Tagged: Bloomberg

In Mayor Mike’s New York, Children Get Lead Paint, Wall Street Gets Its Own Spy Center (as seen on Wall Street on Parade)

The wonderful Pam Martens posted the article below today on Wall Street on Parade. Many thanks Pam!

In Mayor Mike’s New York, Children Get Lead Paint, Wall Street Gets Its Own Spy Center

By Pam Martens: August 14, 2012

illustration by Keith Seidel

We learned a little more about the policies of Mayor Michael (“just call me ‘Mike’ ”) Bloomberg last week. Mayor Bloomberg and Police Commissioner Raymond Kelly held yet another press conference at the Lower Manhattan Security Coordination Center on Broadway in the Wall Street area.  As we first reported on October 18, 2011, this Center was built with at least $150 million of taxpayers’ money but its “partners” in spying on the people of New York City, with their very own staffed computer workstations in the Center, are some of the most notorious Wall Street firms: for example, Goldman Sachs, Citigroup, and JPMorgan Chase, as well as the regulator that’s got their back, the Federal Reserve Bank of New York.

Exactly what is the logic of going into partnership to battle crime with the very firms which the U.S. Department of Justice and regulators worldwide are investigating for their own crimes?  In the case of Citigroup and JPMorgan, the allegations are that they are involved in a global banking cartel colluding on the rigging of Libor interest rates; just the sort of people you want sitting next to your top secret criminal databases.

Bloomberg and Kelly held the press conference to trumpet their latest high tech spy gadget: a program built by Microsoft called the Domain Awareness System (DAS).  The new system will let the City aggregate and analyze data from the thousands of spy cameras placed around Manhattan, license plate readers, radiation sensors, tap into criminal databases and the like.

Since October of last year, 10 months ago, I have been attempting to gain additional information on the spy center through a Freedom of Information Law (FOIL) request, New York’s version of the Federal FOIA statute.  Under FOIL, readily available information should be handed over in 5 business days.  Despite followup letters, emails and phone calls, the City of New York has failed to turn over information that the public has every right to access.  In fact, it’s failed to turn over anything.

We learned one new piece of information last week from Neal Ungerleider, a reporter for Fast Company.com.  Not only does Wall Street have a seat in the spy center, but so does a multi-national pharmaceutical company, Pfizer.  I’ve also confirmed that the very firm that was involved in the eviction of Occupy Wall Street protesters from Zuccotti Park, Brookfield Properties, also has a seat in the spy group.

To fully comprehend the mindset of  New York City’s One-Percent-Mayor, one must read Neil Fabricant’s heart rendering and brilliant new book, Mike! Wall Street’s Mayor, with uproarious illustrations by Keith Seidel.

The Mayor who built a $150 million spy center for his pals on Wall Street, delivered the following to poor and desperate families with children, as Fabricant reports in his new book:

“When it comes to homeless people who don’t have many supporters, the iron fist comes out of the velvet glove.  He once told attendees at a Working Families Party forum that the reason that shelter occupancy rates have reached record levels is that he has made city shelters ‘more attractive’!  One of Mike’s first attractive shelters was an unused Bronx jail that Rudy Giuliani had rejected as a shelter.  The levels of peeling lead paint were eight times the toxicity level defined by the city’s Health Department.

“Mike began filling the old jail with homeless families, 90 to begin with.  A firestorm of criticism erupted.  Mike said he’d compromise and stop sending children younger than six years old to the jail.  The courts finally ordered him to close it down…The Coalition for the Homeless reported that a record 113,553 homeless people – including 42,888 children —slept in city-funded shelters in 2010, a 37 percent increase from 2002.  The number of homeless families is 45 percent higher than when Mike took office.”

Fran Lebowitz Goes to Town on NYU, NYU Students, and Bloomberg’s Micro-Apartments (Video)

Fran Lebowitz was at McNally-Jackson bookstore in Manhattan to speak to a large group — I was in the audience — who, along with the overwhelming majority of its faculty and students, oppose NYU’s relentless real estate grab. Mark Crispin Miller, an NYU faculty member, is leading the opposition. NYU is supported by Bloomberg, the City Council, the administrators who are running the university, and the real estate operators who control the board. This struggle is emblematic of what’s happened to New York City and why.

Lebowitz is as angry as I am about Bloomberg-but she’s much funnier. Watch.

As Seen on “Wall Street on Parade” …

Many thanks to Pam Martens of Wall Street on Parade for her speedy review of Mike! Wall Street’s Mayor. It’s great to get some vindication from someone who understands Wall Street — the New York Times — and Michael Bloomberg as few others do.

Here is what she wrote.

Fabricant Book Busts Myth of Michael Bloomberg As People’s Mayor

By Pam Martens: July 24, 2012

Neil Fabricant, president emeritus of the George Washington University Graduate School of Political Management and lifetime New Yorker, has penned a take-your-breath-away expose on the heretofore inscrutable Mayor of New York City, Michael Bloomberg. Mike! Wall Street’s Mayor is sharp, witty, and pulls no punches when it comes to the billionaire 1 percenter out to portray himself as the man of the people, while growing his estimated $3 billion personal wealth to $22 billion while in office.  (Exactly how does one do that?  It sure didn’t work out that way for Jon Corzine, former Senator and Governor from New Jersey.  If global businesses could run themselves, wouldn’t we all have one?)

Fabricant puts the pieces of the gambit together for you – from the Mayor’s early days at Wall Street investment bank, Salomon Brothers – made variously famous for its Big Swinging Dicks in Michael Lewis’ Liar’s Poker to its attempt to corner the U.S. Treasury two-year note auction  – to Bloomberg’s firing and pay out of at least $10 million of his share of the partnership.

After Bloomberg was fired, Fabricant relates that “Mike thought he’d join another Wall Street firm. But word had gotten around: watch out for this guy.  He’ll eat your lunch and chew on your furniture.  Nobody made him an offer.” Bloomberg founded the firm that is now a Wall Street computer data and publishing empire, Bloomberg L.P. (Read more)


Why Does Anyone Believe Anything Michael Bloomberg (or the New York Times) Says?

Reminiscing About the Good Old Days at Salomon Brothers

Recall the brouhaha when Greg Smith explained in an op ed piece why he was leaving Goldman Sachs — essentially because it’s too corrupt a culture for an investment banker. Now that’s saying something! Bloomberg went nuts, questioning why the paper had published the piece. Attended by photographers and various hacks and flacks, he paid a visit to the firm, thus putting his credibility behind Lloyd (“Doing God’s Work”) Blankfein and the rest of the Goldman Boyz.

Eleven days after Bloomberg visited Goldman Sachs, an op ed piece appeared in the New York Times titled “The Rich Get Even Richer” by Steven Rattner. In it, Rattner, another “life-long Democrat,”  decried income inequality and boldly called for “….letting the Bush tax cuts expire for the wealthy….”

For those who don’t know Rattner’s vitae, here’s a snippet from Mike! Wall Street’s Mayor.

Bloomberg’s Investment Adviser Brings to Mind George Bernard Shaw’s Observation: Politicians Work for Tips.

Steven Rattner, a former New York Times reporter who left the paper to run a private equity firm, is Mike’s investment adviser. He chaired Democrats for Bloomberg in 2005. Rattner has reported his net worth at between $188 and $608 million. In 2010, the Securities and Exchange Commission charged him with paying about $1 million to former state comptroller Alan Hevesi’s political adviser. Rattner wanted the Hevesi-controlled state pension fund to increase its investment in his private equity firm, the Quadrangle Group, from $100 million to $150 million.

Rattner paid $6.2 million to settle the charges and agreed not to associate with any investment advisers or broker-dealers for two years. Quadrangle paid $12 million to settle both the federal and state charges, and agreed to cooperate with the investigation by New York State Attorney General Andrew Cuomo.

The firm severed its ties with Rattner, and said that what he had done was “inappropriate, wrong, and unethical.”

In November 2010, just after Cuomo was elected governor and before he took office, he filed lawsuits for $26 million against Rattner. On December 30, Rattner settled the case for $10 million, and was barred from appearing in any capacity before a public pension fund for five years. His PR guy said that he “shares with the New York Attorney General the goal of eliminating public pension-fund practices that are not in the public interest.” Mike supported Cuomo for governor. Hevesi and his bagman went to jail.

Mike threw a book party for Rattner in the Grill Room of the Four Seasons. Arthur Sulzberger, Jr., the New York Times publisher, co-hosted it. Reportedly, Rattner is his financial adviser as well.

The city’s Ubermenschen turned out to honor one of their own. There was Robert Rubin, Jamie Dimon of J.P. Morgan Chase, Lloyd C. Blankfein of Goldman Sachs, Henry Kravis of Kohlberg Kravis, Tony James of the Blackstone Group, Vernon Jordan of Akin Gump, Roger Altman of Evercore, Alan Schwartz, formerly of Bear Stearns, and dozens of others, including Joel Klein, then chancellor of the city’s public schools.

Bloomberg’s Offshore Accounts

The Bloomberg Family Foundation sends hundreds of millions of dollars to offshore accounts in places like the Cayman Islands, Cyprus, Bermuda, and elsewhere. The money then moves into hedge funds and other investments around the world. It’s a tax dodge to avoid paying federal and New York taxes on what is called “unrelated business income.” Former Manhattan District Attorney Robert Morgenthau tried to stop it, but couldn’t. It’s legal.

Mike isn’t the only tax schemer, of course, but he’s one of the heavyweights and nobody can come up with such mind-bending rationales. When the scheme was exposed, he said, “The less tax I pay, the more money I can put into charity.”

Think how much better off we’d be if Mike and all those other billionaire philanthropists who use offshore accounts paid no taxes at all. The government could come to them directly and apply for grants and loans to finance schools, build bridges, pay social security benefits, and so on.

What got me thinking about this stuff–not that the Giant Mudslide that gangster capitalism has rolled down on America is ever far from my thoughts–is coming across  Pam Martens piece on her terrific website which I highly recommend.

Muppet Masters of the Universe

By Pam Martens

The muppets are in revolt against their masters.  No, I don’t mean customers of Wall Street’s big firms.  I’m speaking of corporate media muppets.  Greg Smith lit a match and now there are smoldering embers dangerously burning at Bloomberg Views and Forbes.

Smith is the 33-year old derivatives executive at Goldman, Sachs & Co. who published his blistering resignation letter on the OpEd page of the New York Times.  According to Smith, managing directors at Goldman call their clients muppets and openly speak about “ripping their clients off.”  Smith said the environment at the firm is “as toxic and destructive as I have ever seen it.”

The OpEd was published on Wednesday, March 14, and went viral on the internet.  Next came a mesmerizing look at the underbelly of crony capitalism.  The Mayor of the city that sent its police in the dead of night to rough up journalists and censor press coverage of their raid and destruction of the Occupy Wall Street encampment at Zuccotti Park in lower Manhattan, is condoning Wall Street employees manning a spy center alongside NYPD cops to keep tabs on protestors, and rents out uniformed, armed cops to Wall Street firms, went into damage control mode for his pals at Goldman over Smith’s letter.

According  to the New York Times, by Thursday Mayor Michael Bloomberg, a former trader for the investment bank, Salomon Brothers, was shaking hands on the trading floor at Goldman and having a burger with CEO Lloyd Blankfein.   According to the 2012 Forbes list of billionaires, Bloomberg ranks number 20 with $22 billion stashed away.  As we previously reported, the Mayor’s business empire which bears his name, includes the expensive Bloomberg terminal, a computer that houses enormous pricing data for stocks, bonds, research, news, charting functions and much more. There are currently an estimated 290,000 of these terminals on Wall Street trading floors around the globe, generating approximately $1500 in rental fees per terminal per month. That’s a cool $435 million a month or $5.2 billion a year, the cash cow of the Bloomberg businesses.  In other words, when the Mayor paid a visit to Goldman on Thursday, he wasn’t just visiting an important employer in New York City, he was visiting one of his biggest clients, while on the taxpayer’s payroll.

At 6:41 p.m. on the same day that Smith’s OpEd ran, Bloomberg View, the opinion pages of the Mayor’s publishing empire, launched an unsigned, snarky and decidedly lop-sided attack on Greg Smith.  The anonymous editorial page authors sounded more like dodgy pr flaks… (read more)

How the New York Times Hides the Truth About Wall Street’s Catastrophic Misdeeds

A good friend of mine sent me a link to an article by Pam Martens, originally posted July 2, 2012. I opened it and navigated to her terrific website which I highly recommend. She agreed that I could re-post the article here.

How the New York Times Hides the Truth About Wall Street’s Catastrophic Misdeeds

By Pam Martens: July 2, 2012

The following piece is a co-exclusive with AlterNet.

The paper of record is in serious need of a fact checker when it comes to whether the Glass-Steagall Act could have prevented the financial crisis.  Promoting ignorance could help sink the financial system  – again.

Back on April 8, 1998, the New York Times ran a slobbering editorial pushing for the repeal of the Glass-Steagall Act.  It sounded like it came straight from Sandy Weill’s public relations flacks.  Weill, head of Wall Street brokerage and investment firms Smith Barney and Salomon Brothers, as well as insurance company, Travelers Group, wanted to merge with a large commercial bank, Citicorp, owner of Citibank, and get his speculative hands on that pile of insured deposits.

The merger was illegal at the time under the depression era Glass-Steagall Act.  The legislation was enacted after the 1929 stock market crash to keep speculative gambling on margin and risky underwriting of stocks away from conservative savers’ bank deposits.  Jamie Dimon, today’s  Chairman and CEO of JPMorgan Chase, who just this year oversaw the blow up of $2 billion of insured depositors’ funds through risky derivatives trading, was Weill’s first lieutenant at the time of the merger and helped to mastermind the deal.  The merged firm was called Citigroup.

The Glass-Steagall Act (formally known as the Banking Act of 1933) created the Federal Deposit Insurance Corporation (FDIC) and barred banks holding insured deposits from merging with securities firms or investment banks.  The Travelers/Citicorp merger was also illegal under the Bank Holding Company Act of 1956 which barred bank and insurance company mergers.

The New York Times editorial gushed:

“Congress dithers, so John Reed of Citicorp and Sanford Weill of Travelers Group grandly propose to modernize financial markets on their own. They have announced a $70 billion merger — the biggest in history — that would create the largest financial services company in the world, worth more than $140 billion… In one stroke, Mr. Reed and Mr. Weill will have temporarily demolished the increasingly unnecessary walls built during the Depression to separate commercial banks from investment banks and insurance companies.”

What the New York Times calls “unnecessary walls” were the bulwarks  that stood between the small investor and a rigged looting machine; between another Great Depression and a stable economy; between fair distribution of wealth and a nation with 46 million people living below the poverty level, including one in every five children; between a Nation where people were proud to save to buy a few shares of stock and a Nation that now reviles everything about Wall Street, from its lousy repentance to its obscene pay to its sappy regulators.  According to a CNN poll conducted between October 14 to 16, 2011, 80 percent of Americans say Wall Street bankers are greedy; 77 percent say they’re overpaid; 66 percent say they are dishonest. And that’s likely just what’s fit to print.

Having greased the skids for the financial debacle, the New York Times, instead  of doing an intense examination of how it got it so wrong, is now permitting the revisionist history of the crisis  through the pen of their financial writer, Andrew Ross Sorkin, who doubles as a co-anchor at the serially conflicted CNBC.

On May 21, 2012, the Times published a piece by Sorkin, titled: “Reinstating an Old Rule Is Not a Cure for Crisis.”  The premise was that the Glass-Steagall Act would not have prevented the financial collapse, the very claptrap coming out of the mouths of Wall Street lobbyists into the attentive ears of the Senate Banking Committee. The article put forth the following “facts.”

“Let’s look at the facts of the financial crisis in the context of Glass-Steagall.

“The first domino to nearly topple over in the financial crisis was Bear Stearns, an investment bank that had nothing to do with commercial banking.  Glass-Steagall would have been irrelevant. Then came Lehman Brothers; it too was an investment bank with no commercial banking business and therefore wouldn’t have been covered by Glass-Steagall either. After them, Merrill Lynch was next — and yep, it too was an investment bank that had nothing to do with Glass-Steagall.

“Next in line was the American International Group, an insurance company that was also unrelated to Glass-Steagall.”

There are four companies mentioned in those five sentences and in every case, the information is spectacularly false.  Lehman Brothers owned two FDIC insured banks, Lehman Brothers Bank, FSB and Lehman Brothers Commercial Bank.  Together, they held $17.2 billion in assets as of June 30, 2008, 75 days before Lehman went belly up.  Lehman Brothers Banks FSB is where Lehman handled its mortgage loan originations.  When the FDIC approved the Lehman Brothers Commercial Bank application in 2005, it specifically noted that the FDIC insured bank “anticipates acting as a derivatives intermediary, engaged in matched trading of interest rate products, primarily interest rate swaps, as well as forward purchase agreements and options contracts.”

Merrill Lynch also owned three FDIC insured banks.  At an FDIC symposium held at the National Press Club in 2003, Merrill Senior VP, John Qua, explained the banking side of Merrill as follows:

“Merrill Lynch conducts banking in the United States through two depository institutions – Merrill Lynch Bank USA, a Utah industrial loan corporation; and Merrill Lynch Bank and Trust, a New Jersey state non-member bank. We also own a federal savings bank that offers personal trust services to our clients. And we conduct significant banking activities outside the United States through banks in London, Dublin, Switzerland, and elsewhere. The combined balance sheet of our global banks is approximately $100 billion.”

Bear Stearns owned Bear Stearns Bank Ireland, which is now part of JPMorgan and called JPMorgan Bank (Dublin) PLC.  According to JPMorgan, “It is the only EU passported bank in the non-bank chain of JPMorgan and provides the firm with direct access to the European Central Bank repo window. It has also been added to the JPMorgan Jumbo issuance programs to issue structured securities for distribution outside the United States.”

As for the statement that AIG was “an insurance company that was also unrelated to Glass-Steagall,” one has the initial reaction to cancel one’s subscription to the New York Times.  AIG owned, in 2008 at the time of the crisis, the FDIC insured AIG Federal Savings Bank.  On June 30, 2008, it held $1 billion in assets.  AIG also owned 71 U.S.-based insurance entities and 176 other financial services companies throughout the world, including AIG Financial Products which blew up the whole company selling credit default derivatives.  What this has to do with Glass-Steagall is that the same deregulation legislation, the Gramm-Leach-Bliley Act that gutted Glass-Steagall in 1999, also gutted the 1956 Bank Holding Company Act and allowed insurance companies and securities firms to be housed under the same umbrella in financial holding companies.

AIG’s annuities are owned by moms and pops all over this country and around the world.  In many cases, they represent a significant source of income to retirees.  Had AIG been allowed to fail, state guaranty funds for insurance products could have been wiped out and the taint of buying insurance products would have damaged legitimate businesses for a lifetime.

For ongoing evidence as to why insured deposit banks cannot be under the same roof with speculating Wall Street firms, one need only look at what the largest banks in the U.S. are holding today.  According to the Office of the Comptroller of the Currency which oversees national banks, as of December 31, 2011, inside the insured banks – not their broker-dealer   components – were the following derivative holdings:  $70.1 trillion at JPMorgan Chase; $52.1 trillion at Citibank; $50.1 trillion at Bank of America; $44.2 trillion at Goldman Sachs Bank USA.

These insured deposit banks have a tiny fraction of their derivative holdings in assets.  For example, JPMorgan Chase has $2.3 trillion in assets in the insured bank.  So why does it need to hedge to the tune of $70.1 trillion in derivatives?  That’s the crux of the issue.  It is not just hedging for the insured bank, it is hedging for its hedge fund clients and corporate clients and institutional clients in the investment bank as well as making proprietary bets to generate profits.

Why should the U.S. taxpayer, through the implied backstop of insured deposits, help JPMorgan make its rich clients richer or eat the losses when the bets go wrong?

Insured deposit banks were meant to function as lenders to individuals and businesses and provide the foundation for stable economic growth in the country.  Today, as the recent blowup in the Chief Investment Office of JPMorgan Chase demonstrates, surplus insured deposits which are backstopped by the U.S. taxpayer are being deployed in exotic, illiquid derivatives.  And these high risk gambles are likely to blow up the system for the second time in a decade while the New York Times and Sorkin pedal egregiously bad data to the public.

Sorkin goes on in the article to make another factually indefensible statement: “Citigroup’s problems are probably the closest call when it comes to whether Glass-Steagall would have avoided its problems. It gorged both on underwriting bad loans and buying up collateralized debt obligations…But Citi’s troubles didn’t come until after Bear Stearns, Lehman Brothers, A.I.G., Fannie Mae and Freddie Mac were fallen or teetering — when all hell was breaking loose.”

By taking Citigroup out of the lead role in the crisis, Sorkin also marginalizes the Glass-Steagall Act.  But he’s dead wrong, again.

Bear Stearns got its emergency infusion from the Fed on March 14, 2008 and was bought out by JPMorgan Chase on March 16, 2008. Lehman failed on September 15, 2008;  AIG, Fannie and Freddie were all rescued by the government in September 2008.  Citigroup’s dire problems began as early as the summer of 2007 according to the Office of the Comptroller of the Currency, regulator of its national bank, and the press was writing about its drastic need for a bailout fund, proposed to be called the SuperSIV, in the fall of 2007.  I wrote extensively about its desperate situation in November 2007.

Sorkin wrote the 2009 bestseller “Too Big to Fail,” a 600-page epic on the 2008 crash.  How he researched the book without discovering these pivotal players owned insured deposit banks is mystifying.

According to Gabriel Sherman in a 2009 piece in New York Magazine, the book party for Sorkin, age 32 at the time, was attended by the titans of Wall Street: Jamie Dimon; John Mack, former head of Morgan Stanley; Steve Rattner, a former New York Times reporter who went on to become a Wall Street investment banker and private equity honcho; Ken Griffin, head of the behemoth Citadel hedge fund;  and other luminaries.

Sherman reveals in the piece that one of Sorkin’s former editors at the Times called his work “thinly reported or loosely written.”  That may not be a big deal if you’re writing gossipy stuff about Wall Street.  But when the public has finally gotten the attention of Congress on the topic of restoring the Glass-Steagall Act to save the country from a potentially more apocalyptic meltdown, putting out a spectacularly inaccurate assessment of the role of Glass-Steagall undermines the safety and soundness of the United States.

The New York Times has financial writers who have been delivering consistently reliable information about Wall Street to the public for more than a decade. Gretchen Morgenson stands out in particular.  It’s time to let those accurate writers weigh in on the Glass-Steagall Act.