McClatchy is out with an incredibly important series on Goldman Sachs, the first two parts of which have gone up already, that raises questions about whether Goldman committed securities fraud at a massive level. I am guessing the next three parts of this series are going to be really explosive as well. What Goldman essentially did was to have one big group of their traders, call them Group 1, marketing mortgage securities as triple-A investments, while other traders in the company, call them Group 2, were secretly betting that there would be a steep drop in housing prices, which would mean the values of those securities Group 1 was selling would drop off a cliff. Goldman Sachs was making money coming and going, and it is virtually impossible to believe senior management did not know that the securities they were selling were junk. Now I'm not a securities lawyer but that sure sounds like fraud to me.
Gordon's superbly researched series follows on Matt Taibbi's brilliant Rolling Stone article on Goldman Sachs earlier this year, which walks through many of the same issues. With what Gordon and Taibbi have both been able to document, folks at the DOJ sure ought to be looking at whether criminal charges should be filed against Goldman. And the Obama White House should be coming down on the executives at Goldman Sachs with both feet, hard. This kind of financial manipulation, which has cost public pension funds and other investors many billions of dollars, needs to be stopped, and huge conglomerates like Goldman need to be broken apart. This story is not just a story about simple greed or securities fraud, it's a story about a company that has gotten so big and powerful that it can manipulate markets at will. This story goes to the heart of the recent financial collapse, for which Goldman Sachs deserves a sizable share of the blame. They need to be broken into pieces so that they can't wreak this kind of havoc again. And it sounds increasingly like some of their executives might deserve to go to prison for a long time.
"Now you don't talk so loud/Now you don't feel so proud/ About havin' to be scroungin' for your next meal"-Bob Dylan
It is not that the big banks themselves are "too big to fail". They are too big because they can cause all of us to fail. In the military terms, that tragedy is cleansed by the use of the innocuous sounding term, "collateral damage".
The problem is this: One is just as dead from collateral damage as from a targeted hit.
We launched www.BreakUptheBigBanks.com because the political power wielded by the big banks is incompatible with a functioning democracy. Such political power renders regulation inadequate-we have already seen Congress bow to the will of the very people whom a year ago it rescued from oblivion.
DISCLAIMER: This is obviously a kos cross post and I am not talking about anyone here and I have the utmost respect for all the OpenLeft FPers and most posters. I gave a nod to Chris Bowers and Paul Rosenberg whom are both excellent resources of information as well as the NN video I got from here to start out.
I haven't posted any diaries here yet, but I worked hard on this one so rather than think of it a attention whoring I would prefer to think of it as finding as big of an audience I can since this diary didn't get a lot of hits, though a few people that I admire there gave it a nod.
Back on August 29, I wrote a diary, "Who Could Have Foreseen The Housing Bubble Collapse? Dean Baker, That's Who--In 2002". It was my intention to follow that up with some further posts on others who saw it coming. Imagine how happy I was to discover that someone else had done it for me-Dutch economist Dirk Bezemer, writing in the Financial Times on September 7, "Why some economists could see the crisis coming". What's more, he has a much more detailed explanation in a 51-page paper, "'No One Saw This Coming': Understanding Financial Crisis Through Accounting Models" (pdf). Long story short, Bezemer set out to find those who had been right in predicting the financial meltdown, not just randomly, but because of a well-reasoned argument. He found eight examples-including Baker-and analyzed what they had in common. He discovered that they all relied on accounting models that looked at the economy in terms of stocks and flows, in sharp contrast to the standard macro-economic models that actually have no way of predicting a financial crisis, since their programming does not allow for the possibility. That's the short argument, so that you don't have to read the rest of my diary. If you want a better understand of what the above means, however, it would be a good idea to jump to the flip.
Once the health care fight is over, the next big fight is the battle over financial regulation. As challenging and frustrating as healthcare has been, at least reformers have been in the game in terms of a decent bill. The odds have never been even, but a decent bill, in my view, is a possible ending. With the financial regulation fight, the odds are much tougher because the Wall Street lobby is so powerful, and the forces on the other side are still relatively weak, and the Obama proposals overall are a weaker starting place than in health care. As important as it is, though, the financial regulations fight is only a pre-cursor to the massive economic policy debates that we will be engaging in for the next four years. These fights are symbolized by a phrase that the President and his economic advisors repeat too often, a phrase that is both politically tone deaf and potentially indicative of a much deeper problem in their thinking. It's the phrase, "jobs are a lagging indicator" of our recovery. I worry less that they say it, though, and more that they might actually believe it.
That "jobs are a lagging indicator" thing is a phrase that conservative economists (which is most of them) like to use because in their neo-classical economic models about recessions and financial crises, first the bankers regain confidence and their economic health, then they start loaning to businesses again, then businesses get healthy - and finally at the end of the happy cycle - they start hiring workers again. Of course, as the brilliant Paul Krugman piece on the economics profession in the NYT magazine pointed out, many of the same economists said both a real estate bubble and a financial panic were actually impossible because they didn't correspond to their free-market-cures-all-problems-and-provides-perfect-equilibrium models.
If the basic ideas behind the jobs being a lagging indicator phrase sound vaguely familiar, it's because they are essentially another version of the trickle-down economics we have been hearing for years from the two Presidents Bush and President Reagan: give those rich people and corporate CEOs more money, and it will eventually trickle down to the rest. There are a great many problems with this theory, but they can be summed up rather simply with the fact: pretty much nothing ever trickles down. In all the years of the Reagan and Bush presidencies, 20 years in all, the income of middle class workers stagnated (or worse), while the income of the rich skyrocketed.
So now we see one article after another on the economy reporting some version of the news that banks have recovered, businesses are starting to do better, but workers are getting left behind. You can grab any article on the economy at random written over the last couple of months, and find the same kind of quote, such as this one from a WP article from September 1st: "The emerging economic recovery suffers from a great contradiction: Even as factories seem to be cranking out more stuff, the job market remains terrible."
Now I am not suggesting that Obama's economic philosophy is the same as the right-wing Republican trickle-down philosophy of Reagan and the Bush kin. There are lots of things to like about what he has done and proposed so far. The stimulus was classically liberal Keynesian, with hundreds of billions in job-creating public capital investments, and it is clearly helping prop up the economy right now. Even the tax cuts that were included in the stimulus bill were considerably more progressively structured than any tax cuts ever passed or proposed by Republican Presidents. Obama's budget proposal was also very progressive: the most money for poor people of any federal budget in history, even LBJ's War on Poverty budgets, for example. He has generally argued strongly for a more progressive tax system than we have seen in the Bush or Reagan years. Although we don't know what we will get in the end, his initial health care and energy proposals included solid policy ideas with lots of good progressive notions in them. And he clearly does believe in a stronger regulatory hand than Republican Presidents whose lack of support for even basic regulation is so much of the reason we are in the economic mess we are in today.
In spite of all this though, I do have a couple of deep worries about Obama's economics, and neither of them are small things, they go to the very core of whether the "lagging indicator" ever catches up to the happy days the Wall Street bankers are experiencing right now. One worry is about the President and his economic team's core belief system, and the other is his tactical mindset.
On the economic belief side, I worry that he doesn't fundamentally get that the neo-classical theories that have dominated the economics profession over the last couple of decades are just flat out wrong, and that our economy, despite the recent uptick in some statistics because of the stimulus and the trillions of dollars the Fed injected into the system over the last year, is on some level truly broken. Neo-classical economics assures that once we stabilize the banking system, more credit will go to businesses to invest, and they will all eventually start hiring people. The problem is that this economy is still fundamentally weakened, that the cracks and bruises it suffered in its sudden fall last year made it vulnerable to other problems that will sap its strength. If the neo-classical economists are wrong again- just like they were about the housing bubble, just like they were about deregulating finance and the financial crisis in general- and the economy stays soft, will the jobs ever start getting ginned up again, especially after all that stimulus money runs out in the middle of 2011? (What a delightful time for the economy to turn south for an incumbent President gearing up for his re-election campaign.)
The other thing I worry about with President Obama is on the tactical level. I give him huge credit (in fact of all the things I like about him, what I like best is this) for his willingness to swing for the fences, to try to do big things, transformational things: health care reform, climate change, financial reform, immigration reform. His ambition and desire for big change is his best quality. But when it comes to how you get things passed, his instinct seems to be to follow Rahm Emanuel's more conservative lead and stay carefully within the cautious conventional wisdom lines: rather than being as gutsy on his tactics as he was on his big change agenda, he seems to be pulling back. In order to break through the power of DC special interests, I think Obama is going to have to take them on directly, pick fights with them, and beat them decisively. Because not only is the economic system broken, the political system is broken as well. He needs to think big about programs that create jobs directly, and think bigger than he's done so far about taking on Wall Street.
In the 1930s, FDR figured out that the economic theories that he studied in college were no longer working, and needed to be directly challenged. He put money directly into jobs and income for the poor and working class people rather than doing bank bailouts and tax cuts for the wealthy. He took the fight to the big special interests, the "economic royalists", with pride and with gusto. And the American people supported him. Now is the time for President Obama to take FDR's example, and to fully embrace bottom-up policies rather than the trickle-down variety.
"Without access to lawyers, the law doesn't apply to you." - Ian Millhiser
I've flown business class a couple times, it was nice.
You get to board the plane early, have a comfortable seat, enjoy free drinks. Nice. And it's fine, they pay extra for that. The airlines make a reasonable calculation about how much they're owed for providing those services and they get compensated.
Yet when it comes to dealing with the rest of society, their workers, customers and government, business interests always want to dispute the bill for services rendered. If the law says otherwise, heck, they can get Congress to write laws they like better.
They can also directly write their own laws. And by laws, I mean contracts. Privately drawn up agreements that will be enforced by the courts or an arbitrator whose judgments are considered binding by the courts.
Goldman Sachs has openly, blatantly gone back to business as usual, knowing they will be bailed out by taxpayers if their high rolling gambles don't work, and they don't care who knows about it.
The reason they can be so breathtakingly arrogant, so stunningly cavalier about not giving a damn about things that any other company's PR and government relations department would advise them against, is that they know they have the power to do anything they want to do. The Obama White House needs to take Goldman Sachs to the woodshed rhetorically, and they should have the Justice Department investigating them for anti-trust violations and all manner of stock manipulation. It is time to start squeezing the management at Goldman, and making them nervous about being broken up into pieces that are not too big to fail.
Here's (with brief intro) Matt Taibbi, Rob Johnson, and myself taking about Goldman Sachs on what is rapidly becoming my favorite media program for discussing economic issues, GRITtv:
If you've seen the news today, you know Goldman Sachs exceeded its second quarter expectations for earnings, making $3.44 billion after dividends. As I wrote yesterday, this gigantic, much better than expected profit is largely from engaging in the same risks that got Goldman and other companies into trouble in the first place- taking massive risks on things like volatile currencies. The same risks that has helped lead the country to economic collapse. Apparently the only thing Goldman learned from the financial collapse was that the government would bail it out if it kept taking big gambles, which isn't the lesson I was hoping it would learn.
And hey look, even more thrilling, it's been reported in late June that the company plans to pay its employee record bonuses. Congrats, guys.
Okay, Goldman. So as long as you're paying record bonuses to many of the same employees that engaged in these wildly speculative trading ventures, how about paying back the $13 billion you got from AIG by way of the U.S.Treasury? Or the unrevealed billions (likely many tens of billions) from the Federal Reserve?
Now I wouldn't be so irritable about all this if unemployment wasn't still going up, and most economists weren't saying it will continue to go up through 2010. I wouldn't be so irate if unemployed folks were getting jobs, home prices were starting to up again, and as a result bankers also made money. I wouldn't be so completely pissed out of my mind if we didn't already know, based on the last eight years, that the trickle-down economics of making sure the biggest banks recovered first just didn't work for everyone else in this economy.
It is time for a movement to take on the big bankers and change the economy so that it produces jobs for the rest of us.
Check out this sad story in the New York Times: apparently Morgan Stanley has been doing the right thing by taking fewer risks in their trading than their competitors at Goldman Sachs and Citibank. But in the perverse Wall Street system we have allowed to remain in place in this country, where the big financial traders make money for their firms by big gambles, the bankers who are actually being more responsible are being punished for it. Meanwhile there are record bonuses for the traders at Citibank and Goldman.
This is the problem I have with the resuscitation model rather than the restructuring model when it comes to Wall Street. I give the Obama team credit for wanting to regulate these big financial traders more, but they need to go further than that and change the fundamental financial trading system. What is being recreated in front of our very eyes is the exact same system with the exact same problems that led to our financial collapse in the first place. These big financial conglomerates will still have all the same incentives to take huge risks, and because they are so huge, the risk is to not just to their own company, but to our entire economy. And their financial clout will be compounded by the political power of being that big, which will inevitably lead to weaker regulations and captured regulatory agencies.
Oh, and by the way, that whole "we have no choice but to revive the banks, because that will start the credit flowing and create jobs" thing: it's not working either. Unemployment is going up, we're still losing hundreds of thousands of jobs every single month. I know that it takes a while for jobs to start being produced, but this jobs report is much worse than the forecasts predicted, and the Geithner/Summers team has consistently been too optimistic in their guesses.
We need a big, bold change of direction in this economy. The old models aren't working. Let's get some economists in the White House who actually made accurate predictions on the economy, and let's take on the big banks that brought us this mess. These Wall Street guys are back to their old tricks - risky trades, huge bonuses - and the rest of us are getting hosed.
There have been some good pieces out in the last few days by Dean Baker and Bob Kuttner on the politics of a modern version of the 1930s Pecora Commission on what happened to cause the Great Depression. The original Pecora Commission was an essential reason why FDR was able to be so successful in enacting sweeping New Deal programs to regulate the banks and stock speculators that had caused the crash. As Dean and Bob allude to, the modern version might not be so effective, but that's all up to Speaker Pelosi, Senator Reid, and (indirectly) the Obama administration. What I'm guessing that Dean and Bob are reacting to is the same rumors that I'm hearing: that Brooksley Born may be the only real progressive on financial issues appointed to the commission.
That would be a tragedy. A strong commission with subpoena powers and a serious mandate from Congress could really dig into the dirty deeds that Wall St. traders purposed that caused this crash. The education of the media and the public that could come with such an investigation would be invaluable. If instead you appoint a commission where a majority of members want to obscure what happened, and in fact want to protect the Wall St. system we have now, you both lose any chance of engaging the public and you make the people angry at both government and the bankers all the more suspicious.
I have said to my friends in the White House over and over again what to me is a plain and obvious truth: another year of economic pain, and a majority of the country is going to be spittin' mad. The only question is whether they are mad at the bankers and de-regulators who caused this mess, or mad at the Obama administration for not doing enough to solve it.
President Obama told Wall Street CEOs awhile back that he was the only thing that stood between them and pitchforks. As a person who has been involved in national politics for a very long time now, I am absolutely certain about one thing regarding next year's election: if Democrats protect Wall Street from the populist "pitchforks", they will be skewered by the pitchforks themselves.
For all the talk of "green shoots", even the oxymoronic "jobless recovery" is almost certainly mythical, according to those with broader time horizons. For example, Martin Wolf, author of a mid-month (June 16) Financial Times article "The recession tracks the Great Depression". It begins:
Green shoots are bursting out. Or so we are told. But before concluding that the recession will soon be over, we must ask what history tells us. It is one of the guides we have to our present predicament. Fortunately, we do have the data. Unfortunately, the story they tell is an unhappy one.
Here's the four-part graph accompanying his article:
Wolf draws directly on the work of Barry Eichengreen and Kevin H. O'Rourke, whose June 4 article at Voxeu.org, "A Tale of Two Depressions", carried this into note:
This is an update of the authors' 6 April 2009 column comparing today's global crisis to the Great Depression. World industrial production, trade, and stock markets are diving faster now than during 1929-30. Fortunately, the policy response to date is much better. The update shows that trade and stock markets have shown some improvement without reversing the overall conclusion -- today's crisis is at least as bad as the Great Depression.
The problem, of course, is that no politicians are talking this frankly about how bad it is, and since they aren't talking frankly, they aren't laying the groundwork for continuing and expanding the sort of robust policy response that's needed.
In a New York magazine article, "My Manhattan Project: How I helped build the bomb that blew up Wall Street", former programmer Michael Osinski tells of his part in the making of the financial meltdown. But along the way he also tells us something of the trader culture he helped to enable, where the really big bucks were. For example:
Now that I was spending more time on the floor, I wondered why the men's room always stank. Then one afternoon at three, when I was in there taking a leak, I discovered the hideous truth. Traders had a contest. Coming in at eight, they never left their desks all day, eating and drinking while working. Then, at three o'clock, they marched into the men's room and stood at the wall opposite the urinals. Dropping their pants, they bet $100 on who could train his stream the longest on the urinals across the lavatory. As their hydraulic pressure waned, the three traders waddled, pants at their ankles, across the floor, desperately trying to keep their pee on target. This is what $2 million of bonus can do to grown men.
These are the guys we have to keep happy?
I'm not just after a cheap shot here. Last month, the Compulsive Theorist posted a couple of posts on "business and cultural norms in the financial sector". The little vignette above is simply a vivid reminder of just how warped those norms have become. And you know what? The conservatives are right: the issue of moral values goes right to the core of our politics, and the fate of our nation. Only it's their values that are the problem.
A New Way Forward is sponsoring demonstrations nationwide today in more than 60 cities, calling for real structural change in the financial sector:
NATIONALIZE: Experts agree on the means -- Insolvent banks that are too big to fail must incur a temporary FDIC intervention - no more blank check taxpayer handouts. (see Krugman on nationalization)
REORGANIZE: Current CEOs and board members must be removed and bonuses wiped out. The financial elite must share in the cost of what they have caused. (see Simon Johnson on reorganizing)
DECENTRALIZE: Banks must be broken up and sold back to the private market with strong, new regulatory and antitrust rules in place-- new banks, managed by new people. Any bank that's "too big to fail" means that it's too big for a free market to function. (see Mike Lux on decentralization)
Open Left's own Mike Lux is an honorary national co-chair, along with Jane Hampshire Hamsher of Firedoglake.
Unlike the wingnut's "Teabagging" movement, A New Way Forward doesn't have a whole cable news network promoting its activities. What it does have is a coherent analysis and a viewpoint about what needs to be done. One of the local organizers, Greg Coleridge, director of the Economic Justice and Empowerment Program at the Northeast Ohio American Friends Service Committee, appeared on Democracy Now! yesterday (video and transcript here). His organization is sponsoring the protest being held in Cleveland on Saturday. Every community in America is suffering from this crisis. It is not a Wall Street crisis, it's an American crisis--and Cleveland is one of its epicenters.
A new group named "A New Way Forward" is organizing nationwide local protests for a people's bailout next Saturday, April 11, at 2 PM EDT. Many are already set up, and others are still being organized. William Greider is a strong supporter of their efforts, and an excerpt of a recent op-ed he wrote (on the flip) sketches out a useful framework for thinking about what a truly people-oriented bailout and financial restructuring would look like. A New Way Forward says:
Big bankers ruined our economy and now they are gaming the political system so they can profit even more off the crisis they caused. They must be stopped.
On April 11th, 2009, the public will come out in cities across the country to express their frustration and disapproval with how our elected officials have handled the economic crisis. No one has been left unscathed; this protest is yours.
(3) Former chief economist of the International Monetary Fund, Simon Johnson, has an article at The Atlantic, "The Quiet Coup", about which the editors say, "If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we're running out of time." The following chart from Johnson's article shows the growing dominance of the financial industry. Josh at TPM notes, "As you can see, the pivot in each case is around 1980." Gee, I wonder what happened then?
It's incredible. Just as 20,000 viewers signed an open letter to CNBC telling them to listen to Jon Stewart and hold Wall Street accountable instead of mindlessly repeating Wall Street talking points, NBC doubled down.
This morning, Meet The Press host David Gregory repeated what CNBC's Erin Burnett has been saying all along: The public is ignorant. If only the simpleton public understood what the Wall Street "experts" understand, we wouldn't be so populist and angry. See for yourself:
In these economic times, NBC needs to stop blaming the public and instead focus like a laser on holding Wall Street accountable. David Gregory, instead of calling the public stupid, how about saying on the air that there are, in fact, no "best and brightest" at AIG worth giving bonuses to if they threaten to leave?
That being said, CNBC is still the center of the fight to get the media to do their job. If we can get CNBC to truly start holding Wall Street's feet to the fire, that will have ripple effects throughout NBC and the entire financial news industry.
You can join leading economists, journalists, the Progressive Change Campaign Committee, and over 20,000 members of the public in signing the open letter to CNBC here.
... and if economists in general ever want the sort of respect accorded to scientists and medical doctors, then the discipline as a whole must stop auditioning for the role of Emperor's New Clothes.
The financial crisis has gotten me worried at times that I might be turning anti-intellectual. I hear people talk about complicated economic equations and leverage, and ... oh, you know, you've been reading the same things ... it just fills me with white hot wrath and furious anger.
But then I realize that it makes me angry because it reminds me of something that Richard Feynman, a celebrated physicist, said in one of his memoirs, and I realize that whatever ails me, anti-intellectualism isn't it.
Right now, it's becoming particularly apparent that there's a real danger of Obama's Administration going really wrong. I've long been hopeful that the historical logic Mike Lux writes about in his book will take hold, and that Obama will be forced to move to the left, to institute progressive reforms, as has happened at crucial times before. But what if he doesn't? What if his current support for Timothy Geithner and his misbegotten plan is the harbinger of all that's to come? How bad could it get?
A lot of railing against the evil Fed and the banking class (which will be conflated with American Jews);
A lot of talk about we shouldn't waste money on "wasteful" and "bloated" government social programs, and how we should instead give it directly to the churches so they can help the poor like Jesus told them to do;
A little dose of the Dolchstosslegende about how the Democrats pussied out and retreated from Iraq and Afghanistan when those wars could have been won, + a sacred vow to go into the Middle East, wipe out all those "heathens," and take back the oil that belongs to the American people by right;
A lot of raving against Muslims (for "being terrorists"), immigrants (for "stealing jobs from honest, decent Americans"), homosexuals (for their "decadent lifestyles"), and liberals (for "hating America");
Bake for four years or so, and you've got yourself an America run by religious fanatics, locked in holy (thermonuclear) wars abroad while engaging in ethnic cleansing at home.
I don't think that's anywhere near guaranteed if Obama fails. But I certainly think it's a distinct possibility. And in responding to limpidglass, Master Jack sketched out a different sort of cost--the opportunity cost of what's potentially going to be wasted if we continue in this way:
President Obama delivered a fantastic speech last night. It's tone alone will go a long way toward reassuring a nation mired in economic crisis. And amazingly, there were many moments of bipartisan applause, like when Obama tackled corporate greed: "I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won't be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over."
This was music to my ears, but as Robert Scheer astutely pointed out at The Nation, the problem Obama had in discussing regulation to fix our financial woes is that many of his top economic advisers, including Lawrence Summers, were responsible for gutting the regulatory system that helped cause this mess in the first place. Don't get me wrong, Obama's speech was strong and hopefully it will symbolize a fundamental change in thinking from his economic team. But I'm just glad we have someone like Senator Bernie Sanders to help Obama make good on his demagoguery.
The Independent Senator from Vermont says we need a new Wall Street. He wants to confront the culture of greed head on, get rid of the CEOs of these corrupt financial institutions, and establish a much stricter regulatory process. Sanders has been a vocal critic of TARP spending from the beginning, and last month he called for the congressional TARP Oversight Panel to expand its focus and dig into the causes of the financial crisis, using subpoena power to expose the roots. Sanders' vigilence and frankness, coupled with Obama's rhetoric last night, is what gives me hope.
How do you know when your bank is standing in the way of economic recovery? Well, take the following quiz. Your bank took $45 billion in bailout funds and:
a) Blew it on an overseas bank investment, DC lobbyists, corporate jets, executive bonuses, and a lavish Super Bowl party worth $10 million alone.
b) Announced it would lay off 35,000 workers while refusing to provide adequate health care for the rest of its 212,000 employees.
c) Asked participants on a conference call to donate large sums of money to vulnerable anti-union Senatorial candidates in order to defeat the Employee Free Choice Act.
d) Blamed the financial crisis on dead mothers.
e) All of the above.
Sadly, for Bank of America, the answer is "e" as in "egregious." TPMMuckraker had a story Friday about Theresa Hatt, a Bank of America customer who died of cancer last month at 52. When her son, Paul Kelleher, called Bank of America to let them know, an estates representative asked if Kelleher intended to pay off the balance of his mother's credit card. When he said he wasn't obligated to, the representative said, "I know that if it were my mother, I'd pay it. That's why we're in the banking crisis we're in: banks having to write off defaulted loans."
Apparently, Bank of America instructs representatives from its collections unit to deceive customers intentionally, both about the legality of paying off balances and obviously about the morality of it as well. Not only that, but the bank also rewards its reps who do bring in "collectible money" with fat bonuses of upwards of $5,000 a month. This is a business practice so sickening it ought to have every Bank of America customer shredding their ATM cards in disgust.
