Saturday, March 23, 2013

The Real Reason Scout Prouty Leaked the Famous Romney "47%" Video -- It Was Over Romney Profiting from Slave Labor | Alternet

The Real Reason Scout Prouty Leaked the Famous Romney "47%" Video -- It Was Over Romney Profiting from Slave Labor | Alternet:

The Real Reason Scout Prouty Leaked the Famous Romney "47%" Video -- It Was Over Romney Profiting from Slave Labor

Scott Prouty was appalled at how Romney was callous to slave labor ... too bad we didn't have an national conversation about that.

Scott Prouty buried his lede.
That's journalism jargon for not recognizing the most newsworthy part of a story -- for delaying the real attention-grabber for later. (Calling a story's first words the "lede" instead of the "lead" is a beloved fossil from the days when typesetters used lead -- the metal -- to put space between lines. No wonder newspapers' bottom lines are hurting.)
Prouty, we learned last week, is the 38-year old bartender who videotaped the $50,000-a-plate Boca Raton fundraiser where Mitt Romney wrote off 47 percent of the country as victims.
It's plausible that footage cost Romney the presidency. It validated his biggest perceived weakness -- his image as a cartoon plutocrat, Mr. Moneybags, the Bain guy who fired workers and saddled companies with debt, the country club Republican who called sports "sport" and didn't have a clue about how ordinary Americans were hurting. Romney tried to counter that image: he wore jeans, reminisced about shooting varmints and had country western stars in his corner. He wanted swing voters to believe that his sucking up to his party's resentful right was just an obligatory primary-season performance, and that as president he'd govern from the middle.
Scott Prouty's tape revealed that the regular-guy stuff was the real performance -- play-acting for the rubes. There he was in a roomful of millionaires, caught in the act, dissing half the country as dependents on the public teat. The contempt for working stiffs wasn't caricature; it was character.
Prouty didn't shoot the video because he wanted the goods on Romney. He was just making a souvenir, like his pictures of Bill Clinton shaking hands with the staff at another event. It was only when Romney talked about going to China to buy a factory "back in my private equity days" that he knew he had something explosive on his hands.
Romney told the room that the factory employed 20,000 young women in their teens and twenties, living 12 to a room in triple bunk beds, 10 rooms sharing one little bathroom, working long hours for a "pittance." The factory was surrounded by barbed wire and guard towers. "And we said gosh, I can't believe that you, you know, keep these girls in. And they said, no, no, no. This is to keep other people from coming in. Because people want so badly to work in this factory that we have to keep them out."
What galled Prouty was that Romney bought the lie. He told the story not to condemn slave labor, but to say how lucky American are to be born in a land of so much opportunity that we don't have to stop people from scaling walls to get work.
Looking around the room, Prouty saw that none of the guests were appalled. He thought it wrong that only people with $50k to shell out could see the real Romney. Afterward, searching online, he learned that the factory was Global-Tech in Donguan, and that Charles Kernaghan, an international labor rights activist, had exposed Bain's interest in ventures built on outsourced American jobs and exploited workers. Two weeks later, when Prouty decided he'd be a coward if he kept what he'd seen to himself, it was this story alone that motivated him to go public. China, not the 47 percent, was his lede.
He posted the China clip on YouTube, under a pseudonym, and began using social media sites to link to it. His goal, as he later explained, was to have the China clip pop up whenever someone typed "Mitt Romney" into Google. He also contacted Mother Jones reporter David Corn, who'd written about Bain's forays into China. Enterprising reporters from BuzzFeed and Huffington Post managed to track Prouty down. But it was only at the end of August, when Prouty posted the clip of Romney saying that 47 percent of Americans were freeloaders, that the video began to catch fire. Corn was the first to get the full 68-minute tape from Prouty, and when he ran with excerpts on September 17, "47 percent," like the Occupy movement's "1 percent," became an indelible part of the American political lexicon, and arguably changed the course of the race.

By remaining anonymous until he went on MSNBC's Ed Show last week, Prouty ensured that the story would be about Romney, not about the motives of the man who made the tape. What was striking about his media appearances was how important it was for him to keep talking about China and Kernaghan's work for the Institute for Global Labour and Human Rights. Prouty now faces right-wing derision, and he's worried about the legal defense costs he may incur. But his courage caught the attention of United Steelworkers president Leo Gerard, who offered Prouty a job. His goal is to go to law school and fight on behalf of ordinary Americans like himself.
But it turns out that the Scott Prouty tending bar at that Boca fundraiser was not an ordinary American. Yes, he was struggling to make ends meet, and he had no health insurance and no car. But going public with the video was not, he said on the Ed Show, the only "incredibly brave or incredibly stupid thing I did"; there was also the time in 2005 -- "one of the proudest moments of my life" -- when he saved a woman's life. She had driven off Florida's I-75 into an alligator-invested canal. Prouty, who was working in a nearby Honda dealership, ran to help. He dove into the water, and with a co-worker he called to bring a knife, he cut her seat belt and carried her to shore.
That moment, he recalled last week, was something that said, 'You know what? If you can jump in, jump in.' And I had a chance to jump in with this again, with the video, and so I said, 'You know what? I'm going to jump in one more time.'"
It's one -- amazing -- thing to try to rescue a woman drowning right in front your eyes. But to have empathy for enslaved workers on the other side of the world, and to try to rescue a country from a candidate who had no such empathy, is even more amazing. Even if he buried the lede.
This is my column from The Jewish Journal of Greater Los Angeles. You can read more of my columns here, and email me there if you'd like.

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Sunday, March 17, 2013

How the American Left Has Gotten the Upper Hand

How the American Left Has Gotten the Upper Hand:


How the American Left Has Gotten the Upper Hand

By John Halpin, ThinkProgress
05 March 13

t's difficult in modern politics for those of one ideological persuasion to adequately describe and comprehend what the other side believes on its own terms. Progressives correctly scoff at right-wing notions that they are trying to pursue some undefined "European socialist" agenda and force the federal government into every aspect of American economic and social life. Progressives see themselves engaging in pragmatic uses of both governmental and private actions to solve concrete problems such as poverty, the lack of health care, or climate change. Progressives want to achieve greater liberty, equality, and opportunity for all people in a manner that acknowledges actual inequalities in social life and takes appropriate steps, within democratic and constitutional limits, to redress these inequities.
Conversely, conservatives rightly recoil at liberal depictions of conservatism as little more than an elaborate justification for greed, moral self-righteousness, economic privilege, and inequality. Conservatives see themselves advancing ideas about limited government and citizenship where individuals and families are the center-piece of social life and economic activity revolves around market interactions with little interference by outside forces. They believe a decentralized and limited government is more consistent with human nature and produces better economic outcomes.
Obviously, there's more to each of these political traditions than described here. And it's certainly fair for ideological proponents to question one another about their motivations, theories, core values, and policies.
But given the mutual confusion that often arises in ideological discussions, it is refreshing as a progressive to read Tod Lindberg's astute article, Left 3.0, in the final issue of the Hoover Institution's Policy Review.
Lindberg argues that the latest iteration of the left has transcended its past ideological divisions to put forth a practical, technologically sophisticated, and politically viable set of ideas tempered by expectations of slow but steady progress. What holds the left together in Lindberg's analysis? "[T]he achievement of a greater degree of economic equality by means of politics." This belief in equality has evolved throughout the nation's history:
One story is its ideological evolution, from the socialists and anarchists of the early twentieth century, through the battles of the communist and anti-communist Left of mid-century, on to the birth of the New Left in the turbulent 1960s, through the quiescence of the Left during the period of neoliberal (i.e., conservative) dominance for the generation following the election of Ronald Reagan. Or one could tell the story in terms of the progressive movement at the end of the nineteenth century, through FDR's New Deal, to LBJ's Great Society, on through the primary challenge Sen. Ted Kennedy launched against Jimmy Carter, its failure, and Bill Clinton's emergence as a "New Democrat" distinct from the old liberal partisans of an expansive role for the federal government. 

Both stories, however, come together with the emergence of the newer Left - call it Left 3.0, tracing the ideological progression from old Left to New Left to today's newer Left. Left 3.0 is not only an ideological movement, but also effectively controls (or rather guides) a political party fully competitive at the national level. Left 3.0 is an entity whose internal divisions are minuscule in comparison to the shared convictions that hold it together. Left 3.0 is a creature of its times, well-organized and fully synced to the digital culture out of which it emerged. And Left 3.0 has come into its own at a time, not coincidentally, when its political rival, the GOP electoral coalition, already under strain because of shifting demographics, is deeply divided over vexing social issues on which Left 3.0 offers clear answers.
Not everything in here is correct. Equality is certainly a primary value for progressives and a core part of our national foundations. But progressives have always placed a premium on human freedom as well. It's clear that the left today holds many advantages over the right on issues of individual choice and a more expansive notion of economic freedom that includes protections against unwarranted interference by the state but also positive steps - on income support, health care, education, and other areas - to increase opportunities for people to exercise real liberty.
Similarly, Lindberg's conception of the left as entirely hostile to its ideological opponents is overstated. From my experience, the left as a whole doesn't view its critics as ignorant, stupid, or venal as Lindberg writes. On the contrary, since the late 1970's progressives have grappled with conservative critiques of government spending, taxation, and regulatory policy fairly seriously in policy and political terms - sometimes too much so. (Financial sector deregulation in the 1990s and the current fervor to cut government spending come to mind.)
But today it seems the shoe is on the other foot as Lindberg suggests. Given shifting economic conditions and demographic trends, conservatives now have to come to grips with rising inequality and diminishing mobility in American life and look seriously at the left's ideas about the use of governmental actions to expand security and opportunity for a diverse population.
Lindberg's historical and ideological analysis provides much to chew on - for both progressives and conservatives.

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Monday, March 11, 2013

FOCUS | Breitbart Duped By Fake Krugman Story

FOCUS | Breitbart Duped By Fake Krugman Story:

Breitbart Duped By Fake Krugman Story

By Ross Kaminsky, The American Spectator
11 March 13

arlier this morning, Breitbart News had posted an article about Paul Krugman filing for bankruptcy after years of lavish spending, seeming to show the irony of someone recommending big spending being done in by those policies on a personal level.
It is a story that has been making its way around the web for a few days, and was picked up at the relatively reputable Boston.com except that it appears to have been posted by a blogger rather than a reporter. That blogger picked up the story from an Austrian magazine, Format. The Austrian magazine noted at the end of the piece that they got the story from the web site The Daily Currant which is a satire site, like an online version of The Onion.
In short, the story about Krugman going bankrupt is an amusing bit of satire, one which many non-leftists might hope to be true - but which isn't true.
If you see the story being passed around as fact, you are now armed with the truth. I don't like seeing "our side" passing around untruths because it makes us seem less credible. To be clear, the story was obviously explicitly satire given the source, and the fault with making it seem as if it were a real story lies with those who aren't doing the one 

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Jail the Bankers

Jail the Bankers:

Jail the Bankers

By Bill Moyers and Matt Taibbi, Moyers & Company
02 February 13

ILL MOYERS: This week on Moyers & Company ...
MATT TAIBBI: The rule of law isn't really the rule of law if it doesn't apply equally to everybody. I mean, if you're going to put somebody in jail for having a joint is his pocket. You can't let higher ranking HSBC officials off for laundering eight hundred million dollars for the worst drug dealers in the entire world.
BILL MOYERS: And ...
VINCENT WARREN: There is not a country in the world that believes that the U.S. drone attacks that we are doing on countries that we are not at war with is the right and sustainable solution for us.
VICKI DIVOLL: All we have is the president interpreting his own powers and the limits on his own powers. And that is not the way it's supposed to work. We need more oversight.
BILL MOYERS: Welcome. This week, two United States senators insisted that the Justice Department come clean. Why are Wall Street's big banks not only too big to fail but too big to jail? Senators Sherrod Brown of Ohio, a Democrat, and Chuck Grassley of Iowa, a Republican, are outraged that the giant banks violate the law with impunity -- laundering money, cheating homeowners, falsifying information -- every trick in the ledger book. They sent a letter to Attorney General Eric Holder demanding to know why the banks get away with fines instead of jail time.
Maybe they had their anger roiled by "Frontline," Public Television's premier investigative series. The other night, "Frontline" broadcast a report called "The Untouchables," on how the Department of Justice allegedly has looked the other way for fear that prosecuting the banks would do even more damage to the American economy.
ELIOT SPITZER in Frontline: The Untouchables: It was a definite sense that justice backed off.
NARRATOR in Frontline: The Untouchables:Did the government fail?
MARTIN SMITH in Frontline: The Untouchables: A number of people told us that you didn't make this a top priority.
LANNY BREUER in Frontline: The Untouchables: Well I'm sorry that they think that because I made it an incredibly top priority:
BILL MOYERS: That's Lanny Breuer, the assistant attorney general in charge of the criminal division at the Justice Department. A week after the Frontline report, he stepped down and is now expected to return to private corporate practice -- one more government appointee spinning through the lucrative revolving door between Washington and Wall Street.
That door could be a big reason why government treats the banks with kid gloves. A man who once worked for Citigroup, Jack Lew, the president's chief of staff, has been picked to be the new Treasury Secretary. And Mary Jo White, the newly named head of the Securities and Exchange Commission, is a chief litigator at a top law firm representing big investment banks like Morgan Stanley.
With all this happening, it's time to talk with journalist Matt Taibbi. You've seen him on our broadcast before. A contributing editor at "Rolling Stone," he's been tracking the high crimes and misdemeanors of Wall Street and Washington for years.
Welcome back to the show.
MATT TAIBBI: Thanks for having me.
BILL MOYERS: You're working on a story right now that'll come out in a couple of weeks on the HSBC settlement. That's the, tell me about that, why it interests you.
MATT TAIBBI: Well, the HSBC settlement was a really shocking kind of new low in the history of the too big to fail issue. HSBC was a serial offender on the money laundering score. They had been twice given formal cease and desist orders by the government. One dating back as far as 2003, another one in 2010 for inadequately policing the accounts in their system. They laundered over $800 million for cartels in Colombia.
BILL MOYERS: Drug cartels?
MATT TAIBBI: Drug cartels in Colombia and Mexico. They laundered money for terrorist connected banks in the Middle East. Russian gangsters. Literally, you know, I talked to one prosecutor who's, like, "They broke basically every law in the book and they did business with every kind of criminal you can possibly imagine. And they got a complete and total walk." I mean, they had to pay a fine.
BILL MOYERS: $1.9 billion, a lot of money.
MATT TAIBBI: It's a lot of money. But it's five weeks of revenue for the bank, to put that in perspective. And no individual had to suffer any consequences at all. There were no criminal charges no individual fines, which was incredible. Incredible.
BILL MOYERS: Lenny Breuer also forced the Swiss bank UBS, as you know, to pay a big fine in the LIBOR, the price fixing conspiracy. And that outraged you as well, didn't it?
MATT TAIBBI: This is the, I think the biggest financial scandal of all time. It was a price fixing scandal where, essentially, some of the world's biggest banks got together and they conspired illegally to artificially rig the global interest rates which are based upon this London inner bank offered rate, which is a rate that measures how much it costs for banks to lend money to each other.
This LIBOR rate affects the prices of hundreds of trillions of dollars of financial products. And it goes from everything from credit cards to mortgages to municipal bonds. Basically everything in the world the price is, you know, is somehow connected to LIBOR. And these guys were monkeying around with this for individual profit. And they got, again, a complete and total walk on this. There were no criminal charges, which is just unbelievable.
BILL MOYERS: Did you see the Frontline documentary "The Untouchables?"
MATT TAIBBI: I did.
BILL MOYERS: Then you're familiar with Lanny Breuer's testimony.
MARTIN SMITH in Frontline: The Untouchables: You made a reference to losing sleep at night worrying about what a lawsuit might result in at a large financial institution. Is that really the job of a prosecutor to worry about anything other than simply pursuing justice?
LENNY BREUER in Frontline: The Untouchables: I think I am pursuing justice and I think the entire responsibility of the department is to pursue justice, but in any given case, I think I am prosecutors around the country being responsible should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case there's some huge economic effect. If it creates a ripple effect so that suddenly counter-parties and other financial institutions or other companies that had nothing to do with this are affected badly, it's a factor we need to know and understand.
MATT TAIBBI: Think about what he's saying. He's essentially saying that some individuals are so systemically important, that they can't be arrested and put in jail. Now, it's only a few steps forward to the corollary to that, which is if some people are too systemically important to arrest, other people may safely be arrested. So we're creating a class of people who are arrestable and another class of people who are not arrestable, which is crazy. It's a crazy thing for the assistant attorney general to say, to admit out loud that he's dividing Americans up into these two classes. There's no reason they couldn't have taken a number of individuals from some of these companies and put them on trial.
Historically, we've always done this. Even under the Bush administration, if you go back just ten years, you know, WorldCom, Enron, you know, Adelphia. We took the leading individuals of these companies and we put them on trial to make an example out of them. And this is exactly what we're not doing in this case. Those companies were systemically important then. I don't see why they can't do the same thing now.
BILL MOYERS: You were shocked when you heard that President Obama had named Mary Jo White to lead the Securities and Exchange Commission. And you wrote that she was a partner in a law firm that represented a lot of these big banks. You know, Bank of America, Goldman Sachs, Chase, AIG, Morgan Stanley.
You said, "She dropped out and made the move a lot of regulators make, leaving government to make bucket loads of money, working for the people she used to police." And I gather your great concern is that you don't want to see the country's top financial cop being indebted to the people who created the bank role?
MATT TAIBBI: Right. Yeah, absolutely. I mean, it's just simple common sense. I mean, you're sitting on $10 million, $15 million, however much money she made working there at Debevoise and Plimpton when she was a partner and you owe that money to this specific group of clients and now you're in charge of policing them, just psychologically think of that. It doesn't really work, you know? It doesn't really work in terms of how aggressive a prosecutor should be, what his attitude towards the people he's supposed to be policing should be. It's just, the circumstances just aren't quite right. You'd much rather see a career civil servant in that in that situation.
BILL MOYERS: She was once a tough prosecutor. What's your beef?
MATT TAIBBI: Well, you know, I have people who are telling me that I'm wrong about this, that Mary Jo White was an excellent prosecutor and she's a good choice. But, you know I've done stories in the past about an episode, you had an SEC investigator named Gary Aguirre who was pursing an insider trading case against the future CEO of Morgan Stanley. He asked for permission to interview that future CEO. His name was John Mack. It was denied. And it was because there was communication between Morgan Stanley's lawyer, who at the time was Mary Jo White and the higher ups at the SEC who included the director of enforcement, Linda Thomsen. Aguirre was later fired for complaining about having this investigation squelched.
BILL MOYERS: Blowing the whistle.
MATT TAIBBI: For blowing the whistle. But the SEC was later forced to pay a $750,000 wrongful termination suit to Aguirre in that case. But what's so interesting is that Aguirre's boss, the guy who killed that case went to work for Mary Jo White's firm nine months after the case died. And he got, you know, a multi-million dollar position. It's a classic example of how the revolving door works in Washington. You know, you have these regulators at the SEC. And they know that there's that job out there waiting for them. So how hard are they really going to regulate these companies when they know they can get that money?
But in Washington, you know, people kind of shake their heads at it because it's so common you know, that these people, they move from government back to, you know, these high priced legal defense firms that represent the banks. And then they go back to government again. And it's this sort of, this coterie of, you know, 100, 200 lawyers who really run this entire thing. And it's all the same people on both sides.
BILL MOYERS: Lanny Breuer was one of them. He was in a very prestigious Washington law firm. Jack Lew, the new incoming secretary of the Treasury if he gets approved, served three years at Citigroup. His record there, according to "The Wall Street Journal" was not very lustrous for a man who's about to take over the Treasury Department. But "The Wall Street Journal" suggests that he got his job, not because he had the experience, but because he was a crony of Robert Rubin.
MATT TAIBBI: Jack Lew served in the Clinton administration. I think he worked in the OMB in the, you know, Office of Management of the Budget. And he was one of the key players in helping pass the repeal of Glass-Steagall. And, you know, this is kind of the way it works. It's not a one to one, you know, obvious connection. But, you know, Glass-Steagall was repealed specifically to legalize the merger of Citi Group. And, you know, coincidentally Bob Rubin, who was the Treasury secretary and Jack Lew end up working at Citi Group five, ten years later. And they make enormous amounts of money. And then they go back to government. And again, this is just sort of this merry-go-round that everybody in Washington knows about. And that's the way it works.
BILL MOYERS: How do you explain President Obama's attitude in this? When he was running for president, he promised the close the revolving door. And he seemed genuinely shocked at the collapse of the financial system and the banks' role in it. But he also was raking in massive campaign contributions from these very people. Did those investments, did those contributions turn out to be good investments, or do you think he's just overwhelmed by the system that's controlled by these guys?
MATT TAIBBI: I think that they genuinely accept the explanation that they're probably hearing from all these people who run these Wall Street companies. You know, people like Bob Rubin and Larry Summers who are close confidants of the Obama administration are probably telling them, "Look, if we start prosecuting all kinds of people for you know, X, Y and Z, there's going to be major instability in the markets. People are going to flee America. They're going to withdraw capital from the American financial system. It'll be a disaster. Jobs will be lost." But it's just not an acceptable it's explanation. I think they're--
BILL MOYERS: Why?
MATT TAIBBI: Well, just because the rule of law isn't really the rule of law if it doesn't apply equally to everybody. I mean, if you're going to put somebody in jail for having a joint in his pocket, you can't let higher ranking HSBC officials off for laundering $800 million for the worst drug dealers in the entire world. People who are suspected, not only of dealing drugs, but of thousands of murders. I mean, this is an incredible dichotomy. And eventually, you know, it eats away at the very fabric of society when some people go to jail and some people don't go to jail.
BILL MOYERS: But do you ever have the sense that those guys are, you know, are and their lawyers are up there laughing at all of us on their way to the bank, no pun intended? I mean, the fact of the matter is they are immune. There was a story in "The Washington Post" the other day by Howard Schneider and Danielle Douglas. With the lead, "Five years after the collapse of Lehman Brothers, a global push to tighten financial regulation around the world has slowed in the face of attempted recovery, which the banks helped bring on. "And a tough industry lobby effort. Big banks, insurers and other financial giants remain intact and arguably too big to fail." I mean, nothing really has changed.
MATT TAIBBI: No, no, definitely not. And in fact, if you want to look at it objectively, since 2008, you know, the companies that we're talking about have become bigger and more dangerous and more immune to prosecution than they were back then. And you might even say by a lot. I mean, you know, the first factor was that you had a series of mergers in 2008, which you know, made companies like Wells Fargo and JP Morgan Chase, you know, double in size.
Or they were much bigger than they were before. So therefore they're more dangerous. And so you have these companies, like Barclays, like Royal Bank of Scotland, like UBS, like HSBC, which are, you know, they can't be regulated. We can't get an accurate accounting of what's going on in their books. And apparently now we can't even criminally prosecute them for laundering money like HSBC does. I mean we just keep setting the bar lower and lower and lower. And it's getting scary I think.
BILL MOYERS: There's a new analysis out just the other day from the Economic Policy Institute that shows the super-rich have done well in the economic recovery, while almost everyone else has done badly. And the economist Robert Reich says, "We're back to the widening inequality we had before the big crash." Are the financial and political worlds just too intertwined and powerful for anything to change?
MATT TAIBBI: I mean, it's a concern, I would worry about. But it doesn't mean you can't, you know, try to stop the problem. I definitely think though that there is this connection now between political power and financial power that's just becoming more and more overt. I mean, what Lanny Breuer is saying in that video is these people who have an enormous amount of power, destructive financial power we can't prosecute them.
On the flip side what they're essentially saying is that people who don't have any money at all, it's politically safe to put them in jail. And so, you know, we're creating this kind of dual class. And it's a very upsetting and disturbing situation.
BILL MOYERS: Matt Taibbi, we'll be looking forward to your next expose in a couple of weeks. Thank you very much for being with us.
MATT TAIBBI: Thanks for having me on.

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FOCUS | Time to Break Up the Big Banks

FOCUS | Time to Break Up the Big Banks:


Time to Break Up the Big Banks

By George F. Will, The Washington Post
09 February 13

George Will? Yes, today we bring you a story from George Will. It may never happen again, but today he is right. SMG/RSN
ith his chronically gravelly voice and relentlessly liberal agenda, Sherrod Brown seems to have stepped out of "Les Miserables," hoarse from singing revolutionary anthems at the barricades. Today, Ohio's senior senator has a project worthy of Victor Hugo - and of conservatives' support. He wants to break up the biggest banks.
He would advocate this even if he thought such banks would never have a crisis sufficient to threaten the financial system. He believes they are unhealthy for the financial system even when they are healthy. This is because there is a silent subsidy - an unfair competitive advantage relative to community banks - inherent in being deemed by the government, implicitly but clearly, too big to fail.
The Senate has unanimously passed a bill offered by Brown and Sen. David Vitter, a Louisiana Republican, directing the Government Accountability Office to study whether banks with more than $500?billion in assets acquire an "economic benefit" because of their dangerous scale. Is their debt priced favorably because, being TBTF, they are considered especially creditworthy? Brown believes the 20 largest banks pay less when borrowing - 50 to 80 basis points less - than community banks must pay.
In a sense, TBTF began under Ronald Reagan with the 1984 rescue of Continental Illinois, then the seventh-largest bank. In 2011, the four biggest U.S. banks (JPMorgan Chase, Bank of America, Citigroup and Wells Fargo) had 40 percent of all federally insured deposits. Today, the 5,500 community banks have 12 percent of the banking industry's assets. The 12 banks with $250?billion to $2.3?trillion in assets total 69?percent. The 20 largest banks' assets total 84.5?percent of the nation's gross domestic product.
Such banks have become bigger, relative to the economy, since the financial crisis began, and they are not the only economic entities to do so. Last year, the Economist reported that in the past 15 years the combined assets of the 50 largest U.S. companies had risen from around 70 percent of GDP to around 130 percent. And banks are not the only entities designated TBTF because they are "systemically important." General Motors supposedly required a bailout because a chain of parts suppliers might have failed with it.
But this just means that the pernicious practice of socializing losses while keeping profits private is not quarantined in the financial sector.
To see why TBTF also can mean TBTM - too big to manage - read "What's Inside America's Banks?" in the January/February issue of the Atlantic. Frank Partnoy and Jesse Eisinger argue that banks are not only bigger but also "more opaque than ever." And regulations partake of the opacity: The landmark Glass-Steagall Act of 1933, separating commercial banking from investment banking, was 37 pages long; the 848 pages of the 2010 Dodd-Frank law may eventually be supplemented by 30 times that many pages of rules. The "Volcker rule" banning banks from speculating with federally insured deposits is 298 pages long.
There is no convincing consensus about a correlation between a bank's size and supposed efficiencies of scale, and any efficiencies must be weighed against management inefficiencies associated with complexity and opacity. Thirty or so years ago, Brown says, seven of the world's 10 largest banks were Japanese, which was not an advantage sufficient to prevent Japan's descent into prolonged stagnation. And he says that when Standard Oil was broken up in 1911, the parts of it became, cumulatively, more valuable than the unified corporation had been.
Brown is fond of the maxim that "banking should be boring." He suspects that within the organizational sprawl of the biggest banks, there is too much excitement. Clever people with the high spirits and adrenaline addictions of fighter pilots continue to develop exotic financial instruments and transactions unknown even in other parts of the sprawl. He is undecided about whether the proper metric for identifying a bank as "too big" should be if its assets are a certain percentage of GDP - he suggests 2 percent to 4 percent - or simply the size of its assets (Richard Fisher, president of the Federal Reserve Bank of Dallas, has suggested $100 billion).
By breaking up the biggest banks, conservatives will not be putting asunder what the free market has joined together. Government nurtured these behemoths by weaving an improvident safety net and by practicing crony capitalism. Dismantling them would be a blow against government that has become too big not to fail. Aux barricades!

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FOCUS | Elizabeth Warren Scares Bankers

FOCUS | Elizabeth Warren Scares Bankers:

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FOCUS | My Friend Was Held and Threatened With Deportation at LAX

FOCUS | My Friend Was Held and Threatened With Deportation at LAX:


My Friend Was Held and Threatened With Deportation at LAX

By Michael Moore, Reader Supported News
21 February 13

ast night was the Motion Picture Academy-sponsored dinner in Beverly Hills honoring the directors and producers of this year's five nominated films for Best Documentary. The dinner was an occasional tradition my wife and I started six years ago when we took our fellow nominees (we were nominated for Sicko) out for a meal to get to know each other. The Academy liked the idea, so this year it is holding dinners during Oscar Week for each of the separate branches' Oscar nominees.
Thus, last night, as an elected Governor of the Documentary Branch, I and my fellow Governors - Michael Apted and Rob Epstein - were co-hosting the nominee dinner for the documentary filmmakers. But one of the nominated directors was not there - Emad Burnat, the co-director of the Oscar-nominated 5 Broken Cameras. This exceptional, award-winning movie about how Emad's village in the West Bank used non-violence to oppose the Israeli's government's decision to build a wall straight through their farms and village - only to see (and capture on camera) Israeli soldiers shooting unarmed Palestinian civilians - had become the first Palestinian documentary ever to be nominated by the Academy.
While we awaited Emad's arrival from the airport - he and his family had already spent nearly six hours at an Israeli checkpoint as he was attempting to drive to Amman to catch their plane - I received an urgent text from Emad, written to me from a holding pen at the Los Angeles International Airport (LAX).
Here is what it said, in somewhat broken English:
"Urgent -- I am in the air port la they need more information why I come here
Invitation or some thing
Can you help they will send us back
If you late
Emad"
I quickly texted him back and told him that help was on the way. He wrote back to say Immigration and Customs was holding him, his wife, Soraya, and their 8-year old son (and "star" of the movie) Gibreel in a detention room at LAX. He said they would not believe him when he told them he was an Oscar-nominated director on his way to this Sunday's Oscars and to the events in LA leading up to the ceremony. He is also a Palestinian. And a olive farmer. Apparently that was too much for Homeland Security to wrap its head around.
"They are saying they are going to put us on the next plane back to Amman," he told me.
I immediately contacted the Academy CEO Dawn Hudson and COO Ric Robertson, who in turn told Academy President Hawk Koch. They got ahold of the Academy's attorney who is also partners with a top immigration attorney and they went to work on it. I called the State Department in D.C.
I told Emad to give the Homeland Security people my name and cell number and to have them call me ASAP so I could explain who he was and why they should let him go.
After being held for somewhere between one and two hours, with repeated suggestions that the U.S. may not let him into the country - saying that they may send him back home - the authorities relented and released Emad and his family.
I texted him to say we would not start the dinner until he arrived. When he got there, he was fairly shaken and upset.
He told us that this sort of treatment is something he is used to "on a daily basis under Occupation." He gave an eloquent and moving impromptu speech, in his usual soft-spoken voice, to his fellow nominees. He said this was his sixth trip with his film to the U.S. this year and that this was the first time he was detained. He said they wanted to see some "official document" that he was an actual nominee. I said, "Doesn't Immigration have Google?"
The Americans in the dining room apologized to Emad for the way our government and its security police treated him. We then sat down and ate some good ol' American roast beef.

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Tuesday, March 5, 2013

Too-Big-to-Fail Crowd Turns on One of Their Own - Bloomberg

Too-Big-to-Fail Crowd Turns on One of Their Own - Bloomberg:

Too-Big-to-Fail Crowd Turns on One of Their Own

There's a scandal brewing at the American Securitization Forum -- and sure to be a lot of schadenfreude to follow.
The trade association "fell into turmoil last week when most of the board resigned in a dispute with the group's executive director over governance and bonuses," Bloomberg News reportedtoday, citing six unnamed people familiar with the matter. Members that quit include Bank of America Corp., JPMorgan Chase & Co., Deutsche Bank AG and Citigroup Inc.
Jonathan Weil

About Jonathan Weil»

Jonathan Weil joined Bloomberg News as a columnist in 2007, and his columns on finance and accounting won Best ...MORE
The article said the resignations came after the board tried, but failed, to remove the forum's executive director, Tom Deutsch. Part of the dispute reportedly concerned bonuses he was paid. Deutsch didn't return phone calls. The forum lobbies and holds conferences for the securitization industry, which packages loans and other financial assets into securities.
Talk about a role reversal: Too-big-to-fail banks upset about somebody else's bonus for a change? (Next thing you know it will be snowing in the Cayman Islands.) And how about transparency? There's nothing on the forum's website about the resignations. Did the forum's staff and remaining board members think they could keep the story under wraps?
For those who have forgotten many of the details of the financial crisis, here's how Michael Lewis, author of "The Big Short," described a conference that the American Securitization Forum put on back in 2006:
"It was essentially a trade show for the subprime-mortgage business: the people who originated subprime mortgages, the Wall Street firms that packaged and sold subprime mortgages, the fund managers who invested in nothing but subprime-mortgage-backed bonds, the agencies that rated subprime-mortgage bonds, the lawyers who did whatever the lawyers did." It once was a cottage industry, "but the cottage had become a castle."
Keep your eyes on this story.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)

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