Simon Johnson | FORECLOSURE FRAUD | by DinSFLA

Tag Archive | "simon johnson"

Simon Johnson | Who’s Afraid of Elizabeth Warren?

Simon Johnson | Who’s Afraid of Elizabeth Warren?


By Simon Johnson

The next big political battle in Washington – after the budget debate is declared “over” – will likely feature the Consumer Financial Protection Bureau, in particular the fight to determine whether Elizabeth Warren can become as the agency’s first official head.

But will this fight feature a classic left vs. right set-piece confirmation showdown in the Senate?  Or it will it be resolved with cloaks and daggers closer to the White House – with Treasury Secretary Tim Geithner managing to prevent Professor Warren’s nomination?

There is much to commend the left vs. right scenario.  The Republicans, after all, want to argue that regulation is excessive in general and regulation of financial products is somewhere between unnecessary and dangerous for economic growth in particular.  This theme came up during the Dodd-Frank legislative debate on financial reform last year but it was largely lost in the larger conversation.

Elizabeth not only deserves this,

she earned it.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

Testimony of Simon Johnson, the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP)

Testimony of Simon Johnson, the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP)


Simon Johnson
Ronald A. Kurtz (1954) Professor of Entrepreneurship, MIT Sloan School of Management, and Senior Fellow, Peterson Institute for International Economics

[ipaper docId=50029822 access_key=key-22shnf6h9cm9qnlfibe7 height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

GORED BY WALL STREET: Senate Blocks Vote To Rein In Big Banks — Because It Probably Would Have Passed

GORED BY WALL STREET: Senate Blocks Vote To Rein In Big Banks — Because It Probably Would Have Passed


Simon JohnsonSimon Johnson

: May 21, 2010 09:21 AM

Focus on This: Merkley-Levin Did Not Get a Vote

After nine months of hard fighting, yesterday financial reform came down to this: an amendment, proposed by Senators Jeff Merkley and Carl Levin that would have forced big banks to get rid of their speculative proprietary trading activities (i.e., a relatively strong version of the Volcker Rule.)

The amendment had picked up a great deal of support in recent weeks, partly because of unflagging support from Paul Volcker and partly because of the broader debate around the Brown-Kaufman amendment (which would have forced the biggest 6 banks to become smaller). Brown-Kaufman failed, 33-61, but it demonstrated that a growing number of senators were willing to confront the power of our biggest and worst banks.

Yet, at the end of the day, the Merkley-Levin amendment did not even get a vote. Why?

continue reading…. Huffington Post

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosures, wall streetComments (0)

What happened to the global economy and what we can do about it: The Baseline Scenario

What happened to the global economy and what we can do about it: The Baseline Scenario


Our Pecora Moment

By Simon Johnson

We have waited long and patiently for our Ferdinand Pecora moment – a modern equivalent of the episode when a tough prosecutor from New York seized the imagination of the country in the early 1930s and, over a series of congressional hearings: laid bare the wrong-doings of Wall Street in simple and vivid terms that everyone could understand, and created the groundswell of public support necessary for comprehensive reregulation.  On Friday, that moment finally arrived.

There is fraud at the heart of Wall Street, according to the Securities and Exchange Commission.  Pecora took on National City Bank and J.P. Morgan (the younger); these were the supposedly untouchable titans of their day.  The SEC is taking on Goldman Sachs; no firm is more powerful.

Pecora exposed the ways in which leading banks mistreated their customers – typically, retail investors.  The SEC alleges, with credible detail, that Goldman essentially set up some trusting clients and deliberately misled them – to the tune of effectively transferring $1 billion from them to a particular unscrupulous investor.

Pecora had the drama of the congressional hearing room and used his skills as an interrogator to batter the bastions of Wall Street, day-after-day, with gruesome and convincing detail.  We don’t know where and when, but the SEC action points in one direction only: Lloyd Blankfein (CEO of Goldman) in the witness box, while John Paulson (unindicted co-conspirator) waits in the on-deck circle.

Either Blankfein knew what was going on – and is therefore liable before the law – or he was clueless and therefore incompetent.  Either way, the much vaunted risk management and control systems of Goldman, i.e., what is supposed to prevent this kind of thing from happening, are exposed to be what we have long here claimed: bunk (as I argued with Gerry Corrigan, former head of the NY Fed and long-time Goldman executive, before the Senate Banking Committee when we both testified on the Volcker Rules in February).

 “Too big and complex to manage” is actually the best defense for Goldman’s executives and they should offer to break up the firm into smaller and more transparent pieces as a way to settle the firm’s liability with the SEC.  The current management of Goldman – along with the team that ran the firm under Hank Paulson – have destroyed the value of an illustrious franchise.  Goldman used to stand for something that customers felt they could trust; now it is just a sophisticated way of ripping them off.

John Paulson obviously knew what he was doing in helping to create the “designed to fail” securities – and the consequences this would have.  If he cannot be convicted of conspiracy to commit fraud, then the law in this regard needs to be tightened significantly.  The Financial Crisis Inquiry Commission, chaired by Phil Angelides, is probably already planning to grill John Paulson about his taxes – the point Pecora made in this regard with J.P. Morgan junior was most telling and gripped the nation; it turned out that Morgan hardly paid any tax.  I would respectfully suggest that the Angelides Commission also pull in Hank Paulson and pursue a similar line of questioning with him – when it focuses on how much money Hank Paulson made, and how little tax he paid, while building and overseeing an extortion scheme of grand proportions, America will scream.

We have something today that Pecora did not have – the pattern of behavior is already established, if not yet widely comprehended.  Senator Levin’s recent grilling of WaMu revealed another layer of deliberate mistreatment of consumers within the mortgage industry.  The Valukas report on the failure of Lehman exposed exactly how investors are misled by balance sheet manipulation in its most modern and insidious form.  And we have learned more than enough about Goldman misleading investors over Greek debt levels.

Brooksley Born was right, a very long time ago, to fear the “dark markets” of over-the-counter derivatives and what those would bring.

Senator Ted Kaufman was right.  Just a few weeks ago, he argued strongly from the Senate floor that there is fraud at the heart of Wall Street.  Even some people who are generally sympathetic to his critique of modern financial practices thought perhaps that this specific notion was pushing the frontier.  But now they get it – and today Ted Kaufman is more than mainstream; he is the public figure who made everything crystal clear.

When you deliberately withhold adverse material information from customers, that is fraud.  When you do this on a grand scale, the full weight of the law will come down on you and the people who supposedly supervised you.  And if the weight of that law is no longer sufficient to deal with – and to prevent going forward – the latest forms of very old and reprehensible crimes, then it is again time to change the law.

Posted in concealment, conspiracy, corruption, FED FRAUD, federal reserve board, G. Edward GriffinComments (0)

13 BANKERS: MIT’s Johnson Says Too-Big-to-Fail Banks Will Spark New Crisis

13 BANKERS: MIT’s Johnson Says Too-Big-to-Fail Banks Will Spark New Crisis


Review by James Pressley :BLOOMBERG REVIEWS

March 22 (Bloomberg) — Alan Greenspan, the master of monetary mumbo jumbo, leaned back in his chair and grew uncharacteristically forthright.

“If they’re too big to fail, they’re too big,” the former Federal Reserve chairman said when asked about the dangers of outsized financial institutions.

It was October 2009, and the man who helped make megabanks possible was sounding more like Teddy Roosevelt than the Maestro as he entertained what he called a radical solution.

“You know, break them up,” he told an audience at the Council on Foreign Relations in New York. “In 1911, we broke up Standard Oil. So what happened? The individual parts became more valuable than the whole.”

Greenspan the bank buster crops up near the end of “13 Bankers,” Simon Johnson and James Kwak’s reasoned look at how Wall Street became what they call “the American oligarchy,” a group of megabanks whose economic power has given them political power. Unless these too-big-to-fail banks are broken up, they will trigger a second meltdown, the authors write.

“And when that crisis comes,” they say, “the government will face the same choice it faced in 2008: to bail out a banking system that has grown even larger and more concentrated, or to let it collapse and risk an economic disaster.”

The banks in their sights include Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. Though Wall Street may not like “13 Bankers,” the authors can’t be dismissed as populist rabble-rousers.

Cash for Favors

Johnson is an ex-chief economist for the International Monetary Fund who teaches at the Massachusetts Institute of Technology. Kwak is a former McKinsey & Co. consultant. In September 2008, they started the Baseline Scenario, a blog that became essential reading on the crisis. When they call Wall Street an oligarchy, they’re not speaking lightly.

Drawing parallels to the U.S. industrial trusts of the late 19th century and Russian businessmen who rose to economic dominance in the 1990s, the authors apply the term to any country where “well-connected business leaders trade cash and political support for favors from the government.”

Oligarchies weaken democracy and distort competition. The Wall Street bailouts boosted the clout of the survivors, making them bigger and enlarging their market shares in derivatives, new mortgages and new credit cards, the authors say.

Suicidal Risk-Taking

These megabanks emerged from the meltdown more opposed to regulation than ever, the authors say. If they get their way — and they will, judging from current congressional maneuvering over President Barack Obama’s proposed regulatory overhaul — Wall Street will retain its license to gamble with the taxpayer’s money. This isn’t good for anyone, including the banks themselves, which often feel compelled by competitive pressure to take suicidal risks.

“There is another choice,” they write: “the choice to finish the job that Roosevelt began a century ago, and to take a stand against concentrated financial power just as he took a stand against concentrated industrial power.”

Obama finds himself in the middle of a struggle that has coursed throughout U.S. history — the struggle between democracy and powerful banking interests. The book’s title alludes to one Friday last March when 13 of the nation’s most powerful bankers met with Obama at the White House amid a public furor over bailouts and bonuses.

The material that sets this book apart can be found at the beginning and end. Chapters three through six present an all- too-familiar, though meticulously researched, primer on how the economy became “financialized” over the past 30 years.

Regulatory Arbitrage

Crisis buffs won’t miss much if they skip ahead to the last chapter, where the authors debunk arguments that curbing the size of banks is too simplistic. A more complex approach, they say, would invite “regulatory arbitrage, such as reshuffling where assets are parked.”

They propose that no financial institution should be allowed to control or have an ownership interest in assets worth more than 4 percent of U.S. gross domestic product, or roughly $570 billion in assets today. A lower limit should be imposed on investment banks — effectively 2 percent of GDP, or roughly $285 billion, they say.

If hard caps sound unreasonable, consider this: These ceilings would affect only six banks, the authors say: Bank of America, JPMorgan Chase, Citigroup Inc., Wells Fargo & Co., Goldman Sachs and Morgan Stanley.

“Saying that we cannot break up our largest banks is saying that our economic futures depend on these six companies,” they say. “That thought should frighten us into action.”

Though Jamie Dimon won’t like this (any more than John D. Rockefeller did), incremental regulatory changes and populist rhetoric about “banksters” are getting us nowhere. It’s time for practical solutions. This might be a place to start.

“13 Bankers: The Wall Street Takeover and the Next Financial Meltdown” is from Pantheon (304 pages, $26.95). To buy this book in North America, click here.

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer on the story: James Pressley in Brussels at jpressley@bloomberg.net.

Last Updated: March 21, 2010 20:00 EDT

By: Simon Johnson
The Baseline Scenario

Posted in bank of america, bernanke, bloomberg, citi, Dick Fuld, federal reserve board, geithner, jpmorgan chaseComments (0)


GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Kenneth Eric Trent, www.ForeclosureDestroyer.com

Archives