House Votes Against Kleptocracy, Puts Obama's Economic Team on Notice

by: David Sirota

Thu Jan 22, 2009 at 14:36

The U.S. House today publicly rebuked the Obama administration's economic team, voting overwhelmingly to disapprove the second half of the Wall Street bailout money that Obama has been demanding. Because this resolution of disapproval was rejected by the Senate, the House's vote does not have the force of law (both chambers would have needed to pass the bill in order to block the money). However, this is a major victory for the progressive movement in that the House has formally gone on record against kleptocracy.
David Sirota :: House Votes Against Kleptocracy, Puts Obama's Economic Team on Notice
What's great about this vote is its juxtaposition of true bipartisanship with Beltway buypartisanship. Indeed, as the roll call shows, the House vote for the resolution of disapproval forged a coalition of about a third of the Democratic caucus, and most of the Republican conference - all voting for a progressive cause: namely, preventing Wall Street from ripping off the American taxpayer. Though we are led by the media to believe that "centrism" means corporatism, this vote is the kind of populist bipartisan coalition that reflects the real centrism in the country at large - a centrism where the "center" is decidedly against letting big corporations raid the federal treasury.

Couple this vote with the House's vote yesterday to attach more strings to the bailout money, and with our work in getting the Senate - through Ohio Sen. Sherrod Brown (D) - to pass a bailout regulation bill, and we're seeing real progress - or, dare I say, the possibility of real, actual, substantive change.

Let's remember that this economic fight isn't over - not by a longshot. The The Politico reports that at his confirmation hearing, incoming Treasury Secretary Tim Geithner - one of the architects of the current kleptocratic bailout - suggested that he may ask Congress for even more bailout money. That means the House's display of strong bipartisan opposition and our work getting the Senate to support tough restrictions is laying the groundwork for the next fight. As these successes accrue, we could also be changing the fundamental dynamics. It's entirely possible that if/when Geithner comes back to Congress asking for more money, he will submit legislation that is - at its origination - far more progressive in transparency, oversight, and objectives than the original bailout, knowing that it must be more progressive to have a shot at passing the new Congress.

So all in all, we should be pretty unhappy that another $350 billion of taxpayer cash - or roughly $1,100 for every man, woman and child in America - is likely headed to Wall Street, no strings attached. But other than failing to stop that money (an almost impossible task because the new president could have effectively vetoed his way to the money), the legislative wrangling over the bailout has been a huge success for the progressive movement. We've helped build a bipartisan coalition in Congress on these issues, and forced the new administration to - at least rhetorically through letters - acknowledge the deep concerns we have with kleptocracy. In defeat, we have scored some real victories that we can build off of.  

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I don;t see it as a victory. (4.00 / 4)
It was an easy vote since it had no impact.

They took the popular position, knowing that it did not matter.  I doubt Obama cared.  

And bipartisan?  

Better to build the stimulus to $1T and pass EFCA.  Those would be real victories.

This was just for show.

the "progressive movement" seems defined by "no effect" (4.00 / 3)
Just a bunch of pointless posturing.

[ Parent ]
Can't be that simple (4.00 / 4)
This can't be that simple and so black and white.  There are a lot of good people that I trust on both sides of this, and a lot of people I think are always wrong on both sides.

"Keep the Faith"

So courageous (4.00 / 5)
Following the Senate vote, the bold members of the House took action with the force and fury of a "strongly worded letter".

Not a victory -- just political theater (4.00 / 3)
This vote was absolutely meaningless.

If Congress was serious about banking reform, then (a) they wouldn't have passed a bailout bill that requires two-thirds of both houses to override a president's veto in order to kill it; and (b) they would start regulating the banking industry, instead of "demanding" that the Fed or the SEC do it.

It was Congress that passed the Glass-Steagall Act generations ago, and now we need a 21st century version of that law.  

Ask Chris Dodd, Chuck Schumer, and Barney Frank -- all of whom agree that we NEED banking reform (see Schumer on Charlie Rose interview) -- why they're not passing new banking regulations.

Here's what Congress could do ...
* either outlaw or impose transparency rules on derivatives such as credit default swaps
* put limits on capitalization (say 10-to-1 -- $10 in loans for each $1 in deposits -- rather than 30-to-1)
* impose conflict of interest rules regarding reporting agencies like Moody's
* tax capital gains and bonuses as income
* forbid stock options as a form of compensation
* Etc.

I don't fault my Congressmen for voting in favor of this asinine bill. Essentially they're saying to Obama: The previous Congress handed you the power of KING to deal with this banking nightmare, and so please go do it.  

I do fault my Congressmen for not passing meaningful banking regulations. Democrats in Congress who voted to deregulate banking back in the 1990s and 2000s are as much to blame for this banking nightmare as the Bush Administration.

The current Congress (0.00 / 0)
is pretty much the same as the previous congress. Most are at fault for setting up this stupid 2/3 requirement.

well, except the republicans and Kucinich who wiseless voted against twice it in the first place.

~* the * Will * to go on *~

[ Parent ]
No strings (4.00 / 1)
As this money so far has gone for purchase of preferred stock, it very much has strings attached.  The best kind even, the kind that says they need to pay the money back (with interest, even).

Sure, it could and should have more strings, but the most important ones are there.  I'd much rather have this then have all the strings about executive compensation, etc. but without the legal requirement to pay the loans back.

youre deluding yourself (0.00 / 0)
you'll be lucky to recoup the losses on sale of those preferred shares. the companies were way over valued on the stock and warrant issuance. and they are mostly all insolvent anyway, so you have worthless paper right now. care to double down?

~* the * Will * to go on *~

[ Parent ]
Crisis (0.00 / 0)
As long as the crisis eventually ends most of the money should come back.  Some won't, of course as some banks will go under.  Of course, if we nationalize the banks the point is moot either way, as we will then owe ourselves that money but will be fully capitalizing it all, anyway.

Don't get me wrong, I agree completely with most, probably all, of the additional limits the House and Senate bills would place on the corporations and how the money is spent.  There are tons more I would also do, like disallowing banks to pay dividends for the next year or so.  This isn't perfect, but it is better than not doing it.

[ Parent ]
Some valid points. Some not. (4.00 / 2)
I agree with the thesis that real bipartisanship is often rejected for "buypartisanship."  How many talking-head pundits will refer to today's vote as "bipartisan consensus".

BUUUUT, I totally disagree that any strong message was sent by the Democrats.  For better or worse, Obama is now the voice of the Democratic Party unless the Congressional Caucuses speak loudly and with near unanimity to the contrary.  Here, Obama was for the continuing release of TARP funds.  The Senate Democrats were for it.  And most of the Democrats in the House were for it.  Hence, the Democrats were for it.  Q.E.D.

The GOP? Yes, THEY are engaging in political theater.  
But a theater that may pay off as the Democrats are on the wrong side of this issue.  

I never thought Democrats could outdo the Bush administration in terms of the looting of the Treasury during the war profiteering...but here they are.

Exactly.. all it did was enable Republicans to save face... (0.00 / 0)
These bills are pointless... What was done was done last year, and you can't undo it...

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 ]
I'd also add...the political theater on Obama's part (0.00 / 0)
Back in September, Obama made a bunch of noise about all the oversight requirements that he would insist upon in order to support TARP.

Now he claims that (a) the TARP funds must be released immediately and (b) there is not enough time to develop an oversight package so that we all need to trust him.


Does anybody else smell a monumental pile of bullshit?

Obama wants us to believe that, post-election, he was able to put together an economic team and fully evaluate the pressing need for releasing additional TARP funds (and I don't dispute his ability come up with an economic plan in the past 2+ months) but that he couldn't have an oversight package ready on day one for Congress to pass?  Bearing in mind that the GOP would be hard-pressed to vote against additional oversight when the alternative is the release of the funds with NO ADDITIONAL STRINGS ATTACHED.

Absolutely (4.00 / 1)
Most of the top Dems, including Obama and Biden, come from states that are home to the major financial companies (NY, NJ, CT, PA, DE, IL, CA, etc). Politicians from these states have essentially deregulated the banking industry to death.

By trying to "protect" the industry from regulation, they've destroyed it. (It's like Carl Levin trying to "protect" the auto industry from mileage standards -- and thereby rendering American automakers obsolete.)

Once these politicians realize they're not helping these industries with their lack of regulation, we might start to see some serious reform.

Banking reform is one policy area that Democrats need to be FORCED into by progressives. It's not just Obama, it's the entire Democratic Congress.  

[ Parent ]
Take DNC away from President (0.00 / 0)
Part of the problem is Obama, specifically.  But most of the problem lies in handing the reigns of the DNC over to the White House whenever a Democrat is President.  Simply put, there is a conflict of interest (or multiple conflicts of interest) between what the President needs for re-election or passing his own agenda in Congress and the needs of the party nationwide.

For some reason we simply accept as a truism that the President gets to control the DNC. Why?  Does the President care about a 50-state strategy with the existence of the electoral college?  Does the President care about down-ballot elections?  Does the President care about training the next generation of activists or seeding ideological roots that may take multiple election cycles to bear fruit?  No, no, and no.  

Unless the President just happens to be particularly altruistic and selfless.  I would look elsewhere than the Oval Office for such character traits.

See the quick hit pointing to 538. (4.00 / 1)
Apparently progressives don't support progressive policy. Who knew?

or perhaps Sirota is (and has been) totally wrong here? (0.00 / 0)
Here's a link to the 538 piece, BTW:

Opposing release to Obama administration of second half of the TARP money -- either for fiscal restraint reasons or for the sake of procedural oversight strings -- is not progressive at all.  These are classic Blue Dog concerns,  and it surprising to see this GOP bill get little more than Blue Dog support accross the aisle.

[ Parent ]

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