Letters 12-05-2016

Trump going back on promises I’m beginning to suspect that we’ve been conned by our new president. He’s backpedaling on nearly every campaign promise he made to us...

This Christmas, think before you speak Now that Trump has won the election, a lot of folks who call themselves Christians seem to believe they have a mandate to force their beliefs on the rest of us. Think about doing this before you start yelling about people saying “happy holidays,” whining about Starbucks coffee cup image(s), complaining about other’s lifestyles…

First Amendment protects prayer (Re: Atheist Gary Singer’s contribution to the Crossed column titled “What will it take to make America great again?” in the Nov. 21 edition of Northern Express.) Mr. Singer, the First Amendment states: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof …”

Evidence of global warming Two basic facts underlay climate science: first, carbon dioxide was known to be a heat-trapping gas as early as 1850; and second, humans are significantly increasing the amount of CO2 in Earth’s atmosphere through the burning of fossil fuels and other activities. We are in fact well on our way to doubling the CO2 concentrations in our atmosphere...

Other community backpack programs I just read your article in the Nov. 28 issue titled “Beneficial backpacks: Two local programs help children.” It is a good article, but there are at least two other such programs in the Traverse City area that I am aware of...

A ‘fox’ in the schoolhouse Trump’s proposed secretary of education, Betsy DeVos (“the fox” in Dutch), is a right-wing billionaire; relentless promoter of unlimited, unregulated charter schools and vouchers; and enemy of public schooling...

Home · Articles · News · Other Opinions · Pure greed drove Wall...
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Pure greed drove Wall Street

Sen. Carl Levin - May 3rd, 2010
Pure greed drove Wall Street
By Sen. Carl Levin
The freezing of financial markets and the collapse of financial
institutions that sparked last week‘s Senate investigation are not
just numbers on a balance sheet. These numbers reflect millions of
Americans who lost their jobs, their homes and their businesses in a
recession that the housing crisis sparked, creating the worst economic
decline since the Great Depression. Behind these numbers are American
families who are still suffering the effects of a man-made economic
Our goal on the Senate Permanent Subcommittee on Investigations, which
I chair, has been to construct a record of the facts in order to
deepen our understanding of what went wrong; to inform the legislative
debate about the need for financial reform; and to provide a
foundation for building better defenses to protect Main Street from
Wall Street.
Our first hearing dealt with the impact of high-risk mortgage lending,
focusing on a case study of Washington Mutual (WaMu) bank, whose
leaders embarked on a reckless strategy to pursue higher profits by
emphasizing high-risk loans. These are not loans that were just likely
to fail. These loans also created real hardships for the borrowers as
well as the risk for the bank itself.
There was basically a conveyor belt that fed toxic, bad, reckless
mortgages into a financial system, just like a polluter dumps poison
into a river. The package that came downstream was a mortgage-backed
security that WaMu sold to get the enormous risk of these mortgages
off its own books and shifted to somebody else.
The second hearing examined how federal regulators at the Office of
Thrift Supervision saw the problems at Washington Mutual year after
year and did nothing to stop them. Supervision that should have been
conducted at arm’s length, instead was done arm-in-arm with the bank
it was supposed to be regulating.
The third hearing dealt with credit rating agencies, Standard & Poor’s
and Moody’s. While Washington Mutual and other lenders dumped their
bad loans, credit rating agencies were assuring everybody that the
poison water was safe to drink. Triple-A ratings were slapped on
bottles of high-risk financial products.
We’ve got to do something about the inherent conflict of interest that
is involved when credit rating agencies are paid by the people whose
products they are rating.
Yesterday’s hearing focused on the actions during 2007 when the
housing bubble burst. Goldman Sachs, one of the oldest firms on Wall
Street, has documents that make it very clear that it was betting
against the housing market while it was aggressively selling
investments in the housing market to its own clients. It was selling
high-risk, mortgage-backed securities... reaching out with one hand
to prospective buyers, but with the other hand betting against those
same securities.
What we discovered in this investigation is that there is a conflict
of interest too often between what’s in Goldman interest, what’s good
for their bottom line, and what is in its clients’ interests. These
are deeply troubling findings.
There not only was a collapse of a housing market. There was a
collapse of values. And extreme greed is the thread that connects
these events, starting with those mortgages that were sold by
Washington Mutual Bank; extreme greed that, indeed, involved the
people who were supposed to be doing the credit rating, being paid and
doing a lousy job, rating the financial instruments.
So what we’ve got to do is build defenses against these kinds of
excesses... We see the problems. Americans see the problems.
Americans cannot understand how a company can design and build a
product and sell that product to its clients while at the same time
they are betting that the product will fail. It just runs contrary to
common sense.
If you’re going to sell somebody a pair of defective shoes and
you’re betting on the failure of the product to make a profit,
hopefully, most Americans would say that kind of a conflict of
interest has got to be stopped.
Goldman Sachs made a bet against the very instrument that they put
together to sell to their customers. That, to me, is incredible. And
they and a lot of other people on Wall Street were engaged in what we
call credit default swaps, which are nothing more than casino bets as
to whether something will happen or not.
If people want to bet on that, let them bet. But when the government
ends up paying the winning bettor, now you’ve got a problem. Where the
company that is taking those bets and ensuring those bets, as in the
case of A.I.G., is sure to fail, that’s a problem. When they insure so
many bets that if that private company fails, the economy is going to
be terribly damaged as result and taxpayers end up paying off those
bets -- that has got to be stopped as well. These are just casino
bets, and we shouldn’t be paying the winner.
Throughout these hearings we see a lack of accountability. Executives
at Washington Mutual made reckless mortgage loans and were not held
accountable. Executives at Goldman Sachs and their company who
packaged many of these same loans into toxic securities and then took
a conflict of interest position on it -- no accountability. Regulators
and credit rating agencies that were supposed to check these excesses
-- no accountability. In each case, senior leaders managed to avoid
responsibility for their contributions to a crisis which caused
millions of Americans to lose their jobs or their homes or their
Now, others may fail to take responsibility for their actions, but we
must exercise our accountability. We must act. I do not understand how
our Republican colleagues can continue to obstruct the start of a
debate on reform.
The Dodd Financial Reform Bill takes very significant steps relative
to the banking area, the regulators’ area, or the credit rating area.
There are some people who say they don’t like portions of the Dodd
bill. Okay, bring the bill to the floor and let’s debate it. Let’s
legislate it. There are a lot of areas in this bill that can be
Where there are differences, we have to bring those differences to the
floor and debate them and offer amendments and vote them up or down.
That’s our responsibility, and it is irresponsible to block that
process from taking place.
I think almost all of us say we want reform. The reform process has
been thwarted by a filibuster. It is wrong, and the remedies that are
offered can be debated, and can be voted, and are essential to avoid a
repeat of this disaster.

Taken from an edited and condensed version of U.S. Senator Carl
Levin‘s (D-MI) Senate Floor Statement on Financial Reform.

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