Enough with the Bernie/Hillary Jabs at Wall Street

Throughout their political campaigns, both Hillary Clinton and Bernie Sanders have laid blame for the 2008 financial crisis on Wall Street; as if the six 'too-big-to-fail' banks that had to be bailed out were somehow representative of thousands of companies who have allowed their stocks to be publicly traded.

Hillary says she's not going to allow "Wall Street to bring down Main Street" ever again. Bernie wants to tax Wall Street; breakup the big banks; and reinstate Glass-Steagall which prevented banks from investment activities on Wall Street.

First of all, both these people act as if nothing was done following the financial crisis.  They seem to forget that, in 2010, both Houses of Congress -- both controlled by Democrats -- and Barack Obama passed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law to, supposedly, stop the 2008 crisis from ever happening again.  So, why is this an issue all over, again?

Also understand, Wall Street IS Main Street. According to Gallup polling, 55% of those surveyed said they were invested in the stock market.  While down from 62% before the financial crisis, that 55% is climbing back from a low of 52% in 2013.  So, I suppose that 55% of this country's households aren't "Main Street" enough for Hillary Clinton.  Or, for Bernie, the lie that only millionaires and billionaires -- of which there are only a little over 10 million in a country of 320 million -- only benefit from Wall Street.

Lastly, the financial crisis that followed the housing bubble was primarily a result of two things.  

• The first was the expanded use and enforcement of the Jimmy Carter passed law known as the Community Reinvestment Act (CRA) by Bill Clinton while he was President. Basically, that Democrat-written law forced banks to lower their lending requirements and increase the number of mortgages for otherwise non-eligible, low-income borrowers.  Thus, banks did get involved with forms of predatory lending in order to comply with the law. In hearings following the financial crisis, the CEO of Bank America said that, while CRA loans only made up 7% of that bank's mortgage portfolio, they resulted in 29% of their losses during the housing meltdown.  Another CEO of a mid-sized bank said that about 20% of all his CRA loans would be in arrears in the first year and 7% would fall into foreclosure.  Democrats have always tried to shift blame away from the CRA because they were responsible for it.  Thus, Wall Street and big banks have become their diversionary targets for those who are uniformed.
• In addition, Glass-Steagall, which Bernie Sanders wants to reinstate, was repealed by none other than Bill Clinton when he signed the Gramm, Leach, Bliley Act which allowed banks to participate in investment banking in the stock market.

The reality is that Bernie and Hillary, as Democrats, should be looking in the mirror when they talk about blaming someone for the financial crisis.   And, by the way.  The best analysis of the financial meltdown is given by two writers from the liberal New York Times titled "Reckless Endangerment".  See below for an excellent video summation of that book by Rush Limbaugh.

References:

Bernie Sanders on Financial Regulation: http://feelthebern.org/bernie-sanders-on-financial-regulation/

Community Reinvestment Act: 

Dodd–Frank Wall Street Reform and Consumer Protection Act: https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act

Little Change in Percentage of Americans Who Own Stocks: http://www.gallup.com/poll/182816/little-change-percentage-americans-invested-market.aspx

More millionaires than ever are living in the US: http://www.cnbc.com/2015/03/09/more-millionaires-than-ever-are-living-in-the-us.html

Gramm–Leach–Bliley Act - Wikipedia, the free encyclopedia: https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

Video: Subprime Disaster - President Clinton Takes Credit for Community Reinvestment Act Loans: https://www.youtube.com/watch?v=WTZIB6Sika4

Video:  Rush Limbaugh on 'Reckless Endangerment': https://www.youtube.com/watch?v=MG7U2g9MFKg

Bernie Sanders: Jail Wall Street CEO's

On October 6th, Bernie Sanders said this:

“It is an obscenity that people in this country are getting arrested at near record rates for smoking marijuana, but not one Wall Street CEO has been prosecuted for triggering the Great Recession in 2008. Millions of Americans lost their jobs, homes, life savings and ability to send their kids to college because of the greed on Wall Street. We can no longer tolerate a criminal justice system that treats Wall Street executives as too big to jail when their actions have ruined the lives of so many Americans.”

Simply, the reason that no Wall Street CEO was ever charged with a single crime during the financial crisis, was that two Democratic-controlled Congresses and two Democratic Presidents -- Jimmy Carter and Bill Clinton -- were responsible for the housing bubble and the fact that banking institutions were engaging in investment activities by bundling loans and selling them on Wall Street. A fact that the Obama Administration didn't want made public with a series of federal trials. 

In 1977, Congress passed a bill called the Community Reinvestment Act (CRA); which President Carter signed into law. That law "encouraged" any banking institution receiving Federal Depositors Insurance to provide increased loan activity to low income neighborhoods in the area they served. In other words, banks were forced to relax their lending requirements and take on more risk by lending to lower income families.  Banking institutions not in compliance could lose FDIC and be barred from any expansion of their operations.

Enforcement was lax until Bill Clinton became President in 1993.  His administration heavily cracked down on banks and expanded the mandate to increase the percentage of low income families being served by the law. Thus, they were seriously forced to take on more risk and severely reduce lending requirements.  This resulted in people getting  loans that never should have. In the following video, Clinton brags about the fact that since 1977, 85+% of the funding in low income neighborhoods had come after his 5 years in office:

Then, too, Clinton also signed the Gramm-Leach-Bliley Act which repealed those parts of the 1933 Glass-Stegall law which had prohibited investment banking.  Therefore, banks got the green light to use Wall Street to bundle mortgages and sell them in the stock market in order to shield themselves from the increased loan risk from low income families.

Basically, it was the federal government that created the financial mess that occurred just 6 years after Clinton left office.  And, any CEO being charged with some kind of fiduciary malfeasance -- as Bernie Sanders has suggested -- would have easily escaped  any fines or prison time because of  "the devil made me do it" defense; where the devil is really President Clinton.

So Bernie, maybe it is Bill Clinton who needs to be behind bars; and not some Wall Street CEO.

References:

Bernie Sanders wants Wall Street execs jailed for 2008 financial crisis: http://www.democraticunderground.com/1251653762

A Brief Description of CRA: http://www.ncrc.org/programs-a-services-mainmenu-109/policy-and-legislation-mainmenu-110/the-community-reinvestment-act-mainmenu-80/a-brief-description-of-cra-mainmenu-136

Gramm-Leach-Bliley Act: https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

Occupy Washington... Not Wall Street

With protestors sitting-in and marching against the corruption and fat-cats on Wall Street, I thought it might be appropriate to repost a March 2009 blog entry of mine. After reading it, please take the time to read my latest comments at the very end of this addition:

Greedy Wall Street or a Political Bunch of Bull?

As a country, we elect a President, 435 members of the House of Representatives and 100 members of the U.S. Senate to watch over our health and well being. We expect them to insure that our food supplies and the drugs we are taking are safe for us to consume. We expect them to protect us from all domestic and foreign enemies.

We very much expect them to make sure that our money and our finances are safe. Our government has supposedly set up a Treasury Department, a Federal Reserve Banking System, a Securities and Exchange Commission, a Commerce Department, A Department of Housing and Urban Development, and a whole host of financial oversights to insure that. Yet, none of them did their jobs and we now find ourselves in the midst of a financial collapse and the only thing our elected Representatives can say is that it was the fault of "Greedy Wall Street."

I, for one, am not buying that. That's because the Executive Branch and our Congress were asleep at the wheel. It's not Wall Street, it's our elected officials that are all at fault. But, politicians just love to deflect the blame. And, this one takes the cake!

While our representatives were having hearings on steroid abuse in baseball, the financial walls of this country were collapsing. Key members of the Senate Banking Committee were saying that Freddie Mac and Fannie Mae were just fine. But, thanks to campaign contributions, it appears there was too much "rose" in those rose-colored glasses.

George Bush and his Administration knew damn well that there were problems at Fannie and Freddie but miserably failed to forcefully bring those issues to forefront. Freddie and Fannie were well-populated with ex-Clinton people and, so, the senior Democratic members of the Senate Banking Committee did everything in their power to shield them from any investigation and exposure. From 2004 and beyond, key financial figures in this country were shouting out that the housing boom was a boom waiting to bust and our Congress wasn't even listening. All along, there were warning signs; yet, our elected officials were both deaf and blind.

The next time you hear the words "Greedy Wall Street," I would suggest you think, instead: "Partisan, incompetent, and corrupt elected officials who left the American people out in the cold!" That's where the real blame lies!

Image of the bronze "Charging Bull" (aka The Wall Street Bull) by sculptor Arturo Di Modica was taken by Christopher Chan for his Flickr site with Creative Commons Licensing. Some rights retained. (Click to View Other Works).

Today, we are almost 5 years past the beginnings of the housing collapse and the eventual financial crisis. Yet, there has never been a criminal indictment of any Wall Street or banking executive. The top people at Fannie Mae and Freddie Mac also remain unscathed. We've had two politically-opposite Justice Departments since then and we've had a completely Democrat-controlled Congress with a Democrat President who could have clearly made political hay out of going after Wall Street and the banks. But, not so. To me, this just shows that our own politicians and government officials are afraid to go after anyone because they, themselves, and maybe some past Presidents, might be seriously exposed as being complicit in the housing/financial fiascoes. Ya think?

Doomsday Fridays

Unless the intention is to destroy billions of dollars of the wealth and investment capital of this country, most government agencies have followed an unwritten law to avoid unloading bad news on the stock market during market hours. Typically, they release the bad news on a Friday evening, after market hours, so that cooler heads will prevail over the long weekend break in trading.

But, releasing bad news during trading can actually create a market crash. That's because many who buy stocks will submit, at the same time, a stop-loss order which is designed to automatically trigger a sell; should a stock reach a certain lower price. When bad news is released during trading, there is a knee-jerk reaction and many stocks reach various levels of stop-loss orders and automatic selling ensues. This, then, creates an environment of fear that draws even more sellers into the market because those traders, all of the sudden, see their particular stock tanking. The cycle repeats itself until the sellers, both automatic and manual, are exhausted and there are enough buyers to stabilize the stock price.

But this government has seen fit to unload on Goldman-Sachs twice; and, each time, it was on a Friday and during market hours. Two weeks ago last Friday, the Securities and Exchange Commission slapped Goldman-Sachs with a lawsuit; sending the market down more, finally, by 213 points. Yesterday, the same thing happened when it was learned that Obama's Justice Department had opened a criminal investigation against Goldman. Fortunately, the loss was only limited to about 160 points.

If Obama and his goons think this is the way to punish Wall Street by announcing adverse news during trading (I'm quite sure for political reasons!), then they are just stupid. In both cases a lot of average people got hurt in the process. The average Joe's 401k probably got hit hard. A lot of managed retirement funds also tanked because of those actions. People's individual savings in things like Mutual Funds had to be hurt too.

The campaigning Obama told Joe the Plumber that taxes on the rich were OK because we should "spread the wealth around". Then, Wednesday, in another anti-Capitalist utterance, Obama said "I do think at some point you've made enough money" -- when talking about Wall Street. Obviously, Mr. Obama doesn't understand the role that Wall Street has played in raising capital for start up companies to grow into major corporations like Apple, Microsoft, IBM, General Motors, GE, and so many more icons within the "world" of business. Corporations that have made this country the envy of most of the world.

Obama also doesn't understand that Wall Street acts as the agent to fund corporate expansion through bond trading and secondary stock offerings. That's why socialist countries fail. All too often great ideas are ignored so the bad, state-run companies are maintained without any competition. Socialist governments are incapable of providing targeted funding for the expansion of good companies and, at the same time, allow bad ones to go under or go out of existence. At the very same time, Wall Street helps connect the average individual in America with investment tools such as stocks, bonds, and funds that will better grow their savings over the measly 1 or 2% that any bank will give you. That's the real role of Wall Street. And, once again, Obama's socialism and lack of understanding of America is showing .

Another Outrageous Claim By Obama

By now, you should be used to some of the most ridiculous and outrageous claims ever given by a President. Last year, Obama claimed that if your kid was sick with a sore throat, the doctor would yank the kid's tonsils so he/she could make more money. Then, there was the physician who would arbitrarily cut a diabetic's foot off to make more bucks.

Now, last Thursday, when he gave his address to Wall Street on reform, he made the statement that for every dollar that is traded on Wall Street there is a family who needs to buy a new home or family who wants to send their kid to college. This, like the outrageous doctors acting badly examples of last year, is just as absurd and the mainstream media again ignored it. The intent of that statement, in typical Obama thuggery style, was to demonize Wall Street by making it seem like "all" their activities are taking money from families so they can't buy a new house or send their kid to college. That is just B.S.

My father was able to pay for my college tuition because of the profits he was able to make in the stock market. That is true for many families today who used their investments to grow their kid's college funds. Believe me, a bank that gives you 1% interest on your savings against a dollar that loses value at a faster rate than 1% isn't going to send anybody to college. Additionally, Wall Street investments have helped millions of Americans grow their savings to buy a newer, bigger home. Further, it is stock market investments (over the long haul) that have made retirement possible for millions.

Lastly, it wasn't Wall Street that was the genesis of the collapse of the housing and mortgage market and the subsequent recession. It was the mortgage industry who gave out shaky, no money down and sub-prime loans that was at fault. More than anyone, it was those federal affiliated mortgage loan agencies like Freddie Mac and Fannie Mae and FHA who gave out more than 55% of the faulty loans who were most at fault, and this Congress, and this President has ignored that completely and decided, instead, to go after Wall Street. Because of that, we are not solving the problem and another housing collapse is probably well on its way to happening.