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too big to fail

Robert Reich Schools Barney Frank for Pretending There's Nothing Wrong With Wall Street

The policy dispute between former Secretary of State Hillary Clinton and Sen. Bernie Sanders (I-VT) spread on Wednesday to include respective supporters ex-Rep. Barney Frank (D-MA) and economist Robert Reich during a joint interview with MSNBC’s Chris Hayes.

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Bernanke's Memoir of 2008 Meltdown Shows Fed's Power Is Even Bigger Than He Says

Ben Bernanke just released his memoir which includes his account of the events around the financial crisis. According to Andrew Ross Sorkin, Bernanke claims the decision to not save Lehman in the fall of 2008 was not really a decision. Bernanke claims that the Fed did not have the ability to save Lehman. This is not true. Since the Fed has essentially a limitless ability to lend money, it surely could have provided enough loans at below market interest rates, for a long enough period of time, that Lehman would eventually have been a viable bank.

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The California County That's Made a Bold Move to Cut the Big Banks Out of Its Economy

Wall Street's role in our economy has come under intense scrutiny since the financial crisis, with many Americans believing that the industry has far too much influence over both our politics and our economy.

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Why Jamie Dimon Is One of the Biggest Economic Polluters in America

Ed Kane, a professor of finance at Boston College and grantee at the Institute for New Economic Thinking, studies the dangerous risk-taking of giant banks. He sees the cultures of Wall Street and regulators coming together to turn taxpayers into victims of theft and great harm. Like extreme drunk drivers before MADD or smokers on airplanes prior to the 1980s ban, megabankers currently get away with endangering others with little fear of repercussions. Kane discusses how changes in corporate law and culture must make it legally and socially unacceptable for bankers to blow their toxic fumes at the rest of us.

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Paul Krugman Exposes Wall Street Vampires' Latest Ploy

"Last year the vampires of finance bought themselves a Congress," Paul Krugman begins his colum Monday. He then spends the rest of the piece explaining why what might seem like a pretty harsh metaphor is actually apt. But first there's the fact that the bought and paid for Congressional Republicans are trying their darndest to repay their masters by killing the financial reform bill enacted in 2010, a.k.a. Dodd-Frank. "And why must Dodd-Frank die?" Krugman asks. "Because it’s working."

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Big Banks Claim Reform Will Hurt the Economy. Here's Why That's Bullsh*t.

Anat Admati, who teaches finance and economics at the Stanford Graduate School of Business, is co-author of The Bankers' New Clothes, a classic account of the problem of Too Big to Fail banks. On May 6th she will address the “Finance and Society” conference sponsored by the Institute for New Economic Thinking, featuring influential women who have challenged the status quo, like Federal Reserve Chair Janet Yellen, IMF Managing Director Christine LaGarde, and Senator Elizabeth Warren. Admati will join Brooksley Born, former chair of Chair of the Commodities Futures Trading Commission, to discuss how effective financial regulation can make the system work better for society. Seven years after financial hell broke loose, Admati warns that we are far from fixing a bloated and dangerous financial system —and that the system can’t fix itself. Why should you care? This gigantic house of cards could fall on you.

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Why We're Heading Towards Another Financial Crisis - And How It Will Play Out

Bloomberg financial reporter Bob Ivry has written an entertaining new book, “The Seven Sins of Wall Street,” which, instead of rehashing the various illegal activities that triggered the financial meltdown, focuses on what the banks have been up to since the crisis. Much of it would be familiar to readers of this space: the Bank of America whistle-blowers who were instructed to lie to homeowners, and received gift card bonuses for pushing them into foreclosure; the London Whale derivatives trade that lost JPMorgan Chase more than $6 billion; the investment banks who traded commodities while also operating physical commodity warehouses and facilities; and more. All the while, megabanks continue to enjoy subsidies on their borrowing costs because of the (accurate) perception that they will get bailed out in the event of any trouble.

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Eric Holder's Failure to Prosecute Wall Street in One Graph

This week, Attorney General Eric Holder announced that he would be stepping down, which set off speculation about who President Obama would appoint to replace him.

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Are Some Banks Too Big to Punish?

        A few months ago, in a press conference about the felony conviction of Credit Suisse, Attorney General Eric Holder said, "This case shows that no financial institution, no matter its size or global reach, is above the law."
        Yet, earlier this month, the Obama administration announced its proposal to waive some of the possible sanctions against Credit Suisse. The little-noticed waiver, which was outlined in the Federal Register, comes amid criticism that the Obama administration has gone too easy on major financial institutions that break the law.
        In its announcement outlining the waiver, the Department of Labor notes that Credit Suisse "operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts" and in "using sham entities" to hide money.
        Under existing Department of Labor rules, the conviction could prevent Credit Suisse from being designated a Qualified Professional Asset Manager. That designation exempts firms from other federal laws, giving them the special status required to do business with many pension funds. The Obama administration's is proposing to waive those anti-criminal sanctions against Credit Suisse, thereby allowing Credit Suisse to get the QPAM designation needed to continue its pension business.
        The waiver proposal follows a larger pattern. In June, Bloomberg News reported that federal prosecutors have successfully pushed U.S. government agencies to allow Credit Suisse to avoid many regulatory sanctions that could have accompanied its criminal conviction.
        "The New York Fed said last month that the bank can continue handling government securities as a so-called primary dealer," reported the news service. "The SEC let the firm continue as an investment adviser while the agency considers a permanent waiver."
        Pensions and Investments magazine has reported that despite Department of Labor assurances of tough enforcement of its sanctions against convicted financial firms, the agency has "granted waivers for all 23 firms seeking individual waivers since 1997."
        Critics say that by using such maneuvers, the Obama administration is effectively cementing a "too big to punish" doctrine. That criticism intensified in 2012 and 2013, when top Justice Department officials defended the administration's reluctance to prosecute banks by publicly declaring that the government considers the potential economic impact of such prosecutions. Those declarations echoed an earlier memo by Attorney General Eric Holder, which stated that officials could take into account "collateral consequences" when deciding whether to prosecute major corporations.
        Why is the Obama administration reducing sanctions on Credit Suisse? The administration says it is a decision based on pragmatism, not favoritism.
        The Federal Register announcement, for instance, notes that Credit Suisse has assets of nearly $1 trillion, and argues that if the anti-criminal provisions were enforced, the bank would lose its ability to offer investment products to pension funds. The announcement also argues that the Credit Suisse entities that specifically conduct pension business "are independent of" and "not influenced by Credit Suisse AG's management and business activities."
        What the administration did not mention, of course, is that according to data compiled by the Sunlight Foundation, employees of Credit Suisse have given President Obama's campaigns more than $376,000. That's particularly relevant in light of an April study of SEC data from London Business School professor Maria M. Correia. That analysis showed that "politically connected firms are on average less likely to be involved in ... enforcement action and face lower penalties if they are prosecuted."
        Whatever the reason for the proposed waiver, one thing is for sure: The move contradicts the claim that "no financial institution, no matter its size or global reach, is above the law." Indeed, the Obama administration's waiver proposal suggests exactly the opposite.

Regulators: Mega-Banks Like Citigroup and Goldman Sachs Still a Giant Threat to America

We hear a lot of big talk about how Dodd-Frank has made the financial system safer. That law was enacted to make certain that the country never gets blown apart by a financial crisis like the one in 2008.

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