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Citi’s Fear

I wanted to return to a detail I mentioned in yesterday’s book salon. As I noted, in his book on the auto bailout, Steven Rattner described Citi as being worried during the Chrysler negotiations that retail customers would retaliate if Citi played hard ball.

Bankers for Goldman and Citi had advised [JP Morgan Chase VP and the Chrysler bondholder’s lead negotiator] Jimmy Lee to make the best of a bad situation. Privately they felt his brinksmanship was embarrassing and potentially costly. Citi especially wanted to avoid a liquidation. Its analysis showed it would recover no more than 20 cents on the dollar in that instance. Citi also feared losing business in its branches in states like Michigan and Ohio where consumers might blame it for Chrysler’s demise. (173)

That didn’t make sense to me given that Citi doesn’t have branches in MI and OH; the closest actual branches are in Chicago. Compare that to Chase, which just took over from Comerica as the biggest bank in MI by deposits and was presumably second at the time of the bailout negotiations. Citi should only fear retaliation from consumers elsewhere, in those urban areas that actually have Citi branches, or they should fear retaliation some other way, presumably through their credit card business. I asked Rattner why Citi was worried, but JP Morgan Chase was not, given its much greater involvement in the auto states. He responded, “Yes, they were definitely worried.”

Frankly, I don’t know what to make of this. Given the context of the claim–in which Goldman and Citi are portrayed as talking Jimmy Lee down from a hardass negotiating position–JPMC appears not to have been sufficiently worried to change its behavior. And the Citi claim doesn’t make sense on its face. Perhaps Citi was worried about something else. Perhaps they were just more worried because they were insolvent? There are a few details he pretty clearly got wrong in his book (such as his claim that Nissan’s consideration of a deal with Chrysler was secret), but this seems instead like one of the abundant examples of where Rattner is an unreliable narrator. Rattner chose to portray Citi as worried (and quickly agree the hard-bargaining JPMC was, too), but it’s unclear whether that was really true or just nice spin on the banks.

What Rattner probably didn’t know was that FDL was trying to increase this worry at the time by encouraging people to take their money out of Chase. That was a mostly unsuccessful effort (let me tell you, Chrysler is  no more popular in this country than the big banks) to target the banksters for actions that hurt the communities they’re in.

As unsuccessful as our effort was in terms of numbers, if Rattner-the-unreliable-narrator’s claim has any basis in fact, then our effort to pressure JPMC to behave better worked. Sort of.

Since then, Arianna’s Move Your Money campaign has more successfully advocated for people and institutions to move their money out of the big banks. By April, they claimed $5 billion had been moved. And it does seem like some of the banks are losing market share to smaller banks.

The largest banks in Michigan are losing market share and Chase Bank now has the most deposits in the state, according to new data released Thursday by the Federal Deposit Insurance Corp.

As of June 30, the five biggest banks in Michigan — Chase Bank, Comerica Bank, PNC Bank, Bank of America and Fifth Third Bank — accounted for 55% of all deposits in the state. That’s down from 57.3% on June 30, 2009.

I raise all this because of another interesting discussion about whether consumer action might more effectively target the banks. Via Yves Smith, I found this Playboy article on Edmundo Braverman’s WallStreetOasis.com’s proposal on How to Destroy a Bank (Yup, it appears you have to have a pierced navel and no pubic hair to be a Playboy model these days).

This article set forth a plan for how consumers could destroy one of America’s four largest banks. Customers would deliver a series of escalating threats against Wells Fargo, Bank of America, JPMorgan Chase and Citibank, demanding policy changes. The threats would culminate in a series of flash-mob bank runs that targeted one of the banks.

In a comment in Yves thread, Braverman acknowledged his idea was a thought exercise to take Move Your Money the next step.

The whole thing was inspired by Arianna Huffington’s “Move Your Money” idea. I thought it was a good idea, but not one that would be dramatic enough to produce any changes in the way the banks did business. So I asked myself, “What would have an impact on the banks?” and that’s when I came up with the Tank-A-Bank plan.

It was always just a thought exercise, and never something I advocated.

Yves seems to be thinking more about this; what can consumers do that won’t get them jailed as terrorists but will get us to a point where the finance industry isn’t dragging our country down even while stealing our money in the process?

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Under Michael Chertoff, DHS Used David Horowitz Propaganda in Intell Report

Mark Hosenball reports that Dianne Feinstein and other Senate Dems have accused the Department of Homeland Security’s spooks of using right wing propaganda to develop finished intelligence reports on Muslims. By looking at this paragraph from last year’s intelligence authorization

The Committee has raised a number of concerns with reports issued by the Department of Homeland Security OIA that inappropriately analyze the legitimate activities of U.S. persons. These reports raised fundamental questions about the mission of the OIA and often used certain questionable open source information as a basis of their conclusions. The Committee recommends that the next Under Secretary for Intelligence and Analysis conduct a comprehensive review of the quality and relevance of the intelligence products produced by the OIA, and provide this review to the congressional intelligence committees within 180 days of enactment.

And analyzing the language from this letter from Russ Feingold and Jay Rockefeller, Hosenball credibly argues that DHS used David Horowitz’ DiscoverTheNetworks.org as a source for a least one intelligence report on a US Islamic leader. (The letter cites the tagline, “identif[y] the individuals and organizations that make up the left,” a term Horowitz has used.)

Among others targeted by Horowitz’ site–though not all Islamic leaders–are Keith Ellison, Arianna Huffington, and Kos. And, ironically enough, Janet Napolitano.

Hosenball also notes that the report on the Islamic leader using Horowitz’ site was developed for DHS’s Civil Rights Office, and from there, was circulated to other intelligence agencies.

Congressional officials say the Homeland intelligence report that particularly angered Feinstein and other committee members is still classified. Nevertheless, three current and former intelligence officials, requesting anonymity when discussing sensitive information, say the report in question is a profile of an unnamed but prominent American Islamic leader and was produced by Homeland Security’s intelligence office during the latter years of the Bush administration. The report was requested by the Department’s civil rights office, whose officials were preparing to meet with the Islamic leader. But instead of sending the civil rights office a quick bio of the individual in question, Homeland’s intelligence office issued a “finished” intel report that was circulated to other intelligence agencies and, eventually, to Congressional oversight committees.

In other words, Michael Chertoff was using the Civil Rights Office at DHS as the impetus to develop finished intelligence reports based on the First Amendment activities of Americans.

Remember the firestorm last year when wingnut groups learned DHS did a report–initiated by the Bush Administration–on right wing extremist groups?

The report, “Right-wing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment,” said right-wing extremist groups may be using the recession and the election of the nation’s first African-American president to recruit members.

The report, which was prepared in coordination with the FBI, was published last week. It was distributed to federal, state and local law enforcement officials. Mainstream media picked up the story after it was reported by conservative bloggers.

I wonder if they’ll show the same alarm with this report?