Wall Street Gods

[Political Waves]

There are some things that define America's soul. One is the notion, so
eloquently expressed by Abraham Lincoln, that this Republic is "of, for and
by the people." During the Bush years, we knew government was at odds with
our individual, trickled-down good; now, we find that so much has transpired
in favor of AmeriCo, there isn't even a pretense of following Lincoln's
lead. The mythology favored by the conservatives is that private industry
drives down costs and must be left alone to do so: the Ayn Rand-ian argument
that Alan Greenspan was shocked -- SHOCKED -- to discover rested in the
hands of those refusing to self-regulate. This would be a good time to plug
in an old favorite YouTube from earlier in this century: "Supply Side Jesus",
narrated by now-Senator, Al Franken.

As the administration attempts to moderate the egregious activity of the
banksters and insurance industry, we've come nose to nose with the power of
corruption and the stonewall of those who think lack of regulation is the
American model. For instance, Obama recently proposed regulations suggested
by Paul Volcker. As Huffy reported, Volcker is no radical. He's a former Fed
chairman from years back, but Volcker knows a scam when he sees one. The
Volcker suggestions, along with an independent Consumer Protection Agency,
are part of the greater reforms that are ruminating in Congress. Retiring
Senator Chris Dodd is attempting to thrash out a deal in committee, but he's
meeting ... and evidently capitulating to ... the Party of No.

A new piece of this was announced today. The "Too Big to Fail" banks with
more than $100 billion of assets will be overseen by the US Federal Reserve.
This is touted as a victory for the "central bank" -- that's the Fed, the
private bank that has almighty power over the Almighty Buck in this nation.
One more time, finance will regulate itself. Insiders will continue to
promote supply-siders.

The focus of this post has to do with one of the remaining deals on the
table, still undecided. The Consumer Financial Protection Agency needs to be
in the hands of an independent regulator if the peoples needs are to be
served. My hero, Elizabeth Warren, makes it clear that a bad bill is NOT
better than no bill, at this point. Paul Krugman seconds the motion. Even
rich guy and folk hero Warren Buffett decries the lack of oversight and
regulation that is crippling recovery.

Warren and Dodd are on the same page regarding the necessities: a
presidentially-appointed director, confirmed by the Senate; a separate
funding source; rule-making and enforcement authority. The problem is the
umbrella under which this Agency looks destined to reside. The bipartisan
agreement that's being negotiated will install the CFPA under the Fed's
wing, where it will be seriously compromised.

Warren declares this as unacceptable, and when straight-talking Rep. Barney
Frank heard the rumors, he had this to say: "I thought that was a joke. Even
by Senate standards, that's mind-boggling." Then he added a critique that
should make every one's hair stand on end: "The Federal Reserve is
undemocratic, it's non-transparent, it's elitist, it's arrogant."

The Federal Reserve itself is coming under further scrutiny -- decades too
late, in my opinion -- and that should be a priority for reporters
everywhere; but it isn't. One of the few economists I trust, Nobel laureate
Joseph Stiglitz, argues that the Fed has become systemically corrupt. Warren
knows that, even Dodd knows that. But unless WE know it -- and ask the
appropriate questions, nail the politicians that keep the lid on all these
bubbling pots -- nothing will change. This is Wall Street double-speak that
Main Street needs to develop an ear for ... or pay a price even higher than
this current challenge that's giving everyone fits.

You'll find links and two reads, below; the Stiglitz article last. All those
who wail that they don't trust government might be better served by
understanding that the Fed has power that reaches into the lives of every
citizen, rich and poor, bureaucrat and blue-collar worker, alike ... and
nobody but the Gods of Wall Street watch over them.

Jude



Fight For The CFPA Is 'A Dispute Between Families And Banks,' Says
Elizabeth Warren
HuffPo
03- 3-10
http://www.huffingtonpost.com/2010/03/03/fight-for-the-cfpa-is-a-d_n_483707.html

While members of the Senate Banking Committee debate proposals to fix the
nation's broken financial system and ineffective approach to protecting
consumers, Elizabeth Warren has one message: Pass a strong bill or nothing
at all.

"My first choice is a strong consumer agency," the Harvard Law professor and
federal bailout watchdog said in an interview with the Huffington Post. "My
second choice is no agency at all and plenty of blood and teeth left on the
floor."

There's been a steady leak of Senate proposals to fix the dysfunctional way
federal regulators protect consumers from abusive lenders. One was an
independent unit housed within the Treasury Department; another was a new
entity, housed in the Federal Reserve, with little independence or power.

The Senate shouldn't waste its time, asserts Warren, explaining that current
proposals fail to address some of her key priorities such as arming the
proposed agency with independent rule-making authority, without interference
by bank regulators.

"My 99th choice is some mouthful of mush that doesn't get the job done,"
Warren said.

The Fed proposal, attributed to Sen. Bob Corker (R-Tenn.), was leaked
earlier this week. Corker is working with Banking Committee Chairman
Christopher Dodd (D-Conn.) on Dodd's update to his November bill to reform
the nation's financial system.

Warren spent Tuesday on the phone with reform groups, members of Congress
and administration officials, rallying support for a new independent agency
tasked solely with protecting consumers. Many of them were skeptical that
Corker is willing to agree to let the entity have real independence, an aide
to Warren said.

But "there's a lot of enthusiasm for a strong bill," Warren said. "The
senators really get the main point -- either vote on something that's strong
or don't do it."

The dispute, after all, is a simple one, Warren said: "It's between families
and banks."

"The lobbyists would like nothing better than for the story to be the
[proposed] agency has died and everyone has given up," Warren said. "The
lobbyists' closest friends in the Senate would like nothing better than
passing an agency that has a good name but no real impact so they have
something good to say to the voters -- and something even better to say to
the lobbyists."

Warren said the new agency should have four simple attributes:

- A chief appointed by the president, confirmed by the Senate;

- Independent budget authority, so it won't be subject to the whims of
Congress or an anti-consumer administration;

- Independent rule-making authority, without interference by bank regulators
or others who may focus on bank profitability before focusing on consumers;

- And independent enforcement powers, so the agency's investigators can go
after abusive lenders.

"Those are the basic elements of an independent agency," Warren said. "It's
not as if there's some fifth thing that was left off that list -- that is
the list."

The House passed a bill in December calling for the creation of such an
agency.

"It's a muscular agency, and that's what really matters," Warren said. House
Financial Services Committee Chairman Barney Frank (D-Mass.) led the fight.

"It's not perfect -- there's no excuse for excluding used car dealers -- but
it's strong," she said. "The agency that passed the House will get the job
done."

Dodd, who has been under fire for the level of his commitment to a muscular
new agency, reiterated his support during a Tuesday evening interview on
"Hardball with Chris Matthews" on MSNBC.

"What`s really important are four points that I have been insisting upon
from the very beginning," Dodd said according to a transcript of his
remarks. "One, I want a presidentially- appointed director of this
operation. I want it confirmed by the Senate. I want a separate funding
source. And I want it to have rule-making authority and enforcement
authority.

"I'm going to insist upon those four points, wherever this is located," he
said.

Warren agreed with those points.

"I read his Hardball transcript and I thought: I could entirely envision
Elizabeth Warren sitting there saying the same thing," Warren said.

However, much of the reporting lately has focused on where the proposed
agency will be housed -- its "address," as White House spokesman Robert
Gibbs put it this week. Warren said the focus is misplaced.

"It's the wrong place to look," Warren said. "The question is functional
independence. Where the agency sits on an organization chart is less
important than its functional independence."

"The key are the elements Sen. Dodd put his thumb on," Warren said.

Warren hasn't met with Dodd since last July, four months before Dodd
publicly released the first version of his financial reform bill.

She does, however, regularly check in with other members of Dodd's
committee, including Democratic Senators Jack Reed of Rhode Island and Jeff
Merkley of Oregon. Warren spoke with Merkley on Tuesday regarding the Fed
proposal, which severely limits the kind of power Warren wants the new
agency to have.

After all, Warren said, until a new agency is created, banks are going to
continue bullying families into poor loans, mortgages and credit cards.

As Warren put it:

"No cop on the beat works for the biggest bullies in town." ++

Krugman: No Bill Is Better Than a Weak Bill
James Kwak, HuffPo
March 1, 2010
http://www.huffingtonpost.com/james-kwak/krugman-no-bill-is-better_b_480764.html

 

Frank: 'If They Want To Kill Consumer Protection, Let There Be 41 Jim
Bunnings Over There'
Ryan Grim, HuffPo
03- 3-10
http://www.huffingtonpost.com/2010/03/03/frank-if-they-want-to-kil_n_484040.html

Who’s Protecting the People from Banks?
Laura Flanders, Common Dreams
Wednesday, March 3, 2010 by Grit TV
http://www.commondreams.org/view/2010/03/03-9

Even Watered-Down CFPA Doesn't Satisfy Key Republican
HuffPo
03-2-10
http://www.huffingtonpost.com/2010/03/02/even-watered-down-cfpa-do_n_482608.html

 

White House Sends Volcker Rule To Congress
HuffPo
03- 3-10
http://www.huffingtonpost.com/2010/03/03/white-house-sends-volcker_n_485042.html

 

Stiglitz, Nobel Prize-Winning Economist, Says Federal Reserve System 'Corrupt'
Shahien Nasiripour, HuffPo
03- 3-10
http://www.huffingtonpost.com/2010/03/03/stiglitz-nobel-prize-winn_n_484943.html

One of the world's leading economists said Wednesday the very structure of
the Federal Reserve system is so fraught with conflicts to the point that
it's "corrupt."

Nobel laureate economist Joseph Stiglitz, a former senior vice president and
chief economist at the World Bank, said that if countries applying for World
Bank aid during his time would have presented a financial regulatory system
similar to that of America's Federal Reserve, in which regional Feds are
partly governed by the very banks they're supposed to police, it would have
raised alarms.

"If we had seen a governance structure that corresponds to our Federal
Reserve system, we would have been yelling and screaming and saying that
country does not deserve any assistance. This is a corrupt governing
structure," Stiglitz said during a conference on financial reform in New
York. "It's time for us to reflect on our own structure today, and to say
there are parts that can be improved."

Stiglitz made the remarks at a conference held by the Roosevelt Institute.
Featuring speakers like Stiglitz, Harvard Law professor and federal bailout
watchdog Elizabeth Warren, and legendary investor George Soros, the event
produced bold ideas on reforming the nation's financial system on topics
like consumer protection, the credit rating agencies, the securitization
market, and ending Too Big To Fail.

After the conference, Stiglitz clarified that his remarks on the Fed were
"maybe a little hyperbole," but stressed that if another country had
presented a plan to reform its financial system, and included a regulatory
regime that copied the makeup of the Federal Reserve system, "it would have
been a big signal that something is wrong."

To Stiglitz, the core issue is that regional Fed banks, like the New York
Fed, have very clear conflicts of interest -- a result of the banks being
partly governed by a board of directors that include the very banks they're
supposed to be overseeing.

At the World Bank, Stiglitz said, "we looked at regulatory structures, and
we would ask questions about that."

The New York Fed, which was led by current Treasury Secretary Timothy
Geithner at the time leading Wall Street firms like Citigroup, JPMorgan
Chase, AIG, and Goldman Sachs were given hundreds of billions of dollars in
taxpayer bailouts, presently has on its board of directors Jamie Dimon, the
head of JPMorgan Chase. He's been there for three years. He replaced former
Citigroup chairman Sanford "Sandy" Weill.

"So, these are the guys who appointed the guy who bailed them out," Stiglitz
said. "Is that a conflict of interest?" he asked rhetorically.

"They would say, 'no conflict of interest, we were just doing our job,'" he
answered. "But you have to look at the conflicts of interest."

A message left for a New York Fed spokeswoman after regular business hours
was not returned.

"The reason you talk about governance is because in a democracy you want
people to have confidence," Stiglitz said. "This is a structure that will
undermine confidence in a democracy." ++


"I'm asking you to believe. Not just in my ability to bring about real
change in Washington ... I'm asking you to believe in yours."
~ Barack Obama

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