The Wall Street White House : How Goldman Sachs and Citi Run the Show

Tuesday, July 7, 2009

The Wall Street White House : How Goldman Sachs and Citi Run the Show

By ANDREW COCKBURN

Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of Economics, Business, and Agricultural Affairs. This comes as one more, probably unnecessary reminder of the total control exercised by Wall Street over the Obama administration’s economic and financial policy. True, Hormats is “a talker rather than a decider” according to one former White House official, but he will find plenty of old friends used to making decisions, almost all of them uniformly disastrous for the U.S. and global economy.

Among the familiar Wall Street faces that Hormats will encounter in his new post will that of Deputy Secretary of State Jacob Lew, lately Chief Financial Officer of Citigroup Alternative Investments Group which lost $509 million in the first quarter of 2008 alone. On visits to the White House he is sure to bump into Michael Froman, who also tore a swath through the Citi balance sheet at the alternative investments shop (they specialized in “esoteric” investments such as private highways) but is now Obama’s Deputy National Security Adviser for International Economic Affairs. If Froman is otherwise engaged, Hormats can interface with Froman’s deputy, David Lipton, who was until recently running Citi’s global country risk management effort.

Citigroup is also well represented at Treasury, in the form of Lewis Alexander, formerly the bank’s chief economist and now Counselor to Treasury Secretary Timothy Geithner. Given the role played by all of the above in bankrupting us all, Alexander’s 2007 verdict on the onset of the mortgage crash, “I think that’s not going to spill more broadly into the economy and so I think we’re going to have a normal kind of housing cycle though the middle of this year,” can only have been a recommendation in the eyes of his current employer.

Alexander’s function at Citi may have been merely to endorse the financial depredations of colleagues with economic blather, rather than exercise loss-making functions personally. Not so Deputy Treasury Secretary Neal Wolin, who has moved over to the number two job at the department from the Hartford Insurance Company, where he served as president and chief operating officer of the Property and Casualty Group. Hartford was one of the insurance companies that got suckered by the banks into backing their ruinous investments in real estate and other esoterica, but Wolin’s Treasury has just handed Hartford $3.4 billion of our money in the form of TARP funds.

Hormats’ agricultural responsibilities will of necessity bring him into frequent contact with the Chairman of the Commodity Futures Trading Commission, Gary Gensler – a former Goldman partner. As Assistant Secretary of Treasury in the Clinton Adminsitration Gensler played a key role in greasing the skids for the notorious Commodity Futures Modernization Act of 2000, which set the stage for the great credit default swaps scam that underpinned the recent bubble and subsequent collapse. News of the appointment did generate threats of obstruction in the Senate – any one of the senators could have blocked the appointment had they really wished to do so – but such threats proved predictably hollow. Had they been otherwise, Treasury Chief of Staff Mark Patterson could of course have lent the expertise he gained as Goldman’s lobbyist to overcome the obstacle.

For sheer gall it would be hard to equal the appointment of Gensler, one of the engineers of this catastrophe, but the administration has managed it with the selection of Linda Robertson, formerly a key Enron lobbyist and intimately involved in pushing through the commodity futures act as chief flack for the Federal Reserve. Prior to joining the crooked energy-trading firm, Robertson was an important figure in the Clinton Treasury Department, latterly serving her friend Larry Summers and before him Robert Rubin during their terms as Treasury Secretaries.

Such connection to the key enablers of our bankrupt casino helps explain many of the other hires listed above. Michael Froman was Chief of Staff to Robert Rubin at Treasury before following Rubin to his reward at Citigroup. Most significantly, it was Froman who first introduced Rubin to his Harvard classmate Barack Obama. David Lipton also served in the Rubin Treasury, as deputy under secretary for international affairs. Neal Wolin, on the other hand, appears to have more an acolyte of Summers, who cherished him as Treasury General Counsel from ’99 to ’01. Summers and Robertson were similarly close, and certainly he raised no objection to her fatal submissions on behalf of her paymasters at Enron.

Recent reports suggest that financial industry lobbying in Washington, at $104.7 million for the first three months of 2009, is 8% down on last year. But that is to be expected – why should Wall Street continue paying top dollar for a wholly owned subsidiary?

Source: Counter Punch

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Top 11 Reasons You Should Fight Hate Laws

Unless we resist now, a thought crimes bureaucracy like those regulating Australia, Canada and Europe will soon rule America. In these nations, federal hate laws have destroyed citizens' rights to free speech. Punishment of politically incorrect bias is the ultimate goal of this legislation.

A national hate law would shatter Americans' First Amendment rights, which are now sadly unique among Western democracies. We would lose our precious freedom to express politically incorrect ideas, moral judgments, or whatever personal convictions the reigning thought police deem "hateful."

Think this can't happen in America? Think again.

Hostile work environment law and campus speech bans already severely curtail free expression in American workplaces and universities. A US federal hate law would follow the examples of Europe, Canada, and Australia where Christian pastors have been indicted simply for quoting politically incorrect Scripture in their sermons. Iceland's Orwellian hate law, for example, promises two years' jail if you verbally "insult" a person on the basis of their nationality, skin color, race, religion, or sexual orientation.

If a federal hate law were passed, free expression across the political spectrum would be threatened. What would happen to blasphemous art like Piss Christ or South Park, to Ann Coulter or Al Franken, to Christians protesting sodomy or homosexuals attacking the Bible? Every American, from left-leaning feminists to red state Republicans, should protest "anti-hate" legislation. If Rosie O'Donnell were an Icelander, she could have been prosecuted for verbal "assault" for her recent statement that radical Christianity is as dangerous as radical Islam. Political activists in nations with hate laws have already been indicted for criticizing Islam, Zionism, and homosexuality. Hate laws threaten your freedom to speak your mind, no matter what's on it.

Here are some of the most powerful, bipartisan reasons to fight this legislation.

1. Speech bans are a political weapon used by those in power to silence their opponents and politically unpopular minorities.

Hate laws empower the government to enforce the orthodoxy of whoever happens to be in charge. The government can define which biases or "hatreds" are unacceptable and which are okay. For instance, hate laws in our PC age allow women to derogate men but would silence men from legitimate (though possibly hurtful) speech like a discussion of biological gender differences.

In 2004 Swedish feminist Joanna Rytel wrote a hate-filled screed published in a major daily. Her article describes white men as arrogant, sex-obsessed and exploitative, explaining that Rytel just wants to "puke" on them. Stockholm authorities refused to indict Rytel under their hate law, saying it was passed to protect ethnic minorities, not white Swedes. This is one example of speech bans' uneven enforcement; they are used to punish certain kinds of hate and allow others.

Because almost every exercise of free speech offends someone, government officials would end up enforcing speech bans on the basis of their own bias. Speech bans simply can't be evenhanded unless everyone is shut up altogether.

In the real world, speech can and does wound. That's a cost of life. We naturally resent painful realities like economic competition, unfair comments, and hard work. But in each case, the cures we've tried were far worse than the sickness. Speech bans might censor some hurtful speech but would empower government to silence minorities and strip the intellectual marketplace of legitimate and needed expression-the kind that creates positive, social change precisely because it is minority and challenges the sins of the group.

2. Hate speech bans don't work.

Genuine racism and false hatreds exist in this world. Bans on hate speech, however, won't solve the problem. If you only break off a tick's body, its head will burrow deep beneath the skin. The only effective response to bad ideas is the truth. We should combat falsehoods with more and freer discussion, not less.

3. Hate laws aren't necessary.

ADL claims an epidemic of hate sweeps America that can only be fought with stiffened penalties for bias-driven crimes. Yet the FBI's 2005 Uniform Crime Report shows alleged hate crimes form a tiny 1/15 of 1 percent of all crime in America. Law enforcers' time would be far better spent fighting the 99.85 percent of crime that's happening every minute across our nation rather than getting entangled in discerning and testifying against the perceived motivations of a tiny minority of criminals.

Hate laws would require vast government bureaucracies, complicate law enforcement, and distract police and prosecutors from dealing with actual physical crimes. Government and law enforcement should focus on criminal acts, not words or motivations, in a nation where someone is murdered every 22 minutes, raped every 5, robbed every 49 seconds and burgled every 10 seconds. Discerning and prosecuting criminal motivations would only be a good plan if law enforcers had God's omniscience and time to waste. Ours have neither.

4. Hate speech bans are unconstitutional.

Because the First Amendment underwrites our most precious civil liberty, the US Supreme Court has repeatedly ruled against speech bans. In 1972 the Court declared, "[A]bove all else, the First Amendment means that government has no power to restrict expression because of its message, its ideas, its subject matter, or its contents." (Police Department of Chicago v. Mosley, 408 U.S. 92)

Some forms of speech are restricted; these include threats and "fighting words" that incite "an immediate breach of peace." But these restrictions are (and must remain) extremely narrow and content-neutral-the government is not allowed to censor speech based on the viewpoint it expresses but only on whether it constitutes an immediate threat. Hate laws, however, would punish the viewpoints expressed in speech, in violation of the Constitution.

International use of ADL-designed hate laws shows that the first kinds of speech to be sanctioned are extreme right, white nationalist speech and Holocaust reductionism. The average person is slow to defend such speech. But hate laws quickly broaden to punish forms of expression the average citizen would never dream of stifling. Sweden's 2002 modified hate law, for example, explicitly exposes Christian sermons to prosecution!

All forms of controversial political and religious speech are potentially vulnerable to prosecution under hate laws. This contradicts Supreme Court Justice Holmes Jr. who said in 1929, "[I]f there is any principle of the Constitution that more imperatively calls for attachment [loyal defense] than any other, it is the principle of free thought-not free thought for those who agree with us but freedom for the thought we hate."

5. Speech bans will be used against the very minorities they were meant to protect.

Speech bans silence some to protect the feelings of others. But when the government has power to silence expression that power can be wielded against the very people who once enjoyed its protection. Liberals, the champions of unrestrained speech in the 1960s, now vote as a bloc in Congress to support speech restrictions. Yet already in countries such as Canada, England and Australia, leftist critics of Islam have become the victims of hate laws, indicted for religious "hate speech."

Leftist artists Rowan Atkinson and Salman Rushdie realize hate laws don't just threaten white nationalists like David Duke but liberals as well- they recently fought for revision of Britain's hate law because it could be used to outlaw art that blasphemes or criticizes religion. Atkinson and Rushdie are just a few of hate laws' leftist critics who know that persons of all political persuasions have a stake in defeating this legislation.

6. Speech bans chill legitimate and valuable speech.

Under the threat of possible indictment, many people will refrain from discussing controversial but important ideas. Speech bans are often broad and vague, leaving citizens unsure what might get them hauled into court.

This is what has happened in American workplaces, where hostile work environment law has left many employees unsure what they can say. Many Americans avoid all controversial speech and voluntarily refrain from exercising First Amendment rights at work. Hate laws would extend this dangerous minefield to the national political scene.

Legal philosopher Edmond Cahn points out that speech bans would leave our bookshelves empty. "[T]he officials could begin by prosecuting anyone who distributes the Christian gospels, because they contain many defamatory statements not only about Jews but also about ChristiansThen the officials could ban Greek literature for calling the rest of the world "barbarians." Roman authors could be suppressed because when they were not defaming the Gallic and Teutonic tribes, they were disparaging the ItaliansThen there is Shakespeare, who openly affronts the French, the Welsh, the Danes" (Beyond the Burning Cross, E. Cleary, Random House, 1994)

7. Speech bans greatly reduce the possibility of healthy, democratic change.

Criminalizing speech that expresses "hate" or "bias" would require us to outlaw history's most valuable speech, especially the political and religious speech that threatens social stasis and ignites progress.

Aggressive speech is often the only tool available to political, social, or religious minorities whose access to government lobbying and mass media is limited. Those agitating for social change often need to use inflammatory and even "hateful" language to startle the public into hearing their message. Socrates compared himself to a horsefly biting the lazy flanks of his republic. We should certainly know enough by now to prefer the annoyance of stinging speech (even when we don't see its value) to a tyrannical majority that plods, unchallenged, toward slavery.

Americans are so used to our mudslinging, no-holds-barred political discourse that we find it hard to envision the way freedom of speech could disappear. But the freedom we enjoy is extremely rare in history, and quickly lost. Free expression for intellectuals is the first thing to go when tyrants rise to power; the history of oppressive regimes makes it clear that freedom of political speech is a delicate exception and the overarching tendency is for majorities or elites to get power and silence all opposition.

8. The government's interest in reducing violent crime does not outweigh our interest in preserving civil liberty.

Hate law advocates including the ADL argue that hateful speech incites violence, and appeal to the government's interest in reducing violent crime. But it would be unfair to ban, for instance, white racist speech or Christian sermons against homosexuality without also banning the plethora of other speech that might incite crime. Gangsta rap and videogames would be open to censure; we would also have to ban pornography, especially sadomasochistic porn, which certainly inspires violence against women.

Yet bans against these kinds of speech have been repeatedly declared unconstitutional. The government has an interest in lowering violent crime of all stripes but has always found the value of the First Amendment to be greater. It's unjust to argue that a few kinds of speech must be banned because they possibly incite violence (e.g., criticism of Jewish actions or homosexuality) yet permit huge categories of speech (violent sexual entertainment) that do the same. This would happen, however, under hate laws' unequal and partial enforcement. The ADL is not truly driven by the desire to reduce violent crime but rather to enforce a social and political orthodoxy.

Instead of passing a hate law that would shatter the First Amendment and impossibly complicate law enforcement, people concerned with hate-driven crimes should focus on improving our existing justice system and making sure hard crimes don't go unpunished.

9. Speech bans are offensively paternalistic.

They presume we can't think for ourselves, reject racist or hateful ideas for ourselves, or deal with the hurt caused by others' free expression. Are we such children that we need the government to cover our ears? Speech bans especially condescend toward the minorities they portray as helpless victims whose feelings must be sheltered from ideas they can't combat in a free intellectual market.

10. Speech bans permit government to do something an individual could not morally do.

Frederic Bastiat's classic treatise on The Law says government exists only to prevent injustice by defending our basic rights to person, liberty, and property. Government does not exist to guarantee our economic outcomes, redistribute our wealth, or protect our psyches. Speech bans would empower government to silence individuals by force. This is immoral whether it's one person silencing another person or the government silencing a fringe group of dissenters. Human fallibility requires at least enough humility to allow others to question, challenge, and dissent from our ideas. John Stuart Mill explains, "If all mankind minus one, were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind."

11. Speech bans deny self-determination and individual freedom by criminalizing self-expression.

By censoring speech, hate laws censor thought and restrict our access to ideas. This is the essence of mind control. They deny the personal growth that comes from sharing ideas-including hateful, prejudiced, or false ideas-and having them challenged in a free intellectual marketplace.

Hate law speech bans have been repeatedly declared unconstitutional and would rend the very foundation of our freedom and democracy. Far from combating hate, The Local Law Enforcement Hate Crimes Prevention Act is actually the most hateful and enslaving legislation to ever reach Congress; it would invade states' rights in law enforcement, enabling a hate crimes bureaucracy to police our thoughts and expression. Government could censor by force all speech that dissents from the reigning orthodoxy. Every American must speak up now in defense of the freedom for which our forefathers gave their very lives.

Freedom of expression is one of the most fundamental rights that individuals enjoy. It is fundamental to the existence of democracy and the respect of human dignity. It is also one of the most dangerous rights, because freedom of expression means the freedom to express one's discontent with the status quo and the desire to change it. As such, it is one of the most threatened rights, with governments - and even human rights groups - all over the world constantly trying to curtail it.

Make your voice heard today or it will be silenced tomorrow.

Fredrick Douglas

"Those who profess to favor freedom, and yet depreciate agitation, are men who want crops without plowing up the ground. They want rain without thunder and lightning. They want the ocean without the awful roar of its waters. This struggle may be a moral one; or it may be a physical one; or it may be both moral and physical; but it must be a struggle! Power concedes nothing without a demand. It never did, and it never will. Find out just what people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue until they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress."

Tuesday, July 7, 2009