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John Reed on Wall Street Influencing Washington and the need for government regulation

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Former Citibank CEO, John Reed was interviewed by Bill Moyers and had some suprising admissions about Wall Street and government. The first quote is his disbelief of how Wall Street is still peddling so much interest in Washington. even having been proven so wrong- I think Moyers menton they out spend the nearest industry by a ration of 25 to 1 on lobbying.

 

 

“I’m quite surprised the political establishment would listen to groups that have been so discredited,” Reed tells Moyers. “It wasn’t that there was one or two or institutions that, you know, got carried away and did stupid things. It was, we all did… And then the whole system came down.”

 

 

"But not only did they want to keep the banks from the business for reasons of not risking the money. They didn't want them to use the guarantee that the government provided for those deposits to leverage their position. Because, you know, if you have a deposit base that's guaranteed by the government, it sure puts you at a great advantage in terms of going into the market and playing around."

 

 

 

"And which (free market forces) was supposed to handle risk better. In fact, it handled risk worse. I mean, this is what the facts are because there was a much greater concentration of risk created. And so we got it wrong.

 

But the restraint of the government and it's agencies disappeared in the enthusiasm.

 

And so it was this combination of the participants getting carried away, the normal checks and balances that should exist against participants. "

 

 

 

 

 

Here is the whole trascript from Bill Moyers interview:

 

http://billmoyers.com/segment/john-reed-on-big-banks-power-and-influence/

 

 

 

 

 

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Read this and does it sound a lot like what Obama was saying about compensation to you?

 

JOHN REED: Sandy Weill. I mean, his whole life was to accumulate money. And he said, "John, we could be so rich." Being rich never crossed my mind as an objective value. I almost was embarrassed that somebody would say out loud. It might be happening but you wouldn't want to say it.

 

But you know, the biggest bonus I had ever received when I was at Citi was three million dollars. The first year I worked with Sandy it was 15. I said to the board, "I'm the same guy doing the same job, same company. There are two of us. The company's bigger but there're two of us. What's going on?" "Oh, you don't understand." And it was just totally different culture. And see, Wall Street developed that culture.

 

BILL MOYERS: That's what happened, isn't it, in the --

 

JOHN REED: Yeah. No, and it happened. It happened in Wall Street and there's a subset of the world, that self-selects, for whom money is an overriding value. And being personally rich somehow is something they aspire to. And you know, it's a minority of the population. Bill Gates certainly did not start Microsoft to become rich. Nor do I think Steve Jobs went back to Apple because he wanted to be rich.

 

These were byproducts. They became rich, but as a byproduct. But there is a subset of the population that self-selects and they go to Wall Street because that's where it's somewhat legitimate. You could do the same thing illegally. And there are people who do that. I mean, there is a drug cartel and so forth and so on. But the thing that has amazed me is, A, it's fairly large and, two, it's sort of been accepted.

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Isn't the heart of the matter the government forced loosening of of a banks criteria to loan out money?? Folks who should not have gotten loans got them and so down the road to the housing boom, credit default swaps,Fanny mae and freddy etc.??

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Isn't the heart of the matter the government forced loosening of of a banks criteria to loan out money?? Folks who should not have gotten loans got them and so down the road to the housing boom, credit default swaps,Fanny mae and freddy etc.??

 

Of course that's what it is but that does not fit the narrative.

 

Don't forget the SEC and the house Frank and senate Dodd banking committees that failed their due dilligence.

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Isn't the heart of the matter the government forced loosening of of a banks criteria to loan out money?? Folks who should not have gotten loans got them and so down the road to the housing boom, credit default swaps,Fanny mae and freddy etc.??

 

Of course that's what it is but that does not fit the narrative.

Don't forget the SEC and the house Frank and senate Dodd banking committees that failed their due dilligence.

 

CRA played a very minor if not negligible role, and I don't know what idiot is spouting that information. Do you really think CRA was the impetuous for mortgage lender CEOs to pressure their loan officers to forge documents and have their underwriters look the other way so that your housekeeper could buy her 4th home? Do you think CRA had anything to do with creating no verification no down payment loans?

 

 

Whoever is telling you the banks were forced to make these loans is selling you a fairy tale. The mortgage lender's sock can only go up if they make more mortgages. They had already saturated the market with conventional loans. Once wall street figured out how to sell the sub-prime loans using credit default swaps, the flood gates opened and they could not package them fast enough.

 

 

RC, do you really think the government forced this on the banks? Or do you think the worlds largest lobbyist group bought influence to ease the restrictions on the financial industry?

 

 

As you ponder that, consider that John Reed reminds us that the merger of travelers and Citibank was illegal at the time. IT WAS PROHIBITED BY LAW, yet they got assurances from the WH and Congress that the law would not be enforced.

 

 

You are missing Reed's critical point - Washing does not come up with ideas - industry, through the lobbyists tell DC what to support. They are all willing players. Which is why he is bothered that Wall Street continues to wield so much power to return to a system that had failed so epically.

 

 

 

 

 

 

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CRA played a very minor if not negligible role, and I don't know what idiot is spouting that information. Do you really think CRA was the impetuous for mortgage lender CEOs to pressure their loan officers to forge documents and have their underwriters look the other way so that your housekeeper could buy her 4th home? Do you think CRA had anything to do with creating no verification no down payment loans?

Whoever is telling you the banks were forced to make these loans is selling you a fairy tale. The mortgage lender's sock can only go up if they make more mortgages. They had already saturated the market with conventional loans. Once wall street figured out how to sell the sub-prime loans using credit default swaps, the flood gates opened and they could not package them fast enough.

RC, do you really think the government forced this on the banks? Or do you think the worlds largest lobbyist group bought influence to ease the restrictions on the financial industry?

As you ponder that, consider that John Reed reminds us that the merger of travelers and Citibank was illegal at the time. IT WAS PROHIBITED BY LAW, yet they got assurances from the WH and Congress that the law would not be enforced.

You are missing Reed's critical point - Washing does not come up with ideas - industry, through the lobbyists tell DC what to support. They are all willing players. Which is why he is bothered that Wall Street continues to wield so much power to return to a system that had failed so epically.

 

 

 

I believe it was Raines, former top level freddy fanny executive testfying before congress

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I believe it was Raines, former top level freddy fanny executive testfying before congress

 

Watch the whole video. It is not exciting, but it is very telling from one the street's elite top executives.

 

 

 

 

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