Progressive Breakfast: Stress Tests Today After PR Rollout

Stress Test Results Today After PR Rollout

"In an interview on Wednesday night with Charlie Rose, Treasury Secretary Tim Geithner struck an optimistic tone [1], saying that none of the 19 banks that experienced government stress tests are insolvent, but he was cautious about upcoming regulatory reform of the financial system, saying that it could take up to three years ... Geithner also acknowledged that the banks were tough negotiators when it came to the results of the stress tests:": HuffPost

Geitnher also pens [2] NYT oped

"US financial stocks soared on Wednesday as investors expressed relief the capital shortfalls identified by the government’s 'stress tests' [3] at large banks such as Citigroup and Bank of America were not as big as some had feared": FT

Dean Baker pans media depiction of bank health: [4] USA Today has joined the rest of the media in helping to paint a bright picture for the health of the banks. (Can we stop the Fed and FDIC subsidies now?) It goes along with a bit if slight of hand in telling readers about how Citigroup was so easily able to deal with much of its capital shortfall ... Most businesses would be doing quite well if they could get the government to pay them more than three times the market value of their stock."

Naked Capitalism: "I continue to be amazed at the bank cheerleading in the press [5] ... my best guess is that this is a quite deliberate effort ... to pump up the bank stocks to facilitate their fundraising.

Baseline Scenario: "The strategy, in short, is to continue to prop up our existing large banks in place [6] (no such consideration has been granted to small banks) through a lengthening list of bailout measures."

"President Barack Obama’s administration is keeping open the option of forcing management changes at banks [7] getting substantial government aid following the release of 'stress test' results.": Bloomberg

[8]

"The Federal Reserve’s program to kick-start consumer loans may not be helping small businesses get credit [9], a group overseeing the U.S. financial bailout said. The Congressional Oversight Panel, in a report released today, also said the Term Asset-Backed Securities Loan Facility may not be “well-designed to meet its purpose” in part because of less-than-expected demand.": Bloomberg

Congress should create an oversight council made up of the nation’s top financial regulators to scrutinize 'too big to fail' institutions for risky practices that could lead to the next financial crisis [10], the chairwoman of the Federal Deposit Insurance Corporation told a Senate committee on Wednesday ... The Senate committee seemed impressed with Ms. Bair’s idea for a 'systemic risk council' whose members would include the Federal Reserve, Securities and Exchange Commission, Treasury Department and F.D.I.C., perhaps avoiding a predicted turf fight if a single agency were assigned the task.": NYT

Dean Baker mocks proposal for new bureaucracy: [11] "The reality is that we have a systematic risk regulator. It is called the Federal Reserve Board. They blew it completely. We will do far more to prevent the next crisis by holding our current risk regulator accountable for its failure (fire people) than by pretending that we somehow had a gap in our regulatory structure and creating another worthless bureaucracy."

Financial Meltdown Commission Nears Final Approval

"The House ... voted to create an independent outside commission to investigate the causes of the financial crisis [12] ... The Senate passed their version of the bill last week. Now the bill goes to conference, where House and Senate negotiators will iron out the differences between the two. Those differences, though, are fairly minor.": TPMDC

AP adds: [13] "Under the bill, the commission would focus on more than 20 areas, including how the government failed to protect investors and the role financial fraud may have played in the meltdown. The group would report its findings by Dec. 15, 2010."

Climate Bill Drama

Politico reports Rep. Waxman "had to back off [14] his threat from a day earlier to skip a key subcommittee vote after [fossil fuel state] members raised a ruckus." But CQ reports the possibility remains: [15] "Waxman said Wednesday that he still expects to meet his Memorial Day deadline for moving the entire bill. However, this will probably mean bypassing the Subcommittee on Energy and Environment and going straight to a full committee markup sometime in the next two weeks."

Bloomberg reports Waxman offering key concession, "offering power producers and companies such as steelmakers free pollution permits [16], said people familiar with negotiations. Waxman ... made the proposal in an effort to win approval in his panel for legislation to establish a carbon- trading system, said the people, who declined to be identified discussing the private talks. The free permits may be worth as much as $40 billion a year according to Mike McKenna, president of MWR Strategies, a policy consulting firm based in Washington. Waxman’s offer marks a break from President Barack Obama’s original proposal to auction off all permits to pay for a middle-class tax cut."

Rep. Mike Doyle (PA) also indicates compromise. Reuters: [17] "Most of the pollution emission permits that industry would need under a climate change bill being negotiated in the U.S. House of Representatives will initially be given to companies, instead of sold to them, Representative Mike Doyle said on Wednesday. The Pennsylvania Democrat, who has been working on portions of the bill aimed at reducing U.S. emissions of carbon dioxide and other greenhouse gases, also told reporters that for the first 10 years to 15 years of the program, most of industry's permits would be free."

The Hill claims fossil fuel state Dems want the bill delayed, while Pelosi employs balancing act: [18] "Democratic centrists are pressing House Speaker Nancy Pelosi to set aside a flagging climate change bill to focus on what they think is a more achievable goal: overhauling the nation’s healthcare system ... There is thinking within leadership that it’s better to have two complex issues going at one time, the aide said. When there’s only one, it draws all the fire. So Pelosi might keep cap-and-trade going, waiting for healthcare to become stalled, then return the emphasis to cap-and-trade."

Biz fears unwarranted according to new Pew report. ClimateWire: [19] "The economic impact of a cap on greenhouse gases will be manageable for industries like aluminum and steel that consume massive amounts of energy ... Climate legislation similar to what is currently being considered in the House would not cause energy-intensive companies to move overseas en masse or lose major market share to foreign competitors operating in countries without global-warming regulations, the study from the Pew Center on Global Climate Change finds. The greater financial hit for such businesses would come from consumers switching to lower-emission products, but that cost could be cushioned through policies such as direct rebates to heavy industries..."

"Dr. Joel Hunter ... The Florida megachurch pastor stars in a blitz of new ads on Christian radio stations intended to raise support for a climate bill [20] like the one under consideration in the U.S. House. Hunter, a registered Republican, draws squarely on religious language in the 60-second spots.": Grist.

HHS Reaffirms Support for Public Health Plan Option

"Kathleen Sebelius [21], in her first appearance before Congress since being confirmed as the secretary of Health and Human Services, said the administration wanted a 'public plan option' to encourage competition. [21] It does not want to create a monopoly ... Sebelius responded that states for years had offered their government employees a choice between a public insurance program and a private plan for healthcare coverage. 'It can work very effectively, and does work very effectively,'": LA Times.

"Ben Nelson (D-insurance industry) is out with his health care reform alternative. Guess what? [22] It's exactly the same as the one proposed by the insurance industry. Like, almost point for point.": HCAN's Jason Rosenbaum.

"The top tax-writer in the House of Representatives said Wednesday that there was 'no way' he would support taxing employer-provided health benefits [23], Americans’ leading source of coverage ... the clearest indication yet of the difficulties Democrats may have in raising money to fulfill President Obama’s campaign promise of offering health insurance to all Americans ... The chairman of the Senate Finance Committee, Max Baucus, Democrat of Montana, has expressed interest in the idea of limiting the tax break for employee health benefits ... Ms. Sebelius affirmed the president’s opposition to the idea but did not completely shut the door on it."

New Health Dialogue debunks [24] Luntz messaging advice to conservatives.

OurFuture.org's Bernie Horn says Luntz memo reveals truths: [25] "First, progressive pollsters have been entirely right about health care. Conservatives who oppose reform have very little public support ... Second, the best conservative strategy is to frame progressive legislation as a 'government takeover' of health care, resulting in bureaucracy, delay, and loss of patient choice. Progressives must block this argument and counterattack ... Third, conservatives can’t succeed without offering their own plan for health care reform. Progressives must hound conservatives to lay out that plan—because it will be horrific."

Wonk Room's Igor Volsky criticizes press coverage of insurance industry: [26] "Press coverage [has] centered around the insurance industry’s so-called 'concessions' ... The industry had offered similar concessions in December 1992, before launching an all-out attack on President Clinton’s health care reform efforts."

Labor Law Compromise In Works, Sans Free Choice

"Senators are working on a compromise version of a labor-organizing bill that will likely drop a contentious card-signing provision in favor of a speedier union election process [27], according to people familiar with the talks ... Among the changes being discussed are dropping the card-signing provision and setting a 21-day deadline for an election to be held -- about the half the median of 40 days that union elections currently take, according to people familiar with the talks .... Another compromise relates to contract negotiations. The bill currently calls for arbitrators to set contracts if an employer and a new union fail to agree within 120 days. Under a compromise, mediators -- rather than arbitrators -- would play a bigger role in helping the sides negotiate a contract. Arbitrators could still be used to rule on certain contract provisions after both sides failed to agree.": WSJ

"Senate Democrats are considering a proposal pushed by Senator Dianne Feinstein [28] ... In a procedure similar to the early voting that precedes elections in many states, workers could sign cards and mail them to the National Labor Relations Board. If a majority mailed cards, the board would order the employer to recognize the union, as it now does when a majority of workers vote for a union through secret ballots ... Several labor leaders said they would accept legislation with fast elections only if it included arbitration and tougher penalties for companies that break labor laws.": NYT

Breakfast Sides

"The Senate could begin consideration as soon as Thursday of a bill to impose new regulations on the credit card industry [29] ... A deal is not imminent, Dodd said Wednesday, but the bill will move to the floor next, even without an agreement ... The key difference between the House and Senate bills — and the major sticking point for some Republican senators — is language in Dodd’s bill that would more sharply limit card companies’ ability to raise interest rates.": CQ

White House Is Firm on Shaking Up Military Spending: [30] NYT

USA Today edit board backs Obama direct student lending plan: [31] "Banks shouldn't need major subsidies to issue guaranteed student loans ... As the saying goes, if you want something done right, do it yourself. Sometimes that even applies to government."

Terrance Heath contributed to the making of this Breakfast