Sign Oregon Banking Agreement Now

Industry sign banking oregon agreement now

democracy now democracynow.org the war and peace report I'm Amy Goodman with Juan Gonzalez well we turn now to look at the state of Wall Street four years after the massive bailout in the news of this week's mortgage settlements with the major banks Matt Taibbi has just written a new piece for Rolling Stone title secrets and lies of the bailout also so with us his former Financial Regulator William black author of the best way to rob a bank is to own one he is an associate professor of economics and law at the University of missouri-kansas city Matt beginning with you the latest announcement of the agreement for some of the banks to pay several billion dollars now to supposedly to homeowners who were cheated in one way or another in the fall foreclosure crisis yeah I mean I think this is just to me the most significant aspect of this is that it speaks to the failure of the government to address the foreclosure problem still four or five years after the financial crisis one of the points I make in the the piece I just wrote secrets and lives of the bailout is that foreclosure relief was originally written into the statute the tarp statute as a primary function of the original bailouts there's it's right there in black and white section 109 that tarp was supposed to provide all a massive program of foreclosure relief and they never got around to it and the only bailout program that ever provided any foreclosure relief was HAMP and that'll today they've only ended up spending about three or four billion dollars out of all the bailout on that program they have now through litigation there are these elements are starting to trickle in but it's just too little too late and you contrast that with what happened at the beginning of the bailout where the banks and the financial companies were instantly handed hundreds of billions trillions of dollars of relief and I think that that dichotomy is important for people to recognize that the relief for ordinary people is still coming slowly and insufficiently years later whereas relief for Wall Street came instantaneously and was excessive the latest news about AIG the board has decided not to sue the American people for not bailing them out enough and not joining the former city probably didn't want to become a Saturday Night Live routine this weekend let ya can you talk about the significance of this and what actually is going on Greenberg the CEO the former CEO is suing great yes this is a long-standing dispute between the former CEO of aig Hank Greenberg and the government and it's funny if you actually read Greenberg suit there are some points in it that have a little bit of validity I mean it's still preposterous that that Greenberg who was in a way kind of like the patient zero the financial crisis because the scandal that he started at AIG back in two thousand in the early 2000s it was a reinsurance scandal where he was artificially inflating the balance sheet of AIG that led to a downgrade of AIG which led to the catastrophe of 2008 when the company went into imploded and that subsequently caused the entire financial crisis you can really point to Hank Greenberg as maybe the guy who caused the financial crisis and here he is suing the American government / / The Bella but one of the things he says and this is lawsuit is that the bailout of AIG was not really a bailout of AIG it was a bailout of the companies that were owed money by aig because they gave a hundred cents on the dollar to all the company the counterparties in AIG like Goldman Sachs and Deutsche Bank and Barclays and that if if he were in that position he would have negotiated a much tougher deal that's probably true I mean it's it there's actually some significant validity to that point that there's no way in on there and under any rational circumstances that those companies should have gotten a hundred cents on the dollar for the money they were owned by aig Oh William black I'd like to ask you about this whole issue of the mortgage settlement that was announced on it is really it's a nice amazingly scandalous that years later justice has not been forthcoming for all of these homeowners who lost their homes i think the settlement are calls for about three and a half billion in cash to some three million homeowners that were such maybe about a thousand dollars at home owner and then here we had instances of banks with a massive Robo signings addicting people from homes that they needed legally owned at the time and it they became such a mess that the government review and that I'm wasting about a billion dollars just on the consultants hired to review all the all the bank foreclosures what do you make of this settlement so the first thing is this is more of what Matt and people like me have been writing about for years the complete immunity of the elite Wall Street folks who caused this crisis through fraud who became wealthy because of those frauds and were then bailed out as a result of their frauds none of them are being prosecuted so we have admissions and by the way this would have continued but for the discovery of this fraud in other words the banks weren't stopping it on their own the robo-signing that means what they were doing was lying systematically to the tune typically at the large places of ten thousand times a month so over a hundred thousand times a year committing felonies that would lead to people being made homeless in America in many cases it's just astonishing aspect that nobody has gone to prison for all of this and that they gave them one of the largest grants of immunity you'll ever see second thing as you say the money in the press reports is grossly inflated there's only about three billion dollars in cash you're quite correct that works out to less than a thousand dollars per victim so it is exactly what borovsky quotes Geithner as saying that these housing programs were not designed for the victims they were designed to quote foam the runways for the banks to reduce their loss exposure so the rest of the supposed five billion in settlement is really just what in the commercial world we call troubled debt restructurings which are the things you would do anyway if the government didn't exist because in most cases it's better for the bank not to have the default to instead reduce the principal slightly so none of that is actually a bailout none of it is actually a settlement it's just the bank's doing that which will profit maximize for the banks anyway you know when JP Morgan Chase is Jamie Dimon testified on Capitol Hill this is Oregon Democratic Senator Jeff Merkley questioning diamond 2009 your company benefited from half a trillion dollars in low-cost federal loans 25 billion in tarp loans of TARP funds untold billions indirectly through the bailout of AIG that helped address your massive exposure in repurchase agreements and derivatives with all that in mind wouldn't JPMorgan have gone down without the massive federal intervention both directly and indirectly in 2008 or 2009 I think you were misinformed and I think that misinformation is leading to a lot of problems are having today JP Morgan took tarp because we were asked to but the Secretary of Treasury of the United States of America but the FDIC in the room head of the New York Fed Tim Geithner chairman of the Federal Reserve Ben Bernanke we did not at that point nee tarp we were asked to because we're told I think correctly so that if the nine banks there and some may have needed it take this tarp we can get into the Holies of the banks and stop the system from going down I'm going down we did not bar from the Federal Reserve except when they asked us to they said please use these facilities that makes it easier for other boo at all like the VI and and we were not build up by aig okay if AG itself when we would had a direct loss or maybe a billion or two billion dollars of energy went down and we are when we were been okay that you you have a difference of opinion with with many analysts situation who felt the AIG bailout did benefit you enormous and I'm not going for that are clearly now sir they're actually walls not your hearing I'm asking you to respond to questions and I also only have five minutes and that was Oregon Democratic Senator Jeff Merkley questioning JPMorgan Chase's Jamie Dimon Matt Taibbi the significance of this exchange well I think that's one of the things that's really interesting and one of the things that I write about in this article is that this is what Neil Barofsky the bailout inspector calls the original sin of the bailout which is this moment in time where right after tarp was passed from the government elected to call companies that were unhealthy and insolvent healthy and Sullivan they when they scrapped the plan to buy up troubled assets remember the tarp was the Troubled Asset Relief Program will they scrapped that idea a few days after the bill was passed and decided to just dump a whole bunch of money on to the balance sheets of these banks this was called the capital purchase program they spent 125 billion dollars right off the bat it was spent on nine companies and one of the things they said was all of these companies are healthy and viable and it turned out later according to numerous sources including all the the sigtarp reports including according to borovsky and other sources that they didn't even check to see if these companies were solvent at the time they had no interest in discovering that no one way or the other and in fact many of these companies were on the brink of failure at the time borovsky was told specifically that morgan stanley and goldman sachs were both on the brink of disaster when they were given this money it's interesting that jamie dimon talks about how his company didn't need that fed money you know it came out in the and Bloomberg's Freedom of Information request when they they've got all the data from the audit of the Federal Reserve I came out that his company at that time and in late 2008 had a 50 or 60 billion dollar line of credit with with the Fed on top of all the money that we're getting through the tarp bailout through the bailout of bear stearns and other another facilities so apparently they didn't need all that money you know that hundred billion dollars or whatever it was they got from the federal government it was just they were taking it because they were they were being polite they were being that and they were asked you by the federal government and this fiction that they didn't need the money that they were healthy all the time the government it we not only gave the money but we vouched for them and now we're stuck vouching for them basically forever and that's that's the ongoing Bella that has become the real problem I wanted to ask William black and in the deal that the Obama administration reached on taxes uh recently with the House Republicans there hasn't been a lot of attention to the issue of what happened to carried interest the hedge fund moguls of the world were most concerned about that their ability to evade taxes by having their payments as capital gains instead of actual of fees and salaries if you talk about what the Obama administration did there yeah let me mention just one thing though that fits to Matt's point they also changed the accounting rules so the bank's didn't have to recognize their losses so that they could hide them and pretend to be healthy so that's a huge part of that story as to taxes you know this was again a classic example of the Obama administration snatching defeat from the jaws of victory where it had all the leverage and negotiated against itself once again and so yes the wealthiest folks and this is the irony of course as we're talking about the George Romney's of the world and I'm sorry the mitt romney's of the world I grew up in Michigan I'm dating myself are the principal beneficiary through the something that is completely unsupportable and on any policy ground which is this carried interest which simply treats income as if it weren't income anymore for the wealthiest Americans who receives their money from running hedge funds and that's continued let's end with the legacy of the outgoing Treasury Secretary Timothy Geithner and Thursday President Obama praised his time in office thanks in person to his steady hand our economy has been growing again for the past three years our businesses have created nearly six million new jobs the money that we spent to save the financial system has largely been paid back we put in place rules to prevent that kind of financial meltdown from ever happening again an auto industry was saved we made sure taxpayers are not on the hook if the biggest firms fail again we've taken steps to help underwater homeowners come up for air and open new markets to sell American goods overseas and we've begun to reduce our deficit through a balanced mix of spending cuts and reforms to a tax code that at the time that we both came in was too skewed in favor of the wealthy of the expense of middle-class Americans so when the history books are written Tim Geithner's are going to go down as one of our finest secretaries of the Treasury that was President Obama professor black final seconds okay first Geithner is a principled person who caused the crisis he was supposed to be the top regulator preventing it in New York and did nothing second he has created crony capitalism american-style third those regulations in fact will not prevent future crises and were designed to make sure they were not and I agree strongly with Matt that the choice of Jack Lew is to not only produce continuity with Geithner's disastrous failed policies but to signal the administration's desire to continue the bailout of Wall Street I think the legacy of Tim Geithner is simple he's the architect of too big to fail and that that's going to be historically his legacy when this all blows up and going to blow up for sure because it can't things can't continue the way they are right now people are going to look back in history and they're going to say who is the blame for this and Timothy Geithner is going to be the guy who designed this entire system of course I'll always be remembered as the first Treasury secretary who neglected to pay his own taxes right right that there's that true exactly we want to thank you both for being with us not taibi contributing editor at rolling stone his latest piece secrets and lies of the bailout will link to it at democracynow.org and william black professor of university professor at university of missouri-kansas city this is democracy now thanks so much for watching this report from democracy now your daily independent global news hour we don't accept advertising or corporate funding but rather rely on donations from viewers like you please make your contribution by visiting democracynow org we need your support today to keep bringing you this hard-hitting in-depth reporting you