Steve understands that while we’re trying to work our way out of this economic crisis, we have to hold the financial industry accountable to prevent the next one. That’s why Steve wrote a bill that would have taken back the bonuses paid to top executives at Wall Street firms – like AIG – that received federal bailout funds. (Source: Steve Israel For Congress Website)

Did you ever wonder where a self-proclaimed corporate raider and Occupy Wall Street supporter such as Congressman Steve Israel gets his campaign donations from?

According to Open Secrets, Israel has raised $1,581,081 for this election cycle (2011-2012), of which $15,790 comes from small donors, the “average Joe” like you and me.

Another $965,850 was raised from his top 100 donors, an all-star team of big labor and big business; many of those businesses from industries, which based on his committee assignments, Israel is supposed to be overseeing (including those Wall Street firms he talks about on his campaign site). The following takes a look at the donations to his reelection campaign and political action committee (PAC).

(more…)

From National Journal:

This is the worst-case scenario from Europe, and it just might come true: Italy defaults on its debts. Every major Italian bank collapses. Recession grips the eurozone. Sovereign defaults and bank failures ripple across the Continent. Saddled with bad loans to nations and lenders in Europe, American banks hemorrhage cash. Credit freezes in the United States. Multinational companies, unable to raise money, curb U.S. investment and hiring. Wall Street demands, but fails to get, new bailouts. The entire developed world plummets into recession and, quite possibly, depression.

This, in contrast, is the placid warning that President Obama gave Americans about the threat: “If Europe is contracting,” he said on Monday, “then it’s much more difficult for us to create good jobs here at home.” There’s still a chance that Europeans, through some combination of fiscal and monetary action, can stop the crisis before it shatters the feeble U.S. recovery. But the worst case is so much worse than Obama’s description, and Washington has failed to prepare voters for the possibility. “The [potential] shock we’re talking about is of very large magnitude,” says Viral Acharya, a New York University professor who studies financial risk extensively. “If you’re just having an Armageddon coming your way, [America’s] buffers may not be adequate.”

(more…)

From the The Telegraph (UK):

The Bank of England and central banks in the United States, eurozone, Japan, Switzerland and Canada have launched co-ordinated global action to ease a growing credit crisis among eurozone banks.

“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the Bank of England said in a statement.

The central banks are providing liquidity to the financial system by lowering the price on existing dollar swaps, making it easier for banks to get access to dollars.

(more…)

From BloombergNews:

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

(more…)

Yes, THAT Gene Simmons, from The Sun (UK):

This mess is our fault — corporations have no responsibility.

Capitalism is the best thing that ever happened to human beings. The welfare state sounds wonderful but it doesn’t work.

Governments hand out more money than they have to support welfare and they land in debt.

Then they have to borrow money — and then there’s interest on top of that.

That’s bad business. And it has created a culture of entitlement.

(more…)

When Sen. Dick Durbin (D-IL) was convinced by a retailing giant to enact legislation imposing price controls on credit card transactions he engineered a massive wealth transfer from credit card companies to retailers – a cost that would ultimately be borne by consumers.  Opponents of Durbin’s fee warned of the consequences of his actions including increased costs for consumers and elimination of credit card incentive programs.  As Milton Friedman said, “there is no free lunch.”

After the government imposed their fee cap, the marketplace responded predictably.  Banks, including Bank of America, raised fees on consumers in order to cover the cost imposed by the Durbin Amendment.  Caught with his tail between his legs, Durbin and his allies declared war on the banks.  In a letter to the newly codified Consumer Financial Protection Bureau (CFPB), Durbin accused banks of trying to “sneak fees past” consumer and “urge[d]” the CFPB to “swiftly require financial institutions to post on their websites a standardized, concise and consumer-friendly disclosure form that lists the fees and key terms associated with checking accounts.”

Whether Durbin is successful in fighting back remains to be seen but what we do know is we now have a government agency at the disposal of elected officials that will police marketplace policies, fee structures and pricing decisions.  If it’s not bad enough that the Bureau will make regulatory decisions based on the political whims of politicians, their own justification for regulations are worse.  Much worse.

(more…)

From The San Francisco Examiner:

Last week, one or more Occupy Oakland protesters smashed the windows of a Wells Fargo branch.

This week, the group’s general assembly agreed — in a near-unanimous vote Monday — to temporarily place $20,000 of the group’s money in an account at the country’s fourth-largest bank holding company, Wells Fargo Bank.

Whether the decision was an abandonment of the movement’s opposition to big banks or an ominous affirmation of the hold that big banks have on Americans, Twitter was ablaze with outrage last night, as news spread about the 162-8 vote, from which 16 people abstained.

“I am so disgusted right now. the hypocrisy of it all is just amazing,” wrote @GiveMeThatJuice.

(more…)

BG contributor Charlie Gasparino in The New York Post:

Jon Corzine appears to have committed more than a few sins in the runup to the demise of MF Global, including possibly using client money to pay for the risky trades that forced his brokerage firm into bankruptcy over the weekend. But possibly his biggest sin was his steadfast belief in the power of government.

The former New Jersey governor and Goldman Sachs chief executive went wrong by assuming that a government bailout would somehow turn his firm’s bet on some of the worst investments in the world — the sovereign debt of Italy and Spain — into gold. That absurd faith has doomed many chief executives — Dick Fuld of Lehman Bros. chief among them, just a little more than three years ago.

And, more than any of the other shenanigans that may have taken place during the ill-fated firm’s final hours, it’s what did in Corzine and MF Global.

(more…)

From #OccupyWallStreet:

We as fellow occupiers of Oscar Grant Plaza propose that on Wednesday November 2, 2011, we liberate Oakland and shut down the 1%.

We propose a city wide general strike and we propose we invite all students to walk out of school. Instead of workers going to work and students going to school, the people will converge on downtown Oakland to shut down the city.

All banks and corporations should close down for the day or we will march on them.

(more…)

From Politico:

Occupy Wall Street protesters will march to five banks in Manhattan on Friday and deliver thousands of letters to the companies — in the form of a “mass paper airplane throwing.”

According to the movement’s website, at 1 p.m., protesters will meet midtown at Bryant Park and march to the headquarters of Bank of America, Morgan Stanley, Wells Fargo, Citigroup and JP Morgan Chase.

Thousands of letters that were submitted to occupytheboardroom.org will be folded into paper airplanes, and at some of the banks, protesters will execute a “mass paper airplane throwing event,” after which the planes will be collected in a large mailbag and left in the lobbies of the banks.

(more…)

The Occupy movement is planning to take ‘direct action’ against banks in the next several days, using a variety of tactics, according to video and email evidence compiled by Big Government. These tactics include physical occupations of banks, and attempts to encourage financial runs on the banks.

In this clip from the video bombshell that BigGovernment revealed on Sunday night, we see a New York Times freelance reporter and a self-described ‘commie’ laughing over the possibility of criminal acts against banks – has have happened recently in Dallas, Oakland, Los Angeles and Minneapolis.  The assault on banks  appears to be the movement’s latest strategy and  part of an overall scheme to ‘take over the banks, to nationalize them’, as one #OWS supporter said in a recent email revealed by BigGovernment.com.

This segment comes at about 57:30 in the full video posted by Jacobin Magazine and it shows New York Times reporter Natasha Lennard authoritatively answering a question about what comes after the park occupation ends. Watching her answer, there’s no possible way to tell she’s reporter and not a active part of the Occupy movement. You’ll note her use of the phrase ‘that’s what we need to think about’.

Then something bizarre happens as Malcom Harris takes the microphone. You’ll remember we showcased Harris on Monday discussing how Glenn Beck was correct in his analysis that Occupy wanted to ‘drag people into the streets.’ As Natasha Lennard hands the mic to Harris, he seems like a kid who can’t keep a secret. He speaks cryptically about banks and their doors while Lennard giggles like a nervous schoolgirl who knows exactly what Harris is talking about. As the vauge hints die down, the moderator seems to stop the conversation before it goes any further.

(more…)

From Entrepreneur:

The Occupy Wall Street movement has very different objectives from most small-business owners. Doug Schoen, a political pollster and Fox News analyst, recently surveyed 200 protesters and concluded that the majority of the movement’s members want higher taxes to redistribute wealth and heavier regulation on the private sector. But most small-business owners have been calling for less regulation and lower taxes to get the economy going again.

Moreover, most small-business owners believe in the capitalist system, while Occupy Wall Street expresses some anti-capitalist views. Take a look at some statements made in the movement’s first official release. “Corporations … have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions…. have consistently outsourced labor and used that outsourcing as leverage to cut workers’ health care and pay…. [and] have spent millions of dollars … to get … out of contracts in regards to health insurance.”

(more…)

While in attendance at Occupy DC, protesters told MRCTV’s Joe Schoffstall that despite President Barack Obama being the number one recipient of Wall Street cash, they still support him. Keep in mind these are people who ‘claim’ they want Wall Street money out of politics and ‘claim’ they are not Democrats or Republicans.

In other news, the ‘Occupy’ protests recently picked up endorsements from both the Communist and Nazi party.

(more…)

In the pitched battle over whether government should take over our health care system, a group of pro-life Democrat congressmen held the line to oppose the legislation because they knew the bill authorized funding for abortion.  Under intense pressure from the president and their pro-choice comrades in the Congress, the group, led by Rep. Bart Stupak (D-MI) flip-flopped when they received a letter from the president ensuring that government would not spend money for abortion.  They were had.

Now Sen. Rob Portman appears ready to “pull a Stupak.”  Under pressure from Democrat Sen. Sherrod Brown, Portman appears ready to cut a deal to confirm former Ohio Attorney General Richard Cordray to a five-year term to head the super-regulatory agency known as the Consumer Financial Protection Bureau (CFPB).

Word on Capitol Hill is that Portman has assured Cordray he has no problems with his nomination and is asking for assurances that his concerns about the Bureau will be address – not in legislation, but in a letter.  Has Portman learned anything from the Stupak incident?  Apparently not.

Unlike Portman, Sen. Richard Shelby (R-AL) is taking a principled stand against the creation of a new super regulatory agency and is not shaking in his boots.  Shelby has organized his colleagues who have pledged to oppose the nomination of Cordray or any other nominee unless the Bureau is reformed.  Unlike Portman, apparently, Shelby is smart enough to demand real statutory changes as opposed to “promised” changes.

The CFPB was structured in a way to give huge, and perhaps unconstitutional, power to its Director.  Alan Raul, who served as general counsel of the Office of Management and Budget and associate counsel to President Ronald Reagan, described the CFPB’s power as “an independent agency on steroids because Congress essentially exempted the director from any meaningful accountability or strong presidential oversight.”

(more…)

Rep. Jan Schakowsky (D, Illinois 9th District), whose husband has been convicted of bank fraud and tax evasion, was recently interviewed by the far-left website “truthout” and served up some rather unsettling thoughts on economics and the role of government.

You’ll remember truthout for its scoop back in 2009; it was the first site to report the big news that Karl Rove had been indicted. Unfortunately for this “news” site, Karl Rove was never indicted. That was a spot of bother, indeed, impugning the site’s veracity just a bit. You may also know that original editor, Marc Ash, was ousted from the site by a coup from within when it was discovered he was making $140,000 a year off the donors and left-wing foundations supporting the site. But he’s all for the downtrodden masses, ya know?

Now that we have established the forum upon which Schakowsky appeared, let’s look at some of the extreme things she said.

The interview began with the most likely of subjects given the national debate: as Joe Biden said, that three letter word–jobs, jobs, jobs. Schakowsky, of course, stuck to that debunked idea that government “creates jobs” and indulged her inner Keynes in every answer.

Saying she just couldn’t understand how people could say government doesn’t create jobs, Schakowsky indulged in the typically Keynesian fantasy that all left-wingers wallow in. She imagines that jobs created by the government are economic boosters because the money such people are paid will be spent in the general economy. This, she absurdly says, means that everyone is a “job creator” because they spend money. (more…)

The White House has denied pressuring Ford to pull its ad that criticizes competitors that took and have yet to repay taxpayer dollars from the Troubled Asset Relief Program. However, the Obama administration can’t deny a new gift it showers on General Motors and Chrysler in its package of tax hikes to pay for its so-called American Jobs Act.

For all the talk about fairness and equity with the so-called Buffett Rule, there is one sneaky loophole in the Obama revenue proposal that has largely escaped notice. In doublespeak that would make even George Orwell do a doubletake, President Obama’s “financial crisis responsibility fee” would tax banks, insurance companies and brokerage houses that have paid back their bailout money — and even some firms that never took a bailout — to pay the tab of irresponsible firms, namely the auto companies that still owe the government billions.

“We also ask the largest financial firms — companies saved by tax dollars during the financial crisis — to repay the American people for every dime that we spent,” President Obama proclaimed in the Rose Garden two weeks ago. But the details of this “responsibility fee” in the 80-page plan the president submitted to the Joint Committee on Taxation makes it clear that this fee will only be on firms that have already repaid the TARP funds and likely on some firms who never took a dime of taxpayer money.

(more…)

In 1999, I was lecturing at the Smithsonian Institution (The Smithsonian Associates), on The History of Revolutions. At the end of the series, a question was put to me, namely: which country was poised for revolution? My answer was “this one”.

Why? came the inevitably anxious reply.

Again my answer was not comforting. ‘Here in the most economically significant and militarily powerful nation in history has blossomed, an endemic entitlement attitude which has fomented a dysfunctional culture. This culture encompasses not merely welfare mavens or dead-beats, so to say. But also corporations and politicians; the latter whom in a zero-sum, future-be-damned spirit, have fed and fostered this culture for their own perceived advantages’.

Such was my view then as now. The ‘fallout’ from such mendacity often results in social upheaval. However, Americans tend to watch public apoplexy in other countries with a gyroscopic fascination, expressed in the mirthful assumption that “such things cannot happen here”.

Yet, they can, have and are; perhaps now, increasingly.

(more…)

I occasionally broker commercial loans between finance companies and small businesses.  It gives me a lot of pride when I bring together an American entrepreneur who is ready to risk all his assets on his own business, with a finance company that sees a way to help that businessman and make a profit himself.

For the past month, I’ve been working with a financier to bring funding to 30 entrepreneurs, eager and ready to start up their businesses.  Yesterday I had the most dis-spiriting conversation of my professional career with my financier, whom I’ll call “Joe”.

Joe has a credit line with a Gigantic American Bank.  The Federal Reserve has slapped the Bank, and all other banks big and small, with new regulations regarding how they loan their money, who they loan it to, and issued a mountain of compliance rules.  The Bank cannot rely on their internal compliance auditors any longer, either.  They must use independent auditors.

The Bank, in order to remain in compliance, must shove all these same regulations and compliance rules onto whomever they loan money to, including Joe, who also must engage an independent compliance auditor.  Joe must shove all these same regulations and compliance rules onto whomever he loans money to, including these entrepreneurs, who also must engage an independent compliance auditor.

The cost of all these regulations and compliance audits, at the entrepreneur level alone, is $30,000.   It costs a heck of a lot more as you move up the chain.

The entrepreneurs cannot afford this.

As a result, the entrepreneurs’ dreams of starting their own businesses die on the vine.  They now must go back into the depressed job market to (not) find a job.

(more…)

In July of 2010, Barack Obama signed the Dodd-Frank bill into law. Forcing this unpopular piece of legislation upon the American people was akin to tossing a hand grenade of regulation into the banking industry and ducking to avoid the inevitable splatter. The problem is that instead of only damaging the profits of the people that Barney Frank claimed were responsible for the 2008 fiscal meltdown, the shrapnel went into the general populace. Those Americans who enjoyed the benefits of their banks debit rewards programs will find that particular perk is becoming extinct.

So what does this mean to the average American? Fall starts the season where consumer spending ticks up dramatically. We are spending money to send our kids back to school. Halloween has also become a bigger ticket holiday for many of us and of course there is the spendgasm of Thanksgiving and Christmas. Millions of people would accumulate points and use those during this time to subsidize the cost of school supplies and the slew of fast approaching holidays. For those people the end of these rewards programs takes literally hundreds of dollars out of their pockets.

The culprit in the Dodd-Frank bill that resulted in many banks pulling back their debit rewards programs is the Durbin amendment. In a nutshell, each time your debit card is swiped at a store or restaurant, that merchant pays a transaction fee. The benefit to the merchant in paying this fee is that they get to accept your card. That is why the door of most establishments displays the Visa, MasterCard, American Express, and other logos from financial service companies. The more methods of payments they accept the deeper their pool of potential customers.

There is no doubt that a business would do itself great damage by not accepting credit or debit cards with the Visa or MasterCard logo on it. On the minus side, they must pay for this privilege. The purpose of the Durbin amendment was to put a cap on this transaction fee, and limit the profits that the banks could make from merchants.

According to the Durbin Amendment, a hard cap of 12¢ per transaction will be put into place. This replaces the previous method of calculating transaction fees based upon the cost of the item. Before the Dodd-Frank bill, banks would charge a transaction fee of approximately 1% of the total cost of the goods or services that had been purchased. The 12¢ rule is now in play whether you are buying a Cadillac with your card, a computer or a can of Mr. Pibb.

According to J.P. Morgan, this cap will cost them over a billion dollars in lost revenue. In fact many banks claim that 12¢ is too low, and that it costs them more than that to process each transaction. In short, the Durbin amendment removes the incentive for banks to encourage their customers to use debit cards as a method of payment. So as a result, the debit rewards program that many of us have come to rely on are going away.

(more…)

Amidst the financial flight-wave to safety, with stocks plunging, gold soaring, and Treasury bond rates collapsing — and all the European banking fears which go with that — there’s an important sub-theme developing: An almost-forgotten monetary indicator, M2, which is mostly cash, demand-deposit checking accounts, savings deposits, and retail money-market funds, has been soaring.

According to the St. Louis Fed, M2 is up 24.2 percent at an annual rate over the past two months. Almost out of the blue, that comes to a near $500 billion increase. In rough terms, the M2 explosion breaks down to $165 billion in demand deposits and $335 billion in savings deposits.

What’s going on here? There’s a flight to government-guaranteed accounts. Some people believe Europeans are withdrawing from their own banking system and parking their money in the U.S. banking system, guaranteed by Uncle Sam. Kelly Evans reports in her Wall Street Journal column of a $30 billion outflow from equity mutual funds that has probably gone into cash.

This is a very disconcerting development. Normally, big M2 growth would signal a faster economy, and maybe even higher inflation. But as economist Michael Darda points out, the velocity, or turnover, of money seems to be plunging.

(more…)