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Martin Column Archive

August 31, 2010

Around The Web: Nothing Natural About Financial Disaster

Filed under: Around the Web, Derivatives, Executive Pay, Martin Column, Outrage, Securities and Exchange Commission (SEC), Too Big To Fail, Uncategorized — admin @ 10:22 am

Maybe this is the one that will finallhy cause people to take to the streets.

The crack investigative journalists at Pro Publica and NPR’s Planet Money have uncovered the latest evidence of how the big bankers schemed to keep their bonuses and fees coming by creating a phony market for their mortgage-backed securities, which were tumbling in value as the housing market tanked in 2006.

The Pro Publica/NPR investigation shows how the bankers from Merrill-Lynch, Citigroup and other “too big to fail” financial institutions undermined a system of independent managers who were supposed to be evaluating the value of the securities. The banks simply browbeat the managers into buying their products rather than face losing the banks’ business.

Meanwhile, the bankers continued to make money off every deal, even though the rest of us paid a high price for their continued trafficking in complicated financial trash.

Then when the entire business unraveled in the financial collapsed, these bankers got a federal rescue and a return to profitability.

Pro Publica acknowledges it’s complex material, so they’ve accompanied their investigation with a cartoon and graphs to make it easier to understand.

My WheresOurMoney colleague Harvey Rosenfield wrote recently about the falseness of the claim that either Hurricane Katrina or the financial collapse were primarily natural disasters. The NPR/ProPublica investigation is yet more evidence that the bankers’ irresponsible self-dealing turned a downturn in the housing market into full-blown catastrophes.

Writing on his blog Rortybomb, Mike Konczai hones in on the stark contrast in the fate of the bankers and many of the rest of us:  “Remember that by keeping the demand artificially high for the housing market in the post-2005, these banks created its own supply of crap mortgages. These mortgages inflated and then crashed local housing prices. Meanwhile the biggest banks got tossed a lifeline and homeowners can’t even short sale their home much less have a bankruptcy judge that can set their mortgage to the market price with a large penalty. And everyone lines up to tell those people what ‘losers’ they are, how `irresponsible’ they’ve been for being pulled into becoming the artificial supply for artificially created demand of housing debt. What sad times we are living in.”

Meanwhile the SEC is supposedly investigating the self-dealing. We’re still waiting for the tougher new SEC that the Obama administration promised. In the latest indication that we may have to wait a while longer, a federal judge has rejected the agency’s proposed $75 million settlement with Citibank over charges that the bank misled its own shareholders about the shrinking value of its mortgage-backed securities. The SEC said the bank misled investors in conference calls by saying its subprime exposure was $13 billion, when it was actually more than $50 billion. Among the pointed questions the judge asked: Why should the shareholders have to pay for the misdeeds of the bank executives, and why didn’t the SEC go after more of the executives?

The judge’s questions about accountability mirror the uneasy questions a lot of us have about this administration’s reluctance to take on the bankers whose behavior led to ruin fee country while they profited.

August 9, 2010

The Credit Wolves Stalk South-Central

Filed under: Foreclosures, Martin Column — admin @ 12:32 pm

Before they fell into a costly cycle of subprime refinancing, Harold and Patricia King could afford to live in their modest two-bedroom home in south-central Los Angeles. They had paid $17,500 for it in 1968 with the help of a low-interest G.I loan.They raised two children and two grandchildren there. Harold retired in 1994 after 30 years on General Motors’ assembly line. His wife retired a few years later from her clerical job with the school district. They had a monthly fixed income of $2,900 and a fixed monthly mortgage payment of less than $1,000. They could handle it.

Unlike some who were able to take advantage of the cash they squeezed from the value of their homes, the Kings have little more than financial devastation to show for it. They refinanced 10 times — eight times between 2000 and 2006 — through various financial institutions. They wound up with more than a half million dollars in debt and payments more than their monthly income. Earlier this year they joined the more than 1 million other homeowners across the country that face foreclosure.

While we’ve seen and heard lots of stories of families suffering through losing homes they could never actually afford, the King’s saga puts into sharp focus one of the overlooked aspects of the on-going foreclosure crisis –many homeowners who had traditional– and affordable – mortgage loans were sold into subprime hell via refinancing deals.

In its 2006 study, “Losing Ground,” the Center for Responsible Lending found that between 1998 and 2006, “the majority of subprime loans have been refinances rather than purchase mortgages to buy homes,” and that homeowners who repeatedly refinance face a higher likelihood of facing foreclosure.

In February, the Kings packed their belongings in boxes, preparing for the loss of their long-time home. But they decided not to fight for the home they’ve lived in for more than 40 years.  With the help of their lawyer, they’ve been able to stave off foreclosure, at least through the rest of the year. They’ve gone on the offense, suing their most recent lenders earlier this year for fraud and elder abuse.

Tracking the complex cast of characters and institutions with key roles on the business side of the Kings’ plight also offers a stark reminder that the explosive growth in subprime created vast wealth that never trickled down to hard-hit communities like south-central Los Angeles, a once-vibrant largely African-American and Latino neighborhood increasingly blighted by the lasting marks of the severe recession – high unemployment and high rates of foreclosure.

Take for example Deutsch Bank, which bought the MortgageIT firm that provided one of their Kings’ refinancings. In 2009, the banking giant increased its compensation to its executive board nine-fold over the previous year, led by the bank’s president, who was paid $13 million. Deutsch Bank’s path through the rocky financial crisis was helped along by its share of more than $50 billion it got in funds from the taxpayer bailout–funds the federal government paid to insurance giant AIG, which were then passed on to AIG’s clients – what has been labeled the “back-door bailout.”

The Kings also crossed paths with a lesser-known firm called Green Tree, which at one time was hired to act as the servicer on their loan – collecting the Kings’ mortgage payments every month. Founded by Lawrence Coss, a former car salesman, the firm had made a fortune in the 1990s by loaning money to people to buy mobile homes. Around the time Harold King was retiring from GM, Coss was drawing attention as the country’s highest-paid executive, winning a $69 million bonus ­– the largest bonus of all time when it was awarded in 1996. The following year he did even better, with a $102 million bonus. However, the fat profits that got Coss the bonus later turned out to be a mirage, built from bundles of risky loans and shaky accounting. Coss had to give some of his bonus back but managed to hang onto his ranches and philanthropic foundation. If anybody had been paying attention back in 2001, the unraveling of Green Tree’s business could have provided an early warning signal of the problems to come.

But in places like south-central Los Angeles, the country’s financial institutions were on a lending spree.  The Kings originally borrowed some money against their equity to supplement their retirement income. But then A series of lenderslenders decided that the retired couple on a fixed income were good candidates for much larger refinancing.  What they offered the Kings were adjustable-interest rate loans with low teaser rates and exorbitant closing costs, fees and prepayment penalties. The Kings readily acknowledge now that they are financially unsophisticated and didn’t understand what they were getting themselves into. The deeper they went into debt the worse they felt.

“I felt guilty; I didn’t want to discuss it,” Patricia King saidsays now. “I knew that something was deeply wrong. You hope for the best. But nothing good ever happened.”

Eventually lenders told the Kings that they needed to find somebody with better credit if they wanted to refinance their home. They brought in their 35-year-old grandson Antonio, who at the time worked at the Coca-Cola bottling plant.

According to the Kings’ lawsuit, Antonio King informed lenders that his monthly income was $3,700 a month, but when the broker or lender prepared the application, it showed his monthly income as $10,200 a month. The application, submitted on Antonio King’s behalf, also exaggerated the value of the home, from $154,000 to $540,000.  The Kings’ lawyer, Philip Koebel said of their grandson: “He threw himself to the credit wolves.”

Koebel said Antionio King found an ad for what sounded like an attractive new loan with a monthly payment of about $1,000 a month.

The Kings didn’t understand that they were getting into a negative amortization loan. The Kings were told that they would save $1,000.00 per month in comparison to a conventional mortgage if they made the minimum payment. They were not told that the minimum payment didn’t even cover the interest. They were not told that the difference would be added to the principal of their mortgage and that they would be charged additional interest on the ever increasing balance of their mortgage.

With the money they got, the Kings paid off the previous loanmortgage. But they couldn’t keep up with the new payments. Antonio tried to work out a loan modification but Green Tree, which was servicing the loan,  “was not interested in making the loan affordable to the Kings,” according to their lawsuit.  Eventually Antonio filed bankruptcy in an effort to save the his grandparents’ house. His 80-year old grandfather mows lawns in the neighborhood to bring in a couple of hundred dollars a month.

The lenders have fought to have the Kings lawsuit thrown out, so far unsuccessfully. In court papers their defense lawyers characterize the lawsuit as nothing more than “vague allegations and broad generalizations.” The Kings, they say, were “reaping the rewards of the strong housing market at the time and taking cash-out payment after cash-out payment each time they refinanced the loans.”

The Kings “were clearly very familiar with the loan refinancing process,” the lenders’ lawyers contend.

Like many others, the Kings didn’t see that the world had fundamentally changed, Koebel said. “Once a mortgage loan had been a relatively simple matter; a talk with a banker and a fixed payment for life. They’re not supposed to put your home at risk.”

June 30, 2010

Around the Web: Volcker Rules – Not!

Filed under: Around the Web, Financial Reform Legislation, Martin Column, Paul Volcker, President Barack Obama — admin @ 10:54 pm

Until the morning of January 21, 82-year-old former Federal Reserve president Paul Volcker had been a lonely and largely ignored figure among President Obama’s economic advisers.

Volcker seemed to be the only one of Obama’s advisers not under the spell of the “too big to fail banks” and their highly touted innovations.

Volcker was especially vocal about protecting the public from the financial world’s riskier innovations. As he told a financial conference last year, “Riskier financial activities should be limited to hedge funds to whom society could say: ‘If you fail, fail. I’m not going to help you. Your stock is gone, creditors are at risk, but no one else is affected.’ ”

It was Volcker who had said that the only financial innovation to benefit consumers in the last 20 years was the ATM card.

But he wasn’t getting much traction with the president and his advisers.

Then the Democrats lost Ted Kennedy’s Senate seat.

In a lurch back toward the populism he had embraced during his campaign, President Obama hastily reached out for Volcker.

During a press conference, the president endorsed something he called the Volcker rule as an essential plank of his financial reform plan. That rule would restrict banks from risky proprietary trades with their own (borrowed) money.

Here’s what the president said:

“Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers.  If financial firms want to trade for profit, that’s something they’re free to do.  Indeed, doing so –- responsibly –- is a good thing for the markets and the economy.  But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”

For a more on proprietary trading and the Volcker rule, read this from Rortybomb’s Mike Konczal and the NYT. For more about why the Volcker rule was a good idea, see this from WSJ’s Dealbreaker.

Obama mentioned the Volcker Rule a couple more times, as did the man who was marshaling financial reform through the House, Rep. Barney Frank.

But neither the president nor anybody else in the Democratic leadership ever mounted a public campaign to make it an essential part of reform. In fact, within a month, the president was already backing off his support of the Volcker rule.

And now, like many other parts of the reform that would have protected consumers and inconvenienced banks, it has been largely gutted.

Bloomberg reports “lobbying by banks and congressmen sympathetic to Wall Street’s views, as well as some administration members in the banks’ defense, trampled the views of Volcker and others who favored a stronger proposal.”

The weaker provisions won’t even go into effect for as many as 12 years.

It would have been one thing for Obama and the Democrats to go down swinging on the Volcker Rule. But they didn’t even put up much of a fight.

If you’re as disappointed as I am with the president’s lack of leadership on this, after he made such a big deal about it, why not let him know?

June 29, 2010

Bombing Ants in the Sausage Factory

Filed under: Financial Reform Legislation, Martin Column, TARP — admin @ 7:39 pm

The only aspect of the financial reform legislation that’s truly strong is the level of rhetorical nonsense that both parties have unleashed around it: Democrats and the media exaggerate when they praise it as “the toughest financial overhaul since the Great Depression.”

Not to be outdone, the Republican House minority leader, John Boehner, has weighed in, describing the proposal as a nuclear weapon being used to kill an ant.

Which would make the financial crisis the ant, I guess.

On Tuesday, the nuclear bomb had to go back to the, uh, sausage factory, for some more grinding after Sen. Robert Byrd’s death and the defection of a former Republican reform supporter left the Dems with less than the 60 votes they need to overcome the wall of Republican opposition.

One of the few chinks in that wall had been Sen. Scott Brown. But Brown balked after a $20 billion tax on hedge funds and banks was inserted into the legislation to pay for the costs of modest additional regulation. The Republican senator from Massachusetts said he opposed placing a greater burden on financial institutions and he feared the costs of the tax would be passed on to consumers. So the reform proposal is headed back to the conference committee.

Let’s be clear: overheated and mangled rhetoric aside, the financial reform proposal does nothing to reduce the risk posed by our “too-big to fail” banks or to prevent another crisis. The proposal leaves much of the details to regulators subject to lobbying by the very institutions they’re supposed to oversee.

Now legislators think they’ve found a better bet to fund their reform: you!

According to the New York Times, they’re considering ending the Troubled Asset Relief Program early and diverting about $11 billion in taxpayer funds.

The Times observed this leaves legislators with a couple of awkward choices. “So,” the Times concludes, “the choice becomes a tax that might be passed along to consumers, or a charge directly to American taxpayers.”

Is this the best they can do? I’m increasingly sympathetic to Sen. Russ Feingold, the Wisconsin Democrat who is bucking his president and party, opposing reform because it doesn’t get the job done.

I would suggest that Boehner got it wrong, that the ant[s] are not the financial crisis; they’re the legislators scrambling around serving the banks’ interests when they’re supposed to be serving ours.

But that would give ants a bad name.

June 25, 2010

Around the Web: Landmark or Pit Stop?

Filed under: Around the Web, Executive Pay, Financial Reform Legislation, Martin Column — admin @ 8:43 pm

I understand why people feel the need to tout the historical significance of the financial reform package that passed the conference committee. The president needs it politically and those who support him want to give him credit for getting anything at all in the face of the onslaught of bank lobbyists. Lots of folks worked very hard against tremendous odds to get something passed.

But I think a more sober analysis shows that what’s been achieved is pretty modest. It hands over many crucial details to the same regulators who oversaw our financial debacle.

Summing up, Bloomberg reports: “Legislation to overhaul financial regulation will help curb risk-taking and boost capital buffers. What it won’t do is fundamentally reshape Wall Street’s biggest banks or prevent another crisis, analysts said.”

Zach Carter characterizes it as a good first step. The Roosevelt Institute’s Robert Johnson writes: “This first round was not the whole fight. It was the wake-up call and the beginning of the fight. Rest up and get ready. There is so much more to do.”

The question is when we’ll get the chance to take the additional steps that are needed. The public is skeptical that the new rules will prevent another crisis, according to this AP poll. The Big Picture’s Barry Ritholtz grades the various aspects of the reform effort. Overall grade? C-. Top marks go to the new minimum mortgage underwriting standards. But legislators get failing grades for leaving four critical issues on the table: “to big to fail banks,” bank leverage, credit rating agencies and corporate pay.

Ritholtz saves some of his harshest evaluation for the proposal to house the new consumer protection agency inside the Federal Reserve, which he finds “beyond idiotic.”

June 22, 2010

Soldiers Lose Out to Yo-Yos

Filed under: Consumer Financial Protection Agency, Financial Reform Legislation, Martin Column — admin @ 9:24 pm

Here’s a snapshot that puts into sharp focus where we are politically this summer:

In a showdown between the U.S. military and the nation’s car dealers over protecting soldiers from predatory lending, the car dealers won.

Even though the commander-in-chief said he wanted the fighting men and women to be shielded by the proposed new consumer protection agency when they went to get a car loan, congressional Democrats Tuesday sided with the car dealers, who would prefer not to face any additional regulation, thank you very much.

After all, they argue, we didn’t cause the financial meltdown, so leave us alone.  But according to the Better Business Bureau, new car dealers rank fifth in complaints about lending practices.  Used car dealers do a little better; they rank seventh.

The military says its soldiers, focused as they should be on other matters, are particularly vulnerable to predatory lending.

Rosemary Shahan, president of a Sacramento-based nonprofit, Consumers For Auto Reliability and Safety, told the Chicago Tribune that auto dealers pack financing contracts with costly items such as extended warranties and insurance to cover loan payments if the vehicle is wrecked.

One of the more obnoxious forms of predatory lending is something called a yoyo loan. The buyer is told they can drive the car off the lot with a deal they can’t refuse – subject to loan approval. Then the dealer calls back and tells the buyer the initial loan wasn’t approved but they can have the vehicle at a higher interest rate.

The car dealers argue that they’re already subject to other forms of regulation. But they also have other means of persuasion: the National Association of Auto Dealers is among the elite top 20 campaign contributors since 1989, according to the Center For Responsive Politics, with more than $25 million in contributions. During 2009 and the first quarter of 2010, the National Automobile Dealers Association and another group that represents foreign-car franchises, the American International Automobile Dealers Association spent almost $3.5 million to lobby on financial reform and other issues, the Center For Public Integrity reported.

Call President Obama and let him know we need him on the front lines in the battle against predatory lending.

June 21, 2010

Around the Web: Tweak Show

Filed under: Around the Web, Martin Column — admin @ 8:27 pm

Rather than providing a terrifying wakeup call to reshape our financial system, the economic meltdown turned out to be a boon to bank lobbyists.

The fight for financial reform looks like it will be a long war.

Who won the first battle? The too-big-to-fail bankers, who spared no expense in protecting their interests. Now they’re stronger than ever, and the job of regulating them has largely been turned over to the same regulators who failed to protect the country from the recent debacle.

House and Senate conferees are still haggling over the final details. In the latest “compromise” to emerge, Rep. Barney Frank has given up fighting for an independent consumer financial protection agency, agreeing with the Senate proposal to house consumer protection within the Federal Reserve.

It hasn’t helped that the man who was supposed to lead the charge  – President Obama – ­ has largely been missing in action. An independent consumer financial agency was once a linchpin of President Obama’s financial reform package. But it’s gone the way of other provisions that the big banks opposed. The president also once threatened to veto reform if it didn’t contain strong derivatives regulation, now the administration is actually working to undermine it.

One of the most articulate advocates of a stronger overhaul of the financial system isn’t waiting around to see the final bill to declare a verdict. Baseline Scenario’s Simon Johnson declares the reform effort a failure. Rather than joining with a handful of congressman and senators fighting more a robust overhaul, Johnson concludes that the White House “punted, repeatedly, and elected instead for a veneer of superficial tweaking.”

Now the focus of financial industry lobbying will shift to the regulators, who will have the task of writing the new rules the administration and Congress balked at providing. The conference committee is televising its proceedings. It’s not a pretty picture, as when Texas Republican congressman Jeb Hensarling argued to gut some controls on bankers’ compensation out of concern that the federal government would be setting bank tellers’ pay.

If you have a strong stomach, you can view the remaining sessions here. The Democrats want the negotiations wrapped up by July 4.

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.

May 20, 2010

The Top 10 Reasons Not to Call Your Senator Now

Filed under: Financial Reform Legislation, Martin Column — admin @ 5:57 pm

I’m in beautiful Glenwood Springs, Colorado with wife Stacie and dog Billie in front of the fireplace in the lobby of the historic Hotel Colorado, which Teddy Roosevelt used as his western White House. There’s the Roosevelt Suite on the second floor, leading out to the grand balcony from which he addressed the masses.  Pictures and cartoons of him line the hallways.

I wish our president was more inspired by TR. He tackled the economic powers of his day—the railroads—with tough regulation, using existing antitrust laws to bust them up. Our political leaders don’t have the stomach for tough regulations or antitrust crackdown on too-big-to-fail financial institutions, let alone insisting on accountability for those bankers and politicians whose greed and carelessness actually caused the crash.

There’s wireless Internet, in the lobby of the Hotel Colorado. Barely. It’s so slow that I imagine overworked employees at Google receiving my page request, then sifting through voluminous files to find the page, then ambling back to their desks, where they stuff it into a pneumatic tube to my Macbook.

We’ve been talking to people who are weathering the economic storm. One waitress told us tourists used to line up four-deep at local bars. They’re still at the bars, but they’re not coming in the crowds they used to. Not a biggie for her: She’s third-generation Coloradoan. People here are used to a boom-and-bust economy: There was a silver crash in 1893; nearly a hundred years later, Black Sunday, May 2, 1982, Exxon pulled out and took a big chunk of the state’s economy with it.  She says her people are ranchers and live within their means: They save, pay cash and know how to live lean, when they have to.

The battle over financial reform is hot and heavy in the U.S. Senate. Looks like the best we’re going to get out of this president and Congress is a series of baby steps—as “Baseline Scenario’s” Simon Johnson describes them—that leave the status quo in place. But even these baby steps are better than the alternative: giving the bankers and their lobbyists a complete victory.

Contact your senators. Tell them you’re paying attention to financial reform. You’re keeping track of how they vote. Tell them not to water down financial reform any more. Ask them to support the Merkley-Levin amendment, the Volcker rule and Sen. Blanche Lincoln’s derivatives reform plan.

Unless, of course, you believe the following top-ten reasons for apathy, in which case, do nothing, and things will stay exactly as they are now:

One. You like it when banks gouge you on credit card and bank fees.

Two. You think the poor banks have suffered enough.

Three. You believe the banks’ propaganda that new proposals to rein in credit card fees will cost them $5 billion and cause them to extend less credit.

Four. You believe that the Obama administration’s toothless foreclosure prevention program has been a whopping success.

Five. You’re convinced that banks do need to continue the secret high-risk trading that caused disaster for the economy.

Six. You agree with the bailed-out bankers that their bonuses are none of our business.

Seven. You agree with the Federal Reserve that their secret handouts to banks shouldn’t be any of your business.

Eight. You agree with the bankers that they can protect consumers’ interests just fine without interference from any regulators.

Nine. You agree that the bailout really did work well for Main Street as well as Wall Street.

Ten. You’re convinced Lehman Brothers and Washington Mutual did nothng wrong when they cooked their books to hide their bad loans from investors and the public.

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