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From Morning Meeting Nov. 25, 2009, Rolling Stone's Matt Taibbi and the Financial Times' Chrystia Freeland discuss Matt's recent article at Rolling Stone and the divide between the recoveries on Wall Street and Main Street. Their analysis about what's wrong with the economic team Obama has surrounded himself with is spot on and until he starts listening to some different voices on how to fix our economy, Matt Taibbi is correct, the cycles of bailouts are going to continue to repeat themselves.

Ratigan: But Matt’s ultimate point is that we have all these people that are still perpetuating a policy that is supportive of the banking system for sure, regardless of who’s in there and an economy that is, has small business lending off a cliff, profits back at a record on Wall Street, one in four, one in seven mortgages delinquent; you know I could go on and on with these statistics but basically the economy was torpedoed and the financial markets were supported and the reality Matt is that it’s far more profitable not to lend money In this country. The fact of the matter is we’re giving banks money at a time when the government has rules that say you can make more money if we give you money if you don’t lend it.

Taibbi: Right…right…

Ratigan: And that is the inherent insanity of the entire situation. It’s like giving the banks money, legalizing the banks to make money without having to lend it is like letting the cops create a military state. They’re the custodians of wealth, the custodians of security have been completely compromised—you think it’s the people around the President that are largely responsible for that, correct?

Taibbi: I think so. I mean you have to remember that probably, if you were going to have a Nuremberg for the financial crisis, Bob Rubin would be one of the first people on the dock.

Ratigan: Yeah.

Taibbi: I mean he has a unique responsibility for what went wrong because he was not only responsible for the bad policy, the deregulatory policy under Clinton but he also helped destroy one of the biggest companies in the world in CitiGroup. And yet he was the guy who was put in charge and his people of being the architect of Clinton’s economic policies.

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From Democracy Now, Robert Sheer weighs in on how difficult it is to cover Wall Street during a discussion about Wall Street's massive profits and bonuses while the economy for most Americans continues to deteriorate. The one bright spot here is that tonight the House Financial Services Committee approved Ron Paul and Alan Grayson's amendment to audit the Fed.

Robert Sheer's latest article at Truthdig is Who Are You and What Have You Done With the Community Organizer We Elected President?

AMY GOODMAN: What about this new government report that’s found Goldman Sachs could have suffered dramatic losses if the federal government hadn’t intervened to bail out AIG, American International Group, the report by the special inspector general for the government bailout program raising doubts about Goldman’s previous claims that it was hedged against potential AIG losses?

ROBERT SCHEER: Yes, well, first of all, this has been—

AMY GOODMAN: What does all that mean?

ROBERT SCHEER: This is the big lie from Goldman, is that, you know, we didn’t—look, look what happened. Lehman was Goldman’s competitor, was allowed to go belly up, OK? The Secretary of the Treasury was a former head of Goldman Sachs. I don’t want to get into conspiracy theories here, but Robert Rubin was a head of Goldman Sachs, OK? And Paulson was a head of Goldman Sachs. They decide not to—you know, and Rubin was involved in these discussions, Lawrence Summers, Paulson and so forth. Timothy Geithner, who is our Secretary of Treasury, was head of the New York Fed for five years while all this was going on. So they say, “Let Lehman go, you know, down the tubes,” which is great for Goldman Sachs, because now you have basically two investment houses that are getting all the business. “But on the other hand, we’ll put all this money into AIG,” which was backing these junkie derivatives, these mysterious packages, “and it will be a pass through. People won’t notice, because we’re giving it to AIG.” $180 billion of our taxpayer money, we taxpayers get nothing in return, AIG is still in the toilet, but Goldman got its money. You know, it got upwards of $20 billion, that they don’t have to pay back. They make a big thing about “We’re going to pay back some of the TARP funds” and everything. And by the way, they were allowed to become a bank. No hearings, no judicial proceedings and so forth. You know, the very thing Lehman was asking for—“Let us become a bank so we can get some of this TARP funds and everything”—that was granted to Goldman Sachs.

You know, Ron Paul, by the way, who has been trying to go after the Fed, and he has an accountability piece of legislation that the Democrats have gutted, and said, “Let’s have an audit of the Fed. Let’s find out what does the Federal Reserve do. What are the deals they made? Where did the money go?” We don’t have that. And the inspector general of the Treasury Department, the inspector general, you know, Elizabeth Warren, all of these people have pointed—from the Congressional Oversight Panel—all of these people point out, “We don’t have the facts. We don’t know where the trillions are going.” We know trillions have been committed. We know all of these huge pools—Bank of America’s $300 billion of toxic assets have been backed up. But there’s no accountability.

I have covered the CIA, I’ve covered national security, and I’ve covered banking. I did it for the LA Times in one way or another for thirty years, OK? It is more difficult to cover Wall Street, in terms of secrecy and classification and their protection, than it is to cover the CIA and the Pentagon. That much I’ll tell you. You know, you get greater claim on the truth covering the Pentagon, as I did in my last book, than I’m having in my current book called The Great American Stick-Up that Nation Books is publishing. And, you know, these people go, “No, it’s proprietary. It’s our business. It has nothing to do with you.” And that goes for the Fed, which is supposed to be a government agency.

And so, for Chris Dodd to say, “No, we have to take power away from the Fed. We have to create a new independent agency to supervise these too big to fail institutions to make sure that they don’t go belly up and we taxpayers pay for them again,” he’s absolutely right. And people watching this, if there’s one thing they should demand from the Obama administration, is get behind the Dodd bill on taking power from the Fed and creating a new publicly accountable agency. That’s absolutely critical. Without that, we’re not going to get out of this mess, and we’re not going to prevent a future one.

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Frontline Oct. 20, 2009. The Warning:

In the midst of the 1990's bull market, one lone regulator warned about derivatives' dangers--and overnight became the enemy of some of the most powerful people in Washington.

You can watch the entire program on line here as well as additional invertiews with Brooksley Born, Gary Gensler, Michael Greenberger, Arthur Levitt and Joseph Stiglitz.

From Frontline's interview with Brooksley Born:

Q: What's the message that you're trying to spread now in the ashes of what happened in 2008 and '09?

BORN: I think we have to close the regulatory gap. ... We cannot afford as a society to go forward with an enormous unregulated market that poses this kind of danger because it’ll happen again if we don't take the appropriate steps. ... We need to take a lesson from the existing futures markets where exchange trading has been safe. As much as possible of the over-the-counter derivatives market should be traded on a regulated derivatives exchange. The transaction should be cleared on a regulated clearinghouse. There should be robust federal regulation of any remaining OTC derivatives market. And personally, I think that remaining market should be limited as much as possible to no more than the customized contracts that are needed for specific businesses to hedge particular business risks. ...

Q: If this moment passes again, the consequences are what from your perspective?

BORN: I think we will have continuing danger from these markets and that we will have repeats of the financial crisis. It may differ in details, but there will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience.

Frontline also put together a video timeline of the events starting in 1987-today.

I highly recommend watching the entire hour at PBS's site, but here's one more portion I wanted to share here.

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You know who Pete Peterson is, right? He's the wingnut hedge-fund billionaire who's pledged a billion dollars to "reform" (and we know what that word means to the right wing) Social Security and Medicare. Via lambert, from Institutional Risk Analysis:

As we discussed with Josh Rosner and will be writing about same next week, Treasury Secretary Tim Geithner and Fed Chairman Bernanke think they are driving this process, but in fact the markets are setting the agenda. Either we act now to deal with AIG and C and take these names off the table before the other zombies arrive for the dance party, or we risk being overwhelmed. If we have a choice between preserving the credit standing of the US Treasury and flushing AIG, C and every other CDS counterparty on the planet, we'll take the latter every time.

Indeed, yesterday we were slumming at the Four Seasons in New York. Among the dinosaurs we observed grazing in the tall grass of this Midtown Manhattan refuge for the transactional class was former C director Robert Rubin, former New York Fed Chairman Pete Peterson and Treasury Secretary Geithner, who apparently was there to get new instructions from his sponsors.

Before Geithner arrived for lunch, Peterson reportedly asked one NY real estate mogul: "How much of that toxic paper is there?" Now we may know where Geithner gathers his market intelligence -- over a luncheon table in New York with his owners. Next time we are going to bring the flip-cam.

But isn't it nice that the man who wants to take our Medicare and Social Security (so we can see it go down the tubes in the market, I guess) has such good relationships with his employees!