bailouts

Mitch McConnell: Shameless, Hypocritical Liar

by: RDemocrat

Tue Apr 27, 2010 at 13:28

Crossposted from Hillbilly Report.

Here in Kentucky Progressives have gotten quite used to the hypocrisy of the Senator who represents Communist China for the state of Kentucky, Mitch McConnell. However, even as hypocritical as he has always been in fighting against working men and women all over the world, sometimes his stunning hypocrisy actually manages to surprise. Like on the banking bailout and new regulations. Of all folks in Washington it seems McConnell would be the one that would just want to keep his mouth shut. I guess when you have gotten away with flat-out lies and rank hypocrisy for so long however, you just expect to keep doing it.

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Weekly Audit: Congress to take up financial reform, but will it be strong enough?

by: The Media Consortium

Tue Apr 06, 2010 at 11:58

by Zach Carter, Media Consortium blogger

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.

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Weekly Audit: How Superhero Hilda Solis is Winning the Fight for Workers' Rights

by: The Media Consortium

Tue Mar 30, 2010 at 12:10

By Zach Carter, Media Consortium blogger

While the poor judgment of top-level officials at Treasury and the Office of Management and Budget frequently makes the news, there is another, unrecognized economic crew doing terrific work: Officials at the Department of Labor are restoring workers' rights after nearly a decade of neglect.

To top it all off, President Barack Obama appears ready to make another set of strong, though less high-profile, economic appointments that will help rein in Wall Street excess.

DoL All-Stars

As Esther Kaplan documents in a masterful piece for The Nation, the Department of Labor  (DoL) has been transformed from an agency that enabled corporate excess to one that holds companies accountable.  In less than a year, Labor Secretary Hilda Solis and her team of deputies significantly leveled the playing field between ordinary workers and high-flying executives.

For decades, when conservatives have attempted to confront social problems, they've relied on the mantra of enforcement. If we had more cops, we'd fix everything. But as Kaplan documents, under President George W. Bush and his Labor Secretary Elaine Chao, the DoL simply stopped enforcing worker protection laws. From wage theft to mine safety, the Department essentially allowed corrupt employers to do anything they wanted.

That neglect has already ended. Armed with a budget of just $1.5 billion-that's roughly 0.2% of the Troubled Asset Relief Program-Solis and company have cultivated a list of economic accomplishments that seemed impossible when they took office. As Kaplan details:

"Facing badly depleted enforcement ranks, Solis hired 710 additional enforcement staff, including 130 at OSHA and 250 for the crucial wage-and-hour division, upping inspectors by more than a third. Another hundred will come on next year to staff a crackdown on the misclassification of millions of employees as "independent contractors"--a dodge to avoid paying taxes and benefits--a move that has set off enormous buzz on business blogs. Her team took a plunger to the stagnant regulatory pipeline, moving forward new rules on coal mine dust, silica, and cranes and derricks. She restored prevailing wages for agricultural guest workers and is poised to restore reporting rules on ergonomic injuries."

Fixing the Fed

Obama also appears ready to make another slate of strong economic appointments at the Federal Reserve, an agency stuffed with free-marketers who helped engineer both an economic catastrophe and resulting bailouts. Obama's rumored picks-economists Janet Yellen and Peter Diamond and bank regulator Sarah Bloom Raskin-are aggressive about making the economy work for everyday citizens, as I emphasize for AlterNet.

If Congress passes financial reforms similar to what Senate Banking Committee Chairman Chris Dodd (D-CT) has proposed, the Fed's regulatory responsibilities will actually expand, despite its failures over the past decade. The Fed has never effectively regulated anything and it's not very concerned with unemployment as an economic problem.

That makes Obama's pending slate of officials who prioritize bank regulation and broader employment very important. Raskin, in particular, stands out with her strong record as a state banking regulator. If Obama ultimately nominates her, she'll be the first pure regulator ever appointed to the Fed. The potential picks don't make up for Obama's reappointment of bailouteer Ben Bernanke as Federal Reserve Chairman, but they do show that the President is capable of sound judgment.

Strengthening the Dodd bill

But the strength of Obama's potential Fed nominees doesn't justify the weakness of Dodd's financial regulation bill. As Amy Goodman and Juan Gonzalez of Democracy Now! reveal in interviews with economist Robert Johnson and ColorLines Editorial Director Kai Wright , the bill leaves plenty to be desired. Dodd is currently making the rounds and declaring that his bill will end the abuses giant banks deployed against the broader economy, but the truth is, the bill has largely been gutted by bank lobbyists. Here's Johnson:

"We're engaged in a Kabuki theater right now, hoping the material is too complex for the American people to understand, declaring victory, and yet basically encoding into law current practices of the banks. Every one of your listeners should ask the question, given this legislation, if the President, House and Senate pass it, will we be in a place where AIG couldn't have happened, Lehman Brothers couldn't have happened, Bear Stearns couldn't have happened, and, more importantly, nine, ten percent unemployment caused by the banking crisis couldn't have happened? I argue this bill does very little."

The importance of trust-busting

So Dodd's bill needs to be substantially strengthened as it moves through the Senate. But there's plenty of other economic work to be done outside of Wall Street. As Barry C. Lynn and Phillip Longman explain for The Washington Monthly, the steady expansion of corporate monopolies has resulted in a fundamentally unstable economy.

The  U.S. simply does not create jobs at the rate it once did, and companies aren't held accountable to market forces like competition. Many of our monopolies are hidden, as Lynn and Longman note. Macy's and Bloomingdale's seem like competitors, but they're owned by the same holding company. The same dynamic holds true in auto manufacturing, banking, pet food, health care and IT. Consumers think they're choosing between competing goods and services, when in fact they're shopping in different divisions of the same corporate Goliath.

All hope is not lost. As Laura Flanders emphasizes for GRITtv, the passage of health care reform proves that the Obama administration and Congress can make substantive progressive changes when they put their minds to it. The question is whether Obama is willing to limit his economic accomplishments to lower-level issues, or go big and take on the deep-pocketed corporate campaign contributors.

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.

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Stop the Nuclear Industry Bailout

by: daveschwab

Wed Mar 03, 2010 at 12:37

President Obama has proposed a whopping $54 billion in loan guarantees for the construction of new nuclear power plants.

What does that mean? If the costly new nuclear plants aren't finished, then taxpayers cover the huge financial loss.

If they are built, then we're stuck with power plants that generate overpriced electricity and create deadly radioactive waste that will remain toxic for thousands of years.

Either way, the nuclear industry wins, and we lose.

Tell President Obama to stop the nuclear power boondoggle.

Nuclear power creates deadly radioactive waste, from the mining process onwards.   It's got a scary history: think Chernobyl and Three Mile Island.

Just recently, a nuclear plant in Vermont was ordered shut down after radioactive tritium, which is linked to cancer, leaked from the plant into local water supplies.

Nuclear power is so financially risky that even Wall Street won't bet on it.  It's a public health and financial disaster waiting to happen.

Instead, our government should promote energy efficiency and a decentralized power system based on safe, clean, renewable energy.

Tell President Obama today: don't risk our future with nuclear power subsidies!
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Weekly Audit: The GOP Hates Jobs

by: The Media Consortium

Tue Mar 02, 2010 at 11:33

By Zach Carter, Media Consortium blogger

Through inaction and timid legislative negotiations, Congress just keeps letting the U.S. sink deeper and deeper into the economic abyss. Last week, Congress denied relief to the jobless and is currently poised to undercut a proposal that would rein in predatory lending. With unemployment out of control and banks pillaging citizens' pocketbooks at every turn, the economy is in dire need of serious financial reform and a major jobs package.

More than one million have lost unemployment benefits

As James Ridgeway emphasizes for Mother Jones, over a million people receiving unemployment benefits ran out of financial rope on March 1 thanks to Sen. Jim Bunning's (R-KY) self-righteousness. As a result of bizarre Senate procedural rules, Bunning's sole "no" vote was enough to stop a bill that would have extended unemployment benefits for those who are out of work. Of course, Bunning had plenty of moral support from his fellow Republicans. Ridgeway highlights a Think Progress post on Rep. Dean Heller's (R-NV) preposterous argument that it is time for the government to cut off unemployment benefits, since there are so many bums.

"What makes Heller's statement really stupid, of course, is that people could become hobos if Congress doesn't extend unemployment benefits, rather than if they do," Ridgeway writes. "Modest as they are, these weekly benefits are what's keeping thousands-and perhaps millions-of families out of poverty."

As Brian Beutler notes for Talking Points Memo, Bunning's economic insanity also triggered a 21% cut in the fees doctors receive for treating Medicare patients. That's a big "Screw you!" to seniors.

What happens when unemployment benefits dry up?

The degree of personal crisis attached to unemployment is also important. We're talking about access to basic necessities. As Roger Bybee notes for Working In These Times, when a family runs out of unemployment benefits, the result is an absolute personal catastrophe in which there is simply no money left to buy food, pay rent, or meet electricity bills.

Yet when a major financial institution finds itself on the verge of collapse, the government is quick to come to the rescue. In addition to the one million people ran out of benefits on March 1, four million more are slated to run out by June-that's roughly the combined populations of Los Angeles and Dallas. This is a tremendous national crisis. Here's Bybee:

"There is plenty of bipartisan compassion in Congress when it comes to bailing out the wealthy and their banks. But when it comes to spending federal money to bail out folks ...  with unemployment compensation and a major jobs program, a bi-partisan consensus forms among conservatives in both parties eager to show 'fiscal discipline.'"

As Nobel laureate economist Joseph Stiglitz emphasizes in an interview at AlterNet, the jobs crisis is so severe that the government needs to go much further than simply extending existing unemployment benefits. At minimum, it also needs to send a major package of fiscal aid to states on the order of $200 billion to allow states to hire teachers and cops, as well as prevent further layoffs.

Making the jobs bill accessible to all

While a new jobs bill is critical, it's important to make sure everyone has access to its efforts, as Aaron Glantz explains for The Progressive. The economic stimulus bill that President Barack Obama signed into law last year has helped keep the economy from falling off a cliff, but it's overwhelmingly neglected communities of color. The unemployment rate for blacks is 16.5%, nearly the double the 8.7% rate for whites, while Latinos face an unemployment rate 50% higher than whites. Not all of that disparity can be blamed on the stimulus, but the federal contracts awarded for new jobs projects overwhelmingly went to white-owned firms. We have to make sure that the funds Congress dedicates to unemployment relief are distributed fairly.

Save the Consumer Financial Protection Agency

After watching the government hurl trillions of dollars at faltering banks, it's obvious that major financial reform is urgently needed. And one of the most important aspects of that reform is a new regulatory agency that defends consumers, not just bank balance sheets. As Tim Fernholz argues for The American Prospect:

"Shoring up our financial system to avoid new disasters remains popular with the public but only if it represents real reform. ...That means closing loopholes and making clear that this bill has what it takes to protect average citizens as well as restricting banks' bad behavior."

And yet astoundingly, Sen. Chris Dodd (D-CT), the current Democratic leader of financial reform negotiations in the Senate, appears ready to drop Obama's proposal to create an independent Consumer Financial Protection Agency (CFPA).

Instead, Dodd would house the regulator under the Treasury Department, and give the existing, failed bank regulators effective veto power over the CFPA's moves. It's a head-fake: We create a new regulator, but are instead giving that power to the same failed agencies who allowed the banks to pillage our pocketbooks, our retirement savings and our home values.

Failed negotiations with the GOP

This is supposedly all part of a set of negotiations with Republicans, but they aren't really negotiating in any clear sense. Negotiating means going through some process of give-and-take. Right now, Republicans are just seeing how far Democrats will bend, and so far, there has been no limit. Ferhnolz is right. Voting for the banks and against taxpayers and consumers will be a very bitter pill for Republicans to swallow. Dodd and the Democrats need to make them do it instead of caving to pressure and allowing Republicans to vote for a weak bill that doesn't protect the public from banker excess. Make the Republicans vote for real reform, or face the consequences at the polls for voting against it.

The public shame that is currently being heaped upon Bunning should prove that point. The American public wants jobs and financial reform. They want to go back to work and make sure that the bankers who tanked the economy can't keep getting rich by hijacking their savings. Woe unto the politician who opposes that.

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.

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He Works. We Wait

by: Betsy L. Angert

Mon Jan 25, 2010 at 14:32


"White House to Main Street" Town Hall: Elyria, OH

copyright © 2010 Betsy L. Angert.  BeThink.org

A recent change of the guard in the Massachusetts Senate race force the President to reveal he is working.  We, the American people, are waiting, just as we have been for months and months.  For a full year, countless citizens have felt as though they were patient.  Yet, the President did not seem to have their interests at heart.  True change has not come.  Countless constituents anticipate none is forthcoming.  Three hundred and sixty five plus have gone by and the American people are tired of being patient.

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Revolving Door Brought Us Too-Big-To-Fail

by: textdog

Tue Dec 29, 2009 at 12:49

Bailouts and political connections go hand in hand according to a just released academic study. The study, which was conducted by the Ross School of Business at the University of Michigan researchers, shows concretely that lobbying, campaign contributions, and the finance/federal government revolving door has helped the most damaging banks despite the dangers they pose to our economy.


In the age of the bailout, blaming the revolving door between corporate lobbying and politics is so obvious that it has become almost cliche. But the reason why it is one of the greatest handicaps to our political system is critically important. The revolving door turns "survival of the fittest" on its head by masking failure, propping up underperforming companies, and hiding inefficiencies in the markets. The new study  shows the extent to which political connections influenced how TARP bailout funds were paid out.


The researchers found that there was a 31% increase in the likelihood of receiving bailout funds at financial companies whose executives had served on the board of the Federal Reserve. Banks that had connections with members of Congress who serve on key finance committees were found to be 26% more likely to receive bailout funds than banks without those kinds of connections. It is the revolving door between lobbyists and politicians that undermine a fair and accurate system for determining healthy policy.


But the research hits just the tip of the iceberg. Zach Carter at The Nation recently reported on a much deeper case of how the revolving door shapes U.S. policy. Our "too-big-to-fail economy" was developed in large part by one of the country's current top bank regulators; someone who has major conflict of interest with the banks he is supposed to regulate, Carter reports. John Dugan is now chief regulator of the largest US banks at the Office of the Comptroller of the Currency. In one of his former positions at the Treasury, he was a chief architect of the three most influential pillars of banking deregulation that have been blamed for causing the financial meltdown last year (hat tip The Big Picture). In 1991, Dugan published a 750-page book where he successfully pushed for policies allowing banks to operate in multiple states without additional regulatory oversight, to repeal the Glass-Steagall Act allowing safe commercial banks to merge with risky investment and insurance companies, and to allow corporations like General Electric and Sears to own banks.


"[Dugan's book] was unquestionably the blueprint for the major Clinton-era deregulation," says Arthur Wilmarth Jr., a longtime banking scholar at George Washington University Law School. "It was the first real recipe for too big to fail."


A few years after publishing his book, Dugan was out of government and in a new job as a lobbyist with the American Bankers Association working his political connections to help pass the financial deregulatations he described in his book. From his earlier years in government, he had enough pals in Congress and the Clinton administration to get many of his policies enacted. Now he's back playing the game from the government side as one of the country's chief regulators. Same guy, same mind, same mission; just working from the inside at the moment. Indeed, "as head of the Office of the Comptroller of the Currency, Dugan played a leading role in gutting the consumer protection system, allowing big banks to take outrageous risks on the predatory mortgages that led to millions of foreclosures," Carter reports.


The revolving door actively hurts our economy because it puts our country on a path of survival of the richest, most connected lobbyists with cover-ups of market inefficiencies and bad consumer products.  Dugan helped dangerous-for-the-consumer, highly-profitable-for-the-bank consumer products pop up throughout the 90's as subprime and adjusted rate loans.   The Ross researchers agree that "the effects of political ties on federal capital investment are strongest for companies with weaker fundamentals, lower liquidity and poorer performance - which suggests that political ties shift capital allocation towards underperforming institutions." When money determines political power, the political system itself encourages corporations to put profit and lobbying above developing consumer products people actually need.


Dugan's role in aiding the creation of too-big-to-fail banks was born out of industry.  Because Dugan has a highly influential political position, his weaving of politics and private interests which has spanned a career is problematic: "Over the course of nearly a quarter-century, Dugan has proved himself a staunch ally of the American financial elite as a Senate staffer (1985-89), a Treasury official (1989-93) and a lobbyist (1993-2005), building a career that culminated in 2005 when George W. Bush appointed him comptroller of the currency. When the financial system finally succumbed to its own excesses in September 2008, Dugan's fingerprints were all over the economic wreckage, but almost nobody noticed." Dugan's work is exemplary of the phenomena of policy being determined by webs of influence.


To be fair, lobbying presents opportunities for busy politicians to learn about issues.  But, unfortunately the weaving of long tentacles in private and public sectors is a prerequisite to effective lobbying. Last week in DC, I met young career politicos who saw Capitol Hill jobs as a first stop on the road to high-paying lobbying jobs later on. Their political connections are golden resume nuggets. This complicated climb to the top is bearing down on policies we see today - President Obama made a campaign promise to keep out the lobbyists in his administration and failed, but the disheartening part is the bottom to top entrenchment  of Citigroup executives and lobbyists and their work on financial reform policy.


At its inception, corporations were allowed to exist when they served the public's interest; the Supreme court ended that in the 1800-1900's . No longer bound by public duty, shareholders' returns have become a singular goal in the free market and politics race to the top  -  Congress seems to have understood less and less the impact these policies have on the economy at large.  The money and secret inner circle of influence in DC is unfair because it creates a snowball effect of making the powerful more powerful and policy less about policy. Thus lobbying and its powerful cousin, the revolving door serve to prop up companies that may be weak or have bad products, leading to an economy that is more likely than not to become fractured or in other words, too big to fail.

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2009 Holiday Movie: It's (Not) A Wonderful Life

by: DaveJ

Tue Dec 01, 2009 at 12:37

I am working with BanksterUSA, and the Real Economy Project to help get financial regulations passed.

Please take a minute to watch this video, and visit BanksterUSA.org.  Then Click Here to Take Action!

We Need Comprehensive Financial Reform Now!

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Weekly Audit: Too Big to Fail is Just Too Big

by: The Media Consortium

Tue Nov 03, 2009 at 11:32

by Zach Carter, Media Consortium Blogger

Last week, President Barack Obama released key legislation designed to fight the banking industry's too-big-to-fail problem. But Obama's plan doesn't actually address too-big-to-fail at all. It reinforces a broken system in which economically dangerous companies are bailed out whenever they drive themselves to the brink of failure.

If we want the economy to support all people, we have to break up the big banks and start treating the creation of good jobs as an economic priority on par with Wall Street rescues.

The editors of The Nation break the political debate over banking into three camps:

  • The first camp is composed of bank lobbyists, Republicans and conservative Democrats and wants to do nothing.
  • Camp two, endorsed by the White House and influential Rep. Barney Frank (D-MA), would impose tougher regulations on too-big-to-fail banks to keep them from getting out of control.
  • The third camp wants to go even further: If a bank is too-big-to-fail, it is also too-big-to-regulate. Companies that pose a danger to the economy have to be split up into smaller firms that cannot induce economic ruin.

The Nation editors rightly see the third strategy as the most sensible. While the "break-up-the-banks" policy is being portrayed as a left-wing pipe dream by cable news networks, the policy actually relies on an age-old observation of conservative economists. Regulators make mistakes, and they often get co-opted by the very industries they are supposed to be supervising.

The practical policy is to impose structural limits on what activities banks can participate in and how big they can get. Just look at the list of high-profile supporters: former Federal Reserve Chairman Paul Volcker, former Citigroup Chairman John Reed, Bank of England Governor Mervyn King. I don't remember seeing any of those guys at the Iraq War protests.

Many of the regulatory blind spots that brought down the economy were obvious to some policymakers for years. Back in 1994, Sen. Byron Dorgan (D-ND) wrote an article for The Washington Monthly warning that derivatives trading was putting the economy in grave danger. Commodities Futures Trading Commission Chair Brooksley Born tried to take action on these derivatives, but was overruled by other regulators, including then-Fed Chair Alan Greenspan, and then-Treasury Secretary Lawrence Summers, now the top economic adviser to President Obama. Summers and Greenspan even convinced Congress to pass a law banning the regulation of key derivatives, including credit default swaps, which ultimately brought down insurance giant AIG.

Fifteen years after Dorgan's article first ran, The Washington Monthly is featuring it again, along with a recent speech by Dorgan that details massive failures in Wall Street and Washington.

"We had regulators come to town in recent years and willfully boasted that they wanted to be blind as regulators," Dorgan says.

There are good elements of Obama's plan to deal with too-big-to-fail. It gives policymakers the option of putting a too-big-to-fail institution through a special bankruptcy process administered by the executive branch, thus avoiding the problems created in bankruptcy court when Lehman Brothers failed. But the bad part is really bad: Officials would also have the option to provide unlimited bailouts to Big Finance via loans, guarantees and even asset purchases.

As Mike Lillis notes for The Washington Independent, some responsible Democrats like Rep. Brad Sherman (D-CA) have been objecting to this aspect of the legislation for months. Sherman, in fact, calls it "TARP on steroids," noting that the bank bailout at least came with some meager oversight and a limit on the program's actual size.

The bank lobby is spending money like mad to maintain their stranglehold on the economy. Neither Congress or the administration will change course without intense public pressure. So it was very reassuring last week to see thousands of people protesting the annual meeting of top bank lobby group, the American Bankers Association. David Moberg chronicles the protest in a blog post for Working In These Times that covers speeches by both key union leaders and ordinary people facing foreclosure after watching their tax dollars go to the very bankers who wrecked the economy.

"There was broad agreement on anger at the banks for providing so little, if any, public benefit for the massive bail-out, and for so quickly returning to the greed and abuse that precipitated the crisis," Moberg writes.

Laura Flanders covers the protests for GRITtv, including video of protesters chanting "Bust up big banks!" In a roundtable discussion with Christina Clausen of the United Food & Commercial Workers Union, George Goehl of National People's Action and Rob Robertson of the Right To The City Alliance, Rolling Stone journalist Matt Taibbi explains the overriding impotence of the regulations Congress is about to approve. Regulators will not be able to crack down on abusive derivatives, a full 8,000 of 8,200 banks will be exempt from Consumer Financial Protection Agency oversight, while the same agencies that screwed up heading into this crisis will be charged with preventing the next one.

"They've had sweeping powers to do whatever they wanted," Taibbi says. "They've had this regulatory power all along."

What we need are good jobs, and lots of them. Obama's economic stimulus package has made tangible economic progress. It's saved hundreds of thousands of jobs, and is clearly responsible for the turnaround in gross domestic product (GDP) we saw in the third quarter. But a full 17% of the workforce remains unable to find full-time work, as Julianne Malveux explains for The Progressive.

When Wall Street crashed in 1929 and unleashed the Great Depression, the government eventually stepped in as an employer-of-last-resort. The Works Progress Administration (WPA) and Civilian Conservation Corps (CCC). built schools, parks, roads and bridges which still serve our communities today. Both the WPA and the CCC employed literally millions of people-in the 1930s. It's a model that could work very well today.

As the current recession makes clear, ending too-big-to-fail and guaranteeing a good job for everyone in our society who wants one are the two most critical structural reforms our economy needs. Don't let lawmakers forget it.

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.

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Priorities at Pravda

by: lambert

Sun Oct 18, 2009 at 10:17

Originally posted at Corrente -- lambert
* * *
Pravda has what looks like a fine report today on AIDS programs in Washington, DC. Here's how they describe it:
About this Investigation
Over ten months, the Washington Post analyzed the spending, services, and finances of every specialized AIDS organization funded by D.C.'s HIV/AIDS Administration from 2004-2008, an estimated 90 groups, building a database from tax returns, audits, lawsuits, real estate records, D.C. Council records, and corporate and police reports. The Post also obtained grant agreements, invoices and government correspondence for about 60 of these groups. The newspaper interviewed dozens of people with HIV or AIDS patients, their families and service providers, and visited more than a dozen offices across the city.

The largest possible sum at issue seems to be $25 million, since that's the total sum available to non-profits, where the problems seem to be concentrated.

So, one question:

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Trumka Demands Real Reform on Wall Street, Across the Economy

by: Seth D Michaels

Tue Sep 22, 2009 at 13:13

On Wall Street today, AFL-CIO President Richard Trumka is calling for tough new regulations on the financial industry and a new approach to making the U.S. economy work for working people.

Trumka spoke today at the New York Stock Exchange as part of the new AFL-CIO leadership team's national tour to set out a jobs-focused, progressive vision for the economy-and to fight back against the corporate agenda that left workers behind.

We've let wealth concentrate for too long, Trumka said. The past decade has shown us the folly of building an unfair and unequal economy that only works for a few, while working people pile up debt to get by. We need to be able to protect consumers from abuses by mortgage lenders and credit card companies and hold accountable those whose greed and irresponsibility have undermined the economy, Trumka said:

Banks and other financial institutions must be held accountable for making this mess that required trillions of dollars of our money to clean up. For the pain they've inflicted on families who face financial ruin-unemployment, wiped out pensions, foreclosures and bankruptcy.
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Democrats Had Better Find Hiding Places

by: DaveJ

Sat Jul 25, 2009 at 13:45

I said it the other day, and I feel the need to repeat it: the public does not yet understand that the government is about to order people to buy health insurance, with their own money.  Yes, the government is about to order people to cough up hundreds of dollars a month each.

When the Republicans start using their toxic message-machine magic on this, and the public starts to understand that they are being ordered by the government to cough up a huge amount of money every month, Democrats had better have good hiding places, because things are going to get really bad out there.

This is the kind of policy that results when "centrist" Democrats give in to to the demands of Republicans and big corporations and the top 1% of the wealthy.  Instead of just taxing the wealthy and corporations at reasonable rates and using the money to provide We, the People with health care -- thereby vastly improving the economy for ... the wealthy and big corporations -- they instead come up with a scheme to order regular people to pay for health insurance because they don't already have it because they can't afford it.

This is how things work in the Post-Reagan era: The corporations and vastly wealthy get tax cuts.  We, the People get service cutbacks, increases in the retirement age, jobs outsourced, the infrastructure deteriorates...  When huge financial corporations get in trouble because they got too greedy the government salutes and says, "Yes, Sir!" and coughs up trillions in bailouts.  But when regular people can't afford insurance, the government as presently constituted comes up with a plan ordering them to buy it.

This fight over health care seems to be exposing the contradictions much more visibly than other policy battles we have had.  Against the background of the vast sums spent on the bailouts we have people in power telling us that it wouldn't be fair to insurance company profits to come up with a health care plan that provides great care to the public for a low price.

Who is our economy FOR, anyway? That is the question that my own blog asks.  Just asking the question takes your thinking in new directions.  

What can we do about this?  We need to fight for meaningful health care subsidies so regular people who do not now have health insurance will not have to pay for health insurance.  It is a simple tradeoff, really: every dollar in new taxes on corporations and the top 1% can be applied to a dollar of subsidies covering health care.  This will result in a more equitable, prosperous and healthier society -- and happier voters.

Discuss :: (52 Comments)

Q: Who Got The Money? A: I Don't Know

by: DaveJ

Tue Jul 21, 2009 at 20:30

In my earlier rant, I wrote,

We are supposed to be a representative democracy where We, the People are in charge, but we allow these companies and the government agencies propping them up to continue to operate with secrecy, refusing or even to let our own elected representatives know what is being done with our money!

And then I saw this.  Just watch.

Alan Grayson: "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."

Discuss :: (4 Comments)

Bailout Priorities And Raw Power

by: DaveJ

Tue Jul 21, 2009 at 18:45

Sometimes you don't find out who your friends are until the bear in the woods hits the Pope's fan.    

In the last year We, the People have been finding out who our friends are and aren't.  (Actually mostly just aren't.)  We especially have been finding out what the priorities are and where the power lies.  And lies and lies.

Since the financial crisis began we have been seeing as clear a display of raw power being used against the interests of the people as I imagine can be seen.  We were given hours to put up all of the money we have to bail out a few large financial institutions because they were "too big to fail," but we did nothing about how big they were -- and still are!  We allowed the use of our tax money to pay incredibly fat paychecks and bonuses while more and more of the rest of us have been laid off, lost our retirement, houses, etc.  We complained about the use in these bailed out companies of private jets by a select few and their families because it "looked bad" but not because of what it was.  Who is this "we" anyway?  I didn't want those things to happen, but "we" let them happen.

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Deficits Saved The World?

by: DaveJ

Wed Jul 15, 2009 at 19:27

Paul Krugman makes the case that big government deficits saved the world.  He says that our economic problems were actually worse than what we encountered in the 1930's, and the reason we haven't spiraled down the drain was that Obama's stimulus package picked up the slack in demand and kept even more people from being laid off, even more companies from going under, even more financial institutions from collapsing.

Aside from the deficits I can't even imagine where we would be today without FDIC insurance on bank accounts, or unemployment benefits.  I think everyone with money in a bank would have lost it.  And just imagine how it would be for the unemployed.  (Well, actually we're on the edge of finding out about that because unemployment is running out for a lot of people...)

Discuss.

Discuss :: (1 Comments)
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