Are We Entitled To Be Sure The Government Will Protect Us From Licensed Financial Predators-- Ask Elizabeth Warren

Because of the systemic corruption of careerist pols like Chuck Schumer, Debbie Wasserman Schultz, Steny Hoyer, Steve Israel, Chris Van Hollen, etc, many Democrats have become so fed up with America's politicians that some are coming around to the Republican position that government is hopeless and useless. But then you see the exceptions-- real public servants like Alan Grayson, Donna Edwards, Ted Lieu and-- as you can see in the video above-- Elizabeth Warren. Watch her just hammer a former Bush-era Federal Reserve (anti-)regulator, now is a crooked Wall Street lawyer, someone the Senate Republicans had called as a witness to complain about the CFPB. As you can see, she showed him no mercy, the reason why Wall Street has insisted that they will cut the Democrats off the gravy train if Schumer doesn't "balance her out" by getting Wall Street lackeys Patrick Murphy (FL), Ted Strickland (OH), Chis Van Hollen (MD), Katie McGinty (PA), Baron Hill (IN) and Patty Judge (IA) into the Senate. As a friend of mine put it so eloquently after watching Warren's questioning, "There is no one else in public life right now who can so effectively take down the smooth, arrogant operators working for corporate America. I’m glad she is on our side."

Yesterday she released a paper her office had prepared about conflicts of interests inside the financial services industry.

Many Americans rely on retirement investment advisers for guidance on how to save towards retirement, and most advisers have their customers’ best interests at heart. But because of loopholes in the law, it is perfectly legal for some advisers to steer customers into complex financial products that will earn the highest rewards, perks and prizes for the advisers-- even if they are bad options for their customers. Research suggests that this loophole costs Americans an estimated $17 billion every year. That’s $17 billion taken out of the pockets of retirees by unscrupulous advisers who are more interested in collecting fees and prizes for themselves than helping families build real security. In order to protect consumers from these types of abuses, the Department of Labor has proposed a draft rule to put an end to these conflicts of interest by closing these loopholes.

Kickbacks pose an especially danger-ous problem. When companies can offer kickbacks to agents for recommending high-cost financial products, and when those kickbacks are hidden from the customers, the likelihood that consumers will be duped into buying bad products increases sharply. To explore the prevalence of this type of conflict of interest, in April 2015 Sen. Elizabeth Warren (D-MA) opened an investigation, asking fifteen leading annuity providers for information on whether they offered non-cash incentives such as lavish cruises, luxury car leases, and other perks to annuity sales agents to promote their products and whether their customers were aware of the agents’ compensation arrangements.

While none of the companies questioned by Sen. Warren provided complete answers to the questions in her April 2015 letter, the responses nonetheless reveal a widespread practice of offering agents kickbacks in exchange for promoting certain annuities and other insurance industry products and that such kickbacks are effectively concealed from customers. Kickbacks may benefit the agent and the company, but they do so at the expense of their customers. And loopholes in the law make these kickbacks perfectly legal.

Overall, thirteen of the fifteen companies-- 87%-- admitted to offering kickbacks directly to agents, indirectly through third party gift payments, or both.

Other key findings of the investigation include:

• The majority of companies admitted to providing rewards and inducements, such as expensive vacations and other prizes, to annuity agents in exchange for sales. While financial industry rules to restrict non-cash compensation have been in place for over a decade, significant loopholes in those rules still allow companies to provide perfectly legal, non- cash compensation to sales agents. Nine of the fifteen companies that responded to Sen. Warren’s request letter indicated that they provide non-cash compensation to annuity agents. One company described these kickbacks as “common in the industry.” The most frequently offered incentives involve all-expense-paid trips to expensive vacation destinations such as Aruba, the Bahamas, and other resorts. The companies also admitted to providing items such as golf outings, dinners at restaurants, tickets to sporting events, sports memorabilia, theatre tickets, gift cards, and other rewards-- to agents who sold their products.

• Companies also create conflicts of interest by offering perks and inducements to annuity sales agents through third party marketing organizations. Even companies that do not provide non-cash compensation awards directly to agents frequently provide incentives to the third-party marketing organizations that then pass these awards on to the agents. Ten of the fifteen companies indicated that they provide such indirect payments. These payments are then used to provide kickbacks to agents, including expensive vacations, golf outings, iPads, jewelry, and other items. One expert described these third party marketing organizations as “the primary culprits of this type of agency perks.”

• Current disclosure rules are inadequate to ensure that customers are informed about the incentives agents receive for selling them specific financial products. Companies are required to provide certain information about non-cash compensation in their prospectuses, but the information provided to Sen. Warren and other publicly available information indicates that no company that offers payments or kickbacks to agents or third parties provides annuity purchasers with a clear, accessible, specific, and easy to understand explanation of their agent reward system, their third-party payments to marketing organizations, or the way these payments may be structured to encourage agents to sell the company’s annuities and other products without regard to whether they benefit the customer.

• Existing rules and regulations to deter conflicts of interest are completely inadequate. Companies that responded to Sen. Warren’s request for information pointed out that they were regulated under federal, state, and industry rules and guidelines and emphasized that they followed these rules quite carefully. However, this investigation reveals that those rules still left these companies with ample room to build a business model in which annuity providers could offer a wide range of perks and kickbacks to annuity agents irrespective of the quality of the financial products sold. As a result, many consumers continue to receive investment advice from sales agents who have incentives to put their own interests ahead of their customers, which may help explain how consumers lose an estimated $17 billion every year relying on the advice of conflicted advisers.

Federal and state regulations are designed to curb kickbacks illegal for certain advisers and certain products, but loopholes in the law permits many companies to continue to offer these rewards and many agents to continue to take them. Thirteen of the companies investigated (87%) admitted providing kickbacks to sales agents-- either directly or indirectly-- for selling their financial products. Giveaways such
as expensive vacations, sports tickets, golf outings, and electronics present a conflict of interest for many agents and create incentives to sell products that are not in the consumers’ best interest. Conflicts of interest like these are not restricted to the annuity industry; throughout the financial industry they cost families an estimated $17 billion every year.

The Department of Labor has proposed a new Conflict of Interest rule that would eliminate some of the worst sales practices in the retirement investment advice industry. This rule, if finalized, would provide important and necessary protections for people who entrust their life savings to a retirement adviser.

So... more important than ever to elect progressives to Congress, not just garden variety Democrats, at least half of which are likely to be as bad-- or almost as bad-- as Republicans. How do you know which is which since these days even the worst, most corrupt and most conservative Democrats called themselves "progressives," Florida "ex"-Republican Patrick Murphy being the worst this cycle. So what do you do. Support carefully vetted Democrats and eye with suspicion anyone being pushed by Chuck Schumer, Debbie Wasserman Schultz, Harry Reid, Jon Tester, Steve Israel or by the DCCC, DSCC or DNC. They tell Obama and Biden who to endorse so chances are if someone is endorsed by Obama or Biden, it's at best a transactional Democrat and at worst... well, someone like Patrick Murphy. Where do you find the good candidates who will be part of the Bernie Sanders/Elizabeth Warren wing of the party? Two places are on either of these thermometers:

Volcker Rule: Each Ending Is A New Beginning For Banksters And Their Lobbyists

As we mentioned Monday, all but one Republican (Walter Jones) voted to exempt private equity fund investment advisers from regulatory registration and reporting requirements. They were joined by 36 Democrats led by Wall Street whores Steve Israel ("ex"-Blue Dog-$800,019) and Jim Himes (New Dem-$1,853,26). Ever since Boehner became Speaker, whittling away at Dodd-Frank has been top priority-- and he knows there are always a couple dozen corrupt Democrats to tag along for the goodies. Conservatives hate the Volcker Rule banning high-risk bank trades but it was something Boehner, the GOP and the ConservaDems weren't able to stop on Tuesday.

The Fed and the FDIC (Federal Deposit Insurance Corp) each voted unanimously under guidelines set by Congress before Boehner took over. Oregon Senator Jeff Merkely was one of the most outspoken and effective advocates of the rule and his office released this statement by him and Carl Levin, a cosponsor of the provision during the crafting of Dodd-Frank:

“We fought for the Merkley-Levin provision of the Dodd-Frank Act in order to put a strong firewall between banks and hedge fund-style high-risk trading. Today is a big step toward that goal. We are still reviewing the details of the final rule, but early indications suggest that persistence and common sense can prevail in the face of even the fiercest special interest lobbying campaigns: hedging looks tougher, market-making looks simpler, trader compensation remains appropriately structured, and CEOs are required to set the tone at the top. No regulation is ever perfect, and we will carefully monitor implementation and hold regulators and firms accountable. If problems emerge-- for whatever reason-- we will quickly press regulators to address them. Overall, though, the final rule looks improved over the proposal from two years earlier.

“The Merkley-Levin Amendment was intended to change the culture and practices at our nation’s largest financial firms, to prevent Wall Street and the big banks from making swing-for-the-fences bets that put depositors and taxpayers at risk. The regulators have taken a serious step forward in mandating critical changes.”

Hedge-fund style proprietary trading at our nation’s largest financial firms was a high-risk, conflict-ridden activity that played a central role in the 2008 financial crisis. Banks should be in the business of serving customers-- including taking deposits from and making loans to ordinary families and businesses. Speculative investing should be left to hedge funds, private equity funds, and other private investors that, if they get in trouble, won’t imperil the lending so critical to our economic growth.

The Volcker Rule firewall, as embodied in the Merkley-Levin Amendment to Dodd-Frank:

• Bars our lending banks and their affiliates and subsidiaries from engaging in the speculative, conflict-ridden activities of making bets on the stock, bond, derivatives, and other markets and limits those activities at systemically important nonbank financial institutions;
• Allows for customer-oriented services, such as underwriting and market-making to facilitate capital formation for clients, risk-mitigating hedging activities to permit safe and sound operations, and fund management services for customers.

Wall Street is not happy. They fought the Volcker Rule at every opportunity and spent millions bribing (legalistically bribing, I guess) Members of Congress to kill it. It didn't work and they and their allies are fuming this week

Regulators' tough stance heralds a new era and new approach for financial markets, CLSA banking analyst Mike Mayo said.

"The big picture is that this ushers in an era of Big Brother banking," with regulators closely monitoring details of top banks' risk-taking, Mayo said. "Big Brother was asleep on the couch before the financial crisis." The new policy reflects Congress' decision that the banking system needed to be "de-risked, de-leveraged and to deliver more consistent financial results," he said. As part of the same overall effort, bank regulators are boosting capital requirements for banks internationally.

…The biggest arguments recently have been about how much trading should be allowed to hedge positions, especially since banks typically have more deposits on hand than they have loans outstanding, with the rest of their assets usually invested in the markets. They also typically own securities as part of legal activities such as executing client trades and making markets, he said.

Liberal-leaning groups such as Better Markets have lobbied for the toughest version of the rule possible, arguing in a Nov. 21 letter to the agencies that allowing too much trading to let banks hedge risks will allow proprietary trading via loopholes. They pointed to JPMorgan Chase's $6 billion-plus loss in the "London Whale" derivatives trade as evidence that trading that banks say is simply a hedge can pose risks to the system. New rules would hurt access to credit far less than another crisis, they said.

"Wall Street and its lawyers are in the loophole creation-and-exploitation business," Better Markets' Dennis Kelleher said. "For 100 years, banks have made the same complaints about every regulation. They said it during the Depression, and we grew the biggest middle class in the history of the world."

President Obama's statement:

Five years ago, a financial catastrophe on Wall Street was rapidly fueling a punishing recession on Main Street that ultimately cost millions of jobs and hurt families across the country. So as we prepared steps to rescue our economy and put Americans back to work, we also put in place tough rules of the road to make sure a crisis like that never happened again-- rules that reward sound financial practices, allow honest innovation and strengthen the financial system’s ability to support job creation and durable economic growth.

As part of this Wall Street reform, we fought to include the Volcker Rule-- a rule that makes sure big banks can’t make risky bets with their customer’s deposits. The Volcker Rule will make it illegal for firms to use government-insured money to make speculative bets that threaten the entire financial system, and demand a new era of accountability from CEOs who must sign off on their firm’s practices.

Our financial system will be safer and the American people are more secure because we fought to include this protection in the law. I thank Paul Volcker, a former Chairman of the Federal Reserve and advisor I trust, for helping to create this important safeguard. I also thank Secretary Lew and the regulators who worked diligently to finalize the rule by the end of this year as we called on them to do. I encourage Congress to give these regulators adequate funding to effectively and efficiently implement the rule, which will help protect hardworking families and business owners from future crisis, and restore everyone’s certainty and confidence in America’s dynamic financial system.

One of the biggest Wall Street whores in Congress is New Jersey extremist Scott Garrett, Wall Street's fully-owned Republican on the House Financial Services Committee. While sitting on the committee, he's taken a tidy $1,235,537 in bribes from the financial services industry. So far this year, he's the 4th biggest recipient of bribes from securities and investment area, beaten out only by Boehner, Cantor and Tom Cotten (R-AR), another corrupt member of the Financial Services Committee and a candidate for the U.S. Senate. He ran right to Fox Tuesday to whine about the rule:

There's an America where workers are paying more and more of their modest wages just to GET those wages

"Natalie Gunshannon, 27, with her daughter, Anie Popish, 7, said she had to use a card because her employers would not deposit her pay directly into her account." (NYT caption)

Krystal McLemore, 22, makes $7.65 an hour at a Taco Bell in St. Louis. She said she was told to sign up for a payroll card. (Taco Bell says it "offers direct deposit and a voluntary option of payroll cards as an added convenience" for employees.)

But she grew tired of being charged $1.75, in addition to the A.T.M.'s fees, to withdraw cash. After a tip from a co-worker, Ms. McLemore realized she could reduce her charges if she took out all her wages once a month. Now, supplied with one of the most modern banking products, Ms. McLemore has a decidedly old-fashioned way of handling her pay: it is stacked in a shoe box in her closet in $10s and $20s.

"It costs too much to get my money," she said.

-- from "Paid via Card, Workers Feel
Sting of Fees," in today's NYT

by Ken

This really sucks. From this report today by the NY Times's Jessica Silver-Greenberg and Stephanie Clifford:

A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.

For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.

But in the overwhelming majority of cases, using the card involves a fee. And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.

These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators.

And they offer some cases in point, like that of 21-year-old Milwaukee McDonald's employee Devote Yates, who "says he spends $40 to $50 a month on fees associated with his JPMorgan Chase payroll card," and says, "It’s pretty bad. There’s a fee for literally everything you do."

Now it's not exactly a new phenomenon to make employees pay to get paid. For ages check-cashing stores have stayed in business servicing workers who don't have the luxury of a bank account to deposit checks into. But now having a bank account no longer guarantees that you can access your pay without paying.

Many employees say they have no choice but to use the cards: some companies no longer offer common payroll options like ordinary checks or direct deposit.

At companies where there is a choice, it is often more in theory than in practice, according to interviews with employees, state regulators and consumer advocates. Employees say they are often automatically enrolled in the payroll card programs and confronted with a pile of paperwork if they want to opt out.

"We hear virtually every week from employees who never knew there were other options, and employers certainly don’t disabuse workers of that idea," said Deyanira Del Rio, an associate director of the Neighborhood Economic Development Advocacy Project, which works with community groups in New York.

As you could surely have imagined, the use of these cards didn't come about for the convenience of workers. It saves companies money, and that's all that matters.

Taco Bell, Walgreen and Wal-Mart are among the dozens of well-known companies that offer prepaid cards to their workers; the cards are particularly popular with retailers and restaurants. And they are quickly gaining momentum. In 2012, $34 billion was loaded onto 4.6 million active payroll cards, according to the research firm Aite Group. Aite said it expected that to reach $68.9 billion and 10.8 million cards by 2017.

Companies and card issuers, which include Bank of America, Wells Fargo and Citigroup, say the cards are cheaper and more efficient than checks -- a calculator on Visa’s Web site estimates that a company with 500 workers could save $21,000 a year by switching from checks to payroll cards. On its Web site, Citigroup trumpets how the cards "guarantee pay on time to all employees."

According to Chuck Harris, president of NetSpend, based in Austin, described as "the largest issuer of payroll cards": "We built a product that an employer can fairly represent to their employees as having real benefits to them." Yeah, right, Chuck. That's what it's all about: "real benefits" to the employees.

It gets worse.

Sometimes, though, the incentives for employers to steer workers toward the cards are more explicit. In the case of the New York City Housing Authority, it stands to receive a dollar for every employee it signs up to Citibank’s payroll cards, according to a contract reviewed by The New York Times. (Sheila Stainback, a spokeswoman for the agency, noted that it had an annual budget of $3 billion and that roughly 430 employees had signed up for the card.)

Some of those interviewed fell back on the hoary check-cashing services, pointing out that for workers without bank accounts, the fees associated with the payroll cards are less than those. And "this population -- people who tend to use few, if any, bank services -- is swelling."

About 10 million households in the United States do not use a bank at all, up from nine million four years ago, according to estimates from the Federal Deposit Insurance Corporation. And 24 million households that do have a bank account still use expensive financial services like prepaid cards, the agency said.

For banks that are looking to recoup billions of dollars in lost income from a spate of recent limits on debit and credit card fees, issuing payroll cards can be lucrative -- the products were largely untouched by recent financial regulations. As a result, some of the nation’s largest banks are expanding into the business, banking analysts say.

All to provide financial services to those who have fallen through the banking net. Philanthropists! Or maybe not.

The lack of regulation in the payroll card market, while alluring for some of the issuers, can potentially leave cardholders swimming in fees. Take the example of inactivity fees that penalize customers for infrequently using their cards. The Federal Reserve has banned such fees for credit and debit cards, but no protections exist on prepaid cards. Cards used by more than two dozen major retailers have inactivity fees of $7 or more, according to a review of agreements.

Some employees can also be hit with $25 overdraft fees, called "balance protection," on some of the prepaid cards. Under the Dodd-Frank financial overhaul law, banks with more than $10 billion in assets are barred from levying overdraft fees on customers’ checking accounts.

Many fees are virtually impossible to dodge, some employees say. A Victoria’s Secret employee, Bintou Kamara, for example, said it cost her $1.50 just to transfer money from her Citi payroll card to her checking account.

"I just make such little money that it seems like a lot to pay just to get access to it," said Ms. Kamara, 23, who works as a sales clerk in New York.

Naoki Fujita, a policy associate at Retail Action Project, an advocacy group for retail workers, said, "These are people who can least afford to fork over huge fees."

It turns out that having a checking account can make life harder, not easier.

For Natalie Gunshannon, 27, another McDonald’s worker, the owners of the franchise that she worked for in Dallas, Pa., she says, refused to deposit her pay directly into her checking account at a local credit union, which lets its customers use its A.T.M.’s free. Instead, Ms. Gunshannon said, she was forced to use a payroll card issued by JPMorgan Chase. She has since quit her job at the drive-through window and is suing the franchise owners.

"I know I deserve to get fairly paid for my work," she said.

The franchise owners, Albert and Carol Mueller, said in a statement that they comply with all employment, pay and work laws, and try to provide a positive experience for employees. McDonald’s itself, noting that it is not named in the suit, says it lets franchisees determine employment and pay policies.

There's a lot more to the report, but I think you get the drift. Employers save money, employees get screwed, and the banks and other financial-services companies producing these financial products make out like bandits.

It's a shame we don't have any prominent politicians willing to talk about something like, I don't know, "The Two Americas," one of which would be the America that doesn't know or care what it's like to be in the low-wage America where your economic status forces you to suffer this further lowering of your wages.

#

As the JPMorganchase mess reminds us, the health of the economy is too important to allow the bizniz elites to have any say in overseeing it

You mean to say we're going to bust Jpmorganchase's chops over a lousy $2 billion in lousy loans? How petty can we be?

"The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today."

-- Rep. Barney Frank, responding to the news of
Jpmorganchase pooping its loan-portfolio pants

by Ken

OK, $2 billion in trading loses here, maybe another $2 billion in trading losses there -- can a financial services company be expected to keep a tight rein on every last penny? I mean, it's not like they misplaced the money and can't find it, or spent it all on ice cream and chocolates, or had it stolen out from under their noses, did the boys and girls -- but mostly boys, I suspect --there at Jpmorganchase. No, they just, you know, lost it the old-fashioned way, making crap investments.

Oops! One day we'll all look back at this and smile.

For ages now I've periodically tried to write a post anytime we're trying to figure out what kinds of laws and regulations we need to maximize the health and functionality of our economy and society, we should never under any circumstances pay any attention to the so-called "business community." It's regrettable in a way, because many businesspersons undoubedly have specialized knowledge that you would think would be of value in such discussions. It just never turns out that way, though. Allow them to so much as voice an opinion and what you'll get will be a road map for lying, cheating, and stealing their way toward gratifying their wildest greed fantasies. The dears just don't seem to be able to help themselves.

The inevitable result is catastrophe. Remember the Great Depression? The current Really Rotten Depression? These are just a couple of random, off-the-top-of-my-head examples.

IT'S LIKE DEALING WITH CHILDREN

Instead of their supposed professional expertise, what we get is their psychotic fantasies of grabbing every chunk of grabbable economic assets. You have to think of it like dealing with children. And as with children, sometimes this process has a certain innocence to it, the way a child who can't be expected to know better can be expected to run amok if allowed to, say, eat his/her way through a candy store. If you don't have a generous supply of barf bags handy, you're a fool. In this case, at least, you can entertain the hope that the little one has "learned his/her lesson." (Possible, but doubtful.) The alternative scenario is that the child being evoked is your classic juvenile delinquent, who will run will because, gosh, that's how he/she was brung up, or whatever causes such destructive behavior.

Let's say Little Billy persuaded Mom to buy him some lemons and show him how to make lemonade (or, more likely, make the stuff for him), and she let him set up a cute little lemonade stand on the sidewalk out front of the house, and Little Billy promptly bought a few billion dollars' worth of stuff (you know, iPads, Xboxes, Oreos, and whatnot) on credit in anticipation of those imminent lemonade earnings, vowing he don't plan to pay no taxes neither 'cause that's communism taking away all that money he made all by hisself and what is this, Russia?

And in all likelihood when that first pitcher of lemonade was sold (probably after Mom called the neighbors and asked if they wouldn't buy a glass), and Billy prevailed on his little sister Sally to make up another batch even though she'd never made lemonade and didn't know how, and the first few customers for the new stuff choked on it, and when Billy heard about it he cursed out old Mom for being selfish and not carrying her load.

He didn't hear about till later 'cause about then his friends Bobby and Barry came by and said they was going to go hang out at the mall and Billy informed Sally she was in charge, right after he took whatever money was in the cigar box 'cause you know he would have to get something to eat and something to drink at the mall. And by the next day Billy had lost interest, and besides, he was too busy with his Xbox and Ipad, although he was starting to get bored with them and he already ate all the Oreos.

The thing is, when Little Billy goes on Fox Noise and says sternly that regulation is strangling economic incentive, and the Fox Noise doofus smiles and winks at the camera and says, "Isn't Little Billy something, folks?," should we pay any attention? The crucial thing to remember is: Pay no attention to the doofuses on Fox Noise. Or on CNN or in the Washington Post, etc.

You're still not convinced? Okay, I know this is a low blow, but there's a job to be done here, so here goes: Does the phrase "CEO president" ring a bell? No, I'm not suggesting that the CEO president himself should have been capable of any better judgment. He was, after all, a person incapable of any kind of reasonable judgment. Look, however, at all the business whizzes who propped him up, who gave him a "career," who invested their resources in putting him in the White House, while other bizniz brains -- and probably some of the same ones -- were taking ownership of a Congress they could count on to give them their spanking-new Wild Wild West.

ANOTHER NAME TO REMEMBER: ENRON

The Enron criminal conspiracy wasn't a fluke; it was, you know, a criminal conspiracy masked as a political program, the inevitable result of the relentless campaign put in place by the bizniz interests who preached "taking the shackles off American entrepreneurs." Yeah, right. The very idea of a CEO president, whether we're talking about a CEO-stooge or a real live specimen, should be so terrifying that the bishops screech for exorcisms when they hear the words.

The problem is that, once this much is said, I've never figured out what more there is to say, except "don't don't don't don't don't." I mean, what more is there to say?

So when one of the wholly owned stooges of Big Bizniz tells you in that smarmy know-it-all voice, "We gotta do it for bizniz 'cause they's the ones what makes jobs," either punch the crap out of him or have him arrested. (Probably the punching-crap-out solution is better because the people who own him very likely also own the people who would be supposed to arrest him. Whatever you do, for gawd's sake, don't pay any attention to the jerkwad, because you know he's either on the take or a gibbering imbecile, and those are two classes of people it's wise not to allow to participate in policy-making discussions.

READ ABOUT IT IN THE NEW YORK TIMES

Because you know that if you do, it's just a matter of time before . . . well, before:

Leading members of Congress on Friday demanded that federal regulators strengthen proposed banking rules and scrutinize trading closely in the wake of JPMorgan Chase's disclosures of trading losses.

"The fact that this can happen at a bank with a solid reputation like JPMorgan is evidence that our banking regulators must remain vigilant," said Senator Tim Johnson, the South Dakota Democrat who is chairman of the Senate Banking Committee, "and why opponents of Wall Street reform must not be allowed to gut important protections for the financial system and taxpayers." The bank has been a leader of industry lobbying against new strictures on trading practices.

The chairwoman of the Securities and Exchange Commission, Mary L. Schapiro, said the agency was focused on JPMorgan Chase's newly disclosed trading losses, and other people with knowledge of the agency's activities said it was already examining possible civil violations involving the bank's public statements and disclosures.

Two Senate authors of the law restricting certain kinds of high-risk trading by banks blasted federal regulators, saying that the agency's draft regulations would not adequately address trading of the kind that has now cost JPMorgan Chase enormous losses.

Senators Carl Levin of Michigan and Jeff Merkley of Oregon, both Democrats, said in a conference call with reporters that as currently drafted by the agencies charged with carrying out the new law, the Volcker Rule, governing a bank's proprietary trading, allows banks to amass a single, large bet as a hedge against possible declines in an entire portfolio of securities.

That, Mr. Levin said, "is a big enough loophole that a Mack truck could drive right through it."

And that is what JPMorgan Chase did, the senators contend. Where the law was written to allow hedging of individual investments by banks to protect them from possible losses, it was not meant to allow hedging an entire portfolio or hedging in favor of or against movements in the economy, they said.

"That is a license pretty much to do anything," Mr. Levin said. . . .

-- from John Cushman Jr. and Edward Wyatt's
NYT report, "Bank Regulations Get Fresh Support"

Or read about it in the Washington Post ("JPMorgan losses reignite clash between Wall Street and Washington").

Just remember: There's no need to get terribly worked up about any of it, any more than I suspect, say. Sen. Tim Johnson is. Oh, I know he's talking the talk now, but talk is cheap. If there were any will in Washington to enforce the laws we already have on the books, we probably wouldn't need to talk about new ones.

IT'LL BE AN ISSUE FOR A FEW MINUTES, AND THEN . . .

I don't think I'm going too far out on a limb in suggesting that this will all blow over soon enough. It'll be like the precocious teen who poops his pants at his parents' party. You take him to his room, help him get calmed down and cleaned up, assure him it could happen to anybody, and then for everyone's sake change the damned subject as soon as possible. And back at the party everybody's thinking about it but nobody wants to talk about it, and after a while nobody even wants to think about it. With luck, Charlie Sheen will provide some fresh humiliation to get worked up about.

So maybe, maybe we'll have some sort of legislation work its way through the Senate aimed at remediating this particular little snafu, without much in the way of enforceability -- and in any case with no disposition in government to do any serious enforcing. Even that won't matter because it won't even get to that stage. Does anyone see the House Republicans -- people who look to Paul Ryan for wisdom on matters of economics and finance -- to do anything that would inconvenience the economic elites who own them?

It's not that I'm "anti-business." I'm just restating the obvious: that when it comes to overseeing the economy, the bizniz elites have no useful input to offer, a reality we ignore at our extreme peril.

#

Financial Advice

Right-Wing con-artist Grover Norquist

Sometimes I mention something I got from "my financial advisor." If he sounds like a conflicted mess, it's because "he's" half a dozen different people from 4 different institutions. Yesterday, the sanest one, who left her career as the finance director for a big Wall Street firm in 1997 to start her own boutique firm (which is not attached to any banksters) sent me a note responding to a post we ran Thursday about the reaction in England to the Conservative Consensus/Austerity movement there. She had just been watching Ron Paul on TV when she read it. Paul, a darling of the paranoid and deranged militia types, was saying how he felt violence was an imminent threat here in America. My financial advisor wrote:

I do find it amazing how no one has rallied the populace regarding the fact that no one has gone to jail for anything to do with the prior collapse let alone this one. They get people who have no chance of ever having to worry about the estate tax to fight against it. That’s why we particularly need you to keep pushing for progressives.
 
The 24 hour media cycle is being exploited to scare the %^& out of people. People’s perceptions are that things are as bad now as they were in 2008. I’m not saying this is a barn burner, but things are more stable. Hopefully the crazy right won’t take over everything.
 
Investment wise, this is an interesting time as the macro issues are the bear cause. The corporations themselves are earning and flush with cash. Even if we do double dip (which I don’t think is going to happen), corporate earnings should hang on due to global pull. 
 
We’ve had twelve years of this!

Another one of my advisors-- who I've worked with for decades, is Lisa Detanna at Wedbush, a mid-sized firm based in L.A. that seems to keep a healthy distance from Wall Street groupthink. She's been all over TV lately and this was her on CNBC this week:



She and I have steered my investments in a much more conservative direction ever since Bush started playing fast and loose with the economy. Obama being elected president didn't make me any less cautious; his policies are basically an extension of Bush's in (too) many ways.

Lisa-- and most people I've spoken to in the financial services industry-- seem to think that when push comes to shove the Republicans will do the right thing and compromise. I think they don't watch the day to day escapades, don't understand the hold of the teabaggers over Boehner and don't know who or what Grover Norquist is. Lisa says the "S & P downgrade is forcing government to react and not be so political." Lisa and others in her industry know more about investments than about politics. I'm nervous that the Republican intransigence the S&P blamed for their downgrade will tank the economy. It's beyond the comprehension of most serious people that members of Congress could be nihilists who want to tank the economy and want to burn down the whole house so "we can start over again" (as in start in 1950 and stop the clock right there). People in that industry are just starting to come to grips with it. After Bachmann's insane rantings in the Iowa debate Thursday night S & P tried to make it clear enough for even someone as congenitally stupid and willfully ignorant as she is to understand. Greg Sargent:

A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default-- a position put forth by some Republicans.

Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.

“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”

Let’s try to wrap our heads around this. Bachmann’s opposition to raising the debt ceiling is one of the most important planks in her presidential platform. She has touted it in two ads, presenting it as a sign of her courage. She repeated it again last night at the debate, asserting that opposing the hike is “the right thing to do,” and even cited Standard and Poors’s downgrade as proof of her superior grasp of our fiscal dilemma.

Less than 24 hours later, S & P confirmed that it was precisely this opposition to raising the debt ceiling, and the cavalier attitude towards default exhibited by the likes of Bachmann, that led to our downgrade.

The question of what led S & P to downgrade our credit rating is a matter of verifiable fact. And S & P has now confirmed that one of the central rationales of her candidacy is a key reason for their downgrade. What will she say when confronted with this fact? How will she explain it away? Will anyone even ask her to try to explain it?

In a rational universe, this would be devastating to her candidacy. Of course, the world of GOP primary politics is anything but a rational universe.

Mukherji, by the way, was referring to Paul Ryan (R-WI). So here are some notes for an outline Lisa sent me of what she's going to be sending to her clients Monday:

Although we have reduced our expectations of GDP growth globally and in the US we
are not anticipating at this point a double dip recession to the magnitude of 2008 – 2009.

Interest rates are at historic lows

Corporate profits are high
75% of corporations have reported positive or 10% better than expected numbers
Companies are lean and have deleveraged ahead of people and governments and continue to exceed expectations

Stocks are trading at historic low level PE’s not only from price decline but growing earnings as well

Balance sheets of banks are better now then they were in 2008
Capital ratios are better then they were at US banks in 2008 2009 Interest rates per the fed will remain low for two years

Oil prices lower

Commodity prices taken pull back but expected to climb as economy stabilizes and EU and US finalize and agree and have plan-- global demand strong

EU needs to address
Bail out of banks
Bail out of weaker EU countries

US
Pass budget that reduces deficient spending

And then to close the week-- as the stock market closed above 11,000 again-- one overall bit of advice from still another financial advisor:

What a week!

I had to wait until the market closed today (Friday) as it isn’t over until it’s over these days. In the first four days of this week, the Dow Jones Industrial Average moved at least 400 points each day. That has never happened before. We had two big ups and two big downs. On a percentage basis, the index moved at least 3.9% in each of the four days, a phenomenon we saw just once in 2008 and once in 1987, and before that 1933. So no doubt our heads are spinning.

As I read in one commentary on recent events, the media doesn’t like it when planes land safely. So while this last week has been incredibly harrowing, I would like to provide a little perspective on where the markets stand. While this correction has been unusual in its swiftness as I mention above, we have been through gyrations before. Just last year as a matter of fact. Last May the S&P 500 dropped 8.2% followed by a 5.4% drop in June. That wiped out all the years gain. The market had Greece, the BP oil disaster, the flash crash and China slowing down to deal with then. The market is dealing with many of the same issues in this year’s downswing as well as the debt ceiling drama in Washington and the S&P credit downgrade and a current flood of rumors surrounding European banks.

But corporate profits and balance sheets were strong in 2010, the financial system was working and the economy was stabilized. So 2010 ended with the S&P up 12.8%. It was not smooth getting there however.

Though it probably doesn’t feel like it, the market is well ahead of where it was one year ago. Versus August 31, 2010 the S&P is up 12.4%. That is despite the 8.9% drop of this August. So most portfolios are still ahead of where they were one year ago.

There are an awful lot of variables at work in the market today. On a very practical note, this turmoil is occurring when many people in the US and even more in Europe are on vacation. The lack of a full complement of market players can exacerbate volatility and allow program computer trading to impact short term results.

Despite the headlines, there is truly a good bit of debate out there about the state of the US economy. Japan (the third largest economy in the world) was largely offline after the tsunami. This created huge supply chain disruptions in the US which led to layoffs and shutdowns. As things return to normal, there may be upside in the coming quarters. Also the consumer sentiment numbers get a lot of play. Personally, I can’t imagine consumers being confident after the display of ineptitude from our esteemed politicians. What doesn’t get reported often is that US consumers report one thing but often do another. Consumer spending as evidenced by retail sales continues to surprise on the upside.

Another paradox, despite the US downgrade, someone out there still thinks the US is the safest place to invest as evidenced by the flight to US Treasuries during the height of the panic. The 10 years note was paying 2.09%, an incredibly low rate absolutely and relative even to the other countries still triple A.

In case you didn't know it, the revolution has already happened, and we lost

House Speaker John Boehner said the White House "moved the goal posts" by demanding an additional $400 billion in revenue during talks over a deal to avoid default. He said he was confident the U.S. will not default but said the White House has "refused to get serious" about spending cuts.

"Dealing with the White House is like dealing with a bowl of Jell-O," Boehner said.

-- a 7:30pm ET Washington Post "Politics News Alert"

by Ken

Compared with thinking about the horror in Norway (about which there doesn't seem to be any news coming in), it's almost a relief to turn to the Theater of the Weird that is our Debt-Ceiling Crisis & Negotiations Inc.

I don't doubt that Sunny John has a point about negotiating with the Obamablob, but when did any right-wing bully ever have trouble getting him to meet them 80 or 90 percent of the way? Besides, when it comes to blobulousness, how can you not return the charge playground-style: "Takes one to know one."

I don't know how this Theater of the Weird tragicomedy is going to work out except that it's going to be really, really bad. In important ways the outcome is predetermined, except for filling in some of the blanks and some of the numbers. As a colleague has been pointing out, the war is over, and we've lost. The oligarchs are in charge, and not many decisions of federal consequence are going to be made which don't meet with their approval.

Call it a civil war, or a New American Revolution, or a putsch, it took place without most of us realizing it was happening, and the New Order was established by the time it was determined that the federal government's basic principle in addressing the economic meltdown was going to be the ensure that the financial elites were made whole.

So I had to chuckle when I saw a piece pumped out by the NYT's DealBook financial-news service, chronicling the woes of the interns to the oligarchs, which starts like so:

"Fewer Perks and More Work for Wall St.’s Summer Interns"
BY KEVIN ROOSE

Wall Street interns have gone from pampered to pummeled.

In better days, college-age interns at the nation’s largest investment banks, known as summer analysts, were treated like young royalty. But shrinking profits and a spate of recent bank layoffs have forced this year’s interns to shoulder full-time workloads.

“I worked 85 hours last week!” said one Goldman Sachs summer analyst, a college senior who spoke on the condition of anonymity because she was not allowed to speak to the media.

“The last two days, I’ve been here until 3 a.m.,” said a Deutsche Bank analyst, who also spoke on the condition of anonymity to protect his job. “My weekends are fun, but that’s about it.”

While hard work has been customary among young finance workers for years, after-hours benefits once made the long days more palatable. . . .

And at this point we're launched on tongue-hanging-out tales of erstwhile intern splendor. The point of the piece, I'm sure, is to spread the word that the banksters are tightening their belts in these troubled times.

Unexpected turbulence in the industry has hit this year’s interns, who say that fewer full-time employees has meant more work for them. UBS and Credit Suisse have both conducted layoffs this year, and Goldman Sachs and Morgan Stanley are cutting back as well.

“Managing directors are telling interns, ‘We’re going to need you to step up,’ ” said one bank recruiter, who spoke only anonymously because she was not authorized to speak to the media.

By all means read the piece. It's entertaining. But I don't believe for a moment it tells us that the banksters are wobbling. What it tells me is that, now that they're consolidating their hegemony, one of the spoils of victory is being able to remake decisions about who has to be paid what. As we've been noting, there appears to be no limit to the greed of our financial lords, and I'm assuming they're simply making new calculations about what they have to pay those summer interns.

Maybe in the past they had to share some of their loot with the fiscal farmhands. For sure now they don't have to. As so many other bulwarks of the old-fashioned middle class have discovered to their chagrin, they're part of the team, they're just hired hands and hangers-on. As regards those poor downtrodden interns, reporter Roose seems to have found no shortage of whiners, but no deniers or decliners.

[D]emand at top-flight colleges for the internships, which had tailed off slightly during the financial crisis, has come roaring back.

“It’s the best way to land a permanent position, it’s prestigious, and there’s a steep learning curve, so you come away having been quickly trained and assigned meaningful work,” said Patricia Rose, director of career services at the University of Pennsylvania.

For their long hours, Wall Street interns are rewarded handsomely. Summer analysts are generally paid based on the prorated salary of a first-year analyst. At Goldman Sachs, for example, a first-year analyst’s salary of $70,000 translates to a summer intern’s pay of about $15,000 for 10 weeks of work, which includes a $2,000 housing stipend, according to one current intern. Interns at the Manhattan offices of BlackRock, the asset management firm, are paid a prorated salary that comes out to around $33 an hour, with time and a half for overtime exceeding 40 hours a week, according to a company spokeswoman.

But for most interns, the real prize is an end-of-summer job offer. Investment banks stock their full-time ranks with former interns, and the pressure to create loyalty during a 10-week summer is palpable. . . .

or interns who survive the summer, the payoff can be big. Top performers are often given offers in the fall for full-time positions that begin the following summer, freeing them from the stress of a senior-year job search.

And even for interns who don’t plan on returning full time next summer, like the overworked Deutsche Bank summer analyst, a Wall Street internship may be good preparation for the trials of working life.

“If I can get through this, I can get through anything,” the intern said.

On the chance that those internships may prove bonanzas, the would be financial wolves and sharks seem happy to take whatever terms are offered, so the oligarchs are adjusting the terms they're offering. "More for themselves" would be the operative economic principle.

#

Imagine a Senate where Ted Kaufman's no-nonsense fin-services speech is the norm, and where Joe Sestak could take his stands

The temporary senator from Delaware

by Ken

Tomorrow night I'm going to toss in my two cents' worth of lamentations about the pathetic state of the U.S. Senate, from what I think is a slightly different angle. Maybe I should leave the outcome in suspense, but I don't want to mislead anyone into thinking I'm going to arrive at a conclusion any less hopeless than everybody else.

However, for tonight I want us to indulge in the luxury of a harmless little fantasy.


(1) A TEMPORARY SENATOR TAKES ON THE MEGABANKS

Ted Kaufman, of course, is only a temporary U.S. senator, having been appointed to fill the Delaware seat vacated by Vice President Joe Biden until a new senator is elected this November. (The general speculation, you'll recall, was that Kaufman, Biden's Senate chief of staff for almost a decade, would be a place-holder for the veep's son, state AG Beau Biden. But Beau took a good look at this year's election climate and decided to sit the race out.)

Yesterday the senator delivered a speech, Ending Too Big to Fail, whose text left a lot of people gasping in disbelief, going beyond the question of where a new consumer regulatory commission should be placed to the proposition that no regulatory commission could deal effectively with the megabanks that fall into the "too big to fail" category, and that bringing them under some basic regulatory control is crucial to our economic well-being.

Here's just the start of the speech:

[T]here is little in the current legislation that would change the behavior or reduce the size of the nation's six mega-banks. Instead, this bill invests its hopes in two ideas: First, that chastened regulators (who failed miserably in preventing the crisis) will this time control these mega-banks more effectively – today, tomorrow and decades into the future. And, second, that a resolution authority designed to shield the taxpayers from yet another bail-out will be able successfully to unwind incredibly complex mega-banks engaged across the globe.

In the midst of the Great Depression, Congress built laws that maintained financial stability for nearly 60 years. Through the Glass-Steagall Act, which included the establishment of the Federal Deposit Insurance Corporation, Congress separated investment banks, which were free to engage in risky behavior, and commercial banks, whose deposits were federally insured. As I described in a previous speech, during the last 30 years, that division was methodically disassembled by a deregulatory mindset, leading to the reckless Wall Street behavior that caused the greatest financial crisis and economic downturn since the 1930s.

What walls will this bill erect? None. On what bedrock does this bill rest if the nation is to hope for another 60 years of financial stability? Better and smarter regulators, plain and simple. No great statutory walls, no hard divisions or limits on regulatory discretion, only a reshuffled set of regulatory powers that already exist. Remember, it was the regulators who abdicated their responsibilities and helped cause the crisis.

Thus far, on the central aspect of “too big to fail,” financial reform consists of giving regulators the authority to supervise institutions that are too big, and then the ability to resolve those banks when they are about to fail. Upon closer examination, however, the former is virtually the same authority regulators currently possess, while the latter – an orderly resolution of a failing mega-bank – is an illusion. Unless Congress breaks up the mega-banks that are "too big to fail," the American taxpayer will remain the ultimate guarantor in an almost certain-to-repeat-itself cycle of boom-bust-and-bailout.

The senator went on to discuss in detail the problem of the "too big to fail" banks and the kind of congressionally mandated control he thinks needs to be included in serious financial reform legislation to deal with it, with no pussyfooting around the issues or trying to make nice to institutions that have a lot of political clout -- and throw around a lot of political cash.

Chris Dodd has many outstanding personal and political qualities. But among his liabilities is a worrying closeness to the financial-services industry which made a lot of people uneasy about his role as the Senate's point man on any reform legislation, especially when the Republicans have made it clear that they will fight tooth and nail against any kind of regulatory reform, not just as part of their "Just Say No" strategy but as a matter of faith. As Howie put it earlier this week, "For Conservatives The Best Bank Regulation Is No Regulation."

There seemed some possible grounds for hope when Dodd announced that he won't run for reelection this year. Maybe now he would feel free to legislate free of electoral "pragmatism." Maybe now he would want this bill to be his congressional "legacy."

Sadly, it doesn't seem to have worked out that way, and in retrospect it's not hard to see why. After all, the senator will still have a family and a lifestyle to support after he leaves the Senate. It appears that retirement is not a time when you suddenly begin biting hands that have been feeding you for a long, long time.

Still, just for tonight, close your eyes and imagine that the speech Ted Kaufman gave yesterday wasn't given by someone who was just passing through the Senate. No, no, imagine harder. I know we here live in that dreary "reality-based" world, but just for this brief moment, let it go.


(2) A SENATE CANDIDATE ESTABLISHES HIS VOICE

As I've mentioned before, Rep. Joe Sestak's insurgent campaign to wrest the Pennsylvania Democratic Senate nomination away from Dem-for-a-day Arlen Specter is on fire with no-nonsense, serious discussion of a vast array of crucial issues, staking out forceful positions that I'd be only too happy to have held by my senator. Of course he has staff to work on these position papers, but they certainly bear the candidate's stamp, and they certainly represent a commitment to run the kind of no-holds-barred campaign-on-the-issues we enlightened folk always claim we're so eager to see.

Yesterday I plucked out three Sestak campaign e-mails from my e-mailbox, and I've added a fourth from this morning. I'm just going to reprint them, so you can read as much or as little as you like. I'm as impressed by how they say what they say as I am by what they say. I get a real sense of a voice emerging here.

Subject: SUNDAY 1:15: Sestak to hold Health Care Town Hall in Philadelphia

SUNDAY 1:15 PM: Joe Sestak to Hold Health Care Town Hall Following Historic Vote in Congress
Continues Dialogue With Voters On Vital Issue for Working Families

Democratic U.S. Senate candidate Congressman Joe Sestak will hold a town hall meeting this Sunday at 1:15 at the Baptist Worship Center in Philadelphia to have an open discussion about health care reform.

Just as Joe was the first member of Congress to hold a health care town hall during last year's August congressional recess, he plans to be the first member to convene a town hall after the historic votes in the House and the expected vote this week in the Senate. Joe believes it is part of an elected official's duty as a public servant to explain his positions and provide people the opportunity to have their questions answered.

"The voters didn't send us to Washington to duck the tough issues -- they sent us to take them head-on, both before and after the votes are cast. We must enact the right policies for America's working families and stand accountable for our votes before the American people. Americans deserve transparency in their public servants, and I will continue to explain why I support this health care reform effort and how it will benefit Pennsylvania's working families. This is the right thing to do. I'm proud of our work, and I look forward to standing accountable for it before the people of Pennsylvania."

WHO: Democratic U.S. Senate candidate Joe Sestak
WHAT: Town Hall on Health Care Reform
WHEN: Sunday, March 28, 2010 at 1:15 PM
WHERE: Baptist Worship Center, 4790 James Street, Philadelphia, PA 19137

Subject: Sestak: Time to End Workplace Discrimination

Sestak: Time to End Workplace Discrimination
Urges Committee to Move on Legislation to Protect LGBT Employees

Democratic U.S. Senate candidate Congressman Joe Sestak wrote today to House Education and Labor Committee Chairman George Miller urging him to bring the Employee Non-Discrimination Act (ENDA) to a vote during the remaining months of this session of Congress. ENDA -- of which Joe is an original co-sponsor -- would protect Americans from being fired or discriminated against in the workplace because of real or perceived sexual orientation or gender identity. Currently, it is legal in 29 states to fire workers simply because of who they are. A committee vote on ENDA was set for last November, but was unexpectedly postponed and has not been rescheduled.

"This fundamental piece of civil rights legislation is long overdue. We should not delay this markup any further," Joe wrote. "My position on this issue and my support for the Employment Non-Discrimination Act is borne out of my experience in the military. While commanding men and women in harm's way during my 31 years in the Navy, we knew, because of public surveys, that a certain percentage were lesbian and gay service members. Having seen their dedication, their allegiance, and their sacrifices, how can I -- or anyone -- not say that these individuals deserve equal rights when they return home."

Subject: Sestak Supports START Follow-On Treaty

Joe Sestak Supports START Follow-On Treaty
Former Admiral Calls on Senate to Move Swiftly Towards Ratification of Historic Nuclear Weapons Agreement

Democratic U.S. Senate candidate Congressman Joe Sestak responded to today's announcement that the United States has reached an agreement with Russia on a new nuclear arms treaty which will be signed next month in Prague.

"President Obama should be commended for his willingness to engage with other nations who have interests that at times are adverse to ours. His efforts to 'push the reset button' on U.S.-Russian ties after eight years of tension under President Bush, particularly over missile defense, have led directly to today's monumental achievement," said Joe.

On December 5, 2009, the historic Strategic Arms Reduction Treaty (START) expired. START was the largest arms control agreement in history and was ratified after a decade of negotiations with the Soviet Union. This landmark agreement was instrumental to reducing Cold War nuclear tensions and establishing precedents for inspection and verification measures that provide both sides with confidence about the other's arsenal.

Under the terms of the treaty announced today, the United States and Russia will cut by one third their numbers of deployed strategic weapons. The agreement contains stringent verification regimes which, according to Defense Secretary Robert Gates, provide our intelligence community the tools they need to assess Russian compliance with the treaty's terms.

"The goodwill that these arms control measures generate has historically provided both sides with the confidence and political capital to cooperate in a number of other areas. There are a multitude of challenges that require collaboration with our Russian counterparts, such as the pursuit of multilateral sanctions against Iran in the U.N. Security Council. Today's remarkable diplomatic breakthrough demonstrates that we have the ability to reach agreement with Russia on divisive issues and can continue to pursue their cooperation on future initiatives," Joe continued.

The future of this landmark agreement is by no means certain, as it must be ratified by both the United States Senate and Russian Duma. Senator John McCain, a key Republican voice on foreign policy, said this week that there would be no GOP cooperation on anything in Congress because the Obama White House had 'poisoned the well' with its health care effort.

"Although Senator McCain has since walked this statement back, I remain concerned that some may play partisan politics with our national security. Similar recalcitrance prevented ratification of the Comprehensive Test Ban Treaty during the 1990s, which has continued to provide other nations with justification to operate outside the international mainstream on nuclear issues," said Joe.

"Signals from the Senate on this issue in coming weeks may have a direct impact on Russian ratification. Additionally, they will also weigh on the appearance of our commitment to nuclear non-proliferation at this spring's nuclear security summit in Washington, where President Obama will host more than 40 heads of state, and at the Nuclear Non-Proliferation Treaty review conference in New York which will follow," said Joe. "This may have a direct bearing on the willingness of non-nuclear states to continue to operate within the tenets of the Nuclear Non-Proliferation Treaty, and with this in mind, I urge the Senate to move quickly towards ratification of today's treaty."

Joe also supports the Comprehensive Test Ban Treaty and President Obama's stated goal of the eventual eradication of nuclear weapons. In September 2008, he voted against the U.S.-India nuclear deal, which would allow trade of nuclear materials with India, because of his concern that the agreement would exacerbate India's nuclear arms race with Pakistan.

Subject: Sestak Backs Administration's Effort to Prevent Foreclosures

Sestak Backs Administration's Effort to Help Americans Avoid Foreclosure
2.25 Million Could Lose their Homes this Year Without Aggressive Action

Democratic U.S. Senate candidate Congressman Joe Sestak released the following statement today following the Obama Administration's plan to implement incentives for principal reduction as a means to decrease the number of foreclosures across the country:



"Since the outset of this housing crisis, I have called for a broad program to help the most vulnerable homeowners - those with homes valued at less than their mortgage," said Joe. "Over a year ago, I introduced H.R. 1356, the Homeownership Vesting Plan, to take similar steps to those the Administration proposed. Similarly, the Homeownership Vesting Plan would have reduced the principal for these 'underwater' homeowners through a new Federal Housing Administration-backed mortgage. It also included incentives for lenders to forgive portions of a mortgage to prevent more foreclosures, which would harm the overall economy.

"

Although I hoped that the Administration would have taken this action sooner, this marks an important step forward. Initial estimates suggest that anywhere between 1 million and 1.5 million homeowners could be helped by this program. The program also provides incentives to support lenders who temporarily reduce mortgage payments for unemployed homeowners. Moody's Chief Economist Mark Zandi-- with whom I worked closely to craft the Homeownership Vesting Plan -- projects that approximately 2.25 million homeowners could lose their homes this year in foreclosures or short sales. We must take aggressive actions, such as those outlined by the Administration today, not only to help those Americans with underwater mortgages, but also to prevent the decrease in property values of surrounding homes that result from foreclosure.

"

I have repeatedly called for this action because the housing market's stability is the key to our overall economic stability. February's housing numbers have rightly given pause to many policy makers. Without action to incentivize premium reduction, we risk a further decline in the housing market which could pull our economy into a 'double-dip' recession and force even more families into foreclosure. This announcement will bring us a step closer to rebuilding the economic security of Pennsylvania's working families."

And yet, even though there's hardly any sort of case to be made for Senator Specter, unless you measure him against the unimaginably debased standard represented by the likely Republican nominee, Club for Growth quack Pat Toomey, whose surging support in this Year of the Teabaggers caused our Arlen to bolt the GOP in the first place, knowing that he had virtually no chance to win a Republican primary.

So Arlen, self-involved opportunist that he is, isn't as benighted as the politically demented Toomey. Is this really a standard we want to apply to candidates? Whereas Sestak, the onetime admiral, who seems to me to be doing all the things we say we want in a serious candidate, can't seem to be making any headway in the polls.

But once again, this is our night for making believe. Let's pretend that the media covering the Pennsylvania Senate primary suddenly woke up and decided to, you know, cover the news, as opposed to merely reporting the latest political race-track odds. And/or that the Sestak campaign found a way to really make Pennsylvania Democratic primary voters hear what the candidate is saying.

Go on and pamper yourself. Doesn't that feel just a little bit good? Like when you get a massage, you don't expect to feel better permanently. You know that by a day later, maybe even an hour later, you're going to feel crummy again. But you do it anyway (well, no, I don't, but a lot of people seem to), for that brief blessed relief.

It's the weekend. There's plenty of time for reality afterward. I'm prepared to offer you a whole day. (That's the best deal I've got.)

#

For Conservatives The Best Bank Regulation Is No Regulation-- Buyer Beware

Judging from the rallies on Wall Street yesterday, the capitalists haven't bought into the GOP talking points about socialism quite to the extent of the Glenn Beck/Rush Limbaugh crowd of modern day Know Nothings. But if you think the conservatives dig in on healthcare reform, just watch them on financial reform-- the real line in the sand for the representatives of institutionalized Greed and Selfishness.

After foot (and knuckle) dragging all year, the GOP was left out of the final legislation entirely-- although far, far too many of their reactionary demands were met as Dodd and the Democrats compromised with good sense for no reason, unless currying favor with the banksters is considered reasonable in Inside the Beltway Democratic circles. Yesterday the Senate Banking Committee approved Dodd's financial overhaul legislation 13-10, without a single Republican vote.

The 10 crooked, bribe-taking handmaidens of the Wall Street banks who have vowed to throw themselves under the bus of progress are Richard Shelby (R-AL- $5,213,130), Robert Bennett (R-UT- $2,354,767), Jim Bunning (R-KY- $2,580,305), Mike Crapo (R-ID- $1,728,513), Bob Corker (R-TN- $3,058,330), Jim DeMint (R-SC- $2,463,860), David Diapers Vitter (R-LA- $2,083,149), Mike Johanns (R-NE- $687,621), Kay Bailey Hutchison (R-TX- $4,702,438) and Judd Gregg (R-NH- $1,077,149).

Dodd says his bill will end taxpayer-funded bailouts of companies supposedly "too big to fail," regulate-- for the first time-- the multitrillion-dollar derivatives market, and bring long-overdue consumer protection to financial products. The Republicans have watered down the most important aspects of real reform and are expected to filibuster the eventual bill, no matter how weak and crappy the Democrats make it to please them. Sound familiar?

President Obama, who's unlikely to favor anything that would ever substantively rein in the banksters, is painting Dodd's overly compromised bill as the bee's knees:

We are now one step closer to passing real financial reform that will bring oversight and accountability to our financial system and help ensure that the American taxpayer never again pays the price for the irresponsibility of our largest banks and financial institutions. For that I congratulate Chairman Dodd and the Senate Banking Committee.
 
By creating a new consumer agency, we will finally set and enforce clear rules of the road across the financial marketplace. And as this bill moves to the floor in the coming weeks, I will continue to fight to strengthen the bill and against attempts to undermine the independence of this agency. I will also oppose efforts to add loopholes that could harm consumers or investors, or that allow institutions to avoid oversight that is critical for financial stability. I urge those in the Senate who support these efforts to resist pressure from those who would preserve the status quo and to stand up for long overdue reform that will protect American families and the long term health of our economy.

Conservatives, of course, think we need less regulation, not more. They believe in the Law of the Jungle:

  

Will Obama's Quest For Illusory Bipartisanship Manage To Screw Up Financial Services Reform As badly As Healthcare Reform?

When I woke up yesterday, the first thing I heard was someone on CNN babbling about how a former Obama political advisor was predicting the Democrats would be slaughtered in November. It was Steve Hildebrand, and here's the quote:

I think that there is a real shot we [Democrats] are going to get slaughtered in elections this fall if we aren't leading the efforts to reform Washington. We campaigned in '06 and '08, and if voters don't see that change, we haven't lived up to that promise.

Sounds reasonable. The healthcare reform bill is a guaranteed disaster because Obama-- so pointlessly eager for a bipartisan patina on the legislation-- compromised away everything that would have made it worth fighting for. You have a raging religious fanatic, Bart Stupak, sensing weakness and deciding to use the nation's healthcare as an opportunity to turn back the clock on women's choice. [Please support his primary opponent, Connie Saltonstall.] And now you have progressives (like Mike Capuano and Hispanic members, for example), who have been made to eat shit all through this whole repulsive process, ready to just say no (along with lobbyist-owned Democrats, like Suzanne Kosmas and John Adler, and natural-born reactionaries, i.e., Blue Dogs).

But healthcare reform isn't the only desperately needed reform that Obama's incompetent team has bungled. We might as well have had the GOP in charge for all that's been accomplished-- next to nothing substantive-- on reining in Wall Street. If there's one thing people hate as much as the Inside the Beltway crowd, it's the Wall Street crowd. And there's plenty-- even short of setting up a guillotine on the corner of Wall and Broad-- that could have been done.

Obviously this can't all be blamed on Obama. The massive endemic corruption of our campaign financing system makes it next to impossible for cowardly career politicians to take on the banksters-- not that the Republicans or Blue Dogs even want to, since their entire philosophy of conservative governance is that our "betters" (rich people) should be calling the shots.

Again, Obama and the Democrats were so eager to work with their sworn enemies-- and, more important, the sworn enemies of reform-- in making it look like they were crafting a bipartisan bill that the whole effort was doomed from the git-go. The conservatives in the Senate, and their masters in the banks, would never agree to anything that would shave a dime off their ill-gotten gains. Yesterday, even financial industry dupe, Chris Dodd, chair of the Banking Committee, finally gave up working with the saboteurs. Supposedly he'll be presenting a bill-- one in which he'll just compromise and water down himself-- on Monday without any further input from foot-dragging Corky (R-TN) who had replaced knuckle-dragging Shelby as the GOP "negotiator." Will there even be a much-needed independent consumer protection agency?

Dodd said he is concerned that the chance for reform will dwindle as memories fade of the near-meltdown of the financial system in 2008... The main sticking point has been the Obama administration's controversial proposal to create an independent consumer protection agency. Republicans have opposed the measure and the financial industry has lobbied furiously against such an agency.

Democrats appear to have relented in an effort to win bipartisan support for the agency. The latest proposal would place the agency within the Federal Reserve, as long as it is given an independent head, independent funding, and rule-making and enforcement powers.

Other elements that appear likely to be included in Dodd's reform bill will be giving the government so-called "resolution authority," the power to wind down large failing firms in an effort to avoid a repeat of the "too big to fail" problems that led to the government's massive bailout of major Wall Street banks.

Dodd is also set to propose a systemic risk council, chaired by the Treasury Secretary, to monitor the nation's economy for possible threats to its stability. The oversight of the nation's biggest banks with assets of more than $100 billion appears likely to remain with the Federal Reserve.

Another element of the reform movement will be an effort to monitor the over-the-counter derivatives market, including the credit-default swaps that played such a pivotal role in the downfall of insurance giant AIG.

Is Chris Dodd's decision (finally!) to spurn GOP "bipartisanship" on banking reform a harbinger of things to come?

by Ken

News today, as reported on the NYT website by Sewell Chan:

The chairman of the Senate Banking Committee, hoping to break a months-long logjam on the biggest overhaul of financial regulations since the Depression, will unveil his own proposal on Monday, without yet having a single Republican endorsement.

You want to think that this could be a a breakthrough for Democratic congressional decision-makers: the realization that nothing they can do, no amount of concession, will induce Republicans to support Democratic initiatives that are in any way controversial. After all, the only political "idea" the GOP has going is obstruction: the conviction that it has the power to make Democrats fail in the eyes of the public by making it impossible for Dems to do anything, however beneficial it might be to that public.

Heck, we can take it further: The more beneficial any legislative idea might be to Americans generally, the more it scares the bejezus out of Republican "strategists," who are terrified of Democrats being able to take credit rather than blame for anything.

Of course we on the sidelines have been screaming about this since we began to see signs that the Obama administration was not only uninterested in undoing the toxic legacy of the Bush regime but actually seemed quite comfortable with a wide range of its policies. (I don't think I have to retrace this bit of history for DWT readers.)

And the point we always have to remember about the wreckage-to-date of this session of Congress is that you really can't blame the Republicans. Especially in the time when the Democrats had their at least theoretical Senate supermajority, the problem has been the leadership's inability or unwillingness to deal with its internal ConservaDem blight.

But even that would have depended on the Dems' rare willingness to go it alone, which so far has appeared only as an absolute last resort. Following the lead of the White House, the Dem congressional leadership has positively groveled across the aisle, not to mention to its own Republican Lite members.

The notion currently being peddled to gullible buyers, of which there appear to be an alarming number, especially inside the Beltway, by the biggest liar inside that same Beltway (quite a distinction)!, Master Rahm Emanuel, that the Obama administration's woes are all the result of the president's failure to heed his urges to moderation might be worth discussing if there were recorded instances of the administration paying anything but (usually much-belated) lip service to its progressive constituency.

At some point we've all had to face up to the reality that the progressive legislative agenda we had hoped might be given serious consideration hasn't, not because "we don't have the votes," but because "we don't wanna do it." It's amazing how easy it is to never have the votes for stuff you actually don't want to do.

Which brings us back to Chris Dodd and "the biggest overhaul of financial regulations since the Depression." First, an aside to reporter Chan: Might we not want to wait and see what if anything is actually signed into law before announcing this as a fact?

Dodd, we all know, is on his final Senate lap, which inevitably raises the "legacy" question. You always worry when pols take to worrying about their legacy. In theory, it opens the possibility that such a person may finally feel able, if not quite impelled, to act out of principle rather than the usual "what's in it for me?" considerations. However, in practice it usually signals One Last Chance to Cover My Outsize Butt.

And there's been heightened concern in the case of Chris Dodd as Senate point man for this attempted overhaul of banking regulations, given his close ties to the financial services industries. We know the Big Money interests are on the job, in a big way, and as I was suggesting yesterday, in the spirit of "following the money" in evaluating legislative initiatives, the high-pressure effort to sabotage meaningful reform is being felt all over the place, both on and below the radar.

Of course Big Money can always count on Republicans to fight to the (political) death to protect their interests, and the news that Dodd has been huddling these weeks if not months with Tennessee dim bulb Bob Corker has led many of us to fear the worst. It's unclear to begin with, as Timesman Chan notes, why it's Corker rather than Banking Committee ranking member Richard Shelby of Albama whom Dodd has been shacked up with. Not that I think Shelby, another proud son of the Confederacy, would have been a more serious negotiating partner. If anything Shelby, with several extra decades' of Village insiderism under his belt, would have been even more impossible a negotiator, assuming there's such a thing as degrees of impossibility. It's just strange.

Even now, though, the stories are being framed, not in terms of the urgent need for meaningful financial-services reform and the Republicans' lockstep conspiracy to undermine it in any way possible, or in terms of the country's rather visible hostility to the banksters' conniving, but in terms of the wounded feeling of the "bipartisan" Senator Corker. Even now the Right knows how to control messaging with the Village media.

So maybe it really does mean something that Chris Dodd has had enough of phony bipartisanship. To Republicans it's only bipartisan if it's Republicanly partisan.

It's not the only issue, but for both practical and symbolic importance the immediate question of how much independence and authority any Consumer Financial Protection Agency is given is the obvious thing to watch.

Even in the worst-case scenario, where Dodd's committee reports a serious financial reform bill that falls victim to the Senate GOP filibuster buzz saw, at least the Dems will have a meaningful issue to take the voters, offering them a reason to return Dems to Congress. And if other Democratic legislative leaders finally rouse themselves to a serious effort to do what's best for the country, the party might even have, you know, a "platform" on which to run.

#