A 1957 foretelling of the 2016 election cycle
Monday, November 28, 2022
Sign the petition: No grocery monopolies!
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Food prices already increased a whopping 11 percent this year. If two of the nation’s biggest grocery chains are allowed to merge, consumers could face higher prices, fewer choices, and food deserts.
Tomorrow, the Senate Judiciary Committee is holding a hearing on the anticompetitive effects of the proposed Kroger-Albertsons merger — and we need to make sure our voices are heard. Regulators must stop the grocery mega-merger!
Sign the petition: The FTC must thoroughly investigate the proposed Kroger-Albertsons merger!
---------- Forwarded message ----------
From: Grocery Megamerger
Date: Wed, Oct 21, 2022 at 3:40 PM
Subject: No grocery monopolies!
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Last week, grocery giants Kroger and Albertsons announced their plan to merge and form a megacorporation. The move would combine Safeway, Ralphs, Smith’s, Fred Meyer, Vons, Kings, Haggen, Tom Thumb, Harris Teeter, Dillons, Star Market, Jewel-Osco, Shaw’s, and more into a single corporation.1 The costs to consumers would be catastrophic. The profits for shareholders would be enormous. We need to make sure the Federal Trade Commission blocks this anticompetitive and disastrous deal! Sign the petition: The FTC must thoroughly investigate the proposed Kroger-Albertsons merger! Grocery corporations are already taking advantage of inflation to artificially inflate food prices — prices have gone up 11% in the past year alone.1 The Kroger-Albertsons deal would leave Americans even more vulnerable to corporate price gouging. We’d likely see “higher prices, employee layoffs and weaker supply chains”, Senator Elizabeth Warren explained.2 Kroger and Albertsons are trying to use a weird trick to deceive consumers about what’s actually happening. They’re promising they’ll “spin off” some of the grocery stores into a separate entity that will supposedly compete with Kroger-Albertsons grocery stores.2 We saw this move back in 2014 when Albertsons acquired Safeway. Unsurprisingly, the least profitable stores were “spun off”; many failed; and giant food deserts resulted, forcing people to travel long distances for groceries or even rely on food banks for food.3 The FTC can’t fall for this head-fake. Send a message to the FTC: we support a thorough investigation into this proposed merger! Sign the petition: The FTC must thoroughly investigate the proposed Kroger-Albertsons merger! Thanks for taking action, Izzi and the team at Demand Progress Sources:
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FOCUS: Dahlia Lithwick | The Real Problem With the Second Alleged Leak at the Court
28 November 22
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Reader Supported News
It doesn’t matter if Alito preemptively revealed the outcome in Hobby Lobby. Consider the rest of the story.
That’s about the sum of the public defense mounted against the blockbuster New York Times report that came out on Saturday. The story dropped a bit of a bombshell: It alleges that in 2014, Justice Samuel Alito told donors to a religiously motivated Supreme Court lobby organization that he would be authoring the opinion in Burwell v. Hobby Lobby, and that the religious objectors would be on the winning side of the case. This revelation can really only be compared to another leak—that of the full draft of the Dobbs opinion this May—but it passed through the media and legal worlds with much less fanfare. Who among us doesn’t like a good dinner and some hot gossip? Court critics, yet again, were told to get over themselves.
As Jodi Kantor and Jo Becker describe it, a then-anti-abortion crusader, the Rev. Rob Schenck, knew the outcome of the 2014 case challenging the contraception mandate of the Affordable Care Act weeks before it was announced. Whether Schenck heard this from the Wrights, the wealthy Ohio donors who dined with the Alitos in early June of that year, as he alleges, or merely from someone else, the fact is that there is ample contemporaneous reporting by Kantor and Becker to show that Schenck knew what was coming and acted accordingly.
Schenck is, to be sure, an unreliable whistleblower, and particularly so based on his own prior activities. And to the extent the problem here is framed as the leak from Alito, it bears keeping in mind that the leak is actually the least problematic aspect of the undisputed relationships between sitting Supreme Court justices and wealthy donors who pay to gain access to them, which the story also recounts in great detail. As the Times notes, the Wrights publicized the fact that they got involved with Schenck’s organization, Faith and Action, “to have a major impact on the attitudes and actions of those in a position to shape and interpret our laws,” as they wrote in a 2001 newsletter. Undisputed is the fact that between 2000 to 2018, when he left Faith and Action, Schenck raised more than $30 million to do just that.
Also undisputed is the fact that Alito and his wife, Martha-Ann, were dining in June with wealthy donors who had a vested interest in the outcome of Hobby Lobby. Alito, in his statement this week from the court, acknowledges this fact. Undisputed is that one of the wealthy donors, Gayle Wright, contacted Schenck immediately after the dinner with an email saying, “Rob, if you want some interesting news please call. No emails.” (The Times, having seen that email, asked Wright what else this secret unprintable “interesting” news was. She said that she was telling him she had recovered from a stomach ailment. M’kay.) Undisputed as well is the fact that the Wrights had been cultivated by Schenck among other wealthy fans of religious liberty to donate big sums of cash to the Supreme Court Historical Society so they could garner access to the justices, and that while some justices rebuffed these efforts, Justices Samuel Alito, Clarence Thomas, and Antonin Scalia did not. Instead, those three justices rewarded donors with access and highly sought-after seats at oral arguments in the marquee religious freedom case of the year.
“We were invited to use seats from Nino and Sam,” Gayle Wright wrote Schenck before arguments in the Hobby Lobby case at hand. “Wow!”
Wright explained that Scalia gave her and her (now deceased) husband seats for arguments “all the time” because “Nino and my husband were very good friends.” In his statement to the New York Times denying improper conduct, Alito insisted that he and his wife shared a “casual and purely social relationship” with the Wrights.
The casual and social relationships cultivated by the Wrights included, among other things: hunting with Scalia; socializing with the Alitos, Scalias, and Thomases; and hosting the Alitos at their vacation home near Jackson Hole, Wyoming. As one does. Gayle Wright was extremely busy with all of these casual and social friendships. A 2016 email noted that her schedule included: “Lunch with CT on Monday, Sam on Wednesday, dinner at court on Monday, Dinner with Maureen [Scalia’s wife] on Wednesday.”
It is also undisputed that donations to the Supreme Court Historical Society purchased access to the justices. Indeed, it is undisputed that it allowed interested donors access to Supreme Court events, which is how the society’s executive director, David T. Pride, came to bring the CEO of Hobby Lobby, David Green, to a November 2011 Christmas party hosted by the chief justice at the high court itself. After, Schenck described Green’s parents as potential big givers to the society: “Family is worth about $3b.” And shortly thereafter, Green got on board with a challenge to the Affordable Care Act that would become the Hobby Lobby litigation.
Also undisputed is that Alito knew enough about Wright’s casual and social religious views (she was interested, she has explained, in “all cases related to biblical issues”) to suggest that she attend a lecture at the court by Kelly Shackelford, the president of First Liberty Institute, which also litigates religious liberty cases before the high court. Also undisputed are earlier reports about Faith and Action in Politico and Rolling Stone. Reports that include claims of praying with the justices in chambers and financing expensive dinners with Thomas, Alito, Scalia, and their wives. And yet, financial disclosures from the justices rarely include expensive meals and “personal hospitality.”
Alito’s statement to the New York Times seems to be more focused on asserting that the Wrights (who are not bound by any ethics or disclosure rules) did nothing wrong: “I never detected any effort on the part of the Wrights to obtain confidential information or to influence anything that I did in either an official or private capacity, and I would have strongly objected if they had done so.” First, whether the Wrights acted improperly by receiving confidential information is far less worrisome than whether he—a Supreme Court justice—acted improperly by somehow revealing information. But even then, what are we to make of the fact that wealthy religious zealots paid money to pray with and socialize with and extract priceless personal favors from Supreme Court justices? Religious zealots are free to do any and all of those things. The real issue is that the justices allowed this to happen, encouraged and rewarded it, and now pretend that the real offense here is a policing of their casual social lives. As Rolling Stone reported this spring, Faith and Action, which claims to have been regularly praying with some of the justices over a span of many years, also filed amicus briefs before the court.
In other words, the leak is actually the very least of it—in part because nobody actually believes the court intends to police its leakers or even to investigate them. The New York Times piece about a massive influence network is the real travesty, without even a mention of the leak, and the fact that the wealthy donors didn’t secure special favors because the justices were already in the tank for their religious ideology doesn’t make this smell any better.
And that is the crux of it. The fact that some of the justices believe that “casual” and “social” relationships with lobbyists, activists, and interested parties who have business before the court are appropriate and acceptable is the problem, because it means they cannot be trusted to avoid such contacts. The problem is that the same justices who keep blaming their colleagues and the press and the American public for broad declining trust in the institution seem to have no comprehension of what kinds of behaviors appear to be inappropriate because they actually are inappropriate. Traffic court judges in towns with four stoplights know better than to drink and vacation and shoot with interested parties before them, much less set aside choice seats for big ticket cases. Evidently it’s different when the interested parties are rich.
What the Wrights and the other donors purchased when they bought access to Supreme Court events and parlayed that access into lavish vacation homes and dinners was not unlawful. But it was, and is, within the power of the justices who benefited from all of these efforts to have avoided them. They did not because they seem to have believed that they were engaged in acts of casual friendship. That is frankly just sad, at a personal level. But it also tells you all you need to know about why this court will keep burning its own legitimacy candle at both ends. They don’t even recognize it as a problem. The unfettered and lucrative sucking up, lobbying, and currying of favor—and the attendant rewards—are all recast as harmless socializing.
These very same Supreme Court justices who continue to claim that they will let us know who is to blame for plummeting approval numbers may well believe that their own judgment on this issue is unimpaired. Their judgment is profoundly impaired, and the New York Times reporting reveals why they cannot be counted on to fix the problem. They cannot even be counted on to name it.
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Mike’s Midterm Tsunami Truth #44
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The odds are long. A Hail Mary pass or two is needed. The opponent is badly bruised from a whoopin’ they took on November 8th. They are left with what will be an anemic majority in the House. But that’s not til January 3rd. Until then, we have 40+ days where we hold the lead and possess the power. If we choose to use it strongly, wisely and with a touch of cooperation from a teeny-weeny group of Republicans who are fed up with being the villains, we have a chance to do some good.
In an amazing turn of events, a bill passed by the House last year to codify the 2015 Supreme Court decision to make same-sex marriage legal, has been shepherded by Senate Majority Leader Chuck Schumer through the Senate where he convinced 12 Republicans to pass the House bill to make same-sex marriage the law of the land.
So I got to thinking — how many other House bills have been passed in this session of Congress and are just sitting in the Senate gathering dust waiting for a vote? Turns out a lot! Many will need 60 votes for them to pass thanks to the anti-Democracy Republicans who keep the filibuster going.
But some can pass with the 51 votes the Dems already have. Why not spend these 40 days and either convince a few Republicans to come along like they did with the same-sex marriage act or we just go ahead and pass the ones we can pass with 51 votes.
Even if we only get one of these enacted as law, it’ll be worth it. And yes, there’s so much more we needed this Democratic majority to pass. Like codifying Roe and making abortion permanently legal. The Dems in the House have had the votes to do that since the day the Supreme Court made it illegal back in June. In fact, they’ve had numerous chances to do it for 49 years. Just never got around to it. So there’s nothing the Democratic Senate has from the House that they can attempt to pass. Same for many other issues that the American people support.
In case you missed it, on Sunday’s podcast of “Rumble with Michael Moore,” I threw a few of those Hail Mary passes to see if we can squeeze a few more victories out of this Congress (until we get it back 10 months from now after two scandals, three resignations, four indictments and an untimely death during an “all you can eat” desert at an Applebee’s in suburban Virginia).
Six weeks during the holiday season makes this a difficult endeavor. But we just took Pennsylvania! Michigan is all Blue — Deep Blue! Crazy Red Nebraska passed a ballot proposal raising the minimum wage by 40%! Marijuana is now legal in Maryland and Missouri!
So how ‘bout continuing the Child Tax Credit? Extending the Civil Rights Act to the LGBTQ+ community? Passing the John Lewis Voting Rights Act?
So please, if you haven’t already, have a listen to the podcast episode, it's only 40 minutes long. Just see it as me laying out my next crazy idea like, “hey, did you hear the one where we're going to have a Democratic woman of color represent Alaska in Congress? Or how ‘bout the one where Kansas would protect the right to abortion in their state constitution? Or the one where there would be no red wave on Roevember?” Crazy, huh?!
Pundits and bloviators will say it can never happen, but they should know by now whenever we hear that, that’s our catnip.
Are you with me Arizona and Nevada? Of course you are. You never left us.
Here’s a list of the bills and legislation ideas discussed in this podcast:
To expand civil rights to the LGBTQ+ Community:
H.R.5: Equality Act — Passed House
S.393: Equality Act — Introduced
To end gerrymandering and protect voting rights: There are currently two bills that have passed the House and are sitting in the Senate.
H.R.1: For the People Act of 2021 — Passed House
S.1: For The People Act 2021 — Introduced
— Expands voter registration (e.g., automatic and same-day registration) and voting access (e.g., vote-by-mail and early voting). It also limits removing voters from voter rolls.
— Requires states to establish independent redistricting commissions to carry out congressional redistricting.
— Sets forth provisions related to election security
— Expands the prohibition on campaign spending by foreign nationals, requires additional disclosures of campaign-related fundraising and spending, disclaimers regarding certain political advertising, and establishes an alt. campaign funding system for certain federal offices.
— Requires a code of conduct for Supreme Court Justices, prohibits House Members from serving on the board of a for-profit entity, establishes conflict-of-interest and ethics provisions for federal employees and the White House.
— Requires President, Vice President, and certain candidates for those offices to disclose 10 years of tax returns
H.R.4: John R. Lewis Voting Rights Advancement Act 2021 — Passed House
S.4: John R. Lewis Voting Rights Advancement Act 2021 — Introduced
— Sets guidelines to determine when states must receive preapproval from the Department of Justice (DOJ) or the U.S. District Court for the District of Columbia before making legal changes that would affect voting rights.
— Requires states to notify the public of changes to voting practices.
…and more.
To cap insulin prices for all:
H.R.6833: Making continuing appropriations for fiscal year 2023, and for other purposes — Became law
S.3700 - Affordable Insulin Now Act — Introduced
To protect DACA kids:
H.R.6 - American DREAM and Promise Act (no Senate bill)
To give pensions back to GM employees:
H.R.6929: Susan Muffley Act of 2022 — Passed House
S.3766: Susan Muffley Act of 2022 — Introduced
Extend the Child Tax Credit (CTC): A group of House Democrats wrote a letter to Dem leadership regarding CTC on Nov 10th. Here’s an excerpt:
“At a time when the price of essential goods and services like food, child care, and housing are near record highs and many Americans are struggling to make ends meet, we write to urge you to oppose the inclusion of corporate tax breaks in any must-pass or tax extenders bill that is brought to the floor for a vote unless workers and families are provided with commensurate support and relief. These include extending the expanded monthly refundable Child Tax Credit (CTC) and expanded Earned Income Tax Credit (EITC) as soon as possible, and no later than the end of the year.”
To provide relief to those whose jobs were outsourced overseas:
H.R.3974: Trade Adjustment Assistance Modernization Act of 2021 — Introduced
S.2218 - Trade Adjustment Assistance Modernization Act of 2021 — Introduced
Expand Medicare coverage to include dental, vision and hearing benefits for everyone.
End the filibuster.
ICYMI:
Mike’s Midterm Tsunami of Truths:
Truth #1: The Campaign
Truth #2: Even a kid from 4th hour Trig class can beat this crowd
Truth #3: The Haters, the Bigots and the Supremacists Always Lose in the End
Truth #4: Introducing The Whackadoodle 10
Truth #5: Trump is not the Big Bad Wolf. But he is very afraid of You.
Truth #6: The Easy-to-Digest Republican Party Platform
Truth #7: Biden, Don’t F**k with Me
Truth #8: If you’re not registered, you can’t Roe, Roe, Roe the Vote!
Truth #9: Why will we win? Because the American people hate fascism.
Truth #10: Meet Blake Masters, Whackadoodle No. 9
Truth #11: 147 Reasons We Will Win on November 8th
Truth #12: Biden just gave us a boost and a toke.
Truth #13: Women. That’s it.
Truth #14: If the Mainstream Media Thinks There’s a Chance We May Be Right about Roevember, Watch Out.
Truth #15: Republican candidate for Governor of Pennsylvania, Whackadoodle No. 8
Truth #16: As Alex Jones has now been fined a billion dollars for his lies, that is nothing compared to the punishment other Republicans are going to get on November 8th.
Truth #17: Early Voting, Mail-in Voting, Dropbox Voting — These Were Made for Libs, Hard Workers, Book Readers, Artists, Busy Parents, Slackers, and Progressives like us! In other words, The Majority!
Truth #18: The Good Queen vs. The Mad King
Truth #19: A Workers' Revolt Extends to the Voting Booth
Truth #20: We Are in Charge
Truth #21: Don’t believe it.
Truth #22: If the election is about inflation and the economy, THANK GOD — We Win
Truth #23: We Believe in Science. And that’s why we will win.
Truth #24: Vote Local, Win National
Truth #25: The side with the best nursery rhymes wins.
Truth #26: We Will Win Because Americans Don’t Want to See This Happen...
Truth #27: We are going to win because our side has millions of good souls like this…
Truth #28: Whackadoodle No More
Truth #29: They’ve Got Big Plans That We’ve Gotta Stop
Truth #30: Turn Off the News! Stop Reading the Paper! They’re Filling Your Head with Mush.
Truth #31: If I Had a Hammer
Truth #32: This Is All You Need to Know
Truth #33: Let Me Call Your Non-voting Brother-in-Law!
Truth #34: Deep Down, You Know You’re Being Played
Truth #35: The kids are all right.
Truth #36: Dem Insiders Quietly Confide to Me What We’ve Known All Along
Truth #37: It Can’t Happen Here
Truth #38: The Day After the Blue Tsunami
Truth #39: Roevember Election Day Mixtape
Truth #40: We Win Either Way
Truth #41: We Killed the Red Wave
Truth #42: Can you bring yourself to say we will win the House?
Truth #43: Even the Losers Get a Trophy.
November 21, 2022 HEATHER COX RICHARDSON
Two big stories landed over the weekend. The first harks back to the furor last May when the Supreme Court’s decision in Dobbs v. Jackson Women’s Health—the decision overturning the 1973 Roe v. Wade decision that recognized abortion rights as a constitutional right—was leaked to Politico before it was released. At the time, Chief Justice John Roberts called the leak a “singular and egregious breach of…trust” and ordered an investigation to find the leaker. In late October, Justice Samuel Alito told the Heritage Foundation that the leak was a “grave betrayal of trust by somebody, and it was a shock” that had made the court’s right-wing majority “targets for assassination.” On Saturday, Jodi Kantor and Jo Becker of the New York Times reported that the Reverend Rob Schenck, formerly an antiabortion activist, wrote to Roberts in July (although the letter was dated June 7, 2022) to say that in 2014 he had received advance notice of the court’s decision in Burwell v. Hobby Lobby—the decision allowing corporations to deny their employees contraceptive health care coverage—from a woman who had just had dinner with Justice and Mrs. Alito. The dinner guest told Schenck that she had learned that Alito was writing the decision and that it would favor evangelical Christians. Schenck, who has become an advocate of choice as he is trying to mark himself as a progressive evangelical leader, signed the letter to Roberts, “Yours in the interest of truth and fairness.” Schenck provided the reporters with contemporary emails suggesting he knew the outcome of the Hobby Lobby case ahead of time, and they talked to four people who confirmed that he had confidential information about it before the court handed it down. He used that information to prepare a public relations push ready to go the minute the decision was public. The leak of a Supreme Court decision is shocking and potentially illegal, but even more shocking than the revelation that there have been two major leaks from the court—both of right-wing opinions authored by Alito—was the story the reporters unraveled of the degree to which evangelical activists worked to become close to the justices, especially through participation in the court’s historical society, as well as religious events, a plan Schenck called “Operation Higher Court.” Their goal was to influence the justices quietly, and it appears to have been at least somewhat successful: in July, Peggy Nienaber, the executive director of Liberty Counsel’s D.C. ministry, who worked with Schenck, was caught on a hot mic saying she prayed with certain Supreme Court justices. On Sunday, Senator Sheldon Whitehouse (D-RI) and Representative Hank Johnson (D-GA) wrote to Chief Justice John Roberts to say that if the court is not going to investigate the breaches, lawmakers will. New York Times reporters were evidently busy this weekend, because Eric Lipton and Maggie Haberman reported Sunday that the Trump family has begun to work not just with foreign nationals, but with foreign governments themselves. The Trumps have recently signed a $4 billion deal with a Saudi Arabian real estate company that is backed by the government of Oman. The Trumps are deeply tangled with the Saudis already, of course, hosting the LIV Golf tournaments backed by the Saudi government and—in Jared Kushner’s case—investing $2 billion of Saudi government funds, a deal that Saudi leader Crown Prince Mohammed bin Salman, known as MBS, personally approved after the panel that screens investments advised against the deal. Meanwhile, prosecutors today called their last witness in the criminal trial of the Trump Organization for fraud and tax evasion. Key witness Allen Weisselberg, former chief financial officer of the Trump Organization, has painted a picture of an organization that avoided taxes by paying officers with private school tuition, cars, and rent money. The company denies all charges and says the fraudulent movement of money can be tied to Weisselberg alone. Finally tonight, on a lighter note, this morning President Joe Biden pardoned turkeys Chocolate and Chip, lucky turkeys indeed in this season where supply chain choke points and the late season, virulent avian flu meant the culling of 7.3 million birds earlier this year, at least 3.6% of the nation’s turkeys. Chocolate and Chip will live out their lives on the campus of North Carolina State University. Later, the president and First Lady Jill Biden had a “Friendsgiving” dinner this afternoon at the Marine Corps Air Station Cherry Point, North Carolina, with service members and military families, greeting them table by table and then thanking both the “best fighting force in the history of the world” and those at home who, in the words of poet John Milton, “stand and wait.” — Notes: https://int.nyt.com/data/documenttools/roberts-letter-redacted-annotated/fb6e34bb904bfafa/full.pdf https://www.reuters.com/world/us/is-it-illegal-leak-us-supreme-court-opinion-2022-05-03/ https://www.nytimes.com/2022/11/19/us/supreme-court-leak-abortion-roe-wade.html https://www.nytimes.com/2022/11/20/us/politics/trump-organization-oman-deal.html https://www.nytimes.com/2022/04/10/us/jared-kushner-saudi-investment-fund.html https://www.politico.com/news/2022/11/20/supreme-court-roberts-whitehouse-johnson-00069673 https://www.cbsnews.com/news/trump-organization-criminal-trial-prosecutors-rest-today-2022-11-21/ https://apnews.com/article/biden-holidays-obituaries-christmas-c98e1ce25e97dbe097f2ed37d9c7a4c2 https://www.nytimes.com/2022/10/21/dining/thanksgiving-turkeys-cost-inflation-supply-chain.html |
FTX’s Latest Casualties: Federally Insured Crypto Banks
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FTX’s Latest Casualties: Federally Insured Crypto Banks
By Pam Martens and Russ Martens: November 21, 2022 ~
On August 1 of this year, we penned this headline at Wall Street On Parade: Brace Yourself for Federally-Insured Bank Failures Caused by Crypto. Our research for that article was so stomach-churning and frightening that we emailed the article to key staff for the Senators who sit on the Senate Banking Committee. One of the banks we researched for that article was Silvergate Bank. We wrote:
“FDIC-insured Silvergate Bank is part of the publicly-traded Silvergate Capital Corp., (ticker SI). Silvergate’s website says this about its hot pursuit of crypto: ‘We began pursuing digital currency customers in 2013 and have been deliberate in our approach to serving this community since then. Today, we have 1,300+ digital currency and fintech customers that are using our platform daily to grow and scale their businesses.’
“Silvergate Capital’s 10-K (annual report) for the year ending Dec 31, 2021 that it filed with the Securities and Exchange Commission acknowledged this about the crypto market that it has so deliberately decided to pursue:
‘The characteristics of digital currency have been, and may in the future continue to be, exploited to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams; if any of our customers do so or are alleged to have done so, it could adversely affect us…’
“Silvergate’s 10-K also states that ‘Deposits from digital currency exchanges represent approximately 58.0% of the Bank’s overall deposits and are held by approximately 94 exchanges.’
“Let’s pause for a moment to digest that last statement: More than half of a federally-insured bank’s deposits are tied to crypto while federal regulators are twiddling their thumbs and letting it happen. This news comes despite the fact that legendary investor Warren Buffet has called the largest cryptocurrency, Bitcoin, ‘rat poison squared’; global economist, Nouriel Roubini, told the Senate Banking Committee in 2018 that ‘Crypto is the Mother of All Scams and (Now Busted) Bubbles While Blockchain Is The Most Over-Hyped Technology Ever, No Better than a Spreadsheet/Database.’ More recently, Bill Gates, co-founder of Microsoft, one of the most valuable tech companies in the world, stated that cryptocurrencies are ‘100% based on greater fool theory.’ And just this past June 1, more than 1,600 scientists and software engineers wrote to Committee chairs in Congress to warn that both crypto and blockchain are shams.”
On November 11 the crypto exchange, FTX, announced it was filing for Chapter 11 bankruptcy, along with its related hedge fund, Alameda Research – which had been using (and losing) billions of dollars of customer funds from FTX to trade without the knowledge of customers. More than 100 opaque affiliates of FTX, many headquartered in offshore locations, also filed for bankruptcy.
Headlines swirling around the world are comparing the management of FTX to that of Madoff, Enron, and blood-testing fraud, Theranos. (Sam Bankman-Fried, the co-founder and now-fired CEO of FTX, learned from news headlines last Friday that the founder and CEO of Theranos, Elizabeth Holmes, was sentenced to 11 years in prison.)
On the same day that FTX made its filing in bankruptcy court in Delaware, the FDIC-insured Silvergate Bank released a statement which included this nugget from its CEO, Alan Lane:
“In light of recent developments, I want to provide an update on Silvergate’s exposure to FTX. As of September 30, 2022, Silvergate’s total deposits from all digital asset customers totaled $11.9 billion, of which FTX represented less than 10%. Silvergate has no outstanding loans to nor investments in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans. To be clear, our relationship with FTX is limited to deposits.”
Why Alan Lane thinks the public would be comforted to know that his bank is connected to FTX – and its potentially wiped-out customers – to the tune of more than $1 billion raises questions about his own mental processes. (Perhaps Lane doesn’t recall that JPMorgan Chase was hit with two felony counts by the U.S. Department of Justice for its role in the Bernie Madoff fraud and forced to pay $1.7 billion to settle the case.) Federally-insured banks must follow “Know Your Customer” rules and report any suspected cases of money laundering to the federal agency, FinCEN. It has been credibly reported that as much as $10 billion was transferred from customer funds at the FTX crypto exchange to Bankman-Fried’s hedge fund, Alameda Research, with a large chunk of that now missing. Federal prosecutors might find that Silvergate Bank’s compliance personnel should have reported the suspicious movement of customer funds to FinCEN.
Shareholders of Silvergate have responded by dumping the stock. On November 18, 2021, Silvergate’s stock closed at $198.60 on the New York Stock Exchange. Last Friday, November 18, 2022, exactly one year later, Silvergate closed at $24.90. The stock has lost 28 percent since FTX filed bankruptcy on November 11 and 87 percent of its market value in one year.
How many more FDIC-insured banks are spread across the United States with significant ties to crypto-related firms and the potential to see their share prices sink and/or reputational damage? We know of four FDIC-insured banks whose share prices have already been hit: Silvergate Bank, Customers Bank, Signature Bank and Metropolitan Bank. (See chart below.)
But there may also be very large banks that have slithered below the radar with their involvement in crypto. For example, on June 21 we reported on the shocking ways that State Street has become involved in crypto. State Street is not some little bank that could go under without causing ripples. As of March 31, it was custodian and/or administrator to $41.7 trillion in assets and held $176 billion in deposits.
Allowing crypto to get anywhere near the federally-insured banking system could not have happened without the flow of money from the crypto industry into the campaign coffers of some members of Congress, including some of the members who sit on the Senate Banking and House Financial Services Committees. This reality screams for reform of corporate financing of political campaigns as well as overhaul of banking regulations. (See After Crypto Money Piled into Campaign Coffers of Senators Lummis and Gillibrand, They Introduced a Sweetheart Legislative Bill for Crypto.)
This metastasizing of the crypto contagion into the federally-insured banking system could also not have happened if members of Congress and federal banking regulators were aware of how federal banking insurance came into being in the first place. Following the Dow Jones Industrial Average losing 89 percent of its value from 1929 to 1932, thousands of banks were insolvent from their reckless involvement with Wall Street speculations.
The 1930s banking crisis came to a head on March 6, 1933, just one day after Franklin D. Roosevelt was inaugurated as President. Following a month-long run on the banks, Roosevelt declared a nationwide banking holiday that closed all banks in the United States. On March 9, 1933, Congress passed the Emergency Banking Act which allowed regulators to evaluate each bank before it was permitted to reopen. Thousands of banks were deemed insolvent and permanently closed.
There was no federal deposit insurance on bank deposits at that time, meaning that depositors lost all of their deposits in many cases or were paid just pennies on the dollar.
To restore the public’s confidence in the U.S. banking system, President Roosevelt signed into law the Banking Act of 1933, now popularly known as the Glass-Steagall Act after its authors Senator Carter Glass from Virginia, and House Rep Henry Steagall from Alabama. The legislation created federal deposit insurance for bank accounts for the first time in the U.S., while also banning these federally-insured banks from speculating in, or underwriting, stocks.
The Glass-Steagall Act protected the U.S. banking system for 66 years until its repeal in 1999 during the Wall Street-friendly Bill Clinton administration. The momentum for its repeal came from the announcement in 1998 that Sandy Weill wanted to merge his trading firms, Salomon Brothers and Smith Barney (under the Travelers Group umbrella), with Citicorp, parent of the federally-insured Citibank. (See the Editor of Wall Street On Parade’s testimony before the Federal Reserve in 1998 on that merger proposal and the proposed repeal of the Glass-Steagall Act in this YouTube video.) The Fed approved the merger despite expert witnesses warning it would be a disaster for the country.
Just nine years after Glass-Steagall was repealed in 1999, Wall Street collapsed the U.S. financial system in 2008 in a replay of 1929.
Weill had a self-confessed personal motive for his merger, which created the so-called “universal bank,” Citigroup. Weill told his merger partner, John Reed of Citibank, that his motivation for the deal was: “We could be so rich,” according to Reed in an interview with Bill Moyers.
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