Rortybomb is great. I wanted to take a paragraph out and quote him but I couldn’t pass up the graph, so, I reblogged.
Give him a read. It’s richly merited.
James Pilant
via Rortybomb
Category: President Obama
Obama Staffer Finds New Job – Citibank!
Citigroup Inc named U.S. President Barack Obama’s former budget director as a senior global banking adviser on Thursday, strengthening its ties to high-profile former officials the same week the bailed-out bank finished shrugging off U.S. government ownership.
Peter Orszag, currently a senior fellow at the Council on Foreign Relations, is Citigroup’s second hire of a former senior government official this month. Last week the bank hired Carlos Gutierrez, former Commerce Secretary under President George W. Bush, as a vice chairman for its institutional clients group.
Orszag, who had worked as director of the Office of Management and Budget under President Obama, left the White House in July. He was one of the president’s most prominent advisers and remains well-connected in U.S. political circles.
As a presidential adviser, wouldn’t he have a played an important perhaps critical role in the bailout (TARP)? Would it be likely that he had a role in making sure there has been no prosecution of the crimes committed by the banking sector during the past two years? Wouldn’t etc., etc?
Is this pathetic or what? How long has this deal been in place? Did he always know there was a warm place for him at Citibank? Or was it just part of the expectations of the job? What’s he going to get, 5 mil, 7 mil, not counting stock options, the company car and the other goodies?
What is this? What is this place where the people who are supposed to be protecting us are the employees of banks, apparently on some kind of rest cure in the oval office until returned to duty?
Wasn’t this supposed to be a different kind of Presidency, you know not run by lobbyist? Well, they keep the lobbyists at a comfortable distance – inside the White House.
James Pilant
Jon Stewart Explains Aftermath Of Budget Deal
(Click the link to see the video.)
Have people been too hard on President Obama? On Thursday night’s “Daily Show,” Jon Stewart approached this topic based on the American people’s response to the President’s recent tax cut deal. At his most recent press conference, you didn’t even need to have the sound on to see how annoyed Obama was.
Stewart pointed out that Obama has always been frustrated with Republicans, but now it seems like he’s become disillusioned with his own supporters. At the press conference, he defended his compromise with Republicans that even the richest Americans would keep their tax cuts and unemployment benefits would be extended. When Obama said it was like the public option battle all over again — no one caring if a much-needed bill was passed because of one compromise that was made — you could really see how frustrated he was.
As always with Jon Stewart it is difficult to add anything to what he has to say, so I’ll let the video say it.
By the way, I am troubled by the not clear connection between this and business ethics. But the tax structure and unemployment are vital elements of the business world and whether or not these actions are just and moral. Should the wealthiest of Americans get a tax cut when so many are unemployed? That’s a business ethics question. At what point is there a shared bond between Americans requiring even a minimal sacrifice? That’s an ethics question.
James Pilant
Obama To Lower Corporate Tax Rate!
Democrats and Republicans should begin a conversation next year about a broad overhaul of the tax code that would involve lowering rates while eliminating tax breaks for favored groups, President Barack Obama said in an interview broadcast on Friday.
The Republicans now have a majority in the House. Shouldn’t this have been something done during the first two years?
Obama said any effort to streamline the multilayered U.S. tax code would be challenging but if successful, it could set the stage for more robust growth.
Okay guys, I’ve been around the block a few times and when ever someone talks about simplifying the tax code, the middle class is about to get nailed hard. By the way, “robust growth” is a code word for lower corporate taxed and business benefits like subsidies.
Tax reform is an idea backed by many in the business community who say the current corporate tax structure puts American firms at a competitive disadvantage.
For “many in the business world,” read every corporate lobbyist is salivating like a hungry German Shepherd in front of filet mignon.
“Typically, the idea is, simplifying the system, hopefully lowering rates, broadening the base — that’s something that I think most economists think would help us propel economic growth,” Obama told National Public Radio in an interview. “But it’s a very complicated conversation.”
Verbiage – means nothing.
“So what I believe is, is that we’ve got to start that conversation next year. I think we can get some broad bipartisan agreement that it needs to be done. But it’s going to require a lot of hard work to actually make it happen,” he said.
For “work” read continuous concessions stretched out over months so that the lack of backbone, resolve and political intelligence of the Obama White House will be fully revealed.
“Change You Can Believe In.” Yes, in the same way I believe in post-apocalyptic waste lands.
Explain this to me. For decades large corporations have been directly evading, off shoring their corporate headquarters, sometimes just not paying taxes, and blackmailing every State, county and city humanly possible to cut their taxes, so we reward them with lower rates?
And here I am again trying to teach business ethics to my students who will observe the real life machinations of our President, which means, I get to say, “Okay, do the right thing, everyone from the President on down will reward the other guys, but you still be good.”
Then I get to go into “good for your soul” argument which is pretty much all I got left at that point.
Writing a business ethics web blog under this Presidency has all the benefits of being a medieval flagellant.
James Pilant
Financial Transaction Tax – Viable Tax Source?
Here are three videos discussing the campaign for a financial transaction tax.
We should have a powerful discussion on this issue in the United States considering the behavior of the banks during the housing boom, the financial meltdown and the current mortgage crisis. They have abdicated any moral high ground they might have had and we need as a people, as a nation, to consider how to run our financial affairs. The middle class should not be a continual target for benefit cuts and tax increases. We have options.
James Pilant
Deficit Commission Recommends Further Destruction Of The Middle Class
A presidential panel set up to help trim the US budget deficit has called for steep spending cuts and tax rises.
The proposal would cut defence, social security and other spending, slashing a total of $4.1tn (£2.62tn) from the budget deficit by 2020.
But analysts say the panel is unlikely to ratify the plan with a vote, calling into question whether the US Congress will act on its recommendations.
“The solution will be painful,” the plan reads. “There is no easy way out.”
The US had a budget deficit of $1.3tn in the year to September, and critics have said the government should do more to narrow the gap.
Social Security pays for itself for another twenty years and its surplus is used in the U.S. to fund things like defense. Social Security taxes are only taken out of the first, 100,000 dollars or so out of income. If we raised the limit even slightly the fund would be intact for many decades.
Why is social security under attack? It’s doctrinal. Friedman economics says that government can do nothing right. Therefore, social security must by its very government nature be a failure. The numbers, the facts, the experience, – mean nothing. It’s very similar to a religion.
It’s why instead of the military rebuilding the Iraqi infrastructure, we used private firms. By the Friedman doctrines, this colossal incompetence and theft of government funds would have been much worse if the government had done the job.
Private and public means to accomplish ends are choices. There is no complete superiority of one over another. There never will be. There are just tools to accomplish things, no more.
That people are able to build a strange worshipful doctrine toward “free enterprise” is a symptom of larger moral and ethical problems. But above all, it’s the result of a successful sales job paid for over decades with millions and billions of dollars and preached by dozens of well financed foundations and other advocacy organizations.
Let’s read another section from the BBC coverage –
The panel’s chairman, Mr Bowles, said the panel’s work had – at the very least – made America engage in substantive debate on the deficit issue.
“The era of debt denial and the denial of its consequences is over,” he said. “We have started an adult conversation that will dominate the debate until the elected leadership in Washington does something real.”
This is nonsense. These measures have been preached for decades by “free market” conservatives.
Besides the real issues aren’t even on the table. Why do we allow companies based and operating in the United States to offshore their tax burden? What is fair tax code and what do we need to do to enforce it? I could go on.
But if you want to quickly discover the intellectual and moral absence in the committee’s recommendations, you only have to examine the question of a bank tax.
What is a bank tax, you say?
It is the phrase that must not be spoken.
Formerly, the United States was a manufacturing giant, so it gathered its taxes from a well paid middle class and by taxes on goods. Now we live in a nation based on finance and “play” money. Financial speculation is the rule of the day. Since our economy is now based on finance, doesn’t it make sense to change the nature of our tax structure to reflect our current realities? What we have now is a shrinking manufacturing base and a deteriorating middle class. We also have a banking and financial industry wedded at the hip to tax rescues and government guarantees. That merits taxation. Yet, a tax to raise a mere twenty billion dollars to help pay for another bailout was defeated in the middle of this year.
Let’s try another phrase, financial transaction tax.
No one seems to talk about this one either. Did the debt commission talk about this for page after page? You’re going to read more about it here.
A report on this kind of tax suggests that even a small, simple tax will produce 100 billion dollars in revenue each. Obviously, a trillion in a decade.
That’s deficit reduction.
There is much more to talk about. But there seems little likelihood of a genuine discussion outside of the limits established by the beltway pundits. We can only talk about Medicare, Social Security and a PR campaign of little significance to rein in defense spending. I see nothing else in the proposals likely of actual action except the mortgage deduction.
President Obama stacked the committee with those who had long wanted to attack social programs. Those programs that benefit the middle class are those that will be successfully attacked. The middle class has been targeted for four decades with continued success. There is no reason for Washington to stop now.
James Pilant
President Obama Understands Your Frustrations!
President Barack Obama has asked security officials whether there’s a less intrusive way to screen U.S. airline passengers than the pat-downs and body scans causing a holiday-season uproar.
That is not what he asked. Further down in the article, they say what he actually asked, which was, “Is there another way to catch a bomber like the Nigerian man who had explosives in his underwear?” And his experts said no.
For now, they’ve told him there isn’t one, the president said Saturday in response to a question at the NATO summit in Lisbon.
But there are some other questions, President Obama could be asking. For instance, should the American security establishment always focus on the last attack? Since that enables terrorists to literally “call the tune.” They decide what security we deploy. You think that’s overstated?
Let me try it out on you. I take a toothbrush into the lavatory and with the sharpened decorative star off my cowboy boots cut it into a makeshift but entirely effective shiv. I then cart this thing back into the plane and get caught. Do you think you’ll be carrying a toothbrush onto an American plane for the foreseeable future? Don’t get me started on the cowboy boots.
I want you to picture five guys, Middle Eastern or not, having those kinds of discussions, not what will succeed in harming an aircraft but what will make the Americans do stupid things ceaselessly demeaning their citizens.
“I understand people’s frustrations,” Obama said, while acknowledging that he’s never had to undergo the stepped-up screening methods.
He feels your pain but not directly.
Passengers at some U.S. airports must pass through full-body scanners that produce a virtually naked image. If travelers refuse, they can be forced to undergo time-consuming fingertip examinations, including of clothed genital areas and breasts, by inspectors of the same sex as the passenger.
My general perception is that body cavity searches are the one frontier left for the intrepid explorers of the TSA.
Obama said he’s told the U.S. Transportation Security Administration: “You have to constantly refine and measure whether what we’re doing is the only way to assure the American people’s safety. And you also have to think through, are there ways of doing it that are less intrusive.”
He implied to them that they should make it better.
At this point, that agency and counterterrorism experts have told him that the current procedures are the only ones that they think can effectively guard against threats such as last year’s attempted Christmas-day bombing. A Nigerian man is accused of trying to set off a bomb hidden in his underwear aboard a flight from Amsterdam with nearly 300 people aboard.
So, let me get this straight, we have organized our entire TSA screening process as if another person was going to wear a bomb in his underwear?
Obama said that in weekly meetings with his counterterrorism team, “I’m constantly asking them whether is what we’re doing absolutely necessary, have we thought it through, are there other ways of accomplishing it that meet the same objectives.”
For now it sounds like there aren’t, and travelers will face potential pat-downs and scans.
“One of the most frustrating aspects of this fight against terrorism is that it has created a whole security apparatus around us that causes huge inconvenience for all of us,” Obama said.
No, you are creating a vast security apparatus and you’re not asking the right questions, just the conventional ones.
The President has the power to say, stop. The President has the power to say, “This is one step too far. We don’t have to sacrifice our dignity and our honor to our fear.”
Don’t hold your breath for that one.
James Pilant
A Thirty Dollar Fee?
Now you, common middle class citizen, you have to pay a thirty dollar fee at a court house in most states for them to record a change in ownership in property. They have to do paperwork and change that little county map that shows who owns what. Now suppose you change the ownership again. You transfer it your spouse, your child, or you’re paying the fee as part of a sales contract. You have to pay a second thirty dollar fee.
Annoying, right? Of course, but has to be done. You have to know who owns what, right?
What if you don’t want to pay the second time? Well, you are out of luck there too. The state is not going to let you out of the fee. Besides without paying the fee, the records won’t show who owns the property, so it’s a good idea to pay it, right?
Everybody has to pay the fees, right??
No, they don’t.
If you are a bank using the MERS system, you don’t have to pay a second fee. (MERS = Mortgage Electronic Registry System)
You see all the transactions are done by computer therefore there is no fee for any transaction after the first one. The banks often transferred these properties dozens of times, but every transfer after the first one was free. Isn’t that great?
Now, you probably would like to say something dumb like, “Isn’t that state law?” Then you might follow it up with, “Doesn’t that mean they don’t own the property?!”
You silly person, don’t you realize this a is a banking institution? They are not like you.
They just decided not to pay.
See, when you want to change a law, you have to lobby and talk to people and ask the legislature to consider a bill changing the law, then it has to go through both houses and then be signed by the governor.
But when you are a bank, you simply decide not to pay the fees. It makes everything simple.
Now, there are those in this country who are bizarre individuals. Those strange people want the banks to cough up the money. So, the banks, their feelings deeply injured, have run to their friends in the United States Congress who are planning a surprise party for you.
At the surprise party a thinly clad financial industry lobbyist will leap out of a cake and tell you that Congress has legalized all that stuff that the banks have been doing for, Oh, about five years now.
Now you might ask another question at this point and it is not “Why aren’t I getting any cake?” Your question is “Doesn’t those payments to the country, those thirty dollars each time, aren’t those part of my county’s taxes?”
Why, yes, they are.
But remember, Virginia, there is a Santa Claus and he just took your county’s money and gave it to the banks.
What a sad story!
And it’s all true!!
It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn’t much — $30 or so — but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.
One mortgage transaction became a dozen or more, and the tab grew ever larger. So the banks came up with a way around the fees. And now they are fighting to avoid perhaps tens of billions of dollars in penalties that have added up over the years.
From further down in the article –
MERS is “an admitted fee-avoidance scheme,” says Robert Hager, the Nevada lawyer who, along with his partner Treva Hearne, is filing the suits against MERS and its bank owners, including the government-backed mortgage-finance companies Fannie Mae and Freddie Mac. Fannie and Freddie provide a low-cost flow of funding to the nation’s mortgage markets by buying mortgages from lenders, packaging them into securities and then selling them to investors.
The suits were filed in California, Nevada and Tennessee and 14 undisclosed states where the cases are still under court seal. Hager and Hearne chose the states because their laws allow what are called false claims suits, in which citizens can take legal action against companies that may have cheated the government.
The suits allege that by privatizing public records, MERS enabled banks to circumvent American property law and bypass the counties’ fee and paperwork requirements, costing billions of dollars in lost revenue over more than a decade. MERS says its process is legal, and that the fees are not required under its system.
If only we were all banks!
James Pilant
MERS And Ownership
MERS, Mortgage Electronic Registry System, is a system used by the banks to evade paying fees or having to do the traditional paperwork necessary to change the ownership of property.
To quote the Associated Press –
MERS’ owners are all the big mortgage companies, including Bank of America, Citigroup, Wells Fargo, JPMorgan Chase and GMAC. They are all facing a foreclosure-fraud investigation launched by all 50 state attorneys general, and all took government bailout money after the financial meltdown in 2008.
As I mentioned in my last posting, our lame duck Congress is thinking (if you could ever refer to their processing as having thought) of legalizing this system now, years after the major banks began using it with full knowledge of its legal problems. (Being a bank is very much like being in love in the movie, Love Story, you never have to say you are sorry.)
This is from the Washington Post. It explains why MERS is a problem.
I very much appreciate the Washington Post for developing this little picture and trust it was useful to you.
James Pilant
Foreclosure Judges Fight The Good Fight
Alain Sherter (who I do not write enough about) has a excellent column titled, “How Local Judges are Putting the Feds to Shame In Halting Improper Foreclosures.”
Here’s a selection from it –
Consider this astonishing stat drawn from a WaPo story today: Courts in the area are estimated to be dismissing upwards of 50 percent of foreclosure cases against homeowners because of slipshod — or outright fraudulent — paperwork filed by lenders. Banks are appealing many of these decisions, a sign of just how afraid they are the rulings could embolden courts around the country to follow suit:
In millions of cases across the United States, local judges have wide latitude to impose sanctions on banks, free homeowners from their mortgage debts or allow the companies to proceed with flawed foreclosures. Ultimately, the industry is likely to face a messy scenario — different resolutions by courts in all 50 states.
Sherter puts his finger on what I try to communicate to my classes. Attorneys and Judges are not the Ogres portrayed on television. It is true that are some very, very bad attorneys. I hold them in contempt. But you would be astonished and impressed by the attorneys I’ve met who fight for their clients for little money, sometimes no money. This whole mortgage foreclosure mess would never have come to light, if it weren’t for attorneys working for next to nothing trying to keep people in their home.
He makes another point in both the title and inside the article.
Federal bank regulators are equally intent on keeping the foreclosure assembly line moving. That’s no surprise, given that they’re deeply implicated in the foreclosure mess. For instance, state financial supervisors turned to the OCC in 2007 after JPMorgan Chase (JPM) and Wells Fargo (WFC) stonewalled their investigations into improper foreclosures.
Not content to simply ignore the problem, the OCC actually made it worse. Protecting its authority to oversee national banks, a doctrine known as “preemption,” the agency shooed the state enforcers away. Then it asked the banks to look into the matter.
I said exactly the same thing in one of my posts – If you are waiting for the Obama administration to come your rescue, you are going to be waiting a long time.
James Pilant
Pilant's Business Ethics Blog 
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