Ry Cooder: "No Banker Left Behind"

Bloomberg View:

"On television, in interviews and in meetings with investors, executives of the biggest U.S. banks -- notably JPMorgan Chase & Co. Chief Executive Jamie Dimon -- make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance."

"So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?"

"Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected."

Three cents out of every tax dollar the government collects from you is pocketed by the Big Banks on Wall Street. Let's take a look at that permanent, yearly bailout:

[Illustration by Bloomberg View]

I'm not surprised to learn that Wall Street and their wealthy investors are "too big" to earn their own profits, too. I just had no idea we were being fleeced on such a grand scale.

Full Bloomberg editorial here.

[Photo via Flickr]

By Cheryl Strauss Einhorn, Special to ProPublica

This story was co-published with Foreign Policy.

Accra is a city of choking red dust where almost no rain falls for three months at a time and clothes hung out on a line dry in 15 minutes. So the new five-star Mövenpick hotel affords a haven of sorts in Ghana's crowded capital, with manicured lawns, amply watered vegetation, and uniformed waiters gliding poolside on roller skates to offer icy drinks to guests. A high concrete wall rings the grounds, keeping out the city's overflowing poor who hawk goods in the street by day and the homeless who lie on the sidewalks by night.

The Mövenpick, which opened in 2011, fits the model of a modern international luxury hotel, with 260 rooms, seven floors, and 13,500 square feet of retail space displaying $2,000 Italian handbags and other wares. But it is exceptional in at least one respect: It was financed by a combination of two very different entities: a multibillion-dollar investment company largely controlled by a Saudi prince, and the poverty-fighting World Bank.

The investment company, Kingdom Holding Company, has a market value of $12 billion, and Forbes ranks its principal owner, Prince Alwaleed bin Talal, as the world's 29th-richest person, estimating his net worth at $18 billion. The World Bank, meanwhile, contributed its part through its International Finance Corporation (IFC), set up back in 1956to muster cheap loans and other financial support for private businesses that contribute to its planet-improving mandate. "At the World Bank, we have made the world's most pressing development issue—to reduce global poverty—our mission," the bank proclaims.

Why, then, did the IFC give a Saudi prince's company an attractively priced $26 million loan to help build the Mövenpick, a hotel the prince was fully capable of financing himself? The answer is that the IFC's portfolio of billions of dollars in loans and investments is not in fact primarily targeted at helping the impoverished. At least as important is the goal of making a profit for the World Bank.

I reached this conclusion after traveling to Ghana—in many ways typical of the more than 100 countries where the IFC works—to see firsthand the kinds of problems the World Bank's lenders are supposed to tackle and whether their efforts are really working on the ground. I pored through thousands of pages of the bank's publicly available reports and financial statements and talked to dozens of experts familiar with its performance in Ghana and many other countries.

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Swiss bank UBS said Wednesday it will pay a $1.5 billion fraud fine for orchestrating the manipulation of benchmark interest rates in the U.S., Europe, and Asia. Last week, British bank HSBC agreed to pay $1.92 billion -- the largest bank fine ever -- to settle a U.S. investigation into the bank’s alleged money laundering with drug cartels. But still, UBS’s stiff penalty is more than three times the $450 million fine levied on British bank Barclays in June, which had also admitted to rigging the LIBOR rate, which is used to price worldwide loans. It hasn’t been a good couple of years for UBS, which also lost $2.3 billion in a rogue trading scandal earlier this year.

Reuters:

Dozens of UBS staff rigged the Libor rate, which is used to price trillions of dollars worth of loans, in collusion with brokers and traders at other banks, according to an investigation by authorities in multiple countries.

The controversy is expected to ensnare other big lenders and spark criminal and civil lawsuits against individuals involved. The penalty UBS agreed with U.S., UK and Swiss authorities far exceeds the $450 million levied on Britain's Barclays in June, also for rigging Libor, and the second largest ever imposed on a bank.

"This is an endemic banking industry problem and shows how far the industry has fallen, failing itself and its customers," said Neil Dwane, chief investment officer for Allianz Global Investors.

"For the future it shows that without strong regulation and strong and new management throughout most of the biggest banks, there can be no reasonable expectation that they will improve their behavior substantially - at least UBS now has strong new management."

(Emphasis mine.)

Unfortunately, it still seems that strong regulation of the banks ranks right up there with jail time for criminal bankers.

DemocracyNow! discusses a major new exposé on the cover of The Nation magazine called "Mitt Romney’s Bailout Bonanza: How He Made Millions from the Rescue of Detroit." Investigative reporter Greg Palast reveals how Republican presidential nominee Mitt Romney made some $15 million on the auto bailout and that three of Romney’s top donors made more than $4 billion for their hedge funds from the bailout. Palast’s report is part of a film-in-progress called "Romney’s Bailout Bonanza." Palast is the author of several books, including recently released New York Times bestseller, "Billionaires & Ballot Bandits: How to Steal an Election in 9 Easy Steps."

The full transcript is available here.

CBS Atlanta 46

Members of Occupy Our Homes Atlanta and demonstrators from across the region marched to Fannie Mae's regional office to demand that they help homeowners having difficulties making their monthly payments.

The Federal National Mortgage Association, commonly known as Fannie Mae, the nation's largest mortgage holder, and The Federal Home Loan Mortgage Corporation, Freddie Mac, the second-largest mortgage buyer, received nearly $200 billion in federal bailout money during the worst economic crisis since The Great Depression.

Protestors want the lending giants to loosen their purse strings and reduce the principal payments on mortgages for homeowners whose houses are underwater, allow people to rent their homes after foreclosure or sell foreclosed properties back to the occupants or non-profit developers.

Robert Anderson, a protestor whose home is underwater, meaning he owes more on his mortgage than what this home is worth, said he has tried to modify with Freddie Mac but with no luck.

"I want the investors to step down and talk to us," Anderson. "I've been going through anxiety."

Security officers stood between protestors and the Fannie Mae offices as demonstrators demanded officials come outside and take a letter requesting a meeting.

"They have the power to turn the key to economic recovery," said Tim Franzen, one of the protest organizers, who added that it is time for Fannie and Freddie to start giving back. "We're here to encourage them to turn the key, to stop holding our neighborhoods hostage."

Protesters were not permitted to speak to Fannie Mae officials, and even CBS asked a spokesman if a meeting would be possible. The spokesman said that he couldn't say for certain if there would be a meeting with the group, but added "we absolutely want to work with homeowners who are having difficulty making payments, who want to work with us to prevent foreclosure."

The spokesman also encouraged Fannie Mae mortgage holders who are experiencing difficulties to contact them for assistance.

If you have a mortgage with Fannie Mae and need help, call Fannie Mae at (866) 442-8573 or go to knowyouroptions.com.

JPMorgan Chase CEO Jamie Dimon has been one of the most outspoken critics of the Volcker Rule, a section of the Dodd-Frank Act that aims to keep the banks in which you deposit your money from gambling it on their own sometimes-risky investments. Now Dimon has announced that risky trades have cost his company $2 billion in losses. In this April 22, 2012 Moyers Moment from Moyers & Company, Paul Volcker himself responds to Jamie Dimon’s complaints about the rule and its effects.