“Romney’s Higher Education Plan”: A Giveaway To Wall Street Banks And Predatory Schools That Fund His Campaign
2012 presumptive presidential nominee Mitt Romney released his higher education plan Wednesday, decrying the nation’s “education crisis.” During a speechbefore the U.S. Chamber of Commerce, Romney blamed President Obama for rising tuition prices and increasing student debt.
Of course, tuition increases and growing debt are a phenomenon several decades in the making. And Romney’s plan would make the problem decidedly worse in two important ways, giving federal money away to Wall Street banks and predatory for-profit colleges, two industries to which Romney has extensive ties.
First, as he’s promised before, Romney intends to divert money away from student aid — instead giving it away to banks — by repealing Obama’s student loan reforms:
Reverse President Obama’s nationalization of the student loan market and welcome private sector participation in providing information, financing, and the education itself.
President Obama did not nationalize the student loan market. (Plenty of banks still make private sector student loans.) Instead, Obama and the Democrats cut private banks out of the federal student loan program, ending billions in subsidies that were needlessly going to banks for acting as loan middlemen. The money saved went into the Pell Grant program. Romney’s plan would entail taking away Pell money in order to pay Wall Street to service federal loans.
Second, Romney would remove regulations meant to protect students from predatory for-profit colleges:
Ill-advised regulation imposed by the Obama administration, such as the so-called “Gainful Employment” rule, has made it even harder for some providers to operate, while distorting their incentives.
This rule simply states that colleges leaving too many students crippled with debt and without good jobs lose their access to federal dollars. Many for-profit schools make nearly all of their revenue from the federal government — in the form of the various streams of aid used by their students — yet have much higher rates of student loan default than public schools. Only 11 percent of higher education students in the country attend for-profit schools, but they account for 26 percent of federal student loans and 44 percent of student loan defaults.
Romney is already intimately tied to the for-profit college industry. Inside Higher Ed noted that two of his advisers “have lobbied on behalf of the Apollo Group, the parent company of the University of Phoenix.” On the campaign trail, Romney has effusively praised Full Sail University, a for-profit institution. And it seems that his policy platform would be a boon to this industry which is, in many instances, extremely predatory.
By: Pat Garofalo, Think Progress, May 24, 2012
“How John Roberts Sold The American People Out”: There Is No Public Benefit From The “Moneyed Interests”
Jeffrey Toobin’s New Yorker masterpiece “Money Unlimited: How Chief Justice John Roberts Orchestrated the Citizens United Decision” is required reading for anyone concerned with one of the central problems plaguing the functioning of American democracy: the influence of corporate spending on the political process.
If you’re impatient, you can skip ahead to the last, chilling line: “The Roberts Court, it appears, will guarantee moneyed interests the freedom to raise and spend any amount, from any source, at any time, in order to win elections.” And from there, you can make your own decision about whom to vote for this November, based on the direction that the Supreme Court is currently headed.
But a full reading of Toobin’s article is essential for understanding the larger context. The fight over whether and how to limit corporate spending on elections in the United States goes back more than a century. The battle lines are well-drawn, the sides well-established: “progressives (or liberals) vs. conservatives, Democrats vs. Republicans, regulators vs. libertarians.” The libertarian/Republican/moneyed interest side is currently in ascendence, but this is a long, long struggle, and the pendulum must one day swing back.
What’s so amazing, however, coming at this particular point in American history, right after Wall Street blew up the global economy, is the justification given by Justice Anthony Kennedy in his opinion announcing the decision.
“The censorship we now confront is vast in its reach,” Kennedy wrote. “The Government has muffled the voices that best represent the most significant segments of the economy. And the electorate has been deprived of information, knowledge and opinion vital to its function. By suppressing the speech of manifold corporations, both for-profit and nonprofit, the Government prevents their voices and viewpoints from reaching the public and advising voters on which persons or entities are hostile to their interests.
The implications of this passage are breathtaking. In his rush to protect free speech, on the grounds that there is a public benefit in protecting the right of corporations to spend freely to advise voters “on which persons or entities are hostile to their interests,” Kennedy and four other justices ensured that “moneyed interests” would essentially be able to buy government support for an agenda defined by corporate priorities. How any intelligent person could believe that skewing political messaging toward the sector of American society with the most cash to spend could be in line what the founders of the United States would have believed prudent is simply mind-boggling. We’ll end up paying the price for this sellout for generations to come, but unlike Wall Street, we can’t afford it.
By: Andrew Leonard, Salon, May 21, 2012
“The Brittle Grip”: Wall Street And The Financial Sector Aren’t Accustomed To Criticism
Republicans often say that the business community feels threatened by President Obama — that he’s hostile to money, hostile to business, etc. You’ve heard this before. And much of it is campaign chatter. But not all. I don’t think we can understand the dynamics of this campaign without getting that a lot of it is actually true — not the reality necessarily (in my mind not the reality at all) but the perception of it in key parts of the financial sector like Wall Street, venture capital and the dread world of private equity.
The case of Wall Street is in many ways the hardest nut to crack. President Obama took a huge political hit for massive amounts of public money that went to bailing out the major banks. By most measures, along with his predecessor, he more or less saved US and global capitalism. And yet, when you talk to people in finance, this is entirely forgotten. What you most often hear about are two or three statements from the President that are still potently remembered.
Most often it’s a late 2009 quote when he said “I did not run for office to be helping out a bunch of fat cat bankers on Wall Street. They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down 10, 20 million dollar bonuses after America went through the worst economic year in decades and you guys caused the problem.”
That’s not something you’d expect folks in finance to like particularly. But it did come after about a year of the President getting grief from Wall Street while simultaneously taking the political hit for bailing the same folks out with tax payer dollars.
I’ve heard similar things talking to folks in the business community in DC. And what strikes me again and again is how much it comes back to a handful of statements and anecdotes, things people remember the President saying over the last three plus years.
Some of this shouldn’t surprise us, I suppose. President Obama has pushed more regulation of business than his predecessor. (It’s certainly a change after eight years of George W. Bush; and it’s an eight years over which quite a lot has changed in the country.) He’s supported — though as yet not acted on — his call to roll back the Bush tax cuts. But Bill Clinton did all of this and more. Clinton after all is the guy whose tax hikes the Bush tax cuts in large part repealed. By most objective standards the President is actually more solicitous of the business community than most or all Democratic presidents over the last half century.
So what’s the explanation? Over recent weeks I’ve come to think that something else is in play: namely, the dramatic run up in wealth at the top of the income scale, not just over the last 35 years but particularly over the last 15 years. More or less since the beginning of the Clinton years. In a sense it’s the other side of the 99% vs 1% meme that has been the most successful legacy of the Occupy Wall Street Movement.
This is less an argument than a theory in progress. So I’d like your input. But I think the very wealthy and those who work in the most advanced and aggressive parts of finance are more defensive about their wealth than in the past — at least in terms of the political expression of it. There’s really no time in the last century in which you’d expect that a candidate running for a major political office who’d been responsible for shutting down a lot of factories wouldn’t have that come up in a major way in a campaign. Simply no way. Agree or not, it would be entirely par for the course. And yet now it’s treated as a possibly unexpected or unacceptable development.
That’s weird.
At the same time, the most important voices in the media are much, much wealthier than in earlier eras. The very wealthy are their friends and peers. Concentrated wealth simply has a stronger hold over mass communications than in the past — not necessarily in venal or corrupt terms but often simply by owning minds and mentalities. What all that amounts to is that people on Wall Street and the financial sector aren’t accustomed to a lot of criticism.
All of it goes to explaining a basic conundrum — President Obama is, when compared to Democrats over the last half century, objectively quite middle of the road. And yet the reaction from Wall Street and the halls of finance is one you’d think meant he was trying to bring capitalism to its knees. The President’s policies and tenure in office simply don’t explain the reaction. And I don’t think political spin does either. We need to look deeper into the political economy of the nation at large to understand it.
By: Josh Marshall, Editor and Publisher, Talking Points Memo, May 21, 2012
“Nauseating”: Cory Booker, Surrogate From Hell
If Cory Booker went on “Meet the Press” on Sunday with the intent of helping President Obama, then his appearance was an utter failure. But anyone who’s followed the enormously ambitious Newark mayor’s career closely knows he’s not one to pull a Joe Biden. He’s just too smart and too smooth to screw up so epically.
More likely, Booker went on the show to help himself and to advance his own long-term political prospects. And on that score, his appearance was a success.
You’ve probably seen or are now seeing the headlines Booker generated by calling the Obama campaign’s attacks on Mitt Romney’s private equity background “nauseating” and likening them to efforts by some on the right to inject Rev. Jeremiah Wright into the campaign.
“Enough is enough,” Booker said. “Stop attacking private equity. Stop attacking Jeremiah Wright.”
He added: “I have to just say from a very personal level, I’m not about to sit here and indict private equity. To me, it’s just we’re getting to a ridiculous point in America. Especially that I know I live in a state where pension funds, unions and other people invest in companies like Bain Capital. If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses, to grow businesses. And this, to me — I’m very uncomfortable with.”
Playing up Romney’s Bain record is, of course, central to Obama’s general election plan. Romney is running as a business-savvy “job creator” and relying on the public’s tendency to associate private sector success with economic competence. There is no overstating how vital it is for Obama and his campaign to break that link, and to establish that Romney’s real expertise is in making investors rich – not adding jobs and improving the quality of life for middle class workers.
In belittling this strategy, Booker isn’t just breaking with Obama, he’s breaking with just about everyone who’s ever run against Romney – including Ted Kennedy, who used criticisms of Bain’s treatment of workers to pull away from Romney in their 1994 Senate race. Essentially, Kennedy created the blueprint that Obama is now using. Booker is also providing Republicans with a dream talking point: A top Obama surrogate not only disapproves of Obama’s use of Bain, he finds it nauseating!
It wouldn’t be surprising if Booker has already heard from the White House, and surely he’s now in for a world of abuse from Obama supporters. But that hardly means he made a mistake, at least in terms of his own ambition. Financial support from Wall Street and, more broadly speaking, the investor class has been key to Booker’s rise, and remains key to his future dreams.
It’s easy to forget, but before the world met Barack Obama in 2004, many believed that the first black president would be Booker. Armed with Stanford, Yale and Oxford degrees and all of the invaluable personal connections he forged at those institutions, he set out in the mid-1990s to craft a uniquely appealing political biography, swearing off lucrative job offers to move to Newark’s Central Ward and take up residence in public housing. Within a few years, he won a seat on the City Council, where he showed an early and consistent knack for self-generated publicity, most notably with a ten-day hunger strike in the summer of 1999.
That set the stage for Booker’s 2002 race for mayor, an ugly contest against incumbent Sharpe James, an entrenched icon of the city’s civil rights generation of black politicians. James, as any self-respecting Newark mayor would do, leveraged his clout for campaign contributions from city workers, vendors and those who aspired to be city workers and vendors.
Booker, meanwhile, had hardly lost touch with his old classmates, keeping one foot in Newark and the other in Manhattan, where he built on the connections to elite donors that he already had. He called the millions of dollars he raised for the race “love money.” The press – and James’ campaign – took note that almost all of it was from outside Newark, nearly half of it was from outside New Jersey, and a quarter of it came directly from Wall Street.
This helped bolster James’ claim that Booker, who grew up in an affluent suburb, was not an authentic Newarker. That attack resonated just enough to save James, who won in a squeaker. It was a pyrrhic victory, though: Booker had captured national interest – there was a Time profile during the campaign, and an Academy Award-nominated documentary followed – and immediately started campaigning for the next race, while a federal investigation soon swallowed up James. In 2006, Booker was elected with ease, while James was on his way to jail.
Since then, the only question in New Jersey has been when – and not if – Booker will seek to run for statewide office. In 2009, the beleaguered Jon Corzine begged him to run for lieutenant governor on his ticket, an offer that Booker wisely refused. He’s often touted as a potential gubernatorial candidate for 2013, but those who know him say his eye is more on the Senate seat now held by 88-year-old Frank Lautenberg, which will be up in 2014.
This is why it’s not at all surprising to see Booker going to bat for private equity. The allies he’s cultivated on Wall Street and in the financial industry (think, for instance, of his chummy relationship with Michael Bloomberg) have made Booker a prolific fundraiser, and when he ventured into the ultra-expensive statewide game, he’ll need them more than ever. Many of them have turned fiercely against Obama over the past few years, convinced that he’s unfairly targeted them. Booker’s words on “Meet the Press” may have enraged the average Obama supporter, but to the Wall Street class they were probably close to heroic – finally, a big-name Democrat with the cojones to call out Obama on his class warfare!
The Booker calculation, in other words, is probably that the average Democratic voter’s memory of his outburst will fade long before 2014 – but that the average Wall Street donor’s won’t.
By: Steve Kornacki, Salon, May 20, 2012
“Why We Regulate”: The Arrogance Of Wall Street And The Lessons Of History
One of the characters in the classic 1939 film “Stagecoach” is a banker named Gatewood who lectures his captive audience on the evils of big government, especially bank regulation — “As if we bankers don’t know how to run our own banks!” he exclaims. As the film progresses, we learn that Gatewood is in fact skipping town with a satchel full of embezzled cash.
As far as we know, Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, isn’t planning anything similar. He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders. So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.
Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on.
Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive “panics,” which can wreak havoc with the economy as a whole. Current right-wing mythology has it that bad banking is always the result of government intervention, whether from the Federal Reserve or meddling liberals in Congress. In fact, however, Gilded Age America — a land with minimal government and no Fed — was subject to panics roughly once every six years. And some of these panics inflicted major economic losses.
So what can be done? In the 1930s, after the mother of all banking panics, we arrived at a workable solution, involving both guarantees and oversight. On one side, the scope for panic was limited via government-backed deposit insurance; on the other, banks were subject to regulations intended to keep them from abusing the privileged status they derived from deposit insurance, which is in effect a government guarantee of their debts. Most notably, banks with government-guaranteed deposits weren’t allowed to engage in the often risky speculation characteristic of investment banks like Lehman Brothers.
This system gave us half a century of relative financial stability. Eventually, however, the lessons of history were forgotten. New forms of banking without government guarantees proliferated, while both conventional and newfangled banks were allowed to take on ever-greater risks. Sure enough, we eventually suffered the 21st-century version of a Gilded Age banking panic, with terrible consequences.
It’s clear, then, that we need to restore the sorts of safeguards that gave us a couple of generations without major banking panics. It’s clear, that is, to everyone except bankers and the politicians they bankroll — for now that they have been bailed out, the bankers would of course like to go back to business as usual. Did I mention that Wall Street is giving vast sums to Mitt Romney, who has promised to repeal recent financial reforms?
Enter Mr. Dimon. JPMorgan, to its — and his — credit, managed to avoid many of the bad investments that brought other banks to their knees. This apparent demonstration of prudence has made Mr. Dimon the point man in Wall Street’s fight to delay, water down and/or repeal financial reform. He has been particularly vocal in his opposition to the so-called Volcker Rule, which would prevent banks with government-guaranteed deposits from engaging in “proprietary trading,” basically speculating with depositors’ money. Just trust us, the JPMorgan chief has in effect been saying; everything’s under control.
Apparently not.
What did JPMorgan actually do? As far as we can tell, it used the market for derivatives — complex financial instruments — to make a huge bet on the safety of corporate debt, something like the bets that the insurer A.I.G. made on housing debt a few years ago. The key point is not that the bet went bad; it is that institutions playing a key role in the financial system have no business making such bets, least of all when those institutions are backed by taxpayer guarantees.
For the moment Mr. Dimon seems chastened, even admitting that maybe the proponents of stronger regulation have a point. It probably won’t last; I expect Wall Street to be back to its usual arrogance within weeks if not days.
But the truth is that we’ve just seen an object demonstration of why Wall Street does, in fact, need to be regulated. Thank you, Mr. Dimon.
By: Paul Krugman, Op-Ed Columnist, The New York Times, May 13, 2012
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