TV News LIES

The latest quarterly reports from the big Wall Street banks revealed a startling fact: None of the big four banks had a single day in the quarter in which they lost money trading.

For the 63 straight trading days in Q1, in other words, Goldman Sachs (GS), JP Morgan (JPM), Bank of America (BAC), and Citigroup (C) made money trading for their own accounts.

Trading, of course, is supposed to be a risky business: You win some, you lose some. That's how traders justify their gargantuan bonuses--their jobs are so risky that they deserve to be paid millions for protecting their firms' precious capital. (Of course, the only thing that happens if traders fail to protect that capital is that taxpayers bail out the bank and the traders are paid huge "retention" bonuses to prevent them from leaving to trade somewhere else, but that's a different story).

But these days, trading isn't risky at all. In fact, it's safer than walking down the street.

Why?

Lawmakers from both parties are calling for a fix to prevent tax cheating companies from getting federal contracts in light of a government investigation that found $24 billion in stimulus act funds went to companies owing $757 million in unpaid taxes.

Texas, which may balance its budget by firing thousands of teachers, plans to commit $25 million in state funds to Formula One auto racing each year for a decade.

As many as 100,000 teachers in Texas may be fired because of spending cuts to cope with the state’s budget crisis, according to Moak Casey & Associates, an Austin-based education consultant. For $25 million a year, the state could pay more than 500 teachers an average salary of $48,000.

The government accused the bank and its subsidiary MortgageIT of lying about the quality of some mortgages that were to be insured by the government. With the government insurance, Deutsche Bank and MortgageIT were allegedly able to sell weak mortgages for more than they were worth. Because the mortgages were weak, the FHA has been forced to honor insurance policies on the loans.

"You can always get someone up on charges if you work hard enough given all the regulations we have," says Ed Novak, an attorney at Polsinelli Shughart. "I don't buy that the financial industry has so weakened the statutory framework of this country that we can't pursue something."

The nation’s unnerving descent into debt began a decade ago with a choice, not a crisis. In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely.

The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed. 1807  Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds.

If we don't bust up Big Finance, there soon will be another financial crisis that will destroy what's left of our middle-class way of life. For all the damning evidence you’ll ever need about Wall Street corruption, take a look at the recent report from the Senate Permanent Subcommittee on Investigations, “Wall Street and the Financial Crisis:

An Anatomy of a Financial Collapse” (PDF). The 650-page indictment reveals the myriad of ways Wall Street lies, cheats, steals and defrauds on a routine basis. Arguably the report is as revealing as the Nixon tapes or the Pentagon Papers. Unfortunately, it’s too technical to get widely read. So here are the Cliff Notes.