Volatility

October 16, 2009

Citi On A Hill

Filed under: Bailouts Only Reopened the Casino, Corporatism, Mainstream Media — Tags: , — Russ @ 5:20 pm

 

You are the light of the world. A city that is set on a hill cannot be hidden.  Matthew 5:14
 
This inspirational line provided the source for John Winthrop’s legendary “City on a Hill” sermon, delivered as he and his fellow pilgrims were about to found the Massachusetts Bay Colony.
 
History’s ways are strange, and this inspiration has reverberated to our own time, as Ronald Reagan repeatedly cited the image of the city on a hill to describe what lighted his vision of what America should be, as at the 1984 Republican Convention, not long after he had signed the Garn-St. Germain act.
 
Did he think of this amazing bill as he evoked that shining city? It is a perfect crystallization of everything he stood for.
 

Now the only way to avoid this shipwreck, and to provide for our posterity, is to follow the counsel of Micah, to do justly, to love mercy, to walk humbly with our God.

 
Shipwreck.
 
Coming into office the Obama administration inherited a big economic mess and an even bigger bailout to “solve”, not the real problems, but the problem of where the banks would next extract their rents.
 
This was “an inheritance with a vengeance”, as Sir Henry Baskerville might have said, and Obama took it up with gusto. Never did an heir more exuberantly seize the estate and embrace it. Immediately the manifestoes came flying: the administration’s top priority was “private profit”, “private investors”, “private banks”. The Bush/Paulson bailout was now the Obama/Geithner bailout.
 
To justify this policy they launched an all-consuming propaganda offensive. With the avid collaboration of the MSM, the official corporate line became that the banks ARE America; by saving them Obama had saved the economy; now everywhere the green shoots are surging and blooming; Wall Street is solvent and profitable; the stock market rally reflects our newfound economic weal; the recovery is on; new growth forever is right around the corner.
 
All of this is a lie. We never needed the bank rackets, which are purely parasitic. Their existence and bailout harm, not help, America. By temporarily propping them up with stolen public wealth Obama and Bush have doomed the economy. The green shoots are a fraud; every real economic indicator is despondent. Wall St. is bankrupt, and its “profits” are all the result of accounting fraud. The stock market is a fantasy goosed by the artificial stimulus of taxpayer money looted by the banks. There is no recovery except for the racketeers. There will never be real growth again.
 
Even by these rather low standards, Citigroup is a pathetic loser. It has received $45 billion in direct welfare through the TARP and over $300 billion in taxpayer guarantees, insurance, and other backstops through the FDIC for all the worthless toxic paper on its balance sheet. To this day it is still the most decrepit and insolvent of the rackets. It’s a suitable poster child for the top Obama/Bush priority. Let’s explore further.
 
Citi just reported a $3.2 billion loss for the third quarter. The first two quarters even it was able to post bogus profits through shell games and accounting tricks, as the other rackets were still able to do this week. But now Citi can’t even scrape together a decent paper scam. A harbinger? (Would you expect a real loser like Citi to be the first to fail at claiming phony profits, before the better-run liars like Goldman and JPMorgan? But that they too must inevitably succumb?)
 
Along with its feckless twin brother Bank of America, Citi keeps whining that it’s capable of paying back the TARP, but the government won’t let it. That should tell you a lot about how hopeless they really are, that even as the administration very much wants to repeat the propaganda exercise of TARP repayments, they’re leery of letting these jokers go ahead.
 
Speaking of propaganda exercises, this week the House Finance committee hashed over its gutted “reform” bill, with administration blessing of course. What a freakshow it was with every imaginable kind of lobbyist calling for a lap-dance. The committee came through, the message is clear: The casino will be flung wide open, more open for business than ever, all bets now with house money.
 
Yep, the rackets are getting their money’s worth from the lobbyists (especially since they’re using taxpayer money). And who’s the ultimate lobbyist? Here’s one nominee:
 
Richard Hohlt was recently hired by Citi chairman Richard Parsons as a “consultant”. Hohlt is a former aide to Richard Lugar. His roster of clients has included, among others, JPMorgan, Washington Mutual, TimeWarner, Philip Morris, Bristol-Myers Squibb, Chevron, and the Nuclear Energy Institute. He’s a close associate of Karl Rove and collaborated with Robert Novak in outing Valerie Plame. He was a George Bush “Super Ranger” bagman.
 
William Black called him “infamous” and his hiring “obscene”.
 

For this end, we must be knit together, in this work, as one man. We must entertain each other in brotherly affection. We must be willing to abridge ourselves of our superfluities, for the supply of others’ necessities.

 
Work as one man, supplying each others’ necessities.
 
Going into the 1980s S&Ls were sleepy, dowdy things, closely regulated. Low risk, steady, modest profit, serving the needs of normal people. “Main Street” to the core.
 
But the racketeers had plans to turn these little engines into rent-seeking dynamos. The big deregulation push came in 1982. Loan restrictions were lifted, and with the Garn-St.Germain act the bipartisan floodgates were opened. The S&Ls were freed up to take and make any loan, pay any interest, so the money flooded in. Racketeers bought them, took in deposits to make loans to real estate developers. Reserve restrictions were removed. Meanwhile the lobbyists fought off the regulators.
 
One of these racketeers was Charles Keating of the Lincoln S&L, who discovered John McCain and bankrolled his congressional campaign. (Alan Greenspan, an economist at JPMorgan, also did flack work for Keating and Lincoln.)
 
Also in the thick of this was Richard Hohlt, chief lobbyist for the US League of Savings Institutions and close associate of Utah senator Jake Garn, chairman of the Senate Banking Committee whose name appears on his S&L blowout bill.
 
Over the years McCain went on to collect an impressive array of pet lobbyists and assorted clients. Yahoo asked, When did John McCain Jump the Shark? The top answer: when he associated with this nasty slew of lobbyists, including Richard Hohlt, who became a leading contributor and bagman.
 

We must uphold a familiar commerce together in all meekness, gentleness, patience and liberality. We must delight in each other; make others’ conditions our own; rejoice together, mourn together, labor and suffer together, always having before our eyes our commission and community in the work, as members of the same body. So shall we keep the unity of the spirit in the bond of peace.

 
Familiar commerce.
 
The taxpayers now “own” 34% of Citigroup, having “invested” $45 billion in direct handouts. Of course this is small compared to over $300 billion of added public exposure through federally guaranteed “insurance” and so on.
 
This incontinent ward of the state has had some strange adventures along the way. For example, it wanted to use $50 million in taxpayer money to buy a corporate jet. But that’s relatively tame compared to its freewheeling days when it was giving Robert Rubin a $115 million no-show job and issuing reports like “Plutonomy” which contemplated a more direct, ruthless dictatorship of the superrich.
 
Ah, those were the days. Where did it all go wrong? CEO Vikram Pandit, or “Vikula” as he’s affectionately called (also “Pandito”), doesn’t know. “This was something that was bigger than Citi”, he lamented. It’s nobody’s fault, he sighs.
 
(He got some backup from a government-ordered management review which gave Pandit and most of the cadre good marks. I’m sure it was at least as rigorous as the stress tests.
 
“Executives were evaluated according to their ability to develop and execute a business strategy, to work well with regulators and other executives, and to understand the bank’s business issues”.
 
Well that’s sure good to hear! How about finger-painting, sharing at recess, and being quiet during naptime? )
 
Indeed this was not the banks’ fault, according to the Obama/Bush administration. The banks aren’t the cause of the disaster but the solution. They aren’t predators but victims. The bailouts aren’t the definitive looting of the country, but a solid investment in a prosperous future.
 
It’s not surprising, since this arose naturally out of the corporatist system, which is by now an automatic machine, with the finance sector at the center of it. And if Citi is a special Obama darling, this must reflect the influence of his economic guru Robert Rubin.
 
“Rubin is the mole of today’s economic crisis.” He is the pivot of much that has happened. As Treasury Secretary in the 90s he worked closely with Greenspan to dismantle the entire regulatory structure which stood between America and the full fury of the bank psychopaths.
 
Perhaps the greatest beneficiary of 90s deregulation was Citigroup. The 1998 merger of Citi and Travellers Group constructed the most complexified Rube Goldberg structure of commercial banks, investment banks, and insurers. It was after Rubin stepped down from Treasury that they gave him the nine-figure job. And so it goes….In January 2008 Rubin declared that nothing was wrong, nothing to see here, “just periodic excess leading to periodic disruption”, the Great Moderation would continue at least for the superrich even if everyone else was doomed, in other words all was well in the world.
 
Evidently it’s to try to keep things that way that Citi has hired Richard Hohlt. According to the NYT he was hired by Parsons as “an advisor to provide strategic counsel on Washington matters related to the bank”. Citi insists he is not a registered lobbyist and won’t act as a lobbyist. No, he’ll keep Parsons informed about “the mood and tenor of the town”.
 
Hohlt himself insists he’s not the same criminal he was way back when. “I wish that everyone would comprehend that because of these past experiences, mistakes made, some problems that were created because of those mistakes, I can maybe offer more candid advice”.
 
The passive voice and channelling of Nixon inspire confidence. He also said that if you watch thirteen botched surgeries, you’re then qualified to advise on a fourteenth.
 
Sources say the real purpose of his hiring is as a strategist against the FDIC (Citi’s great benefactor), and by extension against the American people. So just as he helped loot $150 billion through the S&L crash, so he’s now going to help set up the FDIC as the sucker. The goal will be to take full advantage of that $300 billion backstop.
 

The Lord will be our God, and delight to dwell among us, as His own people, and will command a blessing upon us in all our ways, so that we shall see much more of His wisdom, power, goodness and truth, than formerly we have been acquainted with. We shall find that the God of Israel is among us, when ten of us shall be able to resist a thousand of our enemies; when He shall make us a praise and glory that men shall say of succeeding plantations, “may the Lord make it like that of New England.”

 
Ten of us shall resist.
 
In 1987 when the regulators finally started closing in, Charles Keating enlisted his kept man McCain, along with senators Deconcini, Cranston, Glenn, and Riegle, to try to run interference. Thus we have the egregious “Keating 5″. But when this didn’t work, and McCain bailed on Keating, the game was up. There was nothing left but the arson. As they said in Goodfellas: “You bust the place out. You light a match”. $150 billion.
 
But have no fear. Although Keating and some other scumbags landed in prison, everybody else landed on their feet.
 
McCain quickly found a new pimp. Since 1989 he’s been in the pocket of Big Oil, collecting nearly $3.5 million from fossil fuel “employees” and PACs.
 
And what about lobby kingpin Richard Hohlt? George H. W. Bush named him to the board of Sallie Mae, the student loan corporate launderers.
 
So he was right at home where he’s always been.
 

For we must consider that we shall be as a city upon a hill. The eyes of all people are upon us. So that if we shall deal falsely with our God in this work we have undertaken, and so cause Him to withdraw His present help from us, we shall be made a story and a by-word through the world. We shall open the mouths of enemies to speak evil of the ways of God, and all professors for God’s sake. We shall shame the faces of many of God’s worthy servants, and cause their prayers to be turned into curses upon us till we be consumed out of the good land whither we are going.

 
The worthy servants.
 
Tim Geithner was offered the Citi CEO job in 2007 but turned it down. But he’s kept in touch.
 
Through the first seven months of the Obama administration Geithner had at least 80 telephone contacts with Goldman CEO Lloyd Blankfein, JPMorgan chief Jamie Dimon, and Citi’s Pandit and Parsons. Only Obama himself was in the same exalted company. One time Geithner came out of an important meeting and got right on the phone. He talked first to Blankfein, then Dimon, and then Obama.
 
No word on whether he’s taking calls from Hohlt yet. But as they said, Hohlt’s job is to teach Parsons how to “communicate”. So he’s got a line to the White House regardless.
 

And to shut this discourse with that exhortation of Moses, that faithful servant of the Lord, in his last farewell to Israel, Deut. 30. “Beloved, there is now set before us life and death, good and evil,” in that we are commanded this day to love the Lord our God, and to love one another, to walk in his ways and to keep his Commandments and his ordinance and his laws, and the articles of our Covenant with Him, that we may live and be multiplied, and that the Lord our God may bless us in the land whither we go to possess it. But if our hearts shall turn away, so that we will not obey, but shall be seduced, and worship other Gods, our pleasure and profits, and serve them; it is propounded unto us this day, we shall surely perish out of the good land whither we pass over this vast sea to possess it. Therefore let us choose life,that we and our seed may live, by obeying His voice and cleaving to Him, for He is our life and our prosperity.

 
Whatever your guiding light, whatever covenant your heart compels, whatever article you hear recited by whatever voice, it must all say the same words decrying the misfortune which has descended upon America.
 
Shall we perish out of this good land?
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3 Comments

  1. All those going through a gale need to be engaged in the act. Nobody is warranted a fascinating escape clause. It is not an acceptable option to double our arms and wait for the tempest to pass.

    Comment by Rodney Howard Browne — October 17, 2009 @ 4:32 am

  2. Very good on McCain.

    Comment by jake chase — October 21, 2009 @ 10:08 am

  3. Thanks. I figured I’d try something a little different there.

    Comment by Russ — October 21, 2009 @ 3:53 pm


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