Streams

Washington Grills the Banks

Thursday, July 26, 2012

Yesterday in Washington, lawmakers from both sides of the aisle were talking about the structure and behavior of big banks. Tim Geithner offered testimony about the LIBOR rate-fixing scandal. And comments by a former Citigroup CEO led to buzz about the return of Glass-Steagall, which prevented banks from getting too big. Wall Street Journal economic policy reporter Damian Paletta discusses the latest.

Comments [36]

Em

I overlooked the more obvious thing that the likes of Weill are REALLY worried about with the fall-out from this scandal; it's not criminal accountability, it's a new call for GLOBAL REGULATION. Listen to the final episode of "Capital Justice" on BBC Radio 4.

Dividing the banks may give some reassurance to customers in this country in the short-term, but it won't put an end to the international shenanigans these crooks have been getting away with for decades now, and amongst other things led to the recent food shortages and riots in poorer countries, and will inevitably lead to another meltdown, especially since no one seems willing or able to talk about high-frequency trading, and that our ignorance of the digital technology behind all this is enabling a criminality in the financial sector that makes Anonymous seem quaint by comparison.

The point is we are heading to another global meltdown because it is still business as usual on Wall St. and The City. If ordinary people are to really be protected in the long term, we need to completely reform and overhaul the World Bank and the IMF and make Global Corporations accountable globally. But people need to drag their politicians and public servants over the coals first. They enabled the LIBOR scandal and they should be held criminally responsible. That includes Geitner - passing the buck up the line is not a good enough excuse when no action is taken in fraud cases, especially when you're already seen as Goldman Sachs' point-man.

These guys make Madoff look like an amateur. It is really strange (not) that the mass media were so happy to encourage public outrage and go into mind-numbing detail about the complexity of Madoff's confidence trick, but are incredibly reticent to talk about LIBOR and the obvious implication that this was not a new or isolated phenomenon; apparently it's too hard for us plebs to understand and not that interesting.

But, that's why I listen to Brian.

Jul. 26 2012 03:55 PM
Jim

@Tony from Canarsie

For fun, I took your 320,000 per family and the numbers reported in the link that I posted, and did the math. Assuming that the reported numbers are accurate... If you remove the Walmart heirs from the average calculation, the average American's net worth drops from 320,000 to 187,000. And, of course, that number still includes the wealth of Wall Street tycoons... So, most families have a net worth even lower than that.

Jul. 26 2012 11:08 AM
Tony from Canarsie

Jim -- Thanks for the link. I don't know economics from éclairs, so the info is appreciated.

Jul. 26 2012 10:45 AM
Ansis Vallens from Chatham, NY

Sen. Phil Gramm, public enemy #1. You want to blame someone, blame him. He's the well-rewarded, banker-boot-licking pol who brought Glass-Steagall, the wall between retail and investment banking, come crashing down. Virtually all of our current financial woes stem from this single act.

Jul. 26 2012 10:43 AM
Jim

@Tony from Canarsie

Don't be fooled by averages. The numerator in the average includes the super rich.

http://thinkprogress.org/economy/2012/07/17/534591/walmart-heirs-wealth-combined/?mobile=nc

Jul. 26 2012 10:42 AM
hank

I recommend Bill Moyers' interview of John Reed, former head of citibank, who talks about how he was amazed that Weill could go forward with merger that was illegal because weill had clinton in his pocket agreeing to end glass-s. He also addressed the total greed manifested by Weill. I think people like weill and greenberg are basically crooks who tried to clean their names by having cornell med school named after him (Weill) or the main building at NY Hospital named after him (Greenberg). Now that weill has pocketed his billions, he can try to look honorable now. HYPOCRITE!!!

Jul. 26 2012 10:39 AM
Tony from Canarsie

Though I wouldn't be surprised if it were true, I have a problem with the recent reportage that the average Canadian household is "richer" than the average U.S. household. Articles on the subject always relate that "The net worth of the average Canadian household in 2011 was $363,202, compared to around $320,000 for Americans."

Maybe I need to get out more, but I don't know any American households that have a net worth of $320,000. Besides, if that number were true, then Americans aren't doing so badly after all.

Jul. 26 2012 10:36 AM
Arnold Lippin from Brooklyn

It sounds to me like "sandy" is presenting damage control. He is trying to divert attention away from the criminality of the banks some of which was championed by him and he is trying to salvage the business as usual activities of the investment community and shield it from more regulation.

Jul. 26 2012 10:35 AM

Call my skeptical but Weill's comments made me think 'how could he benefit from bank/insurance/investment banks break-up?' $$$$$$$$$$$$$!

I always thought it was a terrible idea to disband Glass-Steaghall and it will be nearly impossible to get it back on the books.

Jul. 26 2012 10:33 AM
Em

There's a lot of talk about fixing in 2008, but why should we think this hasn't been going on for many years???

We all know this is about CRIMINAL behaviour and these guys know that they could *theoretically* be held accountable for this either through the criminal or the civil courts, that includes Weill. That's why there's a process of mea culpa at the moment. It's the start of major PR damage control, just in case the truth does come out, although I'm dubious about that happening.

Your guest's description of Weill as "Godfather" is right on the nose. We have been trusting our money to Don Corleone.

Jul. 26 2012 10:32 AM
Jean from FiDi

Citigroup is trading at $26/share.

Jul. 26 2012 10:32 AM
Arleigh Hartkopf

How about this -- provide FDIC coverage ONLY to banks that do NOT have a serious (sic) investment operation.

Jul. 26 2012 10:31 AM
Jeff Pappas from Dumbo

Regarding Glass - Steagall act photo posted to museum ny activist blog

http://activistnewyorktoday.mcny.org/node?page=4

Jul. 26 2012 10:30 AM

Not a few people Brian predicted it, Brian, any thinking person focused on this industry who was not vested in the distorted market could see it quite clearly -- not because of their intelligence but simply because it was so plain.

Society is a bit more aware of financial logic today -- yet if they were cynical enough, the LIBOR scandal would have been on the front page of the WSJ long ago.

I hope Bush and Obama both get some blame for worshipping the financial status quo rather than demanding dramatic change.

Jul. 26 2012 10:30 AM

Brian talk about Ron pauls Audit the Fed bill that passed in the House yeasterday (big time) and how Harry Reid says he won't bring it to a vote in the Senate. Look who voted Nay on it...CA, NY dems to a rep...they are the problem.

Jul. 26 2012 10:27 AM

The caller who told how many "benefitted" by low LIBOR rates failed to mention that the rates were manipulated in ALL directions as the UK reports make plain.

In ALL cases, the LIBOR rates were manipulated for the Benefit of the Banks. Any brief spate of lower rates were followed and/or preceded by periods of higher or static rates at many levels - high, low, midrange.

Jul. 26 2012 10:26 AM
Mike from Tribeca

Big money means never having to say you're sorry, at least until you've raked in billions.

Jul. 26 2012 10:26 AM
Sherry from Manhattan

If there is an artifically low LIBOR rate--can't traders do an offsetting swap trade-- ie LIBOR v. Fed Funds and make the rate come back into line? It's a classic arbitrage trade. I don't see how you can manipulate LIBOR for too long. Please have your guest explain. thanks.

Jul. 26 2012 10:25 AM
John A

Its funny how it's still not framed as erasing a moral hazard, as if morality is a lost quality, but that Sandy framed it as just doing whats needed to not scare off the sheep (customers). Still, progress.

Jul. 26 2012 10:24 AM
Robert from NYC

Problem is no one, NO ONE even many (most?) of the "99%", just don't want to let go of the old system, they know nothing else and they're doing a tape and paste job on a failed system. We need inventive people, people in economics and finance to come up with completely new systems and are people friendly.
Well that's the problem, they may have helped the 99% but how much? Just enough to get you on board to defend them. And how many of the 99% did they help? Huh, how many? A minority. So get over it and get on the ball for a real change. Get out and protest and get these thieves in jail.

Jul. 26 2012 10:22 AM
dizzy5 from upstate Manhattan

"...kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta, kinda, sorta,...". Sort of...unlistenable. If I want to listen to inarticulate dopes I'd switch stations to 'FAN. They're all wrong, but they ARE sure. SWITCH OFF!!!! CLICK!!

Jul. 26 2012 10:22 AM

(Seriously though, Weill, why now? I assume deflection from LIBOR or another scam. Reminds me of McGreevey's "I am a gay American" admission that called off the hounds on more relevant misbehaviors that might have been criminal if fully investigated.)

Jul. 26 2012 10:21 AM
Laura from UWS

Yes, break up the big banks including banks that are also selling insurance. The mega-mergers caused journalists to fear writing negative stories about mega-firms like Citi ....... they would get blacklisted from getting loans AND insurance.

Jul. 26 2012 10:20 AM
Bobby G from East Village

Sandy Weill for Treasury Secretary?

Jul. 26 2012 10:20 AM
Robert from NYC

Oh cut it out Brian, with billions in his pocket he's now repentant. Why don't you stop the devil's advocate here, it doesn't apply in this case. Hypocrite slime!!!

Jul. 26 2012 10:18 AM
Mike from Inwood

Weil is a HYPOCRITE! There should be a clawback that goes back to him and his minions.

Jul. 26 2012 10:18 AM

Terrible timing Weil!

If it's Step 9 of AA, mid-July in the Hamptons is no time to quit, man!

And if he is trying to get written into the Book of Life -- dude! Rosh Hoshanah, 2005 is in the rearview mirror!!

Jul. 26 2012 10:18 AM
JT from LI

Do the fines actually deter any behavior? It would seem that they made a lot of money before the LIBOR manipulation was uncovered. A small fine and no jail time or career damage makes this worth the risk.

Jul. 26 2012 10:18 AM
Joan from Brooklyn

Sandy Weill, a new definition for chutzpah.

Jul. 26 2012 10:17 AM

What if voters stood up to politicians, who support big bankers

Jul. 26 2012 10:17 AM
Mike

"Masters of the universe" my arse! More like master crooks!

Jul. 26 2012 10:16 AM
Joseph Cavalieri from east village

2 years ago I switched from CHASE bank to a local non profit Credit Union Bank.
An easy personal way for consumers to not support the big banks that constantly change the playing field.

Jul. 26 2012 10:16 AM
Robert from NYC

So it's a bunch of baloney, they did not do what they should have done. Geithner is full of crap and stop giving them an out, as though they really did something that counts. They did nothing that counts and we're in the hole we're in right now. Stop wasting use of our air space with this talking head, spin back and forth. Nail in the coffin of banks and hopefully those of the administration. Don't let these guys off the hook. Geihner should be dumped and the bankers jailed!

Jul. 26 2012 10:12 AM
Tony from Canarsie

Just a style point, but reporters should avoid saying "you know," "kind of" and "sort of."

Jul. 26 2012 10:11 AM
Em

Weill's comments are hilarious. One can only wonder just how bad and how deep the LIBOR scandal is for the banks, if he's making this preemptive move, which goes against every grain of his being.

Jul. 26 2012 10:07 AM
Joe Mirsky from Pompton Lakes NJ

From my book, Ornamentally Incorrect

Irrational Exuberance
Alan Greenspan, the Chairman of the Federal Reserve from 1987 to 2006, believed that markets would regulate themselves and acted accordingly. He championed deregulation of banks. We all know how that worked out.

He was grilled by Henry Waxman, chairman of the Congressional Committee for Oversight and Government Reform in October, 2008 and admitted that he had been wrong in this view. “I found a flaw in the model that I perceived as the critical functioning structure that defines how the world works.” Translation: Those Wall Street moochers didn’t behave like they were supposed to.

Ask a cop how people do regulating themselves. Duh!
Wisdom is knowing when smart people say dumb things.

Jul. 26 2012 10:06 AM

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