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Posts published in “Day: April 13, 2010”

WaMu as toxic

Here's a striking quote: “Washington Mutual built a conveyor belt that dumped toxic mortgage assets into the financial system like a polluter dumping poison into a river.”

That comes from Michigan Senator Carl Levin, chair of the Senate Permanent Subcommittee on Investigations, and it suggests pretty clearly what will emerge from the Senate banking scandal hearings starting today, which will be focusing on Washington Mutual.

But before absorbing the usual well-coached responses from the lineup of banking execs, give some thought to what was going on here. The press release announcing the hearing is so clear in its smackdown that we really need little else . . . other than some way of ensuring this sort of thing isn't allowed to happen again . . .

On Tuesday, the U.S. Senate Permanent Subcommittee on Investigations, under Chairman Carl Levin, D-Mich., and Ranking Member Tom Coburn, R-Okla., will launch a series of four hearings in April examining some of the causes and consequences of the 2008 financial crisis.

The first hearing will focus on the role of high risk mortgages, and feature Washington Mutual Bank, which was the nation’s largest thrift with more than $300 billion in assets, $188 billion in deposits, and 43,000 employees. Washington Mutual specialized in mortgage lending until it was seized by the government and sold to JPMorgan Chase in 2008. It was the largest bank failure in U.S. history. The Subcommittee investigation found that the bank contributed to the financial crisis by making hundreds of billions of dollars in shoddy, high risk mortgage loans, packaging them, and selling them to investors as mortgage backed securities.

“Washington Mutual built a conveyor belt that dumped toxic mortgage assets into the financial system like a polluter dumping poison into a river,” said Levin. “Using a toxic mix of high risk lending, lax controls, and destructive compensation policies, Washington Mutual flooded the market with shoddy loans and securities that went bad. Examining how Washington Mutual operated, and what its insiders were saying to each other, begins to open a window into the troubling mortgage lending and securitization practices that took our economy over a cliff. As the debate on financial reform begins, it is critical to acknowledge that the financial crisis was not a natural disaster, it was a man-made economic assault. Our hearings on the financial crisis will help provide a public record of what went wrong, who should be held accountable, and the ongoing need to protect Main Street from the excesses of Wall Street.” (more…)

Tea Party crashing

Seems that the man leading an effort to damage the Tea Parties (notably, presumably, those coming up in a couple of days) is from Oregon: Jason Levin runs a tech consulting company at Portland.

The damage would be a matter of PR - a kind of message monkey=-wrenching. A description in Talking Points Memo:

Levin's group of protesters plan to get in the heads of tea partiers at the Tax Day Tea Parties nationwide Thursday and manipulate them right out of relevance. They'll dress like tea partiers, talk like tea partiers and carry signs like tea partiers. In fact, according to Levin they'll be completely indistinguishable from tea partiers, except for one thing -- they won't be out-crazied by anyone.

"Our goal is that whenever a tea partier says 'Barack Obama was not born in America,' we're going be right right there next to them saying, 'yeah, in fact he wasn't born on Earth! He's an alien!" Levin explained. He said that by making the tea parties sound like a gathering of crazy people -- his group's goal -- the movement will lose its power.

Levin said he got the idea from a counter-protest to the infamous Westboro Baptist Church group held outside Twitter headquarters in January. Levin said the Westboro group broke up after counter-protesters showed up holding signs "even crazier" than the ones held by the Westboro group. "They realized they couldn't get their message out, so they just left" Levin said.

The effort has gone national - reportedly, at least 66 local organizations have been formed - and its website is quite active, not least after "bombings" from (evidently) actual tea partiers.

The Oregon Tea Party has taken note. (It has posted on its Facebook site a statement opposing release of Levin's contact information.) What effect will all this have? We may see in a couple of days.

We're entering the second summer after the first Tea Beg summer. The TB opposition was caught flat-footed last time, but this is one indicator it won't be again.