There’s been lots of fire and fury around Washington lately, including a brief government shutdown. In Donald Trump’s White House, you can hardly keep up with the ongoing brouhahas from North Korea to Robert Mueller’s Russian investigation, while it already feels like ages since the celebratory mood over the vast corporate tax cuts Congress passed last year. But don’t be fooled: none of that is as important as what’s missing from the picture. Like a disease, in the nation’s capital it’s often what you can’t see that will, in the end, hurt you most.
Amid a roaring stock market and a planet of upbeat CEOs, few are even thinking about the havoc that a multi-trillion-dollar financial system gone rogue could inflict upon global stability. But watch out. Even in the seemingly best of times, neglecting Wall Street is a dangerous idea. With a rag-tag Trumpian crew of ex-bankers and Goldman Sachs alumni as the only watchdogs in town, it’s time to focus, because one thing is clear: Donald Trump’s economic team is in the process of making the financial system combustible again.
Collectively, the biggest U.S. banks already have their get-out-out-of-jail-free cards and are now sitting on record profits after, not so long ago, triggering sweeping unemployment, wrecking countless lives, and elevating global instability. (Not a single major bank CEO was given jail time for such acts.) Still, let’s not blame the dangers lurking at the heart of the financial system solely on the Trump doctrine of leaving banks alone. They should be shared by the Democrats who, under President Barack Obama, believed, and still believe, in the perfection of the Dodd-Frank Act of 2010.
While Dodd-Frank created important financial safeguards like the Consumer Financial Protection Bureau, even stronger long-term banking reforms were left on the sidelines. Crucially, that law didn’t force banks to separate the deposits of everyday Americans from Wall Street’s complex derivatives transactions. In other words, it didn’t resurrect the Glass-Steagall Act of 1933 (axed in the Clinton era).
Wall Street is now thoroughly emboldened as the financial elite follows the mantra of Kelly Clarkston’s hit song: “What doesn’t kill you makes you stronger.” Since the crisis of 2007-2008, the Big Six U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — have seen the share price of their stocks significantly outpace those of the S&P 500 index as a whole.
Jamie Dimon, chairman and CEO of JPMorgan Chase, the nation’s largest bank (that’s paid $13 billion in settlements for various fraudulent acts), recently even pooh-poohed the chances of the Democratic Party in 2020, suggesting that it was about time its leaders let banks do whatever they wanted. As he told Maria Bartiromo, host of Fox Business’s Wall Street Week, “The thing about the Democrats is they will not have a chance, in my opinion. They don’t have a strong centrist, pro-business, pro-free enterprise person.”
This is a man who was basically gifted two banks, Bear Stearns and Washington Mutual, by the U.S government during the financial crisis. That present came as his own company got cheap loans from the Federal Reserve, while clamoring for billions in bailout money that he swore it didn’t need.
Dimon can afford to be brazen. JPMorgan Chase is now the second most profitablecompany in the country. Why should he be worried about what might happen in another crisis, given that the Trump administration is in charge? With pro-business and pro-bailout thinking reigning supreme, what could go wrong?
Protect or Destroy?
There are, of course, supposed to be safeguards against freewheeling types like Dimon. In Washington, key regulatory bodies are tasked with keeping too-big-to-fail banks from wrecking the economy and committing financial crimes against the public. They include the Federal Reserve, the Securities and Exchange Commission, the Treasury Department, the Office of the Comptroller of the Currency (an independent bureau of the Treasury), and most recently, under the Dodd-Frank Act of 2010, the Consumer Financial Protection Bureau (an independent agency funded by the Federal Reserve).
These entities are now run by men whose only desire is to give Wall Street more latitude. Former Goldman Sachs partner, now treasury secretary, Steven Mnuchin caught the spirit of the moment with a selfie of his wife and him holding reams of newly printed money “like a couple of James Bond villains.” (After all, he was a Hollywood producer and even appeared in the Warren Beatty flick Rules Don’t Apply.) He’s making his mark on us, however, not by producing economic security, but by cheerleading for financial deregulation.
Despite the fact that the Republican platform in election 2016 endorsed reinstating the Glass-Steagall Act, Mnuchin made it clear that he has no intention of letting that happen. In a signal to every too-big-not-to-fail financial outfit around, he also released AIG from its regulatory chains. That’s the insurance company that was at the epicenter of the last financial crisis. By freeing AIG from being monitored by the Financial Services Oversight Board that he chairs, he’s left it and others like it free to repeat the same mistakes.
Elsewhere, having successfully spun through the revolving door from banking to Washington, Joseph Otting, a former colleague of Mnuchin’s, is now running the Office of the Comptroller of the Currency (OCC). While he’s no household name, he was the CEO of OneWest (formerly, the failed California-based bank IndyMac). That’s the bank Mnuchin and his billionaire posse picked up on the cheap in 2009 before carrying out a vast set of foreclosures on the homes of ordinary Americans (including active-duty servicemen and -women) and reselling it for hundreds of millions of dollars in personal profits.
At the Federal Reserve, Trump’s selection for chairman, Jerome Powell (another Mnuchin pick), has repeatedly expressed his disinterest in bank regulations. To him, too-big-to-fail banks are a thing of the past. And to round out this heady crew, there’s Office of Management and Budget (OMB) head Mick Mulvaney now also at the helm of the Consumer Financial Protection Bureau (CFPB), whose very existence he’s mocked.
In time, we’ll come to a reckoning with this era of Trumpian finance. Meanwhile, however, the agenda of these men (and they are all men) could lead to a financial crisis of the first order. So here’s a little rundown on them: what drives them and how they are blindly taking the economy onto distinctly treacherous ground.
Joseph Otting, Office of the Comptroller of the Currency
The Office of the Comptroller is responsible for ensuring that banks operate in a secure and reasonable manner, provide equal access to their services, treat customers properly, and adhere to the laws of the land as well as federal regulations.
As for Joseph Otting, though the Senate confirmed him as the new head of the OCC in November, four key senators called him “highly unqualified for [the] job.” He will run an agency whose history snakes back to the Civil War. Established by President Abraham Lincoln in 1863, it was meant to safeguard the solidity and viability of the banking system. Its leader remains charged with preventing bank-caused financial crashes, not enabling them.
Fast forward to the 1990s when Otting held a ranking position at Union Bank NA, overseeing its lending practices to medium-sized companies. From there he transitioned to U.S. Bancorp, where he was tasked with building its middle-market business (covering companies with $50 million to $1 billion in annual revenues) as part of that lender’s expansion in California.
In 2010, Otting was hired as CEO of OneWest (now owned by CIT Group). During his time there with Mnuchin, OneWest foreclosed on about 36,000 people and was faced with sweeping allegations of abusive foreclosure practices for which it was fined $89 million. Otting received $10.5 million in an employment contract payout when terminated by CIT in 2015. As Senator Sherrod Brown tweeted all too accurately during his confirmation hearings in the Senate, “Joseph Otting is yet another bank exec who profited off the financial crisis who is being rewarded by the Trump Administration with a powerful job overseeing our nation’s banking system.”
Like Trump and Mnuchin, Otting has never held public office. He is, however, an enthusiastic proponent of loosening lending regulations. Not only is he against reinstating Glass-Steagall, but he also wants to weaken the “Volcker Rule,” a part of the Dodd-Frank Act that was meant to place restrictions on various kinds of speculative transactions by banks that might not benefit their customers.
Jay Clayton, the Securities and Exchange Commission
The Securities and Exchange Commission (SEC) was established by President Franklin Delano Roosevelt in 1934, in the wake of the crash of 1929 and in the midst of the Great Depression. Its intention was to protect investors by certifying that the securities business operated in a fair, transparent, and legal manner. Admittedly, its first head, Joseph Kennedy (President John F. Kennedy’s father), wasn’t exactly a beacon of virtue. He had helped raise contributions for Roosevelt’s election campaign even while under suspicion for alleged bootlegging and other illicit activities.
Since May 2017, the SEC has been run by Jay Clayton, a top Wall Street lawyer. Following law school, he eventually made partner at the elite legal firm Sullivan & Cromwell. After the 2008 financial crisis, Clayton was deeply involved in dealing with the companies that tanked as that crisis began. He advised Barclays during its acquisition of Lehman Brothers’ assets and then represented Bear Stearns when JPMorgan Chase acquired it.
In the three years before he became head of the SEC, Clayton represented eight of the 10 largest Wall Street banks, institutions that were then regularly being investigated and charged with securities violations by the very agency Clayton now heads. He and his wife happen to hold assets valued at between $12 million and $47 million in some of those very institutions.
Not surprisingly in this administration (or any other recent one), Clayton also has solid Goldman Sachs ties. On at least seven occasions between 2007 and 2014, he advised Goldman directly or represented its corporate clients in their initial public offerings. Recently, Goldman Sachs requested that the SEC release it from having to report its lobbying activities or payments because, it claimed, they didn’t make up a large enough percentage of its assets to be worth the bother. (Don’t be surprised when the agency agrees.)
Clayton’s main accomplishment so far has been to significantly reduce oversight activities. SEC penalties, for instance, fell by 15.5% to $3.5 billion during the first year of the Trump administration. The SEC also issued enforcement actions against only 62 public companies in 2017, a 33% decline from the previous year. Perhaps you won’t then be surprised to learn that its enforcement division has an estimated 100 unfilled investigative and supervisory positions, while it has also trimmed its wish list for new regulatory provisions. As for Dodd-Frank, Clayton insists he won’t “attack” it, but thinks it should be “looked” at.
Mick Mulvaney, the Consumer Financial Protection Bureau and the Office of Management and Budget
As a congressman from South Carolina, ultra-conservative Republican Mick Mulvaney, dubbed “Mick the Knife,” once even labeled himself a “right-wing nut job.” Chosen by President Trump in November 2016 to run the Office of Management and Budget, he was confirmed by Congress last February.
As he said during his confirmation hearings, “Each day, families across our nation make disciplined choices about how to spend their hard-earned money, and the federal government should exercise the same discretion that hard-working Americans do every day.” As soon as he was at the OMB, he took an axe to social programs that help everyday Americans. He was instrumental in creating the GOP tax plan that will add up to $1.5 trillion to the country’s debt in order to provide major tax breaks to corporations and wealthy individuals. He was also a key figure in selling the plan to the media.
When Richard Cordray resigned as head of the Consumer Financial Protection Bureau in November, Trump promptly selected Mick the Knife for that role, undercutting the deputy director Cordray had appointed to the post. After much debate and a court order in his favor, Mulvaney grabbed a box of Dunkin’ Donuts and headed over from his OMB office adjacent to the White House. So even though he’s got a new job, Mulvaney is never far from Trump’s reach.
The problem for the rest of us: Mulvaney loathes the CFPB, an agency he once called“a joke.” While he can’t unilaterally demolish it, he’s already obstructed its ability to enforce its government mandates. Soon after Trump appointed him, he imposed a 30-day freeze on hiring and similarly froze all further rule-making and regulatory actions.
In his latest effort to undermine American consumers, he’s working to defund the CFPB. He just sent the Federal Reserve a letter stating that, “for the second quarter of fiscal year 2018, the Bureau is requesting $0.” That doesn’t bode well for American consumers.
Jerome “Jay” Powell, Federal Reserve
Thanks to the Senate confirmation of his selection for chairman of the board, Donald Trump now owns the Fed, too. The former number two man under Janet Yellen, Jerome Powell will be running the Fed, come Monday morning, February 5th.
Established in 1913 during President Woodrow Wilson’s administration, the Fed’s official mission is to “promote a safe, sound, competitive, and accessible banking system.” In reality, it’s acted more like that system’s main drug dealer in recent years. In the wake of the 2007-2008 financial crisis, in addition to buying trillions of dollars in bonds (a strategy called “quantitative easing,” or QE), the Fed supplied four of the biggest Wall Street banks with an injection of $7.8 trillion in secret loans. The move was meant to stimulate the economy, but really, it coddled the banks.
Powell’s monetary policy undoubtedly won’t represent a startling change from that of previous head Janet Yellen, or her predecessor, Ben Bernanke. History shows that Powell has repeatedly voted for pumping financial markets with Federal Reserve funds and, despite displaying reservations about the practice of quantitative easing, he always voted in favor of it, too. What makes his nomination out of the ordinary, though, is that he’s a trained lawyer, not an economist.
Powell is assuming the helm at a time when deregulation is central to the White House’s economic and financial strategy. Keep in mind that he will also have a role in choosing and guiding future Fed appointments. (At present, the Fed has the smallest number of sitting governors in its history.) The first such appointee, private equity investor Randal Quarles, already approved as the Fed’s vice chairman for supervision, is another major deregulator.
Powell will be able to steer banking system decisions in other ways. In recent Senate testimony, he confirmed his deregulatory predisposition. In that vein, the Fed has already announced that it seeks to loosen the capital requirements big banks need to put behind their riskier assets and activities. This will, it claims, allow them to more freely make loans to Main Street, in case a decade of cheap money wasn’t enough of an incentive.
The Emperor Has No Rules
Nearly every regulatory institution in Trumpville tasked with monitoring the financial system is now run by someone who once profited from bending or breaking its rules. Historically, severe financial crises tend to erupt after periods of lax oversight and loose banking regulations. By filling America’s key institutions with representatives of just such negligence, Trump has effectively hired a team of financial arsonists.
Naturally, Wall Street views Trump’s chosen ones with glee. Amid the present financial euphoria of the stock market, big bank stock prices have soared. But one thing is certain: when the next crisis comes, it will leave the last meltdown in the shade because our financial system is, at its core, unreformed and without adult supervision. Banks not only remain too big to fail but are still growing, while this government pushes policies guaranteed to put us all at risk again.
There’s a pattern to this: first, there’s a crash; then comes a period of remorse and talk of reform; and eventually comes the great forgetting. As time passes, markets rise, greed becomes good, and Wall Street begins to champion more deregulation. The government attracts deregulatory enthusiasts and then, of course, there’s another crash, millions suffer, and remorse returns.
Ominously, we’re now in the deregulation stage following the bull run. We know what comes next, just not when. Count on one thing: it won’t be pretty.
Nomi Prins is a TomDispatch regular. Her new book, Collusion: How Central Bankers Rigged the World (Nation Books), will be published this May. Of her six other books, the most recent is All the Presidents’ Bankers: The Hidden Alliances That Drive American Power. She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.
US Secr. of State Colin Powell´s Chief of Staff´s Propaganda Effectively Sold 2. Iraq War to Americans. Now He Warns His Propaganda Technique is Being Used to Sell War on Iran
Although slowly, the political temperature is rising in the Middle east. Involved are The US which now declares not being willing to give up its illegal military presence in Syria although ISIS has been defeated. Furthermore Russia, invited by the legally elected Syrian president, which the US imagines to have the right to oust – all the while speaking of bringing democracy!!
Activist Post 6 Febr. 2018: Lawrence Wilkerson, who was chief of staff to former Secretary of State Colin Powell, helped the then-secretary “paint a clear picture that war was the only choice” in his infamous 2003 speech to the U.N.
This week, writing for the New York Times — an outlet that, at the time, parroted misleading narratives in support of the war — Wilkerson accused the Trump administration of manipulating evidence and fear-mongering in the same way the Bush administration did to cultivate public support for ousting Saddam Hussein.
The former chief of staff to Powell further criticized the Trump administration, citing its National Security Strategy, which claims:
“The longer we ignore threats from countries determined to proliferate and develop weapons of mass destruction, the worse such threats become, and the fewer defensive options we have”.
“Though Ms. Niki Haley’s (above right) UN- presentation missed the mark, and no one other than the national security elite will even read the strategy, it won’t matter,” he lamented. “We’ve seen this before: a campaign built on the politicization of intelligence and shortsighted policy decisions to make the case for war. And the American people have apparently become so accustomed to executive branch warmongering — approved almost unanimously by the Congress — that such actions are not significantly contested.”
He implicated the news media, as well, noting that outlets recently “failed to refute false narratives” from the Trump administration that Iran worked with Al-Qaeda to undermine the U.S.
Never forget the CIA’s overseas meddling helped lay the foundation for Al-Qaeda in the first place, and its policy of arming extremists in Syria also ended up empowering the terror group). He compared this false conflation with Dick Cheney’s attempts to link Saddam Hussein to Al-Qaeda during the Bush years.
Nevertheless, Wilkerson wrote, “[t]oday, the analysts claiming close ties between Al Qaeda and Iran come from the Foundation for Defense of Democracies,which vehemently opposes the Iran nuclear deal and unabashedly calls for regime change in Iran.” .
He went on to list the variety of ways the Trump administration is drumming up unfounded support for war against Iran:
We should include the 1) president’s decertification ultimatum in January that Congress must ‘fix’ the Iran nuclear deal, despite the reality of Iran’s compliance; 2 )theWhite House’s pressure on the intelligence community to cook up evidence of Iran’s noncompliance; and the 3) administration’s choosing to view the recent protests in Iran as the beginning of regime change. Like the Bush administration before, these seemingly disconnected events serve to create a narrative in which war with Iran is the only viable policy.
This war was announced already in 2001 by former NATO Commander- in-Chief in Europe, Wesley Clark, in 2001 – besides the wars on another 6 rogue states the US has/is attacked/ is attacking.
He warned: As I look back at our lock-step march toward war with Iraq, I realize that it didn’t seem to matter to us that we used shoddy or cherry-picked intelligence; that we might be hopelessly naïve in thinking that the war would lead to democracy instead of pushing the region into a downward spiral.
Confrontation between Israel and Syria?
DEBKAfile 1.Febr. 2018: Contrary to Moscow’s promises, the Russian military is not pulling out of Syria, but adding four more air bases (one shared with Iran) and 6,000 more troops.
On Dec. 11, 2017, Russian President Vladimir Putin, followed by Defense Minister Sergey Shoigu, announced that the Russian military was to withdraw from Syria to home bases. DEBKAfile’s military and intelligence sources report that the reverse happened.
Russia´s bases very close to Israel – confronted by US bases to defend the US-established new Kurdistan.
Confrontation between US and Syria?
Sputnik 6 Febr. 2018: Turkish President Recep Tayyip Erdogan stated that the United States should leave Syria’s Manbij in Aleppo province as Ankara plans to return it “to its true owners.” He also added that Washginton had “calculations against Turkey, Iran and maybe Russia” in Syria, claiming that the US military presence there was directed against the aforementioned countries after Daesh’s (ISIS) defeat
Confrontation between Israel and Lebanon?
Haaretz 3 Febr. 2018: A delegation of Russian officials that arrived in Israel this week did so in an attempt to prevent a planned Israeli attack on Iranian missile factories in southern Lebanon and Syria, the Saudi daily ASharq Al-Awsat reported on Saturday.
Netanyahu tells Putin: Iranian missile factories in Lebanon are already in progress, we won’t accept this threat.
U.S. warns: Syria’s Assad developing new chemical weapons, we may take action.
Comment: We have heard this before: Ghouta – probably a false flag -where the UN declared the gas did not come from the Syrians. In April and Sept. 2017, there were another 2 gas attacks. Of course Syria was blamed – but that is dubious.
Israeli threats to strike Lebanon missile factory not intended to provoke war, but to distance!!
Russia Today 1 Febr. 2018 Tel Aviv is ready for an all-out ground invasion of Lebanon in the event of a military conflict with Beirut, Defense Minister Avigdor Lieberman said. His comments come as relations between the two neighbors continue to sour.
“We must prepare for maneuvering on the ground too, even if we do not use it,” the minister said at a conference of the Institute for National Security Studies (INSS) held at Tel Aviv University on Wednesday.
Not mincing his words, Lieberman said that, in a worst-case scenario, Israel would conduct the operation at “full strength.” “We must not take one step forward and one step backward. We will move forward as fast as possible,” Lieberman added .
Israel will act tough on Lebanon, minister Leberman warned. “If in Israel they sit in shelters, then in the next fighting all of Beirut will be in shelters,” Lieberman added.
The minister’s comments come amid Israel’s concerns over the Lebanese Hezbollah armed group, which allegedly plans to arm itself with locally-produced precision-guided missiles.
“The Hezbollah terror organization is violating the UN Security Council resolutions, maintaining a military presence in the region, possessing weapons systems and increasing its military capabilities,” Gabi Eisenkot, the head of the Israeli Defense Forces General Staff, said on Tuesday, as cited by Haaretz.
Lieberman also said that he sees no difference between Hezbollah and the rest of Lebanon, as he believes that the armed group has enough influence to control both political and military forces of Israel’s northern neighbor. “They are part of Hezbollah and they will all pay the full price” for any large-scale attack on Israel.
In late November, the Lebanese Army asked the military to be at “full readiness” to face “the Israeli enemy” on the southern border. At the same time, Lebanese President Michel Aoun said that “Israeli targeting still continues and it is the right of the Lebanese to resist it and foil its plans by all available means.”
The Guardin 28 Aug. 2017: At the start of a meeting in Jerusalem with U.N. Secretary-General Antonio Guterres, Netanyahu accused Iran of turning Syria into a “base of military entrenchment as part of its declared goal to eradicate Israel.”
“It is also building sites to produce precision-guided missiles towards that end, in both Syria and in Lebanon. This is something Israel cannot accept. This is something the U.N. should not accept,” Netanyahu said.
Confrontation between US and Russia
So far these two countries have been good at making agreements on their warfare in Syria without clashing. Can that go on? Neoconservatives in the Us want the clash with Russia.
But I don´t think that will happen until London City allows them to.bsp;