Municipal bonds are where a lot of the political kickbacks and corrupt deals are typically hidden, so I can't say I'm surprised. In fact, it's sort of funny that the governments dealing with these guys apparently thought they could trust them, considering how crooked the business is. Lie down with dogs, rise up with fleas, as the nuns used to say:

March 26 (Bloomberg) -- JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.

A government list of previously unidentified “co-conspirators” contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.’s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24.

Gee, look how many were firms that were already taking money from us on the front end. They wanted the back end, too?

The papers were filed by attorneys for a former employee of CDR Financial Products Inc., an advisory firm indicted in October. The attorneys, as part of their legal filing, identified the roster as being provided by the government. The document is labeled “list of co-conspirators.”

None of the firms or individuals named on the list has been charged with wrongdoing. The court records mark the first time these companies have been identified as co-conspirators. They provide the broadest look yet at alleged collusion in the $2.8 trillion municipal securities market that the government says delivered profits to Wall Street at taxpayers’ expense.

Excuse me while I rush to my fainting couch. I'm a little dizzy from the shock.

“If the government is saying they are co-conspirators, the government believes they have sufficient evidence that they can show they were part of the conspiracy,” said Richard Donovan, a partner at New York-based law firm Kelley Drye & Warren LLP and co-chair of its antitrust practice. Donovan isn’t involved in the case.

The government’s case centers on investments known as guaranteed investment contracts that cities, states and school districts buy with the money they receive through municipal bond sales. Some $400 billion of municipal bonds are issued each year, and localities use the contracts to earn a return on some of the money until they need it for construction or other projects.

The Internal Revenue Service sometimes collects earnings on those investments and requires that they be awarded by competitive bidding to ensure that governments receive a fair return. The government charges that CDR ran sham auctions that allowed the banks to pay below-market interest rates to local governments.

[...] Banks may choose to cooperate with prosecutors because in light of the government bailout funds they’ve received “a guilty plea would just be an absolute disaster for some of these companies,” said Nathan Muyskens, a partner at Shook, Hardy & Bacon in Washington and former trial attorney with the Federal Trade Commission’s Bureau of Competition.

“There have been antitrust investigations where there have been companies involved that were just never indicted,” he said in a phone interview.

Yes, this is what's now known as "too big to jail." Why, they're too big for just about anything!

At the same time, the government will probably focus on seeking to convict individual bankers, he said.

“When someone goes to jail for five years, that resonates,” he said. “When a company pays $200 million, it’s simply a balance sheet issue. Jail time is what captures corporate America’s attention.”

Obama's tax proposal has disturbed Wall Street so much, according to this New York Times story, that the CEOs are going over the heads of their own lobbyists to plead their case directly with senators. (Perhaps even lobbyists draw the line at outright bribes?) This was my favorite sentence in the entire story: "The big banks, the lobbyists say, have become increasingly alarmed that the legislative process may move in unexpected directions outside their control."

Heh. We can only hope so:

WASHINGTON — President Obama’s proposals to tax and curb the activities of Wall Street have thrown an unpredictable element into the debate over financial regulatory reform. They also have touched off an intensive new round of lobbying and raised questions in Congress over whether his plan will add urgency or merely bog things down.

For two months, four pairs of Senate Banking Committee members — each with one Democrat and one Republican — have been meeting behind closed doors to reach a bipartisan compromise on regulatory reform. The House already adopted its version, largely along partisan lines, in December.

The new White House approach has already prompted the Senate panel, led by Senator Christopher J. Dodd, Democrat of Connecticut, to interrupt those negotiations. On Tuesday, in the first of several hearings on Mr. Obama’s proposals, the committee will hear from Paul A. Volcker, a former Federal Reserve chairman, and the deputy Treasury secretary, Neal S. Wolin.

Economist Joe Stiglitz told Bloomberg that Wall Street is hyping up the economy to sell stock:

Jan. 7 (Bloomberg) -- Nobel laureate Joseph Stiglitz said investors are “talking up” signs of a global economic recovery in a bid to boost equities.

“Wall Street is talking up the recovery because it would like to sell stocks,” Stiglitz told reporters at a conference in Paris today.

The MSCI World Index of stocks has surged 73 percent since its low of last March even while the economies of advanced nations grow below their potential rates following the worst recession since the Great Depression.

Stocks are rallying because interest rates are low and companies have been cutting costs by reducing payrolls, factors that suggest economies remain weak, said Stiglitz, a professor at Columbia University in New York.

“Whenever rates are low, stock markets are often high,” he said. By contrast, economists are “almost universally pessimistic.”

[...] He recommended a tax be introduced on financial speculation as a way of generating revenue and forcing investors to focus on the longer-term.

Does anything illustrate the bubble some people live in better than this New York Times column?

BEATING up on the wealthy seems to be the order of day. I suspected that. But a recent Wealth Matters column touched a particularly raw nerve. It looked at how even people with sizable fortunes were concerned about money in this recession and the impact that could have on the rest of us.

Readers rejected the attempt to understand the concerns of the rich.

“That’s so stupid that you ought to be slapped for it,” one woman wrote. My favorite began: “Bowties and Reaganomics are for losers. You can cry for the rich all you want, the rest of us will be happy to see them get taxed.”

The vehemence in these e-mail messages made me wonder why so many people were furious at those who had more than they did.

Uh, because we're paying for it when we're out of work and don't have affordable health care?

And why are the rich shouldering the blame for a collective run of bad decision-making? After all, many of the rich got there through hard work. And plenty of not-so-rich people bought homes, cars and electronics they could not afford and then defaulted on the debt, contributing to the crash last year.

"Collective run of bad decision-making"? Let's back up there a minute, pal. As anyone with half a brain knows (yes, even people who write for the New York Times), the financial services industry pushed our country over the economic brink through an assortment of unethical and illegal practices. Someone maxing out their Visa is not exactly in the same category; they merely bought the crack. Wall Street marketed and sold the crack. See the difference?

But in this recession, anger flows one way. Eric Dammann, a Manhattan psychoanalyst, theorizes that a lot of people are angry that the rules of the game seem to have changed.

“There’s always been envy and hatred toward the rich, but there was also a strong undercurrent of admiration that was holding these people up as a goal,” Mr. Dammann said. “This time it’s different because it feels like it’s a closed club and the rich have an unfair advantage.”

Gee, ya think? When corporate gains are privatized and losses are socialized, you think maybe the working people have finally had enough of picking up the slack? Can you say "market manipulation"? Can you say "front running"?

What is troubling is that the anger has hardened for some into a suspicion that all wealthy people are motivated purely by self-interest, said Brad Klontz, a financial psychologist in Hawaii and a co-author of the forthcoming book, “Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health” (Random House).

“The script goes like this: Money is bad, rich people are shallow and greedy, and people become rich by taking advantage of others,” Mr. Klontz said. “But the same people who say money is bad say money is connected to their self-worth — they wished they had it and you didn’t.”

Would you like me to explain the difference, Brad? People who have earned their money through providing a service or product, people who hire others and treat them fairly - we still admire those wealthy people. We'd like to be like them.

Wall St. traders - bloodsucking scum who, as Elizabeth Warren puts it, made their money through selling "tricks and traps" - tricks and traps that destroyed our economy and sent them running to Washington with their hands out - those wealthy people can kiss our collective grits.

Go read the rest. It's all about how "good" wealthy people are suffering by association, how they do their fair share, they fund scholarships, live "modest" lives...

Let's be blunt, shall we, Mr. and Mrs. Wealthy Person? You get hefty tax write-offs for those donations. Yes, you like the feeling of helping, but you really like the tax write-offs - and your pictures in the society pages. Wealthy people haven't been paying their fair share of taxes for a really long time, but like to think they're "giving back" quite enough through supporting charities. (Oh, and it's voluntary. Unlike the banking bailout the rest of us are paying for.)

You're not giving back anywhere near what you're taking. Seen the pictures on the news of Americans lining up like cattle for free health care? That's our reality. So if you really want to help, start lobbying to change the tax laws. Support real healthcare reform.

Because for some odd reason, they don't pay much attention to us.

John Rich performs his new country song, "Shutting Detroit Down," which in the past two weeks is becoming a working-class anthem. Gee, I wonder why? Maybe the media bobbleheads can tell us where all this crazy, wacky populist rage is coming from...

Me, I'm just flabbergasted by today's news. All those things Obama's saying to Detroit, a city of working people left devastated, about sacrifice and restructuring - why isn't he saying them to Wall Street, too?

WASHINGTON -- President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.

[...] A senior administration official, briefing reporters late Sunday night on the condition of anonymity in order to speak freely, said Obama will call for more sacrifice from carmakers, their investors and automotive unions.

Billionaire bankers (and their investors) walk away from the table with their pockets stuffed with taxpayer cash while members of the auto workers union are told they'll have to sacrifice even more - in this case, the Obama administration wants the companies to get rid of "old liabilities" - i.e. retiree pensions. (You know, while bankers complain about having to sell the house in the Hamptons.)

No, Obama's not talking about the insolvent banks. He's talking about Detroit. Could he make it any more obvious that the wealthy are a protected class?

"If they're not willing to make the changes and the restructurings that are necessary, then I'm not willing to have taxpayer money chase after bad money."

Funny, that's just how I feel about Citibank!

And what's all this crap about bringing the cost of wages in line with Japanese auto workers - whose government provides free health care? Why are workers the only ones expected to bear that burden? That's a right-wing meme if ever I heard one.

I'm not even arguing with the concept that deep cuts have to be made now to save the industry for later. For all I know, the union really is dragging their feet in negotiations. But how can the administration not see how it looks to the rest of the country?