Is Donald Trump Likely to Resign?

Thanks to Trump's mismanagement of the Covid-19 outbreak, the U.S. is on the verge of becoming the Typhoid Mary of major industrial nations

by Thomas Neuburger

Donald Trump's resignation is a topic on many lips these days. Chris Hayes, in a dramatic moment at MSNBC, called for Trump to resign over his mishandling of the coronavirus epidemic (deservedly so), and at least one newspaper editorial board has called for Trump to step down, as has Washington Governor Jay Inslee.

Michael Gerson at the Washington Post called for Trump's resignation because of "diminished moral capacity" related to his alleged callous indifference to the alleged Russian bounties offered for American lives in the Afghan theater of war.

Note that there are a lot of "if"s in these bounty reports — Gerson himself leads his argument with "If, as reported by multiple news sources" — while skeptics think it's awfully convenient timing that leaks from ... who? "American intelligence officials," who proudly admit to lying ... have reached the Times just as the Trump administration is working on Afghanistan peace agreements that could get the U.S. out of a war it's been waging for almost 20 years. (Whether the U.S. has been waging the war successfully or not depends on what you think the U.S. considers success. If military occupation counts as success, we've succeeded. By any other measure, we've failed.)

Analysts are also speculating that Trump could leave office voluntarily or be forced out. Robert Kuttner wrote at The American Prospect that Trump may leave on his own, since nothing seems to be going his way lately and the minute he's unelected he'll be subject to quite a bit of prosecution. Kuttner's speculation hinges on the possibility that Trump could pre-emptively negotiate a deal for resigning that amounts to a giant "Get out of jail free" card.

"Trump may conclude," writes Kuttner, "that he has more leverage to cut the best possible deal with all players while the bargain includes a widely wished-for resignation, rather than after he loses an election and his term merely ends. At that point, Trump’s opponents have no incentive to make deals, and a pardon only goes so far."

Sounds plausible to me, but I've been wrong before.

Others feel that increased pressure from Republicans leaders, fearful of losing both the White House and the Senate in November, will cost him critical support within his party. Most of those discussions are private at the moment, but they are many. The question is the method — how to get him to go.

Which brings us back to the Russian bounties story. Will that carry such weight with the American people that his already "crummy" approval rating (39%) and poll numbers (nearly 10 points below Joe Biden) will drop even further? If so, could a combination of public shaming and deep unpopularity force him out of office?

Sounds unlikely to me, but I've been wrong before.

The Typhoid Mary of Major Industrial Nations

Something that might force his resignation, though, is low on people's radar, but it shouldn't be — the EU travel ban on Americans entering Europe. Consider the following from CNN (emphasis added):

What EU's new border rules mean for travelers
Updated 1st July 2020

(CNN) — The European Union has formally agreed a set of recommendations that will allow travelers from outside the bloc to visit EU countries, months after it shut its external borders in response to the outbreak of Covid-19.

As had been widely expected, the list of 14 countries does not include the United States, whose current Covid infection rate does not meet the criteria set by the EU for it to be considered a "safe country."

The criteria requires that confirmed Covid cases in countries on the list are similar or below that of the EU's per 100,000 citizens over the previous 14 days (starting from June 15).

Countries must also have a "stable or decreasing trend of new cases over this period in comparison to the previous 14 days," while the EU will consider what measures countries are taking, such as contact tracing, and how reliable each nation's data is.

The US has not only the highest number of reported coronavirus infections of any nation, currently 2,590,582, but also the highest number of deaths, at, 126,141, according to the latest data from Johns Hopkins University.

US infection rates will need to dramatically drop if Americans are to be allowed entry to European countries, just as the European tourism industry enters what are traditionally its peak months.

The recommendations are expected to come into force as early as July 1, however, it remains up to member states to decide exactly how the implement any changes in border policy.

According to CNN, exemptions may be offered to "EU citizens or family members of an EU citizen; long-term EU residents or family members; those with an 'essential function or need,' such as diplomats, healthcare workers or certain agricultural workers."

Does being wealthy, powerful or connected count as an essential function? How will business travelers be affected? Would Charles Koch be allowed in? Would a high-ranking official of, say, Apple, on her way to a meeting with a German corporate counterpart, be counted as having a need to enter Europe? What if Charles Koch or the Apple CEO wanted merely to look in on their eighth farm in France, bringing the grandkids for a visit? Would they be allowed in?

If yes, how far down the wealth or corporate ladder would one need to be before the ban would apply? Would mere millionaires qualify? How about junior VPs at smaller companies? The questions, once exemptions are granted, are endless.

The Feckless Administration

Which brings us to Donald Trump and his resignation. The following two things are true:

First, U.S. Covid infection rates are never going to drop under the current regimen and under this administration. They will never come down except naturally, if the virus recedes on its own, period. Trump and his administration are structurally incapable of making this better, and yahoo U.S. governors are incapable of not making this worse.

Second, this will be true from now until January 2021 when the next president is sworn in, and perhaps beyond.

The American people can be told to suffer and bear with it, but they don't travel to Europe. Our bipartisan betters do, however, and this includes our Republican betters. If the Europeans are as strict as, frankly, they ought to be, do you think that powerful and wealthy Republicans, many of whose lives are essentially international, will tolerate a travel ban for the next six months?

When and if Republican elites decide that European governments are serious, that France, Germany, Italy and the rest won't let most of them in, I'll bet any money in the world that Donald Trump will be offered a deal, and both parties will be party to crafting it — even if it means letting Vice-President Pence run as an incumbent on the November ballot.

And, if Robert Kuttner is right about Trump's legal needs post-election, I'll also bet he takes it.
  

Señor Trumpanzee Has Been Looking For An Excuse To Demote Or Fire Bannon-- Here Are A Couple On A Silver Platter

This post was written just before Trump fired Bannon today

Chris Cuomo says CNN contacted all 52 Republican senators-- every single one of them, even Mike Rounds, Thad Cochran and James Lankford who no one ever calls for a national interview-- to come on the air and defend their president's Charlottesville remarks. Not one accepted the invitation. Meanwhile Bannon accidentally did an interview with the liberal American Prospect by calling an outspoken Trump foe, Robert Kuttner, out of thin air-- for a chit-chat? I don't think so.

Background: the new CBS poll shows that "nearly two-thirds of Americans consider the attack that led to loss of life in Charlottesville an act of 'domestic terrorism,' a view that spans partisan lines. But President Trump's response to Charlottesville finds more division. He gets majority disapproval overall for his response to the events, while most Republicans approve. Republicans interviewed following Tuesday's press conference also feel Mr. Trump is assigning blame accurately in the matter, while Democrats and Independents, and the country overall, disagree... Disapproval of the president's handling of events rose following the press conference. Both partisan groups showed at least slight ticks up in disapproval, with Republicans becoming a bit more disapproving and Democrats even more so... Overall, Americans are more apt to say Mr. Trump's policies have encouraged racial division rather than racial unity."

Now back to Bannon's interview with Kuttner, which has been driving Regime insiders into a frenzy since it surfaced Wednesday night. By way of introduction, Kuttner wrote that we "might think from recent press accounts that Steve Bannon is on the ropes and therefore behaving prudently. In the aftermath of events in Charlottesville, he is widely blamed for his boss’s continuing indulgence of white supremacists. Allies of National Security Adviser H.R. McMaster hold Bannon responsible for a campaign by Breitbart News, which Bannon once led, to vilify the security chief. Trump’s defense of Bannon, at his Tuesday press conference, was tepid. But Bannon was in high spirits when he phoned me Tuesday afternoon to discuss the politics of taking a harder line with China, and minced no words describing his efforts to neutralize his rivals at the Departments of Defense, State, and Treasury. 'They’re wetting themselves,' he said, proceeding to detail how he would oust some of his opponents at State and Defense." Bannon appears to be calling all the shots at the White House and treating Trump like the puppet Saturday Night Live used it explain their relationship.

“I’m changing out people at East Asian Defense; I’m getting hawks in. I’m getting Susan Thornton [acting head of East Asian and Pacific Affairs] out at State.”

But can Bannon really win that fight internally?

“That’s a fight I fight every day here,” he said. “We’re still fighting. There’s Treasury and [National Economic Council chair] Gary Cohn and Goldman Sachs lobbying.”

“We gotta do this. The president’s default position is to do it, but the apparatus is going crazy. Don’t get me wrong. It’s like, every day.”

Bannon explained that his strategy is to battle the trade doves inside the administration while building an outside coalition of trade hawks that includes left as well as right. Hence the phone call to me.

...I asked Bannon about the connection between his program of economic nationalism and the ugly white nationalism epitomized by the racist violence in Charlottesville and Trump’s reluctance to condemn it. Bannon, after all, was the architect of the strategy of using Breitbart to heat up white nationalism and then rely on the radical right as Trump’s base.

He dismissed the far right as irrelevant and sidestepped his own role in cultivating it: “Ethno-nationalism-- it's losers. It's a fringe element. I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more.”

“These guys are a collection of clowns,” he added.

From his lips to Trump’s ear.

“The Democrats,” he said, “the longer they talk about identity politics, I got ’em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats.”

I had never before spoken with Bannon. I came away from the conversation with a sense both of his savvy and his recklessness. The waters around him are rising, but he is going about his business of infighting, and attempting to cultivate improbable outside allies, to promote his China strategy. His enemies will do what they do.

Either the reports of the threats to Bannon’s job are grossly exaggerated and leaked by his rivals, or he has decided not to change his routine and to go down fighting. Given Trump’s impulsivity, neither Bannon nor Trump really has any idea from day to day whether Bannon is staying or going. He has survived earlier threats. So what the hell, damn the torpedoes.

The conversation ended with Bannon inviting me to the White House after Labor Day to continue the discussion of China and trade. We’ll see if he’s still there.

Yes, we will. When the clownish Mooch attempted to entertain Señor Trumpanzee by making reference to Bannon sucking his own cock, he wasn't just pulling a reference out of thin air. He was probably aware by then about the Coconut Grove party house-- not far from the infamous park where Marco Rubio used to work as a male prostitute-- that Bannon occupied. Bannon and his third ex-wife lived at 1794 Opechee Drive in Miami, a notorious meth and porn den. "The Miami-Dade Police Department’s public corruption unit launched an investigation into whether Bannon had fraudulently registered to vote in that county. Bannon had signed the lease, listed himself as an occupant, and paid the rent every month," wrote Jason Brad Berry yesterday. "One of Bannon’s colleagues, Arlene Delgado, testified that she had met with Bannon at the house on Opechee Drive, which he described as 'my house,' where she saw 'boxes, papers, and effects' that indicated he lived there. They met, according to Delgado, because Bannon had moved to Florida and wanted to increase the presence of the far-right Breitbart News, of which he was executive chair."

[In a 2017 report] the Washington Post focused primarily on the bizarre fact that Bannon listed the Opechee Drive house as his place of residence, despite living in California. The article lightly touched on the state of disrepair in which Bannon left the house-- including a bathtub apparently destroyed by acid.

But the truth turns out to have been much worse than that.

When Curtis first saw the house, the real estate agent, Beatriz Portela, told him the previous tenants “were not very upstanding people” and had “severely damaged” the property.

They had “put padlocks on all the doors, installed video cameras, and had ruined the bathtub, kitchen counter, and floor.”

Worse, though, was that it had been a “party house,” she said, known for frequent drug use.

Carlos Herrera, who owned the house with with his wife, Andreina Morales, painted a picture of what initially seemed to be a normal tenancy but soon evolved into an almost daily parade of debauchery and drug use, including run-ins with the police.

“The conclusion is she was probably cooking meth in here,” Herrera said of Bannon’s ex-wife. That would have explained the damage done to the bathtub and kitchen sink.

Curtis heard the same stories of porn, drugs, and debauchery over and over again.

“Each person gave accounts that the house was used to film pornography, had a constant flow of men, women-- and even children-- at the house and that blatant drug use was occurring at all hours of the night and day,” Curtis said.

At least five people told him tales of drug use and porn at the house.

Felix, a handyman who frequently worked on the property, told Curtis he had personally “witnessed women and men being filmed in the act.” He described the buckets of chemicals and bags of trash and rags he had to remove. He spent hours scrubbing the master bathtub, “which appeared melted by some form of acid.” Felix suspected the bathtub had been used for “making drugs.”

Curtis heard similar stories from the pest control service man.

“In fact,” Curtis said, “he did so in an almost gleeful and boastful manner.”

The pest control worker described witnessing drug use each time he came to the house, “even at early day hours.” He told Curtis it would blow his mind to know what “what went on in the house.”

An unnamed male tenant, he said, who was “a heavy set man,” offered him “girls for sex and/or drugs in lieu of payment,” but he never accepted because he could lose his job.

When the oven range needed repair, the repairman refused to come to the house. Despite the service warranty, Curtis said, he was told no one would come “if the same people were living in the house because ‘that house is evil and the people are evil.’”

The company ultimately agreed to send someone after being assured the prior tenants were gone.

When Curtis opened the gate, the repairman said with seeming relief, “You aren’t him.”

He proceeded to work on the range and also share his own horror stories about the previous tenants.

He told Curtis that on several occasions, when he would arrive to service the house, “the tenants would scream at him to leave and threatened him with violence.” At other times, when he was allowed into the house to perform work, he observed topless and naked men and women and the constant presence of drugs, which they would sometimes offer to him.

He told Curtis it was “the worst experience of his life” and that he “did not want anything to do with those ‘evil people.’”

“You have no idea what kind of evil stuff went on in the house,” he said.

One day, Curtis said, a woman came to the house asking for “Steve or [his ex-wife].” She appeared distraught when he told her they no longer lived there. She stood outside the gate for several minutes in a daze.

“I assumed she was probably a regular visitor to the house looking for drugs from the previous tenants,” Curtis said, “but I didn’t realize just how bad the drug use in the house had been at the time. I firmly told her to leave and to not come back.”

Meanwhile, according to the realtor, the neighbors had formed a committee “in an effort to get the owners to evict” the tenants before they ultimately left.

In September 2016, upon returning from a filming in the South Pacific, Curtis came home to a pile of mail addressed to Steve Bannon and his ex-wife. Curtis would write “return to sender” on the mail, but “the flow of bills, notices from the city of Miami, and letters from the Bank of Ireland started piling up.”

That’s when the landlord finally told Curtis about the identity of the former tenants.

“He told me that [Bannon] was indeed the previous tenant who caused such drama,” Curtis said. And now that Bannon had joined Trump’s presidential campaign, everyone was looking into Bannon and his history.

“He told me the FBI had contacted them, as well as several reporters and journalists,” Curtis said, “and that I should expect to be contacted as well.”

“It was an unusual situation, to say the least,” he added.

But it was more than unusual. It was also a health hazard.

Shortly after Curtis moved into the house, he started to experience a variety of symptoms: fatigue, inability to sleep, eye and skin irritation, chronic chest pain, and dizziness.

The symptoms would subside when he was away from the house for weeks at a time and they would resume when he returned.

In March, Herrera finally admitted to Curtis that the prior tenants had manufactured meth there. That’s when Curtis went to stay in a hotel. Again, his symptoms subsided.

He also purchased kits to test for methamphetamine in the house. At first, he focused on the kitchen, master bathroom, and guest room. The tests showed a high level of contamination, so Curtis ordered six more tests and had them shipped overnight.

The contamination was through the roof. So Curtis hired a company to test the house at well. The test confirmed “levels of meth and very high levels of cocaine.”

In May, Curtis moved out of the house.

He still suffers from health problems related to living in the house once occupied by Steve Bannon.

This morning Digby mentioned that "Steve Bannon is reportedly going back to Breitbart. That is a mistake and I'm surprised he's doing it. He has an agenda and part of it is to sow dissension on the left over "identity politics" vs economic populism and hostility toward the "deep state," which is a real fault line, if less of a chasm than some people want to believe. He could possibly make progress on that if he started a new project and re-branded himself as an isolationist, economic populist but Breitbart's "alt-right" identity is toxic to everyone on the left. From what I'm seeing so far, Breitbart is planning to "go to war" against the administration saying that it's full of "Democrats, globalists and Generals." (You can be sure that they will also continue to be a hub for the "alt-right's" connection to the Nazis and Neo-confederates too.)

"From the commentary I heard this morning, much of the punditocrisy apparently agrees with Bannon that all that confederate statue stuff has no salience among Trump voters since they inexplicably continue to contend that those nice salt-o-the-earth All American boys and girls reject white supremacy and just want some good union work in a factory somewhere and are looking to Donald Trump to finally deliver now that he got rid of that awful racist. The pundits are deluded."

Why the threat of The American Prospect's demise matters to all of us, as explained by E. J. Dionne Jr.

To donate, here's the link.

"[O]pinion magazines, from libertarian to socialist, have cluttered every place I have ever lived. Such publications are about more than brisk polemics. They can change the world. That's what William F. Buckley Jr. did when he started National Review in 1955. He and his writers provided the arguments and ideas that revitalized American conservatism. Its work led, eventually, to Ronald Reagan's victory in 1980. I mourn the result but still admire Buckley’s daring. . . .

"[A]t a moment when the political debate is excessively influenced by tens of millions of dollars spent by super PACs on short, nasty ads, you’d think we could spare a little for places like the Prospect that encourage us to think."

-- E. J. Dionne Jr., in his WaPo column today, "The
American Prospect, a little journal that looms large"

"As a founding editor of The American Prospect, I have never written a column like this one, and I hope never to write another."

-- Robert Kuttner, in "Hard Times, Scary Prospects,"
on the Prospect website

by Ken

This is embarrassing. Here I've been reading for weeks -- as I suspect you have too -- about the imminent financial peril of The American Prospect and not done a darned thing about it, and now E. J. Dionne Jr. writes a column on the subject, and here I am on the soapbox. Well, whatever it takes.

Predictably, E.J. is kinder and gentler, and more open-minded, than I would be. I think Bill Buckley was a hateful monster who should burn in hellfire for eternity -- and at the same time I consider him a saint compared with the dribbling pseudo-intellectual right-wing doodybrains he paved the way for.

Whatever their merits, right-wing rags have access to barrels o' cash from economic predators whose deep pockets are overflowing in good part thanks to predator-friendly laws and government (non)regulation that can be thought of as "return on investment" for chunks of said cash.

He manages ingeniously to let slip early on the fact that he has "occasionally written" for The American Prospect. So let no one accuse him of an undeclared interest in the subject. Of course, to me this disclosed relationship merely speaks well for both the magazine and teis particular occasional contributor. Then he explains his real interest in the magazine's present crisis.

My interest here is, in part, unabashedly political, since I think it's important for our country to have a vibrant publication devoted to an egalitarian brand of liberalism that honors the social contributions of a strong labor movement and values good reporting and writing.

The maddening aspect of the Prospect's crisis is that it has been innovative in dealing with the new online world that, as an opinion-lover, I also appreciate (even if I would insist that opinionated writing can never substitute for the relentless daily reporting of the traditional news outlets). The magazine gave a start or a big push to some of the best younger progressive writers now gracing us with their views. They include Ezra Klein, Matt Yglesias, Jonathan Cohn, Kate Sheppard, Dana Goldstein, Laura Secor and Jonathan Chait. My Post colleague Harold Meyerson is a writer and editor for the Prospect.

The Prospect was founded in 1990 by Robert Kuttner, Paul Starr and Robert Reich partly to provide intellectual competition from the other political shore to the neoconservative Public Interest. (I still have the first issues of both.) It blossomed into a magazine that honors and invests in long-form journalism, "the deeply reported piece that requires a huge amount of time and effort from a writer," says Kit Rachlis, the magazine's current editor. "There’s a strong need for this in the age of Twitter," argues Rachlis, who had successful stints at Los Angeles magazine, LA Weekly and the Village Voice, "since print venues for long form have been dwindling." No kidding.

The progressive think tank Demos came in as a partner with the magazine in early 2010, but the Prospect is now threatened by debts it needs to pay off quickly. And there is some happy news here that marries the new tech world with an old-fashioned sense of community: Rachlis says that since word of the journal's crisis got out, more than 900 people have contributed $133,000. But it will need more to survive. . . .

Here's a portion of what one of the founders, Bob Kuttner, has to say about the crisis on the Prospect website:

As a founding editor of The American Prospect, I have never written a column like this one, and I hope never to write another.

The Prospect could cease publication if we don't bridge a serious funding gap.

Specifically, we need half a million dollars, and we need it by the end of May. We are pulling out all the stops on an emergency fundraising drive. We are cutting costs significantly and have notified our staff that, unless we raise this money, the July/August issue could be our last. . . .

Why the emergency?

Unlike right-wing media organizations and think tanks, where Rupert Murdoch or the Koch brothers just write the editors a check, the Prospect has never had a single “angel” and has always depended on a broad array of donors.

But this is not a typical year. Among other factors, the Supreme Court's Citizens United decision, allowing unlimited political donations, keeps reverberating in toxic ways. In this crucial election year, several of our friends have told us that every spare nickel is going to help elect progressives. . . .

The irony is that if we can finance this temporary gap, we're in great shape going forward. Our new publisher, Jay Harris, working with [editor] Kit [Rachlis], has developed a superb plan to make an enhanced magazine available on tablet readers. This will incorporate audio and video, expand readership, and save costs on paper.

But first, we have to survive the summer.

So this is a onetime urgent appeal, and it is a true emergency. Otherwise, I would not be sending out an all-points bulletin. Issuing a call like this is risky, because bad news tends to spread, and distress can become a self-fulfilling prophecy. We have no choice but to succeed.

For 22 years, The American Prospect has been a beacon of smart progressive journalism. . . . At this critical moment for America, we cannot afford to lose one of the country's flagship progressive magazines. Wouldn't the right just love that?

You can mail donations to: The American Prospect, 1710 Rhode Island Avenue NW, 12th Floor, Washington, D.C. 20036. Or you can donate online at https://prospect.org/donate.

I’ve been at this for 22 years, since Paul Starr, Bob Reich, and I founded the Prospect in 1990 as a quarterly. I suspect some of you have been readers from the first issue. Before I hang it up, I’d like to pass the Prospect along to the next generation, stronger than ever.

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Come Friday, is Larry Summers really going to be our World Bank guy?

No, the Harvard thing didn't work out great, or his stewardship of the U.S. economy as Obama's economic genius, but who's to say our Larry isn't a perfect match for the World Bank? (Most of the economically informed people I know, but you know those nutty left-wingers. Also, it seems, a number of the U.S.'s fellow old-line economic powers.)


"So why does [Larry] Summers keep falling upward, from failure to promotion?

"Three reasons. He has powerful allies and patrons, and his views on the primacy of finance are congenial to theirs. Former Goldman and Citibank executive (with pit stops in between in D.C.) Robert Rubin, Summers' partner in the financial deregulation project of the Clinton era, is the most influential of these. Summers has a capacity to persuade people of his sheer brilliance, which leads some people to excuse both his mistakes and his temperament. But most importantly, Barack Obama likes Summers, and Obama is loyal to a fault."

-- Robert Kuttner, in "Pick Me! Pick Me!," at The American Prospect

by Ken

The charming, chummy little tradition is that the European economic powers get to pick the head of the International Monetary Fund, and the U.S. of A. does the same with the World Bank. And the system has been just humming along. Think "Dominique Strauss-Kahn" in the former case, and "Paul Wolfowitz" in the latter.

In addition to which, inconvenient though it may be for the European powers in the first instance and our own selves in the second, there actually are countries -- countries with economies -- not located in either Europe or the U.S. As a matter of fact, a major part of the world's economy is now happening outside the perimeter of the Big Pickers. Strangely, the newer economic powerhouses like China, India, and Brazil are not at all fans of the "traditional" IMF-World Bank leadership situation.

I'm sure you recall that it's time to pick a new World Bank leader. Which means us. And we're counting down to a deadline. The candidate(s) are supposed to be submitted by this Friday, March 23. Meaning that President Obama is supposed to have made up his mind by then. There are two problems:

(1) President Obama seems to have made up his mind ages ago.

(2) The name he made up his mind on isn't getting an exactly joyous reception amongst our economic partners. Forget those upstarts like China, India, and Brazil. Nobody in the First World much cares what they have to say, a situation likely to obtain until they find a way to force their big brothers to pay attention. (Does anyone think that's going to be a pleasant process? Can you spell "putsch"?) We're getting strong indications that at least some of our European allies are far from thrilled at the prospect of turning the World Bank over to the best damned economic mind the U.S. economic establishment seems to know.

Is it time to share our Larry with the world? (Look out, world!)

I REALLY LIKE ROBERT KUTTNER'S TAKE ON THE
SITUATION AS SET OUT FOR THE AMERICAN PROSPECT

Pick Me! Pick Me!

After being ousted from Harvard and leaving the Obama economic team, Larry Summers has now decided he wants to be president of the World Bank.

ROBERT KUTTNER | MARCH 20, 2012

Why does Larry Summers have more lives than a cat?

He was fired as president of Harvard, did not exactly serve President Obama brilliantly as economic policy czar, and now seems to be in line for the presidency of the World Bank, a post traditionally chosen by the president of the United States.

The deadline for the selection is this Friday, March 23. The appointment is supposed to be made official at the April meeting of the World Bank.

Earlier this month, the White House leaked a short list of three names, Summers plus U.N. Ambassador Susan Rice and Massachusetts Senator John Kerry -- neither of whom want the job. Brilliantly subtle signaling, that.

Pointedly excluded from the list was Columbia University economist and world citizen Jeff Sachs, an adviser to the U.N. Secretary General Ban Ki-moon and a very serious crusader against world poverty. Sachs took the unprecedented and marvelously transparent step of nominating himself and publicly campaigning for the job, but he is a onetime rival of Summers at Harvard, a critic of administration financial policy and at the Bank he would be nobody's cat's paw.

It speaks volumes that Sachs' candidacy is not being taken seriously at the White House, though 27 members of the House have urged his appointment as have leaders of several smaller developing nations.

Nominally, the World Bank president is selected by a majority of the voting shares. The US and Europe together control a majority and invariably vote as a bloc. Ever since the World Bank and its sister institution the International Monetary Fund were founded in 1944, one has traditionally been headed by an American and the other by a European. The current head of the IMF is Christine Lagarde, former French finance minister.

Summers' appointment is all but certain, bur there are two ways that it could still come off the rails. There has been some criticism by third world nations seeking a more open process. And Summers has plenty of detractors in Europe. More generally, smaller nations have been pushing the idea that one of the big-three international economic institutions -- the Fund, the Bank and the World Trade Organization -- be headed by someone from the Third World.

But this will not happen with the Bank presidency any time soon. Perhaps when the WTO job opens up.

Small third world nations don't have the influence to demand an alternative and the larger ones -- China, India, Brazil -- do not have a rival candidate. The closest thing to serious pushback has been a guarded comment by the Mexican finance minister, Jose Antonio Meade, current chair of the G-20, asking for a more open process.

So the only practical way Summers' nomination will be blocked is if Obama has second thoughts or if some major European leader decides that he or she can't abide Summers and decides to spend serious political capital demanding an alternative.

However British Prime Minister David Cameron is happy to play his usual role of lap dog to the U.S, the French are consumed with an election that President Sarkozy is likely to lose, and German Chancellor Angela Merkel has her own problems.

Summers bombed as president of Harvard. He not only offended a large segment of the faculty, but gambled recklessly with the university's endowment based on his own seat-of-the-pants theories, losing billions. At the time people said, "Thank God this man is not running the entire economy."

Then President-elect Obama chose him to run the U.S. economy. As head of the National Economic Council, where Summers was supposed to serve as an honest broker, he functioned more as martinet. On policy issues, he resisted a larger stimulus, as well as more fundamental reform of the financial system. Some latter day reports have suggested a bitter rivalry with Treasury Secretary Tim Geithner, but Geithner is said to be fully supportive of Summers' appointment to head the Bank.

Summers did a stint at the Bank before, as its chief economist. He was not popular among its third world clients or its staff.

So why does Summers keep falling upward, from failure to promotion?

Three reasons. He has powerful allies and patrons, and his views on the primacy of finance are congenial to theirs. Former Goldman and Citibank executive (with pit stops in between in D.C.) Robert Rubin, Summers' partner in the financial deregulation project of the Clinton era, is the most influential of these. Summers has a capacity to persuade people of his sheer brilliance, which leads some people to excuse both his mistakes and his temperament. But most importantly, Barack Obama likes Summers, and Obama is loyal to a fault.

Summers wants this job. Barring last minute doubts on Obama's part, he will get it.

Actually, in addition to the explanations Kuttner suggests for our Larry's indomitability, colleagues have been suggesting others, notably that he's a bully. A big, bad bully. And in the absence of strong, usually organized resistance, bullies tend to get their way. Especially when powerful people like what they have to say.

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Is it time for Tiny Tim Geithner to cash in on all he's done to make the banksters happy (and richer)?

Know anyone who could be a bigger friend to the
banksters? That could be our next Treasury secretary.

"I feel the time has come for me to start cashing in for all I've done to help the big boys in the financial sector live long and prosper."

-- what Treasury Secretary Tim Geithner might have said in
response to reports yesterday that he's preparing to step down

by Ken

The reports, circulated by not exactly fly-by-night sources like Bloomberg and the Wall Street Journal, indicated that the Tinyman "is considering stepping down soon after policy makers agree to raise the government's borrowing limit, a person familiar with the matter said." As Robert Kuttner notes in an American Prospect online piece, "So Long, So Long, and Thanks from All the Banks": "That might be a long time from now given that the Republicans could agree to temporary extensions to maximize their leverage."

Naturally, the Tinyman promptly denied the rumors, telling Bill Clinton ("while sharing the stage at a Clinton Global Initiative event"): "I live for this work. I’m going to be doing it for the foreseeable future." Are you starting to feel a bit teary? (If not, you may in a moment, but not for the same reason.) As Kuttner also points out, "His status as a lame duck would undermine his authority on a variety of fronts, from the debt-ceiling negotiations to implementation of Dodd-Frank." But if our Tim has given any thought to his bargaining position, wouldn't that be a first for anyone in the Obama administration?

I read Kuttner's American Prospect while vaguely gathering my thoughts on the subject, and discovered it was no longer necessary to gather my thoughts. Here are his:

Well, good luck and good riddance to Geithner. The problem, given Obama’s own extreme caution and the Republican ability to block anyone who’d be a tough regulator of Wall Street, is that his successor is likely to be even worse.

Geithner’s main role in the great financial crisis was to shore up the large Wall Street banks without demanding any serious systemic reform in return. The window of opportunity in the spring of 2009 came and went with several zombie banks being propped up with hundreds of billions of taxpayer dollars and trillions of dollars in advances from the Fed, but no progress toward the too-big-to-fail problem, much less any major change in the bankers’ business model that caused the collapse.

Geithner’s main function in crafting what became the Dodd-Frank Act and the lobbying around its key provisions was to argue for weaker rather than stronger ones. Backbenchers in Congress like Senators Merkley, Levin, Kaufman, Reed of Rhode Island, and Franken were instead the advocates of strong reforms. Geithner explicitly opposed many efforts by progressive senators to toughen the bill, as when he opposed a ban on “naked” credit-default swaps (the Dorgan Amendment) or setting explicit limits on the market share of large banks or returning to the strict separations between speculation and investment of the Glass-Steagall Act. Obama, to Geithner’s great discomfort, invoked that reform as the “Volcker Rule,” but then Geithner successfully fought to undermine a serious version of it.

One of Geithner’s first administrative acts in making a decision to implement Dodd-Frank was to water down a key provision on derivatives so that any derivative involving foreign currency (a huge part of the derivatives market and Wall Street profits) was exempt from Dodd-Frank’s sunshine and anti-manipulation provisions. The Wall Street Journal piece on Geithner’s likely departure quotes Jim Vogel, a strategist at FTN Financial Capital Markets, as saying, “Since 2009, the capital markets have gotten very comfortable with Secretary Geithner’s steady approach to both the debt markets and financial policy.”

Well, yes, why wouldn’t they be very comfy? Wall Street has returned to pre-collapse profitability without any fundamental change in its business model. Overly complex financial products and proprietary trading, too-big-to-fail banks, and immense Wall Street influence over policy continue to undermine the recovery and pose the risk of a second collapse.

You can see the lingering influence of an unreformed system in the Greek mess. The European authorities are putting Greece through the austerity ringer, in part to protect banks that are major holders of Greek bonds. But the same banks are also holders of credit-default swaps. Hedge funds use swaps to bet on a Greek default, putting the banks at double risk. So a restructuring of Greek debt, of the sort used in the case of much larger Latin American countries in the 1990s, becomes prohibitively expensive.

Geithner’s legacy will be this: He took a historical moment that offered a rare and overdue chance for systemic financial reform and used it instead to paper over the cracks in a dangerous system.

Now, as to why you might be moved to tears, Kuttner has already said it: "The problem, given Obama’s own extreme caution and the Republican ability to block anyone who’d be a tough regulator of Wall Street, is that his successor is likely to be even worse." This morning a colleague was gathering "insider" speculations, and came up with:

* Ben White, Politico "Morning Money": argues first "Why [JPMorgan CEO Jamie] Dimon May Replace Geithner," then "Why Dimon Won't Replace Geithner," then turns to assorted other possibilities: OMB Director Jack Lew, Clinton White House chief of staff Erskine Bowles, current WH COS Bill Daley {"though Daley has the Wall Street problem" --d'oh!), former Deputy Treasury Secretary Roger Altman ("considered a strong candidate though he too is very much enmeshed in the investment banking culture"), and outgoing FDIC Chair Sheila Bair ("would have more credibility with progressive groups" -- well, scratch her from the list).

* Ben White again, with Carrie Budoff Brown, yesterday evening at Politico: Bowles, Altman, Dimon, Daley, and Bair again, plus now New York City Mayor Michael Bloomberg and GE CEO Jeff Immelt -- in case you thought it couldn't get worse.

* Mark Landler, NYT: Bowles, Altman, Fed Vice Chair Janet Yellen, National Economic Council director Gene Sperling.

* Kuttner is intrigued by the idea of Bair, "Geithner's nemesis," and argues that "Obama could send a salutary signal" by appointing her.

The odds of that happening, of course, are infinitesimal. He will probably name someone even closer to Wall Street, if that's possible.

As for Bair, she has told friends that she is likely to teach or go to a think tank, write a book, and speak out. She has no plans to cash in by going to K Street or Wall Street, where she could pull in a salary of $5 million to $10 million.

Let's see where Tim Geithner goes.

Now are you crying?

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Why wouldn't Treasury, which found billions for the banksters of Wall Street, pony up the $75M ShoreBank was entitled to?

"None of the explanations for the decision to let ShoreBank fail reflects credit on the administration. If the Treasury had one standard for the Wall Street and another for the south side of Chicago, shame on them. And if the administration failed to extend aid to a model institution serving the victims of the subprime mess in Obama's old neighborhood for fear of Fox News, shame on the president."

-- Robert Kuttner, in "Zillions for Wall Street,

Zippo for Barack's Old Neighborhood," on HuffPost

by Ken

"A number of stories that I've reported about the wrongheaded priorities of the Obama administration leave me bewildered and exasperated," The American Prospect's Bob Kuttner writes in the above-noted piece. "This one leaves me really angry." If you want to find out what Bob is so angry about, you can shoot straight down to the full text of his piece. Otherwise, I assure you we'll get to it.

Howie wrote earlier about Paul Krugman's terrific column today, "Now That's Rich," tearing apart the preposterous Republican campaign to dismantle what's left of the U.S. regulatory system, which Tom Friedman -- not a "thinker" I'm much given to quoting -- used to describe as the envy of the economic world, in that it produced, if not a level economic playing field (the corporate interests that can afford to buy advantages are awfully hard to stop from doing so), but at least an economic playing field. What we find out every time the corporate predators have their way, and have what they view as their "shackles" taken off, is that it's a sure formula for disaster.

Just in recent times we've witnessed the S&L crisis, the wave of big 'n' bogus corporate collapses emblemized by Enron, and most recently the economic meltdown brought on by the housing bubble and the general wave of deregulated financial-system chicanery. The more enlightened corporate types understand that they need a system of meaningful regulation to save them from themselves. Left to their own devices, corporate predators will lie, cheat, and steal their way through every loophole they can carve in the economic fabric of society, pleading the necessity of "competition" -- how can they afford to turn their back on any edge their competitors might avail themselves of?

The lying thugs of the Moron Right still screech their guts out about Fannie and Freddy and any other insane irrelevancy they can drum up, but you know that even they know they're lying, for the simple reason that no human being could be so grindingly stupid as to believe that any of those lesser or non-factors could have caused the meltdown that happened Nobody could possibly be that brain-dead. The malefactors of the crap-mortgage-writing boom, who wrote and sold all those crap mortgages not because poor people held guns to their heads, or because Fanny and Freddie made them do it, but by their own admission because everybody else was raking in zillions of dollars in profit by selling all that bundled crap paper to the imbeciles who couldn't buy enough of it -- right up until they stopped buying it -- and they had to do the same just to remain competitive, even to keep their jobs.

You would think that by now all the bogus economic doctrines of buttwipe Milton Friedman and his Chicago School of Economic Thug Disciples would be universal objects of ridicule, that all the Nobel-anointed darlings would have turned in their prizes and found more suitable employment asking, "Fries with that?" But no, here they all are, preaching once again the gospel of deregulation. And I guess why not, now that the U.S. economic system has been officially spit between the predatory superhaves and the rest of us, who get to fight over the left-over scraps.

In all of the above-cited failure-of-regulation economic crises, it's important to note that while the Republicans invariably fulfilled their destiny as the Party of Greed & Selfishness, significant numbers of Democrats collaborated in the takedown. And as progressives have been screaming louder and louder, the Obama administration's fealty to Wall Street and the banksters has been a crucial factor in our ability to dig our way out of the the shambles brought to us by the Bush regime's economic free-for-all. Thank you, Big Larry! Thank you, Tiny Tim!

Which has set me to thinking about another point that Paul Krugman has been making in the debate over financial regulatory reform: his much-disputed insistence that one problem our financial system does not face is a disabling "too big to fail" mechanism. And now, in a really shocking demonstration of the different ways the Obama team has responded to the powerful, connected financial institutions of Wall Street, the institutions that did so much to bring the economy down, and the way it has responded to smaller banks elsewhere which not only don't share in that blame but which have been trying to do what they're supposed to do restart the economy.

Zillions for Wall Street, Zippo for Barack's Old Neighborhood

Robert Kuttner

"The best lack all conviction, while the worst are full of passionate intensity."
-- W. B. Yeats

On Friday, the government moved to seize and temporarily shutter one of the truly heroic banking institutions of this dismal era for American finance -- ShoreBank of Chicago. More precisely, ShoreBank of Barack Obama's old neighborhood.

Over the years, since its founding in 1973, ShoreBank had enabled thousands of moderate income residents to become homeowners, and thousands of small businesses to get credit, without ever playing the subprime game or making a single predatory loan. It was a model bank that earned a modest profit by delivering on a social mission.

In the end, ShoreBank succumbed to the aftermath of a financial crisis made on Wall Street. Yet while the Treasury Department found hundreds of billions of dollars to rescue giant Wall Street institutions, it refused to come up with the $75 million for which ShoreBank qualified under the TARP program.

A number of stories that I've reported about the wrongheaded priorities of the Obama administration leave me bewildered and exasperated. This one leaves me really angry.

The bank will continue under new ownership and a new name, the Urban Partnership Bank, to be run by some recently hired ShoreBank executives, and which has pledged to keep the bank open and continue its basic philosophy. But owners of ShoreBank stock, which include many socially responsible investors, will have the value of their shares wiped out and the directors dismissed. And it remains to be seen whether some of ShoreBank's social commitment will be compromised.

Today, there is a whole category of bank known as a community development financial institution. This category did not exist until it was invented in 1973 by ShoreBank, then known as the South Shore National Bank. But ShoreBank did not set out to create a banking category, only to help a distressed community.

Its idealistic president, Ron Grzywinski [left], now emeritus, had seen the effects of racial redlining first hand as a banker and community activist, and resolved to create a bank that could help the depressed South Shore neighborhood of Chicago regenerate by providing normal banking services to creditworthy borrowers.

I first met Ron in 1975, when I was staffing hearings on redlining for my boss, Senator William Proxmire, then the new chairman of the Senate Banking Committee. When community groups helped us draft legislation requiring banks to disclose by zip code where they had loans, a bill that Congress passed as the Home Mortgage Disclosure Act, we had the entire banking industry lobbying against the bill. The sole banker we could find to testify in favor was Ron Grzywinski.

Over the years, Ron and his colleagues built a model institution, and helped to transform South Shore and other depressed communities. In 1994, the Clinton administration, impressed by the achievement, enacted legislation to help create other community development banks. ShoreBank was the alternative to the predators that worked low income neighborhoods--the subprime sharpies, offering deals that were too good to be true, preying on the dreams of working people.

Fast forward to 2009. ShoreBank is caught up in a crisis not of its own making. Loans that were perfectly well collateralized when they were made are now under water because housing values have dropped. Borrowers who had bankable credit ratings are now behind on their payments because they are out of work. ShoreBank booked a loss of $36.9 million in the first half of this year.

In 2009, the Treasury Department, having dumped hundreds of billions through the TARP program to rescue Wall Street--$45 billion to insolvent Citigroup alone-- grudgingly created a very modest refinancing and recapitalization program to help distressed community development banks. But almost immediately, Herb Allison, the assistant treasury secretary in charge of TARP, set standards so high that hardly any can qualify.

Even so, ShoreBank managed to exceed the standards set by its prime regulator, the Federal Deposit Insurance Corporation. It raised some $150 million in new private capital, ironically much of it from the very institutions rescued by TARP, including Citigroup, Goldman Sachs, Bank of America, and Wells Fargo. Goldman's CEO, Lloyd Blankfein, eager to show that he's a white hat, personally worked the phone to raise money for ShoreBank.

The money raised more than met the capital target that the FDIC had set as a condition for ShoreBank to get $75 million in TARP money (when Citi got TARP money, private investors were fleeing). In the meantime, ShoreBank has had an exemplary record of modifying loans so that borrowers could avoid foreclosure.

But in the end, the Treasury refused to put up its share of the money, requiring ShoreBank to be seized, closed, and reopened under new ownership.

Why did the Treasury Department, which found almost unlimited sums for insolvent mega-banks on Wall Street, not cough up a relative pittance for ShoreBank, which was a going concern that had gotten a seal of approval from its primary regulator, the FDIC?

There are a few explanations. One is that people like Tim Geithner and Herb Allison have their eyes focused on the big picture and don't have much time or money for small fry like ShoreBank. A second is that after all of bad publicity for the first round of TARP credits to Wall Street, they have belatedly tightened their standards when it comes to community banks.

But the saddest explanation is that the Treasury is bending over backwards not to help an exemplary community bank in Barack Obama's old neighborhood, lest somebody accuse the administration of favoritism. And in fact, for weeks Republican congressman have been using Shorebank as a whipping boy. Fox News has been full of broadsides against ShoreBank.

But the sacrifice of ShoreBank has done nothing to quiet the rightwing propaganda. Since the investors in the successor bank include some of the very same Wall Street banks that got aid from TARP, the rightwing storyline continues that Obama's buddies on Wall Street are doing the administration a favor, and that this is a sweetheart deal.

None of the explanations for the decision to let ShoreBank fail reflects credit on the administration. If the Treasury had one standard for the Wall Street and another for the south side of Chicago, shame on them. And if the administration failed to extend aid to a model institution serving the victims of the subprime mess in Obama's old neighborhood for fear of Fox News, shame on the president.

Appeasing the right does nothing except whet their appetite. When will the best--not the worst--display conviction, passion and intensity on behalf of a decent America?

What I find myself thinking is that the institutions that were bailed out by the economic masterminds of the Bush and Obama administrations weren't "too big to fail," they were too well-connected to fail. And over the power of political influence I really don't think financial reform legislation can be written.

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