Category Archives: Obama

A Crucial Week for Financial Reform

26 Monday Apr 2010

Posted by in bailout, Congress, economy, Financial Crisis, financial reform, financial regulation, Obama, Politics, Republicans, too big to fail, Wall Street

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In what’s shaping up as a crucial week in the quest for financial reform there are some encouraging signs, some not so encouraging, and a demonstration by the executives at “the great vampire squid” (aka Goldman Sachs) give us an example of why meaningful reform is necessary.

First, the reasons to be hopeful. There appear to be some cracks in the Republican wall of solidarity. Sen. Olympia Snowe endorsed Sen. Blanche Lincoln’s tough stance toward derivative trading passed last week by the Agriculture Committee. (Sen. Grassley, another possible defector, was the lone Republican on the committee who voted for Lincoln’s proposal). In a letter to Majority Leader Harry Reid, Snowe wrote:

“I believe that strong derivatives regulation goes to the heart of an effective financial reform bill and that Chairman Lincoln’s legislation is a strong step towards realizing this fundamental component to financial reform……I believe that we should err on the side of caution and finally bring full transparency to these markets once and for all and allow regulators to preemptively identify these damaged firms.

“Accordingly, I believe the Senate should start with a comprehensive, strong derivatives reform proposal and defend attempts to weaken it, not the other way around and the legislation produced by the Senate Agriculture Committee includes the strongest safeguards and most robust transparency provisions on our expansive derivatives market.

I urge the Majority Leader to incorporate these provisions into the regulatory reform bill.”

On Friday, Sen. Chris Dodd, chairman of the Senate Banking Committee, “agreed to replace his proposed restrictions on derivatives with those of the Senate Agriculture Committee, chaired by Arkansas Democrat Blanche Lincoln.”

On This Week yesterday, Sen. Bob Corker said he intended to propose an amendment containing a “claw back” provision to the legislation “which would take away the personal earnings for the past five years of the corporate officers of failed institutions that fall under the government’s resolution authority.”

Another possible Republican defector might be the newly-elected senator from Massachusetts, Scott Brown. Will someone who was elected as a sort of “man of the people” want to be painted as a defender of Wall Street? Especially when he faces re-election in 2 years? Maybe not.

Also on the positive side, “President Obama and House Financial Services Chairman Barney Frank have personally urged Dodd not to cut a deal with Republicans…This is a welcome sign that Obama realizes that public opinion is moving in the direction of tougher banking reform, and that he learned from the health debate that bipartisan compromise on key reform issues is a snare and a delusion.”

Sen. Dodd has shown signs of weakening the legislation in order to compromise with Republicans leaders in the Senate, Mitch McConnell and Richard Shelby, who want to use the same tactics Republicans used on health care reform—stall and delay as long as possible. Hopefully, Dodd will be emboldened by support from President Obama and not dilute reform to try and pacify those whose intentions are to maintain the status quo.

Now to the crooks at Goldman. What were they doing as the housing market was collapsing and threatening to take the entire economy with it? Having a party:

“As the U.S. housing market began its epic fall nearly three years ago, top executives at Wall Street powerhouse Goldman Sachs cheered the large financial gains the firm stood to make on certain bets it had placed, according to newly released documents.

The documents show that the firm’s executives were celebrating earlier investments calculated to benefit if housing prices fell, a Senate investigative committee found. In an e-mail sent in the fall of 2007, for example, Goldman executive Donald Mullen predicted a windfall because credit-rating companies had downgraded mortgage-related investments, which caused losses for investors.

“Sounds like we will make some serious money,” Mullen wrote.”

To somewhat defend Goldman, what they were doing, “selling short,” (betting against certain investments) is something that happens on Wall Street every day. But, betting against instruments that they designed to fail, and which were sold to investors as AAA investments allowing Goldman to profit from on both ends, may not be illegal (although it should be) but it certainly shows that the execs at the “great vampire squid” have no interest in what’s best for the country. They have one party’s interests in mind—-their own.

The Most Dangerous Man in the World

20 Tuesday Apr 2010

Posted by in bailout, economy, financial reform, financial regulation, Obama, Politics, too big to fail, Wall Street

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In an April 3 post at Baseline Scenario, Simon Johnson called JPMorgan Chase CEO Jamie Dimon “The Most Dangerous Man in America.” Johnson wrote:

“There are two kinds of bankers to fear.  The first is incompetent and runs a big bank.  This includes such people as Chuck Prince (formerly of Citigroup) and Ken Lewis (Bank of America).  These people run their banks onto the rocks – and end up costing the taxpayer a great deal of money.  But, on the other hand, you can see them coming and, if we ever get the politics of bank regulation straightened out again, work hard to contain the problems they present.

The second type of banker is much more dangerous.  This person understands how to control risk within a massive organization, manage political relationships across the political spectrum, and generate the right kind of public relations.  When all is said and done, this banker runs a big bank and – here’s the danger – makes it even bigger.

Jamie Dimon is by far the most dangerous American banker of this or any other recent generation.”

Following an interview with German newspaper Welt am Sonntag on Sunday, that should be amended to read “the most dangerous man in the world” as Dimon issued this not-so-veiled threat on the possibility of stricter bank regulations:

“When profits fall too sharply then capital will move somewhere else, where there is more money to be earned, for example non-regulated markets. The question is, is that what regulators want?”

Blackmail, anyone?

“[Dimon] also said the banking industry could do with more influence on politicians.”

More influence? According to the White House log, since October 30, 2009 Mr. Dimon has made 8, count ‘em 8, visits. What do you want to do, Jamie? Move in?

The Rule of Law Loses Another Round With Johnsen Withdrawal

13 Tuesday Apr 2010

Posted by in George W. Bush, Justice Department, Obama, Politics, terrorism, torture, war on terror

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In what has become SOP for this administration, President Obama has once again capitulated under the slightest pushback from the GOP obstructionists, although without too much of a struggle I might add. After leaving his nominee to head the OLC, Dawn Johnsen to “twist in the wind for more than a year,” Ms. Johnsen withdrew her nomination.

“The struggle between President Obama and Republicans on Capitol Hill has claimed a fresh victim — Dawn Johnsen. She was Mr. Obama’s choice to lead the Office of Legal Counsel at the Justice Department. Ms. Johnsen withdrew her nomination after more than a year. It was clear that the White House was not going to fight to save her from Republicans who were refusing to allow a vote on her confirmation.

Ms. Johnsen’s problem was not that she lacked strong qualifications to be the legal adviser to the executive branch, informing the White House about what the law requires and what it prohibits.”

Ms. Johnsen’s “problem” was that she is a staunch advocate for the limitation of executive power and an opponent of the president’s “look forward, not back” policy in relation to dealing with abuses of power by the previous administration. In a March, 2008 piece in Slate she wrote:

“The question how we restore our nation’s honor takes on new urgency and promise as we approach the end of this administration. We must resist Bush administration efforts to hide evidence of its wrongdoing through demands for retroactive immunity, assertions of state privilege, and implausible claims that openness will empower terrorists.”

[…]

“Here is a partial answer to my own question of how should we behave, directed especially to the next president and members of his or her administration but also to all of use who will be relieved by the change: We must avoid any temptation simply to move on. We must instead be honest with ourselves and the world as we condemn our nation’s past transgressions and reject Bush’s corruption of our American ideals. Our constitutional democracy cannot survive with a government shrouded in secrecy, nor can our nation’s honor be restored without full disclosure.”

Glenn Greenwald at Salon writes:

“What Johnsen insists must not be done reads like a manual of what Barack Obama ended up doing and continues to do — from supporting retroactive immunity to terminate FISA litigations to endless assertions of “state secrecy” in order to block courts from adjudicating Bush crimes to suppressing torture photos on the ground that “opennees will empower terrorists” to the overarching Obama dictate that we “simply move on.”

Could she have described any more perfectly what Obama would end up doing when she wrote, in March, 2008, what the next President “must not do”?

A rhetorical question, I presume. The answer is painfully obvious.

Channeling TR

03 Saturday Apr 2010

Posted by in bailout, Congress, Financial Crisis, financial reform, financial regulation, Obama, Politics, too big to fail

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Simon Johnson and James Kwak at the Washington Post (emphasis added) :

“In late February 1902, J.P. Morgan, the leading financier of his day, went to the White House to meet with President Theodore Roosevelt and Attorney General Philander Knox. The government had just announced an antitrust suit — the first of its kind — against Morgan’s recently formed railroad monopoly, Northern Securities, and this was a tense moment for the stock market. Morgan argued strongly that his industrial trusts were essential to American prosperity and competitiveness.

The banker wanted a deal. “If we have done anything wrong, send your man to my man and they can fix it up,” he offered. But the president was blunt: “That can’t be done.” And Knox succinctly summarized Roosevelt’s philosophy. “We don’t want to fix it up,” he told Morgan, “we want to stop it.”

[…]

Roosevelt did not launch the antitrust movement by gently tugging on some low-hanging fruit. He took on J.P. Morgan, the central figure in the burgeoning American financial system, and he won…And after many twists and turns, the new consensus regarding acceptable business practices led to the breakup of John D. Rockefeller’s Standard Oil — arguably the most powerful company in U.S. history to that date.

[…]

Will the [Obama] administration stand up and fight now, before we have another crisis? Surely this is what Theodore Roosevelt would have done. He liked to act preemptively; when he saw excessive power, he took it on, creating his own moments of political opportunity.”

President Obama–this is your moment, now is the time. We need another TR.

President Obama to Indonesians: Look Backward, Not Forward

26 Friday Mar 2010

Posted by in Obama, Politics, torture, war on terror

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From the Department of ‘Do As I Say, Not As I Do’ comes this from Glenn Greenwald at Salon:

“President Obama gave an interview earlier this week to an Indonesian television station in lieu of the scheduled trip to that country which was canceled due to the health care vote.  In 2008, Indonesia empowered a national commission to investigate human rights abuses committed by its own government under the U.S.-backed Suharto regime “in an attempt to finally bring the perpetrators to justice,” and Obama was asked in this interview:  “Is your administration satisfied with the resolution of the past human rights abuses in Indonesia?”  He replied:

We have to acknowledge that those past human rights abuses existed.  We can’t go forward without looking backwards . . . .

Did I miss something or isn’t that the polar opposite of Obama’s policy toward officials in the Bush administration accused of human rights violations by way of “enhanced interrogation techniques” (aka torture) in pursuit of the “war on terror?”

Greenwald:

“Why, as Obama sermonized, must Indonesians first look backward before being able to move forward, whereas exactly the opposite is true of Americans?  If a leader is going to demand that other countries adhere to the very “principles” which he insists on violating himself, it’s probably best not to use antithetical clichés when issuing decrees, for the sake of appearances if nothing else.

[…]

Nothing enables the glorification of crimes, and nothing ensures their future re-occurrence, more than shielding the criminals from all accountability.  It’s nice that Barack Obama is willing to dispense that lecture to other countries, but it’s not so nice that he does exactly the opposite in his own.”

White House Set to “Overrule” Justice Department on Civilian Trials for Gitmo Detainees

25 Thursday Mar 2010

Posted by in George W. Bush, Justice Department, Obama, Politics, terrorism, war on terror

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One “change” I had hoped to see on January 20, 2009 was the end of the politicization of the Justice Department. Judging from this report at Newsweek by Michael Isikoff that isn’t going to be the case, as the Obama administration is set to “overrule” and “overturn” the decision of Attorney General Eric Holder to try detainees at Guantanamo Bay in civilian courts rather than military tribunals. The reason being political pressure from New York City mayor Bloomberg and Republicans in Congress:

“The White House may yet be several weeks away from announcing whether it plans to overrule Attorney General Eric Holder and order that the 9/11 conspirators be tried before military commissions rather than in civilian courts. But it’s not hard to figure out which way the wind is blowing.

…The embrace of military tribunals follows months of controversy over Holder’s decision to try Khalid Sheikh Mohammed and other 9/11 conspirators in federal court in New York–a move that generated opposition from New York political figures such as Mayor Michael Bloomberg, and Republicans in Congress. Administration officials have acknowledged it was looking increasingly likely that Congress would block any funding for civilian trials of the 9/11 conspirators.”

…”All the indications we’ve been given are to get ready for a lot of activity in Guanantamo,” said a military prosecutor, who asked not to be identified talking about upcoming cases. “It’s full steam ahead.”

…the big decision everyone is waiting for is whether President Obama, as is increasingly expected inside the Beltway, will overturn Holder’s decision and return Khalid Sheikh Mohammed and four other 9/11 co-conspirators to the military commissions.

Remember the days of an independent Department of Justice? When who was prosecuted and how was done at the discretion of the Attorney General? When an Attorney General would resign rather than succumb to political pressure from the White House?

Those days are apparently gone. No matter who occupies the Oval Office.

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

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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.

Waterboarding Just “A Dunk in the Water?” New Documents Say Otherwise

10 Wednesday Mar 2010

Posted by in Dick Cheney, Obama, Politics, terrorism, torture, war on terror

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See if this sounds like what the Marquis de Cheney referred to as “ a dunk in the water,” and a “well done” technique that if he “had it to do all over again,..would do exactly the same thing.” Judge for yourself if those whose memos authorized and legitimized the following methods are guilty of nothing more than using “poor judgment.” I have a question for President Obama as well. Still think we need to “look forward, not back?” From Mark Benjamin at Salon:

…[R]ecently released internal documents reveal the controversial “enhanced interrogation” practice was far more brutal on detainees than Cheney’s description sounds, and was administered with meticulous cruelty.

…The documents also lay out, in chilling detail, exactly what should occur in each two-hour waterboarding “session.” Interrogators were instructed to start pouring water right after a detainee exhaled, to ensure he inhaled water, not air, in his next breath. They could use their hands to “dam the runoff” and prevent water from spilling out of a detainee’s mouth.

They were allowed six separate 40-second “applications” of liquid in each two-hour session – and could dump water over a detainee’s nose and mouth for a total of 12 minutes a day. Finally, to keep detainees alive even if they inhaled their own vomit during a session – a not-uncommon side effect of waterboarding – the prisoners were kept on a liquid diet. The agency recommended Ensure Plus.”

And for those defenders of waterboarding who say it can’t be torture because our soldiers go through it in SERE training:

“…the documents show that the agency’s methods went far beyond anything ever done to a soldier during training. U.S. soldiers, for example, were generally waterboarded with a cloth over their face one time, never more than twice, for about 20 seconds, the CIA admits in its own documents.

“The difference was in the manner in which the detainee’s breathing was obstructed,” the document notes. In soldier training, “The interrogator applies a small amount of water to the cloth (on a soldier’s face) in a controlled manner,” DOJ wrote. “By contrast, the agency interrogator … continuously applied large volumes of water to a cloth that covered the detainee’s mouth and nose.”

These memos show the CIA went much further than that with terror suspects, using huge and dangerous quantities of liquid over long periods of time. The CIA’s waterboarding was “different” from training for elite soldiers, according to the Justice Department document released last month.

But, the defenders also say, no matter the tactics, waterboarding worked.  It provided intelligence which “kept us safe” from future attacks, right? Wrong.

“When torture supporters would tout the value of the information Abu Zubaydah provided, they somehow failed to mention that the actionable intelligence he provided was admitted prior to his waterboarding.  After President Bush bragged about the information obtained by torturing Abu Zubaydah, the Washington Post, after reviewing case files, concluded that absolutely no credible intelligence came from Zubaydah’s interrogations that utilized torture.”

But despite all the gruesome and sadistic details contained in the documents, this is perhaps the most disturbing:

“NOTE: In order to best inform future medical judgments and recommendations, it is important that every application of the waterboard be thoroughly documented: how long each application (and the entire procedure) lasted, how much water was used in the process (realizing that much splashes off), how exactly the water was applied, if a seal was achieved, if the naso- or oropharynx was filled, what sort of volume was expelled, how long was the break between applications, and how the subject looked between each treatment.”

Paging Dr. Mengele, Dr. Josef Mengele.

Treasury Department “Vigorously Opposed” To Fed Audit

09 Tuesday Mar 2010

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

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What is this man hiding?

“The Treasury Department is vigorously opposed to a House-passed measure that would open the Federal Reserve to an audit by the Government Accountability Office (GAO), a senior Treasury official said Monday.”

And how’s this for openness, transparency, and accountability?

“Secretary Tim Geithner, Assistant Treasury Secretary Alan Krueger and Gene Sperling, a counselor to the secretary, held a briefing Monday with new media reporters and financial bloggers during which they discussed the Fed audit and other topics. Under the briefing’s ground rules, the officials could be paraphrased but not quoted, and the paraphrase could not be connected to a specific official.”

Alan Grayson isn’t buying it:

“Rep. Grayson said he finds Treasury’s opposition to the audit troubling. “There is a growing feeling on the part of real Democrats that the president is getting bad advice from people who have sold out to Wall Street,” said Grayson.”

I’ll go one step further. The president is among those who have sold out to Wall Street, in my opinion.

Washington Still Fiddling

09 Tuesday Mar 2010

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

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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.