financial reform

Better Off? Hell Yes!

Leo Gerard — Tue, 11 Sep 2012 10:24:32 -0400

Damn right America is better off than it was four years ago.

Four years ago was September 2008. George W. Bush was president and Wall Street giant Lehman Brothers was collapsing. It was a time of fear. It was a time of panic about the future. Recalling that anxiety is unsettling. But it’s important for comparison sake.

Lehman filed for bankruptcy this week four years ago – Sept. 15, 2008. Global financial markets spun into a panic. Credit markets froze worldwide. The stock market plunged. GM and Chrysler fell into crisis. Foreclosures were spiking and housing prices plummeting. Main Street shops and factories couldn’t get ordinary loans essential to sustain routine business. Nearly half a million workers lost their jobs that month. It was the ninth consecutive month of massive job losses. The Bush administration had converted a vibrant economy and budget surplus it had inherited from former President Bill Clinton into the Great Recession and massive deficits. America was still mired in two wars, including one Bush started on false pretenses.

Now, in September 2012, global financial markets have stabilized. Credit is available to Main Street. GM and Chrysler are building cars and creating jobs. Unemployment is declining as the private sector has added jobs to the economy every month for the past 30. The value of housing is rising once again, creating wealth for the middle class. Now there’s a financial reform law to prevent another Wall Street bailout. There’s Obamacare to help families retain and secure health insurance. The war in Iraq is over and Osama bin Laden is dead. Is America better off than it was four years ago? Hell, yes it is!

September 2012 can’t be described as boom times. But it’s sure not the dread-filled days of September 2008. As former President Clinton so eloquently said last week in his convention speech, describing the Republican attitude toward President Obama:

“We left him a total mess. He hasn’t cleaned it up fast enough. So fire him and put us back in.”

Republicans want Americans to put them back in charge. Their presidential nominee, Mitt Romney, has promised to “restore” America, to return the country to the days before President Obama.

The Romney plan to “restore” America involves repealing, revoking and rejecting every advance President Obama has achieved, including health insurance reform and Wall Street regulation. As Andy Borowitz suggested, if Romney could, he’d revive Osama bin Laden and kill Detroit. Anything to take America back(wards).

Luckily, Romney wouldn’t be able to undo President Obama’s auto bailout – although he opposed it from day one, urging “Let Detroit Go Bankrupt.” He wrote:

“If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.”

Well, GM and Chrysler got bailouts, and both are doing fine, thank you, Mr. Romney. In fact, in January GM reclaimed for a few months the title of world’s largest car manufacturer. Both companies are repaying the government loans and 1.45 million people are working as a direct result of the bailout, according to the nonpartisan Center for Automotive Research.

Would America be better off without GM and Chrysler? No, it would not. That according to 1.45 million employed people.

Also luckily, Romney couldn’t undo President Obama’s stimulus. He’d like to, though. His campaign is repeating the false GOP meme that the money was wasted.

The non-partisan Congressional Budget Office estimates that the stimulus created or saved as many as 3.3 million jobs. Romney would have preferred no stimulus. He’d have abandoned those workers – your father-in-law, your kid, your neighbor – rendering them unable to pay their mortgages, unable to support their families, unable to imagine a future.

Would America be better off without the stimulus? No, it would not. That according to 3.3 million employed people.

A President Romney could, however, reverse the financial and health insurance reform measures. And he’s pledged to do that “on day one.” Without financial reform, Wall Street could resume, unfettered, the same risky betting that plunged the country into the Great Recession.

Without the health reform law, insurance companies would immediately cancel coverage for millions of young adults now on their parents’ plans and cut off untold millions of Americans with pre-existing conditions and those who have exceeded the now-banned lifetime caps. In addition, senior citizens would have to pay more for prescription drugs and preventative care.

Would America be better off without the financial and health insurance reforms? No, it would not. That according to Americans who would be sicker and poorer and at greater economic risk without the laws.

Romney also promises to restore America to the Bush days of special deals for the rich and up the ante by giving the 1 percent additional tax reductions. Bush didn’t pay for his tax cuts, resulting in massive deficits, and Romney hasn’t specified how he would either.

Would the country be better off if the rich paid even less in taxes? No, it would not. That according to the 99 percent and President Obama. He pledges to end the Bush tax cuts for those making over a quarter million and begin paying down the nation’s debts.

President Obama plans to take the country forward, to create a better tomorrow.

As former President Clinton walked onto the convention floor last week, the Fleetwood Mac song “Don’t Stop” played in the background. This is the refrain:

“Don't stop, thinking about tomorrow,
Don't stop, it'll soon be here,
It'll be, better than before,
Yesterday's gone, yesterday's gone.”

Yesterday’s gone. Thank goodness because America is much better off than it was four years ago. Don’t stop thinking about tomorrow.

Today's Visionary: An Illustrated Guide to Dr. King's 21st Century Insights

Richard Eskow — Fri, 13 Jan 2012 11:37:33 -0500

Here it comes again. This holiday weekend we'll see a lot of media coverage of Martin Luther King, Jr. But we'll hear very little about what he really was - a brave and visionary leader whose vision is as relevant today as ever.

One year ago I listed ten quotes by Dr. King, and mourned the lack of a movement that would advance his kind of vision. Then came the uprising in Madison and the Occupy movement, which began a long-overdue national debate about economic, as well as racial inequality.

Once again, Dr. King's insights provide offer insight and vision for today's movement activists - and tomorrow's.

1. "True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring." Where Do We Go From Here? August 1967 speech.

"Bain Capitalism" - aka "vulture capitalism" - didn't happen out of nowhere. It was made by politicians. It should be un-made by politicians. The system is the problem and it needs to change.

A long list of corporations and banks enriched itself by triggering the events that led to the Great Recession, and many of them took Federal bailout money when it happened. Each of them has a Corporate Social Responsibility policy, designed to show they're good citizens who give back to the community. And each of them has a fleet of lobbyists working to protect their privileged status and tax benefits.

Meanwhile the poverty rate, which had been declining, started to rise again in 2000. That year it stood at 11.3%, but by 2009 the Census Bureau reported that it had climbed back to 14.3%. At last count, 46 million Americans lived in poverty, more than 15 percent of the population. More than 16 million of them are children, which means that nearly one in four American kids (22 percent) is living in poverty.

Is that okay with you?

The situation has become so grave that The Nation responded by allocating an entire page to poverty, which is managed by Greg Kaufman. Sadly, it is now essential reading if we're to understand the real state of our union. As Kaufman points out, one study suggests that 340,000 children joined the ranks of the impoverished last year.

As the New York Times reported last September, another 2.6 million people slipped below the official poverty line in 2010. The official total of impoverished Americans was the highest it's been in the 52 years that it has been reported. For white Americans, the figure was 9.9 percent. The poverty rate for African Americans surged to 27.4 percent. For Hispanics the figure was 26.6 percent. For African American children the figure was 39 percent.

Is that okay with you?

(photo by Jeff Schrier, Saginaw News)

2. "We must develop a federal program of public works, retraining, and jobs for all - so that none, white or black, will have cause to feel threatened ... There is nothing except shortsightedness to prevent us from guaranteeing an annual minimum and livable income for every American family." Where Do We Go From Here?

Many economists agree that the unemployment rate will remain tragically high unless there is a concentrated program of government-funded, short-term job creation. Instead, budget cutbacks are forcing layoffs of government employees, especially at the state level. Republicans are refusing to back any extension of unemployment benefits. Among their Presidential candidates, only Mitt Romney appears to support increasing the minimum wage.

President Obama's pre-compromised and therefore overly mild jobs proposal was weakened with ineffective tax breaks for businesses, but it would have provided some jobs. Yet even that proposal was rejected by the Republicans. Of the political groups in Washington, only the House Progressive Caucus is willing to propose an effective ob creation bill - one that would also reduce the nation's deficit. But mainstream media have stigmatized it as "extreme" and no major politician is willing to back it.

What did Dr. King say about jobs?

"The unemployed, poverty-stricken white man must be made to realize that he is in the very same boat with the Negro. Together, they could exert massive pressure on the government to get jobs for all. Together they could form a grand alliance. Together, they could merge all people for the good of all."

Today it seems that the only bills that even get proposed are those that disguise tax breaks for corporations as "stimulus" spending, even though there is widespread agreement they're an ineffective way of creating jobs when there's not enough consumer demand.

With 24 million people out of work or under-employed, demand is hard to come by. ALong-term unemployment is a portrait of human loss, of human beings cast out of productive, wage-earning lives and into an existence of hopelessness and deprivation.

How bad is unemployment today? There are a number of ways to illustrate it. Here's one:

Pundits and politicians get excited about short-term blips in unemployment figures. But nobody's addressing this long-term catastrophe..

3. "A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth." Beyond Vietnam: A Time to Break Silence, April 1967 speech.

(Daimler Maybach sedan, manufacturer's suggested retail price $366,000 - plus delivery and other charges)

Hello, Occupy!

The gap between the wealthy and the rest of society is greater now than it was when Dr. King spoke those words in April, 1967. The progress we made toward reducing poverty is being eroded as the result of increasingly maldistributed wealth, Wall Street's reckless gambling, and the cost of the Great Recession that followed. Wall Street's doing fine, now that it has been rescued by the American public. But the American public isn't doing so well. We threw a life preserver to the drowning bankers, and now they're sitting on the shore as millions of their rescuers go down for the third time.

Income inequality in this country is worse than it is in Egypt. As economist Edward Wolff explains, wealth inequality has more than doubled in this country since the mid 1970s. The GINI coefficient, which measures economic inequality, has risen nearly 20% since it was first measured in this country (coincidentally, the same year Dr. King's speech was given.)

Where are the trends headed?

The increasing disparity in wealth has been greatest for the top 0.5% of earners - the wealthiest of the wealthy - yet their tax burden has dropped from 70% in 1967 to 35% today (it was scheduled to "soar" to 39.6% until the Obama/McConnell tax deal of December 2010). And hedge fund managers - including the billionaires - continue to pay 15% instead of the 28% commonly paid by teachers, nurses, and police officers. (One hedge fund manager likened the possibility of a change to Hitler's invasion of Poland.)

The Federal minimum wage, however, has dropped from $6.58 in fixed-dollar terms (1996 equivalent) to $5.29 since this speech was given. When Dr. King gave his speech, it was possible to support a family of three on this wage and stay out of poverty, but that's no longer possible.

4. "The profit motive, when it is the sole basis of an economic system, encourages a cutthroat competition and selfish ambition that encourages men to be I-centered rather than thou-centered." Where do we go from here?

The I-centeredness of American business leaders has reached a level Dr. King could not have dreamed of. Two short years after Wall Street ruined the economy and was rescued by the American people, the depth of its self-absorption and self-pity was a miracle of human indulgence. It reflects a self-centeredness so profound that its leaders are in danger of morally imploding, spiritual black holes in an amoral universe.

Case in point: Steven Schwartzman, the hedge fund manager we mentioned earlier, who felt that paying taxes on his billions' at a laborers' rate was the moral equivalent of the invasion of Poland.

Or Goldman Sachs CEO Lloyd Blankfein, who said "We're very important ... we do God's work." (Reverend King might beg to differ.)

Or erstwhile Democrat Daniel S. Loeb comparing himself and his fellow investors to an oppressed minority, victims of tyranny (a "tyranny" that rescued them and asked nothing in return), and even underpaid workers.

Or John Coulson, head of the Mortgage Bankers Association, lecturing underwater homeowners not to walk out on their mortgages - even as his organization was walking away from a headquarters building they lost nearly forty million dollars on in two short years.

Or the King of the Emo Executives, Jamie Dimon, pouring out his hurt feelings to the New York Times - "My Achilles heel?" Jay-Z rapped, "Love! I don't get enough of it!" - even as his bank was on its way to earning record profits in a time of record unemployment (and as it continued to engage in unscrupulous business practices).

Dimon, who has also contributed to the Democratic Party, is stridently resisting regulations that would remove the existential threat his bank (and others like it) pose to the economy. And he won't stop whining.

I'm tired of going after the guy, so this time we'll let Josh Brown tell him what time it is. All these greedy, rapacious, whiny CEOs help to remind us that shame performs a useful social function.

We need better laws and regulations - and they should be ashamed of themselves.

5. "Lamentably, it is an historical fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntarily give up their unjust posture; but, as Reinhold Niebuhr has reminded us, groups tend to be more immoral than individuals." Letter From a Birmingham Jail, April 1963 open letter.

Tea Party supporters may have populist impulses. But the movement itself was created with an outburst by an investor-turned-television commentator who was cheered on in his rantings by traders on the Chicago Board of Mercantile Exchange. And the movement's been funded by wealthy interests ever since.

After it was bailed out, Wall Street immediately redoubled its lobbying efforts. Banks were able to blunt the most effective and urgently needed financial reforms, like breaking up banks that are "too big to fail." Now they're hard at work eliminating the reforms that were passed, with the help of the Republican Congress they helped get elected. Big-bank CEOs have spent more than $170 million to influence politicians in the last ten years.

The situation has gotten so bad that the International Monetary Fund - hardly a leftist organization - issued a report showing a strong correlation between bank lobbying and risky bank behavior in the United States.

That's why the Occupy movement is so important, and why it must grow and evolve in 2012.

6. "An unjust law is a code that a numerical or power majority group compels a minority group to obey but does not make binding on itself. This is difference made legal." Letter From a Birmingham Jail

Recent court cases have revealed widespread lawbreaking on the part of United States banks - a "power majority group" - as they foreclosed on homes that in some cases they don't even own.

Members of both parties have indicated an eagerness to rescue banks from the consequences of their own disregard for state and local laws, which has led to numerous and egregious violations (like foreclosing on a home that is fully paid for). But the criminality goes further: In many cases, mortgages changed ownership without proper notification to the borrower. The new holder of the note often changed the rules - about due dates for payment, late penalties, and other contractually agreed-upon terms - without informing the homeowner, then began imposing steep fees and penalties retroactively. (The banks own servicing companies that benefit from these fees.)

Many homeowners are now delinquent because of these wrongfully-imposed fees. Many of the solutions now being proposed would allow them to seize the homes anyway. The Administration's HAMP program, ostensibly designed to help homeowners, has too often become an "extend and pretend" program that allows banks to take another year or two's worth of mortgage payments before seizing the home anyway.

That's why the Obama Administration's cushy settlement deal - which would immunize bankers from criminal prosecution, or even investigation - must be stopped. (You can help by making your voice heard here.)

7. "When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered." A Testament of Hope (posthumously published essay).

Banking has become divorced from reality. When the financial sector can enrich itself with speculation alone, it no longer needs to fund concrete business activities. That's why statements like "Main Street and Wall Street rise and fall together" are 100% incorrect: Those two geographies have never been more distant from one another.

Robo-trading. Flash crashes. Databases where mortgages are traded like gambling chips. Incentives to lie, and to hide the truth. Banks are "automated greed factories." The most human thing about banking in the 21st Century is its greed.

Is racism conquered? When infant mortality for African Americans in 2.5 times that of whites? With these disparities in poverty and employment?

Militarism? The Cold War is over and the Defense budget continues to expand. We didn't shift military spending when the world changed—we added to it. The Homeland Security Complex is enormous, growing—and looking for targets of surveillance.

And as Tom Engelhardt points out, President Obama's much-touted "defense cuts" are really just a slight reduction in the rate of spending increase. That's like an alcoholic boasting that he's solved his drinking problem by only having three more drinks a day next month, instead of his original plan to have four more.

As for conquering materialism, how many people even want to anymore? Dr. King's "three triplets" still walk the earth.

8. "There is also the violence of (African Americans) having to live in a community and pay higher consumer prices for goods or higher rents for equivalent housing than are charged in white parts of the city." A Testament of Hope

Payday lenders disproportionately exploit minorities and lower-income communities. Big banks (like Jamie Dimon's) make it harder for working minorities to get credit through normal channels. Then they help finance usurious payday lenders who step in and offer credit at outrageous rates designed to trap the borrower in a cycle of debt, so that a "one-time" fee for borrowing against next week's paycheck turns into a revolving loan that costs the borrower 300-400% in interest per year.

As a theologian and scholar, Dr. King would recognize a practice that was condemned as sinful in both the Old and New Testaments.

Big banks also back auto loans, which have been shown to charge more to African Americans than whites. HSBC Bank settled when it was found to have been charging minority customers more than others.

When it comes to banks, Dr. King would recognize the United States of the 21st Century. And he wouldn't be surprised to learn that the government is still more inclined to rescue banks than force them to change. He would probably be encouraging citizens to take action - action that would change things. The CFPB is now up and running with a full-time Director. We wish Richard Cordray and his staff the best.

9. "Congress appropriates military funds with alacrity and generosity. It appropriates poverty funds with miserliness and grudging reluctance. The government is emotionally committed to the war. It is emotionally hostile to the needs of the poor." Domestic impact of the war in America, November 1967 speech..

Today's politics would look all too familiar to Dr. King. In the matter of poverty, as in so many things, the Washington consensus of "centrist" Democrats and Republicans fails to reflect the opinions of the American people.

He would be pleased to learn that the American people are dedicated to eliminating poverty - and to protecting Social Security, defending Medicare, and asking the wealthy to pay their fair share.

He would be disappointed, however, to find that there aren't more national leaders speaking up for the public's values in Washington.

10. "Ultimately a genuine leader is not a searcher for consensus but a molder of consensus." Domestic impact of the war.

Dr. King was discussing a critic who told him that taking a controversial position on Vietnam might diminish his authority as a civil rights leader and weaken his political influence in Washington. Here's the full quote:

And I had to answer by looking that person into the eye, and say 'I'm sorry sir but you don't know me. I'm not a consensus leader.' I do not determine what is right and wrong by looking at the budget of my organization or by taking a Gallup poll of the majority opinion. Ultimately a genuine leader is not a searcher for consensus but a molder of consensus.

We're speculating now, but we can't help imagining that Dr. King might have challenged today's leaders to try harder at molding consensus before seeking to achieve it. That was his idea of genuine leadership.

Lately the President of the United States has been taking a tougher rhetorical stance on behalf of the American majority. We hope that his words will be followed by a year of aggressive action. But we won't be waiting to find out. We'll be acting for ourselves and encouraging others to do the same.

See you at the demonstrations.

Break Up Bank of America Before it Breaks Us

Mary Bottari — Wed, 21 Dec 2011 12:33:47 -0500

On Monday, Bank of America (BofA) stocks briefly traded for under $5. Yes, you could buy a share of BofA for less than the noxious debit card fee they tried to force down your throat.

BofA is massive, with assets equivalent to 15 percent of U.S. GDP. So why is it trading for the price of a latte?

Because Wall Street's dirty little secret is that BofA is a zombie bank. Now the reek is getting too strong to ignore.

The Most Dangerous Bank In America?

In 2008-2009, BofA publicly took $45 billion in TARP bailout funds and secretly took another $91 billion in emergency Federal Reserve loans. According to Bloomberg News, it made $1.5 billion in profits off of those loans. Yet, several analysts predict that BofA is woefully short of capital reserves.

A recent study by NYU's Stern School of Business ranks BofA as the most systemically risky firm in the United States. These analysts use public information and focus on the capital shortfall that would be experienced by the bank in the event of another crisis. BofA's weak condition means it is in a position to "create or extend" such a crisis.

As if this were not enough, recent news reports indicate that BofA is trying to move $22 trillion in derivatives out of its Merrill Lynch subsidiary into its FDIC-insured bank. The Fed favors the move (naturally). The FDIC, which provides insurance to depositors if a bank fails, does not.

In this pile of derivatives could be all sorts of problems, including bad European debt, the same kind of debt that brought down Jon Corzine's derivatives firm, MF Global. Taxpayers don't backstop MF Global. We do backstop BofA through the FDIC and the Fed.

Obama Promised to End the Era of Big Bank Bailouts

While public rage focused on the $700 billion TARP bailout bill at the height of the crisis, we have learned that far more went out the door from the Fed to aid the big banks. The Center for Media and Democracy tallies the bailout at $4.7 trillion under 35 federal programs. Bloomberg News puts the number closer to $7.7 trillion in loans plus guarantees, which generated $13 billion in profits for the banks.

With European Union countries teetering on the verge of default and no resolution in sight, the U.S. government needs to take decisive action to prevent another bailout of a major American firm - a move sure to generate explosive controversy in an election year.

When President Obama signed the Dodd-Frank Wall Street reform bill in 2010, he promised: "It will end taxpayer bailouts of Wall Street firms."

Yet, the "resolution authority" included in the Dodd-Frank Wall Street reform bill requires a joint decision by a group of bank regulators to break up a systemically risky institution. Unfortunately, bank regulators like Tim Geithner and Ben Bernanke, strongly prefer zero accountability and unlimited bailouts.

Time for a Redo

While some on Wall Street frame the financial crisis as events of the distant past, the 99% understand that the crisis hasn't ended for millions of Americans out of work. It hasn't ended for small businesses who can't get credit. It hasn't ended for the millions of Americans facing foreclosure. And now we learn that a new bailout of BofA could be in the works.

We learned from Ron Suskind's new book Confidence Men that President Obama ordered the breakup of Citibank at the height of the crisis, but was stonewalled by Tim Geithner. The President's instincts were good. Now he has an opportunity for a redo.

Most American's have had it with bailouts of the big banks on Wall Street when so little has been done for Main Street.   Banks that are "too big to fail" are too big to exist.

Tell President Obama it's time to break up Bank of America before it breaks us.

Nurses to Obama: Heal America, Tax Wall Street!

Mary Bottari — Tue, 06 Sep 2011 10:24:23 -0400

Janesville, WI -- As President Obama gets ready for his big jobs speech Thursday, America's nurses have a message for him. "Heal America, Tax Wall Street!" the signs read as nurses rallied in front of 61 Congressional offices recently. The nurses are proposing a bold alternative to the "cut, cut, cut" rhetoric emanating from Washington, D.C and governors across the nation.

Their proposal? "It's time for the Wall Street financiers who created this crisis and continue to hold much of the nation's wealth to start contributing to rebuild this country and for the American people to regain their future," explained Rosanne DeMoro, Executive Director of National Nurses United, in a press release. The nurses are joining groups across the nation and around the world calling for a financial transaction tax on high-volume, high-speed Wall Street trades, to tamp down dangerous gambling and to raise revenue for heath care, jobs and other critical needs.

CEO Compensation Outstrips the Company's Tax Bill 

It hasn't escaped the notice of the nurses that while Main Street is suffering, Wall Street is booming. This week, the Institute for Policy Studies researched the top 100 U.S. corporations that shelled out the most last year in CEO compensation. They found that CEOs are hording their wealth; the gap between what workers are paid and what their CEOs are paid is rising fast. In 2009, it was 263-to-1. In 2010, it was 325-to-1.

Worse, at 25 of these firms, CEO compensation was greater than the company's entire federal corporate income tax bill. Corporate free-loader, Prudential CEO John Strangfeld, made $16.2 million in 2010, but his entire company got a $722 million refund from the federal government. Bank of New York Mellon CEO Robert Kelly took home $19.4 million in 2010. The bank, the same year, claimed a $670 million federal tax refund, despite $2.4 billion in U.S. pre-tax income.

"Where's the shared sacrifice?" asked the nurse who cited the study in front of Wisconsin Representative Paul Ryan's Janesville office.

Paul Ryan's Main Street

"Wall Street banks got bailed out, but Main Street towns are still suffering," said nurse Dena McEwen at the Janesville rally. McEwen discussed the hard times that have hit so many families. Her 40-year-old sister nearly died of gangrenous gall bladder infection because she was out of work and without health care. A neighbor tried to commit suicide when she could not afford medications.

Janesville, Wisconsin is a stark illustration of the problem the nurses were addressing. The 2008 Wall Street economic crisis killed the last big employer in Janesville, shuttering a General Motors plant for SUVs that employed 2,400 workers. Wages at the GM plant were in the range of $28 an hour.

Unemployment in the surrounding county is 9.5 percent and over 69,000 people in Ryan's district are uninsured. Hundreds of the stores on Janesville's Main Street stand empty, while the little mall where Ryan's office is located houses Manpower Inc., the temp work service that peddles low-wage, dead end jobs to former GM workers.

Ryan's plan to fix the economy? The chair of the House Budge Committee has proposed a radical "Roadmap for America" that cuts taxes for the wealthiest and corporations, privatizes Social Security, Medicare, Medicaid and the Children's Health Insurance plan, and repeals Wall Street reform to facilitate the next crash.

These policy prescriptions are sheer madness to the folks rallying in downtown Janesville. "What Ryan is doing will destroy Medicare and put people on the streets," said Janesville resident and firefighter Joe Conway. "It's time to stand up to the Paul Ryan's of the world."

Tax Wall Street Speculation

 The nurses were asking leading members of Congress and the White House to support a Wall Street financial transaction fee. A tiny levy on the sale of stocks, futures and options that has the potential to raise billions in revenue, while tamping down on large-volume noise trading and speculation. Such a bill is being planned by Oregon Congressman Pete DeFazio and Iowa Senator Tom Harkin, who paired up two years ago to "put Wall Street to work for Main Street" and tax Wall Street to fund a jobs program.

Canary Warf, London's Wall Street, has been taxing these trades for decades and recently the European Union voted to support a transaction fee. France's Sarkozy and Germany's Angela Merkel are both on board. Now its time for Obama to step up and give meaning to his talk of "shared sacrifice."

On September 8th, we will see if Obama really thinks we have a jobs crisis or if he hopes to coast to victory. If he continues to talk about the job creating potential of insane trade deals, like those proposed with Korea and Panama, we are doomed. If, however, he launches a campaign for a major new infrastructure bank funded by a Wall Street tax, then he is headed in the right direction, putting forward needed and popular proposals that make America stronger.

"This is a time for boldness. And this is a moment that working people will judge all our leaders. Will they propose solutions that are on the scale necessary to address the job crisis that America has right now?" Richard Trumka, president of the 12-million-member AFL-CIO, said recently.

 America's 30 million unemployed and underemployed will be watching.

Today's Visionary: 10 Things Martin Luther King, Jr. Taught Us About Today's Struggles

Richard Eskow — Sun, 28 Aug 2011 14:17:18 -0400

A lot of people in the media are so afraid of offending anyone that they can't even tell the truth about the man whose memorial is being unveiled this weekend in Washington. Their coverage could give you the impression that the purpose of Martin Luther King, Jr's life was simply to make everybody in this country feel good about themselves. So once again we're presenting ten quotes that represent Dr. King as he truly was -- the kind of brave and visionary leader we so badly need today.

You might be forgiven for thinking that everybody liked and admired Dr. King while he was alive except maybe for a few angry old white people down South (who later realized the errors of their ways and were very sorry.) The media have been so reluctant to convey Dr. King's true message that Glenn Beck can claim to have inherited his mantle and millions of people believe him. They're so afraid of telling his truth that a Pentagon official can claim that the recipient of the Nobel Peace Prize, the spiritual heir to Gandhi's mantle of nonviolence, would have supported the wars in Iraq and Afghanistan.

In this fame-addicted age, this activist and challenger of comfortable ideals has been presented as just another celebrity. And these days "celebrity" is another word for "commodity." Dr. King: Didn't they use his picture for one of those Apple ads (or was it Nike?) Didn't he have his picture taken with movie stars and singers? Future generations may come to believe he was famous just for being famous - like a Kardashian.

This weekend Dr. King's name will be spoken by politicians and business leaders who would probably despise what he would have had to say about 21st Century America. They'll try to appropriate his name and memory to ensure their own well-being. They hope to domesticate his moral challenge in order to protect their own ambition.

Fortunately, Martin Luther King left his words behind. In his honor, here are ten quotes from Dr. King, illustrated with images from today's events to show their continued meaning. If they don't manage to comfort the afflicted on this national holiday—and at least unsettle the comfortable—they're followed by a slide show with even more quotes.

A long chain of corporations and banks enriched itself by triggering the events that led to the Great Recession, and many of them took Federal bailout money when it happened. Each of them has a Corporate Social Responsibility policy, designed to show they're good citizens who give back to the community. And each of them has a fleet of lobbyists working to protect their privileged status and tax benefits.

The poverty rate, which had been declining, started to rise again in 2000. That year it stood at 11.3%, but by 2009 the Census Bureau reported that it had climbed back to 14.3%. At last count, 43.6 million Americans lived in poverty. In raw numbers, that's the highest number since these statistics were first collected more than fifty years ago (although it's been higher as a percentage of the population).

We're moving in the wrong direction. Children are being hit the hardest, and their rate of poverty is growing the fastest. More than 20% of children in the United States - one child in five - lived in poverty in 2009. The poverty rate for African Americans was 25.8%, a considerably higher percentage than possess a college degree. A college education is still the best ticket out of poverty - but there's considerable pressure to cut funding for education, too.

Poverty rates would have been even higher if not for unemployment insurance, which was not extended for the long-term unemployed. That means they're likely to jump again. The "99ers" have exhausted their ninety-nine weeks of special unemployment, and the agreement that extended tax cuts for the wealthy and the middle class included nothing for them.

(photo by Jeff Schrier, Saginaw News)

Had Dr. King's vision become reality, it wouldn't have been necessary to extend unemployment for the 99ers. As he said:

"The unemployed, poverty-stricken white man must be made to realize that he is in the very same boat with the Negro. Together, they could exert massive pressure on the government to get jobs for all. Together they could form a grand alliance. Together, they could merge all people for the good of all."

Today the idea of Federal support for jobs is considered so politically unfeasible that President Obama didn't even bother asking Congress for the full stimulus package economists felt was needed - and that was in a national emergency. The only bills that can passed are those that disguise tax breaks for corporations as "stimulus" spending, even though there is widespread agreement they're an ineffective way of creating jobs when there's not enough consumer demand.

With 25 million people out of work or under-employed, demand is harder to come by. And the rapid rise in long-term unemployment is a portrait of human loss, the outline of human beings cast out of productive, wage-earning lives into an existence of hopelessness and deprivation:

In the mid-sixties there was vigorous protest at the idea that 5% might be an acceptable unemployment level. The racial disparities of Dr. King's day haven't changed much, at least as far as employment is concerned: The African American rate that month was 15.8%, as opposed to 8.5% for Caucasians. Official figures reflect the fact that unemployment in the black community is twice that of whites - and the true difference is probably even greater, once figures are adjusted for those who have given up seeking employment. Underemployment is also considerably higher among African Americans.

But Caucasians aren't winning this game, either. 8.5% is a devastating figure. Increased employment for some people means more jobs for all, as newly-employed workers spend their earnings and stimulate economic growth. Dr. King's words are as true today as they were when he spoke them: A unified movement to demand more jobs would benefit all races and communities in the United States.

Income support for lower-income Americans was cut during the Clinton years, in the name of welfare reform. Dr. King's dream of an annual minimum income for all Americans, working or unemployed, may sound hopelessly radical today. But Richard Nixon proposed a guaranteed national income (he called it a "negative income tax") and it almost made it through Congress while he was President.

Could a President as economically progressive as Richard Nixon get elected today? It's hard to tell, because nobody's tried lately.

3. "A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth." Beyond Vietnam: A Time to Break Silence, April 1967 speech.

(Daimler Maybach sedan, manufacturer's suggested retail price $366,000 - plus delivery and other charges)

As economist Edward Wolff explains, wealth inequality has more than doubled in this country since the mid 1970s. The GINI coefficient, which measures economic inequality, has risen nearly 20% since it was first measured in this country (coincidentally, the same year Dr. King's speech was given.)

This increasing disparity in wealth has been greatest for the top 0.5% of earners - the wealthiest of the wealthy - yet their tax burden has dropped from 70% in 1967 to 35% today (it was scheduled to "soar" to 39.6% until the Obama/McConnell tax deal of December 2010). And hedge fund managers - including the billionaires - continue to pay 15% instead of the 28% commonly paid by teachers, nurses, and police officers. (One hedge fund manager likened the possibility of a change to Hitler's invasion of Poland.)

Case in point: Steven Schwartzman, the hedge fund manager we mentioned earlier, who felt that paying taxes on his billions' at a laborers' rate was the moral equivalent of the invasion of Poland.

Or Goldman Sachs CEO Lloyd Blankfein, who said "We're very important ... we do God's work." (Reverend King might beg to differ.)

Or the King of the Emo Executives, Jamie Dimon, pouring out his hurt feelings to the New York Times - "My Achilles heel?" Jay-Z rapped this year, "Love! I don't get enough of it!" - even as his bank was on its way to earning record profits in a time of record unemployment (and as it continued to engage in unscrupulous business practices).

Poverty's up. Unemployment's essentially unchanged. The American family is struggling. American businesses just had their best quarter ever. Yet its leaders are whining. They're using the rhetoric of freedom in defense of greed.

Dr. King trained his followers in the path of nonviolent resistance to endure jail, starvation, beatings, and even death without complaint or retaliation. He would not be impressed with America's CEOs.

After it was bailed out, Wall Street immediately redoubled its lobbying efforts. Banks were able to blunt the most effective and urgently needed financial reforms, like breaking up banks that are "too big to fail." Now they're hard at work eliminating the reforms that were passed last year, with the help of the Republican Congress they helped get elected. Big-bank CEOs have spent more than $170 million to influence politicians in the last ten years.

And that report was issued before the lobbying frenzy of the last twelve months - before the White House hired more bank executives to placate Wall Street, and before leading Republicans paraded themselves before bank lobbyists like le Pigalle hookers on a Parisian summer's night.

Guess who wasn't represented? The American public, 72% of whom want Washington to do more to rein in Wall Street misbehavior. Washington still lives by its version of the Golden Rule: Whoever has the gold, sets the rules.

Recent court cases have revealed widespread lawbreaking on the part of United States banks - a "power majority group" - as they foreclosed on homes that in some cases they don't even own.

The incestuous relationship between big banks and government threatens to undermine fundamental principles of law and justice, some of which were established in the Magna Carta. A recent proposal from "centrist" group Third Way is typical ("centrist" is a term Dr. King wouldn't recognize in its present use, where it denotes a right-wing ideology masquerading as middle-of-the-road "common sense'). It would override centuries of legal tradition and the legal responsibilities of the states to protect the nation's banks at the expense of their clients.

There are rumors that the Administration is sympathetic to solutions of this kind. It seems safe to say that Dr. King would not have felt the same way.

Is racism conquered? When infant mortality for African Americans in 2.5 times that of whites? With these disparities in poverty and employment?

As for conquering materialism, how many people even want to anymore? Dr. King's "three triplets" still walk the earth. And three years into what has become a permanent depression for millions of Americans, reality shows about rich people are still popular.

As a theologian and scholar, Dr. King would recognize a practice that was condemned as sinful in both the Old and New Testaments.

Big banks also back auto loans, which have been shown to charge more to African Americans than whites. HSBC Bank settled when it was found to have been charging minority customers more than others.

He would be pleased to learn that the American people are dedicated to eliminating poverty - and to protecting Social Security, defending Medicare, and asking the wealthy to pay their fair share. He might be disappointed, however, to find that there aren't more national leaders speaking up for the public's values in Washington.

10. "Ultimately a genuine leader is not a searcher for consensus but a molder of consensus." Domestic impact of the war.

And I had to answer by looking that person into the eye, and say 'I'm sorry sir but you don't know me. I'm not a consensus leader.' I do not determine what is right and wrong by looking at the budget of my organization or by taking a Gallup poll of the majority opinion. Ultimately a genuine leader is not a searcher for consensus but a molder of consensus.

This post was produced as part of the Curbing Wall Street project.

Shadows and Light

Richard Eskow — Thu, 14 Jul 2011 18:51:36 -0400

Want to be a cynic? You've got plenty of material to work with, that's for sure. But if you want to be an idealist, a practical idealist who can get things done, cynicism would be a tragic mistake. Lately all I've been hearing — and, frankly, most of what I've been saying — has shed too much heat and not enough light.

Here's the cynical view of what's going on in Washington right now: This whole "debt ceiling crisis" isn't real. Choose your metaphor: It's a Wild West show for gullible rubes, a Kabuki dance, an Indonesian puppet play that's nothing more than shadows on a dirty screen ...

That last image is ideal for the cynically minded. Matchstick puppets dance before a candle or a naked lightbulb, casting images on a bedsheet to enact an ancient epic of good over evil. But they're really only pieces of wood in the hands of puppeteers, masters of illusion who use light and shadow to bring life to dead dolls and make them seem larger than they are.

Or maybe you prefer the Wild West metaphor. That's the one where our politics is a show, a traveling theater troupe that draws in the townsfolk with melodrama just to sell them snake oil. Each player's a selfish actor who only cares about getting top billing on the marquee. They'd burn the theater down to light a producer's cigar if that's what it took.

When Frank Zappa said "politics is the entertainment division of the military-industrial complex," he was aiming too low. The financial system of big banks and mega-corporations makes the military-industrial complex look like a Mom and Pop grocery store.

The cynical reading of this debt ceiling crisis is this: The Republicans pretend they want to cut the deficits, but their plan would actually extend their decade-long record of making them bigger. Democrats in Congress proclaim their unwavering support for Social Security and Medicare, but they refuse to rule out specific cuts. And the President secretly wanted this crisis so that he could resolve it with a 'grand bargain' that life him "above left and right," even if that leads to hurtful and unnecessary cuts.

In the cynic's view, each of them is acting out a melodrama or a ritual, a script they've written for themselves out of vanity and self-interest. And each of them is ready to burn the theater down to get top billing.

The problem with this cynical interpretation isn't that it's wrong. On the contrary, there's a lot of truth in it. But it doesn't reflect the whole picture. Yes, each of our national politicians is capable of acting with shocking selfishness. Each of them has sometimes kept on playing their self-assigned role long after the scene has changed. And we've seen all of them do it this week.

Over the last few years I've seen cold-hearted betrayals and delusional thinking where I would've least expected them. Politicians in both parties have done infuriating and foolish things. I'd be lying if I didn't admit to getting angry with most of them from time to time. But it would be wrong to dismiss them, disparage them, resent them, or give up on them, even when they're at their worst. To paraphrase Jessica Rabbit: They're not bad, they're just drawn that way.

I suspect that most of the country's leaders, especially those outside the radical cult of corporate conservatism, also want to do good. That impulse may be stronger or weaker in any given politician but, like most of us have done at some point in our lives, they've probably rationalized their behavior with an epic script that casts them as a hero. And it gets increasingly unreal: "Liberals" want to cut Social Security. "Conservatives" would deepen the debt. "Pro-business" politicians would hurt all but the biggest and most powerful businesses.

But if they're drawn that way, who's drawing them? More than ever, the corrupt hand of corporate America holds the pen. Corporate power has weakened the voice of the people in Washington, and made the always-compromised game of politics more compromised than ever. The media buy into the myths and narratives of the corporate crowd, confusing and dividing the public in a way that prevents them from responding effectively to this corporate takeover.

But the public holds a pen, too, and we haven't used it enough. I wish the President didn't think it was a good idea to cut Social Security. But consider this: There were stories (later confirmed) that he intended to announce Social Security cuts in his State of the Union address. Instead, thousands and thousands of citizens took the time to call and write their Senators and Representatives and the White House. As a result, those plans were shelved.

The reasons for this reversal don't matter that much. If we're going to feel disappointed in the President's approach to Social Security, we should also be grateful that he responded the way he did. A different President wouldn't have felt the pressure but, whatever the reasons, this one did.

The same thing's true on Capitol Hill. The Democratic leadership felt the pressure of its base during the health reform debate, so it tried harder than it otherwise might have to pass the public option. It succeeded in strengthening provisions for community health clinics and other valuable services. As long as the Progressive Congressional Caucus keeps speaking for the right policies (and the majority's opinion) on economic matters, it deserves high praise.

Even the Republicans are not without the possibility of redemption, as crazy at that may sound to some. Sen. Jim Bunning supported the derivatives bill. Sen. Tom Coburn was a profile in courage for defying his party and issuing a scathing report on Wall Street with Democrat Carl Levin. And several Republican Senators crossed the aisle to support some truly important and tough bank regulations. In the end Scott Brown, Olympia Snowe, and Susan Collins braved the wrath of their own base to vote for the final bill. And together, Ron Paul and Bernie Sanders took the first step toward achieving transparency at the Federal Reserve.

Why did these Republicans act? Because citizens demanded it. And maybe, just maybe, because some of them want to do the right thing, too, when they can. (Ron Paul certainly acted out of conviction.) If there's one area where conservatives and progressives should be united, it's in reforming our broken financial system.

The President defended stimulus spending clearly and forcefully this week, explaining that employment at the state level is falling because stimulus funds for states have run out. In a rational world, that kind of thing wouldn't require an explanation. But it does, and he provided it.

That doesn't mean we shouldn't be prepared to bring the heat down on any politician who's doing the wrong thing. That's exactly what we should do - along with rewarding them when they do the right thing. But it can be tough, at least for me, to bring the heat without getting burned myself.

An Indonesian puppet show is an interplay of light and shadow. Corporate America's endgame is the dismantling of our social contract, and they're playing dirty to get there. A little cynicism can be a good thing, if it makes people angry enough to do something about it. But too much cynicism leads to despair. The right balance of the two should lead to a mobilized and active citizenry. Sometimes it takes anger to enlighten us and idealism and hope to project us onto the field of action.

If we want to rewrite the drama unfolding all around us, we'll need the shadows - and the light.

______________________________

(This Thursday and Friday are call-in days for defending Social Security, and there's even a toll-free number - 1-866-251-4044.)

Why Elizabeth Warren Scares Republicans

Brian Dockstader — Mon, 23 May 2011 18:28:07 -0400

“There is only one person who should lead the Consumer Financial Protection Bureau and that is the brilliant advocate who championed it, the remarkable administrator who has helped get it off the ground, and the middle class champion who will make it work – Elizabeth Warren.”
—Robert L. Borosage, Co-director, Campaign for America's Future

That is a statement that even Republicans couldn't argue with--with the small exception that Republicans view these as negative qualifications. The rest stands, however, because no one is arguing that Elizabeth Warren shouldn't be appointed director of the Consumer Financial Protection Bureau (CFPB) because she isn't the best person for the job. No, the opposition to her comes from the exact opposite position:

Republicans oppose Elizabeth Warren because she is too good at her job.

Since when is being too good at your job--too qualified, too committed--a bad thing? Well if you are a conservative, bankrolled by Wall Street and beholden to their interests, these are all bad qualities because what you really want is to destroy all financial regulation.

The CFPB was a key part of the 2010 Wall Street Reform and Consumer Protection Act that sought to rebuild the regulatory framework established as a response to the Great Depression that had been slowly dismantled by conservatives over the years. All honest observers, even many prominent conservatives, have acknowledged the role of financial deregulation in contributing to the financial collapse and subsequent recession. Wall Street reform and the CFPB were an attempt to make sure such an economy-devastating collapse never happened again. Wall Street had to be reined in. No more playing roulette in the Wall Street casino with the US economy. What could be more sensible than that?

Jump back to now--the CFPB has been without a director at the helm since it was established, and it is legally mandated to fill that position by July. During this time, Elizabeth Warren has proven "her value as an advocate and as an administrator" while setting up the "only financial bureau dedicated to the protection of consumers." Meanwhile, Wall Street lobbyists and the best minority party they can buy have been hard at work trying to cripple the bureau, to make sure the financial sector remains the dangerous and lawless Wild West that made a handful of people incredibly rich while it wrecked the economy for the rest of us. In short, they want to make sure there is no sheriff in town.

Of course we have a sheriff, ready and waiting, and she just happens to be incredibly qualified and dedicated. She set up the bureau and she has persevered in the face of intense resistance from the Right. She is great at her job. She is fearless.

That has the outlaws (and their henchmen) terrified.

Thus we have Tuesday's Republican-led House Oversight Committee hearing entitled "Who's Watching the Watchmen?," which will again put Warren in the interrogation seat. (Note the irony that after the greatest financial meltdown since the Great Depression, Republicans are more concerned with who is watching the sheriff than who is watching the outlaws who collapsed the system. Talk about distorted priorities.)

In case you were wondering how a committee could be so focused on shackling the sheriff while ignoring the outlaws, you need only look at who is running the show: Rep. Patrick McHenry (R-NC). One has ample reason to question the motives of Warren's inquisitor. Even before McHenry convened the hearing to question Warren about the CFPB he had already co-sponsored a bill that seeks to eliminate her position entirely! (Talk about a rough crowd.) So Mr. McHenry is already coming into this hearing with a clear agenda, one that includes hog-tying the sheriff and shipping her off on the first train out of town--but why? For whose benefit? What's the motive? Well, let's just look at Rep. McHenry's top campaign funders in 2010 (show me the money!):

#1: Wells Fargo - $15,550
#3: Deloitte Touche Tohmatsu - $11,500
#5: American Bankers Association - $10,000
#5: Bank of America - $10,000
#5: Ernst & Young - $10,000
#5: PricewaterhouseCoopers - $10,000
#5: Independent Insurance Agents & Brokers of America - $10,000
#5: American Society of Anesthesiologists - $10,000 (seems relevant, since you'd have to be sedated to not see the quid pro quo going on here)

Well it looks like McHenry has a posse of his own! And I see a trend: McHenry's financial backers read like a laundry list of people who have a vested interest in seeing the sheriff run out of town (and the police station burnt to the ground). Perhaps there might be a connection between what the outlaws want and committee's agenda? Hmm..

Political puppetry aside, it is also important to note that the CFPB isn't some all-powerful agency that is single-handedly restructuring the entire financial sector. It is simply one modest and sensible part of a larger set of reforms that were viewed by many as too moderate too begin with. We are talking about making credit lenders more accountable for their practices--cutting down on the fine print, outrageous fees and other abuses that have turned all too many Americans households into money farms for large banks. You can't get less controversial than that.

Nevertheless, the sheriff is going to be put on trail, to be berated and heckled in the town square, again. This has become a bit of a theme for the Republican-led House Oversight Committee--attack the humble defender of the middle class while pretending that the financial crisis never happened. This game is no secret either. After her first appearance before the ~~tribunal~~ congressional hearing (entitled "Oversight of the Consumer Financial Protection Bureau"--notice the consistent hang up on horribly misplaced priorities), Joe Nocera identified the true agenda of the committee in The New York Times:

And thus the real purpose of the hearing: to allow the Republicans who now run the House to box Ms. Warren about the ears. The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers — and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans.

You can be certain that Tuesday's hearing will be no different.

Lest I give the impression that this is all about Elizabeth Warren, it should be pointed out that the Senate Republicans have vowed to filibuster any nominee to head the CFPB until the majority concedes to their demands to gut the fledgling bureau. They may be terrified by the prospect of a strong, competent leader like Warren running the CFPB, but that doesn't mean they would be satisfied with a weak leader either. No, the whole bureau must fall to their quest to erase financial reform and keep the Wild West of Wall Street alive and well (until the next completely preventable meltdown).

So the agency needs a leader to be truly effective, however Republicans refuse to allow any leader until the bureau is made completely ineffective. What's a president to do? That much is simple:

The president should stand up to this outrageous extortion. He has the power to make a recess appointment when the Senate goes out of session at the end of this month. He should use that power to appoint Elizabeth Warren, a true champion of working families to head up the agency. It is time to act.

President Obama must stand up to the right-wing obstructionists and make the case for Elizabeth Warren and financial reform. Then, after Republicans again declare they don't care about protecting the country from another financial meltdown and recession, President Obama should use his constitutionally authorized authority to use a recess appointment to make Elizabeth Warren the director of the Consumer Financial Protection Agency. We need it. She deserves it. President Obama can do it. Outlaws be damned. Sign the petition to the President calling for a recess appointment for Elizabeth Warren.

♦ ♦ ♦

Update: To give you an idea of how good (and completely non-controversial) Elizabeth Warren is, the head of the Oklahoma Banker's Association, who at one point (before he knew her) described Warren as "akin to the Antichrist" has been completely won over by her abilities and is now pushing President Obama to give her a recess appointment to direct the CFPB. Really.

Update #2: The hearing is scheduled to begin at 1:15pm today (Tuesday). Streaming video should be available on the committee website. As you watch the hearing, see if you can guess which members of Congress have pocketed wagon-fulls of cash from the banking industry. @OurFuturedotorg will also be live tweeting the hearing.

Update #3 (2:40pm): Wow, that hearing got nasty. It was clear from the very beginning that Rep. Henry wanted to attack Elizabeth Warren & the CFPB (his campaign contributions preordained that), but it got so bad that Rep. Yarmuth actually had to apologize to Warren for the rude and disrespectful behavior of the chair (Rep. Henry) and his snarky comments. After watching that circus it is even more clear just how much Republicans fear Elizabeth Warren and financial reform.

Kudos to Rep. Maloney for pointing out that the title of the GOP's hearing should have actually been "Let's Pretend the Financial Crisis Never Happened."

The Economic Security President: Four Ways To Be "Bold" and "Gutsy" On the Home Front

Richard Eskow — Mon, 09 May 2011 18:23:05 -0400

The post-bin Laden afterglow is fading. Those video clips of his home movies seem like scenes from a reality show, not glimpses of an Existential Threat. It's the master terrorist as an addled Ozzy Osbourne, minus the Beverly Hills couturiers and groomers. And while a few people might wait for bin Laden to sing Ozzy's "Iron Man" -- "Nobody wants him/he just stares at the world, planning his vengeance" -- our attention-deficit nation is getting ready to move on.

Significantly, while the President's overall approval rating jumped 11 percent after the killing, his economic approval fell and reached a new low: Only 34 percent approved of his handling of the economy, while 55 percent disapproved.

People were happy to see 9/11 avenged, but there's another lesson in that 11% boost, too: The public wants its President to be clear-eyed, resolute, and able to make tough decisions under pressure. We know now that the President can be (and just as importantly, can appear to be) as steely-eyed and decisive as the best of them.

They can't kill Bin Laden again. Al Zawahiri's a distant number two, and after that the terrorists' names are so little-known that our national game of Call of Duty: Black Ops will quickly descend into Trivial Pursuit. So what's next? Hmmm: Steely-eyed. Calm under pressure. Making the tough calls ... wonder where else those Presidential skills might come in handy?

Here are four "bold" and "gutsy" moves the President can make right here at home that would be good for the country ... and good for him:

1. Nominate Elizabeth Warren as a recess appointment to the Consumer Financial Protection Bureau.

The GOP handed this one to him when 44 Republican Senators signed a letter saying that they "will not support the consideration of any nominee, regardless of party affiliation," unless the Agency is watered down and restructured even more than it has been.

Now is the time to say "Look, guys: I'll negotiate whenever it's reasonable and fair. But we had a debate when we created this agency. We took some of your suggestions into consideration and then we had a vote. You lost. You can't re-legislate every law that's ever been passed by holding an agency hostage -- especially one that's designed to protect the public."

Now that's decisive and tough -- two things that Elizabeth Warren will be adding to the President's team in spades. They say she's bumped heads with senior White House officials. But strong leaders know that a little conflict can make a team stronger.

The President can also say: "What's next - ending Medicare by refusing to confirm a Secretary of Health and Human Services? I've spent the last two years making it clear that I'll negotiate with anybody -- except hostage takers. Call me when you're ready to talk. But I'm not waiting: Elizabeth Warren is running this agency. We don't have time for games."

2. Stand up for Medicare and Social Security.

And speaking of Medicare ... The public has decisively rejected the Republican plan to end Medicare and replace it with vouchers (a plan which Republicans, in an Alice-in-Wonderland rhetorical move, deny ends Medicare or even uses vouchers).

It's time for a bold, gutsy defense of Medicare that takes a firm stand against any cuts that would hurt seniors financially. Republicans and their allies keep saving its "brave" of them to contemplate plunging seniors into a future of economic deprivation and reduced access to medical care. This is the President's opportunity to explain what's really brave: Confronting the powerful interests that want to keep our health care system exactly as it is.

The public feels just as strongly that Social Security shouldn't be cut. And it doesn't need to be, since it doesn't contribute to the deficit. The President can take advantages of all the polling which shows that the public would rather raise taxes on the wealthy than cut Social Security by proposing exactly that. It's the right policy, and the right politics. If the other side wants to shut government down to protect the rich by cutting benefits for old people, that's something voters deserve to see for themselves.

3. Defend our financial national security, too.

A strong homeland needs to be protected from attacks. It also needs to be protected from the predation of dishonest financiers, a collapse of the global banking system, and unnecessary depressions and recessions.

We've seen a wave of attempts to de-fang, de-claw, and de-fund the regulatory agencies that exist to protect us from these dangers, along with attempts to revoke key portions of the Dodd/Frank financial reform bill. That bill needs to be strengthened, not weakened. This isn't just a policy issue. It's a question of national security ... economic security.

4. Jobs. Jobs. Jobs. Jobs. Jobs.

After a relentless propaganda assault by the right (including the GOP and the initiatives funded by billionaire Pete Peterson), designed to convince people that deficits are the country's most urgent priority, the public's still not buying it. 39% say that jobs and the stagnating economy are our most pressing need, while only 15% are convinced that our biggest problem is deficits.

The President's been tacitly buying into the notion that the deficit is our most urgent problem, probably because it's one area where he feels he can cut a deal with Republicans. But that's just going to leave him taking the blame in 2012 for a failing economy and an unpopular deal.

Even if he can't get a meaningful job-creating program through Congress, he can propose it. Remember: Bold. Decisive. Gutsy. The President can say "This is what we need to get people back to work and jump-start our economy: Eighteen months of investment, followed by a smart financial plan that begins to address the deficit."

He may not get that program through Congress, but he can throw down the gauntlet: "Help me create jobs, or we'll go before the people next year and let them decide." That's a debate he can win, because the public's already on his side.

Leadership: The Sequel

The moral of last week's story was this: The public likes it when you give them something they want and do it in a courageous and decisive way. Know what else the public wants? Jobs, Medicare, Social Security, and protection from runaway banks.

Leadership in a democracy means giving the people what they want and need, things you promised as a candidate, and delivering them in a calm, cool, rational, and fearless manner. That's exactly the job that needs doing right now -- and I know just the guy to do it.

_________________________________________

This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign.

By the Time You Read This: Why the Mortgage Crisis Dwarfs Almost Everything

Richard Eskow — Thu, 31 Mar 2011 01:52:29 -0400

The mortgage crisis in this country doesn't get much attention in Washington these days, but it's huge. It's so huge, in fact, that it dwarfs most of the economic issues that have Washington in their grip. It's so huge that it's dragging down our entire economy. It's so huge that the numbers can be difficult to picture.

The scale of the crisis is, in a word, staggering.

Here are seven charts (and another that was borrowed from the Wall Street Journal) along with some facts and figures that will help sketch out the scope of the problem. The numbers that follow are most likely understated, if anything, because we've left out some forms of reduced spending (like that which takes place when homeowners who have paid off their mortgages lose home value.)

The budget cutters push the idea that there's a dichotomy between the heart and the brain, and that they're on the "brain" side. But the numbers don't lie: Ignoring the foreclosure crisis is both heartless and brainless.

See for yourself.

By the time you read this ...

How big is the mortgage crisis? Pick an adjective: astronomic, colossal, enormous, gigantic, ginormous, humongous, jumbo, mammoth, massive, monstrous, mastadonic, monumental, prodigious, tremendous, vast, very big, very large, whopping. Here's how big it is. Let's assume that you're reading these words one day after I wrote them. That means that:

By the time you read this, there will have been approximately 8,500 foreclosure actions in this country [1] - more than one thousand every hour during the working day.

By the time you read this, homes in the United States will have lost more than $13 million dollars in value. [2] During a 24-hour day, this figure comes out to more than $500,000 an hour.

By the time you read this, homeowners will have paid $750 million in mortgage payments for non-existent housing value- that is, the amount on their mortgages that disappeared when the bubble burst - according to our estimate. [3]

By the time you read this, the nation's bankers will have earned nearly $400 million, of which $56 million will be bonus money. [4] Bankers like to say they work 24/7. (They don't, but let's say they did.) That means they will have collectively earned more than $16 million in salary and more than $2 million in bonuses during each and every one of the 24 hours hours before you read these words - morning, noon, and night.

And all of these figures for the last 24 hours will be reached again during the next 24.

Federal Spending vs. the Mortgage Crisis

How do the deficit and the mortgage crisis compare economically?

Here's a fact for you: The amount of wealth American homeowners have lost over the least three years is much larger than this year's entire Federal budget.

Even our conservative estimate shows that the debt that homeowners are paying off to the banks for no-longer-existing home value - "money for nothing" - is greater than the entire projected Federal deficit for 2011.

[5]

Those figures could be a little misleading, since they compare a multi-year problem with a single year's Federal budget. So let's look at the mortgage crisis and its impact on 2011. This year's estimated "money for nothing" payments dwarf the annual spending cuts that Washington's fighting over right now:

They're greater than this year's projected savings from the President's spending freeze, and much greater than the $30 billion in additional spending cuts which House Republicans initially demanded (and which they're likely to get.)

What is the "Homeowner Bank Bailout"?

The first column represents my quite rough (but very conservative) estimate of the payments that consumers will make to banks in 2011 for home value that's evaporated. That's money to repay loans which banks often knew were likely to go bad when they issued. (If they didn't know, they should have.) After their generous bailout (which was must costlier than has been acknowledged), the banks are still collecting payments for that portion of the loan that covers assets which no longer "exist."

That amounts to an additional, invisible annual bailout every year for the US banking industry, funded by some of the people who can least afford it: struggling homeowners. [6] (This figure doesn't even include people who've been foreclosed upon, which means the bank got to keep everything they'd paid into the house - and got the house, too.)

The "homeowner deficit" is strangling the country as the financial sector drains money from the overall economy for its own non-productive coffers. This chart illustrates that by showing that banks are once again grabbing an unhealthy share of our national wealth:

Source: Kathleen Madigan, Wall Street Journal

Without this drain, homeowners would be pumping hundreds of billions of dollars into the economy every year. Now that would be a stimulus.

Entitlement Cuts: Misguided Missiles

Instead of addressing the mortgage crisis, politicians (and the journalists who love them) are fixated on entitlement programs. How much sense does that make in dollars-and-cents terms?

The Best Stimulus: Homeowners or Corporations?

What's the best way to stimulate the economy: By giving corporations tax breaks and regulatory relief, or by fixing the housing crisis? Both political parties are turning themselves inside out trying to please corporations - partly, they say, because reports say those corporations are sitting on nearly $2 trillion in cash. If we make the CEO's of those corporations "feel better," the argument goes, they'll cut some of that cash loose for hiring and investment and the economy will pick up.

Let's look at that $2 trillion in comparison to lost housing value, and to our estimate of the mortgages being paid on lost housing value:

Those corporations won't really cut that cash loose until they know there are customers waiting to buy their products. There's a great way to make that happen: by helping consumers (more than 20 million households altogether) escape the burden of all this underwater debt.

Less Is Less

The Administration's response to this crisis has been woefully inadequate ... and the Republicans are much worse than that. The GOP's hard at work trying to end any assistance for underwater homeowners.

Administration programs were insufficient by design and then failed to meet even their own, overly modest goals. The HAMP program, for example, was never intended to help all of the homeowners who are still paying underwater mortgages. It should have been. Here's how limited its goals were, when compared to the problem:

But even when compared to the number of homeowners facing foreclosure, it's been a failure:

It hasn't even spent more than a tiny fraction the money allocated to it!

And yet, incredibly, Republicans want to cut it. And the GOP's Congressional leaders also want to kill several other programs for struggling homeowners, including a principal relief program that might help some of the 14 million underwater homeowners who haven't yet missed a payment.

Source: New York Times

Small Talk

Despite the magnitude of the mortgage crisis, all we've been hearing out of Washington is endless chatter about "deficit emergencies," the need for so-called "entitlement reform" (aka cuts), and the supposed "financial Armageddon" that faces us. [7] We've heard almost nothing about the crisis that is ruining millions of lives, costing us millions of jobs, and strangling the economy.

And by the time you read this, that won't have changed.

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FOOTNOTES:

[1] Based on February's rate of foreclosures, rounded down to be make the estimate conservative. Foreclosure actions are defined as foreclosure filings and the sale of foreclosed homes.

[2] Based on January's price decline of 2.5% in total value, divided by a 30-day month, using an estimated total residential real estate value of $16.3 trillion that was derived from Federal Reserve data.

[3] A very rough estimate. Assumes that roughly half of the total housing value lost in the bubble is included in mortgage principal that's still being paid off (as opposed to foreclosures, etc.) This figure was derived from that amount, plus a rough calculation of the interest being paid and some assumptions about the remaining lifetime of the loan.

[4] Based on reported 2010 figures.

[5] It's a critical battle, of course - especially to the people who are counting on the government to serve its function in time of need. This piece addresses our warped financial perspective, not the very vital role government plays in our lives. That should not be in question (although it is).

[6] But wait, as the ads say: There's more. These homeowners can't refinance, either, because they don't have collateral (the houses aren't worth as much as the new loan). Alll the "quantitative easing" in the world won't touch them. So the banks are borrowing money cheaply and collecting it from these struggling borrowers at higher rates. [6]

[7] Nobody disagrees that it will be important to address the the Federal deficit over the long term, and Social Security's funding issues will need to be addressed before 2037, when the program will only be able to fund 75% of its planned benefits. (Any plan that cuts those benefits below that amount, or cuts them by that amount even before 2037, is a hoax designed to raid the money that working Americans set aside for that program.)

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This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign.

High Noon On Wall Street

Richard Eskow — Mon, 21 Mar 2011 00:49:04 -0400

The bankers are endangering innocent people, their pals are roughing up the law, and the people who should be helping out are sitting on the sidelines doing nothing You can almost hear Tex Ritter singing "Do Not Forsake Me Oh My Darlin'," the theme song from High Noon.

You remember High Noon. That's the movie where Gary Cooper plays Will Kane, a retired gunslinger who can't find anybody to help him defend the town from a dangerous gang. In fact, the townspeople give him almost as much trouble as the gang does.

The financial system has its own sheriffs, and bankers behaved like an unruly mob with one of them this week. Meanwhile Democrats were characteristically diffident and Republicans formed a stone-throwing mob of their own.

Red Lights Everywhere

The lawmen - both women, in this case - were being baited, taunted, and thwarted at a time when the economy's dashboard is flashing red with warning signs. A lot of people think Wall Street banks are healthy again because it's making a lot of money. But they were making lots of money right before the last crash, too.

A new report from from Bloomberg Government confirms that the "too big to fail" banks at the heart of the last crisis and TARP bailout have become bigger since the crisis, not smaller. Bloomberg Government reports that "the number of 'too big to fail banks' will increase by 40 percent over the next 15 years," adding: "Today, the top 10 banks hold 77 percent of all U.S. bank assets, compared with 55 percent of the total assets in 2002."

Here's another flashing red light: The Federal Reserve's chief bank regulator said 30% of the banks in this country have "less than satisfactory" supervisory ratings. Banks are "stabilizing" overall, said Patrick Parkinson, but banks in this country are "still in the repair and recovery stage."

Meanwhile the FDIC reports that 884 banks, nearly 12% of the banks in the country, are in danger of failing.  More than 150 banks failed last year, and the number of expected failures this year, while less, would have been considered catastrophic before the crisis. Profits are up but, as FDIC head Sheila Bair explained, that's not because banking is thriving. It's because banks won't be setting aside as much money to cover losses from bad loans this year.

Super-Over-Prostituting Politicians

If one-third of America's airliners had "less than satisfactory" ratings and one-twelfth of them were at risk of failure, they'd shut down every airport in the country. But politicians are all too eager to help banks keep flying the friendly skies, unsafe or not. They'll probably even serve "a complimentary beverage of your choice" if they're asked.

Take House Majority Leader Eric Cantor, who addressed the American Bankers Association this week and told them "You are at the center of what allows our economy to grow!" (That would explain our current record levels of unemployment and under-employment -- 25 million Americans at last count.)

Cantor added: "We are not overregulated, we are super-overregulated!" "Super-overregulated": It's like "Supercalifragilisticexpialidocious," the made-up word from Mary Poppins that inspires Dick Van Dyke to burst into song -- but without the intellectual heft.

Cantor and his fellow Republicans insist that "We don't need more regulation" even as too-big-to-fail banks get bigger and staggering numbers of banking institutions remain fragile, capable of collapsing at any serious external shock to the economic system. And they're backing up their words with a series of measures to repeal (rather than strengthen) the reforms put in place last year. The bills aren't likely to succeed as long as Democrats control the Senate, but the Senate could change hands next year, and it's part of the GOP's plan to argue that deregulation will lead to more jobs. (Because, you know, the deregulation-induced meltdown was so good for jobs last year ... or something .)

Tea Party Bankers

After they drove their own banks into the ground, taking the economy with it, you might have expected bankers to lay low for a while. But they're acting as self-entitled and unruly as ever. As Dave Clarke at Reuters reported, "bankers guffawed and groaned" at Bair when she told them they should support financial reform at a meeting of the American Bankers Association.

Mob psychology was the rule of the day, replacing even enlightened self-interest with blind hostility. As Reuters reported, "Audience members who complained about Dodd-Frank did not provide specific examples of what troubled them."

"I can't believe this. I really can't believe this," said Bair. These unruly bankers were mostly from community banks, which could actually benefit from financial reform. But they appeared to have been duped by objections from the "too big to fail" mega-banks, whose interests aren't aligned with theirs at all. Like Tea Partiers, these bankers were actually acting against their own interests. Like Tea Party supporters, they seemed to be easily manipulated and ... well,there's no nice way to say this ... not particularly bright.

"I would just encourage you to think for yourselves," said Bair. Good luck with that.

Imagining a World Without Warren

Meanwhile, Republican lawmakers were just as thuggish to Elizabeth Warren as the bankers were to Sheila Bair. Joe Nocera documented the ugliness in the New York Times, in an excellent piece that should be read in its entirety. "The piñata sat alone at the witness table," begins Nocera, who noted that "the real purpose of the hearing" was "to allow the Republicans who now run the House to box Ms. Warren about the ears."

Nocera quotes Warren as saying "If there had been a cop on the beat to hold mortgage servicers accountable a half dozen years ago, the problems in mortgage servicing would have been found early and fixed while they were still small, long before they became a national scandal." That's undoubtedly true. But these Republicans don't want cops on the beat. They want cops who'll sit in the diner sipping coffee when they're told to, so the gang can run wild.

Warren more than held her own, which brought the motto of the Texas Rangers to mind: "One riot, one ranger." But she deserved a little backup from the White House, and it was nowhere to be found.

"Do not forsake me, oh my darling ...."

The real story of High Noon wasn't the confrontation between the hero and the gang, but the one between Kane and the "good people" of Hadleyville who lacked the courage or conviction to act in a time of need.

The FDIC is suing senior executives at the failed WaMu bank for "recklessly disregarding" sound financial practices (along with their wives, who allegedly helped conceal their assets from creditors). It's astonishing that no executives had been held personally responsible for the destruction of the economy or a wave of illegal foreclosures, and the FDIC should be congratulated for this move. It should also be encouraged to move against executives of current banks, as well as ones that no longer exist.

But Sheila Bair must be feeling a little lonely. The Justice Department still hasn't brought any actions against executives from any of the big banks for their corporate crime wave. It needs to do so, and soon, if it doesn't want to look like those Western film sheriffs who are always saying things like, "Gee, Frank, if you want me to let the boys out of jail, just ask!"

Paul Krugman noted that "Warren has clearly faced a lot of hostility from within the administration .... " (Bob Swern has a good round-up of pieces about Administration resistance to Warren.)

On one hand, there are the Republicans, whose most eloquent spokesman is Rep. Spencer Bachus: "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks." Then there's the Administration. Krugman points out that Warren "could serve (the White House) both as an able administrator and as a symbol of commitment to reform," while noting that "so far, the administration seems eager to avoid drawing any contrasts with the GOP, even when it has both justice and public opinion on its side."

This is the Administration's chance to stand with fighters like Elizabeth Warren, both in its words and in its deeds. Some well-targeted prosecutions, along with a strong defense of public champions like Bair and Warren, would be an enormous political boon. It would also be the right thing to do.

Elizabeth Warren stood alone on Capitol Hill. Sheila Bair's fighting the good fight. They're waiting for someone to step forward and help them. If it's any comfort to them, Will Kane knows exactly how they feel.

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This post was produced as part of the Curbing Wall Street project.