Elizabeth Warren vs. Scott Brown In 2012! Its Official! Go Elizabeth!

Elizabeth Warren launches US Senate campaign with Mass. tour

Harvard Law professor and consumer advocate Elizabeth Warren officially launched her Democratic campaign for the U.S. Senate on Wednesday, hoping for a chance to take on Republican Sen. Scott Brown in next year's election.

Warren, who greeted commuters at a subway station in Boston before embarking on a tour of the state, cast herself as fighter for the middle class, saying she's "stood up to some pretty tough folks over the past few years."

"There's been a lot of very powerful interests who have tried to shut me down, squeeze me, push me sideways and so far it just hasn't worked," Warren said. "I'm willing to throw my body in front of a bus to try to stop bad ideas that are going to be harmful to the middle class."

Warren was heavily courted by Democrats hoping to win back the seat long held by Sen. Edward Kennedy, who died in 2009 after a long battle with brain cancer. Democrats are also trying to hold onto their narrow Senate majority by ousting Brown.

Warren was tapped by President Barack Obama last year to set up a new consumer protection agency, but congressional Republicans opposed her leading the office. She returned to Massachusetts this summer.

Supporters say her image as a crusader against well-heeled Wall Street interests and her national profile will give her candidacy muscle, though she's never run for political office.

Some Democrats, including Boston Mayor Thomas Menino, have voiced skepticism about how strong a candidate she will be, given her lack of political experience.

Warren said she knows she has to make her case in a crowded primary if she wants a chance to challenge Brown.

Brown political adviser Eric Fehrnstrom called Warren's entrance into the race evidence of a "crowded, long and divisive Democratic primary."

"In the meantime, people are hurting and they are looking for work. Scott Brown is going to keep his focus on creating jobs, keeping taxes low and getting spending and debt under control," Fehrnstrom said.

Republicans have already branded Warren as a liberal academic from Cambridge whose Harvard ties put her out of touch with working families. They've also mocked her as an outsider whose roots are in Oklahoma where she grew up and not Massachusetts.

Warren has lived in Massachusetts for nearly two decades and said what's most important is what's in a candidate's heart.

"People just want to know ... are you there for big corporations? Are you there for families like mine?" she said. "I think people know where I'm really from."

Democratic leaders are banking that her national profile will help her raise the money needed to topple Brown, who has more than $10 million in his campaign account.

A recent Boston Globe poll showed Brown as the most popular major politician in the traditionally Democratic state. Brown shocked the political establishment by beating Attorney General Martha Coakley in last year's special election to succeed Kennedy. He was a little-known state senator who cast himself as a moderate, an average guy with his trademark barn coat and pickup truck. He once posed as a Cosmopolitan magazine centerfold.

Warren has spent the past several weeks meeting with party activists and voters. She's already gotten a boost from EMILY's List, which raises money for female Democratic candidates.

Commuters who shook hands with Warren said they were keeping an open mind.

Katherine Kinzel, a 25-year-old Boston resident and researcher at a local hospital, voted for Brown but described Warren as "genuine."

"I'm still waiting to see what she has to say, how she plays out against the other Democratic candidates," said Kinzel, an independent voter. "There's still a long way to go."

Chad Capellman, a 38-year-old website manager from Quincy, said he's impressed with Warren's fighting spirit.

"I can tell just from everything I've seen and heard and what's she's put up with in Washington that there's something different about her," he said. "It sounds like a `Mr. Smith Goes to Washington' kind of thing." The 1939 Oscar-winning movie tells the story of a Washington outsider appointed to the U.S. Senate who refuses to back down when surrounded by corruption.

Warren planned to travel Wednesday to New Bedford, Framingham, Worcester, Springfield, Lowell, and Gloucester to meet voters.

Other Democrats already announced include Setti Warren, no relation to the consumer advocate, the first-term mayor of the affluent Boston suburb of Newton and the state's first popularly elected black mayor; City Year youth program co-founder Alan Khazei; immigration attorney Marisa DeFranco; state Rep. Tom Conroy; Newton resident Herb Robinson; and Robert Massie, who unsuccessfully ran for lieutenant governor in 1994.


View Larger Map

Sources: AP, Boston Globe, Youtube, Google Maps

Bank Of America's Lay-Offs Threatens Charlotte's Economy; The Countrywide Curse!

Bank of America Confirms 30,000 Jobs to Go

Bank of America’s chief executive, Brian T. Moynihan, vowed on Monday to eliminate $5 billion in costs annually by 2014, a move that will eliminate at least 30,000 jobs at the company, which employs 288,000 people and is the largest bank in the United States.

In a widely anticipated speech at an investor conference organized by Barclays in New York, Mr. Moynihan outlined his plan to make Bank of America, the largest bank in the United States, more efficient and profitable even if that means sacrificing scale. “We don’t have to be the biggest company out there,” he said. “We have to be the best.”

While he did not specify the number of jobs that might be involved, the company announced shortly after his speech that 30,000 jobs are to be eliminated under the company’s Project New BAC cost-cutting initiative. The initial recommendations by the architects of New BAC, which takes its name from the company’s ticker symbol, were reviewed last Thursday and Friday by the company’s top management in Charlotte, N.C.

“As the decisions are implemented, employment levels in the areas under review during Phase I are expected to be reduced by approximately 30,000 jobs over the next few years,” the bank said in a statement. “The company expects that attrition and the elimination of appropriate unfilled roles will be a significant part of the anticipated decrease in jobs.”

The first part of New BAC involves the consumer banking operations of the company, as well as its home loan, technology and support operations. Other parts of the business, including Bank of America Merrill Lynch, will be reviewed in the second phase, which begins in October and continues through March 2012.

Out of $73 billion in annual expenses, Mr. Moynihan aims to cut at least $5 billion by shutting some of its 63 data centers, eliminating overlapping deposit systems and trimming layers of back-office staff accumulated during the acquisition binge undertaken by his predecessor, Ken Lewis.

“It’s taking out work we don’t need to do any more, and getting it out of the company,” he said. “We’re a much simpler company than we were 24 months ago.”

While the speech fell short of the bold blueprint many analysts and investors had been hoping for, Bank of America shares rose in early trading by 1.1 percent to $7.06.

It has been a very busy summer for Mr. Moynihan. In the last few weeks, the company has announced a management shake-up, a $5 billion investment by Warren E. Buffett and the sale of more than $15 billion in assets.

None of those major news events have propped up the bank’s battered stock, which is down nearly 30 percent since the beginning of August.

During the question-and-answer part of the session, Mr. Moynihan was asked whether Bank of America had been asked by the federal regulators to raise capital at the time of Mr. Buffett’s investment. Mr. Moynihan said they had not.

A shareholder asked him: “Can you or would you bankrupt Countrywide?” Mounting losses at Countrywide Financial are still plaguing the bank, three years after Bank of America bought it for $2.8 billion when Countrywide nearly collapsed into bankruptcy as its financing dried up.

Mr. Moynihan answered that in dealing with the troubled mortgage giant, the bank “looks at all our options on everything.”

When the questioner followed up by asking Mr. Moynihan if he was saying that bankrupting Countrywide was a viable option, Mr. Moynihan again demurred. “There are options around all this stuff that we continue to work on,” he said.

Angry investors are trying to force Bank of America, and other large banks, to buy back billions of dollars worth of mortgages that have defaulted, arguing that the home loans did not conform to the original underwriting standards or were originated with little evidence of adequate assets on the part of borrowers.

In other cases, investors including the federal government and the insurance giant A.I.G. want to recover tens of billions of dollars from the big banks for losses on securities they assembled from now-troubled subprime mortgages.

Then there is the investigation by state attorneys general into mortgage servicing abuses, which could cost the big banks more than $20 billion in a proposed settlement that so far they’ve been unable to finalize. “The attorneys generals settlement is part of what can move us forward, but the settlement has to be reasonable for the company and reasonable for shareholders,” Mr. Moynihan said.


View Larger Map

Sources: Associated Press, Charlotte Magazine, Forbes, NY Times, Youtube, Google Maps

Financial Crisis History Documentaries: Deep Cuts Cause Recessions (Videos)

"I am a most unhappy man.

I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men.

We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

-Woodrow Wilson


Sources: Famous Quotations On Banking, PBS, Rescue America, Youtube

Standard & Poor's Role In 2008 Market Crash Possibly Criminal; Investigation Needed!

Visit msnbc.com for breaking news, world news, and news about the economy

Senate report on Wall Street crash: The criminalization of the American ruling class

The US Senate Permanent Subcommittee on Investigations released a voluminous report last Wednesday on the Wall Street crash of 2008 that documents the fraud and criminality that pervade the entire financial system and its relations with the government.

The 650-page report is the outcome of a two-year investigation that involved over 150 interviews and depositions as well as the examination of subpoenaed emails and internal documents of major banks, government regulatory agencies and credit rating firms. The report, entitled “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” establishes that the financial crash and ensuing recession were the result of systemic fraud and deception on the part of the mortgage lenders and banks, carried out with the collusion of the credit rating corporations and the complicity of the government and its bank regulatory agencies.

The World Socialist Web Site will analyze the contents of this important document in detail in the coming days. However, its basic thrust is clear. As the executive summary states: “The investigation found that the crisis was not a natural disaster, but the result of high-risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”

At a press conference Wednesday and in subsequent interviews, Senator Carl Levin (Democrat from Michigan), the chairman of the subcommittee, was even more explicit. “Using emails, memos and other internal documents,” he said, “this report tells the inside story of an economic assault that cost millions of Americans their jobs and homes, while wiping out investors, good businesses and markets. High-risk lending, regulatory failures, inflated credit ratings and Wall Street firms engaging in massive conflicts of interest contaminated the US financial system with toxic mortgages and undermined public trust in US markets.

“Using their own words in documents subpoenaed by the subcommittee, the report discloses how financial firms deliberately took advantage of their clients and investors, how credit rating agencies assigned AAA ratings to high-risk securities, and how regulators sat on their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of interest are the threads that run through every chapter of this sordid story.”

Levin went on to say that the investigation had found “a financial snake pit rife with greed, conflicts of interest, and wrongdoing.” He told the New York Times: “The overwhelming evidence is that those institutions deceived their clients and deceived the public, and they were aided and abetted by deferential regulators and credit ratings agencies who had conflicts of interest.”

The report is divided into four sections, each focusing on a different contributor to the network of fraud and abuse: the mortgage lenders, the regulators, the credit rating firms and the Wall Street investment banks. The first section takes Washington Mutual (WaMu) as its case history, detailing the predatory and deceptive lending practices and accounting and reporting subterfuges that led, following the implosion of the subprime mortgage market, to the bank’s collapse and takeover by JPMorgan Chase in September of 2008.

The second examines the corrupt role of the federal Office of Thrift Supervision (OTS), which oversaw three of the biggest financial failures in US history—Washington Mutual, IndyMac and Countrywide Financial. “Over a five-year period from 2004 to 2008,” the report states, “OTS identified over 500 serious deficiencies at WaMu, yet failed to take action to force the bank to improve its lending operations and even impeded oversight by the bank’s backup regulator, the FDIC.”

The third section documents the systematic manner in which the rating firms Moody’s and Standard & Poor’s gave top credit ratings to collateralized debt obligations (CDOs) and other complex securities backed by subprime and other toxic mortgages, enabling the banks to make billions of dollars by palming off these junk securities as top-grade investments. In return, the rating companies raked in huge profits for their services.

As the report states: “Credit rating agencies were paid by Wall Street firms that sought their ratings and profited from the financial products being rated… The ratings agencies weakened their standards as each competed to provide the most favorable rating to win business and greater market share. The result was a race to the bottom.”

The final section examines the fraud and deception perpetrated by the major investment banks as they profited first from the inflation of the US housing market and then from its implosion. It takes as its examples Goldman Sachs and Deutsche Bank. Goldman began betting heavily in 2007 that the housing market would collapse, packaging and selling subprime mortgage-backed CDOs even as it secretly bet that the same securities would plummet in value.

The report cites emails by Deutsche Bank’s top global CDO trader, Gregg Lippman, calling risky mortgage securities marketed by the bank “crap” and “pigs” and the bank’s operations a “CDO machine,” which he characterized as a “Ponzi scheme.”

The document points to the central role of the big Wall Street banks in promulgating the fraud, stating: “Investment banks were the driving force behind the structured finance products that provided a steady stream of funding for lenders originating high-risk, poor-quality loans and that magnified risk throughout the US financial system. The investment banks that engineered, sold, traded and profited from mortgage-related structured finance products were a major cause of the financial crisis.”

The overall picture is one of criminality on the part of the entire financial establishment that, with all levels of government serving as its co-conspirator, systematically looted the economy in order to further enrich itself. The result is a social tragedy for tens of millions of people in the US and many millions more around the world. And yet, the result of this historic crime is that the bankers and speculators are richer and more powerful than ever.

Not a single senior executive at a major US bank, hedge fund, mortgage firm or insurance company has gone to jail. Not one has even been prosecuted.

There is every indication that none will be criminally indicted in the future. As with the similarly damning report released in January by the US Financial Crisis Inquiry Commission, the Senate report has been largely buried by the mass media. It was reported perfunctorily on the inside pages of some of the major newspapers and barely mentioned by the broadcast and cable networks, and then dropped.

One day after the release of the Senate report, the New York Times published a long article on the failure to prosecute any of the Wall Street criminals. It recounted a private meeting between the then-president of the Federal Reserve Bank of New York (now Obama’s treasury secretary) Timothy Geithner and then-New York Attorney General Andrew Cuomo in October 2008 at which Geithner urged Cuomo to back off on investigations of the banks and rating agencies.

The article contrasted the absence of criminal charges against bankers today with the aftermath of the savings and loan debacle of the late 1980s, when government task forces referred 1,100 cases to prosecutors and more than 800 bank officials went to jail. It noted the precipitous decline in referrals by bank regulators to the FBI, from 1,837 cases in 1995 to 75 in 2006. Over the ensuing four years, at the height of the financial crisis, an average of only 72 a year have been referred for criminal prosecution.

The Office of Thrift Supervision has not referred a single case to the Justice Department since 2000, and the Office of the Comptroller of the Currency, a unit of the Treasury Department, has referred only three in the last decade.

How is this to be explained? Why are Goldman CEO Lloyd Blankfein, JPMorgan CEO Jamie Dimon, the former CEO of Washington Mutual, Kerry Killinger, as well as Treasury Secretary Geithner and his predecessor, Henry Paulson (previously CEO of Goldman), not in prison?

Such financial manipulators are being shielded while workers are being stripped of their jobs, wages, homes and basic social services to pay for the debts resulting from the transfer of trillions in public funds to the banks. Collective resistance to this attack is being criminalized in the form of anti-strike laws, imposing fines and jail terms for workers who fight back.

One reason for the absence of prosecutions is the power of the individuals involved, all of whom wield immense influence over politicians, the media and the legal system. But it goes deeper than the status of individuals, just as the sordid state of affairs as a whole arises not from individual greed, but rather from a profound crisis of the entire system.

The criminalization of the American ruling class is the outcome of more than three decades in which the accumulation of wealth by the corporate-financial elite has become increasingly separated from real production. In its pursuit of profit, the ruling class has dismantled huge sections of industry and turned ever more decisively to financial manipulation and speculation.

The ascendancy of the most parasitic sections of the capitalist class has been accompanied by a sharp decline in the living standards of the working class. The richest and most powerful layers have acquired staggering levels of wealth by plundering society.

The ruling class itself senses that to prosecute any of the leading figures in the defrauding of the American people (and the rest of humankind) would rapidly expose the criminality of the entire system. It would mean putting the capitalist system itself on trial.


Sources: AP, MSNBC, World Wide Socialist

Wall Street Reform: Pres. Obama's 3rd Legislative Victory

Senate Passes Sweeping Wall Street Reform


Congress passed a sweeping overhaul of America's financial regulations Thursday, securing for President Barack Obama his third major, hard-fought legislative victory.

Obama said he will sign the bill next week.

"I'm about to sign Wall Street reform into law, to protect consumers and lay the foundation for a stronger and safer financial system, one that is innovative, creative, competitive and far less prone to panic and collapse," the president said at the White House.

"Unless your business model depends on cutting corners or bilking your customers, you have nothing to fear."

The bill has been Obama's top domestic priority after the passage of health care legislation and his early victory in setting up a nearly $800 billion fund to pump life into an economy hit with the deepest downturn since the Great Depression of the 1930s.

The 2,300-page bill aims to address regulatory weaknesses blamed for the 2008 financial crisis. It gives regulators broad authority to rein in banks, limit risk-taking by financial firms and supervise previously unregulated trading. It also makes it easier to liquidate large, financially interconnected institutions, and it creates a new consumer protection bureau to guard against lending abuses.

The measure also includes new protections for millions of American consumers.

Only three opposition Republicans in the Senate backed the overhaul, a reflection of the party's solidarity in bucking Obama's legislative agenda. The measure has already passed in the House of Representatives, where Democrats hold a larger margin of votes.

Partisan rancor in the United States has reached levels seldom encountered in recent history, with Republicans apparently gambling that they could gain strength or even win back congressional majorities by erecting roadblocks to Obama's reform agenda.

Republicans are widely expected to recapture many seats from the Democratic majority in both the House and Senate in congressional elections in November. Americans' frustrations and fears spawned by near-10 percent unemployment and a sputtering economic recovery are playing into Republican hands.

The Republicans also have largely welcomed into their ranks ultraconservative tea party activists and candidates who promise to reduce government size and power by, in many cases, uprooting social welfare programs. Their political strategy has been to paint the new financial regulations just another symptom of government overreach.

Senate Banking Committee Chairman Chris Dodd, a Democrat who is retiring, negotiated several provisions with key committee Republicans such as Richard Shelby and Bob Corker. With a virulent anti-incumbent mood sweeping the nation, however, neither senator voted to vote for the bill.

Republicans were betting that the voters' antipathy toward big government and their worries over jobs would trump their anger at Wall Street.

"Ultimately in November, people are going to be looking at the size and scope of the federal government, spending and debt and see that a lot of aspects of this bill make things worse in terms of getting America back to work rather than better," said Sen. John Cornyn, the head of National Republican Senatorial Committee.

Democratic Sen. Chris Dodd, Senate Banking Committee chairman, praised party colleagues for their hard work and also offered thanks to Republicans, even those who voted "no," for having added to the legislation during the long months of negotiations.

The legislation, among other things:

* Gives the government new powers to break up teetering companies whose failure would threaten the economy.
* Creates a new agency to guard consumers in their financial transactions.
* Shines a light into shadow financial markets that have escaped the oversight of regulators.

The bill's many provisions don't offer a quick remedy, however. Rather, they are a prescription for regulators to act. In many cases, the real impact of the legislation won't be felt for at least two years.

"We have no idea whether this bill is historical or not," Corker said. "We won't know for a long time, until the regulators decide what they're going to do with this bill."


Sources: MSNBC, Whitehouse.gov, Youtube

Rich Homeowners Default Mortgages More Than Low Income

Biggest Defaulters On Mortgages Are The Rich


The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars is seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”

The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.

In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.

The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.

The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”

Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.

“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”

The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.

“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.

In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.

The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.

The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.

But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.

His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.

“I’m going to be downsizing,” he said.

The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”


View Larger Map


Sources: MSNBC, NY Times, Google Maps

Highlights Of Obama's Wall Street Reform Bill, What's In It?

Wall Street Reform: What's In The Bill?


After more than a year of work and two weeks of negotiations, lawmakers early Friday finished melding different versions of Wall Street reform.

The final bill won't be ready for a few days, but here's CNNMoney.com's breakdown of key provisions that aim to protect consumers, prevent firms from getting too big to fail and crack down on risky bets that leave taxpayers on the hook.

Creating a consumer agency:

Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Fees paid by banks fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It would not have power over auto dealers.

Credit scores:

All consumers have been able to get one free credit report a year from the credit rating agencies. But the bill would also allow a consumer to get an actual credit score along with a report.

Interchange fees:

Lawmakers want the Fed to crack down on debit card swipe fees, which retailers pay to banks to cover the operational cost of transferring money. The Fed could cap the fees and make them more reasonable and proportional.
0:00 /2:30Behind the derivatives reform debate

Banning 'Liar loans':

Lenders would have to document a borrower's income before originating a mortgage and verify a borrower's ability to repay the loan.

Mortgage help for unemployed:

Unemployed homeowners with good credit would be eligible for low-interest loans to help them avoid foreclosures. The bill would spend $1 billion on such relief, using funds that had been directed for Troubled Asset Relief Fund bailing out the financial system.

Fixed-equity annuities:

Prohibits tougher federal rules on life insurance products, in which customers pay a lump sum upfront in exchange for monthly income over time, pegged to an index. The Securities and Exchange Commission had been gearing up to step in and start requiring more disclosure for these products, often sold to seniors, that are currently regulated by state insurance commissioners. Lawmakers decided to stop the SEC from tougher federal regulation.
Too big to fail

New oversight power:

Creates a new 10-member oversight council consisting of financial regulators to look out for major problems at financial firms and throughout the financial system. The Treasury Secretary gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council also has veto power over new rules proposed by new consumer regulator.

Unwinding powers:

Gives the FDIC new powers to take down giant financial firms in the same way it takes down banks. Banks would be taxed to reimburse the federal government for the cost of resolving these firms after a failure occurs.
Wall Street reform bill ready for final votes

Breaking up Banks:

Gives regulators strengthened powers to break up financial companies that have grown too big, but only if the firms threaten to destabilize the financial system.

Checking on the Fed:

Allows Congress to order the Government Accountability Office to review Fed activities, excluding monetary policy. Audits would be allowed two years after the Fed makes emergency loans and gives financial help to ailing financial firms.

Forcing 'skin in the game':

Firms that sell mortgage-backed securities must keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk.

Financial system fee:

Banks and financial firms would be taxed to pay for the $19 billion cost of implementing the Wall Street reform bill.
Risky bets

Regulating derivatives:

Attempts to shine a light on complex financial products called derivatives that many blame for bringing down American International Group (AIG, Fortune 500) and Lehman Brothers. Would force most derivatives to be bought and sold on clearinghouses and exchanges. Some derivatives, including those traded by agriculture companies and airlines to mitigate risk, would still be unregulated.

Spinning off swaps desks:

Big banks that want to engage in nontraditional bets, such as on mortgage products or certain commodities, would have to spin off their swaps divisions.

Reining in risky bets:

Limits giant Wall Street banks from making trades on their own accounts, although with a long lead time and opportunities for delays up to seven years. While the original proposal would have banned banks from owning hedge funds, the bill would allow banks to sink up to 3% of capital into hedge funds or private equity funds.

Improving credit ratings:

Agencies that rate securities must disclose their methodologies. The Securities and Exchange Commission would have to study a way to find an independent way to match credit rating agencies with financial firms seeking ratings. After two years, they'd have to implement such a process, or appoint a panel to independently match ratings agencies with firms that need securities rated.

Curbing executive pay:

The bill would also impose new rules for how all publicly-traded companies, not just banks and other financial firms, pay top executives. Shareholders will be given a nonbinding advisory vote on how top executives are paid while in office. Shareholders also get a nonbinding advisory vote on executives' outsized severance payments, or so-called "golden parachutes."

The new rules would also beef up oversight of pay practices within the financial industry, which some critics have suggested helped fuel the crisis by encouraging workers to place risky bets. The bill, for example, would require industry regulators to draft their own set of rules aimed at eliminating risky pay practice among banks and other financial firms.


View Larger Map


Sources: CNN, Google Maps

Wall Street Battles Washington: Who Will Win?

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

The Wall Street-Washington Divide


For all the money that has moved back and forth between Wall Street and Washington in recent years, what’s most striking is how little each understands, still, about the other.

When young executives from Goldman Sachs appeared before a Senate panel Tuesday, members were taken aback by what they viewed as an Arrogant and Condescending tone; “smart asses,” said one Conservative Republican.

Yet by afternoon, there were flashes of sympathy for Goldman chief Lloyd Blankfein as he tried to get senators to appreciate his pride in making the markets work — not just in profiting from “short” and “long” bets on derivatives.

All this comes to bear now in a few lines in the giant bill that would force major banks to spin off their swaps operations or lose all federal aid, including access to the Federal Reserve’s discount window. And Wednesday’s agreement to begin debate means the issue could be joined as early as Thursday, when Democrats take up their revised derivatives language — including this Section 716.

The restrictions go beyond even the “Volcker rule” associated with the former Fed chairman, Paul Volcker, an adviser to President Barack Obama. And since just five commercial banks — including Goldman, JPMorgan Chase and Morgan Stanley — account for 97 percent of the value in the derivatives market, it’s seen as a direct hit on Wall Street, provoking a fierce reaction.

Sen. Judd Gregg (R-N.H.) was almost apoplectic this week in a floor speech condemning the provision as an ill-informed attempt to really rough up Wall Street — not reform it.

“It is penal. That is the purpose of this: punitive,” said Gregg. “In the end, it is going to cut off our nose to spite our face.”

“Rampant pandering populism” was his favorite catchphrase; that and Argentina under Juan Peron in the 1950s.

The Treasury — albeit considerably calmer — shares some of his concerns. An unusually aggressive memo from the Federal Reserve staff recommends outright that the provision be deleted. But at the insistence of Senate Agriculture Committee Chairwoman Blanche Lincoln, it remains.

The Arkansas Democrat has touched a chord among senators wanting to break up the concentration of power in a few banks and put the focus back on traditional lending, not speculative trades.

“If they want to do swaps, there’s no problem with them wanting to be in this business,” Lincoln told POLITICO. “But they need to separate themselves out so they are not putting at risk the depositors from the bank. And I don’t think that’s an unreasonable thing to ask.”

“They can do it. They just have to separate it out. They have to capitalize it on its own. They can’t capitalize it from the depositors at the bank.”

Nonetheless, Volcker, who remains an icon for many in Congress, has proposed a more qualified ban: allowing banks to operate a derivatives business to serve their customers but not to trade among themselves or take positions on a proprietary trade.

For example, if a big Wall Street bank were asked to offload a large block of stock for a retirement investment fund, it might decide to do so in increments, so as to guard against any sudden impact on the markets. Since those stock transactions could then take some time, Volcker would allow the bank to protect itself — and its depositors — by generating derivatives as a hedge on the stock price.

Lincoln said she’s not fazed by going beyond Volcker. But as she explained her language, she also seemed to be leaving some room for compromise. Bank holding companies could have swap operations — separate from the bank itself, for example. And she said she is not opposed to a bank’s buying a swap to protect itself but that it ought not to be the dealer.

“They can still use a derivative as a risk-balancing tool,” Lincoln told POLITICO. “They just can’t be a major swap dealer.”

Watching from across the Capitol, House Financial Services Committee Chairman Barney Frank (D-Mass.) said that Lincoln’s comments did leave room for compromise.

“The question is whether there is a legitimate need for commercial banks, including small ones, to be able to hedge their own risks,” Frank said in an interview. “If that’s made clear, then there is no problem.”

“There’s a bit of a push-pull in this. I believe the consensus will be, they can’t be dealers, they can’t be major players, but they should be allowed to hedge their own commercial risk.”

“Volume becomes very important for the regulators,” Frank said, imagining some conversation in the future when a regulator asks a bank: “‘You’re saying you’re hedging your own risk, and you’re way out there?’”

“I like the idea that banks don’t have other profit centers,” the chairman said, smiling. “They’ll have to lend more money.”

Gregg warned that separating the banks from swaps operations will create less credit, not more, since the new independent entity will drain away capital to meet its own needs.

“Where it comes from, quite honestly, is the creditworthiness of other activity. ... It will cause a contraction of about $700 billion of credit in this country.”

Within Democratic ranks, Lincoln’s activist stance is not without some irony. In the run-up to her committee markup last week, Treasury officials had portrayed her as being too weak on derivatives regulation and took credit for turning her around.

But she’s now gone further than the administration expected — and left Treasury in a position where it now looks like it’s defending the Wall Street banks from a more populist Congress.

Treasury Secretary Timothy Geithner didn’t help himself in this regard by failing to even meet with the new chairwoman before her markup. And given his own history with the New York Federal Reserve and dealings with many of the same Wall Street interests, it’s the Lincoln camp that now suggests he ought to be on the defensive.


View Larger Map


Sources: Dylan Ratigan Show, MSNBC, Politico, Google Maps

Kenneth Lewis Violates Campaign Finance Laws, Attacks Cunningham

Ken Lewis Is Late On Campaign Finance Reports


The Federal Election Commission has sent a letter to the Senate campaign of Ken Lewis admonishing them for failing to file its latest campaign finance report on time.

The FEC said that Ken Lewis' campaign had not filed a report listing their donations and expenditures for the period of April 1 through April 14th as required by law, Rob Christensen reports.

Sam Swartz, a Lewis campaign spokesman, said the campaign had not seen the letter.

The letter, dated April 23, signed by Debbie Chacona, assistant staff director of the FEC's reports analysis division, is on file online at the FEC site.






Ken Lewis Launches Negative Ad

In the first attack ad of North Carolina’s Democratic U.S. Senate primary, Ken Lewis knocks rival Cal Cunningham as someone who "says one thing then does another behind closed doors."

The radio ad — which as of Wednesday had yet to air — comes less than a week before the May 4 primary. It also comes a day after a poll showed Lewis, a Chapel Hill lawyer, trailing Cunningham, a former state senator, and Secretary of State Elaine Marshall, Jim Morrill of The Charlotte Observer reports.

The ad involves an effort by the N.C. Banking Commission to award of bonuses to bank regulators. Commissioners discussed the bonuses last year in a conference call.

After the issue came up at a debate this month, Cunningham told reporters he’d left the call before the subject came up. But Lewis produced a transcript that shows Cunningham was on the call for at least some of the bonus discussion.

In earlier statements, Lewis has criticized Cunningham for what he calls inconsistencies. Spokesman Sam Swartz said the ad will be put into the rotation of ads running on mostly on black-oriented urban radio stations.

Cunningham spokeswoman Angela Guyadeen calls the ad "a desperate attempt by a candidate lagging in the polls to throw mud and distract voters from the real issues."

"(Cunningham) wasn’t on the conference call when the vote on bonuses took place, and no bonuses were ever awarded," she said Wednesday.


View Larger Map


Sources: Facebook, Federal Election Commission, McClatchy Newspapers, Google Maps

Democrats Warn Bank Tax Is Coming, "Too Big To Fail"

Max Baucus: A Bank Tax Is Coming


It was a short hallway conversation but spoke volumes about the dilemma facing Democrats, hungry for new revenues after emptying the cupboard on health care reform.

“I don’t think there’s much doubt that there will be a bank tax,” Senate Finance Committee Chairman Max Baucus told POLITICO. And more than ever, the Montana Democrat signaled that Congress will also crack down on wealthy hedge fund and private equity partners who shelter their income as capital gains — taxed at half the top 35 percent rate.

Three times in recent years, the House has voted to rein in the so-called carried interest provision — only to meet Senate resistance. That’s changing with the pressure to find revenues to pay for other priorities such as a $35 billion measure extending popular tax provisions for businesses and families.

“I’ve asked my staff to look at alternatives ... Carried interest will probably be part of the offsets,” said Baucus. “We were thinking of putting it on later as part of tax reform. But we’re here; we’re here now.”

Wealthy Democratic donors are sure to scream; Baucus concedes he could face opposition from his own party moderates. But isn’t the chairman himself the “very soul of the moderate Democrat?” a reporter asks. “I’m a ‘Do-the-Right-Thing’ Democrat,” Baucus grinned.

Doing the right thing isn’t easy in today’s tax-writing world — whipsawed by record deficits, new “pay-go” budget rules, restless voters and a legacy of Bush-era tax breaks due to expire in December. Even the giant financial reform bill, facing its first Senate test Monday night, has potential revenue problems. And Baucus was sorely frustrated last December, when the Senate let the estate tax expire — thereby costing Treasury billions.

At least three major tax-related battles are taking shape in the next few months:

First and most immediate is how to pay for the long-delayed extenders bill, which Democrats want to complete by Memorial Day and which includes a must-pass provision authorizing long-term unemployment benefits past the November elections. Health care picked clean most of the planned revenue offsets in the initial bills, leaving a $35 billion hole and carried interest — worth $24.6 billion over 10 years — standing alone in this game of musical chair offsets.

Second — and fast closing — is President Barack Obama’s proposed bank tax. Baucus wants to keep the bank levy separate from the current debate over financial reform, thereby having the chance to claim the tax revenues as an offset. But the Congressional Budget Office is raising red flags that the Senate reform package will be $17 billion in the red if Democrats drop a $50 billion industry-financed “orderly liquidation fund” opposed by Republicans.

Third, but scarcely least, is this summer’s battle over Bush-era income tax cuts due to expire at the end of this year. The Senate Budget Committee last week approved a five-year plan that assumes the most popular middle-class tax breaks will be made permanent. House Democrats say some extension could be a powerful engine for a revenue bill prior to the elections; part of the mix would be some compromise on the estate tax issue, which splits the party in the Senate.

Each of these fights has its own nuances and competing equities.

The Obama bank tax proposal began as a plan to recoup money already spent by Treasury in the 2008-09 bailouts. The reform bill’s “orderly liquidation fund” is a bet on the future, imposing an assessment on the industry now in case big companies again fail and demand resolution.

Nonetheless, the two issues have become joined in the reform debate. Treasury officials have hinted they would like to sub the bank tax in and the fund out; House Financial Services Committee Chairman Barney Frank (D-Mass.) says Congress should consider a bigger and more permanent bank tax than Treasury has proposed if the liquidation fund is dropped.

“The already strong case for the bank tax gets stronger,” Frank told POLITICO. “I think one possible approach is no pre-existing fund but a bigger and longer-lasting bank tax.”

How the levy is designed depends on how one sees the financial crisis — another reason Baucus is unlikely to move before late May or June, so as to allow time for hearings.

As first proposed in January, the so-called responsibility fee was assumed to raise about $90 billion over 10 years through a 0.15 percent tax on the covered liabilities of the very largest financial institutions. And Treasury has since refined its approach to focus more on risk—measured both by the loans or trading done by banks and how firm the financing is behind them.

In tandem with financial reform the goal is go after what one Treasury official described as “the toxic combination of high levels of risky assets funded by highly unstable sources of funding.”

“We look at both sides of the coin,” he said in an interview. “Someone doing traditional banking — using all deposits to fund even somewhat risky commercial and small-business loans — would be largely shielded from the fee.”

Nonetheless, the mechanics can seem so complicated that this message is lost. And lawmakers are clearly spooked by the notion that the tax could still penalize commercial loans and fall more heavily on banks like Wells Fargo than on Wall Street’s high rollers, Goldman Sachs or Morgan Stanley.

Getting to the bottom of this question means wading into the thicket of Federal Reserve rules governing the weighted risks of commercial loans vs. market activities.

The Fed’s capital experts warn against quick, generalized comparisons, but a Joint Taxation Committee report this month said that “because commercial loans are assigned the highest risk-weight of 100 percent, a tax on risk-based assets could prove a disincentive for an institution to make such loans, including loans to small businesses.”

“There are pluses and minuses,” House Ways and Means Committee Chairman Sander Levin (D-Mich.) told POLITICO. “We’re looking at ways to relate it to risk, but that’s not easy to do because the ‘riskiest’ are commercial loans, and we don’t want to tax those.”

This invites a Ways and Means option based on income and profits. A bank’s taxable income would be first adjusted upward by adding back some portion of the rich bonuses deducted as compensation, then would come a surtax imposed to raise the required funds.

Given the huge profits and bonuses being reported by Wall Street investment banks, this has a clear political appeal. But Treasury would argue that its risk approach is substantively better — in terms of the reform message at home and in partnership with reforms overseas by U.S. allies.

The very different carried interest tax debate has its own nuances — and winners and losers.

At issue is whether income paid to wealthy investment fund managers should be taxed at the 15 percent capital gains rate or the upper income bracket, 35 percent and climbing. Proponents of the current system argue that the managers have a “carried interest” in the capital investments they oversee. Critics say it is ordinary income paid in exchange for the performance of services, and the managers often have very little skin in the capital game.

The House permits some leeway: allowing carried interest to be taxed at the capital gains tax rate to the extent that it reflects a reasonable return on invested capital. And after interviewing different coalitions with a stake in the outcome, Senate Finance staff is now looking at compromises that could address some complaints — but still yield much needed tax revenue.

Hedge fund partners make for an easy political target today, but much of their trading is so short term that it doesn’t qualify for the lower capital gains rate that applies to assets held more than six months.

Private equity, publicly traded partnerships in the energy field and real estate partnerships are often affected more, especially given the strained state of commercial real estate. To win the needed votes, Baucus will have to look at options that ease the transition by perhaps imposing a midpoint rate — between 15 percent and 35 percent — or grandfather in some deals already made before a fixed date.

These deals mean less revenue, so tax writers are also looking at closing a foreign tax credit loophole — estimated to be worth $9.5 billion over 10 years. But the gap is too big to plug without pain.

“There are no easy choices left,” said one person familiar with the search for revenues and focus on carried interest. “No final decisions have been made. We’re about a week away, but I won’t argue, it is a leading candidate.”


Sources: AP, Politico, Youtube