GOP Says It's OK For Big Banks To Screw Consumers

(Cartoon image is by Tony Auth in the Philadelphia Inquirer.)

During the Obama administration, the Democrats created the Consumer Financial Protection Bureau (CFPB). It's purpose was to protect consumers from Big Banks and other financial entities taking advantage of them -- and it's worked pretty well.

But the Republicans have taken millions of dollars from the financial industry, and this week they acted to chip another block off the CFPB wall to pay that industry for their political largesse. The GOP made it clear they are on the side of the giant financial institutions -- not consumers.

Here's how the latest GOP action is described by Ian Millhiser at Think Progress:

Tuesday night, as many Americans were preparing to go to bed, an evenly divided Senate voted to give broad lawsuit immunity to credit card companies, auto lenders, credit reporting companies like Equifax, and many other financial firms. The 50-50 tie in the Senate was broken by Vice President Mike Pence (R), and the House approved the lawsuit immunity measure. President Trump is expected to sign it.

The resolution passed by the Senate overrides a rule created by the Consumer Financial Protection Bureau (CFPB), which prevents many financial firms from engaging in two abusive practices. The rule prohibited much of the financial industry from using “forced arbitration” agreements — a common tactic where a company refuses to do business with consumers who will not sign away their right to sue the company in a real court.

Consumers who sign away their right to sue must resolve any disputes with the company in a privatized arbitration system that favors corporate parties.

Additionally, the CFPB rule prohibited credit card companies and many other financial firms from requiring consumers to sign away their right to bring class action lawsuits, a form of litigation that ensures that companies that charge certain illegal fees to consumers face a consequence for their actions.

The vote is a major victory for the banking industry. Every Senate Democrat voted to preserve the CFPB rule, as did Republican Sens. Lindsey Graham (R-SC) and John Kennedy (R-LA). All other Republicans voted to reverse the CFPB rule.

Tuesday evening’s vote also effectively strips the CFPB of much of its authority to rein in abusive arbitration clauses. Under the Congressional Review Act, CFPB cannot issue a rule “in substantially the same form” to one that is approved by Congress.

Trump/GOP Readying An Attack On The CFPB

The Republicans have never liked the Dodd-Frank Act (or the Consumer Financial Protection Bureau created by that act to protect consumers from abuses by the financial sector), and now that they have a Republican in the White House they are making plans to change the Act -- making it far more bank-friendly. Trump himself said last Monday that he planned to "do a big number on Dodd-Frank".

While Trump hasn't released his plans to attack Dodd-Frank, the GOP in Congress already has a bill. Rep. Jeb Hensarling (caricatured here by DonkeyHotey) is ready to introduce the CHOICE Act -- an odious bill that would remove many of the regulations imposed on the financial sector by Dodd-Frank. It would also de-fang the CFPB, making it much harder to hold the financial industry responsible for abusing consumers.

Here is part of an excellent article by Jared Bennett for the Economic Policy Institute. The part of the article I'm reposting concerns the CFPB, and how the CHOICE Act would change it.

The Choice Act also targets the Consumer Financial Protection Bureau, which Dodd-Frank established to protect consumers from “unfair, deceptive or abusive practices” of the financial sector, according to the law.

But Hensarling believes the agency is an example of government run amok, claiming the CFPB has “infringed on the economic freedoms of consumers.”

That sentiment, along with Trump’s election win, “will result in a sea change at the CFPB,” said Alan Kaplinsky, who leads the Consumer Financial Services Group at the law firm Ballard Spahr. “There’s a lot of discontent among the companies that are regulated and supervised and who have become the target of the CFPB.”

The most likely change would replace the CFPB’s individual director, appointed by the president and confirmed by the Senate, with a five-member commission that would have three Republicans during the Trump administration. The panel would be subject to congressional oversight and appropriations. Bank executives and their allies in Congress say the agency’s current director — former Ohio Attorney General Richard Cordray, a controversial Obama appointment initially made during a congressional recess and confirmed by the Senate only 18 months later — has too much power and is unaccountable to Congress.

CFPB crackdowns on practices the agency deems “abusive” have led some Republicans to charge that the agency is straying from enforcement into advocacy. When the CFPB announced new rules regarding the payday-loan industry, which has been charged with targeting low-income individuals with high-interest loans that can trap them in long-term debt, Hensarling fired back at Cordray.

“Accountable to no one, he alone decides for all Americans whether they can take out a small-dollar loan to meet emergency needs,” Hensarling said in a press release.

The proposed changes to the CFPB, which include repealing the CFPB’s authority to ban products and services that regulators deem abusive, are aimed at reducing what some Congress members believe are controversial actions, like the payday-lending rules.

But the agency still should enforce the law under a Republican-led CFPB, Kaplinsky said. “There are plenty of clear cut violations of law that [the CFPB] can target without taking extreme positions where the industry is caught off guard and surprised,” he said.

Sens. Mike Lee, R-Utah, and Ben Sasse, R-Neb., wrote a letter to Pence this month urging the administration to fire Cordray. Neugebauer, one of the sponsors of the Choice Act, is said to be Trump’s choice to head the agency.

Proponents of reform also say a five-person commission would allow for more industry input in CFPB decision making. Changing the CFPB’s funding source from the Federal Reserve to congressional appropriations also would make the agency more accountable by placing it under the supervision of elected officials in Congress.

Or, the change could inject politics into the agency, say CFPB supporters.

“What we know about commissions is they tend to be gridlocked,” said Yana Miles, policy counsel at the Center for Responsible Lending, a nonprofit research organization that advocates for fair lending practices.

A divided commission may prevent the agency from quickly responding to abusive practices by financial institutions, critics of the proposed structure argue.

“It wasn’t that long ago that we saw the waves of predatory lending that nearly destroyed our economy,” Miles said. The CFPB “is the one thing out there standing between consumers and the wild wild west of the days leading up to the crisis.”

CFPB critics, nevertheless, have the courts on their side, so far. A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruledlast year that the agency’s single-director structure is unconstitutional. The CFPB has asked the full D.C. Circuit to rehear the case.

Supporters say the CFPB is accountable to consumers, as illustrated by a record of punishing banks’ wrongdoing. Since opening its doors in 2010, CFPB actions have resulted in more than $11 billion in compensation or debt reduction to consumers. Among its major cases:

• One of its most high-profile decisions came last year, when the CFPB finedWells Fargo $100 million for opening accounts without customers’ consent, with another $35 million going to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles.
• The CFPB brought complaints in 2014 against Corinthian Colleges, a for-profit college accused of overselling the employability of its graduates, and ITT Educational Services, a for-profit institution accused of predatory student lending.
• On Jan. 18, the CFPB announced a lawsuit against Navient Corp., the nation’s largest student-loan servicer, for “systematically and illegally failing borrowers at every stage of repayment.”

The CFPB relied partly on its mandate to prevent abusive practices to pursue the Wells Fargo case, Miles said. Under changes in the Choice Act, “a Wells Fargo situation could pop up again and it would either not be addressed or would take a much longer time to get to it,” Miles said.

Changing the CFPB may not be so easy, despite Republicans’ control of Congress and a new White House occupant they see as an ally. Sen. Warren, who spearheaded the creation of the agency, warnedHensarling and his colleagues about the CFPB’s importance during a November conference of the Wall Street Journal’s CEO council, a group of influential business leaders.

“The Consumer Financial Protection Bureau is doing the people’s business. And it has its own fan club out there: It’s got the people it’s working for,” Warren said. “You try to take the legs out from underneath the Consumer Financial Protection Bureau — I think that’s not only a problem for Donald Trump and for the Republicans. I think this is something that the American people will say ‘enough.’”

Indeed, 56 percent of Trump voters want the CFPB either left alone (41 percent) or expanded (15 percent), according to a Morning Consult pollconducted in December. Likewise, 71 percent of Republican and Democratic voters said they supported the CFPB, according to a 2016 poll by Lake Research Partners.

Majority of AmericansThink Big Bank Bail-Out A Bad Idea

During the waning time of the Bush administration, the big banks and financial institutions that were in trouble were bailed out by the federal government. Some of those institutions have paid that money back, and some haven't. All of them continued to pay out huge bonuses for their management personnel, while ordinary Americans suffered the ravages of the recession caused by the misadventures of those financial institutions.

And the public hasn't forgotten about that. A new Rasmussen Poll shows that 55% of the public still  thinks that bail-out was a bad idea, while only 23% say it was a good idea. The survey was done on April 17th and 18th of 1,000 adults, with a 3 point margin of error.

This means if there is another financial meltdown (and there will be since the same failed economic policies are in place), it is going to be very difficult for federal politicians to do another bail-out.

Most American Think Another Financial Crisis Is Coming

(Photo image is from Generational Dynamics.)

Back in February, the stock market's Dow Jones Industrial average was about 18,244. Yesterday that average had fallen to 16,058. That's a drop of 2,186 points (or about 12% of market value). That's not the financial disaster of 2008, but it is enough to worry people. And they are worried. A significant majority of Americans say they believe that another financial crisis will hit this country (see chart below) within the next 12 months (something similar to what happened in 2008).

About 58% of the public believes that, while only 21% say it won't happen (and another 21% don't know). They also know that our government has done nothing to protect this country from another financial crisis. About 65% believe that -- and they are right. A Wall Street reform package was passed, but it was a very weak law, and did not contain the regulations needed to prevent the same kind of financial crisis that happened in 2008.

I agree with those who fear another financial crisis. I don't know if we are witnessing the start of it, or even if it will happen within the next 12 months -- but it is going to happen. It's going to happen because our government has done nothing to stop it. The giant financial institutions are still playing fast and loose with consumers money, and trading the same kind of junk they got in trouble for trading in 2008. Also, the vast gap in wealth and income (another of the causes of the 2008 crisis) between the richest Americans and the rest of America continues to grow even larger.

Greed still trumps common sense, as this nation continues to use the utterly failed "trickle-down" economic policies of the Republicans. It seems as though our political leaders, especially the Republican-controlled Congress, learned nothing from the financial crisis of 2008.

The charts below were made from information in a recent YouGov Poll -- done between August 24th and 26th of a random national sample of 1,000 adults, and has a 4.4 point margin of error.

Warren Says Financial Markets Work Better With Rules

The Republican idea to improve the economy is to deregulate Wall Street, and let the giant banks do what they want. But that is exactly what led to the financial meltdown during the Bush administration. Senator Elizabeth Warren tells us that rules are necessary in the financial industry -- to protect consumers and to make competition fair in the industry. She says (and I agree with her) that the financial markets simply work better when they have rules. Here is her latest article on this subject:

For too long, the opponents of financial reform have cast the debate as an argument between the pro-regulation camp and the pro-market camp. They generally put Democrats in the first camp and Republicans in the second.

But that so-called “choice” gets it all wrong.

Rules are not the enemy of markets. Without some basic rules and accountability, financial markets don’t work. People get ripped off, risk-taking skyrockets, and markets fall apart. Rolling back the rules or firing the cops can be profoundly anti-market.

Republicans claim – loudly and repeatedly – that they support competitive markets, but their approach to financial regulation is pure crony capitalism. It helps the rich and the powerful protect and expand their wealth and their power – and leaves everyone else behind.

This week, I gave a big policy speech where I presented ways we can promote competition, innovation, and safety in financial markets. The speech was long and wonky, but it really boils down to two principles:

• First, financial institutions shouldn’t be allowed to cheat people. Markets work only if people can see and understand the products they are buying, only if people can reasonably compare one product to another, only if people can’t get fooled into taking on far more risk than they realize just so that some fly-by-night company can turn a quick profit and move on. That’s true for families buying mortgages and for pension plans buying complex financial instruments.

• Second, financial institutions shouldn’t be allowed to get the taxpayers to pick up their risks. That’s true for using insured deposits for high-risk trading, and it’s true for letting Too-Big-to-Fail banks get a wink-and-a-nod guarantee of a government bailout.

We know what changes we need to make financial markets work better. Strengthen the rules to prevent cheating. Make the cops do their jobs. Cut the banks down to size.  Change the tax code to promote more long-term investment. Tackle shadow-banking done by non-bank firms and subsidiaries.

Changes like these can make a real difference. They can help protect hard-working families from cheats and liars. They can help rein in the lawless practices that are still too common on Wall Street. They can end Too Big to Fail.

The secret to better markets isn’t turning loose the biggest banks to do whatever they want. The secret is smarter, more structural regulation that forces everyone to play by the same rules and doesn’t let anyone put the entire economy at risk.

The key steps aren’t hard. It just takes political courage – and a strong demand from people like you – to complete the unfinished business of financial reform.

More Indefensible Executive Bonuses

While I am certain that the root cause of the current Great Recession was the vast gap of wealth and income between the richest 1-2% of Americans and the bottom 98-99% of Americans, that was not the trigger that started the economy's downhill slide. The trigger was the financial mismanagement on Wall Street -- especially concerning the bundling and sale of unsustainable home mortgages.

The Republicans in Congress have been trying to protect their buddies (and campaign contributors) in the giant Wall Street Banks by placing all of the blame for the economy's crash on Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). That's just hogwash. The giant Wall Street banks played a big part in cratering the U.S. economy, and they should have been held responsible for it (but sadly, they weren't).

But while Fannie Mae and Freddie Mac weren't the sole causes of the economy's crash, neither were they innocent bystanders. They also played a big role in the sale of homes to people who clearly could not afford them (and the bundling and resale of those mortgages), and need to shoulder their own part of the blame for throwing this nation into recession.

The Rich Keep Getting Richer

The recession/depression rages on for most Americans. Millions of Americans have lost their jobs, and many have given up hope of finding another. For every job that does come open, there are many applicants wanting to fill it. And even those who still have their jobs are the victims of wage stagnation (with their current wage unable to purchase the same amount of goods and services that someone with that same job could have purchased in the 1970s). Both those with jobs and those without jobs find themselves falling further behind with every month that passes.

But while that is true of most Americans, it is not true for the richest Americans. They are doing better than ever, and find themselves controlling more and more of the nation's income and wealth. Take for example the Wall Street financial giants, who kicked off this recession with their greed and incompetence.

The American people had to save these Wall Street financial giant firms by giving them billions in taxpayer dollars. The taxpayer bailout worked and these companies are once again making record profits. Are they showing any appreciation for being saved by hard-working Americans? Are they giving back by making loans easier for individuals and small businesses? Are they helping out by backing off on home foreclosures and working with the owners in trouble? No, not at all. They are laughing all the way to the bank.

Instead of using some of their record profits to help the people whose hard-earned money bailed them out, they are using those profits to give themselves huge raises and bonuses. Just a few days ago, the CEO of Goldman Sachs, Lloyd Blankfein, had his salary TRIPLED to $2 million and then was given another $12.6 million in company shares. And what did he do to "earn" this $14.6 million? He presided over a company that saw its profits drop by 38% last year to a measley $8.5 billion (which I'm sure will be an excuse to avoid giving raises to rank-and-file workers).

And Blankfein is not the only beneficiary of Wall Street's generosity to the richest people. The CEO of Citigroup, Vikram Pandit, also got a raise last week -- a raise of $1,749,999.00. Who knows how many millions of dollars in stock went with that raise.

It should be clear to everyone by now that there are two Americas -- the America for the rich where its inhabitants are rolling in money, and the America for everyone else who are becoming little more than victims for the rich to exploit. Regardless of what the so-called economic pundits think, this country's economic problems cannot be fixed without addressing the vast inequality in wealth and income that exists (and grows wider each day).

Derivatives - An Explanation

The root cause of the recession that America is currently still experiencing is the vast wealth and income gap between the richest Americans and the rest of America, but the trigger that set it off was the meltdown of the financial giants on Wall Street.   In a very short period of time trillions of dollars evaporated and many of the financial companies had to be bailed out by the federal government (i.e., the American taxpayers).

One of the main reasons for the financial meltdown was when it was realized that many financial instruments weren't worth anywhere near what they were being bought and sold for, and one of the main culprits was derivatives -- especially derivatives in the mortgage industry ( mortgages were bundled together in large groups called derivatives and traded by the financial giants, until it was learned that many of the mortgages, and therefore the derivatives, were worthless).

Now this angered many people on Main Street, as it should have, because many held mortgages that had been bundled with worthless mortgages and they found their own mortgages affected by the failure of the derivatives, and it angered them even more because they had no idea their mortgages were being traded this was, or even what a derivative even was (in fact most Americans still don't really understand what a derivative really is).   What they do understand is that these mysterious "derivatives" wound up costing them a lot more that the Wall Street greedmongers who invented and traded them.

And checking for a definition of a financial derivative doesn't help very much.   Consider this definition from Wikipedia -- "In finance, a derivative is a financial instrument that has a value, based on the expected future price movements of the asset to which it is linked -- called the underlying asset -- such as a share or a currency."   Now that's about as clear as mud to most of us.

But one of my blogging friends has posted an excellent analogy that makes it very clear just what a derivative is (and why the smart small investor would do good to stay away from them).   Adam Cohen over at Zero Energy Construction gives us the following explanation:


Heidi is the proprietor of a bar in Detroit . She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers' loans). Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit .

By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS. These securities then are bundled and traded on international securities markets.

The President and his financial advisors become concerned about the massive expansion of the Drinkbond market and ask the Congressional oversight committees to rein in the process and investigate the GSE's that are underwriting the Bonds. The President is not aware that Heidi has given unlimited free drinking rights in perpetuity to the ranking members of the oversight committees, BF & CD.

These oversight committee members state that all is well both in the Drinkbond market and the GSE's and in fact more unemployed drinkers should be given access to free whiskey.

Naive investors don't really understand that the securities being sold to them as AAA secured bonds really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.

Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and Heidi's 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank's liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from their cronies in government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar.


The recently passed Wall Street regulation law was originally meant to establish rules that would prevent the trading of really speculative things like derivatives, and return Wall Street to what it used to be -- an investment in the long term growth of a company (with the speculation left to such things as the commodities market, where investors have always know they were taking a substantial risk).   Unfortunately the law was so watered down by the time it was passed, that it didn't change a whole lot.

The Wall Street greedmongers are back to business as usual, earning huge bonuses for trading derivatives and other financial instruments of doubtful value.   And the new law did not put sufficient regulations in place to prevent another financial meltdown in the future (especially with the vast wealth and income gap still growing even larger).

Wall Street and the stock markets are booming again for the financial giants and insiders, but the small investor would be well-advised to stay as far away from it as possible.   That's my opinion, anyway.

Have Democrats Learned Their Lesson ?

The Democrats finally got their health care reform package passed, but they made some mistakes with that bill that made it not only more difficult to pass, but also more unpopular with the public. One of the biggest mistakes was delaying passage of the bill in an effort to get Republican input and try to create a bipartisan bill. What they didn't seem to realize at the time was that the Republicans had absolutely no interest is bipartisanship.

Instead of creating a bipartisan bill, the delay only allowed the Republicans to crank up their propaganda machine. They told a multitude of lies about health care reform (such as the creation of death panels and the destruction of Medicare). And while claiming they wanted to talk about compromise, the Republicans just spread more lies.

Eventually, many people began to believe the lies (which weren't being adequately rebutted by Democrats) and the bill became more and more unpopular with the public (even though I think most people will eventually like most things in the bill).

The Democrat's mistake was in thinking the Republicans had the best interests of the American people in mind. That just wasn't true. The only thing the Republicans are interested in is demonizing President Obama and increasing their chances of regaining power, and if they have to lie and obstruct to accomplish that, so be it.

Now the financial reform bill, which would re-regulate Wall Street, is pending in Congress and the Republicans are trying to do the same thing with it that they did with the health care reform bill. They are making a play at talking about the bill while cranking up the propaganda machine again and filling it with outrageous lies. They are hoping that they can delay the bill long enough with talk to get a large segment of the population to believe their lies (like claiming the bill just amounts to another huge bailout).

But it looks like Democrats are in no mood to fall for the same trick twice. Senator Schumer (D-New York) said the lies will not go unchallenged this time. He said, "On the health care bill, we allowed too many lies to get out there without rebuttal because we thought they were so obviously untrue. But we've learned our lesson. The minute these things come out of the mouths of some of our Republican colleagues, we rebut them, and we rebut them again and again."

Majority Leader Reid (D-Nevada) agrees. He's decided that since the Republicans are putting out huge lies about the bill, the time for talk is over. He's scheduled a vote for Monday to close debate on the bill. It's not clear that the Democrats have the votes to close the debate, but win or lose the vote, it is the right thing to do. If they win, they are much closer to reforming Wall Street. If they lose, then they expose the Republicans as being opposed to reform and doing the bidding of the big banks and brokerages on Wall Street.

The American public is very angry with Wall Street right now, and they're not going to like the Republican attempts to kill reforming the financial industry. But the lie that the bill is another huge bailout must be quashed instantly, and one thing that must be exposed is the $1 million a day that Wall Street is spending lobbying against reform (much of it going into Republican campaign coffers).

Have the Democrats learned their lesson from the mess surrounding the health care bill? I certainly hope so. There's too much vital legislation that needs to be passed (Wall Street reform, immigration reform, energy reform, etc.). It's time for the Democrats to step up and start playing hardball. They must vigorously expose the lies and stop allowing the Republicans to play the delay game.

The people voted for change. It's time for Democrats to deliver it.

Republicans Choose Wall St. Over Main St.

It's no secret to anyone in America what kicked off the current recession in America. It was the financial industry and Wall Street that were so greedy that they were willing to throw the entire country under the bus as long as they could keep making their fees and bonuses. They were so concerned with making their own money they even put their own companies at risk to make a fast buck.

Of course, this couldn't go on forever. Wall Street had convinced Americans that rules were in place that would prevent a financial meltdown like what happened in 1929 and led to the Great Depression. To hear them talk, land and housing values would keep rising forever, the stock market could not bottom out and lose billions of dollars and the financial industry was too big and smart to fail. None of that was true.

Their greed finally caught up with them. Some companies folded (like Lehman Bros.) and others would have folded if they hadn't been bailed out by Republican President George Bush creating a $700 billion bail-out to keep them afloat. This huge failure by Wall Street banks, brokerages and insurance companies led us into the worst recession since the 1930s. Over 12 million jobs were lost and the economy's failure was felt in every state and city throughout the country.

After the $700 billion of taxpayer money was pumped into Wall Street, they are now back to their old ways. The stock market is going up, outrageous salaries are bonuses are being paid to the executives, and we are probably well on our way to another financial meltdown in the future because nothing has been changed. And that seems to be the way Wall Street wants it, because they're pumping over a million dollars a day into lobbying against any changes or new regulations.

But the American people know better. They know that changes on Wall Street must be made and the financial industry must be more closely regulated, because they have shown that they are clearly incapable of controlling their own greed or policing their own industry. This is even true of the teabaggers. While it is true that they are unhappy with government, they are equally unhappy with Wall Street and unhappy that while the financial companies have recovered, ordinary Americans are still mired in the recession.

That's why I am so puzzled that congressional Republicans are now siding with Wall Street against the ordinary citizens on Main Street. President Obama is trying to get some new regulations passed to rein in some of the most egregious abuses on Wall Street. I think he should do even more than he is proposing, but his proposals will make a good start and bring at least a modicum of sanity back to Wall Street.

But the president may be unable to get his new financial regulations thru Congress. This is because the Republicans have decided they are against any reform of Wall Street. That should tell any observer where most of that lobbyist money is going.

Senator Chris Dodd (D-Connecticut) is chairman of the Senate Banking Committee and one of those pushing for new regulations on the financial industry. However, he has received a letter from the Senate Minority Leader (who receives more funds from Wall Street than any other senator) telling him that the Republicans have 41 votes to oppose regulating the financial industry. In fact, he claims they can even prevent Democrats from debating financial reform.

I think the Republicans, while they may be filling their campaign coffers off of Wall Street, are making a big mistake. They are underestimating the rage that the average American feels toward Wall Street and the financial giants. Maybe they think the next election will be fought over health care reform, and they can keep the public's mind off of Wall Street and our jobless economy caused by Wall Street. They are wrong.

The health care reform is old news, and the more people learn about it, the more they will like it -- or at least accept it. The next election will be fought over the economy, and the bill that will be freshest in the minds of voters will be the effort to regulate Wall Street and rein in some of their greed. They are not going to be happy with the protectors of Wall Street.

I think the Republicans are giving the Democrats a great campaign issue. I hope the Republicans continue their efforts to protect Wall Street greed, because it gives Democrats an issue to pound them on. Democrats should repeat over and over again that it is the Republican Party that opposes financial reform. They should make it clear that the Republicans are the ones blocking help for ordinary Americans and acting to protect the rich Wall Street corporations. The issue for Democrats should be simple:

THE REPUBLICANS HAVE CHOSEN WALL STREET OVER MAIN STREET!!!

Understanding Fraud At Goldman Sachs

In the last few days, the newspapers have been trying to tell the story of the criminal fraud done by the executives at financial giant Goldman Sachs (one of the companies bailed out by the American taxpayers). Basically, the company created a toxic product that they knew had to fail, and then bet their own money on its failure while selling the product to unsuspecting buyers.

The problem with the stories in the mainstream media is that their stories are not truly understood by many ordinary Americans. They hear terms like "collateralized debt obligations", "hedge funds" and "credit default swaps", and their eyes glaze over and their heads begin spinning. It is hard to understand by anyone not familiar with the intricacies of the financial industry.

That's why I loved this explanation of what went on at Goldman Sachs done on the blog of the Unrepentant Old Hippie. UOH puts the criminal behavior in plain English and uses an analogy that anyone can understand. Here is how UOH describes it:

"Imagine a building contractor who builds a beautiful new home in which he’s purposely installed faulty wiring, and for insulation he’s used some explosively flammable substance like shredded cedar. He then takes out fire insurance on it — facilitated by the insurance company’s home inspector, who knows the house doesn’t make the cut but gets a few bucks from the contractor to give it a passing grade anyway.

Then the house is sold to some unsuspecting home buyer. After the inevitable fire, the insurance company pays out the contractor’s claim — so he’s been paid twice, once when he sold the house and once from the insurance. The poor suckers who bought the house? They die in the blaze.

Goldman Sachs is the building contractor, AIG is the insurance company, and the pension funds of millions of ordinary people are the home buyers who perished in the inferno. Goldman Sachs was betting on the collapse of properties it sold as good investments — “shorting”, which is a perfectly legitimate trading practice, unless you’re the one who’s engineered the collapse. In that case I’m pretty sure it’s a crime.

It’s worth remembering that Goldman Sachs isn’t some scammy little fly-by-night online trading company — they were supposedly the “gold standard” for investment banks."

$9 Million Bonus Is Small ?

This financial industry doesn't seem to understand why the vast majority of Americans have lost all respect for them, and consider them to be little more than greedy thieves. It still hasn't entered their hard heads that most Americans are still suffering from the recession brought on by the incredible bungling of the financial industry, while they happily go on doing the same things that they had to be bailed out for doing in the past.

One of those things is the bonuses they give themselves -- bonuses that are so far above the reality of ordinary Americans that they are impossible to understand. Take for instance the bonus given to the CEO of Goldman Sachs, Lloyd Blankfein (pictured) Most people in the financial industry were shocked to learn his bonus is only $9 million dollars. Only about a year after the company had to be bailed out by the American taxpayers, most people in the industry had expected him to get a bonus around $100 million.

That's right, they expected him to get $100 million! And they weren't joking. Most thought he deserved that much. They wonder how the company can justify giving him a pittance like $9 million. After all, his counterpart over at JP Morgan Chase, Jamie Dimon, is getting $17 million.

There is no way to reason with people in the financial industry. They are blinded by their own greed and utterly incapable of seeing or understanding the suffering of their fellow Americans -- the same Americans who bailed them out with their hard-earned tax money. Most of that money earned at ridiculously low wages.

They may think they deserve these lofty multi-million dollar bonuses, but I sure don't. In fact, I consider the $9 million "pittance" to be too much. I agree with New Yorker Thomas Barnes when he said, "I think it's excessive, because I don't know one person who's really worth that much money in a year." Amen to that!

And there should be no more bail outs with taxpayer money. The next time these greedy jerks screw up their gravy train (and they will because they're too greedy not to), let them go out of business and jump out of their Wall Street windows. They don't deserve even a penny of the money middle and working class Americans pay in taxes.

House Votes For New Financial Regulations

I was beginning to wonder if Congress would ever get around to putting some badly needed regulations on the financial industry. It took them nearly a year, but the House of Representatives has finally passed some new regulations on a 223-202 vote. Here are some of the changes in the House bill:

* Creation of a new agency to protect consumers from unfair practices.

* Gave the government broad power to dismantle large firms that pose a risk to the economy.

* Outlaws many predatory and abusive loan practices.

* Imposed new restrictions on financial derivatives.

* Gave shareholders the right to hold non-binding votes on executive pay.

* Somewhat reined in the power of the Federal Reserve.

Of course the devil is in the details, but generally all of those changes needed to be made. We have seen what the Republican deregulation of the financial industry did to our economy, and it was not pretty. It will still be a while before our economy can recover from it.

But before these changes can become law, they must also be approved by the Senate. That's where things could really get ugly -- especially if the blue dogs join with Republicans to protect the financial giants from any new regulation. I hope they don't savage this bill like they have health care reform, but I expect they will. We'll probably be lucky to get any new regulations out of the Senate.

Naturally, the Republicans are screaming that the bill will be the death of capitalism. Rep. Steve King (R-Iowa) said, "It's about the difference between a free-enterprise economy and a managed and controlled economy."

He may be right, but we have seen where his free-enterprise economy leads us -- to consumer rip-offs and a seriously damaged economy. It is obvious to any rational person that some controls must be put on the financial industry, or we're left with nothing but naked uncontrolled greed.

I agree with Rep. Barney Frank (D-Massachusetts) when he said, "The Republican position is: business knows best. Do not have any rules, do not prevent...any of the irresponsible, reckless, over-leveraging that happened and led to the crises."

I urge the Senate to pass this bill. Add more regulations if you want, but don't eliminate any of the regulations in the House bill. America's future economic health depends on it.

Financial System Is Still Shaky

A few months ago, the stock market was cratering and our entire financial system was on the brink of collapse. The federal government pumped billions of dollars into some of the largest financial institutions in an effort to keep them from failing and taking many others with them.

Since then, the market has rebounded, and the bailed-out entities are doing better and once again wanting to hand out ridiculously large bonuses (to the same people who nearly sunk them in the first place). So our financial industry has been fixed, right? Well.....NO!

The giant banks who received billions of our tax dollars may be doing OK, but there are hundreds of other banks that are not doing well at all. As of yesterday, 106 banks have folded this year and been taken over by the FDIC. That's the largest number of bank failures since 1992, when 120 banks failed after the savings and loan crises ( and we still have two months to go before the end of the year).

And that's not the worst of it. The federal government has identified at least 416 more banks that are in serious risk of failure. The feds have been trying to slow down the takeovers of failed banks, to keep the public from panicking. The hope is that a rebounding economy could save some of these banks.

But that's a futile hope at this time. With tons of jobs still being lost every month, our economy is a long way from rebounding. With the pundits predicting the job market won't start producing more jobs than it loses for at least another year, we can expect to see hundreds more banks fail.

Rich folks and giant banks may think the recession is over, but workers, small businesses and small banks know they are still in the middle of an economic disaster. And it could be years before things get significantly better (just look at how long the Great Depression dragged on).

(NOTE - Cartoon is by Jeff Parker in Florida Today.)

Financial Industry Still Screwing Up

It looks like the financial sector didn't learn anything from the meltdown in their industry several months ago. Due to their greed and mis-management, many of their companies tanked, and the only ones to survive, did so because the United States government bailed them out with huge influxes of money.

Now they're acting like nothing happened, and reverting to their old ways of doing things -- the same ways that got them in trouble before. In addition, they're opposing and using their lobbyists to fight Congress passing new rules to protect the industry and their customers.

But President Obama is having none of it. He is warning the industry that they must change their way of operating. The president said, "We will not go back to the days of reckless behavior and unchecked excess at the heart of this crises. There are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crises from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's."

He went on to tell them they should not expect the people of America to bail them out again. I say Amen! There should be no more bail-outs for these robber-barons. If they screw it up again, we should just let them go belly-up. It's what they deserve.

And just as soon as Congress has dealt with health care, it should push hard to institute President Obama's new financial regulations. The industry has operated for too long virtually unregulated -- that's what allowed them to screw up the industry and our economy in the first place.

The industry had better listen to President Obama. The American people are angry, and will not spend another penny to bail out these jerks.

(The above cartoon is by Pat Bagley in the Salt Lake Tribune.)