"The Fed's alphabet soup of cash-pumping....actions were so reckless that even the outrageous anecdotes to which they gave rise can scarcely capture the lunacy rampant in the Eccles Building. Thus, the nation's central bank actually guaranteed upward of $200 million that had been borrowed by two New York housewives to start a new business [in November 2008 - FJS]. Amazingly, the purpose was to enable this intrepid duo to purchase large volumes of securitized auto loans about which they knew nothing."
-David A. Stockman, The Great Deformation: The Corruption of Capitalism in America, to be published in April 2013.
Recent attention devoted to banksters by U.S. senators is noteworthy. Not definitive by any means, but the media attention to what could have been ignored may foreshadow a comeuppance.
Members of the Senate Committee on Banking, Housing, and Urban Development did not let Federal Reserve Chairman Ben S. Bernanke escape "Too-Big-to-Jail" questions at a February 26, 2013 hearing. This is alluded to in "Crony Bureaucrat" and "Eating the Fed for Lunch." Some might think the chairman's elliptical answers an attempt to duck and cover but it is more probable his mind simply drifted off, his wafting countenance familiar to travelers in the Sahara beaten by a mind-numbing sun while draped on the back of an anemic camel famished upon the outskirts of Chenachene.
However, it was not only Simple Ben. The parade of government officials previously exempt from crony questioning continues. Attorney General Eric Holder was put on the spot before the Senate Judiciary Committee on March 6, 2013:
SENATOR CHARLES GRASSLEY (R-IA): "In the case of bank prosecution. I'm concerned we have a mentality of 'too big to jail' in the financial sector, spreading from fraud cases to terrorist financing to money laundering cases. I would cite HSBC. I think we are on a slippery slope and that's background for this question. I don't have recollection of DOJ prosecuting any high-profile financial criminal convictions in either companies or individuals...."
ATTORNEY GENERAL ERIC HOLDER: "....the concern that you have raised is one that I, frankly, share. I'm not talking about HSBC here, that would be inappropriate. But I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute - if we do bring a criminal charge - it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large. Again, I'm not talking about HSBC, this is more of a general comment. I think it has an inhibiting influence, impact on our ability to bring resolutions that I think would be more appropriate. I think that's something that we - you all [Congress] - need to consider. The concern that you raised is actually one that I share."
The story of the Grassley-Holder discussion was published in the New York Times under the headline: "Big Banks May be Getting Too Big to Jail." The Times lectured the Attorney General: "Apparently, Mr. Holder didn't get the memo. As you can imagine, both the left and the right made hay of Mr. Holder's statement [one issue they agree upon, one issue they may do something about - FJS], using it as a damning explanation for the lack of prosecutions on Wall Street."
Holder's fear of big-bank failure is without merit. "The Professor Who Did NOT Save the World" discussed some of what the world may finally be willing to recognize.
David A. Stockman's The Great Deformation: The Corruption of Capitalism in America will be published in April. If public opinion is now tending to acknowledge that it fell for the Hank Paulson-Ben Bernanke, phony, financial-terrorism ploy, it will be timely to throw the book at the culprits. The AIG holding company failure never jeopardized a single insurance policy. General Electric's panic - more exactly, the panic instilled in (and by) Simple Ben and Treasury Secretary Hank Paulson - was for the benefit of CEO Jeff Immelt. Too-Big-to-Fail banks were not only loaded with bad assets, but also enough good assets for the equity and bondholders to absorb losses.
The top, front-page headlines in the Friday, March 15, 2013, Financial Times ("J.P. Morgan Under Fire for London Whale Saga") and Wall Street Journal ("Senate Slams Bank on 'Whale'") are encouraging. As was the FT report that [Senator John] McCain "accused the bank of lying when it told Senate investigators it had been fully transparent with regulators." Both stories were referring to a "301-page report by the Senate's Permanent Subcommittee on Investigations." And: "The panel has the discretion to make referrals for criminal proceedings to the Justice Department."
The Journal also published (on page 5) a story about a speech Dallas Federal Reserve President Richard Fisher will deliver (not the media's normal practice) on Saturday, March 16, 2013, noting it is unusual for a Fed official to address a partisan political audience (the Conservative Political Action Conference). Fisher will be "pitching his proposal to break up the biggest U.S. banks.... His presence at the conference is the latest evidence of big-bank bashing's broad political appeal."
As Stockman implicitly acknowledges in the following, Ben S. Bernanke has already steered us off the financial cliff; all that's left is to discover how much it hurts when we hit the ground. Still, even if the banksters go on, it is imperative to rid us of Bernanke and his fellow theorists: