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June 20, 2010

Listening to Our History

Filed under: Action, Martin Column, President Barack Obama — admin @ 11:28 pm

Driving through the west, headed towards home from a cross-country road trip with my wife Stacie and dog Billie, endless hours on the highway, no Internet and not much radio except for hard-right talk.

Hearing the voices passing through the desert states is a grim reminder of the forces we’re up against, who now characterize themselves as the real “community organizers,” who represent the real people.

It’s not just the right wing. Lots of people have adopted the timid trickle-down theories embodied by our political leadership: “Don’t get too tough on BP or they’ll take away our jobs. Don’t cross Wall Street, we need to keep the market stable.”

We’re in Winslow, Arizona, wondering whether a boycott will worsen the dire poverty we see in front of us. It’s easier and more politically expedient to make immigrants the scapegoats for lack of jobs and economic uncertainty than it is to question a system that is seriously out of whack, that offers the biggest rewards to those who gamble on our collective losses without risking their own wealth.

That’s what a big chunk of the financial system like hedge funds and derivatives has become. Cynical and bloodthirsty, producing nothing except profits for the few. And the gesture toward financial reform winding its way through congressional conference committee does little to change that.

I understand the fears of friends and family that the money they have saved and invested over the years will be lost if we challenge Wall Street and the robber barons of our time. The financial industry has shown that if it doesn’t get what it wants it is capable of wrecking our economy and causing great suffering for others. But this kind of blackmail undermines democracy. We deserve a financial system that provides both transparency and financial security.

Traveling through the country, along roads adjacent to rail lines and mile-long freight trains, I kept thinking about our nation’s history and those rare moments of courageous leadership like Teddy Roosevelt tackling the railroad trusts, and FDR and his team creating the New Deal to save the financial system from its own excesses. And the creation of the GI Bill, which was designed to bolster possibilities for people who risked their lives for our country, and had played a huge part in the creation of a vital middle class. These were moments when audacious politics met pragmatic problem-solving.

I attended the Personal Democracy Forum in New York City earlier this month. The topic of the wide-ranging conference was “Can the Internet Save Politics?”

One of the most inspiring speakers was Daniel Ellsberg. Amid all the excitement over the possibilities for political activism and engagement with new social media, Ellsberg reminded us that one of the most important ingredients is the same as it always was: moral courage.

Ellsberg was the Pentagon military analyst who leaked a secret Defense Department account of the disgraceful political decisions that led the country into the Vietnam War and its outcome. Plenty of people on the inside knew what was happening in Vietnam, Ellsberg said, but they had kids to put through college and mortgages to pay. They were not about to step outside the system and jeopardize their careers.

Not everybody has the nerve or inside information to be a whistleblower like Ellsberg. But we can demand a financial and economic system where we don’t have to sacrifice our financial security to those who gamble against our futures.

We can demand that our president delivers on his campaign promise of real change. There can be no real change without confronting corporate power over our government and political system. We are as controlled today by the financial and oil industries as we were by the railroad barons when Teddy Roosevelt took them on. TR said one should speak softly and carry a big stick. President Obama has been doing the opposite. We need to demand that Barack Obama follow TR’s suggestion.

June 2, 2010

Consumer Protection, Fed Style

Filed under: Action, Federal Reserve, Financial Reform Legislation, Martin Column — admin @ 5:53 pm

One of the big unsettled issues for the congressional conference committee considering financial reform is whether to create an independent financial consumer protection agency.

That’s what the House bill does. The argument for an independent agency is that consumers need a strong advocate in the financial marketplace.

The Senate decided that an independent consumer financial watchdog wasn’t needed, and that the consumer financial protector should live in, of all places, the Federal Reserve. After all, the Fed already has responsibilities to “implement major laws concerning consumer credit.” We all know how well that worked out.

The problem is that the Fed has functioned as a protector of the big banks, never more so than since the big bank bailout and in the battle over financial reform.

Despite promises for greater transparency, the Fed has repeatedly resisted attempts to get it to disclose all the favors it’s done for financial institutions since the bailout. If the Fed had put up half the fight against bank secrecy that it’s waged on behalf of bank secrets, consumers would never have been subjected to all those lousy subprime loans.

It is telling that no actual consumers or consumer organizations actually think that housing consumer protection inside the Fed is a good idea. Who does? The big banks and the Fed.

For those who still need convincing that a Fed-housed consumer protection agency is a bad idea, the Fed has provided a more recent example of what it means by consumer protection.

Last month it unveiled a database that’s supposed to help people choose the most appropriate credit card.

The database might be useful to professional researchers but provides little that would be of use to ordinary consumers. It presents the credit card statements by company but provides no other search functions, such as comparing credit cards by interest rates or fees.

Some of the presentation suggests that the information was dumped onto the Fed’s website without much thought. Bill Allison, who is editorial director of the Sunlight Foundation, a non-profit organization that digitizes government data and creates online tools to make it accessible to readers, said the following:

“I don’t think there’s anything wrong with posting it, but this is obviously not data you can search,” Allison told Bailout Sleuth.

He also pointed out that some of the agreements themselves aren’t particularly informative. He cited the entry for Barclays Bank Delaware, which notes that the bank may assess fees for late payments and returned checks. “The current amounts of such Account Fees are stated in the Supplement,” the agreement reads.

But that supplement is not contained in the Fed’s database. The Fed promises to go back and refine its database. But if they’re not devoting the resources to get this right now, with their ability to protect consumers under the microscope, do you really expect they’ll do better later?

An independent consumer protector is not simply some technicality to be bargained away. We’ve learned from the bubble and its aftermath that consumers need all the help they can get. Contact your congressperson and tell them you’re still paying attention to the reform fight. Check out your congressperson and see if they’re on the conference committee. If they are, your voice is especially important. While you’re at it, contact the president and remind him we won’t settle for any more watering down of financial reform.

April 20, 2010

Giving Toxic Waste a Bad Name

Filed under: Action, Glass-Steagel, Goldman-Sachs, Martin Column, President Barack Obama — admin @ 5:11 pm

Face it, if we found out that a Vegas casino was run like our banking system, the worst strung out addict wouldn’t gamble there.

Even they wouldn’t be able to stand the stench.

Casino operators know you have to provide at least the appearance that the games aren’t crooked.

Casino operators know they can’t force people to spend their hard-earned money gambling on a toxic waste dump.

But the bankers and their political cronies who have been playing us for suckers forced us to pay to clean up the shambles, as well as the continuing costs of the broken economy.

Now the casino operators are trying to assure us that everything is hunky-dory but that same foul scent is still wafting from their dumpsite. Goldman Sachs shrugs off  the Securities and Exchange Commission’s fraud charges, hiring the president’s former lawyer to fight them, while it rakes in eye-popping profits that beat even the most optimistic projections.

The man we hoped would clean up the mess, President Obama, appears at long last to be taking a more nimble, hands-on approach to financial reform than he did on health insurance reform. But the plans endorsed by him and the Democratic leadership contain too little actual reform and too much reshuffling of the same weak hand regulators have been bringing to the casino.

We’ll never win against the sharks the way the game is rigged now.

That’s the bitter lesson brought home by the revelations of the last month, from probes into the tragic bank follies of the Lehman and Washington Mutual collapses, and the  SEC lawsuit charging Goldman-Sachs with fraud.

As we learn more details of each of these debacles, they provide potent weapons  in the fight to overhaul the system that led to the financial meltdown.

Far from being a unforeseeable natural disaster, it was a predictable consequence of the system we still have in place today. In each case, the financial giants rigged the game with fraudulent bookkeeping and lack of disclosure while regulators looked the other way. And far from being isolated instances of improper conduct, the Lehman, WAMU and Goldman fiascoes are prime examples of how far the financial industry has fallen in common sense and ethical standards.

But the Democrat leadership has squandered its credibility on financial reform, offering legislation that largely preserves the status quo.

Rather than galvanizing public outrage against Wall Street into support for fundamental change to rebuild a financial system that truly serves our economy, the president and the Democratic leadership are caving in to Wall Street lobbyists and Republican obstructionists who pay lip service to reform while they block and dilute it.

Meanwhile, we’re treated to the truly disgraceful spectacle of each party accusing the other of having taken more campaign cash from Goldman-Sachs and the other major casino operators than the other.

The truth is they’re both beholden to the cash generated by the toxic dump of our financial system. The Democrats may be ahead in the fundraising game right now, but the Republicans are working hard to curry favor from Wall Street and catch up.

Meanwhile, the rest of us are left on the sidelines.

Fortunately we don’t have to stay there.
Several other Democratic senators have proposed amendments worthy of support.

Among the most articulate voices for a stronger version of reform is Sen. Ted Kaufman, D-Delaware. Along with senators Jeff Merkley, D-Oregon, Carl Levin D-MI, Sherrod Brown, D-Ohio and Jeanne Shaheen, D-N.H., Kaufman has proposed a bill that moves toward rebuilding the wall that used to separate traditional, federally guaranteed banking activities from high-risk speculative gambling. That wall was torn down when the Depression-era Glass-Steagall Act was repealed during the Clinton Administration. In addition, a conservative Democrat who faces a tough reelection fight, Blanche Lincoln, D-Arkansas, has proposed derivatives regulation that is substantially tougher than that which has been proposed by the Obama Administration.

Now is the time to clean up the casino. We have to channel our  genuine, justified anger into action to push our politicians to do the right thing, whether they want to or not.

April 8, 2010

Bursting D.C.’s Bubble

Filed under: Action, Consumer Financial Protection Agency, Martin Column, Too Big To Fail — admin @ 2:28 pm

The battle for financial reform comes down to the ownership of one critical piece of real estate, one that has managed to avoid the crash that has ended the dreams of security for so many: the nation’s Capital.

“We’re at a critical moment point in our democracy,” Elizabeth Warren, the congressional bailout monitor, told those of us gathered on a webinar Wednesday. “Either the banks own Washington or the people do.”

Warren was referring to something that the Democratic Senate whip, Dick Durbin, said last year about the place where he works, in an rare moment of a politician telling the truth:  “The banks own this place.”

Elizabeth Warren, a tireless promoter of consumer protection and truth teller about the decline of the decline of fortunes of regular folks, prefers to view Durbin’s declaration as premature.

But a more definitive answer is not far off, according to Warren; it could come next month. The full Senate is expected to begin debate on financial reform when it returns from recess this month with a final vote in May.

Congress is one place where the bubble hasn’t burst. The value of those congressional seats hasn’t gone down since the crash; it’s gone up. Representatives and senators are raking n more than ever from corporate lobbyists.

The banks are fully mobilized, unloading $1 million a day to block, neutralize and weaken reform. The webinar, sponsored by Americans for Financial Reform and Americans for Responsible Lending, was an effort to galvanize reform supporters into action.

As reluctant as I am to disagree with Warren about anything, on this one I’m with Durbin. From the evidence, it’s hard to see how Wall Street hasn’t gotten everything it wants from the politicians, even after the greatest financial meltdown since the Depression.

The question is whether we can take back that inflated piece of real estate and reestablish its true value.  Can we turn our frustration and rage over the bailouts and our elected representatives’ impotence into action?
There are marches – April 29th on Wall Street and May 17 on K street, where the lobbyists have their offices. And there are elected representatives to inundate with messages in favor of reform. Reform advocates can’t match the bankers’ cash but they have people power on their side.
One questioner asked Warren at what point the Senate reform proposal from Sen. Chris Dodd, which was initially strong before Dodd watered it down, would become so weak it wouldn’t be worth supporting. Warren didn’t answer the question directly. “They’re not leaving much margin for error,” she said.

Unfortunately when it comes to financial reform the devil is in the details, and we have to insist on real reforms.

That means:

× Breaking up banks that are too big to fail (Dodd’s proposal doesn’t do that now).

× Creating a strong and independent financial consumer protection agency  (Dodd proposes to house it in the Fed, with other banking regulators able to veto the consumer protector’s decisions)

× Forcing banks to have more “skin in the game” (The Senate bill require bankers to keep money in reserve equal to 5 percent of loans they bundle and sell off; European regulators require twice that amount).

× Congress setting the amounts of capital financial institutions would have to keep on hand, rather than leaving it for the regulators to decide.

What we’ve learned in the past several months, from the report on the Lehman bankruptcy and the Fed’s recent disclosures on its involvement in Bear-Stearns takeover by J.P. Morgan, is that regulators weren’t asleep at the switch before, during and after the financial crisis. Rather, the regulators have actively colluded with the banks in an attempt to conceal the banks shady practices. Too much of what is being called financial reform is actually just maintaining the status quo while pretending to overhaul the system.

I don’t agree with a lot of what the Tea Party has offered. They don’t offer much in the way of positive proposals, and seem particularly weak in grappling with the issue of unchecked corporate power. But I think they’ve shown how a group of people (with some corporate funding) can shake up and shape a national debate. The Tea Party has no corner on frustration, anger, betrayal or the sense that something has gone deeply wrong in our country. There’s no reason we can’t channel that frustration and anger to plant the flag of real reform in the middle of real estate that, after all, belongs to us. Now’s the time to do it.
Here’s how to contact your senator and representative. Here’s the web site for Americans for Financial Reform.

February 25, 2010

Obama to Bailout Cop: Beat It!

Filed under: Action, Martin Column — admin @ 12:33 am

The Obama administration, which has increasingly been adopting a can’t do attitude when it comes to putting real teeth into financial regulation, now wants to take out the teeth already in place.

Treasury officials are signaling they’d rather not have the same aggressive special inspector general overseeing the $700 billion federal bailout anywhere near their new $30 billion bank subsidy to encourage lending to small business.

I wrote about that inspector general, Neil Barofsky, a couple of weeks ago, suggesting he was one of the few public officials actually trying to protect our money rather than just acting as a rubber stamp for Wall Street’s raid on the U.S. Treasury.

Barofsky has issued a series of scathing reports raising questions about federal officials’ handling of the Troubled Asset Relief Program.

Treasury officials contend that although the $30 billion would come from unspent TARP funds, it’s technically not TARP. So Barofsky should butt out. Their real reason for not wanting Barofsky around is simple: the banks don’t like him looking over their shoulders.

You can’t blame the banks for that. No doubt it’s a lot more fun to spend your federal handout without some nosy former federal prosecutor scrutinizing every move you make.

But for the Obama administration to go along with it is troubling and baffling. The president promised an unprecedented level of accountability, understanding that openness would go a long way toward restoring credibility in the financial system and the government’s ability to oversee it.

But Treasury officials appear to be more concerned with keeping the bankers happy than they are with keeping them honest.

The news about Barofsky surfaced as the administration appeared to be backing away from its recent embrace of former Fed chief Paul Volcker, who favors limits on bank size and risky financial trading. Predictably, the financial titans were balking at the proposals.

The administration’s move against Barofsky is both bad policy and bad politics. It seems designed to hand live ammunition to the mistrustful antigovernment troops of the Tea Party.

Meanwhile, Congressional Democrats have been quiet on the issue. The president and the Democrats have accomplished what at one time would have been seen as a nearly impossible task: handing the mantle of accountability and openness over to Republicans, who are howling with outrage over the idea of keeping Barofsky away from the small-business lending subsidy.

Rep. Darrell Issa, R-Ca., said earlier this week: “Denying SIGTARP the ability to defend taxpayers sends a chilling message that IGs who conduct real oversight will be punished for holding this Administration accountable.”

At the very least, the administration needs to come to its senses and regain its commitment to transparency. Let Barofsky do his job. The administration should be paying better attention to his criticisms, not trying to get rid of him.

January 10, 2010

Open Letters to Sens. Feinstein and Boxer

Filed under: Action, Consumer Financial Protection Agency, Glass-Steagel, Martin Column — admin @ 4:57 pm

NO COMPROMISE TOP 10

As the debate over financial reform moves to the Senate I’ve written a couple of open letters to my senators. I’m not endorsing any particular legislative proposals but I do outline the items that shouldn’t be compromised.

Feel free to borrow my ideas for letters to your own senators, or to disagree. Whether you agree or disagree, I’d like to hear what you think.

What’s your bottom line on what financial reform should contain?

OPEN LETTER TO SEN. DIANNE FEINSTEIN

Dear Sen. Feinstein:

Throughout the economic crisis, you have continued to raise serious questions about whether the bailout was protecting the financial industry or the public. Now is the time to turn that skepticism into constructive action.

Sen. Feinstein, voters are counting on your continuing leadership to make sure Congress provides real financial reform to prevent future meltdowns and bailouts stemming from reckless practices and lack of government oversight.

Though you voted for the bailout, at the time, in September 2008, you compared the  preparations for the so-called financial rescue to the build-up to the war in Iraq. “There is a great deal of cynicism among those of us who have to live with having voted to go into Iraq based on misinformation and intelligence that later turned out not to be truthful,” you said.

On March 23 of this year, you were among a group of senators who met with President Obama to express concern that his administration’s proposals didn’t go far enough, and that his economic advisers were many of the same people who oversaw the deregulatory fever that played such a key role in our financial crisis.

Unfortunately, Sen. Feinstein, your concerns have been borne out.

Financial reform as passed by the House of Representatives is filled with loopholes. Lobbyists from financial firms recently rescued from ruin by taxpayers have mounted a fierce campaign to maintain a system in which “too big to fail” institutions” can manipulate the regulatory system.

The good news is that Sen. Chris. Dodd has proposed much stronger legislation, the Restoring American Financial Stability Act of 2009.  By all accounts, his proposal faces a bruising battle as the financial industry gathers all its forces to protect its interests. Sen. Dodd has indicated that compromise is inevitable.

But Sen. Feinstein, the stakes are too high to compromise on the most important aspects of reform. Some of these are contained in Sen. Dodd’s proposal. Others are contained in other legislative proposals under consideration in the session about to begin.

Please help make sure that these key elements of reform are not the victims of compromise:

• Vote against the confirmation of Ben Bernanke to another term as Federal Reserve chair. He was at the center of the bubbles before the meltdown and also helped engineer a bailout that profited Wall Street while Main Street suffered.

•Reinstate a modern-day form of Glass-Steagal, as proposed by Sens. McCain and Cantwell.

•Audit the Federal Reserve, as proposed in legislation sponsored by Reps. Paul and Grayson, which would open up the operations of the institution to public scrutiny for the first time.

•Reconsider and approve judicial cram-downs, which would give bankruptcy judges the power to lower mortgage payments. This would put real teeth in the Obama Administration’s anti-foreclosure efforts.

In the Dodd bill:

• Support creation of a strong, independent Consumer Financial Protection Agency, with regulatory oversight of the Community Reinvestment Act (not provided in the House bill)

•Support creation of a an Agency for Financial Stability, responsible for identifying, monitoring and addressing systemic risks posed by large complex companies and their products, with the authority to break up firms if they pose a threat to the financial stability of the country

• Remove exemptions (contained in the House reform bill) for banks and credit unions with assets of less than $10 billion – about 98 percent of deposit-taking institutions in the country.
• Bar pre-emption (also allowed in the House bill), which would let states, if they choose, to pass tougher financial regulations for nationally chartered banks.

• Don’t exempt other consumer-financial businesses,  such as auto dealers from oversight by the Consumer Financial Protection Agency (as the House bill does.)

• Give two agencies, the Commodities Futures Trading Commission and the Securities and Exchange Commission broad authority to force derivatives markets onto exchanges where they pose less risk.

I’m urging you to put everything you’ve got behind this fight to protect consumers and homeowners. Voters put their trust and faith in you to see that their interests are protected, not compromised away. We’re relying on you to convince your colleagues to put the public’s interests ahead of the private profits and the power of the financial giants.

Sen. Feinstein, your skeptical instincts have been right since the Bush administration tried ramrod through a 3-page $700 bailout. Now everyone in the country can plainly see how that bailout benefited the large financial institutions but did little for small business, consumers and  homeowners. Thank you for your raising the right questions in the past. Thank you for helping us get back on the right track now.

Sincerely,

Martin Berg

Editor

WheresOurMoney.org

AN OPEN LETTER TO SEN. BARBARA BOXER

Dear Sen. Boxer:

Voters are counting on your continuing leadership to make sure the promise of real fundamental financial reform becomes a reality.

In 1989, you were one of a handful of senators to vote against repeal of the Glass-Steagall Act, the Depression-era law that had kept banks’ traditional business separate from their riskier speculative business.

Though you were in the small minority opposing the deregulatory fever sweeping Washington, your vote showed tremendous leadership, courage and prescience.

You withstood the pressures from financial industry lobbyists and contributors as well as the demands of your own party. As you know, then-President Clinton and his economic advisers, after initially opposing the repeal, eventually made a deal to sign off on the dismantling of Glass-Steagall.

We all know what happened over the last decade – record profits for financial institutions while the economic foundation for American families has gotten increasingly shaky. Voters have watched with dismay as the massive federal bailout has helped create even fewer financial institutions, with even greater wealth and wielding even more political power.

Neither the Obama administration’s proposals nor the bill passed by the House of Representatives offer sweeping reform nor do they do anything to break up the power of the “too big to fail” institutions. They also don’t do enough to ease the threat these banks continue to pose to the rest of the economy.

Now Sen. Christopher Dodd has proposed much stronger legislation, the Restoring American Financial Stability.  By all accounts, his proposal faces a bruising battle as the financial industry gathers all its forces to protect its interests. Sen. Dodd has indicated that compromise is inevitable.

But Sen. Boxer, the stakes are too high to compromise on the most important aspects of reform. Some of these are contained in Sen. Dodd’s proposal. Others are contained in other legislative proposals under consideration in the session about to begin.

Please help make sure that these key elements of reform are not the victims of compromise:

• Vote against the confirmation of Ben Bernanke to another term as Federal Reserve chair. He was at the center of the bubbles before the meltdown, helped engineer a bailout that profited Wall Street while Main Street suffered, and has fought increased transparency in the financial system.

• Reinstate a modern-day form of Glass-Steagall, proposed by Sens. McCain and Cantwell.

• Audit the Federal Reserve, as suggested in the proposal by Reps. Paul and Grayson, which would open up the operations of the institution to public scrutiny for the first time.

• Reconsider and approve judicial cram-downs, which would give bankruptcy judges the power to lower mortgage payments. This would put real teeth in the Obama Administration’s anti-foreclosure efforts.

In the Dodd bill:

• Support creation of a strong, independent Consumer Financial Protection Agency, with regulatory oversight of the Community Reinvestment Act (not provided in the House bill).

• Support creation of a an Agency for Financial Stability, responsible for identifying, monitoring and addressing systemic risks posed by large complex companies and their products, with the authority to break up firms if they pose a threat to the financial stability of the country.

• Remove exemptions (contained in the House reform bill) for banks and credit unions with assets of less than $10 billion – about 98 percent of deposit-taking institutions in the country.

• Bar pre-emption (also allowed in the House bill), which would let states, if they choose, to pass tougher financial regulations for nationally chartered banks.

• Don’t exempt other consumer-financial businesses,  such as auto dealers from oversight by the Consumer Financial Protection Agency (as the House bill does).

• Give two agencies, the Commodities Futures Trading Commission and the Securities and Exchange Commission broad authority to force derivatives markets onto exchanges where they pose less risk.

I’m urging you to put everything you’ve got behind this fight to protect consumers and homeowners. Voters put their trust and faith in you to see that their interests are protected, not compromised away. We’re relying on you to convince your colleagues to put the public’s interests ahead of the private profits and the power of the financial giants.

Sen. Boxer, you were right in 1989 when you were in the minority. Now everyone in the country can plainly see the wreckage from the great deregulatory experiment you opposed. Thank you for your vision. Thank you for helping us get back on the right track now.

Sincerely,

Martin Berg

Editor

WheresOurMoney.org

December 10, 2009

Make Your Voice Heard in Battle For Reform

Filed under: Action, Consumer Financial Protection Agency, Glass-Steagel, Martin Column — admin @ 11:03 pm

As the fight over financial reform gets serious in Congress, the atmosphere is thick with intriguing political theater, posturing, and competing proposals of mind-numbing complexity.

But the stakes for consumers and taxpayers have never been higher. Continue reading “Make Your Voice Heard in Battle For Reform” »

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