Friday, July 2, 2010


The House/Senate Conference Committee has reported out a financial reform bill the

White House loves and a handful of Republicans will support. The White House will adore

the media coverage this bill will generate because it looks like they actually did something

to correct the financial meltdown caused by the Goldman Sachs's of the world. It will force

the Republicans to either vote for it or look like they are in Wall Street's pocket. For once,

a bi-partisan bill will emerge which looks like Washington got something done. Not!!

Despite all the weeping and gnashing of teeth by the financial industry, this legislation

essentially leaves Wall Street untouched in all the major areas that were crying out for reform.

Banks will still remain too big to fail. They will still be able to gamble with saver's money

and investor's money without risking their own salaries or bonuses and the ratings agencies

will still be paid by the banks to rate financial instruments ignoring an ongoing conflict of

interest. Equally disturbing, the bill shows Congress has taken sides with the White House,

a side not responsive to the average gum-chewing American tax payer.

What is the purpose of Wall Street? Is it to maximize profits for its investors or is it

to lend money and special seed capital to nurture and grow businesses which will employ

Americans and grow the economy? As it's currently configured, Goldman Sachs, J.P. Morgan,

and others exist solely to make all the money they can whether a single job is created or not.

If you look at all the exotic investments they created, few if any were contrived to incubate

new companies or industries. Most of what the credit default swaps, derivatives, and various

other toxic products did was open more avenues for risky speculation. Speculation is merely

a nicer word some use to justify gambling. Wall Street has always been and continues to be

the world's largest casino. The problem is that they've stopped using house money; now they

are using our money. Our pension money, our savings, and the equity in our homes are what

fuels this newest round of criminally contrived theft. The analogy would be to go to Vegas and

sit down at a black jack table and if you win, the casino requires other gamblers to pay your

debt while the owners of the casino take their cut but are never at risk. If you lose, and happen

to know the casino owners, you get your money back. If you think this is the proper function

for Wall Street, fine. The fact is, the game is no longer "honest". If you fail or screw up, you

go out of business and you and your partners take the loss.

As they stand today, even after this bill passes, the big banks will still be too big to fail,

they will still be able to gamble with your money and get their bonuses even if they lose; and

if you choose to get in the game, you will have no idea if their products will balance the risk

because you can't trust the referee (the ratings agencies). And all that money transferred

between the winners and losers isn't creating a single job on Main Street; it's a rigged

redistribution of wealth with the sole purpose of favoring the most cunning and keeping

plenty of people employed on Wall Street.

Politically, this is a big win for Obama and the Democrats. They look like they stood up

to Wall Street. They forced the Republicans into a corner. Republicans voting for this bill

will dilute their ability to attack incumbents in Washington next November. Their "yes" vote

means they can't claim nothing got done or government has no business regulating the free

market. If Republicans oppose this bill, they will surely get hammered in November for

attempting to shield Wall Street and selling out Main Street. It's a political no-win situation

for Republicans. The problem is that while politically this will boost Obama's stock, it won't

prevent another financial meltdown. We taxpayers are still on the hook. It's as if the Energy

and Commerce Committee announced new legislation to prevent future oil spill disasters in

the Gulf, but the legislation did not mandate better blowout protectors, safety standards,

comprehensive disaster plans, or an increase in the amount of liability oil companies must

accept before they can drill.

This is not a partisan issue. Both the Democrats and the Republicans get millions of

dollars in political contributions from the financial industry. If you ever thought Congressman

Barney Frank (Massachusetts) was a liberal populist, you can forget you ever heard that.

Frank fought to protect derivatives and hedge funds. He fought to water down the Volcker

Rule which would keep banks from gambling with shareholder's and investor's money. The

Volcker Rule would have forced partners in these big firms to gamble with their own money.

Frank and Democratic Senator Chris Dodd fought to protect the Federal Reserve's power by

limiting congressional oversight. They also protected the ratings agencies. (Warren Buffett,

a key Obama advisor, owns a big chunk of Moody's Ratings Service.) The bottom line is that

when given an opportunity to change the culture and practices of Wall Street, when offered

a chance to reform practices which didn't create jobs, didn't make America stronger, and left

taxpayers on the hook to bail out the industries, when given a chance to put back the firewalls

erected by Roosevelt in the 1930's which were designed to keep another depression from

occurring; Washington niggled at the edges, made some cosmetic repairs, but left the system

which almost destroyed the country intact. Washington sided with the free market capitalists

and against those who wanted more regulation, greater transparency, and to shut down the

casino. It's business as usual in Washington, D.C.

White House Chief of Staff Rahm Emanuel is quoted as saying "...a crisis is a terrible thing

to waste". You will hear a lot in the next few weeks about all the hard work, heavy lifting, and

grueling negotiations which went into producing this bill. You will hear how Washington

stood up to Wall Street. The President will tout a new consumer protection agency and other

"benefits". At the end of the day, will there still be banks and insurance companies too big

to fail? Yes. Will Goldman Sachs and others still be able to gamble and pin the losses on

investors and taxpayers? Yes. Will you be able to trust ratings issued by Moody's or Standard

and Poors about the risk an investment represents? No. Is oil still pouring out of the well?

Yes. Will this current environmental disaster prevent an equally bad or worse devastation

in the future? No. Is there any doubt who Washington represents when it comes to money,

finance, Wall Street, and big business? No. Was there really a question about that? This

crisis continues to be simple window dressing in the great drama of Washington politics.

As Deep Throat once said, "...follow the money". What do you think? I welcome your

comments and rebuttals. Please send them to


  1. This so-called financial reform bill is like a deja-vu of the health care reform bill.

    Both trumpeted by Obama and Democrats as a real improvement for the country - and both in reality do very little, and likely will make life even worse for the American People.

    Oh well. I feel like a spectator on the Titanic. Obama and Democrats cheering loudly as they managed to get one single life boat into the water.

  2. Jerald said...
    Bernie -
    As long as there are no jobs, it doesn't matter what wall street does. The jobs are not here because wall street had antyhing to do with. The jobs are not here because they shipped them to China an India - and Americans support that by buying those goods.

    Best wishes,
    A former listener

  3. Another Excellent Blog Bernie... I hope I hear you on the radio again.... ASAP!!!!!!
    Thanks Bernie

  4. Here we have another half-baked woulda-coulda-shoulda from our lawmakers. Bernie, what I fear is sheer voter apathy among once-enthusiastic Obama supporters bringing victory to teabag nut-jobs come November. I hope the Union survives long enough for some of the current nuttines to subside, lest we face a Beck/Palin ticket in 2012.

    Since you and Karel left KGO, I have been listening to Mike Malloy in the evening, but I hope you get back on the air soon!

    Thanks for all you post!

  5. I've said it before, and I'll say it again: Bernie, I would support a podcast of you with a yearly subscription--like I do for Mike Malloy an d Thom Hartmann. I really miss your voice, Bernie.

  6. We need to get a podcast going for Bernie later on. Get his following up again until he makes it back on Radio.

    The 10:00pm hours is so sad right now. We need someone fighting the regressives during the 10:00pm slot, not a middle of the road guy. Miss you Bernie

  7. Why such a long time with no posts Bernie?

  8. Thnx for a great post Bernie! Yes, Wall Street lives and breaths risk daily; in fact, I’d go so far to say it’s their “daily bread.” But totally agree - the results of these newer, far riskier financial “vehicles of mass destruction” (derivatives, CDO’s, etc. are used with our savings, pensions, and money for investing in our country’s stability and growth are callously gambled in Wall Street’s biggest gambling casino are simply outrageous.

    I see this whole meltdown as “Wall Streets’ Blitz on Americans’ Prosperity and Well Being." Evidence: The massive debt the U.S. has accumulated from the bailouts, immense opportunity cost lost from the diversion of that money; the ripple effect telegraphed to other countries; the immense loss of U.S. and citizen wealth lost in housing, jobs lost, savings depleted, 401k’s depleted, human talent wasted and depleting thru lack of jobs, etc.

    Bernie, one very good thing I can see of it is that finally, many more people’s eyes have been open about the evils and abuses of “mega-banks" and powerful investment interests. I do hope this translates into more grassroots monitoring of bank abuses and activism to thwart mal- practices.

    And the ones who have really been paying attention – especially to terrific articles that you’ve written, Bernie, will have become a lot more aware of our Government’s collusion with Wall Street and Big Corporate.

    I believe the trauma for many from this experience that will linger for years (similar to the Great Depression), and I expect it to continue to influence many areas of life (the way people think about Gov’t, Congress [It’s sooo broken. Could Dodd and Frank have sold out any more than they did? Ugh!] Corporations [they’re persons ya know!], consumption [frugal is good; credit unions and local banks too.] the state of our Democracy? [Danger, Danger Will Robinson], etc. So, is the trauma we’re going thru part of a Great Recession,or is the really a Depression -- the taboo word, that these days, “shall not be named?” However you split it, the financial meltdown and repercussions have certainly made for a lot of depressed and hurting people in America.

    Bernie, it’s such a pleasure reading your Blogs. Your sharp mind, savvy perspective, and engaging style still comes through in the blog and helps give clarity to the swirl of messy, important events effecting our country right now. Only thing would be better if you could include an mp3 of the blog so we could actually hear your great voice. But, I’m guessing that’s not possible right now. I’m still very grateful we can access your writings at the website. Wishing you all the best!