America's Petro-Terrorists

How greedy speculators bought politicians and drove up the price of oil.

Yet the heirs to Phil Gramm have done their best to protect speculators, hosing the nation in the process. "Every time the economy starts to show signs of rising, the oil speculators jump in," says Joseph Kennedy II, a former congressman from Massachusetts. "They suck the life out of the economy."

As analysts spoke of recovery in April 2011, the price of gasoline approached the $4 mark. The wicked swings had resumed. Last spring, it topped out once more at $3.96 a gallon.

But this time it had become difficult to screech about environmentalists or supply and demand with a straight face. Even the banks were confessing their sins. An analyst for Goldman Sachs admitted that banks like his had added an artificial 40 percent to the price of a barrel. Everyone from the Federal Reserve to the CEO of ExxonMobil has conceded much the same.

"The big banks pulled the pin on their own grenades," says former regulator William Black.
Michael Forester
"The big banks pulled the pin on their own grenades," says former regulator William Black.
"Wall Street is a high crime area in which we basically have no cops on the beat," says former securities lawyer Dennis Kelleher.
Charles Steck
"Wall Street is a high crime area in which we basically have no cops on the beat," says former securities lawyer Dennis Kelleher.

That led Bart Chilton to do a little math. He's a commissioner with the Commodity Futures Trading Commission, which is supposed to oversee oil trading. By his calculations, the owner of a Honda Civic is sending $7.30 to JP Morgan and men like the Kochs every time she fills up her tank. For an F-150 pickup owner, the banker fee is $14.56 a tank.

Chilton believes the annual cost to the trucking industry is a whopping $29.1 billion. For airlines: $9.8 billion. That means every time you fly, every time you buy an apple or a beer, the nation's thirstiest welfare queens take a cut.

Your neighborhood gas station doesn't get a piece of anything, says Sherri Stone of the Petroleum Marketers Association, which represents 8,000 convenience stores and oil wholesalers. Typically, a gas station makes just seven cents a gallon, all of which is eaten up by credit card fees.

Yet it's the elderly who take the greatest beating. In 1979, Joe Kennedy founded Citizens Energy, a non-profit that provides heating oil to the poor and aged in 22 states. Three years ago, it cost $1,200 per winter to heat a normal house. Today, it's $4,000, he says. To hear Kennedy tell it, Gramm's amendment shouldn't be called the "Enron Loophole." It should be known as the "Let's Try to Starve Grandma Act."

Osama bin Laden could only have dreamed of causing such widespread damage to the U.S. economy. But both parties in Congress remain willing to protect Wall Street at all costs — even if it means terrorizing the country.

"We're going right back to the robber baron days," Kennedy says. "And it's eating away at our heart and soul."


Wall Street: A high crime area

The late 1980s were a quaint period, when the admirals of finance were still eligible for punishment under criminal law. Savings-and-loans were collapsing, just as their larger counterparts would 20 years later, pillaged by executive incompetence and fraud.

So federal prosecutors did something that would never happen today: They convicted 1,000 of the biggest and worst offenders. They also filed some 800,000 civil suits, and banned sleazebags from ever working in banking again.

But Washington didn't grasp the bloodbath's obvious lesson: Bankers still couldn't be trusted. Reagan's "Government Bad, Private Sector Good" mantra had become the nation's official business plan. Instead of watching the wicked more closely, deregulation allowed Big Finance to rampage untethered.

By the time George W. Bush reached office, the philosophy was so entrenched that, without fanfare or any official change in law, the feds decided that Wall Street basically had immunity under fraud statutes.

That was clear by the early 2000s, when accounting fraud became the height of fashion in executive suites across the land. The feds would prosecute the most egregious chieftains at WorldCom, Tyco and Adelphia. But some of the country's biggest names were caught rigging their books as well, firms like Merck, Halliburton and AOL. All were allowed to walk. The game had become fully rigged.

Economist William Black, a former bank regulator and author of The Best Way to Rob a Bank is to Own One, says there are 1 million law enforcement officers in America today. Only 1,300 are devoted to white-collar crime. Most police departments don't have a single detective working the country-club set. When Enron imploded under the largest fraud in Texas history, the Houston PD was busy rousting check bouncers.

With local investigations rare, and the feds purposefully averting their gaze, bankers were allowed to take down the housing market in a scheme 70 times the magnitude of the savings-and-loan collapse.

"Wall Street is a high crime area in which we basically have no cops on the beat," says former securities lawyer Dennis Kelleher, head of Better Markets, a non-profit devoted to protecting taxpayers from the Too Big to Fail crowd.

One might expect this to occur under George W., who made no bones that his presidency was all about aiding his fellow trust-fund swells. But it would only get worse under the self-styled change agent, Barack Obama.

The appointment of Attorney General Eric Holder said it all. He'd been a partner at the law firm of Covington & Burling, whose clients included Goldman, JP Morgan, Citigroup and Bank of America. The year before he joined the Obama administration, he made $2.5 million through fees from the very people he was supposed to prosecute.

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17 comments
Millieann
Millieann

Wikipedia is not the Encyclopedia Britannica. While there may be truth in this Wiki article, it is clearly written by a left-leaning person. How do I know that? Because of their high regard for Paul Krugman: "2008 Nobel Laureate in Economics Paul Krugman, a supporter of Barack Obama and former President Bill Clinton..."

Sotiredofitall
Sotiredofitall

No pictures of hoocies or guidos, no bitching about rich people's toys, no local celebrity sleeze - and you get 16 comments! Do most simply not understand how screwed we are by our elected overlords?

CheeryBitch
CheeryBitch

The next big collapse that will screw the American people will be energy. Just wait.

Sotiredofitall
Sotiredofitall

Phil Gramm is responsible for the repeal of Glass-Steagal and the Commodities Futures Modernization Act; we are still paying the price while he and his cronies sit on buckets of money.

Sotiredofitall
Sotiredofitall

Everyone has forgotten about Phil and Wendy screwing the public.

Sotiredofitall
Sotiredofitall

Ed Wallace (on the radio Saturday mornings) has been pushing this story for a couple of years, nobody cares. The move "Inside Job" covered the political / wallstreet collusion, nobody cares. Most are too busy bashing their favorite boogyman to see the whole system has become corrupt and doomed the public at large. With 35% or less of the registered voters even taking the time to vote, the same group of political opportunists keep getting re-elected. We're doomed.

Disgusted and sickened
Disgusted and sickened

This country is being run by treasonous thieves, liars, incompentents and profiteers. The Koch brothers are the devil incarnate and Phil Gramm was their filthy minion. Bill Clinton is just as much to blame as he happily went along with the deregulation. Dubya was so clueless he had no idea how badly the bankers were raping the country, but he approved of more deregulation anyway. As someone who voted for Obama, he can take his "vote for change" and shove it where the sun don't shine. I see some comments talking about "Lib talking points". I assume the Libs are the Democrats. The way I see it the Democrats are just as much to blame for this thievery as the Republicans and the stunningly clueless Tea Partiers. 11 comments in 2 days on this outrageous article. The apathy of the American population never ceases to amaze.

Guest
Guest

Does privatized profiteering at all costs justify all? I don't believe it does. I have religious texts on my side that warn that we need to balance earth's budget: We need to count more than cash. We need to value the invaluable, the priceless natural ecosystems of God's nature that produce the critical flows that keep humans alive day to day and minute to minute. Our so-called "economy" needs to balance earth's budget of flows impossible to count (or produce) in cash, critical flows produced by God's natural ecosystems of forests, wetlands, prairies, oceans. . . .critical flows such as breathable oxygen only as O2, drinkable water as H2O, rich, organic topsoil that produces the green, food, shelter and baby's laughter. Mechanical cash systems of humans devalue the ecosystems of nature of, by, for privatizing profiteering at all costs.

Zizi JeanMer
Zizi JeanMer

Oh my! You mean Obama wasn't the one who drove up oil prices? Maybe he wasn't born in Kenya either.

mark
mark

This is a great article, but doesn't go far enough. During QE1 and QEII, the government issued trillions of credits to the big banks at amazingly low interest rates like less than 0.25%. This was done in the hope that banks would lend this money to businesses to stimulate the economy, but that's not what they did. What they did was use this money to leverage bets in the commodities market, essentially grabbing every futures contract on every commodity. This was guaranteed to make prices rise, which they did. In one year many commodities rose between 70% to 100%. This then translated into higher prices, especially on food. So American taxpayers were issuing credits to banks that resulted in higher consumer prices, but nobody knows or complains... A side effect of this is that foreign countries are becoming annoyed with the advantage that the dollar provides to American financial interests. Need 100 billion to corner the market on soybeans, the Federal Reserve/Treasury issues low interest credits that are exchanged for a countries commodities that then raises the prices for its own people, no one else can do this so easily. It's so easy to make money in this rigged system that I really don't understand why anyone is paid a bonus for their "performance".

Guest
Guest

Pretty light weight article. They typed out some lib talking points (basically the mirror of Koch Bros, Tea Party) and that is about it. The kernel of truth is the speculation part. But, again the author didn't really back anything up except to toss in lib red meat words and people's names. Pretty weak effort.

Sashali
Sashali

Great article. More, more, more. Wake up our country with further education. Thank you.

Tivasamoht
Tivasamoht

WHEN WILL WE WAKE UP, POLITICIANS ARE NOT ON THE SIDE OF THE AMERICAN PUBLIC!

Hughaynesworth
Hughaynesworth

Good reporting.....Let's have more. Maybe we should investigate just how the billions that have been stolen by these shysters have made their lives (and ours) different.

Chiggers!
Chiggers!

Silly. Everyone knows terrorists are all moslems.

Larry
Larry

There is no reason why Phil and Wendy Gramm are not in prison for collusion, as she was Enron Director when this started. except SEC funding was being cut, and anti-government fervor accelerating. At least Phil brought his 'expertise' to UBS and helped cost them billions!!! So, when are you all gonna stand up and yell that, "I'm not gonna take it anymore" ? Or at least vote every one of them out every time.

 
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