Superhero Elizabeth Warren rises up against Jamie Dimon

Superhero Elizabeth Warren.

I enjoyed seeing Marvel’s Avengers with my son and daughter-in-law yesterday afternoon. I was unfamiliar with all the superheroes in the film, but soon caught on to the plot and appreciated the pervasive humor. My favorite scene showed the Hulk taking out the “puny God” Loki, who was behind all of the evil doings.

Scanning the online news coverage this Monday morning, it occurred to me that America has a superhero in real life – her name is Elizabeth Warren. Warren has been effectively challenging Wall Street – the villain behind the Great Recession - and she just rose up against JPMorgan Chase CEO Jamie Dimon:

Elizabeth Warren called on JPMorgan Chase CEO Jamie Dimon to resign from his post on the Federal Reserve Bank of New York's board, citing the need for "responsibility and accountability" in the financial industry. 

Dimon, who disclosed a $2 billion loss by the banking giant last week, should "send a signal to the American people that Wall Street bankers get it and to show that they understand the need for responsibility and accountability," Warren said in a statement following Dimon's Sunday appearance on "Meet the Press."

Read more:

When will the Obama Administration investigate the perpetrators of the economic crisis?

Obama and bank officials. Photo credits: public domain.

Credo, Moveon.org, and other progressive organizations are joining forces to pressure the Obama Administration during this election year to investigate the big banks that caused the housing crisis and resulting recession.

Check out this message from Credo and sign the petition to get Obama to act:

Wall Street greed fueled the housing bubble, and it's not hard to find evidence of what appears to be widespread and pervasive fraud by the biggest players in the mortgage industry.

Yet, despite the work of a handful of brave state attorneys general, there has been an astonishing lack of investigation into the misdeeds and outright crimes that caused the financial crisis.

The investigations that do exist have barely begun to scratch the surface.

And without meaningful investigations, there won't be any accountability for the Wall Street crooks who drove our economy off a cliff.

Tell President Obama: Announce a full investigation into the cause of the housing bubble and foreclosure crisis. Click here to automatically sign the petition.

The collapse of the housing bubble caused trillions of dollars in homeowner equity to evaporate, which directly led to our economy grinding to a halt.

And the ensuing wave of foreclosures — caused in no small part both by predatory loans designed to fail and out-and-out foreclosure fraud — has destroyed communities across the country and shrank the tax base of local governments right when there was the most need for the services they provide.

Yet with all the resources at its disposal, the Department of Justice and other federal entities have yet to announce a full investigation of the cause of this man-made economic catastrophe.

Quite the opposite. Thus far the president's advisors have been pushing for a bad settlement with the banks that lets them off the hook . But a bad settlement has been stopped so far by courageous progressive attorneys general supported by an army of grassroots activists like you.

We now have an opportunity to change the White House's strategy as the reelection campaign heats up, and get the president to come out on the right side of this issue.

Tell President Obama: Announce a full investigation into the cause of the housing bubble and foreclosure crisis. Click here to automatically sign the petition.

The timing of this fight is critical.

The election calendar is working with us by pushing President Obama to be more aggressive than he's been. We saw this, for example, with his recent recess appointment of Richard Cordray to lead the Consumer Financial Protection Bureau.

And we know that President Obama's political team wants him to run against Wall Street.

CREDO is not alone in asking the Obama administration to launch a full investigation. We're joining with MoveOn and other progressive groups in this campaign.

If we make enough noise, it will be hard for the Obama administration to avoid calling for full investigations into the fraud that led to the housing crisis.

It's a completely reasonable ask, it's within his powers to call for a full investigation, and it's the right thing to do.

Tell President Obama: Announce a full investigation into the cause of the housing bubble and foreclosure crisis. Click here to automatically sign the petition.

Thank you for speaking out. Your activism matters.

Matt Lockshin, Campaign Manager
CREDO Action from Working Assets

Surprise: Wall Street backs Scott Brown; opposes Elizabeth Warren

Greg Sargent at the Plum Line (Washington Post) on Wall Street's support of Scott Brown:

Wall Street executives have been quite open about the fact that they really, really don’t want to see Elizabeth Warren get anywhere near the Senate. And it looks like they’re about to ratchet up their efforts to help Scott Brown prevent it from happening — including the influential U.S. Chamber of Commerce.

The Center for Public Integrity reports today that Wall Street and K Street lobbyists are firing up the fundraising on behalf of Brown in a big way. The report quoted multiple big finance types saying Brown’s reelection campaign is crucial, and it noted — without sourcing — that the U.S. Chamber “will be engaged early and heavily in Massachusetts with ads.”

Well, it’s no wonder the 1 percent is up and arms. Watch this video from the Warren campaign:

If you want to help Elizabeth Warren keep the momentum going, go here.

Bill Moyers speaks out: "How Wall Street occupied America"

This article by the venerable Bill Moyers at the Nation is a must read for anyone concerned about our corporate-driven government and economic system. It’s enough to startle even the most cynical among us, and Moyers doesn’t back off from either the “hypocritical” Obama Administration or our bought and paid for congressional leaders:

Moyers begins:

During the prairie revolt that swept the Great Plains in 1890, populist orator Mary Elizabeth Lease exclaimed, “Wall Street owns the country…. Money rules…. Our laws are the output of a system which clothes rascals in robes and honesty in rags. The [political] parties lie to us and the political speakers mislead us.”

She should see us now. John Boehner calls on the bankers, holds out his cup and offers them total obeisance from the House majority if only they fill it. Barack Obama criticizes bankers as “fat cats,” then invites them to dine at a pricey New York restaurant where the tasting menu runs to $195 a person.

That’s now the norm, and they get away with it. The president has raised more money from employees of banks, hedge funds and private equity managers than any Republican candidate, including Mitt Romney. Inch by inch he has conceded ground to them while espousing populist rhetoric that his very actions betray.

Read more:

Krugman: “If You Aren’t Outraged, You Haven’t Been Paying Attention

Paul Krugman goes after Wall Street in his NY Times op-ed column, and he does not fail to call the Obama Administration to account:

Americans are angry at Wall Street, and rightly so. First the financial industry plunged us into economic crisis, then it was bailed out at taxpayer expense. And now, with the economy still deeply depressed, the industry is paying itself gigantic bonuses. If you aren’t outraged, you haven’t been paying attention.

But crashing the economy and fleecing the taxpayer aren’t Wall Street’s only sins. Even before the crisis and the bailouts, many financial-industry high-fliers made fortunes through activities that were worthless if not destructive from a social point of view.

And they’re still at it. Consider two recent news stories.

Read more:

Enabler or Reformer? From Chicagoland to Washington to Wall Street

Prior to the Democratic primary, political news from Chicago usually concerned the latest exposure of corruption, and a good deal of it was linked to the Daley Administration(s). But riding on a white stallion, Barack Obama blazed forth out of the windy city promising to “change the world,” “transform this country,” and create a Kingdom right here on earth.”

To help him achieve all the above, Lynn Sweet at the Sun Times, reports that Obama has brought with him to the nation’s capitol a startling number of old friends from Chicago’s 51^st Ward:

WASHINGTON -- It's a Tuesday in June, and I am in one of the high-ceiling big rooms of the old office building next to the White House.

As I look around the room at the players assembled here -- including this scribe -- I'm thinking that with a few twists of fate, this all-Chicago gang could be huddling in Mayor Daley's City Hall.

It’s not terribly reassuring to be reminded of the Chicago influence on the guy steering the ship during a global financial meltdown and rising concerns about health care reform. And there probably aren’t any direct links from Chicagoland to what’s happening on Wall Street these days as described by Robert Kuttner’s recent piece at Huffpo:

The New York Times recently reported that the latest scheme--or scam--on Wall Street is something called High Frequency Trading. Very sophisticated financial firms, such as Goldman Sachs, are tipped off by the New York Stock Exchange's own computers to pending buy and sell orders. Armed with ultra sophisticated computer algorithms, the insiders anticipate the direction of the market based on what they learn about supply and demand for a given security. They can make an extra penny here and an extra penny there at the expense of us suckers, adding up to billions.

"Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed," wrote the Times' Charles Duhigg in a front page piece that was the talk of New York and Washington. "High-frequency trading is one answer."

As debates in the blogosphere in the last couple of days have made clear, there are a couple of possibilities of what is at work here. One is that Goldman and others are literally using privileged information to make trades ahead of markets, in which case they are committing a felony. Specifically, the abuse is known as "front-running," or trading ahead of customers, and it is an explicitly illegal form of market manipulation. Front running is epidemic on Wall Street--the whole point of an investment bank trading for its own account is to take advantage of its specialized knowledge of markets--and the SEC or the Justice Department shuts down front-running when it becomes too blatant to ignore.

Kuttner concludes:

If the financial crisis has proven anything, it is that capital markets have become an insiders' game in which trading profits crowd out the legitimate business of investment. The whole business-models of the most lucrative firms on Wall Street are a menace to the rest of the economy. Until the Obama administration recognizes this most basic abuse and shuts it down, it will be more enabler than reformer.

More enabler than reformer? I hate to break the news, but that sounds a lot like the Daley machine’s modus operandi in Chicago.

Will the Geithner Plan Work? Four Leading Economists Speak Out

(Credit: Evan Vucci/Associated Press) Demonstrators standing behind Treasury Secretary Timothy Geithner before the start of a hearing of the House Financial Services Committee on Tuesday.

In Room for Debate, editors at the NY Times invited economists Paul Krugman, Op-Ed columnist, Princeton University; Simon Johnson, M.I.T.; Brad DeLong, U.C. Berkeley; and Mark Thoma, University of Oregon to respond to this question:

“…But is this plan {Geithner’s bank rescue plan} sufficient to restore the banking system to health?”

As far as I could tell, neither of the above named economists gave Geithner’s plan a wholehearted thumbs up, especially not Paul Krugman who writes:

Well, the stock market loved the Geithner plan, which proves … nothing. Stock investors have no special knowledge here; they’re groping like everyone else. For what it’s worth, credit markets didn’t react much at all.

But let’s back up and focus on the fundamentals.

In essence, the Geithner plan is the same as the Paulson plan from six months ago: buy up the toxic assets, and hope that this unfreezes the markets. Don’t be fooled by the apparent role of private enterprise: more than 90 percent of the funds will come from taxpayers. And the way the funds are structured provides a strong incentive for investors to overpay for assets (see my explanation on my blog).

So can this work?

Since the beginning of the crisis, there have been two views of what’s going on.

View #1 is that we’re looking at an unnecessary panic. The housing bust, so the story goes, has spooked the public, and made people nervous about banks. In response, banks have pulled back, which has led to ridiculously low prices for assets, which makes banks look even weaker, forcing them to pull back even more. On this view what the market really needs is a slap in the face to calm it down. And if we can get the market in troubled assets going, people will see that things aren’t really that bad, and — as Larry Summers said on yesterday’s Newshour – the vicious circles will turn into virtuous circles.

View #2 is that the banks really, truly messed up: they bet heavily on unrealistic beliefs about housing and consumer debt, and lost those bets. Confidence is low because people have become realistic.

The Geithner plan can only work if view #1 is right. If view #2 is right – if the banks are really in deep trouble that goes beyond lack of confidence — subsidizing investor purchases of toxic assets, many of which aren’t even held by the most troubled banks, has no real chance of turning things around.

As you can guess, I believe in view #2. We had vast excesses during the bubble years, and I don’t think we can fix the damage with the power of positive thinking plus a bit of financial engineering.

But that’s where the issue lies.

To read the responses of the other three economists, go here.

Watch Jon Stewart Skewer CNBC's Coverage of the Financial Crisis

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Calm Down, People: Wall Street is Showing Signs of Improvement

Just minutes ago, Michael Grynbaum at the NY Times reported:

“Signs of improvement in the credit markets brought a wave of relief to Wall Street on Monday morning, as investors sent stocks to another big rally and welcomed comments from the chairman of the Federal Reserve that seemed to encourage a new government stimulus package.

“At the close, the Dow Jones industrials were up 413.21 points or 4.6 percent, closing back above 9,000. The Standard & Poor’s 500-stock index rose nearly 4.8 percent, and the Nasdaq composite index was up about 3.4 percent.

“After weeks of extraordinary coordinated efforts by the world’s governments and central banks, investors awoke on Monday to find — finally — signs that credit was beginning to flow more easily.”

Hopefully today’s positive signs from Wall Street will soon herald good news for the rest of us out here in the hinterland struggling to hold the fort on America’s Main Streets.

To read the NY Times report in its entirety, go here.

Moronic Exchanges Between Obama and McCain on the Wall Street Meltdown

During the Analysis of Shields and Brooks on the PBS News Hour last night, conservative NY Times columnist David Brooks described both the Republican and Democratic campaign responses to the Wall Street meltdown as “moronic.”

Posting yesterday afternoon at Political Intel (Boston Globe) Foon Rhee captures well a few of the most moronic exchanges between Obama and McCain during a week of turmoil and growing fears about the nation’s economy.

Rhee’s post titled Full Crisis Mode begins with a video of a recent Obama ad in which “Democrats are trying to draw a contrast between what they call Barack Obama's nonpartisan, level-headed response to the Wall Street crisis and John McCain's partisan, hot-headed reaction.”

Rhee notes:

“The video, however, leaves out that Obama's speeches this week where he has aggressively gone after McCain on his record supporting deregulation, has called him out of touch for saying that the "fundamentals" of the economy are strong, and just today assailed him on Social Security.”

To see the Obama video and read more, go here.

Both Obama and McCain Weak on Economic Issues

In the final days of the 2008 presidential campaign, the focus on the economy highlights the fact that neither candidate has the credentials to lead the nation successfully through the latest crisis on Wall Street.

At USA Today, Richard Wolf offers an analysis titled “Economic upheaval shakes up campaign debate.” Wolf reports:

“The economy was at the top of voters' minds in the latest USA TODAY/Gallup Poll. More than two in three respondents cited an economic issue, including energy or health care costs, as their biggest concern. The cratering of Wall Street titans and its impact on jobs, pensions and portfolios are likely to cement those worries.

‘“I always thought this was a campaign about the economy,’ says Doug Holtz-Eakin, McCain's top policy adviser. ‘In the end, it's about will this disaster on Wall Street roll over and crush the Main Street economy.’

“Though more talk about the economy may be a good thing for voters, it poses a risk for both candidates: McCain acknowledged early in the campaign that the economy wasn't his strong suit, and Obama has a short economic résumé.

“Obama emerged from Wall Street's wreckage Wednesday with the better chance of making gains, some analysts say. Polls show voters side with Democrats on the economy.

‘“The tectonic plates shifted, and it's the economy, it's the financial sector, it's Wall Street,’ says Robert Reischauer, president of the non-partisan Urban Institute. ‘The Republicans have been identified with market deregulation, with low taxes on financial executives, and let capitalism and markets show their stuff.’

“Others say McCain can point to his support for tighter regulations on Fannie Mae and Freddie Mac, last week's federal bailout targets. And he can tout his opposition to tax increases.

‘“I think the jury's out on who this is going to benefit,’ says Pat Toomey, a former Republican congressman who leads the anti-tax Club for Growth. McCain, he says, ‘is on the right side of the tax issue, in the minds of the general public.”’

To read Wolf’s article in its entirety, go here.