Why Harry Reid Busted Mitt Romney

There he goes again. When Harry Reid gets badass, the Beltway press corps have to pay attention. So of course, he's making them pay attention to this.

“[Mitt Romney] not only couldn’t be confirmed as a cabinet secretary, he couldn’t be confirmed as dog catcher,” Reid told reporters at a Capitol press briefing, in response to a question from TPM. “Because a dog catcher, you’re at least going to want to look at his income tax returns.”

“The long report that we have in the Boston Globe today indicates that, as one of his own employees said, it doesn’t make sense,” Reid continued. “He said he left Bain to go to the Winter Olympics in Salt Lake City and stopped any association with Bain. But his SEC filings indicated that he was Chief Executive Officer, sole stockholder, and ran the corporation for at least 3 more years. And that’s why people who say there’s been advertisements where businesses were closed, people laid off - and he says oh I wasn’t there, I left in 1999. As his own operative said, it doesn’t make sense. And it doesn’t.”

Reid said the issue is important because Bain was accused of being involved with outsourcing jobs in those ensuing years, and Romney’s campaign has argued that he had left by then.

Senator Reid was talking about this explosive Boston Globe story debunking Mitt Romney's claim that he wasn't in charge of Bain Capital when his company began massive layoffs early last decade. While Romney claimed he left Bain in 1999, the documents Bain Capital filed with the SEC listed Romney as 100% owner and CEO, and that Romney earned a $100,000 annual salary in 2001 and 2002 on top of his Bain investment earnings.

So why does this matter? Here's why.



Need more details? Read this from Kevin Drum.

SEC documents show that he was CEO and owner of the firm between 1999 and 2002. In a political context, there's just no way to weasel your way around that, and Romney is going to look increasingly weaselly if he tries. Your average Joe sees a multi-gazillionaire trying to claim that he was only technically CEO and isn't reponsible for what happened during his technical CEO-ship. That's like a Mafia don taking the Fifth. It's not going to fly, especially from a guy who's constantly yammering away about personal reponsibility and accountability.

So Romney has a problem, and he'd better figure out a better way of dealing with it than releasing increasingly tortured explanations of the definition of "CEO." Voters want a president who takes responsibility, not one who tries to blame other people when something goes wrong.

And while we're on the subject, check out David [Corn's] latest piece on Bain's investment in a Chinese manufacturing company that "depended on US outsourcing for its profits—and that explicitly stated that such outsourcing was crucial to its success." This happened in 1998, when Romney was unequivocally in charge. This stuff is piling up, and it doesn't look very salt-of-the-earth to those independent blue-collar voters Romney is so anxious to court. He'd better figure out an answer.

And speaking of David Corn's explosive Mother Jones article, it reveals even more lurid details on what Mitt Romney was doing at Bain Capital... And another outfit that's just starting to make headlines.

On April 17, 1998, Brookside Capital Partners Fund, a Bain Capital affiliate, filed a report with the Securities and Exchange Commission noting that it had acquired 6.13 percent of Hong Kong-based Global-Tech Appliances, which manufactured household appliances in a production facility in the industrial city of Dongguan, China. That August, according to another SEC filing,Brookside upped its interest in Global-Tech to 10.3 percent. Both SEC filings identified Romney as the person in control of this investment: "Mr. W. Mitt Romney is the sole shareholder, sole director, President and Chief Executive Officer of Brookside Inc. and thus is the controlling person of Brookside Inc." Each of these documents was signed by Domenic Ferrante, a managing director of Brookside and Bain. [...]

At the time Romney was acquiring shares in Global-Tech, the firm publicly acknowledged that its strategy was to profit from prominent US companies outsourcing production abroad. On September 4, 1998, Global-Tech issued a press release announcing it was postponing completion of a $30 million expansion of its Dongguan facility because Sunbeam, a prominent American consumer products company and a major client of Global-Tech, was cutting back on outsourcing as part of an overall consolidation. But John C.K. Sham, Global-Tech's president and CEO, said, "Although it appears that customers such as Sunbeam are not outsourcing their manufacturing as quickly as we had anticipated, we still believe that the long-term trend toward outsourcing will continue." Global-Tech, which in mid-1998 announced fiscal year sales of $118.3 million (an increase of 89 percent over the previous year), also manufactured household appliances for Hamilton Beach, Mr. Coffee, Proctor-Silex, Revlon, and Vidal Sassoon, and its chief exec was hoping for more outsourcing from these and other American firms.

And in case that isn't damning enough...

Brookside downsized its Global-Tech holdings later in 1998. An SEC filing submitted on December 21, 1998, reported that the Bain affiliate now controlled only 4.63 percent of the company's shares. But Brookside was sharing its stake in Global-Tech with Sankaty High Yield Asset Investors LTD—a Bermuda-based corporation of which Romney was the "the sole shareholder, a director, and President." That is, Romney had split his Global-Tech holdings between two of his various business entities. (The SEC filing doesn't indicate why he did that.)

Sankaty is a story in itself. It was recently the focus of an Associated Press investigation that reported that Sankaty "is among several Romney holdings that have not been fully disclosed" and that there is a "mystery surrounding" Sankaty. Reporting on this Romney entity, Vanity Fair noted that "investments in tax havens such as Bermuda raise many questions, because they are in 'jurisdictions where there is virtually no tax and virtually no compliance,' as one Miami-based offshore lawyer put it." With Sankaty, Romney was using a mysterious Bermuda-based entity to invest in a Chinese firm that thrived on US outsourcing.

Wow. This is even worse than I had originally thought. I just knew that Mitt Romney was/is a vulture capitalist who profited from destroying American jobs. Now we know he's caused even more damage to our economy by outsourcing formerly American jobs to China AND by hiding his money in offshore Bermuda based investments!



But really, should we be surprised? This truly is the Mitt Romney way. He makes money while American workers suffer.Desert Beacon warned us back in May. His voodoo economics, as well as his embrace of just plain voodoo emanating from Donald Trump's ass, should have been enough of a warning for us.

And this is why Harry Reid said what he said this morning. Mitt Romney can't be trusted to speak the truth on his own financial records. Mitt Romney can't be trusted to protect American jobs. Mitt Romney can't be trusted to stick to the same position on anything. Is there anything Mitt Romney can be trusted on?

The Bain of Romney's Campaign

It's here. OFA launched RomneyEconomics.com earlier this week, reminding America of what Mitt Romney wanted us all to forget when his G-O-TEA primary opponents stumbled upon Romney's history of job destroying "vulture capitalism".



Remember that? Remember Bain Capital? Romney was hoping you'd forget, but his record can't stay hidden or forgotten altogether. After all, Romney's fellow Republicans were first to point out Romney's record of destroying American businesses and taking away Americans' jobs.



But now, Mittens' Bain scandal is looking even worse. Rural Northern Nevada can be added to the growing list of communities hit hard by Bain.

[...] Between 2000 and 2002, Stage Stores, a clothing chain, shut down three stores in rural Nevada as part of a bankruptcy.

The stores’ closures came after Bain Capital had sold off its interest in the company in 1999. Obama’s campaign said the chain had been saddled with debt after an aggressive expansion under Bain, and after Bain made $170 million profit from the investment.

Nationally, 5,795 workers at Stage, which sells name-brand clothing in small to mid-sized cities, were laid off between 1999 and Feb. 2002, according to the Obama campaign.

It’s unknown how many workers were laid off in the Nevada stores in Winnemucca, Elko and Fallon.

In Winnemucca, 166 miles northeast of Reno, Rich Stone, owner of a dry cleaner next to the former Stage Store, remembers the retailer as a fine fit for the community.

Since it closed, residents of the small town of 8,900 and surrounding Humboldt County can’t buy non-Western-themed clothes there. They have to travel to Reno or shop online, Stone said.

“It’s a void,” said Stone, who is also a city councilman and a Republican. “We lose a lot of sales tax revenue.”

Stone then added that this was just "capitalism" and no one should expect "welfare". Actually, no one there was. However, what consumers were hoping for was another option for clothes shopping. And what local workers were hoping for was an employer willing to treat them right and simply reward them for the hard work they put into those stores. It looks like Bain did neither when it bankrupted Stage Stores and forced it to close Stage's Nevada locations.

As Desert Beacon has said before, the "capitalism" that Romney practiced at Bain Capital is not the kind of capitalism our Founding Fathers wanted for America. Rather, Romney practiced "financialism" that enriched himself and fellow Bain executives while impoverishing formerly middle class American workers. While Bain had one of the "best track records" in making Wall Street plenty of money, it's also had one of the "best track records" in giving workers the shaft.



Do these workers look like they're after "welfare" and "handouts"? No. They just did a good job... And they lost their jobs as soon as Bain lost interest and moved onto other companies to pump up to destroy. And no matter how hard Mitt Romney tries to hide this from the American people, he can't change the facts and he can't make history go away.

Reno Isn't Goldman Sachs' Only ARS Victim

Yesterday, News 4 Reno did a quick piece on it.



But as we discussed yesterday, there's far more to this story than what initially meets the eye. Apparently, Goldman Sachs convinced Reno to issue $210 million in "auction rate securities" that ultimately cost the city far more than Goldman told them once the 2008 financial crisis hit and the "auction rate securities" (ARS) market turned out to be far less stable than Goldman claimed it was. In fact, it looks like Goldman has run into trouble on this issue before.

Last year, Goldman Sachs had to settle a law suit with Colorado's Division of Securities and buy back over $5 million worth of ARS after investors there complained about their inability to sell once the ARS market was frozen. And after New York's Attorney General began investigating Goldman in August 2008 over concerns that they pushed Fidelity Investments to sell Goldman underwritten ARS to investors, Fidelity agreed less than a month later to buy back $300 million worth of ARS from its customers.

Back in February 2008, just as the entire ARS market was starting to crash, The New York Times probed what was happening behind the scenes... And did this story that sounds awfully prophetic today.

In 2006, the Securities and Exchange Commission reached a $13 million settlement with 15 investment banks, and the industry agreed to impose a voluntary code of conduct for the auction-rate market.

The S.E.C. investigation centered on how bidding was conducted for these securities. Critics complain that investment banks have the upper hand in bidding because they can bid after seeing what other investors have bid.

Brokerage firms are not legally obligated to make a market in auction securities, or give clients a price even if there is not one in the market. But clients who are unable to sell are likely to argue that they were wrongly put into long-term securities when their intention was to buy shorter-term debt.

“If these were pitched as cash equivalents, if that is what the broker said they were, the banks may be held responsible for losses and clients’ inability to get their money out,” said Jacob H. Zamansky, a securities lawyer who represents individual investors.

Goldman Sachs and Merrill Lynch declined to comment.

The situation is an awkward one for investment banks and brokers that have had to tell clients that their cash is frozen until at least the next auction — if not longer. One affluent New Jersey family has sued Lehman Brothers for the declining value of its cash in auction-rate securities. Lehman has said it acted properly.

Money managers, chief executives and individual investors have been swept up by the latest turmoil in the credit markets. One wealthy investor said Goldman Sachs had sold him auction-rate securities and had described the instruments as equivalent to cash.

“It’s a moral outrage,” said this investor, who asked not to be named because he still has to deal with the bank. “Their pitch was, keep your cash with us, we get a higher rate.”

And this brings us back to Reno. Remember that in 2005 and 2006, Goldman Sachs was telling the City of Reno that ARS were essentially as good as gold when Goldman convinced Reno to issue that $210 million in ARS for the events center and railroad trench projects.

The city is seeking arbitration against the bank through the Financial Industry Regulatory Authority (basically, a private court for financial institutions), “to recover the damages it sustained due to Goldman’s misrepresentations and omissions” when the city issued the bonds in 2005 and 2006 for its downtown events center and railroad trench projects, according to complaint filed in February. Those bonds were issued on the so-called “auction rate securities” market, which collapsed amid the global financial meltdown in February 2008. [...]

Cities figured that would result in lower interest rates over time and investors thought they could get a liquid investment at higher interest rates compared to other liquid investment options like money market funds.

What cities and investors didn’t know, according to state and federal court filings against banks involved in the auction rate securities market, was the extent the market relied on the financial institutions to keep it running.

In other words, the banks were keeping the market alive by bidding on the bonds, too — and didn’t tell anyone. So when the banks stopped making those bids in February 2008 as the credit crunch began to squeeze the financial system, Reno’s interest rates spiked on the downtown events center bond and forced the city to drain a $5 million reserve fund to cover interest payments that jumped to 15 percent overnight. The city was also forced to pay millions of dollars in fees to the bank to refinance the debt.

Reno’s filing with FINRA says had the city known the market was so dependent on banks like Goldman Sachs — the Biggest Little City’s big bank of choice throughout much of aughts — it would have thought twice about issuing the debt on the auction rate securities market.

“…Goldman’s actions, misrepresentations and omissions demonstrate that it dd not deal fairly with Reno, and as a result Reno sustained extensive damages,” according to Reno’s filing.

So Reno thought that ARS would save them money over a traditional bond sale while still providing the city with needed funding for its infrastructure projects because Wall Street powerhouse firm Goldman Sachs told the city so. And investors thought ARS were "solid and safe" because Goldman Sachs told mutual fund providers like Fidelity to tell them so. What neither side knew was that both sides were being played as "Muppets", as former Goldman Sachs insiders Greg Smith and Jacki Zehner would later admit.

Here's Greg Smith in his own words (from his own New York Times Op-ed):

What are three quick ways to become a leader [of Goldman Sachs]? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus,God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

So the City of Reno may just be one of a multitude of ARS victims played by Wall Street "vulture capitalists" like Goldman Sachs. The Reno case just may be the first time that a municipality convinced into selling ARS seeks compensation for subsequent losses. And strangely enough, Reno may now be providing the Occupy/99% movement with something far more valuable than a pool complex to organize around.

Reno v. Goldman Sachs

We know Reno is still enduring some tough times. Gaming has been struggling (although the February gaming numbers suggest a turnaround may finally be underway), and employment recovery seems to be lagging behind Southern Nevada. And even the city itself has had to struggle with its finances. However, the City of Reno is now claiming that its financial problems were caused by something deeper than just the business cycle.

Yesterday, Reno announced its plans to sue Wall Street powerhouse Goldman Sachs over $210 million in supposedly "safe" bonds that Goldman persuaded Reno to issue... $210 million in "auction rate securities" that ended up essentially junked once the 2008 Global Financial Crisis triggered "The Great Recession".

Joe Peiffer, an attorney with the New Orleans-based law firm Fishman Haygood Phelps that was hired in December to represent Reno, said Wednesday those damages could total into the “multiple millions” of dollars.

He said Goldman Sachs withheld key information when it told Reno to issue bonds on the $330 billion “auction rate securities” market that ultimately fizzled in 2008 amid the global financial crisis.

“The problem was they weren’t told everything (they) needed to know to understand the risk,” Peiffer said. “It was something the banks knew and didn’t tell the cities.”

As a result of the market crash, Reno’s interest rates spiked, forcing the city to scramble to refinance through Goldman Sachs, which also served as Reno’s underwriter and broker-dealer for the bonds.

That resulted in millions in extra fees and interest payments.

This included the city draining a $5 million reserve fund to cover interest payments on the event center debt after the interest rate jumped to 15 percent and an $8 million termination fee it paid Goldman to fix the downtown trench debt.

So what exactly happened? Let me... No, I'll let RGJ's Brian Duggan explain.

So what exactly is an “auction rate security”?

It’s a relatively complex financial instrument that has been around since the 1980s (and first introduced to the municipal market in 1988 by Goldman Sachs, according to the New York Times). It allowed municipalities to issue long term debt at short-term interest rates by resetting the rate every seven to 35 days in a formalized bidding process.

Cities figured that would result in lower interest rates over time and investors thought they could get a liquid investment at higher interest rates compared to other liquid investment options like money market funds.

What cities and investors didn’t know, according to state and federal court filings against banks involved in the auction rate securities market, was the extent the market relied on the financial institutions to keep it running.

In other words, the banks were keeping the market alive by bidding on the bonds, too — and didn’t tell anyone. So when the banks stopped making those bids in February 2008 as the credit crunch began to squeeze the financial system, Reno’s interest rates spiked on the downtown events center bond and forced the city to drain a $5 million reserve fund to cover interest payments that jumped to 15 percent overnight. The city was also forced to pay millions of dollars in fees to the bank to refinance the debt.

Reno’s filing with FINRA says had the city known the market was so dependent on banks like Goldman Sachs — the Biggest Little City’s big bank of choice throughout much of aughts — it would have thought twice about issuing the debt on the auction rate securities market.

So long story short, this was just another one of Wall Street's "Get rich quick!" schemes that had municipal governments thinking they were getting a great deal on bond revenue when they were really just getting hosed. And believe it or not, a former Goldman Sachs executive has at least suggested that his former employer hosed Reno. In fact, Greg Smith, the former Goldman Sachs executive director who ran the firm's US equity derivatives business in Europe, the Middle East, and Africa took to The New York Times' Op-ed page last month to blow the whistle.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

Shortly after Smith left Goldman Sachs, Jacki Zehner, the youngest trader and first female trader to make partner in the firm, stepped forward to confirm Greg Smith's account of what happened at Goldman Sachs. And Zehner actually expressed regret over Goldman Sachs' creation and sale of "so much junk" in the form of "mortgage backed securities", credit default swaps, and auction rate securities that duped so many clients and investors and led to the 2008 financial collapse.

So much junk was created that should never have been with disastrous consequences and that will be a black mark on the whole industry for a long time, as it should be. That in and of itself is testimony to the industry in general having lost its way. When you create toxic waste and market it as if it is was not, you are indeed harming your moral fiber. I know many people who were in ‘that business’ who quit because they could not in good faith sell the crap they were being asked to create and market.

Last year, the Occupy/99% movement sprouted as a protest against Wall Street greed run amok. Back in October, Occupy Las Vegas famously made a mark on the CNN/Western Republican Leadership Conference Presidential Debate.



And of course, this was the same week that Mitt Romney infamously declared that no one should try to stop home foreclosures. Romney and his affiliated PACs have received over $1 million from Goldman Sachs so far this cycle, and he's responded with calls to repeal the kind of financial regulations that curb the kind of "so much junk" that Goldman Sachs has profited from.

Until last month, Goldman Sachs was becoming controversial because of its role in the mortgage meltdown and real estate collapse. But now, we're seeing another way that Goldman made money while putting people at risk. Now, we're seeing an entire city in crisis.

I'm sure we'll be hearing about Reno's "reckless fiscal policy" in the coming days. And yes, the City of Reno may not entirely be blameless in green-lighting this scheme to score "easy money" and avoid making tough decisions on revenue. However, I also have a hard time seeing how Reno could have done this on its own without Goldman Sachs "whispering sweet nothings" in city leaders' ears. It's increasingly looking like Wall Street's top financial powerhouse had a key role in Reno's present crisis at City Hall. We'll have to see how liable Goldman is ultimately held for this, but for now we're reminded again of what happens when we carelessly brush off regulation and oversight to let the financial industry make up its own rules.

So Sharrontology Supports Military DICTATOR's Plan to Eliminate Social Security?

I'm almost speechless...

Sharron Angle is further clarifying her calls for the privatization of Social Security, saying that Chile has done it successfully. That is, Angle is now speaking favorably of a system that was enacted by a military dictator.

"So when I said private, that's what I meant -- that I thought we would have to go just to the private sector just for a template on how this is supposed to be done," Angle told the CBS affiliate in Las Vegas. "However, I've seen been studying, and Chile has done this."

The station noted that Chile's private pensions system, which was originally enacted by the military dictator Augusto Pinochet, has been criticized for being subject to market volatility, though its proponents argue that it gives all citizens a stake in the market.

Well, almost. This is simply ridiculous! For all Sharron Angle's talk of Democrats "taking away our freedoms", she's now copying ideas from a brutal military tyrant who overthrew Chile's democratically elected government in 1973! Is this what Sharron Angle means when she talks about "Second Amendment Remedies"?



This is the reality of what happened to Chile thanks to Pinochet.



And this is the reality of how Pinochet's privatized pension program did NOT work... Unless you consider impoverishing seniors and adding additional unnecessary costs to the federal governent "working".

A quarter of a century since privatization took effect, Chilean's retirement security is on shaky ground. Recent reports by the World Bank and the Federal Reserve have highlighted some of the many problems with Chile's system. A combination of high management fees, low participation rates, unexpectedly heavy dependence on an inadequate safety net, and prohibitively high costs to government have led the system along a path of failure and left many Chilean workers with no reliable retirement plan. Is this really the model the United States hopes to replicate?

There are prohibitively high expenses and fees. Voracious commissions and other administrative costs have swallowed up large shares of personal accounts. It is estimated that roughly 28 to 33 percent one-quarter to one-third of contributions made by employees retiring in 2000 went toward fees.

• The brokerage firm CB Capitales calculated (see English language discussion by Stephen Kay of the Federal Reserve Bank of Atlanta here) that when commission charges are taken into consideration in Chile, the total average return on worker contributions between 1982 and 1999 was 5.1 percent-not 11 percent as calculated by the superintendency of pension funds. That report found that the average worker would have done better simply by placing their pension fund contributions in a passbook savings account.

There are low participation rates. Half of Chileans, primarily the poorest, do not contribute to a pension fund at all. The New York Times notes, "Many [Chileans]—because they earned much of their income in the underground economy, are self-employed, or work only seasonally—remain outside the system altogether. Combined, those groups constitute roughly half the Chilean labor force. Only half of workers are captured by the system."

• Even the military does not participate in the privatized system. While the military imposed the private accounts on all other workers entering the labor force after 1981, it continues to receive pensions under the old, favored governmental system.

There is unexpectedly heavy dependence on an inadequate safety net. Stephen J. Kay of the Federal Reserve Bank of Atlanta recently found that investment accounts of retirees are much smaller than originally predicted-so low that 41 percent of those eligible to collect pensions continue to work.

• The New York Times revealed in an article earlier this year that under the old pay-as-you-go system, the maximum monthly benefit is $1250. Under the privatized system, a worker would have to contribute more than a quarter of a million dollars over the course of his or her career to receive as much in retirement benefits each month. Just 500 of the seven million participants in private accounts, has been able to do so.

There are unexpectedly high transition and supplementary costs. The transition costs of shifting to a privatized system in Chile averaged 6.1 percent of GDP in the 1980s, 4.8 percent in the 1990s, and are expected to average 4.3 percent from 1999 to 2037. Those costs are far higher than originally projected, in part because the government is obligated to provide subsidies for workers failing to accumulate enough money in their accounts to earn a minimum pension.

Oh, and another thing... Chile has been moving AWAY from this failed privatized system because IT DOESN'T WORK! That's why Chile began discussing reform in 2006 in the form of implementing guaranteed benefits for people left out by the private system.

The new $2 billion-a-year program will expand public pensions to groups left out by private pensions - the poor and self-employed, homewives, street vendors and farmers who saved little for rResponding to growing complaints that the privatized pension system here is failing to deliver adequate benefits, the Chilean government has recommended that it be supplanted by a system in which the state would play a much larger role. The current system is a favorite of free-enterprise enthusiasts, including President Bush.

The changes, part of a reform package scheduled to go to Congress early next year, include a guaranteed minimum pension for the country's poorest citizens, even those who have never contributed to the private system. [...]

In recent years, that pioneering privatized system has been emulated by a score of other countries and praised by leaders of many others. Mr. Bush, for example, proposed using the Chilean model as the basis for a reshaping of Social Security, calling the system here ''a great example'' and saying the United States could ''take some lessons from Chile.''

But dissatisfaction with the inability of the system to provide the benefits promised when Gen. Augusto Pinochet imposed it in 1981 has been rising, and became an issue in this year's presidential campaign.

As things now stand, about half the Chileans in the labor force will not qualify for a pension or will receive only a minimum payment, for a variety of reasons that include their not having paid into the system for the minimum 20 years.

So now, it looks like this.

[Sharron] Angle referred to Chile on Thursday in North Las Vegas while explaining previous statements that the United States should phase out its current system.

However, the pension system established in 1981 by right-wing Chilean dictator Augusto Pinochet is no longer a fully private system.

Chile's system was revamped in 2008 to expand public pensions for groups left out of its system, including low-income seniors.

The tea party favorite challenging Democratic Senate Majority Leader Harry Reid says the current U.S. system is broken.

Reid and Democrats say Angle's ideas about Social Security are extreme.

So the fact of the matter here is that Military Dictator Augusto Pinochet scrapped the public pension program favored by the previous democratically elected government (that he violently overthrew against the will of the people!), and instead pushed for this privatized system that ended up denying benefits to nearly half of the Chilean people, costing the Chilean government far more than Pinochet's economic advisers had originally promised, and ultimately had to be reformed in 2008 (in the form of restoring public pensions, creating something similar to the Social Security benefits we enjoy here!) so fewer Chileans would have to "retire" to abject poverty. George Bush tried to shove this miserable failure down our throats in 2005, but it didn't work. However, Sharron Angle and her fellow "Tea Party, Inc." extremists are now trying to distort the facts on Social Security to try to scare us into copying Chile's mistakes! What the hell are they thinking!



I guess this is why more and more Nevada seniors want to stick with the sane, proven, sensible leadership of Harry Reid.



Last I checked, I never heard him endorsing insane and unworkable Social Security privatization schemes copied directly from some brutal, tyrannical Latin American military dictatorship!

Thanks, Senator Reid...

Sometimes, it takes some silly political ad to get one thinking. And you know what? To paraphrase Vice President Joe Biden, this newly passed financial regulatory reform really is a big f*cking deal. And why the hell would we want to get rid of it before we even see it put to work?

Do we really want to repeal the Wall Street reform law before the ink is dry? Do we want depository institutions like commercial banks and bank holding corporations to gamble with proprietary funds so that when they create another bursting bubble we'll have to bail them out again? Don't we want something like Title III section 214 that says no taxpayer funds can be used for bank liquidation? We don't want an audit of the Fed for the period between 2007 and 2008 pertaining to its actions during the financial crisis? I thought these items were considered important features of regulatory reform.

Would we like to repeal the creation of the Consumer Financial Protection Agency, and go back to the "old ways" in which mortgage agents could generate "no-doc" (liar's loans) and other highly questionable financial products? Do we want to go back to the bad-old-days when over the counter derivatives were unregulated and not required to be sent through some form of clearing house? [FT] Do we like being gouged by exploding interest rates and fees?

Some of the bill's critics are correct in saying that it won't absolutely, positively, guaranteed 100%, prevent the next Wall Street manufactured credit calamity. However, it's a whole lot better than the current system which just about guarantees absolutely positively 100% that Wall Street -- left to its own devices -- will create another whopper of a mess. At the very least they'll be playing with their own money, and the taxpayers won't have to clean up after them.

The Republican offering was to create a voluntary financial industry panel of some sort to "oversee" banking and credit operations... We had a good look at how well the financial industry policed itself from 1999-2007, and it wasn't pretty. Reid spokesman Jim Manley summed things up: "The ink hasn’t even dried yet on our bill that takes away big banks’ ability to gamble away our jobs, savings and houses, and Republicans already want to give it back. This is the Republican job-killing agenda in full effect: they want to go back to the system that cost 8 million Americans their jobs because that’s what their friends on Wall Street want, and that’s who they’re looking out for.” [DemSen] Once more, the essential question is simple: Which side are you on? Working Americans? Or, Wall Street financial corporations?

Since of course, Sharron Angle would have rejected any effort to rein in Wall Street greed run amok... Even if we (again) had to bail them out on our taxpayer dime.

So thank you, Harry Reid, for delivering financial regulatory reform that starts to right that badly wronged Wall Street ship... And for health care reform, and for unemployment aid, and for all the Recovery Act aid that meant local jobs in my community AND much improved roads, and for fighting against ridiculous boondoggles like the Yucca Mountain dump and Sloan Hills gravel pit... And, well, the list goes on.

It's really nice to have one Senator who puts Nevada's best interest over the big Wall Street corporate interests.

And by the way, if you don't think Reid has been all that perfect (he's not) or progressive, think of what Sharrontology Obtuse Angle would do. She's in the pocket of the Wall Street corporate interests and California Republican operatives pulling all the strings at Tea Party, Inc.

Again, why would we want that?

NV-03: Thanks, Dina, for Making BofA Do Its Job

Below is a special message from Rep. Dina Titus (D-What a Real Promise-keeper Looks Like) on the new Bank of America homeowner assistance center opening here in Henderson. She, Senator Reid, and some good folks in the Legislature all worked to make this happen... And thank goodness they did! It's about damned time that homeowners doing their due diligence to save their homes get the help they need and deserve.

So thanks again, Dina. You're the best! :-)

Dear Andrew Davey, I wanted to make sure you heard the news that after months of pressuring Bank of America to do more for our community and focus more of their staff and resources in Southern Nevada, Bank of America opened an office in Henderson today. The office will be open from 10 a.m. to 7 p.m. Monday through Friday and will be staffed with five counselors.  You can call toll-free 877-345-6416 to schedule an appointment with them to discuss your situation.  Please be aware that this site is not designed to handle walk-in traffic and will only meet with homeowners by appointment in an effort to ensure that people bring the proper documents and to minimize waiting time. I have heard a number of stories from Southern Nevadans who have struggled to get the help they need from Bank of America.  From lost paper work to unreturned calls, folks are frustrated with Bank of America’s efforts, and I share that frustration.  Since I became your representative, I have worked hard to hold Bank of America accountable, urging the bank to do more in Southern Nevada.  I hope that the opening of the first of two offices in Southern Nevada will mark a turning point in its commitment to address the foreclosure crisis in our community. Please know that I will continue my efforts, from working individually with homeowners facing foreclosure to holding housing workshops, and I will continue to monitor the effectiveness of Bank of America’s actions.  Do not hesitate to contact my district office, 387-4941 if I can be of help. Sincerely, Dina Titus

Meanwhile, Harry Reid Actually Gets Stuff Done...

OK, so it's been hard lately for me to take my eyes off the trainwreck that Suzy Lowdown's campaign has become along with Batsh*t Crazy Sharron Angle catapulting her way to the top of her party so rich with embarrassments. But apparently today, the guy who actually is our Senator delivered some good news.

After failing yesterday to get the 60 votes they needed to bring debate on a historic financial reform bill to a close, Senate Democrats succeeded in this afternoon's cloture vote.

The final vote today was 60-40 (yesterday it was 57-42). Next up is a final vote on passage, which is expected to take place within days.

After today's vote, Senate Majority Leader Harry Reid said there are "a couple of amendments that are germane post-cloture, but they're the ones that we have to figure out a way to get resolved."

"We're going to try to work through this," Reid said, adding that there may be more votes this afternoon.

"Best of all worlds, we'd finish this thing and move onto other issues," Reid said. "We're gonna try to do that."

Sure, financial regulatory reform isn't perfect... But at least it looks like we'll have a chance to see votes on amendments to strengthen the bill tomorrow. Hope isn't all lost. Rather, we have a chance to finally see some kind of overhaul in our financial system to prevent any more "too big to fail" catastrophes like what we saw in 2008.

Oh, and did you hear about this?

Stimulus funds will have created or saved 5,600 construction jobs by the end of the year, according to a press release issued yesterday by the Nevada Department of Transportation.

The American Recovery and Reinvestment Act, the release says, has provided about $201 million in funding for road construction in Nevada, and 90 percent of the funds have already been contracted out to construction companies.

The release states that 32 ARRA-funded projects are currently underway in the state, and an additional six will begin by the end of May. After the rest of the projects begin over the course of summer and fall, a total of 69 road projects will have used stimulus funding.

Stimulus money has provided funding for numerous road preservation projects throughout the state, funding for landscape projects along the U.S. 95 in Las Vegas and the 395 in Carson City, and partial funding for a new interchange at the 395 and Meadowood Way in Reno. A full list of projects, last updated in January, can be found on the NDOT website.

The majority of the funds — $134 million – have been allocated for work on state highways. An additional $40 million was allocated to Clark County, where about 30 projects were funded by Federal stimulus money. $9 million was allocated to Washoe county, $11 million to rural areas and $6 million to numerous “enhancements.”

But wait, haven't the GOoPers been calling the Recovery Act "porkulus"? So that "pork" meant money for roads and some 5,600 much needed jobs? So Harry Reid was right in pushing to pass the Recovery Act?



The difference can't be any clearer. Whoever the GOoPers ultimately decide upon, he or she will be campaigning AGAINST the very measures that are now pulling us out of the worst recession since the 1930s and into economic recovery. Senator Reid actually worked to pass these very measures that are bringing about a turnaround.

Now why would Nevada want to settle for less? I don't think we do. :-)

Wall Street: Financial Regulatory Reform Getting a Full Senate Vote Soon?

Remember that thing called financial regulatory reform? Also referred to these days as Wall Street Reform? Well, Harry Reid hasn't... And he's trying to get a Senate floor vote ASAP this week. However, some Senators aren't making this easy.

Leadership wants every Democrat, and at least one Republican on board, but at this late hour it's not clear they have either. Feeling burned by leadership, and dubious that the legislation reaches far enough to truly rein in excess on Wall Street, Sen. Byron Dorgan (D-ND) has threatened to join the filibuster, unless his amendment that would ban trading in naked credit default swaps gets a vote on the floor. Discussions between Dorgan and other leaders continues, but thus they remain at an impasse.

On the other side, GOP leaders would like more than anything to draw out floor action a bit longer. When Reid moved three weeks ago to bring the bill to the floor, Republicans held together for several days, repeatedly voting to delay the debate, but finally relented when moderates made it clear they wanted the filibuster to end. A repeat performance could be in order, though many of the same moderates, including Sens. Susan Collins (R-ME) and Olympia Snowe (R-ME), have seen their amendments adopted in the past several days.

The top financial reform negotiators, Sens. Chris Dodd (D-CT) and Richard Shelby (R-AL), have been putting together a final package of changes to round out the debate, and it is likely to scale back the bill's title regulating derivatives trading. That section of the legislation was authored by Sen. Blanche Lincoln (D-AR), who's in a closely contested primary and has been guarding her left flank--including by proposing tougher-than-expected derivatives rules. Democrats have sought to delay changing her plan until after today's election. In the end, the Democrats' ability to pass the bill may depend on when that so-called manager's amendment is complete.

Desert Beacon has done a great job in following the Wall Street debate in DC, so go ahead and check her archives if you need a refresher course on what's going on. And in the coming days, it will be interesting to see how today's primaries factor into this week's Senate vote.

All in all, the next few days of Wall Street Reform debate and voting in the Senate should be a wild ride. I hope Senator Reid has a good plan to ride it all the way to final passage (of a strong bill).

GOoPer Solutions on Wall Street Reform? Nope, Can't Find Any Here!

As usual, Desert Beacon has been doing an amazing job following the progress of financial regulatory reform in Washington. And as usual, the GOoPers here in Nevada are doing absolutely nothing to elevate the debate on reform.

Of course, it doesn't help when one of them actually IS directly from Wall Street!

Chachas is well-suited among the candidates to offer insights on Wall Street — he made millions there as an investment banker before deciding to return to Ely, his childhood home, and run for Senate as a Republican.

In a detailed white paper, Chachas argues that our system for “monitoring and managing risk across highly interconnected financial markets” failed. In general, he argues for more transparency and market-based incentives for a more prudent financial services sector.

"Market-based"? Really, Mr. Chachas? Weren't those "market-based" deregulation plans pushed in the last thirty years enough? If anything, the "market-based" laissez faire model of inadequate regulation is what caused this mess in the first place. The system failed because it was never properly equipped to handle the massive financial conglomerates that exist today.

But hey, I'll at least give John Chachas brownie points for actually treating the subject seriously. The rest of them just spouted off nonsense. Here's our favorite "Chicken" Suzy Lowdown:

Lowden, who said she would have voted with Republicans to block debate on the bill, said in a previous Sun interview that the meltdown was caused by too much, not too little regulation.

She stood by that laissez faire philosophy in written answers to Sun questions. Asked whether she favored reform, she replied, “Yes, but not the major reform being proposed by the Democrats. The No. 1 priority should be to protect the taxpayer,” though she didn’t elaborate.

Lowden opposes creation of a fund to help failed financial firms meet their commitments while the government uses an orderly process for liquidating it. Financial reformers have turned to this mechanism because the standard way failed firms are unwound, through the bankruptcy courts, is considered too slow, leading to panics while the onerous process gets bogged down in court. [...]

Lowden concluded by quoting the Republican favorite, President Ronald Reagan: “Government is not a solution to our problem, government is the problem.”

Ah, Ms. Suzy! Once again, she offers nothing meaningful to the table. As I just said above, it was the very laissez faire attitude towards financial regulation in the 1980s, 1990s, and 2000s that got us into this mess in the first place. And what does Suzy Lowdown propose? More of the same.

But hey, what should we expect from the same person who has offered the most laughably stupid "ideas" on health care that we've ever heard? And someone who's been awfully "truthy" about "government bailouts", decrying them while simultaneously benefitting from them?

Next!

Before you ask Angle how Wall Street should be reformed, you need to ask her if it needs to be reformed.

“No,” she said in a written response. “Getting back to tried and true supply-side economics affectionately known as Reaganomics will give small business and international confidence in our economy.”

On this, Angle is quite literally alone, not just among Republicans running for Senate, but also among economists and finance experts — left, right and center. Although there’s disagreement about how to do it, policymakers in both parties agree Wall Street must be governed by rules that will enhance transparency and safety.

Angle, a former assemblywoman with an endorsement from a national Tea Party group, said she opposes regulating the derivative markets, creating a fund for winding down failed banks and establishing a consumer finance protection agency. Angle instead ticked off a list of talking points from her stump speech — calling for an audit of the Federal Reserve, abolishing the IRS code and eliminating Freddie Mac and Fannie Mae.

Asked what she would do to reform the financial system, Angle said she would want to use unspent stimulus money to pay down the federal deficit.

Oh yes, Sharron Angle! As usual, she just says complete and utter nonsense! She "is quite literally alone" because she's crazy. Again, "supply-side economics" failed. Stronger regulatory oversight actually is needed to restore our financial sector to proper working order.

Now Lil' Tark Shark actually showed some promise by expressing support for some needed reforms, even he eventually joined the chorus of insanity as well.

Like most Republicans, Tarkanian opposes a $50 billion bank-financed fund to help failed companies meet financial commitments while the government winds the institutions down. “This provision institutionalizes bailouts, creating what truly is a bottomless bailout,” he said. “We must get away from the bailout mentality that has taken over Congress since the first Wall Street bailout.”

You mean the first Wall Street bailout that Bush and the Republicans shepherded in 2008? After allowing the SEC to decay to the point where it was toothless and meaningless in regulating Wall Street? And he's against finding the kind of solution that would simply break up insolvent banks instead of propping them up with taxpayer-funded bailouts. (The provision in this legislation is actually paid for with bank fees, not taxes on consumers.)

We know there's a major problem on Wall Street. And we know the powers that be on Wall Street are liking the Republicans' delay tactics. So do we really need to send another GOoPer to Washington to just obstruct? Or do we need someone who actually knows how to get something done?

Great LtE on Wall Street Reform

I usually don't do this, but I must give props to local community organizer and progressive activist Marla Turner today. She wrote this awesome letter to the editor on financial regulatory reform, and it managed to get printed in both papers today!

On Monday, Citigroup announced it raked in $4.4 billion in the first quarter of this year and its stock went up. Last week, JP Morgan and Bank of America reported it earned $3.3 billion and $3.2 billion, respectively, during the same time.

They’re back in the black after Americans bailed them out (of the worst national economic debacle we’ve seen in decades), but Nevadans aren’t so fortunate. While Wall Street rejoices, thousands of Nevadans like myself are still making hard choices between food or medicine, shelter or education.

I’m proud of Senate Majority Leader Harry Reid of Nevada for having the courage to hold Wall Street accountable for the mess it created and insisting on financial reform. If folks don’t get behind Reid and get this done, Wall Street will still be posting record profits next year and Nevada will still be in the dumps.

And with Citigroup and Wells Fargo already trying to revive the very same "mortgage backed securities" scheme that helped cause the 2008 meltdown. OK, so maybe "mortgage backed securities" aren't inherently evil, but what is wrong is keeping investors in the dark on what they really are while this whole debt market remains mostly unregulated.

At the risk of redundancy, there is nothing intrinsically wrong with Mortgage Based Securities. They are a very useful way to provide liquidity in our financial markets. In all likelihood, the wary buyer will do some "diligence" and find out more about the loan level data, and the weights attached to the averages. One would think, "once burned, twice very very diligent." What is a bit disconcerting is that the banks would be moving back into the RMBS market without making it easier for investors to find loan level data, and without providing more initial public information about those "weighted averages."

The old argument used to obscure the nature of RMBS transactions said that the hoi polloi didn't need such information because, the bankers sniffed "These are for 'sophisticated' investors." After the average American taxpayer was put on the hook to bail out those 'sophisticated investors' it behooves us to (1) support the notion of exchanges on which these financial instruments can be sold, and (2) support the creation of independent clearinghouses that can scrutinize these deals so we don't have to.

We can't just keep making the same mistakes. It's nice to see all the banks benefitting after receiving all their TARP bailouts, but we the taxpayers can't keep holding the bag for them when their investments go south. And with Citi and Wells Fargo already jumping back into the "mortgage backed securities" game, we need to make sure the feds have the tools necessary to prevent another financial crisis like 2008's.

Wall Street: Financial Regulatory Reform 101

OK, so we've been hearing this and that about the financial reform legislation pending in Congress. And already, we're hearing misleading spin trash-talking efforts to curb Wall Street abuses. Sound familiar?

So what's this all really about? Desert Beacon, as usual, does a great job of explaining what happened on Wall Street:

Shift 1: Back in the day investment and commercial banking were two discrete and totally separate activities. Now they aren't. We can argue about the Volcker Rule or about bringing back the Glass-Steagall Act, but the bottom line is that investment and commercial banking are now being done by divisions of the same bank holding companies. We have rules and a regulatory structure that still assume investment and commercial banking are separated, in an era in which both are done under the same roofing.

Shift 2: The old American financial system included investment banks that were private partnerships, with bankers who had their entire worth (right down to their homes and property) on the line with every trade. When Donaldson, Lufkin & Jenrette went public in 1970 all bets were off. DLJ "established a holding company that was exempted from the stock exchange's restraints on member firms." It wasn't long before other investment banks on Wall St. followed suit. Investment banks were no longer trading with their own funds, but with shareholder's money. The old, often clubby, ultra-conservative restraints on the investment bankers were loosened under the holding company structure; now revenues lines could come from a variety of sources, and the investment banks could make money not just by underwriting corporate bonds and other offerings, but by selling things, lots of different things. We have rules and a regulatory structure that still assume the existence of discrete investment banks -- after the meltdown of '07-08 there are no more investment banks. The major investment banks have been subsumed by commercial bank holding companies.

Shift 3: There was nothing in the wind in 1933 that would have caused anyone to believe that one day there would be hybrid financial corporations such as exist today. GMAC, for example, was incorporated in 1919 as a wholly owned subsidiary of General Motors to offer credit to dealerships to purchase inventory, and to assist individuals to buy GM cars. In 1985 the company expanded to create GMAC Mortgage, and in 1999 it purchased the Bank of New York's asset based lending and factoring business. GMAC begat DITech, and the International Business Group, and in 2005 begat the Residential Capital LLC (ResCap). Then the wheels came off. In 2006 GM sold its controlling stake to Cerberus, a private equity firm, and the company became GMAC Financial Services. In 2008 it restructured as a bank holding company, making it eligible to receive TARP funds to offset the drumming it had taking in the mortgage finance debacle. More changes came in 2009 as GMAC entered into an agreement with Chrysler to provide auto loans for their products, and morphed into Ally Bank. [GMAC timeline] There's been more restructuring since.

The moral of this story is that in the days of the Tail Fins, GMAC simply financed cars; but, in the days of the hybrid fuel models, GMAC became a hybrid itself in the form of a bank holding company. The same sort of timeline could be constructed for insurance giant AIG, once an insurance company which collapsed under the weight of its own Financial Products division based in London.

Basically, Wall Street firms reorganized into holding companies to start using shareholder money to make investments. And as financial regulations were loosened in the 1980s, 1990s, and 2000s, this paved the way for these investment banks to be gobbled up by larger consumer banks to become massive financial conglomerates. GMAC's story looks quite a bit like AIG's, Citigroup's, JP Morgan Chase's, Bank of America's, and so many others.

So how has our federal regulatory system kept up with the times? It has not, and that's the problem here. While these Wall Street firms were becoming gigantic multinational, multi-sector, financial conglomerates, the US regulatory system remained fractured, piecemeal, and completely unprepared to handle the Bear Stearns crisis, the Lehman Brothers crisis, and the start of "The Great Recession" as the financial houses were collapsing all around us.

So that's what this financial regulation legislation is all about. Here, I'll let Ezra Klein do some more explaining.

The underlying issue here is, as per usual, the too-big-to-fail problem. "When big financial institutions fail," says Raj Date, a former managing director at Deutsche Bank Securities and the founder of the Cambridge Winter Project, "they have an immediate, catastrophic impact on the financial system. They live on borrowed money, and as they approach failure, their creditors try to get all their money back at once. So the firm begins selling all its assets into the marketplace very quickly. But when you're large, there's no way to move that volume of assets without cratering their prices. So now the types of assets the firm is selling drop in value. That means that everyone else's balance sheet is worth less, at least if they have these assets, too."

Here's the problem: Banks don't fail. They explode. They take other banks down with them. The easiest analogy is to a bomb. What happened with Lehman Brothers is that the bomb went off, and it took the financial sector with it, at least temporarily. That's, well, one way of handling a bomb. But it's not the preferred way. The preferred way is to defuse it. That's what resolution authority does, at least in theory.

These firms were sucking up more and more and more debt. They were growing and growing and growing, but their whole foundation was made on "financial quicksand" like mortgage backed securities that looked far less "secure" once the housing bubble started to burst. Bond agencies were allowed to market these extremely risky loans as "safe bonds". Banks were allowed to prey on consumers with subprime mortgages, and these same banks were allowed to profit off them by financing them with these very mortgage backed securities that were then used to finance even more borrowing. What was supposedly a "strong economy" five years ago in George Bush's supposedly successful "ownership society" was really more of a very high stakes poker tournament that made any of our Las Vegas poker rooms look like a "safe investment".

And again, we get back to the problem of the feds not being properly prepared to handle this crisis. Robert Kuttner properly diagnosed this crisis in 2008, and offered some specific solutions to get us out of this mess.

What all of these sins had in common was that they led financial markets to misprice assets. In plain English, that means buyers were purchasing securities based on bad information, often with borrowed money. When firms started losing money on sub-prime in mid-2007 and other owners decided it was time to get their money out, the whole miracle of leverage went into reverse. And it spilled over into other securities that had been mispriced thanks to all the conflicts of interest tolerated by regulators.

That's why, no matter how much taxpayer money the Federal Reserve and the Treasury keep pumping in, they can't turn dross back into gold. The next administration and the Congress need to return the financial economy to its historic task of supplying capital to the real economy -- of connecting investors to entrepreneurs -- and shut down the purely casino aspects of the system that have only enriched middlemen and passed along huge risks to everyone else. [...]

Barack Obama said it well in his historic speech on the financial emergency [on] March 27[, 2008,] in New York. "We need to regulate financial institutions for what they do, not what they are." Increasingly, different kinds of financial firms do the same kinds of things, and they are all capable of infusing toxic products into the nation's financial bloodstream. That's why [then] Treasury Secretary Hank Paulson has had to extend the government's financial safety net to all kinds of large financial firms like A.I.G. that have no technical right to the aid and no regulation to keep them from taking outlandish risks. Going forward, all financial firms that buy and sell products in money markets need the same regulation and examination. That will be the essence of the 2009 version of the Glass-Steagall Act.

And while the current Wall Street Reform legislation isn't a panacea, it's a start... And hopefully, it will lead to stronger We need stronger oversight, and we definitely need a regulatory system that equipped with all the proper tools to deal with future crises in a way that doesn't just leave us the taxpayers holding the bag for another no-strings-attached Wall Street bailout.

But as usual, the GOoPers are trying to spin this to look like supporting financial reform is "supporting more bailouts".

Visit msnbc.com for breaking news, world news, and news about the economy

They've pretty much taken Frank Luntz's language, word for word, and tried to run with it. But instead of looking "principled", they just look foolish.



So Republicans want more no-strings-attached Wall Street bailouts? More unregulated Wall Street firms making risky bets, but keeping all the rewards for themselves while making us pay when their risk taking fails? I guess so.

But hopefully, they won't succeed. We can't afford any more inaction on a broken regulatory system and a new generation of "robber barons" that keep stealing from us to make themselves even richer.

Casinos: MGM Mirage to MGM Resorts International? And Are MGM's Fortunes Really Looking Up?

So MGM Mirage is about to become MGM Resorts International? If the shareholders approve, MGM will have a new name.

The Strip casino giant told shareholders the proposed name reflects the company's current vision and future growth. MGM Mirage, through its MGM Hospitality Division, has plans for nongaming hotel brands in several international markets, including China, India and the Middle East.

The company's first international venture was the MGM Grand Macau which opened in December 2007.

"MGM Resorts International better represents our company's growing global presence," company Chairman and Chief Executive Officer Jim Murren told employees this morning. "As a truly international company, our name should clearly reflect that.

"This is a significant step and we don't take it lightly," Murren said.

It also reflects what would happen if The Mirage were no longer part of MGM's casino collection. Now The Mirage's earnings actually held up fairly well in Q1 2010, especially compared to other MGM casinos. So in the short term losing Mirage makes no sense... But what about the long term?

Let's face it, both the sale of TI early last year and the opening of CityCenter late last year shifted MGM's center of gravity further south of Flamingo Road. With the exceptions of The Mirage and Circus Circus, all other MGM casinos are now south of Flamingo: Bellagio, Aria, Monte Carlo, New York New York, MGM Grand, Excalibur, Luxor, and Mandalay Bay.

MGM is also looking to possibly buy Cosmopolitan when it opens to integrate it into CityCenter. And in order to do this, MGM will need to raise capital... But can it?

And is more trouble on the way? Jim Cramer trashed MGM (while talking up Wynn Resorts in advance of Encore Macau opening tomorrow) yesterday on CNBC...



But Goldman Sachs (yes, them... And I'll get to them tomorrow.) likes what it's seeing with MGM Mirage.

Shares of MGM Mirage rose on Tuesday as a Goldman Sachs analyst said the casino operator's stock could move 25 percent higher on momentum in Las Vegas and strength in Macau.

Analyst Steven Kent said in a client note that competitors Las Vegas Sands Corp. and Wynn Resorts Ltd. will be reporting their first-quarter results shortly, with both likely to indicate that business is improving in Las Vegas and Macau remains solid.

Macau, the only place in China where gambling is legal, has reported strong gaming revenue gains since last summer. The same cannot be said for Las Vegas, which has been hindered by the housing downturn and economic slump. But signs are beginning to emerge that the U.S. economy is improving, which has led some consumers to increase their discretionary spending at casinos.

Kent anticipates that solid quarterly results from Las Vegas Sands and Wynn will boost investor confidence and bump MGM Mirage's stock higher.

The analyst added Las Vegas-based MGM Mirage to his Conviction Buy list, which indicates top stock picks.

So perhaps things are really looking up for MGM Mirage, possibly soon to be MGM Resorts International? Perhaps, so. No matter what they want to call themselves in the future, their future success depends on the return of consumer spending. And if consumers are feeling better enough about their personal finances to start spending again, MGM will be back.

Recovery Is Here? Goldman Sachs Turns Bullish on MGM Mirage As 12/09 Casino Winnings Rise

I guess today is the day to toss out the doom & gloom! Look at the big news today!

Nevada casinos' gambling revenue in November rose for the first time in nearly two years, as casinos won nearly $873.2 million from bettors, state regulators said Tuesday.

Revenues this fiscal year, from July through November, were down 7.9 percent from a year earlier.

State revenues collected in December based on the winnings topped $57 million, up 28.3 percent from $44.4 million in December 2008. Taxes paid on casino winnings account for about 30 percent of the state general fund. [...]

More than half of the November 2009 revenues came from the Las Vegas Strip, where casinos won $473.8 million, up 8.3 percent compared with November 2008. The Strip is down 5.5 percent for the fiscal year through November, gambling regulators said.

And hey, that's not the only good news for today...

November marked the third consecutive year-over-year increase in monthly visitation, the Las Vegas Convention and Visitors Authority announced today.

More than 2.9 million people visited Las Vegas during November 2009, an increase of 2.9 percent from November 2008.

Hotel occupancy fell 0.8 percentage points compared to last November, the smallest year-over-year decline since January 2008, the LVCVA said in its monthly report. Citywide occupancy was at 79.2 percent in November 2009 compared to 78.4 percent during the same period last year.

November also brought a year-over-year increase in weekend occupancy for the fourth time in 2009, according to the LVCVA.

Oh, and this news couldn't have come at a better time for MGM Mirage!

Shares of MGM Mirage climbed in premarket trading Tuesday after an analyst upgraded the casino operator, saying its fortunes could be poised to improve if an early recovery in Las Vegas' economy continues.

Goldman Sachs analyst Steven Kent told investors in a research note that he was boosting his investment rating on the company to "Buy" from "Neutral," and that its shares have fallen to a point where investors could reap a tidy profit if the company's earnings begin to recover.

"Our expectation (is) that Las Vegas trends will start to get 'less bad' over the next several quarters," Kent wrote in a research note. Corporate finance activities could prompt a relief rally for the shares, as balance sheet issues lessen, he said. [...]

"For the long term, we believe in Vegas and its ability to transform itself and attract more customers," Kent said.

So is everything looking up from here? Apparently.

But is all the bad news over yet? Not so fast. Room rates are still hovering under $93 per night, and total spending is still down.

But at the very least, more signs are finally appearing and telling us that the worst is over and recovery is arriving. This is the third month in a row with year-over-year gains in tourist volume, and this is the first time since 2007 that Nevada casino winnings have actually seen year-over-year gains. Also remember that this is for November 2009... Before CityCenter opened!

And now with Wall Street giant Goldman Sachs betting on MGM Mirage's and Las Vegas' overall success, it's no longer looking so "crazy" to invest in Southern Nevada's future.

And btw, I bet Harry Reid is also breathing a sigh of relief over these new numbers. This also couldn't have come at a better time when the "nothingness scandal" needs to drop off the radar and Nevadans want to see results on the economy.

Betting on MGM Mirage's (& Las Vegas')... SUCCESS? T. Rowe Price Is. For $277 MILLION!

Oh yes, you heard me right. The Baltimore investment firm is now investing a grand total of $277 million in MGM Mirage. But why, especially when so many are still expecting MGM Mirage to fail?

Apparently, we Americans love spending money so much that T. Rowe Price is expecting us to stop being tightwads and have more fun once it becomes clearer the economy is recovering.

[T. Rowe Price portfolio manager Joseph] Fath’s optimism for MGM Mirage is mainly based on macroeconomic trends, such as recent growth in the gross domestic product, rather than any grand company strategy. Lately, he has been poring over such mind-numbing statistics as retail inventories and manufacturing shipments — data that seem far removed from the glitz and salesmanship of the Strip.

In a phone interview, Fath said he thinks the figures serve as signals of business demand and an eventual indicator of whether Joe and Jane Pittsburgh — or their counterparts in, say, China — will splurge in Las Vegas.

“I feel better than I ever have this year,” Fath said with an audible sigh of relief that sounded out of place on the other end of the phone line, in the nation’s foreclosure capital.

“Things are absolutely better than they were six months ago. Job losses are slowing and home foreclosures are starting to clear. This will be a delayed recovery. But it’s a question of how fast things pick up and what that looks like.”

Some have made similar comments. But what sets Fath apart from the many skeptics who fear for MGM Mirage and Las Vegas tourism in general is his continued belief in a tenet of American culture: “This is a consumption nation. As people’s balance sheets get better, they will spend more.”

Even though Fath admitted later in The Sun's story that he thinks MGM Mirage went in too deep with CityCenter, he now also thinks expectations have been set so low that a modest profit for their new project will be enough to restore confidence in the company, and in Las Vegas... Despite still feeling bearish on other gaming companies with debt problems, like Harrah's Entertainment, Las Vegas Sands, and Station Casinos.

Given lowered financial expectations for CityCenter, the property, he said, only has to generate a modest profit for MGM Mirage stock to benefit. CityCenter will hurt the lowest-performing and least competitive properties, which isn’t necessarily a bad thing for the Strip or MGM Mirage, which owns several of the Strip’s more profitable resorts, he added. [...]

MGM Mirage will seek to refinance its heavy debt load, while likely taking cash out of CityCenter in exchange for debt on the mostly equity-financed project, Fath said. “There’s still heavy lifting to do, but the nasty stuff is done.”

This year will be bumpy, he warns, with business likely to grow in the second half of the year and into next year. “The average Joe needs to feel better about things and for that to happen, things like employment and housing prices need to pick up.”

And yet, many Strip resorts, especially those owned by MGM Mirage, have been able to maintain high occupancy rates by offering unprecedented deals. Thirty-five million visitors flocked to Las Vegas this year in a crummy economy.

“The demand is there. They need to book business at higher rates. But a lot of operators are scared to raise rates,” Fath said.

Well, casino operators have had good reason to be afraid of raising rates. In the dark, hard times of 2009, they had to lower rates just to fill the rooms and cut their losses. If even Steve Wynn agreed to do it, then what else could they have done?

However, things may be changing. Vegas room rates for New Year's Eve 2009/10 were up 4% over NYE 2008/09, and a number of hotels, from Aria to Paris to Sam's Town to The M, were all sold out by December 30. Now we're still nowhere near 2007 room rate highs, but occupancy looks to be flat... Which is a minor miracle of its own, considering all the new hotel rooms added last year on The Strip (CityCenter, PHo Westgate), on Paradise (Hard Rock's new towers), and in Henderson (The M Resort).

So perhaps we finally hit rock bottom at some point in 2009 and are poised for some kind of comeback in 2010? I hope so, and it looks like T. Rowe Price is betting so with its bet on MGM Mirage. And looking at the first tea leaves for 2010, perhaps better days lie ahead in the new year.