Time for ‘Banksters’ to be prosecuted

By Katrina vanden Heuvel

“Banksters,” the cover of the Economist magazine charges, depicting a gaggle of bankers dressed as extras off the “Goodfellas” lot. The editors were reacting to Libor-gate, the collusion among traders of major banks to fix the London interbank offered lending rate, the most recent, most obscure and the most explosive revelation from what seems a bottomless pit of corruption in global banks.

Once more the big banks are exposed in systematic fraudulent activity. When Barclays agreed to a $450 million fine for trying to rig the Libor, its CEO offered the classic excuse: Everyone does it. Once more the question remains: Will CEOs and CFOs, as well as traders, be prosecuted? Or will they depart with their multimillion dollar rewards intact, leaving shareholders to pay the tab for the hundreds of millions in fines?

The Barclays settlement exposed that traders colluded to try to fix the Libor rate. This is the rate used as the basis for exotic derivatives as well as mortgages, credit card and personal loan rates. Almost everyone is affected. Fixing the rate even a few hundreds of a percentage point could make Barclays millions on any single day — money taken out of the pockets of consumers and investors. Once more the banks were rigging the rules; once more their customers were their mark.

The stakes are staggering. The Libor should be as good as gold. It pegs the value of up to $800 trillion in financial instruments. The collusion was systematic and routine. Investigations are underway not only in the United Kingdom but also in the United States, Canada and the European Union. Those named in the probes are all the usual suspects: JPMorgan Chase, Citibank, UBS, Deutsche Bank, HSBC, UBS and others. This wasn’t rogue trading, as the Economist concludes; it was more like a cartel.

The Economist writes that what has been revealed here is “the rotten heart of finance,” a “culture of casual dishonesty.” Once more the big banks are revealed to have allowed greed to trample any concern about trust, respect or legality.

As investment analyst David Kotok suggests, consider the implications of the Barclays settlement: The general counsel tells the bank’s directors that the bank is offered a settlement for a half-billion dollars in fines, with the resignation of the chair of the board, the chief executive and the chief operating officer, with others to follow. The board, knowing the evidence, agrees to take that deal. Other banks are in line for the same level of culpability.

We are five years since Wall Street’s excesses blew up the global economy, and the scandals just keep coming. Each scandal reinforces the need for tough regulation and tough enforcement. Each scandal proves over again the importance of breaking up the big banks. Each scandal raises the question of personal responsibility. How come borrowers are prosecuted for defrauding their banks, but bankers seem never to be prosecuted for defrauding their customers? George Osborne, the conservative British chancellor of the Exchequer, put it succinctly: “Fraud is a crime in ordinary business — why shouldn’t it be so in banking?” He is demanding action: “Punish wrongdoing. Right the wrong of the age of irresponsibility.”

We haven’t heard anything like that out of Washington. Libor-gate once more exposes how lax this administration has been on the banks — and how irresponsible and, frankly, craven Republicans and Mitt Romney have been on this question. Romney echoes the know-nothing Republican right’s call for repealing what little bank regulation has been passed since the financial collapse — primarily the Dodd-Frank legislation. He touts deregulation in the wake of a global economic calamity caused in large part by the misguided belief that banks can police themselves.

Not surprisingly, Romney and Republicans are raking in donations from Wall Street. But they are catering to banksters that know no shame. For example, one of the most powerful Wall Street lobbying groups is the Securities Industry and Financial Markets Association, which has been leading the drive to weaken Dodd-Frank and exempt derivatives from transparency. Its chair was Jerry del Missier, the COO of Barclays, who lost his job and apparently his chairmanship in Libor-gate. Why are we not surprised?

Last January, Barclays’ hard-edged CEO Robert E. Diamond Jr. announced that it was time for bankers to get their brass back. “There was a period of remorse and apology for banks,” he declared. “I think that period is over.” More and more of the customers defrauded by bankers might agree. They are tired of fake remorse and ritual apology. That period is over. It is time for prosecutions to begin.

Romney Campaign Shocked Democrats Would Question Offshore Accounts

Florida closes only tuberculosis hospital amid worst outbreak in 20 years

RAW STORY

Health officials in Florida hastened their closure of the nation’s only dedicated tuberculosis hospital on cost-cutting grounds as one of the worst outbreaks of the deadly disease in 20 years was taking a grip on the state, it has been revealed.

At least 3,000 people in Jacksonville may have been exposed to the highly contagious respiratory illness that claimed 13 lives in the city and left another 100 sick in the last two years, a report from the Atlanta-based Centers for Disease Control and Prevention (CDC) concluded.

But news of the severity of the outbreak never reached Florida’s politicians, who voted in March to bring forward the closure of the 100-bed AG Holley state hospital in Lantana by six months to July 2............

Mitt’s Gray Areas

By PAUL KRUGMAN

Once upon a time a rich man named Romney ran for president. He could claim, with considerable justice, that his wealth was well-earned, that he had in fact done a lot to create good jobs for American workers. Nonetheless, the public understandably wanted to know both how he had grown so rich and what he had done with his wealth; he obliged by releasing extensive information about his financial history.

But that was 44 years ago. And the contrast between George Romney and his son Mitt — a contrast both in their business careers and in their willingness to come clean about their financial affairs — dramatically illustrates how America has changed.

Right now there’s a lot of buzz about an investigative report in the magazine Vanity Fair highlighting the “gray areas” in the younger Romney’s finances. More about that in a minute. First, however, let’s talk about what it meant to get rich in George Romney’s America, and how it compares with the situation today.

What did George Romney do for a living? The answer was straightforward: he ran an auto company, American Motors. And he ran it very well indeed: at a time when the Big Three were still fixated on big cars and ignoring the rising tide of imports, Romney shifted to a highly successful focus on compacts that restored the company’s fortunes, not to mention that it saved the jobs of many American workers.

It also made him personally rich. We know this because during his run for president, he released not one, not two, but 12 years’ worth of tax returns, explaining that any one year might just be a fluke. From those returns we learn that in his best year, 1960, he made more than $660,000 — the equivalent, adjusted for inflation, of around $5 million today.

Those returns also reveal that he paid a lot of taxes — 36 percent of his income in 1960, 37 percent over the whole period. This was in part because, as one report at the time put it, he “seldom took advantage of loopholes to escape his tax obligations.” But it was also because taxes on the rich were much higher in the ’50s and ’60s than they are now. In fact, once you include the indirect effects of taxes on corporate profits, taxes on the very rich were about twice current levels.

Now fast-forward to Romney the Younger, who made even more money during his business career at Bain Capital. Unlike his father, however, Mr. Romney didn’t get rich by producing things people wanted to buy; he made his fortune through financial engineering that seems in many cases to have left workers worse off, and in some cases driven companies into bankruptcy.

And there’s another contrast: George Romney was open and forthcoming about what he did with his wealth, but Mitt Romney has largely kept his finances secret. He did, grudgingly, release one year’s tax return plus an estimate for the next year, showing that he paid a startlingly low tax rate. But as the Vanity Fair report points out, we’re still very much in the dark about his investments, some of which seem very mysterious.

Put it this way: Has there ever before been a major presidential candidate who had a multimillion-dollar Swiss bank account, plus tens of millions invested in the Cayman Islands, famed as a tax haven?

And then there’s his Individual Retirement Account. I.R.A.’s are supposed to be a tax-advantaged vehicle for middle-class savers, with annual contributions limited to a few thousand dollars a year. Yet somehow Mr. Romney ended up with an account worth between $20 million and $101 million.

There are legitimate ways that could have happened, just as there are potentially legitimate reasons for parking large sums of money in overseas tax havens. But we don’t know which if any of those legitimate reasons apply in Mr. Romney’s case — because he has refused to release any details about his finances. This refusal to come clean suggests that he and his advisers believe that voters would be less likely to support him if they knew the truth about his investments.

And that is precisely why voters have a right to know that truth. Elections are, after all, in part about the perceived character of the candidates — and what a man does with his money is surely a major clue to his character.

One more thing: To the extent that Mr. Romney has a coherent policy agenda, it involves cutting tax rates on the very rich — which are already, as I said, down by about half since his father’s time. Surely a man advocating such policies has a special obligation to level with voters about the extent to which he would personally benefit from the policies he advocates.

Yet obviously that’s something Mr. Romney doesn’t want to do. And unless he does reveal the truth about his investments, we can only assume that he’s hiding something seriously damaging.

Rick Perry Saves Poor Texans from Scourge of Medical Care

Opiate-devouring Texas Gov. Rick Perry is joining his friends Bobby, Scott, Nikki, and Bat Boy in choosing to reject the federal government’s Medicaid expansion. He can do this thanks to the Supreme Court handiwork of Burkean minimalist St. John Roberts, whom all liberals must love and respect eternally for only gutting half of Obamacare for no reason. This would leave 1.3 million in Texas, a state that proudly persecutes its poor, for fun, without access to medical coverage. READ MORE »

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