The Freedman’s Bank

After Union victory in the Civil War, the government opened the Freedman’s Bank to provide a safe place for newly-freed black workers to place their funds. By 1871, 37 branches were open in the US, with over 70,000 people depositing $60 million into this bank. Then, in 1873, there was a depression. Narrated by Dr. Henry Louis Gates, with Hasan Jeffries and Vincent Brown, from Black History in 2 Minutes (Or So).

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Why Banks Fail

Former Bank of England Governor Mervyn King explains why and how banks fail.

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Trump Appoints ‘Foreclosure King’ As Treasury Secretary

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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Image (“American Dream, after Grant Wood”) by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

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Market Correction

On Friday Wall Street deflated with a mighty belch, as the Dow dropped over 500 points, the worst one-day loss since 2008. Overall there’s been a 10 percent drop from the May 19 peak, so it’s officially a “Market Correction.“

Why? Some blame it on the fears about the instability of China’s economy, others on the EU and Greece, or the Fed, or the low price of oil and other commodities, or the Zodiac.

Congress: Taxpayers Will Cover Citigroup’s Bad Bets

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:

AIG’s New Deal

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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Image (“Dogs Dealing Securities at AIG, after C.M. Coolidge”) by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

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Iceland

“Remember when the Icelandics did the unthinkable and, unlike Ireland, told bank creditors to take a hike? They also imposed capital controls and allowed the value of their currency to fall – the Icelandic krona has lost almost half of its value against the euro over the past five years.

The ‘experts’ queued up to assure us that these latter-day Vikings would be severely punished for their impertinence. While no one forecast that a hole would open up in the North Atlantic and swallow Iceland whole, some of the predictions came pretty darned close.”

Fender

The Fender company makes electric guitars that have become American icons. The firm is “being buffeted by powerful forces on Wall Street,” writes Janet Morrissey:

“A private investment firm, Weston Presidio, controls nearly half of the company and has been looking for an exit. It pushed to take Fender public in March, to howls in the guitar-o-sphere that Fender was selling out. But, to Fender’s embarrassment, investors balked. They were worried about the lofty price and, even more, about how Fender can keep growing.

Mitt Romney, Financier

Mitt Romney, Republican candidate for president, earned his fortune the old-fashioned way, by gambling speculating with other people’s money. It wasn’t a great deal for investors, but Mr. Romney did just fine. We have every confidence he’d use the same methods with your money if he got his hands on the Federal Treasury.

Mr. Romney brags about his record as a businessman, but his private sector experience has been in finance, not manufacturing or a service business. He’s never made anything but Private Equity deals. Can’t understand how Private Equity works? PE firms like to pretend they’re venture capitalists, but look up “Leveraged Buyout” and you’ll see why PE is called “Vulture Capitalism.” It’s also been called “Casino Capitalism,” and not just because a Bain-related firm financed Sheldon Adelson’s gambling joints. Outfits like Bain always bet with the house — they privatize gains and socialize losses.

Ain’t Got No Home

The ProPublica team has researched the causes of the foreclosure crisis. You can read about it here, but there’s a video that explains it all, and you can dance to it: