Banking Bailout News Articles
Below are key excerpts of revealing news articles on the 2008 banking bailout from reliable news media sources. If any link fails to function, a paywall blocks full access, or the article is no longer available, try these digital tools.
The Occupy Wall Street protest against income disparity spread across Western Europe, Asia, the U.S. and Canada today. Rome's demonstration turned violent, contrasting with peaceful events elsewhere. The rallies started last month in New York's financial district, where people have been staying in lower Manhattan's Zuccotti Park. They widened to 1,500 cities today, including Sydney and Toronto, the organizers said, in a global day of action against Wall Street greed. Protesters say they represent the 99 percent, a nod to a study by Nobel Prize-winning economist Joseph Stiglitz showing the top 1 percent of Americans control 40 percent of U.S. wealth. In Berlin, 6,000 took to the streets and 1,500 gathered in Cologne, ZDF television said. In Frankfurt, 5,000 marched by the European Central Bank headquarters. In New York, demonstrators marched past a JPMorgan Chase & Co. branch urging clients to transfer accounts to a financial institution that supports the 99 percent. They distributed fliers with a list of community banks and credit unions. New York police arrested 24 at a Citigroup Inc. bank branch and 6,000 gathered in Times Square. About 1,000 people gathered in Toronto's financial district carrying signs saying Nationalize the Banks. Demonstrations turned violent in Italy, where the unemployment rate for 15-to-24-year-olds was 27.6 percent in August.
Note: For lots more on the reasons why people all over the world are occupying their city centers, check out our "Banking Bailout" news articles.
Occupy Wall Street, the growing, decentralized protest movement thats clashing with police in New York City, spreading across the country, and grabbing headlines across the world ... is also, somewhat unusually, a protest movement without clear demands, an identifiable leadership, or an evident organizational structure. Decisions are made by the NYC General Assembly, which Nathan Schneider describes as a horizontal, autonomous, leaderless, modified-consensus-based system with roots in anarchist thought, and thus far, the General Assembly has decided against yoking the movement to a particular set of goals, or even a particular ideology. Which is all to say that its important to try and understand the movement on its own terms, rather than the terms most of us are used to. Here are five places to start: - The ... Occupy Wall Street blog, and in particular, the blogs forums. Here, for instance, is the movements Declaration of the Occupation of New York City. - Nathan Schneiders Occupy Wall Street FAQ. Id perhaps recommend this as the single best place to start. - Understanding the theory behind Occupy Wall Streets approach, by Mike Konczal. Also see his post, 15 definitions of freedom from Occupy Wall Street.
Note: For lots more on the reasons why people all over the world are occupying their city centers, check out our "Banking Bailout" news articles.
Their complaints range from corruption to lack of affordable housing and joblessness, common grievances the world over. But from South Asia to the heartland of Europe and now even to Wall Street, these protesters share something else: wariness, even contempt, toward traditional politicians and the democratic political process they preside over. They are taking to the streets, in part, because they have little faith in the ballot box. Economics have been one driving force, with growing income inequality, high unemployment and recession-driven cuts in social spending breeding widespread malaise. Alienation runs especially deep in Europe, with boycotts and strikes. The protest movements in democracies are not altogether unlike those that have rocked authoritarian governments this year, toppling longtime leaders in Tunisia, Egypt and Libya. Protesters have created their own political space online that is chilly, sometimes openly hostile, toward traditional institutions of the elite. Youre looking at a generation of 20- and 30-year-olds who are used to self-organizing, said Yochai Benkler, a director of the Berkman Center for Internet and Society at Harvard University. They believe life can be more participatory, more decentralized, less dependent on the traditional models of organization, either in the state or the big company. Those were the dominant ways of doing things in the industrial economy, and they arent anymore.
Note: For key insights from major media sources into the reasons why so many are protesting worldwide, click here.
In November 2009, Attorney General Eric Holder vowed before television cameras to prosecute those responsible for the market collapse a year earlier, saying the U.S. would be relentless in pursuing corporate criminals. In the 18 months since, no senior Wall Street executive has been criminally charged. Prosecutions of three categories of crime that could be linked to the causes of the crisis -- corporate, securities and bank fraud -- declined last fiscal year by 39 percent from 2003, the period after the accounting scandals at Enron Corp. and WorldCom Inc., Justice Department records show. You need a massive prosecutorial effort, said Solomon Wisenberg, a white-collar defense attorney at Barnes & Thornburg LLP in Washington and a former federal prosecutor. I don't see evidence that it's happening." The seizing up of credit markets led to the collapse of Bear Stearns and Lehman Brothers Holdings Inc. and sparked the worst economic slump in the U.S. since the Great Depression. Much of the blame belongs to banks that profited from selling products that imploded with the housing market.
Note: For undeniable evidence of fraud at the highest levels of Wall Street, click here.
The New York Attorney General's office has been requesting information from Bank of America, Goldman Sachs and Morgan Stanley on how they created and structured mortgage bonds at the height of the credit boom. That investigation has reignited questions about why, nearly three years after the financial crisis, no Wall Streeter has yet to face criminal charges directly related to the mortgage bonds and other toxic deals that lead to the financial crisis. No one really knows the answer, but there are a number of theories out there. Here are the best ones: Theory No. 1: Prosecutors have been told to back off. In mid-April, the New York Times did a large investigative piece that found a number of instances where prosecutors were told not to pursue Wall Street. Theory No. 2: Wall Street is innocent. It may seem like the most bizarre answer, but it is getting some traction. No one is really saying that Wall Street didn't do anything wrong. It's clear that setting up risky mortgage bonds to sell to investors and then betting against them yourself is wrong. But is it illegal? It's not quite clear. Theory No. 3: The cases are still in the works. There seems to be some evidence that prosecutors are starting to be more aggressive in pursuing cases. It's not clear what part of the mortgage process, or what potential wrong doing, the NY AG Eric Schneiderman is investigating. The truth is that Wall Streeters rarely go to jail. Yes, other bubbles and financial crises have resulted in numerous convictions, but generally not of Wall Streeters.
Note: Remember that Elliot Spitzer probably got taken down for going after Wall Street. Now his successor, Eric Schneiderman, is doing the same thing. For an excellent article on this brave man, click here.
The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europes single currency is coming apart at the seams. How did it all go so wrong? The fact is that what were experiencing right now is a top-down disaster. The policies that got us into this mess ... were, with few exceptions, policies championed by small groups of influential people in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes. What happened to the budget surplus the federal government had in 2000? First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs. So who was responsible for these budget busters? It wasnt the man in the street. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, theyll do even more damage in the years ahead.
Note: For highly revealing major articles exposing secret gatherings of the global elite and their activities, click here.
The Federal Reserve will disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view. The justices ... left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News' parent company, Bloomberg. The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window. "I can't recall that the Fed was ever sued and forced to release information" in its 98-year history, said Allan H. Meltzer, the author of three books on the U.S central bank and a professor at Carnegie Mellon University in Pittsburgh. The disclosures, together with details of six bailout programs released by the central bank in December under a congressional mandate, would give taxpayers insight into the Fed's unprecedented $3.5 trillion effort to stem the 2008 financial panic. Under the trial judge's order, the Fed must reveal 231 pages of documents related to borrowers in April and May 2008, along with loan amounts. News Corp.'s Fox News is pressing a bid for 6,186 pages of similar information on loans made from August 2007 to November 2008.
Note: For a treasure trove of reports from major media sources on the hidden activities of the Fed and the biggest Wall Street and international banks, click here.
Michigan lawmakers are on the verge of approving a bill that would enable the governor to appoint "emergency managers" -- officials with unilateral power to make sweeping changes to cities facing financial troubles. Under the legislation ... the governor could declare a "financial emergency" in towns or school districts. He could then appoint a manager to fire local elected officials, break contracts, seize and sell assets, eliminate services - and even eliminate whole cities or school districts without any public input. The measure passed in the state Senate this week; the House passed its own version earlier. Republican Gov. Rick Snyder has said he will sign the bill into law. U.S. Rep. John Conyers, a Democrat who represents Detroit, said in a statement that in a given city, the governor's new "financial czar" could "force a municipality into bankruptcy, a power that will surely be used to extract further concessions from hardworking public sector workers." He said the legislation raises "serious constitutional concerns."
Note: The bill was made law. For more, click here. For a treasure trove of reports from major media sources exposing the control exerted by financial powers on government officials, click here.
When it comes to paychecks, Wall Street's law of gravity is back in full force: What goes down must come back up. In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal. The total is up 5.7% from $128 billion in combined compensation and benefits by the same companies in 2009. At 25 large financial firms that have reported full-year results, revenue rose to $417 billion, another all-time high. "Things are shifting back to where they were before," said J. Robert Brown, a law professor at the University of Denver who studies compensation and corporate-governance issues. Buried in the numbers, though, are signs of how Wall Street's pay culture is bending in response to pressure from regulators and shareholders. Last year, deferred compensation made up as much as half of total pay, up from about a third previously, estimates Alan Johnson, managing director of Johnson Associates Inc., a New York pay consultant. Banks and securities firms are deferring a larger percentage of compensation than they used to, trying to counter criticism that yearly cash bonuses encourage unwise risk-taking by executives, traders and other employees aiming for a big payday.
Note: For the NY State Comptroller's analysis of Wall Street bonuses in 2010, click here and here.
Two of the US's biggest mortgage lenders have had mortgage foreclosures cancelled in a case that could affect other banks. The Supreme Court in Massachusetts ruled against US Bancorp and Wells Fargo in a widely watched case. Backing a lower court ruling made in 2009, it said two foreclosure sales were invalid because the banks did not prove that they owned them at the time. The decision is among the earliest to address the validity of foreclosures done without proper documentation - so-called robo-loans because they were carried out by people who were unqualified and who often did not check a single line in the paperwork. Marty Mosby, an analyst at Guggenheim Securities said: "A ruling like this will slow down the foreclosure process. They're going to have to be really precise and get everything in order. It doesn't leave a lot of wiggle room." The case also applies retrospectively to people who have already been foreclosed. Glenn Russell, a lawyer for one of the couples in the case said: "I'm ecstatic. The fact the decision applies retroactively could mean thousands of homeowners can seek recovery for homes wrongfully foreclosed upon." Analysts said the decision may also threaten banks' ability to package mortgages into securities, and may raise the spectre that loans transferred improperly will need to be bought back.
Note: For lots more from major media sources on the criminal profiteering by the largest banks and Wall Street financial firms, click here.
America's big businesses are less and less American. They're going abroad for sales and employees. That's one reason they've showed record-breaking profits in 2010 while creating almost no American jobs. Consider one of the most popular products for Christmas gifts of all time - Apple's iPhone. Researchers from the Asian Development Bank Institute have dissected an iPhone, whose wholesale price is around $179, to determine where the money actually goes. Only about $11 of that iPhone goes to American workers, mostly researchers and designers. Even old-tech American companies made big money abroad in 2010 - and created scads of jobs there. General Motors, for example, is now turning a nice profit, and American investors are bullish about its future. That doesn't mean GM will be creating lots more blue-collar jobs in America, though. 2010 was a banner year for GM's foreign sales - already two-thirds of its total sales, and rising. In October, GM became the first automaker to sell more than 2 million cars a year in China. The company is now making more cars in China than in the United States. Meanwhile, back home in the United States, GM has slashed its labor costs. New hires are brought in at roughly half the wages and benefits of former GM employees, under a two-tier wage structure accepted by the United Auto Workers. Almost all of GM's U.S. suppliers have also cut their payrolls.
Note: Robert Reich, former U.S. secretary of labor, is professor of public policy at UC Berkeley and the author of the new book Aftershock: The Next Economy and America's Future. He blogs at www.robertreich.org.
Excerpts from complaint by New York State Attorney General (and Governor-Elect) Andrew Cuomo: E&Y [Ernst and Young] substantially assisted Lehman Brothers Holdings Inc., now bankrupt, to engage in a massive accounting fraud, involving the surreptitious removal of tens of billions of dollars of securities from Lehmans balance sheet in order to create a false impression of Lehmans liquidity, thereby defrauding the investing public. As the financial crisis deepened in 2007 and 2008 and Lehmans liquidity problems intensified, E&Y ... assisted Lehman in defrauding the public about the Companys deteriorating financial condition, particularly its leverage. As the public auditor for Lehman, E&Y had the absolute obligation to ensure that Lehmans financial statements ... did not mislead the public. Instead of fulfilling this obligation ... E&Y sat by silently while Lehman deceived the public by concealing [fraulent] transactions and misrepresenting the Companys leverage. By doing so, E&Y directly facilitated a major accounting fraud, and helped Lehman mislead the public as to its true financial condition. E&Y, which reaped over $150 million in fees from Lehman, must be held accountable for its role in this fraud.
Note: For key reports from reliable sources detailing the fraud that led to the financial crisis and bailout of Wall Street by taxpayers, click here.
More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned. Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery. "Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy," Whitney [said]. "There's not a doubt on my mind that you will see a spate of municipal bond defaults. You can see fifty to a hundred sizeable defaults more. This will amount to hundreds of billions of dollars' worth of defaults." American cities and states have debts in total of as much as $2tn. US states have spent nearly half a trillion dollars more than they have collected in taxes, and face a $1tn hole in their pension funds, said the CBS programme, apocalyptically titled The Day of Reckoning.
Note: For a treasure trove of reports from major media sources on the dire impacts of the financial crisis and government bailout of financial capitalists at taxpayers' expense, click here.
As a result of an amendment that I was able to include in the Wall Street reform bill, we have begun to lift the veil of secrecy at the Fed. It is unfortunate that it took this long, and it is a shame that the biggest banks in America and Mr. Bernanke fought to keep this secret from the American public every step of the way. But, the details on this bailout are now on the Federal Reserve's website. This is a major victory for the American taxpayer and for transparency in government. After years of stonewalling by the Fed, the American people are finally learning the incredible and jaw-dropping details of the Fed's multi-trillion-dollar bailout of Wall Street and corporate America. What have we learned so far from the disclosure of more than 21,000 transactions? We have learned that the $700 billion Wall Street bailout signed into law by President George W. Bush turned out to be pocket change compared to the trillions and trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to every major financial institution in this country.
Note: The author is Senator Bernie Sanders (I-VT). For key reports from reliable sources on the massive federal bailout of the biggest banks and financial firms, click here.
The nations workers may be struggling, but American companies just had their best quarter ever. American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, according to a Commerce Department report. That is the highest figure recorded since the government began keeping track over 60 years ago. The next-highest annual corporate profits level on record was in the third quarter of 2006, when they were $1.655 trillion. Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history. As a share of gross domestic product, corporate profits also have been increasing, and they now represent 11.2 percent of total output. That is the highest share since the fourth quarter of 2006, when they accounted for 11.7 percent of output.
Note: Long-term unemployment is at a record high, yet corporations are raking in record profits. With record profits, why aren't corporations hiring more new employees? For many reports from reliable souces on corporate profiteering, click here.
When discussing reserve currency alternatives to the US dollar, conversation almost inevitably returns to the International Monetary Funds synthetic reserve asset, the Special Drawing Right (SDR). However, the SDR basket of currencies is noticeably antiquated in its design, including only the currencies of industrialized nations. This week, foreign exchange manager Overlay Asset Management [OAM] has announced a currency basket its launching in order to offer a more up-to-date virtual world reserve currency. According to the Financial Times: [OAMs] Wealth Preservation Currency Index consists of the currencies of the worlds 15 largest economies, weighted by their gross domestic product, adjusted for purchasing power parity. Overlays rationale is that investment portfolios are often heavily exposed to the dollar, but many investors have doubts as to whether the greenback can retain its value and remain the worlds primary reserve currency. The global currency war as many are calling it continues to heat up, with no obvious resolution in sight. While it wouldnt be a simple, quick, or painless process to replace the US dollar as reserve currency, it seems inevitable that calls for just such action are bound to increase, especially if currently loose US monetary policy ... continues unabated.
Note: You can read more details in Financial Times coverage of how a new world currency index has launched.
"Inside Job," as the movie title implies, sees the 2008 financial meltdown, its causes and ongoing catastrophic consequences, as the work of crooks. Crooks as in members of the financial services industry. Aided and abetted by ... administrations of both political stripes, ratings agencies and regulators, all of whom were committed to an ideology that enabled larceny on a grand scale. The documentary, written, produced and directed by Bay Area high-tech entrepreneur turned filmmaker Charles Ferguson, opened in Bay Area cinemas [on October 22]. Even if you've read through the growing pile of books, congressional hearings and material generated by the Financial Crisis Inquiry Commission, it has plenty to remind you why you are furious, all over again. If further proof is needed, the film effectively demolishes the "who knew?" argument proffered by Goldman Sachs Group CEO Lloyd Blankfein and his peers. And it makes a convincing case that much of the obscenely compensated financial services industry has been rotten to the core for decades, but is yet to be held truly accountable for activities, both immoral and illegal.
Note: For lots more from reliable sources on the criminal practices of the largest financial corporations and regulatory agencies which led to the current economic crisis, click here.
For months, companies have been sitting on the sidelines with record piles of cash. Now they're starting to deploy some of that money - not to hire workers or build factories, but to prop up their share prices. Sitting on these unprecedented levels of cash, U.S. companies are buying back their own stock in droves. So far this year, firms have announced they will purchase $273 billion of their own shares, more than five times as much compared with this time last year, according to Birinyi Associates, a stock market research firm. But the rise in buybacks signals that many companies [do not plan to] spend their cash on the job-generating activities that could produce economic growth. "They don't know what they want to do with all the cash they're sitting on," said Zachary Karabell, president of RiverTwice Research. Historically low interest rates are also prompting some companies to borrow to repurchase shares. Microsoft, for instance, borrowed $4.75 billion last month by issuing new bonds at rock-bottom interest rates and announced it would use some of that money to buy back shares. The company already has nearly $37 billion in cash. A share buyback is a quick way to make a stock more attractive to Wall Street. It improves a closely watched metric known as earnings per share, which divides a company's profit by the total number of shares on the market. Such a move can produce a sudden burst of interest in a stock, improving its price.
Note: For lots more from reliable sources on the massive profiteering by corporate recipients of government financial largesse, click here.
U.S. companies are rebounding quickly from the recession and posting near-historic profits, the result of aggressively re-tooling their operations to cope with lower revenue and an uncertain outlook. An analysis by The Wall Street Journal found that companies in the Standard & Poor's 500-stock index posted second-quarter profits of $189 billion, up 38% from a year earlier and their sixth-highest quarterly total ever, without adjustment for inflation. For all U.S. companies, the Commerce Department estimates second-quarter after-tax profits rose to an annual rate of $1.208 trillion, up 3.9% from the first quarter and up 26.5% from a year earlier. That annual rate is the highest on record, though it doesn't account for inflation. As a percentage of national income, after-tax profits were the third-highest since 1947, surpassed only by two quarters in 2006, near the peak of the last economic expansion. The data indicate that big companies are recovering from the downturn faster and more strongly than the overall economy, helping send stock prices higher this year. To achieve that performance, companies laid off hundreds of thousands of workers, closed less-profitable units, shifted work to cheaper regions and streamlined processes. Despite the hefty profits, executives aren't expected to boost spending on new employees, products and equipment anytime soon. "We've focused on permanent changes that won't have to be undone as sales improve," said John Riccitiello, chief executive of Electronic Arts.
Note: For highly revealing reports on income inequality, click here.
An intelligence analyst named Eitan Arusy [at the district attorney's office in Manhattan] began studying a slim lead. Suspicious money was flowing to and from an Iranian nonprofit. Mr. Arusy's probe, later merged with a Justice Department inquiry, ultimately widened to some of Europe's vaunted banks, helping spark a global inquiry that found they actively evaded U.S. law in aiding sanctioned countries, banks or other enterprises move some $2 billion undetected. Nine banks have been caught up in the probe. These weren't rogue operations. The investigators discovered that the banks ran dedicated units to systematically aid the undetected transfer of money through the U.S. banking system. They did that by removing identifying coding on fund transfers so they could evade automated U.S. bank computer systems designed to spot money flowing from a sanctioned state. The far-reaching inquiry started small. Mr. Arusy arrived at the district attorney's office in 2005 to help ferret out illegal financing tied to the Middle East. Though the office prosecutes everyday crime, it carved out a role infiltrating crimes tied to the city's financial markets and institutions. Its expertise dates to the 1990s, when it led the investigation of Bank of Credit & Commerce International, or BCCI, which collapsed in a fraud and money-laundering scandal.
Note: For a treasure trove of articles from reliable sources revealing the criminality of many major financial corporations, click here.
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