force had drafted a major reform proposal that would be released soon. None of them had ever seen it.

Now that Spitzer has resigned, the groups are hoping his replacement, Governor David Patterson, will open up the process. In a letter today, representatives from NYPIRG, the Center for Justice and Democracy, the Center for Medical Consumers and others wrote Patterson, "We refuse to be mere window dressing, to be used as stage props to create the illusion of inclusion, while proposals that affect the life and safety of every health care consumer in our state are drafted in secret. We hope you will redirect the state’s efforts towards reducing the deaths and injuries caused by a tiny fraction of the state’s physicians, rather than enabling error, negligence, and malpractice to be subsidized by taxpayers."

How Car Dealers Screw You

I know you know they do it. Everyone knows they do it. This how.

Threat Warning

A McCain Lover Speaks Out

Monday, March 31, 2008

Art (And Tribute!) Du Jour

Find the book somewhere here.

The Latest Edition Of "The Crap Rightist Wingnuts Pull In Destroying Our Rights"

Eight years later: What a surprise; The Florida GOP still can't get the restoration of felon voting rights straightened out. (Yeah, yeah; I know it's ex-felons but mainstreaming them back into society as quickly and fully as possible happens to be an anti-crime measure; it's for our good.)

Fox Bidness Journal:
Republican Gov. Charlie Crist went against his party a year ago and made it easier for felons to regain their voting rights. The process has been slow, however -- stirring controversy in a state expected to be closely fought in this fall's elections.

Florida's clemency board has restored voting rights to nearly 75,000 residents. But nearly 96,000 requests are pending, according to information through March 20. Activists say there might be an additional 400,000 people who have been rejected without explanation, making it impossible for them to be reinstated.
Hey, Johnny Mac; Have any straight talk about this?? Where's the leadership??

It's Orwell's 1983 In London

It's freaking crazy, the people in charge are nuts... bonkers....
[Re: photo t]aken at Spitalfields Market, 9:20 AM, Sunday, March 30, 2008. I liked the cartoony cloud-trail decorations seemingly supporting the left side of the ceiling, and the fact that the spire of Nicholas Hawksmoor’s Christ Church Spitalfields was so dramatically framed in the transparent roof.

Right after I took the shot, though, a large security guard walked directly up to me. “We don’t take pictures in here.” “Oh?” I said. “Yes,” he replied, reaching for my camera. “We’ll have to delete that.”

“No you don’t, and I’m leaving the market right now,” I said, walking away briskly. And as I did so, I swear to God, I heard him get out his walkie-talkie and radio for backup. You can’t be too careful with these terrorist photographers.

Out on Brushfield Street, wondering if I was about to be wrestled to the ground by Spitalfield commandos, I phoned the people I’d come to the market to meet for breakfast in the first place. “Hey, Cory,” I said. “You’re not going to believe this, but…”

We tried, we really did. We walked back into the market brandishing the camera high, Cory Doctorow, Alice Taylor, and their celebrated offspring, four humanoids’ worth of concentrated well-informed civil liberties savvy, inviting, nay daring, my security-guard friend to come back and try to arrest my photograph. “It’s total nonsense,” Cory said. “Even assuming they have a posted policy, which they have to do—and they don’t—they certainly aren’t entitled to demand to delete your property.” (And indeed, some individual market stalls have “no photographs” placards on display, which does tend to suggest that this is hardly the default for the entire market.) To no avail. My uniformed security guard had evidently found even more pressing issues to deal with, possibly terroristic squirrels, or people removing mattress tags.

The whole War On Photography is of course puzzling. Leaving aside the obvious hypocrisy of putting a “No Photography” sign on your stall which happens to be devoted to selling framed photographs of Banksy graffiti (yes), it’s simply hard to imagine the thought processes that go into such a decision. Let’s see, we have a stall in a famous London market, selling vintage clothes or organic cookies or African wind instruments. And people want to take snapshots of our stall and put them on their Flickr page or share them with their friends and relatives back in Stevenage or St. Louis or Kyrgyzstan, because they had a good time visiting Spitalfields market and they think your stuff is neat. Logically, the correct thing for us to do is prohibit them from doing so, since we wouldn’t want to actually have any customers or anything.

What is wrong with these people’s brains? Show your work.

Oh My God! Maybe These Are The Viddies Of The Day!?

I've Been Seconded!

Tom Tomorrow -- for whom I have way more respect than about other pundit around -- agrees with me: It's Johnny Mac in 08. Sorry, guys!

No, Wait, This Is The Viddie Of The Day

Viddie Of The Day

Admit it; if you know of Stonehenge, you're fascinated by it and it's mysteries. Here's a small insight, sort of....

Sunday, March 30, 2008

10 Stupid Things The Saint's Said That You May Have Missed

The genius that is the next President of the United States of America:
10. Responding to a student who criticized his remark about our staying in Iraq for 100 years, McCain quipped, "No American argues against our military presence in Korea or Japan or Germany or Kuwait or other places, or Turkey, because America is not receiving casualties."

I guess Ron Paul isn't American. Or Dennis Kucinich. Or many others who have questioned the mindset behind keeping our troops abroad forever, which is what an empire does, not a republic. Although, perhaps more people don't argue "against our military presence" in the other spots he named, because, you know, those wars weren't based on 100 percent fabricated evidence and didn't make us less safe after they were done. Just a thought.

9. John McCain is "very proud to have Pastor John Hagee's support."

Just FYI, John Hagee makes Jeremiah Wright seem like Richard Simmons. Hagee has called the Catholic Church the "Great Whore," an "apostate church," the "Antichrist," and a "false cult system." And let's not even get into what he has said about Jews.

8. "In the shorter term," said McCain, "if you somehow told American businesses and families, 'Look, you're not going to experience a tax increase in 2010,' I think that's a pretty good short-term measure."

This is McCain's statement in suport of making permanent the tax cuts he voted and railed against in 2001 and 2003. Back then they were only a giveaway to the rich and "budget-busters." Now that we are much further along in borrowing our economy from the Chinese, and the rich have become even richer, they are a way to stimulate the economy by putting money in the hands of working Americans.

7. "This is a Catholic Voter Alert. Governor George Bush has campaigned against Senator John McCain by seeking the support of Southern fundamentalists who have expressed anti-Catholic views. Several weeks ago, Governor Bush spoke at Bob Jones University in South Carolina. Bob Jones has made strong anti-Catholic statements, including calling the Pope the anti-Christ, the Catholic Church a satanic cult! John McCain, a pro-life senator, has strongly criticized this anti-Catholic bigotry, while Governor Bush has stayed silent while seeking the support of Bob Jones University. Because of this, one Catholic pro-life congressman has switched his support from Bush to McCain, and many Michigan Catholics support John McCain for president."

This was a John McCain for president campaign robo-call in 2000. Today, as we pointed out, he hangs with the Rev. Hagee who thinks Catholicism is a "cult" and the "Antichrist." How romantic.

6. "Everybody says that they're against the special interests. I'm the only one the special interests don't give any money to."

Here are some examples of Sen. McCain's epic battle with special-interest money: According to the Center for Responsive Politics, McCain has taken nearly $1.2 million in campaign contributions from the telephone utility and telecom service industries, more than any other senator. McCain sides with the telecom companies on retroactive immunity.

McCain is also the single largest recipient of campaign contributions from Ion Media Networks -- formerly Paxson Communication -- receiving $36,000 from the company and employees from 1997 to mid-year 2006.

5. McCain listened intently, pausing a second before delivering what could be a defining answer. "The other one will do just fine."

For what important reason was Sen. McCain interrupting an explanation to the press of his positions on Iraq and national security to take a cell phone from an aide? Why his wife needed to buy them a new barbecue grill.

4. During a Nov. 28, 2007, Republican debate Sen. McCain angrily denounced torture and offered unmitigated support of the Army field manual's restrictions, saying they "are working, and working effectively."

So naturally and quite logically, he voted against applying these same standards to the CIA. Apparently these rules won't work effectively for spooks, just the men and women on the front lines.

3. McCain, while speaking at a town hall meeting in a suburb of Philadelphia, was asked if he had concerns that anti-American insurgents in Iraq might commit increased acts of violence in September or October with a plan in mind to tip the November election to the Democrats. "Yes, I worry about it," McCain said.

How did he figure out what the insurgents -- which his policies in Iraq have helped create -- are up to? When they attacked us on 9/11, and the warning signs were all ignored by President Bush and his then National Security Advisor Condoleezza Rice, he was punished with winning a second term. So, of course, militants, who follow john McCain's campaign like Republicans do the signs of the Rapture, are closely planning their events because they know the exact opposite will be the result this time.

2. Let's go back to the videotape: "I'm the only one the special interests don't give any money to."

Not only have we proven this false, but perhaps many can't give money because they all work on his campaign. His campaign manager, Rick Davis, lobbyist. Top advisor, Charlie Black, lobbyist. The operative currently running his Senate office, Mark Buse, former lobbyist. And so it goes. Here is what one observer had to say. "It's an interesting dichotomy. On the one hand, he's presenting himself as the crusader against special interests and yet, on the other hand, he's surrounded himself with senior advisers that are lobbyists," said Sheila Krumholz of the Center for Responsive Politics, a nonpartisan, non-profit research group focused on money in politics.

1. And finally, McCain's craziest, coolest, most unstoppable McCain Moment: The senator said, while in Jordan, that it was "common knowledge and has been reported in the media that al-Qaeda is going back into Iran and receiving training and are coming back into Iraq from Iran, that's well known. And it's unfortunate." A few moments later, Sen. Joseph Lieberman, admiringly gazing at McCain until that moment, stepped up and whispered something in the presidential candidate's ear. McCain then blurted out: "I'm sorry, the Iranians are training extremists, not al-Qaeda."

Phew. Glad trusty Joe Lieberman was there to explain to the man of "experience," a man who wants to lead the free world, that Sunnis (Al Qaeda) and Shia (Iran) not only don't work together but are in direct conflict. We have only been at war there for five years, so I wouldn't expect Sen. McCain to concern himself with such trivial matters.

Bush And Dick; A Portrait In Dead Servicepersons


Is The Dollar Undervalued?

Even if the currency is debased and devalued, the currency itself should have value -- at least to coke addicts.

Project For The Day

Sign this! Now!

Today's McCa0n-Bashing Viddie

And here's more if you want it....

And In Case You Doubt How Stupid-Crazy Wingnuts Are....

A good Christian reminds us....

This asshole is pissed off that people may actually have an issue with crap like this. This good Christian instead supports stuff like this.

Great Moments In Beloved Leader's Total War Against Terror

9/11 -- well we should all be able to remember what happened 9/11.

9/12: The Secret Service was helping one of the First Twins get into Mexico for some underage drinking.

The Bushes are exemplars of the idea that great wealth doesn't actually improve people; just makes them rich. (Op cit the classic Fitzgerald/Hemingway routine here.)

How The Saint Loves The Troops

Nam was Nam but this is now: a disgusting, stupid, lying panderer. He, things change....

Proposal For A Memorial Of The Iraq Fandango

This got me started thinking about one... and in about two seconds, this came to mind: something along these lines....

For Those Such As Our Leaders Or The Next Beloved Leader Who Might Actually Believe That The Lenders Did Not Pull Crap To Sucker Borrowers

Note this is Chase. One must presume that bottom-feeders were far worse. But Hey, GOP, keep showing your love and blaming the victim! You're just a bunch of whores who have to put out for the Big Money Johns!
A newly surfaced memo from banking giant JPMorgan Chase provides a rare glimpse into the mentality that fueled the mortgage crisis.

The memo's title says it all: "Zippy Cheats & Tricks."

It is a primer on how to get risky mortgage loans approved by Zippy, Chase's in-house automated loan underwriting system. The secret to approval? Inflate the borrowers' income or otherwise falsify their loan application.

The document, a copy of which was obtained by The Oregonian, bears a Chase corporate logo. But it's unclear how widely it was circulated or used within Chase.

Bank spokesman Tom Kelly confirmed that the "Cheats & Tricks" memo was e-mailed from Chase but added that it does not reflect Chase corporate policy.

"This is not how we do things," he said. "We continue to investigate" the memo, Kelly said. "That kind of document would neither be condoned or tolerated."

The March e-mail was sent by Tammy Lish, a former Chase account representative in Portland. Chase fired her days after discovering she had sent it.

"I did not write it," Lish said. "It was sent to me by another (Chase) rep in another office along with some other documents that were more step-by-step customer training documents."

Even if the memo was penned by a single employee, it illustrates an attitude prevalent in certain corners of the mortgage industry during the boom years. In the face of sustained and significant home price increases, much of the industry veered away from traditional notions of safe and sound lending. Loan volume became as important as loan quality, particularly for the rank and file typically paid on commission.

During the boom, it was common for lenders and brokers to get paid more for risky subprime loans than for 30-year fixed-rate loans because the higher-interest loans fetched a higher price on Wall Street.

Chase, the nation's second-largest bank, originates mortgage loans itself but also operates a wholesale arm that underwrites and funds loans brought to them by a network of mortgage brokers. The "Cheats & Tricks" memo was instructing those brokers how to get difficult loans approved by Zippy.

"Never fear," the memo states. "Zippy can be adjusted (just ever so slightly.)"

The Chase memo deals specifically with so-called stated-income asset loans, one of the most dangerous of the mortgage industry's innovations of recent years. Known as "liar loans" in some circles because lenders made little effort to verify information in the borrowers' loan application, they have defaulted in large number since the housing bust began in 2007.

Chase no longer makes any stated-income loans, part of the bank's efforts to tighten its loan underwriting, Kelly said. It wrote down $1.3 billion in nonperforming mortgages at the end of 2007.

Lish said she sent out the document inadvertently. "The document was irrelevant by the time I sent it out because the company had ceased offering stated-income loans."

The document recommends three "handy steps" to loan approval:

Do not break out a borrower's compensation by income, commissions, bonus and tips, as is typically done in a loan application. Instead, lump all compensation as the applicant's base income.

If your borrower is getting some or all of a down payment from someone else, don't disclose anything about it. "Remove any mention of gift funds," the document states, even though most mortgage applications specifically require borrowers to disclose such gifts.

If all else fails, the document states, simply inflate the applicant's income. "Inch it up $500 to see if you can get the findings you want," the document says. "Do the same for assets."

Chase's Kelly said the bank has never encouraged any of the suggestions in the memo.

"If somebody is putting inaccurate information in their loan application, they're lying and committing fraud," he said.

Still, some local mortgage brokers view the memo as vindication. Brokers have argued they've been unfairly blamed for the lax lending standards that led to a wave of defaults. The large national lenders drove the weakening standards, they argue.

The Chase memo is "a perfect example of one of the big five banks out and out telling mortgage brokers to commit fraud," said Todd Williams, a broker with Evergreen Ohana Group in Portland. "And this has been going on for years."

Williams and other mortgage brokers gave a copy of the memo to Oregon financial regulators.

"It boggles my mind that any federally chartered organization would invite this kind of activity in such a flagrant way," said David Tatman, head of Oregon's Division of Finance and Corporate Securities.

But Tatman confirmed that as a state regulator, he doesn't have jurisdiction over the federally chartered Chase.

The U.S. Office of the Comptroller of the Currency has authority over Chase. OCC spokesman Dean DeBuck declined to comment on the document.

And a link to the memo is here.

Video Of The Day: Leonardo Reborn!