Wall Street

Stress Testing Tim Geithner

Mary Bottari — Thu, 26 Jan 2012 12:54:38 -0500

Thanks to Occupy Wall Street, in the State of the Union this week President Obama struck some of his most populist themes yet. He wants to tax millionaires, bring back manufacturing and prosecute the big banks. He touted his Wall Street reforms saying the big banks are “no longer allowed to make risky bets with customers deposits” and “the rest of us aren’t bailing you out ever again.”

But are we safe from the next big bank bailout?

Many experts are dubious and Wednesday the consumer advocacy group Public Citizen decided to test the theory in the most direct way possible. They used the administrative law process to formally petition the nation’s top bank regulators to move swiftly to break up Bank of America (BofA) asserting in their petition: “The bank poses a grave threat to U.S. financial stability by any reasonable definition of that phrase.”

A Ticking Time Bomb

BofA is not just big, its behemoth. With assets of $2.1 trillion, equal to more than 14 percent of U.S. GDP, it is bigger than many small countries. Yet, its stock is trading at $7.

What does Wall Street know that we don’t?

The petition provides a compelling list of disturbing data points. In 2008-2009, BofA publicly took $45 billion in TARP bailout funds and secretly took another $1 trillion in emergency Federal Reserve loans. Yet, several analysts predict that BofA is woefully short of capital reserves and facing potentially billions in legal liability for its role in the crisis.

Although the bank declared net profits in recent quarters, these profit comes from accounting tricks, one-time asset sales and stock swaps. BofA’s share price to tangible book value is extremely low. The market suspects the bank is worth roughly half of what management claims and the price of credit default swaps (a type of insurance) on BofA recently rose to record highs.

“The bank is a ticking time bomb,” says David Arkush of Public Citizen. “If Bank of America in its current form were to fail, it would devastate the financial system. We’re asking the regulators to make sure that never happens. The only way to be sure is to reform the institution into something safer before any crisis materializes.”

Public Citizen asked the new Financial Stability Oversight Council (FSOC), which is chaired by Treasury Secretary Tim Geithner and made up of the nation's top bank regulators, to use the tools provided in the Dodd-Frank Wall Street reform law to act before a crisis occurs and to break BofA into smaller separate institutions. The law allows the FSOC to limit big bank mergers and acquisitions, restrict products and services or order it to divest assets or off-balance-sheet items after a vote to designate the institution a “grave threat” to financial stability.

“Too Big to Fail” Alive and Well

Although President Obama said the goal of Dodd-Frank was to end the era of “too big to fail,” neither Geithner nor Fed Chair Ben Bernanke got the memo.

Geithner told the Special Inspector General for the Troubled Asset Relief Program in 2011 future bailouts are possible: “In the future we may have to do exceptional things again if we face a shock that large. You just don’t know what’s systemic and what’s not until you know the nature of the shock. It depends on the state of the world – how deep the recession is. We have better tools now, thanks to Dodd-Frank. But you have to know the nature of the shock.”

Bernanke may already be engaged in a back-door bailout of BofA. Recent news reports indicate that BofA is trying to move $22 trillion in derivatives out of its Merrill Lynch subsidiary into its FDIC-insured bank. The Fed favors the move. The Federal Depository Insurance Corporation (FDIC), which provides insurance to depositors if a bank fails, does not.

“By taking this action the Fed is allowing these derivatives to pose a direct risk to the FDIC insurance fund, keeping taxpayers on the hook for another bailout,” according to Arthur Wilmarth of George Washington Law School.

Groups like Public Citizen fought hard during the Dodd-Frank debates to insert into the bill tools to allow regulators to break up big banks and prevent the next crisis. With BofA on the brink, its time for a “test of the machinery,” said scholar Lawrence Baxter of Duke Law School.

Expand the Stress Tests

Geithner is right when he says regulators can’t predict future shocks; will it be the EU debt crisis, a multi-million dollar damage award against the bank or exposure to something out of the blue? While we may not know its origin, we know the shock is coming.

Remember in the Dodd-Frank debates, an amendment to break up the banks was rejected, efforts to restore Glass-Steagall were rejected, a proposal to force banks to spin off and separately capitalize their dangerous derivatives desks was quashed. In leading the fight against the stronger measures, Geithner instead pushed the FSOC to scan the horizon for risk and keep an eye on the behemoth banks. He also pushed “stress tests,” which all too many banks seem to pass with flying colors.

Now its time to stress test Geithner. If the FSOC fails to deliberate and vote on the very serious condition of BofA, the whole exercise will be proven a sham.

Click here to tell the President to Break Up Bank of America.

People Power vs Banker Power: Score One for the People

Richard Eskow — Tue, 24 Jan 2012 14:20:30 -0500

I hate to sound Pollyanna-ish, but sometimes the sunny point of view turns out to be right.

Yes, corporate money has hijacked democracy. And it's true that our two-party system often fails to offer real choices or reflect the will of the majority. Our corporate political system doesn't have a problem. It is the problem.

But we saw yesterday that concerned citizens can make a difference. Yesterday they won a battle against one of democracy's most implacable adversaries: Wall Street. They fought back against a lousy bank deal and stopped it in its tracks.

For the moment.

Bankers' Choice

It wasn't obvious that it could be done. Despite a setback or two – the Consumer Financial Protection Bureau being the primary one - bank executives have scored one victory after another:

They got to keep their jobs after destroying the economy and driving their own institutions into the ground.

They kept on collecting fat bonuses after the American people bailed them out.

They were able to weaken regulatory reform so they could keep their too-big-to-fail status and retain many of their screw-the-customer privileges.

They've settled one lawsuit after another, often for flagrant criminal behavior, by paying relatively puny settlements - and writing the checks with other people's money to do it. They've been able to avoid paying for their misdeeds with their money - or their time.

They've even been able to whine ad nauseum without public anger or ridicule, about the mild reprimands and even milder regulatory changes they've had to face since crashing the world's economy.

One for the People

This week bankers were on the brink of another undeserved victory, capping months of negotiation led by Obama Administration officials and involving most of the states. But hundreds of thousands of concerned citizens signed online petitions from a range of organizations that includes MoveOn, Color of Change, Progressives United, and the Campaign for America's Future.

The President was reportedly eager to promote the deal in tonight's State of the Union message as some sort of victory for the American people. The press was told that his negotiating team, which includes Iowa Attorney General Tom Miller and officials from the Justice, Housing, and Treasury Departments, had finalized a deal which was about to be “presented to the states.'

But presenting 360,000 signatures to the White House had an impact. So do demonstrations like this one, which took place outside the building in Chicago where settlement talks were taking place.

Public statements had an impact, too. Elected officials like Sen. Sherrod Brown, Reps. Keith Ellison and Raul Grijalva (speaking for the entire Progressive Caucus), and Rep. Brad Miller opposed the settlement. So did leaders like Richard Trumka of the AFL-CIO, Justin Ruben of MoveOn, and Bob Borosage of Campaign for America's Future. Their widely-reported words hit the media the same day the deal was announced.

The reaction was immediate. Attorney General Miller immediately released a statement retracting earlier announcement. Miller's statement said that the AGs were “today discussing the details of the progress we have made so far in settlement negotiations, including the terms we must still resolve.” (Emphasis ours.) “We have not yet reached an agreement with the nation’s five largest servicers,” Miller added, “and we won’t reach a settlement any time this week.”

How Bad Was the Deal?

How bad was the deal that was stopped this week? Bankers would have been able to settle civil and criminal charges covering a wide range of mortgage misdeeds for a maximum of $25 billion, to be disbursed under their own supervision.

That's $25 billion after a mortgage meltdown that has left more than 11 million homes underwater. That's $25 billion, while banks continue to demand (and usually receive) mortgage payments for more than $700 billion in housing value that no longer exists.

Payments on this $700 billion continue to serve as an “invisible bank bailout.” Each mortgage check on these underwater homes includes money for an ongoing Wall Street rescue, as millions of struggling homeowners continue to pump billions into Wall Street.

Their money continues to artificially inflate banks' balance sheets and providing bonuses for the very same bankers that screwed them over in the first place.

Other People's Money

And speaking of bonuses: The House Progressive Caucus rightly noted today that “the six biggest banks could pay the proposed $25 billion settlement five times over with last year’s bonuses and compensation alone.”

What's more, the $25 billion would have been largely paid by pension funds and other institutional investors who were deceived by the very same bankers collecting those rich payouts. And in return, the deal could have shut down ongoing civil and criminal investigations of those bankers.

(There's more on the deal here, including a radio interview.)

The President's Role

The Obama Administration's usually been on the wrong side of this struggle. It has declined to investigate or prosecute bad bankers, even when the evidence appeared to be overwhelming. (See here, here, and here, for starters.) The President has continued to insist, as recently as last month's 60 Minutes interview, that bankers did nothing illegal – even as it was working behind the scenes to make sure that investigators wouldn't be able to discover what they had or hadn't done.

And yet I'll say this for the Administration: They bowed to public pressure. A Republican Administration would have been less likely to do that. And the citizens who made that happen didn't just send a message to the President. They also saved him. This bank deal would have been a political disaster for him.

The President's most loyal supporters should take note of the political benefits he reaps from this kind of outside pressure. Then they, too, should join in the effort to get a fair settlement deal and investigate bank fraud.

Hopefully the President will use tonight's State of the Union to announce a full-scale investigation of bank fraud. He heard the voice of the people on the settlement issue, but that's only one side of the bank-fraud coin. The other half involves law enforcement, and proving to the nation that bankers operate under the same system of justice as the rest of us.

Next

We've won one battle, and even that victory could be undone if the deal is revived in its present form. And the Administration hasn't committed to doing what's really necessary, which is to support courageous Attorneys General like New York's Eric Schneiderman by conducting a full-scale investigation of bank fraud. So there's more work to be done.

What should people do? Be prepared to mobilize again. As the saying goes, “Watch this space” - and others like it at MoveOn and other progressive organizations.

Patti Smith wasn't wrong when she sang that “People have the power.” We do have the power to win a battle or two, even against those guys on Wall Street. We have more power than we realize – but only if we're willing to use it, and to keep using it until the battles have ended and the war for fair play has been won.
_____________

(There's a website for people who want to send an e-mail to President Obama in the next few hours: No sweetheart deals for big banks in the State of the Union.)

Republicans Try to Convert America into Pottersville

Leo Gerard — Tue, 27 Dec 2011 08:20:41 -0500

In the iconic Christmas film, “It’s a Wonderful Life,” an angel offers the beleaguered main character, George Bailey, the stark choice between a hometown named for a cruel banker or one created by and for the middle class.

The banker’s town, Pottersville, is filled with bars, gambling dens and despair. The people’s town of Bedford Falls is made of hope, hard working middle class families, and their homes financed by the Bailey Brothers Building & Loan.

The film’s happy ending is the people of Bedford Falls banding together to rescue George Bailey and the Bailey Brothers Building & Loan that had given so many of them a leg up over the years. Republicans seek a different conclusion. They find middle class cooperation and community intolerable. They want the banker, Henry Potter, with his “every man for himself” philosophy to triumph. In the spirit of their self-centered mentor Ayn Rand, Republicans are trying to disfigure America so she resembles Pottersville.

A building and loan association, like the Bailey Brothers’, uses the savings of its members to provide mortgages to the depositors. Members essentially pool their money to give each other the opportunity to buy cars and homes. At one point in the film, George Bailey explains this concept to frightened depositors who are trying to withdraw their savings during the panic that led to bank runs in 1929.

Bailey urges the townspeople who had crowded into the building and loan office to withdraw only what they need, not empty their accounts. “We have got to stick together,” he tells them, “We have to do this together.” A building and loan doesn’t function without trust and cooperation.

It works well for Bedford Falls. The mortgages it provides help working people move out of the Potters Field slums and into Bailey Park, where homes well kept by their owners increase in value. Despite the success, Potter condemned this practice, saying it was based on “high ideals without common sense.” He criticized the Bailey Brothers Building & Loan for granting a taxi driver a mortgage after Potter’s bank had rejected his application. Potter scoffed at such practices, asking if the building and loan was a “business or a charity ward.”

This is exactly what Republicans do. They describe beloved American programs like Medicare and Social Security as charities – using the euphemism “entitlements.” Like mortgages from the Bailey Building & Loan, Medicare and Social Security are not charities. They’re the American people depositing and pooling their money for the benefit of the American community.

The GOP tries to destroy programs like these that aid the middle class, the vast majority of Americans – the 99 percent – while Republicans protect tax breaks and special perks for the rich – the one percent, the Henry Potters.

This time last year, Republicans demanded extension of tax breaks for the 1 percent, contending tax breaks stimulate the economy.

For the past three months, however, Republicans have fought extension of payroll tax cuts, contending a break benefiting 160 million middle class Americans did not stimulate the economy.

All year, Republicans have demanded an end to programs the middle class created to aid the majority, the 99 percent. The GOP wants to reverse the new banking regulations that were passed in an attempt to prevent another economic collapse caused by risky Wall Street practices. The GOP tried to to rescind the healthcare reform law that prevents insurance companies from terminating coverage when beneficiaries get sick and prohibits the practice of refusing coverage to people with pre-existing conditions.

Influential Republicans this year have called for repealing laws forbidding child labor, laws guaranteeing minimum wage and laws protecting the environment. They’ve demanded elimination of federal funding for organizations like the Public Broadcasting System that educates preschoolers, Head Start, which provides opportunity to poor children, and Planned Parenthood, which uses 97 percent of its funds to provide general, obstetrical and gynecological medical care to women, many of whom are rural and poor.

Republicans have decided to be the party of Henry Potter, the “meanest man in the county,” a man about whom George Bailey’s father said: “he's a sick man, frustrated. Sick in his mind, sick in his soul, if he has one.”

Like Potter, Republicans deride compassion and community as character defects.

In the Republican world, where greed is good, it was appropriate for Henry Potter to keep the $8,000 in Bailey Building & Loan money that George Bailey’s uncle, Billy Bailey, accidently handed him.

Republicans are attempting to impose that selfish belief system on the selfless American people, people like the citizens of Bedford Falls who rush to the rescue of neighbors.

It won’t work, just like it didn’t in “It’s a Wonderful Life.” Republicans will fail in their attempt to make America Pottersville because the 99 percent believe avarice is a sin, not a value. The GOP will fail because greed is not the American way.

Envisioning A Debt Jubilee

Joseph M. Firestone — Sat, 10 Dec 2011 15:42:42 -0500

A couple of days ago, my friend Lambert Strether raised this question about transitioning to a Modern Monetary Theory-based approach to fiscal policy in the United States:

“Could a "debt jubilee" be a useful demand in a transition to MMT? I think it would certainly have broad appeal. Moreover, it's Biblically based!”

Perhaps a “debt jubilee” would have broad appeal, and I guess a biblical framing for it may not hurt, but I think its reception depends on the details.

1) If the Government takes the big banks into resolution and then:

2) takes big write-downs on mortgage principal;

3) lowers credit card interest rates to a few points over prime;

4) brings about Medicare for All, takes the bankrupt health insurance companies over, while canceling debts to them and paying any remaining debts of consumers to providers;

5) allows previous owners of foreclosed homes to take them back, while it provides grants to them for fixing up the homes the big banks allowed to deteriorate.

That's not a complete debt jubilee, but it is enough to provide lots of relief, and make the majority of people very happy with the Government.

The political opposition from the 1% could be short-circuited through claw-backs of many billions in bonuses paid to financial industry executives whose companies were guilty of fraud in claiming profits on which the bonuses were based. This probably wouldn't require legislation, only careful accounting of the resolved banks showing the frauds, correcting the accounting, restating the real profits or lack of them, and then a strong enforcement effort including pursuing the money to off-shore banking havens. If all this were done many of the rich would be too busy conserving what was left of their fortunes to fund an aggressive right-wing response.

We may get the chance to apply measures like this if the Eurozone collapses in the Spring. Then the US Banks will be looking for a bailout. There will be a firestorm from the 99% directed at both the President and Congress to say no to anymore bailouts. But, if Obama refuses it, and make no mistake, he and Congress will be under enormous pressure from Wall Street not to do that, while Wall Street will be screaming at the Fed to avoid it also, then we'll able to get on the road I laid out with step 1.

Giving Thanks for the Occupation, Election, Demonstrations

Leo Gerard — Tue, 22 Nov 2011 10:29:51 -0500

I want to thank you, thank you
Thank you, thank you,
Thank you, thank you,
Thank you, thank you. ~ Natalie Merchant, “Kind and Generous”

This week’s holiday mandates giving thanks. For many Americans, that is complicated by the harsh years since 2008.

There’s the bitterness of lost jobs, foreclosed homes and diminished opportunity. There’s the resentment over bailing out Wall Street, then watching banksters grant themselves sensational bonuses while denying Main Street loans to save businesses. There’s the fear generated by county club conservatives demanding draconian cuts to Social Security, Medicare and Medicaid.

It’s hard to muster gratitude while suffering, to feel appreciative while dreading a meaner future.

The past two months, though, produced glimmers of hope -- the occupation, the election and the mid-November demonstrations. These events suggest empowerment of the 99 percent and emergence of change. They’re reason for thanks giving, especially by those formerly in the middle class who will for the first time experience this holiday without the traditional feast.

Change began in September with the launch of Occupy Wall Street. Previously, the disaffected had rallied and protested. The newly-homeless had held signs. The jobless had marched on Wall Street, the epicenter of the economy’s crash. But this was different. These rabble-rousers didn’t protest and go home. They dug in. They offered no end date for their cries for justice. Like the sit-down strikers who inhabited the General Motors plant in Flint, Mich. for 44 days in 1936 and 1937, these protesters are determined to stay as long as necessary.

The New York occupiers’ gumption and message – “we are the 99 percent” -- inspired a movement worldwide. Activists encamped in more than a 1,000 cities. And when police tried to rout them, the occupiers defied the official oppression, just as the sit-down strikers did. Emblematic is the 84-year-old Oakland, Calif. protester who said after police pepper sprayed her in the face that the experience energized her.

Before this movement began, country club conservatives had confined political discussion and concern to government deficits. No one acknowledged the unemployed, the impoverished or the foreclosed on – except to condemn them. The occupations changed this. Suddenly, the media talked of the problem of sharply higher income inequality and wrote about highly profitable corporations dodging taxes. Abruptly, politicians recalled the agony of joblessness and homelessness. Amazingly, there was new emphasis on polls showing massive majorities opposing austerity for the 99 percent and supporting higher taxes on the 1 percent.

For those of us in warm homes, Natalie Merchant’s words send a perfect message to those encamped:

“For your kindness, I’m in debt to you,
And I could never have gone this far without you,
For everything you’ve done,
You know I’m bound – I’m bound to thank you for it.”

On Election Day, the majority put the 1 percent and their purchased politicians on notice. The problem for the 1 percent in a one-person-one-vote democracy is that they’re outnumbered. In referendums on Nov. 8, the majority rebuffed attempts to restrict the ability of citizens to vote and to collectively bargain.

Mainers reversed a Republican attempt to limit balloting. The majority there restored Election Day voter registration – a right they’d exercised without problem for 38 years before the state’s GOP-dominated legislature and GOP governor passed a law eliminating it. The 60 percent vote for reinstatement served as public censure to Republican lawmakers nationwide who have worked to suppress voting.

In Ohio, citizens reversed a Republican attempt to sharply constrict the right of public employees to collectively bargain for better wages, benefits and working conditions. Ohio citizens affirmed their belief in unionization as a way to move workers into the middle class. The vote was 61 percent in favor of union rights, a margin that chastened country club conservatives, including Ohio’s GOP Gov. John Kasich, who said afterwards that he would “pause” to reflect because: "The people have spoken clearly. You don't ignore the public.”

To the voters in Ohio and Maine:

“Oh, I want to thank you for so many gifts. . .
I want to thank you for your generosity . . .
I want to thank you, show my gratitude. . .” ~Natalie Merchant

The following week, two demonstrations reinforced the election’s message of hope for the 99 percent. On Nov. 16, two dozen millionaires climbed up Capitol Hill and told Congress they wanted their taxes increased. Really. The following day, on the two-month anniversary of Occupy Wall Street’s birth, activists and unionists took to bridges nationwide in demonstrations for jobs.

The rich guys, the Patriotic Millionaires for Fiscal Strength, told Congress to eliminate the Bush tax cuts for the rich to help balance the budget. This group of 200 members of the 1 percent offered a solution very different from the Republican austerity demand that had dominated discourse for months.

Similarly, the protesters who occupied bridges across America sought federal investment in infrastructure to create jobs, which would help relieve the recession. Jobs, not cuts.

To the Patriotic Millionaires and the protesters,

“Oh, I want to thank you, thank you,
Thank you, thank you,
Thank you, thank you. . .” ~Natalie Merchant

Because of them, because of wise voters in Ohio and Maine, because of the Occupiers, there’s reason for gratitude this Thanksgiving.

Crash Tax: Wall Street Reparations

Leo Gerard — Wed, 16 Nov 2011 09:35:59 -0500

Wall Street waged war on the American economy and middle class with its reckless gambling.

It wasn’t Fannie Mae or Freddie Mac that crashed the economy. It wasn’t the federal government. It wasn’t hapless homeowners who were sold mortgages they couldn’t afford. It was Wall Street financiers that aggressively sought and bought mortgages to package and sell as derivatives, which the banks could wager on.

Americans bailed out Wall Street, handing it a Marshall Plan for reconstruction after its bad bets blew up the world economy. Now, three years later, happy days are here again for the Wall Street banksters. They’re hauling in big profits and paying outrageous bonuses. But the American middle class continues to suffer high unemployment, record foreclosures and rising poverty.

So it’s time for Wall Street to pay reparations. It’s time for a crash tax, a tiny sales tax on Wall Street transactions, the revenues from which would pay for Main Street restoration. It’s time for the 1 percent to repay the 99 percent, for Wall Street to share in the sacrifices necessitated by its rogue behavior.

The levy, sometimes called a Tobin Tax after the American economist and Nobel Laureate James Tobin, who endorsed it in the 1970s, is far from shocking or novel. A financial transaction tax is advocated by a huge range of groups and individuals, from billionaires to conservative heads of state. Thirty nations, including Great Britain and Switzerland, already tax some financial transactions. The United States imposed a similar tax from 1914 to 1966. In addition to raising revenue in a time of government deficits worldwide, the tax would suppress the very kind of risky speculation that got the global economy into this mess.

Supporters of the tax include the expected -- the AFL-CIO, Democratic benefactor George Soros, consumer advocate Ralph Nader, and economist Dean Baker, one of the few who saw the housing bubble and predicted its bursting. The unexpected include billionaires Bill Gates and Peter G. Peterson; former Goldman Sachs chairman John Whitehead, and former chairman of the Federal Reserve Paul Volcker. Conservative political leaders behind it include German chancellor Angela Merkel and French president Nicolas Sarkozy. Experts promoting it include Nobel Laureates Joseph Stiglitz and Paul Krugman. Moral leaders advocating for it include Archbishop of Canterbury Rowan Williams and the Pontifical Council for Justice and Peace.

Here’s what Archbishop Williams wrote in support of imposing the levy:

“There is still a powerful sense around – fair or not – of a whole society paying for the errors and irresponsibility of bankers; of messages not getting through; of impatience with a return to “business as usual” represented by still soaring bonuses and little visible change in banking practices.”

The European Commission recommended in September that the 27 European Union member countries adopt a .1 percent tax on financial transactions beginning in 2014. It estimated that the tax would raise $78 billion a year. Europe hesitates to institute the tax without a similar levy in the United States.

Earlier this month, two U.S. lawmakers who have long supported the levy introduced legislation to impose a smaller tax -- .03 percent or 3 cents on $100 in transactions. The tax proposed by U.S. Rep. Peter DeFazio, D-Ore, and Sen. Tom Harkin, D-Iowa, would raise about $350 billion over a decade.

Here’s what Sen. Harkin said about it:

“I think it’s fair. I think it’s just. I think it’s a reasonable way of raising revenue.”

That’s the gist of it. It’s fair. Wall Street caused the crash. It caused devastating unemployment. It exacerbated deficit problems in the United States, Greece, Ireland, Portugal, Spain and Italy. If the market hadn’t crashed, sustained higher tax revenues would have prevented these difficulties from intensifying.

Now, in countries worldwide, including the United States, conservatives are demanding austerity to deal with deficits. They refuse to ask financial speculators to help pay for the trouble they caused. Instead, these conservatives demand that the middle class and the poor foot the bill. American conservatives insist the middle class lose Social Security benefits, accept Medicare and Medicaid cuts, subsist with fewer teachers, firefighters and police officers.

The 99 percent have sent a pretty clear message, however, that they’re fed up and they’re not going to take unshared sacrifice anymore.

They told Bank of America where it could put its proposed monthly fee on debit cards. They told Ohio governor John Kasich where he and fellow conservatives could put their law denying public workers the right to collectively bargain for a better life. And in parks across America and around the world, the 99 percent are telling the 1 percent where they can put their demand that sacrifice be suffered only by the 99 percent.

The crash tax is, essentially, a sales tax on financial transactions. The middle class pays sales tax on all the stuff it purchases. There should be no special exceptions. The 1 percent should be paying sales tax on the purchase of risky derivatives and on bets that derivatives will fail. This is equity. This is simple fairness.

Some call this levy a Robin Hood tax. But that’s not right. This is not robbing the rich to give to the poor. This is charging the 1 percent a just share.

This is holding speculators accountable. This is individual responsibility, the concept the GOP claims to love. Wall Street bombed the world economy. Now it’s obligated to participate in financing recovery, to pay reparations to Main Street.

Traditional Voting Fails; Alternative Works

Leo Gerard — Tue, 08 Nov 2011 08:16:45 -0500

Voting doesn’t work anymore. If it did, Americans would get what they want -- or at least some of it -- from Washington.

But they don’t.

Instead of the people’s priority, which is jobs, country club conservatives in Congress stubbornly fixate on deficits. Instead of ensuring millionaires and corporations pay their fair share, House Republicans passed a budget that would destroy Medicare and Medicaid.

Corporate and clandestine campaign contributions have undermined the power of traditional voting, the kind done at polls on election day. Rather than voters, politicians now serve donors -- billionaires and banksters -- who invest untold millions and demand returns in the form of self-serving policy.

This is demoralizing to those who cherish democracy and the sanctity of one person, one vote.

Hope, however, arrived with the debit card fee victory. The 99 percent forced Bank of America to back off its proposed fee. Average Americans accomplished this by voting differently, not at the ballot box but at the twitter account, the Occupy march and the teller window, where 1 million depositors went to move $4.5 billion from the big Wall Street banks to community banks and credit unions. They found another way to exercise their franchise and force the powerful to respond.

The 99 percent must exploit the method of this triumph to get what they need. Because politicians sure as hell aren’t giving them what they want.

The numbers don’t lie. Coin-operated conservatives in Congress have rejected President Obama’s jobs plan, parts of the jobs plan and Obama’s pitch to raise taxes on the rich to pay for it.

And yet, the electorate strongly supports both surtaxing millionaires and the elements of the jobs plan. In a CNN poll in October, 75 percent favored sending federal money to the states to hire teachers and first responders and 72 percent favored infrastructure investments.

A whopping 76 percent wanted millionaires to pay higher taxes.

In that same CNN poll, there’s another compelling statistic. Sixty-one percent said reducing unemployment was the most important issue. Reducing the deficit didn’t even come close at 35 percent.

The numbers aren’t flukes. Another survey, taken a week later by CBS found the same thing.

At a time when companies are hoarding $2 trillion in reserves, failing to create jobs and demanding tax cuts, the CBS poll provided a snapshot of public opinion on corporate responsibility. It found 67 percent opposed shrinking big business tax obligations.

That is a result of the public knowing intuitively what a report released last week proved: corporations aren’t paying their fair share. Citizens for Tax Justice conducted a comprehensive study that showed 280 of the nation’s largest publically-traded corporations paid only 18.5 percent of their profits in taxes over the past three years. That is little more than half the official rate of 35 percent, and it is lower than the rate paid by their competitors in other industrialized nations.

Thirty of the companies paid nothing. For three years.

Numerous polls over time found Americans, including Tea Partiers by a two-to-one margin, strongly oppose cutting Social Security, Medicaid and Medicare benefits. Yet, what is the Congressional super-committee talking about? Cutting Social Security, Medicaid and Medicare.

If only the public could get their elected representatives to listen. If only they could walk into those plush Congressional offices -- the way corporate lobbyists do -- grab those lawmakers and get them to understand the sentiment of all those polls, the feeling of the vast majority of the electorate: Tax the rich; don’t cut the social safety net; create jobs now; worry about the deficit when the economy improves.

Traditional balloting has failed to get country club conservatives to listen to the public. To the majority. To the people who a democratically-elected government is supposed to serve.

The Bank of America debit card fee reversal suggests, however, that the majority can win with non-traditional balloting. In this case, a big bank that had been bailed out by the public after it engaged in excessively-risky betting, a bank that gave its CEO a $9 million bonus after he lost billions, announced that it had “the right to make a profit” off the backs of poor people by charging them a new $5-a-month fee to use their own money with their debit cards.

Other Wall Street banks indicated they would do the same.

Fed up, depositors said they wouldn’t take it anymore. They began transferring their money out of the Wall Street banks, participating in the “Move Your Money” campaign that urged citizens to deposit their savings in community banks and credit unions. YouTube began featuring outrageous videos of Wall Street bank branches denying depositors access to their accounts when they tried to withdraw their money to move it.

The effort was tweeted and blogged. It was cheered by Occupy Wall Street protesters who marched to bank headquarters buildings in New York City carrying thousands of letters of complaint.

Wall Street banks began backing off their new fee plans. One by one they abandoned Bank of America. Finally, it too cancelled the fee, meanwhile refusing to disclose just how much businesses it lost.

Last Saturday was the big, official “move your money” day. Of course, the Wall Street banks won’t tell how many more customers they lost. But depositors, more than 78,000 of whom pledged to make the move, made their point.

They voted differently. They voted with their feet and their wallets. And they won. They cast ballots in the only way coin-operated politicians and big banks respond to.

Robin Hood Tax Gains Ground at the G-20

Mary Bottari — Fri, 04 Nov 2011 09:46:02 -0400

The G-20 meeting in Cannes got underway yesterday. The sunny beach resort, playground to movie stars and media moguls was an odd choice for a somber G-20 meeting. As President Obama and Treasury Secretary Tim Geithner touched down in Air Force One, the Greek government was on the verge of collapse, austerity was sweeping Europe and the future of the Eurozone in doubt.

But the first day of talks offered a ray of hope for the entire global economy. For the first time, the 20 most powerful countries in the world sat down to discuss taxing the financial service industry. And for the first time, the U.S. blinked.

Welcome Change of Tune for the U.S. Government

President Sarkozy of France has long championed a small sales tax on the financial services industry. "At a time when states are making remarkable efforts to restore their public finances... how can the financial sector triumphantly continue to march, indifferent to the world around it, carelessly and without a care for the disorder it has more than its share in causing," Sarkozy said. Angela Merkel of German agrees.

President Obama too has supported the idea. Ron Suskind revealed in his new book Confidence Men that Obama thought the tax was a no brainer right after the banks collapsed the global economy -- until his economic team told him otherwise.

Behind the scenes, the “opponent in chief” has been U.S. Treasury Secretary Tim Geithner who has protected his friends on Wall Street by privately characterizing the tax as unworkable, easy to evade and not likely to bring in much income. Geithner doesn't just oppose the tax for the U.S., he has opposed the tax in the context of the G-20 and as EU member nations move forward to apply the tax in their member states.

Now the White House appears to be changing its tune. Reuters is reporting that the U.S. government is backing down from its long standing opposition to the tax.

An unnamed source told Reuters the United States now seemed "less problematic than the U.K." in resisting the idea. The U.S. is still opposed to the idea in principle but would not block others from going ahead. The Wall Street Journal confirmed the story quoting White House adviser Mark Froman as saying that the governments had decided to pursue different financial taxes, but: “I think there is broad consensus between the Europeans that the president met with this morning and ourselves about the ability of each to pursue this in their own way, whatever way they see to be most effective." Translation: Go for it, but the U.S. won’t join you.

The Wall Street Journal editorial board wasted no time, savagely attacking the idea and calling on Geithner for help.

Nurses Hold Geithner's Feet to the Fire

The news reports hit the wire almost at the exact same moment that thousands of nurses took the fight for a fair economy right to Tim Geithner’s doorstep with signs demanding "An Economy for the 99%" and “Tax Timmy’s Friends.” Nurses and other groups are fed up with Geithner's soft pedaling every action that might hold the big banks accountable for the meltdown of the global economy.

The noon rally at the Treasury marks an increased effort by unions to convince the Obama administration that more needs to be done to fix the country’s broken financial system and create jobs. Obama's reelection campaign recently announced that they were hoping to turn anger against Wall Street to their advantange in the next election cycle. Hard to do if the 99% are knocking on your door, calling for meaningful measures to make Wall Street pay. The nurses later fanned out across Capitol Hill, delivering 322,844 petition in support of the idea to Finance Chair Max Baucus and other members of the Joint Select Committee on Deficit Reduction (the Super Committee).

“It is long past time for Secretary Geithner and President Obama to get on board with other world leaders in supporting this common-sense approach to raise badly needed revenues to help fund the critical programs we need to revive the U.S. and other global economies,” said NNU Executive Director RoseAnn DeMoro, who traveled to Cannes to join with nurses from around the world at a press conference and rally close to where world leaders were meeting.

AFL-CIO President Richard Trumka was also in Cannes, quietly pushing the White House to do the right thing. The American labor leader was joined by one of the richest men on the planet, Microsoft co-founder Bill Gates, who presented a paper to the G-20 leaders advocating for the transaction tax to aid the developing world. An increasing number of unions and grassroots groups, including SEIU, AFSCME, Oxfam, Public Citizen, Rebuild the Dream and National People's Action are adopting the tax and campaigning on it, and the Occupy Wall Street crowd has embraced it as well holding small actions across the country October 29th.

The Pope was not present, and neither was the Archbishop of Canterbury, but both men came out for a financial transaction tax as economically feasible and morally right in recent days.

Actor Bill Nighy, the British actor who has long campaigned for the "Robin Hood Tax" as it is called in the U.K. and who did a wonderful video to popularize the idea joined the nurses in Cannes. “I heard a banker remark the other day that 'the time for atonement is over'. I must have been out of the country at the time, or looked away momentarily because I don't remember that period of atonement taking place. It would not affect their multimillion bonuses, “ Nighy dryly observed to the Guardian.

Tax Faces Continued Opposition in the United States

While the domestic implementation of the tax faces continued opposition from the U.S. Congress, Geithner and the White House, proponents reintroduced the legislation this week and are rapidly picking up co-sponsors. Oregon Rep. Pete DeFazio and Iowa Senator Tom Harkin introduced a modest version of the transaction tax (HR 3313) in an effort to get the Super Committee to take a closer look. While the financial services industry will work hard to convince Congress that any tax will result in the immediate collapse of the global financial system and that grannie will be hardest hit, the facts are that the modest fee proposed in this legislation is miniscule in comparison to the management fees applied by some mutual funds.

"Wall Street is 40 percent of the economy. They don't make things. They don't feed people. They churn. They create volatility,” said DeFazio. “The first step on the long path to recovery happens when we rein in the excessive speculative activity that has destabilized our financial system.”

Much more work needs to be done to get the Obama administration to adopt the idea, even more work to get it though Congress, but the tax now has a growing list of powerful allies and a simple common sense appeal.

As Trumka puts it: "It is time to put Wall Street to work rebuilding Main Street with a financial speculation tax to create jobs, rein in speculation and lay the groundwork for long-term economic prosperity."

Sacrilege: Wall Street Worship

Leo Gerard — Tue, 01 Nov 2011 10:05:26 -0400

Americans have been worshiping a bull. Too many citizens, and particularly politicians, prostrate themselves to Wall Street’s bronze idol.

They revere financial titans who pay themselves and their minions millions to manipulate money and gamble recklessly. Politicians gave tribute to the financiers with tax breaks and bailouts when the bankers’ bad bets threatened to bankrupt their institutions.

This false idolatry produced a nation gripped by massive unemployment, a nation in which destructive income inequality has risen beyond robber baron levels, a nation where greed has been perverted from sin to good, a nation where politicians genuflect to money changers, not majority citizens.

Salvation for the majority is not more failed trickle-down economics or more deregulation so that Wall Street can resume committing unfettered wagering. Redemption is political and economic systems devoted to serving the common good, not the affluent few.

These concepts -- that governments should protect majorities and that the international financial collapse is an opportunity to transform the system into one supporting a more fraternal and just human family -- are contained in a report released last week by the Pope’s Council for Justice and Peace. It says:

“The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence.”

Those values mandate economic and political systems that transcend “personal utility for the good of the community,” the report says, then adds:

“The primacy of the spiritual and of ethics needs to be restored and, with them, the primacy of politics, which is responsible for the common good – over the economy and finance.”

This is exactly what the 99 percenters -- the Occupy Wall Street activists of every faith -- have been saying. They want systems that work for the vast majority of citizens, not just the 1 percent at the top.

A day after the Pontifical Council reported that inequitable distribution of wealth has increased both between individuals and nations, the non-partisan Congressional Budget Office documented a massive spike in income inequality within the United States from 1979 to 2007.

The household income of the nation’s richest 1 percent grew 275 percent during that nearly 30-year period, according to the CBO report.

By contrast, the income of the middle class rose by one-seventh of that -- 40 percent. For the poor, the increase was one-fifteenth of that for the rich -- only 18 percent over 30 years.

The result is that the richest 20 percent of households got more money in those 30 years than the entire bottom 80 percent. That is redistribution of wealth – moving it from the poor and middle class to the richest.

The CBO study cites several factors contributing to the rising inequality, including federal tax policy. The CBO says tax policy fed inequity as the incomes of the wealthiest rose astronomically and their federal tax burden shrank.

This pattern is consistent internationally. The Organization for Economic Cooperation and Development determined that from the mid-1980s to the mid-2000s income inequality increased in three-quarters of the 30 developed countries studied.

If basic morality fails as a reason to reverse these trends, then the Pontifical Council suggested another. Such inequality leads to instability and violence:

“If no solutions are found to the various forms of injustice, the negative effects that will follow on the social, political and economic level will be destined to create a climate of growing hostility and even violence, and ultimately undermine the very foundations of democratic institutions, even the ones considered most solid.”

So far, the violence surrounding the 99 percenters in the “Occupy” movement has come from the government and police and not the other way around, thus the photos and videos of defenseless women pepper-sprayed by an officer in New York and a bleeding, critically-injured Iraq war veteran struck down by police in Oakland.

Historically, it wasn’t always that way. During another spike in the nation’s history of income inequality, in the first two decades of the 1900s, violence was turned on the rich. An anarchist shot robber baron Henry Clay Frick and bombings terrorized industrialists. As the socialist movement surged, Andrew Carnegie wrote that the gulf between rich and poor threatened the survival of capitalism.

Also ignoring morality, just consider that income inequality impedes economic development. An International Monetary Fund study found high levels of inequality retards economic recovery while relatively equal income distribution supports sustained growth. Numerous academic studies have reached the same conclusion – inequality diminishes economic expansion, for many reasons, including its tendency to provoke political and social unrest.

Yet conservative politicians continue to demand changes that would make matters worse. Candidates Herman Cain and Rick Perry, seeking the Republican nomination for president, have proffered flat tax plans that would compound the burden on the middle class and poor. On being informed that his would increase income inequality, Perry said, “I don’t care about that.”

When Democrats on the debt-reduction super committee suggested raising $1.3 trillion in tax revenues, including levies on the rich, a measure consistently supported by huge majorities of the American public, Republicans summarily rejected the proposal, calling it absurd.

The answer to the question, “What would Jesus do?” in this case is clear. The only gospel story in which Jesus engaged in violence is the cleansing of the temple of moneychangers. Morality demands an end to Wall Street worship and a new era in which both politics and financial markets work for the majority, for the common good.

The 99% Seek a Just Economy, Not Just an Economy

Leo Gerard — Mon, 24 Oct 2011 11:05:03 -0400

Republicans jammed together a mess of old, failed and vague schemes and called it a jobs bill. Sen. John McCain conceded the reason for the rehash: “Part of it is in response to the president saying we don’t have a proposal.”

They still don’t. This despite the fact that they promised voters during their campaign to take control of the U.S. House one year ago that they’d create jobs. That they’d focus on jobs. That nothing was more important to them than jobs.

Now, what they’ve offered instead of actual jobs is a polyglot of GOP talking points. It’s certainly no vision to move the country forward. It’s a plot to set the country back – to repeal the health care law that will soon help provide coverage for the nearly 50 million Americans without insurance, to rescind the Wall Street reform law designed to prevent another financial sector-caused meltdown, and to thwart regulations, like those that stopped distribution of listeria-infected cantaloupe that killed 25.

GOP Sen. Rob Portman of Ohio called the Republican polyglot a “pro-growth proposal to create the environment for jobs.” It is, in fact, a pro-business proposal to permit corporations to destroy the environment for humans.

It is another GOP ploy to appease, accommodate and absolve corporations. It is another GOP ruse to firmly establish in America an economy designed for, dedicated to and directed by corporations rather than a just economy controlled by and beneficial to the 99 percent.

Republicans offered up their “Jobs Through Growth Act” mishmash after the GOP minority in the Senate wielded the filibuster again to block a vote on President Obama’s $447 billion American Jobs Act, a measure that even Republican economists determined would create 1.9 million jobs and reduce the nation’s aching 9.1 percent unemployment by as much as 1 percent.

The Republican measure, by contrast, could hurt the economy, according to Gus Faucher, director of macroeconomics at Moody’s Analytics, an independent firm whose chief economist advised the McCain presidential campaign. Here is what Faucher said:

“Should we look at regulations and make sure they make sense from a cost benefit standpoint? Certainly. Should we reduce the budget deficit over the long run? Certainly. But in the short term, demand is weak, businesses aren’t hiring, and consumers aren’t spending. That’s the cause of the current weakness, and Republican Senate proposals aren’t going to address that in the short term. In fact, they could be harmful in the short run if the focus is on cutting spending.”

Of all the Republican proposals, the most insidious, the most dangerous, the absolutely most outrageous is their demand to roll back Wall Street reform, to repeal the Dodd-Frank Act that was passed in an attempt to prevent recurrence of the 2008 financial collapse that destroyed the U.S. economy and caused the highest levels of foreclosures, unemployment and misery among the 99 percent since the Great Depression.

Go back, the Republicans are saying. Go back to 2007 when Wall Street financiers sold worthless mortgage-backed securities to unsuspecting investors, contending with a straight face that these were assets. Go back to 2008 when these firms made hundreds of millions betting those securities would fail. Go back to 2009 when the banksters, bailed out by taxpayers, awarded billions in bonuses to the executives who’d gotten the firms and the U.S. economy into so much trouble. Go back to early 2010, the Republicans are saying, before Obama signed the Dodd-Frank reform act, and allow Wall Street to do it all over again. Reprise unfettered, irresponsible Wall Street, the Republicans demand.

For Republicans, it’s all about enforcing freedom for the few – allowing corporations and millionaires to do whatever they want. No matter what that means to the freedoms of the 99 percent. The GOP demand for repeal of health care reform is another example of that. Already, this law has expanded health coverage for a million young adults because it allows them to remain on their parents’ plan until age 26. It has also helped 1.2 million senior citizens afford their prescription drugs by beginning to close the “donut hole” during which they must pay.

Still, Republicans want to get rid of that law. They want to regress to those free-for-all days when health insurance corporations could make unlimited profits from illness, deny coverage to those with chronic illnesses and terminate coverage when policy holders got sick. They want those young adults dropped. They want senior citizens to pay more for their prescriptions again. For Republicans, it’s all about enforcing freedom for the few – allowing health insurance corporations to do whatever they want. No matter what that means to the freedoms of the 99 percent.

The Republican rebuke of any attempt to control the 1 percent is highlighted in their “jobs bill” by its call for a regulation moratorium. No new rules! The country is in the midst of the deadliest outbreak of foodborne illness in 25 years. Twenty-five people are dead. A total of 125 people in 26 states have been sickened by listeria-poisoned cantaloupe from Jensen Farms in Holly, Colo. One sickened woman suffered a miscarriage. The U.S. Food and Drug Administration (FDA) says more illnesses and deaths may occur over the next several weeks.

If the Republicans got their way, the FDA would be unable to write new regulations to prevent another such incident. It’s fine with the GOP that Jensen had hired its own inspector, a firm that certified the Jensen packing plant fine and dandy just before listeria-tainted cantaloupes killed 25 and just before the FDA found numerous, obvious violations.

That’s because the Republican precept is: an economy just for the 1 percent.