Crony Capitalism, Part 3

(Everybody watching Bowl Games? – promoted by TheMomCat)

Following Part 1 and Part 2, Dr. Robert Johnson, Director of Financial Reform for the Roosevelt Institute, and Executive Director of the Institute for New Economic Thinking (INET) (a project with George Soros), in this third part of a series of discussions with Paul Jay talks about the real choices that were ignored by the Obama White House for financial reform in dealing with the financial crisis rather than simply pumping money into the investment banks.

Real News Network – December 31, 2009

Obama had a choice

Robert Johnson: Obama should have saved the functions of the banks not the bankers and the shareholders

Also see (on the flip):

What Congress Did Not Want You to Read: Robert Johnson’s Testimony on OTC Derivative Market

Saturday, 11/7/2009, by Lynn Parramore at New Deal 2.0 (a project of the Roosevelt Institute)

Robert Johnson, Director of Financial Reform for the Roosevelt Institute, submitted his testimony in early October to the Committee on Financial Services as part of the hearing on reform of the over-the-counter derivatives market. Johnson’s hard-hitting analysis of the potentially catastrophic faults in our financial system runs counter to a troubling trend of failing to address risk that has plagued the Committee’s.

Johnson has grave concerns about loophole-riddled bill currently under review, describing it to me in a recent conversation as “Swiss Cheese.”  In his view, regulation of the “reckless” OTC derivatives market is crucial as its impact is so broad, forming “the very fabric of our financial system.”

There has been a disturbing trend of attempts to silence voices like Johnson’s.  His original in-person testimony before the Committee was shut down after an outrageous five minutes by Melissa Bean, while industry players spoke at length. Johnson was forced to submit his full testimony in written form, but my attempts to have it published on the House website were met with a number of implausible excuses by staffers. Ken Silverstein reported the story of what appeared to be deliberate suppression on the Harper’s Magazine website. Finally, amid a growing storm of outrage, the House added the testimony to its website.

Click here to read full text: Rob Johnson Testimony [.PDF]

*For further reading on the dangers of relying on clearinghouses to remedy credit default swaps, see “The Fantasy of the Clearing House Magic Bullet” on Naked Capitalism.

**And please send the link to the post to as many people as possible!


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    • Edger on January 1, 2010 at 1:22 am

    As Obama and Washington prepares for another round of Wall Street bailouts, their thinking seems to be rather menacing:

  1. ….cannot exceed 40 times the hourly wage of the lowest paid employee in the company. So, if someone in the company was making $12.00/hr…the CEO would have an upper limit of all compensation of $998,000 per year.

    Still a pretty lucrative compensation.

  2. How much fucking money did we spend and go into debt for in 2009?  I lost track, trillions to the banks, billions to the wars, billions to the auto companies, billions, to the health insurance and pharma companies (well not yet, but soon).  Now what, we’re gonna try and do it again in 2010.  Can’t possibly last much longer unless they’ve got something up their sleeve, which would have to be downright evil.  

  3. …..get’s the synapses firing.

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