More on bankers bilking billions

Max Keiser and Stacy Herbert discuss David Cameron appointing former bankers to Treasury. We look at another former banker who became a Treasury Secretary only to become a bankster – Robert Rubin – and his role in Citigroup bilking Abu Dhabi of billions. In the second half of the show, Max Keiser talks to Reggie Middleton about Facebook, fraud and financialization.  Here is a direct link.

This clip marries nicely with some stand-out quotes from the Senate Report on banking and currency (dubbed the Pecora Commission Report, after lead prosecutor Ferdinand Pecora) from 1934. Here are a couple of the dozens of findings in the report that have proven timeless:

“During the speculative orgy of 1928-1929, stock exchanges made no adequate effort to curb activities on their exchanges. On the contrary they conceived it as no part of their function to discourage excessive speculation or to warn the public that security values were unduly inflated.” –p. 81, Senate banking and currency report, June 1934

“…banks found a fertile field among depositors for purchasers of security issues which their investment affiliates were sponsoring. These banks, violating their fiduciary duty to depositors seeking disinterested investment counsel from their bankers, referred them to their affiliates for advice…[and] were then sold securities in which the affiliates had a pecuniary interest.” –p. 163, Senate banking and currency report, June 1934

“The deplorable consequences to the investing public, with their misplaced confidence in the competency and integrity of purpose of the investment trustees, is woefully exemplified by the Goldman Sachs Trading Corporation.” –p. 339, Senate banking and currency report, June 1934

5 years after Congress enacted key reformation legislation like The Banking Act of 1933 (Glass-Steagall Act) and The Securities Act of 1933 (‘Truth in Securities’ bill), bankers were lobbying hard to have lax standards return. This prompted Ferdinand Pecora to write a book in 1939 called “Wall Street under oath” encapsulating and reminding of the scathing body of evidence which was proven against the Banksters over 2 years of public hearings. In the Preface, Pecora offers this now haunting caution which was soundly forgotten over the past 20 years:

“The case against the money-changers does not rest upon hearsay or surmise. It is based on a mass of evidence, given publicly and under oath before the US Senate in 1933-1934…After 5 short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempt be made to abolish that post.”

And abolish they did. Lobby by lobby, stroke by stroke, key guard-rails and controls were repealed all the way up to the 1999 repeal of Glass Steagall by Clinton, and the setting aside of fair accounting and disclosure rules by the FASB in 2009. Now we have the chaos we have earned through ignorance of history and human nature. Time to admit, repent, reform, recover, once more.