“She Will Be Heard”: Elizabeth Warren Knows Where A Lot Of The Bodies Are Buried, Puts AIG On Notice
When new members arrive in the US Senate, they are supposed to take a seat on a back bench and listen quietly for a couple of years. That is not in Elizabeth Warren’s nature. She had been a US Senator from Massachusetts for only about a week when she broke with etiquette. Warren was outraged that AIG investors were urging the insurance giant’s directors to join them in a lawsuit against the federal government, claiming damages from the federal bailout of their company during the financial crisis.
The freshman senator sent out a tartly worded statement to her many fans and followers. “AIG should thank American taxpayers for their help—not bite the hand that fed them,” Warren wrote. The message swept the blogosphere like wild fire. The AIG directors folded the next day. It is perhaps mistaken to assume her voice alone stopped this corporate ingratitude in its tracks, but that may well be the message absorbed in Washington politics. Try not to provoke this new senator, especially on the stuff she knows a lot about. She might bite back.
Indeed, Senator Warren has renewed the accusation about the AIG bailout she had made a year ago during her Senate campaign. While the Federal Reserve pumped a fortune ($182 billion) into saving AIG from failure and thereby protected Wall Street megabanks from huge losses, the Treasury Department was arranging its own “sleuth bailout,” as Warren charged. Treasury granted an exception to the standard tax rules that delivered billions more to AIG in the form of a special tax break.
The company was effectively relieved from paying any taxes despite the fact that it has returned to profitability and repaid the Federal Reserve loans. The senator called on her supporters to join a campaign to end AIG’s special tax break. “Enough is enough…,” she wrote. “These special tax giveaways give AIG a competitive advantage over its competitors—all the while inflating AIG’s profit numbers and compensation for executives.”
What separates Elizabeth Warren from your typical newcomer to Congress—in addition to the rare gutsiness—is her deep knowledge of banking and finance. For many years, while she taught at the Harvard law school, Warren was a lonely crusader, exposing predatory bankers and the cruel terms by which millions of families were driven into bankruptcy.
Her reputation led to appointment as the chair of the Congressional Oversight Panel that investigated the AIG bailout in great depth. The COP final report is itself an extraordinary document of government—clear and concise, an unflinching analysis that describes exactly how the Federal Reserve and the Treasury failed to serve the public interest in their incestuous bailout of Wall Street titans.
“The AIG rescue demonstrated that Treasury and the Federal Reserve would commit taxpayers to pay any price and bear any burden to prevent the collapse of America’s largest financial institutions,” Warren’s report concluded.
She will be heard. The new senator will serve on the Senate banking committee and she already knows where a lot of the bodies are buried. I suspect some of those disgruntled AIG investors are wishing they had kept their whining to themselves.
By: William Greider, The Nation, January 10, 2013
“Romney’s Kind Of Guy?”: Pushed Into A “Quayle-Palin” Decision By A Conservative Establishment
For months, Mitt Romney repeated a common complaint about President Obama’s professional background: he’s spent his life in the political world, not the real world. While Romney’s a businessman (notwithstanding 18 years seeking public offices), Obama’s never run a business and never run a state. It makes Obama, the argument goes, a poor choice for national office.
Oddly enough, Romney hasn’t repeated that line of criticism in a while. I guess we know why.
[Paul Ryan] worked in politics his entire life, beginning as an aide to Sen. Bob Kasten, then working for Sen. Sam Brownback and as a speechwriter to Rep. Jack Kemp. He’s known as a relatively ideological politician who has put forward a detailed policy plan to remake the federal government. It’s a rather different message about what’s important. And how does Romney say the problem with Barack Obama is that he’s “never spent a day in the private sector” and then put Ryan a heartbeat away from the presidency?
Indeed, in May, Romney went so far as to say working in the private sector for “at least three years” should be a prerequisite to national office. Now, Romney wants to put Ryan one heartbeat from the presidency, despite the fact that Ryan’s adult life bears all of the characteristics of a background Romney disdains.
I don’t intend this as a “gotcha” moment, exactly, but rather, my larger point is I’m not exactly sure why Romney thinks Ryan should be the vice president, or would even be good at the job.
Everything we know about Romney — he’s a cautious, management-focused executive, who values experience and private-sector success — suggests Ryan’s the last guy he’d want as a governing partner in the White House. Putting aside the radicalism of the Ryan budget plan, at least for a moment, Ryan hasn’t run so much as a lemonade stand.
He’s a 42-year old, seven-term congressman who’s never even held statewide office and has no natural constituency. Ryan voted for every element of the Bush-Cheney agenda — including votes for the bank bailout, the massive Medicare Part D expansion that he didn’t see the need to pay for, and multiple increases to the debt limit.
Ryan’s also a very high-profile figure from the least popular Congress since the dawn of modern polling. He is, in other words, a professional politician who has played a key role in making Capitol Hill even more loathed than it’s ever been. Ryan, like Romney, also has literally zero background in foreign policy, national security, or international affairs.
What is it about this resume that Romney looks at and says, “Yep, that’s my kind of guy”?
The answer is, nothing. Romney was almost certainly pushed into this announcement by a conservative establishment that doesn’t trust him or feel excited to rally behind him, and Romney didn’t have the standing or intestinal fortitude to push back.
It’s a Quayle/Palin kind of decision that reinforces the perception that Romney is not only unsatisfied with the state of the race, but is starting to feel genuine fear about his candidacy.
By: Steve Benen, The Maddow Blog, August 11, 2012
“Taboo Ideas”: Regular People Could Use A Bailout Every Bit As Much As Wealthy Elites
Via Atrios, I see that the idea of just printing money and handing it out is gaining some elite traction. Here’s Anatole Kaletsky in Reuters:
Last week I discussed in this column the idea that the vast amounts of money created by central banks and distributed for free to banks and bond funds – equivalent to $6,000 per man, woman and child in America and £6,500 in Britain – should instead be given directly to citizens, who could spend or save it as they pleased. I return to this theme so soon because radical ideas about monetary policy suddenly seem to be gaining traction. Some of the world’s most powerful central bankers – Mario Draghi of the European Central Bank last Thursday, Eric Rosengren of the Boston Fed on Monday and Mervyn King of the Bank of England this Wednesday – are starting to admit that the present approach to creating money, known as quantitative easing, is failing to generate economic growth. Previously taboo ideas can suddenly be mentioned.
The nice thing about this is it wouldn’t rely on some second-order effects through the expectation channel. With a big cash windfall a major fraction of the population are sure to spend it or use it to pay down some debt. When you’re in a depression, as we are, that’s just what the doctor ordered. This is as opposed to normal quantitative easing, which relies on pushing on the economy through the rotten banking system. Like a sponge, the banks absorb most of the money before it seeps out into the real economy.
Probably the biggest obstacle with this is how ridiculous it sounds. “The money has to come from somewhere,” people say. Actually, no it doesn’t. That’s the whole idea behind fiat money. Nothing behind it. “It’ll create hyperinflation,” conservatives will say. Nope. Right now we’re in a depression: we have very low inflation from too few people with jobs and money buying not enough goods and services to run the economy at potential.
Therefore, more spending will just pull in more idle people and resources. Only when the economy is at capacity is serious inflation a possibility. If it starts to happen, the Fed can easily act to restrain it.
The least convincing counterargument is the moral hazard one. “Can’t give people free money,” people say, “otherwise they’ll lose their moral fiber. Success must be earned.” I suppose all other things equal that’s the case, but that argument sure didn’t stop the Treasury from stuffing $700 billion down the rotting throats of the banks back in 2008, and it hasn’t stopped the Fed from stuffing God knows how many more trillions in cheap loans after it.
Again, I agree that moral hazard should be a consideration, especially for the richest and most powerful people and corporations, but we recognize in a crisis sometimes it’s more important to keep the system from collapsing than make sure every person gets exactly what she deserves. When we had a banking crisis, everyone agreed on this. Elites everywhere panicked, and swooped in with “incredible speed and force to bail out the financial sectors in which creditors are invested, trampling over prior norms and laws as necessary.” We’re now in the fourth year of an unemployment crisis, and it’s high time we found some similar urgency.
Nothing I haven’t said before, and still probably little chance of happening, but here’s hoping. Regular people could use a bailout every bit as much, if not more, than wealthy elites.
By: Ryan Cooper, Washington Monthly Political Animal, August 9, 2012
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