Because the OWS has put the focus back where it should be: On the Economy and how the Plutocrats on Wall Street and Washington crashed it.
Unlike the foot soldiers for the David Koch sponsored Tea Party who swallowed the Republican mantra with an extra dose of steroids, the members of Occupy Wall Street are not accepting the platitudes of EITHER party. You won’t hear them spouting the cliches of the rich: Lower taxes and tort reform. You won’t hear them saying that “corporations are people.” You won’t hear them saying that Democrats are “progressive” and represent the majority either.
ProPublica has answered the question: What’s happened to the big players in the Financial Crisis. Here are a few snippets from that larger piece. Here are the folks who crashed the US economy and then walked away with other people’s money and nothing will change until we kick the plutocrats that support them out of Congress.
THE MORTGAGE ORIGINATORS
WHAT THEY DID: Mortgage Lenders contributed to the financial crisis by using aggressive tactics to rope borrowers into complex mortgages that were more expensive than they first appeared. In addition, some of them like Ameriquest forged documents, and juiced mortgages with hidden rates and fees. A similar culture existed at Washington Mutual. Countrywide also pushed customers to sign on for complex and costly mortgages that boosted the company’s profits. Countrywide CEO Angelo Mozilo was accused of misleading investors about the company’s mortgage lending practices.
WHERE THEY ARE NOW: Few prosecutions have been brought against subprime mortgage lenders. Ameriquest went out of business in 2007 and Citigroup bought its mortgage lending unit. Washington Mutual was bought by JP Morgan in 2008. A Department of Justice investigation into alleged fraud at WAMU closed with no charges this summer. Bank of America purchased Countrywide in January of 2008. Mozilo left the company after the sale and settled an SEC lawsuit for $67.5 million with no admission of wrongdoing. Bank of American invited several senior Countrywide executives to stay on and run its mortgage unit. Deutsche Bank is still under investigation by the Justice Department.
THE MORTGAGE SECURITIZERS
WHAT THEY DID: In the years before the crash, banks took subprime mortagages, bundled them together with prime mortgages and turned them into collateral for bonds or securities and thus seeded the bad mortgages throughout the financial system. Some banks such as Washington mutual, Bank of America, Morgan Stanley and others were securitizing mortgages as well as originating them. Other companies such as Bear Stearns, Lehman Brothers and Goldman Sachs bought the mortgages straight from the subprime lenders, bundled them into securities and sold them to investors including pension funds and insurance companies.
WHERE THEY ARE NOW: This spring New York Attorney General launched a probe into mortgage securitization during the housing boom at Bank of America, JP Morgan, UBS, Deutsche Bank, Goldman Sachs and Morgan Stanley. Morgan Stanley settled with nevada’s Attorney General last month following an investigation into problems with the securitization process. As part of a proposed settlement with 50 state attroneys general over foreclosure abuses, several big banks were offered immunity from charges related to improper mortgage origination and securitization. California and New York have withdrawn from those talks.
THE PEOPLE WHO CREATED AND DEALT THE CDOS
WHAT THEY DID: Once mortgages had been bundled into mortgage-backed securities, other bankers took groups of them and bundled them together into new financial products called Collateralized Debt Obligations. CDOs are composed of tiers with different levels of risk. a hedge fund named Magnetar worked with banks to fill CDOs with the riskiest possible materials, then used credit default swaps to bet that they would fail.
American International Group and their London-based financial products unit was among the entities that provided credit default swaps on CDOs. Their business of insuring these risky securities made AIG large short-term profits but brought the company to the brink of collapse and prompted an $85 billion government bailout.
Merrill Lynch, Citigroup, UBS, Deutsche Bank, Lehman Brothers and JPMorgan all made CDO deals with Magnetar.
When all else failed and the crooks couldn’t sell the CDOs, they bought them from each other to create the illusion of investors when there were none. Goldman Sachs and Morgan Stanley also made similar deals i which they created and them bet against risky CDOs. The hedge fund Paulson & CO helped decide which assets to put in side Goldman’s CDOs. [If you check your Washington elected officials assets on Open Secrets, you may find that many of them are invested in Paulson & Co. --a firm that specializes in betting against the US economy. These Congressional asses believe in covering their Wall Street bets. For example, Eric Cantor is among those who bet against the US Economy--and you count on a guy like this to represent you? People in Cantor's Congressional district need a serious wakeup call.]
WHERE THEY ARE NOW: Magnetar is still thriving. In 2007, magnetar’s founder took home $280 million and the fund had $7.6 billion under management. overall, the banks and individuals involved in DCO deals haven’t been convicted on criminal charges. The civil suits against them have produced fines that aren’t very big compared to the profit they made.
THE RATINGS AGENCIES
WHAT THEY DID: Standard and Poor’s, Moody’s and Fitch gave their highest rating to investments base on risky mortgage in years leading up to the financial crisis. A Senate investigations panel found that S&P and Moody’s continued doing so even as they housing market was collapsing.
WHERE THEY ARE NOW: The SEC is considering suing Standard and Poor’s over one particular CDO deal linked to hedge fund Magnetar. The SEC has previously considered sing Moody’s but instead issued a report criticizing all the rating agencies.
WHAT THEY DID: The Financial Crisis Inquiry Commission concluded that the SED failed to crack down on risky lending practies at banks and make them keep more substantial capital reserves as a buffer against losses. They also found that the Federal reserve failed to stop the housing bubble by setting prudent mortgage lending standards even though it was the one regulator that had the power to do so.
Overall, SEC enforcement actions went down under the leadership of Christopher Cox and a 2009 GAO report found that he increased barriers to launching probes and levying fines. Alan Greenspan refused to heighten scrutiny of the subprime mortgage market. He later said before Congress that it was a mistake to presume that financial firms’ own rational self-interest would serve as an adequate regulator. The Office of Thrift Supervision, tasked with overseeing savings and loan banks, helped to scale back their own regulatory powers. In 2003 James Gillernan and John Reich, then heads of the OTS and the FDIC brought a chainsaw to a press conference as an indication of how they planned to cut back on regulation.
WHERE THEY ARE NOW: Christopher Cox stepped down in 2009 under public pressure. The OTS was dissolvd this summer and its duties assumed by the OCC whose head has been advocating to weaken rules set out by the Dodd Frank financial reform law.
WHAT THEY DID: They passed legislation that made it possible for all this to transpire. In 1999 two bills supported by Phil Gramm and signed into law by Bill Clinton make it possible for the current financial meltdown to take place and it is all directly related to the deregulation of the financial industry. The Gramm-Leach-Bliley Act of 1999 repealed all the remaining parts of Glass-Steagall, allowing firms to participate in traditional banking, investment banking, and insurance at the same time.
The lobbyists for the financial industries also are to be given their due for influencing this mess. Between 1999 and 2008 the financial industry spent $2.7 billion lobbying the federal government, and donated more than $1 billion to political campaigns. While deregulation took place mainly under Clinton’s watch,George W. Bush is faulted for not doing more to stop the out of control housing market.
Tim Geithner as president of the new York Fed from 2003 to 2009 missed opportunities to prevent major financial firms from self-destructing. Henry Paulson introduced greater uncertainty into the financial markets by allowing Lehman Brothers to fail.
WHERE THEY ARE NOW: Phil Gram as been a vice chairman at UBS since he left Congress in 2002. Summers served as a top economic advisor to Obama until November 2010 and since then he has been teaching at Harvard. Geithner is currently serving as Obama’s Treasury Secretary.
THE EXECUTIVES OF THE BIG INVESTMENT BANKS
WHAT THEY DID: Many of them took actions that contributed to the destruction of their own firms. Five major investment banks–Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley– kept such small cushions of capital at the banks that they were extremely vulnerable to losses. Merrill Lynch executives helped to blow up their own company by retaining extremely risky portions of the CDOs they created, paying a unit within the firm to buy them when no one else would.
WHERE THEY ARE NOW: in 2009 two Bear Sterns hedge fund managers were cleared of fraud charges over allegedly lying to investors. A probe of Lehman Brothers stalled this spring. Merrill Lynch was sold to Bank of American in the fall of 2008. As for the executives who helped to crash the firm, they walked away with millions. Some such as Dick Fuld are still woking on Wall Street.
If you have time, be sure to read the complete ProPublica article as it contains many more links and more detail regarding the financial melt down. Cheat Sheet: What’s Happened to the Big Players in the Financial Crisis.