As President Obama wraps-up his second term, people are looking back to reassess his handling of the Great Recession. During his first year in office, our Disappointer-In-Chief introduced his own version of “trickle-down economics” by way of a bank bailout scheme called the Public-Private Investment Program (PPIP or “pee-pip”).
Despite his July 15, 2008, campaign promise that if he were elected, there would be “no more trickle-down economics”, the President and the Federal Reserve embarked on a course of bailing out the banks, rather than distressed businesses or the taxpayers themselves.
As this writer pointed out on Sept. 21, 2009, Australian economist Steve Keen published a report from his website explaining how the “money multiplier” myth, fed to Obama by the very people who facilitated the financial crisis, would be of no use in the effort to strengthen the economy.
Concerns that the United States could be doomed to a Japan-like addiction to monetary stimulus gimmicks have amped-up enthusiasm for the Fed to become more aggressive about raising interest rates. Meanwhile, many economists contend that tightening monetary policy before the economy reaches a robust state could plunge the nation back into recession.
In April 2016, former Federal Reserve Chairman Ben Bernanke advocated the use of “helicopter money” as a last-resort strategy to jump-start a stalled economy. This provoked a response from economist Steve Keen emphasizing that Bernanke and other mainstream economists have shared a flawed belief that the public’s expectations for a healthy rate of inflation could cause such inflation to occur. In other words: “Inflationary expectations cause inflation.”
Steve Keen consistently emphasizes the need to understand how excessive private debt causes severe economic contraction and financial crises. Specifically, when the level of private debt exceeds GDP by 150% and that level continues to grow – disaster awaits.
So what can be done to keep the debt-to-GDP ratio in check? In this video, Steve Keen and Edward Harrison of the Credit Writedowns website explain how Ben Bernanke’s helicopter could be sent on a debt reduction mission.
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Two months ago, Barry Ritholtz wrote a piece for The Washington Post in rebuttal to New York Mayor Michael Bloomberg’s parroting of what has become The Big Lie of our time. In response to a question about Occupy Wall Street, Mayor Bloomberg said this:
“It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.”
Ritholtz then proceeded to list and discuss the true causes of the financial crisis. Among those causes were Alan Greenspan’s Federal Reserve monetary policy – wherein interest rates were reduced to 1 percent; the deregulation of derivatives trading by way of the Commodity Futures Modernization Act; the Securities and Exchange Commission’s “Bear Stearns exemption” – allowing Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns to boost their leverage as high as 40-to-1; as well as the “bundling” of sub-prime mortgages with higher-quality mortgages into sleazy “investment” products known as collateralized debt obligations (CDOs).
After The Washington Post published the Ritholtz piece, a good deal of supportive commentary emerged – as observed by Ritholtz himself:
Since then, both Bloomberg.com and Reuters each have picked up the Big Lie theme. (Columbia Journalism Review as well). In today’s NYT, Joe Nocera does too, once again calling out those who are pushing the false narrative for political or ideological reasons in a column simply called “The Big Lie“.
Purveyors of The Big Lie are also big on advancing the claim that the “too big to fail” beneficiaries of the TARP bailout repaid the money they were loaned, at a profit to the taxpayers. Immediately after her arrival at CNN, former Goldman Sachs employee, Erin Burnett made a point of interviewing a young, Occupy Wall Street protester, asking him if he was aware that the government actually made a profit on the TARP. Unfortunately, the fiancée of Citigroup executive David Rubulotta didn’t direct her question to Steve Randy Waldman – who debunked that propaganda at his Interfluidity website:
Substantially all of the TARP funds advanced to banks have been paid back, with interest and sometimes even with a profit from sales of warrants. Most of the (much larger) extraordinary liquidity facilities advanced by the Fed have also been wound down without credit losses. So there really was no bailout, right? The banks took loans and paid them back.
Bullshit.
* * *
During the run-up to the financial crisis, bank managers, shareholders, and creditors paid themselves hundreds of billions of dollars in dividends, buybacks, bonuses and interest. Had the state intervened less generously, a substantial fraction of those payouts might have been recovered (albeit from different cohorts of stakeholders, as many recipients of past payouts had already taken their money and ran). The market cap of the 19 TARP banks that received more than a billion dollars each in assistance is about 550B dollars today (even after several of those banks’ share prices have collapsed over fears of Eurocontagion). The uninsured debt of those banks is and was a large multiple of their market caps. Had the government resolved the weakest of the banks, writing off equity and haircutting creditors, had it insisted on retaining upside commensurate with the fraction of risk it was bearing on behalf of stronger banks, the taxpayer savings would have run from hundreds of billions to a trillion dollars. We can get into all kinds of arguments over what would have been practical and legal. Regardless of whether the government could or could not have abstained from making the transfers that it made, it did make huge transfers. Bank stakeholders retain hundreds of billions of dollars against taxpayer losses of the same, relative to any scenario in which the government received remotely adequate compensation first for the risk it assumed, and then for quietly moving Heaven and Earth to obscure and (partially) neutralize that risk.
The banks were bailed out. Big time.
Another overlooked cause of the financial crisis was the fact that there were too many psychopaths managing the most privileged Wall Street institutions. Not only had the lunatics taken over the asylum – they had taken control of the world’s largest, government-backed casino, as well. William D. Cohan of Bloomberg News gave us a peek at the recent work of Clive R. Boddy:
It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.
Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
Professor Boddy wrote a book on the subject – entitled, Corporate Psychopaths. The book’s publisher, Macmillan, provided this description of the $90 opus:
Psychopaths are little understood outside of the criminal image. However, as the recent global financial crisis highlighted, the behavior of a small group of managers can potentially bring down the entire western system of business. This book investigates who they are, why they do what they do and what the consequences of their presence are.
Matt Taibbi provided a less-expensive explanation of this mindset in a recent article for Rolling Stone:
Most of us 99-percenters couldn’t even let our dogs leave a dump on the sidewalk without feeling ashamed before our neighbors. It’s called having a conscience: even though there are plenty of things most of us could get away with doing, we just don’t do them, because, well, we live here. Most of us wouldn’t take a million dollars to swindle the local school system, or put our next door neighbors out on the street with a robosigned foreclosure, or steal the life’s savings of some old pensioner down the block by selling him a bunch of worthless securities.
But our Too-Big-To-Fail banks unhesitatingly take billions in bailout money and then turn right around and finance the export of jobs to new locations in China and India. They defraud the pension funds of state workers into buying billions of their crap mortgage assets. They take zero-interest loans from the state and then lend that same money back to us at interest. Or, like Chase, they bribe the politicians serving countries and states and cities and even school boards to take on crippling debt deals.
Do you think that Mayor Bloomberg learned his lesson . . . that spreading pro-bankster propaganda can provoke the infusion of an overwhelming dose of truth into the mainstream news? Nawwww . . .
The November 13 broadcast of 60 Minutes, which featured a piece by Steve Kroft about Congressional insider trading, gave some needed momentum to the effort seeking a ban on the practice. I originally wrote about this activity in September of 2009:
A recent report by American Public Media’s Steve Henn revealed how the law prohibiting “insider trading” (i.e. acting on confidential corporate information when making a transaction involving that company’s publicly-traded stock) does not apply to members of Congress. Remember how Martha Stewart went to prison? Well, if she had been representing Connecticut in Congress, she might have been able to interpose the defense that she was inspired to sell her ImClone stock based on information she acquired in the exercise of her official duties.
* * *
Mr. Henn’s report went on to raise concern over the fact that there is nothing to stop members of Congress from acting on such information to the detriment of their constituents in favor of their own portfolios.
In February of 2011, I discussed the subject again, including the history of Congressman Brian Baird’s introduction of H.R.682, the “Stop Trading on Congressional Knowledge Act” (STOCK Act) in January of 2009. On November 14, I was pleased to report that a conservative pundit – Peter Schweizer – a research fellow at Stanford University’s Hoover Institution – had joined the battle against Congressional insider trading:
A new book by Peter Schweizer – Throw Them All Out – deals with this very subject. The book’s subtitle is reminiscent of the point I tried to make in my February posting: “How politicians and their friends get rich off insider stock tips, land deals and cronyism that would send the rest of us to prison”.
On December 28, J.R. Dunn – consulting editor of the conservative American Thinker, enthusiastically weighed-in with a supportive review of Peter Schweizer’s book. Beyond that, Dunn’s opening remarks addressed the greater problem:
Crony capitalism is the most serious current danger to the American community, a threat not simply to government or the economy, but to our very way of life. It is the worst such threat since the trusts and monopolies of the early 20th century, and in much the same way. Cronyism is one of the major forces behind the establishment of the corrupt pseudo-aristocracy that has been taking shape in this country over the past two decades, a synthetic privileged class made up in large part of politicians, hustlers, and hangers-on who have become expert in exploiting the rest of us.
Fortunately, we have now reached a point where greater scrutiny is being used to investigate the manner in which Congress-cretins enrich themselves while in office. David Richards wrote a great piece for the Daily Mail, which focused on the fact that over the past 25 years, the median net worth of a member of Congress has nearly tripled while the income of an average U.S. family has actually fallen:
Against a backdrop of a vast budget deficit and fears of the fragility of the economy, analysis by the Washington Post shows that the median net worth of a member of Congress has nearly tripled over 25 years while the income of an average U.S. family has actually fallen.
It calculated that their median net worth, between 1984 and 2009 and excluding home equity, rose from $280,000 to $725,000.
Over those same 25 years the wealth of the average U.S. family slipped from $20,500 from $20,600, a University of Michigan study shows.
The Daily Mail article went on to point out that members of Congress are actually doing significantly better than America’s most wealthy citizens – who are so zealously defended by critics of the Occupy Wall Street movement:
The New York Times’ report into the wealth of members of Congress found that they were also getting rich compared with affluent Americans.
It found that the median net worth of members of Congress rose 15 per cent from 2004 to 2010 as the net worth of the richest 10 per cent of the country remained for the most part flat.
This disparity between those they represent also translated into a wider gap in their experiences of the economy, the Post found.
It interviewed Gary Myers, the son of a bricklayer, a Republican who entered Congress in 1975. He said his experience of having worked as a foreman in a steel mill shaped his outlook and led him to vote in favour of raising the minimum wage and helped him to understand the need for workers to have a safety net.
‘It would be hard to argue that the work in the steel mill didn’t give me a different perspective,’ he told the Post. ‘I think everybody’s history has an impact on them.’
The same area is now represented by Republican Mike Kelly who was elected last year. After graduating he married the heiress to an oil fortune and took over his father’s car dealership where he had worked as a youngster.
He told the paper he believed he was overtaxed already and that unemployment benefits made some people less willing to look for employment.
On the other hand, there is one Congressman’s investment portfolio, which is being criticized for other reasons. In fact, I’m sure that many investment analysts are having a good laugh as they read Jason Zweig’s recent posting for his new Total Return blog at The Wall Street Journal:
Yes, about 21% of Rep. Paul’s holdings are in real estate and roughly 14% in cash. But he owns no bonds or bond funds and has only 0.1% in stock funds. Furthermore, the stock funds that Rep. Paul does own are all “short,” or make bets against, U.S. stocks. One is a “double inverse” fund that, on a daily basis, goes up twice as much as its stock benchmark goes down.
The remainder of Rep. Paul’s portfolio – fully 64% of his assets – is entirely in gold and silver mining stocks. He owns no Apple, no ExxonMobil, no Procter & Gamble, no General Electric, no Johnson & Johnson, not even a diversified mutual fund that holds a broad basket of stocks. Rep. Paul doesn’t own stock in any major companies at all except big precious-metals stocks like Barrick Gold, Goldcorp and Newmont Mining.
* * *
Rep. Paul appears to be a strict buy-and-hold investor who rarely trades; he has held many of his mining stocks since at least 2002. But, as gold and silver prices have fallen sharply since September, precious-metals equities have also taken a pounding, with many dropping 20% or more. That exposes the risk in making a big bet on one narrow sector.
At our request, William Bernstein, an investment manager at Efficient Portfolio Advisors in Eastford, Conn., reviewed Rep. Paul’s portfolio as set out in the annual disclosure statement. Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says.
There are many possible doomsday scenarios for the U.S. economy and financial markets, explains Mr. Bernstein, and Rep. Paul’s portfolio protects against only one of them: unexpected inflation accompanied by a collapse in the value of the dollar. If deflation (to name one other possibility) occurs instead, “this portfolio is at great risk” because of its lack of bonds and high exposure to gold.
At least Congressman Ron Paul is authentic enough to “place his money where his mouth is” when criticizing Federal Reserve monetary policy.
As election year progresses, the current trend of “turning over rocks” to investigate the financial dealings of those in Congress could make things quite interesting.
I’m no cheerleader for President Obama. Since he first became our Disappointer-In-Chief, I have vigorously voiced my complaints about his decisions. At the end of President Obama’s first month in office, I expressed concern that his following the advice of “Turbo” Tim Geithner and Larry Summers was putting the welfare (pun intended) of the Wall Street banks ahead of the livelihoods of those who voted for him. I lamented that this path would lead us to a ten-year, Japanese-style recession. By September of 2010, it was obvious that those early decisions by the new President would prove disastrous for the Democrats at the mid-term elections. At that point, I repeated my belief that Obama had been listening to the wrong people when he decided to limit spending on the economic stimulus package to approximately half of what was necessary to end the economic crisis:
Even before the stimulus bill was signed into law, the administration had been warned, by way of an article in Bloomberg News, that a survey of fifty economists revealed that the proposed $787 billion stimulus package would be inadequate.
Last week, I was about to write a piece, describing that decision as “Obama’s Tora Bora moment”. When I sat down at my computer just after 11 p.m. on Sunday, I realized that the timing wouldn’t have been appropriate for such a metaphor. The President was about to make his historic speech, announcing that Osama Bin Laden had been killed. Just as many have criticized the Obama administration’s handling of the disaster in the Gulf of Corexit as “Obama’s Katrina Moment”, I believe that the President’s decision to “punt” on the stimulus – by holding it at $862 billion and relying on the Federal Reserve to “play defense” with quantitative easing programs – was a mistake, similar in magnitude to that of allowing Bin Laden to escape at Tora Bora. The consequences have been enormously expensive (simply adding the $600 billion cost of QE 2 alone to a better-planned stimulus program would have reduced our current unemployment level to approximately 5%). Beyond that, the advocates of “Austerian” economics have scared everyone in Washington into the belief that the British approach is somehow the right idea – despite the fact that their economy is tanking. Never mind the fact Australia’s stimulus program was successful and ended the recession in that country.
The Fox Ministry of Truth has brainwashed a good number of people into believing that Obama’s stimulus program (a/k/a the American Recovery and Reinvestment Act of 2009) was a complete failure. You will never hear the Fox Ministry of Truth admit that prominent Republican economist Keith Hennessey, the former director of the National Economic Council under President George W. Bush, pointed out that the 2009 stimulus “increased economic growth above what it otherwise would have been”. The Truth Ministry is not likely to concede that John Makin of the conservative think-tank, the American Enterprise Institute, published this statement at the AEI website:
Absent temporary fiscal stimulus and inventory rebuilding, which taken together added about 4 percentage points to U.S. growth, the economy would have contracted at about a 1 percent annual rate during the second half of 2009.
On the other hand, count me among those who are skeptical that the Federal Reserve’s monetary policy can have any impact on our current unemployment crisis (it hasn’t yet).
Many of Obama’s critics have complained that the Presidential appearance at Ground Zero was an inappropriate “victory lap” – despite the fact that George W. Bush was invited to the event (although he declined). Not only was that victory lap appropriate – Obama is actually entitled to run another. As E.J. Dionne pointed out, the controversial “nationalization” of the American auto industry (what should have been done to the Wall Street banks) has become a huge success:
The actual headlines make the point. “Demand for fuel-efficient cars helps GM to $3.2 billion profit,” declared The Washington Post. “GM Reports Earnings Tripled in First Quarter, as Revenue Jumped 15 Percent,” reported The New York Times.
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“Having the federal government involved in every aspect of the private sector is very dangerous,” Rep. Dan Burton, R-Ind., told Fox News in December 2008. “In the long term it could cause us to become a quasi-socialist country.” I don’t see any evidence that we have become a “quasi-socialist country,” just big profits.
Rep. Lamar Smith, R-Texas, called the bailout “the leading edge of the Obama administration’s war on capitalism,” while other members of Congress derided the president’s auto industry task force. “Of course we know that nobody on the task force has any experience in the auto business, and we heard at the hearing many of them don’t even own cars,” declared Rep. Louie Gohmert, R-Texas, after a hearing on the bailout in May 2009. “And they’re dictating the auto industry for our future? What’s wrong with this picture?”
* * *
In the case of the car industry, allowing the market to operate without any intervention by government would have wiped out a large part of the business that is based in Midwestern states. This irreversible decision would have damaged the economy, many communities and tens of thousands of families.
And contrary to the predictions of the critics, government officials were quite capable of working with the market in restructuring the industry. Government didn’t overturn capitalism. It tempered the market at a moment when its “natural” forces were pushing toward catastrophe. Government had the resources to buy the industry time.
In fairness, President Obama has finally earned some bragging rights, after punting on health care, the stimulus and financial “reform”. He knows his Republican opponents will never criticize him for his own “Tora Bora moment” – because to do so would require an admission that a more expensive economic stimulus was necessary in 2009. As a result, it will be up to an Independent candidate or a Democratic challenger to Obama (less likely these days) to explain that the persistent economic crisis – our own “lost decade” – lingers on as a result of Obama’s “Tora Bora moment”.
One of my favorite commentators, Paul Farrell of MarketWatch, recently discussed some of the prescient essays of Jeremy Grantham, who manages over $100 billion as chief executive of an asset management firm – GMO. Paul Farrell reminded us that Grantham warned of the impending financial crisis in July of 2007, which came as a surprise to those vested with the responsibility of paying attention to such advice. As Farrell pointed out:
Our nation’s leaders are in denial, want happy talk, bull markets, can’t even see the crash coming, even though the warnings were everywhere for years. Why the denial? Grantham hit the nail on the head: Our leaders are “management types who focus on what they are doing this quarter or this annual budget and are somewhat impatient.”
Paul Farrell is warning of an “inevitable crash that is coming possibly just before the Presidential election in 2012”. He incorporated some of Grantham’s rationale in his own discussion about how and why this upcoming crash will come as another surprise to those who are supposed to help us avoid such things:
Most business, banking and financial leaders are short-term thinkers, focused on today’s trades, quarterly earnings and annual bonuses. Long-term historical thinking is a low priority.
Paul Farrell’s article was apparently written in anticipation of the release of Jeremy Grantham’s latest Quarterly Letter at the conclusion of the first quarter of 2011. Grantham’s newest discourse is entitled, “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever”. The theme is best summed-up by these points from the “summary” section:
From now on, price pressure and shortages of resources will be a permanent feature of our lives. This will increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor countries.
We all need to develop serious resource plans, particularly energy policies. There is little time to waste.
After applying some common sense and simple mathematics to the bullish expectations of immeasurable growth ahead, Grantham obviously upset many people with this sober observation:
Rapid growth is not ours by divine right; it is not even mathematically possible over a sustained period. Our goal should be to get everyone out of abject poverty, even if it necessitates some income redistribution. Because we have way overstepped sustainable levels, the greatest challenge will be in redesigning lifestyles to emphasize quality of life while quantitatively reducing our demand levels.
We have all experienced the rapid spike in commodity prices: more expensive gas at the pump, higher food prices and widespread cost increases for just about every consumer item. Many economists and other commentators have blamed the Federal Reserve’s ongoing program of quantitative easing for keeping interest rates so low that the enthusiasm for speculation on commodities has been enhanced, resulting in skyrocketing prices. Surprisingly, Grantham is not entirely on board with that theory:
The Monetary Maniacs may ascribe the entire move to low interest rates. Now, even I know that low rates can have a large effect, at least when combined with moral hazard, on the movement of stocks, but in the short term, there is no real world check on stock prices and they can be, and often are, psychologically flakey. But commodities are made and bought by serious professionals for whom today’s price is life and death. Realistic supply and demand really is the main influence.
Grantham demonstrated that most of the demand pressure on commodities is being driven by China. This brings us to his latest prediction and dire warning:
The significance here is that given China’s overwhelming influence on so many commodities, especially in terms of the percentage China represents of new growth in global demand, any general economic stutter in China can mean very big declines in some of their prices.
You can assess on your own the probabilities of a stumble in the next year or so. At the least, I would put it at 1 in 4, while some of my colleagues think the odds are much higher. If China stumbles or if the weather is better than expected, a probability I would put at, say, 80%, then commodity prices will decline a lot. But if both events occur together, it will very probably break the commodity markets en masse. Not unlike the financial collapse. That was a once in a lifetime opportunity as most markets crashed by over 50%, some much more, and then roared back.
Modesty should prevent me from quoting from my own July 2008 Quarterly Letter, which covered the first crash.
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In the next decade, the prices of all raw materials will be priced as just what they are, irreplaceable. If the weather and China syndromes strike together, it will surely produce the second “once in a lifetime” event in three years.
For the near-term, we appear to be in an awful double-bind: either we get crushed by increasing commodity prices – or – commodities will become plentiful and cheap, causing the world economy to crash once again. It won’t bother Wall Street at all, because The Ben Bernank and “Turbo” Tim will be ready and willing to provide abundant bailouts – again, at taxpayer expense.
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In the course of attempting to explain or criticize complex economic and financial issues, it usually becomes necessary to quote from the experts – often at length – to provide an understandable commentary. Nevertheless, it was with great pleasure that I read about a dust-up involving Megan McArdle’s use of a published interview conducted by Bruce Bigelow of Xconomy, without attribution. The incident was recently discussed by Brad DeLong. (If you are a regular reader of Professor DeLong’s blog, you might recognize the title of this posting as a variant on the name of his website.) Before I move on, it will be necessary to expand this moment of schadenfreude, due to the ironic timing of the controversy. On March 7, Time published a list of “The 25 Best Financial Blogs”, with McArdle’s blog as number 15. Aside from the fact that many worthy bloggers were overlooked by Time (including Mish and Simon Johnson) the list drew plenty of criticism for its inclusion of McArdle’s blog. Here are just some of the comments to that effect, which appeared on the Naked Capitalism website:
duffolonious says:
Megan McArdle? Seriously? I’ve seen so many people rip her to shreds that I’ve completely ignored her.
Is she another example of nepotism? Like Bill Kristol.
Procopius says:
Basically yes, although not quite as blatant. Her old man was an inspector of contracting in New York City. He got surprisingly rich. From that he went to starting his own contracting business. He got surprisingly rich. Then he went back to New York City in an even higher level supervisory job. He got surprisingly rich. So Megan went to good schools and had her daddy’s network of influential “friends” to help her with her “job search” when she graduated. Of course, she’s no dummy, and did a professional job of networking with all the “right” people she met at school, too.
For my part, in order to discuss the proposed settlement resulting from the investigation of the five largest banks and mortgage servicers conducted by state attorneys general and federal officials (including the Justice Department, the Treasury and the newly-formed Consumer Financial Protection Bureau) I will rely on the commentary from some of my favorite financial bloggers. The investigating officials submitted this 27-page proposal as the starting point for what is expected to be a weeks-long negotiation process, possibly resulting in some loan modifications as well as remedies for those who faced foreclosures expedited by the use of “robo-signers” and other questionable practices.
The argument defenders of the deal make are twofold: this really is a good deal (hello?) and it’s as far as the Obama Administration is willing to push the banks, so we have to put a lot of lipstick on this pig and resign ourselves to political necessities. And the reason the Obama camp is trying to declare victory and go home is that it is afraid that any serious effort to deal with the mortgage mess will reveal the insolvency of the banks.
Team Obama had put on a full court press since March 2009 to present the banks as fundamentally sound, and to the extent they needed more dough, the stress tests and resulting capital raising took care of any remaining problems. Timothy Geithner was even doing victory laps last month in Europe. To reverse course now and expose the fact that writedowns on second mortgages held by the four biggest banks and plus the true cost of legal liabilities from the mortgage crisis (putbacks, servicer fraud, chain of title issues) would blow a big hole in the banks’ balance sheets and fatally undermine whatever credibility the officialdom still has.
But the fallacy of their thinking is that addressing and cleaning up this rot would lead to a financial crisis, therefore anything other than cosmetics and making life inconvenient for the banks around the margin is to be avoided at all costs. But these losses exist already. The fallacy lies in the authorities’ delusion that they are avoiding creating losses, when we are in fact talking about who should bear costs that already exist.
The perspective taken by Edward Harrison of Credit Writedowns focused on the extent to which we can find the fingerprints of Treasury Secretary Tim Geithner on the settlement proposal. Ed Harrison emphasized the significance of Geithner’s final remarks from an interview conducted last year by Daniel Gross for Slate:
The test is whether you have people willing to do the things that are deeply unpopular, deeply hard to understand, knowing that they’re necessary to do and better than the alternatives.
From there, Ed Harrison illustrated how Geithner’s roadmap has been based on the willingness to follow that logic:
More than ever, Tim Geithner runs the show for economic policy. He is the last man standing of the Old Obama team. Volcker, Summers, Orszag, and Romer are all gone. So Geithner’s vision of bailouts and settlements is the one that carries the most weight.
What is Geithner saying with his policies?
The financial system was on the verge of collapse. We all know that now – about US banks and European ones too. Fed Chair Ben Bernanke has said so as has Bank of England head Mervyn King. The WikiLeaks cables affirmed systemic insolvency as the real issue most demonstrably.
When presented with a choice of Japan or Sweden as the model for crisis resolution, the US felt the Japanbanking crisis response was the best historical precedent. It is still unclear whether this was a political or an economic decision.
The most difficult political aspect of the banking crisis response was socialising bank losses. All banking crisis bailouts involve some form of loss socialisation and this is a policy which citizens find abhorrent. That’s what Geithner meant most directly about ‘deeply unpopular, deeply hard to understand’.
Using pro-inflationary monetary policy and fiscal stimulus, the U.S. can put this crisis in the rear view mirror. Low interest rates and a steep yield curve combined with bailouts, stress tests, dividend reductions and private capital will allow time to heal all wounds. That is the Geithner view.
Once the system is healthy again, it should expand. The reason you need to bail the banks out is that they have expansion opportunities abroad. As emerging markets develop more sophisticated financial markets, the Treasury secretary believes American banks are well positioned to profit. American finance can’t profit if you break up the banks.
I would argue that Tim Geithner believes we are almost at that final stage where the banks are now healthy enough to get bigger and take share in emerging markets. His view is that a more robust regulatory environment will keep things in check and prevent another financial crisis.
I hope this helps to explain why the Obama Administration is keen to get this $20 billion mortgage settlement done. The prevailing view in the Administration is that the U.S. is in a fragile but sustainable recovery. With emerging markets leading the economic recovery and U.S. banks on sounder footing, now is the time to resume the expansion of U.S. financial services. I should also add that given the balance sheet recession in the U.S., the only way banks can expand is via an expansion abroad.
I strongly disagree with this vision of America’s future economic development. But this is the road we are on.
Will those of us who refuse to believe in Tinkerbelle face the blame for the next financial crisis?
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Federal Reserve Chairman, Ben Bernanke appeared before the Senate Banking Committee this week to testify about the Fed’s monetary policy. Scot Kersgaard of The American Independent focused our attention on a five-minute exchange between Colorado Senator Michael Bennett and The Ben Bernank, with an embedded video clip. Senator Bennett asked Bernanke to share his opinions concerning the recommendations made by President Obama’s bipartisan deficit commission. Bernanke initially attempted to dodge the question with the disclaimer that the Fed’s authority extends to only monetary policy rather than fiscal policy – such as the work conducted by the deficit commission. If Congressman Ron Paul had been watching the hearing take place, I’m sure he had a good, hard laugh at that statement. Nevertheless, Bernanke couldn’t restrain himself from concurring with the effort to place the cost of Wall Street’s larceny on the backs of middle-class taxpayers.
The chant for “entitlement reform” continues to reverberate throughout the mainstream media as it has for the past year. Last May, economist Dean Baker exposed this latest effort toward upward wealth redistribution:
Emboldened by the fact that none of them have gone to jail for their role in the financial crisis, the Wall Street gang is now gunning for Social Security and Medicare, the country’s most important safety net programs. Led by investment banker Pete Peterson, this crew is spending more than a billion dollars to convince the public that slashing these programs is the only way to protect our children and grandchildren from poverty.
A key propaganda tactic used by the “entitlement reform” crusaders is to characterize Social Security as an “entitlement” even though it is not (as I discussed here). Phil Davis, avowed capitalist and self-described “serial entrepreneur”, wrote a great essay, which refuted the claim that Social Security is “broken” while explaining why it is not an “entitlement”. Unfortunately, there are very few politicians who are willing to step forward to provide the simple explanation that Social Security is not an entitlement. Senator Richard Blumenthal (D-Conn.) recently made a statement to that effect before a senior citizens’ group in East Haven, Connecticut – without really providing an explanation why it is not an entitlement. Susan Feiner wrote a great commentary on the subject last fall for womensenews.org. Here is some of what she said:
Moreover, Social Security is not an entitlement program as it’s paid for entirely by payroll taxes. It is an insurance program, not an entitlement. Not one penny of anyone’s Social Security comes out of the federal government’s general fund.
Social Security is, by law, wholly self-financing. It has no legal authority to borrow, so it never has.
If this incredibly successful and direly needed program hasn’t ever borrowed a dime, why is the president and his hand-picked commissioners putting Social Security cuts (and/or increases in the retirement age) in the same sentence as deficit reduction?
The attempt to mischaracterize Social Security as an “entitlement” is not a “Right vs. Left” dispute — It’s a class warfare issue. There have been commentaries from across the political spectrum emphasizing the same fact: Social Security is not an “entitlement”. The assertion has appeared on the conservative patriotsteaparty.netwebsite, the DailyKos on the Left and in a piece by independent commentator, Marti Oakley.
The battle for “entitlement reform” is just one front in the larger war being waged by Wall Street against the middle class. Kevin Drum discussed this conflict in a recent posting at his Plutocracy Now blog for Mother Jones:
It’s about the loss of a countervailing power robust enough to stand up to the influence of business interests and the rich on equal terms. With that gone, the response to every new crisis and every new change in the economic landscape has inevitably pointed in the same direction. And after three decades, the cumulative effect of all those individual responses is an economy focused almost exclusively on the demands of business and finance. In theory, that’s supposed to produce rapid economic growth that serves us all, and 30 years of free-market evangelism have convinced nearly everyone — even middle-class voters who keep getting the short end of the economic stick — that the policy preferences of the business community are good for everyone. But in practice, the benefits have gone almost entirely to the very wealthy.
Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions. Wall Street money controls voters, runs America, both parties. Yes, Wall Street is bankrupting America.
Wake up America, listen:
“Our country is bankrupt. It’s not bankrupt in 30 years or five years,” warns economist Larry Kotlikoff, “it’s bankrupt today.”
Economist Peter Morici: “Capitalism is broken, America’s government is two bankrupt political parties bankrupting the country.”
David Stockman, Reagan’s budget director: “If there were such a thing as Chapter 11 for politicians” the “tax cuts would amount to a bankruptcy filing.”
BusinessWeek recently asked analyst Mary Meeker to run the numbers. How bad is it? America really is bankrupt, with a “net worth of a negative $44 trillion.” Bankrupt.
And it will get worse. Unfortunately, nothing can stop America’s self-destructive Wall Street bankers. They simply do not care that their “doomsday capitalism” is destroying themselves from within, and is bankrupting America too.
On February 21, I quoted a statement made by bond guru Bill Gross of PIMCO, which included this thought:
America requires more than a makeover or a facelift. It needs a heart transplant absent the contagious antibodies of money and finance filtering through the system. It needs a Congress that cannot be bought and sold by lobbyists on K Street, whose pockets in turn are stuffed with corporate and special interest group payola.
To redeem Wall Street’s soul, radical solutions are clearly needed, but advocating the eradication of profit-based markets that have served humanity well on balance without a viable replacement is fanciful. Gross deserves an “A” for intent — but something more practical than a “heart transplant” is required to restore trust and efficacy to our banking system.
* * *
But an economy based on something other than profit risks misery and injustice of another sort. The antibodies now needed aren’t those that negate profitability. Rather, they are the ones that bind financial engineering to value creation and advancement of society.
Perhaps the most constructive solution to the problem is my suggestion from February 10: Recruit and employ an army of lobbyists to represent and advance the interests of the middle class on Capitol Hill. Some type of non-partisan, “citizens’ lobby” could be created as an online community. Once its lobbying goals are developed and articulated, an online funding drive would begin. The basic mission would be to defend middle-class taxpayers from the tyranny of the plutocracy that is destroying not just the middle class – but the entire nation. Fight lobbyists with lobbyists!
Comments Off on Another Cartoon For The Bernank To Hate
Those of us who found it necessary to explain quantitative easing during the course of a blog posting, have struggled with creating our own definitions of the term. On October 18, 2010, I started using this one:
Quantitative easing involves the Federal Reserve’s purchase of Treasury securities as well as mortgage-backed securities from those privileged, too-big-to-fail banks.
What I failed to include in that description was the fact that the Fed was printing money to make those purchases. I eventually resorted to simply linking the term to the definition of quantitative easing at Wikipedia.org.
Suddenly, in November of 2010, a cartoon – posted on YouTube – became an overnight sensation. It was a 6-minute discussion between two little bears, which explained how “The Ben Bernank” was trying to fix a broken economy by breaking it more.
We eventually learned a few things about the cartoon’s creator, Omid Malekan, who produced the clip for free on the xtranormal.com website. Kevin Depew, the Editor-in-Chief of Minyanville, interviewed Malekan within days of the cartoon’s debut. Malekan expressed his disgust with what he described as “the Washington-Wall Street Complex” and the revolving door between the financial industry and those agencies tasked to regulate it. David Weigel of Slateinterviewed Malekan on November 22, 2010 (eleven days after the cartoon was made). At that point, we learned a bit about the political views of the 30-year-old, former stock trader-turned-real estate manager:
I’m all over the map. Socially, I’m pretty liberal. Economically, I’m fairly free-market oriented. I generally prefer to vote third party, because it’s just good for the country if we get another voice in there. To me none of this is really partisan because things are the same under both parties. Ben Bernanke was appointed by Bush and re-appointed by Obama, so they both have basically the same policies. The problem, really, is that monetary policy is now removed from people in general. People like Bernanke don’t have to get elected. There’s a disconnect between them and the people their decisions are affecting.
One month later, Malekan was interviewed by “Evan” of The Point Blog at the Sam Adams Alliance. On this occasion, the animator explained his decision to put “the” in front of so many proper names, as well as his reference to Ben Bernanke as “The Bernank”. Malekan had this to say about the popularity of the cartoon:
To be fully honest, I had no idea this would get the wide audience that it did. Initially when I made it, it was to explain it to a select group of friends of mine. And any other straggler that happened to see it, and I never thought that would be over 3 million people. But, the main reason was cause I think monetary policy is important to everybody because it’s monetary policy. Unlike fiscal policy or regulation, monetary policy, because of the way it impacts interest rates and the dollar, impacts every single person that buys and sells and earns dollars. So I think it’s something that everybody should be paying attention to, but most people don’t because it’s not ever presented to them in a way they could hope to understand it.
Omid Malekan produced another helpful cartoon on January 28. The new six-minute clip, “Bank Bailouts Explained” provides the viewer with an understanding of what many of us know as Maiden Lane III – as well as how the other “backdoor bailouts” work, including the true cost of Zero Interest Rate Policy (ZIRP) to the taxpayers. This cartoon is important because it can disabuse people of the propaganda based on the claim that the Wall Street megabanks – particularly Goldman Sachs – owe the American taxpayers nothing because they repaid the TARP bailouts. I discussed this obfuscation back on November 26, 2009:
For whatever reason, a number of commentators have chosen to help defend Goldman Sachs against what they consider to be unfair criticism. A recent example came to us from James Stewart of The New Yorker. Stewart had previously written a 25-page essay for that magazine, entitled “Eight Days” — a dramatic chronology of the financial crisis as it unfolded during September of 2008. Last week, Stewart seized upon the release of the recent SIGTARP report to defend Goldman with a blog posting which characterized the report as supportive of the argument that Goldman owes the taxpayers nothing as a result of the government bailouts resulting from that near-meltdown. (In case you don’t know, a former Assistant U.S. District Attorney from New York named Neil Barofsky was nominated by President Bush as the Special Investigator General of the TARP program. The acronym for that job title is SIGTARP.) In his blog posting, James Stewart began by characterizing Goldman’s detractors as “conspiracy theorists”. That was a pretty weak start. Stewart went on to imply that the SIGTARP report refuted the claims by critics that, despite Goldman’s repayment of the TARP bailout, it did not repay the government the billions it received as a counterparty to AIG’s collateralized debt obligations. Stewart referred to language in the SIGTARP report to support the spin that because “Goldman was fully hedged on its exposure both to a failure by A.I.G. and to the deterioration of value in its collateralized debt obligations” and that “(i)t repaid its TARP loans with interest, bought back the government’s warrants at a nice profit to the Treasury” Goldman therefore owes the government nothing — other than “a special debt of gratitude”. One important passage from page 22 of the SIGTARP report that Stewart conveniently ignored, concerned the money received by Goldman Sachs as an AIG counterparty by way of Maiden Lane III, at which point those credit default obligations (of questionable value) were purchased at an excessive price by the government. Here’s that passage from the SIGTARP report:
When FRBNY authorized the creation of Maiden Lane III in November 2008, it lent approximately $24.6 billion to the newly formed limited liability company, and AIG provided Maiden Lane III approximately $5 billion in equity. These funds were used to purchase CDOs from AIG counterparties worth an estimated fair value of $29.6 billion at the time of the purchases, which were done in three stages on November 25, 2008, December 18, 2008, and December 22, 2008. AIGFP’s counterparties were paid $27.1 billion, and AIGFP was paid $2.5 billion per an agreement between AIGFP and FRBNY. The $2.5 billion represented the amount of collateral that AIGFP had previously paid to the counterparties that was in excess of the actual decline in the fair value as of October 31, 2008.
FRBNY’s loan to Maiden Lane III is secured by the CDOs as the underlying assets. After the loan has been repaid in full plus interest, and, to the extent that there are sufficient remaining cash proceeds, AIG will be entitled to repayment of the $5 billion that the company contributed in equity, plus accrued interest. After repayment in full of the loan and the equity contribution (each including accrued interest), any remaining proceeds will be split 67 percent to FRBNY and 33 percent to AIG.
The end result was a $12.9 billion gift to “The Goldman Sachs”.
Thanks to Mr. Malekan, we now have a cartoon that explains how all of AIG’s counterparties were bailed out at taxpayer expense, along with an informative discourse about the other “backdoor bailouts”.
Omid Malekan has his own website here. You should make a point of regularly checking in on it, so you can catch his next cartoon before someone takes the opportunity to spoil all of the jokes for you. Enjoy!
Comments Off on Libertarian Accuses Socialist Of Selling Out
Quite a bit has been written about the Federal Reserve’s December 1 release of documents revealing the details of its bailouts to those business entities benefiting from the Fed’s eleven emergency lending programs initiated as a result of the 2008 financial crisis. When you consider the fact that those documents concern over 21,000 transactions, all the attention should come as no surprise.
The two individuals who seem to have benefited the most from this event are Congressman Ron Paul and Senator Bernie Sanders. The two became unlikely allies in their battle to include an “Audit the Fed” provision in the financial reform bill. Ron Paul, the Libertarian Republican from Texas (considered the “Godfather of the Tea Party movement”) authored the book, End The Fed. Congressman Paul sponsored the original “Audit the Fed” proposal in the House of Representatives – H.R. 1207. Bernie Sanders, who describes himself as a democratic socialist, sponsored the watered-down “Audit the Fed” bill — S. 3217 — which replaced Congressman Paul’s version in what finally became known as the Restoring Financial Stability Act of 2010.
A recent article in The Wall Street Journal by Maya Jackson Randall recalled the backstory of how the Sanders proposal was incorporated into the financial reform bill:
Under pressure from the Obama administration, Mr. Sanders, who has described himself as a democratic socialist, made last-minute changes to his proposal; it doesn’t require audits of monetary policy, and it doesn’t require disclosure of the names of banks that use the discount window.
An unhappy Paul, a long-time Fed critic, said Mr. Sanders had “sold out.”
Who would have ever thought that a Libertarian Republican would, one day, accuse a democratic socialist of “selling out” on a bill to regulate the financial industry?
With the Republicans’ becoming the majority party in the House, the numerous committee chairmanships will now pass from the Democrats to the GOP for the 112th Congress. Although quite a bit of concern has been expressed by liberal pundits that the banking lobby will now have unfettered control over Congress, many banking industry lobbyists are sweating over the fact that Ron Paul will be the likely Chairman of the House Financial Services Committee. That fear and the efforts by ranking Republicans to assuage that dread were discussed in a recent article by Phil Mattingly and Robert Schmidt for Bloomberg BusinessWeek:
Five GOP leadership aides, speaking anonymously because a decision isn’t final, say incoming House Speaker John Boehner has discussed ways to prevent Paul from becoming chairman or to keep him on a tight leash if he does. If Boehner, who will help determine who gets to chair subcommittees as early as Dec. 8, rejects Paul, he may have to contend with thousands of grassroots supporters and dozens of younger lawmakers who see Paul as a hero. Boehner, through a spokesman, declined to comment. “A lot of the older members probably think Ron is a little bit out of step,” says Representative Bill Posey, a Florida Republican and unabashed Paul fan. “The depth of his knowledge on monetary policy, his understanding of it all, is second to none.”
Nevertheless, Ron Paul accused a socialist of “selling out” by capitulating to the pressure exerted by the banking lobby through its puppet – the Obama administration. His use of such a reproach demonstrates that Congressman Paul cannot be trusted to make certain that the House Financial Services Committee serves as a tool of the banking lobby. Beyond that, the extreme, partisan elements of the Republican Party cannot depend on Congressman Paul to “follow the script” written to portray Obama as the socialist.
As the Bloomberg BusinessWeekarticle pointed out, any efforts to deprive Congressman Paul of this chairmanship will guarantee some serious blowback from the Tea Party ranks as well as the other supporters of Ron Paul. John Boehner is in a serious double-bind here. If he allows Paul to assume the chairmanship, Boehner’s anticipated efforts to keep Paul “on a tight leash” should provide some good entertainment.
Comments Off on Well-Deserved Scrutiny For The Fed
In the wake of the 2010 elections, it’s difficult to find a pundit who doesn’t mention the Tea Party at least once while discussing the results. This got me thinking about whether the man referred to as “The Godfather” of the Tea Party movement, Congressman Ron Paul (father of Tea Party candidate, Senator-elect Rand Paul) will become more influential in the next Congress. More important is the question of whether Ron Paul’s book, End The Fed will be taken more seriously – particularly in the aftermath of the Fed’s most recent decision to create $600 billion out of thin air in order to purchase even more treasury securities and mortgage-backed securities by way of the recently-announced, second round of quantitative easing (referred to as QE2).
The announcement by the Federal Open Market Committee to proceed with QE2 drew immediate criticism. The best rebuke against QE 2 came from economist John Hussman, whose Weekly Market Comment – entitled, “Bubble, Crash, Bubble, Crash, Bubble …” was based on this theme:
We will continue this cycle until we catch on. The problem isn’t only that the Fed is treating the symptoms instead of the disease. Rather, by irresponsibly promoting reckless speculation, misallocation of capital, moral hazard (careless lending without repercussions), and illusory “wealth effects,” the Fed has become the disease.
One issue raised by Mr. Hussman – which should resonate well with supporters of the Tea Party – concerns the fact that the Fed is undertaking an unconstitutional exercise of fiscal policy (rather than monetary policy) most notably by its purchase of mortgage-backed securities:
In this example, the central bank is not engaging in monetary policy, but fiscal policy. Creating government liabilities to acquire goods and assets, unless those assets are other government liabilities, is fiscal policy, pure and simple.
Hussman’s analysis of how the “the economic impact of QE2 is likely to be weak or even counterproductive” was best expressed in this passage:
We are betting on the wrong horse. When the Fed acts outside of the role of liquidity provision, it does more harm than good. Worse, we have somehow accepted a situation where the Fed’s actions are increasingly independent of our democratically elected government. Bernanke’s unsound leadership has placed the nation’s economic stability on two pillars: inflated asset prices, and actions that – in Bernanke’s own words – should be “correctly viewed as an end run around the authority of the legislature” (see below).
The right horse is ourselves, and the ability of our elected representatives to create an economic environment that encourages productive investment, research, development, infrastructure, and education, while avoiding policies that promote speculation, discourage work, or defend reckless lenders from experiencing losses on bad investments.
On November 6, another brilliant critique of the Fed came from Ashvin Pandurangi (a/k/a “Ash”) of the Simple Planet website. His essay began with a reminder of what the Fed really is:
The most powerful, influential economic policy-making institution in the country, the Federal Reserve (“Fed”), is an unelected body that is completely unaccountable to the people.
* * *
The Fed, by its own admission, is an independent entity within the government “having both public purposes, and private aspects”. By “private aspects”, they mean the entire operation is wholly-owned by private member banks, who are paid dividends of 6% each year on their stock. Furthermore, the Fed’s decisions “do not have to be ratified by the President or anyone else in the executive or legislative branch of government” and the Fed “does not receive funding appropriated by Congress”. In 1982, the Ninth Circuit Court of Appeals confirmed this view when it held that “federal reserve banks are not federal instrumentalities … but are independent, privately owned and locally controlled corporations”.
As we all know: “Absolute power corrupts absolutely”. At the end of his essay, Ash connected the dots for those either unable to do so or unwilling to face an ugly reality:
In the last two years, the almighty Fed has printed trillions of dollars in our name to buy worthless mortgage assets from “too big to fail” banks. It has lent these banks our hard-earned money at about 0% interest, so they could lend our own money back to us at 3%+. These banks also used our free money to ramp equity and commodity markets, which mostly benefited the top 1% of our population who owns 43% of financial wealth [2], and conveniently, also owns the Fed. The latter has kept interest rates at next to nothing to punish savers and encourage speculation, making everything less affordable for average Americans who have seen their wages stay the same, decrease or disappear. What’s left standing is the perniciously powerful, highly secretive and entirely unaccountable Fed, who now epitomizes the state of American democracy.
At least we still have freedom of speech! As part of the Fed’s roll-out of QE2, Chairman Ben Bernanke found it necessary to write a public relations piece for The Washington Post – perhaps as an apology. Stock market commentator Bill Fleckenstein had no trouble ripping Bernanke’s article to shreds:
Bernanke goes on to say: “Although low inflation is generally good, inflation that is too low can pose risks to the economy — especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation.”
Oh, yeah? Says who? I have not seen any instance where a “too low” inflation rate led to deflation. When deflation is caused by new inventions or increased productivity (or in the old days, bumper crops), which we might term “good” deflation, it was not a consequence of too little inflation; it was due to progress. Similarly, the “bad” deflation isn’t created via inflation that is too low; it tends to come from burst bubbles. In other words, misguided policies, not low inflation, are the cause of deflation.
Because the timing of the Fed’s controversial move to proceed with QE2 dovetails so well with the “energizing” of the Tea Party movement, it will be interesting to observe whether life will become more uncomfortable for Chairman Bernanke. A recent article by Joshua Zumbrun of Bloomberg News gave us this hint:
Six out of 10 self-identified Tea Party supporters who said they were likely to vote supported overhauling or abolishing the Fed, according to a Bloomberg News national poll conducted Oct. 7-10.
The article made note of the fact that Ron Paul’s ill-fated effort to Audit the Fed (HR 1207) received bipartisan support:
“You had a really strange alliance last year that supported the audit of the Fed and that may come back into play,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.
TheCenterLane.com offers opinion, news and commentary on politics, the economy, finance and other random events that either find their way into the news or are ignored by the news reporting business. As the name suggests, our focus will be on what seems to be happening in The Center Lane of American politics and what the view from the Center reveals about the events in the left and right lanes. Your Host, John T. Burke, Jr., earned his Bachelor of Arts degree from Boston College with a double major in Speech Communications and Philosophy. He earned his law degree (Juris Doctor) from the Illinois Institute of Technology / Chicago-Kent College of Law.
