Archive for June 2009
Weekly Audit: Radical Inequality Fueled the Wall Street Meltdown
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Now that Treasury Secretary Timothy Geithner isn’t going to impose pay restrictions on bailed out Wall Street executives, it’s critical to remember that severe economic inequality was a major factor in the financial meltdown. Our tax code funnels money into the hands of our wealthiest citizens, which means that our financial system protects the interests of the affluent—not the the average citizen. The broad divergence between our core democratic values and the existing U.S. economic structure must become part of the public debate over financial reform.
As Les Leopold notes in a roundtable discussion with GritTV’s Laura Flanders, much of the Wall Street meltdown can be traced to a steady redistribution of wealth to the wealthy dating back to the Reagan years. Poor people, after all, do not have money to invest in the Wall Street speculation machine. By 2007, the financial world accounted for over 40% of U.S. corporate profits, an astounding percentage for a business intended to facilitate the operation of other industries. According to Leopold, we need to find constructive ways to shrink the financial sector, like taxing Wall Street transactions to move money into the real economy or imposing meaningful pay caps on financial jobs.
Pay for citizens who live outside the executive class has been steadily falling for decades. As Chuck Collins and Sam Pizzigati note for AlterNet, weekly wages for average Americans are now below 1970s levels after adjusting for inflation, while CEO payouts have exploded. So far, President Barack Obama has been hesitant to fight economic inequality at either end of the spectrum. Remember the promises he made to curb extravagant CEO pay on Wall Street back when the AIG bonuses were generating outrage back in February? Treasury Secretary Timothy Geithner has already made them irrelevant, eliminating a $500,000/year salary cap.
While we’ve heard quite a bit about how Wall Street excess wreaked havoc for homeowners, relatively little attention has been paid to the plight of renters, who often face personal catastrophe when their landlord is foreclosed on. Under a new law passed by Congress, when a bank or new owner takes control over a foreclosed property, they have to give renters living in the home at least 90 days notice before evicting them. But the law does nothing to address other injustices renters face. If your landlord is foreclosed on, for instance, you can forget about getting your security deposit back, even if the house is in top condition.
Banks also are not required to hire property managers to maintain homes they take over, which means they often let houses deteriorate despite objections from tenants. Writing for The Colorado Independent, Martha White explains that these problems are easy to correct, if Congress actually wanted to: Require landlords to put security deposits in a special account that cannot be raided by creditors in bankruptcy and force banks to hire managers to maintain the properties they foreclose on. The latter policy would also discourage banks from foreclosing in the first place by making ownership of the property more expensive for the bank.
Obama recognizes the need for change, which is why he’s proposed a major overhaul of the government’s Wall Street oversight. But in many ways, his plan identifies the wrong problems and offers the wrong solutions. The Real News features a great video spot with commentary by University of Massachusetts at Amherst Economist Robert Pollin. One of the key reforms involves granting the Federal Reserve broad powers to oversee systemic risk in the economy, but the Fed already has similar authority.
“The problem is, the Fed has already had an enormous amount of regulatory power, they just don’t exercise that power,” Pollin says.
Instead of granting the Fed more power, we should be finding ways to hold its leaders accountable. By subjecting top officials at the Fed to democratic elections, we could help ensure that the top regulatory body in the U.S. answers to the people it is supposed to be protecting.
Other creative new approaches to combating the economic crisis are featured in the most recent issue of Yes!, which is devoted entirely to economic reforms. From tips on investing locally to overhauling our broken monetary system to empowering workers, the issue emphasizes solutions that rely on democratic structures, rather than the corporate status quo (full disclosure: I’ve got an article in there on community banks).
It’s time to put some political firepower behind those ideas. Ordinary people simply have no serious voice in the policy debate surrounding Wall Street. In The Nation, Christopher Hayes describes the banking lobby’s total domination over financial reform proposals.
“On the other major legislative battles—healthcare, climate change, the Employee Free Choice Act—there is an organized, mobilized permanent infrastructure to push lawmakers in a progressive direction,” Hayes writes. “They may be underdogs, but at least it’s a fight.”
Changing the too-big-to-fail financial sector must become a priority. If we defer to the banking lobby or advisers like Larry Summers, who helped create the crisis by backing wildly deregulatory laws during the Clinton years, we can guess what the end result will look like. If we want our economy to answer to us, we have to do something about it. Income inequality and unaccountable regulators were a major part of the financial collapse. Addressing those problems has to be part of the economic solution.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Immigration Wire: In Midst of Crisis, Signs of Reform
by Nezua, TMC Mediawire Blogger
President Obama has often stated that immigration reform cannot be approached in a piecemeal fashion, and that his administration would tackle the issue in 2009. This week, Obama will be meeting with members of Congress to kick off a bi-partisan approach to reform. These meetings don’t guarantee any legislative action will take place this year, but are at least an encouraging sign. In the meantime, the deportation industry shows no sign of slowing, hate crimes are rising and hate groups are being main streamed. As a result, the polarization between reform advocates and foes is getting worse.
New America Media’s Jun Wang writes about the disapointing consensus reached by a panel of immigration activists last Thursday at California State University in Los Angeles. A lack of movement around immigration reform won’t help curb rising rates of hate crimes against Latino/as, and compounds other instances of “othering” and racism. According to one panelist: “Employers in conservative cities” are learning that “they are better off not hiring people who are ‘foreign looking or having foreign sound names.’”
Not content with simply raiding homes, workplaces, or storming the local 7-11, Immigrations Customs and Enforcement (ICE) is escalating its enforcement tactics. Also in New America Media, Hiram Soto reports on the joint operation between the Border Patrol and the Transportation Security Administration (TSA) in deporting three high-school age girls, one as young as 16, who were stopped by ICE on their way to school. Immigration attorney Lilia Velasquez, who is representing the minors, said she “hasn’t seen anything like this in her 25-year career,” because the children are being let back into the U.S. to fight their deportation.
The plight of these girls is proof that the destructive deportation fetish sweeping the Department of Homeland Security is producing increasingly ridiculous results.
Pundits like Michael Savage are also feeding the violent and anti-immigrant, anti-Latino/a energy in the U.S. Samhita Mukhopadhyay at Feministing writes that these broadcasts are are created “for the purpose of inciting violence against immigrants and to fuel racial tension.” Exposing Savage’s “paranoid” and fearful obfuscation of reality, Mukhopadhyay clears up the anti-immigrant propaganda by pointing out that despite Savage’s tortured logic, the truth is that Immigrants are the “working base” of California, and not the ones creating a drain upon it. California’s immigrants pay roughly $40 billion in taxes every year.
One of the loudest politicians feeding anti-immigrant hostility is Tom Tancredo, a former Republican congressman from Colorado. The Colorado Independent has linked Tancredo to the Minuteman American Defense (MAD) and its former Executive Director Shawna Forde, accused of murdering Raul and Brisenia Flores, via a letter expressing the politician’s solidarity and gratitude to the organization for organizing a rally. It turns out that not only was this beaming “boilerplate rejection letter” (as campaign chair Bay Buchanan hopes to position it) sent to Forde, but a story published by the Everett Herald in 2007 places official Tancredo campaign staff at the event. The connections don’t end there and only grow more unsettling.
Those fighting for justice and on the side of human rights are hardly laying low in this time of legislative uncertainty. In a guest column for RaceWire, undocumented immigrant Sonia Guinansaca writes about how over 500 students from all over the U.S. attended a “Mock Graduation ceremony” on Capitol Hill last Tuesday. The ceremony was intended to both draw attention and show support for the DREAM Act. Guinansaca reminds us of our country’s most inspiring ideals: To be a nation where “nothin’ is impossible.”
RaceWire also brings us more news of youth behind change in Immigrants’ Kids File Lawsuit Against US, and Other News. In this political lull, “the kids of hundreds of deported parents are filing a lawsuit against the government claiming their constitutional right to stay in the U.S. is violated by the deportation of their parents.”
*Editor’s note: The original version of this post implied that all movement towards immigration reform had halted. We’ve updated this blog to reflect recent developments. Stay tuned to next week’s Wire for in-depth analysis of the push for effective immigration reform.
This post features links to the best independent, progressive reporting about immigration. Visit Immigration.NewsLadder.net for a complete list of articles on immigration, or follow us on Twitter. And for the best progressive reporting on critical economy and health issues, check out Economy.NewsLadder.net and Healthcare.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Pulse: Public Health Insurance Option not Optional
During a press conference yesterday, President Obama voiced support for government-administered health insurance for all who need it (aka the “public option”), as a key component of healthcare reform. Though Obama stopped short of threatening to veto a bill that didn’t contain such an option, he said that a public option is needed to enforce market discipline. If the system is going to reform, the health insurance companies can’t just keep selling the same bad coverage with bigger public subsidies for their monopolies. Essentially, Obama isn’t about to force taxpayers to buy overpriced insurance from private companies.
“The public plan, I think, is an important tool to discipline insurance companies,” Obama said during yesterday’s White House news conference. “I think there is going to be some healthy debate about the shape that this takes.” He outlined three options: Get insurance through your employer, buy insurance on your own, or buy insurance from a marketplace where public and private insurance providers compete for business.
In the Washington Monthly, Steve Benen notes the central irony of the standard insurance industry criticism of Obama’s plan:
A public option, critics tell us, would provide a horrible, bureaucratic service for customers, including rationing and long waiting times. But here’s the follow-up: if that’s true, no one would choose the public option and insurance companies would be just fine for the indefinite future.
Except, of course, insurance companies and their policymaking allies know better. Which is why they’re panicking.
As Senate Democrats continued to cast about for an elusive bipartisan compromise on healthcare reform, their colleagues in the House are pushing ahead on their own. House Democrats are holding hearings this week on draft legislation and is written without Republican input. The house bill would require all Americans to have health insurance and put new restrictions on employers as well. The Uptake is covering the hearings live.
By allowing the proliferation of multiple healthcare bills, the Obama administration is deliberately avoiding the mistakes that the Clintons made in 1994, according to Mark Schmitt in the American Prospect. Instead of submitting its own 1300-page bill to Congress, the Obama administration is letting the legislative branch hash out the details while the executive branch hovers above the fray:
The big picture approach gives the administration room to shore up key allegiances with powerful interest groups. Last week, many feared the public option was DOA when congressional budget analysts announced that the proposal would cost more than expected. Mike Madden explains in Salon that things were looking grim until Obama struck a deal with Big Pharma to save $80 billion on drugs for seniors:
Mike Lillis of the Colorado Independent explains why filling the donut hole isn’t a big sacrifice for the industry: Drug companies have already profited handsomely from the prescription drug program. Furthermore, Lillis notes, the companies may still come out ahead if seniors begin to buy donut hole drugs that they previously couldn’t afford. Even at half price, Big Pharma still does okay.
Finally, Eleanor Bader of RH Reality brings us the story of how the Women’s Medical Fund helps women who can’t afford abortions. The Pennsylvania fund was established in 1985 after state Medicaid cut off abortion funding. The Fund is one of over 100 abortion access funds nationwide providing options for poor women that anti-choicers sought to take away by manipulating healthcare coverage for political ends.
Healthcare reform, priority one on Obama’s domestic agenda, is finally getting its moment in the spotlight. Competing healthcare bills are taking shape and a vigorous public debate is underway. Keep checking The Pulse for play-by-play coverage of the most important policy battle in a generation.
This post features links to the best independent, progressive reporting about health care. Visit
Healthcare.newsladder.net for a complete list of articles on healthcare affordability, healthcare laws, and healthcare controversy. And for the best progressive reporting on the Economy, and Immigration, check out Economy.Newsladder.net and Immigration.Newsladder.net.
This is a project of The Media Consortium, a network of 50 leading independent media outlets, and created by NewsLadder.
Weekly Audit: Obama’s Regulation Overhaul Comes Up Short
by Zach Carter, TMC MediaWire Blogger
President Barack Obama rolled out his plan to overhaul financial regulation last week. While much of the Obama plan relies on the same regulators and structures that led to the current meltdown, there is one key exception. The establishment of an independent Consumer Financial Protection Agency would give ordinary citizens a seat at the financial policy table for the first time and prevent the abuses in credit card and mortgage lending that have wreaked havoc on households all over the country.
The new agency is the brainchild of Harvard University Law School Professor Elizabeth Warren. As chair of a key oversight panel for the Treasury Department’s bank bailout program, Warren has uncovered major deficiencies in the government’s handling of the plan, including nearly $80 billion in overpayments to bailed-out banks. American News Project features footage of an interview with Warren, who explains why we need a separate agency to regulate on behalf of consumers.
Several bank regulatory agencies, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision are already charged with writing and enforcing consumer protection rules for credit cards and mortgages, but have generally abandoned these duties to act as cheerleaders for their banks.The current structure’s problems are two-fold. First, the current regulators are funded by fees levied on the very banks they regulate. When there are several different bank regulators, regulators compete to offer the weakest oversight and attract more banks, and, in turn, more funding. The process quickly becomes a race to the bottom. When the subprime mortgage boom was surging in 2003, the OCC, a federal bank regulator, went to court to ensure that the state of Georgia’s tough predatory lending laws could not be enforced.
Second, the regulatory agencies tend to look at the health of the bank, rather than the quality of the loans it makes. If a commercial bank like Citigroup makes a really outrageous predatory loan, then sells that loan to an unregulated investment bank like Goldman Sachs, Citi’s regulator doesn’t particularly care. A new regulatory agency that answers exclusively to consumers rather than banks would be a very meaningful change for the financial system.
The rest of the overhaul is a little frightening. As William Greider explains for The Nation, instead of crafting explicit rules to curb obvious abuses, Obama’s plan relies very heavily on ceding power to the Federal Reserve. Under the new framework, the Fed would both oversee “systemic risk” in the financial architecture and regulate the banks that have become “too big to fail.” This, Greider emphasizes, is a very bad idea. The Fed has repeatedly proven itself to be uninterested in regulating banks. Citi needed $45 billion in direct cash infusions from the U.S. taxpayer and hundreds of billions of dollars in other guarantees to stay afloat, as Nomi Prins writes for Mother Jones. Who was charged with regulating the company and making sure such an outrage never occurred? The Fed.
In a video spot for GritTV, former senior banking regulator William Black argues that it makes little sense to allow banks to become too big to fail at all. Sturdier regulations are better than nothing, but the real solution is to break them up. “Why would we allow banks to be so big that they threaten the global economy?” Black asks.
Going back to Prins in Mother Jones: Elsewhere, the regulatory revamp is simply too vague to be helpful. Regarding derivatives—the financial weapons of mass destruction that destroyed AIG—it’s not clear if Obama wants to regulate the entire industry, or a small, meaningless fraction. Obama’s plan is to require that “standardized” derivatives are traded on exchanges and allow “customized” derivatives to escape investor scrutiny. But the Treasury never explains what the difference is between these “standard” and “custom” products, or how it will make sure banks don’t game the system.
Lest we forget, this crazy finance system brought us the worst economic calamity since the Great Depression. The unemployment rate, by conservative measures, is at 9.4% and rising. You may have noticed the stories about “green shoots” signaling the first inklings of economic recovery circulating through the media. But these signs are only promising, AlterNet’s Joshua Holland explains, if you take them completely out of context and ignore all of the other terrible news. The economy is in great shape … except for the millions of foreclosures that will take place this year, the skyrocketing unemployment rate, the decimated retirement funds, and the mountains of credit card debt weighing down the average U.S. consumer.
Serious consumer protections are nothing to scoff at, especially after watching an outbreak of predatory mortgage lending spawn an economic collapse. It comes as no surprise then, as Tim Fernholz notes for The American Prospect, that the bank lobby is already working to water down the new consumer protection agency’s powers. But even if a regulator for consumers makes the final legislative cut, with so many drastic problems in the current financial regulatory structure, the Obama plan simply does not do what is necessary to fend off another crisis.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Immigration Wire: Why Are Hate Crimes on the Rise?
by Nezua, TMC MediaWire Blogger
On May 30, 29-year-old Raul Flores and his 9-year-old daughter Brisenia Flores were shot to death, purportedly by a group of far-right anti-immigrant activists who broke into the Flores home by posing as police officers. On Friday, Shawna Forde, anti-immigrant activist and Executive Director of the Minutemen American Defense, (MAD) along with accomplices Jason Eugene Bush and Albert Robert Gaxiola were arrested on two counts of first-degree murder and burglary charges related to the Flores murders.
Josh Marshall of Talking Points Memo notes that the MAD website denounces the murders, but wryly adds that the distancing is “a tad belied by headlines down the page,” like “Subhuman Mexicans (God’s Children?) Prey on Countrymen.” The Flores murders are part of a palpable political and social climate of hostility and revulsion toward Latin American immigrants that is running amok in our nation.
As Democracy Now reports, the FBI has noted a rise in hate crimes against Latinos, which isn’t difficult to verify anecdotally. And, according to Laura Flanders at GritTV, “economics, racial panic, immigration, [and] right wing rhetoric” all play a crucial role. If our government continues to spend resources that help portray people as both predatory and “subhuman,” it will continue to foster a perception that violence against this class can be committed in good conscience.
This national, anti-immigrant fervor has resulted in a courts system in which “countless immigrants are subjected to harassing or denigrating treatment” and “have no assistance in navigating the byzantine court process,” writes Mary Giovagnoli at AlterNet. She reports that “misguided deportation-only strategies have led to a breakdown in our immigration court system.” The system is overloaded, backlogged, and not operating effectively or humanely.
The U.S. immigration process is in disrepair due to neglect and improper stopgap measures (like agreement 287(g)), just as broken bones will fuse in any manner if not set correctly. We are mired in an interim period and tensions will continue rising until we take on the challenge as a nation. In any part of the process, from application to arrest to detention to deportation, there are glaring problems. RaceWire touches briefly on the lack of accountability in the detention system.
Is the increasing absorption of virulently racist mentalities into mainstream groups a terrible confluence of unrelated factors, or a predictable reaction to the “browning” of this country? At the same time the U.S. military has relaxed its rules on accepting recruits with ties to white supremacist movements, so have circumstances allowed for “a new crop of anti-immigrant groups to enter the mainstream dialogue, even though many have ties to hate groups with violent records,” as Miriam Zoila Pérez writes for Feministing.
The video above depicts Shawna Forde as a spokesman for one of these hate groups, the Federation for American Immigration Reform (FAIR). FAIR made news on Tuesday for disingenuously presenting statistics that demonize immigrants as a strain to the economy. At AlterNet, Walter Ewing exposes the tortured logic FAIR employs and makes the case that “once … inconvenient truths are taken into account, FAIR’s ‘cost’ evaporates.”
It wasn’t long ago that we reported on how many anti-immigrant pundits were using the Swine Flu to create a toxic anti-immigrant/anti-Latino climate. And sadly, none of those people understand how hate speech leads directly to violence. Talking Points Memo makes the alleged murderers’ ties to the anti-immigration movement clear.
When the government build walls to stave off fears, it is, ironically, reinforcing that same emotion of fear. When hostile and punitive legislation is enacted, fear of the Other is mixed with aggression. When a fearful and aggressively rigid mindset is applied to social fluctuations that require flexibility and change, the result is an increase in the return of that negative energy.
And yet, hope will live on. And sometimes that hope will lead to historic change. Which is why we must keep writing and talking, keep pushing, and keep challenging all the injustice we find.
This post features links to the best independent, progressive reporting about immigration. Visit Immigration.NewsLadder.net for a complete list of articles on immigration, or follow us on Twitter. And for the best progressive reporting on critical economy and health issues, check out Economy.NewsLadder.net and Healthcare.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Pulse: The Push for a Public Plan
Healthcare reform is back in the news, as legislators and interest groups spar over the promised public component of Obama’s healthcare plan.
In very simple terms, this is a fight between groups with a vested interest in expensive healthcare and everyone else. This week, the American Medical Association warned Obama that a public plan could restrict patient choice. But for millions of Americans, getting a choice between healthcare and no healthcare wold represent a 100% increase in their healthcare options. Obama’s public plan would also give people the choice of keeping their private health insurance. The public plan is an additional option, not a diminution of options.
The AMA is a powerful interest group, but it doesn’t speak for all physicians. Several prominent groups representing doctors and medical students, including the American Association of Family Physicians, co-signed a declaration supporting Obama’s push for a public plan this week.
Expect the health insurance lobby to fight the public option tooth and nail, says economist Dean Baker in AlterNet. It’s smart business from their perspective. Platitudes about the free market aside, no real capitalist welcomes competition. As Baker points out, a public plan represents competition to health insurance companies. For every dollar Medicare pays to providers, it spends two cents on administration. Whereas private insurers spend about fifteen cents on the dollar in administrative costs. Baker estimates that if a public plan were available, insurance profits would drop by 20-30%, all things being equal.
Former president Bill Clinton invited about 20 progressive bloggers to his Harlem office on Monday for a seminar-style discussion about the work of the Clinton Foundation. Several staff from Media Consortium member organizations were in attendance, including yours truly. Healthcare was a major topic of conversation. Emily Douglas of RH Reality Check, who also attended the meeting, writes:
Clinton said that he’s optimistic about the prospects for healthcare reform this year, but he encouraged Obama to drive a hard bargain with congressional Republicans. All things considered, the former president said, it would be better to pass healthcare with 60 votes for the sake of the Obama administration’s long-term relations with congress. The alternative would be to pass healthcare through budget reconciliation, which would require only 51 votes, but which would incur a lot of ill-will among Republicans. However, Clinton cautioned against writing a weak bill to avoid reconciliation. In Clinton’s opinion, if we don’t contain healthcare costs by moving to outcomes-based medicine and making our healthcare delivery systems more efficient, the system will be unsustainably expensive.
James Ridgeway of Mother Jones has also been mulling the challenge of writing a bill that’s acceptable to enough Republicans to avoid a budget reconciliation fight. Ridgeway fears that sweeping structural reform will take a back seat to political expediency. He fears that by trying to please everyone, Obama could end up pleasing no one:
If the healthcare debate sounds vague and abstract, that’s because it is. There are several competing bills coalescing, but at this point, there’s no overall vision for reform. Everything is up for grabs. Never afraid to think big, Sen. Bernie Sanders (I-VT) is circulating a petition for single-payer healthcare, with an assist from Chelsea Green.
Surely the weirdest healthcare story of the week comes from Tracy Clark-Flory of Salon: An anti-choice blogger who claimed to be carrying a non-viable pregnancy to term out of pro-life principle was exposed as a hoaxster when an alert reader identified her “dead baby” as a doll. It’s not clear why the 26-year-old social worker perpetrated the hoax. Jessica Valenti of Feministing injects a note of compassion for the perpetrator, “Though as angry as this makes me, I’m with Sadie at Jezebel on this: ‘It’s tempting of course to use this as a chance to take an easy bash at anti-choice, and revel in anything that makes them look foolish, but frankly, I’m just sad for this woman.’ As am I.”
This post features links to the best independent, progressive reporting about health care. Visit Healthcare.newsladder.net for a complete list of articles on healthcare affordability, healthcare laws, and healthcare controversy. And for the best progressive reporting on the Economy, and Immigration, check out Economy.Newsladder.net and Immigration.Newsladder.net.
This is a project of The Media Consortium, a network of 50 leading independent media outlets, and created by NewsLadder.
Weekly Audit: Reining in the Subprime Scoundrels
by Zach Carter, TMC MediaWire Blogger
President Barack Obama is scheduled to unveil his agenda for revamping financial regulation later this week. As the economy struggles though a recession created by the banking industry, it’s crucial that Obama and his advisers craft a set of rules ensuring that the financial sector strengthens our economy instead of destroying it.
Various government regulatory agencies are sparring over how the final regulatory structure will be divided. But, as Robert Kuttner notes for The American Prospect, the most important aspects of the plan will not be who regulates what, but how stringently they are required to regulate. The Federal Reserve has had the power to devise consumer protection regulations for years, but has generally decided against writing strong rules to defend borrowers. There is perhaps no area of public policy more critical to the nation’s economic stability than consumer protections in banking, especially as the subprime mortgage crisis continues to devastate U.S. households.
Without stronger regulations, the government’s rescue programs for the financial sector will be a complete waste, and bailouts will only reward the destructive behavior that created the current recession. And the bailout plans are getting more absurd every week. Writing for Mother Jones, Nomi Prins details the latest bank bailout farce: The false euphoria emanating from the Treasury Department after it decided to allow 10 banks to return the bailout money it received from the public. Or, at least, some of the bailout money.
As Prins explains, the Troubled Asset Relief Program (TARP) accounts for just a tiny fraction of the bank rescue efforts currently orchestrated by the Treasury, the Federal Reserve and the FDIC. When banks accepted TARP money, they agreed to implement a few modest restrictions on executive pay, though none of the other bailouts came with any strings attached. The FDIC, for instance, agreed to guarantee the corporate debt that banks issue to fund their operations without requiring banks to adopt any changes in the way they do business. This government backing has allowed banks to raise several billion dollars in funding at extremely inexpensive rates, at a time when most banks were struggling to raise any money at all. Suddenly, some of the chief beneficiaries of the FDIC program—Goldman Sachs, Morgan Stanley and American Express, to name three—find themselves flush with cash and able to pay back the TARP money, and thus allow their CEOs to escape the executive compensation caps.
As Laura Flanders explains in the below video from GritTV, there is a difference between how “healthy” a bank appears to the U.S. Treasury and what it actually does for ordinary people. The TARP money was supposed to serve a public purpose by freeing up funds that could be lent out into the economy. But the very banks now going off the public payroll have been retroactively jacking up interest rates on credit cards all year and spending millions to lobby against legislation that would prevent foreclosures. Small surprise, then, that the state of the U.S. housing market is as bad as it has ever been.
“The lesson is pretty clear: you cannot stabilize the mortgage market and undercut the working family at the same time, you just can’t,” Flanders says.
It’s not as if the economy has suddenly turned a corner. In addition to all those foreclosures, the unemployment rate is 9.4% at last count and keeps surging higher. But the effects of the recession are not being felt equally among all workers. New America Media (NAM) features a piece by Raechal Leone that highlights the even more severe unemployment rate among blacks in the U.S.—a whopping 14.9%. Those numbers are not expected to get better anytime soon. When economists talk about the recession “ending,” they mean that the Gross Domestic Product (GDP), a measurement of the total output of the U.S. economy, will have stopped shrinking. Economists almost universally believe that the unemployment rate will increase well after GDP stops contracting—as many as five years in some predictions.
The Applied Research Center (ARC) has released a report detailing the disparate impact of the recession on minorities, accompanied by a host of constructive policy recommendations. In the financial world, minority borrowers still face a dramatically uneven playing field. Black and Latino borrowers were more much more likely to be steered into an expensive subprime mortgage during the housing bubble than white borrowers were. As Nina Jacinto details for Wiretap, these lending practices have been so pervasive that the NAACP has filed lawsuits against both Wells Fargo and HSBC for systematically targeting black borrowers with expensive supbrime mortgages.
We need to upgrade our anti-discrimination banking regulations to end this systematic predation. Many of the other policies that ARC endorses are not geared specifically toward ending the racial wealth gap, but would alleviate some of the glaring effects of institutional racism. Since people of color are disproportionately relegated to low-paying jobs (or, as Leone noted for NAM, no work at all), policies that make it easier for low-wage workers to organize and demand fair pay, like the Employee Free Choice Act, would help ease this rampant inequality.
The Obama team’s regulatory proposal will only mark the beginning of a policy debate that will likely last for months. But make no mistake, serious bank reform is one of the most important steps the government can take to make the economy accountable to ordinary citizens and CEOs alike. Without substantive change in the financial sector, the next meltdown could already be underway.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Immigration Wire: Key Legal Battles in Fight for Immigrant Rights
by Nezua, TMC MediaWire Blogger
While the United States’ legal system is founded on grand ideals like all humans being equal, the law is rarely as benevolent or efficient in practice, especially for immigrants. Different classes of people receive different consideration, and the subsequent disparities are glaringly evident in the lives of immigrants. This week’s Wire focuses on immigration-related legal battles, including unconstitutional raids by Immigrations Customs and Enforcement (ICE) and the rights to have competent representation in a court of law.
In 2007, ICE raided numerous residences in New Haven, Connecticut without arrest warrants, probable cause, or consent. The violent and “highly visible” raid was likely “retaliatory,” as it came two days after New Haven approved “the issuance of identification cards for all residents irrespective of immigration status.” The Department of Homeland Security was clearly sending their own message to the town, or so many perceive it. But good news: M. Junaid Levesque-Alam of Wiretap mag reports that a federal judge ruled the raid unconstitutional, stating that ICE officials violated the rights of four undocumented immigrants and called a halt to the deportation proceedings on Monday.
RaceWire’s Michelle Chen reports on an important reversal in Bush-era immigration law made by U.S. Attorney General Eric Holder. Previously, immigrants represented by counsel they claimed were “incompetent, unethical, fraudulent, or absent” could not halt deportation proceedings. The right to contest the quality of their counsel has been restored. It’s a fair ruling, as the former law implied that, while immigrants members supposedly had “the privilege of being represented,” justice was little more than a show.
Unfortunately, even with this positive change in law, it’s hard to assert that justice has been attained for more than a relative handful. As Chen writes, “current law does not guarantee government-appointed counsel” and so most detained immigrants will not even have state-appointed representation.
In Local (In)hospitality, Chen also provides a good roundup of issues around the country that touch on immigration legislation, such as Republican lawmaker Joe Carr’s “vigorously slamming the door on undocumented workers” by advancing a bill to “block local governments from explicitly restricting police from enforcing federal immigration law.”
RH Reality Check’s Margo Kaplan reports on one Judge’s ruling that “doubled the recommended sentence and exceeded federal sentencing guideline recommendations” for Quinta Layin Tuleh, a woman five months pregnant, “for the sole purpose of keeping Tuleh in prison until she gave birth.” Whether or not such a ruling creates a double standard for women or women immigrants in the eyes of the law may be up for debate, but this interpretation of the law was cruel.
In other immigration news, Steve Benen of The Washington Monthly reports that approximately a million people cross into Mexico each year for medical care. Personalities or media outlets that seek to spread fear or maintain a particular view of Mexico often insist that violence is bubbling and spilling up over our southern border. It is difficult, however, to remember that many people are crossing the border into Mexico to reap the benefits offered there. And not only are the reported numbers thought to be low, but the trend shows no signs of slowing down.
“If America is the land of beckoning opportunity,” writes Terray Sylvester for High Country News, “Mexico is the land of bargain operations — and cheap dental care, and sensibly-priced treatments for chronic illness.” Sylvester points out that, since approximately 500,000 of these people are Mexican immigrants returning for care, there’s a new “twist in the refrain that Mexican immigrants stress social services” in the U.S.
Speaking of opportunity, Wiretap is featuring a video called Immigration: New York Voices, which puts today’s hostile attitudes against immigrants in stark contrast. In the words of one interviewee, the U.S. has a legacy: It is where you go when you need to find safety or are “unhappy” with the land you live in.
Finally, we come to New America Media (NAM), which is featuring a bunch of content related to last week’s Expo and Awards. In Women Immigrants Key to Family Unity, Viji Sundaram reports a panel focused on both a breakfast for women and ethnic media and the recent survey [pdf] that New America Media commissioned from pollster Sergio Bendixen.
“Women journalists navigate a greater range of threats than do their ‘male counterparts,’” said Meredith Greene Megaw, communications director at the Committee to Protect Journalists, because women face the same threats, in addition to “cultural taboos, as well as the danger danger of being sexually assaulted and threatened.” See the page to view a slideshow of that panel.
And in Coalition Vows to Press Congress and Obama for Immigration Reform, New America Media’s Khalil Abdullah reports on the Reform Immigration for America campaign (RIFA), a coalition of groups like the Center for American Progress and AFL-CIO and the National Hispanic Christian Leadership Conference that came together to “press Congress for comprehensive immigration reform legislation this year.” It sounds like a very positive move overall, but time will tell how effective this coalition is.
This post features links to the best independent, progressive reporting about immigration. Visit Immigration.NewsLadder.net for a complete list of articles on immigration, or follow us on Twitter. And for the best progressive reporting on critical economy and health issues, check out Economy.NewsLadder.net and Healthcare.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Pulse: Will the Feds Dare Call It Terrorism?
The fallout from the assassination of women’s healthcare provider Dr. George Tiller continues. As Zack Roth of Talking Points Memo reports, the Justice Department will investigate whether Tiller’s shooter, an anti-choice zealot, violated the Freedom of Access to Clinic Entrances (FACE) Act or any other federal statutes. But little has been said about investigating the killing as an act of terrorism, a federal crime. The Oklahoma City bombers were investigated by the FBI and tried under a 1994 federal anti-terrorism statute, and that was before the PATRIOT ACT, which presumably makes it even easier to prosecute terrorism as a federal crime today.
Tiller’s murder was terrorism by any reasonable definition of the term. It was a politically-motivated act of conspicuous brutality, designed to suppress abortions through fear. The feds will probably stop short of investigating Tiller’s murder as a terrorist attack. That designation would unleash vast federal powers to investigate large swathes of the radical anti-choice movement and hold accountable anyone who gives them the slightest aid and comfort. The feds are simply not prepared for the political fallout that would ensue if, say, Operation Rescue were officially designated as a terrorist organization.
But Tiller’s assassination seems to be working as an intimidation tactic. On Tuesday, Dr. Tiller’s family announced that his clinic, one of only three facilities of its kind in the country, will close its doors forever. Tracy Clark-Flory writes in Salon that the terrorist got exactly what he wanted:
A lesson in the effectiveness of terrorism: Dr. George Tiller’s Kansas clinic is closing permanently, according to his family’s lawyers. In a statement Tuesday, the family said: “We are proud of the service and courage shown by our husband and father and know that women’s healthcare needs have been met because of his dedication and service.” They will continue to honor his memory “through private charitable activities” — in other words, the type of activism that is less likely to get a person killed.
Of course, the intimidation won’t stop at a single act. As James Ridgeway notes in Mother Jones, the alleged assassin is inciting further violence from his jail cell:
The fact that the family made clear that it would not be involved “in any other similar clinic” suggests that they are traumatized and fearful–in a word, terrorized. And no wonder, since Roeder, as I detailed yesterday, has issued warnings from his jail cell of further attacks on abortion providers–an act which, coming from just about any other comparable source, would certainly be deemed terrorism, and treated accordingly.
Making explict the link between Tiller’s murder and larger political goals, the Associated Press headline calls the closing a “tainted victory” for the larger anti-choice movement.
Professional anti-choicer Ross Douthat sparked controversy in an op/ed for the New York Times, insinuating that Dr. Tiller might still be alive if pro-choicers didn’t make such a big deal about protecting late-term abortions. Hilzoy of the Washington Monthly tackles some Douthat’s errors, starting with his misleading implication that third trimester abortions are unregulated. Without that premise, Douthat’s argument falls apart, since he’s arguing in effect that pro-choicers have created a free-for-all in which anyone can get a late term abortion for any reason.
Amanda Marcotte of RH Reality does a great job exposing the misogyny behind the anti-choice myth of frivolous late-term abortions. If you think that women are flighty, irrational, fundamentally unserious beings, you expect them to opt out of pregnancy on a whim after months of gestation. The imagined problem of casual late-term abortions reveals what anti-choicers really think of women, that they are lesser beings who need to be controlled by the state. Dr. Tiller’s motto was the exact opposite: Trust women.
This post features links to the best independent, progressive reporting about health care. Visit
Healthcare.newsladder.net for a complete list of articles on healthcare affordability, healthcare laws, and healthcare controversy. And for the best progressive reporting on the Economy, and Immigration, check out Economy.Newsladder.net and Immigration.Newsladder.net.
This is a project of The Media Consortium, a network of 50 leading independent media outlets, and created by NewsLadder.
Weekly Audit: Ending the Economic Status Quo
by Zach Carter, TMC MediaWire Blogger
The banking lobby still holds enough sway inside the Beltway to torpedo sensible consumer protection rules, even after releasing a flood of predatory mortgages that kicked off the current economic crisis. On issues ranging from payday loans to subprime mortgages, the banking industry continues to successfully defend itself against new regulations that would protect the consumer. As if that weren’t outrage enough, the finance lobby has also joined other corporate interest groups to fund misinformation campaigns that smear unions and block wage growth.
As Mary Kane explains for The Colorado Independent, the push to rein in predatory mortgage lending appears to be losing steam on Capitol Hill. An extremely complex mortgage reform bill that is conciliatory to the finance lobby passed the House last month, angering consumer advocacy groups. Among the problems: the bill pre-empts many stronger state predatory lending laws and protects the Wall Street investment banks that gorged themselves on mortgage-backed securities.
Consumer protection shortfalls are not limited to messy mortgages. Lagan Sebert and David Murdoch detail the payday loan industry’s continued assault on U.S. consumers for the American News Project. By offering small loans, typically in amounts ranging from a few hundred to a few thousand dollars, payday lenders target consumers who need money for basic necessities, then charge them outrageous interest rates (as in, above 700%).
For years, newspaper editorials have denounced payday lenders for systematically exploiting the most vulnerable members of society, including members of the U.S. military, who are often targeted as a result of their reliable paychecks. The solution to the problem is as simple as the business is repulsive: Capping annual interest rates on all consumer credit products at 36% would make this kind of predation impossible.
Nevertheless, the payday loan industry has been able to escape a regulatory crackdown via an intense and sustained lobbying effort. Senate Banking Committee Chairman Chris Dodd, D-Conn., is now parroting payday lending lobbyists. Since payday loans are supposedly paid back within a matter of weeks, Dodd and the payday lending lobby say that it’s unfair to hold them subject to the same standards as a 30-year mortgage.
The argument is insane. No bank would ever get away with charging a 36% interest rate on a mortgage. Even the most predatory subprime mortgages didn’t have interest rates anywhere near that high. But Sebert and Murdoch go further, highlighting a report from the Center for Responsible Lending which found that payday lenders make 90% of their revenue from borrowers who do not pay their loans off on time. The loans are structured to be so expensive that consumers become trapped into making payments for the long-term, often spending thousands of dollars over multiple years to get out from under an initial loan of just a few hundred dollars.
Dodd has received major campaign contributions from the banking industry, but sometimes the lobbying effort is much more subtle. Several major corporate lobby groups have united under the misleading moniker of “Alliance to Save Main Street Jobs” to finance shoddily researched projects that defend the interests of the executive class in economic policy. An Alliance for Main Street Jobs report written by Anne Layne-Farrar has received quite a bit of attention for its claim that the Employee Free Choice Act (EFCA) would kill 600,000 jobs by making it easier for employees to organize. Several major news outlets have cited the allegation, including Fox News, MSNBC, The Wall Street Journal, and CBS News. As Art Levine reveals for In These Times, however, this research relies on completely meaningless statistical trends and disingenuous research design that render its findings utterly hollow.
Corporate executives are not afraid of EFCA because they think it will kill jobs or disenfranchise workers. They are afraid because it will empower workers to fight for living wages and provide safe working conditions—things that leave less money around for big executive bonuses at the end of the year and give workers a greater say in how companies operate.
In some respects, EFCA also represents the other side of the predatory lending problem. It is important to ban abusive loans, but it is just as important to make sure people are paid fairly for their work to ensure they don’t need to seek out shady credit just to make ends meet.
When so many brewing legislative battles relate to the economy, it’s easy to forget about the programs that have already been enacted. Some of the tax cuts included in the economic stimulus package were aimed at fostering investment in low-income and minority neighborhoods—a worthy goal. But as Michelle Chen notes for ColorLines, the program has some significant flaws. Chen highlights a report from the Government Accountability Office (GAO) which found that minority-owned community development entities are largely being excluded from the program, with approval rates about 67% lower than other applicants. The GAO could find no reasonable explanation for why minorities were not making the cut, especially when some recipients of the tax credits have a history of consumer exploitation. Capital One Bank, for instance, is receiving $90 million of these tax credits, despite its long history of abusive subprime credit card lending.
There have been some successes this year in the push for an economy that answers to workers and consumers. Much of the stimulus bill is designed to make sure important jobs don’t disappear during the recession, and Sen. Dodd’s credit card reform bill passed both chambers of Congress by comfortable margins and included some very strong improvements. But we know what caused the economic crisis: stagnant wages and predatory lending. A true recovery will have to empower workers and protect consumers, both of which will require breaking with the corporate status quo.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.