Polar Opposites: Jeb Hensarling (R-TX) And Ted Lieu (D-CA)

I'm up to the part in Elizabeth Warren's new book, A Fighting Chance, when she's the chairman of the congressional oversight panel (COP) for TARP. The chapter is called "Bailing Out The Wrong People" and one of the villains is Wall Street shill Jeb Hensarling, a corrupt and backward congressman from Texas' 5th congressional district sprawling out from Garland northeast of Dallas into Lake Highlands and the eastern Dallas suburbs through Mesquite and Balch Springs and southeast down into small towns like Palestine, Athens and Jacksonville. The PVI is a daunting R+17 and Romney won the district 65-34%. Hensarling beat his little known Democratic opponent by roughly the same margins and, though it was a near tie in Dallas County, 42,158 (49%) to 41,652 (48%), Hensarling did win each of the 7 counties in the district, Van Zandt and Wood with 81% each!

It's a safe district and he can get away with murder-- or with selling his constituents out to the banksters. Which is what he does. The Finance Sector has rewarded Hensarling well for his efforts-- chronicled in part by Warren as he did everything he could to disrupt the TARP oversight-- on their behalf. Last cycle he got the 5th largest amount of legalistic bribes from the Finance sector of anyone in the House, $1,321,206. So far this cycle he's already at #3, as you can see in the chart below of the dozen most Wall Street-corrupted members of the House this year:

Warren makes it clear that he's a shameless partisan hack whose only interest in TARP oversight was protecting his Wall Street donors from oversight. His only role on the panel was obstruction and dissent. The banksters rewarded him with more than just cash. The told Boehner to give him the top position on "their committee," House Financial Services in 2013. He now chairs that committee. And the banksters, needless to say, are as happy as pigs in shit. He's there for exactly one reason-- protecting the ability of the banksters to rip off the public with impunity. What's not to like? It's how Wall Street rules.

Reading Warren's hassles with Hensarling reminded me of another political sojourn, one by a California state senator I've gotten to know this year, Ted Lieu, who Blue America endorsed for the Henry Waxman congressional seat. Though Ted first came to our attention for his efforts to stop unconstitutional, warrentless, bulk collection of civilian communications in the state of California, it was his multi-cycle war against the mortgage banksters that helped us envision him as a Member of Congress worthy of Waxman's legacy. In 2007 Ted wrote the following OpEd for the San Jose Mercury News at a time when many people still idolized Fed Chair and sociopath Alan Greenspan. Greenspan eventually ended up apologizing to Congress much later and acknowledged his views were wrong. It was under questioning by Congressman Waxman. Ted's prescient title: Greenspan And His Policies Bear Much Blame In Foreclosure Crisis.

As Alan Greenspan tours the world promoting his memoir, an average of 12,000 Californians and 55,000 homeowners across the nation receive a foreclosure notice every week, the highest in American history. Next year, a record 2 million adjustable rate home loans are scheduled to spike upward nationwide, putting 1.4 million homeowners at risk of foreclosure. We are at the tip of the iceberg in a rapidly accelerating mortgage meltdown, and the prime cause started with the former Federal Reserve chairman's policies.

The roots of the foreclosure crisis can be traced to three deliberate decisions made by Greenspan. First, by reducing the federal funds rate to a mere 1 percent in 2003 and refusing to increase it for a year, Greenspan and the Federal Reserve created the economic conditions for rampant investor speculation and a loosening of loan underwriting standards as lenders frantically competed for market share.

Second, Greenspan shunned increased regulations, even though he has now admitted knowing about abuses in the subprime loan industry. His failure to act has resulted in the mass use of the foreclosure, one of the most inefficient mechanisms in the market. Not only is there a severe human toll to families thrown out on the street, but foreclosures also carry with them massive societal costs, with lenders losing up to 50 percent of the loan value on each foreclosed home.

Third, blinded by the irrational exuberance of surging home prices, Greenspan promoted the non-traditional mortgages that have devastated so many homeowners. In a speech on Feb. 23, 2004, Greenspan stated consumers were paying too much for fixed-rate mortgages and asked lenders to provide "greater mortgage product alternatives to the traditional fixed-rate mortgage." When a person of Greenspan's influence and stature promotes alternative mortgage products, lenders and consumers listen.

Wall Street followed Greenspan's call and designed a whole range of risky, alternative adjustable rate mortgages, including those with low teaser rates that spiked after two to three years. These risky loans were sold-- sometimes fraudulently-- on a mass scale to a public ill-informed about their significant risks. The regulatory system also allowed mortgage brokers to receive monetary incentives to place a borrower in a higher interest, adjustable-rate subprime loan even though the borrower would have qualified for a fixed-rate prime loan.

California and the nation are now suffering the consequences of Greenspan's policies. As the first large wave of adjustable rate mortgages started to spike earlier this year, hundreds of thousands of homes went into foreclosure when homeowners were unable to pay the increased monthly payments. Some of these borrowers could have saved their homes by refinancing but were unable to because of significant prepayment penalties.

My colleagues and I recently proposed a set of reforms in the mortgage industry that will be introduced as bills in January. We propose to: ban kickbacks to the broker for putting a homeowner in a higher interest rate loan; ban prepayment penalties; and mandate that the lender evaluate the borrower's ability to repay the loan based on the entire length of the loan and not just the initial teaser rate. We also call for increasing counselors and financial literacy, and making loan terms easier to understand. The intent is to ensure this crisis never happens again, regardless of what the Federal Reserve and Wall Street might think up in the future.

President Bush recently set forth a proposal in which some lenders and loan servicers will voluntarily agree to freeze the interest rates for up to five years for non-delinquent borrowers on certain subprime adjustable rate loans. The Center for Responsible Lending estimates the Bush plan will reach 7 percent of homeowners.

For many homeowners, especially the hundreds of thousands that have already defaulted, there will be very little the state or federal government can do. They can thank Greenspan. Maybe he can donate the profits of his book to those families who have already lost their homes.

It took Ted 3 sessions of the legislature to pass his bill. The mortage banksters fought ferociously but he never gave up. It actually passed the second time by Gray Davis, a corporate whore from the Republican wing of the Democratic Party, vetoed it. The next year many progressives sat on their hands when the execrable Davis was recalled and replaced with Republican Arnold Schwarzenegger. Eventually, Republican Arnold Schwarzenegger signed Ted's bill into law-- after first vetoing it-- when both house of the legislature passed it on his third try. In 2008-- and sounding a lot like Elizabeth Warren-- Ted wrote that "during the mortgage boom, industry players became addicted to the drug of high-yield, adjustable rate subprime mortgages that they foisted on borrowers. Raking in massive quarterly and annual bonuses, corporate executives didn't care if borrowers could repay the mortgages a few years later. It was greed on speed, the future be damned, and now all of us are suffering the consequences." AB 1830, his legislation was a comprehensive subprime mortgage reform bill banning predatory subprime loan practices and exotic, overly risky and unsuitable loan products. Ted:

If the Bush Administration wants to use your hard-earned money to bail out Wall Street, then taxpayers should demand major industry reforms. First, industry should agree that they will no longer fight mortgage reforms such as those contained in AB 1830. Second, industry should agree to fix executive compensation so that the Gordon Geckos of Wall Street are not incentivized to place short-term profits above long-term financial health.

Third, we need to slow down the number of foreclosures and stabilize home prices or the problems will get even worse. This can be done by granting bankruptcy judges the ability to modify loans on the borrower's place of residence, and by following the Federal Deposit Insurance Corporation's lead of imposing a foreclosure moratorium.

Ted's persistence eventually overcame the banksters' dogged opposition. He beat them. But they weren't done. They went to the corrupt Democratic leadership in Sacramento, the same way they had gone to Boehner in DC to tell him to appoint Hensarling to chair the House Financial Services Committee. But in this case, they demanded that Ted be removed as Chairman of the Banking Committee. He was duely "promoted" to the Chair of the Assembly Rules Committee. Ted has already shown he'll be part of the Elizabeth Warren team for working families. If you'd like to see him in the House as a counterbalance to the wretched Jeb Hensarling, please consider contributing to his campaign here.

Banks Too Big To Jail?

Elizabeth Warren questioned Treasury officials Thursday at a Senate Banking Committee about their failure to do more than give HSBC criminals a meaningless love tap after they were caught again and again financing international illicit drug cartels. She was blunt: "How many billions of dollars do you have to launder fro drug lords before somebody says, 'we're shutting you down'?" Even a senile old reactionary like Chuck Grassley (R-IA) is edging down the same path and he questioned Eric Holder about why the HSBC criminals haven't been arrested and tried for their crimes. Holder states clearly that these big banks are too big to hold accountable in any meaningful way. “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute-- if we do bring a criminal charge-- it will have a negative impact on the national economy, perhaps even the world economy," Holder told Grassley. That wouldn't be a satisfactory answer coming from a Republican administration and it isn't a satisfactory response coming from the Obama administration. Bob Borosage, head of the Campaign for America's Future, called the argument "indefensible." He's correct. “Holder’s outrageous admission means that bankers operate-- and know they operate-- above the law... Holder’s admission makes action-- however improbable-- imperative. A nation of laws and markets cannot abide huge private financial institutions that are accountable to neither.”

HSBC paid a pathetic and meaningless fine last year for financing drug cartels and international terrorism. No one was charged with any crimes. The Obama Administration hasn't done squat. Senator Warren made it clear that she feels HSBC should have been prohibited from doing business in the U.S. and that the perps be tried as criminals. “If you’re caught with an ounce of cocaine," she posited to a Treasury regulator, "the chances are good you go to jail. If you’re caught repeatedly, you can go to jail for life. Incidentally, if you launder nearly a billion dollars in drug money, your company pays a fine and you go home and sleep in your own bed at night.”

Undersecretary of the Treasury David Cohen told Senator Warren he wouldn't answer hypothetical questions. Later Jeff Merkley (D-OR) had a crack at him and asked how they would explain to the American people why no HSBC officials faced criminal charges and whether they had played any role in Justice’s decision not to prosecute the bank or any of the employees who were responsible for the money laundering.

If a bank is too big to fail or jail, maybe it needs to be smaller.

He's Not Joe The Plumber, But Maybe We Can Learn Something From Andy The Hedge Fund Manager Too

You probably never heard of Santa Monica-based hedge fund manager Andrew Lahde, unless you were one of his clients (or victims). I never had, but last year one of his investment portfolios was up 870%. Yesterday's L.A. Times carried the story of his parting shot to the investment world, a letter he wrote to friends and foes. And while he doesn't exactly come off as a sympathetic character, there's plenty of Truth in his rant-- even beyond his outrage about anti-marijuana laws. He was contemptuous for the self-important, dysfunctional, workaholic modus operandi of the corporate world:

"Appointments back to back, booked solid for the next three months, they look forward to their two-week vacation in January during which they will likely be glued to their BlackBerries or other such devices. What is the point? They will all be forgotten in 50 years anyway. Steve Ballmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the BlackBerry away and enjoy life."

Lahde predicted years of pain for capital markets.

"I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life-- where I had to compete for spaces in universities and graduate schools, jobs and assets under management-- with those who had all the advantages (rich parents) that I did not," he wrote. "May meritocracy be part of a new form of government, which needs to be established."

Showing outrage over Congress' failure over the last eight years to rein in "the predatory lending practices of now mostly defunct institutions," he urged that billionaire activist George Soros launch a forum to rethink the "corrupt" U.S. capitalist system.

Lahde closed by arguing for the legalization of hemp and marijuana. He called hemp "an alternative food and energy source" and labeled marijuana laws "ludicrous."

"My only conclusion as to why it is illegal is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other... drugs than allow you to grow a plant in your home without some of the profits going into their coffers."

..."I was in this game for the money," Lahde wrote in the two-page missive, saying he would now focus on his personal portfolio of unspecified millions. "The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Bros. and all levels of our government.

"All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."

No, not "Joe" the Plumber but another denizen of George Bush's America with a story to tell. In fact Andy's last paragraph is a pretty damn good encapsulation of George W. Bush and his era. It's certainly a more succinct means of getting Oliver Stone's primary message from W. out.

BUSH REGULATORY REFORM PACKAGE JUST A COVER STORY FOR MORE DISASTROUS RIGHT WING IDEOLOGY

A prescription for an even worse economy

Saturday we looked at the fake regulatory reforms Bush is trying to throw as a sop to a concerned and angry public, a public seeing the economy spiraling into the toilet, one sign of which is the highest number of people on Food Stamps ever. I mentioned how I'd be eager to see Paul Krugman do a little slicin' and dicin' on Monday. He doesn't disappoint. Basically he's confirmed my instincts that they were just shuffling around the deck chairs. "[I]t’s all about creating the appearance of responding to the current crisis, without actually doing anything substantive."

[I]f financial players like Bear [Stearns] are going to receive the kind of rescue previously limited to deposit-taking banks, the implication seems obvious: they should be regulated like banks, too.

The Bush administration, however, has spent the last seven years trying to do away with government oversight of the financial industry. In fact, the new plan was originally conceived of as “promoting a competitive financial services sector leading the world and supporting continued economic innovation.” That’s banker-speak for getting rid of regulations that annoy big financial operators.

To reverse course now, and seek expanded regulation, the administration would have to back down on its free-market ideology-- and it would also have to face up to the fact that it was wrong. And this administration never, ever, admits that it made a mistake.

Krugman finds all the reforms, substantively speaking, bogus and hollow. Bush had to pretend to be doing something to show he learned a lesson. The Regime is counting on the likelihood that your typical TV announcer is exactly as clueless and preoccupied as everyone else and that people won't be much attention, just notice something appears to be happening. Krugman must have been watching the same cookie recipe lady on CNN that I was watching on Saturday because he also laments the fact that "some news outlets report as fact the administration’s cover story-- the claim that lack of coordination among regulatory agencies was an important factor in our current problems. The truth is that that’s not at all what happened. The various regulators actually did quite well at acting in a coordinated fashion. Unfortunately, they coordinated in the wrong direction."

Not only did the Regime do absolutely nothing about regulating speculators-- other than cheering them on as free market avatars-- they "actively blocked state governments when they tried to protect families against predatory lending."

If Bush is Calvin Coolidge, McCain is absolutely Herbert Hoover, something Krugman hints at in the last line of his column. McCain brags about his economic ignorance, surrounds himself with Bush Regime retreads who largely authored the current crisis, and chose his old pal, Phil Gramm, one of the worst financial reactionaries in American politics, as his chief economics advisor. Ironically, it you had to point to just two people who were responsible for the subprime mortgage meltdown, one would be McCain's guy, ex-Senator Phil Gramm.

McCain's concern for financial matters, though, has to do with winning over wealthy GOP donors, many of whom have been sitting on their hands so far in this election season. He probably thinks he can lure them into his camp with promises of fulfilling the Republican Party's long-held dream of destroying Social Security. Yes, Mr. Straight Talk may be flipping and flopping all over the stage now, but he has been a huge advocate of privatizing (GOP-talk for destroying) Social Security

IS THERE A SOLUTION TO THE UNDERLYING FINANCIAL MESS?

DLC's Bill Clinton joins GOP bloodsuckers to kill Glass-Steagall

I spent most of December and January in India and Southeast Asia. At the time I posted that their-- especially China's-- inflation was headed our way. The Bush Regime agenda has mandated it and the current financial policies are bringing it on even faster that I expected at the time. This morning's Washington Post dares to speculate that inflation is looming, although one wonders what the gargantuan increase in the cost of energy since Bush and Cheney took over (with the help of Big Oil) seems like if not inflation.

People were excited to see the Dow Jones soar yesterday because of another interest rate cut. A good day does not a healthy market make. Unfortunately, that is likely to help set off an inflationary spiral because by "reducing the interest rate financial institutions charge each other for short-term loans, the Fed makes money more readily and cheaply available. If it miscalculates, it can pump too much money into the economy, fueling excessive demand for goods, housing and capital spending-- and driving up prices... Through higher consumer prices, all Americans would effectively help pay for the rescue of the financial industry.

And the laws are written by the legislators bought and paid for by the banks and oil companies and lobbyists and those laws, which have gotten significantly worse in the past 7 years-- are meant to protect the ill-gotten gains of the authors of the current crisis, while penalizing the rest of us.

The threat of inflation was evident in commodity markets yesterday. Though at historically high levels, prices for corn and copper rose on the expectation that the Fed rate cut would breathe new life into the economy and avert a drop in demand. Oil prices jumped more than $3 in New York to $109.42 a barrel.

Commodity price hikes could translate into higher prices at gas stations and grocery stores. Airlines will be less likely to get relief. Yesterday Delta Air Lines offered voluntary severance payouts to about 30,000 employees, more than half its workforce, as it restructures to adapt to high jet fuel prices, among other problems it faces.

The Labor Department reported that the producer price index for finished goods rose 0.3 percent on a seasonally adjusted basis in February after a 1 percent increase the previous month. Food prices fell last month, while prices for consumer products, automobiles, prescription drugs and other goods rose.

...Lee Hoskins, former president of the Federal Reserve Bank of Cleveland, co-wrote a Forbes magazine piece that compared the current economy with that of the 1970s. "The Fed has abandoned the one thing it can truly control-- the long-run increase in price levels-- in a self-defeating attempt to keep the economy growing," he wrote. "Creating more dollar bills will not add to the nation's wealth, or make workers more productive."

And Hoskins is hardly the only economist worried about Bush Regime quick fixes. Last night former Federal Reserve Chairman Paul Volcker was interviewed on the Charlie Rose Show and this morning's Wall Street Journal has some sobering excerpts. He doesn't seem to think the Fed should be bailing out robber barons with our tax dollars.

Volcker: We’ve seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with a financial crisis, which raises some real questions about not only for the Federal Reserve and its authorities, but for the structure of the financial system… The Federal Reserve is designed to lend to banks. And the banks were considered to be at the center of the financial system, and lend liquidity, provide cash in return for good assets, when a bank got in trouble. Now they found in this case, where some of the investment houses were in trouble, and prototypically Bear Stearns … it’s lightly regulated by the SEC or some other, but not for the same reasons. They haven’t got the concern over the stability of those things….We’re going to lend to them and protect them, shouldn’t they be regulated?

Rose: Is it a wise precedent?

Volcker: Whether it’s wise or not depended upon how severe this crisis was and their judgment about the threat of demise of Bear Stearns. That’s a judgment they had to make and an understandable judgment. There is no question about it.

...Rose: Has [the economy] bottomed out, or have we seen the worst?

Volcker: Look. The basic economy is not irretrievably damaged in any way, shape, or form. We had to go through an adjustment, which is tough. It’s happening much quicker. You’d rather have it happen gradually. But I’m optimistic that, okay, we’ve got to get the consumption down, we got to get spending in line with our capacity to produce. I think that’s going on. And that process is going to take a while. If we can stabilize the financial market, we ought to come out of this. Then we’ve got a lot of work to do about what we do with the regulatory system, the supervisory system, what the role of the Federal Reserve is, what the role of the Treasury and the government is, because this is a different financial market.

You thought you wanted to have a beer with George W. Bush back in 2000? Now you're going to have to cut back on  what you consume. You know what that means? Think about it when you listen to the hateful rants by the Republican propaganda networks about Obama's preacher and Hillary's lesbian Arab lover or whatever crap they decide to throw at either one of them. They'll say and do anything to force a third George Bush term on us. Don't buy into it.

If you're having a hard time grasping the intracacies of all these economic news-- and who isn't?-- today's NY Times has a kind of a primer to make it almost easy enough for McCain and Bush to grasp.

The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are doing just fine. So how is it that a mess
concentrated in one part of the mortgage business-- subprime loans-- has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

I said almost easy enough for McCain and Bush to grasp. Bush is too stupid and disinterested and McCain is too pig-headed-- a classic know-it-all who will never learn anything-- but you can try to go through it. It isn't that hard. I read it and understood it and... it doesn't help figuring out anything in the real world that I can do to protect myself-- other than to not vote for any Republicans. But we all knew that already, didn't we?