No surprises here. Typical WaDC clusterf**k, no?

Thanks masaccio.

digg is open.

Dugg

That first quote, about the disorganization in the White House and even the Treasury, is really telling. I hope this crowd doesn’t have that problem.

BFF . . . Banker’s Friend First

thank you massacio, truly appeciate the insider material. didn’t see your 2nd post yet. answers the what-to-read on my one day off question ;D

p.s. haven’t done any serious googling yet – has Paul O’Neil weighed in on any of this ?

Three Trillon for Bank’s personel accounts still no money for Universal health care. Stupid Libruls always cryin’ about being sick…candy ass poor and sick.

Paul who? Haven’t heard a peep out of him since his tell-all to Suskind. Guess he thinks he did his civic duty.

i think we ought to demand something in return for the bankster bailout: comprehensive single payer health care.

What is going to change this shit?

More and better Democrats? Ha, ha, ha.

Blogs “putting pressure” on Obama? Ha, ha, ha.

By process of elimination, we get to REVOLUTION — either in the streets or at the ballot box. It’s either revolution or a continual more-of-the-same.

I think the term “break the glass” refers to the crystal flutes that were smashed against the brick fireplace in celebration of all that free taxpayer money. However, I could be mistaken about that.

No doubt Newt will promise to fix everything.

And Paulson & kashkarri got what 0.5%? 1%? as Mandate fee?

Villager wisdom: In return for subsidizing the rich we now need to reign in entitlements, after all the we must be realistic and pragmatic.

Not sure what you mean.

If it’s that I must like Newt, that’s wrong.

I’m way beyond seeing value in either major party.

Do you think Obama’s economic policies would be any different if he had 100% Dems in both the House and Senate?

I hope they were using the Pier 1 flutes. We need that crystal to pay off the debt.

That’s a relief. We all know what a fine job he did back in the day.

Newter is coming back around like a bad dream. IMO, he’s the one to watch out for in 2012. And if Obama’s bailout/economic recovery crap doesn’t work (and work well), we just might be staring down the barrel of another Repug presidency. Splintered though the Repug party might be, we underestimate those neanderthals and gangsters at our own peril.

Moral character, like sexual fidelity, is not something associated with Wall Street or the Beltway. Those who have it usually leave town in a hurry. We don’t need purity or an absence of failure; we need an absence of malice.

Congress is good at one thing: testing the wind. It can easily navigate and sale by the lobbyists’ trade winds. Time for Congress to detect a coming whirlwind of popular resentment that falling down on the job will have prompt electoral consequences.

OT from MinnPost’s Eric Black.

As speculation swirls around what the three judge panel will do in the Coleman-Franken contest, keep this in mind: The likeliest outcome — no matter whether Team Coleman takes their case to the U.S. Supreme Court and/or tries to get a fresh start in federal district court — is that Franken will be seated in the Senate in roughly May or June.

Wait, wait! Too soon, too soon. We’re not ready!! /s

It is hard to see the end of the two party system. The problems that exist today are directly the fault of the Republic Party since they have had nearly total control for many years. That they still retain some power makes it difficult to correct things today. My comment about Newt was made because he seems to be trying to recapture a leadership position. He is a simple rhetorical bomb thrower, devoid of any real solutions.

“In case of emergency, break glass, press button to sound alarm”.

But I do think they’ve thrown a few crystal champagne flutes and bottles of Dom Perignon into the gas fire to celebrate one more cleaning out of the taxpayer for private gain.

Congress is good at one thing: testing the wind. It can easily navigate and sale by the lobbyists’ trade winds. Time for Congress to detect a coming whirlwind of popular resentment that falling down on the job will have prompt electoral consequences.

Funny you should mention that. I just got off the phone with Speaker Pelosi’s office. I asked for large-scale hearings into all aspects of the financial services industry bailout. Special counsel, subpoena power and an open timeline – the opposite of the “joke hearings” that Frank ran a few weeks back. I said that anything less than real hearings constitutes enabling of and complicity in this broad daylight hijacking of the US Treasury.

The response I got was (approximately): “Hunh? OK..” I suspect they’re now cleaning up the resultant drool.

May or June of what year?

[A]n honest appraisal is that the Treasury in 2007 and 2008 took important and difficult steps to stabilize the financial system but did not succeed in explaining them to a skeptical public.

This is pure unadulterated horseshit. Treasury and the Fed too have been consistently behind the curve, choosing the wrong policies, and refusing to take “difficult steps”. This Swagel paper comes across more and more as a whitewash.

Parenthetically I wonder if the the disarray at Treasury was a result of conflict between the Goldman people and everyone else or the general hollowing out of departments that took place during the Bush years.

My bad! I’ll get back to you on that! :~]

** Big Orange reporting reconciliation is ‘in’ on healthcare – and the fact the usual Dem suspects aren’t howling, tells me it wont be single payer anytime soon.

** did you catch my note about Stiglitz and Simon Johnson testifying before Maloney’s comm. tomorrow ?

** in retreiving a link, I see that I completely misunderstood your comment in one of the early FNC/teabagger threads – so sorry

I tried to read it with an open mind, as Swagel explains that he is trying to report on what he saw and did as accurately as he can remember. What becomes clear on a second and third review is that there was a lot of ideological bias, and much of the decision-making was based on their perception of political constraints rather than what they thought was best.

He is explicit about that, and he is clear on another important point. Some of the best ideas, like the forced debt-for-equity swap by bondholders, would require legislation, as current laws don’t give them the ability to force that outcome. At one point he says that academics who complain about some action not taken should be required to point to a statute authorizing that action.

He is less clear about the factual basis for some of the decisions they made. I am reading the last Elizabeth Warren report, she is much more clear on that point.

howdy cbl2,

1) thanks for the link. have you seen this last week (it looks like pre-capitulation even by the progressive caucus):

http://www.pnhp.org/blog/2009/…..the-point/

The progressives in the House of Representatives have stated that they “will only support comprehensive health care reform legislation which includes a public plan option on a level playing field with private health insurance plans.” (http://cpc.grijalva.house.gov/index.cfm?ContentID=351&ParentID=0&SectionID=66&SectionTree=66&lnk=b&ItemID=349)

The Republicans will not support a government-run plan that competes “unfairly” with the private health plans. Specifically, they will not support a Medicare-like option.

But look at the wording of the statement from the Progressive Caucus. The public plan option must be “on a level playing field with the private plans.” The model that meets that definition is a PPO that is sponsored by the government but administered by private insurers, with a firewall separating the PPO from the government. Thus the government option will be simply another PPO, with all of its perverseness, competing in a market of private plans. The line in the sand drawn by the Progressive Caucus was washed away by their carefully worded release.

Mark McClellan has it right. The only hope for gaining the support of Republicans is to make the government option “look like another private sector choice, and then what would be the point?”

With the concession of the progressives, the strategy for a Medicare-like public option has already failed. Moving forward with what amounts to another private PPO with a government seal of approval means that the private insurance industry will maintain control of health care financing for the majority of Americans.

We have in the making yet one more example of where the Republicans will extract enough concessions from the Democrats to ruin the legislation, and then when it comes time to vote, the Republicans will vote against it anyway.

The Democrats have to give up the fantasy of a bipartisan solution since Congressional bipartisanship is a total fiction. The Democrats have to move forward with honest health care reform that works for everyone. They shouldn’t look for help from the party of NO.

2) yes, thank you, i did (even left you a reply). but i think the hearing is next tues (not tomorrow)? will be looking forward to that one!

3) all my fault for the way i wrote it.

Hi masaccio. Thanks for the continuing dissection of this document. Using the word “pirate” made me think of the Crimson Permanent Assurance from the beginning of Monty Python’s The Meaning of Life.

Yeah, but that’s why I think the first bit masaccio quotes — about the internal confusion and disconnects within Treasury — are so rich.

The logic of that documentary evidence appears to be:
1. We had self-imposed hurdles, internal constraints, and we were chronically disorganized at Treasury.

2. But forget about the Treasury! Really, the problem stemmed from the distrust between Congress and the WH; we at Treasury were innocent, helpless, disorganized onlookers who had nothing to do with the mess in which the country now finds itself.

3. The ‘financial participants’ on Wall Street told us to create an emergency to ‘break the glass’ in order to stabilize the financial system. Being helpless and disorganized, who were we to push back at their advice?

4. We did not succeed in using ‘populist rhetoric’ to explain to the American pubic why they should underwrite the losses of the ‘financial participants’ who told us to ‘break the glass’. But we didn’t know how, since all we know is WallStreetSpeak and we have no grasp of HoosierDialect, or BoiseFrankTalk.

Social and personal dysfunction.

I have to admit to a great deal of skepticism about the argument that Treasury or the Fed could not act because they lacked statutory authorization. It seems to me that whenever Paulson, Geithner, or Bernanke wanted to act statutory authorization has never been an issue for them. It is only when they didn’t want to do something that they use this as an excuse.

Just look at how the government took over AIG. It bought 79.9% of the company and informed AIG of what it had done. The Fed has moved from monetary to fiscal policy with no statutory authorization I know of. Geithner’s PPIP uses the FDIC in ways never envisioned in any law. The whole failure to declare banks insolvent and move them promptly into receivership is a case where the law is clear but is being completely ignored. So when Swagel says that debt for equity swaps could not be done because there wasn’t a specific law authorizing it, I don’t buy his argument for a second.

If you choose to believe nothing could be done, then you make government equivalent to pre-FDR days when nobody would have thought of using government to ‘fix’ an economic crisis. Somehow FDR found a way to exert government and I see no reason to believe that has changed. Obama and a Dem-controlled Congress could have passed an equivalent to the PATRIOT Act if they had wanted to give Treasury some specific powers for the duration of the crisis.

Another aspect of this which could be considered is that many foreign countries could easily have chosen to view this as some strange kind of aggression which was trashing their economies. In that context this would have been a kind of economic war and in that environment government HAS to act to protect America from whatever crazy things a few banks have done.

In the end it comes down to the will to act for the good of the country instead of protecting minority interests to the exclusion of everybody else — as Bush did so often.

Thanks, Masaccio. I applaud the optimism of your closing premise:

This last statement is Swagel’s snide way of saying that both the Bush administration and the Obama administration operate on the belief that the only way out is to subsidize the rich. Apparently, no one has the moral character to make their friends and supporters eat their losses.

In the thick of 2008’s presidential primaries & subsequent general election, nothing was clearer than what the real contest was about — who could craft, then sell the most effective marketing campaign of rejecting Bush/Cheney policies, which were wildly successful for a very small segment of the country.

Eventually “Yes we can” was the winner over McCain/Palin’s trainwreck of a message machine as it careened from one week to the next.

While Wall Street’s power play symbiosis with D.C. seemed to be at risk, it never was. Obama’s very first appointment of Rahm Emmanuel as White House chief of staff was the harbinger of today’s private losers take all from the massively expanding public debt mentality.

Soaring rhetoric and coherent sentence structure notwithstanding, the moral imperative remains unchanged. As a matter of domestic and just as importantly foreign policy, the U.S. corporate & central bank financial structure must be preserved, protected and defended …. so help them God.

It begs the question — when we speak for a sustainable future, sustainable for whom?

This is an excellent point in general. In the specific case of the debt for equity swap, the question is how to force a bondholder to take equity in exchange for the bonds. It can be done in bankruptcy under certain circumstances, but otherwise, I don’t think it can be done with current law. I think courts would protect the bondholder.

rOTL, that feels a bit harsh to me in the context of Swagel’s paper. There is a real feel of the pressures these people faced in the paper, which perhaps makes me too sympathetic, but I think they were trying in the context of their preconceptions about the nature of the problem and the general tenor of the incompetent Bush administration.

Still, there is no denying that their unwillingness to talk to the nation about the problems and their plans was a major part of the disconnect we all feel from the solutions. The lack of respect for the citizenry is really obvious, and you may be able to see in my comments on it a bit of hostility at the idea that I can’t be trusted to understand the brilliance of their actions.

It’s as if the Bush catastrophe ended as it began: with chaos in the Treasury department.

but I think they were trying in the context of their preconceptions about the nature of the problem and the general tenor of the incompetent Bush administration.

Wow, thank you so much for the correction in pointing out that this report merits more fair-mindedness that I’ve clearly given to it (and I’m not being snarky!).
What you describe is what I would call a Case Study, and IMHO they are quite difficult to do well. They’re hard for many reasons, some emotional, but also intellectual.

From your comment @35, it sounds like this document is what I would call a Case Study (or a Quality Analysis Assessment: QAA), and if that’s the case and you recommend it then I’ll put it on my reading list.

The other background reading that I’ve been doing has been incredibly eye-opening — simply looking at relationships and shifting patterns of money and influence has been incredibly discouraging, although it explains a great deal. So it is true that I now view almost anything written by an ‘insider’ through dark, corroded lenses. But that creates its own inaccuracies, and is not helpful over the long term — certainly not for such a vast, complex problem as we’re watching unfold.

I wouldn’t want to insult or smear anyone’s genuine efforts to do a solid ‘Case Study’, and in that spirit — knowing how hard those are to write up (and how much WORK they are to write up!), then I deeply appreciate your gently worded guidance and correction.

FWIW, I left a comment re: Phil Gramm, the SEC’s 2000 budget and Gramm’s determination to undercut the SEC by means of cutting its budget on a thread at EW today on the topic of Louis Freeh and his role in protecting activities like BAE’s corruption. After looking at the Senate’s role in diminishing regulatory institutions, perhaps I’ve become to cynical to see with clarity, so I do appreciate your efforts to help me see with greater accuracy.

Why haven’t several lawsuits been launched to expose the fraud that was perpetrated on America and the world by the Bush team of Paulson, Bernanke, Geithner, et.al.??

That is well said, it comes out as a case study, and Swagel acknowledges the problems of writing them. I think it is worth reading for those interested in the minutia.

As my post on cramdown says, they were utterly unable to conceptualize my side. They rejected it for reasons that made no sense. There were other similar issues where ideological bias controlled the outcome. Swagel writes in such a way that these matters are fairly clear.

As my post on cramdown says, they were utterly unable to conceptualize my side. They rejected it for reasons that made no sense. There were other similar issues where ideological bias controlled the outcome. Swagel writes in such a way that these matters are fairly clear.

Well, if Swagel has managed to pull that off, my hat is off to him.

Thanks for the follow-up, and this Case Study is now added to my ever-expanding list of reading materials on this general topic of economic meltdown.