Some of the largest U.S. banks may be on the ropes these days, but the disparity between the plight of financial executives and ordinary Americans has never been starker. Over the past two decades, the banking system has grown accustomed to scoring massive profits by preying on its own customers, making 2009's transition to pilfering taxpayer wallets an easy one. After burying the economy under a mountain of unaffordable debt, bank CEOs are now finding ways to subsidize their own paychecks with taxpayer bailout funds.
The way Tim Geithner has structured the banking plan, the Obama administration will, sooner or later, almost certainly be facing another AIG bonuses type of outrage. For example, Dean Baker told me that his biggest fear is that some sleazy character will make a fortune off the leverage given by the government, or that a bank will arrange an insider deal under which a front buys its assets at an inflated price, leaving the government with a big loss.
If this happens, I can already hear the cries of the faux populists in the Republican Party, those same folks who created this crisis with their opposition to regulatory oversight of Wall Street. If they were still in charge, we'd be having one of these kinds of scandals every week. But they will be full of howling indignation that Obama let this happen.
Those of us who are opposing this bank plan, in part because we are worried of just these kinds of scandals described above, will need to restrain ourselves from doing too much I-told-you-so-ing, because we will need to be helping to save the Obama team from themselves. We need to be ready, though, to step into the moment with our own very aggressive plan to put the banks into receivership and break them up. No matter how populist Republicans will want to pretend they are, they will never be willing to actually do something that progressive. If Obama is willing to go there, and do it decisively, it will help Obama to get over all the recriminations and saber-rattling that inevitably happens in such a moment.
I very much wish that Obama was moving bolder and more progressive in dealing with the banking crisis. To paraphrase a friend, I feel like he is giving mouth-to-mouth resuscitation to a system that needs to die. But if we are to get through the problems that will almost inevitably come from the Obama/Geithner plan, those of us who want to save Obama's agenda need to be ready with a strategy to turn things around ASAP when another scandal flares. Unlike Bush, Obama is smart enough to change direction when something isn't working, and progressives need to be ready to help him when that day comes.
As I have written several times over the past several months, I think the most important thing progressives can do over the next four years is to help President Obama succeed. Through most of our country's history, if a President didn't succeed, it was bad for himself and his party, but not necessarily for the country. But there have been a couple of times in American history - in the 1860s during the Civil War period and in the 1930s/40s during the Great Depression and World War II - when a President's success was fundamental to our country's success. I believe that our economic crisis is profound enough that now is just such a time.
Beyond that, President Obama's very identity makes it fundamental to progressive prospects for the future that he succeed. As a multi-cultural, African-American, son of an immigrant, and as the personification of hope for an idealistic young generation, if Obama fails, it hurts progressive hopes for decades if not generations to come, and likely engenders a dangerous right wing populism in response that will undoubtedly be tinged with racism and anti-immigrant fervor.
The good news is that President Obama has gone out on a boldly progressive course on his budget, health care, climate change, and education plans, and that his stimulus bill had more progressive investments for the public good than any single piece of legislation in history. Progressives can and should be proud of, and push hard for, all of these great legislative goals of the President.
The problem comes when those of us who are strong supporters of the President disagree with him on something important.
The newspapers are full of Wall Street businesspeople and conservative economists and pundits worried that all this demand for an end to multi-million bonuses is going to destroy our economy by driving away the best talent frmo the firms taking government bailout money. A typical quote from the Washington Post:
"I honestly think TARP banks have a grave risk of losing just the people they need to keep to help get them out of trouble," said Pat Wieser, co-head of financial services at Rhodes Associates in Manhattan, a boutique executive recruiting firm.
So let me get this straight: in this horrendous economy, with companies in the financial sector shedding massive numbers of jobs, these firms can't retain or find people smart enough to manage their assets in a responsible way? With the fate of the entire global economy at stake? There aren't enough people who are both skilled at managing finances and patriotic and moral enough to step into the breach and save their coutnry and the world from even worse economic crisis?
I know I have beaten up on Wall Street bankers a fair amount, but I think whis way underestimates just how depraved and immoral they are. With the fate of our ecomony in the balance, I believe that these companies can find enough talented people who are willing to make that ultimate sacrifice and not receive a multi-million dollar bonus this year.
The enormous complexity of the economic mess that we are in makes an incredibly smart man like President Obama understandably irritated with people who want to simplify everything down to a quick either/or equation. I understand that, and am sympathetic to the overwhelming swirl of nuance, subtlety, ripple effects, and unintended consequences inherent in every Presidential decision when the stakes are this high.
Sometimes, though, you just have to make a basic "gut check" decision to go down one basic path or another. To his enormous credit, that's what Obama did on the economic recovery bill, his budget, and his framing of the health care, energy, and education issues: he decided to go big, bold, and progressive in all of those areas.
Now he has to do that on the issue of these big bank and insurance company bailouts.
It seems that another bank on the public dole is using its taxpayer-subsidized time and resources to lobby against the Employee Free Choice Act.
Today, Sam Stein of the Huffington Post reports that Citigroup hosted a private conference call yesterday to bolster opposition to the Employee Free Choice Act that included a senior executive at the U.S. Chamber of Commerce, a business lobbying group that has put tens of millions of dollars into the anti-Employee Free Choice disinformation campaign. Jane Hamsher at Firedoglake notes that the Citi stock analyst who downgraded Wal-Mart over fears of the Employee Free Choice Act passing was on the call, too.
By Zach Carter, Media Consortium MediaWire Blogger
President Barack Obama rolled out his highly anticipated federal budget proposal on Thursday, and while the plan represents a dramatic departure from the priorities of the Bush administration, its ultimate impact may be crippled by a counterproductive bank bailout.
David Sirota just said on the frontpage here that he doesn't care if it's called bank "nationalization" or not, as long as it gets done.
Well, if we call it "nationalization," it may not get done, or it may not get done in the most effective way.
We need a different term to start promoting in all of our blog posts, interviews, YouTube clips, everything.
Call it bank rehab. And for the process of dealing with all the bad loans, call it bank detox. Why? It places the emphasis on the illness of the banks -- and the irresponsibility of the bankers -- rather than on the authority the government is exercising. It replaces a 15-letter word that most people can't define too well with two 5-letter words that everyone knows. (Safe to say there's never been a #1 R&B; hit called "Nationalization.") It makes the concept approachable instead of wonky. And as a bonus, newspapers and magazines and the tickers on the TV news channels will gladly embrace the shorter words to save space. (So if you talk to any mass media types, make sure to say "rehab" and "detox" as much as possible.)
Plus, it sidesteps a word and a concept that smacks of old-style central planning, a word that's most commonly used today to describe a dictator's seizure of privately held assets. It sounds European, and in the annals of American political rhetoric, sounding European can be fatal (which is why we should also ban "the Swedish model" from our vocabulary, unless it's to make a joke).
If we want to maximize the support for a policy, then we need to make sure that the name for that policy is a good one. This should no longer be a controversial approach; we just need to follow through.
People burning to death in fires that normally would be prevented.
Crime increasing because cops are laid off.
People literally stacked on top of each other in prisons, despite court orders that it is unconstitutional.
More and more homeless people on the street.
Libraries, many times the only way for low-income people to connect to the internet and access a world of knowledge, closed.
Trash collecting for weeks in the summer, leading to more rat infestations.
We can talk all we want about abstract ideas. But as Washington fiddles, and worries more about bankers than about us, that is the reality that was just announced in Philadelphia. The stories are similar all over the US. Will we do something about it, or not?
As a back story, in November, due to falling tax receipts and a pension fund that hit rock bottom, Philadelphia Mayor Mike Nutter announced he was going to cut 1 billion dollars from our five-year budget plan. It meant some layoffs, services being stopped, efficiencies searched, parks funding cut, and an attempt to shutter about 10 libraries.
People went berserk, especially at the library closures. A bunch of people fought the library closures specifically, and in what seemed like a miracle, a judge sided with us, and enjoined the Mayor from closing them, saving our neighborhood treasures. It was a small victory.
What started with slashing contraceptive funding has now escalated into removing $78 billion from the stimulus package. Elena Schor has the details:
Sens. Ben Nelson (D-NE) and Susan Collins (R-ME) have come up with a list of $77.9 billion in programs they want slashed from the stimulus package, according to a staff paper outlining the cuts.
Among the biggest cuts on the list: $24.8 billion in state stabilization money for education, which was intended to plug existing budget holes; $15 billion in state incentive grants for education; and $1.4 billion for the National Science Foundation, which is wracked by a porn-viewership flap.
This is about 15% of the public spending from the House version of the stimulus. Given that apparently twenty or so Senators, mainly Democrats, are involved with the Collins-Nelson group, it is a pretty safe bet than this funding will be slashed.
However, don't expect it to be voted on anytime soon. Tom Coburn is going to hold up the bill until he gets 15 more amendments:
And we're told by the majority leader that we have to finish up, so we can get to conference.
This bill ought to have a thousand amendments on it, if we're truly going to do the work of the American people. We ought to debate this bill line by line.
I will not agree to any unanimous consent until the next 15 amendments that I've got have a scheduled time to be brought up, so the American people can hear of all the stinky stuff in this bill.
Those of you who are regular readers know that I am an Obama loyalist. I volunteered to help out during the transition; I think it's desperately important that he succeed; I am more than willing to give him the benefit of the doubt; I have consistently defended him when some of my progressive friends have been critical; and I generally swallow my tongue when I don't agree with something because I want to be able to work quietly and constructively with his administration whenever I can. I so much believe in his transformational agenda that I have even made the decision to give all of the money I get from sales of my new book, The Progressive Revolution: How The Best In America Came To Be, to help get the big progressive pieces of that agenda on the economy, health care, and climate change passed. Sometimes, though, I just have to say something publicly, and when I read in this morning's paper and learned that the Obama economic team's bank rescue plan will include no more restrictions on executive salaries and bonuses than are in the ineffectual TARP bill because these banks might not take our billions of dollars if there were more restrictions, I knew that I had to protest.
This is exactly the kind of crap thinking that had Paulson give away $350 billion with no strings attached, and resulted in our tax dollars going not for an easing of credit, but for shareholder dividends, exec bonuses, corporate jets, and mergers- none of which has done bupkis to actually help the economy. We need some new thinking to save our economy, not this kind of rehashed Bushism. If these bastards don't want our money because we keep them from giving themselves extra tens of millions of dollars, LET THEM FAIL, LET THEM FAIL, LET THEM FAIL. I suspect most of them will take our money, because that's really their only option, and if they don't there are plenty of places that need shoring up that might actually help the real economy, so LET THEM FAIL.
President Obama, I am so happy with most of what I've seen so far: the Lily Ledbetter act, S-CHIP expansion, great new executive orders, reaching out constructively on Middle East peace, and an economic recovery bill that is great in many ways. But don't disappoint those of us who believe so strongly in you by giving into this Bush-like thinking about needing to coddle the big bank execs. If they don't want our money, fine: give it to the sectors of the economy that really need our help.
When I offered in a blog thread to go lobby on TARP oversight and reform while I was in DC, little did I know that I was going to be asked to write about it on Open Left. It's a challenge to rise to the standards set by all the wonderful writers and activists on the front page of this blog. And did I mention that I am sure they are all much better typists than I am....(.Any misspellings really is my typing, I won spelling bees as a kid.)
In the past I have employed 2 methods. The first, more official one is call ahead, get an appointment with hopefully the legislator, but often it is the Chief of Staff, Legislative aide or the Press person. This works when they are friendly, agree with you and want very much for the legislation to pass. My other is the walk in and see what happens....and that's what I did Wednesday, not because Dorgan wouldn't welcome help on this bill because there had been no time to make an appointment.
As the House engaged in a bit of theatrics designed to show the Obama administration it was serious about TARP reform, the Senate now seems to be reconsidering its carte blanche release of the second $350 billion. But the Frank TARP reform bill addresses substantially more issues of concern to TARP critics than does the Dorgan legislation (still in committee with no cosponsors).
Perhaps most importantly, the Frank bill (H.R.384) prevents any funds from being made available unless between $40 billion and $100 billion are committed to a foreclosure prevention plan. The legislation calls for creation of FDIC's popular and oft-cited loss-sharing foreclosure mitigation program that would prevent an estimated 1.5 million foreclosures. Problems exist with the effort, as noted below, but the truth remains that 0$ of the first $350 billion were spent on foreclosure mitigation. The Dorgan bill (S.195) omits all foreclosure provisions. Is this any way to ensure that a foreclosure mitigation plan will actually be administered?
Though the conditions included in each bill for receiving TARP funds - agreements laying out how the funds will be used - are similar, Frank's provisions are stronger. Frank's bill prevents the use of TARP funds for M&As; without certification that the action will reduce taxpayer risk or could have occurred without taxpayer money. Frank's legislation requires reports on lending increases attributable to TARP where the Dorgan bill requires only "a detailed monthly report about how emergency economic assistance...is being used..." This Dorgan provision leaves "the intended objectives and goals of [emergency economic] assistance" undefined, while the Frank legislation requires Treasury to establish "benchmarks" in its agreements with firms receiving TARP assistance.
About an hour ago I had a chance to speak with Senator Sherrod Brown of Ohio, who sits in the Banking committee. I asked Senator Brown that, in light of HR 384 ready to pass the House, would he help push Senator Dorgan's S 195, which has been referred to the banking committee and which places similar oversight and transparency requirements on the Wall Street bailout money. His response was both clear and positive: yes, he would try to push S 195 out of committee, and that "we" (I assume he meant himself and other banking committee Senators) would speak to, and work with, Chairman Dodd in an attempt order to make it happen.
This is news gives real hope that additional legal restrictions will be placed on the second $350 billion in TARP funds, and that the House's effort to pass HR 384 will not be in vain. I will try to follow-up with Senator Brown's office on this matter later in the week, checking in and progress and looking for ways that we can assist in his efforts.
Further, I also was able to speak to Senator Byron Dorgan. I told him that the Open Left community was ready to help pass S 195, and that we appreciated his efforts in introducing the bill. He thanked us for our support. Thank you, Senators Dorgan and Brown.
by Zach Carter, Media Consortium MediaWire Blogger
"I'm not talking about a budget deficit. I'm not talking about a trade deficit. I'm not talking about a deficit of good ideas or new plans. I'm talking about a moral deficit . . . . We have a deficit when CEOs are making more in ten minutes than some workers make in ten months; when families lose their homes so that lenders make a profit; when mothers can't afford a doctor when their children get sick."
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