Banking Bailout Media 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.
When the Occupy Wall Street protests began three weeks ago, most news organizations were derisive if they deigned to mention the events at all. For example, nine days into the protests, National Public Radio had provided no coverage whatsoever. It is, therefore, a testament to the passion of those involved that the protests not only continued but grew, eventually becoming too big to ignore. Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point. The protesters indictment of Wall Street as a destructive force, economically and politically, is completely right. Bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. The bubbles burst but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers sins. Bankers showed their gratitude by turning on the people who had saved them, throwing their support and the wealth they still possessed thanks to the bailouts behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis. Given this history, how can you not applaud the protesters for finally taking a stand?
Note: For insights into the reasons why people have decided they must occupy their cities in protest of the predations of financial corporations, check out our extensive "Banking Bailout" news articles.
The world is facing the worst financial crisis since at least the 1930s if not ever, the Governor of the Bank of England said last night. Sir Mervyn King was speaking after the decision by the Banks Monetary Policy Committee to put 75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession. Economists said the Banks decision to resume its quantitative easing [QE] showed it was increasingly fearful for the economy, and predicted more such moves ahead. Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster. This is the most serious financial crisis weve seen, at least since the 1930s, if not ever. Were having to deal with very unusual circumstances, but to act calmly to this and to do the right thing. Announcing its decision, the Bank said that the eurozone debt crisis was creating severe strains in bank funding markets and financial markets. Financial experts said the committees actions would be a Titanic disaster for pensioners, savers and workers approaching retirement. Under QE, the Bank electronically creates new money which it then uses to buy assets such as government bonds, or gilts, from banks. By increasing the demand for gilts, QE pushes down the interest rate yields paid to holders of these and other bonds. Critics of the policy say it pushes up inflation and drives down sterling.
Note: For lots more on the global financial crisis from reliable sources, click here.
Yes, there are a wide array of complaints, demands, and goals from the Wall Street protesters: the collapsing environment, labor standards, housing policy, government corruption, ... and so on. Different people have been affected by different aspects of the same system -- and they believe they are symptoms of the same core problem. I witnessed [many cogent conversations] as I strolled by Occupy Wall Street's many teach-ins this morning. There were young people teaching one another about, among other things, how the economy works, ... the history of centralized interest-bearing currency, the creation and growth of the derivatives industry, and about the Obama administration deciding to settle with, rather than investigate and prosecute the investment banking industry for housing fraud. Anyone who says he has no idea what these folks are protesting is not being truthful. We all know that there are investment bankers working on Wall Street getting richer while things for most of the rest of us are getting tougher. Occupy Wall Street is meant more as a way of life that spreads through contagion, creates as many questions as it answers, aims to force a reconsideration of the way the nation does business and offers hope to those of us who previously felt alone in our belief that the current economic system is broken.
Note: For insights into the reasons why people have decided they must occupy their cities in protest of the predations of financial corporations, check out our extensive "Banking Bailout" news articles.
It began as the brainchild of activists across the border in Canada when an anti-consumerism magazine put out a call in July for supporters to occupy Wall Street. Now, three weeks after a few hundred people heeded that initial call and rolled out their sleeping bags in a park in New York's financial district, they are being joined by supporters in cities across the US and beyond. Protesters against corporate greed, unemployment and the political corruption that they say Wall Street represents have taken to the streets in Boston, Los Angeles, St Louis and Kansas City. The core group, Occupy Wall Street, claims people will take part in demonstrations in as many as 147 US cities this month, while the website occupytogether.org lists 47 US states as being involved. Around the world, protests in Canada, the UK, Germany and Sweden are also planned, they say. The speed of the leaderless movement's growth has taken many by surprise. The movement, which organisers say has its roots in the Arab spring and in Madrid's Puerta del Sol protests, has been galvanised by recent media attention. Last week, the Guardian reported that a NYPD police officer had been filmed spraying four women protesters with pepper spray. On Saturday, a peaceful march on Brooklyn bridge intended as a call to the other four boroughs of New York to join in resulted in 700 arrests. Some protesters claim the police trapped them.
Note: For insights into the reasons why people have decided they must occupy their cities in protest of the predations of financial corporations, check out our extensive "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.
An independent trader, appearing on BBC News, reveal[ed] that he thinks banks and hedge funds believe the stock market 'is toast'. Alessio Rastani said that Goldman Sachs rules the world, not governments, and that Goldman Sachs don't care about this rescue package because they know the stock market is finished and they don't really care about the Euro. US Treasury Secretary Tim Geithner said over the weekend: "Sovereign and banking stresses in Europe are the most serious risk now confronting the world economy. Decisions cannot wait until the crisis gets more severe." He has proposed the so-called Geithner plan which will leverage the EU's 440bn bail-out fund (EFSF) from 440bn to 2 trillion to cope with Italy and Spain. But according to Mr Rastani it may already be too late as: In less than twelve months, my prediction is, the savings of millions of people are going to vanish.
Note: To watch the full BBC video of this most unusual interview, click here. For lots more on the fraudulent practices of major financial firms, click here.
Why are people occupying Wall Street? Why has the occupation despite the latest police crackdown sent out sparks across America, within days, inspiring hundreds of people to send pizzas, money, equipment and, now, to start their own movements called OccupyChicago, OccupyFlorida, in OccupyDenver or OccupyLA? We are watching the beginnings of the defiant self-assertion of a new generation of Americans, a generation who are looking forward to finishing their education with no jobs, no future, but still saddled with enormous and unforgivable debt. Is it really surprising they would like to have a word with the financial magnates who stole their future? Just as in Europe, we are seeing the results of colossal social failure. The occupiers are the very sort of people, brimming with ideas, whose energies a healthy society would be marshaling to improve life for everyone. Instead, they are using it to envision ways to bring the whole system down. But the ultimate failure here is of imagination. If the occupiers finally manage to break the 30-year stranglehold that has been placed on the human imagination ... everything will once again be on the table and the occupiers of Wall Street and other cities around the US will have done us the greatest favour anyone possibly can.
Note: A post on the JP Morgan Chase website confirms an unprecedented $4.6 million gift to the New York City Police Foundation. The money was donated ostensibly as a "gift ... to strengthen security in the Big Apple." Now why would this huge bank be donating millions for security in New York City? For key insights from major media sources into the reasons why so many are protesting worldwide, click here.
The American banking sector apparently is going to be vastly different when it finally emerges from the financial crisis that took hold more than three years ago. It is going to be significantly smaller, and the domination of a relative handful of behemoth institutions is going to increase. At the end of June, there were 7,522 commercial banks, down from 8,542 on Dec. 31, 2007. That is a decline of nearly 12 percent in just three and a half years. Of the more than 1,000 banks that disappeared, about 370 failed. But the rest of the decrease came through mergers and acquisitions as a decades-long pattern of consolidation continued. Most banks in the United States still are fairly small. The median size of a bank at the end of June, according to an analysis of statistics from the Federal Deposit Insurance Corp. was about $155 million in assets. Thats about an 18 percent increase since the end of 2007. But those numbers seriously skew the nature of the industry. Of the more than $13.6 trillion in assets held by banks at the end of June, nearly $9.4 trillion is in the hands of just 37 institutions, each with more than $50 billion in assets. And of that, $5.5 trillion is held by just four banks: JPMorgan Chase, Bank of America, Citibank and Wells Fargo. Each of those have more than $1 trillion in assets. In other words, the U.S. banking industry resembles a tall cake, with a very thick layer of icing on top.
Note: To learn how these same four banks and their holding companies hold over 90% of the $700 trillion derivatives market, click here. For many revealing reports from reliable sources on the concentration and centralization of financial power by a few megabanks, click here.
What if we stood up for Main Street? Corporations and elected officials are making decisions that are impacting our lives, and we are at their mercy. Americans, many [of] whose lives have been destroyed by the 2008 subprime mortgage market disaster, resent the lack of accountability on the part of Wall Street for its role in this scandal. Few have been indicted for the market collapse and resulting meltdown of the global economy. After the federal government bailed out the financial institutions, it is back to business as usual. Corporate profits are accumulating and bonuses are raining down on the very players who created the bubble and crash in the first place. On the other hand, the taxpayers who bailed out Wall Street aren't doing so well. Instead of bonuses, we are suffering from unemployment and underemployment of epic proportions. Homeowners continue to lose their homes to foreclosure, and homelessness is on the rise. Public services, public safety and public welfare funding is being cut back or cut out. Public education has been decimated. American corporations have lost all sense of responsibility for U.S. citizens. While the U.S. economy fights to survive, corporations have turned their backs on those whose tax dollars kept our ship of state from sinking. Sending jobs overseas might improve corporate profit margins, but at what expense to the workforce and U.S. economy? These decisions have devastated American workers' lives. So, what needs to be done? What if we begin to stand up for Main Street?
Note: For a treasure trove of reports detailing the criminal collusion between the federal government and Wall Street financial corporations, click here.
Citigroup Inc. and Bank of America Corp. were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits. By 2008, the housing markets collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret. Fed Chairman Ben S. Bernankes [actions] included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley, got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. It wasnt just American finance. Almost half of the Feds top 30 borrowers, measured by peak balances, were European firms. Data gleaned [under the Freedom of Information Act] make clear for the first time how deeply the worlds largest banks depended on the U.S. central bank to stave off cash shortfalls. Even as the firms asserted in news releases or earnings calls that they had ample cash, they drew Fed funding in secret.
Note: For a treasure trove of information from reliable sources on the government transfer of public assets to private banks and financial corporations, click here.
The SEC has violated federal law by destroying the records of thousands of enforcement cases in which it decided not to file charges against or conduct full-blown investigations of Wall Street firms and others initially suspected of wrongdoing, a former agency official has alleged. The purged records involve major firms such as Goldman Sachs, Citigroup, Bank of America, Morgan Stanley and hedge-fund manager SAC Capital. At issue were suspicions of actions such as insider trading, financial fraud and market manipulation. A file closed in 2002 involved Lehman Brothers, the investment bank whose collapse fueled the financial meltdown of 2008, according to the former official. A file closed in 2009 involved suspected insider trading in securities related to American International Group, the insurance giant bailed out by the government at the height of the financial crisis. The allegations were leveled in a July letter to Sen. Charles E. Grassley (R-Iowa) from Gary J. Aguirre, a former SEC enforcement lawyer now representing a current SEC enforcement lawyer, Darcy Flynn. Flynn last year began managing SEC enforcement records and became concerned that records that were supposed to be preserved under federal law were being purged as a matter of SEC policy, Aguirre wrote.
Note: For more on this important news by Rolling Stone's Matt Taibbi, click here. For lots more from reliable sources on the criminal practices of Wall Street corporations which led to global economic recession and massive government bailouts, click here.
The insurer AIG is suing Bank of America to recover more than $10 billion of losses from a "massive fraud" on mortgage debt, deepening the morass of litigation faced by the largest U.S. bank. American International Group Inc, still largely owned by taxpayers after $182.3-billion of government bailouts, is the latest of a growing number of investors filing lawsuits to hold banks responsible for losses on soured mortgages that contributed to the financial crisis. The AIG complaint accuses Bank of America and its Countrywide and Merrill Lynch units of misrepresenting the quality of mortgages placed in securities and sold to investors. "Defendants were engaged in a massive scheme to manipulate and deceive investors, like AIG, who had no alternative but to rely on the lies and omissions made," said the complaint, being filed in the New York State Supreme Court in Manhattan. Bank of America bought Countrywide for $2.5 billion in July 2008 and acquired Merrill six months later. The Countrywide acquisition is almost universally considered a disaster because of the costs of litigation and writing down bad loans.
Note: For lots more from reliable sources on the government bailout of major banks and Wall Street corporations, click here.
As the government struggled to reach an agreement on raising the debt ceiling, the U.S. Treasury's cash balance fell to $74 billion this week. That's less than the $76 billion that Apple now has in cash. To be fair, comparing Apple's cash reserves with the Treasury's is not exactly apples to apples. Apple's billions are essentially the funds in its bank accounts, while the federal number represents the amount of money the government has left before it hits the legal debt limit a figure that can be changed by Congress. At about $362 billion, Apple is the second-largest company in the world by market value (behind Exxon Mobil Corp. at $395 billion) big by any standard, but still far smaller than the U.S. government, which will spend close to $3.8 trillion this year, 10 times what Apple is worth. Still, Apple's reasons for keeping such a giant cash stockpile may well be related to worries about the stability of the U.S. government's finances. "One of the reasons U.S. companies have amassed so much cash is that it provides them financial flexibility in times of heightened uncertainty," said Laurie Simon Hodrick, a professor of business economics at Columbia University's business school. "It might seem ironic, but as the risk of a government default grows, bringing with it the specter of higher interest rates, the incentives for firms to finance with internally generated cash grows as well."
By some measures, the United States is even more deeply in hock than Greece. Greeces debt-to-GDP ratio is 143%. Americas is officially 97%. But the $14.3 trillion national debt, stacked up against a $14.7 trillion economy, doesnt tell the whole story. [It] doesnt count the black box of bailouts. We know how much the Federal Reserve doled out in emergency loans: $16.1 trillion between Dec. 1, 2007, and July 21, 2010. We know that because yesterday the Government Accountability Office completed its first-ever audit of the Fed, made possible largely through the persistence of Rep. Ron Paul (R.-Tex.) making that audit, however incomplete, the law. What we dont know is how much of that has been paid back. We have literally injected about $5.3 trillion, said Dr. Paul earlier this month during his questioning of Fed chief Ben Bernanke, and I dont think we got very much for it. The national debt went up $5.1 trillion. Bernanke did not challenge those figures. Even now, Americans are turning to their credit cards to pay for groceries and gas. According to First Data Corp., the volume of gasoline purchases put on credit cards jumped 39% over the last 12 months. You dont want to be the average American in a default scenario, whenever it arrives. Ray Dalio, the head of Bridgewater Associates, the worlds biggest hedge fund, puts that day in late 2012 or early 2013.
Note: A careful Internet search reveals that no one in the major media except this Forbes blog even mentioned the astonishing results of the first ever audit of the Federal reserve - $16 trillion in secret loans. To understand how the media is controlled from reporting vitally important information like this, click here. For another revealing article showing what is happening from a historical perspective and its relationship to gold prices, click here. For an article detailing who received these trillions and links to the official GAO report, click here. For critical information on the financial system kept hidden from the public, click here.
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. Among the [Government Accountability Office] investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. The [report] also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans. For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.
Note: We don't normally use the website of a member of the U.S. Senate as a source, but as amazingly none of the media covered this vitally important story other than one blog on Forbes, we are publishing this here. The GAO report to back up these claims is available for all to see at this link. For how the media is so controlled, don't miss the powerful two-page summary with reports by many award-winning journalists at this link. For another good article on the Fed's manipulations, click here.
With the first anniversary of the Dodd-Frank financial reform law on July 21, ... what has it accomplished? Consumer advocates, many congressional Democrats and some economists say banks are still too big, the derivatives market remains untamed and opaque, and regulators have been slow to write hundreds of rules. Rules forcing most derivatives trades to be processed through clearinghouses, and backed by collateral, should ... be accepted globally to avoid regulatory arbitrage, in which trading firms move to countries with the least intrusive, and lowest cost, oversight. Less than three years ago, the financial system almost buckled under the weight of worthless mortgages, and the country narrowly avoided another Great Depression. Regulators had been blind to the credit boom and bust; banks took huge risks that exploited regulatory gaps. Today, the economy remains weak ... because of the lingering fallout of the financial crisis. Dodd-Frank isnt perfect, but already its influence on the financial system has been positive, in ways big and small. Accounting is more transparent; off-balance-sheet assets are largely a thing of the past. [Yet] with the top 10 U.S. banks holding 77 percent of the industrys domestic assets, compared with 55 percent in 2002, too-big-to-fail is an even bigger worry today. Thomas M. Hoenig, the Kansas City Federal Reserve president, has said that the incentives for risk-taking that existed before the crisis all remain in place.
Note: For many of the most informative reports from major media sources on the financial meltdown and government bailout of the biggest banks, click here.
The more aggressively a bank lobbied before the financial crisis, the worse its loans performed during the economic downturn -- and the more bailout dollars it received, according to a study published by the National Bureau of Economic Research this week. The report, titled "A Fistful of Dollars: Lobbying and the Financial Crisis," said that banks' lobbying efforts may be motivated by short-term profit gains, which can have devastating effects on the economy. "Overall, our findings suggest that the political influence of the financial industry played a role in the accumulation of risks, and hence, contributed to the financial crisis," said the report, written by three economists from the International Monetary Fund. Data collected by the three authors -- Deniz Igan, Prachi Mishra and Thierry Tressel -- show that the most aggressive lobbiers in the financial industry from 2000 to 2007 also made the most toxic mortgage loans. They securitized a greater portion of debt to pass the home loans onto investors and their stock prices correlated more closely to the downturn and ensuing bailout. The banks' loans also suffered from higher delinquencies during the downturn.
Note: If the above link fails, click here. For lots more from reliable sources on corruption in the government bailouts of the biggest banks, 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.
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