Posts tagged with 'regulation'
Weekly Audit: Unemployment Fueling Political Storm
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By Zach Carter, Media Consortium Blogger
Unemployment figures in the U.S. are staggering: The official rate stands at 10.2%, the highest in 26 years. A broader measure that includes people who are involuntarily working part-time or who have given up looking for work is at 17.5%. That’s a full-blown economic emergency.
But, as Joshua Holland explains for AlterNet, President Barack Obama’s response to the unemployment crisis has not matched the urgency of his response to the crisis on Wall Street. This isn’t just unfair, it’s bad economics. (more…)
Weekly Audit: Too Big to Fail is Just Too Big
by Zach Carter, Media Consortium Blogger
Last week, President Barack Obama released key legislation designed to fight the banking industry’s too-big-to-fail problem. But Obama’s plan doesn’t actually address too-big-to-fail at all. It reinforces a broken system in which economically dangerous companies are bailed out whenever they drive themselves to the brink of failure.
If we want the economy to support all people, we have to break up the big banks and start treating the creation of good jobs as an economic priority on par with Wall Street rescues. (more…)
Weekly Audit: Dismantling the Wall Street Casino
By Zach Carter, Media Consortium Blogger
Bailout pay czar Ken Feinberg raised a ruckus last week when he announced plans to slash cash payouts to executives at seven companies that have received massive levels of taxpayer support. While better oversight of the bailout barons is helpful, the best way to change Wall Street pay practices is to adopt a set of tough, comprehensive regulations that cover everything from the executive suite to the loan department. As is, many of the executives Feinberg cracked down on will still make millions this year from stocks and other perks, while the very banks that depend the most on bailout money are spending like mad to lobby against reform. (more…)
Weekly Pulse: Oh, That Filibuster-Proof Majority
By Lindsay Beyerstein, Media Consortium Blogger
This week’s biggest health care story shouldn’t even be making headlines: Democratic leaders in the Senate are finally pressuring the entire caucus to help bring a health care bill to the floor by sticking with the party on procedural motions. Astute readers will ask: “But aren’t Senators supposed to stick with their party on procedural motions?” Yes, of course they are. (more…)
Daily Pulse: Uncharted Territory
By Lindsay Beyerstein, Media Consortium Blogger
The public option remains in limbo. The Senate Finance Committee is fine-tuning the bill it unveiled last week, which does not include a public option. However, Brian Beutler of TPM reports that Democrats have already submitted three separate amendments that might add a public option.
Sen. Chuck Schumer (D-NY) submitted what he calls a “level playing field” amendment, which would, incongruously, create a public option that couldn’t set its own rates. A second amendment submitted by Schumer and Sen. Maria Cantwell (D-WA) would create a public option much like that outlined the HELP Committee bill. Finally, Sen. Jay Rockefeller (D-WV) submitted an amendment that would create a robust public option, much like the one originally drafted in the House.
It’s pretty clear that no bill containing a public option in its first draft will get 60 votes in the senate. However, as Beutler reports in a second TPM piece, the Democrats are seriously revisiting the prospect of using budget reconciliation to get a health care bill through the senate with a simple majority. However, Beutler explains that Democrats are reluctant to go the reconciliation route because senate rules restrict the kind of bill that can be passed through reconciliation. For example, only provisions that “materially affect” spending can be passed through reconciliation. But what qualifies as a material effect?
Meanwhile, President Obama continues to insist that the public option isn’t dead yet, Steve Benen reports in the Washington Monthly.
In other news, women’s health remains a hot topic in health care reform. To understand why health care reform is especially critical for women, Public News Service interviewed Dr. Susan Wood, a scientist who famously resigned from the Bush-era Food and Drug Administration over the politicization of the approval of Plan B. Since leaving the government, Wood has returned to academia to study women’s health. Some of her key findings include:
About 20 percent of women under the age of 65 have no health care insurance; in some states, women are denied coverage if they have experienced domestic violence; and when women do have coverage, they are charged higher premiums and often see a long list of preexisting conditions that are excluded, with pregnancy sometimes on that list.
If there is a public option, will it cover abortion? Rep. Lois Capps has written an amendment addressing that question. She explains her proposal in her own words at RH Reality Check.
Uncertainty remains high as the senate inches towards a bill.
This post features links to the best independent, progressive reporting about health care and is free to reprint. Visit Healthcare.newsladder.net for a complete list of articles on health care affordability, health care laws, and health care controversy. 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: One Year After the Crash
by Zach Carter, Media Consortium Blogger
On Thursday, the U.S. Census released new data on the economic straits many American households faced in 2008. The grim report illustrates a nation enduring its highest poverty level in decades, coupled with a significant decline in middle class financial security. But one year after Lehman Brothers filed for the largest bankruptcy in U.S. history, not a single law has been passed to protect ordinary citizens from Wall Street’s excess.
Just how bad was 2008 for the ordinary U.S. household? As Kevin Drum emphasizes for Mother Jones, median household income plunged $1,860 last year. That’s the biggest decline since the Census began tracking incomes in the 1970s. The poverty rate increased from 12.5% to 13.2%, the highest level since 1997, and the total number of people living below the poverty line surged by 1.5 million to 39.8 million. Nearly one-fifth of all children in the United States are now poor. To fit the Census definition of poor, families have to be pretty hard up: A family of four must be living on less than $22,025 to qualify.
The Census data does not include any of the economic damage the U.S. sustained this year. In February 2009 alone, the economy shed a staggering 741,000 jobs. That fallout has hurt the poor more than anyone else, as Andrew Leonard explains for Salon.
“In 2008, the rich got less rich, while the poor got even poorer,” Leonard writes. “Which just goes to show that a falling tide lowers all boats—with one difference: The boats belonging to the rich probably still float, while the poor have smashed into the rocks.”
Lest there be any doubt, President Barack Obama’s economic stimulus package was absolutely critical for the nation’s economic health. The Census believes programs enacted under the stimulus will keep a total of 6.2 million people from falling into poverty, including 2.4 million children. To put that number in perspective, over the entire course of the George W. Bush Presidency, the number of people living below the poverty line climbed by 8.2 million, while the number of children in poverty increased by 2.5 million. Were it not for the stimulus Obama pushed through, the Bush legacy would be 75% worse, and almost 100% worse for children.
What is most alarming about the Census figures is the fact that workers were already treading a difficult path before the financial crisis sent the economy off a cliff. After years of economic “growth,” the median income was lower in 2007 than it was when President Bill Clinton left office. And the majority of people entering poverty during the Bush years did so prior to the great crash of 2008.
Another recent report from Jeannette Wiks-Lim of the Political Economy Research Institute drives this point home. In an interview with Jesse Freeston of The Real News, Wiks-Lim discusses the projected path of decent jobs in the U.S. economy, based on data from 2006, well before the crisis broke out. Wiks-Lim defined a “decent job” defined as one that pays $17 an hour plus health insurance, but found that in 2006, a full 65% of workers in the U.S. were paid below that benchmark. Equally distressing, her study indicates that by 2016, the number of decent jobs will be roughly the same as in 2006. Job-quality stagnation will persist even though the economy is likely to grow over this time period. That growth will be going to those who are already well off, Wiks-Lim says, while ordinary workers will face the same problems.
There are frightening long-term trends in this data. In 1975, average pay for workers outside the managerial class was $18.23 per hour, according to the study. But by 2007, those wages dropped to $17.42 per hour. These wage declines came despite major growth in economic output over those three decades, and despite an 85% increase in worker productivity.
While workers experienced increasing pressure on their pocketbooks, Wall Street gambled away their retirement investments. Lehman Brothers filed for bankruptcy one year ago today, a move which created chaos in the financial sector and heavy damage in the rest of the economy. Things were looking bad for the economy before Wall Street imploded, but the financial crisis made those problems a lot worse. “In a modern society, a credit freeze means instant death to the real economy, since virtually every enterprise, big and small, runs on credit,” Les Leopold explains for In These Times. “When the financial sector froze, it pushed the real economy off a cliff.”
But incredibly, after a year marked by massive financial bailouts, not one new law has been signed to protect our economy—and taxpayers—from Wall Street. Not one. Even the modest plans to rein in executive pay for taxpayer-supported companies have proved toothless. Leopold notes that President Barack Obama’s refusal to crack down on the banks has left both the financial regulatory process and other important progressive plans—like overhauling the broken health care system—in a precarious political state. The largesse we have shown for bailed-out bankers gives conservatives ammunition against other, more productive activities.
“We have a horrific feedback loop where Main Street’s anger is directed as much against the government as it is against Wall Street,” Leopold writes. “In fact, more and more people are turning against the administration because it looks as if it sold out to the banks. … The outrage-turned-anti-government has spilled into the health care debate and now undermines badly needed government intervention into our wasteful health insurance industry. If we roll over on the Wall Street fight, anti-government politicians will ride to power on populist anger. ”
And make no mistake, Wall Street is pushing back as hard as it can against even the most obvious reforms. Writing for The American Prospect, Tim Fernholz details the massive push by the Chamber of Commerce against the creation of a Consumer Financial Protection Agency. The CFPA would do just what its name implies—regulate all financial products that target consumers, and nothing else. It’s a simple and much-needed reform, but Wall Street is spending a lot of money to keep it from happening.
Our entire system of economic value has become inverted, as Wendell Berry argues in an essay for The Progressive. Anything that creates financial profits is considered economically productive, while environmental impacts and social benefits are viewed as economically unimportant. “Only in a financial system, an anti-economy, can it seem to make sense to talk about ‘what the economy needs,’” Berry writes. “In an authentic economy, we would ask what the land, what the people, need.”
The U.S. is frequently referred to as the richest nation in the world. Free-market ideologues and conservative pundits often couch their preferred policies as a defense of U.S. prosperity—there’s even a right-wing astroturf group called “Americans for Prosperity.” But more than 13% of the nation lives in poverty while the government backs paychecks for millionaire bankers. The problem is obvious to everyone, but if we do not demand change, Wall Street will ride the status quo to another economic catastrophe within a few short years.
This post features links to the best independent, progressive reporting about the economy and is free to reprint. 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: The White House vs. Reality
by Nezua, TMC Mediawire Blogger
The immigration discussion is sometimes reduced to symbols or a war of “sides,” be it on blogs, comment threads, or conference calls between legislators, media outlets, and activists. But it’s important to remember what this fight is about: People. In last week’s Wire, we covered the White House’s June 25th meeting with lawmakers, during which an intention to address immigration reform was formally announced. The meeting yielded much celebration and discussion by advocacy groups and activists alike, but waiting for reform does not change the situation on the ground. This week, we look at everyday situations—from students who are deported upon graduation to the growing number of hate crimes—that make a clear argument for reform now, not later.
RaceWire’s Julianne Hing reports on the “good immigrant/bad immigrant” fallacy inherent in even the DREAM Act’s terms:
When the DREAM Act is passed, heck, when immigration reform gets passed, people in this country will feel so magnanimous. But families will still get torn apart because we insist on dividing immigrants into two camps: the good and deserving, and the bad and unworthy.
Hing writes this in reference to the case of Walter Lara, a child of immigrants, who wasn’t aware of his undocumented status until attending college. He was nearly deported this July, but managed to stay thanks to a “a frenzied couple months of multi-pronged organizing” and petitioning the Department of Homeland Security (DHS). Hing calls Lara’s halted deportation a “pyrrhic victory” for the movement.
The phrase “comprehensive reform” is used by media, activists. and politicians alike, but what does it actually mean? Will comprehensive reform include aid to those fleeing military corruption in Mexico? Or will our immigration policies keep them at bay with a wall or more border troops? In Mother Jones, Richard Bowden writes of reporter Emilio Gutiérrez Soto’s flight from the Mexican Army and appeal for asylum in the U.S., even though “no Mexican reporter has ever been given political asylum.” The U.S. supports Mexican President Felipe Calderón’s harsh Drug War policies, and yet our policies have forced this migrant and many others North, where they often end up in detention. With truly “comprehensive” reform, we could resolve this glaring hypocrisy.
In the video below, Gutiérrez Soto speaks about his belief in the U.S. justice system, and his hopes for the future.
Writing for RaceWire, Michelle Chen reports on Utah’s newly introduced law that requires home childcare providers to show proof of immigration status in addition to normally-required background and safety checks. There is no argument that childcare standards are necessary. But laws like this don’t take the realities on the ground into account. “Utah’s crackdown on undocumented immigrants threatens to throw off a critical balance between quality and accessibility,” writes Chen. The move will cause many to lose their jobs, “while pushing families to seek out less-regulated care.”
In the absence of a definitive immigration policy, restrictionists use convoluted rhetoric to muddy facts. Walter Ewing, posting at Alternet, warns of the “Green Xenophobia” employed by hate groups like the Federation for American Immigration Reform (FAIR). Ewing handily debunks one of FAIR’s “special reports” that ties greenhouse gases to immigrants. Simply put, the greenhouse gases emitted by the U.S. are “a function not of population size, but of the degree to which we as a society rely upon fossil fuels, power plants, industrial processes, and automobiles.” Ewing also reminds us that John Tanton, an “uber nativist” is responsible for creating FAIR, and several other anti-immigrant groups (like NumbersUSA, and CIS.)
Finally, reporting for the Progressive, Yolanda Chávez Leyva writes a stirring appeal to our better natures as individuals, and collectively as a nation in “Recent Attacks on Immigrants Tell Us Who We Are.” She asks, “What kind of nation are we that allows our youth to stalk and kill others for being ‘different’?” and then draws a line. “It’s time that we take the anti-immigrant rhetoric and its fear-mongering leaders for what they are — not protectors of this nation but destroyers.” It’s hard to argue with that.
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 Immigration Wire: White House Meeting a First Step to Reform
by Nezua, TMC MediaWire Blogger
After postponing twice, President Obama finally met with a bipartisan group of lawmakers on June 25 to discuss moving immigration reform legislation forward. The meeting was applauded by activists and advocates for immigration reform, as the issue seemed to have stalled, and the acrimonious tone of the debate has proven deadly.
All parties emerged from the meeting with positive feelings about the prospect for progress, as I heard on last Friday’s White House debriefing conference call. A confluence of positive factors are contributing to the momentum: Major labor leaders are united for reform, Democrats are leading much of Washington, and voters in the U.S. clearly want to see reform passed. President Obama made his intention to pass reform very clear and the White House predicts the process will begin late this year or early 2010.
New America Media calls the meeting a hopeful beginning, but makes it clear that nothing is guaranteed this year—despite the pressing need. And we can’t wait too long for reform to begin. 2010 is the beginning of the 2012 Presidential election cycle and the issue could be “too easily politicized” at that time.
Wiretap Mag’s M. Junaid Levesque-Alam writes that, while Obama complimented Senator John McCain for taking risks, he seemed averse to boldly stating what he hoped to see or would stand behind; that “nothing [Obama] said indicated significant political movement” on the issue. But, Levesque-Alam hypothesizes that Obama’s caution is related to tension caused by “core contradictions not simply between but within the political parties.” The immigration issue is contentious, even among members of the same party.
GritTV and The Nation teamed up to present a panel asking Is Immigration Reform Dead or Alive? (video). The panelists discuss a potential future in which immigration reform does not pass. Their predictions make a grim scene, centered around the horrors of a growing detention industry. Children are incarcerated in these facilities. Over 90 people have died in detention and they are damaging families. Guest Ravi Ragbir, now a member of Families for Freedom, spent two years in a detention center. Ragbir’s young daughter was so disturbed by the sight of her father in shackles that Ragbir requested she no longer visit while he was detained.
A Truthdig article titled America’s ICE Backwards Approach to Immigration details the broken legal system that further clouds the immigration process. Over 200,000 immigration cases are backlogged and the number of government attorneys who argue for deportation has risen by 35%, stressing the court system accordingly. Add a declining number of judges and a sharp increase in the number of border guards and the result is a setting where “the equivalent of death penalty cases” are heard “in a traffic court setting,” according to Judge Dana Leigh Marks, the president of the National Association of Immigration Judges.
New America Media also explores the results of a study that finds a low rate of crimes are committed by the undocumented, which is a stark contrast to the accusations of right-wing pundits. The undocumented population in Utah grew from 70,000 to 110,000 in the last four years, according to a new study released by the Sutherland Instituate, but the number of incarcerated undocumented increased by only 28. That’s 28 people, not percent. In fact, the crime rate for undocumented immigrants in Utah is only 3.9% and dropping.
Finally, RaceWire’s Michelle Chen reports on the impact of the Western Hemisphere Travel Initiative on Mexican Americans who want to deliver children using a midwife. The Initiative, which went into effect yesterday, “requires Americans passing across the Canadian and Mexican borders to have a valid U.S. passport or passport card.” Previously, only a valid driver’s license was required. This is yet another policy that refuses to recognize the long pattern of movement over the border area, and is culturally antagonistic to Mexican Americans.
Law indicates humankind’s attempt to be just; it is an extension of a civilization’s morality. Immigration reform must come soon; it is a moral duty. It must pass not just for the benefit of the undocumented community, but so we can live up to our national ideals, and also, to decisively stave off a destructive energy made possible by the lack of humane law.
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 Audit: Radical Inequality Fueled the Wall Street Meltdown
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 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.