Over the weekend my husband and I watched The Wolf of Wall Street. I thought the
acting was excellent. The ending was of course naïve given the real world
realities of Wall Street’s sustained and routine disregard for risk and externalizations of
their myriad costs.
Wall Street culture has been explored effectively in books,
news coverage, blogs, and film. No surprises there.
What is surprising to me that nothing is done to fix the
problems since Wall Street effectively runs the US economy and much of the
global one through its ownership of stocks and bonds and overlapping corporate
board-membership.
Did you read that Goldman agreed to pay $5 billion to settle
charges made by the Justice Department regarding securities fraud?
Aruna Viswanatha (2016, April 12).
New details disclosed in Goldman mortgage pact. The Wall Journal, C1, C4.
“Under the agreement, the bank
acknowledged it sold tens of billions of dollars in risky mortgage securities,
and didn’t screen out questionable loans from some of the bonds in the way it
told investors it would, authorities said… The pact, which mirrors past
agreements other banks have reached tied to the crisis and doesn’t specifically
name any allegedly culpable executives, includes a $2.3 billion federal penalty
levied by the Justice Department. It also contains $875 million to end claims
by serval other federal agencies and states, including New York, and $1.8
billion in help to struggling borrowers….”
The “pact” does NOT NAME ANY CULPABLE EXECS.
So, the corporation pays fines and the people who created the culture of disregard
for clients and ethics get off with no consequences.
Recently, the Wall Street Journal reported that the
Government Accounting Office is going to “Study Wall Street’s Sway at the Fed”
(text below paraphrased with excerpts in quotation marks):
Rubin, Gabriel (2016, March 7). “GAO
[Government Accounting Office] to “Study Wall Street’s Sway at the Fed.” The
Wall Street Journal (print ed): C3.
California Rep. Maxine Waters
(Democrat) and Texas Rep. Al Green (Republican) requested the GAO investigate
the Fed’s influence, with a “particular focus on the Federal Reserve Bank of
New York.” (C3). The investigation represents the “first time the GAO has
examined the notion of ‘regulatory capture’ at the Fed—when regulated companies
co-opt the regulators, giving them great influence over rules and enforcement.”
The article notes that a 2014 Senate Banking subcommittee that was at the time led by Ohio Sen Sherrod Brown, addressed whether the New York Fed had suppressed dissent within its own ranks after former employees complained of censorship, including Carmen Segarra who alleged it fired her for refusing to temper her regulatory approach toward Goldman Sachs.
This story illustrates the regulatory capture that prevents
reform of Wall Street’s externalizing and extractive ways.
Likewise, Federal prosecutors recently charged two former
State Street Corp. with “running a scheme to defraud clients by secretly
charging commissions on billions of dollars in securities trades." The March 31
indictment accuses Ross McLellan, former president of State Street's US broker-dealer
unit, and Edward Pennings, of the bank's London office, of securities and wire fraud.
Apparently, prosecutors did not directly name State Street in the indictment
referring to it instead as a Boston-based financial services company, described
in the indictment as “one of the world’s largest asset managers and custody
banks.”
Kate O’Keefe (2016, April 6).
Former State Street executives charged with client fraud. The Wall Street
Journal, C4.
The Federal Reserve is too often aligned with Wall Street’s
interests, precluding policies that create sustainable and just economies.
The Department of Labor has stepped up where the Fed has
failed by proposing a new rule that would require those giving financial advice
to act as fiduciaries, meaning to act in the best interest of their client
rather than their personal or firm’s best interest:
Department of Labor Proposes Rule
to Address Conflicts of Interest in Retirement Advice, Saving Middle-Class
Families Billions of Dollars Every Year http://www.dol.gov/ebsa/newsroom/fsconflictsofinterest.html
As you can imagine, this new rule is not popular with Wall
Street, which will no doubt find a work-around if the rule is implemented. Indeed,
the Wall Street Journal reported that “the financial industry has mounted a
fierce campaign against the government’s new rule imposing stricter standards
on retirement advisers, saying burdensome requirements will crimp the sector.”
Michael Wursthorn,
Sarah Krouse, and Leslie Scism (2016, April 6). Retirement-Saving Rule: Who
Wins? The Wall Street Journal, C1.
The work-around for avoiding having earnings “crimped”
appears to be an acceleration toward recurring fees rather than commissions for
trading, according to the article by Wursthorn et al cited above.
I would prefer to avoid investing the stock market
altogether. However, the move toward negative interests rates will
accelerate individuals' loss of savings already occurring with inflation in key sectors
(health, education, and housing). Ellen Brown has covered these issues very thoroughly https://ellenbrown.com/
My new book Crisis Communication,
Liberal Democracy, and Ecological Sustainability: The Threat of Financial and
Energy Complexes in the Twenty-First Century (Lexington here) makes this
argument empirically, drawing upon a variety of evidence forms including
governmental reports, academic analyses, investigative journalism, and routine
reporting in major news media and blogs. I recommend asking your library to order it (Lexington is pricing the book rather high).
MEANWHILE in JAPAN
Netc has not indicated worrying radiation levels in Kyushu. After 400 quakes on the island, the LDP is insane not to shut down the Sendai NPP.
FUKUSHIMA
Whatever was going on yesterday with the flashing lights has ceased. However, emissions are up in comparison to when TEPCO first activated: e.g., April 14, 2016 see post here
Screenshots from today:
