USuncutMN says: Tax the corporations! Tax the rich! Stop the cuts, fight for social justice for all. Standing in solidarity with http://www.usuncut.org/ and other Uncutters worldwide. FIGHT for a Foreclosure Moratorium! Foreclosure = homelessness. Resist the American Legislative Exchange Council, Grover Norquist and Citizen's United. #Austerity for the wheeler dealers, NOT the people.



We Are The 99% event

USuncutMN supports #occupyWallStreet, #occupyDC, the XL Pipeline resistance Yes, We, the People, are going to put democracy in all its forms up front and center. Open mic, diversity, nonviolent tactics .. Social media, economic democracy, repeal Citizen's United, single-payer healthcare, State Bank, Operation Feed the Homeless, anti-racism, homophobia, sexISM, war budgetting, lack of transparency, et al. Once we identify who we are and what we've lost, We can move forward.



Saturday, April 30, 2011

Danny Schechter : Why Wall Street is Winning:

 Rag Blog


Wall Street: The bull is back.

Why Wall Street is winning
The hated financial center is bouncing back. How did they do it?
By Danny Schechter / The Rag Blog / April 26, 2011

Two years ago, as financial reform was put on the U.S. Congressional agenda, a skeptical Senator, Dick Durbin of Illinois, spoke of the power of the banks over the country’s legislative process.

“They run the place,” he said matter-of-factly.

The comment was then treated as a sidebar in the few newspapers that carried it, perhaps because it hinted at how interests, not ideology, dictate what happens on Capital Hill.

The remark about a shadowy power structure far more important than all the partisan in-fighting that dominates the news is worth recalling as a way of explaining how little has been done to rein in Wall Street in the years since its crash virtually wrecked the global economy.

It is also worth realizing that the people who “run the place” usually do so in ways that rarely get high profile media scrutiny or even public attention.

During the deliberations on re-regulating banks, they mounted a formidable army of lobbyists. It was reported that as many as 25 industry lobbyists were assigned to each member of Congress.

Even as new laws passed to satisfy an angry public, the industry dominated the process of what the laws would cover and how.

They also spread money around to help politicians who helped them. For years those donations were made on a nonpartisan basis, with Democrats as well as Republicans the beneficiaries of carefully-targeted help. Today, they are cutting off the Democrats who pushed financial reform.

The corporate sector is following suit. Nominally “liberal” companies like BP, sharply criticized by the White House for the Gulf Oil spill, are pouring money, not oil, into GOP coffers.

As bipartisanship fades, and certain ideological lines are drawn more sharply, the bankers are now favoring the Republicans financially, perhaps to thank them for erecting a unified wall against tighter rules for banks.

The GOP, led by the pro-free market slogans of the Tea Party, are busy defunding regulators as well.

Right-wingers in turn are being funded by wealthy billionaire backers including the shadowy Koch Brothers who are responsible for backing the anti-union programs of governors like Scott Walker in Wisconsin. These campaigns are designed to neuter all opposition to a conservative agenda.

Meanwhile, President Obama reaches into the corporate sector for “help” on his economic “recovery” agenda. In recent months, he named Jeffrey R. Immelt, president of General Electric, a company known for outsourcing jobs, as his jobs advisor.

He plucked William Daley from the American Chamber of Commerce to become his Chief of Staff.

Daley recently scolded politicians for calling for the prosecution of Wall Street criminals. He said that job belongs to producers in Hollywood, not lawmakers.

These efforts have emboldened other arms of Wall Street to intervene in politics. The most visible last week was the statement by the ratings agency Standard and Poor's that it was revising the country’s credit rating to “negative,” warning that it will consider lowering the long-term rating of the United States “within two years.”

Many stocks fell, but bond markets ignored it. Former International Monetary Fund economist Simon Johnson raised questions about their decision of a kind absent in most media outlets.

Writing on his website Baseline Scenario, Johnson noted that few outlets pointed out how inaccurate the ratings agencies had been at the height of the crisis, and how irresponsibly they hyped worthless bonds packed with sub prime junk. Yet once again they were treated as credible, despite their sloppy analysis.
The main problem is that S&P did not lay out even the most basic numbers or even point readers towards the nonpartisan and definitive Congressional Budget Office analysis of medium -- and longer-term budget issues. This matters, because the CBO numbers definitely do not show debt exploding upwards immediately from today...
Bloggers like Cannonfire go further arguing that
The revised credit rating is meant to push the administration and lawmakers into going after Social Security and Medicare. The right-wing now has an additional propaganda tool to push for draconian cuts in areas that will most hurt working and middle class Americans.
Here's the kicker: Standard and Poor's and Moody's are private firms. They don't work for the United States; they serve the interest of Wall Street banks. 2008 taught us that they are completely unaccountable.”

Doug Smith adds on the influential Naked Capitalism blog that Wall Street should know that joining the Tea Party jihad on government spending will be counterproductive for economic recovery.
We know the banksters control both parties and are immune from any threats to their bonuses or their liberty. Still, even on the banksters’ own terms of extend-and-pretend, these cuts are idiotic.
Despite all of its frauds and deceptions, Wall Street has bought its way out of the many pressures that it change its ways. In a special issue, New York Magazine concludes that in this economic war, “Wall Street Won.”

Their editors write,
In the political realm, Wall Street faced the prospect of root-and-branch reregulation, up to and including the potential nationalization of the industry’s largest players, and in the cultural realm its transfiguration into a kind of pariah state. Once upon a time, the Street’s leading lights had been glamorized and admired to the point of worship; now the likes of Robert Rubin, Lloyd Blankfein, and Richard Fuld were relentlessly pilloried and demonized...

Yet today on Wall Street, all of that seems a very long time ago. Not only are the banks rolling in dough again, but their denizens’ customs and sense of self-esteem have largely reverted to the status quo ante.
A retired well-known journalist, James Clay Fuller, notes that media coverage of these issues adds to the confusion because it is often superficial and misleading.
Corporate media refuse to tell many of the stories of bank fraud, as they decline to tell many of the stories that would show the public the corporate takeover of government, but the facts are available to those who recognize that they won't learn much of importance from CNN.
The public is not just uninformed; it is unorganized on these issues and not fighting back. The power of the bank lobby can be compared to the pro-Israel lobby in the sense it dominates the discourse.

With a besieged Democratic administration siding with the banks, unions and activists may not be willing or able to challenge Wall Street. They are so desperate to hold on to the White House, they seem willing to pull any potential punches to make Wall Street a target.

Only a national high profile and populist campaign will be able to stop the financial industry from consolidating its clout. The banks are banking on their ability to stop such a campaign before it starts or gains any traction.

[News Dissector and blogger Danny Schechter made the film, Plunder The Crime of Our Time, treating the financial crisis as a crime story. Comments to dissector@mediachannel.org. Read more by Danny Schechter on The Rag Blog.]

MN-CCD: Current Legislative Proposals Limit Access to Services for Minnesotans with Disabilities

Current Legislative Proposals Limit Access to Services for Minnesotans with Disabilities

April, 2011

*This document will be updated periodically as proposals evolve and change*

Limited Access to Health and Long-term Care Services

The House and Senate Health and Human Services Omnibus bills both cut disability waiver programs. The House proposes to freeze spending as of March 2010, requires the same number of people to be served as were enrolled at that time, and requires DHS to reduce services provided and freeze enrollment before reducing provider rates to achieve the savings specified. The House also proposes to cap enrollment at the end of March 2010 for the DD, CADI, and TBI waivers. No one currently receiving services is removed, reduction is achieved through attrition. The Senate proposes to freeze enrollment at the end of fiscal year (FY) 2011 for the DD, CADI, and TBI waivers.

The House Health and Human Services Omnibus bill repeals funding set aside for alternatives for those losing personal care assistance (PCA) services. This funding would have provided a minimum level of PCA services to 2,800 Minnesotans with disabilities who will lose access to more comprehensive PCA services this July. Total amount cut: $8,028,000 (Line 780 in HF 927).

The House Health and Human Services Omnibus bill contains a 20% cut in wages for PCAs providing services to relatives. These are cuts in wages that are being used to pay rent and purchase food. In many of these cases, a non- relative PCA provider is simply not an option, whether due to uncompensated miles that a PCA would have to travel in rural areas or because many individuals need PCA assistance off and on throughout a 24-hour period. Total amount cut: $23,774,000 (Line 530 of HF 927).

The House Health and Human Services Omnibus bill contains potential additional cuts to waivered services if other savings don’t materialize. The bill proposes to apply to the federal government for a “Global Waiver (CHOICE)” that could reduce the states’ requirements for serving Minnesotans on Medical Assistance (Medicaid), as well as for a waiver to repeal the early expansion of Medicaid. If these prove not to be viable, Minnesotans with disabilities could see even further cuts to their already tenuous community-based service system. These cuts would be in addition to those already proposed in the bill. Total amount cut: $300,000,000 in rate cuts to service providers.

The Senate Health and Human Services Omnibus bill cuts Children and Community Services Act (CCSA) county grants. Some counties use these funds to provide the minimal support needed for an individual with a disability to be able to engage in meaningful daily activities, or for respite services. Total amount cut: $22,000,000 (Line 165 in SF 760).

The Senate Health and Human Services Omnibus bill cuts Family Support Grants. These grants are small amounts of funding that families use to prevent out of home placement of their children with disabilities. Total amount cut: $4,131,000 (Line 310 in SF 760).

The Senate Health and Human Services Omnibus bill eliminates Medical Assistance coverage of eyeglasses, prosthetics, dentures, and rehabilitation therapies. This cut applies to adults ages 18 and over who are on Medical Assistance. The rehabilitation therapies include speech, occupational, and physical therapy. These and the other services mentioned all help individuals to maintain or reacquire the skills necessary to continue to live as independently in the community as possible. Total amount cut: $12,060,000 (Line 165 in SF 760).

The Senate Health and Human Services Omnibus bill cuts mental health services for children and adults. These cuts include reducing adult mental health grants, eliminating children’s mental health screening grants and early intervention services, eliminating school-linked mental health grants, and eliminating metro area adult mental health crisis grants. Total amount cut: $49,378,000.

The House and Senate Health and Human Services Omnibus bills repeal the early expansion of Medical Assistance. This will leave 100,000 Minnesotans, many of whom have disabilities, without health insurance or access to health care. As a result, many such persons will delay needed care resulting in more severe medical conditions which will be more difficult and expensive to treat. Such treatment will be uncompensated, putting additional economic strain on our hospitals which will also experience a rate cut as required by the bill. Total amount cut in House: $457,932,000 (Line 798 in HF 927); Total amount cut in Senate: $921,296,000 (Line 787 in SF 760).

Limited Access to Employment Services


The Senate Jobs and Economic Growth and Development Omnibus bill freezes Vocational Rehabilitation (VR) funding at current levels. VR provides counseling and support services funding to help people with disabilities find jobs. VR operates as a federal/state partnership, drawing down $3.71 federal dollars for every $1 of state appropriation. Without an increase in the state match appropriation, $7,644,992 will be returned to the federal government at the end of the current Federal FY. An additional $11,936,100 will be returned in Federal FY 12, and fewer Minnesotans with disabilities will be able to access these services.

The House and Senate Health and Human Services Omnibus bills cut the MA-EPD (Medical Assistance for Employed Persons with Disabilities) program. This is a state program started in 1999 that has allowed people with disabilities to pay a monthly premium to access needed Medicaid services as an incentive to join the workforce. About 7,000 people are now using this option. The House and Senate propose to have these individuals pay more to keep these job supports in place by having their monthly premiums increased by 100 percent in some cases and turning over more of their monthly Social Security checks to the government.

Limited Access to Special Education Services

The House and Senate Education Omnibus bills eliminate the 4.6% growth factor for special education aid and special education excess cost aid, which results in a $286 million dollar cut for FY 12-13.

Limited access to Transportation Services

The House and Senate Transportation Omnibus bills cut funding for public transit budgets, including Metro Mobility. Many people with disabilities can’t drive due to physical or cognitive limitations. Many who could drive can’t afford the expensive vehicle modifications that would make it possible. The Senate cuts general fund spending on transportation by $41 million for FY 12-13, while the House cuts transportation spending by $138 million for FY 12-13.

The Senate Health and Human Services Omnibus bill cut special transportation services. These services help individuals with disabilities get to and from their necessary medical appointments, appointments that help them to maintain their health and independence. Total amount cut: $1,529,000 (Line 711 in SF 760).

April 27, 2011

MN-CCD: Current Legislative Proposals Limit Access to Services for Minnesotans with Disabilities

Current Legislative Proposals Limit Access to Services for Minnesotans with Disabilities

April, 2011

*This document will be updated periodically as proposals evolve and change*

Limited Access to Health and Long-term Care Services

The House and Senate Health and Human Services Omnibus bills both cut disability waiver programs. The House proposes to freeze spending as of March 2010, requires the same number of people to be served as were enrolled at that time, and requires DHS to reduce services provided and freeze enrollment before reducing provider rates to achieve the savings specified. The House also proposes to cap enrollment at the end of March 2010 for the DD, CADI, and TBI waivers. No one currently receiving services is removed, reduction is achieved through attrition. The Senate proposes to freeze enrollment at the end of fiscal year (FY) 2011 for the DD, CADI, and TBI waivers.

The House Health and Human Services Omnibus bill repeals funding set aside for alternatives for those losing personal care assistance (PCA) services. This funding would have provided a minimum level of PCA services to 2,800 Minnesotans with disabilities who will lose access to more comprehensive PCA services this July. Total amount cut: $8,028,000 (Line 780 in HF 927).

The House Health and Human Services Omnibus bill contains a 20% cut in wages for PCAs providing services to relatives. These are cuts in wages that are being used to pay rent and purchase food. In many of these cases, a non- relative PCA provider is simply not an option, whether due to uncompensated miles that a PCA would have to travel in rural areas or because many individuals need PCA assistance off and on throughout a 24-hour period. Total amount cut: $23,774,000 (Line 530 of HF 927).

The House Health and Human Services Omnibus bill contains potential additional cuts to waivered services if other savings don’t materialize. The bill proposes to apply to the federal government for a “Global Waiver (CHOICE)” that could reduce the states’ requirements for serving Minnesotans on Medical Assistance (Medicaid), as well as for a waiver to repeal the early expansion of Medicaid. If these prove not to be viable, Minnesotans with disabilities could see even further cuts to their already tenuous community-based service system. These cuts would be in addition to those already proposed in the bill. Total amount cut: $300,000,000 in rate cuts to service providers.

The Senate Health and Human Services Omnibus bill cuts Children and Community Services Act (CCSA) county grants. Some counties use these funds to provide the minimal support needed for an individual with a disability to be able to engage in meaningful daily activities, or for respite services. Total amount cut: $22,000,000 (Line 165 in SF 760).

The Senate Health and Human Services Omnibus bill cuts Family Support Grants. These grants are small amounts of funding that families use to prevent out of home placement of their children with disabilities. Total amount cut: $4,131,000 (Line 310 in SF 760).

The Senate Health and Human Services Omnibus bill eliminates Medical Assistance coverage of eyeglasses, prosthetics, dentures, and rehabilitation therapies. This cut applies to adults ages 18 and over who are on Medical Assistance. The rehabilitation therapies include speech, occupational, and physical therapy. These and the other services mentioned all help individuals to maintain or reacquire the skills necessary to continue to live as independently in the community as possible. Total amount cut: $12,060,000 (Line 165 in SF 760).

The Senate Health and Human Services Omnibus bill cuts mental health services for children and adults. These cuts include reducing adult mental health grants, eliminating children’s mental health screening grants and early intervention services, eliminating school-linked mental health grants, and eliminating metro area adult mental health crisis grants. Total amount cut: $49,378,000.

The House and Senate Health and Human Services Omnibus bills repeal the early expansion of Medical Assistance. This will leave 100,000 Minnesotans, many of whom have disabilities, without health insurance or access to health care. As a result, many such persons will delay needed care resulting in more severe medical conditions which will be more difficult and expensive to treat. Such treatment will be uncompensated, putting additional economic strain on our hospitals which will also experience a rate cut as required by the bill. Total amount cut in House: $457,932,000 (Line 798 in HF 927); Total amount cut in Senate: $921,296,000 (Line 787 in SF 760).

Limited Access to Employment Services

The Senate Jobs and Economic Growth and Development Omnibus bill freezes Vocational Rehabilitation (VR) funding at current levels. VR provides counseling and support services funding to help people with disabilities find jobs. VR operates as a federal/state partnership, drawing down $3.71 federal dollars for every $1 of state appropriation. Without an increase in the state match appropriation, $7,644,992 will be returned to the federal government at the end of the current Federal FY. An additional $11,936,100 will be returned in Federal FY 12, and fewer Minnesotans with disabilities will be able to access these services.

The House and Senate Health and Human Services Omnibus bills cut the MA-EPD (Medical Assistance for Employed Persons with Disabilities) program. This is a state program started in 1999 that has allowed people with disabilities to pay a monthly premium to access needed Medicaid services as an incentive to join the workforce. About 7,000 people are now using this option. The House and Senate propose to have these individuals pay more to keep these job supports in place by having their monthly premiums increased by 100 percent in some cases and turning over more of their monthly Social Security checks to the government.

Limited Access to Special Education Services

The House and Senate Education Omnibus bills eliminate the 4.6% growth factor for special education aid and special education excess cost aid, which results in a $286 million dollar cut for FY 12-13.

Limited access to Transportation Services

The House and Senate Transportation Omnibus bills cut funding for public transit budgets, including Metro Mobility. Many people with disabilities can’t drive due to physical or cognitive limitations. Many who could drive can’t afford the expensive vehicle modifications that would make it possible. The Senate cuts general fund spending on transportation by $41 million for FY 12-13, while the House cuts transportation spending by $138 million for FY 12-13.

The Senate Health and Human Services Omnibus bill cut special transportation services. These services help individuals with disabilities get to and from their necessary medical appointments, appointments that help them to maintain their health and independence. Total amount cut: $1,529,000 (Line 711 in SF 760).

Great Austrailian Show about Disability and Societal Prospectives

Public Statement made in Press Conference

Hello, my name is Nichole Villavicencio. I am here in support of the MN Consortium for Citizens with Disabilities (MN-CCD). As a Citizen Lobbyist for people with disabilities, I am frustrated by the continued cuts to services for citizens with disabilities. Some of the services I receive through Medical Assistance include Personal Care Attendant services as well as coverage of my eyeglasses and dental services.

Although I am concerned with a number of the proposed cuts to disability services included in current legislation, one cut that will impact me personally is the proposed elimination of coverage of eyeglasses for adults on Medical Assistance included in the Senate Health and Human Services omnibus bill. On average, I get one pair of eyeglasses every year. I have had glasses every year since I was six years old. I am very near sighted and I have a stigmatism. I am on SSI and I struggle to pay the bills that I have now, so without this eyeglasses coverage I wuold not be able to afford a new pair of glasses. Without a proper pair of glasses, I could not drive my wheelchair. Being able to drive my wheelchair allows me to be the active member of my community that I am - working and volunteering are just two examples of what I contribute to my community. Another service that I access is coverage of my dental services. The Senate Health and Human Services omnibus bill also includes a proposal to eliminate coverage of dental services for adults on Medical Assistance. This would prevent me from seeing a dentist, which would eventually create more costly and avoidable dental issues for me.

For myself and the other disability advocates that I work with, these proposed cuts are frightening. I’m tired of the legislature telling me to compromise the quality of my life. The proposed cuts before us will jeopardize not only my freedoms, but also my ability to be a tax-paying contributor. Thank you to all here and I can take further questions after the news conference.



--Nichole L. Villavicencio
http://capablemn.org/

Cell: (507)206-8400

Could Michigan-style "Martial Law" Be On Its Way to Wisconsin? | Center for Media and Democracy

Could Michigan-style "Martial Law" Be On Its Way to Wisconsin? | Center for Media and Democracy

Rumors have been circulating about a little-known initiative to subject Wisconsin local governments to "stress tests" and other new constraints. Many believe the proposal resembles the "martial law" bill that was recently passed in Michigan, which allows the state government to dissolve local governments in a "fiscal emergency," and worry that Wisconsin Governor Scott Walker or his friends in the legislature could be cooking up a similar plan.

Progressive commentator and former Wisconsin gubernatorial candidate Ed Garvey sounded the warning in a blog post for FightingBob.com that snowballed all the way to Forbes.com.

Rick Ungar of Forbes wrote that:

Walker is said to be preparing a plan that would allow him to force local governments to submit to a financial stress test with an eye towards permitting the governor to take over municipalities that fail to meet with Walker's approval. According to the reports, should a locality's financial position come up short, the Walker legislation would empower the governor to insert a financial manager of his choosing into local government with the ability to cancel union contracts, push aside duly elected local government officials and school board members and take control of Wisconsin cities and towns whenever he sees fit to do so. Such a law would additionally give Walker unchallenged power to end municipal services of which he disapproves, including safety net assistance to those in need.

King WalkerThe law in Michigan, which was put in effect for the first time in Benton Harbor, gives sweeping authority to a governor-appointed emergency financial manager for towns that have been subject to a stress test and declared to be in a state of "financial emergency." In Benton Harbor, the newly-appointed manager has taken all decision-making power away from the city's executive board and committees.

Greater Milwaukee Committee

Garvey's blog pointed to the activities of Michael Grebe and the Greater Milwaukee Committee (GMC). The GMC recently released a study and unveiled a new website that call for stress testing municipalities, "streamlining" the county government, creating a new elected uber-comptroller position, more "flexibility" with labor contracts, the consolidation of services across municipal lines and changes to health care and pension plans. The website for Make it Your Milwaukee outlines a "Statewide Local Government Felxibility Toolkit" with some language that seems to echo a similar toolkit produced by the American Legislative Exchange Council.

Michael Grebe is the Chair of GMC. He also Chaired Scott Walker's gubenatorial campaign. He has been instrumental in furthering the conservative agenda in Wisconsin and nationally. He is also the former CEO of Foley & Lardner, the state's largest law firm. The popular blog
picked up Garvey's story and dug deeper into the web of ties between Grebe, Foley & Lardner, the American Legislative Exchange Council (ALEC) and even the Koch brothers.

In response to the coverage, GMC staff released a statement: "contrary to the rumors that circulated this week, the Initiative does not support providing the state with the ability to takeover cities and other entities."

But Ed Garvey puts it plainly: what is the point of doing a stress test if you are not then going to take actions based upon the test?

"What is the point? Who designs it and what is this test for? And what does transparency even mean?," said Garvey pointing out that a local government's finances are a matter of public record. "None of this is out of the blue though. It seems to me that what Walker, Kasich, Snyder, Christie are all doing is creating centralized power in the governor's office where they can do whatever the hell they want to do."

These governors have all introduced legislation to erode the rights of workers and curtail other democratic freedoms. They are all using the same playbook if not identical plays.

Walker Denies Legislation in the Works

Gov. Walker went on Milwaukee's WTMJ-AM Charlie Sykes show to say that it was "absolutely false" to say that legislation was in the works. However, a PR firm representing Foley & Lardner told CMD in a conversation about the GMC intitative, that the firm is "working on developing recommendations for legislation" right now. The firm could be working for any number of Republican leaders or advocacy groups.

Whether we are to believe Walker or not, it is worth taking a look at what he has already proposed to consolidate power and gut small 'd' democratic control.

In his budget and collective bargaining bill, the Governor works hard to take away power from local governments and government agencies and consolidate it in his office. He takes away the ability of cities, counties and school boards to collectively bargain with their employees; he takes away the ability of towns to set their own budget limits; he appoints three dozen new political apparatchiks and czars across state government; and he wants to do away with an elected State Treasurer and Secretary of State.

On schools, Walker takes away local control over charter schools and places it into the hands of a board. His budget mandates a 5.5 percent cut in per-pupil local education spending. No school district will be permitted to maintain its current level of property tax-based funding for education or be able to increase that tax to offset state cuts. He overrides local control on windfarms and wetlands, making it harder for local communities to create jobs or protect the environment. And let's not forget Assembly Bill 7, which Wisconsin Common Cause calls "the most restrictive voter identification law in the nation."

Whether a "fiscal emergency bill" is introduced in Wisconsin or a weaker version that focuses on stress tests combined with comptrollers on steroids, the erosion of local control and baseline democracy is well underway in Wisconsin and the charge is being led by the Republican party -- the formerly-ardent champions of all things local.

ACTIVISM; trickledownbs blog says ACT NOW

THE TIME TO TAKE ACTION IS NOW


Don’t bitch later that the Republican Teahadists destroyed your benefits
Attend a Local Town Hall

Bring your camera to a local town hall in your area and report back to us on what you see by e-mailing us at rapidresponse@dccc.org.

You can also print out a pledge card and ask your Member of Congress to declare their opposition to benefit cuts.
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Use our online form to send a letter to your Member of Congress >>

Fed Laugh Track: ‘Can We Borrow from the Greeks?’

Federal Open Market Committee meetings entail central bankers going around a table discussing their views about the economy. They also include numerous jokes and attempted jokes, many from economists who have a unique sense of humor. Transcripts of the meetings mark such moments with a simple tag: [Laughter].
Here’s a sampling of jokes from the 2005 transcripts, released today with the customary five-year lag with updates to come:

Alan Greenspan, March 22, 2005, in an exchange with Dino Kos, then head of the New York Fed’s markets desk.

Bloomberg News
Former Fed Chairman Alan Greenspan yukking it up.
MR. KOS. As some of you know, Greece issued a 30-year bond recently at 26 basis points above the rate on Bunds, or about ½ point below the U.S. 10-year rate and about 100 basis points below the 30-year rate.
CHAIRMAN GREENSPAN. Can we borrow from the Greeks? [Laughter]
MR. KOS. It’s interesting, since they are at about double the 3 percent (borrowing) limit. So the markets are not punishing anybody for not complying.
Fed officials joking about Bear Stearns and Lehman Brothers long before the crisis, November 1, 2005
CHAIRMAN GREENSPAN. On the bottom of page 3, are these brokerage sector CDS? Is this the mix of their individual portfolios or their estimates of the total market?
MR. KOS. No, no. This is if you want to buy protection on, say, Lehman Brothers or Bear Stearns. This is the price of protection on these firms.
CHAIRMAN GREENSPAN. Oh, this is the actual credit default swap on Lehman Brothers or on—
MR. KOS. Yes, all eight of them.
CHAIRMAN GREENSPAN. This tells you a good deal about the individual firms. That’s interesting.
VICE CHAIRMAN GEITHNER. There’s a moral hazard in there, too, if you look at it. [Laughter]
CHAIRMAN GREENSPAN. I’m going back in the private sector. I’ve got to know who’s risky! [Laughter] That was off the record. [Laughter]
Edward Gramlich, lamenting fiscal laxity, March 22, 2005
In recent meetings, I have held out one factor that could get me to be less hawkish—the prospect of real fiscal tightening. This has become less likely, too. There has been a dispute between those who want to cut spending and extend the tax cuts and those who want to maintain spending. When not dealing with steroids in baseball and feeding tubes in Florida, the Congress seems to be working toward one of their unique compromises: Let’s extend the tax cuts and maintain spending. [Laughter] There just doesn’t seem to be much voice for and hope for real fiscal tightening.
David Stockton, March 22, 2005, Sept. 20, 2005 and Dec. 13, 2005, economist and Fed funnyman
–I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled “Flip That House.” [Laughter] As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas, and access to a bank, you too could tap into the great real estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]
–So what should we worrying about? While my colleagues who attend our lengthy forecast meetings were not exactly thrilled by it, the removal of my arm from its sling in the past few weeks has allowed me, once again, to bring my principal value added to the forecasting process, and that is copious amounts of hand-wringing. [Laughter]
–With the retail price of gasoline having risen above $3.00 per gallon in much of the country, there is certainly cause to be concerned. As a macro guy, I hope that those of you involved in supervision haven’t been too hard on home equity lending, because pretty soon people are going to need a loan to fill up their SUVs. [Laughter]
–Our calibrated vintage capital models failed us, and clearly finger-crossing has not proven a terribly robust forecasting technique. We even tried an approach gently suggested to us by Governor Olson at the time of our last forecast—you know, had we thought about trying common sense? [Laughter] We tried, but even that didn’t seem to work.
Kansas City Fed President Thomas Hoenig and Fed Vice Chairman Roger Ferguson with words of wisdom for central bankers, September 20, 2005:
MR. HOENIG. Mr. Chairman, I support your recommendation. And having listened to your comments, I would like to invoke the central banker’s prayer from Jackson Hole this year. It says, “Lord, if there be shocks, let them be varied and preferably moderate ones so that we can stress test our systems.” [Laughter]

Mr. FERGUSON. I’ll close with one other thing, the central banker’s anxiety, which is: “Good times are bad because they could turn out to be bad. Bad times are bad for obvious reasons.” [Laughter] I think you’ve given us a lesson in why these extremely good times are unlikely to be good for us in the long run.
David Stockton again and Dallas Fed President Richard Fisher with separate informational anecdotes, September 20, 2005:
MR. STOCKTON. In adjusting our forecast of the U.S. economy to incorporate the consequences of Hurricane Katrina, we were forced to rely more on economic judgment and assumption than our models. Perhaps that is just as well, given what I heard last month in Jackson Hole. At various turns, the staff was criticized for building models that bear no resemblance to economic reality and praised—or at least I think it was praised—for then having the good sense to essentially ignore those models through the wise use of add factors.
That mixed message reminded me of a story told by Nobel laureate Ken Arrow. During World War II, Arrow was assigned to a team of statisticians to produce long-range weather forecasts. After a time, Arrow and his team determined that their forecasts were not much better than pulling predictions out of a hat. They wrote their superiors, asking to be relieved of the duty. They received the following reply, and I quote “The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.” [Laughter]

MR. FISHER. I’m reminded of a story that George Shultz told me about his time working under President Reagan, who was very frustrated about spending. George picked up the phone and called I think it was Sam Cohen and said, “Tell me, Sam, is there really any difference between Republicans and Democrats when it comes to spending?” And Cohen said, “I want to think about it, do some research, and give you a serious answer.” He called back the next morning and said, “Yes, George, there is. Democrats enjoy it more.” [Laughter] “But otherwise there doesn’t appear to be any difference.”
Vincent Reinhart, Feb. 1-2, 2005, Director of Monetary Affairs
Over the intermeeting period, I surveyed you about whether the summary of your economic projections should be expedited—that is, released next week rather than three weeks later when the Chairman delivers the Monetary Policy Report in testimony to the Congress. My experience in surveying you has been that if I ask the 19 of you “What is the color of an orange?” I couldn’t be sure of getting a majority on a single answer. [Laughter] This most recent survey was no exception. Almost as many of you strongly endorsed an expedited release of your projections as strongly opposed it. An equal number of you endorsed it as opposed it, and there were two lonely people who were indifferent. [Laughter]
Alan Greenspan teasing Tim Geithner, then New York Fed President, March 22, 2005
VICE CHAIRMAN GEITHNER. I have no humor in my statement and nothing that differs from the consensus.
CHAIRMAN GREENSPAN. Your straightforward remarks are very humorous. [Laughter]
VICE CHAIRMAN GEITHNER. Careful. [Laughter]
Fed Chairman Greenspan, the Henny Youngman of the FOMC, June 29-30, 2005 and Nov. 1, 2005:
MS. JOHNSON. Absent a dollar depreciation that’s now probably on the order of 8, 9, or 10 percent, the deficit is going to steadily worsen. If the dollar were to start depreciating, that would slow the rate of deterioration. If the dollar depreciation that we put into the forecast were to get as high as 8 or 9 percent, that might plateau the deficit.
CHAIRMAN GREENSPAN. One thing we can be sure of is that the value of the dollar will be worth 100 cents. [Laughter]

MR. FERGUSON: Someone quoted Yogi Berra. I’m going to quote that equally famous poet, Archilochus, whom some of you may recall from the 7th century B.C. [Laughter]
CHAIRMAN GREENSPAN. I knew him well. [Laughter]
Richard Fisher again, June 29-30, 2005 and Nov. 1, 2005:
The largest paper product company, Kimberly-Clark, is in our District. Interestingly, its CEO reported only one product line where they feel the ability to pass on costs based on energy prices, which again was the diaper market. That has been the subject of quite a lot of discussion in our District! [Laughter]
Everyone I’ve talked to continues to try to figure out ways to exploit globalization. Each of them, from the IT [information technology] guys to the big box retailers to the specialty chemical firms to the service firms, wants to have offshore supply. One of the CEOs said, “We have a long way to go in exploiting China.” We’ve heard that forever. And one of my favorites was the comment, “China, India, and Indonesia can make Italian ceramics better than Italians can now or could 200 years ago.” [Laughter]
Federal Reserve Board economist David Wilcox, August 9, 2005:
I can’t think of any reason off the top of my head for the confidence band to have changed. We certainly perceived no asymmetry in the risks. We’ve gone to enormous effort this time, as always, to present to you a forecast with balanced risks. I don’t see any reason why the width of our confidence band should have narrowed or widened. I suppose I’m going to fall into a common conceptual error here, but I guess I would say that the uncertainty around the oil price projection might be even greater now than average. But I hear echoes in my brain saying, “You know, now is a particularly uncertain time,” and I never hear anybody ever saying, “Now is a particularly certain time.” [Laughter] Nevertheless, if I were going to point to something that would widen the confidence intervals, it may be the oil situation, but I don’t find that a very compelling piece of evidence.

Interesting Move Your Money news bits ..

Mass. Treasurer Pitches Move Your Money Program

State Treasurer Steve Grossman has proposed moving up to $100 million for deposit into local community banks, with the caveat that they must in turn loan out the money to the state’s small businesses. The idea is that by giving loans to small businesses, the local economy will grow, thus creating more jobs and speeding up the economic recovery. According to state data, small businesses make up for 85 percent of the state’s businesses. Already, 24 banks have agreed to join in, and more are expected to follow. Read the full story here.
Campaign Via Social Media Blocks Dutch Bankers Pay 

ING customers in Amsterdam became furious over executive bonuses and mobilized on Twitter and other social networks, threatening to remove deposits from the bank that received a taxpayer bailout that it has yet to repay. That reaction was so incendiary that ING’s chief executive Jan Hommen agreed to forego his bonus and encouraged other ING directors to do so as well. Now the Dutch parliament has voted for a 100% retroactive tax on bonuses paid to executives at financial institutions who have yet to pay back their bailout loans. The finance minister must approve the parliament’s proposal in order for it to be implemented.

Goldman Sachs CEO Could Face Criminal Prosecution

Goldman Sachs CEO Lloyd Blankfein could face criminal prosecution for his role in deceiving clients into buying securities he knew were worthless, as well as misleading Congress. Senator Carl Levin has announced that he will recommend Goldman executives who testified before his panel including Blankfein to be referred to the Justice Department for possible criminal prosecution. Senator Levin’s announcement comes after a two-year investigation on the causes of the financial crisis. Members of the investigative panel must deliberate Levin’s proposal before the referral can be made.

Report On Rating Agencies Caving To Banks

A two-year government investigation has concluded that the major credit rating agencies Standard & Poor’s and Moody’s Ratings, knowingly mislead investors by artificially inflating their ratings for mortgage-backed securities that ended up being worth significantly less. The report points to the rating agencies financial conflict of interest as the cause for their misconduct and argues that the rating agencies fallacious ratings contributed to the housing bubble and the resulting financial crisis.

Read the report here.

Federal Regulators Issue Weak Settlement Against Big Banks

Following the robo-signer scandal where mortgage firms hired people to sign thousands of foreclosure documents a day without verifying or even reading them, the three federal bank regulators – the Office of the Comptroller of Currency, the Federal Reserve and the Office of Thrift Supervision announced a settlement last week that demands the banks stop such practices and fix their foreclosure process. Yet the regulators have left it up to the banks to decide what actions they need to take and how to implement the new procedures. The three regulators also announced that fines would be imposed but have yet to announce how much the banks will be subject to. While the settlement appears to be a step in the right direction, many have criticized the settlement for being very weak and an attempt to undercut the 50 State Attorneys General investigations that are expected to impose a stricter settlement on the mortgage firms.

Read Joe Nocera’s great op-ed on the OCC settlement.



Action Report
Around the country, Americans are speaking out against Wall Street banks and the havoc they have created. Below are a few groups that are fed up and taking action. Find out how you can help below:

Make Wall Street Pay

Last week, 150 people in the Chicago area protested outside a Bank of America for dodging $3.8 billion in taxes last year. Rather than pay taxes, Bank of America received a $666 million tax rebate. The group then marched to Senator Mark Kirk’s office and demanded that he take a stand against banks and corporations. Senator Kirk received $2 million in campaign contributions from the financial industry.

Showdown in Ohio

Main Street will meet Wall Street, as thousands of people from local and national grassroots organizations will travel to Columbus, OH, from May 16 to 17 for two days of direct action against JP Morgan Chase at their annual shareholder meeting. The showdown is being organized by National People’s Action and the Ohio Organizing Collaborative. Click here to learn more about the event and how you can get involved!

Fordham for the Bronx

Fordham for the Bronx, a small student group at Fordham University created a proposal to move 0.5% to 1% of the Operating Account to be moved out of Wall Street banks and reinvested in either Bethel Federal Credit Union or the Amalgamated Bank. With the help of the Responsible Endowments Coalition, the student group successfully convinced the Student Government to unanimously support their proposal. On March 7th, the students submitted their proposal to the Chief Financial Officer and the Director of Treasury Operations and received an overwhelmingly positive response. The students hope that if their campaign is successfully implemented, they will be able to push for more money to be moved into local banks in the future.

Want advice on submitting a proposal at your own University? Click here.

Slave Labor & ALEC - Join us in Cincy April 28-30th for a protest and Workshops!

Bob Sloan  Daily Kos,

I have been writing and informing others about an insidious lobbying organization that serves as the core of right wing conservatism for more than a year now - here on D Kos and elsewhere.  This is the American Legislative Exchange Council (ALEC) and they try and justify their very existence - and avoid taxes and reporting donations and secretive legislative activities - behind a label of "educating" and "training" state lawmakers on how to write effective legislation at the state level.
The entire membership has a Conservative driven agenda that has brought our society to the brink of bankruptcy - state and personal - through their efforts of imprisoning over 2 million of us to create a captive workforce in America.  They use that workforce to fill the jobs we once held with prisoners making pennies an hour.  This increases corporate profits and denies necessary jobs for the rest of us.
They are funded by the likes of Koch Industries and 300 other corporations that profit from the laws ALEC is able to get each state to enact; prison privatization, PIECP to allow member corporations access to those they've imprisoned, union busting, right to work and laws attacking collective bargaining - to mention just a handful of their most recent efforts.
This month we want to start a campaign to stop ALEC's unchecked pursuit of incarceration for profits and begin taking our jobs back.  On April 29th many of us have agreed to meet and protest ALEC.  They are holding their "Spring Summit" that weekend in Cincinnati, Ohio.  This is the day that the orders and efforts of the corporate elite - such as Charles and David Koch - are put forth as marching orders to the thousands of lawmakers representing every state, who will attend (paid for by your tax dollars).  ALEC serves as the face and voice of the Kochs and those corporations working to change the landscape of America - from incarceration to jobs, deregulation to no taxation upon the rich.  Ohio is ground zero for this protest as Governor Kasich is a former ALEC ALUMNI!  He'll no doubt be in attendance at the Summit to speak and reap the rewards and accolades from fellow ALEC members for his efforts at Union busting, prison privatization and eliminating public sector jobs.
Many other conservative Alumni will be there.  Republican Presidential candidates always attend these events to give speeches and mingle with the underworld of conservative politics.  Here is a link to ALEC's Agenda" on the 29th.  Keep in mind that this is their Spring "Task Force" Summit.  At this event they will be setting their sights on 2011 legislation beneficial to their corporate members and supporters. Let's add our loud voices to their whispers behind closed doors.  This has never happened before and will fill them with worry about what may happen at their next Summits or Annual conferences!
Ohio Activists have worked hard and fast to put together a protest for that weekend. to give us the chance to make our voices heard. Here is a link to the website that will inform of the issues, allow each of us register to attend and participate.  They have been able to secure permitting and a public space for the protest and have found a way to provide housing for those of us coming from out of state.
I will be there to inform and help "teach" others how to overcome the influence of this nest of political vipers that have preyed upon us for so long, while hiding behind a curtain of secrecy.  This is the first effort of calling these people out and it provides us, as a collective society a unique opportunity to not only say "no" to their continued agenda, but also to stand up and spit in the face of the Koch brothers.
Bring lots of signs, lots of water to form the spittle needed to do just that.  I'm hoping to see many of you there where we can meet and greet and take these bastards on in the streets.  They have always had their way without real interference.  Join me there to show them the day has arrived when all of that stops!
STAND UP FOR JOBS, UNIONS AND YOUR OWN FUTURE AS AN AMERICAN by attending and lending your voice to the millions nationwide who have been doing that for more than six weeks now in places like Wisconsin, Indiana, Michigan, Nebraska and many other states.  Let's help others give ol' Kasich and the other ALEC Alumni and sitting members a raucous greeting!
Remember what the ALEC acronym really means to us today: American Legislators Exemplifying Corruption!

Originally posted to Bob Sloan on Thu Apr 07, 2011 at 07:00 AM PDT.

 52 comments if you go to the link

Friday, April 29, 2011

Posted: 28 Apr 2011 02:13 PM PDT
A pair of recent Gallup Polls shows distinct loss of confidence in the US economy. The first poll shows Americans' Economic Confidence at the 2011 Low. A second poll shows 55% still think the economy is in a recession, or worse.

Please consider Americans' Economic Confidence Declines Further
Gallup's Economic Confidence Index dropped to -39 in the week ending April 24 -- a new weekly low for 2011. This continues a downward trend that began in mid-February. The current deterioration of confidence contrasts sharply with the improving trend found at this time a year ago.


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Optimism About Economic Outlook Drops to 2011 Low

Slightly more than one in four Americans said the economy is "getting better" last week. This measure has been declining since mid-February, and is now at its 2011 low. Far fewer Americans currently feel the economy is improving than held that expectation a year ago, when 41% said things were getting better.



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Just 12 months ago, economic confidence was improving and there was talk of "frugality fatigue." The U.S. saw a sharp spike in spending -- particularly among those with higher incomes -- during May 2010. Things were looking up for the nation's retailers and the economy as a whole until the debt crisis in Europe surfaced.

This year, economic confidence is going in the opposite direction. There is an increasing danger of stagflation as prices surge and the economy slows. As a result, retailers and the economy could find it difficult to match last May's sales performance in 2011.
Survey Respondents Think US Still In Recession

For example, please consider More Than Half Still Say U.S. Is in Recession or Depression
More than half of Americans (55%) describe the U.S. economy as being in a recession or depression, even as the Federal Open Market Committee (FOMC) reports that "the economic recovery is proceeding at a moderate pace."

Right now, do you think the economy is growing, slowing down, in a recession, or in an economic depression?



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Although economists announced that the recession ended in mid-2009, more than half of Americans still don't agree. These ratings are consistent with Gallup's mid-April findings that 47% of Americans rate the economy "poor" and 19.2% report being underemployed.

In another possible disconnect with monetary policymakers, many Americans may not see the trade-off Bernanke suggests between promoting a stronger economy and experiencing higher inflation. Right now, prices are soaring, yet the latest Gallup Daily tracking data show that 67% of Americans say the economy is "getting worse."
Majority Do Not See A Recovery

Is there a recovery? The answer is in the eyes of the beholder. Turn on mainstream media and the answer would likely be a resounding yes. Take a poll of average citizens and the answer is clearly different.

The one bright spot in the Gallup survey is 27% of respondents now think the economy is growing. This is up from 3% in September of 2008. However, there are more who think the US is in a depression than a recession, and more who think the US is a depression than think the economy is growing.

With rising gas prices, rising food prices, falling real wages, and falling nominal wages for many households, it should not be difficult to figure out reasons for declining sentiment.

Recovery is a Mirage

There is no real recovery, at least in any meaningful sense. Unemployment is down, but employment is not up. The economy is finally adding jobs, but at snail's pace compared to any normal recovery.

Mean Unemployment Duration Weeks

'

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If you lose your job, good luck finding another one quickly. You will need it.

Civilian Employment



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Does that depict a recovery? Before you answer, bear in mind that Bernanke estimates that it takes 125,000 jobs a month just to hold the unemployment rate flat.

The only reason the unemployment rate has fallen is 2.3 million workers dropped out of the labor force in the last year alone, smack in the midst of an alleged recovery.

Take away government spending, unemployment insurance, and food stamps and you have a widespread economic depression. Gallup respondents realize that; The average commentator on mainstream media doesn't.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Thursday, April 28, 2011

Reclaiming Oil Subsidies: Senate Democrats Prepping Bill That Would Recover Billions From Big Firms

http://www.huffingtonpost.com/2011/04/28/oil-subsidies-senate-bill_n_855193.html

Seizing the moment, Senate Democrats are working on legislation that would reclaim billions of dollars in taxpayer subsidies to Big Oil and redirect the money toward developing cleaner and cheaper fuel sources instead.
Senate Finance Committee Chairman Max Baucus (D-Mont.) announced on Thursday that his committee is crafting a measure that would repeal major tax breaks for the five largest oil and gas companies, which reported huge spikes in first-quarter profits this week due to skyrocketing oil prices.
"Now is not the time to stand idly by while large oil and gas companies get billions of dollars in tax breaks -- now is the time to take concrete steps toward cleaner, more affordable, domestically-produced energy," Baucus said in a statement. "Reducing dependence on foreign oil isn't easy, but this plan puts us on a path toward a clean, affordable energy future that works for our planet -- and our pocketbooks."
The bill could be ready as soon as next week.
Democrats seem to have found their own source of renewable energy in some poorly-chosen words by House Speaker John Boehner, who in an interview with ABC News on Monday seemingly abandoned longstanding Republican dogma by conceding that oil companies "ought to be paying their fair share" and that the subsidies are "certainly something we should be looking at."
Boehner's staff and colleagues quickly corrected the speaker. But empowered Democrats were already in motion.
Capitalizing on Boehner's comments -- and anger about high gas prices, and first-quarter profit reports -- President Barack Obama and his press secretary called for immediate action Tuesday.

House Minority Leader Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) followed suit by pledging their support. "I'm going to try to get it done as soon as I can do it procedurally in the Senate here," Reid told reporters on Wednesday.
Democratic and environmental groups revved up their email lists. The Democratic Congressional Campaign Committee even popped up a new website Thursday morning, dubbing the GOP's relationship with the petroleum industry the "R-Oil Wedding."
Meanwhile, the liberal thinkprogress.org website distributed a video in which House Budget Committee Chairman Paul Ryan (R-Wisc.) told a town hall audience that he favored ending oil subsidies. "[W]e propose to repeal all that," Ryan said of corporate welfare generally. Asked specifically about ending oil subsidies, he said "I agree."
But Ryan's office told Politico that the congressman made his comments in the context of overall corporate tax reform.
The American Petroleum Institute and the rest of the oil and gas lobby have historically had more than enough clout on Capitol Hill to fend off attacks.
In fact, many considered Obama's proposal to repeal the subsidies in his State of the Union speech in January to be dead on arrival. Congress had rejected similar requests in two previous budget proposals, even with Democratic majorities in both houses.
But the API seems to be getting increasingly testy as of late.
The group on Thursday called Baucus' plan "a proposal borne of desperation that would do nothing to reduce gasoline prices." API chief economist John Felmy said in a statement, "If Senator Baucus were serious about gasoline prices, he would focus on further development of our vast resources here at home which would create much needed American jobs, increase revenue to the government, and strengthen our energy security."
Baucus' office said his plan would bar the biggest companies from receiving a credit intended for domestic manufacturers, reduce their foreign tax credits for royalty payments to foreign governments and impose an excise tax on certain Gulf leases.
The billions of dollars recouped through those means would be used to promote demand for clean and domestic fuel, incentivize fuel efficient vehicles and build a clean energy infrastructure.
House Democrats have already introduced a bill that would eliminate $40 billion in tax breaks for big oil and gas companies over five years.


*************************
Dan Froomkin is senior Washington correspondent for The Huffington Post. You can send him an email, bookmark his page; subscribe to his RSS feed, follow him on Twitter, friend him on Facebook, and/or become a fan and get email alerts when he writes.

Largest Banks Likely Profited By Borrowing From Federal Reserve, Lending To Federal Government

http://www.huffingtonpost.com/2011/04/26/fed-lending-helped-wall-street_n_853884.html]

There are nearly 4000, yes 4000 comments, posted ....

A newly-released study from the Congressional Research Service bolsters claims that the nation's largest banks profited off the Federal Reserve's financial crisis-era programs by borrowing cash for next to nothing, then lending it back to the federal government at substantially higher rates.
The report reinforces long-held beliefs that the banking system in essence engaged in taxpayer-financed arbitrage: They got money for free, then lent it back to Uncle Sam while collecting juicy returns. Left out of the equation are the millions of everyday borrowers, like households and small businesses, who were unable to secure loans needed to tide them over until the crisis ended.
The Fed released records under pressure in December and March that showed the extent of its largesse. The CRS study shows for the first time how some of the most sophisticated financial firms could have taken the Fed's money and flipped easy profits simply by lending it back to another arm of the government.
The report was requested by Sen. Bernie Sanders (I-Vt.), who likened the crisis-era emergency loans to "direct corporate welfare to big banks," in a statement. The cash likely was lent back to Uncle Sam in the form of Treasuries and other debt "instead of using the Fed loans to reinvest in the economy," Sanders added.
In all, more than $3 trillion was lent to financial institutions from the Fed, and terms were generous. Junk-rated securities were pledged as collateral for taxpayer-backed loans. The Fed did not provide conditions for how the money was to be used.
As part of one Fed program, on 33 separate occasions, nine firms were able to borrow between $5.2 billion and $6.2 billion in U.S. government securities for four-week intervals, paying one-time fees that amounted to the minuscule rate of 0.0078 percent.
In another, financial firms pledged more than $1.3 trillion in junk-rated securities to the Fed for cheap overnight loans. The rates were as low as 0.5 percent.


During one three-month period in 2009, Bank of America borrowed more than $48 billion at rates ranging from 0.25 to 0.5 percent. Meanwhile, the largest U.S. lender tripled its holdings of Treasuries and other taxpayer-backed debt to about $15 billion -- securities that yielded 3.5 percent.
During the third quarter of 2009, the bank borrowed $2.9 billion from the Fed through a program that charged 0.25 percent interest. In that same period, Bank of America increased its holdings of taxpayer-backed federal debt by $12 billion, according to the Congressional Research Service. Those securities yielded an average of 3.2 percent.
"Bank of America provided vital support to the economy throughout the financial crisis and we continue to support businesses and individuals today through our lending and capital raising activities," spokesman Jerry Dubrowski said in an email.
In another period, JPMorgan Chase, the second-largest bank, swelled its holdings of taxpayer-backed federal debt by $20 billion, which yielded 2.1 percent, while at the same time borrowing $29 billion from the Fed at a rate of 0.3 percent.
JPMorgan did not respond to a request for comment.
In contrast, during the first year of the Obama administration, small businesses shuttered due to lackluster sales and a lack of credit, foreclosures surged, and credit contracted at one of the quickest rates on record.
"Why wasn't the Fed providing these same sweetheart deals to the American people?" asked Warren Gunnels, senior policy adviser to Sanders. "The Fed was practicing socialism for the rich, powerful and the connected, while the federal government was promoting rugged individualism to everyone else."
At the time, Fed officials said its bailout programs were necessary to restart the flow of credit. If money couldn't flow to lenders, households and businesses would be next. Even more layoffs and foreclosures could have ensued, officials argued.
Lending, however, decreased, according to Fed and Federal Deposit Insurance Corporation data. Mortgage rates dropped, but mortgages were harder to come by. Credit card lines were slashed. Loans were called in. New financing plunged. In 2009, outstanding credit to U.S. households declined by $234.5 billion. For non-corporate businesses, credit plunged $296.1 billion, Fed data show.
Sanders said the spread between firms' borrowing rates and their lending rates to Uncle Sam amounted to "free money." For Bank of America during the third quarter of 2009, the spread was nearly 3 percent.
Dubrowski countered by pointing out that Bank of America "extended $184 billion in credit to individuals and businesses" during that time.
The author of the CRS report, Marc Labonte, cautioned that "correlation does not prove causation."
"There is no information available on how banks used specific funds borrowed from the Federal Reserve," he wrote.
The Federal Reserve declined to comment.
CRS on the Federal Reserve's Bailout



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