Saturday, March 19, 2011

Who's Afraid of Reforming Wall Street? The Journal!

You will not find an article like this in the Albuquerque Journal. From this week's TIME:

By Joe Klein Thursday, Mar. 03, 2011

"Three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail," said Charles Ferguson, accepting a well-deserved Oscar for Inside Job, his documentary about the great Wall Street heist. "And that's wrong." Of course it is — but that shouldn't be a surprise. To put bad guys in jail, you need police and prosecutors. The financial police we have, agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have been laughably inept in the era of financial deregulation. The SEC wasn't even able to spot the broad-daylight highway robbery committed by Bernard Madoff. And so, in 2010, the Obama Administration nudged through Congress the Dodd-Frank financial-reform bill, which was designed to put real cops, with real regulatory heft, on the financial beat. And now, in 2011, the Republican House seems intent on quietly gutting the bill under the sordid camouflage of budget cutting. "They're defunding the police after we had the biggest bout of looting in history," an Administration official told me. "That's just crazy."

Let's review the outrage: the heart of the financial collapse was a fraudulent effort to sell home mortgages to people who couldn't afford them. Some of these mortgages were truly mind-boggling — no money down (but a hefty interest rate hidden in the thicket of contractual codicils), no documentation (like proof of job and salary). The mortgages were then thrown together into giant, opaque bond packages and sold again as solid investments. (The ratings agencies, Moody's and Standard & Poor's, were essentially unindicted co-conspirators in the scam.) And those packages were then sliced up, resold and transformed into exotic derivatives, which were bet on by bond traders and investors. (See "The Demise of Bernie Madoff.")

Confused? Well, that was the point. According to Michael Lewis, whose book The Big Short is a riveting encyclopedia of the disaster, even the SEC was confused by the actual contents of the most far-fetched packages, called collateralized debt obligations (CDOs). Wall Street spewed terms like collateralized debt obligation in order to mislead: a more accurate abbreviation might have been RCLs —repackaged crappy loans. When the crappy loans couldn't be repaid, the housing market, Wall Street and the American economy imploded. The Wall Street traders pocketed hundreds of millions in profits; the American taxpayer, and homeowner, picked up the losses.

Read more here.

Remember, the Albuquerque Journal enjoys a near monopoly in this state. It should be held to a high standard, so if you have your own Untold Stories, send them to me. If you think this type of e-mail is a good idea, forward it to others, so they can request to be added the Untold Stories list.

Yours in media education,

Bob McCannon


Anonymous said...

I am in fact glad to glance at this web site posts which consists of lots of helpful facts, thanks for providing these kinds of statistics.

Feel free to surf to my blog post:

Anonymous said...

I'm not sure why but this blog is loading very slow for me. Is anyone else having this problem or is it a problem on my end? I'll
check back later on and see if the problem still exists.

Also visit my website - trabajo orquestas

Anonymous said...

If you desire to take much from this paragraph then you
have to apply these strategies to your won blog.

Feel free to visit my blog; Elevate GF

Anonymous said...

This excellent website really has all the info I needed concerning this subject and didn't know who to ask.

My web page - trabajo orquestas