Drudge Retort: The Other Side of the News
Friday, January 05, 2018

Nomi Prins: The Big Six banks have paid billions of dollars in settlements for a variety of frauds committed before and since the 2007-2008 financial crisis, but that didn't keep them from tallying up new fines in 2017. The nation's largest bank, JPMorgan Chase, agreed to pay $53 million in fines for scamming African-American and Latino mortgage borrowers with disproportionately higher rates than for white borrowers. The Consumer Financial Protection Bureau fined Citigroup $28.8 million for not disclosing foreclosure-avoiding actions. Bank of America got fined $45 million for its foul treatment of a California couple trying to save their home. But the Big Six bank that received the most attention in 2017, as it did in 2016, was Wells Fargo. The number of people affected by its fake-account creation scandal grew from 2 million reported in 2016 to about 3.5 million. That increase resulted in Wells Fargo expanding its associated class-action settlement to $142 million.

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The Consumer Financial Protection Bureau (CFPB) is being decapitated through the appointment of Mick Mulvaney, its greatest detractor. The CFPB, a 1,600-person regulatory entity, has provided $11.9 billion in relief to consumers for enforcement actions affecting more than 29.1 million people. They handled 1.2 million consumer complaints and garnered timely responses on concerns for 97% of consumers.

The amount of outstanding corporate debt has nearly doubled from pre-crisis levels of $3.4 trillion to record levels of $6.4 trillion. The Fed's balance sheet is down a mere $10 billion (an equivalent of a rounding error) this year. Its book of assets remains at $4.41 trillion, a figure equivalent to 23% of U.S. GDP.

Central banks' excuse for their massive injections of liquidity in the 21st century is that they are striving to stimulate the 2% rate of inflation that they think is the requirement for sustained rises in wages and GDP. The quantitative easing policy is based on belief in an economic relationship between inflation and GDP growth, the Phillips curve, discredited during the Reagan administration. The belief in the Phillips curve persists, because supply-side economics was misrepresented by the financial media and neoliberal junk economics.

Whenever the next financial crisis occurs, it will be worse than the last one because the system remains fundamentally unreformed, banks remain too big to fail and the Fed and other central banks continue to control the flow of funds to these banks (and through to the markets) by maintaining a cheap cost of funds.

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It'll be worse because the government will be far too broke to provide any stimulus to the economy.

#1 | Posted by 726 at 2018-01-04 12:33 PM | Reply

Because Obama lowered our debt, right, Copernicus?

#2 | Posted by cookfish at 2018-01-05 06:36 PM | Reply

Lowered the deficit. Different thing.

#3 | Posted by REDIAL at 2018-01-05 06:38 PM | Reply

Forgot the old yellow dog motto: Democrat debt - excellent, dude. Trump debt - crap your shorts mightily.

#4 | Posted by cookfish at 2018-01-05 06:39 PM | Reply

Because Obama lowered our debt, right, Copernicus?

#2 | POSTED BY COOKFISH

The reason the debt increased under Obama was due to programs/money spent before 2009. The only thing Obama spent money on was the 2009 Stimulus.

• Two Bush Tax Cuts = $6.6 trillion (2001, 2003)
• Medicare Part D = $1 trillion (2003)
• Iraq War = $7 trillion (2003 - 2009)
• Wall Street Bank Bailout = $12.8 trillion (2008)
• Obama Stimulus = $1 trillion (2009)
• Trump/GOP Tax Cuts = $1.5 trillion (2017)

Almost $30 trillion since 2001.

And before some chucklehead chimes in about Obamacare not being paid for, it was ... www.washingtonpost.com

If House Republicans (namely, the FreeDumb Caucus) didn't sabotage the Obama/Boehner Grand Bargain, the national debt you complain about wouldn't be what it is today.

#5 | Posted by PinchALoaf at 2018-01-05 06:57 PM | Reply | Newsworthy 4


@#2 Because Obama lowered our debt, right, Copernicus?

Not debt, but interest rates were kept low.

Government's main and most powerful stimulus to the economy is lower interest rates.

fmr Pres Obama knew that, and he encouraged it to help us out of that brutal recession.

That is why interest rates in some countries have gone negative. Yes, that is correct. Think about that for a moment or two. Negative interest rates.

With our current interest rates so low, the room to maneuver is limited.

Maybe that is why the Trump administration is so eager to raise interest rates, even though the economy's current or projected growth does not warrant a rate increase. They see the need for maneuvering room in the future.

If the rate is raised artificially, it is easier to lower it in the future to appear you are doing something.

#6 | Posted by lamplighter at 2018-01-05 08:45 PM | Reply

With our current interest rates so low, the room to maneuver is limited.

Exactly. Pre-2008, anytime the DOW slumped the Fed dropped the interest rate a quarter point to generate a "rally". Sometimes they even did it in "emergency" meetings on the weekend.

Once it hit almost zero that didn't work anymore and the whole thing fell apart.

#7 | Posted by REDIAL at 2018-01-05 08:52 PM | Reply

#6 | POSTED BY LAMPLIGHTER AT 2018-01-05 08:45 PM | FLAG: FYI, interest rates are not raised [or lowered] by the administration, rather it is the Fed that makes and implements those decisions.

#8 | Posted by MSgt at 2018-01-06 12:32 AM | Reply

That 'truth dig' write up is a bunch of crud from top to bottom. I've been saying AND YOU'VE BEEN IGNORING.....

DODD FRANK cemented too big too fail. It's a Demorat creation. And now you're crying about the unintended consequence we've been warning you about since inception....

But you can't handle the truth. You have no idea how to respond to me. You keep spraying and praying with links hoping you seem relevant/smart/holier than thou.

#9 | Posted by DavetheWave at 2018-01-06 09:51 AM | Reply

How does waveydavey explain the fact that Goldman-Sachs demanded that Sergey Aleynikov be denied bail because the code he wrote and allegedly stole from Goldman Sachs could be used, according to Goldman-Sachs to "manipulate the market." A deed which apparently only G-Sax is allowed to do?

Could it be that waveydavey depends on rigged markets to earn his living and therfore seeks to deny their existence???

#10 | Posted by bayviking at 2018-01-06 10:24 AM | Reply

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10 See you can't even answer a straight question.

Definition of TROLL:
Cut and paste some outrageous statements.
Ignore all arguments contrary to your asinine POV
Refuse to debate....then when you yourself can't ignore the stupidity of your POV....Run off to next irrelevant point of view
PRETENDING THAT SOMEHOW VALIDATES your conspiracy theory.

I've called you out in retort 9. It's your thread. You are challenging debate. I've engaged you on your subject.
SO ANSWER 9 or else prove beyond a shadow of a doubt
YOU BE..........TROLL !!!!!!!!

#11 | Posted by DavetheWave at 2018-01-06 11:17 AM | Reply

There is one word for why we have a huge debt; Reagan. We have never corrected our tax laws after that lying POS took the highest tax rate from 70% down to 28%. Ronald Reagan destroyed America, if you want it back repudiate him and reverse what he did. If you are too cowardly to do that then we will just continue to sink. All the rest of the blah, blah, blah is just nonsense. When a problem has an easily recognized beginning then that is where you look to fix it. Duh!

#12 | Posted by danni at 2018-01-06 11:25 AM | Reply | Funny: 1

12 no its not irrelevant. Dodd Frank forced the banks to own exactly the same 'books of business' by definition of basil 1,2, and 3.

I had a very leftie friend describe Basel net worth eligiblity. Hes an auditor for one of the biggest banks. It'd blow your mind to hear what they can count at 100% of their face values, versus what only counts at 40% or less of their face value.

This has forced the banks to own all the same assets.

Seeing you called for all the tarp banks to be nationalized, one would think you cared now about their solvency. BTW I guess you were 100% wrong heh!!

#13 | Posted by DavetheWave at 2018-01-06 12:19 PM | Reply

"DODD FRANK cemented too big too fail." Can't necessarily argue with that except to say that Dodd-Frank benefits outweigh its faults. One way being paybacks to consumers systematically cheated by Wells Fargo and a string of other banks.

This post provides a large, yet incomplete list, of Banking crimes for which Banks have agreed to pay humongous fines. For manipulating LIBOR & exchanges rates....and anything else they can get away with... they are institutional and became evident during the 2008 crisis and continue to this day, yet the only punishment is fines which come out of stockholders pockets and jail for Madoff and a few rogue traders. What is wrong with this picture?

waveydavey's comments are absurd, since I mention specific crimes for which waveydavey NEVER provides a specific retort, only glittering generalities, based on faith.

Has waveydavey ever answered a direct question, such as when Sergey Aleynikov's arrest has Goldman-Sachs declaring the system is rigged, how can anyone believe that it isn't rigged? Not that one or any other, instead he rants that Dodd-Frank under Democrats are the cause of TBTF, which was and is a huge problem, with or without Dodd-Frank. Under Dodd-Frank billions of dollars have been recovered by consumers from Banks for Banking crimes, On balance the benefits of Dodd-Frank would seem to outweigh its faults. waveysavey disagrees, but without a single supporting example EVER.

Having just begun reading "Flash Boys", its already clear that its no longer possible for anybody to purchase a stock for a bid or ask price without a hi-speed trader getting in between the trade line and they constitute 70% of all trades on what used to be a transparent system on two exchanges has morphed into a bunch of dark pools controlled by criminals.

waveydavey never denies, let alone proves that these things do not exist, he just pretends to hold deep insider knowledge and we should all take his word for it.

I never gave a thought to our financial system until 2008. I have found the work of Keen and Hudson more credible than most though others such as Mishel have been doing it longer...It should be obvious to the most casual observer that control of the economy remains in the hands of a few men hiding behind a curtain...

theintercept.com

#14 | Posted by bayviking at 2018-01-06 12:52 PM | Reply

1 You've proven yet again that you can't answer a question. Instead you throw out more junk observations pretending they 'prove' your conspiarcy.

2. John Vogle says HST actually benefits small investors. Imagine that! Do you know better then Vogle?! ! NOT!!!

3 Libor 'fixing'. LOL libor is a rate published in all newspapers. It's known to all. You like it and use it or you don't. Do you think world banks weren't pushing rates down lower during the debt crisis? That's the 'rub' that hacks don't get. The world central banks wanted LOWER rates to help 'save' the financial markets.Libor is the london internbank offering rate. So lower rates meant borrowers paid less. Are you saying that lendees should have been charged MORE during the crisis?? Are you saying they should have been higher?

4 GS's trading algo's controlled nothing.

5 Dodd frank cemented too big too fail. NO ONE here backed the banks in the debt crisis. Except me. I'm on record standing behind tarp. Stop pretending you supported them. You were't here then, but we all know your MO.

6 So you read flash boys, but never read the Big Short. Which means you no absolutely ZIP about the debt crisis.

#15 | Posted by DavetheWave at 2018-01-06 01:10 PM | Reply

There is no question in #9, or #11 or #13.

TBTF remains a huge problem which can recur. But this has nothing to do with Wells Fargo fake accounts, or any of the other ongoing crimes. Issuing Bonds after hiding debt and then betting the Bonds will fail remains a frequent, unpunished crime, central to Greece & Puerto Rico and secondary to 2008, where Mortgage Fraud by Countywide and WAMU and Securities Fraud by Wall Street and the ratings agencies in their pockets. Short your own Bonds and Securities and win big. Government won't do anything because TBTF and besides the Fed only cares about their 20 or so stockholders. What Henley calls "An Inside Job".

Hi-speed traders use small purchases to determine prices, price differences and trading volumes. They use this information immediately to intervene in large volume trades seeking small price differences between Chicago and NY, really New Jersey now. 200 traders operate a fiber cable between Chicago and New Jersey to the exclusion of all others. At the exchange, whoever is closest, measured in milliseconds, skims from everybody else. But, as far as you're concerned, nothing to see here. Not my words, Michael Lewis.

You're either clueless or part of the problem.

#16 | Posted by bayviking at 2018-01-06 03:23 PM | Reply

Want to talk mkt manipulation?
Cover how MMs move price to exert max pain and burn premium on OpEx Fridays. It's wild what you can discover, what is allowed, and the games institutions play.

#17 | Posted by GOnoles92 at 2018-01-06 03:34 PM | Reply

200 traders operate a fiber cable between Chicago and New Jersey to the exclusion of all others. At the exchange, whoever is closest, measured in milliseconds, skims from everybody else. But, as far as you're concerned, nothing to see here. Not my words, Michael Lewis.
You're either clueless or part of the problem. #16 | POSTED BY Bayviking

So I take it you've read Flash Boys?
At a big picture view, I don't see what you described as a big "issue," technological advantage has been an edge used to make money for millennia.

#18 | Posted by GOnoles92 at 2018-01-06 03:42 PM | Reply

In a related issue of tech in markets: Bots providing constant volume is a benefit for otherwise player-less markets, ex: In December I BTO deep ITM longcalls in DIS, then sold to close a week later. I was the only volume in that contract for the trade duration (spreads were rough, but using limit buy/sells + patience eventually gets a fill). I was thankful to that bot for providing the necessary liquidity to open and close the transaction. I made money, and the bot owner institution did as well. /shrug

#19 | Posted by GOnoles92 at 2018-01-06 03:48 PM | Reply

17 you did again ignoring everything cause you know nothing. Cutting a pasting someone else's words prove you can't think for yourself.

I said it before, I'll say it again. Wall Street was long those bonds, not short them. ALL the banks and brokerages were long junk and sub prime.

Thats a fact. Why do you think they all almost went broke? It wasn't because they were short, it because they were long.

But like a troll you ignore 95% of what I've challenged you about.

#20 | Posted by DavetheWave at 2018-01-06 05:03 PM | Reply

And not only were they long, they borrowed short term and invested WITH LEVERAGE long junk and SP. So they got squeezed on both sides. Short borrowing costs went thru the roof, and their long books went down below 40 cents on the dollar.

#21 | Posted by DavetheWave at 2018-01-06 05:06 PM | Reply

They went broke when no one would buy their junk securities anymore, because they were failing. In rushes the Fed, secretly on weekends to provide $17 trillion in liquidity followed by QE 1, 2 & 3. It's a public crime.

#22 | Posted by bayviking at 2018-01-06 07:11 PM | Reply

Wow, so now you admit they owned the very bonds you say they instantly sold. I've explained to you the bought them, on leverage. In many cases they bought 5 to 10 times more then their original principal. And they got burned alive doing so. So you're whole premises falls apart flat. Kaput. In other words you have ZERO knowledge of the debt crisis.

And I'm an outspoken critic of QE.

#23 | Posted by DavetheWave at 2018-01-06 08:20 PM | Reply

Then there's Basel 1,2,3. Seeing that you never even thought about the financial system prior 5o 2008 I'll try to keep this simple for you. Instead of banks owning different areas of yhe markets, they are all forced to own the same crud.

It's the regulators setting the table for the next crisis. It's another unintended consequence of idiot lawyers /politicians getting involved with good intentions but horrible ideas.

Do you know that sovereign debt is a 0 risk asset? Like Greek bonds worth exactly the same as T bills???

www.reuters.com

#24 | Posted by DavetheWave at 2018-01-06 08:32 PM | Reply

They were sold to suckers until they couldn't be sold anymore. My story has never changed, even though you constantly put words in my mouth.

Regulators are not a root cause, although many support hi speed traders because they are dying to join in that rip off.

The EU holds Greek citizens responsible for Greek Bonds issued by G-Sax criminals who bet they would fail because they knew they would fail....then buyback for 5 cents on the dollar, then demand full face value and get it. They are criminals.

#25 | Posted by bayviking at 2018-01-06 09:38 PM | Reply

OMG you are clueless. I've tried to explain to you. You refuse to listen.

#26 | Posted by DavetheWave at 2018-01-07 10:01 AM | Reply

In many ways the EU has suffered more under Mario Draghi than we have under Bernanke and Yellen. But the 2008 crisis was an American creation, which many EU Banks participated in. Your point that regulators are putting Bank solvency at risk ignores the fact that Banks wanted them to do that. They fight constantly to reduce their liquidity requirements. Is there merit to the argument regulators aren't tough enough? Absolutely, but they are not the beneficiaries of poorly written rules or even necessarily the authors.

A bigger problem is deregulation permitted Commercial Banks to play a variety of risky games with consumer deposits once bound by risk averse rules. Worse the bigger losers, crooked Investment Banks, were converted to FDIC insured actors after fleecing investors for a period and then getting stuck holding the bag of toxic assets they created.

I haven't read Dodd-Frank but have heard it has restored some of the capital requirements, at least for commercial Banks, as if there's any difference anymore.

I get that each regulation that attempts to close an unfair loophole more often than not, creates a different loophole which criminals find and exploit. This doesn't change the fact that the intent of the regulation was to fix a flaw which permits exploitation of the many by a few. Nor does it change the fact that Banks, brokers and hi-frequency traders are the beneficiaries of the loopholes which were not created deliberately with intent to defraud the pubic, at least until Trump came along.

We know Banks routinely violate regulations and get fined in amounts less than the profits they extracted through violation. That doesn't make the regulation the problem. Enforcement is inadequate because the enforcement agencies want to travel through the revolving door and cannot do so if they are tough on Wall Street. This doesn't change the fact that the money, much of it collecting secretly and/or illegally resides in an small elite private group. They are the problem, part of a larger class war against regulation of any kind and living wages or health care for the 99%,

Blaming regulation is delusional. They remain imperfect, but are absolutely better than nothing, whether you are eating food or investing money. There are too many crooks in the world to live without them.

#27 | Posted by bayviking at 2018-01-07 12:04 PM | Reply

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