Michael Moore and Wolf Blitzer

If you haven't seen Michael Moore making the TV circuit to promote his new movie, Capitalism: A Love Story, the clips below showcase his best performance. He makes Wolf Blitzer looks like an amateur, with repetitive, sound-bite inspired questions:





My favorite moment came when Wolf asked Michael how he would respond to allegations that he is being hypocritical in his movie because he himself has benefited and become wealthy from our capitalistic system. To which Michael Moore responded:

"I wonder if there was a Wolf Blitzer 200 years ago who asked Thomas Jefferson, or John Adams, or George Washington: "Hey you guys are wealthy land owners, you've benefited from the Kings system, what are you complaining about? whats this revolt all about?"

Brilliant.

PS: If you missed Wolf's appearance on celebrity Jeopardy, you missed the man who represents one of the supposed leaders in cable news making a fool of himself and getting blown out by comedian Andy Richter. His grand total: -$4600.

Banking: "Heads I win, Tails you lose"

New York Attorney General Andrew Cuomo has just released his analysis of the compensation of the 9 largest banks participating in the Troubled Asset Relief Program, or the TARP, and the conclusions are rather shocking. (The above chart shows just how ridiculous bonus payments were in 2008 alone and comes from the AG's report, linked above)

Despite the executive claim that "employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak," their bonus structures can be summed up as "heads I win, tails you lose."

According to a Wall Street Journal review of the report:

The $32.6 billion in bonuses is one-third larger than California's budget deficit. Six of the nine banks paid out more in bonuses than they received in profit. One in every 270 employees at the banks received more than $1 million.

Although the report is full of financial information, I feel the most striking data can be seen in the following the chart I put together:

So, are we to believe that it is somehow a coincidence that a massive spike in compensation and benefits, as compared to net income, occurred at the same time as the largest government bailout this country has ever seen? Between 2007 and 2008, the average compensation as a percentage of net income at these banks increased by 47% while at the same time posting record losses totaling almost $100 billion. How have we not opened investigations into this unprecedented theft from the American taxpayer?

So while the White House is on the record as saying:

"The president continues to believe that the American people don't begrudge people making money for what they do as long as...we're not basically incentivizing wild risk-taking that somebody else picks up the tab for"

How is that not the situation we are currently in?

So for anyone who thinks a pay czar is too much socialism, I ask what are the other options? If the banking sector won't responsibly reform themselves from the inside, how is it NOT the proper role of government to step in and fix the problem?

Just to add insult to injury, at the same time that the banks are taking unprecedented amounts of "free" money from the government and Federal Reserve, they are also increasing their overdraft fees. If current trends continue, banks stand to collect a record $38.5 billion in overdraft fees alone, double what they brought in in 2000. In fact, 5 of the 10 largest banks have increased their overdraft fees within the last year, raising the median overdraft fee from $25 to $26, the first increase during a recession in 40 years. The largest banks (with over $50 billion in assets, i.e. Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo) charge even more, with a median fee of $35.

What makes this practice so destructive is that it disproportionally affects the poorest depositors and those with the lowest credit ratings. According to Moeb Services, 90% of overdraft revenues come from just 10% of the 130 million checking accounts in the US. After taking so much taxpayer money, how can we let the banks do this?

Banking in America: 2009

Just weeks after announcing massive profits, it appears that the banking sector made them off of the backs of the taxpayer, NOT by increased lending or refinancing.

JP Morgan Chase, Bank of America, Goldman Sachs, and Citigroup alone announced profits totaling $13.6 billion for the second quarter, just 6 short months after losing a combined $20.8 billion. That is a net turnaround of $34.4 billion in half a year. If you were to step back even further, according to Presido, the 115 banks that participated in the TARP managed to turn their 2006 combined profits of $119.3 billion into a loss of $19.3 billion in 2008, totaling a net turnaround of $138.6 billion in 2 years. Over that same period, roughly 33% of CEOs and 40% of CFOs at these very same banks saw their direct compensation rise, primarily through increases in stock options of 71% for CEOs and 59% for CFOs. So not only did the banks destroy our economy, their executives got paid more to do it.

To make matters worse, New York State Attorney General Andrew Cuomo just released a report showing that in 2008 several financial institutions that received bailout money gave bonuses that greatly exceeded the amount of profit generated by the banks. For example, according to CBS News:

• Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses in 2008 - more than double their net income.

• Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.475 billion in bonuses, nearly three times their net income.

• JPMorgan Chase, which earned $5.6 billion in 2008 and received $25 billion from the government, paid out $8.69 billion in bonus money.

• Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses. ($5.33 billion for Citigroup; $3.6 billion for Merrill Lynch, which was subsequently acquired by Bank of America, which was just fined $33 million by the SEC for misleading investors about the Merrill bonus payments.)

According to a Wall Street Journal article from back in April, the major recipients of the TARP contracted their lending and refinancing by 23%, as compared to when the program began in October. The decline was so widespread that only 3 of the TARP's 19 largest beneficiaries had an increase in new loans and the total dollar amount lent declined in 3 of the first 4 months of the program. According to the Treasury Department (compiled by the Wall Street Journal), the decrease in lending per bank is as follows, with a median value of -2.2%:

Perhaps the banks have been failing to loan money because they were too busy refinancing delinquent loans through Obama's $75 billion Making Home Affordable program? Think again. Here are the percentage of eligible loans currently being modified, broken down by bank according to the Treasury Department:

• Wachovia: 2%
• Bank of America: 4%
• Wells Fargo: 6%
• Citigroup: 15%
• JP Morgan: 20%
• GMAC: 20%
• Aurora Loan Services (a former unit of Lehman Brothers): 21%
• Morgan Stanley’s Saxon Mortgage Services: 25%

So to summarize: over the last two years the banking sector managed to lose $140 billion while dramatically increasing executive compensation (to the point that, for some banks, their bonuses paid exceeded total profits and the ratio of CEO pay to worker pay is now between 300-400 to 1 on average ) and managing to receive a massive taxpayer bailout. Then, once they had the bailout funds, they cut lending even further and (because of a little known change in mark-to-market, fair-value accounting standards by the FASB) are drag their feet in helping their customers renegotiate their loan agreements.

What a system...

Dennis Kucinich: Why We Need To Audit The Fed

During a segment on the Thom Hartmann show last Wednesday, 7/29, Rep. Dennis Kucinich (D-OH) walked through his argument for why he, along with Republican Ron Paul and others, inserted an amendment, which passed the House, into a recent bill that would allow Congress to audit the Federal Reserve. Take a listen, it's worth the 3 minutes of your time.



I had no idea this was happening.

Dennis Kucinich is, in my opinion, one of the most important, progressive voices in all of Congress. If you aren't familiar with his passion, like his "Wake Up America" speech from the Democratic Convention last year, check out the video section of his website.

Senator Dick Durbin: "[The Banks] Own the Place"

This audio clip from Dick Durbin is a few months old, but as Congress breaks for the summer recess, with the Senate failing to bring new health care legislation to a vote, I feel it's more relevant than ever. Why is it that any meaningful, progressive legislation get's either filabustered into obscurity or watered-down by the Republicans or Blue Dog Democrats until it's impotent? Personally, as Sen. Durbin agrees, I blame corporate lobbyists. In the clip, Mr Durbin articulates why passing any banking legislation is doomed to failure. This time the poor quality is not my fault:



For those not familiar with Dick Durbin, he is the current senator from Illinois and Senate Majority Whip, the second highest position for the Democratics in the Senate. He was also voted one of "America's 10 Best Senators" by Time Magazine back in 2006.

For a great overview on corporate lobbying totals for just the first quarter of 2009, check out this link or, for a more comprehensive look at the influence of ALL money in politics, check out Open Secrets. Once you learn how much money the wealthy and corporations spend to influence our elected representatives, you'll understand why campaign finance reform should be priority number one.

How The Disaster Happened

I recorded the following audio clip from the Thom Hartmann show last year. In it Bill Seedman, the former head of the Resolution Trust Corporation and inventor of tranched, mortgage-backed securities (more commonly known as CDO's), discusses how his team went to the Federal Reserve to ask how their new financial instruments should be regulated, to which Alan Greenspan responded that they wouldn't be regulating them at all. He considered it to be a test of his free-market ideology. Now that the results are in, can we get rid of that debunked economic theory?

The clip is practically unbelievable.

Alan Greenspan Admits Failure to Congress

To all the fans of Alan Greenspan and Free Market Ideology (libertarians and objectivists alike), you may have missed this testimony of Mr Greenspan to Congress last year where he admits his economic theory was WRONG. The audio is from an episode of The Thom Hartmann show last year that I recorded with my iPhone, sorry about the quality.

Total Cost of the Bailout?

I'll just copy and paste this story from Bloomberg, it's short and sweet:

July 20 (Bloomberg) -- U.S. taxpayers may be on the hook for as much as $23.7 trillion to bail out financial companies, according to Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

Barofsky made the estimate in testimony prepared for a congressional hearing tomorrow.

(emphasis added)