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
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September 15, 2013
Posted by raemd95 |
Big Banks, Financial Crisis | American International Group, Consumer Financial Protection Bureau, Dodd-Frank, Economy, Homeowners, Lehman Brothers, TARP, Wall Street |
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When we talk about hypocrisy in politics, we usually highlight personal behavior. The serially-married politician who proclaims “family values” while also having affairs is now a rather dreary stock figure in our campaign narratives.
But the hypocrisy that matters far more is the gap between ideology and practice that has reached a crisis point in American conservatism. This Republican presidential campaign is demonstrating conclusively that there is an unbridgeable divide between the philosophical commitments conservative candidates make before they are elected and what they will have to do when faced with the day-to-day demands of practical governance. Conservatives in power have never been — and can never be — as anti-government as they are in a campaign.
Begin by asking yourself why so many conservative politicians say they’re anti-government but spend long careers in office drawing paychecks from the taxpayers. Also: Why do they bash government largesse while seeking as much of it as they can get for their constituents and friendly interest groups?
Why do they criticize “entitlements” and “big government” while promising today’s senior citizens — an important part of the conservative base — never, ever to cut their Medicare or Social Security? Why do they claim that they want government out of the marketplace while not only rejecting cuts in defense but also lauding large defense contracts that are an enormous intrusion in the operation of the “free market”?
The contest between Mitt Romney and Rick Santorum is unearthing all sorts of double standards of this sort, and I salute each of them for drawing attention to the other’s inconstancies.
Santorum scored a direct hit on Romney last Thursday in a speech at the Detroit Economic Club. Both Romney and Santorum opposed President Obama’s rescue of the auto industry, a form of direct government intervention whose success Republicans (though not, it appears, Michigan’s voters) have a hard time acknowledging.
But Santorum raised a good question. “Governor Romney supported the bailout of Wall Street and decided not to support the bailout of Detroit,” Santorum said. “My feeling was that . . . the government should not be involved in bailouts, period. I think that’s a much more consistent position.”
Indeed it is. Romney can offer all sorts of rationales for the difference between the two bailouts, but once he backed the Wall Street rescue, he could no longer claim free market purity. The financial bailout he thought was so vital created the very “dependency” and sense of “entitlement” within our privileged classes that he condemns when it comes to the less well-off.
Many conservatives — including, bravely, George W. Bush — pushed for the bank bailout because the alternative was a catastrophic collapse of the financial system. But having done so, could they please stop claiming they are free market virgins? They gave that up long ago.
Santorum has a long list of ideological heresies of his own to defend. They include his eagerness to win federal earmarks, a habit he shares with Romney, as The Washington Post’s Rosalind Helderman recently reported.
There is also the critique that Romney’s super PAC is making in an ad airing in advance of Michigan’s Feb. 28 primary: It attacks Santorum for regularly voting to increase the debt ceiling when he was a senator from Pennsylvania.
This is the same Santorum who supported congressional conservatives last year when they blocked a debt-ceiling increase in pursuit of more budget cuts. “We cannot continue to write blank checks that our nation cannot cash,” Santorum said — the very blank checks he freely endorsed when he was in the Senate. True, both parties have played games on the debt ceiling, but never to the point of undermining the federal government’s credit standing, as the Republicans did last year.
Of course Santorum was only doing the responsible thing when he was a senator, but he cannot really defend what he did in the past without acknowledging that what he said more recently is flatly contradicted by his own behavior.
Can conservatives finally face the fact that they actually want quite a lot from government, and that they are simply unwilling to raise taxes to pay for it?
This is why our political system is so broken. Conservatives keep pretending that they can keep anti-government promises that they know perfectly well they are destined to break. We won’t have sensible politics again until our friends on the right bring their rhetorical claims into closer alignment with what they do — and what it takes to make government work.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, February 19, 2012
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February 20, 2012
Posted by raemd95 |
GOP Presidential Candidates, Ideology | Conservatives, Federal Government, Mitt Romney, Politics, Republicans, Rick Santorum, Social Safety Net, TARP |
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More than most elections, the contest for President this fall is likely to be decided less on “wedge issues” — or even candidate positions that are symbolic of who is on whose side — and more on the character and core values of the candidates — and for that matter on the question of the core values of the society we hope to leave to our children.
Last Friday, speaking to the Democratic Caucus Policy Conference, Vice-President Joe Biden told a story that speaks volumes about the character of Barack Obama.
According to Biden, the day before he ordered the raid that finally stopped Osama Bin Laden, President Obama met with his top national security advisers in the Situation Room. At the close of the meeting, he went around the room asking each person for his or her recommendation on whether to launch the risky nighttime mission.
As it went around the table, Leon Panetta recommended that the President proceed. Most of the others expressed reservations and handicapped the odds of success as only fair. Finally, the President got to Biden who said he recommended not proceeding until two additional steps were taken to enhance the odds.
Then the President stood and told his advisers he would let them know of his decision in the morning.
The next day, as Obama stepped onto his helicopter to leave on a day trip, he turned to his National Security Adviser, Tom Donilan, and issued a simple order: “let’s go.”
Much more was at stake in the Bin Laden mission than success or failure killing or capturing the most wanted fugitive of modern times. In some respects Obama’s Presidency itself was at stake.
To quote Biden, “The President has a backbone like a ramrod.”
Whether or not you like all of his policies — or all of his decisions — it’s hard to argue that Barack Obama is not a tough, decisive guy — a guy who is guided by solid core principles and has a disciplined, laser-focused will. This is not a President that flip-flops in the political wind or is swayed by the last person who talks to him. Above all, Barack Obama is centered. He has a solid core built around strong core values.
America — and the rest of the world — have seen those character traits over and over again during the last four years.
They saw them when he announced his candidacy to become the first African American president of the United States — and then organized the highly disciplined, leave-no-stone-unturned campaign that elected him 2008.
They saw that same inner toughness in his — at the time unpopular — decision that saved the American auto industry.
In early 2009, Obama simply refused to throw in the towel on health care reform, when the election of Senator Scott Brown made it appear impossible to succeed — and he won.
Later that year, Obama’s force of will guaranteed the passage of Wall Street reform and the creation of a Consumer Financial Protection Bureau. And his willingness to just say no to Republican obstructionism last month by making a recess appointment of Richard Cordray, guaranteed that American financial institutions — for the first time — have a regulator dedicated solely to looking out for the interests of everyday consumers.
Obama has remained determined and unflappable in the face of the toughest economic and political environment in sixty years and has emerged from three years of battle ready to wage a highly organized, focused campaign this fall that will center on most fundamental question facing our society: whether we will have a nation where we look out for each other, and have each other’s back — or a society where we are all in this alone.
Obama intends to make this campaign a battle over core values — a choice between a society where we are all responsible for our future, and for each other — or a society where selfishness is our highest value — where “greed is good.” His campaign will frame the choice before America as whether we have a government dedicated to defending privilege — or one whose mission is giving everyone a fair shot, a fair share, and a guarantee that we all have to play by the same set of rules. His campaign will be about reigniting the values that underlie the American Dream and the hopes of the middle class and all of those who aspire to it. It will be about restoring fairness and opportunity and hope.
Contrast that kind of President — and that kind of campaign — with Obama’s likely opponent, Mitt Romney.
Right after the 2004 election I was riding in a New Jersey taxicab. The driver was a typical male New Jersey cabbie. “So what do you think of Corzine?” I asked.” “Oh, Corzine, tough guy. Like him,” he replied about the then-Senator.
“What do you think of Bush?” I said. “Like him too. Tough guy. Stands up for what he believes,” came the answer.
“How about Hillary Clinton?” I asked. “Tough gal. Like her,” he said.
“What about Kerry?” I asked. “Kerry? Can’t stand him. Flip-flopper–a phony.”
Ideology, policy positions — none of that mattered to this cabdriver who liked Corzine, Clinton and Bush. He wanted a tough, committed leader. But the Republicans had convinced him of its central message — “John Kerry is a flip-flopper–a phony.”
Bush strategist Karl Rove had sold that version of Kerry — a Senator who in fact has strong core values — largely because of his tendency to “Senate-speak.” He also realized that Kerry’s vote for the Iraq War, and then against continued funding in 2004, could be portrayed as the symbolically powerful flip-flop. The icing on the cake was Kerry’s explanation of the 2004 vote: “I voted for it before I voted against it.” Rove illustrated his flip-flop message with an iconic commercial that featured pictures of Kerry windsurfing and tacking one way and then another.
Kerry’s perceived lack of core values was the factor that, more than any other, led to George Bush’s second term as president.
Voters want leaders who believe in something other than their own election. Quite correctly they want leaders with a strong moral center. They want leaders who make and keep commitments to their principles and to other people. And they want to know that the candidates they support are the leaders they will get after the election — not, as John Huntsman said of Romney, “a well-oiled weathervane”.
Romney has never seen a position he couldn’t change if he determined it would be to his advantage to do so. He thinks of politics as a business marketing project, where you say what you think you need to in order to maximize sales. Romney doesn’t think of voters as citizens to be engaged — he thinks of them as customers to be manipulated.
As Massachusetts Governor, Romney was pro-choice — now he is anti-choice.
Romney was the author of the Massachusetts health care plan that in many respects served as the model for Obama’s own health care plan. Now he wants to repeal “Obamacare.”
Romney once refused to sign the “no new tax pledge.” Now he has signed the “no new tax pledge.”
Romney favored extension of the assault weapons ban. Now he opposes extension of the assault weapon ban.
Once he said the TARP “was the right thing to do.” Now he says he opposed it.
Right after the economy collapsed he said he favored an economic stimulus program; now he says he opposed the stimulus bill.
Once Romney said he believed that human activity contributed to global warming; now he says he doesn’t think we know what causes global warming.
One day he was emphatically neutral on Ohio Governor Kasich’s union-busting legislation — that was ultimately “vetoed” by the Ohio voters. The next day he one hundred percent supported that legislation.
Romney is a guy who, when called on his flip-flops and inconsistencies, said: “I’m running for office, for Pete’s sake.”
The reason Romney is having such a difficult time making the sale in the Republican primary contest is that many Republicans don’t think he has strong core beliefs, don’t trust him and think he’s a phony.
Wait until he has to convince swing voters that he’s anything more than a “vulture capitalist” who will say anything and do anything to make the biggest deal of his life — the “acquisition” of the government of the United States of America.
But, you say, maybe he will flip-flop back into a more “moderate” Mitt Romney if he becomes President. Don’t bet on it. People who have no core values will sell their services to the highest bidder. Romney’s Presidency has already been sold lock, stock and barrel to the big Wall Street banks, the CEO class, the multi-millionaires who are behind his super PAC and the Republican Establishment that have financed his campaign.
In fact, throughout his career, Mitt Romney has demonstrated that his only “core value” is his own financial and political success. In Romney’s view, both in politics and in business, every other belief or commitment can be thrown overboard if it weighs him down in his quest for success. And that goes for the people and communities that were impacted by the “creative destruction” of his corporate takeovers and leveraged buyouts at Bain Capital. To him, they were apparently nothing more than “collateral damage.”
In the end, it is likely that the ultimate irony of the Romney campaign will be that his own willingness to toss aside positions and values that might at one time or another have appeared inconvenient, will ultimately weigh him down more than anything else.
By: Robert Creamer, The Huffington Post, January 29, 2012
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February 1, 2012
Posted by raemd95 |
Election 2012, GOP Presidential Candidates | American Values, Auto Industry, Barack Obama, CFPB, Health Reform, Mitt Romney, Politics, TARP |
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The death this past weekend of former Oregon Gov. and U.S. Sen. Mark Hatfield, was not just the passing of a good and decent man with a strong sense of Western independence, but a realization that “this ain’t your mother’s Republican Party anymore!”
Of course, it hasn’t been for some time. The era of Senators Hatfield and Mathias and Percy and Baker and Javits and Case and Brooke and Scott and Dirksen and so many others is long gone. The moderates and progressives were drummed out or retired long ago and were replaced with Republican conservatives beginning in the late ‘70s and ‘80s.
Even many of the hard liners who were replaced were still pragmatic conservatives who often worked across the aisle. The Bennetts, Hatches, Bonds, Grahams and others are practical, serious conservatives.
But if you look at the collection of candidates for president, if you look at what just happened with the debt limit insanity on the Hill, if you examine the inner workings of the Republican caucus in the House, you begin to wonder whether Washington is governable and whether the radicalization of the Republican Party is responsible for this meltdown. Has the Republican Party become an extreme Nihilist party?
Let’s look at the current state of politics within the Republican Party.
The upcoming Iowa straw poll and the debate tomorrow night will further push the already extreme candidates more to the extremes . There are so many potential nominees who have not only gone hard right on the social issues but have decided that they must call for abolishing the Departments of Education, Commerce, Energy, and even the IRS. They still oppose the TARP program, which kept the world from a depression, and they are proud to reject any form of additional revenue stream by signing inane pledges that handcuff America.
The extreme agenda of cut, cut, cut without regard for the consequences is backed up by statements that even Pell education grants for needy college students are “welfare.” All the sound and fury about the debt did not create a single job or advance economic stability or growth. In fact, the failure of Speaker John Boehner and the Tea Party to agree to efforts by President Obama to reach a $4 trillion grand bargain to right the economic ship was an example of radicals’ my-way-or-the-highway approach.
The American people, overwhelmingly, reject this extremism. They are fed up with the lack of progress and the extremism that has become the modern Republican Party. Their anger is across the board but it is more heavily directed towards what has become of the Republican Party—Tea Party ideologues who lack common sense and have no desire to actually solve problems. In the campaign of 2010 the Tea Party was more or less a Rorschach test, many people saw in it what they wanted. In April 2010, the strong unfavorable was 18 percent; it has risen to around 50 percent.
The scary market volatility, the lack of public confidence in the economy, and most important, the many Americans who are suffering the disasters of unemployment and foreclosure should be front and center for Republicans. Instead, we have a “get Obama” frenzy and a pull to the extreme right that precludes progress.
Speaker Boehner, who seemed close to negotiating the grand bargain with the president, was pulled back into the extremist fold. He even said that he got “98 percent of what I wanted” on the debt deal and declared himself happy with it! If he is happy, there aren’t many Americans who are there with him.
There are few Republican leaders who recognize that what they did with this budget deal led to Americans’ savings and retirements taking a severe hit, a downgrade from Standard & Poor’s that will ripple for years, and a decline in confidence for businesses and consumers.
The old Republican Party wouldn’t have done it; Ronald Reagan wouldn’t have done it; even recent conservatives committed to debt reduction and cutting spending wouldn’t have done it, if they had the courage to stand up to the radicals within the Party.
The time for the Republicans to rediscover their pragmatic, governing side is now. The time to reject the pledges, the ideological straitjackets, the wave of Tea Party hysteria is now. The public is demanding it and the country needs it. (And just a bit of advice from this Democrat: the overreaching and the extremism won’t win you many elections either!)
By: Peter Fenn, U. S. News and World Report, August 10, 2011
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August 11, 2011
Posted by raemd95 |
Class Warfare, Congress, Conservatives, Debt Ceiling, Debt Crisis, Deficits, Democracy, Economic Recovery, Economy, Education, GOP, Government, Ideologues, Ideology, Iowa Caucuses, Jobs, Lawmakers, Politics, President Obama, Republicans, Right Wing, Standard and Poor's, Tax Loopholes, Taxes, Teaparty, Unemployment, Wall Street | Depression, Extremists, Foreclosues, GOP Presidential Candidates, Governing, Grand Bargain, House Republicans, Iowa Straw Poll, Markets, Moderates, Nihilist's, Progressives, Radicalization, Recession, Rep John Boehner, Ronald Reagan, Spending Cuts, TARP, The Pledge, Welfare |
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In retrospect, the emergence of a suicide-bomber wing of the Republican Party should’ve seemed obvious.
Why use such an inflammatory term? What I mean by it is this: They would blow up the economy to fulfill a mission of otherworldly righteousness.
Their first attempt to blow up the economy arrived with the defeat TARP. It was a reckless subversion of the leadership of both parties and, at least for a day, brought equity markets to their knees.
With ideological bravado to match their breathtaking economic illiteracy, they positively relished the impact they could have on our national life.
Since then, they’ve become still more emboldened, knocking off an incumbent senator in Utah and propping up a bad joke of a senate candidate in Delaware.
Last year’s wave election infested the party with additional scores of suicide bombers.
In a repeat of the TARP fiasco, the bomber boys and (and, lest we forget bomber-in-chief Michele Bachmann, girls) have, once again, made it impossible for congressional leaders to do the right thing. A grand bargain was in sight—but the itch for destruction overmatched the desire for reasonable compromise.
We may yet stumble toward some cobbled-together agreement that staves off a catastrophe. But the bombers will be emboldened again.
And why wouldn’t they be? They’ve got a cheering section among Washington pundits.
The normally thoughtful Yuval Levin calls this suboptimal state of affairs, in which Republicans will secure far less in deficit reduction than they could have, a “stunning victory.” New York Post columnist Michael Walsh compares the debt ceiling showdown to the Union’s victory at Gettysburg. Most depressing of all is my former hero George Will, who calls the Tea Party “the most welcome political development since the Goldwater insurgency.”
Will is dead wrong: Ronald Reagan’s election—or rather his administration—did not simply bring the “Goldwater impulse” to “fruition.” It signaled that the Goldwater impulse had matured into a governing philosophy—a governing philosophy that could accept compromise, could acknowledge reality.
The Tea Party’s triumph has reversed that process of maturation; a governing philosophy has degraded back into mere impulse.
Enjoy your ascendancy while it lasts, Tea Partyers.
But know this: You are not legislators. You are vandals.
By: Scott Galupo, U. S. News and World Report, July 26, 2011
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July 27, 2011
Posted by raemd95 |
Congress, Conservatives, Debt Ceiling, Debt Crisis, Deficits, Democracy, Democrats, Disasters, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Journalists, Lawmakers, Politics, Press, Public, Pundits, Republicans, Right Wing, Teaparty, Voters | Barry Goldwater, Compromise, George Will, Governing, Legislators, Markets, Michael Walsh, Rep Michele Bachmann, Suicide Bombers, TARP, Yuval Levin |
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