90.9 WBUR - Boston's NPR news station
Top Stories:
PLEDGE NOW
Gary Gensler, Obama’s Toughest Fighter For Wall Street Reform

Gary Gensler is a hero to those who call for a crackdown on Wall Street. “Arch-enemy” to those who don’t. He’s leaving his top watchdog  job, and sits with us for an exit interview.

Outgoing Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler testifies on Capitol Hill in Washington, Tuesday, July 30, 2013, before the Senate Banking Committee as lawmakers examine how to mitigate systemic risk in financial markets through Wall Street reforms. (AP)

Outgoing Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler testifies on Capitol Hill in Washington, Tuesday, July 30, 2013, before the Senate Banking Committee as lawmakers examine how to mitigate systemic risk in financial markets through Wall Street reforms. (AP)

No top heads have rolled.  No big banker sits in jail.  America’s biggest banks – the “too big to fail brigade” – have not been broken up.  But you had better believe there’s been a battle on since the Great Crash and Recession to try to clean up Wall Street.  And the toughest battler of all in the Obama administration has been Gary Gensler.  A onetime Goldman Sachs prodigy himself who helped undo regulation, then turned around to fight for it.  He drives Wall Street crazy.  After five years fighting, he’s on his way out.  This hour On Point:  Wall Street now and the exit interview with big fighter, Gary Gensler.

– Tom Ashbrook

Guests

Jesse Eisinger, Pulitzer Prize-winning financial reporter for ProPublica. (@EisingerJ)

Gary Gensler, outgoing chairman of the U.S. Commodity Futures Trading Commission. (@CFTC)

From Tom’s Reading List

Wall Street Journal: Gensler’s Record: Achievements and Disappointments — “Mr. Gensler began his tenure amid an economic meltdown sparked in large part by the implosion of parts of the derivatives market. Large firms with complex ties to the financial system such as American International Group Inc. and Lehman Brothers Holdings Inc. suffered devastating losses on bad bets on derivatives, which nearly caused the financial system to collapse. The 2010 Dodd-Frank law was designed by Congress to ward off the threat of such a collapse by the meltdown of too-big-to-fail companies.”

Washington Post: Gary Gensler explains how financial reform is going — “On Oct. 2, the Commodity Futures Trading Commission (CFTC) oversaw the launch of ‘swap execution facility’ platforms. Called the ‘future of derivatives trading’ by Bloomberg, these platforms are the culmination of reforms in Dodd-Frank designed to bring price transparency to the opaque and dark over-the-counter derivatives market that helped cause the financial crisis. And, unlike the health-care exchanges in Obamacare, these electronic platforms launched without any notable problems.”

Bloomberg: Wall Street May Take Derivatives Regulator to Court — “The financial industry’s trade groups have consulted with lawyers about how to block Gensler’s final moves, according to four people briefed on the matter. A lawsuit would probably be focused on CFTC guidance issued in July that described when the agency should defer its rules in favor of regulations by foreign derivatives overseers, the people said. Gensler, 56, has fought a five-year battle with the industry over how to draw up a safer and more open marketplace for derivatives, the products that helped push the world economy to the precipice in 2008.”

Please follow our community rules when engaging in comment discussion on this site.
  • rich4321

    A cleaner Wall Street? I also believe in a cockroach and rat free ghetto

    • Don_B1

      “Cleaner” doesn’t mean “clean room” clean. But if it reduces the prospect of another financial crisis/crash, and prevents the financial sector from helping the growth of economic inequality in the country, it will be well worth the effort.

      Efforts to keep cockroaches and rats out of the home is a never-ending battle and so must be the efforts to keep the wealthy from rent-seeking and speculating with other people’s money when they can reap the upside and pass the downside to the taxpayers.

  • responseTwo
    • jimino

      Laws are for “little people”.

    • MrNutso

      The summary at the beginning sums it up.

    • John_in_VT

      Thanks, that’s a great article. I’ll share it with othes.

  • Shag_Wevera

    “On His Way Out, Gary Gensler Leaves A Cleaner Wall Street”. This statement just sounds silly. I guess the operative word is “cleaner”. Has the same gravitas as “New and Improved”. Wall Street has got to be at least as dirty and corrupt as our government.

  • jimino

    His main target, the derivatives market, is almost 10x the value of the entire world’s GDP. What conceivable legitimate economic purpose can there be for such a system? And who could legitimately deny that a pool of obligations that dwarfs the entire real global output needs to be transparent and regulated?

    • Ray in VT

      Oh, I’m sure that we could find a few people who would argue if favor of less transparency and less regulation.

      • Don_B1

        The big banks are fighting transparency to the bone, because that is the way they sell derivatives to people who cannot get the full data to evaluate their worth.

        • Government_Banking_Serf

          Transparency is a foundation for free markets. Its absence is just evidence that we don’t have them, and shouldn’t blame them.

          • Don_B1

            The big point here is that any “market” that is totally free is subject to external forces that will undermine that transparency to the benefit of the wealthy and powerful.

            That is why regulation is absolutely necessary to maintain transparency for all sides in financial contracts. The only issue is the way those regulations are conceived, implemented and enforced.

            And there will always be the need for vigilance in oversight of those regulations and the ways new technology may allow the regulations to be bypassed or superseded. There will always be those who see a way to take advantage of others.

          • Government_Banking_Serf

            I am pro lying, cheating and stealing law enforcement.

    • sickofthechit

      It doesn’t need to be transparent and regulated, it needs to be destroyed.

      • Don_B1

        There are legitimate reasons for the buying and selling of derivatives; for one, that is the way farmers protect their incomes against changes in the prices of their crops.

        It is the overleveraging of derivatives, and the transactions with derivatives based on other derivatives and possible events that are more like betting on a horse race that need to be eliminated or at least separated from the use of the public’s money.

        • Government_Banking_Serf

          Its the Bailout of gambling sharks, combined with Fed-fueledleveraging.

          Take away the gas, take away the rescue team, see what happens.

  • MadMarkTheCodeWarrior

    Never before have so few screwed so many and gotten away with so much.
    This is not the brave new world that I was born into. Thanks to Free market advocates who lauded the intelligence of the market to police itself we undid regulations that protected us from unbridled greed.
    Funny that the same party promoting using the foxes to guard the hen house rails against the disintegration of the family and morality. That begs the question: when did greed become an ideal we should fully embrace?

    • Ray in VT

      Perhaps around about the same time that the head of the world’s largest religious institution started to get hammered by some because he decried the sort of massive commercialization which is on full display at this time of year.

      • geraldfnord

        Fun fact: Ignatius Donnelly, who fruitlessly championed the Church’s again condemning any interest on loans as usury, was also the author of what many consumers of Newage* _know_ to be the facts about Atlantis.

        Next up: An Ohio Mom reveals one weird trick to make $$$ from the writings of Lovecraft and of Shaver.

        *(it rhymes with ‘sewage’)

        • Ray in VT

          I’m somewhat familiar with Donnelly, although I had forgotten about his Atlantis work, which I think that I saw covered on some show about that topic.

          I think that it is true that during the Middle Ages many Jews became associated with the money trade because not only were there restrictions on them owning land and such in most or all of Christian Europe, but also because Christians were forbidden from engaging in the practice of money lending.

    • Government_Banking_Serf

      That is such a naive, tired dodge to blame “free market advocates”.

      Wall St. is a corrupt cabal working in lockstep with the Federal Reserve and Washington Technocrats, as they try to manipulate our economy in a way that provides just enough to the masses to prevent uprising, while being sure to take their cut along the way.

      There is nothing Free Market about Bank Bailouts, Easy Money Open Fed Windows for Wall St etc, etc etc.

      Here is our current economic model:

      Fed prints money/manipulates interest rates to perpetuate debt spending. Washington gets cut to make impossible promises for vote pandering. Wall St gets cut to help issue and trade debt. Corporations get cut by getting debt money to support stocks. Masses get sucked into the hopes of a “good market”. Wall St sets up their short positions against the flimsiest cards in the house of cards. Crash, Wall St wins, people lose.

      Repeat.

      To blame a competitive, free market for what ails us is naive, counterproductive, and frankly protects the Wall St. big picture.

      Just what besides Free Markets operating within a Constitutional Rule of Law framework that outlaws collusion, cheating, rent-seeking, insider trading, bailouts, do you want?

      • outmost1

        The framework built to “outlaw(s) collusion, cheating, rent-seeking, insider trading, bailouts,” would be part of the regulations that have been destroyed in the last twenty years by the “free market advocates”

        It doesn’t matter which label you place on the policy or the people trying to undo it, what we are experiencing in this day and time is a massive criminal organization that is in control of our government, our money, and our markets – I will not even discuss how the fallout from these gangsters actions have killed health care, environmental protections, research and manufacturing in this country. The best way – really, the only way forward is for the people who are affected every day by a cut in services, a loss of employment, an under-educated child, etc. band together and take back the power to regulate and enforce laws that are not only correct but right for the majority, not just for the “special people” that committed the crimes against our civilization. The disagreements over what that might mean can be worked out like adults after the criminals are put away and the system has been restored to the way it was forty years ago – not the good old days, but certainly the last time anyone who was not born with a silver spoon had a chance to move up in their world without having to sell their soul.

        • Government_Banking_Serf

          “The framework built to “outlaw(s) collusion, cheating, rent-seeking, insider trading, bailouts,” would be part of the regulations that have been destroyed in the last twenty years by the “free market advocates”

          That statement shows you do not understand Rule of Law, and what real, libertarian Free Market ideas advocate.

          Please please please look up Rule of Law and Classical Liberalism and realize how our current markets and governance are so far off track.

          • outmost1

            You are getting bogged down in the labels – see my next line. It doesn’t matter what you call the criminal enterprise, it remains criminal. My point is that the power to determine criminal needs to be placed back in the hands of people who are not running the organizations. I agree that we are off track and that there is a need to return to a more regulated system with the power for enforcement firmly placed in the hands of government/people with no interest in the success or failure of the regulated organization. Again – it isn’t the label that you apply to the process or behavior.

          • Government_Banking_Serf

            My apologies.

            I would like to get Bill Black and a libertarian “Rule of Law” advocate on the show together so we can discuss Rule of Law and how it relates to Capitalism and the current Financial Sector.

            We need to clearly identify the basic Laws that should protect us from Lying, Cheating and Stealing, so that we can unambiguously persecute people and get some semblance of justice and accountability back in this banana republic.

          • Don_B1

            Just what “Law” are you referring to?

            The “law” that it written by the federal and state legislatures and signed by the executives of those institutions?

            Or some Platonic ideal law that is only in the minds of the beholders and thuds is different for each individual?

          • Government_Banking_Serf

            Freedome to trade with Laws against cheating, lying, stealing vs. Discretionary Power of appointed Technocrats.

            Bring back Glass Steagall, get rid of Fed and Summers, Rubin, etc technocratic discretionary manipulation of our economy.

            I know you are smart enough to appreciate the Rule of Law concept of Classical Liberalism. Are you against it?

          • Don_B1

            I am definitely AGAINST your form of the “Rule of Law” and a “Classical Liberalism” that follows Friedrich Hayek whose economic hypotheses have been proven wrong by real-world data that supports the theories of John Maynard Keynes (who, incidentally, was a highly successful investor) who, unlike Hayek, took account of the power of excess money in the hands of a few to reduce the freedom of others.

            Read the post by David Kay Johnston as linked here:

            http://krugman.blogs.nytimes.com/2013/12/11/upstairs-downstairs-outside/?_r=0

            I provided the non-direct path because it adds more context, though you seem to be so fixated on your libertarian ideology that it is unlikely you will give adequate time and analysis to really think it through.

    • geraldfnord

      The Victorian model was, for many, that the husband went out into the amoral World (and the Prophet Spencer ibn Malthus, or at least his acolytes, hath shewn why it were only right that it were devoid of morality!) whilst his wife, the Light of the Home, inculcated and exemplified morality even as she were protected/barred from the outside world. That was her real job, as all good people had servants to do the actual work. (The servants might be considered ‘good’ if they never complained, but their lack of servants always made them morally suspect.)

      “A Christmas Carol” was set forty or so years before its publication, allowing Dickens to _claim_ that it was just about The Bad Old Days, but it was more a satire of his own adult day, and a system that gave licence to men of property even as it made of their wives and servants people one could credibly argue were not competent to govern themselves.

      These are the days the Right worship or nearly—the Left’s worship of the future can get equally stupid, but at least the future isn’t the nightmare the past should be known to have been for nearly all.

  • Government_Banking_Serf

    Libertarians Occupy Wall St.

    “Over the past the month, the Occupy movement has taken to the streets across cities nationwide to protest economic inequality as well as corporate greed and control of government. These grievances are legitimate and well intentioned, but at the same time the top-down solutions to solve the problems proposed by a handful of OWS actors unfortunately empower the very establishment that they claim to be against by giving the government even more power. This will only incentivize more rent-seeking from corrupt Wall Street actors. What is truly needed is a set of libertarian demands that not only ends corporatism and restores true free markets but also bring back the rule of law, well defined property rights, and a respect for individuals liberties. Here is a set of ten demands that will put our political economy on the right track:”

    http://studentsforliberty.org/blog/2011/11/08/libertarian-occupy-wall-street-demands/

    • Don_B1

      While a lot of what the Occupy movement pointed out as wrong was arrived at correctly, the movement has foundered totally in its idealistic and completely impractical ways to achieve even the most modest goals.

      I hope you come to see that soon and then some practical approaches can be worked out and implemented.

      • Government_Banking_Serf

        I think the utopian leftist aspects of Occupy were as you say, the libertarian minority within it is all about practical solutions.

  • http://hlb-engineering.us/ HLB

    Radar watch: puff piece coming at 10 a.m. No serious, significant, nail-’em-to-the-wall questions coming. Just hoopla, huzzahs, and handstands. “Thanks Gary. Which Wall Street gangbanger is gonna hire you now? Geithner’s?”

    No wonder the working Joe can’t get a fair deal.

    Hoober Doober

    • wauch

      Yeah that is my worry that he enters revolving door. Geithner was the beginning of the end for my support of “populist” “liberal” Obama.

  • Government_Banking_Serf
  • wauch

    Thank you Mr. Gensler those of us that have been paying attention since your predecessor Brooksley Born went toe-to-toe with Rubin, Leavitt, Summers, and Greenspan and was chauvinistically marginalized we have been wondering if someone would put the teeth back in the CFTC. We know that the SEC is spineless and doomed to eternal milqueoast but maybe the CFTC can come in the side door to take down these Too Big To Fail financial “institutions”. NOW Mr. Gensler don’t betray our confidence by leaving CFTC only to become employed by one of the institutions you are hammering! PLEASE!!!

    • wauch

      My support of Gensler is tenuous given that I didn’t know he worked for Robert Rubin during his advocacy for TBTF banks and “exotic instruments”

    • Government_Banking_Serf

      Do we know where he is going? That will say a lot.

    • sickofthechit

      To late.

  • Jasoturner

    Leave the wealth creators alone! They know how to self-regulate!

    • wauch

      Are you related to Eugene Fama?

    • Government_Banking_Serf

      Let them FAIL for crying out loud. You know how to regulate them?

  • geraldfnord

    John Brooks’ “Once in Golconda”, anyone?—the section on how its private governance treated Stutz’s Allen Ryan is, alone, a near-proof that it is only State action that has made of Wall Street a place any sane outsider would dare venture…though when one is competing against automated trades whose efficiencies are boosted by taking the speed of light into consideration….

  • Government_Banking_Serf

    Bring back essence of Glass-Steagal, Let Wall St and investors do what they want with their play money, but Outlaw Bailouts.

    Wall St gamblers should be free to cannibalize themselves, but they shouldn’t be subsidized by the government and Federal Reserve, and they shouldn’t be able to gamble with savings.

    There is no top down, micromanagement solution to this.

  • twenty_niner

    For starters, how about not printing $85 billion a month (over a trillion a year) and handing it directly to Wall Street?

  • Government_Banking_Serf

    Can we make cocaine less dangerous?

    We can ban it, legalize it whatever. At the end of the day, regular people should just avoid it.

    Wasting our time and money thinking we can make it less dangerous is futile.

    Let Wall St be a casino for people who want to risk their money.

    JUST LET THEM FAIL WHEN THEY F IT UP.

  • nlpnt

    Will you mention the Blackstone/Codere derivative swap as covered on The Daily Show last night? http://www.thedailyshow.com/watch/wed-december-4-2013/heavy-settle—admissions-of-non-guilt

  • sickofthechit

    Mr. Gensler,
    Isn’t it true that if the core of the various derivatives had been allowed to “runoff” as is done in a reinsurance company liquidation that the actual losses would have more closely mirrored the unleveraged base? So the real fix would have been to step back and wait.

    It’s like if we have a single $100,000 mortgage and it is put into the derivatives market and ten layers leverage it, it becomes on the derivative markets “books” a $1,000,000 risk. The mortgagee then misses four payments and goes into foreclosure. There is not even a $100,000 loss, let alone a $1,000,000 as “the sky is falling, the sky is falling” panic stricken markets proclaimed. There is still a home (an asset) that can be sold to lessen any loss. It will take time to unwind all the transactionls. If it doesn’t work this way, then it is gambling or insurance and either it is illegal, or it should have been regulated by the Insurance Commissioners.

    As the caller says, they are “bets” which is tantamount to gambling. charles a. bowsher

  • sickofthechit

    Why didn’t anyone go to jail? or at least be publicly scourged? charles a. bowsher

    • Government_Banking_Serf

      Tar and Feather.

      • jimino

        I am being totally serious when I suggest the death penalty would be appropriate and useful.

        Unlike the crimes for which we now impose it, these are premeditated, calculated crimes that harm infinitely more people than even the most heinous murder, done by people who would actually be deterred by the punishment. The purposes of criminal punishment that underlie the death penalty are totally applicable to these types of widespread financial crimes.

  • sickofthechit

    Derivatives may have begun in the 1800′s, but the leveraging (betting aspect) is way overboard.

  • Government_Banking_Serf

    Simple question for guest:

    Putting aside the “catastrophic consequences” dodge, how does Mr. Gensler feel that Wall. St. firms would behave if they knew absolutely they would not be bailed out, or given “open windows” by the Fed.

    I find it very hard to believe they would act recklessly against their own self-preservation.

    • NewtonWhale

      I agree that we should not bail them out, but first they need to be broken up so they are not too big to fail.

      As for enlightened self interest, here’s what Greenspan said:

      “I have found a flaw” in free market theory, Greenspan said under intense questioning by Representative Henry Waxman, the Democratic chairman of the Government Oversight Committee of the House of Representatives. “I don’t know how significant or permanent it is,” Greenspan added. “But I have been very distressed by that fact.”

      “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Greenspan said.

      Waxman pushed the former Fed chief, who left office in 2006, to clarify his explanation.

      “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Waxman said.

      “Absolutely, precisely,” Greenspan replied.

      http://www.nytimes.com/2008/10/23/business/worldbusiness/23iht-gspan.4.17206624.html?_r=0

      • Government_Banking_Serf

        That was Greenspan atoning, and weaseling out of his role. His monetary policy combined with the Too Big to Fail and Bailout culture is what set up the disaster, not Free Market Capitalism and Rule of Law.

        • Don_B1

          But in his writings that have followed that testimony, he has, though not explicitly, recanted what he said then, that his ideology was wrong, since his latest pronouncements indicate he still follows that “wrong ideology.”

    • hennorama

      G_B_S — a large part of the issue is the leverage ratio.

      If the firm is highly leveraged, with little of their own money at risk, then the corporate/personal downside is very limited.

      For example, if the firm is leveraged at 49:1, they have only $2 of equity at risk for each $100 of asset value. If the value of their assets falls by 2 percent, their book equity value is eliminated.

      On the other hand, if the value of the assets increases by 2 percent, they have a 100 percent return on equity. That’s what makes leverage so attractive, and so tempting.

      This is similar to how many homeowners obtained mortgages with little or even no money down, meaning they had very little financial or other downside to walking away when things went south, other than the significant hit to their credit rating.

      Increasing capital requirements, making firms have more “skin in the game,” and thereby reducing leverage, is important to systemic safety.

      • Government_Banking_Serf

        Leverage and Margin are powerful forces, but a lot of it is made possible by monetary policy in the first place. Low interest Fed money makes Margin more attractive.

        Again, if those who want to play with fire are allowed to get burned, and are actually made to suffer their losses, it would become a lot less common.

        If we need new corporate governance rules, like personal stakes for the CEOs etc, great.

        I think allowing corporations to be structured to have all gains collected by corrupted boards and CEOS, while all the risk is shunted through Fed policy and bailout promises to the taxpayer and Mom and Pop investor, is wrong and an example of Lying, Cheating, Stealing.

  • Government_Banking_Serf

    Interest rates were rigged by Alan Greenspan. He opened the spigot and we all know it.

  • sickofthechit

    The power of money ruling the day is NOT a part of Democracy!

  • Government_Banking_Serf

    Alan Greenspan’s bubble pumping and Glass Steagall repeal. What else do we need to say?

  • sickofthechit

    How is this not regulated heavily by the various Insurance Commissioners, or by the various Gaming Commissions?

    • John_in_VT

      Leading up to the crash banking regulators were actually encouraging banks to take more risks with real estate loans. It has been amply documented that the regulators (led by Greenspan et al) were a big part of the problem – and still are.

  • sickofthechit

    Bomb the Cayman Islands!

  • realedreform

    Tom, could you ask Mr. Gensler what role government paper money plays in this? From what I understand, paper money encourages greed and dishonesty throughout a society as people naturally try to keep up with the depreciating currency. There’s a general sense that you’ll need even more money in the coming years and so speculative and risky activities become more common over time.

    • James

      LOL, It will be a cold day in hell before Mr. Ashbrook recognizes the insidious nature of seemingly benign or “compassionate” government policy.

  • http://www.CayerComputing.com/ Melissa A. Cayer

    Speaking of commodities, what happened with the Canadian strategic maple syrup reserve heist last year?

  • John_in_VT

    Greenspan also decided to hide the US economic weakness by making real estate the core of the market. This was in both new construction and ‘freeing the wealth trapped in existing properties.’ The high risk loans and derivatives to spread the risk around quickly followed. The financial press and government are still looking for real estate to turn the economy around – or another high-tech bubble.

  • Dab200

    Why are financial gains taxed at a lower rate that regular work? This should change and in addition a new tax should be introduced on all and every transaction on Wall Street – small 0.5%-1% but still it would discourage speculations.

    • geraldfnord

      Just as there are some on the Left who talk as if nothing good ever happened but that it came from the State, many on the right hold that nothing good ever happens unless rich men can do exactly as they will with every mill and farthing.

  • dt03044

    What about the “too big to fail” issue? Some of the investment banks deemed TBTF are now even larger. How do we deal with that in the future?

    • Government_Banking_Serf

      Pass a bill outlawing taxpayer bailout of firms suffering from consequences of risk.

      Risk has to have meaning.

      We live in a 0 accountability culture now. Particularly at the elite level.

  • edgers

    In 2012, after an expose by “60 Minutes”, Congress passed an amendment signed by the President prohibiting members from investing in insider information gathered from hearings. In 2013, Congress very quietly reversed that law. How can we solved Wall Streets problems when Congress itself is corrupt.

    • 65noname

      not to mention the administration

  • Government_Banking_Serf

    Thanks Tom.

    I just think we need to say. No Bailouts. Not, “reform is working toward this.”

  • sickofthechit

    The more this guy talks, the more I realize he is full of sewage.

  • Government_Banking_Serf

    That is all true Mr. Gensler, you just have to let them fail when they are wrong, and you can’t let the Fed subsidize them.

  • alsordi

    Gensler is part of the charade.

    There is always one or two of the crooks that pose as good guy to let the masses think there is justice acting on their behalf… and of course there is not.

    Its like a steam valve release.

  • Government_Banking_Serf

    The silence following Tom’s comment that Glass Steagall worked for us for a long time, was deafening.

  • alsordi

    Brooksley Born was the real thing. Not Gensler.

  • sickofthechit

    Nancy should have been the guest today.

  • 65noname

    this dude refers to himself, rubin, summers and gaitner as being soldiers on the same side and as having made significant financial reforms. in other words, the dudes who gave “liberal” cover to clinton when he deregulated financial instiitutions. The announcer should have ended the show at the firs such reference. But, instead, government radio gives its right of center cover to neo-libs such as this dude, clinton and obama.
    YOU GO!!!!! GOVERNMENT RADIO!!!!!!!!!!!!!!!!!

    • Government_Banking_Serf

      They are the face of Crony Capitalism and Rent Seeking that the majority of Americans really need to get their head around.

  • manganbr

    All the talk about risk taking and american history is fairly sentimental. The reality is that when individuals take risks, the economic rewards or the damages are always to some degree, broadly shared. Hence, there should be a broad debate, mediated by political institutions, about the kinds of risk we want to let individuals take, and how the rewards or costs of those individual choices will get broadly distributed.

  • Government_Banking_Serf

    Wall St sharks are not farmers.

    Barf.

  • OnPointComments

    President Obama’s Justice Department, headed by Eric Holder, didn’t prosecute anyone on Wall Street. I’m shocked, shocked I tell you.

    INSIGHT: TOP JUSTICE OFFICIALS CONNECTED TO MORTGAGE BANKS
    http://www.reuters.com/article/2012/01/20/us-usa-holder-mortgage-idUSTRE80J0PH20120120

    Excerpt:

    U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm [Covington & Burling] that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

    Where is Lanny Breuer, who failed to prosecute anyone on Wall Street?
    http://dealbook.nytimes.com/2013/03/28/once-more-through-the-revolving-door-for-justices-breuer/

    Excerpt:

    Covington & Burling, a prominent law firm, plans to announce on Thursday [3/15/2013] that Mr. Breuer will be its vice chairman…Mr. Breuer is expected to earn about $4 million in his first year at Covington.

    IS WALL STREET STILL “UNTOUCHABLE”?
    http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/untouchables/is-wall-street-still-untouchable/

    Excerpt:

    In The Untouchables…FRONTLINE correspondent Martin Smith examines why not one major Wall Street executive has been prosecuted for fraud tied to the sale of bad mortgages. Breuer has since left the government to return to private practice with Covington & Burlington — a firm that counts major Wall Street firms such as JPMorgan Chase among its clients.

    • jimino

      Well what do you expect from someone whose boss is an anti-capitalism, Marxist, communist socialist?

  • Government_Banking_Serf

    Its an honor to learn the inside game and bring it back to the shark tank?

    • Government_Banking_Serf

      Instead, Mr. Gensler will hopefully take his knowledge of how the Washington/Wall St. game is fixed by an elite that operates outside the Rule of Law, and will become an advocate for reform and prosecution like Bill Black.

  • Government_Banking_Serf

    None of the LIBOR stuff could have happened without Greenspan’s easy money bubble creating the fertile ground. Such events have been predicted and come true, time after time through history.

    Unfortunately, the masses prefer the false security of the Fed printing press and empty promises of politicians spending the funny money.

    But our children and grandchildren will be horrified.

  • hennorama

    Mr. Gensler has fought the good fight, but the American Public will not believe anything has truly changed until some big players go to jail, and firms are put out of business rather than simply paying a fine, which they regard as part of the cost of doing business.

    Jail time for the humans involved and a corporate death penalty for the entities involved are really the only way to prevent this from recurring.

    The Justice Dept. routinely negotiates “deferred prosecution agreements” in lieu of possible jail time for offenders, which significantly contributes to public apathy and cynicism. Most people who hear about these outrageous acts think to themselves “well at least someone’s going to jail…” and are confounded to no end when prosecutors allow these entities to go on with their business after simply paying a fine, implementing corporate reforms, and “fully cooperating” with the investigation.

    These agreements generally do NOT count as part of a criminal history if there was no finding of guilt by a court and the defendant did not plead guilty or otherwise admit guilt in open court.

    Corporations simply consider these fines, forfeitures and legal costs as part of the costs of doing business. The vast profits generated by these firms and individuals allows them to purchase influence, and virtually guarantees that true reform will not occur. Any reforms in place will be relentlessly attacked, watered down, and eroded behind the scenes by lobbyists, and modified or repealed by future legistative actions of politicians purchased by “The Street.”

  • TyroneJ

    As PBS’ Frontline investigations broadcast as “Money, Power and Wall Street” (April 24 & May 1 2013) and “The Untouchables” (January 22, 2013) showed, the Obama Administration was bought & paid for, lock, stock & barrel by Wall Street, before Obama even took office.

    There never will be any significant financial reform by this Administration.

    • TJPhoto40

      In general, I tend to agree with you, but I think you’re placing too much blame on the President when it’s Congress that has just as much if not more culpability for this situation.

  • jefe68

    And then there’s this:
    Banks Come Under Fire For Filling In The Payday Loan Gap

    http://www.wbur.org/npr/247182721/banks-fill-in-the-payday-loan-gap

    It never ends.

    • hennorama

      jefe68 — hey someone’s gotta fill in for the loan sharks.

      Usury has been legalized.

      The following pertains to credit cards, but the concepts are the same.

      The 1978 Supreme Court decision (Marquette National Bank v. First of Omaha Service Corp.) changed everything. This decision held that national banks have to obey the interest-rate caps of the state they are chartered in, not that of the state where the customer lives. There was a sort of “land rush” of banks moving their credit card operations, primarily to South Dakota and Delaware, which abolished their interest rate caps.

      That’s how credit card issuers can charge such usurious rates. The top card issuers are now in states with no cap or very high limits – South Dakota, Delaware, New Hampshire, Virginia, Utah and Arizona.

      • Government_Banking_Serf

        Lets be sure to thank Hillary Clinton for her great work for the Credit Card companies.

        • Government_Banking_Serf

          Whats with the vote down? Bill got rid of Glass Steagall, Hillary helped out the Credit Card companies. Whats not to like?

          • hennorama

            G_B_S — there seems to be little rhyme or reason to down votes, even for posts that are simple statements of fact.

            IMO, votes are generally best ignored, with one’s energy and time directed elsewhere.

  • Government_Banking_Serf

    I would like to get Bill Black and a libertarian “Rule of Law” advocate on the show together so we can discuss Rule of Law and how it relates to Capitalism and the current Financial Sector.

    We need to clearly identify the basic Laws that should protect us from Lying, Cheating and Stealing, so that we can unambiguously persecute people and get some semblance of justice and accountability back in this banana republic.

    Enforcement of such laws is a different kettle of fish than getting in and actively micromanaging the economy with good intentions, but corruptible unintended consequences.

    We need to have these discussions.

  • Government_Banking_Serf
  • Government_Banking_Serf
    • Government_Banking_Serf

      “have always called attention to the often-incestuous relationships between all things big, irrespective of whether they are found in the “public” or the “private” sector. We have been on the forefront of demonstrating the causal link that connects misallocation to corporate welfare in all of its myriad embodiments that show why government intervention in the economic sphere is profoundly harmful, particularly for ordinary working people.”

  • Government_Banking_Serf

    Last post, apologies, but so fitting for our discussion, especially the apparent paradox of Paul/Nader kind of ideas.

    “Indeed the principled radical defense of liberty, property, and free markets has always been populist as a matter of course. The very emergence of such a defense represented, in its infancy, an outright attack on entrenched mercantile interests during a time when the mere suggestion of the separation of economy and state was regarded as bare apostasy. As Jeff Riggenbach showed in his introduction to revisionism, establishing the true divide as between authoritarianism and libertarianism, the latter logically belongs on the Left — as the successor to classical liberalism. Rothbard placed this liberal tradition in square opposition to conservatism, to “the party of reaction, the party that longed to restore the hierarchy, statism, theocracy, serfdom, and class exploitation of the old order.”

  • jbseniorcare

    Well Tom I must say that you and your callers asked mr Gensier some very to the point questions but I could almost hear the frustration in your voice as he performed the standard D.C. verbal stonewall. Bring back Glass- Steagall , congress bought and paid for, the D.C. revolving door, to whom will he now be marketing his roll-a-dex / political entree,…. He seems like a nice man, has a daughter, a father and probably a (rented ) puppy, but still the same old, same old. The fox is still in the hen house and, sad to say, it is becoming more and more apparent that he/they will not leave peacefully.

  • marygrav

    No sound!

  • marygrav

    If we knew US 20th century history, we can understand that Obama has modeled his Kitchen Cabinet on FDR’s. Ginsler is Obama’s Joe Kennedy.

    Tom keeps getting his knickers in a twist because of his ignorance of the history involved in the First Great Depression. I don’t give a good one about the word game the “System” uses to make US ignorant of the fact that we are living in the Second Great Depression. The only difference is Food Stamps and Unemployment which is propping up the System. If you look closely it was FDR’s Socialism which helped US to cope.

    I am tired of people not understanding that Capitalism needs Capital. Capital is located in the banking system. If the banks had been allowed to fail, we would be back in 1929 lost and at sea. There is no WWII to reemploy people. Computers & Robotics have taken most labor intensive jobs. And as quiet as it is kept, it was not WWII that pulled US out of the Great Depression, it was the Marshall Plan. Europe and its colonies were destroyed and the US was the last Man standing with the equipment to manufacture. Every “good deed” has its reward and WE GOT RICH, while keeping the Third World in trawled using the excuse of fighting godless Communism.

    The T-Party GOP is always talks of Market Forces, but WE the PEOPLE are the Market and WE had better get a better understanding of Money and Banking and how LIBOR and Jamie Dimon flim-flammed all of US.

    I wrote about LIBOR in my blog when the BBC World Service wrote about this scam. If WE THE PEOPLE don’t know it is because you don’t want to know.

    Knowledge is power and antanizing crooks makes Gary Gensler my man, but I still have to vote for Hilary.

    • James

      If you look closely it was FDR’s Socialism which helped US to cope.

      It may have helped us to cope but it didn’t exactly help us get out of it. Ever hear of Depression of 1920? Of course not Warren G. Harding was an outspoken l laissez-faire capitalist, sat on his butt and did next to nothing, and they were out of it in 18 months. Regan inherited higher unemployment then Obama and by this time in his administration the economy was booming. The three most notorious economic downturns over the last century have been the Great Depression, Stagflation, and the Great Recession…interesting no?

      Capitalism needs Capital…..

      That’s comical! QE1?, QE2?, QE3? The single biggest spike in government spending since the Great Depression? Near 0% interest rates for years? How much more capital do you want? All we’re doing is making another bubble as big investment banks try and recoup the loans they are getting from the fed.

    • FrankensteinDragon

      I like your comment about–we the people are the market. I don’t disagree with much of what you say.

      But…

      Do you assume we need capitalism? Do you eliminate all other options in a complicated issue?

      Breaking up the banks–even making them all local or some of them co-ops like they should have done with the BIg 3 in auto…or allowing the gov to run one of the break ups.

      1. break up: small local and regional banks. And auto industries.
      2. Some of those new entities would be co-ops/mandated by gov.
      3. one would be gov operated–for banks and cars. The gov auto industry would be all-green, electric, solar, hybrids and perhaps even hydrogen models–in this way they can force nationwide infrastructure development–charging stations, etc…incentives for businesses to install charging stations–not that they would need incentive. And N.D. style banks, land banks and so-forth.

      You ignore a world of possibilities infinitely more practical and moral and prosperous than what they did or ever imagined.

      We are hostages of a psychotic ultra-capitalist system. The greedy, the selfish, the vain, the evil…we’ve experimented with ruthless free trade long enough–its time for radical change in another direction–no harm in practical experimentation. The reality is–the powers that be DO NOT want prosperity among the plebs, equality or democracy. They want to rule.

      Hilary is part of the system. A vote for the establishment is a wasted vote. Dem or repub–its all the same animal. Two sides of the same aisle.

      Hilary like Obama or almost any other dem is a vote for repub.

    • TJPhoto40

      I can’t figure out where you stand with your garbled prose, apparent typos or misspellings, and funky all caps, etc., but being impassioned and having a loose grasp on historical factoids won’t make for a fully formed argument anyway. And your take on capitalism is somewhere between simplistic and truly incoherent.

    • Don_B1

      It was NEITHER the federal spending during WWII nor the Marshall Plan that ended the Great Depression; it was the spending to prepare the U.S. and to support Lend-Lease that ended the Great Depression by mid 1941.

      There was a fear that a recession could put the country back into depression following the war that helped the Congress adopt both the G.I. Bill and the Marshall Plan to prevent a surge of unemployed returning soldiers and generate demand for goods for export, but it was the domestic pent-up demand for goods and services that provided most of the force driving a growing U.S. economy.

      But you are correct in saying that the current economic problem is the lack of demand for goods and services due to the remaining homeowners with underwater mortgages and workers with stagnant or decreasing wages not being able to spend even as much as they did in the past, not to mention spending more. That is why the government should spend to make up for the loss of private sector spending until they private sector recovers and can grow on its own.

  • Don_B1

    That is basically what I said; while there is a place for derivatives, a lot of what the big banks (and A.I.G.) did was pure speculation, and non-transparent speculation to boot. It is precisely that non-transparency that allowed the banks to make their huge profits because they could over-price the derivative at will.

    That is why the whole financial system shut down after Lehman Brothers Holdings Inc. went bust. No bank would enter a transaction with any other bank because they did not know whether the other bank would be good for what it owed as part of the transaction.

    It was why the Federal Reserve had to strongly enter the market to guarantee transactions and prove that banks that were not insolvent were able to complete any financial contract that they entered.

    What has been something that was not carried far enough because the TARP funds that built up the banks balance sheets which were highly stressed by the overleveraging that had occurred, where not required to help the mortgagees that they had defrauded recover their balance sheets. The Republicans strangled that effort with cries of “moral hazard” which they did not apply for the banks but made sure would be held against homeowners.

    But I started off with the statement showing that the baby should not be thrown out with the bathwater.

    What is being negotiated right now in the (hopefully) final stages of completing the Dodd-Frank Act implementation rules is the Volcker Rule, which will make it impossible for the big investment banks to “invest for themselves” which is where their ignoring their conflict of interest led them to practices that basically plundered their customers. Just how that is finally worded will be interesting to see.

  • hennorama

    The world has lost a giant. Nelson Mandela is dead. May he rest in peace.

  • spencercmc

    he didn’t sound like a tough fighter at all.

    • The poster formerly known as t

      I thought I was the only person who picked up on that. Like Obama, the guy seems very cautious about ruffling feathers. I’m not saying that he needs to be polarizing, but he never said one bad thing about all these financial workers that were breaking the law. He gave me the impression that he’s the kind of person that caves in within a minute of a legal confrontation. Given the regulatory capture accusations made by observers of financial regulation, I wonder why no one asked him if anyone under his tenure took a bribe or …”made a deal”.
      I think any toughness he exhibited was theater. It will be interesting to see what he ends up doing after his term.

  • Buster1

    if Gensler is the toughest reformer we have it is game over for the American middle class. This is the same guy who deregulated the derivatives business and exposed us all to frauds at Enron Lehman Brothers and the Mortgage mess MF Global, PFG, every major market melt down can be traced back to this guy since Enron and the commodity modernization act and all of the crappy law written to support it since..
    Thanks for nothing schmuck-o. One can make a well researched argument that Gensler’s deregulation act is the basis for the largest divide between rich and poor in Americas history. Even the payola of Citizens United has been funded by the ability of big business to commit fraud via his law that deregulated the derivative business.

    His work at the CFTC has been a joke fines that do not admit guilt are nothing but graft. On a larger scale the man has destroyed the free flow of credit by creating a culture of fraud via deregulation.

    • The poster formerly known as t

      It’s possible that he could have had a change in heart. To be fair, his productivity was limited because his efforts were underfunded.

      • Buster1

        Yeah that’s why he crapped in your hat because he was unfunded.

        The guy kicked down the door of deregulation that allowed laws to be written to support fraud ie the Sentinel ruling in the 7th district court in Chicago, the judge ruled that its okay to seize segregated accounts and that he bankers were too stupid to act in their own self interests.

        Gensler recused himself from prosecuting the MFG thefts where Corzine stole money sent it to London and declared bankruptcy in the US because there wasn’t transparency.

        Gensler is a weasel. He speaks in platitudes and accomplished nothing more than destroying an egalitarian credit system and the largest transfer of wealth in American history from the lower and middle class to the 1%er criminals on Wall Street.

        Look at the admissions of FED governors about QE a crime against the American people its a scheme to enrich bankers to prop up their frauds. Dudley the head of the NY FED accused bankers of being criminal the men he gives free money to to the tune of 85 billion a month.

        And we are supposed to fete Gensler the man who was the architect of this fraud and the reason why derivatives have moved from hedging physical crops to notional bullshit bets built on frauds that are hung over our heads like a rusty axe. Its laughable if it weren’t such a dangerous meme to spread by news sources deemed to be credible.

        Gensler is a bought and paid for hack unfunded is a convenient alibi.

        • The poster formerly known as t

          We gave Gary Gensler a chance to redeem himself but restricted the degree to which he could redeem himself. Let’s say 10 crimes were committed and and Gensler could only pursue 5, due to underfunding. The under-funding,imo, gave Gensler the opportunity to pick and choose who he decided to prosecute and to what degree. It’s very likely that his personal biases played a large role in who who he prosecuted and to what degree. If Gensler’s personal biases determined who he prosecuted then that undermined any attempt he made to redeem himself and serve the public. My argument is that the problem is systemic with potentially the entire government being under regulatory capture by the Finance sector. If that is the situation, then it doesn’t matter who was appointed, any effort to regulate the finance sector would be half-hearted.

          • Buster1

            Lets say Gary Gensler was responsible for the economic genocide of America.
            By writing the POS Commodity Modernization act he wrote the law that allowed America to be destroyed via a derivative behemoth built on fraud. then we put him in charge so all your blather is bullcrap his personal bias has institutionalized fraud. They Destroyed the middle class and have cut the rungs out of the ladder. that is all

          • The poster formerly known as t

            I blame the Americans, particularly the highly educated ones whom the politicians court for donations, for the economic genocide of America. THEY bought the hook,line, and sinker about offshoring industrial activity and transforming the U.S. into a “service economy, “knowledge economy” or whatever claptrap that’s trendy these days. T

      • Buster1

        Formerly known as T what Gensler didn’t do is much more important than the flailing around he did do and he knows that. The consigliari at the bank like Goldman Sachs is the compliance lawyer.

        A compliance lawyer is in charge of making sure all of the business complies with existing laws simple they do not concern them selves with what is morally correct or just or even with the regulators may deem just their victory is to establish case law that allows them the widest latitude to operate legally.

        Gensler was in the seat to decide what resources to spend money on and which case law to look at or over look what laws needed to be written or strengthened to serve the people or the banks.

        This is where your argument falls apart. Gensler recused himself from major case law and by failing to prosecute and bring charges in a timely manner bought and paid for judicial law was written in Southern district of NY and in Chicago seventh district. Case law that will allow the American people to continue to be defrauded by a small group of bankers, case law that aligns against what is morally right and just and serves the majority for a small group of very wealthy people. Now they are legally able to rip your face off and not go to prison.

        The reason federal judicial appointments should be well scrutinized and not given a nuclear option to railroad law for a small minority at the top.

  • Michael Difani

    I heard this last night from 8-9 pm and I finally heard a brief explanation of derivatives, a very complex subject. I still think some high flying WS execs should have been tried, convicted and sent to a joint…not some plush “Club Fed” as were ENRON honchos. Skilling. Kenny Boy Lay died, so he missed prison life.

  • TJPhoto40

    I appreciate this discussion for a number of points brought out, including great questions by the callers and by Tom. I have some respect for Ginsler and his attitude about the job he attempted to do at the CFTC, and think he means well within the limits of his fairly restrained approach to financial reform. But I’m troubled by several of his casual, emotionless and often unconvincing answers to certain questions and the way he repeatedly evades the most pointed questions like the one about why not simply bring back the Glass Steagall Act (or build on its foundation with further adjustments to address new financial instrument variations). His only reply is basically to say times have changed (derivatives and swaps are beyond the “futures” we had before) and therefore the rules have to “evolve” with the times. This strikes me as spurious nonsense. If it worked well for decades and at heart is a sensible approach, why abolish it and then reinvent the wheel with several key parts missing? This isn’t evolution–it’s caving to the financial sector which, as callers suggested, is often reckless and has too much control over our representatives.

    As for the regulatory agencies, I’d like to believe that Ginsler is right that most of the people working at such agencies are devoted public servants who want to do a good job. But I think there’s good evidence that many of the people in the most powerful positions in several regulatory agencies in recent years and to this day have been largely beholden to the very industries they’re charged with regulating. In fact, the “revolving door” continues to turn with even more lubrication these days.

    I hope Ginsler’s basic pitch–that what his agency has done along with Dodd Frank will be a big improvement and help to avoid another catastrophe–will prove to be realistic and that the troublesome market forces will be under more control, with more transparency. But greed and the drive for short-term gain at any price are unlikely to be curtailed by half-measures and minor tweaks, so I can’t say I’m that optimistic.

  • The poster formerly known as t

    Most of the new jobs don’t require high levels of skills. Aside from engineers, machines do a lot of the wealth creation. We have reached a stage in history where most of the working population is economically expendable. Too many people can only find a marginal use in our civilization by making the comfortable more comfortable. The good news about this stage is that this stage is not sustainable on an ecological level. The bad news is that those with even a modest level of affluence to may be willing to do anything to maintain their resource-intense lifestyles, and that includes using money (debt-slavery, unemployment, underemployment) to keep the poor, poor in, other words, restrict the consumption patterns of the so they can enjoy their quasi-luxurious lifestyles. I don’t think there are enough resources on this planet to allow a majority of working age people to have the consumption patterns associated with a modestly affluent lifestyle I don’t care how smart, educated, and hard-working they are now or in the future. The term modestly affluent doesn’t refer to millionaires, in this reply, but to the professional class made up of highly educated people who make 100k a year–or have their incomes supplemented by parents or spouses who make that amount. These highly educated and modestly affluent people often side with the financial elite on many economic issues. Some of them were against the bail-outs before they realized all their financial assets were in the hands of these two-big-to fail financial institutions.

ONPOINT
TODAY
Jul 25, 2014
Pallbearers carry a coffin out of a military transport plane during a ceremony to mark the return of the first bodies, of passengers and crew killed in the downing of Malaysia Airlines Flight 17, from Ukraine at Eindhoven military air base, Eindhoven, Netherlands, Wednesday, July 23, 2014. (AP)

Secretary of State Kerry to Israel. Obamacare back in the courts. Mourning as remains of Malaysia Flight 17 victims come home. Our weekly news roundtable goes behind the headlines.

Jul 25, 2014
An oven full of hot pies in Beth Howard's Iowa kitchen.' (Courtesy Beth Howard)

There is nothing more American than a piece of pie. We taste and talk pies.

RECENT
SHOWS
Jul 24, 2014
Orchid (Galileo55/Flickr)

We’ll look at the new science of what plants feel, smell, see – and remember.

 
Jul 24, 2014
Youths seen playing basketball through bars on a window at the Wisconsin Department of Corrections Ethan Allen School in Wales, Wis. (AP file)

The cold hard facts about juvenile prisons. And the case for shutting them all down. Plus: former Secretary of State Hillary Rodham Clinton is with us.

On Point Blog
On Point Blog
Hillary Clinton: ‘The [Russian] Reset Worked’
Thursday, Jul 24, 2014

Former Secretary of State Hillary Rodham Clinton took time out of her global book tour to talk to us about Russia, the press and the global crises shaking the administration she left two years ago.

More »
Comment
 
Where Did Nickel Creek Go?
Thursday, Jul 24, 2014

The Nickel Creek interview originally scheduled for Thursday, July 24 is rescheduled for an as-of-yet undetermined later date. We explain why.

More »
2 Comments
 
Our Week In The Web: July 11, 2014
Friday, Jul 11, 2014

As we prepare for a week of rebroadcasts, we reflect on Facebook posts, misplaced comments and the magic of @ mentions. Internet, ASSEMBLE!

More »
Comment