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“The Devil’s Christmas Tree”: It’s Still A Long Ride On The Crazy Train

Expect to hear a great deal of cheerleading for a government shutdown from unusual quarters today. That’s because House Speaker John Boehner is now beginning to implement his earlier and much-puzzling-to-rational-people strategy of shifting Republican hostage-taking from efforts to keep the federal government operating to a debt limit bill due at the very latest by October 17.

Why is he doing this? You have to assume that Boehner is mesmerized by polling showing a debt default is more popular than a government shutdown–polling that is, of course, based on broad public incomprehension of the implications of a debt default.

Because (a) the president’s position after the dispiriting debt limit impasse of 2011 is that he will not negotiate over the debt limit, and because (b) congressional Democrats support that position, often with implicit or explicit “Hell No!” amendment, Boehner needs a debt limit bill that can pass the House with Republican votes only. And so his bill, as it is developing, is a right-wing Devil’s Christmas Tree, or to use a more secular metaphor, an evil child’s wish list for Santa. The generally very calm and very articulate Ezra Klein is almost at a loss for words in describing it:

The House GOP’s debt limit bill — obtained by the National Review — isn’t a serious governing document. It’s not even a plausible opening bid. It’s a cry for help.

In return for a one-year suspension of the debt ceiling, House Republicans are demanding a yearlong delay of Obamacare, Rep. Paul Ryan’s tax reform plan, the Keystone XL pipeline, more offshore oil drilling, more drilling on federally protected lands, rewriting of ash coal regulations, a suspension of the Environmental Protection Agency’s efforts to regulate carbon emissions, more power over the regulatory process in general, reform of the federal employee retirement program, an overhaul of the Dodd-Frank financial regulations, more power over the Consumer Financial Protection Bureau’s budget, repeal of the Social Services Block Grant, more means-testing in Medicare, repeal of the Public Health trust fund, and more.

[T]his is really the [Republican] conference teaching Boehner a lesson. He had so little support to raise the debt ceiling at all — and so little trust from his members that he had a strategy to maximize their leverage — that this is the bill he had to present. At this point, Boehner either can’t stop them, or he’s too exhausted to try.

I suppose the other interpretation is that Boehner intends to eventually patch together something less psychotropic that can be passed with mostly Democratic votes (he has, after all, publicly and repeatedly said he won’t let the country default on its debts), and/or that business community pressure will be brought in like a deus ex machina to pull Republicans back from the brink. In that case, I suppose, there’s no reason to say no to any House Republican demand (though the leadership did, it is being reported, turn down including a late-term abortion ban similar to the one the House passed earlier this year).

It’s also possible, theoretically, that Boehner and company wanted to shock Democrats and the MSM with the consequences of his party’s impending defeat on appropriations in order to force some sort of compromise on measures designed to avoid a shutdown. But at this point, Republicans will find it increasingly difficult to accept any deal that doesn’t disable Obamacare, now that Boehner has embraced the idea that a one-year implementation delay is a “reasonable” alternative to “defunding” it. And that’s a non-starter for Democrats, even if they do prove willing to directly or indirectly violate constant pledges not to consider a debt limit bill with conditions.

So that gets back to why a lot of folk will soon be begging John Boehner to put aside his little do-it-yourself atomic bomb assembly kit and go back to threatening the conventional warfare of a government shutdown. TNR’s Noam Scheiber is already there:

[O]ne of two things is probably going to happen if we avoid a shutdown: Either John Boehner is going to turn around and appease irate conservatives by insisting on delaying Obamacare in exchange for raising the debt limit, thereby sending the government into default (since Obama isn’t negotiating). Or he’s going to back down and allow the debt ceiling to be raised with a minority of House Republicans and a majority of House Democrats, thereby further infuriating conservatives and almost certainly costing himself his job. (Recall that conservatives got more than halfway to the number of defections they needed to oust Boehner back in January, after he’d merely allowed a vote on a small tax increase when a much bigger one was kicking in automatically.) That is, either Boehner gets it or the global economy gets it, both of which Boehner would like to avoid even more than he’d like to avoid a shutdown.

If Boehner resigns himself to a shutdown, on the other hand, suddenly the future looks manageable. After a few days of punishing political abuse, Boehner will be able to appear before his caucus, shrug his shoulders in his distinctive Boehnerian way, and bleat that he executed the strategy conservatives demanded, but that the country is overwhelmingly opposed to it, as are most Senate Republicans and almost every semi-legitimate right-wing pundit and media outlet

That’s just great. I suppose begging John Boehner to be somewhat less destructive is a preferable alternative to caving to his demands. But it still involves a long ride on the crazy train in order to reach the engineer with a request to please turn around.

 

By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, September 26, 2013

September 27, 2013 Posted by | Debt Ceiling, Government Shut Down | , , , , , , | Leave a comment

“Biggest Banks Are Bigger Than Ever”: Five Years After Lehman Brothers, We’re Still Just One Crisis From The Edge

Five years ago tomorrow, the investment bank Lehman Brothers filed for bankruptcy, officially kicking off the financial crisis that led to what we now call the Great Recession. Lehman’s bankruptcy was followed by the bailout of insurance giant AIG, the $700 billion bank bailout known as TARP and an alphabet soup of Federal Reserve programs launched in an attempt to stem the damage being done to the economy.

But even with those emergency measures, the final toll of the crisis was staggering: 8.7 million jobs were lost, $16 trillion in household wealth was wiped out and 12 million homeowners were left underwater, owing more on their mortgages than their homes were worth. According to the Federal Reserve Bank of Dallas, the cumulative effects of the crisis – wealth lost during the recession plus the effect that lower earnings and wealth will have on future earnings and output – could add up to more than $28 trillion.

The crisis began with a housing bubble fueled by subprime mortgage lenders, who were encouraged to make loan after loan by Wall Street banks that wanted mortgage securities to slice, dice and sell around the world. But it was exacerbated by the fact that the biggest Wall Street banks were so interconnected that the failure of one meant all the others were brought to the brink of collapse. The banks – engorged on debt and engaging in risky trading for only their own benefit – put the whole economy at risk.

Since then, quite a lot of time, effort and ink have been spent trying to fix what went wrong. So how did that attempt go?

The main legislative response to the crisis – the Dodd-Frank financial reform law – undeniably contains some things that will make the next crisis, whatever its form, easier to manage (or even prevent). There’s now a regulator explicitly tasked with policing consumer financial products, the Consumer Financial Protection Bureau. There’s a new process that, at least in theory, will allow the government to dismantle a failing mega-bank without resorting to ad-hoc bailouts, a legal process that was sorely missing during the 2008 crisis.

There’s a new regulatory regime for derivatives – the risky financial instruments that helped bring down AIG – that should make their market much more transparent. And banks are now required to hold more capital on hand to protect against a sudden downturn.

In other areas, though, not much has changed. For instance, the biggest banks are bigger than ever. In fact, the six largest banks in the U.S. now hold $9.6 trillion in assets, a 37 percent increase from five years ago. That total is equal to 58 percent of the entire economy. As Fortune’s Stephen Gandel noted, “The biggest bank in the nation, JPMorgan, has $2.4 trillion in assets alone — the size of England’s economy.”

And while those banks have gotten bigger, rules meant to rein in their risky trading have gone precisely nowhere. A key part of Dodd-Frank known as the Volcker Rule – which was supposed to prevent banks from making risky trades with taxpayer-backed dollars, such as consumer deposits – was watered down by Congress even before it passed, and is now stuck in a bureaucratic and lobbying morass. (Overall, just 40 percent of the rules in Dodd-Frank are actually finished.) More ambitious reforms, like capping the size of banks, garnered just one unsuccessful vote in the Senate.

Homeowners, meanwhile, continue to struggle. Not only are 7.1 million still underwater, but banks are engaging in shady practices to push homeowners into foreclosure who should have been able to stay in their homes. A much ballyhooed settlement stemming from rampant “foreclosure fraud,” as it’s called, doesn’t seem to have actually stopped these pernicious practices.

So while some things have certainly changed for the better – and having a consumer regulator will hopefully shortcircuit a lot of problems before they start – the biggest banks are still just one catastrophe away from pulling the country back to the edge of a cliff. And if the new process for unwinding a failed mega-bank doesn’t work, there won’t be many options available other than the odious bailouts used in 2008. In the meantime, homeowners who have suffered at the hands of the financial industry still find themselves with few avenues for receiving any justice.

Is there any momentum for new reform? Well, Sen. Elizabeth Warren, D-Mass., has been beating the drum for breaking up the biggest banks, and introduced a bill – along with Sens.  John McCain, R-Ariz., Maria Cantwell, D-Wash., and Angus King, I-Maine – that would bring back a Depression-era regulation keeping investment and commercial banking separate. Former Citigroup CEO John Reed, who presided over the nation’s first true banking behemoth, told the Financial Times recently that breaking up banks can and should be done, making him one of a handful of Wall Street titans to take such a position.

But the financial industry is as strong as ever, so the prospects of real reform happening absent another crisis or a real populist reawakening are still pretty slim. If another crash comes along, we’re going to have to hope that the tinkering and tweaking that’s already occurred is enough to save us.

 

By: Pat Garofalo, U. S. News and World Report, September 14, 2013

September 15, 2013 Posted by | Big Banks, Financial Crisis | , , , , , , , | 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

“Taxing The Most Vulnerable”: Student Loan Debt Is Bad For Women And Congress Is Making It Worse

How bad is the wage gap for women in the workplace?

For college graduates, it’s so bad that it begins even before women begin their careers.

According to a study by AAUW, Graduating to a Pay Gap: The Earnings of Women and Men One Year After College Graduation:

Women and men pay the same amount for their college degrees, but they often do not reap the same rewards. Among 2007-08 college graduates, women and men typically borrowed similar amounts to finance their educations, about $20,000. Because women are paid less than men are paid after college, student loan repayments make up a larger part of women’s earnings. In 2009, among full-time workers repaying their loans one year after college graduation, just over half of women (53 percent) compared with 39 percent of men were paying more than what we estimate a typical woman or man could reasonably afford to pay toward student loan debt. These numbers have risen in recent years.

Outstanding student loans today total more than $1 trillion, surpassing credit card debt. Student loan debt has increased nearly 300 percent over the last eight years, according to a report by the New York Federal Reserve.

Is Congress doing anything about this problem? As a matter of fact they are. They’re making it worse.

This July, unless Congress acts, the interest rate on federally subsidized Stafford loans is set to increase from 3.4 to 6.8 percent. In another example of the Congress’ attitude of “don’t tax the rich, but tax the most vulnerable,” student loans are seen as a nice little moneymaker.

The federal government will make $34 billion this year on student loans. If Congress allows the interest rate on these loans to double, the federal government will bring in even more revenue — money that comes straight from the pockets of students who had to borrow money to go to college.

Of course, not everyone has to pay such a burdensome rate of interest on loans. Big banks can borrow money from the Federal Reserve at a rate of less than 1 percent. There’s something very wrong with this picture.

This week, I attended a breakfast meeting with Senator Elizabeth Warren (D. Mass.) where she spoke about the first piece of standalone legislation she is introducing in the United States Senate.

In a speech on the Senate floor, Sen. Warren said:

The Bank on Students Loan Fairness Act would allow students who are eligible for federally subsidized Stafford loans to borrow at the same rate that big banks get through the Federal Reserve discount window. For one year, the Federal Reserve would make funds available to the Department of Education to make loans to students at the same low rate offered to the big banks. This will give students relief from high interest rates while giving Congress time to find a long-term solution.

At our breakfast, I remembered that it was the mobilization of enormous grassroots support for the Consumer Financial Protection Bureau (then-Professor Warren’s brainchild) that kept pressure on Congress to pass the legislation that established that agency. Her fight to keep student loan interest rates low is her next big campaign, and women should pull out all the stops to support her.

AAUW’s findings tell us that women are disproportionately likely to take out loans; among 2007-2008 graduates, 68 percent of women borrowed money for college compared to 63 percent of men.

According to the AAUW report:

For many young women, the challenge of paying back student loans is their first encounter with the pay gap. “Student loan debt burden” is defined as the percentage of earnings devoted to student loan payments. A high student loan debt burden is an indicator that repayment may create hardship. Individuals with high student loan debt burden are less likely to own a home, have a car loan, or even make rent payments. High student loan debt burden is a challenge for a growing number of college graduates, men and women alike, but is particularly widespread among women, in large part because of the pay gap.

The National Organization for Women (NOW) has a long history of supporting equal pay, comparable worth and other policies that advance women’s economic security. NOW was proud to support Elizabeth Warren in her successful campaign for the U.S. Senate, and we are equally proud to support her urgently needed legislation to reduce the burden of student loan debt.

It’s hard to imagine how anyone could oppose a bill that simply requires the Fed to set interest rates for students at the same low rate the big banks get. But get this: an opponent of Sen. Warren’s bill reportedly suggested — presumably hoping we’ve all forgotten about the taxpayers’ bailout of the too-big-to-fail banks — that unlike students, the big banks deserve to pay a super-low interest rate because they never fail. And they say the 1 Percent has no sense of humor.

Elizabeth Warren has planted the flag for student loan reform by introducing her bill, and now it’s up to us to mobilize support and pressure Congress to pass it. This is grassroots democracy at its best. So, blog about this, write letters to the editor, lobby your senators and your representative.

Help ensure that a college education is a pathway to fulfillment and success for women, and not an opening to crushing debt.

 

By: Terry O’Neill, President, National Organization for Women, The Huffington Post, May 20, 2013

May 22, 2013 Posted by | Education, Women | , , , , , , , | 1 Comment

“In The Thicket Of Fine Print”: Elizabeth Warren Rips NRA And GOP For “Keeping The Game Rigged”

Senator Elizabeth Warren (R-MA) used her speech at the Consumer Federation of America Thursday to make a wide-ranging argument defending the role of government and ripping Republicans and the National Rifle Association for intentionally keeping the American public in the dark.

After calling out the NRA’s “armies of lobbyists [that] are fighting to rig the system so that the public remains in the dark,” the senior senator from Massachusetts attacked the organization’s efforts to stop public research into gun violence.

“If as many people were dying of a mysterious disease as innocent bystanders are dying from firearms, a cure would be our top priority,” Warren said. “But we don’t even have good data on gun violence. Why? Because the NRA and the gun industry lobby made it their goal to prevent any serious effort to document the violence.”

Her defense of the Consumer Financial Protection Bureau (CFPB), which she first conceived and helped create as part of the Dodd-Frank financial reforms, was especially pointed.

“This agency is about making consumer credit clear — no more hiding tricks and traps in a thicket of fine print. It is about letting consumers see the deal — and not worrying about the things they can’t see,” Warren said.

Senator Warren discussed the creation of the CFPB in a 2010 speech at the Consumer Federation of America that you can watch here.

Republicans have praised the work of CFPB director Richard Cordray, who President Obama installed via recess appointment after the GOP blocked his nomination. But they are blocking him again because they are bent on increasing congressional oversight of the bureau, while weakening its power.

“Blocking Rich Cordray is about keeping the game rigged, keeping the game rigged so that consumers remain in the dark — and a few bad actors can rake in big profits,” Warren said.

Republicans are basically working to void a federal law simply because they don’t like it. And by abusing the filibuster, they’ll likely be effective.

Senator Warren called out this unprecedented obstruction at Cordray’s nomination hearing:

“What I want to know is why every banking regulator since the Civil War has been funded outside the Appropriations process, but unlike the consumer agency, no one in the United States Senate has held up confirmation of their directors demanding that that agency or those agencies be redesigned.

 

By: Jason Sattler, The National Memo, March 14, 2013

March 15, 2013 Posted by | GOP, National Rifle Association | , , , , , , , | Leave a comment

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