America's Petro-Terrorists

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

Even more comical: Lanny Breuer was named head of the Justice Department's criminal division. He'd previously chaired the white-collar defense unit at Covington. Prosecutions on Wall Street slammed to a halt.

Black estimates that at the height of the mortgage crisis, two million fraudulent loans were being written each year, largely through lenders inflating buyers' incomes. But not a single major figure was ever prosecuted. Had those 1,000 savings-and-loan criminals from the 1980s practiced their larceny under Bush II or Obama, they would have been given million-dollar bonuses and retired to beach homes in the Hamptons.

It was under these pleasant skies that oil speculators launched their attack on America. In 2008, when their assault became evident, even some Republicans called for investigations. But that quickly ended when Obama became president. Senate Minority Leader Mitch McConnell, not one for subtlety, announced that his party's Mission One was sabotaging Obama.

"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.

Democrats managed to pass the Dodd-Frank Act in 2010. One of its goals was to hand the oil market back to actual users and allow the feds to crack down on excess speculation. Kennedy believes this alone would have reduced the price of gas by $1 a gallon.

But after Congress announced its great triumph over Wall Street, it quietly teamed with bankers to gut the law. The Commodity Futures Trading Commission, which was supposed to spearhead the crackdown, saw its budget slashed. Speculators filed suit, essentially arguing that they had the inalienable right to violate the country.

The financial industry would eventually spend $100 million to stave off regulation, buying congressmen, setting up fake public-interest groups and funding academics to produce laughable studies.

Two years after Dodd-Frank passed, the feds have yet to touch a single hair on a speculator's head.

The propaganda campaign has worked. "What they've really won is the intellectual struggle," Black says. "People can't conceive of a world without these massive institutions, and can't believe they're a negative influence."

Take the Tea Party movement. Its followers are largely concentrated in the red states, statistically the nation's poorest and the most easily damaged by high gas prices. Yet their greatest benefactors, the Koch brothers, have boasted of being among the top five speculators in the world.

So while the Tea Partiers rally against regulation and government interference, the Kochs steal $14 from them every time they fill up their Fords.

"This is all part of the same formula of lower taxes and less regulation," Kennedy says. "That formula wins elections and ruins the country."


Sorry, but it could get scarier

As gas prices neared $4 this spring, Republicans reprised their Great Campaign of Idiocy from 2008. Once again the environmentalists and liberals were to blame, this time for blocking construction of the Keystone Pipeline, a massive project that would allow the shipping of oil from Canada to Texas.

Presidential aspirants Newt Gingrich and Michele Bachmann claimed they'd lower gas prices to $2 if elected, presumably by magic. Congressman Paul Ryan of Wisconsin, considered the party's brightest financial mind, proposed cutting the Commodity Futures Trading Commission's staff by two-thirds, just in case they might decide to grab coffee in the general vicinity of Wall Street. Mitch McConnell said he'd be happy to address speculation — but only if Democrats agreed to allow drilling on environmentally sensitive lands.

"They believe nothing was wrong with the markets in 2008," says Mark Cooper of the Consumer Federation.

Obama, meanwhile, was doing an inverse impression of Teddy Roosevelt. Instead of speaking softly and carrying a big stick, he brayed noisily and brandished a twig.

When gas prices approached $4 in April 2011, the president announced the creation of the Oil and Gas Price Fraud Working Group. This was Obama's grand plan to finally strike a blow against our enemies within.

But while the announcement came with fireworks, these new crime fighters would meet just a few times over the next year. Malevolence uncovered: zero.

"Anybody who looks at the non-activity of that working group knows that the only fraud was in naming it," Kelleher says. "I think their non-record speaks for itself."

Some senators like Sherrod Brown of Ohio and Bernie Sanders of Vermont have pushed earnestly for the feds to step in. But Republicans say they'll block any move against Wall Street — with swing-state Democrats there to serve the appetizers.

"There's a free-market philosophy that continues to exist," says Mark Williams, a former Federal Reserve examiner now at Boston University. "If you're a trader, you should have the right to trade. But if the greater community is harmed, you shouldn't have that right. We still live in a democracy, right?"

Michael Greenberger is among the few who believe a reprieve is in store. He's a law professor at the University of Maryland and a former director at the Commodity Futures Trading Commission. He believes Wall Street's relentless ineptitude may finally do it in.

Two months ago, JP Morgan was the latest to set itself aflame. One of its traders managed to gamble away $2 billion in just a few weeks. The damage is expected to reach $7 billion by the time the cinders go out.

"The JP Morgan episode really struck at the nerve of the American psyche about banks and what kind of damage they can do," Greenberger says. "These people who are doing nothing productive for the economy are walking away and, even in failure, collecting millions and millions of dollars."

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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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