At his inauguration President Trump repeatedly promised the American people that power would be handed back to them. He attacked the so called Establishment which was blamed for so many of the problems facing ordinary Americans. The Washington swamp of corruption would be drained.
At the moment the world’s media are covering everything Trump does or says in great detail. However, few column inches are spent on the dire problems facing America that will undermine Trump’s presidency. Let us be clear, Trump’s presidency will fail to drain the swamp of corruption in American society and will fail to bring back millions of manufacturing jobs to rust belt towns.
Those of you with a memory longer than the average TV advert may recall how the mainstream media totally failed to warn the public about the approach of the 2008-9 recession. In 2007 we were subjected to media eulogies about booming stock/ housing markets which were evidence of how capitalism had overcome the boom-bust cycle.
The well documented collapse of the U.S. property and stock market bubbles, that spread like contagion through the global economy, was caused by the rampant criminality on Wall Street. This criminality led to the unprecedented intervention of the U.S. Congress which was blackmailed into passing the TARP act that bailed out Wall Street to the tune of $750billion.
In 2008 Congress was told by Treasury Secretary Hank Paulson that unless Congress bailed out the Wall Street banks then the U.S. economy would suffer a 1930s style collapse as the banks were too systemically important to the economy. A new term entered the public domain the too big to fail bank.
Since 2008 global capitalism has enjoyed mild growth driven by China’s gigantic infrastructure boom. This sub-standard growth has been hindered by the rampant criminality of too big to fail banks across the world.
Financial commentator Max Kaiser has hammered home the point time and time again that financial fraud has become the modus operandi of the too big to fail banks. The too big to fail banks are acting like parasitical vampires upon the world economy sucking out huge amounts of wealth to the detriment of the real economy and the livelihoods of the rest of the population.
In 2016 the huge fraud committed by Wells Fargo in the U.S. came to light as has Bank of America admitting it misused customers’ cash. These acts of fraud are dwarfed by the villainous activities of America’s largest banks Goldman Sachs and JP Morgan.
JP Morgan has paid over $32 billion in fines for its infringements of banking regulations since 2008 which is chickenfeed against its $110 billion in profits over the same period. One of its most iniquitous acts was its alleged collusion with the Bernie Madoff ponzi scheme that robbed $64 billion from thousands of investors.
Not once has its nefarious activities been met with the threat of a criminal prosecution. Indeed its CEO Jamie Dimon was one of President’s Obama’s favourite bankers, having been given a pair of Presidential cuff links, in recognition of his vital services to the U.S. economy.
The mainstream media and the corporate politicians in the U.S. Congress have given JP Morgan and the rest of Wall Street’s too big to fail banks a free pass and ignored their criminal activities.
American capitalism increasingly resembles a Third World failed state where the rule of law has effectively broken down and the one per cent can do whatever they like.
However, while crony capitalism runs rampant all over a beleaguered population the last year has seen increasing anger at the untrammelled law breaking of Wall Street and its bought and sold politicians in Congress. This anger led to the huge swell of support for Bernie Sanders and was reflected in the support for Trump’s demagogic promises of dealing with hedge fund tax evasion and an end to bank bail outs.
Large sections of the American population are fed up, angry, alienated and mad as hell with a society which allows the richest one per cent to break the law with impunity. This is against a backdrop of falling living standards, increasing job insecurity, hideously expensive medical care/no medical cover and a society that is drowning in a sea of debt.
Despite all of the hot air against Wall Street spouted by Trump and Democrats such as Sanders there has been relatively little resistance to the too big to fail banks. However, one example of such resistance is a couple of brave lawyers who have written a damning indictment of America’s biggest bank JP Morgan. Their book documents in forensic detail its rampant criminality. JP Madoff by Helen Chaitman and Lance Gotthoffer claims that America’s biggest bank helped facilitate the biggest white collar fraud in U.S. history with its active involvement in Bernie Madoff’s ponzi scheme.
Helen Chaitman has a long track record of taking on Wall Street. She is a nationally recognized litigator and was the lead attorney representing 1,600 victims of Bernie Madoff’s ponzi scam. In May of 2016 she represented former customers of JP Morgan who claimed the bank had actively colluded with Madoff’s ponzi scheme. Not surprisingly, the judge dismissed the lawsuit saying the bank had been,”negligent, not fraudulent’‘ in their dealings with Bernie Madoff.
The book and the website of the same name expose the activities of JP Morgan in great detail. They lead the reader to a very definite conclusion: criminal fraud is the daily business practice of the too big to fail banks who will not stop until they are prosecuted and broken up.
Don’t hold your breath on a Trump presidency taking on his buddies from Wall Street. His cabinet is the richest in US history made up as it is of individuals whose estimated net worth ranges from $6 to $14 billion. As US Representative Mark Pocan has noted, Trump’s first 17 picks for his cabinet, ”have a net worth of more than a third of America.”
Even worse is how that well known bankster outfit Goldman Sachs has managed to become deeply embedded in Trump’s new government with 6 of its alumni being appointed to Trump’s administration. These include such indefatigable defenders of the poor like Steve Mnuchin whose hedge fund Dune Capital Management threw many heavily indebted mortgage holders out of their homes. Maybe we should take heart for the great unwashed from the appointment of Gary Cohn former Goldman Co-President who marketed $57 billion in risky sub prime mortgages without telling investors he was betting against the housing market for which Goldman paid a mere $500 fine. Meanwhile, it did nothing to help the millions of Americans who became homeless because of the sub prime fraud committed by Wall Street.
Trump’s billionaire cabinet will ensure that rampant criminality by Wall Street and its destructive effect upon the middle and working class will continue unabated.
Trump is taking advice from Jamie Dimon on how to gut the Dodd-Frank Act which instituted limited protections for taxpayers and consumers from abusive financial services and practices. It represents an attempt to eventually turn the clock back to before Roosevelt’s introduction of the Glass-Steagall banking act leaving the too big to fail banks with no legal limitations upon their predatory activities.
Former Goldman managing-director Nomi Prins, now an outspoken critic of Wall Street, has prophetically warned:
”Whether you’re gearing up for the revolution or waiting for his next tweet to drop, rest assured that, in the years to come, the ideology that matters most won’t be that of the “forgotten” Americans of his Inaugural Address. It will be that of Goldman Sachs and it will dominate the US economy and, by extension, the global one.”
Only an internal revolt of the American population will bring to an end the tyranny of Wall Street. Let us not forget that Wall Street is a key pillar of the American Empire whose decline is leading to death and destruction all over the globe as it tries to cling on to its economic and military dominance of the planet.
Ordinary people fighting back against Trump’s oligarchy can draw inspiration from opponents of Wall Street such as Helen Chaitman. I spoke with Helen Chaitman about the biggest recorded crime in Wall Street history, the role of JP Morgan in this, and what it tells us about the state of the American financial and political system.
On your website JP Madoff you state that Bernie Madoff committed one of the biggest financial crimes in history when he stole $64 billion from thousands of innocent people. Can you briefly explain how the Bernie Madoff ponzi scheme worked?
Madoff was an SEC-regulated broker/dealer from 1960 on. His business operated as a sole proprietorship and had three aspects: proprietary trading, market making, and investment advisory. In January 2001, he began operating as Bernard L. Madoff Investment Securities LLC. He built up his firm until he had approximately 200 employees of whom 188 worked in the legitimate proprietary trading and market making operations and about 12 worked in the fraudulent investment advisory business. Madoff was very highly regarded on Wall Street: he was the President of the NASDAQ; he had been very innovative in computerizing his office; he had a huge market making business which executed trades for most of the major Wall Street firms. There were times when Madoff executed trades equal to 10% of the daily volume on the NY Stock Exchange.
We don’t have all the facts on this but Madoff claims that, in the early 1990’s, he began defrauding his investment advisory customers by not purchasing securities for them. He had a small group of people who sat in a room and just made up the statements after the fact. Madoff’s investment advisory business was originally just servicing New York/Palm Beach investors but, I believe in the mid-1990’s, he began attracting feeder funds and then international feeder funds.
The fraudulent investment advisory business was operated out of the 17th floor of the office building in Manhattan where Madoff had his offices. The legitimate trading groups were on different floors and people were not allowed to come to the 17th floor unless they had special passes. In 2008, with the collapse of Bear Stearns, Madoff was getting huge calls for redemptions. I think he redeemed about $15 billion in 2008 and then, after Lehman collapsed, his firm collapsed. Had Lehman not collapsed, he probably would still be operating.
In your book JPMadoff you talk about the collusion of JP Morgan in Bernie Madoff’s criminal fraud. In your opinion how did JP Morgan help facilitate Madoff’s criminal ponzi scheme?
Madoff used Bank of New York for the proprietary trading and market making units. He used JPMC (previously Chemical) for the investment advisory business. Under the Bank Secrecy Act of 1970, banks have an obligation (punishable by a felony conviction if they breach it) to monitor their customers’ accounts and to report any suspicious activity to the federal government.
Madoff was kicked out of Bankers Trust Company in the early 1990’s for doing illegal transactions and he went across the street to Chemical Bank and continued doing the same illegal transactions. Chemical (later merged into JPMorgan Chase) recognized that the transactions were illegal but instead of kicking Madoff out of the bank Chemical just made sure it was not losing money on the transactions. Chemical (and then JPMorgan Chase) knew that Madoff was an investment advisor; they could see, however, that he never purchased securities. He kept on deposit, just in the period from 2003 – 2007, $3 – $6 billion which JPMorgan Chase was free to use for its own purposes.
Since the 2008 economic crash central bankers across the world have made over 600 rate cuts and lent hundreds of billions to the big banks to keep them alive. What have the too big to fail banks done with the hundreds of billions of public money they have been given?
The Fed has loaned the major US banks trillions of dollars. They have not used this money to lend to small businesses; they have used this money to speculate and to develop criminal lines of business: like fixing LIBOR, fixing the foreign exchange rates, rigging the electricity market, rigging the gold and silver markets
Mainstream politicians and the corporate media lament so called ‘banker bashing’ yet are deafeningly silent whenever a new case of banker criminality comes to light. The recent admission by Deutsche Bank that it helped rig the gold and silver market along with other banks such as HSBC has been ignored by the mainstream media and our elected politicians.
Exactly. It’s like the Emperor’s new clothes. The major banks pay off the major media to look the other way and everyone makes believe it’s not happening.
Has criminal activity become the modus operandi of the too big to fail banks?
Of course it has. 20 of the largest banks conspired to fix LIBOR; several of the largest banks conspired to fix the foreign exchange rates; the banks routinely violate the Foreign Corrupt Practices Act; Jamie Dimon himself committed securities fraud with respect to the London Whale. The banks have proven that they will violate any law so long as they can make money by doing so.
If I walk into a supermarket and steal a bottle of water then chances are that I will be arrested and prosecuted. Why have none of the bankers who have stolen billions from customers, consumers, shareholders and their workers been prosecuted and put in jail?
Because the Wall Street firms make huge political contributions to presidential candidates. Obama probably owes his election to Wall Street contributions. Hence, he appointed Eric Holder whose mandate was not to prosecute a single criminal banker. In the face of undeniable crimes, Holder simply entered into settlements.
There is increasing evidence to support the view that the too big to fail banks have become like vampires on the world economy extracting wealth on a massive scale and doing precious little to support the real economy. The world economy is clearly slowing down as the incomes of most ordinary people are getting squeezed. In this situation what should governments do with the too big to fail banks?
They should be broken up into much smaller pieces; Glass Steagall should be reinstated so that the FDIC is not insuring customer deposits that are used by the banks to speculate in a heads-I-win/tails-you-lose situation. It is absolutely absurd that the federal government pours trillions of dollars of essentially free money into the mega banks which just use the money to speculate and commit massive criminal acts in the process.
Article written by Leon Tressell and originally published on SouthFront, republished here with the author’s permission.