Today Occupy Wall Street Held A March To Bank Headquarters

This is a video of OWS protesters marching to the Manhattan headquarters of Bank of America, Morgan Stanley, Wells Fargo, Citigroup and JP Morgan Chase.  When they arrived they threw paper planes they collected from the website Occupy The Boardroom.  Afterwords, they sent them in large bags to the banks.  

Could Another Bail-Out For Bank of America Be On The Way

Bank of America is in the news yet again and of course not for a good reason. They are again trying to position itself for another bailout, and it is going under the radar of mainstrem media. A recent article came out in Bloomberg (available here) titled BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit. 

William K. Black of ThinkProgress describes this article:   

The thrust of their story is that Bank of America’s holding company, BAC, has directed the transfer of a large number of troubled financial derivatives from its Merrill Lynch subsidiary to the federally insured bank Bank of America (BofA). The story reports that the Federal Reserve supported the transfer and the Federal Deposit Insurance Corporation (FDIC) opposed it. Yves Smith of Naked Capitalism has  writtenan appropriately blistering attack on this outrageous action, which puts the public at substantially increased risk of loss.  

Bloomberg reports:  

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation… 

Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades. 

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show. 

If you recall, derivatives played a huge part in bringing down the financial system in 2008, and it was determined at that time that some derivatives should absolutely be eliminated. 

Remember the credit default swaps (per Naked Capitalism): 

They have virtually no legitimate economic uses (no one was complaining about the illiquidity of corporate bonds prior to the introduction of CDS; this was not a perceived need among investors). They are an inherently defective product, since there is no way to margin adequately for “jump to default” risk and have the product be viable economically. CDS are systematically underpriced insurance, with insurers guaranteed to go bust periodically, as AIG and the monolines demonstrated. 

We The People of Occupy Wall Street Want Justice – Time To Prosecute the Bankster Crooks

One of the recurring issues being raised by the Occupy Wall Street protesters is the lack of accountability by the Wall Street executives for taking our economy over the cliff.

In fact, they are now bringing in record profits with another round of record bonuses expected. Meanwhile not one person from Wall Street has been prosecuted with the exception of Madoff and a hedge-fund tycoon, Raj Rajaratnam, who was ordered to serve 11 years in prison for insider-trading. 

They have successfully escaped any repercussions from creating such things as credit-default swaps. Michael Greenberger, a law professor at the University of Maryland, explains: 

A credit default swap is a contract between two people, one of whom is giving insurance to the other that he will be paid in the event that a financial institution, or a financial instrument, fails. It is an insurance contract, but they’ve been very careful not to call it that because if it were insurance, it would be regulated. So they use a magic substitute word called a ‘swap,’ which by virtue of federal law is deregulated.   

Who was selling this? Banks like Bear Sterns, Lehman Brothers, AIG, Bank of America, and Citigroup. Yet not one executive from any of these banks has been arrested, charged, and prosecuted. How can that happen? It has something to do with the revolving door between our government and Wall Street. President Obama has chosen to surround himself with former Wall Street executives including former Goldman Sachs CEO Jon Corzine, Evercore Partners executive Charles Myers, Greenstreet Real Estate Partners CEO Steven Green, and Azita Raji, a former investment banker for JP Morgan. 

Tim Geithner was interviewed on CNBC yesterday and was asked about the OWS movement and their claims of the lack of prosecutions. He said that the Administration is getting right on the whole “prosecuting the people who defrauded the economy” thing. Geithner said action is on the way. “You’ve seen very, very dramatic enforcement actions already by the enforcement authorities across the U.S. government, and I’m sure you’re going to see more to come. You should stay tuned for that.”  

David Dayen of FireDogLake had his own version Geithner’s response: 

Let me rewrite that: “We moved within a year and a half of getting in office to put in place a relatively stronger set of rules of the game, in the sense that 1/8 is stronger than 1/16, across the financial sector. Now, we’re now facing a lot of resistance to those rules, and we’re accommodating that resistance by gutting the rules in implementation. We’re going to make sure that we deliver the promise of those reforms, or at least the promise we made to the finance lobby to back off and let them grow their way back to the top.” 

Unfortunately, I don’t see the Hope and Change candidate changing all that much. Saying that, I still think given the 2 parties and the candidate we have to choose from, Obama is still the better choice….but that is not saying much. 

I know there are people out there that will disagree saying he has tried, but keep in mind in 2008, he was swept in with a majority in both Houses, and even though he did have obstacles even within his own party, he chose to do nothing. He chose to ignore the crimes committed by Wall Street and as a result Eric Holder has done pretty much nothing.

How Bad Is The Income Gap In America – A Few Facts About The 1%

Why are Occupy Wall Street protesters out there….they don’t even know what they are protesting about? That is what we are hearing over and over from Fox News and other conservative pundits on an hourly basis.

I can’t speak for them all but here are a few clues: How about protesting to object corporate control of government policies, which has led to unfair tax loopholes, job outsourcing, cuts to public programs and gross overcompensation of executive employees, a widening wealth disparity between the top 1 percent and the rest of the country. 

So what is the disparity? How is wealth distributed in the United States? When you hear your conservative, Tea Party relatives or friends talking down the OWS movement, here are a few fun facts you can mention. These were compiled by staff writer of Life’s Little Mysteries, Natalie Wolchover. 

FACT #1: The wealthiest 1 percent of households own 34.6 percent of all privately held wealth, and 42.7 percent of all financial wealth (total net worth minus the value of one’s home). 

According to the NYU economist Edward Wolff a 2010 report, the bottom 80 percent of the population holds just 15 percent of the total wealth and only 7 percent of the total financial wealth (as a large portion of their wealth is tied up in their homes). The bottom 40 percent of Americans — that’s 120 million people — hold just 0.3 percent of the wealth. 

FACT #2: The United States has more income and wealth inequality than most countries that have been studied, including India and China — countries that are traditionally viewed as having unequal distributions of wealth. 

The degree of income inequality in each country is assigned a “Gini coefficient” — a number that ranges from zero (if everyone in the country has the same income) to 1 (if one person in the country has all the income). According to data gathered by the Central Intelligence Agency for 2010, the United States has a Gini coefficient of 0.45, on par with such countries as Iran (0.44) and Mexico (0.48); this is higher than the Gini coefficients of 94 of the 134 countries that have been studied, including China (0.42) and India (0.37), and much higher than Canada, Australia and all of Europe. Sweden has the lowest Gini coefficient at 0.23.  

The United States’ Gini coefficient has been rising for decades; it was just 0.35 in the 1960s. 

FACT #3: Among the 299 companies listed in the S&P 500 Index, the average CEO’s compensation was $11.4 million in 2010, or 343 times more than the median pay ($33,190) of American workers. The ratio of CEO pay to median worker pay was just 42:1 in 1980, and is currently 25:1 in Europe. 

Bill Domhoff, a sociologist at UC Santa Cruz, claims the ballooning of chief executives’ salaries in recent years has resulted from the fact that, for the most part, they set their own wages. “If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select — and which includes some fellow CEOs on whose boards they sit — gives them the pay they want,” Domhoff wrote in a 2011 articleon his website. 

FACT #4: Between 1979 and 2005, the average after-tax income for the top 1 percent increased by 176 percent, compared with an increase of only 6 percent for the bottom 20 percent. Between 1990 and 2005, the purchasing power of the federal minimum wage actually declined by 9.3 percent when adjusted for inflation. 

This rapid widening in the income gap between the rich and poor was identified in a 2007 report by the Center on Budget and Policy Priorities. The report attributed the trend to tax policies that favor the wealthy. According to Domhoff, other contributing factors include the diminishing political clout of labor unions and decreased expenditure on social services. 

FACT #5: Most Americans have no idea that the wealth distribution is as concentrated as it is, but regardless of their gender, age, income level or party affiliation, they believe wealth should be much more evenly distributed than they think it is. 

In 2010, Michael Norton of Harvard Business School and behavioral economist Dan Ariely of Duke University surveyed 5,522 Americans about their views on the country’s wealth distribution. They found that most respondents (regardless of their genders, ages, income levels and party affiliations) guessed that the top 20 percent of Americans hold about 60 percent of the wealth (rather than the 85 percent that they actually hold). Survey respondents also guessed that the bottom 40 percent hold between 8 and 10 percent of the wealth in the U.S. (rather than the 0.3 percent that they actually hold).

For Occupy Wall Street What is Next

So the occupations across the country have been going on for over a month and have been very successful bringing attention to the growing income inequality, the corrupt, too big to fail banking system, the manipulation of our tax system allowing the wealthy and corporations to pay either the lowest tax rates, some paying no taxes, and yet some corporations actually getting refunds, the robo-signing, unlawful foreclosures, and so on and so on. 

I am hoping the occupation will last as long as possible, but I think it is safe to say that over a long period of time and with the coming winter months, the occupations will be very difficult to maintain. This means the Occupy Wall Street Movement must have a better organizational structure that looks to the future and focuses on where we take it from here. Daniel Denvir of Alternet has written an article asking this same question and to my surprise he has come up with some great ideas. 

After reading it, I thought back to what happened immediately after the Bush bank bailouts in 2008. There was true outrage at the corruption of the financial system and what it led to. People were gathering and protesting at the homes of the CEO’s of these banks, going to the corporate headquarters, showing up at shareholder meetings, etc.  

It wasn’t the continued protest that we are seeing now but it definitely had an effect, and I believe that even though it took some time, it had played a part in what we are seeing today. 

This is was Mr. Denvir touched on in his piece. In order to keep this outrage alive (I hate to say it but like the Tea Party who keep their movement going for 2 years…and thankfully is but a mere memory), we need to make sure the issues of Occupy Wall Street stay in the media, and the only way to do that is through our numbers. The 99% isn’t just a slogan, it is true. The best way we can fight for change is using our sheer massive numbers and force the politicians to not ignore us. 

Here are some of the ideas of Mr. Denvir: 

• Occupy one of the many troublemaking banks, whether it be Bank of America, Goldman Sachs, JP Morgan or whichever, until it agrees to let people fighting foreclosure stay in their homes and offer meaningful debt forgiveness. Or target a bank whose casino capitalism deals left municipal coffers broke, demanding that they cut indebted cities and counties some slack. 
• Occupy a home where a family is fighting eviction. Millions of American homes have been foreclosed upon, and another wave of foreclosure is now upon us. 
• Occupy an exploitative company and demand they stop funding the right-wing U.S. Chamber of Commerce, or link up with a labor struggle like that of the Communications Workers of America (CWA) against Verizon’s attempt to roll back benefits and retirement. Unions across the country are fighting anti-worker lawmakers and businesses that say America can no longer pay decent wages and benefits for a hard day’s work. Occupy Wall Street should join that fight, and ask workers how they can help. 
• Occupy a statehouse that is slashing education and welfare funding or, like in Wisconsin, eliminating collective bargaining rights. The mass protests in Madison earlier this year set the tone for today’s occupations. 
• Occupy the office of a congressman who refuses to raise taxes on the rich and end the war, or who denies the existence of global warming, or who refuses to take concrete action to create good jobs now. 
• Occupy where the 1 percent “live, work and play.” The super rich all belong to country clubs and other exclusive institutions. If the movement is targeting a specific bank, a picket of the CEO’s country club will hit them one place it hurts: their easy comfort amongst high society. 

Way to go to all of us participating. Lets keep up the fight!

The Richest Americans and Their Tax Rate

The GOP has been saying in ad nauseam that the way to grow the economy is not by raising taxes on the wealthiest because they are the ones that create jobs, the trickle down economics theory.

Needless to say this has been proven wrong over and over. Just in the past decade, tax rates were decreased to their lowest levels in over 50 years (I have also previously posted an interview with Warren Buffett who acknowledged the inequality in our current tax system stating that his secretary pays more in taxes than he does).   

 The IRS has released data on the tax rates for the 400 richest Americans in 2008. 

The IRS report shows that in 2008 (the latest year for which data are available), the 400 richest income tax filers paid just 18.1 percent of their adjusted gross income (AGI) in federal income taxes. That is down from 22.3 percent in 2000, and is just more than half of the top statutory income tax rate of 35 percent. More than half of the income reported by those 400 taxpayers consisted of capital gains and dividends subject to the preferential rates.

The IRS report, which shows the effective federal income tax rates paid by the 400 highest-income Americans in each year since 1992, offers an important opportunity to understand how the tax system affects the most privileged Americans.

• Only those with at least $109 million of AGI were members of this group in 2008, and the average AGI for these 400 taxpayers was $270 million. 
• Each one of these 400 taxpayers enjoyed, on average, more than $155 million of net capital gains and dividend income that was subject to special lower tax rates in 2008.
• Although 400 returns are less than 1/1000th of a percent of the total individual tax returns filed, these 400 taxpayers collected more than 10 percent of the total preferential-rate capital gains and dividends in the nation in 2008.
• These 400 taxpayers paid income taxes averaging just under $49 million in 2008. As a share of AGI, their tax bills averaged 18.1 percent. 
• This decline from 22.3 percent to18.1 percent represented a total tax cut of $4.5 billion in 2008 for this group, or an average tax cut of over $11.3 million each.

“This valuable data confirms what we already knew—that the very richest Americans are paying much less of their income in tax than many would have us believe,” noted Citizens for Tax Justice director Robert S. McIntyre. “These taxpayers are now paying lower effective tax rates than at virtually any time since the IRS began publishing these data in 1992—and the Bush Administration’s capital gains and dividends tax cuts are the main culprit.”

GOP Policies Obliterating the Middle Class

I have been listening to GOP representatives and pundits proclaiming that taxing the wealthy who they refer to as so-called job creators would be bad for the economy.  These “job creators” have had the lowest tax rates in centuries, and over the last decade, we are still waiting for those millions of jobs they are supposed to create.  In fact, it has created such a gap in wealth between them and the middle class that it rivals the decade prior to the Great Depression. 

I came across a ThinkProgress article that articulates this point and brings into light how much income the middle and lower classes have lost and how the wealth in America is now concentrated into just 1% of our society. 

It may shock you exactly how wealthy this top 1 percent of Americans is. ThinkProgress has assembled five facts about this class of super-rich Americans: 

1. The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth: As Nobel Laureate Joseph Stiglitz points out, the richest 1 percent of Americans now own 40 percent of the nation’s wealth. Sociologist William Domhoff illustrates this wealth disparity using 2007 figures where the top 1 percent owned 42 percent of the country’s financial wealth (total net worth minus the value of one’s home). How much does the bottom 80 percent own? Only 7 percent:

As Stiglitz notes, this disparity is much worse than it was in the past, as just 25 years ago the top 1 percent owned 33 percent of national wealth. 

2. The Top 1 Percent Of Americans Take Home 24 Percent Of National Income: While the richest 1 percent of Americans take home almost a quarter of national income today, in 1976 they took home just 9 percent — meaning their share of the national income pool has nearly tripled in roughly three decades.

3. The Top 1 Percent Of Americans Own Half Of The Country’s Stocks, Bonds, And Mutual Funds: The Institute for Policy Studies illustrates this massive disparity in financial investment ownership, noting that the bottom 50 percent of Americans own only .5 percent of these investments:

4. The Top 1 Percent Of Americans Have Only 5 Percent Of The Nation’s Personal Debt:  Using 2007 figures, sociologist William Domhoff points out that the top 1 percent have 5 percent of the nation’s personal debt while the bottom 90 percent have 73 percent of total debt: 

5. The Top 1 Percent Are Taking In More Of The Nation’s Income Than At Any Other Time Since The 1920s: Not only are the wealthiest 1 percent of Americans taking home a tremendous portion of the national income, but their share of this income is greater than at any other time since the Great Depression, as the Center for Budget and Policy Priorities illustrates in this chart using 2007 data: 

As Professor Elizabeth Warren has explained, “there is nobody in this country who got rich on his own. Nobody…Part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” More and more often, that is not occurring, giving the protesters ample reason to take to the streets.

The Debt Ceiling And What Republicans Are Protecting

If you are curious about the reason for the stalemate in the debt ceiling negotiations, it has to do with GOP insisting there be no tax increases or ending of any tax subsidies, which they also view as a tax increase. All newly elected Republicans are asked to sign a pledge given to them by Grover Norquist that essentially says they will never vote for any tax increase, and all current Republicans serving in office have signed this pledge. 

This has created a road block in efforts to fix our budget crisis. Economists, conservative, liberal, and nonpartisan, have gone on record saying there is no way to balance our budget without tax increases. We cannot cut our way (Medicare, Medicaid, Social Security) out of this financial mess. 

Are you curious about some of the tax subsidies the Republicans are protecting? An estimated $40 million in write-offs that owners of motorsports entertainment complexes are given; the $162 million in expensing rules for U.S. film and television productions; and $30 million (over ten years) that could be saved by eliminating a withholding provision for those lucky enough to win at horse and dog race tracks. 

Taxpayers for Common Sense compiled a list of some of the tax expenditures Democrats are looking to end. The money that would be saved in comparison to our fiscal crisis is not a large amount but it is a starting point, however, the GOP will not even agree to end these expenditures. Keep in mind our tax code is full of these kind of expenses, and Democrats feel all should be put on the table. 

What do you think….could our government do without this kind of spending (aka corporate socialism)? 

Extension of Seven Year Straight Line Cost Recovery Period for Motorsports Entertainment Complexes (NASCAR tracks)  
Estimated cost to taxpayers in 2011: $40 million 

Extension of Special Expensing Rules for U.S. Film and Television Productions
Estimated cost to taxpayers in 2011: $162 million  

Extension of Temporary Increase in Limit on Cover Over of Rum Excise Tax Revenues to Puerto Rico and the Virgin Islands 
Estimated cost to taxpayers in 2011: $235 million 

Extension of American Samoa Economic Development Credit
In general, this credit allows certain corporations operating in American Samoa to offset a portion of their U.S. tax liability on income earned in American Samoafrom active business operations, sales of assets used in a business, or certain investments in American Samoa. This credit would be extended for two years (through 2011). 
Estimated cost to taxpayers in 2011: $15 million 

Special tax withholding break on Horse & Dog track winnings 
The American Jobs Creation Act of 2004 eliminated a 30% tax withholding on income earned by foreigners who gamble at American horse racing and dog racing tracks. Other forms of gambling such as lotteries do not receive this special treatment. 
10-year savings: $30 million

Starbucks Roasting Provision  
The American Jobs Creation Act of 2004 jobs bill also declared that coffee roasting, but not coffee preparation, is a manufacturing activity. This special classification allows Starbucks to qualify for a corporate tax reduction designed for hard-hit domestic manufacturing companies. 
10-year savings: not estimated 

Race horse owners depreciation 
The 2008 farm bill permitted racehorse owners to depreciate horses over three years instead of the normal seven year period.   
10-year savings: $126 million

Republican’s Corporate and Individual Tax Cuts, Job Creation and Wages

In order to raise the debt ceiling which will prevent America from defaulting on our debt, Republicans are insisting on cutting spending by slashing entitlement programs like Medicare and Medicaid while at the same time refusing any revenue increases like ending subsidies on gas and oil or tax increases on the wealthy and corporations. The blanket reason for this they say is raising taxes on the “job creators” will have a negative effect on our economy and will not create new jobs. 

Well, I am here to tell you that is simply wrong. If keeping the tax rate on the above mentioned people at the lowest levels in decades created jobs, the previous decade should have had a plethora of job creation. That would mean our jobless rate should be well below 5% (now it is maintaining at around 9%, however, in minority communities it is much higher). The fact is, under the Bush tax cuts, job creation has been at its lowest.  (click to enlarge graph below)

Also, the wages for the middle and lower classes have stagnated. Pat Garofalo reported:  Over the 2000 to 2009 period, workers experienced a “lost decade,” with incomes falling by nearly five percent and wages hardly growing at all. And according to Jed Graham, the last decade in terms of real wages was actually worse than the Great Depression: 

The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economy wide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation). Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show. 

Compassion-Free Conservatism

I read an op-ed this morning by Charles Blow who perfectly described today’s Republican Party, “Compassion-Free Conservatism.”  In the past I have written on the GOP’s plan of turning government programs like Medicare and Social Security over to private companies or just ending them all together like Medicaid (although they won’t come out and say it), and they call it “Starve the Beast.” 

This is part of the modern doctrine of a compassion-free conservatism that’s using the fog of the fiscal crisis to push a program of perverse wealth inequality as sound economic policy: The only way to jump-start the economy is to slash taxes on the wealthy and on companies; the only way to compensate for the deficits that those tax cuts exacerbate is to slash benefits to the poor and vulnerable. It would be comical if it weren’t so callous.

Now that the budgets, both state and national, have been pushed to the brink caused by our last decade of Bush and Republican rule (but began under Reagan in the 80s), they have put themselves in a position to end all of these programs that help sustain and create lower and middle classes. 

At the same time, they are promoting the idea that the only way to do this is to implement even deeper tax cuts for the wealthy and continue corporate tax cuts and tax subsidies that are funded by our tax dollars. 

First, the tax burden of American companies is lower than that of other Organization for Economic Cooperation and Development countries, as economist Bruce Bartlett pointed out this week. Also, a report issued on Wednesday by Citizens for Tax Justice looked at 12 Fortune 500 companies from 2008-10 and found that on $171 billion in profits earned, their effective tax rate was negative-1.5 percent because of corporate loopholes, shelters and special tax breaks.

And, as Time magazine reported in its June 6 issue, In the 18 months since the Great Recession, which ended in June 2009, U.S. annualized corporate profits rose 42 percent, to a record $1.68 trillion in the fourth quarter of 2010.

Corporations aren’t hurting. They’re hoarding.

This is not what America is all about and is not the values this country was founded on.  Our country does not exist to be used by corporations, and American middle and lower classes are not here to serve them for their benefit.