Big Banks | - Part 2

The Big Banks are Doing Fine

Among other news about spying and Dennis Rodman’s latest escapades in North Korea, Bloomberg reports that bank profits in 2013 rose to a seven year high.

In what is yet another somewhat disturbing sign of the times, profits would have reached an all-time high last year if not for the nation’s biggest banks having to set aside many billions for legal costs and penalties associated with their prior misdeeds.

Don’t Mess with Goldman Sachs

[Alternate title: More Tarnish on the Goldman Shine - Part 63]

Via this ProPublica story, ex-Federal Reserve Bank of New York examiner Carmen Segarra is in the news today after she found fault with the company policies on conflict of interest at Goldman Sachs and brought that to the attention of her superiors.

That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.

Carmen SegarraBefore she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change them. When she refused, Segarra said she was called to a meeting where her bosses told her they no longer trusted her judgment.

Her phone was confiscated, and security officers marched her out of the Fed’s fortress-like building in lower Manhattan, just 7 months after being hired.

“They wanted me to falsify my findings,” Segarra said in a recent interview, “and when I wouldn’t, they fired me.”

Of course, Segarra has sued for wrongful termination and lots of juicy details have already been revealed about the cozy relationship between one of the world’s most powerful investment banks and its regulator, the New York Federal Reserve.

As is the case for the Treasury Department, there is what amounts to a revolving door between the New York Fed and Goldman Sachs as evidenced by former Goldman partner William Dudley who now runs this particular branch of the central bank. Top Goldman executive E. Gerald Corrigan used to run the New York Fed as did Stephen Friedman who headed up the risk committee at Goldman was Segarra was at the Fed.

This is a comprehensive report at ProPublica that is well worth reading in its entirety and there’s no telling how this will end up. One thing seems certain – Segarra’s chances of walking through that revolving door over to Goldman Sachs have decreased substantially.

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The Dangerous Fed

Here’s an infographic that’s been making the rounds this week and for good reason – it paints a none-too-flattering picture of what the Fed is and what it does.

Also, I didn’t know that Ron Paul’s Audit the Fed Bill has been held up in the Senate for over a year now – I guess that shouldn’t come as too much of a surprise.

Dangerous Fed
For the entire graphic, see The Dangers of an All-powerful Federal Reserve.

Inequality for All

Robert Reich’s highly regarded new documentary Inequality for All debuted across the country over the weekend and, as a result, its garnering a good deal of media attention, for example in Prosperity for the Few, Inequality for All at U.S. News and World Report along with Is America Catching Up With Robert Reich’s Income-Inequality Crusade? at NY Mag.

Here’s the trailer:

The Rotten Tomatoes Tomatometer gives it a 100% rating.

I’ve always liked Robert Reich and I hope this kicks off some sort of a broader movement as the growing divide between rich and poor, enabled by the Federal Reserve and Washington lawmakers, is headed for a French Revolution style ending at some point if left to take its natural course. Then again, this kind of ending would actually be its natural course…

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