Wall Street, Romney, And Obama

By Mike Lux, cross-posted from Crooks and Liars

The most critical battle in this election year is the battle over Wall Street. Candidates all over the place, from the high profile candidates like Elizabeth Warren to a slew of others all over the country, are battling over who is on Wall Street’s side, who wants to keep bailing them out, and who is pushing them to go to jail. But nowhere is this battle being played out more prominently than in the race for the White House.

The Obama campaign is doing a major push in the coming weeks on Mitt Romney’s sordid history at the helm of Bain Capital. His fellow Republicans called it vulture capitalism, and they were right. Mitt bought companies (many of them doing just fine at the time he bought them), loaded them up with massive amounts of debt that Bain could write off on their taxes, in many cases destroyed and outsourced jobs and cut pay and benefits, and then frequently carved them up and sold off the pieces to maximize short-term profits. A few of these companies ended up surviving this brutal process and becoming more profitable, and we will hear a lot from Mitt about those examples. But way too many times, Mitt and Bain left these companies, and especially their workers, far worse for the wear, leaving behind a lot of shattered lives in the process, while Mitt and his fun-loving pals stuffed money in their pockets and walked away. High School wasn’t the only place Mitt brutalized those weaker than him, and he enjoyed doing it.

Bain Capital was Wall Street at its worst. But the cutthroat, anything-goes-in-the-pursuit-of-one-more-dollar culture at Bain has infected our entire banking system. The Obama campaign is right to attack on Bain and on the culture of Wall Street; it is in my view their single most powerful attack line. However, that attack will be undercut unless they buttress their own credibility on taking on Wall Street. Republicans aren’t going to hesitate coming after Obama hard on his ties to Wall Street (ironically with a lot of Wall Street money) in order to weaken the campaign’s credibility when they attack Bain, and we are seeing signs of that right now.

Look at how the issue has played out in recent days. Over the course of the last week, we have seen Jamie Dimon twisting himself into a pretzel trying to explain why his bank’s dangerous and irresponsible trades don’t merit any regulation, stories on how the Obama campaign is being hurt by not being tougher on Wall Street, like this one from Politico, a major new ad campaign by a Republican group attacking Obama for his ties to Wall Street, and new polling paid for by an anti-Wall Street coalition showing Obama’s numbers on housing/banking issues in swing states being pretty bad. These issues are clearly going to be huge in this campaign, and the Republicans will do everything in their power to exploit any Obama weakness in this area.

The Obama team, in the White House and in the campaign, in order to win on the Bain attack, needs to face—and turn around —the perception that the administration has been weak on Wall Street. They need to be willing to shed past caution and take Wall Street titans head on.

One of the toughest problems they have to work through is that the most visible vehicle for action on holding Wall Street accountable is the financial fraud task force announced with great fanfare at the State of the Union. This task force raised hopes that an aggressive investigation was forthcoming, that perhaps some of the big bankers who intentionally pumped up the housing market and then dumped the securities, would be brought to justice. But the best case scenario (and that is only if things really start moving) is that indictments won’t start rolling out until September, and that is a very long time to wait given the narrative being written as we speak on the Wall Street issue. And even in terms of that best case scenario, unfortunately questions continue to be raised by sources I am talking to about whether the DOJ is slow-walking this investigation, whether enough resources are being given to the task force, and whether key staff at the White House are paying enough attention. Those questions ultimately won’t be answered until the task force starts to produce something tangible, and if we have to wait until the fall, these questions are going to keep building.

The administration should act right now to give the DOJ much more in the way of staff resources to the task force, and the President and White House senior staff need to send signals that they care about what is going on and that this is a high priority for them. If, for example, the DOJ is slow-walking, the White House needs to lean hard on the DOJ to make sure they aren’t. It seems like politics 101 to me to make sure the task force has the person-power to be successful in its work, but they are failing the test.

Given that (even with extra resources, by the way) the task force isn’t going to be moving fast enough for any of us who care about the political calendar, the entire Obama administration needs to show every day that they are willing to take on the big banks on behalf of homeowners, students, credit card consumers, and everyone else who is getting taken advantage of every day by bankers. Their reaction to the JP Morgan news, for example, has been far too low key. They should be banging away on Dimon and the other speculative bankers every single day, using this news to drive and build a narrative about reckless bankers rather than being restrained in their messaging about it. When a retiring bank CEO mentions in passing that the repeal of Glass-Steagall had something to do with the banking collapse, they should have used that as part of their narrative, too. Same when a trader at Goldman Sachs quits because the ethics at the firm have gone so far south. In every case, these were tailor-made opportunities for the White House and campaign to jump in with both feet and build that narrative about how this is why we need a President willing to take on bankers rather one who was the worst kind of one at Bain Capital.

Speaking of message restraint, though, there is some major restraint they do need to employ, and that is on their lame duck Treasury Secretary. In recent weeks, Geithner has stabbed the task force in the back by downplaying banker fraud, has rejected the idea that the repeal of Glass-Steagall was a problem in the 2008 collapse, and has similarly dismissed credit default swaps as a big problem. He seems more like a spokesperson for Wall Street than a member of the Obama administration. He needs to be shut up or eased out before he destroys any chance of the President getting re-elected.

Team Obama is on the knife’s edge right now. The economy is still too slow, with too many bridges out along the way, to build up much if any speed as we head down the home stretch to the election. Even if it does pick up a little bit, voters are still in a very bad mood because things have been so slow for so long. Focusing voters’ ire on the people who set off this crisis, the Wall Street pump-and-dump gang, is our best shot at winning this election, most especially with one of their ultimate homies, Mitt Romney, as the Republican candidate. But for that to work, the White House and campaign need to be focused like a laser beam at telling the story of how Wall Street greed brought us down, and how putting Wall Street’s guy in the White House would be the ultimate mistake—and they need to have their own credibility in terms of holding Wall Street accountable built up considerably. Getting resources to the fraud task force and making sure everyone at the DOJ knows it is a priority is a huge deal in that regard. Bottom line: Team Obama needs to be focused on the Wall Street credibility dynamic every single day.

Bain Capital shows that Mitt Romney’s high school career was no fluke: He has proven himself to be the ultimate pick-on-the-weak bully. His Wall Street values are definitional about the kind of man he has always been. Obama needs to show that his values are the opposite by being tough on Wall Street, while Romney is shown to be the personification of it.

You Really Want To Have A Culture War?

DonkeyHotey

What is going on with the Republican Party?  Sure, the House is filled with Tea Party extremists, the base has supported (and continues to support) some pretty wacky presidential hopefuls, and its leaders are far more concerned with toppling Obama than governing.  But they used to be more politically astute in their choice of wedge issues.  Now it seems they've completely lost their moorings with their aggressive and quite unpopular assault on contraceptive coverage.

As I wrote about earlier (see Occupy the Bedroom), Republicans are pushing for an amendment to the Affordable Care Act that would allow employers to deny coverage not just for contraception but for any treatment or any condition they claimed was contrary to their religious beliefs.

They are enthusiastically, if transparently, framing their attack on women's health, the right to privacy and health care reform as an issue of religious freedom.  Hence, the hearing today before a House Committee on the following question:  “Has the Obama Administration Trampled on Freedom of Religion and Freedom of Conscience?”   The hearing, consisting of a panel of eight men, is skewed so that only those who agree with the Republican position will be heard from. But are they really fooling anyone?

It is one thing for the far right to be agitating for this kind of culture war, but purportedly moderate Republicans are being drawn in too.  Maybe, there just aren't any more moderates in the Republican Party.

As this piece in the New York Times suggests, it is all about firing up the base, which has been somewhat lackluster in the wake of their uninspiring presidential candidates, and once again going after Obamacare:

Major evangelical groups that openly opposed Mr. Obama and his health care plan in the past see this as a new affront and a new opportunity for attack.
The National Association of Evangelicals, which represents thousands of churches in 40 denominations, “will be working vigorously” against the mandate, said Galen Carey, the association’s vice president for government relations — lending substance to the statement last week by Mike Huckabee, the former Arkansas governor and a Baptist minister, that “we are all Catholics now.”
Evangelical leaders say they would be outraged by the mandate in any case, but many also believe that it will bring them political gains. [Ralph] Reed, the conservative strategist, said that even if a majority of Americans expressed general support for requiring contraceptive coverage — and even if, as he believes, the economy remained the primary issue — getting conservative and religious voters more fired up could make a difference.

Democrats, as always, should follow Elizabeth Warren's lead and take on the Republicans.  She unapologetically attacked her Senate opponent, Scott Brown, for supporting the proposed amendment which she framed as "an extreme attack on every one of us”:

It opens the door to outright discrimination. It would let insurance companies and corporations cut off pregnant women, overweight guys, older Americans, or anyone — because some executive claims it’s part of his moral code. Maybe that wouldn’t happen, but I don’t want to take the chance.

Warren, quite correctly, argues that this issue must be viewed through the prism of economics:

This election is about whose side you stand on.  Here’s an example of giving power to insurance companies and corporations to undercut basic health care coverage. I’m going to fight for families to keep that coverage. The economics around health care are huge for families.

It has long been conventional wisdom that the culture wars help Republicans and drive a wedge between so-called Independents and Democratic "elites."  If the Democrats fight back, it won't work this time.

The Forgotten Leading Actor In The American Dream Story: Labor Unions

By Robert L. Borosage, cross-posted from Campaign for America's Future

When Newt Gingrich maligned our "truly stupid" child labor laws and suggested that children 14 and under be put to work cleaning their schools, he sparked the outrage the former House speaker relishes. Less attention was paid to the other casualty of his proposition: "get rid of the unionized janitors."

This is the slur turned to high art: a little race bait posturing at "poor kids" who, Gingrich tells us, don't work like middle class kids do, and a shot at "unionized janitors"—almost by definition overpaid and lazy, whose work could be done by a grade-schooler.

Newt's blistering of child labor protections expresses his own perversity, but his scorn for union workers is a conservative staple. It's been a basic theme for the right since President Reagan broke the PATCO strike in 1981, and declared open season on unions for corporate employers.

That assault has been stunningly successful. Globalization gave manufacturers a large club in negotiations—concessions or jobs get shipped abroad. And often the reality was concessions AND jobs got shipped abroad. Corporations perfected techniques, often against the law, to crush organizing drives, and stymie new contracts for the few that succeeded. The National Labor Relations Board, stacked with corporate lobbyists under Republican presidents, turned a blind eye to systematic violations of the law.

So now union workers are down to about 7 percent of the private workforce. Virtually the only growing unions are public employees— teachers, nurses, cops. Not surprisingly, conservative Republican governors, led by Wisconsin's Scott Walker and Ohio's John Kasich, used the budget squeeze caused by the Great Recession to go after these unions, combining layoffs with efforts to eviscerate the right of public employees to organize and negotiate.

But if unions remain a prime target of corporate and conservative assaults, they are often slighted in progressive and Democratic narratives.

Elizabeth Warren's story

Last week, I had the pleasure of listening to Elizabeth Warren deliver a version of the stump speech she is using in the Massachusetts Senate race. She was sensational—clear, compelling, human, funny. She knitted her own journey as the daughter of a hard-scrabble working family who worked her way up to her passion for defending consumers from the financial flimflam and frauds of Wall Street. She faces a tough race in Massachusetts against the incumbent, but she is the real deal. She will lead any progressive surge in 2012 and deserves everyone's support.

In her speech, Warren described how America built the broad middle class, and made the American dream real for millions, after World War II. We educated a generation through the GI bill, subsidized research and development, made college affordable. We invested in basic infrastructure, exemplified by the interstate highway system launched under Republican President Dwight Eisenhower. We shackled finance, with regulations that, in her words, "made banking boring." The gamblers and speculators in investment houses were not allowed to combine with banks carrying federally guaranteed consumer accounts. Progressive taxes featured a top rate of 90 percent.

During this time, the economy grew and we all grew together. The rich got richer, but so did the middle and working class. In fact, incomes on the bottom grew faster than those on the top, building the broad middle class that was at the heart of what made America exceptional.

Warren then described how this system was dismantled, with the election of Ronald Reagan providing a good marker. Wall Street was deregulated—and we suffered one banking crisis after another. Investments in infrastructure were starved. Colleges were gradually privatized, with more and more of the costs placed on students. Taxes were lowered on the top end, and America moved back to the extreme inequality that we had not witnessed since 1929.

She tells the story better than I do—but one striking actor in this play was missing: American trade unions. We emerged from World War II with unions headed towards representing about 30% of the workforce. Fierce struggles with companies were needed to ensure that workers got a fair share of the rewards of their work. Unions were strong enough that non-union employers had to compete for good workers by offering comparable wages. Unions enforced the 40-hour week, overtime pay, paid vacations, health care and pensions, and family wages. Strong unions limited excesses in corporate boardrooms, a countervailing power beyond the letter of the contract. As profits and productivity rose, wages rose as well.

When unions were weakened and reduced, all that changed. Productivity and profits continued to rise, but wages did not. The ratio of CEO pay to the average worker pay went from 40 to 1 to more than 350 to 1. CEOs were given multimillion-dollar pay incentives to cook their books and merge and purge their companies. Unions were not strong enough to police the excess. America let multinationals define its trade and manufacturing strategy, hemorrhaging good jobs to mercantilist nations like China.

The result was the wealthiest few captured literally all the rewards of growth. And 90% of America struggled to stay afloat with stagnant wages, rising prices and growing debt.

Unions were not the only factor in the rise of the middle class or in its decline. But they surely were central to the story of how the middle class was built and where America went wrong.

Similarly, President Obama's fine speech at Osawatomie, Kansas, detailed the dangers of extreme inequality, and how it saps both our economy and suborns our democracy. He boldly challenged the conservative ideas and ideology that helped to create that inequality. He talked about how we faced the same challenge in the Gilded Age at the dawn of the 20th Century, and how Teddy Roosevelt, a Republican, challenged the great trusts, calling for busting up monopolies, protecting child labor, policing unsafe food and medicine. "We're a richer nation and stronger democracy because of what he fought for in his last campaign: an eight hour day and a minimum wage for women, insurance for the unemployed and for the elderly, and those with disabilities, political reform and a progressive income tax."

Terrific -- but missing from the story was the worker organizing, the unions that helped wage often brutal campaigns to help make these ideas a reality.

Vital To Democracy

The omissions aren't surprising, I suppose. Unions are under siege. Their numbers are down. Economically, fewer and fewer working people look to unions as a way out of their struggles. Politically, Democratic analysts suggest that the emerging majority that is the core of the Obama majority can win without the white working class. In our big-money politics, union contributions are far less important. Democratic presidents and Congresses under Clinton and Obama notoriously failed to pass or press even modest labor law reforms that could curb some of the most egregious employer abuses against the right to organize.

But it is worth remembering just how vital unions are to democracy. America supports independent free trade unions across the globe. It helped to create the International Labor Organization to put unions, companies and governments at the table to negotiate the terms for decent work. The Universal Declaration of Human Rights, championed by Eleanor Roosevelt and adopted in 1948, incorporated much of the Economic Bill of Rights that Franklin Roosevelt had promised would emerge from the sacrifices of the Great Depression and the Great War. Article 23 of that Declaration establishes the following as basic human rights:

• (1) Everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment.
• (2) Everyone, without any discrimination, has the right to equal pay for equal work.
• (3) Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
• (4) Everyone has the right to form and to join trade unions for the protection of his interests.

Independent trade unions were acknowledged then —and in U.S. foreign policy now—as vital to any robust democracy. Unions give workers practice in exercising their democratic rights. They elect their own leaders; they voice their concerns; they must learn to compromise and prioritize. They are true laboratories of democracy. They provide a democratic forum, and the organizing skills vital to challenging democracy's opponents.

Unions are also essential to building a free- market economy with shared prosperity. Unions help ensure that the rewards of rising productivity are widely shared. They help curb greed and lawlessness in executive suites. They help sustain legitimate order in the workplace, giving workers a way to express grievances and adjudicate wrongs. Their workplace success is vital to insuring that workers earn enough to generate consumer demand vital to economic growth.

In our current economic distress unions should be more important than ever. The net jobs being created in America are almost entirely in the non-tradable sectors of the society—retail services, public employees, health care, education etc. These tend to feature low-wage jobs, from the shop clerk to the hotel maid. But there is no intrinsic reason they are low-paid. With strong unions, hotel maids in New York City make a middle-class wage, with health care benefits. At least a part of countering the increasing income disparity in America is to empower workers to organize once more.
And, as any veteran of social movements knows, no major social reforms succeed in Washington without strong union support and mobilization. If we are once more going to succeed in making banking boring; raising taxes on the rich; and investing in areas vital to our future, building a new foundation for growth, the resistance of entrenched corporate lobbies will be overcome only with popular mobilization, to which unions will be essential.

And now, as the president stated, that defining moment is on us. The spark was lit in Madison, Wisconsin, when students and farmers joined public workers demonstrating to protect their basic right to organize and bargain collectively. Occupy Wall Street turned that into a conflagration. As this fight intensifies, labor unions and the workers that they represent—reduced in membership, short of funds, savaged by their enemies and too often ignored by their friends—will by what they do or what they fail to do make a fundamental difference in what kind of society we build out of the ruins.

Cordray, It's Not You, It's Them -- Republicans Don't Want To Protect Consumers From Wall Street

By Terrance Heath, cross-posted from Campaign for America's Future

It seems ages ago (Doesn't it?) that progressives were pushing hard to get Elizabeth Warren appointed to head her brainchild, the Consumer Financial Protection Bureau. We know how that worked out. Despite our best efforts, Warren didn't get the appointment and moved on to become Senate candidate Warren, challenging Scott Walker for his Senate seat.

When it became clear that Senate Republicans would block Warren's appointment, no matter what she or anyone else said or did, President Obama appointed Richard Cordray. The response from progressives was mixed. Many of us were, understandably disappointed that Warren didn't get the appointment. Some viewed it as a betrayal. Some viewed it as a chance to for the CFPB to fulfill its vitally important mission.

Well, now Senate Republicans are blocking Cordray's appointment. But unlike Warren's appointment, this time its not about Cordray.

If this week’s rhetoric is any indication, Senate Republicans will block Cordray’s nomination — not because of his qualifications, but because they are trying to force structural changes to the bureau, changes they’ve called for the White House to make since the proposal for the bureau.
Republicans have been consistently concerned with the bureau’s “lack of transparency or accountability,” and will continue to make a lot of hay about the fact that Thursday’s cloture vote will come before they feel they have had their concerns adequately addressed by the White House.
Seven months ago 45 Republicans signed a letter to President Obama outlining their concerns.
...Republicans say they want the potential director replaced with a board of directors that would oversee the bureau, because they don’t believe a single person should have so much power. Additionally they say the bureau should be subject to the congressional appropriations process, because without that, they say, the bureau has a “funding stream” without oversight from the American people.

At this point, even Scott Brown — Warren's opponent for Massachusetts' senate seat — has endorsed Codray. This is Wall Street's favorite Senator we're talking about.

It's not about Cordray, this time. Republicans have said that their opposition to Corday's appointment is "nothing personal." It's not about Codray, it's about the agency he's appointed to lead. It's about the CFPB's mission.

The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.
The consumer bureau is working to:
Educate
An informed consumer is the first line of defense against abusive practices.
Enforce
Like a neighborhood cop on the beat, the CFPB supervises banks, credit unions, and other financial companies, and we will enforce Federal consumer financial laws.
Study
The consumer bureau gathers and analyzes available information to better understand consumers, financial services providers, and consumer financial markets.
Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families—that prices are clear up front, that risks are visible, and that nothing is buried in fine print. In a market that works, consumers should be able to make direct comparisons among products and no provider should be able to build, or feel pressure to build, a business model around unfair, deceptive, or abusive practices.

It's about Republicans wanting to remake CFPB, in the own image and to Wall Street's liking, so as to stop the agency from fulfilling its mission. Republicans don't want the CFPB mainly because Wall Street doesn't want the CFPB to get to work (thus Republicans on the Senate Banking Committee received at least $31 million from the financial sector), and their willing to engage in more exertion politics to stop the CFPB from fulfilling its mission.

It’s all part of the normalization of extortion politics. Traditionally, if the GOP wanted to alter the powers of the CFPB, it would write legislation, send it to committee, bring it to the floor, send it to the other chamber, etc. But that takes time and effort, and might not work. Instead, we see the latest in a series of GOP extortion strategies: Republicans will force Democrats to accept changes to the agency, or Republicans won’t allow the agency to meet its legal mandate.
Our system of government has never worked this way; it wasn’t designed to work this way; and it can’t work this way. As Jonathan Cohn recently explained, “The consumer protection agency exists because a majority of democratically elected lawmakers passed a law and a democratically elected president signed it. Now a minority of Senators representing a minority of the country are exploiting procedural rules (i.e., using the filibuster) to prevent that law from taking effect. That’s undemocratic. And I mean that with a small ‘d.’”

It Republicans are successful in blocking Cordray and thus preventing the part of the Dodd-Frank bill that created the Consumer Financial Protection Bureau from taking effect, the impact will be that Wall Street will have as loud a voice in Washington as ever, while consumers will have almost none.

If you look at Wall Street profits, it’s hard to believe that just three years ago, these banks were on the verge of collapse — threatening to take our entire economy down with them. Now, banking industry profits have returned to pre-crisis levels — with more than $35 billion in the third quarter, a nearly 50 percent increase over the past year and the highest level for profits since 2007.
While Wall Street is back to business as usual, Main Street Americans — many of whom lost their homes, their pensions and their jobs because of reckless Wall Street practices — haven’t been so lucky.
For too long, Wall Street bankers have wielded too much influence in Washington, using scores of lobbyists to protect extra tax giveaways to hedge fund managers and to fight efforts to ensure that “too big to fail” megabanks do not threaten to take down our economy. Consumers haven’t had as loud or as powerful a voice representing them. Until now.
Last year’s Wall Street reform law created the Consumer Financial Protection Bureau to help clean up a financial system rigged in favor of Wall Street and against middle-class workers. This is an independent agency, with a single director, designed to help prevent another meltdown by cracking down on financial tricks and traps designed to deceive consumers.

One of the main reasons that "Main Street Americans" have lost homes, pensions, and jobs is because of Wall Street practices. Homeowners in particular were left on their own to deal with financial instruments so abstruse that even the brightest minds on Wall Street couldn't adequately explain them. It's no surprise, then, that a majority of American are in favor of an agency like the CFPB.

The agency, first conceived of by Harvard law professor Elizabeth Warren, was created under last summer's financial reform with the aim of protecting consumers from abuses by financial institutions. Republicans, however, have promised to block any nominee to run the CFPB until its powers are scaled back.
The sentiments of Republicans, however, appear to stand in opposition to the sentiments of the American people, according to a new poll by Lake Research Partners.
The poll, sponsored by the AARP, Americans for Financial Reform and the Center for Responsible Lending, found that as many as 63 percent of Americans favor more, not less, government oversight of financial companies. Only a small minority of those polled, 25 percent, want the opposite.
Of those polled, 74 percent favored having a single agency focus on protecting consumers from financial organizations. And it's not split down partisan lines, either. Indeed, 68 percent of Republicans feel the same.

Despite engaging in everything from filing fraudulent documents to push through mortgages, to failing to check borrowers' financial status, misleading investors and giving high ratings to investments made on risky mortgages, nothing has happened to the major players and worst actors in the financial crisis.

No investigations, because it's easier for politicians to "let their financial-industry campaign contributors off the hook." No prosecutions. because it's just "too hard." Just plenty of free money.
The culture vote on Cordray's appointment as director of the CFPB isn't about Cordray. It's one of the key economic battles facing Congress during what remains of this session. It's about having someone in Washington to demand accountability from Wall Street, on behalf of the other 99 percent of us, instead of letting Wall Street off the hook, again.

Warren Shows Her Occupy Wall Street Cred

With so many timid Democrats unsure of how to discuss the Occupy Movement, Elizabeth Warren shows them how it's done.

Warren initially drew fire from Republicans after stating she not only supports the movement, but that she, in fact, "created much of the intellectual foundation for what they do.”

And when attacked by the GOP for these remarks, did she walk them back or say she was only joking?  Hardly.  At most, she clarified that she did not mean to imply that she created the movement itself, which she recognized as an organic -- and perfectly appropriate -- grassroots response to the unaccountability and recklessness of Wall Street.

A spokesperson for the campaign followed up with this statement:

Elizabeth was making the point that she has been protesting Wall Street’s practices and policies for years – and working to change them.  Wall Street’s tricks brought our economy to the edge of collapse, and there hasn’t been any real accountability. She understands why people are so angry and why they are taking their fight to the street. She has said repeatedly everyone has to abide by the law. Elizabeth is working for change in a different way, to take this fight to the United States Senate.

Elizabeth, herself, remains unequivocal: 

I've been protesting Wall Street for a very long time. And that I understand the frustration, I share their frustration, with what's going, that right now Washington is wired to work well for those on Wall Street who can hire lobbyists and lawyers and it doesn't work very well for the rest of us. That's what I'm talking about, that's why I'm running for office . . . Occupy Wall Street is an organic movement, it expresses enormous frustration and gives a great faith all across the country for people to talk about what's broken. So I am glad that that conversation is going forward and that it's going forward in an organic way.

Listen and learn fellow Democrats.

We Need Both: Angry Protesters and Progressive Candidates

I have previously argued that we must elect more progressives to Congress, people like Elizabeth Warren and Norman Solomon.  Of course, as David Atkins argues, this is a necessary but not sufficient condition "for creating real change in this country."

In order for change to take place, good Democrats do need to be in power. But only an angry and motivated populace angry with both Parties and strongly intent on holding Democrats accountable will scare and motivate Democrats enough to do what they were elected to do.

Occupy Wall Street seems to have galvanized that anger.  Protests are catching on all over the country.  Not surprisingly, attention is paid to some of the outliers (like the guy who wants Andrew Jackson removed from the $20 bill) and the burgeoning movement has been criticized for failing to articulate concrete goals.

But as Betsy Reed wrote in The Nation:

[S]ometimes, you also need a spark. “Occupy Wall Street,” as an idea and an action, is a stroke of brilliance. It’s not poll-tested or focus-grouped, but it expresses perfectly the outrage that is the appropriate response to the maddening political situation we find ourselves in today. It succeeds as symbolic politics: taking back the square is just what we need to do.

And when protesters do provide a clear and coherent message, like Jesse LaGreca does below, it ends up on the cutting room floor because it doesn't fit the media narrative (especially the Fox News narrative).



Chris Bowers has started a resource page for information about Occupy solidarity events around the country.   And Act Blue (click the badge on the right side of this blog) is the place to go to support progressive candidates for Congress.

We Need More Elizabeth Warrens

I hear all this, you know, “Well, this is class warfare, this is whatever.” No! There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.  -- Elizabeth Warren

Elizabeth Warren is a national treasure.  As a brilliant Harvard law professor, she argued for a new agency to protect consumers before the financial crisis hit.  She chaired the Congressional Oversight Panel tasked with investigating the bank bailout, where she took on the financial giants as well as the government.  After she essentially created the Consumer Financial Protection Bureau, President Obama failed to nominate her to run the agency because she was perceived as too much of a lightening rod (and was opposed by Treasury Secretary Tim Geithner, who feared her aggressiveness in pushing for financial reform.)

Elizabeth Warren is running for the Senate in Massachusetts and is ahead of Republican Senator Scott Brown in the latest poll.  As can be seen from the video below, Warren can explain in plain but passionate terms what must be done -- and what must not be done -- to turn the country around.  It is baffling that the skittish leadership in the Democratic Party still hasn't figured out that this is how you talk to voters.

Our only hope for change is to elect Elizabeth Warren and other progressive voices to Congress.  Click here to join or contribute to Elizabeth Warren's campaign.

Elizabeth Warren's Choice: Politics Or Independence

By Richard (RJ) Eskow, originally published at Huffington Post, July 18, 2011.

Elizabeth Warren's well-heeled opponents have behaved... well, like heels. The Washington/Wall Street axis prevented her from becoming the first director of the Consumer Financial Protection Bureau, but they may regret it someday. Washington has lost the best person for the job, but hopefully the country has gained an independent voice for real financial reform.

She clearly was the best choice. As a forceful and articulate advocate for consumers, Warren was best positioned to give it clout and meaning. The CFPB was her brain child, and the country owes her a debt of thanks for shepherding it this far. Her non-appointment is a loss for the public and a win for the banks.

But she can thank her opponents for a newfound freedom to speak candidly. Among her other laudable qualities, she's clearly a good soldier. That's presumably why she hasn't spoken up on topics like the lack of bank prosecutions, or the proposed mortgage settlement that would let banks escape their financial and moral responsibilities yet again. Hopefully she'll use her newly-won independence and her increased visibility to resume her role as an independent voice for reform, and as a critic of unnecessary compromise wherever it appears.

The Anti-Warren Movement

We're told that Professor Warren had opponents inside the Administration and among right-leaning Democrats on the Hill, as well as among the bought-and-paid-for Republicans. Now she's free to become a leading voice for an independent bank reform movement. And that's exactly what's needed. Our financial system remains hopelessly broken and corrupt. As a result, our political process is also broken, too. Wall Street money has been used to water down much-needed reforms, delay their implementation, impede legal investigations, and prevent the additional reforms needed to protect the country -- and the global economy -- from a new class of financial super-predator.

Republicans made it clear that they would never confirm Warren. She scares both the politicians and the bank masters who finance them -- and she should. They made their opposition clear when they used one hearing after another to treat her with extraordinary crudity and hostility -- a mood only lightened by the interjection of economic statements so cartoonish and loony that she showed extraordinary restraint simply by keeping a straight face.

(We showed the video and discussed their behavior on The Young Turks. If you're depressed about this, watch the video. Her facial expressions alone will cheer you up.)

Elizabeth Warren 2.0

Their lynch mob behavior toward one of our generation's leading reformers had one saving grace: It put the Republicans' fawning servitude to Wall Street lobbyists on display for the entire nation to see. But what's next for Warren?

There's a lot of talk that she may run for Scott Brown's Senate seat in 2012, and that seems like a real possibility. But sometimes our best role is chosen for us by events and circumstances. They've already conspired to give Warren the role of public champion against the power and corruption of the big banks. And she's earned it.

It's her life, or course, but one way to weigh every opportunity is by asking if it's the best way to serve that mission. She hasn't asked our advice, but here are a few other things she may want to consider as she designs Elizabeth Warren 2.0.

Bank reform really is -- or should be -- a nonpartisan issue.

Financial reform shouldn't be a partisan issue. Pro-business conservatives should recognize that banks are seizing an unhealthy share of the nation's profits (which has once again reached the 40% range), restricting lending while fattening themselves off low-cost Federal Reserve money, and making it difficult for entrepreneurs and growing companies to earn their fair share of the country's income. Banks are occupying our economy like an invasion force, skimming off the cream and leaving only the dregs for the small and medium-sized businesses that are the lifeblood of a truly free-market economy.

And everyone, Republican or Democrat, is a bank customer. That means that everyone has been frustrated or misled by banks. And lest the politicians forget, the Tea Party movement was born in large part out of frustration and anger at the big banks.

Would Professor Warren have more clout as an independent voice for change? We can't know yet, but that's a possibility worth exploring.

A new "Warren Commission"?

A successful Senate run would give consumers another badly-needed voice in Washington, and the Senate could be a platform for pursuing more investigations into bank fraud and misbehavior. But that will be harder if the Democrats lose their Senate majority.

Sen. Elizabeth Warren could lead hearings into bank behavior. But first she'd have to win, which is by no means a given in this political climate. And then she'd have to get the right committee appointments, persuade her colleagues to support an investigation, etc. etc. (Politics is the art of the "etc. etc.")

She could conduct investigations outside the Senate, too, if the right venue were found. We've already had one "Warren Commission," but we need another. It could be charged with identifying bank corruption -- root, stem, and branch -- and laying out its influence on politics, law enforcement, media, and all aspects of American life.

Who better to lead such a Commission than Elizabeth Warren?

Warren as Democrat

Warren's appointment, or that of her senior deputy Raj Date, wasn't a fight the president wanted to fight. But by appointing Richard Cordray, President Obama selected a strong advocate for consumers. The obstructionist Republicans in the Senate have already indicated that they'll oppose any nominee, no matter how right-wing, unless the bureau is weakened to the point of ineffectiveness.

So any temptation to fault the president for failing to choose Warren should be tempered by the fact that he could have gone much further right. If GOP Senators had rejected a fellow Republican, for example, the White House could have made even more political hay out of their vote than it's likely to do if (as seems probable) Cordray is also rejected. Perhaps Warren the proto-Democrat has already won a concession.

Does that mean the Democratic Party is her natural home? Maybe. But if she runs for a Democratic seat she'll be called upon to pull her punches on some critical financial battles, if only to protect the party's lifeline to corporate contributions. Can she resist that temptation forcefully enough to keep fighting for meaningful change? That's something to consider.

An independent reform movement

We need an independent movement for financial reform. We can't look to politicians to fix Wall Street. Bankers' money is too tempting for any politician or party to resist, especially in this post-Citizens United world. This systemic corruption can only be stopped by an independent citizens' movement that's beholden to no party or individual.

Whatever she chooses to do, Elizabeth Warren will be an asset to that movement. If she passes on the politician's life she'd be ideally suited to galvanizing it. If she runs and wins she'd be a great voice for reform in the Senate. But that would mean staying as independent as possible, which isn't easy for a Senator.
Whatever she does, we hope that Prof. Warren will continue to make independent and imaginative thinking about financial reform a core part of her life's work. If she does, today's loss could be tomorrow's gain.

The Shameful Murder of Dodd Frank

By Robert Reich, originally published at his website, July 20, 2011.

Happy Birthday Dodd Frank,
Happy Birthday to you,
You’ve lost all your muscle,
And your teeth are gone, too.

One full year after the financial reform bill spearheaded through Congress by Christopher Dodd and Barney Frank was signed into law, Wall Street looks and acts much the way it did before. That’s because the Street has effectively neutered the law, which is the best argument I know for applying the nation’s antitrust laws to the biggest banks and limiting their size.

Treasury Secretary Tim Geithner says the financial system is “on more solid ground” than prior to the 2008 crisis, but I don’t know what ground he’s looking at.

Much of Dodd-Frank is still on the drawing boards, courtesy of the Street. The law as written included loopholes big enough to drive bankers’ Lamborghini’s through — which they’re now doing.

What kind of derivatives must be traded on open exchanges? What are the capital requirements for financial companies that insure borrowers against default, such as AIG? How should credit rating agencies be funded? What about the much-vaunted Volcker Rule requiring that banks trade their own money if they’re going to gamble in the stock market – how should their own money be defined? What “stress tests” must the big banks pass to maintain their privileged status with the Fed?

The short answer: whatever it takes to maintain the Street’s profits and perquisites.


The law included a one-year delay, ostensibly to give regulators time to iron out these sorts of details. But the real purpose of the delay, it’s now obvious, was to give the Street time to expand the loopholes and fill the details with pablum — when the public stopped looking.

Since Dodd Frank was enacted a year ago, Wall Street has spent as much – if not more – on lobbyists and political payoffs designed to stop the law’s implementation than it did trying to kill off the law in the first place. The six largest banks spent $29.4 million on lobbying last year, according to firm disclosures — record spending for the group. This year they’re on track to break last year’s record.

According to the Center for Public Integrity, the Street and other financial institutions engaged about 3,000 lobbyists to fight Dodd-Frank – more than five lobbyists for every member of Congress. They’ve hired almost the same number to delay, weaken, or otherwise prevent its implementation.

Meanwhile, the portion of the law that’s now supposed to be in effect is barely being enforced. That’s because the agencies charged with enforcing it, such as the Securities and Exchange Commission, don’t have enough money or staff to do the job. Congress hasn’t seen fit to appropriate these necessities.
Several of these agencies are still lacking directors or commissioners. Senate Republicans have refused to confirm anyone. They wouldn’t even consider Elizabeth Warren to run the new consumer bureau.

Many of same business leaders who blame the sluggish economy on regulatory uncertainty are complicit in all this. A senior vice president of the Chamber of Commerce told the New York Times that “uncertainty among companies about the rules of the road is keeping a lot of capital on the sidelines.” The Chamber has been among the groups responsible for keeping Dodd Frank at bay.

But it’s the biggest Wall Street banks – the ones that got us into this mess in the first place, and got bailed out by the public – that have taken the lead in killing off Dodd-Frank. They can afford the hit job.

At the same time, their executives  – enjoying pay and bonuses as large as in the boom days of the housing bubble – are busily bankrolling both political parties, although Republicans are favored in this election cycle. A significant portion of Mitt Romney’s sizable war chest has come from the Street. President Obama is no slouch when it comes to pulling at the Street’s purse strings.

Bankers try to justify their shameful murder of Dodd-Frank by saying tightened regulatory standards will put them at a disadvantage relative to their overseas competitors. JP Morgan’s Jamie Dimon had the nerve to publicly accost Ben Bernanke recently, complaining that the law’s implementation would harm the Street’s competitiveness.

The argument is pure claptrap. In the wake of global finance’s near meltdown, Europe has been more aggressive than the United States in clamping down on banks headquartered there. Britain is requiring its banks to have higher capital reserves than are so far contemplated in the United States. In fact, senior Wall Street executives have warned European leaders their tighter bank regulations will cause Wall Street to move more of its business out of Europe.

Wall Street is global because capital is global. JP Morgan Chase, Goldman Sachs, Citigroup, Bank of America, and Morgan Stanley are doing business in every corner of the world. Goldman even advised Greece on how to hide its growing indebtedness, before the rest of the world got wind, through a derivatives deal that circumvented Europe’s deficit rules.

The real reason Wall Street has spent the last year bludgeoning Dodd-Frank into meaninglessness is the vast sums of money it can make if Dodd-Frank is out of the way. If you took the greed out of Wall Street all you’d have left is pavement.

Wall Street is the richest and most powerful industry in America with the closest ties to the federal government – routinely supplying Treasury secretaries and economic advisors who share its world view and its financial interests, and routinely bankrolling congressional kingpins.

How else can you explain why the Street was bailed out with no strings attached? Or why no criminal charges from being brought against any major Wall Street figure – despite the effluvium of frauds, deceptions, malfeasance and nonfeasance in the years leading up to the crash and subsequent bailout? Or why Dodd-Frank has been eviscerated?

As a result of consolidations brought on by the bailout, the biggest banks are bigger and have more clout than ever. They and their clients know with certainty they will be bailed out if they get into trouble, which gives them a financial advantage over smaller competitors whose capital doesn’t come with such a guarantee. So they’re becoming even more powerful.

Face it: The only answer is to break up the giant banks. The Sherman Antitrust Act of 1890 was designed not only to improve economic efficiency by reducing the market power of economic giants like the railroads and oil companies but also to prevent companies from becoming so large that their political power would undermine democracy.

The sad lesson of Dodd-Frank is Wall Street is too powerful to allow effective regulation of it. We should have learned that lesson in 2008 as the Street brought the rest of the economy – and much of the world – to its knees. Now we’re still on our knees but the Street is back on top. Its leviathans do not generate benefits to society proportional to their size and influence. To the contrary, they represent a clear and present danger to our economy and our democracy.

They should be broken up, and their size must be capped. Congress won’t do it, obviously. So we’ll need to rely on the nation’s two antitrust agencies — the Federal Trade Commission and the Antitrust Division of the Justice Department. The trust-busters are now investigating Google. They should be turning their sights onto JPMorgan Chase, Citigroup, and Goldman Sachs instead.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, most recently, Aftershock.  He writes a blog at www.robertreich.org.  

Washington Microcosm

Senator Warren?

Not only would Elizabeth Warren be the most qualified person to run the new Consumer Financial Protection Bureau, the agency that she essentially created, but fighting for her nomination would provide a perfect opportunity to contrast the anti-regulation, pro-corporate Republicans with support for the unmitigated champion of consumer protection.  Indeed, the fact that she has been so demonized by the GOP should provide a clue as to how effective she would be.  As Paul Krugman said a while back, "by the sheer craziness of their attacks . . . Republicans are offering the administration a perfect opportunity to revive the debate over financial reform, not to mention highlighting exactly who’s really in Wall Street’s pocket these days."

So, of course, President Obama decided that Warren was too much of a lightening rod and nominated former Ohio Attorney General Richard Cordray instead.  (Perhaps a more significant factor in dooming Warren's nomination was the opposition of Treasury Secretary Geithner, who feared her aggressiveness in pushing for financial reform.)  Cordray, by all accounts, is an excellent second choice and is supported by Warren herself.  But that is not the point.

By failing to nominate Warren, Obama has not only missed a golden political opportunity, he has done nothing to appease the Republicans -- because he can never appease the Republicans.  As the Times reports, already "forty-four Republican senators have signed a letter saying they would refuse to vote on any nominee to lead the bureau," demanding instead changes that would dilute the Dodd-Frank law that created the agency, including replacing the director position with a 5-person board.

So what now?  Obama needs to install Cordray as the agency’s director by using a recess appointment, which he should have done to appoint Warren, and ensure that the agency can finally start doing its important work.

As for Warren, the good news is that she may be persuaded to run for the Massachusetts Senate against Republican Scott Brown.  As Robert Kuttner put it, this is "the bigger stage and more important use of her stunning talents."  And a Steve Benen says, "If Warren runs and beats Brown next year, I wonder how much Senate Republicans will come to regret the decision to block her CFPB prospects?"

Will The President Pass The Warren Test?

By Robert L. Borosage, originally posted at Huffington Post, June 9, 2011.

This is not a high bar.

Will the president name the indisputably best leader -- Elizabeth Warren -- to head the Consumer Financial Protection Bureau, the agency that she conceived, championed and constructed?

Senate Republicans, eager to curry favor with the big banks, have vowed to block ANY nominee to the post. So naming Warren will entail a fight. And if the minority succeeds in blocking the nomination with a filibuster, Warren will have to be named in a recess appointment.

This should have been done months ago. But opposition to Warren comes not only from Senate Republicans, but, by all reports, from Treasury Secretary Tim Geithner, the last man standing in the president's economic team.

So the White House has dithered. It once more would rather switch than fight. And now the administration is floating the notion that it will name a Warren deputy to head the bureau.

That trial balloon won't fly. Every informed citizen with a whit of sense, every consumer activist, and legions of legislators, bloggers, organizers and opinion leaders will be simply outraged if Elizabeth Warren is not nominated.

The Warren test cannot be ducked. There are no "acceptable alternatives." If the president names someone else, he gets the worst of both worlds. The Republicans will still block the nomination, demanding that the bureau be neutered. And the White House will be savaged across the progressive community for demonstrating once more that it caters far more to bankers than to the customers who are too often their victims.

It really is simple. Do the right thing. Name the best person to the job. Take on the fight. Help Americans see who is on their side and who is not. This is not a hard test, but it can't be postponed much longer.

(To sign a petition protesting the obstruction of the Warren appointment click here and/or click on the Support Elizabeth Warren badge on the right panel of this blog.)

[Related post:  Macroeconomics]

Macro Economics

The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers — and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans. -- Joe Nocera, N.Y. Times

Rather than writing the same thing over and over again, I should create a keyboard macro to save time.  An issue invariably arises, usually involving the economy, which provides a golden opportunity for the Democrats to demonstrate that they are the Party that cares about regular, working people while the Republicans are shamelessly in the pocket of Big Business and the ultra-wealthy.  Extending the Bush tax breaks is a perfect example.  The current budget debate in which the Republicans only want to cut domestic programs but nothing else and are threatening to shut down the government is another.  All the Democrats have to do is stay united and stay principled.  But other than a few lonely progressives, the Democrats, including the President, invariably cave and their message remains forever muddled.

Here they go again.  If the Democrats could ever be savvy enough to create a symbol to demonstrate their zeal for protecting the public from the greed, corruption and unaccountability of the financial industry it would be Elizabeth Warren.  She is a brilliant Harvard law professor who argued for a new agency to protect consumers before the financial crisis hit.  She chaired the Congressional Oversight Panel tasked with investigating the bank bailout, where took on the financial giants as well as the government.  She also comes across as warm and earnest, speaking in plain-spoken terms with a southern accent. 

Elizabeth Warren has been tasked by President Obama with setting up the new Consumer Financial Protection Bureau, which was a key part of the reforms that were passed in the wake of the financial meltdown.  An independent agency that will be operational in July, it will have the power to regulate credit cards, mortgages and other financial products.  Last week, Warren appeared before Congress and explained the agency's goals: "We firmly believe in the importance of making prices clearer, making risks more obvious, and cutting back on the fine print and legalese that can make it impossible for families to compare a mortgage or credit card with two or three others."

Naturally, the Republicans want to skewer Elizabeth Warren and gut the power of an agency that is being set up to protect ordinary Americans from big financial institutions.  According to news reports, the Republicans are concerned the agency will be "too powerful and are trying to portray Warren as the "unaccountable" head of a bureaucracy immune from oversight.  They want to cut its funding and control what's left by replacing a single director with a 5-member board.

CNN reported that "the hearing was one of the more hostile Warren has yet faced on Capitol Hill."  Joe Nocera in the Times described her as being treated by Republicans like a "pinata."  Paul Krugman wrote that the Republicans "lined up to grill and attack" her even though the accusations made no sense.  According to Krugman, the point was "to ensure that neither she nor anyone with similar views ends up actually protecting consumers."  He explained that for Republicans, "people like Ms. Warren . . . who warned that we were heading for a debt crisis before it happened" threaten their attempts to revise recent history and argue that the financial crisis was caused by too much regulation, not too little. "Such people must therefore be demonized, using whatever tools are at hand." 

One key question remains is who will be appointed to run the agency.  Elizabeth Warren is the obvious choice.  Krugman again: 

Given Ms. Warren’s prescience and her role in shaping financial reform legislation — not to mention her effective performance running the Congressional panel exercising oversight over federal financial bailouts — it was only natural that she be appointed to get the new consumer protection agency up and running. And it’s hard to think of anyone better qualified to head the agency once it goes into action.  The fact that she’s so well qualified is, of course, the reason she’s being attacked so fiercely. Nothing could be worse, from the point of view of bankers and the politicians who serve them, than to have consumers protected by someone who knows what she’s doing and has the personal credibility to stand up to pressure.

And this is where the opportunity comes for the President and his fellow Democrats.  Krugman wonders whether "the Obama administration will see the war on Elizabeth Warren for what it is: a second chance to change public perceptions" about who is truly to blame for the financial crisis.  "By the sheer craziness of their attacks on Ms. Warren, however, Republicans are offering the administration a perfect opportunity to revive the debate over financial reform, not to mention highlighting exactly who’s really in Wall Street’s pocket these days. And that’s an opportunity the White House should welcome."