It is no secret if you have been reading my stuff for a while that I am pretty focused on the biggest banks as being the heart of much of our economic problem. When six companies have assets equaling 64 percent of GDP, that fundamentally destroys normal market functioning and threatens our entire democracy, so I have gotten pretty focused on doing everything in my power to lessen the stranglehold these behemoths have on every aspect of our economy. One modest but important issue I have been working on with a coalition of the retail industry and consumer groups is the debit card swipe fee issue.
The Federal Reserve's proposal to reduce credit and debit card "swipe fees" would keep banks from taking advantage of small businesses and consumers. It's only natural that banks, along with the credit union allies they have managed to sweet talk into their coalition, are grasping at straws in their fight to hang on to as much of our money as possible.
A bipartisan amendment included in the Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Fed to establish regulations to ensure debit interchange fees are "reasonable and proportional" to the actual cost of processing a debit card transaction. The Durbin amendment, as you may remember if you followed this issue in the financial reform fight, was crafted to help rein in the excessive fees Visa and MasterCard charge businesses each time customers use a credit or debit card. The Fed concluded that swipe fees, which currently cost businesses about 1 to 2 percent of each transaction, should be capped at 12 cents per transaction. Credit unions and banks with less than $10 billion in assets would be exempt from this new rule.
Critics of the long overdue interchange fee cap -- including Bill Cheney of the Credit Union National Association -- have claimed that implementing such a policy would stifle debit card providers by forcing them to pay more for their customers' transactions. (The big banks get the vast majority of the benefit from swipe fees, but they prefer to use willing front men like CUNA to make their case for them, since no one is too fond of big bankers right now.) This is the same baseless argument credit union lobbyists were making in June 2010 when the Durbin amendment was being debated. Reuters analyst Felix Salmon wrote in June about his exchange with CUNA Chairman Harriet May:
"The fact is that the banks have worked out, over the past five years or so, that raising interchange fees is a great way of making money, more or less invisibly. As financial regulatory reform curtails their ability to make money in other ways, they're going to look to interchange fees as a method of making up for revenue lost elsewhere - unless the Durbin amendment, or something like it, passes.
"May's stated reason for believing that U.S. interchange fees -- which are already the highest in the world -- won't continue to rise indefinitely is that 'merchants can work together with the card associations and we can work through it'. But the fact is that this is a game where the card associations very much have the upper hand: merchants aren't allowed to group together in a negotiating bloc, and most of the time just have take-it-or-leave-it offers from the Visa/Mastercard duopoly."
Credit unions and small banks, on the other hand, have wrangled an excellent deal with Visa, because the credit card industry (wholly owned by the big bank companies) needed the political cover of the more popular credit union industry. On Jan. 6, the credit card company announced it would support a two-tier debit interchange system, allowing credit unions and banks with less than $10 billion in assets to continue charging high interchange fees. MasterCard is still evaluating the two-tier system, but will likely implement it to remain in competition with Visa.
According to the Fed, debit interchange fees raked in $16.2 billion for banks in 2009. Also, CUNA has already admitted in an official fact sheet that these interchange fees exceed the cost of providing debit services. Even the estimated losses from new consumer-protection regulation in the Dodd-Frank law are more than $10 billion less than that swipe fee bounty.
Despite this, charges to businesses and consumers have never gone down. As processing costs for credit and debit card transactions have decreased, Visa and MasterCard have continued to raise swipe fees. Through all of this, banks and credit card companies have been hacking into the tight profit margins of small businesses. It's absurd to think that halting the Fed's swipe fee cap will suddenly result in lower rates for consumers.
It's also unreasonable to expect banks to place their own limitations on how much than can extort from the American public. Just recently, credit card companies have blamed fee hikes on the 2008 financial crisis, the Credit CARD Act of 2009, and overdraft regulation. The threat of raised fees and eliminated free checking will always exist, and banks are always happy to blame their actions on any financial event or gust of wind. There is no reason to allow financial institutions to use the Durbin amendment as just another excuse to burglarize exorbitant amounts from small businesses and consumers.
A Paul Rosenberg Golden Oldie
From Nov 06, 2007. Original here. Note: This diary was written at a time when many were still touting Ron Paul as the great libertarian voice of reason on the Iraq War--and ignoring a whole lot of his crazy, and just how deep it went. There's a slightly different reason for re-running it now. The practice of deploying false equivalencies is not necessarily a centrist foible per se. Indeed, it's often evidence of the center following the right. The events of last week, following the attempted assassination of Gabrielle Giffords, in which false equivalence was raised to a high art, combined with the occassion of Martin Luther King's birthday, reminded me of this diary, which I think speaks volumes about the right's laughable attempts to make itself out to be the moral equivalent of the left.
To further this point, I have added a p.s. to this diary, highlighting a copycat act of foolish misrepresentation of King that was posted just last Friday at the Daily Paul.
(H/T to L.W.M. in Comments at Unclaimmed Territory, from whom this is shamelessly ripped off.]
The IRS is a monster Ron Paul wants to get rid of. He says the income tax is unconstitutional. What's more, "Federal Reserve notes aren't leagal tender," he informs us. He doesn't actually know the details of the case, but that doesn't bother him facilely comparing wingnut tax-evaders to Martin Luther King. This has been up on YouTube for four months.
Read about Ron Paul's would-be heroes on the flip.
None of this invalidates him when he's right. Even if Hitler told you the sky was blue, it would still be blue. But it does provide some useful context--and raise some pretty basic questions. Like, "How bad is it when a freakin nutball is the voice of reason?"
On Wednesday, the Federal Reserve finally released the data on trillions of dollars worth of secret low-interest loans it madeto banks and other institutions during the height of the financial crisis. Three banks received a total of over $2 trillion each--roughly three times the amount of money authorized for the much more high-profile TARP program:
A total of 23 banks received more that $100 billion each (chart on the flip).
The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday.
The loans were made through a special loan program set up by the Fed in the wake of the Bear Stearns collapse in March 2008 to keep the nation's bond markets trading normally.
The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed -- an annual rate of between 0.5% to 3.5%.
Still, the total amount was a surprise, even to some who had followed the Fed's rescue efforts closely.
"That's a real number, even for the Fed," said FusionIQ's Barry Ritholtz, author of the book "Bailout Nation." While the fact that the markets were in trouble was already well known, he said the amount of help they needed is still surprising.
"It makes it very clear this was a very serious, very unusual situation," he said.
Sen. Bernie Sanders, the Vermont independent who had authored the provision of the financial reform law that required Wednesday's disclosure, called the data that was released incredible and jaw-dropping.
"The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.
He said that even if the Fed was right to make the loans to keep the economy from toppling into a depression, it should have made stronger demands that the banks help American consumers and small businesses.
"They may have repaid their loans, but that's not good enough," he said. "It's clear the demands the Fed made were not enough."
Weekly Audit: Banks Get Big Bucks, Consumers Get Bupkis
by Lindsay Beyerstein, Media Consortium blogger
Last week, the Federal Reserve announced a plan to buy an additional $600 billion worth of Treasury bonds in an attempt to stimulate the economy. On Democracy Now!, economist Michael Hudson argues that the $600 billion T-bill buy will help Wall Street at the expense of ordinary Americans.
Editor's Note: Zach Carter is out this week, but we've compiled a rundown of the biggest economy-related stories, including the rise of foreclosure mills and why social security isn't in jeopardy. Zach will be back next Tuesday, so stay tuned!
Who needs ethics when you've got foreclosure mills?
Want to make money quickly, but don't want ethics to get in the way? Big banks are outsourcing their foreclosure duties to fraudulent law firms, known as foreclosure mills, and getting away with it. Zach Carter explains the latest get rich quick scheme for AlterNet. Foreclosure mills are ethically questionable law firms that process legal documents for foreclosures. They tend to have an emphasis on quantity, not quality. Carter writes:
Big banks are not outsourcing their foreclosure processing to shady law firms with a history of breaking the law for a quick buck. These foreclosure scammers forge documents, backdate signatures, slap families with thousands of dollars in illegal fees and even foreclosure on borrowers who haven't missed a payment.
Andy Kroll chronicles the evolution of foreclosure mills for Mother Jones. Kroll also exposes a notorious Floridian law firm founded by David J. Stern that is using every trick in the book-including backdating documents and illegally charging clients massive fees-to profit from the foreclosure crisis:
While rushing foreclosures isn't illegal, Stern's fledgling firm was promptly accused of something that is: gouging people who are trying to get out of default. In October 1998, Tallahassee attorney Claude Walker filed a class-action lawsuit involving tens of thousands of claimants, alleging that Stern had piled excessive fees on families fighting to keep their homes. (Walker, who visited Stern's offices in 1999 to collect depositions, described the place as "a big warehouse" where hordes of attorneys holed up in tiny, crowded offices "like hamsters in a cage.")
The President's failure to make these nominations and secure their confirmation in a timely manner will, in retrospect, prove to have been his biggest mistake.
This is certainly possible. The President's failure to change the culture at the Fed by filling these vacancies earlier may well prove to be his biggest mistake. The dire condition of the economy is by far the top political problem facing the Obama administration.
But really, going back further, not allowing Republicans to destroy the filibuster back in 2005 is the biggest mistake made by not only President Obama, but by the Democratic trifecta as a whole (and, I admit, my biggest mistake too). This would have resulted in a wide swatch of changes, including a larger stimulus, the Employee Free Choice Act, a better health bill (in all likelihood, one with a public option, and completed in December), an actual climate / energy bill, a second stimulus, and more. If Democrats had tacked on other changes to Senate rules that sped up the process, such as doing away with unanimous consent, ending debating time after cloture is achieved on nominations, eliminating the two days between filing for cloture and voting on cloture, and restricting quorum calls, then virtually every judicial and administration vacancy would already be filled, as well.
Playing the "what if" game can be painful, because there is no way to go back in time and change what happened. However, it is also useful in that it gives us a roadmap on how to do better in the future. In this case, that means focusing our efforts on changing Senate rules for the next Congress. Right now, it is hard to imagine any more important effort in order to achieve more effective governance.
In the fall of 2008, decades of finance-first, bankers-know-best economic policies coalesced to create one of the worst economic crises in history, one that the banks themselves could not survive without staggering levels of government support.
Yet astonishingly, nearly two years after the crash, Wall Street is still setting the economic agenda in Washington. As Congress begins to examine broader economic policy, lawmakers are under heavy Wall Street pressure to reduce the federal budget deficit-even though that could mean deepening the jobs crisis without any substantive economic benefits.
Small-bore reforms
At the same time, the financial reform bill that Congress is on the verge of passing leaves quite a bit to be desired. As the editors of The Nation emphasize, that legislation includes several small-bore fixes to ease the damage caused by Wall Street excess, but almost nothing to actually curb the excesses themselves. The capital markets casinos will largely be left untouched. Congress still has time to improve the bill over the next month as the House and Senate iron out their differences, and many useful reforms remain in play.
Nevertheless, Wall Street's lobbyists have succeeded in taking the most important reforms off the table. We will not break up the biggest banks this year, nor will we tax reckless financial speculation. We aren't even banning economically essential banks from participating in risky securities businesses.
Et tu, Buffet?
As Annie Lowrey notes for The Washington Independent, the crisis has even discredited Warren Buffett, one the few financial superstars who previously had a reputation as a "straight-shooter" that invested in responsible enterprises.
Buffett was once a harsh critic of credit rating agencies, the firms who slapped top ratings on toxic mortgage-backed securities and derivatives. But Buffett himself is also a top shareholder in Moody's, one of the worst ratings agencies. The Financial Crisis Inquiry Commission had to compel Buffett's testimony at a recent hearing via subpoena after Buffett turned down multiple requests to appear. At the hearing itself, Buffett did everything he could to pass the buck from himself and Moody's to any other possible target.
Slashing the deficit
Wall Street's ugly influence on economic policy extends far beyond the realm of bank regulation itself. Right now, financial elites are pushing hard on a right-wing plan to slash the federal budget deficit, and even many moderate Democrats are coming out in support of reduced government spending.
This strategy is a tremendous political blunder, as Steve Benen emphasizes for The Washington Monthly. It's true that the deficit does not poll very well-but the deficit is only one side of the issue. Cutting the deficit means slashing federal support for jobs-we can help the economy or we can slash the deficit, but we cannot do both at the same time.
Nearly everyone believes that creating jobs should be a top priority for the government, but if politicians only ask questions about the deficit, they won't hear answers about the economy. The political imperative is clear, as Benen notes:
This really shouldn't be complicated: invest in more job creation, help struggling states as they keep laying off workers, and make clear to voters that the economy is more important than the deficit. Do this immediately, without apology.
Replacing Social Security with credit cards?
Wall Street loves cutting social services in the name of deficit reduction. Every public good that can be efficiently provided for by the government can also be inefficiently provided by the private sector-replacing public benefits with corporate profits. The bank lobby would like nothing more than to replace Social Security with credit cards for senior citizens. Wall Street doesn't make a dime on the government's Social Security payments-but they can make a killing on a privatized market.
Weak job growth=Weak private sector
Lest there be any question about whether or not the government needs to take strong action to strengthen the labor market, take a look at Friday's jobs report. As Tim Fernholz notes for The American Prospect, this report was the most disappointing piece of economic news in months. While the economy gained 431,000 new jobs during the month, 411,000 of them were temporary hires by the U.S. Census, meaning the private sector is not able to support much new hiring.
There's a critical lesson there: The only serious engine of job growth in the month of May was the federal government. Absent government hiring, the economy is not improving at all. There is an almost bottomless supply of critical social needs that require work right now, but no private-sector momentum to meet those needs.
The BP oil catastrophe should underscore how important new, green energy is to the U.S. economy-yet U.S. efforts to develop green energy solutions have fallen far behind those of China and other industrial powerhouse nations. Major federal investment into the research and implementation of green energy would be good for our environment and good for our economy.
Don't let social services suffer
But astoundingly, the advice on the world economy currently coming from top policymakers at the Federal Reserve, the International Monetary Fund and European central banks is echoing the bank lobby line: Slash social programs now, and let the job market fend for itself. As Dean Baker emphasizes for AlterNet, these are the exact same policymakers who missed the housing bubble, made the wrong calls on bank regulation and sent the global economy into freefall.
There has been little change in personnel and no acknowledgment of error at the central banks whose incompetence was responsible for the crisis . . . . their agenda seems to be the same everywhere, cut back retirement benefits, reduce public support for health care, weaken unions and make ordinary workers take pay cuts.
In short, Wall Street and the Wall Street policy agenda remain ascendant, despite economic catastrophe. In the Great Depression, the government actually learned its lesson-we regulated the banks, created Social Security and put millions to work through government hiring programs. That same basic agenda is needed today. Failing to meet it could well mean decades of economic decline.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Next week, the debate over financial reform will begin in earnest when Congress returns from its Easter break. Both political parties are gearing up for a major fight, and the stakes couldn't be higher. An out-of-control banking sector has cost the economy over 7 million jobs since 2007, and without major reforms, Wall Street could repeat this disaster in just a few years' time. But thanks to Wall Street's lobbying might, all of the necessary reforms are currently in jeopardy.
Key Reforms
Writing for The Nation, Christopher Hayes offers a useful primer on financial regulation, highlighting three reforms that are crucial to any bill.
With no effective regulation of consumer protection issues for years, the existing banking regulators were more focused on preserving bank profitability than on going to bat for ordinary citizens. If banks could make big profits with unfair gimmicks (or even fraud), regulators usually looked the other way. The solution is a strong, independent Consumer Financial Protection Agency (CFPA) charged with nothing but protecting consumers from banker abuses, an agency with the broad authority to both write rules and enforce them.
We need to rein in the $300 trillion market for derivatives, the complex financial contracts brought down AIG. Unlike ordinary stocks and bonds, derivatives are not traded on exchanges, so nobody really knows what is going on in this tremendous market. When something goes wrong, like with the collapse of Lehman Brothers, nobody can tell who the problem will effect. Without information, markets panic, and the entire financial system can collapse within a matter of days. Fortunately, this problem has a simple solution: require all derivatives to be traded on exchanges.
Too-big-to-fail is too big to exist. The U.S. has never had banks as large as those that exist today, and their size gives them enormous political clout. It's part of the reason why regulators didn't make banks obey consumer protection laws, and why banks have been so effective in derailing reform. It's been almost two years since the Big Crash, yet we are still wrangling over reform because giant banks deploy giant lobbying teams, and have almost unlimited resources to devote to their lobbying efforts. If we can't scale back the banks' power by breaking them up into smaller institutions, it's unlikely that other reforms will be effective.
As Margaret Dorfman emphasizes for American Forum, a strong CFPA would help protect small businesses, since a huge proportion of them are financed with credit cards and home equity loans (Dorfman is CEO of the U.S. Women's Chamber of Commerce, an advocacy group for women that should not be confused with the U.S. Chamber of Commerce-a nasty lobbying front for a few hundred high-flying executives). As Dorfman notes, small businesses are where most new jobs come from-- if a regulator can ensure that these businesses are not pushed around by abusive banks, they can help repair our jobs.
Unfortunately, all three reforms are in real jeopardy as the bill moves to the Senate floor for a vote, as Simon Johnson notes in his Baseline Scenario blog carried at AlterNet. Senate Banking Committee Chairman Chris Dodd (D-CT) hasn't included any language on breaking up the banks, he has significantly watered down the CFPA proposal President Obama put forward, and derivatives reform was almost entirely gutted in the House.
What's at stake
So what's at stake? For some perspective, consider last week's jobs report. As Steve Benen notes for The Washington Monthly, the U.S. economy added 160,000 jobs in March, the first significant monthly gain since the start of the recession, and the best jobs report in three years. But while it's good to see the economy actually adding jobs, at the March rate, it would take more than three-and-a-half years to win back the 7 million jobs lost since 2007.
This jobs disaster was not caused by faceless and unpreventable forces-it was the direct result of a reckless and unregulated banking system. Without major reforms, banks will always have this economic leverage when that recklessness overpowers them: bail us out, or watch your economy collapse.
This is an issue of basic democratic fairness, as Noam Chomsky explains for In These Times. Wall Street has purchased the right to bend public policy to anything that benefits banks-the rest of society is not their concern. The bailouts of 2008 and 2009 make that clear. After wrecking the economy to enrich themselves, bank executives then looted the public coffers with the threat of still further economic havoc.
And the political clout of America's largest banks insulates them from criticism when they profit from abuses-particularly when those activities don't spark wider economic crises. As Andy Kroll highlights for Mother Jones, J.P. Morgan Chase is currently making a killing by financing mountaintop removal mining (MTR). MTR is an ecological nightmare-literally a bombing campaign in which entire mountains in Appalachia are destroyed to make way for cheap coal. That's meant billions in profits for J.P. Morgan, and an environmental catastrophe for the United States.
Obama and Congress have a choice. They can play financial reform for campaign contributions, pushing a watered-down bill that will function as a set of reforms-in-name-only. Alternatively, they can do their jobs, confront a dangerous financial oligarchy head-on, and help build an economy that works for everyone.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Several weeks ago, the House Financial Services Committee approved an amendment that would quite negatively impact our economy's future well-being. If passed, this change could hamper GDP growth for decades to come.
Offered by Congressman Ron Paul, the amendment vastly expands the Congressional Accounting Office's auditing powers over the Federal Reserve. Consequently, the Federal Reserve's cherished independence would be drastically curbed. Every unpopular action the Federal Reserve made could potentially be scrutinized by vote-seeking politicians. This would effectively intertwine politics into the serious business of running the economy - and if the Soviet Union taught us anything, that is a terrible, terrible idea.
Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled his latest financial reform proposal on Monday, and the stakes for the new legislation couldn't be higher. After consumer groups raised a major ruckus, Dodd has dropped one of his most egregious concessions to the bank lobby-cutting enforcement authority from the proposed Consumer Financial Protection Agency (CFPA). That's good news: Without a major regulatory overhaul, the U.S. economy's destructive boom and bust cycle will start all over again.
We've been down this road before. The Enron fiasco should have served as a wake-up call for policymakers, but instead, the weak federal response to Enron's major fraud helped pave the way for the current economic slump.
What does Enron have to do with the crisis?
As Megan Carpentier emphasizes for The Washington Independent, one of the key "reforms" Congress enacted in the Enron aftermath was a law requiring every CEO to sign-off on their company's accounting statements-but it has accomplished almost nothing.
Enron collapsed due to accounting fraud. Its executives weren't stupid or careless-they made their money by engaging in deliberate and coordinated acts of illegal deception. But CEOs of companies like Enron had always been able to deny that they knew about the shenanigans that were playing out in their accounting departments. By forcing CEOs to sign off on their accounting statements, Congress was attempting to "deny them plausible deniability," as Carpentier puts it.
But accounting fraud has plagued the U.S. economy, even after the Enron scandal. It also plays a major role in the Wall Street crisis. A recent court report from Lehman Brothers' bankruptcy examiner reveals that the company arranged a series of complicated transactions to hide $50 billion in debt, making Lehman appear healthier than it was. By hiding this debt, Lehman was able to make bigger bets on the mortgage market. The defense issued by Lehman CEO Richard Fuld? He apparently didn't know the accounting hijinks were happening
An epidemic of fraud
Most U.S. policymakers are still having a hard time coming to grips with the fact that our financial system is rife with fraud at almost every level. Writing for AlterNet, Joe Costello reports on a recent Roosevelt Institute conference featuring several major economic luminaries. Costello argues that some of Wall Street's biggest problems were driven by run-of-the-mill fraud. And a key vehicle for this fraud, Costello notes, was the derivatives market-the same market that allowed Enron to perpetrate its own frauds. Many of the scams aren't even particularly new or creative. They're simply the same cons that helped usher in the Great Depression.
"If we're going to get our economy up and running again, the first thing we're going to have to do is end the fraud," Costello writes.
Protecting Whistleblowers
But astonishingly, even after the worst financial crisis in history, bigwig bankers have been able to avoid fraud charges and investigations. Even when the Justice Department went after Swiss banking Giant UBS for a massive tax evasion scheme, they let the company's U.S. executives off the hook and instead jailed the very whistleblower who told the government about the fraud.
The whistleblower, Bradley Birkenfeld, is by no means innocent of wrongdoing-he even smuggled diamonds in a toothpaste container for a wealthy UBS client. But as Corbin Hiarr notes for Mother Jones, jailing the man who blows the whistle sends exactly the wrong message to anybody in Big Finance who recognizes a problem. Not only will your employer come at you with everything it has, but the government you aid will actually send you to prison. The fraudsters you finger get to retire to the Caymans.
This is part of the reason that successful financial reform is not just what the rules are, but who gets to enforce them. There were many reasonable rules against predatory lending that bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency (OCC) could have used to thwart the financial crisis early on, but neither agency was interested in doing so. They were more concerned with short-term banking profits, and up until 2007, sketchy accounting was allowing banks to book big gains on the subprime market.
Why we need a CFPA
That's why all the way back in June of 2009, President Barack Obama proposed establishing a CFPA focused exclusively on defending consumers against banks. With no concerns for bank profitability, CFPA regulators could go after unfair practices and fraud because they were wrong, regardless of what they did for bank balance sheets.
The proposal was watered down significantly in the House, as Kai Wright notes for The Nation, and just a week ago it appeared that Dodd was ready to completely torpedo the new regulator in an effort to craft bipartisan support for a so-called "reform" bill.
He's backed off since then, but without strong enforcement authority, nothing is gained-the same corrupt regulators will simply continue to look the other way. But Dodd would still house the new agency at the Federal Reserve. Dodd insists the Fed would have no authority over the CPFA, but if that were the case, why would he introduce the provision at all?
"Reform in name alone will be useless to both consumers and politicians," writes Wright.
Strong financial reform is overwhelmingly popular. While it's good to see Dodd backing away from some of the gifts he'd previously proposed to bank lobbyists, progressives must keep the pressure high to ensure that financial reform is strengthened as it moves through the Senate.
It's easy for a corrupt lawmaker to vote against a weak bill: He can always plead that the bill wasn't good enough and be right. But serious, popular reform is not so easy to oppose. If Dodd and the Democratic leadership make the politicians backed by the bank lobby-that's literally every Republican, plus a handful of conservative Democrats-stand up and vote against a good bill, many of them will have to choose between their lobbyist friends and their political future.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Filling in for Chris on this, who has unavoidable conflicts at the moment
The Senate voted to confirm Ben Bernanke for another term as Chairman just now. The final vote on cloture was 77-23. The final vote on passage was 70-30. It was the highest number of Senators ever to vote against a nominee for the Chairmanship.
A number of opponents of Bernanke's nomination, including Boxer, Harkin and Whitehouse, "aye" in favor of cloture and "nay" on the nomination. By my count, a total of six Democrats (Begich, Cantwell, Feingold, Merkley, Sanders, Specter) voted nay on both. Pretty amazing that a number of Senators who opposed his nomination were persuaded to treat his nomination differently in terms of cloture than regular legislation when, in my view, the Fed Chairman's influence is just as wide-reaching as any piece of public legislation.
Here's the full vote count on cloture. Here's a link to Chris' latest whip count yesterday.
Moved from "undecided" to "no": Ensign (R-NV), Grassley (R-IA); Harkin (D-IA)
Moved from "yes" to "no": Whitehouse (D-RI)
Moved from "lean yes" to "undecided: Begich (D-AK)
Negative changes:
Moved from "undecided" to "yes": Brown (D-OH), Cardin (D-MD), Casey (D-PA), Cochran (R-MS), Klobuchar (D-MN), Lautenberg (D-NJ), Leahy (D-NJ), McCaskill (D-MO), Ben Nelson (D-NE), Pryor (D-AR), Rockefeller (D-WV); Tom Udall (D-CO)
Moved from "undecided" to "lean yes": Barbara Mikulski (D-MD), Lisa Murkowski (R-AK), Debbie Stabenow (D-MI)
The odds are long, but there is still time to win this. In the extended entry, you will find a complete list of Senators sorted by state, along with their current position on Bernanke and phone numbers for their D.C. office. Check out the extended entry, and make a phone call or two--we need to round up as many no votes as possible!
During his time as chairman of the Federal Reserve, Ben Bernanke failed to identify, prevent and adequately respond to the financial crisis. This week, the Senate will vote on whether to reconfirm Ben Bernanke to a second, four-year term as chair of the Federal Reserve.
The Senate should not confirm Bernanke without:
Demanding a job plan from the Federal Reserve. The Federal Reserve is required by law to work to achieve full employment in America. However, even as he gave two trillion dollars to Wall Street, Ben Bernanke says there is nothing he can do for Main Street.
Launching a comprehensive investigation into the Fed's role in the bailout of insurance giant A.I.G. and the big banks. Taxpayers are on the hook for hundreds of billions for AIG; big banks got paid off dollar for dollar. How does that make sense?
Requiring an audit of the Fed. Trillions were used to backstop American and foreign financial institutions. What were the terms? Who got helped and who got shafted and why? The Fed can't commit literally trillions with no accountability whatsoever.
Demanding a detailed admission of responsibility from Bernanke showing he understands how he missed the housing bubble, and how he will change his approach to managing the economy.
Probing Bernanke's views on reform. Bernanke has opposed the administration's reform package, including the Consumer Financial Protection Agency, crucial to protecting consumers from credit card and bank abuse.
Is your Senator going to vote this week to re-appoint Ben Bernanke to run the Federal Reserve, without demanding any accountability for actions before and during the financial crisis?
You can find out TODAY by joining the "Bernanke Whip Count!"
Campaign for America's Future is partnering with OpenLeft.com on the "Bernanke Whip Count," finding out who is blindly supporting the Fed Chairman, so we can maximize grassroots pressure for accountability.
In the extended entry, you will find a list of all 100 Senators, and the phone numbers for their Washington, D.C. offices. Call your Senators and find out where they stand on Ben Bernanke. If your Senators have already made their position clear, you can call other Senators, too.
When you get a response from an office, either post a comment or email me at christopher_j_bowers@yahoo.com, and I will update the chart.
Call your Senators now! A complete list of phone numbers can be found in the extended entry.
If Ben Bernanke is not reconfirmed by the Senate this week to another four-year term as chairman of the Federal Reserve, then the stock market will be sent into a tailspin so dire that it is likely our children, and their children, will all work as chimney sweeps in the ensuing century of Dickensian poverty.
If a left-right coalition of 40 Senators blocks his confirmation, then it's hard to see what other candidate would be more to their liking. You'd have gridlock. But Bernanke's term as a member of the Fed's Board of Governors is actually a 14-year term that doesn't expire for a long time. Consequently, the same Open Market Committee that's making decisions right now would just go on making decisions. Bernanke would, however, be unable to perform the formal responsibilities of the Chairman, so that role would devolve to Donald Kohn, the Vice Chair.
The truth is, functionally, that defeating Bernanke might not change that much in terms of Federal Reserve policy. However, it would still have some positive effects, including sending a strong message, opening up the possibility for change at the Federal Reserve and, as I discuss in the extended entry, empowering the left-wing of the Democratic Party in the Senate.
STATE BLOGS
