Letting The Banks Off The Hook: Top Bank Regulator Is Back To Its Old Tricks
Judging by last week’s performance, it sure looks as though the country’s top bank regulator is back to its old tricks.
Though, to be honest, calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.
Back during the subprime bubble, for instance, it was so eager to please its “clients” — yes, that’s how O.C.C. executives used to describe the banks — that it steamrolled anyone who tried to stop lending abuses. States and cities around the country would pass laws requiring consumer-friendly measures such as mandatory counseling for subprime borrowers, or the listing of the fees the banks were going to charge for the loan. The O.C.C. would then use its power to either block or roll back the legislation.
It relied on the doctrine of pre-emption, which holds, in essence, that federal rules pre-empt state laws. More than 20 times, states and municipalities passed laws aimed at making subprime loans less predatory; every time, the O.C.C. ruled that national banks were exempt. Which, of course, rendered the new laws moot.
You’d think the financial crisis would have knocked some sense into the agency, exposing the awful consequences of its regulatory negligence. But you would be wrong. Like the banks themselves, the O.C.C. seems to have forgotten that the financial crisis ever took place.
It has consistently defended the Too Big to Fail banks. It opposes lowering hidden interchange fees for debit cards, even though such a move is mandated by law, because the banks don’t want to take the financial hit. Its foot-dragging in implementing the new Dodd-Frank laws stands in sharp contrast to, say, the Commodity Futures Trading Commission, which is working diligently to create a regulatory framework for derivatives, despite Republican opposition. Like the banks, it views the new Consumer Financial Protection Bureau as the enemy.
And, as we learned last week, it is doing its darndest to make sure the banks escape the foreclosure crisis — a crisis they created with their sloppy, callous and often illegal practices — with no serious consequences. There is really no other way to explain the “settlement” it announced last week with 14 of the biggest mortgage servicers (which includes all the big banks).
The proposed terms call on servicers to have a single point of contact for homeowners with troubled mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings while supposedly working on a mortgage modification. They would have to hire consultants to do spot-checks to see if people were foreclosed on improperly. (Gee, I wonder how that’s going to turn out?)
If you’re thinking: that’s what they should have done in the first place, you’re right. If you’re wondering what the consequences will be if the banks don’t abide by the terms, the answer is: there aren’t any. And although the O.C.C. says that it might add a financial penalty, I’ll believe it when I see it. While John Walsh, the acting comptroller, called the terms “tough,” they’re anything but.
No, the real reason the O.C.C. raced to come up with its weak settlement proposal is that last month, a document surfaced that contained a rather different set of terms with the banks. These were settlement ideas being batted around by the states’ attorneys general, who have been investigating the foreclosure crisis since late October. The document suggested that the attorneys general were not only trying to fix the foreclosure process but also wanted to penalize the banks for their illegal actions.
Their ideas included all the terms (and then some) included in the O.C.C. proposal, though with more specificity. Unlike the O.C.C., the attorneys general had devised a way to actually enforce their settlement, by deputizing the new consumer bureau, which opens in July. And they wanted to impose a stiff fine — possibly $20 billion — which would be used to modify mortgages. In other words, the attorneys general were trying to help homeowners rather than banks.
By jumping out in front of the attorneys general, the O.C.C. has made the likelihood of a 50-state master settlement much less likely. Any such settlement needs bipartisan support; now, thanks to the O.C.C., there’s a good chance that Republican attorneys general will walk away. The banks will be able to say that they’ve already settled with the federal government, so why should they have to settle a second time? If they wind up being sued by the states, the federal settlement will help them in court.
“It’s a vintage O.C.C. move,” said Prentiss Cox, a law professor at the University of Minnesota who was formerly an assistant attorney general. “It is clearly an attempt to undercut the A.G.’s”
Old habits die hard in Washington. The O.C.C.’s historical reliance on pre-emption should have died after the financial crisis. Instead, it’s merely been disguised to look like a settlement.
By: Joe Nocera, Op-Ed Columnist, The New York Times, April 18, 2011
Our Narrow And Wrong Headed Economic Debate
There’s a janitor who lives in a studio apartment just outside of Stevens Point, Wis. He cleans the math and science buildings at a state university, a job he’s been doing for about 18 months, after a year of unemployment. He’s 43 and last year made $24,622. He doesn’t have kids, so he doesn’t qualify for a child-care tax credit. He doesn’t own a home or a hybrid car — those credits don’t apply to him, either. He hasn’t been enrolled in school since the 10th grade, so he definitely doesn’t qualify for any education credits or deductions. He just learned that Gov. Scott Walker’s new budget has slashed his benefits and that next year he’ll be bringing in about 16 percent less per month. And when he sits down to do his taxes next week, he’ll find that he paid the federal government around $1,400 in 2010.
“People can think what they think,” said Jeff Immelt, GE’s chief executive, in response to a growing anger to this story, first reported last week by the New York Times. What else is there to think, one wonders, but that with the muscle and money of lobbyists and lawyers, with the access and influence built over generations, GE has done not just the audacious but the outrageous. And it is not alone.
Exxon Mobil, for example, made $19 billion in profits in 2009 but paid no federal income taxes. In fact, it received a $156 million rebate from the IRS. Bank of America received a $1.9 billion tax refund from the IRS last year, even though it made $4.4 billion in profits and was handed a nearly $1 trillion bailout by taxpayers. The list, inconceivably, goes on.
And yet the conversation in Washington hasn’t turned to aggressively closing the loopholes that GE’s lobbyists created for its accountants to exploit. It hasn’t turned toward ending the ridiculous tax breaks on corporate dividends and capital gains that allow hedge fund managers and the very wealthy to pay the government a lower percentage than their middle-class employees. Instead, Congress is debating whether $33 billion in cuts to the social safety net is enough to make the Tea Party happy.
While Republicans in the House have stopped talking nearly altogether about jobs (and have embraced a budget that could cost the economy 700,000 of them, according to Moody’s chief economist Mark Zandi), the head of the President’s Council on Jobs and Competitiveness, someone charged with finding a way to sustained job growth, is none other than Jeff Immelt himself, tax evader in chief. This is a systemic problem that neither belongs to nor can be solved by a single man. But for Immelt to keep his post with the administration now would be bad politics, bad policy and bad messaging. Yet as I write this, it doesn’t look as if he will be asked to step down.
Still, I am hopeful.
I am hopeful because an incredible spirit and energy has been unleashed. It was first shown during the Wisconsin labor battle, and it is being sustained and nurtured, and broadened to communities across the country. People are showing that they will not abide a system that finances corporate greed on the backs of the poor and middle class.
On Monday, the nation commemorated the assassination of Martin Luther King Jr., who was killed in Memphis, where he had gone to fight for the rights of sanitation workers. Thousands gathered across America for a national day of action supporting public employees, other working people and trade unions in a common quest for jobs, justice and decency for all citizens. They participated in teach-ins, protests, demonstrations and vigils, all with a simple and deeply American message: It is time for the richest, most privileged among us to pay their fair share.
They spoke of the widening gulf in American politics, between the powerful and the powerless, between those who most need the government’s assistance and those most likely, instead, to receive it. They are not alone. For all the disappointment that progressives feel about this Congress, there are members who have been leaders and allies on Capitol Hill.
Consider Sen. Bernie Sanders (I-Vt.). Always the people’s champion, Sanders has called for closing corporate tax loopholes, which, if done, would raise more than $400 billion over a 10-year period. He’s also introduced legislation imposing a 5.4 percent surtax on millionaires that would yield up to $50 billion more a year — more than enough to protect Pell Grants and Head Start and other programs facing the chopping block.
He is joined by Rep. Jan Schakowsky (D-Ill.), who has introduced legislation to create a separate tax bracket for millionaires and billionaires — an option that garners the support of 81 percent of the American people, according to an NBC/Wall Street Journal poll.
The common sense, humane response at this moment is to fight to reset the terms of a suffocatingly narrow and wrongheaded debate. This is the heritage of the progressive movement and, indeed, our obligation. The best principles of our country have been trampled by corporate immorality and right-wing extremism. But they can be restored. Martin Luther King Jr. knew as much when he fought for the sanitation workers of Tennessee 43 years ago. Now, we must know it too.
By: Katrina Vanden Heuvel, Opinion Writer, The Washington Post, April 5, 2011
Would John Boehner And The Republicans Shut Down The Government Over Planned Parenthood?
The good news is, Democrats and Republicans have reportedly reached a general agreement on the size of the cuts for the rest of the fiscal year. As of this morning, the package is up to $34.5 billion, from $33 billion, and now reportedly includes some additional reductions in military spending.
The bad news, Republicans still want to use the budget to wage a culture war, and tomorrow night, will shut down the government to advance this agenda.
Senator Harry Reid of Nevada, the top Democrat in the Senate, said Thursday morning that he is “not nearly as optimistic” about avoiding a shutdown as he was after a Wednesday night Oval Office meeting and said “it looks like it’s headed in that direction.”
Mr. Reid said that Republicans have “drawn a line in the sand” on issues of abortion funding and changes to the clean air act, and he said those issues could not be resolved in the hours left before a government shutdown.
“The numbers are basically there. But I am not as nearly as optimistic, and that’s an understatement, as I was eleven hours ago,” Mr. Reid said on the floor of the Senate. “The only thing holding up an agreement is ideology.”
In case this isn’t already clear, we’re dealing with obvious madness. Republicans want to cut off Planned Parenthood and gut the Clean Air Act, but instead of pursuing legislation to achieve their goals, they’re insisting that this be part of the budget. Democrats can’t go along with this nonsense, and John Boehner is too weak a Speaker to tell his caucus to act like grown-ups, so the entire process is unraveling.
This has led to talk about the GOP shutting down the government over abortion, but even that’s not quite right — Planned Parenthood is already prohibited from using public funds to terminate pregnancies, and has been for many years. What we’re talking about here is Republicans shutting down the government over access to contraception and family planning services.
This is the basis for the GOP hostage strategy.
President Obama will host his third budget talks in as many days in two hours, summoning Boehner and Reid to the Oval Office. Stay tuned.
By: Steve Benen, Political Animal, Washington Monthly, April 7, 2011
No More Fence Straddling: Even Moderates Should Condemn Paul Ryan’s Budget
Political moderates and on-the-fencers have had it easy up to now on budget issues. They could condemn “both sides” and insist on the need for “courage” in tackling the deficit.
Thanks to Rep. Paul Ryan’s budget and the Republicans’ maximalist stance in negotiations to avert a government shutdown, the days of straddling are over.
Ryan’s truly outrageous proposal, built on heaping sacrifice onto the poor, slashing scholarship aid to college students and bestowing benefits on the rich, ought to force middle-of-the-roaders to take sides. No one who is even remotely moderate can possibly support what Ryan has in mind.
And please, let’s dispense with the idea that Ryan is courageous in offering his design. There is nothing courageous about asking for give-backs from the least advantaged and least powerful in our society. It takes no guts to demand a lot from groups that have little to give and tend to vote against your party anyway.
And there is nothing daring about a conservative Republican delivering yet more benefits to the wealthiest people in our society, the sort who privately finance the big ad campaigns to elect conservatives to Congress.
Ryan gives the game away by including the repeal of financial reform in his “budget” plan. What does this have to do with fiscal balance? Welcome to the Wall Street Protection Act of 2011.
Oh, yes, and this budget has nothing to do with deficit reduction. Ryan would hack away at expenditures for the poor. The Center on Budget and Policy Priorities estimates he gets about two-thirds of his $4.3 trillion in actual cuts from programs for low- income Americans. Note that this $4.3 trillion almost exactly matches the $4.2 trillion he proposes in tax cuts over a decade. Welcome to the Bah Humbug Act of 2011.
But you’d expect a progressive to feel this way. What’s striking is that Ryan is pushing moderates to stand up for a government that will have enough money to perform the functions now seen as basic in the 21st century. These notably include helping those who can’t afford health insurance to get decent medical care, a goal Ryan would have the government abandon, slowly but surely.
Erskine Bowles and Alan Simpson, the co-chairs of the deficit commission and the heroes of the budget-cutting center, put out a statement saying some nice things about the idea of the Ryan budget. They called it “serious, honest, straightforward,” even though there is much about its accounting that is none of those.
But then they got to the real point, declaring themselves “concerned that it falls short of the balanced, comprehensive approach” needed for bipartisan accord because it “largely exempts defense spending from reductions and would not apply any of the savings from eliminating or reducing tax expenditures as part of tax reform to deficit reduction.”
Ryan, they argued, “relies on much larger reductions in domestic discretionary spending than does the commission proposal, while also calling for savings in some safety-net programs — cuts which would place a disproportionately adverse effect on certain disadvantaged populations.”
This is much like what I said, with an added layer of diplomacy. When even deficit hawks begin choking, however politely, on a proposal whose main motivation is ideological, you know there is an opening for a coalition between moderates and progressives on behalf of sane, decent government.
The Republican approach to shutdown talks should reinforce this possibility. Democrats have nearly given away the store to avoid a crackup, yet Republican leaders, under pressure from their right wing, have continued to ask for more and more and more. My word, even President Obama has finally gotten impatient.
However the shutdown saga ends, the negotiating styles of the two sides ought to tell moderates that they can no longer pretend that the two ends of our politics are equally “extreme.” No, conservatives are the ones who’ve been radicalized. The Ryan budget is definitive evidence of this.
It is conservatives who would transform our government from a very modestly compassionate instrument into a machine dedicated to expanding existing privileges while doing as little as possible for the marginalized and the aspiring — those who, with a little help from government, might find it a bit easier to reach for better lives.
Moderation involves a balance between government and the private sector, between risk and security, between our respect for incentives and our desire for greater fairness. The war against moderation has begun. Will moderates join the battle?
By: E. J. Dionne, Opinion Writer, The Washington Post, April 6, 2011
No, Rep Paul Ryan’s Budget Proposal Is Not Brave
Prominent opinion writers have spent the last few days fawning over Rep. Paul Ryan’s budget plan, which would essentially abolish Medicare and Medicaid while lowering taxes on top earners, and many of them have deployed a litany of superlatives usually reserved for costumed superheroes. Commentators like David Brooks and Jacob Weisberg have described Ryan’s plan as “brave,” and “bold,” and the word “courageous” has been ubiquitous.
But the closer people look at Ryan’s plan, the clearer it becomes that the plan isn’t all that brave. Let’s take stock of all the recent revelations about it.
Ryan’s plan included a laughably implausible unemployment analysis from Heritage predicting it would bring unemployment down to 4 percent by 2015 and 2.8 percent by 2012 — an analysis Heritage then quitely retracted by attempting to disappear it from the internet. Ryan’s plan claims to save money while repealing the Affordable Care Act, even though the CBO has said repealing the ACA will increase the deficit. Ryan implied that his plan was supported by President Bill Clinton’s former OMB Director Alice Rivlin, even though it isn’t. It cuts taxes on top earners, when the easiest way to reduce the deficit is to let the Bush tax cuts expire.
Ryan’s misleading claims aren’t the only thing that isn’t particularly brave about his plan. After accusing Democrats of “raiding” Medicare with the Affordable Care Act, Ryan spares the elderly voters who supported Republicans in 2010 by making sure only he guts medical care for future seniors (he still calls it “saving Medicare,” however). And as the Center for Budget and Policy Priorities noted, 2.9 trillion in Ryan’s budget comes from cuts in programs focused on low-income Americans. It doesn’t touch defense spending.
In other words, it focuses on cuts to programs that benefit those most likely to vote Democratic, while preserving programs that serve those more likely to vote Republican.Rewarding your constituencies while punishing the other side’s is how partisan politics usually works, but there’s nothing particularly brave about it.
Ryan himself said during the rollout that his plan isn’t so much a budget as a “cause.” As Steve Benen wrote yesterday, the cause here is destroying the modern welfare state so that rich people have to pay less in taxes. The only reason so many people think Ryan’s plan is “brave” is because they agree with this cause.
When we call a person brave, what we usually mean is that his or her “bravery” is being employed towards an end we agree with. In this case, those who are hailing Ryan’s proposal as brave are doing so because they agree with its goal, which — no matter how many times people insist otherwise — is not deficit reduction. It’s destroying the social safety net. It just so happens that’s a cause a lot of wealthy people with a disproportionate influence on our political discourse happen to believe in. So they think it’s brave, even if the numbers are phony and even if it disproportionately punishes the poor. But there’s nothing at all brave about it.
By: Adam Serwer, The Washington Post, April 7, 2011
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About a thousand miles to the east, in Fairfield, Conn., General Electric, one of the world’s largest multinational corporations, posted a $14.2 billion profit for 2010. When its accountants were finished working their magic, the company didn’t owe a single dollar in federal taxes.