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Malaysia charges 17 current & ex-Goldman Sachs bosses with looting of country’s wealth fund

Superyacht linked to Malaysia’s state fund looting scandal © AFP / Sonny Tumbelaka
RT | August 9, 2019

Malaysia has extended pressure on Wall Street titan Goldman Sachs, filing criminal charges against 17 current and former directors of the bank’s subsidiaries over alleged involvement in the multi-billion-dollar 1MDB scandal.

Goldman Sachs has been under scrutiny for its role in helping to arrange $6.5 billion through bond offerings for Malaysian state fund, the 1Malaysia Development Berhad (1MDB). The fund is at the center of one of the biggest financial scandals of all time, and is now being investigated for money laundering.

In the filings issued on Friday, Malaysian Attorney General Tommy Thomas said the executives mentioned in the document should be held responsible for the US bank’s role in the scheme. The prosecution wants to seek custodial sentences and criminal fines for the accused, “given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds, the lengthy period over which the offenses were planned and executed.”

Each charge carries a maximum jail term of 10 years and a penalty of at least 1 million ringgit ($239,000), according to Reuters.

The list includes 17 people who were in charge of three Goldman Sachs subsidiaries between May 2012 and March 2013, during which the alleged fraud took place, according to the attorney general. Richard Gnodde, who leads the bank’s international business in London, as well as Canadian business executive Michael Evans, a former Goldman Sachs Asia chief who is currently the president of Chinese e-commerce giant Alibaba, were among those charged on Friday. British banker Michael Sherwood, former vice chairman of the Wall Street firm, is also on the list.

The latest case adds to last year’s accusations, when Malaysian authorities filed charges against three Goldman Sachs units and two ex-employees. Kuala Lumpur is seeking $7.5 billion in compensation from the bank.

The US investment bank has repeatedly denied any wrongdoing, claiming it fell victim to the previous corrupt Malaysian government. Commenting on the latest accusations, Goldman Sachs said the charges were misdirected and promised to “vigorously” contest them.

August 9, 2019 Posted by | Corruption, Deception | , , | 4 Comments

Goldman Sachs faces criminal charges in Malaysia for helping billions vanish from state fund

RT | December 18, 2018

Malaysia filed criminal charges against Goldman Sachs and two ex-bankers over the multi-billion dollar looting of state fund, 1MDB. The US bank denies the accusation, claiming it was deceived by the previous Malaysian government.

The subsidiaries of the Wall Street banking giant and its former key employees, ex-chairman of Goldman’s South East Asia, Tim Leissner, and ex-managing director, Roger Ng, are accused of giving false statements when helping to arrange bonds for 1MDB, Malaysia’s Attorney General Tommy Thomas announced on Monday.

Malaysia says the accused wanted to misappropriate $2.7 billion from $6.5 billion in bonds, issued by 1MDB and underwritten by Goldman Sachs, in three separate offerings between 2012 and 2013.

Malaysia also filed charges against former employee of 1MDB Jasmine Loo Ai Swan and local financier Low Taek Jho, also known as Jho Low, who maintains his innocence. The prosecution believes the duo conspired with Leissner and Ng to bribe officials in order to procure the selection, involvement and participation of Goldman Sachs in these bond issuances.

Now Kuala Lumpur is seeking to take back the misappropriated $2.7 billion from Goldman Sachs as well as $600 million in fees received by the bank. The prosecution is demanding fines and up to 10 years behind bars for each of the accused. The fines may amount to at least 1 million ringgit ($240,000), according to the charge sheets, seen by Reuters.

Billions of dollars from the Malaysian fund were reportedly used to buy everything from Beverly hills mansions, yachts and a private jet to artworks among other things in a fraud that allegedly involved former Malaysian Prime Minister Najib Razak.

As Malaysia brought the charges, the bank hit back, claiming that it was the victim of deceptive Malaysian officials. The long-running scandal has already rocked the bank’s shares this year, which dropped more than 30 percent.

“Certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of proceeds from these transactions,” Goldman said in a statement cited by media. It added that the charges have no effect on its “ability to conduct our current business globally.”

Analysts warn that the scandal is just the tip of the iceberg of the bank’s “criminal” deeds. Despite being investigated in several countries, including in the US, no matter the crimes, Goldman chiefs will never go to jail as they are too close to both sides of the US political aisle, Jack Rasmus, professor of political economy at St. Mary’s College told RT. He also warned that the bank is driving the world to the next financial crisis.

“They just haven’t been caught in the other places,” Rasmus said in an interview to RT. “We’re on the verge of another financial crisis that will make the last one pale in comparison and Goldman Sachs and businesses like them are at the center of the cause of this.”

December 18, 2018 Posted by | Corruption, Deception, Economics | , | 1 Comment

Ex-Goldman Banker To Plead Guilty To 1MDB Criminal Charges, Forfeit $44 Million

By Tyler Durden | Zero Hedge | November 1, 2018

Last we checked in with former Goldman Sachs SE Asia chairman Tim Leissner, the banker was nearing the nadir of a dramatic fall from grace that resulted in him being terminated from the bank, as it sought to distance itself from a series of shady bond underwritings organized by Leissner.

Goldman, as first reported in 2016, was deeply involved with the Malaysian government’s efforts to seed the 1MDB development fund, which, as we now know thanks to the DOJ, was used by former Malaysian President Najib Razak as his own personal slush fund, with most of the money going to purchase luxury yachts, paints – and some of the money was even used to help finance the Hollywood blockbuster “The Wolf of Wall Street”. In total, Razak and his cronies are believed to have stolen nearly $700 million.

Leissner

Tim Leissner and Kimora Lee Simmons Leissner

Back in July, it was believed that Leissner was planning to cooperate with federal authorities, raising the possibility that he could help expose some of the endemically corrupt practices happening behind the scenes at the Vampire Squid. Since WSJ exposed the fraud back in 2015 after 1MDB missed bond payments, the scandal has riveted the financial press and drawn intense scrutiny from the DOJ, with AG Jeff Sessions calling it “kleptocracy at its worst.”

And now it appears Leissner – who is married to Kimora Lee-Simmons – has done just that. As the Wall Street Journal reported Thursday morning, the former banker is expected to plead guilty to conspiracy to launder money and violate the FCPA. As part of the settlement, he has agreed to a $44 million fine for his role in the scandal – a guilty plea that, we imagine, will lead to his eventual cooperation.

But while Leissner’s situation is hardly ideal, his former deputy has it even worse. Roger Ng, the former deputy director of Goldman’s SE Asia practice, is expected to be indicted by the DOJ, alongside Jho Low, the Malaysian financier whose exploits have been widely chronicled in the Western media. Low allegedly masterminded the 1MDB fraud.

Last week, Razak and his former Treasury secretary were charged with criminal breach of trust, months after Razak was imprisoned shortly after losing his reelection race to a rival who had promised to prosecute him.

As the DOJ prepares its announcement, attention will now turn to what, exactly, Leissner told investigators and whether his former employer could be held liable.

November 1, 2018 Posted by | Corruption, Deception | , , , | 3 Comments

Trump’s Adviser and Son-in-Law Fails to Report Dealings With Soros, Goldman Sachs

Sputnik – May 2, 2017

US President Donald Trump’s senior adviser and son-in-law Jared Kushner did not disclose existing business connections with the investment firm Goldman Sachs Group Inc. and billionaires George Soros and Peter Thiel, media reported on Tuesday.

Kushner holds shares of a New York-based real-estate financial firm Cadre that works on a number of project with Goldman Sachs and prominent investors, including Soros, The Wall Street Journal reported citing securities filings.

Trump’s son-in-law also failed to report nearly $1 billion in loans from more than 20 lenders to his corporations and properties, according to the filings. Kushner’s lawyer Jamie Gorelick said his client disclosed his ownership of BFPS Ventures LLC, which is a housing company for Cadre.

Since Trump took office in January, US media and lawmakers have detailed a number of his and his family’s business dealings and possible conflicts of interest. In April, Senator Michael Bennet suggested foreign individuals, entities and governments may patronize Trump businesses to influence the White House policies.

Kushner is a former real estate developer who began advising Trump and meeting foreign leaders after the November election. He was named to an official White House position on January 9, the same day he announced he would step down as CEO of the Kushner Companies.

May 2, 2017 Posted by | Corruption, Deception | , , , | 2 Comments

Clinton Scandal: Taxpayers’ Money for the Campaign Election

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By Federico PIERACCINI | Strategic Culture Foundation | 10.10.2016

The American election campaign never ceases to amaze in terms of twists.

The Clinton Foundation has again been the victim of a new hack carried out by Guccifer 2.0, leading to the revelation of some interesting details. Among them is an Excel file with a list of donors.

So far (let’s face it) there is nothing new. But the problem for Clinton, the banks and Barney Frank is the refrain «Tarp Funds»; basically the 2008 financial crisis. The Bush administration, with a $700 billion maxi-loan (made up by citizens’ taxes), granted instant cash and saved the big banks from bankruptcy.

The infamous measure will be called TARP:

The Troubled Asset Relief Program (TARP) is a United States government program to purchase toxic assets from financial institutions, and actions to strengthen the financial sector. It was signed by US President George W. Bush on October 3, 2008.

A small detail to keep in mind: the loan was funded with taxes paid by US citizens.

However, the banks were saved, speculation continued, and two years later, a decree that negatively changed the American financial system was passed, the infamous Dodd-Frank.

The words of the Wall Street Journal thoroughly explain how the financial giants and the big banking conglomerates have profited from this other law-saving bank:

«Dodd-Frank was allegedly written thinking of Wall Street, but has hit Main Street. The financial community institutions, which make up most of loans to small businesses, are overwhelmed by the complexity of the new law. Government figures indicate that the country is losing an average of a community bank or credit union each day.

Before Dodd-Frank, 75% of banks were offering a free account. Two years later, only 39% of bank still offer that free-of-charge savings account.

Due to the Dodd-Frank, the financial markets will have less ability to cope with shocks and are more likely to panic [and panic = speculation = profits for banks and financial institutions]. Many economists believe this could be the source of the next financial crisis».

Two further details if you have not already guessed the extent of these revelations. The Frank in question is Barney Frank, the guy mentioned several times in the the donations. Guess who Frank received the money from. Banks, of course! The same banks for whom Frank significantly increased their revenue thanks to the law with his name. What better way for JP Morgan, Goldman, Bank of America and company to show appreciation for their future gains than by raising tens of thousands of dollars for Frank and his party?

The revelations are likely to be a disaster for Clinton and the Democrats. The large banking corporations have funded them using money from the TARP fund. They have given the Democratic Party money collected from taxes and granted for a completely different purpose (namely, to deal with the failure of the financial giants).

These hidden financial mechanisms reveal the backstory behind the US electoral system. An elite made up of financiers, bankers and lobbies are the real stakeholders and decisive contributors in presidential elections. They fund all central and vital aspects of democratic and republican campaigns, becoming an indispensable support for any candidate. In return, politicians allow direct procurement and assign huge projects to large industries, or turn a blind eye in case of financial fraud. The consequences are clearly visible in America’s deterioration, increasingly grappling with corruption cases, postponed projects, a lagging behind, and a general feeling of backwardness in vital infrastructure.

In the military field, for example, large lobby groups of weapons manufacturers have created a procurement system that threatens to squander forever the tactical and strategic advantage obtained by the United States over the last 70 years. Programs such as the F-35 were delayed and costs surged stratospherically due to likely corruption and a lack of competition in the procurement process. Similarly, a perpetual race to produce more and more weapons systems that are in the end unnecessary and redundant, instead of exploring new pathways, has enriched US policymakers and made the military-industrial complex much wealthier, but in the process has served to reduce the gap between the US and her peer competitors.

This whole process is a vicious cycle that can easily be summarized in the following manner. Politicians often derive their strategies and tactics from the reasoning and the conversations that take place in US think-tanks, which are funded and supported by companies involved in such industries as pharmaceuticals, insurance, the military, and the cyber and space spheres. In the case of war involving weapons systems, for example, it is easy to understand why policymakers are being influenced by their contributors, who often suggest courses of action and strategies based on the need to spend huge amounts of money to acquire their new products, thereby enriching said lobbies and manufacturers in the process. This triangular system – lobby-thinktank-policy – is one of the founding pillars of current American war doctrine that is failing miserably.

In the same manner, the banking and financial system of Wall Street also contributes and enjoys the same privileges. The banks were bound to return the favor, in the form of millions of dollars of donations, to the political class that was responsible for saving them from the 2008 financial crisis stemming from wild speculation and accounting deceptions. Within a few months, billions of dollars were transferred for free into the accounts of the banking giants thanks to the TARP decree, effectively preventing a major bankruptcy. The consequences were so devastating that today we are experiencing a systemic and endemic crisis of the financial sector that is likely to completely overwhelm Western economies the next time a too-big-to-fail scenario arises.

Politicians continue to enact laws in favor of the banking giants, pocketing large sums of money for their election campaigns in the process. The attention is constantly drawn towards effectively increasing the gap between the top 0.1% and the remaining 99.9%, and the politicians are the key factor in this strategy. Laws adopted in recent years have created an environment where banks have become untouchable and beyond reach. It is a situation that is exactly the opposite of what should have happened after the 2008 crisis, with increased oversight and transparency in financial transactions.

The extent of the degeneration of this system has been revealed in recent days with the information released by Guccifer 2.0. Even though nothing should any longer be surprising given what has transpired over the last few years, one is still taken aback by revelations that the banking giants are financing the Clinton campaign directly with American taxpayers’ money. If we add to this the funds that were freely handed over by the government to save those same banking institutions from bankruptcy in 2008, we take another step further into the theater of the absurd.

October 10, 2016 Posted by | Corruption, Deception, Economics, Timeless or most popular | , , , , | 3 Comments

‘I’m kind of far removed’: Clinton admits estrangement from middle class in Wall Street paid speech

RT | October 8, 2016

The struggles of the middle class are something Hillary Clinton once admitted in a paid speech she is “far removed” from, thanks to the “fortunes” she and her husband “enjoy,” a WikiLeaks-posted email shows. She also admitted she “did all she could” for Wall Street to prosper.

These are just two excerpts from the numerous paid speeches Clinton gave to Wall Street giants behind closed doors between 2013 and 2015.

“I’m kind of far removed because the life I’ve lived and the economic, you know, fortunes that my husband and I now enjoy,” Clinton told members of Goldman-Black Rock in February 2014. “I am not taking a position on any policy, but I do think there is a growing sense of anxiety and even anger in the country over the feeling that the game is rigged.”

Her remarks would never have seen the light of day, but an email found among over 2,000 “Podesta emails” has now shone a spotlight on what Clinton was telling Goldman Sachs, Morgan Stanley, Deutsche Bank and others in between her job as Secretary of State and the current presidential campaign.

“Team, attached are the flags from HRC’s paid speeches we have from HWA. I put some highlights below. There is a lot of policy positions that we should give an extra scrub with policy,” Tony Carrk, the research director of the Clinton campaign, wrote in the email to John Podesta, the campaign chairman, and others on January 25, 2016.

“HWA” stands for Harry Walker Agency, which calls itself “an exclusive speakers bureau” that has been representing Hillary Clinton’s husband Bill “for over a decade.”

The agency also arranged Hillary Clinton’s speeches, which earned $675,000 from three events at Goldman Sachs and reportedly $3 million for speaking at banks and financial firms.

Carrk “flagged” some 25 excerpts that he titled, presumably highlighting the parts the campaign had to take care of: “CLINTON ADMITS SHE IS OUT OF TOUCH,” “CLINTON SAYS YOU NEED TO HAVE A PRIVATE AND PUBLIC POSITION ON POLICY,” and “CLINTON ADMITS NEEDING WALL STREET FUNDING” to name a few.

Clinton’s links to Wall Street is something that she and her team have been trying to downplay since the start of her presidential campaign in April 2015.

However, excerpts from her speeches, most of which she gave in front of Goldman Sachs people, show the scale of her “cozy relationships” with Wall Street.

“When I was a senator from New York, I represented and worked with so many talented principled people who made their living in finance,” Hillary Clinton said in a speech at Robbins Geller Rudman & Dowd in San Diego in September 2014. “But even though I represented them and did all I could to make sure they continued to prosper, I called for closing the carried interest loophole and addressing skyrocketing CEO pay.”

Prior to that, in 2013, Clinton was telling Goldman Sachs that running for office has its downsides, such as for example “bias against people who have led successful and/or complicated lives.”

“You know, the divestment of assets, the stripping of all kinds of positions, the sale of stocks. It just becomes very onerous and unnecessary,” she said, adding that is “part of the problem with the political situation.”

In 2014 speeches, Hillary Clinton expressed her pro-Keystone pipeline views, the opinion she appeared to have changed just recently.

Clinton has been known to have to changed her mind on big issues in recent years. However, in 2013 she told a housing trade group that she has “a public and a private position.”

“If everybody’s watching, you know, all of the back room discussions and the deals, you know, then people get a little nervous, to say the least,” she said. “So, you need both a public and a private position.”

In her other speeches, which also surfaced from the recent WikiLeaks dump, Clinton discussed countries such as Saudi Arabia, which she said “exported more extreme ideology than any other place on earth” and Libya, where she said “they can’t provide security.”

She also spoke about the UK and the EU, predicting “some pretty unpredictable leaders and political parties coming to the forefront in a lot of countries.”

Clinton has long been under intense pressure to release transcripts of her paid speeches to corporations.

poll released in June showed that nearly 60 percent of surveyed voters wanted transcripts of her speeches released.

READ MORE: 

Sanders endorses Clinton, reversing everything he’s said about ‘Wall Street candidate’

October 8, 2016 Posted by | Corruption, Deception, Timeless or most popular | , , | Leave a comment

Clinton ignores question of how much money Goldman Sachs CEO gave her son-in-law’s hedge fund

RT | May 28, 2016

Hillary Clinton refused to disclose how much money Goldman Sachs’ chief executive invested in her son-in-law’s fund, ignoring questions from The Intercept during a photo-op fundraising event in San Francisco.

The publication’s reporter, Lee Fang, visited Clinton’s campaign rally in San Francisco on Thursday, as she kept busy touring California to raise last minute support ahead of the crucial June 7 primary.

As the former secretary of state was doing photo ops, Fang jumped in with his question.

“Do you know how much money [Goldman Sachs chief executive] Lloyd Blankfein invested in your son-in-law’s hedge fund?”

In fact, he peppered her with the question, but Clinton chose not to pay any attention at all, staying focused on picture-taking with her supporters.

Moments later, Clinton’s campaign traveling press secretary Nick Merrill stepped in, but he was unable, or unwilling, to help when asked the same question.

“I don’t know, has it been reported?” Merrill responded, before promising to “email it right now” once Fang handed off his contact information.

Merrill has yet to follow up, according to Fang.

Eaglevale Partners LP, founded by Marc Mezvinsky, husband of Hillary’s daughter Chelsea Clinton, and his two partners, has been supported with investments from several wealthy names of Wall Street, including Goldman Sachs chief executive Blankfein.

The CEO also allowed the use of his name in the marketing of Mezvinsky’s flagship fund, which is currently managing about $330 million.

However, despite having Blankfein by his side, Mezvinsky and his fund suffered losses linked to an ill-timed bet on Greece’s economic recovery. It was reportedly the Clinton’s son-in-law, who recommended his investors to put their money behind Greek government bonds, betting that the Greek economy would improve.

In February 2015, the Wall Street Journal broke the news that Eaglevale admitted in a letter to its investors that it was “incorrect” on Greece. According to the newspaper, the dedicated Greek fund also included an investment from Marc Lasry, a longtime Clinton donor, who formerly employed Chelsea Clinton at his $13.3 billion New York hedge-fund firm, Avenue Capital Group.

After losing 90 percent of its value, Mezvinsky was forced to close the Greece-focused fund called Eaglevale Hellenic Opportunity earlier this year. According to The New York Times, the fund raised $25 million from investors in order to buy Greek bank stocks and government debt.

Goldman Sachs is known to have cozy financial relations with the Clintons, including the company’s paying $675,000 in personal speaking fees to Hillary Clinton as well as $1,550,000 to Bill Clinton for the same service. Donations between $250,000 and $500,000 were also made to the Clinton Foundation, The Intercept reported.

The publication has been trying to find out whether Hillary Clinton is going to release the transcripts of her paid speeches to Goldman Sachs. Fang is reported to have been the first to pose that question in January, but four months later, the likely Democratic nominee for president only laughed and turned away.

Throughout her campaign, Clinton has been repeatedly called upon to disclose her relationships with Wall Street banks, but she has so far avoided giving direct answers.

READ MORE:

Hillary Clinton’s wealthy donors revealed in Panama Papers

May 28, 2016 Posted by | Corruption, Deception | , , , , | 1 Comment

Goldman Sachs: Just 5 Billion dollar Fine Compared to 13 Billion Dollar Taxpayer Bailout

By Craig Murray | April 11, 2016

Goldman Sachs aggressively sold sub-prime packages to investors as a first class product, while at the same time laying equally aggressive bets that those packages would fail. That is not my analysis; it is one of the things they have admitted as part of the deal in the United States that means that, in return for a 5 billion dollar fine, yet again no corrupt and fraudulent bankers are going to jail.

The ultimate irony is that the 5 billion dollar fine is dwarfed by the 13 billion dollar taxpayer bailout they received after the banks’ immoral antics caused massive economic collapse. So the net result of their appalling behaviour has been that they collect not only the profit from those bets the system would collapse, but an eight billion dollar net payment from ordinary taxpayers thrown in. Which eight billion dollars has been just a contribution to the bonuses and partner remuneration which have continued to bulge in their over-stuffed pockets since 2008, uninterrupted by the crash, thanks to the generosity of poor taxpayers struggling to balance their personal budgets.

This is a description of the position of Goldman Sachs in the United States, but it sums up the entire banking crisis worldwide and its result in the punishment of entirely the wrong people, and the continued rewards enjoyed by the crooks.

Due to new media (of which this blog is one atom in a mighty sea) public awareness of what is happening is growing, as is the desire for popular resistance to the super-rich. But they are not surrendering control any time soon. Which is why the call for Clinton to release the transcripts of the extravagantly paid talks she gave to Goldman Sachs is more than a question of political openness. It goes to the heart of the rot in the system.

April 11, 2016 Posted by | Corruption, Deception | , | 1 Comment

Goldman Sachs to Invest in Mexican Energy Sector

teleSUR – January 19, 2016

Goldman Sachs is set to invest in Mexico’s newly opened energy sector, Reuters reported Tuesday.

The company’s private equity arm has teamed up with Ainda, a Mexican consulting firm, to invest in energy and infrastructure, signing a deal to “identify, pursue, evaluate and make investments jointly,” according to a filing seen by Reuters.

Ainda would invest up to US$1.15 billion in projects with Goldman’s Merchant Banking Division, with the latter putting up at least 50 percent of the total equity amount in joint projects, a source told Reuters.

The Mexican government approved a comprehensive, neoliberal reform of its energy policies in August, 2014.

The energy reform allows private companies to participate in the oil and gas industries for the first time since 1938, when President Alvaro Obregon nationalized the oil industry.

The decline in the price of oil has also negatively affected the income of the state-oil company, Pemex, reducing its capability of investing in production, leading government to pursue private investment even more vigorously.

As such, in September Mexico’s finance ministry unveiled a new vehicle in September similar to a real estate investment trust called a Fibra E.

Reuters reported in November that Ainda plans to raise US$1.15 billion through a public offering of certificates for an infrastructure energy investment vehicle, and that vehicle can subsequently be converted into a Fibra E.

The filing specifying the joint investment between Goldman and Ainda is expected to be submitted to the Mexican stock exchange shortly.

January 19, 2016 Posted by | Economics | , , | Leave a comment

Hillary Clinton’s Strong Proclivity toward the Use of Force

By Edward S. Herman | Dissident Voice | November 5, 2015

Diana Johnstone has written an extremely valuable book on Hillary Clinton, which not only examines in detail Mrs. Clinton’s political history and record, but places them in their evolving political context, which enlightens readers on the domestic and international political environment within which she works and into which she adapts and serves. Mrs. Clinton played an important role in the termination of Honduran democracy in 2009 and in the war on Libya in 2011, during her term as Secretary of State, and she had a lesser role but staked out definite positions in the 1999 war on Yugoslavia and the escalating hostilities against Russia in more recent years. Johnstone has excellent analyses of these cases: in her introductory chapter (a section on “A Taste of Hillary in Action: Hypocrisy on Honduras”) and in separate chapters on Yugoslavia (“Yugoslavia: the Clinton War Cycle”), Libya (“A War of Her Own”) and Russia (“Not Understanding Russia”).

410GsPu3iRL._SX322_BO1,204,203,200_As Johnstone indicates Mrs.Clinton quickly and clearly displayed her regressive, intellectually lightweight and hypocritical policy agenda in connection with the June 28, 2009, military coup in Honduras. She attended an OAS meeting in Honduras just a few weeks earlier, where she saw as her first order task how to prevent the lifting of the 47-year-old ban excluding Cuba, which a large majority of the OAS now considered “an outdated artifact of the Cold War”. Johnstone notes that Hillary and staff solved the problem by pouring the old wine into a new bottle. “No more Cold War, no more ‘communist threat’. ‘Given what President Obama had said about moving past the stale debates of the Cold War,’ Hillary wrote in her memoir Hard Choices, ‘it would be hypocritical of us to continue insisting that Cuba be kept out of the OAS for the reasons it was first suspended in 1962, ostensibly its adherence to ‘Marxism-Leninism’ and alignment ‘with the communist bloc.’ It would be more credible and accurate to focus on Cuba’s present-day human rights violations, which were incompatible with the OAS charter.’”

As Johnstone points out, Hillary sees nothing hypocritical in inventing a transparent device to keep Cuba out while pretending to let Cuba in: “What if we agreed to lift the suspension, but with the condition that Cuba be reseated as a member only if it made enough democratic reforms to bring it in line with the charter? And, to expose the Castro brothers’ contempt for the OAS itself, why not require Cuba to formally request readmittance?” Indeed, this proved just hypocritical enough to persuade the fence-hangers, Brazil and Chile, to go along. Thus Hillary began her diplomatic career in Latin America by rebranding hostility to any independent socio-economic policy from “anti-communism” to defense of “human rights”, by transparent hypocrisy enforced by arm-twisting, and by enforcing the Monroe Doctrine in both domestic and international affairs.

During and after the Honduran coup that followed, the Clinton State Department refused to call it a coup, and engaged in steady apologetics and protection of the coup leaders and their terroristic and corrupt new order. As Johnstone concludes, following a useful account of the negative outcome: “When a white hat appears on the horizon of a wretched place like Honduras proclaiming his intention to try to improve conditions [here the ousted president Manuel Zelaya], couldn’t the rich and powerful United States react otherwise than stigmatizing him as a potential ‘dictator’? Instead of giving an advocate of change the opportunity to try, Hillary’s State Department connived to help bundle him out of power. All is back to normal; however below normal that particular normal happens to be…. As we will see throughout this book, the foreign policy of Hillary Clinton amounts to the application of an enlarged Monroe Doctrine to the entire world.”

Mrs. Clinton has portrayed herself as an employer of “soft power,” but in reality Johnstone shows that she has had a strong proclivity toward the use of force. She hasn’t been bothered by its extensive use in post-coup Honduras, she pushed for it in Yugoslavia in 1999, she supported the invasion of Iraq, and it was central in her own war in Libya in 2011. She has been extremely hostile to Putin and seems to be anxious to fight with him in Ukraine and possibly elsewhere..She was a strong supporter of the war-mongering Madeleine Albright during Bill Clinton’s tenure, and her own appointments have included a string of militant women –Victoria Nuland, Susan Rice, and Samantha Power. Johnstone observes that: “A salient trait of the new school of women diplomats is that they are strikingly undiplomatic. Indeed, Madeleine Albright’s greatest diplomatic success [in the Yugoslavia war], was to obstruct diplomacy.” Secretary of State Clinton also appointed the notorious neocon husband of Victoria Nuland, Robert Kagan, as an adviser.

One of her soft power triumphs was the intense politician-media-human rights organizations’ campaign on the trials and tribulations of the Pussy Riot group in Russia. This group achieved notoriety by arrests following their occupation and interruption of the service in the Cathedral of Christ the Savior in Moscow, which offended worshipers on the spot with anti-Christian obscenities, not by any “political messages.” They had their escapade videotaped, with a post-occupation addition of an attack on Putin. This was made in the West into a telling proof of a free speech crackdown, and by Putin, although the police had been called in by Church officials. And this group had been carrying out similar antics for some years without arrest or trial. Amnesty International and Human Rights Watch made this into major campaigns in defense of Russian freedom, although these same organizations put up no defense at all for Chelsea Manning, Thomas Drake or Edward Snowden. A similar group Semen, specializing in female bare breast exhibition, had similar success in France. Hillary Clinton was proud to be photographed with the Pussy Riot heroines, and her former State Department associate Susan Nossel, pushed the Pussy Riot-anti-Putin campaign aggressively from her position as head of Amnesty International (a low point in AI history). Johnstone has a valuable analysis of this episode and campaign.

Johnstone places Mrs. Clinton in the context of the triumph of the military-industrial complex and the derived forward actions of the warfare state. The gradual triumph of the MIC and rising inequality have made domestic reform out of bounds for political leaders in this country. But aggressive actions abroad are actually required to demonstrate belief in the “exceptional” nation called upon to “shape” the world in accord with U.S. free market ideology, and to feed the demands of the MIC. Johnstone argues that “The United States no longer even makes war in order to win, but rather to make sure that the other side loses.” Thus the fact that Mrs. Clinton’s wars were not won in any meaningful sense has not dented her popularity where it counts. She has kept the MIC busy and dealt blows to proper targets.

The American people swallow this nonsense because the wars are kept at a distance, no U.S. homes are blown up, and “for most Americans, U.S. wars are simply a branch of the entertainment industry, something to hear about on television but rarely seen.” Popular illusions are maintained by the “political branch of the entertainment industry: politicians, mass media news coverage, defense intellectuals, commentators.” These are sponsored by members of the underlying power structure, and Johnstone suggests that we can learn about these sponsors by examining the list of Clinton Foundation donors who have contributed millions of dollars, supposedly for charity:

“Eight digit donors [10 million or more] include: Saudi Arabia, the pro-Israel Ukrainian oligarch Victor Pinchuk, and the Saban family.”… Seven digit sponsors include: Kuwait, Exxon Mobil, ‘Friends of Saudi Arabia,’ James Murdoch, Qatar, Boeing, Dow, Goldman Sachs, Walmart, and the United Arab Emirates,” Earlier in her book Johnstone notes that billionaire Haim Saban was especially taken with Mrs. Clinton, declaring in a Bloomberg interview in July 2014 that he would contribute “as much as needed” to elect her to the presidency; also mentioning that “I’m a one-issue guy, and my issue is Israel.”

Johnstone asks “What is it about the Clintons that makes them so popular, particularly with Saudi Arabia?” She answers: “With friends like that, you need enemies. And Hillary knows where to find them – in countries these friendly donors don’t like. In her driving ambition to be the First Woman President of the United States, Hillary Rodham Clinton has made herself a figment of the collective imagination by fitting herself into the role of top salesperson for the ruling oligarchy:

• She has shifted her interest from children’s rights, a field with no big money backers, to promotion of military power (also known as ‘the only language they understand’).
• She has spread the message that U.S. interference in other countries is motivated by the generous impulse to spread ‘our ideals’ to the dark corners of elsewhere.
• She readily treats foreign heads of state with dehumanizing contempt, declaring that they have ‘no soul’, or ‘no conscience’, and dismissing them as lowly creatures that ‘must go’.
• She ‘misspeaks’, but sees nothing wrong with that. In politics, who doesn’t ‘misspeak’? She is not there to tell the truth, but to tell her story.
• She can still pose as a woman whose only aspiration is to ‘break the glass ceiling’ for the benefit of all women, who will now be able to fill all the top jobs in the country… thanks to Hillary!”

“In short, she has used all the stereotypical clichés of the ‘exceptional America’ narrative as rungs in her ladder to the top. Hillary Clinton’s performance as Secretary of State was a great success in one respect: it has made her the favorite candidate of the War Party. This appears to have been her primary objective. But Hillary Clinton is far from being the whole problem. The fundamental problem is the War Party and its tight grip on U.S. policy.”

Diana Johnstone has written an exceptional book that enlightens on Hillary Clinton’s history, role and threat and the war system context in which she thrives.

• First Published at Z Magazine. November 2015

December 26, 2015 Posted by | Book Review, Militarism | , , , , , , , , , , | Leave a comment

Corporations shell out $1.2mn in Senate contributions to fast-track TPP

RT | May 28, 2015

Records from the Federal Election Commission show corporations have been donating tens of thousands of dollars to Senate campaign coffers, particularly to lawmakers who were undecided over a controversial trade deal involving Pacific Rim countries.

Using data from the Federal Election Commission, the Guardian studied donations from the corporate members of the US Business Coalition for TPP – the Trans-Pacific Partnership – to US Senate campaigns between January and March 2015, when debate over the trade deal was ramping up.

What the documents showed was that out of a total of nearly $1.2 million given, an average of $17,000 was donated to each of the 65 “yes” votes. Republicans received an average of $19,000 and Democrats received $9,700.

“It’s a rare thing for members of Congress to go against the money these days,” Mansur Gidfar, spokesman for the anti-corruption group Represent.Us, told the Guardian. “They know exactly which special interests they need to keep happy if they want to fund their re-election campaigns or secure a future job as a lobbyist.”

Fast-tracking the TPP means voting to allow President Barack Obama to negotiate a deal without permitting Congress to amend the final document. The Senate first voted to debate Trade Promotion Authority – the fast-track bill – by a 65-33 margin on May 14. On May 21, lawmakers voted 62-37 to bring the debate on TPA to a close and pass the bill.

Little is known about the specifics of the trade deal. According to a draft document leaked by WikiLeaks, the pact would grant broad powers to multinational companies operating in North America, South America and Asia, such as the ability to challenge regulations, rules, government actions and court rulings – federal, state or local – before tribunals organized under the World Bank or the United Nations.

Besides the United States, the accord would include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Most business interests support the Pacific Rim deal while labor groups have said it will cost American jobs and suppress wages.

Just two days before the fast-track vote, when Obama’s trade deal lacked a filibuster-proof majority, six out of eight Democrats who were on the fence decided to vote in favor of fast-track. Senators Michael Bennett (Colorado), Patty Murray (Washington) and Ron Wyden (Oregon) all received contributions totaling $105,900 combined. Bennett alone received $53,700.

The other Democrats who voted in favor were Dianne Feinstein (California), Claire McCaskill (Missouri) and Bill Nelson (Florida), though it’s unclear if they received contributions.

“How can we expect politicians who routinely receive campaign money, lucrative job offers, and lavish gifts from special interests to make impartial decisions that directly affect those same special interests?” Gidfar told the Guardian. “As long as this kind of transparently corrupt behavior remains legal, we won’t have a government that truly represents the people.”

In comparison, almost 100 percent of Senate Republicans voted for fast-tracking the TPP, with “no” votes from Louisiana and Alaska. Seven of those Republicans are running for re-election in 2016 and received contributions to their campaigns – Senators Johnny Isakson (Georgia), Roy Blunt (Missouri) John McCain (Arizona), Richard Burr (NC), Chuck Grassley (Iowa) and Tim Scott (SC).

According to the Federal Election Commission documents, most of the donations came from corporations like Goldman Sachs, Pfizer and Procter & Gamble.

Read more: EU drops controls on dangerous chemicals after TTIP pressure from US – report

May 28, 2015 Posted by | Corruption, Economics, Progressive Hypocrite | , , , , , , , | 1 Comment

The Clintons and Their Banker Friends

The Wall Street Connection (1992 to 2016)

By Nomi Prins | TomDispatch | May 7, 2015

[This piece has been adapted and updated by Nomi Prins from chapters 18 and 19 of her book All the Presidents’ Bankers: The Hidden Alliances that Drive American Powerjust out in paperback (Nation Books).]

The past, especially the political past, doesn’t just provide clues to the present. In the realm of the presidency and Wall Street, it provides an ongoing pathway for political-financial relationships and policies that remain a threat to the American economy going forward.

When Hillary Clinton video-announced her bid for the Oval Office, she claimed she wanted to be a “champion” for the American people. Since then, she has attempted to recast herself as a populist and distance herself from some of the policies of her husband. But Bill Clinton did not become president without sharing the friendships, associations, and ideologies of the elite banking sect, nor will Hillary Clinton.  Such relationships run too deep and are too longstanding.

To grasp the dangers that the Big Six banks (JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley) presently pose to the financial stability of our nation and the world, you need to understand their history in Washington, starting with the Clinton years of the 1990s. Alliances established then (not exclusively with Democrats, since bankers are bipartisan by nature) enabled these firms to become as politically powerful as they are today and to exert that power over an unprecedented amount of capital. Rest assured of one thing: their past and present CEOs will prove as critical in backing a Hillary Clinton presidency as they were in enabling her husband’s years in office.

In return, today’s titans of finance and their hordes of lobbyists, more than half of whom held prior positions in the government, exact certain requirements from Washington. They need to know that a safety net or bailout will always be available in times of emergency and that the regulatory road will be open to whatever practices they deem most profitable.

Whatever her populist pitch may be in the 2016 campaign — and she will have one — note that, in all these years, Hillary Clinton has not publicly condemned Wall Street or any individual Wall Street leader.  Though she may, in the heat of that campaign, raise the bad-apples or bad-situation explanation for Wall Street’s role in the financial crisis of 2007-2008, rest assured that she will not point fingers at her friends. She will not chastise the people that pay her hundreds of thousands of dollars a pop to speak or the ones that have long shared the social circles in which she and her husband move. She is an undeniable component of the Clinton political-financial legacy that came to national fruition more than 23 years ago, which is why looking back at the history of the first Clinton presidency is likely to tell you so much about the shape and character of the possible second one.

The 1992 Election and the Rise of Bill Clinton

Challenging President George H.W. Bush, who was seeking a second term, Arkansas Governor Bill Clinton announced he would seek the 1992 Democratic nomination for the presidency on October 2, 1991. The upcoming presidential election would not, however, turn out to alter the path of mergers or White House support for deregulation that was already in play one iota.

First, though, Clinton needed money. A consummate fundraiser in his home state, he cleverly amassed backing and established early alliances with Wall Street. One of his key supporters would later change American banking forever. As Clinton put it, he received “invaluable early support” from Ken Brody, a Goldman Sachs executive seeking to delve into Democratic politics. Brody took Clinton “to a dinner with high-powered New York businesspeople, including Bob Rubin, whose tightly reasoned arguments for a new economic policy,” Clinton later wrote, “made a lasting impression on me.”

The battle for the White House kicked into high gear the following fall. William Schreyer, chairman and CEO of Merrill Lynch, showed his support for Bush by giving the maximum personal contribution to his campaign committee permitted by law: $1,000. But he wanted to do more. So when one of Bush’s fundraisers solicited him to contribute to the Republican National Committee’s nonfederal, or “soft money,” account, Schreyer made a $100,000 donation.

The bankers’ alliances remained divided among the candidates at first, as they considered which man would be best for their own power trajectories, but their donations were plentiful: mortgage and broker company contributions were $1.2 million; 46% to the GOP and 54% to the Democrats. Commercial banks poured in $14.8 million to the 1992 campaigns at a near 50-50 split.

Clinton, like every good Democrat, campaigned publicly against the bankers: “It’s time to end the greed that consumed Wall Street and ruined our S&Ls [Savings and Loans] in the last decade,” he said. But equally, he had no qualms about taking money from the financial sector. In the early months of his campaign, BusinessWeek estimated that he received $2 million of his initial $8.5 million in contributions from New York, under the care of Ken Brody.

“If I had a Ken Brody working for me in every state, I’d be like the Maytag man with nothing to do,” said Rahm Emanuel, who ran Clinton’s nationwide fundraising committee and later became Barack Obama’s chief of staff. Wealthy donors and prospective fundraisers were invited to a select series of intimate meetings with Clinton at the plush Manhattan office of the prestigious private equity firm Blackstone.

Robert Rubin Comes to Washington

Clinton knew that embracing the bankers would help him get things done in Washington, and what he wanted to get done dovetailed nicely with their desires anyway. To facilitate his policies and maintain ties to Wall Street, he selected a man who had been instrumental to his campaign, Robert Rubin, as his economic adviser.

In 1980, Rubin had landed on Goldman Sachs’ management committee alongside fellow Democrat Jon Corzine. A decade later, Rubin and Stephen Friedman were appointed cochairmen of Goldman Sachs. Rubin’s political aspirations met an appropriate opportunity when Clinton captured the White House.

On January 25, 1993, Clinton appointed him as assistant to the president for economic policy. Shortly thereafter, the president created a unique role for his comrade, head of the newly created National Economic Council. “I asked Bob Rubin to take on a new job,” Clinton later wrote, “coordinating economic policy in the White House as Chairman of the National Economic Council, which would operate in much the same way the National Security Council did, bringing all the relevant agencies together to formulate and implement policy… [I]f he could balance all of [Goldman Sachs’] egos and interests, he had a good chance to succeed with the job.” (Ten years later, President George W. Bush gave the same position to Rubin’s old partner, Friedman.)

Back at Goldman, Jon Corzine, co-head of fixed income, and Henry Paulson, co-head of investment banking, were ascending through the ranks. They became co-CEOs when Friedman retired at the end of 1994.

Those two men were the perfect bipartisan duo. Corzine was a staunch Democrat serving on the International Capital Markets Advisory Committee of the Federal Reserve Bank of New York (from 1989 to 1999). He would co-chair a presidential commission for Clinton on capital budgeting between 1997 and 1999, while serving in a key role on the Borrowing Advisory Committee of the Treasury Department. Paulson was a well connected Republican and Harvard graduate who had served on the White House Domestic Council as staff assistant to the president in the Nixon administration.

Bankers Forge Ahead

By May 1995, Rubin was impatiently warning Congress that the Glass-Steagall Act could “conceivably impede safety and soundness by limiting revenue diversification.” Banking deregulation was then inching through Congress. As they had during the previous Bush administration, both the House and Senate Banking Committees had approved separate versions of legislation to repeal Glass-Steagall, the 1933 Act passed by the administration of Franklin Delano Roosevelt that had separated deposit-taking and lending or “commercial” bank activities from speculative or “investment bank” activities, such as securities creation and trading. Conference negotiations had fallen apart, though, and the effort was stalled.

By 1996, however, other industries, representing core clients of the banking sector, were already being deregulated. On February 8, 1996, Clinton signed the Telecom Act, which killed many independent and smaller broadcasting companies by opening a national market for “cross-ownership.” The result was mass mergers in that sector advised by banks.

Deregulation of companies that could transport energy across state lines came next. Before such deregulation, state commissions had regulated companies that owned power plants and transmission lines, which worked together to distribute power. Afterward, these could be divided and effectively traded without uniform regulation or responsibility to regional customers. This would lead to blackouts in California and a slew of energy derivatives, as well as trades at firms such as Enron that used the energy business as a front for fraudulent deals.

The number of mergers and stock and debt issuances ballooned on the back of all the deregulation that eliminated barriers that had kept companies separated. As industries consolidated, they also ramped up their complex transactions and special purpose vehicles (off-balance-sheet, offshore constructions tailored by the banking community to hide the true nature of their debts and shield their profits from taxes). Bankers kicked into overdrive to generate fees and create related deals. Many of these blew up in the early 2000s in a spate of scandals and bankruptcies, causing an earlier millennium recession.

Meanwhile, though, bankers plowed ahead with their advisory services, speculative enterprises, and deregulation pursuits. President Clinton and his team would soon provide them an epic gift, all in the name of U.S. global power and competitiveness. Robert Rubin would steer the White House ship to that goal.

On February 12, 1999, Rubin found a fresh angle to argue on behalf of banking deregulation. He addressed the House Committee on Banking and Financial Services, claiming that, “the problem U.S. financial services firms face abroad is more one of access than lack of competitiveness.”

He was referring to the European banks’ increasing control of distribution channels into the European institutional and retail client base. Unlike U.S. commercial banks, European banks had no restrictions keeping them from buying and teaming up with U.S. or other securities firms and investment banks to create or distribute their products. He did not appear concerned about the destruction caused by sizeable financial bets throughout Europe. The international competitiveness argument allowed him to focus the committee on what needed to be done domestically in the banking sector to remain competitive.

Rubin stressed the necessity of HR 665, the Financial Services Modernization Act of 1999, or the Gramm-Leach-Bliley Act, that was officially introduced on February 10, 1999. He said it took “fundamental actions to modernize our financial system by repealing the Glass-Steagall Act prohibitions on banks affiliating with securities firms and repealing the Bank Holding Company Act prohibitions on insurance underwriting.”

The Gramm-Leach-Bliley Act Marches Forward

On February 24, 1999, in more testimony before the Senate Banking Committee, Rubin pushed for fewer prohibitions on bank affiliates that wanted to perform the same functions as their larger bank holding company, once the different types of financial firms could legally merge. That minor distinction would enable subsidiaries to place all sorts of bets and house all sorts of junk under the false premise that they had the same capital beneath them as their parent. The idea that a subsidiary’s problems can’t taint or destroy the host, or bank holding company, or create “catastrophic” risk, is a myth perpetuated by bankers and political enablers that continues to this day.

Rubin had no qualms with mega-consolidations across multiple service lines. His real problems were those of his banker friends, which lay with the financial modernization bill’s “prohibition on the use of subsidiaries by larger banks.”  The bankers wanted the right to establish off-book subsidiaries where they could hide risks, and profits, as needed.

Again, Rubin decided to use the notion of remaining competitive with foreign banks to make his point. This technicality was “unacceptable to the administration,” he said, not least because “foreign banks underwrite and deal in securities through subsidiaries in the United States, and U.S. banks [already] conduct securities and merchant banking activities abroad through so-called Edge subsidiaries.” Rubin got his way. These off-book, risky, and barely regulated subsidiaries would be at the forefront of the 2008 financial crisis.

On March 1, 1999, Senator Phil Gramm released a final draft of the Financial Services Modernization Act of 1999 and scheduled committee consideration for March 4th. A bevy of excited financial titans who were close to Clinton, including Travelers CEO Sandy Weill, Bank of America CEO, Hugh McColl, and American Express CEO Harvey Golub, called for “swift congressional action.”

The Quintessential Revolving-Door Man

The stock market continued its meteoric rise in anticipation of a banker-friendly conclusion to the legislation that would deregulate their industry. Rising consumer confidence reflected the nation’s fondness for the markets and lack of empathy with the rest of the world’s economic plight. On March 29, 1999, the Dow Jones Industrial Average closed above 10,000 for the first time. Six weeks later, on May 6th,  the Financial Services Modernization Act passed the Senate. It legalized, after the fact, the merger that created the nation’s biggest bank.  Citigroup, the marriage of Citibank and Travelers, had been finalized the previous October.

It was not until that point that one of Glass-Steagall’s main assassins decided to leave Washington. Six days after the bill passed the Senate, on May 12, 1999, Robert Rubin abruptly announced his resignation. As Clinton wrote, “I believed he had been the best and most important treasury secretary since Alexander Hamilton… He had played a decisive role in our efforts to restore economic growth and spread its benefits to more Americans.”

Clinton named Larry Summers to succeed Rubin. Two weeks later, BusinessWeek reported signs of trouble in merger paradise — in the form of a growing rift between John Reed, the former Chairman of Citibank, and Sandy Weill at the new Citigroup. As Reed said, “Co-CEOs are hard.” Perhaps to patch their rift, or simply to take advantage of a political opportunity, the two men enlisted a third person to join their relationship — none other than Robert Rubin.

Rubin’s resignation from Treasury became effective on July 2nd. At that time, he announced, “This almost six and a half years has been all-consuming, and I think it is time for me to go home to New York and to do whatever I’m going to do next.” Rubin became chairman of Citigroup’s executive committee and a member of the newly created “office of the chairman.” His initial annual compensation package was worth around $40 million.  It was more than worth the “hit” he took when he left Goldman for the Treasury post.

Three days after the conference committee endorsed the Gramm-Leach-Bliley bill, Rubin assumed his Citigroup position, joining the institution destined to dominate the financial industry. That very same day, Reed and Weill issued a joint statement praising Washington for “liberating our financial companies from an antiquated regulatory structure,” stating that “this legislation will unleash the creativity of our industry and ensure our global competitiveness.”

On November 4th, the Senate approved the Gramm-Leach-Bliley Act by a vote of 90 to 8.  (The House voted 362–57 in favor.) Critics famously referred to it as the Citigroup Authorization Act.

Mirth abounded in Clinton’s White House. “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the twenty-first century,” Summers said. “This historic legislation will better enable American companies to compete in the new economy.”

But the happiness was misguided. Deregulating the banking industry might have helped the titans of Wall Street but not people on Main Street. The Clinton era epitomized the vast difference between appearance and reality, spin and actuality. As the decade drew to a close, Clinton basked in the glow of a lofty stock market, a budget surplus, and the passage of this key banking “modernization.” It would be revealed in the 2000s that many corporate profits of the 1990s were based on inflated evaluations, manipulation, and fraud. When Clinton left office, the gap between rich and poor was greater than it had been in 1992, and yet the Democrats heralded him as some sort of prosperity hero.

When he resigned in 1997, Robert Reich, Clinton’s labor secretary, said, “America is prospering, but the prosperity is not being widely shared, certainly not as widely shared as it once was… We have made progress in growing the economy. But growing together again must be our central goal in the future.”  Instead, the growth of wealth inequality in the United States accelerated, as the men yielding the most financial power wielded it with increasingly less culpability or restriction. By 2015, that wealth or prosperity gap would stand near historic highs.

The power of the bankers increased dramatically in the wake of the repeal of Glass-Steagall. The Clinton administration had rendered twenty-first-century banking practices similar to those of the pre-1929 crash. But worse. “Modernizing” meant utilizing government-backed depositors’ funds as collateral for the creation and distribution of all types of complex securities and derivatives whose proliferation would be increasingly quick and dangerous.

Eviscerating Glass-Steagall allowed big banks to compete against Europe and also enabled them to go on a rampage: more acquisitions, greater speculation, and more risky products. The big banks used their bloated balance sheets to engage in more complex activity, while counting on customer deposits and loans as capital chips on the global betting table. Bankers used hefty trading profits and wealth to increase lobbying funds and campaign donations, creating an endless circle of influence and mutual reinforcement of boundary-less speculation, endorsed by the White House.

Deposits could be used to garner larger windfalls, just as cheap labor and commodities in developing countries were used to formulate more expensive goods for profit in the upper echelons of the global financial hierarchy. Energy and telecoms proved especially fertile ground for the investment banking fee business (and later for fraud, extensive lawsuits, and bankruptcies). Deregulation greased the wheels of complex financial instruments such as collateralized debt obligations, junk bonds, toxic assets, and unregulated derivatives.

The Glass-Steagall repeal led to unfettered derivatives growth and unstable balance sheets at commercial banks that merged with investment banks and at investment banks that preferred to remain solo but engaged in dodgier practices to remain “competitive.” In conjunction with the tight political-financial alignment and associated collaboration that began with Bush and increased under Clinton, bankers channeled the 1920s, only with more power over an immense and growing pile of global financial assets and increasingly “open” markets. In the process, accountability would evaporate.

Every bank accelerated its hunt for acquisitions and deposits to amass global influence while creating, trading, and distributing increasingly convoluted securities and derivatives. These practices would foster the kind of shaky, interconnected, and opaque financial environment that provided the backdrop and conditions leading up to the financial meltdown of 2008.

The Realities of 2016

Hillary Clinton is, of course, not her husband. But her access to his past banker alliances, amplified by the ones that she has formed herself, makes her more of a friend than an adversary to the banking industry.  In her brief 2008 candidacy, all four of the New York-based Big Six banks ranked among her top 10 corporate donors. They have also contributed to the Clinton Foundation. She needs them to win, just as both Barack Obama and Bill Clinton did. 

No matter what spin is used for campaigning purposes, the idea that a critical distance can be maintained between the White House and Wall Street is naïve given the multiple channels of money and favors that flow between the two.  It is even more improbable, given the history of connections that Hillary Clinton has established through her associations with key bank leaders in the early 1990s, during her time as a senator from New York, and given their contributions to the Clinton foundation while she was secretary of state. At some level, the situation couldn’t be less complicated: her path aligns with that of the country’s most powerful bankers. If she becomes president, that will remain the case.

Nomi Prins is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book, All the Presidents’ Bankers: The Hidden Alliances that Drive American Power (Nation Books) has just been released in paperback and this piece is adapted and updated from it. She is a former Wall Street executive.

Copyright 2015 Nomi Prins

May 7, 2015 Posted by | Book Review, Corruption, Economics, Progressive Hypocrite | , , , , , , , , | Leave a comment