So close, yet so far

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Jefferson Morley at Salon:

In his new book, “Pity the Billionaire,” Tom Frank turns his mordant eye on the unlikeliest political development of the Obama presidency: how the crash of 2008 served to strengthen the political right. The deregulation of Wall Street, championed for 30 years by right-wing leaders, had led to an economic catastrophe so frightening that the country elected a liberal Democrat to the presidency. Yet two years later, the most conservative faction of the Republican Party, the Tea Party, had taken effective control of the House of Representatives, the regulation of Wall Street had stalled, and the champions of economic deregulation in Washington had emerged stronger than ever.

Frank, author of the bestselling book “What’s the Matter With Kansas?” provides a pithy and nuanced explanation of what he calls the “hard-times swindle.” He spoke with Salon from his father’s home in Kansas City, Mo.

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As you can see, the whole article goes off track early with “the country elected a liberal Democrat to the presidency.” You might expect that whatever follows that is probably not gonna be accurate.

Early in the book, you describe the moment in the spring of 2009 when free-market economics had been so thoroughly discredited that Newsweek could run a cover story proclaiming, “We’re all socialists now.” What happened? Why did that moment dissipate?

I saw that cover so many times [at Tea Party events]. For these people, that rang the alarm bell. I think the AIG moment [when the bailed-out insurance behemoth used taxpayer relief to dole out huge bonuses to its executives] was in some ways the high point of the crisis, when [the politics] could have gone either way. There was this amazing public outrage, and that for me was the turning point. Newsweek had another cover, “Thinking Man’s Guide to Populism,” and I remember this feeling around the country, that people were just furious. Somehow the right captured the sense of anger. They completely captured it. You could say they had no right to it, but they did. And one of the reasons they were able to do it was because the liberals were not interested in that anger.

I’m speaking here of the liberal culture in Washington, D.C. There was no Occupy Wall Street movement [at that time] and there was only people like me on the fringes talking about it. The liberals had their leader in Barack Obama … they had their various people in Congress. But these people are completely unfamiliar with populist anger. It’s an alien thing to them. They don’t trust it, and they have trouble speaking to it. I like Barack Obama, but at the end of the day he’s a very professorial kind of guy. The liberals totally missed the opportunity, and the right was able to grab it.

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Obama and the Democrats had the opportunity to catch a wave. We never believed his Hopenchange™ horseshit, but many people did. If he had done the right things he might have even persuaded some of us. All he had to do was channel the popular anger at the targets that deserved it.

They didn’t even use the bailout as leverage to break-up the TBTF banks and force them to accept new financial regulations. They just gave it away, no strings attached.

Looking back on it, I feel like people like myself were part of the problem. We sort of assumed with the Democrats in power, the system would correct itself.

One of the problems with liberalism in this country is that it’s headquartered in Washington and its leaders are a very comfortable class of people. Washington is one of the richest cities in the country, maybe the richest. It’s not a place that feels the crisis, that feels the economic downturn. By and large, the real estate market stayed OK. The city continued to boom. The contracts continued to flow. What we’re talking about here is the failure of modern liberalism. At one time it was a movement of working-class people. The idea that liberals wouldn’t feel economic pain was ridiculous. That’s who liberals were. No more.

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“Comfortable” is not the word I would use. I would use “corrupt.”

That’s why Obama and the Democrats failed. They are corrupt.

A bail-out with no strings. A stimulus that rewarded contributors but failed to stimulate. Financial regulations that don’t regulate. Healthcare reform that created a windfall for health insurance companies but didn’t reform health care. Crony capitalism.

The problem in this country isn’t the Tea Party. It isn’t the Occupiers either. They are both a reaction to the problem.

The Tea Party was created as an astroturf organization to channel right-wing anger at Obama and the Democrats. It turned on its creators and attacked the Republicans.

OWS was created as an astroturf organization to channel left-wing anger away from Obama and the Democrats. It succeeded.

Neither the Tea Party nor OWS has done much to change any minds. The red states are still red and the blue states are still blue. They are never gonna agree on most issues. But they both agree on a couple key things.

Both the Tea Party and the majority of OWS want responsive government. They want their elected representatives in Congress to keep their campaign promises. Sure, they voted for different candidates and different promises, but the principle is the same.

Both the Tea Party and the majority of OWS want to end crony capitalism. They might say it differently, but they both want the same thing. They are tired of seeing their tax dollars going to campaign contributors. Neither side likes Wall Street. They want their votes to count.

You would think some smart people would use those facts to make a change.

But now the Tea Party is busy trying to select a candidate to defeat Obama. When the Occupiers start up again in the spring they will be busy trying to defeat the Republicans. Meanwhile the crony capitalists will be laughing all the way to their banks.

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Bunker mentality

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Democrats Dare Not “Abandon” the White Working Class

It’s an enduring myth of modern American politics that the white working class is what stands between Democrats and a majority. Even before the character of Archie Bunker became a liberal scapegoat on television, the demise of the FDR coalition was reduced to bubba blowback.

In a sense, “All in the Family” captures decades of Democratic deliberation. The debate between old Archie (Joe Sixpack) and the young, college-educated Michael Stivic (hippie) defined the 1970s sitcom. The Democratic establishment decided that it had to choose between the two archetypes. It bet on Michael. And the Nixon-Reagan coalition dominated American politics for more than four decades.

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Way back when I was at Corrente, one of my very first blog posts was about Archie Bunker. I thought he got a bad rap. It’s ironic that he is mentioned in this context because Michael Stivic ultimately dumps Gloria and their young son and runs off to live on a commune.

For his bullheadedness, Stivic was sometimes criticized for being an elitist. He also struggled with assumptions of male superiority. He spoke of believing in female equality, but often tried to control Gloria’s decisions and desires in terms of traditional gender roles.

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Sound familiar? Meanwhile Archie mellowed over the years, became more tolerant and eventually rejected bigotry.

But wait! There’s more!

Gratuitous Clinton Bashing

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Even though it’s been out for a couple months now, Dan Froomkin decided to bring up Ron Suskind’s Confidence Men again:

In the book, Suskind describes how Obama made the conscious choice to staff his economic team with former Clinton appointees whose sympathies were with Wall Street — and that those men were unable to see how drastically out of whack the country’s financial system had gotten both because they helped create it and because it had served them so well.

Then, rather than forcefully impose his campaign’s populist vision on these men, Obama again consciously chose to defer to them repeatedly — and tolerated it even when they slow-walked, pushed back against, or simply ignored his instructions.

[...]

During his 2008 presidential campaign, Obama spoke eloquently and strikingly about the excesses of Wall Street.

[...]

In the midst of the U.S. government’s September 2008 bank bailout, Obama told a Nevada audience: “Let me be perfectly clear. The fact that we are in this mess is an outrage. It’s an outrage because we did not get here by accident. This was not a normal part of the business cycle. This was not the actions of a few bad apples.

“This financial crisis is a direct result of the greed and irresponsibility that has dominated Washington and Wall Street for years.”

And although he said it wasn’t time yet, he promised: “There will be time to punish those who set this fire.”

In October 2008, he promise to “take on the corruption in Washington and on Wall Street to make sure a crisis like this can never, ever happen again.”

And one day before he was elected president, he told a Florida audience: “Tomorrow, you can turn the page on policies that have put the greed and irresponsibility of Wall Street before the hard work and sacrifice of folks on Main Street.”

Obama’s most seminal speech on the crisis was his March 2008 address at Cooper Union. There, he laid part of the blame for the disaster on Clinton-era financial deregulation, including the 1999 repeal of the 1933 Glass-Steagall Act. That repeal, which broke down barriers between commercial and investment banking, led to the growth of financial behemoths that were able to take enormous risks with impunity because they were “too big to fail.”

“[I]nstead of establishing a 21st century regulatory framework, we simply dismantled the old one, aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight,” Obama said. “In doing so we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.”

Among the foremost champions of that deregulatory regime were the key members of President Clinton’s economic team, including Robert Rubin, who was Clinton’s treasury secretary, Larry Summers, who succeeded Rubin, and Timothy Geithner, who worked directly under both of them.

But once Obama was elected, and was staring into the maw of staggeringly large financial crisis, he made a fateful decision: He left most of his progressive economic advisers behind — including such liberal luminaries as Robert Reich and Joseph Stiglitz — and chose to go with name brand Clinton officials instead. Summers became his chief economic adviser, Geithner became his Treasury secretary, and fellow Rubin protégé Peter Orszag became his budget director. (According to Suskind, Obama even offered Rubin himself an office in the White House.)

The “bold visions of the campaign season… resolved into the serious, often risk-averse business of actually governing,” Suskind writes. “In the midst of a battering economic storm, it no longer seemed like the right time to be making waves.”

While the appointments of these men and a slew of similarly pedigreed subordinates reassured the financial markets, their leadership undermined Obama’s populist promises.

Many of them had already spent their interregnum feeding at the Wall Street trough.

[...]

Back in March 2010, I wrote for HuffPost that “people looking for the reasons why the Obama presidency has not lived up to its promise won’t find the answer amid the minor rifts between key players….. The fact is that after a campaign that appealed so successfully to idealism, Obama hired a bunch of saboteurs of hope and change.”

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Why is Froomkin blaming Bill Clinton for what the Obama administration has done (or failed to do?)

Look, if you want to make a case that Bill Clinton is responsible for the financial meltdown, then go ahead and make it. Yes, he signed the repeal of Glass-Steagall. But that bill (Gramm–Leach–Bliley Act) passed Congress with veto-proof majorities. (Senate 90-8, House 362-57) So it’s a little disingenuous to blame it all on the Big Dawg.

But does anyone really think that Bill Clinton wanted to cause a financial meltdown? In hindsight it seems easy to connect the dots, but I don’t recall hearing lots of controversy back in 1999. More importantly, the Big Dawg left office on January 2001, nearly eight years before the shit hit the fan.

What is really ridiculous is blaming Bill Clinton for what his former appointees have done since leaving his employ.

First of all, Obama had limited options if he wanted to appoint Democrats with executive branch experience. There aren’t many former Kennedy/Johnson staffers still above ground, and the Carter people are getting a little long in the tooth.

Obama picked the people he wanted. Once they were in office they were HIS people, not Bill’s. Whether they gave Obama bad advice or ignored his directions, Bill Clinton had no responsibility or control over any of them.

If you read the whole article you will see that the reason why Obama has failed to hold Wall Street accountable is right in front of Froomkin’s nose:

Consider what progressive hero Elizabeth Warren told Suskind in a September 2009 interview:

“You can’t run a policy based on a misdirection, on a fiction,” she said. “I don’t know what the president is thinking. I don’t see the president. He meets with bankers. He doesn’t meet with me. But if he’s involved in this at all, he’s got to know that his angry words at Wall Street, at their recklessness and dangerous incentives in compensation, about how they do their business in ways utterly divorced from what’s actually good for the economy — that he can’t just say that sort of thing, and then dump money in their laps and be credible.”

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Who’s the number one recipient of Wall Street donations?

B-A-R-A-C-K O-B-A-M-A

They didn’t spend all that money for nothing. He’s the best investment they ever made.

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Bloomberg FOIA suit reveals Massive Secret Fed Loans

You have to click on this jaw-dropping article to see the interactive graphic that shows which bank got how much, and to read how the Fed and our favorite Money Men gave banks billions without Congress having a clue.

Secret Fed Loans Gave Banks Undisclosed $13B

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret.

…

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

…

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

…

Lawmakers knew none of this.
They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.
Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.
Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

I guess this guy is proven right once again:

I think there are people in the Fed and the Treasury who should go to jail for this. Ben Bernanke, Hank Paulson, Tim Geithner — some of the most successful white-collar criminals of all time.

Poor Baby

The new Mitt Romney Ad:

I’m no fan of Mitt Romney, but he may actually have an idea of what it would take to unseat Obama. The ad itself is pretty boiler plate stuff about how he’ll fix everything and repeal Romneycare Obamacare. What I enjoy is the media’s reaction to the ad.

“If we keep talking about the economy, we’re going to lose” is played from a recording of Barack Obama’s own words. Apparently, he was quoting a McCain aide when he spoke those words in 2008. First of all, that’s why you have to watch what you say. This reminds of a similar incident when Red Eye’s Greg Gutfeld pulled parts of Obama’s biography where he was quoting a sleazy friend.

Then there’s the fact that every quote preceding the one in question basically turned out to be a promise Obama failed to deliver. At least he’s telling the truth that the economy is a losing issue for him. Of course, there’s no way the media will fact check Obama in a Romney ad, so instead they and the White House went into overdrive outrage.

This is the key. It’s how Sarah Palin began to crack Obama. It’s how Netanyahu made Obama lose it about 10 seconds after the camera was off. You have to make him angry. You have to make him a joke. You have to treat him like a bad student. The media will follow. The DNC has produced 2 ads already to counter a line to whom most people who saw the Romney ad probably didn’t even pay attention. Someone’s pissed and they took time out of their schedule to whine about it.

Romney’s people are getting smart. They said it was taken out of context, but Obama took it out of context 3 years ago. Then they said that they’ll keep doing these ads just because it enrages the White House. Jay Carney even brought it up. I guess jobs was the number 2 priority in that press conference. If this keeps up, I might not have to hold my nose the whole time I vote for Romney.

Finally! Occupy Congress

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Next up: `Occupy Congress’

One of the enduring questions about Occupy Wall Street has been this: Can the energy unleashed by the movement be leveraged behind a concrete political agenda and push for change that will constitute a meaningful challenge to the inequality and excessive Wall Street influence highlighted by the protests?

A coalition of labor and progressive groups is about to unveil its answer to that question. Get ready for “Occupy Congress.”

The coalition — which includes unions like SEIU and CWA and groups like the Center for Community Change — is currently working on a plan to bus thousands of protesters from across the country to Washington, where they will congregate around the Capitol from December 5-9, SEIU president Mary Kay Henry tells me in an interview.

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It’s about time. I’m sure they’re going to pressure Congress to enact strict new ethics laws to put an end to crony capitalism, and to launch an investigation into the financial meltdown.

One goal of the protests, Henry says, is to pressure Republicans to support Obama’s jobs creation proposals.

Wait, what?

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Sacred Tropes and Right-Wing Cows

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Sister Toldjah:

Remember when Barack Obama was upset at the bonuses paid to AIG execs?

[...]

When the bubble burst in 2007, Fannie and Freddie began to lose billions of dollars of investments in mortgage-backed securities (MBS) guarantees. In September 2008, the Federal Housing Finance Agency (FHFA) took Fannie and Freddie into conservatorship as a result of mounting losses stemming from the financial crisis.The Enterprises became de facto government entities, funded by preferred stock purchase agreements from the Department of the Treasury (Treasury). Today, the Enterprises remain a multi-billion-dollar drag on the federal government’s finances. Since they entered conservatorship, Treasury has provided $169 billion to Fannie and Freddie – and the payouts are scheduled to continue with no end in sight. According to recent FHFA projections, by the end of 2014, Treasury assistance to the Enterprises will total $220 billion to $311 billion.

Since the Enterprises have become government-funded entities, lavish payment packages have been doled out to their senior executives, and taxpayers have been footing the bill. In 2009 and 2010, the Enterprises’ top six officers were given a total of more than $35 million in compensation. Of that amount, a total of $17 million in compensation was given to the CEOs of the Enterprises. Additional bonus installments for 2010 may still be forthcoming, and the two CEOs stand to make a total of $12 million in 2011. In addition, an executive has been awarded a substantial signing bonus – $1.7 million – upon joining the Fannie Mae. As these figures indicate, senior executives at Fannie Mae and Freddie Mac have become the highest compensated workers on the federal payroll – making as much as eight times more than the President of the United States. The executives even make more than their conservator, FHFA Acting Director Edward J. DeMarco.

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Yeah, I know, I’m tap-dancing in a mine field for even bringing this stuff up. Somebody will point to this as evidence we’re all a bunch of tea-kissing whip-baggers or something. But since everybody already hates us what the fuck.

I’ve been trying to figure out the housing crash/financial meltdown for a couple years now. Here’s what I know:

1) It didn’t happen overnight, it took years for everything to get in place. Democrats and Republicans are both in it up to their eyeballs. Banks were involved but they weren’t the only ones.

2) I’ve read lots of explanations for what went wrong. All of them seem to make sense, but none of them seem to agree with the others. I’m not an expert so I don’t know who is telling the truth. Maybe none of them.

3) Cry racism all you want, but when you make loans to people who can’t afford to pay them back you’re going to have a high rate of defaults. On the other hand it makes no sense to pay bonuses to executives who drove their companies into a ditch.

4) Things aren’t going to change as long as we keep sending the same people back to Washington.

5) Obama is the worst president ever.

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Why did they foreclose?

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Occupy Atlanta Encamps In Neighborhood To Save Police Officer’s Home From Foreclosure

Occupy Atlanta has repeatedly run into hurdles, as it has been evicted from Woodruff Park in Atlanta multiple times by the city’s unsympathetic mayor, Kasim Reed. Yet the group was invigorated yesterday as it moved to a new location to take action for economic justice.

Last week, Tawanna Rorey’s husband, a police officer based in Gwinnett County, e-mailed Occupy Atlanta to explain that his home was going to be foreclosed on and his family was in danger of being evicted on Monday. So within a few hours Occupy Atlanta developed an action plan to move to Snellville, Georgia on Monday to stop the foreclosure. At least two dozen protesters encamped on the family’s lawn, to the applause of neighbors and bystanders:

Nearly two dozen protesters assembled Monday afternoon at Tawanna Rorey’s four-bedroom home in a neighborhood just south of Snellville, clogging the narrow, winding street that runs in front of the house with cars, vans and TV trucks. Many neighbors stopped to gawk at the spectacle and even honked their car horns in support of the crowd. [...] [The protesters] set up two tents in the front yard, draped a “This Home is Occupied” sign over the porch railing and handed out bottled water and granola bars to other members.

The Sheriff’s Department did not come to evict the Roreys that day. A spokesman for the department told the Atlanta Journal-Constitution that the foreclosure process is still ongoing and that it has not scheduled an eviction. “It’s a good cause,” said Diona Murray, one of the Roreys’ neighbors, about the occupation. “If we don’t take a stand, who will?”

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I don’t know about you but the first thing I thought when I read this story was “Why did they foreclose?”

I watched the video, clicked through to the original story, and even checked out the posts of the usual suspects who were linking to this story at Memeorandum. Bupkis.

Not one mention of WHY the bank foreclosed.

If you borrow money to buy a house and then fail to repay the loan, what is “economic justice?”

I feel sorry for the family but what is the bank supposed to do? “Never mind, keep the house, don’t worry about the loan!“

So Occupy Atlanta camps out there in the people’s yard. Then what?

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Where did the money go?

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Let’s say it’s 1986, you’re in your mid-twenties and you and your spouse decide to buy a home for you and your two young children. You live in a medium-large city and you both have good jobs. With a little help from your parents and in-laws you manage to get a modest 3 bedroom tract home for $100,000, most of which you finance with a 30 year mortgage.

About fifteen years later you borrow against your home’s equity to put your kids through college. You support them and pay their tuitions at a nice (but not great) university. This costs you approximately $100,000 but you don’t mind.

In 2006 both your kids have finished school and are starting new careers. You and your spouse have a house bigger than your needs and you’ve grown tired of the rat race. You want to move to a smaller community with a slower pace of life.

A realtor tells you your home is now worth $300,000. If you sell it you can pay off your first and second mortgages along with your credit card debts and have enough left over to buy a small home in the rural community where you grew up nearly free and clear.

You sell the house and move. You’re not retired, but your financial situation allows you and your spouse to take lower-paying jobs without reducing your standard of living. You’re both in your early fifties and looking forward to early retirement.

One problem. You sold your old house at the peak of the housing bubble. Now that the bubble has popped the house is worth $100,000 again, and the new buyer walked away from it leaving the bank holding the note.

Are you going to give back your $200,000 ill-gotten gain?

There is a lot of anger at the housing crash and bankers are an easy target. While they certainly deserve their fair share of blame, they weren’t the only ones who cashed in during the boom.

Realtors, appraisers, inspectors, construction contractors, building supply stores, painters, roofers, and landscapers are just some of the people who profited from the housing boom. It was all good for years, then the music stopped.

People bought books and paid to go to seminars on how to “flip this house” and get rich quick. It was like a nation-wide Ponzi scheme. The people who got out before the bubble popped made out like bandits. Everyone else got left holding the bag.

Lots of people walked away from underwater mortgages. Lots of others tried or are trying to hold on to properties they can’t afford. What are we supposed to do about it?

Some people think the government should step in and fix things so they can keep their homes and have some or all of their debt forgiven. “I can’t pay my $2,000 month mortgage but I want to keep my house anyway!”

The “show the note” defense to foreclosure is based on the fact that sloppy recording practices make it hard for some banks to prove they hold the note to a property. But the hard fact is that in most of those cases the buyers really are in default and will never be able to catch up.

The banks didn’t hold a gun on anybody and tell them to borrow money. They didn’t force anyone to run up thousands of dollars in credit card debt. They didn’t make anyone take out student loans for a degree in interpretive dance.

I have no problem with investigating the housing crash and jailing those who deserve it. But a lot of what took place was legal, and the constitution prohibits ex post facto laws. We can and should make those practices illegal in the future, and we should also break up any bank that is “too big to fail.”

Banks will not change the way they do business no matter how many protesters march up and down Wall Street. They will change their ways when the law is changed. Law making takes place in Washington D.C., not New York City.

BTW – No investigation will take place while the candidate from Wall Street sits in the Oval Office.

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