Inching forward

[Political Waves]

The financial bill, today, but first -- in memoriam:

 

I can't help but wonder how many obit's have been rewritten and updated, waiting in the can, for Bobby Byrd's passing. The longest-serving member of Congress has passed at 92, the last of the great Senators from a century gone by in which we actually listened to one another. Byrd was a bona fide orator in a style that goes back over the centuries to Cicero chiding Rome, of which he was a scholar, warning us that we were closing in on their fate. Even as he needed to be propped up, his voice shaking and weak, he still managed to put thunder into the debate and demand that the nation find her moral center; he found his own in a come-to-Jesus moment when he quit the Klan and became bigger than his tribal roots. He more than redeemed himself over the years.

His plaintive wail when Bobby Kennedy died seemed to me a precursor to his own -- and I'm not surprised he quit us at this moment. But he had fire in his belly until the end, and he was dependable in his embrace of the Constitution over the politics, even as he saw to it that his state got a wide cut of the pie, holding true to his 'duty,' as he saw it, to bring pork into his poverty-stricken state. He was one of a handful, along with Kennedy, who refused to vote for the Iraq war.

I'll miss him. We ALL will, we just don't know it yet. And add that his passing puts a hole in the numbers for the reform bill, which will likely delay the process; unpredictable Massachusetts Senator Brown is hedging, as well, despite his involvement in its creation. Feingold is refusing to vote on principal ... I'm not sure what Dennis thinks.

Still, two full years after the economy tanked, we've finally wrestled some kind of financial reform from the grasp of the congressional beast but if it succeeds, it will be by exquisitely slim margins. Again, we misunderstand the role Congress plays in our lives and fortunes, much as we misidentify the roles of Executive and Judiciary. "What will we do next" always shakes out to "What will we spend next," and, like it or not, they are almost entirely about redistribution of national wealth. Unhappily, as the G20 is making clear, we are following a model that will not serve our long-term interest.

Still, it's fair to say that the economic reforms agreed upon are a dramatic turn from the recent past -- it's also fair to say they're stupefying weak considering all the rage, intent and time invested. But wrestling control from our corporate masters is no mean fete, so I will take a moments joy in this pin prick to their power and determine to work harder to come after them with a sledge hammer! Again -- this is a toe-hold, breaking the steady shift to the right that has hijacked our nation; it remains to be seen if we can scale a mountain of corruption with this first step.

 

Even if Obama had FDR's inclination to go radical, he doesn't have FDR's noisy, insistent progressive movement behind him nor a Congress that supports him. If we lose too many seats in November ... due to Lefty lethargy ... we won't make any progress to refine the legislative toe-holds we've already established. In fact, they'll likely be turned back and the Congressional season locked up in investigations, challenges and -- I'm betting -- impeachment.

 

Here's an early bit of progressive response to what's call FinRef, from Huffy's Ryan Grim:

Among others, the group included Elizabeth Warren, a Harvard professor and head of the congressional panel overseeing the bailout; Heather Booth, the director of Americans for Financial Reform; Richard Trumka, the president of the AFL-CIO who has made confronting Wall Street a central part of his union's mission; and Kathleen Day, a former Washington Post business reporter now with the Center for Responsible Lending.

All of them are out with statements celebrating the final bill, though with some reservations. The AFL-CIO put its statement out under the name of the director of the office of investment, Daniel Pedrotty. "This is a David and Goliath victory of working people against the big banks and Wall Street," he said. "While it's not perfect, this legislation is a giant step to changing the rules of the game that caused the economic crisis."

Elizabeth Warren's statement comes as she is routinely floated as the best candidate to head the Consumer Financial Protection Bureau. "It has been more than 20 months since the largest financial crisis since the Great Depression, and we are still living under the same set of rules we had in place before the meltdown. Thanks to the leadership of President Obama, Chairman Frank, and Chairman Dodd, that's about to change. Members of the House-Senate conference committee and their staffs worked through the night to produce the strongest set of Wall Street reforms in three generations. They created a strong, independent consumer agency that will have the tools to rein in industry tricks and traps and to cut out the fine print. For the first time, there will be a financial regulator in Washington watching out for families instead of banks," said Warren.

Warren didn't mention in her statement that the CFPB won't have the power to regulate lending by auto dealers, an often predatory practice involving the second-largest purchase a consumer typically makes. The Pentagon battled the auto dealers over the carve-out, arguing that soldiers are being ripped off so routinely that it is damaging military readiness and national security.

The auto dealer lobby is chest thumping. Ed Tonkin, chairman of the National Automobile Dealers Association, said that the carve-out was "a testament to the hard work of all of the auto dealers and dealership employees around the country who made sure that the merits of the issue were heard. Their grassroots efforts truly made today's victory possible."

In a business climate where we expect to be scammed by the used-car-salesmen mentality running every large corporation, the actual used car salesmen get the perk that matters most -- license to cheat the consumer, even those risking life and well being in America's name. And there it is, there.

Add that there is as litmus test for anything that occurs on a national level and it's called the Dow. In the last 18 months, we have instituted liberal reforms on runaway corporations that illustrate our level of servitude to them and our helplessness to control them. By the time the bills make it to the desk of the Prez, they have been watered down to their maximum. In each instance, the Dow reflected the result. When health care passed, insurance companies celebrated and their stocks rose. As the financial reform bill heads out of committee, Wall Street popped their Champagne corks and the Dow rose. When BP was strong-armed into placing 20 billion in escrow to compensate its victims, their stock steadied and exec's shook hands in the boardroom. You and I are not a stockholder in the American dream -- we're an asset to be manipulated. Until we get on to that grand scam and throw our weight behind a progressive movement that would make a real difference, we can't win this argument with the corporate overlords.

As well, the Supreme Court is doing a lot of 'legislating from the bench' in ruling gun control in this nation moot with the Chicago overturn; Jeff Toobin, on CNN, mentioned that when Reagan came to power, the idea of unfettered gun ownership of this ilk was considered abject craziness. Obviously, this is a GIGANTIC win for the conservatives and 2nd Amendment fanatics. Earlier, a ruling watering down anti-fraud law made the [Enron] Jeff Skilling conviction a possible overturn. In other SCOTUS news, Ruth Bader-Ginsburg's husband passed away and and John Paul Stevens said his goodbyes, as Kagen stepped up for Congressional crossfire yesterday.

We're in the thick of it, my dears -- but a state of flux is a very fluid, changeable thing, so keep the faith and do the work! Our collective voice is still the most important tool in the shed. If necessity is the mother of invention, we'd better get our Rube Goldberg hat jammed down over our ears pretty soon: the fearful are contracting, doubling down on austerity and punitive possibilities and COMMON SENSE continues to be a rare bird, indeed. That's why I'm a fan of RJ Eskow [below] -- he's as angry with all of this as anyone else, but he seeks a way forward in an adult manner ... and this is NO time for tantrum and kids stuff.

Lots of wrinkles to discover, below, with links and a few excellent reads, including Naomi Klein of Shock Doctrine. And let's start with a little reality check on this deficit business, that I spoke of in the last weekly -- here's yer chart for the day:

Reminder, The Deficit You're Freaking Out About Is Bush's Fault

Jude



Bank stocks soar on financial regulation agreement
TIM PARADIS (AP) 
http://www.google.com/hostednews/ap/article/ALeqM5jmT59dgLTTziX4p9X9MRBRpWZGdQD9GII7704


Wall Street Hiring Jumps Most Since 2008 As Guarantees Return
Bloomberg
6/27/10
http://www.bloomberg.com/news/2010-06-27/wall-street-hiring-increases-most-since-2008-as-guaranteed-bonuses-return.html


The Dodd-Frank bank reform bill: A deeply flawed success
In a world where incremental progress is all but impossible to achieve, this is what a triumph looks like
Andrew Leonard, Salon
http://www.salon.com/news/bank_reform/index.html?story=/tech/htww/2010/06/25/the_dodd_frank_bank_reform_bill


Chamber's Head Explodes
digby, Hullabaloo
Friday, June 25, 2010
http://digbysblog.blogspot.com/2010/06/chambers-head-explodes.html

This interview with the head of the Chamber of Commerce on the Fin Reg bill is the most positive take on the bill I've seen. In other words, he really, really hates it --- says it's going to cost jobs, jobs, jobs.

[open link for video]

(Interestingly, he does break with the Republicans by saying that they need to extend unemployment insurance. He also says that the states should starve though, so he's still an idiot.) ++


from The Progress Report
http://pr.thinkprogress.org/2010/06/pr20100628/index.html

JUSTICE -- FINANCIAL REGULATION BILL CONTAINS MEASURE TO ADDRESS 'CONFLICT
MINERALS': Congressional negotiators reached a deal on Friday to reconcile the House and Senate versions of financial regulatory reform. The bill contains an obscure provision "that requires any publicly traded company that uses certain minerals to file reports annually with the Securities and Exchange Commission certifying whether the minerals originated in Congo or neighboring countries." Many of the minerals used in electronic devices like cell phones and computers are mined in the Congo, a country "plagued by regional conflict and a deadly scramble for its vast natural resources." The mineral sales finance "multiple armed groups, many of whom use mass rape as a deliberate strategy to intimidate and control local populations." The provision in the financial regulation bill is designed to, according to its sponsor, Sen. Sam Brownback (R-KS), "brings accountability and transparency to the supply chain of minerals used in the manufacturing of many electronic devices." The Center for American Progress' Enough Project -- an organization "helping to build a permanent constituency to prevent genocide and crimes against humanity" -- advocated for the inclusion of this provision. Though industry lobbyists complained about the cost, Enough's Jenny Russell pointed out that "tech companies have admitted it would cost one penny per product to ensure a conflict-free supply chain." Reacting to the provision's passage, Enough's John Prendergast said, "A year ago most members of Congress hadn't even heard of conflict minerals." Now, "in the middle of a turbulent legislative calendar, activists all over the country were heard loudly and clearly." Private institutions are also joining the effort. Stanford University's trustees recently considered a resolution "to create a new proxy voting guideline" that would "support shareholders' efforts to make companies trace the supply chain of the minerals used in their products." If the guideline is adopted, "it would be the first university in the country to take such action on the issue."  ++


Financial Reform: The Road Behind, the Way Forward
Richard (RJ) Eskow, HuffPo
June 25, 2010
http://www.huffingtonpost.com/rj-eskow/financial-reform-the-road_b_626006.html?ir=Business

The House and Senate have reached an agreement and we have a financial reform bill. That means we'll see significant improvements over the status quo as it existed yesterday. It also means we still haven't addressed the gravest risks to the economy. And for those of us who care about this country, it means that we still have work to do. We must be the voices of reason, the ones who praise what's been accomplished but call for even deeper reforms going forward.

This bill has a number of very positive features, and progressive voices helped build the momentum for them: We'll see an audit of the Federal Reserve, which will shine a light on the hidden workings of the crony-ized banking system. A Consumer Protection Bureau will be created to protect people from bank predators. We'll see an end to the cynical speculation in food and fuel prices that have wreaked havoc on household budgets throughout the nation. We'll also have a new provision that gives the SEC authority to ensure that brokers act with "fiduciary responsibility" toward their clients (after a period of study). While this most directly benefits wealthier investors, it will help end abuses like the Goldman Sachs ABACUS program that nearly destabilized the entire economy.

Those who want to fall into cynicism and despair can find material to feed that worldview, if they're so inclined. This legislation will not stop Wall Street speculation in derivatives, and our financial system will still be dominated by a few "too big to fail" banks, which means our economy is still in danger. Auto dealers got their sleazy carve-out from the consumer protection bureau. It was a frustrating spectacle to watch elected officials on the Hill shoot down amendments that would have solved these problems. And cynics might be forgiven for believing that Treasury Undersecretary Neal Wolin's blog post yesterday, where he overpraised the bill's accomplishments and said "we don't have to wait until (the bill's done) to know what reform will look like," was a signal to Hill negotiators that they could gut the Lincoln amendment without White House objection - which they promptly did.

But, to those who would take that route, consider the words of labor leader Joe Hill: Don't mourn, organize. We've learned that elected officials in Washington will respond to eloquent and impassioned voices calling for change, whether those voices are raised on phone calls to representatives, in letters and commentary, or in voting booths in Pennsylvania and Arkansas. But remember that elected leaders are human. If they come to see the progressive movement or any other voting bloc as relentlessly negative, they'll stop listening.

And, for those who celebrate what this bill accomplishes, a Joe Hill variation: Celebrate, then organize. The two activities aren't mutually exclusive. In fact, that should be the preferred approach. Without the principled stand of some Democratic leaders in the White House and on the Hill, coupled with some surprise moves by courageous Republicans, we wouldn't have the reforms we have today. So, by all means, celebrate. Reward our leaders for what they've done right, just before we go about the business - our business, as citizens - of pushing them to do more.

What can we do to frame the argument going forward and build momentum for deeper reform? It seems to me that there are five things that must be done:

1. Create the right context

Are people saying that President Obama is no FDR? Let them know that FDR was no FDR either - at least not at first. Zach Carter is right to point out that it took years for Roosevelt to enact all his banking reforms. In an equally strong historical parallel, a conservative bank-oriented faction persuaded FDR to focus prematurely on the deficit, as Obama is being persuaded now by the "AmericaSpeaks" contingent. It took years of trial and error before FDR came to realize that this concession was undermining the recovery he had put into motion.

2. Criticize - but don't lose perspective

Let people know that the President is right when he says that this is the most significant financial reform since the 1930s. And remind them that it took several years for FDR and Hill leaders to get that right, too. Imagine how different - and how much worse - history might have been if Roosevelt and his allies had gone down to defeat in the polls because nobody bothered to balance their criticisms with recognition of their accomplishments.

FDR became a great leader because he had the capacity and the willingness to learn - from his critics, from events, and even from his own mistakes. That's the standard to which we should hold our leaders.

3. Keep framing the moral argument

Too often we forget that there are basic issues of right and wrong involved here. We're perpetrating an unethical system as long as bankers can gamble with discounted Federal Reserve money or other public subsidies, and as long as they know taxpayers will bail them out whenever they lose. When financiers can make more money speculating than they can serving consumers and smaller businesses, the system isn't working for its intended purpose.

California readers were outraged to read yesterday that welfare recipients can use the debit cards issued by the state at ATMs in casinos, making it possible to receive a public subsidy and immediately gamble with it. Isn't it ironic that more voters don't feel the same level of outrage when bankers do it? Bankers, who hardly need the money, receive far more in public funds for their gambling - and they endanger the entire system when they do it.

Concerned citizens can and must keep making the case for financial reform as a moral issue.

4. Keep pointing out the risks

Those of us who keep warning that we're still at risk must feel sometimes like Kevin McCarthy in Invasion of the Body Snatchers, screaming "they're here! they're here!" as indifferent drivers whiz past in their comfortable cars. Keep those warnings coming anyway. Our system is just as much at risk as it was before this bill was finalized. Millions of people are still victims of the last crisis. There are those who suggest another downturn may be coming soon. Historical trends suggest that crises will keep returning every seven years on average - unless and until we do something to change things. From a risk management point of view, we're flying a plane with our eyes closed and congratulating ourselves that we haven't crashed into
anything ... lately.

There are political risks, too, and we shouldn't hesitate to point those out. If we experience another crisis after this bill passes, voters will be ruthless toward the incumbents who celebrated its passage. Polls show that the public despises big banks, so the concessions we've seen will be a political liability - that is, until tougher reforms are enacted.

5. Look for teachable moments

There will be a temptation to put this issue behind us now that the bill has passed. But history has a way of offering teachable moments - another economic downturn, a "flash crash" like the one Wall Street experienced a few weeks ago, or the conviction of a malefactor like Bernie Madoff. Negative events are tragic, but the hard truth is that they will keep coming until we make systemic changes . They are "teachable moments" for voters and elected officials alike, and should be opportunities to speak out. The Federal Reserve audit will provide additional opportunities to inform the public.

Activists and concerned citizens should be pushing for indictments of corrupt bankers, too. There are a number of signs of malfeasance, with so many potential crime scenes to investigate that half the buildings on Wall Street should be marked with yellow police tape. A perp walk is a very teachable moment.
___________________________

So, if someone were to ask me what to do now, I'd say keep those letters, emails, and calls coming - to your Representatives, to the White House, to newspapers and talk shows. Keep talking to people around you. Be unstinting in your praise for what's been accomplished and unhesitating in your demands for demand more. Their job is to respond to pressure. Our job is to provide pressure for the right things.

Financial reform has been passed. Long live the movement to demand financial reform. Let's pause for a moment of celebration ... and then get back to work. ++


Sticking the Public With the Bill for the Bankers' Crisis
Naomi Klein, HuffPo
June 28, 2010
http://www.huffingtonpost.com/naomi-klein/sticking-the-public-with_b_627805.html?ir=Daily%2520Brief

My city feels like a crime scene, and the criminals are all melting into the night, fleeing the scene. No, I'm not talking about the kids in black who smashed windows and burned cop cars on Saturday.

I'm talking about the heads of state who, on Sunday night, smashed social safety nets and burned good jobs in the middle of a recession. Faced with the effects of a crisis created by the world's wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill.

How else can we interpret the G20's final communique, which includes not even a measly tax on banks or financial transactions, yet instructs governments to slash their deficits in half by 2013. This is a huge and shocking cut, and we should be very clear who will pay the price: students who will see their public educations further deteriorate as their fees go up; pensioners who will lose hard earned benefits; public sector workers whose jobs will be eliminated. And the list goes on. These types of cuts have already begun in many G20 countries including Canada, and they are about to get a lot worse. For instance, reducing the projected 2010 deficit in the U.S. by half, in the absence of a sizeable tax increase, would mean a whopping $780-billion cut.

They are happening for a simple reason. When the G20 met in London in 2009, at the height of the financial crisis, the leaders failed to band together to regulate the financial sector so that this type of crisis would never happen again. All we got was empty rhetoric, and an agreement to put trillions of dollars in public monies on the table to shore up the banks around the world. Meanwhile, the U.S. government did little to keep people in their homes and jobs, so in addition to hemorrhaging public money to save the banks, the tax base collapsed, creating an entirely predictable debt and deficit crisis.

At this weekend's summit, Prime Minister Stephen Harper convinced his fellow leaders that it simply wouldn't be fair to punish those banks that behaved well and did not create the crisis (despite the fact that Canada's highly protected banks are consistently profitable and could easily absorb a tax). Yet, somehow, these leaders had no such concerns about fairness when they decided to punish blameless individuals for a crisis created by derivative traders and absentee regulators.

Last week, the Globe and Mail ran a fascinating article about the origins of the G20. It turns out the entire concept was conceived in a meeting back in 1999 between then Finance Minister Paul Martin and his U.S. counterpart Lawrence Summers (itself interesting since Summers was, at that time playing a central role in creating the conditions for this financial crisis, allowing a wave of bank consolidation and refusing to regulate derivatives).

The two men wanted to expand the G7, but only to countries they considered strategic and safe. They needed to make a list but apparently they didn't have paper handy. So, according to reporters John Ibbitson and Tara Perkins, "the two men grabbed a brown manila envelope, put it on the table between them, and began sketching the framework of a new world order." Thus was born the G20.

The story is a good reminder that history is shaped by human decisions, not natural laws. Summers and Martin changed the world with the decisions they scrawled on the back on that envelope. But there is nothing to say that citizens of G20 countries need to take orders from this handpicked club.

Already, workers, pensioners and students have taken to the streets against austerity measures in Italy, Germany, France, Spain and Greece, often marching under the slogan "We won't pay for your crisis." And they have plenty of suggestions for how to raise revenues to meet their respective budget shortfalls.

Many are calling for a financial transaction tax that would slow down hot money and raise new money for social programs and climate change. Others are calling for steep taxes on polluters that would underwrite the cost of dealing with the effects of climate change and moving away from fossil fuels. And ending losing wars is always a good cost saver.

The G20 is an ad-hoc institution with none of the legitimacy of the United Nations. Since it just tried to stick us with a huge bill for a crisis most of us had no hand in creating, I say we take a cue from Martin and Summers. Flip it over, and write on the back of the envelope: Return to sender. ++

 

 

"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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