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=TOO BIG TO FAIL:=What exactly does it mean for a big Wall Street bank to plead guilty to a serious crime? Right now, practically nothing.But it will if California’s Santa Cruz County has any say. First, some background.Five giant banks – including Wall Street behemoths JPMorgan Chase and Citicorp – recently pleaded guilty to criminal felony charges that they rigged the world’s foreign-currency market for their own profit.This wasn’t a small heist. We’re talking hundreds of billions of dollars worth of transactions every day.The banks altered currency prices long enough for the banks to make winning bets before the prices snapped back to what they should have been. Attorney General Loretta Lynch <a href="http://www.usatoday.com/story/money/2015/05/20/billions-in-bank-fx-settlements/27638443/" style="text-decoration: none;">called it</a> a “brazen display of collusion” that harmed “countless consumers, investors and institutions around the globe — from pension funds to major corporations, and including the banks’ own customers.”The penalty? The banks have agreed to pay $5.5 billion. That may sound like a big chunk of change, but for a giant bank it’s the cost of doing business. In fact, the banks are likely to deduct the fines from their taxes as business costs.The banks sound contrite. After all, they can’t have the public believe they’re outright crooks.It’s “an embarrassment to our firm, and stands in stark contrast to Citi’s values,“ says Citigroup CEO Michael Corbat.Values? Citigroup’s main value is to make as much money as possible. Corbat himself raked in $13 million last year.JPMorgan CEO Jamie Dimon calls it "a great disappointment to us,” and says “we demand and expect better of our people.”Expect better? If recent history is any guide – think of the bank’s notorious “London Whale” a few years ago, and, before that, the wild bets leading to the 2008 bailout – JPMorgan expects exactly this kind of behavior from its people.Which helped Dimon rake in $20 million last year, as well as a $7.4 million cash bonus.When real people plead guilty to felonies, they go to jail. But big banks aren’t people despite what the five Republican appointees to the Supreme Court say.The executives who run these banks aren’t going to jail, either. Apologists say it’s not fair to jail bank executives because they don’t know what their rogue traders are up to.Yet ex-convicts often suffer consequences beyond jail terms. In many states they lose their right to vote. They can’t run for office or otherwise participate in the political process.So why not take away the right of these convicted banks to participate in the political process, at least for some years? That would stop JPMorgan’s Dimon from lobbying Congress to roll back the Dodd-Frank act, as he’s been doing almost non-stop. Why not also take away their right to pour money into politics? Wall Street banks have been among the biggest contributors to political campaigns. If they’re convicted of a felony, they should be barred from making any political contributions for at least ten years.Real ex-convicts also have difficulty finding jobs. That’s because, rightly or wrongly, many people don’t want to hire them. A strong case can be made that employers shouldn’t pay attention to criminal convictions of real people who need a fresh start, especially a job.But giant banks that have committed felonies are something different. Why shouldn’t depositors and investors consider their past convictions?Which brings us to Santa Cruz County.The county’s board of supervisors just voted not to do business for five years with any of the five banks felons.The county won’t use the banks’ investment services or buy their commercial paper, and will pull its money out of the banks to the extent it can.“We have a sacred obligation to protect the public’s tax dollars and these banks can’t be trusted. Santa Cruz County should not be involved with those who rigged the world’s biggest financial markets,” <a href="http://sccounty01.co.santa-cruz.ca.us/BDS/Govstream2/Bdsvdata/non_legacy_2.0/agendas/2015/20150609-659/PDF/029-1.pdf" style="text-decoration: none;">says</a> supervisor Ryan Coonerty.The banks will hardly notice. Santa Cruz County’s portfolio is valued at about $650 million.But what if every county, city, and state in America followed Santa Cruz County’s example, and held the big banks accountable for their felonies?What if all of us taxpayers said, in effect, we’re not going to hire these convicted felons to handle our public finances? We don’t trust them.That would hit these banks directly. They’d lose our business. Which might even cause them to clean up their acts.There’s hope. Supervisor Coonerty says he’ll be contacting other local jurisdictions across the country, urging them to do what Santa Cruz County is doing.http://www.alternet.org/economy/california-county-thats-leading-way-cutting-banks-out-its-economy<h2 style="font-weight: normal; margin: 0px 0px 0.6em; overflow: hidden; padding-top: 0.5em; padding-bottom: 0.17em; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(170, 170, 170); line-height: 19.2000007629395px; background: none rgb(255, 255, 255);">Financial crisis and the bailout</h2><h3 style="margin: 0px 0px 0.3em; overflow: hidden; padding-top: 0.5em; padding-bottom: 0.17em; border-bottom-style: none; line-height: 19.2000007629395px; background: none rgb(255, 255, 255);">Role in the crisis</h3>In 1975, the SEC’s trading and markets division ruled that investment banks must maintain a debt-to-net capital ratio of less than 12 to 1. In 2004, following extensive lobbying by the investment banks, the SEC under chairman Christopher Cox authorized five investment banks to develop their own net capital requirements. This enabled investment banks to push borrowing ratios to as high as 40 to 1.<a href="http://www.sourcewatch.org/index.php/Merrill_Lynch#cite_note-4" style="text-decoration: none; white-space: nowrap; background: none;">[4]</a> These five investment banks were Goldman Sachs, <a href="http://www.sourcewatch.org/index.php/Morgan_Stanley" title="Morgan Stanley" style="text-decoration: none; background: none;">Morgan Stanley</a>, <a href="http://www.sourcewatch.org/index.php/Lehman_Brothers" title="Lehman Brothers" style="text-decoration: none; background: none;">Lehman Brothers</a>, <a href="http://www.sourcewatch.org/index.php/Bear_Stearns" title="Bear Stearns" class="mw-redirect" style="text-decoration: none; background: none;">Bear Stearns</a>, and Merrill Lynch. This very high debt-to-reserves helped lead to the financial crisis of 2008 by weakening the ability of these institutions to recover from losses incurred when the risky CDO and CDS bets failed.<a href="http://www.sourcewatch.org/index.php/Merrill_Lynch#cite_note-5" style="text-decoration: none; white-space: nowrap; background: none;">[5]</a><a href="http://www.sourcewatch.org/index.php/Merrill_Lynch#cite_note-6" style="text-decoration: none; white-space: nowrap; background: none;">[6]</a>Lee A. Pickard, who had been Director of the SEC’s Division of Market Regulation when the 1975 12-1 rule was ordered, said of the change, "The SEC modification in 2004 is the primary reason for all of the losses that have occurred."<a href="http://www.sourcewatch.org/index.php/Merrill_Lynch#cite_note-7" style="text-decoration: none; white-space: nowrap; background: none;">[7]</a>salon...Although Federal Reserve officials have said all of that money was repaid, critics of the Fed have said the Fed’s loans were detrimental to the U.S. economy because they encouraged mega-banks to grow even larger and more reckless. Reich has warned that because those banks have grown even bigger than they were half a decade ago, future bailouts could be even more costly. According to Reich: “The danger of an even bigger cost in coming years continues to grow….In fact, now that they know for sure they’ll be bailed out, Wall Street banks—and those who lend to them or invest in them—have every incentive to take even bigger risks.”Below are six too-big-to-fail banks that should have been reined in back in 2008, yet continue to pose a major threat to the U.S. economy.1. Bank of AmericaOriginally Bank of Italy, BofA has been around since 1904. And a company that had about 100 branches in 1926 now has more than 5,300. BofA played Russian roulette with the economy prior to the 2008 crash, robo-signing countless mortgages on expensive homes for low-income people it knew wouldn’t be able to handle them. After the U.S. economy went into cardiac arrest in September 2008, BofA received <a href="http://online.wsj.com/news/articles/SB125979263687773579" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">$45 billion in bailout money</a>. But instead of being reined in, the company was allowed to continue growing.BofA presently controls a whopping 17% of all home mortgages in the U.S. (almost one in five) and at least 12% of U.S. bank deposits. BofA’s total assets, according to the Comptroller of the Currency (OCC) in Washington, DC, now total $1.4 trillion. The mega-bank’s exposure to derivatives now exceeds $50 trillion (in finance, a derivative is a type of financial contract whose value is derived from an underlying financial instrument). In a scathing article he wrote for Rolling Stone in 2012, journalist Matt Taibbi asserted that with BofA, “the FDIC, and by extension you and me, is now on the hook for as much as <a href="http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">$55 trillion in potential losses</a>.”2. Goldman SachsIn April 2012, Bloomberg Businessweek’s website posted a chart showing how much the U.S.’ five largest banks—JP Morgan Chase, Bank of America, Wells Fargo, Goldman Sachs and Citigroup—had grown in terms of the country’s GDP (gross domestic product). In 2006, the five of them together, according to Businessweek, comprised 43% of the country’s GDP; in 2011 they comprised <a href="http://www.businessweek.com/articles/2012-04-19/big-banks-now-even-too-bigger-to-fail" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">56% of American GDP</a>. Goldman Sachs, the smallest of that “big five,” is a veteran of the financial world and was founded in 1869 by financier Marcus Goldman and his son-in-law Samuel Sachs. But Goldman Sachs is not only much larger than it was during the 19th century, it is much larger than it was in 2008, when it received $10 billion in bailout money.For all of 2007, Goldman Sachs reported net revenues of $46 billion. But Goldman Sachs’ commercial bank unit now oversees about $113 billion (according to the OCC), while its exposure to derivatives (which tycoon Warren Buffet famously describes as “financial weapons of mass destruction”) now exceeds <a href="http://www.businessweek.com/articles/2012-04-19/big-banks-now-even-too-bigger-to-fail" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">$44 trillion</a>(according to Business Insider). Taibbi has accurately characterized Goldman Sachs as “a company that in a pure, free capitalist system would definitely have been bust in 2008 had it not leeched parasitically off the taxpayer.”3. JPMorgan ChaseJPMorgan Chase is a name that didn’t exist prior to 2000, when J.P. Morgan & Co. (founded in 1871) merged with Chase Manhattan Bank (which had been formed in 1955, when Chase National Bank merged with the Manhattan Company, an institution that started in 1799). In 2011, JPMorgan Chase surpassed BofA as the U.S.’ largest financial institution. JPMorgan Chase has been a major recipient of corporate welfare: the company received $25 billion in bailout money in October 2008, and in 2012, Bloomberg News estimated that JPMorgan Chase had been receiving government subsidies worth about $14 billion a year (a figure partially based on research by the International Monetary Fund). JPMorgan Chase now has $2.4 trillion in assets (according to its own website), which is 12% of the size of England’s economy. If a behemoth of that size runs into problems, the results could be disastrous not only for the U.S., but around the world.JPMorgan Chase was inundated with bad publicity last year. In October 2013, the mega-bank was the subject of a probe by the Commodity Futures Trading Commission (CFTC) and agreed to pay a <a href="http://www.bloomberg.com/news/2013-10-16/jpmorgan-to-pay-100-million-to-settle-cftc-claims-chilton-says.html" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">$100 million fine</a> for recklessly distorting prices during a series of London trades. Less than a month earlier, the Securities and Exchange Commission accused JPMorgan traders of fraudulently overvaluing investments and concealing hundreds of millions of dollars in trading losses; JPMorgan Chase agreed to pay a $200 million fine. Between probes by the SEC, the Federal Reserve, the U.K. Financial Conduct Authority and the Office of the Comptroller of the Currency, JPMorgan Chase faced $920 million in penalties in September 2013. But despite all those fines, JPMorgan Chase’s board recently voted to give CEO Jamie Dimon a <a href="http://www.nytimes.com/2014/02/01/business/accounting-for-jamie-dimons-big-pay-raise.html?r=0" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">74% pay raise</a>.4. Wells FargoWhen CoreStates Bank (previously Philadelphia National Bank) merged with First Union Bank in 1998, many CoreStates customers in and around Philadelphia (where CoreStates had its headquarters) were apprehensive about becoming part of the much larger mega-bank that resulted from the merger. It was the largest merger in commercial banking that had taken place in the U.S. up to that point, but ironically, many of those CoreStates customers—assuming they didn’t take their money elsewhere—eventually became part of a much larger mega-bank than the one created in 1998. First Union merged with Wachovia Bank in 2001, and when Wachovia suffered major problems in 2008, Wells Fargo acquired it.Wells Fargo was already gigantic during the 2008 crash, when it should have been broken up into at least 20 or 25 smaller banks as Michael Moore and others have recommended. But instead, Wells Fargo received $25 billion in bailout money and kept growing. Wachovia was a huge acquisition for Wells Fargo, and other acquisitions followed (including Merlin Securities and the Rock Creek Group in 2012). The Los Angeles Times has reported that Wells Fargo went from having $609 billion in assets before 2008 to <a href="http://articles.latimes.com/2013/sep/17/business/la-fi-too-big-to-fail-20130917" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">$1.4 trillion in assets</a> in late 2013 (its exposure to derivatives, according to Business Insider, is over $3 trillion). If Wells Fargo received $25 billion in bailout money not long before its acquisition of Wachovia, one can only imagine how much more expensive a bailout for Wells Fargo would be now.5. CitigroupOne of the cardinal rules of free enterprise is that capitalism works best when there is a great deal of competition, but the banking field has become increasingly anti-competition. In 2011, BofA announced it would begin charging a new $5-per-month fee for using debit cards, and the outcry was so vehement the bank ended up backing down from that idea. BofA apologists argued that if consumers didn’t like the fee, they could simply bank elsewhere. But as Lynn Stuart Parramore <a href="http://www.alternet.org/story/152695/banking_has_become_an_oligopoly_instead_of_a_competitive_business--_and_that%27s_really_bad_news_for_us_99" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">pointed out</a> in 2011, the problem with that argument is that consumers have fewer and fewer options when it comes to banking. The more mega-banks are allowed to swallow up everything in sight and minimize the competition, the fewer options there are for consumers—and the more mega-banks can get away with abusing their customers. Parramore noted that in the 1930s, an important element of the New Deal was protecting smaller banks and making sure they could remain competitive, but that hasn’t happened in the current economic crisis.In the banking field, there has been a lot less competition and a lot more consolidation since the crash of 2008. More than 1,400 banks have disappeared in the last five years: roughly 485 of them failed, while others merged with other banks. As the number of small banks has plummeted, Citigroup has continued its expansion. The name Citigroup came about in 1998, when Citicorp merged with Travelers Group. Citigroup, like other mega-banks, ran into trouble in 2008 thanks, in part, to its heavy exposure to subprime mortgages. Citigroup ended up receiving <a href="http://www.bloomberg.com/news/2011-01-13/citigroup-45-billion-rescue-based-on-fear-of-the-unknown-barofsky-says.html" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">$45 billion in bailout money</a>. Initially, Citigroup “only” received $25 billion, but the company was in such bad shape that two months later another $20 billion was added. Instead of being reduced in size, however, Citigroup’s too-big-to-fail status grew. Citigroup’s total assets now exceed $1.3 trillion, and its exposure to derivatives is roughly $58 trillion.6. Morgan StanleyIn 1999, many American politicians, both Republicans and Democrats, forgot the lessons of the Great Depression when they supported the disastrous repeal of the Glass-Steagall Act of 1933, which mandated the separation of commercial and investment banking and was designed to prevent a repeat of the crash of 1929. Glass-Steagall served the U.S. well for many years: although there some tough recessions along the way (including the early 1980s and early 1990s), none were as catastrophic or cut as deep as the meltdown of September 2008.A Wall Street giant that came about as a direct result of Glass-Steagall was Morgan Stanley, which was founded by Henry S. Morgan (J.P. Morgan’s grandson), Harold Stanley and others in 1935 during President Franklin Delano Roosevelt’s first term. Thanks to Glass-Steagall, J.P. Morgan & Co. could no longer be involved in both commercial and investment banking—it had to pick one or the another—and when J.P. Morgan & Co. chose commercial banking, a new and separate company called Morgan Stanley was created for investment banking. But with the repeal of Glass-Steagall 64 years later, Morgan Stanley was no longer bound by the rules that had caused it to come into existence in the first place. Along with other Wall Street giants, Morgan Stanley was bailed out in 2008 (when it received $10 billion in TARP money). The too-big-to-fail status of Morgan Stanley (which acquired Smith Barney in 2009) has continued, and its net assets climbed to $832 billion in 2013. Morgan Stanley’s exposure to derivatives is around $1.7 trillion.In 2011, the Federal Reserve Bank of Dallas released its annual report, titled <a href="http://www.dallasfed.org/assets/documents/fed/annual/2011/ar11.pdf" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none; background: transparent;">“Choosing the Road to Prosperity: Why We Must End Too Big to Fail Now.”</a> Richard W. Fisher, president of the Dallas Fed, called for a drastic downsizing of the megabanks and argued that not doing so would eventually result in more taxpayer-funded bailouts.Fisher isn’t alone in that assertion. But reforming the U.S.’ dysfunctional banking system will take a lot of work. The Glass-Steagall Act needs to be reinstated and vigorously enforced with a strict separation of commercial and investment banking. Mega-banks in their present size should cease to exist, resulting in an abundance of smaller, more manageable regional and local banks—and the number of bank mergers needs to be seriously limited. But given the enormous power banking lobbyists exert on Capitol Hill, accomplishing those things will be difficult. As long as the mega-banks are allowed to continue growing, the U.S. economy will continue to be imperiled.great charts<a href="http://www.motherjones.com/mojo/2014/05/imf-christine-lagarde-income-inequality">http://www.motherjones.com/mojo/2014/05/imf-christine-lagarde-income-inequality</a><img src="http://www.motherjones.com/files/Screen%20Shot%202014-05-28%20at%2010.47.47%20AM.png" />

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<div class="byline news-politics"><a href="http://alternet.org/">AlterNet</a> [1] / By <a href="http://www.alternet.org/authors/jim-hightower">Jim Hightower</a> [2]</div>

<h1 property="dc:title" datatype="" class="node-title">The Rot of Wall Street Stinks All the Way to the Bank</h1>

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<div class="story-date">April 9, 2014  |  </div>

Not too many years ago, any news story about bonus money would've been about some 20-year-old baseball player — an up-and-coming superstar getting $100,000 or so on top of his salary as an extra incentive to join the Yankees, Giants, Red Sox or whatever team. Sportswriters dubbed them: "Bonus Babies."

How quaint. These days, stories about bonus money don't elicit cheers, for they feature some of society's least admirable people: Wall Street bankers. Far from superstars, they can be subpar performers or even what amounts to crime syndicate bosses overseeing everything from simple fraud to laundering money for drug cartels. Yet, in the first part of each year, we witness this cluster of greedmeisters quaffing champagne, laughing uproariously and shouting, "It's bonus time, baby!"

This year, even though the Wall Street bosses have presided over a 30 percent drop in their banks' profits, they've extracted a 15 percent raise in overall bonus money, totaling a ridiculous $27 billion. That averages out to $165,000 in extra pay to each Wall Street banker. But averages deceive, for thousands of lower-level bankers are given a dab, while those up in the executive suites make off with the bulk of the bonus heist.

Michael Corbat, CEO of Citigroup, for example, didn't just grab a 15 percent increase in bonus pay, but nearly three times that. His total haul was $16 million. Then there's Jamie Dimon, boss of JPMorgan Chase. He had a really terrible year in 2013, forcing his shareholders to shell out some $22 billion in penalties for tallying up a long list of illegalities. But that didn't stop Jamie from taking a 74 percent hike in bonus money this year — he pulled in a cool $18.5 million.

In a time when the 90 percent majority of Americans see their income falling, you'd think Wall Street might show a bit of modesty.

But, instead, they choose to show us just how much Wall Street crime really does pay.

Let's review the rap sheet of Wall Street banks: Defrauding investors, cheating homeowners, forgery, rigging markets, tax evasion, credit card ripoffs ... and so sickeningly much more.

At last, though, some of the cops on the bank beat seem to be having regulatory epiphanies. The New York Times reports that some financial overseers are questioning "whether such misdeeds are not the work of a few bad actors, but rather a flaw that runs through the fabric of the banking industry. ... Regulators are starting to ask: Is there something rotten in bank culture?"

Really? Where've they been?

Millions of everyday Americans had no problem sniffing out that rot back in 2007 at the start of the Wall Street collapse and nauseating bailout. Imagine how pleased they are that it took only seven years for the stench of bank rot to reach the tender nostrils of authorities. Still, even sloooww progress is progress.

Both the head of the New York Fed and the Comptroller of the Currency are at least grasping one basic reality, namely that the tightened regulations enacted to deal with the "too big to fail" issue do nothing about the fundamental ethical collapse among America's big bankers. The problem is that, again and again, Wall Street's culture of greed is rewarded — bank bosses preside over gross illegalities, are not punished, pocket multimillion-dollar bonuses despite their shoddy ethics and blithely proceed to the next scandal.

More restraint on bank processes miss a core fact: Banks don't engage in wrongdoing; bankers do. As Comptroller Tom Curry says, the approach to this problem is not to call in more lawyers, "It is more like a priest-penitent relationship."

Public shaming can be useful, but it should include actual punishment of the top bosses — take away their bonuses, fire them and prosecute them!

<div style=" font-style: italic;">Copyright Creators.com.</div>

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<a href="http://www.democracynow.org/2014/4/8/all_the_presidents_bankers_nomi_prins">http://www.democracynow.org/2014/4/8/all_the_presidents_bankers_nomi_prins</a>

<span style="font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: 21px; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; display: inline !important; background-color: rgb(255, 255, 255);">With U.S. inequality at its highest point since 1928 and Wall Street bonuses hitting pre-2008 levels, we look at the 100-year history of secret collusion between Washington and the financial industry. In her new book, "All the Presidents’ Bankers: The Hidden Alliances that Drive American Power," financial journalist Nomi Prins explores how a small number of bankers have played critical roles in shaping a century’s worth of financial, foreign and domestic policy in the United States. Prins examines how these relationships have influenced events from the creation of the Federal Reserve, the response to the Great Depression, and the founding of the International Monetary Fund and the World Bank. Now a senior fellow at Demos, Prins is a former managing director at Bear Stearns and Goldman Sachs, and previously an analyst at Lehman Brothers and Chase Manhattan Bank.

NOMI PRINS: Well, actually, we were on the show a few years ago; I was talking about a novel I had written, a historical novel on the 1929 crash called Black Tuesday. And what had happened as one of the segments in that book was that six bankers had gotten together at the behest of the acting chairman of the Morgan bank, who was Thomas Lamont at the time, and they had so been afraid of losing all of the money and all of their reputations and their institutions at the time that they got together and decided to pool their own money to save the markets—stark difference from what happened more recently, which was that the Federal Reserve, Treasury Department and everyone else from the government decided to work with them to save themselves. But the impetus for the book really came from those big six bankers. We still have big six bankers today. And I looked into the relationships that they had with all of the presidents going forward and backward from that time to come up with this All the Presidents’ Bankers analysis.

And what I did was I went backwards from the crash in 1929 and noticed that J.P. Morgan, who is arguably—not even arguably, who is the most powerful banker this country has ever known and the most powerful political, financial actor—he died a hundred years ago, but his legacy, his family and what he created and the constellation of relationships between him and, at the time, Teddy Roosevelt, as far back as 1907, through Jamie Dimon’s relationship with Obama more recently, has been a very apparent apparatus in the connection of politics and finance, which I believe has no separation line.

They had help with a senator, Nelson Aldrich, who was head of the Senate Finance Committee at the time, after—a year or so after that under President Taft. Nelson Aldrich took a group of bankers in 1910 to Jeckyll Island. He almost didn’t make that meeting. He got hit by a trolley car up on Madison Avenue, was convalescing with his son, Winthrop Aldrich, who became the head of Chase later, and took a bunch of representatives from J.P. Morgan’s bank—J.P. Morgan was not there, and that’s power: you don’t go, you send your lieutenants—to Jeckyll Island for 10 days. They hunted. They shot pheasants. They did all sorts of things. But they came out also with the impetus for the Federal Reserve. On the way back, the train back to Washington, Nelson Aldrich had to present this plan. He was still convalescing. Two bankers that came from that meeting went in his place to Washington to put up the plans. Now, it wasn’t passed under Taft; it was passed under the Democratic president, Woodrow Wilson. But a lot of those same individuals were friends with Woodrow Wilson, as well, into his presidency, and in fact helped campaign and raise money for his presidency.

NOMI PRINS: Right, so this—one of them was Tom Lamont, who, I mentioned, was around in 1929. But he started his life moving up the chain of Morgan after the panic in 1907 in things called the Pujo trials, which were in 1912, which, at the time, looked at what bankers had done to cause the panic of 1907. He was a young lawyer at the time. He had gone to Harvard with FDR. But as a young man, he was also hanging out—living in the house of FDR up on 65th Street, renting it for several years while FDR was the assistant Navy secretary under Woodrow Wilson. They chose Tom Lamont to go with Wilson to France for six weeks. Wilson was in France. It was the longest time a U.S. president was outside of U.S. soil and the first time a U.S. president was outside of U.S. soil. But the banker that was by his side was Tom Lamont. He was a Republican. He went across his party lines to come back with Woodrow Wilson to fight for the League of Nations to try to preserve peace after World War I, which was defeated.

But Tom Lamont and Woodrow Wilson developed this relationship. And their letters are crazy. They’re like—they’re like so full of gratuity and love and just, you know, "thank you for being there by my side, and I couldn’t have done it without you," because when Woodrow Wilson then got a stroke and it was difficult for him to go around the country to, after the war, fight for the League of Nations, which the Senate didn’t want to pass and ultimately did not pass, Tom Lamont took it up in his newspapers that he owned, the Saturday Review, went before—you know, backdoors in terms of the senators that he knew, and really tried to push it. And the two of them really worked very closely together and had this bromance. And, of course, Woodrow Wilson ultimately did die from complications of those strokes.

AARON MATÉ: If we look back on the Great Depression, it’s understood that Wall Street was hostile in many ways to the New Deal, but how did Wall Street work with Roosevelt, and why?

NOMI PRINS: So, one of the men, Winthrop Aldrich, who I mentioned before was the son of the founder of the Fed, one of the founders of the Fed, Senator Nelson Aldrich, was also friends with the Roosevelts. He was friends with FDR. And he also knew, from a business perspective, he wanted to outdo the Morgans. So he said, you know, Chase has some trading, some speculation, that went miles wrong in the crash of 1929, and he believed that for the stability of the economy and for his bank going forward, so he could sort of walk and chew gum at the same time—see the public interest as well as his bank’s interest—worked with FDR to pass the Glass-Steagall Act, which separated the speculative activities from the depositors that had their money entrusted to banks at the time, including at Chase. And, actually, Carter Glass, whose name is on that act, wanted a slightly weaker version of the act than Winthrop Aldrich pushed inside of Washington with the alliance of FDR. So that was a very, very different time. You cannot imagine today Jamie Dimon pushing with President Obama to separate his bank in such a way that it decreases its risk to depositors and taxpayers. It’s just unimaginable.

AMY GOODMAN: Well, talk about the relationship today. You have said that the relationships between bankers and presidents, those in power, is more dangerous today. And maybe you can use the example of JPMorgan Chase, Jamie Dimon’s relationship. I mean, it’s hard to forget him going before a Senate committee when there are so many questions, even the question of would he be criminally prosecuted, and they are on bended knee to him. And you’re just looking at senators, one by one, and though the TV corporate networks weren’t showing it, you know, the ch-ching, how many millions his bank and him were responsible for giving to these senators, Republican and Democrat.

So, the relationship is much more dangerous also because those big six banks today—again, slight derivations of the big six banks in 1929, but today—own 85 percent of deposits of all the commercial banks, 84 percent of assets of all the commercial banks, and control 96 percent of all of the derivatives that financial institutions that are backed by the government utilize today, and 45 percent of the world’s derivatives. Six banks control so much capital and have so much power as to the laws around that capital. And the administration—and this started in Reagan, through Bush, through Clinton, into Obama—this is not new—but the reaction of the administrations has been to allow this to happen, to allow the concentration of this capital, of this power, to do nothing in the face of the financial crisis of 2008, which I believe is still ongoing, just in a different manifestation, because this risk still exists and because these numbers are worse than they were before the crisis of 2008.

But the other side of JFK is that his personal relationship, despite the social background, was a little more stilted. He just came off as a little more trying to do his own thing. So, even when—and because he had this long-standing relationship with David Rockefeller, they started to really diffuse. Rockefeller started saying disparaging things in public, in particular in this really interesting Life magazine article that came out in 1962, that were going against what JFK was trying to do. JFK, for example, in Latin America was trying to allow those countries to be more independent, to not have more private debt imposed upon them, which is what Rockefeller and the other bankers wanted to do at the time as a new source of making money. And this really disturbed Rockefeller, in particular, who was trying to expand the bank into those areas.

So, on the one side, they had a very strong social connection, and on the other side,JFK really tried to go about in a way to make external countries a little bit more independent financially from the United States, whereas that was a point where things started going in separate directions, and Rockefeller and Walter Wriston, who ran National City Bank at the time, really wanted to dump them with debt and to privatize and do all sorts of things that have gotten worse since then.

AARON MATÉ: So what happens since the 1970s? You have, at least for the bulk of the 20th century, banks and the government working together. Since the ’70s, though, Wall Street kind of goes rogue. So, what accounts for this shift, and how do we fix it now?

By the time the ’70s came along, with Nixon, who had less personal relationships and also ultimately took the country off the gold standard, which he did because the bankers pushed him to do it, because at this point they wanted two things. They saw that there was Middle East oil, and they could go in there and start to forge relationships and branches in the Middle East and utilize those petrodollars to recycle—it was a huge thing in the early ’70s—into Latin America and other countries. So they started operating more internationally and independently of their connections to the president.

And the minute they discovered all that money and they dumped all of that debt into the Third World, that manifested in a huge Third World debt crisis in the 1980s. And that was the first very large instance of a bailout. There was a small bailout for Penn Central, which was a railroad constellation in the '70s. But in the ’80s, under Reagan and under Bush, the idea of bailing out the banks, who had now refunneled all of this debt into Latin America, was a very epic decision, and it was one in which the bankers gave nothing back to the government. They were like, "We're going to use your money to bail us out." They were in Washington talking about the catastrophe that would happen to America if that didn’t happen. They got the government to basically push the World Bank and the IMF to work on the areas where they had the most risk and they had the most interest in retrieving it, and then in the ’90s just compiled that with the Mexican peso crisis, where Clinton also worked with Robert Rubin to save Mexican interests for Goldman and other U.S. banks, and then the repeal of Glass-Steagall in 1999. And then all of this idea of consolidation of risk and power just exponentially grew from there.

NOMI PRINS: Yeah, Goldman Sachs almost died in 1928. Or, well, basically between 1928 and 1929, they had a trading partnership, "partnership," in which investors invested money, and the stock of that trust went up to $320-something, and then it subsequently went down to $1. And there were a lot of angry investors around the street and so forth. But a man named Sidney Weinberg, who was the chairman of Goldman at the time, who actually joined Goldman in the panic of 1907 as sort of an underling, decided that if he could befriend FDR in such a manner as to help him run his 1932 campaign, he would kind of have a seat at the table. And so, the legitimacy of Goldman with respect to FDR also allowed FDR to create the first Business Council, that Sidney Weinberg pushed in Washington to forge relationships between the business financial community and Washington and so on. Sidney Weinberg also was behind LBJ’s choice of Henry Fowler as a treasury secretary, who then joined Goldman Sachs after being a treasury secretary. And, of course, we had Henry Paulson, who did the other way—Bush picked him to be the treasury secretary, George W. Bush. And then, of course, Clinton picked Robert Rubin, coming from Goldman Sachs, to be the treasury secretary in his administration. So, but it started with Sidney Weinberg and FDR.

[break]

AMY GOODMAN: In a moment, we’ll be speaking with Vermont Congressmember Peter Welch, but right now we’re continuing with Nomi Prins, the author of All the Presidents’ Bankers. She’s a former managing director at Bear Stearns and Goldman Sachs and previously an analyst at Lehman Brothers and other places. But we want to go to a clip right now of President Obama in 2009, 60 Minutes. He lashes out at what he calls the "fat cat bankers" of Wall Street.

PRESIDENT BARACK OBAMA: I did not run for office to be helping out a bunch of, you know, fat cat bankers on Wall Street. The only ones that are going to be paying out these fat bonuses are the ones that have now paid back that TARP money and aren’t using taxpayer loans.

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PRESIDENT BARACK OBAMA: I think, in some cases, that was a motivation, which I think tells me that the people on Wall Street still don’t get it. They don’t get it. They’re still puzzled: Why is it that people are mad at the banks? Well, let’s see. You know, you guys are drawing down $10-20 million bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem, and we’ve got 10 percent unemployment—why do you think people might be a little frustrated?

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<p class="collapsed-hide" style="margin: 0px 0px 1em; padding: 0px; direction: ltr; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: 30px; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; display: block !important; background-color: rgb(255, 255, 255);">AARON MATÉ: That’s President Obama speaking in 2009. I’m wondering if there’s been any break in the symbiotic relationship between Wall Street and Washington that you document. Certainly with Obama’s second term, when he ran against Romney, his donations from Wall Street dropped. It was something like $16 million, went down to $6 million. So, do you see any change of course in this pattern of symbiosis that you trace in your book?

But in that clip, and in a lot of what Obama has said, you know, what is said publicly and what actually happens inside the private office and with respect to what’s going on with bankers, you know, shows up in the reforms. It shows up in the structures. It shows up in the minions of lobbyists and lawyers that continue to funnel money, and little chips away at even very weak but existing rules. And Obama has allowed that to happen. He’s never come out and named a name against a banker. He talks about Wall Street "fat cats" as some sort of like big, broad category. He has not named names. He has not said what Wall Street needs to done. It’s just sort of fluffy rhetoric.

NOMI PRINS: No. You know why? Because he believes—or he says—I shouldn’t say "believes," I don’t know—but that the 2010 Dodd-Frank Act was somehow sweeping reform, and he characterizes it as being relative to FDR’s reform when he did the Glass-Steagall Act and the New Deal and created the SEC and all sorts of things. And it simply wasn’t. As I mentioned before, banks got bigger. Their concentration of our deposits and assets and risk got bigger. Nothing was fixed by that, quote, "reform" act. And so, he would—he doesn’t need to say that now. He said it kind of in the beginning to consolidate his base, to get elected, whatever it was. But many presidents—and, actually, Democrats are a little bit more guilty of this than Republicans, because I think they feel they need to do this—from Wilson on, have always bashed the bankers in their campaign speeches, and then when it comes right down to it, most of them have been very helpful and very symbiotic with them after they have been in office. So it tends to get said to the public, and then when you look at what actually occurred, it’s a completely different matter, because they are connected.

AMY GOODMAN: Well, Nomi Prins, we want to thank you for being with us. All the Presidents’ Bankers is her book, The Hidden Alliances that Drive American Power. You can <a href="http://www.democracynow.org/blog/2014/4/8/read_excerpt_of_nomi_prins_all" style="text-decoration: none; outline: 0px;">read an excerpt</a> of that book on our website at democracynow.org. This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Aaron Maté.

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http://crooksandliars.com/2014/03/court-filing-wells-fargo-used-guide-making

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The big bankers who enriched themselves while wiping out many blameless peoples’ life savings have been the focus of substantive inquiries, but the people advocating jail time for the bankers’ criminal behavior have been repeatedly ridiculed by corporate news outlets as irrational and vengeful. As Janine Jackson of Extra! reports, “While there have been substantive inquiries into the wrongdoing of investment banks and auditors, those calling for jail time are often dismissed as irrational, driven by “blood lust” (Washington Post, 9/12/13), “anger” (Chicago Tribune, 11/30/13) or “vengeance” (Washington Post, 11/18/13).

Various media outlets have explained that, while bad business decisions are not crimes, knowingly selling fraudulent mortgages and other dubious financial products is punishable by jail time. People have pointed to multiple reasons for the lack of prosecutions, such as regulatory agencies stopping key functions and non-deterrent settlements from government watchdogs. Media outlets have also made the case that imprisonment and increased liability would be ineffective, and many press accounts appear to be arguing for the legality of CEO actions. As Jackson reports, “Many press accounts seem more intent on explaining why what CEOs did wasn’t a crime than on asking whether it should be.”

However, outlets acknowledging the human victims of Wall Street wrongdoing have been less dismissive of imprisonment. Calls for jail time can be seen as demands for equal treatment under law. For example, in February 2013, Matt Taibbi of Rolling Stone argued against the emerging distinction between “an arrestable class and an unarrestable class.”

As of December 6, 2013, the closest thing to corporate coverage of the story is a Washington Post article with less detail, and an article in Forbes, which has a relatively small audience.

Sources:

Janine Jackson, “Why Aren’t Big Bankers in Jail?” Fairness and Accuracy in ReportingExtra!, January 1, 2014, <a href="http://fair.org/extra-online-articles/why-arent-big-bankers-in-jail/" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://fair.org/extra-online-articles/why-arent-big-bankers-in-jail/</a>.

Matt Taibbi, “Gangster Bankers: Too Big to Jail,” Rolling Stone, February 14, 2013,<a href="http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214</a>.

Student Researcher: Noah Tenney (Sonoma State University)

Faculty Evaluator: Peter Phillips (Sonoma State University)

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A story that spans a decade has come to an unfortunate, but not surprising, end. Three former General Electric bankers, Dominick Carollo, Steven Goldberg and Peter Grimm, had been convicted in 2012 for rigging auctions of municipal bonds, thus stealing from projects to build schools, hospitals, libraries and nursing homes in virtually every U.S. state.

However, in November 2013, those convictions were reversed on a technicality: basically, that federal prosecutors took so long to build the massive case that the statute of limitations ran out. The three men were released from prison the next day—just in time, as a defense attorney sanctimoniously noted, to be home for Thanksgiving dinner.

These men were part of a decade-long scheme that bilked cities and towns of funds for public-works projects by paying kickbacks to brokers and manipulating bids. Between August 1999 and November 2006, Carollo, Goldberg and Grimm participated in countless rigged bids via telephone. Like Mafiosi, they used a secret language and code words to keep their underground business low-key. Prosecutors accumulated over 570,000 recorded phone conversations that directly linked the men to fraudulent activity. Evidence at trial established that they cost municipalities around the country millions of dollars.

This type of white-collar immorality is a major issue because the money stolen could have been used by cash-strapped towns to provide essential services. Matt Taibbi of Rolling Stone called this fraud the equivalent of robbing a church fund to pay for lap dances. Taibbi, however, is one of the few reporters to consistently inform the public on these crimes and to point out the perhaps-insurmountable obstacles faced by even an activist U.S. Justice Department in getting convictions. “It really is hard to put these guys away,” Taibbi writes. “It’s even harder to keep them there.”

Sources:

Max Stendahl, “Former GE Execs Freed From Prison After Convictions Nixed,” Law360, November 27, 2013, <a href="http://www.law360.com/articles/492222/former-ge-execs-freed-from-prison-after-convictions-nixed" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://www.law360.com/articles/492222/former-ge-execs-freed-from-prison-after-convictions-nixed</a>.

Matt Taibbi, “Another Batch of Wall Street Villains Freed on Technicality,” Rolling Stone, December 4, 2013, <a href="http://www.rollingstone.com/politics/blogs/taibblog/another-batch-of-wall-street-villains-freed-on-technicality-20131204" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://www.rollingstone.com/politics/blogs/taibblog/another-batch-of-wall-street-villains-freed-on-technicality-20131204</a>.

Additional Sources:

Matt Taibbi, “The Scam Wall Street Learned From the Mafia,” Rolling Stone, June 21, 2012, <a href="http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620</a>.

Chad Bray, “Three Sentenced in Bid-Rigging Case,” The Wall Street Journal, October 18, 2012,<a href="http://online.wsj.com/news/articles/SB10000872396390444734804578064903311016908" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://online.wsj.com/news/articles/SB10000872396390444734804578064903311016908</a>.

“Three Former Financial Services Executives Convicted for Roles in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds,” United States Department of Justice, May 11, 2012, <a href="http://www.justice.gov/opa/pr/2012/May/12-at-620.html" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://www.justice.gov/opa/pr/2012/May/12-at-620.html</a>.

Bob Van Voris, “Ex-GE Bankers Win Reversal of Convictions for Bid-Rigging,” December 2, 2012, Bloomberg, <a href="http://www.bloomberg.com/news/2013-12-02/ex-ge-bankers-win-reversal-of-convictions-for-bid-rigging.html" style="margin: 0px; padding: 0px; word-wrap: break-word; box-sizing: border-box; text-decoration: none;">http://www.bloomberg.com/news/2013-12-02/ex-ge-bankers-win-reversal-of-convictions-for-bid-rigging.html</a>.

Student Researcher: Markisha Barber (Frostburg State University)

Faculty Evaluator: Andy Duncan (Frostburg State University)

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In 2008, three leading banks, Citi, JP Morgan Chase, and Morgan Stanley, announced a common coal power financing policy, known as the <a href="http://carbonprinciples.org/" target="_blank" style="border-style: initial; border-color: initial; font-style: inherit; text-decoration: underline; outline: none;">Carbon Principles</a>. Wells Fargo, Bank of America, and Credit Swiss later joined them. According to the bank proponents, The Carbon Principles represented the first time “that financial institutions, advised by their clients and environmental advocacy groups, have jointly committed to advance a consistent approach to the issue of climate change in the US electric power industry.”

In hindsight, the Principles don’t stand for much at all. The banks comprise six of the top seven ranked banks in Bloomberg League Tables for underwriting and loans in the electric utility sector in the U.S. They also accounted for more than 55% of the $125 billion in loan and bond underwriting in the United States to the coal sector from the beginning of the Carbon Principles implementation date of August 4, 2008 through June 30, 2010.

In 2011, <a href="http://ran.org/carbonprinciples" target="_blank" style="border-style: initial; border-color: initial; font-style: inherit; text-decoration: underline; outline: none;">RAN evaluated the Carbon Principles</a> and discovered that they have had almost no effect on the banking sector.

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