Senator Bernie Sanders:

When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country - and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.

But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.

In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.

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I know 11,000 people who aren’t too excited about these “transformations.” Citigroup announced that it will absorb a tax charge of $1 billion for the quarter and eliminate about 11,000 jobs. The third-biggest U.S. banks CEO said that the move was a “logical” step in the bank’s “transformation.” The plan of restructuring also includes branch closings:

The latest eliminations amount to about 4.2 percent of Citigroup’s workforce of 262,000 people at the end of September. The largest share of reductions, about 6,200 jobs, will come from the global consumer-banking business, Citigroup said. The lender expects to sell or scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay.

An additional 2,600 jobs will be cut in the operations and technology group and global functions. Citi Holdings, the unit disposing of unwanted assets, will eliminate about 350 positions.

The plan will save about $900 million in 2013, and projected annual savings will exceed $1.1 billion beginning in 2014, the company said. Annual revenue will drop about $300 million, according to the forecast. The $1 billion charge this quarter is before taxes. An additional $100 million of related charges will come in the first half of next year.

Those of you bankers who didn't have your jobs slashed, not to worry about your annual bonus. While it will be cut by 10%, you'll still receive it. What's that, you're crying over the 10%? Oh, good grief!

Moody’s Investors Service has lowered the ratings of some of the world’s largest banks, including Bank of America, JPMorgan Chase, Citigroup and Goldman Sachs.

The ratings agency said late Thursday that the banks were downgraded because their long-term prospects for profitability and growth are shrinking.

[Via]

Watch A Financial Crisis Will Happen Again on PBS. See more from FRONTLINE.

Frontline: The nation’s largest banks are “a perversion of capitalism” and “a clear and present danger to the U.S. economy.” The Dodd-Frank financial reform legislation passed in the wake of the crisis “may actually perpetuate an already dangerous trend of increasing banking industry concentration.”

These arguments come not from an Occupy Wall Street activist, not from a Tea Party member, but from a scathing report released last week by one of the nation’s top banking regulators, the Federal Reserve Board of Dallas. In a column for ProPublica and The New York Times, reporter Jesse Eisenger described the report as “a radical indictment of the nation’s financial system.”

FRONTLINE sat down on Saturday with the Dallas Fed CEO and president, former banker Richard W. Fisher, to talk about the report and its core argument about “too big to fail” institutions. According to their calculation, the five biggest commercial banks — JPMorgan, Bank of America, Citigroup, Wells Fargo and U.S. Bancorp — hold 52 percent of all U.S. deposits, which means the “too big to fail” problem is with us now more than ever.

Dodd-Frank proposes to solve this problem by giving the government “resolution authority” to dismantle a big bank, but Fisher suggests a better solution is to not allow banks to get so big.

Watch Dodd-Frank Legislation is "Impracticable" on PBS. See more from FRONTLINE.

Fisher argues that now is an ideal time to solve this problem. Regulators feared that aggressive steps to end the “too big to fail” problem during the crisis would further destabilize an already delicate system. But now that the financial system is healthier, and the normal lending and borrowing that keeps the system liquid has been restored, the risks have lessened.

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The federal government is nearing a a settlement with mortgage servicers in a case in which they are accused of initiating foreclosures based on inaccurate and sometimes fraudulent documents, or robo-signing.

The settlement could help a million homeowners by reducing what they owe on their mortgages, said Housing Secretary Shaun Donovan. The settlement would also provide cash payments to a smaller number of families directly harmed by the servicers’ conduct.

The announcement of a settlement could come within weeks, Donovan told a meeting of the nation’s mayors on Wednesday.

Any settlement would have to be approved by state attorneys general and the major mortgage services. Geoff Greenwood, spokesman for Iowa Attorney General Tom Miller, said that his office believes they are “really close to reaching a potential settlement.”

A deal worth between $19 billion and $25 billion is expected, and would likely cover the five biggest mortgage services: Bank of America , JPMorgan , Citigroup , Wells Fargo , and Ally Financial .

The settlement may help more borrowers, including those who owe more on their mortgages than their homes are worth, refinance into lower-interest-rate loans, while setting more stringent mortgage servicing standards for the entire industry.

[WSJ]

Citigroup's Executive Vice President Candi Wolff has developed an interest in the future of our democracy, now that Richard Cordray has been appointed director of the Consumer Financial Protection Bureau. Here Wolff asks some serious questions about the controversial move by Obama, outlined in this news release:

What precedent has been set? Each Administration has to weigh questions of political expedience against matters of Constitutional principle. It goes without saying that every decision made within one Administration can impact not just the next, but future Administrations as well. Has this action opened the door for future presidents to make highly controversial appointments without regard to Congressional advice and consent? Will the American people view this action with acceptance, ambivalence, or take it to be a Constitutional challenge?

Is bipartisanship dead in the water? If things weren't tense before, the political stakes have been upped. Republicans in Congress may now see even less reason to seek compromise between the GOP and President Obama. Add to that a hostile election-year environment and even the most non controversial piece of legislation may not make it in 2012.

Woe, the Constitutional precedents, the future, and *gasp* how will the Congressional Democrats and Republicans get any work done together again? Oh, wait...

Certainly thoughts of the Constitution and precedents danced in the heads of Citigroup's top execs as those billions of your tax dollars, courtesy of the federal government came pouring in. What patriots.

U.S. District Court Judge Jed Rakoff is stepping up his fight with the Securities and Exchange Commission over its regulation of Wall Street. After accusing the regulator of negotiating a weak settlement with Citigroup, Rakoff said the SEC withheld important information that prevented him from doing his job.

The SEC isn’t taking Rakoff's attacks sitting down:

Meanwhile, the SEC took the dramatic step of asking the U.S. Court of Appeals for the 2nd Circuit to overrule a recent Rakoff decision by issuing a special writ generally reserved for cases in which a judge has grossly overstepped his bounds. Called a writ of mandamus, such a direct and personal challenge to a judge is far from a routine gambit.

The judge and the SEC are locked in an extraordinary battle over how the government should police financial fraud, and just when it seemed that the conflict could not get more contentious, Thursday’s development added a dimension.

Rakoff, who presides over major Wall Street cases from his bench in Manhattan, has been pushing the SEC to stop negotiating settlements in which firms accused of securities fraud neither admit nor deny wrongdoing. In a recent case involving a Citigroup mortgage deal in which investors allegedly lost more than $700 million, he rejected a settlement under which Citigroup would pay $285 million, saying it was “neither fair, nor reasonable, nor adequate, nor in the public interest.”

Companies can look upon such settlements as “a cost of doing business,” he wrote.

A spokesman for the SEC issued a statement saying that the agency “will respond as appropriate in the proceedings before the Court of Appeals.”

[Via The Washington Post]