Weary

I am weary of indignant Congresspeople holding hearings where they “question” those involved in our economic problems. Congress is as much to blame as anyone. In fact, they probably deserve the most blame. They changed the regulations and rules of the money game. They allowed Wall Street to go berserk. They voted for two illegal wars that have consumed huge amounts of taxpayer money. I wish they would stop grandstanding and acting holier-than-thou. If they don’t like the way that the Wall Streeters have behaved then put some of them in jail, stop giving them more money, and shut the hell up.

From What Did the Banks Do With Your Cash? by Matthew Jaffe:

"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," Sen. Claire McCaskill, D-Mo., recently said from the Senate floor.

"I'm mad," she said. "Everyone I work for is mad."

Congress is the problem. I’m mad at them. Congress has allowed Wall Street to kick sand in the face of the American taxpayer. Instead of reminding us of what we already know, Congress should stop the sand kicking. If they don’t have the power to do this, who the hell does?

Paying The "Best People" On Wall Street

From Pay curbs a right of ownership by David Weidner:

Maybe the biggest mistake made by the likes of Smith, Thain, Tiger Management's Julian Robertson or former New York Mayor Rudolph Giuliani, when defending bonuses, is they forget that making the rules about pay is part of the right of ownership and an essential part of capitalism and free markets.

After doling out more than $350 billion to acquire stakes in investment banks and commercial banks, the U.S. government -- you and I, as taxpayers -- definitely own the biggest banks on Main Street and Wall Street.

Put it this way: Citigroup Inc. and Bank of America Corp. each received $40 billion in cash and more than $360 billion in guarantees. Yet, Citigroup has a market value of only around $22 billion. Bank of America is valued at about $34 billion. Morgan Stanley is worth about $24 billion.

The list goes on, but you get the picture. The government either has effectively bought majority stakes in these companies or put more cash into them than they are worth. If these companies did not want the government exercising its right of ownership, then they should have not accepted the cash and prepared a bankruptcy filing.

It's true firms that haven't taken government cash will have a competitive pay advantage. That's how it should be. Firms that are run right should have an advantage. Why would we reward banks and bankers who got it wrong?

All this nonsense about Americans not understanding compensation on Wall Street is a bunch of elitist posturing. We understand it perfectly well, thank you. We know that even the most troubled of firms will look for ways around the new pay caps. We know that some people will flee for riches at smaller banks or hedge funds. We can live without the high flyers.

What Exactly Did They Do?

Whatever investment banks do, (or did) it must not be that important. None of the big ones are around anymore. How will we ever live without them?

From In switch to banks, brokers eye thinner profits by Alistar Barr:

In less than a year, the five largest U.S. brokerage firms -- Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley -- have, in turn, collapsed, been acquired by a larger commercial bank or decided to become a bank.

I think that all they used to do was steal people's money. Let’s remember that the person supposed to be fixing all of this used to be the head of Goldman Sachs. I’ll leave it to you to put two and two together.

I'm considering calling George W. Bush "Fagin" from now on.

Update:
Think Progress has this on the “fixer.”

Think Progress has this on “Fagin.”

Update:
From Salon Radio: Notre Dame finance professor Richard Sheehan by Glenn Greenwald:

University of Notre Dame Professor of Finance Richard Sheehan has been one of the most incisive economist-critics of the Paulson plan since it was unveiled, and he's my guest today on Salon Radio. We discuss the ways in which the key fear-mongering claims of Paulson have been both misleading and exaggerated; the reasons the bailout plan won't work even if the best case scenario occurs; where and how the Federal Government will get $700 billion to fund it; and the role Paulson himself has played in the events that have caused this crisis. From Professor Sheehan in the interview:

Unfortunately, Mr. Paulson was among those that were creating the problem, rather than warning about the problem. In his role as CEO of Goldman Sachs, Goldman -- under his watch -- created a whole lot of CDOs [collateralized debt obligations] that now are under the heading of "toxic waste." So it's amusing in a twisted way to look at him now as the one who is going to save us from imminent financial collapse, when it was at least in part brought on by the actions of Goldman, in terms of being so liberal in their willingness to create new and improved CDOs.

And Yet They Still Believe Him

Bush lies over and over and over… Yet they still believe him. It’s like some perverse version of the Boy Who Cried Wolf.

From The complete (though ever-changing) elite consensus over the financial collapse by Glenn Greenwald:

Leave aside for the moment whether this gargantuan nationalization/bailout scheme is "necessary" in some utilitarian sense. One doesn't have to be an economics expert in order for several facts to be crystal clear:

First, the fact that Democrats are on board with this scheme means absolutely nothing. When it comes to things the Bush administration wants, Congressional Democrats don't say "no" to anything. They say "yes" to everything. That's what they're for.

They say "yes" regardless of whether they understand what they're endorsing. They say "yes" regardless of whether they've been told even the most basic facts about what they're being told to endorse. They say "yes" anytime doing so is politically less risky than saying "no," which is essentially always and is certainly the case here. They say "yes" whenever the political establishment -- meaning establishment media outlets and the corporate class that funds them -- wants them to say "yes," which is the case here. And they say "yes" with particular speed and eagerness when told to do so by the Serious Trans-Partisan Republican Experts like Hank Paulson and Ben Bernake (or Mike McConnell and Robert Gates and, before them, Donald Rumsfeld and Colin Powell).

So nothing could be less reassuring or more meaningless than the fact that the Democratic leadership has announced that what they heard scared them so much that they are certain all of this is necessary -- whatever "all this" might be (and does anyone think that they know what "this" even is?). It may be "necessary" or may not be, but the fact that Congressional Democrats are saying this is irrelevant, since they would not have done anything else -- they're incapable of doing anything else -- other than giving their stamp of approval when they're told to.

Read more here.

From Thoughts On Sunday Bobbleheads by tristero:

The Republicans are also playing politics. They believed it is necessary, before actually addressing the crisis in real terms, to make sure they are carefully positioned as the "protectors of the American people" advocating a "clean" solution. Given the shared sense of imminent crisis requiring immediate action, the oversight, compensation limits, and "reciprocity" - whatever that is - put on this bill will be limited. In other words, Congress is about to hand the Bush administration the biggest blank check they have received to date.

And finally, I am confident that the American people will greatly benefit from this. Which American people? After 8 years of Bushism, you have to ask? Why, those who caused this crisis and who exploited this crisis, of course. They will slurp up the trillion dollars of our hard-earned money that's gonna be served up on a silver platter faster than you can say "Americans are suckers if they vote Republican."

Update from digby: I just have to add that when I heard Paulson say this bail out was actually going to make money for the government, I couldn't help but remember Paul Wolfowitz assuring us that the Iraq war would pay for itself.

Trust 'em?

Read more here.

From Before We Jump In by Josh Marshall:

There are subjects I know a lot about and others I know very little about. And the high-wire financial mess we're currently in falls clearly into the latter category. But I know enough to be troubled that we appear ready to give upwards of a trillion dollars in unfettered and unreviewable spending authority to the ... let's face it, the Bush administration, the folks who did such a bang up job in Iraq and New Orleans.

This morning a friend told me it's like the Iraq War all over again -- Shock & Awe, followed by an occupation of Wall Street, and all with no exit plan.

You Fail, We Bail

Wasn’t what the government did concerning Bear Stearns supposed to stop the imminent collapse of the financial empire? For too long now the fear card has been played. “They” told us that if the government didn’t step in and throw some money around the house of cards would fall. And it will trickle down and effect YOU. Why can't the government come up with a better motivator than fear? Time and time again the government has stepped in and thrown unprecedented amounts of money around, and the house of cards is still falling down. Couldn’t they have saved a lot of money by simply doing nothing? I personally don’t care if all the investment banks fail. They don’t have any of my money. I don’t have enough to put any there. They cater to the rich and powerful. Let the rich and powerful deal with this mess. Leave the average American taxpayer out of it.

From Looks Like I Spoke Too Soon by Jeffrey Stingerstein:

No sooner does the federal government show some sensibility by not bailing out a failing company, then it shows its stupidity once again by bailing out yet another company. What the hell is wrong with our government? One bailout after another using tax payer money and it isn’t getting us anything. Is it getting us a sound economy? No! It’s getting us a delayed crash. All these bailouts are leading to one thing, more irresponsible and risky behavior by already imprudent businessmen. First these guys get tax cuts, now they get bailouts. Why not just hand them the US Treasury Department and say, “Hey, take whatever you need. We’ll just borrow more from our enemies over in China.” This is getting utterly ridiculous and I can’t imagine how this could possible be doing anything good for our economy in the long run. What a lesson to learn! You fail, we bail you out!

Where Did It Go Wrong?

From Risk is gone on Wall Street by David Weidner:

Dick Fuld, the soon-to-be former chairman and chief executive of Lehman, and Jimmy Cayne, the former CEO of Bear Stearns, tried to outdo each other with compensation.

The "hard-charging" Fuld took home about $45 million last year. But that was OK because he was a lifer at the firm who had helped rebuild it a couple of times when it neared collapse. No one ever thought that maybe the executive people liked to call the gorilla was one of the reasons the firm kept running into trouble.

Cayne's net worth soared to $1 billion at the end of 2006, but we're supposed to feel sorry for him because he lost a fortune in the collapse and has to live in a $26 million apartment in the Plaza Hotel.

The employees of these firms aren't much better. They can't figure out why the market has lost confidence in their eggshell companies built on mountains of combustible derivatives. They scowl at journalists, pay coffee vendors not to serve reporters who make a fraction of what brokers do. They blame the media for their woes, not their banking counterparts who have cold feet.

Wall Street tells investors to buy and hold and then goes on a bank run against two of its own.

Read more here.

The Greatest Financial Scandal In History?

From Bringing Down Bear Stearns by Bryan Burrough:

On Monday, March 10, the rumor started: Bear Stearns was having liquidity problems. In fact, the maverick investment bank had around $18 billion in cash reserves. But soon the speculation created its own reality, and the race was on to keep Bear’s crisis from ravaging Wall Street. With the blow-by-blow from insiders, Bryan Burrough follows the players—Bear’s stunned executives, trigger-happy reporters at CNBC, a nervous Fed, a shadowy group of short-sellers—in what some believe was the greatest financial scandal in history.

Read the rest here.

Foreclosures, England, And Yachts

From The Meltdown Lowdown by Dean Baker:

This week in economic woes: Congress acts to worsen the foreclosure crisis, why we should hope investment banks move to England, and how ordinary Americans are subsidizing fancy yachts and private clubs.