Opening the Day: The Housing Scandal

by: Matt Stoller

Tue Jul 29, 2008 at 10:43


I was at a meeting this morning, and I learned a good amount about the housing debacle.  It's very nasty, and every liberal group and politician was bought off for cheap.  And yes, that includes Chris Dodd and Barney Frank.

  • Home prices are getting whacked.

  • Lionel bashes Moveon, liberal blogs on Air America.  Awesome.

  • Tim Kaine is on Obama's VP short list.  He signed an estate tax repeal Mark Warner vetoed and tried to push through a sales tax hike.  He's also horrible on global warming and coal, oh, and he's pro-life.  Awesome.

  • The new Housing bill is a disaster.  It's weird how people are on the board of the Center for Responsible Lending and Freddie Mac, and CRL isn't putting out a peep about how bad this bill is.

  • Are superlobbyists afraid of the netroots?  Maybe.

    "They're scared of the netroots. In any meeting of senior Democratic staff, someone says, 'What does MoveOn.org say about this?' " said Michael Franc, who worked for then-House Majority Leader Dick Armey, R-Texas, and who now studies lobbying for the Heritage Foundation. "In the modern sense, you don't even have to be in Washington, and you can be more powerful than all these lobbyists. I'm sure Tommy Boggs was saying, 'Who the hell is this guy in the Daily Kos?' "

    Maybe not.

    "He's adapted to the new environment of lobbying, which is not just personal contact. You have to build coalitions - grassroots, top roots, Astroturf," Thurber said of Boggs. "He understands that, and he either hires them or contracts them."

  • Darcy Burner is third nationally among cash on hand for challengers.

Democrats just led the charge to give hundreds of billions of dollars to Wall street banks.  There's no reason to think that all that much will change in 2009.

Discuss.

Matt Stoller :: Opening the Day: The Housing Scandal

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Opening the Day: The Housing Scandal | 39 comments
Got anything positive to say, Matt? (0.00 / 0)
Here's one... we're winning.. for the moment... but, make sure to dampen down that enthusiasm so we start losing!  Better to lose, right?  that way our hopes won't get dashed or something....  I don't get your attitude...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
He's only being honest ... (4.00 / 4)
do you think the housing bill is going to do much?  His Constitution stance aside .. do you see where Dodd raises his campaign money from?
[ Parent ]
Almost nothing about the bad housing bill on liberal blogs... (4.00 / 1)
before it passed.  Why not?

Its another giveaway of our money to the rich and powerful.

[ Parent ]
I don't know ... (0.00 / 0)
I am not a front pager .. and as bad as the bill was ... it was only a question of if Bush would sign it and Congress would override the veto .. maybe it was one of those no-win situations .. I don't know what the backroom dealings on it were
[ Parent ]
Re: Tim Kaine .. (4.00 / 2)
I think his name was put out there to give Broder and his ilk an orgasm .. I'd be hard pressed to think that Planned Parenthood and NARAL would go quietly into the night if Kaine was picked as VP .. and I doubt Obama would want the drama associated with it

Re: Lionel ... who is that clown anyway? .. does anyone know if he's really a liberal? ... or was hired because he supposedly is a "name" for the morning drive time(is that when he's on)?

The Housing Bill: Did you think it was anything other than a Wall Street bailout of sorts?  I know there is reason to get as excited as Kos does about money the Democrats are raising ..  but you have to remember that the money comes with a price .. why do you think Rahm Emanuel and Chuck Schumer are disliked by a lot of people in the "netroots"?  It's because they are, and tend to recruit if possible, corporate whores

Housing Bill (4.00 / 4)
The only good part is the money for local governments to help people avoid foreclosure so that neighborhoods don't become blighted.  Many people, such as low-income and elderly people, were conned into getting many of these swubprime mortgages and cash-out home equity loans--really lied to by mortgage brokers who made money selling them mortgages that had worse terms than they qualified for.  The industry was rife with sharks.

The Dems relationship with the financial industry is very incestuous.  It was once explained as the Dems going for what was perceived as a "clean" industry as opposed to "dirty" industries like coal, oil, and polluting manufacturing industries. Kind of like their affinity for high tech industries. Also, there are cultural ties among liberals in the financial industry (liberal on social issues, that is) and Dems.  

But of course nothing seduces like money, and who has more money than the financial industry?

The key mistakes were the repeal of the Glass-Steagall Act, which kept investment banks out of the commercial banking business, and not requiring Fannie Mae and Freddie Mac to have more capital to cover loan losses.  Both were championed by the Dems during the Clinton years and after.  Fannie and Freddie had huge lobbying shops that showered Congress with money.  Franklin Raines, who headed Fannie Mae for a time, had been Clinton's budget director, IIRC, and was sued for fraud in 2004 for misstating Fannie's financial information.  

While Fannie and Freddie played an important role in buying up mortgages and packaging them as securities, the Republicans long complained that Fannie and Freddie were able to borrow money at lower rates because of the perception that they were backed by the federal government, even though they were shareholder-owned, disadvantaging commerical lenders.  The Dems beat back all attempts to more heavily regulate them, to require them to, for example, hold larger loan reserves.

The regulators who should have been watching the banking and housing sectors totally looked the other way as investment banks devised all kinds of exotic loan instruments and used more and more leverage to boost returns.  It was a conspiracy by both parties, but of course the GOP was in power, and it is explicitly based on laissez-faire economics.  But the Dems DID NOT look out for the middle class, let alone the lower middle class.

My hope is that the reckless lending will lead to some real reforms of the banking industry, although like drugs the amount of money involved is so large that the system is built on abuse.  In addition, as William Greider suggested on Bill Moyers' show, we could have a revival in the concept of usury, which is the use of ones superior economic position to extract concessions and impose burdens on those who are weaker.  There really need to be some fraud prosecutions of people at the top of big investment banking and brokerage houses, as they defraused ordinary investors with misinformation while taking care of themselves and their biggest clients.  But of course greed is at the root of it all, greed and the idea that money is the only measure of people's worth.

John McCain--He's not who you think he is.

[ Parent ]
Lionel... (4.00 / 3)
...also attacked liberals upset by the FISA compromise.  He asked why they should care since it would not affect them at all.

Why can't AirAmerica put someone decent on in the morning?

stop spreading misinformation (4.00 / 2)
Dammit, you and Chris have to stop saying that Kaine is pro-life. He's not.

The truth about Saxby Chambliss
even if he was, he'd be anti-choice. (4.00 / 1)
not pro life.
[ Parent ]
Tim Kaine is pro-choice (4.00 / 1)
but against abortion personally. Similar stance to Obama.

Check out the brand new Living Liberally Blog

And John Kerry (0.00 / 0)

[ Parent ]
it's not pro life. (4.00 / 1)
it's anti-choice.
Irritating (0.00 / 0)
It irritates me to no end when people do this.  Call people what they choose to be called.  I call people who are opposed to legal abortion "pro-life," because I afford them the dignity of choosing whatever name they wish (so long as it is reasonable-- and I think it is in this case; unreasonable would be "pro-unicorns.")  I call those who wish to leave the decision up to individuals "pro-choice" instead of "anti-life" or "pro-abortion," because it is what they want to be called.

It's called dignity, and there is none in name-calling.  It's why I dislike it when Republicans use "Democrat" as an adjective.  It cheapens politics and accomplishes nothing except frayed nerves and apathy.

[ Parent ]
They can call themselves pro-life (0.00 / 0)
If they oppose the death penalty and wars of aggression. Otherwise calling them pro-life isn't reasonable.

Pro-zygote maybe, but let's not allow them to frame themselves so aggressively on a lie.

Forgotten Countries - a foreign policy-focused blog

[ Parent ]
Don't be silly. (0.00 / 0)
They refer to themselves as pro-life legitimately when they're talking about abortion and a few related issues.  I mean, we can use this same rhetoric when talking about pro-choicers, i.e., if they oppose the right to bear arms and imminent domain, then they can call themselves pro-choice.  Yes, that sounds stupid, but those are two things that are predicated on individual choices, so, shouldn't pro-choicers be for them?  Of course not.  Pro-choicers call themselves that when they're talking about reproductive freedom, just as pro-lifers do.
[ Parent ]
Kaine is anti death penalty (0.00 / 0)
it is pretty amazing to have elected someone anti death penalty in the South
[ Parent ]
He's also (0.00 / 0)
been executing people at a record pace and has made no real effort to roll back the death penalty.  

John McCain: Beacuse lobbyists should have more power
[ Parent ]
Dems deep in the corruption (4.00 / 4)
Matt its heartening that you raise the issue of corruption of the Dems in the financial/housing/bailout fleecing of middle class Americans. I find that folks in the liberal blogosphere tend to be very partisan and are not willing to look deeply into the corruption by the Dems.

We need to hold the Dems to account too. The financial crisis we face is due to a nexus between DC and Wall Street and the Dems are right in the middle of it along with the Repubs.

This bailout of Wall Street and Fannie/Freddie under the euphemism of helping hapless homeowners was written by Barney Frank & Chris Dodd! Just take a look at how much campaign contributions they receive from Wall Street.

The major financial deregulation that took place was the repeal of Glass-Steagall that happened during Clinton. This allowed the consolidation of investment banking and commercial banking. Bob Rubin - former Goldman Sachs honcho was instrumental in that as Treasury Secretary along with Alan Greenspan. They also gave us Enron style accounting and non-enforcement of existing regulations. Franklin Raines, former CEO of Fannie during the Clinton administration was indicted for fraud as he made away with a $50 million bonus. Barney Frank and Chuck Schumer have been intimately involved in the Fannie protection racket that's now going to cost middle class and working Americans trillions to bailout. Now look where they are now - Rubin is Chairman at Citi and Greenspan is at PIMCO the largest bond manager with a huge stake in Fannie & Freddie. Look at who the current Treasury Secretary is - Hank Paulson - former CEO of Goldman Sachs. Does that say something? Who is running the show under both Democratic and Republican administrations and Congresses? Investigate Obama's economic brain-trust and you'll find a preponderance of Wall Streeters that got us in this mess or in their parlance the ultimate state of crony capitalism where profits are privatized and losses are socialized. That means they get to keep their billion dollar bonuses and you and me and our grandchildren pay for that.

Folks we need to wake up! The collusion between the DC elite and the Wall Street elite is raking us over the coals. We are seeing a historic transfer of wealth from middle class Americans to the most wealthiest in America - and this is a very bi-partisan affair.

It goes back to the Clinton Administration (4.00 / 2)
That's when the repeal of Glass-Steagall happened, and the Terry McAuliffe push to getting money from the rich and corporations.  Rubin was Clinton's treasury sec.  

Obama does have several of these people as advisers, but he has others as well, like labor people. Robert Reich etc.  Wm Donaldson may have been Bush's pick for the SEC after Harvey Pitt, but he is oriented to the small shareholder.   It's why he was replaced by Chris "deregulate" Cox.

But you are fundamentally correct, and I wrote something similar above, that the Dems are up to their necks in these financial scandals.

Just like they are with the national security abuses.  I don't know who can clean it up, or how bad it has to get before it gets better.

John McCain--He's not who you think he is.

[ Parent ]
Wall Street Welfare (4.00 / 1)
Mimikatz

You are absolutely right on this. For the past 30 years Wall Street has been in charge of the Treasury, the Fed, the financial regulators and all the policy shops in DC. They lavish funds on both parties and have provided the free market, globalization, deregulation, capitalism trumps everything ideology.

But the caveat is that the middle and working class Americans and now poor workers around the world foot the bill when their leveraged speculations go awry.

These guys suddenly make Marxists blush calling for the working class to pay for their investment mistakes after they have run away with the loot. How do they do it? Using fear as the vehicle - if Wall Street banks are not bailed out the financial system will collapse. Fannie and Freddie are to big to fail. Citi is too big to fail. These were the same guys pushing to get big and to be allowed unfettered leveraged speculation because that's what free market capitalism is all about.

Take Bear Stearns as an example. They paid their top executives $6 billion in bonuses in 2006. In 2008 the Fed uses taxpayer funds and Paul Volcker says acted at the edge of illegality and bails out Bear Stearns bondholders 100% and even shareholders got something. Now no one is asking about the billions in bonuses that were paid out based on fraudulent financial performance.

In 2007 Wall Street paid hundreds of billions of dollars in bonuses as the ponzi scheme was toppling over. This is beyond daylight robbery - its thuggery! Why aren't the Democratic Congress having investigations on corporate and specifically Wall Street chicanery? Why don't we have an independent prosecutor and grand jury investigation of the outright fraud and collusion between regulators and executives? Because this is a bipartisan scheme to steal from working Americans.

I hope the blogosphere wakes up to the fact that both parties are working hand in glove to keep middle class Americans in debt slavery for generations and organize to shine a spotlight and create enough noise for an independent prosecutor.

[ Parent ]
Tim Kaine (4.00 / 1)
He signed an estate tax repeal Mark Warner vetoed and tried to push through a sales tax hike.  He's also horrible on global warming and coal, oh, and he's pro-life.  

a grossly inadequate summary of his work as Gov. Kaine is a thousand times better than Webb, which may explain why he is more popular.

This would be the same Tim Kaine (4.00 / 1)
Whose favourables hover around the 50% mark? Besides, better than Jim Webb is not an especially good qualification to be VP.

Forgotten Countries - a foreign policy-focused blog
[ Parent ]
Franc sounds like he's pushing the Repub meme (0.00 / 0)
"The Democrats are controlled by far left extremists on the Internet."

I don't think he's giving an objective assessment. I could hear the same thing on Fox News.

Blogospheres (0.00 / 0)
plural. love it. Are the others hiding at the other end of these tubes somewhere?

John McCain opposes the GI Bill.
Kaine. (0.00 / 0)
I agree he is bad.

Here is why they're considering him....

Kaine could serve as ambassador, his proponents say, to four key groups: Virginians, Catholics, working-class white voters and Hispanics. (Kaine can be seen in one YouTube video endorsing Obama in proficient Spanish.)

He is a more votes guy.

Sigh.

We won the Battle. Now the Real Fight for Change Begins. Join MoveOn.org and fight for progressive change.  

it is trial ballon (0.00 / 0)
to see how the single issue groups react....and so far there isn't much--reaction.

it can't surprise anyone that he would consider someone more conservative than himself. that seems like a no brainier.

he fits the old, white, guy criteria with a touch of the south thrown in for good measure. sounds perfect politically speaking.

i don't think it matters that much one way or the other.

[ Parent ]
Re: it is a trail ballon (4.00 / 1)
Old?

The truth about Saxby Chambliss
[ Parent ]
how is not young? (0.00 / 0)
and plus he is older than obama...kaine is a boomer and looks his age plus some.

point of age (in the old, white guy as vp scenario) is an image of wisdom and experience added to obama's youth and vitality.

[ Parent ]
Matt (0.00 / 0)
He's anti-choice. Quit using the "pro-life" frame, please.

"Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it." - Mark Twain
As mentioned above... (0.00 / 0)
...he's neither of those...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
How is Kaine anti-choice (0.00 / 0)
what has he done as governor to limit women's access to abortion?  
[ Parent ]
net neutrality (0.00 / 0)
Here's FCC Commissioner Robert McDowell's latest free-market attack on net neutrality. It's interesting that he doesn't even use the words "net neutrality."

The truth about Saxby Chambliss
Jon Corzine (0.00 / 0)
Gov of and former Senator from NJ, formerly high at Goldman Sachs.  He's been fairly critical of the financial industry and was at Obama's ecopn meeting, despite having been a Clinton supporter.

On the theory that it takes a thief to catch a thief, maybe Obama needs to pick someone like that for VP who really understands both the inner workings of Wall Street and how government works to help devise reforms.  I remember suggesting him once before and it being shot down, but I forget why.

But please, please not Robert Rubin.

John McCain--He's not who you think he is.

And Corzine ,,, (4.00 / 1)
is actually trying to correct NJ's finacnes .. that Whitman amongst others wrecked .. and everyone is bitching because Corzine is making tough choices .. and everyone else wants to try to ignore NJ's fiscal problems
[ Parent ]
Was the knock on him before (0.00 / 0)
That he was a Clinton backer, that he was still recovering from that car crash, that he wouldn't bring much because he is from NJ?  

I used to think Obama would pick someone with fopo cred, but he did so well on the foreign tour, and obviously feels very confident on foreign policy issues, and McCain is so bad on the economy, and the economy is so bad, that I now think he'll go for an econ background, and Corzine might fit the bill.  He's pretty liberal, no?  Better than Dodd, who is complicit in the worst of it.

So what were the knocks on him?

John McCain--He's not who you think he is.

[ Parent ]
I don't know of any knocks on Corzine .. (0.00 / 0)
yes he is pretty liberal .. I think Corzine backed Clinton .. like Rendell and a lot of the others did .. because Clinton was seen as inevitable .. better to be safe then sorry .. face it .. Obama surpassed all expectations .. even Rahm(who should have had an idea .. if anyone) backed Clinton .. though later backed off
[ Parent ]
Kaine's not pro-life.. (0.00 / 0)
... in the sense that he is against legal abortion.

He is for the "partial-birth" abotion ban, but for including protections for life and health of the mother (of course, there has been some dispute over what is covered by term, "health," but that's a debate outside of Kaine's stated positions).

Kaine has faith-based opposition to abortion, and is for preventative measures including promoting adoption and "abstinence-focused" education. Of course, this sounds troublesome, but that does not necessarily mean abstinence-only, and I would give him the benefit of the doubt since he is also for prevention by increasing women's access to health care and contraception.

Basically - Kaine's position is where mainstream America is and where more and more liberals (like Ten Kennedy) are going (emphasis on prevention of unwanted pregnancies).

Of course the partial-birth crap is just playing to a right-wing farse, but admiting a personal faith-based opposition to the practice of abortion and acknowledging that the goal is to have less of them through preventing unwanted pregnancies is NOT an anti-choice stance by any means.... there was a Kos post yesterday that made the same estate tax/enviro/choice argument. I would argue that the estate tax is pretty black and white and he should be held accountable for signing that bill, but the coal thing might be more complicated for lack of many other options (although doubtful). With the choice argument, however, I think people are being completely unfair to Kaine, who also has some decent progressive cred when it comes to some other things.

http://www.ontheissues.org/Gov...

How's he on birth control? (4.00 / 1)
This is the most important issue to me.  Is he fundamentally of the belief, like the Catholic Church, that sex not for purposes of procreation is sinful and that the woman who engages in same should be punished if she conceives?  Does he support a woman's right to prevent pregnancy through birth control and thus enjoy a sexual life as freely as a man?  Does he support making birth control readily available, even to teens?  Without parental consent?

If not, then he is NOT acceptable, because his view is based on an Augustinian view of women as inherently sinful and the guardians of men's sexuality.  That is really unacceptable in this day and age.  I understand many people's queasiness about abortion, and think maybe it does get treated a little too casually sometimes, which is not an argument for criminalizing it.  But the real proof is in whether someone supports factually based sex education and readily available contraception.  The rest follows from that, and that is really what is meant by "pro-choice":  thinking other people should be given the ability to make choices for themselves.

John McCain--He's not who you think he is.

[ Parent ]
He does support birth control (contraception) (0.00 / 0)
Kaine is for keeping abortion legal, but for reducing the number of abortions by preventing unwanted pregnancies (including with birth control).

(He also doesn't exhibit the typical right-wing "pro-life" hypocrisy because he's anti-death penalty, as some others have pointed out.)

Kaine is a smart pick... and he's a good pick longterm for the Dems (as long as he's 'just left enough' not to cause a rightward drift in the party) because of his possible appeal to Hispanics. 'Just left enough' means he cannot be a sellout on nat'l security issues and social issues way more than it has to do with economic and business issues. There can be legit debates about pro-business/'anti-business' (more economic populist) policies - especially from the perspective of a Governor who is expected to shepherd his state's economy. But most of the time DLCers, blue dogs and some other southern Dems go the wrong way on constitutional issues or cultural issues it's because of political expediency (or what they think is politically expedient).

[ Parent ]
Opening the Day: The Housing Scandal | 39 comments
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