Throw the bums out. Elizabeth Warren for President!

Larry Summers will never let anything bad happen to his homies at AIG and Citi.

You watch. Elizabeth Warren will be the one to get the axe.

Maybe Warren can get through to Obama as nothing else seems to be working. There is a article written by William Engdalh in the Asia Times.

http://www.atimes.com/atimes/Global_Economy/KD03Dj02.html

Geithner's Dirty Little Secret

Today, five US banks, according to data in the just-released Federal Office of Comptroller of the Currency's Quarterly Report on Bank Trading and Derivatives Activity, hold 96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default.

The top three are, in declining order of importance: JPMorgan Chase, which holds a staggering $88 trillion in derivatives; Bank of America with $38 trillion, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs, with a mere $30 trillion in derivatives; number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain's HSBC Bank USA, has $3.7 trillion.

After that the size of US bank exposure to these explosive off-balance-sheet unregulated derivative obligations falls off dramatically. Continuing to pour taxpayer money into these five banks without changing their operating system, is tantamount to treating an alcoholic with unlimited free booze.

The government bailout of AIG, at more than $180 billion so far, has primarily gone to pay off AIG's credit default swap obligations to counterparty gamblers Goldman Sachs, Citibank, JP Morgan Chase and Bank of America, the banks who believe they are "too big to fail". In effect, these institutions today believe they are so large that they can dictate the policy of the federal government. Some have called it a bankers' coup d'etat. It definitely is not healthy.......Con't

You (and all your colleagues) are burying the lead here, Zach. The last sentence in the Observer story is the important one:

"...thirdly, the equity investors are always wiped out."

Shareholder wipeout is the big kahuna, and it's what sends the Administration running for the hills. Institute that policy, they think, and hello, Dow 2000. Goodbye all consumer confidence. Goodbye to all their positive media. Goodbye to Obama's entire agenda.

I don't think they're quite right, but I think that's their thinking.

Let's hope Warren does not meet the same fate as Brooksley Born, when Born tried to warn the Commodity Futures Trading Commission about derivatives back in '97. Warren is much more visible, as is the issue at hand, obviously. Time to break up the oligarchy and bring down the oligarchs.

Warren makes a lot of good points. Soon,she will be demonized as an "Obama hater." Like Krugman, Galbraith, Stiglitz, etc.

Warren is one of the good guys in this administration, but simply replacing AIG's current CEO is not going to solve the problems at that company. It is worth noting that AIG is now on it's third CEO since the resignation (under fire) of Hank Greenberg. Greenberg may actually be one of very few folks alive who actually understand all the complex interwoven (and possibly--no, strike that---probably illegal) businesses that AIG has become. It is quite telling that none of Greenberg's successors has demonstrated a sufficient understanding of the company to put together any kind of objective numbers defining AIG's exposure. To be fair, it took Greenberg nearly 40 years to create this tangled web-- Without a real understanding of the big picture, it has obviously and un-surprisingly been impossible to manage the mess. Each of the successive CEOs are seasoned executives---these are not stupid guys. Simply replacing the most recent guy with another bright and qualified executive is really not the answer. It may become obvious that no CEO could ever manage this mess, and an orderly bankruptcy will be the only possible remedy for AIG.

Warren is a law professor with absolutely no background in finance or business. She also seems completely ignorant of the fact that AIG execs were already canned, and the guy with the thankless job of running AIG now is doing so for $1 per year with no bonuses.

If all of the execs are canned, who exactly will run these banks? Lawyers and law professors who have never run anything in their lives? Warren seems bright, but at this point it seems that she is just riding on justified populist anger while proposing "cures" that will just worsen the disease.

Yes, the bankers should be fired with compensation packages and the banks and other financial institutions should be declared bankrupt and shares declared worthless and then sold to recover tax payer money.

Oops, Freudian slip. That should have read fired WITHOUT compensation packages.