(Oopsie; it turned out longer than I’d meant it to be…) But ya know how sometimes it’s the little things that piss ya off…and ya have to write about them to relieve some of the pressure?
Stick a pin in the diary title for now, and allow yourselves to imagine what the economic lives of untold millions of people around the globe look like right now…if banks had been simply created as public utilities, their funds lent at reasonable interest rates in order to facilitate projects or purchases in aid of The People, not the wealth of capitalist financiers without conscience, and whose credo is: Caveat Emptor, or ‘Dog Eat Dog Survival; So Sorry’. Imagine all the suffering we might have been spared…not to mention our childrens’ children…
But I digress; let me get back to the title and content of the piece at the Guardian, and why it made my brain go Ka-Boom.How many years have we been living through the results of the economic meltdown that was essentially created during Clinton Rule, then expanded under President Greeks-Bearing-Gifts? You don’t need me to list all the sectors in which misery rules the Rabble’s lives. Nor do I need to remind you of the conventional predictions that true financial reform would be, would have to be reconstructed…lest the same damned thing happen again. Oh, but wait: what we got was the obscene ‘Dodd-Frank’, almost more of an insult than no bill at all would have been.
We all now know that those who assert that in the future, ‘Too Big to Fail will mean Too Big to Bail’ the *next time*; pffft; anyone who believes that is delusional (barring a citizens’ revolution). The Oligarchs and the Kleptocrats will always be bailed out, while We, the Rabble, get sold out. Yes indeed, the Pigs will keep clutching their forks and knives as they eat the Bacon that it is the fruits of our labor. And as they feed at the troughs, we’ll keep on dying of their gravy spills, as Buffy Sainte Marie says so well.
Zo, as you likely know, the National Archives has recently been releasing tranches of Clinton era documents as per the Presidential Records Act, the ‘twelve years after a President leaves office’, etc. rule. The most recent tranche of ‘previously restricted documents’ consisted of some 7,000 pages, all in pdf format.
Now the first I’d read of this batch of declassified docs was at the Guardian, and hoping to find a different angle or two, I went a-Googling, and pretty much just found spin-off pieces of the Guardian’s. Thus, the meme seems to have been reified. (Hillary-Care and Lewinsky memos might be far more interesting, of course).
Well, groovy two-shoes:
Let’s let the Big Dawg off the hook, okay? Poor, poor, Slick Willie, America’s First Black President (©Toni Morrison) was pressured by the self-same freaking Chicago Boys economics team he installed once he hit the Oval Office. Shoot, while all this pressuring was goin’ on, Monica was givin’ him blow-jobs under the Resolute Desk; whaddya want? He was distracted! And hell, they wuz tryin’ to crucify the poor sod for doin’ what came naturally!
Well, let’s look at the evidence the author, Dan Robertson, provided (with images of the memos). Now my guess is that he likely had some interns print all 178 pages (pdf) of the photocopies of the memos since they’re so hard to read online. A few were held in abeyance (ahem), and it’s hard to say why Robertson chose to focus on those he did, but here are the key few. I will say that I tried hard to discover more Clinton-damning evidence, but in the end…we know that he indeed signed the Financial Services Modernization Act of 1999 (Graham-Leach-Bliley) into being, so…what a pyrrhic victory would have been, yes? I gave up my quixotic quest due to eye strain and eventual ennui.
Robertson takes note that the same Clinton team of advisors is still working in the Obama White House policy-making apparatus, and that deregulation ‘deepened the banking crisis’; ya think? Keep in mind that Glass-Steagall had created a firewall between commercial banking and investment banking, although there had been some erosion of it over the years. But the FSMA not only tore down that firewall, but also allowed insurance companies into the Wall Street Casino, retrospectively legalizing the merger of Citicorps and Travelers Insurance into Citigroup, with joint assets of $700 billion to er…play with. Treasury had earlier granted the two a waiver, but think of what giving other firms the same deal could mean for the banking sector; consolidations, mergers, and insurance; nothing could be finer!
Back to the memos:
‘The White House papers show only limited discussion of the risks of such deregulation, but include a private note which reveals that details of a deal with Citigroup to clear its merger in advance of the legislation were deleted from official documents, for fear of it leaking out.
“Please eat this paper after you have read this,” jokes the hand-written 1998 note addressed to Gene Sperling, then director of Clinton’s National Economic Council.’
Earlier, in February 1995, newly-appointed Treasury secretary Robert Rubin, his deputy Bo Cutter and senior advisers including John Podesta gave the president three days to decide whether to back a repeal of Glass-Steagall.
In what Cutter described as “an action forcing event”, he wrote to Clinton on 21 February, telling him Rubin wanted to announce the policy before it was raised by the House banking committee on 1 March.’
Perhaps the President could afford to take his time considering this ‘modernization’ a bit longer, since it was only 1995.
‘Podesta, who was then staff secretary but went on to become Clinton’s chief of staff, wrote a covering note telling the president that all his senior advisers backed the plan, although he noted the danger that “allowing banks to engage in riskier activities like securities or insurance could subject the deposit insurance fund to added risk”.
But Clinton’s advisers repeatedly reassured him that the decision to let Wall Street dismantle regulatory barriers designed to protect the public after the Great Depression simply represented inevitable modernisation.
“The argument for reform is that the separation between banking and other financial services mandated by Glass-Steagall is out of date in a world where banks, securities firms and insurance companies offer similar products and where firms outside the US do not face such restrictions,” wrote Podesta.’
Coincidentally, Podesta was born in Chicago, became Clinton’s Chief of Staff in 1998, and became co-chair of the Obama-Biden Transition Team.
And yeppers, the memos show that Clinton was again ‘pressured’ by Sperling and Rubin in 1998, noting that Treasury could handle all the details and not ‘take up much of the President’s time’. ““I and my staff will manage the process of advancing the proposal,” Rubin adds. Who taught him grammar, anyhoo? Narcissists R Us?
And this power-jockeyingfrom 1995:
‘In order to position Secretary Rubin – rather than any of the regulators – as the Administration’s chief spokesman on this issue, the Secretary intends to discuss the Administration’s position at a speech which will be covered by the press in New York on 27 February,” wrote Cutter on 21 February.’
Podesta currently works at the White House as special adviser to President Barack Obama; Sperling stood down as director of Obama’s National Economic Council last month, and Rubin has been raking it in off and on at Citigroup, having received more than $126 million in cash and stock during his tenure at Citigroup up through and including Citigroup’s bailout by the U.S. Treasury. Comedy time: his Wiki says that aside from his several $$$ gigs, he is currently engaged actively as a founder of The Hamilton Project, an economic policy think tank which produces research and proposals on how to create a growing economy that benefits more Americans (yes, we needed moar har har after the note to Sperling hilarity) Robertson did not one might-have-been hero of the story, bless her heart:
‘“Notwithstanding the pounding Treasury took today, there’s still much to their position on the regulatory structure (which really depends on the proposition that we’re not good at regulating complex financial (let alone non-financial) companies, but we’re pretty good at walling off the bank to protect the taxpayers),” concludes Clinton adviser Ellen Seidman in one 1997 memo.’
The second part of the title of the Guardian piece is: ‘Previously restricted papers reveal attempts to rush president to support act, later blamed for deepening banking crisis’, which caused my mind to ping about this possibly more major ingredient of the catastrophe:
Another Hero of the story, had she not been nuked by Greenspan, Rubin, Summers, all Clinton’s Creatures Great and er….
My favorite Brooksley Born. A few things to keep in mind, here. We don’t know yet if or when Clinton will declassify the documents on the 2000 Commodity Futures Moderniztion Act (Graham-Leach-Bliley) he signed into law. The author didn’t mention that travesty as equal to, or more key to the financial meltdown, either, which was a misstep as far as I’m concerned. During my search into the docs, I did find back and forths over Clinton’s Community Reinvestment Act and the proposed law so loathed by Republicans. But in the end, clever lenders granted liars loans and the subprime mortgages that were so often chopped up and sold as credit default swaps, bets on repayment or not (usually not, and oy veh: massive foreclosure rates). Of course there were so many other contributing factors, regulatory capture by bogus credit ratings agencies, and so many other egregious factors later, it’s hard to assign causative percentages in the end. But for my money, it was this, especially as commercial banks had already been allowed create holding companies that engaged in…speculation. So much corruption, massive fraud, zero will to prosecute later…(Deferred Prosecutions? Orwell weeps.)
Another key thing to remember is that the’ working group’ mentioned was Larry Summers, Robert Rubin, Arthur Leavitt, and the CFTC’s Wm. Rainer. While you all may know what the CFMA was about, the arguments over the law that produced the 1997 Commodity Futures Trading Commission itself were hotly contested, which is why the dispute between Born and the Money Changers blew up large: Born, of course…was correct. Cold comfort, given that they trashed her. Recalling all of this added to my anger, including how much or little Miz Hillary Clinton ever fought for her school chum. Lynn Stout’s explanation is the simplest I’ve found about a very complicated law:
‘Prior to 2000, off-exchange derivatives contracts were subject to a common-law rule called the “rule against difference contracts” that treated derivative contracts that could not be proven to hedge against a real position in the underlying asset as legally unenforceable wagering contracts. Speculative wagers on prices could only be safely made on regulated exchanges. Congress overturned this centuries-old rule in 2000, making it legal for hedge funds, banks and insurance companies to use derivatives for speculative gambling, not just for true hedging. This led to the collapse of AIG and the 2008 credit crisis.’
Let’s watch a bit of the story of The Three Priests of the Golden Bull trashing Born (and winning the fight):
Consider the massive spread of exported uncontrolled and thoroughly opaque derivatives and credit default swaps all over the world; the interest rate swaps that tanked whole national economies, cities, and down to school districts like my own, that were sold (and bought) a bill of goods. And cripes, think what President Global Initiative must be worth by now, and Eye God, how the crowds do love the Teflon Man! How many dollars’ worth of his ill-gotten booty will help fund his wife’s campaign (may she lose in spades…). May you rot in the hell of your own making, Mr. ConArtist Clinton, and the rest of your duplicitous and depraved ilk, as well.
Sing the song, Buffy
We’ll build a better world soon, and when we do, may you all be tried for your crimes, and found guilty in the court of public opinion, at the very least.
Worthy links: from NewsVandal.com, JP Sottile’s ‘America’s Surge Toward Oligarchy ‘, detailing the “cradle to grave” control of the Dodd-Frank financial reforms and how the plutocracy pays off its members in so-called “public service.”
from wsws.org, 1999: ‘Clinton, Republicans agree to deregulation of US financial system‘ (lobbyist $ spent and much more)
(cross-posted at My.Firedoglake.com)