10 Ways the American Economy Is Built on Fraud
Fraud has become so endemic in this country that it's woven its way into America’s DNA.
April 29, 2010 | Mark Ames
Here are 10 ways the American economy is built on fraud:
1). Accounting Fraud: Last year, America’s leading banks were insolvent. They had tens or hundreds of billions in losses on their books, and the only way to wipe those losses out would be to either a) own up to the mess, raise enormous amounts of money on top of all the bailout money; or b) get out a big fat eraser, and wipe those losses off the books as if they never existed. The first option was nice and all, but a real hassle. So Geithner and Larry Summers chose Door Number Two: Accounting Fraud. They forced the FASB to accept a rule-change in the accounting methodology called “mark-to-model” which let banks decide how much their assets were worth, rather than letting the markets decide. So if for example a BofA owned a complex security called “Orion Butt Fungus” that was worth 5 pesos on the open market, but BofA was too broke to go out and raise 5 pesos to cover that loss, under the new accounting rules, the government told BofA that rather than pricing “Orion Butt Fungus” at what the market will actually pay for it, why not first ask, “How much would BofA like ‘Orion Butt Fungus’ to be worth, in a perfect world?’” If BofA answers, “Doyee, gee I dunno, how about $500 million?” then under the “mark-to-model” accounting rules, BofA could now value “Orion Butt Fungus” at $500 million, and voila! Their problems are over. That wasn’t so hard, was it? Suddenly, BofA looks like it knows how to pick winners! more
Taibbi, Naked Capitalism Re: Our Bipartisan "Fraudemocracy"
Sun May 02, 2010 at 06:26:17 AM PDT
Hindsight is 20/20. (And, what we're seeing, clearly, in the rearview mirror is pretty damn ugly.)
We live in a nation bursting at the seams with fraud. For the purposes of this diary, I'm calling it our "Fraudemocracy."
Call it our moment of clarity. Call it mass disgust with the way things are. But, let's call it what "it" is.
It is fraud, greed and spin versus suffering, compassion and reality. It is Wall Street versus Main Street. It is the haves versus the have nots. It is those that make the news versus those too poor to make the news.
It is the "new normal." It is the new golden rule: "Those that have the gold write the rules." It is bullshit. It is fraud.
And, IMHO, too many Democrats are okay (or, ambivalent, or dealing with a serious bout of cognitive dissonance about it) with that. more