Columnist Kinsley Promotes Real Tax Reform
|June 26, 2012||Posted by Jeffery J. Smith under News|
The parasites feasting on you are identified and so is the one economist who once had a movement for justice pushing forward. We trim, blend, and append four 2012 articles from: (1) Common Dreams, Jun 12, on conflicts of interest; (2) ThinkProgress, Jun 24, on Morgan by P. Garofalo; (3) Reader Supported News, Jun 18, on petro handouts by R. Redford; and (4) Bloomberg, Jun 13, on Henry George by columnist by M. Kinsley.
by Common Dreams, by Pat Garofalo, by Robert Redford, and by Michael Kinsley
Federal Reserve Directors’ Banks and Businesses Took $4 Trillion
Action taken by the Federal Reserve overwhelmingly benefited directors of the Federal Reserve, above other beneficiaries.
“This report – Jamie Dimon Is Not Alone — reveals the inherent conflicts of interest that exist at the Federal Reserve,” US Senator Bernie Sanders (I-Vt.) said. “The Fed was providing trillions in near zero-interest secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks. These conflicts must end.”
The GAO study found that allowing members of the banking industry to both elect and serve on the Federal Reserve’s board of directors creates “an appearance of a conflict of interest” and poses “reputational risks” to the Federal Reserve System.
In Dimon’s case, JPMorgan received some $391 billion of the $4 trillion in emergency Fed funds at the same time his bank was used by the Fed as a clearinghouse for emergency lending programs. In March of 2008, the Fed provided JPMorgan with $29 billion in financing to acquire Bear Stearns. Dimon also got the Fed to provide JPMorgan Chase with an 18-month exemption from risk-based leverage and capital requirements. And he convinced the Fed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired the troubled investment bank.
Another conflict involved Stephen Friedman, the former chairman of the New York Fed’s board of directors. Late in 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap loans from the Federal Reserve. During that period, Friedman sat on the Goldman Sachs board. He also owned Goldman stock, something that was prohibited by Federal Reserve conflict of interest regulations. Although it was not publicly disclosed at the time, Friedman received a waiver from the Fed’s conflict of interest rules in late 2008. Unbeknownst to the Fed, Friedman continued to purchase shares in Goldman from November 2008 through January of 2009, according to the GAO.
In another case, General Electric CEO Jeffrey Immelt was a New York Fed board member at the same time GE helped create a Commercial Paper Funding Facility during the financial crisis. The Fed later provided $16 billion in financing to GE under this emergency lending program.
JJS: Focus on just one of the Wall Street banks.
JPMorgan Gets $14 Billion a Year From the US Government
The privilege that JPMorgan Chase receives from the government — the bank may borrow money at lower rates than other, less systemically risky banks — constitutes a subsidy worth about $14 billion a year, according to the International Monetary Fund. The extra money helps the bank pay big salaries and bonuses.
The estimated dollar value of the subsidy to the country’s 18 largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc, is about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.
JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the bank’s multibillion-dollar trading loss.
At Senate hearings, the Senators all but grovel at Dimon’s feet.
As Bloomberg’s editors put it, “when Dimon pushes back against [regulations like] capital requirements or the Volcker rule, it’s worth remembering that he’s pushing for a form of corporate welfare that, left unchecked, could lead to a crisis too big for the government to contain.”
JJS: Bankers aren’t the only insiders to get free trillions from us.
Stop Public Handouts to Oil, Gas, and Coal
Every year, around the world, almost one trillion dollars of subsidies is handed out to help the fossil fuel industry. Who came up with the crazy idea that the fossil fuel industry deserves our hard-earned money, no less in economic times of such harsh human consequence? We cut budgets for fire teachers, police, and firemen and yet the fossil fuel industry can laugh all the way to the bank on our dime?
We pay more at the pump. We pay in taxpayer subsidies to a highly profitable industry. And we pay in the rising costs of climate change in the form of floods, storms, and droughts. Fossil fuels are literally cooking our planet, polluting our air, and draining our wallets. Why should we continue to reward companies to do that?
Politicians have made commitments to stop these unnecessary payouts. But commitments need to become action to have any meaning. In poll after poll after poll, the public says they want more renewable energy and less fossil fuels. Over a million people have already signed onto a petition to end fossil fuel subsidies. We need the fossil fuel industry to stop asking us to pay them and governments to #endfossilfuelsubsidies.
JJS: Those subsidies lie at the root of income inequality. Rather than pay them, one Bloomberg columnist suggests do the opposite and tax the source of undue fortune — land and resources.
Inequality: It’s Even Worse Than We Thought
Let me tell you about my favorite economist, an American named Henry George, who died in 1897 at the age of 58. He once ran for mayor of New York. He lost.
George would look at our present situation and ask: In what sense were we richer three or four years ago, when the exact same housing stock sold for up to twice as much? In what sense are we poorer now?
George’s solution to everything was to eliminate all taxes on working, saving and investing, and to put the entire tax burden on unproductive land, which can’t escape the tax by moving. I don’t have room to do George justice, but take a look at his masterwork, “Progress and Poverty.” For an economics tract, it’s actually a fun read.
JJS: While George’s book sold millions of copies, do keep reading the modern analyses you find here, too — and maybe you’d like to write one.