Yesterday I wrote a post on the steadily increasing physical and rhetorical violence happening on the right wing of the political spectrum. It is a sad and scary story, one that conservatives try to brush away by saying both sides are responsible when almost none of it is coming from the progressive side of the aisle. The ironic thing is that I underestimated the depth of violence and threats, as I have had many examples sent to me since I wrote the piece that I had forgotten or didn't know about it, plus it has since come out that the person who stomped on the MoveOn activist's head in Kentucky turns out to be closely affiliated with the Rand Paul campaign.
Today, though, I want to write about another form of thuggery, because I think this story is the biggest reason people should vote and vote Democratic. More about that in a moment. First, I think it's appropriate to quote Woody Guthrie's classic line:
Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
And as through your life you travel,
Yes, as through your life you roam,
You won't never see an outlaw
Drive a family from their home.
I think the lawlessness reflected in the physical violence on the campaign trail coming from so many on the right, and the blatant disregard for the rule of law by the big banks trying to railroad so many people out of their homes without the proper paper work, are more related than conventional wisdom would suggest. The fact that banks and their "servicers" have apparently committed massive document fraud and have in some cases actually hired thugs to break into people's homes and change their locks during foreclosure proceedings, and the fact that they lied to and bet against their own clients in investment deals is all part of a pattern: people with too much power and an Ayn Randian view of the world. Ayn Rand, the Social Darwinists of the 1880s, the big Wall Street banks, libertarian candidates like Rand Paul and these thugs who work on their campaigns all make the same arguments: power is morality, greed is good, compassion is weakness, buyer beware. While they call for civility, and argue against class warfare and populism, they believe in turning the Golden Rule of the bible on its head and replacing it with another one: he who has the gold, rules. And if the rule of law gets in their way, they just ignore it or use their political power to change the law. If politicians or public opinion create a problem for them, they use their money to dump millions into lobbying to change the law, or dump millions into secretive groups to buy elections.
Violence is just another means to a political end, and so is the lawlessness of falsified affidavits and paperwork to push massive numbers of people from their homes. Here's where my argument about politics comes in, and I know there are some of you who may find it ironic given that the administration (especially some of the folks at Treasury) has been closer to the big banks at times than it should have been. Here's the deal, though: the financial reform bill in the end got stronger as it went through the process rather than weaker only because the Democrats controlled Congress. Alan Grayson and Maria Cantwell and Sherrod Brown and Ted Kaufman were able to get concessions they would have never gotten had they been in the minority. Elizabeth Warren was able to out-negotiate Chris Dodd on the consumer protection agency only because the Democrats were in control- Richard Shelby only would have shut her down.
And speaking of Elizabeth Warren, who according to sources at the White House has done a superb job of quietly putting together the building blocks of that new agency, the Republicans will do everything in their power to make her job tougher if they take control of Congress. They will try to harass her and intimidate her every way they can. Fortunately, no one can intimidate Elizabeth Warren, and she will destroy them in the media when they try to take her on, but her work standing up for homeowners and consumers will be far easier if Wall Street's best friends don't run Congress. The hit jobs on her will keep coming (did you see this ridiculous piece on her aide Raj Date, who folks on Capitol Hill told me was one of the strongest advocates during the financial reform fight for a progressive financial reform bill), but her job is made easier if the Democrats stay in control.
The best argument for the Democrats in these elections is that the sharks are in the water, and the thugs are in the street. Democrats can and do drive us crazy sometimes, but when the Ayn Rand Social Darwinists on Wall Street and the streets of Kentucky argue that the strong should rule over the weak, it is better to strengthen the hand of our advocates like Warren and Grayson and Sherrod (rather than Scott) Brown. There are some who rob you with a gun, and some with a fountain pen- some who kick you in the head and some who throw you out of your home- and it is better to have a sheriff who will be on your side at least some of the time.
We're seeing lots of media stories cropping up these days about how very, very angry Wall Street tycoons are at certain nasty Democrats who have had the temerity, the sheer gall, to stand up to them on certain issues. They are giving a lot less money to Democrats, and a lot more to Republicans- which sounds to me like the best single argument for voting Democratic that I have heard in a while.
My heart bleeds for these poor persecuted bankers and traders. People are speaking poorly of them for trashing the economy and then having to be bailed out when they are used to being worshiped by politicians and journalists, and most hurtful of all, they are not getting every single thing they want out of Congress, regulators, and the White House as they are used to. It's a shock to them.
They are regrouping, though, making sure reporters know that they just won't give as much money to Democrats as they used. And they have seen all the fun the tea partiers and progressives have had running primaries against people, so they are starting to get into the act. Earlier this year, they almost convinced Harold Ford to challenge Kirsten Gillibrand in the Senate race on the incredibly compelling "Let's stop beating up on Wall Street" platform. That didn't work out so well, but they did at least get a woman named Reshma Saujani to challenge Carolyn Maloney in a primary for her House seat. Sanjani has raised at least 800 K from Wall Street traders, using quotes like "We need to extend a hand [to Wall Street] rather than a fist" to proclaim her love for the big bankers.
Maloney has been irritating the hell out of Wall Street types for a while now. Her credit card consumer bill of rights has cost Visa, Mastercard, and the big banks billions of dollars; she played an incredibly important role negotiating a good compromise on the swipe fee issue that will move billions more from bank profits into merchants and small businesspeople's pockets; her overall role on the financial reform bill was incredibly constructive and important.
Us progressives are justifiably angered at how much power Wall Street and other big corporate interests have over our government, but we also sometimes forget the wealth and power of the industries we oppose. It takes real courage for leaders like Carolyn Maloney to take on the titans of Wall St, because they can quickly find a candidate who is happy to be in their pocket and can quickly raise them a boatload of money to take potshots at them. Here's a shout-out Carolyn Maloney: thanks for having the guts to be on the side of us regular folks.
America's founding fathers got some things really wrong (that slavery thing, for example), but they understood one thing really well: the kind of representative democracy society they were trying to build would never work unless power was widely distributed among many different actors in society. This fundamental idea was at the heart of Tom Paine's Common Sense, Thomas Jefferson's Declaration of Independence, the checks and balances devised in the Constitutional Convention, and the foundational arguments by Madison, Jay, Hamilton in the Federalist Papers. These pluralist theories about democratic governance have been proven right over the course of our history. When the slave-holding elite became too dominant a power in the mid-1800s, our country was torn apart in civil war. When the robber barons got too powerful in the late 1800s, our government became deeply corrupted. When the financial elites on Wall Street got too much economic and political power, the Great Depression of the 1930s and the Great Recession of today resulted. When any small group of corporations get big enough to sweep away serious competition they inevitably get big enough to control many politicians and regulators as well. What happens after that are market distortions and insider deals that make those companies ever more powerful. Once they have enough market and political power, they get even greedier, arrogant and big enough that when they make speculative mistakes, they can hurt the entire economy. And with regulators and politicians and looking the other way because of their political influence, the worst case scenario happens- and if the cycle is not stopped, it happens again.
This pattern follows like night follows day. This is why I have been saying to people for the last year that the number one goal of financial reform should be to lessen the power of the big banks- not to punish them, but to make it possible for our economy and democracy to effectively function again. By this standard, the bills passed by the House and Senate still far short. A NYTimes article today sums up the dynamic:
The financial reform legislation making its way through Congress has Wall Street executives privately relieved that the bill does not do more to fundamentally change how the industry does business. Despite the outcry from lobbyists and warnings from conservative Republicans that the legislation will choke economic growth, bankers and many analysts think that the bill approved by the Senate last week will reduce Wall Street's profits but leave its size and power largely intact.
Don't get me wrong: the best provisions in the House and the best provisions in the Senate are steps forward. Solid progress will be made in several key areas including consumer protection, opening up the Fed for an audit, and derivatives reform. There are also some terrific surprises that got added to the bill during the floor debate, like the Durbin amendment regulating credit card swipe fees, am amendment that will help retail businesses and consumers alike. Like Ted Kaufman, Sherrod Brown and other progressives, I support passing this bill even though I think it falls short in critical areas. But let's not make any mistake here: let's applaud the progress, but be very clear-eyed that this bill doesn't come close to solving the problem. The only way to stop future economic meltdowns and restore a healthy balance to our economy and our democracy is to break up these massive banking conglomerates and keep the speculators away from the traditional bankers.
The reason that Lincoln, Teddy Roosevelt, and FDR go down in history as our country's greatest Presidents is that they understood the crisis that too much power in too few hands had caused, and moved boldly to take the powerful on. We need that kind of leadership today.
Simon Johnson and I were talking this morning about his appearance on Rachel Maddow's show last night (I wrote about here this morning), and about the sleazeball Wall Street front group that funded this ad targeting Harry Reid, Claire McCaskill, Mark Warner and Jim Webb. That conversation led to an idea, and then I got the good folks at Americans United for Change involved: let's do a video calling these fraudulent bankers out. Simon volunteered that he was doing a big speech at Harvard this afternoon, and if AUFC got the ad done in time, he would show it as part of his presentation. We got it done in time, Simon used it in his speech, and I think it came out pretty good. Check it out:
The stakes in the war over financial reform are deadly serious, but I also have to admit it is fun to watch. It has dawned on politicians of both parties that voters' anger at Wall Street is not fading anytime soon, and that the usual insider establishment political tactics aren't working exactly the way they usually do. I have heard a peep lately whining about class warfare because, well, everyone is doing it whether they mean it or not. Republicans and certain Democrats who have taken a lot of money from Wall Street are trying to sound populist, but they are getting nervous that they may have to face some tough decisions on votes around certain amendments. It happened in the House when Alan Grayson forced a vote on opening up the Federal Reserve to an audit, and the banking lobbyists that control the Federal Reserve weren't able to defeat the amendment in a public vote on the floor, and it may well happen again in the Senate on some amendments.
The Republicans have put themselves in a tricky situation by using the Frank Luntz talking points about how the bill encourages more Too Big To Fail bailouts. In the short run, it's a good line, but now when they have to vote on specific amendments being offered to break up the big banks and bring them down to size, thus actually doing something real about the Too Big To Fail issue, they have put themselves in a very bad place. One amendment that will make them squirm for sure is the one just introduced by Sherrod Brown and Ted Kaufman. They call it the Safe Banking Act of 2010. It puts hard leverage and size caps financial institutions, limiting total assets to 3% of GDP for any financial company, and only 2% for banks. Given that the six biggest banks have holdings equal to over 60% of GDP, this bill would force the mega-banks to break themselves up. The bill also puts a hard cap of 6% on banks' ability to leverage loans, making the ratio about 16-1 rather than the 50-1 or worse leveraging going on in recent years.
In the meantime, the battle on the issue is being joined off the senate floor by both progressive reformers and fake grassroots groups on the side of the bank lobby. The Roosevelt Institute put together a letter signed by 36 economists and businesspeople calling for a much stronger bill, while the bankers are funding phony front groups with an anti-bank progressive populist message opposing any bill (their cynicism would be stunning if they weren't, well, the Wall Street bankers who destroyed the economy and then screamed for a bailout). Check out this unbelievably cheeky ad the bank front groups are running, and check out this superb segment on Rachel Maddow's show last night where she exposed their game and nailed the hypocrites to the wall. We are going to see a lot more of this faux populism paid for by bailed out bankers before the year is through, and progressives have to be quick to expose it. Thanks to Rachel for calling out their lies last night.
Goldman Sachs, JP Morgan Chase, and these other mega-banks committed fraud in banking, and now they are committing fraud in messaging. The banking wars are in full scale battle mode. If we can continue to expose their fraud, we can win this battle. Here's how I look at the House and Senate bills: they both have nuggets of gold, they both have some weak links, they both have some solid reasonable language, and neither goes far enough. But the big banks are overplaying a weak hand by this kind of blatant lying ad campaign, and we have a chance to isolate them even further in this debate. The potential for making the final bill better if the big banks get ostracized they way they deserve is huge. Forcing a vote on the Brown/Kaufman amendment is incredibly important. We might just win at least some of these battles in spite of the tens of millions being spent by the big boys on Wall Street.
