Mammon, Get Thee Away from the USA!

Mammon, get thee away from the USA...

"I rose up at the dawn of day, --

'Get thee away! get thee away!

Pray'st thou for riches? Away, away!

This is the throne of Mammon grey.'" 

-- William Blake, "Mammon"

"Mammon led them on --

Mammon, the least erected Spirit that fell

From Heaven: for even in Heaven his looks and thoughts

Were always downward bent, admiring more

The riches of Heaven's pavement, trodden gold,

Than aught divine or holy else enjoyed

In vision beatific."

-- John Milton, "Paradise Lost" (1667-1674), Book I, line 678.

Hierarchy of Greed: All For One

It's great to be me. Me, me, me...

All the Devils Are Here: The Hidden History of the Financial Crisis

"Hell is empty, and all the devils are here."-- Shakespeare, The Tempest

As soon as the financial crisis erupted, the finger-pointing began. Should the blame fall on Wall Street, Main Street, or Pennsylvania Avenue? On greedy traders, misguided regulators, sleazy subprime companies, cowardly legislators, or clueless home buyers?

According to Bethany McLean and Joe Nocera, two of America's most acclaimed business journalists, the real answer is all of the above-and more. Many devils helped bring hell to the economy. And the full story, in all of its complexity and detail, is like the legend of the blind men and the elephant. Almost everyone has missed the big picture. Almost no one has put all the pieces together.

All the Devils Are Here goes back several decades to weave the hidden history of the financial crisis in a way no previous book has done. It explores the motivations of everyone from famous CEOs, cabinet secretaries, and politicians to anonymous lenders, borrowers, analysts, and Wall Street traders. It delves into the powerful American mythology of homeownership. And it proves that the crisis ultimately wasn't about finance at all; it was about human nature.

Among the devils you'll meet in vivid detail:

• Angelo Mozilo, the CEO of Countrywide, who dreamed of spreading homeownership to the masses, only to succumb to the peer pressure-and the outsized profits-of the sleaziest subprime lending.
• Roland Arnall, a respected philanthropist and diplomat, who made his fortune building Ameriquest, a subprime lending empire that relied on blatantly deceptive lending practices.
• Hank Greenberg, who built AIG into a Rube Goldberg contraption with an undeserved triple-A rating, and who ran it so tightly that he was the only one who knew where all the bodies were buried.
• Stan O'Neal of Merrill Lynch, aloof and suspicious, who suffered from "Goldman envy" and drove a proud old firm into the ground by promoting cronies and pushing out his smartest lieutenants.
• Lloyd Blankfein, who helped turn Goldman Sachs from a culture that famously put clients first to one that made clients secondary to its own bottom line.
• Franklin Raines of Fannie Mae, who (like his predecessors) bullied regulators into submission and let his firm drift away from its original, noble mission.
• Brian Clarkson of Moody's, who aggressively pushed to increase his rating agency's market share and stock price, at the cost of its integrity.
• Alan Greenspan, the legendary maestro of the Federal Reserve, who ignored the evidence of a growing housing bubble and turned a blind eye to the lending practices that ultimately brought down Wall Street-and inflicted enormous pain on the country.

Just as McLean's The Smartest Guys in the Room was hailed as the best Enron book on a crowded shelf, so will All the Devils Are Here be remembered for finally making sense of the meltdown and its consequences.

Bethany McLean 2010 CSPAN YouTube video:

http://www.youtube.com/watch?v=3C8tC_0dsDI

Dennis M. Kelleher Blog: Jamie Dimon's Decision Time: Statesman or Continued Shill?

For Jamie Dimon and all of Wall Street, it's time to wake up and step up.

They lost on their biggest bets in a long time: defeating President Obama, defeating Elizabeth Warren in Massachusetts and, more important to them, defeating financial reform. They went all in. Spent hundreds of millions of dollars directly and indirectly. They had a presidential candidate expressly vowing to repeal the Dodd-Frank financial reform and Wall Street re-regulation law. All their efforts were for naught. The loss was total.

The question now is whether or not they will learn anything. If past is prologue, they won't, but they have a moment to seize an opportunity, rehabilitate themselves, and do what's right for the country, which will also turn out to be what's right for Wall Street.

So, the question is, will Jamie Dimon allow himself to continue to be the pretty face behind which the ugly business of Wall Street gets done? Or will he, against all evidence, become a statesman that rises above his parochial economic interests and ego and genuinely and truly take on a role that promotes the greater good? (I've written about the total lack of statesmanship on Wall Street before here.)

Reflexive hostility if not hatred, unrelenting opposition to the most modest financial reform, and an inexplicable inability to take even an occasional mild criticism has turned Wall Street into a caricature of itself. Will it move on? Will Jamie see how self-defeating such an approach and attitude ultimately is? Will Wall Street move even lower in the opinion of the American people? Those are the questions confronting Jamie and Wall Street at this electoral cross roads.

What should Jamie do? First, he has to realize that using his influence to address the fiscal cliff and related issues isn't going to do him any good. Actually, it reflects shallow thinking and useless conventional wisdom. Yes, Wall Street and American business have to try to influence the rigid, ideological, right wing who are still opposed to all-things Obama and think compromise is akin to surrendering to the devil. But, doing that is just trying to restore a little sanity into the debate skewed due to unyielding right wing ideologues. Trying to get people to be responsible is not leadership, is not being brave or, frankly, doing more than what should be done as a routine matter anyway. It is also, unquestionably, in their obvious immediate self-interest.

What Jamie and other adults on Wall Street need to do is show real, meaningful leadership. That means call off their war on financial regulation and Obama/Democrats more broadly. Call off the thousands of lobbyists and lawyers; reach out to those fighting for financial reform; give up on those things that help their short-term profits and support those things that promote long-term growth and market confidence.

Just one big example: Jamie has often said he is against too-big-to-fail banks and firms. He has gone so far as to testify recently that if any such firm requires government assistance that it should be "dismantled" and "the name should be buried in disgrace." But, as is so often with Wall Street, what Jamie says isn't what Jamie's lawyers, lobbyists, allies, front groups, purchased academics, political fundraisers and other fellow travelers directly and indirectly on his payroll fight for and against. His bank, JP Morgan Chase, is the biggest of the too-big-to-fail banks in the U.S. and the world. Jamie Dimon alone has the singular and unilateral ability to dramatically and meaningfully change that entire debate by aligning his bank's actions with his words. That would be leadership. That would be a statesman.

This isn't asking Jamie or Wall Street to become public servants or even to act against their own real best interests. The war on financial regulation is not only wrong; it is not even in Wall Street's best interests. For 70 years after the Great Depression Wall Street and the U.S. financial industry was more heavily regulated than any time in history. Yet, our country prospered; we built the largest and most broad-based middle class in the history of the world; American business thrived and Wall Street dominated finance worldwide. All under the heaviest regulation ever, as recently presented at a symposium.

What happened? Deregulation and non-regulation resulted in the biggest financial collapse since the Great Crash of 1929 and has caused the worst economy since the Great Depression, all in just seven years or so. That is going to cost our country no less than $12.8 trillion dollars. It has cost Wall Street as well in terms of prestige, confidence, status, revenue, profits and influence, as so dramatically proved in this election and in the opinion polls.

This all proves the value of Goldman's old in-artful slogan: long-term greedy. A key problem is that Wall Street and its enablers have all become super-short-term super-greedy. That caused the financial collapse and is destroying Wall Street as well as rotting and corrupting the country's political system and culture. Nothing wrong with making money, including lots of it, but it must be done in the service of open, fair and competitive financial markets and a growing real economy rather than just grabbing the biggest bonus as fast as possible.

Decision time, Jamie: Statesman or continue to shill for a discredited Wall Street?

Bankruptcy Bonuses: Another Way Execs Cheat Workers (and Taxpayers)

By Bruce Watson Posted 07/24/12

Ever since 2008, when sordid tales of big bonuses at bailed-out Wall Street banks flooded the news media, the huge checks that top executives often write themselves have been reliable class warfare bait. Little wonder: That year, amid failing banks, mass foreclosures, skyrocketing unemployment and frenzied bailouts, New York financial companies paid their workers an estimated $18.4 billion in bonuses.

Since then, Wall Street has gotten a bit more careful about its bonus structure. Many companies reduced their bonuses, some capped the amount that employees could receive, and still others found creative ways to conceal their biggest paychecks. Even so, banker bonuses remain a tough sell to the general public, especially when it appears that they are coming at the expense of average workers -- and taxpayers.

The New Bonus Math

Recently, Hawker Beechcraft (HBC), a Wichita-based aircraft company, landed at the cutting edge of the bonus battle. Earlier this year, it entered bankruptcy and is now in the process of being sold to a Chinese firm, Superior Aviation Beijing Co. Ltd. In return for negotiating the sale of the company, HBC's nine top executives are hoping to get more than $5.3 million in bonuses -- 200% of their base salaries. Meanwhile, another 31 members of management will presumably split $1.9 million.

And what of HBC's workers? In preparation for the sale, the company is trying to shed its pension fund, which is currently $751 million in the hole. To put it mildly, the company's new Chinese owners don't want responsibility for its pensions; one plan is to dump responsibility for the fund onto taxpayers through the Pension Benefit Guaranty Corporation, an agency of the federal government.

The Outsourcing Business Plan

This isn't the first time that Hawker Beechcraft has hung its workers out to dry. The company was formed in March 2007, when Goldman Sachs and Onex Partners, a Canadian investment firm bought the division from Raytheon. Seven months later, HBC opened a huge new factory in Chihuahua, Mexico.

Between October 2008 and mid-August 2009, the company laid off 2,800 employees -- 25% of its workforce. They got rid of another 300 in late August 2009, 240 in September 2009, 350 in October 2010, and 906 in 2012.

Even apart from the costs of providing for the company's laid-off workers, much of the bill for HBC's downfall has landed on taxpayers. In 2010, the company struck a deal with the state of Kansas, promising to keep 4,000 jobs in Wichita until 2020, in exchange for which it received $45 million in tax benefits.

Currently, the company has 4,100 workers in Wichita, but it's unclear if those jobs will survive the company's sale to China. According to the International Association of Machinists and Aerospace Workers, a union that represents 3,500 HBC workers, "there is no reason to believe that Superior, an entity owned and financed by the Chinese government and the Beijing municipal development corporations, would preserve jobs in the United States rather than eventually transporting the work to China."

Emptying the Coffers

For that matter, Hawker Beechcraft's slow-motion march to bankruptcy seems to have gone hand-in-hand with the deflation of its pension fund. Recently, The Atlantic's James Fallows quoted a former employee of the company who claimed that "The pension plan was fully funded at the time of the sale in 2007 and was 98% in 2009."

So, to recap: In 2007, a pair of investment funds bought HBC. They proceeded to fire over 4,000 workers, looted the company's pensions, and are now hoping to leave U.S. taxpayers holding the bag on their responsibilities while top execs sell the company to China and pocket $7.2 million in bonuses in the bargain.

As horrifying as the HBC story is, it's not uncommon. Recently, Kodak, MF Global, Lear Corp, Lee Enterprises, and dozens of other bankrupt companies have asked for permission to give their execs huge bonuses -- often while carrying billions in government bailout funds.

In context, it's not hard to see why many critics are arguing that Wall Street is playing by a skewed set of rules, and the middle class is paying the price.