Thursday, March 03, 2016

I Can't Sleep Nights, Worrying I'm Not Doing Enough For Bernie


Progressive pundit Michael Tomasky has given his permission for Bernie to stay in the race but warned him that "if he wants to remain a major progressive leader in a Clinton presidency, it’s time to ratchet back his attacks on the presumptive nominee." Has Bernie been attacking her? I must've fallen asleep and missed it. "From here on in," write Tomasky, "Sanders ought to lay off the attacks on Hillary Clinton, the Goldman Sachs speeches and all the rest. Eventually, he’s going to lose. She’s going to win. He can do it in a way that burnishes his standing in the party he’s decided to be a member of and that makes him a pivotally powerful senator during a potential Clinton presidency. Or he can do it in a way that damages her reputation and ultimately his own." I'm sure the rest of his story is wonderful but I deleted it. I was too eager to get to get to something less silly. The Intercept ran a piece by David Dayen yesterday that Tomasky should read. Perhaps it would help him focus on why it's so, so important that Bernie turn up the heat and do everything he can to save the country from a Trumpf presidency by beating the unelectable Democratic establishment candidate. In fact, anyone who doubts, Hillary plans to turn the country over to Wall Street-- so if you've been living under a rock (though not a BlackRock) for a year-- needs to read it.
Goldman Sachs paid Hillary Clinton $675,000 for three speeches, but an even bigger Wall Street player stands ready to mold and enact her economic and financial policy if she becomes president.

BlackRock is far from a household name but it is the largest asset management firm in the world, controlling $4.6 trillion in investor funds — about a trillion dollars more than the annual federal budget, and five times the assets of Goldman Sachs. And Larry Fink, BlackRock’s CEO, has assembled a veritable shadow government full of former Treasury Department officials at his company.

Fink has made clear his desire to become Treasury Secretary someday. The Obama Administration had him on the short list to replace Timothy Geithner. When that didn’t materialize, he pulled several members of prior Treasury Departments into high-level positions at the firm, which may improve the prospects of realizing his dream in a future Clinton Administration.

And his priorities appear to be so in sync with Clinton’s that it’s not entirely clear who shares whose agenda.

Clinton, for her part, has refused to rule out a Treasury Secretary drawn from Wall Street.

Fink’s ready-made team available for a move from Wall Street to Washington includes... Cheryl Mills, arguably Clinton’s most trusted confidant. Mills was Clinton’s chief of staff at the State Department, was deputy White House counsel in the Bill Clinton administration and is on the board of directors of the Clinton Foundation. Fink hired Mills for the BlackRock board of directors in October 2013, in what observers mused was a ploy to insinuate himself into the Clinton inner circle.

It’s worth considering how Fink’s recent experiences might inform his approach at Treasury. Asset management firms invest pools of money into securities on behalf of their clients, which in BlackRock’s case include 94 of the Fortune 100. They don’t issue securities themselves; they just buy stuff.

Asset managers don’t package and sell dodgy financial products like investment banks, and don’t trade with borrowed money like hedge funds, so they are typically viewed as more restrained and less averse to regulation than their colleagues in those related industries.

But they are embedded in the broader financial system as voracious buyers of securities. For example, BlackRock holds major share amounts in nearly every mega-bank, takes funds from scores of Wall Street investors, and manages a majority of the federal government’s bailout programs. They may not create the risk, but they own a lot of it. Fink, who co-created the mortgage-backed security while a trader at First Boston in the 1980s, is a longtime respected figure on Wall Street; Geithner reportedly used him as a conduit between Treasury and the financial industry.

He also knows how to work the levers of power to achieve his ends.

Whether buy-side firms like BlackRock represent a systemic risk to the financial system is the subject of some debate. Some believe asset managers could trigger problems by failing to pay off counter-parties, or being forced into a fire sale of their assets.

But Fink and BlackRock pushed hard to successfully resist the designation of asset managers as systemically important financial institutions (or SIFIs), which would be subject to additional regulation like larger capital requirements.

Fink also opposes efforts to reinstitute the Glass-Steagall firewall between investment and commercial banks, as does Clinton.

In fact, Fink’s views on Wall Street are so similar to Clinton’s that it’s hard to see that as a coincidence. Most notably, Clinton’s financial reform plan is mute when it comes to regulating asset management firms as SIFIs.

Fink has in recent months stressed an end to “short-termism” in the financial markets. For example, he wants to limit share buybacks that pump up stock prices, and encourage investors to hold stock longer, to focus on long-term corporate performance. Clinton has mirrored this language to such a degree that the New York Times’ Andrew Ross Sorkin suggested that Clinton “could have been channeling Laurence D. Fink.”

While the call to end short-termism is in some ways laudable, in Fink’s case it certainly reflects his self-interest. Clinton’s tax plan, for example, would keep capital gains rates higher for short-term holdings and decrease the rate for investors who hold assets over five years. Because BlackRock buys and holds most of its investments, any policy favoring long-term strategies in the markets would improve the firm’s bottom line.

Victor Fleischer, a leading tax lawyer and professor at the University of San Diego, questioned Clinton’s embrace of the short-termism argument in the New York Times earlier this month, saying it would “do little to address top-end income inequality,” since plenty of wealthy people buy and hold. And Fleischer explicitly worries that the short-termism idea originated from Fink. “I find it hard to shake the feeling that at the end of the day, in a Clinton administration, it would be Larry Fink, not the technocrats, calling the shots,” Fleischer wrote.

Fink has also promoted the privatization of Social Security, while mocking the idea of retiring at 65, which is easy for a business executive who sits at a desk all day to say, rather than working on an assembly line or as a waiter. Fink owes his initial backing at BlackRock to Pete Peterson, the former commerce secretary who has been at the forefront of the campaign to cut or privatize Social Security. He sat on the steering committee of the Campaign to Fix the Debt, a stalking horse for Peterson’s ideas.

While Clinton has adamantly pledged not to cut or privatize Social Security benefits, Fink’s track record would cause concern among advocates, were he to obtain a cabinet post. And having a ready-made team of trusted advisors who know their way around the Treasury building and the players in a potential Clinton West Wing can only help Fink in that campaign.
I can imagine her giving the nomination speech now... "who better to deal with those horrible Wall Street cheats than a Wall Street cheat expert?" Maybe that's what she was doing with Giovanni Gambino in Charleston, South Carolina. Attorney General? Remember, a vote for Hillary is a vote for Wall Street and, probably, a vote for the cruel reality of a Herr President Trumpf. The alternative to another Wall Street Administration:

Goal Thermometer

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At 4:52 AM, Blogger Rob G. said...

I understand that Sanders was never supposed to perform as well as he has or be more than I token protest candidate, dragging the window and all that BS (heh). I really do get that. And I get that the party elites was this to be over like yesterday. I get that to. But do they have even the smallest clue what's happening and why Sanders is taking off? Have they done the slightest bit of introspection and considered that this condescending, dismissive attitude is wearing real thin on people like myself who are trying to find reasons to vote for Clinton, should she make it to the general. It also makes me wonder if the reason they seem so sure a president Sanders won't "get things done" is that he's not going to have Democratic support. I hate to think it but could the Democrats be gearing up for the same obstruction against your own part nonsense as the Republicans are doing?

And Bernie attacking? Please. What happened to battle tested Clinton? It's sweet that they have so much concern for how Bernie will fare against right wing attacks but it's also rather concerning that merely pointing out the fact that Clinton took a ton of money from GS for some questionable speeches should be off limits? We're to expect the GOP is going to stand down on this too? Frankly her handling of this now has been bad. Does she think Trump is going let her off as easy as Bernie really has?

Of course, if they'd stop giving people so much ammo in the first place...

Anyway, keep up the good work.

At 5:01 AM, Blogger Rob G. said...

Sorry for all the typos. Hope the meaning gets through. Just wanted to add this thought, how many false (and often race based) smears on Obama originated from Hillary's 2008 primary run? Not saying his hands are clean, but let's be real here. The hypocracy is killing me like it must be killing them that the don't have a Rev. Wright tape for Bernie.

At 5:18 AM, Blogger Rob G. said...

One last thought. Sorry this post hit me in the right spot. Lol

I think this attitude is also priming the pump for blaming Sanders and his supporters for a Hillary loss in the general. I've seen a lot of blame the voters attitude across the board for mainstream Democrats. They never get that they need to stop running corporately owned insiders and that it's not the voter's fault when they don't turn out to vote for them. I don't see how anyone can take a big picture look at the Democratic primaries and not see this as happening again. Yes, Hillarly appeals to a lot of hardcore Democratic partisans. But that's just about where it ends. In an election that is so clearly about anti-establishment, they're ramming through the ultimate establishment insider. So when the voters don't show up in November, don't blame it on Sanders. He was right.

At 9:30 AM, Anonymous willf said...

Michael Tomasky can eat a rock. His use of the phrase "Bernie Bros" indicates that he is not a neutral arbiter in this race. He's been a Clinton supporter for years, and advocated for US intervention in Libya (we know how that worked out) as well as Syria.

Tomasky is part of the problem.


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