War chests from right-wing billionaires and corporate titans are funding tremendous portions of political activity, from the so-called grassroots activism of the Tea Party to the streamlined lobbying assaults of the nation's largest corporations.
Last week, the U.S. Senate rejected a plan that would have broken up the nation's six largest banks firms into firms that could fail without wreaking havoc on the economy. Even though the defeat reinforces Wall Street's political dominance, there is still room for a handful of other useful reforms, like banning banks from gambling with taxpayer money and protecting consumers from banker abuses. After looting our houses, banks are now pushing for the ability to bet on movie box-office receipts, and will keep trying to financialize anything they can unless Congress acts.
Wall Street calls the shots
Writing for The Nation, John Nichols details last week's Capitol Hill damage. Today's financial oligarchy, in which a handful of bigwig bankers and their lobbyists are able to write regulations and evade rules they don't like, will still be in place after the Wall Street reform bill is passed. The lesson is clear, as Nichols notes:
Whatever the final form of federal financial services reform legislation, one thing is now certain: The biggest of the big banks will still be calling the shots.
Still worth fighting for
As I emphasize for AlterNet, Congress has made a terrible mistake here, but there is still room for reform. It took President Franklin Delano Roosevelt seven years to enact his New Deal banking laws. It took even longer to reshape public opinion of monopolies when President Theodore Roosevelt took on Corporate America in the early 1900s.
What's still worth fighting for? We have to curb the derivatives market-the multi-trillion-dollar casino that destroyed AIG. We have to impose a strong version of the Volcker Rule, which would ban banks from engaging in speculative trading for their own accounts. We have to change the way the Federal Reserve does business and force the government's most secretive bailout engine to operate in the open. And we have to establish a strong, independent Consumer Financial Protection Agency to ensure that the horrific subprime mortgage abuses are not repeated.
As Nomi Prins details for The American Prospect, the current reform bill will not effectively deal with the dangers posed by hedge funds and private equity firms-companies that partnered with banks to blow up the economy through investments in subprime mortgages. That means that whatever happens with the current bill, Congress must again take action next year to rein in other financial sector excesses.
The derivatives casino at the movies
As Nick Baumann demonstrates for Mother Jones, banks are doing everything they can to gobble up other productive elements of the economy. The economy crashed in 2008 in large part because banks had used the derivatives market to place trillions of dollars in speculative bets on the housing market. This wasn't lending, it was pure gambling: Instead of using poker chips, bankers placed their bets with derivatives. But, as Baumann emphasizes, banks are now looking to expand the sort of thing they can make derivatives gambles with. The latest proposal is to allow banks to bet on the box office success of movies. That's right, banks would be gambling on movies.
Hollywood may be shallow, but it isn't stupid. It doesn't want to see the banking industry repeat its destructive looting of the housing industry on the movie business, and is pushing hard to ban banks from betting on movies. But we can't count on every industry having a powerful lobby group to counter every assault from the banking system.
Taking stock in schools
Consider the unsettling report by Juan Gonzales of Democracy Now!. Gonzales details how big banks gamed the charter school system to score huge profits while simultaneously saddling taxpayers with massive debts that make teaching kids supremely difficult. By exploiting multiple federal tax credits, banks that invest in charter schools have been able to double their money in seven years-no small feat in the investing world-while schools have seen their rents skyrocket. One school in Albany, N.Y. saw its rent jump from $170,000 to $500,000 in a single year.
About that unemployment rate...
It's not like public schools are flush with cash right now. The $330,000 increase in rent could pay the salaries of more than a few teachers. As the recession sparked by big bank excess grinds on, even the good news is pretty hard to swallow. As David Moberg emphasizes for Working In These Times, the economy added 290,000 jobs in April, but the unemployment rate actually climbed from 9.7 percent to 9.9 percent in March. That's because the unemployment rate only counts workers who are actively seeking a job-if you want a job but haven't found one for so long that you give up, you're not technically "unemployed." All of those "new" workers are driving the official figures up.
In other words, it's still rough out there. And likely to stay rough as state governments try to deal with the lost tax revenue from plunging home values and mass layoffs. Nearly half of all unemployed people in the U.S. have been out of a job for six months or more. And while we'd be much worse off without Obama's economic stimulus package, that percentage is likely to grow this year, Moberg notes.
This is what unrestrained banking behemoths do. They book big profits and bonuses for themselves, regardless of the consequences for the rest of the economy. Congress absolutely must impose serious financial reform this year. After the November election, breaking up the banks must once again be on the agenda when Congress considers the future fate of hedge funds, private equity firms, Fannie Mae and Freddie Mac. If we don't rein in Wall Street, banks will continue to wreak havoc on our homes, our jobs and even our schools. Congress must act.
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.
Last week, the Securities and Exchange Commission filed fraud charges against Goldman Sachs and underscored what most Americans have believed for some time: Wall Street has rigged the economy in its own favor, and will stop at nothing-not even outright theft-to boost its profits. What's worse, Goldman's scam could have been completely prevented by better regulations and law enforcement.
Goldman's heist
Let's be clear. "Financial fraud" means "theft." Goldman Sachs sold investors securities that were stocked with subprime mortgages and had been cherry-picked by a hedge fund manager named John Paulson. Paulson believed these mortgages were about to go bust, so he helped Goldman Sachs concoct the securities so that he could bet against them himself.
Goldman Sachs, like Paulson, also bet against the securities. But when Goldman sold the securities to investors, it didn't tell them that Paulson had devised the securities, or that he was betting on their failure. By withholding crucial information from investors, Goldman directly profited from the scam at the expense of its own clients. If ordinary citizens did what the SEC's alleges Goldman did, we'd call it stealing.
As Nick Baumann emphasizes for Mother Jones, the SEC's suit against Goldman is just the tip of the iceberg. During the savings and loan crisis of the late 1980s, literally thousands of bankers were jailed for financial fraud. Today's crisis was much larger in scope, yet the Goldman allegations are among the first serious charges of legal wrongdoing to emerge (other complaints have been filed against Regions Bank and former Countrywide CEO Angelo Mozilo). If the SEC or the FBI are doing their jobs, we should see many more of these cases.
Bust 'em up.
How do banks get away with these kinds of shenanigans and still secure epic taxpayer bailouts? It's all about their political clout, as Robert Reich notes for The American Prospect. So long as banks are so enormous that they can ruin the economy with their collapse, the institutions will always carry tremendous political clout.
Even in the case of Goldman Sachs, which is too-big-to-fail by any reasonable standard, the SEC's fraud case is being filed three years after the company's alleged offense. That's well after the company rode to safety on the Troubled Asset Relief Program, the AIG bailout and billions more in other indirect assistance-and only after multiple journalists made Goldman's offensive transactions general public knowledge.
If we don't break up the big banks, politically connected Wall Street titans will make sure they get bailed out when the next crisis hits, regardless of whatever laws we have on the books.
Fix the derivatives casino
If Congress doesn't soon pass a bill to break up behemoth banks, it will be neglecting the gravest problem in our financial system today. But several other reforms are needed if Wall Street is ever going to serve a useful economic function again.
As Nomi Prins emphasizes for AlterNet, much of the Wall Street profit machine has been divorced from the economy that the rest of us live in. These days, banks make most of their money from securities trades and derivatives deals. Their actual lending business is taking a beating. That means big banks have very little incentive to promote economic well-being for every day citizens. We need to create these incentives by banning economically essential banks from engaging in securities trades, and make sure all derivatives transactions are conducted on open, transparent exchanges, just like ordinary stocks and bonds.
Better derivatives regulations could help protect against fraud. If Goldman Sachs' sketchy subprime deal had been subject to market scrutiny on an exchange, it's very unlikely that any investor would have bought into it. Goldman Sachs almost got away with it because the deal was secretive and beyond the scope of most regulatory oversight.
Protect whistleblowers
The Goldman case also raises significant questions about the government's enforcement of existing financial fraud laws. Bradley Birkenfeld, a banker for Swiss financial giant UBS, helped the Department of Justice bring the largest tax fraud case in history against his company, which was helping rich Americans hide money from the IRS in offshore bank accounts.
For his cooperation, Birkenfeld was rewarded with a four-year prison sentence, even though nobody else at UBS-nobody-has been sentenced to prison over the scam. As Juan Gonzalez and Amy Goodman emphasize for Democracy Now!, Birkenfeld's imprisonment could have something to with who exactly is hiding money with UBS.
Gonzalez discusses an interview with Birkenfeld, in which the former banker notes that the bank had a special office to handle the accounts of "politically exposed persons"- American politicians. Moreover, the top brass at UBS includes key advisors to top politicians in both parties. This is exactly the kind of influence smuggling that breaking up the banks would help fix. UBS is a multi-trillion-dollar institution with no less than 27 U.S. subsidiaries.
But protecting Birkenfeld would accomplish still more-by jailing him, the Justice Department is actively discouraging others from coming forward, and making it more difficult for regulators to enforce the law.
Greenspan's failure
It's abundantly clear that almost every major regulatory agency charged with curtailing financial excess failed to prevent the Crash of 2008. But that failure doesn't mean that effective regulation is impossible-it only shows that the regulators in power failed. The top bank regulator in the U.S., John Dugan, was a former bank lobbyist.
As Christopher Hayes demonstrates for The Nation, former Federal Reserve Chairman Alan Greenspan has never had any interest in regulation whatsoever. After the crash, Greenspan insisted that nobody could have seen it coming. But as Hayes notes, many people did-Greenspan simply didn't listen to them. These days, Greenspan is revising his story, claiming that he did in fact see the crisis coming, but that nobody could have prevented it. That is simply not credible.
Hayes draws a useful parallel Hurricane Katrina, a problem sparked by a natural event that became a catastrophe when regulators failed to take the necessary precautions. The lesson from both Katrina and the financial crash is not that government always screws up-we have plenty of examples of government preventing floods and economic calamity. The lesson we should learn is that people who don't believe in government will never do a good job governing. As Hayes notes:
If Greenspan couldn't figure things out, that doesn't mean others can't. In fact, developing systems for doing just that is called-quite simply-progress, and Alan Greenspan continues to be one of its enemies.
That is exactly the task that now presents itself before Congress: Developing a system to prevent and constrain economic destruction wielded by Wall Street. The U.S. had a system that did exactly this for more than fifty years. For the last thrity years, it has been systematically dismantled. How well Congress lives up to that challenge will define much of our economic future for decades to come.
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.
Coal consumption has costs - this week's explosion at a West Virginia mine, which killed 25, made that clear. Those costs aren't limited to human lives, either. Massey Energy Co., the owner of the West Virginia mine, has racked up not just safety violations but also consistently has disregarded the environmental effects of its work.
Black marks on Massey's record
This week's explosion is far from the first debacle associated with a Massey project, and past incidents have had disastrous impacts on the environment. In 2000, a break in a Massey-owned reservoir, filled with coal waste, caused more damage than the Exxon Valdez spill, Steve Benen writes at The Washington Monthly. Clara Bingham described the flood of sludge for the magazine in 2005:
"The gooey mixture of black water and coal tailings traveled downstream through Coldwater and Wolf creeks, and later through the river's main stem, Tug Fork. Ten days later, an inky plume appeared in the Ohio River. On its 75-mile path of destruction, the sludge obliterated wildlife, killed 1.6 million fish, ransacked property, washed away roads and bridges, and contaminated the water systems of 27,623 people."
A year later, another 30,000 gallons of sludge poured into a river in Madison, WV, "with nary a peep from Massey," Kevin Connor points out at AlterNet.
"Between 2000 and 2006, Massey violated the Clean Water Act more than 4,500 times by dumping sediment and leftover mining waste into rivers in Kentucky and West Virginia, the EPA said in 2008. (Environmental groups say the EPA's tally is a lowball figure; they estimate that the true number of violations is more than 12,000.) As a result of these breaches of the law, the company agreed to pay the EPA a $20 million settlement."
It appears that prior spills have not chastened Massey, either. Brooke Jarvis at Yes! Magazine notes that the company stores 8.2 billion gallons of coal sludge in the same West Virginia county suffering from this week's explosion, and that two months ago, "West Virginia's Department of Environmental Protection issued a notice of violation because the dam failed to meet safety requirements."
Don Blankenship, denier!
Massey's owner, Don Blankenship, has as dark a record as his company on environmental issues. Blankenship believes in the "survival of the most productive," Mike Lillis writes at The Washington Independent, which means that safety and environmental concerns come second. He "loves to slam 'greeniacs' for believing in things like climate change," says Nick Baumann at Mother Jones. The Colorado Independent's David O. Williams calls Blankenship "a notorious right-wing climate change denier and outspoken critic of the policies of 'Obama bin Laden,'" and notes that Blankenship is on the board of the U.S. Chamber of Commerce, which has tried its hardest to squelch any climate legislation eking through Congress.
Methane and mountaintop removal
Although Massey and Blankenship stand out for their scorn of the environment, all coal production extracts a cost. Accidents and violations like Massey's can devastate forests and streams, but coal's biggest environmental impact comes when it is burned and pours tons of carbon dioxide into the atmosphere. As Yes! Magazine's Jarvis puts it, "Coal may be cheap now, but that's simply because we're not counting-and don't even know how to count-the long-term costs."
The Obama administration has taken some steps towards limiting coal production. Last week the EPA announced restrictions that would limit mountaintop removal mining. But those regulations won't ban the practice altogether. The Senate could, in theory, take up that task: Sen. Ben Cardin (D-MD) and Sen. Lamar Alexander (R-TN) introduced a bill a year ago that would make mountaintop removal mining so expensive it would be economically infeasible, effectively banning the practice, Mike Lillis reports for The Washington Independent. Although the bill accrued a few more sponsors during 2009, mostly liberal Democrats like Sen. Dianne Feinstein (D-CA) and Sen. Frank Lautenberg (D-NJ), it hasn't attracted much attention and is still sitting in the Environment and Public Works Committee.
In the Mountain West, the Bureau of Land Management is opening up federal lands for coal mining and claiming it can't require companies to flare off or capture methane, a greenhouse gas 20 times more potent than carbon dioxide, David O. Williams reports for The Colorado Independent. Without methane capture, the new mines would pour carbon pollution into the atmosphere. This BLM stance, Williams writes, has green advocates in Colorado "longingly reminiscing about the bygone days of the Bush administration," which said it would require companies to manage methane.
This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: WV Mine Had Over 1300 Health and Safety Violations
By Lindsay Beyerstein, Media Consortium blogger
Massey Energy's Disregard for Safety
A massive explosion ripped through the Big Branch coal mine in West Virginia on Monday, killing 25 miners and leaving 6 others missing and presumed dead. The mine had an egregious record of health and safety violations. Peter Rothberg of The Nation writes:
The US Mine Safety and Health Administration cited the mine for 1,342 safety violations from 2005 through Monday for a total of $1.89 million in proposed fines, according to federal records. The company has contested 422 of those violations, totaling $742,830 in proposed penalties, according to federal officials. Massey Energy is actively contesting millions of dollars of fines for safety violations at its West Virginia coal mine where disaster struck yesterday afternoon.
Nick Baumann of Mother Jones reports that company that owns the mine, Massey Energy, has been fined over $400,000 this year for allowing flammable gas and coal dust to build up inside the mine. Investigators suspect that just such a buildup caused the blast. Aaron Weiner of the Washington Independent observed that Massey's website was trumpeting 2009 as "another record setting year for safety."
This week's blast was a tragic illustration a longstanding problem. Jeff Biggers, himself a coal miner's grandson, writes in AlterNet that all mine safety laws are "written in in the blood of coal miners." Over 104,000 workers have died in America's coal mines over the industry's history. Furthermore:
Three coal miners still die daily from black lung disease-one of the most flagrant safety issues and scandals overlooked in our nation.
Suspect Charged Over Death Threats to Senator
In other health news, Steve Benen of the Washington Monthly reports that a Yakima man has been arrested and charged with threatening the life of Sen. Patti Murray (D-Wash) over the passage of the health care bill. The FBI alleges that Charles Wilson left multiple anonymous death threats on Murray's office voicemail system. According to the criminal complaint federal agents tracked Wilson down by tracing his home phone number. Note to stupid criminals, just because the person you're calling can't see your blocked number doesn't make it invisible to phone company, or the FBI.
According to the criminal complaint, a special agent called Wilson posing as a member of Patients United Now. The real Patients United Now (PUN) is a project of Americans for Prosperity (AFP), a major right wing anti-reform group. Normally the FBI gets permission from real, active organizations before impersonating their members, but as I report for AlterNet, the FBI didn't get permission from AFP or PUN to use PUN's name as cover. That's a bit disturbing, in my opinion, if only because it's likely to fuel suspicions of anti-government conspiracy theorists. Still, it's ironic that FBI astroturfed the astroturfers to catch Wilson.
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: Pelosi Makes Her Move; GOP Rep. Calls for Coup
By Lindsay Beyerstein, Media Consortium blogger
Speaker Nancy Pelosi (D-CA) has laid out a strategy to pass health care reform in the next couple of days by allowing the House to vote on the details of the reconciliation package instead of the Senate bill itself. As usual, progressives are fretting that winning will make them look bad. On the other hand, conservatives are baying for blood and calling for revolution.
'Deem and pass'
Nick Baumann of Mother Jones discusses the parliamentary tactic known as "deem and pass" (D&P), which House Democrats plan to use to avoid voting for the Senate bill before the Senate fixes the bill through reconciliation. The House doesn't want to sign a blank check. If the health care bill passes the House first, there's no guarantee that the Senate will make the fixes as promised.
Originally, the hope was that the Senate could do reconciliation first. The problem is that you can't pass a bill to amend a bill that isn't law yet. That would be like putting the cart before the horse. To clear that hurdle, the House will invoke a rule that deems that Senate bill to have passed if and when the House passes the reconciliation package. It's sort of like backdating a check. Ryan Grim explains the process in more detail on Democracy Now!
D&P does not equal treason
Progressives like Kevin Drum worry that D&P will make the Democrats look bad. Meanwhile, the Tea Party crowd is calling for Nancy Pelosi to be tried for treason, as TPM reports. The bottom line is that D&P is no big deal. Republicans used the process 36 times in 2005 and 2006; Democrats used it 49 times in 2007 and 2008. D&P is constitutional. We know because it has already been upheld by the Supreme Court. Kevin Drum writes, "If you have a life, you don't care about the subject of this post and have never heard of it."
Teabag revolution
There is no joy in Tea Party Land, as Dave Weigel reports in the Washington Independent. The tea baggers are frantically lobbying to stop the bill, but the reality is starting to sink in. Their leaders are shifting from trying to kill the bill to planning the tantrum they're going to throw when it passes:
While many held out hope that plans to pass the Senate's version of reform in the House would stall out, others pondered their next steps. Some, like Rep. Steve King (R-IA), took a dark view of what might come.
"Right now, they're civil, because they think they have a chance of stopping this bill," said King to reporters, waving his arm at a pack of "People's Surge" activists forming a line to enter the Cannon House Office Building. "The reason we don't have violence in this country like they do in dictatorships is because we have votes, and our leaders listen to their constituents. Now we're in a situation where the leaders are defying the people!" Later, King would expand on those remarks and speculate on a possible anti-Washington revolt in which Tea Parties would "fill the streets" of the capital.
Sounds like King is calling for a revolution, doesn't it? As it turns out, that's exactly what he says he wants if health care reform passes. Eric Kleefeld of TPMDC reports that King is hoping for something akin to the uprising that overthrew the Communists in Prague in 1989. "Fill this city up, fill this city, jam this place full so that they can't get in, they can't get out and they will have to capitulate to the will of the American people," King said in an interview with the Huffington Post.
Women and health care reform
Health care reform seems poised to pass. Amid the heady excitement, there's a sense of gloom in the reproductive rights community. Bart Stupak was defeated, but health care reform will probably end private insurance coverage for abortion.
In The American Prospect, Michelle Goldberg urges feminists to support reform anyway. She argues that the women suffer disproportionately under the status quo. If reform passes, it will insure 17 million previously uninsured women. Expanding health care coverage might help reverse rising maternal mortality rates in the United States.
A recent report by Amnesty International found that at least two women die in childbirth every day in the U.S., a much higher rate than most developed countries. The anti-choicers had the advantage because they were willing to kill health reform over abortion. The pro-choice faction did not allow itself the luxury of nihilism.
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
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