Global No Confidence Vote: Banksters Rule!

Two stories today highlight the fact that while Obama is doing a pretty good job running the country, he's still letting the banksters run the damn country and will continue to do so. First, we see the reason the Dow was up 150+ points today: anticipation of tomorrow's announced rules changes in mark-to-market accounting.

It's unclear exactly what changes the FASB plans to make on Thursday, but none is expected to be radical enough to have an immediate impact on stocks. Still, most investment experts say bank stocks should be avoided until the full impact can be weighed.

Advocates of mark-to-market rules say they provide a clearer picture of troubled assets' value because they are priced according to their present worth in the marketplace. The alternative, known as mark-to-model, allows banks to price the assets at a model determined by the institution and at times not easily in view of the investing public.

That's fancy MBA talk for "We're lying and we made this too complex for you peons to figure out on purpose, so take our word for it."

With the rise of derivatives used to package now-distressed mortgages, mark-to-market opponents say the rules need to be changed because there is no fair market value for the bad assets. The current bid offer in the marketplace is at a level that would wipe out some banks if they had to sell at those prices, some analysts say.

So, the banksters want a mulligan. They want their assets to be what their models predict, and not what they are actually selling for right now in the marketplace. If they have to sell at these near worthless prices (and they have to sell at these worthless prices because the toxic assets really are nearly worthless) they they go under.

This is what I mean by America's major banks are insolvent. They are holding pieces of paper that are worth 20 cents on the dollar when the banksters say they are worth 100. But we can't call the banks out on them because they will collapse the entire global financial system if they are forced to go under.

Which means Obama's boys are letting the banksters lie about what these assets are worth. And how are these banks Too Big To Fail? Why, the Gramm-Leach-Bliley Act, which allowed these huge megabanks to form into ravenous cancers on our economy. So what's Obama's response to this regulatory nightmare?

Why, hiring the guys who created it in the first place! Larry Summers, Robert Rubin, Tim Geithner, and now we learn the nominee for Geithner's second-in-command is the guy who did the legwork on the GLB Act:

Tim Geithner’s new nominee for number two at the Treasury Department, Neal Wolin, played a key role in drafting legislation in the late 1990s deregulating the banking system, a former Treasury Department official confirms to us.

The law that Wolin helped draft has been blamed by some critics, many of them Democrats, for easing up regulatory pressure on huge financial institutions, tangentially helping create today’s mess — and his role drafting it could come under questioning at his upcoming confirmation hearings.

Our reporter, Ryan Derousseau, came across Wolin’s role in researching our big profile of Wolin at WhoRunsGov.com. Stuart Eizenstat, a deputy Treasury secretary under Bill Clinton, confirmed that as Treasury’s general counsel at the time, Wolin “provided the technical and legal drafting” for the Gramm-Leach-Bliley Act.

As Ryan writes, the Act hasn’t been directly blamed for today’s meltdown. But it did pave the way for the birth of huge financial companies like Citigroup that were deemed “too big to fail” when their mortgage bets went belly-up and the credit market evaporated. The government, of course, had to bail out these institutions with billions in taxpayer dollars.

Wolin — who was picked after several other candidates passed on the slot — did the legal work under then-Treasury Secretary Larry Summers, who is now Obama’s head of the National Economic Council. The difference here is that Summers’ post, unlike Wolin’s, is a non-confirmable one, so he hasn’t been pressed publicly on Gramm-Leach-Bliley. The question now is whether Wolin will come under sharp questioning over his role in creating it.

Failing upwards is apparently not just a prerequisite to be in the Bush administration, but one for the Obama administration too. We're already seeing the influence of the deregulators on the banksters and in a major way: virtually no accountability and despite all of Obama's tough talk, the reality is the banksters will continue to get free trillions until we inflate our way into a banana republic. These are the same guys that pitched the notions that the Depression-era protections on Too Big To Fail were antiquated nonsense, and that housing values would go up forever. Now they're calling the shots on Obama's economic policy. Why should we expect anything different?

At least the Republicans are somewhat more honest about their plan to eradicate the American middle class. Obama either doesn't realize what's going on, or has been talked into it by the same guys that sold it to Clinton on the way out the door.

Either way, it rewards failure with trillions...our trillions.

The foxes aren't in charge of just the henhouse. The foxes own chicken and egg distribution, production, sales, marketing, and logistics, every step of the way. That money they're giving away to themselves isn't backed up by gold, it's backed up by Helicopter Ben's printing press.

We're in for a hell of a ride down the tracks. One way. Your standard of living will go with it.

Be prepared.