Recently in Wall St. Bailout Category

"For the past several years, while the mainstream media was dutifully reporting on all things Kardashian or (more recently) a wholly manufactured debt-ceiling crisis, ordinary people were losing their health care, their homes, their jobs, and their savings."

For the benefit of the willfully dense -- i.e. all the telegenic denizens of the Village -- Slate's Dahlia Lithwick explains the basic meaning behind Occupy Wall Street: "They are holding up signs that are perfectly and intrinsically clear: They want accountability for the banks that took their money, they want to end corporate control of government. They want their jobs back. They would like to feed their children. They want--wait, no, we want-- to be heard by a media that has devoted four mind-numbing years to channeling and interpreting every word uttered by a member of the Palin family while ignoring the voices of everyone else."

"This move reflects either criminal incompetence or abject corruption by the Fed. Even though I've expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail."

Along the same lines, Naked Capitalism's Yves Smith responds to the disclosure that repeat offender Bank of America is trying -- with the Fed's help -- to foist their more toxic assets into FDIC-backed accounts (meaning that taxpayers will eat the losses.) "[T]his move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral."

Continues Smith: "The FDIC is understandably ripshit...Bill Black said that the Bloomberg editors toned down his remarks considerably. He said, 'Any competent regulator would respond: 'No, Hell NO!' It's time that the public also say no, and loudly, to yet another route for running a drip feed from taxpayers to banksters.'" (Cartoon via here.)

"The contrast in fortunes between those on top of the economic heap and those buried in the rubble couldn't be starker. The 10 biggest banks now control more than three-quarters of the country's banking assets. Profits have bounced back, while compensation at publicly traded Wall Street firms hit a record $135 billion in 2010. Meanwhile, more than 24 million Americans are out of work or can't find full-time work, and nearly $9 trillion in household wealth has vanished. There seems to be no correlation between who drove the crisis and who is paying the price."

As Bank of America pays a pittance to other banks for its malfeasance, former chair of the Financial Crisis Inquiry Commission Phil Angelides looks into how the winners are now rewriting the history of the 2008 financial collapse. "So, how do you revise the historical narrative when the evidence of what led to economic catastrophe is so overwhelming and the events at issue so recent? You and your political allies just do it. And you bet on the old axiom that a lie is halfway around the world before the truth can tie its shoes." Attorney General Schneiderman, our nation turns its lowly eyes to you.

"The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents. Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources."

As the alleged perps try to get off by paying the (to-them) meager sum of $5 billion, a confidential audit conducted by HUD finds (surprise, surprise) compelling evidence of rampant foreclosure fraud at the big banks. "The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government...The audit on Bank of America finds that the company -- the nation's largest handler of home loans -- failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October."

And, in very related news, someone has finally stepped up to the plate with regards to the roots of the financial crisis: New York Attorney General Eric Schneiderman has announced he's officially going to look into the Street's role in precipitating the meltdown. "The inquiry appears to be quite broad, with the attorney general's requests for information covering many aspects of the banks' loan pooling operations." Godspeed, Mr. Schneiderman.

"Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn't make a massive short bet and didn't bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a 'big short' and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?"

In Rolling Stone, a simile-happy Matt Taibbi reiterates the open-and-shut fraud and perjury case against Goldman Sachs that was laid out last month in the Levin report -- a case that, thus far, nobody in a prosecutorial position seems to be taking up. Too busy going after Wikileaks, I guess.

"To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it's betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried."

"Treasury's mismanagement of TARP and its disregard for TARP's Main Street goals -- whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in -- may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP's most lasting, and unfortunate, legacy." On his last day on the job, outgoing special inspector general for TARP Neil Barofsky laments the failures of the program he oversaw.

In very related news, see also NYT columnist William Cohan on the same subject yesterday: "Not only did the government's theory fail in practice -- unemployment remains relentlessly and historically high and American businesses seem intent on hoarding, rather than spending, the $2 trillion in cash on their collective balance sheets -- but it also lost a once-in-a-century opportunity to change the mores of a momentarily chastened Wall Street, which remains badly in need of substantive reform. This is more than a shame; it is prima facie evidence of how deep Wall Street's hooks have been -- and continue to be -- into the powers that be in Washington (and vice versa)."

"The Fed accepted a total of $1.31 trillion in junk-rated collateral between Sept. 15, 2008 and May 12, 2009 through the Primary Dealer Credit Facility. TARP was nothing compared to this." (Also, $500 billion of that junk was rated CCC or below, which -- given the rampant grade inflation going on at all the rating agencies -- means it was really garbage.)

So, yeah, Wikileaks isn't the only document dump in town this week. As mandated by the Dodd-Frank Act (after much pushing from below), the Federal Reserve today released information about some of its dealings from December 2007 to July 2010. And, while folks are just now delving into the intel, it already seems that some of the bodies buried during the financial crisis are now floating to the surface: "A quick analysis...indicates that Citigroup was the greatest beneficiary, drawing on a total of $1.8 trillion in loans, followed by Merrill Lynch, which used $1.5 trillion; Morgan Stanley, which drew $1.4 trillion; and Bear Stearns, which used $960 billion."

In very related news, former Alan Grayson staffer (and a Hill friend of mine) Matthew Stoller lays out a compelling case for a harder stance against the Fed from the Left from now on. Some brief excerpts:

"It is good that this debate is happening. It means that we will be able to examine the real power structure of the American order, rather than the minor food fights allowable in our current political system. This will bring deep disagreements, profound ones, but also remarkable possibility. Modern American industrial policy is to push capital into housing, move manufacturing abroad, build a massive defense establishment, and maintain an oligarchic financial sector. This system isn't a structural inevitability. People built it, and people are unbuilding it...

Like most American institutions, the Fed has shrouded itself in myth, with self-serving officials discussing the immaculate design of the central bank as untouchable, secretive, an autocratic and technocratic adult in the world of democratic children. But the Fed, and specifically the people who run it, are responsible for declining wages, for de-industrialization, for bubbles, and for the systemic corruption of American capital markets."

Also on this topic, it comes out today that Bank of America was given a break by the SEC on a securities fraud settlement "'because of the nation's perilous economic situation at the time' and the fact that it had received billions of dollars in taxpayer aid, according to the report by the SEC's inspector general...Specifically, during settlement negotiations, Bank of America won relief from sanctions that could have hurt its investment banking business."

To tie this back to the top, according to Bloomberg's Lizzie O'Leary, who's also been parsing the new Fed data, "52% of the collateral Bank of America pledged to the #Fed's PDCF was rated Ba/BB or lower, or didn't have available ratings." (And, let's keep in mind, PDCF was only one of several emergency programs.)

So, in other words, the government kept banks like BoA alive by buying up trillions in toxic assets and looking askance at their illegal activity. They repaid us with record bonuses for themselves and an epidemic of foreclosure fraud -- the "getaway car for the financial crisis," as a friend well put it -- that's screwing over millions of American families. And in terms of fixing bad behavior on the Street, nothing changed whatsoever. Boy, that's some deal.

A tale of two financial crimes: After the Savings and Loan Crisis of the late 80's and early 90's -- a clear consequence of Reagan-era deregulation, by the way -- had run its course, 1852 S&L officials were prosecuted, and 1072 of them ended up behind bars, as did over 2500 bankers for S&L-related crimes. But, when a similarly-deregulated Wall Street plunged the US economy into a much steeper recession two decades later...nobody (with the notable exception of Bernie Madoff) went to jail -- In fact, it was barely even admitted by the powers-that-be that serious crimes had even occurred at all. So what happened?

That is the stark question driving Charles Ferguson's well-laid-out prosecutorial brief Inside Job, which works to explain exactly how we ended up in the most calamitous economic straits since the 1930s. If you've been keeping up on current events at all, even if by comic books, stick figures, or Oliver Stone flicks, then you won't be surprised by the frustrating tale Inside Job has to tell. But unlke the more inchoate and disorganized Casino Jack and the United States of Money earlier this year, which ultimately let its subject wriggle off the hook, Inside Job tells its sad, sordid story clearly, concisely, and well.

The central through-line of the financial crisis by now is well-known. Basically, Wall Steet banksters -- relying heavily on "market innovations" (i.e. unregulated toys) like securitization, collaterized debt obligations (CDOs) and credit default swaps -- spent the first decade of the 21st century engaged in a trillion-dollar orgy of avarice, criminality, and fraud. And, a few prominent casualties like Lehman Brothers and Bear Stearns aside, the perpetrators of these financial misdeeds mostly walked away unscathed from the economic devastation they wrought. In fact, they're doing better than ever.

Said banksters got away with this from start to finish mainly becauset they could, thanks to thirty years of deregulation and an absolute bipartisan chokehold on the political process. So, when the bill came due in 2008, these masters of the free market just got the Fed to socialize their losses, thus handing the damage over to the American taxpayer by way of Secretary of the Treasury Hank Paulson (former Chairman and CEO of Goldman Sachs) and his successor, Tim Geithner (no stranger to Wall Street himself.)

As I said recently, my thoughts on the relative necessity of TARP have shifted a good deal since 2008, but, surprisingly, Ferguson doesn't really get into that debate here. Inside Job is more broad in its focus: It aims instead to show how Wall Street has systematically corrupted both our political process and our economics departments over the course of decades, and nobody is safe from its wrath. Sure, it was probably a tremendously bad idea to let an Ayn Rand acolyte like Alan Greenspan call the shots for the American economy for so long, but he's just the tip of the iceberg. There are other fish to fry.

After all, it is President Clinton and his financial lieutenants, Robert Rubin and Larry Summers, who preside over the death of Glass-Steagall, the original sin that precipitates all the later shenanigans. It is also they who work to keep prescient regulators like Brooksley Born from sounding the alarm. And, after the house of cards has collapsed in 2008, and President Obama steps up to the plate promising "change we can believe in," who does he pull out of the bullpen to lead us but...the irrepressibly porcine Larry Summers and Tim Geithner, the Chair of the New York Fed? Meet the new boss, same as the old boss. (But remember, folks, Obama is really an anti-business socialist.)

What goes for the US government goes for the academy as well. As Ferguson shows, Milton Friedman aficionadoes and Reagan/Bush policy guys like Marty Feldstein of Harvard and Glenn Hubbard of Columbia, who now find themselves atop prestigious Ivy League economics departments, are all too happy to give an academic imprimatur to bad bankster behavior, as long as they see a piece of the cut. (Nobody gets it worse than Columbia prof and former Fed governor Frederic Mishkin, who appears here to have walked into a battle of wits completely unarmed.)

In the meantime, Ferguson fleshes out the documentary with related vignettes on the financial crisis and those who brought us low -- some work, some don't. The movie begins with the cautionary tale of Iceland, about as pure a real-time case study into the abysmal failures of deregulation as you can ask for. (If that doesn't do ya, try Ireland.) But the film ends as badly as it starts well, with an overheated monologue about the way forward, cut to swelling music and images of the Statue of Liberty -- a cliche that serves to dissipate much of the pent-up anger of the last 90 minutes. (Perhaps Inside Job should've used the lightning strike.)

What's more, at times Ferguson seems to try too hard to frame guilty men, and never more so than when he has a former psychiatrist-to-the-bankster-stars opine about cocaine abuse and prostitution all over the Street. Sure, it's unsavory, and I see the ultimate point here -- that these petty crimes could've been used to flip the lower-level traders if anyone had had tried to bring a RICO case against these jokers. But this sort of bad behavior, however frat-tastically douchey, is extraneous to the real crime at hand, and it seems really out of place when you're using fallen crusader Elliot Spitzer as a witness for the prosecution.)

Still, overall, Inside Job is a very solid documentary that manages to capture its elusive quarry, and in a better world it would result in more serious consequences for the banksters who put us in this mess. Make no mistake -- this is a crime story. As Massachusetts rep Michael Capuano observes in the trailer, and as Woody Guthrie put it many moons ago, "some rob you with a six-gun, and some with a fountain pen." Thing is, when Pretty Boy Floyd or John Dillinger robbed banks back in the day, they got shot. When the banks rob you...well, that's apparently another thing entirely.

"A shame the Lemur Brothers had to be sacrificed." "Yes, the Invisible Hand works in mysterious ways." By way of Mother Jones, Erich Origen and Gan Golan explain the financial crisis in comic book form. (The full Adventures of Unemployed Man are available here.)

Like W before it, Oliver Stone's peppy, decently enjoyable, and ultimately far too convivial Wall Street: Money Never Sleeps, which I caught as the first leg of a three-film swing two weeks ago, suggests the director has moved out of the near-decade-long nadir that brought us Any Given Sunday and World Trade Center. (Rock bottom was, without a doubt, Alexander.)

Wall Street 2 turns out to be a brisk two hours, and its ability to explain some relatively complex financial goings-on in a crowd-pleasing format is admirable. Still, the movie also ends up feeling like a missed opportunity. Bringing 80's corporate raider Gordon Gekko (Michael Douglas) back to comment on the amoral rapacity of today's financial sector could be a stroke of genius, and the movie is most entertaining when it shows how the greed and corruption of today's Wall Street has outpaced anything Gekko could ever have imagined back in the American Psycho era. ("Someone reminded me I once said, 'Greed is good.' Now, it seems it's legal.")

But even more than W, a movie which treated the many foibles of our 43rd president with kid gloves, Wall Street: Money Never Sleeps is a film that seems lacking in sufficient indignation. I mean, those venerable and self-proclaimed Masters of the Universe, the Titans of Wall Street, managed to plunge the entire American economy into a death spiral and pass the bill off to the increasingly jobless American taxpayer. And yet, they still managed to avoid any seriously damaging regulation as a consequence, and, at the end of the day, they give themselves record bonuses for two years running. And all Stone can muster up about it is this? Where's the outrage?

To be fair, avarice and plunder are central to Stone's story here, bubbles abound (Stone does love to beat a metaphor to death), and the film does dramatize the September 2008 collapse and subsequent bailout, with Wall Street tycoons Josh Brolin and Eli Wallach, among others, worriedly communing with Hank Paulson and Tim Geithner lookalikes in a darkly-lit Federal Reserve antechamber. The problem isn't the content so much as the tone. Eventually, you get the sense that, despite all their bad behavior, Stone likes and looks up to these guys. (This may be because Stone's father was a Wall Street banker, so this may be the film where a director who continually relies on characters with daddy issues is now trying to work out his own.)

As a result, Wall Street feels confused -- It doesn't really seem to know which tale it wants to tell. On one hand, we have the story I just mentioned -- the obvious sickness and eventual collapse of the financial sector. But then we also have the story of our protagonist, Jake Moore (Shia LaBoeuf) -- a savvier operator than Charlie Sheen ever was -- who shuffles through various potential father figures (Gekko, Brolin, and, in the early going, Frank Langella) and woos the professional-blogger daughter of the fallen Gekko king (Carey Mulligan -- By the way, Stone doesn't seem to have a handle on what blogging's about. We wear pajamas all day, and we don't have sleek Facebook-looking offices.)

And then we have the Return of Gordon Gekko himself. Now on the CNBC book and lecture circuit, a seemingly chastened Gekko wants Jake's help to reconnect with his prodigal daughter. In the meantime, he teaches Jake a thing or two about the way the Game is played at the top. And hewatches today's unsustainable financial shenanigans with wry bemusement -- he likes to discourse on tulips -- and perhaps a little jealousy. Does Gekko want a seat at the table again? Well, he's Gordon Gekko. What do you think? (For what it's worth, Douglas is great fun here -- let's hope it's not his last performance -- but his character is getting a bit of the Ridley Scott's Hannibal treatment. To my mind, Gekko makes for a better villain than he does an anti-hero.)

In any case, Stone has a lot of balls in the air throughout Money Never Sleeps and as the film goes on they become more and more clumsily handled. This flaw becomes glaringly obvious in the final reel, when the film suffers from more endings than Return of the King, including one -- in front of Lady Gekko's apartment -- that comes out of nowhere and feels exceedingly cheap. (The movie even has three closing-credit sequences -- one focused on time, one one family, and one on money -- Four if you count all the bubbles floating around. Stone apparently couldn't decide what his film was about.)

There's a lot of upside to Money Never Sleeps -- It's a surprisingly fun movie at times, and the acting is solid across the board. (People like to hate on Shia LaBoeuf, but I actually think he's a pretty good actor. Here, he even starts to seem a bit like his father from a more ill-conceived sequel, Harrison Ford -- although with less finger and family issues.) Still, I wish the movie weren't so confused about its purpose, and I definitely wish it took a more aggrieved stance towards its bankster subjects. I don't want to watch these jokers having totally random Ducati races. I want to see them in jail. (Then again, be careful what you wish for: Gekko says several times here that it's the next collapse we really need to worry about, and that could happen at any time...like, say, now.)

"'The potential for exit in terms of emigration is huge and it's a major part of the Irish story'...'Ireland is on the verge of losing a whole generation. People are simply not able to get a job in Ireland, not happy with the quality of life here and they are upping and leaving."

Faced, like so many other nations, with a bank-fueled financial meltdown and a grueling austerity program to make up the slack (sound familiar?), the Irish are -- well, according to Reuters at least -- either leaving or taking it in stride...for now. "'It's a cultural characteristic of the Irish people,' said portrait photographer Kevin Abosch as he strode down O'Connell Street. 'Generations of pacifism have been bred into them.'"

Particularly as I was just writing up The Town, it reminds me of that line from The Departed: "If we're not gonna make it, it's gotta be you that gets out, cause I'm not capable. I'm f**king Irish, I'll deal with something being wrong for the rest of my life."

"[T]o the extent that the 'liberal left' is upset at the President, it's because they are seeing a great opportunity slip away in real time. The only one that told the base that they could change America from the bottom up and bring forth a transformative new era of leadership is Barack Obama. If he didn't want one, he shouldn't have said anything."

In response to the most recent disparaging of liberal and progressive blogs by "senior administrative official" to his or her media lap dog of choice, FDL's Dave Dayen gets to the heart of progressive consternation with Team Obama: "Nobody had a bigger challenge coming into office than Barack Obama but nobody had a bigger opportunity. And liberals like myself are generally peeved that the opportunity has been squandered. Yes, squandered." Yep, sounds about right.

In very related news, with the passage of financial reform in the Senate today, The Prospect's Kevin Drum gets off a zinger about Obama's legislative accomplishments thus far. I think, overall, this president could have accomplished much more than Drum's biting joke suggests -- most obviously on executive power issues like torture and indefinite detention. (Or, put another way, I just get irritated with people who throw up their hands and say the problem with our politics is entirely structural when you have an ostensibly-lefty president saying patently dumb things like this. Choices matter, and this administration makes terrible ones.) All that being said, Drum's comment was still worth a (rueful) laugh regardless.

"They're not accustomed to being engaged in politics this way," says a private-equity investor. 'Their skin isn't toughened. They actually take [the attacks by Obama] personally. This is a profession with a lot of smart people, but who aren't necessarily terribly introspective. They think they actually deserve to make all this money. So any attack on their livelihood is, ahem, unpleasant.'"

In the wake of the Senate's 59-39 passage of financial reform last week (not to mention increasing evidence of rampant and pervasive fraud at Goldman, Morgan, and elsewhere), New York's John Heilemann surveys the bruised egos of Wall Street's would-be robber barons. (In very related news, Paul Krugman and the WP note that Wall Street is now betting heavily on the GOP again.)

Keep in mind: Wall Street is angry with the administration despite the fact that "Geithner's team spent much of its time during the debate over the Senate bill helping...kill off or modify amendments being offered by more-progressive Democrats." [Change we can believe in!] Heilemann writes: "Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system's stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn't need to be rebooted or downsized, merely better supervised."

Still, on the bright side and despite the ambivalence (or open opposition) from folks in high places, this bill did get significantly stronger on the Senate floor, and in some ways is now stronger than the House version passed last year. Let's hope this welcome progressive trend continues in conference.

"The initial reaction of traders to the Flash Crash was that some human must have made a mistake submitting a trade. But the SEC...hasn't found evidence of a 'Fat Fingered Louie' punching a billion rather than a million on an order. In fact, the SEC still doesn't know what caused this crash. Curiously, no one is focusing on what caused the crash to stop...JP Morgan and Merrill Lynch were big buyers precisely as the market hit minus one thousand points on the Dow. It seems rather odd that both these firms at the same time would see the same trading opportunity.

In fact, what they did was violate one of the prime rules of trading: never try to catch a falling knife. The market was falling fast and furious at the point they entered the pit to buy equity futures, so why did they take such an enormous risk? We learned yesterday that both of these firms, plus Goldman Sachs, were such superb traders in the market that none of them had a single losing trading day all last quarter. This type of risky trade is not how you get to be a superb trader."

Over at the Agonist, Numerian digs deep into last week's "Flash Crash" -- and comes to some very troubling conclusions. To wit, the big players know the thresholds where the trading algorithms kick in, and thus, basically, the fix is in. "The stock market seems to be nothing but a playground for the big banks and other connected firms who get a preview peek at everything that goes through the market, and who can program their computers to skim profits off daily with no risk whatever. The stock market is also, quite possibly, prone to more serious manipulation that resulted in last Thursday's crash."

Oof. I'm out of my comfort zone when it comes to understanding market behavior, so I hope someone has a better explanation for the Flash Crash than the disconcertingly plausible one offered here. (Just saying Greece doesn't quite cut it, I don't think.)

"Last week, Congress decided it would not confront Too Big To Fail, the single gravest threat to our collective financial security. But there are still several key Wall Street reforms worth fighting for--reforms that must be enacted before the next crisis hits, with or without a big bank break-up. And fortunately, key Senators have authored amendments dealing with each one." In HuffPo, Zach Carter delineates the most worthwhile progressive amendments to financial reform still up for debate in the Senate. A good encapsulation of the state of play.

"'I think he's a guy who's willing to get down into the weeds,' said South Dakota Sen. John Thune, who is No. 4 in GOP leadership. 'Because he immerses himself in that and understands it so well -- the positions he adopts may not always be the ones that everyone else in our conference comes to.'"

Hmmm, that explains a lot. In trying to explain why Sen. Bob Corker has been bucking the GOP line on financial reform of late, Sen. John Thune gaffe-tastically concedes that it's because Corker actually tries to figure out what he's talking about. "When Sen. Richard Shelby of Alabama started working on a draft outline of a GOP alternative to the Democrats' bill, Corker said he didn't plan on spending 'any time' on it. 'At the end of the day -- look it's a messaging piece, isn't it?' Corker smiled."

"The big U.S. banks were the source of the global financial crisis, in part because their bigness and their practices were copied by major banks around the world. What happens in this reform effort is being watched avidly in many countries, because it will say much about how global finance is to be conducted. What is often missing in these discussions are the assumptions people make about banking and its role in a modern economy. We should begin therefore with some first principles."

As the manifestly fradulent behavior by Goldman Sachs of late comes to full light -- one among many, it seems -- Numerian of The Agonist goes back to basics to make a case for strong banking reform. "The very first lesson we should learn from this crisis, which we thought this nation learned in the 1930s, is never again...The second lesson we should learn from this crisis is that we should not as a nation have to learn these lessons over and over again every 80 years. Something has to be done to make the legislative changes this time stick."

"From the mid-1930s through the late '50s, Time Inc. was probably the largest news organization in the world, with bureaus on every continent...The company's success was partly a result of shrewd management. But it was also a result of Luce, who had looked into the future and seen an increasingly integrated nation bound together by railroads, highways, radio, movies and the rise of a national corporate culture. As a result, Americans would need a vast amount of information and an efficient way of accessing it. Luce embraced that future and created vehicles that served the needs of his rapidly changing times."

On the release of his long-awaited The Publisher, an extensive biography of TIME/LIFE founder Henry Luce, Columbia historian (and my dissertation advisor) Alan Brinkley discusses how Luce may have coped with the Digital Age. "Luce -- for all his flaws -- was an innovator, a visionary and a man of vast and daunting self-confidence. Were he to live in our time, trying once again to revolutionize the spread of knowledge, he might find his talents much in demand."

And, in very related news, Boing Boing posts Chris Ware's recently rejected throwback cover for Fortune's annual 500 issue. "It hearkens back to the golden age of Fortune as an exemplar of beautifully designed and illustrated magazines...'and he filled the image with tons of satirical imagery, like the U.S. Treasury being raided by Wall Street, China dumping money into the ocean, homes being flooded, homes being foreclosed, and CEOs dancing a jig while society devolves into chaos. The cover, needless to say, was rejected.'"

"'How can anyone -- regulators, investors or anyone -- understand what's in these financial statements if they have to dig 15 layers deep to find these kinds of interlocking relationships and these kinds of transactions?' said Francine McKenna, an accounting consultant who has examined the financial crisis on her blog, re: The Auditors. "'Everybody's talking about preventing the next crisis, but they can't prevent the next crisis if they don't understand all these incestuous relationships.'"

The NYT delves into the sordid story of Hudson Castle, a.k.a. Lehman Brothers' alter-ego, which they used to squirrel away shady investments. (This shell game didn't even make the recent Lehman report, which apparently found enough "materially misleading" behavior to warrant criminal charges against Lehman's leadership.)

"Somewhere in literary-character hell, John Galt is spending an eternity getting beat down by Tom Joad & his pick handle." Ah, Ayn Rand...come for the vaguely kinky sex, stay for the self-serving, thoroughly reprehensible philosophy. Salon's Andrew Leonard asks if the recent economic downturn has discredited Rand's Objectivism once and for all, prompting -- as you might expect -- a war in the comments section between the true believers and the gleeful cynics.

Among the many funny comments, this one, reposted from here: "There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

"'Taxpayers are subsidizing a legislative agenda that is inimical to their interests and offensive to what the whole TARP program is about,; said William Patterson, executive director of CtW Investment Group, an activist group affiliated with a coalition of labor unions. 'It's business as usual with taxpayers picking up the bill." Sigh. The WP's Dan Eggen reports on GM and a host of financial firms using bailout money to lobby for the status quo. "Major recipients of federal bailout money spent more than $10 million to lobby lawmakers in the first three months of 2009, including arguing against pay limits for corporate executives, according to newly filed disclosure records."

"What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it...OUR financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The pressure to do this in today’s financial markets is immense. Obviously the greater the market pressure to excel in the short term, the greater the need for pressure from outside the market to consider the longer term. But that’s the problem: there is no longer any serious pressure from outside the market."

In an extended NYT editorial, authors Michael Lewis and David Einhorn survey recent economic developments with an eye to the broader problem: a financial institutional culture that fosters and legitimates idiotic amounts of risk. "The fixable problem isn’t the greed of the few but the misaligned interests of the many...The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest."

Among the culprits in Lewis and Einhorn's worthwhile dissection: the credit rating agencies. "In pursuit of their own short-term earnings, they did exactly the opposite of what they were meant to do: rather than expose financial risk they systematically disguised it. " See also: the S.E.C. "Created to protect investors from financial predators, the commission has somehow evolved into a mechanism for protecting financial predators with political clout from investors...And here’s the most incredible thing of all: 18 months into the most spectacular man-made financial calamity in modern experience, nothing has been done to change that, or any of the other bad incentives that led us here in the first place."

It's not all doom, gloom, and (highly justified) finger-pointing. In part two of the editorial, Lewis and Einhorn offer some quick fixes to our current institutional myopia that should be relatively simple to put through...in a perfect world. "The funny thing is, there’s nothing all that radical about most of these changes. A disinterested person would probably wonder why many of them had not been made long ago. A committee of people whose financial interests are somehow bound up with Wall Street is a different matter."

"'Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,' the White House statement said. 'However, given the current weakened state of the U.S. economy, we will consider other options if necessary -- including use of the TARP program -- to prevent a collapse of troubled automakers.'" After Senate Republicans manage to kill the auto bailout bill -- apparently, GOP conservatives wanted to see more arbitrary union-busting therein -- the Dubya administration, to its credit, announces it may just move ahead anyway. "A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."

I can't say I ever expected to pat this administration on the back for broadly interpreting its legislative mandate. But, we live in strange times, I guess.

Said Michigan Governor Jennifer Granholm of the bailout bill's demise in the Senate: "Their no vote is an astounding blow. They have chosen to ignore the livelihood of 3 million Americans, 3 million families, and in the process have chosen to drive the American manufacturing industry -- and perhaps the American economy -- into the ground." Said Republican L. Brooks Patterson of his party's behavior in Congress: "The arsenal of democracy is under attack by the arsenal of hypocrisy." (The world markets didn't like it much either.)

"Well, you know, Sen. McCain, in the last debate and today, again, suggested that I don't understand. It's true. There are some things I don't understand. I don't understand how we ended up invading a country that had nothing to do with 9/11, while Osama Bin Laden and Al Qaeda are setting up base camps and safe havens to train terrorists to attack us. That was Sen. McCain's judgment and it was the wrong judgment."

As you know, the second of three presidential debates is now in the books. [Transcript.] And, while it's still way too early to put this election in the fridge -- there's a lot of crucial get-out-the-vote work to be done first, and we all saw how that turned out last time 'round -- we nevertheless seem to be moving away from the closely divided America of 2000 and 2004 and fast approaching an contest similar to Bill Clinton's relatively smooth re-election of 1996. That year, the nation ignored the continued haranguing of an aging war hero about cultural matters to back the candidate with a clearly better grasp on both the economy and the way Americans really live. By all reliable accounts, Sen. Obama, who won the evening handily last night, is the Clinton candidate this time around, and it seems to be helping him across the board.

Sen. Obama not only seemed to have a clearer grasp on the causes, consequences of, and potential remedies for our current economic travails last night, he came across as more competent, more discerning, more likable, and more presidential throughout. Meanwhile, for all McCain-Palin's wallowing in the tired old culture war over the past few days, the Senator from Arizona seemingly left all of his new favorite talking points in his other suit. And, while desperately needing some kind, any kind, of game-changer last night, McCain instead just puttered around the town hall muttering the same stale GOP platitudes -- he'll raise your taxes! he's won't keep you safe! -- that didn't get the job done the first time 'round. In short, let's not count our chickens just yet -- we've got one more of these next week, and three weeks thereafter to keep the pressure on. But, right now, it's looking pretty good, folks.

"'The fact is people are scared and the only thing they're doing is selling,' said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. 'Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working.'" And on the first Monday of that October, the Dow plunged 800 points...I know I spend more time than most contemplating the 1920's, but I can't be the only person out there for whom this is all starting to sound eerily familiar...

Update: Hold those dismal historical analogies just yet: Thankfully for everyone, the rally monkey roared at the end of the day, bringing today's losses to only 370 or so. Still, it's safe to say things are looking a tad, er, erratic on Wall Street at the moment.

"'If you turn the clock back two or two and half weeks, you could make a plausible argument that if a couple of things go our way we will lose three to four Senate races,' said one Republican strategist. 'Now we will lose six to eight.'" Reeling from both the economic collapse on Wall St. and the ensuing shenanigans surrounding the bailout -- which passed on its second try yesterday, despite continued opposition from a majority of the House GOP -- the Republicans prepare to be ousted en masse in a month. "Polling in most Senate races over the past 14 days has shown a five-point decline for the Republican candidate, the strategist said."

Update: "'Before the economic crisis, we had a number of races moving our way,' said Matthew Miller, communications director of the Democratic Senatorial Campaign Committee. 'But now we’re seeing Republican numbers plummet.' GOP officials largely agree. " Is 60 in the Senate now in sight?

"'Today's the decision day. I wish it weren't the case,' said Rep. Barney Frank (D-Mass.)." Despite the apparent attempt by divider-not-a-uniter John McCain to kill a compromise he hadn't even read last week, the Dubya White House and Congress hold their respective noses and come to agreement on Paulson's $700 billion bailout plan, with debate in the House starting today. "The proposed legislation would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates. The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them."

As I said here, I'm not all that happy about the nation having to subsume the risk, and ride to the rescue of, the many banks and Wall Street types that profited massively from these obviously suspect mortgage deals. But, what else is there to do? As with so much else occurring over the past eight years, it befalls us now to clean up the mess left by the free market fundies of late. I just hope we learn something from the economic consequences of this latest binge of free-market fraudulence, before they grow too dire. To wit, whatever the corporate-funded right tells you about self-regulating markets, we need, and will continue to need, real refs on the field.

Update: Uh oh. The bailout compromise dies in the House, prompting the Dow Jones to swiftly tank 700 points. "The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against."

As the TIME article linked above noted before the vote, "the candidate with the most riding on Monday's vote is McCain, who backed the concerns of conservatives in the House over the initial agreement...[I]f a majority of the House Republicans don't vote for the measure, McCain could lose political face. 'If McCain cannot persuade them, it is hard to portray him as a leader,' said Clyde Wilcox, a political science professor at Georgetown University." So, that's the silver lining, I guess. But the bad news now, alas, is considerably worse.

"Let's be clear about why we're facing a crisis that could pull down the global financial system. The irresponsibility of individuals who bought houses they couldn't quite afford pales in comparison with the irresponsibility of the financial wizards who built on those shaky mortgages a towering edifice of irrational faith. Someone in the government should have looked at all those trillions of dollars' worth of mortgage-backed securities and collateralized debt obligations and credit default swaps and demanded that Wall Street prove that all, or even most, of this purported money was real. But we're in the eighth year of the Bush administration; adult supervision left the building long ago." -- Eugene Robinson.

Boy, nothing like panic and near-catastrophe in the banking and financial sectors to turn all the stark raving free-market fundies redder than Eugene Debs on May Day, eh? In any event, once again we're on the verge of learning the hard way that Wall Street does a really lousy job of regulating itself, and that, when push comes to shove, it's the "don't-tread-on-me" entrepreneurial capitalists among us who are the first to beg for Big Guvmint to come in and bail them out -- at above-market prices. "The only emergency is on Wall Street, and that is entirely of Wall Street's making. It was the banks that made the loans, the banks that bought the paper, the banks that dumbly believed the models that said that housing prices wouldn't collapse...How touching to see executives from the likes of Lehman Brothers, not normally an institution associated with widows and orphans, squawk about cutthroat tactics." And I don't seem to remember the economic Big Boys, or their mostly-GOP minions in Congress, show such concern about the vagaries of risk when the plight of ordinary folks was being discussed, vis a vis the egregious bankruptcy bill of 2005.

Of course, we can't just let many of our major financial institutions implode without consequence, and -- even though delegating the Dubya administration any more "emergency powers" at this point seems like a colossally bad idea -- it seems a given that something will have to be done to sort out all this out, and it will no doubt end up costing taxpayers and aggrieved homeowners a bundle. I just hope, when the dust settles, we remember this time how this all came about, and not just let the idiotic free-market fundies blather on about tax-and-spend liberals killing the entrepreneurial spirit every time some sort of regulatory apparatus is discussed in Washington. We know how that movie ends.

"The Glass-Steagall Act is the Depression-era law that separated commercial and investment banking. It was functionally repealed in 1998, when Travelers (the parent company of Salomon Smith Barney) acquired Citicorp. And it was officially repealed in 1999. But recent events on Wall Street -- the failure or sale of three of the five largest independent investment banks -- have effectively turned back the clock to the 1920s, when investment banks and commercial banks cohabited under the same corporate umbrella." As Wall Street takes a dive in the wake of several bank failures and near-failures -- but, don't worry, the fundamentals of the economy are strong and everything -- Newsweek's Daniel Gross briefly discusses the end of the Glass-Steagal era, and what it means for the American economy.