Obama's Bailout Bunch Brings Us More of the Same: Jonathan Weil

[Andre II]

What's your take on this commentary of Jonathan Weill?

It's hard to believe Barack Obama would even think of calling this change. Take a good look at some of the 17 people our nation's president-elect chose last week for his Transition Economic Advisory Board. And then try saying with a straight face that these are the leaders who should be advising him on how to navigate through the worst financial crisis in modern history.

First, there's former Treasury Secretary Robert Rubin. Not only was he chairman of Citigroup Inc.'s executive committee when the bank pushed bogus analyst research, helped Enron Corp. cook its books, and got caught baking its own. He was a director from 2000 to 2006 at Ford Motor Co., which also committed accounting fouls and now is begging Uncle Sam for Citigroup- style bailout cash.

Two other Citigroup directors received spots on the Obama board: Xerox Corp. Chief Executive Officer Anne Mulcahy and Time Warner Inc. Chairman Richard Parsons. Xerox and Time Warner got pinched years ago by the Securities and Exchange Commission for accounting frauds that occurred while Mulcahy and Parsons held lesser executive posts at their respective companies.

Mulcahy and Parsons also once were directors at Fannie Mae when that company was breaking accounting rules. So was another member of Obama's new economic board, former Commerce Secretary William Daley. He's now a member of the executive committee at JPMorgan Chase & Co., which, like Citigroup, is among the nine large banks that just got $125 billion of Treasury's bailout budget.

More here:
http://www.bloomberg.com/apps/news?pid=20601039&sid=aNCFKvAMUQ6w

[leftchick]

1. he makes some valid points

and where are the freakin economists???

[Andre II]

10. Agreed n/t

[HamdenRice]

2. When FDR created the SEC, he put one of the biggest crooks of them all in charge because

he knew how all the inside criminal activity was conducted. That crook was Joseph Kennedy, father of President Kennedy, who had sold short and engaged in insider trading. FDR said of Kennedy's appointment, "Takes one to catch one."

Kennedy is widely considered to have done a brilliant job.

[Name removed]

3. Deleted message

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[HamdenRice]

4. So you're saying you're ignorant of history?

Joe Kennedy formed a brokerage partnership that engaged in insider trading and stock manipulation. He cornered the market in certain shares, putting out phoney information that the stock was good, ran the price up, then raided as a bear.

Kennedy admitted all of this himself and then set out to fix all the opportunities for insider trading that he himself had benefited from.

If you know anything about history, you would know that. FDR did.

[nc4bo]

5. He must be referring to this - If wiki can be trusted.........

Wall Street

In 1919, he joined the prominent stock brokerage firm of Hayden, Stone & Co. where he became an expert in dealing in the unregulated stock market of the day, engaging in tactics that would later be labeled insider trading and market manipulation. In 1923 he left, and set up his own investment company, becoming a multi-millionaire during the bull market of the 1920s.

David Kennedy, author of Freedom From Fear, describes the Wall Street of the Kennedy era:
“ (It) was a strikingly information-starved environment. Many firms whose securities were publicly traded published no regular reports or issued reports whose data were so arbitrarily selected and capriciously audited as to be worse than useless. It was this circumstance that had conferred such awesome power on a handful of investment bankers like J.P. Morgan, because they commanded a virtual monopoly of the information necessary for making sound financial decisions. Especially in the secondary markets, where reliable information was all but impossible for the average investor to come by, opportunities abounded for insider manipulation and wildcat speculation. ”

The Crash

Kennedy formed alliances with several other Irish-Catholic money men, including Charles E. Mitchell, Michael J. Meehan and Bernard Smith. He helped establish the Libby-Owens-Ford stock pool, an arrangement in which Kennedy and colleagues created a scarcity of Libby-Owens-Ford stock to drive up the value of their own holdings in the stock, using inside information and the public's lack of knowledge. Pool operators would bribe journalists to present information in the most advantageous manner. Attempts to corner stocks were made that would cause the price to go up, and bear raids could cause the price to collapse downward. Kennedy got into a bidding war seeking control of founder John Hertz's company Yellow Cab which is recounted in a book <2>.

Kennedy later claimed he knew the rampant stock speculation of the late 1920s would lead to a crash. It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy.<3>

It has been noted that during the Depression Kennedy vastly increased his financial fortune by investing most of his fortune in real estate. In 1929 Kennedy's fortune was estimated to be $4 million. By 1935, his wealth had increased to $180 million.

Not illegal in those days but a ruthless and aggressive businessman, it seems.

[HamdenRice]

7. Good point -- was it a crime before the SEC? Probably yes

I think there's a very good case to be made that Joe Kennedy engaged repeatedly in criminal fraud.

The problem in the 1920s was that there were no federal laws against securities fraud and there was a confusing welter of state anti fraud laws. FDR's Securities Act and Securities Exchange Act federalized securities fraud and clarified what was and wasn't fraudulent activity. It also created a whole series of new crimes, like insider trading.

So you're right that insider trading probably wasn't a crime when Kennedy did it, but I also think it's pretty clear that if the states had had the resources, info and capacity, they could have convicted him of criminal fraud.

What Kennedy did before the crash is well known beyond Wiki and has been written about extensively by many historians. It's not really in doubt.

[a la izquierda]

9. Sheesh, relax and read a history book.

My family worships the Kennedy clan, but it is true that Joseph Kennedy was quite the scheister.

[nc4bo]

6. I don't understand the outrage, seriously.

Who better to help get us out of this mess than the very ones who helped get us into it? He is a smart man who surrounds himself with smart people (even the shady ones), keeps an open mind and listens to a variety of opinions for intelligent, workable solutions.

Obama will be in 100% control and has proven he is his own man.

We should all just chill for a minute.

[HamdenRice]

8. This has nothing to do with Kennedy or Obama

The poster in question is angry about issues and positions taken in other threads.