Congress Refuses to Outlaw Insider Trading For Lawmakers

Even a cynic can find Washington’s hypocrisy shocking at times. The Wall Street Journal reports today a House bill that would force lawmakers to make greater disclosures on financial transactions and disallow them from trading on nonpublic information is going nowhere fast.

That’s right. Members of Congress are currently allowed to profit on insider trading!

The bill, which has been languishing in the House for four years, would require elected officials “to make their financial transactions public within 90 days of a purchase or sale” and “prohibit lawmakers from trading in financial markets based on nonpublic information they learn on the job,” the WSJ reports.

It seems they’re above the transparency they’ve been calling for on Wall Street.

This comes a day after the same newspaper reported several lawmakers profited by betting against the housing and stock market in 2008. And some did it using derivatives they’ve recently been railing against.

As our colleague Henry Blodget wrote Tuesday, “If you’re going to complain about how awful short-selling is and how evil and venal people are for doing it, you should probably abstain from the practice yourself.”

ORIGINAL STORY AND VIDEO REPORT HERE

No One Cares, by Chris Hedges

We are approaching a decade of war in Afghanistan, and the war in Iraq is in its eighth year. Hundreds of thousands of Iraqis and thousands more Afghans and Pakistani civilians have been killed. Millions have been driven into squalid displacement and refugee camps. Thousands of our own soldiers and Marines have died or been crippled physically and psychologically. We sustain these wars, which have no real popular support, by borrowing trillions of dollars that can never be repaid, even as we close schools, states go into bankruptcy, social services are cut, our infrastructure crumbles, tens of millions of Americans are reduced to poverty, and real unemployment approaches 17 percent. Collective, suicidal inertia rolls us forward toward national insolvency and the collapse of empire. And we do not protest. The peace movement, despite the heroic efforts of a handful of groups such as Iraq Veterans Against the War, the Green Party and Code Pink, is dead. No one cares.

The roots of mass apathy are found in the profound divide between liberals, who are mostly white and well educated, and our disenfranchised working class, whose sons and daughters, because they cannot get decent jobs with benefits, have few options besides the military. Liberals, whose children are more often to be found in elite colleges than the Marine Corps, did not fight the North American Free Trade Agreement in 1994 and the dismantling of our manufacturing base. They did nothing when the Democrats gutted welfare two years later and stood by as our banks were turned over to Wall Street speculators. They signed on, by supporting the Clinton and Obama Democrats, for the corporate rape carried out in the name of globalization and endless war, and they ignored the plight of the poor. And for this reason the poor have little interest in the moral protestations of liberals. We have lost all credibility. We are justly hated for our tacit complicity in the corporate assault on workers and their families.

Our passivity has resulted, however, in much more than imperial adventurism and a permanent underclass. A slow-motion coup by a corporate state has cemented into place a neofeudalism in which there are only masters and serfs. And the process is one that cannot be reversed through the traditional mechanisms of electoral politics.

Last Thursday I traveled to Washington to join Rep. Dennis Kucinich for a public teach-in on the wars. Kucinich used the Capitol Hill event to denounce the new request by Barack Obama for an additional $33 billion for the war in Afghanistan. The Ohio Democrat has introduced H. Con Res. 248, with 16 co-sponsors, which would require the House of Representatives to debate whether to continue the Afghanistan war. Kucinich, to his credit, is the only member of Congress to publicly condemn the Obama administration’s authorization to assassinate Anwar al-Awlaki, a U.S. citizen and cleric living in Yemen, over alleged links to a failed Christmas airline bombing in Detroit. Kucinich also invited investigative journalist Jeremy Scahill, writer/activist David Swanson, retired Army Col. Ann Wright and Iraq war veteran Josh Stieber to the event.

The gathering, held in the Rayburn Building, was a sober reminder of our insignificance.

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U.S. States Consider Starting Their Own Banks

ATLANTA, Georgia, Apr 30, 2010 (IPS) – At least eight U.S. states are considering proposals to start state-run banks in the wake of an economic crisis where many private banks ceased or greatly decreased their lending, literally shrinking the money pool available in state economies.

Economist Ellen Brown, author of “Web of Debt”, has been writing commentaries on various websites and runs a Google Group that has been pushing the idea of state-run banks for a couple of years, efforts which she says have made a lot of state legislators aware that a state-run bank was even a possibility.

North Dakota is the only one out of the 50 U.S. states that is still operating with a fiscal surplus, and some economists argue it is in part due to the state-owned Bank of North Dakota – the only bank of its kind in the U.S. – which has been able to pump money into its own economy by making loans to farmers, small businesses and families.

Numerous states are beginning to consider the idea of starting their own bank, since the issuance of credit is one of the main ways that money enters the economy.

The George W. Bush and Barack Obama administrations have pumped trillions of dollars into private banks through the federal bank bail-outs, with the hope that they will begin lending again. Yet any entity can start a bank, including a corporation, university, nonprofit, or even a governmental entity like a state, city, or county.

Hawaii, Illinois, Massachusetts, Michigan, Missouri, New Mexico, Vermont, Virginia, and Washington each have proposals on the table in their respective state legislatures considering the formation of a state-run bank in one way or another.

In addition, current candidates for political office in eight states – California, Florida, Idaho, Illinois, Missouri, Oregon, Vermont, and Washington State – are pushing a state-run bank as part of their platform.

“I researched this for several months,” State Sen. Hanson Clark of Detroit, Michigan, told IPS. “I spoke to the president of the Bank of North Dakota in early February. It’s a way to get our economy going in the region and the state, to create more jobs. Time and time again business people would tell me they were ready to expand, do projects, but they didn’t have financing.”

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Computerized Front-Running By ELLEN BROWN

Market commentators are fond of talking about “free market capitalism,” but according to Wall Street commentator Max Keiser, it is no more.  It has morphed into what his TV co-host Stacy Herbert calls “rigged market capitalism”: all markets today are subject to manipulation for private gain.

Keiser isn’t just speculating about this.  He claims to have invented one of the most widely used programs for doing the rigging.  Not that that’s what he meant to invent.  His patented program was designed to take the manipulation out of markets.  It would do this by matching buyers with sellers automatically, eliminating “front running” – brokers buying or selling ahead of large orders coming in from their clients.  The computer program was intended to remove the conflict of interest that exists when brokers who match buyers with sellers are also selling from their own accounts.  But the program fell into the wrong hands and became the prototype for automated trading programs that actually facilitate front running.

Also called High Frequency Trading (HFT) or “black box trading,” automated program trading uses high-speed computers governed by complex algorithms (instructions to the computer) to analyze data and transact orders in massive quantities at very high speeds.  Like the poker player peeking in a mirror to see his opponent’s cards, HFT allows the program trader to peek at major incoming orders and jump in front of them to skim profits off the top.  And these large institutional orders are our money — our pension funds, mutual funds, and 401Ks.

When “market making” (matching buyers with sellers) was done strictly by human brokers on the floor of the stock exchange, manipulations and front running were considered an acceptable (if morally dubious) price to pay for continuously “liquid” markets.  But front running by computer, using complex trading programs, is an entirely different species of fraud.  A minor flaw in the system has morphed into a monster.  Keiser maintains that computerized front running with HFT has become the principal business of Wall Street and the primary force driving most of the volume on exchanges, contributing not only to a large portion of trading profits but to the manipulation of markets for economic and political ends.

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Seize and Liquidate Goldman Sachs, by Webster Tarpley

April 27, 2010

Today’s Senate hearings, carried on CNBC, Bloomberg, and C-SPAN, represent the first major exposure of the American people to the scandalous frauds of the derivatives casino, including synthetic collateralized debt obligations (synthetic CDOs or CDO²). These are things most people have heard very little about. They begin to open up the shocking reality behind such shopworn euphemisms like “toxic assets,” “exotic instruments,” and “troubled assets.” Reactionaries in general and Republicans in particular have done everything possible to hide the role of derivatives, which must be considered the main cause of the financial panic of September 2008 which brought down Lehman Brothers, Merrill Lynch, and AIG, after felling Bear Stearns in March of the same year. The reactionary legend, repeated yesterday on the Senate floor by financier minion GOP Sen. Gregg of New Hampshire, is that the crisis was caused by poor people taking out subprime mortgages and then defaulting, bringing down the entire Anglo-American banking system and triggering the bailouts. Either that, or too much government spending was too blame.

A mass of kited derivatives blew up in September 2008

This Big Lie has come from such propaganda sources as the Limbaugh Institute of Retarded Reactionary Ranting. But the $1.5 trillion in subprime mortgages were dwarfed by the $15 trillion US residential real estate market, to say nothing of the $1.5 thousand trillion world derivatives bubble. But, starting with Bush-Goldman Sachs Treasury Secretary Henry Paulson, the talk has been of a “housing correction,” not a derivatives panic. It must be pointed out that derivatives are nothing but wagers, bets placed from a distance on securities which themselves are often not mortgages, but rather other derivatives. The bettor buying a synthetic CDO or CDO² does not own the underlying mortgages or mortgage-backed securities, any more than someone who bets on a racehorse owns part of the horse. Blankfein and others tried to portray derivatives as a service to hedgers and end-users, but it’s clear that the vast majority of derivatives involve neither hedgers nor users, but only bettors on both side of the transaction. It is in any case this mass of kited derivatives which blew up in 2008, bringing on the present world economic depression.

Goldman Sachs executives are babbling cretins

The mystique of Goldman Sachs is based in large part on their reputation as the smartest financiers on Wall Street. After today’s hearings, this mystique has permanently dissipated. The Goldman executives babbled. They sounded dumb. They stalled and stammered and went into contortions to avoid giving straight answers to simple questions. They were mendacious and evasive when they did speak. Financial powers around the world will note carefully the refusal of three out of four Goldman executives on one panel to state that they had a duty to defend the interests of their clients. Who will want to do business with such a gang? Goldman Sachs got $10 billion of taxpayer money in low-interest loans under the Bush-Paulson TARP. Part of that money went to pay for obscene bonuses for Goldman executives like the ones on display today. The argument for bonuses is that they must be paid to retain the highly talented personnel, virtual geniuses, who are indispensable for Wall Street speculative success. But these are no geniuses, they are imbeciles. No more bonuses should be paid by banks saved through public money.

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A SWISS BANK, A PRESIDENT, AND THE PERMANENT GOVERNMENT

Last August, the presidential press corps followed Barack Obama and his family to Martha’s Vineyard for their brief vacation. The coverage focused on summery fare—a visit to an ice cream parlor, the books the president had brought along. Nearly everyone mentioned his few rounds of golf, including his swing, and the enthusiasm of onlookers. What caught my eye, though, was the makeup of his foursome. The president was joined by an old friend from Chicago; a young aide; and Robert Wolf, Chairman and CEO, UBS Group Americas. In a decidedly incurious piece, a New York Times reporter made light of Wolf’s presence:

“The president has told friends that to truly relax he prefers golfing with young aides…But he departed from that pattern Monday when he invited a top campaign contributor, Robert Wolf, president of UBS Investment Bank, to join him for 18 holes. Call it donor maintenance.”

Wolf, however, is hardly—as the Times suggested— just another donor. For one thing, he is a leading figure in an industry that almost brought down the entire financial system—and then was the recipient of astonishing government largesse. UBS, along with other banks, benefited directly from the backdoor bailout of the insurance giant AIG.

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Goldman Sachs Vampire Squid

In a startling turn of events, the SEC announced a civil fraud lawsuit against Goldman Sachs. I use the word startling because a) the SEC has done virtually nothing in the way of enforcement for years, managing to sleep through every bubble and bust in recent memory, and b) Government Sachs has been presumed to be above the law since it took over Washington during the Clinton years. Of course, there is nothing startling about bad behavior at Goldman—that is its business model. The only thing that separates Goldman on that score from all other Wall Street financial institutions is its audacity to claim that it channels God as it screws its customers. But when the government is your handmaiden, why not be audacious?

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Chase tricking customers into default

JPMorgan Chase instructed homeowners to stop making mortgage payments, as that was the only way to be considered for a loan modification, then repossessed their house when they followed the bank’s advice, a couple claims in Federal Court. “I’ve seen this happen to so many people,” their attorney said. “When they come in here to tell me their story, I can actually tell it to them.”

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