Jeffrey Sparshott, Jon Hilsenrath and Brody Mullins wrote an article in the Wall Street Journal about some questionable activity from the Federal Reserve:
Some of the biggest banks and investment firms on Wall Street were among those that received minutes of the Federal Reserve’s latest policy meeting 19 hours before the market-sensitive document was released.
The Fed said Wednesday that a staff member in its congressional liaison office accidentally released minutes of a March 19-20 policy meeting Tuesday afternoon to many of his contacts, including Washington representatives at Goldman Sachs Group Inc., Barclays Capital, Wells Fargo & Co., Citigroup Inc. and UBS AG. Also among the recipients: King Street Capital Management, a hedge fund, and Carlyle Group, CG -1.97% a private-equity firm.
Lorraine Woellert from Bloomberg recently reported about the leaking of sensitive information, possible insider trading and cronyism inside the Federal Reserve.
Banks including Citigroup Inc. and Goldman Sachs Group Inc., along with congressional staff members and trade groups, received potentially market-moving Federal Reserve information 19 hours before the public in a release the central bank called accidental.
The release was “entirely accidental,” Smith said. “This was a list of professional contacts that one individual had,” she said. “This group of individuals does not in any normal course receive any information early.” The mistake was discovered this morning, according to the central bank.
The list included Barclays Plc, BB&T Corp., BNP Paribas SA, Capital One Financial Corp., Citigroup Inc. (C), Fifth Third Bancorp, Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Nomura Holdings Inc., PNC Financial Services Group Inc., Regions Financial Corp., U.S. Bancorp, UBS AG and Wells Fargo & Co.
Nick Sorrentino at Against Crony Capitalism writes about a new book published by David Stockman, focusing on how capitalism has been corrupted and turned into cronyism.
…we heartily recommend this sprawling work to anyone who wants to look into the crony capitalist heart of darkness, to anyone who really wants to understand what is actually going on in the economy. Stockman doesn’t hold back in any way and he couples his intellectual kinetic energy with the expert analysis of an insider who is actually inclined to tell the truth. You’ll grow some brain cells.
David Stockman has written a classic. The Great Deformation is a triumph.
The Project on Government Oversight (POGO) has recently published a comprehensive report about the current cases of: revolving door, conflict of interests and cronyism associated with former employees of the Security and Exchange Commission (SEC) and the corporations they are supposed to regulate. You can read the report as an eBook here.
“A revolving door blurs the lines between one of the nation’s most important regulatory agencies and the interests it regulates. Former employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rule-making counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals, and win exemptions from federal law.
Mark Modica from the National Legal and Policy Center has written the following article, regarding how a watchdog for the government’s bailout, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), has recently directed a devastating critique against the US Treasury’s methods of channeling billions of taxpayer dollars into bailed-out companies.
The Detroit News quotes the SIGTARP report as stating, ‘While taxpayers struggle to overcome the recent financial crisis and look to the U.S. government to put a lid on compensation for executives of firms whose missteps nearly crippled the U.S. financial system, the U.S. Department of the Treasury continues to allow excessive executive pay.’ The report goes on to mention that executives at bailed-out firms, “…continue to rake in Treasury-approved multimillion-dollar pay packages that often exceed guidelines.
The Wall Street Journal has recently reported the recent most serious case of revolving-door between too-big-to-fail banks and the federal government:
There was a time when you had to be successful on Wall Street to become secretary of the Treasury. Now along comes presidential nominee Jack Lew, whose only business credential is a stint at the most troubled too-big-to-fail bank.”
“During the darkest days of the financial crisis Mr. Lew served as the chief operating officer of Citigroup‘s Alternative Investments unit (CAI). […] CAI no longer exists. At the end of Mr. Lew’s first quarter on the job, the unit reported a $358 million loss. Things got much worse after that but Citi stopped breaking out CAI results in its earnings releases. The unit was eventually shuttered and many of its assets were sold.
CJ Ciaramella writes an article at the Washington Free Beacon about the Ex-Im Bank’s deals with overseas energy companies, and the corporate welfare involved:
Critics of the Ex-Im Bank say the connection between Richardson, Abengoa, and the bank is another instance of “corporate welfare” at the bank.
“The Export-Import Bank is nothing more than a massive, taxpayer-backed fund for corporate welfare, so a story like this comes at no surprise to us or to anyone who has pushed for the bank to be shut down,” said Club for Growth spokesman Barney Keller.
The Charlotte Observer’s Andrew Dunn writes about Wells Fargo expanding lobbying strategy as the company seeks to place legislative lobbyists in state capitals where none had been before.
“Wells Fargo has built up a significant lobbying presence in state capitals to manage the torrent of mortgage-related bills flooding legislatures.
Five years ago, the San Francisco bank reported a limited state lobbying presence focused on the West Coast and Iowa.”
Kevin Roose, a writer for New York magazine, outlines the blatant revolving door going on between regulators, banks, and law firms. There is nothing inherently wrong with the revolving door, but it can quite easily lead to cronyism:
Regulatory capture — the systematic undermining and co-opting of the financial sector’s watchdogs by those financial firms being watched — is one of those issues that should come up a lot but almost never does.
The Huffington Post writes that that the Finance, Insurance, and Real Estate industries have spent $4.2 billion on lobbying since 2006.
Since 2006, the Finance, Insurance, and Real Estate (FIRE) sector, has poured around $4.2 billion into efforts to maintain influence in the halls of Congress, according to a new report by Elect Democracy, a nonpartisan effort by human rights organization Global Exchange. That comes out to $1,331 a minute.