Geithner Promotes Megabanks' Monopoly, in DC as at
Fed, 17 Cut to 7 on Derivatives
Byline: Matthew R. Lee of Inner
City Press on Wall Street: News Analysis
NEW YORK, March 28
-- Seven megabanks' renewed grab
for monopoly power in the over the counter derivatives market shows how
Wall Street's real power has changed in the transition from the Bush to
including Citigroup, JPMorgan Chase, Goldman Sachs,
Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying
million to p.r. firm Prism Public Affairs to "educate" the voters
weary of bonus and bailouts that those who caused the crisis should
Congress members hungry for campaign contribution have
submitted to closed door briefings by Ed Rosen of the law firm Cleary
who drafted the legislative language for monopoly.
connector in this story is Timothy Geithner, under Bush
the president of the Federal Reserve Bank of New York and now Obama's
Secretary. Geithner in June 2008 convened closed door meetings with 17
essentially allowing them to propose and draft their own rules for the
This led to advocacy
by the Fair
Finance Watch that Geithner's meetings were in fact rule making that
the public in violation of the Administrative Procedure Act, and by
Press, as media, to get the meetings opened to journalists and the
The Administrative Procedures Act (5
U.S.C. Section 553) and related
laws require that when the government engaged in rule-making, it must
notice to the public, and allow and weigh public comments. The
New York Fed under Geithner tried to rule-make without any involvement
by the public, even the
public most impacted by the subprime lending that underlies these
processes. The New York Fed on June 9, 2008 met with a group of the
to discuss, according to the Geithner himself
"Regulatory policy. These are
the incentives and constraints designed to affect the level and
of risk-taking across the financial system. You can think of these as a
financial analog to imposing speed limits and requiring air bags and
brakes in cars, or establishing building codes in earthquake zones.
Regulatory structure. This is about who is responsible for setting and
enforcing those rules. Crisis management. This is about when and how we
intervene and about the
expectations we create for official intervention in crises."
made clear that the financial
instruments and regulatory issues discussed behind closed doors are
issues of public interest, which in fact are disproportionately
and moderate- income people and communities of color -- subprime and
Geithner, next to Obama, monopoly of 7 banks not shown
The financial institutions invited, in mid
Bank of America, N.A. - Barclays
Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG -
Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase -
Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of
Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC
Citadel Investment Group, L.L.C.
forward to March 2009, with Geithner despite tax evasion installed as
Secretary of the Treasury, and with Lehman have failed and Wachovia
swallowed by Wells Fargo. Now he is promoting monopoly powers in the
an even smaller group of banks, just seven: Citigroup, JPMorgan Chase,
Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank --
despite European headquarters received billions of dollars in U.S.
Assets Relief Program bailout funds through AIG.
idea is to formalize the monopoly through legislation, not rule making.
Industry friendly Congress people like Connecticut's Chris Dodd are
the monopoly for the privileged. The fig leaf policy argument is that
derivatives should runs through regulated banks. The push is made now,
it is formalized that non-banks, too, are regulated.
It is a pure power grab, with Timothy
Geithner as the connector. And who is fighting this monopoly of the
not financially bankrupt? To be continued.
A new Inner
City Press debate will appear over the weekend here.
Click here for Inner City
Press March 12 UN (and AIG
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Press' Feb 26 UN debate
12 debate on Sri Lanka http://bloggingheads.tv/diavlogs/17772?in=11:33&out=32:56
Click here for Inner City Press' Jan.
16, 2009 debate about Gaza
Click here for Inner City Press'
review-of-2008 UN Top Ten debate
Click here for Inner
City Press' December 24 debate on UN budget, Niger
Click here from Inner City Press'
December 12 debate on UN double standards
Click here for Inner
City Press' November 25 debate on Somalia, politics
and this October 17 debate, on
Security Council and Obama and the UN.
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