Archive for April 24th, 2010

by Pete Talbot

Hey! Since corporations can now give unlimited amounts to federal campaigns, why not allow political parties the same latitude? At least that’s the Republican Party’s take on the recent Citizens United decision by the Supreme Court.

Special interests don’t have enough influence in national elections and policy, the GOP’s thinking goes. Now, not just corporations, but political parties can raise and spend unlimited dollars on federal campaigns. That is, if the Supremes rule in favor of the GOP request, and there’s no reason to think they won’t.

It’s called ‘soft money’ and the Republicans want to raise and spend big bucks to, “help elect GOP candidates to state offices, finance congressional redistricting efforts following the 2010 census, and fund lobbying efforts on federal legislation.”

As the AP reports, Democrats have opposed the Republican effort, even though they, too, would be allowed to collect unlimited contributions.

This is going to make for one long, sickening political season. You can now look forward to even bigger campaign war chests and more independent expenditures on TV, radio, direct mail, et al. Look for even more lobbying on behalf of corporations and parties, too, which is almost impossible to fathom.


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Heads we win, tails you lose

By JC

Finance regulation is all over the media recently, and it seems that some legislation is finally moving in Congress. But what do we really know about all of this? For most people, health care reform was pretty arcane stuff, but we knew that somehow it had the potential to affect us, and we paid attention and learned as we went.

Finance and financial regulation is much more arcane, and it’s adherents speak a foreign language. And somehow we are all supposed to understand enough of this to figure out what our Wall Street money-soaked crony capitalist legislators are supposed to do in D.C. in order to fix it. And the less “we” know of it, the better “they” will make out.

I’m not going to bore all of you with a lecture on derivatives, CDOs, or default swaps. But I am going to leave you with some quotes from Goldman Sachs in emails released Saturday by the Senate Permanent Subcommittee on Investigations, via HuffPo.

Consider this an open thread on the future of our financial system.

goldman sacks america

The firm made money on the upside — originating, securitizing and selling subprime mortgage-based securities to investors — and on the downside, thanks to the insurance.

“Bad news [we lost $2.5 million],” a May 17, 2007, email began from one Goldman employee to another. A security the firm had underwritten and sold had just lost value, costing Goldman about $2.5 million.

Further down in the email, the employee, Deeb Salem, wrote “Good news…we own 10mm protection…we make $5mm.”

The firm made $5 million betting against the very securities it had underwritten and sold.

In a July 25 email that year, Gary Cohn, the firm’s chief operating officer, wrote Viniar to update him on the firm’s mortgage market activities. The firm lost about $322 million on residential mortgages — but it made $373 million on its bets against the market, bets that increased in value as the market tanked.

About 25 minutes later, Viniar wrote back, “Tells you what might be happening to people who don’t have the big short.” The firm made $51 million that day.

In a Nov. 17, 2007, email, Goldman’s chief executive officer, Lloyd Blankfein, wrote to his top lieutenants in response to an upcoming New York Times story about how the firm had profited off the souring subprime market:
“Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts.”

You want to warn something about the whole mess? Head on over to The Baseline Scenario and start reading and following Simon Johnson. It doesn’t get much clearer than his rendition of what happened in “13 Bankers,” which is next up on my reading list.




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