Posts tagged with 'The Washington Independent'
Weekly Audit: Will Weak Reforms Bring on Another Crisis?
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By Zach Carter, Media Consortium blogger
Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled his latest financial reform proposal on Monday, and the stakes for the new legislation couldn’t be higher. After consumer groups raised a major ruckus, Dodd has dropped one of his most egregious concessions to the bank lobby—cutting enforcement authority from the proposed Consumer Financial Protection Agency (CFPA). That’s good news: Without a major regulatory overhaul, the U.S. economy’s destructive boom and bust cycle will start all over again.
We’ve been down this road before. The Enron fiasco should have served as a wake-up call for policymakers, but instead, the weak federal response to Enron’s major fraud helped pave the way for the current economic slump. (more…)
Weekly Pulse: Bayh-Partisanship=Giving Your Seat to a Republican
By Lindsay Beyerstein, Media Consortium Blogger
You will be shocked, shocked to hear that a Blue Dog Democrat who made a career out of undermining his own party is sucker-punching them on his way out. Sen. Evan Bayh of Indiana abruptly announced this week that he would not seek reelection in November. Bayh’s departure is ratcheting up insecurity in the Democratic caucus at the very moment they need to take decisive action to pass health care reform.
Bayh could easily have won a third term, but it’s unclear whether any other Democrat can hold the seat. To add insult to injury, Bayh waited until 24 hours before the filing deadline for Democratic primary candidates, sending Indiana Dems scrambling to find a candidate to run in his place. Bayh’s tardiness was calculated. Since no Democrats were ready to file by the deadline, the Indiana Democratic establishment will get to handpick Bayh’s successor.
In a call with state Democratic officials, Bayh said his abrupt departure is for the best, as Evan McMorris-Santoro reports for TPMDC. According to Bayh, he’s doing the party a favor by sparing them a contentious primary process. Thanks a lot.
What does this mean for health care reform?
What does Bayh’s departure portend for health care reform? Monica Potts of TAPPED argues that replacing a conservative Democrat like Bayh with a moderate Republican won’t make that much difference. Bayh was never a reliable Democratic vote.
But Tim Fernholtz of TAPPED dismisses this view as naive. Fernholtz predicts that, for all of Bayh’s faults, the senate will be much worse without him: “In essence, the difference between this insubstantial Hoosier and, say, [GOP hopeful] Dan Coats, is simple: You can buy off Bayh.” Bayh voted for health care reform and the stimulus, no Republican, no matter how “moderate” is going to vote that way.
Anyone who expects a moderate Republican from Indiana to support any part of the Democratic agenda is deluded. On the other hand, the Senate Democrats already passed their bill, their only remaining task would be to pass a “fix” through budget reconciliation to make changes in the legislation that would be acceptable to the House. Of course, reconciliation will be a bitter political fight. One wonders whether the demoralized Senate Democrats will have the stomach for it.
About that health care summit…
Note that congressional Republicans have yet to commit to attending the “bipartisan” health care summit that they called for. Christina Bellatoni of TPMDC reports that yesterday White House Press Secretary Robert Gibbs wondered why the Republicans were for the summit before they were against it:
“Right before the president issued the invitation, the—the thing that each of these individuals was hoping for most was an opportunity to sit down on television and discuss and engage on these issues. Now, not accepting an invitation to do what they’d asked the president to do, if they decide not to, I’ll let them leap the—leap the chasm there and try to explain why they’re now opposed to what they said they wanted most to do,” Gibbs said.
Busting the filibuster
On the bright side, the Democrats still have a sizable majority in the Senate, with or without Bayh. Republicans would have to beat all 10 vulnerable Democratic incumbent senators in the next election in order to regain control of the Senate. The more immediate threat to health care reform and the Democrats’ ability to govern in general is the institutional filibuster. Structural reform is needed to break the impasse. Lawyer and author Tom Geoghegan talks with Amy Goodman on Democracy Now! on strategies for busting the filibuster.
Public option resurfacing
Mike Lillis of the Washington Independent reports that four senate Democrats have thrown their lot in with progressives clamoring for a public option through reconciliation. Sens. Sherrod Brown (OH), Jeff Merkley (OR), Kirsten Gillibrand (NY) and Michael Bennet (CO) argue for the public option in an open letter to Majority Leader Harry Reid. The letter reads:
There are four fundamental reasons why we support this approach – its potential for billions of dollars in cost savings; the growing need to increase competition and lower costs for the consumer; the history of using reconciliation for significant pieces of health care legislation; and the continued public support for a public option….
Big pharma’s lobby
That’s nice, but let’s not forget who’s really in charge. In AlterNet, Paul Blumenthal recaps the sorry history of collusion between the White House, the pharmaceutical lobby group PhRMA, and the Senate. According to Blumenthal the White House steered pharmaceutical lobbyists directly to Sen. Max Baucus (D-MT), chair of the powerful Finance Committee, who was entrusted with crafting the White House’s favored version of health care reform.
Abortion and health care reform
As if we didn’t have enough to worry about, Nick Baumann of Mother Jones notes that the National Right to Life Committee (NRLC) is making abortion is an obstacle to passing health care reform through reconciliation. The NRLC is insinuating that Bart Stupak (D-MI) and his coalition of anti-choice Democrats will vote against the Senate health care bill because it it’s slightly less restrictive of abortion than the bill the House passed. The good news is that it’s procedurally impossible to insert Stupak’s language into the Senate bill through reconciliation. The bad news is that Speaker Nancy Pelosi (D-CA) needs every vote she can get to pass the Senate bill and anti-choice hardliners could be an obstacle.
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: Who are Landrieu’s Alleged Phone Tamperers?
By Lindsay Beyerstein, Media Consortium Blogger
The four young men arrested last week for allegedly attempting to tamper with the phones at the office of Sen. Mary Landrieu (D-LA) have ties to Republican politicians, conservative think tanks, radical campus activists, and even the intelligence community.
It appears that Landrieu was targeted, at least indirectly, because of her stance on health care reform. Two of the men posed as telephone repairmen while a third taped them with his cell phone. A fourth alleged accomplice was arrested in a car a few blocks away. (more…)
Weekly Audit: House Bank Bill Fatally Flawed
By Zach Carter, Media Consortium Blogger
Last week, the House of Representatives finally approved a financial regulatory overhaul and President Barack Obama announced a new initiative to address the unemployment crisis. Both are a step in the right direction, but neither offer effective solutions to problems that still plague the U.S. economy.
The House bill doesn’t do away with too-big-to-fail banks and that’s a big problem. As John Nichols explains for The Nation, “the big banks aren’t going to get sidelined—let alone broken up—anytime soon.” Instead of splitting large, risky banks into smaller firms that could fail without wreaking economic havoc, the House bill gives regulators more power, including the ability to bail out a faltering bank with billions of taxpayer dollars. When push comes to shove, regulators are not going to risk letting a major bank fail. They’ll just bail the company out. We all saw what happened when Lehman Brothers collapsed last year.
By imposing a tougher set of rules on banks, it’s conceivable that regulators could prevent some future failures. But as Mary Kane notes for The Washington Independent, Congress carved so many loopholes in the new laws that banks will have little trouble skirting them.
Obama had hoped to create a new Consumer Financial Protection Agency (CFPA) to crack down on predatory lending, but a coalition of bank-friendly Democrats pushed through amendments that significantly weaken it. Obama wanted states to have the power to enforce stronger rules on predatory lending. Under a loophole that Rep. Melissa Bean (D-IL) pressed into the House bill, states are prevented from writing or enforcing rules that limit interest rates charged by credit card companies and payday lenders. That’s a really destructive move, Kane notes, since it was state regulators, not federal regulators, who cracked down on abusive lending over the past decade.
Obama also hoped to require that risky derivatives transactions would be conducted via exchange like ordinary stock trades. Derivatives are the type of trades that brought down AIG. But the House bill exempts a huge portion of transactions from this requirement and changes the definition of “exchange” to include private, unregulated derivatives trades, as Nick Baumann explains for Mother Jones. This is a fatal flaw in the regulatory overhaul. Derivatives are the primary technique that banks use to make themselves too-big-to-fail. Over 95% of the $290 trillion derivatives market is housed at just five banks. These derivatives tie the bank to other financial firms in a complicated web of risk that is impossible for regulators to navigate. If one of those five banks goes down, there’s no way a regulator can predict the consequences.
The only hope for meaningful reform right now rests in the Senate, which is considering a much tougher bill than what the House approved. But the Senate has yet to even conduct mark-up hearings on its legislation and the pressure from the banking lobby is going to be enormous. Progressives have to keep pushing for a better bill if we want to protect our economy from the abuses that brought on the current recession.
And while huge federal bailouts for banking giants like Citigroup and Bank of America have helped the financial sector recover, the broader economy is battling the highest unemployment levels since the early Reagan era. Things are poised to get a lot worse. As Daniela Perdomo emphasizes for AlterNet, a full 3.2 million workers will lose their unemployment benefits by the end of March 2010. Even if the unemployment rate stays where it is—and Perdomo notes that a vast majority of experts think its going to go higher—the impact on ordinary people is going to be even more severe than today’s nightmare.
In a blog post for Working In These Times, Roger Bybee highlights a piece by Harvard University Law School Professor Elizabeth Warren, who emphasizes the hardships faced by ordinary families. The statistics are grim—one-eighth of Americans are on food stamps, one-eighth cannot pay their mortgages and 120,000 families are filing for bankruptcy every month.
We need to take serious steps to get people back to work. Mass unemployment means that consumers don’t spend money, which means that companies don’t sell as much, which makes companies lay off more workers to cut costs. It’s a self-reinforcing cycle. The market can’t fix unemployment without help.
So Obama’s Dec. 8 speech announcing a new job-creation plan was a welcome event. But the concrete aspects of Obama’s plan are not effective. All the tax cuts in the world won’t necessarily put people back to work. Obama did endorse a public jobs plan which involved the government hiring people to improve the nation’s infrastructure and clean up communities ravaged by the economic crisis, but he shied away from any specific numbers.
As David Roberts explains for Grist, Obama’s willingness to sign off on a $23 billion program for environmentally friendly home renovations is a step in the right direction. The plan is being referred to as “cash-for-caulkers” and is modeled on the very successful cash-for-clunkers program. The government will pay people to increase the energy efficiency of their homes, helping people cut down on utility bills and increasing the demand for construction labor and products like new windows and doors. It’s a good idea. But if all we get are tax cuts and $23 billion for greener homes, the jobs bill is not going to assuage the unemployment crisis.
There is no reason to be concerned about the cost of a thorough jobs program. Taxpayers committed trillions of dollars to help the financial sector weather the economic storm. Anybody who is worked up about the prospect of spending money on jobs should read Amitabh Pal’s piece for The Progressive. A modest tax on speculative trades of stock and derivatives could easily raise $150 billion a year to finance a robust jobs program.
At this point in the economic downturn, the government needs to take much stronger steps to rein in Wall Street and create jobs. We know what needs to be done to protect the economy from risky banking and we can afford to fix the unemployment crisis. All we need is the political will.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Audit: Unemployment Fueling Political Storm
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 Mulch: The Grown Ups are Back in Charge
By Raquel Brown, Media Consortium Blogger
Senate Democrats in the Environment and Public Works Committee (EPW) finally squelched Republican boycotts and passed a version of the climate bill yesterday morning. Last week, Republican Senators refused to show up to committee hearings in an attempt to stall the bill. Brian Beutler of Talking Points Memo notes that EPW has now set “the stage for other panels to amend the legislation.”
To no one’s surprise, Sen. James Inhofe (R-OK) immediately complained about the legislation on Fox News. Sen. Max Baucus (D-MT) was the lone Democrat that did not vote, which Inhofe interpreted as a sign that the bill is “dead.”
Chairman Barbara Boxer (D-CA) was much more upbeat and argued that the Republican boycott actually marred their credibility. “The absence of the Republicans during the Environmental Protection Agency’s presentation was a clear message that their criticism of the EPA analysis was not a substantive one,” Boxer said. “We are pleased that despite the Republican boycott, we have been able to move the bill.”
Inhofe also condemned Boxer for passing the bill through the committee unconventionally. Aaron Wiener writes for The Washington Independent that “Without a quorum that included at least two Republicans, the committee was unable to open formal debate on amendments to the bill. But passage requires just a simple majority, and Chairman Boxer and the Democratic leadership chose to forgo amendments in order to move the legislation quickly, given that the end of the GOP boycott was nowhere in sight.” Luckily, now that the bill is moving on to other committees, Inhofe and his Republican EPW colleagues will no longer have much of a say on the bill’s final outcome.
With Copenhagen just a month away, Kate Sheppard argues for Mother Jones that the odds of passing a viable climate bill before the climate summit are very grim. On Tuesday, Senate Majority Leader Harry Reid announced that the Environmental Protection Agency (EPA) will run a series of studies after each committee’s climate and energy bills are combined into a single piece of legislation. Even though the bill passed through the EPW committee, other committees, such as the Energy and Natural Resources Committee, Finance Committee, and Agriculture Committee, need to weigh in before the bill is reviewed by the EPA and sent for a vote in the full Senate. How will this affect climate talks in Copenhagen? Sheppard writes that, “Without the urgency imposed by the Copenhagen deadline, any little momentum that the climate bill had could disappear very fast.”
While this news is discouraging, Steve Benen of the Washington Monthly points out that, “It’s worth remembering that it wasn’t too terribly long ago that reports said the same thing about health care reform. Legislative battles can often take some unpredictable twists and turns.” This is certainly true, but in order for the legislation to pass, more Republicans will have to get on board. Democrats are trying to gain Republican support for a bipartisan bill by pledging to meet them halfway.
“For several GOP lawmakers, the key on energy policy is building new nuclear power plants. So, Dems are willing to make a deal — they’ll back approval for expedited construction of U.S. nuclear reactors in exchange for support for the rest of the bill,” Benen writes.
Meanwhile, on Wednesday, Sen. Lindsey Graham (R-SC.) showed that some Republicans are capable of exerting leadership. In a press conference with Sen. John Kerry (D-MA) and Sen. Joe Lieberman (I-CT), Graham criticized Republicans’ childish behavior toward climate change legislation. He asked, “If you can’t participate in solving the problem, then why are you up here?”
David Roberts writes for Grist that the three senators pledged to work with the White House to rescue the climate bill. The senators’ plan is not meant to undermine Sen. Boxer’s efforts but to strengthen the bill overall through a “dual track.”
“By stepping in, Kerry, Graham, and Lieberman are letting the political establishment know that the Very Serious grown-ups are back in charge. (It’s pretty telling that Kerry feels the need to craft another bill alongside the one with his name on it.) They will go to the White House, close the door, and hash out what kind of bill can really pass,” writes Roberts.
The road ahead won’t be easy. Congress’ inability to pass climate change legislation could ruin any chance of success in Copenhagen. In weeks to come, the bill will move on to other Senate committees and the world will be watching. Stay tuned.
This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
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 Mulch: A Bipartisan Climate Bill
By Raquel Brown, Media Consortium Blogger
The U.S. might not have to go to December’s climate change talks in Copenhagen empty handed. Two weeks after Senators John Kerry (D-MA) and Barbara Boxer (D-CA) unveiled a new draft of the climate change bill, Kerry and Sen. Lindsey Graham (R-SC) announced their bipartisan partnership to pass climate change legislation in an op-ed for the New York Times. By working together, the two hope to appeal to their respective party’s interests and help the climate change bill get 60 votes in the Senate. (more…)
Weekly Immigration Wire: Piecemeal Reform is Dangerous
By Nezua, Media Consortium Blogger
We’re coming to the close of the year in which President Obama said that immigration reform would be a priority. But to date, the Obama administration has only extended harsh immigration enforcement provisions put in place by the Clinton or second Bush administrations. These punitive pieces of legislation include E-Verify, a 100% detainment policy, the Secure Communities initiative, and the infamous 287(g) agreement. Cumulatively, they do not reflect a workable philosophy on immigrants, society, or the U.S. economy. Instead, this enforcement agenda destabilizes communities with police persecution and terror.
As Christopher W. Ortiz writes for AlterNet, “Comprehensive immigration reform is large-scale systemic reform encompassing all aspects of social, political and legal life here in the United States.” Ortiz, a police sargeant and criminal justice lecturer, presents an enforcement-heavy view of immigration reform, yet he does not agree with the current system of patchwork, or “band-aid” legislation. It is “a system of haphazard enforcement and piecemeal policies” that are “usurped” in some areas of the country and fully “ignored” in others. Ortiz calls for “a complete overhaul of the immigration system, from entry to citizenship.”
But on all fronts, the White House is rapidly backing away from anything resembling a systematic overhaul. On the same day that the E-Verify mandate went into effect, as Daphne Eviatar reports for The Washington Independent, Dora B. Schriro, the woman appointed to overhaul detention system, left the Obama administration to run New York’s jails. Shiro’s sudden departure is another stall for meaningful reform of the nation’s growing network of detention systems.
In another article, Eviatar highlights some of the issues that make E-Verify controversial. “In the middle of the toughest job market in decades, the administration has chosen to erect another roadblock to gainful employment for U.S. workers,” Eviatar writes. But is it a roadblock to economic growth or simply to justice? The cash still flows, but the stream is diverted to the growing detention industry. Productive members of our society are simply shifted into incarceration. Instead of earning money to spend in their communities, the funds are redirected to the Corrections Corporation of America, and to Immigrations and Customs Enforcement (ICE).
The recent mass firings at American Apparel also punishes productive workers in favor of harsh immigration enforcement. M. Junaid Levesque-Alam at Wiretap tries to find the logic, and justice, in these firings. The Los Angeles-based clothing manufacturer let go of 25 per cent of its workforce due to pressure from a federal immigration probe. Levesque-Alam doesn’t find logic or justice in the Obama administration’s approach to immigration—only the hypocrisy of Obama’s use of a Cesar Chavez rallying cry—”Sí Se Puede!”—to gain Latino votes. “When a corporation can offer vulnerable people better prospects than the most respected elected officials, then something is very wrong with liberal policy—or the lack thereof,” Levesque-Alam writes.
New America Media’s Marcelo Ballvé reports on a cosmetic, if not useless, change to the detention industry. On August sixth, ICE announced “the creation of two new government offices, one to oversee ongoing reforms to the detention system, and another to monitor and inspect detention centers.” This comes in response to a flood of complaints from human rights activists who charge the detention centers overall with a substandard level of care. As the Wire reported on March 19th, the quickly growing detention industry has been soundly criticized for a lack of humane standards in reports issued by both the Human Rights Watch and the Florida Immigrant Advocacy Center. But ICE overseeing itself hardly solves the problem.
Ballvé also points out that in the first five months of Obama’s presidency, ICE raids have spiked, and despite promises given by the President or the Department of Homeland Security, there is no greater focus on employers whatsoever.
“Despite the significant uptick in prosecutions,” Balivé writes in another piece for New America Media that “none of the May 2009 ICE cases targeted employers under the statute that makes it a criminal offense to knowingly hire undocumented immigrants.”
Finally, Sherriff Joe Arpaio, the public face of the 287(g) provision, is in the news again. Arpaio, who has anointed himself “America’s Toughest Sheriff,” is being sued by the American Civil Liberties Union, which charges that Arpaio used racial profiling in detaining a father and son who are both U.S. citizens, thus “violating the U.S. Constitution’s guarantee of equal protection under the law and prohibition on unreasonable seizures.” Arpaio is legendary for using humiliation as standard operating procedure. He’s made inmates dress in pink, parade through town in shackles, and this case is rife with it. It is repugnant and sadistic.
This country’s approach to immigration cannot rely on force, prisons, and persecution—no matter how well they self-regulate. We are not so young a race or civilization that we cannot employ a scope that doesn’t rely on prison-oriented profits and xenophobia. The White House needs to rethink its entire approach, and with originality and courage. The alternative is that this issue will become more problematic, manifesting greater chaos down the line.
This post features links to the best independent, progressive reporting about immigration and is free to reprint. 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: Bigger Than ‘Too Big to Fail’
by Zach Carter, TMC MediaWire Blogger
Now that trillions of taxpayer dollars have been pumped through the financial system, Wall Street giants JPMorgan and Goldman Sachs are reporting record profits—and giving out record bonuses. Goldman is planning to pay out $11.4 billion in compensation “earned” with our money. Even worse, attempts to regulate reckless financiers or empower ordinary workers are still being stymied by influential corporate lobbyists.
How did Goldman score the biggest quarterly profit in its history? Matt Taibbi explains in an interview with GritTV’s Laura Flanders. The $10 billion in direct capital that Goldman received from taxpayers under the Troubled Asset Relief Program (TARP) is actually one of the minor offenses. The company also converted corporate charters to become eligible for guarantees, and issued a whopping $28 billion in debt guaranteed by the government.
Banks were foundering last Fall, and very few investors were willing to supply them with emergency capital. So the FDIC guaranteed their debt, which allowed banks to raise funds at extremely low interest rates. The FDIC guarantee means that taxpayers will get stuck with the bill if the company defaults. If you can raise money at absurdly low rates, its very easy to turn over huge profits, as both Goldman and JPMorgan did.
There are other outrages: We still don’t know how much money the Federal Reserve loaned Goldman through its emergency lending facilities. The government’s bailout of AIG served as a huge windfall for the company, funneling at least $12.9 billion in taxpayer largesse directly to Goldman Sachs.
“AIG owed Goldman about $20 billion, and if AIG had gone through a normal bankruptcy, Goldman probably would have gone out of business. Instead, they got paid 100 cents on the dollar for every dollar that AIG owed them,” says Taibbi, author of a blistering take-down of the investment banking giant in the most recent issue of Rolling Stone.
In Salon, former Clinton Secretary of Labor Robert Reich says that this year’s big bank failures have resulted in a heavier concentration of financial influence in the few surviving firms, namely Goldman Sachs and JPMorgan. We have taken the “too big to fail” problem and made it bigger. JPMorgan acquired rival Bear Stearns for a pittance last March with billions of dollars in government guarantees. The company also picked up national banking giant Washington Mutual last fall. That means more risk in our economy and a greater concentration of lobbying power in our political system.
“We’ve ended up with two giants that now have most of the casino to themselves, are playing with poker chips backed by taxpayers, and have a big say in what the rules of the game are to be,” Reich writes.
Adam Schlesinger of Air America took to Wall Street to compile a hodgepodge of one-on-one interviews with bailout critics and condescending financiers. Schlesinger underscores the absurdity of Goldman’s pending bonuses by posting his own checking account balance ($13.75). The point of this massive bailout was to make the economy function for ordinary people. Instead, we’ve made sure that it benefits extremely wealthy bankers.
The government so completely resists doing anything about this staggering inequality, as Eyal Press writes for The Nation. There are two ways to approach the inequality problem. We can rein in the recklessness at the top by imposing serious regulations, and empower those at the bottom by giving them greater negotiating leverage with their employers (i.e., promoting unionization). While the bonus money flows on Wall Street, the Employee Free Choice Act (EFCA), a key bill to empowering unions, was just stripped of a crucial provision that would have made it easier for workers to organize, as David Moberg reports for In These Times.
As EFCA is gutted, bills proposing regulations for the financial sector are moving at a snail’s pace—even after two years of economic turmoil. Last week, Congressional leaders from both parties nominated members for a new panel, the Financial Crisis Inquiry Commission, to investigate the causes of the financial crisis. The investigation seems doomed to failure by its very design. Zachary Roth details the committee’s various shortcomings for Talking Points Memo. Of the panelists, six were nominated by the Democratic leadership, while four were nominated by the Republican leadership. If all four Republican nominees vote to block a subpoena, the committee cannot issue it, and without broad subpoena power, the entire exercise is futile.
Roth also emphasizes the excessively political nature of the appointees, particularly on the Republican side, which named former Rep. Bill Thomas, R-Calif., as Vice Chair. The Democratic picks are generally uninspiring, except for Brooksley Born, who fought to regulate derivatives in the 1990s as head of the Commodity Futures Trading Commission. But the Democrats have nobody anywhere near as frightening as Rep. Thomas, a vicious partisan who specialized in ushering money to special interests during his tenure as Chairman of the House Ways and Means Committee.
Mary Kane of The Washington Independent explains the troubling record of another Republican commission appointee, Peter Wallison of the American Enterprise Institute (AEI), a conservative think tank. The various conspiracy theories Wallison peddled include a robustly debunked belief that a decades-old anti-discrimination law is responsible for the mortgage meltdown. The law in question, known as the Community Reinvestment Act (CRA), dates back to 1977, and Wallison’s conspiracy theory has been rejected by nearly everyone in the financial commentariat, including regulators appointed by George W. Bush.
The Community Reinvestment Act requires banks to make loans to communities where they collect deposits. If you accept deposits at a branch in a poor neighborhood, you have to offer responsible loans in the same community. The idea is to expand access to affordable credit in the inner cities, while the subprime crisis is heavily concentrated in the suburbs. CRA loans have to be affordable, which means high-interest subprime loans do not count. CRA does not require banks to lower their lending standards, because any recipients have to be credit-worthy. Only 6% of high-interest mortgages were made by companies subject to CRA regulations, and lest we forget, this law was passed in 1977, while financial crisis erupted in 2007.
Instead of appointing toothless commissions, we should be making sure the financial oligarchs do things that are good for the rest of us. Congress should be writing regulations to curb risk in the financial system as fast as bankers are paying themselves bonuses. They’re our representatives, after all, and it’s our money.
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.