“Wall Street Vampires”: Lurking In Their Coffins, The Enemies Of Reform Can’t Withstand Sunlight
Last year the vampires of finance bought themselves a Congress. I know it’s not nice to call them that, but I have my reasons, which I’ll explain in a bit. For now, however, let’s just note that these days Wall Street, which used to split its support between the parties, overwhelmingly favors the G.O.P. And the Republicans who came to power this year are returning the favor by trying to kill Dodd-Frank, the financial reform enacted in 2010.
And why must Dodd-Frank die? Because it’s working.
This statement may surprise progressives who believe that nothing significant has been done to rein in runaway bankers. And it’s true both that reform fell well short of what we really should have done and that it hasn’t yielded obvious, measurable triumphs like the gains in insurance thanks to Obamacare.
But Wall Street hates reform for a reason, and a closer look shows why.
For one thing, the Consumer Financial Protection Bureau — the brainchild of Senator Elizabeth Warren — is, by all accounts, having a major chilling effect on abusive lending practices. And early indications are that enhanced regulation of financial derivatives — which played a major role in the 2008 crisis — is having similar effects, increasing transparency and reducing the profits of middlemen.
What about the problem of financial industry structure, sometimes oversimplified with the phrase “too big to fail”? There, too, Dodd-Frank seems to be yielding real results, in fact, more than many supporters expected.
As I’ve just suggested, too big to fail doesn’t quite get at the problem here. What was really lethal was the interaction between size and complexity. Financial institutions had become chimeras: part bank, part hedge fund, part insurance company, and so on. This complexity let them evade regulation, yet be rescued from the consequences when their bets went bad. And bankers’ ability to have it both ways helped set America up for disaster.
Dodd-Frank addressed this problem by letting regulators subject “systemically important” financial institutions to extra regulation, and seize control of such institutions at times of crisis, as opposed to simply bailing them out. And it required that financial institutions in general put up more capital, reducing both their incentive to take excessive risks and the chance that risk-taking would lead to bankruptcy.
All of this seems to be working: “Shadow banking,” which created bank-type risks while evading bank-type regulation, is in retreat. You can see this in cases like that of General Electric, a manufacturing firm that turned itself into a financial wheeler-dealer, but is now trying to return to its roots. You can also see it in the overall numbers, where conventional banking — which is to say, banking subject to relatively strong regulation — has made a comeback. Evading the rules, it seems, isn’t as appealing as it used to be.
But the vampires are fighting back.
O.K., why do I call them that? Not because they drain the economy of its lifeblood, although they do: there’s a lot of evidence that oversize, overpaid financial industries — like ours — hurt economic growth and stability. Even the International Monetary Fund agrees.
But what really makes the word apt in this context is that the enemies of reform can’t withstand sunlight. Open defenses of Wall Street’s right to go back to its old ways are hard to find. When right-wing think tanks do try to claim that regulation is a bad thing that will hurt the economy, their hearts don’t seem to be in it. For example, the latest such “study,” from the American Action Forum, runs to all of four pages, and even its author, the economist Douglas Holtz-Eakin, sounds embarrassed about his work.
What you mostly get, instead, is slavery-is-freedom claims that reform actually empowers the bad guys: for example, that regulating too-big-and-complex-to-fail institutions is somehow doing wheeler-dealers a favor, claims belied by the desperate efforts of such institutions to avoid the “systemically important” designation. The point is that almost nobody wants to be seen as a bought and paid-for servant of the financial industry, least of all those who really are exactly that.
And this in turn means that so far, at least, the vampires are getting a lot less than they expected for their money. Republicans would love to undo Dodd-Frank, but they are, rightly, afraid of the glare of publicity that defenders of reform like Senator Warren — who inspires a remarkable amount of fear in the unrighteous — would shine on their efforts.
Does this mean that all is well on the financial front? Of course not. Dodd-Frank is much better than nothing, but far from being all we need. And the vampires are still lurking in their coffins, waiting to strike again. But things could be worse.
By: Paul Waldman, Op-Ed Columnist, The New York Times, May 11, 2015
“In Defense Of ‘Uppity-ism'”: Michelle Obama, “Rise Above The Noise”; All Black Americans Should Take Her Advice
It became clear during the 2008 presidential campaign that America was going to have some real trouble handling the prospect of a black president of the United States and a black first lady. Despite hip-hop having defined much of pop culture since the 1980s, a fist bump was all of a sudden unfamiliar: Is it a salute or a “terrorist fist jab?” Cue the disingenuous shrugs.
Coded and blatant racial insults were everywhere during that election season and haven’t abated in the seven years since. Michelle Malkin, herself a woman of color, called Michelle Obama one of her husband Barack’s “cronies of color” in her 2009 book Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies. A Fox News Channel graphic colloquially insulted the married mother of two daughters, calling her “Obama’s baby mama.” Another slur came from conservative radio host Rush Limbaugh in 2011, when in the course of lying about the public paying for presidential vacations, he charged the first lady and family with “a little bit of uppity-ism.” There are, of course, many more vitriolic examples.
“Uppity,” translated from thinly-veiled racial code, is meant to describe a black person who doesn’t know her or his place. It is as paternalistic as it is racist, meant to convey that a black person is somehow lower, in need of guidance back to the subjugated existence that makes the dominant caste more comfortable. Heaven forbid one even consider her or himself an equal. Or superior!
It’s a word I’ve been called once to my face, a few times online, and likely more behind my back. Unlike “nigger,” I’ve always felt oddly affirmed by it. It’s a term of hatred, no doubt, but someone who thinks me “uppity” considers my very existence a threat. That’s a good thing. We are threats to them and their detestable worldview, and Michelle Obama’s life, perhaps even more so than Barack’s, is a testament to this.
The first lady reminded us of these insults and slights in a commencement speech on Saturday, all in the context of facing “pressure to live up to the legacy of those who came before you; pressure to meet the expectations of others”—a fitting message for the new graduates of the historically black Tuskegee University in Alabama, where the Tuskegee Airmen, famed black military pilots of World War II, were educated while they trained at nearby Moton Field.
“As potentially the first African American first lady, I was also the focus of another set of questions and speculations; conversations sometimes rooted in the fears and misperceptions of others,” she said during her speech. “Was I too loud, or too angry, or too emasculating? Or was I too soft, too much of a mom, not enough of a career woman?”
These sorts of questions are regularly hurled at women in America, of which the first lady is an avatar of sorts. They have a special appeal to sexists seeking to challenge the manhood of the president, a job that required the kind of fortitude and strength our culture has misguidedly sought to find in a pair of testicles. But given the entirety of Michelle Obama’s experience, we have to consider these narrowing notions in the context of race.
In an essay for The Root last September about the New York Times Arts review, historian Blair L.M. Kelley reminded how deeply rooted the stereotype of the angry, emasculating black woman is:
Beginning in the early 1830s, the first ‘black women’ American audiences saw on the American stage were minstrel ‘Negro wenches.’ Using burned cork and greasepaint to blacken their skin, white men in their performances as black men and women became wildly popular in the mid-19th century. White men used crude drag along with the burned cork to mark black women as grotesque, loudmouthed, masculine and undeserving of the protections afforded to white ‘ladies’ in American society.
Michelle Obama told the graduates how out here in the world that this sort of framing may seem small in the face of those denied a house or a job because of their race, and she’s right. But I’m glad she brought them up. (Frankly, I’m always happy to see a black person in the public sphere reflect black reality, as opposed to the white stories we’ve been forced to tell and celebrate for so long.) Microaggressions like this feed the systemic, more obvious incarnations of racial discrimination. And in that light, “uppity-ism,” as Limbaugh termed it, is worth claiming for our own and defending.
“Eventually,” she told the graduates, “I realized that if I wanted to keep my sanity and not let others define me, there was only one thing I could do and that was to have faith in God’s plan for me. I had to ignore all of the noise and be true to myself—and the rest would work itself out. So throughout this journey, I have learned to block everything out and focus on my truth.” The First Lady closed by urging the graduates to “rise above the noise,” a fitting metaphor for the Tuskegee crowd.
Being deemed “uppity” signifies a specific kind of arrogance to a predominantly white power structure. For that, I embrace the term. Not as how oppressors seek to define it, but for what it literally represents: a desire to prove yourself superior to an inherently racist society and above the category they would otherwise assign you.
I’m hardly the first to do so; former National League president and baseball player Bill White used the word as a title for his frank memoir four years ago. “It’s a person, especially someone of a different color, who says, ‘Hell no’ and stands his ground,” he told the Times. It’s a crude declaration of the power of black ambition and steadfastness. Those are things I’ll never look down upon.
By: Jamil Smith, The New Republic, May 11, 2015
“Big Appetite”: Christie Buys $300K Of Food & Booze With NJ Expense Account
Chris Christie’s expense account tells a story of appetite and ambition, one that pits government waste versus the New Jersey governor’s waistline.
Christie spent $360,000 from his state allowance during his five years in office. More than 80 percent of that money, or $300,000, was used to buy food, alcohol and desserts, according to a New Jersey Watchdog analysis of records released by the governor’s office.
In addition to his $175,000 a year salary, the governor receives $95,000 a year in expense advances, paid quarterly by the state. In the state budget, it is listed as “an allowance of funds not otherwise appropriated and used for official receptions on behalf of the state, the operation of an official residence, for other expenses.”
While Christie returns surplus funds to the state each year, Treasury officials say he does not submit receipts or accounting for the public monies he spends. The governor’s ledger, obtained from Christie under the Open Public Records Act, offers a rare, if partial glimpse of a controversial expense account shrouded in secrecy.
Christie’s most notable spending spree occurred during the 2010 and 2011 NFL football seasons at MetLife Stadium, where the New York’s Giants and Jets play their home games. New Jersey’s governor traditionally enjoys free use of luxury boxes for games and other events at the government-owned venue, but food and beverages cost extra.
On 58 occasions, Christie used a debit card to pay a total of $82,594 to Delaware North Sportservice, which operates the concessions at MetLife. The governor’s office did not provide any receipts, business reasons or names of individuals entertained, but defended the expense.
“The official nature and business purpose of the event remains the case regardless of whether the event is at the State House, Drumthwacket or a sporting venue,” said Christie’s press secretary Kevin Roberts in a prepared statement.
To avoid a potential scandal that could embarrass their rising political star, the New Jersey Republican State Committee reimbursed the Treasury in March 2012 for Christie’s purchases from “DNS Sports.” Since then, the governor has refrained from using his expense account at MetLife and other sports venues.
Meanwhile, Christie found other ways to enjoy the allowance.
The governor used it to buy $102,495 worth of groceries and alcoholic beverages from retail stores. It’s not clear from records whether the goods stocked the pantries and filled the refrigerators at Drumthwacket, the governor’s official mansion in Princeton, or the Mendham house where Christie and his family live. The store addresses were not disclosed.
Christie did most of his serious food shopping at Wegmans Food Markets, where he spent $76,373 during 53 shopping runs. He patronized ShopRite supermarkets 51 times for $11,971 in purchases – plus another $6,536 in seven visits to ShopRite’s liquor stores.
Those grocery bills dropped dramatically in early 2013, shortly after Barbara Walters asked on network television whether Christie was too overweight to be president.
“There are people who say you couldn’t be president because you’re so heavy,” said Walters in an ABC special that aired in December 2012. “What do you say to that?”
“That’s ridiculous,” Christie shot back. “I mean, that’s ridiculous.”
Two months later, the governor underwent Lap-Band surgery in an attempt to lose weight. Nearly two years after the operation to restrict the size of his stomach, Christie boasted he had shed 85 pounds.
It also shrank Christie’s supermarket bills.
The governor bought $64,687 in groceries during the 38 months leading up to the surgery. That tab shrank to $31,236 for the 26 months after the operation.
On top of those food bills, Christie spent another $109,133 to hire caterers for official state receptions and special events – expenses more consistent with the stated purpose of the allowance. His favorite vendor was Jacques Exclusive Caterers of Middletown, which received $74,161 worth of business from the governor.
Other payments included $35,027 for tents and rental equipment, $10,786 for printing and office supplies and $4,338 for candy, cookies and confections.
The records released by the governor’s office did not include receipts or descriptions of what was purchased. Such secrecy would change under a bill introduced by Assemblymen Troy Singleton, D-Burlington, and Vince Mazzeo, D-Atlantic.
“New Jersey taxpayers have every right to know where their hard-earned money goes,” said Mazzeo. “Any governor who makes a responsible and appropriate use of this expense account should have no objection to complying with what’s required under this bill.”
If enacted, A-4424 would require the governor to disclose expenses with receipts in an annual report to be posted on the State Ethics Commission web site.
“There is a growing sense of cynicism in politics today and it is imperative for those of us in public office to overcome that cynicism by ensuring a more transparent and accountable system,” added Singleton.
As Christie’s out-of-state travel increased while he pursued his political ambitions, the governor’s state allowance expenditures decreased. During those political journeys, many of the costs have been picked by the state GOP, the Republican Governors Association and his PAC, Leadership Matters for America.
In 2010, the governor spent all but $2,716 of his state expense allowance during his first year in office. The annual surpluses grew to $9,882 in 2011, $21,225 in 2012, $47,472 in 2013 and $30,377 last year. Christie returned those monies to the Treasury, according to records he provided.
However, the rising costs of protecting the governor on his sojourns away from New Jersey dwarfed any decreases in allowance expenditures by Christie.
The travel costs for the state police’s Executive Protection Unit reached $492,420 in 2014. It is 22 times more than the $21,704 spent in 2009, former Gov. Jon Corzine’s last year in office.
During Christie’s first five years as governor, EPU travel costs totaled nearly $1.2 million.
The governor’s office has not responded to New Jersey Watchdog’s questions about the expenses. Instead, Roberts pointed to his previous statement: “These are the same standards and practices that every other former governor followed when it comes to their security detail.”
Over the past five years, $975,000 of those security costs were charged to American Express credit cards issued to the governor’s office. Christie has flatly refused to release the monthly statements, claiming details of past expenditures could jeopardize his safety in the future.
New Jersey Watchdog is suing Christie in Mercer County Superior Court to force the governor to release the Amex records of EPU charges.
By: Mark Lagerkvist, New Jersey Watchdog.org, May 11, 2015
“A Bold Truth-Teller”: What If A 2016 GOP Candidate Told The Truth About Obamacare?
If you’re a Republican presidential candidate, there aren’t too many ways you can distinguish yourself from your primary opponents on the issue of health care — I hate Obamacare, you hate Obamacare, we all hate Obamacare. But maybe there’s another way, for someone who has the courage to shift his rhetoric and present themselves as a bold truth-teller.
To put that in context, let’s look at some new developments on the Obamacare front.
A study just out from the Rand Corporation — not exactly a hotbed of socialist thinking — finds that after the coverage provisions in the Affordable Care Act took effect: “we estimate that 22.8 million people became newly insured and that 5.9 million lost coverage, for a net increase of 16.9 million with insurance as of February 2015.”
In addition, a new Gallup poll shows that 43 percent of Americans say they’re satisfied with the government’s work in health care, which doesn’t sound so great until you learn it’s the highest number this question has received since the organization began asking it in 2001.
We already know that all the predictions Republicans made about the ACA — a decline in health coverage, skyrocketing medical spending and premiums, massive job losses — failed to come true. One seemingly sensible response to the facts about Obamacare is to pretend they aren’t true, which is how prominent Republicans have handled things until now. After all, there hasn’t been much punishment for spreading falsehoods about the law, and the public is still woefully uninformed about it. For example, for every American who knows that the law has proven much less expensive than was originally estimated, there are eight who mistakenly believe it ended up being more expensive.
Nevertheless, the good news continues to pile up, and at least some of it may be penetrating to the public, albeit slowly (approval of the law has been ticking up of late). Which could create the opening for a Republican willing to say something different from his peers.
Let’s imagine a presidential candidate who said something like this to GOP primary voters:
“I know that just saying ‘Repeal Obamacare!’ is a good applause line. And believe me, I wish it had never passed. But we’ve had over 50 votes to repeal it in Congress, and it’s still here. Like it or not, it’s becoming entrenched. If we repealed it tomorrow, it would mean that millions of Americans would lose the coverage they’ve got. We can’t object to people losing their plans because of Obamacare, and then say it’s no big deal if a much larger number of Americans lose their coverage when we repeal the law. And Obamacare does a few things that we Republicans favor.
“So instead of just saying ‘Repeal it now!’, I’m going to give you a plan to keep the good things, ditch the bad things, and move toward a better health care system. We’ve spent the last five years banging our heads against the wall over this law, and some of my opponents think more banging is the answer. But I want to solve the problem.”
The Republican who said that would, of course, be branded a traitor by some. But he’d also get a wave of adoring press coverage, in which he’d be characterized as a straight-talking man of courage and the only one willing to have an adult conversation about health care.
The outcome of the King v. Burwell lawsuit could also help make his case. If the Supreme Court rules in Republicans’ favor, millions of Americans will lose their health coverage when subsidies are taken away, and efforts for a legislative fix are uncertain at best. The experience will make it clear even to many Republicans that “Burn it down!” isn’t always the wisest approach.
Yes, a Republican who turned his back on “repeal” to focus on “replace” would be taking a huge risk, since GOP primary voters are not necessarily going to be thoughtful and measured in their response to someone proposing something less than all-out war against Barack Obama and everything he ever touched. But it might just be crazy enough to work.
By: Paul Waldman, Senior Writer, The American Prospect; The Plum Line Blog, The Washington Post, May 7, 2015
“It Ain’t Over Yet, There’s A Whole New Inquiry”: Christie’s Administration Is Facing Another Investigation
If after last week’s Bridgegate indictments you thought Chris Christie was finally done as the focus of government investigations, think again. The Republican governor’s administration in New Jersey is facing a whole new inquiry — this one involving hundreds of millions of dollars, and not just blocked-off bridge lanes.
At issue are the fees being paid by New Jersey’s beleaguered public pension system to Wall Street firms. In recent years, Christie’s officials have shifted more of the retirement savings of teachers, firefighters, police officers, and other public workers into the hands of private financial firms. That has substantially increased the management fees paid by taxpayers to those firms. Indeed, while Christie says the pension system cannot afford to maintain current retirement benefits, pension fees paid to financial firms have quadrupled to $600 million a year — or $1.5 billion in total since he took office in 2010.
In recent months, details have emerged showing that Christie officials have directed lucrative pension management deals to some financial companies whose executives have made contributions to Republican groups backing Christie’s election campaigns. Additionally, Christie’s officials have admitted that they have not been fully disclosing all the fees the state has been paying to private financial firms.
Not surprisingly, this has made the trustees who oversee the state’s retirement system more than a little bit nervous — especially since the ever-higher fees have coincided with below-median returns for the state’s pension fund. So the trustees began asking questions, and when they didn’t get the answers they were looking for, they announced in April that they are launching a formal investigation of the matter.
Wayne Hall, the chairman of one of the state’s pension funds, told the Newark Star-Ledger that the new investigation is designed to help retirees understand why the state is paying so much.
“I’m a layman. I’m not on Wall Street. I’m not an investor, and I have 33,000 people that I answer to and they’re not investors either,” he told the newspaper. “Why are we paying that kind of money? When I see the exorbitant fees the state has been paying for the last couple of years, I have to question that.”
In their quest for better disclosure, Hall and his colleagues received a boost from an unlikely source: conservative activists. When it comes to pensions, those activists are often calling for benefit cuts, but when it comes to transparency, they are standing on the same side as the retirees.
“Both government workers and taxpayers deserve to know why such an incredible sum is being expended every year with the current system in deep crisis,” said Erica Klemens of the New Jersey chapter of Americans for Prosperity. “These are dollars that could be funding the system and preventing the state’s pension hole from growing even deeper. The decision by the trustees to look into this matter is the right thing to do.”
You might assume that the conservative support was designed to set the stage for New Jersey’s Republican governor to cooperate with the investigation’s push for transparency. But no — quite the opposite.
Only days after prosecutors indicted his appointees in the Bridgegate affair, Christie vetoed a bipartisan anti-corruption bill designed to insulate the state’s pension system from undue political influence. One of that bill’s provisions would have forced the state to better disclose the fees being paid to politically connected Wall Street firms.
That leaves the trustees to try get to the bottom of what’s really happening at the state’s $80 billion pension fund. They may not have the governor’s bully pulpit, but thousands of retirees are relying on them to bring the truth out from the shadows.
By: David Sirota, Senior Writer at The International Business Times; The National Memo, May 8, 2015
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