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Bernie Sanders Hasn’t Quite Captured What Wall Street Does: It’s Actually a Fraud-Monetization System with a Money-Printing Unit Called the New York Fed
Senator Bernie Sanders has come closer than anyone on the Presidential campaign trail in defining what Wall Street actually does. Sanders has repeatedly stated at his rallies that “the business model of Wall Street is fraud.”
That analysis is correct but abbreviated. Sanders needs to go further. It’s not just Wall Street’s business model that has left the United States with the greatest wealth inequality since the Roaring Twenties (a time when Wall Street investment banks were also allowed to own deposit-taking banks). It’s how Wall Street is monetizing that fraud that poses an existential threat to the solvency of the United States and the impoverishment of millions of Americans.
The attempted WeWork Initial Public Offering (IPO) of last year was a classic example of how Wall Street can put lipstick on a pig, pass it off as a hot new startup company, and sell its shares, which were overpriced by about $40 billion, to unwary public pension funds and mutual funds that dominate millions of Americans’ 401(k) plans. The IPO failed to materialize simply because alternative media sent the dirty details of the offering viral, forcing business media to cover the story.
Rather than being a hot new tech startup with oodles of potential, WeWork was a money-losing real estate leasing company with a grifter as its CEO. That, however, didn’t stop two of the largest law firms, Skadden Arps, Slate, Meagher & Flom and Simpson, Thacher & Bartlett, from representing the company and the underwriters, respectively, and it didn’t stop two of the biggest firms on Wall Street, JPMorgan Chase and Goldman Sachs, from trying to unload the dog of a deal on investors for a hefty underwriting fee.
In 2003 the Securities and Exchange Commission settled charges against ten of the largest Wall Street firms over how their research analysts had been issuing fraudulent reports to the public on IPOs. The analysts were sending internal emails to colleagues calling the offerings “dogs” and “crap” while telling the investing public that these were great companies with bright futures and putting a “buy” recommendation on the stock.
Those fraudulent research reports and “buy” recommendations led to a $4 trillion bust in the stock market, known as the dot.com crash. While public pensions and individuals investors suffered enormous losses, the Wall Street analysts and their bosses got to keep their fat bonuses.
This is another example of long-running monetization of fraud schemes on Wall Street.
The epic financial collapse on Wall Street in 2008 was, reduced to its basic terms, simply the end game of Wall Street banks’ efforts to monetize their frauds. Insiders at the major Wall Street banks had told their bosses that the mortgage underwriting department was issuing mortgage loans to people who could not possibly afford to repay the loan.
The 2008 crash and the ensuing Great Recession were the worst economic disasters in the United States since the Great Depression. Millions of Americans lost their homes to foreclosure, millions more lost their jobs as a result of the economic contraction, and trillions of dollars of household wealth was wiped out.
The Financial Crisis Inquiry Commission (FCIC) issued a report attempting to capture for the American people what had gone so wrong on Wall Street and how Federal regulators and Congress had failed to catch the corruption in time to prevent the epic crash. If you were asked to give a one-sentence explanation for what happened on Wall Street from the findings of the FCIC report, you could do no better than this: Wall Street was monetizing fraud.
The dot.com bust in 2000 and the epic financial crash in 2008 were both the well-documented result of Wall Street monetizing its fraud and its execs and traders getting to keep the multi-million dollar salaries and bonuses that ensued from that fraud monetization.
The reason that Wall Street continues to be allowed by Congress to pursue its fraud monetization schemes is that Wall Street has captured both Congress and its federal regulators. A significant number of members of Congress are beholding to Wall Street to fund their political campaigns. Without that funding, the incumbent doesn’t stand a chance against their opponent, who will tell Wall Street what they want to hear and grab Wall Street’s funding. Federal regulators are either looking to return to their seven figure jobs on Wall Street or are auditioning to get one.
rest at link
https://wallstreetonparade.com/2020/01/bernie-sanders-hasnt-quite-captured-what-wall-street-does-its-actually-a-fraud-monetization-system-with-a-money-printing-unit-called-the-new-york-fed/
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