Free market follies

Now that the big-time media is wrapping up its commemoration of the 20th anniversary of the Los Angeles riots, it can get back to its real job: bird-dogging celebrities and cheerleading a “jobless recovery.”

It can get back to its regularly scheduled programming, reporting on the sale price of movie stars’ homes while ignoring the persistent and unpleasant economic and political realities in low-income neighborhoods like south Los Angeles where the riots ignited.

But it was a different story at a terrific conference last week at the University of Southern California called “Up From the Ashes,” sponsored by the school’s Program and Regional  Equity.

It focused on how activists responded to the riots, their accomplishments and defeats, sweet victories and bitter frustrations, and the hard work that remains.

While many gave credit to the Los Angeles police for reforming their approach to minority and low-income communities, on other issues the prognosis was far grimmer. By critical economic measures such as unemployment, availability of affordable housing  access to health care, and the percentage of its sons and daughters in prison, low-income Los Angeles is worse off today than it was in 1992.

At the conference, longtime public transit activist Eric Mann pointed out that as in many other things, Los Angeles has been ahead of its time in its starkly contrasting communities of wealth and poverty.

He also tracked the decline of the government as a problem-solver and the rise of the worship of the free market as the panacea for even the most complex issues.

Mann compared the response to the earlier 1967 Watts riots with the response 1992 Los Angeles riots.

After the earlier riots, the McCone Commission, which had been appointed to investigate, predicted that if poverty and housing issues weren’t addressed, the city would erupt again.

While the War on Poverty initially resulted in some government attention to those problems, it wasn’t sustained. Antipoverty programs dried up as politicians embraced their new philosophy that demonized government as the problem and idealizing the private sector as the solution.

After the 1992 riots, the recovery was left in private hands, specifically to the Orange County-based former baseball commissioner who had organized the 1984 Los Angeles Olympics, Peter Ueberroth. While Ueberroth obtained promises for corporate funding for recovery for south Los Angeles, Ueberroth and his corporate colleagues were clueless about the community they were trying to help and the social issues they were wading into. As a result they failed to delivery any real economic benefit or social change. Government also failed to come through with any serious programs, leaving the community stranded once again.

Any gains came, not from corporate or government benevolence, but from determined efforts from the grass-roots, within the community.

Listening at the conference with ears attuned to the 2008 financial collapse and its aftermath, I heard a direct link between the “let the free market fix it” response the 1992 Los Angeles riots and the run-up to the economic meltdown.

The media and the politicians saw the geniuses who ran the big financial firms as not being unable to do wrong, with no need for the traditional oversight put in place after bank speculation led to the Great Depression. This led to the bipartisanship repeal of the 1933 Glass-Steagall Act, which had kept federally-guaranteed banks from engaging in other risky financial businesses, as well as the dismantling of the remaining regulatory structure.

Despite the massive failures of the free market to either regulate itself or solve social problems, we’re still in thrall to this faulty philosophy that the free market should largely be left alone to take on tasks for which it is clearly not equipped.

One of the biggest reasons for this is that the media has itself been so lax in holding the champions of the free market, like Ueberroth and the too big to fail bank bankers, accountable for the consequences of their missteps, broken promises, and failures, preferring instead to cheer them on in their folly.

Martin Column - 05/01/2012

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

What's Plan B For Jobs?

That’s the big question after the Republicans, true to their word, killed President Obama’s $447 billion jobs proposal.

In response, the president has pledged to break up his plan, which is already too small to significantly reduce unemployment, into even smaller chunks that the Republicans might swallow. It’s hard to find anybody who believes that’s a serious plan to put a dent in unemployment.

The only job the president seems to have a clue about preserving is his own, continuing to raise campaign cash at a record-breaking pace, raising $70 million for his own and Democrats’ reelection.

Meanwhile Republicans pursue their own single-minded agenda to enhance corporate power and their own – destroy President Obama, reduce taxes and cripple government regulation.

Unfortunately for Republicans, when you look at the facts, regulations don’t turn out to be much of a threat to jobs after all

The only legislation the two parties agree on are a handful of NAFTA-style trade agreements that most Americans fear will only lead to more outsourcing.

Where does that leave the 99 percent?

Out in the street.

That’s where they’ll be across the country and the globe today, to register their frustration with a political and financial elite whose actions created persistently high unemployment, plummeting home values, social service cutbacks and a world of growing economic uncertainty.

As OccupyLA states on its web site, “We have been giving away our representation to people who do not deserve it …”

Check here for a list of demonstrations around the world.

 

 

Congress / D.C. Disconnect / Martin Column / Outrage / President Barack Obama - 10/15/2011

Tweet Charlie: Pop the Corporate Personhood Question

Now that Mitt Romney has taken a stand on corporate personhood, shouldn’t the rest of the Republican field?

Luckily, they have the perfect opportunity to all go on the record this Tuesday at their debate in New Hampshire.

They may need a little help. That’s why we’re tweeting the debate moderator, Charlie Rose, to remind him about this key issue and suggest he should pin the candidates down on their stance.

In case you missed it, Romney made his position clear at the Iowa State Fair in August, when he said, in response to an angry heckler, “Corporations are people, my friend.”

The only other Republican candidate who I found has taken a stand is Ron Paul, who came out strongly against the notion that corporations are people.

Rose also might want to follow up with Romney: if corporations are people for purposes of political contributions, why aren’t they people for the purposes of paying taxes, where they have an entirely separate set of laws that enable corporations to take advantage of all kinds of arcane loopholes, so that many of the largest companies, like General Electric, pay absolutely no taxes?

If Charlie wants to get beyond the rhetoric to the heart of the uneasy feeling most people are having about our political system, he should follow up with these questions:

Is it good for our country for corporate lobbyists to have unlimited access to our politicians to engineer trillions in no strings attached bailouts and other special treatment for their clients, while Americans without that access get screwed?

Is it OK for corporations to buy our politicians with lavish anonymous contributions, making a mockery of our democracy? 

Nothing shows the disconnect between Washington and the rest of the country better than the U.S. Supreme Court’s terrible Citizen United decision last year, which defined corporations as people under the First Amendment for purposes of influencing elections and unleashed a tsunami of anonymous corporate donations to politicians and their PACs.

Isn’t the best way to fix the corporate dominance over our politics to pass a constitutional amendment, like the one we have proposed here, to undo Citizens United?

I’m sure I’m not the only American who’d like to hear the Republican candidates’ answers to these questions. I’m sure plenty of other Americans would like to hear the answers as well.

Tweet Charlie @charlieroseshow. Ask him in your own words or feel free to send him this post.

Go ahead, Charlie, pop the questions.

Citizens United / Martin Column - 10/07/2011

Feds Unsettle Foreclosure Abuses

Wall Street is apparently about to win another round as federal regulators prepare to sign off on a “slap on the wrist” settlement stemming from widespread abuses in the foreclosure process.

The settlement continues the federal policy of relying entirely on the banks’ voluntary compliance, despite repeated examples of banks using fraudulent and forged documents to foreclosure on homeowners. The settlement apparently imposes no fines.

“Judges don’t tell burglars to go design their own plan to stop breaking into people’s homes and report back in 30 days,” said Rev. Lucy Kolin of the PICO National Network in response to the settlement, which is supposed to be announced later this week. “A judge would get laughed off the bench if they did this, and yet this is exactly what the Fed, OCC and FDIC have chosen to do.”

At Credit Slips, Georgetown Law prof Adam Levitin first labels the proposed settlement “Potempkin regulation,” then decides the better analogy for where we are on bank regulation is the “inmates running the asylum.”

The Obama administration’s lack of enthusiasm for holding the big banks accountable doesn’t exactly come as a surprise. Dog bites man.
They were supposed to working with the 50 state attorneys general to investigate the extent and impact of the foreclosure problems, but the attorneys general and the Fed have yet to conduct an investigation worthy of the name, as if they were investigating violations of law, which they should be. If the Feds and the AG's insist on negotiations with the banks, negotiation without robust investigation is a recipe for disaster.

What’s left unclear by reports of the proposed settlement is whether the state AGs are now free to pursue investigations and remedies on their own or whether the settlement will undercut them.

That’s especially relevant in places like California, where the state’s new attorney general, Kamala Harris, ran a strong election campaign promising to protect homeowners from foreclosure abuses and to hold banks accountable. During the “negotiations”, Harris hasn’t had much, if anything, to say. Her office hasn’t been returning my calls.

Now that the Feds have once again caved in to the big banks, Harris will have the opportunity to keep her campaign promises and enforce the law equally. Homeowners will be counting on her.

 

 

Around the Web / Federal Reserve / Foreclosure / Martin Column - 04/07/2011

Remind AGs Who They Work For

The big banks are headed to Washington D.C. in an effort to weaken any potential settlement stemming from complaints about the banks’ misbehavior in the foreclosure crisis.

Those of us who favor holding the banks accountable are taking a different route Tuesday – through the country’s 50 state capitals.

A coalition of homeowner and consumer advocates are encouraging people to contact their state attorney generals today in an effort to encourage them to conduct real robust investigations into the big banks’ foreclosure fraud, not just go through the motions.

The official response to disclosures of the big banks’ sloppiness and downright fraud in the foreclosure process has been a mishmosh. President Obama refused to declare a moratorium while the mess was sorted out; the state attorney generals promised a tough investigation but don’t appear to have followed through, and then the various federal bank regulators got involved in an effort to negotiate a settlement.

One strategy for the big banks and their Republican allies has been to demonize Elizabeth Warren, a strong homeowners’ advocate who has been working to set up the Consumer Financial Protection Bureau, which was created as part of the financial reform package passed last year. While the CFPB doesn’t exist yet, Warren has apparently been involved in the settlement process because that agency will have a hand in enforcing a settlement.

At the national level, it’s not just the Republicans that are covering for the bankers. The Obama administration in its present mood of bank coziness hasn’t been inclined to either prosecute bankers for violating the law or drive a hard bargain with them.

So that leaves it up to the attorneys general, several of whom, including Illinois’ Lisa Madigan, Iowa’s Tom Miller and California’s new attorney general have promised tough stances in protecting homeowners and holding banks accountable. Which means it’s up to us to call them – today – and remind them to hang tough.

 

 

Consumer Financial Protection Agency / Foreclosure / Martin Column - 03/28/2011

Top 4 Lesson Big Bankers Can Teach Us

America’s bankers have been extraordinarily effective in responding to a financial crisis that they created. They’ve worked hard to make sure that the response to the crisis didn’t threaten their fat bonuses or their awesome political power.

They succeeded in gutting the toughest aspects of financial reform. Then they started lobbying the regulators who will have the enforcement power.

Now they’re toiling to undermine a proposed settlement with authorities over widespread abuses in the foreclosure process, and demonizing consumer champion Elizabeth Warren and the Consumer Financial Protection Agency in the process.

Of course they’re getting plenty of help from their government enablers. As Gretchen Morgenstern reported in the New York Times, the 50 state attorney generals who are supposed to be spearheading the investigation into the foreclosures aren’t doing any actual investigating.

This puts them at a definite disadvantage when they sit down to negotiate with the banks.

Those of us who aren’t bankers and would like to see a different outcome could learn a few things from the bankers.

How do the bankers do it?

  1. They’re relentless. They don’t take no for an answer and they don’t know the meaning of defeat. They have lots of money and they’re not afraid to spend it on campaign contributions and lobbying. While we may not be able to match their cash, there’s no reason we can’t be as relentless as the big bankers. They wouldn’t still be in business, let alone raking in billions in bonuses, if we hadn’t bailed them out.
  2. They have no illusions about loyalty. They spent big to elect President Obama. But when it looked like they could get more from the Republicans, they switched sides. Nobody can take their support for granted.
  3. They have no shame. They never apologized for all the risk and fraud that created the collapse. They never offered to tighten their belts or pick up part of the tab. They just kept fighting for their selfish interests.
  4. They maintained their sense of humor. How else do you explain their carping about how anti-business the president is, while Obama’s team does whatever it can to prop up the “too big to fail banks” while wringing its hands that it just can’t do any more to help the unemployed or distressed homeowners?

 

Financial Crisis / Financial Reform Legislation / Foreclosure / Martin Column / Outrage - 03/19/2011

Lame Ducks, Bogus Excuses

Sen. Chris Dodd brought the big banks back to Capitol Hill Tuesday to hear more about the foreclosure mess.

By the end of the day Dodd, who is retiring from the Senate after presiding over the watering down of financial reform, had a novel response: he called for an investigation.

By now nearly federal agency as well as every state attorney general is already investigating the scandal, after banks disclosed the shoddy record-keeping they were using in the foreclosure process.

How hard any of these investigations is really digging is an open question. But the more the merrier, according to Dodd. He suggested it would be a first test for the systemic risk council, which was set up under the financial reform law that bears his name, along with his House colleague Barney Frank.

The systemic risk council will be made up of members of the Obama administration, led by Treasury Secretary Tim Geithner. The administration has already brushed off the foreclosure scandal, so it’s highly unlikely the council would come back later and reverse its assessment.

Meanwhile the congressional bailout monitor, now headed by former Delaware senator Ted Kaufman, issued a stern warning about the consequences of the foreclosure scandal in its monthly report. “If document irregularities prove to be pervasive and, more importantly, throw into question ownership of not only foreclosed properties but also pooled mortgages, the result could be significant harm to the financial stability,” the monitor wrote.

Not to worry, the big banks keep reassuring us. It’s just a matter of some sloppy paperwork.

The big banks’ credibility, to put it politely, is not so hot. For example, Bank of America insists that they would be doing better modifying mortgages if not for the investors standing in the way. So the investigative journalism outfit Pro Publica took a look and found out their explanation was bogus.

Around the Web / Bank of America (BoA) / Martin Column - 11/17/2010

Urgent Challenges, Modest Responses

The good thing about President Obama’s state of the union speech is that he acknowledged the public’s anger over the financial crisis.

The bad thing is that he appears to reject it. “Look,” he said. “I’m not interested in punishing banks.”

As expected, the president put the rhetorical focus on jobs and the economy in his state of the union. But the actual proposals, a combination of tax cuts and subsidies were relatively modest. But the combination of his proposed freeze on most discretionary spending and continuing Republican opposition make the possibility of dramatic improvement in jobs and the economy unlikely. The speech didn’t contain the kind of dramatic response that 18 percent real unemployment and a continuing foreclosure crisis demand.

President Obama insisted he would veto any financial reform that wasn’t real. But he didn’t spell out what that might mean. Does that mean he’ll veto financial reform that doesn’t contain a Consumer Financial Protection Agency or meaningful derivatives regulation? The president didn’t say. He also didn’t pledge to fight for any specific reforms in Congress. The only specific he mentioned was his proposed bank fee to recoup costs of the bailouts.

President Obama blames his legislative frustrations on his own inability to fully explain his policies. But the president who has repeatedly promised no more business as usual remains afraid to tap into, and act on, the public’s honest passion for real change.

Martin Column / President Barack Obama - 01/28/2010

Finding Opportunity Among Democrats' Troubles

It’s the bankers, stupid!

President Obama, fresh from a stinging defeat in Massachusetts, came out swinging Thursday against the banks, promising a return to the spirit of Glass-Steagall.

The rhetoric was strong but the details were a little vague. It sounds like he’s suggesting limiting the size of banks as well as their ability to gamble with taxpayer backing. You can be sure the finance lobby will fight to block whatever new initiative the president offers.

Obama’s rhetoric is a year late but does provide opportunity nonetheless. The key thing is that Obama and the Democrats’ problems put real financial reform back on the table.

The debate over breaking up the banks has been fraught with fear-mongering and propaganda: supporters of the big banks argue business won’t have the resources to make big deals. Even smart people say dumb things in the debate, as Dean Baker points out. Broken-up banks will still be huge by any standard, just not quite so capable of taking the entire economy with them when they crash.

The obstacles to reform remain the same as they have been:

1.) a financial industry with unlimited resources for the fight

2.) politicians squeamish to take on their contributors in that industry, and only too willing to let bankers squiggle out of regulation in the legislative fine print

But Obama and other Democratic leaders have felt the sharp prick of the pitchforks in their rear ends.

They know that the public is aware of their clueless response to the financial crisis, shoveling billions to the titans of finance while failing to stem rising unemployment and foreclosures.

One step Obama didn’t take this morning was to scrap his entire financial team, the engineers of his too-comfy relationship to Wall Street and timid response to the crisis that has afflicted Main Street.

Except for 80-year-old Paul Volcker, the former Fed chief who has been born again as a reformer, they should all be fired.

On Thursday, Obama insisted he wasn’t afraid of a fight with the bankers. Certainly none of his team except Volcker have shown any inclination for doing or saying anything that would upset the bankers, let alone a brawl.

The current Fed chief, Ben Bernanke, is also feeling the chill from Massachusetts. Roll Call  is reporting that his confirmation for another term may be in peril, while The Hill reports that Senate Majority Harry Reid has “serious concerns” about how Bernanke, who has strong backing from Obama, plans to deal with the economy.

Now is the time to hold the president to his word. By all means contact Obama and applaud his tough speech Thursday. Contact your congressperson and senator and remind them that you’re paying attention to the reform battle and aren’t about to be fooled. Check out my open letters to Sens. Boxer and Feinstein for my bottom line on real reform.

We  need to tell the president and Congress that we won’t settle for phony reform that lacks transparency or a piddling tax on banks that represents just a fraction of their revenues. We need to tell them that we won’t settle for legislation alone – we need an antitrust crackdown to break the power of the big banks.

If you need ammunition for your phone calls and emails, here’s a study that shows how the financial industry has managed to thwart meaningful reform so far: it spent $344 million lobbying Congress – just in the first three quarters of 2009!

Meanwhile, Goldman-Sachs announced record profits last year, while it doled a mere $16.2 billion for bonuses.

Time will tell whether Obama is capable of delivering the fight he promised to back up his newfound populist punch. But let’s not give the president, or Congress, any excuse to back off or get distracted. Only relentless jabs from you and others will keep them from getting cozy again with their financial industry cronies.

The question right now is not whether Obama is up for the fight. The question is: can we turn our anger and frustration into a political force?

Glass-Steagel / Goldman-Sachs / Martin Column / Outrage / President Barack Obama - 01/21/2010