Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Several Items on Banking RegulationSeveral interesting items about financial (re-)regulation, and the unlikelihood of anything approaching adequate regulation getting through Congress, have come across our desk.First, the business section of Friday's New York Times had a pretty good piece by Joe Nocera on financial regulation, Have Banks No Shame? He partially skewers Barney Frank for watering down the planned regulations, and there are some nice quotes from MIT economist Simon Johnson, a vocal critic of the banking industry. But Nocera ends up endorsing the flawed bill, even with its severely weakened provision for a consumer financial protection agency. Next, our friends Jane D'Arista and Gerald Epstein and folks at the Political Economy Research Institute have started a new organization of economists pushing for tougher banking regulation: Economists' Committee for Stable, Accountable, Fair and Efficient Financial Reform Next, the Sunlight Foundation's blog has a great post (with this great graphic) about how members of the House Financial Services Committee are "on F.I.R.E":  One year after the biggest economic collapse since the Great Depression, Congress is still debating new financial regulations to protect consumers and prevent risk-taking in the financial sector. The House Committee on Financial Services is currently undertaking the important first step of writing, amending and voting on some of the pieces of the long-proposed financial regulatory reform. While debating these issues top committee members have been the recipients of disproportionate campaign contributions from the very industry that they are tasked with regulating. Twenty-seven committee members have so far received over one-quarter of their contributions from the finance, insurance and real estate (FIRE) sector. This includes Chair Barney Frank, Ranking Member Spencer Bachus, four subcommittee chairs and four subcommittee ranking members. Of the twenty-seven, twelve committee members received over 35% of their contributions in 2009 from the FIRE sector. Ranking Member Bachus, a crucial decision maker on the committee, received 71% of his campaign contributions from the finance, insurance and real estate (FIRE) sector so far this year. (These numbers run from January 1-June 30.) For his career, the Alabama congressman receives 45% of his contributions from the FIRE sector. Bachus leads the committee in his reliance on FIRE sector campaign contributions. Bachus has taking a position in opposition to most of the regulatory reforms. Bachus recently stated in a hearing, “this is absolutely the wrong time to be creating a new government agency empowered not only to ration credit, but to design the financial products offered to consumers.Read the rest of the post. Last but not least, the Buffalo News had an article on the conference of post-Keynesians that was held in the rust-belt city last weekend (with D&S classroom readers available at the book exhibit). The article has its charmingly corny moments, starting with the title (get it?) and the first quotation, but it's nice coverage.
Read the original article. Labels: banking regulation, barney frank, Gerald Epstein, Jane D'Arista, Joe Nocera, PERI, post-Keynesianism Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). It's a Start? Maybe?This is nothing more than a gimmick in a market that lost $2 trillion or something like that in 2008 alone. And it's ironic that the piece comes out on the day the administration seems to be caving in on the only worthwhile part (not very worthwhile at that, compared to single-payer) of the healthcare reform bill--the public option. But there it is. Noteworthy of the diminishing vision of "public servants" in this age of "change we can believe in" is Rep. Frank's remark to the effect that simply having a home is a dream these days. From The Boston Globe:President shifts focus to renting, not owning Using $4.25b to build affordable housing By Joseph Williams Globe Staff / August 16, 2009 WASHINGTON The Obama administration, in a major shift on housing policy, is abandoning George W. Bush's vision of creating an "ownership society" and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities. The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates. Analysts say the approach takes a wrecking ball to Bush's heavy emphasis on encouraging homeownership as a way to create national wealth and provide upward mobility for low- and working-class families, especially minorities. Housing and Urban Development Secretary Shaun Donovan's recalibration of federal housing policy, they said, shows that the Obama White House has acknowledged that not everyone can or should own a home. In addition to an ideological shift, the move is a practical response to skyrocketing foreclosure rates, tight credit, and the economic crisis. "I've always said the American dream should be a home--not homeownership," said Representative Barney Frank, chairman of the House Financial Services Committee and one of the earliest critics of the Bush administration's push to put mortgages in the hands of low- and moderate-income people. Read the rest of the article Labels: Barack Obama, barney frank, housing market, hud, renting Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Sen. Durbin: Bankers 'Own' CongressFrom Glenn Greenwald's blog at Salon.com; hat-tip to LF:Thursday April 30, 2009 05:35 EDT Top Senate Democrat: bankers "own" the U.S. Congress Sen. Dick Durbin, on a local Chicago radio station this week, blurted out an obvious truth about Congress that, despite being blindingly obvious, is rarely spoken: "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place." The blunt acknowledgment that the same banks that caused the financial crisis "own" the U.S. Congress -- according to one of that institution's most powerful members -- demonstrates just how extreme this institutional corruption is. The ownership of the federal government by banks and other large corporations is effectuated in literally countless ways, none more effective than the endless and increasingly sleazy overlap between government and corporate officials. Here is just one random item this week announcing a couple of standard personnel moves: Former Barney Frank staffer now top Goldman Sachs lobbyist So: Paese went from Chairman Frank's office to be the top lobbyist at Goldman, and shortly before that, Goldman dispatched Paese's predecessor, close Tom Daschle associate Mark Patterson, to be Chief of Staff to Treasury Secretary Tim Geithner, himself a protege of former Goldman CEO Robert Rubin and a virtually wholly owned subsidiary of the banking industry. That's all part of what Desmond Lachman -- American Enterprise Institute fellow, former chief emerging market strategist at Salomon Smith Barney and top IMF official (no socialist he) -- recently described as "Goldman Sachs's seeming lock on high-level U.S. Treasury jobs." Meanwhile, the above-linked Huffington Post article which reported on Durbin's comments also notes Sen. Evan Bayh's previously-reported central role on behalf of the bankers in blocking legislation, hated by the banking industry, to allow bankruptcy judges to alter the terms of mortgages so that families can stay in their homes. Bayh is up for re-election in 2010, and here -- according to the indispensable Open Secrets site -- is Bayh's top donor: Goldman is also the top donor to Bayh over the course of his Congressional career, during which Bayh has received more than $4 million from the finance, insurance and real estate sectors. In a totally unrelated coincidence -- after the Government, as Matt Taibbi put it, enacted "a bailout program that has now figured three ways to funnel money to Goldman, Sachs"-- this is what happened earlier this month: Goldman reports $1.8 billion profit Nobody even tries to hide this any longer. The only way they could make it more blatant is if they hung a huge Goldman Sachs logo on the Capitol dome and then branded it onto the foreheads of leading members of Congress and executive branch officials. Of course, ownership of the government is not confined to Goldman or even to bankers generally; legislation in virtually every area is written by the lobbyists dispatched by the corporations that demand it, and its passage then ensured by "representatives" whose pockets are stuffed with money from those same corporations. Just as one example, as Jane Hamsher reported about Bayh: Bayh's little "lobbyist problem" is considered by many to be what tanked his Vice Presidential aspirations. His wife Susan earns about $837,000 a year serving on seven corporate boards, among them Wellpoint, a health insurance company for which Bayh helped secure a $24.7 million dollar grant. She's on the board of ETrade, even as Bayh is on the Senate Finance Committee. Meanwhile, the only citizen protests relating to this mass robbery are driven by anger at the government for treating bankers too harshly and unfairly -- one of the most classic manifestations of what Taibbi, in a separate piece, so aptly calls the "peasant mentality": After all, the reason the winger crowd can't find a way to be coherently angry right now is because this country has no healthy avenues for genuine populist outrage. It never has. The setup always goes the other way: when the excesses of business interests and their political proteges in Washington leave the regular guy broke and screwed, the response is always for the lower and middle classes to split down the middle and find reasons to get pissed off not at their greedy bosses but at each other. That's why even people like [Glenn] Beck's audience, who I'd wager are mostly lower-income people, can't imagine themselves protesting against the Wall Street barons who in actuality are the ones who fucked them over. . . . One might think it would be a big news story for the second most-powerful member of the U.S. Senate to baldly state that the Congress is "owned" by the bankers who spawned the financial crisis and continue to dictate the government's actions. But it won't be. The leading members of the media work for the very corporations that benefit most from this process. Establishment journalists are integral and well-rewarded members of the same system and thus cannot and will not see it as inherently corrupt (instead, as Newsweek's Evan Thomas said, their role, as "members of the ruling class," is to "prop up the existing order," "protect traditional institutions" and "safeguard the status quo"). That Congress is fully owned and controlled by a tiny sliver of narrow, oligarchical, deeply corrupted interests is simultaneously so obvious yet so demonized (only Unserious Shrill Fringe radicals, such as the IMF's former chief economist, use that sort of language) that even Durbin's explicit admission will be largely ignored. Even that extreme of a confession (Durbin elaborated on it with Ed Schultz last night) hardly causes a ripple. Read the full post (I may have missed some his links, too). Labels: banking system, barney frank, Glenn Greenwald, Richard Durbin, U.S. Congress, U.S. Senate Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Obama Plans To Avoid Repeat of CrisisFrom Bloomberg:Obama to Outline Regulation Changes to Avoid Repeat of Crisis By Hans Nichols March 22 (Bloomberg) The Obama administration will this week outline regulatory changes aimed at avoiding a repeat of the financial crisis that's crippled the banking system and pushed the U.S. into the deepest recession since 1982. The proposals will address the risks that remain in financial regulation, an administration official said, including the need for an agency to have the power to resolve a breakdown at a major financial institution. Federal Reserve Chairman Ben S. Bernanke two weeks ago called for regulators to be given the authority to seize such firms, in the way the Federal Deposit Insurance Corp. already has for deposit-taking institutions. Officials favor giving the Fed greater responsibility for managing risk across the financial system as was proposed almost a year ago by former Treasury secretary Henry Paulson, support for which is waning in Congress. President Barack Obama may also subject executive pay to greater scrutiny, the New York Times reported. An administration official denied that curbing compensation will be a major focus of the regulatory plan. "There’s still a need for a systemic-risk regulator," Representative Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, said on March 20. "The argument for the Fed alone has lost a lot of political support. I think that’s now got to be re-looked at." Treasury Secretary Timothy Geithner will testify before Frank's committee on March 26 as Obama prepares to travel to London for a summit of the Group of 20 industrial and developing nations. G-20 Summit Obama has said that the meeting must deal with how to prevent further crises like the current financial meltdown that began almost two years ago with the collapse of the market for subprime mortgages. American banks have suffered more than $800 billion in writedowns and credit losses since then. The credit contraction that followed dragged first the U.S., and then Europe and Japan, into recession. A surge in unemployment and collapse in house prices has added to bad loans and further discouraged banks from lending. The crisis also pushed the U.S. government into pouring hundreds of billions of dollars into financial institutions, including Citigroup Inc., Bank of America Corp. and American International Group Inc. Like the White House, Congress is trying to overhaul U.S. financial regulations and agencies that lawmakers have faulted for lax oversight. Frank, who is playing a lead role in the redesign, has been pushing to expand the Fed's authority. Read the rest of the article Labels: bailout, banking regulation, Barack Obama, barney frank, financial crisis, Timothy Geithner Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Fed May Gain More Financial OversightFrom the Washington Post, courtesy of Michael Perelman. Here are his thoughts on the matter:Considering that the Federal Reserve is supposed to be independent of the government, it would seem that getting such powers to the Fed would be ill-advised. In addition, considering that the Fed's posture in the bailout makes the Treasury Department looks like a paragon of transparency, giving such powers to the Fed seems even more questionable. When the Democrats promised change, I thought they meant change for the better. Maybe I was wrong. Here's the article: Fed May Gain More Financial Oversight Some Worry Plan Would Give Bank Too Much Power By Neil Irwin and Binyamin Appelbaum Washington Post Staff Writers Monday, January 26, 2009; A01 Congress is moving to create strong new oversight of the financial sector that would likely give the Federal Reserve authority to examine the workings of a wide range of companies in an attempt to address one of the key failures that led to the financial crisis. But the initiative, which could be finalized in the House by spring, is raising concerns about whether it would muddy the Fed's traditional mission and concentrate too much power in a single federal body. The legislation envisioned by House Financial Services Committee Chairman Barney Frank (D-Mass.) would put the Fed, or less likely another government agency, in charge of protecting the stability of the entire system, Frank and other congressional sources said. An abundance of federal agencies regulate the financial industry. But no agency is responsible for understanding or containing risks affecting the financial system as a whole. In fact, none even has a complete picture of the financial markets. The danger was highlighted by last year's meltdown of insurance giant American International Group. In the days before the government was forced to bail out the firm, no federal official comprehended the magnitude of the threat the company's troubles posed to the economy. Under Frank's legislation, the new regulator would likely be given the power to gather information about the inner workings of banks, investment firms, insurance companies, hedge funds and any other entity big enough or so intertwined with other companies that it creates the risk of a systemic collapse. These companies would have to provide detailed information about how they manage risk, their derivative contracts and the extent to which they use borrowed money. Read the rest of the article Labels: bailout, barney frank, financial crisis, financial regulation, Michael Perelman Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Barney Frank's JP Morgan Chase ConnectionFrom Bob Feldman:Since 1989, the corporation whose Political Action Committee [PAC] or executives have been the top source of campaign contributions for the House Financial Services Committee Chairman, Barney Frank, has been JP Morgan Chase & Company. A Democratic Congressional representative from Massachusetts, Frank has accepted over $70,000 in campaign contributions from JP Morgan Chase executives or its PAC since 1989, according to the Center for Responsive Politics web site data base at www.opensecrets.org. In 2007, for example, Rep. Frank accepted $6,000 in campaign contributions from JP Morgan Chase's PAC, according to the JP Morgan Chase web site. Coincidentally, Frank recently helped push through Congress a Wall Street corporate welfare bill which authorized the U.S. Treasury Department to invest $25 billion in JP Morgan Chase. In a January, 1996, I asked Rep. Frank, in a phone interview for the now-defunct Lower East Side alternative weekly, Downtown, why his campaign committee had accepted a $500 contribution from then J.P. Morgan vice-chairman Robert Mendoze in April 1995. "I'm surprised by the question," Frank replied in 1996. "There's no alternative to accepting such contributions, although I'm in favor of public financing of campaigns. I am on the banking committee and I accept contributions from many different contributors. But none of these contributors will determine how I vote on the banking committee." According to Frank, when he first ran for Congress he received no campaign contributions from banking industry executives. But apparently, after some banks saw that, as a House Banking Committee member, Frank favored allowing banks to again enter the securities business, he began to receive some campaign contributions from people in the banking industry. Asked in 1996 how he'd respond to the argument that the acceptance of a campaign contribution from a bank executive by a member of the House Banking Committee, which passes legislation that regulates banks, represents a conflict of interest, Frank replied in 1996: "That's nonsense." According to the Massachusetts representative, it was as ethical for him to accept campaign contributions from corporate special interest groups and JP Morgan's vice-chairman as it was for him to accept campaign contributions from public interest groups, labor union members or organizations that favor the legalized use of marijuana for medical purposes. Yet in the appendix of his 1992 book, Still The Best Congress Money Can Buy, Philip Stern defined "conflict-of-interest' receipts as "contributions given to, and accepted by, that lawmaker from groups having a particular interest in the decision of the legislative committee on which that lawmaker sits (e.g....gifts by banks and other financial PACs to members of the House Banking Committee)..." Stern also indicated in this same book that the "conflict-of-interest" receipts accepted by Rep. Frank between 1985 and 1990 exceeded $149,000. The chairman of the JP Morgan Chase board of directors' Risk Policy Committee and a member of the JP Morgan Chase corporate board's Public Responsibility Committee, General Dynamics board member James Crown, has also been a heavy campaign contributor to 2008 Democratic Presidential candidate Barack Obama's campaigns since 2003. On June 27, 2003, for example, JP Morgan Chase board member Crown gave a $10,000 campaign contribution to Obama's campaign committee, prior to Obama's 2004 election to the U.S. Senate. Coincidentally, U.S. Senator Obama also supported using U.S. Treasury Department money to help bail out JP Morgan Chase. Other members of the JP Morgan Chase board of directors besides James Crown include Exxon Mobil's retired chairman of the board and former CEO Lee Raymond and Comcast Cable Communications President Stephen Burke. --bob f. Labels: barney frank, Bob Feldman, JP Morgan Chase Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Success! Thank You for Your Calls!Thank you to all who called Barney Frank to ask him to allow New Orleans Public Housing residents to speak at yesterday’s meeting of the House Committee on Financial Services. And thank you to Barney Frank for recognizing the importance of including testimony from a resident at yesterday’s hearings. I received the following report from Anita Sinha, Staff Attorney at the Advancement Project, which, with Bill Quigley, Tracey Washington and the law firm of Jenner & Block, LLP, filed the class action lawsuit against HUD and HANO, on behalf of New Orleans public housing residents.
Labels: barney frank, congress, hano, hud, nola, public housing Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). HUD Considers Allowing Public Housing Residents to Wait for Demolitions in Their Own HomesUS Representative Maxine Waters (D-CA) and New Orleans Mayor Ray Nagin recently met with the US Secretary of Housing and Urban Development (HUD), Alphonso Jackson, to negotiate the possible return of some New Orleans public housing residents to their homes .
Waters is the incoming chair of the subcommittee on Housing and Community Opportunity for the House Financial Services Committee, which Barney Frank chairs. Without a call for cessation of all demoliton plans and a Congressional investigation, Waters' advocacy may only amount to St. Bernard residents coming home now and getting evicted later, when the public housing demolitions begin. Elsewhere, Barney Frank was recently heard correctly referring to the New Orleans housing crisis as "ethnic cleansing through inaction." He has also recently been heard taking some clearly progressive economic positions :
But the question remains: will Barney Frank and Maxine waters stop the ultimate destruction of public housing in New Orleans? Barney Frank and Maxine Waters need to feel strongly supported by their constituents in taking uncompromising stands for the rights of public housing residents to return to—and keep—their homes. (Cross-posted on Gulf Coast Fair Housing Network.) Labels: alphonso jackson, barney frank, hud, katrina, maxine waters, nola, public housing, ray nagin, st. bernard Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
