Former rating agency worker: ‘I am genuinely frightened’
Joris’s interviewee worries that no fundamental changes have been made since the financial crisis hit

“Every time I read about a new financial product, I think: ‘Uh-oh.’ Every new product is described in those same warm, fuzzy phrases: how great they are and how safe. Well, that’s how credit default swaps and asset-backed securities were explained when banks were introducing these.

“I still get so angry when I think about it. Taking a job at a rating agency seemed a perfect match: drawing a good salary while providing a service of genuine value for society. We need ratings to work out how safe a company or an investment bond is, what the risk of default might be. If you can’t trust it, you shouldn’t do business with it – it’s that simple.

“The reality was very different. What’s making me even angrier is that we don’t seem to have learned from the crisis. It’s back to business as usual. I am no longer with a rating agency, and when I ask former colleagues what lessons they’ve taken away from the 2008 debacle, they give me a blank stare and say: ‘That wasn’t us, that was Moody’s and Standard & Poor’s.’ But we just lucked out: our methods were similar.

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Now here we are four years later, and the most incredible thing has happened – we’ve learned nothing from the whole thing. Everybody pretends it’s all OK. Sometimes I feel finance has reacted to the crisis the way a motorist might respond to a near-accident. There is the adrenaline surge directly after the lucky escape, followed by the huge shock when you realise what could have happened. But then, as the journey continues and the scene recedes in the rearview mirror, you tell yourself: maybe it wasn’t that bad. The memory of your panic fades, and you even begin to misremember what happened. Was it really that bad?

“If you had told people at the height of the crisis that four years later we’d have had no fundamental changes, nobody would have believed you. Such was the panic and fear. But there we are. We went from ‘We nearly died from this’ to ‘We survived this’.

“Have you read Gillian Tett’s Fool’s Gold about the crisis? It was exactly like that. You had bankers who did not understand their own complex financial products but thought that they did, and then raters who took their word for it. And nothing has fundamentally changed.

http://www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog/2012/jul/24/rating-agency-worker-voice-of-finance

New video by Paul Grignon producer of Money As Debt – What the Heck is a Bailout? And is it really true that we can get out of a hole if only we just keep digging a deeper hole?

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Stunning Crimes of the Big Banks: Worse than Your Wildest Imagination

Preface: Not all banks are criminal enterprises. The wrongdoing of a particular bank cannot be attributed to other banks without proof. But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior.

You Wont Believe What They’ve Done …

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The executives of the big banks invariably pretend that the hanky-panky was only committed by a couple of low-level rogue employees. But studies show that most of the fraud is committed by management.

Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this and this.

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We can almost understand why Thomas Jefferson warned:

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies ….

John Adams said:

Banks have done more injury to religion, morality, tranquillity, prosperity, and even wealth of the nation than they have done or ever will do good.

And Lord Acton argued:

The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.

http://www.washingtonsblog.com/2012/08/big-banks-worse-than-you-think.html

Our economic ruin means freedom for the super-rich

Cameron and Osborne’s neoliberal agenda promised prosperity for all, but created a totalitarian capitalism that feeds on crisis

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As Colin Crouch shows in The Strange Non-Death of Neoliberalism, the state and the market are not, as neoliberals insist, in perpetual conflict. Instead they have united around the demands of giant corporations.

When the state cuts regulation and social provision, business is enriched. It uses this wealth to trample on the doctrine that enriched it. Through campaign finance, networking and lobbying, big business recruits the state to champion its interests. In Britain corporations lobbied for privatisation programmes that replaced public monopolies with private ones. They also persuaded the government to create hybrid schemes (like the private finance initiative) that guarantee state funding for business. In the US, giant corporations persuaded Congress to remove the key regulations governing auditors and the banks. This led first to the Enron and WorldCom scandals, then the financial crisis.

Big business has used its power to persuade the state to let it keep dumping its environmental costs on the rest of us. It has vitiated anti-trust laws. It has excluded new entrants to the market (through its advertising budgets and distribution networks); and become big enough to prevent its own exit even when it fails (note the bailout of the banks). These are results of neoliberal policies of the kind that Cameron is applying, but they are sharply at odds with the predictions neoliberals made of how free markets would behave.

Above all, the neoliberal programme has closed down political choice. If the market, as the doctrine insists, is the only valid determinant of how societies evolve, and the market is dominated by giant corporations, then what big business wants is what society gets. You can see this squalid reality at work in Cameron’s speech last week. “We have listened to what business wants and we are delivering on it. Business said, ‘We want competitive tax rates,’ so we are creating the most competitive corporate tax regime in the G20 and the lowest rates of corporation tax in the G7 …”. What about the rest of us? Don’t we get a say?

The neoliberal hypothesis has been disproved spectacularly. Far from regulating themselves, untrammelled markets were saved from collapse only by government intervention and massive injections of public money. Far from delivering universal prosperity, government cuts have pushed us further into crisis. Yet this very crisis is now being used as an excuse to apply the doctrine more fiercely than before.

http://www.guardian.co.uk/commentisfree/2012/jul/30/economic-ruin-super-rich-totalitarian-capitalism