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NEWS FLASH

Goldman Sachs CEO Endorses Marriage Equality | Goldman Sachs CEO Lloyd Blankfein has joined the Human Rights Campaign’s Americans for Marriage Equality campaign. Likewise, HRC awarded Goldman Sachs this weekend for Workplace Equality Innovation, but the honor was not without controversy. Members of the Occupy Wall Street Queer Caucus protested HRC’s black tie gala, condemning Goldman Sachs’ “unethical business practices and greed.” Watch Blankfein’s video:

NEWS FLASH

Coal’s Future Is Downgraded | The private sector is starting to recognize the true cost of coal, our dirtiest fuel. Goldman Sachs downgraded coal giant Peabody Energy Corp, while lowering its view on the coal sector from “attractive” to “neutral.” Exxon’s energy outlook report found that coal is on its way out, to be replaced by natural gas.

Special Topic

Congressman Who Hired Bank Lobbyists As Senior Staffers Now Threatens Politicized Investigation Of Occupy Wall Street

By Lee Fang on Nov 8, 2011 at 3:55 pm

Rep. Darrell Issa (R-CA)

Rep. Darrell Issa (R-CA), the chairman of the committee tasked with investigating on behalf of the public interest, is launching a politicized probe of Occupy Wall Street. Using his position as the head of the House Oversight Committee, Issa filed a letter asking the Department of Justice to look into accusations that New York Communities for Change “misappropriated” funds in support of the Occupy Wall Street protests. The request, which is bizarre given that NYCC has openly embraced the 99 Percent Movement, comes after revelations, first reported by ThinkProgress, that several senior staffers with Issa are revolving door bank lobbyists.

New York Communities for Change has organized protests against the big banks, and worked to mobilize people around issues like predatory lending practices and fraud on Wall Street. Issa’s transparent smear campaign against NYCC, as some sort of zombie ACORN organization, only serves the bank lobby’s interests. Since so many lobbyists have spun through the revolving door and onto Issa’s staff, bank lobbyists could actually be directing Issa’s new campaign from within Congress:

– Issa’s Staff Director Is A Longtime Lobbyist For Private Student Loan Companies, Including Banks Like CitiGroup: In July, ThinkProgress reported that Issa had hired Peter Warren to be his staff director for investigations. Until last year, Warren was the chief lobbyist for a trade group that represents Citigroup, Wells Fargo, Bank of America, and Discover Student Loans, on issues related to student loan policy. Our story revealed that Warren, on his congressional ethics forms, signed a special severance contract with his previous employer, suggesting a bonus, incentive package or special arrangement so Warren could move into Issa’s office.

– One Of Issa’s Top Investigators Is A Revolving Door Lobbyist For Goldman Sachs: In August, ThinkProgress reported that Issa hired Peter Haller, a former lobbyist and Goldman Sachs official, as a financial investigator. Haller’s hadn’t been noticed by other good government groups because he had changed his last name between working for Goldman Sachs and Issa. We found several letters showing that Haller had supervised Issa efforts to block regulators from imposing new rules on investment banks like Goldman Sachs. Haller’s biography, in a way, encapsulates the revolving door problem: Haller had worked at the Securities and Exchange Commission, and later took a job at Goldman Sachs to work on regulatory advocacy.

As Lucas O’Connor has reported on his Issa Watch blog, Issa has a history of running interference for the banking industry. Issa launched a number of attacks on the Financial Crisis Inquiry Commission as an effort to undermine any report that showed that Wall Street was responsible for the financial crisis.

The cozy relationship between Issa and Wall Street goes beyond Issa’s staff. ThinkProgress broke the story that Issa, while fighting to derail an SEC investigation of a case in which Goldman Sachs had bet against its own customer’s investments, Issa purchased large quantities of Goldman Sachs bonds.

Special Topic

The Other Occupation: How Wall Street Occupies Washington

By Zaid Jilani on Oct 12, 2011 at 2:00 pm

As ThinkProgress has previously noted, the 99 Percent Movement has been set off thanks to long-standing economic inequities and and a recession caused primarily by Wall Street’s misdeeds.

But Wall Street did not engage in reckless financial behavior — which plunged 64 million people worldwide into extreme poverty — in a vacuum.

In order to engage in these practices that brought the world’s economy to its knees, Wall Street had to make sure that the federal government based in Washington, DC would both de-regulate the financial industry (and provide lax oversight) and that Congress and the Federal Reserve would bail out banks with few strings attached if they were in danger of failing. The way the financial industry and big banks won this kid glove treatment from the federal government is by occupying Washington — flooding it with campaign contributions, lobbyists, and its own staffers and executives to occupy key positions of power. ThinkProgress has assembled a rundown of three ways Wall Street has occupied Washington:

1. Wall Street Occupies Washington With Massive Campaign Contributions: On Nov. 12, 1999 President Bill Clinton signed into law the repeal of the Glass-Steagall Act of 1933, a Depression-era law that created a firewall between commercial and investment banking. Repealing this law was one of the top legislative goals of the financial industry. In the 1998 election cycle, commercial banks spent $18 million on congressional campaign contributions, with 65 percent going to Republicans and 35 percent going to Democrats. Securities and investment firms donated over $40 million. The mega-bank Citibank spent $1,954,191 during that cycle, and it was soon able to merge with Travelers Group as a result of the repeal of banking regulations. Between 2008 and 2010, when new financial regulations were being written following the financial crisis, the finance, insurance, and real estate industries spent $317 million in federal campaign contributions, with $73 million of that coming from Political Action Committees (PACs). The hold of campaign contributions is starkly bipartisan. As Sen. Jim Webb (D-VA) explained to Real Clear Politics in an interview last year, he couldn’t get a vote on a windfall profits tax on bonuses at bailed out banks due to campaign contributors. “I couldn’t even get a vote,” Webb explained. “And it wasn’t because of the Republicans. I mean they obviously weren’t going to vote for it. But I got so much froth from Democrats saying that any vote like that was going to screw up fundraising.”

2. Wall Street Occupies Washington With Its Lobbyists: One way to control what Washington lawmakers do is to give them access to exclusive funding streams that allow them to finance their campaigns. But yet another is to control the stream of information. From the deregulatory period of 1998 to 2009, the financial sector spent $3.3 billion on lobbyists. In 2007, the financial industry employed 2,996 separate lobbyists, five for every member of Congress. During the debate over financial reform last year, the industry flooded the nation’s capital with its own lobbyists. On just one issue — regulating derivatives — financial industry lobbyists outnumbered consumer group lobbyists and other pro-reform advocates by 11 to 1. In fact, by 2010, the industry had hired a whopping 1,600 former federal employees as lobbyists. Included among these lobbyists were high-ranking former public leaders like former Democratic House Majority Leader Dick Gephardt (MO) and Kenneth Duberstein, Ronald Reagan’s chief of staff. Much of this lobbying is done through elite K Street firms that specialize in hiring government insiders. Yet there are also bank-funded front groups like the Chamber of Commerce that deploy lobbyists on behalf of the big banks.

3. Wall Street Literally Occupies Washington By Placing Its Staff In Government Positions: Shortly after Clinton signed into law the repeal of the firewall between commercial and investment banking, his Treasury Secretary and Goldman Sachs alumni Robert Rubin left the government to work for newly-formed Citigroup — whose merger was only possible thanks to the policies Rubin championed and enacted. His compensation at Citigroup topped $15 million, not including stock options. Goldman’s alumni are found across the government, including bailout architect and former Treasury Secretary Hank Paulson, Paulson’s bailout chief Neil Kashkari, and Commodity Futures Trading Commission chairman Gary Gensler. The revolving door, of course, works both ways. Obama budget director Peter Orszag joined Citigroup shortly after leaving the government. This is just a small sampling of Wall Street’s staffers who found their way into government.

These three facets of lobbying do not include how these financial interests fan their funding out among nonprofits and think tanks, and how they fund media campaigns and public relations efforts within the parameters of the geographic territory of the District of Columbia. The amount of money spent on these tasks is likely formidable but is difficult to track.

There are reforms that can be enacted to combat this Wall Street infiltration of Washington. Ranging from public financing of federal campaigns to new disclosure laws to placing restrictions on lobbying from federal public officials, these reforms would blunt the impact of big money on federal policymaking. Yet only vigilance from the American public can get such reforms enacted.

Economy

11 Facts You Need To Know About The Nation’s Biggest Banks

By Pat Garofalo on Oct 7, 2011 at 1:05 pm

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The Occupy Wall Street protests that began in New York City more than three weeks ago have now spread across the country. The choice of Wall Street as the focal point for the protests — as even Federal Reserve Chairman Ben Bernanke said — makes sense due to the big bank malfeasance that led to the Great Recession.

While the Dodd-Frank financial reform law did a lot to ensure that a repeat of the 2008 financial crisis won’t occur — through regulation of derivatives, a new consumer protection agency, and new powers for the government to dismantle failing banks — the biggest banks still have a firm grip on the financial system, even more so than before the 2008 financial crisis. Here are eleven facts that you need to know about the nation’s biggest banks:

– Bank profits are highest since before the recession…: According to the Federal Deposit Insurance Corp., bank profits in the first quarter of this year were “the best for the industry since the $36.8 billion earned in the second quarter of 2007.” JP Morgan Chase is currently pulling in record profits.

– …even as the banks plan thousands of layoffs: Banks, including Bank of America, Barclays, Goldman Sachs, and Credit Suisse, are planning to lay off tens of thousands of workers.

– Banks make nearly one-third of total corporate profits: The financial sector accounts for about 30 percent of total corporate profits, which is actually down from before the financial crisis, when they made closer to 40 percent.

– Since 2008, the biggest banks have gotten bigger: Due to the failure of small competitors and mergers facilitated during the 2008 crisis, the nation’s biggest banks — including Bank of America, JP Morgan Chase, and Wells Fargo — are now bigger than they were pre-recession. Pre-crisis, the four biggest banks held 32 percent of total deposits; now they hold nearly 40 percent.

– The four biggest banks issue 50 percent of mortgages and 66 percent of credit cards: Bank of America, JP Morgan Chase, Wells Fargo and Citigroup issue one out of every two mortgages and nearly two out of every three credit cards in America.

– The 10 biggest banks hold 60 percent of bank assets: In the 1980s, the 10 biggest banks controlled 22 percent of total bank assets. Today, they control 60 percent.

– The six biggest banks hold assets equal to 63 percent of the country’s GDP: In 1995, the six biggest banks in the country held assets equal to about 17 percent of the country’s Gross Domestic Product. Now their assets equal 63 percent of GDP.

– The five biggest banks hold 95 percent of derivatives: Nearly the entire market in derivatives — the credit instruments that helped blow up some of the nation’s biggest banks as well as mega-insurer AIG — is dominated by just five firms: JP Morgan Chase, Goldman Sachs, Bank of America, Citibank, and Wells Fargo.

– Banks cost households nearly $20 trillion in wealth: Almost $20 trillion in wealth was destroyed by the Great Recession, and total family wealth is still down “$12.8 trillion (in 2011 dollars) from June 2007 — its last peak.”

– Big banks don’t lend to small businesses: The New Rules Project notes that the country’s 20 biggest banks “devote only 18 percent of their commercial loan portfolios to small business.”

– Big banks paid 5,000 bonuses of at least $1 million in 2008: According to the New York Attorney General’s office, “nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008.”

In the last few decades, regulations on the biggest banks have been systematically eliminated, while those banks engineered more and more ways to both rip off customers and turn ever-more complex trading instruments into ever-higher profits. It makes perfect sense, then, that a movement calling for an economy that works for everyone would center its efforts on an industry that exemplifies the opposite.

Economy

Big Bank Cuts Costs Via Layoffs And Smaller Cups, While Increasing Bonus Pool

By Rebecca Leber on Sep 27, 2011 at 2:55 pm

Goldman Sachs CEO Lloyd Blankfein

Wall Street is planning to lay off thousands of workers in a supposedly underperforming quarter, and Goldman Sachs is no exception, saying that it plans to cut $1.2 billion in costs by laying off 1,000 people, roughly 3 percent of its workforce. The mega-bank is also going after small savings by downsizing its drinking cups.

Even plants aren’t safe from the bank’s tightened budget. The London office removed potted plants, reportedly causing “disquiet” among employees and led “to a stand-off between the plant pickers and staff.” Morgan Stanley has also cut back on office foliage, while Bank of America skipped an annual field day.

However, the real measure of whether Wall Street is serious about cutting costs will be if bonuses go down during lean times. And so far, the chances do not look good. The New York Times’ Dealbook reports that banks, including Goldman, have set aside $65.69 billion for bonuses at the end year, an 8 percent increase over last year:

Wall Street executives are also preparing their staffs for smaller year-end bonuses, although the change is not yet reflected in the expenses. During the first six months of the year Citigroup, JPMorgan, Goldman, Morgan Stanley and Bank of America set aside $65.69 billion to cover compensation and benefits, up 8 percent from a year ago, according to data provided by Nomura. But financial firms tend to wait until the fourth quarter to make the call on the annual payouts.

Unless Goldman and other banks follow up a tough season by handing out smaller bonuses later this year, its cost-saving initaitves are only superficial. A group of shareholders challenged the Goldman board of directors for showing “scant regard” for their interests, having handed out billions in bonuses the same year it received federal aid. Goldman won a dismissal of the case yesterday.

The bonuses may have been a part of “God’s work,” which Goldman CEO Lloyd Blankfein claimed to be doing in 2009, but if Goldman practiced the same austerity toward bonuses that it did toward office plants, it could afford to keep both its employees and its 12 ounce cups.

– Rebecca Leber

NEWS FLASH

International Trader: ‘I Go To Bed Every Night And I Dream Of Another Recession’ | While European government and financial leaders are scrambling to prevent a financial crisis in the Eurozone that would likely throw the global economy into even more turmoil, stock trader Alessio Rastani took to BBC today to tell the world that traders were looking forward to the possibility of a second big recession. “For most traders, it’s not about – we don’t really care that much how they’re going to fix the economy, how they’re going to fix the whole situation,” he said. “Our job is to make money from it.” Rastani, who also claimed “Goldman Sachs rules the world,” said, “Personally, I’ve been dreaming of this moment for three years…I go to bed every night and I dream of another recession. When the market crashes… if you know what to do, if you have the right plan set up, you can make a lot of money from this.” Watch it:

Wall Street bankers like Rastani, meanwhile, are large donors to the GOP’s presidential frontrunners, who want to repeal the Dodd-Frank financial reform law that was aimed at preventing another financial crisis like the one that wrecked the American economy in 2008.

Update

Forbes contacted Rastani today after rumors emerged online alleging that he was a member of the Yes Men, a group that carries out hoaxes with a goal of public humiliation. Rastani denied being a member of the organization, and the BBC issued a statement today claiming it had undertaken an investigation into the matter and found no evidence that Rastani was part of a prank.

Economy

Goldman Sachs Gave Sen. Shelby $5,000 The Day After He Denounced The CFPB As ‘Dangerous’

By Pat Garofalo on Sep 6, 2011 at 7:05 pm

Republicans today, as Travis Waldron noted, continued promising to filibuster the nomination of former Ohio Attorney General Richard Cordray to be the first director of the Consumer Financial Protection Bureau, as Cordray made his first appearance before Congress. A spokesman for Sen. Richard Shelby (R-AL), the Senate Banking Committee’s ranking member, said that “opposition to or support of Mr. Cordray’s nomination will become relevant as soon as the President agrees to make the structural changes we’ve requested.” “Until then, Sen. Shelby and his colleagues stand firmly behind the statement they expressed in their May letter: No accountability, no confirmation,” he added.

Few lawmakers have spent as much time trying to block the creation and then implementation of the CFPB as Shelby. And as the Public Campaign Action Fund noted today, some of Wall Street’s biggest players have rewarded Shelby for his efforts:

A day after Sen. Shelby published an op-ed in the Wall Street Journal about his opposition to Cordray, the Alabama Senator’s political action committee (PAC), Defend America, received a $5,000 donation from the Goldman Sachs PAC and $1,500 from the PAC for MFS, a Boston-based investment firm.

In that op-ed, Shelby called the CFPB “dangerous” for businesses and said that its “only a matter of time before [the CFPB's] concentration of power is abused or misused to the detriment of American businesses and consumers.” Of course, the timing could just be coincidental, but during the 2010 election cycle, securities and investment firms were Shelby’s top contributors, giving more than $1 million to his campaign and his leadership PAC.

NEWS FLASH

Fed Sanctions Goldman Sachs Over Shady Mortgage Practices | The Federal Reserve sanctioned Goldman Sachs over a former subsidiary’s use of “robo-signing,” an all-too-common procedure in which foreclosure documents were processed without anyone actually examining the case. The Fed action orders Goldman to retain an independent consultant to review foreclosure proceedings initiated over a certain period of time by Litton Loan Servicing LP, which was owned by Goldman, and to “provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified.” Monetary sanctions will likely be announced later, as well.

Politics

Norm Ornstein On Chairman Issa’s Ex-Goldman Sachs Staffer: ‘Disturbing’

By Lee Fang on Aug 31, 2011 at 7:01 pm

American Enterprise Institute scholar Norm Ornstein

Earlier this month, ThinkProgress broke a story about ex-bank lobbyists employed by Oversight Chairman Rep. Darrell Issa (R-CA) who have spent the year pressuring financial regulators to weaken rules on investment banks. One staffer in particular, Issa’s financial investigator named Peter Haller, had coordinated a letter on behalf of Issa to stop Dodd-Frank regulations on banks like Goldman Sachs, a firm he worked for only a few years ago. Haller’s identity had been obscured by a mid-life name change between working for Goldman Sachs and Issa (Haller says he changed his name honor his grandfather, who died in 1944).

The letter fit a pattern: the same staffer authored a letter to the SEC to clarify rules governing a deal between Goldman Sachs and Facebook and had been involved in an infamous confrontation with consumer advocate Elizabeth Warren during an Oversight Committee hearing. In reaction to our story, a number of good government experts have weighed in on what Issa’s revolving door staff means for the integrity of his office:

– Norm Ornstein of the American Enterprise Institute called our story about Issa’s former Goldman Sachs staffer “fascinating, and disturbing.” He explained: “Of course, one can argue that experience inside the SEC and in the industry is useful for a congressional investigator. But the employer of such a staffer should be ultra-sensitive about an investigator examining or exerting influence over policies that directly affected the previous employer. That certainly does not seem to be the case here.”

– Bart Naylor of Public Citizen: “Chairman Issa must take every step to ensure that his investigations are unclouded by any appearance of conflict. The next time Chairman Issa sends a scolding letter to regulators and asks that they contact Peter Haller, he should disclose that Mr. Haller worked at Goldman Sachs.”

On Fierce Finance, blogger Jim Kim noted that “it makes some sense if the congressman wants to make himself a friend of Goldman Sachs” to hire a Goldman Sachs vice president. “But to those who favor stronger oversight of the industry, it does seem dubious.”

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