Financial Commission: Call for Courage, Curiosity

June 30, 2009

Dear Citizens and Elected Officials:

Financial Inquiry Commission
Needs Leaders with Courage and Curiosity

Urgent: Calls Needed

We were happy to report in our last posting (“Stagnation, Stagflation, Stalemate…or Reform, Reconstruction, Renewal?”) that Congress had decided to authorize a 10 member Financial Crisis Inquiry Commission to get at the root causes of the financial crisis, something that is necessary before we rush to implement the largely unsatisfactory regulatory reforms put out by the Obama administration on June 17th, all 85 pages of them.

With an exemplary precedent looking over the shoulder of this Congress, in the shape of the Pecora hearings of 1932-1934, there is now an urgent scramble to pick the leaders and the members. It’s almost a given, judging from the accounts we direct you to below, that Republican congressional leaders will appoint defenders of the Wall Street status quo. Therefore, we really need a top notch Democratic appointment for Chair. Robert Kuttner has supplied a long list of those he likes and could live with.

My top three choices would be Brooksley Born, James Galbraith and Nouriel Roubini, all of whom should be familiar to our readers. William K. Black, Joseph Stiglitz and Nomi Prins (the only one whom I haven’t previously written about) would be great choices as well. Damon Silvers, whom I’ve met and spoken with several times, is deputy chair of the Congressional Oversight Panel (chaired by the formidable Elizabeth Warren). Both would be good choices, but I suspect both he and Chair Warren, because of current duties, aren’t on the leadership’s list for these appointments.

There is no time to waste. The best thing to do: hop on the phone to Senate Majority Leader Harry Reid at 202-224-3542 and House Speaker Nancy Pelosi at 202-225-4965.

Now here’s some background to help fill in the picture for you. Even the New York Times thinks that the Inquiry Commission’s findings should be the preliminary groundwork before rushing to implement financial reforms. Here’s their editorial “On the Road to Regulation” from Sunday, June 28th: http://www.nytimes.com/2009/06/28/opinion/28sun1.html [1]

William Greider is both tough on the proposed Obama regulations (which I have just finished reading on June 29th) and agrees with the New York Times’ call to slow things down: “Right now, I think the political imperative is to slow down the rush to weak solutions.” Here’s Bill’s take from June 19th in The Nation, “Obama’s False Financial Reform:” at http://www.thenation.com/doc/20090706/greider2 [2]

Robert Kuttner’s call to action from today, June 30th at the Huffington Post, lays out the urgency for progressives to lobby and the choices for the Inquiry Commission. At
http://www.huffingtonpost.com/robert-kuttner/pecora-whirling_b_222072.ht... [3]

Christopher Hayes, writing in The Nation on June 24th, has a brief, excellent article called “Capitolism: Bucking the Banks” which covers President Obama’s June 17th roll-out of the proposed regulations. He also introduces readers to a new coalition formed to lobby on the financial crisis and reforms: Americans for Financial Reform. It’s headed by Heather Booth, someone who is a recipient of the same postings you get, and whom we’ve already thanked for getting this organized. Hayes’ article is at http://www.thenation.com/doc/20090713/hayes [4]

Here’s the pathway to the home website of Americans For Financial Reform: http://ourfinancialsecurity.org/ [5]

And here’s the website and bio page for Nomi Prins: http://www.nomiprins.com/ [6]

Editor’s Note: President Obama seems intent on driving as many major reforms as he possibly can through the proverbial “narrow window” granted to new presidents in their first six months-one year. That would be fine if the situation, and the legislation being advanced, matched 1933-1935. But history is not repeating itself. As I’m writing this we have a Global Warming/Energy bill (passed by the House on June 26th by a 219-212 margin), Health Care Reform and Financial Regulation all on the front burners at the same time. Whatever the intent, it has the effect of forcing progressives to pick one area and leave the others to the “specialists,” which does not seem to be working out too well, looking at the results so far. (I’m still waiting for someone in the environmental community to send out a 25 page summary of that 1,200 page bill to convince me we’re making progress and not constructing a legislative hydra-headed-horror which will pull it in contradictory directions. Same goes for health care.)

Knowing that’s the situation we face, I’ll leave my readers with two articles, to firm up the sense of where we stand in matters economic and financial. They’re both “hot” off the press from Bloomberg.com. The first appeared on June 25th. The title says it directly: “Wall Street Begins Campaign to Thwart ‘Populist Overreaction.’” Any time you have the securities industry pushing a “grassroots” approach, and hiring two former aides to Treasury Secretary Hank Paulson to “spearhead the effort,” it’s good for citizens to pay close attention. Here’s Robert Schmidt’s article at http://www.bloomberg.com/apps/news?pid=20601087&sid=aNBWPPxGyWaU [7]

The second one delivers a brutal reminder of what we said in our June 15th essay: President Obama’s housing and foreclosure policy is failing, and failing big time. The article is by Kathleen Howley and puts it right on the line: “Housing in Peril as Obama Fails to Get Breakthrough.” One economist quoted in the article, from Moody’s Economy, delivers the finding in a very compact form: “‘The housing market is not going to hit bottom before mid-2010.’” Here it is: http://www.bloomberg.com/apps/news?pid=20601109&sid=aSewRQVhTjyY [8]

Until my next post, which something tells me is not going to be very far away, I wish my readers well…

Best,

Bill Neil
Rockville, MD

PS It’s not often, if ever, that I find myself on the same side of a Supreme Court decision as Antonin Scalia – but it’s just happened (Monday, June 29th) in the case “Cuomo vs. Clearing House Association.” It’s relevant for this post because it goes to the matter of that terrible Bush Administration intervention to head off state level action against the worst of subprime lenders. Our June 15th post reminded readers how awful former Comptroller of the Currency John D. Hawke’s regulations were - to prevent states from going after national banks - he was sued by 49 state attorney generals. Here’s the Washington Post article from today, “Ruling Adds Teeth to State Oversight of Banks” at
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/29/AR200906... [9]

We hope that this ruling makes it easier for Maryland’s Attorney General Doug Gansler to intervene alongside the City of Baltimore in their legal action against Wells Fargo Bank, which we also wrote about on June 15th. Here’s the link to the powerful New York Times article which describes what went on in Maryland’s backyard: in Baltimore, Prince Georges County and southeast Washington, DC. : http://www.nytimes.com/2009/06/07/us/07baltimore.html [10]

The article was by Michael Powell and entitled “Bank Accused of Pushing Mortgage Deals on Blacks.” Based on the content, that would be the politest way to describe what seems to have happened.