Former Bank of England Governor Mervyn King explains why and how banks fail.
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President-elect and self-proclaimed swamp-drainer Donald J. Trump has named Goldman Sachs alum and former hedge fund partner Steve Mnuchin as his Treasury Secretary. Mr. Mnuchin, who was finance chair of the Trump campaign and the producer of Suicide Squad, became infamous as the “Foreclosure King” when his OneWest Bank foreclosed on over 36,000 family homes during the financial crisis. OneWest specialized in “harsh, repugnant and repulsive” foreclosures on the homes of minority families and the elderly, and in one celebrated case foreclosed on a 90-year-old woman over a 27 cent error.
The Department of the Treasury controls mortgage guarantee agencies Fannie Mae and Freddie Mac and runs the MHA mortgage relief program and the Hardest Hit Fund, which helps homeowners most in danger of foreclosure due to the financial crisis. Oh, it also regulates banks.
More:
“Trump Treasury pick made millions after his bank foreclosed on homeowners,” Lorraine Woellert, Politico
“Steve Mnuchin: Evictor, Forecloser, and Our New Treasury Secretary,” Peter Dreier, American Prospect
“Trump Was Always Going to Be a Gift to Wall Street. His Pick for Treasury Secretary Proves It.,” Jordan Weissmann, Slate
“Donald Trump voter who lost her home to new Treasury pick Steven Mnuchin has ‘no faith in our government anymore,’” Josh Boak and Jeff Horowitz, AP via Salon
“Angus King: Trump’s not draining swamp, he’s adding alligators,” Mark Hensch, The Hill
Bonus:
“Before heading to the Treasury, Steven Mnuchin will grace the silver screen in ‘Rules Don’t Apply,'” Mark Olsen, Los Angeles Times
“The fiancée of Trump’s twice-married new Treasury Secretary, 53, is 35-year-old actress who sparked fury after she ‘invented parts of her memoir about nearly being killed in Africa,'” Jennifer Newton, Daily Mail
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While running for his U.S. Senate seat in 2012, Texas Republican Ted Cruz failed to disclose a $500,000 campaign loan from Goldman Sachs, reports the New York Times. That’s especially awkward since Ted’s missus, Heidi Nelson Cruz, is a Managing Director at Goldman Sachs in Houston. In fact, Chad Sweet, Cruz 2016 presidential campaign manager, worked for Goldman Sachs for 10 years. Candidate Cruz has recently tried to distance himself from Goldman as part of his hardly credible populist pose.
Besides that sizeable low-interest loan from his wife’s bosses, Mr. Cruz apparently got one from Citibank, too. Other campaigns have been fined for failing to make such disclosures to the FEC. The Cruz campaign’s response to the Times story: “Ooops.”
More:
“Ted Cruz Hates ‘New York Values’ But Sure Loves New York Money,” Jon Schwarz, The Intercept
“Ted Cruz’s Loan from Goldman Sachs Was a Bullish Bet on the Obama Economy,” David Nir, AlterNet
Related:
“Goldman Sachs Will Pay $5 Billion To Settle Financial-Crisis Claims,” Jim Zarroli, NPR News
“The Great American Bubble Machine,” Matt Taibbi, Rolling Stone
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Update: “China’s stock market falls for the 5th straight day,” Timothy B. Lee,Vox
“China’s stock market plunges for the fourth straight day,” Timothy B. Lee, Vox
“China 2015: beware the links with 1929,” Larry Elliott, The Guardian
“Why the Chinese slowdown everybody knew was coming is causing a freak-out,” Chico Harlan, Washington Post
Unregulated derivatives trading crashed the U.S. economy back in 2008, and two years later Congress passed laws to prevent that from happening again. But Citigroup just wrote derivatives deregulation into the $1.1 trillion federal funding bill, and Congress passed it. Now Citi can blow people’s savings on bad exotic derivatives bets, and taxpayers will likely cover the losses.
Here’s what Senator Elizabeth Warren (D-MA) had to say about that:
Earlier this month the Consumer Financial Protection Bureau fined Amerisave Mortgage Corporation and an affiliate over $20 million for “bait-and-switch” practices. The firm advertised misleading interest rates, locked consumers in with steep up-front fees, failed to honor the low rates and illegally overcharged customers for third-party services. Amerisave will refund $14.8 million to the “baited” consumers and pay a $4.5 million penalty, and the firm’s CEO Patrick Markert will pay an additional $1.5 million penalty.
More:
“Amerisave to pay $19.3M for bait-and-switch mortgage scheme,” Phil W. Hudson, Atlanta Business Chronicle
“CFPB fines deceptive mortgage company $20M,” Jeff Gelles, Philadelphia Inquirer
“CFPB Orders Amerisave To Pay $19.3 Million For Bait-And-Switch Mortgage Scheme,” CFPB press release
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In recent antiquarian book irony financial news: Commodity Fetishism?
“Copy of Das Kapital sells for $40k just as Dow Jones hits record high,” Richard Davies, AbeBooks
Related:
“Give Karl Marx a Chance to Save the World Economy,” George Magnus, Bloomberg View
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1953: GM President Charles Erwin Wilson tells the Senate Armed Services Committee “for years I thought what was good for the country was good for General Motors and vice versa.”
2009: The United States Government takes 60 percent ownership of General Motors, 912 million shares.
2012: GM buys back 200 million shares of its own stock from the government for $5.5 billion; company execs are now allowed to use corporate jets again.
June 2013: The U.S. Treasury sells off 30 million shares in GM.
December 2013: The Federal government sells off its remaining shares in General Motors, leaving taxpayers with a net $10.5 billion loss on the total $49.5 billion bailout. The Canadian government still owns $4.2 billion in GM preferred shares and the United Auto Workers union owns $5.4 billion in GM stock.
Related:
“With The Government Gone, GM Can Now Start Paying Its Execs Big Bucks,” Aaron Foley, Jalopnik
“New study estimates the effect on the U.S. economy of successful restructuring of General Motors” (press release), Center for Automotive Research
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“The rankings are based on predictions made last January about how inflation, unemployment, interest rates and economic output would fare over the course of the year.” — “Ranking Economists’ 2012 Predictions: The Best and Worst,” Phil Izzo, Wall Street Journal blog
“As the old saying goes, even a stopped clock is right twice a day.” “Show me a forecaster who comes close to the figures year after year, in recessions and booms, and I’ll agree he or she may offer value to investors and executives. Until then, you’ll do just as well guessing the numbers yourself as guessing which forecaster would do better.” — “Why Do Economic Forecasters Still Have Jobs?” Daniel Altman, Big Think
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During the Bush administration AIG, the American International Group,”insured’ trillions of dollars in bad deals with worthless credit default swaps, and when the whole deregulated house of cards teetered, U.S. taxpayers paid $182 billion to save the firm from bankruptcy and the economy from total collapse. The economy is still in a hole but finance is doing just fine, so AIG bought back its stock and is now suing the government that saved its sorry butt, saying the price of the bailout was too high.
But AIG thanks you for the loan, suckers America:
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