Bloomberg View’s William Cohan and panel debate who the S.E.C. is really protecting.
“So that goes back to a much bigger issue which is we have a whole host of contracts, that were entered into during better times that unfortunately have to be rewritten.” – Mohamed El-Erian, CEO of PIMCO, a trillion dollar money management firm.
Forgiving debt is fundamental to American history. So is redefining property rights. We fought a Civil War over the idea that human beings could be property, and repudiated the debt of the Confederacy in the Constitution itself. Bankruptcy – which is the destruction of debt – is in the Constitution, while a central bank like the Federal Reserve is not.
And this is because debt is a contractual promise, it is not sacred. The problem we have now, as El-Erian told me in our podcast [link], is there are too many obligations promised to too many interest groups, and not enough resources to honor them all. So what’s happening is that the creditors are fighting with each other to bleed as much from a stone as possible. China wants to be paid on its Treasury bonds, so does Goldman Sachs, and so do Social Security recipients. The same is true for mortgage-backed securities, Greek debt, and every IOU in the American financial system.
But now, because there isn’t enough to go around, the accounting for and attempted collection of this debt is driving the welfare of our society. Rather than saying how we can build a productive culture and thereby create more wealth to award to everyone, creditors are trying to divide what exists now. The real waste, of course, are the tens of millions of unemployed and underemployed workers. We will never know what businesses weren’t started, what ideas weren’t turned into products, and what innovation didn’t happen because these people are lying fallow. But the loss is vast. This is the consequence of letting the accounting drive the culture.
There’s a lot of discussion over how to properly regulate the banking system, and if you want to hear from one of the best minds, listen to my podcast with Mohamed El-Erian. He analogized our system to a highway, – importantly though, it’s not just that we need clear rules of the road. We shouldn’t be driving just to drive, just as the financial system should be a means to an end. Talking about debt in the abstract is like talking about driving without having a destination in mind. What kind of society do we want to build with our banks and resources? That’s the question to start with, not percentages of GDP or spending cuts or tax increases or ratings agency downgrades
In 1862, Lincoln offered to compensate the South for slaves with Treasury bonds, rather than fighting an expensive and deadly war. A few years later, a series of amendments to the Constitution specifically argued that the obligations and property of the South, both debt and slave holdings, were not valid. In 1989, Treasury Secretary Nicholas Brady organized what was essentially a debtor’s cartel of Latin American companies that had defaulted on their debt to American banks. The Brady Bond plan worked for everyone.
In 1944, America had probably its finest moment, when it convened the Bretton Woods summit to organize the finances of the post-war world. The post-WW I reparations deal looked much like what we are pursuing now, a “blood from the stone” philosophy of stripping as much from German as possible, while America got as much back from England and France as possible. We know where that led, to depression, then global tensions, then a trade war, then a real war. The post-WW II deal was organized around turning Western Europe into a productive society, to pursue the goal of peace. And it worked! The Marshall Plan, Bretton Woods, the IMF, and the World Bank turned Western Europe into a rich trading partner, and the idea of war between Germany and France is now laughable. This was clearly worth debt forgiveness!
We need a new global restructuring of our obligations, a new Bretton Woods or Brady Bonds solution. Greece should not be descending into poverty, it has an educated workforce and wonderful traditions. American homeowners shouldn’t be under siege by creditor predator banks, and millions of us shouldn’t be unemployed as debt-holders forced into a Survivor-like fight with each other over scraps. We cannot allow giant creditors to turn fights over debt into currency wars, and then into real wars.
We need leadership to say that this world will not be a lowest common denominator fight over satisfying old debts that cannot be satisfied, with no environmental, labor, or consumer protections. We need leadership to move us towards a high-trust, global productive society that can solve our collective problems. This is doable. We’ve done it before. We can do it again.
Introducing America for Sale, a new Huffington Post-Dylan Ratigan Show collaboration.
(Scroll down for video segments)
In Chicago, it’s the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In Indiana, it’s the sale of the northern toll road to a Spanish and Australian joint venture. In Wisconsin it’s public health and food programs, in California it’s libraries. It’s water treatment plants, schools, toll roads, airports, and power plants. It’s Amtrak. There are revolving doors of corrupt politicians, big banks, and rating agencies. There are conflicts of interest. It’s bipartisan.
And it’s coming to a city near you — it may already be there. We’re talking about the sale of public assets to private investors. You may have heard of one-off deals, but what we’ll be exploring with the Huffington Post is the scale and scope of what is a national and organized campaign to shift the way we govern ourselves. In an era of increasingly stretched local and state budgets, privatization of public assets may be so tempting to local politicians that the trend seems unstoppable. Yet, public outrage has stopped and slowed a number of initiatives.
While there are no televised debates around this issue, there is no polling, and there are no elections, who wins it will determine the literal shape of modern America. The Dylan Ratigan show is teaming up with the Huffington Post to do a three part series called “America for Sale”, showing the pros and cons, and the politics and economics, of a new and far more privatized government.
On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.” While the bank sees increased opportunity in “distressed assets” (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes “reputational concerns with the manner in which these assets are being operated or held.”
The funds themselves are clear when communicating with investors about why they are good investments — a public asset is usually a monopoly. Says Quadrant Real Estate Advisors: “Most assets are monopolistic in nature and have limited competitors, creating the opportunity for stable, long-term investment returns. Investment choices include economic assets and social assets.” Quadrant notes that the market size is between $12-20 trillion, roughly the size of the American mortgage market. “Given the market and potential return opportunities, institutional investors should consider infrastructure a strategic investment allocation.”
As with mortgage securitizations, the conflicts of interest are intense. Pennsylvania nearly privatized its turnpike, with Morgan Stanley on multiple sides of the deal as both an advisor to the state and a potential bidder. As you’ll see, these deals are often profitable because they constrain the public’s ability to govern, not because they are creating value. For instance, private infrastructure company Transurban, now attempting to privatize a section of the Beltway around DC, is ready to walk away if local governments insist on an environmental review of the project. Many of them have clauses enshrining their monopolistic positions, preventing states and localities from changing zoning, parking, or transportation options.
While the trend is worldwide, privatization of public infrastructure only came to America en masse in the 2000s. It is worth discussing, because where it has happened it has sparked deep and intense anger. In Chicago, protests flared as Mayor Richard Daley pushed the privatization deal through. In Wisconsin, recent protests and counter-protests around controversial Governor Scott Walker revolved around, among other issues, the privatization of state medical services. In Ohio, a controversy is swirling around the political proposal to put the turnpike up for sale, while in Indiana, the state toll road has been in private hands since 2006 (upsetting the truckers who are paying much higher tolls).
The political organizing is intense – on the Republican side, conservative groups are aggressively driving it as a strategy for fiscal prudence. The American Legislative Exchange Council (ALEC), the influential think tank that targets conservative state and local officials, has launched an initiative called “Publicopoly”, a play on the board game Monopoly. “Select your game square”, says the webpage, and ALEC will help you privatize one of seven sectors: government operations, education, transportation and infrastructure, public safety, environment, health, or telecommunications.
On the Democratic side, the Obama administration has been encouraging Chinese sovereign wealth funds to invest in American infrastructure as a way to bring in foreign capital. It was Chicago Mayor and Democratic icon Richard Daley who privatized Chicago’s Midway Airport, Chicago’s Skyway road, and Chicago’s Parking Meters. Out of office after 22 years, he is now a paid advisor to the law firm that negotiated the parking meter sale.
Ratings agencies are also in the game, rating up municipalities willing to privatize assets, or even developing potential new profit centers around the trend (see the chapter titled “Significant Debt issuance Expected with the Privatization of Military Housing” from this September 2007 Moody’s report).
Over the next three days, we will explore what it means to have a government for profit, whether we get better roads when Goldman Sachs determines how much we pay in tolls. As we explore this topic, I hope we as Americans will be able to decide if we truly want to see America for Sale.
Indiana activist Steve Bonney and The Huffington Post’s Dave Jamieson explain why citizens are fighting back against Wall Street’s campaign to rule the roads.
The Huffington Post’s Amanda Terkel and Peter Rickman of the University of Wisconsin explain why some states and local governments are selling themselves to stay afloat.
Follow Dylan Ratigan on Twitter: www.twitter.com/DylanRatigan
Looking at the recent announcement of disclosure changes by Goldman Sachs (GS) meant to make the bank more open, on the one hand, and revelations about the surreptitious GS investments in Facebook (Facebook), on the other, one is reminded of Chapter III of The Great Crash by John Kenneth Galbraith, appropriately entitled “In Goldman Sachs We Trust.”
In the summer of 1929, the partnership that was the predecessor of GS floated two trusts on the New York Stock Exchange, Blue Ridge and Ticonderoga, which in turn were spawned by something called the Goldman Sachs Trading Corporation. The Goldman firm was still a separate and private partnership, mind you, but the small investment bank struck upon the idea of floating these ersatz trusts on the NYSE.
In 1929 there was no SEC, no government regulation in the equity markets of 1929, only the rules of the various exchanges and bank clearinghouses around the country. In 1925, Louis Brandeis had issued his landmark decision regarding collateral in trusts, Benedict v. Ratner, but the world of American finance was a dark jungle not unlike today’s world of over-the-counter derivatives and private mortgage-backed securities.
Hundreds of similar trusts had been sold to retail investors in the years preceding the crash and most of these, like the GS vehicles, were frauds to one degree or another. In that sense, nothing has changed on Wall Street in the past century or more except that there is now a far greater role for government, both directly and via various parastatal corporations. Banks like GS are now able to arbitrage opportunities between the public and private sector.
The floatation of the Goldman trusts would mark close to the high tide of the speculative wave of 1929. In the aftermath of the Great Crash, both of these vehicles were busted and ended up trading at pennies on the dollar before being finally liquidated. Now wind the clock forward to 2011. The Boys of Broad Street have created another trust to allow clients to invest in Facebook, the latest iteration of the GS model that traces its roots back to Blue Ridge and Ticonderoga.
As Andrew Ross Sorkin reports in the New York Times, the GS private equity fund would not buy these same shares, but Lloyd Blankfein and his generous colleagues did offer these choice cuts of Facebook to their favored clients. The situation with Facebook, in my view, illustrates why the Volcker Rule misses the point when it comes to the real causes of the financial meltdown. The syndicate desk, not prop trading, is where the rule of “yield to commission” still reigns supreme and legal norms such as suitability and know your customer are ignored with impunity.
It must be stated up front that the trust created by GS to facilitate their clients’ investments in Facebook sure looks like a deliberate violation of securities laws. Based on press reports, it seems that Facebook is, in fact, a public company by virtue of the number of direct and indirect shareholders. This assumes, of course, that the GS-sponsored trust is a sham created by Facebook for the purpose of evading SEC reporting and regulation. Once Facebook starts to make disclosures to the SEC, we will have more information.
And just what are those lucky GS clients getting with Facebook? Earlier this month I posted an interview on ZH with my brother Michael Whalen on the future of new media. Below let’s elaborate on the Facebook business model as an investment proposition with some input from Michael as well as my observations as a former dot.com banker. I’ve been watching the debate over the value of an online “user” since a search portal called Alta Vista was part of something called Digital Equipment Corporation, but the ability of Wall Street to sell vapor to credulous investors remains unchanged.
Look, for example, how the Facebook portal got a lot of ink last week because of the superlative public relations job by GS. In feeding their “private investment” hype to the Big Media, GS was effectively front-running their own private market, the little ghetto called Face Book that they created apparently to evade securities laws. Keep in mind that there is a direct parallel here between the GS trust created for investing in Facebook and the OTC derivatives markets in that both models are set up to avoid public reporting and oversight.
The GS guys are usually the smartest guys in the room – but they must have provided more than the usual incentives to make this deal happen. We can tell stories of the abortive IPO of Alta Vista by something called CMGI in Boston. The GS bankers and CMGI management tried to convince investors that Alta Vista had a community of users based upon search. Sound familiar?
Morgan Stanley was supposedly the lead on a four handed deal, this care of the participation of Mary “Queen Bee” Meeker. But GS, ostensibly number two, was running the client and the deal. I was the banker for PruVolpe Securities and eventually told bank management that the deal would never happen. Meeker was nowhere to be found. The deal eventually died for lack of revenue, a verity made apparent by the fact that after three draft S-1s, we still had no financials for the deal.
Remember that in those heady days of the Internet bubble, the GS internal private equity fund that apparently turned up its nose at Facebook was freely making investments in all manner of emerging “opportunities.” With Facebook, GS seemingly convinced a group of Russian “media” investors to drop another $450 million into Facebook (this after an initial $50 million) so as to buy a small stake of the gigantic social network.
This initial investment apparently opened the doors to the ersatz GS “private market” that allowed other GS investors to play, but GS management may have screwed up yet again and created significant legal and reputational liability for Facebook, itself and the investors. Thus the observation that the GS investment “conduit” appears to be a public offering of securities and, if so, a violation of U.S. securities laws by Facebook.
Naturally GS is covered with fees on all sides of this one – brilliant. GS thinks that it has no exposure on the Facebook deal — more brilliant, unless of course Mary Schapiro and her colleagues at the SEC wake up. And GS actually got the media to help them in justifying this mess to a group of investors who may not know what they bought – but it was sure expensive.
Here are three reasons why the Facebook deal doesn’t work IMHO:
(1) Obviously, the allure of Facebook is getting 500 million + pairs of eyeballs to look at whatever you want to put in front of them, right? Facebook drives this traffic via free enablement of our inner narcissist and user defined communities. But comes the question: How are you charging for this? The very thing that makes Facebook popular is the thing that also keeps it from being monetized effectively. This is the same problem that has always dogged new web ventures, namely that “free” features attracts lots traffic of questionable value.
News reports suggest that Facebook only generates about $1.5 billion in ad revenue. Hopefully we’ll have some SEC filings to look at soon to better understand this business. But like Twitter and other broad “social” portals, Facebook has yet to demonstrate how they can make this service a going concern that does not need continuous capital infusions.
And speaking of potential exit strategies, other media companies are still reticent about buying into the “marketplace” scenario that Amazon first created on-line. So, unless the Russians got a strategic plan from Facebook dude Mark Zuckerberg – they are flying blind into media hype land and paying GS handsomely for the privilege.
(2) Michael and others make the point that the staying power of Facebook remains to be tested. Facebook is the techno hype love object of this moment — however, once people stop “playing” with Facebook and they have been virtually “befriended” by literally everyone they have ever slept with, done business with and more – what else is there?
Facebook needs to claim some content that is theirs or make the delivery of other people’s content easier. They also have yet to demonstrate, speaking of monetizing traffic, how they will segment their population for advertisers. What is really funny is that some of the largest media companies, portals and search engines are literally soling their nappies over Facebook, a company which like Alta Vista is still looking for a business model.
Portals such as Yahoo, Google, Amazon and Ebay use various types of functionality to attract and define users. Facebook is essentially everything and anything, thus the large base of registered users and the massive ramp. There has been talk and discussion of a “Facebook TV” which looks an awful lot like YouTube. However, the grab for control (not ownership) of intellectual property in any digital media right now is intense. Is Facebook throwing around its popularity and some cash to eventually be THE hub for all content? We’ll see, but even if Facebook keeps the eyeballs, they are still going to have to monetize this site.
(3) In the film “All The President’s Men,” Hal Holbrook says to Robert Redford “follow the money.” If you did follow the money on this deal, you would likely see that the real source of this Russian “media” money was oil and energy. Got to love when people from one industry play inside another because it’s “sexier,” a transaction the GS bankers know how to initiate and facilitate. And like Andrew Ross Sorkin reports, GS does not have a dollar of their own money in this deal.
The NYT reports suggests that the GS bankers who were willing to throw their own money at all manner of dot.com crap a decade ago, would not buy into Facebook when they had the chance to get in early. The story is that GS couldn’t justify it internally, but if you have ever competed with GS in the private equity channel, you know that GS reticence regarding an opportunity is a red flag. Bright red.
Were Facebook really so amazing, GS would have quietly ponied up a few billion and no one would have been the wiser. An IPO would have followed in a year or so. Instead, they chose to sell the opportunity to clients and ramp the deal to the sky now — and in the process defy U.S. regulators. The fact that the unveiling of Facebook was done with so much noise and fanfare by GS, a firm that never does anything rash you understand, suggests that there was a need to divert attention from the issue of valuation.
Based on what we know today, it looks like some Russian investors were sold a “bridge” by the Boys from Broad Street and GS wanted to pump the deal in the mess to help the “valuation.” Wonder if GS has committed to make a market in the shares of their new trust? Now that would be a real change in corporate behavior.
But if Facebook ends up like Blue Ridge and Ticonderoga in the early 1930s, I sure would not want to be Lloyd Blankfein and the other senior managers of GS. When it comes to money, you see, Russians do not have a sense of humor.
You already know the answer — more government handouts.
The latest gambit?
Politicians like Judd Gregg and Ben Nelson are fighting to keep the crooked $600 trillion derivatives market unreformed. The dirty not-so-little secret about derivatives? In their current form, they are basically government insurance where the bailed-out mega-banks get to keep the premiums but the taxpayer pays the claims.
Senator Gregg points out that good, honest American companies like Harley-Davidson and Caterpillar use these derivatives to hedge against things like currency changes and costs of materials. Hedging against price fluctuations is something that any smart business would want to do and should be encouraged.
What Senator Gregg doesn’t point out is that companies can already do this WITHOUT secret derivatives. They just have to buy them on a market exchange or, if it’s something unusual or exotic, go to an actual regulated insurer like Lloyd’s of London. If Mariah Carey can get her legs insured, I am pretty sure that Caterpillar can find a regulated insurer to cover a seasonal drop in steel prices.
The reason no one wants to cut this scam off is because it works out great for everyone except the taxpayer/sucker who actually pays the claims. The buyers get cheap insurance backed by the US government, the banksters (the big four: JPMorgan Chase, Bank of America , Citigroup and Goldman Sachs) get to keep the premiums and WE THE TAXPAYER pay the claims — and trust me, AIG is just the tip of the iceberg (note: Fannie + Freddie) in this ongoing derivative bailout!
Just because a few good, American companies like Berkshire Hathaway (major stockholder: Ben Nelson) like getting a sweet deal from the taxpayer doesn’t mean that we should keep giving them one. This is especially true when CEOs like Warren Buffet already knew they were a deal too good to be true when they bought them. It is time for us to cut off their welfare checks.
Too many politicians in this country have decided that socialism buys votes, especially when their generation doesn’t have to pay for it. But thankfully, there are politicians willing to keep our great country from falling further into this abyss and are willing to put an end to this ridiculous taxpayer giveaway.
The following includes questions and commentary for Goldman Sachs as the company defends itself against charges of fraud:
Since I haven’t been able to get you or anyone from Goldman Sachs to appear on my show in months, perhaps we can just try corresponding in writing. Thank you for your press release. I have submitted my follow-up questions in bold:
Goldman Sachs Makes Further Comments on SEC Complaint
April 16, 2010
The Goldman Sachs Group, Inc. (NYSE: GS) said today: We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact. We want to emphasize the following four critical points which were missing from the SEC’s complaint.
Goldman Sachs Lost Money On The Transaction.
Goldman Sachs, itself, lost more than $90 million. Our fee was $15 million. We were subject to losses and we did not structure a portfolio that was designed to lose money.
But what about the other “transactions”… You know, the one where you may have potentially shorted this exact transaction with AIG for a lot more than $90 million? You remember AIG, right? It’s where the taxpayers paid you 100 cents on the dollar for a company that you helped blow up.
Extensive Disclosure Was Provided.
IKB, a large German Bank and sophisticated CDO market participant and ACA Capital Management, the two investors, were provided extensive information about the underlying mortgage securities. The risk associated with the securities was known to these investors, who were among the most sophisticated mortgage investors in the world. These investors also understood that a synthetic CDO transaction necessarily included both a long and short side.
There must be a big difference between “extensive disclosure” and “complete disclosure,” because if you provided “complete disclosure,” you probably would have mentioned to your customers that the entire product was funded and selected by someone who was betting on it to fail. You know, kind of like you did for your coworkers at Goldman Sachs, but forgot to do for your customers!
ACA, the Largest Investor, Selected The Portfolio.
The portfolio of mortgage backed securities in this investment was selected by an independent and experienced portfolio selection agent after a series of discussions, including with Paulson & Co., which were entirely typical of these types of transactions. ACA had the largest exposure to the transaction, investing $951 million. It had an obligation and every incentive to select appropriate securities.
Not to mention their incentive to be Goldman and Paulson’s unwitting patsy…
Goldman Sachs Never Represented to ACA That Paulson Was Going To Be A Long Investor.
The SEC’s complaint accuses the firm of fraud because it didn’t disclose to one party of the transaction who was on the other side of that transaction. As normal business practice, market makers do not disclose the identities of a buyer to a seller and vice versa. Goldman Sachs never represented to ACA that Paulson was going to be a long investor.
True, but Goldman also never represented to ACA that Paulson was planning on shorting the same product that Paulson & Co. created in the first place!
Background: In 2006, Paulson & Co. indicated its interest in positioning itself for a decline in housing prices. The firm structured a synthetic CDO through which Paulson benefited from a decline in the value of the underlying securities. Those on the other side of the transaction, IKB and ACA Capital Management, the portfolio selection agent, would benefit from an increase in the value of the securities. ACA had a long established track record as a CDO manager, having 26 separate transactions before the transaction. Goldman Sachs retained a significant residual long risk position in the transaction.
IKB, ACA and Paulson all provided their input regarding the composition of the underlying securities. ACA ultimately and independently approved the selection of 90 Residential Mortgage Backed Securities, which it stood behind as the portfolio selection agent and the largest investor in the transaction.
The offering documents for the transaction included every underlying mortgage security. The offering documents for each of these RMBS in turn disclosed the various categories of information required by the SEC, including detailed information concerning the mortgages held by the trust that issued the RMBS.
Any investor losses result from the overall negative performance of the entire sector, not because of which particular securities ended in the reference portfolio or how they were selected.
The transaction was not created as a way for Goldman Sachs to short the subprime market. To the contrary, Goldman Sachs’s substantial long position in the transaction lost money for the firm.
No, it was created as a way for Paulson & Co. (and maybe you), to short your customers… you know, the same customers that you apparently forgot to mention that little fact to…
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.
Lucas van Praag
Tel: 212-902-5400Investor Contact:
Thanks Lucas, hope we can chat again soon. Maybe next time about exactly how a then-28-year-old Goldman Sachs junior executive did this with no apparent supervision?
“Everything is context-driven. After ten benign years in the context of where we were…How would you look at the risk of a hurricane? The season after we had four hurricanes on the East Coast, which was actually extraordinary versus the year before, rates got very low… that year after 4 hurricanes… rates went up spectacularly… Is the risk of hurricanes any different any of those times?”
-Lloyd Blankfein, CEO of Goldman Sachs (January 12, 2010)
It is true that our economy was hit by hurricane Mr. Blankfein, but it was one created by you and your cohorts.
The financial services industry lobbied for the repeal of the Glass Steagall Act in 1999. That allowed banks to use their custodial power over your money to assume huge risks in investment markets.
And to help grow the hurricane, then CEO of Goldman Sachs Hank Paulson made a personal plea to the SEC to allow banks to leverage more money against their capital. As much as $4,000 for every $100 in capital they held.
Wall Street may claim this was caused by a perfect storm, but the only thing perfect about it was their ability to line their pockets at the expense of our country.
Look at just the past few years of compensation for some of the CEO’s testifying today. Numbers that don’t even include the expected record-breaking 2009 bonuses.
- $410 million for Goldman Sachs CEO Lloyd Blankfein over 3 years
- $195 million in that timespan for JP Morgan CEO Jamie Dimon
- $132 million for just two years work at Morgan Stanley for John Mack
Unfortunately for the rest of us, their man-made money-making hurricane has devastated this country.
- The deficit has skyrocketed over the past ten years. Our national debt now more than 12 trillion dollars.
- More than 2 million families have lost their homes to foreclosure in the last 3 years. And seniors are denied interest on their savings, just so banks can receive tons of cheap money to try to gamble their way out of their hole.
So to you hurricane-makers, we say it’s time for you to come clean on your actions, let us fix your crooked system and finally pay us back for your destruction.
Today, Morgan Stanley CEO John Mack and JP Morgan’s Jamie Dimon talked about clawbacks they’ve instituted for their banks to recoup future losses… but what about the clawbacks for the bonuses you made over the past 10 years? The ones you made on the massive fraud that the American taxpayer is currently paying for?
Potentially record profits Mr. Mack but they are clearly the result of a windfall of taxpayer support. So it only makes sense that this country follow the lead of Great Britain and France and enact a windfall profits tax.
Look at it this way: If we found out Katrina was the result somebody’s get-rich quick scheme, wouldn’t we demand restitution?