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RedditIn April, President Obama delivered a speech in which he alluded to the Sermon on the Mount to describe the stronger, more just economy he envisioned: "We cannot rebuild this economy on the same pile of sand," he said. "We must build our house upon a rock."
But the regulatory reforms he laid out on Wednesday do not fully accord with those eloquent words. Indeed columnist Joe Nocera accurately described President Obama's new plan in the New York Times yesterday: "The Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself…. Everywhere you look in the plan, you see the same thing: additional regulation on the margin, but nothing that amounts to a true overhaul."
Yet, at a time when we are living amid the blowback of an overgrown financial sector that did more harm than good, and we've seen the failure of a whole model of banking -- the Administration has offered some useful reforms. Most promising is the creation of a Consumer Finance Protection Agency-- the brainchild of Elizabeth Warren. But we don't see the kind of real revamping that is sorely needed. What we really need now -- as Obama himself indicated in April -- is a new foundation for a new economy. That means ensuring -- through tough regulatory reforms that Nocera pointed out would "make some bankers mad" -- that we have a financial sector that is more responsive to the public interest and the real economy; that is a servant, not master, of the people.
That is why it's so critical that a new national coalition of nearly 200 state and local organizations ranging from financial experts to community advocates announced its formation this week. Americans for Financial Reform is committed to working for reforms "that keep people in their homes and prompt smart investment in communities and businesses that create good jobs and strong neighborhoods."
"For too long the big banks have been making their own rules and gambling with your money," campaign director Heather Booth said. "We've come together today to tell them those days are over. The excesses of Wall Street have spilled over into our communities and now our communities are going to take on the fight for real financial reform."
This coalition is impressive -- far too many strong groups to name here -- it is also timely and critical. At best, the prospects for meaningful reform are uncertain, as evident in Senator Dick Durbin's recent description of Congress: "The banks are the most powerful lobby on Capitol Hill…and frankly they own the place."
Indeed too many banker fingerprints are on the Administration's new plan as well. Rather than breaking up banks that place our economy at risk by being "too big to fail", those institutions simply get a new name and promises of more regulation as "Tier 1 Financial Holding Companies". (Contrast that with Senator Bernie Sanders' refrain: "If you're too big to fail, you're too big to exist.") Customized derivatives of the AIG variety -- which wreaked such havoc all over the world -- will still be permitted and will still be difficult to regulate.
Finally, too much power is centralized in the Federal Reserve despite its recent failures and coziness with the financial sector it is supposed to watch. As The Nation's John Nichols wrote, "The Fed is famously unaccountable and resistant to transparency…. What should be obvious to everyone is that Congress needs to get a grip on the Fed -- which is structured in a manner so that it faces little or no congressional oversight -- before it allows Obama's proposal to advance." (Note: Watch for William Greider's major piece in our end of month issue on the dangers of entrusting the Fed with too much regulatory power.)
The banking lobbyists are already lining up to put the kibosh on the good Consumer Finance Protection Agency proposal with ridiculous proclamations of the exorbitant costs it will impose on consumers. With Congress setting a goal for a signed financial regulatory reform bill by the end of the year, the creation of Americans for Financial Reform comes none too soon. Even if the table is flawed -- and the Obama Administration perhaps missed an opportunity to set it right -- consumers and citizens need a seat there nonetheless. Otherwise, it's business as usual, and we know precisely where that leads.
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Katrina vanden Heuvel
Thoughts on politics, current affairs, riffs and reflections on what’s in the news and what’s not--but should be.
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"In April, President Obama delivered a speech in which he alluded to the Sermon on the Mount to describe the stronger, more just economy he envisioned:"
And don't you know guys like Larry/antisoc just HATE IT when he does that stuff....heheh.
On-topic, sorry Ms vanden Heuvel, but there is little public interest and less support (despite your "200 state and local organizations" and the ubiquitous Senator Sanders)....for what you want.
Which is, if I'm not mistaken...nationalizing the banks, right?
Posted by Mask at 06/19/2009 @ 08:40am
Fed regs are self-regulation, as the Tier 1's own the Fed which is legally obliged to serve the interests of its owners. However, if the Fed were federalized, then it would be answerable to We the People.
And then there's that little matter of putting teeth back into the SEC & restoring the Glass-Steagall normsthat worked so well for decades of prosperity ... until Bill Clinton gave Rubin his wish & it's been a social darwinian free-for-all ever since, great for the handfull & their handservants (Congress, the White House), a disaster for We the People.
The messages coming from Obama actions, rather than his words, would indicate he, like Bill Clinton, works for the handfull. AFR will have more than its hands full taking on this Congress, the White House & Wall St. Godspeed.
Posted by sloper at 06/19/2009 @ 09:03am
>>>As The Nation's John Nichols wrote, "The Fed is famously unaccountable and resistant to transparency…. What should be obvious to everyone is that Congress needs to get a grip on the Fed -- which is structured in a manner so that it faces little or no congressional oversight<<<
KVH,
JOHN NICHOLS was way off base on that remark!
There is a REASON the Fed is INDEPENDENT from Congress - the US Congress is and has been corrupted by special interest money for quite some time.
Putting the Fed under the thumb of Congress will only exacerbate the problem as Congress does NOT answer to the American people - it answers to those lobbyist that fund their re-election campaigns!
Posted by Metteyya at 06/19/2009 @ 09:10am
Real reform of the Fed means shutting the revolving door between Fed governors and their staff and the Wall Street firms that need oversight.
Posted by Metteyya at 06/19/2009 @ 09:13am
And don't you know guys like Larry/antisoc just HATE IT when he does that stuff....heheh.
Posted by Mask at 06/19/2009 @ 08:40am
Why would I hate it? It didn't bother me.
Posted by antisocialist at 06/19/2009 @ 09:14am
Posted by antisocialist at 06/19/2009 @ 09:14am
Doesn't bother you when a "marxist" co-opts The Lord? Given Jesus was a laissex-faire capitalist????
Posted by Mask at 06/19/2009 @ 09:33am
Posted by antisocialist at 06/19/2009 @ 09:14am
Doesn't bother you when a "marxist" co-opts The Lord? Given Jesus was a laissex-faire capitalist????
Posted by Mask at 06/19/2009 @ 09:33am
Jesus was neither a marxist/socialist nor a laissez-faire capitalist. His message to those who trust in Him was to submit to whatever authority you are under because this world is not our world. We have to live in it temporarily, but our focus is elsewhere.
Posted by antisocialist at 06/19/2009 @ 09:55am
Posted by antisocialist at 06/19/2009 @ 09:55am
Are you...no...it can't be?!?!?
Larry, are you saying Jesus doesn't necessarily endorse the free market? And that a socialist could legitimately claim to be a....Christian?!?!!!????
Posted by Mask at 06/19/2009 @ 11:06am
Posted by antisocialist at 06/19/2009 @ 09:55am
Are you...no...it can't be?!?!?
Larry, are you saying Jesus doesn't necessarily endorse the free market? And that a socialist could legitimately claim to be a....Christian?!?!!!????
Posted by Mask at 06/19/2009 @ 11:06am
Jesus doesn't endorse or condemn economic systems.
Could a socialist be a true Christian? Yes they could. However, it seems more unlikely given that most socialists tend to be either nonbelievers or Christians in name only (belonging to liberal churches that don't uphold central tenets of Christianity). Secondly, socialists tend to hold up humanism and human govt over submission to G-d.
Posted by antisocialist at 06/19/2009 @ 11:23am
by antisocialist at 06/19/2009 @ 11:23am...
Well... this could indicate that most people who have 'chosen' to be Christian in the west, have done so more out of a desire to conform to the societal norms of a Judeo-Christian culture than true piety...
...and/or... that those considered 'open' to Socialism and alternative spiritual endeavours... are generally antithetical to prioritising conformity higher than effectiveness... in their life pursuits.
I see your point, however... and there is some truth to it.
There are many 'old school' radicals who determine their self worth by the pound of antipathy generated in those around them... on the left, and on the right.
Foolish dated drama hounds all...;^)
Posted by ttr at 06/19/2009 @ 11:59am
There are many 'old school' radicals who determine their self worth by the pound of antipathy generated in those around them... on the left, and on the right.
Foolish dated drama hounds all...;^)Posted by ttr at 06/19/2009 @ 11:59am
So teeter, you don't like satire? PJ O'Rourke is gonna be hurt.
Posted by Sorelish at 06/19/2009 @ 12:20pm
So far, our economic whiz kids have not been able come up with anything to stop the following fraud from happening again:
The fraud in question:
Straw was turned into gold and sold to rubes the world over:
How they did it:
How easy is it for the big timers on Wall Street to take your hard earned money? Let us count the ways. The biggest scam ever was the subprime mortgage business (1). Credit was so easy (2) that anyone with a pulse (3) was given a junk mortgage, these, in turn, were shoveled through the doors of the banks and insurers like AIG (4). Next, our best and brightest bankers prevailed (5) upon the rating agencies to label the junk as AAA securities. These "troubled assets" were then sliced and diced, securitized , leveraged 30x and sold around the world as if they were gold (6). The business was such a money machine that it was impossible to say no to it. When the housing bubble burst, people lost their life savings, and countries went down. (Take particular notice of the "securitization" part. This is the way they turn junk into gold. They can do this any day of the week, including Sundays: beware when Madoff or Summers knocks on your door!)
Capitalism has finally developed its own economic weapons of mass destruction: cdo's, quants, credit default swaps, securitization, mega-million dollar salaries. Combine this with the usual greed, fraud and avarice and you have a killer system. Except it will kill itself.
Posted by hkaplan at 06/19/2009 @ 12:56pm
Teeter?... Oh... I get it... 'Mickey' and all that... thanks but no thanks... I paid at the office.
I haven't bothered to pick up one of PJ's works since his cursory treatment of Adam Smith... sure, I laughed... but more at PJ's veil of biases than with him... if you know what I mean...;^)
... like you are doing right now with me!;^)
I considered it to be more disrespectful than enlightening...
Be well!
Posted by ttr at 06/19/2009 @ 1:04pm
Could a socialist be a true Christian? Yes they could.----Posted by antisocialist at 06/19/2009 @ 11:23am
Wow. But I guess that's not unbelievable, since one of your major influences, Ms. Ayn Rand, was an atheist.
Posted by Mask at 06/19/2009 @ 1:48pm
Wow. But I guess that's not unbelievable, since one of your major influences, Ms. Ayn Rand, was an atheist.
Posted by Mask at 06/19/2009 @ 1:48pm
You know better. I've stated that I've never read Ms Rand so she cannot possibly be an influence on my views.
Posted by antisocialist at 06/19/2009 @ 2:28pm
Don'tcha love these moments, anti...
...and I'm the Christian leftist who thinks Ayn is an authentic thinker!
What will Mask do when the labels don't stick anymore... ;^)
Posted by ttr at 06/19/2009 @ 2:47pm
Don'tcha love these moments, anti...
...and I'm the Christian leftist who thinks Ayn is an authentic thinker!
What will Mask do when the labels don't stick anymore... ;^)
Posted by ttr at 06/19/2009 @ 2:47pm
I think most on the right and left agree that Mask has some strange conclusions about others.
Posted by antisocialist at 06/19/2009 @ 3:11pm
The messages coming from Obama actions, rather than his words, would indicate he, like Bill Clinton, works for the handfull. AFR will have more than its hands full taking on this Congress, the White House & Wall St. Godspeed.
Posted by sloper at 06/19/2009 @ 09:03am
Well said sloper.
Posted by Wolfgang1 at 06/19/2009 @ 4:21pm
Katrina,
Your advice puts us squarely on the road to poverty & repression. But it's not your fault. You just bought into your college professors' political shticks.
Try completing your education and read the following:
The Road to Serfdom by Friedrich Hayek;
Atlas Shrugged by Ayn Rand;
Animal Farm by George Orwell;
Brave New World by Aldous Huxley; and
Capitalism & Freedom by Milton Friedman.
You may've read Animal Farm & Brave New World. And if you did, I recommend you read them again after reading the other books on my list.
I double dog dare you.
Posted by Mitty at 06/19/2009 @ 5:00pm
What we really need to do is to deprive some of these special interest lobbyists (not only banking, but also defense, energy, healthcare,pharmaceuticals and lots of others) out of Congress. The best way to do this is public financing of political campaigns, so that members of congress aren't in a perpetual fundraising mode just to save their sorry asses. Congress has been sold to the corporations and banks and we need to buy it back.
Posted by playwrtr at 06/19/2009 @ 5:26pm
"What we really need to do is to deprive some of these special interest lobbyists (not only banking, but also defense, energy, healthcare,pharmaceuticals and lots of others) out of Congress."
Sorry about my grammar. What I meant to say was that we need to deprive all of these special interest groups of their ability to buy congress.
Posted by playwrtr at 06/19/2009 @ 5:40pm
From where I sit, it seems doubtful that we can regulate our economy into a finely tuned financial engine. There are but a scant few who believe that the lax regulations of the last 10-20 years haven't paled our economy's complexion... or made a high stakes game out of America as we know it...
The basic problem with our economy is that we as Americans have devalued industrial production... and tried to supplant it with 'money juggling' and service industries...
In order to have a healthy economy... we first need an economy.
The bankers were just doing their best to cover for us while some of us were pretending to 'trickle down'... while the rest of us were wishing we were being trickled upon more than we were down...
Obama's doing what he needs to do to get the catastrophe out of the larder... because someone set a fire in there before he was given the office.
The American People need some special attention right now, Mr. President... This has gone on too long...
Posted by ttr at 06/19/2009 @ 6:18pm
Good,
You need middle America on your side too how are you going to counter the Banking lobbyists and other Federal Reserve emissaries control over the maintstream press.
HR1207 is gaining ground but remarkably it is the Democrats that are reluctant to audit the Fed for the first time in its history. How is this possible? Why do they want to fill it full of holes????
Thanks...... nice to see a few people are figuring some of their mischief out. All we have to do is go back in time to see what the Fed has been up to in the name of the people of the United States Of America.
Posted by philocus at 06/19/2009 @ 7:50pm
Nobel Memorial Prize in Economic Sciences winner Milton Friedman proved that the fed caused the 1st great depression. http://www.youtube.com/watch?v=9V5OP-VmXgE
Bernanke admits the fed caused the 1st great depression. http://www.wnd.com/index.php?fa=PAGE.view&pageId=59405
The fed is responsible for putting money in to the economy and taking it out. Over the last 8 years the fed expanded the money supply tremendously. A lot of that money went strait to the government and there was not an increase in goods or services in relation to that extra money. This is called inflation.
The Fed lowered interest rates to 1% after 911 enticing banks to over borrow. Greenspan, Bush and countless others encouraged people to buy a home with VARIABLE interest rate mortgages then the fed raised the interest rates over a few years to 4.5%. The housing bubble BURSTS.
When the money supply increases, its value decreases. Meaning that it takes more dollars to buy the same barrel of oil. In addition to that over speculation on oil prices and the looming fear of peak oil caused $175 oil.
The bottom line is that it is the enticement of easy money by the Fed and then the ensuing debt and decrease in the money supply that causes recessions and depressions. We should not give the Fed more power. Giving the Fed more power means that they will get to decide which financial institutions get to win or loose and that should be decided by the free markets. Obama's plan has no transparency.
Send a message to your Rep. and your two Senators asking them to sponsor HR 1207 Federal Reserve Transparency Act of 2009. http://www.downsizedc.org/etp/campaigns/112
Posted by afbfxt at 06/20/2009 @ 12:27am
Atlas Shrugged by Ayn Rand;
drivel best left for high school seniors.
Posted by emile duBois at 06/20/2009 @ 12:44pm
those novels are of course a hoot, as is the arrogance of the poster towards Kat.
summa cum laude anyone?
Posted by emile duBois at 06/20/2009 @ 1:13pm
Katrina, Princeton '81
Posted by emile duBois at 06/20/2009 @ 1:31pm
Hmm... Advanced economics by fictional writers.
Guess they should have given the Nobel Memorial Prize in Economic Sciences to Heinlein. Wouldn't that be a brave new world.
P.S. To all... Send a message to your Rep. and your two Senators asking them to sponsor HR 1207 Federal Reserve Transparency Act of 2009.
http://www.downsizedc.org/etp/campaigns/112
Posted by afbfxt at 06/20/2009 @ 1:46pm
The economy rewards producing more goods for less labor. The problem is that now we have too many goods and too little labor.
Why is that so hard to understand?????
Posted by Culturerules at 06/21/2009 @ 05:16am
I believe the "Cassandra Prize" for future dystopian fiction goes to Margaret Atwood for ORYX AND CRAKE (2003). I dare you to read it!
For a more utopian view, I recommend Ursula K. LeGuin's classic THE DISPOSSESSED (1974).
I believe LeGuin deserves something of a lifetime achievement award for SOCIAL science fiction.
Posted by JakobFabian at 06/21/2009 @ 08:00am
by Culturerules at 06/21/2009 @ 05:16am...
Bullseye!
Posted by ttr at 06/21/2009 @ 11:59am
Posted by snowball666 at 06/20/2009 @ 1:14pm
Don't forget his prediction of the right-wing "mega-churches" with the "Church of the New Revelation/Fosterites" in "SIASL".
Posted by Mask at 06/22/2009 @ 08:19am
Posted by snowball666 at 06/22/2009 @ 09:45am
True. None of the Scientologists see that connection...naturally, being a cult and all.
Of course few "Crystal Palace" or Ted Haggard types would see themselves as "Fosterites" either.
Posted by Mask at 06/22/2009 @ 10:53am
You may've read Animal Farm & Brave New World. And if you did, I recommend you read them again after reading the other books on my list.
I double dog dare you.
Posted by Mitty at 06/19/2009 @ 5:00pm
If Milton Friedman weren't dead, I'd recommend he be boiled in his own pudding and buried with a stake of holly through his heart!!
Posted by Wolfgang1 at 06/23/2009 @ 08:58am
Robert A. Heinlein's, "For Us the Living", written in 1939
Posted by snowball666 at 06/20/2009 @ 1:14pm
Thanks snowball. I think I'll give it a read.
Posted by Wolfgang1 at 06/23/2009 @ 09:04am
If Milton Friedman weren't dead, I'd recommend he be boiled in his own pudding and buried with a stake of holly through his heart!!
Posted by Wolfgang1 at 06/23/2009 @ 08:58am
If there ever was a modern day Scrooge, old Milty would be the man. In his eyes, poor people were poor because they were lazy and only the thrifty working class should survive and the capitalists running the show should have all of the wealth and trimmings their ultimate greed could conceive. That guy was the friggin anti-Christ if there ever was one.
Posted by Wolfgang1 at 06/23/2009 @ 09:32am
Once upon a time, maybe 30 years ago, there were lots of strong, well capitalized commercial banks. They were highly regulated and rarely failed.
They had low leverage (by today's standards) of maybe 9 or 10X. A well performing bank earned 1%+ on total assets and 10%+ on equity. They loaned out perhaps 80% of their deposit base to local or regional customers. They rarely funded themselves with "hot" money. They paid solid if uninspiring dividends to the little old ladies and local businessmen who owned their stock.
There were thousands of these banks from the largest cities to the most rural area.
They operated in virtually protected franchises as hostile take-over, or virtually any take-over for that matter that didn't involve a failing bank was not an option. Banking regulators simply wouldn't allow it. Branching was severely restricted by state statues, protecting smaller banks from intense competition from major metropolitan area banks. There was plenty of credit available and plenty of banks from which to choose. Banks developed their own specialities in order to effectively compete. Bank of Boston had vast trading contacts in Latin America. Irving Trust was the largest commercial factor in America. Morgan Guaranty was the premier corporate bank. Citi was NYC's largest retail bank. Regional banks dominated their geographic areas as branching restrictions kept others away. North Carolina allowed state-wide banking which nurtured NCNB, First Union and Wachovia.
Posted by toritto at 06/23/2009 @ 10:40am
continued:The system worked fine even if it could be criticized as dowdy. Banking was not the most exciting profession to be in.
Then came deregulation. Branching and nation-wide banking came into existence. With it came the hostile take-over. Glass-Steagle was revoked. Suddenly there was money to be made in bank stocks..
It all began in 1988 when Bank of New York put a take-over offer in front of the Board of Irving Trust. Irving rejected th offer. BONY sweetened it. It was rejected again. Irving was counting of the Fed and regulators to do what they had always done - reject hostile takeovers. But the wind of change was in the air. Wall Street smelled b;ood, money and defeat for Irving. After battling BONY for a year Irving lost in court and the Regulators gave approval. The rout was on. Chairman Rice of Irving Trust caved the day after losing in Court and Irving was acquired. Rice immediately retired.
Thus was set in motion the creation of the banking system we have today. Plenty of money was made by Wall Street, bank stockholders and insiders holding shares and options, including me. Venture funds began buying up bank stocks with the sole purpose of selling off to the highest bidder. The major regional banks were acquired and disappeared along with thousands of jobs.
Posted by toritto at 06/23/2009 @ 10:42am
"Growth, growth, growth!" was the mantra. "Marketing" rather than credit worthiness became the norm as loans were marketed as if selling soap. Credit insurance from AIG made it possible to shovel billions of dollars into mortgage assets without worrying about the loans themselves - after all, they were insured by AIG or some other sterling counter-party and carried a Moody's / S & P investment grade ratings. Trading rooms moved from customer based trading activities to "own account" trading activities. After all there were enormous profits to be made especially when betting other peoples' money.
Within all of the major banks in trouble today there were those who had serious doubts about how business was being conducted. "Nay-sayers". "Old fashioned". "Not up to date". They were ignored. There was no money in their Cassandra prognostications; not for "business development officers", executive management or shareholders.
What was the matter with the old system? Not much. It just wasn't sexy.
Deregulation, the revocation of Glass-Steagle and the cowboy mentality of growth and consolidation brought us to where we are. Bank shares were bought up by funds whose only interest was to sell the bank at a profit. So now we have perhaps a dozen "too big to fail" financial institutions. If they are too big to fail then they are too big not to be broken up.
Unfortunately, the banking system needs to be rescued. It is more than the system deserves.
Posted by toritto at 06/23/2009 @ 10:43am
There are those who's intention is to confuse, disrupt, damage morale and neutralize positive change via propaganda, Disinformation, Misinformation, and Opposing Information.
Don't buy in to it. Anyone who wants to see positive change...
Send a message to your Rep. and your two Senators asking them to sponsor HR 1207 Federal Reserve Transparency Act of 2009. Here is the link.
http://www.downsizedc.org/etp/campaigns/112
Posted by afbfxt at 06/23/2009 @ 10:54am
Maybe you and your interests are worried that HR 1207 is now up to 237 cosponsors.
I say this because your suggestion about everyone taking there money out would only give the Fed more power in the long run and you know it.
Send a message to your Rep. and your two Senators asking them to sponsor HR 1207 Federal Reserve Transparency Act of 2009. Here is the link.
http://www.downsizedc.org/etp/campaigns/112
Posted by afbfxt at 06/23/2009 @ 12:32pm
In closing, I would like to point out that YOU keep electing "democrats" and "republicans", cycle after cycle, and STILL maintain the delusion of "Change"...WHY on Earth WOULD they Change if they're GUARANTEED to be Re-Elected???
That is the Definition of INSANITY.
Posted by IlyaKuryakin at 06/23/2009 @ 3:32pm
Good God Man, You make me look like an optimist.
Posted by Wolfgang1 at 06/23/2009 @ 3:45pm
Posted by IlyaKuryakin at 06/23/2009 @ 3:32pm
Inspiring!
Posted by winyahn at 06/23/2009 @ 4:55pm
Posted by IlyaKuryakin at 06/23/2009 @ 8:16pm
You may be right, but consider this. Do you think we would have invaded Iraq if Gore had won in 2000?
I agree with you that both parties are owned by the same crooked crowd of self serving businessmen wishing to make a buck at the expense of anyone, everyone and anything.
The Iraq War appears to have been designed before W got into office and it was paramount that he be elected in 2000....hence the Florida fiasco. We would have attacked Iraq 9/11 or no 9/11, but 9/11 made things a hell of a lot easier for W and Cheney. Perhaps that is why Gore conceded, we'll never know. But, I have a hard time picturing Al Gore telling the world that either they're with us, or against us like Gaston off the Disney Cartoon Beauty and the Beast ( I have two daughters, what can I say).
Posted by Wolfgang1 at 06/25/2009 @ 4:03pm