Put Big Bank CEOs in Jail

Elizabeth Warren to Wall Street Regulators: Put Big Bank CEOs in Jail

—By Erika Eichelberger

| Wed Oct. 23, 2013 12:33 PM PDT

 

This past weekend, the Department of Justice slapped a record fine on JPMorgan Chase for packaging and selling the mortgage-backed financial products that helped cause the financial meltdown. But Sen. Elizabeth Warren (D-Mass.) wants the administration to know that fines are not enough. On Wednesday, she called on Wall Street regulators to hold all those responsible for the 2008 crisis accountable.
In a letter to the Federal Reserve, the Securities and Exchange Commission (SEC) and the Officer of the Comptroller of the Currency (OCC), Warren lauded the overseer of the TARP bailout program for cracking down on financial industry players who wasted, stole, or abused the federal emergency funds doled out to banks during the financial crisis, and implied that the three banking regulators should also punish individuals who helped cause the financial meltdown.
Although the budget for TARP's inspector general was "a small fraction of the size of the budgets and staffs at your agencies," Warren pointed out, the program's watchdog has brought criminal charges against nearly 100 senior executives; obtained criminal convictions on 107 defendants, including 51 jail sentences; and suspended or banned 37 people from working in the banking industry.
How about you guys, Warren asked. She called on the Fed, the SEC, and the OCC to provide records on the number of people the agencies have charged criminally and civilly, the number of convictions and prison sentences they have obtained, the number of people banned or suspended from working in the industry, and the total amount of fines leveled against Wall Street ne'er-do-wells.
Warren knows the answer to most of these questions, but wants to shame the agencies into action. Yes, big banks have been forking over billions of dollars in civil settlements for bad behavior in the lead up to the crisis. There have been prosecutions of various smaller mortgage brokers, and some civil charges and settlements against executives who helped cause the crisis. But zero Wall Street CEOs are in jail for bringing down the economy, and no CEOs have faced criminal charges.
Earlier this year, U.S. Attorney General Eric Holder seemed to concede that some banks are "too big to jail." But Warren doesn't buy it. "There have been some landmark settlements in recent weeks for which your agencies and others deserve substantial credit," Warren said in the letter. "However, a great deal of work remains to be done to hold institutions and individuals accountable for breaking the rules and to protect consumers and taxpayers from future violations."

Every American needs to watch this NOW!

Every American needs to watch this NOW!
http://www.youtube.com/watch?feature=player_embedded&v=JTxWMkW8s_c

“Ah, if we could only clone her." Elizabeth Warren,

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Elizabeth Warren, Supreme Court, Elizabeth Warren, Richard Trumka, Supreme Court Of The United States, Afl-Cio, Elizabeth Warren Supreme Court, Glass-Steagall, Scotus, Politics News

In a speech at an AFL-CIO convention on Sunday, Sen. Elizabeth Warren (D-Mass.) criticized the Supreme Court for being too right-wing and serving the interests of Big Business over the needs of Americans.
In voicing her support for the labor movement and promoting an agenda aimed at defending working families, Warren warned of conservative-leaning justices and a "corporate capture of the federal courts."
“You follow this pro-corporate trend to its logical conclusion, and sooner or later you’ll end up with a Supreme Court that functions as a wholly owned subsidiary of big business,” Warren said.
Warren said that Wall Street and major corporations are making it difficult for labor leaders to enact financial reform.
“The big banks and their army of lobbyists have fought every step of the way to delay, water down, block or strike down regulations,” Warren said. “When a new approach is proposed -– like my bill with John McCain, Angus King and Maria Cantwell to bring back Glass-Steagall -– you know what happens. They throw everything they’ve got against it."
“I believe that if people would be opposed to a particular trade agreement, then that trade agreement should not happen," she said.
Warren was citing a bipartisan bill aimed at separating lending and trading.

"Despite the progress we've made since 2008, the biggest banks continue to threaten the economy," Warren said in a written statement defending the bill. "The four biggest banks are now 30 percent larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk."
After Warren concluded her speech, AFL-CIO President Richard Trumka praised the senator, saying, “Ah, if we could only clone her.”

Elizabeth Warren’s secret: The Salon interview

Thursday, Aug 22, 2013 07:45 AM EST

The senator tells Salon how one senator can wield tremendous power -- and (kind of) addresses those '16 rumors

By David Dayen

Topics: Elizabeth Warren, interview, Massachusetts, U.S. Senate, Editor's Picks, Banks, Glass-Steagall, SEC, Business News, Politics News

Massachusetts Sen. Elizabeth Warren (Credit: Reuters/Eric Thayer)

It’s been well-documented that the 113th Congress specializes in getting nothing consequential done. While the nation’s supply of named post offices is apparently well-stocked, anything more critical has generally stalled out, with little hope to break the gridlock.
So let’s say you’re a high-profile freshman senator walking into this den of inertia, and you want to make your large following proud and advance your agenda, but you’re in no position to do that legislatively? How do you, Elizabeth Warren, find your way through this minefield, and even chalk up successes?
“It’s all about learning to use the new tools,” Warren told Salon in an interview this week. “In the Senate, there are more tools in the toolbox than are obvious.” Warren, now the senior senator from Massachusetts (Ed Markey, with a 37-year congressional career, is the junior member), has employed those more unconventional tools effectively, doing her part to both change the conversation around the financial industry inside and outside Washington, and change the sharpness of the regulatory response to financial misdeeds.
Warren sits on the Senate Banking Committee, which has marked up all of two bills so far this year (she played a role in both, passing an amendment to a national insurance licensing bill and working closely with the committee leadership on reforming the Federal Housing Administration). But she has really shone in oversight hearings, where she has gained a reputation for offering uncomfortable questions to regulatory officials about their lack of prosecuting criminal activity on Wall Street.  “Too big to fail has become too big for trial,” she said at a hearing in February. “How big do the biggest banks have to get before we consider breaking them up?” she asked Treasury Secretary Jack Lew in May. And she’s used the bully pulpit outside the hearing room, too, schooling CNBC anchors so badly on the history of financial regulation that the network forced the clip to be removed from YouTube.

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This creates a consequence for the regulators for lax enforcement. Nobody wants to end up on the business end of an Elizabeth Warren viral video, and the hope is that the prodding will spur the regulators into action, or at least keep them alert. “There’s a lot that banking regulators can do to make the system safer without Congress passing any new laws,” Warren told Salon. “But only if they do their jobs. It’s about accountability in both directions. The largest financial institutions should be held accountable, and so should the regulators.”
She added, “They are not there to serve the banks, they are there to serve the public. I’m reminded of that when we have public hearings. I try to ask questions that the public wants to hear.”
This extends beyond the occasional badgering of witnesses (“I beg your pardon,” said Warren when I termed it that way, though she misunderstood, as I have a great affection for badgering). In one of her first major actions, Warren opened an investigation into the Independent Foreclosure Review, which was supposed to review every foreclosure from 2009-2010 for errors, but ended up so botched (the banks picked their own reviewers) that regulators shut it down and gave wronged homeowners a seemingly random amount of cash compensation, typically around $300. Warren demanded information on how the aborted reviews were conducted, what they found and how regulators arrived at the final penalties. After a series of embarrassing hearings on the subject, last month Federal Reserve chairman Ben Bernanke promised the release of some details, though none have yet come out.
Other agencies have come to expect Warren’s queries. Just yesterday, she asked the Justice Department about why it settled with five large banks who submitted fraudulent mortgage insurance claims to the FHA for $225 million, when based on the number of claims made public in a government report, the damages could have been as high as $37 billion. That comes out to a settlement for 0.6 percent of potential damages.
Warren has had more luck with the Securities and Exchange Commission, which she previously criticized for generating settlements with giant financial institutions on securities fraud and other violations without making the guilty party admit wrongdoing. Corporations can’t stand this because they expose themselves to future litigation, could suffer reputational risk and even lose their banking licenses. But putting this price on misconduct could have a tremendous deterrent effect (in addition, fines in cases where the defendant admits wrongdoing are not tax deductible).
The Massachusetts senator used both hearings and a series of letters to new SEC chairwoman Mary Jo White to question the policy. This has borne fruit: White announced a new settlement policy that will require admissions of guilt in more cases. “I’m very optimistic about the direction Mary Jo White is taking the SEC,” Warren said. “She didn’t make a generalized ‘we’re going to get tough’ statement, she identified a class of cases in which the agency would take a different position, with harsher consequences for companies that don’t cooperate.”
“Commissioner White is showing some real spirit,” Warren added. “She has come in and made it clear that it’s a new day in town.”
Just this week, hedge fund manager Philip Falcone admitted wrongdoing in a settlement over improper use of funds at Harbinger Capital, the first individual to do so since White announced the new policy. While Falcone didn’t admit to liability on specific violations of law, Warren called it a “step in the right direction,” and an indication that “the SEC is a watchdog that’s starting to show some teeth.”
So while critics call Warren’s verbal jabs mere showboating, combined with her persistence they have had a tangible impact, both exposing some bank-friendly regulators and spurring others to better alternatives. “Those who criticize her for being all talk and no achievements don’t understand the Senate,” said Jeff Connaughton, a former chief of staff to Sen. Ted Kaufman who wrote an appreciation of Warren earlier this year. “I think she and others have made regulators think twice about how kid glove treatment of the banks will look in a harsh Senate spotlight.”
Warren has also done plenty of unsung work in her freshman year. She actually has the highest attendance at Banking Committee proceedings so far this year, making 27 out of 35 hearings and executive sessions, more than chairman Tim Johnson or ranking member Mike Crapo. And in hearings, she almost always stays from start to finish, learning from her fellow members’ questioning and often tailoring hers to cover a different subject area. “I learn a lot from those hearings,” Warren said. “Not everyone is engaged, but there’s a core of people really interested in the issues and really driving them.”
The freshman senator named her Banking Committee colleagues Sherrod Brown and Jeff Merkley as part of this core group. (She even had nice words to say for Republican Bob Corker, whom she has worked with on the future of Fannie Mae and Freddie Mac “since before I was a senator.”) Another reformer, Carl Levin, has made a habit of using his Permanent Subcommittee on Investigations to delve into issues of financial crimes, most recently with the “London Whale” trade by JPMorgan Chase. Levin’s report was instrumental in the criminal indictments of two ex-traders at the bank for hiding losses and lying to regulators and investors. “Progress on the London Whale and admit or deny has come because of three or four determined senators and despite two captured committees,” argued Jeff Connaughton.
The increased scrutiny has a cumulative effect. When one regulatory agency like the SEC changes its policy, it provokes other agencies to consider toughening theirs. When one senator points the way toward more provocative questioning of the broken regulatory response to a tsunami of financial crimes, other senators want in on the act. “She has elevated ‘the game’ of other senators,” said Bartlett Naylor of Public Citizen. “No longer can her peers survive a committee hearing on a one-minute staff briefing before asking a question written for them, if it might be at odds with one of her positions.”
Warren is hoping such momentum-building will play out in her first banking legislation, which would reinstate the Depression-era “Glass-Steagall” protections separating commercial banking (like taking deposits and making loans) from investment banking (like trading derivatives and other Wall Street casino gambling pursuits). Critics allege that the Glass-Steagall repeal had nothing to do with the financial crisis. But in a system where those duties are separated, Warren believes, regulators would have an easier time at their jobs. “They wouldn’t have to develop expertise in multiple lines of business,” she said. “The SEC can oversee the non-bank institutions, and bank regulators could focus on the safety of banks.” While all big legislation faces a long road in a divided Washington, Warren partnered with Republican John McCain, Democrat Maria Cantwell and Independent Angus King on the Glass-Steagall bill to raise its profile, using an outside-inside approach. “We’re two freshmen and two members not on the Banking Committee,” Warren said, “and we got together to make this a more urgent issue.”
Regardless of the eventual outcome of that bill, Warren has learned that a senator has power if he or she knows how to wield it. As for how else she can make an impact, Jeff Connaughton has a suggestion. “Run for president.”
I asked if she had any reaction to that kind of buzz. The senator had a pat response. “No!”
Read the full transcript of our conversation here.

Senators Ask Why JPMorgan Execs Won't Be Punished

Senators Ask Why JPMorgan Execs Won't Be Punished For Involvement In FERC Investigation 

 

US Senator Elizabeth Warren ,D-MA, speaks at a press conference April 16, 2013 in Boston, Massachusetts, in the aftermath of two explosions that struck near the finish line of the Boston Marathon April 15. The number of casualties in a Monday's bombings at the Boston marathon has risen to 176, police said Tuesday. Three people were killed. AFP PHOTO/Stan HONDA (Photo credit should read STAN

WASHINGTON (Reuters) - Two Democratic Senators on Wednesday asked U.S. energy regulators for more details on how terms of a settlement were reached on alleged power market manipulation in California and the Midwest by a unit of JPMorgan Chase & Co.
In a letter to the head of the Federal Energy Regulatory Commission (FERC), Elizabeth Warren and Edward Markey, both of Massachusetts, questioned whether the settlement announced on Tuesday included "adequate refunds to defrauded ratepayers."
They also asked FERC why certain JPMorgan executives "who sought to impede the commission's investigation" will not be punished.

 

WE THE PEOPLE DEMAND THE TRUTH!

NO MR. BERNANKE -NOT SOME OF THE INFORMATION NEEDS TO BE RELEASED- ALL OF IT NEEDS TO BE RELEASED. WE WERE THE VICTIMS AND PROTECTING TO BIG TO FAIL BANKS IS OVER. WE THE PEOPLE DEMAND THE TRUTH!

"The truth is that they stopped the review process and "Settled" because the regulators were under a mandate to protect the banks. They were finding far too many wrongful and illegal foreclosures. The investigator testified that the sampling they used was not random but rather designed to show how few foreclosures were illegal. But even that showed that at least 6500 homeowners had been illegally foreclosed and evicted. The banks and regulators were sitting on a time bomb so they swept it under the rug with "settlements" to cover up the widespread pandemic rush to illegal, wrongful foreclosures where strangers tot he transaction took title to property at a foreclosure sale by submitting a "Credit bid" in which they had absolutely no interest or authority."  ---- Neil F Garfield Livinglies.me

Not long ago, if someone told you that the government would review the foreclosure process, find that many people were foreclosed illegally and wrongfully --- perhaps up to 90% --- and then step in to protect the banks with a pennies on the dollar settlement WITHOUT TELLING THE FAMILIES THAT WERE WRONGFULLY FORECLOSED THAT IT HAD BEEN DETERMINED THAT THEY WERE ILLEGALLY AND WRONGFULLY FORECLOSED --- you might have said, it can't be true --- things are not that bad.

Besides, you might say, how could the foreclosures have been illegal and wrongful to the point that the banks would agree to pay any settlement, even if it was pennies on the dollar. After all, as Judges are want to say "You took the loan, you didn't pay, you lose your house."

But in open session sworn testimony before the Senate Committee on banking and finance, under questioning from Senator Warren (see recent post for the video) that is exactly what the investigator admitted. In fact, it gets worse --- they entered into the settlement to get this out of the way fast and sweep it under the rug.  And, the investigator admitted that they had not yet notified those whom the agency had already found had definitely been illegally and wrongfully foreclosed and evicted from their homes. Worse, the investigator admitted that no decision had been made when or if those families would be notified.

So here we have the government withholding information of civil and perhaps criminal wrongdoing, not informing the victims that they not only have a cause of action for damages, but that the proof is already in the hands of the regulatory agencies. And perhaps worse, this admission comes AFTER Bernanke assured Senator Warren that the victims would be notified.

So Judges, lawyers, borrowers and investors across the land and indeed across the world are still laboring under the misapprehension that when the dust settles the home will still be foreclosed. Not so.

If the real creditor has not stepped up to enforce the debt there can only be one reason --- they have already been paid. And if they have already been paid, then the balance due from the borrower to that creditor is zero. And if someone else paid it, the most they COULD have is an action in contribution or unjust enrichment against the borrower; but they don't have that right because they expressly waived it. Nonetheless, the Federal reserve is "buying" these mortgage bonds, supposedly backed by mortgage loans that we have now seen were paid or unenforceable at the rate of $85 Billion per month.

The presumption ought to be, based upon the filings of the regulatory agencies, the settlements and the sworn testimony before Congress, that the foreclosure is suspect and Judges should stop ramming these wrongful foreclosures down the throat of lawyers whose objections and arguments are dismissed without a thought. We don't have to wait for the evidence before we decide. The time to decide is now because the evidence IS in.

And even if you can't get the information from the regulatory agencies who claim the results to be confidential even though they admit what is in them, aggressive lawsuits against the pretender lenders should lead to huge awards to borrowers and their attorneys. What are you waiting for? Stop wasting time by delaying the cases so that the client gets another month of free rent and start being the aggressor in discovery, pleading and litigating.

Watch Elizabeth Warren Grill Regulators Over Illegal Foreclosures

A Brief Refresher on Glass Stegal From Barry Ritholtz

http://www.housingwire.com/fastnews/2013/07/18/bernanke-regulators-will-release-some-details-foreclosure-reviews

Jacques Cheminade Sends Letter to Sen. Warren Urging Full Glass-Steagall

ITS TIME WE ALL TAKE A STAND AND WRITE TO OUR SENATORS AND CONGRESSMEN AND WOMEN AND DEMAND THEY STAND WITH ELIZABETH WARREN AND OTHERS TO NOT ONLY SAVE OUR COUNTRY BUT OTHER COUNTRIES AS WELL. PASS THIS FORWARD .

Jacques Cheminade Sends Letter to Sen. Warren Urging Full Glass-Steagall

July 18, 2013 • 12:10PM

The following letter was sent to Sen. Elizabeth Warren by Jacques Cheminade today. Cheminade had written to Sen. Warren on May 6 encouraging her to introduce a Glass-Steagall bill into the Senate.
Jacques Cheminade Paris, July 17 2013
Solidarité et Progrès
BP 27 92114 Clichy Cedex
France
To the Honorable Senator Elizabeth Warren
Dear Mrs. Warren,
Following my letter of May 6, 2013, I want to congratulate you again, this time for having introduced in Senate, together with senators Angus King, John McCain and Maria Cantwell, a 21st century Glass-Steagall Act to separate deposit-taking financial institutions from speculative investment banking. As I told you before, I am deeply convinced that the adoption of such a Glass-Steagall Act in the United States is, for us all, the first step to emerge out of the present world crisis. You should make it happen now!
Your action is extremely inspiring for us in Europe, for two main reasons. First, it shows that the spirit of the American Constitution is still alive and that Main Street could prevail over Wall Street. Second, because you in the United States should give the first kick because we in Europe are presently under the shackles of the world monetary system mediated by the euro monetarist cult, which prevents us to exert our respective national sovereignties through a government of the people, by the people and for the people. This principle is written in the words of our French Constitution, but it is thanks to your push that we are going to be able to move ahead to re-establish our own banking separation, as it was established in 1945, following the victory over Nazism and the lead of the Roosevelt Administration. You in the United States, endowed with the tradition of a national economy of the Hamiltons and the Roosevelts, should therefore reopen the way for us.
I hope that Joe Manchin, Barbara Boxer, Richard Shelby, Barbara Mikulski and many, many other Senators are going to join you soon. It is a matter of life and death at this point of the present economic and financial collapse.
The Glass-Steagall principle implies a return to a national economy based on a credit policy system, as Roosevelt developed it. A project like NAWAPA in the United States or to restore the Lake Chad water system in Africa should be examples for the 21st century as the TVA was in the '30s of the last century. My hope is that you keep going in that direction, for our common good.
Very respectfully yours in this moment of emergency,
Jacques Cheminade
Former French presidential candidate


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 LET YOUR VOICES BE HEARD

Sen. Warren on CNBC's "Squawk Box"

Okay, I am officially in love with Elizabeth Warren's brain.

Check out this video, enjoy, and... share, share, share!

Now if only we could get 99 more senators like her...

 

 

 

 

 

 

 

 

http://www.youtube.com/watch?v=M6rnsLNvXzM

JPMorgan Outlook Worsens Fears About Mortgages

Forget the huge boost in trading income. Set aside (for now) the legion of questions about new capital requirements.

The real news in JPMorgan Chase's second-quarter report was the weak outlook that it provided for traditional banking. Rising rates could cut the mortgage business by at least a third the rest of the year, and commercial loan growth was anemic. Credit cards offered a bright spot.
Above all, its results cast doubt on predictions that industrywide mortgage volume was going to fall by 20% this year compared with 2012, says Christopher Whalen, managing director and head of investment banking at Carrington Investment Services in Greenwich, Conn.
"JPMorgan numbers suggest that interest rates could account for an additional 10% to 20% drop in volumes," on top of the expected decline in refinance volumes, Whalen says.
The headline numbers for JPMorgan were strong, as they often are.
Much of the 31% increase in JPMorgan's quarterly earnings, to $6.5 billion, came from investment banking. Net income from corporate and investment banking rose 19% to $2.8 billion, from a year earlier. That included a 38% rise in investment banking fees, a 50% rise in debt underwriting fees and an 83% increase in equity underwriting fees.
"Their capital markets business continues to do so well during a period of unprecedented volatility," says Nancy Bush, a banking industry analyst with NAB Research. "Clients continue to come to them for their trading ability."
Meanwhile, analysts incessantly questioned Jamie Dimon, chairman and chief executive, about the potential effect on the company's capital position from proposed Basel III rules. Dimon responded that JPMorgan "intends to be in compliance" when required to do so but internal details are still being worked out.
However, it all came back to mortgages.
For the second quarter, net income from mortgage banking at JPMorgan fell 15% to $1.1 billion, from $1.3 billion a year earlier.
The effect of rising rates on its mortgage business could be huge, Marianne Lake, chief financial officer, said. JPMorgan's mortgage production, both refinancings and new purchase mortgages, "could be reduced by an estimated 30% to 40%" in the second half of 2013, Lake said.
JPMorgan is looking at a potential "dramatic reduction in profits," Dimon said. "This would be a significant event if mortgage rates stay where they are."
Ten-year Treasury yields rose from 1.63% on May 2 to 2.74% on July 5, the highest yield since August 2011. The 10-year Treasury yield stood at 2.58% in late Friday morning trading.
Dimon said that it's difficult to make broad comments about the impact of interest rates on the bank overall. Higher rates were one contributing factor to market volatility, and heightened volatility helped trading results.
"Higher rates hurt mortgages but, again, they can help other areas, so it's a whole potpourri," Dimon said. "It's impossible to separate it out."
Commercial lending fell 8% to $621 million, from $673 million a year earlier, with Lake characterizing the drop as a result of continued pessimism among borrowers.
"Corporate America is very liquid right now and has access to the capital markets, and that obviously affects demand," Lake said. "Our customers are still very cautious and also still very liquid. We need confidence to pick up."
Average loans in credit cards fell 2% to $122.9 billion, from a year earlier. But Lake predicted an increase in card business later this year.
"We saw a stabilization…at the end of the second quarter after 15 quarters of net run-off," Lake said during the call. "We feel we've reached an inflection point and expect some modest growth from here."
JPMorgan's second-quarter results also included $600 million in new expenses for litigation, although Dimon declined to provide details on the source of the litigation cost.
Federal regulators signed off this week on Basel III rules on capital ratios, which include new risk-based capital requirements. JPMorgan executives were asked numerous questions by analysts about the proposed rules; including one question from Whalen whether the U.S. should withdraw from the Basel process.
Dimon said the company has "always believed in high capital, high liquidity, good regulation and things like that and finishing it." But he did express frustration with the process.
"One of the things that Basel" was supposed to do was "harmonize global rules," Dimon said. "This is clearly no longer harmonization. I don't think there's any industry out there to be comfortable with something like that in the long run, because in the long run that has a lot of effects that you can determine, quarter by quarter."
Some analysts and investors are also becoming frustrated with the lack of clarity on the Basel III rules, as well as new proposals to break up JPMorgan and other large banks.
"Everything is so squarely aimed at Chase," Bush says. "If you had to look at what [Sen. Elizabeth] Warren did yesterday with Glass-Steagall, I characterize that as the 'Get Jamie Dimon Act.'"

ELIZABETH WARREN AND JOHN MCCAIN TEAM UP TO REIGN IN BANKS

MSNBC had a segment today in which they interviewed Elizabeth Warren about a new set of laws reinstating the old style of Chinese walls. There are probably similar interviews on other channels with Senator Warren or Senator McCain and others. Just go to your favorite news channel and look it up. Their approach has bi partisan support because of its simplicity and its history. Historically it is merely a tune-up of the old laws to include definitions of new financial products that did not exist and were not adequately considered in the 1930's when EVERYONE AGREED THE RESTRICTIONS WERE NEEDED.

Bottom Line: RETURN TO THE BORING BANK SAFETY WITHOUT BOOMS AND BUSTS FROM 1930's into the 1990's: leading republicans and democrats are stepping out of gridlock into agreement. They want to stop Wall Street from access to checking and savings accounts for use in high risk investment banking because that is what brought us to the brink and some say brought us Into the abyss. And it would stop commercial banks that are depository institutions for your checking and savings accounts from using your money on deposit in ways where there is a substantial risk of loss that would require FDIC ((taxpayer) intervention.

Banking should be boring. In the years when restrictions were in place we only had one serious breach of banking practices --- the S&L Scandal in the 1980's. But it didn't threaten the viability of our entire economy and more than 800 people were serving prison terms when the dust cleared. Of course Bankers saw prison terms as an invasion of their business practices and regulation as unnecessary.

But the simple reason for bipartisan support is that the public is enraged that the mega banks (too big to fail) have GROWN 30% SINCE THE 2007-2008 while the people on Main Street are losing jobs, homes, businesses, families (divorce), thus stifling an already grievously injured economy because credit and cash are now scarce --- unless you are a mega bank that made hundreds of billions or even trillions of dollars because they were able to create an illusion (securitization) and at the same time, knowing it was an illusion, they bet heavily using extreme leverage on the illusion being popped.

They made it so complex as to be intimidating to even bank regulators. So no wonder borrowers could not realize or even contemplate that their mortgage was not a perfected lien, so they admitted it. Foreclosure defense attorneys made the same mistake and added to it by admitting the default without knowing who had paid what money that should have been allocated to the loan receivable account of the borrower that was supposedly converted for a note receivable from the borrower to a bond receivable from an asset pool that supposedly owned the note receivable account.

The complexity made it challenging to enforce regulations and laws. The complexity was hidden behind curtains for reasons of "privacy". The real reason is that as long as bankers know they are acting behind a curtain, they are subject to moral hazard. In this case it erupted into the largest PONZI scheme in human history.

And the proof of that just beginning to come out in the courts as judges are confronted with an absurd position --- where the banks "foreclosing" on homes and businesses want delays and the borrower wants to move the case alone; and where those same banks want a resolution (FORECLOSURE OR BUST) that ALWAYS yields the least possible mitigation damages, the least coverage for the alleged loss on the note because they would be liable for all the money they made on the bond. Just yesterday I was in Court asking for expedited discovery and the Judge's demeanor changed visibly when the Plaintiff seeking Foreclosure refused to agree to such terms. The Judge wanted to know why the defendant borrower wanted to speed the case up while the Plaintiff bank wanted to slow it down.

And because of all the multiple sales, the insurance funds, the proceeds of credit default swaps, because the initial money funding mortgages came from depositors ("investors"), and all the money from the Federal Reserve who is still paying off these bond receivables 100 cents to the dollar --- all that money amounting to far more than the loans to borrowers --- because it related to the bond receivable, the banks think they can withhold allocation of that money to the receivable until after foreclosure and avoid refunding all the excess payments to the borrower the investor and everyone else who paid money in this scheme. And the system is letting them because it is difficult to distinguish between the note receivable and the bond receivable and the asset pool that issued the bond to the actual lender/depositor.

Senators Warren and McCain and others want to put an end to even the illusion that such an argument would even be entertained. Support them now if not for yourselves then for your children and grandchildren.

Elizabeth Warren Introduces 21st Century Glass-Steagall Act

At today's Senate Banking Committee hearing, Elizabeth Warren introduced the 21st Century Glass-Steagall Act of 2013, co-sponsored by Senators McCain, Cantwell, and King. The bill mirrors the heart of the original 1933 law, which separated traditional banking activity (like checking and lending) from the riskier activity investment banking (like derivatives).

The original law was repealed in 1999 toward the end of the Clinton administration, though the law had been eroding for years leading up to 1999. This repeal was one of several laws passed during that era which allowed the big banks to transform into megabanks, in part creating our current "too big to fail" policy.

To illustrate, the chart below shows that from 1935 to 1990 the three biggest banks averaged around 10% of total bank assets, but by 2009 they suddenly had over 40%.

This new bill from Senator Warren aims to play a part in reversing this trend so the banks will be smaller. After all, the three biggest banks (Chase, Bank of America, and Citi) are all bloated conglomerate banks that have enormous traditional and investment subsidiaries, so these banks wouldn't be able to continue as they're currently instituted. They would be broken up into much smaller firms.

What's more, the 21st Century Glass-Steagall Act of 2013 will make it so banks cannot gamble with derivatives using depositor's money like they do today. Currently, anyone who has money at banks like Chase, Bank of America, or Citi is implicitly using that money to help these banks make amplified bets that have the potential to cause another global meltdown. Reintroducing Glass-Steagall will make it so depositor's money cannot be used for the derivatives market. This would be a major step toward restoring sanity to Wall Street.

For more on why it's important to restore Glass-Steagall, see this compilation video that shows expert after expert calling to restore it:

Perhaps one of the best quotes from the video is from University of Chicago economist Luigi Zingales who says the strength of Glass-Steagall was its simplicity. The new bill from Warren shares that strength. It's a mere 30 pages (compare that to the 30,000 pages of rules that will come out of Dodd-Frank).

 You can read the full text of the bill here, or glance at the fact sheet

Look at what the GOP can do for you - NOT!

After reading this and you still decide to vote for the GOP , than I would be clueless.

WASHINGTON -- The House Appropriations Committee approved an agriculture budgeting bill last month that would significantly restructure the U.S. bank regulatory regime as part of a GOP effort to protect Wall Street's offshore trading in derivatives -- the complex financial products at the heart of the 2008 economic meltdown.
Republicans in Congress have been pressuring regulators for years to exempt derivatives that U.S. companies sell overseas from the new rules set by the 2010 Dodd-Frank financial reform law. For much of 2013, the deregulatory drive enjoyed bipartisan support in the House, with lawmakers casting their efforts as an attempt to harmonize U.S. law with international regulations. But financial reform advocates have attacked the initiative for padding Wall Street profits at the expense of important public protections, and Democratic support has eroded.
In June, the House passed a bill that would completely exempt from U.S. oversight derivatives sold through the nine most popular foreign derivatives jurisdictions. The legislation is occasionally derided as the "London Whale Loophole Act" on Capitol Hill -- a reference to the overseas trades that cost JPMorgan Chase more than $6 billion in 2012. London was the epicenter of much of the derivatives trading by U.S. financial firms leading up the 2008 crash, including AIG's infamous Financial Products division. If banks can simply route trades through loosely regulated overseas affiliates, financial reform advocates warn, the most critical aspects of Dodd-Frank will be effectively nullified.
The "London Whale Loophole Act" faces opposition from Senate Democrats and President Barack Obama, so it's unlikely to be signed into law. But June's House Agriculture Committee funding bill has much stronger prospects for passage, since it's tied to approximately $19 billion in other spending. That bill would require the Commodities Futures Trading Commission -- the agency with responsibility for more than 90 percent of the derivatives market -- to negotiate its regulations with the Securities and Exchange Commission, which oversees the remainder of the derivatives business.
Big banks have railed against the CFTC guidelines for taking a broad view of what constitutes an American firm. The SEC's proposed rule, by contrast, would bar American regulators from overseeing many offshore partnerships run by U.S. firms, and many trades between U.S. firms and overseas companies. Forcing the CFTC to negotiate with the SEC would almost certainly introduce loopholes into the CFTC's rules, and may shut down the rulemaking process altogether.

"The House bill is nothing more than a backdoor way of killing derivatives reform," said Dennis Kelleher, president and CEO of the financial reform advocacy group Better Markets. "It's Christmas in July for Wall Street."

Prior to Dodd-Frank, derivatives trades were essentially secret deals between two companies, with no market or regulatory scrutiny. The 2010 law required companies to trade through a third party that guaranteed each side’s ability to make good on its bets. To buttress the guarantee, each side of the trade was required to post margin -– a small upfront deposit just in case the trade went bad. An offshoring loophole would allow firms to evade these requirements, provided they meet the technical definitions of the loophole.

While Wall Street has pursued multiple avenues to derail the CFTC’s rule, some Senate Democrats cautioned that even the more aggressive regulatory interpretation may ultimately undermine the essence of Dodd-Frank.

Eight Democratic senators, organized by Sens. Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.), on Wednesday signed a letter to CFTC Chairman Gary Gensler and SEC Chairman Mary Jo White stating that both the CFTC and the SEC have failed to deal with shadowy financial entities “sponsored” by U.S. banks without any explicit legal guarantee for their obligations.

This type of arrangement was common in the years leading up to the 2008 crash. Citigroup held nearly $50 billion in complex derivatives off its official balance sheet in so-called structured investment vehicles, and Bear Stearns operated risky hedge funds that it officially had no financial obligations to. The financial crisis began in August 2007 when two such Bear Stearns funds failed, and the company decided to pay off its investors rather than take the damage to its reputation from leaving clients out to dry. By the fall of 2008, Citi had decided to suck up its losses on structured investment vehicles, rather than signal to the market it was incapable of doing so.
"A U.S.-based firm should not be able to escape U.S.-mandated swaps oversight simply because its swaps trading is conducted through an offshore affiliate or branch," the letter from the Democratic senators reads. "It is likely that, if your agencies’ current proposals were adopted, foreign firms doing business with the foreign affiliate of a U.S.-based derivatives dealer would opt to forego an explicit guarantee from the U.S.-based entity in return for: (1) more favorable pricing, and (2) the ability to avoid U.S. trading regulations and any attendant costs."
Both the CFTC and SEC standards would allow an offshore fund organized by a U.S. bank that formally rejected any responsibility for the fund’s solvency to evade American oversight. Reform watchdogs said they worry that U.S. firms will simply route much of their derivatives business through these nebulous entities, leaving the financial system to operate much as it did in the years before the crash.

Read the full letter, signed by Sens. Merkley, Levin, Elizabeth Warren (D-Mass.), Tom Harkin (D-Iowa), Jeanne Shaheen (D-N.H.), Barbara Boxer (D-Calif.), Richard Blumenthal (D-Conn.) and Dianne Feinstein (D-Calif.) here.

http://big.assets.huffingtonpost.com/derivativesletter.pdf

Is she the only one with a brain?

Sen. Elizabeth Warren (D-Mass.) condemned the possibility of sequestration and urged her fellow lawmakers on Monday to reach a deal to avoid the automatic spending cuts.
Speaking Monday morning at a breakfast held by the New England Council and attended by a group of nearly 300 local businesses, Warren described the sequester as “just plain dumb," according to the Boston Globe.
"We’re out there trying to make clear this means children kicked out of Head Start programs. This means teachers that are potentially laid off. This means fewer air traffic controllers ... that means jobs right here in Massachusetts," the freshman lawmaker said, according to the Boston Herald, emphasizing the effects the sequester on her state. "It just means blunt, across-the-board cuts. It’s just an irresponsible way."
Warren's remarks came just hours after the White House released a detailed report on how each state would be impacted by the cuts to defense and domestic spending.
Warren also conveyed her disgust for how negotiations in Washington work.
"We seem to have a government that works only by holdout," she said, according to the Globe. "I don’t know anything more to do but get up and talk to the American people."
She told reporters before the event, however, that "the White House, the leaders in the Senate and the House of Representatives are in negotiations" to avoid the cuts.

Warren said she hoped that lawmakers in Washington would support President Barack Obama's proposal to avoid sequestration, which she acknowledged wasn't perfect.
"It's a little more balanced than I would have put on the table," she told the audience at the event, noting that the proposal is a 50-50 split between cutting spending and closing corporate tax loopholes.
The $85 billion in cuts are set to go into effect on Friday