By Pam Martens and Russ Martens: December 16, 2016 

On December 6, the Gallup organization together with the U.S. Council on Competitiveness published a jolting study demonstrating that the pervasive sense among Americans that the U.S. is in economic decline isn’t imagined. It’s real and it’s dangerous.

The study was conducted by Gallup’s Senior Economist, Jonathan Rothwell, with other Gallup experts and external scientists serving as reviewers to “ensure statistical and theoretical accuracy and objectivity,” according to Gallup Chairman and CEO Jim Clifton.

The problem, in a nutshell, is this: real Gross Domestic Product (GDP) per capita ran at a rate of 2.4 percent per year from 1929 to 1979. But since 2007, real GDP per capita has been a negligible 1 percent. Since the depths of the Wall Street crash in 2009, it has been a paltry 1.4 percent. (GDP per capita is the value of all goods and services produced in a country, divided by the number of people living in the country at the time.)

Jim Clifton adds this perspective in a letter attached to the report to drive home the point that America “is dangerously running on empty”:

“Think of our country as a company, America Inc., which has more than 100 million full-time employees, with about $18 trillion in sales and $20 trillion of debt. The most serious problem facing it is no growth.”

The study places the bulk of the blame for shrinking productivity on three sectors: healthcare, education and housing. Soaring costs and inefficiencies in these sectors are barriers to innovation and entrepreneurship, which in turn is holding back growth in GDP, according to the study. This analysis is offered:

“…the deterioration clearly links to specific regulations and inefficiencies created by government and industry practices that are entirely reversible. There is no inherent reason, for example, that the U.S. healthcare system needs to devote hundreds of billions of dollars to administrative expenses related to billing and claims processing, or that higher education now employs more professionals and executives than it does teachers, or that municipalities with the highest demand for housing refuse to allow multi-family housing to be built on under-utilized land. Eliminating these market barriers and the related waste and inefficiency would return the United States to rapid growth even without a spike in invention.”

Rothwell concedes in the study that there are widely divergent opinions among economists as to what is causing the low growth rate, writing:

“Another theory for why productivity growth has slowed is that demand for investment has fallen. Reviving a theory from the 1930s, Larry Summers has argued that the fundamental problem is a lack of investment opportunities. Summers provides few details as to why he thinks investment demand has fallen, but he argues that large-scale government-funded investment is a potential cure. Yet, weak demand for investment may be an effect of a still more fundamental change. Lower real wage growth, for example, would depress opportunities for businesses to form or expand, depressing investment. So, if Summers is right, the question remains: Why has investment demand become so weak? If consumers could afford to buy new goods and services, then businesses would have a strong incentive to invest in providing them.

“Macroeconomist Kenneth Rogoff has taken almost the opposite view of Summers, arguing that excessive debt is dragging down growth, resulting from the collapse of the housing bubble. Whereas Summers recommends increased government borrowing to fund investments, Rogoff argues this will exacerbate long-term problems.”

In our opinion, the one sector that should be singled out in any study of declining GDP growth in the U.S. is Wall Street. It has sacked the current and future prospects for the country in so many ways that it is beyond comprehension that any economic study on subpar growth wouldn’t first look in its direction.

In a study in November 2009, two researchers did take a cold, hard look. David Weild and Edward Kim authored a study for the accounting firm, Grant Thornton LLP titled “A Wakeup Call for America.” The study found that since 1991, the number of U.S. exchange-listed companies is down more than 22 percent, and when adjusted for real GDP growth (inflation-adjusted), that percentage balloons to a stunning 53 percent.

The authors trace the decline in IPOs to the disappearance of the Four Horsemen, four boutique investment banks which played an outsized role in bringing innovative companies to market: Alex. Brown & Sons, Robertson Stephens, Montgomery Securities, and Hambrecht & Quist. These super job creators were gobbled up by the same Wall Street behemoth banks that have eviscerated so much else that was good in America – like the separation of insured banks from speculating dark pools and derivative desks.

As we reported in 2012:

“Alex Brown’s roots dated back to 1808.  It was involved in the IPO of Microsoft and Oracle Systems. It was acquired by Bankers Trust in 1997 and two years later merged into the German behemoth Deutsche Bank.

“Robertson Stephens was a much younger firm, starting out in 1978. The firm was involved in the IPOs of Sun Microsystems, Excite and Chiron.  Before being sold to BankAmerica for $540 million in 1997, the company was lead or co-manager on 10 of the top 25 best IPO performers in 1997.  (The firm was resold several times after that, each time to a large commercial bank and eventually liquidated.)

“Montgomery Securities, heavily involved in high-tech issues, was sold to Nationsbank for $1.2 billion in 1997.  Nationsbank would acquire BankAmerica the following year, but keep the name BankAmerica as the legal entity. In 2008, during the financial crisis, BankAmerica purchased the large retail brokerage firm, Merrill Lynch, which was teetering near insolvency.

“Boutique investment bank, Hambrecht & Quist, was the final of the Four Horsemen. The firm was founded by Bill Hambrecht and George Quist in 1968. The firm was the underwriter of the following well known firms: Apple Computer, Genentech, Adobe Systems, Netscape, and Amazon.com.  In September 1999, Chase Manhattan Bank acquired the firm for $1.35 billion. The firm is now part of the largest U.S. bank, JPMorgan Chase.”

Each of the behemoth banks mentioned above (Deutsche Bank, Bank of America, JPMorgan Chase) that gobbled up the super productive investment boutiques, have been repeatedly charged with frauds against the public and added enormously to the U.S. national debt by forcing the government to enact fiscal stimulus measures to compensate for the 2008 to 2010 economic collapse — which these and other Wall Street banks triggered through their corruption.

Another major problem is that when Wall Street investment banks were partnerships, they had to put the partners’ own money at risk in the deals they engaged in or brought to market. Today, every major Wall Street firm is publicly traded and owns a commercial bank holding the insured deposits of Moms and Pops across the country, thanks to the repeal of the Glass-Steagall Act in 1999. Instead of worrying about losing their own principal if they bring “crap” or “dogs” to market as IPOs, they have been caught actually bragging about doing just that. They are now, in many cases, simply selling companies with a sexy story rather than companies with solid prospects for innovation or job creation potential. Equally problematic, much of what these banks do today is to facilitate high frequency trading in a quest for outsized profits. This trading provides no meaningful benefit to society or the overall economy. It is pure casino capitalism.

More recently, economist Michael Hudson delivered a powerful critique on how Wall Street is crippling America in his 2015 book “Killing the Host.” Hudson explains how these financial parasites have tricked our society into accepting them as a normal, productive part of our economy. This depraved financial model which imploded in 2008 in the worst crash since the Great Depression should have brought an end to itself as a result. Instead, says Hudson, “Any given development crisis is said to be a natural product of market forces, so that there is no need to regulate and tax the rentiers.”

Chapter 8 of “Killing the Host” begins with this quotation from John Maynard Keynes: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” Hudson explains further:

“Instead of warning against turning the stock market into a predatory financial system that is de-industrializing the economy, [business schools] have jumped on the bandwagon of debt leveraging and stock buybacks. Financial wealth is the aim, not industrial wealth creation or overall prosperity. The result is that while raiders and activist shareholders have debt-leveraged companies from the outside, their internal management has followed the post-modern business school philosophy viewing ‘wealth creation’ narrowly in terms of a company’s share price. The result is financial engineering that links the remuneration of managers to how much they can increase the stock price, and by rewarding them with stock options. This gives managers an incentive to buy up company shares and even to borrow to finance such buybacks instead of to invest in expanding production and markets.”

We suggest the Gallup folks and the U.S. Council on Competitiveness seriously delve into the issues raised by David Weild, Edward Kim and Michael Hudson. No meaningful conversation about what is holding back America can take place without a comprehensive understanding of Wall Street’s broken, corrupt business model.

By Pam Martens and Russ Martens: December 15, 2016

With the news that Gary Cohn, the sitting President of Goldman Sachs, will join two other Goldman Sachs alumni to make up the economic, treasury and strategy team in the Donald Trump administration, we had a fleeting vision of retired Michigan Senator Carl Levin flinging open a window in Detroit and screaming obscenities into the wind. Cohn was the Co-President of Goldman Sachs who oversaw its trading business in the leadup to the 2008 crash as it offloaded billions of dollars of toxic subprime mortgage paper onto its customers, with employees even referring to one offering as a “shitty deal” in emails, while Goldman shorted the hell out of the paper (betting against it) to make massive profits for itself. Billions of dollars of this rotten paper was sold to retirement funds for low-wage municipal workers.

On Wednesday, April 13, 2011, following a two-year investigation, Senators Carl Levin and Tom Coburn, Chairman and Ranking Member of the Senate’s Permanent Subcommittee on Investigations, released a 635-page report which included specifics on the deceitful and fraudulent role that Goldman Sachs played, among others, in burning down Wall Street and the U.S. economy in the greatest collapse since the Great Depression.

Goldman Sachs is referenced 2,495 times in the report; Cohn is referenced 89 times. Cohn’s role in overseeing the firm’s peddling of its subprime mortgage-backed securities is called out in the example below; (other references show how Cohn kept close tabs on the firm’s shorting of the market):

“In 2006 and 2007, the head of the Mortgage Department was Daniel Sparks. Goldman Co-Presidents Gary Cohn and Jon Winkelried, as well as CFO David Viniar, had been involved in Mr. Sparks’ earlier career at Goldman, and he maintained frequent, direct contact with them regarding the Mortgage Department.”

The report characterizes the actions of the denizens of Wall Street as an “economic assault” on the United States. The report came a year after the Subcommittee had conducted a series of hearings in April 2010, including taking direct testimony from Goldman Sachs officials. (See video clips below.) The report summarizes its findings about Goldman Sachs as follows:

“When Goldman Sachs realized the mortgage market was in decline, it took actions to profit from that decline at the expense of its clients. New documents detail how, in 2007, Goldman’s Structured Products Group twice amassed and profited from large net short positions in mortgage related securities. At the same time the firm was betting against the mortgage market as a whole, Goldman assembled and aggressively marketed to its clients poor quality CDOs that it actively bet against by taking large short positions in those transactions. New documents and information detail how Goldman recommended four CDOs, Hudson, Anderson, Timberwolf, and Abacus, to its clients without fully disclosing key information about those products, Goldman’s own market views, or its adverse economic interests.  For example, in Hudson, Goldman told investors that its interests were ‘aligned’ with theirs when, in fact, Goldman held 100% of the short side of the CDO and had adverse interests to the investors, and described Hudson’s assets were ‘sourced from the Street,’ when in fact, Goldman had selected and priced the assets without any third party involvement. New documents also reveal that, at one point in May 2007, Goldman Sachs unsuccessfully tried to execute a ‘short squeeze’ in the mortgage market so that Goldman could scoop up short positions at artificially depressed prices and profit as the mortgage market declined.”

The report does a deep-dive into how Goldman Sachs actually created product for the express purpose of reducing its own exposure to subprime mortgages while offloading the toxic paper onto its clients. The report notes:

“The review begins in mid to late 2006, when Goldman realized that the market for subprime mortgage backed securities was beginning to decline, and the large long positions it held in ABX assets, loans, RMBS and CDO securities, and other mortgage related assets began to pose a disproportionate risk to both the Mortgage Department and the firm. In October 2006, the Mortgage Department designed a synthetic CDO called Hudson Mezzanine 2006-1, which included over $1.2 billion of long positions on CDS contracts to offset risk associated with ABX assets in Goldman’s own inventory and another $800 million in single name CDS contracts referencing subprime RMBS securities that Goldman wanted to short; the Mortgage Department then sold the Hudson securities to its clients.”

The Senate investigators found that “By the end of the first quarter of 2007, the Mortgage Department had swung from a $6 billion net long position in December 2006, to a $10 billion net short position in late February 2007, a $16 billion reversal.” Clearly, Goldman Sachs was anticipating a financial catastrophe while failing to share that reality early on with its clients or with the public in its research reports.

Gary Cohn was well aware of the massive short position at Goldman Sachs in 2007, as explained in this part of the Senate report:

“In late February [2007], Goldman’s Operating Committee, a subcommittee of its Firmwide Risk Committee, became concerned about the size of the $10 billion net short position. The Firmwide Risk Committee was co-chaired by Mr. Viniar [CFO], and Messrs. Cohn [Co-President] and Blankfein [CEO] regularly attended its meetings. The concern arose, in part, because the $10 billion net short position had dramatically increased the Mortgage Department’s Value-at-Risk or ‘VAR,’ the primary measure Goldman used to compute its risk. The Committee ordered the Department to lock in its profits by ‘covering its shorts,’…The Mortgage Department complied by covering most, but not all, of the $10 billion net short and brought down its VAR. It then maintained a relatively lower risk profile from March through May 2007.”

Next came a Goldman Sachs market manipulation that the Senate investigators call an “attempted short squeeze.” The report explains:

“In May 2007, the Mortgage Department’s Asset Backed Security (ABS) Trading Desk attempted a ‘short squeeze’ of the CDS market that was intended to compel other market participants to sell their short positions at artificially low prices. Goldman’s ABS Desk was still in the process of covering the Mortgage Department’s shorts by offering CDS contracts in which Goldman took the long side. The ABS Desk devised a plan in which it would offer those CDS contracts to short parties at lower and lower prices, in an effort to drive down the overall market price of the shorts. As prices fell, Goldman’s expectation was that other short parties would begin to sell their short positions, in order to avoid having to sell at still lower prices. The ABS Desk planned to buy up those short positions at the artificially low prices it had caused, thereby rebuilding its own net short position at a lower cost. The ABS Desk initiated its plan, and during the same period Goldman customers protested the lower values assigned by Goldman to their short positions as out of line with the market. Despite the lower prices, the parties who already held short positions generally kept them and did not try to sell them. In June, after learning that two Bear Stearns hedge funds specializing in subprime mortgage assets might collapse, the ABS Desk abandoned its short squeeze effort and recommenced buying short positions at the prevailing market prices.”

The Senate report notes the following about Goldman’s attempted short squeeze: “Trading with the intent to manipulate market prices, even if unsuccessful, is a violation of the federal securities laws.” No one at Goldman Sachs has gone to jail for any of its actions in the leadup to, or during, the financial crash in 2008.

According to the Senate report, Goldman’s net short position reached its peak on June 22, 2007 at $13.9 billion, nearly 40 percent larger than its net short in February of the same year. The report makes clear that Gary Cohn was calling the shots in this area, writing that by August 2007 “Goldman senior management again became concerned about the size of the Department’s net short position and its VAR levels, which had reached record levels. On August 21, 2007, Goldman’s Chief Operating Officer [and Co-President] Gary Cohn ordered the Mortgage Department to ‘get down now.’ ” This meant the traders should, once again, cover their shorts and lock in their profits.

Senate investigators provide detailed documents and evidence showing that Goldman Sachs went on a concerted public relations campaign to conceal its massive profits from shorting the subprime mortgage market. The Subcommittee produced emails showing that a Goldman Sachs trader, Joshua Birnbaum, had described Goldman Sachs in 2007 as “the market leader in shorting the housing market” then corrected that in July 2007 to concede that the John Paulson hedge fund was “definitely the man in this space, up 2-3 bil on this trade. We were giving him a run for his money for a while but now are a definitive #2.” When Birnbaum mapped out his case to his bosses for trader compensation for their handling of the shorts, he wrote: “#1 on the street by a wide margin. #2 in the world behind Paulson Partners.”

But when Goldman Sachs began feeling the heat after the financial crash as the details unfolded, the Senate report notes how the firm hypocritically changed its tune:

“In April 2010, Goldman posted a statement on its website entitled, ‘Goldman Sachs: Risk Management and the Residential Mortgage Market.’ In the statement’s Executive Summary, Goldman made the following assertions, among others: – ‘Goldman Sachs did not take a large directional ‘bet’ against the U.S. housing market, and the firm was not consistently or significantly net ‘short the market’ in residential mortgage related products in 2007 and 2008, as the performance of our residential mortgage-related products business demonstrates. Goldman Sachs did not engage in some type of massive ‘bet’ against our clients. The risk management of the firm’s exposures and the activities of our clients dictated the firm’s overall action, not any view of what might or might not happen to any security or market.”

Goldman Sachs has a long storied history of offloading its bad investments into the arms of the unsophisticated and unwary. In the asset bubble of 1928, Goldman ran the Goldman Sachs Trading Company, a closed end fund (called a trust in those days) that Goldman Sachs created and offered to the public at $104 a share, conveniently before the 1929 crash. The trust was filled with conflicted investments while paying Goldman a hefty management fee, only to end up a few years after the crash trading at a buck and change. On May 20, 1932, Walter Sachs, President of the Goldman Sachs Trading Company, was interrogated by the Senate Committee on Banking and Currency. The hearings produced the same conclusions as the Senate report in 2011: Goldman Sachs royally fleeced its customers to line its own pockets.

If President-elect Donald Trump wants to have any credibility at all in the handling of economic and treasury policy for the United States, he needs to eliminate those who have the name Goldman Sachs on their resumes — unless those individuals left the company out of disgust of its practices, like author Nomi Prins and, more recently, Greg Smith.

By Pam Martens and Russ Martens: December 14, 2016

Gary Cohn, President and COO of Goldman Sachs

Two former Goldman Sachs bankers and the sitting President of the Wall Street firm are taking high positions in Donald Trump’s administration despite the egregious role that Goldman Sachs played in the 2008 financial collapse that cost millions of Americans their homes and their jobs.

Steve Bannon, who at one time worked in Mergers and Acquisitions at Goldman, will be Trump’s Senior Counselor and Chief White House Strategist.

Steve Mnuchin, who joined Goldman in 1985 and worked there for the next 17 years, has been nominated by Trump to serve as U.S. Treasury Secretary. That post also entitles Mnuchin to Chair the Financial Stability Oversight Council, a body that frequently meets in secret to deliberate if the U.S. could be looking at another 2008-style meltdown.  Yesterday, an article at Bloomberg News raised questions about Mnuchin’s qualifications to serve in one of the most important cabinet posts in government, writing that shortly after Mnuchin had made a windfall last year from the sale of OneWest Bank, problems emerged: “The U.S. Department of Housing and Urban Development opened an investigation into foreclosure practices in a division that handles loans to senior citizens. Accountants determined the unit’s books were a mess. Eventually, the bank’s new owner, CIT Group Inc., discovered a shortfall of more than $230 million.”

Mnuchin, at least, was not at Goldman Sachs in the leadup to the greatest financial crash since the Great Depression. He left in 2002. The same cannot be said for Gary Cohn, the current President and Chief Operating Officer of Goldman, whom Trump has picked to lead the National Economic Council and be his chief strategist in developing his economic policy. It’s convenient that Cohn’s new position does not require Senate confirmation since exactly what he knew about Goldman selling bogus investments to its clients while the firm made billions of dollars betting the instruments would fail might be raised in Senate questioning of Cohn’s fitness to serve.

In the two years leading up to the epic 2008 financial crash on Wall Street, Cohn was Co-President of Goldman. Cohn became a multi-millionaire from the business done in those years, earning $27.5 million in restricted stock and options just in the year 2006. However, as Greg Gordon of McClatchy Newspapers would report in 2009, a key part of Goldman’s business in the years before the crash operated like this: “In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.”

On April 11 of this year, the U.S. Justice Department and other regulators announced a $5.06 billion settlement with Goldman Sachs related to the fraudulent manner in which it had sold residential mortgage bonds. On the day the settlement was announced, a spokesman for the Justice Department stated: “This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail.”

What the Justice Department settlement didn’t do was put any Goldman Sachs’ executive in jail nor did it provide details about how Goldman Sachs was not only selling investments that it knew were likely to fail but it was also making billions of dollars making wagers (shorting) that the instruments would indeed fail. The profits from those wagers flowed to the top executives – men like Gary Cohn.

One particularly slimy and illegal deal done by Goldman Sachs was the 2007 ABACUS. The Securities and Exchange Commission described the deal as follows when it brought charges on April 16, 2010:

“The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.”

The SEC complaint goes on: “…after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS [Residential Mortgage Backed Securities] portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.’s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.”

According to the SEC’s complaint, Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By October 2007, 83 percent of the bonds in the portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded. The SEC estimated that investors lost more than $1 billion in the deal while Paulson made an equivalent amount.

Earlier this year, the American people got a devastating look at what was really going on inside the SEC that prevented it from bringing fraud charges against higher ups at Goldman Sachs who were involved in the ABACUS deal. Jesse Eisinger, writing for the New Yorker, reported that the SEC attorney, James Kidney, who was in charge of bringing the ABACUS case to trial, wrote in an email to his boss at the SEC that it was an “unbelievable fraud.” According to the emails and documents Kidney turned over to Eisinger after Kidney retired from the SEC, Kidney had wanted to charge higher ups. But his efforts were quashed by his bosses at the SEC.

Less than three months after filing its lawsuit on the ABACUS deal, the SEC settled with Goldman Sachs for $550 million, bringing charges solely against a low level trader, Fabrice Tourre. No charges or settlement was ever leveled against Paulson by the SEC.

Making the appointment of Cohn even more of a travesty and insult to the American people, Cohn is reported to own more than $200 million in Goldman Sachs stock, much of it awarded to him during the company’s years of selling their fraudulent mortgage investments to public pension funds. Cohn will be able to get a monster tax break on that stock by serving in the Trump administration. Under the law, if Cohn sells his Goldman stock to avoid a conflict of interest as a member of the Executive Branch, he will be able to indefinitely defer capital gains taxes on the sale, providing he invests the proceeds from the stock sales in government securities or an approved government securities mutual fund.

Hank Paulson, a Goldman Sachs CEO who served in the George W. Bush administration as Treasury Secretary, immediately filed to sell almost $500 million of his Goldman stock and take advantage of a tax-savings windfall estimated to be $200 million by The Economist. Paulson was also on hand at the Treasury when all of those fraudulently constructed mortgage bonds across Wall Street began to implode, taking down the iconic names on Wall Street and the U.S. economy. Paulson’s government position allowed him to oversee the biggest taxpayer bailout of Wall Street in U.S. history – portions of which remained secret for years, like the Fed’s covert $16 trillion in hidden loans to Wall Street and foreign banks.

Trump is sending a loud and clear message to Americans: crime not only pays on Wall Street but it qualifies you to run the government of the United States. Instead of draining the swamp, Trump is simply restocking it.

Related Articles:

Goldman Sachs’ Rich Man’s Bank Backstopped by You and Me

Goldman Sachs Beats Another Fraud Rap: Can the Public Ever Get Justice in New York Courts?

If You Remove Trade Secrets from Goldman Sachs You’re Prosecuted; If You Remove Top Secret Files from the Government, You’re Good to Go

Blowing the Whistle on the New York Fed and Goldman Sachs

Occupy Goldman Sachs — Bring Pitch Fork (And Property Tax Bills)

Goldman Sachs Smears Greg Smith: Shades of Christian Curry

Barofsky Book: Goldman Sachs and Morgan Stanley Would Have Failed Next

Goldman Sachs to America: F*** You!

Why A Criminal Case Against Goldman Sachs Matters and Why Charges Could Stick

By Pam Martens and Russ Martens: December 13, 2016

Carmen Segarra Photo from Public Radio’s “This American Life”

Whistleblowers certainly haven’t enjoyed halcyon days under either Presidents Obama or George W. Bush (see related article below) but President-elect Donald Trump’s cabinet could actually produce an upsurge in corporate corruption by making whistleblowers fearful of coming forward at all.

Now that Trump has announced his intention to put Big Oil in charge of the State Department; an executive opposed to the new overtime pay laws at the helm of the “Labor” Department; and the vampire squid Goldman Sachs’ alumni in charge of “anything that smells like money,” it seems safe to say this isn’t exactly the populist President the working class had in mind. In fact, it looks very much like a corporate coup d’état with three military generals thrown in to the mix as the Praetorian Guard in case the sold-out laborers grab their pitchforks.

Trump’s nominee for Labor Secretary, Andy Puzder, is particularly problematic. Puzder is the CEO of CKE Restaurants, a fast food chain famous for its ads of scantily clad women. We don’t know if that’s what attracted Trump to him or if it was the book Puzder co-authored with David Newton titled: Job Creation: How It Really Works And Why Government Doesn’t Understand It.  The book carries this analysis of what it will take to jump-start the economy from the doldrums left from the Great Recession:

“A sustainable recovery requires strong corporate profits, a balanced budget with drastically reduced government spending, reduced business regulation, and across-the-board lower individual and corporate taxes. These will release the U.S. free enterprise system’s dynamic energy for growth, incentivize entrepreneurship, and lead to robust job creation – THE key indicator of any economic recovery.”

Puzder apparently hasn’t read the dozens of books or the official report from the Financial Crisis Inquiry Commission which places his cure of reduced regulation as the key culprit of the greatest financial crash in 2008 since the Great Depression, which then took down the rest of the U.S. economy. Attempting to deregulate our way out of an epic deregulation catastrophe only makes sense to CEOs who get filthy rich from deregulation.

In May, Puzder had this to say about the new overtime pay law in an opinion piece at Forbes:

“Today the Labor Department released its new overtime rule requiring that employers pay overtime to salaried managers who earn less than $47,500 per year, doubling the previous threshold of $23,660. Labor Secretary Tom Perez is promoting it as a means to increase middle-class wages claiming that ‘the overtime rule could… help millions of workers get back into the middle class.’ As with the Obama Administration’s other efforts to regulate their way to economic prosperity, it will not deliver as promised.”

Puzder ends his opinion piece with a dig at progressives and a salute to the preaching of Charles Koch, writing:

“One can only wonder when the advocates of progressive economics will realize that, despite their best efforts, you cannot regulate your way to economic prosperity.”

The U.S. Department of Labor that Puzder will head includes OSHA, the Occupational Safety and Health Administration, which administers more than 20 whistleblower protection laws, including the laws which protect whistleblowers from retaliation for filing a claim. In addition, any employee who works for a company traded on a stock exchange or over-the-counter is protected by OSHA from retaliation for reporting “mail, wire, bank or securities fraud; violations of SEC rules or regulations of the SEC; or violations of federal laws relating to fraud against shareholders.”

That’s how it’s supposed to work anyway. According to a report by Ann Marsh, for Financial Planning on December 9, “protections for whistleblowers have broken down at the Labor Department.” Marsh cites examples of OSHA investigators looking into whistleblower claims at politically powerful financial firms like JPMorgan Chase and Wells Fargo, only to find themselves fired by OSHA.

That sounds incredibly similar to what happened to Gary Aguirre, an SEC attorney, and Carmen Segarra, an attorney and a bank examiner at the Federal Reserve Bank of New York. Segarra says she was fired by the New York Fed for refusing to change her negative bank examination of Goldman Sachs, after being bullied by her colleagues to do so. After the Senate’s shaming her boss, Bill Dudley, in a hearing, the whole matter was quickly forgotten by Congress and Dudley has gone on his merry way as President of the New York Fed, delivering a series of hypocritical speeches on what it will take to change the bad culture on Wall Street.

When George W. Bush was president, there was the case of Gary Aguirre, an SEC attorney who tangled with the powerful John Mack, a former official at Morgan Stanley. Aguirre wanted to serve a subpoena on Mack and take testimony about Mack’s potential involvement in an insider trading case. Aguirre was fired just three days after contacting the Office of Special Counsel to discuss how the SEC was protecting Mack.

Given the history of the crony SEC, the last place one would expect to find an Office of the Whistleblower is at the SEC. But under the Dodd-Frank financial reform legislation that was passed in 2010, the SEC was forced to create one.

It’s long past the time for Congress to apply common sense to the concept of whistleblowing and move the whistleblower offices out of both the Labor Department and the SEC and into a completely independent agency. If not, Trump can look forward to an epic increase in corporate corruption scandals on his watch.

Related Article: 

Four Other Lawyer Whistleblowers are Essential at the Carmen Segarra Senate Witness Table

By Pam Martens and Russ Martens: December 12, 2016

Michael Froman

The Washington Post continues to double-down on its Red-baiting hysteria, reporting over the weekend as follows:

“Intelligence agencies have identified individuals with connections to the Russian government who provided WikiLeaks with thousands of hacked emails from the Democratic National Committee and others, including Hillary Clinton’s campaign chairman, according to U.S. officials.”

The objective, according to the Post’s perpetually anonymous sources, was this: “Those officials described the individuals as actors known to the intelligence community and part of a wider Russian operation to boost Trump and hurt Clinton’s chances.”

One aspect of the manner in which WikiLeaks released a specific subset of emails is almost certain proof that a sophisticated state-supported intelligence operation was not behind the alleged hack of the emails. The emails WikiLeaks released from Podesta’s email account didn’t just pertain to his work as Campaign Chairman for Hillary Clinton in 2016; they also reached back to 2008 when he was Co-Chairman of President Obama’s Transition Team.

If Russia had really wanted to interfere in the U.S. elections and tilt the playing field against Clinton, who was promising an Obama third term and with Obama traveling around the country campaigning for her, it would have scooped up all of the emails from 2008 in which Citigroup executive, Michael Froman, is caught heading up the decisions on who is going to be in President Obama’s cabinet and subcabinet. A sophisticated state-sponsored agent would have put these emails in timeline order, handed the emails as a cohesive group to Glenn Greenwald at The Intercept or Matt Taibbi at Rolling Stone and watched as all hell broke loose. Alternatively, the Russian source could have handed the group of Froman emails to WikiLeaks and suggested that WikiLeaks highlight their release on its Twitter page where it was regularly highlighting other mini bombshells from the Podesta emails. But none of this happened.

Instead, what actually happened was that the Michael Froman emails were released in dribbles from October 7 through November 8, mixed in with giant piles of unrelated Podesta emails, so that the full impact of what Froman had done wasn’t readily discernible.

Wall Street On Parade was one of the few outlets to report on the Froman bombshell, showing that President Obama, the candidate promising hope and change to the American people, had allowed an executive of the biggest bank failure in history to pick his cabinet, in the very midst of the bank collapsing and in the very midst of the taxpayer having a gun put to its head to bail it out. After all the dust settled and the details came out, Citigroup was revealed to have received $45 billion in equity infusions from the taxpayer; over $300 billion in asset guarantees from the taxpayer; and more than $2.5 trillion in secret loans from the Federal Reserve.

But even after Wall Street On Parade filed its reports, more Froman emails continued to be released with more stunning revelations. On the very day before the election, November 7, 2016, when media was thoroughly engrossed elsewhere, WikiLeaks released a shocker of a Froman email showing that the thoroughly discredited Robert Rubin, sitting atop Citigroup’s Board as the bank collapsed and sheltered by the warm glow of the $126 million he had collected from the bank over the prior decade, was actually being considered for a new run as U.S. Treasury Secretary by a man in his own bank – Michael Froman.

The email is dated October 7, 2008. In the thread from Froman to Podesta, Froman writes as follows:

“The vetting of Bob Rubin could probably wait until he indicates whether there is any circumstance in which he would consider taking the Treasury job (and whether Barack would prefer that, even if it were time-limited, to Tim or Larry.) I don’t think we need to do as much of a vet for Harry Hopkins role.”

The “Tim or Larry” likely refers to Tim Geithner, former President of the New York Fed (who did serve as Obama’s first Treasury Secretary) and Larry Summers, who, like Rubin, served as Treasury Secretary under President Bill Clinton. Both Rubin and Summers played heavy-handed rolls in the deregulation of banks and derivatives during the Clinton administration, which ushered in the epic financial crash of 2008.

The founder of WikiLeaks, Julian Assange, has already stated that Russia did not provide the Podesta emails. Over the weekend, the Guardian newspaper reported even stronger revelations from Craig Murray, a close associate to Assange. Murray said the CIA was “absolutely making it up.” Murray also stated: “I’ve met the person who leaked them, and they are certainly not Russian and it’s an insider. It’s a leak, not a hack; the two are different things.”

Murray also raised another common sense issue, arguing: “If what the CIA [is] saying is true, and the CIA’s statement refers to people who are known to be linked to the Russian state, they would have arrested someone if it was someone inside the United States. America has not been shy about arresting whistleblowers and it’s not been shy about extraditing hackers. They plainly have no knowledge whatsoever.”

There were other email leaks released by Guccifer 2.0 and DC Leaks. Wall Street On Parade did not conduct any in-depth research on those leaks, thus we cannot say with any authority who was responsible for those leaks. But the tens of thousands of WikiLeaks emails that were randomly released look like the work, as Murray states, of an insider and not that of a sophisticated state actor.

Moreover, the WikiLeaks emails, the text of which have not been disputed by the Podesta/Clinton/Obama camps, show that crony capitalism has corrupted the top of the Democratic Party. It makes sense that the plutocrats would want to pivot to a different investigation. But that’s not what the American people should demand of their Congress and that’s not what a democratically elected Congress should succumb to under pressure from the front pages of the corporate-owned Washington Post and New York Times.