by Pam Martens and Russ Martens, Wall St On Parade:
The New York Times has been able to fly below the radar in terms of its insufferable ability to muck up the financial system of the United States and then canonize its aiders and abettors with puff pieces.
It was none other than the New York Times that repeatedly used its editorial page to advocate for the repeal of the Glass-Steagall Act, which had protected the U.S. financial system from crisis for 66 years until its repeal under the Wall Street friendly Bill Clinton administration in 1999. It took only nine years after its repeal for the U.S. financial system to crash in 2008, requiring the largest public bailout in U.S. history. We’re now in banking crisis and bailout 3.0.
TRUTH LIVES on at https://sgtreport.tv/
The 1933 Glass-Steagall Act was passed by Congress at the height of the Wall Street collapse that began with the 1929 stock market crash, the insolvency and closure of thousands of banks, followed by the Great Depression. The legislation addressed two equally critical flaws in the U.S. banking system. It created, for the first time, federally-insured deposits at commercial banks to restore the public’s confidence in the U.S. banking system and it barred commercial banks that were holding those newly-insured deposits from being part of Wall Street’s trading casinos – the brokerage firms and investment banks that were underwriting and/or trading in stocks and other speculative securities.
In 1988 a Times editorial read: “Few economic historians now find the logic behind Glass-Steagall persuasive.” Another in 1990 ridiculed the idea that “banks and stocks were a dangerous mixture,” writing that separating commercial banking from Wall Street trading firms “makes little sense now.”
On April 8, 1998, the editorial board of the New York Times became an outright cheerleader for a bank merger that would end up devastating Wall Street. The editorial was so pro-Wall Street and anti-public interest that it could have come straight from the desk of Sandy Weill, the man who wanted to merge his brokerage firm, Smith Barney, his investment bank, Salomon Brothers, and his insurance company, Travelers Group, with the large insured commercial bank, Citicorp, owner of Citibank. (The behemoth bank became known as Citigroup as a result of the merger and was the single largest recipient of the taxpayer bailout during the 2007-2010 financial crisis.)
The New York Times editorial in 1998 sounded like it came from Sandy Weill’s publicist. The Times wrote:
“Congress dithers, so John Reed of Citicorp and Sanford Weill of Travelers Group grandly propose to modernize financial markets on their own. They have announced a $70 billion merger — the biggest in history — that would create the largest financial services company in the world, worth more than $140 billion… In one stroke, Mr. Reed and Mr. Weill will have temporarily demolished the increasingly unnecessary walls built during the Depression to separate commercial banks from investment banks and insurance companies.”
With the green light from the New York Times, Congress repealed the Glass-Steagall Act the very next year.
Here’s what happened to Sandy Weill’s grand creation, Citigroup: By early 2009, it was a 99-cent stock and clearly insolvent. Despite this reality, the Federal Reserve made secret, cumulative loans of more than $2.5 trillion to prop up Citigroup from December 2007 through at least July 21, 2010, according to a Fed audit conducted by the Government Accountability Office. In addition, the U.S. Treasury injected $45 billion in capital into Citigroup; there was a government guarantee of over $300 billion on its dodgy assets; and the FDIC provided a guarantee of $5.75 billion on its senior unsecured debt and $26 billion on its commercial paper and interbank deposits.
But Sandy Weill made out just fine, walking away as a billionaire as a result of his Count Dracula stock options. (Compensation expert, Graef “Bud” Crystal, coined the Count Dracula stock option moniker because nothing could kill them, because the Citigroup Board had authorized them.)
One of the men who had put the pieces in place for these monster bailouts of the new mega banks on Wall Street was lawyer Rodge Cohen of Sullivan & Cromwell. In testimony to the Financial Crisis Inquiry Commission (FCIC) in 2010, Cohen admitted that he was personally involved in the amendment contained in the Federal Deposit Insurance Corporation Improvement Act (FDICIA) that changed the Fed’s emergency lending powers under Section 13(3) of the Federal Reserve Act.
That one-sentence amendment to Section 13(3) was interpreted by the Federal Reserve from December 2007 to mid-2010 as giving it carte blanche to shovel $29 trillion in cumulative loans to Wall Street banks and their foreign derivatives counterparties.
Read More @ WallStOnParade.com
