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“Obama’s Other Success”: Dodd-Frank Financial Reform Is Working

Although the enemies of health reform will never admit it, the Affordable Care Act is looking more and more like a big success. Costs are coming in below predictions, while the number of uninsured Americans is dropping fast, especially in states that haven’t tried to sabotage the program. Obamacare is working.

But what about the administration’s other big push, financial reform? The Dodd-Frank reform bill has, if anything, received even worse press than Obamacare, derided by the right as anti-business and by the left as hopelessly inadequate. And like Obamacare, it’s certainly not the reform you would have devised in the absence of political constraints.

But also like Obamacare, financial reform is working a lot better than anyone listening to the news media would imagine. Let’s talk, in particular, about two important pieces of Dodd-Frank: creation of an agency protecting consumers from misleading or fraudulent financial sales pitches, and efforts to end “too big to fail.”

The decision to create a Consumer Financial Protection Bureau shouldn’t have been controversial, given what happened during the housing boom. As Edward M. Gramlich, a Federal Reserve official who warned prophetically of problems in subprime lending, asked, “Why are the most risky loan products sold to the least sophisticated borrowers?” He went on, “The question answers itself — the least sophisticated borrowers are probably duped into taking these products.” The need for more protection was obvious.

Of course, that obvious need didn’t stop the U.S. Chamber of Commerce, financial industry lobbyists and conservative groups from going all out in an effort to prevent the bureau’s creation or at least stop it from doing its job, spending more than $1.3 billion in the process. Republicans in Congress dutifully served the industry’s interests, notably by trying to prevent President Obama from appointing a permanent director. And the question was whether all that opposition would hobble the new bureau and make it ineffective.

At this point, however, all accounts indicate that the bureau is in fact doing its job, and well — well enough to inspire continuing fury among bankers and their political allies. A recent case in point: The bureau is cracking down on billions in excessive overdraft fees.

Better consumer protection means fewer bad loans, and therefore a reduced risk of financial crisis. But what happens if a crisis occurs anyway?

The answer is that, as in 2008, the government will step in to keep the financial system functioning; nobody wants to take the risk of repeating the Great Depression.

But how do you rescue the banking system without rewarding bad behavior? In particular, rescues in times of crisis can give large financial players an unfair advantage: They can borrow cheaply in normal times, because everyone knows that they are “too big to fail” and will be bailed out if things go wrong.

The answer is that the government should seize troubled institutions when it bails them out, so that they can be kept running without rewarding stockholders or bondholders who don’t need rescue. In 2008 and 2009, however, it wasn’t clear that the Treasury Department had the necessary legal authority to do that. So Dodd-Frank filled that gap, giving regulators Ordinary Liquidation Authority, also known as resolution authority, so that in the next crisis we can save “systemically important” banks and other institutions without bailing out the bankers.

Bankers, of course, hate this idea; and Republican leaders like Mitch McConnell tried to help their friends with the Orwellian claim that resolution authority was actually a gift to Wall Street, a form of corporate welfare, because it would grease the skids for future bailouts.

But Wall Street knew better. As Mike Konczal of the Roosevelt Institute points out, if being labeled systemically important were actually corporate welfare, institutions would welcome the designation; in fact, they have fought it tooth and nail. And a new study from the Government Accountability Office shows that while large banks were able to borrow more cheaply than small banks before financial reform passed, that advantage has now essentially disappeared. To some extent this may reflect generally calmer markets, but the study nonetheless suggests that reform has done at least part of what it was supposed to do.

Did reform go far enough? No. In particular, while banks are being forced to hold more capital, a key force for stability, they really should be holding much more. But Wall Street and its allies wouldn’t be screaming so loudly, and spending so much money in an effort to gut the law, if it weren’t an important step in the right direction. For all its limitations, financial reform is a success story.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, August 3, 2014

August 4, 2014 Posted by | Big Banks, Dodd-Frank, Financial Reform | , , , , , , | Leave a comment

“GOP Civil War?”: More Like Petty Wrangling Over Infinitesimal Ideological ‘Distinctions’

Mississippi primary voters just could not decide whether they wanted to nominate a very conservative Republican or a very conservative Republican for the US Senate.

Very nearly 50 percent of Tuesday’s primary voters favored a right-wing stalwart who opposes abortion rights and marriage equality, supports restrictive Voter ID laws, promises to oppose minimum-wage hikes, rips “Obamacare,” the IRS, the EPA and OSHA and trashes “entitlement” programs.

Very nearly 50 percent of Tuesday’s primary voters favored another right-wing stalwart, who opposes abortion rights and marriage equality, supports restrictive Voter ID laws, promises to oppose minimum-wage hikes, rips “Obamacare,” the IRS, the EPA and OSHA and trashes “entitlement” programs.

But Mississippi Republicans couldn’t quite get to a majority opinion about which conservative was conservative enough. So with virtually all the votes counted (and with a tiny percentage of the total streaming off to a little-known third candidate), the good Republicans of the Magnolia State appear to have decided to have another go at it—setting up a June 24 runoff that will require several more weeks of wrangling over what to most Americans will seem to be infinitesimal ideological “distinctions.”

That’s the thing to remember about the fabulous imagining that there is a meaningful difference between “establishment Republicans” and “Tea Party Republicans.”

Yes, there are stylistic distinctions to be noted between incumbent Senator Thad Cochran, a relatively distinguished senior senator, and state Senator Chris McDaniel, a relatively undistinguished challenger who says his campaign “had nothing to do with this sad incident” where a conservative blogger photographed the incumbent’s bedridden wife. Yes, the two Republicans now appear to be set for a high-profile runoff race that will be portrayed as a “GOP civil war” over emphasis and approach.

But that does not place them anywhere near the opposite ends of the ideological spectrum.

Cochran is identified as the “establishment” choice, which means he is favored by the US Chamber of Commerce and the CEOs and Wall Street financiers who support its campaign to elect a Senate that will rubber-stamp a wildly pro-corporate agenda.

McDaniel is identified as the “anti-establishment” Tea Party insurgent, which means that he is favored by the Club for Growth and the CEOs and Wall Street financiers interests who support its campaign to elect a Senate that will rubber-stamp a wildly pro-corporate agenda.

For the most part, this year’s supposedly significant Senate contests between the establishment and the “Tea Party” have explored the range of opinion from what would historically have been understood as the right wing of the Republican Party to what is now understood as the right wing of the Republican Party.

Some very wealthy people take these distinctions very seriously. They have money to burn, and they are burning it up this year on political purity tests that pit those who like their economic and social conservatism straight against those who want it with a twist of Ted Cruz.

This has already made for an expensive race in Mississippi. Roughly $8 million in outside spending has been lavished on the state’s television stations—in addition to big spending from the Club for Growth, Citizens United and the Tea Party Patriots for McDaniel and big spending from the Chamber and the National Association of Realtors for Cochran. The race has seen $1.1 million spent by “Senate Conservatives Action” for McDaniel and $1.7 million spent by the “Mississippi Conservatives” super PAC for Cochran.

Confused? Don’t be.

McDaniel is a conservative.

And so is Cochran.

Despite the theater-of-the-absurd campaign, it is even more absurd to suggest that Cochran is a liberal with a Southern accent. Mississippi is not in the habit of populating the Senate with progressives. The incumbent’s latest US Chamber of Commerce rating is 100 percent, while his National Education Association ranking is zero. Cochran’s latest ACLU rating is zero, while the American Security Council Foundation has got him at 100 percent. Cochran gets 100 percent from the National Rifle Association and he’s at zero with the American Association of University Women. His latest rating from the National Right-to-Life Committee is 100 percent, while NARAL Pro-Choice America has him at zero—as does the latest assessment from the Planned Parenthood Action Fund.

It is true that Cochran has, on rare occasions been a reasonable player. But those are pretty much the same rare occasions when Senate minority leader Mitch McConnell, another Tea Party target this year, has chosen not to follow Cruz off whatever deep end the Texan might be approaching. Usually, what passes for reasonableness is a vote to take care of some pressing home-state business—such as, in Cochran’s case, specific support for disaster assistance after hurricanes hit the Mississippi coast and general enthusiasm for military spending that keeps Mississippians employed.

That may make Cochran insufficiently “pure” for the purists.

But it is not a distinction that the vast majority of Americans need bother with, unless, of course, they really do imagine that Thad Cochran and Mitch McConnell are liberals.

 

By: John Nichols, The Nation, June 4, 2014

June 5, 2014 Posted by | GOP, Tea Party | , , , , , , , | Leave a comment

“They’re Not Scientists…Or Mathematicians”: Face It, Republicans Are Really, Really Slow Learners

Last week, Florida Gov. Rick Scott and House Speaker John Boehner made clear that the Republican Party has a new line in response to questions about climate change: they don’t feel “qualified” to know whether or not to believe scientists and the available evidence. “I’m not a scientist,” Florida’s GOP governor told reporters.

Apparently, they’re not mathematicians, ether.

For example, Sen. Roy Blunt (R-Mo.), a member of the Senate Science Committee*, yesterday issued a statement condemning the Obama administration’s climate policy, vowing to “fight the president and his administration every step of the way to stop this unprecedented power grab.” (The White House is acting under congressionally approved legislation, endorsed by the Supreme Court. How this could possibly be a “power grab” is unclear.)

Blunt’s statement went on to get specific, pointing to evidence from the U.S. Chamber of Commerce that Americans will pay “almost $290 billion more for electricity between 2014-2030” as a result of Obama’s policy, adding, “Missouri consumers would pay on average $65.4 billion more between 2014-2030, on average $11 billion more per year.”

Roll Call’s Steven Dennis took a closer look and concluded that Blunt’s math is “spectacularly wrong – and even internally inconsistent.”

Missouri is covered in part by three different regions, Blunt’s spokeswoman, Amber Marchand, explained in an email. Blunt’s office totaled up the costs for all three regions – including parts of 25 states – and divided by three to come up with Missouri’s supposed costs of $65.4 billion.

That’s not how math works.

The Blunt release then kept the $11 billion total yearly costs for all three regions – remember, parts of 25 states – and assigned them all to “Missouri consumers.” … It’s simply wrong to take regional costs – and certainly not the costs for three regions covering 25 states – and ascribe them all to Missouri.

Of course, the Missouri Republican wasn’t the only one struggling with math yesterday.

Speaker Boehner, also relying on the hilariously wrong U.S. Chamber of Commerce report, argued, “The president’s plan would indeed cause a surge in electricity bills – costs stand to go up $17 billion every year. But it would also shut down plants and potentially put an average of 224,000 more people out of work every year.”

As Glenn Kessler discovered, none of this is true, either.

Note that the EPA rule said that the agency would seek a reduction of 30 percent. But on page 15 of the Chamber report, the Chamber says it assumed the rule would impose a 42 percent reduction…. Given the significant difference between the emission targets in the proposed rule and the assumptions in the Chamber report, Republicans should have avoided using the Chamber’s numbers in the first place. We understand that they believe the negative impact will outweigh any positive impact but even by the Chamber’s admission, these numbers do not apply at all to the EPA rule as written.

Some might argue this was only an innocent mistake, but the EPA last week in a blog post on the Chamber’s study noted that it would not require carbon capture technology for new natural gas plants…. That should have been a tip-off that some of the Chamber’s assumptions were shaky — and that it would have been a good idea to double check what the rule actually said before firing off a statement.

 * Update: Blunt’s office contacted me to note that the Senate committee that oversees science policy is formally known as the Senate Commerce, Science, and Transportation Committee. The Missouri Republican is a member.

 

By: Steve Benen, The Maddow Blog, June 3, 2014

June 4, 2014 Posted by | Climate Change, Republicans | , , , , , , , , | 1 Comment

“Mission Accomplished”: Tea Party Has Succeeded In Moving GOP Further Right

Last week, primary elections in several states killed off a few ultraconservative candidates whose views flirted with nuttiness. In Georgia, for example, U.S. Rep. Paul Broun — a physician who has called evolution and the big-bang theory “lies straight from the pit of hell” — drew only 9.8 percent of the vote in a crowded race to become the Republican nominee for the U.S. Senate.

In the same Georgia primary contest, U.S. Rep. Phil Gingrey, an obstetrician-gynecologist, pulled down just 10 percent of the vote. Last year, the gaffe-prone Gingrey drew national ridicule for defending former Missouri congressman Todd Akin, who had said that natural processes protect a woman from pregnancy after rape.

Meanwhile, in Kentucky, Senate Minority Leader Mitch McConnell easily dispatched a Republican challenger, Matt Bevin, who had suggested that legalizing gay marriage could lead to parents marrying their children.

Those results, among others, cheered the Republican establishment, which has grown tired of fielding weird candidates who cannot win general elections, and led to a round of obituaries for the Tea Party movement, which had backed several of the losers. According to the chattering classes, the election results prove that the Tea Party is on life support, a dying force in conservative politics. That goes double for the doyenne of the Tea Party movement, Sarah Palin, whose chosen candidate in the Georgia Senate primary, Karen Handel, also lost.

But that view is just wrong. Tea Partiers have already accomplished what they set out to do: move the Republican Party much further to the right. While the foot-in-mouth, reality-challenged candidates may have been swept from the stage, the Tea Party has grafted its DNA onto the GOP. The Republican Party is now a small tent of hard-right absolutists who deny science, worship the rich and detest compromise.

Ronald Reagan wouldn’t recognize his party — and wouldn’t be welcome there either, as former Florida governor Jeb Bush noted two years ago. “Ronald Reagan would have, based on his record of finding accommodation, finding some degree of common ground, as would my dad — they would have a hard time if you define the Republican Party — and I don’t — as having an orthodoxy that doesn’t allow for disagreement, doesn’t allow for finding some common ground,” he said.

Georgia’s Republican primary for an open U.S. Senate seat (as Senator Saxby Chambliss retires) was instructive. It was a frenzy of Obama-bashing, an unedifying contest among candidates who repeated far-right orthodoxy like a mantra. They pledged to fight Obamacare, to resist tax increases, to cut spending on social programs, to defend every citizen’s right to own a shoulder-fired rocket launcher. Each of them pledged to fight abortion, though they all want to cut the programs that help keep poor babies healthy.

When the leading candidate, millionaire businessman David Perdue, said something rational, it was denounced as a gaffe and used as fodder by his opponents. Asked by a Macon Telegraph editorial writer whether he would chose spending cuts or increased revenue to improve the economy, Perdue said “both.” His opponents jumped on the remark quickly, claiming he had given notice that he would raise taxes.

The peculiar aversion to compromise runs counter to the example set by Reagan, the patron saint of the modern conservative movement. He famously bartered with Democratic House Speaker Tip O’Neill to arrive at a 1983 agreement to cut spending and raise taxes, which firmed up Social Security for a generation.

Yet, the Tea Party takeover of the GOP is holding strong, producing an adherence to far-right dogma. That’s what voters are likely to see in the runoff for the Republican nomination for a U.S. Senate seat, in which frontrunner Perdue will face U.S. Rep. Jack Kingston on July 22. Both candidates will feel pressure to prove themselves to the Tea Party supporters who voted for Gingrey, Broun and Handel, so they’ll engage in even more ultraconservative rhetoric and indulge even more right-wing impulses.

The Republican establishment thought that it was going to use the energy of far-right activists to win elections while remaining firmly in control. If any members of the GOP establishment — including old-line institutions such as the Chamber of Commerce — still believe that’s what happened, they are only fooling themselves.

 

By: Cynthia Tucker, Visiting Professor at the University of Georgia; The National Memo, May 24, 2014

May 25, 2014 Posted by | GOP, Tea Party | , , , , , , | 1 Comment

“Ultimately Responsible For Republican Inaction”: Whether He Likes It Or Not, Boehner Controls Immigration Bill’s Fate

For months, House Speaker John Boehner (R-Ohio) tried to blame President Obama for House Republicans’ refusal to consider immigration reform: GOP lawmakers don’t trust the White House, the argument went, so the administration’s responsible for Republican intransigence. A few weeks ago, however, Boehner accidentally told the truth: House Republicans, afraid of hard work and tough choices, are ultimately responsible for inaction on the issue.

So which is it? As a matter of substance, the Speaker’s accidental honesty gave away the game, but as a matter of politics, it’s awkward when the House Republican leader blames his own members for a colossal failure – so now Boehner seems to be pushing both arguments simultaneously.

The Ohio Republican, speaking at a luncheon sponsored by several San Antonio business groups, acknowledged that there are some in his conference who do not want to take on the issue, but he was measured in speaking about his colleagues’ resistance.

“There are some members of our party who just do not want to deal with this. It’s no secret,” he said. “I do believe the vast majority of our members do want to deal with this, they want to deal with it openly, honestly and fairly.”

Boehner then added, “I put the ball back in the president’s court. He’s going to have to do something to demonstrate his trustworthiness.”

There are hints of good news here for reform proponents, but for the most part, the Speaker’s position is simply incoherent. If the “vast majority” of House Republicans want to tackle immigration reform, Boehner and his leadership team can … wait for it … tackle immigration reform. There’s nothing stopping them – they’re the House majority; they can do as they please; the Senate has already acted; and the White House is eager to sign something into law.

As for President Obama demonstrating his “trustworthiness,” the administration has already shown its commitment on this issue by increasing deportations and boosting border security to heights without modern precedent. What’s more, leading Democratic lawmakers have offered to delay implementation of the law until 2017, at which time there will be a new president.

Boehner has never been a policy guy, per se, but it’s implausible to think the Speaker of the House isn’t aware of these basic details. It’s what makes his odd rhetoric somewhat baffling – Boehner says Republicans are and aren’t interested in reform, while the president is and isn’t to blame for GOP intransigence.

The Speaker added, in reference to immigration reform in general, “This is not about politics, not about elections. It’s about doing the right thing for the American people. It’s about doing the right thing for the country. Period.”

That’s a perfectly nice sentiment, though it naturally leads one to wonder when, exactly, Boehner might stop talking about the issue and might start governing.

In the meantime, some of the Speaker’s allies are offering his party some not-so-subtle advice. Benjy Sarlin noted yesterday:

Republican-leaning immigration supporters, which include a variety of business leaders and trade associations, have been lobbying Republicans for a year to pass a reform bill. Chamber of Commerce CEO Tom Donohue warned Republicans on Monday that failure to pass a bill this year would be fatal to the party’s presidential hopes given the rising power of Hispanic and Asian voters who are largely opposed to the GOP’s current immigration stance.

“If the Republicans don’t do it, they shouldn’t bother to run a candidate in 2016,” he said in a panel discussion. “I mean, think about that. Think about who the voters are.”

To borrow a metaphor, the ball is in Boehner’s court.

 

By: Steve Benen, The Maddow Blog, May 13, 2014

 

 

 

May 15, 2014 Posted by | House Republicans, Immigration Reform, John Boehner | , , , , , | Leave a comment

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