FDIC
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promote 2nd 12 24 on trump ATTACK
IT’S A BUFFER
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an 12 24
Trump's allies have discussed dismantling a Depression-era reform intended to prevent bank failures and maintain trust in the financial system, according to a report.
Sources told CNN that the president-elect's allies are interested in shrinking or even closing the Federal Deposit Insurance Corporation (FDIC) and giving the Treasury Department oversight of deposit insurance, but former regulators and academics say that makes little sense and questioned whether Congress would go through with that plan.
“This idea would pose an enormous risk of terrifying Americans about the safety of their deposits and triggering bank runs,” said Patricia McCoy, a law professor at Boston College and former federal regulator.
ALSO READ:We're watching the largest and most dangerous 'cult' in American history
The FDIC provides a safety net funded by the banking industry that protects customers from their bank going belly up with at least $250,000 in insurance provided to every depositor at each insured bank where they've got money, and while some believe there are too many bank regulators, experts doubt lawmakers would close this one.
“This has as much logic as asking if Trump can abolish Wednesday, and split it between Tuesday and Thursday,” said Aaron Klein, a senior fellow at the Brookings Institution and a former Treasury Department official who helped craft the Dodd-Frank Act in 2010. “The FDIC’s brand value to consumers is immense. Millions of Americans trust the FDIC insures their nest egg.”
The FDIC receives no congressional appropriations, and its deposit insurance fund covering trillions of dollars of deposits is instead funded by charging premiums on banks, not taxpayers, but sometimes those costs are passed on to bank customers through fees.
“This is one of the dumbest ideas anyone could have, and it’s a reflection of how incredibly out of touch billionaires are,” said Dennis Kelleher, CEO of the government watchdog Better Markets. “In 2008, the FDIC was absolutely pivotal in stabilizing the financial system and making sure the Great Financial Crisis didn’t become a second Great Depression. Eliminating the FDIC or cutting it back would be a disaster for the American people.”
The idea of ending or shrinking the FDIC has echoes of the right-wing Project 2025 blueprint for Trump's second term, but Congress has historically opposed calls to consolidate bank regulators, and experts think the threat against the agency is intended as a not-so-subtle message to the president-elect's appointees.
“If they don’t go along with the regulatory agenda of Donald Trump, there is an existential threat in the background that could be triggered,” said Mills. “In my mind, this is a way to work the umpire – before the umpire even takes the job.”
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an 12 24
Some advisors to President-elect Donald Trump have reportedly floated several ideas to gut regulations on banks, including one proposal to eliminate the Federal Deposit Insurance Corporation (FDIC).
The Wall Street Journal reported Thursday that several unnamed advisors and officials close to Trump — including some who part of the "Department of Government Efficiency" (which is not yet an actual federal agency authorized by Congress) — are mulling several major changes to government oversight of the banking sector. The Officer of the Comptroller of the Currency (OCC) and the Federal Reserve have also been eyed for "restructuring," according to the Journal.
Under the plan, the FDIC would be eliminated, but deposit insurance would be rolled into the Department of the Treasury. Still, the proposal set off alarm bells among various experts on social media. Historian Kevin Kruse wrote on Bluesky that past major reforms to financial regulators sometimes led to catastrophe.
READ MORE:'Extraordinary situation': How Musk could personally reap billions from 'efficiency' panel
"When I lecture about New Deal banking reforms, I note that some of the key measures — like Glass Steagall — were repealed by the right with disastrous results like the 2008 financial meltdown, but ha ha, no one will ever be stupid enough to kill FDIC and bring back the old bank runs," Kruse wrote.
Journalist Walker Bragman further elaborated on why the FDIC was established in the first place in the wake of the 1929 financial crisis and subsequent bank failures of the 1930s. President Franklin Delano Roosevelt had explicitly sought to create more stability in the financial sector by guaranteeing all Americans' bank deposits would be insured up to $2,500 (the FDIC now insures deposits up to $250,000).
"This is so bad," Bragman lamented. "FDR created the FDIC amid The Great Depression in order to restore faith in American banking. People were basically losing everything when their banks failed. The FDIC was meant to prevent so-called 'bank runs' where people would pull their money out to save what the could get."
MSNBC host Chris Hayes sarcastically wrote that he would "love to have to re learn all the lessons of the New Deal again." Writer Karl Folk responded to the Journal's report by arguing that Americans "are all about to get robbed by the wealth class in a way that really can not be described." Civil rights lawyer Joshua Erlich was more blunt: "[G]etting rid of the FDIC is so cartoonishly evil that it’s hard to even process."
READ MORE:'Deep cuts that hit hard': Why Trump's budget will be especially painful in red states
Click here to read the Journal's report in full (subscription required).
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3 23
intercept
silicon Valley Bank Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC
Ken Klippenstein
Two senior aides to House Speaker Kevin McCarthy were among the top lobbyists for the bank at the center of a new financial crisis.
mma 3/22/20
| Grift watch: How right-wing media are trying to profit off a pandemic |
We've talked about how right-wing media are trying to downplay the pandemic. Even worse are those that are trying to profit off of it.
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https://www.nytimes.com/2018/05/03/us/scott-pruitt-lobbyist-house.html
thehill
Scott Pruitt
once purchased a house from a top lobbyist in Oklahoma with the help of a shell company, The New York Times reported Saturday.
Two business associates involved in the 2003 purchase are now aides to Pruitt at the agency: Kenneth Wagner, a senior adviser at the EPA, and Albert Kelly, who runs the agency's effort to redesign the Superfund program.
According to the Times, the home, which was seen as a prime property because of its proximity to the state Capitol building, was purchased for $375,000 from a retiring telecommunications lobbyist.
But that price was $100,000 less than the lobbyist, Marsha Lindsey, had paid for it just a year before. The shortfall, according to the Times, which examined the records, was picked up by Lindsey's company, telecom giant SBC Oklahoma.
The company, now a subsidiary of AT&T, lobbied on a number of matters including a deregulatory bill that would allow it to raise rates and an effort to reopen a decade-old bribery case. According to the Times, Pruitt sided with the company on both matters.
Pruitt, then a state senator, intended to use the residence as a place to stay while Oklahoma's legislature was in session. During this time he also rented out a room to another Republican state senator, Jim Dunlap.
Wagner, who was a partner at the private legal practice where Pruitt worked, was a co-investor in the shell company that purchased the residence.
Kelly wasn't involved in the shell company but ran the community bank which issued the mortgage for the residence.Kelly was later barred for life from the banking industry by the Federal Deposit Insurance Corporation (FDIC) because the agency had “reason to believe that [Kelly] violated a law or regulation, by entering into an agreement pertaining to a loan by the Bank without FDIC approval.”
The two now hold top positions at the EPA.
In 2005, the company owned by Wagner and Pruitt sold the residence for $95,000 more than it had paid just two years earlier.
Dunlap told the Times that he had no knowledge that Pruitt had purchased the residence from a lobbyist. He said he was under the impression that Pruitt had purchased it from a group of lawyers.
“This was a place where you slept and had dinner,” Dunlap told the Times. “It was all above board.”
The Oklahoma deal is only the latest in a series of stories raising ethics issues involving Pruitt.
Pruitt was reported earlier this month to have been living in 2017 in a Washington, D.C., condo partly owned by the wife of a top energy lobbyist at a rate of just $50 per night, which he and others have insisted was market value.
The EPA chief also came under fire after it was discovered that two top aides received raises after the White House declined to approve the pay hikes.
When asked about the Oklahoma house deal and Pruitt's business relationship with his top appointees, an EPA spokeswoman told the Times that the dealings "were ethical" and that Pruitt's stake in the company "was a simple real estate investment.”
“Mr. Wagner and Mr. Kelly left high-profile positions in law and banking in Oklahoma, to serve in the administration,” the spokeswoman said in an email to the Times.
“They are dedicated EPA employees who have earned the respect and admiration of EPA career employees across the country. They serve the country professionally, and transparently — and are committed to ensuring the programs they work on are successful.”
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In a record first involving the Federal Deposit Insurance Company suing the auditors of a failed bank, the government agency has filed a lawsuit against Crowe Horwath LLP (CROHORP) and PricewaterhouseCoopers LLP for over $1 billion for their alleged failure to detect the securities fraud perpetuated by Taylor Bean & Whitaker Mortgage Corp. that led to the demise of Colonial Bank. Taylor Bean was one of the bank’s biggest clients. The two auditors are accused of gross negligence, professional malpractice, and breach of contract for not spotting the scam.
According to the FDIC’s complaint, two Colonial mortgage lending employees, Teresa Kelly and Catherine Kissick, let Taylor Bean officials divert money from the bank without it getting collateral in return. This resulted in Taylor Bean allegedly stealing nearly $1 billion from Colonial by promising it would provide the bank with mortgages that it had actually sold to other banks. The FDIC contends that not only did Kissick and Kelly know about Bean’s fraud but also they made it possible for the cash to be illegally diverted. The two of them would later plead guilty to aiding Taylor Bean’s fraud.
In 2009, Alabama banking regulators seized Colonial.The downfall of Colonial Bank is considered one of the biggest bank failures in our nation’s history and Is expected to cost the FDIC’s insurance fund about $5 billion.
Although auditing firms usually tend to benefit from pari delicto, a common-law doctrine that prevents one wrongdoer from suing another for money made from a joint wrongdoing (and since employees’ actions are usually imputed to the corporation, in this case Colonial typically would also be considered a wrongdoer), the FDIC’s securities caseportrays the Colonial lending officials as rogue employees who were working against the bank’s interest—especially as Colonial was harmed by the fraud when it lent Taylor Bean hundreds of millions of dollars that had been secured by loans that didn’t exist or were worthless. If the FDIC succeeds in demonstrating that Kissick and Kelly were working for their own benefit, then in pari delicto may not provide Pricewaterhouse Coopers and Crowe Horwath with such protections.
Meantime, Pricewaterhouse Coopers’s legal team is contending that Colonial’s employees acted to protect Colonial from loss and that Taylor Bean had been paying the bank $20-30 million/month in interest. The defendants are also arguing that auditors shouldn’t have been expected to discover the fraud that was so well hidden that the FDIC and OCC didn’t uncover it either when they conducted targeted exams.
ATale of Two Lawsuits — PricewaterhouseCoopers and Colonial Bank, Forbes, November 10, 2012
FDIC Sues Auditors Over Colonial Bank Collapse, Smart Money/Dow Jones, November 15, 2012
Federal Deposit Insurance Corporation
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The Women Who Were Right About the Economy
bigthink
Who could have saved us from the global financial crisis? In a word, women. The release of the Federal Reserve’s transcripts of policymaking meetings up to 2007 has shed new light on the machinations inside the central bank as the Great Recession dawned. One member of the Board of Governors cast in a positive light is Janet Yellen, the vice-chair, who saw the potential for trouble in the shadow banking system. She isn’t the only woman who might have done a better job than the man who outranked her:
Brooksley Born. The former chair of the Commodities Futures Trading Commission warned that the Commodities Futures Modernization Act of 2000 could lead to excesses in the derivatives markets. The act eliminated most monitoring and regulation of the over-the-counter derivatives market where the subprime loan crisis exploded. But Born was overruled by Larry Summers, the Treasury secretary, and President Bill Clinton signed it into law.
Alice Rivlin. As vice-chair of the Board of Governors and a possible successor to Alan Greenspan as chair, her resignation in 1999, just as the Fed began to raise interest rates for the first time in four years, came as a surprise. Her view of monetary policy the late 1990s suggests she correctly perceived the global economy as more fragile than Greenspan did; the markets’ crash in 2000 soon forced him to reverse course. She latercriticized Greenspan for endorsing the 2001 Bush tax cuts, which ended up casting the nation into deep deficits.
Sheila Bair. She chaired the Federal Deposit Insurance Corporation before, during, and after the financial crisis. A strong believer in aiding consumers more and big banks less, she dissented from Treasury Secretary Timothy Geithner’s view that bailing out big banks – some of which she said didn’t need the help – was the best way to get the economy back on its feet. She argued for more accountability, but she lost; the big banks got their money, with few strings attached.
Christina Romer. The first chair of President Barak Obama’s Council of Economic Advisers wanted a much bigger stimulus package than the one he eventually proposed to Congress in 2009 - $1.8 trillion rather than about $900 billion. But before Obama even saw the plan, Summers, who was director of the National Economic Council, persuaded her to water it down to $1.2 trillion. The shortcomings of the initial package led Obama to pursue additional stimulus, an effort largely stymied by the Republicans in the Congress.
Would we be better off today if these women had held the top jobs in economic policy rather than the men who steamrolled them? There’s no way to know for sure, but my guess is that, in at least a few cases, the answer is yes.