More evidence of who really runs things


The New York Times reports on yet another deal in which the government lets a big bank get off lightly with crimes and does not disclose the deal to the public. The deal between the New York Fed and Bank of America occurred in July but only came to light because of court filings last week. Not only did the government give the bank a mere slap on the wrist, it then maneuvered to release the bank from other massive legal claims against it totaling billions of dollars.

Late last Wednesday, the New York Fed said in a court filing that in July it had released Bank of America from all legal claims arising from losses in some mortgage-backed securities the Fed received when the government bailed out the American International Group in 2008. One surprise in the filing, which was part of a case brought by A.I.G., was that the New York Fed let Bank of America off the hook even as A.I.G. was seeking to recover $7 billion in losses on those very mortgage securities.

It gets better.

What did the New York Fed get from Bank of America in this settlement? Some $43 million, it seems, from a small dispute the New York Fed had with the bank on two of the mortgage securities. At the same time, and for no compensation, it released Bank of America from all other legal claims.

In an interview, Senator Sherrod Brown, Democrat of Ohio, who serves on the Banking Committee, said the New York Fed’s behavior in this case “underscores that the more we learn about these bailouts, gifts and advantages that Wall Street gets, the clearer it becomes that one set of rules applies to the largest megabanks and another set of rules to the smaller financial institutions and the rest of the country.”

Walker F. Todd, a former official at the Federal Reserve Bank of Cleveland, warned: “As a public entity, the Federal Reserve needs to take its custody of public funds seriously enough to ask for more than merely nominal compensation when it is giving up things of value to a bank holding company. If the central bank starts releasing binding legal claims for nominal compensation, it looks like just one more element of the secret or back-door bailout of the banking system.”

You need to read the article for the whole sordid story of what was done.

Does anyone really still need to be convinced that Wall Street runs the government?

Comments

  1. Pierce R. Butler says

    I useta think that when we saw (partial) justice meted out to the Big Boys, that happened because they had burned other Big Boys (e.g., Enron, Madoff, Stanford).

    Now not even that rule applies.

  2. Didaktylos says

    As the old joke goes:

    “Balls!” said the Queen ” – If I had them I’d be King.”
    “Nuts!” said the Prince ” – I’ve got ‘em and I’m not King yet.”
    “Crap!” said the King – and all the courtiers dropped their breeches and fell heaving and straining on the floor.

  3. sunny says

    Didn’t Marx say that the government is only the executive committee of the ruling class. What I find remarkable is the ability of the state to keep everything under wraps in a country where the press is ostensibly free.

  4. says

    Going back to Marx, if the government is just the executive committee of the ruling class–i.e. the rich–and the rich run the media, why is that remarkable?

    Keeping with the trend, I’d say the people have too many opiates these days keeping them far too docile to act out against such injustices by their rulers. After all, we’ve got shows to watch and video games to play!

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