A "landmark" we still can't see

For the most part, the big media and housing nonprofits have bought the government’s hype on the recent foreclosure fraud settlement, lauding it with great fanfare as a historic landmark.

It’s a good thing that not all our national landmarks are as phony as that settlement has turned out to be.

If they were, none of them would still be standing.

If big media had taken a more objective view, rather than just copying the authorities’ press releases, they might have chosen another, much less dramatic description, such as “yet to be released.”

The best description might take a few more words: “designed to make the Obama administration and state attorneys general look like they’re doing something while letting banks off the hook and leaving homeowners out in the cold and taxpayers and investors holding the bag.”

The settlement continues to raise more questions than it answers. For example, California’s attorney general Kamala Harris announced that the state would get $18 billion in foreclosure relief from the national settlement.

But then a couple of days later, Jeff Collins of the Orange County Register reported that Harris hadn’t offered a complete explanation.

As it turns out, the state might get only $12 billion.

The amount, Harris’ people explained to Collins, depends on which of two methods you used to calculate it.

“There are two sets of numbers,” said Linda Gledhill, a Harris spokeswoman told Collins.

Hah! Who knew?

One method calculates the cost of the settlement to banks, which as explained in the settlement’s “executive summary” are required to provide $25.2 billion in a variety of forms of assistance to borrowers. But providing that assistance doesn’t actually cost them $25 billion.

Apparently the settlement only requires the banks to pay out $5 billion in cash, with the balance consisting of a yet to be released complex system of credits that the the government will give the banks credit for offering the assistance, with details yet to be announced.

Meanwhile, the Financial Times (registration required) has been parsing the sparse publicly available details about the settlement. Their prognosis: The settlement shifts the costs of modifying mortgages from the banks to the taxpayers and to investors who bought securitized mortgages. As a result, it resembles another bailout more than it does a settlement.

Neil Barofsky, the former Inspector-General of the Troubled Asset Relief Program told the FT:

“If the banks are doing something under this settlement, and cash flows from taxpayers to the banks, that is fundamentally an upside-down result.”

And keep in mind that the actual settlement agreement still hasn’t been released yet, more than ten days after it was announced. What exactly is the hangup?

Do the authorities really expect us to take their word for it? How gullible do they think we are?

Remember how the 2008 bank bailout started: a three-page document submitted by the treasury secretary.

As my colleague Harvey Rosenfield warned when the President first announced the settlement, we’ll be in for a lot of surprises when the actual settlement is actually released, whenever that will be.

And something tells me they won’t be the good kind of surprises.

California Attorney General Kamala Harris / Foreclosure / Martin Column / President Barack Obama / SIGTARP - 02/22/2012

Second-Half Score Depends on Who Calls the Plays

Clint Eastwood’s Chrysler ad during the Super Bowl knocked me out.

It was stunningly effective piece of work. It resonated deeply with me as a skillfully crafted message – even as I knew it wasn’t telling the whole truth about the comeback of Detroit, my hometown.

Still, I wanted to believe, if only for a few minutes, that we could work together to confront our national problems, and millions of other Super Bowl watchers joined me in that yearning.

It reminded me of another inspired piece of highly distilled corn-pone football-inspired poetry: what Coach told his players on `Friday Night Lights,’ “Clear eyes, full hearts, can’t lose.”

With its irresistibly simple pep-talk pitch, the ad stirred up strong feelings, both for what it said and what it left unsaid about what’s actually going on in Detroit and the U.S.

It showed once again the power of plain language, delivered in Eastwood’s classic growl.

It reminded me how ineffective those of us who oppose corporate power have often been in claiming for our cause our deeply rooted patriotism and our pride in how every-day Americans have fought again and again, against terrible obstacles, to build a democracy that would work for everyone.

It also provoked deep feelings about Clint Eastwood, the ever-evolving artist.

He's been a great champion of Detroit. He made one of his finest films, “Gran Torino,” in the city. Released in 2008 in the wake of the financial collapse, it tells the story of the redemption of a retired autoworker, recently widowed and deeply racist.

Reviewing the film, Manohla Dargis wrote in the New York Times: “Melancholy is etched in every long shot of Detroit’s decimated, emptied streets and in the faces of those who remain to still walk in them. Made in the 1960s and `70s, the Gran Torino was never a great symbol of American automotive might, which makes Walt [Eastwood’s character’s] love for the car more poignant. It was made by an industry that now barely makes cars, in a city that hardly works, in a country that too often has felt recently as if it can’t do anything right anymore except, every so often, make a movie like this one.”

Eastwood made `Gran Torino’ under the generous tax breaks of a program designed to encourage filmmaking in Detroit, a program that has since been limited by the state’s current Republican governor, eroding the promise of the nascent film industry.

For the Chrysler ad, the auto company enlisted not only Eastwood, but hired a top ad agency, Wieden-Kennedy; the director of several terrific films, David Gordon Green; and two top-notch writers: Oregon-based poet Matthew Dickman and Texas-based fiction writer, Smith Henderson.

Even so, it’s an ad, meant to sell cars by inspiring hope and pride in Americans’ ability to get up and come back after a hard punch.

So the ad doesn’t quite tell you the real score at the end of the first half, nor does it come entirely clean on who's been playing on which team.

If the 99 percent were writing the script, not Chrysler, Eastwood might have something very different to say about our game plan as the second half gets underway.

It doesn’t mention that the majority owner of Chrysler is now Fiat, an Italian auto firm, or that Chrysler, newly profitable after it $12.5 billion taxpayer bailout, now pays new employees $14-$16 an hour, about half of what Chrysler employees used to be paid.

“The gratitude that many Detroit workers felt just after the bailout,” Reuters reported last October, “has given way to a frustrated sense that blue-collar workers have not shared equally in the industry's comeback.”

I wonder what Clint Eastwood’s characters might say about our current predicament.

Something tells me Eastwood’s iconic Dirty Harry character wouldn’t think much of our state attorneys general’s settlement with the big banks, which lets the bankers off the hook for fraud in the foreclosure process in exchange for ineffective and inadequate assistance for homeowners.

Describing the $26 billion settlement, the Times acknowledges it would “help

a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure.”

Meanwhile, while it will be good for the banks to get the foreclosure fraud charges behind them, it remains unclear how much the settlement will help the “moribund” housing market, the Times reports.

The $26 million will be distributed to states according to a complex formula. Actual victims of foreclosure fraud are supposed to get about $1,500 apiece. An undetermined number of underwater homeowners will get their principals written down by about $20,000. Some funding will also go to further investigation into banker fraud and consumer education.

Unfortunately neither the Obama Administration nor the AGs’ credibility is very good in living up to previous promises to help homeowners. Previous administration efforts, as well as previous AG settlements, have delivered much less than they initially promised, plagued by inadequate oversight and relying on voluntary bank participation. For more details, check Naked Capitalism; for more critique, Firedoglake.

What would Eastwood’s Dirty Harry think?

Just another day at the office, with the thugs getting away with their crimes in a world gone awry.

I couldn’t help wondering: would Dirty Harry negotiate with an intruder who robbed your house? Would he suggest to the intruder, “OK, just give back 30 percent of what you took and clean out the rain gutters and we’ll call it even?”

Unlikely. Dirty Harry would track down the crooks, scowl and start blasting away with his trademark .44 Magnum.

One of our previous presidents, Ronald Reagan, understood the visceral power of Dirty Harry and evoked him in a fight with Congress, when it was threatening to raise taxes. Reagan said he would veto any tax increase. “Go ahead,” the former president said, quoting the Dirty Harry character, “make my day.”

You’ll find very little of that spirit among the Obama administration officials and lawmen and law women assigned to the big bank beat.

Walt, the character in  `Gran Torino,’ and Dirty Harry are very different characters, separated by age and experience. They both live in broken worlds, filled with violence and cynicism. But confronted with today’s bankers, they would recognize them for what they are: shameless bullies, terrifying our neighborhood. And they would recognize the Obama administration and the state AGS who negotiated with them rather than investigated them for what they have become: cowards.

 

 

California Attorney General Kamala Harris / Foreclosure / Martin Column / President Barack Obama - 02/10/2012

Is There a Secret White House Memo on Corporate Control of our Country?

An internal White House memo in 2010, just before the Supreme Court’s outrageous decision in Citizens United, suggested President Obama address the influence of money in politics. Other items crowded his agenda instead, but this election year President Obama would be wise to take up the citizen call for a 28th Constitutional Amendment to end the corruption caused by the Court’s corporate personhood decision.

First, some important background on the 2010 memo. It used to be that a history of a presidential administration would await the president’s departure, but in recent years mid-term profiles have become the norm. Bob Woodward chronicled the Bush White House with four books, and Ron Suskind’s “Confidence Men,” published last year, captured President Obama’s errors in strategy and communications. Both authors had access to sources close to the top of the White House. But this week’s New Yorker takes the genre to a new level. Ryan Lizza’s “The Obama Memos” is a fascinating analysis of the Obama presidency that relies greatly on White House memos that Lizza somehow obtained.  One of them, the transition team’s memo to the president-elect in 2008 on the economy, is available in its entirety for download on the New Yorker site.

It was another memo, excerpted in a sidebar, that really got my attention. It was from the President’s political advisers, in late December 2009 according to Lizza, and listed “ideas on how on how try and recapture some of the anti-Washington spirit of his 2008 campaign” in the President’s 2010 State of the Union address. One of the suggestions in the memo anticipated the Supreme Court’s decision in the Citizens United case.

Campaign Finance reform: By the time of the SOTU [State of the Union], the Citizens United case will have been handed down and at the time of the decision will likely make an announcement on our response/plans. We could use the SOTU opportunity to push the ball forward on whatever proposal we put forward, calling on Congress to act by a ‘date certain’ or further fleshing out our proposals.

The Court handed down its decision on January 21, just a week before the State of the Union speech. Of course, no one expected the decision to cement into American Constitutional law the proposition that corporations have the same First Amendment rights as human beings and that spending money to influence elections is a form of free speech. So when the advisers referred to the White House's “response/plans,” it was not clear what kind of decision they were expecting, or what they thought they could do about it.

We now know that the only thing that can be done about Citizens United is for the American people to join together to overrule it, by passing the 28th Amendment to the Constitution, such as the one we have proposed.

Meanwhile, the President had something to say about corporate money in politics at the end of his State of the Union speech on January 27, 2010, and it stirred quite a controversy. He began by noting that a byproduct of the 2008 financial collapse was the public’s loss of confidence in government of, by and for the people:

We face a deficit of trust -– deep and corrosive doubts about how Washington works that have been growing for years. To close that credibility gap we have to take action on both ends of Pennsylvania Avenue -- to end the outsized influence of lobbyists; to do our work openly; to give our people the government they deserve.

 Then, with members of the Supreme Court seated right in front of him, he slammed the Court’s ruling in Citizens United:

With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests –- including foreign corporations –- to spend without limit in our elections. I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. They should be decided by the American people. And I'd urge Democrats and Republicans to pass a bill that helps to correct some of these problems.

It was a powerful moment, to be sure, though hardly the assault on the Court that it was subsequently described as, at least in some quarters.

What happened next created the evening’s drama. Supreme Court Justice Samuel Alito, who had voted in favor of the Court’s ruling, took it upon himself to provide some instant analysis. Cameras caught Alito angrily mouthing the words “not true” in response to Obama’s critique. The New York Times recalled the moment recently.

Whatever the President or anyone else thought that night about the week-old decision, it has since opened the floodgates of corporate money while individual Americans – I’m referring to the human beings who cast ballots, not so-called "corporate citizens" – have become bystanders. Decades-old laws limiting the influence of big money in politics have fallen, with few exceptions – one of which I wrote about last week.

It’ll likely be a few years before we get to read the memos that his political team is forwarding President Obama this year. But focus on Citizens United and the power of corporations to determine the outcome of supposedly “free” elections in what is proudly hailed as the world’s greatest democracy is certainly consistent with the themes of government accountability and the ninety nine percent vs. the one percent that are dominating public discourse and even the debates between the pro-corporate Republican presidential candidates. Obama would find a welcoming, bipartisan audience for the 28th Amendment. Let’s see how far he’s prepared to go.

 

Citizens United / D.C. Disconnect / Harvey Column / Outrage / President Barack Obama / Supreme Court - 01/30/2012

Busting Wall Street, by the numbers

How many FBI agents does it take to bust one Wall Street crook?

This isn’t the beginning of a joke. It’s one way to measure how serious the Obama’s administration latest highly touted financial fraud task force is about tackling its beat.

The task force is staffed with 10 FBI agents, according to U.S. Attorney General Eric Holder.

You can get some idea of whether that’s an adequate number by comparing it to the law enforcement effort in the wake of the Savings and Loan crisis in the 1980s, a major but vastly smaller financial collapse.

It only cost the taxpayers a mere $150 billion in bailout money, compared to the 2008 banking collapse, which cost us trillions.

Bill Black, a former S&L regulator turned white-collar criminal law expert and law professor at University of Missouri at Kansas City, has been one of the sharpest critics of the administration’s sharpest critics.

Black makes the point that regulators investigating S&L fraud two decades ago made thousands of criminal referrals, and the FBI assigned 1,000 agents to follow up on those referrals. Black says the referrals led to more than 1,000 felony convictions, including the executives of the S&Ls.

Black is just one of many who have noticed that President Obama’s heart has not really been into the task of putting top bank executives in jail.

As recently as December 11, the president told 60 Minutes in an interview: “I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn't illegal.”

Black points out that this at best a non-answer; at worst it’s double-talk. The president says that “some of the most damaging behavior on Wall Street, in some cases some of the least ethical behavior on Wall Street, wasn’t illegal.”

So the reasonable follow-up question would be: where are the prosecutions, over the past 3 years, of the rest of the behavior, the part that was illegal?

The other aspect of Obama’s answer that I find worrisome is the president’s perspective – he acknowledges that he’s making a judgment based on a view from 40,000 feet.

That’s a distance of 7.5 miles. The president isn’t predicting the weather here; he’s talking about whether crimes were committed in the process of the worst financial disaster in almost a century.

Good prosecutors and FBI agents don’t investigate from 7.5 miles away. They get in a suspect’s face, and into their history, find out who their friends and associates are. They dig into their family lives if they need to.

That’s how they operate when their hearts are in it if they want to make the case.

But even when their hearts are in it, good law enforcement people can’t do their jobs without resources.

And that’s a decision the president can make. He doesn’t have to ask Congress.

Call the president today and let him know that we won’t be fooled by faux enforcement efforts, and the we know the difference between what 10 FBI agents can do and what 1,000 can do – even from seven miles away.

 

 

 

 

 

 

 

 

 

 

 

 

Financial Crisis / Martin Column / President Barack Obama - 01/29/2012

Task Force Deja Vu

MoveOn.org and other groups are declaring President Obama’s announcement of a new task force to investigate foreclosure fraud a significant victory.

These groups deserve credit and thanks for mobilizing people to call the White House and state attorneys general and organizing protests to push back against a weak proposed settlement of foreclosure fraud charges against big banks, without having first fully investigated the allegations.

But before we get too carried away with the celebrations, I think it’s worth examining the president’s announcement with a healthy dose of skepticism.

Because we’ve heard it all before.

In 2009, the Obama administration convened, with great fanfare, the “”Financial Fraud Enforcement Task Force,” which included officials from the Justice Department, Treasury, Housing and Urban Development, and the Securities and Exchange Commission.

Announcing the task force, U.S. Attorney General Eric H. Holder said it mission was to the mission was to prosecute the financial fraud that led to the 2008 economic collapse.

“Mortgages, securities and corporate fraud schemes have eroded the public's confidence in the nation's financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street,” Holder said.

State attorneys general then formed their own mortgage fraud working group to work with federal authorities.

These previous efforts haven’t produced noteworthy results – no criminal charges have been brought against major bank executives, and no major policy changes have been put in place to force banks to help homeowners.

The 2009 task force was not exactly targeting the titans of Wall Street. As these high-profile task forces like to do, this one gave its “operations” hokey names like Operation Stolen Dreams and Operation Broken Trust that make everybody but the prosecutors cringe.

Touting Operation Broken Dreams in 2010, prosecutors bragged that it had netted 330 convictions related to mortgage fraud  – but it focused on borrower, not bank fraud. While Operation Broken Trust focused on investment fraud, among its 343 criminal cases, it focused on lower-level fraudsters.

There was not a single case against a Wall Street banker.

While prosecutors often build cases against higher-ups using those lower in the food chain, that doesn’t seem to be the case with the 2009 task force.

In other words, the 2009 task force hasn’t done anything that would interfere with the flow of political contributions from Wall Street.

Evaluating the task force’s work, the Columbia Journalism Review found it more publicity stunt that real prosecution effort.

Meanwhile, the state AG’s efforts stirred MoveOn.org and other organizations to action. A handful of state AGs are balking at the inadequate proposed settlement, and California’s attorney general, Kamala Harris has joined with Nevada’s attorney general in walking away from the proposed settlement and pledging a real investigation into the foreclosure mess.

There are plenty of other reasons to be skeptical of the President’s newly- anointed task force, rounded up here by Dave Dayen on Firedoglake. While one of its co-chairs, New York Attorney General Eric Schneiderman, appears to be the genuine deal in his intention to crack down on financial crime, he’s being babysat (co-chaired) by two administration lawyers with dubious backgrounds when it comes to getting tough on bankers.

Robert Khuzami, head of enforcement at the SEC, used to be general counsel at Deutsche Bank, overseeing its huge risky investments in mortgages. Shouldn’t Deutsch Bank be a prime target of the task force?

At the SEC, he’s presided over several settlements that appeared to be overly generous to banks. Another other co-chair is the head of Justice’s criminal division, Lanny Breuer, who has been apologist in chief for the agency’s lack of aggressiveness in going after too big to fail bankers.

As a private lawyer, Breuer worked at the Washington D.C. law firm Covington & Burling, which represented too big to fail banks Bank of America, Well Fargo, Citgroup and JPMorgan Chase as well as MERS, the Mortgage Electronic Registration Service, a concoction of the real estate finance industry that runs a vast computerized registry of mortgages that has been at the center of complaints about false and fraudulent documents in the foreclosure process.

Breuer and Khuzami both played prominent roles in the president’s previous financial fraud task force, as members of its securities and commodities fraud working group.

The bottom line is that the new task force is only needed because of the abject failure of the administration’s previous efforts to prosecute the fraud at the heart of the financial meltdown.

According to statistics gathered by Syracuse University’s Transactional Records Access Clearinghouse, despite all the prosecutors’ puffery about their inanely named operations, financial fraud prosecutions fell to a 20-year low in 2011, continuing a decade-long downward trend.

If this new task force is not going to be a fraud itself, Khuzami and Breuer have to go. They should be replaced by real prosecutors without close ties to the big bankers.

Though you wouldn’t know it from the Obama administration, people like that do exist.

Blogger Abigail Field nominates two crackerjacks – Neil Barofsky, the tough former inspector general of the bailout, and Patrick Fitzgerald, U.S. attorney for the northern district of Illinois, who has successfully pursued several high-profile cases, including the perjury conviction of Scooter Libby, former VP Dick Cheney’s chief of staff.

So after you finish that glass of champagne celebrating the new task force, it’s time to get back on the phone. Here’s the president’s number.

Tell the president we don’t need another task force. We need prosecutors who aren’t compromised and who aren’t afraid to do their jobs.

 

 

California Attorney General Kamala Harris / Foreclosures / Martin Column / President Barack Obama / Securities and Exchange Commission (SEC) - 01/27/2012

Stop Forecclosuregate Bailout

Is President Obama going to try to sell us another bank bailout in his State of the Union address tonight?

Of course, he won't call it a bailout. He'll tout it as “the largest multi-state settlement of charges of wrongdoing against corporate malefactors in history;” something that sounds important and unprecedented.

But don’t be fooled, a bailout is exactly what Obama administration officials are scheming, under the guise of settling foreclosure fraud charges against the big banks.

The fraud stems from widespread robo-signing in which banks used forged documents or had employees sign off on documents they hadn’t read.

The Obama administration has been pressuring state attorneys general to end a joint federal-state investigation with a sweetheart deal that would amount to another bailout for the banks – rewarding them again for their bad behavior, this time with a light slap on the wrist.

Unlike in 2008, we know a lot more about how government officials under the influence of Wall Street misbehave. When administration officials met privately with state AGs Monday in Chicago, they were met with protestors, and a number of groups have been mobilizing phone calls to the White House and state AGs.

Let me give you some perspective: Banks have made hundreds of billions off the adjustable, high-interest loans they pawned off on borrowers, then sliced and diced and resold to investors until the bankers’ shenanigans sank our economy. Now the Obama administration wants to settle with them for between $19 and $25 billion in fines. Some of that money could be sent directly to 750,000 borrowers who were found to be victims of robo-signing. But there haven’t any thorough investigations to determine the full scope of that scandal or how many people were actually effected.  Part of the money could be used to reduce principal (by a piddling $20,000) for a small number of homeowners, and some could be used to pay housing counselors, who provide advice for people facing foreclosure.

But as in previous foreclosure reduction efforts and previous settlements with the banks, enforcement and accountability are completely lacking.

And while $19 to $25 billion may sound like a lot of money to us, to the bankers, it’s pocket change: It’s neither punitive nor a deterrent.

This foreclosure deal is so bad that Kamala Harris, the California AG who is a close ally of the president’s, walked away from it, promising instead to join with Nevada’s AG to scrutinize the bankers’ foreclosure practices more closely.

In doing so, Harris is behaving like real law enforcement official, not a bank apologist. Like any prosecutor, she knows she has to have solid evidence in hand before she talks about a plea bargain.

A  handful of other state AGs are expressing skepticism about the proposed settlement, but the Obama administration continues to pressure the AGs to settle before the banks’ behavior is fully investigated and understood.

As MIT economist and Baseline Scenario blogger Simon Johnson told Dave Dayen at Firedoglake, “Why go small when you have a strong case for fraud?”

Harris isn’t the only one who walked away from what she saw as a shabby deal for her constituents. The New York AG, Eric Schneiderman also balked, and when he started to question the deal, he was booted off the negotiating committee.  What particularly disturbed Schneiderman was the notion that as part of a proposed settlement, banks would get immunity from lawsuits, not only relating to robo-signing, but for other mortgage-related fraud as well.

“I wasn't willing to provide a release that ... released conduct that hadn't been investigated, essentially,” Schneiderman told National Public Radio. Schneiderman has started his own investigation.

Initially the joint state-federal investigation looked like it had teeth. Back in 2010 when the process began, Tom Miller, the Iowa AG who headed the multi-state task force, stated bluntly: “We will put people in jail.”

What happened?

Remember what Deep Throat told investigative reporters Woodward and Bernstein during Watergate: Follow the money.

After Miller launched that initial investigation of the banks’ foreclosure practices, he raised $261,445 from finance, insurance and real estate interests – more than 88 times as much as he’d raised before the investigation. Not all that much money in the scheme of things, but apparently enough to inspire him to back off. Now Miller is leading the settlement juggernaut.

Where we see fraud, our leaders see financial opportunity.

We can’t let Miller and the Obama administration let the banks off the hook again at our expense. We want thorough, transparent investigations and indictments where appropriate.

Please call the White House today and tell them that if it walks like a bailout and quacks like a bailout, we’ll know it’s a bailout, no matter how administration officials try to dress it up.

 

And we don't want any more bailouts.

 

 

 

 

 

 

 

 

 

Foreclosure / Martin Column / President Barack Obama - 01/24/2012

Re-Bending the Moral Arc of the Universe

Thanks largely to the Occupy movement, the disparity between the incomes of the wealthiest Americans and everybody else – now a chasm of historic proportions – has exploded onto the national consciousness. Even the Republican presidential candidates have stumbled into the fray; motivated by the fact that the current frontrunner is a financier, they are arguing over what they insist are the differences between “venture” capitalism (good) and “vulture” capitalism (bad).

Debating the role of finance and speculation in our economy in this election year is a bit of good news for beleaguered Americans who have been steadily losing their economic standing for decades and encouraged to offset that long decline through borrowing on credit cards and homes – until this house of cards collapsed in 2008.

This is a discussion that President Obama should embrace for reasons that transcend the usual relentless drive to get re-elected. Obama has frequently recalled Martin Luther King’s dictum that “the arc of the moral universe is long but it bends toward justice.” Economic inequality became as much a priority for King as racial inequality towards the end of his life. As Ron Suskind points out in his masterly assessment of President Obama’s first years in office, Confidence Men, King wrote that, “‘the contemporary tendency in our society is to base our distribution on scarcity, which has vanished, and to compress our abundance into the overfed mouths of the middle and upper classes until they gag with superfluity. If democracy is to have breadth of meaning, it is necessary to adjust this inequity.”

That adjustment is now a matter of great urgency, because the arc of the moral universe has been twisted away from justice.

The middle class is no longer riding the coattails of the rich. To the contrary, the American dream – that through hard work one can hoist oneself up from modest beginnings or even poverty to a better life – has vanished. The Wall Street Journal reports that the economic recovery may take generations. LINK. Saturday’s New York Times contains an interactive feature that illustrates the deepening divide between the wealthy and everyone else. It lets you check out which professions are more likely to usher you into the 1% club, and how much you need to make to qualify as a member of the 1% in various cities throughout the country. ’

Readers' comments to the article are poignant in their reflection of the profound economic struggle so many Americans are facing. Not all those among the 1% are defensive; indeed, many who might be in the 1% themselves point out that when it comes to the distribution of wealth, and the opportunity that wealth provides, it’s really the .01% at the topmost pinnacle vs. the 99.99% – a distinction the data confirms.

Whatever the numerical pivot point, the destruction of the middle class in this country is a stunning transformation that King would have seized upon. As a community organizer, he understood the importance of calling out inequality wherever it is found in order to engage the powerful force that is the American people. Demanding the attention of the affluent, and their intervention, King said, “Injustice anywhere is a threat to justice everywhere.”

Contrary to some pundits and outspoken advocates of the .01%, challenging the increasing distance between the “haves” and the “have nots” – now that the category of “I have because I borrowed to get it” has been foreclosed – isn’t class “warfare.” As the New York Times pointed out: “Class reality has nothing to do with class warfare.”

The super-elites do not want the presidential candidates even to broach the subject of income inequality because they understand, as King knew, that the discussion inevitably will lead to a national demand for action by the 99.99%, which, to this point, is disorganized, fractured and only dimly aware of the strength they might wield if they were united.

Consider this historical example. Back in the mid-1980s, auto insurance rates in California were skyrocketing. Auto insurance companies weren’t just jacking up everyone’s premiums; they were basing rates on where a person lived, rather than their driving safety record. So people who lived in low-income neighborhoods often paid more for the insurance they were required by law to buy – if they could afford it at all. People who couldn’t afford it – lower middle class and the poor – were surcharged with a penalty for not having had prior insurance when they later scraped the money together to buy it. Not surprisingly, there were lots of uninsured motorists on the road, which forced up the price of insurance for those who did buy it. It all came down to one problem: insurance companies were unregulated and free to impose arbitrary prices. But the insurance lobby was able to block any reforms in the state legislature by pitting urban vs. rural drivers, and the middle class against the poor.

California voters, presented with the opportunity, were not so easily manipulated. By directly attacking and then addressing the inequities in the insurance marketplace, Proposition 103 educated and united the constituencies: the 1988 measure mandated an across the board, twenty percent rollback of auto, home and small business insurance premiums. It also ended zip-code based premiums for auto insurance. Everyone saved money; the only losers were the insurance companies. The industry spent an unprecedented $63 million on advertisements scapegoating the urban and, with a thinly veiled racial tinge, the poor. But the strategy didn't work. The voters saw through the industry’s cunning and passed the initiative, with conservative Republicans in Orange County joining Democrats in Los Angeles to provide the margin of victory.

As a candidate in 2008, Obama promised that the presidential election would be meaningful to the vast majority of Americans who had been disenfranchised by the corrupt political system that precipitated the financial collapse. But he failed to wield his victory as a sword on behalf of those Americans. Now he has a chance to win a second chance to do so. He faces a much tougher battle this time around, among other reasons because corporations are far more deeply entrenched in the guts of the democracy, thanks to the U.S. Supreme Court’s decision in Citizens United, which has unleashed the furious, dominating power of corporate money in electoral campaigns.

The nation’s future cannot be dictated by the 1% and their money  – not if the country is to retain the democracy that was bequeathed to us by the Founders. If Obama or some other candidate engages the citizenry in a debate over the foundational issue of economic inequality, and offers a vision of democracy in which regular people are back in charge – starting with a constitutional amendment restoring the primacy of humans over money in the electoral process – he will be able to lay claim to having re-bent the moral arc of the universe traced by King.

Citizens United / Harvey Column / Occupy / Outrage / President Barack Obama / Supreme Court - 01/16/2012

The President Aims For the Skyboxes

I keep telling myself I’m going to stop picking on President Obama and his administration because I don’t want to sound like a broken record.

One reader even suggested I might even be giving comfort to the Republicans.

Which, believe me, is not my intention.

But then the president and his people do something so clueless it seems to demand attention.

The latest example is the news that his campaign is contemplating moving the final extravaganza of the Democratic Party convention this summer in Charlotte, Bank of America’s corporate headquarters, to a stadium named for the country’s largest too big to fail bailed out bank.

You know, the one that wanted to charge its customers to use their debit cards, before the huge public outcry stopped them. Even the president slammed the bank’s debit card debacle. I wrote about some of the bank’s numerous other fiascoes here.

Now, the president and his campaign need to switch to the B of A stadium, according to the president’s people, because they need more luxury skyboxes for their big-money donors.

Remember when President Obama stirred the nation on election night in 2008? Speaking before a crowd of 240,000 in a public park in Chicago as well as a huge televised audience, Obama assured the country that “change had come to America.”

In 2008, the president spoke in Grant Park, which has been public space since the 1840s. Bank of America Park is an NFL stadium, home of the Carolina Panthers. They sell the naming rights for millions of dollars a year.  Local residents call it the BofA, or the Vault. Before the name belonged to Bank of America it belonged to the cell phone company Ericsson.

Imagine what a different impression the speech would have made if the president gave it surrounded by advertisements for the country’s banks.

We might have been better prepared for his economic policies if he had. The president has gone from shooting for the stars that night in Grant Park to aiming for the skyboxes.

I’m sure the president’s people will make sure that there are no actual advertisements on display while he speaks. But the symbolism, or optics, couldn’t be more powerful.

If the president and his party want to perform a public service, they should arrange to have the amount Bank of America, has contributed to each of the presidential candidates and their parties up on the scoreboard, along with the amount of bailout money, low-interest loans and loan buyouts the bank received from taxpayers.

If there was room, the party could display the names of its top donors.

If the BofA donations were displayed today, you might wonder why the president didn’t find somebody else’s stadium to give his speech from.

So far, the bank has forked over $126,500 to Romney and a measly $39,024 to the president.

But don’t cry for the president and his party. I’m sure they’ll more than make up the difference in the skyboxes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of America (BoA) / Martin Column / President Barack Obama - 01/13/2012

All the President's Millionaires

While there’s some shuffling of desks close to President Obama, the most important factor isn’t changing ¬– the 1 percent is retaining a tight grip on the administration.

Exit Bill Daley (income from J.P. Morgan in 2010 = $8.7 million). Enter Jacob Lew (income from Citigroup in 2010 = $1.1 million). Lew was CEO of the Citigroup division that invested in credit default swaps, among other risky investments that sank the economy. But the bank, which survived only thanks to taxpayer generosity, paid Lew a $900,000 bonus.
Were they really paying him for overseeing the investments that nearly sank the bank – or were they compensating him for the work he did for the bank while he served in the Clinton administration, betting that Lew would serve again?
And who can forget Daley’s predecessor, Rahm Emanuel, who got paid $16.2 million during a 2 1/2/ year as an investment banker, and remained a hedge fund favorite?
Meanwhile, still firmly in place near President Obama’s ear as his closest outside adviser on creating jobs is Jeffrey Immelt, CEO of General Electric. The Center for Public Integrity’s i-watch news is out with a devastating investigation into how GE under Immelt lost more than $1 billion getting into the subprime loan business, ignoring its own whistleblowers who were trying to tell their bosses how the irresponsible pursuit of profits led to widespread fraud.
This is more than just inside baseball – with these people in charge of the Democrats and the Republicans as well, there’s little hope that the administration will come to grips with the foreclosure crisis – or hold bankers accountable for looting and tanking the economy. Only a huge public outcry, much larger than the Occupy has mustered so far, can hope to change that.

Martin Column / Occupy / Outrage / President Barack Obama - 01/09/2012

We the Fee

I couldn’t find any comment from the Republican presidential candidates on one of the most compelling financial events of the last week: Verizon’s virtually instant reversal of its $2 fee on people who pay their wireless bills over the phone or online.

Nor apparently did the White House have anything to say, even though the Federal Communication Commission’s announcement that it was “concerned” about the fee no doubt factored into Verizon’s decision. The FCC, once the cell phone industry’s best friend in Washington, D.C., has morphed into something actually looking like a consumer protection agency under Obama. It also killed the AT&T – T-Mobil merger that would have destroyed competition in the wireless marketplace and led to vastly higher prices and much worse service. The President certainly deserves a victory lap – and could use one – but remained incommunicado during his vacation in Hawaii.

Nothing from the Tea Party or Occupy Wall Street either.

Fees have become the bane of the American consumer. Airlines make more money from fees than from air fares. Banks replaced tellers with machines and now force their customers to pay $3-$5 for the privilege of accessing their own money. Hotels apply “resort fees” for using the typically impoverished gym. And then there is the coup de grace: the fee you have to pay for getting a bill in the mail – a favorite of the cell phone and health insurance companies.

Undisclosed, or at best hidden in the fine print, these fees cripple consumers’ ability to compare prices. Which becomes a nightmare if you realize you are paying too much and decide to take your business elsewhere: many of these companies require you to stay with them for two years or pay an early termination fee in the hundreds of dollars.

Verizon’s retreat from the fee was a major victory for consumers, who organized a massive internet/Twitter/Facebook protest worthy of Zuccotti Park or Tahrir Square. In November, Bank of America tried to institute a $5 fee for using a debit card – it too was forced to back down in the face of national outrage.

How then to explain the silence of political candidates and public officials? The simple answer harkens back to the Occupy metaphor. The political class doesn’t sweat the small stuff like a $2 fee – they can afford not to. But most Americans can’t afford to throw away two bucks.

Harvey Column / Occupy / Outrage / President Barack Obama / Tea Party - 01/03/2012