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[Diarist's Note: Naked Capitalism Publisher Yves Smith has provided written authorization to the diarist to reproduce her blog post in its entirety for the benefit of the Daily Kos community.]

When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives
Yves Smith
Naked Capitalism
Tuesday, March 19, 2013   5:36 AM

One of the big lessons of the fraught negotiations over bailing out (or more accurately, in) Cyprus’s banks is that deregulating institutions with an implicit or explicit state guarantee is a bad idea. You’ve just given them a license to gamble with the public’s money, and you can rest assured that they will eventually avail themselves of it.

In Cyprus, bank deposits, which in theory are senior (meaning everyone else who gives money to the bank gets wiped out before they lose a penny) are proving to be not so. The reason is that there isn’t much left in the way of equity, there is pretty much no subordinated debt. The senior debt (still junior to deposits) is mainly sovereign or central bank debt. The Germans are insisting on “private sector participation” which means someone other than central banks need to take losses. Joseph Cotterill of FT Alphaville described why the officialdom decided it was too hard to go after the non-central bank bondholders:

As it is, there were lots of good reasons why a sovereign debt restructuring did not happen. I don’t want to downplay them. Notably, the fact that the bonds that were best to restructure were governed under English law, and were likely held by the kind of investor who’s willing to litigate. I listed the problems here. Around it all was the inability to get write-downs out of Cypriot domestic-law sovereign debt, because that was held by the banks which already bore big black holes in their balance sheets. Again we come up to something that could be raised in the defence of the deposit levy — local exposure was so great everywhere, that any distribution of losses would have been painful. For the widow depositor, substitute the pension fund holding local-law bonds.

In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders. Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation its depositary in late 2011. As Bloomberg reported:
Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation…

Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

And Bank of America is hardly unique. Bloomberg again:
That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
As we wrote at the time:
This changes the picture completely. This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail. Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. So this move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral. It’s well nigh impossible to have an orderly wind down in this scenario. You have a derivatives counterparty land grab and an abrupt insolvency. Lehman failed over a weekend after JP Morgan grabbed collateral.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors.

Now unlike Cyprus, the US does not have a financial sector that is a ginormous multiple of the real economy, so that taxpayers almost certainly can and will foot the bill for any derivatives misadventure that digs too deeply into FDIC reserves. And don’t kid yourself about the odds of that happening. Academics that aren’t on bank meal tickets consistently find that FDIC insurance is underpriced. The last time bank losses bled the FDIC dry, in the savings & loan crisis, the FDIC got a Congressional appropriation to make up the shortfall.

A bit more than a week ago, Jim Himes (an ex Goldman officer) and Randy Hultgren introduced bills that not only aim perpetuate this situation but will make it worse. And do not labor under any delusion as to whether this bill has official support. Himes is national finance chairman of the Democratic Congressional Campaign Committee, and Bernanke made approving noises about the legislation.

The proposed legislation, which predictably is not getting much attention from the mainstream media, will grease the wheels even more for banks. And where is Elizabeth Warren when a real bill is moving forward? (The three bills we will discuss are going before the House Agricultural Committee for markup on Wednesday; a Senate version of the most obviously troubling one, as discussed immediately below, has been introduced).

Americans for Financial Reform has written a series of layperson friendly letters opposing each of these bills. The first is to pretty much eliminate Section 716 of Dodd Frank, which would force banks like Bank of America and JP Morgan to take their derivatives operations out of taxpayer-backstopped subsidiaries and house them in separately-financed operations. This is the germane section discussing the House bill (its Senate evil twin is S. 474):

[Diarist’s Note: Yves, in the last sentence, above, references the first two paragraphs of the following letter…]

  AFR  Letter Opposing HR 992 (Allows Banks to Keep Derivatives in Depositaries) by webber3292

Since the Senate hearings on the London Whale trade confirmed that JP Morgan has an ugly combination of terrible controls and no respect for regulators, allowing banks to continue to gamble with taxpayer deposits is asking for bigger, more costly blowups. Remember, these losses took place when financial markets were calm and JPM had simply made a big, clumsy series of wagers. What happens if we get a repeat of the crisis, of banks choking on their own highly levered bad cooking?

The second bill also makes banks impossible to resolve through a sneakier mechanism. If you read Sheila Bair’s Bull by the Horns, she recounts that it was particularly troubling to see at Citigroup how its operations took place with no relationship to legal entities. One of her big pushes with the bank was to tidy that up. And in coming up with living wills, banks who were not as loosely managed as Citi have still found it difficult to move businesses into specific legal entities so they could be resolved (as in sold or put into bankruptcy).

One proposed bill would end Dodd Frank restrictions on inter-affiliate swaps. The reason this matters is that swaps can be used to move risk, profits, or other economic exposures from one entity to another. And the effect of this sort of arrangement is to tie entities that might have been separated out legally back into one big economic hairball. That would make it impossible to hive them into pieces, so it would also impede legislation aimed at forcing the banks to break up. Think this sort of thing doesn’t happen now? One of the reasons that AIG was not broken up and sold as originally planned was that its property and casualty operations in the US are tethered together in a dense web of cross company-guarantees, turning what on paper are subsidiaries licensed and supervised in 19 states into one operation overseen by no one (I had a whole team, including two heavyweight economists and two serious insurance accounting experts, one of them a former senior examiner, trying to figure out how to get through all the cross guarantees and figure out the economics of the major subsidiaries, and after spending weeks on it with statutory filings, we concluded it was too hard).

  AFR Letter Opposing HR 677 (on inter-affiliate swaps) by webber3292

The third bill, HR 1003, is a more straightforward “throw sand in the gears” operation. It seeks to neuter the CFTC by requiring it to make more than twice as many cost-benefit assessments of proposed decisions, which will undermine enforcement actions. It effectively subjects regulation to a second screen, by requiring regulators to jump through another hurdle and prove that rules already passed by Congress don’t impose an undue cost relative to the supposed benefits. But that logic is heinous. First, recall that that sort of reasoning led to exploding Pintos. It was cheaper for Ford not to fix its cars and merely pay off the bereaved relatives of people who got fried. Second, the banks will always argue that tail risks, which is what a good deal of regulation is intended to reduce, are lower than they appear. But the cost of tail events, as in financial crises, are so great that it is imperative to be overinsured, since (as Nassim Nicholas Taleb has stressed) is inherently hard to measure and established approaches lowball it. And most important, he has described how complex derivatives risks are inherently unsuited to statistical measurement. Our summary of the key points of his article on what he calls the fourth quadrant:

Nassim Nicholas Taleb gave a presentation in New York yesterday which hews closely to a recent piece of his, although his talk did include some additional interesting charts and anecdotes…

First was his “fourth quadrant” construct. He sets up a 2 by 2 matrix. On one axis is phenomena that are normally distributed versus ones that have fat tails or unknown tails or unknown characteristics. On the other axis is the simple versus payoff from events. Simple payoffs are yes/no (dead or alive, for instance). “How much” payoffs are complex.

Models fail in the quadrant where you have fat or unknown tails and complex payoffs. A lot of phenomena fall there, such as epidemics, environmental problems, general risk management, insurance, natural catastrophes. And there are phenomena in that quadrant that have very complex payoffs, like payoffs from innovation, errors in analysis of deviation, derivative payoffs.

The other part that caught my attention was the estimation of fat tail risk.

As most readers know, all the fundamental models of finance theory use Gaussian (normal) distributions…Now supposedly quants have developed some fixes to various pricing and risk management models to allow for tail risk…

Taleb casts doubts on these fixes:

The tragedy is as follows. Suppose that you are deriving probabilities of future occurrences from the data, assuming (generously) that the past is representative of the future. Now, say that you estimate that an event happens every 1,000 days. You will need a lot more data than 1,000 days to ascertain its frequency, say 3,000 days. Now, what if the event happens once every 5,000 days? The estimation of this probability requires some larger number, 15,000 or more. The smaller the probability, the more observations you need, and the greater the estimation error for a set number of observations. Therefore, to estimate a rare event you need a sample that is larger and larger in inverse proportion to the occurrence of the event.

If small probability events carry large impacts, and (at the same time) these small probability events are more difficult to compute from past data itself, then: our empirical knowledge about the potential contribution—or role—of rare events (probability × consequence) is inversely proportional to their impact. This is why we should worry in the fourth quadrant!

So it isn’t just that the CTFC will be snowed under with busywork to justify its efforts, but that they are also likely to be shoehorned into a statistical template which will give the banks the upper hand. Well played!

Please contact your Senator and Representative and tell them you are firmly opposed to these bills since they are all “gimmie my bailout and leave me alone” proposals from the banks. One bit of good news here is that at least on paper, Republicans are not happy about the fact that Dodd Frank resolutions aren’t likely to work even before the launch of this effort to assure they won’t ever be attempted. Spencer Bachus issued a paper last year criticizing the inadequacy of the Dodd Frank resolution provisions. So it can’t hurt to tell Democrats that they need to stand behind Dodd Frank, and remind Republicans that they’ve stood for “no more bailouts” and they need not to allow those sneaky ex Goldman Democrats to allow Wall Street to suck resources away from Main Street. This sort of bill depends on the complacency and indifference of the public to get passed, and correctly painting its as an egregious piece of pro-bailout pork might make some Congresscritters loath to be associated with it.

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Comment Preferences

  •  Tip Jar (144+ / 0-)
    Recommended by:
    Ray Pensador, DRo, One Pissed Off Liberal, boriskamite, Statusquomustgo, TheMomCat, Azazello, Sandino, Habitat Vic, Chaddiwicker, whenwego, ricklewsive, leeleedee, dov12348, Ginny in CO, Wolf10, Jim P, pat bunny, ctsteve, deconite, poliwrangler, lenzy1000, gloriana, emal, Mother Mags, joe shikspack, old wobbly, wonkydonkey, JesseCW, ladywithafan, ek hornbeck, reflectionsv37, antirove, dance you monster, Kingsmeg, WheninRome, nailbender, run around, LamontCranston, LucyandByron, Lefty Coaster, Williston Barrett, SpecialKinFlag, dharmafarmer, Chi, cal2010, VTCC73, Gowrie Gal, BlueDragon, timethief, Dreaming of Better Days, pfiore8, jadt65, randallt, happymisanthropy, NoMoreLies, aliasalias, profh, Willa Rogers, buckstop, berko, Joieau, Shippo1776, basquebob, Aunt Martha, Alumbrados, jamess, cloudbustingkid, triv33, MrJayTee, biggiefries, Plox, carpunder, truong son traveler, Jarrayy, blueoasis, Persiflage, rustypatina, rapala, Dr Erich Bloodaxe RN, Horsefeathers, albrt, Oye Sancho, No Exit, terabytes, hubcap, Publius2008, psnyder, ozsea1, BradyB, Bluesee, tofumagoo, Kristina40, Paper Cup, lostinamerica, dotsright, ChemBob, Teiresias70, Buckeye Nut Schell, ffour, priceman, David Futurama, TracieLynn, Involuntary Exile, newpioneer, RUNDOWN, dewley notid, Medium Head Boy, thomask, pcl07, Kitsap River, LSmith, Nebraskablue, RageKage, KenBee, getlost, yoduuuh do or do not, pgm 01, shypuffadder, kurt, CIndyCasella, HCKAD, ratzo, jbob, dkmich, rmonroe, LI Mike, expatjourno, WisePiper, semiot, onionjim, jack 1966, RFK Lives, ScienceMom, Marihilda, Brian B, allenjo, opinionated, Steven D, LillithMc, Anthony Page aka SecondComing, No one gets out alive, NBBooks, Eyesbright

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Wed Mar 20, 2013 at 03:24:19 PM PDT

    •  Or continue watching Dancing with the Stars. (18+ / 0-)

      "Well, yeah, the Constitution is worth it if you succeed." - Nancy Pelosi // Question: "succeed" at what?

      by nailbender on Wed Mar 20, 2013 at 04:05:25 PM PDT

      [ Parent ]

      •  I read a lot of what is happening now (3+ / 0-)

        At www.thethrivemovement.com.
        Many people here will think this info is CT, but if you look at what is happening all over the aworld, moving from one country to the next, it makes sense.
        Same things with the War of Terror,  which is really resource grabs for the corporations using our money and soldiers lives.

        Gitmo is a Concentration Camp. Not a Detention Center. Torture happens at Concentration Camps. Torture happens at Gitmo. How much further will US values fall? Where is YOUR outrage at what the United States does in OUR names?

        by snoopydawg on Wed Mar 20, 2013 at 11:19:47 PM PDT

        [ Parent ]

    •  But to do that, you need two things (8+ / 0-)

      First, class consciousness, i.e., class structure consciousness, which is necessary to understand and respond to the corporate state.  Second, the will to mass action so overwhelming that corporations and their stooges (namely the US government) will give up power, if only for the chance to protect profits long term.

      The people running the system aren't letting go of power unless they have no choice. This is all but universal.

      Even if we get item #2, there is a strong chance that the US government will respond with martial law.  Expect the leaders of the movement to be prosecuted as terrorists.  And that's under the current regime.

      I'm not in the least optimistic about achieving either of these necessary conditions. Americans are well trained in obedience and to hate and distrust a left they don't understand. If anything, they'll turn right.

      How do we create the necessary consciousness and will to action? (I'm not laying the whole task on you, it's a question for anyone.)  It isn't just the government that's captured. Americans' minds are captured, too.  I see plenty of dissatisfaction, but very little inclination to think or work.

      Cutting Social Security will end my support for the Democratic Party.

      by MrJayTee on Wed Mar 20, 2013 at 06:37:01 PM PDT

      [ Parent ]

    •  Most people on this site (8+ / 0-)

      don't have the faintest idea what almost happened and could still happen on Cyprus. They don't understand what's been happening since 2008. They look at their 401ks and are simply delighted with the job their president is doing.

      If People will not act within the circles that they keep either out of ignorance or feigned ignorance, you have to make a long jump to get to positive action  that you refer to as "the next step". It is going way beyond most people's comfort zones. A quick look at the demographics of this site and you'll see, most here are very comfortable and happy.

      There is something very big and dear to the thieves hearts that they don't get about the food-stamps program.  It acts as a national security blanket to keep their property and their assets safe from the starving. Imagine where people would go if they were starving. They wouldn't go to a another poor person's house. They would go to any neighborhood that looked  prosperous and they wouldn't care how they voted.

      The only people time people will act is when they are starving and their kids are starving and death is inevitable if action isn't taken. Then and only then will they go outside their comfort zone.  By then it's usually way too late. They are too weak for physical action which makes it easy for the state to put them down.

      There will never be anything even close to what you mentioned. Compared to the depression of the 1930s , we have it pretty damn good. If they didn't move then, it will take far more to move now.

      “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

      by Dburn on Wed Mar 20, 2013 at 07:33:22 PM PDT

      [ Parent ]

      •  agree - most on site engaged in back and forth (4+ / 0-)

        back and forth of the 2 factions

        the 2 factions that work for the 1%

        and all the while the banksters and other 1% have corrupted the rule of law and the government to transfer resources to themselves

        now they are no longer hiding

        they are out in the open

        now with Citizens United they can buy the elections and the government

        more and better democrats is no longer enough

        •  You could probably fit better Dems in a minivan (2+ / 0-)
          Recommended by:
          opinionated, Dburn

          You could definitely fit them in a minibus.  There are Warren and Sherrod Brown in Senate.  I once had high hopes for Franken, but I've often looked for his picture on milk cartons since he took office.  There are probably some very good House members elected in the last 2-3 cycles, but I'm having difficulty recalling them right now.

          Occupy at least provided a different vision for a few months' time, but thuggish police crackdowns that seemed to follow a coordinated template seems to have taken care of that.  350.0rg rallied the troops against KXL, but I'm not sure what they'll do when (almost inevitably) the pipeline gets approved.  People rallied to labor's banner in WI 2 years ago, but that energy was channeled into a recall campaign that largely failed.

          I'm at a loss as to where to go at this point.

          Some men see things as they are and ask why. I dream of things that never were and ask why not?

          by RFK Lives on Thu Mar 21, 2013 at 07:46:35 AM PDT

          [ Parent ]

          •  The problem has always been (1+ / 0-)
            Recommended by:
            RFK Lives

            that when new members are elected to congress most of them (Warren is an exception so far) get co-opted. They have a very effective way of doing it. If they don't toe the line that don't get committee assignments. They don't get the backing  of the national party. Heads of Committees don't donate to their campaigns. Finding support from fellow member is spares in terms of co-sponsoring a bill.

            I'm sure it upsets them to no end that Sherrod and Warren's popularity have helped them eclipsed the need for acceptance of the normal rules that basically come down to : if you don't participate in "our little deals" you hear nothing and will never say nothing or you can expect to see your time hear limited.

            Warren has already gotten through that when she pushed the Office of the Comptroller regulators on why they haven't brought any banks to Trial.  

            “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

            by Dburn on Thu Mar 21, 2013 at 08:51:54 AM PDT

            [ Parent ]

    •  Wonder what the minimum deposit is on a (2+ / 0-)

      Swiss bank account.   anybody know?   can we little folks get our money out of the country before they steal it all?

      What we need is a Democrat in the White House.

      by dkmich on Thu Mar 21, 2013 at 05:20:20 AM PDT

      [ Parent ]

  •  Great diary as always (7+ / 0-)

    But your BFF GoGo may have another sad and "Democrat" in the diary title may cause some to bristle.

    It is, after all, an epithet that the execrable Joe McCarthy originated during the commie witch hunts.

    The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

    by ozsea1 on Wed Mar 20, 2013 at 03:31:57 PM PDT

    •  THANK YOU for pointing that out: DEMOCRAT? (4+ / 0-)
      Recommended by:
      Geiiga, Christy1947, I love OCD, kefauver

      Immediate turn off. Anyone who consciously or subconsciously buys into that disrespectful moniker does NOT get my eyes on his or her words, no matter what those words say.

      NO recommendation here!

      It is ignorance which is hopeless.

      by IdeaTipper on Wed Mar 20, 2013 at 05:49:13 PM PDT

      [ Parent ]

      •  Really? (0+ / 0-)

        Not to sound disrespectful, but you won't read anything that shows the Dems in a bad light?  
        Is that what you are saying?  
        If so, wow!  

        Gitmo is a Concentration Camp. Not a Detention Center. Torture happens at Concentration Camps. Torture happens at Gitmo. How much further will US values fall? Where is YOUR outrage at what the United States does in OUR names?

        by snoopydawg on Wed Mar 20, 2013 at 11:26:55 PM PDT

        [ Parent ]

        •  The use of intentionally insulting renaming by Rs (3+ / 0-)
          Recommended by:
          I love OCD, kefauver, Short Bus

          is well known, and the contempt for Democrats and the Democratic Party is apparently intended. All it does is convinces me not to read beause of the high probability of R sources or Teabag  or Obama hating sources for the material which has that in the headline.

  •  Seriously? Dissing Elizabeth Warren??? (11+ / 0-)

    From the Yves Smith post:

    And where is Elizabeth Warren when a real bill is moving forward?
    What a load. Yves gives herself away in the title, "Democrat Bank Stooges..."

    I ♥ President Barack Obama.

    by ericlewis0 on Wed Mar 20, 2013 at 03:35:42 PM PDT

    •  I happen to think Elizabeth Warren's the best... (64+ / 0-)

      ...thing to happen to the U.S. Senate in, perhaps, decades. I also think I'm going to ignore folks that cherry-pick shit out of otherwise-important content. Sorry, if I've done something sacrilegious...but, I'm used to the type of crap you're pulling here...it's happened to me hundreds of times in this community. (Citing the Wall Street Journal, and being criticized for it by folks that do it themselves; focusing upon tangential matter that's not pertinent to the gist of the story, and on and on and on; Greenwald; FireDogLake, etc., etc.) And, frankly, the agenda's transparent. Newsflash: I do NOT agree 100% with the positions of many of the folks whose work I crosspost. (And, Eric, I actually like you!)

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Wed Mar 20, 2013 at 03:45:58 PM PDT

      [ Parent ]

    •  Are they working for the banks or for us? (16+ / 0-)

      This bill sure won't help average Americans.

      I give you credit for reading the whole article.

      look for my eSci diary series Thursday evening.

      by FishOutofWater on Wed Mar 20, 2013 at 03:53:10 PM PDT

      [ Parent ]

    •  Look at the conclusion (4+ / 0-)
      Please contact your Senator and Representative and tell them you are firmly opposed to these bills since they are all “gimmie my bailout and leave me alone” proposals from the banks. One bit of good news here is that at least on paper, Republicans are not happy about the fact that Dodd Frank resolutions aren’t likely to work even before the launch of this effort to assure they won’t ever be attempted. Spencer Bachus issued a paper last year criticizing the inadequacy of the Dodd Frank resolution provisions. So it can’t hurt to tell Democrats that they need to stand behind Dodd Frank, and remind Republicans that they’ve stood for “no more bailouts” and they need not to allow those sneaky ex Goldman Democrats to allow Wall Street to suck resources away from Main Street. This sort of bill depends on the complacency and indifference of the public to get passed, and correctly painting its as an egregious piece of pro-bailout pork might make some Congresscritters loath to be associated with it.
      Even though these are bills pushed out of House Republican majority committee, the message is Democrats suck and at least there is good news about Republicans. The fact that the bills are gutting Dodd-Frank, which the diary content frames as needing to be protected, the Republicans, who have been trying to dismantle it, are not the culprits. The Democrats (likely a few blue dogs) and Elizabeth Warren are supposed to be held as suspect.  
      •  Hating on Rs, while always a good thing, is far (2+ / 0-)
        Recommended by:
        ericlewis0, blueoasis

        from the only thing. Policies are what matters, party affiliations be damned.

        The frog jumped/ into the old pond/ plop! (Basho)

        by Wolf10 on Wed Mar 20, 2013 at 04:11:08 PM PDT

        [ Parent ]

      •  You're missing the obvious: (25+ / 0-)

        The Public is getting in a "hang 'em all" mood. The Democratic leadership is stupidly aligning itself closer and closer to the Criminal Banker Class.

        The Republicans -- who are part and parcel of said class -- is nonetheless positioning itself with the Public (and remember a Public roundly sick of the rampant corruption of Wall Street) as being against more bailouts and such.

        In short, instead of destroying once and for all Reaganomics and all the attendant disease which flowed from it, including the current Depression, our Party chooses time and again to do everything it possibly can to justify Republican/Bankster frames.

        The Republicans did this in 2010, when they scared the seniors into thinking Republicans!!! were the saviors of Medicare. Because we were stupidly offering grand bargains which could be interpreted as hurting them. Even though, in the real world, Republicans burn to destroy Medicare.

        You're ire is misplaced. Ask why our own Party is doing everything it can to help make the Republicans look like they are on the little guys side; while we do the opposite. Think "chained-CPI." Think "the legislation Democrats proposed as shown in this diary."


        If Republicans said every 3rd person named "Smith" should hang, we'd bargain them to every 7th. Then we'll see apologia written praising this most pragmatic compromise. There's our losing formula.

        by Jim P on Wed Mar 20, 2013 at 04:13:22 PM PDT

        [ Parent ]

        •  That really doesn't explain why Republicans (2+ / 0-)
          Recommended by:
          ericlewis0, I love OCD

          should be couched in defensive excuses.

          If the goal is to prevent a repeat of 2010, when as you say, Republicans scared people into thinking they were the saviors, then I don't see how a broadbrush criticism of  Democrats about a law they worked hard to pass in the face of Republican opposition, helps. I take issue with the claim that there is anything good about Republican criticism of Dodd-Frank when their primary goal is to dismantle.

          •  It really doesn't matter. (13+ / 0-)

            It's trivial. Pretty much irrelevant. The American people would throw both Parties to the sharks if they could at this point,  but our electoral game is rigged to leave us unable to do that.

            So...
            Is our Party delivering for the People or not? That's all that matters.

            The Insider Baseball Game of Optics is pure bullshit, and the only way it does matter is what OUR PARTY is communicating to the public.

            Is our Party delivering for the People or not in the fields of Economics and defending the Safety Net? What are the American people seeing us do? What's your take on that? Yes or no?


            If Republicans said every 3rd person named "Smith" should hang, we'd bargain them to every 7th. Then we'll see apologia written praising this most pragmatic compromise. There's our losing formula.

            by Jim P on Wed Mar 20, 2013 at 04:36:44 PM PDT

            [ Parent ]

            •  It does matter (4+ / 0-)
              Recommended by:
              shrike, ericlewis0, I love OCD, scott5js

              You said so yourself. If you think that Republicans being successful at duping people doesn't matter, then 2010 is irrelevant. The point is that getting Democrats to do better doesn't require elevating Republicans unnecessarily. Bolstering their dubious positions serves no one. There goal is to dismantle Dodd-Frank. Claiming that their criticism of the bill is valid is bolstering a dubious position.

              •  Nope. (9+ / 0-)

                Did you read the article?

                Whatever passing reference is made to Republicans, this is what WE'RE doing.

                Stand for the people, stand for the safety-net, stand against the criminal banker class and we win elections hand over fist.

                Stand for pretending and extending the Criminal class, stand for cutting back social security, stand for hurting the voters, and OF COURSE the Republicans are going to make headway.

                So instead of worrying about trivial shit we can't control, why not simply take control?

                I dare you to answer the question:

                Is our Party delivering for the People or not in the fields of Economics and defending the Safety Net? What are the American people seeing us do? What's your take on that? Yes or no?


                If Republicans said every 3rd person named "Smith" should hang, we'd bargain them to every 7th. Then we'll see apologia written praising this most pragmatic compromise. There's our losing formula.

                by Jim P on Wed Mar 20, 2013 at 05:49:23 PM PDT

                [ Parent ]

                •  A dare? (3+ / 0-)
                  Recommended by:
                  Jim P, I love OCD, kefauver

                  Dodd-Frank, including the CFPB, Medicare is strengthened, the Affordable Care Act are all for the people.

                  Are these all perfect? No. There is much more to be done.

                  One of the best ways to attack inequality is raising the minimum wage.

                  House Republicans Unanimously Vote Down Minimum Wage Hike
                  http://livewire.talkingpointsmemo.com/...

                  The Senate Budget Committee just passed legislation to increase minimum wage:

                  The Senate Budget Committee on Thursday approved a plan that would reduce the deficit by $1.85 trillion over 10 years through a mix of spending cuts and tax increases. The panel added amendments by Sen. Bernie Sanders to end offshore tax havens and raise the minimum wage. In the House, meanwhile, a budget was proposed that would make drastic spending cuts without asking the wealthy and profitable corporations to contribute to deficit reduction. “Disastrous” and “insane” were two words Sanders used to describe what House Budget Chairman Paul Ryan proposed. Earlier in the week, Sanders chaired a Wednesday hearing on a claims backlog at the VA. And on Tuesday he introduced a constitutional amendment that would undo Citizens United, the notorious Supreme Court ruling that voided campaign finance regulations.

                  Budget Committee One Sanders amendment approved by the committee would go after tax-dodging corporations. A second one supports increasing the minimum wage. Both Sanders amendments were approved by votes of 12 to 10. House Republicans, meanwhile, offered what Sanders called a “disastrous” budget that would cut programs for working families. “It is insane to simply talk about ‘cut, cut, cut’ when you’ve got the wealthiest people and large corporations doing phenomenally well and paying lower effective tax rates than they should,” Sanders said Thursday on The Cycle on MSNBC. Watch the MSNBC interview

                  Tax Havens The Wall Street Journal reported on Monday that its own analysis of 60 big U.S. companies found that they parked $166 billion offshore last year. Sanders has called for closing those tax loopholes to help bring down deficits. “At a time when we have a $16.6 trillion national debt; at a time when roughly one-quarter of the largest corporations in America are paying no federal income taxes; and at a time when corporate profits are at an all-time high, it is past time for corporate America to contribute significantly to deficit reduction,” he said.

                  http://www.sanders.senate.gov/...

                  Speaking of Elizabeth Warren:

                  Warren politely SCHOOLS businessman at Senate hearing who tries to explain wage economics to her
                  http://www.dailykos.com/...

                  There was also a debate about the impact of the recent tax deal, but simple arithmetic shows the reality.

                  Pre Bush tax cuts: lowest tax bracket 15 percent and top tax bracket 39.6 percent.
                   Bush tax cuts: lowest tax bracket 10 percent and top tax bracket 35 percent.
                  President Obama's tax deal, lowest rate 10 percent, top rate 39.6 percent.

                  Do the math and it will show that the gap between someone earning $50,000 and someone earning $500,000 closed to more than what it was in the 1990s. Add the health care law tax and the gap closes even more.

                  <...>

                  Perhaps the best prism through which to see the Democrats’ gains is inequality. In the 2008 campaign, Mr. Obama said that his top priority as president would be to “create bottom-up economic growth” and reduce inequality...In the 2009 stimulus, he insisted on making tax credits “fully refundable,” so that even people who did not make enough to pay much federal tax would benefit. The 2010 health care law overhaul was probably the biggest attack on inequality since it began rising in the 1970s, increasing taxes on businesses and the rich to pay for health insurance largely for the middle class.

                  http://www.nytimes.com/...

                  Obama and Redistribution

                  Some notes for myself: how much impact have Obama’s policies actually had on current and prospective inequality?

                  The main policies to consider are PPACA (the health reform) and ATRA (the fiscal cliff deal with its associated tax rise).

                  I’m not a fan of the Tax Foundation’s work, but their analysis of the distributional effects of Obamacare looks about right: significant benefits to the bottom half of the income distribution, paid for largely by taxes on the top few percent (the Medicare surcharge and the extra tax on investment income). The Tax Policy Center — whose work I do trust — has the Act reducing the after-tax income of the top 1 percent by 1.8 percent, the top 0.1 percent by 2.5 percent.

                  Meanwhile, ATRA raises taxes relative to a continuation of the Bush high-end tax cuts: after-tax income down 4.5 percent for the 1-percenters, 6.2 percent for the top 0.1 percent.

                  Putting this together, we have a roughly 6 percent hit to the 1 percent, around 9 to the superelite. That’s only a partial rollback of these groups’ huge gains since 1980, but it’s not trivial.

                  http://krugman.blogs.nytimes.com/...

                  These are steps in the right direction, but again, there is much more to be done.

                  I hope that answers your question.

                  •  Thanks for trying, but you missed the (5+ / 0-)

                    obvious I hate to tell you again.

                    We started with umbrage that the insulting "Democrat" was quoted in an article which was about Democratic Party members proposing legislation which will protect criminal bankers, while increasing risk and difficulty to every depositor in the United States, and ultimately, all the tax-payers.

                    There was also the passing reference to Republican's pledges against bailouts and a challenge to Sen. Warren. (Which she will more than rise to meet, I'm certain.)

                    The idea, I take it, being that if someone reads a stupid insult, and a statement of publicly-taken Republican positions... that knowledge alone will hurt Democratic Party electoral chances.

                    But that's absurd. And in context of the actual policies being promoted by Democratic Leadership, it's like looking at a twig on the water while the Titanic is racing at your head.

                    President Obama has repeatedly offered to cut Social Security as part of a deal around the deficit and the debt. But you know, and I know, and I don't see how it's possible President Obama doesn't know that Social Security being in trouble, being connected to debt/deficit is...

                    a Republican lie. The President offers to negotiate based on a Republican lie.

                    It's a Republican lie. And he, and Pelosi, and Reid, actually validate a Republican lie.

                    Now, since there are tens of millions of voters now dependent, or soon to be, on Social Security -- including elderly, disabled and disabled Vets, and various other pockets of humanity --

                    ...which "promotion" of Republicanism do you judge the more dangerous to our Party, and the more worthy of your concern?

                    That a blogger seen by, what? 10,000? -- wrote a trivial insult and pointed to Republican rhetoric against banks?

                    Or,

                    That our President repeats Republican lies as if they were true, while putting a thumb in the eye of tens of millions of voters -- voters who by all rights should be 100% Democratic -- for no sound reason whatsoever; neither economic (it's actually BAD for the economy); nor political advantage; nor for any real service to the nation in its real needs?

                    Remember. You are not an inside player in DC politics. You're just a citizen. Our job is not to defend them; their job is to meet our necessities. DC politics is about doing everything possible to deaden the will of the People, so counting the points on the scorecard... It's like this:

                    ACA. Hooray, better than a stick in the eye. Original complaint about healthcare? Insurance unaffordable; Illness leading to bankruptcy; lousy health care outcomes compared to the rest of the monied world.

                    ACA. Hooray. What happens to the original complaints? Insurance has risen and will continue to rise. More and more people can't afford the deductibles, and seek care when something small grows to crises. People will still go bankrupt from illness. And we didn't even mention the lousiest health care in the world's top 40 nations.

                    But that's what the corrupt DC game is about. Throw them a bone, tell them anything that actually works is unrealistic, and blow smoke up their ass with statistics.

                    Gallup just said 72% of the American people want stimulus to create Jobs. 72% want Federal Job Creation

                    On the other hand, with the safety-net, we've seen 2/3 of the voters, even more in some polls, say "don't touch Social Security; don't touch Medicare."

                    And you know, everybody knows, that Jobs Jobs Jobs is the one way to fix deficit/debt issues.

                    Well, the President created a Jobs and Competitiveness Commission. And then picked a pace-setter in exporting US jobs to head it. Which Commission met four times the first year, none the second, as is now disbanded.

                    Why aren't you worried that our Leadership is a) affirming lies told by Republicans, b) accepting Republican priorities as our own, c) hurting likely Democratic voters, while d) ignoring that the Public demands jobs at all costs, nor focusing that demand, e) while offering the very things the voters want preserved up for sacrifice?

                    Don't you think that will affect elections more than someone called you a name?

                    If "Democratic Leaders Pushing Republican Priorities Over and Over" equals 1000, being called a name and a friendly reference to a claimed Republican position, is about .0001 on any sane scale, as far as threats go.

                     


                    If Republicans said every 3rd person named "Smith" should hang, we'd bargain them to every 7th. Then we'll see apologia written praising this most pragmatic compromise. There's our losing formula.

                    by Jim P on Wed Mar 20, 2013 at 10:39:03 PM PDT

                    [ Parent ]

                    •  Thanks JimP - speaking truth about Grand Bargain (0+ / 0-)

                      a nation of shoppers should love a bargain

                      wow

                      kick the new deal down the curb

                      wow

                      republicans been trying since law passed to do this, but it takes a "democrat" to pull off the deed

                      wow

                      and using the shock doctrine (check it on wiki if you don't know about it) and a shoppers wonder word, Grand Bargain, you can sell anything to our country of shoppers

      •  That's a subjective and incorrect read of... (26+ / 0-)

        ...Yves' sentiments. She's, perhaps, THE biggest (at least one of the strongest, for sure) supporter of the Occupy movement of all economic/financial bloggers.

        And, to be in denial of the reality that there's a large block of corporatocratic/neoliberal Dems in the House (and Senate) is exactly that.

        As someone noted in these pages, over the past day or two: the political party that gets the credit for taking the lead in the struggle to break-up up the TBTFs and fight Wall Street (hopefully, that party's one and the same), will win the next Presidential election.

        Unfortunately, to be unsure that it will be the Democratic Party (and, I'm being quite kind when I say this) that's at the forefront of this effort, is a sad statement to make.

        My "bet" is that, when it gets down to it, it's a propaganda trip, because BOTH parties are owned lock, stock and barrel by Wall Street.

        Actually, there are four business gangs that control the government (and just about everything else) in this country.

        The more we talk about that, without respect to party affiliation, the better, IMHO!

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Wed Mar 20, 2013 at 04:24:38 PM PDT

        [ Parent ]

        •  But only one party passed Dodd-Frank. nt (3+ / 0-)
          Recommended by:
          shrike, kefauver, scott5js
          •  Correction: (3+ / 0-)
            Recommended by:
            terabytes, kefauver, scott5js

            No House Republicans voted for the bill, but Republican votes were needed in the Senate, and look what that led to.

            After Watering Down Financial Reform, Ex-Senator Scott Brown Joins Goldman Sachs’ Lobbying Firm
            http://thinkprogress.org/...

            •  The greater reality is that it's usually much... (10+ / 0-)

              ...more important, when it comes to ANY legislation, in terms of what happens to it after it's "passed." And, then how well-funded the regulatory arms of our government are when it comes to enforcing those laws. When all that's said and done, we need only look at the actions of AG Holder and the DoJ's (former) criminal division chief Breuer to underscore a greater, inconvenient reality. Their negligence inaction occurred with Democratic oversight/rule, too. And, at the end of the day (and reiterating what I state at the beginning of this comment), we can pass all the laws and legislation we wish.  What matters AFTER that is what really matters.

              "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

              by bobswern on Wed Mar 20, 2013 at 05:11:26 PM PDT

              [ Parent ]

              •  How does this help? (2+ / 0-)
                Recommended by:
                kefauver, scott5js

                When you start by saying Democrats and Republicans are equal, how are you helping?  This reminds me of "Kill The Bill".  

                Democrats passed Dodd-Frank, and even it's sponsors were amazed that they got more than they hoped for, given the opposition.  Since then, all I read here is that it's not enough, it's not harsh enough, the banksters weren't jailed.

                This is a pivot for the Republicans, a way to make it look like they give a shit about TBTF, and we're missing the fact that Dodd-Frank puts the bailout problem in the hands of the banks, not the taxpayers.

                Let them be too big to fail, let them make the same stupid mistakes again, and then watch them break up those big banks themselves after it costs THEM billions to clean their own litter box.  

                In the meantime, could we possibly avoid helping the Republicans gut the best regulations since FDR?  Just once, could we stop spreading the gloom and doom and start working on making the initial reforms stronger?  

                 

                I'm not looking for a love that will lift me up and carry me away. A love that will stroll alongside and make a few amusing comments will suffice.

                by I love OCD on Thu Mar 21, 2013 at 06:45:12 AM PDT

                [ Parent ]

          •  And Dodd-Frank has a TBTF liquidation trigger (3+ / 0-)

            when capital falls below a safe level.

            Barney Frank (a real progressive) calls it a bank Death Panel.

            That is the goal, right?  Death to the TBTFs!

            "The way to see by faith is to shut the eye of reason." - Thomas Paine

            by shrike on Wed Mar 20, 2013 at 04:50:47 PM PDT

            [ Parent ]

        •  Given the enormity of the issue, (2+ / 0-)
          Recommended by:
          ozsea1, bobswern

          That subjective and incorrect reading of Yves Smith represents either a piss poor sense of proportion or a phony excuse to avoid the central issue.

          Cutting Social Security will end my support for the Democratic Party.

          by MrJayTee on Wed Mar 20, 2013 at 06:46:55 PM PDT

          [ Parent ]

    •  Nothing about the entire rest of (19+ / 0-)

      the diary? Just the one sentence struck you? Quick, without looking again: from which party come the people proposing these odious measures?

      Do you think the servicing of the Bankster Class is harming the nation and the Party?

      Or is all this fine?


      If Republicans said every 3rd person named "Smith" should hang, we'd bargain them to every 7th. Then we'll see apologia written praising this most pragmatic compromise. There's our losing formula.

      by Jim P on Wed Mar 20, 2013 at 04:03:11 PM PDT

      [ Parent ]

    •  Eric, that's not a diss, it's a call-out. (21+ / 0-)

      Who knows, maybe Warren will read this diary and do something proactive.  I wouldn't put it past her.

      Smith, however, leaves out the most apropos diss of a more prominent Dem in this situation, whose vigorous actions a decade ago are responsible for putting us in this precarious situation: Joe Biden, the prime sponsor and instigator of the '05 bankruptcy reform act that allows these casinos to place their gambling operations with the FDIC ahead of our meager savings deposits.  

      If you want this site to quite blaming Dems for their wrongdoing, you should come right out and say it, btw.  Clinton pushed through the repeal of Glass Stegall and the Commodities Futures Modernization Act for crissake.

      "Well, yeah, the Constitution is worth it if you succeed." - Nancy Pelosi // Question: "succeed" at what?

      by nailbender on Wed Mar 20, 2013 at 04:20:46 PM PDT

      [ Parent ]

    •  "Democrats suck" is the central theme of most (3+ / 0-)
      Recommended by:
      Lying eyes, kefauver, scott5js

      bobswern diaries - that is why he put it in the headline.

      Go over to NC and see the seething hatred of President Obama and tell me that it is not mirrored in these diaries.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Wed Mar 20, 2013 at 04:25:50 PM PDT

      [ Parent ]

      •  If you think the fight for "better Democrats" is (9+ / 0-)

        over and the ones we have now are above criticism, you should spend your time elsewhere.

        The frog jumped/ into the old pond/ plop! (Basho)

        by Wolf10 on Wed Mar 20, 2013 at 04:34:00 PM PDT

        [ Parent ]

      •  Good lord that's not true at all (2+ / 0-)
        Recommended by:
        BradyB, basquebob

        Your ignorance is astounding.

      •  Nah, (2+ / 0-)
        Recommended by:
        snoopydawg, Don midwest

        you miss the point of his diaries. It is not "Democrats suck" but  the water carriers of the oligarchs suck regardless of party affiliation. Too bad that some of those water carriers happen to be Democrats. Being a Democrat does not exempt you from criticism and the path to more and better Democrats goes through calling out the bad Democrats such as Senator Hagan the sponsor of S474. We also happen to be in a Democratic blog and if we want to improve the Democratic party we need to talk about Democrats. Talking about Republicans all the time does little to make us better Democrats. It might be enjoyable but not conducive to self improvement.

        I live in NC and worked for the Obama campaign in 2008 and 2012 and canvased for Hagan in 2008 as part of my work for the Obama campaign and independently of the Obama campaign.

        Your characterization that Bobswern hates Obama just as many do in NC is cringe worthy if not hr worthy. For one, you are basically calling Bobswern a racist since I know for a fact, I deal with them on a daily basis, that a lot of the Obama haters down here in NC are racists, period. Is that the comparison you are making? Also, last time I checked Obama won NC in 2008 and got 48.4% of the vote vs Romney's 50.4%, so your characterization of NC being some huge well of haters is way off the mark. Sure we have plenty of them but not even close to a majority of them unless you asume that everyone that votes Republican is a hater. Sure a lot of them are, but more than not are misguided and vote against their self-interests mainly out of ignorance, but haters? All or a majority of them? A bridge too far.

        "The great enemy of the truth is very often not the lie -- deliberate, contrived and dishonest, but the myth, persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought." -John F. Kennedy

        by basquebob on Wed Mar 20, 2013 at 07:42:10 PM PDT

        [ Parent ]

  •  cash checks at the bank, use their online banking (3+ / 0-)

    keep you extra money in a mattress... fuck the banks...

    "It is horrifying that we have to fight our own government to save the environment." *Ansel Adams* ."Even if you are on the right track, you'll get run over if you just sit there."*Will Rogers*

    by Statusquomustgo on Wed Mar 20, 2013 at 03:39:49 PM PDT

  •  As coincidence would have it, (7+ / 0-)

    I'm reading Econned right now, finally got around to it. Yves is very smart.

    The free market is not the solution, the free market is the problem.

    by Azazello on Wed Mar 20, 2013 at 03:52:42 PM PDT

  •  I haven't yet gone through this... (2+ / 0-)
    Recommended by:
    blueoasis, ozsea1

    ...in detail but looks like very good work, man.

    Boehner Just Wants Wife To Listen, Not Come Up With Alternative Debt-Reduction Ideas

    by dov12348 on Wed Mar 20, 2013 at 03:59:01 PM PDT

  •  Will no one rid us of these troublesome priests (3+ / 0-)
    Recommended by:
    bobswern, blueoasis, Paper Cup

    of finance?

    The frog jumped/ into the old pond/ plop! (Basho)

    by Wolf10 on Wed Mar 20, 2013 at 04:00:45 PM PDT

  •  the rich struck back (22+ / 0-)

    after WW II and until the 1970's, economy was focused on manufacturing and during this time we saw the rise of the middle class

    but the rich struck back

    took many forms

    the rich took government help in the form of taxes, balance of payments, and the rise of the power of finance

    something else was useful was to rig the government statistics to make people think that things were OK.

    wages are now a fraction of what they were in 1974 for the median income

    two families were needed to make ends meet. Even that didn't work so they borrowed against the house and now have lost even that asset

    and the politicians who lied us into wars which now have a price tag of $6 trillion dollars are rattling the sabers for a war with Iran

    the 1% have won and they want even more.

  •  These all are House bills (21+ / 0-)

    It appears that none of them have passed.

    The Senate bill S.474 was proposed by Sen. Kay Hagan (D-NC) and sponsored by Sen. Pat Toomey [R-PA]; Sen. Mark Warner (D-VA); and Sen.  Mike Johanns (R-NE). As of 3/6/13, it has been read twice on the floor of the Senate and referred to the Committee on Banking, Housing, and Urban Affairs.

    The full text of the bill can be [read here     03/06/2013 Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.]

    I expect that Sen. Warren will have a lot to say about it when it comes up for a hearing.


    "Information is power. But like all power there are those who want to keep it for themselves" Aaron Swartz, 1986 - 2013
    TheStarsHollowGazette.com

    by TheMomCat on Wed Mar 20, 2013 at 04:05:49 PM PDT

  •  Also either Yves is stupid or thinks her readers (3+ / 0-)

    are with this remark:

    Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors.
    Lehman had no depositors as they were not a deposit (commercial) bank.

    Had actual depositors existed at Lehman they would have been first in line.

    "The way to see by faith is to shut the eye of reason." - Thomas Paine

    by shrike on Wed Mar 20, 2013 at 04:47:01 PM PDT

    •  Yeah, first in line for 8 cents on the dollar. (11+ / 0-)

      Yves wasn't saying that Lehman had depositors, shrike.  She was emphasizing what depositors of BofA stand to lose as unsecured creditors now that BofA, N.A. holds most of the BofA derivatives.

      •  Ridiculous. Depositors are FDIC insured here. (3+ / 1-)
        Recommended by:
        virginislandsguy, johnny wurster, kefauver
        Hidden by:
        snoopydawg

        She is scare-mongering her feeble readers.

        "The way to see by faith is to shut the eye of reason." - Thomas Paine

        by shrike on Wed Mar 20, 2013 at 05:34:14 PM PDT

        [ Parent ]

        •  Cypriots are supposedly insured, too, (3+ / 0-)

          under the EU constitution.

          Bank of America, N.A. is ranked second in the U.S. in terms of total deposits, shrike.  At the end of 2012, that figure was $1.2 trillion dollars.  Do you honestly think FDIC can cover that?

          •  Last I checked the FDIC had $50 million or so. (3+ / 0-)

            But that is irrelevant.  Bank of America has its capital ratio monitored daily, has passed numerous stress tests, and has a large cash position on reserve at the Fed.

            Yves has been wrong on Bank of America for years.  She talks about their HELOC exposure as fatal since 2009.

            Buffett put $5 billion in BAC and he can read a balance sheet like no other.

            In fact it is sad to mention Buffett here with a rank amateur like Yves Smith.

            "The way to see by faith is to shut the eye of reason." - Thomas Paine

            by shrike on Wed Mar 20, 2013 at 06:02:00 PM PDT

            [ Parent ]

            •  how do you know Buffet hasn't hedged? (2+ / 0-)
              Recommended by:
              lostinamerica, basquebob
              $5 billion in BAC
              do you know for a fact that he did not ?

              The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

              by ozsea1 on Wed Mar 20, 2013 at 07:23:59 PM PDT

              [ Parent ]

            •  You know who else passed the stress tests (3+ / 0-)
              Recommended by:
              Azazello, RageKage, dharmafarmer

              with "flying colors" a year or so ago? The two largest Cypriot banks, the very same two that Schäuble said yesterday are bankrupt. You know why the bank stocks remain so depressed here and elsewhere compared to their pre-2009 valuations? Because no one, in the markets or elsewhere, believes for a second the data that is being shown in public is accurate, except a small cadre of true-believers.

              Perhaps you meant $50 billion which for the $10.34 trillion (as of 2012) in insured deposits in the U.S. is grossly inadequate and many experts think so. The reserves should be $139.6 billion according to FDIC rules and $200.64 billion according to the 2012 target based on $10.34 trillion total insured deposits. In 2010, 157 banks with approximately $92 billion in total assets failed. (source SNL Financial).

              I don't know where you got the $50 million figure from, but as you can see $50 billion, with a b, is not even close to what is needed. By 1995 the S&L losses where estimated to be $97 billion. (U.S. General Accounting Office estimated cost of the crisis to around USD $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government from 1986 to 1996.[1] That figure does not include thrift insurance funds used before 1986 or after 1996. It also does not include state run thrift insurance funds or state bailouts. sources http://en.wikipedia.org/... ) So I don't know how you can draw so much comfort from $50 million or $50 billion, and $50 billion is a thousand times more than $50 million, something that sadly and surprisingly is not so apparent to a majority of the citizenry.

              Keep trusting what they tell you about the capital ratios of BoA or any of the TBTF at your own peril. Particularly on the week after in a Senate hearing became abundantly clear that Jamie Dimon, "the best bank CEO in the world", lied to the markets and the regulators. Some are blind because they choose to be blind.

              "The great enemy of the truth is very often not the lie -- deliberate, contrived and dishonest, but the myth, persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought." -John F. Kennedy

              by basquebob on Wed Mar 20, 2013 at 08:39:29 PM PDT

              [ Parent ]

              •  I last looked at the FDIC balance in 2009 (2+ / 0-)
                Recommended by:
                virginislandsguy, johnny wurster
                The Deposit Insurance Fund (DIF) balance decreased by $18.6 billion (180%) to negative $8.2 billion during the third quarter, the FDIC said in its Third Quarter 2009 CFO Report to the Board. The decrease was primarily due to a $21.7 billion increase in the provision for insurance losses, which was partially offset by a $3 billion increase in assessment revenue.
                When it was close to negative.

                http://www.journalofaccountancy.com/...

                Since then the big banks have beefed up their capital by trillions.

                I won't bother with a link for that...

                I am always right.

                "The way to see by faith is to shut the eye of reason." - Thomas Paine

                by shrike on Wed Mar 20, 2013 at 09:00:04 PM PDT

                [ Parent ]

                •  Have you ever read this quote? (1+ / 0-)
                  Recommended by:
                  RageKage
                  "The way to see by faith is to shut the eye of reason." - Thomas Paine
                  So the $50 million figure was based on faith, thin air, or I guess in 2009 going from $10.4 billion to -$8.2 billion you have to pass by $50 million. I see the rigor of your arguments.

                  Faith by definition is infalible, but that is best left to other realms.

                  "The great enemy of the truth is very often not the lie -- deliberate, contrived and dishonest, but the myth, persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought." -John F. Kennedy

                  by basquebob on Wed Mar 20, 2013 at 09:17:28 PM PDT

                  [ Parent ]

        •  You're deflecting (3+ / 0-)
          Recommended by:
          Paper Cup, basquebob, snoopydawg

          by picking up something, anything, to discredit the diarist and Smith's article from which he quotes.

          Bob has addressed this attempt to hijack and deflect by others.

          Clearly, you're unhappy with the content and tone of the diary, assuming you read the entire thing.

          Perhaps you'd be happier elsewhere.

          The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

          by ozsea1 on Wed Mar 20, 2013 at 07:22:02 PM PDT

          [ Parent ]

        •  No, she's informing us that the FDIC would be... (6+ / 0-)

          responsible for the other $.92, and indicating that, given the size of its reserves, taxpayers would have to pick up much of that tab.

          "The Democratic Party is not our friend: it is the only party we can negotiate with."

          by 2020adam on Wed Mar 20, 2013 at 08:30:02 PM PDT

          [ Parent ]

        •  Enough with attacks (1+ / 0-)
          Recommended by:
          Don midwest

          And calling those of us that read her feeble.
          Keep defending Obama and the Dems no matter what damage they do to this country and you enable them and do not hold their actions accountable, then they will keep doing it.

          Gitmo is a Concentration Camp. Not a Detention Center. Torture happens at Concentration Camps. Torture happens at Gitmo. How much further will US values fall? Where is YOUR outrage at what the United States does in OUR names?

          by snoopydawg on Thu Mar 21, 2013 at 12:04:13 AM PDT

          [ Parent ]

      •  they're up to around 30 cents for the bondholders. (0+ / 0-)

        and the bankruptcy estate is still winding down, so they could get more.  

        Smith gets a lot of facts wrong.  if you're interested in knowing true facts, you should trust but verify with her.

  •  Derivatives are regulated? (5+ / 0-)

    Who knew? Has the SEC heard about this?
    Dodd-Frank: that was like trying to reregulate Genghis Khan after he’s burned down your country… We’re talking Genghis CON in the Gazillions!
    Naked Capitalism? The nude bomb went off a long time ago…
    why-derivatives-are-still-not-regulated
    http://www.businessweek.com/...

    Love Me, I'm a Liberal!

    by simplesiemon on Wed Mar 20, 2013 at 05:23:00 PM PDT

  •  I seem to remember JP Morgan bailing out the Fed (0+ / 0-)

    in a move that helped end the depression.  

    WTH is going on now?  Are those bankers THAT bad at their jobs?  

    "In Capitalist West, man takes advantage of his fellow man.  In Soviet Russia, is other way around !"

    Stop the World, I want to get off.  

    "We must close union offices, confiscate their money and put their leaders in prison. We must reduce workers salaries and take away their right to strike.” -Adolf Hitler, May 2, 1933

    by bekosiluvu on Wed Mar 20, 2013 at 06:21:49 PM PDT

    •  No. Old Man Morgan saved the system in 1907 (3+ / 0-)

      pre-Fed.

      The panic might have deepened if not for the intervention of financier J. P. Morgan,[3] who pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system. At the time, the United States did not have a central bank to inject liquidity back into the market.
      Wiki - Panic of 1907.

      Morgan died in 1913 just before the Fed was created by progressives.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Wed Mar 20, 2013 at 06:31:34 PM PDT

      [ Parent ]

      •  Dayum! how many 1%ers would it take (1+ / 0-)
        Recommended by:
        shrike

        stepping in now to pull off the same move?  

        and...would it be a good thing?

        "We must close union offices, confiscate their money and put their leaders in prison. We must reduce workers salaries and take away their right to strike.” -Adolf Hitler, May 2, 1933

        by bekosiluvu on Wed Mar 20, 2013 at 06:58:56 PM PDT

        [ Parent ]

        •  Actually that is a GREAT question! (3+ / 0-)

          It would take hundreds because Morgan was a giant back then that could not exist now.

          IOW, Morgan owned Morgan in 1907 - today JPM is still the biggest but is owned by millions of shareholders.

          "The way to see by faith is to shut the eye of reason." - Thomas Paine

          by shrike on Wed Mar 20, 2013 at 07:04:44 PM PDT

          [ Parent ]

          •  Besides (0+ / 0-)

            Market crashes preferentially hurt the rich and decrease inequality, because the rich tend to have more to lose in terms of income and assets.

            If you're poor, you're poor before the crash and after it too.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Thu Mar 21, 2013 at 05:29:21 AM PDT

            [ Parent ]

      •  wait-whut? (0+ / 0-)
        Fed was created by progressives.
        Not really......

        The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

        by ozsea1 on Wed Mar 20, 2013 at 07:27:53 PM PDT

        [ Parent ]

        •  Of course it was. President Wilson was the (4+ / 0-)

          first Democratic progressive.

          I am not watching your CT video.  The Fed originated in the Greenback Party - farmers who wanted an elastic banking system to protect their deposits.

          I know my history.

          "The way to see by faith is to shut the eye of reason." - Thomas Paine

          by shrike on Wed Mar 20, 2013 at 07:36:44 PM PDT

          [ Parent ]

          •  so do I (1+ / 0-)
            Recommended by:
            lostinamerica

            Better still, I understand the lessons of history.

            Andrew Jackson. Jefferson. Mayer Amschel Rothschild. Bank of England.

            You can't tell me that private banking cartels controlling a nation's money supply is progressive, no matter what you think you know about banking history.

            The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

            by ozsea1 on Wed Mar 20, 2013 at 07:52:05 PM PDT

            [ Parent ]

            •  Seriously, you don't know shit. (3+ / 0-)
              Recommended by:
              kovie, johnny wurster, kefauver

              There was a free banking era in the US - 1837-1862 when private bankers did control the money supply.

              http://en.wikipedia.org/...

              During the free banking era, the banks were short-lived compared to today's commercial banks, with an average lifespan of five years. About half of the banks failed, and about a third of which went out of business because they could not redeem their notes.[2] (See also "Wildcat banking".)

              During the free banking era, some local banks took over the functions of a central bank. In New York, the New York Safety Fund provided deposit insurance for member banks. In Boston, the Suffolk Bank guaranteed that bank notes would trade at near par value, and acted as a private bank note clearinghouse.

              Since progressives stepped in the banking system has been under federal control.

              "The way to see by faith is to shut the eye of reason." - Thomas Paine

              by shrike on Wed Mar 20, 2013 at 08:03:34 PM PDT

              [ Parent ]

              •  yeah, there were "panics" every ten years or so (0+ / 0-)

                this "free banking" system that you speak of was unregulated in the extreme.

                And so the solution?

                Privatize the money supply? So the private banking cartels can skim off the top of the nation's money?

                Pregressive? Really?

                You're the one that doesn't understand shit.

                The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

                by ozsea1 on Thu Mar 21, 2013 at 08:17:51 AM PDT

                [ Parent ]

            •  Jefferson and Jackson were wrong, deeply so (0+ / 0-)

              both drastically cut federal spending to balance the budget and tried to kill the Bank of the US (Jackson succeeded, Jefferson failed), and in so doing caused huge recessions and monetary problems.

              "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

              by kovie on Wed Mar 20, 2013 at 10:09:33 PM PDT

              [ Parent ]

              •  hmmm (0+ / 0-)

                I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
                Thomas Jefferson, (Attributed)

                The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

                by ozsea1 on Thu Mar 21, 2013 at 08:18:26 AM PDT

                [ Parent ]

                •  And we have a modern world without banks how? (0+ / 0-)

                  Everything can be bad if poorly done and unregulated. We need banks like we need air to have a modern world. They fuel the economy. We'd be back to the early middle ages without finance. And Jefferson had no credibility to talk about money, having been terrible at personal AND national finance and been in debt most of his life for reasons entirely of his own making.

                  We need banks. We need to regulate banks. End of discussion.

                  "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                  by kovie on Thu Mar 21, 2013 at 08:54:23 AM PDT

                  [ Parent ]

                  •  Public and regulated banking, fine (1+ / 0-)
                    Recommended by:
                    kovie

                    Privatized control of our national money  - the commons - where "overhead" is charged as the cost of doing "business", is not.

                    Please note that I never advocated doing away with the banking system. As you note, we wouldn't have a "modern world" without it.

                    Please see "The History of Money"  - the wiki article isn't too bad.....

                    http://en.wikipedia.org/..._(book)

                    On that, I hope that we can agree.

                    The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

                    by ozsea1 on Thu Mar 21, 2013 at 10:21:06 AM PDT

                    [ Parent ]

                    •  On this we agree (0+ / 0-)

                      Public and regulated banking. Which, in theory, we have. In practice, we do not, as the banks control the government and the fed, indirectly but just as effectively. I have no problem with private banking too. In fact we absolutely need it. But it too has to be heavily regulated.

                      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                      by kovie on Thu Mar 21, 2013 at 11:17:11 AM PDT

                      [ Parent ]

          •  More generally, it originated (0+ / 0-)

            in the minds of Robert Morris and Alexander Hamilton, who saw the need for a federally-overseen national banking system to provide a stable and reliable money supply. But point taken, since the fed added many new features.

            "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

            by kovie on Wed Mar 20, 2013 at 10:08:01 PM PDT

            [ Parent ]

  •  Abandon hope, all ye (3+ / 0-)
    Recommended by:
    Paper Cup, bobswern, basquebob

    who expect to gather enough honest politicians to effect actual progressive change.  The system is hopelessly corrupt.

    Private health insurance: a protection racket without the protection.

    by rustypatina on Wed Mar 20, 2013 at 06:40:49 PM PDT

  •  Always good to see our servants are learning from (3+ / 0-)
    Recommended by:
    bobswern, basquebob, Don midwest

    their past mistakes.

    Learning to serve themselves even better, more like it.

    "To recognize error, to cut losses, to alter course, is the most repugnant option in government." Historian Barbara Tuchman

    by Publius2008 on Wed Mar 20, 2013 at 06:59:35 PM PDT

  •  We really don't want to know how bad (5+ / 0-)

    the problems in the banking industry are.

    The diary quotes liability numbers that dwarf our GDP - maybe the world's GDP.

    The numbers are so astronomical - they are beyond calculation - everybody in power knows this, and have absolutely no idea what to do to fix it.

    It's not a Dem or GOP thing, both are complicit over time - we are far past blame now.

    In a capitalist democracy - every dollar is a "vote" ... spend wisely ...

    by RUNDOWN on Wed Mar 20, 2013 at 09:59:49 PM PDT

  •  It seems to me that the only way to unravel (3+ / 0-)
    Recommended by:
    Azazello, Don midwest, bobswern

    these entities is to have a small army of top accountants, lawyers, economists, finance experts and programmers get together and come up with a workable plan. This sounds extremely computing-intensive given the multiple and multi-layed relationship and deals involved. But it can be unraveled, I'm convinced. What's lacking is the political will, not the technical ability.

    If they can map the human genome and eventually the brain and reverse-engineer incredibly complex particle physics experiments, they can do this.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Wed Mar 20, 2013 at 10:02:46 PM PDT

    •  And there will likely be a Nobel Prize in it (2+ / 0-)
      Recommended by:
      Don midwest, bobswern

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Wed Mar 20, 2013 at 10:03:14 PM PDT

      [ Parent ]

      •  is there the will to solve these problems? (0+ / 0-)

        or after years of smoke screens, and claiming complexity greater than anything the universe has ever known, and by the way, the too big to fail banks, who is willing to tackle these problems?

        or some crap like that is thrown about

        if it is impossible to solve them, then no one is responsible and not worth the effort to try

        the canadian environmentalist, David Suzuki, points out that the biosphere is something we really don't understand. And as totally obvious, all life depends on air, water, sun, soil, etc.

        but man has created economics, governments, etc. What man has created, man can deal with. But we don't because we create mountains of confusion, or we operate from a faulty paradigm.

        but the take over of the oligarch, the 1%, is an old game

        and if we do actually look backward, we can see similar things in history and what was done then to bring the kings under the rule of law

        is there the will to solve these problems?

        wait, I need to go shopping ........

  •  Combating US Capitalism's Moral Blinders (0+ / 0-)

    Combating US Capitalism's Moral Blinders

    title of article. First two paragraphs:

    Is US capitalism now mired in a moral cesspool? Consider the following:
    Richard Eskow, senior fellow at the Campaign for America’s Future, comments: “Jamie [Dimon] did know that the London Whale scheme had cost his bank billions, even as he told investors on a phone call that it was just a 'tempest in a teapot.' If that’s not prima facie evidence of criminal stock fraud, conducted by The Man himself, it’s hard to know what is.”
    known for years that the capitalists are driving the world into the ground

    takes governments to help them out along with the 2 political factions

    http://www.commondreams.org/...

  •  I'm sticking with "both" (1+ / 0-)
    Recommended by:
    bobswern
    This move reflects either criminal incompetence or abject corruption by the Fed.

    For Christ's sake, let's help more of our frightened people get through this thing, whatever it is - Kurt Vonnegut on our "faithless custodians of capital"

    by Anthony Page aka SecondComing on Thu Mar 21, 2013 at 08:15:00 AM PDT

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