The Financial Crisis Inquiry Commission report is sure to provide a powerful reinforcement to the growing lack of faith in elites and especially the financial industry. Because they will outline, in painstaking detail, how the financial meltdown of 2008 was completely avoidable – the result of policy failure at the highest levels of government and Wall Street, failures that bordered on criminal and that have never been fully adjudicated.
The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.
“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions, which were read by The New York Times. “If we accept this notion, it will happen again.”
This failure was not limited to one party or one set of elites. Everyone at the top level of the business and government food chain had a role to play in creating the conditions to crash the economy and cause untold and unnecessary suffering for hundreds of millions across the planet. If this were only the elite’s playground, if only they bore the consequences for their actions, it would be acceptable to dismiss the entire process. But in fact, that’s been the opposite of what occurred. Financial greed and mismanagement had a profound effect on the world’s poor and plunged countries across the globe into a near-depression, but just two years later, they’re back on top, strutting around Davos, thrilled and optimistic and still laden with bonus cash. Almost nothing changed for the elites who irresponsibly destroyed the global economy; almost everything changed for those without the same level of power and influence.
The 576-page FCIC report, due out tomorrow, will spare nobody:
The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke, who did not foresee the crisis but played a crucial role in the response. It criticizes Mr. Greenspan for advocating deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” under his leadership as a “prime example” of negligence.
It also criticizes the Bush administration’s “inconsistent response” to the crisis — allowing Lehman Brothers to collapse in September 2008 after earlier bailing out another bank, Bear Stearns, with Fed help — as having “added to the uncertainty and panic in the financial markets.”
Like Mr. Bernanke, Mr. Bush’s Treasury secretary, Henry M. Paulson Jr., predicted in 2007 — wrongly, it turned out — that the subprime collapse would be contained, the report notes.
Democrats also come under fire. The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton’s term, is called “a key turning point in the march toward the financial crisis.”
Timothy F. Geithner, who was president of the Federal Reserve Bank of New York during the crisis and is now the Treasury secretary, was not unscathed; the report finds that the New York Fed missed signs of trouble at Citigroup and Lehman, though it did not have the main responsibility for overseeing them.
The worst part about this financial crisis is that it has not ended. On an almost daily basis, we see additional reports of foreclosure fraud, the broad cover-up of the failures in securitization that were at the heart of the crisis. Just yesterday, a Bank of America home mortgage unit was ordered to stop all foreclosures in Nevada, a non-judicial foreclosure state, that aren’t authorized by a court order. There have now been allegations of robo-signers on the notice of default, virtually the only thing that has to be done properly in these non-judicial foreclosure states. In a separate case, Countrywide (now a division of BofA) has been suit by a coterie of investors, saying that the mortgage-back securities they bought from Countrywide were completely misrepresented. This is an example of the continuing mortgage bond scandal and the repurchase wave that threatens to swamp major banks.
Despite these injustices, despite the continued rush to foreclose, to bury the evidence of fraud, we’ve yet to see any major prosecutions coming out of the crisis. The FCIC will reportedly refer a wide range of activities for criminal prosecutions, but the Justice Department or individual state Attorneys General have to act on it. The actions of Iowa Attorney General Tom Miller are instructive in this regard.
The latest step backwards by Miller is a softening in his stance and a refusal to reaffirm his earlier commitments. From Iowa CCI’s press release about its meeting yesterday with Miller:
Following their December 14th meeting with Iowa Attorney General Tom Miller, who is leading the 50-state investigation of the “foreclosure-gate” scandal, 200 members of Iowa CCI met with him again on Tuesday to continue the push for a settlement that will help millions of Americans stay in their homes. Iowa CCI is part of a coalition of community groups across the country fighting to end the foreclosure crisis.
“Tuesday’s meeting felt a lot different than the meeting in December,” said Iowa CCI Director Hugh Espey, “In our first meeting with Attorney General Miller we felt like we had a champion that was ready to go toe to toe with the big banks. We left this meeting wondering if the big banks had knocked the wind out of our state’s top law enforcer.”
“In many cases a loan modification is in everybody’s best interest – the homeowner, the investor, servicer and the national economy,” Miller had said in a statement following the December meeting. “… I know it’s worth our best efforts to save as many homes as we can.”
In Tuesday’s meeting The Attorney General was less forthcoming about the intended outcome of the settlement. He did not repeat previous commitments to aim for a settlement that would keep people in their homes, nor to press criminal charges against bank officials where evidence of fraud and criminal wrongdoing is found. The Financial Crisis Commission has recently referred several cases to the states for further criminal investigation.
The reason so many people have lost faith in elites is because they see a country operating without a rule of law, with rogue criminals still working at major banks across the country and a two-tiered system of justice depending on your power and influence. The FCIC report will provide powerful proof of this.
More from The Financial Times. But I’ll leave you with this, written by Phil Angelides, the panel’s chairman:
“The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire,” the report states. “The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble.” [...]
The report, which was heavily shaped by the commission’s chairman, Phil Angelides, is dotted with literary flourishes. It calls credit-rating agencies “cogs in the wheel of financial destruction.” Paraphrasing Shakespeare’s “Julius Caesar,” it states, “The fault lies not in the stars, but in us.”




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How about this:
Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money.
The question now is who could or would counterfeit or smuggle these non-negotiable bonds.
In order to stop money laundering Italian law sets a ceiling of 10,000 euros per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.
If the certificates were real, for Italy it would be like hitting the jackpot. The fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.
If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.
As soon as the seizure was made the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.
Some important international financial newspapers had already reported on the existence of “funny money” circulating on parallel, i.e. unofficial, financial markets.
For AsiaNews a few points need considering:
1. When it comes to Italy the world press has tended to focus on Italian Prime Minister Berlusconi’s personal problems rather than on stories like the bonds smuggling affair which has been front page on Italian newspapers.
2. The fear of counterfeit bonds and securities has spread across Asia with the result that real securities are also considered with suspicion.
3. During the Second World War several countries at war printed and put in circulation perfectly counterfeit enemy money. It is also historically established that some central banks, like the Bank of Italy 65 years ago, issued the same securities twice (identical registered number and code). This way they could print more money with legal tender than they officially declared. The main difference though is that 65 years ago the world was involved in a bloody war, which is not the case today.
People that are close enough can make a citizen’s arrest. Isn’t strange how this report comes out after the Wikileaks handover of Swiss banking criminal activity?
Heh, probably trying to get some of that to our leader’s accounts and their own. Italy will be bought off and nothing will come of it.
I can just see the news tomorrow as Eric Holder announces a press conference to say, “There is nothing to see. Move along”
Yep.
Though PTB & MOTUs would not agree. Dow over 12,000. What additional proof do you need?
This report will be buried by the MSM. No one could have predicted that:
Planes could fly into buildings
Predator Drones don’t win hearts and minds
The repeal of Glass Steagal would lead to deregulation
Deregulation would lead to CDO swaps and the massive pump and dump of the entire economy.
How long before this whole story of the bonds goes away, one day, two days?
I really didn’t need a 576 page report to tell me that the financial leaders screwed us. When paulson says give me billions of dollars and don’t ask questions, congress goes along, and then obama continues the scattering of $$$$ to the chosen few with no requirements in using the money, what is unknown?
Why can’t we have real news? Serious, real news of our own Country and the rest of the world is needed. Now, more than ever.
But didn’t you need to read Shakespeare, in what has by now become some of English’s greatest cliches?
We are in debt. Social Security and Medicare must be cut. Medicaid must be cut. Liberal Obama must stop spending. Everyone, except the fat cats, must pitch in to help. We are all in this together.
The MIC and Wall Street need all our tax revenue.
Hmmm… Daily Kos is now calling itself “center left”, while I still call them the veal pen.
I haven’t been there in ages. All I know is that they are supposed to be one of us. Their leader did have the ear and stage presence at one time. Guess he forgot what his goals were.
The MSM belongs to GE, Disney and a handful of billionaires. They benefit by dispensing fluff, propaganda and prole on prole crime.
They don’t want us to know about the Ponzi Schemes they commit daily.
what ponzi schemes did you have in mind?
Kos moved to the center. The center moved to the right. Kos has moved to the center. The center has moved to the right.
I understand that. I just feel like some of these very wealthy left leaners could jump through the ceiling and take a small chunk of space that is able to be seen widely. With all the 24/7 news channels, why can’t America have one that is not propaganda?
Sounds like “row, row, row your boat.” Or maybe “100 bottles of beer on the wall.”
simple. Thee isn’t a large enough audience to keep it running. People watch “news” to have their views confirmed not be educated.
Knowingly entering a Ponzi scheme, even at the last round of the scheme, can be rational economically if there is a reasonable expectation that government or other deep pockets will bail out those participating in the Ponzi scheme.
I disagree. The majority would rather watch it than the yakking yakkers. Hell, even Oprah has her own network!
How can Social Security be gutted with liberals on teevee telling people about it?
I’m hip. I was observing that they are now calling themselves “center left”, not expressing dismay that they are right of center
Even Conservatives or the new Tea Party Republicans do not want social security gutted. Nobody wants the banksters ponzi games played with their social security.
Who knew? Now, I’d like to see the whole lot of these shyster thieves go to prison.
I don’t know I can see some pretty good reasons why one would want to control their own retirement. Some will stick in the market others FDIC insured accounts. Seems pretty legit.
Yes that is funny. Calling oneself center left today is akin to being a Goldwater Republican.
Somehow, I knew you would like the idea.
more control is better than less
Ha! You aren’t looking at the headlines and financial sites are you?
Bernanke and Geithner will probably be on bended knee again soon.
Not true. All of the bankers and the recipients of their generosity very much want it and since that includes most of our elected officials, might as well say bye-bye to Social Security and say hello to Social Gamble.
Headlines?
More control? How are you going to control it after you hand it over to the bankstas?
how is putting the equivalent you put into ss into an FDIC insured account a gamble?
Except they’re not going to give us back the money we’ve already put in. That’s not “more control”, that’s theft.
same way one controls their 401(k), IRA, or savings accounts……
Because it will never be insured to the full amount, as you well know.
We don’t know that. But it does make a good punchline to scare some folks. More likely it would be phased out over a number of years giving ample time for people to prepare for the new reality. Not turning on/off the faucet.
You have to be kidding me! You cannot get a monthly withdrawal from either of the first two and you are penalized if you even call them to ask a question!
What sort of control are you referring to? Is that the same control that was in place when real estate and the Stock Market crashed?
I don’t know about you, but my portfolio is still down around 1990 levels.
HeadedWest, do you have a 401K and held it for longer than 15 years?
Pretty sure current FDIC insured levels are to 250K….in each separate bank, So if you hit the limit just open a new bank account across the street
They are paying the same interest the SS trust gets!
Please. The REASON they want it is because it’s a fat pot of money. What universe do you live in?
you can withdrawal when you reach retirement age.
or
just make it like a brokerage account
So then you are no worse off if you want to play it safe. Or you could put on a little risk. Add treasury bonds or municipal securities. Or dump it all into the stock market. Bottom line is you control where the money is being invested.
Again, I ask. Do you have a 401K and have you held it for 15 years or longer?
I already have money invested in places that I want it to be. I don’t want my SS handed over to the markets. With all the insider trading and poor analysts yapping daily you can lose your life savings in a flash if you are not standing inside the trading center.
fat fees? like .0006%…… That is the going rate for a S&P 500 index ETF. That is $600 for every million invested….
so don’t put it “in the market” put it in your safety deposit box or your mattress. Bottom line is you are controlling where it goes.
yes I have a 401(k)
Okay. We will wait for you to catch up. Maybe you can get some other advice to share with us in the meantime.
It no advice and I’m not suggesting someone puts it in the stock market, bond market or anywhere else. But I think citizens should be able to make that decision for themselves.
Then you lost money the past 4 years and it is still not back up to what you had. Everyone, regardless of their percentages of investments in the stable funds, US, or Foreign based mkts. LOST! YOU DID TOO!
Right on!
Control your own account when the broksters sic their high pressure sales force on you to put your assets into stocks at the peak and ‘diversify’ out of stocks at the bottom. And add fees that eat up all the returns. And front run you. And all the other tricks they play.
Good luck.
On edit: Jeanette Winter Loeb, the first female partner of Goldman Sucks, lost $22 million, her whole financial assets (understand she also had some real estate) to Bernie Madoff.
I do too! I think it should be a referendum on the next ballot for all citizens to vote on. That way we the people decide, not some political blowhard.
And if I was planning on retiring this year that might be an issue. But then again if that was the case I would not have had it in the market, I would have it in cash or treasury bonds…..
;-) Or let Golden Sacs hedge against you!
Nobody is forcing anyone to put their money anywhere
Cash would be better. T-Bonds can’t even be paid back cause they all walked out the door with the money.
If the bonds could be paid back, then they could pay back all the money they took out of SS to begin with and there would be no “crisis looming” in the future!
Except if several million people opt out of SSI, the system is no longer solvent or viable. Why should what you want prevent me from having any kind of secure retirement?
noone is suggesting taking money out. Its starting to limit the money going in. If I’m a 22 year old wouldn’t i be better off on my own then placing 6% of my paycheck into ss. You allow this person to 4% into a pre-tax retirement account and the other 2% goes towards ss. This coupled with rising age requirements over time will phase out the program into a new retirement program that puts citizens back in control.
That still crashes the system and you know it, or would if you hadn’t become addicted to the Ayn Rand kool aid.
how does that crash the system? be specific.
You, as an apparent Kool-Aid drinker, give no thought to how people actually function, as opposed to how you think they should function.
That kind of thinking only works if the investment system is NOT corrupt.
When people realize that they are responsible for their own retirement habits will change.
Less money going in = less available money to pay benefits = the system going into the red much sooner than it would if it were fully funded. Stop being deliberately obtuse.
Yeah because that worked out SOOOOO well before Social Security… Not only are you apparently incapable of basic arithmetic but you seem woefully ignorant of history. Big surprise.
There are corrupt people on wall street just like there are corrupt people in police departments, factory workers, waiters, bartenders, retailers, gardeners, housekeepers, politicians, professional athletes, accountants etc etc etc. Corrupt people are everywhere but that doesn;t mean it won’t work.
When you are raising the age for ss you are paying out a lot less than you are currently. Better the 22 year old plan on getting nothing from ss than being surprised when h/she hits 62
haha. before ss most people weren’t living long enough to even receive it
ROFLMAO
Guessing you’ve never heard about the economic probs of information asymmetry. It has nothing to do with responsible behavior of the less informed (and nothing can be done to correct that) customer, than the much better informed vulture seller of financial assets.
Lloyd Blankfein, is that you?
There’s nobody left by corrupt people on Wall St., and moral hazard means that will continue forever, since Wall ST., and all other dysfunctional U.S. industries now own the USG.
don’t trust yourself to make the right decisions? been burned too many times?
Your compassion is underwhelming. Wish I could say the same for your ignorance and bullshit.
what size tinfoil hat do you wear?
LMAO! Do you really not know who you’re talking to? More ignorance.
How did compassion come into play. Nothing changes for anyone approaching retirement while still giving the younger generations opportunities outside of ss to save for retirement
Nope. Just worked on Wall St for 30 years. Know what goes on pretty well.
Margaret, you have yet to make a coherent sentence let alone a strong counterpoint or suggestion other than maintaining the status quo
shoe shine guy?
but seriously what were you doing on wall street. I’m actually interested.
I have “net” to make a coherent sentence? Wonderful irony.
catch a typo…nice job.
So what is your suggestion again?
Going to make yourself look like a fool….but you seem to be pretty good at that….
Oh, I think I’d get moderated if I answered that one truthfully.
Oh, you mean my SSI suggestion. I must have repeated it a thousand times but once more for the incredibly inattentive: Raise the contribution cap and work on creating jobs. Problem solved.
Chief U.S. economist at CSFB.
Had a weekly standing group meeting with Brady Dougan, now head of all of CS, then head of equities at CSFB. Taught me that Wall St. had no idea what their risk exposure was.
Notice that while you have taken every opportunity to belittle me, I have responded to you seriously on every turn.
are you going to raise max benefits then?
HeadedWest is a misogynist and not just a right winger. It’s very annoying.
S/he can’t possibly be a misogynist, since the comment at 81 implies I am male.
Just a dismissive contempt for actual information or real arguments.
Am intimately familiar with the type.
On edit: I no longer feel obliged to present my bona fides in order to be taken seriously. My arguments stand on their own. In this case, however, I couldn’t resist.
I am humbled and certainly surprised.
I’m actually really surprised with your opinion regarding the level of corruption across the street. My experience, while not 30 years, has yet to indicate any of this perceived widespread corruption. Misunderstanding of risk I understand and happens in many jobs outside of wall street, but I would say that is far from a malicious practice.
Well he may have thought you were a male but that only illustrates my point. He is much more respectful with males on this blog than females. I doubt he would have ever expected a woman to be as competent and as well versed as you are.
I’ll note, for the record, that HeadedWest did not respond to my latest comments. *g*
Oh, and my 90 is logically inaccurate. Just becuz HeadedWest did not know I am female, does not mean s/he isn’t a misogynist. Just means belittling me in this particular interchange did not involve gender considerations.
@91 just had to wait for mod’s consent….
Oops. Missed this comment of yours.
Wall St. pays enough that “missing the level of corruption” would be a normal human failing. When your paycheck depends on seeing things in a certain light, it is not unusual when you do so.
That is one of the kinds of considerations I was getting at when I referred to seeing people as you think they should be, not as they actually are.
That doesn’t just mean your own colleagues on Wall St., but also constantly questioning your own assumptions & hypotheses.
In addition to being an economist for many years, my initial training was in science. In that field, nothing is ever proven. Everything is just an hypothesis waiting to be disproven.
So when you notice massive failures, such as occurred at every stage of financial market deregulation, starting in the 1980s, you should question your hypothesis that people can look after their own financial well being and that financial intermediaries act responsibly.
I’ll leave that as my parting thought and wish you well. I hope you never get caught in a Ponzi scheme nor any other financial malfeasance.
But as you get older, take care. That is not an easy row you have chosen to hoe.
Appreciate it and apologize for my tone above. I find myself on the other side of a lot of opinion and comments on here and am generally immediately on the defensive and get into a nasty habit on these forums of shutting people off.
Best of luck and appreciate the kind words.
Thers is upstairs!
Late Night: The Courage to Talk Crap
Apology accepted. And sentiments sincere.
David, here’s how you end the corruption and move to a fairer and saner society…
1. Enact Fair Elections Now Act. $100.00 maximum donation
2. FCC mandate that all TV political advertising is a public service and therefore free. Designate special channels for it.
3. Permanently ban anyone who has served in federal office from becoming a lobbyist
4. Enact The Bipartisan Tax Fairness and Simplification Act of 2010 – Eliminate $1 trillion in tax giveaways. Change the top tax bracket to 70% to help pay down debt
5. Break up the big banks and strengthen the Volker Rule
6. End ALL wars and lower the bloated defense budget
7. Reduce health care costs by adding the public option. Allow Medicare to purchase drugs. Allow drug re-importation. The Medicare Independent Payment Advisory Board should be given a broader mandate for cost control.
8. National Infrastructure Bank – Run by engineers, not politicians. Find $2 trillion over 10 years to create jobs now and increase productivity later. Put millions back to work. Fund with a millionaire’s tax
9. Federal government make massive investments in R & D to create quality jobs long term in areas like biotechnology, alternative energy, IT, materials, science, alternative-fuel automobiles, and clean technology. Fund with a financial transactions tax
10. Government pass a law requiring the seating of public and worker representatives on corporate boards to help stem the tide of jobs being shipped overseas
11. Raise educational standards through a national core curriculum. Advocate the firing of the bottom 10% of teachers nationwide and replace them with good teachers. Make higher education free to families that can’t afford it to encourage upward mobility in society. Fund with a carbon tax
12. Advocate a national ban on handguns
….conspiracies being generally avoidable… http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html
Heh, yep. It feels like we are saying that we could stop bank robbery if the CEO’s would simply refrain from robbing their own banks.