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Biden's Back To Normalcy-- The Normalcy That Got Trump Elected In The First Place?


"Fat Uncle Scam"

Yesterday, Pam and Russ Martens wrote at Wall Street on Parade that The Four Years of the Trump Administration Saw the Largest Number of IPOs With Negative Earnings In The Last 40 Years. They noted that 16 says before Trump was inaugurated in 2017 "he sent the message to Wall Street that 'I’ve got your back.' On January 4, 2017, Trump nominated Jay Clayton to Chair the Securities and Exchange Commission, ostensibly the top watchdog on Wall Street. But Clayton’s resume ensured that he would be doing a lot more recusing than watchdogging. Clayton, a law partner at Sullivan & Cromwell, had represented 8 of the 10 largest Wall Street banks in the three years prior to his nomination. Clayton did not disappoint [them]. He looked the other way as the Wall Street banks traded their own bank’s stock in their own Dark Pools. He wore blinders as the Wall Street banks flagrantly violated the Dodd-Frank financial reform legislation’s Volcker Rule. He took no action to stop Wall Street from running its own private justice system (mandatory arbitration) that effectively locks the nation’s courthouse doors to Wall Street employees and customers. On May 5, 2020 Clayton’s SEC approved the application for some of the worst actors on Wall Street (such as Citadel, JPMorgan Chase, Citigroup, Goldman Sachs and others) to run their own stock exchange called “Members Exchange” or MEMX... And when it came to allowing Wall Street to pump out dodgy Initial Public Offerings, Clayton didn’t disappoint there either."


[T]here were more traditional IPOs with negative earnings issued in the four years of the Trump administration than at any time in the last 40 years.
...We could find no other era in the last 40 years that even came close to this disastrous record. For example, in the four years leading up to the historic dot.com crash in 2000, the percentage of IPOs with negative earnings looked like this: 36 percent in 1997; 46 percent in 1998; 76 percent in 1999; and 81 percent in 2000. That four-year average comes to 59.75 percent versus the four-year average from 2017 through 2020 of 78.75 percent of traditional IPOs coming to market with negative earnings.
And, of course, last year also set a record for companies coming to market with no businesses at all. We’re talking about Special Purpose Acquisition Companies (SPACs) that tap the public markets with an IPO when they have no commercial operations at all and simply plan to eventually acquire an existing company. SPACs are also known as “blank check” companies but could more accurately be called “blank brain” companies if one were to characterize the investor that buys in to this insanity.
According to FactSet, if you include SPACs and all types of IPOs, the total amount raised in 2020 through IPOs was $174 billion-- which was a 150 percent increase over 2019. FactSet notes that SPACs accounted for half of all IPOs in 2020.
This IPO bonanza was wonderful for the bottom line of the mega banks on Wall Street that collected underwriting fees in the process, but as with the dot.com bust, the U.S. economy will pick up the price tag for this hubris.
Following the dot.com bust from 2000 to 2002, the Nasdaq stock index lost 78 percent of its value. Ron Chernow explained to New York Times’ readers on March 15, 2001 how America was paying the price for Wall Street’s excesses:
“Let us be clear about the magnitude of the Nasdaq collapse. The tumble has been so steep and so bloody-- close to $4 trillion in market value erased in one year-- that it amounts to nearly four times the carnage recorded in the October 1987 crash.”
Chernow explained that the Nasdaq stock market had performed as a “lunatic control tower that directed most incoming planes to a bustling, congested airport known as the New Economy while another, depressed airport, the Old Economy, stagnated with empty runways. The market functioned as a vast, erratic mechanism for misallocating capital across America,” Chernow observed.
But it wasn’t an “erratic mechanism” at all. It was a mechanism fueled by Wall Street’s personal greed and callous disregard for the good of the country. Just as today, the men pushing out those lemon companies as hot IPOs were doing it to make themselves and their bosses rich.
Following the dot.com bust, on April 28, 2003 the Securities and Exchange Commission settled charges for $875 million against 10 Wall Street banks that the SEC said had rigged the research they were disseminating to the public on IPOs. Investors lost more than $4 trillion but Wall Street got off with a payment of $875 million. No one went to jail. Just two individual research analysts were charged: Jack Grubman of Citigroup’s former Salomon Smith Barney unit and Merrill Lynch’s Henry Blodget. Both men were barred from future affiliation with a broker-dealer and paid fines that were a fraction of the bonuses they had collected.
The SEC did not stop these Wall Street banks from simultaneously bringing companies public and then issuing buy recommendations on the same stocks. The SEC simply made the underwriters spell out their fatal conflicts of interest. For example, the SEC’s settlement mandated that “Each firm will include a disclosure on the first page of each research report stating that it ‘does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.’ ”
When this current stock market bubble bursts and leaves the economy in ruins, Americans will look back on 20 years of Congressional failures to rein in the obscene greed and malfeasance on Wall Street that has dangerously impaired the United States from building legitimate new industries and innovations that will ensure good jobs for Americans in the future and the nation’s ability to compete on an increasingly competitive global stage.

With Trump gone, everything will go back to normal? Um... yeah, and the status quo ante ain't that great. After Obama's election in 2008-- Note: in my last lesser of two evils presidential election, I had supported him and voted for him-- his first staff announcement was Rahm Emanuel to run the White House. And that was the end of any positive feelings I still had for Obama. The most pernicious crook in the Democratic Party was just put in charge. After Biden was elected-- without my support or vote-- he appointed someone nearly as pernicious as Emanuel to his staff: medical industrial complex lobbyist Steve Ricchetti. He's Biden's most conservative top advisor, the skunk on the team. And previously worked as executive director of the DSCC, deputy chief of staff for Bill Clinton (Clinton's ambassador to corporate America) and as the top lobbyist for Blue Cross/Blue Shield in their anti-Medicare for All jihad. Ricchetti's family are every bit as crooked and predatory as he is-- and they're all over the Biden Administration.


Biden and the Ricchettis

Yesterday Washington Post reporters Michael Scherer, Jeff Stein and Sean Sullivan wrote that Steve's lobbyist brother Jeff is opposing a Biden Administration effort to raise the estate tax on the super wealthy. The Ricchetti brothers opened their own corporate lobbying firm and Jeff still runs it. He's lobbying senators on behalf of Finseca, the trade group that represents financial planners and life insurance brokers, against what The Post team called "a central plank of President Biden’s legislative agenda that would raise taxes on the inheritors of large estates... to lead an effort by a life insurance trade group to preserve the practice of 'stepping up' the basis for capital gains taxes when property is inherited. Under the current system, wealthy heirs pay capital gains taxes only on increases in value that occur after they take possession of property. Under the Biden proposal, they would pay capital gains taxes from the time the property was first acquired by the previous owner."


The conflicting interests within an influential Democratic family speak to the often insular, and revolving, roles of power players in Washington. As recently as 2008, Steve Ricchetti worked alongside his brother lobbying for the same life insurance trade group on estate tax issues, according to federal filings. A little more than a decade later, he chaired the Biden campaign, where he helped craft the stepped-up-basis proposal.
Biden singled out the provision in a Wednesday speech at McHenry County College in Crystal Lake, Ill., calling it a “loophole” and saying that closing it would generate $400 billion in government revenue. That would cover the cost of extending the child tax credit under his American Families Plan, Biden said.
He described being a wealthy person who plans to sell appreciated stock but whose heirs, after his sudden death, don’t have to pay capital gains tax.
“If on the way to cash it in, I get hit by a truck, God forbid, and died, and it was left to my daughter, there’d be no tax paid,” Biden said. “It’s not inheritance tax-- it was a tax due 10 seconds earlier.”
...Finseca chief executive Marc Cadin said his industry has worked with Jeff Ricchetti on these issues for 20 years and previously worked with his brother as well. He confirmed Jeff Ricchetti’s role in lobbying Democrats in the Senate.
...Biden has said his own family will not be involved with his administration, but that ban does not apply to his advisers.
...For Jeff Ricchetti, the rise of Biden and his brother has been good for business: He has signed 12 new clients since the campaign his brother chaired secured the Democratic presidential nomination in 2020, including four clients for whom he lobbied Biden’s office. Jeff Ricchetti reported making $820,000 from lobbying in the first three months of this year, nearly five times what he earned in the same period a year earlier.
Government watchdogs have raised concerns about the close family relations between two influential people, even if they’re working on opposite sides of the same issue.
Danielle Brian, the executive director of the Project on Government Oversight, a watchdog group, said the relationship raised troubling questions.
“You can see why there is a general distrust of the political elite,” she said. “This is a perfect example of why a big part of our country does not trust Washington or whose side they are on.”
The work for Finseca, for which Jeff Ricchetti billed $50,000 between January and March, targets a fundamental feature of Biden’s plan to pay for expanding the government safety net and climate-related programs. The president has proposed nearly doubling the capital gains rate paid by wealthy investors earning more than $1 million, as well as limiting how wealthy investors can avoid capital gains taxes when they pass assets down at death.
Tax experts have found that the two proposals have to move together to be effective at raising substantial new revenue. If Congress passed only the increase in the capital gains rate, Biden’s plan would lead federal revenue to fall by about $33 billion over the next 10 years, as the wealthy held on to their assets, according to the Penn Wharton Budget Model, a nonpartisan budget forecaster. Passing both would increase federal tax revenue by more than $100 billion, Penn Wharton found.
“The core element of Biden’s plan turns on taxing capital effectively, and the linchpin of that is collecting a tax on the unrealized gains at death-- or they’ll escape taxation completely,” said Steve Rosenthal, a tax expert at the Tax Policy Center, a nonpartisan think tank. “Billionaires and the superwealthy create dynastic wealth by avoiding selling their stocks until death. If we just raised the capital gains tax rate, the rich would just carry their assets to death and avoid them. But if we’re going to tax them at death and induce more sales, that gives Biden much more latitude. It’s absolutely crucial to his plan.”
Biden’s proposal to repeal the current rules faces other political challenges, particularly from farm groups that are increasingly vocal in complaining that the plan could hit agricultural producers. The White House has stressed that the plan includes exemptions for family farms that continue to operate, as well as for people whose assets increase by up to $1 million for an individual.
Congressional aides view Sens. Mark Warner (VA) and Maggie Hassan (NH) as the Democrats on the Senate Finance Committee most likely to oppose Biden’s plan. Spokespeople for Hassan did not return requests for comment.

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