How The Media Promotes Ignorance And Stifles Debate
Friday night, my eyes were glued to to the news, as I awaited any and all emerging details about the possible government shutdown. As outlets began reporting that republicans and democrats had finally reached a deal, I immediately felt a sense of relief. Thank goodness, I thought, so much unnecessary suffering averted. But the relief didn’t last long, because in the pit of my stomach was fear for the many millions of people who will be affected by the $38 billion in budget cuts passed by congress. Unfortunately, the media feels differently, preferring to discuss ad-nausium the budget cut’s political ramifications for the two parties.
The same thing happened when the GOP was determined to shutdown the government if democrats did not sign on to defunding Planned Parenthood. Again, the media’s focus was not on the health of the 3 million people the organization treats every year, by providing cancer screenings, HIV and STI checks, and contraceptives. They focused on how this painted republicans as partisan ideologues, or the democrats as supporters for women’s rights, which party was to blame for the almost-shutdown, and most notably, the consequences this would have on their popularity.
Almost all of the reporting by the establishment media centers around how X will affect the democrats favorability numbers, or how Y will affect the republicans chances in 2012. Whether I was watching MSNBC or CNN, the sole concern was always on the political implications of the budget cuts, rather than the real life consequences for the many millions of Americans already suffering from unemployment, foreclosures, and sky-rocketing medical costs.
And therein lies the problem with our media establishment: Every major policy issue is strangled by the established “right vs left” consensus. Whether it’s civil liberties, our endless wars, healthcare reform, or the economy, all are presented through the prism of democrat and republican disagreement. Not only does this ignore the tribulation of people around the country, but most importantly the media omits discussion of issues that receive bipartisan support, which has increasingly become the case, issue after issue.
There is very little that republicans and democrats in office disagree on. They both support the wars, the private insurance industry, tax cuts for the wealthy, deregulation, budget cuts during an economic recession, and the list goes on. Perhaps this is because both parties are corporately owned by the same interests. The only real difference today remains their position on social issues. Republicans are still against women’s reproductive rights and marriage equality, while democrats remain pro-choice and advocates for ending institutionalized discrimination against homosexuals (although they don’t do a very good job at consistently standing up for these rights). While these issues are of great importance, they are not the only problems afflicting the nation.
Look no further than the lack of coverage on economic suffering for proof. Republicans want to cut all social spending, while democrats prefer to cut a fraction of social services that benefit the public at large. So rather than discussing alternatives to austerity aimed at the working class and poor, the media solely focuses on how much austerity is enough. Poll after poll shows that Americans overwhelmingly support increasing taxes on the wealthy to reduce the deficit. In addition, major cuts to Medicaid, Medicare, or Social Security to balance the budget are wildly unpopular. But the mainstream narrative does not even challenge whether budget cuts are necessary, or if other alternatives for deficit reduction exist, let alone the public’s opinion.
The media also refuses to bring up defense spending, which costs upwards of $1 trillion annually. Probably because both parties agree that the national security and warfare state are untouchable. Which is interesting, given that the public prefers cutting defense spending rather than social spending to reduce the deficit. Then again public support for the Afghanistan war is at an all-time low, but the bipartisan Washington consensus in support of the war remains unmoved. The fact that war spending is draining our treasury should be a significant story for the media, particularly since the government just launched another war in Libya, while ironically calling for fiscal responsibility.
If they aren’t even capable of exposing the cost of war, it is no surprise that the casualties of war, both the injured and dead, soldiers and civilians, are completely omitted from discussion. Again, this makes sense, given the bipartisan support for war, with tactical nuances making up the few points of contention. This was most apparent in the lead up to the Iraq war, which enjoyed strong bipartisan support, with the media following suit by forcing a pro-war narrative and firing those who loudly dissented.
The same is true for healthcare reform. Americans overwhelmingly support a single payer, medicare-for-all system, but since democrats and republicans are both in the pockets of the private insurance industry, single-payer is not a viable topic for debate on the airwaves. Even climate change has become a forgotten issue. Now that President Obama and his fellow democrats have adopted the Bush approach — i.e. refusing to cut greenhouse gas emissions, regulate resource exploiting industries, or invest in alternative energy — climate change and it’s very real, disastrous effects, are almost never examined.
It is no wonder so many Americans are turned off by politics. Many don’t realize how political decisions effect their everyday lives, from the quality of the water and air that they breath, to the seat-belts they wear and sick days they receive. If not for independent media outlets like Democracy Now! and independent journalists like Glenn Greenwald, Jeremy Scahill, and Marcy Wheeler, to name a few, I would be an apathetic liberal uninterested in “silly political debate”.
If the goal of the establishment media class is to portray significant political decisions as boring ideological nonsense, then they have succeeded. One doesn’t need to attend journalism school to understand that the mainstream media has failed at its job of informing the public and holding those in power accountable. Instead they have successfully promoted ignorance and stifled debate, to the detriment of truth and social justice.
By: Rania Khalek, CommonDreams.org, April 10, 2011
Despite Scandalous Abuses, Banks Are Off the Hook Again
Americans know that banks have mistreated borrowers in many ways in foreclosure cases. Among other things, they habitually filed false court documents. There were investigations. We’ve been waiting for federal and state regulators to crack down.
Prepare for a disappointment. As early as this week, federal bank regulators and the nation’s big banks are expected to close a deal that is supposed to address and correct the scandalous abuses. If these agreements are anything like the draft agreement recently published by the American Banker — and we believe they will be — they will be a wrist slap, at best. At worst, they are an attempt to preclude other efforts to hold banks accountable. They are unlikely to ease the foreclosure crisis.
All homeowners will suffer as a result. Some 6.7 million homes have already been lost in the housing bust, and another 3.3 million will be lost through 2012. The plunge in home equity — $5.6 trillion so far — hits everyone because foreclosures are a drag on all house prices.
The deals grew out of last year’s investigation into robo-signing — when banks were found to have filed false documents in foreclosure cases. The report of the investigation has not been released, but we know that robo-signing was not an isolated problem. Many other abuses are well documented: late fees that are so high that borrowers can’t catch up on late payments; conflicts of interest that lead banks to favor foreclosures over loan modifications.
The draft does not call for tough new rules to end those abuses. Or for ramped-up loan modifications. Or for penalties for past violations. Instead, it requires banks to improve the management of their foreclosure processes, including such reforms as “measures to ensure that staff are trained specifically” for their jobs. The banks will also have to adhere to a few new common-sense rules like halting foreclosures while borrowers seek loan modifications and establishing a phone number at which a person will take questions from delinquent borrowers. Some regulators have reportedly said that fines may be imposed later.
But the gist of the terms is that from now on, banks — without admitting or denying wrongdoing — must abide by existing laws and current contracts. To clear up past violations, they are required to hire independent consultants to check a sample of recent foreclosures for evidence of improper evictions and impermissible fees.
The consultants will be chosen and paid by the banks, which will decide how the reviews are conducted. Regulators will only approve the banks’ self-imposed practices. It is hard to imagine rigorous reviews, but if the consultants turn up problems, the banks are required to reimburse affected borrowers and investors as “appropriate.” It is apparently up to the banks to decide what is appropriate.
It gets worse. Consumer advocates have warned that banks may try to assert that these legal agreements pre-empt actions by the states to correct and punish foreclosure abuses. Banks may also try to argue that any additional rules by the new Consumer Financial Protection Bureau to help borrowers would be excessive regulation.
The least federal regulators could do is to stress that the agreements are not intended to pre-empt the states or undermine the consumer bureau. If they don’t, you can add foreclosure abuses to other bank outrages, like bailout-financed bonuses and taxpayer-subsidized profits.
By: The New Yor Times, Editorial, April 9, 2011
Note To Banks: It’s Not 2006 Anymore
Nostalgia is running high on Wall Street for the days when junk mortgage underwriting and opaque derivatives trading juiced bank profits. As regulators continue to devise the machinery of the Dodd-Frank regulatory reform law, major financial institutions are working overtime in Washington to bring the good times back again.
Unfortunately for taxpayers, some of these efforts are gaining traction, particularly regarding the regulation of derivatives and mortgages.
As you may recall, Dodd-Frank was supposed to shed light on derivatives trading so that the risks and costs of these instruments would be clear to regulators and market participants. To this end, the law required derivatives to be cleared and traded on exchanges or through other approved facilities. But Dodd-Frank contained a big loophole: the Treasury secretary can exempt foreign-exchange swaps from the regulation.
Currency trading is enormous: on average, about $4 trillion of these contracts change hands each day. Major banks are huge in this market. According to the Comptroller of the Currency, trading in foreign-exchange contracts generated revenue of $9 billion in 2010 at the nation’s top five banks. That’s more than was produced by any other type of derivative.
No one was shocked when the banks began pushing the Treasury to exempt these swaps from regulatory scrutiny. From last November through January, Treasury officials met to discuss foreign-exchange swaps with 34 representatives of large financial institutions, the Treasury’s Web site shows.
A spokesman for Timothy F. Geithner, the Treasury secretary, said last week that Mr. Geithner had not made up his mind on this matter. If Mr. Geithner sides with the banks, he will have bought into their argument that foreign-exchange swaps are different from other derivatives, that this market performed ably during the financial crisis and does not need additional oversight.
Others disagree. Testifying before the House Financial Services Committee in October 2009, Gary Gensler, the chairman of the Commodity Futures Trading Commission, said: “Any exception for foreign-currency forwards should not allow for evasion of the goal of bringing all interest rate and currency swaps under regulation to protect the investing public.”
Dennis Kelleher, the president of Better Markets, a nonprofit organization that promotes the public’s interest in capital markets, said he was dubious of the contention that the market for foreign-exchange contracts performed well during the turmoil of 2008. Mr. Kelleher said that the only reason this market did not seize up like others was that the Fed lent huge amounts — $5.4 trillion — to foreign central banks through so-called swap lines during the fall of 2008.
“We suggested that Treasury hire truly independent experts to look at the data and provide the secretary with advice on whether or not the FX market performed well in the crisis and whether the exemption should be granted,” he said.
The analysis could be done within 60 days, he said. The Treasury told him it was confident that it had all the information it needed. “Their response was, ‘Thank you,’ ” he said.
Big financial institutions are also eager to return to the days of lax mortgage lending, judging from two initiatives being discussed in Washington. Both are intended to get the home loan market moving again — and to buoy falling home prices.
One relates to how regulators define a “qualified residential mortgage,” a term of art in the Dodd-Frank law. Issuers of asset-backed securities that are made up of such loans needn’t keep any credit risk of those securities. But sellers of loan pools that don’t consist of qualified mortgages are required to retain some of the risk in them. This provision was meant to eliminate the perverse incentives of the mortgage boom, when packagers of loan pools were encouraged to fill said pools with toxic waste because they had little or no liability for the deals once they were sold.
What constitutes a qualified mortgage has become a battleground issue because of the risk-retention rules under Dodd-Frank. Qualified mortgages should be of higher quality, based upon a borrower’s income, ability to pay and other attributes to be decided by financial regulators.
The board of the Federal Deposit Insurance Corporation will hold an open meeting on Tuesday to discuss qualified mortgages and the risk-retention rule. Among the questions to be considered is how much of a down payment should be required in a qualified loan, and whether mortgage insurance can be used to protect against the increased risks in loans that have smaller down payments.
The use of mortgage insurance during the boom effectively encouraged lax lending. Investors who bought securities containing loans with small or no down payments were lulled into believing that they would be protected from losses associated with defaults if the loans were insured.
But when loans became delinquent or sank into default, many mortgage insurers rescinded the coverage, contending that losses were a result of lending fraud or misrepresentations. When they did so, the insurers returned the premiums they had received to the investors who owned the loans. Lengthy litigation between the parties is under way but has by no means concluded.
Clearly, for many mortgage securities investors, this insurance was something of a charade. So any argument that mortgage insurance can magically transform a risky loan into a qualified residential mortgage should be laughed off the stage. And yet, mortgage insurers are making those arguments vociferously in Washington.
The final front in the mortgage battle involves a plan to restart Wall Street’s securitization machine with instruments known as covered bonds. Here, too, the big banks and the housing-financial complex are arguing that if private investors are to return to the mortgage market, we must create a new instrument that will let the good times roll again.
Covered bonds are pools of debt obligations that have been assembled by banks and sold to investors who receive the income generated by the assets. The bank that issues the bonds, meanwhile, retains the credit risk. If losses arise, the bank that issued the covered bonds must offset the loss with its own capital. That could push troubled banks closer to the edge.
If an asset in the pool defaults, a separate entity would be required to remove the assets from the bank’s control. The assets would then be out of reach of the F.D.I.C. should the bank fail and the agency step in as receiver. The investors who bought the covered bonds would have first call on the assets, ahead of the F.D.I.C.
This structure would wind up bestowing a new form of government backing to the major banks issuing the bonds, raising the potential for losses at the F.D.I.C. insurance fund, which protects savers’ deposits.
Equally troubling, the covered bond structure favored by the banks would let the pools invest in risky assets such as home equity lines of credit. These loans have been among the worst-performing assets out there. Covered bonds issued overseas, by contrast, typically consist solely of high-quality loans.
“The industry is trying to do an end run around the F.D.I.C.,” said Christopher Whalen, publisher of the Institutional Risk Analyst. “This proposal is about restarting the Wall Street assembly line for selling toxic waste to investors.”
Clearly, the battle for the safety and soundness of the nation’s financial markets is far from won. The issues are complex and confounding — by design, in many cases — and financial institutions have armies of advocates in Washington. The taxpayers do not, which makes monitoring of these crucial proceedings all the more essential.
By: Gretchen Morgenson, The New York Times, March 26, 2011
Another Inside Job: The Continuation Of Banker Bad Behavior
Count me among those who were glad to see the documentary “Inside Job” win an Oscar. The film reminded us that the financial crisis of 2008, whose aftereffects are still blighting the lives of millions of Americans, didn’t just happen — it was made possible by bad behavior on the part of bankers, regulators and, yes, economists.
What the film didn’t point out, however, is that the crisis has spawned a whole new set of abuses, many of them illegal as well as immoral. And leading political figures are, at long last, showing some outrage. Unfortunately, this outrage is directed, not at banking abuses, but at those trying to hold banks accountable for these abuses.
The immediate flashpoint is a proposed settlement between state attorneys general and the mortgage servicing industry. That settlement is a “shakedown,” says Senator Richard Shelby of Alabama. The money banks would be required to allot to mortgage modification would be “extorted,” declares The Wall Street Journal. And the bankers themselves warn that any action against them would place economic recovery at risk.
All of which goes to confirm that the rich are different from you and me: when they break the law, it’s the prosecutors who find themselves on trial.
To get an idea of what we’re talking about here, look at the complaint filed by Nevada’s attorney general against Bank of America. The complaint charges the bank with luring families into its loan-modification program — supposedly to help them keep their homes — under false pretenses; with giving false information about the program’s requirements (for example, telling them that they had to default on their mortgages before receiving a modification); with stringing families along with promises of action, then “sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions”; and, in general, with exploiting the program to enrich itself at those families’ expense.
The end result, the complaint charges, was that “many Nevada consumers continued to make mortgage payments they could not afford, running through their savings, their retirement funds, or their children’s education funds. Additionally, due to Bank of America’s misleading assurances, consumers deferred short-sales and passed on other attempts to mitigate their losses. And they waited anxiously, month after month, calling Bank of America and submitting their paperwork again and again, not knowing whether or when they would lose their homes.”
Still, things like this only happen to losers who can’t keep up their mortgage payments, right? Wrong. Recently Dana Milbank, the Washington Post columnist, wrote about his own experience: a routine mortgage refinance with Citibank somehow turned into a nightmare of misquoted rates, improper interest charges, and frozen bank accounts. And all the evidence suggests that Mr. Milbank’s experience wasn’t unusual.
Notice, by the way, that we’re not talking about the business practices of fly-by-night operators; we’re talking about two of our three largest financial companies, with roughly $2 trillion each in assets. Yet politicians would have you believe that any attempt to get these abusive banking giants to make modest restitution is a “shakedown.” The only real question is whether the proposed settlement lets them off far too lightly.
What about the argument that placing any demand on the banks would endanger the recovery? There’s a lot to be said about that argument, none of it good. But let me emphasize two points.
First, the proposed settlement only calls for loan modifications that would produce a greater “net present value” than foreclosure — that is, for offering deals that are in the interest of both homeowners and investors. The outrageous truth is that in many cases banks are blocking such mutually beneficial deals, so that they can continue to extract fees. How could ending this highway robbery be bad for the economy?
Second, the biggest obstacle to recovery isn’t the financial condition of major banks, which were bailed out once and are now profiting from the widespread perception that they’ll be bailed out again if anything goes wrong. It is, instead, the overhang of household debt combined with paralysis in the housing market. Getting banks to clear up mortgage debts — instead of stringing families along to extract a few more dollars — would help, not hurt, the economy.
In the days and weeks ahead, we’ll see pro-banker politicians denounce the proposed settlement, asserting that it’s all about defending the rule of law. But what they’re actually defending is the exact opposite — a system in which only the little people have to obey the law, while the rich, and bankers especially, can cheat and defraud without consequences.
By: Paul Krugman, Op-Ed Columnist, The New York Times, March 13, 2011
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