Strong message for weak leaders

A New York jury didn’t just acquit a midlevel Citibank executive, they sent a strong, clear message to Washington.

The only question is, how do we get Washington to start listening?

The message came along with a not guilty verdict in the case of a Citibank executive, accused by the SEC of negligence for failing to provide disclosures to clients that his own bank was betting against the complex financial packages that the bank was selling.

Brian Stoker’s lawyer argued that he was just one of many who were doing the same thing in Citibank’s employ.

The attorney argued that it was others, higher up the chain of command at Citibank,  who had committed the misconduct.

Evoking the child’s book, “Where’s Waldo?” the lawyer, John Keker, invited jurors find those hidden characters who were really to blame.

Not only did the jurors acquit Stoker, they wrote an unusual letter to the SEC: “This verdict should not deter the SEC from continuing to investigate the financial industry, review current regulations and modify existing regulations as necessary,” the jurors wrote.

Twenty-three year old juror Travis Dawson told the New York Times: “I’m not saying that Stoker was 100 percent innocent, but given the crazy environment back then it was hard to pin the blame on one person. Stoker structured a deal that his bosses told him to structure, so why didn’t they go after the higher-ups rather than a fall guy?”

And the jury foreman, Beau Brendler, told American Lawyer magazine: ”I would like to see the CEOs of some of these banks in jail or given enormous fines,” he said, “not a lower level employee.”

In a separate case, Citibank has already agreed to pay a fine on the collateralized debt obligations at the heart of the case against Stoker.

While the Justice Department is touting that civil fines for fraud have skyrocketed, the Times reported that prosecutions against individuals, especially those at the top, are rare to nonexistent.

“A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Sen. Jack Reed, Democrat of Rhode Island and chairman of a subcommittee that oversees securities regulation, said at a recent hearing.

The SEC has been hobbled by 20 years of inadequate funding and a revolving door that delivers SEC lawyers right into jobs with the firms that they’re supposed to be regulating, or with the law firms that represent those firms.

And that’s not the worst of it.

Prosecutors take their cues from the top. The Obama administration, from the president to his treasury secretary, Tim Geithner and his attorney general, Eric Holder, has consistently blamed the 2008 financial collapse on stupidity and greed but said that most of the worst banker conduct was not illegal. President Obama has paid only lip service to holding bankers accountable while doing nothing.

The most recent example is a mortgage fraud task force the president announced in January. It took months to get staff and office and the task force has done little more than issue a couple of subpoenas and some press releases.

So it’s no wonder that the SEC continues to avoid pursuing the financial elite.

Meanwhile, both presidential candidates and the big media continue to ignore the issue of banker accountability.

As Mike Lux has pointed out, in the 2010 exit polls, 37 percent of voters blamed Wall Street for the on-going weak condition of the U.S. economy. Those voters, who are angry at Wall Street and skeptical of government, had voted 2 to 1 for Obama in 2008, but in the midterms, broke 56 to 42 percent Republican. They now view the president as a “Wall Street liberal.” These voters have no illusions about Romney, but  given the choice, they will favor the candidate who promises to lower their taxes and reduce the deficit, according to Lux.

Can our political leaders hear the message that the New York jury is sending? Or has the money that rules our political system completely drowned it out?

Contact your representative and let them know we haven’t forgotten all the promises to hold Wall Street accountable for its misdeeds.

 

 

 

 

 

 

 

 

 

Citibank / Martin Column / Securities and Exchange Commission (SEC) - 08/10/2012

Underwater secrets

Local governments'  have often stirred controversy with their use of eminent domain. While it's supposed to be used for the public good, too often it has been used to profit developers, while the public just feels ripped off.

Still, the idea of local governments using eminent domain as a tool to stabilize home prices in some of Southern California’s hardest hit communities is an intriguing one.

It’s the kind of bold action that’s been missing in the government’s limp response to the foreclosure crisis.

But the scheme that’s unfolding in Southern California’s Inland Empire, rated as the one of the most underwater in the nation, is a step in the wrong direction.

It smacks of politically-connected high-finance types, boasting of their access to politicians as their “secret formula,” wheeling and dealing in secret.

A san Francisco venture capital firm is cooking up a scheme in San Bernardino to use the government’s eminent domain power to seize some underwater mortgages from investors who own them and have been unwilling to offer borrowers principal reduction that would allow them to stay in their homes.

The firm’s idea, apparently, is to for San Bernardino County and other local government’s form a joint powers authority that would allow those government to act together to use eminent domain to seize mortgage loans, not the property, of underwater homeowners who were not behind on their payments at “market value.”

Then, according to the scheme, the firm would find investors to issue new mortgages to the homeowners at that lower, more affordable “market value.”]

The plan was hatched by San Francisco-based Mortgage Resolution Partners. That’s the firm originally headed by Phil Angelides, former state treasurer, real estate developer and venture capitalist best known recently for leading a congressionally-appointed investigation into the financial crisis.

After issuing a report highly critical of the banks, Angelides didn’t stump the country to put pressure on authorities to follow up on his report with prosecutions.

He went into the mortgage business himself, swaddling his efforts to make profits from distressed mortgages in good intentions of finding solutions to the foreclosure crisis.

It was Angelides who boasted in a letter to potential investors that his firms’ secret formula was its connections to public officials. Reuters reported that Angelides told potential investors they could generate 20 percent profits.

After Angelides’ involvement in the firm was publicized earlier this year, he stepped aside. Replacing him was Steven Gluckstern, a hedge fund veteran who was one of President Obama’s major bundlers in the 2008 election.

According to published reports, Mortgage Partners would make its profit charging a fee on every mortgage seized. How much will it be paid and how? That hasn’t been disclosed. But according to Naked Capitalism, its sources say that the firm expects to make a 5.5 percent fee on each mortgage ­– paid for by having the government seize the mortgages at a discount and sell them back to the homeowner for a profit.

The most serious general flaw in the scheme is that has unfolded behind the cloak of confidentiality agreements between government officials and Mortgage Resolution Partners, with no public disclosure or debate on the concept or details, giving the whole deal the stink of a sweetheart deal, not a solution.

When the Riverside Press-Enterprise sought written records of communication between county officials and the mortgage firm, they were told there were none.

The use of eminent domain is highly controversial because it has often been justified as benefiting the public when it ends up benefiting real estate developers. In this case, investors who own the mortgage loans have already weighed in opposing the plan. Though the plan’s backers say eminent domain has been used to seize intangible goods, they acknowledge it hasn’t been used to seize mortgage loans before. So investors are likely to challenge the process in court.

But I wouldn’t shed too many tears for the investors, who have stood in the way of principal reductions or any other means of helping homeowners.

Another question raised by the current plan: why is only Mortgage Resolutions Partners being considered as a partner for the joint powers authority? The idea should be put out for an open bid. Maybe other firms would have even better plans and offer a better deal.

And there are plenty of other issues surrounding the plan. Walter Hackett is a former banker who is now lead attorney in the Legal Aid Riverside’s branch near San Bernardino. While he likes the idea of using eminent domain as a tool to stabilize home prices,

he questions why eminent domain would be used to seize mortgage loans – which are more difficult to set a price on – rather than property itself. Seizing the property and paying the investor for the fair market value of the property, rather than the mortgage, would extinguish the old mortgage and the new investors could then issue a new one to the borrower at the market value.

Hackett also questions why eminent domain would be used only on mortgages deemed current, so-called performing loans, rather than including properties that have already fallen into foreclosure that are still owned by investors. “Former owners, or others might be able to afford reduced payments once the properties are priced at market value, rather than at the price of the underwater mortgage,” Hackett said.

Hackett’s unusual background, having been a banker and represented homeowners in foreclosure, would be invaluable in redesigning such a proposal. It should not be left only to the venture capitalists and the county politicians.

I’m not suggesting that local governments shouldn’t find a way to use eminent domain or find other creative solutions to help struggling homeowners. But we also need to stop assuming that when the financiers and politicians go into the back room, they come out with something that’s in our interest – even if they say it is.

We learned from the bailout and the government’s subsequent coddling of the financial industry how the secrecy and lack of transparency undermine trust in both our financial system and our government.

However inconvenient to the bankers and hedge fund honchos, such proposals must be hammered out with full public participation and debate. We don’t need any more secret formulas” brewed with corporate cash and political connections in back rooms with you and me kept out.

 

 

Foreclosures / Martin Column - 07/12/2012

Guide to congressional cosmetics

President Obama praised the STOCK Act when he signed it into law in April as a good first step to rid Congress of financial conflicts that undermine public confidence.

But it’s really no more than a fast makeup job to cover up the continuing blemishes on our democracy and give the president and members of Congress some talking points for the campaign trail.
The STOCK Act is supposed to prohibit legislators from profiting from the nonpublic information they get on the job. The STOCK Act also prohibits members of Congress from participating in initial public offerings unavailable to the public, and provides some additional public disclosure of congressional stock trading.
But we already know that members of Congress do better than civilians when they invest in the stock market. According to a 2011 study, investment portfolios of members of the House beat the market by about 6 percent annually, mimicking the performance of the stock portfolios of their Senate colleagues.
As an example, the Washington Post reported, four congressmen sitting on a committee investigating deceptive billing practices by video game makers sold their stock in the country’s biggest video game maker, GameStop, one of the companies under investigation.
One of the most egregious examples is Sen. Tom Coburn, the Republican Oklahoma senator who has made a name for himself preaching government austerity and self-righteously criticizing both parties for not having the courage to make the cuts needed to reduce the debt.
But austerity and sacrifice were apparently not on Sen. Coburn’s mind when he bought $25,000 in bonds in a genetic technology company at the same time he released a hold on legislation that the company supported. A hold is an informal Senate practice by which a senator can stall a piece of legislation. Coburn, meanwhile, cast one of the few votes against the STOCK Act, dismissing it as nothing more than a stunt.
One clue to just how innocuous the STOCK Act is: it was opposed by only two votes in the House and three in the Senate. This confirms my theory that whenever you see much ballyhooed-bipartisanship at work, you can be sure that members of Congress are either doing the bidding of the 1 percent, or covering their own butts.
The bottom line is that while members of Congress pass laws that prohibit other government officials from presiding over companies and industries in which they have a financial interest, Congress effectively exempts itself from such broad restrictions.
Writing on Yahoo Finance, Ron DeLegge outlines the STOCK Act’s major flaws and omissions: it still allows the sleazy, little-known practice of members selling “political intelligence” to lobbyists as well as continuing to allow members of Congress to own stock in industries over which they can exert influence.
The STOCK Act reminds us, when it comes to Congress, we shouldn’t be distracted by lame cover-ups or blather about bipartisanship, we should follow the money.
And we shouldn’t forget: it’s not their money.
It’s our money.

Bipartisanship / Congress / Martin Column / President Barack Obama - 07/06/2012

What's the `worst CEO' worth?

Why did the nation’s largest pension fund take a strong stance against Citibank’s excessive CEO compensation, but then turn around and vote for Bank of America’s lesser, but still outrageous, pay plan?

The California pension fund, CalPERS, was among the 92 percent of shareholders who went along with Bank of America in an advisory vote on CEO compensation earlier this week. In Wednesday’s vote, CalPERs did vote for measures that would have required disclosure on B of A’s lobbying activities as well an independent review of the bank’s foreclosure actions.

While But Bank of America CEO Brian Moynihan faced noisy protests and pointed questions at the bank’s annual meeting in Charlotte, N.C,  both of those initiatives, like say on pay, were defeated.

In their nonbinding “say on pay” vote, Bank of America shareholders approved a $7 million 2011 pay package for Moynihan. Last month, 55 percent of Citibank’s shareholders, including CalPERS, voted against a 15 percent pay hike for their CEO, Vikram Pandit, who had been getting along on $1 a year in 2009 and 2010 while Citibank floundered.

CalPERS’ position this week is strangely at odds with its previous positions.

In the past, CalPERS has been has been particularly tough on Bank of America. In 2010, it cast an unusual vote against all of the bank’s directors, including then-CEO Ken Lewis.

Asked for comment on Wednesday’s Bank of America CalPERS vote, a spokesperson referred me to the pension board’s 79-page governing principles, specifically the provisions covering executive compensation. CalPERS declined to answer any questions about why the pension fund voted for Moynihan’s compensation fund, but against Citibank’s.

True, Moynihan’s pay is less ($7 million) than Pandit’s ($15 million), but that doesn’t make either of them acceptable, much less understandable, by anything but the tortured logic of the too big to fail, government-coddled banks.

To approve Moynihan’s pay, shareholders had to overlook mountains of evidence that the bank is on the wrong track. Back in October, the bank retreated on a scheme to soak its customers for a $5 a month fee on debit cards after President Obama blasted it. The bank, which Bloomberg News estimates received more than $1.5 billion in federal bailout aid, has repeatedly been the target of criticism for underperforming in voluntary government loan modification programs. Earlier this year, B of A was among the big banks that settled foreclosure fraud charges with the feds and states attorney general. Though it was touted as $25 billion settlement, it actually only cost the banks $5 billion. But the bank fraud it highlighted was real.

Richard Eskow of Campaign For America’s Future outlined Moynihan’s dark career trajectory, from B of A general counsel to head of its retail division to CEO, while the bank completed its disastrous $2.5 billion acquisition of slimy subprime lending king Countrywide. When Moynihan joined senior management the bank’s stock traded around $52 a share. Today it trades around $7 or $8 a share.

Tallying the eventual costs of the Countrywide acquisition, Eskow includes a massive $8.4 billion settlement with states over illegal behavior, $600 million to settle a class action suit,  $335 million to settle a discrimination suit and $50 to $55 million for its part of lawsuits against Countrywide’s former CEO.

One bank analyst, Michael Mayo, recently ranked the worst CEOs. Moynihan was at the top of the list (with Citibank’s Pandit not far behind). Mayo cited the stock slide along with the debit card fee debacle and the bank’s failure to stem its foreclosure fraud and mortgage servicing problems.

Eskow hits the nail on the head when he asks: By what standard does Moynihan still have a job, let alone a multimillion-dollar salary?

And by what standard does he merit a vote of confidence by CalPERS, which less than a month earlier had taken a strong stand against excessive pay for another failed bank executive, Pandit?

Especially after the pension fund’s chief investment fund officer, Joe Dear, vowed after the Citibank vote to get even more activist. “Excessive CEO pay is not in the interest of the shareowners and not in the interest of companies,” Dear told CNNMoney.

CalPERS has long been an advocate for improved corporate governance, but its credibility has sagged after it suffered staggering losses in the financial collapse and was caught in its own sleazy “pay to play” scandal.

CalPERS’ Bank of America’s vote leaves unanswered questions about the pension fund’s claims to increased activism. Did CalPERS single out Citibank because that was the only too-big-to-fail bank to fail its latest government stress test, as U.S News and World Report suggested?

Or could the vote have something to do with the confidential settlement last November of a lawsuit CalPERS and 15 other institutional investors filed against Bank of America? Could CalPERS officials have agreed to back off their previous hard line against the Bank of America board as part of a secret deal the public will never see?

Of course, we don’t know details – the settlement is sealed.

Was Citibank a publicity-grabbing one-off, or did the pension fund give Bank of America a bye? We’ll have to wait and see just exactly what CalPERS means by activism when it comes to challenging the pampered, powerful titans of the nation’s too big to fail banks.

For now, all we can do is paraphrase the classic film portraying of the lack of accountability of corrupt power, `Chinatown’:

“Forget it Jake, it’s Wall Street.”

 

 

 

 

Bank of America (BoA) / CalPERS / Citibank / Executive Pay / Martin Column - 05/11/2012

Different strokes for different protestors

Operating on very different pieces of turf, the Occupy movement and the budding shareholder revolt are putting the status quo on notice: no more business as usual.

With May Day marches across the country earlier this month, the occupiers signaled they’re not going away. They intend to keep taking public space, protesting and reminding the country what our democracy has lost in a takeover by corporate powers.

Meanwhile, corporate shareholders appeared to be slumbering in the wake of the financial crisis, lulled by soothing predictions about economic recovery and buoyed by a stock market recovery.

But taking advantage of an advisory vote granted them in the Dodd-Frank financial reform legislation, shareholders have recently taken highly publicized swipes at excessive compensation plans for CEOs at Citibank and British Petroleum and several smaller banks.

At Citibank, 55 percent of shareholders rejected the notion that a company whose shares dropped 45 percent over the past year, wiping out $60 billion in shareholder equity, owed its CEO a $15 million salary hike. Citibank’s board said it would carefully consider the shareholders’ concerns.

CEO compensation plans narrowly won approval at General Electric, where the value of the stock has fallen 45 percent over the past 5 years, as well as at insurance giant Cigna, but not without noisy protests. At Credit Suisse and Barclays, a sizeable minority of shareholder voted against their executives’ compensation packages.

And excessive compensation is not the only thing shareholders are upset about. Some Cigna shareholders also expressed their opposition to the $1.8 million Cigna spent lobbying against health care reform in 2009.

At Wellpoint and Aetna insurance companies, shareholders want company officials to improve disclosure of their political spending, after the Center for Political Accountability found that both companies’ disclosure policies "leave significant room for serious misrepresentation of the company's political spending through trade associations."

Four of Wellpoint’s directors who are standing for reelection also face unusual no vote campaigns because the company has failed to live up to earlier commitments to improve disclosures of their political spending.

To be sure, these actions represent only a small number of corporations so far; most shareholders are approving without a fight the executive pay plans proposed by the board of directors’ compensation committees.

But like the occupiers protesting in the public square, the shareholders at these major corporations have driven a very large, sharp stake into their turf, and these first, highly publicized steps toward more accountability and transparency are likely to inspire more like them.

Occupiers, with their horizontal leaderless anarchist principles and drum circles, and shareholders, with their focus on the bottom line, might not seem to share much other than a desire for more accountability and a sense that the system as it is, isn’t working. But both groups are equally shut out of this political season, with neither party doing anything but paying the slightest lip service to their issues.

The occupiers and the shareholders are also carrying an important message for the rest of us: democracy isn’t just a matter of walking in to the ballot box and pulling the lever for our team every four years and waiting for the politicians to fix our problems.

 

 

 

 

Martin Column / Occupy / Outrage - 05/09/2012

Main Street talks back

Inside the D.C. bubble, Wall Street’s titans continue to have their way.

Their Republican allies in the Senate helped the titans kill the Buffet Rule, which would have required those who made more than $1 million a year to pay at least 30 percent in taxes, double what investors pay on capital gains income.

Wall Street has continued to stifle efforts to regulate risky derivatives like the ones that led to the financial collapse, while most of the Dodd-Frank financial reform enacted in the wake of the financial crisis has yet to be implemented.

In the Wall Street Journal (no link), columnist David Weidner asserted Wednesday that Wall Street has gotten some of its swagger back. “Big financial interests,” Weidner wrote, “are beating back every broadside with a vigor not seen since the financial-bubble days.”

But outside Washington it is a different story.

Voting for the first time on the CEO compensation of a too-big –to-fail bank, Citibank shareholders rejected a $14.9 million annual compensation for its top executive.  The “say on pay” vote, mandated as part of Dodd-Frank, is strictly advisory. Citibank officials can ignore it if they want.

For years, the company’s executives had promised that their pay would be strictly tied to performance. The CEO, Vikram Pandit, had been making $1 a year since the bailout during which time the bank performed miserably. But this year, the bank’s directors decided that Pandit deserved to get back on the gravy train with the rest of the industry’s CEOs.

The following day, shareholders at another smaller regional bank, FirstMeritCorp of Akron, Ohio, rejected the compensation package for their CEO in another “say on pay” vote. Directors of that bank wanted to raise the CEO’s pay $1 million to $6.4 million a year, after the bank’s stock had fallen 20 percent during the past year.

They’re just a couple of non-binding votes. But I found it striking that when Main Street voters had the opportunity to express their opinion directly on one aspect of Wall Street’s practices, the voters voiced disapproval.

Wall Street can’t dismiss their shareholders as a bunch of Occupy Wall Street types out to destroy the system, or marginalize their rejection as mere envy. These are hardnosed investors who would like nothing better than for Wall Street banks to get on solid footing and make money. But these voters realize that despite all the administration’s happy talk about how well the bailouts have worked, the banks still aren’t sound, and that the outrageous pay for top executives who haven’t delivered is a big part of the problem because it encourages focus on short-term profit, loading up on risk and relying on continuing government help to prop up their businesses.

According to Weidner, polls show that most voters have moved on from anger at Wall Street. That may be so. But if ordinary citizens, rather than Washington insiders beholden to Wall Street, were making decisions, I think they would coolly, calmly and rationally favor the wealthy paying their fair share of taxes, and sensible regulation that would keep the titans from getting too carried away with themselves and their schemes.

 

Congress / Derivatives / Executive Pay / Financial Reform Legislation / Martin Column - 04/20/2012

President aims to take the money and run

Here’s what President Obama wants you to believe about his relationship to the Supreme Court’s Citizens United ruling and the toxic torrent of corporate cash polluting our politics: “it’s complicated.”

In their ruling, the justices determined that corporations had a free speech right to anonymously contribute as much as they wanted to third-party political action groups that worked in support of candidates, as long as those PACs had no formal connection to the candidate.

On the one hand, the president blasted the court’s ruling less than a week after it was issued, with the justices seated right in front of him, in his January 2010 State of the Union speech, for opening “the floodgates for special interests – including foreign companies – to spend without limit in our elections.”

On the other hand, his campaign decided two years later to “level the playing field” with Republicans and encourage Super PAC support for the president, by allowing cabinet members and senior White House officials to cooperate with a Super PAC that supports their boss.

On yet another hand, the president insisted he would support a constitutional amendment to undo Citizens United.

And on yet still another hand, when the president had the opportunity to actually do something to shed some sunlight on the secretive stash of corporate donations unleashed by Citizens United, by issuing an executive order requiring government contractors to reveal all their political spending, he balked.

When you follow the president’s actions, rather than listen to his words, it’s not complicated at all.

The president and his Democratic Party colleagues are determined to “take the money and run.”

For nearly a year, President Obama had floated the idea of issuing an executive order requiring government contractors to disclose all their political contributions – including contributions to PACs and organizations like the US Chamber of Commerce – when they submit a bid.

The biggest contractors, for the most part, are defense contractors like Lockheed Martin, which smother the politicians in contributions to keep the weapons contracts flowing. In the 2012 cycle, Lockheed’s PAC has spent more than $2 million in contributions that we know of, 59 percent to Republicans and 41 percent to Democrats.

Its contributions go beyond an attempt to win a single weapons contract. What they and the other contractors have been able to do is to purchase the country’s entire debate over defense spending, so that few of our representatives ever raise a peep about whether the expensive defense systems are necessary.

Republicans howled at the President Obama’s proposal, accusing him of attempting to politicize the bidding process. President Obama wanted to know who had made the contributions, the Republicans charged, so he could award bids to the highest-contributing bidders.

While President Obama stewed, the Republicans passed measures in May 2011 to block[m1]  an executive order if it was issued.

The venerable Public Citizen organization made a suggestion that would sidestep the Republicans’ stated objection.

Why not, Public Citizen said, limit the disclosure requirement to the winning bidder?

But the president backed off – either because he didn’t want a fight with Republicans or because his fundraisers reminded him he had a tough campaign ahead and the little people they dote on with their solicitation emails weren’t going to be able to foot the bill.

On the most critical issue facing our political system, the president of the United States is incapable of leveling with the American people.

President Obama may want to do the right thing, but he is trapped in a system controlled by big money that is bigger than he is.

The first step to fight back against that system won’t come from Washington. It will come from building a grassroots movement to undo Citizens United. Read more about it, and our proposed constitutional amendment, which is easy to understand and will withstand any legal challenge, here.

 

 

Citizens United / Congress / Martin Column - 04/13/2012

Doing the minimum for the 99 percent

From both left and right, commentators have been heating up the Internet with proposals to raise the minimum wage from $7.25 an hour.

It’s not just Ralph Nader beating the drum for the Occupy movement to spearhead a movement to raise the wage, which hasn’t been increased since 2009.

Ron Unz, commentator at the American Conservative, has proposed an increase as part of a new Republican immigration strategy, and he’s has been pleading for Mitt Romney to adopt an increase in the minimum wage as part of his campaign.

Romney has yet to heed Unz’s plea, which force the candidate to fight some ingrained Republican dogma that preaches against the minimum wage, let alone increasing it. According to this old dogma, the minimum wage discourages small business from hiring.

It was President Obama’s chairman of his council advisers, Alan Kreuger, wrote a study, back when he was a Princeton economics professor, who debunked that notion.

In the past, Romney has shown some willingness to discard the customary Republican disdain for the minimum wage, speaking in favor of increases pegged to increases in the consumer price index.

Then last month, after the Wall Street Journal and others beat up on Romney’s minimum wage position, the leading Republican contender backed down. “There’s probably not a need to raise the minimum wage,” Romney told CNBC.

On this issue, the Wall Street Journal and the Republican base is way out of step with voters across the country, who consistently support an increase. According to one recent poll, 67 percent of voters favor an increase.

Which brings us to the other candidate: the president. He’s always said he favors an increase.

Back in 2007, when he was just a contender in Bettendorf, Iowa, Barack Obama gave a speech on “Reclaiming the American Dream,” in which he promised:  “I won’t wait 10 years to raise the minimum wage, I’ll raise it every single year. That’s the change we need.”

After Obama was elected, during his transition to the presidency, Obama’s team promised to raise the minimum wage to $9.50 an hour by 2011, with future raises pegged to inflation “to make sure that full-time workers can earn a living wage.”

But the only increase during Obama’s administration was the one in 2009 from $6.55 to $7.25, which was mandated by a law passed during a previous administration.

The president had nothing to do with it.

Last year, when his labor secretary, Hilda Solis, was asked about the need for a minimum wage hike, Huffington Post reported that she “largely ducked the questions.”

Maybe keeping his campaign promise and improving the economy are not good enough reasons to recharge the president’s enthusiasm for launching a campaign to boost wages for the lowest paid workers.

Fortunately, there are plenty of other reasons that should convince him to do what he said he would.

For one, it’s simply the right thing to do.

As the president himself pointed out just four months ago in a speech with a broad populist message in Osawatomie, Kansas, income inequality is the “defining issue of our time.”

In 1968, the federal minimum wage was $1.60 an hour. Gasoline was 34 cents a gallon and an average new car cost $2,800 dollars.

So the worker on minimum wage could buy nearly 5 gallons of gas for an hour’s wage.  Now that minimum wage worker can buy less than 2 gallons of gas for an hour’s wage.

If you adjust that 1968 wage for inflation, it would be $10 an hour – far more than today’s $7.25 minimum wage.

As the New York Times pointed out Sunday, the average corporate CEO made $14.4 million last year, compared to the average annual U.S. salary of $45,230. A fulltime worker paid the minimum wage makes far less – $15,080 a year.

Correcting for inflation, those with the least income have seen their incomes reduced over the past decade.

Another good reason for Obama to get with it– his base, which has been frustrated with his compromises with Republicans and cave-ins to bailed-out bankers, strongly supports an increase. And so do independent voters. Obama needs both of those groups to win re-election. So doing the right thing is also smart politics.

Income inequality / Martin Column / Mitt Romney / President Barack Obama - 04/11/2012

Etch-a-Sketch Politicians in a PAC Man world

Every once in a while a jaded political operative utters a profound truth, cutting through all the baloney and phony punditry.

That’s what Mitt Romney’s adviser did when he suggested that his boss could just hit “reset” and adopt more moderate positions once he locked up the Republican nomination and didn’t have to cater to the far right of his party. “It’s almost like an Etch-a-Sketch,” the aide, Eric Fehrnstrom, said. “You can kind of shake it up, and we start all over again.”

Sure, all of Romney’s foes will now clobber him with his aide’s comments and try to score political points off the “gaffe.”

But Fehrnstrom was offering a truth that rarely gets told in big media about how our politicians operate.

Romney and his fellow candidates count on voters not to pay attention, to leave them plenty of room to gloss over earlier statements.

Politicians count on the media’s cynicism and its craven need for access to power to blunt any remaining watchdog instincts. The media ignore commitments the candidates make and contradictions between what they do and what they said, shrugging it off because “everybody does it.”

Romney has had to shake the Etch-a-Sketch hard to erase the image of himself as the moderate Republican governor of Massachusetts whose own health care plan provided the template for President Obama’s health care plan, while candidate Romney now falls over himself to oppose the plan.

But the president has his own image shifts to answer for.

For example, candidate Obama portrayed himself as a strong advocate for the 99 percent, promising to change bankruptcy laws to help homeowners facing foreclosure keep their homes.

That shift, known as “judicial cram-downs,” would have provided a powerful incentive for banks to work out loan modifications with homeowners.

But when bankers fought cram-downs, President Obama quietly folded and judicial cram-downs died in Congress. Since then, the president and his administration have offered a series of limp anti-foreclosure measures that rely on voluntary bank cooperation, with paltry results.

But the Etch-a-Sketch is a pretty old toy. The current political season reminds me more of a slightly less retro game that gripped the public imagination – Pacman. In this wildly popular video game, a pizza-shaped icon gobbles up everything else on the screen.

The Supreme Court’s Citizens United ruling unleashes unlimited, anonymous contributions to political action committees, or PACs, aligned, but not formally tied, to specific candidates.

Unfortunately, when it comes to using the PACs to bolster their campaigns, the Republicans and Democrats are on the same page.

Both are eager to gobble up the gazillions of dollars available through the PACs, thoroughly undermining the spirit and practice of democracy, in which the majority, not the super-rich minority, are supposed to win.

The best way for us to shake up the political establishment, and the billionaires and big corporations who control it, is to fight for a constitutional amendment to overturn Citizens United.

Here’s our version of such an amendment, written in language that’s easy to understand and will withstand any legal challenge.

 

 

 

 

 

 

 

Citizens United / Martin Column / President Barack Obama - 03/23/2012

Bipartisanship for dummies

Ever notice how all the dysfunctional wrangling in D.C. stops the minute our politicians need to do the 1 percent’s bidding?

When it comes to taking away your rights as an investor, consumer or citizen, politicians who can’t seem to agree on anything else seem to work together fine.

The latest proof that “bipartisanship” is a cynical gimmick is the so-called JOBS act, passed by the House with bipartisan support and now under consideration by the Senate, with the blessing of President Obama.

In this case, the bill’s original Republican sponsors came up with the idea of packaging a collection of measures that would weaken investor and consumer protections by the acronym JOBS, which stands for Jumpstart Our Business Startups.

After all, who could be against JOBS? Most Democrats in the House were happy to sign on – only 23 voted against it. Even Democratic representatives Nancy Pelosi and Maxine Waters voted for it.

Maybe these politicians thought the JOBS branding and the bipartisan marketing would conceal what the bill really was – the latest of several disastrous bills dismantling sensible financial regulation.

The JOBS act is the ugly stepchild of the 1999 Gramm-Leach-Billey Act repealing the Depression-era Glass-Steagall Act, which kept banks from mingling federally-guaranteed banking activities from riskier activities, and the 2000 Commodities Futures Modernization Act, a Frankenstein bill that kept credit default swaps deregulated and led to the Enron scandal in 2001.

Both pieces of legislation contributed directly to the 2008 financial collapse.

In the case of the JOBS act, it would gut many of the accounting reforms contained in the Sarbanes-Oxley Act, which was passed in the wake of the Enron debacle. The JOBS act would exempt emerging companies worth up to $1 billion from disclosure, reporting and governance rules. It would allow such companies to operate for 5 years without regulatory oversight.

John Coffee, securities law professor at Columbia University Law School, says it could be more accurately described as the “boiler room legalization act” because it would allow companies to raise money from small investors on the Internet, without any regulatory supervision, evoking the small operations that sold dubious investments over the phone using high-pressure tactics.

Arthur Levitt, former head of the SEC, told San Francisco Chronicle columnist Kathleen Pender the bill was “a disgrace.”

In a scathingly sarcastic column in the New York Times, Pro Publica’s Jessie Eisenger wrote: “Nigeria shouldn’t be the only country to benefit from the Web. Right here in America, the elderly are increasingly attractive to a variety of entrepreneurial spirits. If JOBS becomes the law, such innovators could flourish.”

Barbara Roper, the Consumer Federation of America’s director of investment protection suggested that “Republicans cannot believe they have suckered the Democrats into taking up their idea that deregulation is the way to promote job growth.”

I don’t think the Democrats got suckered. I think they know exactly what they’re doing. President Obama has been struggling in his fundraising because Wall Street and the big-money donors have lost their enthusiasm for him this electoral cycle.

But he’s showing signs of bouncing back, after his campaign manager, Jim Messina, issued a pledge that the president would stop demonizing Wall Street. In February, the president went on a fundraising blitz, raising $45 million, up from $29 million the previous month.

But it’s still far less than the $56 million he raised during the same month in 2008, when he was fighting Hilary Clinton in a bruising primary campaign. The president and his party have to deliver for their funders, and the JOBS act is a perfect gift to show the big donors what they can expect for their generosity.

But they all must take us for a bunch of clods if they think we can’t tell the difference between a nasty attack on our rights and real jobs promotion.

Call your senator today and remind them you can’t be fooled by an acronym.  Suggest you know how to spell jobs, and this awful piece of legislation doesn’t.

 

Congress / Derivatives / Jobs crisis / Martin Column / President Barack Obama - 03/20/2012