Neil Barofsky: Credit ratings for banks now include assurance of government bailouts

In other words, they can gamble and do anything they like and the banks know they will be bailed out. Even worse, everyone including the credit rating agencies know it. This is a very dangerous and expensive problem that has been created by the Bush/Paulson team. We went from "too big to fail" to even larger without any questions. Remember that it was the financial industry who wanted extreme capitalism so why shouldn't they learn to live with the end result? That means when they blow it, they lose every last cent. No bailouts. No lifestyle help by middle class taxpayers. Gamble and lose means you gamble and lose. Period. It's unbelievable that the Obama administration has only continued this policy rather than delivering real reform. Not a single damned lesson was learned and that is just sad. NPR:

INSKEEP: Let me make sure I understand what you're saying. You're saying that credit rating agencies and investors, when they look at the risk of investing in a bank, they say, well, they can do whatever they want because the government will bail them out. That's what you think.

Mr. BAROFSKY: Exactly. And it's not just what I think. Recently, just this past month, S&P;, one of the largest of the rating agencies, did something remarkable. They said that they're intending to change their rating methodology to make it a permanent assumption that the government will bailout (technical difficulties) the largest institutions, give those banks higher ratings. Which means they're going to be able to borrow money more cheaply. They're going to be able to access credit and capital and debt more easily.

And they say this even with respect the deregulatory reform and the Dodd-Frank Act that Congress has put in place, that they still believe the United States, as a government, is one that is moderately high, that they're going to bailout a systemically significant or big bank.

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Egyptian army doing little to stop protests

NYT:

Late Saturday, it was still unclear whether the military was defying orders to crack down or simply had not been issued them yet. But at least some troops seemed to be sympathizing with the protesters. In the most striking instance, four armored military vehicles moved at the front of a crowd of thousands of protesters in a pitched battle against Egyptian security police officers defending the Interior Ministry.

Protesters there crouched behind armored trucks as they advanced on the police line surrounding the building, then darted forward to hurl rocks or Molotov cocktails and to set abandoned cars on fire.

Everywhere in Cairo, soldiers and protesters hugged or snapped pictures together on top of tanks. With the evident consent of the soldiers, protesters had scrawled graffiti denouncing Mr. Mubarak on many of the tanks in downtown Cairo. “This is the revolution of all the people,” read a common slogan. “No, No, Mubarak” was another. In Alexandria, demonstrators took tea to troops.

The loyalty of the military — the country’s most popular and respected institution — will be crucial to determining whether Mr. Mubarak can remain as the president of his country, a leader in the Arab world and perhaps America and Israel’s closest ally in the region. A change in leadership here would threaten to upend the established order throughout the Middle East.

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A personal observation about unrest in Egypt

A few years ago I spent several weeks in Cairo on contract with a non-political group. I walked widely through the city and talked with as many people as possible. I wanted to get the broadest possible feel of the place, and a sense of the people's attitude to their government. From street vendors to professionals, I found the Egyptians generous, welcoming, and intelligent.

I came away with one thing above all else — the Mubarak government is universally seen as incredibly corrupt, a machine geared for theft. Everything is stolen by the president's palace, I was told, before anything is spent on the country itself. And I can say from experience, for a city that's lauded as the gateway to Europe, the infrastructure of Cairo is wanting by any European standard. Almost everyone I saw was poor but employed, often in small stores; the "middle class" seemed paper-thin in numbers. If most of the money in Egypt gets stuck at the top, the street view was consistent with that.

I encountered no radical Muslim presence, though I'm sure it exists. No one feared radical violence — I was told there had been none for more than a decade. The Muslim Brotherhood was thought of as political opposition, not a revolutionary force. I never felt unsafe.

No one agreed on solutions for the country's ills but one: Mubarak had to go. I never failed to encounter anger and disgust at the theft of the country's resources. Specifically named by many was the income from the Suez Canal. No one mentioned the regime's brutality, but the google will tell you about that. Egyptians, most of them anyway, knew how to stay under that radar.

So my observation is this: Any news story, any government comment, that does not acknowledge corruption as at least one source of the pressure for Mubarak to leave, is just not recognizing a prime (and obvious) cause of unrest. And when something is this obvious — anger at perceived corruption — and not spoken about, I become suspicious.

I'm listening to a lot of televised comment right now, and a lot of verbal dancing around this fact. I would distrust, or at least listen between the lines to, any comment that doesn't contain this fact. The Bigs are trying to figure out how to present this. When they finally settle on a story, measure it carefully against the patently obvious — no one wants to be ruled by thieves.

And one more point: The U.S. has a real opportunity to get this right for a change. It sure seems like the last time we supported people against a dictator, Jefferson favored the French Revolution and the Federalists sided with the British in opposing it. Brian Katulis, on the Rachel Maddow Show, talked about our "addiction to dictators". Indeed.

The Katulis comment comes at 6:30 in the clip below. It's an excellent discussion. (And please note Steve Clemons' earlier answer to "why so much military support?" The other answer — look at the amount of dollars involved, and ask where they end up.)



We're walking quite the fine line here, as Clinton in the above clip shows. But so far, so good. This is a post-WikiLeaks world, and every government knows it. Egypt won't be East Timor, done in the dark. There's a big light on this one, with leaks at the ready. Time to get it right.

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VIDEO: Some 2nd graders meet technology from the 70s

Hysterical video of some French 2nd graders being shown technology from the 1970s and asked to try to figure out what it is. It's in French, though you don't really need to understand the language - oh, and one of the readers found a version with English subtitles (my favorite part is the yellow 8-track player with the big slam button on top and the cute kid on the right goes "I thought it was a bomb" - sign of the times).

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Goldman CEO receives substantial salary and bonus increase

What economic crisis?

Lloyd C. Blankfein, the chief executive of Goldman Sachs, had a rough 2010. But at least he got a raise: his bonus increased by $3.6 million, according to a regulatory filing.

The firm’s board granted restricted stock valued at $12.6 million to Mr. Blankfein and other senior executives, including Gary D. Cohn, the firm’s president. The board also approved a new annual base salary of $2 million for its chief executive, up from $600,000. Mr. Cohn and others will see their base salaries increase to $1.85 million, according to the filing on Friday.

With his previous salary of $600,000, Mr. Blankfein’s 2010 compensation comes to $13.2 million. Senior executives often receive part of their compensation in cash, but Goldman did not release details on this component of Mr. Blankfein’s compensation.

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SEC approves 'say on pay' for executives

Unless the votes are going to be binding, why bother? We've already seen businesses ignore the non-binding votes and it's not clear how any future votes will differ. Politicians love this idea and the executives probably do as well. It gives the impression of change without actually delivering change. Bloomberg:

The U.S. Securities and Exchange Commission gave shareholders the right to weigh in on pay packages for top executives to increase scrutiny of compensation practices blamed for fueling Wall Street risk-taking.

SEC commissioners voted 3-2 today to enact the say-on-pay measure that will subject compensation plans to non-binding shareholder votes as often as once a year. The proposal is part of the agency’s rulemaking under the Dodd-Frank Act.

Dodd-Frank, the regulatory overhaul enacted in response to the 2008 credit crisis, directed the SEC to let investors vote their views on executive pay amid public furor over incentives that rewarded the kind of risky trading that toppled Lehman Brothers Holdings Inc. and Bear Stearns Cos.

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Blondie - Heart of Glass

Another sunny winter day over here. It seems like every time I check the weather in the northeast, there's another snow storm and it's cold. The good news for all of us is that spring is not that far away. What will Punxsutawney Phil say this year? Read the rest of this post...

Mubarak digs in as 25 protesters die during protests

Note to Mubarak: it's not necessarily the team around you that people want to remove. It's you they're fed up with the most. The Guardian:

Tanks moved on to the streets of Cairo and Alexandria as protesters in Egypt defied a nationwide curfew ordered by President Hosni Mubarak in an effort to quell the fourth and most violent day of demonstrations against his 30-year rule.

In a late-night TV address, Mubarak refused to relinquish power, but dismissed his government, promising a new administration to tackle unemployment and promote democracy.

But his call for stability appeared to cut little ice with many protesters, who surged on to the streets as soon as he finished speaking, defying a curfew. Protesters who had earlier been forced into nearby side streets by the military could be heard chanting "People want to change the regime" immediately after Mubarak's broadcast to the nation finished.

The US is warning Mubarak to address the legitimate protest issues or else risk $1.5 billion in financial aid. Read the rest of this post...

WikiLeaks Swedish ISP to anonymize its user traffic

Don't they know that they're socialists who hate freedom and democracy? In order to be a true democracy these days it's critical that governments have the full authority to spy on citizens. More from BoingBoing. Read the rest of this post...