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Citigroup: Too Big to Fail?

The fall of Citigroup is a resonant political event--akin to the Republican Party's failure to win reform of Social Security--only this time the bell tolls for the Democratic Party. The creation of Citigroup as an all-purpose financial supermarket and too-big-to-fail banking marvel was very much the accomplishment of Clinton Democrats. They enacted the law in the late 1990s that authorized this megabank monstrosity, with coaching from Treasury Secretary Robert Rubin, Fed chairman Alan Greenspan and of course Sanford Weill, the creative genius who built Citi.

Now that this institution has slid into deep trouble and Rubin has been appointed emergency chairman to rescue it, Democrats inherit the stink. They made this mess possible. Will they now accept the meaning of Citigroup gone sour and begin to undo the damage? That is, undertake reform of the financial system in fundamental ways? I doubt it, though the message is obvious.

Just as the GOP dreamed for decades of dismantling Social Security, investment bankers campaigned for thirty years to repeal the Glass-Steagall Act, which separated commercial banking from its investment-house cousins. This was the New Deal achievement enacted in response to the double-dealing banking practices that contributed to the crash of 1929. Bankers pushed their depositors into buying the corporate stocks the bankers were hustling, among other malpractices. Wall Street hated the law but failed year after year to win repeal. The problem was always Democrats (since Republicans were sure supporters).

Bill Clinton delivered his "New Democrat" party, accompanied by lots of happy talk about magic words like "synergy" and how "modernization" would create a more stable (and profitable) financial system. It did the latter, for sure, but not the former.

Actually, the combination of insurance, investment banking and old-line commercial banks multiplied the conflicts of interest within banks, despite so-called "firewalls" supposed to keep these activities separate. Much like Enron, placing some deals in off-balance sheet entities did not insulate Citigroup from the losses in its swollen subprime housing lending. The bank has so far written off something like $15 billion and more to come.

Think of Citigroup's rise and fall as another high-water mark for the conservative order. Like Social Security reform, it looked like a sure thing in politics. It was accompanied by the usual encouragement of lavish campaign contributions. On the downside, no one will remember having voted for it.

Reforming the deregulated financial system is another test for the new "New Democrats." I expect it will take them a while--maybe years--to face up to the implications. This is a far more daunting challenge--substantively and politically--than reforming healthcare or restoring labor organizing rights. Other megabanks like JP Morgan Chase also exist and will argue they have none of Citigroup's flaws. As investors (including pension funds) continue to lose billions in the deformed financial system, government will continue to worry more about the survival of these banking institutions that generate the losses. The megabanks are indeed "too big to fail" and, if that seems likely, Washington will come to their rescue in the name of protecting the soundness of the system. What a scam that is.

At least the unambiguous truth about "financial modernization" is now on the table for all to see. That should keep the Wall Street guys from whining for a while about the oppressive nature of bank regulation. The next reform era, when it does finally arrive, will head in the opposite direction--restoring public protections for the little guys against the greedy excesses of big hogs.

Mukasey Is (Much) Worse Than Gonzales

George Bush's nominee to replace disgraced former Attorney General Alberto Gonzales, retired Federal Judge Michael B. Mukasey, must be rejected by the Senate Judiciary Committee for the same reason that Gonzales should have been rejected in 2005.

Like Gonzales, Mukasey refuses to accept that the president of the United States must abide by the laws of the land, beginning with the Constitution. In fact, the nominee to replace the worst Attorney General since Calvin Coolidge forced Harry Micajah Daugherty to quit rather than face impeachment is actually takes a more extreme position in defense of an imperial presidency than did Gonzales.

When questioned by Judiciary Committee chair Patrick Leahy, D-Vermont and Constitution sub-committee chair Russ Feingold, D-Wisconsin, during the key hearing on his nomination, Mukasey embraces an interpretation of presidential authority so radical that it virtually guarantees more serious abuses of power by the executive branch.

There is no question that one of the ugliest manifestations of that expansion of authority involves the Bush-Cheney administration's embrace of extraordinary rendition and torture as tools for achieving its ends. But those who focus too intensely on Mukasey's troubling dance around the waterboarding question make a mistake. Even if the nominee were to embrace the Geneva Conventions -- not to mention the 8th Amendment to the U.S. Constitution -- and condemn all forms of torture as the cruel and unusual punishment that they are, he would still be an entirely unacceptable choice to serve as the nation's chief law-enforcement officer.

And while some Democrats on the Judiciary Committee have made their peace with Mukasey -- shame on New York's Chuck Schumer and California's Dianne Feinstein -- the fight to block this nomination cannot be abandoned. Mukasey's critics on the committee, led by Leahy and Feingold, should do everything in their power to re-frame the debate to focus on the broader question of whether a president can break the law -- and on the nominee's entirely unacceptable answers to it. They should pressure Schumer and Feinstein to reconsider, and they should reach out, aggressively, to "Republicans who know better" such as Pennsylvania Senator Arlen Specter.

Mukasey has made the case against his confirmation more convincingly than any of his critics.

The former judge has defended the administration's attempts to dramatically expand the definition of executive privilege, telling the Judiciary Committee that it would be inappropriate for a U.S. attorney to press for contempt charges against a White House official who claimed to be protected by a grant of executive privilege. Under this reading of the law, U.S. attorneys would cease to be independent defenders of the rule of law and become mere extensions of the White House.

As such, Mukasey accepts a politicization of U.S. Attorneys far more extreme than that attempted by Gonzales and former White House political czar Karl Rove when they sought to remove U.S. Attorneys who failed to fully embrace the administration's electoral and ideological goals.

But Mukasey does not stop there.

Under questioning from Feingold, Mukasey endorsed the administration's argument that congressional attempts to define appropriate surveillance strategies and techniques could infringe inappropriately on presidential authority.

When pressed by Feingold, Mukasey refused to say whether he thought the president could order a violation of federal wiretapping rules.Feingold's response was measured. "I find your equivocation here somewhat troubling," said the senator.

In fact, everything about Mukasey's testimony suggested that he would as Attorney General be more of a threat to Constitutional governance than the inept and frequently inarticulate Gonzales. Mukasey gives every indication that he is as enthusiastic as was Gonzales about helping the president to bend and break they law. The scary thing is that Mukasey appears to be a good deal abler when it comes to cloaking lawlessness in a veneer of legal uncertainty.

Consider the nominee's suggestion that the president can ignore any law, including the Foreign Intelligence Surveillance Act, if he and his lawyers determine that the law impinges on his authority as commander in chief during wartime.

"The president is not putting somebody above the law; the president is putting somebody within the law," Mukasey explained, with a response that employed legalese at levels not heard in Washington since Richard Nixon boarded that last plane for San Clemente. "The president doesn't stand above the law. But the law emphatically includes the Constitution."

Leahy said after that "troubling" statement by the man who would be the nation's chief law enforcement officer: "I see a loophole big enough to drive a truck through."

The Judiciary Committee chair is right. It's the truck carrying the trappings of an imperial presidency. And Mukasey should not be handed the keys.

'A Potential Death Sentence'

If the situation in Iraq is improving, as Bush and Cheney insist, why are US diplomats likening forced postings in Iraq to "a potential death sentence"? In a contentious hour-long "town hall meeting" last week, US diplomats faced off with State Department officials about a recent order that requires them to serve in the Baghad embassy and outlying areas.

"It's one thing if someone believes in what's going on over there and volunteers, but it's another thing to send someone over there on a forced assignment," Jack Croddy, a Foreign Service veteran of many postings and a former political advisor with NATO forces, said. "I'm sorry, but basically that's a potential death sentence and you know it. Who will raise our children if we are dead or seriously wounded?" His remarks were greeted with loud and sustained applause from the 300 diplomats at the meeting. "Any other embassy in the world would be closed by now," Croddy said.

As Juan Cole wrote the other day ("Informed Comment," Nov. 1), "The US Embassy in Iraq should be closed. It is not safe for the personnel there.... Please write your congressional representatives and senators and demand that the US Embassy be closed and the forced deportation of US diplomats to Iraq be halted." This may be one way to start ending the war--along with bringing home (and bringing to justice) security contractors/ mercenaries like Blackwater, which has served as the State Department's security force in Baghdad. (Watch for Jeremy Scahill's article about Congressperson Jan Schakowsky introducing legislation this week that would attempt to end mercenaries' activities in Iraq. )

Waterboarding Justice

Maybe it's to be expected that a Bush Administration nominee for Attorney General refuses to say whether waterboarding--an interrogation tactic that simulates drowing and that has been prosecuted as torture in US courts since the Spanish-American war--is torture.

Michael Mukasey's elaborate tap dance of oral and written testimony, orchestrated by the White House, was clearly designed to avoid putting the CIA, other US interrogators and those at the very highest line of command in this Administration (Bush, Cheney, Rumsfeld, Addington & others) in legal jeopardy. Just remember that the Washington Post reported-- over a year ago-- that CIA and others involved in interrogations were seeking legal counsel. In deciding to vote for Mukasey's nomination, Senators Schumer and Feinstein are condoning waterboarding and damaging our values, our international relations and the safety of our own soldiers if captured.

Instead of following the lead of all the Democratic Senators running for President, and four on the Judiciary Committee, Schumer broke ranks and stated that "The best we can hope for is someone who will rebuild the Justice Department and remain independent, even when pressured by this Administration."

It seems pretty clear from his refusal to state that waterboarding constitutes torture -- in order to protect those who have acted criminally-- if confirmed, Judge Mukasey would continue to act as a team player, helping to cover up issues of torture, rather than as an independent enforcer of the nation's laws.

There is still time to tell Senators Schumer and Feinstein that torture is un-American and unacceptable. The Washington office phone numbers for the Senators are: Feinstein: (202) 224-3841 and Schumer (202) 224-8542. If they do vote to confirm Mukasey, do not contribute to the DSCC which Schumer heads. Instead, select those Senators running in '08 who stand against torture, in defense of the constitution and rule of law, and donate generously to them.

And support groups like the Bill of Rights Defense Committee and the Center for Constitutional Rights and the American Freedom Campaign--which are working to end torture. It is time we support defenders not subverters of our Constitution--and restore the rule of law, decency, dignity and human security to our country and the world.

Is The Government Finally Scrutinizing The Death Penalty?

The Supreme Court's focus on the administration of death by lethal injection could expose the plethora of problems that come with the death penalty.

That's the hope of Russ Feingold who's using the Court's stay of execution for a Mississippi prisoner to re-introduce his Federal Death Penalty Abolition Act. The Wisconsin Democrat fired off a statement yesterday declaring that, "This de facto moratorium on executions by lethal injection gives us a chance to recognize just how deeply flawed the implementation of capital punishment in this country is."

Since the Supreme Court effectively legalized the federal death penalty in 1976, death penalty legislation or even legislative oversight has been nearly non-existent. Feingold's hearing this summer on death penalty implementation was the first of its kind since 2001-- the last time a Democratic majority enabled Feingold to chair a Senate committee.

But there are indications that Feingold may no longer be the lone wolf in Washington howling about the death penalty's moral and practical problems. His hearing this summer actually made front-page headlines when fired U.S. Attorney Paul Charlton gave specific examples of the Alberto Gonzales-led Justice Department eagerly pursuing death sentences at the expense of due process. Nationally, executions this year are down to 42, their lowest level in a decade.

Of those executions all but one were done via lethal injection. And the Supreme Court's stay of execution for Mississippi prisoner Earl Berry was, according to the New York Times, an "indisputable indication" that the Court will stop all deaths by lethal injection until next spring.

That's when the nine justices argue Baze v. Rees, which will determine if death row inmates can challenge the so-called three-drug cocktail used for executions as a violation of 8th amendment prohibition of cruel and unusual punishment. Some doctors now argue that the drug combination may sometimes result in inmates being paralyzed but not anesthetized, meaning the final moments of their lives are spent in searing pain, unable to move.

While the case will focus on the narrow legal issues of whether such a constitutional claim can ever be brought, it might represent the best chance in years to publicly debate whether the entire enterprise of state-sanctioned killing is cruel and unusual.

Just this week, for example, the American Bar Association released a timely report showing the misuse and outright neglect of DNA evidence in capital cases, racial disparity in death sentences and instances of prosecutorial overzealousness. The findings aren't new but such reports might at last be heard in the courts and Congress.

Calling the Question -- In the House -- on Impeaching Cheney

Broadcast media's gate-keeping "stars" have done just about everything in their power to keep the matter of presidential accountability off the radar of the American people. That was evident during the most recent Democratic presidential debate, when NBC anchors Brian Williams and Tim Russert meticulously avoided following up on Congressman Dennis Kucinich's three references to impeachment but somehow found time to grill the contenders on UFOs and what costume Barack Obama would be wearing on Halloween.

Pollsters are almost as bad. Rarely are questions about impeachment included in statewide or national surveys.

Despite the lack of media coverage, however, when citizens are asked what they think about holding members of the Bush administration to account, they respond with an enthusiasm far greater than that displayed for impeaching Richard Nixon at the height of the Watergate scandal. It is this reality -- as opposed to the state of denial fostered by so much of the media and the political class -- that Congressman Dennis Kucinich will act upon next week, when he offers a privileged resolution on the House floor to bring articles of impeachment against Vice President Dick Cheney.

Kucinich will face an uphill fight in a chamber led by House Speaker Nancy Pelosi, the California Democrat who continues to say that impeachment is "off the table."

The Ohio congressman and long-shot presidential contender may not be following the rules of engagement as dictated by major media and his party leaders. But when Kucinich raises the issue of impeachment, he will be speaking for a great mass of Americans who agree with his argument that, "Congress must hold the Vice President accountable."

How great?

A fresh poll conducted for Vermont's WCAX television station finds that citizens of that state enthusiastically believe that Congress beginning impeachment proceedings against President Bush.

Sixty-one percent of the Vermonters surveyed favor taking steps to impeach the president, while just 33% oppose doing so.

The numbers are even higher for impeaching Cheney. Sixty-four percent of Vermonters favor beginning the process of holding the vice president to account, where only 31 percent are opposed.

The greater level of support for impeaching Cheney parallels the few nationwide figures that have been ascertained. When the American Research Group conducted a national survey in early July of this year, it found that 54 percent of American adults wanted the House to begin impeachment proceedings against Cheney -- with 76 percent of Democrats, 51 percent of independents and a striking 17 percent of Republicans favoring the step.

Forty-six percent of Americans surveyed backed impeachment proceedings against Bush -- with support for impeachment at 69 percent among Democrats, 50 percent among independents and 13 percent among Republicans.

What is notable is that, when Time magazine surveyed Americans in the late spring of 1974, after the Watergate scandal had evolved into a full-scale crisis of confidence in Nixon's presidency, only 43 percent favored impeachment.

A media that actually had a sense of history, not to mention reality, would focus on the fact that Americans are more supportive of a congressional intervention to thwart Bush and Cheney's wrongdoing than they were of moves to hold Nixon to account just months before the former president resigned in disgrace.

Now, it falls to Kucinich to speak the reality that, "The momentum is building for impeachment. Millions of citizens across the nation are demanding Congress rein in the Vice President's abuse of power."

Says the congressman, "Despite this groundswell of opposition to the unconstitutional conduct of office, Vice President Cheney continues to violate the U.S. Constitution by insisting the power of the executive branch is supreme... The Vice President continues to use his office to advocate for a continued occupation of Iraq and prod our nation into a belligerent stance against Iran. If the Vice President is successful, his actions will ensure decades of disastrous consequences."

Kucinich introduced articles of impeachment against Cheney several months ago, and his H. Res. 333 has attracted almost two dozen co-sponsors. All Democrats, they are Tammy Baldwin (D-WI), Robert Brady (D-PA), Yvette Clarke (D-NY), Rep. William Lacy Clay (D-MO), Rep. Steve Cohen (D-TN), Rep. Keith Ellison (D-MN), Rep. Sam Farr (D-CA), Rep. Bob Filner (D-CA), Rep. Sheila Jackson-Lee (D-TX), Rep. Henry Johnson (D-GA), Rep. Carolyn Kilpatrick (D-MI), Rep. Barbara Lee (D-CA), Rep. Jim McDermott (D-WA), Rep. James Moran (D-VA), Rep. Donald Payne (D-NJ), Rep. Jan Schakowsky (D-IL), Rep. Edolphus Towns (D-NY), Rep. Maxine Waters (D-CA), Rep. Diane Watson (D-CA), Rep. Lynn Woolsey (D-CA) and Rep. Albert Wynn (D-MD).

Frustrated by the refusal of Democratic leaders to set up a process for holding hearings on his proposal, Kucinich will use an arcane House rule allowing for the prodding of the process with privileged resolutions to try and force consideration. Once introduced, a privileged resolution must be addressed within two legislative days.

Kucinich is expected to offer his privileged resolution on Tuesday. He expects to continue pushing it until the House acts. That action is likely to be a successful move by Democratic leaders to table the measure. Such a vote could be instructive, however, in that it would provide a rare measure of the willingness of at least some House members to respond to the popular will -- which is that Dick Cheney be held to account.

Washing His Hands of Katrina

President Bush wasted no time in using the emergency response to the California wildfires as a means of escaping culpability for his Administration from blame for its lethal non-response to Katrina.

According to the the Times-Picayune, while touring the California disaster area, Bush said, "It makes a significant difference when you have somebody in the statehouse willing to take the lead."

Bush's blame game further underlines the importance of getting at the truth about what was perhaps the most colossal failure of emergency response by the government in our nation's history.

I posted earlier this year about Senator Joe Lieberman--chair of the Senate Homeland Security and Governmental Affairs Committee--doing a 180 on the need for hearings after his favorite Kisser, President Bush, helped him get re-elected against antiwar Democratic nominee Ned Lamont. I raised the question then of whether Senator Barack Obama--also a member of the committee--would speak out on the need for hearings that Lieberman himself had once described as necessary, saying, "Only through a thorough and comprehensive investigation of what went wrong [can] we be assured that the government will know what steps are necessary to get it right the next time." At the time, it seemed Obama had no interest in taking on another Democratic Caucus member. But now, as he attempts to wage a more aggressive campaign to become the next President, Obama again has the opportunity to distinguish himself by speaking the simple truth that our nation needs to uncover what transpired during Katrina. On the House side, Representative Henry Waxman, chair of the Committee on Oversight and Government Reform, had told me, "I have a strong interest in the response to Hurricane Katrina, and it is under consideration by the Committee." It remains to be seen whether any action will be taken there as well.

In the absence of such hearings, Bush and too many in the mainstream media will continue to engage in revisionism. For example, this recent Washington Post editorial carried water for the Bush Administration: "Californians have something that Louisianans, in particular those in New Orleans, didn't have when they needed it most: leadership, in this case from Gov. Arnold Schwarzenegger and the San Diego mayor on down." In a letter to the editor, Representative Bennie Thompson of Mississippi, chair of the House Committee on Homeland Security, responded, "Californians have other things that Louisianans and Mississippians did not: running water, electricity, open stores, passable roadways and an engaged federal partner."

Why wasn't that federal partner engaged? And don't the American people need and deserve those answers?

Environmental Action Surges

Mark Hertsgaard recently wrote in The Nation about the growing surge of environmental activism in the US. As he put it, "Washington's sluggish pace is calling forth a surge of activism aimed at persuading the next President and Congress to be far bolder--to advocate and deliver solutions as big as the problem."

Last April 14 saw a significant step forward for this new movement when the unified Step it Up day of actions nationwide launched a citizen's movement with more than 1,400 events in 50 states, the largest global warming event in US history. This Saturday, November 3, the movement is stepping out again with a series of gatherings coast to coast designed to pressure our elected reps to adopt three key priorities to combat global warming--1) Creating five million Green Jobs by 2015, 2) Radically cutting carbon by 2050 and 3) a moratorium on new coal-fired power plants.

"Americans are demanding real solutions that will reduce carbon emissions and stop global warming before it is too late," said Step It Up co-coordinator Jamie Henn. "Many events will occur in historic places such as the Lincoln Memorial or on Paul Revere's route to symbolize the need for politicians to provide leadership on global warming."

"November 3 represents a new move towards political accountability," said author and Step It Up founder Bill McKibben. "So far it's been enough for politicians to say: I care. Now, one year out from a pivotal global warming election, it's time to see who's going to lead."

While Step It Up rallies issue a call for action from local communities, thousands of youth will gather at the University of Maryland at College Park, calling for change at the November 2 to 5 Powershift 2007 conference.

Find an action near you this Saturday.

The Media on Iraqi Oil--Don't Ask, Won't Tell

History… phooey!

Or, more mildly, Americans traditionally aren't much interested in it and the media largely don't have time for it either. For one thing, the past is often just so inconvenient. On Monday, for instance, there was a front-page piece in the New York Times by Elisabeth Bumiller on Robert Blackwill, one of the "Vulcans" who helped Condoleezza Rice advise George W. Bush on foreign policy during the 2000 election campaign, Iraq Director on the National Security Council during the reign in Baghdad of our viceroy L. Paul Bremer III, and the President's personal envoy to the faltering occupation (nicknamed "The Shadow"), among many other things.

He is now--here's a giant shock--a lobbyist. And, among those he's lobbying for (in this case to the tune of $300,000) is Ayad Allawi, former CIA asset and head--back in Saddam's day--of an exile group, the Iraq National Accord. Bumiller identifies Allawi as "the first prime minister of the newly sovereign nation--America's man in Baghdad." She also refers to him as having had "close ties to the CIA" and points out that he was not just Bremer's, but Blackwill's "choice" to be prime minister back in 2004. Now, he's Blackwill's "choice" again. Allawi is, it seems, yet once more on deck, with his own K-Street lobbyist, ready to step in as prime minister if the present PM, Nouri al-Maliki, were to fall (or be shoved aside).

But there's another rather inconvenient truth about Allawi that goes unmentioned -- and it's right off the front page of the New York Times, no less -- a piece by Joel Brinkley, "Ex-C.I.A. Aides Say Iraq Leader Helped Agency in 90's Attacks," published in early June 2004, just at the moment when Allawi had been "designated" prime minister. In the early 1990s, Brinkley reported, Allawi's exile organization was, under the CIA's direction, planting car bombs and explosive devices in Baghdad (including in a movie theater) in a fruitless attempt to destabilize Saddam Hussein's regime. Of course, that was back when car bombs weren't considered the property of brutes like Sunni extremists, al-Qaeda in Iraq, and the Taliban. (Just as, inconveniently enough, back in the 1980s the CIA bankrolled and encouraged the training of Afghan "freedom fighters" in mounting car-bomb and even camel-bomb attacks in a terror campaign against Soviet officers and soldiers in Russian-occupied Afghan cities (techniques personally "endorsed," according to Steve Coll in his superb book Ghost Wars, by then-CIA Director William Casey).

But that was back in the day--just as, to randomly cite one more inconvenient piece of history also off the front page of the New York Times (Patrick Tyler, "Officers Say U.S. Aided Iraq in War Despite Use of Gas," August 18, 2002), years before we went into Iraq to take out Saddam's by then nonexistent weapons of mass destruction, we helped him use them. The Reagan Pentagon had a program in which 60 officers from the U.S. Defense Intelligence Agency "were secretly providing detailed information on Iranian deployments" to Saddam's forces, so that he could, among other things, wield his chemical weapons against them more effectively. ("The Pentagon 'wasn't so horrified by Iraq's use of gas,' said one veteran of the program. 'It was just another way of killing people -- whether with a bullet or phosgene, it didn't make any difference.'")

Of course, when it comes to America's oily history in Iraq, there is just about no backstory--not on the front page of the New York Times, not basically in the mainstream. Even at this late date, with the price of crude threatening to head for the $100 a barrel mark, Iraqi oil is--well, not exactly censored out--just (let's face it) so darn embarrassing to write about. In fact, now that all those other explanations for invading Iraq -- WMD, freedom, you name it -- have long since flown the coop, there really is no explanation (except utter folly) for Bush's invasion. So, better to move on, and quickly at that.

Unfortunately, history, even when not in sight, matters. And the deeper you go, as Michael Schwartz proves in a recent piece, "Why Did We Invade Iraq Anyway?", the more likely you are to find that gusher you're looking for.