In the age of all-American anger: Bernie Sanders, “The Big Short” & a nation that’s had it up to here

www.salon.com|Edwin Lyngar

We are always told that life isn’t fair, and most of us accept that truism. I have to be honest and tell my kids that they might not be the smartest, fastest, luckiest or richest people out there. That’s just how it goes. However, “fairness” isn’t the same thing as justice.

The biggest financial crime of my lifetime, the financial collapse of 2008, is a historic injustice that has gone unpunished. The people who caused it also profited from it. The plutocratic class, spanning from Wall Street to Silicon Valley,   manipulate politicians to get whatever they want, while the rest of us get almost nothing for our votes. This state of affairs is obvious to anyone who cares to look, and it’s the driving factor behind Bernie Sanders’ strong performance in Iowa. If this election becomes a referendum on that unaddressed outrage, Sanders can and should become the next president.

They’re all bought and sold: American democracy belongs to the billionaires now

www.salon.com|Nomi Prins

Speaking of the need for citizen participation in our national politics in his final State of the Union address, President Obama said, “Our brand of democracy is hard.” A more accurate characterization might have been: “Our brand of democracy is cold hard cash.”

Cash, mountains of it, is increasingly the necessary tool for presidential candidates. Several Powerball jackpots could already be fueled from the billions of dollars in contributions in play in election 2016. When considering the present donation season, however, the devil lies in the details, which is why the details follow.

With three 2016 debates down and six more scheduled, the two fundraisers with the most surprising amount in common are Bernie Sanders and Donald Trump. Neither has billionaire-infused super PACs, but for vastly different reasons. Bernie has made it clear billionaires won’t ever hold sway in his court. While Trump… well, you know, he’s not only a billionaire but has the knack for getting the sort of attention that even billions can’t buy.

Robert Reich: Wall Street and the GOP are trying to rewrite history

www.salon.com|Robert Reich

If you haven’t yet seen “The Big Short” – directed and co-written by Adam McKay, based on the non-fiction prize-winning book by Michael Lewis about the housing and credit bubble that triggered the Great Recession — I recommend you do so.

Not only is the movie an enjoyable (if that’s the right word) way to understand how the big banks screwed millions of Americans out of their homes, savings, and jobs – and then got bailed out by taxpayers. It’s also a lesson in why they’re on the way to doing all this again – and how their political power continues to erode laws designed to prevent another crisis and to shield their executives from any accountability.

10 more reasons Wall Street would hate Bernie Sanders

No bank will be too big to fail under Bernie. The Vermont senator plans to radically overhaul our financial system

www.salon.com|Steven Rosenfeld

The underlying logic of this federal policy is that the biggest banks cannot fail and shut down, even if they make terrible investments or wreak great harm to the economy, because the U.S. economy and millions of ordinary people would become financially destitute. Sanders said this “scheme…is nothing more than a free insurance policy for Wall Street.” Compared to before the crash of 2008, the biggest banks in the country are larger than ever, he said, adding, “if a bank is too big to fail, it is too big to exist.”

If elected, Sanders said he would direct the Treasury Department to compile a list of the institutions “whose failure would pose a catastrophic risk to the United States economy without a taxpayer bailout.” Using the power of executive authority, he would break up these institutions. “Within one year, my administration will break these institutions up so that they no longer pose a grave threat to the economy as authorized under Section 121 of the Dodd-Frank Act.”

This Depression-era law, which was repealed by Congress under President Bill Clinton, prevented commercial banks from investing in risky and arcane financial instruments, such as bundled home loans during the housing market bubble that predated the 2008 financial market collapse.

Sanders said that the government needs to run Wall Street, not the other way around, which he said is the reality today. He said that “equal justice under the law” means that banking and finance executives whose reckless gambles damaged people’s lives must face real criminal penalties including prison.

One of Sanders’ most incisive comments concerned Wall Street’s ways of doing business, which he said are based on intentionally ripping off average Americans and engaging in all kinds of unethical and illegal behaviors. He said the government must do more to penalize companies that routinely rip off the public and richly reward the executives overseeing that process.

Sanders said one of the keys of reforming Wall Street was ending its culture of financial speculation. He said he would do that by imposing a transaction tax aimed at high-speed, high-volume traders who are not investing “in the job-creating economy.” Those funds would then be used for cutting the cost of higher education.

This is the industry that not only rates people on their personal financial credit but also rates investments—and before the 2008 crash falsely labeled as credible many of the risky investments that failed. These firms are like foxes guarding the hen house, Sanders said, and cannot base their profits on getting paid by the companies whose products they are rating. “We will turn for-profit credit rating agencies into non-profit institutions, independent from Wall Street. No longer will Wall Street be able to pick and choose which credit agency will rate their products.”

Banks and credit card companies must be stopped “from ripping off the American people by charging sky-high interest rates and outrageous fees,” Sanders said. “It is unacceptable that Americans are paying a $4 or $5 fee each time they go to the ATM. It is unacceptable that millions of Americans are paying credit card interest rates of 20 or 30 percent.”

The post office’s money order service could be greatly expanded “to give Americans affordable banking options,” Sanders said. “The reality is that, unbelievably, millions of low-income Americans live in communities where there are no normal banking services.”

Sanders said this arcame institution that regulates the flow of the U.S. currency and interest rates charges to banks must be reformed so that its primary purpose is serving the public, not private bankers. “When Wall Street was on the verge of collapse, the Federal Reserve acted with a fierce sense of urgency to save the financial system,” he said. “We need the Fed to act with the same boldness to combat unemployment and low wages.”

Bernie, Hillary go to war over Wall Street: Sanders gets upper hand as he pitches fix for financial industry

www.salon.com|Sean Illing

This week Sanders doubled down on his economic populism. In a speech on Tuesday, just a few miles away from Wall Street, the Vermont senator clarified his views on financial reform. “To those on Wall Street who may be listening today,” Sanders said, “let me be very clear…Greed is not good. Wall Street and corporate greed is destroying the fabric of our nation. And, here is a New Year’s Resolution that we will keep: If you do not end your greed we will end it for you.”

Responding to Clinton’s accusation that his proposals are too vague and simplistic, Sanders was especially clear about his intentions as president...

Uber fail: Why the start-up giant stumbled in Europe — and how it could happen in the U.S.

www.salon.com|Elias Isquith

So here’s a story you don’t read very often anymore, certainly not in the United States.

A red-hot and impossibly well-funded corporation — one with extensive ties to the powers that be not only on Wall Street but also in Silicon Valley — recently tried to strong-arm its way into a major market. It did so despite the fact that its business model was, in many respects, incompatible with that market’s predominant government regulations and social norms. The plan, I guess, was to “disrupt.”

If you’re someone who pays attention to the business press, or lives in a big city, then you’ve probably already guessed that I’m talking about Uber. You’re probably already aware of its market valuation — currently a gobsmacking $62.5 billion — and you’re probably already familiar with the company’s preferred means of market penetration. You’ve probably heard tales before of its smash-and-grab ethos, its fondness for ignoring the law and daring overmatched regulators to do something about it.

“Bold, brash and wholly false”: Hillary Clinton is misleading people about Bernie Sanders’ Wall Street reform, again

Hillary's Wall Street reform plan is to misrepresent Sanders', while falsely claiming her's is tougher. Nice try

www.salon.com|Eliza A. Webb

Today at 2 p.m., Bernie Sanders gave a speech on Wall Street reform.

Yesterday, Hillary Clinton’s campaign preemptively attacked.

Her chief financial officer said of the then-undelivered speech that “Senator Sanders should go beyond his existing plans for reforming Wall Street and endorse Hillary Clinton’s tough, comprehensive proposals to rein in risky behavior within the shadow banking sector.”

This is bold, brash and wholly false.

The distinction between Sanders’ plan to break up the banks, and reining in shadow banking, is nonsensical, as “many so-called banks are in fact deeply involved in shadow banking activities.”

Controlled by shadow government: Mike Lofgren reveals how top U.S. officials are at the mercy of the “deep state”

www.salon.com|Elias Isquith

One of the predominant themes of the 2016 presidential campaign thus far — and one that is unlikely to lose significance once the primaries give way to the general election — is the American people’s exasperation with a political system they see as corrupt, self-serving, disingenuous and out of touch.

It is not an especially partisan or ideological sentiment; you can just as easily find it among supporters of Sen. Bernie Sanders as among fans of Donald Trump. You can even find those who support paragons of the status quo, like Hillary Clinton or Jeb Bush, making similar complaints. It’s about as close to a consensus position as you’re likely to find nowadays in American politics.

Yet despite the widespread agreement that something is seriously wrong with democracy in the U.S., there’s much less of a consensus as to what that something is — and, crucially, how to fix it. The answers Bernie Sanders offers, for example, are not exactly the same as those proffered by Donald Trump. Is the problem too much government? Not enough government? Too much immigration? Not enough immigration? Too much taxing and regulating? Not enough taxing and regulating?

The one simple thing Hillary Clinton can do to fix her trust problem

www.salon.com|Joan Mandle

Hillary Clinton has a trust problem. Sixty percent of American voters – the highest number among candidates running for president – say she is not honest and trustworthy, according to a Quinnipiac University poll in November.

Her cozy ties to a vast network of wealthy donors who have raised more than $3 billion in support of the Clintons’ political and philanthropic efforts over four decades have made Americans question whether she is fighting for us or for the large campaign donors supporting her.

Elizabeth Warren endorses Hillary Clinton’s proposed new Wall Street regulations

www.salon.com|Sophia Tesfaye

On Monday, the New York Times ran an op-ed from Democratic presidential candidate Hillary Clinton, titled, “How I’d Rein In Wall Street.”

In her op-ed, Clinton outlined how she would “fight for tough new rules, stronger enforcement and more accountability that go well beyond” Dodd-Frank. Although Clinton does not support the reinstatement of Glass-Stegall, she wrote that her “plan goes beyond the biggest banks to include the whole financial sector.”

“We need to tackle excessive risk wherever it lurks, not just in the banks,” Clinton suggested.

The GOP’s devious Wall Street welfare plan: Why the future of the economy hangs in the balance

www.salon.com|David Dayen

You wouldn’t know it, but this is a consequential week for the future of financial regulation, and in a larger sense, the future of the economy. Republicans have pulled out a successful playbook, and are planning an assault on Wall Street regulations. They’re doing it with the avowed support of a lingering faction of conservative Democrats. And the level of that support, which will be tested in House votes this week, is key to the success of the plan.

The game plan is simple: stick as many riders onto two must-pass bills as possible, holding them hostage to conservative ideology. The bills include a long-term reauthorization of the Highway Trust Fund, which expires shortly, and a package of appropriations bills to keep the government funded, which have a deadline ofDecember 11. Even if the Obama Administration forces some riders out, plenty of other policies would pass into law that would never have a shot on a straight-up vote.

Hillary’s disgusting Wall Street deceit: The 9/11 gaffe that could come back to haunt her

www.salon.com|Steven Rosenfeld

While much of the world’s attention was still focused on the terrorist attacks in Paris, Hillary Clinton made her worst stumble in Saturday night’s Democratic debate in Iowa by defending her cozy relationship with Wall Street contributors as a consequence of being New York’s senator after the 9/11 attacks.

The exchange that led to that eyebrow-raising explanation started with CBS moderator John Dickerson saying, “So you’ve received millions of dollars in contributions and speaking fees from Wall Street companies. How do you convince voters that you are going to level the playing field when you’re indebted to some of its biggest players?”

Wall Street is finally getting its comeuppance: Why new global regulations are a vital step in the right direction

www.salon.com|David Dayen

People all over the world have been appalled and infuriated by “too big to fail” banks receiving taxpayer lifelines rather than facing the consequences of their hazardous actions. After the financial crisis, governments vowed to change the rules so this would never happen again, and the public rolled their eyes, cynically figuring that government bailouts of failing banks were as immutable as the seasons.

That public outrage has gradually driven a more robust post-crisis response as we get further and further away from the event, an unusual and encouraging scenario. The latest action, from the global banking regulator known as the Financial Stability Board (FSB), would force the world’s 30 biggest banks to raise over $1 trillion in additional funds that can be used to absorb losses in a downturn.

The real reason Donald Trump appeals to working-class whites

www.salon.com|Robert Reich

I’ve just returned from three weeks in “red” America.

It was ostensibly a book tour but I wanted to talk with conservative Republicans and Tea Partiers.

I intended to put into practice what I tell my students – that the best way to learn is to talk with people who disagree you. I wanted to learn from red America, and hoped they’d also learn a bit from me (and perhaps also buy my book).

But something odd happened. It turned out that many of the conservative Republicans and Tea Partiers I met agreed with much of what I had to say, and I agreed with them.

For example, most condemned what they called “crony capitalism,” by which they mean big corporations getting sweetheart deals from the government because of lobbying and campaign contributions.

Robert Reich: Wall Street has this whole game rigged

We have economic redistribution backwards, says the former secretary of labor. Money is flowing up from the bottom

www.salon.com|Robert Reich

Much of the national debate about widening inequality focuses on whether and how much to tax the rich and redistribute their income downward.

But this debate ignores the upward redistributions going on every day, from the rest of us to the rich. These redistributions are hidden inside the market.

The only way to stop them is to prevent big corporations and Wall Street banks from rigging the market.

For example, Americans pay more for pharmaceuticals than do the citizens of any other developed nation.

That’s partly because it’s perfectly legal in the U.S. (but not in most other nations) for the makers of branded drugs to pay the makers of generic drugs to delay introducing cheaper unbranded equivalents, after patents on the brands have expired.

This costs you and me an estimated $3.5 billion a year – a hidden upward redistribution of our incomes to Pfizer, Merck, and other big proprietary drug companies, their executives, and major shareholders.

www.salon.com

The year is 1995, and I am sitting at a massive octagonal table on the top floor of the large modern building that dominates the town of Halifax, West Yorkshire. The location is the boardroom of the Halifax Building Society. The proposal before the board was that Group Treasury, which managed the cash held by the Society from day to day, should no longer simply serve the needs of the business—taking deposits from savers and making loans to home-buyers. Treasury should take active positions in money markets, and become another profit centre. The plan was to trade debt instruments: usually either government stock or the liabilities of other financial institutions. The Society would take full advantage of Lew Ranieri’s revolution in the promotion of markets in fixed-interest securities. Nick Carraway had given way to Sherman McCoy, and the Halifax was lusting after its share of the action.

In the years that followed, many financial institutions continued (and still continue) to report profits from their trading activities. The mainspring of investment banking profits in recent years has been trading in fixed-income, currency and commodities (FICC). But the aggregate value of debt securities and currencies is fixed, and although commodity prices fluctuate, the long-run trend has been downward. Individual businesses and traders can make profits at the expense of each other, but this cannot be true for the activity taken as a whole.

That raised a question in my mind. Where would Treasury profits come from? Who would lose the money we expected to make? The reaction to my question was not polite. I was sent for re-education so that the traders could resolve my confusion. I did not find this experience enlightening. We would make money, I was told, because our traders were smarter. But the people I met did not seem particularly smart. And not everyone could be smarter than everyone else.

Hillary Clinton’s Wall Street problem: She’s still going too easy on the banksters

www.salon.com|Wallace Turbeville

Hillary Clinton’s Wall Street policy proposals are all good, solid reforms and will improve the performance of the financial sector. These proposals have been carefully crafted to outlaw and punish bad behavior, correct some flaws in the 2010 Dodd-Frank law and repair damage done by reform opponents. While Clinton’s proposals mark an improvement over the current system, however, we are left to ponder what might have been. The proposals stop short of measures that would change the system and alter the trajectory of capital and investment for the benefit of the average household.