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“The Wall Street That Cried Wolf”: Banks Complain About Onerous New Regulations While Reaping Record Profits

The headlines have been nothing short of dazzling: “Bank of America profits soar“; “Citigroup’s profits surge“;  “Bank boom continues: Goldman Sachs profit doubles.” In fact, the six biggest Wall Street banks – Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Wells Fargo and Morgan Stanley  – all beat their profit expectations in the most recent quarter, according to results announced over the last week. JP Morgan Chase is even on pace to make $25 billion (yes, billion with a b) this year.

If you’re thinking that these numbers don’t at all square with the ominous warnings of bank executives and lobbyists, who have been saying non-stop that new regulations meant to safeguard the financial system and prevent a repeat of the 2008 financial crisis are going to irreparably harm their ability to do business, you’re right. But that hasn’t stopped the banks’ griping.

The latest iteration of this argument played out after regulators recently announced new rules regarding bank capital – the financial cushion banks must keep on hand to guard against a downturn. Failed presidential candidate turned bank lobbyist Tim Pawlenty, for instance, said that the new rules “will make it harder for banks to lend and keep the economic recovery going.” JP Morgan Chase CEO Jamie Dimon, who has been scaremongering for years about various regulations, warned that the new rules would put U.S. banks at a competitive disadvantage with foreign lenders.

But this same dynamic has been playing out since the Dodd-Frank financial reform law was signed by President Obama in 2010. Banks and their allies complain about onerous new regulations, while at the same time reaping record profits.

And as the New Yorker’s John Cassidy explained, those profits are due to many of the same practices that helped cause the 2008 debacle in the first place: “an emphasis on trading rather than lending, a high degree of leverage, and implicit subsidies from the taxpayer.” That would seem to make the case that new regulations, rather than going too far, have not gone far enough.

Perhaps that’s why banks haven’t been crowing about their new avalanche of profits, and Dimon is even warning about an upcoming profit squeeze. As the Financial Times’ U.S. banking editor Tom Braithwaite explains:

In the next 12 months the Fed will hit the banks with a new flurry of measures. … Those are coming, they are serious and the banks fear them. There is an outside chance that lawmakers will go even further, such as by restoring the split between investment banking and commercial banking known as Glass-Steagall. There is still plenty to play for in deciding how painful the next round of regulations will be.

But, with every earnings season, warnings of calamity look more and more hollow.

One of the major knocks against Dodd-Frank – beyond the obvious one that it left the biggest banks even bigger than they were before the financial crisis – is that it left too much discretion to regulators to write new rules. Corporations and trade organizations familiar with how the agency rule-writing process works are almost inevitably going to have the upper hand in such a system.  And there are still so many rules left to be written – some 60 percent, according to the law firm Davis Polk – that Wall Street will have ample opportunity to water the law down to meaninglessness.

But it’s hard to keep saying with a straight face that new regulations will spell doom for the industry when the new rules that are in place so far, which were accompanied by similarly dire warnings, have done nothing to even dent Wall Street’s bottom line. In fact, the huge pile of profits may be the best thing that could have happened for those trying to bring a modicum of sanity back to Wall Street regulation.


By: Pat Garofalo, U. S. News and World Report, July 18, 2013

July 19, 2013 Posted by | Big Banks, Financial Institutions | , , , , , , | Leave a comment

“We Were Wrong”: What If Republicans Had Come To This Realization Sooner?

It took over 700 days, a recess appointment, and a nuclear-option showdown, but a prominent Republican senator yesterday took stock of his party’s efforts to reject Richard Cordray and nullify the Consumer Financial Protection Bureau. He reached an interesting conclusion.

“Cordray was being filibustered because we don’t like the law” that created the consumer agency, said Senator Lindsey Graham, Republican of South Carolina. “That’s not a reason to deny someone their appointment. We were wrong.”

That’s not a phrase we often hear from politicians, especially congressional Republicans, and it’s a welcome concession. Indeed, since I made the same argument on Monday, I’m delighted by Graham’s candor.

Perhaps, if Senate Republicans had come to this realization just a little sooner, Elizabeth Warren would be at the CFPB right now and Scott Brown would still be making Wall Street happy as a senator.

Regardless, the question many Senate Democrats are asking right now is whether yesterday’s breakthrough — which overwhelmingly tilted in their favor — can help lay the foundation for broader progress, at least in the upper chamber. Greg Sargent reported this morning:

Democrats plan to seize on yesterday’s events to exacerbate what they hope is a developing schism between the GOP leadership/hard right alliance and a bloc of GOP Senators who (Dems are betting) are genuinely fed up with that alliance’s continued flouting of basic governing norms. They hope to renew the push for a return to budget negotiations, with an eye towards replacing the sequester.”

Greg added that Sen. Patty Murray (D-Wash.), the chair of the Banking Committee and an influential member of the Democratic leadership, is set to deliver a pointed message on the floor this afternoon: “There is a group of Republicans — led by Senator McCain — who are very interested in ending the gridlock and working together to solve problems…. I am really hopeful that the bipartisanship we’ve seen this week will carry over into the budget debate, and that rather than listening to the Tea Party, Republican leaders will listen to the Republican members who prefer common-sense bipartisanship over chaos and brinkmanship.”

There are obviously a whole lot of hurdles between the painful status quo and competent governing, and even if there’s a Senate GOP contingent prepared to be responsible the odds in the House are far worse, but between low expectations and the events of recent years, “we were wrong” is a step in the right direction.


By: Steve Benen, The Maddow Blog, July 17, 2013

July 19, 2013 Posted by | Politics | , , , , , , , , | 3 Comments

“The Conservative Struggle Against Demographics”: Republicans Should Spend Less Time And Energy Fighting The Inevitable

Monday, Attorney General Eric Holder said Trayvon Martin’s death was “tragic and unnecessary.” The continuing American tragedy is the lingering racial chasm in American society. The U.S. has a black president and a black attorney general. But Paula Deen uses racial slurs, the Supreme Court guts the Voting Rights Act and an innocent 17-year-old black youth dies because he was black and wears a hoodie.

Tuesday, Hillary Clinton and conservative blogger Erick Erickson weighed in on the Zimmermann case.

Erickson wrote, “Bad choices were made by George Zimmerman and by Trayvon Martin.” It’s easy to pick out the bad choices that George Zimmerman made. He decided not to leave the scene after the Sanford police department dispatcher warned him to get out way and let police officers handle the situation. Zimmerman’s biggest mistake, of course, was his choice to shoot an unarmed boy.

It’s much harder for me to identify the mistakes that Erickson thinks Trayvon Martin made. Was it a mistake for him to decide to buy Skittles? Did he set himself up for death by choosing to wear a hoodie? Or was it his choice to be black? Sorry, being black isn’t a choice, is it?

Hillary Clinton said Tuesday that “no mother, no father, should ever have to fear for their child walking down a street in the United States of America.” Fortunately neither the Clintons nor I had to worry that our teenage kids might be gunned down by a vigilante. Chelsea Clinton and my kids aren’t black.

The debate over immigration underscores the persistence of racial hostility in American society. The racial bias in the fight against immigration reform is palatable. Last year, during a Republican presidential debate in South Carolina, one of the candidates said the word “Mexico” and the crowd booed.

Republicans and their tea party supporters are fighting a rear guard action to keep the United States white. The Census Bureau estimates that white people will be in the minority in the U.S. by 2040. Demographers believe that the biggest state, California, became a minority white state earlier this year.

Some people just can’t stand the idea that white people in the United States are on their way to becoming a racial minority. Republicans worry, with good cause, that the rapid growth of Democratic demographic groups like Latinos and Asians will consign the GOP to political oblivion.

States with 102 electoral votes have voted for the GOP presidential nominee in each of the last  six elections. The comparable Democratic base is 240. 38 of  the 102 electoral votes in the Republican base are from Texas and demography threatens the Republican destiny there.

A majority (55 percent) of residents of the Lone State are either Hispanic or black but the GOP still dominates there because Latino political participation is so low. Mitt Romney won Texas by 1.2 million votes in 2012, but at least three million Latino residents eligible to vote didn’t turn out on Election Day. The Texas Democratic Party and a progressive group, Battleground Texas, have just started an effort to mobilize these Latino voters. If that work is successful, the GOP will lose a big part of its already small national electoral college base.

Demography is destiny, so Republicans and conservatives should spend less time and energy fighting the inevitable than figuring out how to attract supporters among the new American majority.


By: Brad Bannon, U. S. News and World Report, July 18, 2013

July 19, 2013 Posted by | GOP, Politics | , , , , , , , | 3 Comments

“Populism Needs To Be Popular”: Not A Viable Political Strategy For Conservatives

Having already posted my thoughts on the problems associated with the Republican Party adopting some ideology or message of “libertarian populism,” I will note in passing Ramesh Ponnuru’s succinct rejection of the idea that combining hostility to state subsidies for big businesses and other special interests with the traditional conservative hostility to state “redistributive” efforts on behalf of the needy will work electoral magic.

It was not until Monday that Tim Carney, a libertarian-populist writer (and a colleague of mine at the American Enterprise Institute), got around to publishing a manifesto for the group. It is a document that contains several good ideas — but not a viable political strategy for conservatives.

The main focus of Carney’s work is that big government and big business collude at the expense of the little guy, and he recommends that Republicans run against that collusion in order to win working-class votes. In particular he wants them to break up the big banks, end corporate-welfare programs, clean up the tax code so that powerful interests no longer profit from it, and end regulations that protect established businesses from competitors (regulations that stifle food trucks, for example). He would also cut the payroll tax and end government policies that favor employer-based health insurance.

I’m sympathetic to most of the items on Carney’s list — and those on the list that fellow populist Conn Carroll has compiled. Taken together, though, they do not seem to amount to a winning political platform. A Republican party that took on the U.S. Export-Import Bank might improve its image a bit, but how many Americans really care enough about the issue to change their votes based on it? Nor does freeing the food trucks seem like it would win many votes, however right it might be as a policy matter….

Cutting the payroll tax, unlike most of these ideas, would tangibly affect most people’s lives by raising their take-home pay. If Republicans proposed it, though, they would surely be accused of jeopardizing Social Security and Medicare, which seems like a rather large political defect. Other Carroll proposals, such as ending student loans and the mortgage deduction, seem likely to be unpopular even at first glance.

Republicans ought to propose conservative answers to the concerns that are uppermost on most voters’ minds. The libertarian-populist method seems to be to start with the solutions and then to imagine that voters have the relevant concerns. And while many of the proposed solutions have great potential appeal to conservative voters, few would do much to expand their ranks.

In other words, if you want to sell a political party highly resistant to change a “new” ideology of “populism,” it had better be popular. Because it’s not, you typically find Republicans taking the easier route of defending government programs that benefit their own constituencies against the claims of those people. I don’t think it’s a winning formula in the long run, but it’s more promising than pretending the voters Republicans need would be happier if government stayed out of their lives altogether.


By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, July 18, 2013

July 19, 2013 Posted by | Conservatives, Populism | , , , , , | Leave a comment

“We Know Them From The Nightly News”: Washington Post Columnist Richard Cohen Is Terrified Of Black People

Washington Post columnist Richard Cohen wrote an offensive, poorly reasoned column about racial profiling. In 1986. And also this week. And once or twice or let’s say perhaps a dozen additional times in the interim. The occasion of this week’s installment of “Richard Cohen explains why black men should be treated as second-class citizens for the safety of us all, which is to say rich old white men” is the acquittal of George Zimmerman for the murder of Trayvon Martin. Cohen is very sorry that Martin is dead due to Zimmerman incorrectly assuming him to be a criminal of some sort based solely on Martin’s demographic profile — in other words, Cohen is sorry that Martin is dead because of racial profiling — but on the other hand, Cohen argues, racial profiling is correct and necessary because black people are scary, at least when they wear certain things.

I don’t like what George Zimmerman did, and I hate that Trayvon Martin is dead. But I also can understand why Zimmerman was suspicious and why he thought Martin was wearing a uniform we all recognize. I don’t know whether Zimmerman is a racist. But I’m tired of politicians and others who have donned hoodies in solidarity with Martin and who essentially suggest that, for recognizing the reality of urban crime in the United States, I am a racist. The hoodie blinds them as much as it did Zimmerman.

A “uniform we all recognize.” “We all.” “We.” Richard Cohen speaks for us all. Or “us” “all.” That one incredibly dumb assertion, stated with perfect idiotic certainty in the first-person plural, is exactly the sort of thing that makes Richard Cohen America’s worst columnist on America’s worst opinion page.

In the world outside Cohen’s tiny boomer rich guy bubble, “a hoodie” is worn by … nearly all young people and plenty of not-so-young people. To call a hoodie part of a (universally recognized!) “uniform” of Dangerous Black Thuggishness makes about as much sense as invoking high-tops or baseball caps. It is the “uniform” of youth. But then, to Richard Cohen, youth plus blackness makes probable cause.

Throughout much of the column, Cohen, play-acting at being a brave speaker of uncomfortable truths, keeps claiming that no one in America is willing to broach the topic of Black Criminals.

Where is the politician who will own up to the painful complexity of the problem and acknowledge the widespread fear of crime committed by young black males? This does not mean that raw racism has disappeared, and some judgments are not the product of invidious stereotyping. It does mean, though, that the public knows young black males commit a disproportionate amount of crime. In New York City, blacks make up a quarter of the population, yet they represent 78 percent of all shooting suspects — almost all of them young men. We know them from the nightly news.

And, obviously, the nightly news has no ingrained bias in favor of fear-mongering and sensationalist coverage of crime.

That statistic is the only one in the column. Left out are numbers indicating current crime rates, the historical trend of crime rates, the probability of any given person, or any given wealthy white person, becoming a victim of violent crime, the percentage of crimes committed by black men in Sanford, Fla., or really any number at all that would’ve provided more enlightening context than “number of black shooting suspects in New York City.” Political scientist Jamie Chandler says, “Cohen should be embarrassed by his innumeracy,” but Cohen does not embarrass easily.

If he did, he might remember the lesson of his 1986 Washington Post Magazine column justifying racist treatment of black men. In it he defended shopkeepers who deny black men entrance into their stores. “As for me,” he wrote, “I’m with the store owners, although I was not at first. It took Bernhard Goetz, of all people, to expose my sloppy thinking.” Bernhard Goetz was a man who shot four young black men on a New York City subway car after he became frightened that they were going to rob him. (It was never actually proven that they were going to rob him.) Because this column ran in a newly relaunched Washington Post Magazine featuring a cover story on a young black rapper accused of murder, black Washingtonians protested, and eventually earned an apology from Post executive editor Ben Bradlee.

They did not receive an apology, at least not right away, from Cohen, who instead wrote a newspaper column headlined “‘Accused of Racism,’” in which Cohen complained of being accused of racism. In this column he defended cabdrivers who refuse to pick up black people. (Two years later, as Tom Scocca reports, Cohen acknowledged that his critics were “mostly right.” He acknowledged this after he went to Atlanta and met rich black people.)

That lesson, apparently, was short-lived. In an interview with Politico about this week’s column, Cohen explained how racial profiling isn’t inherently racist, because everyone does it:

“Now, a menace in another part of the country could be a white guy wearing a wife-beater under-shirt. Or, if you’re a black guy in the South and you come around the corner and you see a member of the Klu Klux Klan.”

This is Richard Cohen defending his position — that “young black males” dressed in “hoodies” deserve to be targeted not just by the police but by armed idiot civilians pretending to be the police — by invoking the Klan. For Richard Cohen, a young black person dressed in not just politically neutral but also omnipresent attire is basically the equivalent of a guy dressed in the actual official uniform of a terrorist organization dedicated to the violent establishment and maintenance of white supremacy. Richard Cohen just has a pathological fear of black men, and he wants not just to espouse and justify this view, but also to be allowed to do so without anyone calling him racist.

Richard Cohen is obsessed with the notion that no one in America is ever brave enough to talk about race, or at least brave enough to talk about it in the way he would like to talk about it, bearing in mind that he probably doesn’t actually read anyone outside his immediate professional sphere, or anyone below the age of 50, or probably women or writers of color. “In the meantime, the least we can do is talk honestly about the problem,” he says in this week’s column. (“The problem” is the black male crime wave.) “Crime where it intersects with race is given the silent treatment,” he says. He complains that instead of addressing the fears of white people like Richard Cohen head-on, Barack Obama has instead sold out his own grandmother for being racist, a malicious misreading of his 2008 Philadelphia speech that is common among right-wingers complaining of reverse racism. (Cohen does not add, as FAIR’s Peter Hart notes, that in the same speech, Barack Obama did explicitly say that “wish[ing] away the resentments of white Americans” as “misguided or even racist” is unfair, because “they are grounded in legitimate concerns.” It’s not clear that Cohen bothered to read the speech before quoting the bit about the grandma.)

It could be argued that politicians and public officials everywhere are addressing the fears of Richard Cohen, and they are doing so by locking a breathtaking number of young black men in prison, in addition to regularly stopping and harassing them on the streets of large American cities. But Cohen doesn’t concern himself with that. What he wants is for politicians — liberal politicians, preferably black ones — to tell him that it is OK to be scared of black people.

Here is Cohen in 2012, sort of defending stop-and-frisk, and again invoking the story of Trayvon Martin as an opportunity to discuss America’s single most pressing racial issue, people calling Richard Cohen racist:

As with the killing of Trayvon Martin by George Zimmerman, race is not only a complicating and highly emotional factor but one that does not always get discussed in an open manner. A suffocating silence blankets these incidents. Accusations of racism are hurled at those who so much as mention the abysmal homicide statistics — about half of all murders are committed by blacks, who represent just 12.6 percent of the population — and they come, more often than not, from liberals who advocate candor in (almost) all things. Others reply as if there are not basic questions of civil rights and civil liberties at stake.

It never occurs to Cohen that perhaps accusations of racism hurled at Richard Cohen constitute the “open discussion” he is so desperate for.

Cohen is not always such a fan of “open” discussions, as we learned in 2006, when he built an entire column around the fact that he’d received a lot of emails criticizing and insulting him. In that column he described getting a lot of mean emails as being the target of “a digital lynch mob,” so, yes, this is definitely the right guy for an informed and constructive conversation on race in America.

As a man who still somewhat incoherently clings to the label of “liberal,” Cohen does acknowledge, in what amounts to an aside in this week’s column, that there are some complicating factors in his diagnosis of Black Criminality:

The problems of the black underclass are hardly new. They are surely the product of slavery, the subsequent Jim Crow era and the tenacious persistence of racism. They will be solved someday, but not probably with any existing programs. For want of a better word, the problem is cultural, and it will be solved when the culture, somehow, is changed.

Whoops, we created a huge impoverished underclass. There is probably nothing we can do for them now, and they scare me, so they should work on fixing their “culture.”

The problem actually is cultural. It’s the culture that created and still coddles Richard Cohens.


By: Alex Pareene, Salon, July 17, 2013

July 19, 2013 Posted by | Racism | , , , , , , , , | Leave a comment

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