At the Mercy of the Repairman
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Matt Taibbi latest exposé in Rolling Stone is an eye-opener. He reports on a recently-concluded, and totally-ignored-by-the-MSM, trial that took place in Manhattan.
The Scam Wall Street Learned From the Mafia
The article reveals more than a decade of fraud perpetrated by TBTF banks and their middlemen.
"The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement."
The explanation the defendants' lawyers offered?
"Siffert tried to lay this outrageous load of balls on the jury using a faux-folksy analogy. "When your refrigerator breaks down, if you're not mechanically inclined, you're at the mercy of that repair person," he told the jury. "And if he repairs the refrigerator, makes it work well, charges you a fair price, you're likely to call on him again when the stove breaks." What he was essentially telling jurors was: This shit is complicated, so best just to leave it to the experts. Whether they're fixing a fridge or fixing a bond rate, they get to set the price, because we're all morons who are dependent on them to make our world work. Siffert, in his scuzzy way, was actually telling us an essential economic truth: You're at the mercy of that repair person."
For most of you this probably isn't a revelation, but the media's lack of coverage is telling and goes a long way toward explaining how we came to this impasse. Big finance, with convoluted financial instruments purposely devised to be beyond the understanding of the average person, have left most Americans "at the mercy of the repairman."
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Just started reading this, scoff, and you're right --
the trial hasn't gotten any coverage that I'm aware of. I stumbled on the story by accident and wondered why I hadn't heard anything about it before. Actually, I'm surprised that this went to trial. Maybe these guys are just being thrown to the wolves?
I haven't heard a word of it
in any MSM outlet, until this article.
Taibbi seems to agree with you. The defendants are just sacrificial lambs offered up to the system to protect the real culprits.
Very important Taibbi piece, scoff.
It was linked on "Naked Capitalism". I am going to copy it and give it to my county commissioners and city council members.
Great Idea.
I wonder how many local government officials might be swayed to a better understanding of the stranglehold we're in by reading the details of this huge swindle being pulled off by the banks.
Methinks a lot.
Well done, scoff
Thanks for this. So much to follow...
It's a homer for sure, just not a grand slam
Libertarians will tell you that what Matt Taibbi is laying out is an argument against government, that elected officials and government bureaucrats inevitably will fail to perform the necessary due diligence in financial matters because they are in charge of "other people's money" (i.e. the taxpayers') and not their own (or that these public servants will be guilty of worse than that). There's a wider point about the inevitable course of unregulated capitalism that Taibbi ends up rushing past, at least in this article, after having pointed to the true breadth of the problem just once early on in the article:
Speaking of LIBOR
2008-10-10 (Lehman was 9-15).
* * *
What I missed was the idea that the banksters were a mafia, not metaphorically, but literally. (Shystee got this. I wrote the headline that mistakenly applied to idea to Republicans. In 2008, I had not accepted that the rot in the Democratic Party was complete.)
* * *
What I'm seeing in the last two days is a convergence around this idea, that banksters are a mafia, first with Yves and Matt Taibbi on Bill Moyers, then with Charles Ferguson, Bill Black, Maureen Tckacik and many others at FDL. Super analysis, and resolutely non-, or really a-, partisan.
That's really a lot of firepower, but in two rooms. Next time, they should all be in one room. Needs a media platform. Not sure how to do that, but I'm thinking university New Media Departments might be an excellent place to start.
Your parenthetical was pretty sharp analysis for back in the day
In your Libor post you cited your own passage from an earlier post:
Your reference was to a September 28, 2008 Stirling Newberry post:
In the matter of agency, or lack thereof, I think this is an important chronology. The meltdown came about as a result the stimuli of a series of panics being followed by responses that came to be associated with a general sense of gratification being experienced system-wide. The system, itself, more than individuals within the system, were learning the lessons. For instance, even weeks after the meltdown crisis had passed Alan Greenspan, for a moment, was willing to concede his theory about the system being able to regulate itself was wrong. Shortly thereafter I'm sure Greenspan rethought that, realizing that the system, itself, not the individuals in charge of it, had had the insight that it was too big to fail and that therefore no matter what it did it would not be putting itself at risk.
As late as at the time of the crisis, though, he and Larry Summers and Robert Rubin, among others, did not understand that. Instead, they really did believe that the system was unstable but manageable, requiring their own extraordinary talents and wiles to protect and, on occasion, to save it.
See also from Inside Job, the then IMF Director's comment here
Inside Job*
[1:19:53] Dominique Strauss-Khan: I attended a very interesting dinner organized by Hank Paulson a little more than one year ago [ed- in late 2008]. It was some officials and a couple of CEOs from the biggest banks in the U.S.
And surprisingly enough all the sentiment was arguing, "We were too greedy so we have part of the responsibility." Fine. And then they were turning to the Treasurer, the Secretary of the Treasury, saying, "You should regulate more because we're too greedy, we can't avoid it. The only way to avoid this is to have more regulation."
Charles Ferguson: I have spoken to many bankers about this question including many senior ones and this is the first time I ever heard anyone say that they actually wanted their compensation to be regulated--
Strauss-Kahn: Yeah, because it was at the moment when they were afraid. And, threreafter, when solutions to the crisis began to appear then, probably, they changed their minds.
_______________
*No soundtrack plays during the last 24 minutes of this 106 minute YouTube video of Ferguson's Inside Job.
(BTW with Strauss-Khan, Assange, and even Spitzer, it turns out, in some ways, it's a small world after all.)
Isn't it reasonable to assume that organized crime,
bank owners since at least the first Depression, ultimately would own any instrument of American finance that could guarantee them steady returns? Didn't the Savings and Loan crisis also have ties to huge systemic fraud conspiracies like BCCI? Wasn't that what "in five years, the Corleone Family will be completely legitimate" meant?
I didn't love Godfather III, and neither did most fans, but at least it did us the service of explaining the P2/Banco Ambrosiano crisis as one large enough to affect countries and popes. Sure, conspiracy-theory land, but don't most of the obvious ones serve as cover for the ones that, once revealed, seem too big to be true?
Also, interesting that the jury was mostly lower class/minority -- you'd think they'd be easier to tamper with, but perhaps the tampering was during the selection process, when no white person with FIRE city ties had a reason to be kept on. I wonder if that will be a factor in the appeal -- "Your Honor, how could my clients face a jury of their peers, when none of these people attended Wharton?"