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August 29, 2010

Hurricane Katrina & Wall Street

Filed under: Harvey Column — admin @ 12:43 pm

Hurricane Katrina, once considered the disaster of the decade, is the subject of a new exhibition at the Newseum, a high tech museum devoted to journalism in Washington, D.C., timed to coincide with the fifth anniversary of our national failure in New Orleans.

NewseumFirst you walk down a hall lined with the front pages of newspapers that chronicle the progress of Katrina from a natural disaster when it hit New Orleans with unprecedented force on Monday, August 29, 2005, to a few days later, when, as the world watched, Katrina became a man-made catastrophe, with the levees collapsed, the city underwater and the vaunted United States government unable to come to the aid of its citizens. The September 3 headlines range from “Unbelievable” to “Is This America?” 1800 Americans died, and the entire city evacuated – more than a million U.S. citizens rendered homeless.

The rest of the exhibit focuses on how journalists covered the story, without electricity and often at great risk. Suffice it to say that the blogosphere will never substitute for professional reporters when it comes to these kinds of events.

It is an infuriating and emotional visit. Boxes of Kleenex are strategically placed through the exhibit, and you’ll need them.

Katrina invites comparison to 9/11, when the failure of U.S. intelligence, military planners and airline security personnel combined to render our nation powerless against a throng of determined fanatics. Congressional investigators said, “If 9/11 was a failure of imagination then Katrina was a failure of initiative.”

A court later held the federal Army Corps of Engineers responsible for the collapse of the levees and thus the destruction of New Orleans once Katrina hit. You can read the congressional report chronicling the government’s failure to prepare for and then manage the disaster here.

Conservatives seized on Katrina as more proof that big government is bad, although it’s hard to fathom how “market forces” could fill the shoes of a national government.

After a viciously hot summer throughout the nation, you wonder whether Katrina was the result of yet another failure of political imagination, at the US and global level: the failure to acknowledge and reverse global warming while there was still time.

Meanwhile, Katrina has been superseded by an even more devastating man-made disaster: the economic collapse in 2008. Like Katrina or 9/11, the initial catastrophe was not government’s doing, it was Wall Street greed and speculation. But, like 9/11 and Katrina, government bears responsibility for allowing it to happen. As I noted in the introduction to our report on the crash, Wall Street paid off Congress to let “market forces” run amok, and when the bubble inevitably burst, Washington quickly rescued the financiers.

But like the residents of New Orleans, many Americans are struggling to stay afloat and some have gone under. In terms of lives ruined, families sundered, pensions lost, people made homeless or left without health care, who knows whether the toll from this disaster will exceed that of Katrina or, for that matter, 9/11.

August 7, 2010

The Lawyer With the Dragon Tattoo

Filed under: Harvey Column, President Barack Obama — admin @ 2:21 pm

This year’s most fearsome movie heroine is Lisbeth Sander, the hacker vigilante who outwits corporate and political evildoers with her superior investigatory skills, not to mention some kickboxing and the deft use of a taser. “The Girl With the Dragon Tattoo” smashes and hacks her way through the government officials, business executives and journalists that comprise Sweden’s lazy and corrupt Establishment. They do everything they can to stop her, but – I’m about to give away the ending – Sander ultimately triumphs, exposing decades-long corporate and government conspiracies.

Elizabeth Warren shares none of Sanders’ characteristics – except an exceptional intellect – ­but when it comes to inspiring fear and loathing among the denizens of Washington and Wall Street, she is every inch as frightening, as has been pointed out over the last few days in profiles and posts across the mediascape.

Warren, a bankruptcy professor at Harvard Law, long criticized the practices of America’s banks and credit card companies in law reviews and academic pieces. In 2005, when the financial industry was lobbying Congress to make it harder for the average American to declare bankruptcy, Warren penned a landmark analysis that concluded that most Americans sought bankruptcy protection not because they were freeloaders but because they could no longer afford to pay their medical bills. Long before the current crash, Warren proposed the establishment of a federal agency to protect consumers against credit card tricks and other financial abuses.

In November 2008, in a rare example of a perfect congressional appointment, Senate President Harry Reid put her in charge of the congressional task force monitoring how the $700 billion in taxpayers’ bailout money was spent. She has demanded answers to the same question we ask here: “where did the money go?”  The results of her investigations, which can be found here, pull no punches.

Back in 2008, no one could have expected that Congress would create a financial consumer watchdog agency of the kind Warren advocated for years.  But her powerful and outspoken performance as chair of the bailout oversight panel has made her the obvious and only credible candidate to head the new Consumer Financial Protection Bureau created by the otherwise innocuous financial “reform” legislation Congress passed a few weeks ago.

Which, of course, has got Wall Street fired up, members of Congress tied in knots and the White House cornered. Unlike the Byzantine complexities of the financial swindles and the ostensible legislative “solutions,” none of which garnered public attention much less support, the question of whether the President will appoint a skilled lawyer/consumer advocate to protect consumers, or whether he will instead choose a Wall Street insider as he did when he appointed Treasury Secretary Geithner and White House economic advisor Larry Summers, is one the public and press can easily grasp.

The appointment raises the kind of simple and straightforward “whose side is he really on?” question that Obama has so far been able to soft peddle, though he unceremoniously surrendered on the public option in the health care bill and on “too big to fail” banks in the financial reform bill, to name just a few instances of his unilateral disarmament.

Make no mistake: Warren is a highly sophisticated lawyer that knows all the tricks of the financial industry and how to use the powers of government to stop them. This expertise will be essential. I wrote a ballot proposition, approved by California voters in 1988, that regulates the insurance industry. Having spent the last twenty two years defending it against incessant lawsuits by industry lawyers and not infrequent efforts of elected state officials to hobble it, I can tell you that few decision-makers in the federal government have the technical skills and expertise to go head to head against the battalions of lawyering orcs deployed by big financial firms. Warren does.

Which brings us back to the fascinating spectacle of the hypocritical Washington establishment trying to grapple with her candidacy. She is, literally, made for the job, and a spontaneous grassroots campaign for her appointment is mounting around the country. But the politicians, obeying their paymasters on Wall Street, are trying to figure out a strategy to sabotage her nomination. It’s almost comic to behold. Republicans should be hailing Warren as a savior of beleaguered taxpayers, but one of their Senate leaders said that her tenure as chair of the bailout watchdog was “marked with ‘controversy”” and implied that Warren doesn’t have the necessary qualifications.

It’s the same for some Dems: Senate Finance Committee Chair Chris Dodd, who had never met a financial “innovation” (or industry lobbyist) he didn’t embrace until the whole rotten system collapsed two years ago, damned Warren with faint praise, the suggested she couldn’t be confirmed. He floated the name of FDIC Chair Sheila Bair, but she said no thanks.

Nor has the Obama administrationt been particularly supportive. Two weeks ago, Treasury Secretary Geithner was forced to dispel rumors that he is opposed to Warren by mouthing some platitudes about how “capable” and “effective” she would be in the post. A White House spokesperson told reporters, “We’ve got many good candidates. I know that the president will look at this job and the several other jobs that are created as part of this legislation and make an announcement.”

Warren’s appointment could be one of the few meaningful victories for consumers in the aftermath of the Wall Street deregulation disaster. She is not your typical accommodating political appointee. She does not appear likely to “play ball” with Team Obama or anyone else inside the Beltway when it comes to protecting consumers against the pillaging financial industry. The White House is well aware that once appointed, she would be very hard to fire, especially for doing her job with the zeal it requires. Having never served in such a position, Warren has not yet been tested, so my assessment of her political spine is partly speculation. But if I’m right, she’s at least as threatening as Lisbeth Sander.

May 4, 2010

F**king Grandmothers, Widows and Orphans

Filed under: Goldman-Sachs, Harvey Column, Outrage — admin @ 2:10 pm

“They’re fucking taking all the money back from you guys? All the money you guys stole from those poor grandmothers in California?”

“Yeah, Grandma Millie man. But she’s the one who couldn’t figure out how to fucking vote on the butterfly ballot.”[Laughing from both sides]

“Yeah, now she wants her fucking money back for all the power you’ve charged right up, jammed right up her ass for fucking $250 a megawatt hour.”

– Transcript of two Enron traders discussing the blackouts in California caused by the company’s manipulation of electricity prices in 2000.

“I’ve managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport….”

– Email from Fabrice Tourre, Goldman Sachs trader, joking about derivatives he was selling that later proved worthless.

I have a job I really love – fighting injustice – so I always thought that being a Wall Street trader was just about as boring and inconsequential a job as you could think of. I mean, how enjoyable could it be to sit in front of a computer all day, doing nothing but moving an artificial construct around – “a ‘thing,’ which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price’” as the Goldman dealer described the derivatives he was peddling.

But it seems these guys were able to have a few laughs after all. Turns out the money ain’t bad either.

It would all be very amusing if their antics – “God’s work,” as Goldman’s CEO Lloyd Blankfein described it not long ago – hadn’t cost the country trillions of dollars, and many Americans their jobs, homes and pensions.

Not so funny.

Something is seriously wrong when the pursuit of wealth unabashedly becomes the preeminent aspiration of a culture. And when those who succeed in obtaining vast riches and privilege have nothing but disdain for the rest of the nation, and aren’t a bit embarrassed to say so.

The financial collapse was not an isolated, once in a century deviation. During the 1990’s, Enron and other energy companies, California’s public utilities and the Chamber of Commerce got together and, with the aid of a few million dollars in campaign contributions, got the California Legislature to deregulate electricity rates. Wall Street loved the idea. As soon as the law took effect, in late 2000, the traders jumped in and engineered phony shortages that ultimately cost California taxpayers $70 billion. We’ll be paying off the debt from that debacle for another twenty years.

With hindsight, it is clear that the California energy crisis was merely a forerunner of the current financial collapse. And I’ve noted the disturbing similarities between how Governor Gray Davis and President Obama responded to an emergency not of their own making. As I pointed out in “The Smartest Guys in the Room,” an action movie figure is the Governor of California today as a result.

Two crises in the same decade. Both the product of avarice. How could we let that happen?

9/11 had something to do with it. For most of the years that followed, the American people were told that our greatest enemy lived in a cave half way around the world. That was wrong, as it was eighty years ago, when in the midst of the Great Depression President Franklin Roosevelt told Americans, “our enemies of today are the forces of privilege and greed within our own borders.”

We now know that the enemies of American consumers and taxpayers were sitting in front of multiple computer screens by day, living in palaces and yachts and on their own private islands. Their weapons were pieces of paper that were backed by other pieces of paper that were backed by packages of mortgages, student loans and credit card debt, the complexity and value of which no one understood.

The people who were supposed to defend us against financial mayhem were overtly or covertly working for our enemies. They betrayed us, as we have painfully documented, and whether it was a few million to California lawmakers or $5 billion over ten years to Washington, it all came down to money.

The Republicans rail against the Democrats. The Tea Partiers rail against both. But where’s the debate over the culture of greed that is eroding our values, not to mention our strength as a nation? When will our universities and religious institutions weigh in? When the Times of London asked Goldman’s Blankfein if it were “possible to make too much money,” he replied: ““Is it possible to have too much ambition? Is it possible to be too successful?” My answer to those questions is “yes.” What’s your answer?

April 22, 2010

Funny Money

Filed under: Derivatives, Harvey Column — admin @ 5:23 pm

I had to laugh when I saw Treasury Secretary Geithner and Fed Chair Bernanke announce, with great fanfare, a new high-tech $100 bill. It’s supposed to ward off counterfeiters.

How big is the currency fraud the two G-men are after? Of the roughly $625 billion in “Franklins” in circulation, less than 1/100 of one percent is reported counterfeit, according to the Treasury Department.

That means that Geithner and Bernanke are trying to protect the taxpayers against the loss of $62.5 million from phony hundred dollar bills. That might seem to be a big hit on the American people – we need every dollar we can get these days – except that’s nothing when you compare it to, say, the $750 billion in taxpayer money that went to rescue Wall Street from speculation and outright thievery.

It’s less than nothing when compared to the estimated $600 trillion dollars in “derivatives” – packages of investments – that are sitting in investment portfolios throughout the global economy. That sum is about ten times the value of the entire output of goods and services by every country on earth. The geniuses on Wall Street were giddy trading derivatives with each other, getting a cut of every transaction, until suddenly the players realized they had no idea what the derivatives were worth. Indeed, many derivatives have no intrinsic economic value, but rather are simply bets on how other packages of investments will perform on Wall Street. Derivatives were at the core of the Wall Street collapse that threw our economy into a deep dive.

Our two crime-fighting government officials missed the real crime against the taxpayers – like everyone else who was supposed to be looking after the public’s interest. They sat idly by while hundreds of wealthy and politically-connected individuals made billions of dollars trading worthless securities until greed and the laws of gravity caught up with them.

Geithner and Bernanke remain at the scene of the crime. Which, of course, is still going on, day and night, and will continue until Congress puts an end to it, if our elected representatives can overcome the power of the Dark Side – derivatives lobby.

Meanwhile, we are meant to be thrilled and comforted by the spectacle of a greenback that is tough to duplicate. It’s like a cheap magic trick designed to distract us from what’s really going on.

You can see a $100 bill, after all. And it’s easy to imagine some lowlife printing it up in a shed in his backyard. But no Americans ever saw a Wall Street trader concoct a derivative or try to foist one off on a clerk at the local grocery store. The derivatives that brought America to its knees exist only as electronic apparitions on a bank of monitors in front of some speculator at a Goldman Sachs or similar operation. Those are the people who were really “making” money.

Meanwhile, the new U.S. $100 bill introduced by Geithner and Bernanke has a big blue stripe down the middle, and all sorts of busy and confusing images designed to thwart criminals. It looks like something that has been run over several times by a truck. Just like our economy.

April 14, 2010

Roll Back Interest Rates Now!

Filed under: Harvey Column, Outrage, Uncategorized — admin @ 7:55 pm

Washington has spent trillions of taxpayer dollars to bail out the Money Industry – not just the $700 billion cash life preserver, but also loans at near zero percent interest. Then the banks and credit card companies turned around and loaned us our own money at ten times the interest rate they paid, forcing us to pay through the nose coming and going.

And there’s no sign of relief. The New York Times reports that interest rates on mortgages, car loans and credit cards are reaching historical records. Credit card rates could climb another three points by the fall, according to one expert.

And that doesn’t include the endless creation of other techniques to fleece beleaguered consumers – ATM charges, minimum balance requirements, and my personal favorite, “billing fees.” That’s a fee you pay the company for the privilege of receiving a bill. To catch a glimpse of where this is all headed, just look at how the airlines are unbundling their services. Last week, Spirit Airlines announced that flyers will be required to pay up to $45 for carry on baggage.

Having abetted the financial collapse with decades of deregulatory coddling of Wall Street (PDF), Washington spared no expense to rescue its patrons. But regular Americans never got any relief.

In fact, now that Washington has declared “mission accomplished” on the economy, it’s shutting down programs that were designed to benefit Wall Street but indirectly affected the rest of us. For example, last month the Federal Reserve stopped buying risky mortgage-based securities from banks – a two-year, $1.25 trillion bailout that relieved the banks of the risks of these speculation-driven investments. It was intended to encourage the firms to expand their lending. The end of this federal subsidy is one reason why experts are saying mortgage rates are going to go up.

On the very day in 2008 that the Bush Administration first proposed the $700 billion bailout, I urged that Congress slap a cap on the interest rates that recipients of any bailout would turn around and charge American consumers. And I’ve repeated that call since. But there was no quid pro quo for the public in the deal. Even in the so-called Credit Card Reform Act of 2009, Congress not only placed no cap on credit card rates, it gave the industry months in which to raise interest rates through the roof before the new rules kicked in.

Congress has gone back to work on “financial reform.” The purpose, supposedly, is to pass new laws that would prevent another financial collapse. There’s no reason why Congress can’t include some relief for Americans who are still suffering from the last debacle. My proposal: a rollback of credit card interest rates. Although there’s no reason to do it, lets be generous and let the banks and credit card companies earn three percentage points more from us than they have to pay when they borrow our money from the Federal Reserve. That would knock interest rates down to around 4%. Citibank, which is alive today only because it got $45 billion of taxpayer support, is charging upwards of 15% for its best credit card customers. Most of the other big card companies are doing the same.

Lowering interest rates would provide needed relief for tens of millions of American families, and would jumpstart the economy by stimulating more spending. No doubt some would say that we should not return to the era of “cheap money” when everybody was encouraged to spend more than they had by putting lifestyle improvements on plastic. I’m not advocating fiscal irresponsibility, but right now that argument sounds more than a little patronizing. True, some Americans got in over their heads, but the financial collapse itself was the fault of greed-driven Money Industry speculators, many of whom walked away with millions of dollars in pay and bonuses. So they’re all set; they got theirs – in fact, are still raking it in – but now average Americans are told they need to scale back at a time when many are struggling to put food on the table and might need to use a credit card to pay for a doctor’s visit? Why should Americans pay exorbitant rates to fatten the coffers of the firms that got us into this mess?

I say, roll ‘em back!

March 23, 2010

Don’t Dump the Government, Sue It!

Filed under: Harvey Column — admin @ 12:58 pm

When our government institutions fail us through incompetence or corruption – the financial collapse being Exhibit A – what is the solution? That’s the question I posed a few weeks ago.

The Tea Partyers increasingly seem to advocate getting rid of government altogether, or at least the federal government. They (and the health insurance industry) are getting a lot of mileage these days by arguing that the Wall Street debacle shows government cannot be trusted to regulate health care. It’s not a crazy argument, but their solution is.

When government fails, the answer is not to get rid of government, but to force it to work better. How?

To start, citizens should be given “standing to sue” the federal government. It might surprise you to learn that the courts have often rejected the right of citizens to go to court to enforce state and federal laws. When I worked for Congress Watch, the D.C.-based lobbying group founded by consumer advocate Ralph Nader, back in the late 1970s, one of our top goals was to make sure that when Congress passed a law, no matter the subject, it gave Americans the right to sue if a federal agency failed to enforce that law, conducted itself in an arbitrary manner, spent taxpayer money improperly, or if the law was unconstitutional. We were often unsuccessful, defeated by lobbyists for big business who hoped to later subvert the agencies with impunity. Nader has written frequently about this tool of democracy, and it’s also covered in an excellent biography of the Nader consumer organizations by David Bollier that is now available online.

Can you imagine how much economic damage could have been  avoided if citizens had been able to sue the federal agencies that unilaterally stopped regulating the Money Industry over the last decade?

A lot of Americans don’t like litigation – because they have never seen how it can work to protect their interests as consumers or taxpayers. But suing the government is a crucial, even life-saving right that is part of the law in some states, including California. For example, my colleagues at Consumer Watchdog and I sued the California Department of Managed Health Care when it suddenly started permitting HMOs to evade state laws and deny autistic children medically-necessary treatments. The agency’s misconduct began after intense behind-the-scenes lobbying by the heath insurance companies. The trial will be held this fall in a Los Angeles Superior Court and based on a recent preliminary ruling by the judge, we are looking forward to forcing this renegade agency to follow the law.

No doubt the prospect of litigation against the government raises fears of wasted taxpayer resources. But court rules allow judges to block truly frivolous cases. And I believe the costs would be more than offset by the benefits to Americans.

Standing to sue is one of many proposals for systemic reform that you don’t hear much about, because they aren’t sexy. They involve changes to the internal mechanisms of government. But if they were adopted, government would operate far more effectively and with much greater accountability to the public.

March 15, 2010

AIG Founder Asks “Terrorists” for Help

Filed under: AIG, Harvey Column — admin @ 1:54 pm

One of the particularly infuriating aspects of the financial crisis is the unapologetic hypocrisy of the Wall Street titans.

These devotees of free markets didn’t hesitate to grab the taxpayer life preservers blithely tossed them by the U.S. Treasury when they were about to go under. Taxpayers never got a “thank you,” much less “I’m sorry,” from these geniuses who nearly destroyed our economy.

But one among them has set himself apart. I refer to Maurice Greenberg, the founder of American International Group, or AIG. In its prime, AIG was possibly the largest insurance company on the planet, selling everything from life insurance to environmental liability coverage for big corporations.

Greenberg was used to the royal treatment accorded the billionaires at the top of the Money Industry. He pulled in $20 million in 2004 from AIG and an off-the-books executive slush fund the company setup for its top execs.

Like many of his peers at that level, Greenberg was a major player in American politics. AIG and Greenberg’s charities donated tens of millions of dollars to grease the wheels in Washington and keep his company free of regulation.

But unlike many of his insurance brethren, who had figured out that they were usually better off keeping their thoughts to themselves, Greenberg never hesitated to pronounce his views, especially when he thought it was good for business. So Greenberg put himself and his behemoth insurance company at the forefront of “tort reform” – an insurance industry inspired propaganda effort to blame trial lawyers and personal injury lawsuits (“torts”) for higher insurance premiums.

“Tort reform” conveniently diverted public attention from the fact that insurance companies were raising rates in order to offset investment losses in the stock market  – often while friendly state insurance regulators looked the other way. There was another benefit, too. The “solution” advocated by the insurance companies was to restrict the rights of Americans to have their day in court. This usually involved capping damages or attorneys fees, both of which enabled insurance companies to pay out less in claims, and keep more money for themselves. Too many willing state legislatures fell for this trick, though California voters ultimately got it right and capped the insurance industry’s premiums.

Back in 2004, when George Bush and the Corporate Republican Establishment were firmly control of Washington, “tort reform” was high on their list of priorities. In fact, they expanded their attack, targeting the class action lawsuits that consumers often bring against corporations. Greenberg was a particularly vociferous cheerleader for the push to limit the ability of injured or ripped-off consumers to undertake a class action.

Referring to legislation that would restrict consumers’ ability to bring a class action lawsuit, Reuters reported in 2004 that “Greenberg likened the battle over reforming class action litigation to the White House’s ‘war on terror.’” Reuters quoted Greenberg as saying, “It’s almost like fighting the war on terrorists….I call the plaintiff’s bar terrorists.”

That was 2004. A year later, Greenberg himself was in a world of legal trouble (PDF). He was ousted in 2005 after an investigation by New York Attorney General Elliot Spitzer found that AIG had engineered a series of sham transactions intended to make AIG’s financial picture look better. In 2006, AIG paid $1.6 billion to settle a variety of charges.

Then came the financial collapse. AIG was at the forefront of the form of Wall Street gambling known as “credit default swaps,” under which AIG would sell insurance on packages of subprime mortgages known as “derivatives.” Though long gone, Greenberg remained AIG’s biggest shareholder, so he lost billions when AIG’s credit default swaps went into default and the Bush Administration took over the company in exchange for a taxpayer bailout that now totals $182 billion.

Ever since then, Greenberg’s been insisting on justice… for himself.

Demanding an investigation of the government’s decision to seize AIG, Greenberg suggested “class-action lawsuits that put people under oath in depositions and discovery.”

A fervent deregulator, Greenberg now blames the federal government for failing to regulate his industry. “I don’t recall any regulator coming to look at the [insurance] holding companies, and if they did, it was a very superficial job,” according to a report on a speech Greenberg gave last year.

In a speech in February, Greenberg had this to say about improving America’s judicial system: “We go around the world preaching about the importance of the rule of law…. We better take a look at America and make sure we have the rule of law here first.”

March 2, 2010

Back to the Future of Reform with Sen. Chris Dodd

Filed under: Consumer Financial Protection Agency, Harvey Column, Uncategorized — admin @ 2:51 am

Dodd moves to scale back Consumer Financial Protection Agency plan

In an attempt to lure the Republican votes needed to get a sweeping overhaul through the Senate, the Banking Committee chief is circulating a plan for a less powerful Bureau of Financial Protection.

– Los Angeles Times, March 2, 2010

Dodd Proposes Financial Protection Committee Housed in Treasury Department

In new attempt to lure the Republican and Democrat votes needed to get semi-sweeping overhaul through Senate, the Banking Committee chief is circulating a plan to create a Financial Protection Committee inside the U.S. Treasury.

– Los Angeles Times, March 28, 2010

Dodd Proposes Professor of Financial Protection at University of Connecticut

In renewed attempt to lure the Republican and Democrat votes needed to get modest financial fixes through Senate, the Banking Committee chief is circulating a plan to give the University of Connecticut $150,000 to hire a professor to teach the public about financial protection.

– Los Angeles Times, April 15, 2010

Dodd Proposes Dial 1-900-4Protection Line

In a leisurely attempt to lure the Republican and Democrat votes needed to get itsy-bitsy, not too scary reform bill through Senate, the Banking Committee chief is circulating a plan to set up a 900 number to be answered on weekends by volunteers from credit card customer service departments. Costs of the program will be defrayed by charge of 99 cents per call.

– Los Angeles Times, May 20, 2010

Dodd Proposes Facebook Financial Protection Page

In further attempt to lure the Republican and Democrat votes needed to get any kind of friggin’ bill through Senate, the soon to retire to the financial industry Banking Committee chief is circulating a plan to create a Facebook page where consumers can share financial protection ideas with each other.

– Los Angeles Times, June 15, 2010

Dodd Proposes Wall Street Protect Consumers

Fuhghettaboutit.

– Los Angeles Times, July 4, 2010

February 22, 2010

Bad Government

Filed under: Harvey Column, Outrage — admin @ 2:08 pm

In his weekly address last Saturday, President Obama said, “What’s being tested here is not just our ability to solve this one problem, but our ability to solve any problem.” Obama’s speech was about health care reform, but his point goes to the heart of the debate underway in this country – a debate that the Tea Party movement has given a sharp edge.

American’s have lost their confidence in the basic institutions of our democracy. It’s not just the President’s rating that is down in the polls, it’s Congress’s, the United States Supreme Court, even the college system.

There is more than ample justification for this stark collapse of trust. As I wrote last summer, I believe it all begins with the crash of the Money Industry after years of deregulation by federal officials who, quite simply, sold out – and then showered billions of taxpayer dollars to save the speculators while the rest of the economy, along with millions of people’s jobs and savings, went into the tank. Even now, the Wall Street execs whose greed and speculation caused the crash continue to call the shots in D.C.

After that pitiful performance by our government, who can blame people for distrusting Washington’s plan to fix the health care system?

Lately I’ve been pondering two other disasters that might have been averted had government done its job.

An appendix (PDF) to the 2004 report of the 9/11 Commission describes in agonizing detail how our government was unable to mount a defense of the nation that day despite trillions of dollars spent on defense and the military in preceding years. That morning, there were only fourteen jet fighters guarding the country. Flight controllers couldn’t connect the dots as the multiple hijackings unfolded; FAA officials failed to follow procedures to communicate with the military; scrambled fighters were too far away and sent to the wrong locations; the military never even knew how many or which commercial airplanes were involved until all four were down. A fateful order from the White House to shoot down any commercial planes that refused to land never even reached the fighter pilots who by then were flying combat cover over the East Coast.

On that horrible morning, it was only when individuals took matters into their own hands – the passengers of United 93 who fought the terrorists as their plane headed for a strike on he nation’s capitol, or an FAA manager who ignored protocols and unilaterally ordered all planes in the air to land – that more lives were spared.

Or, consider the case of Amy Bishop, the University of Alabama professor who shot six colleagues a few weeks ago. As rendered by the New York Times, her profile now, after the deed, reads like the description of “angry loner” we have grown familiar with from previous mass murders, but no one ever connected the dots of her obviously deranged life. In 1986, she killed her brother but claimed it was an accident and got off, perhaps due to political connections; in 1993, she was questioned in connection with a pipe bomb sent to one of her college professors; in 2002, she punched a women in the head at a House of Pancakes for taking the last booster seat.

What to do, then, about such profound failures by government? Do we follow the suggestion of Glenn Beck, who over the weekend blamed progressivism – the philosophy of engaged government championed by Theodore Roosevelt – for our nation’s ills?

I’m not one of those people who is offended by the eruption of angry Tea Party organizations around the country. To the contrary, the TP’rs are raising questions, pointing out problems and demanding answers from elected officials – just what an active citizenry is supposed to do.

But I disagree with their premise, which is that government is responsible for all that is wrong with our country, and that the solution therefore is a castrated federal government or no federal government at all.

That’s stupid.

We need police. We need the military. We also need a cop on the corporate beat in the executive suites of Wall Street. And we need rules and regulations to prevent health insurance companies from ripping us off or condemning us to death.

When our government institutions fail us, as they have, through incompetence and corruption, the answer is not to get rid of government, but to make it work better. How to do that? Read my next column.

February 9, 2010

It’s Alive!

Filed under: Harvey Column, Uncategorized — admin @ 6:29 pm

Wall Street has weighed in with powerful evidence that the United States Supreme Court was right when it concluded a few weeks ago that corporations are the same as human beings. Turns out, Wall Street has feelings, and they are hurt.

Wall Street is so “irked” at President Obama and the Democratic Party that it is rebuffing their requests for political money, according to the New York Times. “[I]t doesn’t feel good,” when Obama talks about Wall Street greed, complained a Morgan Stanley executive. “The expectation in Washington is that ‘We can kick you around, and you are still going to give us money,’” whined a major Wall Street executive. He warned: “‘We are not going to play that game anymore.’”

That’s just a bluff, of course, because Wall Street has been playing the Washington money game for decades – in fact, as we documented in our two hundred page report (PDF) last year, the nation’s economy is in the toilet now because between 1998 and 2008, Wall Street spent $5 billion on Washington, and Washington, without even a hint of partisanship, rolled over – deregulating the industry and encouraging the orgy of speculation that led to the crash.

The Supreme Court’s decision last month in the Citizens United v. Federal Election Commission case guarantees that big business will always be happy by solidifying corporate control over the nation’s legislative process. Discarding one hundred years of previous decisions, the court held that, under the First Amendment, when corporations spend money in the political process, it’s the same as when people make speeches.

This is a travesty. The practical effect of the decision is to accord huge multinational corporations the power to nullify the First Amendment rights of individual Americans. While you and I are “free” to drag a soapbox on to a street corner and  proclaim to our heart’s content, credit card companies, hedge funds, insurance companies are now “free” to unleash tens of millions of dollars from their corporate treasuries in an attempt to fix the outcome of any political debate in their favor. Sometimes that will backfire, as it did when insurance companies spent $80 million trying to persuade voters to defeat Proposition 103, the insurance reform I wrote back in 1988.  Californians figured out who was on the their side, and who wasn’t. But in the vast majority of lower profile issues, in which elected officials are called upon to choose between the policy choice favored by a huge money donor and the one that’s better for constituents, the money talks.

That’s why, despite the near-collapse of our financial system at the hands of the Money Industry, their lobbyists have still been able to stymie just about every congressional proposal to prevent another crash: reform of derivatives and the student loan system, creation of a Consumer Financial Protection Agency, and the recent proposal by the White House to ban banks from speculation.

The tyranny of the British monarchy led to the American Revolution. The Supreme Court’s decision substitutes a corporatocracy for the oppression of kings. So far, the tea parties that seem to be erupting spontaneously around the nation are directing their fire at the bailouts and other encroachments of government. They also need to keep an eye on the corporations that are arguably more powerful than the government already, or will soon be so thanks to the Supreme Court.

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