Effective Oversight In A Financial World Gone Bad?

Remember: Tell members of Congress that you want them to take action here. We will be delivering your comments to Congress in the coming week.

After the announcement that Earl Devaney would step into the role of financial watchdog for the TARP and other fund disbursements during the ongoing financial crisis, I have to admit I was thrilled.

As Interior Department IG, Devaney’s accountability arguments with former Secretary of the Interior Gale Norton got around the Beltway, and his help in taking down Abramoff largesse recipients was exceptional.

But it was this interview in the Federal Times that really caught my eye:

A lot of the cases we’ve had over here have ended up being close calls as to whether they were prosecutable. When the cases are taken for prosecution, it’s pretty clear cut. As often as not, cases that get declined for prosecution often result in a reprimand. There is a whole range of disciplinary action between going to jail and getting a reprimand that’s being ignored here, and that’s my main complaint. Short of a crime, it seems the only thing that happens is a letter of reprimand.

I’m a strong believer that just because something isn’t a crime or doesn’t violate the law doesn’t mean it’s OK. Once the American public loses trust in any department, the people or its programs, that trust is awfully hard to get back. Appearances do matter.

Damn straight. Because Devaney is old-school, having him watch-dog the financial sector makes me smile. Respect for the rule of law is a nice change.

But is it enough? Not even close.

The last few weeks, we’ve seen millions of taxpayer dollars pour into the coffers of ginormous financial institutions whose accounting practices leave even experienced accounting geeks mystified. And it keeps on pouring.

Where is it all going? Is it being used prudently? Will there be a full accounting? Will the government receive a real return on the money? Are we getting appropriate value for these "investments" to shore up liquidity? Are all of these institutions truly worth saving or would we be better off allowing collapse? Is this money going to the business or to outside investors — and why?

Shouldn’t we have answers to some of this instead of just shoveling more money onto the shitpile?

We’re going to be asking a lot of these questions and more this week with some excellent guests. On deck today: James Galbraith at 4:30pm Eastern Daylight Time (3:30 Central, 1:30 Pacific), and Rep. Alan Grayson at 7:30pm Eastern (6:30 Central, 4:30 Pacific).

In the meantime, take a peek at just one tiny slice of takeover hell for smaller banks and consider what Sheila Bair, the head of FDIC, says to 60 Minutes about larger investment institutions: should we limit size of these behemoths in the future for taxpayer’s sake? And, if so, how? It’s not enough to get through the current financial crisis — we need to think about ways to stave off the next one, too.


 
100 Responses to "Effective Oversight In A Financial World Gone Bad?"
Elliott | Tuesday March 10, 2009 05:51 am 1

Morning Christy, hope the Peanut is feeling better.

Really looking forward to Grayson and Galbraith today *s*


Christy Hardin Smith | Tuesday March 10, 2009 05:54 am 2
In response to Elliott @ 1

She’s feeling much better today, thanks — fever is gone and she went back to school this morning. We’ve really got some fantastic chats scheduled this week. Can’t wait…


jayt | Tuesday March 10, 2009 06:10 am 3

I’m a strong believer that just because something isn’t a crime or doesn’t violate the law doesn’t mean it’s OK.

Is this guy *new* to D.C.? *g*


Christy Hardin Smith | Tuesday March 10, 2009 06:10 am 4

Don’t know why, but the “danger: low-flying attack dog” sign cracked me up. *g*


Christy Hardin Smith | Tuesday March 10, 2009 06:11 am 5
In response to jayt @ 3

Surprisingly, no — which made that all the more remarkable. *G*


selise | Tuesday March 10, 2009 06:12 am 6

christy – do you know when galbraith is going to be here?


selise | Tuesday March 10, 2009 06:15 am 7

re: too big to fail. first of all – re-impose something like glass-steagall to separate commercial banking from investment banking. that is such a no brainer, the only reasons i can see for not doing it are political:

1) it would mean larry summers admitting he was wrong and joe stiglitz was right. summers does not strike me as that self-aware or intellectually honest.

2) it would mean giving up all the $$$ the Ds especially are getting from the financial industry.

well, there may be a geopolitical reason too – that our gov doesn’t want any other country’s banks to be bigger than ours.


spacefish | Tuesday March 10, 2009 06:15 am 8

should we limit size of these behemoths in the future for taxpayer’s sake?

The role of government, as it relates to a business should be to regulate that business so that it does not get too big to fail. Failing that, government’s role should be to ensure that the business does not fail. Failing that, government’s role should be to see to it that the business has a soft landing and not a crash and burn. I believe we are almost at the point of another “Failing that…”, but I have no idea what that would be.


Christy Hardin Smith | Tuesday March 10, 2009 06:15 am 9
In response to selise @ 6

I’m double-checking on that but I believe Galbraith will be here at 4:30 pm ET and Grayson will be here at 7 pm ET. Once I confirm, we’ll pop that into the post for everyone.


Bluetoe2 | Tuesday March 10, 2009 06:15 am 10

Would have liked to see Galbraith and Krugman in the Obama administration. Instead we’ve got Summers and Geithner who are nothing more than accomplices to the banksters.


selise | Tuesday March 10, 2009 06:17 am 11
In response to Christy Hardin Smith @ 9

thanks!


selise | Tuesday March 10, 2009 06:19 am 12
In response to Bluetoe2 @ 10

imo, stiglitz more than anyone.

but i’d also want galbraith and krugman and roubini and baker and born and greenberger and….. probably a ton more that i’ve never even heard of. very sad though that all the good one i have heard of are out. because we need all hands on deck right now.


jayt | Tuesday March 10, 2009 06:25 am 13
In response to selise @ 7

“too big to fail” sounds pretty good to me. I’ve been lifting weights like crazy.

Not sure how I’ll know when to stop though.


Leen | Tuesday March 10, 2009 06:26 am 14

Good to hear that you have confidence in “Devaney”

Here is Ralph Nader’s recent take on the economic crisis and the management of it

The Bottomless Bailout

By Ralph Nader

March 07, 2009 “Commondreams” — -Does anybody in the federal government know or could know “who, what, where and when” of the massive, complex, vertical, horizontal, global collapse of Wall Street and its planetary tentacles in over 100 countries abroad? Step forward if you exist! Uncle Sam needs you!

Is the multi-million dollar bailout of this financial mess and house of cards, this phantom wealth mummy hitting air beyond the federal governments’ salvage capability?

It is relatively easy to announce hundreds of billions of dollars of corporate rescue programs here and hundreds of billions of dollars of guarantees of corporate recklessness there and trillions of dollars of assorted stimulus, loan availabilities and foreclosure prevention initiatives in all directions. Now comes the rubber hitting the road.

Where are the skilled people to be hired by the federal agencies—the administrators, field implementers, auditors, financial whizzes able to understand the complexity of greed and over-reach; the inspectors, prosecutors and contract negotiators to name a few categories?

In other words, how are a hurried President Obama and his deputies going to rapidly build up the infrastructure of the federal government itself to advance all these “public works” efficiently and to avoid expenditure disasters amidst a potential orgy of waste, fraud and abuse by the coast to coast recipients?

http://informationclearinghous…..e22171.htm


Bluetoe2 | Tuesday March 10, 2009 06:26 am 15
In response to selise @ 12

Yeah, Obama’s biggest misstep in an otherwise hopeful administration has been putting faith in the same people that contributed to the climate of greed that today puts the nation at peril. This one misstep may well be the undoing of an administration that had the potential of moving the country in a trully progressive direction.


Christy Hardin Smith | Tuesday March 10, 2009 06:31 am 16
In response to Bluetoe2 @ 15

It’s early yet — who knows who will stay at the forefront of advisors over the next few months and who will fall by the wayside.


Adie | Tuesday March 10, 2009 06:31 am 17

Good Morning Christy and Puppies.

Thank you for this, Christy.

Your lineup of interviews this week showcases one of the many reasons why FDL just can’t be beat. I’ll bet we won’t be the only ones reading at the Lake and searching for answers.

The MSM bots don’t seem to have a clue what to do. I suggest they might look over your shoulder and learn something, then DO THEIR JOBS!


Christy Hardin Smith | Tuesday March 10, 2009 06:32 am 18

selise — just updated the post above — these are firm times:

On deck today: James Galbraith at 4:30pm Eastern Daylight Time (3:30 Central, 1:30 Pacific), and Rep. Alan Grayson at 7:30pm Eastern (6:30 Central, 4:30 Pacific).


Adie | Tuesday March 10, 2009 06:37 am 19
In response to Leen @ 14

It’s nice to see Nader barking down the trail along with the pack. I just hope he doesn’t touch anything breakable. I trust him to grouse and grumble, but I wouldn’t think of having him even try to fix a door hinge. Fuming, yes; he does that very well. Fixing should be left to others, Ralph. No offense intended. just imo.


Knut | Tuesday March 10, 2009 06:38 am 20

We need a nice clean account of exactly how the banking system works today. It’s not the banking system we taught about 30 years ago and that still populates the textbooks. In that system, banks essentially pool cash — when you have more than you currently need, it goes into the bank and passes through that bank to someone who needs more than she has. The next month or so, the flow reverses and the system stays in balance as long as nobody gets scared that he won’t get his money back.

That’s obviously not how it works anymore. I’m thinking about working capital here, because that is the bottleneck that will give the coup de grace to our economy if it isn’t opened. It’s what keeps small businesses alive. What’s the structure of the cash flows that sustains it? Why are banks pulling back? Where are the cash deposits you make when you cut back your spending going? Who’s getting the vig, so to speak?

It seems to me that the practices of investment banking have colonized regular commercial banking. Commercial banking runs on the difference between the deposit and lending rates; investment banking runs on fees (and capital gains on banks’ speculative holdings). It would be nice to have someone on this board who can give a nice reasonably clear– in the measure that it can be done–explanation of how the current banking system works. Without that knowledge we are walking around in the dark, just like the Administration.


Adie | Tuesday March 10, 2009 06:38 am 21

Thanks! Got our social calendar all arranged. *g*


foothillsmike | Tuesday March 10, 2009 06:39 am 22

Well it seems you are prejudiced against us in MDT. *G*


ThingsComeUndone | Tuesday March 10, 2009 06:39 am 23

Either we get a good return on our cash or taxes for the rich go up and military spending go down 2 things the GOP hates.
There will be no cuts in Social Security with the boomers all retiring now so where else will we get the cash for the budget… or is a South American style default on our debt in the future?
Either Obama and the GOP make things with the banks transparent or they can’t in which case questions about a default are deserved.


Bluetoe2 | Tuesday March 10, 2009 06:40 am 24

It is early but my concern is that if the house of cards collapses Obama will be limited in what he can do given Republican opposition to any dramatic change that threatens the plutocracy. With the plutocracy in firm control of the corporate media public opinion will be manipulated to turn against Obama.


Adie | Tuesday March 10, 2009 06:42 am 25
In response to foothillsmike @ 22

awwww. no one gets their nose out of joint around here. do a lil’ math, hon, and feel quite rest-assured we appreciate your foothills more than you could ever imagine. ;->


selise | Tuesday March 10, 2009 06:42 am 26

but decisions are being made now that can’t be unmade. sorta like the decision to start a stupid useless war. it’s a good thing to end it, but it would have been better never to have started it. especially for all the people who suffer needlessly.

every day that goes by, the hole we’re in gets deeper. and every $ that is spent on bailing out the banksters is a $ that won’t have gone to taking care of people in need or investing in the real economy.

larry summers has helped kill millions of people with his economic policies. and i just found out about geithner’s role in the asian financial crisis. think how you would feel if phil gramm was in charge of economic policy – that’s almost how i feel about summers and geithner (and getter closer every day). they aren’t just bad choices – they are a massive disaster on an epic scale.

p.s. thanks for the schedule info – much appreciated.


oldgold | Tuesday March 10, 2009 06:43 am 27
In response to Leen @ 14

Well, perhaps, Nader might have considered some of this in 2000, when he ran around claiming there wasn’t a nickels worth of difference between Bush and Gore.
For that, I will not forgive him.


Kathryn in MA | Tuesday March 10, 2009 06:43 am 28

Wow, great guests! thanks, Christy! (and signed)


NorskeFlamethrower | Tuesday March 10, 2009 06:44 am 29

AND THE KILLIN’ GOEZ ON A ND ON AND…

Citizen Hardin Smith and the Firepup Freedom Fighters:

Wow, Galbraith and Grayson in one afternoon…now ken ya get ‘em both ta spend an afternoon with Obama??!! Seems ta me that puttin’ someone with the name of Galbraith between Obama and the likes of Larry Summers and Tim Geithener might jest get the constipation outta the political economy…like right now!!!

KEEP THE FAITH AND PASS THE AMMUNITION, AND THE STRUGGLE GOEZ ON AND ON AND…


Leen | Tuesday March 10, 2009 06:45 am 30
In response to selise @ 12

“all hands on deck” you can say that again. Did you read Ralph Nader’s latest at International Clearing house “the Bottomless bailout”

The ark seems to be going down


Kathryn in MA | Tuesday March 10, 2009 06:45 am 31

Re oversight infrastructure that is lacking – that’s where we come in, with that website!


selise | Tuesday March 10, 2009 06:48 am 32
In response to Knut @ 20

We need a nice clean account of exactly how the banking system works today.

i like this from stiglitz on friday:

One of the things that financial markets prize themselves on and one of the criticisms of proposals to regulate them is that they were very innovative and the fear is that the innovation will stop. But if you look at the innovation, what they were very clever at doing was circumventing regulations, getting around accounting standards so that we wouldn’t know what was on their books. They were so clever at getting around accounting regulations that they themselves didn’t know what their own books were like. So they succeeded in deceiving themselves. And that’s a real achievement.


stratocruiser | Tuesday March 10, 2009 06:48 am 33

What angers me the most, as an accounting type myself, is the way that the profession has been betrayed. The purpose of accounting is to provide useful and timely information to shareholders and stakeholders.What is really behind the fall of Wall Street is the belief that we shareholders are not being told of the true condition of our investments. “It’s for our own good”. My ass!
Remember when Enron failed. Kenny Boy went to the feds and asked for help in getting a bailout. Whoever it was he talked to kept the information from everbody, so as to respect the confidentiality of the communication. But what of the duty to the shareholders?
I’m at the point with this bank bailout and the related secrecy of thinking that the whole lot of them are complicit in defrauding the shareholders and are guilllty (originallya typo, but I like it) of violations of the Deceptive Trade Practices Act.
I want treble damages.


ThingsComeUndone | Tuesday March 10, 2009 06:48 am 34

With the Dow down private retirement pensions are down that home the boomer paid for 20 years and planned to sell at retirement will not bring in much cash now.
Forget the budget and spending they are meant to start up the economy by creating jobs now and a return on investment later like no more falling bridges, or clean water with a fixed up water treatment system in other words these jobs have to be done and to neglect them now means the cost to do them later goes up significantly .
Bank bailouts well where when and how much if any is the payoff we get?


Christy Hardin Smith | Tuesday March 10, 2009 06:50 am 35
In response to Knut @ 20

One of the things that Bair says in the video above that struck me was that the bigger institutions really no longer function as banks at all. They are investment vehicles which also have a small sideline in banking. When you try and wrap your brain around all of the possibilities of that one little nugget, you begin to see why all of this is so insanely dense. SIGH


DWBartoo | Tuesday March 10, 2009 06:50 am 36
In response to Adie @ 19

So then, Adie, has Nader reached his nadir in your opinion?

Or, do you expect that lesser things may yet be expected of him?

Just wondering.

BTW, Good morning, all you blogging fomentors of necessary and meaningful change.

Looking forward to Galbraith and Grayson, Christy.

FDL remains well on the cutting edge, far to the fore, in fact.

Thanks to all who make it so, for it benefits everyone who cares about a better world, and even the rest of ‘them’, whose sensibilities remain more or less, self-centered …

DW


stratocruiser | Tuesday March 10, 2009 06:51 am 37

Selise, we appear to be like-minded on this.


Christy Hardin Smith | Tuesday March 10, 2009 06:52 am 38
In response to stratocruiser @ 33

Wouldn’t you have thought that we would have learned that lesson and then some just from the Enron mess alone? Mind-boggling stupid is what we’ve been — and deliberately so — for the last few years. It’s as though government officials planned it that way. (Oh wait, perhaps they did…)


Leen | Tuesday March 10, 2009 06:52 am 39
In response to Adie @ 19

I am not on the “I hate Ralph” bus. He had every right to run, folks were fools to vote for him in such a close race. I argued my ass off with young folks who I knew were going to vote for him. Ralph came to Athens just before the election and I challenged him face to face asked him “why in the hell do you keep repeating that there is no difference between the Dems and Republicans….that is a lie” He went silent.

Thirty five years ago a dear old Italian (immigrant) union card carrying brick layer asked me “do you have any crumbs in your pocket (cash)” “yes” I answered. His response “all you need to know is that the Republicans will take those crumbs and the Democrats will leave you a few”

Nader has done a great deal for our nation.


NorskeFlamethrower | Tuesday March 10, 2009 06:52 am 40
In response to oldgold @ 27

Citizen oldgold:

There are a lot of us out here who weren’t fooled by ol’ Raph long before 2000…he’s a very shrewd self promoter who leveraged his politics into a a non-profit fortune and empire insulating himself from accountability by millions of workers who labored for nuthin…many of ‘em college students.

No Brother oldgold, Ralph is an old con artist whose operations look a lot like Stalinism or, better still, Moonie operations.


eCAHNomics | Tuesday March 10, 2009 06:53 am 41
In response to selise @ 32

That’s looking at innovation from the POV of their substance. If you look at financial innovation from the POV of its results for the economy, you come to the same conclusion. There is no marcroeconomic statistic that is any better for the financial innovation. For awhile it looked like homewonership was slightly higher, but we know how that turned out.


selise | Tuesday March 10, 2009 06:53 am 42
In response to Bluetoe2 @ 24

that’s an excellent point – and i’d add that imo obama’s best chance to overcome those obstacles is in the very beginning. the more he gives up happy talk and bad policy and really bad economic team – the more people will come to distrust him. he won’t get an infinite number of chances for a re-do.


foothillsmike | Tuesday March 10, 2009 06:56 am 43
In response to stratocruiser @ 33

I have a gripe with the CDS ponzi scam. They decided that changing the name from insurance to CDS they could skate on the requirement for cash reserves and now we are supposed to anti up to meet their losses looting.


eCAHNomics | Tuesday March 10, 2009 06:57 am 44

You would not believe the hubris of the people who are doing this kind of financial legerdemaine. They won’t be talked out it easily. They’re analogous to the neocons in the sense that they know what they are doing is right and good, all evidence to the contrary notwithstanding.


stratocruiser | Tuesday March 10, 2009 06:57 am 45

Accounting is a method of finding and reporting truth, as best as can be done. When it is perverted, just like cherry-picking inelligence, truth suffers. decisions on bad data are bad decisions.
I want to see licenses and certifications ripped off, swords broken and thrown in the dirt.
Branded!


Adie | Tuesday March 10, 2009 06:57 am 46
In response to Bluetoe2 @ 24

Given observable behavior by some hotshot republican honchos so far, it would seem you are closer to the truth than not.

My main question: when do they step over that imaginary line when political sniping and petty bickering should be considered downright UNAmerican?

Trea*on by any other name (obstruction? indulging in stupid frivolous games to jam the gears of governance) in such a dangerous climate as that at present is way beyond shameful and annoying. IMO, it’s tantamount to playing with fire while sitting in a tub of gasoline.

When will the republican leadership wake up and realize THEIR OWN pants are on fire along with everyone elses?!


Christy Hardin Smith | Tuesday March 10, 2009 06:58 am 47
In response to eCAHNomics @ 44

Sadly, I think I would believe it. Which may actually be worse.


NorskeFlamethrower | Tuesday March 10, 2009 06:59 am 48
In response to Leen @ 14

Citizen Leen:

And jest why would anyone wanna waste any time (OR MONEY) on what ol’ Ralph has to say…God I wish that man would jest retire into the history of bad dreams.


eCAHNomics | Tuesday March 10, 2009 07:00 am 49

Anyone know why the “ratings” firms are still in existence?


Christy Hardin Smith | Tuesday March 10, 2009 07:00 am 50
In response to stratocruiser @ 45

Having done enough divorce work in my day to know hidden assets and fraud when I see it, it amazes me the level of hubris it must take to think that “creative accounting practices” would never be publicly discovered. Insane.


selise | Tuesday March 10, 2009 07:02 am 51
In response to Leen @ 30

yeah. it’s too bad more people haven’t been reading what nader has been saying for years. but the D party has done a very good job with the propaganda and too many people hear his name and they are incapable of hearing any more.

reminds me of the Rs and clinton or “socialism”

the ideas are either good or not, the facts are either true or not.


selise | Tuesday March 10, 2009 07:03 am 52
In response to stratocruiser @ 33

I want treble damages.

and fair trials!


DWBartoo | Tuesday March 10, 2009 07:03 am 53
In response to Adie @ 46

Treason it is, Adie.

Let us call it what it deserves to be called.

And, in the process, we shall regain the meaning and intent of language.

Language is for sharing, learning and understanding, it is not and should not be a tool of deceit, abuse and manipulation.


cbl2 | Tuesday March 10, 2009 07:04 am 54

Good Morning Christy and Firedogs -

o/t

Breaking:

Alabama Attorney General Troy King’s office is reportedly under investigation by federal authorities.

Reports published Tuesday said at least six former members of King’s staff went before a federal grand jury meeting in Montgomery last week. They were asked about investigations and their possible connection to allies of the Republican attorney general

but . . .

the investigation apparently is being headed up by U.S. Attorney Alice Martin of Birmingham

.

why is this woman still employed ???


Christy Hardin Smith | Tuesday March 10, 2009 07:04 am 55

So, are there particular questions folks would like to see asked of James Galbraith?


Leen | Tuesday March 10, 2009 07:05 am 56

Christy/selise/all

did folks see this bit on the economy on the Daily show
“In Cramer we trust”
http://www.thedailyshow.com/?g…..GgodxizzZQ


foothillsmike | Tuesday March 10, 2009 07:06 am 57
In response to eCAHNomics @ 49

Anyone know why the “ratingsraping” firms are still in existence?

fixed it for you


cbl2 | Tuesday March 10, 2009 07:06 am 58
In response to cbl2 @ 54

stratocruiser | Tuesday March 10, 2009 07:07 am 59
In response to selise @ 52

Yes. First the fair trial, then off with their heads.


Adie | Tuesday March 10, 2009 07:07 am 60

I’m with you on that. But I think his perspective has been, well, dented and put askew over the last several years. I appreciate what he did in the ’60’s. I just wish he’d hush now. But, yes, he has every right to speak his mind any time he wants to.

Compared to McConnell, Vitter, Graham, Shelby et al., who’re doing the moral equivalent of yelling ”fire” in a theater just for the heck of it, Nader’s a pussycat.


Christy Hardin Smith | Tuesday March 10, 2009 07:07 am 61

Orszag currently testifying before Senate Banking Committee on C-Span1. Just FYI…


selise | Tuesday March 10, 2009 07:07 am 62

i’m going to make a list and check it twice!


NorskeFlamethrower | Tuesday March 10, 2009 07:09 am 63
In response to selise @ 51

Citizen selise:

“…it’s too bad that more people haven’t been reading what nader has been saying for years…”

Certainly you are not serious, are you Citizen selise? Talk to anyone who worked for any of his PIRG canvasses in the 80’s and read everything he has said right along about unions and race and gender issues…this guy hasn’t been sayin anythin’ that a lot of others weren’t sayin right along only better , the difference bein’ ol’ Ralph got the press and developed a non-profit, labor exploitive operation that made money on his self serving politics.


Leen | Tuesday March 10, 2009 07:09 am 64

Christy

On Chris Matthews Hardball Jim Cramer recommended that interest rates be set at 4% across the board. So that the mortgage bailout would not unfairly favor those who consciously or unconsciously made mistakes. That this would stimulate borrowing.

What is wrong with this idea?


Elliott | Tuesday March 10, 2009 07:09 am 65

selise | Tuesday March 10, 2009 07:10 am 66

fyi – hearing list for the day at oxdown . i’ve been doing it every tues, wed and thurs and try not to miss any hearings – so folks can decide what ones interest them the most.


Leen | Tuesday March 10, 2009 07:11 am 67
In response to selise @ 66

And we so appreciate what you do


selise | Tuesday March 10, 2009 07:11 am 68
In response to NorskeFlamethrower @ 63

you got some links? i’d be happy to read them.


Adie | Tuesday March 10, 2009 07:12 am 69
In response to cbl2 @ 58

Here, hon. Have a sip of this herbal tea, and a little lie-down. *hands cool soothing handkerchief for smoldering forehead*


Christy Hardin Smith | Tuesday March 10, 2009 07:13 am 70

Sen. Grassley is putting me into a coma. Not enough coffee in the entire world this morning for a long opening statement from him…Zzzzzzzzzzzzzzzzzzz


ThingsComeUndone | Tuesday March 10, 2009 07:14 am 71
In response to foothillsmike @ 43

That is inspired ask that question to all the speakers that change from insurance to CDS meant that AIG kept no reserves we know how that worked if we can get the courts to rule that that change was stupid and illegal well I think we can go after


Christy Hardin Smith | Tuesday March 10, 2009 07:14 am 72
In response to Leen @ 64

I don’t know that there is or is not anything wrong with it because econ number crunching is not my forte. But I’m sure someone is crunching the numbers on the yays and nays as I type…


Christy Hardin Smith | Tuesday March 10, 2009 07:15 am 73

Grassley now trying to scare seniors about losing their health care if we reform health care overall. Classy.


twolf1 | Tuesday March 10, 2009 07:16 am 74

Sen. Grassley (R-Ambien)


NorskeFlamethrower | Tuesday March 10, 2009 07:17 am 75
In response to selise @ 68

Citizen selise:

You are talkin to one of the hundreds of thousands who experienced ol’ Raplh’s operation…if you can’t remember any of his statements about “gonad politics” relating to gender issues or “organized slavery” in relation to unions, then you’ve probably drunk too much of the KoolAid.


cbl2 | Tuesday March 10, 2009 07:17 am 76
In response to Adie @ 69

thankee!


Phoenix Woman | Tuesday March 10, 2009 07:18 am 77

The upshot is that nationalization — and socialism — is coming to America. The transition can be painful or not so painful, but the longer we delay, the more painful it will be.

It’ll be great for the vast majority of us, once we actually transition over, but the banksters are resisting it tooth and nail.


Adie | Tuesday March 10, 2009 07:18 am 78
In response to selise @ 66

We notice and we greatly appreciate the considerable effort and consistency. We are truly spoiled. Have we thanked you lately? ;->

((((selise!))))


Adie | Tuesday March 10, 2009 07:19 am 79
In response to cbl2 @ 76

No problem! Cookies?


Knut | Tuesday March 10, 2009 07:22 am 80
In response to selise @ 32

My very first published article (1977) goes right to Joe’s point about banking innovation– that it can go the route of counterfeiting means of payment. Sunk like a stone.


Leen | Tuesday March 10, 2009 07:22 am 81
In response to Phoenix Woman @ 77

this comment really says it all “our economy is being nationalized faster than you can say Hugo Chavez”


selise | Tuesday March 10, 2009 07:23 am 82
In response to NorskeFlamethrower @ 75

i read a lot of people – should i refuse to listen to obama over fisa? or summers? or the tarp? should i refuse to listen to clinton because of the number of iraqis he killed with his murderous sanctions?

personally, i don’t know any saints. but someone who has done a lot of good will get a hearing from me. and i’ll take what they say, like i always try to, with a big dose of skepticism.

and btw, every single time i’ve asked someone to back up their nader hate with some material i can check out for myself, i’ve gotten exactly zero. and that makes me wonder too. not saying this is the case with you – since you have personal experience to back up your position. but for most people it seems to come down to nothing – they have to go looking for evidence to support the position they already have and not the other way around (that their position is based on evidence they’ve already tested and reflected on).


Bluetoe2 | Tuesday March 10, 2009 07:23 am 83
In response to Phoenix Woman @ 77

“Democratic socialism” would benefit the vast majority of the citizenry but what impacts would it have on the plutocracy? I think we know the answer to that. The plutocracy still has the media and the military and they will use both to prevent “socialism” from coming to America. Truman tried to nationalize the steel industry and was soundly defeated in the both the courts of public opinion and the judiciary.


selise | Tuesday March 10, 2009 07:24 am 84
In response to Knut @ 80

all i can say is bless you for writing it.


selise | Tuesday March 10, 2009 07:25 am 85
In response to Adie @ 78

thanks. you’re very welcome.


Adie | Tuesday March 10, 2009 07:25 am 86
In response to Phoenix Woman @ 77

Screaming, spoiled brats, hanging on with every ounce of their strength to the toys they themselves broke.

Greed killeth monster along with prey, if ‘e don’t mind ‘is step.


Bluetoe2 | Tuesday March 10, 2009 07:27 am 87
In response to NorskeFlamethrower @ 63

Had a friend who was a “Nader Raider” in the 80’s and she said he was a self-absorbed and self-promoting carney.


Adie | Tuesday March 10, 2009 07:32 am 88
In response to Bluetoe2 @ 87

that’s not necessarily a fault in the political arena, is it?

i’d take it over a vicious, lying, crooked fella like [fill in the blank]


Leen | Tuesday March 10, 2009 07:36 am 89
In response to Bluetoe2 @ 87

complete hogwash


Leen | Tuesday March 10, 2009 07:37 am 90
In response to selise @ 82

bingo…BUT back to Christy’s post on the economy


Bluetoe2 | Tuesday March 10, 2009 07:40 am 91
In response to Leen @ 89

Just passing along the opinion of one person who worked for Nader.


selise | Tuesday March 10, 2009 07:40 am 92
In response to Bluetoe2 @ 87

that’s true of most people in politics (although they spend lots of money and effort trying to convince us otherwise).

the stuff i care most about is: has he caused real harm to people? is he dishonest or manipulative? how does that stack up to the number of people he’s helped and the times he’s been honest even when it wasn’t helpful to him.

that kind of thing…. the character stuff more than the personality stuff if that makes any sense.


Leen | Tuesday March 10, 2009 08:06 am 93

Bill Moyers interviews James Galbraith
http://economistsview.typepad……s-int.html

Amy Goodman’s interview with James Galbraith
http://www.democracynow.org/20….._out_banks


zak822 | Tuesday March 10, 2009 10:18 am 94

Yes.

Mr. Galbraith, why haven’t we done price discovery on the balance sheets of the investment banks receiving bailout money? The assets can’t be sold unless they have a value attached to them. Lacking that, you don’t even have a starting point for negotiation.


acquarius74 | Tuesday March 10, 2009 10:37 am 95

Mr. Galbraith: Please give your opinion as to whether the agreement for rules changes between the 5 SEC Commissioners and the 5 big investment bank CEOs who met 04/28/2004 were/are the root cause of our current financial meltdown.

SEC rules changes allowed self-regulation, increased debt ratio to capital reserve, allowed investment in CDSs, MBSs, credit derivatives, a form of insurance for bond holders, and other exotic instruments.

At that meeting Henry M. Paulson, then CEO of Goldman Sachs, was the force behind the changes and spokesman for the group of investment bankers. The other 4 banks represented were: Morgan Stanly, Bear Stearns, Lehman Brothers, Merrill Lynch.

Reference: NY Times, 10/03/2008

(Christy, feel free to edit and condense as you see fit. I have more links that give more background going back to 02/29/2000 if you’re interested.)


acquarius74 | Tuesday March 10, 2009 10:52 am 96
In response to acquarius74 @ 95

BTW, that 2004 program ref’d in my #95 was formally ended by the SEC on 09/25/2008. “…acknowledging that it had failed to anticipate the problems at Bear Stearns and the other 4 major investment banks.”

Quote also from same NY Times article, link at 95


Leen | Tuesday March 10, 2009 01:09 pm 97

Mr. Galbraith,

During a Frontline special called “Banking on the Brink” they reported that Former Secretary of the Treasury Hank Paulson and Former CEO of Lehman Brothers Dick Fuld were arch enemies when Paulson was CEO of Goldman/Sachs. Do you think there was anything personal in Paulson allowing Lehman Brothers to fail?

What is your opinion about that decision?


Leen | Tuesday March 10, 2009 01:27 pm 98

Mr. Galbraith

You said this during your interview with Bill Moyers

“JAMES GALBRAITH: That’s no doubt true. First of all, the crisis had been developing for a year. When it broke, he sent up a three-page bill to Congress. Many people said that’s a power grab. My view was it was a punt. It said to the Congress, “You take this ball. You write the legislation,” which Barney Frank and the other leadership of the Congress actually did do. And they came back. And eventually they passed a bill. And Paulson has been improvising ever since. He’s done a number of things that actually I was recommending as early as the 25th of September in the “Washington Post”. Guarantee all deposits in the banking system. Support the commercial paper market. Take out equity investment in the banks, effectively partially nationalizing them. All of these things which were unimaginable in mid-September are now policy, even though they weren’t, strictly speaking, part of the bill.”

What would you have done differently if you had been in Paulson’s position?


Leen | Tuesday March 10, 2009 01:38 pm 99

it makes sense to me..but I know very little about economics.

the reason it makes sense to me is not setting those who did not make mistakes and those who did whether purposely or not against one another


Leen | Tuesday March 10, 2009 01:45 pm 100

Hey christy since I can not get on over at your Salon with Galbraith. (you know banned by the moderator over at the mothership last fall when I would not back off when a moderator was on me for bringing up the I/P conflict) Is there anyway my questions can be posted from above?

My other questions for him.

What’s wrong with lowering the interest rate to 4% as Jim Cramer suggested? This somehow makes sense to me.

What does he mean by a “corporate republic”

If he were President who would he pick to be his Secretary of the Treasury besides himself? Who would be on his economic team?

What does he mean when he says “treat banking like a utility”


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