Category Archives: Congress

Let’s Move On From Health Care. Please.

24 Wednesday Mar 2010

Posted by in bailout, Congress, Financial Crisis, financial reform, financial regulation, health care, Obama, Politics, Wall Street

≈ Leave a comment

Tags

, , , , , , , ,

Now that health care reform, such as it is, has been signed, sealed, and set to be delivered in varying stages between now and 2014, can we please move on to other things. Believe it or not there are some significant storm clouds on the horizon which have the potential to come on shore sooner than 4 years from now, and which might merit some attention from policymakers in Washington, D.C. Such as:

The next wave of the housing crisis:

“This month, the Fed confirmed that it will no longer make open market purchases of mortgage backed securities after March 31st…As the Fed begins to unwind its historic intervention, it faces a second wave of toxic mortgage maturities that could be even more damaging than the last wave of subprime mortgages. These are the 3 and 5 year Option ARM mortgages, and they were the credit bubble’s absolute creme de la creme…these loans will reset at rates that are far higher than the initial “teaser” rate. Sadly, this may spell doom for borrowers who used these loans to fund overpriced home purchases in 2006-2007, especially in high-priced markets along the coasts.”

Add to that the lack of success of the foreclosure prevention program which has fallen far short of its original goals of helping 4 million homeowners. The number so far is less than 170,000.

“The program risks helping few, and for the rest, merely spreading out the foreclosure crisis over the course of several years” at significant expense for taxpayers and borrowers, the inspector general’s office wrote. If too many participants re- default, the modification plan “will have done little to achieve the goal of assisting homeowners who would still find themselves losing their homes.”

Then there’s the commercial real estate “ticking time bomb”:

“Estimates published last November by the Urban Land Institute and PricewaterhouseCoopers suggest that commercial real estate vacancies will continue to increase in 2010, while prices could tumble further during the year. Prices could fall as low as half their peak levels from 2007.

If that happens, that would only darken borrowers’ hopes that banks will refinance their outstanding loans. And some $1.4 trillion is commercial real estate debt is expected to come due over the next three years.”

Existing home sales have fallen for the third straight month, to their lowest level since last July:

“Resales of U.S. homes and condominiums fell 0.6% in February to a seasonally adjusted annual rate of 5.02 million, the lowest level in eight months, raising doubts about the durability of the housing recovery, the National Association of Realtors reported Tuesday.

…”We need to have a second surge,” said Lawrence Yun, chief economist for the real estate lobbying group. However, the jury’s still out, he said…A double-dip recession is a “possibility” if a second surge of buying doesn’t occur, he said.”

And last but not least, the economic “recovery” which is being felt in few places outside of big business and Wall Street:

“The earnings of companies in the Standard & Poor’s 500 stock index tripled in the fourth quarter, but this does not mean the rest of the US economy is doing well. Much of their sales were into fast-growing markets in places like India, China and Brazil. Meanwhile, they continued to slash jobs and cut costs at home.”

Large corporations are flush with cash, but:

“…Much is being used to buy other companies, which usually leads to more job losses. Much of the rest is being used to buy back their own stock in order to boost their share prices…The major beneficiaries are shareholders, including top executives, whose pay is linked to share prices. But the buy-backs do nothing for most Americans.

…The economy shows signs of improvement largely because the government is spending huge sums and the Fed is essentially printing even more money. But where will demand come from when the stimulus is over and the Fed tightens? That question hangs over the economy like a dense cloud. Until there is an answer, a sustainable recovery for any other than America’s largest corporations, Wall Street and the wealthy is a mirage.”

Just a few things for our elected representatives to consider. You’ve done your touchdown dance, now it’s time to get ready for the kickoff—the game is far from over.

As The Health Care Reform Turns

18 Thursday Mar 2010

Posted by in Congress, Democrats, health care, Politics, Uncategorized

≈ Leave a comment

Tags

, , , , , , , , ,

In today’s episode of  “As The Health Care Reform Turns”:

“House Democrats are inching toward the majority they need to pass health care legislation, giving them added confidence as they work out the last details of the bill and gird for a showdown as soon as this weekend.”

“Details” like what’s in the bill and how much it costs:

“House Democratic leaders on Wednesday night said the long-awaited Congressional Budget Office score of the reconciliation bill will not come out until Thursday, forcing an acknowledgment that a Saturday healthcare vote is likely off the table…But leaders are still hoping for a score on Thursday, and are still preparing for a possible vote before the end of the weekend.

…Rep. Robert Andrews (D-N.J.)…said that the delay is the result of numerous technical issues involved, and stressed that, despite any rumors to the contrary, the delays are not the result of policy problems.”

Translation: The delays are the result of policy problems. Just a hunch—Pelosi has seen the CBO numbers and they ain’t good. Hence the need to raise the tax on benefits:

“AFL-CIO President Richard Trumka is headed into a meeting with President Obama this afternoon after the White House and Congressional leaders have begun to discuss a higher-than-expected excise tax on some health care plans, in order to maintain their claim that health care legislation will reduce the deficit, a source involved in health care talks said.”

Policy problems like President Obama’s support for the so-called “Louisiana Purchase”:

“That provision, which I think should remain in, said that if a state has been affected by a natural catastrophe, that has created a special health care emergency in that state, they should get help,” Obama told Fox News’s Bret Baier…”

And since PhRMA has agreed to spend $6 million on pro-reform advertising, it’s safe to assume that the not-so-secret deal between the White House and the drug industry will be in the elusive bill as well.

So, where does HCR stand today? Pretty much in the same place its been:

“Democratic leaders say they have not nailed down the 216 votes they need for passage, but they are pressing ahead in the belief that they can get them.”

Dodd’s Toothless Consumer Protection “Watchdog”

17 Wednesday Mar 2010

Posted by in bailout, Congress, Democrats, Financial Crisis, financial reform, financial regulation, Politics, Wall Street

≈ Leave a comment

Tags

, , , , , , , , , , ,

Sen. Chris Dodd’s so-called “sweeping overhaul of the U.S. financial system” creates a Bureau of Consumer Financial Protection, which is supposed to be “a new, independent consumer watchdog.” You just know there’s a “but” coming here, right? Right:

“…the legislation would impose significant limits on the autonomy of the new watchdog. It would establish a Financial Stability Oversight Council [with veto power over the bureau] of nine members, all but one of whom would be existing financial regulators such as the Treasury Secretary and Comptroller of the Currency, which oversees national banks.”

In just one example, let’s take a look at what those “existing regulators” and the now-Treasury Secretary were doing in the case of Lehman Brothers, as revealed in the report by the examiner of Lehman’s bankruptcy. While management at Lehman was engaging in Enron-stlye accounting, where were the federal regulators? Looking on:

“One crucial move was to shift assets off its books at the end of each quarter in exchange for cash through a clever accounting maneuver…to make its leverage [debt] levels look lower than they were. Then they would bring the assets back onto its balance sheet days after issuing its earnings report.

And where was the government while all this “materially misleading” accounting was going on? In the vernacular of teenage instant messaging, let’s just say they had a vantage point as good as POS (parent over shoulder).”

What’s worse is that “there is no evidence that Lehman kept two sets of books or tried to hide what it was doing from regulators.” Among the spectators:

“The NY Fed, the regulatory agency led by then FRBNY President Geithner [which] stood by while Lehman deceived the public through a scheme that FRBNY officials likened to a “three card monte routine.”

The FRBNY knew that Lehman was engaged in smoke and mirrors designed to overstate its liquidity and, therefore, was unwilling to lend as much money to Lehman. The FRBNY did not, however, inform the SEC, the public, or the OTS (which regulated an S&L that Lehman owned) of what should have been viewed by all as ongoing misrepresentations.”

So much for the “watchdog” capabilities of existing regulators and the Treasury Secretary. What about the other named mentioned, the Comptroller of the Currency. That would be John Dugan, a name not many are familiar with, but who was called in an article in The Nation last December, “one of the earliest architects of the too big to fail economy”:

“Too big to fail banks were a ticking time bomb, but they might not have ravaged the global economy in 2008 without major shortcomings in consumer protection over the previous five years. As head of the Office of the Comptroller of the Currency, Dugan played a leading role in gutting the consumer protection system, allowing big banks to take outrageous risks on the predatory mortgages that led to millions of foreclosures.

“For years, the OCC has had the power and the responsibility to protect both banks and consumers, and it has consistently thrown the consumer under the bus,” says Harvard University Law School professor Elizabeth Warren, chair of the Congressional Oversight Panel for the Troubled Asset Relief Program.”

Consumer Financial Protection? Sounds more like Wall Street Financial Protection to me.

Health Care “Sleight of Hand”

16 Tuesday Mar 2010

Posted by in Congress, financial reform, health care, Politics, Uncategorized

≈ Leave a comment

Tags

, , , ,

If members of Congress have any question as to why they rank somewhere below used car salesmen on the trustworthy scale, there are 2 shining examples relating to 2 pieces of proposed legislation in today’s news—one on health care reform and one on financial reform—which should make it crystal clear. First there’s this from the Washington Post:

“After laying the groundwork for a decisive vote this week on the Senate’s health-care bill, House Speaker Nancy Pelosi suggested Monday that she might attempt to pass the measure without having members vote on it.”

Wait a minute, I thought President Obama said it was time for an up or down vote on health care reform? Que pasa? I guess that only applies when the votes are there. Failing that, the need for an alternative procedure arises. Such as:

“Instead, Pelosi (D-Calif.) would rely on a procedural sleight of hand: The House would vote on a more popular package of fixes to the Senate bill; under the House rule for that vote, passage would signify that lawmakers “deem” the health-care bill to be passed.”

Note to Speaker Pelosi: For future reference, any time the words “sleight of hand” are used in relation to an action by Congress, it doesn’t exactly inspire confidence that what you’re trying to do is on the up and up.

“The tactic — known as a “self-executing rule” or a “deem and pass” — has been commonly used, although never to pass legislation as momentous as the $875 billion health-care bill. It is one of three options that Pelosi said she is considering for a late-week House vote, but she added that she prefers it because it would politically protect lawmakers who are reluctant to publicly support the measure.”

Wait another minute. Haven’t the Speaker and the Democratic leadership been extolling the virtues of this “reform” and how good it will be for us ( just trust them)?  Then why the need for “political protection?” I’m confused.

The other bit of news is Sen. Chris Dodd’s release of his so-called “sweeping financial regulatory reform” bill. This quote from Dodd at the end of a Huffington Post article says it all:

“Interestingly, Dodd seemed to want to minimize expectations for the proposed legislation’s impact by saying several times that it is not enough to prevent another crisis: “This legislation will not stop the next crisis from coming. No legislation can…”

Yes it can, Sen. Dodd. If you want it to. Ay, there’s the rub.

An Earmark Ban That’s Not Really an Earmark Ban

11 Thursday Mar 2010

Posted by in Congress, Democrats, lobbyists, Politics, special interests

≈ Leave a comment

Tags

, , , , , , , , ,

Reading this headline in the New York Times—“Leaders in House Block Earmarks to Corporations”— might give the impression that some serious reform is underway on Capitol Hill, right? Wrong. As usual with our esteemed members of Congress,  it’s all about appearance. The appearance of doing something while actually doing nothing. And again, as usual, there are loopholes big enough for Patton’s Third Army to march through.

For instance, the ban on earmarks only applies to for-profit companies, allegedly. Which means that:

“Under the new restrictions, not-for-profit institutions like schools and colleges, state and local governments, research groups, social service centers and others are still free to receive earmarks. The new restrictions, for example, would still allow the type of award to local governmental agencies that became infamous in 2005 with Alaska’s “Bridge to Nowhere.”

Loophole No. 2:

“In addition, billions added to the defense bills for existing national security programs under contract with major defense companies such as Boeing, General Dynamics, Lockheed Martin and Northrop Grumman probably would not be affected.

For example, when House appropriators add more funds for Boeing’s C-17 cargo aircraft, they do not disclose them as earmarks. Instead, they are considered programs essential to national security even though none of the funds are requested by the Pentagon. These funds benefit lawmaker districts where the weapons systems are built.”

So what’s the point? It’s all about “image,” “appearances” and “optics.”

“House Democrats, in a bid to rehabilitate the image of a committee long mired in ethical mishaps, announced the Appropriations panel would not approve earmarks for for-profit corporations…”

“…For Pelosi, it clearly seemed to be a bid to simultaneously rehabilitate her party’s image and that of the Appropriations Committee, several of whose members were cleared in a wide-ranging ethics probe last month.”

“…Practically, many understand this rule means very little. Defense insiders say the proposal, especially without the help of the Senate, is an empty stab at reform…But optically, the move was important for Democrats.”

“…Democrats still think it’s a step in the right direction for the body as a whole, even if just for the sake of appearances. Rep. Chris Murphy (D-Conn.), a second-term member, said he doesn’t earmark for private entities and still is able to help defense contractors in Connecticut with federal projects.”

“I think it helps some of the optics with some of the members who I think are for earmark reform,” said [Rep. Joseph] Crowley [D-NY].”

Better headline: “Congress’ Eternal Quest, How Can We Fool ‘Em Today”

Lindsey Graham is For Our System of Justice…Except When He’s Against It

10 Wednesday Mar 2010

Posted by in Congress, Justice Department, Politics, terrorism, war on terror

≈ 1 Comment

Tags

, , , ,

Senator Lindsey Graham believes suspected terrorists are entitled to legal representation—except when they aren’t. Confused? So is Sen. Graham. On the one hand he condemns the Keep America Scared Safe ad which refers to Justice Department lawyers who defended terrorism suspects as the “al-Qaeda 7”:

“Sen. Lindsey Graham, R-S.C., a member of the Senate Armed Services and Judiciary Committees, told The Cable Tuesday that the Cheney-Kristol ad was inappropriate and unfairly demonized DOJ lawyers for doing a noble public service by defending unpopular suspects.

“I’ve been a military lawyer for almost 30 years, I represented people as a defense attorney in the military that were charged with some pretty horrific acts, and I gave them my all,” said Graham. “This system of justice that we’re so proud of in America requires the unpopular to have an advocate and every time a defense lawyer fights to make the government do their job, that defense lawyer has made us all safer.”

On the other hand, Sen. Graham is “looking for a legal framework” by which suspected terrorists can be indefinitely detained:

“There has to be some type of statute– and he’s been clear on that — for indefinite detention,” [Graham spokesman Kevin] Bishop said…Primarily, the system Graham is designing is set up for handling the Obama administration’s so-called “Fifth Category” of detainees that a Justice Department task force recommended against charging and releasing. “What do you do with them? What type of system do you have to hold them indefinitely?” Bishop said. “What type of system do you establish where we can ensure that we’re looking back at their cases; that we are holding them; we still determine that they are enemy combatants; they’re too dangerous to release; but we also aren’t going to try them in either a military or a civilian court.” So there has to be a system for that, and that’s why Senator Graham is looking for a legal framework.”

There are countries where that “type of system” exists, Mr. Bishop. Places named Iran…and China…and North Korea. Are they now our roles models for jurisprudence?

Washington Still Fiddling

09 Tuesday Mar 2010

Posted by in Congress, economy, health care, Obama, Politics

≈ Leave a comment

Tags

, , , , , ,

Bob Herbert’s op-ed in yesterday’s New York Times echos what I’ve been thinking lately—it’s time for Congress and President Obama to get past health care reform and move on to jobs. Please.

“The Obama administration and Democrats in general are in trouble because they are not urgently and effectively addressing the issue that most Americans want them to: the frightening economic insecurity that has put a chokehold on millions of American families.

The economy shed 36,000 jobs last month, and that was trumpeted in the press as good news. Well, after your house has burned down I suppose it’s good news that the flames may finally be flickering out. But once you realize that it will take 11 million or more new jobs to get us back to where we were when the recession began, you begin to understand that we’re not really making any headway at all.

…Instead of focusing with unwavering intensity on this increasingly tragic situation, making it their top domestic priority, President Obama and the Democrats on Capitol Hill have spent astonishing amounts of time and energy, and most of their political capital, on an obsessive quest to pass a health care bill.”

“Obsessive quest” is right. But sadly I don’t see it ending any time soon. Now the talk is to have health care done by Easter. Anybody who believes that believes in the Easter bunny. But never mind, Congress. Take your time. The good economic news is that another million people stopped looking for work last month and no longer count in the unemployment statistics. Hooray.

By the way, what happened to “jobs must be our number one focus in 2010″ from the State of the Union speech in January? Just curious.

Another Kabuki Dance on Consumer Financial Protection Agency

07 Sunday Mar 2010

Posted by in Congress, Democrats, Financial Crisis, financial regulation, lobbyists, Obama, Politics, special interests, Wall Street

≈ Leave a comment

Tags

, , , , , ,

If there’s anything transparent in this administration of “openness and transparency” it’s the way the well-rehearsed and often-repeated three-act Kabuki theater plays out their alleged attempts at any major reform on any particular issue. It’s as easy to see through as a pane of glass and as easy to see coming as a freight train. Here’s how it goes, again and again:

Act I.  The president professes to want (but doesn’t actually want) real reform on a given issue. The House passes a bill containing real reform. The Senate at first seems to embrace it, but then claims ‘woe is us, we can’t pass it without Republican votes.’

Act II. The legislation is watered-down in search of bi-partisan support that the administration and the Senate leadership knows they aren’t going to get in spite of the watering-down.

Act III. What started out as “reform” becomes so weakened as to be of no real affect. Thus, the original goal of the president and his former colleagues and current accomplices in the Senate is achieved–give the appearance of doing something while actually doing nothing.

The latest example is on the creation of the Consumer Financial Protection Agency. In July of last year:

“The Obama administration…proposed legislation for a financial oversight agency designed to protect consumers and investors from unscrupulous deals…The White House sent Congress a 152-page draft bill to create the Consumer Financial Protection Agency, which it says would offer greater consumer protections for such financial products as mortgages, credit cards and loans by establishing simpler and more transparent rules and regulations.

“Consumer protection will have an independent seat at the table in our financial regulatory system,” Treasury Secretary Timothy F. Geithner said.”

At the time, Senate Banking Committee chairman Chris Dodd “called the administration’s bill a “bold and aggressive plan” to defend against a future financial crisis.”

In December the House passed a sweeping financial reform bill which contained an independent consumer protection agency.

Fast forward to Thursday of last week:

“Creating a powerful and independent consumer agency, which is strongly opposed by the financial industry and Republicans, has been the major roadblock in drafting a bill that could pass in the Senate…Dodd has been searching for months for a bipartisan compromise, a move made more urgent after a Republican, Scott Brown, won the special Massachusetts Senate election in January, giving the GOP enough votes to block any Democratic legislation. After negotiations with Sen. Richard C. Shelby (R-Ala.) reached an impasse, Dodd began working with Sen. Bob Corker (R-Tenn.).

The “compromise” reached by Dodd and Corker would take away the independence of the agency and instead making it an arm of the Federal Reserve. This despite the fact that Dodd himself said 4 months ago that Fed’s record on consumer protection was an “abysmal failure,” and more recently, “criticized the Fed’s previous inaction as a main reason for creating such an entity, noting that the central bank took 14 years before enacting rules in 2008 to protect consumers from unscrupulous mortgage lending.”

And where does the Obama administration come down? It appears to be the usual fence-straddling:

“Treasury Secretary Timothy F. Geithner and Valerie Jarrett, a senior White House advisor, met Wednesday with representatives from consumer, labor and other organizations that support a strong, stand-alone consumer agency and told them that “strengthening consumer protections remains a central objective of our financial reform efforts,” according to an administration official.

Although Geithner and Jarrett said they would not accept a bill unless it included a consumer agency with “real independence,” they did not specifically rule out housing it in the Fed or another agency.”

But appearances can be deceiving. With a little reading between the lines one can see what the administration really wants. Geithner is the former president of the New York Fed, Valerie Jarrett is a former member of the board of directors of the Chicago Fed. It seems to be too much of a coincidence that these were the two administration representatives to the negotiations. I would surmise that the president wants the agency in the Fed.

Why? It follows the script–giving the appearance of doing something–creating a consumer protection agency, while actually doing nothing–putting the agency inside the Fed, whose track record on enforcing any kind of regulation is, to use Sen. Dodd’s word, abysmal.

Mission accomplished. The peasants are appeased and the corporate masters are not angered. The campaign contributions continue to flow, and business as usual continues.

Another Financial Crisis “More Than Predictable, It’s Inevitable”

04 Thursday Mar 2010

Posted by in bailout, Congress, economy, Financial Crisis, Goldman Sachs, Obama, Politics, Wall Street

≈ Leave a comment

Tags

, , , , , , , ,

Remember the economy and that little thing we had not too long ago called…what was it…oh yeah, the financial crisis. While Congress and the White House spend “the next few weeks” mired in the never-ending saga of health care reform, there are some potential problems which could affect us a lot sooner than 2014. If legislators have some spare time they might want to give it a glance:

“Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

…Without more stringent reforms, “another crisis – a bigger crisis that weakens both our financial sector and our larger economy – is more than predictable, it is inevitable,” Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.”

In the report, the panel, which includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high-risk investing that precipitated the near-collapse of the U.S. economy in 2008.

But in typical Congressional fashion, “beefing up” financial regulations and “stringent reforms” aren’t on the agenda:

“The proposal” [that would ban the banks receiving federally insured deposits from engaging in trading which benefits the banks and not their customers] “faces strong resistance in Congress, where lawmakers have shown little appetite for adding to the prolonged debate on overhauling financial regulations.”

The reason for Congress’ “little appetite” should come as no great surprise:

“Goldman Sachs and Morgan Stanley would probably be the Wall Street firms most affected by the ban, known informally as the Volcker Rule…”

Goldman most affected? We can’t have any of that. Chris Dodd needs a job starting in January.

A Little Perspective on the National Debt

03 Wednesday Mar 2010

Posted by in budget, Congress, economy, Politics

≈ 1 Comment

Tags

, , , , , ,

Any time the discussion turns to the national debt, a popular tactic among Democrats is to go back to the origin of exploding debt numbers under President Reagan. They like to point out that when Reagan took office in 1981 the debt was $998 billion and when he left in 1989 it was $2.9 trillion, due mostly to tax cuts and spending increases over that time. That is true, but here’s the rest of the story.

Spending and revenue bills originate in the House of Representatives, and at no time during Reagan’s 8 years did Republicans control the House. In the 4 Congresses during Reagan’s 2 terms, the 97th thru the 100th, the average spread in the House of Representatives was 257 Democrats to 178 Republicans. The Kemp-Roth tax cuts of 1981, for example, passed 323-107 and there were only 191 Republicans in the House at that time. Likewise with spending. Democrats had the numbers to stop any of those proposals but didn’t.

Let’s be honest, when parceling out blame for our massive national debt there’s plenty of blame to go around, and plenty of fingers to be pointed in both directions.