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Author Topic: Obama’s Economic Foxes To Guard Financial Henhouse  (Read 636 times)
Bindare_Dundat
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« on: November 25, 2008, 12:32:05 AM »

Today President elect Obama officially introduces his economic team to the world. What many may fail to recognize however is the fact that those tasked with rescuing the economy are the very people who helped create the financial crisis in the first instance.

We already know that the team will include Tim Geithner as Treasury Secretary; Lawrence Summers as head of the National Economic Council; Peter Orszag as director of The Office of Management and Budget; and Jason Furman, Austan Goolsbee and Jack Lew in other senior economic positions.

The man that ties almost all these people together is former Treasury Secretary and current Citigroup executive Robert Rubin.

Rubin is as much to blame for the creation of the current financial crisis as Alan Greenspan is, as both men ignored the advice of the Commodity Futures Trading Commission (CFTC) and strongly opposed the regulation of derivatives. Over-exposure to credit derivatives of mortgage-backed securities - or credit default swaps (CDS) was a key reason for the failure of Bear Stearns, Lehman Brothers, Merrill Lynch, American International Group, and Washington Mutual in 2008.

At Citi, Rubin was one of the grand strategists of the speculation in securitized loans, on November 4, 2007, he became the Chairman there.

Rubin is also currently co-chairman of the board of directors of the Council on Foreign Relations and a member of the Group of Thirty.

Every one of the afore mentioned economic “experts” to be appointed by Obama, with the exception of representative Austan Goolsbee, is a protégé of Rubin.

Furthermore, as the New York Times pointed out in a weekend feature:

Even the headhunters for Mr. Obama have Rubin ties: Michael Froman, Mr. Rubin’s chief of staff in the Treasury Department who followed him to Citigroup, and James P. Rubin, Mr. Rubin’s son. All three advisers - whom Mr. Obama will officially name on Monday and Tuesday - have been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation, a combination that was credited with fueling the prosperity of the 1990s.

Today the government approved a radical plan to stabilize Citigroup in an arrangement in which will see the taxpayer assume the risk on $306 billion of Citigroup’s predatory loans, including billions in mortgage-related securities.

In addition, the U.S. Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program (TARP), on top of the $25 billion that the government gave Citi in October.

Critics have called it the worst and most undeserved bailout to date, pointing out that less than two months ago, the agencies tried to give Citigroup the whole of Wachovia, portraying Citi as a savior.

The Financial Times’ chief business commentator writes:

The downfall of Citigroup has taken place over a long time and involved many people, but attention is now focussing on the role of Robert Rubin, the former US Treasury Secretary, who is a Citi director and senior adviser and was briefly its chairman. Mr Rubin has had an influential role at Citi since being brought on board by Sandy Weill in 1999 but has not been an executive. Having formerly been co-chairman of Goldman Sachs, he preferred to exercise influence behind the scenes.

(…) Now, of course, a big loss has been disclosed at Citi and various people are asking what Mr Rubin had to do with it. That was among the subjects covered in a long article in The New York Times on Saturday. It found that Mr Rubin and Chuck Prince, Citi’s former chairman and chief executive, played “pivotal roles” in the bank’s disastrous push into underwriting and trading collateralised debt obligations. The man in charge of this effort was Tommy Maheras, the former head of capital markets at Citi, who lost his job a year ago, shortly before Mr Prince resigned. Mr Rubin was then influential in selecting Vikram Pandit to succeed Mr Prince.

As a New York magazine’s headline states Robert Rubin Helped Break Citigroup and Now He Must Fix It.

“This seems a little awkward. We’re giving the guys that broke the system the contract for the reconstruction project?” the article concludes.

Perhaps an even bigger concern lies in the fact that Rubin does not even acknowledge his own role in the crisis.

As Matthew R. Lee of Inner City Press has noted, Rubin has no regrets, does not acknowledge that he has damaged the economy and has stated that it was “not under my aegis” to reign in Citigroup’s predatory lending.

The only “change” Obama’s economic team represents is that the foxes are now guarding the hen house, rather than plundering it.


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« Reply #1 on: November 25, 2008, 01:17:22 AM »

The buzz right now is supposedly that Obama managed to get Clinton's former treasury of state to accept a cabinet role that was less than the treasury of the state.
From what I've seen, most economical analysists are more than happy with the current appointments.
   
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« Reply #2 on: November 25, 2008, 06:55:23 AM »

Obama is going to be the same pro-wall street guy that Clinton was.  The markets 'know' that and responded favorably to the Clinton appointments.

"You mean Tattaglia?"

"I mean Barzini...But I didn't know until this day that it was Barzini all along."
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« Reply #3 on: November 25, 2008, 07:08:23 AM »

market's up 900 points since he made the announcement on friday.

If Coach and others want to fault Obama for the 2000 point decline since the election, shouldn't they credit him for a 900+ point turnaround once he announces his cabinet and plan for fixing shit?
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Bindare_Dundat
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« Reply #4 on: November 25, 2008, 08:38:35 AM »

The buzz right now is supposedly that Obama managed to get Clinton's former treasury of state to accept a cabinet role that was less than the treasury of the state.
From what I've seen, most economical analysists are more than happy with the current appointments.
   

and considering that most economic analysts  believe that, "no one could see this crisis coming" really makes me feel good.
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« Reply #5 on: November 25, 2008, 09:01:24 AM »

and considering that most economic analysts  believe that, "no one could see this crisis coming" really makes me feel good.

I bumped the original thread too, but I thought I could put it here as well.

Instead of focusing on bullshit issues like abortion, gun-laws and similar stuff where all the three candidates will be pretty similar anyways, why not have them talk about shit that really matters.

How many presidents the last 50 years have made any radical changes to gun laws eg? Roll Eyes

Stuff that will affect the national economy.

How about the sub prime mortgage? And the whole mortgage sector.

Some say it's not criminal to be stupid, and that mortgage companies should be able to offer whatever mortgages they want.

But what if millions of people are getting sub prime mortgages and fcuking up their economy?

It will eventually hit the national economy. It will become an avalanche, bringing down everything in its way.


Look at the current economic situation, with millions having real estate issues.

It's fcuking up the economy world wide.

Because the finance industry isn't regulated hard enough. You need to have laws.

Otherwise there will be Enron's, Ken Lay's, and millions of fcuked citizens. Always.

Political science indicates that Trans National Corporations are the new powerhouses.

The only chance for the common man to hold his own is by legislative measures.


And then you always have the select dumb few who applaud the advances of the Trans National Corporations. Those who somehow believes that it is great to be in the hands of a board of directors instead of a voted parlament Huh

The point is - I saw it coming in April.

And I'm far from a political wiz or insider.

I'm not even living in the USA.

So there are lots of people who were perfectly capable of predicting the crisis much earlier than I did.

Eg, Obama actually spoke out on fears about the mortgage situation last year.

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« Reply #6 on: November 25, 2008, 09:12:15 AM »



Eg, Obama actually spoke out on fears about the mortgage situation last year.



lol

I'd like to know how much Swedish banks recieved in comparison to how much American banks have recieved thus far.
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« Reply #7 on: November 25, 2008, 09:36:28 AM »

lol

I'd like to know how much Swedish banks recieved in comparison to how much American banks have recieved thus far.

One middle sized Swedish bank, an investment bank, have lost its permit and is currently run by the government until it's sold off.
The government has secured loans and liquidity in the bank.

The other major banks haven't received anything.

They're in pretty good shape.

But that's probably because a lot of them were in very bad shape in the early 90's and had to be rescued by the government for a couple of years.

In the end, analysis shows that tax payers got their money back, or even had a slight surplus on the whole thing.

But that probably installed a slightly more sober culture throughout the banks in Sweden.

But the government is still introducing a gigantic safety system, worth $200 billions, that will prevent any future collapse of the banks.

And Sweden are population wise around the size of New York.

However, the banks will fund the safety net as well.

Further, the regulations will be tightened up.

But the rescue of the banks in the early 90's in Sweden were probably different in comparison to what is going on right now with the US banks in that regard that the banks were stripped from control and the government had a special "rescue team" to clearing out the bad loans, liquidity and rates.

Right now it seems like the Bush administration are letting the banks keep too much control of the funds coming in.

Instead of getting a firm grip of the whole situation and leading every action, every decision.
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« Reply #8 on: November 25, 2008, 07:38:22 PM »

found this article: But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.

But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.
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« Reply #9 on: November 25, 2008, 08:39:31 PM »

http://www.nytimes.com/2008/11/25/business/25sorkin.html?_r=2&ref=business&oref=slogin

Mr. Geithner’s involvement in several ultimately ill-fated efforts to buttress the American financial system is the very reason some Wall Street C.E.O.’s — a number of whom spoke on the condition of anonymity for fear of piquing the man who regulates them — question whether he’s up to the challenge.

“We have only two things to say about Tim Geithner, who we do not know: A.I.G. and Lehman Brothers,” said Christopher Whalen of Institutional Risk Analytics. “Throw in the Bear Stearns/Maiden Lane fiasco for good measure,” he said.

“All of these ‘rescues’ are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion.”

Ouch.

“He was in the room at every turn of the crisis,” said another executive who participated in several such confidential meetings with Mr. Geithner. “You can look at that both ways.”

Behind the scenes, Mr. Geithner was the point person for weeks of sleep-deprived Bailout Weekends. It was Mr. Geithner, not Mr. Paulson, for example, who put together the original rescue plan for the American International Group.

And, of course, Mr. Geithner also oversaw and regulated an entire industry whose decline has delivered a further blow to an already weakened American economy. Under his watch, some of the biggest institutions that were the responsibility of the New York Fed — Bear Stearns, Lehman Brothers, Merrill Lynch and most recently, Citigroup — faltered. While he was one of the first regulators to smartly articulate the potential for an impending disaster, a number of observers question whether he went far enough to stop the calamity.


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« Reply #10 on: February 08, 2013, 07:49:27 PM »


February 8, 2013, 6:21 pmComment

Lew’s Cayman Islands Fund a Likely Issue at Confirmation Hearings
 
By JONATHAN WEISMAN


As recently as 2010, Jack Lew, President Obama‘s nominee to be the next secretary of the Treasury, had $56,000 invested in a CitiGroup venture capital fund based in the Cayman Islands’ notorious Ugland House, a building whose mailboxes are home to nearly 19,000 corporate entities, many of them tax shelters.

The investment has been in public documents for years and drew no attention when Mr. Lew was confirmed to be deputy secretary of state in 2009 and director of the White House Office of Management and Budget in 2010.

But the fund is coming to light as Mr. Obama and Congressional Democrats are zeroing on taxes lost to off-shore entities, including hedge funds, as a way to stave off $1 trillion in across-the-board spending cuts set to begin March 1.

Aides in both parties said it was quite likely to come up during his confirmation hearing Wednesday. Senate Democrats are struggling to come up with a package of spending cuts and tax loophole closings that could stave off the automatic spending cuts — known as sequestration — for at least three months. Tax breaks for hedge fund managers and offshore tax shelters are a prime target.

The Finance Committee held hearings in 2008 burrowing in on Ugland House, a nondescript white building in George Town, Cayman Islands, that shelters a bewildering number of corporate headquarters.

“Today we will take a look at some ostensibly crowded halls, those of the Ugland House in the Cayman Islands,” Senator Max Baucus of Montana, the committee’s chairman, said, opening the hearing. “That is a remarkable five-story building that the G.A.O. tells us has some 18,857 tenants. Today we will examine whether many of those tenants are feasting at America’s taxpayers’ expense.”

Mr. Lew divested himself of the CitiGroup Venture Capital International Growth Partnership in 2010. When confirmed as budget director in 2010, he sold the investment at a loss, for $54,418.

“Jack Lew paid all of his taxes and reported all of the income, gains and losses from the investment on his tax returns,” said Eric Schultz, a White House spokesman. “The existence of Mr. Lew’s investment is not news to the Senate. Mr. Lew disclosed the investment in his prior confirmations, before three separate committees. There are no new facts that provide a basis for senators to reach a different conclusion about Mr. Lew’s nomination than they reached twice before in this administration.”

Mr. Lew did not create, manage or operate the fund, officials said. Republican aides did not suggest any illegality or tax cheating with the disclosure. Indeed, Republicans on the Finance Committee had leaped to the defense of Henry Paulson, President George W. Bush‘s last Treasury secretary, when numerous Cayman Island investments surfaced during his confirmation.

Senator Charles E. Grassley of Iowa, then the Finance Committee’s ranking Republican, accused the president of hypocrisy.

“President Obama has been almost obsessively critical of offshore investments,” Mr. Grassley said. “He called Ugland House ‘either the biggest building or the biggest tax scam on record.’ That makes this Cayman Islands investment of his top official and now Treasury secretary nominee worthy of attention. The irony is thick. Members of the Finance Committee will question Mr. Lew about his foreign investments at the hearing.”
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